John Hancock Alternative Asset Allocation Fund. Semiannual report 2/28/18

Transcription

1 John Hancock Alternative Asset Allocation Fund Semiannual report 2/28/18

2 A message to shareholders Dear shareholder, Markets around the world experienced a meaningful rise in volatility in the last few weeks of the reporting period. Stocks declined as investors reacted to higher interest rates and rising inflation, even if that inflation was rising from historically low levels. While many in the asset management community see the sell-off as an overdue correction, it s likely the era of extremely low volatility is behind us for the time being. Ultimately, the asset prices of stocks and corporate bonds are underpinned by fundamentals, and those continue to appear supportive. There was no shortage of good economic news to report as 2017 came to a close. In the United States, unemployment remained close to historic lows, consumer confidence rose, and the housing market continued to notch steady gains. In step with these signals of domestic economic strength, synchronized global growth continued to gain momentum, which has contributed to favorable corporate earnings across the world s developed and emerging markets. For fixed-income markets, recent volatility is likely representative of the balancing act investors will face in the year ahead: Continued solid economic growth will lead to a continued normalizing of monetary policy, meaning higher borrowing costs and greater headwinds for interest-rate-sensitive securities. While markets delivered positive results for the overall period, it s important for investors to be cognizant of the downside risks. Your best resource in unpredictable markets is your financial advisor, who can help position your portfolio so that it s sufficiently diversified to meet your longterm objectives and to withstand the inevitable turbulence that accompanies investing in any market cycle. On behalf of everyone at John Hancock Investments, I d like to take this opportunity to welcome new shareholders and to thank existing shareholders for the continued trust you ve placed in us. Sincerely, Andrew G. Arnott President and CEO, John Hancock Investments Head of Wealth and Asset Management, United States and Europe This commentary reflects the CEO s views, which are subject to change at any time. Investing involves risks, including the potential loss of principal. Diversification does not guarantee investment returns and does not eliminate risk of loss. For more up-to-date information, please visit our website at jhinvestments.com.

3 John Hancock Alternative Asset Allocation Fund Table of contents 2 Your fund at a glance 4 Discussion of fund performance 8 A look at performance 10 Your expenses 12 Fund s investments 15 Financial statements 19 Financial highlights 25 Notes to financial statements 35 More information SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 1

4 Your fund at a glance INVESTMENT OBJECTIVE The fund seeks long-term growth of capital. AVERAGE ANNUAL TOTAL RETURNS AS OF 2/28/18 (%) Class A shares (without sales charges) HFRX Global Hedge Fund Index Morningstar multialternative fund category average month (cumulative) 1 year 3 year 5 year Since inception (1/2/09) The HFRX Global Hedge Fund Index is composed of all eligible hedge fund strategies including four principal strategies: equity hedge,event driven,macro/managed futures,and relative value arbitrage. It is not possible to invest directly in an index.index figures do not reflect expenses or sales charges,which would result in lower returns. Figures from Morningstar,Inc.include reinvested distributions and do not take into account sales charges.actual loadadjusted performance is lower.since-inception returns for the Morningstar fund category average are not available. The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative. Performance of the other share classes will vary based on the difference in the fees and expenses of those classes. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current month-end performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling For further information on the fund s objectives, risks, and strategy, see the fund s prospectus. 2 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT

5 PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS Improving economic conditions had diverse effects on the financial markets Stocks and commodities responded well to the acceleration of growth, but bonds and other interest-rate-sensitive investments lagged. The fund underperformed its benchmark The fund produced a positive absolute return, but it fell short of the HFRX Global Hedge Fund Index. Mixed results for the fund s underlying investments The fund benefited from its allocations to commodity-related stocks and alternative equity strategies, but its positions in bonds, real estate investment trusts, and certain absolute-return strategies detracted. ASSET ALLOCATION AS OF 2/28/18 (%) Affiliated investment companies 86.4 Alternative investment approaches 46.9 Absolute return strategies 22.4 Alternative markets 12.9 Other affiliated investments 4.2 Unaffiliated investment companies 12.3 Alternative markets 6.7 Absolute return strategies 5.6 Short-term investments and other 1.3 As a percentage of net assets. A note about risks The fund s performance depends on the subadvisor s ability to determine asset class allocations, the mix of underlying funds, and the performance of those underlying funds. The fund is subject to the same risks as the underlying funds and exchange-traded funds (ETFs) in which it invests.owning an ETF generally reflects the risks of owning the underlying securities it is designed to track.an ETF has its own fees and expenses,which are indirectly borne by the fund.stocks and bonds can decline due to adverse issuer,market, regulatory, or economic developments. Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. The securities of small companies are subject to higher volatility than those of larger, more established companies. High-yield bonds are subject to additional risks, such as increased risk of default. Although asset allocation among different asset categories generally limits risk and exposure to any one category, the risk remains that the subadvisor may favor an asset category that performs poorly relative to the other asset categories. Hedging, derivatives, and other strategic transactions may increase a fund s volatility and could produce disproportionate losses, potentially more than the fund s principal investment. Currency rates in foreign countries may fluctuate significantly for a number of reasons, including the forces of supply and demand in the foreign exchange markets, actual or perceived changes in interest rates, and intervention (or the failure to intervene) by U.S. or foreign governments or central banks, or by currency controls or political developments in the United States or abroad. The fund s currency losses could exceed the amount invested in its currency instruments. Short sales involve costs and risk. Liquidity the extent to which a security may be sold or a derivative position closed without negatively affecting its market value may be impaired by reduced trading volume, heightened volatility, rising interest rates, and other market conditions. Please see the fund s prospectus for additional risks. SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 3

6 Discussion of fund performance An interview with Portfolio Manager Robert M. Boyda, John Hancock Asset Management a division of Manulife Asset Management (US) LLC Robert M. Boyda Portfolio Manager John Hancock Asset Management How did the global financial markets perform during the six months ended February 28, 2018? Financial assets produced mixed returns,as stocks and bonds responded differently to the acceleration in global growth.the U.S.economy picked up steam during the period,with unemployment near historic lows,rising real estate prices, and improving confidence among both businesses and consumers.in addition,the passage of a taxreduction package in December fueled hopes that the pickup in growth would be sustained throughout 2018.The strength in economic conditions wasn t limited to the United States,as both the developed and emerging international markets experienced a better-than-expected expansion. These developments provided a boost to corporate earnings,leading to a rally in global equity prices.from the beginning of the period through late January,stocks marched steadily higher with day-to-day volatility that was well below the historical average.this favorable backdrop changed in February,however,as the persistent strength in the world economy began to foster concerns that the U.S.Federal Reserve and other major central banks would be compelled to raise interest rates more aggressively than investors had been anticipating.stocks sold off sharply as a result,but they quickly regained their footing and performed well through the second half of February.Although volatility resumed,the major global equity indexes were able to close the period with robust, positive returns.conversely,the concerns about tighter monetary policy weighed on both bonds and the interest-rate-sensitive areas of the stock market. 4 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT

7 How did the fund perform? The fund s Class A shares gained 1.23% for the period,excluding sales charges. The fund s benchmark,the HFRX Global Hedge Fund Index,rose 2.07%,while the Although volatility resumed, the major global equity indexes were able to close the period with robust, positive returns. average return for the funds in Morningstar s multialternative category was 1.45%. Can you review how the fund invests? We think about the fund s holdings in terms of three broad categories:alternative investment approaches,absolute return strategies,and alternative markets.at the close of the period, alternative investment approaches which use opportunistic,relatively unconstrained techniques and can strategically alter their market exposure made up the largest percentage of the fund s assets.absolute return strategies,or those designed with the goal of generating positive performance through a wide range of scenarios,was the next-largest allocation.alternative markets,which include niche asset classes where the drivers of performance are often unrelated to those of traditional U.S.stock or fixed-income investments,represented the smallest allocation. How did these various categories respond to this environment? The alternative investment approaches portfolio made the largest contribution to performance. Technical Opportunities Fund (Wellington) a flexible equity strategy that employs a momentumoriented investment process based on technical analysis registered a double-digit gain due to the combination of its overweight position in the technology sector,as well as its strong stock selection in the category.seaport Fund (Wellington),a long/short equity strategy,generated a mid-singledigit return thanks to its net long allocations across various sectors of the stock market.redwood Fund (Boston Partners),a covered equity call option-writing strategy,and Short Duration Credit Opportunities Fund (Stone Harbor),which benefited from the outperformance of credit-oriented investments,also finished in positive territory.on the negative side,real Return Bond Fund (PIMCO) SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 5

8 and Strategic Income Opportunities Fund (JHAM) detracted from results amid the downturn in the bond market. The absolute return segment of the fund produced mildly positive results, as currency strategies,equity-arbitrage funds,and an actively managed global absolute return strategy generated returns in a range of +2% to -2%.While the performance of the absolute return segment was somewhat muted,we believe it can provide an We continued to focus on providing a well-diversified portfolio intended to produce long-term performance results with a low correlation to traditional assets. alternative source of long-term returns,meaningful diversification compared to traditional assets, and potential ballast in turbulent markets. The fund experienced mixed results from the holdings in its alternative markets portfolio.on the positive side,our positions in funds linked to physical commodities and commodity-related equities performed very well.the improvement in global growth translated to rising end-market demand, which provided a strong tailwind for oil and industrial metals.on the other end of the spectrum,the fund was hurt by positions in gold and gold-mining stocks.the gold price fell sharply in the first half of the period before staging a recovery that enabled it to close virtually unchanged.at a time of robust gains for stocks,the flat return for gold represented a drag on performance.in addition,gold stocks posted a double-digit loss and trailed the broader equity market by a wide margin.the fund also lost some ground in the alternative markets portfolio through its allocation to real estate investment trusts (REITs), which tend to lag when interest rates are rising sharply. Despite their recent underperformance,we continue to see an opportunity in REITs due to their attractive yields and ability to augment diversification over longer-term periods.a position in Enduring Assets Fund (Wellington) was a key laggard due in part to the fund s overweight in the underperforming utilities sector. 6 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT

9 Finally,we added marginally to the fund s return through tactical strategies that are designed to provide incremental performance without significantly increasing the portfolio s risk profile.the fund held long positions in technology and financials sectors against short positions in the S&P 500 Index,which was a positive given that both outperformed. MANAGED BY Robert M. Boyda On the fund since 2010 Investing since 1979 Nathan W. Thooft, CFA On the fund since 2013 Investing since 2000 Christopher Walsh, CFA On the fund since 2018 Investing since 2002 How was the fund positioned at period end? We made no significant changes during the period,as we maintained our balanced approach to investing across the three major categories.we continued to focus on providing a well-diversified portfolio intended to produce long-term performance results with a low correlation to traditional assets.when stocks perform as well as they have in the past two years,it s easy to overlook the potential diversification benefits this type of approach can provide.however,we believe the merits of owning potentially uncorrelated assets could become more evident if the recent return of volatility signals the onset of a more challenging backdrop for the financial markets. Can you tell us about a recent manager change? Effective February 20,2018,Marcelle Daher,CFA,left the team and was replaced by Christopher Walsh, CFA. The views expressed in this report are exclusively those of Robert M.Boyda,John Hancock Asset Management,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 fund s investment strategy and may vary in the future.current and future portfolio holdings are subject to risk. SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 7

10 A look at performance TOTAL RETURNS FOR THE PERIOD ENDED FEBRUARY 28, 2018 Average annual total returns (%) with maximum sales charge Cumulative total returns (%) with maximum sales charge 1-year 5-year Since inception 1,2 6-month 5-year Since inception 1,2 Class A Class C Class I 3, Class R2 3, Class R4 3, Class R6 3, Index Performance figures assume all distributions are reinvested. Figures reflect maximum sales charges on Class A shares of 5% and the applicable contingent deferred sales charge (CDSC) on Class C shares. Class C shares held for less than one year are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class R2, Class R4, and Class R6 shares. The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Net expenses reflect contractual expense limitations in effect until December 31, 2018 and are subject to change. Had the contractual fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include expenses of the affiliated underlying funds in which the fund invests. The expense ratios are as follows: Class A Class C Class I Class R2 Class R4 Class R6 Gross (%) Net (%) Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class. The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund s current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call or visit the fund s website at jhinvestments.com. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable. Index is the HFRX Global Hedge Fund Index. See the following page for footnotes. 8 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT

11 This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Alternative Asset Allocation Fund for the share classes and periods indicated,assuming all distributions were reinvested.for comparison,we ve shown the same investment in the HFRX Global Hedge Fund Index. $20,000 Class A shares (with maximum sales charge) Ending values Class A shares (without sales charges) HFRX Global Hedge Fund Index $18,829 $17,887 $12,495 10,000 9,500 8, Start date With maximum sales charge ($) Without sales charge ($) Index ($) Class C 2,3, ,975 17,975 12,495 Class I 2,3, ,291 19,291 12,495 Class R2 2,3, ,667 18,667 12,495 Class R4 2,3, ,942 18,942 12,495 Class R6 2,3, ,312 19,312 12,495 The HFRX Global Hedge Fund Index is composed of all eligible hedge fund strategies, including four principal strategies: equity hedge, event driven, macro/ managed futures, and relative value arbitrage. It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns. Footnotes related to performance pages 1 From Performance information prior to reflects an allocation to a different mix of underlying funds, and would have been different if the fund s investments had been allocated to its current mix of underlying funds. 3 Class C, Class I, Class R2, Class R4, and Class R6 shares were first offered on , , , , and , respectively. Returns prior to these dates are those of Class A shares that have not been adjusted for class-specific expenses; otherwise, returns would vary. 4 For certain types of investors, as described in the fund s prospectus. 5 The contingent deferred sales charge is not applicable. SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 9

12 Your expenses These examples are intended to help you understand your ongoing operating expenses of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. Understanding fund expenses As a shareholder of the fund, you incur two types of costs: n Transaction costs, which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc. n Ongoing operating expenses, including management fees, distribution and service fees (if applicable), and other fund expenses. We are presenting only your ongoing operating expenses here. Actual expenses/actual returns The first line of each share class in the table on the following page is intended to provide information about the fund s actual ongoing operating expenses, and is based on the fund s actual return. It assumes an account value of $1, on September 1, 2017, with the same investment held until February 28, 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 February 28, 2018, by $1,000.00, then multiply it by the expenses paid for your share class from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows: Example [ My account value / $1, = 8.6 ] x $ [ expenses paid ] = My actual $8, from table expenses Hypothetical example for comparison purposes The second line of each share class in the table on the following page allows you to compare the fund s ongoing operating expenses with those of any other fund. It provides an example of the fund s hypothetical account values and hypothetical expenses based on each class s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund s actual return). It assumes an account value of $1, on September 1, 2017, with the same investment held until February 28, Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses. Please remember that these hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectus for details regarding transaction costs. 10 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT

13 SHAREHOLDER EXPENSE EXAMPLE CHART Account value on Ending value on Expenses paid during period ended Annualized expense ratio 2 Class A Actual expenses/actual returns $1, $1, $ % Hypothetical example for comparison purposes 1, , % Class C Actual expenses/actual returns 1, , % Hypothetical example for comparison purposes 1, , % Class I Actual expenses/actual returns 1, , % Hypothetical example for comparison purposes 1, , % Class R2 Actual expenses/actual returns 1, , % Hypothetical example for comparison purposes 1, , % Class R4 Actual expenses/actual returns 1, , % Hypothetical example for comparison purposes 1, , % Class R6 Actual expenses/actual returns 1, , % Hypothetical example for comparison purposes 1, , % 1 Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 2 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the fund. The range of expense ratios of the underlying funds held by the fund was 0.10%-2.19% for the period ended SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 11

14 Fund s investments AS OF (unaudited) Shares Affiliated investment companies (A) 86.4% $610,176,634 (Cost $611,051,927) Absolute return strategies 22.4% 158,300,556 Absolute Return Currency, Class NAV, JHF II (First Quadrant) (B) 6,694,574 64,134,019 Global Absolute Return Strategies, Class NAV, JHF II (Standard Life) (B) 9,011,152 94,166,537 Alternative investment approaches 46.9% 331,218,646 Redwood, Class NAV, JHF II (Boston Partners) (B) 7,327,699 79,871,924 Seaport, Class NAV, JHIT (Wellington) 4,809,044 55,736,823 Short Duration Credit Opportunities, Class NAV, JHF II (Stone Harbor) 8,242,744 79,954,615 Strategic Income Opportunities, Class NAV, JHF II (JHAM) (C)(D) 8,146,536 87,575,258 Technical Opportunities, Class NAV, JHF II (Wellington) 2,170,017 28,080,026 Alternative markets 12.9% 90,868,748 Enduring Assets, Class NAV, JHIT (Wellington) 2,522,032 29,179,912 Global Income, Class NAV, JHF II (Stone Harbor) 3,055,737 28,723,927 Global Real Estate, Class NAV, JHF II (Deutsche) 1,171,108 10,891,309 Real Return Bond, Class NAV, JHF II (PIMCO) 2,030,690 22,073,600 Other affiliated investments 4.2% 29,788,684 Touchstone Merger Arbitrage Fund, Class I (E) 2,850,592 29,788,684 Unaffiliated investment companies 12.3% $87,386,753 (Cost $81,499,557) Absolute return strategies 5.6% 40,019,571 The Arbitrage Fund, Class I 3,024,911 40,019,571 Alternative markets 6.7% 47,367,182 Energy Select Sector SPDR Fund 61,896 4,130,939 Financial Select Sector SPDR Fund 224,093 6,469,565 ishares U.S. Oil & Gas Exploration & Production ETF (F) 16,991 1,022,858 PowerShares DB Commodity Index Tracking Fund (B)(F) 526,500 8,739,900 PowerShares DB Energy Fund (B) 263,534 3,797,525 PowerShares DB Gold Fund (B) 175,669 7,332,424 SPDR S&P Global Natural Resources ETF 86,175 4,189,829 VanEck Vectors Gold Miners ETF 56,287 1,201,727 Vanguard Industrials ETF 12,476 1,776,333 Vanguard Information Technology ETF 19,789 3,509,381 Vanguard Real Estate ETF 70,848 5,196,701 Yield (%) Shares Value Securities lending collateral 0.9% $6,424,947 (Cost $6,425,602) John Hancock Collateral Trust (G) (H) 642,276 6,424,947 Value 12 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT SEE NOTES TO FINANCIAL STATEMENTS

15 Yield* (%) Maturity date Par value^ Value Short-term investments 1.4% $9,684,428 (Cost $9,684,428) U.S. Government 0.7% 4,976,295 U.S. Treasury Bill ,000,000 4,976,295 Yield (%) Shares Value Money market funds 0.7% 4,708,133 State Street Institutional U.S. Government Money Market Fund, Premier Class (H) 4,708,133 4,708,133 Total investments (Cost $708,661,514) 101.0% $713,672,762 Other assets and liabilities, net (1.0)% (7,408,091) Total net assets 100.0% $706,264,671 The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. ^All par values are denominated in U.S. dollars unless otherwise indicated. Security Abbreviations and Legend JHF II John Hancock Funds II JHIT John Hancock Investment Trust (A) The underlying funds subadvisor is shown parenthetically. (B) Non-income producing. (C) The subadvisor is an affiliate of the advisor. (D) Manulife Asset Management (US) LLC is doing business as John Hancock Asset Management. (E) 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 financial statements. (F) A portion of this security is on loan as of (G) Investment is an affiliate of the fund, the advisor and/or subadvisor. This security represents the investment of cash collateral received for securities lending. (H) The rate shown is the annualized seven-day yield as of * Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end. Affiliated Underlying Funds Subadvisors Boston Partners Global Investors, Inc. (Boston Partners) Deutsche Asset Management, Inc. (Deutsche) First Quadrant LP (First Quadrant) John Hancock Asset Management (JHAM) Pacific Investment Management Company LLC (PIMCO) Standard Life Investment, (Corporate Funds) Limited (Standard Life) Stone Harbor Investment Partners LP (Stone Harbor) Wellington Management Company LLP (Wellington) SEE NOTES TO FINANCIAL STATEMENTS SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 13

16 DERIVATIVES FUTURES Open contracts Number of contracts Position Expiration date Notional basis* Notional value* Unrealized appreciation (depreciation) S&P 500 Index E-Mini Futures 78 Short Mar 2018 $(10,328,971) $(10,586,160) $(257,189) $(257,189) * Notional basis refers to the contractual amount agreed upon at inception of open contracts; notional value represents the current value of the open contract. FORWARD FOREIGN CURRENCY CONTRACTS Contract to buy Contract to sell Counterparty (OTC) Contractual settlement date Unrealized appreciation Unrealized depreciation EUR 108,838 USD 133,026 Citibank N.A. 3/21/2018 $(54) USD 129,223 EUR 108,838 Citibank N.A. 3/21/2018 (3,749) $(3,803) Derivatives Currency Abbreviations EUR Euro USD U.S. Dollar At , the aggregate cost of investments for federal income tax purposes was $723,386,231. Net unrealized depreciation aggregated to $9,974,461, of which $507,173 related to gross unrealized appreciation and $10,481,634 related to gross unrealized depreciation. OTC is an abbreviation for over-the-counter. See Notes to financial statements regarding investment transactions and other derivatives information. 14 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT SEE NOTES TO FINANCIAL STATEMENTS

17 Financial statements STATEMENT OF ASSETS AND LIABILITIES (unaudited) Assets Investments in unaffiliated funds,at value (Cost $91,183,985) including $6,255,700 of securities loaned $97,071,181 Investments in affiliated funds and issuers,at value (Cost $617,477,529) 616,601,581 Total investments, at value (Cost $708,661,514) 713,672,762 Receivable for futures variation margin 124,598 Foreign currency,at value (Cost $33) 32 Cash held at broker for futures contracts 382,800 Receivable for investments sold 699,692 Receivable for fund shares sold 1,068,619 Dividends and interest receivable 562,528 Receivable for securities lending income 3,642 Receivable due from advisor 1,881 Other receivables and prepaid expenses 71,197 Total assets 716,587,751 Liabilities Unrealized depreciation on forward foreign currency contracts 3,803 Due to custodian 45,146 Payable for investments purchased 2,406,904 Payable for fund shares repurchased 1,257,955 Payable upon return of securities loaned 6,425,625 Payable to affiliates Accounting and legal services fees 40,126 Transfer agent fees 58,427 Distribution and service fees 1,047 Trustees fees 1,233 Other liabilities and accrued expenses 82,814 Total liabilities 10,323,080 Net assets $706,264,671 Net assets consist of Paid-in capital $741,122,927 Undistributed net investment income 751,128 Accumulated net realized gain (loss) on investments,futures contracts and foreign currency transactions (40,361,052) Net unrealized appreciation (depreciation) on investments,futures contracts and translation of assets and liabilities in foreign currencies 4,751,668 Net assets $706,264,671 SEE NOTES TO FINANCIAL STATEMENTS SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 15

18 STATEMENT OF ASSETS AND LIABILITIES (continued) Net asset value per share Based on net asset values and shares outstanding-the fund has an unlimited number of shares authorized with no par value Class A ($113,015,119 7,766,527 shares) 1 $14.55 Class C ($64,199,748 4,395,299 shares) 1 $14.61 Class I ($508,228,911 34,909,158 shares) $14.56 Class R2 ($2,722, ,206 shares) $14.54 Class R4 ($1,379,132 94,638 shares) $14.57 Class R6 ($16,719,133 1,148,616 shares) $14.56 Maximum offering price per share Class A (net asset value per share 95%) 2 $ Redemption price per share 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. 16 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT SEE NOTES TO FINANCIAL STATEMENTS

19 STATEMENT OF OPERATIONS For the six months ended (unaudited) Investment income Income distributions received from affiliated funds $4,824,337 Dividends 702,995 Interest 54,819 Securities lending 6,198 Total investment income 5,588,349 Expenses Investment management fees 829,195 Distribution and service fees 537,608 Accounting and legal services fees 59,522 Transfer agent fees 378,581 Trustees fees 5,147 State registration fees 44,988 Printing and postage 41,368 Professional fees 38,894 Custodian fees 18,097 Other 8,690 Total expenses 1,962,090 Less expense reductions (436,854) Net expenses 1,525,236 Net investment income 4,063,113 Realized and unrealized gain (loss) Net realized gain (loss) on Unaffiliated investments and foreign currency transactions 334,794 Affiliated investments 86,170 Capital gain distributions received from unaffiliated investments 1,102,601 Capital gain distributions received from affiliated investments 10,536,444 Futures contracts (662,880) Forward foreign currency contracts (273,076) 11,124,053 Change in net unrealized appreciation (depreciation) of Unaffiliated investments and translation of assets and liabilities in foreign currencies 1,216,103 Affiliated investments (6,933,939) Futures contracts (125,376) Forward foreign currency contracts 210,226 (5,632,986) Net realized and unrealized gain 5,491,067 Increase in net assets from operations $9,554,180 SEE NOTES TO FINANCIAL STATEMENTS SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 17

20 STATEMENTS OF CHANGES IN NET ASSETS Six months ended Year ended (unaudited) Increase (decrease) in net assets From operations Net investment income $4,063,113 $6,197,175 Net realized gain (loss) 11,124,053 (9,663,027) Change in net unrealized appreciation (depreciation) (5,632,986) 40,910,998 Increase in net assets resulting from operations 9,554,180 37,445,146 Distributions to shareholders From net investment income Class A (911,627) (1,398,657) Class C (54,455) Class I (5,429,139) (3,517,940) Class R2 (24,806) (32,686) Class R4 (10,563) (31,759) Class R6 (194,684) (120,764) From net realized gain Class A (542,925) (448,981) Class C (308,623) (66,536) Class I (2,344,624) (765,531) Class R2 (16,956) (12,128) Class R4 (5,289) (8,209) Class R6 (77,016) (23,545) Total distributions (9,920,707) (6,426,736) From fund share transactions (20,698,012) (141,445,056) Total decrease (21,064,539) (110,426,646) Net assets Beginning of period 727,329, ,755,856 End of period $706,264,671 $727,329,210 Undistributed net investment income $751,128 $3,313, JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT SEE NOTES TO FINANCIAL STATEMENTS

21 Financial highlights CLASS A SHARES Period ended Per share operating performance Net asset value, beginning of period $14.55 $13.96 $14.12 $15.35 $14.68 $14.32 Net investment income 2, Net realized and unrealized gain (loss) on investments (0.81) Total from investment operations (0.62) Less distributions From net investment income (0.11) (0.08) (0.21) (0.19) (0.14) (0.14) From net realized gain (0.07) (0.03) (0.17) (0.42) (0.19) (0.08) Total distributions (0.18) (0.11) (0.38) (0.61) (0.33) (0.22) Net asset value, end of period $14.55 $14.55 $13.96 $14.12 $15.35 $14.68 Total return (%) 5, (4.14) Ratios and supplemental data Net assets,end of period (in millions) $113 $136 $278 $404 $484 $329 Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income Portfolio turnover (%) Six months ended Unaudited. 2 Based on average daily shares outstanding. 3 Net investment income is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the fund invests. Accordingly,a significant portion of income is recorded in December. 4 Less than $0.005 per share. 5 Total returns would have been lower had certain expenses not been reduced during the applicable periods. 6 Does not reflect the effect of sales charges,if any. 7 Not annualized. 8 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the fund.the range of expense ratios of the underlying funds held by the fund was as follows:0.10%-2.19%,0.10%-3.50%,0.10%-3.39%,0.12% %, 0.68% 2.70% and 0.71% 1.29% for the periods ended , , , , and ,respectively. 9 Annualized. SEE NOTES TO FINANCIAL STATEMENTS SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 19

22 CLASS C SHARES Period ended Per share operating performance Net asset value, beginning of period $14.56 $13.97 $14.12 $15.35 $14.68 $14.32 Net investment income 2, Net realized and unrealized gain (loss) on investments (0.82) Total from investment operations (0.73) Less distributions From net investment income (0.01) (0.11) (0.08) (0.03) (0.04) From net realized gain (0.07) (0.01) (0.17) (0.42) (0.19) (0.08) Total distributions (0.08) (0.01) (0.28) (0.50) (0.22) (0.12) Net asset value, end of period $14.61 $14.56 $13.97 $14.12 $15.35 $14.68 Total return (%) 5, (4.83) Ratios and supplemental data Net assets,end of period (in millions) $64 $72 $99 $135 $162 $109 Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income Portfolio turnover (%) Six months ended Unaudited. 2 Based on average daily shares outstanding. 3 Net investment income is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the fund invests. Accordingly,a significant portion of income is recorded in December. 4 Less than $0.005 per share. 5 Total returns would have been lower had certain expenses not been reduced during the applicable periods. 6 Does not reflect the effect of sales charges,if any. 7 Not annualized. 8 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the fund.the range of expense ratios of the underlying funds held by the fund was as follows:0.10%-2.19%,0.10%-3.50%,0.10% %,0.12% 2.83%, 0.68% 2.70% and 0.71% 1.29% for the periods ended , , , , and ,respectively. 9 Annualized. 10 Less than 0.005%. 20 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT SEE NOTES TO FINANCIAL STATEMENTS

23 CLASS I SHARES Period ended Per share operating performance Net asset value, beginning of period $14.58 $13.99 $14.15 $15.37 $14.70 $14.34 Net investment income 2, Net realized and unrealized gain (loss) on investments (0.81) Total from investment operations (0.57) Less distributions From net investment income (0.15) (0.12) (0.25) (0.23) (0.18) (0.20) From net realized gain (0.07) (0.03) (0.17) (0.42) (0.19) (0.08) Total distributions (0.22) (0.15) (0.42) (0.65) (0.37) (0.28) Net asset value, end of period $14.56 $14.58 $13.99 $14.15 $15.37 $14.70 Total return (%) (3.80) Ratios and supplemental data Net assets,end of period (in millions) $508 $495 $433 $532 $592 $290 Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income Portfolio turnover (%) Six months ended Unaudited. 2 Based on average daily shares outstanding. 3 Net investment income is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the fund invests. Accordingly,a significant portion of income is recorded in December. 4 Less than $0.005 per share. 5 Total returns would have been lower had certain expenses not been reduced during the applicable periods. 6 Not annualized. 7 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the fund.the range of expense ratios of the underlying funds held by the fund was as follows:0.10%-2.19%,0.10%-3.50%,0.10% %,0.12% 2.83%, 0.68% 2.70% and 0.71% 1.29% for the periods ended , , , , and ,respectively. 8 Annualized. SEE NOTES TO FINANCIAL STATEMENTS SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 21

24 CLASS R2 SHARES Period ended Per share operating performance Net asset value, beginning of period $14.53 $13.95 $14.11 $15.33 $14.66 $14.30 Net investment income 2, Net realized and unrealized gain (loss) on investments (0.79) Total from investment operations (0.65) Less distributions From net investment income (0.09) (0.07) (0.20) (0.15) (0.11) (0.12) From net realized gain (0.07) (0.03) (0.17) (0.42) (0.19) (0.08) Total distributions (0.16) (0.10) (0.37) (0.57) (0.30) (0.20) Net asset value, end of period $14.54 $14.53 $13.95 $14.11 $15.33 $14.66 Total return (%) (4.31) Ratios and supplemental data Net assets,end of period (in millions) $3 $4 $7 $2 $2 $1 Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income Portfolio turnover (%) Six months ended Unaudited. 2 Based on average daily shares outstanding. 3 Net investment income is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the fund invests. Accordingly,a significant portion of income is recorded in December. 4 Total returns would have been lower had certain expenses not been reduced during the applicable periods. 5 Not annualized. 6 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the fund.the range of expense ratios of the underlying funds held by the fund was as follows:0.10%-2.19%,0.10%-3.50%,0.10% %,0.12% 2.83%, 0.68% 2.70% and 0.71% 1.29% for the periods ended , , , , and ,respectively. 7 Annualized. 22 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT SEE NOTES TO FINANCIAL STATEMENTS

25 CLASS R4 SHARES Period ended Per share operating performance Net asset value, beginning of period $14.58 $13.99 $14.15 $15.36 $14.69 $14.50 Net investment income 3, Net realized and unrealized gain (loss) on investments (0.80) Total from investment operations (0.60) Less distributions From net investment income (0.13) (0.10) (0.23) (0.19) (0.14) From net realized gain (0.07) (0.03) (0.17) (0.42) (0.19) Total distributions (0.20) (0.13) (0.40) (0.61) (0.33) Net asset value, end of period $14.57 $14.58 $13.99 $14.15 $15.36 $14.69 Total return (%) (3.99) Ratios and supplemental data Net assets,end of period (in millions) $1 $5 $ Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income Portfolio turnover (%) Six months ended Unaudited. 2 The inception date for Class R4 shares is Based on average daily shares outstanding. 4 Net investment income is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the fund invests. Accordingly,a significant portion of income is recorded in December. 5 Total returns would have been lower had certain expenses not been reduced during the applicable periods. 6 Not annualized. 7 Less than $500, Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the fund.the range of expense ratios of the underlying funds held by the fund was as follows:0.10%-2.19%,0.10%-3.50%,0.10% %,0.12% 2.83%, 0.68% 2.70% and 0.71% 1.29% for the periods ended , , , , and ,respectively. 9 Annualized. 10 The portfolio turnover is shown for the period from to SEE NOTES TO FINANCIAL STATEMENTS SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 23

26 CLASS R6 SHARES Period ended Per share operating performance Net asset value, beginning of period $14.58 $13.99 $14.15 $15.39 $14.70 $14.34 Net investment income 2, Net realized and unrealized gain (loss) on investments (0.81) Total from investment operations (0.57) Less distributions From net investment income (0.17) (0.14) (0.27) (0.25) (0.18) (0.19) From net realized gain (0.07) (0.03) (0.17) (0.42) (0.19) (0.08) Total distributions (0.24) (0.17) (0.44) (0.67) (0.37) (0.27) Net asset value, end of period $14.56 $14.58 $13.99 $14.15 $15.39 $14.70 Total return (%) (3.74) Ratios and supplemental data Net assets,end of period (in millions) $17 $15 $16 $9 $10 $2 Ratios (as a percentage of average net assets): Expenses before reductions Expenses including reductions Net investment income Portfolio turnover (%) Six months ended Unaudited. 2 Based on average daily shares outstanding. 3 Net investment income is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the fund invests. Accordingly,a significant portion of income is recorded in December. 4 Total returns would have been lower had certain expenses not been reduced during the applicable periods. 5 Not annualized. 6 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the fund.the range of expense ratios of the underlying funds held by the fund was as follows:0.10%-2.19%,0.10%-3.50%,0.10% %,0.12% 2.83%, 0.68% 2.70% and 0.71% 1.29% for the periods ended , , , , and ,respectively. 7 Annualized. 24 JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND SEMIANNUAL REPORT SEE NOTES TO FINANCIAL STATEMENTS

27 Notes to financial statements (unaudited) Note 1 Organization John Hancock Alternative Asset Allocation Fund (the fund) is a series of John Hancock Funds II (the Trust),an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940,as amended (the 1940 Act).The investment objective of the fund is to seek long-term growth of capital. The fund operates as a fund of funds, investing in Class NAV shares of affiliated underlying funds of the Trust,other affiliated funds in the John Hancock funds complex and other permitted investments,including unaffiliated funds. The fund may offer multiple classes of shares.the shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class I shares are offered to institutions and certain investors.class R2 and R4 shares are available only to certain retirement and 529 plans.class R6 shares are available only to certain retirement plans,institutions and other investors.shareholders of each class have exclusive voting rights to matters that affect that class.the distribution and service fees,if any,and transfer agent fees for each class may differ. The accounting policies of the John Hancock underlying funds in which the fund invests are outlined in the underlying funds shareholder reports,which include the underlying funds financial statements,available without charge by calling or visiting jhinvestments.com,on the Securities and Exchange Commission (SEC) website at sec.gov or at the SEC s public reference room in Washington,D.C.The underlying funds are not covered by this report. Note 2 Significant accounting policies The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP),which require management to make certain estimates and assumptions as of the date of the financial statements.actual results could differ from those estimates and those differences could be significant.the fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of US GAAP. Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.the following summarizes the significant accounting policies of the fund: Security valuation.investments are stated at value as of the scheduled close of regular trading on the New York Stock Exchange (NYSE),normally at 4:00 P.M.,Eastern Time.In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close,the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the fund s Valuation Policies and Procedures. In order to value the securities,the fund uses the following valuation techniques:investments by the fund in underlying affiliated funds,including John Hancock Collateral Trust (JHCT),and other open-end management investment companies, other than exchange-traded funds (ETFs) are valued at their respective NAVs each business day.etfs held by the fund are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades.in the event there were no sales during the day or closing prices are not available,the securities are valued using the last available bid price.futures contracts are valued at settlement prices,which are the official closing prices published by the exchange on which they trade.foreign securities and currencies,including forward foreign currency contracts,are valued in U.S.dollars based on foreign currency exchange rates supplied by an independent pricing vendor. In certain instances,the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled,or if trading closed earlier than scheduled,and trading occurred as normal on another exchange or market. Other portfolio securities and assets,for which reliable market quotations are not readily available,are valued at fair value as determined in good faith by the fund s Pricing Committee following procedures established by the Board of Trustees.The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. SEMIANNUAL REPORT JOHN HANCOCK ALTERNATIVE ASSET ALLOCATION FUND 25