China Emerging Leaders Fund

Transcription

1 Semiannual Report John Hancock China Emerging Leaders Fund

2 John Hancock China Emerging Leaders Fund Table of Contents Your expenses Page 3 Portfolio summary Page 4 Fund's investments Page 5 Financial statements Page 9 Financial highlights Page 12 Notes to financial statements Page 15 More information Page 23

3 Your expenses These examples are intended to help you understand your ongoing operating expenses. Understanding your fund expenses As a shareholder of the fund, you incur two types of costs: Transaction costs which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc. Ongoing operating expenses including management fees, distribution and service fees (if applicable), and other fund expenses. We are going to present only your ongoing operating expenses here. Actual expenses/actual returns This example is intended to provide information about your fund s actual ongoing operating expenses, and is based on your fund s actual return. It assumes an account value of $1, on August 1, 2013, with the same investment held until January 31, Account value on Ending value on Expenses paid during period ended Class A $1, $1, $8.57 Class I 1, , Class NAV 1, , Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at January 31, 2014, by $1,000.00, then multiply it by the expenses paid for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows: Example [ My account value $8, / $1, = 8.6 ] x $[ expenses paid from table ] = My actual expenses Hypothetical example for comparison purposes This table allows you to compare the fund s ongoing operating expenses with those of any other fund. It provides an example of the fund s hypothetical account values and hypothetical expenses based on each class s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund s actual return). It assumes an account value of $1, on August 1, 2013, with the same investment held until January 31, Look in any other fund shareholder report to find it s hypothetical Example and you will be able to compare these expenses. Account value on Ending value on Expenses paid during period ended Class A $1, $1, $8.59 Class I 1, , Class NAV 1, , Remember, these examples do not include any transaction costs; therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectus for details regarding transaction costs. 1 Expenses are equal to the fund's annualized expense ratio of 1.69%, 1.36% and 1.25% for Class A, Class I and Class NAV shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). 3

4 As of (Unaudited) Portfolio Summary Top 10 Holdings (36.9% of Net Assets on ) 1,2 NQ Mobile, Inc., Class A 7.2% Renhe Commercial Holdings Company, Ltd. 4.2% Hua Han Bio-Pharmaceutical Holdings, Ltd., H Shares 4.1% China Fiber Optic Network System Group, Ltd. 3.7% Tencent Holdings, Ltd. 3.2% Biosensors International Group, Ltd. 3.2% Silver Base Group Holdings, Ltd. 3.2% China Mobile, Ltd. 2.7% Bank of China, Ltd., H Shares 2.7% Industrial & Commercial Bank of China, Ltd., H Shares 2.7% Country Concentration 1 China 59.3% Hong Kong 30.8% Singapore 3.2% Great Britain 2.3% Bermuda 1.1% United States 3.3% Sector Composition 1,3 Financials 23.0% Information Technology 11.5% Consumer Discretionary 11.3% Energy 10.3% Industrials 9.7% Health Care 9.5% Consumer Staples 8.2% Utilities 5.0% Materials 4.4% Telecommunication Services 3.8% Short-Term Investments & Other 3.3% 1 As a percentage of net assets on Cash and cash equivalents not included. 3 Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors. International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. Although they are larger and/or more established than many emerging markets, the markets of China function in many ways as emerging markets and carry the high levels of risk associated with emerging markets. 4

5 Fund s investments As of (Unaudited) Shares Common Stocks 93.3% $276,676,502 (Cost $314,955,060) China 59.3% 175,732,609 Agricultural Bank of China, Ltd., H Shares 6,684,000 2,917,882 Air China, Ltd., H Shares 512, ,426 Aluminum Corp. of China, Ltd., H Shares (I) 956, ,108 Anhui Conch Cement Company, Ltd., H Shares 321,000 1,238,202 Bank of China, Ltd., H Shares 18,876,000 7,967,183 Bank of Communications Company, Ltd., H Shares 2,355,000 1,526,656 BBMG Corp., H Shares 166, ,635 Biostime International Holdings, Ltd. 55, ,794 Byd Company, Ltd., H Shares (I) 102, ,841 China CITIC Bank Corp., Ltd., H Shares 2,207,000 1,055,808 China Coal Energy Company, Ltd., H Shares 772, ,310 China Communications Construction Company, Ltd., H Shares 2,800,000 2,037,627 China Construction Bank Corp., H Shares 9,943,000 6,887,973 China COSCO Holdings Company, Ltd., H Shares (I) 870, ,799 China Eastern Airlines Corp., Ltd., H Shares (I) 532, ,736 China International Marine Containers Group Company, Ltd., H Shares 52, ,945 China ITS Holdings Company, Ltd. 2,481, ,309 China Life Insurance Company, Ltd., H Shares 2,560,000 6,967,973 China Longyuan Power Group Corp., H Shares 300, ,903 China Mengniu Dairy Company, Ltd. 900,000 4,128,109 China Merchants Bank Company, Ltd., H Shares 1,449,000 2,552,293 China Minsheng Banking Corp., Ltd., H Shares 788, ,485 China Molybdenum Company, Ltd., H Shares 399, ,484 China National Building Material Company, Ltd., H Shares 246, ,189 China Oilfield Services, Ltd., H Shares 202, ,822 China Pacific Insurance Group Company, Ltd., H Shares 844,600 3,050,737 China Petroleum & Chemical Corp., H Shares 7,176,000 5,659,103 China Qinfa Group, Ltd. 3,214, ,798 China Railway Construction Corp., H Shares 209, ,586 China Railway Group, Ltd., H Shares 1,227, ,272 China Shenhua Energy Company, Ltd., H Shares 1,093,500 2,806,730 China Telecom Corp., Ltd., H Shares 3,920,000 1,786,118 China Yurun Food Group, Ltd. (I) 10,363,000 6,100,108 Chinasoft International, Ltd. (I) 2,342, ,653 Chongqing Rural Commercial Bank, H Shares 561, ,392 CITIC Securities Company, Ltd., H Shares 323, ,545 CNOOC, Ltd. 3,820,000 5,933,657 Country Garden Holdings Company, Ltd. 1,219, ,940 CSR Corp., Ltd., H Shares 170, ,879 Datang International Power Generation Company, Ltd., H Shares 956, ,746 Dongfeng Motor Group Company, Ltd., H Shares 672, ,465 ENN Energy Holdings, Ltd. 206,000 1,331,526 Enterprise Development Holdings, Ltd. (I) 1,524, ,919 Evergrande Real Estate Group, Ltd. 1,423, ,286 Fosun International, Ltd. 287, ,833 Great Wall Motor Company, Ltd., H Shares 249,500 1,187,026 Guangzhou Automobile Group Company, Ltd., H Shares 386, ,507 Guangzhou Pharmaceutical Company, Ltd. 62, ,212 Guangzhou R&F Properties Company, Ltd., H Shares 193, ,858 Guangzhou Shipyard International Company, Ltd., H Shares 8,000 17,136 Hengan International Group Company, Ltd. 181,500 1,959,467 Hengshi Mining Investments Ltd. (I) 18,621,000 6,259,926 Huaneng Power International, Inc., H Shares 356, ,842 Value 5

6 Fund s investments As of (Unaudited) Shares China (continued) Huili Resources Group, Ltd. (I) 10,402,000 $2,143,693 Industrial & Commercial Bank of China, Ltd., H Shares 12,844,000 7,935,553 Inner Mongolia Yitai Coal Company, H Shares 3,471,800 4,567,390 Jiangsu Expressway Company, Ltd., H Shares 168, ,995 Jiangxi Copper Company, Ltd., H Shares 231, ,777 Lenovo Group, Ltd. 1,168,000 1,506,365 Longfor Properties Company, Ltd. 270, ,522 Metallurgical Corp. of China, Ltd., H Shares (I) 491,000 86,653 New China Life Insurance Company, Ltd., H Shares (I) 85, ,976 NQ Mobile, Inc., Class A (I) 6,250,000 21,275,000 PetroChina Company, Ltd., H Shares 7,748,000 7,469,122 PICC Property & Casualty Company, Ltd., H Shares 866,000 1,172,071 Ping An Insurance Group Company, H Shares 541,000 4,368,794 Renhe Commercial Holdings Company, Ltd. (I) 256,294,000 12,586,294 Sany Heavy Equipment International Holdings Company, Ltd. 5,163,000 1,343,801 Shandong Weigao Group Medical Polymer Company, Ltd., H Shares 2,312,000 2,725,183 Shanghai Electric Group Company, Ltd., H Shares 1,148, ,587 Shanghai Fosun Pharmaceutical Group Company, Ltd., H Shares 21,500 66,300 Shanghai Pharmaceuticals Holding Company, Ltd., H Shares 78, ,592 Shenzhou International Group Holdings, Ltd. 66, ,930 Sihuan Pharmaceutical Holdings Group, Ltd. 104, ,499 Sino-Ocean Land Holdings, Ltd. 69,000 37,253 Sinopec Shanghai Petrochemical Company, Ltd., H Shares 988, ,495 Sinopharm Group Company, Ltd., H Shares 160, ,407 SOHO China, Ltd. 119,500 95,104 Sun Art Retail Group, Ltd. 623, ,676 Tencent Holdings, Ltd. 136,300 9,547,185 Tingyi Cayman Islands Holding Corp. 568,000 1,469,555 Tsingtao Brewery Company, Ltd., H Shares 70, ,976 Want Want China Holdings, Ltd. 1,639,000 2,206,815 Weichai Power Company, Ltd., H Shares 68, ,396 Xiao Nan Guo Restaurants Holdings, Ltd. 21,480,000 3,788,806 Yanzhou Coal Mining Company, Ltd., H Shares 230, ,201 Zijin Mining Group Company, Ltd., H Shares 904, ,026 Zoomlion Heavy Industry Science and Technology Company, Ltd., H Shares 523, ,416 ZTE Corp., H Shares (I) 146, ,442 Hong Kong 30.8% 91,443,628 Beijing Enterprises Holdings, Ltd. 109, ,013 Beijing Enterprises Water Group, Ltd. 392, ,343 Belle International Holdings, Ltd. 1,196,000 1,299,696 Brilliance China Automotive Holdings, Ltd. 588, ,248 China Everbright International, Ltd. 295, ,485 China Fiber Optic Network System Group, Ltd. 46,534,000 10,847,732 China Foods, Ltd. (I) 16,156,000 5,729,270 China Gas Holdings, Ltd. 400, ,413 China Merchants Holdings International Company, Ltd. 278, ,590 China Metal Recycling Holdings, Ltd. (I) 14,221,734 0 China Mobile, Ltd. 845,000 8,068,704 China Overseas Land & Investment, Ltd. 1,010,000 2,711,189 China Resources Cement Holdings, Ltd. 466, ,025 China Resources Enterprises, Ltd. 312, ,149 China Resources Gas Group, Ltd. 108, ,502 China Resources Land, Ltd. 424, ,886 China Resources Power Holdings, Ltd. 1,890,000 4,493,504 China State Construction International Holdings, Ltd. 390, ,901 Value 6

7 Fund s investments As of (Unaudited) Shares Hong Kong (continued) China Unicom Hong Kong, Ltd. 1,138,000 $1,480,940 China Water Affairs Group, Ltd. 19,702,000 6,141,780 ChinaVision Media Group, Ltd. (I) 34,690,000 1,380,035 Citic Pacific, Ltd. 950,000 1,187,508 GCL-Poly Energy Holdings, Ltd. (I) 590, ,843 Guangdong Investment, Ltd. 614, ,381 Haier Electronics Group Company, Ltd. 1,818,000 5,227,313 Hao Tian Development Group, Ltd. (I) 32,960,000 1,101,162 Hua Han Bio-Pharmaceutical Holdings, Ltd., H Shares 51,888,800 12,099,926 Kunlun Energy Company, Ltd. 680,000 1,126,015 Ming Fung Jewellery Group, Ltd. (I) 74,860,000 1,324,248 New World China Land, Ltd. 308, ,235 Shanghai Industrial Holdings, Ltd. 3,000 9,997 Shimao Property Holdings, Ltd. 337, ,220 Silver Base Group Holdings, Ltd. (I)(V) 73,742,000 9,372,200 Silver Grant International, Ltd. 5,130, ,324 Viva China Holdings, Ltd. (I) 109,224,000 6,756,672 Wison Engineering Services Company, Ltd. 12,000,000 1,530,179 Singapore 3.2% 9,500,265 Biosensors International Group, Ltd. 14,060,000 9,500,265 Warrants (K) 3.4% $10,129,485 (Cost $10,131,053) Bermuda 1.1% 3,317,969 Huabei Expressway Company, Ltd. (Expiration Date: ; Counterparty: CLSA Asia-Pacific Markets) (I) 5,040,132 3,317,969 Great Britain 2.3% 6,811,516 Daqin Railway Company, Ltd. (Expiration Date: ; Counterparty: Goldman Sachs International) (I) 3,300,100 3,952,949 Tibet Rhodiola Pharmaceutical Holding Company (Expiration Date: ; Counterparty: Goldman Sachs International) (I) 927,500 2,858,567 Value Yield (%) Shares Value Short-Term Investments 0.3% $920,863 (Cost $920,863) Money Market Funds 0.3% 920,863 State Street Institutional Liquid Reserves Fund (Y) 920, ,863 Total investments (Cost $326,006,976) 97.0% $287,726,850 Other assets and liabilities, net 3.0% $8,907,518 Total net assets 100.0% $296,634,368 The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. (I) (K) Non-income producing security. Underlying issuer is shown parenthetically in security description. 7

8 Fund s investments As of (Unaudited) (V) The fund owns 5% or more of the outstanding voting shares of the issuer and the security is considered an affiliate of the fund. For more information on this security refer to the Notes to the financial statements. (Y) The rate shown is the annualized seven-day yield as of At , the aggregate cost of investment securities for federal income tax purposes was $326,031,091. Net unrealized depreciation aggregated $38,304,241, of which $28,328,832 related to appreciated investment securities and $66,633,073 related to depreciated investment securities. The fund had the following sector composition as a percentage of total net assets on : Financials 23.0% Information Technology 11.5% Consumer Discretionary 11.3% Energy 10.3% Industrials 9.7% Health Care 9.5% Consumer Staples 8.2% Utilities 5.0% Materials 4.4% Telecommunication Services 3.8% Short-Term Investments & Other 3.3% Total 100.0% 8

9 Statement of assets and liabilities January 31, 2014 (Unaudited) Assets Investments in unaffiliated issuers, at value (Cost $297,788,177) $ 278,354,650 Investments in affiliated issuers, at value (Cost $28,218,799) 9,372,200 Total investments, at value (Cost $326,006,976) 287,726,850 Foreign currency, at value (Cost $5,497,533) 5,497,811 Receivable for investments sold 10,470,275 Dividends and interest receivable 112,508 Other receivables and prepaid expenses 1,838 Total assets 303,809,282 Liabilities Payable for investments purchased 7,045,345 Payable for futures variation margin 5 Payable to affiliates Accounting and legal services fees 12,308 Transfer agent fees 39 Trustees' fees 325 Other liabilities and accrued expenses 116,892 Total liabilities 7,174,914 Net assets $ 296,634,368 Net assets consist of Paid-in capital $ 343,500,981 Accumulated distributions in excess of net investment income (1,651,792) Accumulated net realized gain (loss) on investments, futures contracts and foreign currency transactions (6,923,375) Net unrealized appreciation (depreciation) on investments, futures contracts and translation of assets and liabilities in foreign currencies (38,291,446) Net assets $ 296,634,368 Net asset value per share Based on net asset values and shares outstanding-the fund has an unlimited number of shares authorized with no par value Class A ($84,887 10,000 shares) 1 $ 8.49 Class I ($85,022 10,000 shares) $ 8.50 Class NAV ($296,464,459 34,871,932 shares) $ 8.50 Maximum offering price per share Class A (net asset value per share 95%) 2 $ Redemption price is equal to net asset value less any applicable contingent deferred sales charge. On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements 9

10 Statement of operations For the six months ended January 31, 2014 (Unaudited) Investment income Dividends $ 1,067,933 Interest 4,387 Less foreign taxes withheld (40,208) Total investment income 1,032,112 Expenses Investment management fees 1,895,938 Distribution and service fees 135 Accounting and legal services fees 22,407 Transfer agent fees 115 Trustees' fees 1,640 Professional fees 29,226 Custodian fees 196,488 Registration and filing fees 7,734 Other 4,492 Total expenses 2,158,175 Less expense reductions (10,082) Net expenses 2,148,093 Net investment loss (1,115,981) Realized and unrealized gain (loss) Net realized gain (loss) on Investments in unaffiliated issuers (4,134,725) Investments in affiliated issuers (972,525) Futures contracts (1,773,522) Foreign currency transactions (40,941) (6,921,713) Change in net unrealized appreciation (depreciation) of Investments in unaffiliated issuers 17,571,618 Investments in affiliated issuers (4,221,344) Futures contracts (11,758) Translation of assets and liabilities in foreign currencies (49) 13,338,467 Net realized and unrealized gain 6,416,754 Increase in net assets from operations $ 5,300,773 See notes to financial statements 10

11 Statements of changes in net assets Increase (decrease) in net assets Six months ended Year ended (Unaudited) From operations Net investment income (loss) $ (1,115,981) $ 1,138,385 Net realized gain (loss) (6,921,713) 14,535,900 Change in net unrealized appreciation (depreciation) 13,338,467 (27,297,822) Increase (decrease) in net assets resulting from operations 5,300,773 (11,623,537) Distributions to shareholders From net investment income Class A (4) Class I (333) (256) Class NAV (1,687,747) (1,058,174) From net realized gain Class A (2,563) (3,558) Class I (2,563) (3,558) Class NAV (9,772,310) (10,873,251) Total distributions (11,465,520) (11,938,797) From fund share transactions (28,740,896) 70,372,684 Total increase (decrease) (34,905,643) 46,810,350 Net assets Beginning of period 331,540, ,729,661 End of period $ 296,634,368 $ 331,540,011 Undistributed (accumulated distributions in excess of) net investment income $ (1,651,792) $ 1,152,273 See notes to financial statements 11

12 Financial highlights Class A Shares Per share operating performance Net asset value, beginning of period $ 8.65 $ 9.32 $ Net investment income (loss) 3 (0.05) (0.02) 0.02 Net realized and unrealized gain (loss) on investments 0.15 (0.29) (0.70) Total from investment operations 0.10 (0.31) (0.68) Less distributions From net investment income 4 From net realized gain (0.26) (0.36) Total distributions (0.26) (0.36) Net asset value, end of period $ 8.49 $ 8.65 $ 9.32 Total return (%) 5, (3.96) (6.80) 7 Ratios and supplemental data Net assets, end of period (in millions) Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income (loss) (1.09) 9 (0.20) Portfolio turnover (%) Six months ended Unaudited. 2 Period from (commencement of operations) to Based on the average daily shares outstanding. 4 Less than $0.005 per share. 5 Does not reflect the effect of sales charges, if any. 6 Total returns would have been lower had certain expenses not been reduced during the applicable periods. 7 Not annualized 8 Less than $500, Annualized 10 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions. See notes to financial statements 12

13 Financial highlights Class I Shares Per share operating performance Net asset value, beginning of period $ 8.68 $ 9.34 $ Net investment income (loss) 3 (0.03) Net realized and unrealized gain (loss) on investments 0.14 (0.29) (0.70) Total from investment operations 0.11 (0.27) (0.66) Less distributions From net investment income (0.03) (0.03) From net realized gain (0.26) (0.36) Total distributions (0.29) (0.39) Net asset value, end of period $ 8.50 $ 8.68 $ 9.34 Total return (%) (3.61) (6.60) 5 Ratios and supplemental data Net assets, end of period (in millions) Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income (loss) (0.77) Portfolio turnover (%) Six months ended Unaudited Period from (commencement of operations) to Based on the average daily shares outstanding. Total returns would have been lower had certain expenses not been reduced during the applicable periods shown. Not annualized. Less than $500,000. Annualized. See notes to financial statements 13

14 Financial highlights Class NAV Shares Per share operating performance Net asset value, beginning of period $ 8.69 $ 9.34 $ Net investment income (loss) 3 (0.03) Net realized and unrealized gain (loss) on investments 0.14 (0.30) (0.71) Total from investment operations 0.11 (0.26) (0.66) Less distributions From net investment income (0.04) (0.03) From net realized gain (0.26) (0.36) Total distributions (0.30) (0.39) Net asset value, end of period $ 8.50 $ 8.69 $ 9.34 Total return (%) (3.41) (6.60) 5 Ratios and supplemental data Net assets, end of period (in millions) $ 296 $ 331 $ 285 Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income (loss) (0.65) Portfolio turnover (%) Six months ended Unaudited Period from (commencement of operations) to Based on the average daily shares outstanding. Total returns would have been lower had certain expenses not been reduced during the applicable periods shown. Not annualized. Annualized. See notes to financial statements 14

15 Notes to financial statements (unaudited) Note 1 Organization John Hancock China Emerging Leaders Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to achieve long-term capital appreciation. The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A shares are offered to all investors. Class I shares are offered to institutions and certain investors. Class NAV shares are offered to John Hancock affiliated funds of funds and certain 529 plans. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, printing and postage and state registration fees for each class may differ. Note 2 - Significant accounting policies The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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. Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund: Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost. Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund s Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund s Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE. The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily 15

16 an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. Securities with market values of approximately $3,559,171 at the beginning of the year were transferred from Level 2 to Level 3 during the period because significant observable inputs used in valuations were no longer readily available. The following is a summary of the values by input classification of the fund s investments as of January 31, 2014, by major security category or type: Total Market Value at Level 1 Quoted Price Level 2 Significant Observable Inputs Level 3 Significant Unobservable Inputs Common Stocks China $175,732,609 $175,732,609 Hong Kong 91,443,628 89,913,449 $1,530,179 Singapore 9,500,265 9,500,265 Warrants Bermuda 3,317,969 3,317,969 Great Britain 6,811,516 6,811,516 Short-Term Investments 920,863 $920,863 Total Investments in Securities $287,726,850 $920,863 $285,275,808 $1,530,179 Other Investments Futures ($11,758) ($11,758) The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value. Transfers into or out of Level 3 represent the beginning value of any security or instrument where a change in the level has occurred from the beginning to the end of the period, and in all cases were transferred into or out of Level 2. Securities were transferred into Level 3 because of a lack of observable market data which resulted from an absence of market activity for these securities. In addition, securities were transferred from Level 3 since observable market data became available due to the increased market activity of these securities. Common Stock Balance as of Realized gain (loss) ($889,324) Change in unrealized appreciation (depreciation) (2,667,381) Purchases 1,627,795 Sales (100,082) Transfer into Level 3 3,559,171 Transfer out of Level 3 - Balance as of $1,530,179 Changes in unrealized at period end * (3,656,787) * Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at the period end. This balance is included in the change in unrealized appreciation (depreciation) on the Statement of operations. Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a 16

17 realized gain if amounts are estimable. Foreign taxes are provided for based on the fund s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation. Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments. Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. Funds investing in a single country or in a limited geographic region tend to be riskier than funds that invest more broadly. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency. Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation. Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund s custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft. In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the six months ended January 31, 2014 were $234. For the six months ended January 31, 2014, the fund had no borrowings under the line of credit. Expenses. Within the John Hancock funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known. Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Classspecific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage expenses, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class. Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. As of July 31, 2013, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years. 17

18 Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. Distributions paid by the fund with respect to each class of shares are calculated in the same manner, at the same time and in the same amount, except for the effect of class level expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to passive foreign investment companies. Note 3 Derivative Instruments The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the over-the-counter market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction. Futures are traded or cleared on an exchange or central clearinghouse. Exchange-traded or cleared transactions generally present less counterparty risk to a fund than OTC transactions. The exchange or clearinghouse stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange or clearinghouse and the clearing member. Securities pledged by the fund for exchange-traded and cleared transactions, if any are identified in the Fund s investments. Futures. A futures contract is a contractual agreement to buy or sell a particular currency or financial instrument at a pre-determined price in the future. Risks related to the use of futures contracts include possible illiquidity of the futures markets, contract prices that can be highly volatile and imperfectly correlated to movements in the underlying financial instrument and potential losses in excess of the amounts recognized on the Statement of assets and liabilities. Use of long futures contracts subjects the fund to the risk of loss up to the notional value of the futures contracts. Use of short futures contracts subjects the fund to unlimited risk of loss. Upon entering into a futures contract, the fund is required to deposit initial margin with the broker in the form of cash or securities. The amount of required margin is generally based on a percentage of the contract value; this amount is the initial margin for the trade. The margin deposit must then be maintained at the established level over the life of the contract. Futures collateral receivable / payable is included on the Statement of assets and liabilities. Futures contracts are marked-to-market daily and an appropriate payable or receivable for the change in value (variation margin) and unrealized gain or loss is recorded by the fund. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. During the six months ended January 31, 2014, the fund used futures contracts to gain exposure to certain securities markets. During the six months ended January 31, 2014, the fund held futures contracts 18

19 with notional values up to $6.0 million, as measured at each quarter end. The following table summarizes the contracts held at January 31, Open Contracts Number of Contracts Position Expiration Date Notional Basis Notional Value Unrealized Appreciation (Depreciation) H-Shares Index Futures 94 Long Feb 2014 $5,948,657 $5,936,899 ($11,758) ($11,758) Notional basis refers to the contractual amount agreed upon at inception of open contracts; notional value represents the current value of the open contract. Note 4 - Guarantees and indemnifications Under the Trust s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote. Note 5 Fees and transactions with affiliates John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC). Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor equivalent, on an annual basis, to the sum of: a) 1.10% of the first $500,000,000 of the fund s average daily net assets, b) 1.05% of the next $500,000,000 of the fund s average daily net assets and c) 1.00% of the fund s average daily net assets in excess of $1,000,000,000. Prior to December 18, 2013, the Advisor had a subadvisory agreement with Atlantis Investment Management (H.K.), Ltd. Effective December 18, 2013, the Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees. The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; % of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees. The Advisor has voluntarily agreed to waive and/or reimburse operating expenses for Class A, Class I and Class NAV shares, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund s business. The fee waivers and/or reimbursements are such that the expenses will not exceed 1.70%, 1.37% and 1.26% for Class A, Class I and Class NAV shares, respectively. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund. 19

20 Additionally, the Advisor has voluntarily agreed to waive and/or reimburse other expenses of the fund, excluding advisory fees, Rule 12b-1 fees, service fees, transfer agent fees, state registration fees, taxes, brokerage commissions, interest expense, printing and postage, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business. The waivers are such that these expenses will not exceed 0.25% of average net assets. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund. Accordingly, these expense reductions amounted to $3, $3 and $10,076 for Class A, Class I and Class NAV shares, respectively for the six months ended January 31, The investment management fees incurred for the six months ended January 31, 2014, were equivalent to a net annual effective rate of 1.09% of the fund s average daily net assets. Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the six months ended January 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates. Amounts Eligible for recovery through July 1, 2014 Amounts Eligible for recovery through July 1, 2015 Amounts Eligible for recovery through July 1, 2016 Amounts Eligible for recovery through January 1, 2017 Amount recovered during the period ended 1/31/ $1 - Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the six months ended January 31, 2014 amounted to an annual rate of 0.01% of the fund s average daily net assets. Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund may pay up to 0.30% for Class A shares for distribution and service fees, expressed as an annual percentage of average daily net assets for each class of the fund s shares. Sales charges. Class A shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the six months ended January 31, 2014, CDSCs received by the Distributor amounted to $0 for Class A shares. Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, including payments made to third-parties for 20

21 recordkeeping services provided to their clients who invest in one or more John Hancock funds. In addition, Signature Services Cost may be reduced by certain fees that Signature Services receives in connection with retirement and small accounts. Signature Services Cost is calculated monthly and allocated, as applicable, to five categories of share classes: Retail Share and Institutional Classes of Non- Municipal Bond Funds, Class R6 Shares, Retirement Share Classes and Municipal Bond Classes. Within each of these categories, the applicable costs are allocated to the affected John Hancock affiliated funds and/or classes, based on the relative average daily net assets. Prior to October 1, 2013, Signature Services Cost were calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were allocated to the affected John Hancock affiliated funds and/or classes, based on the relative average daily net assets. Class level expenses. Class level expenses for the six months ended January 31, 2014 were: Class Distribution and Transfer agent fees service fees A $135 $62 I 53 Total $135 $115 The fund did not incur printing and postage and state registration fees for the six months ended January 31, Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock funds complex. Note 6 - Fund share transactions Transactions in fund shares for the six months ended January 31, 2014 and the year ended July 31, 2013 were as follows: Six months ended Year ended January 31, 2014 July 31, 2013 Shares Amount Shares Amount Class NAV shares Sold 7,432 $ 67,041 6,903,780 $ 62,149,839 Distributions reinvested 1,340,358 11,460,057 1,165,178 11,931,425 Repurchased (4,620,928) (40,267,994) (376,638) (3,708,580) Net increase (decrease) (3,273,138) $ (28,740,896) 7,692,320 $ 70,372,684 Total net increase (decrease) (3,273,138) $ (28,740,896) 7,692,320 $ 70,372,684 There were no fund share transactions for Class A and Class I shares for the six months ended January 31, 2014 and the year ended July 31, Affiliates of the fund owned 100% of shares of beneficial interest of the fund on January 31, Note 7 - Purchase and sale of securities Purchases and sales of securities, other than short-term securities, amounted to $251,497,463 and $293,739,248, respectively, for the six months ended January 31,

22 Note 8 - Investment by affiliated funds Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, affiliated fund investments may represent a significant portion of the fund s net assets. At January 31, 2014, funds within the John Hancock funds complex held 100% of the fund. The following funds had an affiliate ownership of 5% or more of the fund s net assets: Fund Affiliated Concentration John Hancock Lifestyle Growth Portfolio 37.8% John Hancock Lifestyle Balanced Portfolio 28.2% John Hancock Lifestyle Aggressive Portfolio 17.0% Note 9 Transactions in securities of affiliated issuers Affiliated issuers, as defined by the 1940 Act, are those in which the fund s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the fund s transactions in the securities of these issuers during the year ended January 31, 2014, is set forth below: Beginning Ending Realized share share gain Dividend Ending Affiliate amount amount (loss) income value Silver Base Group Holdings, Ltd. Bought: 2,000,000 Sold: 3,258,000 75,000,000 73,742,000 ($972,525) -- $9,372,200 22