Prospectus
John
Hancock
Floating
Rate Income Fund
Fixed
income
January
1, 2023
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A |
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R6 |
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JFIAX |
JFIGX |
JFIIX |
JFIRX |
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As with all
mutual funds, the Securities and Exchange Commission has not approved or
disapproved
these securities or passed upon the adequacy of this prospectus. Any
representation to the
contrary is a criminal offense.
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Fund
summary |
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The
summary section is a concise look at the investment objective,
fees and expenses, principal investment strategies,
principal risks, past performance, and investment
management. |
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Fund
details |
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More
about topics covered in the summary section, including
descriptions of the investment strategies and various
risk factors that investors should understand before
investing. |
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Your
account |
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How
to place an order to buy, sell, or exchange shares, as
well as information about the business policies and any
distributions that may be paid.For
more information See
back cover |
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John
Hancock Floating Rate Income Fund
Investment
objective
To seek a
high level of current income.
Fees
and expenses
This table
describes the fees and expenses you may pay if you buy, hold, and sell shares of
the fund. You may
pay other fees, such as brokerage commissions
and other fees to financial intermediaries, which are not reflected in the
tables and examples below. You may
qualify for sales
charge discounts on Class A shares if you and your family invest, or agree to
invest in the future, at least $100,000 in the
John Hancock family of funds.
Intermediaries may have different policies and procedures regarding the
availability of front-end sales charge waivers or contingent deferred
sales
charge (CDSC) waivers (See Appendix 1 - Intermediary sales charge waivers, which
includes information about specific sales charge waivers applicable
to the intermediaries identified therein). More information about these and
other discounts is available from your financial professional and on pages
24 to
26 of the
prospectus under “Sales charge reductions and waivers” or pages 161 to
166 of the
fund’s Statement of Additional Information
under “Sales Charges on Class A and Class C
Shares.”
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Shareholder
fees (%)
(fees paid directly from your investment) |
A |
C |
I |
R6 |
Maximum
front-end sales charge (load) on purchases, as a % of purchase
price |
2.50 |
None |
None |
None |
Maximum
deferred sales charge (load) as a % of purchase or sale price, whichever
is less |
0.50 (on
certain purchases,
including
those of $250,000
or more) |
1.00 |
None |
None |
Small
account fee (for fund account balances under $1,000) ($) |
20 |
20 |
None |
None |
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Annual
fund operating expenses (%)
(expenses that you pay each year as a percentage of the value of your
investment)
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Management
fee |
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Distribution
and service (Rule 12b-1) fees |
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Other
expenses |
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Acquired
fund fees and expenses1
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Total
annual fund operating expenses2
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Contractual
expense reimbursement3
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Total
annual fund operating expenses after expense
reimbursements |
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1 |
“Acquired
fund fees and expenses” are based on indirect net expenses associated with
the fund’s investments in underlying investment
companies. |
2 |
The
“Total annual fund operating expenses” shown may not correlate to the
fund’s ratios of expenses to average daily net assets shown in the
“Financial highlights” section
of the fund’s prospectus, which does not include “Acquired fund fees and
expenses.”
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The
advisor contractually agrees to reduce its management fee or, if
necessary, make payment to the fund in an amount equal to the amount by
which expenses of the fund
exceed 0.66% of average daily net assets of the fund and expenses of Class
A, Class C, Class I and Class R6 shares, as applicable, exceed 1.00%,
1.75%, 0.77%
and 0.66%,
respectively, of average daily net assets attributable to the applicable
class. For purposes of these agreements, “expenses of the fund” means all
fund
expenses, excluding (a) taxes, (b) brokerage commissions, (c) interest
expense, (d) litigation and indemnification expenses and other
extraordinary expenses not incurred
in the ordinary course of the fund’s business, (e) class-specific
expenses, (f) acquired fund fees and expenses paid indirectly, (g)
borrowing costs, (h) prime brokerage
fees, and (i) short dividend expense; and “expenses of Class A, Class C,
Class I and Class R6 shares” means all expenses of the fund (as defined
above) attributable
to the applicable class plus class-specific expenses. These agreements
expire on December 31, 2023,
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 also contractually agrees to waive
a portion of its
management fee and/or reimburse expenses for the fund and certain other
John Hancock funds according to an asset level breakpoint schedule that is
based on the
aggregate net assets of all the funds participating in the waiver or
reimbursement. This waiver is allocated proportionally among the
participating funds. During its most
recent fiscal year, the fund’s reimbursement amounted to 0.01% of the
fund’s average daily net assets. This agreement expires on
July
31, 2024,
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. |
Expense
example
This
example is intended to help you compare the cost of investing in the fund with
the cost of investing in other mutual funds. Please see below a hypothetical
example showing the expenses of a $10,000 investment for the time periods
indicated and then, except as shown below, assuming you sell all of
your shares at the end of those periods. The example assumes a 5% average annual
return and that fund expenses will not change over the periods.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:
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Expenses
($) |
A |
C |
I |
R6 |
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Sold
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Not
Sold
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1
year |
351 |
280 |
180 |
81 |
69 |
3
years |
585 |
576 |
576 |
267 |
233 |
5
years |
838 |
997 |
997 |
470 |
410 |
10
years |
1,560 |
1,976 |
1,976 |
1,054 |
924 |
Portfolio
turnover
The fund
pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not reflected
in annual fund operating expenses or in the example, affect the fund’s
performance. During its most recent fiscal year, the fund’s portfolio
turnover
rate was 52% of the
average value of its portfolio.
Principal
investment strategies
Under
normal market conditions, the fund will invest at least 80% of its net assets
(plus any borrowings for investment purposes) in floating-rate loans,
which often
include debt securities of domestic and foreign issuers that are rated below
investment grade (rated below Baa by a nationally recognized statistical
rating organization such as Moody’s Investors Service, Inc. or BBB by S&P
Global Ratings), at the time of purchase, or are of comparable quality, as
determined by the manager, and other floating-rate securities. Bonds that are
rated at or below BB by S&P Global Ratings or Ba by Moody’s Investors
Service, Inc. are considered junk bonds.
The fund
may invest in domestic and foreign loans and loan participations that pay
interest at rates that float or reset periodically at a margin above a
generally
recognized base lending rate such as the Prime Rate, the London InterBank
Offered Rate (LIBOR), or another generally recognized base lending
rate. Loans and debt instruments rated below investment grade are considered
speculative. The fund may invest in loans of companies whose financial
conditions are troubled or uncertain and that may be involved in bankruptcy
proceedings, reorganizations, or financial restructurings. Some loans may
be illiquid. The fund may also acquire and hold warrants and other equity
interests. The fund may invest in loans, loan participations, and other
securities of any maturity and duration. The fund may also invest in loans of
any aggregate principal amount, which will vary from time to
time.
For
purposes of reducing risk and/or improving liquidity, the fund may invest in
derivative instruments such as options (including options on securities
indexes)
and swaps (including credit default swaps).
The fund
may invest in any number of issuers and may, at times, invest its assets in a
small number of issuers. The fund may focus its investments in a particular
sector or sectors of the economy. The fund’s investment process may result in a
higher-than-average portfolio turnover
ratio.
Principal
risks
An
investment in the fund is not a bank deposit and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government
agency. Many
factors affect performance, and fund shares will fluctuate in price, meaning you
could lose money. The fund’s
investment strategy
may not produce the intended results.
During
periods of heightened market volatility or reduced liquidity, governments, their
agencies, or other regulatory bodies, both within the United States and
abroad, may take steps to intervene. These actions, which could include
legislative, regulatory, or economic initiatives, might have unforeseeable
consequences and could adversely affect the fund’s performance or otherwise
constrain the fund’s ability to achieve its investment objective.
The fund’s
main risks are listed below in alphabetical order, not in order of importance.
Before
investing, be sure to read the additional descriptions of these
risks beginning on page 6 of the
prospectus.
Changing
distribution levels risk. The fund
may cease or reduce the level of its distribution if income or dividends paid
from its investments declines.
Credit
and counterparty risk. The issuer
or guarantor of a fixed-income security, the counterparty to an over-the-counter
derivatives contract, or a borrower of
fund securities may not make timely payments or otherwise honor its obligations.
A downgrade or default affecting any of the fund’s securities
could affect the fund’s performance.
Distressed
investments risk. Distressed
investments, including loans, mortgages, bonds, and notes, may not be publicly
traded and may involve substantial
risk. A fund may lose up to its entire
investment.
Economic
and market events risk. Events in
the U.S. and global financial markets, including actions taken by the U.S.
Federal Reserve or foreign central
banks to stimulate or stabilize economic growth, may at times result in
unusually high market volatility, which could negatively impact performance.
Reduced liquidity in credit and fixed-income markets could adversely affect
issuers worldwide. Banks and financial services companies could
suffer losses if interest rates rise or economic conditions
deteriorate.
Equity
securities risk. The price
of equity securities may decline due to changes in a company’s financial
condition or overall market conditions.
Fixed-income
securities risk. A rise in
interest rates typically causes bond prices to fall. The longer the average
maturity or duration of the bonds held by a
fund, the more sensitive it will likely be to interest-rate fluctuations. An
issuer may not make all interest payments or repay all or any of the
principal
borrowed. Changes in a security’s credit quality may adversely affect fund
performance.
Floating
rate loans risk. Floating
rate loans are generally rated below investment-grade and are generally
considered speculative because they present a
greater risk of loss, including default, than higher quality debt
instruments.
Foreign
securities risk. Less
information may be publicly available regarding foreign issuers, including
foreign government issuers. Foreign securities
may be subject to foreign taxes and may be more volatile than U.S. securities.
Currency fluctuations and political and economic developments
may adversely impact the value of foreign securities. If applicable, depositary
receipts are subject to most of the risks associated with investing
in foreign securities directly because the value of a depositary receipt is
dependent upon the market price of the underlying foreign equity security.
Depositary receipts are also subject to liquidity
risk.
Hedging,
derivatives, and other strategic transactions risk. Hedging,
derivatives, and other strategic transactions may increase a fund’s volatility
and could produce disproportionate losses, potentially more than the fund’s
principal investment. Risks of these transactions are different from and
possibly greater than risks of investing directly in securities and other
traditional instruments. Under certain market conditions, derivatives
could
become harder to value or sell and may become subject to liquidity risk (i.e.,
the inability to enter into closing transactions). Derivatives and other
strategic transactions that the fund intends to utilize include: credit default
swaps, options, and swaps. Options and swaps generally are subject to
counterparty risk. In addition, swaps may be subject to interest-rate and
settlement risk, and the risk of default of the underlying reference
obligation.
High
portfolio turnover risk. Trading
securities actively and frequently can increase transaction costs (thus lowering
performance) and taxable distributions.
Illiquid
and restricted securities risk. Illiquid
and restricted securities may be difficult to value and may involve greater
risks than liquid securities. Illiquidity
may have an adverse impact on a particular security’s market price and the
fund’s ability to sell the security.
Interest-rate
risk.
Fixed-income securities are affected by changes in interest rates. When interest
rates decline, the market value of fixed-income securities
generally can be expected to rise. Conversely, when interest rates rise, the
market value of fixed-income securities generally can be expected to
decline. The longer the duration or maturity of a fixed-income security, the
more susceptible it is to interest-rate
risk.
LIBOR
discontinuation risk. The
publication of the London Interbank Offered Rate (LIBOR), which many debt
securities, derivatives and other financial
instruments have used
or continue to use as the
reference or benchmark rate for interest rate calculations, was
discontinued for certain
maturities
as of December 31, 2021, and
is expected
to be discontinued on June 30,
2023 for the remaining maturities. The transition process away from LIBOR
may lead to increased volatility and illiquidity in markets that currently rely
on LIBOR to determine interest rates, and the eventual use of an
alternative reference rate may adversely affect the fund’s performance. In
addition, the usefulness of LIBOR may deteriorate in the period leading
up to its
discontinuation, which could adversely affect the liquidity or market value of
securities that use LIBOR.
Liquidity
risk. The extent
(if at all) to which a security may be sold or a derivative position closed
without negatively impacting its market value may be impaired
by reduced market activity or participation, legal restrictions, or other
economic and market impediments. Liquidity risk may be magnified in rising
interest rate environments due to higher than normal redemption rates.
Widespread selling of fixed-income securities to satisfy redemptions
during
periods of reduced demand may adversely impact the price or salability of such
securities. Periods of heavy redemption could cause the fund to sell assets
at a loss or depressed value, which could negatively affect performance.
Redemption risk is heightened during periods of declining or illiquid
markets.
Loan
participations risk.
Participations and assignments involve special types of risks, including credit
risk, interest-rate risk, counterparty risk, liquidity
risk, risks associated with extended settlement, and the risks of being a
lender.
Lower-rated
and high-yield fixed-income securities risk.
Lower-rated and high-yield fixed-income securities (junk bonds) are subject to
greater credit
quality risk, risk of default, and price volatility than higher-rated
fixed-income securities, may be considered speculative, and can be difficult to
resell.
Operational
and cybersecurity risk.
Cybersecurity breaches may allow an unauthorized party to gain access to fund
assets, customer data, or proprietary
information, or cause a fund or its service providers to suffer data corruption
or lose operational functionality. Similar incidents affecting issuers of
a fund’s securities may negatively impact performance. Operational risk may
arise from human error, error by third parties, communication errors, or
technology failures, among other causes.
Sector
risk. When a
fund focuses its investments in certain sectors of the economy, its performance
may be driven largely by sector performance and could
fluctuate more widely than if the fund were invested more evenly across
sectors.
Small
number of issuers risk. Adverse
events affecting a particular issuer or group of issuers may magnify losses for
funds which may invest a large portion of
assets in any one issuer or a small number of
issuers.
Warrants
risk. The prices
of warrants may not precisely reflect the prices of their underlying securities.
Warrant holders do not receive dividends or have voting
or credit rights. A warrant ceases to have value if not exercised prior to its
expiration date.
Past
performance
The
following information illustrates the variability of the fund’s returns and
provides some indication of the risks of investing in the fund by showing
changes in
the fund’s performance from year to year and by showing how the fund’s average
annual returns compared with a broad-based market index.
Past
performance (before and after taxes) does not indicate future
results. All
figures assume dividend reinvestment. Performance information is updated
daily, monthly, and quarterly and may be obtained at our website,
jhinvestments.com, or by
calling
800-225-5291 (Class A and Class C), Monday to
Thursday, 8:00 A.M.—7:00
P.M., and
Friday, 8:00 A.M.—6:00
P.M., Eastern
time, or 888-972-8696 (Class I and Class R6) between 8:30 A.M.
and 5:00
P.M., Eastern
time, on most business days.
A note
on performance
Prior to
August 30, 2018, the fund was managed by a different subadvisor and thus, the
performance presented prior to August 30, 2018 should not be
attributed to the current subadvisor, BCSF Advisors, LP (Bain Capital Credit).
The fund’s performance shown below might have differed materially had Bain
Capital Credit managed the fund prior to August 30,
2018.
Please note
that after-tax returns (shown for Class A shares
only) reflect
the highest individual federal marginal income-tax rate in effect as of the date
provided
and do not reflect any state or local taxes.
Your actual
after-tax returns may be different. After-tax returns are not relevant to shares
held in an IRA,
401(k), or other tax-advantaged investment plan. The
returns for Class A shares have been adjusted to reflect the reduction in the
maximum sales
charge from 3.00% to 2.50%, effective February 3, 2014. After-tax returns for
other share classes would vary.
Calendar
year total returns (%)—Class A
(sales
charges are not reflected in the bar chart and returns would have been lower if
they were)
Year-to-date
total return. The fund’s
total return for the nine months ended September
30, 2022, was
-5.77%.
Best
quarter:
2020,
Q2,
9.85%
Worst
quarter:
2020,
Q1,
-13.74%
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Average
annual total returns (%)—as of 12/31/21
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Class
A (before
tax) |
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after
tax on distributions |
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after
tax on distributions, with sale |
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Class
C |
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Class
I |
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Class
R6 |
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Morningstar
LSTA US Leveraged Loan Index (reflects no deduction for fees, expenses, or
taxes) |
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Investment
management
Investment
advisor John
Hancock Investment Management LLC
Subadvisor BCSF
Advisors, LP (Bain Capital Credit)
Portfolio
management
The
following individuals are jointly and primarily responsible for the day-to-day
management of the fund’s portfolio.
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Andrew
Carlino Managing
Director and Portfolio Manager Managed
the fund since 2018 |
Kim
Harris Managing
Director and Portfolio Manager Managed
the fund since 2018 |
Nate
Whittier Director
and Portfolio Manager Managed
the fund since 2019 |
Purchase
and sale of fund shares
The minimum
initial investment requirement for Class A and Class C shares is $1,000 ($250
for group investments), except that there is no minimum for certain
group retirement plans, certain fee-based or wrap accounts, or certain other
eligible investment product platforms. The minimum initial investment
requirement for Class I shares is $250,000, except that the fund may waive the
minimum for any category of investors at the fund’s sole discretion.
The minimum initial investment requirement for Class R6 shares is $1 million,
except that there is no minimum for: qualified and nonqualified
plan investors; certain eligible qualifying investment product platforms;
Trustees, employees of the advisor or its affiliates, employees of the
subadvisor, members of the fund’s portfolio management team and the spouses and
children (under age 21) of the aforementioned. There are no subsequent
minimum investment requirements.
Class A,
Class C, Class I and Class R6 shares may be redeemed on any business day by
mail: John Hancock Signature Services, Inc., P.O. Box 219909,
Kansas City, MO 64121-9909; or for most account types through our website:
jhinvestments.com; or by telephone: 800-225-5291 (Class A and Class
C); 888-972-8696 (Class I and Class R6).
Taxes
The fund’s
distributions are taxable, and will be taxed as ordinary income and/or capital
gains, unless you are investing through a tax-deferred arrangement,
such as a 401(k) plan or individual retirement account. Withdrawals from such
tax-deferred arrangements may be subject to tax at a later
date.
Payments
to broker-dealers and other financial intermediaries
If you
purchase the fund through a broker-dealer or other financial intermediary (such
as a bank, registered investment advisor, financial planner, or retirement
plan administrator), the fund and its related companies may pay the
broker-dealer or other intermediary for the sale of fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend
the fund over another investment. These payments are not applicable to Class R6
shares. Ask your salesperson or visit your financial intermediary’s
website for more information.
Principal
investment strategies
Investment
objective: To seek a
high level of current income.
The Board
of Trustees can change the fund’s investment objective and strategies
without shareholder approval. The fund will provide written notice to
shareholders at least 60 days prior to a change in its 80% investment
policy.
Under
normal market conditions, the fund will invest at least 80% of its net assets
(plus any borrowings for investment purposes) in floating-rate loans,
which often include debt securities of domestic and foreign issuers
that are rated below investment grade (rated below Baa by a nationally
recognized statistical rating organization such as Moody’s Investors
Service, Inc. or BBB by S&P Global Ratings), or are of comparable
quality, as determined by the manager, and other floating-rate
securities. Bonds that are rated at or below BB by S&P Global
Ratings or Ba by Moody’s Investors Service, Inc. are considered junk bonds.
The fund’s investment policies are based on credit ratings at the time of
purchase.
The fund
may invest in domestic and foreign issuer loans and loan participations
that pay interest at rates that float or reset periodically at a margin
above a generally recognized base lending rate such as the Prime Rate,
the London InterBank Offered Rate (LIBOR), or another generally
recognized base lending rate. Loans and debt instruments rated below
investment grade are considered to have speculative characteristics.
The fund may invest in loans of companies whose financial
conditions are troubled or uncertain and that may be involved in bankruptcy
proceedings, reorganizations, or financial restructurings. Direct
investments in loans may be illiquid and holding a loan could expose the
fund to the risks of being a direct lender. The fund may also acquire,
and subsequently hold, warrants and other equity interests.
In
purchasing loans, loan participations, and other securities for the fund, the
manager may take full advantage of the entire range of maturities
and durations and may from time to time adjust the average maturity or
duration of the investments held by the fund, depending on its
assessment of the relative yields of different maturities and durations
and its
expectations of future changes in interest rates.
The fund
may invest in any number of issuers and may, at times, invest its assets
in a small number of issuers. The fund may focus its investments
in a particular sector or sectors of the economy. The fund may also
invest in loans of any aggregate principal amount, and the average
aggregate principal amount of the loans held by the fund will vary from
time to time.
For
purposes of reducing risk and/or improving liquidity, the fund may invest in
derivative instruments such as options (including options on securities
indexes) and swaps
(including credit default swaps).
The manager
considers
environmental, social, and/or governance (ESG) factors,
alongside other relevant factors, as part of its investment process.
ESG factors
may include, but are not limited to, matters regarding
board diversity, climate change policies, and supply chain and human
rights policies. The ESG
characteristics utilized in the fund’s investment
process may change over time and one or more
characteristics
may not be relevant with respect to all issuers that are eligible
fund investments.
The fund’s
investment process may, at times, result in a higher-than-average
portfolio turnover ratio and increased trading expenses.
The fund
may invest in cash or money market instruments for the purpose of
meeting redemption requests or making other anticipated cash
payments.
The fund
may deviate from its principal investment strategies during transition
periods, which may include the reassignment of portfolio management,
a change in investment objective or strategy, a reorganization
or liquidation, or the occurrence of large inflows or outflows.
Temporary
defensive investing
The fund
may invest up to 100% of its assets in cash, money market instruments,
or other investment-grade short-term securities for the purpose of
protecting the fund in the event the manager determines that market,
economic, political, or other conditions warrant a defensive posture.
To the
extent that the fund is in a defensive position, its ability to achieve
its
investment objective will be limited.
Securities
lending
The fund
may lend its securities so long as such loans do not represent more than
33⅓% of the fund’s total assets. The borrower will provide collateral
to the lending portfolio so that the value of the loaned security will be
fully collateralized. The collateral may consist of cash, cash equivalents,
or securities issued or guaranteed by the U.S. government or its
agencies or instrumentalities. The borrower must also agree to increase
the collateral if the value of the loaned securities increases. As with other
extensions of credit, there are risks of delay in recovery or even loss
of rights in the collateral should the borrower of the securities fail
financially.
Principal
risks of investing
An
investment in the fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government
agency. The fund’s shares will go up and down in price, meaning
that you could lose money by investing in the fund. Many factors
influence a fund’s performance. The fund’s
investment strategy may not
produce the intended results.
Instability
in the financial markets has led many governments, including the U.S.
government, to take a number of unprecedented actions designed to
support certain financial institutions and segments of the financial
markets that have experienced extreme volatility and, in some cases, a
lack of liquidity. Federal, state, and other governments, and their
regulatory agencies or self-regulatory organizations, may take actions
that affect the regulation of the instruments in which the fund invests, or
the issuers of such instruments, in ways that are unforeseeable.
Legislation or regulation may also change the way in which the
fund itself is regulated. Such legislation or regulation could limit or
preclude the fund’s ability to achieve its investment objective. In
addition,
political events within the United States and abroad could negatively
impact financial markets and the fund’s performance. Further,
certain
municipalities of the United States and its territories are financially
strained and may face the possibility of default on their debt obligations,
which could directly or indirectly detract from the fund’s performance.
Governments
or their agencies may also acquire distressed assets from financial
institutions and acquire ownership interests in those institutions.
The implications of government ownership and disposition of these
assets are unclear, and such a program may have positive or negative
effects on the liquidity, valuation, and performance of the fund’s portfolio
holdings. Furthermore, volatile financial markets can expose the fund to
greater market and liquidity risk, increased transaction costs, and
potential difficulty in valuing portfolio instruments held by the fund.
The
principal risks of investing in the fund are summarized in its fund summary
above. Below are descriptions of the main factors that may play a role
in shaping the fund’s overall risk profile. The descriptions appear in
alphabetical order, not in order of importance. For further details
about fund risks, including additional risk factors that are not discussed
in this prospectus because they are not considered primary factors,
see the fund’s Statement of Additional Information (SAI).
Changing
distribution levels risk
The
distribution amounts paid by the fund generally depend on the amount of
income and/or dividends paid by the fund’s investments. As a result of
market, interest rate and other circumstances, the amount of cash
available for distribution by the fund and the fund’s distribution rate
may vary or
decline. The risk of such variability is accentuated in currently
prevailing market and interest rate circumstances.
Credit
and counterparty risk
This is the
risk that the issuer or guarantor of a fixed-income security, the
counterparty to an over-the-counter (OTC) derivatives contract (see “Hedging,
derivatives, and other strategic transactions risk”), or a borrower of
a fund’s securities will be unable or unwilling to make timely principal,
interest, or settlement payments, or otherwise honor its obligations.
Credit risk associated with investments in fixed-income securities
relates to the ability of the issuer to make scheduled payments of
principal and interest on an obligation. A fund that invests in
fixed-income securities is subject to varying degrees of risk that the
issuers of
the securities will have their credit ratings downgraded or will default,
potentially reducing the fund’s share price and income level. Nearly all
fixed-income securities are subject to some credit risk, which may vary
depending upon whether the issuers of the securities are corporations,
domestic or foreign governments, or their subdivisions or instrumentalities.
When a fixed-income security is not rated, a manager may have to
assess the risk of the security itself. Asset-backed securities,
whose principal and interest payments are supported by pools of
other assets, such as credit card receivables and automobile loans, are
subject to further risks, including the risk that the obligors of the
underlying assets default on payment of those assets.
Funds that
invest in below-investment-grade securities, also called junk bonds
(e.g., fixed-income securities rated Ba or lower by Moody’s Investors
Service, Inc. or BB or lower by S&P Global Ratings or Fitch Ratings, as
applicable, at the time of investment, or determined by a
manager to
be of comparable quality to securities so rated) are subject to
increased credit risk. The sovereign debt of many foreign governments,
including their subdivisions and instrumentalities, falls into this
category. Below-investment-grade securities offer the potential for higher
investment returns than higher-rated securities, but they carry greater
credit risk: their issuers’ continuing ability to meet principal and
interest
payments is considered speculative, they are more susceptible to real or
perceived adverse economic and competitive industry conditions,
and they may be less liquid than higher-rated securities.
In
addition, a fund is exposed to credit risk to the extent that it makes
use of OTC
derivatives (such as forward foreign currency contracts and/or swap
contracts) and engages to a significant extent in the lending of fund
securities or the use of repurchase agreements. OTC derivatives transactions
can be closed out with the other party to the transaction. If the
counterparty defaults, a fund will have contractual remedies, but there is no
assurance that the counterparty will be able to meet its contractual
obligations or that, in the event of default, a fund will succeed in
enforcing them. A fund, therefore, assumes the risk that it may be
unable to obtain payments owed to it under OTC derivatives contracts
or that those payments may be delayed or made only after the fund has
incurred the costs of litigation. While the manager intends to monitor the
creditworthiness of contract counterparties, there can be no assurance
that the counterparty will be in a position to meet its obligations,
especially during unusually adverse market conditions.
Distressed
investments risk
Distressed
investments include loans, loan participations, bonds, notes, and
nonperforming and subperforming mortgage loans, many of which are not
publicly traded and may involve a substantial degree of risk. In certain
periods, there may be little or no liquidity in the markets for these
securities
or instruments. In addition, the prices of such securities or instruments
may be subject to periods of abrupt and erratic market movements
and above-average price volatility. It may be more difficult to value such
securities, and the spread between the bid and asked prices of such
securities may be greater than normally expected. If the manager’s
evaluation of the risks and anticipated outcome of an investment
in a distressed security should prove incorrect, the fund may lose a
substantial portion or all of its investment or it may be required to
accept cash
or securities with a value less than the fund’s original investment.
Economic
and market events risk
Events in
certain sectors historically have resulted, and may in the future result, in
an unusually high degree of volatility in the financial markets, both
domestic and foreign. These events have included, but are not limited to:
bankruptcies, corporate restructurings, and other similar events;
governmental efforts to limit short selling and high frequency trading;
measures to address U.S. federal and state budget deficits; social,
political, and economic instability in Europe; economic stimulus by the
Japanese central bank; dramatic changes in energy prices and currency
exchange rates; and China’s economic slowdown. Interconnected
global economies and financial markets increase the possibility
that conditions in one country or region might adversely impact
issuers in a different country or region. Both domestic and foreign
equity markets have experienced increased volatility and turmoil, with
issuers that have exposure to the real estate, mortgage, and credit
markets
particularly affected. Financial
institutions could
suffer losses as interest
rates rise or economic conditions deteriorate.
In
addition, relatively high market volatility and reduced liquidity in credit
and
fixed-income markets may adversely affect many issuers worldwide. Actions
taken by the U.S. Federal Reserve (Fed) or foreign central banks to
stimulate or stabilize economic growth, such as interventions in currency
markets, could cause high volatility in the equity and fixed-income
markets. Reduced liquidity may result in less money being available
to purchase raw materials, goods, and services from emerging markets,
which may, in turn, bring down the prices of these economic staples. It
may also result in emerging-market issuers having more difficulty
obtaining financing, which may, in turn, cause a decline in their securities
prices.
Beginning
in March 2022, the Fed began increasing interest rates and has
signaled the potential for further increases. As a result, risks associated
with rising interest rates are currently heightened. It is difficult
to accurately predict the pace at which the Fed will increase interest
rates any further, or the timing, frequency or magnitude of any such
increases, and the evaluation of macro-economic and other conditions
could cause a change in approach in the future. Any such increases
generally will cause market interest rates to rise and could cause the
value of a fund’s investments, and the fund’s net asset value (NAV), to
decline, potentially suddenly and significantly. As a result, the fund may
experience high redemptions and, as a result, increased portfolio
turnover, which could increase the costs that the fund incurs and may
negatively impact the fund’s performance.
In
addition, as the Fed
increases the target Fed funds rate, any such rate increases, among
other factors, could cause markets to experience continuing
high volatility. A significant increase in interest rates may cause a
decline in the market for equity securities. These
events and the possible
resulting market volatility may have an adverse effect on the fund.
Political
turmoil within the United States and abroad may also impact the fund.
Although the U.S. government has honored its credit obligations,
it remains possible that the United States could default on its
obligations. While it is impossible to predict the consequences of such an
unprecedented event, it is likely that a default by the United States
would be highly disruptive to the U.S. and global securities markets and
could significantly impair the value of the fund’s investments.
Similarly, political events within the United States at times have
resulted, and may in the future result, in a shutdown of government services,
which could negatively affect the U.S. economy, decrease the value of
many fund investments, and increase uncertainty in or impair the
operation of the U.S. or other securities markets. In recent
years, the U.S.
renegotiated many of
its global trade relationships and imposed or
threatened
to impose significant import tariffs. These actions could lead to price
volatility and overall declines in U.S. and global investment markets.
Uncertainties
surrounding the sovereign debt of a number of European Union (EU)
countries and the viability of the EU have disrupted and may in the
future disrupt markets in the United States and around the world. If one or
more countries leave the EU or the EU dissolves, the global
securities
markets likely will be significantly disrupted. On January 31, 2020, the
United Kingdom (UK) left the EU, commonly referred to as
“Brexit,”
and the UK ceased to be a member of the EU. Following a transition
period during which the EU and the UK Government engaged in a series
of negotiations regarding the terms of the UK’s future relationship
with the EU, the EU and the
UK
Government signed an agreement
regarding
the economic relationship between the UK and the EU.
While the
full impact of Brexit is unknown, Brexit has already resulted in
volatility in European and global markets. There
remains significant
market uncertainty regarding Brexit’s ramifications, and the range and
potential implications of possible political, regulatory, economic,
and market outcomes are difficult to predict. This uncertainty may affect
other countries in the EU and elsewhere, and may cause volatility
within the EU, triggering prolonged economic downturns in certain
countries within the EU. Despite the
influence of the lockdowns, and the
economic bounce back, Brexit has had a material impact on the UK’s
economy. Additionally, trade between the UK and the EU did not benefit
from the global rebound in trade in 2021, and remained at the very low
levels experienced at the start of the
coronavirus (COVID-19) pandemic
in 2020,
highlighting Brexit’s potential long-term effects on the UK
economy.
In
addition, Brexit may create additional and substantial economic stresses
for the UK, including a contraction of the UK economy and price volatility
in UK stocks, decreased trade, capital outflows, devaluation of the British
pound, wider corporate bond spreads due to uncertainty and declines in
business and consumer spending as well as foreign direct investment.
Brexit may also adversely affect UK-based financial firms that have
counterparties in the EU or participate in market infrastructure (trading
venues, clearing houses, settlement facilities) based in the EU. Additionally,
the spread of the coronavirus (COVID-19) pandemic is likely to continue
to stretch the resources and deficits of many countries in the EU and
throughout the world, increasing the possibility that countries may be
unable to make timely payments on their sovereign debt. These events and
the resulting market volatility may have an adverse effect on the
performance of the fund.
A
widespread health crisis such as a global pandemic could cause substantial
market volatility, exchange trading suspensions and closures,
which may lead to less liquidity in certain instruments, industries,
sectors or the markets generally, and may ultimately affect fund
performance. For example, the coronavirus
(COVID-19) pandemic has
resulted and may
continue to result in
significant disruptions to global
business activity and market
volatility due to disruptions in market access,
resource availability, facilities operations, imposition of tariffs,
export
controls and supply chain disruption, among others. The
impact of a health
crisis and other epidemics and pandemics that may arise in the future,
could affect the global economy in ways that cannot necessarily
be foreseen at the present time. A health crisis may exacerbate
other pre-existing political, social and economic risks. Any such impact
could adversely affect the fund’s performance, resulting in losses to
your investment.
The United
States responded
to the coronavirus
(COVID-19) pandemic and
resulting economic distress with fiscal and monetary stimulus packages.
In late March 2020, the government passed the Coronavirus Aid,
Relief, and Economic Security Act, a stimulus package providing for over $2.2
trillion in resources to small businesses, state and local governments,
and individuals adversely
impacted by the coronavirus
(COVID-19) pandemic.
In late December 2020, the government also
passed a
spending bill that included $900 billion in stimulus relief for the
coronavirus
(COVID-19) pandemic.
Further, in March 2021, the government
passed the American Rescue Plan Act of 2021, a $1.9 trillion
stimulus bill to accelerate the United States’ recovery from the economic
and health effects of the coronavirus
(COVID-19) pandemic.
In addition,
in mid-March 2020 the Fed cut interest rates to historically low levels and
promised unlimited and open-ended quantitative easing, including
purchases of corporate and municipal government bonds. The Fed also
enacted various programs to support liquidity operations and funding in
the financial markets, including expanding its reverse repurchase
agreement operations, adding $1.5 trillion of liquidity to the banking
system, establishing swap lines with other major central banks to provide
dollar funding, establishing a program to support money market
funds, easing various bank capital buffers, providing funding backstops
for businesses to provide bridging loans for up to four years, and
providing funding to help credit flow in asset-backed securities markets.
The Fed also extended credit to
small- and medium-sized businesses.
Political
and military events, including in Ukraine,
North
Korea, Russia,
Venezuela,
Iran, Syria, and other areas of the Middle East, and nationalist
unrest in Europe and South America, also may cause market disruptions.
As a result
of continued political tensions and armed conflicts, including the Russian
invasion of Ukraine commencing in February of 2022, the extent and
ultimate result of which are unknown at this time, the United States and
the EU, along with the regulatory bodies of a number of countries,
have imposed economic sanctions on certain Russian corporate
entities and individuals, and certain sectors of Russia’s economy,
which may result in, among other things, the continued devaluation
of Russian currency, a downgrade in the country’s credit rating,
and/or a decline in the value and liquidity of Russian securities, property or
interests. These sanctions could also result in the immediate freeze of
Russian securities and/or funds invested in prohibited assets, impairing
the ability of a fund to buy, sell, receive or deliver those securities
and/or assets. These sanctions or the threat of additional sanctions
could also result in Russia taking counter measures or retaliatory
actions, which may further impair the value and liquidity of Russian
securities. The United States and other nations or international organizations
may also impose additional economic sanctions or take other
actions that may adversely affect Russia-exposed issuers and companies
in various sectors of the Russian economy. Any or all of these potential
results could lead Russia’s economy into a recession. Economic
sanctions and other actions against Russian institutions, companies,
and individuals resulting from the ongoing conflict may also have a
substantial negative impact on other economies and securities markets
both regionally and globally, as well as on companies with operations
in the conflict region, the extent to which is unknown at this time. The
United States and the EU have also imposed similar sanctions on Belarus
for its support of Russia’s invasion of Ukraine. Additional sanctions
may be imposed on Belarus and other countries that support Russia. Any
such sanctions could present substantially similar risks as those
resulting from the sanctions imposed on Russia, including substantial
negative impacts on the regional and global economies and securities
markets.
In
addition, there is a risk that the prices of goods and services in the
United
States and many foreign economies may decline over time, known as
deflation. Deflation may have an adverse effect on stock prices and
creditworthiness and may make defaults on debt more likely. If a country’s
economy slips into a deflationary pattern, it could last for a prolonged
period and may be difficult to reverse. Further,
there is a risk that the
present value of assets or income from investments will be less in the
future, known as inflation. Inflation rates may change frequently and
drastically as a result of various factors, including unexpected shifts
in the
domestic or global economy, and a fund’s investments may be affected,
which may reduce a fund’s performance. Further, inflation may lead to the
rise in interest rates, which may negatively affect the value of debt
instruments held by the fund, resulting in a negative impact on a fund’s
performance. Generally, securities issued in emerging markets are subject
to a greater risk of inflationary or deflationary forces, and more
developed markets are better able to use monetary policy to normalize
markets.
Equity
securities risk
Common and
preferred stocks represent equity ownership in a company. Stock
markets are volatile. The price of equity securities will fluctuate,
and can
decline and reduce the value of a fund investing in equities. The price of
equity securities fluctuates based on changes in a company’s financial
condition and overall market and economic conditions. The value of
equity securities purchased by a fund could decline if the financial
condition of the companies in which the fund is invested declines,
or if overall market and economic conditions deteriorate. An issuer’s
financial condition could decline as a result of poor management decisions,
competitive pressures, technological obsolescence, undue reliance on
suppliers, labor issues, shortages, corporate restructurings, fraudulent
disclosures, irregular and/or unexpected trading activity among
retail investors, or other factors. Changes in the financial condition
of a single issuer can impact the market as a whole.
Even a fund
that invests in high-quality, or blue chip, equity securities, or securities
of established companies with large market capitalizations (which
generally have strong financial characteristics), can be negatively impacted by
poor overall market and economic conditions. Companies with large
market capitalizations may also have less growth potential than
smaller companies and may be less able to react quickly to changes in
the marketplace.
The fund
generally does not attempt to time the market. Because of its exposure to
equities, the possibility that stock market prices in general will
decline over short or extended periods subjects the fund to unpredictable
declines in the value of its investments, as well as periods of poor
performance.
ESG
integration risk
The manager
considers ESG
factors that it deems relevant or additive, along with
other material factors and analysis, when managing the fund. The portion
of the fund’s investments for which the manager considers these ESG
factors may vary, and could increase or decrease over time. In
certain
situations, the extent
to which
these ESG factors may be applied according
to the manager’s integrated investment process may not include
U.S. Treasuries, government securities, or other asset
classes.
ESG factors
may include, but are not limited to, matters regarding board diversity,
climate change policies, and supply chain and human rights
policies.
Incorporating ESG criteria and making investment decisions based on
certain ESG characteristics, as determined by the manager, carries the
risk that the fund may perform differently, including underperforming,
funds that do not utilize ESG criteria, or funds
that utilize
different ESG criteria.
Integration of ESG factors into the fund’s investment
process may result in a manager making different investments
for the fund than for a fund with a similar investment universe
and/or investment style that does not incorporate such considerations
in its investment strategy or processes, and the fund’s investment
performance may be affected. Because
ESG factors are one of many
considerations for the fund, the manager may nonetheless include
companies with low ESG characteristics or exclude companies with high
ESG characteristics in the fund’s investments.
The ESG
characteristics utilized in the fund’s investment process may change over
time, and different ESG characteristics may be relevant to different
investments. Although the manager has established its own structure
to oversee ESG integration in accordance with the fund’s investment
objective and strategies, successful integration of ESG factors
will depend on the manager’s skill in researching,
identifying, and applying
these factors, as well as
on
the
availability of relevant data. The method of
evaluating ESG factors and subsequent impact on portfolio composition,
performance, proxy voting decisions and other factors, is subject to
the interpretation of the manager in accordance with the fund’s
investment objective and strategies. ESG factors may be evaluated
differently by different managers, and may not carry the same meaning to
all investors and managers. The manager may employ
active shareowner
engagement to raise ESG issues with the management of select
portfolio companies. The
regulatory landscape with respect to ESG
investing in the United States is evolving and any future rules or regulations
may require the fund to change its investment process with respect to
ESG integration.
Fixed-income
securities risk
Fixed-income
securities are generally subject to two principal types of risk, as
well as other risks described below: (1) interest-rate risk and (2) credit
quality risk.
|
Interest-rate
risk.
Fixed-income securities are affected by changes in
interest rates. When interest rates decline, the market value of
fixed-income
securities generally can be expected to rise. Conversely,
when interest rates rise, the market value of fixed-income
securities generally can be expected to decline. The longer
the duration or maturity of a fixed-income security, the more susceptible
it is to interest-rate risk. Duration
is a measure of the price
sensitivity of a debt security, or a fund that invests in a portfolio
of
debt securities, to changes in interest rates, whereas the maturity
of a
security measures the time until final payment is due. Duration
measures
sensitivity more accurately than maturity because it takes into
account the time value of cash flows generated over the life of a
debt
security. Recent
and potential future changes in government monetary
policy may affect interest
rates. |
|
Beginning
in March 2022, the Federal Reserve Board (Fed) began increasing
interest rates and has signaled the potential for further increases.
It is difficult to accurately predict the pace at which the Fed
will increase interest rates any further, or the timing, frequency
or
magnitude of any such increases, and the evaluation of macro-economic
and other conditions could cause a change in
|
|
approach
in the future. Any such increases generally will cause market
interest rates to rise and could cause the value of a fund’s investments,
and the fund’s net asset value (NAV), to decline, potentially
suddenly and significantly. As a result, the fund may experience
high redemptions and, as a result, increased portfolio turnover,
which could increase the costs that the fund incurs and may
negatively impact the fund’s performance. |
|
The
fixed-income securities market has been and may continue to be
negatively
affected by the coronavirus
(COVID-19) pandemic. As with other
serious economic disruptions, governmental authorities and regulators
responded with
significant fiscal and monetary policy changes,
including considerably lowering interest rates, which, in some
cases could result in negative interest rates. These actions, including
their reversal
or potential ineffectiveness, could further increase
volatility in securities and other financial markets and reduce
market liquidity. To the extent the fund has a bank deposit or
holds
a debt instrument with a negative interest rate to maturity, the
fund
would generate a negative return on that investment. Similarly,
negative
rates on investments by money market funds and similar cash
management products could lead to losses on investments, including
on investments of the fund’s uninvested
cash. |
|
Credit
quality risk.
Fixed-income securities are subject to the risk that
the issuer of the security will not repay all or a portion of the
principal
borrowed and will not make all interest payments. If the credit
quality of a fixed-income security deteriorates after a fund has
purchased
the security, the market value of the security may decrease
and lead to a decrease in the value of the fund’s investments.
An issuer’s credit quality could deteriorate as a result of poor
management decisions, competitive pressures, technological obsolescence,
undue reliance on suppliers, labor issues, shortages, corporate
restructurings, fraudulent disclosures, or other factors. Funds
that may invest in lower-rated fixed-income securities, commonly
referred to as junk securities, are riskier than funds that may
invest in higher-rated fixed-income
securities. |
|
Investment-grade
fixed-income securities in the lowest rating category
risk.
Investment-grade fixed-income securities in the lowest
rating category (such as Baa by Moody’s Investors Service, Inc.
or BBB by S&P Global Ratings or Fitch Ratings, as applicable,
and
comparable unrated securities) involve a higher degree of risk
than
fixed-income securities in the higher rating categories. While
such
securities are considered investment-grade quality and are deemed
to have adequate capacity for payment of principal and interest,
such securities lack outstanding investment characteristics and
have speculative characteristics as well. For example, changes in
economic
conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than
is
the case with higher-grade securities. |
|
Prepayment
of principal risk. Many
types of debt securities, including
floating-rate loans, are subject to prepayment risk. Prepayment
risk is the risk that, when interest rates fall, certain types
of obligations will be paid off by the borrower more quickly than
originally
anticipated and the fund may have to invest the proceeds in securities
with lower yields. Securities subject to prepayment risk can
offer less potential for gains when the credit quality of the issuer
improves. |
Floating
rate loans risk
Floating
rate loans are generally rated below investment-grade, or if unrated,
determined by the manager to be of comparable quality. They are
generally considered speculative because they present a greater risk
of loss,
including default, than higher quality debt instruments. Such investments
may, under certain circumstances, be particularly susceptible
to liquidity and valuation risks. Although certain floating rate loans are
collateralized, there is no guarantee that the value of the collateral
will be sufficient or available to satisfy the borrower’s obligation.
In times of unusual or adverse market, economic or political conditions,
floating rate loans may experience higher than normal default
rates. In the event of a serious credit event the value of the fund’s
investments
in floating rate loans are more likely to decline. The secondary
market for floating rate loans is limited and, therefore, the fund’s
ability to sell or realize the full value of its investment in these
loans to
reinvest sale proceeds or to meet redemption obligations may be
impaired. In addition, floating rate loans generally are subject to extended
settlement periods that may be longer than seven days. As a result, the
fund may be adversely affected by selling other investments at an
unfavorable time and/or under unfavorable conditions to meet redemption
requests or pursue other investment opportunities. In addition,
certain floating rate loans may be “covenant-lite” loans that may contain
fewer or less restrictive covenants on the borrower or may contain
other borrower-friendly characteristics. The fund may experience
relatively greater difficulty or delays in enforcing its rights on its
holdings of certain covenant-lite loans and debt securities than its
holdings of
loans or securities with the usual covenants.
In certain
circumstances, floating rate loans may not be deemed to be securities.
As a result, the fund may not have the protection of the anti-fraud
provisions of the federal securities laws. In such cases, the fund
generally must rely on the contractual provisions in the loan agreement
and common-law fraud protections under applicable state law.
Foreign
securities risk
Funds that
invest in securities traded principally in securities markets outside the
United States are subject to additional and more varied risks, as
the value of foreign securities may change more rapidly and extremely
than the value of U.S. securities. Less information may be publicly
available regarding foreign issuers, including foreign government
issuers. Foreign securities may be subject to foreign taxes and may be
more volatile than U.S. securities. Currency fluctuations and political
and economic developments may adversely impact the value of foreign
securities. The securities markets of many foreign countries are relatively
small, with a limited number of companies representing a small
number of industries. Additionally, issuers of foreign securities may not be
subject to the same degree of regulation as U.S. issuers. Reporting,
accounting, and auditing standards of foreign countries differ, in
some cases significantly, from U.S. standards. There are generally
higher commission rates on foreign portfolio transactions, transfer
taxes, higher custodial costs, and the possibility that foreign taxes will
be charged on dividends and interest payable on foreign securities,
some or all of which may not be reclaimable. Also, adverse changes in
investment or exchange control regulations (which may include
suspension of the ability to transfer currency or assets from a country);
political changes; or diplomatic developments could adversely
affect a
fund’s investments. In the event of nationalization, expropriation, confiscatory
taxation, or other confiscation, the fund could lose a substantial
portion of, or its entire investment in, a foreign security. Some of the
foreign securities risks are also applicable to funds that invest a
material portion of their assets in securities of foreign issuers traded in
the United States.
If
applicable, depositary receipts are subject to most of the risks associated
with investing in foreign securities directly because the value of a
depositary receipt is dependent upon the market price of the underlying
foreign equity security. Depositary receipts are also subject to
liquidity risk.
Additionally, the Holding Foreign Companies Accountable
Act (HFCAA) could cause securities of foreign companies, including
American depositary receipts, to be delisted from U.S. stock exchanges
if the companies do not allow the U.S. government to oversee the
auditing of their financial information. Although the requirements of
the HFCAA
apply to securities of all foreign issuers, the SEC has thus far limited its
enforcement efforts to securities of Chinese companies. If securities
are delisted, a fund’s ability to transact in such securities will be
impaired, and the liquidity and market price of the securities may decline.
The fund may also need to seek other markets in which to transact in
such securities, which could increase the fund’s costs.
|
Currency
risk.
Currency risk is the risk that fluctuations in exchange
rates may adversely affect the U.S. dollar value of a fund’s investments.
Currency risk includes both the risk that currencies in which
a fund’s investments are traded, or currencies in which a fund
has
taken an active investment position, will decline in value relative
to
the U.S. dollar and, in the case of hedging positions, that the U.S.
dollar
will decline in value relative to the currency being hedged. Currency
rates in foreign countries may fluctuate significantly for a number
of reasons, including the forces of supply and demand in the foreign
exchange markets, actual or perceived changes in interest rates,
intervention (or the failure to intervene) by U.S. or foreign governments
or central banks, or currency controls or political developments
in the United States or abroad. Certain funds may engage
in proxy hedging of currencies by entering into derivative transactions
with respect to a currency whose value is expected to correlate
to the value of a currency the fund owns or wants to own. This
presents the risk that the two currencies may not move in relation
to one another as expected. In that case, the fund could lose money
on its investment and also lose money on the position designed
to act as a proxy hedge. Certain funds may also take active currency
positions and may cross-hedge currency exposure represented
by their securities into another foreign currency. This may
result in a fund’s currency exposure being substantially different
than
that suggested by its securities investments. All funds with foreign
currency holdings and/or that invest or trade in securities denominated
in foreign currencies or related derivative instruments may
be adversely affected by changes in foreign currency exchange rates.
Derivative foreign currency transactions (such as futures, forwards,
and swaps) may also involve leveraging risk, in addition to currency
risk. Leverage may disproportionately increase a fund’s portfolio
losses and reduce opportunities for gain when interest rates,
stock prices, or currency rates are
changing. |
Hedging,
derivatives, and other strategic transactions risk
The ability
of a fund to utilize hedging, derivatives, and other strategic transactions
to benefit the fund will depend in part on its manager’s ability to
predict pertinent market movements and market risk, counterparty
risk, credit risk, interest-rate risk, and other risk factors, none of
which can be assured. The skills required to utilize hedging and other
strategic transactions are different from those needed to select a fund’s
securities. Even if the manager only uses hedging and other strategic
transactions in a fund primarily for hedging purposes or to gain exposure to
a particular securities market, if the transaction does not have the
desired outcome, it could result in a significant loss to a fund. The amount
of loss could be more than the principal amount invested. These
transactions may also increase the volatility of a fund and may involve a
small investment of cash relative to the magnitude of the risks assumed,
thereby magnifying the impact of any resulting gain or loss. For
example, the potential loss from the use of futures can exceed a fund’s
initial investment in such contracts. In addition, these transactions
could result in a loss to a fund if the counterparty to the transaction
does not perform as promised.
A fund may
invest in derivatives, which are financial contracts with a value that
depends on, or is derived from, the value of underlying assets, reference
rates, or indexes. Derivatives may relate to stocks, bonds, interest
rates, currencies or currency exchange rates, and related indexes. A
fund may use derivatives for many purposes, including for hedging and
as a substitute for direct investment in securities or other assets.
Derivatives may be used in a way to efficiently adjust the exposure of
a fund to various securities, markets, and currencies without a fund
actually having to sell existing investments and make new investments.
This generally will be done when the adjustment is expected to
be relatively temporary or in anticipation of effecting the sale of
fund assets and making new investments over time. Further, since many
derivatives have a leverage component, adverse changes in the value
or level of the underlying asset, reference rate, or index can result in a
loss substantially greater than the amount invested in the derivative
itself. Certain derivatives have the potential for unlimited loss, regardless
of the size of the initial investment. When a fund uses derivatives
for leverage, investments in that fund will tend to be more volatile,
resulting in larger gains or losses in response to market changes. To
limit risks associated with leverage, a fund is required
to comply with
the Derivatives Rule as outlined below. For a
description of the various
derivative instruments the fund may utilize, refer to the SAI.
The
regulation of the U.S. and non-U.S. derivatives markets has undergone
substantial change in recent years and such change may continue.
In particular, the Dodd-Frank Wall Street Reform and Consumer
Protection Act, and regulations promulgated or proposed thereunder
require many derivatives to be cleared and traded on an exchange,
expand entity registration requirements, impose business conduct
requirements on dealers that enter into swaps with a pension plan,
endowment, retirement plan or government entity, and required banks to
move some derivatives trading units to a non-guaranteed affiliate
separate from the deposit-taking bank or divest them altogether. Although
the Commodity Futures Trading Commission (CFTC) has released
final rules relating to clearing, reporting, recordkeeping and registration
requirements under the legislation, many of the provisions are subject
to further final rule making, and thus its ultimate impact remains
unclear. New regulations could, among other things, restrict the
fund’s
ability to engage in derivatives transactions (for example, by making
certain types of derivatives transactions no longer available to the fund)
and/or increase the costs of such derivatives transactions (for example, by
increasing margin or capital requirements), and the fund may be
unable to fully execute its investment strategies as a result. Limits or
restrictions applicable to the counterparties with which the fund
engages in derivative transactions also could prevent the fund from using these
instruments or affect the pricing or other factors relating to these
instruments, or may change the availability of certain investments.
In
addition, the regulation of the U.S. and non-U.S. derivatives markets
has
undergone substantial change in recent years and such change may continue.
In particular, effective August 19, 2022 (the Compliance Date), Rule
18f-4 under the Investment Company Act of 1940 (the Derivatives
Rule) replaced the asset segregation regime of Investment Company Act
Release No. 10666 (Release 10666) with a new framework
for the use of derivatives by registered funds. As of the Compliance
Date, the SEC rescinded Release 10666 and withdrew no-action
letters and similar guidance addressing a fund’s use of derivatives
and began requiring funds to satisfy the requirements of the Derivatives
Rule. As a result, on or after the Compliance Date, the funds will no
longer engage in “segregation” or “coverage” techniques with respect to
derivatives transactions and will instead comply with the applicable
requirements of the Derivatives Rule.
The
Derivatives Rule mandates that a fund adopt
and/or implement: (i) value-at-risk
limitations (VaR); (ii) a
written derivatives risk management program;
(iii) new Board oversight responsibilities; and (iv) new reporting and
recordkeeping requirements. In the
event that a fund’s derivative exposure is
10% or less of its net
assets, excluding certain currency and interest
rate hedging transactions, it can
elect to be classified as a limited
derivatives user (Limited Derivatives User) under the
Derivatives Rule, in which
case the fund is not subject to the full requirements of the Derivatives
Rule. Limited Derivatives Users are excepted from VaR testing,
implementing a derivatives risk management program, and certain
Board oversight and reporting requirements mandated by the
Derivatives
Rule. However,
a Limited Derivatives User is still required to implement
written compliance policies and procedures reasonably designed to
manage its derivatives risks.
The
Derivatives Rule also provides special treatment for reverse repurchase
agreements, similar financing transactions and unfunded commitment
agreements. Specifically, a fund may elect whether to treat reverse
repurchase agreements and similar financing transactions as “derivatives
transactions” subject to the requirements of the Derivatives Rule or as
senior securities equivalent to bank borrowings for purposes of Section
18 of the Investment Company Act of 1940. In addition, when-issued
or forward settling securities transactions that physically settle
within 35-days are deemed not to involve a senior security.
At any time
after the date of this prospectus, legislation may be enacted that could
negatively affect the assets of the fund. Legislation or regulation
may change the way in which the fund itself is regulated. The advisor
cannot predict the effects of any new governmental regulation that may be
implemented, and there can be no assurance that any new governmental
regulation will not adversely affect the fund’s ability to achieve its
investment objectives.
The use of
derivative instruments may involve risks different from, or potentially
greater than, the risks associated with investing directly in securities
and other, more traditional assets. In particular, the use of derivative
instruments exposes a fund 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,
although either party may engage in an offsetting transaction
that puts that party in the same economic position as if it had closed
out the transaction with the counterparty or may obtain the other
party’s consent to assign the transaction to a third party. If the counterparty
defaults, the fund will have contractual remedies, but there is no
assurance that the counterparty will meet its contractual obligations
or that, in the event of default, the fund will succeed in enforcing
them. For example, because the contract for each OTC derivatives
transaction is individually negotiated with a specific counterparty,
a fund is subject to the risk that a counterparty may interpret
contractual terms (e.g., the definition of default) differently than the
fund when the fund seeks to enforce its contractual rights. If that
occurs, the cost and unpredictability of the legal proceedings required
for the fund to enforce its contractual rights may lead it to decide not
to pursue its claims against the counterparty. The fund, therefore,
assumes the risk that it may be unable to obtain payments owed to it
under OTC derivatives contracts or that those payments may be delayed
or made only after the fund has incurred the costs of litigation.
While a manager intends to monitor the creditworthiness of counterparties,
there can be no assurance that a counterparty will meet its
obligations, especially during unusually adverse market conditions. To the
extent a fund contracts with a limited number of counterparties, the fund’s
risk will be concentrated and events that affect the creditworthiness
of any of those counterparties may have a pronounced effect on
the fund. Derivatives are also subject to a number of other risks,
including market risk, liquidity
risk and operational risk.
Since the value of
derivatives is calculated and derived from the value of other assets,
instruments, or references, there is a risk that they will be improperly
valued. Derivatives also involve the risk that changes in their value may
not correlate perfectly with the assets, rates, or indexes they are
designed to hedge or closely track. Suitable derivatives transactions
may not be
available in all circumstances. The fund is also subject to the risk that
the counterparty closes out the derivatives transactions upon the
occurrence of certain triggering events. In addition, a manager may determine
not to use derivatives to hedge or otherwise reduce risk exposure.
Government legislation or regulation could affect the use of derivatives
transactions and could limit a fund’s ability to pursue its investment
strategies.
A detailed
discussion of various hedging and other strategic transactions
appears in the SAI. To the extent that the fund utilizes the following
list of certain derivatives and other strategic transactions, it will be
subject to associated risks. The main risks of each appear below.
|
Credit
default swaps.
Counterparty risk, liquidity risk (i.e., the inability
to enter into closing transactions), interest-rate risk, risk of
default
of the underlying reference obligation, and risk of disproportionate
loss are the principal risks of engaging in transactions
involving credit default swaps. |
|
Options.
Counterparty risk, liquidity risk (i.e., the inability to enter
into
closing transactions), and risk of disproportionate loss are the
|
|
principal
risks of engaging in transactions involving options. Counterparty
risk does not apply to exchange-traded
options. |
|
Swaps.
Counterparty risk, liquidity risk (i.e., the inability to enter into
closing
transactions), interest-rate risk, settlement risk, risk of default
of the underlying reference obligation, and risk of disproportionate
loss are the principal risks of engaging in transactions
involving swaps. |
High
portfolio turnover risk
A high fund
portfolio turnover rate (over 100%) generally involves correspondingly
greater brokerage commission and tax expenses, which must be
borne directly by a fund and its shareholders, respectively. The portfolio
turnover rate of a fund may vary from year to year, as well as within a
year.
Illiquid
and restricted securities risk
Certain
securities are considered illiquid or restricted due to a limited trading
market, legal or contractual restrictions on resale or transfer, or are
otherwise illiquid because they cannot be sold or disposed of in seven
calendar days or less without the sale or disposition significantly changing
the market value of the investment. Securities that have limitations
on their resale are referred to as “restricted securities.” Certain
restricted securities that are eligible for resale to qualified institutional
purchasers may not be regarded as illiquid. Illiquid and restricted
securities may be difficult to value and may involve greater risks than
liquid securities. Market quotations for such securities may be volatile
and/or subject to large spreads between bid and ask price. Illiquidity
may have an adverse impact on market price and the fund’s ability to
sell particular securities when necessary to meet the fund’s liquidity
needs or in response to a specific economic event. The fund may incur
additional expense when disposing of illiquid or restricted securities,
including all or a portion of the cost to register the securities.
LIBOR
discontinuation risk
Certain
debt securities, derivatives and other financial instruments may utilize
LIBOR as the reference or benchmark rate for interest rate calculations.
However, following allegations of manipulation and concerns
regarding liquidity, in July 2017 the U.K. Financial Conduct Authority,
which regulates LIBOR, announced that it would cease its
active
encouragement of banks to provide the quotations needed to sustain
LIBOR. The ICE Benchmark Administration Limited, the administrator
of LIBOR, ceased
publishing certain LIBOR
maturities, including
some U.S. LIBOR
maturities, on December 31, 2021, and is
expected to
cease publishing the
remaining and most liquid U.S. LIBOR
maturities
on June 30, 2023. It is expected that market participants have or
will
transition to the use of alternative reference or benchmark rates prior
to the applicable LIBOR publication cessation date. Additionally, although
regulators have encouraged the development and adoption of
alternative rates such as the Secured Overnight Financing Rate
(SOFR), the future utilization of LIBOR or of any particular replacement
rate remains uncertain.
Although
the transition process away from LIBOR has become increasingly
well-defined in advance of the anticipated discontinuation dates, the
impact on certain debt securities, derivatives and other financial
instruments remains uncertain. It is expected that market participants
will adopt
alternative rates such as SOFR or otherwise amend
financial instruments referencing LIBOR to include fallback
provisions
and other measures that contemplate the discontinuation of LIBOR or
other similar market disruption events, but neither the effect of the
transition process nor the viability of such measures is known. Further,
uncertainty and risk remain regarding the willingness and ability of issuers
and lenders to include alternative rates and revised provisions in new and
existing contracts or instruments. To
facilitate the transition of legacy
derivatives contracts referencing LIBOR, the International Swaps and
Derivatives Association, Inc. launched a protocol to incorporate
fallback provisions. However, there are obstacles to converting
certain longer term securities and transactions to a new benchmark
or benchmarks and the effectiveness of one alternative reference
rate versus multiple alternative reference rates in new or existing
financial instruments and products has not been determined. Certain
proposed replacement rates to LIBOR, such as SOFR, which is a broad
measure of secured overnight U.S. Treasury
repo rates, are materially
different from LIBOR, and changes in the applicable spread for
financial instruments transitioning away from LIBOR will need to be made to
accommodate the differences. Furthermore, the risks associated
with the expected discontinuation of LIBOR and transition to replacement
rates may be exacerbated if an orderly transition to an alternative
reference rate is not completed in a timely manner.
As market
participants transition away from LIBOR, LIBOR’s usefulness may
deteriorate and these
effects could be experienced until the permanent
cessation of the majority of U.S. LIBOR rates in 2023. The
transition
process may lead to increased volatility and illiquidity in markets
that currently rely on LIBOR to determine interest rates. LIBOR’s deterioration
may adversely affect the liquidity and/or market value of securities
that use LIBOR as a benchmark interest rate, including securities
and other financial instruments held by the fund. Further, the utilization
of an alternative reference rate, or the transition process to an alternative
reference rate, may adversely affect the fund’s performance.
Alteration
of the terms of a debt instrument or a modification of the terms of
other types of contracts to replace LIBOR or another interbank offered
rate (IBOR) with a new reference rate could result in a taxable exchange
and the realization of income and gain/loss for U.S. federal income tax
purposes. The IRS has issued final regulations regarding the tax
consequences of the transition from IBOR to a new reference rate in debt
instruments and non-debt contracts. Under the final regulations, alteration
or modification of the terms of a debt instrument to replace an operative
rate that uses a discontinued IBOR with a qualified rate (as defined in
the final regulations) including true up payments equalizing the fair
market value of contracts before and after such IBOR transition, to add a
qualified rate as a fallback rate to a contract whose operative rate uses a
discontinued IBOR or to replace a fallback rate that uses a discontinued
IBOR with a qualified rate would not be taxable. The IRS may provide
additional guidance, with potential retroactive effect.
Liquidity
risk
The extent
(if at all) to which a security may be sold or a derivative position
closed without negatively impacting its market value may be impaired by
reduced market activity or participation, legal restrictions, or other
economic and market impediments. Funds with principal investment
strategies that involve investments in securities of companies
with smaller market capitalizations, foreign securities, derivatives,
or securities with substantial market and/or credit risk tend to have the
greatest exposure to liquidity risk. Exposure to liquidity risk
may be
heightened for funds that invest in securities of emerging markets and
related derivatives that are not widely traded, and that may be subject
to purchase and sale restrictions.
The
capacity of traditional dealers to engage in fixed-income trading has
not kept
pace with the bond market’s growth. As a result, dealer inventories
of corporate bonds, which indicate the ability to “make markets,”
i.e., buy or sell a security at the quoted bid and ask price, respectively,
are at or near historic lows relative to market size. Because market
makers provide stability to fixed-income markets, the significant reduction
in dealer inventories could lead to decreased liquidity and increased
volatility, which may become exacerbated during periods of economic or
political stress.
Loan
participations risk
A fund’s
ability to receive payments of principal and interest and other amounts in
connection with loans (whether through participations, assignments,
or otherwise) will depend primarily on the financial condition
of the borrower. The failure by a fund to receive scheduled interest or
principal payments on a loan or a loan participation, because of a
default, bankruptcy, or any other reason, would adversely affect the
income of
the fund and would likely reduce the value of its assets. Transactions
in loan investments may take a significant amount of time (i.e.,
seven days or longer) to settle. This could pose a liquidity risk to the
fund and,
if the fund’s exposure to such investments is substantial, could impair the
fund’s ability to meet shareholder redemptions in a timely manner.
Investments in loan participations and assignments present the possibility
that a fund could be held liable as a co-lender under emerging legal
theories of lender liability. Even with secured loans, there is no assurance
that the collateral securing the loan will be sufficient to protect a
fund against losses in value or a decline in income in the event of a
borrower’s nonpayment of principal or interest, and in the event of a
bankruptcy
of a borrower, the fund could experience delays or limitations
in its ability to realize the benefits of any collateral securing the loan.
Unless, under the terms of the loan or other indebtedness, a fund has
direct recourse against the corporate borrower, the fund may have to
rely on the agent bank or other financial intermediary to apply appropriate
credit remedies against a corporate borrower. Furthermore, the value
of any such collateral may decline and may be difficult to liquidate.
The amount of public information available with respect to loans may
be less extensive than that available for registered or exchange-listed
securities. Because a significant percent of loans and loan
participations are not generally rated by independent credit rating agencies, a
decision by a fund to invest in a particular loan or loan participation
could depend exclusively on the manager’s credit analysis of the
borrower, and in the case of a loan participation, the intermediary.
A fund may
have limited rights to enforce the terms of an underlying loan.
It is
unclear whether U.S. federal securities laws afford protections against
fraud and misrepresentation, as well as market manipulation, to investments
in loans and other forms of direct indebtedness under certain
circumstances. In the absence of definitive regulatory guidance, a fund
relies on the manager’s research in an attempt to avoid situations where
fraud, misrepresentation, or market manipulation could adversely affect the
fund.
A fund also
may be in possession of material non-public information about a
borrower as a result of owning a floating-rate instrument issued
by such
borrower. Because of prohibitions on trading in securities of issuers
while in possession of such information, a fund might be unable to enter
into a transaction in a publicly traded security issued by that borrower
when it would otherwise be advantageous to do so.
Lower-rated
and high-yield fixed-income securities risk
Lower-rated
fixed-income securities are defined as securities rated below
investment grade (such as Ba and below by Moody’s Investors Service,
Inc. and BB and below by S&P Global Ratings and Fitch Ratings, as
applicable) (also called junk bonds). The general risks of investing in
these
securities are as follows:
|
Risk
to principal and income.
Investing in lower-rated fixed-income
securities is considered speculative. While these securities
generally provide greater income potential than investments
in higher-rated securities, there is a greater risk that principal
and interest payments will not be made. Issuers of these securities
may even go into default or become
bankrupt. |
|
Price
volatility. The
price of lower-rated fixed-income securities may
be more volatile than securities in the higher-rated categories.
This
volatility may increase during periods of economic uncertainty
or
change. The price of these securities is affected more than higher-rated
fixed-income securities by the market’s perception of their
credit quality, especially during times of adverse publicity. In
the
past, economic downturns or increases in interest rates have, at
times,
caused more defaults by issuers of these securities and may do so
in the future. Economic downturns and increases in interest rates
have an even greater effect on highly leveraged issuers of these
securities. |
|
Liquidity. The
market for lower-rated fixed-income securities may have
more limited trading than the market for investment-grade fixed-income
securities. Therefore, it may be more difficult to sell these
securities, and these securities may have to be sold at prices
below
their market value in order to meet redemption requests or to respond
to changes in market conditions. |
|
Dependence
on manager’s own credit analysis.
While a manager may
rely on ratings by established credit rating agencies, it will also
supplement
such ratings with its own independent review of the credit
quality of the issuer. Therefore, the assessment of the credit
risk
of lower-rated fixed-income securities is more dependent on the
manager’s
evaluation than the assessment of the credit risk of higher-rated
securities. |
|
Additional
risks regarding lower-rated corporate fixed-income securities.
Lower-rated corporate fixed-income securities (and comparable
unrated securities) tend to be more sensitive to individual
corporate developments and changes in economic conditions
than higher-rated corporate fixed-income securities. Issuers
of lower-rated corporate fixed-income securities may also be highly
leveraged, increasing the risk that principal and income will not
be repaid. |
|
Additional
risks regarding lower-rated foreign government fixed-income
securities.
Lower-rated foreign government fixed-income
securities are subject to the risks of investing in foreign countries
described under “Foreign securities risk.” In addition, the ability
and willingness of a foreign government to make payments on debt
when due may be affected by the prevailing economic and political
conditions within the country. Emerging-market countries
|
|
may
experience high inflation, interest rates, and unemployment, as
well
as exchange-rate fluctuations which adversely affect trade and
political
uncertainty or instability. These factors increase the risk that
a foreign government will not make payments when
due. |
Operational
and cybersecurity risk
With the
increased use of technologies, such as mobile devices and “cloud”-based
service offerings and the dependence on the internet and computer
systems to perform necessary business functions, the fund’s service
providers are susceptible to operational and information or cybersecurity
risks that could result in losses to the fund and its shareholders.
Intentional cybersecurity breaches include unauthorized access to
systems, networks, or devices (such as through “hacking” activity or
“phishing”); infection from computer viruses or other malicious
software code; and attacks that shut down, disable, slow, or otherwise
disrupt operations, business processes, or website access or functionality.
Cyber-attacks can also be carried out in a manner that does not
require gaining unauthorized access, such as causing denial-of-service
attacks on the service providers’ systems or websites rendering
them unavailable to intended users or via “ransomware” that renders the
systems inoperable until appropriate actions are taken. In addition,
unintentional incidents can occur, such as the inadvertent release of
confidential information (possibly resulting in the violation of applicable
privacy laws).
A
cybersecurity breach could result in the loss or theft of customer data
or funds,
loss or theft of proprietary information or corporate data, physical
damage to a computer or network system, or costs associated with system
repairs. Such incidents could cause a fund, the advisor, a manager, or
other service providers to incur regulatory penalties, reputational
damage, additional compliance costs, litigation costs or financial
loss. In addition, such incidents could affect issuers in which a fund
invests, and thereby cause the fund’s investments to lose value.
Cyber-events
have the potential to materially affect the fund and the advisor’s
relationships with accounts, shareholders, clients, customers, employees,
products, and service providers. The fund has established risk
management systems reasonably designed to seek to reduce the risks
associated with cyber-events. There is no guarantee that the fund will be
able to prevent or mitigate the impact of any or all cyber-events.
The fund is
exposed to operational risk arising from a number of factors, including,
but not limited to, human error, processing and communication
errors, errors of the fund’s service providers, counterparties,
or other third parties, failed or inadequate processes and
technology or system failures.
In
addition, other disruptive events, including (but not limited to) natural
disasters
and public health crises (such as the coronavirus
(COVID-19) pandemic),
may adversely affect the fund’s ability to conduct business, in
particular if the fund’s employees or the employees of its service providers
are unable or unwilling to perform their responsibilities as a result of
any such event. Even if the fund’s employees and the employees of its
service providers are able to work remotely, those remote work arrangements
could result in the fund’s business operations being less efficient
than under normal circumstances, could lead to delays in its processing
of transactions, and could increase the risk of cyber-events.
Sector
risk
When a
fund’s investments are focused in one or more sectors of the economy,
they are less broadly invested across industries or sectors than other
funds. This means that focused funds tend to be more volatile than other
funds, and the values of their investments tend to go up and down more
rapidly. In addition, a fund that invests in particular sectors is particularly
susceptible to the impact of market, economic, political, regulatory,
and other conditions and risks affecting those sectors. From time to
time, a small number of companies may represent a large portion of
a single sector or a group of related sectors as a whole.
Small
number of issuers risk
Overall
risk can be reduced by investing in securities from a larger pool of issuers,
while overall risk is increased by investing in securities of a small
number of issuers. If a fund invests in a small number of issuers, it
may
experience greater susceptibility to associated risks. As a result, credit,
market, and other risks associated with a fund’s investment strategies
or techniques may be more pronounced than for funds that are more
diversified.
Warrants
risk
Warrants
are rights to purchase securities at specific prices and are valid for a
specific period of time. Warrant prices do not necessarily move
parallel to the prices of the underlying securities, and warrant holders
receive no dividends and have no voting rights or rights with respect to
the assets of an issuer. The price of a warrant may be more volatile
than the price of its underlying security, and a warrant may offer greater
potential for capital appreciation as well as capital loss. Warrants
cease to have value if not exercised prior to the expiration date. These
factors can make warrants more speculative than other types of
investments.
Who’s
who
The
following are the names of the various entities involved with the fund’s
investment and business operations, along with brief descriptions of the role
each entity performs.
Board
of Trustees
The
Trustees oversee the fund’s business activities and retain the services of
the various firms that carry out the fund’s operations.
Investment
advisor
The
investment advisor manages the fund’s business and investment activities.
John
Hancock Investment Management LLC
200
Berkeley Street
Boston,
MA 02116
Founded in
1968, the advisor is an indirect principally owned subsidiary of John
Hancock Life Insurance Company (U.S.A.), which in turn is a subsidiary
of Manulife Financial Corporation.
The
advisor’s parent company has been helping individuals and institutions
work toward their financial goals since 1862. The advisor offers
investment solutions managed by leading institutional money managers,
taking a disciplined team approach to portfolio management and
research, leveraging the expertise of seasoned investment
professionals.
As of September 30, 2022, the
advisor had total assets under
management of approximately $138.6
billion.
Subject to
general oversight by the Board of Trustees, the advisor manages and
supervises the investment operations and business affairs of the
fund. The advisor selects, contracts with and compensates one or more
subadvisors to manage all or a portion of the fund’s portfolio assets,
subject to oversight by the advisor. In this role, the advisor has supervisory
responsibility for managing the investment and reinvestment of the
fund’s portfolio assets through proactive oversight and monitoring of the
subadvisor and the fund, as described in further detail below. The advisor is
responsible for developing overall investment strategies for the fund
and overseeing and implementing the fund’s continuous investment
programs and provides a variety of advisory oversight and investment
research services. The advisor also provides management and
transition services associated with certain fund events (e.g., strategy,
portfolio manager, or subadvisor changes) and coordinates and
oversees services provided under other agreements.
The advisor
has ultimate responsibility to oversee a subadvisor and recommend
to the Board of Trustees its hiring, termination, and replacement.
In this capacity, the advisor, among other things: (i) monitors on
a daily basis the compliance of the subadvisor with the investment
objectives and related policies of the fund; (ii) monitors significant
changes that may impact the subadvisor’s overall business and
regularly performs due diligence reviews of the subadvisor; (iii) reviews the
performance of the subadvisor; and (iv) reports periodically on such
performance to the Board of Trustees. The advisor employs a team of
investment professionals who provide these ongoing research and
monitoring services.
The fund
relies on an order from the Securities and Exchange Commission
(SEC) permitting the advisor, subject to approval by the Board of
Trustees, to appoint a subadvisor or change the terms of a subadvisory
agreement without obtaining shareholder approval. The fund,
therefore, is able to change subadvisors or the fees paid to a subadvisor,
from time to time, without the expense and delays associated
with obtaining shareholder approval of the change. This order does not,
however, permit the advisor to appoint a subadvisor that is an affiliate
of the advisor or the fund (other than by reason of serving as a subadvisor
to the fund), or to increase the subadvisory fee of an affiliated subadvisor,
without the approval of the shareholders.
Management
fee
The fund
pays the advisor a management fee for its services to the fund. The advisor
in turn pays the fees of the subadvisor. The management fee is stated
as an annual percentage of the aggregate net assets of the fund
(together with the assets of any other applicable fund identified in
the
advisory agreement) determined in accordance with the following schedule,
and that rate is applied to the average daily net assets of the fund.
| |
Average
daily net assets ($) |
Annual
rate (%) |
First
1.1 billion |
0.680 |
Next
1.9 billion |
0.630 |
Next
1.5 billion |
0.605 |
Next
1.5 billion |
0.590 |
Excess
over 6 billion |
0.570 |
During its
most recent fiscal period, the fund
paid the advisor a management
fee equal to 0.58% of
average daily net assets (including any waivers
and/or reimbursements).
The basis
for the Board of Trustees’ approval of the advisory fees, and of the
investment advisory agreement overall, including the subadvisory agreement,
is discussed in the fund’s most recent annual shareholder report for
the period ended August 31.
Additional
information about fund expenses
The fund’s
annual operating expenses will likely vary throughout the period and
from year to year. The fund’s expenses for the current fiscal year may be
higher than the expenses listed in the fund’s Annual fund operating
expenses table, for some of the following reasons: (i) a significant
decrease in average net assets may result in a higher advisory
fee rate if any advisory fee breakpoints are not achieved; (ii) a significant
decrease in average net assets may result in an increase in the expense
ratio because certain fund expenses do not decrease as asset
levels decrease; or (iii) fees may be incurred for extraordinary events such
as fund tax expenses.
As may be
described in “Fund summary - Fees and expenses” on page 1 of this
prospectus, the advisor has contractually agreed to waive a portion of
its management fee and/or reimburse expenses for certain funds of
the John Hancock funds complex, including the fund (the participating
portfolios). The waiver equals, on an annualized basis, 0.0100% 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; 0.0150% of that portion of the aggregate net assets of
all the participating portfolios that exceeds $150 billion but is less than
or equal to $175 billion; 0.0175% of that portion of the aggregate
net assets of all the participating portfolios that exceeds $175
billion but is less than or equal to $200 billion; 0.0200% of that portion of
the aggregate net assets of all the participating portfolios that exceeds
$200 billion but is less than or equal to $225 billion; and 0.0225% of
that portion of the aggregate net assets of all the participating
portfolios that exceeds $225 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 participating
portfolio. This agreement expires on July 31, 2024, unless
renewed by
mutual agreement of the fund and the advisor based upon a determination
that this is appropriate under the circumstances at that time.
The advisor
voluntarily agrees to reduce its management fee for the fund, or if
necessary make payment to the fund, in an amount equal to the amount
by which the expenses of the fund exceed 0.15% of the average
daily net assets of the fund. For purposes of this agreement, “expenses
of the fund” means all the expenses of the fund, excluding (a) taxes, (b)
brokerage commissions, (c) interest expense, (d) litigation and indemnification
expenses and other extraordinary expenses not incurred in the
ordinary course of the fund’s business, (e) advisory fees, (f) class-specific
expenses, (g) underlying fund expenses (acquired fund fees), and
(h) short dividend expense. The advisor may terminate this voluntary
waiver at any time upon notice to the fund.
Subadvisor
The
subadvisor handles the fund’s portfolio management activities, subject to
oversight by the advisor.
BCSF
Advisors, LP
200
Clarendon Street
Boston,
MA 02116
BCSF
Advisors, LP (Bain Capital Credit) is a subsidiary of Bain Capital Credit, LP.
Bain Capital Credit, LP was formed in 1998 as the credit investing
arm of Bain Capital. Bain Capital Credit, LP is located at 200 Clarendon
Street, Boston, MA 02116, and is one of the world’s premier alternative
investment firms. Bain Capital Credit has entered into a resource
sharing agreement with Bain Capital Credit, LP, pursuant to which Bain
Capital Credit, LP will provide Bain Capital Credit with experienced
investment professionals and access to the resources of Bain
Capital Credit, LP. Bain Capital Credit, LP invests across the full spectrum of
credit strategies, including leveraged loans, high-yield bonds,
distressed debt, direct lending, structured products, non-performing
loans and equities. With offices in several
locations including
Boston,
Chicago, New York, London, Dublin, Hong Kong and Melbourne,
Bain Capital Credit, LP and its subsidiaries have a global footprint
with approximately $59.5 billion in
assets under management as of
September 30, 2022.
The
following are brief biographical profiles of the leaders of the fund’s
investment
management team, in alphabetical order. These managers are jointly
and primarily responsible for the day-to-day management of the fund’s
portfolio. These managers are employed by Bain Capital Credit. For
more details about these individuals, including information about their
compensation, other accounts they manage, and any investments
they may have in the fund, see the SAI.
Andrew
Carlino
• |
Managing
Director and Portfolio Manager |
• |
Managed
the fund since 2018 |
• |
Joined
Bain Capital Credit in 2002 |
Kim
Harris
• |
Managing
Director and Portfolio Manager |
• |
Managed
the fund since 2018 |
• |
Joined
Bain Capital Credit in 2000 |
Nate
Whittier
• |
Director
and Portfolio Manager |
• |
Managed
the fund since 2019 |
• |
Joined
Bain Capital Credit in 2013 |
Custodian
The
custodian holds the fund’s assets, settles all portfolio trades, and
collects
most of the valuation data required for calculating the fund’s net asset
value.
State
Street Bank and Trust Company
State
Street Financial Center
One
Lincoln Street
Boston,
MA 02111
Principal
distributor
The
principal distributor markets the fund and distributes shares through
selling brokers, financial planners, and other financial professionals.
John
Hancock Investment Management Distributors LLC
200
Berkeley Street
Boston,
MA 02116
Transfer
agent
The
transfer agent handles shareholder services, including recordkeeping
and statements, distribution of dividends, and processing of
buy-and-sell requests.
John
Hancock Signature Services, Inc.
P.O. Box
219909
Kansas
City, MO 64121-9909
Additional
information
The fund
has entered into contractual arrangements with various parties that
provide services to the fund, which may include, among others, the advisor,
subadvisor, custodian, principal distributor, and transfer agent, as
described above and in the SAI. Fund shareholders are not parties to,
or intended
or “third-party” beneficiaries of, any of these contractual arrangements.
These contractual arrangements are not intended to, nor do they,
create in any individual shareholder or group of shareholders any right,
either directly or on behalf of the fund, to either: (a) enforce such
contracts against the service providers; or (b) seek any remedy under such
contracts against the service providers.
The
advisor internally
credits a portion of its profits to an affiliated business,
John Hancock Retirement (JHR), which is the record keeper for certain
401(k) plans that invest in Class R6 shares. JHR may reduce the record
keeping fees paid to it by such 401(k) plans by a commensurate
amount. JHR may discontinue this practice with adequate
notice to plan sponsors.
This
prospectus provides information concerning the fund that you should
consider in determining whether to purchase shares of the fund. Each of
this prospectus, the SAI, or any contract that is an exhibit to the fund’s
registration statement, is not intended to, nor does it, give rise to
an
agreement or contract between the fund and any investor. Each such document
also does not give rise to any contract or create rights in any individual
shareholder, group of shareholders, or other person. The foregoing
disclosure should not be read to suggest any waiver of any rights
conferred by federal or state securities laws.
Financial
highlights
These
tables detail the financial performance of each share class described in this
prospectus, including total return information showing how much an
investment in the fund has increased or decreased each period (assuming
reinvestment of all dividends and distributions). Certain information
reflects
financial results for a single fund share.
The
financial statements of the fund as of August 31, 2022, have been
audited by PricewaterhouseCoopers LLP (PwC), the fund’s independent registered
public accounting firm. The report of PwC, along with the fund’s financial
statements in the fund’s annual report for the fiscal period ended August 31,
2022, has been
incorporated by reference into the SAI. Copies of the fund’s most recent annual
report are available upon request.
|
|
|
|
|
| |
Floating
Rate Income Fund Class A Shares |
Per
share operating performance |
Period
ended |
|
|
|
|
|
Net
asset value, beginning of period |
|
|
|
|
|
|
Net
investment income1
|
|
|
|
|
|
|
Net
realized and unrealized gain (loss) on investments |
|
|
|
|
|
|
Total
from investment operations |
|
|
|
|
|
|
Less
distributions |
|
|
|
|
|
|
From
net investment income |
|
|
|
|
|
|
Net
asset value, end of period |
|
|
|
|
|
|
Total
return (%)3,4
|
|
|
|
|
|
|
Ratios
and supplemental data |
|
|
|
|
|
|
Net
assets, end of period (in millions) |
|
|
|
|
|
|
Ratios
(as a percentage of average net assets): |
|
|
|
|
|
|
Expenses
before reductions |
|
|
|
|
|
|
Expenses
including reductions |
|
|
|
|
|
|
Net
investment income |
|
|
|
|
|
|
Portfolio
turnover (%) |
|
|
|
|
|
|
1 |
Based
on average daily shares outstanding. |
2 |
Less
than $0.005 per share. |
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 |
Includes
reimbursement of legal fees of 0.01%. |
|
|
|
|
|
| |
Floating
Rate Income Fund Class C Shares |
Per
share operating performance |
Period
ended |
|
|
|
|
|
Net
asset value, beginning of period |
|
|
|
|
|
|
Net
investment income1
|
|
|
|
|
|
|
Net
realized and unrealized gain (loss) on investments |
|
|
|
|
|
|
Total
from investment operations |
|
|
|
|
|
|
Less
distributions |
|
|
|
|
|
|
From
net investment income |
|
|
|
|
|
|
Net
asset value, end of period |
|
|
|
|
|
|
Total
return (%)2,3
|
|
|
|
|
|
|
Ratios
and supplemental data |
|
|
|
|
|
|
Net
assets, end of period (in millions) |
|
|
|
|
|
|
Ratios
(as a percentage of average net assets): |
|
|
|
|
|
|
Expenses
before reductions |
|
|
|
|
|
|
Expenses
including reductions |
|
|
|
|
|
|
Net
investment income |
|
|
|
|
|
|
Portfolio
turnover (%) |
|
|
|
|
|
|
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 |
Includes
reimbursement of legal fees of 0.01%. |
|
|
|
|
|
| |
Floating
Rate Income Fund Class I Shares |
Per
share operating performance |
Period
ended |
|
|
|
|
|
Net
asset value, beginning of period |
|
|
|
|
|
|
Net
investment income1
|
|
|
|
|
|
|
Net
realized and unrealized gain (loss) on investments |
|
|
|
|
|
|
Total
from investment operations |
|
|
|
|
|
|
Less
distributions |
|
|
|
|
|
|
From
net investment income |
|
|
|
|
|
|
Net
asset value, end of period |
|
|
|
|
|
|
Total
return (%)3
|
|
|
|
|
|
|
Ratios
and supplemental data |
|
|
|
|
|
|
Net
assets, end of period (in millions) |
|
|
|
|
|
|
Ratios
(as a percentage of average net assets): |
|
|
|
|
|
|
Expenses
before reductions |
|
|
|
|
|
|
Expenses
including reductions |
|
|
|
|
|
|
Net
investment income |
|
|
|
|
|
|
Portfolio
turnover (%) |
|
|
|
|
|
|
1 |
Based
on average daily shares outstanding. |
2 |
Less
than $0.005 per share. |
3 |
Total
returns would have been lower had certain expenses not been reduced during
the applicable periods. |
4 |
Includes
reimbursement of legal fees of 0.01%. |
|
|
|
|
|
| |
Floating
Rate Income Fund Class R6 Shares |
Per
share operating performance |
Period
ended |
|
|
|
|
|
Net
asset value, beginning of period |
|
|
|
|
|
|
Net
investment income1
|
|
|
|
|
|
|
Net
realized and unrealized gain (loss) on investments |
|
|
|
|
|
|
Total
from investment operations |
|
|
|
|
|
|
Less
distributions |
|
|
|
|
|
|
From
net investment income |
|
|
|
|
|
|
Net
asset value, end of period |
|
|
|
|
|
|
Total
return (%)3
|
|
|
|
|
|
|
Ratios
and supplemental data |
|
|
|
|
|
|
Net
assets, end of period (in millions) |
|
|
|
|
|
|
Ratios
(as a percentage of average net assets): |
|
|
|
|
|
|
Expenses
before reductions |
|
|
|
|
|
|
Expenses
including reductions |
|
|
|
|
|
|
Net
investment income |
|
|
|
|
|
|
Portfolio
turnover (%) |
|
|
|
|
|
|
| |
1 |
Based
on average daily shares outstanding. |
2 |
Less
than $0.005 per share. |
3 |
Total
returns would have been lower had certain expenses not been reduced during
the applicable periods. |
4 |
Includes
reimbursement of legal fees of 0.01%. |
Choosing
an eligible share class
Class A and
Class C shares have a Rule 12b-1 plan that allows the class to pay fees
for the sale, distribution, and service of its shares. Class I and
Class R6
shares do not have a Rule 12b-1 plan. Your
financial professional
can help you decide which share class you are eligible to buy and is
best for you. Each class’s eligibility guidelines are described below.
Class
A shares
Class A
shares are not available to group retirement plans that do not currently
hold Class A shares of the fund and that are eligible to invest in Class I
shares or any of the R share classes, except as provided below. Such group
retirement plans include defined benefit plans, 401(k) plans, 457 plans,
403(b)(7) plans, pension and profit-sharing plans, and nonqualified
deferred compensation plans. Individual retirement accounts
(IRAs), Roth IRAs, SIMPLE IRAs, individual (“solo” or “single”) 401(k)
plans, individual profit sharing plans, individual 403(b) plans, individual
defined benefit plans, simplified employee pensions (SEPs), SAR-SEPs,
529 tuition programs and Coverdell Educational Savings Accounts
are not considered group retirement plans and are not subject to this
restriction on the purchase of Class A shares.
Investment
in Class A shares by such group retirement plans will be permitted
in the following circumstances:
• |
The
plan currently holds assets in Class A shares of the fund or any
John
Hancock fund; |
• |
Class
A shares of the fund or any other John Hancock fund were established
as an investment option under the plan prior to January 1, 2013,
and the fund’s representatives have agreed that the plan may invest
in Class A shares after that date; |
• |
Class
A shares of the fund or any other John Hancock fund were established
as a part of an investment model prior to January 1, 2013,
and the fund’s representatives have agreed that plans utilizing
such
model may invest in Class A shares after that date;
and |
• |
Such
group retirement plans offered through an intermediary brokerage
platform that does not require payments relating to the provisions
of services to the fund, such as providing omnibus account services,
transaction-processing services, or effecting portfolio transactions
for the fund, that are specific to assets held in such group retirement
plans and vary from such payments otherwise made for such
services with respect to assets held in non-group retirement plan
accounts. |
Class
C shares
The maximum
amount you may invest in Class C shares with any single purchase is
$999,999.99. John Hancock Signature Services, Inc. (Signature
Services), the transfer agent for the fund, may accept a purchase
request for Class C shares for $1,000,000 or more when the purchase is
pursuant to the reinstatement privilege (see “Sales charge reductions
and waivers”). Class C shares automatically convert to Class A shares
after eight years, provided that the fund or the financial intermediary
through which a shareholder purchased or holds Class C shares has
records verifying that the Class C shares have been held for at least
eight years. Group retirement plan recordkeeping platforms of certain
intermediaries that hold Class C shares with the fund in an
omnibus
account do not track participant level share lot aging and, as such, these
Class C shares would not satisfy the conditions for the automatic
Class C to Class A conversion.
Class
I shares
Class I
shares are offered without any sales charge to the following types of
investors if they also meet the minimum initial investment requirement
for purchases of Class I shares (see “Opening an account”):
• |
Clients
of financial intermediaries who: (i) charge such clients a fee for
advisory,
investment, consulting, or similar services; (ii) have entered
into
an agreement with the distributor to offer Class I shares through a
no-load
program or investment platform; or (iii) have entered into an agreement
with the distributor to offer Class I shares to clients on certain
brokerage platforms where the intermediary is acting solely as
an
agent for the investor who may be required to pay a commission
and/or
other forms of compensation to the intermediary. Other share classes
of the fund have different fees and
expenses. |
• |
Retirement
and other benefit plans |
• |
Endowment
funds,
foundations, donor advised funds, and other charitable
entities |
• |
Any
state, county, or city, or its instrumentality, department, authority,
or
agency |
• |
Accounts
registered to insurance companies, trust companies, and bank
trust departments |
• |
Any
entity that is considered a corporation for tax
purposes |
• |
Investment
companies, both affiliated and not affiliated with the advisor |
• |
Trustees,
employees of the advisor or its affiliates, employees of the subadvisor,
members of the fund’s portfolio management team and the
spouses and children (under age 21) of the
aforementioned |
Class
R6 shares
Class R6
shares are offered without any sales charge and are generally made
available to the following types of investors if they also meet the minimum
initial investment requirement for purchases of Class R6 shares.
(See “Opening an account.”)
• |
Qualified
401(a) plans (including 401(k) plans, Keogh plans, profit-sharing
pension plans, money purchase pension plans, target benefit
plans, defined benefit pension plans, and Taft-Hartley multi-employer
pension plans) (collectively, qualified
plans) |
• |
Endowment
funds and foundations |
• |
Any
state, county, or city, or its instrumentality, department, authority,
or
agency |
• |
403(b)
plans and 457 plans, including 457(a) governmental entity plans
and tax-exempt plans |
• |
Accounts
registered to insurance companies, trust companies, and bank
trust departments |
• |
Investment
companies, both affiliated and not affiliated with the advisor |
• |
Any
entity that is considered a corporation for tax purposes, including
corporate
nonqualified deferred compensation plans of such corporations |
• |
Trustees,
employees of the advisor or its affiliates, employees of the subadvisor,
members of the fund’s portfolio management team and the
spouses and children (under age 21) of the
aforementioned |
• |
Financial
intermediaries utilizing fund shares in certain eligible qualifying
investment product platforms under a signed agreement with
the distributor |
Class R6
shares may not be available through certain investment dealers.
The
availability of Class R6 shares for qualified plan investors will depend upon
the policies of your financial intermediary and/or the recordkeeper
for your qualified plan.
Class R6
shares also are generally available only to qualified plan investors
where plan level or omnibus accounts are held on the books of the
fund.
Class R6
shares are not available to retail non-retirement accounts, Traditional
and Roth individual retirement accounts (IRAs), Coverdell Education
Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs, and 529 college
savings plans.
Class
cost structure
Class
A shares
• |
A
front-end sales charge, as described in the section “How sales
charges
for Class A and Class C shares are
calculated” |
• |
Distribution
and service (Rule 12b-1) fees of 0.25% |
• |
A
0.50% contingent deferred sales charge (CDSC) on certain shares
sold
within eighteen months of purchase |
Class
C shares
• |
No
front-end sales charge; all your money goes to work for you right
away |
• |
Rule
12b-1 fees of 1.00% |
• |
A
1.00% CDSC on shares sold within one year of
purchase |
• |
Automatic
conversion to Class A shares after eight years, thus reducing
future annual expenses (certain exclusions may
apply) |
Class
I shares
• |
No
front-end or deferred sales charges; however, if you purchase Class
I shares through a broker acting solely as an agent on behalf of
its
customers, you may be required to pay a commission to the
broker |
Class
R6 shares
• |
No
front-end or deferred sales charges; all your money goes to work
for
you right away |
Rule
12b-1 fees
Rule 12b-1
fees will be paid to the fund’s distributor, John Hancock Investment
Management Distributors LLC, and may be used by the distributor
for expenses relating to the sale, distribution of, and shareholder
or administrative services for holders of the shares of the class, and
for the payment of service fees that come within Rule 2341 of the Conduct
Rules of the Financial Industry Regulatory Authority (FINRA).
Because
Rule 12b-1 fees are paid out of the fund’s assets on an ongoing basis,
over time they will increase the cost of your investment and may
cost
shareholders more than other types of sales charges.
Your
broker-dealer or agent may charge you a fee to effect transactions
in
fund shares. Other share classes of the fund, which have their own
expense
structure, may be offered in separate prospectuses.
Additional
payments to financial intermediaries
Class A and
Class C shares of the fund are primarily sold through financial
intermediaries, such as brokers, banks, registered investment advisors,
financial planners, and retirement plan administrators. These firms may
be compensated for selling shares of the fund in two principal ways:
• |
directly,
by the payment of sales commissions, if any;
and |
• |
indirectly,
as a result of the fund paying Rule 12b-1
fees. |
Class I
shares do not carry sales commissions or pay Rule 12b-1 fees. However, if
you purchase Class I shares through a broker acting solely as an agent on
behalf of its customers, you may be required to pay a commission
to the broker.
No dealer
compensation is paid from fund assets on sales of Class R6 shares.
Class R6 shares do not carry sales commissions, pay Rule 12b-1 fees, or
make payments to financial intermediaries to assist in the distributor’s
efforts to promote the sale of the fund’s shares. Neither the fund nor
its affiliates make any type of administrative or service payments in
connection with investments in Class R6 shares.
Except with
respect to Class R6 shares, certain firms may request, and the
distributor may agree to make, payments in addition to sales commissions
and Rule 12b-1 fees, if applicable, out of the distributor’s own
resources.
These
additional payments are sometimes referred to as revenue sharing.
These payments assist in the distributor’s efforts to promote the sale of the
fund’s shares. The distributor agrees with the firm on the methods for
calculating any additional compensation, which may include the level
of sales or assets attributable to the firm. Not all firms receive additional
compensation, and the amount of compensation varies. These payments
could be significant to a firm. The distributor determines which firms
to support and the extent of the payments it is willing to make. The
distributor generally chooses to compensate firms that have a strong
capability to distribute shares of the fund and that are willing to cooperate
with the distributor’s promotional efforts.
The
distributor hopes to benefit from revenue sharing by increasing the fund’s net
assets, which, as well as benefiting the fund, would result in additional
management and other fees for the advisor and its affiliates. In
consideration for revenue sharing, a firm may feature the fund in its
sales
system or give preferential access to members of its sales force or management.
In addition, the firm may agree to participate in the distributor’s
marketing efforts by allowing the distributor or its affiliates to
participate in conferences, seminars, or other programs attended by the
intermediary’s sales force. Although an intermediary may seek revenue-sharing
payments to offset costs incurred by the firm in servicing
its clients who have invested in the fund, the intermediary may earn a
profit on these payments. Revenue-sharing payments may provide your firm
with an incentive to favor the fund.
The SAI
discusses the distributor’s revenue-sharing arrangements in more
detail. Your intermediary may charge you additional fees other than those
disclosed in this prospectus. You can ask your firm about any payments it
receives from the distributor or the fund, as well as about fees and/or
commissions it charges.
The
distributor, advisor, and their affiliates may have other relationships
with your
firm relating to the provisions of services to the fund, such as providing
omnibus account services, transaction-processing services, or effecting
portfolio transactions for the fund. If your intermediary provides
these services, the advisor or the fund may compensate the intermediary
for these services. In addition, your intermediary may have other
compensated relationships with the advisor or its affiliates that are
not related
to the fund.
How
sales charges for Class A and Class C shares are calculated
Class
A sales charges are as follows:
|
| |
Your
investment ($) |
As
a % of offering price* |
As
a % of your investment |
Less
than 100,000 |
2.50 |
2.00 |
100,000–249,999 |
2.00 |
1.50 |
250,000
and over |
See
below |
|
* |
Offering
price is the net asset value per share plus any initial sales
charge. |
You may
qualify for a reduced Class A sales charge if you own or are purchasing
Class A, Class C, Class I, Class R2, Class R4, Class R5, or Class R6
shares of a John Hancock open-end mutual fund. To
receive the
reduced sales charge, you must tell your broker or financial professional
at the time you purchase the fund’s Class A shares about
any other John Hancock mutual funds held by you, your spouse,
or your children under the age of 21. This
includes investments
held in an individual retirement account, in an employee benefit
plan, or with a broker or financial professional other than the one handling
your current purchase. John Hancock will credit the combined value, at
the current offering price, of all eligible accounts to determine whether you
qualify for a reduced sales charge on your current purchase.
You may need to provide documentation for these accounts, such as an
account statement. For more information about sales charges,
reductions, and waivers, you may visit the fund’s website at jhinvestments.com,
which includes hyperlinks to facilitate access to this information.
You may also consult your broker or financial professional, or refer to
the section entitled “Sales Charges on Class A and Class C Shares” in
the fund’s SAI. You may request an SAI from your broker or financial
professional by accessing the fund’s website at jhinvestments.com
or by calling Signature Services at 800-225-5291.
Investments
of $250,000 or more
Class A
shares are available with no front-end sales charge on investments
of $250,000 or more. There is a CDSC on any Class A shares upon
which a commission or finder’s fee was paid that are sold within 18
months of purchase, as follows:
Class
A deferred charges on investments of $250,000 or more
| |
Months
after purchase |
CDSC
(%) |
First
18 months |
0.50 |
| |
Months
after purchase |
CDSC
(%) |
After
18 months |
None |
For
purposes of this CDSC, all purchases made during a calendar month
are
counted as having been made on the first day of that month.
The CDSC is
based on the lesser of the original purchase cost or the current
market value of the shares being sold, and is not charged on shares you
acquired by reinvesting your dividends. To keep your CDSC as low as
possible, each time you place a request to sell shares, we will first sell
any shares in your account that are not subject to a CDSC.
Class
C shares
Shares are
offered at their net asset value per share, without any initial sales
charge.
A CDSC may
be charged if a commission has been paid and you sell Class C
shares within a certain time after you bought them, as described in the
table below. There is no CDSC on shares acquired through reinvestment
of dividends. The CDSC is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. The
CDSC is as follows:
Class
C deferred charges
| |
Years
after purchase |
CDSC
(%) |
1st
year |
1.00 |
After
1st
year |
None |
For
purposes of this CDSC, all purchases made during a calendar month
are
counted as having been made on the first day of that month.
To keep
your CDSC as low as possible, each time you place a request to sell
shares, we will first sell any shares in your account that carry no CDSC.
Sales
charge reductions and waivers
The
availability of certain sales charge waivers and discounts will depend
on whether
you purchase your shares directly from the fund or through a financial
intermediary. Intermediaries may have different policies and procedures
regarding the availability of front-end sales charge waivers or CDSC
waivers (See Appendix 1 - Intermediary sales charge waivers, which
includes information about specific sales charge waivers applicable
to the intermediaries identified therein).
Reducing
your Class A sales charges
There are
several ways you can combine multiple purchases of shares of John
Hancock funds to take advantage of the breakpoints in the sales charge
schedule. The first three ways can be combined in any manner.
• |
Accumulation
privilege—lets you add the value of any class of shares of
any John Hancock open-end fund you already own to the amount of
your
next Class A investment for purposes of calculating the sales charge.
However, Class A shares of money market funds will not qualify
unless you have already paid a sales charge on those
shares. |
• |
Letter
of intention—lets you purchase Class A shares of a fund over a
13-month
period and receive the same sales charge as if all shares had
been purchased at once. You can use a letter of intention to qualify
for reduced sales charges if you plan to invest at least to the
first
breakpoint level (generally $50,000 or $100,000 depending on the
specific fund) in a John Hancock fund’s Class A shares during the
|
|
next
13 months. Completing a letter of intention does not obligate you
to
purchase additional shares. However, if you do not buy enough shares
to qualify for the lower sales charges by the earlier of the end of
the
13-month period or when you sell your shares, your sales charges
will
be recalculated to reflect your actual amount purchased. It is your
responsibility
to tell John Hancock Signature Services Inc. or your financial
professional when you believe you have purchased shares totaling
an amount eligible for reduced sales charges, as stated in your
letter of intention. Further information is provided in the
SAI. |
• |
Combination
privilege—lets you combine shares of all funds for purposes
of calculating the Class A sales charge. |
To
utilize any reduction, you must complete the appropriate section
of your application, or contact your financial professional or
Signature Services. Consult the SAI for additional details (see the back
cover of this prospectus).
Group
investment program
A group may
be treated as a single purchaser under the accumulation and
combination privileges. Each investor has an individual account, but
the group’s
investments are lumped together for sales charge purposes, making the
investors potentially eligible for reduced sales charges. There is no
charge or obligation to invest (although initial investments per account
opened must satisfy minimum initial investment requirements
specified in the section entitled “Opening an account”), and
individual investors may close their accounts at any time.
To
utilize this program, you must contact your financial professional
or Signature Services to find out how to qualify. Consult
the SAI for additional details (see the back cover of this prospectus).
CDSC
waivers
As long as
Signature Services is notified at the time you sell, any CDSC for Class A
or Class C shares will be waived in the following cases, as applicable:
• |
to
make payments through certain systematic withdrawal
plans |
• |
certain
retirement plans participating in PruSolutionsSM
programs |
• |
redemptions
pursuant to the fund’s right to liquidate an account that is below
the minimum account value stated below in “Dividends and account
policies,” under the subsection “Small
accounts” |
• |
redemptions
of Class A shares made after one year from the inception of a
retirement plan at John Hancock |
• |
redemptions
made under certain liquidation, merger or acquisition transactions
involving other investment companies or personal holding
companies |
• |
to
make certain distributions from a retirement
plan |
• |
because
of shareholder death or disability |
• |
rollovers,
contract exchanges, or transfers of John Hancock custodial 403(b)(7)
account assets required by John Hancock as a result of its decision
to discontinue maintaining and administering 403(b)(7) accounts |
To
utilize a waiver, you must contact your financial professional or
Signature Services. Consult the SAI for additional details (see the back
cover of this prospectus). Please note, these waivers are
distinct
from those described in Appendix 1, “Intermediary sales charge
waivers.”
Reinstatement
privilege
If you sell
shares of a John Hancock fund, you may reinvest some or all of the
proceeds back into the same share class of the same fund and account
from which it was removed, within 120 days without a sales charge,
subject to fund minimums, as long as Signature Services or your financial
professional is notified before you reinvest. If you paid a CDSC when you
sold your shares, you will be credited with the amount of the CDSC.
Consult the SAI for additional details.
To
utilize this privilege, you must contact your financial professional
or Signature Services. Consult the SAI for additional details
(see the back cover of this prospectus).
Waivers
for certain investors
Class A
shares may be offered without front-end sales charges or CDSCs to the
following individuals and institutions:
• |
Selling
brokers and their employees and sales representatives (and their
Immediate Family, as defined in the SAI) |
• |
Financial
intermediaries utilizing fund shares in eligible retirement platforms,
fee-based, or wrap investment products |
• |
Financial
intermediaries who offer shares to self-directed investment brokerage
accounts that may or may not charge a transaction fee to their
customers |
• |
Fund
Trustees and other individuals who are affiliated with these or
other
John Hancock funds, including employees of John Hancock companies
or Manulife Financial Corporation (and their Immediate Family,
as defined in the SAI) |
• |
Individuals
exchanging shares held in an eligible fee-based program for
Class A shares, provided however, subsequent purchases in Class
A
shares will be subject to applicable sales
charges |
• |
Individuals
transferring assets held in a SIMPLE IRA, SEP, or SARSEP invested
in John Hancock funds directly to an IRA |
• |
Individuals
converting assets held in an IRA, SIMPLE IRA, SEP, or SARSEP
invested in John Hancock funds directly to a Roth
IRA |
• |
Individuals
recharacterizing assets from an IRA, Roth IRA, SEP, SARSEP,
or SIMPLE IRA invested in John Hancock funds back to the original
account type from which they were
converted |
• |
Participants
in group retirement plans that are eligible and permitted to
purchase Class A shares as described in the “Choosing an eligible
share
class” section above. This waiver is contingent upon the group
retirement
plan being in a recordkeeping arrangement and does not apply
to group retirement plans transacting business with the fund through
a brokerage relationship in which sales charges are customarily
imposed, unless such brokerage relationship qualifies for a
sales charge waiver as described. In addition, this waiver does not
apply
to a group retirement plan that leaves its current recordkeeping
arrangement
and subsequently transacts business with the fund through
a brokerage relationship in which sales charges are customarily
imposed. Whether a sales charge waiver is available to your
group retirement plan through its record keeper depends upon the
policies and procedures of your intermediary. Please consult your
financial
professional for further information |
• |
Retirement
plans participating in PruSolutionsSM
programs |
• |
Terminating
participants in a pension, profit-sharing, or other plan qualified
under Section 401(a) of the Code, or described in Section 457(b)
of the Code, (i) that is funded by certain John Hancock group annuity
contracts, (ii) for which John Hancock Trust Company serves as
trustee or custodian, or (iii) the trustee or custodian of which has
retained
John Hancock Retirement Plan Services (“RPS”) as a service provider,
rolling over assets (directly or within 60 days after distribution)
from such a plan (or from a John Hancock Managed IRA or
John Hancock Annuities IRA into which such assets have already
been
rolled over) to a John Hancock custodial IRA or John Hancock custodial
Roth IRA that invests in John Hancock funds, or the subsequent
establishment of or any rollover into a new John Hancock fund
account by such terminating participants and/or their Immediate
Family
(as defined in the SAI), including subsequent investments into
such
accounts, and that are held directly at John Hancock funds or at
the
John Hancock Personal Financial Services (“PFS”) Financial
Center |
• |
Participants
in a terminating pension, profit-sharing, or other plan qualified
under Section 401(a) of the Code, or described in Section 457(b)
of the Code (the assets of which, immediately prior to such plan’s
termination, were (a) held in certain John Hancock group annuity
contracts, (b) in trust or custody by John Hancock Trust Company,
or (c) by a trustee or custodian which has retained John Hancock
RPS as a service provider, but have been transferred from such
contracts or trust funds and are held either: (i) in trust by a
distribution
processing organization; or (ii) in a custodial IRA or custodial
Roth IRA sponsored by an authorized third-party trust company
and made available through John Hancock), rolling over assets
(directly or within 60 days after distribution) from such a plan
to a
John Hancock custodial IRA or John Hancock custodial Roth IRA that
invests in John Hancock funds, or the subsequent establishment
of or
any rollover into a new John Hancock fund account by such participants
and/or their Immediate Family (as defined in the SAI), including
subsequent investments into such accounts, and that are held
directly at John Hancock funds or at the PFS Financial
Center |
• |
Participants
actively enrolled in a John Hancock RPS plan account (or an
account the trustee of which has retained John Hancock RPS as a
service
provider) rolling over or transferring assets into a new John Hancock
custodial IRA or John Hancock custodial Roth IRA that invests
in John Hancock funds through John Hancock PFS (to the extent
such assets are otherwise prohibited from rolling over or transferring
into such participant’s John Hancock RPS plan account), including
subsequent investments into such accounts, and that are held
directly at John Hancock funds or at the John Hancock PFS Financial
Center |
• |
Individuals
rolling over assets held in a John Hancock custodial 403(b)(7)
account into a John Hancock custodial IRA
account |
• |
Former
employees/associates of John Hancock, its affiliates, or agencies
rolling over (directly or indirectly within 60 days after distribution)
to a new John Hancock custodial IRA or John Hancock custodial
Roth IRA from the John Hancock Employee Investment-Incentive
Plan (TIP), John Hancock Savings Investment Plan
(SIP), or the John Hancock Pension Plan, and such participants
and
their Immediate Family (as defined in the SAI) subsequently establishing
or rolling over assets into a new John Hancock account through
the John Hancock PFS Group, including subsequent
|
|
investments
into such accounts, and that are held directly at John Hancock
funds or at the John Hancock PFS Financial
Center |
• |
A
member of a class action lawsuit against insurance companies who
is
investing settlement proceeds |
To
utilize a waiver, you must contact your financial professional or
Signature Services. Consult the SAI for additional details (see the back
cover of this prospectus). Please note, these waivers are distinct
from those described in Appendix 1, “Intermediary sales charge
waivers.”
Other
waivers
Front-end
sales charges and CDSCs are not imposed in connection with the
following transactions:
• |
Exchanges
from one John Hancock fund to the same class of any other John
Hancock fund (see “Transaction policies” in this prospectus for
additional
details) |
• |
Dividend
reinvestments (see “Dividends and account policies” in this prospectus
for additional details) |
• |
In
addition, the availability of certain sales charge waivers and
discounts
will depend on whether you purchase your shares directly from
the fund or through a financial intermediary. Intermediaries may
have
different policies and procedures regarding the availability of
front-end
sales charge waivers or CDSC waivers (See Appendix 1 - Intermediary
sales charge waivers, which includes information about specific
sales charge waivers applicable to the intermediaries identified
therein). In all instances, it is the purchaser’s responsibility
to
notify the fund or the purchaser’s financial intermediary at the time
of
purchase of any relationship or other facts qualifying the purchaser
for
sales charge waivers or discounts. For
waivers and discounts not
available through a particular intermediary, shareholders will
have to purchase fund shares directly from the fund or through
another intermediary to receive these waivers or discounts. |
Opening
an account
1 |
Read
this prospectus carefully. |
2 |
Determine
if you are eligible by referring to “Choosing an eligible share
class.” |
3 |
Determine
how much you want to invest. The
minimum initial investments
for Class A, Class C, Class I and
Class R6 shares are described
below. There are no subsequent minimum
investment
requirements
for these share classes. |
| |
Share
Class |
Minimum
initial investment |
Class
A and Class C |
$1,000
($250 for group investments). However, there is no
minimum initial investment for certain group retirement
plans using salary deduction or similar group methods
of payment, for fee-based or wrap accounts of selling
firms that have executed a fee-based or wrap agreement
with the distributor, or for certain other eligible
investment product platforms. |
| |
Share
Class |
Minimum
initial investment |
Class
I |
$250,000.
However, the minimum initial investment requirement
may be waived, at the fund’s sole discretion, for
investors in certain fee-based, wrap, or other investment
platform programs, or in certain brokerage platforms
where the intermediary is acting solely as an agent
for the investor. The fund also may waive the minimum
initial investment for other categories of investors
at its discretion, including for Trustees, employees
of the advisor or its affiliates, employees of the
subadvisor, members of the fund’s portfolio management
team and the spouses and children (under age
21) of the aforementioned. |
Class
R6 |
$1
million. However, there is no minimum initial investment
requirement for: (i) qualified and nonqualified plan
investors; (ii) certain eligible qualifying investment product
platforms; or (iii) Trustees, employees of the advisor
or its affiliates, employees of the subadvisor, members
of the fund’s portfolio management team and the
spouses and children (under age 21) of the aforementioned. |
4 |
All
shareholders
must complete the account application, carefully following
the instructions. If you have any questions, please contact your
financial professional or call Signature Services at 800-225-5291
for Class A and Class C shares or 888-972-8696 for Class
I and Class R6 shares. |
5 |
For
Class A and Class C shares, complete the appropriate parts of the
account
privileges application. By applying for privileges now, you can
avoid
the delay and inconvenience of having to file an additional application
if you want to add privileges later. |
6 |
Make your
initial investment using the instructions under “Buying shares.”
You and your financial professional can initiate any purchase,
exchange,
or sale of shares. |
Important
information about opening a new account
To help the
government fight the funding of terrorism and money laundering
activities, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism
Act of 2001 (USA PATRIOT Act) requires all financial institutions
to obtain, verify, and record information that identifies each person or
entity that opens an account.
For
individual investors opening an account. When you
open an account,
you will be asked for your name, residential address, date of birth, and
Social Security number.
For
investors other than individuals. When you
open an account, you will be
asked for the name of the entity, its principal place of business, and
taxpayer identification number (TIN), and you may be requested to provide
information on persons with authority or control over the account,
including, but not limited to, name, residential address, date of birth, and
Social Security number. You may also be asked to provide documents,
such as articles of incorporation, trust instruments, or partnership
agreements, and other information that will help Signature Services
identify the entity. Please see the mutual fund account application
for more details.
Information
for plan participants
Plan
participants generally must contact their plan service provider to purchase,
redeem, or exchange shares. The administrator of a retirement
plan or employee benefits office can provide participants with detailed
information on how to participate in the plan, elect a fund as an investment
option, elect different investment options, alter the amounts contributed
to the plan, or change allocations among investment options.
For questions about participant accounts, participants should contact
their employee benefits office, the plan administrator, or the organization
that provides recordkeeping services for the plan.
Financial
service firms may provide some of the shareholder servicing and account
maintenance services required by retirement plan accounts and their
plan participants, including transfers of registration, dividend payee
changes, and generation of confirmation statements, and may arrange for
plan administrators to provide other investment or administrative
services. Financial service firms may charge retirement plans and
plan participants transaction fees and/or other additional amounts for
such services. Similarly, retirement plans may charge plan participants
for certain expenses. These fees and additional amounts could
reduce an investment return in the fund.
Buying
shares
Class
A and Class C shares
| |
Opening
an account |
Adding
to an account |
By
check |
|
|
-
Fill
out the detachable investment slip from an account statement. If no
slip
is available, include a note specifying the fund name, the share class,
your
account number, and the name(s) in which the account is
registered.
|
By
exchange |
|
|
|
By
wire |
|
-
Instruct
your bank to wire the amount of your investment. Specify the
fund
name, the share class, your account number, and the name(s) in
which
the account is registered. Your bank may charge a fee to wire
funds. |
-
Instruct
your bank to wire the amount of your investment. Specify the fund
name,
the share class, your account number, and the name(s) in which the
account
is registered. Your bank may charge a fee to wire
funds. |
By
internet |
|
|
|
By
phone |
|
|
-
Call
your financial professional or call Signature Services between 8:00
A.M.
and 7:00 P.M.,
Monday–Thursday, and on Friday, between 8:00 A.M.
and 6:00
P.M.,
Eastern time.
To
add to an account using the Monthly Automatic Accumulation Program, see
“Additional
investor services.” |
|
|
|
| |
Regular
mail John
Hancock Signature Services,
Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services,
Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
EASI-Line (24/7
automated service) 800-338-8080 |
Signature
Services, Inc. 800-225-5291 |
Buying
shares
Class
I shares
| |
Opening
an account |
Adding
to an account |
By
check |
|
|
-
If
your account statement has a detachable investment slip, please
complete
it in its entirety. If no slip is available, include a note specifying
the
fund name, your share class, your account number, and the name(s) in
which
the account is registered.
|
By
exchange |
|
|
|
By
wire |
|
-
Instruct
your bank to wire the amount of your investment. Specify the
fund
name, the share class, your account number, and the name(s) in
which
the account is registered. Your bank may charge a fee to wire
funds. |
-
Instruct
your bank to wire the amount of your investment. Specify the fund
name,
the share class, your account number, and the name(s) in which the
account
is registered. Your bank may charge a fee to wire
funds. |
By
internet |
|
|
|
By
phone |
|
|
|
|
|
| |
Regular
mail John
Hancock Signature Services, Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services, Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
Signature
Services, Inc. 888-972-8696 |
Buying
shares
Class
R6 shares
| |
Opening
an account |
Adding
to an account |
By
check |
|
|
-
If
your account statement has a detachable investment slip, please
complete
it in its entirety. If no slip is available, include a note specifying
the
fund name, the share class, your account number, and the name(s) in
which
the account is registered.
|
By
exchange |
|
|
|
By
wire |
|
-
Instruct
your bank to wire the amount of your investment. Specify the
fund
name, the share class, your account number, and the name(s) in
which
the account is registered. Your bank may charge a fee to wire
funds. |
-
Instruct
your bank to wire the amount of your investment. Specify the fund
name,
the share class, your account number, and the name(s) in which the
account
is registered. Your bank may charge a fee to wire
funds. |
By
internet |
|
|
|
By
phone |
|
|
|
|
|
| |
Regular
mail John
Hancock Signature Services, Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services, Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
Signature
Services, Inc. 888-972-8696 |
Selling
shares
Class
A and Class C shares
| |
|
To
sell some or all of your shares |
By
letter |
|
|
-
Write
a letter of instruction or complete a stock power indicating the fund
name,
the share class, your account number, the name(s) in which the
account
is registered, and the dollar value or number of shares you wish to
sell.
|
By
internet |
|
|
|
By
phone |
|
|
-
Call
your financial professional or call Signature Services between 8:00
A.M.
and
7:00 P.M.,
Monday–Thursday, and on Friday, between 8:00 A.M.
and
6:00
P.M.,
Eastern time. |
By
wire or electronic funds transfer (EFT) |
|
|
|
By
exchange |
|
|
To
sell shares through a systematic withdrawal plan, see “Additional investor
services.” |
|
|
|
| |
Regular
mail John
Hancock Signature Services,
Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services,
Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
EASI-Line (24/7
automated service) 800-338-8080 |
Signature
Services, Inc. 800-225-5291 |
Selling
shares in writing
Class
A and Class C shares
In certain
circumstances, you will need to make your request to sell shares in writing. You
may need to include additional items with your request, unless they
were previously provided to Signature Services and are still accurate. These
items are shown in the table below. You may also need to include a
signature guarantee, which protects you against fraudulent orders. You will need
a signature guarantee if:
• |
your
address or bank of record has changed within the past 30 days, and you
would like the payment to be sent to your new address or
bank, |
• |
you
are selling more than $100,000 worth of shares (this requirement is waived
for certain entities operating under a signed fax trading agreement
with
John Hancock), or |
• |
you
are requesting payment other than by a check mailed to the address/bank of
record and payable to the registered
owner(s). |
You will
need to obtain your signature guarantee from a member of the Medallion Signature
Guarantee Program. Most broker-dealers, banks, credit unions, and
securities exchanges are members of this program. A notary public CANNOT provide
a signature guarantee. Signature
Services may make exceptions
to any of the signature guarantee requirements.
| |
Seller |
Requirements
for written requests |
Owners
of individual, joint, or UGMA/UTMA accounts (custodial accounts
for minors) |
|
Owners
of corporate, sole proprietorship, general partner, or association
accounts |
|
Owners
or trustees of trust accounts |
|
Joint
tenancy shareholders with rights of survivorship with deceased
co-tenant(s) |
|
Executors
of shareholder estates |
|
Administrators,
conservators, guardians, and other sellers, or account types
not listed above |
|
|
|
|
| |
Regular
mail John
Hancock Signature Services,
Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services,
Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
EASI-Line (24/7
automated service) 800-338-8080 |
Signature
Services, Inc. 800-225-5291 |
Selling
shares
Class
I shares
| |
|
To
sell some or all of your shares |
By
letter |
|
|
-
Write
a letter of instruction or complete a stock power indicating the fund
name,
the share class, your account number, the name(s) in which the
account
is registered, and the dollar value or number of shares you wish to
sell.
|
By
internet |
|
|
|
By
phone |
|
Amounts
up to $100,000:
Amounts
up to $5 million:
-
Available
to the following types of accounts: custodial accounts held by
banks, trust companies, or broker-dealers; endowments and foundations;
corporate accounts; group retirement plans; and pension
accounts (excluding IRAs, 403(b) plans, and all John Hancock
custodial retirement accounts) |
-
To
place your request with a representative at John Hancock, call
Signature
Services between 8:30 A.M.
and 5:00 P.M.,
Eastern time, on most business
days, or contact your financial professional.
-
Redemption
proceeds exceeding $100,000 will be wired to your designated
bank account, unless a Medallion signature guaranteed letter
is
provided requesting payment by check. Please refer to “Selling shares in
writing.” |
By
wire or electronic funds transfer (EFT) |
|
|
|
By
exchange |
|
|
|
|
|
| |
Regular
mail John
Hancock Signature Services, Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services, Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
Signature
Services, Inc. 888-972-8696 |
Selling
shares in writing
Class
I shares
In certain
circumstances, you will need to make your request to sell shares in writing. You
may need to include additional items with your request, unless they
were previously provided to Signature Services and are still accurate. These
items are shown in the table below. You may also need to include a
signature guarantee, which protects you against fraudulent orders. You will need
a signature guarantee if:
• |
your
address or bank of record has changed within the past 30 days, and you
would like the payment to be sent to your new address or
bank; |
• |
you
are selling more than $100,000 worth of shares and are requesting payment
by check (this requirement is waived for certain entities operating
under
a signed fax trading agreement with John
Hancock); |
• |
you
are selling more than $5 million worth of shares from the following types
of accounts: custodial accounts held by banks, trust companies, or
broker-dealers;
endowments and foundations; corporate accounts; group retirement plans;
and pension accounts (excluding IRAs, 403(b) plans, and
all John Hancock custodial retirement accounts);
or |
• |
you
are requesting payment other than by a check mailed to the address/bank of
record and payable to the registered
owner(s). |
You will
need to obtain your signature guarantee from a member of the Medallion Signature
Guarantee Program. Most broker-dealers, banks, credit unions, and
securities exchanges are members of this program. A notary public CANNOT provide
a signature guarantee. Signature
Services may make exceptions
to any of the signature guarantee requirements.
| |
Seller |
Requirements
for written requests |
Owners
of individual, joint, or UGMA/UTMA accounts (custodial accounts
for minors) |
|
Owners
of corporate, sole proprietorship, general partner, or association
accounts |
|
Owners
or trustees of trust accounts |
|
Joint
tenancy shareholders with rights of survivorship with deceased
co-tenant(s) |
|
Executors
of shareholder estates |
|
Administrators,
conservators, guardians, and other sellers, or account types
not listed above |
|
|
|
| |
Regular
mail John
Hancock Signature Services, Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services, Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
Signature
Services, Inc. 888-972-8696 |
Selling
shares
Class
R6 shares
| |
|
To
sell some or all of your shares |
By
letter |
|
|
-
Write
a letter of instruction or complete a stock power indicating the fund
name,
the share class, your account number, the name(s) in which the
account
is registered, and the dollar value or number of shares you wish to
sell.
|
By
internet |
|
|
|
By
phone |
|
Amounts
up to $5 million:
|
-
To
place your request with a representative at John Hancock, call
Signature
Services between 8:30 A.M.
and 5:00 P.M.,
Eastern time, on most business
days, or your financial professional.
-
Redemption
proceeds exceeding $100,000 will be wired to your designated
bank account, unless a Medallion signature guaranteed letter
is
provided requesting payment by check. Please refer to “Selling shares in
writing.” |
By
wire or electronic funds transfer (EFT) |
|
|
|
By
exchange |
|
|
|
|
|
| |
Regular
mail John
Hancock Signature Services, Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services, Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
Signature
Services, Inc. 888-972-8696 |
Selling
shares in writing
Class
R6 shares
In certain
circumstances, you will need to make your request to sell shares in writing. You
may need to include additional items with your request, unless they
were previously provided to Signature Services and are still accurate. These
items are shown in the table below. You may also need to include a
signature guarantee, which protects you against fraudulent orders. You will need
a signature guarantee if:
• |
your
address or bank of record has changed within the past 30 days, and you
would like the payment to be sent to your new address or
bank; |
• |
you
are selling more than $100,000 worth of shares and are requesting payment
by check (this requirement is waived for certain entities operating
under
a signed fax trading agreement with John
Hancock); |
• |
you
are selling more than $5 million worth of shares from the following types
of accounts: custodial accounts held by banks, trust companies, or
broker-dealers;
endowments and foundations; corporate accounts; and group retirement
plans; or |
• |
you
are requesting payment other than by a check mailed to the address/bank of
record and payable to the registered
owner(s). |
You will
need to obtain your signature guarantee from a member of the Medallion Signature
Guarantee Program. Most broker-dealers, banks, credit unions, and
securities exchanges are members of this program. A notary public CANNOT provide
a signature guarantee. Signature
Services may make exceptions
to any of the signature guarantee requirements.
| |
Seller |
Requirements
for written requests |
Owners
of individual, joint, or UGMA/UTMA accounts (custodial accounts
for minors) |
|
Owners
of corporate, sole proprietorship, general partner, or association
accounts |
|
Owners
or trustees of trust accounts |
|
Joint
tenancy shareholders with rights of survivorship with deceased
co-tenant(s) |
|
Executors
of shareholder estates |
|
Administrators,
conservators, guardians, and other sellers, or account types
not listed above |
|
|
|
| |
Regular
mail John
Hancock Signature Services, Inc. P.O.
Box 219909 Kansas
City, MO 64121-9909 |
Express
delivery John
Hancock Signature Services, Inc. 430 W
7th Street Suite
219909 Kansas
City, MO 64105-1407 |
Website jhinvestments.com |
Signature
Services, Inc. 888-972-8696 |
Transaction
policies
Valuation
of shares
The net
asset value (NAV) for each class of shares of the fund is normally determined
once daily as of the close of regular trading on the New York Stock
Exchange (NYSE) (typically 4:00 P.M., Eastern
time, on each business
day that the NYSE is open). In case of emergency or other disruption
resulting in the NYSE not opening for trading or the NYSE closing at
a time other than the regularly scheduled close, the NAV may be
determined as of the regularly scheduled close of the NYSE pursuant to the
advisor’s Valuation
Policies and Procedures. The time at which shares and
transactions are priced and until which orders are accepted may vary to
the extent permitted by the Securities and Exchange Commission
and applicable regulations. On holidays or other days when the NYSE is
closed, the NAV is not calculated and the fund does not transact
purchase or redemption requests. Trading of securities that are primarily
listed on foreign exchanges may take place on weekends and U.S.
business holidays on which the fund’s NAV is not calculated. Consequently,
the fund’s portfolio securities may trade and the NAV of the fund’s
shares may be significantly affected on days when a shareholder
will not be able to purchase or redeem shares of the fund.
Each class
of shares of the fund has its own NAV, which is computed by dividing
the total assets, minus liabilities, allocated to each share class by the
number of fund shares outstanding for that class. The current NAV of the
fund is available on our website at jhinvestments.com.
Valuation
of securities
Portfolio
securities are valued by various methods that are generally described
below. Portfolio securities also may be fair valued by the advisor’s Pricing
Committee in certain instances pursuant to procedures established
by the advisor and
adopted by the Board of Trustees.
Equity securities
are generally valued at the last sale price or, for certain markets,
the official closing price as of the close of the relevant exchange.
Securities not traded on a particular day are valued using last available
bid prices. A security that is listed or traded on more than one exchange is
typically valued at the price on the exchange where the security
was acquired or most likely will be sold. In certain instances, the Pricing
Committee may determine to value equity securities using prices obtained
from another exchange or market if trading on the exchange or market on
which prices are typically obtained did not open for trading as scheduled,
or if trading closed earlier than scheduled, and trading occurred as
normal on another exchange or market. Equity securities traded
principally in foreign markets are typically valued using the last sale price
or official closing price in the relevant exchange or market, as adjusted by
an independent pricing vendor to reflect fair value. On any day a
foreign market is closed and the NYSE is open, any foreign securities
will typically be valued using the last price or official closing price
obtained from the relevant exchange on the prior business day adjusted
based on information provided by an independent pricing vendor to
reflect fair value. Debt obligations are typically valued based on
evaluated prices provided by an independent pricing vendor. The value of
securities denominated in foreign currencies is converted into U.S.
dollars at the exchange rate supplied by an independent pricing vendor.
Forward foreign currency contracts are valued at the prevailing forward
rates which are based on foreign currency exchange spot rates and forward
points supplied by an independent pricing vendor. Exchange-traded
options are valued at the mid-price of the last quoted
bid and ask
prices. Futures contracts whose settlement prices are determined
as of the close of the NYSE are typically valued based on the settlement
price while other futures contracts are typically valued at the last traded
price on the exchange on which they trade. Foreign equity index
futures that trade in the electronic trading market subsequent to the close
of regular trading may be valued at the last traded price in the electronic
trading market as of the close of the NYSE, or may be fair valued
based on fair value adjustment factors provided by an independent
pricing vendor in order to adjust for events that may occur between the
close of foreign exchanges or markets and the close of the NYSE. Swaps
and unlisted options are generally valued using evaluated prices
obtained from an independent pricing vendor. Shares of other open-end
investment companies that are not exchange-traded funds (underlying
funds) are valued based on the NAVs of such underlying funds.
Pricing
vendors may use matrix pricing or valuation models that utilize certain
inputs and assumptions to derive values, including transaction data,
broker-dealer quotations, credit quality information, general market
conditions, news, and other factors and assumptions. The fund may receive
different prices when it sells odd-lot positions than it would receive for
sales of institutional round lot positions. Pricing vendors generally
value securities assuming orderly transactions of institutional round lot
sizes, but a fund may hold or transact in such securities in smaller,
odd lot sizes.
The Pricing
Committee engages in oversight activities with respect to pricing
vendors, which includes, among other things, monitoring significant
or unusual price fluctuations above predetermined tolerance levels from
the prior day, back-testing of pricing vendor prices against actual
trades, conducting periodic due diligence meetings and reviews, and
periodically reviewing the inputs, assumptions and methodologies used by
these vendors. Nevertheless, market quotations, official closing prices, or
information furnished by a pricing vendor could be inaccurate, which could
lead to a security being valued incorrectly.
If market
quotations, official closing prices, or information furnished by a pricing
vendor are not readily available or are otherwise deemed unreliable
or not representative of the fair value of such security because of market-
or issuer-specific events, a security will be valued at its fair value as
determined in good faith by the Board’s
valuation designee, the advisor. The
Trustees are assisted in their responsibility to fair value securities
by the advisor’s Pricing
Committee, and the actual calculation of a
security’s fair value may be made by the Pricing Committee acting pursuant to
the procedures established by the advisor, as
the valuation designee. In
certain instances, therefore, the Pricing Committee may determine
that a reported valuation does not reflect fair value, based on additional
information available or other factors, and may accordingly determine
in good faith the fair value of the assets, which may differ from the
reported valuation.
Fair value
pricing of securities is intended to help ensure that a fund’s NAV
reflects the fair market value of the fund’s portfolio securities as of
the close
of regular trading on the NYSE (as opposed to a value that no longer
reflects market value as of such close), thus limiting the opportunity
for aggressive traders or market timers to purchase shares of the fund
at deflated prices reflecting stale security valuations and promptly
sell such shares at a gain, thereby diluting the interests of long-term
shareholders. However, a security’s valuation may differ
depending
on the method used for determining value, and no assurance can be
given that fair value pricing of securities will successfully eliminate
all potential opportunities for such trading gains.
The use of
fair value pricing has the effect of valuing a security based upon the
price the fund might reasonably expect to receive if it sold that security in
an orderly transaction between market participants, but does not
guarantee that the security can be sold at the fair value price. Further,
because of the inherent uncertainty and subjective nature of fair valuation,
a fair valuation price may differ significantly from the value that would
have been used had a readily available market price for the investment
existed and these differences could be material.
Regarding
the fund’s investment in an underlying fund that is not an ETF, which (as
noted above) is valued at such underlying fund’s NAV, the prospectus
for such underlying fund explains the circumstances and effects of
fair value pricing for that underlying fund.
Buy
and sell prices
When you
buy shares, you pay the NAV, plus any applicable sales charges, as
described earlier. When you sell shares, you receive the NAV, minus
any applicable deferred sales charges.
Execution
of requests
The fund is
open for business when the NYSE is open, typically 9:30 A.M.
to 4:00
P.M. Eastern
time, Monday through Friday. A purchase or redemption
order received in good order by the fund prior to the close of regular
trading on the NYSE, on a day the fund is open for business, will be effected
at that day’s NAV. An order received in good order after the fund close
will generally be effected at the NAV determined on the next business
day. In case of emergency or other disruption resulting in the NYSE not
opening for trading or the NYSE closing at a time other than the
regularly scheduled close, the time until which orders are accepted may vary to
the extent permitted by the Securities and Exchange Commission
and applicable regulations. This may result in the fund closing for
business prior to the time at which the fund’s NAV is determined.
In this case, orders submitted after the fund closing may receive the
NAV determined on the next business day.
At times of
peak activity, it may be difficult to place requests by telephone,
if available for your share class. During these times, consider using
EASI-Line (if available for your share class), accessing jhinvestments.com,
or sending your request in writing.
The fund
typically expects to mail or wire redemption proceeds between 1 and 3
business days following the receipt of the shareholder’s redemption
request. Processing time is not dependent on the chosen delivery
method. In unusual circumstances, the fund may temporarily suspend the
processing of sell requests or may postpone payment of proceeds
for up to three business days or longer, as allowed by federal securities
laws.
Under
normal market conditions, the fund typically expects to meet redemption
requests through holdings of cash or cash equivalents or through
sales of portfolio securities, and may access other available liquidity
facilities. In unusual or stressed market conditions, such as, for example,
during a period of time in which a foreign securities exchange is closed,
in addition to the methods used in normal market conditions, the fund
may meet redemption requests through the use of its line of credit,
interfund lending facility, redemptions in kind, or such other
liquidity
means or facilities as the fund may have in place from time to time.
Telephone
transactions
For your
protection, telephone requests may be recorded in order to verify
their accuracy. Also for your protection, telephone redemption transactions
are not permitted on accounts in which a name, mailing address, or
recorded bank has changed within the past 30 days. Proceeds
from telephone transactions can only be sent to the address or bank on
record.
Exchanges
and conversions
You may
exchange Class A or Class C shares of one John Hancock fund for shares
of the same class of any other John Hancock fund that is then offering
that class, generally without paying any sales charges, if applicable.
You may
exchange Class I or Class R6 shares of one John Hancock fund for shares
of the same class of any other John Hancock fund or for John Hancock
Money Market Fund Class A shares.
The
registration for both accounts involved in an exchange must be identical.
Note: Once
exchanged into John Hancock Money Market Fund Class A shares,
shares may only be exchanged back into the original class from which the
shares were exchanged. As
applicable, shares acquired in an exchange
will be subject to the CDSC rate and holding schedule of the fund in
which such shares were originally purchased if and when such shares are
redeemed. For purposes of determining the holding period for calculating
the CDSC, shares will continue to age from their original purchase
date.
Provided
the fund’s eligibility requirements are met, and to the extent the
referenced share class is offered by the fund, an investor in the fund
pursuant to
a fee-based, wrap, or other investment platform program of certain
firms, as determined by the fund, may be afforded an opportunity to make a
conversion of (i) Class A shares and/or Class C shares (not subject to
a CDSC) also owned by the investor in the same fund to Class I shares or
Class R6 shares of that fund; or (ii) Class I shares also owned by the
investor to Class R6 shares of the same fund. Investors that no longer
participate in a fee-based, wrap, or other investment platform program of
certain firms may be afforded an opportunity to make a conversion
to Class A shares of the same fund. Class C shares may be converted
to Class A at the request of the applicable financial intermediary
after the expiration of the CDSC period, provided that the financial
intermediary through which a shareholder purchased or holds Class C
shares has records verifying that the Class C share CDSC period has expired
and the position is held in an omnibus or dealer-controlled account.
The fund may in its sole discretion permit a conversion of one share class
to another share class of the same fund in certain circumstances
other than those described above.
In
addition, Trustees, employees of the advisor or its affiliates, employees
of the subadvisor, members of the fund’s portfolio management
team and the spouses and children (under age 21) of the aforementioned,
may make a conversion of Class A or Class I shares also owned by
the investor in the same fund to Class R6 shares. If Class R6 shares are
unavailable, such investors may make a conversion of Class A shares in
the same fund to Class I shares.
The
conversion of one share class to another share class of the same fund in
these particular circumstances should not cause the investor to realize
taxable gain or loss. For further details, see “Additional information
concerning taxes” in the SAI for information regarding taxation
upon the redemption or exchange of shares of the fund (see the back cover
of this prospectus).
The fund
may change or cancel its exchange policies at any time, upon 60 days’
written notice to its shareholders. For further details, see “Additional
services and programs” in the SAI (see the back cover of this prospectus).
Excessive
trading
The fund is
intended for long-term investment purposes only and does not
knowingly accept shareholders who engage in market timing or other types of
excessive short-term trading. Short-term trading into and out of the fund
can disrupt portfolio investment strategies and may increase fund
expenses for all shareholders, including long-term shareholders who do not
generate these costs.
Right
to reject or restrict purchase and exchange orders
Purchases
and exchanges should be made primarily for investment purposes.
The fund reserves the right to restrict, reject, or cancel (with respect to
cancellations within one day of the order), for any reason and without any
prior notice, any purchase or exchange order, including transactions
representing excessive trading and transactions accepted by any
shareholder’s financial intermediary. For example, the fund may, in its
discretion, restrict, reject, or cancel a purchase or exchange order
even if the
transaction is not subject to a specific limitation on exchange activity,
as described below, if the fund or its agent determines that accepting
the order could interfere with the efficient management of the fund’s
portfolio, or otherwise not be in the fund’s best interest in light of
unusual
trading activity related to your account. In the event that the fund
rejects or cancels an exchange request, neither the redemption nor the
purchase side of the exchange will be processed. If you would like the
redemption request to be processed even if the purchase order is rejected,
you should submit separate redemption and purchase orders rather than
placing an exchange order. The fund reserves the right to delay for
up to one business day, consistent with applicable law, the processing
of exchange requests in the event that, in the fund’s judgment,
such delay would be in the fund’s best interest, in which case both the
redemption and purchase side of the exchange will receive the fund’s NAV
at the conclusion of the delay period. The fund, through its agents in
their sole discretion, may impose these remedial actions at the account
holder level or the underlying shareholder level.
Exchange
limitation policies
The Board
of Trustees has adopted the following policies and procedures by which
the fund, subject to the limitations described below, takes steps
reasonably designed to curtail excessive trading practices.
Limitation
on exchange activity
The fund or
its agent may reject or cancel a purchase order, suspend or terminate
the exchange privilege, or terminate the ability of an investor to invest
in John Hancock funds if the fund or its agent determines that a proposed
transaction involves market timing or disruptive trading that it believes is
likely to be detrimental to the fund. The fund or its agent cannot
ensure that it will be able to identify all cases of market timing or
disruptive
trading, although it attempts to have adequate procedures in place to do
so. The fund or its agent may also reject or cancel any purchase
order (including an exchange) from an investor or group of investors
for any other reason. Decisions to reject or cancel purchase orders
(including exchanges) in the fund are inherently subjective and will be
made in a manner believed to be in the best interest of the fund’s shareholders.
The fund does not have any arrangement to permit market timing or
disruptive trading.
Exchanges
made on the same day in the same account are aggregated for
purposes of counting the number and dollar amount of exchanges made by the
account holder. The exchange limits referenced above will not be
imposed or may be modified under certain circumstances. For example,
these exchange limits may be modified for accounts held by certain
retirement plans to conform to plan exchange limits, ERISA considerations,
or U.S. Department of Labor regulations. Certain automated
or preestablished exchange, asset allocation, and dollar-cost-averaging
programs are not subject to these exchange limits. These
programs are excluded from the exchange limitation since the fund
believes that they are advantageous to shareholders and do not offer an
effective means for market timing or excessive trading strategies.
These investment tools involve regular and predetermined purchase or
redemption requests made well in advance of any knowledge
of events affecting the market on the date of the purchase or redemption.
These
exchange limits are subject to the fund’s ability to monitor exchange
activity, as discussed under “Limitation on the ability to detect and curtail
excessive trading practices” below. Depending upon the composition
of the fund’s shareholder accounts, and in light of the limitations
on the ability of the fund to detect and curtail excessive trading
practices, a significant percentage of the fund’s shareholders may not be
subject to the exchange limitation policy described above. In applying
the exchange limitation policy, the fund considers information available
to it at the time and reserves the right to consider trading activity in
a single account or multiple accounts under common ownership,
control, or influence.
Limitation
on the ability to detect and curtail excessive trading practices
Shareholders
seeking to engage in excessive trading practices sometimes
deploy a variety of strategies to avoid detection and, despite the efforts
of the fund to prevent excessive trading, there is no guarantee that the
fund or its agent will be able to identify such shareholders or curtail
their trading practices. The ability of the fund and its agent to detect and
curtail excessive trading practices may also be limited by operational
systems and technological limitations. Because the fund will not always
be able to detect frequent trading activity, investors should not assume
that the fund will be able to detect or prevent all frequent trading or
other practices that disadvantage the fund. For example, the ability of
the fund to monitor trades that are placed by omnibus or other nominee
accounts is severely limited in those instances in which the financial
intermediary, including a financial advisor, broker, retirement plan
administrator, or fee-based program sponsor, maintains the records of
the fund’s underlying beneficial owners. Omnibus or other nominee
account arrangements are common forms of holding shares of the fund,
particularly among certain financial intermediaries, such as financial
advisors, brokers, retirement plan administrators, or fee-based
program
sponsors. These arrangements often permit the financial intermediary
to aggregate its clients’ transactions and ownership positions
and do not identify the particular underlying shareholder(s) to the fund.
However, the fund will work with financial intermediaries as necessary
to discourage shareholders from engaging in abusive trading practices
and to impose restrictions on excessive trades. In this regard, the fund
has entered into information-sharing agreements with financial intermediaries
pursuant to which these intermediaries are required to provide to
the fund, at the fund’s request, certain information relating to their
customers investing in the fund through omnibus or other nominee accounts.
The fund will use this information to attempt to identify excessive
trading practices. Financial intermediaries are contractually required to
follow any instructions from the fund to restrict or prohibit future
purchases from shareholders that are found to have engaged in excessive
trading in violation of the fund’s policies. The fund cannot guarantee
the accuracy of the information provided to it from financial intermediaries
and so cannot ensure that it will be able to detect abusive trading
practices that occur through omnibus or other nominee accounts.
As a consequence, the fund’s ability to monitor and discourage
excessive trading practices in these types of accounts may be
limited.
Excessive
trading risk
To the
extent that the fund or its agent is unable to curtail excessive trading
practices in the fund, these practices may interfere with the efficient
management of the fund’s portfolio and may result in the fund engaging in
certain activities to a greater extent than it otherwise would, such as
maintaining higher cash balances, using its line of credit, and engaging in
increased portfolio transactions. Increased portfolio transactions
and use of the line of credit would correspondingly increase the fund’s
operating costs and decrease the fund’s investment performance.
Maintenance of higher levels of cash balances would likewise
result in lower fund investment performance during periods of rising
markets.
While
excessive trading can potentially occur in the fund, certain types of funds
are more likely than others to be targets of excessive trading. For
example:
• |
A
fund that invests a significant portion of its assets in small- or
mid-capitalization
stocks or securities in particular industries that may trade
infrequently or are fair valued as discussed under “Valuation of
securities”
entails a greater risk of excessive trading, as investors may seek
to trade fund shares in an effort to benefit from their understanding
of the value of those types of securities (referred to as price
arbitrage). |
• |
A
fund that invests a material portion of its assets in securities of
foreign
issuers may be a potential target for excessive trading if investors
seek to engage in price arbitrage based upon general trends in
the securities markets that occur subsequent to the close of the
primary
market for such securities. |
• |
A
fund that invests a significant portion of its assets in below-investment-grade
(junk) bonds that may trade infrequently or are
fair valued as discussed under “Valuation of securities” incurs a
greater
risk of excessive trading, as investors may seek to trade fund
shares
in an effort to benefit from their understanding of the value of
those
types of securities (referred to as price
arbitrage). |
Any
frequent trading strategies may interfere with efficient management of a fund’s
portfolio and raise costs. A fund that invests in the types of securities
discussed above may be exposed to this risk to a greater degree than
a fund that invests in highly liquid securities. These risks would be
less significant, for example, in a fund that primarily invests in U.S.
government securities, money market instruments, investment-grade
corporate issuers, or large-capitalization U.S. equity securities.
Any successful price arbitrage may cause dilution in the value of the fund
shares held by other shareholders.
Account
information
The fund is
required by law to obtain information for verifying an account holder’s
identity. For example, an individual will be required to supply his or her
name, residential address, date of birth, and Social Security number. If
you do not provide the required information, we may not be able to
open your account. If verification is unsuccessful, the fund may close your
account, redeem your shares at the next NAV, minus any applicable
sales charges, and take any other steps that it deems reasonable.
Certificated
shares
The fund
does not issue share certificates. Shares are electronically recorded.
Sales
in advance of purchase payments
When you
place a request to sell shares for which the purchase money has not yet
been collected, the request will be executed in a timely fashion,
but the fund will not release the proceeds to you until your purchase
payment clears. This may take up to 10 business days after the
purchase.
Dividends
and account policies
Account
statements
For Class A
and Class C shares, in general, you will receive account statements
as follows:
• |
after
every transaction (except a dividend reinvestment, automatic investment,
or systematic withdrawal) that affects your account balance |
• |
after
any changes of name or address of the registered
owner(s) |
• |
in
all other circumstances, every quarter |
For Class I
and Class R6 shares, in general, you will receive account statements
as follows:
• |
after
every transaction (except a dividend reinvestment) that affects
your
account balance |
• |
after
any changes of name or address of the registered
owner(s) |
• |
in
all other circumstances, every quarter |
Every year
you should also receive, if applicable, a Form 1099 tax information
statement, mailed by February 15.
Dividends
The fund
generally declares income dividends daily and pays them monthly.
Capital gains, if any, are typically distributed at least annually, typically
after the end of the fund’s fiscal year. Most of the fund’s dividends
are income dividends. Your dividends begin accruing the day
after the
fund receives payment and continue through the day your shares are
actually sold.
Dividend
reinvestments
Most
investors have their dividends reinvested in additional shares of the
same class
of the same fund. If you choose this option, or if you do not indicate
any choice, your dividends will be reinvested. Alternatively, you may choose
to have your dividends and capital gains sent directly to your bank
account or a check may be mailed if your combined dividend and capital
gains amount is $10 or more. However, if the check is not deliverable
or the combined dividend and capital gains amount is less than $10,
your proceeds will be reinvested. If five or more of your dividend or
capital gains checks remain uncashed after 180 days, all subsequent
dividends and capital gains will be reinvested. No front-end sales
charge or CDSC will be imposed on shares derived from reinvestment
of dividends or capital gains distributions.
Taxability
of dividends
For
investors who are not exempt from federal income taxes, dividends you receive
from the fund, whether reinvested or taken as cash, are generally
considered taxable. Dividends from the fund’s short-term capital
gains are taxable as ordinary income. Dividends from the fund’s long-term
capital gains are taxable at a lower rate. Whether gains are short term
or long term depends on the fund’s holding period. Some dividends
paid in January may be taxable as if they had been paid the previous
December.
The Form
1099 that is mailed to you every February, if applicable, details
your dividends and their federal tax category, although you should
verify your tax liability with your tax professional.
Returns
of capital
If the
fund’s distributions exceed its taxable income and capital gains realized
during a taxable year, all or a portion of the distributions made in the same
taxable year may be recharacterized as a return of capital to shareholders.
A return of capital distribution will generally not be taxable,
but will reduce each shareholder’s cost basis in the fund and result in a
higher reported capital gain or lower reported capital loss when those
shares on which the distribution was received are sold.
Taxability
of transactions
Any time
you sell or exchange shares, it is considered a taxable event for you if you
are not exempt from federal income taxes. Depending on the purchase
price and the sale price of the shares you sell or exchange, you may have a
gain or a loss on the transaction. You are responsible for any tax
liabilities generated by your transactions.
Small
accounts
If the
value of your account of Class A or Class C shares is less than $1,000, you
may be asked to purchase more shares within 30 days. If you do not
take action, the fund may close out your account and mail you the
proceeds. Alternatively, the fund may charge you $20 a year to maintain
your account. You will not be charged a CDSC if your account is closed for
this reason.
Additional
investor services
Monthly
Automatic Accumulation Program (MAAP)
MAAP lets
you set up regular investments from paychecks or bank accounts to
the John Hancock fund(s) to purchase Class A and Class C shares.
Investors determine the frequency and amount of investments ($25
minimum per month), and they can terminate the program at any time. To
establish, you must satisfy the minimum initial investment requirements
specified in the section “Opening an account” and complete
the appropriate parts of the account application.
Systematic
withdrawal plan
This plan
may be used for routine bill payments or periodic withdrawals from your
account of Class A and Class C shares. To
establish:
• |
Make
sure you have at least $5,000 worth of shares in your
account. |
• |
Make
sure you are not planning to invest more money in this account
(buying
shares during a period when you are also selling shares of the
same
fund is not advantageous to you because of sales
charges). |
• |
Specify
the payee(s). The payee may be yourself or any other party, and
there is no limit to the number of payees you may have, as long as
they
are all on the same payment schedule. |
• |
Determine
the schedule: monthly, quarterly, semiannually, annually, or in
certain selected months. |
• |
Fill
out the relevant part of the account application. To add a systematic
withdrawal plan to an existing account, contact your financial
professional or Signature Services. |
Retirement
plans
John
Hancock funds offer a range of retirement plans, including Traditional
and Roth IRAs, Coverdell ESAs, SIMPLE plans, and SEPs. Using these
plans, you can invest in any John Hancock fund. To find out more, call
Signature Services at 800-225-5291.
John
Hancock does not accept requests to establish new John Hancock custodial
403(b)(7) accounts, does not accept requests for exchanges or
transfers into your existing John Hancock custodial 403(b)(7) accounts,
and requires additional disclosure documentation if you direct John
Hancock to exchange or transfer some or all of your John Hancock custodial
403(b)(7) account assets to another 403(b)(7) contract or account. In
addition, the fund no longer accepts salary deferrals into 403(b)(7)
accounts. Please refer to the SAI for more information regarding
these restrictions.
Disclosure
of fund holdings
The
following information for the fund is posted on the website, jhinvestments.com,
generally on the fifth business day after month end: top 10
holdings; top 10 sector analysis; total return/yield; top 10 countries;
average quality/maturity; beta/alpha; and top 10 portfolio composition. All of the
holdings of the fund will be posted to the website no earlier
than 15 days after each calendar month end, and will remain posted on
the website for six months. All of the fund’s holdings as of the end of the
third month of every fiscal quarter will be disclosed on Form N-PORT
within 60 days of the end of the fiscal quarter. All of the fund’s holdings as
of the end of the second and fourth fiscal quarters will be disclosed
on Form N-CSR within 70 days of the end of such fiscal quarters. A
description of the fund’s policies and procedures with respect to
the disclosure of its portfolio securities is available in the
SAI.
Appendix
1 - Intermediary sales charge waivers
Intermediary
sales charge waivers
Merrill Lynch, Pierce, Fenner & Smith
Incorporated (Merrill Lynch)
Effective
June 30, 2020, shareholders purchasing fund shares through a Merrill
Lynch platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those
disclosed elsewhere in this fund’s prospectus or SAI:
Front-end
Sales Load Waivers on Class A shares available at Merrill
Lynch
• |
Employer-sponsored
retirement, deferred compensation and employee
benefit plans (including health savings accounts) and trusts used
to fund those plans, provided that the shares are not held in a
commission-based
brokerage account and shares are held for the benefit
of the plan |
• |
Shares
purchased by a 529 Plan (does not include 529 Plan units or 529-specific
share classes or equivalents) |
• |
Shares
purchased through a Merrill Lynch affiliated investment advisory
program |
• |
Shares
exchanged due to the holdings moving from a Merrill Lynch affiliated
investment advisory program to a Merrill Lynch brokerage (non-advisory)
account pursuant to Merrill Lynch’s policies relating to sales
load discounts and waivers |
• |
Shares
purchased by third party investment advisors on behalf of their
advisory
clients through Merrill Lynch’s platform |
• |
Shares
of funds purchased through the Merrill Edge Self-Directed platform
(if applicable) |
• |
Shares
purchased through reinvestment of capital gains distributions and
dividend reinvestment when purchasing shares of the same fund (but
not any other fund within the fund
family) |
• |
Shares
exchanged from Class C (i.e. level-load) shares of the same fund
pursuant to Merrill Lynch’s policies relating to sales load discounts
and waivers |
• |
Employees
and registered representatives of Merrill Lynch or its affiliates
and their family members |
• |
Directors
or Trustees of the fund, and employees of the fund’s investment
adviser or any of its affiliates, as described in the prospectus |
• |
Eligible
shares purchased from the proceeds of redemptions within the
same fund family, provided (1) the repurchase occurs within 90
days
following the redemption, (2) the redemption and purchase occur
in
the same account, and (3) redeemed shares were subject to a front-end
or deferred sales load (known as Rights of Reinstatement). Automated
transactions (i.e. systematic purchases and withdrawals) and
purchases made after shares are automatically sold to pay Merrill
Lynch’s
account maintenance fees are not eligible for
reinstatement |
CDSC
Waivers on Class A and Class C shares available at Merrill Lynch
• |
Death
or disability of the shareholder |
• |
Shares
sold as part of a systematic withdrawal plan as described in the
fund’s prospectus |
• |
Return
of excess contributions from an IRA
Account |
• |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts pursuant to the Internal Revenue
Code |
• |
Shares
sold to pay Merrill Lynch fees but only if the transaction is initiated
by Merrill Lynch |
• |
Shares
acquired through a Right of Reinstatement |
• |
Shares
held in retirement brokerage accounts, that are exchanged for a
lower cost share class due to transfer to certain fee based accounts
or
platforms (applicable to Class A and Class C shares
only) |
• |
Shares
received through an exchange due to the holdings moving from a
Merrill Lynch affiliated investment advisory program to a Merrill
Lynch
brokerage (non-advisory) account pursuant to Merrill Lynch’s policies
relating to sales load discounts and
waivers |
Front-end
Load Discounts Available at Merrill Lynch; Breakpoints,
Rights of Accumulation & Letters of Intent
• |
Breakpoints
as described in the fund’s prospectus |
• |
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint
discounts
as described in the fund’s prospectus will be automatically calculated
based on the aggregated holding of fund family assets held by
accounts (including 529 program holdings where applicable) within
the
purchaser’s household at Merrill Lynch. Eligible fund family assets
not
held at Merrill Lynch may be included in the ROA calculation only if
the
shareholder notifies his or her financial professional about such
assets |
• |
Letters
of Intent (LOI) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through Merrill Lynch, over a
13-month period of time (if applicable) |
Ameriprise Financial Services, Inc.
(Ameriprise Financial)
The
following information applies to Class A shares purchases if you
have
an account with or otherwise purchase fund shares through Ameriprise
Financial:
Effective
January 15, 2021, shareholders purchasing fund shares through an
Ameriprise Financial retail brokerage account are eligible for the
following front-end sales charge waivers, which may differ from those
disclosed
elsewhere in this fund’s prospectus or SAI:
Class A
Shares Front-End Sales Charge Waivers Available at Ameriprise
Financial
• |
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension
plans and defined benefit plans). For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs,
Simple IRAs or SAR-SEPs |
• |
Shares
purchased through reinvestment of capital gains distributions and
dividend reinvestment when purchasing shares of the same fund (but
not any other fund within the same fund
family) |
• |
Shares
exchanged from Class C shares of the same fund in the month of or
following the 7-year anniversary of the purchase date. To the extent
that this prospectus elsewhere provides for a waiver with respect
to exchanges of Class C shares or conversion of Class C shares
following a shorter holding period, that waiver will
apply |
• |
Employees
and registered representatives of Ameriprise Financial or its
affiliates and their immediate family
members |
• |
Shares
purchased by or through qualified accounts (including IRAs, Coverdell
Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to
ERISA and defined benefit plans) that are held by a covered family
member,
defined as an Ameriprise financial advisor and/or the advisor’s
spouse, advisor’s lineal ascendant (mother, father, grandmother,
grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson,
granddaughter, great grandson, great granddaughter) or any
spouse of a covered family member who is a lineal
descendant |
• |
Shares
purchased from the proceeds of redemptions within the same fund
family, provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the
same account, and (3) redeemed shares were subject to a front-end
or deferred sales load (i.e. Rights of
Reinstatement) |
In
addition, shareholders purchasing fund shares that are available through an
Ameriprise Financial Advisory account are eligible for front-end
sales charge waivers, which may differ from those disclosed elsewhere
in this fund’s prospectus or SAI.
Morgan Stanley Smith Barney (Morgan
Stanley)
Effective
July 1, 2018, shareholders purchasing fund shares through a Morgan
Stanley Wealth Management transactional brokerage account which is
not held directly at the fund are eligible only for the following front-end
sales charge waivers with respect to Class A shares, which may differ from
and may be more limited than those disclosed elsewhere in this fund’s
Prospectus or SAI:
Front-end
Sales Charge Waivers on Class A Shares available at Morgan
Stanley Wealth Management
• |
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension
plans and defined benefit plans). For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans |
• |
Morgan
Stanley employee and employee-related accounts according to
Morgan Stanley’s account linking rules |
• |
Shares
purchased through reinvestment of dividends and capital gains distributions
when purchasing shares of the same fund |
• |
Shares
purchased through a Morgan Stanley self-directed brokerage account |
• |
Class
C (i.e., level-load) shares that are no longer subject to a contingent
deferred sales charge and are converted to Class A shares of
the same fund by Morgan Stanley Wealth Management pursuant to its
share class conversion program |
• |
Shares
purchased from the proceeds of redemptions within the same fund
family, provided (i) the repurchase occurs within 90 days following
the redemption, (ii) the redemption and purchase occur in the
same account, and (iii) redeemed shares were subject to a front-end
or deferred sales charge |
Raymond James & Associates, Inc., Raymond
James Financial Services, Inc. and each entity’s affiliates
(Raymond James)
Effective
March 1, 2019, shareholders purchasing fund shares through a Raymond
James platform or account, or through an introducing broker-dealer
or independent registered investment adviser for which Raymond
James provides trade execution, clearance, and/or custody
services,
are eligible only for the following load waivers (front-end sales charge
waivers and contingent deferred, or back-end, sales charge waivers)
and discounts, which may differ from those disclosed elsewhere in this
fund’s prospectus or SAI.
Front-end
sales load waivers on Class A shares available at Raymond
James
• |
Shares
purchased in an investment advisory
program |
• |
Shares
purchased within the same fund family through a systematic reinvestment
of capital gains distributions and dividend reinvestment when
purchasing shares of the same fund |
• |
Employees
and registered representatives of Raymond James or its affiliates
and their family members as designated by Raymond
James |
• |
Shares
purchased from the proceeds of redemptions within the same fund
family, provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the
same account, and (3) redeemed shares were subject to a front-end
or deferred sales load (known as Rights of
Reinstatement) |
• |
A
shareholder in the fund’s Class C shares will have their shares
converted
at net asset value to Class A shares (or the appropriate share
class) of the fund if the shares are no longer subject to a CDSC
and
the conversion is in line with the policies and procedures of Raymond
James |
CDSC
Waivers on Class A and Class C shares available at Raymond
James
• |
Death
or disability of the shareholder |
• |
Shares
sold as part of a systematic withdrawal plan as described in the
fund’s prospectus |
• |
Return
of excess contributions from an IRA
Account |
• |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus |
• |
Shares
sold to pay Raymond James fees but only if the transaction is initiated
by Raymond James |
• |
Shares
acquired through a right of reinstatement |
Front-end
load discounts available at Raymond James: breakpoints,
and/or rights of accumulation, and/or letters of intent
• |
Breakpoints
as described in the fund’s prospectus |
• |
Rights
of accumulation which entitle shareholders to breakpoint discounts
will be automatically calculated based on the aggregated holding
of fund family assets held by accounts within the purchaser’s household
at Raymond James. Eligible fund family assets not held at Raymond
James may be included in the calculation of rights of accumulation
only if the shareholder notifies his or her financial professional
about such assets |
• |
Letters
of intent which allow for breakpoint discounts based on anticipated
purchases within a fund family, over a 13-month time period.
Eligible fund family assets not held at Raymond James may be included
in the calculation of letters of intent only if the shareholder
notifies
his or her financial professional about such
assets |
Edward D. Jones & Co., L.P. (Edward
Jones)
Effective
on or after January 15, 2021, the following information supersedes
prior information with respect to transactions and positions held in
fund shares through an Edward Jones system. Shareholders purchasing
fund shares through an Edward Jones platform or account are
eligible only for the following load waivers (front-end sales charge
waivers and
contingent deferred, or back-end sales charge waivers) and discounts,
which may differ from those disclosed elsewhere in this fund’s prospectus
or Statement of Additional Information (SAI). In all instances, it is the
shareholder’s responsibility to inform Edward Jones at the time of purchase
of any relationship, holdings of fund family or other facts qualifying
the purchaser for discounts or waivers. Edward Jones can ask for
documentation of such circumstance. Shareholders should contact Edward
Jones if they have questions regarding their eligibility for these discounts
and waivers.
Front-end
Sales Charge Waivers on Class A shares available at Edward
Jones
Sales
charges are waived for the following shareholders and in the following
situations:
• |
Associates
of Edward Jones and its affiliates and their family members who
are in the same pricing group (as determined by Edward Jones under
its policies and procedures) as the associate. This waiver will
continue
for the remainder of the associate’s life if the associate retires
from Edward Jones in good-standing and remains in good standing
pursuant to Edward Jones’ policies and
procedures |
• |
Shares
purchased in an Edward Jones fee-based
program |
• |
Shares
purchased through reinvestment of capital gains distributions and
dividend reinvestment |
• |
Shares
purchased from the proceeds of redeemed shares of the same fund
family so long as the following conditions are met: 1) the proceeds
are from the sale of shares within 60 days of the purchase, and
2) the sale and purchase are made in the same share class and the
same account or the purchase is made in an individual retirement
account
with proceeds from liquidations in a non-retirement
account |
• |
Shares
exchanged into Class A shares from another share class so long
as the exchange is into the same fund and was initiated at the
discretion
of Edward Jones. Edward Jones is responsible for any remaining
CDSC due to the fund company, if applicable. Any future purchases
are subject to the applicable sales charge as disclosed in the
prospectus |
• |
Exchanges
from Class C shares to Class A shares of the same fund, generally,
in the 84th month following the anniversary of the purchase date
or earlier at the discretion of Edward
Jones |
CDSC
Waivers on Class A and Class C shares available at Edward Jones
If the
shareholder purchases shares that are subject to a CDSC and those
shares are redeemed before the CDSC is expired, the shareholder is
responsible to pay the CDSC except in the following conditions:
• |
Shares
sold upon the death or disability of the
shareholder |
• |
Shares
sold as part of a systematic withdrawal plan (limited to up to
10%
per year of the account value) |
• |
Return
of excess contributions from an Individual Retirement Account (IRA) |
• |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts if the redemption is taken in or after the year the shareholder
reaches qualified age based on applicable IRS
regulations |
• |
Shares
sold to pay Edward Jones fees or costs in such cases where the
transaction
is initiated by Edward Jones |
• |
Shares
exchanged at Edward Jones’ discretion in an Edward Jones fee-based
program. In such circumstances, Edward Jones is responsible
for any remaining CDSC due to the fund company, if applicable |
• |
Shares
acquired through a right of reinstatement |
• |
Shares
redeemed at the discretion of Edward Jones for Minimum Balances,
as described below |
Front-end
Load Discounts Available at Edward Jones; Breakpoints,
Rights of Accumulation & Letter of Intent
• |
Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds,
as described in this prospectus |
• |
Rights
of Accumulation (ROA). The applicable sales charge on a purchase
of Class A shares is determined by taking into account all share
classes (except certain money market funds and any assets held
in
group retirement plans) of the fund family held by the shareholder
or in
an account grouped by Edward Jones with other accounts for the
purpose
of providing certain pricing considerations (pricing groups). If
grouping
assets as a shareholder, this includes all share classes held on
the Edward Jones platform and/or held on another platform. The
inclusion
of eligible fund family assets in the ROA calculation is dependent
on the shareholder notifying Edward Jones of such assets at
the time of calculation. The employer maintaining a SEP IRA plan
and/or
SIMPLE IRA plan may elect to establish or change ROA for the IRA
accounts associated with the plan to a plan-level grouping as opposed
to including all share classes at a shareholder or pricing group
level. ROA is determined by calculating the higher of cost minus
redemptions
or market value (current shares x NAV). Money market funds
are included only if such shares were sold with a sales charge at
the
time of purchase or acquired in exchange for shares purchased with
a sales charge |
• |
Letter
of Intent (LOI). Through a LOI, shareholders can receive the sales
charge and breakpoint discounts for purchases shareholders intend
to make over a 13-month period from the date Edward Jones receives
the LOI. The LOI is determined by calculating the higher of cost
or market value of qualifying holdings at LOI initiation in combination
with the value that the shareholder intends to buy over a 13-month
period to calculate the front-end sales charge and any breakpoint
discounts. Each purchase the shareholder makes during that
13-month period will receive the sales charge and breakpoint discount
that applies to the total amount. The inclusion of eligible fund
family
assets in the LOI calculation is dependent on the shareholder notifying
Edward Jones of such assets at the time of calculation. Purchases
made before the LOI is received by Edward Jones are not adjusted
under the LOI and will not reduce the sales charge previously paid.
Sales charges will be adjusted if LOI is not met. If the employer
maintaining
a SEP IRA plan and/or SIMPLE IRA plan has elected to establish
or change ROA for the IRA accounts associated with the plan to a
plan-level grouping, LOIs will also be at the plan-level and may only
be
established by the employer |
Other
Important Information Regarding Transactions Through Edward
Jones
Minimum
Purchase Amounts
• |
Initial
purchase minimum: $250 |
• |
Subsequent
purchase minimum: none |
Minimum
Balances
• |
Edward
Jones has the right to redeem at its discretion fund holdings with
a balance of $250 or less. The following are examples of accounts
that are not included in this policy: |
• |
A
fee-based account held on an Edward Jones
platform |
• |
A 529
account held on an Edward Jones platform |
• |
An
account with an active systematic investment plan or
LOI |
Exchanging
Share Classes
• |
At
any time it deems necessary, Edward Jones has the authority to
exchange
at NAV a shareholder’s holdings in a fund to Class A shares of
the same fund |
Janney Montgomery Scott LLC
(Janney)
Effective
May 1, 2020, if you purchase fund shares through a Janney brokerage
account, you will be eligible for the following load waivers (front-end
sales charge waivers and contingent deferred sales charge (CDSC), or
back-end sales charge, waivers) and discounts, which may differ from
those disclosed elsewhere in this fund’s prospectus or SAI.
Front-end
sales charge* waivers on Class A shares available at Janney
• |
Shares
purchased through reinvestment of capital gains distributions and
dividend reinvestment when purchasing shares of the same fund (but
not any other fund within the fund
family) |
• |
Shares
purchased by employees and registered representatives of Janney
or its affiliates and their family members as designated by Janney |
• |
Shares
purchased from the proceeds of redemptions within the same fund
family, provided (1) the repurchase occurs within ninety (90) days
following the redemption, (2) the redemption and purchase occur
in
the same account, and (3) redeemed shares were subject to a front-end
or deferred sales load (i.e., right of
reinstatement) |
• |
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension
plans and defined benefit plans). For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs,
Simple IRAs, SAR-SEPs or Keogh plans |
• |
Shares
acquired through a right of reinstatement |
• |
Class
C shares that are no longer subject to a contingent deferred sales
charge and are converted to Class A shares of the same fund pursuant
to Janney’s policies and procedures |
CDSC
waivers on Class A and Class C shares available at Janney
• |
Shares
sold upon the death or disability of the
shareholder |
• |
Shares
sold as part of a systematic withdrawal plan as described in the
fund’s prospectus |
• |
Shares
purchased in connection with a return of excess contributions from
an IRA account |
• |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts if the redemption is taken in or after the year the shareholder
reaches qualified age based on applicable IRS
regulations |
• |
Shares
sold to pay Janney fees but only if the transaction is initiated
by
Janney |
• |
Shares
acquired through a right of reinstatement |
• |
Shares
exchanged into the same share class of a different
fund |
Front-end
sales charge* discounts available at Janney: breakpoints,
rights of accumulation, and/or letters of intent
• |
Breakpoints
as described in the fund’s prospectus |
• |
Rights
of accumulation (ROA), which entitle shareholders to breakpoint
discounts, will be automatically calculated based on the aggregated
holding of fund family assets held by accounts within the purchaser’s
household at Janney. Eligible fund family assets not held at
Janney may be included in the ROA calculation only if the shareholder
notifies his or her financial professional about such
assets |
• |
Letters
of intent which allow for breakpoint discounts based on anticipated
purchases within a fund family, over a 13-month time period.
Eligible fund family assets not held at Janney may be included
in
the calculation of letters of intent only if the shareholder notifies his
or
her financial professional about such
assets |
*Also
referred to as an “initial sales charge.”
Robert W. Baird & Co.
(Baird)
Effective
June 15, 2020, shareholders purchasing fund shares through a Baird
platform or account will only be eligible for the following sales charge
waivers (front-end sales charge waivers and contingent deferred sales
charge (CDSC) waivers) and discounts, which may differ from those
disclosed elsewhere in this prospectus or the SAI.
Front-End
Sales Charge Waivers on Class A shares Available at Baird
• |
Shares
purchased through reinvestment of capital gains distributions and
dividend reinvestment when purchasing shares of the same
fund |
• |
Shares
purchased by employees and registered representatives of Baird
or its affiliates and their family members as designated by
Baird |
• |
Shares
purchased from the proceeds of redemptions within the same fund
family, provided (1) the repurchase occurs within 90 days following
the redemption, (2) the redemption and purchase occur in the
same account, and (3) redeemed shares were subject to a front-end
or deferred sales charge (known as rights of
reinstatement) |
• |
Class
C shares will be converted at net asset value to Class A shares of
the
same fund if the shares are no longer subject to CDSC and the conversion
is in line with the policies and procedures of
Baird |
• |
Employer-sponsored
retirement plans or charitable accounts in a transactional
brokerage account at Baird, including 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit sharing and money purchase
pension plans and defined benefit plans. For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs,
Simple IRAs or SAR-SEPs |
CDSC
Waivers on Class A and Class C shares Available at Baird
• |
Shares
sold due to death or disability of the
shareholder |
• |
Shares
sold as part of a systematic withdrawal plan as described in the
fund’s prospectus |
• |
Shares
bought due to returns of excess contributions from an IRA Account |
• |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching the qualified age based
on applicable IRS regulations as described in the fund’s prospectus |
• |
Shares
sold to pay Baird fees but only if the transaction is initiated by
Baird |
• |
Shares
acquired through a right of reinstatement |
Front-End
Sales Charge Discounts Available at Baird: Breakpoints
and/or Rights of Accumulations
• |
Breakpoints
as described in this prospectus |
• |
Rights
of accumulations which entitle shareholders to breakpoint discounts
will be automatically calculated based on the aggregated holdings
of fund family assets held by accounts within the purchaser’s household
at Baird. Eligible fund family assets not held at Baird may be
included in the rights of accumulations calculation only if the
shareholder
notifies his or her financial advisor about such
assets |
• |
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated
purchases within the fund family through Baird, over a 13-month
period of time |
Stifel, Nicolaus & Company, Incorporated
(Stifel)
Effective
July 1, 2020, shareholders purchasing fund shares through a Stifel
platform or account or who own shares for which Stifel or an affiliate
is the broker-dealer of record are eligible for the following additional
sales charge waiver.
Front-end
Sales Load Waiver on Class A Shares
• |
Class
C shares that have been held for more than seven (7) years converted
to Class A shares of the same fund pursuant to Stifel’s policies
and procedures. |
All other
sales charge waivers and reductions described elsewhere in the fund’s
prospectus or SAI still apply.
For more
information
The
following documents are available that offer further information on the
fund:
Annual/semiannual
reports to shareholders
Additional
information about the fund’s investments is available in the fund’s annual and
semiannual reports to shareholders. In the fund’s annual report, you
will find a
discussion of the market conditions and investment strategies that significantly
affected the fund’s performance during its last fiscal year.
As of
January 1, 2021, paper copies of the fund’s shareholder reports are no longer
sent by mail. Instead, the reports are made available on jhinvestments.com,
and you will be notified and provided with a link each time a report is posted
to the website. You may request to receive paper reports from the fund or
from your financial intermediary, free of charge, at any time. You may also
request to receive documents through eDelivery.
Statement
of Additional Information (SAI)
The SAI
contains more detailed information on all aspects of the fund and includes a
summary of the fund’s policy regarding disclosure of its portfolio holdings,
as well as legal and regulatory matters. A current SAI
has been filed with the SEC and is incorporated by reference into (and is
legally a part of) this prospectus.
To
obtain a free copy of these documents or request other
information
There are
several ways you can get a current annual/semiannual report, prospectus, or SAI
from John Hancock, request other information, or make inquiries:
Online:
jhinvestments.com
By
mail:
John
Hancock Signature Services, Inc.
P.O. Box
219909
Kansas
City, MO 64121-9909
By
EASI-Line:
800-338-8080 for Class A and Class C shares
By
phone:
800-225-5291 for Class A and Class C shares; 888-972-8696 for Class I and Class
R6 shares
By
TTY:
888-999-4721 for Class A, Class C, Class I, and Class R6 shares
You can
also view or obtain copies of these documents through the SEC:
Online:
sec.gov
|
|
©
2023 John Hancock Investment Management Distributors LLC, Member FINRA,
SIPC 200
Berkeley Street Boston, MA 02116 800-225-5291,
jhinvestments.com
Manulife,
Manulife Investment Management, Stylized M Design, and Manulife Investment
Management & Stylized M Design are trademarks of The Manufacturers
Life Insurance
Company and are used by its affiliates under license. |
|
SEC
file number: 811-21779 3280PN
1/1/23 |