UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04173
John Hancock Investors Trust
(Exact name of registrant as specified in charter)
200 Berkeley Street, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
200 Berkeley Street
Boston, Massachusetts 02116
(Name and address of agent for service)
Registrants telephone number, including area code: 617-663-4497
Date of fiscal year end: October 31
Date of reporting period: October 31, 2020
ITEM 1. |
REPORTS TO STOCKHOLDERS |
Dear shareholders,
Despite heightened fears over the coronavirus (COVID-19), which sent markets tumbling in the first quarter of the calendar year, global financial markets delivered positive returns for the 12 months ended October 31, 2020.
During the first-quarter sell-off, many investors reacted by exiting higher-risk assets and moving into cash, leading to a liquidity crunch in the fixed-income markets. In response to the sell-off, the U.S. Federal Reserve acted quickly, lowering interest rates to near zero and reinstating quantitative easing, as well as announcing its plans for broad support of debt markets. Many other nations followed suit and credit spreads rebounded off their highs as liquidity concerns eased.
The continued spread of COVID-19, trade disputes, and other geopolitical tensions continues to create uncertainty among businesses and investors. Consumer spending remains far below prepandemic levels. Your financial professional can help position your portfolio so that its sufficiently diversified to seek to meet your long-term objectives and to withstand the inevitable bouts of market volatility along the way.
On behalf of everyone at John Hancock Investment Management, Id like to take this opportunity to welcome new shareholders and thank existing shareholders for the continued trust youve placed in us.
Sincerely,
Andrew G. Arnott
President and CEO,
John Hancock Investment Management
Head of Wealth and Asset Management,
United States and Europe
This commentary reflects the CEOs views as of this reports period end and are subject to change at any time. Diversification does not guarantee investment returns and does not eliminate risk of loss. All investments entail risks, including the possible loss of principal. For more up-to-date information, you can visit our website at jhinvestments.com.
|
John Hancock
Investors Trust
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 1 |
|
INVESTMENT OBJECTIVE
The fund seeks to generate income for distribution to its shareholders, with capital appreciation as a secondary objective.
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/2020 (%)
The Bloomberg Barclays Government/Credit Index is an unmanaged index of U.S. government bonds, U.S. corporate bonds, and Yankee bonds.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
The performance data contained within this material represents past performance, which does not guarantee future results.
Investment returns and principal value will fluctuate and a shareholder may sustain losses. Further, the funds performance at net asset value (NAV) is different from the funds performance at closing market price because the closing market price is subject to the dynamics of secondary market trading. Market risk may be augmented when shares are purchased at a premium to NAV or sold at a discount to NAV. Current month-end performance may be higher or lower than the performance cited. The funds most recent performance can be found at jhinvestments.com or by calling 800-852-0218.
2 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Bond yields fell amid pandemic U.S. bond yields declined sharply, lifting bond prices, as the COVID-19 pandemic led to a substantial and widespread economic downturn.
U.S. Treasury bonds outperformed U.S. Treasury bonds posted positive returns in the bond market as their yields fell to historically low levels; investment-grade corporate bonds also performed well, while high-yield corporate bonds lagged.
The fund trailed its comparative index The funds underperformance of the Bloomberg Barclays Government/Credit Index was driven mainly by a sizable position in high-yield corporate bonds.
|
PORTFOLIO COMPOSITION AS OF 10/31/2020 (% of total investments)
QUALITY COMPOSITION AS OF 10/31/2020 (% of total investments)
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 3 |
|
Ratings are from Moodys Investors Service, Inc. If not available, we have used Standard & Poors Ratings Services. In the absence of ratings from these agencies, we have used Fitch Ratings, Inc. Not rated securities are those with no ratings available from these agencies. All ratings are as of 10-31-20 and do not reflect subsequent downgrades or upgrades, if any.
A note about risks
As is the case with all exchange-listed closed-end funds, shares of this fund may trade at a discount or a premium to the funds net asset value (NAV). An investment in the fund is subject to investment and market risks, including the possible loss of the entire principal invested. There is no guarantee prior distribution levels will be maintained, and distributions may include a substantial return of capital. Fixed-income investments are subject to interest-rate and credit risk; their value will normally decline as interest rates rise or if a creditor, grantor, or counterparty is unable or unwilling to make principal, interest, or settlement payments. Investments in higher-yielding, lower-rated securities are subject to a higher risk of default. An issuer of securities held by the fund may default, have its credit rating downgraded, or otherwise perform poorly, which may affect fund performance. Mortgage- and asset-backed securities may be sensitive to changes in interest rates and may be subject to early repayment and the markets perception of issuer creditworthiness. Liquiditythe extent to which a security may be sold or a derivative position closed without negatively affecting its market valuemay be impaired by reduced trading volume, heightened volatility, rising interest rates, and other market conditions. The funds use of leverage creates additional risks, including greater volatility of the funds NAV, market price, and returns. There is no assurance that the funds leverage strategy will be successful. In addition, in volatile market environments the fund could be required to sell securities in its portfolio in order to comply with regulatory or other debt compliance requirements, which could negatively impact the funds performance. The fund has significant exposure to the communication services, consumer discretionary, energy, and financials sectors. Focusing on a particular sector may increase the funds volatility and make it more susceptible to market, economic, and regulatory risks as well as other factors affecting those sectors. The fund has significant exposure to the financials and communication services sectors. Focusing on a particular sector may increase the funds volatility and make it more susceptible to market, economic, and regulatory risks as well as other factors affecting those sectors. Derivatives transactions, such as hedging and other strategic transactions, may increase a funds volatility and could produce disproportionate losses, potentially more than the funds principal investment. Cybersecurity incidents 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 fund securities may negatively impact performance.
A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange trading suspensions and closures, and affect fund performance. For example, the novel coronavirus disease (COVID-19) has resulted in significant disruptions to global business activity. 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 funds performance, resulting in losses to your investment.
4 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
Can you describe the U.S. bond market environment during the 12 months ended October 31, 2020?
U.S. bonds posted solid gains for the 12-month period despite an increase in market volatility resulting from the COVID-19 pandemic. As shelter-in-place policies designed to slow the spread of the virus led to a dramatic slowdown in economic activity, the federal government responded with unprecedented monetary and fiscal stimulus to shore up the economy and financial markets. Lockdown restrictions gradually eased in the summer months, leading to signs of an emerging economic recovery. However, a resurgence of coronavirus cases late in the period and a lack of additional fiscal stimulus dampened economic optimism.
A pandemic-driven flight to quality pushed U.S. Treasury bond yields down to all-time lows in most maturity segments. Consequently, U.S. Treasury securities delivered favorable returns in the bond market for the period. The credit-related sectors of the market suffered the biggest declines in the immediate wake of the virus-related economic shutdown, and although investment-grade corporate bonds recovered to post solid gains, high-yield corporate securities produced the weakest returns in the bond market for the period.
COUNTRY COMPOSITION |
||||||||||
AS OF 10/31/2020 (% of total investments) | ||||||||||
|
||||||||||
United States |
73.2 | |||||||||
Luxembourg |
3.9 | |||||||||
France |
3.3 | |||||||||
Canada |
2.9 | |||||||||
Mexico |
2.5 | |||||||||
Netherlands |
2.2 | |||||||||
Cayman Islands |
2.1 | |||||||||
United Kingdom |
2.1 | |||||||||
Japan |
1.7 | |||||||||
Switzerland |
1.2 | |||||||||
Other countries |
4.9 | |||||||||
TOTAL |
100.0 | |||||||||
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 5 |
|
How did the fund perform? | MANAGED BY | |
The fund trailed the return of its | Jeffrey N. Given, CFA | |
comparative index, the Bloomberg Barclays Government/Credit Index. The primary factor behind the underperformance was the funds holdings of high-yield corporate bonds, which made up more than half of the portfolio during the period but arent |
John F. Addeo, CFA
Dennis F. McCafferty, CFA
III Manulife Investment Management |
represented in the index. The funds duration positioning also weighed on relative performance during the period. The funds duration (a measure of interest-rate sensitivity) was shorter than that of the index, which meant that the fund didnt benefit as much as the index from the sharp decline in bond yields.
On the positive side, the funds exposure to investment-grade corporate bonds aided performance versus the index, as did a small position in convertible bonds, which benefited from strong stock market returns during the period. Another positive factor was leverage, which the fund uses to increase its overall fixed-income market exposure. This extra exposure amplified the impact of positive bond market returns, providing an additional boost to fund performance.
How was the portfolio positioned at the end of the reporting period?
We took advantage of market volatility over the past year to selectively increase the funds position in corporate bonds, while reducing the funds exposure to emerging-market debt. The economic outlook remains clouded by the ongoing COVID-19 pandemic, especially the potential for rising coronavirus cases to lead to renewed restrictions and lockdowns. However, we continue to believe that corporate credit will outperform as investors around the world seek out higher yields in a low interest-rate environment.
The views expressed in this report are exclusively those of the funds portfolio management team at Manulife Investment Management (US) LLC, and are subject to change. They are not meant as investment advice. Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the funds investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.
6 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
AS OF 10-31-20
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
U.S. Government and Agency obligations 2.7% (1.7% of Total investments) |
$3,993,470 | |||||||||||||||||||
(Cost $3,751,101) |
||||||||||||||||||||
U.S. Government Agency 2.7% |
3,993,470 | |||||||||||||||||||
Federal National Mortgage Association 30 Yr Pass Thru |
4.000 | 12-01-40 | 1,364,531 | 1,529,445 | ||||||||||||||||
30 Yr Pass Thru |
4.000 | 09-01-41 | 1,081,493 | 1,201,723 | ||||||||||||||||
30 Yr Pass Thru |
4.000 | 10-01-41 | 604,657 | 674,900 | ||||||||||||||||
30 Yr Pass Thru |
4.000 | 01-01-42 | 329,145 | 367,382 | ||||||||||||||||
30 Yr Pass Thru |
6.500 | 01-01-39 | 184,092 | 220,020 | ||||||||||||||||
Corporate bonds 139.0% (88.7% of Total investments) |
$207,095,907 | |||||||||||||||||||
(Cost $205,919,482) |
||||||||||||||||||||
Communication services 31.7% |
47,206,493 | |||||||||||||||||||
Diversified telecommunication services 5.3% |
||||||||||||||||||||
Frontier Communications Corp. (A)(B)(C) |
5.875 | 10-15-27 | 300,000 | 305,625 | ||||||||||||||||
Intelsat Jackson Holdings SA (A)(D) |
8.500 | 10-15-24 | 2,735,000 | 1,689,136 | ||||||||||||||||
Level 3 Financing, Inc. (A)(B)(C) |
4.625 | 09-15-27 | 1,245,000 | 1,269,900 | ||||||||||||||||
Level 3 Financing, Inc. |
5.375 | 01-15-24 | 600,000 | 604,326 | ||||||||||||||||
Radiate Holdco LLC (A) |
4.500 | 09-15-26 | 365,000 | 366,825 | ||||||||||||||||
Radiate Holdco LLC (A)(B)(C) |
6.500 | 09-15-28 | 555,000 | 571,650 | ||||||||||||||||
Telecom Argentina SA (A) |
6.500 | 06-15-21 | 1,000,000 | 945,010 | ||||||||||||||||
Telecom Argentina SA (A) |
8.000 | 07-18-26 | 350,000 | 288,754 | ||||||||||||||||
Telecom Italia Capital SA |
6.000 | 09-30-34 | 1,560,000 | 1,815,060 | ||||||||||||||||
Entertainment 3.2% |
||||||||||||||||||||
Cinemark USA, Inc. (A)(B)(C) |
8.750 | 05-01-25 | 750,000 | 774,375 | ||||||||||||||||
Lions Gate Capital Holdings LLC (A) |
5.875 | 11-01-24 | 1,095,000 | 1,029,300 | ||||||||||||||||
Lions Gate Capital Holdings LLC (A) |
6.375 | 02-01-24 | 1,600,000 | 1,536,000 | ||||||||||||||||
Netflix, Inc. |
5.875 | 11-15-28 | 1,220,000 | 1,457,650 | ||||||||||||||||
Interactive media and services 1.3% |
||||||||||||||||||||
ANGI Group LLC (A) |
3.875 | 08-15-28 | 280,000 | 276,850 | ||||||||||||||||
Cars.com, Inc. (A) |
6.375 | 11-01-28 | 750,000 | 746,250 | ||||||||||||||||
Match Group Holdings II LLC (A) |
5.625 | 02-15-29 | 500,000 | 538,750 | ||||||||||||||||
TripAdvisor, Inc. (A) |
7.000 | 07-15-25 | 305,000 | 317,276 | ||||||||||||||||
Media 12.6% |
||||||||||||||||||||
Altice Financing SA (A)(B)(C) |
5.000 | 01-15-28 | 760,000 | 737,200 | ||||||||||||||||
Altice Financing SA (A) |
7.500 | 05-15-26 | 1,300,000 | 1,356,875 | ||||||||||||||||
Altice France Holding SA (A)(B)(C) |
6.000 | 02-15-28 | 710,000 | 680,993 | ||||||||||||||||
Altice France Holding SA (A) |
10.500 | 05-15-27 | 500,000 | 551,250 | ||||||||||||||||
CCO Holdings LLC (A)(B)(C) |
5.000 | 02-01-28 | 630,000 | 663,390 | ||||||||||||||||
CCO Holdings LLC (A)(B)(C) |
5.125 | 05-01-27 | 1,245,000 | 1,307,250 | ||||||||||||||||
Comcast Corp. (B)(C) |
3.300 | 04-01-27 | 820,000 | 919,105 | ||||||||||||||||
CSC Holdings LLC (A)(B)(C) |
5.500 | 04-15-27 | 1,245,000 | 1,310,363 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 7 |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Communication services (continued) |
||||||||||||||||||||
Media (continued) |
||||||||||||||||||||
CSC Holdings LLC (A) |
7.500 | 04-01-28 | 855,000 | $936,110 | ||||||||||||||||
Grupo Televisa SAB |
4.625 | 01-30-26 | 725,000 | 819,665 | ||||||||||||||||
Grupo Televisa SAB |
8.490 | 05-11-37 | MXN | 26,200,000 | 1,140,929 | |||||||||||||||
iHeartCommunications, Inc. (A)(B)(C) |
4.750 | 01-15-28 | 610,000 | 582,550 | ||||||||||||||||
iHeartCommunications, Inc. (B)(C) |
8.375 | 05-01-27 | 1,200,000 | 1,170,300 | ||||||||||||||||
LCPR Senior Secured Financing DAC (A)(B)(C) |
6.750 | 10-15-27 | 1,050,000 | 1,115,625 | ||||||||||||||||
MDC Partners, Inc. (A)(B)(C) |
6.500 | 05-01-24 | 1,955,000 | 1,870,583 | ||||||||||||||||
Meredith Corp. (A)(B)(C) |
6.500 | 07-01-25 | 1,000,000 | 1,027,500 | ||||||||||||||||
Meredith Corp. (B)(C) |
6.875 | 02-01-26 | 850,000 | 704,438 | ||||||||||||||||
ViacomCBS, Inc. (C) |
5.850 | 09-01-43 | 1,125,000 | 1,411,031 | ||||||||||||||||
WMG Acquisition Corp. (A) |
3.000 | 02-15-31 | 560,000 | 532,000 | ||||||||||||||||
Wireless telecommunication services 9.3% |
||||||||||||||||||||
America Movil SAB de CV |
6.450 | 12-05-22 | MXN | 10,370,000 | 495,339 | |||||||||||||||
Comunicaciones Celulares SA (A) |
6.875 | 02-06-24 | 1,775,000 | 1,814,938 | ||||||||||||||||
SoftBank Group Corp. |
5.125 | 09-19-27 | 1,000,000 | 1,003,651 | ||||||||||||||||
SoftBank Group Corp. (6.875% to 7-19-27, then 5 Year ICE Swap Rate + 4.854%) (E) |
6.875 | 07-19-27 | 2,123,000 | 2,015,258 | ||||||||||||||||
Sprint Communications, Inc. (B)(C) |
6.000 | 11-15-22 | 385,000 | 412,092 | ||||||||||||||||
Sprint Corp. |
7.125 | 06-15-24 | 1,750,000 | 2,012,850 | ||||||||||||||||
Sprint Corp. |
7.875 | 09-15-23 | 1,000,000 | 1,141,250 | ||||||||||||||||
T-Mobile USA, Inc. (B)(C) |
4.750 | 02-01-28 | 640,000 | 685,694 | ||||||||||||||||
T-Mobile USA, Inc. (B)(C) |
6.500 | 01-15-26 | 1,125,000 | 1,172,250 | ||||||||||||||||
Turkcell Iletisim Hizmetleri AS |
5.750 | 10-15-25 | 1,255,000 | 1,245,929 | ||||||||||||||||
U.S. Cellular Corp. (B)(C) |
6.700 | 12-15-33 | 1,395,000 | 1,837,348 | ||||||||||||||||
Consumer discretionary 18.1% |
27,027,662 | |||||||||||||||||||
Automobiles 4.3% |
||||||||||||||||||||
Ford Motor Company (C) |
4.750 | 01-15-43 | 683,000 | 632,629 | ||||||||||||||||
General Motors Company (B)(C) |
5.400 | 10-02-23 | 1,150,000 | 1,271,877 | ||||||||||||||||
General Motors Company (C) |
6.750 | 04-01-46 | 1,000,000 | 1,287,995 | ||||||||||||||||
General Motors Company (B)(C) |
6.800 | 10-01-27 | 734,000 | 900,253 | ||||||||||||||||
General Motors Financial Company, Inc. (5.700% to 9-30-30, then 5 Year CMT + 4.997%) (C)(E) |
5.700 | 09-30-30 | 1,000,000 | 1,035,000 | ||||||||||||||||
Nissan Motor Company, Ltd. (A) |
4.345 | 09-17-27 | 1,000,000 | 1,002,164 | ||||||||||||||||
Tesla, Inc. (A)(B)(C) |
5.300 | 08-15-25 | 300,000 | 310,388 | ||||||||||||||||
Diversified consumer services 1.8% |
||||||||||||||||||||
Garda World Security Corp. (A) |
4.625 | 02-15-27 | 750,000 | 731,250 | ||||||||||||||||
Sothebys (A)(B)(C) |
7.375 | 10-15-27 | 1,130,000 | 1,157,256 | ||||||||||||||||
Stena International SA (A)(B)(C) |
6.125 | 02-01-25 | 800,000 | 752,000 | ||||||||||||||||
Hotels, restaurants and leisure 6.5% |
||||||||||||||||||||
Caesars Resort Collection LLC (A) |
5.750 | 07-01-25 | 280,000 | 287,176 |
8 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Consumer discretionary (continued) |
||||||||||||||||||||
Hotels, restaurants and leisure (continued) |
||||||||||||||||||||
Cedar Fair LP (A) |
5.500 | 05-01-25 | 550,000 | $556,875 | ||||||||||||||||
Connect Finco SARL (A) |
6.750 | 10-01-26 | 1,110,000 | 1,117,992 | ||||||||||||||||
Jacobs Entertainment, Inc. (A)(B)(C) |
7.875 | 02-01-24 | 1,261,000 | 1,235,780 | ||||||||||||||||
Marriott Ownership Resorts, Inc. (A) |
6.125 | 09-15-25 | 390,000 | 406,575 | ||||||||||||||||
MGM Resorts International |
6.000 | 03-15-23 | 610,000 | 632,875 | ||||||||||||||||
New Red Finance, Inc. (A)(B)(C) |
4.375 | 01-15-28 | 585,000 | 592,313 | ||||||||||||||||
Twin River Worldwide Holdings, Inc. (A)(B)(C) |
6.750 | 06-01-27 | 1,850,000 | 1,873,273 | ||||||||||||||||
Waterford Gaming LLC (A)(D)(F) |
8.625 | 09-15-14 | 363,162 | 0 | ||||||||||||||||
Wyndham Destinations, Inc. (A)(B)(C) |
4.625 | 03-01-30 | 639,000 | 611,843 | ||||||||||||||||
Wyndham Destinations, Inc. |
6.600 | 10-01-25 | 1,190,000 | 1,267,350 | ||||||||||||||||
Wyndham Destinations, Inc. (A) |
6.625 | 07-31-26 | 465,000 | 494,737 | ||||||||||||||||
Wyndham Hotels & Resorts, Inc. (A) |
4.375 | 08-15-28 | 180,000 | 178,906 | ||||||||||||||||
Yum! Brands, Inc. (A) |
4.750 | 01-15-30 | 400,000 | 429,084 | ||||||||||||||||
Household durables 1.0% |
||||||||||||||||||||
Lennar Corp. (B)(C) |
5.875 | 11-15-24 | 800,000 | 898,000 | ||||||||||||||||
Taylor Morrison Communities, Inc. (A)(B)(C) |
5.125 | 08-01-30 | 600,000 | 651,408 | ||||||||||||||||
Internet and direct marketing retail 2.4% |
||||||||||||||||||||
Expedia Group, Inc. (C) |
5.000 | 02-15-26 | 1,000,000 | 1,071,930 | ||||||||||||||||
Expedia Group, Inc. (A)(C) |
6.250 | 05-01-25 | 530,000 | 582,789 | ||||||||||||||||
Prosus NV (A) |
4.850 | 07-06-27 | 745,000 | 852,228 | ||||||||||||||||
Prosus NV (A) |
5.500 | 07-21-25 | 915,000 | 1,049,790 | ||||||||||||||||
Multiline retail 0.9% |
||||||||||||||||||||
Macys, Inc. (A)(B)(C) |
8.375 | 06-15-25 | 700,000 | 730,870 | ||||||||||||||||
Nordstrom, Inc. (A)(C) |
8.750 | 05-15-25 | 625,000 | 684,492 | ||||||||||||||||
Specialty retail 0.4% |
||||||||||||||||||||
Abercrombie & Fitch Management Company (A) |
8.750 | 07-15-25 | 270,000 | 288,563 | ||||||||||||||||
Michaels Stores, Inc. (A)(B)(C) |
4.750 | 10-01-27 | 265,000 | 259,038 | ||||||||||||||||
Textiles, apparel and luxury goods 0.8% |
||||||||||||||||||||
G-III Apparel Group, Ltd. (A)(B)(C) |
7.875 | 08-15-25 | 830,000 | 840,375 | ||||||||||||||||
Hanesbrands, Inc. (A)(B)(C) |
5.375 | 05-15-25 | 335,000 | 352,588 | ||||||||||||||||
Consumer staples 2.6% |
3,925,442 | |||||||||||||||||||
Food products 2.3% |
||||||||||||||||||||
JBS Investments II GmbH (A)(C) |
5.750 | 01-15-28 | 570,000 | 598,856 | ||||||||||||||||
Kraft Heinz Foods Company (A)(B)(C) |
4.250 | 03-01-31 | 500,000 | 541,895 | ||||||||||||||||
Kraft Heinz Foods Company (C) |
6.750 | 03-15-32 | 1,098,000 | 1,443,234 | ||||||||||||||||
Lamb Weston Holdings, Inc. (A)(B)(C) |
4.875 | 05-15-28 | 305,000 | 330,466 | ||||||||||||||||
Post Holdings, Inc. (A)(B)(C) |
5.625 | 01-15-28 | 510,000 | 538,050 | ||||||||||||||||
Household products 0.3% |
||||||||||||||||||||
Edgewell Personal Care Company (A)(C) |
5.500 | 06-01-28 | 450,000 | 472,941 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 9 |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Energy 17.5% |
$26,117,661 | |||||||||||||||||||
Energy equipment and services 1.6% |
||||||||||||||||||||
CSI Compressco LP (A) |
7.500 | 04-01-25 | 500,000 | 438,750 | ||||||||||||||||
CSI Compressco LP (A) |
7.500 | 04-01-25 | 380,000 | 333,450 | ||||||||||||||||
CSI Compressco LP (10.000% Cash or 7.250% Cash and 2.750% PIK) (A) |
10.000 | 04-01-26 | 1,194,525 | 860,058 | ||||||||||||||||
Tervita Corp. (A)(B)(C) |
7.625 | 12-01-21 | 655,000 | 628,800 | ||||||||||||||||
Transocean, Inc. (A) |
8.000 | 02-01-27 | 655,000 | 178,488 | ||||||||||||||||
Oil, gas and consumable fuels 15.9% |
||||||||||||||||||||
Aker BP ASA (A) |
4.750 | 06-15-24 | 380,000 | 390,407 | ||||||||||||||||
Antero Resources Corp. (B)(C) |
5.000 | 03-01-25 | 735,000 | 551,250 | ||||||||||||||||
Ascent Resources Utica Holdings LLC (A) |
9.000 | 11-01-27 | 195,000 | 189,150 | ||||||||||||||||
Calumet Specialty Products Partners LP |
7.750 | 04-15-23 | 700,000 | 672,000 | ||||||||||||||||
Cheniere Energy Partners LP (B)(C) |
4.500 | 10-01-29 | 1,620,000 | 1,651,622 | ||||||||||||||||
DCP Midstream LP (7.375% to 12-15-22, then 3 month LIBOR + 5.148%) (E) |
7.375 | 12-15-22 | 1,000,000 | 650,000 | ||||||||||||||||
DCP Midstream Operating LP |
5.375 | 07-15-25 | 600,000 | 630,000 | ||||||||||||||||
DCP Midstream Operating LP (5.850% to 5-21-23, then 3 month LIBOR + 3.850%) (A) |
5.850 | 05-21-43 | 1,060,000 | 788,015 | ||||||||||||||||
Enbridge, Inc. (5.750% to 4-15-30, then 5 Year CMT + 5.314%) (B)(C) |
5.750 | 07-15-80 | 250,000 | 254,813 | ||||||||||||||||
Energy Transfer Operating LP (C) |
4.200 | 04-15-27 | 1,500,000 | 1,558,710 | ||||||||||||||||
Energy Transfer Operating LP (7.125% to 5-15-30, then 5 Year CMT + 5.306%) (B)(C)(E) |
7.125 | 05-15-30 | 1,285,000 | 1,050,308 | ||||||||||||||||
Marathon Petroleum Corp. (B)(C) |
4.750 | 09-15-44 | 1,500,000 | 1,470,425 | ||||||||||||||||
MPLX LP (C) |
5.250 | 01-15-25 | 870,000 | 897,226 | ||||||||||||||||
Occidental Petroleum Corp. |
6.375 | 09-01-28 | 340,000 | 297,500 | ||||||||||||||||
Occidental Petroleum Corp. (B)(C) |
6.625 | 09-01-30 | 340,000 | 297,942 | ||||||||||||||||
Odebrecht Oil & Gas Finance, Ltd. (A)(E) |
0.000 | 11-30-20 | 100,959 | 50 | ||||||||||||||||
Parkland Corp. (A) |
5.875 | 07-15-27 | 1,150,000 | 1,186,898 | ||||||||||||||||
Parsley Energy LLC (A)(B)(C) |
4.125 | 02-15-28 | 1,115,000 | 1,160,213 | ||||||||||||||||
Parsley Energy LLC (A) |
5.375 | 01-15-25 | 370,000 | 378,325 | ||||||||||||||||
Parsley Energy LLC (A)(B)(C) |
5.625 | 10-15-27 | 1,025,000 | 1,090,344 | ||||||||||||||||
PBF Holding Company LLC (A)(B)(C) |
6.000 | 02-15-28 | 1,050,000 | 405,563 | ||||||||||||||||
PBF Holding Company LLC |
7.250 | 06-15-25 | 1,005,000 | 420,216 | ||||||||||||||||
Petrobras Global Finance BV |
5.093 | 01-15-30 | 1,041,000 | 1,087,194 | ||||||||||||||||
Petroleos Mexicanos (B)(C) |
6.840 | 01-23-30 | 635,000 | 566,674 | ||||||||||||||||
Petroleos Mexicanos |
7.470 | 11-12-26 | MXN | 31,356,000 | 1,166,934 | |||||||||||||||
Plains All American Pipeline LP (6.125% to 11-15-22, then 3 month LIBOR + 4.110%) (E) |
6.125 | 11-15-22 | 1,250,000 | 771,875 | ||||||||||||||||
Sabine Pass Liquefaction LLC (B)(C) |
5.000 | 03-15-27 | 1,000,000 | 1,121,777 | ||||||||||||||||
Southwestern Energy Company (C) |
8.375 | 09-15-28 | 770,000 | 804,650 |
10 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Energy (continued) |
||||||||||||||||||||
Oil, gas and consumable fuels (continued) |
||||||||||||||||||||
Sunoco Logistics Partners Operations LP (C) |
3.900 | 07-15-26 | 925,000 | $952,899 | ||||||||||||||||
The Oil and Gas Holding Company BSCC (A)(B)(C) |
7.500 | 10-25-27 | 1,155,000 | 1,215,135 | ||||||||||||||||
Financials 26.1% |
38,819,935 | |||||||||||||||||||
Banks 15.3% |
||||||||||||||||||||
Bank of America Corp. (6.100% to 3-17-25, then 3 month LIBOR + 3.898%) (C)(E) |
6.100 | 03-17-25 | 2,760,000 | 3,046,792 | ||||||||||||||||
BBVA Bancomer SA (A) |
6.500 | 03-10-21 | 870,000 | 884,355 | ||||||||||||||||
BNP Paribas SA (7.000% to 8-16-28, then 5 Year U.S. Swap Rate + 3.980%) (A)(B)(C)(E) |
7.000 | 08-16-28 | 1,205,000 | 1,384,991 | ||||||||||||||||
Citizens Financial Group, Inc. (5.650% to 10-6-25, then 5 Year CMT + 5.313%) (E) |
5.650 | 10-06-25 | 1,000,000 | 1,063,750 | ||||||||||||||||
Credit Agricole SA (7.875% to 1-23-24, then 5 Year U.S. Swap Rate + 4.898%) (A)(B)(C)(E) |
7.875 | 01-23-24 | 865,000 | 953,403 | ||||||||||||||||
Credit Agricole SA (8.125% to 12-23-25, then 5 Year U.S. Swap Rate + 6.185%) (A)(B)(C)(E) |
8.125 | 12-23-25 | 2,495,000 | 2,927,433 | ||||||||||||||||
Freedom Mortgage Corp. (A) |
8.250 | 04-15-25 | 840,000 | 848,904 | ||||||||||||||||
HSBC Holdings PLC (6.500% to 3-23-28, then 5 Year ICE Swap Rate + 3.606%) (B)(C)(E) |
6.500 | 03-23-28 | 1,880,000 | 2,012,540 | ||||||||||||||||
HSBC Holdings PLC (6.875% to 6-1-21, then 5 Year ICE Swap Rate + 5.514%) (C)(E) |
6.875 | 06-01-21 | 760,000 | 771,226 | ||||||||||||||||
ING Groep NV (6.500% to 4-16-25, then 5 Year U.S. Swap Rate + 4.446%) (C)(E) |
6.500 | 04-16-25 | 1,410,000 | 1,492,838 | ||||||||||||||||
JPMorgan Chase & Co. (6.750% to 2-1-24, then 3 month LIBOR + 3.780%) (B)(C)(E) |
6.750 | 02-01-24 | 1,500,000 | 1,640,038 | ||||||||||||||||
Lloyds Banking Group PLC (7.500% to 6-27-24, then 5 Year U.S. Swap Rate + 4.760%) (E) |
7.500 | 06-27-24 | 1,165,000 | 1,229,075 | ||||||||||||||||
Natwest Group PLC (6.000% to 12-29-25, then 5 Year CMT + 5.625%) (B)(C)(E) |
6.000 | 12-29-25 | 800,000 | 827,760 | ||||||||||||||||
Societe Generale SA (7.375% to 9-13-21, then 5 Year U.S. Swap Rate + 6.238%) (A)(E) |
7.375 | 09-13-21 | 2,470,000 | 2,537,184 | ||||||||||||||||
Wells Fargo & Company (5.875% to 6-15-25, then 3 month LIBOR + 3.990%) (B)(C)(E) |
5.875 | 06-15-25 | 1,065,000 | 1,142,618 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 11 |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Financials (continued) |
||||||||||||||||||||
Capital markets 2.6% |
||||||||||||||||||||
Credit Suisse Group AG (7.250% to 9-12-25, then 5 Year CMT + 4.332%) (A)(B)(C)(E) |
7.250 | 09-12-25 | 1,500,000 | $1,625,565 | ||||||||||||||||
Credit Suisse Group AG (7.500% to 7-17-23, then 5 Year U.S. Swap Rate + 4.600%) (A)(E) |
7.500 | 07-17-23 | 1,100,000 | 1,166,011 | ||||||||||||||||
Morgan Stanley (C) |
5.750 | 01-25-21 | 1,000,000 | 1,012,476 | ||||||||||||||||
Consumer finance 4.6% |
||||||||||||||||||||
Ally Financial, Inc. (B)(C) |
5.800 | 05-01-25 | 2,000,000 | 2,333,724 | ||||||||||||||||
Avation Capital SA (A)(B)(C) |
6.500 | 05-15-21 | 730,000 | 445,300 | ||||||||||||||||
Enova International, Inc. (A) |
8.500 | 09-01-24 | 465,000 | 426,638 | ||||||||||||||||
Enova International, Inc. (A) |
8.500 | 09-15-25 | 1,200,000 | 1,104,000 | ||||||||||||||||
OneMain Finance Corp. (B)(C) |
6.875 | 03-15-25 | 1,650,000 | 1,815,000 | ||||||||||||||||
OneMain Finance Corp. |
7.125 | 03-15-26 | 725,000 | 803,924 | ||||||||||||||||
Diversified financial services 1.0% |
||||||||||||||||||||
Allied Universal Holdco LLC (A) |
6.625 | 07-15-26 | 1,395,000 | 1,459,519 | ||||||||||||||||
Insurance 1.6% |
||||||||||||||||||||
Athene Holding, Ltd. (C) |
6.150 | 04-03-30 | 1,500,000 | 1,790,701 | ||||||||||||||||
Prudential Financial, Inc. (3.700% to 7-1-30, then 5 Year CMT + 3.035%) (B)(C) |
3.700 | 10-01-50 | 600,000 | 613,500 | ||||||||||||||||
Mortgage real estate investment trusts 1.0% |
||||||||||||||||||||
Starwood Property Trust, Inc. (B)(C) |
5.000 | 12-15-21 | 970,000 | 965,150 | ||||||||||||||||
Starwood Property Trust, Inc. (A) |
5.500 | 11-01-23 | 500,000 | 495,520 | ||||||||||||||||
Health care 9.4% |
14,067,001 | |||||||||||||||||||
Health care providers and services 7.7% |
||||||||||||||||||||
Centene Corp. (B)(C) |
3.000 | 10-15-30 | 980,000 | 1,017,684 | ||||||||||||||||
Centene Corp. (B)(C) |
3.375 | 02-15-30 | 515,000 | 534,915 | ||||||||||||||||
Centene Corp. (B)(C) |
4.625 | 12-15-29 | 400,000 | 435,494 | ||||||||||||||||
Centene Corp. (A) |
5.375 | 06-01-26 | 1,000,000 | 1,052,210 | ||||||||||||||||
DaVita, Inc. (A)(B)(C) |
3.750 | 02-15-31 | 440,000 | 422,950 | ||||||||||||||||
Encompass Health Corp. |
4.625 | 04-01-31 | 750,000 | 772,500 | ||||||||||||||||
Encompass Health Corp. (B)(C) |
4.750 | 02-01-30 | 600,000 | 624,972 | ||||||||||||||||
Encompass Health Corp. |
5.750 | 11-01-24 | 935,000 | 935,000 | ||||||||||||||||
HCA, Inc. (B)(C) |
5.250 | 04-15-25 | 1,000,000 | 1,158,172 | ||||||||||||||||
HCA, Inc. |
5.500 | 06-15-47 | 1,760,000 | 2,183,372 | ||||||||||||||||
MEDNAX, Inc. (A) |
5.250 | 12-01-23 | 1,575,000 | 1,586,813 | ||||||||||||||||
Team Health Holdings, Inc. (A)(B)(C) |
6.375 | 02-01-25 | 1,240,000 | 763,468 | ||||||||||||||||
Pharmaceuticals 1.7% |
||||||||||||||||||||
Bausch Health Americas, Inc. (A) |
9.250 | 04-01-26 | 1,000,000 | 1,102,500 | ||||||||||||||||
Bausch Health Companies, Inc. (A) |
7.000 | 01-15-28 | 900,000 | 954,000 | ||||||||||||||||
Teva Pharmaceutical Finance Netherlands III BV (B)(C) |
6.000 | 04-15-24 | 520,000 | 522,951 |
12 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Industrials 11.9% |
$17,646,242 | |||||||||||||||||||
Aerospace and defense 0.9% |
||||||||||||||||||||
Bombardier, Inc. (A)(B)(C) |
7.875 | 04-15-27 | 1,000,000 | 728,470 | ||||||||||||||||
TransDigm, Inc. (A) |
6.250 | 03-15-26 | 630,000 | 656,775 | ||||||||||||||||
Airlines 3.8% |
||||||||||||||||||||
American Airlines Group, Inc. (A) |
5.000 | 06-01-22 | 1,450,000 | 949,750 | ||||||||||||||||
American Airlines, Inc. (A)(B)(C) |
11.750 | 07-15-25 | 700,000 | 680,750 | ||||||||||||||||
Delta Air Lines, Inc. (A)(C) |
4.500 | 10-20-25 | 700,000 | 710,425 | ||||||||||||||||
Delta Air Lines, Inc. (A)(C) |
4.750 | 10-20-28 | 715,000 | 730,255 | ||||||||||||||||
Delta Air Lines, Inc. (A) |
7.000 | 05-01-25 | 1,000,000 | 1,091,250 | ||||||||||||||||
Delta Air Lines, Inc. (B)(C) |
7.375 | 01-15-26 | 900,000 | 930,184 | ||||||||||||||||
United Airlines 2020-1 Class A Pass Through Trust (C) |
5.875 | 10-15-27 | 490,000 | 489,388 | ||||||||||||||||
Virgin Australia Holdings, Ltd. (A)(D) |
8.125 | 11-15-24 | 1,100,000 | 66,000 | ||||||||||||||||
Building products 0.3% |
||||||||||||||||||||
Builders FirstSource, Inc. (A)(B)(C) |
5.000 | 03-01-30 | 370,000 | 390,350 | ||||||||||||||||
Commercial services and supplies 1.1% |
||||||||||||||||||||
Cimpress PLC (A) |
7.000 | 06-15-26 | 1,300,000 | 1,293,500 | ||||||||||||||||
LSC Communications, Inc. (A)(D) |
8.750 | 10-15-23 | 2,100,000 | 315,000 | ||||||||||||||||
Construction and engineering 1.1% |
||||||||||||||||||||
AECOM |
5.125 | 03-15-27 | 650,000 | 710,905 | ||||||||||||||||
MasTec, Inc. (A) |
4.500 | 08-15-28 | 450,000 | 462,375 | ||||||||||||||||
Picasso Finance Sub, Inc. (A) |
6.125 | 06-15-25 | 525,000 | 553,665 | ||||||||||||||||
Electrical equipment 0.4% |
||||||||||||||||||||
WESCO Distribution, Inc. (A)(B)(C) |
7.250 | 06-15-28 | 535,000 | 585,659 | ||||||||||||||||
Machinery 0.9% |
||||||||||||||||||||
JB Poindexter & Company, Inc. (A) |
7.125 | 04-15-26 | 625,000 | 664,256 | ||||||||||||||||
Vertical US Newco, Inc. (A)(B)(C) |
5.250 | 07-15-27 | 600,000 | 617,520 | ||||||||||||||||
Road and rail 2.0% |
||||||||||||||||||||
Uber Technologies, Inc. (A)(B)(C) |
6.250 | 01-15-28 | 865,000 | 876,894 | ||||||||||||||||
Uber Technologies, Inc. (A)(B)(C) |
7.500 | 09-15-27 | 600,000 | 627,150 | ||||||||||||||||
Uber Technologies, Inc. (A)(B)(C) |
8.000 | 11-01-26 | 1,350,000 | 1,422,563 | ||||||||||||||||
Trading companies and distributors 1.4% |
||||||||||||||||||||
Air Lease Corp. (C) |
2.875 | 01-15-26 | 1,020,000 | 1,010,367 | ||||||||||||||||
Ashland LLC (B)(C) |
6.875 | 05-15-43 | 845,000 | 1,082,791 | ||||||||||||||||
Information technology 6.4% |
9,594,625 | |||||||||||||||||||
IT services 1.6% |
||||||||||||||||||||
Sabre GLBL, Inc. (A)(B)(C) |
9.250 | 04-15-25 | 1,000,000 | 1,102,500 | ||||||||||||||||
Shift4 Payments LLC (A)(B)(C) |
4.625 | 11-01-26 | 600,000 | 608,250 | ||||||||||||||||
Sixsigma Networks Mexico SA de CV (A) |
7.500 | 05-02-25 | 725,000 | 629,844 | ||||||||||||||||
Semiconductors and semiconductor equipment 0.3% |
||||||||||||||||||||
ON Semiconductor Corp. (A)(B)(C) |
3.875 | 09-01-28 | 500,000 | 508,750 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 13 |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Information technology (continued) |
||||||||||||||||||||
Software 0.2% |
||||||||||||||||||||
BY Crown Parent LLC (A)(B)(C) |
4.250 | 01-31-26 | 305,000 | $ | 308,813 | |||||||||||||||
Technology hardware, storage and peripherals 4.3% |
|
|||||||||||||||||||
CDW LLC |
3.250 | 02-15-29 | 335,000 | 334,581 | ||||||||||||||||
Dell International LLC (A)(C) |
8.350 | 07-15-46 | 1,600,000 | 2,177,374 | ||||||||||||||||
Seagate HDD Cayman (A)(B)(C) |
4.091 | 06-01-29 | 593,000 | 638,273 | ||||||||||||||||
Seagate HDD Cayman |
4.875 | 06-01-27 | 549,000 | 612,144 | ||||||||||||||||
Seagate HDD Cayman (B)(C) |
5.750 | 12-01-34 | 1,700,000 | 1,933,696 | ||||||||||||||||
Xerox Holdings Corp. (A) |
5.500 | 08-15-28 | 750,000 | 740,400 | ||||||||||||||||
Materials 7.3% |
10,925,326 | |||||||||||||||||||
Chemicals 1.1% |
||||||||||||||||||||
Orbia Advance Corp. SAB de CV (A) |
5.500 | 01-15-48 | 835,000 | 944,385 | ||||||||||||||||
The Scotts Miracle-Gro Company |
4.500 | 10-15-29 | 720,000 | 765,000 | ||||||||||||||||
Containers and packaging 1.2% |
||||||||||||||||||||
Graham Packaging Company, Inc. (A) |
7.125 | 08-15-28 | 295,000 | 308,275 | ||||||||||||||||
Owens-Brockway Glass Container, Inc. (A)(B)(C) |
6.625 | 05-13-27 | 750,000 | 804,375 | ||||||||||||||||
Sealed Air Corp. (A) |
6.875 | 07-15-33 | 500,000 | 645,000 | ||||||||||||||||
Metals and mining 4.0% |
||||||||||||||||||||
Carpenter Technology Corp. |
6.375 | 07-15-28 | 515,000 | 539,884 | ||||||||||||||||
First Quantum Minerals, Ltd. (A) |
6.875 | 10-15-27 | 1,400,000 | 1,393,000 | ||||||||||||||||
Freeport-McMoRan, Inc. (C) |
4.250 | 03-01-30 | 550,000 | 577,841 | ||||||||||||||||
Freeport-McMoRan, Inc. (C) |
5.450 | 03-15-43 | 1,500,000 | 1,711,605 | ||||||||||||||||
Novelis Corp. (A)(B)(C) |
4.750 | 01-30-30 | 810,000 | 821,433 | ||||||||||||||||
QVC, Inc. (C) |
5.950 | 03-15-43 | 1,000,000 | 960,000 | ||||||||||||||||
Paper and forest products 1.0% |
||||||||||||||||||||
Boise Cascade Company (A)(B)(C) |
4.875 | 07-01-30 | 625,000 | 668,078 | ||||||||||||||||
Norbord, Inc. (A) |
6.250 | 04-15-23 | 735,000 | 786,450 | ||||||||||||||||
Real estate 0.9% |
1,268,826 | |||||||||||||||||||
Equity real estate investment trusts 0.9% |
||||||||||||||||||||
GLP Capital LP (B)(C) |
5.375 | 04-15-26 | 815,000 | 905,172 | ||||||||||||||||
VICI Properties LP (A) |
4.625 | 12-01-29 | 350,000 | 363,654 | ||||||||||||||||
Utilities 7.1% |
10,496,694 | |||||||||||||||||||
Electric utilities 3.1% |
||||||||||||||||||||
ABY Transmision Sur SA (A) |
6.875 | 04-30-43 | 1,004,044 | 1,337,889 | ||||||||||||||||
Instituto Costarricense de Electricidad (A) |
6.375 | 05-15-43 | 1,595,000 | 1,084,600 | ||||||||||||||||
NRG Energy, Inc. |
6.625 | 01-15-27 | 600,000 | 631,500 | ||||||||||||||||
PG&E Corp. (B)(C) |
5.000 | 07-01-28 | 295,000 | 295,745 | ||||||||||||||||
PG&E Corp. (B)(C) |
5.250 | 07-01-30 | 295,000 | 295,000 | ||||||||||||||||
Vistra Operations Company LLC (A) |
5.500 | 09-01-26 | 900,000 | 931,500 |
14 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Utilities (continued) |
||||||||||||||||||||
Gas utilities 1.4% |
||||||||||||||||||||
AmeriGas Partners LP |
5.625 | 05-20-24 | 900,000 | $956,250 | ||||||||||||||||
AmeriGas Partners LP |
5.750 | 05-20-27 | 1,000,000 | 1,095,770 | ||||||||||||||||
Independent power and renewable electricity producers 0.5% |
||||||||||||||||||||
Clearway Energy Operating LLC (A) |
4.750 | 03-15-28 | 650,000 | 683,313 | ||||||||||||||||
Multi-utilities 2.1% |
||||||||||||||||||||
Berkshire Hathaway Energy Company (A)(C) |
4.050 | 04-15-25 | 895,000 | 1,015,164 | ||||||||||||||||
Cheniere Corpus Christi Holdings LLC (C) |
7.000 | 06-30-24 | 800,000 | 916,763 | ||||||||||||||||
Sempra Energy (4.875% to 10-15-25, then 5 Year CMT + 4.550%) (C)(E) |
4.875 | 10-15-25 | 1,205,000 | 1,253,200 | ||||||||||||||||
Convertible bonds 2.0% (1.3% of Total investments) |
$2,947,239 | |||||||||||||||||||
(Cost $3,206,948) |
||||||||||||||||||||
Communication services 1.3% |
1,971,088 | |||||||||||||||||||
Entertainment 0.6% |
||||||||||||||||||||
Cinemark Holdings, Inc. (A) |
4.500 | 08-15-25 | 480,000 | 414,317 | ||||||||||||||||
WildBrain, Ltd. (A) |
5.875 | 09-30-24 | CAD | 999,000 | 562,373 | |||||||||||||||
Media 0.7% |
||||||||||||||||||||
DISH Network Corp. |
3.375 | 08-15-26 | 1,125,000 | 994,398 | ||||||||||||||||
Information technology 0.7% |
976,151 | |||||||||||||||||||
Software 0.7% |
||||||||||||||||||||
Avaya Holdings Corp. |
2.250 | 06-15-23 | 1,000,000 | 976,151 | ||||||||||||||||
Capital preferred securities (G) 0.5% (0.3% of Total investments) |
$750,900 | |||||||||||||||||||
(Cost $689,526) |
||||||||||||||||||||
Financials 0.5% |
750,900 | |||||||||||||||||||
Banks 0.5% |
||||||||||||||||||||
Wachovia Capital Trust III (Greater of 3 month LIBOR + 0.930% or 5.570%) (B)(C)(E)(H) |
5.570 | 11-30-20 | 750,000 | 750,900 | ||||||||||||||||
Term loans (I) 3.9% (2.4% of Total investments) |
$5,738,115 | |||||||||||||||||||
(Cost $6,126,656) |
||||||||||||||||||||
Communication services 1.2% |
1,789,940 | |||||||||||||||||||
Interactive media and services 0.9% |
||||||||||||||||||||
Ancestry.com Operations, Inc., 2019 Extended Term Loan B (1 month LIBOR + 4.250%) |
4.400 | 08-27-26 | 529,353 | 527,463 | ||||||||||||||||
Ancestry.com Operations, Inc., Non-Extended Term Loan B (1 month LIBOR + 3.750%) |
4.750 | 10-19-23 | 848,713 | 846,166 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 15 |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Communication services (continued) |
||||||||||||||||||||
Media 0.3% |
||||||||||||||||||||
Hoya Midco LLC, 2017 1st Lien Term Loan (6 month LIBOR + 3.500%) |
4.500 | 06-30-24 | 496,595 | $416,311 | ||||||||||||||||
Consumer discretionary 1.8% |
2,668,564 | |||||||||||||||||||
Auto components 0.7% |
|
|||||||||||||||||||
American Tire Distributors, Inc., 2015 Term Loan (1 and 3 month LIBOR + 7.500%) |
8.500 | 09-02-24 | 1,168,569 | 986,611 | ||||||||||||||||
Diversified consumer services 1.1% |
|
|||||||||||||||||||
Sothebys, Term Loan B (1 month LIBOR + 5.500%) |
6.500 | 01-15-27 | 1,697,519 | 1,681,953 | ||||||||||||||||
Energy 0.3% |
426,231 | |||||||||||||||||||
Oil, gas and consumable fuels 0.3% |
|
|||||||||||||||||||
Ascent Resources Utica Holdings LLC, 2020 Fixed 2nd Lien Term Loan |
9.000 | 11-01-25 | 405,452 | 426,231 | ||||||||||||||||
Financials 0.6% |
853,380 | |||||||||||||||||||
Diversified financial services 0.6% |
|
|||||||||||||||||||
Allied Universal Holdco LLC, 2019 Term Loan B (1 month LIBOR + 4.250%) |
4.398 | 07-10-26 | 872,229 | 853,380 | ||||||||||||||||
Industrials 0.0% |
0 | |||||||||||||||||||
Airlines 0.0% |
|
|||||||||||||||||||
Global Aviation Holdings, Inc., PIK, 2nd Lien Term Loan (D)(F) |
0.000 | 07-13-21 | 51,038 | 0 | ||||||||||||||||
Global Aviation Holdings, Inc., PIK, 3rd Lien Term Loan (D)(F) |
0.000 | 03-13-21 | 514,063 | 0 | ||||||||||||||||
Collateralized mortgage obligations 0.5% (0.3% of Total investments) |
$755,211 | |||||||||||||||||||
(Cost $717,308) |
||||||||||||||||||||
Commercial and residential 0.5% |
726,323 | |||||||||||||||||||
HarborView Mortgage Loan Trust |
||||||||||||||||||||
Series 2007-3, Class ES IO (A) |
0.350 | 05-19-47 | 2,578,317 | 32,651 | ||||||||||||||||
Series 2007-4, Class ES IO |
0.350 | 07-19-47 | 2,759,409 | 36,465 | ||||||||||||||||
Series 2007-6, Class ES IO (A) |
0.343 | 08-19-37 | 2,507,158 | 35,287 | ||||||||||||||||
MSCG Trust |
||||||||||||||||||||
Series 2016-SNR, Class D (A) |
6.550 | 11-15-34 | 629,705 | 621,920 | ||||||||||||||||
U.S. Government Agency 0.0% |
28,888 | |||||||||||||||||||
Government National Mortgage Association Series 2012-114, Class IO |
0.711 | 01-16-53 | 905,144 | 28,888 |
16 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||
Asset backed securities 0.5% (0.4% of Total investments) |
$780,857 | |||||||||||||||||||
(Cost $757,685) |
||||||||||||||||||||
Asset backed securities 0.5% |
780,857 | |||||||||||||||||||
ContiMortgage Home Equity Loan Trust |
||||||||||||||||||||
Series 1995-2, Class A5 |
8.100 | 08-15-25 | 16,337 | 13,151 | ||||||||||||||||
Driven Brands Funding LLC |
||||||||||||||||||||
Series 2015-1A, Class A2 (A) |
5.216 | 07-20-45 | 741,000 | 767,706 | ||||||||||||||||
Shares | Value | |||||||||||||||||||
Common stocks 0.4% (0.3% of Total investments) |
$557,199 | |||||||||||||||||||
(Cost $1,130,095) |
||||||||||||||||||||
Communication services 0.0% |
0 | |||||||||||||||||||
Media 0.0% |
||||||||||||||||||||
Vertis Holdings, Inc. (F)(J) |
34,014 | 0 | ||||||||||||||||||
Industrials 0.0% |
0 | |||||||||||||||||||
Airlines 0.0% |
||||||||||||||||||||
Global Aviation Holdings, Inc., Class A (F)(J) |
82,159 | 0 | ||||||||||||||||||
Information technology 0.0% |
1,548 | |||||||||||||||||||
Software 0.0% |
||||||||||||||||||||
Avaya Holdings Corp. (J) |
90 | 1,548 | ||||||||||||||||||
Utilities 0.4% |
555,651 | |||||||||||||||||||
Multi-utilities 0.4% |
||||||||||||||||||||
Dominion Energy, Inc. |
5,350 | 555,651 | ||||||||||||||||||
Preferred securities (K) 6.4% (4.1% of Total investments) |
$9,591,497 | |||||||||||||||||||
(Cost $9,450,100) |
||||||||||||||||||||
Communication services 0.5% |
714,538 | |||||||||||||||||||
Media 0.5% |
||||||||||||||||||||
2020 Cash Mandatory Exchangeable Trust, 5.250% (A) |
686 | 714,538 | ||||||||||||||||||
Energy 0.5% |
774,110 | |||||||||||||||||||
Oil, gas and consumable fuels 0.5% |
||||||||||||||||||||
Energy Transfer Operating LP (7.600% to 5-15-24, then 3 month LIBOR + 5.161%) |
39,800 | 774,110 | ||||||||||||||||||
Financials 0.7% |
1,078,763 | |||||||||||||||||||
Banks 0.7% |
||||||||||||||||||||
GMAC Capital Trust I (3 month LIBOR + 5.785%), 6.065% (B)(C)(H) |
41,910 | 1,078,763 | ||||||||||||||||||
Health care 0.9% |
1,317,226 | |||||||||||||||||||
Health care equipment and supplies 0.9% |
||||||||||||||||||||
Becton, Dickinson and Company, 6.000% (B)(C) |
12,856 | 669,540 | ||||||||||||||||||
Boston Scientific Corp., 5.500% (B)(C) |
6,253 | 647,686 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 17 |
|
Shares | Value | |||||||
Industrials 0.1% |
$167,008 | |||||||
Machinery 0.1% |
||||||||
Stanley Black & Decker, Inc., 5.250% (B)(C) |
1,600 | 167,008 | ||||||
Information technology 1.3% |
2,022,983 | |||||||
Semiconductors and semiconductor equipment 1.3% |
||||||||
Broadcom, Inc., 8.000% |
1,700 | 2,022,983 | ||||||
Utilities 2.4% |
3,516,869 | |||||||
Electric utilities 1.6% |
||||||||
NextEra Energy, Inc., 5.279% (B)(C) |
25,250 | 1,248,613 | ||||||
NextEra Energy, Inc., 6.219% (B)(C) |
13,533 | 667,583 | ||||||
The Southern Company, 6.750% |
8,309 | 401,657 | ||||||
Multi-utilities 0.8% |
||||||||
DTE Energy Company, 6.250% |
25,200 | 1,199,016 | ||||||
Warrants 0.0% (0.0% of Total investments) |
$90,543 | |||||||
(Cost $0) |
||||||||
Avaya Holdings Corp. (Expiration Date: 12-15-22; Strike Price: $25.55) (J) |
20,390 | 22,429 | ||||||
Stearns LLC (Expiration Date: 11-5-39) (F)(J)(L) |
42,538 | 68,114 | ||||||
Par value^ | Value | |||||||
Short-term investments 0.8% (0.5% of Total investments) |
$1,179,000 | |||||||
(Cost $1,179,000) |
||||||||
Repurchase agreement 0.8% |
1,179,000 | |||||||
Repurchase Agreement with State Street Corp. dated 10-30-20 at 0.000% to be repurchased at $1,179,000 on 11-2-20, collateralized by $1,164,900 U.S. Treasury Notes, 1.750% due 7-15-22 (valued at $1,202,590) |
1,179,000 | 1,179,000 | ||||||
Total investments (Cost $232,927,901) 156.7% |
$233,479,938 | |||||||
Other assets and liabilities, net (56.7%) |
(84,527,617 | ) | ||||||
Total net assets 100.0% |
$148,952,321 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund unless otherwise indicated.
^All par values are denominated in U.S. dollars unless otherwise indicated.
Currency Abbreviations | ||
CAD | Canadian Dollar | |
MXN | Mexican Peso | |
Security Abbreviations and Legend | ||
CMT | Constant Maturity Treasury | |
ICE | Intercontinental Exchange |
18 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
IO |
Interest-Only Security - (Interest Tranche of Stripped Mortgage Pool). Rate shown is the annualized yield at the end of the period. |
LIBOR |
London Interbank Offered Rate |
PIK |
Pay-in-Kind Security - Represents a payment-in-kind which may pay interest in additional par and/or cash. Rates shown are the current rate and most recent payment rate. |
(A) |
These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $112,111,418 or 75.3% of the funds net assets as of 10-31-20. |
(B) |
All or a portion of this security is on loan as of 10-31-20, and is a component of the funds leverage under the Liquidity Agreement. |
(C) |
All or a portion of this security is pledged as collateral pursuant to the Liquidity Agreement. Total collateral value at 10-31-20 was $95,795,507. A portion of the securities pledged as collateral were loaned pursuant to the Liquidity Agreement. The value of securities on loan amounted to $53,095,278. |
(D) |
Non-income producing - Issuer is in default. |
(E) |
Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date. |
(F) |
Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. Refer to Note 2 to the financial statements. |
(G) |
Includes hybrid securities with characteristics of both equity and debt that trade with, and pay, interest income. |
(H) |
Variable rate obligation. The coupon rate shown represents the rate at period end. |
(I) |
Term loans are variable rate obligations. The coupon rate shown represents the rate at period end. |
(J) |
Non-income producing security. |
(K) |
Includes preferred stocks and hybrid securities with characteristics of both equity and debt that pay dividends on a periodic basis. |
(L) |
Strike price and/or expiration date not available. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 19 |
|
DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS
Contractual | ||||||||||||||||||||||||||
Counterparty | settlement | Unrealized | Unrealized | |||||||||||||||||||||||
Contract to buy | Contract to sell | (OTC) | date | appreciation | depreciation | |||||||||||||||||||||
USD |
538,271 | CAD | 711,000 | CITI | 1/27/2021 | $4,387 | | |||||||||||||||||||
USD |
11,212 | CAD | 15,000 | RBC | 1/27/2021 | | $(52 | ) | ||||||||||||||||||
USD |
11,210 | CAD | 15,000 | TD | 1/27/2021 | | (53 | ) | ||||||||||||||||||
USD |
2,870,278 | MXN | 62,294,056 | GSI | 1/27/2021 | | (39,311 | ) | ||||||||||||||||||
$4,387 | $(39,416 | ) |
Derivatives Currency Abbreviations | ||
CAD | Canadian Dollar | |
MXN | Mexican Peso | |
USD | U.S. Dollar | |
Derivatives Abbreviations | ||
CITI | Citibank, N.A. | |
GSI | Goldman Sachs International | |
OTC | Over-the-counter | |
RBC | Royal Bank of Canada | |
TD | The Toronto-Dominion Bank |
At 10-31-20, the aggregate cost of investments for federal income tax purposes was $234,021,343. Net unrealized depreciation aggregated to $576,434, of which $11,311,188 related to gross unrealized appreciation and $11,887,622 related to gross unrealized depreciation.
See Notes to financial statements regarding investment transactions and other derivatives information.
20 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 21 |
|
22 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
STATEMENTS OF CHANGES IN NET ASSETS
|
|
|||||||
Year ended
10-31-20 |
Year ended
10-31-19 |
|||||||
Increase (decrease) in net assets |
||||||||
From operations |
||||||||
Net investment income |
$11,049,731 | $10,358,334 | ||||||
Net realized loss |
(7,108,452 | ) | (1,566,589 | ) | ||||
Change in net unrealized appreciation (depreciation) |
(3,290,556 | ) | 13,761,963 | |||||
Increase in net assets resulting from operations |
650,723 | 22,553,708 | ||||||
Distributions to shareholders |
||||||||
From earnings |
(11,722,269 | ) | (10,432,759 | ) | ||||
Total distributions |
(11,722,269 | ) | (10,432,759 | ) | ||||
Total increase (decrease) |
(11,071,546 | ) | 12,120,949 | |||||
Net assets |
||||||||
Beginning of year |
160,023,867 | 147,902,918 | ||||||
End of year |
$148,952,321 | $160,023,867 | ||||||
Share activity |
||||||||
Shares outstanding |
||||||||
Beginning of year |
8,707,025 | 8,707,025 | ||||||
End of year |
8,707,025 | 8,707,025 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 23 |
|
STATEMENT OF CASH FLOWS For the year ended 10-31-20 |
|
|||
Cash flows from operating activities |
||||
Net increase in net assets from operations |
$650,723 | |||
Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities: |
|
|||
Long-term investments purchased |
(142,832,107 | ) | ||
Long-term investments sold |
142,590,092 | |||
Net purchases and sales in short-term investments |
1,503,162 | |||
Net amortization of premium (discount) |
246,503 | |||
(Increase) Decrease in assets: |
||||
Unrealized appreciation on forward foreign currency contracts |
(4,273 | ) | ||
Dividends and interest receivable |
(130,365 | ) | ||
Receivable for investments sold |
123,513 | |||
Other assets |
(7,279 | ) | ||
Increase (Decrease) in liabilities: |
||||
Unrealized depreciation on forward foreign currency contracts |
(104,819 | ) | ||
Payable for investments purchased |
(1,164,507 | ) | ||
Interest payable |
(129,753 | ) | ||
Payable to affiliates |
(8,592 | ) | ||
Other liabilities and accrued expenses |
8,348 | |||
Net change in unrealized (appreciation) depreciation on: |
||||
Investments |
3,402,423 | |||
Net realized (gain) loss on: |
||||
Investments |
7,348,196 | |||
Net cash provided by operating activities |
$11,491,265 | |||
Cash flows provided by (used in) financing activities |
||||
Distributions to shareholders |
$(11,722,269 | ) | ||
Increase in due to custodian |
161,924 | |||
Net cash used in financing activities |
$(11,560,345 | ) | ||
Net decrease in cash |
$(69,080 | ) | ||
Cash at beginning of year |
$69,080 | |||
Cash at end of year |
| |||
Supplemental disclosure of cash flow information: |
||||
Cash paid for interest |
$(1,352,418 | ) |
24 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
|
Period ended | 10-31-20 | 10-31-19 | 10-31-18 | 10-31-17 | 10-31-16 | |||||||||||||||
Per share operating performance |
||||||||||||||||||||
Net asset value, beginning of period |
$18.38 | $16.99 | $18.81 | $18.11 | $17.20 | |||||||||||||||
Net investment income1 |
1.27 | 1.19 | 1.21 | 1.28 | 1.32 | |||||||||||||||
Net realized and unrealized gain (loss) on investments |
(1.19 | ) | 1.40 | (1.79 | ) | 0.72 | 0.96 | |||||||||||||
Total from investment operations |
0.08 | 2.59 | (0.58 | ) | 2.00 | 2.28 | ||||||||||||||
Less distributions |
||||||||||||||||||||
From net investment income |
(1.35 | ) | (1.20 | ) | (1.24 | ) | (1.30 | ) | (1.39 | ) | ||||||||||
Anti-dilutive impact of repurchase plan |
| | | | 0.02 | 2 | ||||||||||||||
Net asset value, end of period |
$17.11 | $18.38 | $16.99 | $18.81 | $18.11 | |||||||||||||||
Per share market value, end of period |
$15.47 | $17.14 | $15.51 | $17.87 | $16.73 | |||||||||||||||
Total return at net asset value (%)3,4 |
1.56 | 16.56 | (2.74 | ) | 11.87 | 14.95 | ||||||||||||||
Total return at market value (%)3 |
(1.53 | ) | 19.07 | (6.54 | ) | 15.05 | 20.17 | |||||||||||||
Ratios and supplemental data |
||||||||||||||||||||
Net assets, end of period (in millions) |
$149 | $160 | $148 | $164 | $158 | |||||||||||||||
Ratios (as a percentage of average net assets): |
||||||||||||||||||||
Expenses before reductions |
1.91 | 2.74 | 2.52 | 1.95 | 1.79 | |||||||||||||||
Expenses including reductions5 |
1.90 | 2.73 | 2.51 | 1.94 | 1.78 | |||||||||||||||
Net investment income |
7.42 | 6.77 | 6.76 | 6.96 | 7.75 | |||||||||||||||
Portfolio turnover (%) |
62 | 40 | 52 | 53 | 62 | |||||||||||||||
Senior securities |
||||||||||||||||||||
Total debt outstanding end of period (in millions) |
$87 | $87 | $87 | $87 | $87 | |||||||||||||||
Asset coverage per $1,000 of debt6 |
$2,714 | $2,841 | $2,702 | $2,884 | $2,814 |
1 |
Based on average daily shares outstanding. |
2 |
The repurchase plan was completed at an average repurchase price of $13.99 for 84,400 shares for the period ended 10-31-16. |
3 |
Total return based on net asset value reflects changes in the funds net asset value during each period. Total return based on market value reflects changes in market value. Each figure assumes that distributions from income, capital gains and tax return of capital, if any, were reinvested. |
4 |
Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
5 |
Expenses including reductions excluding interest expense were 1.08%, 1.04%, 1.12%, 1.06% and 1.16% for the periods ended 10-31-20, 10-31-19, 10-31-18, 10-31-17 and 10-31-16, respectively. |
6 |
Asset coverage equals the total net assets plus borrowings divided by the borrowings of the fund outstanding at period end (Note 8). As debt outstanding changes, the level of invested assets may change accordingly. Asset coverage ratio provides a measure of leverage. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 25 |
|
Note 1 Organization
John Hancock Investors Trust (the fund) is a closed-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act).
In 2012, 2015 and 2018, the fund filed registration statements with the Securities and Exchange Commission SEC), in each case registering and/or carrying forward 1,000,000 common shares, through equity shelf offering programs. Under these programs, the fund, subject to market conditions, may raise additional equity capital from time to time by offering new common shares at a price equal to or above the funds net asset value (NAV) per common share.
Note 2 Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.
Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:
Security valuation. Investments are stated at value as of the scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the funds Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Debt obligations are typically valued based on evaluated prices provided by an independent pricing vendor. Independent pricing vendors utilize matrix pricing, which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Equity securities, including exchange-traded or closed-end funds, are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. 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. Foreign securities and currencies are valued in U.S. dollars based on foreign currency exchange rates supplied by an independent pricing vendor.
In certain instances, the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market.
Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the funds Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.
26 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities, including registered investment companies. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the funds own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the funds investments as of October 31, 2020, by major security category or type:
Total
value at
|
Level 1
price |
Level 2
significant observable inputs |
Level 3
significant unobservable inputs |
|||||||||||||
Investments in securities: |
||||||||||||||||
Assets |
||||||||||||||||
U.S. Government and Agency obligations |
$3,993,470 | | $3,993,470 | | ||||||||||||
Corporate bonds |
207,095,907 | | 207,095,907 | | ||||||||||||
Convertible bonds |
2,947,239 | | 2,947,239 | | ||||||||||||
Capital preferred securities |
750,900 | | 750,900 | | ||||||||||||
Term loans |
5,738,115 | | 5,738,115 | | ||||||||||||
Collateralized mortgage obligations |
755,211 | | 755,211 | | ||||||||||||
Asset backed securities |
780,857 | | 780,857 | | ||||||||||||
Common stocks |
557,199 | $557,199 | | | ||||||||||||
Preferred securities |
9,591,497 | 8,876,959 | 714,538 | | ||||||||||||
Warrants |
90,543 | 22,429 | | $68,114 | ||||||||||||
Short-term investments |
1,179,000 | | 1,179,000 | | ||||||||||||
Total investments in securities |
$233,479,938 | $9,456,587 | $223,955,237 | $68,114 | ||||||||||||
Derivatives: |
||||||||||||||||
Assets |
||||||||||||||||
Forward foreign currency contracts |
$4,387 | | $4,387 | | ||||||||||||
Liabilities |
||||||||||||||||
Forward foreign currency contracts |
(39,416 | ) | | (39,416 | ) | |
Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the funds custodian, or for tri-party repurchase agreements, collateral is held at a third-party custodian bank in a segregated account for the benefit of the fund. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in the Funds investments as part of the caption related to the repurchase agreement.
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 27 |
|
Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, assets and liabilities resulting from repurchase agreements are not offset in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay claims resulting from close-out of the transactions.
Term loans (Floating rate loans). The fund may invest in term loans, which are debt securities and are often rated below investment grade at the time of purchase. Term loans are generally subject to legal or contractual restrictions on resale and generally have longer settlement periods than conventional debt securities. Term loans involve special types of risk, including credit risk, interest-rate risk, counterparty risk, and risk associated with extended settlement. The liquidity of term loans, including the volume and frequency of secondary market trading in such loans, varies significantly over time and among individual loans. During periods of infrequent trading, valuing a term loan can be more difficult and buying and selling a term loan at an acceptable price can be more difficult and delayed, which could result in a loss.
The funds ability to receive payments of principal, interest and other amounts in connection with term loans will depend primarily on the financial condition of the borrower. The funds failure to receive scheduled payments on a term loan due to a default, bankruptcy or other reason would adversely affect the funds income and would likely reduce the value of its assets. Transactions in loan investments typically take a significant amount of time (i.e., seven days or longer) to settle. This could pose a liquidity risk to the fund. Because term loans may not be rated by independent credit rating agencies, a decision to invest in a particular loan could depend exclusively on the subadvisors credit analysis of the borrower and/or term loan agents. There is greater risk that the fund may have limited rights to enforce the terms of an underlying loan than for other types of debt instruments.
Mortgage and asset backed securities. The fund may invest in mortgage-related securities, such as mortgage-backed securities, and other asset-backed securities, which are debt obligations that represent interests in pools of mortgages or other income-bearing assets, such as consumer loans or receivables. Such securities often involve risks that are different from the risks associated with investing in other types of debt securities.
Mortgage-backed and other asset-backed securities are subject to changes in the payment patterns of borrowers of the underlying debt. When interest rates fall, borrowers are more likely to refinance or prepay their debt before its stated maturity. This may result in the fund having to reinvest the proceeds in lower yielding securities, effectively reducing the funds income. Conversely, if interest rates rise and borrowers repay their debt more slowly than expected, the time in which the mortgage-backed and other asset-backed securities are paid off could be extended, reducing the funds cash available for reinvestment in higher yielding securities. The timely payment of principal and interest of certain mortgage-related securities is guaranteed with the full faith and credit of the U.S. Government. Pools created and guaranteed by non-governmental issuers, including government-sponsored corporations (e.g. FNMA), may be supported by various forms of insurance or guarantees, but there can be no assurance that private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The fund is also subject to risks associated with securities with contractual cash flows including asset-backed and mortgage related securities such as collateralized mortgage obligations, mortgage pass-through securities and commercial mortgage-backed securities. The value, liquidity and related income of these securities are sensitive to changes in economic conditions, including real estate value, pre-payments, delinquencies and/or defaults, and may be adversely affected by shifts in the markets perception of the issuers and changes in interest rates.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off
28 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
interest receivable when the collection of all or a portion of interest has become doubtful. Dividend income is recorded on the ex-date, except for dividends of certain foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Non-cash dividends, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a tax return of capital and/or capital gain, if any, are recorded as a reduction of cost of investments and/or as a realized gain, if amounts are estimable. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Foreign investing. Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments. Foreign investments are subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.
Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors.
Overdrafts. Pursuant to the custodian agreement, the funds custodian may, in its discretion, advance funds to the fund to make properly authorized payments. When such payments result in an overdraft, the fund is obligated to repay the custodian for any overdraft, including any costs or expenses associated with the overdraft. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the funds relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Statement of cash flows. A Statement of cash flows is presented when a fund has a significant amount of borrowing during the period, based on the average total borrowing in relation to total assets, or when a certain percentage of the funds investments is classified as Level 3 in the fair value hierarchy. Information on financial transactions that have been settled through the receipt and disbursement of cash is presented in the Statement of cash flows. The cash amount shown in the Statement of cash flows is the amount included in the funds Statement of assets and liabilities and represents the cash on hand at the funds custodian and does not include any short-term investments or collateral on derivative contracts, if any.
Change in accounting principle. Accounting Standards Update (ASU) 2017-08, Premium Amortization on Purchased Callable Debt Securities, shortens the premium amortization period for purchased non contingently callable debt securities and is effective for public companies with fiscal years beginning after December 15, 2018. Adoption of the ASU did not have a material impact to the fund.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of October 31, 2020, the fund has a short-term capital loss carryforward of $3,670,337 and a long-term capital loss carryforward of $18,005,385 available to offset future net realized capital gains. These carryforwards do not expire.
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 29 |
|
As of October 31, 2020, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The funds federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends quarterly. Capital gain distributions, if any, are typically distributed annually.
The tax character of distributions for the years ended October 31, 2020 and 2019 was as follows:
October 31, 2020 | October 31, 2019 | |||||||
Ordinary income |
$ 11,722,269 | $ 10,432,759 |
As of October 31, 2020, the components of distributable earnings on a tax basis consisted of $1,146,598 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the funds financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to foreign currency transactions and amortization and accretion on debt securities.
Note 3 Derivative instruments
The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the over-the-counter (OTC) market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Derivatives which are typically traded through the OTC market are regulated by the Commodity Futures Trading Commission (the CFTC). Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential counterparties and, if applicable, designated clearing organizations. The fund attempts to reduce its exposure to counterparty risk for derivatives traded in the OTC market, whenever possible, by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement with each of its OTC counterparties. The ISDA gives each party to the agreement the right to terminate all transactions traded under the agreement if there is certain deterioration in the credit quality or contractual default of the other party, as defined in the ISDA. Upon an event of default or a termination of the ISDA, the non-defaulting party has the right to close out all transactions and to net amounts owed.
As defined by the ISDA, the fund may have collateral agreements with certain counterparties to mitigate counterparty risk on OTC derivatives. Subject to established minimum levels, collateral for OTC transactions is generally determined based on the net aggregate unrealized gain or loss on contracts with a particular counterparty. Collateral pledged to the fund, if any, is held in a segregated account by a third-party agent or held by the custodian bank for the benefit of the fund and can be in the form of cash or debt securities issued by the U.S. government or related agencies; collateral posted by the fund, if any, for OTC transactions is held in a
30 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
segregated account at the funds custodian and is noted in the accompanying Funds investments, or if cash is posted, on the Statement of assets and liabilities. The funds risk of loss due to counterparty risk is equal to the asset value of outstanding contracts offset by collateral received.
Forward foreign currency contracts. A forward foreign currency contract is an agreement between two parties to buy and sell specific currencies at a price that is set on the date of the contract. The forward contract calls for delivery of the currencies on a future date that is specified in the contract. Forwards are typically traded OTC. Risks related to the use of forwards include the possible failure of counterparties to meet the terms of the forward agreement, the failure of the counterparties to timely post collateral if applicable, and the risk that currency movements will not favor the fund thereby reducing the funds total return, and the potential for losses in excess of the amounts recognized on the Statement of assets and liabilities.
The market value of a forward foreign currency contract fluctuates with changes in foreign currency exchange rates. Forward foreign currency contracts are marked-to-market daily and the change in value is recorded by the fund as an unrealized gain or loss. Realized gains or losses, equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed, are recorded upon delivery or receipt of the currency or settlement with the counterparty.
During the year ended October 31, 2020, the fund used forward foreign currency contracts to manage against changes in foreign currency exchange rates. The fund held forward foreign currency contracts with USD notional values ranging from $3.4 million to $6.1 million, as measured at each quarter end.
Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held by the fund at October 31, 2020 by risk category:
Risk |
Statement of assets and liabilities location |
Financial instruments location |
Assets
derivatives fair value |
Liabilities
derivatives fair value |
||||||||
Currency | Unrealized appreciation / depreciation on forward foreign currency contracts | Forward foreign currency contracts | $4,387 | $(39,416) |
Effect of derivative instruments on the Statement of operations
The table below summarizes the net realized gain (loss) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended October 31, 2020:
Statement of operations location - Net realized gain (loss) on: | ||
Risk |
Forward foreign currency contracts |
|
Currency |
$261,234 |
The table below summarizes the net change in unrealized appreciation (depreciation) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended October 31, 2020:
Statement of operations location - Change in net unrealized appreciation (depreciation) of: |
||
Risk |
Forward foreign currency contracts |
|
Currency |
$ 109,092 |
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 31 |
|
Note 4 Guarantees and indemnifications
Under the funds organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The funds maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 5 Fees and transactions with affiliates
John Hancock Investment Management LLC (the Advisor) serves as investment advisor for the fund. John Hancock Investment Management Distributors LLC (the Distributor), an affiliate of the Advisor, serves as distributor for the common shares offered through the equity shelf offering of the fund. The Advisor and the Distributor are indirect, principally owned subsidiaries of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor, equivalent on an annual basis, to the sum of (a) 0.650% of the first $150 million of the funds average daily managed assets (net assets plus borrowings under the Liquidity Agreement (see Note 8)), (b) 0.375% of the next $50 million of the funds average daily managed assets, (c) 0.350% of the next $100 million of the funds average daily managed assets and (d) 0.300% of the funds average daily managed assets in excess of $300 million. The Advisor has a subadvisory agreement with Manulife Investment Management (US) LLC, an indirectly owned subsidiary of MFC and an affiliate of the Advisor. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended October 31, 2020, this waiver amounted to 0.01% of the funds average daily net assets. This arrangement expires on July 31, 2022, 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 expense reductions described above amounted to $16,734 for the year ended October 31, 2020.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended October 31, 2020, were equivalent to a net annual effective rate of 0.54% of the funds average daily managed net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, compliance, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred, for the year ended October 31, 2020, amounted to an annual rate of 0.01% of the funds average daily managed net assets.
Distributor. The fund will compensate the Distributor with respect to sales of the common shares offered through the equity shelf offering at a commission rate of 1.00% of the gross proceeds of the sale of common shares, a portion of which is allocated to the selling dealers. During the years ended October 31, 2020 and 2019, there was no compensation paid to the Distributor. The Distributor has an agreement with a sub-placement agent in the sale of common shares. The fund is not responsible for payment of commissions to the sub placement agent.
32 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. These Trustees receive from the fund and the other John Hancock closed-end funds an annual retainer. In addition, Trustee out-of-pocket expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 6 Fund share transactions
On December 10, 2015, the Board of Trustees approved a share repurchase plan, which is subsequently reviewed by the Board of Trustees each year in December. Under the current share repurchase plan, the fund may purchase in the open market, between January 1, 2020 and December 31, 2020, up to of its outstanding common shares as of December 31, 2019. The current share repurchase plan will remain in effect between January 1, 2020 and December 31, 2020.
During the years ended October 31, 2020 and 2019, the fund had no activities under the repurchase program. Shares repurchased and corresponding dollar amounts, if any, are included on the Statements of changes in net assets. The anti-dilutive impacts of these share repurchases are included on the Financial highlights.
Transactions in common shares, if any, are presented in the Statements of changes in net assets. Proceeds received in connection with the shelf offering are net of commissions and offering costs. Total offering costs of $248,706 have been prepaid by the fund. As of October 31, 2020, $44,629 has been deducted from proceeds of shares issued and the remaining $204,077 is included in Other assets on the Statement of assets and liabilities.
Note 7 Leverage risk
The fund utilizes a Liquidity Agreement (LA) to increase its assets available for investment. When the fund leverages its assets, shareholders bear the expenses associated with the LA and have potential to benefit or be disadvantaged from the use of leverage. The Advisors fee is also increased in dollar terms from the use of leverage. Consequently, the fund and the Advisor may have differing interests in determining whether to leverage the funds assets. Leverage creates risks that may adversely affect the return for the holders of shares, including:
the likelihood of greater volatility of NAV and market price of shares;
fluctuations in the interest rate paid for the use of the LA;
increased operating costs, which may reduce the funds total return;
the potential for a decline in the value of an investment acquired through leverage, while the funds obligations under such leverage remains fixed; and
the fund is more likely to have to sell securities in a volatile market in order to meet asset coverage or other debt compliance requirements.
To the extent the income or capital appreciation derived from securities purchased with funds received from leverage exceeds the cost of leverage, the funds return will be greater than if leverage had not been used; conversely, returns would be lower if the cost of the leverage exceeds the income or capital appreciation derived. The use of securities lending to obtain leverage in the funds investments may subject the fund to greater risk of loss than would reinvestment of collateral in short term highly rated investments.
In addition to the risks created by the funds use of leverage, the fund is subject to the risk that it would be unable to timely, or at all, obtain replacement financing if the LA is terminated. Were this to happen, the fund would be required to de-leverage, selling securities at a potentially inopportune time and incurring tax consequences. Further, the funds ability to generate income from the use of leverage would be adversely affected.
Note 8 Liquidity Agreement
The fund has entered into a Liquidity Agreement (LA) with State Street Bank and Trust Company (SSB) that allows it to borrow or otherwise access up to $86.9 million (maximum facility amount) through a line of credit, securities lending and reverse repurchase agreements. The amounts outstanding at October 31, 2020 are shown in the Statement of assets and liabilities as the Liquidity agreement.
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 33 |
|
The fund pledges its assets as collateral to secure obligations under the LA. The fund retains the risks and rewards of the ownership of assets pledged to secure obligations under the LA and makes these assets available for securities lending and reverse repurchase transactions with SSB acting as the funds authorized agent for these transactions. All transactions initiated through SSB are required to be secured with cash collateral received from the securities borrower (the Borrower) or cash is received from the reverse repurchase agreement (Reverse Repo) counterparties. Securities lending transactions will be secured with cash collateral in amounts at least equal to 100% of the market value of the securities utilized in these transactions. Cash received by SSB from securities lending or Reverse Repo transactions is credited against the amounts borrowed under the line of credit.
Upon return of securities by the Borrower or Reverse Repo counterparty, SSB will return the cash collateral to the Borrower or proceeds from the Reverse Repo, as applicable, which will eliminate the credit against the line of credit and will cause the drawdowns under the line of credit to increase by the amounts returned. Income earned on the loaned securities is retained by SSB, and any interest due on the reverse repurchase agreements is paid by SSB.
SSB has indemnified the fund for certain losses that may arise if the Borrower or a Reverse Repo Counterparty fails to return securities when due. With respect to securities lending transactions, upon a default of the securities borrower, SSB uses the collateral received from the Borrower to purchase replacement securities of the same issue, type, class and series. If the value of the collateral is less than the purchase cost of replacement securities, SSB is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any of the funds losses on the reinvested cash collateral. Although the risk of the loss of the securities is mitigated by receiving collateral from the Borrower or proceeds from the Reverse Repo counterparty and through SSB indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the Borrower or Reverse Repo counterparty fails to return the securities on a timely basis.
Interest charged is at the rate of one month LIBOR (London Interbank Offered Rate) plus 0.600% and is payable monthly on the aggregate balance of the drawdowns outstanding under the LA. As of October 31, 2020, the fund had an aggregate balance of $86,900,000 at an interest rate of 0.74%, which is reflected in the Liquidity agreement on the Statement of assets and liabilities. During the year ended October 31, 2020, the average balance of the LA and the effective average interest rate were $86,900,000 and 1.41%, respectively.
The fund may terminate the LA with 60 days notice. If certain asset coverage and collateral requirements, or other covenants are not met, the LA could be deemed in default and result in termination. Absent a default or facility termination event, SSB is required to provide the fund with 360 days notice prior to terminating the LA.
Due to the anticipated discontinuation of LIBOR, as discussed in Note 9, the LA may be amended to remove LIBOR as the reference rate for interest and to replace LIBOR with an alternative reference rate for interest mutually agreed upon by the fund and SSB. However, there remains uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate and the potential effect of a transition away from LIBOR on the fund and/or the LA cannot yet be fully determined.
Note 9 LIBOR Discontinuation Risk
The LA utilizes LIBOR as the reference or benchmark rate for interest rate calculations. LIBOR is a measure of the average interest rate at which major global banks can borrow from one another. Following allegations of rate manipulation and concerns regarding its thin liquidity, in July 2017, the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it will stop encouraging banks to provide the quotations needed to sustain LIBOR after 2021. This event will likely cause LIBOR to cease to be published. Before then, it is expected that market participants such as the fund and SSB will transition to the use of different reference or benchmark rates. However, although regulators have suggested alternative rates, there is currently no definitive information regarding the future utilization of LIBOR or of any replacement rate.
It is uncertain what impact the discontinuation of LIBOR will have on the use of LIBOR as a reference rate in the LA. It is expected that market participants will amend financial instruments referencing LIBOR, such as the LA, to
34 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
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. In addition, 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. As market participants transition away from LIBOR, LIBORs usefulness may deteriorate, which could occur prior to the end of 2021. The transition process may lead to increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates. LIBORs deterioration may adversely affect the liquidity and/or market value of securities that use LIBOR as a benchmark interest rate. The use of an alternative reference rate, or the transition process to an alternative reference rate, may result in increases to the interest paid by the fund pursuant to the LA and, therefore, may adversely affect the funds performance.
Note 10 Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $142,832,107 and $142,590,092, respectively, for the year ended October 31, 2020.
Note 11 Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the funds assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the funds NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors. Financial services companies can be hurt by economic declines, changes in interest rates, and regulatory and market impacts.
Note 12 Coronavirus (COVID-19) pandemic
The novel COVID-19 disease has resulted in significant disruptions to global business activity. A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange trading suspensions and closures, and affect fund performance.
Note 13 New accounting pronouncement
In March 2020, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU), ASU 2020-04, which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of the LIBOR and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU 2020-04 is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management is currently evaluating the potential impact of ASU 2020-04 to the financial statements.
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 35 |
|
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of John Hancock Investors Trust
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the funds investments, of John Hancock Investors Trust (the Fund) as of October 31, 2020, the related statements of operations and cash flows for the year ended October 31, 2020, the statements of changes in net assets for each of the two years in the period ended October 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended October 31, 2020 (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of October 31, 2020, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period ended October 31, 2020 and the financial highlights for each of the five years in the period ended October 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Funds management. Our responsibility is to express an opinion on the Funds financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2020 by correspondence with the custodian, transfer agent, agent banks and brokers; when replies were not received from agent banks and brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
December 10, 2020
We have served as the auditor of one or more investment companies in the John Hancock group of funds since 1988.
36 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended October 31, 2020.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
The fund reports the maximum amount allowable of its Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
Eligible shareholders will be mailed a 2020 Form 1099-DIV in early 2021. This will reflect the tax character of all distributions paid in calendar year 2020.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 37 |
|
Unaudited
Investment objective and policy
The fund is a diversified, closed-end, management investment company, common shares of which were initially offered to the public in January 1971. The funds primary investment objective is to generate income for distribution to its shareholders, with capital appreciation as a secondary objective. The preponderance of the funds assets are invested in a diversified portfolio of debt securities issued by U.S. and non-U.S. corporations and governments, some of which may carry equity features. Up to 50% of the value of the funds assets may be invested in restricted securities acquired through private placements. The fund may also invest in repurchase agreements. The fund utilizes a liquidity agreement to increase its assets available for investments.
Dividends and distributions
During the year ended October 31, 2020, distributions from net investment income totaling $1.3463 per share were paid to shareholders. The dates of payments and the amounts per share were as follows:
Payment Date | Income Distributions | |||
December 31, 2019 |
$0.3274 | |||
March 31, 2020 |
0.2956 | |||
June 30, 2020 |
0.3778 | |||
September 30, 2020 |
0.3455 | |||
Total |
$1.3463 |
Dividend reinvestment plan
The funds Dividend Reinvestment Plan (the Plan) provides that distributions of dividends and capital gains are automatically reinvested in common shares of the fund by Computershare Trust Company, N.A. (the Plan Agent). Every shareholder holding at least one full share of the fund is entitled to participate in the Plan. In addition, every shareholder who became a shareholder of the fund after June 30, 2011, and holds at least one full share of the fund will be automatically enrolled in the Plan. Shareholders may withdraw from the Plan at any time and shareholders who do not participate in the Plan will receive all distributions in cash.
If the fund declares a dividend or distribution payable either in cash or in common shares of the fund and the market price of shares on the payment date for the distribution or dividend equals or exceeds the funds net asset value per share (NAV), the fund will issue common shares to participants at a value equal to the higher of NAV or 95% of the market price. The number of additional shares to be credited to each participants account will be determined by dividing the dollar amount of the distribution or dividend by the higher of NAV or 95% of the market price. If the market price is lower than NAV, or if dividends or distributions are payable only in cash, then participants will receive shares purchased by the Plan Agent on participants behalf on the NYSE or otherwise on the open market. If the market price exceeds NAV before the Plan Agent has completed its purchases, the average per share purchase price may exceed NAV, resulting in fewer shares being acquired than if the fund had issued new shares.
There are no brokerage charges with respect to common shares issued directly by the fund. However, whenever shares are purchased or sold on the NYSE or otherwise on the open market, each participant will pay a pro rata portion of brokerage trading fees, currently $0.05 per share purchased or sold. Brokerage trading fees will be deducted from amounts to be invested.
The reinvestment of dividends and net capital gains distributions does not relieve participants of any income tax that may be payable on such dividends or distributions.
38 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
Shareholders participating in the Plan may buy additional shares of the fund through the Plan at any time in amounts of at least $50 per investment, up to a maximum of $10,000, with a total calendar year limit of $100,000. Shareholders will be charged a $5 transaction fee plus $0.05 per share brokerage trading fee for each order. Purchases of additional shares of the fund will be made on the open market. Shareholders who elect to utilize monthly electronic fund transfers to buy additional shares of the fund will be charged a $2 transaction fee plus $0.05 per share brokerage trading fee for each automatic purchase. Shareholders can also sell fund shares held in the Plan account at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan Agents website at www.computershare.com/investor. The Plan Agent will mail a check (less applicable brokerage trading fees) on settlement date. Pursuant to regulatory changes, effective September 5, 2017, the settlement date is changed from three business days after the shares have been sold to two business days after the shares have been sold. If shareholders choose to sell shares through their stockbroker, they will need to request that the Plan Agent electronically transfer those shares to their stockbroker through the Direct Registration System.
Shareholders participating in the Plan may withdraw from the Plan at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan Agents website at www.computershare.com/investor. Such termination will be effective immediately if the notice is received by the Plan Agent prior to any dividend or distribution record date; otherwise, such termination will be effective on the first trading day after the payment date for such dividend or distribution, with respect to any subsequent dividend or distribution. If shareholders withdraw from the Plan, their shares will be credited to their account; or, if they wish, the Plan Agent will sell their full and fractional shares and send the shareholders the proceeds, less a transaction fee of $5 and less brokerage trading fees of $0.05 per share. If a shareholder does not maintain at least one whole share of common stock in the Plan account, the Plan Agent may terminate such shareholders participation in the Plan after written notice. Upon termination, shareholders will be sent a check for the cash value of any fractional share in the Plan account, less any applicable broker commissions and taxes.
Shareholders who hold at least one full share of the fund may join the Plan by notifying the Plan Agent by telephone, in writing or by visiting the Plan Agents website at www.computershare.com/investor. If received in proper form by the Plan Agent before the record date of a dividend, the election will be effective with respect to all dividends paid after such record date. If shareholders wish to participate in the Plan and their shares are held in the name of a brokerage firm, bank or other nominee, shareholders should contact their nominee to see if it will participate in the Plan. If shareholders wish to participate in the Plan, but their brokerage firm, bank or other nominee is unable to participate on their behalf, they will need to request that their shares be re-registered in their own name, or they will not be able to participate. The Plan Agent will administer the Plan on the basis of the number of shares certified from time to time by shareholders as representing the total amount registered in their name and held for their account by their nominee.
Experience under the Plan may indicate that changes are desirable. Accordingly, the fund and the Plan Agent reserve the right to amend or terminate the Plan. Participants generally will receive written notice at least 90 days before the effective date of any amendment. In the case of termination, participants will receive written notice at least 90 days before the record date for the payment of any dividend or distribution by the fund.
Effective November 1, 2013, the Plan was revised to provide that Computershare Trust Company, N.A. no longer provides mail loss insurance coverage when shareholders mail their certificates to the funds administrator.
All correspondence or requests for additional information about the Plan should be directed to Computershare Trust Company, N.A., at the address stated below, or by calling 800-852-0218, 201-680-6578 (For International Telephone Inquiries) and 800-952-9245 (For the Hearing Impaired (TDD)).
Shareholder communication and assistance
If you have any questions concerning the fund, we will be pleased to assist you. If you hold shares in your own name and not with a brokerage firm, please address all notices, correspondence, questions or other communications regarding the fund to the transfer agent at:
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 39 |
|
Regular Mail:
Computershare
P.O. Box 505000
Louisville, KY 40233
Registered or Overnight Mail:
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
If your shares are held with a brokerage firm, you should contact that firm, bank or other nominee for assistance.
40 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
Continuation of Investment Advisory and Subadvisory Agreements
Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Investors Trust (the fund) of the Advisory Agreement (the Advisory Agreement) with John Hancock Investment Management LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Manulife Investment Management (US) LLC (the Subadvisor). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-25, 2020 telephonic1 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at a telephonic meeting held on May 26-27, 2020.
Approval of Advisory and Subadvisory Agreements
At telephonic meetings held on June 23-25, 2020, the Board, including the Trustees who are not parties to any Agreement or considered to be interested persons of the fund under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the fund and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and other pertinent information, such as the market premium and discount information, and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisors revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board noted that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board (including its various committees) at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The information received and considered by the Board in connection with the May and June meetings and throughout the year was both written and oral. The Board noted the affiliation of the Subadvisor with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisors affiliates, including distribution services. The Board considered the Advisory Agreement and the Subadvisory Agreement separately in the course of its review. In doing so, the Board noted the respective roles of the Advisor and Subadvisor in providing services to the fund.
1On March 25, 2020, as a result of health and safety measures put in place to combat the global COVID-19 pandemic, the Securities and Exchange Commission issued an exemptive order (the Order) pursuant to Sections 6(c) and 38(a) of the Investment Company Act of 1940, as amended (the 1940 Act), that temporarily exempts registered investment management companies from the in-person voting requirements under the 1940 Act, subject to certain requirements, including that votes taken pursuant to the Order are ratified at the next in-person meeting. The Board determined that reliance on the Order was necessary or appropriate due to the circumstances related to current or potential effects of COVID-19 and therefore, the Boards May and June meetings were held telephonically in reliance on the Order.
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 41 |
|
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the fund and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and did not treat any single factor as determinative, and each Trustee may have attributed different weights to different factors. The Boards conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Boards ongoing regular review of fund performance and operations throughout the year.
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisors compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the funds Chief Compliance Officer (CCO) regarding the funds compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board observed that the scope of services provided by the Advisor, and of the undertakings required of the Advisor in connection with those services, including maintaining and monitoring its own and the funds compliance programs, risk management programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other developments.. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and third-party service providers. The Board also considered the significant risks assumed by the Advisor in connection with the services provided to the fund including entrepreneurial risk in sponsoring new funds and ongoing risks including investment, operational, enterprise, litigation, regulatory and compliance risk with respect to all funds.
The Board also considered the differences between the Advisors services to the fund and the services it provides to other clients that are not closed-end funds, including, for example, the differences in services related to the regulatory and legal obligations of closed-end funds
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisors management and the quality of the performance of the Advisors duties, through Board meetings, discussions and reports during the preceding year and through each Trustees experience as a Trustee of the fund and of the other funds in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) |
the skills and competency with which the Advisor has in the past managed the funds affairs and its subadvisory relationship, the Advisors oversight and monitoring of the Subadvisors investment performance and compliance programs, such as the Subadvisors compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisors timeliness in responding to performance issues; |
(b) |
the background, qualifications and skills of the Advisors personnel; |
42 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
(c) |
the Advisors compliance policies and procedures and its responsiveness to regulatory changes and fund industry developments; |
(d) |
the Advisors administrative capabilities, including its ability to supervise the other service providers for the fund, as well as the Advisors oversight of any securities lending activity, its monitoring of class action litigation and collection of class action settlements on behalf of the fund, and bringing loss recovery actions on behalf of the fund; |
(e) |
the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; |
(f) |
the Advisors initiatives intended to improve various aspects of the funds operations and investor experience with the fund; and |
(g) |
the Advisors reputation and experience in serving as an investment advisor to the fund and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the funds performance, the Board noted that it reviews at its regularly scheduled meetings information about the funds performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) |
reviewed information prepared by management regarding the funds performance; |
(b) |
considered the comparative performance of an applicable benchmark index; |
(c) |
considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; |
(d) |
took into account the Advisors analysis of the funds performance; and |
(e) |
considered the funds share performance and premium/discount information. |
The Board noted that while it found the data provided by the independent third-party generally useful it recognized its limitations, including in particular that the data may vary depending on the end date selected and the results of the performance comparisons may vary depending on the selection of the peer group. The Board noted that, based on its net asset value, the fund outperformed its benchmark index and peer group median for the one-, three-, five-and ten-year periods ended December 31, 2019. The Board took into account managements discussion of the funds performance, including the favorable performance relative to the benchmark index and peer group median for the one-, three-, five- and ten-year periods. The Board concluded that the funds performance has generally been in line with or outperformed the historical performance of the funds benchmark index.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of fund data, including, among other data, the funds contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund in light of the nature, extent and quality of the management and advisory and subadvisory services provided by the Advisor and the Subadvisor. The Board considered the funds ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the funds ranking within a broader group of funds. In comparing the funds contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs.
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 43 |
|
The Board also took into account the impact of leverage on fund expenses. The Board took into account the management fee structure, including that management fees for the fund were based on the funds total managed assets, which are attributable to common stock and borrowings. The Board noted that net management fees for the fund are lower than the peer group median and total expenses for the fund are higher than the peer group median.
The Board took into account managements discussion of the funds expenses. The Board also took into account managements discussion with respect to the overall management fee and the fees of the Subadvisor, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee, in each case in light of the services rendered for those amounts and the risks undertaken by the Advisor. The Board also noted that the Advisor pays the subadvisory fee. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisors and Subadvisors services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable in light of the nature, extent and quality of the services provided to the fund under the Advisory Agreement.
Profitability/Fall out benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisor) from the Advisors relationship with the fund, the Board:
(a) |
reviewed financial information of the Advisor; |
(b) |
reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; |
(c) |
received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole and with respect to the fund; |
(d) |
received information with respect to the Advisors allocation methodologies used in preparing the profitability data and considered that the Advisor hired an independent third-party consultant to provide an analysis of the Advisors allocation methodologies; |
(e) |
considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; |
(f) |
noted that the funds Subadvisor is an affiliate of the Advisor; |
(g) |
noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; |
(h) |
noted that the subadvisory fees for the fund are paid by the Advisor; |
(i) |
considered the Advisors ongoing costs and expenditures necessary to improve services, meet new regulatory and compliance requirements, and adapt to other challenges impacting the fund industry; and |
(j) |
considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the risks it assumes as Advisor, including entrepreneurial, operational, reputational, litigation and regulatory risk. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.
44 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
Economies of scale. In considering the extent to which the fund may realize any economies of scale and whether fee levels reflect these economies of scale for the benefit of the fund shareholders, the Board noted that the fund has a limited ability to increase its assets as a closed-end fund. The Board took into account managements discussions of the current advisory fee structure, and, as noted above, the services the Advisor provides in performing its functions under the Advisory Agreement and in supervising the Subadvisor.
The Board also considered potential economies of scale that may be realized by the fund as part of the John Hancock Fund Complex. Among them, the Board noted that the Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. The Board reviewed the funds advisory fee structure and concluded that: (i) the funds fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account managements discussion of the funds advisory fee structure. The Board also considered the Advisors overall operations and its ongoing investment in its business in order to expand the scale of, and improve the quality of, its operations that benefit the fund. The Board determined that the management fee structure for the fund was reasonable.
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) |
information relating to the Subadvisors business, including current subadvisory services to the fund (and other funds in the John Hancock Fund Complex); |
(2) |
the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; and |
(3) |
the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisors Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisors current level of staffing and its overall resources, as well as received information relating to the Subadvisors compensation program. The Board reviewed the Subadvisors history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisors investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisors compliance program and any disciplinary history. The Board also considered the Subadvisors risk assessment and monitoring process. The Board reviewed the Subadvisors regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the funds CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisors investment process and philosophy. The Board took into account that the Subadvisors responsibilities include the development and maintenance of an investment program for the fund that is consistent with the funds investment objective, the selection of investment securities and the placement of
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 45 |
|
orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisors brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund. The Board also received information and took into account any potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisors relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays subadvisory fees to the Subadvisor. As noted above, the Board also considered the funds subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the Lipper peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fee paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the funds performance as compared to the funds peer group median and the benchmark index and noted that the Board reviews information about the funds performance results at its regularly scheduled meetings. The Board noted the Advisors expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisors focus on the Subadvisors performance. The Board also noted the Subadvisors long-term performance record for similar accounts, as applicable.
The Boards decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) |
the Subadvisor has extensive experience and demonstrated skills as a manager; |
(2) |
the funds performance, based on net asset value, has generally been in line with or outperformed the historical performance of the funds benchmark index; |
(3) |
the subadvisory fees are reasonable in relation to the level and quality of services being provided under the Subadvisory Agreement; and |
(4) |
that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. |
* * *
Based on the Boards evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
46 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 47 |
|
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years |
Trustee
of the Trust since1 |
Number of John
Hancock funds overseen by Trustee |
||||||
Deborah C. Jackson, Born: 1952 |
2008 | 196 | ||||||
Trustee | ||||||||
President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, Massachusetts Womens Forum (since 2018); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts (2014-2017); Chief Executive Officer, American Red Cross of Massachusetts Bay (20022011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (19962009); Board of Directors of Boston Stock Exchange (20022008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (20072011). Trustee of various trusts within the John Hancock Fund Complex (since 2008).
|
|
|||||||
James M. Oates,2 Born: 1946 |
2012 | 196 | ||||||
Trustee | ||||||||
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, Emerson Investment Management, Inc. (2000-2015); Independent Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services company) (19972011); Director, Stifel Financial (since 1996); Director, Investor Financial Services Corporation (19952007); Director, Connecticut River Bancorp (1998-2014); Director/Trustee, Virtus Funds (since 1988). Trustee (since 2004) and Chairperson of the Board (2005-2016) of various trusts within the John Hancock Fund Complex.
|
|
|||||||
Steven R. Pruchansky, Born: 1944 |
2005 | 196 | ||||||
Trustee and Vice Chairperson of the Board | ||||||||
Managing Director, Pru Realty (since 2017); Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2014); Director and President, Greenscapes of Southwest Florida, Inc. (2000-2014); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (2014-2017); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992), Chairperson of the Board (20112012), and Vice Chairperson of the Board (since 2012) of various trusts within the John Hancock Fund Complex.
|
|
|||||||
Frances G. Rathke,2,* Born: 1960 |
2020 | 196 | ||||||
Trustee | ||||||||
Director, Northern New England Energy Corporation (since 2017); Director, Audit Committee Chair and Compensation Committee Member, Green Mountain Power Corporation (since 2016); Director, Treasurer and Finance & Audit Committee Chair, Flynn Center for Performing Arts (since 2016); Director, Audit Committee Chair and Compensation Committee Member, Planet Fitness (since 2016); Director, Citizen Cider, Inc. (high-end hard cider and hard seltzer company) (since 2016); Chief Financial Officer and Treasurer, Keurig Green Mountain, Inc. (2003-retired 2015); Independent Financial Consultant, Frances Rathke Consulting (strategic and financial consulting services) (2001-2003); Chief Financial Officer and Secretary, Ben & Jerrys Homemade, Inc. (1989-2000, including prior positions); Senior Manager, Coopers & Lybrand, LLC (independent public accounting firm) (1982-1989). Trustee of various trusts within the John Hancock Fund Complex (since 2020). |
|
48 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
Independent Trustees (continued)
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 49 |
|
Principal officers who are not Trustees
The business address for all Trustees and Officers is 200 Berkeley Street, Boston, Massachusetts 02116-5023. |
1 |
Each Trustee holds office until his or her successor is elected and qualified, or until the Trustees death, retirement, resignation, or removal. Mr. Boyle has served as Trustee at various times prior to the date listed in the table. |
2 |
Member of the Audit Committee. |
3 |
The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
* |
Appointed as Independent Trustee effective as of September 15, 2020. |
50 | JOHN HANCOCK INVESTORS TRUST | ANNUAL REPORT |
|
Trustees
Hassell H. McClellan, Chairperson
Steven R. Pruchansky, Vice Chairperson
Andrew G. Arnott
Charles L. Bardelis*
James R. Boyle
Peter S. Burgess*
William H. Cunningham
Grace K. Fey
Marianne Harrison
Deborah C. Jackson
James M. Oates*
Frances G. Rathke1,*
Gregory A. Russo
Officers
Andrew G. Arnott
President
Charles A. Rizzo
Chief Financial Officer
Salvatore Schiavone
Treasurer
Christopher (Kit) Sechler
Secretary and Chief Legal Officer
Trevor Swanberg2
Chief Compliance Officer
Investment advisor
John Hancock Investment Management LLC
Subadvisor
Manulife Investment Management (US) LLC
Portfolio Managers
John F. Addeo, CFA
Jeffrey N. Given, CFA
Dennis F. McCafferty, CFA
Distributor
John Hancock Investment Management Distributors LLC
Custodian
State Street Bank and Trust Company
Transfer agent
Computershare Shareowner Services, LLC
Legal counsel
K&L Gates LLP
Independent registered public accounting firm
PricewaterhouseCoopers LLP
Stock symbol
Listed New York Stock Exchange: JHI
* Member of the Audit Committee
Non-Independent Trustee
1 Appointed as Independent Trustee effective as of September 15, 2020
2 Effective July 31, 2020
The funds proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
All of the funds holdings as of the end of the third month of every fiscal quarter are filed with the SEC on Form N-PORT within 60 days of the end of the fiscal quarter. The funds Form N-PORT filings are available on our website and the SECs website, sec.gov.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com or by calling 800-852-0218.
The report is certified under the Sarbanes-Oxley Act, which requires closed-end funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in all material respects.
ANNUAL REPORT | JOHN HANCOCK INVESTORS TRUST | 51 |
John Hancock family of funds |
DOMESTIC EQUITY FUNDS
Blue Chip Growth
Classic Value
Disciplined Value
Disciplined Value Mid Cap
Equity Income
Financial Industries
Fundamental All Cap Core
Fundamental Large Cap Core
New Opportunities
Regional Bank
Small Cap Core
Small Cap Growth
Small Cap Value
U.S. Global Leaders
Growth U.S. Growth
GLOBAL AND INTERNATIONAL EQUITY FUNDS
Disciplined Value International
Emerging Markets
Emerging Markets Equity
Fundamental Global Franchise
Global Equity
Global Shareholder Yield
Global Thematic Opportunities
International Dynamic Growth
International Growth
International Small Company
INCOME FUNDS
Bond
California Tax-Free Income
Emerging Markets Debt
Floating Rate Income
Government Income
High Yield
High Yield Municipal Bond
Income
Investment Grade Bond
Money Market
Short Duration Bond
Short Duration Credit Opportunities
Strategic Income Opportunities
Tax-Free Bond
ALTERNATIVE AND SPECIALTY FUNDS
Absolute Return Currency
Alternative Asset Allocation
Alternative Risk Premia
Diversified Macro
Infrastructure
Multi-Asset Absolute Return
Real Estate Securities
Seaport Long/Short
A funds investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investment Management at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
|
ASSET ALLOCATION
Balanced
Multi-Asset High Income
Multi-Index Lifetime Portfolios
Multi-Index Preservation Portfolios
Multimanager Lifestyle Portfolios
Multimanager Lifetime Portfolios
Retirement Income 2040
EXCHANGE-TRADED FUNDS
John Hancock Multifactor Consumer Discretionary ETF
John Hancock Multifactor Consumer Staples ETF
John Hancock Multifactor Developed International ETF
John Hancock Multifactor Emerging Markets ETF
John Hancock Multifactor Energy ETF
John Hancock Multifactor Financials ETF
John Hancock Multifactor Healthcare ETF
John Hancock Multifactor Industrials ETF
John Hancock Multifactor Large Cap ETF
John Hancock Multifactor Materials ETF
John Hancock Multifactor Media and Communications ETF
John Hancock Multifactor Mid Cap ETF
John Hancock Multifactor Small Cap ETF
John Hancock Multifactor Technology ETF
John Hancock Multifactor Utilities ETF
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS
ESG All Cap Core
ESG Core Bond
ESG International Equity
ESG Large Cap Core
CLOSED-END FUNDS
Financial Opportunities
Hedged Equity & Income
Income Securities Trust
Investors Trust
Preferred Income
Preferred Income II
Preferred Income III
Premium Dividend
Tax-Advantaged Dividend Income
Tax-Advantaged Global Shareholder Yield
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Investment Management Distributors LLC or Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in, John Hancock Multifactor ETFs.
John Hancock Investment Management
A trusted brand
John Hancock Investment Management is a premier asset manager with a heritage of financial stewardship dating back to 1862. Helping our shareholders pursue their financial goals is at the core of everything we do. Its why we support the role of professional financial advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach: We search the world to find proven portfolio teams with specialized expertise for every strategy we offer, then we apply robust investment oversight to ensure they continue to meet our uncompromising standards and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set of investments backed by some of the worlds best managers, along with strong risk-adjusted returns across asset classes.
|
John Hancock Investment Management Distributors LLC ◾ Member FINRA, SIPC 200 Berkeley Street ◾ Boston, MA 02116-5010 ◾ 800-225-5291 ◾ jhinvestments.com
A company of Manulife Investment Management | ||
P5A 10/20 | ||
MF1399356 | 12/2020 |
ITEM 2. CODE OF ETHICS.
As of the end of the year, October 31, 2020, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer, Chief Financial Officer and Treasurer (respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the Senior Financial Officers). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Peter S. Burgess is the audit committee financial expert and is independent, pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees for John Hancock Investors Trust billed for professional services rendered by the principal accountant(s) for the audit of the registrants annual financial statements or services that are normally provided by the accountant(s) in connection with statutory and regulatory filings or engagements amounted to $50,115 for the fiscal year ended October 31, 2020 and $53,840 for the fiscal year ended October 31, 2019. These fees were billed to the registrant and were approved by the registrants audit committee.
(b) Audit-Related Services
Audit-related fees for John Hancock Investors Trust amounted to $3,713 for the fiscal year ended October 31, 2020 and $5 for the fiscal year ended October 31, 2019 billed to the registrant or to the registrants investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant (control affiliates).
(c) Tax Fees
The aggregate fees for John Hancock Investors Trust billed for professional services rendered by the principal accountant(s) for the tax compliance, tax advice and tax planning (tax fees) amounted to $3,837 for the fiscal years ended October 31, 2020 and 2019. The nature of the services comprising the tax fees was the review of the registrants tax returns and tax distribution requirements. These fees were billed to the registrant and were approved by the registrants audit committee.
(d) All Other Fees
The all other fees for John Hancock Investors Trust billed to the registrant for products and services provided by the principal accountant were $89 for the fiscal year ended October 31, 2020 and $84 for the fiscal year ended October 31, 2019 billed to control affiliates for products and services provided by the principal accountant. These fees were approved by the registrants audit committee.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The trusts Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the Auditor) relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trusts Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committees consideration of audit-related and non-audit services by the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per instance/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per instance/per fund are subject to specific pre-approval by the Audit Committee.
All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.
(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
Audit-Related Fees, Tax Fees and All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
(f) According to the registrants principal accountant, for the fiscal year ended October 31, 2020, the percentage of hours spent on the audit of the registrants financial statements for the most recent fiscal year that were attributed to work performed by persons who were not full-time, permanent employees of principal accountant was less than 50%.
(g) The aggregate non-audit fees billed by the registrants accountant(s) for services rendered to the registrant and rendered to the registrants control affiliates for each of the last two fiscal years of the registrant were $1,304,206 for the fiscal year ended October 31, 2020 and $1,078,605 for the fiscal year ended October 31, 2019.
(h) The audit committee of the registrant has considered the non-audit services provided by the registrants principal accountant(s) to the control affiliates and has determined that the services that were not pre-approved are compatible with maintaining the principal accountant(s) independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee comprised of independent trustees. The members of the audit committee are as follows:
Peter S. Burgess - Chairman
Charles L. Bardelis
James M. Oates
Frances G Rathke
ITEM 6. SCHEDULE OF INVESTMENTS.
(a) |
Not applicable. |
(b) |
Not applicable. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
See attached exhibit - Proxy Voting Policies and Procedures.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Information about the portfolio managers
Management Biographies
Below is a list of the Manulife Investment Management (US) LLC (Manulife IM (US)) portfolio managers who share joint responsibility for the day-to-day investment management of the Fund. It provides a brief summary of their business careers over the past five years. Information is provided as of October 31, 2020.
John F. Addeo, CFA
Managing Director and Portfolio Manager
Manulife Investment Management (US) LLC since 2012
Investment Officer, Portfolio Manager/Analyst, High Yield Bond Group, MFS Investment Management (19982012)
Began business career in 1984
Managed the Fund since 2013
Jeffrey N. Given, CFA
Senior Managing Director and Senior Portfolio Manager
Manulife Investment Management (US) LLC since 2012
Managing Director, Manulife Investment Management (US) LLC (20052012)
Second Vice President, John Hancock Investment Management LLC (19932005)
Began business career in 1993
Managed the Fund since 1999
Dennis F. McCafferty, CFA
Managing Director and Portfolio Manager
Manulife Investment Management (US) LLC since 2009
Investment Analyst, Manulife Investment Management (US) LLC (20082009)
Principal and Senior Analyst, Pardus Capital Management (20052008)
Began business career in 1995
Managed the Fund since 2013
Other Accounts the Portfolio Managers are Managing
The table below indicates for each portfolio manager information about the accounts over which the portfolio manager has day-to-day investment responsibility. All information on the number of accounts and total assets in the table is as of October 31, 2020. For purposes of the table, Other Pooled Investment Vehicles may include investment partnerships and group trusts, and Other Accounts may include separate accounts for institutions or individuals, insurance company general or separate accounts, pension funds and other similar institutional accounts.
Registered Investment
Companies |
Other Pooled
Investment Vehicles |
Other Accounts | ||||||||||||||||||||||
Number
of Accounts |
Total
Assets $Million |
Number
of Accounts |
Total
Assets $Million |
Number
of Accounts |
Total
Assets $Million |
|||||||||||||||||||
John F. Addeo, CFA |
1 | 1,282 | 7 | 1,559 | 4 | 342 | ||||||||||||||||||
Jeffrey N. Given, CFA |
20 | 41,125 | 27 | 4,337 | 21 | 12,891 | ||||||||||||||||||
Dennis F. McCafferty, CFA |
1 | 1,282 | 10 | 4,841 | 0 | 0 |
Number and value of accounts within the total accounts that are subject to a performance-based advisory fee: None.
Conflicts of Interest. When a portfolio manager is responsible for the management of more than one account, the potential arises for the portfolio manager to favor one account over another. The principal types of potential conflicts of interest that may arise are discussed below. For the reasons outlined below, the Fund does not believe that any material conflicts are likely to arise out of a portfolio managers responsibility for the management of the Fund as well as one or more other accounts. The Advisor and Subadvisor have adopted procedures that are intended to monitor compliance with the policies referred to in the following paragraphs. Generally, the risks of such conflicts of interests are increased to the extent that a portfolio manager has a financial incentive to favor one account over another. The Advisor and Subadvisor have structured their compensation arrangements in a manner that is intended to limit such potential for conflicts of interests. See Compensation of Portfolio Managers below.
|
A portfolio manager could favor one account over another in allocating new investment opportunities that have limited supply, such as initial public offerings and private placements. If, for example, an initial public offering that was expected to appreciate in value significantly shortly after the offering was allocated to a single account, that account may be expected to have better investment performance than other accounts that did not receive an allocation on the initial public offering. The Subadvisor has policies that require a portfolio manager to allocate such investment opportunities in an equitable manner and generally to allocate such investments proportionately among all accounts with similar investment objectives. |
|
A portfolio manager could favor one account over another in the order in which trades for the accounts are placed. If a portfolio manager determines to purchase a security for more than one account in an aggregate amount that may influence the market price of the security, accounts that purchased or sold the security first may receive a more favorable price than accounts that made subsequent transactions. The less liquid the market for the security or the greater the percentage that the proposed aggregate purchases or sales represent of average daily trading volume, |
the greater the potential for accounts that make subsequent purchases or sales to receive a less favorable price. When a portfolio manager intends to trade the same security for more than one account, the policies of the Subadvisor generally require that such trades be bunched, which means that the trades for the individual accounts are aggregated and each account receives the same price. There are some types of accounts as to which bunching may not be possible for contractual reasons (such as directed brokerage arrangements). Circumstances may also arise where the trader believes that bunching the orders may not result in the best possible price. Where those accounts or circumstances are involved, the Subadvisor will place the order in a manner intended to result in as favorable a price as possible for such client. |
|
A portfolio manager could favor an account if the portfolio managers compensation is tied to the performance of that account rather than all accounts managed by the portfolio manager. If, for example, the portfolio manager receives a bonus based upon the performance of certain accounts relative to a benchmark while other accounts are disregarded for this purpose, the portfolio manager will have a financial incentive to seek to have the accounts that determine the portfolio managers bonus achieve the best possible performance to the possible detriment of other accounts. Similarly, if the Subadvisor receives a performance-based advisory fee, the portfolio manager may favor that account, whether or not the performance of that account directly determines the portfolio managers compensation. The investment performance on specific accounts is not a factor in determining the portfolio managers compensation. See Compensation of Portfolio Managers below. Neither the Advisor nor the Subadvisor receives a performance-based fee with respect to any of the accounts managed by the portfolio managers. |
|
A portfolio manager could favor an account if the portfolio manager has a beneficial interest in the account, in order to benefit a large client or to compensate a client that had poor returns. For example, if the portfolio manager held an interest in an investment partnership that was one of the accounts managed by the portfolio manager, the portfolio manager would have an economic incentive to favor the account in which the portfolio manager held an interest. The Subadvisor imposes certain trading restrictions and reporting requirements for accounts in which a portfolio manager or certain family members have a personal interest in order to confirm that such accounts are not favored over other accounts. |
|
If the different accounts have materially and potentially conflicting investment objectives or strategies, a conflict of interest may arise. For example, if a portfolio manager purchases a security for one account and sells the same security short for another account, such trading pattern could disadvantage either the account that is long or short. In making portfolio manager assignments, the Subadvisor seeks to avoid such potentially conflicting situations. However, where a portfolio manager is responsible for accounts with differing investment objectives and policies, it is possible that the portfolio manager will conclude that it is in the best interest of one account to sell a portfolio security while another account continues to hold or increase the holding in such security. |
Compensation of Portfolio Managers. The Subadvisor has adopted a system of compensation for portfolio managers and others involved in the investment process that is applied systematically among investment professionals. At the Subadvisor, the structure of compensation of investment professionals is currently composed of the following basic components: base salary and short-and long-term incentives. The following describes each component of the compensation package for the individuals identified as a portfolio manager for the Funds.
|
Base salary. Base compensation is fixed and normally reevaluated on an annual basis. The Subadvisor seeks to set compensation at market rates, taking into account the experience and responsibilities of the investment professional. |
|
Incentives. Only investment professionals are eligible to participate in the short-and long-term incentive plan. Under the plan, investment professionals are eligible for an annual cash award. The plan is intended to provide a competitive level of annual bonus compensation that is tied to the investment professional achieving superior investment performance and aligns the financial incentives of the Subadvisor and the investment professional. Any bonus under the plan is completely discretionary, with a maximum annual bonus that may be well in excess of base salary. Payout of a portion of this bonus may be deferred for up to five years. While the amount of any bonus is discretionary, the following factors are generally used in determining bonuses under the plan: |
|
Investment Performance: The investment performance of all accounts managed by the investment professional over one, three and five-year periods are considered. With respect to fixed income accounts, relative yields are also used to measure performance. The pre-tax performance of each account is measured relative to an appropriate benchmark and universe as identified in the table below. |
|
Financial Performance: The profitability of the Subadvisor and its parent company are also considered in determining bonus awards. |
|
Non-Investment Performance: To a lesser extent, intangible contributions, including the investment professionals support of client service and sales activities, new fund/strategy idea generation, professional growth and development, and management, where applicable, are also evaluated when determining bonus awards. |
|
In addition to the above, compensation may also include a revenue component for an investment team derived from a number of factors including, but not limited to, client assets under management, investment performance, and firm metrics. |
|
Manulife Equity Awards. A limited number of senior investment professionals may receive options to purchase shares of Manulife Financial stock. |
Generally, such option would permit the investment professional to purchase a set amount of stock at the market price on the date of grant. The option can be exercised for a set period (normally a number of years or until termination of employment) and the investment professional would exercise the option if the market value of Manulife Financial stock increases. Some investment professionals may receive restricted stock grants, where the investment professional is entitled to receive the stock at no or nominal cost, provided that the stock is forgone if the investment professionals employment is terminated prior to a vesting date. |
|
Deferred Incentives. Investment professionals may receive deferred incentives which are fully invested in strategies managed by the team/individuals as well as other Manulife Asset Management strategies. |
The Subadvisor also permits investment professionals to participate on a voluntary basis in a deferred compensation plan, under which the investment professional may elect on an annual basis to defer receipt of a portion of their compensation until retirement. Participation in the plan is voluntary.
Share Ownership by Portfolio Managers. The following table indicates as of October 31, 2020, the value of shares beneficially owned by the portfolio managers in the Fund.
Portfolio Manager |
Range of Beneficial
Ownership in the Fund |
|||
John F. Addeo, CFA |
$ | 100,001-$500,000 | ||
Jeffrey N. Given, CFA |
$ | 1-10,000 | ||
Dennis F. McCafferty, CFA |
$ | 100,001-$500,000 |
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
(a) |
Not applicable. |
(b) |
|
REGISTRANT PURCHASES OF EQUITY SECURITIES
Period |
Total number
of shares purchased |
Average
price per share |
Total number of
shares purchased as part of publicly announced plans* |
Maximum number of
shares that may yet be purchased under the plans* |
||||||||||||
Nov-19 |
| | | 870,703 | ||||||||||||
Dec-19 |
| | | 870,703 |
Jan-20 |
| | | 870,703 | ||||||||||||
Feb-20 |
| | | 870,703 | ||||||||||||
Mar-20 |
| | | 870,703 | ||||||||||||
Apr-20 |
| | | 870,703 | ||||||||||||
May-20 |
| | | 870,703 | ||||||||||||
Jun-20 |
| | | 870,703 | ||||||||||||
Jul-20 |
| | | 870,703 | ||||||||||||
Aug-20 |
| | | 870,703 | ||||||||||||
Sep-20 |
| | | 870,703 | ||||||||||||
Oct-20 |
| | | 870,703 | ||||||||||||
Total |
| | |
* |
On December 10, 2015, the Board of Trustees approved a share repurchase plan, which is subsequently reviewed by the Board of Trustees each year in December. Under the current share repurchase plan, the Fund may purchase in the open market, up to 10% of its outstanding common shares as of December 31, 2019. The current share repurchase plan will remain in effect between January 1, 2020 to December 31, 2020. |
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The registrant has adopted procedures by which shareholders may recommend nominees to the registrants Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached John Hancock Funds Nominating and Governance Committee Charter.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrants disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrants principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.
(b) There were no changes in the registrants internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrants internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
The Fund did not participate directly in securities lending activities. See Note 8 to financial statements in Item 1.
ITEM 13. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Investors Trust | ||
By: |
/s/ Andrew Arnott |
|
Andrew Arnott | ||
President | ||
Date: | December 11, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: |
/s/ Andrew Arnott |
|
Andrew Arnott | ||
President | ||
Date: | December 11, 2020 | |
By: |
/s/ Charles A. Rizzo |
|
Charles A. Rizzo | ||
Chief Financial Officer | ||
Date: | December 11, 2020 |
John Hancock Code of Ethics
January 1, 2008
(Revised September 17, 2020)
This is the Code of Ethics for the following:
John Hancock Investment Management, LLC and
John Hancock Variable Trust Advisers, LLC, LLC
(each, a John Hancock Adviser)
and
John Hancock Investment Management
Distributors, LLC
John Hancock Distributors, LLC,
each open-end fund, closed-end fund, and exchange traded
fund advised by a John Hancock Adviser
(the John Hancock Affiliated Funds),
(together, called John Hancock)
Table of Contents
Introduction |
4 | |||
Standards of Business Conduct |
5 | |||
Applicability and Scope |
5 | |||
Access Levels |
6 | |||
Access Level 1 |
6 | |||
Access Level 2 |
6 | |||
Access Level 3 |
7 | |||
Overview of Rules for All Access Persons |
7 | |||
Brokerage Account Disclosure |
7 | |||
Brokerage Account Examples (non-exclusive list) |
7 | |||
Employee Compensation Instruments (non-exclusive list) |
8 | |||
College Savings Plans - 529s |
8 | |||
401(k) and John Hancock Variable Products: John Hancock Affiliated Funds Reporting |
9 | |||
Managed Accounts |
9 | |||
Preferred Brokerage Account Requirements |
9 | |||
Opening/Closing Accounts |
10 | |||
Statements and Duplicate Confirmations of Trades |
10 | |||
Personal Trading |
10 | |||
Personal Trading Restrictions for all Access Persons |
11 | |||
Reporting and Pre-clearance |
11 | |||
Level 1 Access Persons: Additional Personal Trading Restrictions and Disclosures |
12 | |||
Level 2 Access Persons: Additional Personal Trading Restrictions and Disclosures |
15 | |||
Level 3 Access Persons: Additional Personal Trading Restrictions and Disclosures |
17 | |||
Pre-clearance Process |
17 | |||
Reporting and Certification Requirements |
18 | |||
Reporting |
18 | |||
Reporting Upon Designation |
18 | |||
Quarterly Reporting |
18 | |||
Annual Reporting |
19 | |||
Ad Hoc Reporting |
19 |
2
Administration and Enforcement |
20 | |||
Administration of the Code |
20 | |||
Subadviser Compliance |
20 | |||
Adoption and Approval |
20 | |||
Subadviser Reporting & Recordkeeping Requirements |
21 | |||
Reporting to the Board |
21 | |||
Reporting Violations |
21 | |||
Exemptions & Appeals |
22 | |||
Exemptions: |
22 | |||
Appeals |
22 | |||
Interpretation and Enforcement |
22 | |||
Education of Employees |
23 | |||
Recordkeeping |
23 | |||
Other Important Policies |
24 | |||
MFC Code of Business Conduct & Ethics (All Covered Employees) |
24 | |||
John Hancock Conflicts of Interest Policy (All Covered Employees) |
25 | |||
John Hancock Gift & Entertainment Policy (All Covered Employees) |
25 | |||
John Hancock Insider Trading Policy (All Covered Employees) |
25 | |||
John Hancock Pay to Play Rule on Political Contributions (All Covered Associates) |
25 | |||
John Hancock Whistleblower Policy (All Covered Employees) |
26 | |||
Policy and Procedures Regarding Disclosure of Portfolio Holdings (All Covered Employees) |
26 | |||
Additional Policies Outside the Code (All Covered Employees) |
27 | |||
Appendix |
28 | |||
Definitions |
28 | |||
Preferred Brokers List |
32 | |||
Compliance Contacts |
33 |
3
Introduction
John Hancock is required by law to adopt a Code of Ethics. The purpose of a Code of Ethics is to ensure that companies and their Covered Persons comply with all applicable laws and to prevent abuses in the investment advisory business that can arise when conflicts of interest exist between the employees of an investment advisor and its clients. By adopting and enforcing a Code of Ethics, we strengthen the trust and confidence entrusted in us by demonstrating that at John Hancock, client interests come first.
The Code of Ethics (the Code) that follows represents a balancing of important interests. On the one hand, as registered investment advisers, the John Hancock Advisers owe a duty of undivided loyalty to their clients and must avoid even the appearance of a conflict that might be perceived as abusing the trust they have placed in John Hancock. On the other hand, the John Hancock Advisers do not want to prevent conscientious professionals from investing for their own accounts where conflicts do not exist or that are immaterial to investment decisions affecting the John Hancock Advisers clients.
When conflicting interests cannot be reconciled, the Code makes clear that, first and foremost, Covered Persons owe a fiduciary duty to John Hancock clients. In most cases, this means that the affected employee will be required to forego conflicting personal securities transactions. In some cases, personal investments will be permitted, but only in a manner, which, because of the circumstances and applicable controls, cannot reasonably be perceived as adversely affecting John Hancock client portfolios or taking unfair advantage of the relationship John Hancock employees have to John Hancock clients.
The Code contains specific rules prohibiting defined types of conflicts. Since every potential conflict cannot be anticipated by the Code, it also contains general provisions prohibiting conflict situations. In view of these general provisions, it is critical that any Covered Person who is in doubt about the applicability of the Code in a given situation seek a determination from Chief Compliance Officer (CCO), designee, or the Code of Ethics Administration Group about the propriety of the conduct in advance.
It is critical that the Code be strictly observed. Not only will adherence to the Code ensure that John Hancock renders the best possible service to its clients, it will help to ensure that no individual is liable for violations of law.
It should be emphasized that adherence to this policy is a fundamental condition of employment at John Hancock. Every Covered Person is expected to adhere to the requirements of the Code despite any inconvenience that may be involved. Any Covered Person failing to do so may be subject to disciplinary action, including financial penalties and termination of employment as determined by the CCO, designee, or Ethics Oversight Committee.
4
Standards of Business Conduct
Each Covered Person within the John Hancock organization is responsible for maintaining the very highest ethical standards when conducting our business.
This means that you must at all times:
|
Place the interests of clients first. You have a fiduciary duty at all times to place the interests of our clients and fund investors first. |
|
Conduct all personal trading in full compliance with this Code. All of your personal securities transactions must be conducted consistent with the provisions of the Code that apply to you and in such a manner as to avoid any actual or potential conflict of interest or other abuse of your position of trust and responsibility. |
|
Avoid taking inappropriate advantage of your position at John Hancock. You should not take inappropriate advantage of your position or engage in any fraudulent or manipulative practice (such as front-running or manipulative market timing) with respect to our clients accounts or fund investors. |
|
Maintain confidentiality of our clients and John Hancock. You must treat as confidential any information concerning the identity of security holdings and financial circumstances of clients or fund investors. |
|
Comply with applicable Federal Securities Laws. You must comply with all applicable federal Securities Laws. |
|
Report any violation of the Code. You must promptly report any violation of the Code that comes to your attention to the CCO (or designee) of your company. |
It is essential that you understand and comply with the general principles, noted above, in letter and in spirit as no set of rules can anticipate every possible problem or conflict situation. Failure to comply with the general principles and the provisions of the Code may result in disciplinary action, including termination of employment.
Applicability and Scope
Individuals subject to this policy will be notified by the CCO, designee, or the Code of Ethics Administration Group. Generally, if you meet the requirements listed below, you are deemed an Access Person1 and this Code applies to you2:
|
a director, officer or other Supervised Person of a John Hancock Adviser; |
|
an interested director, officer or Access Person of John Hancock Investment Management Distributors, LLC, John Hancock Distributors, LLC, or a John Hancock open-end or closed-end fund registered under the 1940 Act and are advised by a John Hancock Adviser;3 |
|
an employee of Manulife Financial Corporation (MFC) or its subsidiaries who participates in making recommendations for, or receives information about, portfolio trades or holdings of the John Hancock Affiliated Funds.4 |
1 |
See the Definitions section and contact a member of the Office of the CCO with any questions. |
2 |
Access Persons of John Hancock GA Mortgage Trust that are personnel of John Hancock Investment Management, LLC are covered by this Code. |
3 |
Disinterested Trustees of John Hancock open-end and closed-end funds registered under the 1940 Act and advised by a John Hancock Adviser are subject to a separate Code of Ethics adopted by the Board of Trustees. |
4 |
The preceding excludes John Hancock Asset Management (U.S.) and John Hancock Asset Management (N.A.) each of whom have adopted their own Code of Ethics in accordance with Rule 204A-1 under the Advisers Act. |
5
Access Levels
The requirements of this policy will differ depending on your Access Level category. There are three categories for persons covered by the Code, taking into account position, duties and access to information regarding fund portfolio trades.5 You will receive notification as to your particular category, based on the Code of Ethics Administration Groups understanding of your current role in coordination with the Office of the CCO. If you have a level of investment access beyond your assigned category, or if you are promoted or change duties and as a result should more appropriately be included in a different category, it is your responsibility to notify the CCO, designee, or the Code of Ethics Administration Group.
Please note: If a specific Code provision (examples: personal investing restriction or limitations, pre-clearance obligation, or reporting obligation, etc.) applies to the Access Person, it also applies to all Securities and Brokerage Accounts over which the Access Person has Beneficial Ownership.
Access Level 1
A person who, in connection with his/her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Fund or account.
Examples (may include but are not limited to):
|
Portfolio Managers |
|
Analysts |
|
Traders |
Access Level 2
A person who, in connection with his/her regular functions or duties, has regular access to nonpublic information regarding any clients purchase or sale of securities, nonpublic information regarding the portfolio holdings of any John Hancock Affiliated Fund(s), is involved in making securities recommendations to clients, or has regular access to such recommendations that are nonpublic.
Examples (may include but are not limited to):
|
Office of the CCO |
5 |
The Code of Ethics Administration Group, CCO (or designee) may modify the requirements of this Code for those John Hancock Associates whose covered status is expected not to exceed 90 days (for instance contractors, co-ops and interns) or in instances where a person is subject to another Code of Ethics or fiduciary duty and where the modification is not otherwise specifically prohibited by law. In reliance on an SEC no-action letter, the Code of Ethics Administration Group or CCO (or designee) may include in the definition of John Hancock Associate any person of a John Hancock Affiliate who is engaged, directly or indirectly in John Hancocks investment advisory activities. |
6
|
Fund Administration |
|
Investment Management Services |
|
Technology Resources Personnel (as designated) |
|
Legal Staff |
|
Marketing (as designated) |
Access Level 3
A person who, in connection with his/her regular functions or duties, has periodic access to nonpublic information regarding any clients purchase or sale of securities or nonpublic information regarding the portfolio holdings of any John Hancock Affiliated Funds.
Examples (may include but are not limited to):
|
Marketing (as designated) |
|
Product Development |
|
E-Commerce |
|
Corporate Publishing |
|
Technology Resources Personnel (as designated) |
Overview of Rules for All Access Persons
This policy contains rules regarding your obligations to comply with federal Securities Laws and John Hancocks standards of conduct. Access Persons are responsible for complying with the personal trading restrictions and obligations of their access designation level including: Brokerage Account disclosure, personal trading restrictions, pre-clearance requirements, disclosure requirements, and various reporting and certification requirements.
Brokerage Account Disclosure
You must use the automated compliance reporting system (StarCompliance), to disclose all Brokerage Accounts that have the capability to hold Reportable Securities including all Brokerage Accounts:
|
of your own; regardless of what is currently held in the account, |
|
of your spouse, Significant Other, minor children or family members sharing the same household (Household Family Member), |
|
over which you have discretion or give advice or information, and/or |
|
in which your Household Family Member have Beneficial Ownership, or the opportunity to directly or indirectly profit or share in any profit derived from a Reportable Securities transaction. |
Brokerage Account Examples (non-exclusive list)
You need to report:
|
Brokerage Accounts |
7
|
John Hancock 401(k) accounts |
|
MFC Global Share Ownership Plan (GSOP) |
|
Solium accounts (some if they hold reportable securities including options on MFC securities) |
|
Self-directed IRA accounts |
|
Custodial accounts |
|
Mutual fund accounts* |
|
College investment plans 529s* |
|
401(k)/403(b) accounts* |
|
Dividend reinvestment program or dividend reinvestment plan (DRIP) |
|
Registered Retirement Savings Plan (RRSP/RESP/TFSA) |
|
Stock Purchase accounts |
* |
if they have the capability to hold John Hancock Affiliated Funds |
Employee Compensation Instruments (non-exclusive list)
You need to report:
|
John Hancock 401(k) |
|
MFC Global Share Ownership Plan (GSOP) |
|
Options acquired from MFC (only MFC Solium account options that are granted) |
|
Public company employer as part of employee compensation |
|
Sole discretion accounts |
|
Accounts holding John Hancock Affiliated Funds |
|
Certain Manulife Pension Plans (RPS, RRSP) |
You are not responsible for reporting:
|
MFC Restricted Share Units (RSU) |
|
Deferred Share Units (DSU) |
|
Performance Share Units (PSU) |
|
US John Hancock Pension Plans |
|
Employer phantom stock/phantom option interest (granted as compensation to employee, only employer can redeem interest and interest is non-transferrable) |
To prevent any potential violations of the Code, you are strongly encouraged to request clarification for accounts that are in question from the Code of Ethics Administration Group INVDIVCodeofEthics@manulife.com.
College Savings Plans - 529s
You must report John Hancock affiliated 529 plans including both the Freedom 529 plan and any other 529 plans that can hold John Hancock Affiliated Funds. You are not required to report transactions or holdings in 529 Plans for which the Adviser or a control affiliate does not manage, distribute, market or underwrite the 529 Plan or the investments and strategies underlying the 529 Plan. If you have any questions about this requirement, please contact the Code of Ethics Administration Group or a member of the Office of the CCO.
8
401(k) and John Hancock Variable Products: John Hancock Affiliated Funds Reporting
You must report your holdings and trades in a John Hancock Affiliated Funds. This includes voluntary trades in your John Hancock affiliated accounts such as your 401(k) and any external Brokerage Account.
To comply with this requirement, if you purchase a John Hancock variable product you must provide your contract or policy number to the Code of Ethics Administration Group and if you have a John Hancock 401(k), you must you must enter the Brokerage Account on StarCompliance.
Managed Accounts
Managed Accounts are considered fully managed if neither Access Person nor Household Family Member has no direct influence or control. Prior to the execution of Reportable Securities transactions in the Managed Account, you must obtain approval from the CCO (or designee). Once the Brokerage Account is approved as a Managed Account, in writing from the CCO (or designee) of the Adviser/Trust, the transactions do not need to be pre-cleared. Exemption requests which pose a conflict of interest for the CCO (or designee) will be escalated to the Ethics Oversight Committee for review and consideration.
You may request approval by disclosing the Brokerage Account in the automated compliance system, marking it as a Managed Account and by providing the appropriate evidence as described below. You are required to provide evidence that you or your Household Family Member has no direct or indirect influence or control including not being able to:
1) |
Suggest that the trustee or third-party discretionary manager make any particular purchases or sales of Reportable Securities; |
2) |
Direct the trustee or third-party discretionary manager to make any particular purchases or sales of Reportable Securities; and |
3) |
Consult with the trustee or third-party discretionary manager as to the particular allocation of investments to be made in your account. |
You may also be asked to periodically attest to the status of the Managed Account(s) and provide electronic feeds or duplicate statements.
Preferred Brokerage Account Requirements
You must maintain your Brokerage Accounts at one of the preferred brokers approved by John Hancock. Upon designation as an Access Person, you have 45 calendar days to (i) qualify any non-compliant Brokerage Account as an exempt account or (ii) transfer all assets to a preferred broker and close the non- compliant account. Please note that you are not required to move 401(k) accounts. Exceptions may be granted with the approval from the CCO, its designee, or the Code of Ethics Administration Group. Requests for exceptions to this policy must be submitted in writing to the Code of Ethics Administration Group. A list of the Preferred Brokers can be found in the Appendix.
9
Opening/Closing Accounts
You are required to report each transaction in any Reportable Security to the Code of Ethics Administration Group. To comply with this requirement, you:
|
Are required to notify the Code of Ethics Administration team within 10 days of opening or closing a Brokerage Account. In the case of a new Brokerage Account in which you have a beneficial interest, you must notify the Code of Ethics Administration Group before any trades are placed. |
|
Are required by this Code and by the Insider Trading Policy to inform your broker-dealer that you are employed by a financial institution. Your broker- dealer is subject to certain rules designed to prevent favoritism toward your Brokerage Accounts. You may not accept negotiated commission rates that you believe may be more favorable than the broker grants to accounts with similar characteristics. |
|
Must notify the broker-dealer if you are registered with the Financial Industry Regulatory Authority or are employed by John Hancock Investment Management Distributors, LLC or John Hancock Distributors, LLC. |
Statements and Duplicate Confirmations of Trades
The Code of Ethics Administration Group may rely on information submitted by your broker as part of your reporting requirements under the Code. Upon notification of your Brokerage Account, the Code of Ethics Administration Group will notify the broker-dealer to have duplicate confirmations of any trade, as well as statements or other information concerning the Brokerage Account, sent to:
John Hancock Financial Services
Attention: General Funds Compliance
197 Clarendon Street, C-03-13
Boston, MA 02116
Personal Trading
Personal Trading is a privilege and must always come second to the fiduciary duty you owe to our clients. Below is a list of personal trading restrictions for all Access Persons.
All Access Persons must:
|
Disclose holdings in Reportable Securities (including John Hancock Affiliated Funds and John Hancock Variable Products) |
|
Disclose Brokerage Accounts |
|
Pre-clear applicable Reportable Securities transactions |
10
Personal Trading Restrictions for all Access Persons
All Access Persons are prohibited from:
|
Profiting from the purchase and sale of a John Hancock Affiliated Fund within 30 calendar days. |
|
Engaging in speculative transactions involving MFC securities including: options, hedging or short sales involving securities issues by Manulife. |
|
Transacting in securities that appear on the confidential John Hancock Restricted list (pre-clearance requests will be denied). |
|
Transacting in Initial Public Offerings (IPOs), Private Placements, and Limited Offerings without obtaining proper pre-clearance approval.6 |
|
Transacting in securities while in possession of material nonpublic information including but not limited to: fund events, due diligence visits etc. |
An Access Person who either directs 45 or more trades in a quarter or redeems shares of a John Hancock Affiliated Fund within 30 days of purchase, should expect additional scrutiny of his or her trades and he or she may be subject to limitations on the number of trades allowed during a given period.
Reporting and Pre-clearance
As an Access Person, you are required to report to the Code of Ethics Administration Group each transaction in any Reportable Security. You must ensure that all transactions (unless it is an Involuntary Issuer Transaction) and holdings in Reportable Securities are properly reflected in the requisite initial, quarterly and annual reporting certifications. To facilitate the reporting process, please ensure that you have properly disclosed your correct Brokerage Account information to the Code of Ethics Administration Group in the automated compliance system, including the disclosure of participation in the John Hancock 401(k) and Manulife GSOP.
The transaction and holding reporting requirement does not include John Hancock money market funds or any dividend reinvestment, payroll deduction, systematic investment/withdrawal and/or other program trades. Please note that different requirements apply to shares of John Hancock Affiliated Funds, including a 30-day holding period requirement.
As an Access Person, in addition to your reporting obligations, you have pre-clearance obligations for certain securities, depending on your Access Level group. Please see the appropriate access level below, for more detailed information.
6 |
Please note, Level 1 Access Persons and Registered Representatives are prohibited from purchasing IPOs. |
11
Level 1 Access Persons: Additional Personal Trading Restrictions and Disclosures
Please note, there are additional restrictions that apply to all Access Persons listed in the section entitled, Personal Trading Restrictions for All Access Persons.
Level 1 Access Persons
|
Pre-clear MFC Securities: You must pre-clear all transactions in MFC securities including stock, company issued options, securities such as debt, and sell transactions in the MFC Global Share Ownership Plan. |
|
Pre-clear all of the following securities: You must pre-clear and receive approval prior to transactions in the following securities: |
|
Stocks; including sell transactions of MFC Shares held in your Global Share Ownership Plan |
|
Bonds; |
|
Government securities that are not direct obligations of the U.S. government, such as Fannie Mae, or municipal securities, in each case that mature in more than one year; |
|
John Hancock Affiliated Funds;7 |
|
Closed-end funds (including John Hancock affiliated closed-end funds) |
|
Options on securities, on indexes, and on currencies; |
|
Swaps on securities, on indexes, and on currencies; |
|
Limited partnerships; |
|
Exchange traded funds and notes; |
|
Domestic unit investment trusts; |
|
Non-US unit investment trusts and Non-US mutual funds; |
|
Private investment funds and hedge funds; and |
|
Futures, investment contracts or any other instrument that is considered a security under the Securities Act of 1933; |
|
Private Placements, limited offerings8. |
|
Ban on IPOs: You may not acquire securities in an IPO. You may not purchase any newly-issued Reportable Security until it is listed on a public exchange. |
|
Seven Day Blackout: You are prohibited from buying or selling a Reportable Security within 7 calendar days before or after that Reportable Security is traded for a fund that the Person manages or for a John Hancock Affiliated Fund unless no conflict of interest exists in relation to that Reportable Security as determined by the Code of Ethics Administration Group. |
|
Gifting Reportable Securities: If you gift or donate shares of a Reportable Security it is considered a sale and you must receive pre-clearance approval. |
|
Inheriting Reportable Securities: If you inherit shares of a Reportable Security you must notify the Code of Ethics Administration Group within 10 days. |
7 |
John Hancock Affiliated open ended mutual funds do not require pre-clearance, only reporting. However, there are certain holding period requirements. A list of John Hancock Affiliated Funds can be found on StarCompliance. |
8 |
Level 1 Access Persons are banned from participation in IPOs. |
12
|
30 Day Hold John Hancock Affiliated Funds: You cannot profit from the purchase and sale of a John Hancock Affiliated Funds within 30 calendar days. |
|
60 Day Hold: You may not profit from the purchase and sale (or sale and purchase) of the same (or equivalent) Reportable Security (see note on John Hancock Affiliated Funds) within 60 calendar days, also known as a Ban on Short Term Profits. |
|
Exclusion: pre-clearance requests in a Reportable Security with a market capitalization of $5 billion or more would, in most cases, not be subject to the 60 day hold and would be approved if they are appropriately pre-cleared. |
Options requiring additional consideration are as follows:
Call Options
You can purchase a call option that is subject to pre-clearance only if the call option has an expiration of equal to or greater than 60 days from the date of purchase. You must either (i) hold the option for at least 60 days prior to sale or (ii) if exercised, must hold the option and the underlying Security of the option for a total of 60 days (i.e., the period during which the call option was held will count towards the 60 day holding period for the underlying Security).
You can sell (i.e. write) a call option that is subject to pre-clearance only if the underlying Security (in the corresponding quantity) has been held for at least 60 days (i.e. covered call). You can not engage in a subsequent purchase of a call option unless the conditions specified above are met.
Put Options
You can purchase a put option that is subject to pre-clearance only if the put option has a period to expiration of at least 60 days from the date of purchase and you hold the put option for at least 60 days. If you purchases a put option on a Security already owned (i.e. put hedge), the time the underlying Security has been held will count towards the 60 day holding period for the put.
You may not sell (i.e. write) a put option on a Security.
You may not use derivatives including futures, options on futures, or options or warrants on a Security to circumvent the restrictions of the Code. (i.e. you may not use derivative transactions with respect to a Security if the Code otherwise prohibits them from taking the same position directly in the underlying Security.)
|
Ownership Ban: Securities of Sub-advisers: you are prohibited from owning securities of any sub-adviser of a John Hancock Affiliated Fund.9 |
9 |
MFC securities are excluded from Level 1 & Level 2 sub-adviser ownership prohibition. The list of securities of sub-advisers can be found on the automated compliance system or upon request from the CCO. |
13
|
Must promptly disclose: |
|
Ownership of Securities Under Consideration for John Hancock Affiliated Fund: Any direct or indirect beneficial interest in a Reportable Security that is under consideration for purchase or sale in a John Hancock Affiliated Fund. |
|
Private Placement Conflicts: You must disclose holdings of any Reportable Securities purchased in a private placement when you participate in a decision to purchase or sell that same issuers securities for a John Hancock Affiliated Fund. |
|
Restriction on Securities Under Active Consideration: You are prohibited from buying or selling a Reportable Security if the Reportable Security is being actively traded by a John Hancock Affiliated Fund. |
|
Exceptions: |
|
De Minimis Trading: pre-clearance requests for 500 shares or less of a particular Reportable Security within a market value of $25K or less, aggregated daily, would, in most cases, not be subject to the 7- day blackout period restrictions and the restriction on actively traded securities. |
|
Market Cap Securities: pre-clearance requests in a Reportable Security with a market capitalization of $5B or more would not be subject to the blackout period restrictions and the restriction on actively traded securities. |
|
Pre-clearance of Exchange Traded Funds/Exchange Traded Notes (ETF/ETN) and Options on Reportable Securities: you are required to pre-clear ETFs, ETNs and Options on Reportable Securities. |
|
Exceptions to the pre-clearance requirement for ETF/ETN or options on Reportable Securities (provided it is not a John Hancock Affiliated Fund): |
|
has an average market capitalization of $5 billion or more; |
|
is based on a non-covered security; |
|
or is based on a Broad-Based Index. |
|
Prohibition on Investment Clubs, Good Until Canceled Orders, or Limit Orders: You may not participate in: |
|
investment clubs, |
|
good until cancelled orders, or |
|
limit orders unless the limit orders are day orders that automatically |
expire at the end of the trading day and cancel any orders that have not been executed.
Investment Professionals Only
Level 1 Access Persons who are Investment Professionals (Analysts and Portfolio Managers) must disclose the following:
|
Ownership of 5% or Greater: 5% or greater interest in a company, John Hancock Affiliated Funds and its affiliates may not make any investment in that company; |
|
Ownership of 1% or greater 1% or greater interest in a company, you cannot participate in any decision by John Hancock Funds and its affiliates to buy or sell that companys securities; |
14
|
ANY other interest in a company, you cannot recommend or participate in a decision by John Hancock Affiliated Funds, and its affiliates to buy or sell that companys securities unless your personal interest is fully disclosed at all stages of the investment decision. |
In such instances, you must initially disclose that beneficial interest orally to the primary portfolio manager (or other appropriate analyst) of the Affiliated Fund(s) or account or the appropriate Chief Investment Officer. Following the oral disclosure, you must send a written acknowledgement to the primary portfolio manager with a copy to the Code of Ethics Administration Group.
Level 2 Access Persons: Additional Personal Trading Restrictions and Disclosures
Please note, there are additional restrictions that apply to all Access Persons listed in the section entitled, Personal Trading Restrictions for All Access Persons.
Level 2 Access Persons:
|
Pre-clear MFC Securities: You must pre-clear all transactions in MFC securities including stock, company issued options, sell transactions in the MFC Global Share Ownership Plan, and any other securities such as debt. |
|
Pre-clear the following securities: You must pre-clear and receive approval prior to transactions in the following securities: |
|
Stocks; including sell transactions of MFC Shares held in your Global Share Ownership Plan |
|
Bonds; |
|
Government securities that are not direct obligations of the U.S. government, such as Fannie Mae, or municipal securities, in each case that mature in more than one year; |
|
John Hancock Affiliated Funds;10 |
|
Closed-end funds (including John Hancock affiliated closed-end funds) |
|
Options on securities, on indexes, and on currencies; |
|
Swaps on securities, on indexes, and on currencies; |
|
Limited partnerships; |
|
Exchange traded funds and notes; |
|
Domestic unit investment trusts; |
|
Non-US unit investment trusts and Non-US mutual funds; |
|
Private investment funds and hedge funds; and |
|
Futures, investment contracts or any other instrument that is considered a security under the Securities Act of 1933; |
10 |
John Hancock Affiliated open ended mutual funds do not require pre-clearance, only reporting. However, there are certain holding period requirements. |
15
|
IPOs11, Private Placements, limited offerings. |
|
Three Day Blackout Period: You are prohibited from knowingly buying or selling a Reportable Security within three calendar days before and after that Reportable Security is traded for a John Hancock Affiliated Fund unless no conflict of interest exists in relation to that Reportable Security as determined by the Code of Ethics Administration Group. |
|
Gifting Reportable Securities: If you gift or donate shares of a Reportable Security the transaction is considered a sale and you must receive pre-clearance approval. |
|
Inheriting Reportable Securities: If you inherit shares of a Reportable Security you must notify the Code of Ethics Administration Group within 10 days. |
|
30 Day Hold John Hancock Affiliated Funds: You cannot profit from the purchase and sale of a John Hancock Affiliated Funds within 30 calendar days. |
|
60 Day Hold: You may not profit from the purchase and sale (or sale and purchase) of the same (or equivalent) Reportable Security within 60 calendar days, also known as a Ban on Short Term Profits. |
|
Exclusion: pre-clearance requests in a Reportable Security with a market capitalization of $5 billion or more would, in most cases, not be subject to the Ban on Short Term Profits, and would be approved if they are appropriately pre-cleared. |
|
Ownership Ban: Securities of Sub-advisers: you are prohibited from owning securities of any sub-adviser of a John Hancock Affiliated Fund.12 |
|
Restriction on Securities Under Active Consideration: You are prohibited from buying or selling a Reportable Security if the security is being actively traded by a John Hancock Affiliated Fund. |
|
Exceptions: |
|
De Minimis Trading: pre-clearance requests for 500 shares or less of a particular Reportable Security within a market value of $25K or less, aggregated daily, would, in most cases, not be subject to the 7- day blackout period restrictions and the restriction on actively traded securities. |
|
Market Cap Securities: pre-clearance requests in a Reportable Security with a market capitalization of $5B or more would not be subject to the blackout period restrictions and the restriction on actively traded securities. |
|
Pre-clearance of Exchange Traded Funds/Exchange Traded Notes (ETF/ETN) and Options on Reportable Securities: you are required to pre-clear ETFs, ETNs and Options on Reportable Securities. |
|
Exceptions to the pre-clearance requirement for ETF/ETN or options on Reportable Securities (provided it is not a John Hancock Affiliated Fund): |
|
has an average market capitalization of $5 billion or more; |
11 |
Level 1 Access Persons are banned from participation in IPOs. |
12 |
MFC securities are excluded from Level 1 &Level 2 sub-adviser ownership prohibition. The list of securities of sub-advisers can be found on the automated compliance system or upon request from the CCO. |
16
|
is based on a non-covered security; |
|
or is based on a Broad-Based Index. |
|
Prohibition on Investment Clubs, Good Until Canceled Orders, or Limit Orders: You may not participate in: |
|
investment clubs, |
|
good until cancelled orders, or |
|
limit orders unless the limit orders are day orders that automatically expire at the end of the trading day and cancel any orders that have not been executed. |
Level 3 Access Persons: Additional Personal Trading Restrictions and Disclosures Please note, there are additional restrictions that apply to all Access Persons listed in the section entitled, Personal Trading Restrictions for All Access Persons.
Level 3 Access Persons:
|
Pre-clear transactions in: |
|
closed-end funds and exchange traded funds advised by a John Hancock Adviser |
|
transactions in IPOs |
|
private placements and limited offerings. |
|
Gift or Donation of Reportable Securities: You must obtain pre-clearance approval prior to gifting or donating any Reportable Securities transactions that would require pre-clearance. |
|
Inheritance of Reportable Securities: If you inherit shares of a Reportable Security you must notify the Code of Ethics Administration Group within 10 days. |
|
30 Day Hold John Hancock Affiliated Funds: You cannot profit from the purchase and sale of a John Hancock Affiliated Funds within 30 calendar days. |
An Access level 3 Person is not required to pre-clear other trades. However, please keep in mind that an Access level 3 Person is required to report Reportable Securities transactions after every trade (even those that are not required to be pre-cleared) by requiring your broker to submit duplicate confirmation statements or electronic feeds to the Code of Ethics Administration Group. You must also ensure that all transactions in Reportable Securities are properly reported on your quarterly transaction/annual holdings certification.
Pre-clearance Process
You may request a trade pre-clearance through the automated compliance system, StarCompliance.
Please note that:
|
You may not trade until clearance approval is received. |
|
Clearance approval is valid only for the date granted (i.e. the pre-clearance requested date and the trade date should be the same). |
|
A separate procedure should be followed for requesting pre-clearance of an IPO, a private placement, or a limited offering in StarCompliance. |
17
Certain transactions in securities that would normally require pre-clearance are exempt from the pre-clearance requirement in the following situations: (1) shares are being purchased as part of an Automatic Investment Plan; (2) shares are being purchased as part of a dividend reinvestment plan; or (3) transactions are being made in a Managed/discretionary account, an account over which you have designated a third party as having sole discretion to trade (you must have approval from the CCO (or designee) to establish a discretionary account).
Reporting and Certification Requirements
Reporting
All Access Persons, regardless of their level, must complete and submit reports and certifications to compliance using StarCompliance, the automated compliance system, in an accurate and timely manner as described below.
Reporting Upon Designation
Within 10 calendar days after designation as an Access Person, you must complete and submit to compliance using StarCompliance:
|
Initial Holdings Report: A report of all Brokerage Accounts (please see the definition section) that hold or have the ability to hold any Reportable Securities and all Reportable Securities holdings current as of the date you became an Access Person. |
|
Initial Certification of Compliance: Certify to your understanding of the Code of Ethics. |
|
Initial Training: Certify that you have attended a training on the Code of Ethics Policy. |
Quarterly Reporting
Within 30 calendar days after the end of each calendar quarter, you must complete and submit to compliance using StarCompliance:
|
Quarterly Certification: a report of all Brokerage Accounts and all transactions in Reportable Securities (including transactions in John Hancock Affiliated Funds, including sell transactions in your Global Share Ownership Plan (GSOP) and voluntary transactions, such as fund exchanges, in your John Hancock 401(k)). |
|
Managed Account Certification: A certification of related to your Managed Accounts (only if applicable). |
Additional transaction notes:
|
All transactions in John Hancock Affiliated Funds and Variable Products must be reported. |
|
Only sell transactions of MFC stock in your Global Share Ownership Plan (GSOP) need to be reported. |
18
|
Only voluntary transactions, such as fund exchanges, need to be reported for transactions in your John Hancock 401(k) Savings account. |
For each Brokerage Account you must certify that the following information is captured accurately:
|
Account number |
|
Brokerage Firm |
For each transaction required to be reported you must certify the following information was captured accurately:
|
the date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, interest rate and maturity date, number of shares, and principal amount of each Reportable Security involved; |
|
the nature of the transaction (i.e. purchase, sale or any other type of acquisition or disposition); |
|
the price at which the transaction was effected; |
|
the name of the broker, dealer or bank with or through which the transaction was effected. |
Annual Reporting
At a date designated by the Code of Ethics Administration Group, at least annually (or additionally when the Code has been materially changed), you must complete and submit to compliance:
|
Annual Holdings Report: disclosing all of your Brokerage Accounts that hold or can hold any Reportable Securities and all holdings in Reportable Securities, current as of a date not more than 45 days before the report is submitted. |
|
John Hancock Affiliated Funds & Variable Products holdings must be reported, regardless of where they are held. |
|
Global Share Ownership holdings of Manulife Financial Corporation, Inc. (MFC) stock must be reported. |
|
Annual (or additionally when the Code has been materially changed) Certification of Code of Ethics: acknowledging that you have received, read, and complied with the requirements of the Code of Ethics. |
Ad Hoc Reporting
Throughout the year you must complete and submit to compliance:
|
Brokerage Account Changes: You are required to promptly notify (within 10 days) Compliance of any applicable account changes. |
|
Changes to the Code of Ethics: You are required to complete an additional certification of compliance stating that you read, received and understood material changes to the Code of Ethics. |
19
Administration and Enforcement
Administration of the Code
Sub-adviser Compliance
A sub-adviser to a John Hancock Affiliated Fund has a number of Code of Ethics responsibilities:
|
The sub-adviser must have adopted their own code of ethics in accordance with Rule 204A-1(b) under the Advisers Act which has been approved by the Board of Trustees; |
|
On a quarterly basis, each sub-adviser certifies compliance with their Code of Ethics or reports material violations if such have occurred; and |
|
Each sub-advisor must report quarterly to the CCO (or designee), any material changes to its Code of Ethics. |
Adoption and Approval
The Board of a John Hancock Affiliated Fund, including a majority of the Funds Independent Board Members, must approve the Code of Ethics of the Funds adviser, sub-adviser or principal underwriter (if an affiliate of the underwriter serves as a Board member or officer of the Fund or the adviser) before initially retaining its services.
Each material change to a Code of Ethics of a sub-adviser to a fund must be approved by the Board of the John Hancock Affiliated Fund, including a majority of the Funds Independent Board Members, no later than six months after adoption of the material change.
The Board may only approve the Code if they determine that the Code:
|
Contains provisions reasonably necessary to prevent the subadvisers Access Persons (as defined in Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act) from engaging in any conduct prohibited by Rule 17j-1 and 204A-1; |
|
Requires the sub-advisers Access Persons to make reports to at least the extent required in Rule 17j-1(d) and Rule 204A-1(b); |
|
Requires the sub-adviser to institute appropriate procedures for review of these reports by management or compliance personnel (as contemplated by Rule 17j- 1(d)(3) and Rule 204 A- 1(a)(3)); |
|
Provides for notification of the sub-advisers Access Persons in accordance with Rule 17j-1(d)(4) and Rule 204A-1(a)(5); |
|
Requires the sub-advisers Access Persons who are Investment Personnel to obtain the pre- clearances required by Rule 17j-1(e); and |
|
Requires the sub-advisers Access Persons to obtain the pre-clearances required by Rule 204A- 1(c). |
The CCO of the John Hancock Affiliated Funds oversees each of the funds sub-adviser to ensure compliance with each of the provisions included in this section.
20
Sub-adviser Reporting & Recordkeeping Requirements
Each sub-adviser must complete an annual Code of Ethics questionnaire and certification as to their compliance under Rule 17j-1 and summary of any violation to the relevant John Hancock Adviser, whom present summaries to the Board of Trustees annually during their 2nd quarter meeting (which is typically held in June).
Reporting to the Board
No less frequently than annually, the Office of the CCO will furnish to the Board of Trustees a written report that:
|
describes issues that arose during the previous year under the Code of Ethics or the related procedures, including, but not limited to, information about material Code or procedure violations, as well as any sanctions imposed in response to the material violations, and |
|
certifies that each entity, including the sub-advisers have adopted procedures reasonably necessary to prevent its Access Persons from violating its Code of Ethics, |
|
Any material changes to the Code are presented to the Trustees within six months for their approval. |
The CCO of the John Hancock Affiliated Funds oversees each of the funds sub-adviser to ensure compliance with each of the provisions included in this section.
Reporting Violations
If you know of any violation of the Code, you have a responsibility to promptly report it to the CCO of your company. You should also report any deviations from the controls and procedures that safeguard John Hancock and the assets of our clients.
Since we cannot anticipate every situation that will arise, it is important that we have a way to approach questions and concerns. Always ask first, act later. If you are unsure of what to do in any situation, seek guidance before you act.
Speak to your manager, a member of the Human Resources Department or Legal Department or your divisional compliance officer if you have:
|
a doubt about a particular situation; |
|
a question or concern about a business practice; or |
|
a question about potential conflicts of interest |
You may report suspected or potential illegal or unethical behavior without fear of retaliation. John Hancock does not permit retaliation of any kind for good faith reports of illegal or unethical behavior. Concerns about potential or suspected illegal or unethical behavior should be referred to a member of the Human Resources or Legal Department. John Hancock relies on the Manulife Code of Business Conduct which advises that unethical, unprofessional, illegal, fraudulent or other questionable behavior may also be reported by calling a confidential toll-free Ethics Hotline at 1-866-294-9534 or at www.ManulifeEthics.com.
21
Exemptions & Appeals
Exemptions: to the Code may be granted by the CCO (or designee) where supported by applicable facts and circumstances. If you believe that you have a situation that warrants an exemption to any of the rules and restrictions of this Code you need to submit a written request to the CCO (or designee). All requests will be reviewed on a case by case basis. The CCO (or designee) will provide a written response detailing its decision once the review has been completed.
Exemption requests which pose a conflict of interest for the CCO will be escalated to the Ethics Oversight Committee for review and consideration.
Appeals: If you believe that your request has been incorrectly denied or that an action is not warranted, you may appeal the decision. To make an appeal, you need to give the CCO (or designee) of the Adviser/Trust a written explanation of your reasons for appeal within 30 days of the date that you were informed of the decision. Be sure to include any extenuating circumstances or other factors not previously considered. During the review process, you may, at your own expense, engage an attorney to represent you. The Code of Ethics Administration Group may arrange for Ethics Oversight Committee or other parties to be part of the review process.
Interpretation and Enforcement
The Code cannot anticipate every situation in which personal interests may be in conflict with the interests of our clients and fund investors. You should be responsive to the spirit and intent of the Code as well as its specific provisions.
When any doubt exists regarding any Code provision or whether a conflict of interest with clients or fund investors might exist, you should discuss the situation in advance with the CCO (or designee) of your company. The Code is designed to detect and prevent fraud against clients and fund investors, and to avoid the appearance of impropriety.
The CCO has general administrative responsibility for the Code as it applies to the covered employees; an appropriate member of the Code of Ethics Administration Group will administer procedures to review personal trading activity. The Code of Ethics Administration Group also regularly reviews the forms and reports it receives. If these reviews uncover information that is incomplete, questionable, or potentially in violation of the rules in this document, the Code of Ethics Administration Group will investigate the matter and may contact you.
The Board of the John Hancock Affiliated Funds approve material amendments to the Code and authorize sanctions imposed on Access Persons of the Funds. Accordingly, the Code of Ethics Administration Group will refer violations to the CCO of the Trust/Adviser (or designee) for further review and action, including determination if the matter should be presented to the Ethics Oversight Committee and/or the Board of Trustees for recommended action.
22
The following factors will be considered when determining a fine or other disciplinary action:
|
the persons position and function (senior personnel may be held to a higher standard); |
|
the amount of the trade; |
|
whether the John Hancock Affiliated Funds hold the security and were trading the same day; |
|
whether the violation was by a family member; |
|
whether the person has had a prior violation and which policy was involved; and |
|
whether the employee self-reported the violation. |
John Hancock takes all rule violations seriously and, at least once a year, provides the Board of the John Hancock Affiliated Funds with a summary of all material violations and sanctions, significant conflicts of interest and other related issues for their review. Sanctions for violations could include (but are not limited to) fines, disgorgement, limitations on personal trading activity, suspension or termination of the Covered Persons position with John Hancock and/or a report to the appropriate regulatory authority.
You should be aware that other Securities Laws and regulations not addressed by the Code may also apply to you, depending on your role at John Hancock.
The CCO of the Adviser/Trust (or designee) and the Ethics Oversight Committee retain the discretion to interpret the Codes provisions and to decide how they apply to any given situation.
Education of Employees
This Code constitutes the Code of Ethics required by Rule 17j-1 under the Investment Company Act of 1940 and by Rule 204A-1 under the Investment Advisers Act of 1940. The Code of Ethics Administration Group will provide a copy of the Code (and any amendments) to each person subject to the Code. The Code of Ethics Administration Group in coordination with the CCO or designee will also administer initial and annual training to employees on the principles and procedures of the Code and other related policies.
Recordkeeping
The Code of Ethics Administration Group will maintain a:
|
Copy of the current Code for John Hancock and a copy of each Code of Ethics in effect at any time within the past five years. |
|
Record of any violation of the Code, and of any action taken as a result of the violation, for six years. |
|
Copy of each report made by an Access Person under the Code, for six years (the first two years in a readily accessible place). |
23
|
Record of all persons, currently or within the past five years, who are or were, required to make reports under the Code. This record will also indicate who was responsible for reviewing these reports. |
|
Record of any decision, and the reasons supporting the decision, to approve the acquisition by an Access Level I Persons of IPOs or private placement securities, for six years. |
|
Record of any decision, and the reasons supporting the decision, to approve the acquisition by an Access Person of the John Hancock Advisers IPOs or private placement securities, for six years. |
Other Important Policies
The John Hancock Affiliated Funds have additional policies or may rely on certain MFC policies. Summary excerpts of such policies are listed below please review each full policy for additional details.
MFC Code of Business Conduct & Ethics (All Covered Employees)
The MFC Code of Business Conduct and Ethics (the MFC Code) provides standards for ethical behavior when representing the Company and when dealing with employees, field representatives, customers, investors, external suppliers, competitors, government authorities and the public.
The MFC Code applies to directors, officers and employees of MFC, its subsidiaries and controlled affiliates. Sales representatives and third-party business associates are also expected to abide by all applicable provisions of the MFC Code and adhere to the principles and values set out in the MFC Code when representing Manulife to the public or performing services for, or on behalf of, Manulife.
Other important issues in the MFC Code include:
|
MFC values; |
|
Ethics in workplace; |
|
Ethics in business relationships; |
|
Conflicts of Interest; |
|
Handling information; |
|
Receiving or giving of gifts, entertainment or favors; |
|
Misuse or misrepresentation of your corporate position; |
|
Disclosure of confidential or proprietary information; |
|
Disclosure of outside business activities; |
|
Antitrust activities; and |
|
Political campaign contributions and expenditures relating to public officials. |
24
John Hancock Conflicts of Interest Policy (All Covered Employees)
Conflicts of Interest are both inherent to the investment advisory business and also exist as a result of our unique organizational structure. The Conflicts of Interest Policy governs organizational/Adviser conflicts, rather than personal conflicts (such as outside business activities or gifts and entertainment). Our fiduciary obligation as an adviser to the Funds requires us to effectively disclose and/or manage these conflicts, which we do today through various documents and controls, and ultimately to act in the best interest of our clients and the Fund shareholders.
John Hancock Gift & Entertainment Policy (All Covered Employees)
You are subject to the Gift and Entertainment Policy for the John Hancock Advisers which is designed to prevent the appearance of an impropriety, potential conflict of interest or improper payment.
The Gift & Entertainment Policy covers many issues relating to giving and accepting of gifts and entertainment when dealing with business partners, such as:
|
Gift & Business Entertainment Limits |
|
Restrictions on Gifts & Entertainment |
|
Reporting of Gifts & Entertainment |
John Hancock Insider Trading Policy (All Covered Employees)
The antifraud provisions of the federal Securities Laws generally prohibit persons with material nonpublic information from trading on or communicating the information to others. Sanctions for violations can include civil injunctions, permanent bars from the securities industry, civil penalties up to three times the profits made or losses avoided, criminal fines and jail sentences. While Access Level I Persons are most likely to come in contact with material nonpublic information, the rules (and sanctions) in this area apply to all persons covered under this code and extend to activities both related and unrelated to your job duties.
The John Hancock Insider Trading Policy (the Insider Trading Policy) covers a number of important issues, such as:
|
Possession, misuse and access to material nonpublic information |
John Hancock Pay to Play Rule on Political Contributions (All Covered Associates)
The Pay to Play rule restricts Investment Advisers and certain employees who fall within the definition of Covered Associates from making contributions to elected officials (including incumbents, candidates, or successful candidates for an elective office of a government entity) who may be able to influence the selection of the investment adviser to manage the assets of government entities (any state or political subdivision of a state). The rule has three primary elements:
|
A two-year prohibition on an advisers providing compensated investment advisory services to a government entity after a contribution has been made by the adviser or one of its covered associates; |
|
A prohibition on the use of third-party solicitors who are not themselves regulated persons subject to pay-to-play restrictions on political contributions; and |
|
A prohibition on bundling and other efforts by advisers to solicit political contributions to certain officials of a government entity to which the adviser is seeking to provide services. |
25
Sanctions for violating the rule include a prohibition from receiving compensation for providing advisory services to a fund in which such government entitys participant-directed plan or program invests for two years thereafter, otherwise known as a time-out period.
John Hancock Whistleblower Policy (All Covered Employees)
The Committees of the mutual funds Board of Trustees investigate improprieties or suspected improprieties in the operations of the Funds and has established procedures for the confidential, anonymous submission by employees of John Hancock Investment Management, LLC and John Hancock Variable Trust Advisers, LLC. (collectively the Advisers) or any other provider of services to the Funds or Advisers of complaints regarding accounting, internal accounting controls, auditing matters or violations of the Securities Laws. The objective of this policy is to provide a mechanism by which complaints and concerns regarding accounting, internal accounting controls, auditing matters or violations of Securities Laws may be raised and addressed without the fear or threat of retaliation. The funds desire and expect that the employees and officers of the Advisers, or any other service provider to the funds will report any complaints or concerns they may have regarding accounting, internal accounting controls or auditing matters.
Persons may submit complaints or concerns to the attention of funds CCO (or designee) by sending a letter or other writing to the funds principal executive offices, by telephone call to or an email to the Ethics Hotline, Ethics Hotline can be reached at 1-866-294-9534, or through the Ethicspoint website at www.manulifeethics.com. The Ethics Hotline and Ethicspoint website are operated by an independent third party, which maintains the anonymity of all complaints.
Complaints and concerns may be made anonymously to the funds CCO (or designee) or the respective Committees Chairperson. Furthermore, nothing in this policy prohibits reporting possible violations of applicable law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of applicable law or regulation.
Policy and Procedures Regarding Disclosure of Portfolio Holdings (All Covered Employees)
It is our policy not to disclose nonpublic information regarding Fund portfolio holdings except in the limited circumstances noted in this Policy. You can only provide nonpublic information regarding portfolio holdings to any person, including affiliated persons, on a need to know basis (i.e., the person receiving the information must have a legitimate business purpose for obtaining the information prior to it being publicly available and you must have a legitimate business purpose for disclosing the information in this manner). We consider nonpublic information regarding Fund portfolio holdings to be confidential and the intent of the policy and procedures is to guard against selective disclosure of such information in a manner that would not be in the best interest of Fund shareholders.
26
Additional Policies Outside the Code (All Covered Employees)
|
Policy Regarding Dissemination of Mutual Fund Portfolio Information |
|
Manulife Financial Corporation Anti-Fraud Policy |
|
John Hancock Anti-Money Laundering (AML) and Anti-Terrorist Financing (ATF) Program |
|
Conflict of Interest Rules for Directors and Officers |
|
John Hancock Non-Cash Compensation Policy |
27
Appendix
Definitions
Access Person:
You are an Access Person if you are a Supervised Person who has access to nonpublic information regarding any clients purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any John Hancock Affiliated Fund, or who is involved in making securities recommendations to clients, or who has access to such recommendations that are nonpublic.
Automatic Investment Plan:
Means a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.
Beneficial Ownership:
Means the opportunity, directly or indirectly, to profit or share in any profit (for loss) derived from a Reportable Securities transaction. This includes Reportable Securities held by an Access Persons Household Family Member and Covered Securities held through certain family trusts, family custodial accounts, entities controlled by the Access Person, portfolios from which the Supervised Person may receive a performance fee, and other circumstances in which the Access Person may profit, directly or indirectly through any contract, arrangement, understanding, relationship, or otherwise, from transactions in the respective Reportable Securities, as defined further in Rule 16a-1 (a) (2) of the Securities Exchange Act of 1934.
Broad-Based Index:
For the purposed of this Code a Broad-Based Index will include the following:
|
the S&P 100, S&P Midcap 400, S&P 500, FTSE 100, and Nikkei 225; |
|
Direct obligations of the U.S. Government (e.g., treasury securities) |
|
Indirect obligations of the U.S. Government with a maturity of less than 1 year (GNMA) |
|
Commodities; |
|
Foreign currency |
Brokerage Account:
Any of your accounts:
|
Which have the capability to hold Reportable Securities; |
|
Accounts of your spouse, Significant Other, minor children or family members sharing your household (together, Household Members); |
28
|
Accounts in which you or your Household Members have a Beneficial Ownership; |
|
Accounts over which you have discretion, give advice or information or have Power of Attorney (POA). |
Covered Person:
Includes all Access Persons as defined under Securities and Exchange Commission (SEC) Rule 17j-1 under the Investment Company Act of 1940, as amended (the 1940 Act), and Supervised Persons as defined under SEC Rule 204A-1 under the Investment Advisers Act of 1940, as amended (the Advisers Act).
Household Family Member:
An Access Persons spouse, Significant Other, minor children, or other family member who also shares the same household as the Access Person.
Investment Professionals:
Means a Supervised Person who are either Portfolio Managers, Analysts, and Traders.
Involuntary Issuer Transaction:
Transaction where the account owner has not determined the timing as to when the purchase or sale transaction will occur or the amount of shares purchased or sold, i.e. making changes to existing positions or asset allocations within the John Hancock retirement plans, buying or selling shares of a Reportable Security, etc.
Involuntary Issuer Transactions include:
|
transactions which result from a corporate action applicable to all similar security holders (such as splits, tender offers, mergers, stock dividends, etc.); or |
|
automatic dividend reinvestment and stock purchase plan acquisitions. |
Please note: any transaction that overrides the pre-set schedule or allocations must be included in a quarterly transaction report.
John Hancock Affiliated Fund:
For the purposes of this Code, a John Hancock Affiliated Fund shall include both:
|
a John Hancock Mutual Fund (i.e., a 1940 Act mutual fund that is advised or sub-advised by a John Hancock Adviser or by another Manulife entity); or |
|
John Hancock Variable Product (i.e., contracts funded by insurance company separate accounts that use one or more portfolios of John Hancock Variable Insurance Trust). |
|
Any other financial product or security advised or sub-advised by a John Hancock Adviser or John Hancock Insurance or another Manulife entity. |
The definition for John Hancock Affiliated Fund does not include John Hancock money market funds. A list of John Hancock Affiliated Funds can be found on StarCompliance.
29
John Hancock Variable Products:
Contracts funded by insurance company separate accounts that use one or more portfolios of John Hancock Variable Insurance Trust.
Managed Account:
Any account over which neither you nor a Household Family Member has direct or indirect influence or control and cannot a) suggest purchases or sales of investments to the trustee or third-party discretionary manager; b) direct purchases or sales of investments; or c) consult with the trustee or third-party discretionary manager as to the particular allocation of investments to be made in the account.
Private Placements:
Securities exempt from SEC registration under section 4(2), section 4(6) and/or rules 504 506 under the Securities Act.
Reportable Securities:
Means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or warrant or right to subscribe to or purchase any of the foregoing, except it should not include:
(i) Direct obligations of the Government of the United States;
(ii) Bankers acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements;
(iii) Shares issued by money market funds;
(iv) Shares issued by open-end funds other than reportable funds; and
(v) Shares issued by unit investment trusts that are invested exclusively in one or more open-end funds, none of which are reportable funds.
30
Please note: Reportable Securities includes both John Hancock Affiliated Funds and John Hancock Variable Products.
Securities Laws:
Means the Securities Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the SEC under any of these statutes, the Bank Secrecy Act as it applies to funds and investment advisers, and any rules adopted there under by the SEC or the Department of the Treasury.
Significant Others:
Two people who (1) share the same primary residence; (2) share living expenses; and (3) are in a committed relationship and intend to remain in the relationship indefinitely.
Supervised Person:
Is defined by the Advisers Act to mean a partner, officer, director (or other person occupying a similar status or performing similar functions) or employee, as well as any other person who provides advice on behalf of the adviser and is subject to the advisers supervision and control. However, in reliance on the Prudential no-action letter, John Hancock does not treat as a Supervised Employee any of its non-advisory personnel, as defined below.
In reliance on the Prudential no-action letter, John Hancock treats as an Advisory Person any Supervised Employee who is involved, directly, or indirectly, in John Hancock Financial Services investment advisory activities, as well as any Supervised Employee who is an Access Person. John Hancock treats as non-advisory personnel, and does not treat as a Supervised Person, those individuals who have no involvement, directly or indirectly, in John Hancock investment advisory activities, and who are not Access Persons.
31
Preferred Brokers List
Preferred Brokers List While employed by John Hancock, you must maintain your Brokerage Accounts at one of the preferred brokers approved by John Hancock. The following are the preferred brokers:
Ameriprise | Sanders Morris Harris | |
Bank of Oklahoma | Scottrade | |
Bank of Texas | Stifel | |
Barclays Wealth Management | TD Ameritrade | |
Brave Warrior Advisors | T. Rowe Price | |
Charles Schwab | Thompson Davis & Co. | |
Chase Investment Services | UBS | |
Citigroup | US Trust | |
Constellation Wealth Management | Vanguard | |
Credit Suisse | Robert W. Baird & Co. | |
DB Alex Brown | ||
Edward Jones | ||
E*Trade | ||
Fidelity | ||
First Republic | ||
Goldman Sachs Wealth Management | ||
HSBC Private Bank | ||
Interactive Brokers | ||
JB Were | ||
JP Morgan Private Bank | ||
JP Morgan Securities | ||
Lincoln Financial | ||
Merrill Lynch & Bank of America | ||
Morgan Stanley Private Wealth | ||
Morgan Stanley Smith Barney | ||
Northern Trust | ||
Northern Trust Institutional | ||
Oppenheimer & Co. | ||
OptionsXpress | ||
Pershing Advisor Solutions | ||
Piper Jaffray | ||
Raymond James | ||
Revolution Capital |
32
Compliance Contacts
Entity |
Chief Compliance Officer |
|
John Hancock Investment Management, LLC | Trevor Swanberg 617-572-4398 | |
John Hancock Variable Trust Advisers, LLC | Trevor Swanberg | |
Each open-end and closed-end fund advised by a John Hancock Adviser | Trevor Swanberg | |
John Hancock Investment Management Distributors, LLC |
Michael Mahoney - 617-663-3021 | |
John Hancock Distributors, LLC | Michael Mahoney | |
Code of Ethics Contacts |
|
|
Code of Ethics Administration Group | INVDIVCodeofEthics@manulife.com |
33
JOHN HANCOCK VARIABLE INSURANCE TRUST
JOHN HANCOCK FUNDS
JOHN HANCOCK FUNDS II
JOHN HANCOCK EXCHANGE-TRADED FUND TRUST
SARBANES-OXLEY CODE OF ETHICS
FOR
PRINCIPAL EXECUTIVE, PRINCIPAL FINANCIAL OFFICER & TREASURER
I. |
Covered Officers/Purpose of the Code |
This code of ethics (this Code) for John Hancock Variable Insurance Trust, John Hancock Funds1, and John Hancock Funds II, John Hancock Exchange-Traded Fund Trust and, each a registered management investment company under the Investment Company Act of 1940, as amended (1940 Act), which may issue shares in separate and distinct series (each investment company and series thereunder to be hereinafter referred to as a Fund), applies to each Funds Principal Executive Officer (President), Principal Financial Officer (Chief Financial Officer) and Treasurer (Treasurer) (the Covered Officers as set forth in Exhibit A) for the purpose of promoting:
Ø |
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
Ø |
full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (SEC) and in other public communications made by the Fund; |
Ø |
compliance with applicable laws and governmental rules and regulations; |
Ø |
the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and |
Ø |
accountability for adherence to the Code. |
1 John Hancock Funds includes the following trusts: John Hancock Financial Opportunities Fund; John Hancock Bond Trust; John Hancock California Tax-Free Income Fund; John Hancock Capital Series; John Hancock Funds III; John Hancock Income Securities Trust; John Hancock Investment Trust; John Hancock Investment Trust II; John Hancock Investors Trust; John Hancock Municipal Securities Trust; John Hancock Premium Dividend Fund ; John Hancock Preferred Income Fund; John Hancock Preferred Income Fund II; John Hancock Preferred Income Fund III; John Hancock Sovereign Bond Fund; John Hancock Strategic Series; John Hancock Tax-Advantaged Dividend Income Fund; John Hancock Tax-Advantaged Global Shareholder Yield Fund; John Hancock Hedged Equity and Income Fund; and John Hancock Collateral Trust.
1 of 6
Each of the Covered Officers should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.
II. |
Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview |
A conflict of interest occurs when a Covered Officers private interest interferes with the interests of, or his service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund. Certain conflicts of interest arise out of the relationships between the Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the Investment Company Act) and the Investment Advisers Act of 1940, as amended (the Investment Advisers Act). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as affiliated persons of the Fund. Each of the Covered Officers is an officer or employee of the investment adviser or a service provider (Service Provider) to the Fund. The Funds, the investment advisers and the Service Providers compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.
Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the investment adviser and the Service Provider of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund, for the investment adviser or for the Service Provider), be involved in establishing policies and implementing decisions which will have different effects on the investment adviser, the Service Provider and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the investment adviser and the Service Provider and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if such participation is performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, it will be deemed to have been handled ethically. In addition, it is recognized by the Funds Board of Trustees/Directors (the Board) that the Covered Officers may also be officers or employees of one or more other investment companies covered by other Codes.
Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but the Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund.
* * *
2 of 6
Each Covered Officer must:
Ø |
not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund; |
Ø |
not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than for the benefit of the Fund; and |
Ø |
not use material non-public knowledge of portfolio transactions made or contemplated for the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions. |
Additionally, conflicts of interest may arise in other situations, the propriety of which may be discussed, if material, with the Funds Chief Compliance Officer (CCO). Examples of these include:
Ø |
serve as a director/trustee on the board of any public or private company; |
Ø |
the receipt of any non-nominal gifts; |
Ø |
the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety (or other formulation as the Fund already uses in another code of conduct); |
Ø |
any ownership interest in, or any consulting or employment relationship with, any of the Funds service providers, other than its investment adviser, any sub-adviser, principal underwriter, administrator or any affiliated person thereof; and |
Ø |
a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officers employment, such as compensation or equity ownership. |
III. |
Disclosure & Compliance |
Ø |
Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Fund; |
Ø |
Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Funds directors and auditors, and to governmental regulators and self-regulatory organizations; |
3 of 6
Ø |
Each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Fund and the Funds adviser or any sub-adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and |
Ø |
It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. |
IV. |
Reporting & Accountability |
Each Covered Officer must:
Ø |
upon adoption of the Code (or thereafter as applicable, upon becoming an Covered Officer), affirm in writing to the Funds CCO that he/she has received, read, and understands the Code; |
Ø |
annually thereafter affirm to the Funds CCO that he/she has complied with the requirements of the Code; |
Ø |
not retaliate against any employee or Covered Officer or their affiliated persons for reports of potential violations that are made in good faith; |
Ø |
notify the Funds CCO promptly if he/she knows of any violation of this Code (Note: failure to do so is itself a violation of this Code); and |
Ø |
report at least annually any change in his/her affiliations from the prior year. |
The Funds CCO is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers sought by the Principal Executive Officer will be considered by the Funds Board or the Compliance Committee thereof (the Committee).
The Fund will follow these procedures in investigating and enforcing this Code:
Ø |
the Funds CCO will take all appropriate action to investigate any potential violations reported to him/her; |
Ø |
if, after such investigation, the CCO believes that no violation has occurred, the CCO is not required to take any further action; |
Ø |
any matter that the CCO believes is a violation will be reported to the Board or, if applicable, Compliance Committee; |
Ø |
if the Board or, if applicable, Compliance Committee concurs that a violation has occurred, the Board, either upon its determination of a violation or upon |
4 of 6
recommendation of the Compliance Committee, if applicable, will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the Service Provider or the investment adviser or its board; or a recommendation to dismiss the Registrants Executive Officer; |
Ø |
the Board, or if applicable the Compliance Committee, will be responsible for granting waivers, as appropriate; and |
Ø |
any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. |
V. |
Other Policies & Procedures |
This Code shall be the sole code of ethics adopted by the Fund for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Fund, the Funds adviser, any sub-adviser, principal underwriter or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds and its investment advisers codes of ethics under Rule 204A-1 under the Investment Advisers Act and Rule 17j-1 under the Investment Company Act, respectively, are separate requirements applying to the Covered Officers and others and are not part of this Code.
VI. |
Amendments |
Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Funds Board, including a majority of independent directors.
VII. |
Confidentiality |
All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Funds Board and its counsel, the investment adviser and the relevant Service Providers.
VIII. |
Internal Use |
The Code is intended solely for the internal use by the Fund and does not constitute an admission, by or on behalf of the Fund, as to any fact, circumstance, or legal conclusion.
5 of 6
Exhibit A
Persons Covered by this Code of Ethics
(As of December 31, 2019)
John Hancock Variable Insurance Trust
Ø |
Principal Executive Officer and President Andrew Arnott |
Ø |
Principal Financial Officer and Chief Financial Officer Charles Rizzo |
Ø |
Treasurer Salvatore Schiavone |
John Hancock Funds
Ø |
Principal Executive Officer and President Andrew Arnott |
Ø |
Principal Financial Officer and Chief Financial Officer Charles Rizzo |
Ø |
Treasurer Salvatore Schiavone |
John Hancock Funds II
Ø |
Principal Executive Officer and President Andrew Arnott |
Ø |
Principal Financial Officer and Chief Financial Officer Charles Rizzo |
Ø |
Treasurer Salvatore Schiavone |
John Hancock Exchange-Traded Trust
Ø |
Principal Executive Officer and President Andrew Arnott |
Ø |
Principal Financial Officer and Chief Financial Officer Charles Rizzo |
Ø |
Treasurer Salvatore Schiavone |
6 of 6
CERTIFICATION
I, Andrew Arnott, certify that:
1. I have reviewed this report on Form N-CSR of the John Hancock Investors Trust (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: |
December 11, 2020 |
/s/ Andrew Arnott |
||||||
Andrew Arnott |
||||||||
President |
CERTIFICATION
I, Charles A. Rizzo, certify that:
1. I have reviewed this report on Form N-CSR of the John Hancock Investors Trust (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: |
December 11, 2020 |
/s/ Charles A. Rizzo |
||||||
Charles A. Rizzo |
||||||||
Chief Financial Officer |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the attached Report of John Hancock Investors Trust (the registrant) on Form N-CSR to be filed with the Securities and Exchange Commission (the Report), each of the undersigned officers of the registrant does hereby certify that, to the best of such officers knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant as of, and for, the periods presented in the Report.
/s/ Andrew Arnott |
||
Andrew Arnott | ||
President | ||
Dated: | December 11, 2020 | |
/s/ Charles A. Rizzo |
||
Charles A. Rizzo | ||
Chief Financial Officer | ||
Dated: | December 11, 2020 |
A signed original of this written statement, required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Manulife Investment Management
Global Proxy Voting Policy and
Procedures
January 2020
About Us
Manulife Investment Management (Manulife IM) has a boutique style investment team structure, where each team is responsible for investing in line with its investment philosophy and clients objectives. Manulife IMs approach to proxy voting aligns with its organizational structure and encourages best practices in governance and management of environmental and social risks and opportunities. Manulife IM has adopted and implemented proxy voting policies and procedures to ensure that proxies are voted in the best interests of its clients for whom it has proxy voting authority.
This Global Proxy Voting Policy and Procedures (Policy) applies to each of the Manulife IM advisory affiliates listed in Appendix A. In seeking to adhere to local regulatory requirements of the jurisdiction in which an advisory affiliate operates, additional procedures specific to that affiliate may be implemented to ensure compliance, where applicable. The Policy is not intended to cover every possible situation that may arise in the course of business, but rather to act as a decision-making guide. It is therefore subject to change and interpretation from time-to-time as facts and circumstances dictate.
Statement of Policy
|
The right to vote is a basic component of share ownership and is an important control mechanism to ensure that a company is managed in the best interests of its shareholders. Where clients delegate proxy voting authority to Manulife IM, Manulife IM has a fiduciary duty to exercise voting rights responsibly. |
|
Where Manulife IM is granted and accepts responsibility for voting proxies for client accounts, it will seek to ensure proxies are received and voted in the best interests of the client with a view to maximize the economic value of their equity securities, unless it determines that it is in the best interests of the client to refrain from voting a given proxy. |
|
If there is any potential material proxy-related conflict of interest between Manulife IM and its clients, identification and resolution processes are in place to provide for determination in the best interests of the client. |
|
Manulife IM will disclose information about its proxy voting policies and procedures to its clients. |
|
Manulife IM will maintain certain records relating to proxy voting. |
Philosophy on Sustainable Investment
|
Manulife IMs commitment to sustainable investment1 is focused on protecting and enhancing the value of our clients investments and, as active owners in the companies in which we invest, we believe that voting at shareholder meetings can contribute to the long-term sustainability of our investee companies. Manulife IM will seek to exercise the rights and responsibilities associated with equity ownership, on behalf of its clients, with a focus on maximizing long-term shareholder returns, as well as enhancing and improving the operating strength of the companies to create sustainable value for shareholders. |
1 |
Further information on Sustainable Investment at Manulife IM can be found at www.manulifeam.com/Responsible-Investment/. |
|
Manulife IM invests in a wide range of securities across the globe, ranging from large multinationals to smaller early stage companies, and from well-developed markets to emerging and frontier markets. Expectations of those companies vary by market to reflect local standards, regulations and laws. Manulife IM believes, however, that successful companies across regions are generally better positioned over the long-term if they have: |
|
Robust oversight including a strong and effective board with independent and objective leaders working on behalf of shareholders; |
|
Mechanisms to mitigate risk such as effective internal controls, board expertise covering a firms unique risk profile, and routine use of KPIs to measure and assess long-term risks; |
|
A management team aligned with shareholders through remuneration structures that incentivize long-term performance through the judicious and sustainable stewardship of company resources; |
|
Transparent and thorough reporting of the components of the business that are most significant to shareholders and stakeholders with focus on the firms long-term success and, |
|
Management focused on all forms of capital including environmental, social and human capital. |
|
The Manulife Investment Management Voting Principles (Voting Principles) outlined in Appendix B provide guidance for our voting decisions. An active decision to invest in a firm reflects a positive conviction in the investee company and we generally expect to be supportive of management for that reason. Manulife IM may seek to challenge managements recommendations, however, if they contravene these Voting Principles or Manulife IM otherwise determines that doing so is in the best interest of its clients. |
|
Manulife IM also regularly engages with boards and management on environmental, social or corporate governance issues consistent with the principles stipulated in our Sustainable Investing Policy and our Engagement Policy. Manulife IM may, through these engagements, request certain changes of the portfolio company to mitigate risks or maximize opportunities. In the context of preparing for a shareholder meeting, Manulife IM will review progress on requested changes for those companies engaged. In an instance where Manulife IM determines that the issuer has not made sufficient improvements on an issue, then we may take voting action to demonstrate our concerns. |
|
In rare circumstances Manulife IM may consider filing, or co-filing, a shareholder resolution at an investee company. This may occur where our team has engaged with management regarding a material sustainability risk or opportunity, and where we determine that the company has not made satisfactory progress on the matter within a reasonable time period. Any such decision will be in the sole discretion of Manulife IM and acted on where we believe filing, or co-filing, a proposal is in the best interests of our clients. |
|
Manulife IM may also divest of holdings in a company where Portfolio Managers are dissatisfied with company financial performance, strategic direction and/or management of material sustainability risks or opportunities. |
Procedures
Receipt of Ballots and Proxy Materials
|
Proxies received are reconciled against the clients holdings, and the custodian bank will be notified if proxies have not been forwarded to the proxy service provider when due. |
Voting Proxies
|
Manulife IM has adopted the Voting Principles contained in Appendix B of this Policy. |
|
Manulife IM has deployed the services of a proxy voting services provider to ensure the timely casting of votes, and to provide relevant and timely proxy voting research to inform our voting decisions. Manulife IM periodically reviews the detailed policies created by the proxy voting service provider to ensure consistency with our Voting Principles, to the extent this is possible. |
|
Portfolio managers actively review voting options and make voting decisions for their holdings. Where Manulife IM holds a significant ownership position in an issuer, the rationale for a portfolio managers voting decision is specifically recorded, including whether the vote cast aligns with the recommendations of the proxy voting services provider or has been voted differently. A significant ownership position in an investment is defined as those cases where Manulife IM holds at least 2% of a companys issued share capital in aggregate across all Manulife IM client accounts. |
|
The Manulife IM ESG Research and Integration Team (ESG Team) is an important resource for portfolio management teams on proxy matters. This team provides advice on specific proxy votes for individual issuers if needed. ESG Team advice is supplemental to the research and recommendations provided by our proxy voting services provider. In particular, ESG analysts actively review voting resolutions for companies in which: |
|
Manulife IMs aggregated holdings across all client accounts represent 2% or greater of issued capital; |
|
A meeting agenda includes shareholder resolutions related to environmental and social risk management issues, or where the subject of a shareholder resolution is deemed to be material to our investment decision; or |
|
The issuer has been engaged by Manulife IM within the past two years seeking a change in behavior. |
After review, the ESG Team may provide research and advice to investment staff in line with the Voting Principles.
|
Manulife IM also has an internal Proxy Voting Working Group (Working Group) comprising senior managers from across Manulife IM including the equity investment team, Legal, Compliance, and the ESG Team. The Working Group operates under the auspices of the Manulife IM Public Markets Sustainable Investment Committee. The Working Group regularly meets to review and discuss voting decisions on shareholder proposals or instances where a portfolio manager recommends a vote different than the recommendation of the proxy voting services provider. |
|
Manulife IM clients retain the authority, and may choose, to lend shareholdings. Manulife IM, however, generally retains the ability to recall shares in order to execute proxy votes. Manulife IM will, where feasible, weigh the benefit of casting votes at a given meeting when deciding whether to recall lent shares for voting. |
|
Manulife IM may refrain from voting a proxy where we have agreed with a client in advance to limit the situations in which we will execute votes. Manulife may also refrain from voting due to logistical considerations that may have a detrimental effect on our ability to vote. These issues may include, but are not limited to: |
1. |
Costs associated with voting the proxy exceed the expected benefits to clients; |
2. |
Underlying securities have been lent out pursuant to a clients securities lending program and have not been subject to recall; |
3. |
Short notice of a shareholder meeting; |
4. |
Requirements to vote proxies in person; |
5. |
Restrictions on a non-nationals ability to exercise votes, determined by local market regulation; |
6. |
Restrictions on the sale of securities in proximity to the shareholder meeting (i.e. share blocking); |
7. |
Requirements to disclose commercially sensitive information that may be made public (i.e. re-registration); |
8. |
Requirements to provide local agents with power of attorney to facilitate the voting instructions (such proxies are voted on a best-efforts basis); or |
9. |
Inability of a clients custodian to forward and process proxies electronically. |
|
If a Manulife IM portfolio manager believes it is in the best interest of a client to vote proxies in a manner inconsistent with the Policy, the portfolio manager will submit new voting instructions to a member of the ESG Team with rationale for the new instructions. The ESG Team will then support the PM in developing voting decision rationale that aligns with this Policy and the Voting Principles. The ESG Team will then submit the vote change to the Proxy Voting Working Group. The Proxy Voting Working Group will review the change and ensure that the rationale is sound and the decision will promote the long-term success of the issuer. |
|
On occasion, there may be proxy votes which are not within the research and recommendation coverage universe of the proxy voting service provider. Portfolio managers responsible for the proxy votes will provide voting recommendations to the ESG Team and those items may be escalated to the Proxy Voting Working Group for review to ensure that the voting decision rationale is sound and the decision will promote the long-term success of the issuer. the Manulife IM Proxy Operations Team will be notified of the voting decisions and execute the votes accordingly. |
|
Manulife IM does not engage in the practice of empty voting (a term embracing a variety of factual circumstances that result in a partial, or total, separation of the right to vote at a shareholders meeting from beneficial ownership of the shares on the meeting date). Manulife IM prohibits investment managers from creating large hedge positions solely to gain the vote while avoiding economic exposure to the market. Manulife IM will not knowingly vote borrowed shares (for example, shares borrowed for short sales and hedging transactions). |
Engagement of the Proxy Voting Service Provider
|
Manulife IM has contracted with a third-party proxy service provider to assist with the proxy voting process. Except in instances where a client retains voting authority, Manulife IM will instruct custodians of client accounts to forward all proxy statements and materials received in respect of client accounts to the proxy service provider. |
Manulife IM has engaged its proxy voting service provider to:
1. |
Research and make voting recommendations; |
2. |
Ensure proxies are voted and submitted in a timely manner; |
3. |
Perform other administrative functions of proxy voting; |
4. |
Maintain records of proxy statements and provide copies of such proxy statements promptly upon request; |
5. |
Maintain records of votes cast; and |
6. |
Provide recommendations with respect to proxy voting matters in general. |
Scope of Proxy Voting Authority
|
Manulife IM and our clients shape the proxy voting relationship by agreement provided there is full and fair disclosure and informed consent. Manulife IM may agree with clients to other proxy voting arrangements in which Manulife IM does not assume proxy voting responsibility or will only vote in limited circumstances.2 |
|
While the application of our fiduciary duty in the context of proxy voting will vary with the scope of the voting authority we assume, we acknowledge the relationship in all cases remains that of a fiduciary to the client. Beyond the general discretion retained by Manulife IM to withhold from voting as outlined above, Manulife IM may enter a specific agreement with a client not to exercise voting authority on certain matters where the cost of voting would be high or the benefit to the client would be low. |
Disclosure of Proxy Votes
|
Manulife IM may inform company management of our voting intentions ahead of casting the vote. This is in line with Manulife IMs objective to provide the opportunity for companies to better understand our investment process, policies and objectives. |
|
We will not intentionally disclose to anyone else, including other investors, our voting intention prior to casting the vote. |
2 |
We acknowledge SEC guidance on this issue from August 2019 which lists several non-exhaustive examples of possible voting arrangements between the client and investment advisor including: (i) an agreement with the client to exercise voting authority pursuant to specific parameters designed to serve the clients best interest; (ii) an agreement with the client to vote in favor of all proposals made by particular shareholder proponents; or (iii) an agreement with the client to vote in accordance with the voting recommendations of management of the issuer. All such arrangements could be subject to conditions depending on instruction from the client. |
|
Manulife IM keeps records of proxy voting available for inspection by clients, regulatory authorities or government agencies. |
|
Manulife IM will annually disclose voting records aggregated across funds. |
Conflicts of Interest
Manulife IM has an established infrastructure designed to identify conflicts of interest throughout all aspects of the business. Proxy voting proposals may raise conflicts between the interests of Manulife IMs clients and the interests of Manulife IM, its affiliates, or employees. Apparent conflicts are reviewed by the Working Group to determine whether there is a conflict of interest and, if so, whether the conflict is material. Manulife IM shall consider any of the following circumstances a potential material conflict of interest:
|
Manulife IM has a business relationship or potential relationship with the issuer; |
|
Manulife IM has a business relationship with the proponent of the proxy proposal; or |
|
Manulife IM members, employees or consultants have a personal or other business relationship with managers of the business such as top-level executives, corporate directors or director candidates. |
In addressing any such potential material conflict Manulife IM will seek to ensure proxy votes are cast in the advisory clients best interests and are not affected by Manulife IMs potential conflict. In the event a potential material conflict of interest exists, the Proxy Voting Working Group or its designee will either (i) review the proxy voting decisions to ensure robust rationale, that the voting decision will protect or enhance shareholder value over the long-term, and is in line with the best interest of the client; (ii) vote such proxy according to the specific recommendation of the proxy voting services provider; (iii) abstain; or (iv) request the client vote such proxy. The basis for the voting decision, including the process for the determination of the decision that is in the best interests of the client, is recorded.
Voting Shares of Manulife Financial Company
Manulife Financial (MFC) is the publicly listed parent company of Manulife IM. Generally, legislation restricts the ability of a public company (and its subsidiaries) to hold shares in itself within its own accounts. Accordingly, the MFC Share Investment Policy outlines the limited circumstances in which MFC or its subsidiaries may, or may not, invest or hold shares in MFC on behalf of MFC or its subsidiaries.3
The MFC Share Investment Policy does not apply to investments made on behalf of unaffiliated third parties, which remain assets of the client.4 Such investing may be restricted, however, by specific client guidelines, other Manulife policies or other applicable laws.
3 |
This includes general funds, affiliated segregated funds or separate accounts, and affiliated mutual / pooled funds. |
4 |
This includes assets managed or advised for unaffiliated third parties, such as unaffiliated mutual/pooled funds and unaffiliated institutional advisory portfolios. |
Where Manulife IM is charged with voting MFC shares we will execute votes in proportion with all other shareholders (i.e. proportional or echo vote). This is intended to neutralize the effect of our vote on the meeting outcome.
Policy Responsibility and Oversight
|
The Working Group oversees and monitors the Voting Policy and Manulife IMs proxy voting function. The Working Group is responsible for reviewing regular reports, potential conflicts of interest, vote changes and non-routine proxy voting items. The Working Group also oversees the third-party proxy voting service provider. The Working Group will meet at least monthly and report to the Public Markets Sustainable Investing Committee and, where requested, the Manulife IM Operating Committee. |
|
Manulife IMs Proxy Operations Team is responsible for the daily administration of the proxy voting process for all Manulife IM operations that have contracted with a third-party proxy voting services provider. Significant proxy voting issues identified by Manulife IMs Proxy Operations Team are escalated to the Chief Compliance Officer or its designee and the Working Group. |
|
The Working Group is responsible for the proper oversight of any service providers hired by Manulife IM to assist it in the proxy voting process. This oversight includes: |
|
Annual Due Diligence: Manulife IM conducts an annual due diligence review of the proxy voting research service provider. This oversight includes an evaluation of the service providers industry reputation, points of risk, compliance with laws and regulations and technology infrastructure. Manulife IM also reviews the providers capabilities to meet Manulife IMs requirements including reporting competencies; the adequacy and quality of the proxy advisory firms staffing and personnel; the quality and accuracy of sources of data and information; the strength of policies and procedures that enable it to make proxy voting recommendations based on current and accurate information; and the strength of policies and procedures to address conflicts of interest of the service provider related to its voting recommendations. |
|
Regular Updates: Manulife also requests that the proxy voting research service provider deliver updates regarding any business changes that alter that firms ability to provide independent proxy voting advice and services aligned with our policies. |
|
Additional Oversight in Process: Manulife IM has additional control mechanisms built into the proxy voting process to act as checks on the service provider and ensure that decisions are made in the best interest of our clients. These mechanisms include: |
|
Sampling pre-populated votes: Where we utilize a third-party research provider for either voting recommendations or voting execution (or both), we may assess pre-populated votes shown on the vendors electronic voting platform before such votes are cast to ensure alignment with the Voting Principles. |
|
Consideration of additional information: Where Manulife IM utilizes a proxy service provider for voting recommendations, we consider additional information that may become available regarding voting items. This additional information may include filings by an issuer or shareholder proponent that are issued subsequent to the filing of meeting materials. |
|
Decision scrutiny from the Working Group: Where our voting policies and procedures do not address how to vote on a particular matter, or where the matter is highly contested or controversial (e.g. major acquisitions involving takeovers or contested director elections where a shareholder has proposed its own slate of directors), review by the Working Group may be necessary or appropriate to ensure votes cast on behalf of its client are cast in the clients best interest. |
Record-Keeping and Reporting
|
Manulife IM provides clients with a copy of the Voting Policy upon request and it is also available on our website at www.manulifeam.com. Manulife IM describes its proxy voting procedures to its clients in the relevant or required disclosure document and discloses to its clients the process to obtain information on how Manulife IM voted that clients proxies. |
|
Manulife IM keeps records of proxy voting activities and those records include proxy voting policies and procedures, records of votes cast on behalf of clients, records of client requests for proxy voting information; and any documents generated in making a vote decision. These documents are available for inspection by clients, regulatory authorities or government agencies. |
|
Manulife IM will disclose voting records on its website and those records will be updated on an annual basis. The voting records will generally reflect the voting decisions made for retail, institutional and other client funds in the aggregate. |
Policy Amendments and Exceptions
|
This policy is subject to periodic review by the Proxy Voting Working Group. The Working Group may suggest amendments to this policy and any such amendments must be approved by the Manulife IM Public Markets Sustainable Investing Committee and the Manulife IM Operating Committee. |
|
Any deviation from this policy will only be permitted with the prior approval of the Chief Investment Officer or Chief Administrative Officer (or their designee), with the counsel of the Chief Compliance Officer / General Counsel. |
APPENDIX A
MANULIFE IM ADVISORY AFFILIATES IN SCOPE OF POLICY
+Investment management business only.
Manulife Investment Management Limited
Manulife Investment Management (North America) Limited
Manulife Investment Management (Hong Kong) Limited
PT Manulife Aset Manajemen Indonesia*
Manulife Investment Management (Japan) Limited
Manulife Investment Management (Malaysia) Bhd.
Manulife Investment Management and Trust Corporation
Manulife Investment Management (Singapore) Pte. Ltd.
Manulife IM (Switzerland) LLC
Manulife Investment Management (Taiwan) Co., Ltd.*
Manulife Investment Management (Europe) Limited
Manulife Investment Management (US) LLC
Manulife Investment Fund Management (Vietnam) Company Limited*
* |
By reason of certain local regulations and laws with respect to voting, e.g.: manual/physical voting processes or the absence of a third-party proxy voting service provider for those jurisdictions, Manulife Investment Fund Management (Vietnam) Company Limited, and PT Manulife Aset Manajemen Indonesia do not engage a third-party service provider to assist in their proxy voting processes. Manulife Investment Management (Taiwan) Co., Ltd. Uses the third-party proxy voting service provider to execute votes for non-Taiwanese entities only. |
APPENDIX B
MANULIFE IM VOTING PRINCIPLES
Manulife Investment Management (Manulife IM) believes that strong management of all forms of corporate capital, whether financial, social or environmental will mitigate risks, create opportunities and drive value over the long-term. Manulife IM reviews and considers environmental, social and corporate governance risks and opportunities in our investment decisions. Once invested, Manulife IM continues its oversight through active ownership which includes portfolio company engagement and proxy voting of underlying shares. We believe proxy voting is a vital component of this continued oversight as it provides a voice for minority shareholders regarding management actions.
Manulife IM has developed some key principles that drive our proxy voting decisions and engagements. We believe these principles preserve value and generally lead to outcomes that drive positive firm performance. These principles dictate our voting on issues ranging from director elections and executive compensation to the preservation of shareholder rights and stewardship of environmental and social capital. The facts and circumstances of each issuer are unique, and Manulife IM may deviate from these principles where we believe doing so will preserve or create value over the long-term. These principles also do not address the specific content of all proposals voted around the globe, but provide a general lens of value preservation, value creation, risk management and protection of shareholder rights through which Manulife IM analyzes all voting matters.
I. |
Boards and Directors: Manulife IM uses the following principles to review proposals covering director elections and board structure in the belief that they encourage engaged and accountable leadership of a firm. |
a. |
Board Independence: The most effective boards are composed of directors with a diverse skill set that can provide an objective view of the business, oversee management, and make decisions in the best interest of the shareholder body at large. To create and preserve this voice, boards should have a significant number of non-executive, independent directors. The actual number of independent directors can vary by market and Manulife IM accounts for these differences when reviewing the independence of the board. Ideally, however, there is an independent majority among directors at a given firm. |
b. |
Committee Independence: Manulife IM also prefers that key board committees are composed of independent directors. Specifically, the audit, nomination and compensation committees should be entirely or majority composed of independent directors. |
c. |
Attendance: A core part of a directors duties is to remain an engaged and productive participant at board and committee meetings. Directors should, therefore, attend at least 75% of board and committee meetings in the aggregate over the course of a calendar year. |
d. |
Gender Diversity: In line with the principles expressed in relation to Board Independence above, Manulife IM believes boards with strong gender representation |
are better equipped to manage risks and oversee business resilience over the long-term compared to firms with low gender balance. Manulife IM generally expects boards to have at least one woman on the board and encourages companies to aspire to a higher balance of gender representation. |
e. |
Classified/Staggered Boards: Manulife IM prefers that directors be subject to election and re-election on an annual basis. Annual elections operate to hold directors accountable for their actions in a given year in a timely manner. Shareholders should have the ability to voice concerns through a director vote and to potentially remove problematic directors if necessary. Manulife IM generally opposes the creation of classified or staggered director election cycles designed to extend director terms beyond one year. Manulife IM also supports proposals to eliminate these structures. |
f. |
Overboarding: Manulife IM believes directors should limit their outside board seats in order to ensure that they have the time and attention to provide their director role at a firm in question. Generally, this means directors should not sit on more than 5 public company boards. The role of CEO requires an individuals significant time and attention. Directors holding the role of CEO at any public firm, therefore, should not sit on more than 3 public company boards inclusive of the firm at which they hold the CEO role. |
g. |
Independent Chair/CEO: Governance failures can occur where a manager has firm control over a board through the combination of the Chair/CEO roles. Manulife IM generally supports the separation of the Chair/CEO roles as a means to prevent board capture by management. We will evaluate proposals to separate the Chair/CEO roles on a case-by-case basis, for example, however considering such factors as the establishment of a strong lead independent director role or the temporary need for the combination of the CEO/Chair roles to help the firm through a leadership transition. |
h. |
Vote Standard: Manulife IM supports a vote standard that allows resolutions to pass, or fail, based on a majority voting standard. Manulife IM expects companies to adopt a majority vote standard for director elections and supports the elimination of a plurality vote standard except in the case of contested elections. |
i. |
Contested Elections: Where there is a proxy contest or a directors election is otherwise contested, Manulife IM evaluates the proposals on a case-by-case basis. Consideration is given to firm performance, whether there have been significant failures of oversight, and whether the proponent for change makes a compelling case that board turnover will drive firm value. |
j. |
Significant and Problematic Actions or Omissions: Manulife IM believes boards should be held accountable to shareholders in instances where there is a significant failure of oversight that has led to a loss of firm value or otherwise curtailed shareholder rights. Manulife IM considers withholding from, or voting against, certain directors where the board acted, or failed to act, in a way that significantly affected shareholder rights or otherwise negatively affected firm value. Some examples of actions that might warrant a vote against directors include, but are not limited to, the following: |
i. |
Failure of Oversight: Manulife IM may take action against directors where there has been a significant negative event leading to a loss of shareholder value and stakeholder confidence. A failure may manifest itself in multiple ways including adverse auditor opinions, material misstatements, failures of leadership and governance and environmental or human rights violations. |
ii. |
Adoption of Anti-Takeover Mechanism: Boards should generally review takeover offers independently and objectively in consideration of the potential value created or lost for shareholders. Manulife IM holds boards accountable when they create or prolong certain mechanisms, bylaws or article amendments that act to frustrate genuine offers that may lead to value creation for shareholders. These can include poison pills; classes of shares with differential voting rights; classified, or staggered, board structures; unilateral bylaw amendments and supermajority voting provisions. |
iii. |
Problematic Executive Compensation Practices: Manulife IM encourages companies to adopt best practices for executive compensation in the markets in which they operate. Generally, this means that pay should be aligned with performance. Manulife IM may hold directors accountable where this alignment is not robust. We may also hold boards accountable where they have not adequately responded to shareholder votes against a previous proposal on remuneration or have adopted problematic agreements or practices (e.g. golden parachutes, repricing of options). |
iv. |
Bylaw/Article Adoption and Amendments: Shareholders should have the ability to vote on any change to company articles or bylaws that will materially change their rights as shareholders. Any amendments should require only a majority of votes to pass. Manulife IM will hold directors accountable where a board has amended or adopted bylaw and/or article provisions that significantly curtail shareholder rights. |
v. |
Engagement Responsiveness: Manulife IM regularly engages with issuers to discuss ESG risks and opportunities and may request changes from firms during these discussions. Manulife IM may vote against certain directors where we have engaged with an issuer and requested certain changes but the firm has not made sufficient progress on those matters. |
II. |
Environmental and Social Proposals: Manulife IM expects its portfolio companies to manage material environmental and social issues affecting its business, whether risks or opportunities, with a view towards long-term value preservation and creation.5 Manulife IM expects firms to identify material environmental and social risks and opportunities specific to their business, to develop strategies to manage those matters, and to provide meaningful, substantive reporting while demonstrating progress year-over-year against their plans. Proposals touching on management of risks and opportunities related to environmental and social issues are often put forth as shareholder proposals but can be proposed by management as well. Manulife IM reviews these proposals on a case-by-case basis considering, among other factors: |
a. |
The Magnitude of the Risk/Opportunity: Manulife IM evaluates the level of materiality of a certain environmental or social issue identified in a proposal as it pertains to the firms ability to generate value over the long-term. This review includes deliberation of the effect an issue will have on the financial statements and/or the cost of capital. |
b. |
The Firms Current Management of the Risk/Opportunity: Manulife IM analyzes a firms current approach to an issue to determine whether the firm has robust plans, infrastructure and reporting to mitigate the risk or embrace the opportunity. |
c. |
Firms Current Disclosure Framework: Manulife IM expects firms to disclose enough information for shareholders to assess the companys management of environmental and social risks and opportunities material to the business. Manulife IM may support proposals calling for enhanced firm disclosure regarding environmental and social issues where additional information would help our evaluation of a companys exposure, and response, to those factors. |
d. |
Legislative or Regulatory Action of a Risk/Opportunity: When reviewing proposals on environmental or social factors, Manulife IM considers whether a given risk or opportunity is currently addressed by local regulation or law in the markets in which a firm operates and whether those rules are designed to adequately manage an issue. Manulife IM also considers whether a firm should proactively address a matter in anticipation of future legislation or regulation. |
e. |
Cost to, or Disruption of, the Business: When reviewing environmental and social proposals Manulife IM assesses the potential cost of the requested action against the benefit provided to the firm and its shareholders. Particular attention is paid to proposals that request actions that are overly prescriptive on management or that request a firm exit markets or operations that are essential to its business. |
III. |
Shareholder Rights: Manulife IM generally supports management or shareholder proposals that protect, or improve, shareholder rights and opposes proposals that remove, or curtail, existing rights. |
a. |
Shareholder Rights Plans (Poison Pills): Manulife IM opposes mechanisms intended to frustrate genuine takeover offers. Manulife IM may, however, support shareholder rights plans where the plan has a trigger of 20% ownership or more and will expire in three years or less. In conjunction with these requirements Manulife IM evaluates the companys strategic rationale for adopting the poison pill. |
b. |
Supermajority Voting: Shareholders should have the ability to direct change at a firm based on a majority vote. Manulife IM opposes the creation, or continuation, of any bylaw, charter or article provisions that require approval of more than a majority of shareholders for amendment of those documents. Manulife IM may consider supporting such a standard where the supermajority requirement is intended to protect minority shareholders. |
5 |
For more information on issues generally of interest to our firm please see the Manulife Investment Management Engagement Policy and the Manulife Investment Management Sustainable Investing Policy. |
c. |
Proxy Access: Manulife IM believes that shareholders have a right to appoint representatives to the board that best protect their interests. The power to propose nominees without holding a proxy contest is a way to protect that right and is potentially less costly to management and shareholders. Accordingly, Manulife IM supports creation of a proxy access right (or similar power at non-U.S. firms) provided there are reasonable thresholds of ownership and a reasonable number of shareholders can aggregate ownership to meet those thresholds. |
d. |
Written Consent: Written consent provides shareholders the power to formally demand board action outside of the context of an annual general meeting. Shareholders can use written consent as a nimble method of holding boards accountable. Manulife IM supports the right of written consent so long as that right is reasonably tailored to reflect the will of a majority of shareholders. Manulife IM may not support such a right, however, where there is a holder with a significant, or controlling, stake. Manulife IM evaluates the substance of any written actual consent proposal in-line with these principles. |
e. |
Right to Call a Special Meeting: Manulife IM is supportive of the shareholder right to call a special meeting. This right allows shareholders to quickly respond to events which can significantly affect firm value. Manulife IM believes that a 10% ownership threshold to call a special meeting reasonably protects this shareholder right while reducing the possibility of undue distraction for management. |
IV. |
Executive Compensation: Manulife IM encourages companies to align executive incentives with shareholder interests when designing executive compensation plans. Companies should provide shareholders with transparent, comprehensive and substantive disclosure regarding executive compensation that aids shareholder assessment of the alignment between executive pay and firm performance. Companies should also have the flexibility to design remuneration programs that fit a firms business model, business sector and industry and overall corporate strategy. No one template of executive remuneration can fit all companies. |
a. |
Advisory Votes on Executive Compensation: While acknowledging that there is no singular model for executive compensation, Manulife IM scrutinizes companies closely that have certain practices. Some concerning practices can include: |
i. |
Misalignment Between Pay and Company Performance: Pay should generally move in tandem with corporate performance. Firms where CEO pay remains flat, or increases, though corporate performance remains down relative to peers are particularly concerning. |
ii. |
One-Time Grants: A firms one-time grant to an executive, outside of the normal salary, bonus and long-term award structure, may be indicative of an overall failure of the board to design an effective remuneration plan. A company should have a robust justification for making grants outside of the normal remuneration framework. |
iii. |
Significant Quantity of Non-Performance Based Pay: Executive pay should generally be weighted more heavily towards performance-based remuneration to create the alignment between pay and performance. Companies should provide a robust explanation for any significant awards made that vest solely based on time or are not otherwise tied to performance. |
iv. |
Lack of Rigor in Performance Targets: Performance targets should challenge managers to improve corporate performance and outperform peers. Targets should, where applicable, generally align with, or even outpace, guidance; incentivize outperformance against a peer group; and otherwise remain challenging. |
v. |
Lack of Disclosure: Transparency is essential to shareholder analysis and understanding of executive remuneration at a company. Manulife IM expects firms to clearly disclose all major components of remuneration. This includes disclosure of amounts, performance metrics and targets, vesting terms, and pay outcomes. |
vi. |
Repricing of Options: Resetting the exercise price of outstanding options significantly undermines the incentive nature of the initial option grant. Though a firm may have a strong justification for repricing options, Manulife IM believes that firms should put such decisions to a shareholder vote. Manulife IM may oppose an advisory vote on executive compensation where a company has repriced outstanding options for executives without that shareholder approval. |
vii. |
Adoption of Problematic Severance Agreements (Golden Parachutes): Manulife IM believes managers should be incentivized to pursue and complete transactions that may benefit shareholders. Severance agreements, if structured appropriately, can provide such inducements. At the same time, however, the significant payment associated with severance agreements could potentially drive managers to pursue transactions at the expense of shareholder value. Manulife IM may oppose an executive remuneration proposal where a firm has adopted, or amended, an agreement with an executive that contains an excise tax gross-up provision, permits accelerated vesting of equity upon a change-in-control, allows an executive to unilaterally trigger the severance payment, or pays out in an amount greater than 300% of salary and bonus combined. |
b. |
Frequency of Advisory Votes on Executive Compensation: Manulife IM supports an annual advisory vote on executive compensation to provide shareholders with a regular channel to voice concerns regarding executive pay at a firm. |
c. |
Proposals to Approve Executive Severance: Manulife IM may oppose a vote on an executive severance agreement where a firm has adopted, or amended, an agreement with an executive that contains an excise tax gross-up provision, permits accelerated vesting of equity upon a change-in-control, allows an executive to unilaterally trigger the severance payment, or pays out in an amount greater than 300% of salary and bonus combined. |
d. |
Equity Plans: Manulife IM encourages companies to pay executives in equity as a way for management to tie their personal wealth to the long-term interests of shareholders. Equity plans should, however, manage equity responsibly by reasonably limiting both the quantum of shares available and the potential dilution to shareholders. Manulife IM may oppose plans with evergreen provisions that regularly refresh shares available without shareholder approval, plans that permit options to be priced less than market value on grant date, or plans that permit repricing of options without shareholder approval. In line with our position on golden-parachutes above, Manulife IM may oppose plans that permit acceleration of vesting of equity upon a change-in-control. |
V. |
Capital Structure: Manulife IM believes firms should balance the need to raise capital and encourage investment with the rights and interests of the existing shareholder body. Evaluation of proposals to issue shares, repurchase shares, conduct stock splits or otherwise restructure capital are evaluated on a case-by-case basis with some specific requests covered here: |
a. |
Common Stock Authorization: Requests to increase the pool of shares authorized for issuance are evaluated on a case-by-case basis with consideration given to the size of the current pool, recent use of authorized shares by management, and the company rationale for the proposed increase. Manulife IM also supports these increases where the company intends to execute a split of shares or pay a stock dividend. |
b. |
Reverse Stock Splits: Manulife IM generally supports proposals for a reverse stock split if the company plans to proportionately reduce the number of shares authorized for issue in order to mitigate against the risk of excessive dilution to our holdings. We may also support these proposals in instances where the firm needs to quickly raise capital in order to continue operations. |
c. |
Dual Class Voting Structure: Voting power should align with economic interest at a given firm. Manulife IM opposes the creation of new classes of stock with differential voting rights and supports the elimination of these structures. |
VI. |
Corporate Transactions and Restructurings: Manulife IM reviews mergers, acquisitions, restructurings and reincorporations on a case-by-case basis through the lens of whether the transaction will create shareholder value. Considerations include fairness of the terms, valuation of the event, changes to management and leadership, realization of synergies and efficiencies and whether the rationale for a strategic shift is compelling. |
VII. |
Audit-related Issues: Manulife IM believes that an effective auditor will remain independent and objective in their review of company reporting. Firms should be transparent regarding auditor fees and other services provided by an auditor which may create a conflict of interest. Manulife IM uses the below principles to guide voting decisions related to auditors. |
a. |
Auditor Ratification: Manulife IM generally approves the reappointment of the auditor absent evidence that they have either failed in their duties or appear to have a conflict that may not allow independent and objective oversite of a firm. |
b. |
Auditor Rotation: If Manulife IM believes that the independence and objectivity of an auditor may be impaired at a firm, we may support a proposal requesting a rotation of auditor. Reasons to support the rotation of the auditor can include a significant failure in the audit function and excessive tenure of the auditor at the firm. |
JOHN HANCOCK FUNDS1
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
Overall Role and Responsibility
The Nominating and Governance Committee (the Committee) of each of the Trusts shall (1) make determinations and recommendations to the Board of Trustees (the Board) regarding issues related to (a) the composition of the Board and (b) corporate governance matters applicable to the Trustees who are not interested persons as defined in the Investment Company Act of 1940, as amended (the 1940 Act), of any of the Trusts, or of any Funds investment adviser, subadviser or principal underwriter and who are independent as defined in the rules of the New York Stock Exchange (NYSE) (the Independent Trustees) and (2) discharge such additional duties, responsibilities and functions as are delegated to it from time to time.
Membership
The Nominating and Governance Committee (the Committee) shall be composed of all of the Independent Trustees of the Board. One member of the Committee shall be appointed by the Board as Chair of the Committee. The chair shall be responsible for leadership of the Committee, including scheduling meetings or reviewing and approving the schedule for them, preparing agendas or reviewing and approving them before meetings, presiding over meetings of the Committee and making reports to the full Board, as appropriate.
Structure, Operations and Governance
Meetings and Actions by Written Consent. The Committee shall meet as often as required or as the Committee deems appropriate, with or without management present. Meetings may be called and notice given by the Committee chair or a majority of the members of the Committee. Members may attend meetings in person or by telephone. The Committee may act by written consent to the extent permitted by law and the Funds governing documents. The Committee shall report to the Board on any significant action it takes not later than the next following Board meeting.
Required Vote and Quorum. The affirmative vote of a majority of the members of the Committee participating in any meeting of the Committee at which a quorum is present is necessary for the adoption of any resolution. At least a majority of the Committee members present at the meeting in person or by telephone shall constitute a quorum for the transaction of business.
1 |
John Hancock Funds includes each trust and series as may be amended from time to time (each individually, a Trust, and collectively, the Trusts, and each series thereof, a Portfolio or Fund, and collectively, the Portfolios or Funds). |
1
Delegation to Subcommittees. The Committee may delegate any portion of its authority to a subcommittee of one or more members.
Appropriate Resources and Authority. The Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority to retain special counsel and other advisers, experts or consultants, at the Funds expense, as it determines necessary or appropriate to carry out its duties and responsibilities. In addition, the Committee shall have direct access to such officers of and service providers to the Funds as it deems desirable.
Review of Charter. The Committee Charter shall be approved by at least a majority of the Independent Trustees of the Trust. The Committee shall review and assess the adequacy of this Charter periodically and, where necessary or as it deems desirable, will recommend changes to the Board for its approval. The Board may amend this Charter at any time in response to recommendations from the Committee or on its own motion.
Executive Sessions. The Committee may meet privately and may invite non-members to attend such meetings. The Committee may meet with representatives of the Investment Management Services department of the Funds advisers, internal legal counsel of the Funds advisers, members of the John Hancock Funds Risk & Investment Operations Committee (the RIO Committee) and with representatives of the Funds service providers, including the subadvisers, to discuss matters that relate to the areas for which the Committee has responsibility.
Specific Duties and Responsibilities
The Committee shall have the following duties and powers, to be exercised at such times and in such manner as the Committee shall determine:
1. |
Except where a Trust is legally required to nominate individuals recommended by another, to identify individuals qualified to serve as Independent Trustees of the Trusts, and to consider and recommend to the full Board nominations of individuals to serve as Trustees. |
2. |
To consider, as it deems necessary or appropriate, the criteria for persons to fill existing or newly created Trustee vacancies. The Committee shall use the criteria and principles set forth in Annex A to guide its Trustee selection process. |
3. |
To consider and recommend changes to the Board regarding the size, structure, and composition of the Board. |
4. |
To evaluate, from time to time, and determine changes to the retirement policies for the Independent Trustees, as appropriate. |
5. |
To periodically review the Boards committee structure and, in collaboration with the Chairs of the various Committees, the charters of the Boards committees, and recommend to the Board of Trustees changes to the committee structure and charters as it deems appropriate. |
2
6. |
To retain and terminate any firm(s) to be used to identify or evaluate or assist in identifying or evaluating potential Independent Board nominees, subject to the Boards sole authority to approve the firms fees and other retention terms. |
7. |
To consider and determine the amount of compensation to be paid by the Trusts to the Independent Trustees, including the compensation of the Chair of the Board or any Vice-Chair of the Board and of Committee Chairs, and to address compensation-related matters. The Chair of the Board has been granted the authority to approve special compensation to Independent Trustees in recognition of any significant amount of additional time and service to the Trusts provided by them, subject to ratification of any such special compensation by the Committee at the next regular meeting of the Committee. |
8. |
To coordinate and administer an annual self-evaluation of the Board, which will include, at a minimum, a review of its effectiveness in overseeing the number of Funds in the Fund complex and the effectiveness of its committee structure. |
9. |
To review the Board Governance Procedures and recommend to the Board of Trustees changes to the Procedures as the Committee deems appropriate. |
10. |
To report its activities to the full Board and to make such recommendations with respect to the matters described above and other matters as the Committee may deem necessary or appropriate. |
Additional Responsibilities
The Committee will also perform other tasks assigned to it from time to time by the Chair of the Board or by the Board, and will report findings and recommendations to the Board, as appropriate.
Last revised:
3
ANNEX A
The Committee may take into account a wide variety of factors in considering Trustee candidates, including (but not limited to) the criteria set forth below. The Committee may determine that a candidate who does not satisfy these criteria in one or more respects should nevertheless be considered as a nominee if the Committee finds that the criteria satisfied by the candidate and the candidates other qualifications demonstrate the appropriate level of fitness to serve.
General Criteria
1. |
Nominees should have a reputation for integrity, honesty and adherence to high ethical standards, and such other personal characteristics as a capacity for leadership and the ability to work well with others. |
2. |
Nominees should have business, professional, academic, financial, accounting or other experience and qualifications which demonstrate that they will make a valuable contribution as Trustees. |
3. |
Nominees should have a commitment to understand the Funds, and the responsibilities of a trustee/director of an investment company and to regularly attend and participate in meetings of the Board and its committees. |
4. |
Nominees should have the ability to understand the sometimes conflicting interests of the various constituencies of the Funds, including shareholders and the investment adviser, and to act in the interests of all shareholders. |
5. |
Nominees should not have, nor appear to have, a conflict of interest that would impair their ability to represent the interests of all the shareholders and to fulfill the responsibilities of a trustee. |
6. |
Nominees should have experience on corporate or other institutional bodies having oversight responsibilities. |
It is the intent of the Committee that at least one Independent Trustee be an audit committee financial expert as that term is defined in Item 3 of Form N-CSR.
Application of Criteria to Current Trustees
The re-nomination of current Trustees should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above based on, among other things, the current Trustees contribution to the Board and any committee on which he or she serves.
Review of Nominations
1. |
The Committee believes that it is in the best interests of each Trust and its shareholders to obtain highly-qualified candidates to serve as members of the Board. |
2. |
In nominating candidates who would be Independent Trustees, the Committee believes that no particular qualities or skills nor any specific minimum qualifications or disqualifications are controlling or paramount. The Committee shall take into consideration any such factors as it deems appropriate; however, the appropriate mix of skills, expertise and attributes needed to maintain an effective board are sought in the applicant pool as part of every search the Board undertakes for new trustees, including but not limited to the diversity of thought, as well as of gender, race, ethnic background and geographic origin. These factors may also include (but are not limited to) the persons character, integrity, judgment, skill and experience with investment companies and other organizations of comparable purpose, complexity and size and subject to similar legal restrictions and oversight; the interplay of the candidates experience with the experience of other Board members; and the extent to which the candidate would be a desirable addition to the Board and any Committees thereof. Other factors that the Committee may take into consideration include a persons availability and commitment to attend meetings and perform his or her responsibilities; whether or not the person has or had any relationships that might impair or appear to impair his or her independence, such as any business, financial or family relationships with Fund management, the investment adviser and/or any subadviser of the Funds, as applicable, Fund service providers, or their affiliates or with Fund shareholders. The Committee will strive to achieve a group that reflects a diversity of experiences in respect of industries, professions and other experiences, and that is diversified as to thought, gender, race, ethnic background and geographic origin. |
3. |
While the Committee is solely responsible for the selection and recommendation to the Board of Independent Trustee candidates, the Committee may consider nominees recommended by any source, including shareholders, management, legal counsel and Board members, as it deems appropriate. The Committee may retain a professional search firm or a consultant to assist the Committee in a search for a qualified candidate. Any recommendations from shareholders shall be directed to the Secretary of the relevant Trust at such address as is set forth in the Trusts disclosure documents. Recommendations from management may be submitted to the Committee Chair. All recommendations shall include all information relating to such person that is required to be disclosed in solicitations of proxies for the election of Board members and as specified in the relevant Trusts By-Laws, and must be accompanied by a written consent of the proposed candidate to stand for election if nominated for the Board and to serve if elected by shareholders. |
4. |
Any shareholder nomination must be submitted in compliance with all of the pertinent provisions of Rule 14a-8 under the Securities Exchange Act of 1934 in order to be considered by the Committee. In evaluating a nominee recommended by a shareholder, the Committee, in addition to the criteria discussed above, may consider the objectives of the shareholder in submitting that nomination and whether such objectives are consistent with the interests of all shareholders. If the Board determines to include a shareholders candidate among the slate of its designated nominees, the candidates name will be placed on the Trusts proxy card. If the Board determines not to include such candidate among its designated nominees, and the shareholder has satisfied the requirements of Rule 14a-8, the shareholders candidate will be treated as a nominee of the shareholder who originally nominated the candidate. In that case, the candidate will not be named on the proxy card distributed with the Trusts proxy statement. |
5. |
As long as a current Independent Trustee continues, in the opinion of the Committee, to satisfy the criteria listed above, the Committee generally would favor the re-nomination of a current Trustee rather than a new candidate. Consequently, while the Committee will consider nominees recommended by shareholders to serve as trustees, the Committee may only act upon such recommendations if there is a vacancy on the Board, or the Committee determines that the selection of a new or additional Trustee is in the best interests of the relevant Trust. In the event that a vacancy arises or a change in Board membership is determined to be advisable, the Committee will, in addition to any shareholder recommendations, consider candidates identified by other means as discussed in this Annex A. |
6. |
With respect to candidates for Independent Trustee, a biography of each candidate shall be acquired and shall be reviewed by counsel to the Independent Trustees and counsel to the Trust to determine the candidates eligibility to serve as an Independent Trustee. |
7. |
The Committee may from time to time establish specific requirements and/or additional factors to be considered for Independent Trustee candidates as it deems necessary or appropriate. |
8. |
After its consideration of relevant factors, the Committee shall present its recommendation(s) to the full Board for its consideration. |