UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811- 22733
John Hancock Exchange-Traded Fund Trust
(Exact name of registrant as specified in charter)
601 Congress Street, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
601 Congress Street
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-663-4497
Date of fiscal year end: | April 30 |
Date of reporting period: | April 30, 2017 |
ITEM 1. REPORT TO STOCKHOLDERS.
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Consumer Discretionary ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
17 | Financial statements | |
20 | Financial highlights | |
21 | Notes to financial statements | |
25 | Auditor's report | |
26 | Tax information | |
27 | Trustees and Officers | |
31 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Consumer Discretionary Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Consumer Discretionary Index is designed to comprise securities in the consumer discretionary sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The consumer discretionary sector is composed of companies in areas such as restaurants, media, consumer retail, leisure equipment and products, hotels, apparel, automobiles, and consumer durable goods. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Consumer Discretionary Index comprises securities within the consumer discretionary sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
This chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.27 |
Net (%) | 0.50 |
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities had positive performance for the one-year period, outperforming both developed ex-U.S. markets and emerging markets.
Consumer discretionary shares were up, but they trailed the market
The fund generated a positive return for the period, but trailed its benchmark, the Russell 1000 Consumer Discretionary Index
The fund's emphasis on mid-cap stocks detracted
Overweight allocations to mid-cap stocks detracted from the fund's returns relative to its benchmark.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Consumer Discretionary Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
Amazon.com, Inc. | 6.4 |
Comcast Corp., Class A | 4.6 |
The Home Depot, Inc. | 3.8 |
The Walt Disney Company | 3.4 |
Starbucks Corp. | 2.0 |
McDonald's Corp. | 1.9 |
Lowe's Companies, Inc. | 1.9 |
Delphi Automotive PLC | 1.5 |
Charter Communications, Inc., Class A | 1.5 |
Ford Motor Company | 1.5 |
TOTAL | 28.5 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the period, outperforming both developed ex-U.S. and emerging markets. The Russell 3000 Index was up 18.58%, as compared to a 10.92% return for the MSCI World ex-USA Investable Market Index and a 18.42% return for the MSCI Emerging Markets Investable Market Index.
How did the fund perform for the period?
The fund widely underperformed the Russell 1000 Consumer Discretionary Index, a cap-weighted benchmark we use as a proxy for the consumer discretionary sector of the U.S. stock market.
Relative to most commercial measures of the consumer discretionary sector, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
The fund's greater emphasis on mid-cap stocks detracted from relative performance, as mid caps underperformed large caps. Conversely, the fund's greater emphasis on low relative price (value) stocks contributed positively to relative performance, as value stocks outperformed growth within the consumer discretionary sector.
Detractors included Amazon.com, Inc., Netflix, Inc., and The Priceline Group, Inc. Contributors included NIKE, Inc., Best Buy Company, Inc., and Twenty-First Century Fox, Inc.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Consumer Discretionary Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Consumer Discretionary Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations while emphasizing companies with higher profitability. The fund held approximately 140 names, and in absolute terms, the fund's largest industry exposures were to media and specialty retail.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Consumer Discretionary ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.27 |
Net (%) | 0.50 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $11,866.
The John Hancock Dimensional Consumer Discretionary Index is designed to comprise securities in the consumer discretionary sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The consumer discretionary sector is composed of companies in areas such as restaurants, media, consumer retail, leisure equipment and products, hotels, apparel, automobiles, and consumer durable goods. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Consumer Discretionary Index comprises securities within the consumer discretionary sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 67 | 26.69% | 181 | 72.11% | ||||
25 - < 50 | 0 | 0.00% | 3 | 1.20% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 67 | 26.69% | 184 | 73.31% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,131.70 | $2.64 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 99.9% | $30,824,953 | |||||||||||||
(Cost $28,200,508) | ||||||||||||||
Consumer discretionary 99.9% | 30,824,953 | |||||||||||||
Auto components 4.9% | ||||||||||||||
Adient PLC | 1,237 | 90,994 | ||||||||||||
Autoliv, Inc. | 1,843 | 184,650 | ||||||||||||
BorgWarner, Inc. | 3,973 | 167,978 | ||||||||||||
Delphi Automotive PLC | 5,922 | 476,129 | ||||||||||||
Gentex Corp. | 5,273 | 108,887 | ||||||||||||
Lear Corp. | 1,807 | 257,787 | ||||||||||||
The Goodyear Tire & Rubber Company | 6,623 | 239,951 | ||||||||||||
Automobiles 4.4% | ||||||||||||||
Ford Motor Company | 39,786 | 456,345 | ||||||||||||
General Motors Company | 10,805 | 374,285 | ||||||||||||
Harley-Davidson, Inc. | 4,083 | 231,955 | ||||||||||||
Tesla, Inc. (I) | 739 | 232,098 | ||||||||||||
Thor Industries, Inc. | 816 | 78,483 | ||||||||||||
Distributors 1.7% | ||||||||||||||
Genuine Parts Company | 2,747 | 252,779 | ||||||||||||
LKQ Corp. (I) | 5,062 | 158,137 | ||||||||||||
Pool Corp. | 829 | 99,165 | ||||||||||||
Diversified consumer services 1.3% | ||||||||||||||
Bright Horizons Family Solutions, Inc. (I) | 740 | 56,329 | ||||||||||||
H&R Block, Inc. | 4,019 | 99,631 | ||||||||||||
Service Corp. International | 4,573 | 147,342 | ||||||||||||
ServiceMaster Global Holdings, Inc. (I) | 2,912 | 110,947 | ||||||||||||
Hotels, restaurants and leisure 16.2% | ||||||||||||||
Aramark | 5,831 | 212,948 | ||||||||||||
Carnival Corp. | 3,981 | 245,906 | ||||||||||||
Chipotle Mexican Grill, Inc. (I) | 416 | 197,380 | ||||||||||||
Cracker Barrel Old Country Store, Inc. | 522 | 83,619 | ||||||||||||
Darden Restaurants, Inc. | 2,381 | 202,837 | ||||||||||||
Domino's Pizza, Inc. | 721 | 130,782 | ||||||||||||
Dunkin' Brands Group, Inc. | 1,860 | 103,900 | ||||||||||||
Hilton Worldwide Holdings, Inc. | 3,564 | 210,169 | ||||||||||||
Hyatt Hotels Corp., Class A (I) | 554 | 30,747 | ||||||||||||
International Game Technology PLC | 2,077 | 46,109 | ||||||||||||
Las Vegas Sands Corp. | 3,829 | 225,873 | ||||||||||||
Marriott International, Inc., Class A | 2,390 | 225,664 | ||||||||||||
McDonald's Corp. | 4,172 | 583,788 | ||||||||||||
MGM Resorts International | 10,344 | 317,664 | ||||||||||||
Norwegian Cruise Line Holdings, Ltd. (I) | 3,214 | 173,331 |
Shares | Value | |||||||||||||
Consumer discretionary (continued) | ||||||||||||||
Hotels, restaurants and leisure (continued) | ||||||||||||||
Panera Bread Company, Class A (I) | 523 | $163,532 | ||||||||||||
Royal Caribbean Cruises, Ltd. | 3,067 | 326,942 | ||||||||||||
Six Flags Entertainment Corp. | 1,465 | 91,724 | ||||||||||||
Starbucks Corp. | 10,051 | 603,663 | ||||||||||||
The Wendy's Company | 2,806 | 41,360 | ||||||||||||
Vail Resorts, Inc. | 698 | 137,967 | ||||||||||||
Wyndham Worldwide Corp. | 2,501 | 238,370 | ||||||||||||
Wynn Resorts, Ltd. | 1,117 | 137,402 | ||||||||||||
Yum! Brands, Inc. | 4,216 | 277,202 | ||||||||||||
Household durables 6.1% | ||||||||||||||
CalAtlantic Group, Inc. | 929 | 33,648 | ||||||||||||
D.R. Horton, Inc. | 6,364 | 209,312 | ||||||||||||
Leggett & Platt, Inc. | 2,615 | 137,392 | ||||||||||||
Lennar Corp., A Shares | 3,473 | 175,387 | ||||||||||||
Lennar Corp., B Shares | 176 | 7,499 | ||||||||||||
Mohawk Industries, Inc. (I) | 1,104 | 259,208 | ||||||||||||
Newell Brands, Inc. | 7,610 | 363,301 | ||||||||||||
NVR, Inc. (I) | 80 | 168,900 | ||||||||||||
PulteGroup, Inc. | 5,600 | 126,952 | ||||||||||||
Toll Brothers, Inc. | 2,753 | 99,080 | ||||||||||||
Whirlpool Corp. | 1,630 | 302,658 | ||||||||||||
Internet and direct marketing retail 10.2% | ||||||||||||||
Amazon.com, Inc. (I) | 2,118 | 1,959,129 | ||||||||||||
Expedia, Inc. | 1,831 | 244,841 | ||||||||||||
Liberty Interactive Corp., QVC Group, Series A (I) | 7,894 | 167,195 | ||||||||||||
Netflix, Inc. (I) | 1,625 | 247,325 | ||||||||||||
The Priceline Group, Inc. (I) | 242 | 446,930 | ||||||||||||
TripAdvisor, Inc. (I) | 1,740 | 78,317 | ||||||||||||
Leisure products 1.8% | ||||||||||||||
Brunswick Corp. | 1,638 | 92,957 | ||||||||||||
Hasbro, Inc. | 2,279 | 225,872 | ||||||||||||
Mattel, Inc. | 5,452 | 122,234 | ||||||||||||
Polaris Industries, Inc. | 1,256 | 107,087 | ||||||||||||
Media 22.7% | ||||||||||||||
AMC Entertainment Holdings, Inc., Class A | 649 | 19,665 | ||||||||||||
AMC Networks, Inc., Class A (I) | 974 | 58,128 | ||||||||||||
Cable One, Inc. | 77 | 52,503 | ||||||||||||
CBS Corp., Class B | 4,902 | 326,277 | ||||||||||||
Charter Communications, Inc., Class A (I) | 1,331 | 459,408 | ||||||||||||
Cinemark Holdings, Inc. | 2,350 | 101,520 | ||||||||||||
Comcast Corp., Class A | 36,501 | 1,430,480 | ||||||||||||
Discovery Communications, Inc., Series A (I) | 3,977 | 114,458 |
Shares | Value | |||||||||||||
Consumer discretionary (continued) | ||||||||||||||
Media (continued) | ||||||||||||||
Discovery Communications, Inc., Series C (I) | 3,199 | $89,508 | ||||||||||||
DISH Network Corp., Class A (I) | 2,782 | 179,272 | ||||||||||||
Liberty Global PLC, Series A (I) | 3,333 | 118,055 | ||||||||||||
Liberty Global PLC, Series C (I) | 6,395 | 221,331 | ||||||||||||
Liberty Media Corp.-Liberty Formula One, Series A (I) | 359 | 12,174 | ||||||||||||
Liberty Media Corp.-Liberty Formula One, Series C (I) | 2,415 | 84,573 | ||||||||||||
Liberty Media Corp.-Liberty SiriusXM, Series A (I) | 3,030 | 115,443 | ||||||||||||
Lions Gate Entertainment Corp., Class A | 773 | 20,229 | ||||||||||||
Lions Gate Entertainment Corp., Class B (I) | 1,546 | 36,872 | ||||||||||||
Live Nation Entertainment, Inc. (I) | 2,250 | 72,360 | ||||||||||||
News Corp., Class A | 6,890 | 87,641 | ||||||||||||
News Corp., Class B | 2,155 | 28,015 | ||||||||||||
Omnicom Group, Inc. | 5,452 | 447,718 | ||||||||||||
Regal Entertainment Group, Class A | 1,229 | 27,124 | ||||||||||||
Scripps Networks Interactive, Inc., Class A | 1,903 | 142,192 | ||||||||||||
Sinclair Broadcast Group, Inc., Class A | 1,178 | 46,472 | ||||||||||||
Sirius XM Holdings, Inc. | 25,414 | 125,799 | ||||||||||||
TEGNA, Inc. | 5,464 | 139,223 | ||||||||||||
The Interpublic Group of Companies, Inc. | 7,970 | 187,853 | ||||||||||||
The Madison Square Garden Company, Class A (I) | 392 | 79,094 | ||||||||||||
The Walt Disney Company | 9,068 | 1,048,261 | ||||||||||||
Time Warner, Inc. | 4,373 | 434,108 | ||||||||||||
Twenty-First Century Fox, Inc., Class A | 7,196 | 219,766 | ||||||||||||
Twenty-First Century Fox, Inc., Class B | 3,070 | 91,670 | ||||||||||||
Viacom, Inc., Class A | 117 | 5,218 | ||||||||||||
Viacom, Inc., Class B | 8,613 | 366,569 | ||||||||||||
Multiline retail 5.9% | ||||||||||||||
Dollar General Corp. | 6,057 | 440,404 | ||||||||||||
Dollar Tree, Inc. (I) | 4,940 | 408,884 | ||||||||||||
Kohl's Corp. | 4,538 | 177,118 | ||||||||||||
Macy's, Inc. | 8,454 | 247,026 | ||||||||||||
Nordstrom, Inc. | 3,219 | 155,381 | ||||||||||||
Target Corp. | 7,113 | 397,261 | ||||||||||||
Specialty retail 19.2% | ||||||||||||||
Advance Auto Parts, Inc. | 1,381 | 196,295 | ||||||||||||
AutoNation, Inc. (I) | 1,663 | 69,846 | ||||||||||||
AutoZone, Inc. (I) | 400 | 276,876 | ||||||||||||
Bed Bath & Beyond, Inc. | 3,953 | 153,179 | ||||||||||||
Best Buy Company, Inc. | 6,669 | 345,521 | ||||||||||||
Burlington Stores, Inc. (I) | 1,237 | 122,364 | ||||||||||||
CarMax, Inc. (I) | 3,640 | 212,940 | ||||||||||||
Dick's Sporting Goods, Inc. | 1,948 | 98,471 |
Shares | Value | |||||||||||||
Consumer discretionary (continued) | ||||||||||||||
Specialty retail (continued) | ||||||||||||||
Foot Locker, Inc. | 2,936 | $227,070 | ||||||||||||
L Brands, Inc. | 3,216 | 169,837 | ||||||||||||
Lowe's Companies, Inc. | 6,758 | 573,619 | ||||||||||||
O'Reilly Automotive, Inc. (I) | 1,723 | 427,562 | ||||||||||||
Penske Automotive Group, Inc. | 769 | 36,689 | ||||||||||||
Ross Stores, Inc. | 4,677 | 304,005 | ||||||||||||
Signet Jewelers, Ltd. | 1,098 | 72,292 | ||||||||||||
Staples, Inc. | 11,465 | 112,013 | ||||||||||||
The Gap, Inc. | 5,529 | 144,860 | ||||||||||||
The Home Depot, Inc. | 7,537 | 1,176,526 | ||||||||||||
The Michaels Companies, Inc. (I) | 1,392 | 32,517 | ||||||||||||
The TJX Companies, Inc. | 4,740 | 372,754 | ||||||||||||
Tiffany & Company | 2,154 | 197,414 | ||||||||||||
Tractor Supply Company | 2,863 | 177,248 | ||||||||||||
Ulta Salon Cosmetics & Fragrance, Inc. (I) | 1,107 | 311,554 | ||||||||||||
Williams-Sonoma, Inc. | 2,009 | 108,586 | ||||||||||||
Textiles, apparel and luxury goods 5.5% | ||||||||||||||
Carter's, Inc. | 1,046 | 96,274 | ||||||||||||
Coach, Inc. | 5,015 | 197,541 | ||||||||||||
Columbia Sportswear Company | 520 | 29,442 | ||||||||||||
Hanesbrands, Inc. | 7,248 | 158,079 | ||||||||||||
lululemon athletica, Inc. (I) | 1,631 | 84,812 | ||||||||||||
Michael Kors Holdings, Ltd. (I) | 3,673 | 137,113 | ||||||||||||
NIKE, Inc., Class B | 8,227 | 455,858 | ||||||||||||
PVH Corp. | 1,418 | 143,261 | ||||||||||||
Ralph Lauren Corp. | 1,260 | 101,707 | ||||||||||||
Skechers U.S.A., Inc., Class A (I) | 1,593 | 40,223 | ||||||||||||
Under Armour, Inc., Class A (I) | 2,067 | 44,420 | ||||||||||||
Under Armour, Inc., Class C (I) | 2,082 | 40,412 | ||||||||||||
VF Corp. | 2,796 | 152,745 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $36,732 | |||||||||||||
(Cost $36,732) | ||||||||||||||
Money market funds 0.1% | 36,732 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 36,732 | 36,732 | ||||||||||
Total investments (Cost $28,237,240)† 100.0% | $30,861,685 | |||||||||||||
Other assets and liabilities, net 0.0% | ($12,436 | ) | ||||||||||||
Total net assets 100.0% | $30,849,249 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $28,244,626. Net unrealized appreciation aggregated to $2,617,059, of which $3,741,867 related to appreciated investment securities and $1,124,808 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $28,237,240) | $30,861,685 | ||||||||||||||||||||
Dividends and interest receivable | 14,364 | ||||||||||||||||||||
Receivable due from advisor | 3,870 | ||||||||||||||||||||
Other receivables and prepaid expenses | 3,240 | ||||||||||||||||||||
Total assets | 30,883,159 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 1,558 | ||||||||||||||||||||
Other liabilities and accrued expenses | 32,352 | ||||||||||||||||||||
Total liabilities | 33,910 | ||||||||||||||||||||
Net assets | $30,849,249 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $28,625,923 | ||||||||||||||||||||
Undistributed net investment income | 82,359 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (483,478 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 2,624,445 | ||||||||||||||||||||
Net assets | $30,849,249 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $30,849,249 | ||||||||||||||||||||
Shares outstanding | 1,100,000 | ||||||||||||||||||||
Net asset value per share | $28.04 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $574,828 | |||||||||||||||||||||||
Interest | 156 | |||||||||||||||||||||||
Total investment income | 574,984 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 106,355 | |||||||||||||||||||||||
Accounting and legal services fees | 5,283 | |||||||||||||||||||||||
Transfer agent fees | 14,433 | |||||||||||||||||||||||
Trustees' fees | 442 | |||||||||||||||||||||||
Printing and postage | 11,401 | |||||||||||||||||||||||
Professional fees | 55,598 | |||||||||||||||||||||||
Custodian fees | 38,218 | |||||||||||||||||||||||
Stock exchange listing fees | 19,089 | |||||||||||||||||||||||
Other | 2,083 | |||||||||||||||||||||||
Total expenses | 252,902 | |||||||||||||||||||||||
Less expense reductions | (134,650 | ) | ||||||||||||||||||||||
Net expenses | 118,252 | |||||||||||||||||||||||
Net investment income | 456,732 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (476,063 | ) | ||||||||||||||||||||||
Redemptions in-kind | 330,184 | |||||||||||||||||||||||
(145,879 | ) | |||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 2,516,491 | |||||||||||||||||||||||
2,516,491 | ||||||||||||||||||||||||
Net realized and unrealized gain | 2,370,612 | |||||||||||||||||||||||
Increase in net assets from operations | $2,827,344 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $456,732 | $101,128 | |||||||||||||||||||||||||||
Net realized gain (loss) | (145,879 | ) | 23,821 | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 2,516,491 | 107,954 | |||||||||||||||||||||||||||
Increase in net assets resulting from operations | 2,827,344 | 232,903 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (432,608 | ) | (43,303 | ) | |||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 14,489,796 | 16,347,186 | |||||||||||||||||||||||||||
Shares repurchased | (1,374,195 | ) | (1,197,874 | ) | |||||||||||||||||||||||||
Total from fund share transactions | 13,115,601 | 15,149,312 | |||||||||||||||||||||||||||
Total increase | 15,510,337 | 15,338,912 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 15,338,912 | — | |||||||||||||||||||||||||||
End of period | $30,849,249 | $15,338,912 | |||||||||||||||||||||||||||
Undistributed net investment income | $82,359 | $58,235 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 600,000 | — | |||||||||||||||||||||||||||
Shares issued | 550,000 | 650,000 | |||||||||||||||||||||||||||
Shares repurchased | (50,000 | ) | (50,000 | ) | |||||||||||||||||||||||||
End of period | 1,100,000 | 600,000 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.56 | $24.21 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.51 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.45 | 1.24 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.96 | 1.42 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.48 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $28.04 | $25.56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 11.78 | 5.87 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $31 | $15 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.07 | 1.27 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.93 | 1.22 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)6 | 16 | 5 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Consumer Discretionary ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Consumer Discretionary Index. The John Hancock Dimensional Consumer Discretionary Index is a rules-based index of U.S. consumer discretionary stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 30, 2016, the fund had a similar agreement that enabled it to participate in a $750 million unsecured committed line of credit. For the year ended April 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the year ended April 30, 2017 were $2,831.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $357,559 and a long-term capital loss carryforward of $118,533 available to offset future net realized capital gains. These carryforwards do not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually.
The tax character of distributions for the year ended April 30, 2017 and the period ended April 30, 2016 was as follows:
April 30, 2017 | April 30, 2016 | |
Ordinary Income | $432,608 | $43,303 |
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $82,359 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $134,650.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 80% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $3,783,946 and $3,824,605, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $14,489,796 and $1,295,568, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Consumer Discretionary ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Consumer Discretionary ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period September 28, 2015 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-Div in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMC |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Consumer Discretionary ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0620 | 830A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Financials ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
17 | Financial statements | |
20 | Financial highlights | |
21 | Notes to financial statements | |
25 | Auditor's report | |
26 | Tax information | |
27 | Trustees and Officers | |
31 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Financials Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Financials Index is designed to comprise securities in the financials sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The financials sector is composed of companies in areas such as banking, savings and loans, insurance, consumer finance, investment brokerage, asset management, or other diverse financial services. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Financial Services Index comprises securities classified in the financial services sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.19 |
Net (%) | 0.50 |
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities had positive performance for the one-year period, outperforming both developed ex-U.S. markets and emerging markets.
The financials sector was up and significantly ahead of the broad market
With an exclusive focus on financials, the fund generated a positive return for the period and led its benchmark, the Russell 1000 Financial Services Index.
The fund's value emphasis contributed
The fund's greater emphasis on low relative price stocks contributed positively to relative performance, as value stocks outperformed growth within the financials sector.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Financials Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
Can you briefly describe the market environment over the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the one-year period, outperforming both developed ex-U.S. and emerging markets. The Russell 3000 Index was up 18.58%, as compared with a 10.92% return for the MSCI World ex-USA Investable Market Index and a 18.42% return for the MSCI Emerging Markets Investable Markets Index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
JPMorgan Chase & Co. | 4.0 |
Bank of America Corp. | 3.9 |
Berkshire Hathaway, Inc., Class B | 3.8 |
Wells Fargo & Company | 3.7 |
Citigroup, Inc. | 3.3 |
Visa, Inc., Class A | 3.0 |
Mastercard, Inc., Class A | 2.0 |
Capital One Financial Corp. | 1.7 |
U.S. Bancorp | 1.6 |
Prudential Financial, Inc. | 1.6 |
TOTAL | 28.6 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
How did the fund perform for the period?
The fund widely outperformed the Russell 1000 Financial Services Index, a cap-weighted benchmark we use as a proxy for the financials sector of the U.S. stock market.
Relative to most commercial measures of the financials sector, our approach typically results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
The fund's greater emphasis on low relative price (value) stocks contributed positively to performance, as value stocks outperformed growth within the financials sector for the year. The fund generally excludes real estate investment trusts (REITs). This exclusion had a positive impact on the fund's relative performance, as REITs underperformed the overall benchmark. For example, not holding certain REITs added to performance, as many REITs were under pressure. Additionally, holding a lower exposure to Berkshire Hathaway, Inc. helped as that stock fell as well.
To a lesser extent, the fund's greater emphasis on mid-cap stocks than the benchmark detracted from relative performance, as mid caps underperformed large caps for the year. Detractors also included money center banks JPMorgan Chase & Co. and Bank of America Corp. and investment firm T. Rowe Price Group, Inc.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock
Dimensional Financials Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Financial Services Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations while emphasizing companies with higher profitability. The fund held approximately 150 names, and in absolute terms, the fund's largest industry exposures were to commercial banks, insurance companies, and capital markets.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Financials ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.19 |
Net (%) | 0.50 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $13,124.
The John Hancock Dimensional Financials Index is designed to comprise securities in the financials sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The financials sector is composed of companies in areas such as banking, savings and loans, insurance, consumer finance, investment brokerage, asset management, or other diverse financial services. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Financial Services Index comprises securities classified in the financial services sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 87 | 34.66% | 164 | 65.34% | ||||
25 - < 50 | 0 | 0.00% | 0 | 0.00% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 87 | 34.66% | 164 | 65.34% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,193.00 | $2.72 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 99.9% | $42,456,628 | |||||||||||||
(Cost $37,523,140) | ||||||||||||||
Consumer discretionary 0.7% | 291,404 | |||||||||||||
Internet and direct marketing retail 0.2% | ||||||||||||||
Liberty Ventures, Series A (I) | 1,481 | 79,752 | ||||||||||||
Media 0.5% | ||||||||||||||
Liberty Broadband Corp., Series A (I) | 388 | 34,893 | ||||||||||||
Liberty Broadband Corp., Series C (I) | 1,939 | 176,759 | ||||||||||||
Consumer staples 0.1% | 38,919 | |||||||||||||
Household products 0.1% | ||||||||||||||
HRG Group, Inc. (I) | 1,945 | 38,919 | ||||||||||||
Financials 91.2% | 38,761,081 | |||||||||||||
Banks 34.3% | ||||||||||||||
Associated Banc-Corp. | 1,856 | 46,214 | ||||||||||||
Bank of America Corp. | 70,992 | 1,656,953 | ||||||||||||
Bank of Hawaii Corp. | 585 | 47,666 | ||||||||||||
Bank of the Ozarks, Inc. | 2,032 | 96,459 | ||||||||||||
BankUnited, Inc. | 2,052 | 72,415 | ||||||||||||
BB&T Corp. | 9,748 | 420,919 | ||||||||||||
BOK Financial Corp. | 615 | 51,838 | ||||||||||||
Chemical Financial Corp. | 754 | 35,777 | ||||||||||||
CIT Group, Inc. | 4,988 | 230,994 | ||||||||||||
Citigroup, Inc. | 23,991 | 1,418,348 | ||||||||||||
Citizens Financial Group, Inc. | 12,728 | 467,245 | ||||||||||||
Comerica, Inc. | 3,761 | 265,903 | ||||||||||||
Commerce Bancshares, Inc. | 2,594 | 142,540 | ||||||||||||
Cullen/Frost Bankers, Inc. | 1,356 | 127,993 | ||||||||||||
East West Bancorp, Inc. | 3,439 | 186,635 | ||||||||||||
Fifth Third Bancorp | 23,150 | 565,555 | ||||||||||||
First Citizens BancShares, Inc., Class A | 102 | 35,502 | ||||||||||||
First Hawaiian, Inc. | 634 | 18,874 | ||||||||||||
First Horizon National Corp. | 4,769 | 87,511 | ||||||||||||
First Republic Bank | 2,970 | 274,606 | ||||||||||||
Hancock Holding Company | 900 | 42,030 | ||||||||||||
Home BancShares, Inc. | 2,066 | 52,580 | ||||||||||||
Huntington Bancshares, Inc. | 23,008 | 295,883 | ||||||||||||
IBERIABANK Corp. | 544 | 43,166 | ||||||||||||
Investors Bancorp, Inc. | 5,855 | 81,092 | ||||||||||||
JPMorgan Chase & Co. | 19,334 | 1,682,058 | ||||||||||||
KeyCorp | 21,769 | 397,067 | ||||||||||||
M&T Bank Corp. | 2,820 | 438,256 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Banks (continued) | ||||||||||||||
MB Financial, Inc. | 867 | $36,856 | ||||||||||||
PacWest Bancorp | 2,377 | 117,400 | ||||||||||||
People's United Financial, Inc. | 7,745 | 135,305 | ||||||||||||
Popular, Inc. | 1,761 | 73,804 | ||||||||||||
Prosperity Bancshares, Inc. | 1,760 | 118,272 | ||||||||||||
Regions Financial Corp. | 32,573 | 447,879 | ||||||||||||
Signature Bank (I) | 1,218 | 168,632 | ||||||||||||
SunTrust Banks, Inc. | 7,778 | 441,868 | ||||||||||||
SVB Financial Group (I) | 1,150 | 202,331 | ||||||||||||
Synovus Financial Corp. | 2,458 | 102,744 | ||||||||||||
Texas Capital Bancshares, Inc. (I) | 547 | 41,627 | ||||||||||||
The PNC Financial Services Group, Inc. | 4,320 | 517,320 | ||||||||||||
U.S. Bancorp | 13,371 | 685,665 | ||||||||||||
UMB Financial Corp. | 503 | 36,462 | ||||||||||||
Umpqua Holdings Corp. | 4,701 | 83,067 | ||||||||||||
United Bankshares, Inc. | 847 | 33,795 | ||||||||||||
Webster Financial Corp. | 2,163 | 109,902 | ||||||||||||
Wells Fargo & Company | 29,014 | 1,562,114 | ||||||||||||
Western Alliance Bancorp (I) | 2,647 | 126,791 | ||||||||||||
Wintrust Financial Corp. | 776 | 54,987 | ||||||||||||
Zions Bancorporation | 4,865 | 194,746 | ||||||||||||
Capital markets 19.7% | ||||||||||||||
Affiliated Managers Group, Inc. | 1,125 | 186,289 | ||||||||||||
Ameriprise Financial, Inc. | 3,891 | 497,464 | ||||||||||||
BlackRock, Inc. | 758 | 291,504 | ||||||||||||
CBOE Holdings, Inc. | 1,838 | 151,470 | ||||||||||||
CME Group, Inc. | 2,755 | 320,103 | ||||||||||||
E*TRADE Financial Corp. (I) | 6,370 | 220,084 | ||||||||||||
Eaton Vance Corp. | 3,117 | 133,813 | ||||||||||||
FactSet Research Systems, Inc. | 1,096 | 178,933 | ||||||||||||
Franklin Resources, Inc. | 7,522 | 324,273 | ||||||||||||
Intercontinental Exchange, Inc. | 5,754 | 346,391 | ||||||||||||
Invesco, Ltd. | 8,205 | 270,273 | ||||||||||||
Legg Mason, Inc. | 2,327 | 86,983 | ||||||||||||
MarketAxess Holdings, Inc. | 860 | 165,567 | ||||||||||||
Moody's Corp. | 3,170 | 375,074 | ||||||||||||
Morgan Stanley | 10,908 | 473,080 | ||||||||||||
Morningstar, Inc. | 537 | 39,271 | ||||||||||||
MSCI, Inc. | 2,352 | 235,953 | ||||||||||||
Nasdaq, Inc. | 2,450 | 168,732 | ||||||||||||
Northern Trust Corp. | 5,136 | 462,240 | ||||||||||||
Raymond James Financial, Inc. | 3,083 | 229,745 | ||||||||||||
S&P Global, Inc. | 3,136 | 420,820 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Capital markets (continued) | ||||||||||||||
SEI Investments Company | 3,550 | $180,021 | ||||||||||||
State Street Corp. | 3,886 | 326,035 | ||||||||||||
Stifel Financial Corp. (I) | 707 | 34,551 | ||||||||||||
T. Rowe Price Group, Inc. | 5,372 | 380,821 | ||||||||||||
TD Ameritrade Holding Corp. | 5,998 | 229,543 | ||||||||||||
The Bank of New York Mellon Corp. | 13,500 | 635,310 | ||||||||||||
The Charles Schwab Corp. | 9,661 | 375,330 | ||||||||||||
The Goldman Sachs Group, Inc. | 2,755 | 616,569 | ||||||||||||
Wins Finance Holdings, Inc. (I) | 9 | 413 | ||||||||||||
Consumer finance 6.1% | ||||||||||||||
Ally Financial, Inc. | 18,577 | 367,825 | ||||||||||||
American Express Company | 6,312 | 500,226 | ||||||||||||
Capital One Financial Corp. | 9,186 | 738,371 | ||||||||||||
Credit Acceptance Corp. (I) | 168 | 34,146 | ||||||||||||
Discover Financial Services | 5,112 | 319,960 | ||||||||||||
Navient Corp. | 9,876 | 150,115 | ||||||||||||
OneMain Holdings, Inc. (I) | 1,037 | 24,183 | ||||||||||||
Santander Consumer USA Holdings, Inc. (I) | 3,664 | 46,679 | ||||||||||||
SLM Corp. (I) | 5,953 | 74,651 | ||||||||||||
Synchrony Financial | 12,475 | 346,805 | ||||||||||||
Diversified financial services 4.6% | ||||||||||||||
Berkshire Hathaway, Inc., Class B (I) | 9,877 | 1,631,779 | ||||||||||||
Leucadia National Corp. | 6,479 | 164,502 | ||||||||||||
Voya Financial, Inc. | 4,560 | 170,453 | ||||||||||||
Insurance 25.8% | ||||||||||||||
Aflac, Inc. | 5,874 | 439,845 | ||||||||||||
Alleghany Corp. (I) | 349 | 213,134 | ||||||||||||
American Financial Group, Inc. | 1,826 | 177,688 | ||||||||||||
American International Group, Inc. | 8,067 | 491,361 | ||||||||||||
AmTrust Financial Services, Inc. | 2,412 | 38,713 | ||||||||||||
Aon PLC | 2,999 | 359,400 | ||||||||||||
Arch Capital Group, Ltd. (I) | 2,381 | 230,886 | ||||||||||||
Arthur J. Gallagher & Company | 3,614 | 201,697 | ||||||||||||
Assurant, Inc. | 1,869 | 179,873 | ||||||||||||
Assured Guaranty, Ltd. | 5,356 | 204,224 | ||||||||||||
Athene Holding, Ltd., Class A (I) | 403 | 21,484 | ||||||||||||
Axis Capital Holdings, Ltd. | 2,331 | 153,613 | ||||||||||||
Brown & Brown, Inc. | 3,079 | 132,089 | ||||||||||||
Chubb, Ltd. | 2,753 | 377,849 | ||||||||||||
Cincinnati Financial Corp. | 3,071 | 221,388 | ||||||||||||
CNA Financial Corp. | 780 | 35,303 | ||||||||||||
Enstar Group, Ltd. (I) | 176 | 34,285 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Insurance (continued) | ||||||||||||||
Erie Indemnity Company, Class A, Class A | 657 | $81,350 | ||||||||||||
Everest Re Group, Ltd. | 942 | 237,111 | ||||||||||||
First American Financial Corp. | 2,610 | 113,300 | ||||||||||||
FNF Group | 4,797 | 196,437 | ||||||||||||
Lincoln National Corp. | 5,370 | 354,044 | ||||||||||||
Loews Corp. | 6,580 | 306,760 | ||||||||||||
Markel Corp. (I) | 219 | 212,342 | ||||||||||||
Marsh & McLennan Companies, Inc. | 5,867 | 434,921 | ||||||||||||
MetLife, Inc. | 6,933 | 359,199 | ||||||||||||
Old Republic International Corp. | 6,499 | 134,399 | ||||||||||||
Primerica, Inc. | 634 | 53,129 | ||||||||||||
Principal Financial Group, Inc. | 7,701 | 501,566 | ||||||||||||
Prudential Financial, Inc. | 6,282 | 672,362 | ||||||||||||
Reinsurance Group of America, Inc. | 1,600 | 200,064 | ||||||||||||
RenaissanceRe Holdings, Ltd. | 983 | 139,753 | ||||||||||||
The Allstate Corp. | 4,452 | 361,903 | ||||||||||||
The Hanover Insurance Group, Inc. | 1,059 | 93,478 | ||||||||||||
The Hartford Financial Services Group, Inc. | 11,285 | 545,743 | ||||||||||||
The Progressive Corp. | 11,864 | 471,238 | ||||||||||||
The Travelers Companies, Inc. | 4,693 | 570,950 | ||||||||||||
Torchmark Corp. | 2,532 | 194,230 | ||||||||||||
Unum Group | 6,273 | 290,628 | ||||||||||||
Validus Holdings, Ltd. | 2,322 | 128,360 | ||||||||||||
W.R. Berkley Corp. | 2,592 | 176,204 | ||||||||||||
White Mountains Insurance Group, Ltd. | 101 | 86,753 | ||||||||||||
Willis Towers Watson PLC | 2,226 | 295,212 | ||||||||||||
XL Group, Ltd. | 6,212 | 259,972 | ||||||||||||
Thrifts and mortgage finance 0.7% | ||||||||||||||
MGIC Investment Corp. (I) | 6,575 | 69,301 | ||||||||||||
New York Community Bancorp, Inc. | 9,576 | 127,265 | ||||||||||||
Radian Group, Inc. | 3,728 | 62,929 | ||||||||||||
TFS Financial Corp. | 1,049 | 17,350 | ||||||||||||
Industrials 0.9% | 377,786 | |||||||||||||
Professional services 0.9% | ||||||||||||||
Equifax, Inc. | 2,792 | 377,786 | ||||||||||||
Information technology 5.8% | 2,468,327 | |||||||||||||
Internet software and services 0.1% | ||||||||||||||
Zillow Group, Inc., Class A (I) | 566 | 21,785 | ||||||||||||
Zillow Group, Inc., Class C (I) | 1,051 | 40,989 | ||||||||||||
IT services 5.7% | ||||||||||||||
Black Knight Financial Services, Inc., Class A (I) | 636 | 26,330 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
IT services (continued) | ||||||||||||||
Mastercard, Inc., Class A | 7,273 | $845,995 | ||||||||||||
The Western Union Company | 12,420 | 246,661 | ||||||||||||
Visa, Inc., Class A | 14,104 | 1,286,567 | ||||||||||||
Real estate 1.2% | 519,111 | |||||||||||||
Real estate management and development 1.2% | ||||||||||||||
CBRE Group, Inc., Class A (I) | 6,680 | 239,211 | ||||||||||||
Jones Lang LaSalle, Inc. | 1,016 | 116,698 | ||||||||||||
Realogy Holdings Corp. | 3,162 | 96,599 | ||||||||||||
The Howard Hughes Corp. (I) | 541 | 66,603 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $41,639 | |||||||||||||
(Cost $41,639) | ||||||||||||||
Money market funds 0.1% | 41,639 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 41,639 | 41,639 | ||||||||||
Total investments (Cost $37,564,779)† 100.0% | $42,498,267 | |||||||||||||
Other assets and liabilities, net 0.0% | $3,135 | |||||||||||||
Total net assets 100.0% | $42,501,402 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $37,565,916. Net unrealized appreciation aggregated to $4,932,351, of which $5,086,520 related to appreciated investment securities and $154,169 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $37,564,779) | $42,498,267 | ||||||||||||||||||||
Dividends and interest receivable | 36,503 | ||||||||||||||||||||
Other receivables and prepaid expenses | 3,315 | ||||||||||||||||||||
Total assets | 42,538,085 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 2,175 | ||||||||||||||||||||
Investment management fees | 63 | ||||||||||||||||||||
Other liabilities and accrued expenses | 34,445 | ||||||||||||||||||||
Total liabilities | 36,683 | ||||||||||||||||||||
Net assets | $42,501,402 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $37,624,033 | ||||||||||||||||||||
Undistributed net investment income | 131,296 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (187,415 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 4,933,488 | ||||||||||||||||||||
Net assets | $42,501,402 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $42,501,402 | ||||||||||||||||||||
Shares outstanding | 1,350,000 | ||||||||||||||||||||
Net asset value per share | $31.48 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $526,586 | |||||||||||||||||||||||
Interest | 143 | |||||||||||||||||||||||
Total investment income | 526,729 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 130,469 | |||||||||||||||||||||||
Accounting and legal services fees | 6,464 | |||||||||||||||||||||||
Transfer agent fees | 14,433 | |||||||||||||||||||||||
Trustees' fees | 482 | |||||||||||||||||||||||
Printing and postage | 14,621 | |||||||||||||||||||||||
Professional fees | 61,446 | |||||||||||||||||||||||
Custodian fees | 38,297 | |||||||||||||||||||||||
Stock exchange listing fees | 19,329 | |||||||||||||||||||||||
Other | 2,119 | |||||||||||||||||||||||
Total expenses | 287,660 | |||||||||||||||||||||||
Less expense reductions | (142,617 | ) | ||||||||||||||||||||||
Net expenses | 145,043 | |||||||||||||||||||||||
Net investment income | 381,686 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (106,894 | ) | ||||||||||||||||||||||
Redemptions in-kind | 1,260,780 | |||||||||||||||||||||||
1,153,886 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 4,991,903 | |||||||||||||||||||||||
4,991,903 | ||||||||||||||||||||||||
Net realized and unrealized gain | 6,145,789 | |||||||||||||||||||||||
Increase in net assets from operations | $6,527,475 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $381,686 | $128,832 | |||||||||||||||||||||||||||
Net realized gain (loss) | 1,153,886 | (16,324 | ) | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 4,991,903 | (58,415 | ) | ||||||||||||||||||||||||||
Increase in net assets resulting from operations | 6,527,475 | 54,093 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (325,897 | ) | (55,006 | ) | |||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 23,289,238 | 20,245,595 | |||||||||||||||||||||||||||
Shares repurchased | (6,004,275 | ) | (1,229,821 | ) | |||||||||||||||||||||||||
Total from fund share transactions | 17,284,963 | 19,015,774 | |||||||||||||||||||||||||||
Total increase | 23,486,541 | 19,014,861 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 19,014,861 | — | |||||||||||||||||||||||||||
End of period | $42,501,402 | $19,014,861 | |||||||||||||||||||||||||||
Undistributed net investment income | $131,296 | $75,507 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 750,000 | — | |||||||||||||||||||||||||||
Shares issued | 800,000 | 800,000 | |||||||||||||||||||||||||||
Shares repurchased | (200,000 | ) | (50,000 | ) | |||||||||||||||||||||||||
End of period | 1,350,000 | 750,000 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.35 | $24.37 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.38 | 0.21 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 6.10 | 0.85 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 6.48 | 1.06 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.35 | ) | (0.08 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $31.48 | $25.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 25.78 | 4.33 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $43 | $19 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.99 | 1.19 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.32 | 1.41 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)7 | 7 | 11 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of the issuances and repurchases of shares in relation to fluctuating market values of the investments of the fund. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Financials ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Financials Index. The John Hancock Dimensional Financials Index is a rules-based index of U.S. financial stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 30, 2016, the fund had a similar agreement that enabled it to participate in a $750 million unsecured committed line of credit. For the year ended April 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the year ended April 30, 2017 were $2,841.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $156,809 and a long-term capital loss carryforward of $29,470 available to offset future net realized capital gains. These carryforwards do not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually.
The tax character of distributions for the year ended April 30, 2017 and the period ended April 30, 2016 was as follows:
April 30, 2017 | April 30, 2016 | |
Ordinary Income | $325,897 | $55,006 |
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $131,296 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $142,617.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 65% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $2,079,746 and $2,247,822, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $23,289,238 and $5,816,592, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors. Financial services companies can be hurt by economic declines, changes in interest rates and regulatory and market impacts.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Financials ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Financials ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period September 28, 2015 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMF |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
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John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
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| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Financials ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0618 | 810A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Healthcare ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
15 | Financial statements | |
18 | Financial highlights | |
19 | Notes to financial statements | |
24 | Auditor's report | |
25 | Tax information | |
26 | Trustees and Officers | |
30 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Healthcare Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Healthcare Index comprises securities in the healthcare sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. Stocks that compose the index include those that may be considered medium or smaller capitalization company stocks. The healthcare sector is composed of companies in areas such as the manufacture of healthcare equipment and supplies, biotechnology, home or long-term healthcare facilities, hospitals, pharmaceuticals, or the provision of basic healthcare services. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Health Care Index comprises securities within the health care sector in the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.23 |
Net (%) | 0.50 |
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities had positive performance for the one-year period, outperforming both developed ex-U.S. markets and emerging markets.
Healthcare shares were up
With an exclusive focus on healthcare, the fund generated a positive return for the period and led its benchmark, the Russell 1000 Health Care Index.
The fund's smaller-cap and value emphasis contributed
The fund's greater emphasis on smaller-cap stocks and low relative price (value) stocks contributed positively to relative performance, as smaller caps and value stocks outperformed growth within the healthcare sector.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Healthcare Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the period, outperforming both developed ex-U.S. and emerging markets. The Russell 3000 Index was up 18.58%, as compared with a 10.92% return for the MSCI World ex-USA Investable Market Index and a 18.42% return for the MSCI Emerging Markets Investable Market Index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
Johnson & Johnson | 5.9 |
UnitedHealth Group, Inc. | 5.1 |
Pfizer, Inc. | 4.9 |
Merck & Company, Inc. | 4.2 |
Amgen, Inc. | 3.4 |
Medtronic PLC | 2.5 |
AbbVie, Inc. | 2.3 |
Cardinal Health, Inc. | 2.2 |
Express Scripts Holding Company | 2.2 |
Celgene Corp. | 2.1 |
TOTAL | 34.8 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
How did the fund perform for the period?
The fund outperformed the Russell 1000 Health Care Index, a cap-weighted benchmark we use as a proxy for the healthcare sector of the U.S. stock market, for the period.
Relative to most commercial measures of the healthcare sector, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
When compared to the benchmark, the fund's greater emphasis on mid caps contributed positively to relative performance, as mid-cap stocks outperformed large-cap stocks within the healthcare sector during the period. The fund's greater emphasis on low relative price (value) stocks also had a positive impact on relative performance, as value stocks outperformed growth within the healthcare sector.
By industry, the fund's greater emphasis on healthcare providers and services detracted, as those securities generally underperformed the broader healthcare sector. By security, Bristol-Myers Squibb Company, IDEXX Laboratories Inc., and Gilead Sciences, Inc. contributed, while Express Scripts Holding Company, Cardinal Health, Inc., and Universal Health Services, Inc. detracted.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Healthcare Index are updated, as well as any unscheduled changes to the index driven
by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Health Care Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations while emphasizing companies with higher profitability. The fund held approximately 100 names, and its greatest exposure at the industry level was to the healthcare providers and services and pharmaceuticals industries, followed by healthcare equipment and supplies.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Healthcare ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.23 |
Net (%) | 0.50 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $12,084.
The John Hancock Dimensional Healthcare Index comprises securities in the healthcare sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. Stocks that compose the index include those that may be considered medium or smaller capitalization company stocks. The healthcare sector is composed of companies in areas such as the manufacture of healthcare equipment and supplies, biotechnology, home or long-term healthcare facilities, hospitals, pharmaceuticals, or the provision of basic healthcare services. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Health Care Index comprises securities within the health care sector in the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 66 | 26.29% | 184 | 73.31% | ||||
25 - < 50 | 0 | 0.00% | 1 | 0.40% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 66 | 26.29% | 185 | 73.71% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,148.20 | $2.66 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 99.9% | $32,848,937 | |||||||||||||
(Cost $29,999,932) | ||||||||||||||
Health care 99.9% | 32,848,937 | |||||||||||||
Biotechnology 18.6% | ||||||||||||||
AbbVie, Inc. | 11,616 | 765,959 | ||||||||||||
ACADIA Pharmaceuticals, Inc. (I) | 1,211 | 41,574 | ||||||||||||
Alexion Pharmaceuticals, Inc. (I) | 1,972 | 251,982 | ||||||||||||
Alkermes PLC (I) | 2,141 | 124,713 | ||||||||||||
Alnylam Pharmaceuticals, Inc. (I) | 884 | 47,382 | ||||||||||||
Amgen, Inc. | 6,802 | 1,110,903 | ||||||||||||
Biogen, Inc. (I) | 1,901 | 515,570 | ||||||||||||
BioMarin Pharmaceutical, Inc. (I) | 2,025 | 194,076 | ||||||||||||
Bioverativ, Inc. (I) | 1,768 | 103,976 | ||||||||||||
Bluebird Bio, Inc. (I) | 397 | 35,313 | ||||||||||||
Celgene Corp. (I) | 5,618 | 696,913 | ||||||||||||
Dyax Corp. (I) | 702 | 1,720 | ||||||||||||
Exelixis, Inc. (I) | 2,018 | 45,203 | ||||||||||||
Gilead Sciences, Inc. | 9,762 | 669,185 | ||||||||||||
Incyte Corp. (I) | 3,216 | 399,684 | ||||||||||||
Ionis Pharmaceuticals, Inc. (I) | 1,446 | 69,683 | ||||||||||||
Neurocrine Biosciences, Inc. (I) | 1,036 | 55,322 | ||||||||||||
OPKO Health, Inc. (I) | 7,322 | 56,892 | ||||||||||||
Regeneron Pharmaceuticals, Inc. (I) | 810 | 314,677 | ||||||||||||
Seattle Genetics, Inc. (I) | 1,398 | 95,483 | ||||||||||||
TESARO, Inc. (I) | 442 | 65,235 | ||||||||||||
United Therapeutics Corp. (I) | 1,303 | 163,787 | ||||||||||||
Vertex Pharmaceuticals, Inc. (I) | 2,537 | 300,127 | ||||||||||||
Health care equipment and supplies 21.9% | ||||||||||||||
Abbott Laboratories | 15,655 | 683,184 | ||||||||||||
ABIOMED, Inc. (I) | 581 | 75,716 | ||||||||||||
Align Technology, Inc. (I) | 1,255 | 168,948 | ||||||||||||
Baxter International, Inc. | 5,352 | 297,999 | ||||||||||||
Becton, Dickinson and Company | 2,461 | 460,133 | ||||||||||||
Boston Scientific Corp. (I) | 11,041 | 291,262 | ||||||||||||
C.R. Bard, Inc. | 1,693 | 520,564 | ||||||||||||
DENTSPLY SIRONA, Inc. | 5,095 | 322,208 | ||||||||||||
DexCom, Inc. (I) | 995 | 77,570 | ||||||||||||
Edwards Lifesciences Corp. (I) | 3,917 | 429,577 | ||||||||||||
Hill-Rom Holdings, Inc. | 1,885 | 142,581 | ||||||||||||
Hologic, Inc. (I) | 7,356 | 332,123 | ||||||||||||
IDEXX Laboratories, Inc. (I) | 1,692 | 283,799 | ||||||||||||
Intuitive Surgical, Inc. (I) | 323 | 269,986 |
Shares | Value | |||||||||||||
Health care (continued) | ||||||||||||||
Health care equipment and supplies (continued) | ||||||||||||||
Masimo Corp. (I) | 391 | $40,171 | ||||||||||||
Medtronic PLC | 10,055 | 835,476 | ||||||||||||
NuVasive, Inc. (I) | 907 | 65,767 | ||||||||||||
ResMed, Inc. | 2,825 | 192,072 | ||||||||||||
STERIS PLC | 1,864 | 137,563 | ||||||||||||
Stryker Corp. | 2,889 | 393,973 | ||||||||||||
Teleflex, Inc. | 988 | 204,407 | ||||||||||||
The Cooper Companies, Inc. | 937 | 187,709 | ||||||||||||
Varian Medical Systems, Inc. (I) | 2,011 | 182,478 | ||||||||||||
West Pharmaceutical Services, Inc. | 1,468 | 135,100 | ||||||||||||
Zimmer Biomet Holdings, Inc. | 3,817 | 456,704 | ||||||||||||
Health care providers and services 29.1% | ||||||||||||||
Acadia Healthcare Company, Inc. (I) | 1,587 | 69,161 | ||||||||||||
Aetna, Inc. | 4,832 | 652,658 | ||||||||||||
AmerisourceBergen Corp. | 3,583 | 293,985 | ||||||||||||
Anthem, Inc. | 3,526 | 627,240 | ||||||||||||
Cardinal Health, Inc. | 10,150 | 736,789 | ||||||||||||
Centene Corp. (I) | 4,187 | 311,513 | ||||||||||||
Cigna Corp. | 3,505 | 548,077 | ||||||||||||
DaVita, Inc. (I) | 5,871 | 405,158 | ||||||||||||
Envision Healthcare Corp. (I) | 3,495 | 195,825 | ||||||||||||
Express Scripts Holding Company (I) | 11,565 | 709,397 | ||||||||||||
HCA Holdings, Inc. (I) | 2,842 | 239,325 | ||||||||||||
HealthSouth Corp. | 2,268 | 106,369 | ||||||||||||
Henry Schein, Inc. (I) | 1,862 | 323,616 | ||||||||||||
Humana, Inc. | 1,686 | 374,258 | ||||||||||||
Laboratory Corp. of America Holdings (I) | 2,893 | 405,454 | ||||||||||||
McKesson Corp. | 2,986 | 412,934 | ||||||||||||
MEDNAX, Inc. (I) | 2,425 | 146,373 | ||||||||||||
Patterson Companies, Inc. | 2,461 | 109,490 | ||||||||||||
Quest Diagnostics, Inc. | 4,574 | 482,603 | ||||||||||||
UnitedHealth Group, Inc. | 9,631 | 1,684,269 | ||||||||||||
Universal Health Services, Inc., Class B | 3,086 | 372,665 | ||||||||||||
VCA, Inc. (I) | 2,081 | 190,557 | ||||||||||||
WellCare Health Plans, Inc. (I) | 1,179 | 180,870 | ||||||||||||
Life sciences tools and services 5.4% | ||||||||||||||
Bio-Rad Laboratories, Inc., Class A (I) | 484 | 105,638 | ||||||||||||
Bio-Techne Corp. | 754 | 80,738 | ||||||||||||
Bruker Corp. | 2,452 | 59,804 | ||||||||||||
Charles River Laboratories International, Inc. (I) | 1,210 | 108,537 | ||||||||||||
Illumina, Inc. (I) | 2,212 | 408,910 | ||||||||||||
Patheon NV (I) | 231 | 6,216 |
Shares | Value | |||||||||||||
Health care (continued) | ||||||||||||||
Life sciences tools and services (continued) | ||||||||||||||
PRA Health Sciences, Inc. (I) | 525 | $33,579 | ||||||||||||
Quintiles IMS Holdings, Inc. (I) | 2,348 | 197,889 | ||||||||||||
Thermo Fisher Scientific, Inc. | 2,749 | 454,492 | ||||||||||||
VWR Corp. (I) | 2,266 | 64,037 | ||||||||||||
Waters Corp. (I) | 1,543 | 262,140 | ||||||||||||
Pharmaceuticals 24.9% | ||||||||||||||
Allergan PLC | 2,561 | 624,525 | ||||||||||||
Bristol-Myers Squibb Company | 9,097 | 509,887 | ||||||||||||
Catalent, Inc. (I) | 2,562 | 75,015 | ||||||||||||
Eli Lilly & Company | 6,579 | 539,873 | ||||||||||||
Jazz Pharmaceuticals PLC (I) | 1,599 | 254,689 | ||||||||||||
Johnson & Johnson | 15,823 | 1,953,666 | ||||||||||||
Mallinckrodt PLC (I) | 2,399 | 112,561 | ||||||||||||
Merck & Company, Inc. | 22,073 | 1,375,810 | ||||||||||||
Mylan NV (I) | 12,254 | 457,687 | ||||||||||||
Perrigo Company PLC | 1,618 | 119,635 | ||||||||||||
Pfizer, Inc. | 47,025 | 1,595,088 | ||||||||||||
The Medicines Company (I) | 554 | 27,323 | ||||||||||||
Zoetis, Inc. | 9,449 | 530,183 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $35,548 | |||||||||||||
(Cost $35,548) | ||||||||||||||
Money market funds 0.1% | 35,548 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 35,548 | 35,548 | ||||||||||
Total investments (Cost $30,035,480)† 100.0% | $32,884,485 | |||||||||||||
Other assets and liabilities, net 0.0% | ($9,324 | ) | ||||||||||||
Total net assets 100.0% | $32,875,161 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $30,038,112. Net unrealized appreciation aggregated to $2,846,373, of which $3,812,250 related to appreciated investment securities and $965,877 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $30,035,480) | $32,884,485 | ||||||||||||||||||||
Dividends and interest receivable | 16,773 | ||||||||||||||||||||
Receivable due from advisor | 5,908 | ||||||||||||||||||||
Other receivables and prepaid expenses | 3,218 | ||||||||||||||||||||
Total assets | 32,910,384 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 1,664 | ||||||||||||||||||||
Other liabilities and accrued expenses | 33,559 | ||||||||||||||||||||
Total liabilities | 35,223 | ||||||||||||||||||||
Net assets | $32,875,161 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $30,190,225 | ||||||||||||||||||||
Undistributed net investment income | 134,968 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (299,037 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 2,849,005 | ||||||||||||||||||||
Net assets | $32,875,161 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $32,875,161 | ||||||||||||||||||||
Shares outstanding | 1,150,000 | ||||||||||||||||||||
Net asset value per share | $28.59 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $407,374 | |||||||||||||||||||||||
Interest | 145 | |||||||||||||||||||||||
Total investment income | 407,519 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 112,875 | |||||||||||||||||||||||
Accounting and legal services fees | 5,652 | |||||||||||||||||||||||
Transfer agent fees | 14,433 | |||||||||||||||||||||||
Trustees' fees | 501 | |||||||||||||||||||||||
Printing and postage | 13,564 | |||||||||||||||||||||||
Professional fees | 58,840 | |||||||||||||||||||||||
Custodian fees | 38,363 | |||||||||||||||||||||||
Stock exchange listing fees | 19,089 | |||||||||||||||||||||||
Other | 2,103 | |||||||||||||||||||||||
Total expenses | 265,420 | |||||||||||||||||||||||
Less expense reductions | (139,924 | ) | ||||||||||||||||||||||
Net expenses | 125,496 | |||||||||||||||||||||||
Net investment income | 282,023 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (232,767 | ) | ||||||||||||||||||||||
Redemptions in-kind | 340,137 | |||||||||||||||||||||||
107,370 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 2,251,743 | |||||||||||||||||||||||
2,251,743 | ||||||||||||||||||||||||
Net realized and unrealized gain | 2,359,113 | |||||||||||||||||||||||
Increase in net assets from operations | $2,641,136 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $282,023 | $64,383 | |||||||||||||||||||||||||||
Net realized gain (loss) | 107,370 | (66,270 | ) | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 2,251,743 | 597,262 | |||||||||||||||||||||||||||
Increase in net assets resulting from operations | 2,641,136 | 595,375 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (181,449 | ) | (30,400 | ) | |||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 15,098,515 | 16,188,612 | |||||||||||||||||||||||||||
Shares repurchased | (1,436,628 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 13,661,887 | 16,188,612 | |||||||||||||||||||||||||||
Total increase | 16,121,574 | 16,753,587 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 16,753,587 | — | |||||||||||||||||||||||||||
End of period | $32,875,161 | $16,753,587 | |||||||||||||||||||||||||||
Undistributed net investment income | $134,968 | $34,394 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 650,000 | — | |||||||||||||||||||||||||||
Shares issued | 550,000 | 650,000 | |||||||||||||||||||||||||||
Shares repurchased | (50,000 | ) | — | ||||||||||||||||||||||||||
End of period | 1,150,000 | 650,000 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.77 | $23.93 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.30 | 0.11 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.72 | 1.78 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 3.02 | 1.89 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.20 | ) | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $28.59 | $25.77 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 11.78 | 7.89 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $33 | $17 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.06 | 1.23 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.12 | 0.74 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)6 | 14 | 6 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Healthcare ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Healthcare Index. The John Hancock Dimensional Healthcare Index is a rules-based index of U.S. healthcare stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund's investments as of April 30, 2017, by major security category or type:
Total value at 4-30-17 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Biotechnology | $6,125,359 | $6,123,639 | — | $1,720 | |
Health care equipment and supplies | 7,187,070 | 7,187,070 | — | — | |
Health care providers and services | 9,578,586 | 9,578,586 | — | — | |
Life sciences tools and services | 1,781,980 | 1,781,980 | — | — | |
Pharmaceuticals | 8,175,942 | 8,175,942 | — | — | |
Short-term investments | 35,548 | 35,548 | — | — | |
Total investments in securities | $32,884,485 | $32,882,765 | — | $1,720 |
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 30, 2016, the fund had a similar agreement that enabled it to participate in a $750 million unsecured committed line of credit. For the year ended April 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the year ended April 30, 2017 were $2,836.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $109,165 and a long-term capital loss carryforward of $187,240 available to offset future net realized capital gains. These carryforwards do not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually.
The tax character of distributions for the year ended April 30, 2017 and the period ended April 30, 2016 was as follows:
April 30, 2017 | April 30, 2016 | |
Ordinary Income | $181,449 | $30,400 |
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $134,968 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short
dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $139,924.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 60% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $3,512,909 and $3,605,916, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $15,098,515 and $1,345,619, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Healthcare ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Healthcare ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period September 28, 2015 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMH |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Healthcare ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
2017-05-12-0619 | 820A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Large Cap ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
34 | Financial statements | |
37 | Financial highlights | |
38 | Notes to financial statements | |
44 | Auditor's report | |
45 | Tax information | |
46 | Trustees and Officers | |
50 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Large Cap Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Large Cap Index is designed to comprise a subset of securities in the U.S. universe issued by companies whose market capitalizations are larger than that of the 801st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Index comprises 1000 publicly-traded large-cap companies in the United States.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 0.93 |
Net (%) | 0.35 |
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities rose, outperforming both developed ex-U.S. and emerging markets.
Fund gained, narrowly leading its benchmark
The fund generated a positive return for the period, ahead of its benchmark, the Russell 1000 Index.
Emphasis on certain value stocks was beneficial
Our approach of maintaining intentionally higher allocations to securities trading at lower prices relative to their book values aided the fund's relative performance.
SECTOR COMPOSITION AS OF 4/30/17 (%)
A note about risks
Large company stocks could fall out of favor. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Large Cap Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
Apple, Inc. | 2.6 |
Microsoft Corp. | 1.5 |
Alphabet, Inc., Class A | 1.3 |
Exxon Mobil Corp. | 1.1 |
JPMorgan Chase & Co. | 1.1 |
Johnson & Johnson | 1.0 |
Berkshire Hathaway, Inc., Class B | 0.9 |
Amazon.com, Inc. | 0.9 |
Wells Fargo & Company | 0.8 |
Intel Corp. | 0.7 |
TOTAL | 11.9 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance, outperforming both developed ex-U.S. markets and emerging markets. The Russell 3000 Index was up 18.58%, as compared to a 10.92% return for the MSCI World ex-USA Investable Market Index and a gain of 18.42% for the MSCI Emerging Markets Investable Market Index.
How did the fund perform for the period?
The fund was up on a net asset value basis and led the Russell 1000 Index, a cap-weighted benchmark we use as a proxy for the broad large-cap U.S. stock market.
Compared with the Russell 1000 Index, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values within the large-cap universe. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
When compared to the Russell 1000 Index, the fund's greater emphasis on low relative price (value) stocks contributed positively to relative performance, as value stocks outperformed growth within the benchmark for the period. To a lesser extent, the fund's greater emphasis on mid-cap stocks than the benchmark detracted from relative performance, as mid caps underperformed large caps for the year.
The fund's positions in General Electric Company, Bristol-Meyers Squibb Company, and Exxon Mobil
Corp. contributed to performance, while holdings in Apple, Inc., Amazon.com, Inc., and Bank of America Corp. detracted from relative results.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Large Cap Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
The fund held approximately 750 names. Compared with the Russell 1000 Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations, while emphasizing companies with higher profitability. The fund's largest absolute exposures were to the information technology, financials, consumer discretionary, and healthcare sectors.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Large Cap ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 0.93 |
Net (%) | 0.35 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $13,000.
The John Hancock Dimensional Large Cap Index is designed to comprise a subset of securities in the U.S. universe issued by companies whose market capitalizations are larger than that of the 801st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The U.S. universe is defined as a free float-adjusted market capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Index comprises 1000 publicly-traded large-cap companies in the United States.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 41 | 16.33% | 210 | 83.67% | ||||
25 - < 50 | 0 | 0.00% | 0 | 0.00% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 41 | 16.33% | 210 | 83.67% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,136.80 | $1.85 | 0.35% |
Hypothetical example for comparison purposes | 1,000.00 | 1,023.10 | 1.76 | 0.35% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 99.9% | $341,687,521 | |||||||||||||
(Cost $315,918,648) | ||||||||||||||
Consumer discretionary 13.5% | 46,108,307 | |||||||||||||
Auto components 0.6% | ||||||||||||||
Adient PLC | 1,916 | 140,941 | ||||||||||||
Autoliv, Inc. | 2,802 | 280,732 | ||||||||||||
BorgWarner, Inc. | 6,468 | 273,467 | ||||||||||||
Delphi Automotive PLC | 8,463 | 680,425 | ||||||||||||
Gentex Corp. | 6,310 | 130,302 | ||||||||||||
Lear Corp. | 2,727 | 389,034 | ||||||||||||
The Goodyear Tire & Rubber Company | 8,977 | 325,237 | ||||||||||||
Automobiles 0.6% | ||||||||||||||
Ford Motor Company | 54,058 | 620,045 | ||||||||||||
General Motors Company | 14,611 | 506,125 | ||||||||||||
Harley-Davidson, Inc. | 7,078 | 402,101 | ||||||||||||
Tesla, Inc. (I) | 1,000 | 314,070 | ||||||||||||
Thor Industries, Inc. | 504 | 48,475 | ||||||||||||
Distributors 0.2% | ||||||||||||||
Genuine Parts Company | 4,933 | 453,935 | ||||||||||||
LKQ Corp. (I) | 7,229 | 225,834 | ||||||||||||
Diversified consumer services 0.1% | ||||||||||||||
Service Corp. International | 4,878 | 157,169 | ||||||||||||
ServiceMaster Global Holdings, Inc. (I) | 2,936 | 111,862 | ||||||||||||
Hotels, restaurants and leisure 2.0% | ||||||||||||||
Aramark | 7,088 | 258,854 | ||||||||||||
Carnival Corp. | 7,071 | 436,776 | ||||||||||||
Chipotle Mexican Grill, Inc. (I) | 736 | 349,210 | ||||||||||||
Darden Restaurants, Inc. | 3,718 | 316,736 | ||||||||||||
Domino's Pizza, Inc. | 899 | 163,070 | ||||||||||||
Dunkin' Brands Group, Inc. | 2,245 | 125,406 | ||||||||||||
Hilton Worldwide Holdings, Inc. | 3,815 | 224,971 | ||||||||||||
Hyatt Hotels Corp., Class A (I) | 606 | 33,633 | ||||||||||||
International Game Technology PLC | 1,985 | 44,067 | ||||||||||||
Las Vegas Sands Corp. | 5,201 | 306,807 | ||||||||||||
Marriott International, Inc., Class A | 4,424 | 417,714 | ||||||||||||
McDonald's Corp. | 7,404 | 1,036,042 | ||||||||||||
MGM Resorts International | 13,784 | �� | 423,307 | |||||||||||
Norwegian Cruise Line Holdings, Ltd. (I) | 2,337 | 126,034 | ||||||||||||
Panera Bread Company, Class A (I) | 526 | 164,470 | ||||||||||||
Royal Caribbean Cruises, Ltd. | 4,554 | 485,456 | ||||||||||||
Six Flags Entertainment Corp. | 953 | 59,667 | ||||||||||||
Starbucks Corp. | 13,419 | 805,945 |
Shares | Value | |||||||||||||
Consumer discretionary (continued) | ||||||||||||||
Hotels, restaurants and leisure (continued) | ||||||||||||||
Vail Resorts, Inc. | 740 | $146,268 | ||||||||||||
Wyndham Worldwide Corp. | 4,064 | 387,340 | ||||||||||||
Wynn Resorts, Ltd. | 1,614 | 198,538 | ||||||||||||
Yum! Brands, Inc. | 6,019 | 395,749 | ||||||||||||
Household durables 0.9% | ||||||||||||||
D.R. Horton, Inc. | 10,347 | 340,313 | ||||||||||||
Garmin, Ltd. | 3,472 | 176,516 | ||||||||||||
Leggett & Platt, Inc. | 3,964 | 208,269 | ||||||||||||
Lennar Corp., A Shares | 4,721 | 238,411 | ||||||||||||
Lennar Corp., B Shares | 213 | 9,076 | ||||||||||||
Mohawk Industries, Inc. (I) | 1,993 | 467,936 | ||||||||||||
Newell Brands, Inc. | 10,509 | 501,700 | ||||||||||||
NVR, Inc. (I) | 147 | 310,354 | ||||||||||||
PulteGroup, Inc. | 7,672 | 173,924 | ||||||||||||
Toll Brothers, Inc. | 4,147 | 149,251 | ||||||||||||
Whirlpool Corp. | 2,993 | 555,740 | ||||||||||||
Internet and direct marketing retail 1.5% | ||||||||||||||
Amazon.com, Inc. (I) | 3,257 | 3,012,692 | ||||||||||||
Expedia, Inc. | 3,404 | 455,183 | ||||||||||||
Liberty Interactive Corp., Series A (I) | 15,665 | 331,785 | ||||||||||||
Netflix, Inc. (I) | 3,059 | 465,580 | ||||||||||||
The Priceline Group, Inc. (I) | 443 | 818,141 | ||||||||||||
TripAdvisor, Inc. (I) | 2,233 | 100,507 | ||||||||||||
Leisure products 0.2% | ||||||||||||||
Brunswick Corp. | 1,040 | 59,020 | ||||||||||||
Hasbro, Inc. | 4,338 | 429,939 | ||||||||||||
Mattel, Inc. | 9,643 | 216,196 | ||||||||||||
Polaris Industries, Inc. | 1,597 | 136,160 | ||||||||||||
Media 3.3% | ||||||||||||||
CBS Corp., Class B | 9,412 | 626,463 | ||||||||||||
Charter Communications, Inc., Class A (I) | 2,432 | 839,429 | ||||||||||||
Cinemark Holdings, Inc. | 1,318 | 56,938 | ||||||||||||
Comcast Corp., Class A | 59,698 | 2,339,565 | ||||||||||||
Discovery Communications, Inc., Series A (I) | 8,327 | 239,651 | ||||||||||||
Discovery Communications, Inc., Series C (I) | 2,496 | 69,838 | ||||||||||||
DISH Network Corp., Class A (I) | 5,386 | 347,074 | ||||||||||||
Liberty Broadband Corp., Series A (I) | 260 | 23,382 | ||||||||||||
Liberty Broadband Corp., Series C (I) | 2,189 | 199,549 | ||||||||||||
Liberty Global PLC, Series A (I) | 6,417 | 227,290 | ||||||||||||
Liberty Global PLC, Series C (I) | 7,702 | 266,566 | ||||||||||||
Liberty Media Corp.-Liberty Formula One, Series A (I) | 293 | 9,936 | ||||||||||||
Liberty Media Corp.-Liberty Formula One, Series C (I) | 2,017 | 70,635 |
Shares | Value | |||||||||||||
Consumer discretionary (continued) | ||||||||||||||
Media (continued) | ||||||||||||||
Liberty Media Corp.-Liberty SiriusXM, Series A (I) | 4,541 | $173,012 | ||||||||||||
Lions Gate Entertainment Corp., Class A | 580 | 15,179 | ||||||||||||
Lions Gate Entertainment Corp., Class B (I) | 1,053 | 25,114 | ||||||||||||
Live Nation Entertainment, Inc. (I) | 3,030 | 97,445 | ||||||||||||
News Corp., Class A | 8,975 | 114,162 | ||||||||||||
News Corp., Class B | 1,729 | 22,477 | ||||||||||||
Omnicom Group, Inc. | 9,881 | 811,428 | ||||||||||||
Scripps Networks Interactive, Inc., Class A | 2,813 | 210,187 | ||||||||||||
Sirius XM Holdings, Inc. | 42,259 | 209,182 | ||||||||||||
TEGNA, Inc. | 7,787 | 198,413 | ||||||||||||
The Interpublic Group of Companies, Inc. | 14,438 | 340,304 | ||||||||||||
The Walt Disney Company | 15,183 | 1,755,155 | ||||||||||||
Time Warner, Inc. | 8,103 | 804,385 | ||||||||||||
Twenty-First Century Fox, Inc., Class A | 13,172 | 402,273 | ||||||||||||
Twenty-First Century Fox, Inc., Class B | 6,841 | 204,272 | ||||||||||||
Viacom, Inc., Class A | 173 | 7,716 | ||||||||||||
Viacom, Inc., Class B | 11,249 | 478,757 | ||||||||||||
Multiline retail 0.8% | ||||||||||||||
Dollar General Corp. | 8,145 | 592,223 | ||||||||||||
Dollar Tree, Inc. (I) | 6,784 | 561,512 | ||||||||||||
Kohl's Corp. | 7,635 | 297,994 | ||||||||||||
Macy's, Inc. | 13,393 | 391,343 | ||||||||||||
Nordstrom, Inc. | 5,424 | 261,816 | ||||||||||||
Target Corp. | 10,426 | 582,292 | ||||||||||||
Specialty retail 2.6% | ||||||||||||||
Advance Auto Parts, Inc. | 2,043 | 290,392 | ||||||||||||
AutoNation, Inc. (I) | 2,211 | 92,862 | ||||||||||||
AutoZone, Inc. (I) | 554 | 383,473 | ||||||||||||
Bed Bath & Beyond, Inc. | 6,103 | 236,491 | ||||||||||||
Best Buy Company, Inc. | 9,754 | 505,355 | ||||||||||||
Burlington Stores, Inc. (I) | 1,165 | 115,242 | ||||||||||||
CarMax, Inc. (I) | 5,733 | 335,381 | ||||||||||||
Dick's Sporting Goods, Inc. | 2,728 | 137,900 | ||||||||||||
Foot Locker, Inc. | 3,944 | 305,029 | ||||||||||||
L Brands, Inc. | 4,556 | 240,602 | ||||||||||||
Lowe's Companies, Inc. | 12,087 | 1,025,945 | ||||||||||||
O'Reilly Automotive, Inc. (I) | 2,027 | 503,000 | ||||||||||||
Ross Stores, Inc. | 8,996 | 584,740 | ||||||||||||
Staples, Inc. | 16,728 | 163,433 | ||||||||||||
The Gap, Inc. | 8,847 | 231,791 | ||||||||||||
The Home Depot, Inc. | 12,614 | 1,969,045 | ||||||||||||
The TJX Companies, Inc. | 8,932 | 702,412 |
Shares | Value | |||||||||||||
Consumer discretionary (continued) | ||||||||||||||
Specialty retail (continued) | ||||||||||||||
Tiffany & Company | 3,526 | $323,158 | ||||||||||||
Tractor Supply Company | 3,699 | 229,005 | ||||||||||||
Ulta Salon Cosmetics & Fragrance, Inc. (I) | 1,532 | 431,166 | ||||||||||||
Textiles, apparel and luxury goods 0.7% | ||||||||||||||
Coach, Inc. | 6,517 | 256,705 | ||||||||||||
Hanesbrands, Inc. | 8,586 | 187,261 | ||||||||||||
lululemon athletica, Inc. (I) | 2,335 | 121,420 | ||||||||||||
Michael Kors Holdings, Ltd. (I) | 4,388 | 163,804 | ||||||||||||
NIKE, Inc., Class B | 14,513 | 804,165 | ||||||||||||
PVH Corp. | 1,913 | 193,270 | ||||||||||||
Ralph Lauren Corp. | 1,989 | 160,552 | ||||||||||||
Under Armour, Inc., Class A (I) | 2,911 | 62,557 | ||||||||||||
Under Armour, Inc., Class C (I) | 2,950 | 57,260 | ||||||||||||
VF Corp. | 5,481 | 299,427 | ||||||||||||
Consumer staples 7.8% | 26,713,554 | |||||||||||||
Beverages 1.7% | ||||||||||||||
Brown-Forman Corp., Class A | 1,387 | 66,659 | ||||||||||||
Brown-Forman Corp., Class B | 5,926 | 280,418 | ||||||||||||
Constellation Brands, Inc., Class A | 2,854 | 492,429 | ||||||||||||
Dr. Pepper Snapple Group, Inc. | 6,807 | 623,862 | ||||||||||||
Molson Coors Brewing Company, Class B | 5,157 | 494,505 | ||||||||||||
Monster Beverage Corp. (I) | 6,992 | 317,297 | ||||||||||||
PepsiCo, Inc. | 14,921 | 1,690,251 | ||||||||||||
The Coca-Cola Company | 38,414 | 1,657,564 | ||||||||||||
Food and staples retailing 1.7% | ||||||||||||||
Costco Wholesale Corp. | 4,822 | 856,001 | ||||||||||||
CVS Health Corp. | 13,663 | 1,126,378 | ||||||||||||
Rite Aid Corp. (I) | 17,576 | 70,304 | ||||||||||||
Sysco Corp. | 9,762 | 516,117 | ||||||||||||
The Kroger Company | 23,026 | 682,721 | ||||||||||||
US Foods Holding Corp. (I) | 1,882 | 53,072 | ||||||||||||
Wal-Mart Stores, Inc. | 20,200 | 1,518,636 | ||||||||||||
Walgreens Boots Alliance, Inc. | 9,192 | 795,476 | ||||||||||||
Whole Foods Market, Inc. | 9,048 | 329,076 | ||||||||||||
Food products 2.1% | ||||||||||||||
Archer-Daniels-Midland Company | 9,311 | 425,978 | ||||||||||||
Blue Buffalo Pet Products, Inc. (I) | 942 | 23,220 | ||||||||||||
Bunge, Ltd. | 4,711 | 372,310 | ||||||||||||
Campbell Soup Company | 6,102 | 351,109 | ||||||||||||
Conagra Brands, Inc. | 12,411 | 481,299 | ||||||||||||
General Mills, Inc. | 11,162 | 641,927 | ||||||||||||
Hormel Foods Corp. | 7,032 | 246,683 |
Shares | Value | |||||||||||||
Consumer staples (continued) | ||||||||||||||
Food products (continued) | ||||||||||||||
Ingredion, Inc. | 2,471 | $305,959 | ||||||||||||
Kellogg Company | 4,095 | 290,745 | ||||||||||||
Lamb Weston Holdings, Inc. | 4,138 | 172,762 | ||||||||||||
McCormick & Company, Inc. | 3,846 | 384,215 | ||||||||||||
Mead Johnson Nutrition Company | 4,441 | 394,006 | ||||||||||||
Mondelez International, Inc., Class A | 17,741 | 798,877 | ||||||||||||
Pilgrim's Pride Corp. | 1,625 | 42,185 | ||||||||||||
Pinnacle Foods, Inc. | 2,501 | 145,433 | ||||||||||||
Post Holdings, Inc. (I) | 1,418 | 119,381 | ||||||||||||
The Hershey Company | 5,065 | 548,033 | ||||||||||||
The J.M. Smucker Company | 3,041 | 385,356 | ||||||||||||
The Kraft Heinz Company | 4,414 | 398,981 | ||||||||||||
TreeHouse Foods, Inc. (I) | 880 | 77,088 | ||||||||||||
Tyson Foods, Inc., Class A | 6,592 | 423,602 | ||||||||||||
Household products 1.2% | ||||||||||||||
Church & Dwight Company, Inc. | 3,755 | 185,985 | ||||||||||||
Colgate-Palmolive Company | 8,394 | 604,704 | ||||||||||||
Kimberly-Clark Corp. | 4,385 | 568,954 | ||||||||||||
Spectrum Brands Holdings, Inc. | 620 | 89,113 | ||||||||||||
The Clorox Company | 4,168 | 557,220 | ||||||||||||
The Procter & Gamble Company | 24,841 | 2,169,365 | ||||||||||||
Personal products 0.1% | ||||||||||||||
Coty, Inc., Class A | 618 | 11,031 | ||||||||||||
Herbalife, Ltd. (I) | 1,447 | 91,537 | ||||||||||||
The Estee Lauder Companies, Inc., Class A | 4,242 | 369,648 | ||||||||||||
Tobacco 1.0% | ||||||||||||||
Altria Group, Inc. | 20,409 | 1,464,958 | ||||||||||||
Philip Morris International, Inc. | 12,871 | 1,426,622 | ||||||||||||
Reynolds American, Inc. | 8,907 | 574,502 | ||||||||||||
Energy 5.5% | 18,954,902 | |||||||||||||
Energy equipment and services 0.8% | ||||||||||||||
Baker Hughes, Inc. | 6,046 | 358,951 | ||||||||||||
Core Laboratories NV | 652 | 72,255 | ||||||||||||
Halliburton Company | 8,722 | 400,165 | ||||||||||||
Helmerich & Payne, Inc. | 3,464 | 210,057 | ||||||||||||
National Oilwell Varco, Inc. | 7,616 | 266,332 | ||||||||||||
Schlumberger, Ltd. | 11,925 | 865,636 | ||||||||||||
TechnipFMC PLC (I) | 11,014 | 331,852 | ||||||||||||
Transocean, Ltd. (I) | 7,740 | 85,372 | ||||||||||||
Weatherford International PLC (I) | 14,089 | 81,294 |
Shares | Value | |||||||||||||
Energy (continued) | ||||||||||||||
Oil, gas and consumable fuels 4.7% | ||||||||||||||
Anadarko Petroleum Corp. | 5,394 | $307,566 | ||||||||||||
Antero Resources Corp. (I) | 6,375 | 135,086 | ||||||||||||
Apache Corp. | 6,337 | 308,232 | ||||||||||||
Cabot Oil & Gas Corp. | 9,230 | 214,505 | ||||||||||||
Cheniere Energy Partners LP Holdings LLC | 566 | 14,535 | ||||||||||||
Cheniere Energy, Inc. (I) | 2,673 | 121,221 | ||||||||||||
Chevron Corp. | 22,290 | 2,378,343 | ||||||||||||
Cimarex Energy Company | 1,893 | 220,875 | ||||||||||||
Concho Resources, Inc. (I) | 2,548 | 322,730 | ||||||||||||
ConocoPhillips | 13,798 | 661,062 | ||||||||||||
Continental Resources, Inc. (I) | 2,193 | 93,005 | ||||||||||||
Devon Energy Corp. | 6,914 | 273,034 | ||||||||||||
Diamondback Energy, Inc. (I) | 1,069 | 106,729 | ||||||||||||
Energen Corp. (I) | 1,570 | 81,624 | ||||||||||||
EOG Resources, Inc. | 5,201 | 481,093 | ||||||||||||
EQT Corp. | 5,724 | 332,793 | ||||||||||||
Exxon Mobil Corp. | 47,453 | 3,874,537 | ||||||||||||
Hess Corp. | 7,392 | 360,951 | ||||||||||||
HollyFrontier Corp. | 6,202 | 174,524 | ||||||||||||
Kinder Morgan, Inc. | 20,397 | 420,790 | ||||||||||||
Marathon Oil Corp. | 17,816 | 264,924 | ||||||||||||
Marathon Petroleum Corp. | 15,568 | 793,034 | ||||||||||||
Murphy Oil Corp. | 1,971 | 51,601 | ||||||||||||
Newfield Exploration Company (I) | 3,025 | 104,726 | ||||||||||||
Noble Energy, Inc. | 12,479 | 403,446 | ||||||||||||
Occidental Petroleum Corp. | 7,690 | 473,243 | ||||||||||||
ONEOK, Inc. | 7,616 | 400,678 | ||||||||||||
Parsley Energy, Inc., Class A (I) | 2,767 | 82,429 | ||||||||||||
Phillips 66 | 7,691 | 611,896 | ||||||||||||
Pioneer Natural Resources Company | 1,923 | 332,660 | ||||||||||||
Range Resources Corp. | 4,221 | 111,814 | ||||||||||||
RSP Permian, Inc. (I) | 704 | 26,787 | ||||||||||||
Targa Resources Corp. | 2,502 | 137,935 | ||||||||||||
Tesoro Corp. | 4,485 | 357,499 | ||||||||||||
The Williams Companies, Inc. | 16,069 | 492,193 | ||||||||||||
Valero Energy Corp. | 10,969 | 708,707 | ||||||||||||
WPX Energy, Inc. (I) | 3,871 | 46,181 | ||||||||||||
Financials 14.3% | 48,787,010 | |||||||||||||
Banks 5.4% | ||||||||||||||
Bank of America Corp. | 92,271 | 2,153,605 | ||||||||||||
Bank of the Ozarks, Inc. | 1,007 | 47,802 | ||||||||||||
BB&T Corp. | 11,710 | 505,638 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Banks (continued) | ||||||||||||||
BOK Financial Corp. | 342 | $28,827 | ||||||||||||
CIT Group, Inc. | 5,746 | 266,097 | ||||||||||||
Citigroup, Inc. | 26,921 | 1,591,570 | ||||||||||||
Citizens Financial Group, Inc. | 11,754 | 431,489 | ||||||||||||
Comerica, Inc. | 5,204 | 367,923 | ||||||||||||
Commerce Bancshares, Inc. | 1,787 | 98,196 | ||||||||||||
Cullen/Frost Bankers, Inc. | 507 | 47,856 | ||||||||||||
East West Bancorp, Inc. | 3,547 | 192,496 | ||||||||||||
Fifth Third Bancorp | 28,054 | 685,359 | ||||||||||||
First Republic Bank | 3,566 | 329,712 | ||||||||||||
Huntington Bancshares, Inc. | 25,190 | 323,943 | ||||||||||||
JPMorgan Chase & Co. | 41,729 | 3,630,423 | ||||||||||||
KeyCorp | 25,732 | 469,352 | ||||||||||||
M&T Bank Corp. | 4,086 | 635,005 | ||||||||||||
PacWest Bancorp | 2,143 | 105,843 | ||||||||||||
People's United Financial, Inc. | 7,690 | 134,344 | ||||||||||||
Prosperity Bancshares, Inc. | 574 | 38,573 | ||||||||||||
Regions Financial Corp. | 40,634 | 558,718 | ||||||||||||
Signature Bank (I) | 1,226 | 169,740 | ||||||||||||
SunTrust Banks, Inc. | 11,409 | 648,145 | ||||||||||||
SVB Financial Group (I) | 1,040 | 182,978 | ||||||||||||
Synovus Financial Corp. | 1,174 | 49,073 | ||||||||||||
The PNC Financial Services Group, Inc. | 6,165 | 738,259 | ||||||||||||
U.S. Bancorp | 19,190 | 984,063 | ||||||||||||
Wells Fargo & Company | 50,386 | 2,712,782 | ||||||||||||
Western Alliance Bancorp (I) | 941 | 45,074 | ||||||||||||
Zions Bancorporation | 5,501 | 220,205 | ||||||||||||
Capital markets 3.1% | ||||||||||||||
Affiliated Managers Group, Inc. | 1,484 | 245,736 | ||||||||||||
Ameriprise Financial, Inc. | 5,624 | 719,028 | ||||||||||||
BlackRock, Inc. | 1,058 | 406,875 | ||||||||||||
CBOE Holdings, Inc. | 1,906 | 157,073 | ||||||||||||
CME Group, Inc. | 3,937 | 457,440 | ||||||||||||
E*TRADE Financial Corp. (I) | 6,524 | 225,404 | ||||||||||||
Eaton Vance Corp. | 1,989 | 85,388 | ||||||||||||
FactSet Research Systems, Inc. | 1,085 | 177,137 | ||||||||||||
Franklin Resources, Inc. | 9,001 | 388,033 | ||||||||||||
Intercontinental Exchange, Inc. | 7,657 | 460,951 | ||||||||||||
Invesco, Ltd. | 10,355 | 341,094 | ||||||||||||
MarketAxess Holdings, Inc. | 747 | 143,812 | ||||||||||||
Moody's Corp. | 4,727 | 559,299 | ||||||||||||
Morgan Stanley | 15,227 | 660,395 | ||||||||||||
MSCI, Inc. | 2,728 | 273,673 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Capital markets (continued) | ||||||||||||||
Nasdaq, Inc. | 3,339 | $229,957 | ||||||||||||
Northern Trust Corp. | 6,192 | 557,280 | ||||||||||||
Raymond James Financial, Inc. | 3,652 | 272,147 | ||||||||||||
S&P Global, Inc. | 4,729 | 634,585 | ||||||||||||
SEI Investments Company | 4,846 | 245,741 | ||||||||||||
State Street Corp. | 5,678 | 476,384 | ||||||||||||
T. Rowe Price Group, Inc. | 6,582 | 466,598 | ||||||||||||
TD Ameritrade Holding Corp. | 8,787 | 336,278 | ||||||||||||
The Bank of New York Mellon Corp. | 16,153 | 760,160 | ||||||||||||
The Charles Schwab Corp. | 14,390 | 559,052 | ||||||||||||
The Goldman Sachs Group, Inc. | 3,900 | 872,820 | ||||||||||||
Wins Finance Holdings, Inc. (I) | 4 | 183 | ||||||||||||
Consumer finance 0.8% | ||||||||||||||
Ally Financial, Inc. | 16,222 | 321,196 | ||||||||||||
American Express Company | 9,150 | 725,138 | ||||||||||||
Capital One Financial Corp. | 10,182 | 818,429 | ||||||||||||
Discover Financial Services | 8,261 | 517,056 | ||||||||||||
Santander Consumer USA Holdings, Inc. (I) | 2,061 | 26,257 | ||||||||||||
SLM Corp. (I) | 4,693 | 58,850 | ||||||||||||
Synchrony Financial | 7,787 | 216,479 | ||||||||||||
Diversified financial services 1.0% | ||||||||||||||
Berkshire Hathaway, Inc., Class B (I) | 18,360 | 3,033,256 | ||||||||||||
Leucadia National Corp. | 7,631 | 193,751 | ||||||||||||
Voya Financial, Inc. | 4,354 | 162,753 | ||||||||||||
Insurance 3.9% | ||||||||||||||
Aflac, Inc. | 7,397 | 553,887 | ||||||||||||
Alleghany Corp. (I) | 403 | 246,112 | ||||||||||||
American Financial Group, Inc. | 2,337 | 227,413 | ||||||||||||
American International Group, Inc. | 11,853 | 721,966 | ||||||||||||
Aon PLC | 4,799 | 575,112 | ||||||||||||
Arch Capital Group, Ltd. (I) | 2,956 | 286,643 | ||||||||||||
Arthur J. Gallagher & Company | 4,150 | 231,612 | ||||||||||||
Assurant, Inc. | 1,669 | 160,625 | ||||||||||||
Assured Guaranty, Ltd. | 2,164 | 82,513 | ||||||||||||
Athene Holding, Ltd., Class A (I) | 310 | 16,526 | ||||||||||||
Axis Capital Holdings, Ltd. | 2,871 | 189,199 | ||||||||||||
Brown & Brown, Inc. | 3,020 | 129,558 | ||||||||||||
Chubb, Ltd. | 4,105 | 563,411 | ||||||||||||
Cincinnati Financial Corp. | 4,235 | 305,301 | ||||||||||||
CNA Financial Corp. | 980 | 44,355 | ||||||||||||
Erie Indemnity Company, Class A | 494 | 61,167 | ||||||||||||
Everest Re Group, Ltd. | 1,287 | 323,951 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Insurance (continued) | ||||||||||||||
FNF Group | 6,444 | $263,882 | ||||||||||||
Lincoln National Corp. | 7,843 | 517,089 | ||||||||||||
Loews Corp. | 8,617 | 401,725 | ||||||||||||
Markel Corp. (I) | 286 | 277,306 | ||||||||||||
Marsh & McLennan Companies, Inc. | 7,231 | 536,034 | ||||||||||||
MetLife, Inc. | 8,461 | 438,364 | ||||||||||||
Old Republic International Corp. | 5,876 | 121,516 | ||||||||||||
Principal Financial Group, Inc. | 9,783 | 637,167 | ||||||||||||
Prudential Financial, Inc. | 7,190 | 769,546 | ||||||||||||
Reinsurance Group of America, Inc. | 2,064 | 258,083 | ||||||||||||
RenaissanceRe Holdings, Ltd. | 946 | 134,493 | ||||||||||||
The Allstate Corp. | 6,214 | 505,136 | ||||||||||||
The Hartford Financial Services Group, Inc. | 14,717 | 711,714 | ||||||||||||
The Progressive Corp. | 16,403 | 651,527 | ||||||||||||
The Travelers Companies, Inc. | 6,876 | 836,534 | ||||||||||||
Torchmark Corp. | 3,762 | 288,583 | ||||||||||||
Unum Group | 8,991 | 416,553 | ||||||||||||
W.R. Berkley Corp. | 3,227 | 219,371 | ||||||||||||
Willis Towers Watson PLC | 3,001 | 397,993 | ||||||||||||
XL Group, Ltd. | 7,835 | 327,895 | ||||||||||||
Thrifts and mortgage finance 0.1% | ||||||||||||||
New York Community Bancorp, Inc. | 12,651 | 168,132 | ||||||||||||
TFS Financial Corp. | 619 | 10,238 | ||||||||||||
Health care 12.8% | 43,656,541 | |||||||||||||
Biotechnology 2.1% | ||||||||||||||
AbbVie, Inc. | 13,655 | 900,411 | ||||||||||||
Alexion Pharmaceuticals, Inc. (I) | 2,275 | 290,700 | ||||||||||||
Alkermes PLC (I) | 2,033 | 118,422 | ||||||||||||
Amgen, Inc. | 8,449 | 1,379,891 | ||||||||||||
Biogen, Inc. (I) | 2,605 | 706,502 | ||||||||||||
BioMarin Pharmaceutical, Inc. (I) | 2,280 | 218,515 | ||||||||||||
Bioverativ, Inc. (I) | 1,985 | 116,738 | ||||||||||||
Celgene Corp. (I) | 7,242 | 898,370 | ||||||||||||
Exelixis, Inc. (I) | 1,756 | 39,334 | ||||||||||||
Gilead Sciences, Inc. | 15,790 | 1,082,405 | ||||||||||||
Incyte Corp. (I) | 3,266 | 405,898 | ||||||||||||
Ionis Pharmaceuticals, Inc. (I) | 724 | 34,890 | ||||||||||||
OPKO Health, Inc. (I) | 5,164 | 40,124 | ||||||||||||
Regeneron Pharmaceuticals, Inc. (I) | 942 | 365,958 | ||||||||||||
Seattle Genetics, Inc. (I) | 1,226 | 83,736 | ||||||||||||
TESARO, Inc. (I) | 224 | 33,060 | ||||||||||||
United Therapeutics Corp. (I) | 1,238 | 155,617 |
Shares | Value | |||||||||||||
Health care (continued) | ||||||||||||||
Biotechnology (continued) | ||||||||||||||
Vertex Pharmaceuticals, Inc. (I) | 2,723 | $322,131 | ||||||||||||
Health care equipment and supplies 2.9% | ||||||||||||||
Abbott Laboratories | 23,114 | 1,008,695 | ||||||||||||
ABIOMED, Inc. (I) | 487 | 63,466 | ||||||||||||
Align Technology, Inc. (I) | 1,016 | 136,774 | ||||||||||||
Baxter International, Inc. | 7,958 | 443,101 | ||||||||||||
Becton, Dickinson and Company | 4,026 | 752,741 | ||||||||||||
Boston Scientific Corp. (I) | 16,409 | 432,869 | ||||||||||||
C.R. Bard, Inc. | 2,665 | 819,434 | ||||||||||||
Danaher Corp. | 6,803 | 566,894 | ||||||||||||
DENTSPLY SIRONA, Inc. | 6,020 | 380,705 | ||||||||||||
DexCom, Inc. (I) | 1,027 | 80,065 | ||||||||||||
Edwards Lifesciences Corp. (I) | 5,205 | 570,832 | ||||||||||||
Hologic, Inc. (I) | 8,669 | 391,405 | ||||||||||||
IDEXX Laboratories, Inc. (I) | 2,503 | 419,828 | ||||||||||||
Intuitive Surgical, Inc. (I) | 463 | 387,008 | ||||||||||||
Medtronic PLC | 13,236 | 1,099,779 | ||||||||||||
ResMed, Inc. | 3,823 | 259,926 | ||||||||||||
STERIS PLC | 1,677 | 123,763 | ||||||||||||
Stryker Corp. | 4,420 | 602,755 | ||||||||||||
Teleflex, Inc. | 999 | 206,683 | ||||||||||||
The Cooper Companies, Inc. | 1,146 | 229,578 | ||||||||||||
Varian Medical Systems, Inc. (I) | 2,941 | 266,866 | ||||||||||||
West Pharmaceutical Services, Inc. | 1,114 | 102,521 | ||||||||||||
Zimmer Biomet Holdings, Inc. | 4,346 | 519,999 | ||||||||||||
Health care providers and services 3.4% | ||||||||||||||
Aetna, Inc. | 7,253 | 979,663 | ||||||||||||
AmerisourceBergen Corp. | 4,680 | 383,994 | ||||||||||||
Anthem, Inc. | 5,499 | 978,217 | ||||||||||||
Cardinal Health, Inc. | 6,246 | 453,397 | ||||||||||||
Centene Corp. (I) | 4,431 | 329,666 | ||||||||||||
Cigna Corp. | 5,341 | 835,172 | ||||||||||||
DaVita, Inc. (I) | 8,421 | 581,133 | ||||||||||||
Envision Healthcare Corp. (I) | 1,817 | 101,807 | ||||||||||||
Express Scripts Holding Company (I) | 10,524 | 645,542 | ||||||||||||
HCA Holdings, Inc. (I) | 3,566 | 300,293 | ||||||||||||
Henry Schein, Inc. (I) | 2,838 | 493,244 | ||||||||||||
Humana, Inc. | 2,612 | 579,812 | ||||||||||||
Laboratory Corp. of America Holdings (I) | 4,142 | 580,501 | ||||||||||||
McKesson Corp. | 3,565 | 493,004 | ||||||||||||
MEDNAX, Inc. (I) | 2,813 | 169,793 | ||||||||||||
Quest Diagnostics, Inc. | 7,185 | 758,089 |
Shares | Value | |||||||||||||
Health care (continued) | ||||||||||||||
Health care providers and services (continued) | ||||||||||||||
UnitedHealth Group, Inc. | 13,163 | $2,301,945 | ||||||||||||
Universal Health Services, Inc., Class B | 3,885 | 469,153 | ||||||||||||
VCA, Inc. (I) | 1,839 | 168,397 | ||||||||||||
WellCare Health Plans, Inc. (I) | 1,000 | 153,410 | ||||||||||||
Health care technology 0.2% | ||||||||||||||
athenahealth, Inc. (I) | 519 | 50,867 | ||||||||||||
Cerner Corp. (I) | 8,562 | 554,390 | ||||||||||||
Veeva Systems, Inc., Class A (I) | 947 | 50,778 | ||||||||||||
Life sciences tools and services 0.9% | ||||||||||||||
Agilent Technologies, Inc. | 9,209 | 506,955 | ||||||||||||
Bio-Rad Laboratories, Inc., Class A (I) | 230 | 50,200 | ||||||||||||
Illumina, Inc. (I) | 2,475 | 457,529 | ||||||||||||
Mettler-Toledo International, Inc. (I) | 801 | 411,249 | ||||||||||||
PerkinElmer, Inc. | 2,812 | 167,061 | ||||||||||||
Quintiles IMS Holdings, Inc. (I) | 2,988 | 251,829 | ||||||||||||
Thermo Fisher Scientific, Inc. | 4,367 | 721,996 | ||||||||||||
Waters Corp. (I) | 2,415 | 410,284 | ||||||||||||
Pharmaceuticals 3.3% | ||||||||||||||
Allergan PLC | 2,935 | 715,729 | ||||||||||||
Bristol-Myers Squibb Company | 12,920 | 724,166 | ||||||||||||
Eli Lilly & Company | 10,192 | 836,356 | ||||||||||||
Jazz Pharmaceuticals PLC (I) | 1,088 | 173,297 | ||||||||||||
Johnson & Johnson | 27,416 | 3,385,054 | ||||||||||||
Mallinckrodt PLC (I) | 1,585 | 74,368 | ||||||||||||
Merck & Company, Inc. | 30,141 | 1,878,689 | ||||||||||||
Mylan NV (I) | 10,731 | 400,803 | ||||||||||||
Perrigo Company PLC | 2,891 | 213,761 | ||||||||||||
Pfizer, Inc. | 64,652 | 2,192,996 | ||||||||||||
Zoetis, Inc. | 10,935 | 613,563 | ||||||||||||
Industrials 12.4% | 42,339,762 | |||||||||||||
Aerospace and defense 2.3% | ||||||||||||||
Arconic, Inc. | 9,991 | 273,054 | ||||||||||||
General Dynamics Corp. | 3,202 | 620,516 | ||||||||||||
HEICO Corp. | 229 | 16,293 | ||||||||||||
HEICO Corp., Class A | 392 | 24,045 | ||||||||||||
Huntington Ingalls Industries, Inc. | 1,256 | 252,318 | ||||||||||||
L3 Technologies, Inc. | 2,521 | 433,032 | ||||||||||||
Lockheed Martin Corp. | 2,903 | 782,213 | ||||||||||||
Northrop Grumman Corp. | 3,288 | 808,716 | ||||||||||||
Orbital ATK, Inc. | 976 | 96,624 | ||||||||||||
Raytheon Company | 5,585 | 866,848 | ||||||||||||
Rockwell Collins, Inc. | 5,037 | 524,301 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Aerospace and defense (continued) | ||||||||||||||
Spirit AeroSystems Holdings, Inc., Class A | 3,219 | $183,998 | ||||||||||||
Textron, Inc. | 8,165 | 380,979 | ||||||||||||
The Boeing Company | 6,397 | 1,182,358 | ||||||||||||
TransDigm Group, Inc. | 1,121 | 276,584 | ||||||||||||
United Technologies Corp. | 9,597 | 1,141,947 | ||||||||||||
Air freight and logistics 0.6% | ||||||||||||||
C.H. Robinson Worldwide, Inc. | 4,613 | 335,365 | ||||||||||||
Expeditors International of Washington, Inc. | 5,483 | 307,541 | ||||||||||||
FedEx Corp. | 3,756 | 712,513 | ||||||||||||
United Parcel Service, Inc., Class B | 6,821 | 732,985 | ||||||||||||
XPO Logistics, Inc. (I) | 1,458 | 72,011 | ||||||||||||
Airlines 1.0% | ||||||||||||||
Alaska Air Group, Inc. | 4,038 | 343,593 | ||||||||||||
American Airlines Group, Inc. | 13,517 | 576,095 | ||||||||||||
Delta Air Lines, Inc. | 14,744 | 669,967 | ||||||||||||
JetBlue Airways Corp. (I) | 6,246 | 136,350 | ||||||||||||
Southwest Airlines Company | 12,936 | 727,262 | ||||||||||||
United Continental Holdings, Inc. (I) | 11,689 | 820,685 | ||||||||||||
Building products 0.5% | ||||||||||||||
Allegion PLC | 2,298 | 180,715 | ||||||||||||
AO Smith Corp. | 3,019 | 162,664 | ||||||||||||
Fortune Brands Home & Security, Inc. | 4,027 | 256,681 | ||||||||||||
Johnson Controls International PLC | 14,436 | 600,105 | ||||||||||||
Lennox International, Inc. | 973 | 160,924 | ||||||||||||
Masco Corp. | 7,525 | 278,576 | ||||||||||||
Owens Corning | 3,146 | 191,434 | ||||||||||||
Commercial services and supplies 0.6% | ||||||||||||||
Cintas Corp. | 3,276 | 401,212 | ||||||||||||
Copart, Inc. (I) | 4,356 | 134,600 | ||||||||||||
KAR Auction Services, Inc. | 3,569 | 155,680 | ||||||||||||
Republic Services, Inc. | 10,226 | 644,136 | ||||||||||||
Rollins, Inc. | 2,196 | 85,271 | ||||||||||||
Stericycle, Inc. (I) | 2,028 | 173,070 | ||||||||||||
Waste Management, Inc. | 8,565 | 623,361 | ||||||||||||
Construction and engineering 0.2% | ||||||||||||||
AECOM (I) | 3,163 | 108,206 | ||||||||||||
Fluor Corp. | 5,515 | 283,030 | ||||||||||||
Jacobs Engineering Group, Inc. | 3,514 | 192,989 | ||||||||||||
Quanta Services, Inc. (I) | 1,576 | 55,853 | ||||||||||||
Electrical equipment 0.8% | ||||||||||||||
Acuity Brands, Inc. | 819 | 144,226 | ||||||||||||
AMETEK, Inc. | 6,746 | 385,871 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Electrical equipment (continued) | ||||||||||||||
Eaton Corp. PLC | 7,708 | $583,033 | ||||||||||||
Emerson Electric Company | 10,298 | 620,763 | ||||||||||||
Hubbell, Inc. | 1,508 | 170,600 | ||||||||||||
Rockwell Automation, Inc. | 4,014 | 631,603 | ||||||||||||
Sensata Technologies Holding NV (I) | 4,272 | 175,921 | ||||||||||||
Industrial conglomerates 1.6% | ||||||||||||||
3M Company | 6,513 | 1,275,427 | ||||||||||||
Carlisle Companies, Inc. | 1,966 | 199,333 | ||||||||||||
General Electric Company | 78,500 | 2,275,715 | ||||||||||||
Honeywell International, Inc. | 8,028 | 1,052,792 | ||||||||||||
Roper Technologies, Inc. | 2,718 | 594,427 | ||||||||||||
Machinery 2.8% | ||||||||||||||
Allison Transmission Holdings, Inc. | 4,057 | 156,925 | ||||||||||||
Caterpillar, Inc. | 7,567 | 773,801 | ||||||||||||
Cummins, Inc. | 5,013 | 756,662 | ||||||||||||
Deere & Company | 6,387 | 712,853 | ||||||||||||
Donaldson Company, Inc. | 3,960 | 183,269 | ||||||||||||
Dover Corp. | 6,686 | 527,392 | ||||||||||||
Flowserve Corp. | 4,564 | 232,171 | ||||||||||||
Fortive Corp. | 6,569 | 415,555 | ||||||||||||
Graco, Inc. | 483 | 52,092 | ||||||||||||
IDEX Corp. | 2,163 | 226,596 | ||||||||||||
Illinois Tool Works, Inc. | 5,229 | 722,073 | ||||||||||||
Ingersoll-Rand PLC | 8,575 | 761,031 | ||||||||||||
Lincoln Electric Holdings, Inc. | 1,621 | 144,318 | ||||||||||||
Nordson Corp. | 1,002 | 125,450 | ||||||||||||
Oshkosh Corp. | 968 | 67,170 | ||||||||||||
PACCAR, Inc. | 10,767 | 718,482 | ||||||||||||
Parker-Hannifin Corp. | 4,499 | 723,439 | ||||||||||||
Pentair PLC | 4,692 | 302,681 | ||||||||||||
Snap-on, Inc. | 1,680 | 281,450 | ||||||||||||
Stanley Black & Decker, Inc. | 4,868 | 662,778 | ||||||||||||
The Middleby Corp. (I) | 1,203 | 163,764 | ||||||||||||
The Toro Company | 1,975 | 128,217 | ||||||||||||
WABCO Holdings, Inc. (I) | 1,374 | 163,327 | ||||||||||||
Wabtec Corp. | 2,170 | 182,041 | ||||||||||||
Xylem, Inc. | 4,465 | 229,546 | ||||||||||||
Professional services 0.5% | ||||||||||||||
Equifax, Inc. | 4,251 | 575,203 | ||||||||||||
ManpowerGroup, Inc. | 2,859 | 288,702 | ||||||||||||
Nielsen Holdings PLC | 5,591 | 229,958 | ||||||||||||
Robert Half International, Inc. | 3,796 | 174,806 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Professional services (continued) | ||||||||||||||
TransUnion (I) | 1,924 | $77,018 | ||||||||||||
Verisk Analytics, Inc. (I) | 4,012 | 332,234 | ||||||||||||
Road and rail 1.1% | ||||||||||||||
AMERCO | 205 | 76,764 | ||||||||||||
CSX Corp. | 17,883 | 909,172 | ||||||||||||
J.B. Hunt Transport Services, Inc. | 3,701 | 331,832 | ||||||||||||
Kansas City Southern | 3,266 | 294,169 | ||||||||||||
Norfolk Southern Corp. | 6,308 | 741,127 | ||||||||||||
Old Dominion Freight Line, Inc. | 1,833 | 162,257 | ||||||||||||
Union Pacific Corp. | 9,893 | 1,107,620 | ||||||||||||
Trading companies and distributors 0.4% | ||||||||||||||
Fastenal Company | 8,168 | 364,946 | ||||||||||||
HD Supply Holdings, Inc. (I) | 4,590 | 184,977 | ||||||||||||
MSC Industrial Direct Company, Inc., Class A | 740 | 66,252 | ||||||||||||
United Rentals, Inc. (I) | 2,696 | 295,643 | ||||||||||||
W.W. Grainger, Inc. | 2,058 | 396,577 | ||||||||||||
Watsco, Inc. | 540 | 74,952 | ||||||||||||
Transportation infrastructure 0.0% | ||||||||||||||
Macquarie Infrastructure Corp. | 1,795 | 146,059 | ||||||||||||
Information technology 19.7% | 67,544,436 | |||||||||||||
Communications equipment 1.1% | ||||||||||||||
Arista Networks, Inc. (I) | 639 | 89,230 | ||||||||||||
ARRIS International PLC (I) | 3,255 | 84,597 | ||||||||||||
Brocade Communications Systems, Inc. | 5,755 | 72,340 | ||||||||||||
Cisco Systems, Inc. | 52,011 | 1,772,015 | ||||||||||||
CommScope Holding Company, Inc. (I) | 4,630 | 194,645 | ||||||||||||
F5 Networks, Inc. (I) | 1,859 | 240,053 | ||||||||||||
Harris Corp. | 4,611 | 515,925 | ||||||||||||
Juniper Networks, Inc. | 11,811 | 355,157 | ||||||||||||
Motorola Solutions, Inc. | 4,314 | 370,875 | ||||||||||||
Palo Alto Networks, Inc. (I) | 1,041 | 112,855 | ||||||||||||
Electronic equipment, instruments and components 1.1% | ||||||||||||||
Amphenol Corp., Class A | 10,475 | 757,447 | ||||||||||||
Arrow Electronics, Inc. (I) | 3,675 | 259,088 | ||||||||||||
Avnet, Inc. | 4,562 | 176,504 | ||||||||||||
CDW Corp. | 3,926 | 231,987 | ||||||||||||
Cognex Corp. | 608 | 51,887 | ||||||||||||
Corning, Inc. | 26,428 | 762,448 | ||||||||||||
Dolby Laboratories, Inc., Class A | 638 | 33,642 | ||||||||||||
Flex, Ltd. (I) | 23,527 | 363,727 | ||||||||||||
FLIR Systems, Inc. | 980 | 35,995 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Electronic equipment, instruments and components (continued) | ||||||||||||||
IPG Photonics Corp. (I) | 719 | $90,824 | ||||||||||||
Keysight Technologies, Inc. (I) | 4,050 | 151,592 | ||||||||||||
TE Connectivity, Ltd. | 8,272 | 640,005 | ||||||||||||
Trimble, Inc. (I) | 6,268 | 222,075 | ||||||||||||
Internet software and services 2.8% | ||||||||||||||
Akamai Technologies, Inc. (I) | 4,863 | 296,351 | ||||||||||||
Alphabet, Inc., Class A (I) | 4,641 | 4,290,697 | ||||||||||||
Alphabet, Inc., Class C (I) | 735 | 665,881 | ||||||||||||
CoStar Group, Inc. (I) | 609 | 146,702 | ||||||||||||
eBay, Inc. (I) | 20,494 | 684,705 | ||||||||||||
Facebook, Inc., Class A (I) | 14,844 | 2,230,311 | ||||||||||||
GoDaddy, Inc., Class A (I) | 341 | 13,272 | ||||||||||||
InterActiveCorp (I) | 2,136 | 177,309 | ||||||||||||
LogMeIn, Inc. | 745 | 84,185 | ||||||||||||
MercadoLibre, Inc. | 743 | 170,080 | ||||||||||||
Twitter, Inc. (I) | 1,565 | 25,791 | ||||||||||||
VeriSign, Inc. (I) | 2,626 | 233,504 | ||||||||||||
Yahoo!, Inc. (I) | 13,252 | 638,879 | ||||||||||||
Zillow Group, Inc., Class A (I) | 384 | 14,780 | ||||||||||||
Zillow Group, Inc., Class C (I) | 1,181 | 46,059 | ||||||||||||
IT services 3.9% | ||||||||||||||
Accenture PLC, Class A | 7,556 | 916,543 | ||||||||||||
Alliance Data Systems Corp. | 1,961 | 489,524 | ||||||||||||
Amdocs, Ltd. | 5,487 | 336,024 | ||||||||||||
Automatic Data Processing, Inc. | 6,889 | 719,832 | ||||||||||||
Black Knight Financial Services, Inc., Class A (I) | 502 | 20,783 | ||||||||||||
Booz Allen Hamilton Holding Corp. | 1,932 | 69,417 | ||||||||||||
Broadridge Financial Solutions, Inc. | 3,100 | 216,814 | ||||||||||||
Cognizant Technology Solutions Corp., Class A (I) | 9,685 | 583,328 | ||||||||||||
CSRA, Inc. | 5,900 | 171,572 | ||||||||||||
DXC Technology Company (I) | 8,354 | 629,390 | ||||||||||||
Fidelity National Information Services, Inc. | 7,098 | 597,581 | ||||||||||||
First Data Corp., Class A (I) | 6,600 | 103,092 | ||||||||||||
Fiserv, Inc. (I) | 7,900 | 941,206 | ||||||||||||
FleetCor Technologies, Inc. (I) | 1,909 | 269,436 | ||||||||||||
Gartner, Inc. (I) | 2,189 | 249,743 | ||||||||||||
Genpact, Ltd. | 2,829 | 69,084 | ||||||||||||
Global Payments, Inc. | 3,279 | 268,091 | ||||||||||||
IBM Corp. | 9,113 | 1,460,723 | ||||||||||||
Jack Henry & Associates, Inc. | 2,143 | 207,700 | ||||||||||||
Leidos Holdings, Inc. | 3,156 | 166,195 | ||||||||||||
Mastercard, Inc., Class A | 10,377 | 1,207,053 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
IT services (continued) | ||||||||||||||
Paychex, Inc. | 8,772 | $520,004 | ||||||||||||
PayPal Holdings, Inc. (I) | 10,757 | 513,324 | ||||||||||||
Sabre Corp. | 3,622 | 84,791 | ||||||||||||
Square, Inc., Class A (I) | 1,190 | 21,706 | ||||||||||||
The Western Union Company | 15,726 | 312,318 | ||||||||||||
Total System Services, Inc. | 5,939 | 340,364 | ||||||||||||
Vantiv, Inc., Class A (I) | 3,817 | 236,807 | ||||||||||||
Visa, Inc., Class A | 17,364 | 1,583,944 | ||||||||||||
Semiconductors and semiconductor equipment 3.3% | ||||||||||||||
Advanced Micro Devices, Inc. (I) | 7,500 | 99,750 | ||||||||||||
Analog Devices, Inc. | 9,490 | 723,138 | ||||||||||||
Applied Materials, Inc. | 21,347 | 866,902 | ||||||||||||
Broadcom, Ltd. | 3,936 | 869,108 | ||||||||||||
Intel Corp. | 66,910 | 2,418,797 | ||||||||||||
Lam Research Corp. | 5,050 | 731,493 | ||||||||||||
Marvell Technology Group, Ltd. | 12,670 | 190,303 | ||||||||||||
Maxim Integrated Products, Inc. | 8,420 | 371,743 | ||||||||||||
Microchip Technology, Inc. | 5,566 | 420,678 | ||||||||||||
Micron Technology, Inc. (I) | 26,249 | 726,310 | ||||||||||||
Microsemi Corp. (I) | 1,271 | 59,661 | ||||||||||||
NVIDIA Corp. | 5,215 | 543,925 | ||||||||||||
ON Semiconductor Corp. (I) | 6,357 | 90,142 | ||||||||||||
Qorvo, Inc. (I) | 2,920 | 198,648 | ||||||||||||
QUALCOMM, Inc. | 16,884 | 907,346 | ||||||||||||
Skyworks Solutions, Inc. | 5,346 | 533,210 | ||||||||||||
Teradyne, Inc. | 2,655 | 93,642 | ||||||||||||
Texas Instruments, Inc. | 11,590 | 917,696 | ||||||||||||
Xilinx, Inc. | 8,733 | 551,140 | ||||||||||||
Software 4.0% | ||||||||||||||
Activision Blizzard, Inc. | 11,510 | 601,398 | ||||||||||||
Adobe Systems, Inc. (I) | 3,813 | 509,951 | ||||||||||||
ANSYS, Inc. (I) | 2,137 | 235,412 | ||||||||||||
Atlassian Corp. PLC, Class A (I) | 688 | 23,722 | ||||||||||||
Autodesk, Inc. (I) | 4,215 | 379,645 | ||||||||||||
CA, Inc. | 12,391 | 406,797 | ||||||||||||
Cadence Design Systems, Inc. (I) | 7,011 | 228,348 | ||||||||||||
CDK Global, Inc. | 3,492 | 227,015 | ||||||||||||
Citrix Systems, Inc. (I) | 4,339 | 351,199 | ||||||||||||
Dell Technologies, Inc., Class V (I) | 3,449 | 231,462 | ||||||||||||
Electronic Arts, Inc. (I) | 4,615 | 437,594 | ||||||||||||
Fortinet, Inc. (I) | 1,720 | 67,080 | ||||||||||||
Intuit, Inc. | 4,420 | 553,428 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Software (continued) | ||||||||||||||
Microsoft Corp. | 74,738 | $5,116,563 | ||||||||||||
Oracle Corp. | 38,824 | 1,745,527 | ||||||||||||
PTC, Inc. (I) | 1,262 | 68,211 | ||||||||||||
Red Hat, Inc. (I) | 3,986 | 351,087 | ||||||||||||
salesforce.com, Inc. (I) | 4,321 | 372,125 | ||||||||||||
ServiceNow, Inc. (I) | 2,180 | 205,966 | ||||||||||||
Splunk, Inc. (I) | 1,723 | 110,806 | ||||||||||||
SS&C Technologies Holdings, Inc. | 4,299 | 157,945 | ||||||||||||
Symantec Corp. | 19,731 | 624,092 | ||||||||||||
Synopsys, Inc. (I) | 4,198 | 309,393 | ||||||||||||
Take-Two Interactive Software, Inc. (I) | 1,030 | 64,736 | ||||||||||||
The Ultimate Software Group, Inc. (I) | 379 | 76,812 | ||||||||||||
Tyler Technologies, Inc. (I) | 471 | 77,051 | ||||||||||||
VMware, Inc., Class A (I) | 1,073 | 100,991 | ||||||||||||
Workday, Inc., Class A (I) | 1,509 | 131,887 | ||||||||||||
Technology hardware, storage and peripherals 3.5% | ||||||||||||||
Apple, Inc. | 61,704 | 8,863,780 | ||||||||||||
Hewlett Packard Enterprise Company | 26,905 | 501,240 | ||||||||||||
HP, Inc. | 25,920 | 487,814 | ||||||||||||
NCR Corp. (I) | 1,348 | 55,605 | ||||||||||||
NetApp, Inc. | 8,444 | 336,493 | ||||||||||||
Seagate Technology PLC | 11,534 | 485,927 | ||||||||||||
Western Digital Corp. | 10,119 | 901,299 | ||||||||||||
Xerox Corp. | 30,959 | 222,595 | ||||||||||||
Materials 4.2% | 14,359,215 | |||||||||||||
Chemicals 2.6% | ||||||||||||||
Air Products & Chemicals, Inc. | 3,386 | 475,733 | ||||||||||||
Albemarle Corp. | 2,918 | 317,799 | ||||||||||||
Ashland Global Holdings, Inc. | 2,005 | 247,618 | ||||||||||||
Axalta Coating Systems, Ltd. (I) | 5,158 | 161,806 | ||||||||||||
Celanese Corp., Series A | 4,661 | 405,693 | ||||||||||||
CF Industries Holdings, Inc. | 8,489 | 226,996 | ||||||||||||
E.I. du Pont de Nemours & Company | 9,444 | 753,159 | ||||||||||||
Eastman Chemical Company | 5,599 | 446,520 | ||||||||||||
Ecolab, Inc. | 3,926 | 506,807 | ||||||||||||
FMC Corp. | 4,305 | 315,255 | ||||||||||||
Huntsman Corp. | 3,225 | 79,883 | ||||||||||||
International Flavors & Fragrances, Inc. | 2,375 | 329,151 | ||||||||||||
LyondellBasell Industries NV, Class A | 5,272 | 446,855 | ||||||||||||
Monsanto Company | 5,239 | 610,920 | ||||||||||||
NewMarket Corp. | 243 | 114,380 | ||||||||||||
Olin Corp. | 1,807 | 58,059 |
Shares | Value | |||||||||||||
Materials (continued) | ||||||||||||||
Chemicals (continued) | ||||||||||||||
PPG Industries, Inc. | 4,386 | $481,758 | ||||||||||||
Praxair, Inc. | 4,217 | 527,041 | ||||||||||||
RPM International, Inc. | 3,871 | 203,460 | ||||||||||||
The Chemours Company | 2,008 | 80,902 | ||||||||||||
The Dow Chemical Company | 12,186 | 765,281 | ||||||||||||
The Mosaic Company | 6,653 | 179,165 | ||||||||||||
The Scotts Miracle-Gro Company | 1,103 | 106,550 | ||||||||||||
The Sherwin-Williams Company | 1,457 | 487,629 | ||||||||||||
The Valspar Corp. | 2,249 | 252,878 | ||||||||||||
W.R. Grace & Company | 1,742 | 121,452 | ||||||||||||
Westlake Chemical Corp. | 935 | 58,204 | ||||||||||||
Construction materials 0.2% | ||||||||||||||
Martin Marietta Materials, Inc. | 1,683 | 370,580 | ||||||||||||
Vulcan Materials Company | 3,572 | 431,783 | ||||||||||||
Containers and packaging 0.8% | ||||||||||||||
AptarGroup, Inc. | 1,024 | 82,227 | ||||||||||||
Avery Dennison Corp. | 2,022 | 168,251 | ||||||||||||
Ball Corp. | 5,134 | 394,753 | ||||||||||||
Bemis Company, Inc. | 1,621 | 72,832 | ||||||||||||
Berry Global Group, Inc. (I) | 2,294 | 114,700 | ||||||||||||
Crown Holdings, Inc. (I) | 3,844 | 215,610 | ||||||||||||
International Paper Company | 14,852 | 801,562 | ||||||||||||
Packaging Corp. of America | 3,007 | 297,031 | ||||||||||||
Sealed Air Corp. | 5,390 | 237,268 | ||||||||||||
Sonoco Products Company | 2,592 | 135,588 | ||||||||||||
WestRock Company | 4,691 | 251,250 | ||||||||||||
Metals and mining 0.6% | ||||||||||||||
Alcoa Corp. | 3,896 | 131,412 | ||||||||||||
Freeport-McMoRan, Inc. (I) | 30,395 | 387,536 | ||||||||||||
Newmont Mining Corp. | 12,674 | 428,508 | ||||||||||||
Nucor Corp. | 9,861 | 604,775 | ||||||||||||
Reliance Steel & Aluminum Company | 2,226 | 175,453 | ||||||||||||
Southern Copper Corp. | 1,504 | 53,196 | ||||||||||||
Steel Dynamics, Inc. | 5,710 | 206,359 | ||||||||||||
United States Steel Corp. | 1,684 | 37,587 | ||||||||||||
Real estate 3.6% | 12,275,807 | |||||||||||||
Equity real estate investment trusts 3.5% | ||||||||||||||
Alexandria Real Estate Equities, Inc. | 1,579 | 177,653 | ||||||||||||
American Campus Communities, Inc. | 1,986 | 94,117 | ||||||||||||
American Homes 4 Rent, Class A | 2,614 | 60,253 | ||||||||||||
American Tower Corp. | 4,035 | 508,168 | ||||||||||||
Apartment Investment & Management Company, Class A | 3,020 | 132,095 |
Shares | Value | |||||||||||||
Real estate (continued) | ||||||||||||||
Equity real estate investment trusts (continued) | ||||||||||||||
AvalonBay Communities, Inc. | 2,579 | $489,597 | ||||||||||||
Boston Properties, Inc. | 3,053 | 386,510 | ||||||||||||
Brixmor Property Group, Inc. | 4,624 | 91,324 | ||||||||||||
Camden Property Trust | 1,702 | 140,126 | ||||||||||||
Colony NorthStar, Inc., Class A | 4,380 | 57,247 | ||||||||||||
Crown Castle International Corp. | 4,492 | 424,943 | ||||||||||||
CubeSmart | 2,065 | 52,327 | ||||||||||||
DDR Corp. | 5,816 | 62,871 | ||||||||||||
Digital Realty Trust, Inc. | 2,940 | 337,630 | ||||||||||||
Douglas Emmett, Inc. | 1,950 | 73,457 | ||||||||||||
Duke Realty Corp. | 6,914 | 191,725 | ||||||||||||
EPR Properties | 556 | 40,427 | ||||||||||||
Equinix, Inc. | 946 | 395,144 | ||||||||||||
Equity LifeStyle Properties, Inc. | 1,302 | 105,345 | ||||||||||||
Equity Residential | 6,207 | 400,848 | ||||||||||||
Essex Property Trust, Inc. | 1,260 | 308,032 | ||||||||||||
Extra Space Storage, Inc. | 2,183 | 164,882 | ||||||||||||
Federal Realty Investment Trust | 1,398 | 182,984 | ||||||||||||
Forest City Realty Trust, Inc., Class A | 3,780 | 85,428 | ||||||||||||
Gaming and Leisure Properties, Inc. | 2,623 | 91,280 | ||||||||||||
GGP, Inc. | 6,991 | 151,076 | ||||||||||||
HCP, Inc. | 8,854 | 277,573 | ||||||||||||
Highwoods Properties, Inc. | 1,501 | 76,371 | ||||||||||||
Hospitality Properties Trust | 2,175 | 69,230 | ||||||||||||
Host Hotels & Resorts, Inc. | 14,893 | 267,329 | ||||||||||||
Hudson Pacific Properties, Inc. | 1,165 | 40,029 | ||||||||||||
Iron Mountain, Inc. | 5,182 | 180,126 | ||||||||||||
Kilroy Realty Corp. | 1,744 | 123,004 | ||||||||||||
Kimco Realty Corp. | 8,158 | 165,526 | ||||||||||||
Lamar Advertising Company, Class A | 1,360 | 98,015 | ||||||||||||
Liberty Property Trust | 2,887 | 117,126 | ||||||||||||
MGM Growth Properties LLC, Class A | 782 | 22,381 | ||||||||||||
Mid-America Apartment Communities, Inc. | 1,699 | 168,558 | ||||||||||||
National Retail Properties, Inc. | 2,488 | 105,043 | ||||||||||||
Omega Healthcare Investors, Inc. | 3,276 | 108,108 | ||||||||||||
Park Hotels & Resorts, Inc. | 1,482 | 38,043 | ||||||||||||
Prologis, Inc. | 6,977 | 379,619 | ||||||||||||
Public Storage | 1,520 | 318,258 | ||||||||||||
Realty Income Corp. | 4,919 | 287,024 | ||||||||||||
Regency Centers Corp. | 1,958 | 123,706 | ||||||||||||
SBA Communications Corp. (I) | 2,988 | 377,952 | ||||||||||||
Senior Housing Properties Trust | 2,068 | 44,503 | ||||||||||||
Simon Property Group, Inc. | 2,789 | 460,910 |
Shares | Value | |||||||||||||
Real estate (continued) | ||||||||||||||
Equity real estate investment trusts (continued) | ||||||||||||||
SL Green Realty Corp. | 1,973 | $207,027 | ||||||||||||
Spirit Realty Capital, Inc. | 7,642 | 71,988 | ||||||||||||
Sun Communities, Inc. | 866 | 72,406 | ||||||||||||
The Macerich Company | 2,807 | 175,241 | ||||||||||||
UDR, Inc. | 5,187 | 193,683 | ||||||||||||
Ventas, Inc. | 5,721 | 366,201 | ||||||||||||
VEREIT, Inc. | 14,672 | 122,805 | ||||||||||||
Vornado Realty Trust | 3,556 | 342,229 | ||||||||||||
Welltower, Inc. | 5,855 | 418,281 | ||||||||||||
Weyerhaeuser Company | 19,990 | 677,061 | ||||||||||||
WP Carey, Inc. | 1,894 | 118,564 | ||||||||||||
Real estate management and development 0.1% | ||||||||||||||
CBRE Group, Inc., Class A (I) | 7,611 | 272,550 | ||||||||||||
Jones Lang LaSalle, Inc. | 1,069 | 122,785 | ||||||||||||
The Howard Hughes Corp. (I) | 496 | 61,063 | ||||||||||||
Telecommunication services 1.6% | 5,427,107 | |||||||||||||
Diversified telecommunication services 1.5% | ||||||||||||||
AT&T, Inc. | 59,679 | 2,365,079 | ||||||||||||
CenturyLink, Inc. | 16,085 | 412,902 | ||||||||||||
Level 3 Communications, Inc. (I) | 6,888 | 418,515 | ||||||||||||
Verizon Communications, Inc. | 38,278 | 1,757,343 | ||||||||||||
Zayo Group Holdings, Inc. (I) | 3,080 | 108,016 | ||||||||||||
Wireless telecommunication services 0.1% | ||||||||||||||
Sprint Corp. (I) | 9,734 | 87,898 | ||||||||||||
T-Mobile US, Inc. (I) | 4,123 | 277,354 | ||||||||||||
Utilities 4.5% | 15,520,880 | |||||||||||||
Electric utilities 2.5% | ||||||||||||||
Alliant Energy Corp. | 6,628 | 260,613 | ||||||||||||
American Electric Power Company, Inc. | 10,635 | 721,372 | ||||||||||||
Duke Energy Corp. | 6,477 | 534,353 | ||||||||||||
Edison International | 10,932 | 874,232 | ||||||||||||
Entergy Corp. | 6,517 | 496,986 | ||||||||||||
Eversource Energy | 8,470 | 503,118 | ||||||||||||
Exelon Corp. | 17,976 | 622,509 | ||||||||||||
FirstEnergy Corp. | 12,063 | 361,166 | ||||||||||||
Great Plains Energy, Inc. | 1,040 | 30,774 | ||||||||||||
NextEra Energy, Inc. | 5,815 | 776,651 | ||||||||||||
OGE Energy Corp. | 7,530 | 261,893 | ||||||||||||
PG&E Corp. | 8,675 | 581,659 | ||||||||||||
Pinnacle West Capital Corp. | 3,953 | 336,361 | ||||||||||||
PPL Corp. | 18,504 | 705,187 |
Shares | Value | |||||||||||||
Utilities (continued) | ||||||||||||||
Electric utilities (continued) | ||||||||||||||
The Southern Company | 12,337 | $614,383 | ||||||||||||
Westar Energy, Inc. | 3,733 | 194,228 | ||||||||||||
Xcel Energy, Inc. | 17,511 | 788,871 | ||||||||||||
Gas utilities 0.2% | ||||||||||||||
Atmos Energy Corp. | 2,555 | 207,006 | ||||||||||||
National Fuel Gas Company | 1,673 | 92,651 | ||||||||||||
UGI Corp. | 5,482 | 274,977 | ||||||||||||
Independent power and renewable electricity producers 0.1% | ||||||||||||||
AES Corp. | 23,967 | 271,067 | ||||||||||||
NRG Energy, Inc. | 3,460 | 58,474 | ||||||||||||
Multi-utilities 1.6% | ||||||||||||||
Ameren Corp. | 8,484 | 463,990 | ||||||||||||
CenterPoint Energy, Inc. | 14,931 | 425,981 | ||||||||||||
CMS Energy Corp. | 8,142 | 369,647 | ||||||||||||
Consolidated Edison, Inc. | 9,300 | 737,304 | ||||||||||||
Dominion Resources, Inc. | 7,841 | 607,129 | ||||||||||||
DTE Energy Company | 5,808 | 607,459 | ||||||||||||
MDU Resources Group, Inc. | 3,551 | 95,522 | ||||||||||||
NiSource, Inc. | 12,715 | 308,339 | ||||||||||||
Public Service Enterprise Group, Inc. | 18,343 | 808,009 | ||||||||||||
SCANA Corp. | 4,051 | 268,622 | ||||||||||||
Sempra Energy | 3,285 | 371,271 | ||||||||||||
WEC Energy Group, Inc. | 7,746 | 468,788 | ||||||||||||
Water utilities 0.1% | ||||||||||||||
American Water Works Company, Inc. | 4,365 | 348,152 | ||||||||||||
Aqua America, Inc. | 2,180 | 72,136 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $185,473 | |||||||||||||
(Cost $185,473) | ||||||||||||||
Money market funds 0.1% | 185,473 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 185,473 | 185,473 | ||||||||||
Total investments (Cost $316,104,121)† 100.0% | $341,872,994 | |||||||||||||
Other assets and liabilities, net 0.0% | $128,532 | |||||||||||||
Total net assets 100.0% | $342,001,526 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $316,132,649. Net unrealized appreciation aggregated to $25,740,345, of which $32,307,951 related to appreciated investment securities and $6,567,606 related to depreciated investment securities. |
DERIVATIVES
FUTURES
Open contracts | Number of contracts | Position | Expiration date | Notional basis* | Notional value* | Unrealized appreciation (depreciation) |
S&P 500 Index E-Mini Futures | 50 | Long | Jun 2017 | $117,840 | $119,025 | $1,185 |
$1,185 |
* Notional basis refers to the contractual amount agreed upon at inception of open contracts; notional value represents the current value of the open contract.
See Notes to financial statements regarding investment transactions and other derivatives information.
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $316,104,121) | $341,872,994 | ||||||||||||||||||||
Cash held at broker for futures contracts | 5,000 | ||||||||||||||||||||
Receivable for fund shares sold | 1,560,122 | ||||||||||||||||||||
Dividends and interest receivable | 266,824 | ||||||||||||||||||||
Other receivables and prepaid expenses | 5,599 | ||||||||||||||||||||
Total assets | 343,710,539 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable for investments purchased | 1,557,811 | ||||||||||||||||||||
Payable for futures variation margin | 280 | ||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 17,727 | ||||||||||||||||||||
Investment management fees | 41,876 | ||||||||||||||||||||
Other liabilities and accrued expenses | 91,319 | ||||||||||||||||||||
Total liabilities | 1,709,013 | ||||||||||||||||||||
Net assets | $342,001,526 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $315,912,776 | ||||||||||||||||||||
Undistributed net investment income | 1,349,378 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (1,030,686 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 25,770,058 | ||||||||||||||||||||
Net assets | $342,001,526 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $342,001,526 | ||||||||||||||||||||
Shares outstanding | 11,000,000 | ||||||||||||||||||||
Net asset value per share | $31.09 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $4,546,719 | |||||||||||||||||||||||
Interest | 780 | |||||||||||||||||||||||
Total investment income | 4,547,499 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 674,450 | |||||||||||||||||||||||
Accounting and legal services fees | 51,613 | |||||||||||||||||||||||
Transfer agent fees | 14,433 | |||||||||||||||||||||||
Trustees' fees | 1,747 | |||||||||||||||||||||||
Printing and postage | 18,741 | |||||||||||||||||||||||
Professional fees | 187,394 | |||||||||||||||||||||||
Custodian fees | 52,111 | |||||||||||||||||||||||
Stock exchange listing fees | 19,089 | |||||||||||||||||||||||
Other | 3,228 | |||||||||||||||||||||||
Total expenses | 1,022,806 | |||||||||||||||||||||||
Less expense reductions | (234,408 | ) | ||||||||||||||||||||||
Net expenses | 788,398 | |||||||||||||||||||||||
Net investment income | 3,759,101 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (1,045,257 | ) | ||||||||||||||||||||||
Redemptions in-kind | 7,772,840 | |||||||||||||||||||||||
Futures contracts | 18,196 | |||||||||||||||||||||||
6,745,779 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 24,996,693 | |||||||||||||||||||||||
Futures contracts | 1,185 | |||||||||||||||||||||||
24,997,878 | ||||||||||||||||||||||||
Net realized and unrealized gain | �� | 31,743,657 | ||||||||||||||||||||||
Increase in net assets from operations | $35,502,758 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $3,759,101 | $195,836 | |||||||||||||||||||||||||||
Net realized gain (loss) | 6,745,779 | (7,748 | ) | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 24,997,878 | 772,180 | |||||||||||||||||||||||||||
Increase in net assets resulting from operations | 35,502,758 | 960,268 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (2,525,455 | ) | (80,700 | ) | |||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 336,448,827 | 25,820,626 | |||||||||||||||||||||||||||
Shares repurchased | (54,224,798 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 282,224,029 | 25,820,626 | |||||||||||||||||||||||||||
Total increase | 315,201,332 | 26,700,194 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 26,800,194 | 100,000 | |||||||||||||||||||||||||||
End of period | $342,001,526 | $26,800,194 | |||||||||||||||||||||||||||
Undistributed net investment income | $1,349,378 | $115,732 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 1,004,107 | 4,000 | |||||||||||||||||||||||||||
Shares issued | 11,800,000 | 1,000,107 | |||||||||||||||||||||||||||
Shares repurchased | (1,804,107 | ) | — | ||||||||||||||||||||||||||
End of period | 11,000,000 | 1,004,107 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.69 | $24.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.49 | 0.27 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 4.31 | 2.17 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 4.80 | 2.44 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.40 | ) | (0.10 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $31.09 | $26.69 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 18.13 | 10.01 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $342 | $27 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.45 | 0.93 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.35 | 0.35 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.67 | 1.80 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)6 | 12 | 6 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Large Cap ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Large Cap Index. The John Hancock Dimensional Large Cap Index is a rules-based index of large-cap U.S. stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day. Futures contracts are valued at settlement prices, which are the official closing prices published by the exchange on which they trade.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Real estate investment trusts. The fund may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of the fiscal year as a reduction of cost of investments and/or as a realized gain. As a result, the fund will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.
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 extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 30, 2016, the fund had a similar agreement that enabled it to participate in a $750 million unsecured committed line of credit. For the year ended April 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the year ended April 30, 2017 were $3,266.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $1,000,973 available to offset future net realized capital gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually.
The tax character of distributions for the year ended April 30, 2017 and the period ended April 30, 2016 was as follows:
April 30, 2017 | April 30, 2016 | |
Ordinary Income | $2,525,455 | $80,456 |
Long term capital gains | — | 244 |
Total | $2,525,455 | $80,700 |
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $1,349,378 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Derivative instruments
The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the over-the-counter (OTC) market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the portfolios are exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Futures, certain options and cleared swaps are traded or cleared on an exchange or central clearinghouse. Exchange-traded or cleared transactions generally present less counterparty risk to a fund than OTC transactions. The exchange or clearinghouse stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange or clearinghouse and the clearing member.
Futures. A futures contract is a contractual agreement to buy or sell a particular currency or financial instrument at a pre-determined price in the future. Risks related to the use of futures contracts include possible illiquidity of the futures markets, contract prices that can be highly volatile and imperfectly correlated to movements in the underlying financial instrument and potential losses in excess of the amounts recognized on the Statement of assets and liabilities. Use of long futures contracts subjects the fund to the risk of loss up to the notional value of the futures contracts. Use of short futures contracts subjects the fund to unlimited risk of loss.
Upon entering into a futures contract, the fund is required to deposit initial margin with the broker in the form of cash or securities. The amount of required margin is generally based on a percentage of the contract value; this amount is the initial margin for the trade. The margin deposit must then be maintained at the established level over the life of the contract. Futures margin receivable / payable is included on the Statement of assets and liabilities. Futures contracts are marked-to-market daily and an appropriate payable or receivable for the change in value (variation margin) and unrealized gain or loss is recorded by the fund. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
During the year ended April 30, 2017, the fund used futures contracts to gain exposure to certain securities markets and as a substitute for securities purchased. The fund held futures contracts with notional values ranging from $113.7 thousand to $423.7 thousand as measured at each quarter end.
Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held by the fund at April 30, 2017 by risk category:
Risk | Statement of assets and liabilities location | Financial instruments location | Asset derivatives fair value | |
Equity | Receivable/payable for futures | Futures† | $1,185 | |
† Reflects cumulative appreciation/depreciation on futures as disclosed in Note 3. Only the year end variation margin is separately disclosed on the Statement of assets and liabilities. |
Effect of derivative instruments on the Statement of operations
The table below summarizes the net realized gain (loss) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended April 30, 2017:
Risk | Statement of operations location | Futures contracts |
Equity | Net realized gain (loss) | $18,196 |
The table below summarizes the net change in unrealized appreciation (depreciation) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended April 30, 2017:
Risk | Statement of operations location | Futures contracts |
Equity | Change in unrealized appreciation (depreciation) | $1,185 |
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) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.300% of the first $300 million of the fund's average daily net assets; and (b) 0.280% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.35% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short
dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $234,408.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.20% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 6 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Note 7 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $28,898,454 and $28,023,035, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $334,709,067 and $51,973,372, respectively, for the year ended April 30, 2017.
Note 8 — Investment by affiliated funds
Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund's net assets. At April 30, 2017, funds within the John Hancock group of funds complex held 58.3% of the fund's net assets. The following affiliated funds owned 5% or more of the fund's net assets:
Fund | Affiliated concentration |
JHVIT Lifestyle Balanced MVP | 25.4% |
JHVIT Lifestyle Growth MVP | 31.7% |
Note 9 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Large Cap ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Large Cap ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period September 28, 2015 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHML |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Large Cap ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0612 | 850A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Mid Cap ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
30 | Financial statements | |
33 | Financial highlights | |
34 | Notes to financial statements | |
38 | Auditor's report | |
39 | Tax information | |
40 | Trustees and Officers | |
44 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Mid Cap Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Mid Cap Index is designed to comprise a subset of securities in the U.S. universe issued by companies whose market capitalizations are between the 200th and 951st largest U.S. companies at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell Midcap Index comprises approximately 800 publicly-traded mid-cap companies in the United States.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.11 |
Net (%) | 0.45 |
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities rose, outperforming both developed ex-U.S. markets and emerging markets.
The fund gained and outperformed the Russell Midcap Index
The fund generated a positive return for the period and led its benchmark, the Russell Midcap Index.
Emphasis on certain value and smaller-cap stocks within the mid-cap universe was beneficial
The fund's greater emphasis on low relative price and smaller-cap stocks contributed positively to relative performance.
SECTOR COMPOSITION AS OF 4/30/17 (%)
A note about risks
The stock prices of midsize companies can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Mid Cap Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
Western Digital Corp. | 0.6 |
United Continental Holdings, Inc. | 0.5 |
Lam Research Corp. | 0.5 |
Fiserv, Inc. | 0.4 |
C.R. Bard, Inc. | 0.4 |
Parker-Hannifin Corp. | 0.4 |
Amphenol Corp., Class A | 0.4 |
Xcel Energy, Inc. | 0.4 |
Quest Diagnostics, Inc. | 0.4 |
Fifth Third Bancorp | 0.4 |
TOTAL | 4.4 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the one-year period, outperforming both developed ex-U.S. markets and emerging markets. The Russell 3000 Index was up 18.58%, as compared to a 10.92% return for the MSCI World ex-USA Investable Market Index and a gain of 18.42% for the MSCI Emerging Markets Investable Market Index.
How did the fund perform for the period?
The fund outperformed the Russell Midcap Index, a cap-weighted benchmark we use as a proxy for the broad mid-cap U.S. stock market, for the one-year period.
Compared with the Russell Midcap Index, our approach generally results in the fund maintaining intentionally greater allocations to securities with smaller market capitalizations within the mid-cap portion of the market. This approach also maintains higher allocations to securities with a favorable combination of lower relative prices (in relation to book value) and higher profitability.
The fund's greater emphasis on low relative price (value) stocks contributed positively to relative performance, as value stocks outperformed growth within the mid-cap portion of the market for the period. The fund's greater emphasis on smaller market cap stocks as compared with the benchmark also had a positive impact on relative performance, as smaller-cap stocks generally outperformed. However, the fund's greater emphasis on smaller caps detracted within semiconductors and semiconductor equipment stocks, as larger-cap stocks outperformed within those industries.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Mid Cap Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
The fund held approximately 670 names. Compared with the Russell Midcap Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations while emphasizing companies with higher profitability. The fund's largest absolute sector exposures were to the information technology, industrials, and financials sectors.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Mid Cap ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.11 |
Net (%) | 0.45 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $12,813.
The John Hancock Dimensional Mid Cap Index is designed to comprise a subset of securities in the U.S. universe issued by companies whose market capitalizations are between the 200th and 951st largest U.S. companies at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The U.S. universe is defined as a free float-adjusted market capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell Midcap Index comprises approximately 800 publicly-traded mid-cap companies in the United States.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 20 | 7.97% | 231 | 92.03% | ||||
25 - < 50 | 0 | 0.00% | 0 | 0.00% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 20 | 7.97% | 231 | 92.03% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,144.00 | $2.39 | 0.45% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.60 | 2.26 | 0.45% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 99.9% | $169,934,848 | |||||||||||||
(Cost $156,896,351) | ||||||||||||||
Consumer discretionary 13.6% | 23,045,469 | |||||||||||||
Auto components 1.4% | ||||||||||||||
Adient PLC | 1,569 | 115,416 | ||||||||||||
Autoliv, Inc. | 3,025 | 303,075 | ||||||||||||
BorgWarner, Inc. | 6,225 | 263,193 | ||||||||||||
Delphi Automotive PLC | 4,110 | 330,444 | ||||||||||||
Gentex Corp. | 12,196 | 251,847 | ||||||||||||
Lear Corp. | 3,270 | 466,498 | ||||||||||||
The Goodyear Tire & Rubber Company | 15,940 | 577,506 | ||||||||||||
Automobiles 0.3% | ||||||||||||||
Harley-Davidson, Inc. | 6,772 | 384,717 | ||||||||||||
Thor Industries, Inc. | 1,245 | 119,744 | ||||||||||||
Distributors 0.5% | ||||||||||||||
Genuine Parts Company | 4,857 | 446,941 | ||||||||||||
LKQ Corp. (I) | 7,553 | 235,956 | ||||||||||||
Pool Corp. | 1,436 | 171,774 | ||||||||||||
Diversified consumer services 0.5% | ||||||||||||||
Bright Horizons Family Solutions, Inc. (I) | 1,375 | 104,665 | ||||||||||||
H&R Block, Inc. | 6,726 | 166,738 | ||||||||||||
Service Corp. International | 10,342 | 333,219 | ||||||||||||
ServiceMaster Global Holdings, Inc. (I) | 5,804 | 221,132 | ||||||||||||
Hotels, restaurants and leisure 2.4% | ||||||||||||||
Aramark | 9,237 | 337,335 | ||||||||||||
Chipotle Mexican Grill, Inc. (I) | 580 | 275,193 | ||||||||||||
Cracker Barrel Old Country Store, Inc. | 895 | 143,370 | ||||||||||||
Darden Restaurants, Inc. | 4,325 | 368,447 | ||||||||||||
Domino's Pizza, Inc. | 1,371 | 248,686 | ||||||||||||
Dunkin' Brands Group, Inc. | 3,736 | 208,693 | ||||||||||||
Hyatt Hotels Corp., Class A (I) | 1,076 | 59,718 | ||||||||||||
International Game Technology PLC | 3,188 | 70,774 | ||||||||||||
MGM Resorts International | 12,548 | 385,349 | ||||||||||||
Norwegian Cruise Line Holdings, Ltd. (I) | 3,283 | 177,052 | ||||||||||||
Panera Bread Company, Class A (I) | 1,145 | 358,019 | ||||||||||||
Royal Caribbean Cruises, Ltd. | 3,940 | 420,004 | ||||||||||||
Six Flags Entertainment Corp. | 2,616 | 163,788 | ||||||||||||
Vail Resorts, Inc. | 1,317 | 260,318 | ||||||||||||
Wyndham Worldwide Corp. | 4,413 | 420,603 | ||||||||||||
Wynn Resorts, Ltd. | 1,116 | 137,279 | ||||||||||||
Household durables 1.8% | ||||||||||||||
CalAtlantic Group, Inc. | 2,151 | 77,909 |
Shares | Value | |||||||||||||
Consumer discretionary (continued) | ||||||||||||||
Household durables (continued) | ||||||||||||||
D.R. Horton, Inc. | 10,442 | $343,437 | ||||||||||||
Garmin, Ltd. | 3,341 | 169,856 | ||||||||||||
Leggett & Platt, Inc. | 6,291 | 330,529 | ||||||||||||
Lennar Corp., A Shares | 5,555 | 280,528 | ||||||||||||
Lennar Corp., B Shares | 313 | 13,337 | ||||||||||||
Mohawk Industries, Inc. (I) | 1,795 | 421,448 | ||||||||||||
NVR, Inc. (I) | 192 | 405,360 | ||||||||||||
PulteGroup, Inc. | 12,597 | 285,574 | ||||||||||||
Toll Brothers, Inc. | 6,309 | 227,061 | ||||||||||||
Whirlpool Corp. | 2,916 | 541,443 | ||||||||||||
Internet and direct marketing retail 0.5% | ||||||||||||||
Expedia, Inc. | 2,338 | 312,637 | ||||||||||||
Liberty Interactive Corp., Series A (I) | 15,239 | 322,762 | ||||||||||||
Liberty Ventures, Series A (I) | 2,395 | 128,971 | ||||||||||||
TripAdvisor, Inc. (I) | 2,333 | 105,008 | ||||||||||||
Leisure products 0.6% | ||||||||||||||
Brunswick Corp. | 3,504 | 198,852 | ||||||||||||
Hasbro, Inc. | 3,503 | 347,182 | ||||||||||||
Mattel, Inc. | 9,986 | 223,886 | ||||||||||||
Polaris Industries, Inc. | 2,122 | 180,922 | ||||||||||||
Media 1.6% | ||||||||||||||
AMC Entertainment Holdings, Inc., Class A | 663 | 20,089 | ||||||||||||
AMC Networks, Inc., Class A (I) | 1,859 | 110,945 | ||||||||||||
Cinemark Holdings, Inc. | 5,202 | 224,726 | ||||||||||||
Discovery Communications, Inc., Series A (I) | 2,727 | 78,483 | ||||||||||||
Discovery Communications, Inc., Series C (I) | 4,413 | 123,476 | ||||||||||||
Liberty Broadband Corp., Series A (I) | 628 | 56,476 | ||||||||||||
Liberty Broadband Corp., Series C (I) | 2,370 | 216,049 | ||||||||||||
Liberty Media Corp-Liberty SiriusXM, Class A (I) | 4,593 | 174,993 | ||||||||||||
Liberty Media Group, Series A (I) | 337 | 11,428 | ||||||||||||
Liberty Media Group, Series C (I) | 2,196 | 76,904 | ||||||||||||
Lions Gate Entertainment Corp., Class A | 662 | 17,325 | ||||||||||||
Lions Gate Entertainment Corp., Class B (I) | 1,196 | 28,525 | ||||||||||||
Live Nation Entertainment, Inc. (I) | 5,004 | 160,929 | ||||||||||||
News Corp., Class A | 14,674 | 186,653 | ||||||||||||
News Corp., Class B | 4,300 | 55,900 | ||||||||||||
Scripps Networks Interactive, Inc., Class A | 2,631 | 196,588 | ||||||||||||
TEGNA, Inc. | 17,346 | 441,976 | ||||||||||||
The Interpublic Group of Companies, Inc. | 15,369 | 362,247 | ||||||||||||
The Madison Square Garden Company, Class A (I) | 881 | 177,759 | ||||||||||||
Multiline retail 0.6% | ||||||||||||||
Dollar Tree, Inc. (I) | 6,028 | 498,938 | ||||||||||||
Kohl's Corp. | 8,435 | 329,218 |
Shares | Value | |||||||||||||
Consumer discretionary (continued) | ||||||||||||||
Multiline retail (continued) | ||||||||||||||
Nordstrom, Inc. | 4,561 | $220,159 | ||||||||||||
Specialty retail 2.4% | ||||||||||||||
Advance Auto Parts, Inc. | 2,447 | 347,817 | ||||||||||||
AutoNation, Inc. (I) | 3,688 | 154,896 | ||||||||||||
Bed Bath & Beyond, Inc. | 4,376 | 169,570 | ||||||||||||
Best Buy Company, Inc. | 8,767 | 454,218 | ||||||||||||
Burlington Stores, Inc. (I) | 2,604 | 257,588 | ||||||||||||
CarMax, Inc. (I) | 6,140 | 359,190 | ||||||||||||
Dick's Sporting Goods, Inc. | 4,773 | 241,275 | ||||||||||||
Foot Locker, Inc. | 4,620 | 357,311 | ||||||||||||
Penske Automotive Group, Inc. | 1,972 | 94,084 | ||||||||||||
Signet Jewelers, Ltd. | 1,473 | 96,982 | ||||||||||||
Staples, Inc. | 20,118 | 196,553 | ||||||||||||
The Gap, Inc. | 2,838 | 74,356 | ||||||||||||
The Michaels Companies, Inc. (I) | 2,714 | 63,399 | ||||||||||||
Tiffany & Company | 2,728 | 250,021 | ||||||||||||
Tractor Supply Company | 3,612 | 223,619 | ||||||||||||
Ulta Salon Cosmetics & Fragrance, Inc. (I) | 1,714 | 482,388 | ||||||||||||
Williams-Sonoma, Inc. | 3,897 | 210,633 | ||||||||||||
Textiles, apparel and luxury goods 1.0% | ||||||||||||||
Carter's, Inc. | 2,312 | 212,796 | ||||||||||||
Coach, Inc. | 6,068 | 239,019 | ||||||||||||
Columbia Sportswear Company | 886 | 50,165 | ||||||||||||
Hanesbrands, Inc. | 12,166 | 265,340 | ||||||||||||
lululemon athletica, Inc. (I) | 2,759 | 143,468 | ||||||||||||
Michael Kors Holdings, Ltd. (I) | 4,600 | 171,718 | ||||||||||||
PVH Corp. | 3,014 | 304,504 | ||||||||||||
Ralph Lauren Corp. | 2,003 | 161,682 | ||||||||||||
Skechers U.S.A., Inc., Class A (I) | 3,683 | 92,996 | ||||||||||||
Under Armour, Inc., Class A (I) | 3,732 | 80,201 | ||||||||||||
Under Armour, Inc., Class C (I) | 3,900 | 75,699 | ||||||||||||
Consumer staples 4.2% | 7,209,932 | |||||||||||||
Beverages 0.7% | ||||||||||||||
Brown-Forman Corp., Class A | 295 | 14,178 | ||||||||||||
Brown-Forman Corp., Class B | 6,100 | 288,652 | ||||||||||||
Dr. Pepper Snapple Group, Inc. | 5,577 | 511,132 | ||||||||||||
Molson Coors Brewing Company, Class B | 3,895 | 373,492 | ||||||||||||
Food and staples retailing 0.5% | ||||||||||||||
Casey's General Stores, Inc. | 1,962 | 219,881 | ||||||||||||
Rite Aid Corp. (I) | 34,743 | 138,972 | ||||||||||||
US Foods Holding Corp. (I) | 2,137 | 60,263 | ||||||||||||
Whole Foods Market, Inc. | 9,707 | 353,044 |
Shares | Value | |||||||||||||
Consumer staples (continued) | ||||||||||||||
Food products 2.3% | ||||||||||||||
Blue Buffalo Pet Products, Inc. (I) | 2,674 | $65,914 | ||||||||||||
Bunge, Ltd. | 4,061 | 320,941 | ||||||||||||
Campbell Soup Company | 4,301 | 247,480 | ||||||||||||
ConAgra Foods, Inc. | 10,266 | 398,115 | ||||||||||||
Flowers Foods, Inc. | 2,795 | 54,810 | ||||||||||||
Ingredion, Inc. | 3,042 | 376,660 | ||||||||||||
Lamb Weston Holdings, Inc. | 3,856 | 160,988 | ||||||||||||
Lancaster Colony Corp. | 454 | 57,159 | ||||||||||||
McCormick & Company, Inc., Non-Voting Shares | 3,230 | 322,677 | ||||||||||||
Mead Johnson Nutrition Company | 2,599 | 230,583 | ||||||||||||
Pilgrim's Pride Corp. | 2,921 | 75,829 | ||||||||||||
Pinnacle Foods, Inc. | 4,624 | 268,886 | ||||||||||||
Post Holdings, Inc. (I) | 2,562 | 215,695 | ||||||||||||
Seaboard Corp. | 10 | 42,340 | ||||||||||||
The Hain Celestial Group, Inc. (I) | 3,606 | 133,386 | ||||||||||||
The Hershey Company | 4,308 | 466,126 | ||||||||||||
The J.M. Smucker Company | 2,966 | 375,852 | ||||||||||||
TreeHouse Foods, Inc. (I) | 1,870 | 163,812 | ||||||||||||
Household products 0.5% | ||||||||||||||
Church & Dwight Company, Inc. | 5,027 | 248,987 | ||||||||||||
Spectrum Brands Holdings, Inc. | 1,027 | 147,611 | ||||||||||||
The Clorox Company | 3,340 | 446,525 | ||||||||||||
Personal products 0.2% | ||||||||||||||
Coty, Inc., Class A | 974 | 17,386 | ||||||||||||
Edgewell Personal Care Company (I) | 3,133 | 223,978 | ||||||||||||
Herbalife, Ltd. (I) | 2,981 | 188,578 | ||||||||||||
Energy 3.5% | 6,004,059 | |||||||||||||
Energy equipment and services 0.8% | ||||||||||||||
Core Laboratories NV | 1,727 | 191,386 | ||||||||||||
Helmerich & Payne, Inc. | 5,803 | 351,894 | ||||||||||||
Nabors Industries, Ltd. | 5,479 | 56,653 | ||||||||||||
National Oilwell Varco, Inc. | 5,850 | 204,575 | ||||||||||||
Patterson-UTI Energy, Inc. | 2,131 | 46,126 | ||||||||||||
RPC, Inc. | 530 | 9,630 | ||||||||||||
TechnipFMC PLC (I) | 10,412 | 313,714 | ||||||||||||
Transocean, Ltd. (I) | 10,786 | 118,970 | ||||||||||||
U.S. Silica Holdings, Inc. | 884 | 36,686 | ||||||||||||
Weatherford International PLC (I) | 9,400 | 54,238 | ||||||||||||
Oil, gas and consumable fuels 2.7% | ||||||||||||||
Antero Resources Corp. (I) | 8,149 | 172,677 | ||||||||||||
Cabot Oil & Gas Corp. | 9,918 | 230,494 | ||||||||||||
Cheniere Energy Partners LP Holdings LLC | 1,015 | 26,065 | ||||||||||||
Cheniere Energy, Inc. (I) | 2,600 | 117,910 |
Shares | Value | |||||||||||||
Energy (continued) | ||||||||||||||
Oil, gas and consumable fuels (continued) | ||||||||||||||
Chesapeake Energy Corp. (I) | 6,863 | $36,099 | ||||||||||||
Cimarex Energy Company | 1,917 | 223,676 | ||||||||||||
Concho Resources, Inc. (I) | 3,024 | 383,020 | ||||||||||||
CONSOL Energy, Inc. (I) | 3,892 | 59,081 | ||||||||||||
Continental Resources, Inc. (I) | 703 | 29,814 | ||||||||||||
Diamondback Energy, Inc. (I) | 2,113 | 210,962 | ||||||||||||
Energen Corp. (I) | 2,213 | 115,054 | ||||||||||||
EQT Corp. | 5,005 | 290,991 | ||||||||||||
Hess Corp. | 2,659 | 129,839 | ||||||||||||
HollyFrontier Corp. | 9,322 | 262,321 | ||||||||||||
Marathon Oil Corp. | 9,530 | 141,711 | ||||||||||||
Murphy Oil Corp. | 7,747 | 202,816 | ||||||||||||
Newfield Exploration Company (I) | 4,247 | 147,031 | ||||||||||||
Noble Energy, Inc. | 8,580 | 277,391 | ||||||||||||
ONEOK, Inc. | 7,072 | 372,058 | ||||||||||||
Parsley Energy, Inc., Class A (I) | 5,253 | 156,487 | ||||||||||||
PDC Energy, Inc. (I) | 1,115 | 61,581 | ||||||||||||
Range Resources Corp. | 6,501 | 172,211 | ||||||||||||
Rice Energy, Inc. (I) | 2,127 | 45,284 | ||||||||||||
RSP Permian, Inc. (I) | 2,416 | 91,929 | ||||||||||||
Southwestern Energy Company (I) | 5,549 | 41,673 | ||||||||||||
Targa Resources Corp. | 2,594 | 143,007 | ||||||||||||
Tesoro Corp. | 4,093 | 326,253 | ||||||||||||
Whiting Petroleum Corp. (I) | 6,070 | 50,381 | ||||||||||||
WPX Energy, Inc. (I) | 8,581 | 102,371 | ||||||||||||
Financials 15.5% | 26,354,734 | |||||||||||||
Banks 5.2% | ||||||||||||||
Associated Banc-Corp. | 2,202 | 54,830 | ||||||||||||
Bank of the Ozarks, Inc. | 3,466 | 164,531 | ||||||||||||
BankUnited, Inc. | 3,629 | 128,067 | ||||||||||||
BOK Financial Corp. | 1,125 | 94,826 | ||||||||||||
CIT Group, Inc. | 7,987 | 369,878 | ||||||||||||
Citizens Financial Group, Inc. | 13,483 | 494,961 | ||||||||||||
Comerica, Inc. | 6,014 | 425,190 | ||||||||||||
Commerce Bancshares, Inc. | 4,688 | 257,606 | ||||||||||||
Cullen/Frost Bankers, Inc. | 2,409 | 227,386 | ||||||||||||
East West Bancorp, Inc. | 6,778 | 367,842 | ||||||||||||
Fifth Third Bancorp | 25,798 | 630,245 | ||||||||||||
First Citizens BancShares, Inc., Class A | 92 | 32,022 | ||||||||||||
First Hawaiian, Inc. | 764 | 22,744 | ||||||||||||
First Horizon National Corp. | 6,260 | 114,871 | ||||||||||||
First Republic Bank | 4,705 | 435,024 | ||||||||||||
Hancock Holding Company | 1,013 | 47,307 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Banks (continued) | ||||||||||||||
Home BancShares, Inc. | 1,553 | $39,524 | ||||||||||||
Huntington Bancshares, Inc. | 36,614 | 470,856 | ||||||||||||
Investors Bancorp, Inc. | 11,753 | 162,779 | ||||||||||||
KeyCorp | 32,584 | 594,332 | ||||||||||||
M&T Bank Corp. | 2,828 | 439,499 | ||||||||||||
PacWest Bancorp | 5,458 | 269,571 | ||||||||||||
People's United Financial, Inc. | 13,984 | 244,300 | ||||||||||||
Popular, Inc. | 3,093 | 129,628 | ||||||||||||
Prosperity Bancshares, Inc. | 2,471 | 166,051 | ||||||||||||
Regions Financial Corp. | 40,858 | 561,798 | ||||||||||||
Signature Bank (I) | 2,184 | 302,375 | ||||||||||||
SVB Financial Group (I) | 2,017 | 354,871 | ||||||||||||
Synovus Financial Corp. | 4,980 | 208,164 | ||||||||||||
Texas Capital Bancshares, Inc. (I) | 645 | 49,085 | ||||||||||||
UMB Financial Corp. | 511 | 37,042 | ||||||||||||
Umpqua Holdings Corp. | 9,389 | 165,904 | ||||||||||||
Webster Financial Corp. | 3,270 | 166,149 | ||||||||||||
Western Alliance Bancorp (I) | 3,179 | 152,274 | ||||||||||||
Wintrust Financial Corp. | 891 | 63,136 | ||||||||||||
Zions Bancorporation | 7,838 | 313,755 | ||||||||||||
Capital markets 3.2% | ||||||||||||||
Affiliated Managers Group, Inc. | 1,707 | 282,662 | ||||||||||||
Ameriprise Financial, Inc. | 3,887 | 496,953 | ||||||||||||
CBOE Holdings, Inc. | 3,333 | 274,673 | ||||||||||||
E*TRADE Financial Corp. (I) | 10,384 | 358,767 | ||||||||||||
Eaton Vance Corp. | 6,665 | 286,128 | ||||||||||||
FactSet Research Systems, Inc. | 1,956 | 319,337 | ||||||||||||
Invesco, Ltd. | 10,757 | 354,336 | ||||||||||||
Legg Mason, Inc. | 4,671 | 174,602 | ||||||||||||
MarketAxess Holdings, Inc. | 1,336 | 257,207 | ||||||||||||
Moody's Corp. | 4,180 | 494,578 | ||||||||||||
MSCI, Inc. | 3,490 | 350,117 | ||||||||||||
Nasdaq, Inc. | 3,867 | 266,320 | ||||||||||||
Northern Trust Corp. | 3,618 | 325,620 | ||||||||||||
Raymond James Financial, Inc. | 5,033 | 375,059 | ||||||||||||
SEI Investments Company | 5,875 | 297,921 | ||||||||||||
T. Rowe Price Group, Inc. | 1,970 | 139,653 | ||||||||||||
TD Ameritrade Holding Corp. | 7,932 | 303,558 | ||||||||||||
Wins Finance Holdings, Inc. (I) | 9 | 413 | ||||||||||||
Consumer finance 0.6% | ||||||||||||||
Ally Financial, Inc. | 28,059 | 555,568 | ||||||||||||
Credit Acceptance Corp. (I) | 355 | 72,154 | ||||||||||||
Navient Corp. | 18,481 | 280,911 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Consumer finance (continued) | ||||||||||||||
OneMain Holdings, Inc. (I) | 1,507 | $35,143 | ||||||||||||
Santander Consumer USA Holdings, Inc. (I) | 5,573 | 71,000 | ||||||||||||
SLM Corp. (I) | 5,295 | 66,399 | ||||||||||||
Diversified financial services 0.3% | ||||||||||||||
Leucadia National Corp. | 11,367 | 288,608 | ||||||||||||
Voya Financial, Inc. | 8,110 | 303,152 | ||||||||||||
Insurance 6.0% | ||||||||||||||
Alleghany Corp. (I) | 582 | 355,427 | ||||||||||||
American Financial Group, Inc. | 4,380 | 426,218 | ||||||||||||
AmTrust Financial Services, Inc. | 4,145 | 66,527 | ||||||||||||
Arch Capital Group, Ltd. (I) | 3,445 | 334,062 | ||||||||||||
Arthur J. Gallagher & Company | 5,782 | 322,693 | ||||||||||||
Assurant, Inc. | 3,462 | 333,183 | ||||||||||||
Assured Guaranty, Ltd. | 9,877 | 376,610 | ||||||||||||
Athene Holding Ltd., Class A (I) | 232 | 12,368 | ||||||||||||
Axis Capital Holdings, Ltd. | 4,925 | 324,558 | ||||||||||||
Brown & Brown, Inc. | 6,400 | 274,560 | ||||||||||||
Cincinnati Financial Corp. | 4,595 | 331,254 | ||||||||||||
CNA Financial Corp. | 866 | 39,195 | ||||||||||||
Erie Indemnity Company, Class A | 972 | 120,353 | ||||||||||||
Everest Re Group, Ltd. | 1,354 | 340,815 | ||||||||||||
First American Financial Corp. | 4,945 | 214,662 | ||||||||||||
FNF Group | 6,801 | 278,501 | ||||||||||||
Lincoln National Corp. | 6,917 | 456,038 | ||||||||||||
Loews Corp. | 6,525 | 304,196 | ||||||||||||
Markel Corp. (I) | 322 | 312,211 | ||||||||||||
Old Republic International Corp. | 12,598 | 260,527 | ||||||||||||
Principal Financial Group, Inc. | 8,738 | 569,106 | ||||||||||||
Reinsurance Group of America, Inc. | 3,557 | 444,767 | ||||||||||||
RenaissanceRe Holdings, Ltd. | 2,402 | 341,492 | ||||||||||||
The Hanover Insurance Group, Inc. | 1,575 | 139,025 | ||||||||||||
The Hartford Financial Services Group, Inc. | 8,947 | 432,677 | ||||||||||||
The Progressive Corp. | 11,464 | 455,350 | ||||||||||||
Torchmark Corp. | 4,198 | 322,029 | ||||||||||||
Unum Group | 10,451 | 484,195 | ||||||||||||
Validus Holdings, Ltd. | 4,247 | 234,774 | ||||||||||||
W.R. Berkley Corp. | 6,020 | 409,240 | ||||||||||||
White Mountains Insurance Group, Ltd. | 192 | 164,916 | ||||||||||||
Willis Towers Watson PLC | 3,240 | 429,689 | ||||||||||||
XL Group, Ltd. | 7,998 | 334,716 | ||||||||||||
Thrifts and mortgage finance 0.2% | ||||||||||||||
New York Community Bancorp, Inc. | 17,021 | 226,209 | ||||||||||||
Radian Group, Inc. | 3,678 | 62,085 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Thrifts and mortgage finance (continued) | ||||||||||||||
TFS Financial Corp. | 1,889 | $31,244 | ||||||||||||
Health care 9.9% | 16,831,862 | |||||||||||||
Biotechnology 1.1% | ||||||||||||||
ACADIA Pharmaceuticals, Inc. (I) | 1,429 | 49,058 | ||||||||||||
Alkermes PLC (I) | 3,542 | 206,322 | ||||||||||||
Alnylam Pharmaceuticals, Inc. (I) | 987 | 52,903 | ||||||||||||
BioMarin Pharmaceutical, Inc. (I) | 2,646 | 253,593 | ||||||||||||
Bioverativ, Inc. (I) | 1,516 | 89,156 | ||||||||||||
Exelixis, Inc. (I) | 2,234 | 50,042 | ||||||||||||
Incyte Corp. (I) | 2,572 | 319,648 | ||||||||||||
Ionis Pharmaceuticals, Inc. (I) | 2,547 | 122,740 | ||||||||||||
Neurocrine Biosciences, Inc. (I) | 1,833 | 97,882 | ||||||||||||
OPKO Health, Inc. (I) | 9,119 | 70,855 | ||||||||||||
Seattle Genetics, Inc. (I) | 1,950 | 133,185 | ||||||||||||
TESARO, Inc. (I) | 429 | 63,316 | ||||||||||||
United Therapeutics Corp. (I) | 2,563 | 322,169 | ||||||||||||
Health care equipment and supplies 3.1% | ||||||||||||||
ABIOMED, Inc. (I) | 1,082 | 141,006 | ||||||||||||
Align Technology, Inc. (I) | 2,282 | 307,203 | ||||||||||||
C.R. Bard, Inc. | 2,453 | 754,248 | ||||||||||||
DENTSPLY SIRONA, Inc. | 5,700 | 360,468 | ||||||||||||
DexCom, Inc. (I) | 1,795 | 139,938 | ||||||||||||
Edwards Lifesciences Corp. (I) | 5,642 | 618,758 | ||||||||||||
Hill-Rom Holdings, Inc. | 2,181 | 164,971 | ||||||||||||
Hologic, Inc. (I) | 10,765 | 486,040 | ||||||||||||
IDEXX Laboratories, Inc. (I) | 2,488 | 417,312 | ||||||||||||
Masimo Corp. (I) | 567 | 58,254 | ||||||||||||
ResMed, Inc. | 4,526 | 307,723 | ||||||||||||
STERIS PLC | 3,712 | 273,946 | ||||||||||||
Teleflex, Inc. | 1,882 | 389,367 | ||||||||||||
The Cooper Companies, Inc. | 1,685 | 337,556 | ||||||||||||
Varian Medical Systems, Inc. (I) | 3,845 | 348,895 | ||||||||||||
West Pharmaceutical Services, Inc. | 2,523 | 232,192 | ||||||||||||
Health care providers and services 3.3% | ||||||||||||||
Acadia Healthcare Company, Inc. (I) | 2,841 | 123,811 | ||||||||||||
AmerisourceBergen Corp. | 4,663 | 382,599 | ||||||||||||
Centene Corp. (I) | 6,994 | 520,354 | ||||||||||||
DaVita, Inc. (I) | 7,570 | 522,406 | ||||||||||||
Envision Healthcare Corp. (I) | 5,867 | 328,728 | ||||||||||||
HealthSouth Corp. | 3,892 | 182,535 | ||||||||||||
Henry Schein, Inc. (I) | 2,747 | 477,429 | ||||||||||||
Laboratory Corp. of America Holdings (I) | 3,856 | 540,418 | ||||||||||||
MEDNAX, Inc. (I) | 5,191 | 313,329 |
Shares | Value | |||||||||||||
Health care (continued) | ||||||||||||||
Health care providers and services (continued) | ||||||||||||||
Patterson Companies, Inc. | 5,439 | $241,981 | ||||||||||||
Premier, Inc., Class A (I) | 2,214 | 74,833 | ||||||||||||
Quest Diagnostics, Inc. | 6,294 | 664,080 | ||||||||||||
Universal Health Services, Inc., Class B | 4,356 | 526,031 | ||||||||||||
VCA, Inc. (I) | 3,817 | 349,523 | ||||||||||||
WellCare Health Plans, Inc. (I) | 2,372 | 363,889 | ||||||||||||
Health care technology 0.5% | ||||||||||||||
athenahealth, Inc. (I) | 1,363 | 133,588 | ||||||||||||
Cerner Corp. (I) | 8,820 | 571,095 | ||||||||||||
Veeva Systems, Inc., Class A (I) | 2,360 | 126,543 | ||||||||||||
Life sciences tools and services 1.6% | ||||||||||||||
Agilent Technologies, Inc. | 6,627 | 364,816 | ||||||||||||
Bio-Rad Laboratories, Inc., Class A (I) | 1,022 | 223,062 | ||||||||||||
Bio-Techne Corp. | 1,358 | 145,415 | ||||||||||||
Bruker Corp. | 3,354 | 81,804 | ||||||||||||
Charles River Laboratories International, Inc. (I) | 2,209 | 198,147 | ||||||||||||
Mettler-Toledo International, Inc. (I) | 933 | 479,021 | ||||||||||||
Patheon NV (I) | 271 | 7,293 | ||||||||||||
PerkinElmer, Inc. | 5,802 | 344,697 | ||||||||||||
Quintiles Transnational Holdings, Inc. (I) | 3,027 | 255,116 | ||||||||||||
VWR Corp. (I) | 3,263 | 92,212 | ||||||||||||
Waters Corp. (I) | 2,638 | 448,170 | ||||||||||||
Pharmaceuticals 0.3% | ||||||||||||||
Jazz Pharmaceuticals PLC (I) | 2,799 | 445,812 | ||||||||||||
Mallinckrodt PLC (I) | 2,864 | 134,379 | ||||||||||||
Industrials 15.9% | 26,993,217 | |||||||||||||
Aerospace and defense 2.3% | ||||||||||||||
Arconic, Inc. | 10,000 | 273,300 | ||||||||||||
BWX Technologies, Inc. | 3,187 | 156,705 | ||||||||||||
Curtiss-Wright Corp. | 1,552 | 145,050 | ||||||||||||
HEICO Corp. | 922 | 65,509 | ||||||||||||
HEICO Corp., Class A | 1,693 | 103,750 | ||||||||||||
Hexcel Corp. | 4,406 | 228,011 | ||||||||||||
Huntington Ingalls Industries, Inc. | 1,772 | 355,977 | ||||||||||||
L3 Technologies, Inc. | 2,538 | 435,952 | ||||||||||||
Orbital ATK, Inc. | 2,735 | 270,765 | ||||||||||||
Rockwell Collins, Inc. | 4,682 | 487,349 | ||||||||||||
Spirit AeroSystems Holdings, Inc., Class A | 6,923 | 395,719 | ||||||||||||
Teledyne Technologies, Inc. (I) | 1,334 | 179,863 | ||||||||||||
Textron, Inc. | 9,124 | 425,726 | ||||||||||||
TransDigm Group, Inc. | 1,325 | 326,917 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Air freight and logistics 0.5% | ||||||||||||||
C.H. Robinson Worldwide, Inc. | 4,914 | $357,248 | ||||||||||||
Expeditors International of Washington, Inc. | 6,102 | 342,261 | ||||||||||||
XPO Logistics, Inc. (I) | 3,316 | 163,777 | ||||||||||||
Airlines 1.0% | ||||||||||||||
Alaska Air Group, Inc. | 5,487 | 466,889 | ||||||||||||
Copa Holdings SA, Class A | 525 | 61,121 | ||||||||||||
JetBlue Airways Corp. (I) | 16,605 | 362,487 | ||||||||||||
United Continental Holdings, Inc. (I) | 11,414 | 801,377 | ||||||||||||
Building products 1.1% | ||||||||||||||
Allegion PLC | 3,827 | 300,955 | ||||||||||||
AO Smith Corp. | 5,287 | 284,864 | ||||||||||||
Fortune Brands Home & Security, Inc. | 5,371 | 342,348 | ||||||||||||
Lennox International, Inc. | 1,695 | 280,336 | ||||||||||||
Masco Corp. | 6,658 | 246,479 | ||||||||||||
Owens Corning | 5,459 | 332,180 | ||||||||||||
USG Corp. (I) | 4,065 | 123,170 | ||||||||||||
Commercial services and supplies 1.1% | ||||||||||||||
Cintas Corp. | 3,031 | 371,207 | ||||||||||||
Copart, Inc. (I) | 10,783 | 333,195 | ||||||||||||
KAR Auction Services, Inc. | 6,682 | 291,469 | ||||||||||||
Republic Services, Inc. | 9,237 | 581,839 | ||||||||||||
Rollins, Inc. | 3,907 | 151,709 | ||||||||||||
Stericycle, Inc. (I) | 2,128 | 181,604 | ||||||||||||
Construction and engineering 0.7% | ||||||||||||||
AECOM (I) | 6,061 | 207,347 | ||||||||||||
EMCOR Group, Inc. | 1,453 | 95,520 | ||||||||||||
Fluor Corp. | 6,730 | 345,384 | ||||||||||||
Jacobs Engineering Group, Inc. | 4,856 | 266,692 | ||||||||||||
Quanta Services, Inc. (I) | 8,167 | 289,438 | ||||||||||||
Electrical equipment 1.1% | ||||||||||||||
Acuity Brands, Inc. | 1,009 | 177,685 | ||||||||||||
AMETEK, Inc. | 7,852 | 449,134 | ||||||||||||
Hubbell, Inc. | 3,194 | 361,337 | ||||||||||||
Rockwell Automation, Inc. | 3,916 | 616,183 | ||||||||||||
Sensata Technologies Holding NV (I) | 6,835 | 281,465 | ||||||||||||
Industrial conglomerates 0.5% | ||||||||||||||
Carlisle Companies, Inc. | 2,913 | 295,349 | ||||||||||||
Roper Technologies, Inc. | 2,714 | 593,552 | ||||||||||||
Machinery 4.5% | ||||||||||||||
AGCO Corp. | 4,119 | 263,575 | ||||||||||||
Allison Transmission Holdings, Inc. | 7,254 | 280,585 | ||||||||||||
Colfax Corp. (I) | 2,682 | 108,541 | ||||||||||||
Crane Company | 1,460 | 116,669 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Machinery (continued) | ||||||||||||||
Donaldson Company, Inc. | 7,488 | $346,545 | ||||||||||||
Dover Corp. | 6,034 | 475,962 | ||||||||||||
Flowserve Corp. | 5,707 | 290,315 | ||||||||||||
Graco, Inc. | 2,268 | 244,604 | ||||||||||||
IDEX Corp. | 3,728 | 390,545 | ||||||||||||
Ingersoll-Rand PLC | 4,510 | 400,263 | ||||||||||||
ITT, Inc. | 3,739 | 157,524 | ||||||||||||
Lincoln Electric Holdings, Inc. | 2,574 | 229,163 | ||||||||||||
Nordson Corp. | 2,299 | 287,835 | ||||||||||||
Oshkosh Corp. | 2,631 | 182,565 | ||||||||||||
Parker-Hannifin Corp. | 4,630 | 744,504 | ||||||||||||
Pentair PLC | 5,195 | 335,129 | ||||||||||||
Snap-on, Inc. | 2,170 | 363,540 | ||||||||||||
Stanley Black & Decker, Inc. | 4,564 | 621,389 | ||||||||||||
The Middleby Corp. (I) | 2,068 | 281,517 | ||||||||||||
The Toro Company | 4,221 | 274,027 | ||||||||||||
Trinity Industries, Inc. | 5,325 | 143,243 | ||||||||||||
WABCO Holdings, Inc. (I) | 2,443 | 290,399 | ||||||||||||
Wabtec Corp. | 3,645 | 305,779 | ||||||||||||
Woodward, Inc. | 1,774 | 120,047 | ||||||||||||
Xylem, Inc. | 6,454 | 331,800 | ||||||||||||
Professional services 1.0% | ||||||||||||||
Equifax, Inc. | 4,110 | 556,124 | ||||||||||||
ManpowerGroup, Inc. | 3,476 | 351,006 | ||||||||||||
Robert Half International, Inc. | 5,655 | 260,413 | ||||||||||||
The Dun & Bradstreet Corp. | 1,549 | 169,786 | ||||||||||||
TransUnion (I) | 2,914 | 116,647 | ||||||||||||
Verisk Analytics, Inc. (I) | 3,545 | 293,561 | ||||||||||||
Road and rail 0.8% | ||||||||||||||
AMERCO | 349 | 130,687 | ||||||||||||
Genesee & Wyoming, Inc., Class A (I) | 2,261 | 153,205 | ||||||||||||
J.B. Hunt Transport Services, Inc. | 3,172 | 284,402 | ||||||||||||
Kansas City Southern | 3,196 | 287,864 | ||||||||||||
Old Dominion Freight Line, Inc. | 3,321 | 293,975 | ||||||||||||
Ryder Systems, Inc. | 3,513 | 238,568 | ||||||||||||
Trading companies and distributors 1.1% | ||||||||||||||
Air Lease Corp. | 1,879 | 71,665 | ||||||||||||
Fastenal Company | 7,566 | 338,049 | ||||||||||||
HD Supply Holdings, Inc. (I) | 7,443 | 299,953 | ||||||||||||
MSC Industrial Direct Company, Inc., Class A | 2,088 | 186,939 | ||||||||||||
United Rentals, Inc. (I) | 3,707 | 406,510 | ||||||||||||
Univar, Inc. (I) | 1,084 | 32,357 | ||||||||||||
W.W. Grainger, Inc. | 1,803 | 347,438 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Trading companies and distributors (continued) | ||||||||||||||
Watsco, Inc. | 1,012 | $140,466 | ||||||||||||
Transportation infrastructure 0.2% | ||||||||||||||
Macquarie Infrastructure Corp. | 2,966 | 241,343 | ||||||||||||
Information technology 17.9% | 30,484,295 | |||||||||||||
Communications equipment 1.8% | ||||||||||||||
Arista Networks, Inc. (I) | 1,568 | 218,956 | ||||||||||||
ARRIS International PLC (I) | 9,128 | 237,237 | ||||||||||||
Brocade Communications Systems, Inc. | 23,161 | 291,134 | ||||||||||||
CommScope Holding Company, Inc. (I) | 7,904 | 332,284 | ||||||||||||
EchoStar Corp., Class A (I) | 1,810 | 104,184 | ||||||||||||
F5 Networks, Inc. (I) | 2,862 | 369,570 | ||||||||||||
Harris Corp. | 4,643 | 519,505 | ||||||||||||
Juniper Networks, Inc. | 12,358 | 371,605 | ||||||||||||
Motorola Solutions, Inc. | 3,962 | 340,613 | ||||||||||||
Palo Alto Networks, Inc. (I) | 1,115 | 120,877 | ||||||||||||
Ubiquiti Networks, Inc. (I) | 756 | 38,949 | ||||||||||||
ViaSat, Inc. (I) | 1,782 | 114,101 | ||||||||||||
Electronic equipment, instruments and components 2.6% | ||||||||||||||
Amphenol Corp., Class A | 9,462 | 684,197 | ||||||||||||
Arrow Electronics, Inc. (I) | 6,522 | 459,801 | ||||||||||||
Avnet, Inc. | 7,030 | 271,991 | ||||||||||||
CDW Corp. | 7,026 | 415,166 | ||||||||||||
Cognex Corp. | 1,994 | 170,168 | ||||||||||||
Coherent, Inc. (I) | 260 | 56,056 | ||||||||||||
Dolby Laboratories, Inc., Class A | 2,256 | 118,959 | ||||||||||||
Flex, Ltd. (I) | 24,330 | 376,142 | ||||||||||||
FLIR Systems, Inc. | 6,238 | 229,122 | ||||||||||||
IPG Photonics Corp. (I) | 1,428 | 180,385 | ||||||||||||
Jabil Circuit, Inc. | 10,759 | 312,226 | ||||||||||||
Keysight Technologies, Inc. (I) | 7,816 | 292,553 | ||||||||||||
National Instruments Corp. | 4,156 | 145,086 | ||||||||||||
SYNNEX Corp. | 1,541 | 167,091 | ||||||||||||
Trimble, Inc. (I) | 8,780 | 311,075 | ||||||||||||
Universal Display Corp. | 326 | 29,128 | ||||||||||||
Zebra Technologies Corp., Class A (I) | 1,755 | 165,444 | ||||||||||||
Internet software and services 1.2% | ||||||||||||||
Akamai Technologies, Inc. (I) | 5,687 | 346,566 | ||||||||||||
CoStar Group, Inc. (I) | 980 | 236,072 | ||||||||||||
GoDaddy, Inc., Class A (I) | 660 | 25,687 | ||||||||||||
InterActiveCorp (I) | 3,978 | 330,214 | ||||||||||||
j2 Global, Inc. | 2,017 | 182,014 | ||||||||||||
LogMeIn, Inc. | 1,300 | 146,900 | ||||||||||||
Match Group, Inc. (I) | 1,264 | 23,548 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Internet software and services (continued) | ||||||||||||||
MercadoLibre, Inc. | 1,303 | $298,270 | ||||||||||||
Nutanix, Inc., Class A (I) | 106 | 1,610 | ||||||||||||
VeriSign, Inc. (I) | 2,864 | 254,667 | ||||||||||||
Zillow Group, Inc., Class A (I) | 1,132 | 43,571 | ||||||||||||
Zillow Group, Inc., Class C (I) | 2,489 | 97,071 | ||||||||||||
IT services 4.0% | ||||||||||||||
Alliance Data Systems Corp. | 1,703 | 425,120 | ||||||||||||
Amdocs, Ltd. | 5,911 | 361,990 | ||||||||||||
Black Knight Financial Services, Inc., Class A (I) | 864 | 35,770 | ||||||||||||
Booz Allen Hamilton Holding Corp. | 5,121 | 183,998 | ||||||||||||
Broadridge Financial Solutions, Inc. | 4,038 | 282,418 | ||||||||||||
CSRA, Inc. | 6,560 | 190,765 | ||||||||||||
DST Systems, Inc. | 2,154 | 265,179 | ||||||||||||
DXC Technology Company (I) | 6,457 | 486,470 | ||||||||||||
EPAM Systems, Inc. (I) | 1,001 | 77,077 | ||||||||||||
Euronet Worldwide, Inc. (I) | 1,855 | 153,260 | ||||||||||||
First Data Corp., Class A (I) | 6,660 | 104,029 | ||||||||||||
Fiserv, Inc. (I) | 6,374 | 759,398 | ||||||||||||
FleetCor Technologies, Inc. (I) | 1,974 | 278,610 | ||||||||||||
Gartner, Inc. (I) | 3,575 | 407,872 | ||||||||||||
Genpact, Ltd. | 8,017 | 195,775 | ||||||||||||
Global Payments, Inc. | 4,454 | 364,159 | ||||||||||||
Jack Henry & Associates, Inc. | 3,795 | 367,811 | ||||||||||||
Leidos Holdings, Inc. | 6,149 | 323,806 | ||||||||||||
MAXIMUS, Inc. | 2,664 | 162,477 | ||||||||||||
Sabre Corp. | 6,372 | 149,169 | ||||||||||||
Square, Inc., Class A (I) | 2,695 | 49,157 | ||||||||||||
Teradata Corp. (I) | 6,778 | 197,782 | ||||||||||||
The Western Union Company | 12,136 | 241,021 | ||||||||||||
Total System Services, Inc. | 5,437 | 311,594 | ||||||||||||
Vantiv, Inc., Class A (I) | 5,093 | 315,970 | ||||||||||||
WEX, Inc. (I) | 992 | 100,648 | ||||||||||||
Semiconductors and semiconductor equipment 3.1% | ||||||||||||||
Advanced Micro Devices, Inc. (I) | 8,557 | 113,808 | ||||||||||||
Analog Devices, Inc. | 8,242 | 628,040 | ||||||||||||
Cavium, Inc. (I) | 1,444 | 99,419 | ||||||||||||
Cypress Semiconductor Corp. | 8,334 | 116,759 | ||||||||||||
First Solar, Inc. (I) | 3,913 | 115,629 | ||||||||||||
Lam Research Corp. | 5,319 | 770,457 | ||||||||||||
Marvell Technology Group, Ltd. | 17,993 | 270,255 | ||||||||||||
Maxim Integrated Products, Inc. | 9,547 | 421,500 | ||||||||||||
Microchip Technology, Inc. | 5,958 | 450,306 | ||||||||||||
Microsemi Corp. (I) | 4,368 | 205,034 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Semiconductors and semiconductor equipment (continued) | ||||||||||||||
ON Semiconductor Corp. (I) | 24,337 | $345,099 | ||||||||||||
Qorvo, Inc. (I) | 4,963 | 337,633 | ||||||||||||
Skyworks Solutions, Inc. | 6,122 | 610,608 | ||||||||||||
Teradyne, Inc. | 10,391 | 366,491 | ||||||||||||
Xilinx, Inc. | 8,011 | 505,574 | ||||||||||||
Software 3.7% | ||||||||||||||
ANSYS, Inc. (I) | 3,003 | 330,810 | ||||||||||||
Aspen Technology, Inc. (I) | 1,657 | 101,889 | ||||||||||||
Atlassian Corp. PLC, Class A (I) | 1,232 | 42,479 | ||||||||||||
Autodesk, Inc. (I) | 4,285 | 385,950 | ||||||||||||
CA, Inc. | 11,908 | 390,940 | ||||||||||||
Cadence Design Systems, Inc. (I) | 12,772 | 415,984 | ||||||||||||
CDK Global, Inc. | 5,341 | 347,218 | ||||||||||||
Citrix Systems, Inc. (I) | 4,999 | 404,619 | ||||||||||||
Dell Technologies, Inc., Class V (I) | 2,322 | 155,829 | ||||||||||||
Fair Isaac Corp. | 1,318 | 178,563 | ||||||||||||
Fortinet, Inc. (I) | 4,545 | 177,255 | ||||||||||||
Guidewire Software, Inc. (I) | 2,073 | 127,469 | ||||||||||||
Nuance Communications, Inc. (I) | 11,950 | 213,786 | ||||||||||||
PTC, Inc. (I) | 4,868 | 263,115 | ||||||||||||
Red Hat, Inc. (I) | 4,169 | 367,206 | ||||||||||||
ServiceNow, Inc. (I) | 2,136 | 201,809 | ||||||||||||
Splunk, Inc. (I) | 3,353 | 215,631 | ||||||||||||
SS&C Technologies Holdings, Inc. | 7,684 | 282,310 | ||||||||||||
Symantec Corp. | 18,492 | 584,902 | ||||||||||||
Synopsys, Inc. (I) | 5,884 | 433,651 | ||||||||||||
Tableau Software, Inc., Class A (I) | 1,242 | 66,671 | ||||||||||||
Take-Two Interactive Software, Inc. (I) | 2,690 | 169,067 | ||||||||||||
The Ultimate Software Group, Inc. (I) | 928 | 188,078 | ||||||||||||
Tyler Technologies, Inc. (I) | 1,201 | 196,472 | ||||||||||||
Workday, Inc., Class A (I) | 1,523 | 133,110 | ||||||||||||
Technology hardware, storage and peripherals 1.5% | ||||||||||||||
NCR Corp. (I) | 8,477 | 349,676 | ||||||||||||
NetApp, Inc. | 12,631 | 503,345 | ||||||||||||
Seagate Technology PLC | 11,461 | 482,852 | ||||||||||||
Western Digital Corp. | 10,664 | 949,842 | ||||||||||||
Xerox Corp. | 34,219 | 246,035 | ||||||||||||
Materials 6.7% | 11,328,187 | |||||||||||||
Chemicals 2.8% | ||||||||||||||
Albemarle Corp. | 3,592 | 391,205 | ||||||||||||
Ashland Global Holdings, Inc. | 3,013 | 372,106 | ||||||||||||
Axalta Coating Systems, Ltd. (I) | 7,882 | 247,258 | ||||||||||||
Celanese Corp., Series A | 4,453 | 387,589 |
Shares | Value | |||||||||||||
Materials (continued) | ||||||||||||||
Chemicals (continued) | ||||||||||||||
CF Industries Holdings, Inc. | 9,940 | $265,796 | ||||||||||||
Eastman Chemical Company | 4,891 | 390,057 | ||||||||||||
FMC Corp. | 5,015 | 367,248 | ||||||||||||
Huntsman Corp. | 7,078 | 175,322 | ||||||||||||
International Flavors & Fragrances, Inc. | 2,168 | 300,463 | ||||||||||||
NewMarket Corp. | 414 | 194,870 | ||||||||||||
Olin Corp. | 4,626 | 148,633 | ||||||||||||
RPM International, Inc. | 5,923 | 311,313 | ||||||||||||
The Chemours Company | 2,543 | 102,457 | ||||||||||||
The Mosaic Company | 6,744 | 181,616 | ||||||||||||
The Scotts Miracle-Gro Company, Class A | 2,219 | 214,355 | ||||||||||||
The Valspar Corp. | 2,410 | 270,980 | ||||||||||||
Valvoline, Inc. | 388 | 8,633 | ||||||||||||
W.R. Grace & Company | 2,861 | 199,469 | ||||||||||||
Westlake Chemical Corp. | 1,676 | 104,331 | ||||||||||||
Construction materials 0.6% | ||||||||||||||
Eagle Materials, Inc. | 1,792 | 171,978 | ||||||||||||
Martin Marietta Materials, Inc. | 1,737 | 382,470 | ||||||||||||
Vulcan Materials Company | 4,123 | 498,388 | ||||||||||||
Containers and packaging 2.1% | ||||||||||||||
AptarGroup, Inc. | 3,181 | 255,434 | ||||||||||||
Avery Dennison Corp. | 4,446 | 369,952 | ||||||||||||
Ball Corp. | 4,524 | 347,850 | ||||||||||||
Bemis Company, Inc. | 6,254 | 280,992 | ||||||||||||
Berry Plastics Group, Inc. (I) | 4,477 | 223,850 | ||||||||||||
Crown Holdings, Inc. (I) | 5,600 | 314,104 | ||||||||||||
Graphic Packaging Holding Company | 18,615 | 252,792 | ||||||||||||
Packaging Corp. of America | 5,775 | 570,455 | ||||||||||||
Sealed Air Corp. | 7,066 | 311,045 | ||||||||||||
Sonoco Products Company | 6,822 | 356,859 | ||||||||||||
WestRock Company | 5,312 | 284,511 | ||||||||||||
Metals and mining 1.2% | ||||||||||||||
Alcoa Corp. | 4,567 | 154,045 | ||||||||||||
Freeport-McMoRan, Inc. (I) | 16,234 | 206,984 | ||||||||||||
Newmont Mining Corp. | 11,973 | 404,807 | ||||||||||||
Nucor Corp. | 8,089 | 496,098 | ||||||||||||
Reliance Steel & Aluminum Company | 3,647 | 287,457 | ||||||||||||
Royal Gold, Inc. | 1,816 | 128,355 | ||||||||||||
Steel Dynamics, Inc. | 9,806 | 354,389 | ||||||||||||
United States Steel Corp. | 1,867 | 41,671 | ||||||||||||
Real estate 6.4% | 10,951,142 | |||||||||||||
Equity real estate investment trusts 5.9% | ||||||||||||||
Alexandria Real Estate Equities, Inc. | 2,110 | 237,396 |
Shares | Value | |||||||||||||
Real estate (continued) | ||||||||||||||
Equity real estate investment trusts (continued) | ||||||||||||||
American Campus Communities, Inc. | 3,835 | $181,741 | ||||||||||||
American Homes 4 Rent, Class A | 4,140 | 95,427 | ||||||||||||
Apartment Investment & Management Company, Class A | 4,678 | 204,616 | ||||||||||||
Apple Hospitality REIT, Inc. | 4,201 | 78,685 | ||||||||||||
Brixmor Property Group, Inc. | 6,438 | 127,151 | ||||||||||||
Camden Property Trust | 2,575 | 212,000 | ||||||||||||
Colony NorthStar, Inc., Class A | 5,553 | 72,578 | ||||||||||||
CoreCivic, Inc. | 1,207 | 41,581 | ||||||||||||
CoreSite Realty Corp. | 660 | 64,581 | ||||||||||||
CubeSmart | 4,966 | 125,838 | ||||||||||||
CyrusOne, Inc. | 1,580 | 86,331 | ||||||||||||
DCT Industrial Trust, Inc. | 2,363 | 119,473 | ||||||||||||
DDR Corp. | 9,142 | 98,825 | ||||||||||||
Digital Realty Trust, Inc. | 2,631 | 302,144 | ||||||||||||
Douglas Emmett, Inc. | 4,271 | 160,889 | ||||||||||||
Duke Realty Corp. | 9,615 | 266,624 | ||||||||||||
DuPont Fabros Technology, Inc. | 794 | 40,931 | ||||||||||||
EPR Properties | 1,647 | 119,753 | ||||||||||||
Equity Commonwealth (I) | 3,311 | 105,919 | ||||||||||||
Equity LifeStyle Properties, Inc. | 2,313 | 187,145 | ||||||||||||
Essex Property Trust, Inc. | 1,178 | 287,986 | ||||||||||||
Extra Space Storage, Inc. | 3,038 | 229,460 | ||||||||||||
Federal Realty Investment Trust | 1,724 | 225,654 | ||||||||||||
Forest City Realty Trust, Inc., Class A | 6,984 | 157,838 | ||||||||||||
Gaming and Leisure Properties, Inc. | 4,542 | 158,062 | ||||||||||||
Gramercy Property Trust | 3,678 | 102,212 | ||||||||||||
HCP, Inc. | 2,880 | 90,288 | ||||||||||||
Healthcare Realty Trust, Inc. | 1,703 | 55,858 | ||||||||||||
Healthcare Trust of America, Inc., Class A | 3,616 | 115,314 | ||||||||||||
Highwoods Properties, Inc. | 2,894 | 147,247 | ||||||||||||
Hospitality Properties Trust | 4,726 | 150,429 | ||||||||||||
Host Hotels & Resorts, Inc. | 13,233 | 237,532 | ||||||||||||
Hudson Pacific Properties, Inc. | 2,539 | 87,240 | ||||||||||||
Iron Mountain, Inc. | 6,740 | 234,282 | ||||||||||||
Kilroy Realty Corp. | 2,773 | 195,580 | ||||||||||||
Kimco Realty Corp. | 7,346 | 149,050 | ||||||||||||
Lamar Advertising Company, Class A | 3,084 | 222,264 | ||||||||||||
Liberty Property Trust | 4,392 | 178,183 | ||||||||||||
Life Storage, Inc. | 1,047 | 82,074 | ||||||||||||
Medical Properties Trust, Inc. | 5,620 | 73,453 | ||||||||||||
MGM Growth Properties LLC, Class A | 1,171 | 33,514 | ||||||||||||
Mid-America Apartment Communities, Inc. | 2,214 | 219,651 | ||||||||||||
National Retail Properties, Inc. | 4,267 | 180,153 | ||||||||||||
Omega Healthcare Investors, Inc. | 5,586 | 184,338 |
Shares | Value | |||||||||||||
Real estate (continued) | ||||||||||||||
Equity real estate investment trusts (continued) | ||||||||||||||
Paramount Group, Inc. | 4,894 | $80,262 | ||||||||||||
Park Hotels & Resorts, Inc. | 1,224 | 31,420 | ||||||||||||
Realty Income Corp. | 4,208 | 245,537 | ||||||||||||
Regency Centers Corp. | 2,891 | 182,653 | ||||||||||||
Retail Properties of America, Inc., Class A | 5,778 | 77,079 | ||||||||||||
SBA Communications Corp. (I) | 3,282 | 415,140 | ||||||||||||
Senior Housing Properties Trust | 7,019 | 151,049 | ||||||||||||
SL Green Realty Corp. | 1,797 | 188,559 | ||||||||||||
Spirit Realty Capital, Inc. | 13,684 | 128,903 | ||||||||||||
STORE Capital Corp. | 3,673 | 88,115 | ||||||||||||
Sun Communities, Inc. | 1,598 | 133,609 | ||||||||||||
Taubman Centers, Inc. | 1,765 | 110,401 | ||||||||||||
The Macerich Company | 2,659 | 166,001 | ||||||||||||
UDR, Inc. | 6,568 | 245,249 | ||||||||||||
Uniti Group, Inc. (I) | 2,919 | 80,156 | ||||||||||||
VEREIT, Inc. | 20,833 | 174,372 | ||||||||||||
Weingarten Realty Investors | 3,541 | 116,039 | ||||||||||||
Weyerhaeuser Company | 15,807 | 535,383 | ||||||||||||
WP Carey, Inc. | 3,015 | 188,739 | ||||||||||||
Real estate management and development 0.5% | ||||||||||||||
CBRE Group, Inc., Class A (I) | 9,060 | 324,439 | ||||||||||||
Jones Lang LaSalle, Inc. | 1,993 | 228,916 | ||||||||||||
Realogy Holdings Corp. | 6,550 | 200,103 | ||||||||||||
The Howard Hughes Corp. (I) | 1,070 | 131,728 | ||||||||||||
Telecommunication services 0.4% | 752,664 | |||||||||||||
Diversified telecommunication services 0.4% | ||||||||||||||
CenturyLink, Inc. | 11,752 | 301,674 | ||||||||||||
Level 3 Communications, Inc. (I) | 4,540 | 275,850 | ||||||||||||
Zayo Group Holdings, Inc. (I) | 4,994 | 175,140 | ||||||||||||
Utilities 5.9% | 9,979,287 | |||||||||||||
Electric utilities 2.3% | ||||||||||||||
Alliant Energy Corp. | 7,715 | 303,354 | ||||||||||||
Entergy Corp. | 5,963 | 454,738 | ||||||||||||
Eversource Energy | 7,410 | 440,154 | ||||||||||||
FirstEnergy Corp. | 15,355 | 459,729 | ||||||||||||
Great Plains Energy, Inc. | 7,203 | 213,137 | ||||||||||||
IDACORP, Inc. | 1,635 | 138,190 | ||||||||||||
OGE Energy Corp. | 11,028 | 383,554 | ||||||||||||
Pinnacle West Capital Corp. | 4,382 | 372,864 | ||||||||||||
Portland General Electric Company | 3,488 | 158,146 | ||||||||||||
Westar Energy, Inc. | 6,140 | 319,464 | ||||||||||||
Xcel Energy, Inc. | 15,088 | 679,714 |
Shares | Value | |||||||||||||
Utilities (continued) | ||||||||||||||
Gas utilities 0.7% | ||||||||||||||
Atmos Energy Corp. | 4,514 | $365,724 | ||||||||||||
National Fuel Gas Company | 2,837 | 157,113 | ||||||||||||
Southwest Gas Holdings, Inc. | 779 | 65,249 | ||||||||||||
UGI Corp. | 9,079 | 455,403 | ||||||||||||
WGL Holdings, Inc. | 1,325 | 109,260 | ||||||||||||
Independent power and renewable electricity producers 0.4% | ||||||||||||||
AES Corp. | 33,210 | 375,605 | ||||||||||||
Calpine Corp. (I) | 16,817 | 171,533 | ||||||||||||
NRG Energy, Inc. | 10,459 | 176,757 | ||||||||||||
Multi-utilities 2.1% | ||||||||||||||
Ameren Corp. | 7,918 | 433,035 | ||||||||||||
CenterPoint Energy, Inc. | 14,775 | 421,531 | ||||||||||||
CMS Energy Corp. | 9,610 | 436,294 | ||||||||||||
DTE Energy Company | 5,042 | 527,343 | ||||||||||||
MDU Resources Group, Inc. | 10,183 | 273,923 | ||||||||||||
NiSource, Inc. | 21,018 | 509,687 | ||||||||||||
SCANA Corp. | 5,210 | 345,475 | ||||||||||||
Vectren Corp. | 3,545 | 210,644 | ||||||||||||
WEC Energy Group, Inc. | 6,522 | 394,711 | ||||||||||||
Water utilities 0.4% | ||||||||||||||
American Water Works Company, Inc. | 5,597 | 446,417 | ||||||||||||
Aqua America, Inc. | 5,456 | 180,539 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $162,100 | |||||||||||||
(Cost $162,100) | ||||||||||||||
Money market funds 0.1% | 162,100 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 162,100 | 162,100 | ||||||||||
Total investments (Cost $157,058,451)† 100.0% | $170,096,948 | |||||||||||||
Other assets and liabilities, net 0.0% | ($3,726 | ) | ||||||||||||
Total net assets 100.0% | $170,093,222 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $157,086,291. Net unrealized appreciation aggregated to $13,010,657, of which $16,662,019 related to appreciated investment securities and $3,651,362 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $157,058,451) | $170,096,948 | ||||||||||||||||||||
Cash | 1,957 | ||||||||||||||||||||
Dividends and interest receivable | 81,146 | ||||||||||||||||||||
Other receivables and prepaid expenses | 4,235 | ||||||||||||||||||||
Total assets | 170,184,286 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 8,679 | ||||||||||||||||||||
Investment management fees | 24,184 | ||||||||||||||||||||
Other liabilities and accrued expenses | 58,201 | ||||||||||||||||||||
Total liabilities | 91,064 | ||||||||||||||||||||
Net assets | $170,093,222 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $157,290,173 | ||||||||||||||||||||
Undistributed net investment income | 403,119 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (638,567 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 13,038,497 | ||||||||||||||||||||
Net assets | $170,093,222 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $170,093,222 | ||||||||||||||||||||
Shares outstanding | 5,550,000 | ||||||||||||||||||||
Net asset value per share | $30.65 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $1,806,624 | |||||||||||||||||||||||
Interest | 244 | |||||||||||||||||||||||
Total investment income | 1,806,868 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 449,885 | |||||||||||||||||||||||
Accounting and legal services fees | 25,766 | |||||||||||||||||||||||
Transfer agent fees | 14,433 | |||||||||||||||||||||||
Trustees' fees | 1,010 | |||||||||||||||||||||||
Printing and postage | 17,726 | |||||||||||||||||||||||
Professional fees | 117,772 | |||||||||||||||||||||||
Custodian fees | 40,519 | |||||||||||||||||||||||
Stock exchange listing fees | 19,089 | |||||||||||||||||||||||
Other | 2,587 | |||||||||||||||||||||||
Total expenses | 688,787 | |||||||||||||||||||||||
Less expense reductions | (182,588 | ) | ||||||||||||||||||||||
Net expenses | 506,199 | |||||||||||||||||||||||
Net investment income | 1,300,669 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (612,152 | ) | ||||||||||||||||||||||
Redemptions in-kind | 4,756,719 | |||||||||||||||||||||||
4,144,567 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 12,471,627 | |||||||||||||||||||||||
12,471,627 | ||||||||||||||||||||||||
Net realized and unrealized gain | 16,616,194 | |||||||||||||||||||||||
Increase in net assets from operations | $17,916,863 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $1,300,669 | $134,068 | |||||||||||||||||||||||||||
Net realized gain (loss) | 4,144,567 | (25,085 | ) | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 12,471,627 | 566,870 | |||||||||||||||||||||||||||
Increase in net assets resulting from operations | 17,916,863 | 675,853 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (974,578 | ) | (58,506 | ) | |||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 165,935,421 | 18,937,237 | |||||||||||||||||||||||||||
Shares repurchased | (32,339,068 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 133,596,353 | 18,937,237 | |||||||||||||||||||||||||||
Total increase | 150,538,638 | 19,554,584 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 19,554,584 | — | |||||||||||||||||||||||||||
End of period | $170,093,222 | $19,554,584 | |||||||||||||||||||||||||||
Undistributed net investment income | $403,119 | $77,028 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 750,000 | — | |||||||||||||||||||||||||||
Shares issued | 5,900,000 | 750,000 | |||||||||||||||||||||||||||
Shares repurchased | (1,100,000 | ) | — | ||||||||||||||||||||||||||
End of period | 5,550,000 | 750,000 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.07 | $24.29 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.33 | 0.21 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 4.58 | 1.65 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 4.91 | 1.86 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.33 | ) | (0.08 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $30.65 | $26.07 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 18.96 | 7.70 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $170 | $20 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.61 | 1.11 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.45 | 0.45 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.16 | 1.44 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)6 | 14 | 12 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Mid Cap ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Mid Cap Index. The John Hancock Dimensional Mid Cap Index is a rules-based index of mid-cap U.S. stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Real estate investment trusts. The fund may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of the fiscal year as a reduction of cost of investments and/or as a realized gain. As a result, the fund will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.
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 extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 30, 2016, the fund had a similar agreement that enabled it to participate in a $750 million unsecured committed line of credit. For the year ended April 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the year ended April 30, 2017 were $3,025.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $610,727 available to offset future net realized capital gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually.
The tax character of distributions for the year ended April 30, 2017 and the period ended April 30, 2016 was as follows:
April 30, 2017 | April 30, 2016 | |||||||
Ordinary Income | $974,578 | $58,170 |
April 30, 2017 | April 30, 2016 | |||||||
Long term capital gains | — | 336 | ||||||
Total | $974,578 | $58,506 |
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $403,119 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.400% of the first $300 million of the fund's average daily net assets; and (b) 0.370% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.45% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $182,588.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.24% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $15,822,703 and $15,621,652, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $165,718,503 and $31,810,069, respectively, for the year ended April 30, 2017.
Note 7 — Investment by affiliated funds
Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund's net assets. At April 30, 2017, funds within the John Hancock group of funds complex held 58.7% of the fund's net assets. The following affiliated funds owned 5% or more of the fund's net assets:
Fund | Affiliated concentration |
JHVIT Lifestyle Balanced MVP | 25.6% |
JHVIT Lifestyle Growth MVP | 31.9% |
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Mid Cap ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Mid Cap ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period September 28, 2015 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMM |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Mid Cap ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0613 | 840A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Technology ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
16 | Financial statements | |
19 | Financial highlights | |
20 | Notes to financial statements | |
24 | Auditor's report | |
25 | Tax information | |
26 | Trustees and Officers | |
30 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Technology Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Technology Index is designed to comprise securities in the technology sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The technology sector is composed of companies in areas such as the creation, development or provision of software, hardware, internet services, database management, information technology consulting and services, data processing, or semi-conductors. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Technology Index comprises securities classified in the technology sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.18 |
Net (%) | 0.50 |
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities had positive performance for the one-year period, outperforming both developed ex-U.S. markets and emerging markets.
The fund was up and narrowly led the benchmark
With an exclusive focus on information technology, the fund generated a positive return for the period and led its benchmark, the Russell 1000 Technology Index.
Value emphasis contributed to performance
The fund's greater emphasis on low relative price stocks contributed positively to relative performance, as value stocks outperformed growth within the technology sector.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Technology Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
Microsoft Corp. | 6.1 |
Apple, Inc. | 5.9 |
Facebook, Inc., Class A | 5.7 |
Alphabet, Inc., Class A | 5.0 |
Intel Corp. | 4.7 |
Cisco Systems, Inc. | 3.4 |
Oracle Corp. | 3.2 |
IBM Corp. | 2.7 |
Micron Technology, Inc. | 1.8 |
Western Digital Corp. | 1.7 |
TOTAL | 40.2 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the period, outperforming both developed ex-U.S. and emerging markets. The Russell 3000 Index was up 18.58%, as compared with a 10.92% return for the MSCI World ex-USA Investable Market Index and a 18.42% return for the MSCI Emerging Markets Investable Market Index.
How did the fund perform for the period?
The fund narrowly outperformed the Russell 1000 Technology Index, a cap-weighted benchmark we use as a proxy for the information technology sector of the U.S. stock market.
Relative to most commercial measures of the information technology sector, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
The fund's emphasis on low relative price (value) stocks contributed positively to relative performance, as value stocks outperformed growth within the information technology sector for the period. Contributors included Applied Materials, Inc., NVIDIA Corp., and Western Digital Corp.
The benchmark held a more concentrated position in Apple, Inc., which detracted from the fund's
relative performance, as Apple outperformed the overall benchmark. Other detractors included out-of-benchmark holdings in Cerner Corp. and ViaSat, Inc.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Technology Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Technology Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations, while emphasizing companies with higher profitability. The fund held approximately 100 names, and its largest absolute exposure was to the software, semiconductors and semiconductor equipment, and Internet software and services industries of the information technology sector.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Technology ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%) | 1.18 |
Net (%) | 0.50 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $14,632.
The John Hancock Dimensional Technology Index is designed to comprise securities in the technology sector within the U.S. Universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The technology sector is composed of companies in areas such as the creation, development or provision of software, hardware, internet services, database management, information technology consulting and services, data processing, or semi-conductors. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Technology Index comprises securities classified in the technology sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 78 | 31.08% | 173 | 68.92% | ||||
25 - < 50 | 0 | 0.00% | 0 | 0.00% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 78 | 31.08% | 173 | 68.92% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,172.90 | $2.69 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 100.0% | $42,097,850 | |||||||||||||
(Cost $34,759,609) | ||||||||||||||
Consumer discretionary 0.4% | 152,062 | |||||||||||||
Household durables 0.4% | ||||||||||||||
Garmin, Ltd. | 2,991 | 152,062 | ||||||||||||
Health care 1.7% | 699,126 | |||||||||||||
Health care providers and services 0.1% | ||||||||||||||
Premier, Inc., Class A (I) | 848 | 28,662 | ||||||||||||
Health care technology 1.6% | ||||||||||||||
athenahealth, Inc. (I) | 772 | 75,664 | ||||||||||||
Cerner Corp. (I) | 8,093 | 524,022 | ||||||||||||
Veeva Systems, Inc., Class A (I) | 1,320 | 70,778 | ||||||||||||
Information technology 97.9% | 41,246,662 | |||||||||||||
Communications equipment 9.1% | ||||||||||||||
Arista Networks, Inc. (I) | 842 | 117,577 | ||||||||||||
ARRIS International PLC (I) | 5,847 | 151,964 | ||||||||||||
Brocade Communications Systems, Inc. | 11,264 | 141,588 | ||||||||||||
Ciena Corp. (I) | 2,747 | 62,934 | ||||||||||||
Cisco Systems, Inc. | 42,405 | 1,444,738 | ||||||||||||
CommScope Holding Company, Inc. (I) | 5,411 | 227,478 | ||||||||||||
EchoStar Corp., Class A (I) | 1,162 | 66,885 | ||||||||||||
F5 Networks, Inc. (I) | 1,728 | 223,137 | ||||||||||||
Finisar Corp. (I) | 1,965 | 44,881 | ||||||||||||
Harris Corp. | 4,284 | 479,337 | ||||||||||||
Juniper Networks, Inc. | 11,500 | 345,805 | ||||||||||||
Motorola Solutions, Inc. | 3,209 | 275,878 | ||||||||||||
Palo Alto Networks, Inc. (I) | 1,132 | 122,720 | ||||||||||||
Ubiquiti Networks, Inc. (I) | 659 | 33,952 | ||||||||||||
ViaSat, Inc. (I) | 1,568 | 100,399 | ||||||||||||
Electronic equipment, instruments and components 2.7% | ||||||||||||||
CDW Corp. | 4,316 | 255,032 | ||||||||||||
Corning, Inc. | 24,176 | 697,478 | ||||||||||||
Dolby Laboratories, Inc., Class A | 1,387 | 73,137 | ||||||||||||
SYNNEX Corp. | 1,042 | 112,984 | ||||||||||||
Internet software and services 17.2% | ||||||||||||||
Akamai Technologies, Inc. (I) | 4,828 | 294,218 | ||||||||||||
Alphabet, Inc., Class A (I) | 2,277 | 2,105,132 | ||||||||||||
Alphabet, Inc., Class C (I) | 561 | 508,244 | ||||||||||||
eBay, Inc. (I) | 15,585 | 520,695 | ||||||||||||
Facebook, Inc., Class A (I) | 15,944 | 2,395,586 | ||||||||||||
GoDaddy, Inc., Class A (I) | 463 | 18,020 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Internet software and services (continued) | ||||||||||||||
InterActiveCorp (I) | 2,270 | $188,433 | ||||||||||||
j2 Global, Inc. | 1,650 | 148,896 | ||||||||||||
LogMeIn, Inc. | 1,133 | 128,029 | ||||||||||||
Match Group, Inc. (I) | 1,179 | 21,965 | ||||||||||||
MercadoLibre, Inc. | 833 | 190,682 | ||||||||||||
Nutanix, Inc., Class A (I) | 121 | 1,838 | ||||||||||||
Twitter, Inc. (I) | 3,016 | 49,704 | ||||||||||||
VeriSign, Inc. (I) | 2,112 | 187,799 | ||||||||||||
Yahoo!, Inc. (I) | 10,587 | 510,399 | ||||||||||||
IT services 8.2% | ||||||||||||||
Amdocs, Ltd. | 4,006 | 245,327 | ||||||||||||
Cognizant Technology Solutions Corp., Class A (I) | 7,784 | 468,830 | ||||||||||||
CSRA, Inc. | 4,000 | 116,320 | ||||||||||||
DST Systems, Inc. | 1,077 | 132,589 | ||||||||||||
DXC Technology Company (I) | 6,493 | 489,183 | ||||||||||||
EPAM Systems, Inc. (I) | 928 | 71,456 | ||||||||||||
Gartner, Inc. (I) | 1,831 | 208,899 | ||||||||||||
IBM Corp. | 7,132 | 1,143,188 | ||||||||||||
Leidos Holdings, Inc. | 4,513 | 237,655 | ||||||||||||
Sabre Corp. | 4,761 | 111,455 | ||||||||||||
Science Applications International Corp. | 643 | 46,933 | ||||||||||||
Square, Inc., Class A (I) | 2,396 | 43,703 | ||||||||||||
Teradata Corp. (I) | 4,428 | 129,209 | ||||||||||||
Semiconductors and semiconductor equipment 23.4% | ||||||||||||||
Advanced Micro Devices, Inc. (I) | 10,909 | 145,090 | ||||||||||||
Analog Devices, Inc. | 7,078 | 539,344 | ||||||||||||
Applied Materials, Inc. | 16,010 | 650,166 | ||||||||||||
Broadcom, Ltd. | 2,791 | 616,281 | ||||||||||||
Cavium, Inc. (I) | 736 | 50,674 | ||||||||||||
Cypress Semiconductor Corp. | 7,580 | 106,196 | ||||||||||||
Intel Corp. | 54,760 | 1,979,574 | ||||||||||||
Lam Research Corp. | 4,618 | 668,917 | ||||||||||||
Marvell Technology Group, Ltd. | 11,082 | 166,452 | ||||||||||||
Maxim Integrated Products, Inc. | 7,286 | 321,677 | ||||||||||||
Microchip Technology, Inc. | 4,110 | 310,634 | ||||||||||||
Micron Technology, Inc. (I) | 27,213 | 752,984 | ||||||||||||
Microsemi Corp. (I) | 3,105 | 145,749 | ||||||||||||
Monolithic Power Systems, Inc. | 369 | 33,764 | ||||||||||||
NVIDIA Corp. | 3,726 | 388,622 | ||||||||||||
ON Semiconductor Corp. (I) | 14,171 | 200,945 | ||||||||||||
Qorvo, Inc. (I) | 3,298 | 224,363 | ||||||||||||
QUALCOMM, Inc. | 12,803 | 688,033 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Semiconductors and semiconductor equipment (continued) | ||||||||||||||
Skyworks Solutions, Inc. | 5,416 | $540,192 | ||||||||||||
Teradyne, Inc. | 6,037 | 212,925 | ||||||||||||
Texas Instruments, Inc. | 8,686 | 687,757 | ||||||||||||
Xilinx, Inc. | 6,509 | 410,783 | ||||||||||||
Software 25.8% | ||||||||||||||
Activision Blizzard, Inc. | 10,062 | 525,740 | ||||||||||||
Adobe Systems, Inc. (I) | 2,905 | 388,515 | ||||||||||||
ANSYS, Inc. (I) | 1,934 | 213,049 | ||||||||||||
Aspen Technology, Inc. (I) | 1,701 | 104,594 | ||||||||||||
Atlassian Corp. PLC, Class A (I) | 1,003 | 34,583 | ||||||||||||
Autodesk, Inc. (I) | 3,377 | 304,166 | ||||||||||||
Blackbaud, Inc. | 1,204 | 96,814 | ||||||||||||
CA, Inc. | 10,889 | 357,486 | ||||||||||||
Cadence Design Systems, Inc. (I) | 7,457 | 242,874 | ||||||||||||
CDK Global, Inc. | 3,741 | 243,202 | ||||||||||||
Citrix Systems, Inc. (I) | 3,956 | 320,199 | ||||||||||||
Dell Technologies, Inc., Class V (I) | 5,590 | 375,145 | ||||||||||||
Electronic Arts, Inc. (I) | 3,413 | 323,621 | ||||||||||||
Fair Isaac Corp. | 744 | 100,797 | ||||||||||||
Fortinet, Inc. (I) | 2,279 | 88,881 | ||||||||||||
Guidewire Software, Inc. (I) | 1,196 | 73,542 | ||||||||||||
Intuit, Inc. | 3,030 | 379,386 | ||||||||||||
Manhattan Associates, Inc. (I) | 1,721 | 80,353 | ||||||||||||
Microsoft Corp. | 37,614 | 2,575,054 | ||||||||||||
Nuance Communications, Inc. (I) | 6,733 | 120,453 | ||||||||||||
Oracle Corp. | 30,093 | 1,352,981 | ||||||||||||
Proofpoint, Inc. (I) | 658 | 49,593 | ||||||||||||
PTC, Inc. (I) | 2,357 | 127,396 | ||||||||||||
Red Hat, Inc. (I) | 3,461 | 304,845 | ||||||||||||
salesforce.com, Inc. (I) | 3,040 | 261,805 | ||||||||||||
ServiceNow, Inc. (I) | 2,261 | 213,619 | ||||||||||||
Splunk, Inc. (I) | 1,855 | 119,295 | ||||||||||||
SS&C Technologies Holdings, Inc. | 4,188 | 153,867 | ||||||||||||
Symantec Corp. | 14,790 | 467,808 | ||||||||||||
Synopsys, Inc. (I) | 3,796 | 279,765 | ||||||||||||
Tableau Software, Inc., Class A (I) | 599 | 32,154 | ||||||||||||
Take-Two Interactive Software, Inc. (I) | 2,332 | 146,566 | ||||||||||||
The Ultimate Software Group, Inc. (I) | 513 | 103,970 | ||||||||||||
Tyler Technologies, Inc. (I) | 565 | 92,428 | ||||||||||||
VMware, Inc., Class A (I) | 865 | 81,414 | ||||||||||||
Workday, Inc., Class A (I) | 1,695 | 148,143 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Technology hardware, storage and peripherals 11.5% | ||||||||||||||
Apple, Inc. | 17,302 | $2,485,432 | ||||||||||||
Hewlett Packard Enterprise Company | 23,868 | 444,661 | ||||||||||||
HP, Inc. | 18,869 | 355,115 | ||||||||||||
NCR Corp. (I) | 3,920 | 161,700 | ||||||||||||
NetApp, Inc. | 8,277 | 329,838 | ||||||||||||
Seagate Technology PLC | 7,965 | 335,565 | ||||||||||||
Western Digital Corp. | 8,048 | 716,835 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $48,885 | |||||||||||||
(Cost $48,885) | ||||||||||||||
Money market funds 0.1% | 48,885 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 48,885 | 48,885 | ||||||||||
Total investments (Cost $34,808,494)† 100.1% | $42,146,735 | |||||||||||||
Other assets and liabilities, net (0.1%) | ($23,782 | ) | ||||||||||||
Total net assets 100.0% | $42,122,953 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $34,810,074. Net unrealized appreciation aggregated to $7,336,661, of which $7,493,347 related to appreciated investment securities and $156,686 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $34,808,494) | $42,146,735 | ||||||||||||||||||||
Dividends and interest receivable | 7,258 | ||||||||||||||||||||
Receivable due from advisor | 2,270 | ||||||||||||||||||||
Other receivables and prepaid expenses | 3,259 | ||||||||||||||||||||
Total assets | 42,159,522 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 2,107 | ||||||||||||||||||||
Other liabilities and accrued expenses | 34,462 | ||||||||||||||||||||
Total liabilities | 36,569 | ||||||||||||||||||||
Net assets | $42,122,953 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $34,727,648 | ||||||||||||||||||||
Undistributed net investment income | 90,521 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (33,457 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 7,338,241 | ||||||||||||||||||||
Net assets | $42,122,953 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $42,122,953 | ||||||||||||||||||||
Shares outstanding | 1,200,000 | ||||||||||||||||||||
Net asset value per share | $35.10 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $456,422 | |||||||||||||||||||||||
Interest | 152 | |||||||||||||||||||||||
Total investment income | 456,574 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 127,663 | |||||||||||||||||||||||
Accounting and legal services fees | 6,400 | |||||||||||||||||||||||
Transfer agent fees | 14,433 | |||||||||||||||||||||||
Trustees' fees | 500 | |||||||||||||||||||||||
Printing and postage | 12,678 | |||||||||||||||||||||||
Professional fees | 61,949 | |||||||||||||||||||||||
Custodian fees | 38,350 | |||||||||||||||||||||||
Stock exchange listing fees | 19,089 | |||||||||||||||||||||||
Other | 2,125 | |||||||||||||||||||||||
Total expenses | 283,187 | |||||||||||||||||||||||
Less expense reductions | (141,259 | ) | ||||||||||||||||||||||
Net expenses | 141,928 | |||||||||||||||||||||||
Net investment income | 314,646 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (19,633 | ) | ||||||||||||||||||||||
Redemptions in-kind | 1,116,581 | |||||||||||||||||||||||
1,096,948 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 7,363,147 | |||||||||||||||||||||||
7,363,147 | ||||||||||||||||||||||||
Net realized and unrealized gain | 8,460,095 | |||||||||||||||||||||||
Increase in net assets from operations | $8,774,741 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $314,646 | $163,574 | |||||||||||||||||||||||||||
Net realized gain (loss) | 1,096,948 | (14,102 | ) | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 7,363,147 | (24,906 | ) | ||||||||||||||||||||||||||
Increase in net assets resulting from operations | 8,774,741 | 124,566 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (327,970 | ) | (60,405 | ) | |||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 20,338,821 | 18,039,532 | |||||||||||||||||||||||||||
Shares repurchased | (4,766,332 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 15,572,489 | 18,039,532 | |||||||||||||||||||||||||||
Total increase | 24,019,260 | 18,103,693 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 18,103,693 | — | |||||||||||||||||||||||||||
End of period | $42,122,953 | $18,103,693 | |||||||||||||||||||||||||||
Undistributed net investment income | $90,521 | $103,845 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 700,000 | — | |||||||||||||||||||||||||||
Shares issued | 650,000 | 700,000 | |||||||||||||||||||||||||||
Shares repurchased | (150,000 | ) | — | ||||||||||||||||||||||||||
End of period | 1,200,000 | 700,000 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.86 | $24.42 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.34 | 0.27 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 9.30 | 1.26 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 9.64 | 1.53 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.40 | ) | (0.09 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $35.10 | $25.86 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 37.66 | 6.26 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $42 | $18 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.00 | 1.18 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.11 | 1.75 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)7 | 18 | 11 |
1 | Period from 9-28-15 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Technology ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Technology Index. The John Hancock Dimensional Technology Index is a rules-based index of U.S. technology stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 30, 2016, the fund had a similar agreement that enabled it to participate in a $750 million unsecured committed line of credit. For the year ended April 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the year ended April 30, 2017 were $2,843.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $31,877 available to offset future net realized capital gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually.
The tax character of distributions for the year ended April 30, 2017 and the period ended April 30, 2016 was as follows:
April 30, 2017 | April 30, 2016 | |
Ordinary Income | $327,970 | $60,405 |
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $90,521 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $141,259.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 65% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $5,210,890 and $5,052,048, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $20,332,032 and $4,714,687, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Technology ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Technology ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period September 28, 2015 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMT |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
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A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Technology ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0615 | 800A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Materials ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
14 | Financial statements | |
17 | Financial highlights | |
18 | Notes to financial statements | |
22 | Auditor's report | |
23 | Tax information | |
24 | Trustees and Officers | |
28 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Materials Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Materials Index is designed to comprise securities in the materials sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. Stocks that compose the index include those that may be considered medium or smaller capitalization company stocks. The materials sector is composed of companies involved in areas such as chemicals, metals, paper products, containers and packaging, and construction materials. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Materials and Processing Index comprises securities classified in the materials sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.69 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities rose, outperforming both developed ex-U.S. markets and emerging markets.
The materials sector was up as well
With an exclusive focus on materials, the fund generated a positive return for the period and outperformed its benchmark, the Russell 1000 Materials and Processing Index.
Chemicals stocks boosted returns
The fund's exposure to chemicals stocks was a strong contributor during the period.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Materials Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
International Paper Company | 6.1 |
The Dow Chemical Company | 6.0 |
Monsanto Company | 5.2 |
Nucor Corp. | 5.2 |
E.I. du Pont de Nemours & Company | 4.8 |
Praxair, Inc. | 4.5 |
Newmont Mining Corp. | 4.2 |
Ecolab, Inc. | 4.0 |
LyondellBasell Industries NV, Class A | 3.9 |
Air Products & Chemicals, Inc. | 3.8 |
TOTAL | 47.7 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the one-year period, outperforming both developed ex-U.S. markets and emerging markets. The Russell 3000 Index was up 18.58%, as compared to a 10.92% return for the MSCI World ex-USA Investable Market Index and a gain of 18.42% for the MSCI Emerging Markets Investable Market Index.
How did the fund perform for the period?
The fund outperformed the Russell 1000 Materials and Processing Index, a cap-weighted benchmark we use as a proxy for the materials sector of the U.S. stock market.
Relative to most commercial measures of the materials sector, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
The benchmark's inclusion of some securities outside of the materials sector contributed positively to the fund's relative performance, as those securities generally underperformed. The fund's positions in chemical companies Albermarle Corp. and FMC Corp. contributed to performance. Arconic, Inc. was additive to returns in the aerospace industry. Conversely, Newmont Mining Corp. and CF Industries Holdings, Inc. detracted from relative performance.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Materials Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Materials and Processing Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations while emphasizing companies with higher profitability. The fund held approximately 50 names, and in absolute terms, the fund's largest industry exposures were to the chemicals and metals and mining segments of the materials sector.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Materials ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.69 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $12,461.
The John Hancock Dimensional Materials Index is designed to comprise securities in the materials sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. Stocks that compose the index may be considered medium or smaller capitalization company stocks. The materials sector is composed of companies involved in areas such as chemicals, metals, paper products, containers and packaging, and construction materials. The U.S. universe is defined as a free float-adjusted market capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Materials and Processing Index comprises securities classified in the materials sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 94 | 37.45% | 152 | 60.56% | ||||
25 - < 50 | 0 | 0.00% | 4 | 1.59% | ||||
50 - < 75 | 0 | 0.00% | 1 | 0.40% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 94 | 37.45% | 157 | 62.55% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,167.10 | $2.69 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 99.9% | $20,036,668 | |||||||||||||
(Cost $17,868,949) | ||||||||||||||
Energy 1.1% | 212,376 | |||||||||||||
Energy equipment and services 0.5% | ||||||||||||||
U.S. Silica Holdings, Inc. | 2,508 | 104,082 | ||||||||||||
Oil, gas and consumable fuels 0.6% | ||||||||||||||
CONSOL Energy, Inc. (I) | 7,134 | 108,294 | ||||||||||||
Industrials 3.1% | 631,258 | |||||||||||||
Aerospace and defense 2.8% | ||||||||||||||
Arconic, Inc. | 20,591 | 562,752 | ||||||||||||
Trading companies and distributors 0.3% | ||||||||||||||
Univar, Inc. (I) | 2,295 | 68,506 | ||||||||||||
Materials 95.7% | 19,193,034 | |||||||||||||
Chemicals 68.0% | ||||||||||||||
Air Products & Chemicals, Inc. | 5,418 | 761,229 | ||||||||||||
Albemarle Corp. | 4,798 | 522,550 | ||||||||||||
Ashland Global Holdings, Inc. | 2,806 | 346,541 | ||||||||||||
Axalta Coating Systems, Ltd. (I) | 11,196 | 351,219 | ||||||||||||
Cabot Corp. | 2,430 | 146,262 | ||||||||||||
Celanese Corp., Series A | 7,153 | 622,597 | ||||||||||||
CF Industries Holdings, Inc. | 11,191 | 299,247 | ||||||||||||
E.I. du Pont de Nemours & Company | 12,105 | 965,374 | ||||||||||||
Eastman Chemical Company | 8,536 | 680,746 | ||||||||||||
Ecolab, Inc. | 6,209 | 801,520 | ||||||||||||
FMC Corp. | 5,937 | 434,767 | ||||||||||||
Huntsman Corp. | 13,423 | 332,488 | ||||||||||||
International Flavors & Fragrances, Inc. | 3,070 | 425,471 | ||||||||||||
LyondellBasell Industries NV, Class A | 9,168 | 777,078 | ||||||||||||
Monsanto Company | 8,970 | 1,045,992 | ||||||||||||
NewMarket Corp. | 467 | 219,817 | ||||||||||||
Olin Corp. | 7,263 | 233,360 | ||||||||||||
Platform Specialty Products Corp. (I) | 8,027 | 113,743 | ||||||||||||
PPG Industries, Inc. | 6,918 | 759,873 | ||||||||||||
Praxair, Inc. | 7,179 | 897,231 | ||||||||||||
RPM International, Inc. | 5,166 | 271,525 | ||||||||||||
Sensient Technologies Corp. | 1,603 | 131,125 | ||||||||||||
The Chemours Company | 6,362 | 256,325 |
Shares | Value | |||||||||||||
Materials (continued) | ||||||||||||||
Chemicals (continued) | ||||||||||||||
The Dow Chemical Company | 19,248 | $1,208,774 | ||||||||||||
The Mosaic Company | 15,672 | 422,047 | ||||||||||||
The Scotts Miracle-Gro Company | 2,204 | 212,906 | ||||||||||||
Valvoline, Inc. | 916 | 20,381 | ||||||||||||
W.R. Grace & Company | 3,362 | 234,399 | ||||||||||||
Westlake Chemical Corp. | 2,293 | 142,739 | ||||||||||||
Containers and packaging 7.8% | ||||||||||||||
Avery Dennison Corp. | 4,237 | 352,561 | ||||||||||||
International Paper Company | 22,571 | 1,218,157 | ||||||||||||
Metals and mining 19.9% | ||||||||||||||
Alcoa Corp. | 7,556 | 254,864 | ||||||||||||
Freeport-McMoRan, Inc. (I) | 55,355 | 705,776 | ||||||||||||
Newmont Mining Corp. | 24,643 | 833,180 | ||||||||||||
Nucor Corp. | 16,850 | 1,033,411 | ||||||||||||
Reliance Steel & Aluminum Company | 3,429 | 270,274 | ||||||||||||
Royal Gold, Inc. | 3,182 | 224,904 | ||||||||||||
Southern Copper Corp. | 2,564 | 90,689 | ||||||||||||
Steel Dynamics, Inc. | 11,566 | 417,996 | ||||||||||||
United States Steel Corp. | 6,895 | 153,896 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $21,846 | |||||||||||||
(Cost $21,846) | ||||||||||||||
Money market funds 0.1% | 21,846 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 21,846 | 21,846 | ||||||||||
Total investments (Cost $17,890,795)† 100.0% | $20,058,514 | |||||||||||||
Other assets and liabilities, net 0.0% | ($7,945 | ) | ||||||||||||
Total net assets 100.0% | $20,050,569 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $17,890,795. Net unrealized appreciation aggregated to $2,167,719, of which $2,271,053 related to appreciated investment securities and $103,334 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $17,890,795) | $20,058,514 | ||||||||||||||||||||
Dividends and interest receivable | 13,910 | ||||||||||||||||||||
Other receivables and prepaid expenses | 7,834 | ||||||||||||||||||||
Total assets | 20,080,258 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 1,028 | ||||||||||||||||||||
Investment management fees | 428 | ||||||||||||||||||||
Other liabilities and accrued expenses | 28,233 | ||||||||||||||||||||
Total liabilities | 29,689 | ||||||||||||||||||||
Net assets | $20,050,569 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $17,938,752 | ||||||||||||||||||||
Undistributed net investment income | 65,954 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (121,856 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 2,167,719 | ||||||||||||||||||||
Net assets | $20,050,569 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $20,050,569 | ||||||||||||||||||||
Shares outstanding | 650,000 | ||||||||||||||||||||
Net asset value per share | $30.85 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $270,037 | |||||||||||||||||||||||
Interest | 79 | |||||||||||||||||||||||
Total investment income | 270,116 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 60,403 | |||||||||||||||||||||||
Accounting and legal services fees | 3,064 | |||||||||||||||||||||||
Transfer agent fees | 11,013 | |||||||||||||||||||||||
Trustees' fees | 131 | |||||||||||||||||||||||
Printing and postage | 14,701 | |||||||||||||||||||||||
Professional fees | 26,658 | |||||||||||||||||||||||
Custodian fees | 23,532 | |||||||||||||||||||||||
Stock exchange listing fees | 10,808 | |||||||||||||||||||||||
Other | 3,579 | |||||||||||||||||||||||
Total expenses | 153,889 | |||||||||||||||||||||||
Less expense reductions | (86,694 | ) | ||||||||||||||||||||||
Net expenses | 67,195 | |||||||||||||||||||||||
Net investment income | 202,921 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (121,869 | ) | ||||||||||||||||||||||
Redemptions in-kind | 323,611 | |||||||||||||||||||||||
201,742 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 1,842,421 | |||||||||||||||||||||||
1,842,421 | ||||||||||||||||||||||||
Net realized and unrealized gain | 2,044,163 | |||||||||||||||||||||||
Increase in net assets from operations | $2,247,084 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $202,921 | $7,326 | |||||||||||||||||||||||||||
Net realized gain | 201,742 | — | |||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 1,842,421 | 325,298 | |||||||||||||||||||||||||||
Increase in net assets resulting from operations | 2,247,084 | 332,624 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (144,934 | ) | — | ||||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 14,134,376 | 5,019,934 | |||||||||||||||||||||||||||
Shares repurchased | (1,538,515 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 12,595,861 | 5,019,934 | |||||||||||||||||||||||||||
Total increase | 14,698,011 | 5,352,558 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 5,352,558 | — | |||||||||||||||||||||||||||
End of period | $20,050,569 | $5,352,558 | |||||||||||||||||||||||||||
Undistributed net investment income | $65,954 | $7,453 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 200,000 | — | |||||||||||||||||||||||||||
Shares issued | 500,000 | 200,000 | |||||||||||||||||||||||||||
Shares repurchased | (50,000 | ) | — | ||||||||||||||||||||||||||
End of period | 650,000 | 200,000 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.76 | $25.10 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.44 | 0.04 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 3.97 | 1.62 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 4.41 | 1.66 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.32 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $30.85 | $26.76 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 16.58 | 6.63 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $20 | $5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.15 | 5.85 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.51 | 1.57 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)6 | 17 | 0 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Materials ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Materials Index. The John Hancock Dimensional Materials Index is a rules-based index of U.S. material stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. For the year ended April 30, 2017, the fund had no borrowings under the line of credit. Commitment fees for the year ended April 30, 2017 were $2,128.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $121,856 available to offset future net realized capital gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually. The tax character of distributions for the year ended April 30, 2017 was $144,934 of ordinary income.
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $65,954 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $86,694.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 84% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $2,277,275 and $2,293,551, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $14,133,135 and $1,471,802, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Materials ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Materials ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period March 28, 2016 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMA |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Materials ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0614 | 880A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Energy ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
14 | Financial statements | |
17 | Financial highlights | |
18 | Notes to financial statements | |
22 | Auditor's report | |
23 | Tax information | |
24 | Trustees and Officers | |
28 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Energy Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Energy Index is designed to comprise securities in the energy sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. Stocks that compose the index include those that may be considered medium or smaller capitalization company stocks. The index is reconstituted and rebalanced on a semiannual basis. The energy sector is composed of companies involved in areas such as the production, distribution, or sale of alternative fuels, coal, electricity, natural gas, nuclear power, oil, and other forms of energy. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Energy Index comprises securities classified in the energy sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.62 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities rose, outperforming both developed ex-U.S. markets and emerging markets.
The energy sector was up and the fund outperformed its benchmark
The fund generated a positive return for the period and led its benchmark, the Russell 1000 Energy Index.
The fund's emphasis on mid-cap stocks contributed
The fund's greater emphasis on mid-cap stocks contributed positively to relative performance, as mid caps outperformed large caps within the energy sector.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Energy Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
Marathon Petroleum Corp. | 6.5 |
Chevron Corp. | 6.0 |
Exxon Mobil Corp. | 5.6 |
Kinder Morgan, Inc. | 4.2 |
Schlumberger, Ltd. | 3.9 |
The Williams Companies, Inc. | 3.8 |
ConocoPhillips | 3.7 |
Valero Energy Corp. | 3.6 |
Phillips 66 | 3.4 |
Noble Energy, Inc. | 3.3 |
TOTAL | 44.0 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the period, outperforming both developed ex-U.S. and emerging markets. The Russell 3000 Index was up 18.58%, as compared with a 10.92% return for the MSCI World ex-USA Investable Market Index and a gain of 18.42% for the MSCI Emerging Markets Investable Market Index.
How did the fund perform for the period?
The fund outperformed the Russell 1000 Energy Index, a cap-weighted benchmark we use as a proxy for the energy sector of the U.S. stock market.
Relative to most commercial measures of the energy sector, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
The fund's greater emphasis on mid-cap stocks contributed positively to relative performance, as mid caps outperformed large caps within the energy sector. Conversely, the fund's greater emphasis on low relative price (value) stocks in the smallest market capitalization segment of the eligible market detracted from relative performance, as these stocks underperformed the overall index.
Contributors included Marathon Petroleum Corp., Exxon Mobil Corp., and Spectra Energy Corp.
Detractors included Chevron Corp., First Solar, Inc., and EQT Corp. We sold Spectra Energy prior to period end.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semi-annual process by which the list of stocks and their weights in the John Hancock Dimensional Energy Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Energy Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations, while emphasizing companies with higher profitability. The fund held approximately 55 names, and in absolute terms, the fund's largest industry exposure was to oil, gas, and consumable fuels.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Energy ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.62 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $11,171.
The John Hancock Dimensional Energy Index is designed to comprise securities in the energy sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. Stocks that compose the index include those that may be considered medium or smaller capitalization company stocks. The index is reconstituted and rebalanced on a semiannual basis. The energy sector is composed of companies involved in areas such as the production, distribution, or sale of alternative fuels, coal, electricity, natural gas, nuclear power, oil, and other forms of energy. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Energy Index comprises securities classified in the energy sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 90 | 35.86% | 161 | 64.14% | ||||
25 - < 50 | 0 | 0.00% | 0 | 0.00% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 90 | 35.86% | 161 | 64.14% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,005.50 | $2.49 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 100.0% | $16,445,777 | |||||||||||||
(Cost $16,438,888) | ||||||||||||||
Energy 98.2% | 16,152,625 | |||||||||||||
Energy equipment and services 18.3% | ||||||||||||||
Baker Hughes, Inc. | 7,316 | 434,351 | ||||||||||||
Core Laboratories NV | 1,233 | 136,641 | ||||||||||||
Halliburton Company | 5,954 | 273,170 | ||||||||||||
Helmerich & Payne, Inc. | 3,269 | 198,232 | ||||||||||||
Nabors Industries, Ltd. | 11,943 | 123,491 | ||||||||||||
National Oilwell Varco, Inc. | 9,681 | 338,545 | ||||||||||||
Patterson-UTI Energy, Inc. | 2,591 | 56,082 | ||||||||||||
RPC, Inc. | 1,247 | 22,658 | ||||||||||||
Schlumberger, Ltd. | 8,943 | 649,172 | ||||||||||||
TechnipFMC PLC (I) | 16,098 | 485,033 | ||||||||||||
Transocean, Ltd. (I) | 17,216 | 189,892 | ||||||||||||
Weatherford International PLC (I) | 18,462 | 106,526 | ||||||||||||
Oil, gas and consumable fuels 79.9% | ||||||||||||||
Anadarko Petroleum Corp. | 5,390 | 307,338 | ||||||||||||
Antero Resources Corp. (I) | 7,921 | 167,846 | ||||||||||||
Apache Corp. | 5,569 | 270,876 | ||||||||||||
Cabot Oil & Gas Corp. | 9,838 | 228,635 | ||||||||||||
Cheniere Energy Partners LP Holdings LLC | 708 | 18,181 | ||||||||||||
Cheniere Energy, Inc. (I) | 3,035 | 137,637 | ||||||||||||
Chesapeake Energy Corp. (I) | 11,610 | 61,069 | ||||||||||||
Chevron Corp. | 9,242 | 986,121 | ||||||||||||
Cimarex Energy Company | 1,429 | 166,736 | ||||||||||||
Concho Resources, Inc. (I) | 2,429 | 307,657 | ||||||||||||
ConocoPhillips | 12,659 | 606,493 | ||||||||||||
Continental Resources, Inc. (I) | 2,493 | 105,728 | ||||||||||||
Devon Energy Corp. | 7,278 | 287,408 | ||||||||||||
Diamondback Energy, Inc. (I) | 1,468 | 146,565 | ||||||||||||
Energen Corp. (I) | 2,459 | 127,843 | ||||||||||||
EOG Resources, Inc. | 4,941 | 457,043 | ||||||||||||
EQT Corp. | 6,820 | 396,515 | ||||||||||||
Exxon Mobil Corp. | 11,351 | 926,809 | ||||||||||||
Hess Corp. | 7,724 | 377,163 | ||||||||||||
HollyFrontier Corp. | 4,976 | 140,025 | ||||||||||||
Kinder Morgan, Inc. | 33,294 | 686,855 | ||||||||||||
Marathon Oil Corp. | 22,110 | 328,776 | ||||||||||||
Marathon Petroleum Corp. | 20,941 | 1,066,735 | ||||||||||||
Murphy Oil Corp. | 5,651 | 147,943 | ||||||||||||
Newfield Exploration Company (I) | 3,133 | 108,464 |
Shares | Value | |||||||||||||
Energy (continued) | ||||||||||||||
Oil, gas and consumable fuels (continued) | ||||||||||||||
Noble Energy, Inc. | 16,690 | $539,588 | ||||||||||||
Occidental Petroleum Corp. | 4,645 | 285,853 | ||||||||||||
Parsley Energy, Inc., Class A (I) | 4,373 | 130,272 | ||||||||||||
PDC Energy, Inc. (I) | 1,947 | 107,533 | ||||||||||||
Phillips 66 | 6,974 | 554,851 | ||||||||||||
Pioneer Natural Resources Company | 2,074 | 358,781 | ||||||||||||
QEP Resources, Inc. (I) | 7,170 | 84,678 | ||||||||||||
Range Resources Corp. | 5,937 | 157,271 | ||||||||||||
Rice Energy, Inc. (I) | 5,558 | 118,330 | ||||||||||||
RSP Permian, Inc. (I) | 1,946 | 74,045 | ||||||||||||
Southwestern Energy Company (I) | 9,146 | 68,686 | ||||||||||||
Targa Resources Corp. | 5,570 | 307,074 | ||||||||||||
Tesoro Corp. | 4,828 | 384,840 | ||||||||||||
The Williams Companies, Inc. | 20,201 | 618,757 | ||||||||||||
Valero Energy Corp. | 9,201 | 594,477 | ||||||||||||
Whiting Petroleum Corp. (I) | 8,620 | 71,546 | ||||||||||||
WPX Energy, Inc. (I) | 10,041 | 119,789 | ||||||||||||
Information technology 0.4% | 70,595 | |||||||||||||
Semiconductors and semiconductor equipment 0.4% | ||||||||||||||
First Solar, Inc. (I) | 2,389 | 70,595 | ||||||||||||
Utilities 1.4% | 222,557 | |||||||||||||
Electric utilities 1.4% | ||||||||||||||
OGE Energy Corp. | 6,399 | 222,557 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $18,570 | |||||||||||||
(Cost $18,570) | ||||||||||||||
Money market funds 0.1% | 18,570 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 18,570 | 18,570 | ||||||||||
Total investments (Cost $16,457,458)† 100.1% | $16,464,347 | |||||||||||||
Other assets and liabilities, net (0.1%) | ($9,787 | ) | ||||||||||||
Total net assets 100.0% | $16,454,560 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $16,457,976. Net unrealized appreciation aggregated to $6,371, of which $686,020 related to appreciated investment securities and $679,649 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $16,457,458) | $16,464,347 | ||||||||||||||||||||
Dividends and interest receivable | 11,209 | ||||||||||||||||||||
Receivable due from advisor | 111 | ||||||||||||||||||||
Other receivables and prepaid expenses | 7,840 | ||||||||||||||||||||
Total assets | 16,483,507 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 927 | ||||||||||||||||||||
Other liabilities and accrued expenses | 28,020 | ||||||||||||||||||||
Total liabilities | 28,947 | ||||||||||||||||||||
Net assets | $16,454,560 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $16,553,447 | ||||||||||||||||||||
Undistributed net investment income | 73,744 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (179,520 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 6,889 | ||||||||||||||||||||
Net assets | $16,454,560 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $16,454,560 | ||||||||||||||||||||
Shares outstanding | 600,000 | ||||||||||||||||||||
Net asset value per share | $27.42 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $260,693 | |||||||||||||||||||||||
Interest | 85 | |||||||||||||||||||||||
Total investment income | 260,778 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 59,708 | |||||||||||||||||||||||
Accounting and legal services fees | 3,005 | |||||||||||||||||||||||
Transfer agent fees | 11,013 | |||||||||||||||||||||||
Trustees' fees | 130 | |||||||||||||||||||||||
Printing and postage | 14,838 | |||||||||||||||||||||||
Professional fees | 26,556 | |||||||||||||||||||||||
Custodian fees | 23,535 | |||||||||||||||||||||||
Stock exchange listing fees | 10,807 | |||||||||||||||||||||||
Other | 3,577 | |||||||||||||||||||||||
Total expenses | 153,169 | |||||||||||||||||||||||
Less expense reductions | (86,747 | ) | ||||||||||||||||||||||
Net expenses | 66,422 | |||||||||||||||||||||||
Net investment income | 194,356 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (179,345 | ) | ||||||||||||||||||||||
Redemptions in-kind | 279,952 | |||||||||||||||||||||||
100,607 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | (470,595 | ) | ||||||||||||||||||||||
(470,595 | ) | |||||||||||||||||||||||
Net realized and unrealized loss | (369,988 | ) | ||||||||||||||||||||||
Decrease in net assets from operations | ($175,632 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $194,356 | $950 | |||||||||||||||||||||||||||
Net realized gain (loss) | 100,607 | (178 | ) | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (470,595 | ) | 477,484 | ||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (175,632 | ) | 478,256 | ||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (122,206 | ) | — | ||||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 12,736,058 | 4,967,584 | |||||||||||||||||||||||||||
Shares repurchased | (1,429,500 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 11,306,558 | 4,967,584 | |||||||||||||||||||||||||||
Total increase | 11,008,720 | 5,445,840 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 5,445,840 | — | |||||||||||||||||||||||||||
End of period | $16,454,560 | $5,445,840 | |||||||||||||||||||||||||||
Undistributed net investment income | $73,744 | $1,077 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 200,000 | — | |||||||||||||||||||||||||||
Shares issued | 450,000 | 200,000 | |||||||||||||||||||||||||||
Shares repurchased | (50,000 | ) | — | ||||||||||||||||||||||||||
End of period | 600,000 | 200,000 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.23 | $24.84 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.42 | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.06 | 4 | 2.39 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.48 | 2.39 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.29 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $27.42 | $27.23 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | 1.73 | 9.63 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $16 | $5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.15 | 5.86 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.46 | 0.20 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)8 | 30 | 2 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of issuances and repurchases of shares in relation to fluctuating market values of the investments of the fund. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Energy ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Energy Index. The John Hancock Dimensional Energy Index is a rules-based index of U.S. energy stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. For the year ended April 30, 2017, the fund had no borrowings under the line of credit. Commitment fees for the year ended April 30, 2017 were $2,127.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $179,002 available to offset future net realized capital gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually. The tax character of distributions for the year ended April 30, 2017 was $122,206 of ordinary income.
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $73,744 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $86,747.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 89% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $4,029,407 and $4,055,395, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $12,736,058 and $1,336,987, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Energy ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Energy ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period March 28, 2016 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHME |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Energy ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0616 | 900A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Consumer Staples ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
14 | Financial statements | |
17 | Financial highlights | |
18 | Notes to financial statements | |
22 | Auditor's report | |
23 | Tax information | |
24 | Trustees and Officers | |
28 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Consumer Staples Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Consumer Staples Index is designed to comprise securities in the consumer staples sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The consumer staples sector is composed of companies involved in areas such as the production, manufacture, distribution or sale of food, beverages, tobacco, household goods, or personal products. The U.S. universe is defined as a free float-adjusted market capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Consumer Staples Index tracks stocks in the consumer staples sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.65 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities rose, outperforming both developed ex-U.S. markets and emerging markets.
Consumer staples shares were up, but trailed the market
With an exclusive focus on consumer staples, the fund generated a positive return for the period, but trailed its benchmark, the Russell 1000 Consumer Staples Index.
The fund's emphasis on mid-cap stocks detracted
The fund's overweight allocations to mid-cap stocks detracted from returns relative to its benchmark.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Consumer Staples Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the period, outperforming both developed ex-U.S. and emerging markets. The Russell 3000 Index was up 18.58%, as compared to a 10.92% return for the MSCI World ex-USA Investable Market Index and a gain of 18.42% for the MSCI Emerging Markets Investable Market Index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
The Coca-Cola Company | 6.1 |
PepsiCo, Inc. | 5.9 |
The Procter & Gamble Company | 5.8 |
Wal-Mart Stores, Inc. | 5.2 |
Altria Group, Inc. | 5.1 |
Philip Morris International, Inc. | 4.9 |
CVS Health Corp. | 4.0 |
Costco Wholesale Corp. | 3.1 |
Walgreens Boots Alliance, Inc. | 2.8 |
Mondelez International, Inc., Class A | 2.5 |
TOTAL | 45.4 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
How did the fund perform for the period?
The fund underperformed the Russell 1000 Consumer Staples Index, a cap-weighted benchmark we use as a proxy for the consumer staples sector of the U.S. stock market.
Relative to most commercial measures of the consumer staples sector, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
The fund's greater emphasis on mid-cap stocks detracted from relative performance, as mid caps underperformed large caps for the period. Conversely, the fund's greater emphasis on low relative price (value) stocks contributed positively to relative performance, as value stocks outperformed growth in the consumer staples sector.
Contributors for the period included out-of-benchmark holdings in Costco Wholesale Corp. and Wal-Mart Stores, Inc., as well as The Coca-Cola Company. Detractors included Philip Morris International, Inc., Rite Aid Corp., and The Procter & Gamble Company.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Consumer Staples Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Consumer Staples Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations while emphasizing companies with higher profitability. The fund held approximately 50 names, and in absolute terms, the fund's largest industry exposures were to food products and food and consumer staples retailing.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Consumer Staples ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.65 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $10,685.
The John Hancock Dimensional Consumer Staples Index is designed to comprise securities in the consumer staples sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The consumer staples sector is composed of companies involved in areas such as the production, manufacture, distribution or sale of food, beverages, tobacco, household goods, or personal products.The U.S. universe is defined as a free float-adjusted market capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Consumer Staples Index tracks stocks in the consumer staples sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 82 | 32.67% | 169 | 67.33% | ||||
25 - < 50 | 0 | 0.00% | 0 | 0.00% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 82 | 32.67% | 169 | 67.33% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,049.90 | $2.54 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 99.9% | $17,197,074 | |||||||||||||
(Cost $17,153,850) | ||||||||||||||
Consumer staples 99.9% | 17,197,074 | |||||||||||||
Beverages 21.4% | ||||||||||||||
Brown-Forman Corp., Class A | 1,655 | 79,539 | ||||||||||||
Brown-Forman Corp., Class B | 3,556 | 168,270 | ||||||||||||
Constellation Brands, Inc., Class A | 1,634 | 281,930 | ||||||||||||
Dr. Pepper Snapple Group, Inc. | 4,095 | 375,307 | ||||||||||||
Molson Coors Brewing Company, Class B | 3,977 | 381,355 | ||||||||||||
Monster Beverage Corp. (I) | 7,179 | 325,783 | ||||||||||||
PepsiCo, Inc. | 9,034 | 1,023,372 | ||||||||||||
The Coca-Cola Company | 24,467 | 1,055,751 | ||||||||||||
Food and staples retailing 21.9% | ||||||||||||||
Casey's General Stores, Inc. | 1,068 | 119,691 | ||||||||||||
Costco Wholesale Corp. | 3,033 | 538,418 | ||||||||||||
CVS Health Corp. | 8,347 | 688,127 | ||||||||||||
Rite Aid Corp. (I) | 19,872 | 79,488 | ||||||||||||
Sysco Corp. | 4,951 | 261,759 | ||||||||||||
The Kroger Company | 12,748 | 377,978 | ||||||||||||
US Foods Holding Corp. (I) | 2,231 | 62,914 | ||||||||||||
Wal-Mart Stores, Inc. | 11,911 | 895,469 | ||||||||||||
Walgreens Boots Alliance, Inc. | 5,572 | 482,201 | ||||||||||||
Whole Foods Market, Inc. | 7,280 | 264,774 | ||||||||||||
Food products 28.8% | ||||||||||||||
Archer-Daniels-Midland Company | 5,577 | 255,148 | ||||||||||||
Blue Buffalo Pet Products, Inc. (I) | 1,654 | 40,771 | ||||||||||||
Bunge, Ltd. | 2,798 | 221,123 | ||||||||||||
Campbell Soup Company | 4,110 | 236,489 | ||||||||||||
Conagra Brands, Inc. | 7,140 | 276,889 | ||||||||||||
Flowers Foods, Inc. | 4,214 | 82,637 | ||||||||||||
General Mills, Inc. | 6,042 | 347,475 | ||||||||||||
Hormel Foods Corp. | 6,159 | 216,058 | ||||||||||||
Ingredion, Inc. | 1,691 | 209,380 | ||||||||||||
Kellogg Company | 4,494 | 319,074 | ||||||||||||
Lamb Weston Holdings, Inc. | 2,223 | 92,810 | ||||||||||||
Lancaster Colony Corp. | 460 | 57,914 | ||||||||||||
McCormick & Company, Inc. | 2,215 | 221,279 | ||||||||||||
Mead Johnson Nutrition Company | 2,857 | 253,473 | ||||||||||||
Mondelez International, Inc., Class A | 9,619 | 433,144 | ||||||||||||
Pilgrim's Pride Corp. | 1,574 | 40,861 | ||||||||||||
Pinnacle Foods, Inc. | 2,232 | 129,791 | ||||||||||||
Post Holdings, Inc. (I) | 1,367 | 115,088 |
Shares | Value | |||||||||||||
Consumer staples (continued) | ||||||||||||||
Food products (continued) | ||||||||||||||
Seaboard Corp. | 7 | $29,638 | ||||||||||||
Snyder's-Lance, Inc. | 1,300 | 45,838 | ||||||||||||
The Hain Celestial Group, Inc. (I) | 1,865 | 68,986 | ||||||||||||
The Hershey Company | 2,742 | 296,684 | ||||||||||||
The J.M. Smucker Company | 2,208 | 279,798 | ||||||||||||
The Kraft Heinz Company | 3,863 | 349,177 | ||||||||||||
TreeHouse Foods, Inc. (I) | 1,078 | 94,433 | ||||||||||||
Tyson Foods, Inc., Class A | 3,736 | 240,075 | ||||||||||||
Household products 13.6% | ||||||||||||||
Church & Dwight Company, Inc. | 5,560 | 275,387 | ||||||||||||
Colgate-Palmolive Company | 4,495 | 323,820 | ||||||||||||
Kimberly-Clark Corp. | 2,706 | 351,104 | ||||||||||||
Spectrum Brands Holdings, Inc. | 547 | 78,620 | ||||||||||||
The Clorox Company | 2,462 | 329,145 | ||||||||||||
The Procter & Gamble Company | 11,335 | 989,886 | ||||||||||||
Personal products 2.3% | ||||||||||||||
Coty, Inc., Class A | 1,156 | 20,635 | ||||||||||||
Edgewell Personal Care Company (I) | 1,302 | 93,080 | ||||||||||||
Herbalife, Ltd. (I) | 1,297 | 82,048 | ||||||||||||
The Estee Lauder Companies, Inc., Class A | 2,249 | 195,978 | ||||||||||||
Tobacco 11.9% | ||||||||||||||
Altria Group, Inc. | 12,250 | 879,304 | ||||||||||||
Philip Morris International, Inc. | 7,668 | 849,921 | ||||||||||||
Reynolds American, Inc. | 4,837 | 311,987 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $9,757 | |||||||||||||
(Cost $9,757) | ||||||||||||||
Money market funds 0.1% | 9,757 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 9,757 | 9,757 | ||||||||||
Total investments (Cost $17,163,607)† 100.0% | $17,206,831 | |||||||||||||
Other assets and liabilities, net 0.0% | $2,620 | |||||||||||||
Total net assets 100.0% | $17,209,451 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $17,163,817. Net unrealized appreciation aggregated to $43,014, of which $591,162 related to appreciated investment securities and $548,148 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $17,163,607) | $17,206,831 | ||||||||||||||||||||
Dividends and interest receivable | 23,241 | ||||||||||||||||||||
Receivable due from advisor | 296 | ||||||||||||||||||||
Other receivables and prepaid expenses | 7,813 | ||||||||||||||||||||
Total assets | 17,238,181 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 880 | ||||||||||||||||||||
Other liabilities and accrued expenses | 27,850 | ||||||||||||||||||||
Total liabilities | 28,730 | ||||||||||||||||||||
Net assets | $17,209,451 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $17,186,355 | ||||||||||||||||||||
Undistributed net investment income | 86,491 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (106,619 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 43,224 | ||||||||||||||||||||
Net assets | $17,209,451 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $17,209,451 | ||||||||||||||||||||
Shares outstanding | 650,000 | ||||||||||||||||||||
Net asset value per share | $26.48 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $302,923 | |||||||||||||||||||||||
Interest | 74 | |||||||||||||||||||||||
Total investment income | 302,997 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 57,692 | |||||||||||||||||||||||
Accounting and legal services fees | 2,894 | |||||||||||||||||||||||
Transfer agent fees | 11,013 | |||||||||||||||||||||||
Trustees' fees | 126 | |||||||||||||||||||||||
Printing and postage | 14,841 | |||||||||||||||||||||||
Professional fees | 26,379 | |||||||||||||||||||||||
Custodian fees | 23,486 | |||||||||||||||||||||||
Stock exchange listing fees | 10,808 | |||||||||||||||||||||||
Other | 3,577 | |||||||||||||||||||||||
Total expenses | 150,816 | |||||||||||||||||||||||
Less expense reductions | (86,635 | ) | ||||||||||||||||||||||
Net expenses | 64,181 | |||||||||||||||||||||||
Net investment income | 238,816 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (106,821 | ) | ||||||||||||||||||||||
Redemptions in-kind | 160,262 | |||||||||||||||||||||||
53,441 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 46,093 | |||||||||||||||||||||||
46,093 | ||||||||||||||||||||||||
Net realized and unrealized gain | 99,534 | |||||||||||||||||||||||
Increase in net assets from operations | $338,350 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $238,816 | $6,790 | |||||||||||||||||||||||||||
Net realized gain | 53,441 | — | |||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 46,093 | (2,869 | ) | ||||||||||||||||||||||||||
Increase in net assets resulting from operations | 338,350 | 3,921 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (159,742 | ) | — | ||||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 14,592,527 | 5,024,733 | |||||||||||||||||||||||||||
Shares repurchased | (2,590,338 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 12,002,189 | 5,024,733 | |||||||||||||||||||||||||||
Total increase | 12,180,797 | 5,028,654 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 5,028,654 | — | |||||||||||||||||||||||||||
End of period | $17,209,451 | $5,028,654 | |||||||||||||||||||||||||||
Undistributed net investment income | $86,491 | $6,915 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 200,000 | — | |||||||||||||||||||||||||||
Shares issued | 550,000 | 200,000 | |||||||||||||||||||||||||||
Shares repurchased | (100,000 | ) | — | ||||||||||||||||||||||||||
End of period | 650,000 | 200,000 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.14 | $25.12 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.48 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.21 | (0.01 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.69 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.35 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $26.48 | $25.14 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 6.75 | 0.08 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $17 | $5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.18 | 5.96 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.86 | 1.49 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)6 | 11 | 0 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Consumer Staples ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Consumer Staples Index. The John Hancock Dimensional Consumer Staples Index is a rules-based index of U.S. consumer staples stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. For the year ended April 30, 2017, the fund had no borrowings under the line of credit. Commitment fees for the year ended April 30, 2017 were $2,128.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $106,410 available to offset future net realized capital gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually. The tax character of distributions for the year ended April 30, 2017 was $159,742 of ordinary income.
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $86,491 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $86,635.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 87% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $1,459,690 and $1,473,642, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $14,573,060 and $2,485,289, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Consumer Staples ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Consumer Staples ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period March 28, 2016 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMS |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed
from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP.
Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the
John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no
representation as to the advisability of investing in, John Hancock Multifactor ETFs.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Funds, LLC n Member FINRA, SIPC 601 Congress Street n Boston, MA 02210-2805 800-225-5291 n jhinvestments.com | |
This report is for the information of the shareholders of John Hancock Multifactor Consumer Staples ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0617 | 920A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Industrials ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
18 | Financial statements | |
21 | Financial highlights | |
22 | Notes to financial statements | |
26 | Auditor's report | |
27 | Tax information | |
28 | Trustees and Officers | |
32 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Industrials Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Industrials Index comprises securities in the industrials sector within the U.S. universe, whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The industrials sector is composed of companies involved in areas such as aerospace and defense, construction and engineering, machinery, building products and equipment, road/rail/air/marine transportation and infrastructure, industrial trading and distribution, and related services. The U.S. universe is defined as a free float-adjusted market capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE),NYSE MKT LLC,NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Producer Durables Index comprises securities classified in the industrials sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.67 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities had positive performance for the one-year period, outperforming both developed ex-U.S. markets and emerging markets.
The industrials sector was up and ahead of the broad market
With an exclusive focus on industrials, the fund generated a positive return for the period and led its benchmark the Russell 1000 Producer Durables Index.
The fund's emphasis on smaller-cap stocks contributed
The fund's greater emphasis on smaller-cap stocks contributed positively to relative performance, as smaller caps outperformed large caps within the industrials sector.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Industrials Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
TOP 10 HOLDINGS AS OF 4/30/17 (%)
General Electric Company | 3.6 |
3M Company | 1.9 |
The Boeing Company | 1.8 |
Union Pacific Corp. | 1.7 |
United Technologies Corp. | 1.7 |
Honeywell International, Inc. | 1.6 |
United Continental Holdings, Inc. | 1.4 |
Fiserv, Inc. | 1.4 |
Cummins, Inc. | 1.4 |
CSX Corp. | 1.3 |
TOTAL | 17.8 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the period, outperforming both developed ex-U.S. and emerging markets. The Russell 3000 Index was up 18.58%, as compared with a 10.92% return for the MSCI World ex-USA Investable Market Index and a 18.42% return for the MSCI Emerging Markets Investable Market Index.
How did the fund perform for the period?
The fund outperformed the Russell 1000 Producer Durables Index, a cap-weighted benchmark we use as a proxy for the industrials sector of the U.S. stock market, for the period.
Relative to most commercial measures of the industrials sector, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
The fund's greater emphasis on smaller-cap stocks contributed positively to relative performance, as small caps outperformed large caps within the industrials sector during the period. At the security level, an underweight in General Electric Company, which underperformed in the period, and holdings in Accenture PLC and United Parcel Service, Inc. contributed to relative returns. Conversely, Boeing Company, Nielsen Holdings PLC, and Acuity Brands, Inc. detracted from returns.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Industrials Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Producer Durables Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations while emphasizing companies with higher profitability. The fund held approximately 180 names, and in absolute terms, the fund's largest industry exposures were to machinery, aerospace and defense, and information technology services.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Industrials ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.67 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $12,253.
The John Hancock Dimensional Industrials Index comprises securities in the industrials sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The industrials sector is composed of companies involved in areas such as aerospace and defense, construction and engineering, machinery, building products and equipment, road/rail/air/marine transportation and infrastructure, industrial trading and distribution, and related services. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Producer Durables Index comprises securities classified in the industrials sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 60 | 23.90% | 189 | 75.30% | ||||
25 - < 50 | 0 | 0.00% | 2 | 0.80% | ||||
50 - < 75 | 0 | 0.00% | 0 | 0.00% | ||||
75 - < 100 | 0 | 0.00% | 0 | 0.00% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 60 | 23.90% | 191 | 76.10% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,164.70 | $2.68 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 100.0% | $21,270,087 | |||||||||||||
(Cost $19,049,306) | ||||||||||||||
Health care 2.6% | 560,982 | |||||||||||||
Health care equipment and supplies 0.8% | ||||||||||||||
Danaher Corp. | 2,042 | 170,160 | ||||||||||||
Life sciences tools and services 1.8% | ||||||||||||||
Agilent Technologies, Inc. | 2,878 | 158,434 | ||||||||||||
Mettler-Toledo International, Inc. (I) | 300 | 154,026 | ||||||||||||
PerkinElmer, Inc. | 1,319 | 78,362 | ||||||||||||
Industrials 72.9% | 15,514,108 | |||||||||||||
Aerospace and defense 12.8% | ||||||||||||||
BWX Technologies, Inc. | 780 | 38,353 | ||||||||||||
Curtiss-Wright Corp. | 392 | 36,636 | ||||||||||||
General Dynamics Corp. | 1,004 | 194,565 | ||||||||||||
HEICO Corp. | 231 | 16,435 | ||||||||||||
HEICO Corp., Class A | 425 | 26,053 | ||||||||||||
Hexcel Corp. | 999 | 51,698 | ||||||||||||
Huntington Ingalls Industries, Inc. | 543 | 109,083 | ||||||||||||
L3 Technologies, Inc. | 836 | 143,600 | ||||||||||||
Lockheed Martin Corp. | 904 | 243,583 | ||||||||||||
Northrop Grumman Corp. | 1,014 | 249,403 | ||||||||||||
Orbital ATK, Inc. | 714 | 70,686 | ||||||||||||
Raytheon Company | 1,708 | 265,099 | ||||||||||||
Rockwell Collins, Inc. | 1,556 | 161,964 | ||||||||||||
Spirit AeroSystems Holdings, Inc., Class A | 1,579 | 90,256 | ||||||||||||
Teledyne Technologies, Inc. (I) | 362 | 48,808 | ||||||||||||
Textron, Inc. | 3,063 | 142,920 | ||||||||||||
The Boeing Company | 2,045 | 377,977 | ||||||||||||
TransDigm Group, Inc. | 445 | 109,795 | ||||||||||||
United Technologies Corp. | 2,988 | 355,542 | ||||||||||||
Air freight and logistics 3.5% | ||||||||||||||
C.H. Robinson Worldwide, Inc. | 1,611 | 117,120 | ||||||||||||
Expeditors International of Washington, Inc. | 1,926 | 108,029 | ||||||||||||
FedEx Corp. | 1,166 | 221,190 | ||||||||||||
United Parcel Service, Inc., Class B | 2,427 | 260,805 | ||||||||||||
XPO Logistics, Inc. (I) | 940 | 46,427 | ||||||||||||
Airlines 5.8% | ||||||||||||||
Alaska Air Group, Inc. | 1,739 | 147,972 | ||||||||||||
American Airlines Group, Inc. | 4,216 | 179,686 | ||||||||||||
Copa Holdings SA, Class A | 258 | 30,036 | ||||||||||||
Delta Air Lines, Inc. | 5,277 | 239,787 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Airlines (continued) | ||||||||||||||
JetBlue Airways Corp. (I) | 3,845 | $83,936 | ||||||||||||
Southwest Airlines Company | 4,037 | 226,960 | ||||||||||||
Spirit Airlines, Inc. (I) | 515 | 29,494 | ||||||||||||
United Continental Holdings, Inc. (I) | 4,358 | 305,975 | ||||||||||||
Building products 3.3% | ||||||||||||||
Allegion PLC | 901 | 70,855 | ||||||||||||
AO Smith Corp. | 1,436 | 77,372 | ||||||||||||
Fortune Brands Home & Security, Inc. | 1,551 | 98,861 | ||||||||||||
Johnson Controls International PLC | 4,473 | 185,943 | ||||||||||||
Lennox International, Inc. | 418 | 69,133 | ||||||||||||
Masco Corp. | 2,543 | 94,142 | ||||||||||||
Owens Corning | 1,332 | 81,052 | ||||||||||||
USG Corp. (I) | 974 | 29,512 | ||||||||||||
Commercial services and supplies 3.7% | ||||||||||||||
Cintas Corp. | 974 | 119,286 | ||||||||||||
Copart, Inc. (I) | 2,742 | 84,728 | ||||||||||||
Deluxe Corp. | 226 | 16,252 | ||||||||||||
KAR Auction Services, Inc. | 1,554 | 67,785 | ||||||||||||
Republic Services, Inc. | 3,102 | 195,395 | ||||||||||||
Rollins, Inc. | 1,022 | 39,684 | ||||||||||||
Stericycle, Inc. (I) | 772 | 65,882 | ||||||||||||
Waste Management, Inc. | 2,599 | 189,155 | ||||||||||||
Construction and engineering 1.7% | ||||||||||||||
AECOM (I) | 1,529 | 52,307 | ||||||||||||
Chicago Bridge & Iron Company NV | 1,022 | 30,742 | ||||||||||||
EMCOR Group, Inc. | 492 | 32,344 | ||||||||||||
Fluor Corp. | 1,806 | 92,684 | ||||||||||||
Jacobs Engineering Group, Inc. | 1,344 | 73,812 | ||||||||||||
Quanta Services, Inc. (I) | 2,043 | 72,404 | ||||||||||||
Electrical equipment 4.6% | ||||||||||||||
Acuity Brands, Inc. | 363 | 63,924 | ||||||||||||
AMETEK, Inc. | 2,378 | 136,022 | ||||||||||||
Eaton Corp. PLC | 2,715 | 205,363 | ||||||||||||
Emerson Electric Company | 3,656 | 220,384 | ||||||||||||
Hubbell, Inc. | 497 | 56,226 | ||||||||||||
Rockwell Automation, Inc. | 1,433 | 225,483 | ||||||||||||
Sensata Technologies Holding NV (I) | 1,808 | 74,453 | ||||||||||||
Industrial conglomerates 8.5% | ||||||||||||||
3M Company | 2,051 | 401,647 | ||||||||||||
Carlisle Companies, Inc. | 836 | 84,762 | ||||||||||||
General Electric Company | 26,238 | 760,640 | ||||||||||||
Honeywell International, Inc. | 2,602 | 341,226 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Industrial conglomerates (continued) | ||||||||||||||
Roper Technologies, Inc. | 986 | $215,638 | ||||||||||||
Machinery 17.4% | ||||||||||||||
AGCO Corp. | 1,000 | 63,990 | ||||||||||||
Allison Transmission Holdings, Inc. | 1,699 | 65,717 | ||||||||||||
Caterpillar, Inc. | 2,265 | 231,619 | ||||||||||||
Colfax Corp. (I) | 726 | 29,381 | ||||||||||||
Crane Company | 400 | 31,964 | ||||||||||||
Cummins, Inc. | 1,915 | 289,050 | ||||||||||||
Deere & Company | 1,945 | 217,081 | ||||||||||||
Donaldson Company, Inc. | 1,629 | 75,390 | ||||||||||||
Dover Corp. | 2,029 | 160,048 | ||||||||||||
Flowserve Corp. | 1,651 | 83,986 | ||||||||||||
Fortive Corp. | 2,471 | 156,315 | ||||||||||||
Graco, Inc. | 687 | 74,093 | ||||||||||||
IDEX Corp. | 858 | 89,884 | ||||||||||||
Illinois Tool Works, Inc. | 1,608 | 222,049 | ||||||||||||
Ingersoll-Rand PLC | 3,017 | 267,759 | ||||||||||||
ITT, Inc. | 1,081 | 45,543 | ||||||||||||
Lincoln Electric Holdings, Inc. | 727 | 64,725 | ||||||||||||
Nordson Corp. | 576 | 72,115 | ||||||||||||
Oshkosh Corp. | 618 | 42,883 | ||||||||||||
PACCAR, Inc. | 4,107 | 274,060 | ||||||||||||
Parker-Hannifin Corp. | 1,409 | 226,567 | ||||||||||||
Pentair PLC | 1,930 | 124,504 | ||||||||||||
Snap-on, Inc. | 650 | 108,895 | ||||||||||||
Stanley Black & Decker, Inc. | 1,795 | 244,389 | ||||||||||||
The Middleby Corp. (I) | 471 | 64,117 | ||||||||||||
The Toro Company | 1,070 | 69,464 | ||||||||||||
Trinity Industries, Inc. | 920 | 24,748 | ||||||||||||
WABCO Holdings, Inc. (I) | 616 | 73,224 | ||||||||||||
Wabtec Corp. | 980 | 82,212 | ||||||||||||
Woodward, Inc. | 508 | 34,376 | ||||||||||||
Xylem, Inc. | 1,879 | 96,599 | ||||||||||||
Marine 0.1% | ||||||||||||||
Kirby Corp. (I) | 283 | 19,980 | ||||||||||||
Professional services 2.3% | ||||||||||||||
ManpowerGroup, Inc. | 932 | 94,113 | ||||||||||||
Nielsen Holdings PLC | 2,988 | 122,896 | ||||||||||||
Robert Half International, Inc. | 1,361 | 62,674 | ||||||||||||
The Dun & Bradstreet Corp. | 409 | 44,830 | ||||||||||||
TransUnion (I) | 802 | 32,104 | ||||||||||||
Verisk Analytics, Inc. (I) | 1,611 | 133,407 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Road and rail 6.1% | ||||||||||||||
AMERCO | 87 | $32,578 | ||||||||||||
CSX Corp. | 5,632 | 286,331 | ||||||||||||
Genesee & Wyoming, Inc., Class A (I) | 576 | 39,030 | ||||||||||||
J.B. Hunt Transport Services, Inc. | 1,073 | 96,205 | ||||||||||||
Kansas City Southern | 1,208 | 108,805 | ||||||||||||
Landstar System, Inc. | 227 | 19,397 | ||||||||||||
Norfolk Southern Corp. | 1,882 | 221,116 | ||||||||||||
Old Dominion Freight Line, Inc. | 741 | 65,593 | ||||||||||||
Ryder System, Inc. | 936 | 63,564 | ||||||||||||
Union Pacific Corp. | 3,248 | 363,646 | ||||||||||||
Trading companies and distributors 2.8% | ||||||||||||||
Air Lease Corp. | 1,116 | 42,564 | ||||||||||||
Fastenal Company | 3,026 | 135,202 | ||||||||||||
HD Supply Holdings, Inc. (I) | 1,866 | 75,200 | ||||||||||||
MSC Industrial Direct Company, Inc., Class A | 578 | 51,748 | ||||||||||||
United Rentals, Inc. (I) | 1,135 | 124,464 | ||||||||||||
W.W. Grainger, Inc. | 635 | 122,365 | ||||||||||||
Watsco, Inc. | 264 | 36,643 | ||||||||||||
Transportation infrastructure 0.3% | ||||||||||||||
Macquarie Infrastructure Corp. | 712 | 57,935 | ||||||||||||
Information technology 17.4% | 3,703,123 | |||||||||||||
Electronic equipment, instruments and components 5.6% | ||||||||||||||
Amphenol Corp., Class A | 3,117 | 225,390 | ||||||||||||
Arrow Electronics, Inc. (I) | 1,352 | 95,316 | ||||||||||||
Avnet, Inc. | 1,692 | 65,463 | ||||||||||||
Cognex Corp. | 518 | 44,206 | ||||||||||||
Coherent, Inc. (I) | 101 | 21,776 | ||||||||||||
Flex, Ltd. (I) | 7,868 | 121,643 | ||||||||||||
FLIR Systems, Inc. | 1,500 | 55,095 | ||||||||||||
IPG Photonics Corp. (I) | 339 | 42,822 | ||||||||||||
Jabil Circuit, Inc. | 2,697 | 78,267 | ||||||||||||
Keysight Technologies, Inc. (I) | 1,579 | 59,102 | ||||||||||||
Littelfuse, Inc. | 113 | 17,419 | ||||||||||||
National Instruments Corp. | 1,015 | 35,434 | ||||||||||||
TE Connectivity, Ltd. | 2,484 | 192,187 | ||||||||||||
Trimble, Inc. (I) | 2,307 | 81,737 | ||||||||||||
Universal Display Corp. | 150 | 13,403 | ||||||||||||
Zebra Technologies Corp., Class A (I) | 467 | 44,024 | ||||||||||||
Internet software and services 0.3% | ||||||||||||||
CoStar Group, Inc. (I) | 240 | 57,814 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
IT services 11.2% | ||||||||||||||
Accenture PLC, Class A | 2,218 | $269,043 | ||||||||||||
Alliance Data Systems Corp. | 641 | 160,013 | ||||||||||||
Automatic Data Processing, Inc. | 2,064 | 215,667 | ||||||||||||
Booz Allen Hamilton Holding Corp. | 1,443 | 51,847 | ||||||||||||
Broadridge Financial Solutions, Inc. | 1,428 | 99,874 | ||||||||||||
CoreLogic, Inc. (I) | 733 | 31,328 | ||||||||||||
Euronet Worldwide, Inc. (I) | 437 | 36,105 | ||||||||||||
Fidelity National Information Services, Inc. | 2,146 | 180,672 | ||||||||||||
First Data Corp., Class A (I) | 2,712 | 42,361 | ||||||||||||
Fiserv, Inc. (I) | 2,444 | 291,178 | ||||||||||||
FleetCor Technologies, Inc. (I) | 762 | 107,549 | ||||||||||||
Genpact, Ltd. | 1,899 | 46,374 | ||||||||||||
Global Payments, Inc. | 1,425 | 116,508 | ||||||||||||
Jack Henry & Associates, Inc. | 970 | 94,012 | ||||||||||||
MAXIMUS, Inc. | 643 | 39,217 | ||||||||||||
Paychex, Inc. | 3,119 | 184,894 | ||||||||||||
PayPal Holdings, Inc. (I) | 3,498 | 166,925 | ||||||||||||
Total System Services, Inc. | 2,017 | 115,594 | ||||||||||||
Vantiv, Inc., Class A (I) | 1,636 | 101,497 | ||||||||||||
WEX, Inc. (I) | 263 | 26,684 | ||||||||||||
Technology hardware, storage and peripherals 0.3% | ||||||||||||||
Xerox Corp. | 10,387 | 74,683 | ||||||||||||
Materials 6.8% | 1,436,003 | |||||||||||||
Chemicals 1.1% | ||||||||||||||
The Sherwin-Williams Company | 448 | 149,937 | ||||||||||||
The Valspar Corp. | 818 | 91,976 | ||||||||||||
Construction materials 1.7% | ||||||||||||||
Eagle Materials, Inc. | 429 | 41,171 | ||||||||||||
Martin Marietta Materials, Inc. | 653 | 143,784 | ||||||||||||
Vulcan Materials Company | 1,368 | 165,364 | ||||||||||||
Containers and packaging 4.0% | ||||||||||||||
AptarGroup, Inc. | 788 | 63,276 | ||||||||||||
Ball Corp. | 1,549 | 119,103 | ||||||||||||
Bemis Company, Inc. | 1,340 | 60,206 | ||||||||||||
Berry Global Group, Inc. (I) | 1,138 | 56,900 | ||||||||||||
Crown Holdings, Inc. (I) | 1,406 | 78,863 | ||||||||||||
Graphic Packaging Holding Company | 4,180 | 56,764 | ||||||||||||
Packaging Corp. of America | 1,257 | 124,166 | ||||||||||||
Sealed Air Corp. | 1,943 | 85,531 | ||||||||||||
Sonoco Products Company | 1,425 | 74,542 | ||||||||||||
WestRock Company | 2,323 | 124,420 |
Shares | Value | |||||||||||||
Utilities 0.3% | $55,871 | |||||||||||||
Multi-utilities 0.3% | ||||||||||||||
MDU Resources Group, Inc. | 2,077 | 55,871 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $25,118 | |||||||||||||
(Cost $25,118) | ||||||||||||||
Money market funds 0.1% | 25,118 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 25,118 | 25,118 | ||||||||||
Total investments (Cost $19,074,424)† 100.1% | $21,295,205 | |||||||||||||
Other assets and liabilities, net (0.1%) | ($13,216 | ) | ||||||||||||
Total net assets 100.0% | $21,281,989 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $19,074,446. Net unrealized appreciation aggregated to $2,220,759, of which $2,445,379 related to appreciated investment securities and $224,620 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $19,074,424) | $21,295,205 | ||||||||||||||||||||
Dividends and interest receivable | 10,461 | ||||||||||||||||||||
Other receivables and prepaid expenses | 7,846 | ||||||||||||||||||||
Total assets | 21,313,512 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 1,087 | ||||||||||||||||||||
Investment management fees | 1,943 | ||||||||||||||||||||
Other liabilities and accrued expenses | 28,493 | ||||||||||||||||||||
Total liabilities | 31,523 | ||||||||||||||||||||
Net assets | $21,281,989 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $19,091,395 | ||||||||||||||||||||
Undistributed net investment income | 47,291 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (77,478 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 2,220,781 | ||||||||||||||||||||
Net assets | $21,281,989 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $21,281,989 | ||||||||||||||||||||
Shares outstanding | 700,000 | ||||||||||||||||||||
Net asset value per share | $30.40 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $246,302 | |||||||||||||||||||||||
Interest | 99 | |||||||||||||||||||||||
Total investment income | 246,401 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 63,659 | |||||||||||||||||||||||
Accounting and legal services fees | 3,211 | |||||||||||||||||||||||
Transfer agent fees | 11,013 | |||||||||||||||||||||||
Trustees' fees | 132 | |||||||||||||||||||||||
Printing and postage | 14,855 | |||||||||||||||||||||||
Professional fees | 26,968 | |||||||||||||||||||||||
Custodian fees | 23,605 | |||||||||||||||||||||||
Stock exchange listing fees | 10,722 | |||||||||||||||||||||||
Other | 3,582 | |||||||||||||||||||||||
Total expenses | 157,747 | |||||||||||||||||||||||
Less expense reductions | (86,934 | ) | ||||||||||||||||||||||
Net expenses | 70,813 | |||||||||||||||||||||||
Net investment income | 175,588 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (75,887 | ) | ||||||||||||||||||||||
Redemptions in-kind | 417,017 | |||||||||||||||||||||||
341,130 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 2,148,911 | |||||||||||||||||||||||
2,148,911 | ||||||||||||||||||||||||
Net realized and unrealized gain | 2,490,041 | |||||||||||||||||||||||
Increase in net assets from operations | $2,665,629 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $175,588 | $2,294 | |||||||||||||||||||||||||||
Net realized gain (loss) | 341,130 | (1,756 | ) | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 2,148,911 | 71,870 | |||||||||||||||||||||||||||
Increase in net assets resulting from operations | 2,665,629 | 72,408 | |||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (131,217 | ) | — | ||||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 16,488,222 | 5,002,325 | |||||||||||||||||||||||||||
Shares repurchased | (2,815,378 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 13,672,844 | 5,002,325 | |||||||||||||||||||||||||||
Total increase | 16,207,256 | 5,074,733 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 5,074,733 | — | |||||||||||||||||||||||||||
End of period | $21,281,989 | $5,074,733 | |||||||||||||||||||||||||||
Undistributed net investment income | $47,291 | $2,419 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 200,000 | — | |||||||||||||||||||||||||||
Shares issued | 600,000 | 200,000 | |||||||||||||||||||||||||||
Shares repurchased | (100,000 | ) | — | ||||||||||||||||||||||||||
End of period | 700,000 | 200,000 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.37 | $25.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.35 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 4.94 | 0.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 5.29 | 0.36 | ||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.26 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $30.40 | $25.37 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 20.95 | 1.45 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $21 | $5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.12 | 5.95 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.24 | 0.50 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)6 | 8 | — | 7 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Less than 1%. |
Note 1 — Organization
John Hancock Multifactor Industrials ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Industrials Index. The John Hancock Dimensional Industrials Index is a rules-based index of U.S. industrial stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. For the year ended April 30, 2017, the fund had no borrowings under the line of credit. Commitment fees for the year ended April 30, 2017 were $2,130.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $77,456 available to offset future net realized capital gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually. The tax character of distributions for the year ended April 30, 2017 was $131,217 of ordinary income.
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $47,291 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $86,934.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 80% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $1,104,187 and $1,191,733, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $16,487,339 and $2,720,218, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Industrials ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Industrials ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period March 28, 2016 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-DIV in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMI |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Industrials ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0621 | 940A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before plateauing in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Utilities ETF
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
9 | Premium/discount analysis | |
10 | Your expenses | |
12 | Fund's investments | |
14 | Financial statements | |
17 | Financial highlights | |
18 | Notes to financial statements | |
22 | Auditor's report | |
23 | Tax information | |
24 | Trustees and Officers | |
28 | More information |
INVESTMENT OBJECTIVE
The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Utilities Index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/17 (%)
Market performance is determined using the bid/ask midpoint at 4 P.M. Eastern time, when the NAV is typically calculated. Your returns may differ if you traded shares at other times during the day. The NAV is calculated by dividing the total value of all the securities in the fund's portfolio plus cash, interest, receivables, and other assets, minus any liabilities, by the number of fund shares outstanding.
The John Hancock Dimensional Utilities Index comprises securities in the utility sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The utilities sector is composed of companies involved in areas such as the provision of gas, electric and water power, energy trading or the provision of related infrastructure or services. The U.S. universe is defined as a free float-adjusted market capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Utilities Index tracks stocks in the utilities sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund 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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.69 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Shares will fluctuate in value and, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com/etf or call 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Stocks ended the period higher with reduced market volatility
Most U.S. equities had positive performance for the one-year period, outperforming both developed ex-U.S. markets and emerging markets.
The fund was up and ahead of the benchmark
With an exclusive focus on utilities, the fund generated a positive return for the period and led its benchmark, the Russell 1000 Utilities Index.
The fund's emphasis on utilities-only stocks contributed
The benchmark's inclusion of telecommunications securities outside of the utilities sector contributed positively to the fund's relative performance, as those securities generally underperformed.
INDUSTRY COMPOSITION AS OF 4/30/17 (%)
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Companies in the utilities sector may be affected by general economic conditions, supply and demand, financing and operating costs, rate caps, interest rates, liabilities arising from governmental or civil actions, consumer confidence and spending, competition, resource conservation and depletion, manmade or natural disasters, geopolitical events, and environmental and other government regulations. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
Lukas J. Smart, CFA
Portfolio Manager
Dimensional Fund Advisors LP
Would you tell us about your investment philosophy and how it drives the composition of the exchange-traded fund (ETF)?
At Dimensional Fund Advisors LP, we have identified four characteristics, or dimensions, of expected returns—the overall market, company size, relative price, and profitability—that academic research has shown to account for most of the variation in historical asset returns and that we believe will account for most of the variation in future returns.
The overall market dimension reflects the excess return over the risk-free rate that market participants demand for investing in a broadly diversified portfolio of equity securities without any style or market capitalization bias. That premium is called the equity premium.
The company size dimension reflects the excess return that investors demand for investing in small-capitalization stocks relative to large-capitalization stocks. The premium associated with this dimension is the small-cap, or size, premium.
The relative price dimension reflects the excess return that investors expect from investing in low relative price, or value, stocks (as measured, for instance, by their price-to-book ratios) in comparison with high relative price, or growth, stocks. The premium associated with this dimension is the value premium.
Finally, the profitability dimension provides a way to discern the expected returns of companies with similar price-driven characteristics. Our research shows that if two companies trade at the same relative price, the one with higher profitability should have a higher expected return over time. The premium associated with this dimension is called the profitability premium.
Relative to a cap-weighted measure of the market, we believe that incorporating these dimensions of expected returns into an investment strategy offers the potential for outperformance over time, and an ETF is a vehicle well suited to our systematic and transparent investment approach.
The custom index we developed, the John Hancock Dimensional Utilities Index, is designed to capture these dimensions over time, and the fund is, in turn, designed to track the custom index.
Can you briefly describe the market environment during the 12-month period ended April 30, 2017?
The U.S. market had positive performance for the period, outperforming both developed ex-U.S. and emerging markets. The Russell 3000 Index was up 18.58%, as compared with a 10.92% return for the MSCI World ex-USA Investable Market Index and a 18.42% return for the MSCI Emerging Markets Investable Market Index.
How did the fund perform for the period?
The fund widely outperformed the Russell 1000 Utilities Index, a cap-weighted benchmark we use
TOP 10 HOLDINGS AS OF 4/30/17 (%)
Edison International | 5.6 |
Consolidated Edison, Inc. | 5.3 |
PPL Corp. | 5.2 |
Exelon Corp. | 4.7 |
Xcel Energy, Inc. | 4.5 |
Dominion Resources, Inc. | 4.5 |
Public Service Enterprise Group, Inc. | 4.3 |
American Electric Power Company, Inc. | 4.0 |
NextEra Energy, Inc. | 4.0 |
Duke Energy Corp. | 3.4 |
TOTAL | 45.5 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Relative to most commercial measures of the utilities sector, our approach generally results in the fund maintaining greater allocations to securities of smaller-cap issuers and to securities trading at lower prices relative to their book values. In the weightings of individual positions, we also place greater emphasis on companies that have demonstrated higher profitability.
The fund holds companies involved in the provision of gas, electric, and water power as well as energy trading or the provision of related infrastructure or services. The fund excludes stocks within telecommunication services, a sector that is included in the benchmark.
The underperformance of telecommunications securities held by the benchmark contributed positively to the fund's relative performance for the period. Conversely, the fund's greater emphasis on the lowest relative price (deep value) stocks detracted from relative performance as that segment of the market underperformed within the utilities sector.
Contributors included in an out-of-benchmark holding in ONEOK, Inc., as well as CenterPoint Energy, Inc. and Edison International. Detractors included Public Service Enterprise Group, Inc., Calpine Corp., and FirstEnergy Corp.
Were there changes to the composition of the fund?
Changes were made to the fund as a result of regularly scheduled reconstitutions during the period, the semiannual process by which the list of stocks and their weights in the John Hancock Dimensional Utilities Index are updated, as well as any unscheduled changes to the index driven by company events. Reconstitution ensures that both the fund and the custom index that it tracks maintain their intended exposure to the dimensions of expected returns. For this period, we
increased the fund's exposure to electric utility companies, while decreasing its exposure to multi-utilities.
How was the fund positioned at the close of the period?
Compared with the Russell 1000 Utilities Index, the fund ended the period with greater weights in low relative price stocks and in equities with smaller market capitalizations while emphasizing companies with higher profitability. The fund held approximately 40 names, and in absolute terms, the fund's largest industry exposure was to the electric utilities segment of the utilities sector.
MANAGED BY
Lukas J. Smart, CFA On the fund since inception Investing since 2003 | |
Joel P. Schneider On the fund since inception Investing since 2011 |
This chart shows what happened to a hypothetical $10,000 investment in John Hancock Multifactor Utilities ETF for periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
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 prospectus for the fund and may differ from those disclosed in the Financial highlights table in this report. The fee waivers and/or expense limitations are contracted through 8-31-17. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Gross (%)* | 0.69 |
Net (%)* | 0.50 |
*Expenses have been estimated for the first year of operations.
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for the fund.
The value of a $10,000 investment calculated at market value from inception through period end would be $11,050.
The John Hancock Dimensional Utilities Index is designed to comprise securities in the utilities sector within the U.S. universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. The index is reconstituted and rebalanced on a semiannual basis. The U.S. universe is defined as a free float-adjusted market-capitalization-weighted portfolio of U.S. operating companies listed on the New York Stock Exchange (NYSE), NYSE MKT LLC, NASDAQ Global Market, or such other securities exchanges deemed appropriate in accordance with the rules-based methodology that is maintained by Dimensional Fund Advisors LP.
The Russell 1000 Utilities Index tracks stocks in the utilities sector of the Russell 1000 Index.
It is not possible to invest directly in an index. Unlike an index, the fund's total returns are reduced by operating expenses and management fees.
The chart does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 31 | 12.35% | 218 | 86.85% | ||||
25 - < 50 | 0 | 0.00% | 0 | 0.00% | ||||
50 - < 75 | 0 | 0.00% | 1 | 0.40% | ||||
75 - < 100 | 0 | 0.00% | 1 | 0.40% | ||||
100 or Above | 0 | 0.00% | 0 | 0.00% | ||||
Total | 31 | 12.35% | 220 | 87.65% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 11-1-2016 | Ending value on 4-30-2017 | Expenses paid during period ended 4-30-20171 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,071.30 | $2.57 | 0.50% |
Hypothetical example for comparison purposes | 1,000.00 | 1,022.30 | 2.51 | 0.50% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 100.0% | $17,554,360 | |||||||||||||
(Cost $16,879,540) | ||||||||||||||
Energy 2.0% | 339,492 | |||||||||||||
Oil, gas and consumable fuels 2.0% | ||||||||||||||
ONEOK, Inc. | 6,453 | 339,492 | ||||||||||||
Utilities 98.0% | 17,214,868 | |||||||||||||
Electric utilities 52.4% | ||||||||||||||
Alliant Energy Corp. | 5,872 | 230,887 | ||||||||||||
American Electric Power Company, Inc. | 10,350 | 702,041 | ||||||||||||
Duke Energy Corp. | 7,171 | 591,608 | ||||||||||||
Edison International | 12,230 | 978,033 | ||||||||||||
Entergy Corp. | 5,575 | 425,150 | ||||||||||||
Eversource Energy | 8,978 | 533,293 | ||||||||||||
Exelon Corp. | 23,798 | 824,125 | ||||||||||||
FirstEnergy Corp. | 13,751 | 411,705 | ||||||||||||
Great Plains Energy, Inc. | 5,689 | 168,338 | ||||||||||||
IDACORP, Inc. | 1,366 | 115,454 | ||||||||||||
NextEra Energy, Inc. | 5,232 | 698,786 | ||||||||||||
PG&E Corp. | 8,736 | 585,749 | ||||||||||||
Pinnacle West Capital Corp. | 4,270 | 363,334 | ||||||||||||
Portland General Electric Company | 3,116 | 141,279 | ||||||||||||
PPL Corp. | 23,743 | 904,846 | ||||||||||||
The Southern Company | 10,357 | 515,779 | ||||||||||||
Westar Energy, Inc. | 4,409 | 229,400 | ||||||||||||
Xcel Energy, Inc. | 17,474 | 787,203 | ||||||||||||
Gas utilities 5.8% | ||||||||||||||
Atmos Energy Corp. | 3,222 | 261,046 | ||||||||||||
National Fuel Gas Company | 1,716 | 95,032 | ||||||||||||
ONE Gas, Inc. | 1,588 | 109,302 | ||||||||||||
Southwest Gas Holdings, Inc. | 1,860 | 155,794 | ||||||||||||
UGI Corp. | 5,655 | 283,655 | ||||||||||||
WGL Holdings, Inc. | 1,430 | 117,918 | ||||||||||||
Independent power and renewable electricity producers 2.9% | ||||||||||||||
AES Corp. | 21,404 | 242,079 | ||||||||||||
Calpine Corp. (I) | 10,425 | 106,335 | ||||||||||||
NRG Energy, Inc. | 9,718 | 164,234 | ||||||||||||
Multi-utilities 34.2% | ||||||||||||||
Ameren Corp. | 9,623 | 526,282 | ||||||||||||
Black Hills Corp. | 973 | 66,183 | ||||||||||||
CenterPoint Energy, Inc. | 13,496 | 385,041 | ||||||||||||
CMS Energy Corp. | 8,656 | 392,982 |
Shares | Value | |||||||||||||
Utilities (continued) | ||||||||||||||
Multi-utilities (continued) | ||||||||||||||
Consolidated Edison, Inc. | 11,757 | $932,095 | ||||||||||||
Dominion Resources, Inc. | 10,106 | 782,508 | ||||||||||||
DTE Energy Company | 5,164 | 540,103 | ||||||||||||
NiSource, Inc. | 11,575 | 280,694 | ||||||||||||
Public Service Enterprise Group, Inc. | 17,074 | 752,110 | ||||||||||||
SCANA Corp. | 4,566 | 302,771 | ||||||||||||
Sempra Energy | 2,734 | 308,997 | ||||||||||||
Vectren Corp. | 2,872 | 170,654 | ||||||||||||
WEC Energy Group, Inc. | 9,152 | 553,879 | ||||||||||||
Water utilities 2.7% | ||||||||||||||
American Water Works Company, Inc. | 4,504 | 359,239 | ||||||||||||
Aqua America, Inc. | 3,594 | 118,925 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.1% | $25,905 | |||||||||||||
(Cost $25,905) | ||||||||||||||
Money market funds 0.1% | 25,905 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 25,905 | 25,905 | ||||||||||
Total investments (Cost $16,905,445)† 100.1% | $17,580,265 | |||||||||||||
Other assets and liabilities, net (0.1%) | ($18,550 | ) | ||||||||||||
Total net assets 100.0% | $17,561,715 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
(I) | Non-income producing security. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $16,907,360. Net unrealized appreciation aggregated to $672,905, of which $817,525 related to appreciated investment securities and $144,620 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $16,905,445) | $17,580,265 | ||||||||||||||||||||
Dividends and interest receivable | 20,304 | ||||||||||||||||||||
Other receivables and prepaid expenses | 7,814 | ||||||||||||||||||||
Total assets | 17,608,383 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable for investments purchased | 15,625 | ||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 880 | ||||||||||||||||||||
Investment management fees | 2,321 | ||||||||||||||||||||
Other liabilities and accrued expenses | 27,842 | ||||||||||||||||||||
Total liabilities | 46,668 | ||||||||||||||||||||
Net assets | $17,561,715 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $16,856,321 | ||||||||||||||||||||
Undistributed net investment income | 122,950 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (92,376 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 674,820 | ||||||||||||||||||||
Net assets | $17,561,715 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $17,561,715 | ||||||||||||||||||||
Shares outstanding | 650,000 | ||||||||||||||||||||
Net asset value per share | $27.02 |
STATEMENT OF OPERATIONS For the year ended 4-30-17
Investment income | ||||||||||||||||||||||||
Dividends | $403,346 | |||||||||||||||||||||||
Interest | 71 | |||||||||||||||||||||||
Total investment income | 403,417 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 55,450 | |||||||||||||||||||||||
Accounting and legal services fees | 2,792 | |||||||||||||||||||||||
Transfer agent fees | 11,013 | |||||||||||||||||||||||
Trustees' fees | 125 | |||||||||||||||||||||||
Printing and postage | 14,812 | |||||||||||||||||||||||
Professional fees | 23,970 | |||||||||||||||||||||||
Custodian fees | 23,434 | |||||||||||||||||||||||
Stock exchange listing fees | 10,808 | |||||||||||||||||||||||
Other | 3,572 | |||||||||||||||||||||||
Total expenses | 145,976 | |||||||||||||||||||||||
Less expense reductions | (84,285 | ) | ||||||||||||||||||||||
Net expenses | 61,691 | |||||||||||||||||||||||
Net investment income | 341,726 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | (92,376 | ) | ||||||||||||||||||||||
Redemptions in-kind | 121,689 | |||||||||||||||||||||||
29,313 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 692,382 | |||||||||||||||||||||||
692,382 | ||||||||||||||||||||||||
Net realized and unrealized gain | 721,695 | |||||||||||||||||||||||
Increase in net assets from operations | $1,063,421 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 4-30-17 | Period ended 4-30-161 | ||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||
Net investment income | $341,726 | $4,257 | |||||||||||||||||||||||||||
Net realized gain | 29,313 | — | |||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 692,382 | (17,562 | ) | ||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | 1,063,421 | (13,305 | ) | ||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||
From net investment income | (223,656 | ) | — | ||||||||||||||||||||||||||
From fund share transactions | |||||||||||||||||||||||||||||
Shares issued | 13,096,687 | 4,984,653 | |||||||||||||||||||||||||||
Shares repurchased | (1,346,085 | ) | — | ||||||||||||||||||||||||||
Total from fund share transactions | 11,750,602 | 4,984,653 | |||||||||||||||||||||||||||
Total increase | 12,590,367 | 4,971,348 | |||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||
Beginning of period | 4,971,348 | — | |||||||||||||||||||||||||||
End of period | $17,561,715 | $4,971,348 | |||||||||||||||||||||||||||
Undistributed net investment income | $122,950 | $4,380 | |||||||||||||||||||||||||||
Share activity | |||||||||||||||||||||||||||||
Shares outstanding | |||||||||||||||||||||||||||||
Beginning of period | 200,000 | — | |||||||||||||||||||||||||||
Shares issued | 500,000 | 200,000 | |||||||||||||||||||||||||||
Shares repurchased | (50,000 | ) | — | ||||||||||||||||||||||||||
End of period | 650,000 | 200,000 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. |
Financial highlights
Period ended | 4-30-17 | 4-30-161 | ||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $24.86 | $24.92 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.71 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.94 | (0.08 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.65 | (0.06 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.49 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $27.02 | $24.86 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 10.79 | (0.27 | ) 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $18 | $5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.18 | 6.05 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.50 | 0.50 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.77 | 0.95 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%)6 | 16 | 0 |
1 | Period from 3-28-16 (commencement of operations) to 4-30-16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Utilities ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Utilities Index. The John Hancock Dimensional Utilities Index is a rules-based index of U.S. utility stocks that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day.
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.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of April 30, 2017, all investments are categorized as Level 1 under the hierarchy described above.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 30, 2016, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. For the year ended April 30, 2017, the fund had no borrowings under the line of credit. Commitment fees for the year ended April 30, 2017 were $2,127.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $90,461 available to offset future net realized gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually. The tax character of distributions for the year ended April 30, 2017 was $223,656 of ordinary income.
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $122,950 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.450% of the first $300 million of the fund's average daily net assets; and (b) 0.420% of the fund's average daily net assets in excess of $300 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.50% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2017, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the year ended April 30, 2017, the expense reductions described above amounted to $84,285.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the year ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units. Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 88% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $2,033,592 and $2,045,721, respectively, for the year ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $13,096,116 and $1,216,359, respectively, for the year ended April 30, 2017.
Note 7 — Industry or sector risk
The fund generally invests a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
Note 8 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Utilities ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Utilities ETF (the "Fund") as of April 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period March 28, 2016 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended April 30, 2017.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2017 Form 1099-Div in early 2018. This will reflect the tax character of all distributions paid in calendar year 2017.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock symbol NYSE Arca: JHMU |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Utilities ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0623 | 860A 4/17 6/17 |
A message to shareholders
Dear shareholder,
U.S. stocks and the credit segments of the bond market rallied sharply in recent months, with several indexes reaching all-time highs before pulling back in the first half of April. In some ways, this recent pause wasn't surprising: Much of the fuel for the rally had been investor optimism over the Trump administration's ability to implement pro-growth policies that would boost economic expansion. Instead, the new administration has struggled with a series of controversies, and investors seem to be waiting for policy to catch up with expectations before bidding asset prices up further.
Outside the United States, economic activity and corporate earnings appear to be picking up. In a year of key European elections, investors have also been encouraged by the rejection of candidates with potentially trade-inhibiting agendas; for example, the recent victory of moderate French presidential candidate Emmanuel Macron has been well received by the markets. While it is still possible for this sentiment to shift in the months ahead, the risk of political uncertainty in Europe appears to be diminishing.
Regardless of what happens in the political sphere, markets worldwide are enjoying the support of strengthening economic activity and mostly low inflation. Just as John Hancock Investments regularly monitors the risks taken by the portfolio teams managing our funds, it is prudent to periodically check in with your financial advisor to ensure your portfolio is sufficiently diversified to meet your long-term objectives and to withstand the inevitable bumps along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
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 a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Multifactor Developed International ETF
Table of contents
2 | Portfolio summary | |
4 | Premium/discount analysis | |
5 | Your expenses | |
7 | Fund's investments | |
25 | Financial statements | |
28 | Financial highlights | |
29 | Notes to financial statements | |
34 | Auditor's report | |
35 | Evaluation of advisory and subadvisory agreements by the Board of Trustees | |
40 | Trustees and Officers | |
44 | More information |
TOP 10 HOLDINGS AS OF 4/30/17 (%)
Toyota Motor Corp. | 1.5 |
Nestle SA | 1.1 |
Novartis AG | 1.0 |
Linde AG | 0.9 |
Roche Holding AG | 0.9 |
HSBC Holdings PLC | 0.8 |
Cie Financiere Richemont SA | 0.8 |
Zurich Insurance Group AG | 0.7 |
British American Tobacco PLC | 0.7 |
Nippon Telegraph & Telephone Corp. | 0.7 |
TOTAL | 9.1 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
TOP 10 COUNTRIES AS OF 4/30/17 (%)
Japan | 24.3 |
United Kingdom | 16.3 |
Germany | 9.7 |
France | 9.6 |
Switzerland | 8.2 |
Australia | 7.4 |
Hong Kong | 3.6 |
Netherlands | 3.5 |
Spain | 3.2 |
Sweden | 2.9 |
TOTAL | 88.7 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
A note about risks
While the fund holds large-cap as well as mid-cap companies, the prices of midsize company stocks can change more frequently and dramatically than those of large companies. Value stocks may underperform other segments of the market. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Foreign investing has additional risks, such as currency and market volatility and political and social instability. Investments focused in one sector or industry may fluctuate more dramatically than investments in a wider variety of sectors or industries. Exchange-traded fund shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual market conditions. Errors in the construction or calculation of the fund's index may occur from time to time, which may cause tracking error. Brokerage commissions will reduce returns. Please see the fund's prospectus for additional risks.
ETF shares are bought and sold through exchange trading at market price—not net asset value (NAV)—and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and as a result you may pay more than NAV when you buy shares and receive less than NAV when you sell shares. Additionally due to various factors, a fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions.
A premium exists when the closing market price is trading above NAV, while a discount indicates that the closing market price is trading below NAV. The differences are expressed as basis points, with one basis point equaling 1/100 of 1%.
The chart below presents information about the differences between the fund's daily closing market price and the fund's NAV. The closing market price is determined using the bid/ask midpoint as reported on the NYSE Arca, Inc., at 4 P.M. Eastern time, when the NAV is typically calculated.
Data presented represents past performance and cannot be used to predict future results.
Period Ended April 30, 2017
Closing price below NAV | Closing price above or equal to NAV | |||||||
Basis point differential | Number of days | % of Total days | Number of days | % of Total days | ||||
0 - < 25 | 2 | 2.17% | 2 | 2.17% | ||||
25 - < 50 | 0 | 0.00% | 10 | 10.87% | ||||
50 - < 75 | 1 | 1.09% | 27 | 29.35% | ||||
75 - < 100 | 0 | 0.00% | 34 | 36.96% | ||||
100 or Above | 0 | 0.00% | 16 | 17.39% | ||||
Total | 3 | 3.26% | 89 | 96.74% |
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 funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which may include creation and redemption fees and brokerage charges. |
• | Ongoing operating expenses, including management fees and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line 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 NAV return. It assumes an account value of $1,000.00 on December 15, 2016, with the same investment held until April 30, 2017.
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 April 30, 2017, by $1,000.00, then multiply it by the "expenses paid" from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line 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 the fund's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on November 1, 2016, with the same investment held until April 30, 2017. 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. The fund charges a transaction fee per creation unit to those creating or redeeming creation units, and those buying or selling shares in the secondary market will incur customary brokerage commissions and charges. 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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 12-15-2016 | Ending value on 4-30-20171 | Expenses paid during period ended 4-30-20172 | Annualized expense ratio | |
Actual expenses/actual returns | $1,000.00 | $1,000.00 | $1.68 | 0.45% |
Hypothetical example for comparison purposes | 1,000.00 | 1,017.10 | 1.69 | 0.45% |
1 | The inception date for the fund is 12-15-16. Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 136/365 (to reflect the period). |
2 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Fund's investments
As of 4-30-17 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 98.7% | $32,179,651 | |||||||||||||
(Cost $29,928,454) | ||||||||||||||
Australia 7.4% | 2,400,453 | |||||||||||||
AGL Energy, Ltd. | 2,408 | 48,190 | ||||||||||||
Amcor, Ltd. | 4,530 | 53,222 | ||||||||||||
AMP, Ltd. | 29,521 | 118,334 | ||||||||||||
APA Group | 2,618 | 17,934 | ||||||||||||
Aristocrat Leisure, Ltd. | 2,558 | 37,571 | ||||||||||||
ASX, Ltd. | 706 | 26,779 | ||||||||||||
Aurizon Holdings, Ltd. | 10,950 | 42,173 | ||||||||||||
Australia & New Zealand Banking Group, Ltd. | 4,931 | 120,807 | ||||||||||||
BHP Billiton PLC | 6,491 | 98,673 | ||||||||||||
BHP Billiton, Ltd. | 11,245 | 199,475 | ||||||||||||
Brambles, Ltd. | 3,412 | 26,384 | ||||||||||||
Caltex Australia, Ltd. | 1,055 | 23,567 | ||||||||||||
CIMIC Group, Ltd. | 464 | 12,849 | ||||||||||||
Coca-Cola Amatil, Ltd. | 3,367 | 23,594 | ||||||||||||
Cochlear, Ltd. | 246 | 25,734 | ||||||||||||
Commonwealth Bank of Australia | 2,849 | 186,217 | ||||||||||||
Computershare, Ltd. | 1,301 | 14,341 | ||||||||||||
Crown Resorts, Ltd. | 1,830 | 17,107 | ||||||||||||
CSL, Ltd. | 1,044 | 103,489 | ||||||||||||
Dexus Property Group | 1,983 | 15,126 | ||||||||||||
Fortescue Metals Group, Ltd. | 8,868 | 35,216 | ||||||||||||
Goodman Group | 3,541 | 21,476 | ||||||||||||
Insurance Australia Group, Ltd. | 8,275 | 38,430 | ||||||||||||
LendLease Group | 3,197 | 38,326 | ||||||||||||
Macquarie Group, Ltd. | 407 | 28,307 | ||||||||||||
Medibank Pvt., Ltd. | 13,709 | 29,834 | ||||||||||||
Mirvac Group | 8,151 | 13,837 | ||||||||||||
National Australia Bank, Ltd. | 4,420 | 112,387 | ||||||||||||
Newcrest Mining, Ltd. | 1,958 | 30,984 | ||||||||||||
Oil Search, Ltd. | 6,527 | 35,242 | ||||||||||||
Origin Energy, Ltd. (I) | 9,145 | 49,105 | ||||||||||||
Qantas Airways, Ltd. | 7,586 | 24,054 | ||||||||||||
QBE Insurance Group, Ltd. | 3,146 | 30,280 | ||||||||||||
Ramsay Health Care, Ltd. | 513 | 27,507 | ||||||||||||
REA Group, Ltd. | 230 | 10,577 | ||||||||||||
Santos, Ltd. (I) | 7,880 | 20,508 | ||||||||||||
Scentre Group | 4,411 | 14,218 | ||||||||||||
Sonic Healthcare, Ltd. | 1,314 | 21,707 | ||||||||||||
South32, Ltd. | 24,621 | 51,188 | ||||||||||||
Stockland | 6,051 | 21,947 |
Shares | Value | |||||||||||||
Australia (continued) | ||||||||||||||
Suncorp Group, Ltd. | 3,019 | $31,157 | ||||||||||||
Sydney Airport | 8,937 | 46,050 | ||||||||||||
Telstra Corp., Ltd. | 28,208 | 89,022 | ||||||||||||
The GPT Group | 3,889 | 15,269 | ||||||||||||
Transurban Group | 1,939 | 17,691 | ||||||||||||
Treasury Wine Estates, Ltd. | 1,597 | 14,332 | ||||||||||||
Vicinity Centres | 6,183 | 13,317 | ||||||||||||
Wesfarmers, Ltd. | 1,056 | 33,958 | ||||||||||||
Westfield Corp. | 2,168 | 14,722 | ||||||||||||
Westpac Banking Corp. | 6,307 | 165,367 | ||||||||||||
Woodside Petroleum, Ltd. | 1,765 | 42,476 | ||||||||||||
Woolworths, Ltd. | 2,507 | 50,396 | ||||||||||||
Austria 0.2% | 63,881 | |||||||||||||
ANDRITZ AG | 184 | 10,173 | ||||||||||||
Erste Group Bank AG | 727 | 25,982 | ||||||||||||
OMV AG | 210 | 9,667 | ||||||||||||
Raiffeisen Bank International AG (I) | 199 | 4,536 | ||||||||||||
Verbund AG, Class A | 100 | 1,661 | ||||||||||||
voestalpine AG | 284 | 11,862 | ||||||||||||
Belgium 1.4% | 449,884 | |||||||||||||
Ageas | 1,362 | 55,766 | ||||||||||||
Anheuser-Busch InBev SA | 1,303 | 146,714 | ||||||||||||
bpost SA | 288 | 6,900 | ||||||||||||
Colruyt SA | 510 | 26,183 | ||||||||||||
KBC Groep NV | 633 | 45,687 | ||||||||||||
Proximus SADP | 847 | 25,904 | ||||||||||||
Solvay SA | 587 | 74,628 | ||||||||||||
Telenet Group Holding NV (I) | 93 | 5,647 | ||||||||||||
UCB SA | 477 | 37,170 | ||||||||||||
Umicore SA | 432 | 25,285 | ||||||||||||
Canada 0.0% | 698 | |||||||||||||
International Petroleum Corp. (I) | 192 | 698 | ||||||||||||
Chile 0.1% | 22,106 | |||||||||||||
Antofagasta PLC | 2,039 | 22,106 | ||||||||||||
Denmark 1.8% | 583,433 | |||||||||||||
A.P. Moeller - Maersk A/S, Series A | 10 | 16,589 | ||||||||||||
A.P. Moeller - Maersk A/S, Series B | 9 | 15,563 | ||||||||||||
Carlsberg A/S, Class B | 546 | 54,482 | ||||||||||||
Chr. Hansen Holding A/S | 698 | 47,032 | ||||||||||||
Coloplast A/S, Class B | 179 | 15,319 | ||||||||||||
Danske Bank A/S | 1,107 | 40,197 | ||||||||||||
DONG Energy A/S (S) | 162 | 6,381 | ||||||||||||
DSV A/S | 960 | 53,469 |
Shares | Value | |||||||||||||
Denmark (continued) | ||||||||||||||
Genmab A/S (I) | 117 | $23,264 | ||||||||||||
H Lundbeck A/S | 282 | 14,451 | ||||||||||||
ISS A/S | 516 | 21,396 | ||||||||||||
Novo Nordisk A/S, Class B | 3,001 | 116,748 | ||||||||||||
Novozymes A/S, B Shares | 1,757 | 75,890 | ||||||||||||
Pandora A/S | 251 | 27,122 | ||||||||||||
Vestas Wind Systems A/S | 645 | 55,530 | ||||||||||||
Finland 1.1% | 361,000 | |||||||||||||
Elisa OYJ | 682 | 23,223 | ||||||||||||
Fortum OYJ | 938 | 13,646 | ||||||||||||
Kone OYJ, Class B | 817 | 37,420 | ||||||||||||
Neste OYJ | 453 | 18,494 | ||||||||||||
Nokia OYJ | 4,117 | 23,537 | ||||||||||||
Nokian Renkaat OYJ | 548 | 23,571 | ||||||||||||
Orion OYJ, Class A | 92 | 5,245 | ||||||||||||
Orion OYJ, Class B | 468 | 26,832 | ||||||||||||
Sampo OYJ, A Shares | 751 | 35,975 | ||||||||||||
Stora Enso OYJ, R Shares | 6,280 | 74,678 | ||||||||||||
UPM-Kymmene OYJ | 1,907 | 50,317 | ||||||||||||
Wartsila OYJ ABP | 461 | 28,062 | ||||||||||||
France 9.6% | 3,130,246 | |||||||||||||
Air Liquide SA | 889 | 107,069 | ||||||||||||
Airbus SE | 884 | 71,456 | ||||||||||||
AXA SA | 3,967 | 105,880 | ||||||||||||
BNP Paribas SA | 1,853 | 130,715 | ||||||||||||
Bouygues SA | 2,490 | 104,650 | ||||||||||||
Cap Gemini SA | 505 | 50,538 | ||||||||||||
Carrefour SA | 3,304 | 77,804 | ||||||||||||
Christian Dior SE | 107 | 29,357 | ||||||||||||
Cie de Saint-Gobain | 2,477 | 133,653 | ||||||||||||
Cie Generale des Etablissements Michelin | 1,214 | 158,572 | ||||||||||||
Credit Agricole SA | 2,659 | 39,524 | ||||||||||||
Danone SA | 946 | 66,115 | ||||||||||||
Dassault Systemes SA | 656 | 58,527 | ||||||||||||
Electricite de France SA | 2,898 | 24,192 | ||||||||||||
Engie SA | 4,373 | 61,668 | ||||||||||||
Essilor International SA | 481 | 62,304 | ||||||||||||
Hermes International | 31 | 14,826 | ||||||||||||
Iliad SA | 130 | 31,555 | ||||||||||||
Kering | 70 | 21,690 | ||||||||||||
L'Oreal SA | 348 | 69,292 | ||||||||||||
Legrand SA | 1,418 | 91,768 | ||||||||||||
LVMH Moet Hennessy Louis Vuitton SE | 544 | 134,176 | ||||||||||||
Natixis SA | 4,688 | 32,606 |
Shares | Value | |||||||||||||
France (continued) | ||||||||||||||
Orange SA | 9,749 | $150,750 | ||||||||||||
Pernod Ricard SA | 159 | 19,885 | ||||||||||||
Peugeot SA (I) | 4,411 | 92,393 | ||||||||||||
Publicis Groupe SA | 948 | 68,412 | ||||||||||||
Renault SA | 1,371 | 127,811 | ||||||||||||
Safran SA | 1,326 | 109,769 | ||||||||||||
Sanofi | 1,450 | 136,755 | ||||||||||||
Schneider Electric SE | 501 | 39,553 | ||||||||||||
SFR Group SA (I) | 210 | 6,874 | ||||||||||||
Societe Generale SA | 1,631 | 89,177 | ||||||||||||
Sodexo SA | 513 | 65,192 | ||||||||||||
Thales SA | 525 | 55,180 | ||||||||||||
TOTAL SA | 4,148 | 213,065 | ||||||||||||
Unibail-Rodamco SE | 209 | 51,310 | ||||||||||||
Valeo SA | 934 | 67,127 | ||||||||||||
Vinci SA | 1,171 | 99,590 | ||||||||||||
Vivendi SA | 2,998 | 59,466 | ||||||||||||
Germany 9.2% | 2,984,744 | |||||||||||||
adidas AG | 343 | 68,688 | ||||||||||||
Allianz SE | 868 | 165,222 | ||||||||||||
BASF SE | 1,726 | 168,143 | ||||||||||||
Bayer AG | 1,519 | 187,907 | ||||||||||||
Bayerische Motoren Werke AG | 1,409 | 134,484 | ||||||||||||
Beiersdorf AG | 361 | 35,907 | ||||||||||||
Continental AG | 254 | 56,840 | ||||||||||||
Covestro AG (S) | 325 | 25,326 | ||||||||||||
Daimler AG | 2,896 | 215,706 | ||||||||||||
Deutsche Bank AG | 6,604 | 118,874 | ||||||||||||
Deutsche Boerse AG | 57 | 5,577 | ||||||||||||
Deutsche Post AG | 1,540 | 55,340 | ||||||||||||
Deutsche Telekom AG | 11,395 | 199,778 | ||||||||||||
Deutsche Wohnen AG, BR Shares | 2,735 | 93,488 | ||||||||||||
E.ON SE | 14,475 | 112,813 | ||||||||||||
Evonik Industries AG | 1,537 | 51,308 | ||||||||||||
Fresenius Medical Care AG & Company KGaA | 847 | 75,125 | ||||||||||||
Fresenius SE & Company KGaA | 937 | 75,924 | ||||||||||||
Hannover Rueck SE | 306 | 36,687 | ||||||||||||
HeidelbergCement AG | 912 | 84,415 | ||||||||||||
Henkel AG & Company, KGaA | 117 | 13,652 | ||||||||||||
Infineon Technologies AG | 4,931 | 102,023 | ||||||||||||
Innogy SE (S) | 367 | 13,488 | ||||||||||||
Linde AG | 1,674 | 300,688 | ||||||||||||
MAN SE | 163 | 17,118 | ||||||||||||
Merck KGaA | 302 | 35,451 | ||||||||||||
Muenchener Rueckversicherungs-Gesellschaft AG | 640 | 122,624 |
Shares | Value | |||||||||||||
Germany (continued) | ||||||||||||||
SAP SE | 884 | $88,629 | ||||||||||||
Siemens AG | 889 | 127,399 | ||||||||||||
Telefonica Deutschland Holding AG | 3,232 | 15,662 | ||||||||||||
thyssenkrupp AG | 2,340 | 55,690 | ||||||||||||
TUI AG | 1,912 | 27,779 | ||||||||||||
Volkswagen AG | 126 | 20,300 | ||||||||||||
Vonovia SE | 2,119 | 76,689 | ||||||||||||
Hong Kong 3.6% | 1,165,115 | |||||||||||||
AIA Group, Ltd. | 11,632 | 80,537 | ||||||||||||
Bank of East Asia, Ltd. | 15,791 | 65,377 | ||||||||||||
BOC Hong Kong Holdings, Ltd. | 14,580 | 59,988 | ||||||||||||
Cathay Pacific Airways, Ltd. | 18,730 | 26,972 | ||||||||||||
Cheung Kong Infrastructure Holdings, Ltd. | 863 | 7,562 | ||||||||||||
Cheung Kong Property Holdings, Ltd. | 7,288 | 52,288 | ||||||||||||
Chow Tai Fook Jewellery Group Ltd. | 8,516 | 9,351 | ||||||||||||
CK Hutchison Holdings, Ltd. | 7,175 | 89,624 | ||||||||||||
CLP Holdings, Ltd. | 4,219 | 44,509 | ||||||||||||
Dairy Farm International Holdings, Ltd. | 700 | 6,230 | ||||||||||||
Galaxy Entertainment Group, Ltd. | 5,207 | 28,989 | ||||||||||||
Hang Lung Properties, Ltd. | 11,558 | 30,316 | ||||||||||||
Hang Seng Bank, Ltd. | 1,097 | 22,243 | ||||||||||||
Henderson Land Development Company, Ltd. | 2,294 | 14,541 | ||||||||||||
HK Electric Investments & HK Electric Investments, Ltd. (S) | 26,644 | 23,569 | ||||||||||||
HKT Trust and HKT, Ltd. | 25,236 | 32,285 | ||||||||||||
Hong Kong & China Gas Company, Ltd. | 11,357 | 22,692 | ||||||||||||
Hong Kong Exchanges & Clearing, Ltd. | 2,711 | 66,786 | ||||||||||||
Hongkong Land Holdings, Ltd. | 6,500 | 50,115 | ||||||||||||
Kingston Financial Group, Ltd. | 13,050 | 4,514 | ||||||||||||
Link REIT | 3,717 | 26,739 | ||||||||||||
MTR Corp., Ltd. | 3,427 | 19,740 | ||||||||||||
New World Development Company, Ltd. | 44,190 | 55,056 | ||||||||||||
NWS Holdings, Ltd. | 11,080 | 20,828 | ||||||||||||
Power Assets Holdings, Ltd. | 2,375 | 21,376 | ||||||||||||
Sino Land Company, Ltd. | 22,658 | 38,397 | ||||||||||||
Sun Hung Kai Properties, Ltd. | 2,918 | 43,784 | ||||||||||||
Swire Pacific, Ltd., Class A | 2,644 | 25,462 | ||||||||||||
Swire Pacific, Ltd., Class B | 5,225 | 8,868 | ||||||||||||
Swire Properties, Ltd. | 4,062 | 13,631 | ||||||||||||
Techtronic Industries Company, Ltd. | 6,399 | 27,480 | ||||||||||||
The Wharf Holdings, Ltd. | 2,762 | 23,598 | ||||||||||||
Wheelock & Company, Ltd. | 9,299 | 72,514 | ||||||||||||
Yue Yuen Industrial Holdings, Ltd. | 7,374 | 29,154 | ||||||||||||
Ireland 0.9% | 298,916 | |||||||||||||
Bank of Ireland (I) | 124,672 | 31,361 |
Shares | Value | |||||||||||||
Ireland (continued) | ||||||||||||||
CRH PLC (I) | 1,837 | $66,963 | ||||||||||||
DCC PLC | 319 | 29,426 | ||||||||||||
Glanbia PLC | 1,191 | 23,241 | ||||||||||||
James Hardie Industries PLC | 848 | 14,377 | ||||||||||||
Kerry Group PLC, Class A | 347 | 28,347 | ||||||||||||
Paddy Power Betfair PLC | 131 | 14,593 | ||||||||||||
Shire PLC | 981 | 57,582 | ||||||||||||
Smurfit Kappa Group PLC | 1,238 | 33,026 | ||||||||||||
Israel 0.5% | 154,392 | |||||||||||||
Azrieli Group | 36 | 1,918 | ||||||||||||
Bank Hapoalim BM | 3,440 | 21,487 | ||||||||||||
Bank Leumi Le-Israel BM (I) | 3,850 | 18,028 | ||||||||||||
Bezeq The Israeli Telecommunication Corp., Ltd. | 5,400 | 9,093 | ||||||||||||
Check Point Software Technologies, Ltd. (I) | 171 | 17,786 | ||||||||||||
Elbit Systems, Ltd. | 21 | 2,503 | ||||||||||||
Israel Chemicals, Ltd. | 660 | 2,854 | ||||||||||||
Mobileye NV (I) | 177 | 10,955 | ||||||||||||
Taro Pharmaceutical Industries, Ltd. (I) | 34 | 3,973 | ||||||||||||
Teva Pharmaceutical Industries, Ltd. | 2,080 | 65,795 | ||||||||||||
Italy 1.8% | 588,514 | |||||||||||||
Assicurazioni Generali SpA | 1,900 | 30,063 | ||||||||||||
Atlantia SpA | 702 | 17,796 | ||||||||||||
Banca Mediolanum SpA | 982 | 7,512 | ||||||||||||
Davide Campari-Milano SpA | 1,203 | 14,227 | ||||||||||||
Enel SpA | 11,392 | 54,137 | ||||||||||||
Eni SpA | 3,935 | 61,147 | ||||||||||||
Ferrari NV | 461 | 34,664 | ||||||||||||
Intesa Sanpaolo SpA | 16,620 | 48,395 | ||||||||||||
Intesa Sanpaolo SpA | 1,748 | 4,778 | ||||||||||||
Leonardo-Finmeccanica SpA (I) | 1,707 | 26,823 | ||||||||||||
Luxottica Group SpA | 276 | 15,989 | ||||||||||||
Mediobanca SpA | 4,131 | 39,699 | ||||||||||||
Parmalat SpA | 836 | 2,831 | ||||||||||||
Poste Italiane SpA (S) | 3,616 | 24,768 | ||||||||||||
PRADA SpA | 2,309 | 10,836 | ||||||||||||
Prysmian SpA | 875 | 25,260 | ||||||||||||
Recordati SpA | 512 | 18,962 | ||||||||||||
Snam SpA | 5,029 | 22,223 | ||||||||||||
Telecom Italia SpA (I) | 32,327 | 28,690 | ||||||||||||
Telecom Italia SpA (I) | 21,717 | 15,502 | ||||||||||||
Terna Rete Elettrica Nazionale SpA | 5,635 | 28,411 | ||||||||||||
UniCredit SpA (I) | 2,687 | 43,715 | ||||||||||||
UnipolSai Assicurazioni SpA | 5,260 | 12,086 |
Shares | Value | |||||||||||||
Japan 24.3% | $7,910,696 | |||||||||||||
ABC-Mart, Inc. | 200 | 11,106 | ||||||||||||
Acom Company, Ltd. (I) | 1,400 | 6,217 | ||||||||||||
Aeon Company, Ltd. | 4,100 | 60,818 | ||||||||||||
AEON Financial Service Company, Ltd. | 400 | 7,683 | ||||||||||||
Aisin Seiki Company, Ltd. | 800 | 39,114 | ||||||||||||
Ajinomoto Company, Inc. | 600 | 11,675 | ||||||||||||
Alps Electric Company, Ltd. | 800 | 23,504 | ||||||||||||
ANA Holdings, Inc. | 20,000 | 60,196 | ||||||||||||
Aozora Bank, Ltd. | 4,000 | 14,569 | ||||||||||||
Asahi Glass Company, Ltd. | 2,000 | 17,332 | ||||||||||||
Asahi Group Holdings, Ltd. | 700 | 26,406 | ||||||||||||
Asahi Kasei Corp. | 8,000 | 76,254 | ||||||||||||
Asics Corp. | 200 | 3,536 | ||||||||||||
Astellas Pharma, Inc. | 2,000 | 26,339 | ||||||||||||
Bandai Namco Holdings, Inc. | 1,000 | 31,354 | ||||||||||||
Bridgestone Corp. | 2,400 | 100,074 | ||||||||||||
Brother Industries, Ltd. | 700 | 14,387 | ||||||||||||
Calbee, Inc. | 400 | 13,959 | ||||||||||||
Canon, Inc. | 2,300 | 76,261 | ||||||||||||
Casio Computer Company, Ltd. | 400 | 5,637 | ||||||||||||
Central Japan Railway Company | 400 | 67,049 | ||||||||||||
Chubu Electric Power Company, Inc. | 2,600 | 34,929 | ||||||||||||
Chugai Pharmaceutical Company, Ltd. | 200 | 7,087 | ||||||||||||
Concordia Financial Group, Ltd. | 4,500 | 20,677 | ||||||||||||
Dai Nippon Printing Company, Ltd. | 3,000 | 33,372 | ||||||||||||
Dai-ichi Life Holdings, Inc. | 2,400 | 40,822 | ||||||||||||
Daicel Corp. | 900 | 10,327 | ||||||||||||
Daiichi Sankyo Company, Ltd. | 1,200 | 26,622 | ||||||||||||
Daikin Industries, Ltd. | 400 | 38,845 | ||||||||||||
Daito Trust Construction Company, Ltd. | 100 | 14,712 | ||||||||||||
Daiwa House Industry Company, Ltd. | 800 | 23,762 | ||||||||||||
Daiwa Securities Group, Inc. | 2,000 | 12,152 | ||||||||||||
Denso Corp. | 700 | 30,136 | ||||||||||||
Dentsu, Inc. | 200 | 11,268 | ||||||||||||
Don Quijote Holdings Company, Ltd. | 700 | 25,527 | ||||||||||||
East Japan Railway Company | 1,300 | 116,087 | ||||||||||||
Eisai Company, Ltd. | 200 | 10,500 | ||||||||||||
Electric Power Development Company, Ltd. | 1,000 | 23,190 | ||||||||||||
FamilyMart UNY Holdings Company, Ltd. | 100 | 5,652 | ||||||||||||
FANUC Corp. | 100 | 20,324 | ||||||||||||
Fast Retailing Company, Ltd. | 100 | 32,619 | ||||||||||||
FUJIFILM Holdings Corp. | 1,000 | 37,086 | ||||||||||||
Fujitsu, Ltd. | 4,000 | 24,932 | ||||||||||||
Hamamatsu Photonics KK | 200 | 5,876 | ||||||||||||
Hankyu Hanshin Holdings, Inc. | 2,000 | 66,027 |
Shares | Value | |||||||||||||
Japan (continued) | ||||||||||||||
Hino Motors, Ltd. | 1,400 | $17,546 | ||||||||||||
Hirose Electric Company, Ltd. | 100 | 13,430 | ||||||||||||
Hisamitsu Pharmaceutical Company, Inc. | 100 | 5,113 | ||||||||||||
Hitachi Chemical Company, Ltd. | 300 | 8,585 | ||||||||||||
Hitachi Construction Machinery Company, Ltd. | 300 | 7,727 | ||||||||||||
Hitachi High-Technologies Corp. | 100 | 3,988 | ||||||||||||
Hitachi Metals, Ltd. | 1,500 | 21,006 | ||||||||||||
Hitachi, Ltd. | 17,000 | 93,807 | ||||||||||||
Honda Motor Company, Ltd. | 3,600 | 104,380 | ||||||||||||
Hoshizaki Corp. | 200 | 16,668 | ||||||||||||
Hoya Corp. | 900 | 42,986 | ||||||||||||
Hulic Company, Ltd. | 900 | 8,478 | ||||||||||||
Idemitsu Kosan Company, Ltd. | 600 | 19,189 | ||||||||||||
Iida Group Holdings Company, Ltd. | 800 | 12,732 | ||||||||||||
Inpex Corp. | 2,200 | 21,088 | ||||||||||||
Isetan Mitsukoshi Holdings, Ltd. | 2,000 | 21,835 | ||||||||||||
Isuzu Motors, Ltd. | 1,300 | 17,633 | ||||||||||||
ITOCHU Corp. | 3,600 | 50,898 | ||||||||||||
Japan Airlines Company, Ltd. | 900 | 28,420 | ||||||||||||
Japan Exchange Group, Inc. | 2,200 | 30,808 | ||||||||||||
Japan Post Bank Company, Ltd. | 600 | 7,466 | ||||||||||||
Japan Post Holdings Company, Ltd. | 700 | 8,672 | ||||||||||||
Japan Post Insurance Company, Ltd. | 100 | 2,277 | ||||||||||||
Japan Real Estate Investment Corp. | 3 | 15,798 | ||||||||||||
Japan Retail Fund Investment Corp. | 4 | 7,816 | ||||||||||||
Japan Tobacco, Inc. | 2,000 | 66,493 | ||||||||||||
JFE Holdings, Inc. | 1,200 | 20,459 | ||||||||||||
JGC Corp. | 600 | 10,469 | ||||||||||||
JSR Corp. | 600 | 10,959 | ||||||||||||
JTEKT Corp. | 2,600 | 40,911 | ||||||||||||
JXTG Holdings, Inc. | 9,700 | 43,779 | ||||||||||||
Kajima Corp. | 7,000 | 47,537 | ||||||||||||
Kansai Paint Company, Ltd. | 400 | 8,856 | ||||||||||||
Kao Corp. | 1,100 | 60,669 | ||||||||||||
Kawasaki Heavy Industries, Ltd. | 14,000 | 42,325 | ||||||||||||
KDDI Corp. | 3,900 | 103,404 | ||||||||||||
Keikyu Corp. | 2,000 | 22,948 | ||||||||||||
Keio Corp. | 1,000 | 8,002 | ||||||||||||
Keisei Electric Railway Company, Ltd. | 200 | 4,756 | ||||||||||||
Keyence Corp. | 100 | 40,190 | ||||||||||||
Kintetsu Group Holdings Company, Ltd. | 11,000 | 40,163 | ||||||||||||
Kirin Holdings Company, Ltd. | 2,000 | 38,862 | ||||||||||||
Koito Manufacturing Company, Ltd. | 600 | 30,950 | ||||||||||||
Komatsu, Ltd. | 900 | 23,996 | ||||||||||||
Konami Holdings Corp. | 300 | 12,474 |
Shares | Value | |||||||||||||
Japan (continued) | ||||||||||||||
Konica Minolta, Inc. | 4,000 | $35,346 | ||||||||||||
Kose Corp. | 100 | 9,482 | ||||||||||||
Kubota Corp. | 1,200 | 18,871 | ||||||||||||
Kuraray Company, Ltd. | 3,700 | 59,681 | ||||||||||||
Kyocera Corp. | 700 | 39,625 | ||||||||||||
Kyowa Hakko Kirin Company, Ltd. | 900 | 15,437 | ||||||||||||
Kyushu Electric Power Company, Inc. | 4,000 | 43,133 | ||||||||||||
Kyushu Railway Company | 200 | 6,271 | ||||||||||||
Lawson, Inc. | 300 | 19,916 | ||||||||||||
LINE Corp. (I) | 100 | 3,467 | ||||||||||||
Lion Corp. | 1,000 | 18,050 | ||||||||||||
LIXIL Group Corp. | 1,500 | 37,450 | ||||||||||||
M3, Inc. | 800 | 20,447 | ||||||||||||
Makita Corp. | 200 | 7,132 | ||||||||||||
Marubeni Corp. | 3,900 | 24,015 | ||||||||||||
Mazda Motor Corp. | 4,300 | 63,032 | ||||||||||||
Mebuki Financial Group, Inc. | 3,400 | 13,329 | ||||||||||||
MEIJI Holdings Company, Ltd. | 300 | 25,460 | ||||||||||||
MINEBEA MITSUMI, Inc. | 1,100 | 15,898 | ||||||||||||
Mitsubishi Chemical Holdings Corp. | 8,200 | 64,168 | ||||||||||||
Mitsubishi Corp. | 3,000 | 64,686 | ||||||||||||
Mitsubishi Electric Corp. | 2,000 | 27,882 | ||||||||||||
Mitsubishi Estate Company, Ltd. | 1,000 | 19,108 | ||||||||||||
Mitsubishi Gas Chemical Company, Inc. | 600 | 12,821 | ||||||||||||
Mitsubishi Heavy Industries, Ltd. | 11,000 | 44,012 | ||||||||||||
Mitsubishi Materials Corp. | 700 | 20,817 | ||||||||||||
Mitsubishi Motors Corp. | 1,600 | 10,234 | ||||||||||||
Mitsubishi Tanabe Pharma Corp. | 300 | 6,088 | ||||||||||||
Mitsubishi UFJ Financial Group, Inc. | 22,800 | 145,059 | ||||||||||||
Mitsubishi UFJ Lease & Finance Company, Ltd. | 4,300 | 22,451 | ||||||||||||
Mitsui & Company, Ltd. | 4,100 | 57,857 | ||||||||||||
Mitsui Chemicals, Inc. | 7,000 | 35,794 | ||||||||||||
Mitsui Fudosan Company, Ltd. | 1,400 | 30,764 | ||||||||||||
Mizuho Financial Group, Inc. | 39,900 | 72,877 | ||||||||||||
MS&AD Insurance Group Holdings, Inc. | 900 | 29,324 | ||||||||||||
Murata Manufacturing Company, Ltd. | 300 | 40,222 | ||||||||||||
NEC Corp. | 29,000 | 72,064 | ||||||||||||
Nexon Company, Ltd. | 700 | 11,900 | ||||||||||||
NGK Insulators, Ltd. | 1,200 | 25,632 | ||||||||||||
NGK Spark Plug Company, Ltd. | 800 | 17,303 | ||||||||||||
NH Foods, Ltd. | 1,000 | 28,438 | ||||||||||||
Nidec Corp. | 300 | 27,505 | ||||||||||||
Nikon Corp. | 2,000 | 28,528 | ||||||||||||
Nintendo Company, Ltd. | 100 | 25,159 | ||||||||||||
Nippon Building Fund, Inc. | 2 | 10,640 |
Shares | Value | |||||||||||||
Japan (continued) | ||||||||||||||
Nippon Express Company, Ltd. | 9,000 | $49,412 | ||||||||||||
Nippon Paint Holdings Company, Ltd. | 200 | 7,670 | ||||||||||||
Nippon Steel & Sumitomo Metal Corp. | 1,900 | 42,791 | ||||||||||||
Nippon Telegraph & Telephone Corp. | 5,200 | 222,471 | ||||||||||||
Nissan Chemical Industries, Ltd. | 300 | 9,298 | ||||||||||||
Nissan Motor Company, Ltd. | 10,000 | 94,958 | ||||||||||||
Nisshin Seifun Group, Inc. | 100 | 1,533 | ||||||||||||
Nissin Food Holdings Company, Ltd. | 200 | 11,447 | ||||||||||||
Nitori Holdings Company, Ltd. | 200 | 26,034 | ||||||||||||
Nitto Denko Corp. | 100 | 7,526 | ||||||||||||
Nomura Holdings, Inc. | 6,400 | 38,410 | ||||||||||||
Nomura Real Estate Master Fund, Inc. | 7 | 10,092 | ||||||||||||
Nomura Research Institute, Ltd. | 200 | 6,962 | ||||||||||||
NSK, Ltd. | 3,700 | 50,453 | ||||||||||||
NTT Data Corp. | 300 | 13,914 | ||||||||||||
NTT DOCOMO, Inc. | 2,900 | 69,931 | ||||||||||||
Obayashi Corp. | 5,600 | 54,307 | ||||||||||||
Obic Company, Ltd. | 100 | 5,401 | ||||||||||||
Odakyu Electric Railway Company, Ltd. | 1,500 | 29,093 | ||||||||||||
Oji Holdings Corp. | 5,000 | 24,177 | ||||||||||||
Olympus Corp. | 800 | 30,789 | ||||||||||||
Omron Corp. | 800 | 33,480 | ||||||||||||
Ono Pharmaceutical Company, Ltd. | 400 | 8,243 | ||||||||||||
Oracle Corp. Japan | 200 | 11,519 | ||||||||||||
Oriental Land Company, Ltd. | 400 | 22,966 | ||||||||||||
ORIX Corp. | 5,100 | 77,825 | ||||||||||||
Osaka Gas Company, Ltd. | 17,000 | 63,641 | ||||||||||||
Otsuka Corp. | 200 | 10,711 | ||||||||||||
Otsuka Holdings Company, Ltd. | 300 | 13,798 | ||||||||||||
Panasonic Corp. | 5,200 | 62,067 | ||||||||||||
Rakuten, Inc. | 900 | 9,212 | ||||||||||||
Recruit Holdings Company, Ltd. | 400 | 20,203 | ||||||||||||
Resona Holdings, Inc. | 5,200 | 28,913 | ||||||||||||
Ricoh Company, Ltd. | 3,900 | 32,468 | ||||||||||||
Rohm Company, Ltd. | 500 | 35,077 | ||||||||||||
Ryohin Keikaku Company, Ltd. | 100 | 22,553 | ||||||||||||
Santen Pharmaceutical Company, Ltd. | 900 | 12,652 | ||||||||||||
Secom Company, Ltd. | 200 | 14,508 | ||||||||||||
Seibu Holdings, Inc. | 900 | 15,712 | ||||||||||||
Seiko Epson Corp. | 1,500 | 30,681 | ||||||||||||
Sekisui Chemical Company, Ltd. | 3,300 | 55,360 | ||||||||||||
Sekisui House, Ltd. | 1,400 | 23,229 | ||||||||||||
Seven & i Holdings Company, Ltd. | 1,700 | 71,831 | ||||||||||||
Seven Bank, Ltd. | 3,000 | 10,065 | ||||||||||||
Sharp Corp. (I) | 1,000 | 3,606 |
Shares | Value | |||||||||||||
Japan (continued) | ||||||||||||||
Shimadzu Corp. | 300 | $5,087 | ||||||||||||
Shimano, Inc. | 100 | 15,278 | ||||||||||||
Shimizu Corp. | 4,000 | 38,360 | ||||||||||||
Shin-Etsu Chemical Company, Ltd. | 400 | 34,750 | ||||||||||||
Shinsei Bank, Ltd. | 14,000 | 26,124 | ||||||||||||
Shionogi & Company, Ltd. | 300 | 15,429 | ||||||||||||
Shiseido Company, Ltd. | 300 | 8,117 | ||||||||||||
SMC Corp. | 100 | 28,160 | ||||||||||||
SoftBank Group Corp. | 1,700 | 128,747 | ||||||||||||
Sohgo Security Services Company, Ltd. | 100 | 4,364 | ||||||||||||
Sompo Holdings, Inc. | 700 | 26,412 | ||||||||||||
Sony Corp. | 1,100 | 37,094 | ||||||||||||
Sony Financial Holdings, Inc. | 800 | 13,291 | ||||||||||||
Stanley Electric Company, Ltd. | 400 | 11,698 | ||||||||||||
Start Today Company, Ltd. | 800 | 17,081 | ||||||||||||
Subaru Corp. | 1,200 | 45,343 | ||||||||||||
Sumitomo Chemical Company, Ltd. | 9,000 | 50,785 | ||||||||||||
Sumitomo Corp. | 2,600 | 34,719 | ||||||||||||
Sumitomo Dainippon Pharma Company, Ltd. | 600 | 9,839 | ||||||||||||
Sumitomo Electric Industries, Ltd. | 1,500 | 24,444 | ||||||||||||
Sumitomo Metal Mining Company, Ltd. | 2,000 | 27,119 | ||||||||||||
Sumitomo Mitsui Financial Group, Inc. | 2,600 | 96,191 | ||||||||||||
Sumitomo Mitsui Trust Holdings, Inc. | 600 | 20,545 | ||||||||||||
Suntory Beverage & Food, Ltd. | 200 | 8,944 | ||||||||||||
Suruga Bank, Ltd. | 400 | 8,357 | ||||||||||||
Suzuki Motor Corp. | 900 | 37,560 | ||||||||||||
Sysmex Corp. | 300 | 18,247 | ||||||||||||
T&D Holdings, Inc. | 1,300 | 19,284 | ||||||||||||
Taisei Corp. | 6,000 | 45,752 | ||||||||||||
Taisho Pharmaceutical Holdings Company, Ltd. | 200 | 16,435 | ||||||||||||
Taiyo Nippon Sanso Corp. | 700 | 8,358 | ||||||||||||
Takeda Pharmaceutical Company, Ltd. | 800 | 38,339 | ||||||||||||
TDK Corp. | 1,200 | 74,280 | ||||||||||||
Terumo Corp. | 400 | 14,587 | ||||||||||||
The Chiba Bank, Ltd. | 4,000 | 26,770 | ||||||||||||
The Chugoku Electric Power Company, Inc. | 3,100 | 33,789 | ||||||||||||
The Kansai Electric Power Company, Ltd. | 2,400 | 32,446 | ||||||||||||
The Shizuoka Bank, Ltd. | 4,000 | 33,731 | ||||||||||||
Tobu Railway Company, Ltd. | 10,000 | 50,686 | ||||||||||||
Toho Company, Ltd. | 200 | 5,732 | ||||||||||||
Tohoku Electric Power Company, Inc. | 5,600 | 74,653 | ||||||||||||
Tokio Marine Holdings, Inc. | 1,500 | 63,138 | ||||||||||||
Tokyo Electric Power Company, Inc. (I) | 11,800 | 45,837 | ||||||||||||
Tokyo Electron, Ltd. | 200 | 23,262 | ||||||||||||
Tokyo Gas Company, Ltd. | 10,000 | 46,425 |
Shares | Value | |||||||||||||
Japan (continued) | ||||||||||||||
Tokyu Corp. | 3,000 | $21,477 | ||||||||||||
Toppan Printing Company, Ltd. | 3,000 | 30,170 | ||||||||||||
Toray Industries, Inc. | 2,000 | 17,693 | ||||||||||||
Toshiba Corp. (I) | 13,000 | 26,287 | ||||||||||||
Tosoh Corp. | 1,000 | 9,393 | ||||||||||||
TOTO, Ltd. | 700 | 26,720 | ||||||||||||
Toyota Industries Corp. | 300 | 14,910 | ||||||||||||
Toyota Motor Corp. | 9,000 | 487,261 | ||||||||||||
Toyota Tsusho Corp. | 1,300 | 40,993 | ||||||||||||
Trend Micro, Inc. | 700 | 30,771 | ||||||||||||
Unicharm Corp. | 900 | 21,868 | ||||||||||||
United Urban Investment Corp. | 3 | 4,535 | ||||||||||||
USS Company, Ltd. | 1,200 | 21,208 | ||||||||||||
West Japan Railway Company | 600 | 40,068 | ||||||||||||
Yahoo Japan Corp. | 3,100 | 13,265 | ||||||||||||
Yakult Honsha Company, Ltd. | 100 | 5,688 | ||||||||||||
Yamada Denki Company, Ltd. | 2,800 | 14,695 | ||||||||||||
Yamaha Corp. | 400 | 11,088 | ||||||||||||
Yamaha Motor Company, Ltd. | 1,500 | 35,539 | ||||||||||||
Yamato Holdings Company, Ltd. | 600 | 12,964 | ||||||||||||
Yamazaki Baking Company, Ltd. | 300 | 6,322 | ||||||||||||
Yaskawa Electric Corp. | 800 | 15,279 | ||||||||||||
Jersey, Channel Islands 0.1% | 36,096 | |||||||||||||
Randgold Resources, Ltd. | 410 | 36,096 | ||||||||||||
Jordan 0.0% | 10,976 | |||||||||||||
Hikma Pharmaceuticals PLC | 438 | 10,976 | ||||||||||||
Luxembourg 0.3% | 107,882 | |||||||||||||
ArcelorMittal (I) | 4,337 | 34,207 | ||||||||||||
Millicom International Cellular SA | 905 | 49,671 | ||||||||||||
RTL Group SA | 213 | 16,503 | ||||||||||||
Tenaris SA | 479 | 7,501 | ||||||||||||
Macau 0.1% | 39,211 | |||||||||||||
MGM China Holdings, Ltd. | 2,284 | 5,204 | ||||||||||||
Sands China, Ltd. | 4,311 | 19,566 | ||||||||||||
Wynn Macau, Ltd. | 6,568 | 14,441 | ||||||||||||
Mexico 0.1% | 16,832 | |||||||||||||
Fresnillo PLC | 896 | 16,832 | ||||||||||||
Netherlands 3.5% | 1,155,219 | |||||||||||||
ABN AMRO Group NV (S) | 1,286 | 33,749 | ||||||||||||
Aegon NV | 4,784 | 24,375 | ||||||||||||
Akzo Nobel NV | 1,773 | 154,997 | ||||||||||||
Altice NV, Class A (I) | 475 | 11,796 |
Shares | Value | |||||||||||||
Netherlands (continued) | ||||||||||||||
Altice NV, Class B (I) | 184 | $4,574 | ||||||||||||
ASML Holding NV | 430 | 56,822 | ||||||||||||
Heineken Holding NV | 125 | 10,469 | ||||||||||||
Heineken NV | 369 | 32,889 | ||||||||||||
ING Groep NV | 6,694 | 108,941 | ||||||||||||
Koninklijke Ahold Delhaize NV | 1,667 | 34,527 | ||||||||||||
Koninklijke DSM NV | 745 | 53,276 | ||||||||||||
Koninklijke KPN NV | 26,346 | 76,171 | ||||||||||||
Koninklijke Philips NV | 2,436 | 84,408 | ||||||||||||
NN Group NV | 1,054 | 34,938 | ||||||||||||
Randstad Holding NV | 350 | 20,852 | ||||||||||||
Royal Dutch Shell PLC, A Shares | 7,197 | 186,455 | ||||||||||||
Royal Dutch Shell PLC, B Shares | 6,035 | 160,255 | ||||||||||||
Wolters Kluwer NV | 1,548 | 65,725 | ||||||||||||
New Zealand 0.1% | 42,914 | |||||||||||||
Auckland International Airport, Ltd. | 1,455 | 6,893 | ||||||||||||
Fisher & Paykel Healthcare Corp., Ltd. | 599 | 4,141 | ||||||||||||
Fletcher Building, Ltd. | 1,653 | 9,703 | ||||||||||||
Mercury NZ, Ltd. | 761 | 1,680 | ||||||||||||
Meridian Energy, Ltd. | 3,201 | 6,087 | ||||||||||||
Ryman Healthcare, Ltd. | 424 | 2,512 | ||||||||||||
Spark New Zealand, Ltd. | 4,690 | 11,898 | ||||||||||||
Norway 0.5% | 167,450 | |||||||||||||
Aker BP ASA | 252 | 4,286 | ||||||||||||
DNB ASA | 1,834 | 28,709 | ||||||||||||
Gjensidige Forsikring ASA | 187 | 2,879 | ||||||||||||
Marine Harvest ASA (I) | 486 | 8,101 | ||||||||||||
Norsk Hydro ASA | 1,887 | 10,794 | ||||||||||||
Orkla ASA | 718 | 6,517 | ||||||||||||
Schibsted ASA, A Shares | 352 | 8,773 | ||||||||||||
Schibsted ASA, B Shares | 254 | 5,708 | ||||||||||||
Statoil ASA | 3,708 | 61,335 | ||||||||||||
Telenor ASA | 1,443 | 23,380 | ||||||||||||
Yara International ASA | 187 | 6,968 | ||||||||||||
Portugal 0.1% | 43,545 | |||||||||||||
EDP - Energias de Portugal SA | 7,906 | 26,086 | ||||||||||||
Galp Energia SGPS SA | 382 | 5,936 | ||||||||||||
Jeronimo Martins SGPS SA | 628 | 11,523 | ||||||||||||
Singapore 1.1% | 360,798 | |||||||||||||
Ascendas Real Estate Investment Trust | 3,800 | 6,960 | ||||||||||||
CapitaLand Mall Trust | 5,500 | 7,752 | ||||||||||||
CapitaLand, Ltd. | 6,400 | 17,217 | ||||||||||||
City Developments, Ltd. | 2,300 | 17,756 |
Shares | Value | |||||||||||||
Singapore (continued) | ||||||||||||||
ComfortDelGro Corp., Ltd. | 7,000 | $13,723 | ||||||||||||
DBS Group Holdings, Ltd. | 4,000 | 55,377 | ||||||||||||
Genting Singapore PLC | 5,900 | 4,707 | ||||||||||||
Global Logistic Properties, Ltd. | 6,300 | 12,981 | ||||||||||||
Hutchison Port Holdings Trust | 18,200 | 7,371 | ||||||||||||
Jardine Cycle & Carriage, Ltd. | 200 | 6,758 | ||||||||||||
Keppel Corp., Ltd. | 3,300 | 15,370 | ||||||||||||
Oversea-Chinese Banking Corp., Ltd. | 3,800 | 26,644 | ||||||||||||
Sembcorp Industries, Ltd. | 2,600 | 5,636 | ||||||||||||
Singapore Airlines, Ltd. | 1,600 | 11,734 | ||||||||||||
Singapore Exchange, Ltd. | 3,100 | 16,413 | ||||||||||||
Singapore Press Holdings, Ltd. | 4,200 | 10,427 | ||||||||||||
Singapore Technologies Engineering, Ltd. | 3,900 | 10,575 | ||||||||||||
Singapore Telecommunications, Ltd. | 18,600 | 49,770 | ||||||||||||
StarHub, Ltd. | 3,800 | 7,585 | ||||||||||||
United Overseas Bank, Ltd. | 3,300 | 51,470 | ||||||||||||
Wilmar International, Ltd. | 1,800 | 4,572 | ||||||||||||
South Africa 0.3% | 112,603 | |||||||||||||
Investec PLC | 1,760 | 13,013 | ||||||||||||
Mediclinic International PLC | 2,269 | 24,101 | ||||||||||||
Mondi PLC | 2,916 | 75,489 | ||||||||||||
Spain 3.1% | 1,024,579 | |||||||||||||
Abertis Infraestructuras SA | 3,217 | 56,576 | ||||||||||||
ACS Actividades de Construccion y Servicios SA | 787 | 29,164 | ||||||||||||
Aena SA (S) | 173 | 30,519 | ||||||||||||
Amadeus IT Group SA | 1,680 | 90,557 | ||||||||||||
Banco Bilbao Vizcaya Argentaria SA | 9,618 | 76,969 | ||||||||||||
Banco Santander SA | 27,378 | 178,492 | ||||||||||||
Bankia SA | 12,719 | 15,429 | ||||||||||||
CaixaBank SA | 11,851 | 53,802 | ||||||||||||
EDP Renovaveis SA | 1,035 | 7,884 | ||||||||||||
Endesa SA | 743 | 17,505 | ||||||||||||
Ferrovial SA | 1,206 | 25,655 | ||||||||||||
Gas Natural SDG SA | 1,380 | 31,197 | ||||||||||||
Grifols SA | 1,576 | 42,313 | ||||||||||||
Iberdrola SA | 12,260 | 88,140 | ||||||||||||
Industria de Diseno Textil SA | 2,374 | 91,024 | ||||||||||||
Red Electrica Corp. SA | 1,776 | 34,618 | ||||||||||||
Repsol SA | 3,157 | 49,969 | ||||||||||||
Telefonica SA | 9,474 | 104,766 | ||||||||||||
Sweden 2.9% | 933,653 | |||||||||||||
Alfa Laval AB | 2,025 | 41,553 | ||||||||||||
Assa Abloy AB, Class B | 1,023 | 22,170 | ||||||||||||
Atlas Copco AB, A Shares | 1,203 | 44,996 |
Shares | Value | |||||||||||||
Sweden (continued) | ||||||||||||||
Atlas Copco AB, B Shares | 707 | $23,522 | ||||||||||||
Boliden AB | 2,420 | 69,199 | ||||||||||||
Electrolux AB, Series B | 1,379 | 40,974 | ||||||||||||
Fastighets AB Balder, B Shares (I) | 282 | 6,299 | ||||||||||||
Getinge AB, B Shares | 1,024 | 20,018 | ||||||||||||
Hennes & Mauritz AB, B Shares | 1,820 | 45,095 | ||||||||||||
Hexagon AB, B Shares | 210 | 9,147 | ||||||||||||
Husqvarna AB, B Shares | 1,670 | 16,606 | ||||||||||||
ICA Gruppen AB | 592 | 20,217 | ||||||||||||
Lundin Petroleum AB (I) | 576 | 11,000 | ||||||||||||
Nordea Bank AB | 5,240 | 64,503 | ||||||||||||
Sandvik AB | 2,221 | 35,667 | ||||||||||||
Securitas AB, B Shares | 1,248 | 20,634 | ||||||||||||
Skandinaviska Enskilda Banken AB, Series A | 2,350 | 27,070 | ||||||||||||
Skandinaviska Enskilda Banken AB, Series C | 35 | 403 | ||||||||||||
Skanska AB, B Shares | 821 | 19,647 | ||||||||||||
SKF AB, B Shares | 2,955 | 64,941 | ||||||||||||
Svenska Cellulosa AB SCA, B Shares | 785 | 26,011 | ||||||||||||
Svenska Handelsbanken AB, A Shares | 2,909 | 41,295 | ||||||||||||
Svenska Handelsbanken AB, B Shares | 139 | 1,959 | ||||||||||||
Swedbank AB, A Shares | 1,915 | 45,394 | ||||||||||||
Swedish Match AB | 500 | 16,500 | ||||||||||||
Tele2 AB, B Shares | 3,059 | 30,815 | ||||||||||||
Telefonaktiebolaget LM Ericsson, B Shares | 5,546 | 35,763 | ||||||||||||
Telia Company AB | 5,026 | 20,490 | ||||||||||||
Trelleborg AB, Series B | 576 | 13,543 | ||||||||||||
Volvo AB, A Shares | 971 | 15,878 | ||||||||||||
Volvo AB, B Shares | 5,032 | 82,344 | ||||||||||||
Switzerland 8.2% | 2,670,628 | |||||||||||||
ABB, Ltd. | 4,319 | 105,692 | ||||||||||||
Cie Financiere Richemont SA | 3,157 | 263,704 | ||||||||||||
Coca-Cola HBC AG (I) | 1,512 | 41,901 | ||||||||||||
Credit Suisse Group AG (I) | 9,047 | 137,507 | ||||||||||||
Givaudan SA | 41 | 78,956 | ||||||||||||
Glencore PLC (I) | 16,589 | 65,169 | ||||||||||||
Kuehne + Nagel International AG | 161 | 24,325 | ||||||||||||
LafargeHolcim, Ltd. (I) | 2,323 | 131,616 | ||||||||||||
Nestle SA | 4,571 | 351,969 | ||||||||||||
Novartis AG | 4,348 | 334,361 | ||||||||||||
Roche Holding AG | 1,103 | 288,423 | ||||||||||||
Roche Holding AG, BR Shares | 93 | 24,337 | ||||||||||||
Schindler Holding AG, Participation Certificates | 196 | 40,029 | ||||||||||||
Schindler Holding AG, Registered Shares | 92 | 18,262 | ||||||||||||
SGS SA | 16 | 35,988 | ||||||||||||
STMicroelectronics NV | 1,727 | 27,927 |
Shares | Value | |||||||||||||
Switzerland (continued) | ||||||||||||||
Swiss Re AG | 2,075 | $180,516 | ||||||||||||
Swisscom AG | 153 | 66,706 | ||||||||||||
The Swatch Group AG | 139 | 10,780 | ||||||||||||
The Swatch Group AG, BR Shares | 83 | 33,210 | ||||||||||||
UBS Group AG | 5,094 | 86,994 | ||||||||||||
Wolseley PLC | 1,303 | 82,669 | ||||||||||||
Zurich Insurance Group AG | 866 | 239,587 | ||||||||||||
United Kingdom 16.3% | 5,315,810 | |||||||||||||
3i Group PLC | 7,301 | 74,951 | ||||||||||||
Admiral Group PLC | 937 | 24,378 | ||||||||||||
Anglo American PLC (I) | 6,187 | 88,569 | ||||||||||||
Ashtead Group PLC | 2,584 | 54,525 | ||||||||||||
Associated British Foods PLC | 367 | 13,342 | ||||||||||||
AstraZeneca PLC | 2,159 | 129,535 | ||||||||||||
Aviva PLC | 15,776 | 107,051 | ||||||||||||
Babcock International Group PLC | 2,658 | 30,915 | ||||||||||||
BAE Systems PLC | 14,934 | 121,142 | ||||||||||||
Barclays PLC | 29,352 | 80,600 | ||||||||||||
Barratt Developments PLC | 4,803 | 36,009 | ||||||||||||
BP PLC | 34,436 | 197,141 | ||||||||||||
British American Tobacco PLC | 3,420 | 230,744 | ||||||||||||
BT Group PLC | 11,001 | 43,374 | ||||||||||||
Bunzl PLC | 1,782 | 55,516 | ||||||||||||
Burberry Group PLC | 2,667 | 55,690 | ||||||||||||
Centrica PLC | 32,846 | 84,097 | ||||||||||||
CNH Industrial NV | 5,092 | 56,170 | ||||||||||||
Coca-Cola European Partners PLC | 630 | 23,826 | ||||||||||||
Compass Group PLC | 3,883 | 78,268 | ||||||||||||
Diageo PLC | 5,096 | 148,111 | ||||||||||||
Direct Line Insurance Group PLC | 5,974 | 26,989 | ||||||||||||
Experian PLC | 6,366 | 136,635 | ||||||||||||
Fiat Chrysler Automobiles NV (I) | 6,573 | 74,368 | ||||||||||||
GKN PLC | 13,347 | 61,974 | ||||||||||||
GlaxoSmithKline PLC | �� | 8,471 | 169,870 | |||||||||||
Hargreaves Lansdown PLC | 1,320 | 23,533 | ||||||||||||
HSBC Holdings PLC | 32,977 | 271,556 | ||||||||||||
Imperial Brands PLC | 2,089 | 102,214 | ||||||||||||
InterContinental Hotels Group PLC | 548 | 29,040 | ||||||||||||
International Consolidated Airlines Group SA | 8,827 | 63,998 | ||||||||||||
Intertek Group PLC | 685 | 36,034 | ||||||||||||
ITV PLC | 20,540 | 55,805 | ||||||||||||
J Sainsbury PLC | 7,786 | 27,741 | ||||||||||||
Johnson Matthey PLC | 1,524 | 58,736 | ||||||||||||
Kingfisher PLC | 15,215 | 67,183 | ||||||||||||
Land Securities Group PLC | 1,803 | 25,799 |
Shares | Value | |||||||||||||
United Kingdom (continued) | ||||||||||||||
Legal & General Group PLC | 28,611 | $91,095 | ||||||||||||
Lloyds Banking Group PLC | 107,157 | 95,935 | ||||||||||||
London Stock Exchange Group PLC | 966 | 42,279 | ||||||||||||
Marks & Spencer Group PLC | 16,221 | 76,934 | ||||||||||||
Merlin Entertainments PLC (S) | 2,093 | 13,688 | ||||||||||||
National Grid PLC | 8,273 | 107,032 | ||||||||||||
Next PLC | 847 | 47,174 | ||||||||||||
Old Mutual PLC | 25,903 | 65,013 | ||||||||||||
Pearson PLC | 4,692 | 38,789 | ||||||||||||
Persimmon PLC | 765 | 23,060 | ||||||||||||
Prudential PLC | 2,289 | 50,818 | ||||||||||||
Reckitt Benckiser Group PLC | 1,323 | 121,714 | ||||||||||||
RELX NV | 2,373 | 45,880 | ||||||||||||
RELX PLC | 2,492 | 50,488 | ||||||||||||
Rio Tinto PLC | 3,629 | 143,761 | ||||||||||||
Rio Tinto, Ltd. | 1,359 | 61,427 | ||||||||||||
Rolls-Royce Holdings PLC (I) | 13,462 | 141,422 | ||||||||||||
Rolls-Royce Holdings PLC (I) | 955,802 | 1,237 | ||||||||||||
Royal Bank of Scotland Group PLC (I) | 5,776 | 19,833 | ||||||||||||
RSA Insurance Group PLC | 4,314 | 33,264 | ||||||||||||
Schroders PLC | 589 | 24,286 | ||||||||||||
Schroders PLC, Non-Voting Shares | 230 | 6,903 | ||||||||||||
Severn Trent PLC | 1,220 | 36,697 | ||||||||||||
Sky PLC | 2,539 | 32,586 | ||||||||||||
Smith & Nephew PLC | 4,256 | 69,929 | ||||||||||||
Smiths Group PLC | 1,652 | 35,051 | ||||||||||||
SSE PLC | 4,455 | 80,172 | ||||||||||||
St. James's Place PLC | 1,717 | 25,501 | ||||||||||||
Standard Chartered PLC (I) | 4,901 | 45,729 | ||||||||||||
Standard Life PLC | 11,058 | 52,061 | ||||||||||||
Taylor Wimpey PLC | 14,014 | 36,261 | ||||||||||||
Tesco PLC (I) | 18,653 | 44,222 | ||||||||||||
The British Land Company PLC | 2,073 | 17,607 | ||||||||||||
The Sage Group PLC | 5,503 | 47,701 | ||||||||||||
Unilever NV | 652 | 34,183 | ||||||||||||
Unilever PLC | 2,552 | 131,142 | ||||||||||||
United Utilities Group PLC | 7,729 | 97,344 | ||||||||||||
Vodafone Group PLC | 52,223 | 134,485 | ||||||||||||
Whitbread PLC | 1,023 | 53,403 | ||||||||||||
WM Morrison Supermarkets PLC | 9,335 | 28,973 | ||||||||||||
Worldpay Group PLC (S) | 4,768 | 18,506 | ||||||||||||
WPP PLC | 1,253 | 26,796 | ||||||||||||
United States 0.1% | 27,377 | |||||||||||||
Carnival PLC | 444 | 27,377 |
Shares | Value | |||||||||||||
Preferred securities 0.6% | $190,900 | |||||||||||||
(Cost $170,491) | ||||||||||||||
Germany 0.5% | 161,240 | |||||||||||||
Bayerische Motoren Werke AG | 390 | 32,056 | ||||||||||||
Henkel AG & Company KGaA | 149 | 20,282 | ||||||||||||
Porsche Automobil Holding SE | 423 | 24,740 | ||||||||||||
Volkswagen AG | 531 | 84,162 | ||||||||||||
Spain 0.1% | 29,660 | |||||||||||||
Grifols SA, Class B | 1,390 | 29,660 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 0.0% | $1,403 | |||||||||||||
(Cost $1,403) | ||||||||||||||
Money market funds 0.0% | 1,403 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.6809(Y | ) | 1,403 | 1,403 | ||||||||||
Total investments (Cost $30,100,348)† 99.3% | $32,371,954 | |||||||||||||
Other assets and liabilities, net 0.7% | $235,456 | |||||||||||||
Total net assets 100.0% | $32,607,410 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||||||||||||
Security Abbreviations and Legend | ||||||||||||||
SDR | Swedish Depositary Receipts | |||||||||||||
(I) | Non-income producing security. | |||||||||||||
(S) | These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 4-30-17. | |||||||||||||
† | At 4-30-17, the aggregate cost of investment securities for federal income tax purposes was $30,130,830. Net unrealized appreciation aggregated to $2,241,124, of which $2,549,263 related to appreciated investment securities and $308,139 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-17
Assets | |||||||||||||||||||||
Investments, at value (Cost $30,100,348) | $32,371,954 | ||||||||||||||||||||
Foreign currency, at value (Cost $67,604) | 68,287 | ||||||||||||||||||||
Dividends and interest receivable | 156,305 | ||||||||||||||||||||
Other receivables and prepaid expenses | 38,756 | ||||||||||||||||||||
Total assets | 32,635,302 | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Payable for investments purchased | 1,237 | ||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||
Accounting and legal services fees | 1,576 | ||||||||||||||||||||
Investment management fees | 117 | ||||||||||||||||||||
Other liabilities and accrued expenses | 24,962 | ||||||||||||||||||||
Total liabilities | 27,892 | ||||||||||||||||||||
Net assets | $32,607,410 | ||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||
Paid-in capital | $30,080,502 | ||||||||||||||||||||
Undistributed net investment income | 306,167 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (52,398 | ) | |||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 2,273,139 | ||||||||||||||||||||
Net assets | $32,607,410 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Net assets | $32,607,410 | ||||||||||||||||||||
Shares outstanding | 1,200,000 | ||||||||||||||||||||
Net asset value per share | $27.17 |
STATEMENT OF OPERATIONS For the period ended 4-30-17 1
Investment income | |||||||||||||||||||||||||||||||||
Dividends | $380,825 | ||||||||||||||||||||||||||||||||
Interest | 73 | ||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (34,971 | ) | |||||||||||||||||||||||||||||||
Total investment income | 345,927 | ||||||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||
Investment management fees | 44,789 | ||||||||||||||||||||||||||||||||
Accounting and legal services fees | 1,583 | ||||||||||||||||||||||||||||||||
Transfer agent fees | 975 | ||||||||||||||||||||||||||||||||
Trustees' fees | 46 | ||||||||||||||||||||||||||||||||
Printing and postage | 10,323 | ||||||||||||||||||||||||||||||||
Professional fees | 27,165 | ||||||||||||||||||||||||||||||||
Custodian fees | 7,027 | ||||||||||||||||||||||||||||||||
Stock exchange listing fees | 5,206 | ||||||||||||||||||||||||||||||||
Other | 1,501 | ||||||||||||||||||||||||||||||||
Total expenses | 98,615 | ||||||||||||||||||||||||||||||||
Less expense reductions | (53,390 | ) | |||||||||||||||||||||||||||||||
Net expenses | 45,225 | ||||||||||||||||||||||||||||||||
Net investment income | 300,702 | ||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | |||||||||||||||||||||||||||||||||
Net realized gain (loss) on | |||||||||||||||||||||||||||||||||
Investments and foreign currency transactions | (51,974 | ) | |||||||||||||||||||||||||||||||
Redemptions in-kind | 249,130 | ||||||||||||||||||||||||||||||||
197,156 | |||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | |||||||||||||||||||||||||||||||||
Investments and translation of assets and liabilities in foreign currencies | 2,273,139 | ||||||||||||||||||||||||||||||||
2,273,139 | |||||||||||||||||||||||||||||||||
Net realized and unrealized gain | 2,470,295 | ||||||||||||||||||||||||||||||||
Increase in net assets from operations | $2,770,997 |
1 | Period from 12-15-16 (commencement of operations) to 4-30-17. |
STATEMENT OF CHANGES IN NET ASSETS
Period ended 4-30-171 | |||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||
From operations | |||||||||||||||||
Net investment income | $300,702 | ||||||||||||||||
Net realized gain | 197,156 | ||||||||||||||||
Change in net unrealized appreciation (depreciation) | 2,273,139 | ||||||||||||||||
Increase in net assets resulting from operations | 2,770,997 | ||||||||||||||||
From fund share transactions | |||||||||||||||||
Shares issued | 32,444,015 | ||||||||||||||||
Shares repurchased | (2,607,602 | ) | |||||||||||||||
Total from fund share transactions | 29,836,413 | ||||||||||||||||
Total increase | 32,607,410 | ||||||||||||||||
Net assets | |||||||||||||||||
Beginning of period | — | ||||||||||||||||
End of period | $32,607,410 | ||||||||||||||||
Undistributed net investment income | $306,167 | ||||||||||||||||
Share activity | |||||||||||||||||
Shares issued | 1,300,000 | ||||||||||||||||
Shares repurchased | (100,000 | ) | |||||||||||||||
End of period | 1,200,000 |
1 | Period from 12-15-16 (commencement of operations) to 4-30-17. |
Financial highlights
Period ended | 4-30-171 | ||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||
Net asset value, beginning of period | $24.54 | ||||||||||||||||||||||||||||
Net investment income2 | 0.31 | ||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.32 | ||||||||||||||||||||||||||||
Total from investment operations | 2.63 | ||||||||||||||||||||||||||||
Net asset value, end of period | $27.17 | ||||||||||||||||||||||||||||
Total return (%)3 | 10.73 | 4 | |||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $33 | ||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||
Expenses before reductions | 0.99 | 5 | |||||||||||||||||||||||||||
Expenses including reductions | 0.45 | 5 | |||||||||||||||||||||||||||
Net investment income | 3.02 | 5 | |||||||||||||||||||||||||||
Portfolio turnover (%)6 | 8 |
1 | Period from 12-15-16 (commencement of operations) to 4-30-17. | |||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable period. | |||||||||||||||||||||||||||||||||||||
4 | Not annualized. | |||||||||||||||||||||||||||||||||||||
5 | Annualized. | |||||||||||||||||||||||||||||||||||||
6 | Portfolio turnover rate excludes securities received or delivered from in-kind transactions. |
Note 1 — Organization
John Hancock Multifactor Developed International ETF (the fund) is a series of John Hancock Exchange-Traded Fund Trust (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Developed International Index. The John Hancock Dimensional Developed International Index is a rules-based index of developed markets outside the U.S. and Canada that have been selected based on sources of expected returns. Securities eligible for inclusion in the index are classified according to their market capitalization, relative price, and profitability, and are weighted accordingly in favor of smaller, less expensive, more profitable companies.
The fund commenced operations on December 15, 2016.
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: Equity securities 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. Investments by the fund in open-end mutual funds are valued at their respective NAVs each business day. 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. Trading in foreign securities may be completed before the scheduled daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund's Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities
valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund's investments as of April 30, 2017, by major security category or type:
Total value at 4-30-17 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Australia | $2,400,453 | — | $2,400,453 | — | |
Austria | 63,881 | — | 63,881 | — | |
Belgium | 449,884 | — | 449,884 | — | |
Canada | 698 | — | 698 | — | |
Chile | 22,106 | — | 22,106 | — | |
Denmark | 583,433 | — | 583,433 | — | |
Finland | 361,000 | — | 361,000 | — | |
France | 3,130,246 | — | 3,130,246 | — | |
Germany | 2,984,744 | — | 2,984,744 | — | |
Hong Kong | 1,165,115 | $6,230 | 1,158,885 | — | |
Ireland | 298,916 | — | 298,916 | — | |
Israel | 154,392 | 32,714 | 121,678 | — | |
Italy | 588,514 | 20,280 | 568,234 | — | |
Japan | 7,910,696 | 2,277 | 7,908,419 | — | |
Jersey, Channel Islands | 36,096 | — | 36,096 | — | |
Jordan | 10,976 | — | 10,976 | — | |
Luxembourg | 107,882 | — | 107,882 | — | |
Macau | 39,211 | — | 39,211 | — | |
Mexico | 16,832 | — | 16,832 | — | |
Netherlands | 1,155,219 | — | 1,155,219 | — | |
New Zealand | 42,914 | — | 42,914 | — | |
Norway | 167,450 | — | 167,450 | — | |
Portugal | 43,545 | — | 43,545 | — | |
Singapore | 360,798 | — | 360,798 | — | |
South Africa | 112,603 | — | 112,603 | — | |
Spain | 1,024,579 | — | 1,024,579 | — | |
Sweden | 933,653 | — | 933,653 | — | |
Switzerland | 2,670,628 | — | 2,670,628 | — | |
United Kingdom | 5,315,810 | — | 5,315,810 | — | |
United States | 27,377 | — | 27,377 | — | |
Preferred securities | |||||
Germany | 161,240 | 129,184 | 32,056 | — | |
Spain | 29,660 | 29,660 | — | — | |
Short-term investments | 1,403 | 1,403 | — | — | |
Total investments in securities | $32,371,954 | $221,748 | $32,150,206 | — |
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
The fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $1 billion unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $750 million, subject to asset coverage and other limitations as specified in the agreement. 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 based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. For the period ended April 30, 2017, the fund had no borrowings under the line of credit. Commitment fees for the period ended April 30, 2017 were $710.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of April 30, 2017, the fund has a short-term capital loss carryforward of $52,039 available to offset future net realized capital gains. This carryforward does not expire.
As of April 30, 2017, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends semiannually from net investment income, if any. Capital gain distributions, if any, are typically distributed annually.
As of April 30, 2017, the components of distributable earnings on a tax basis consisted of $336,290 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to redemptions in-kind and investments in passive foreign investment companies.
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a monthly management fee to the Advisor equivalent on an annual basis to the sum of 0.450% for all asset levels. 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 group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the period ended April 30, 2017, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to the fund, in an amount equal to the amount by which expenses of the fund exceed 0.45% of average annual net assets (on an annualized basis). Expenses means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense. The expense limitation expires on August 31, 2018, unless renewed by mutual agreement of the fund and the Advisor based on a determination that this is appropriate under the circumstances at that time.
For the period ended April 30, 2017, the expense reductions described above amounted to $53,390.
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the period ended April 30, 2017 were equivalent to a net annual effective rate of 0.00% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the period ended April 30, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Capital share transactions
The fund will issue and redeem shares at NAV only in a large specified number of shares, each called a "creation unit," or multiples thereof, that consist of 50,000 shares. Only authorized participants may engage in creation or redemption transactions directly with the fund. Such transactions generally take place when an authorized participant deposits into the fund a designated portfolio of securities (including any portion of such securities for which cash may be substituted) and a specified amount of cash approximating the holdings of the fund in exchange for a specified number of creation units.
Similarly, shares can be redeemed only in creation units, generally for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) held by the fund and a specified amount of cash. For purposes of US GAAP, in-kind redemption transactions are treated as a sale of securities and any resulting gains and losses are recognized based on the market value of the securities on the date of the transfer. Authorized participants pay a transaction fee to the custodian when purchasing and redeeming creation units of the fund. The transaction fee is used to defray the costs associated with the issuance and redemption of creation units. Individual shares of the fund may only be purchased and sold in secondary market transactions through brokers. Secondary market transactions may be subject to brokerage commissions. Shares of the fund are listed and traded on the NYSE Arca, Inc., trade at market prices rather than NAV, and may trade at a price greater than or less than NAV.
Affiliates of the fund or the Advisor owned 82% of shares outstanding on April 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than in-kind transactions and short-term securities, amounted to $2,186,677 and $2,136,075, respectively, for the period ended April 30, 2017. Securities received and delivered from in-kind transactions aggregated $32,275,653 and $2,439,205, respectively, for the period ended April 30, 2017.
Note 7 — New rule issuance
In October 2016, the Securities and Exchange Commission (SEC) issued Final Rule Release No.33-10231, Investment Company Reporting Modernization (the Release). The Release calls for the adoption of new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The SEC is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The updates to Regulation S-X are effective August 1, 2017 and may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments. These updates will have no impact on the fund's net assets or results of operations.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Exchange-Traded Fund Trust and Shareholders of John Hancock Multifactor Developed International ETF
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Multifactor Developed International ETF (the "Fund") as of April 30, 2017, and the results of its operations, the changes in its net assets and the financial highlights for the period December 15, 2016 (commencement of operations) through April 30, 2017, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities as of April 30, 2017 by correspondence with the custodian and broker, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 15, 2017
EVALUATION OF ADVISORY AND SUBADVISORY AGREEMENTS BY THE BOARD OF TRUSTEES
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on December 6-8, 2016, the Board of Trustees (the Board) of John Hancock Exchange-Traded Fund Trust (the Trust), including all of the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), approved the John Hancock Multifactor Developed International ETF (the New Fund).
This section describes the evaluation by the Board of:
(a) | an advisory agreement between the Trust and John Hancock Advisers, LLC (the Advisor) (the Advisory Agreement); and |
(b) | a subadvisory agreement between the Advisor and Dimensional Fund Advisors LP (the Subadvisor) with respect to the New Fund (the Subadvisory Agreement). |
In considering the Advisory Agreement and the Subadvisory Agreement with respect to the New Fund, the Board received in advance of the meetings a variety of materials relating to the New Fund, the Advisor and the Subadvisor, including comparative expense information for a peer group of similar exchange-traded funds and a broader universe of exchange-traded funds, simulated performance information of the New Fund's underlying index (Underlying Index) as compared to applicable benchmarks, and other information provided by the Advisor and the Subadvisor regarding the nature, extent, and quality of services to be provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's anticipated profitability in connection with its proposed relationship to the New Fund and any compensation paid to affiliates of the Advisor. The Board also took into account discussions with management and information provided to the Board members at prior meetings with respect to the services provided by the Advisor and the Subadvisor to other John Hancock Funds (the Funds), including quarterly performance reports prepared by management containing reviews of investment results, and periodic presentations from the Subadvisor with respect to the other Funds that it manages. The Board also considered information regarding the New Fund presented at the September 13-15, 2016 meeting. The Board also considered the nature, quality, and extent of the non-advisory services, if any, to be provided to the New Fund by the Advisor and/or its affiliates, including administrative services. The Board members also took into account information with respect to other exchange-traded funds in the Trust and the Subadvisor provided at in-person meetings held over the past year.
Throughout the process, the Board asked questions of and were afforded the opportunity to request additional information from management. The Board is assisted by legal counsel for the Trust, and the Independent Trustees were also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed Advisory Agreement and Subadvisory Agreement and discussed the proposed Advisory Agreement and Subadvisory Agreement in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the New Fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets and the industry) and did not treat any single factor as determinative, and each Trustee may have attributed different weights to different factors. The Board members' conclusions may have been based in part on its consideration of the advisory and subadvisory arrangements for other Funds in prior years.
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent and quality of services to be provided to the New Fund, the Board considered information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information
regarding the Advisor's compliance and regulatory history. The Board members also noted that, on a regular basis, they receive and review information from the Funds' Chief Compliance Officer (CCO) regarding the Funds' compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board considered the investment strategy and Underlying Index of the New Fund. The Board also considered the Advisor's risk management processes. The Board considered that the Advisor would be responsible for the management of the day-to-day operations of the New Fund, including but not limited to, general supervision of and coordination of the services to be provided by the Subadvisor, and also would be responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers, including the New Fund's distributor.
In considering the nature, extent and quality of the services to be provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management of other Funds and the quality of the performance of the Advisor's duties with respect to other Funds, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a trustee of the other trusts in the complex.
In the course of its deliberations regarding the Advisory Agreement, the Board members considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Funds' affairs and its subadvisory relationships, including those with the Subadvisor, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives; review of brokerage matters, including with respect to trade allocation and best execution; and the Advisor's timeliness in responding to performance issues; |
(b) | the background, qualifications, and skills of the Advisor's personnel; |
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and fund industry developments; |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the Funds; |
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the New Fund; and |
(f) | the Advisor's reputation and experience in serving as an investment advisor to the Funds, and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that Advisor may reasonably be expected to provide a high quality of services under the Advisory Agreement with respect to the New Fund.
Investment performance. In connection with its consideration of the Advisory Agreement, the Board considered, the New Fund's investment strategy and processes, including the fact that the New Fund will seek performance that closely corresponds to its Underlying Index, which was developed by, and will be maintained, by, the Subadvisor. The Board also considered the simulated performance of the New Fund's Underlying Index as compared to applicable benchmarks.
Fees and Expenses. The Board reviewed comparative information including, among other data, the New Fund's anticipated fees and expenses as compared to similarly situated exchange-traded funds deemed to be comparable to the New Fund. The Board noted that the New Fund's anticipated net total expenses were below the peer group average and above the peer group median. The Board took into account management's discussion of the New Fund's anticipated expenses. The Board took into account management's discussion with respect to the proposed advisory/subadvisory fee structure, including the amount of the advisory fee to be retained by the Advisor after payment of the subadvisory fees. The Board also noted that the Advisor, and not the New Fund, would be responsible for paying the subadvisory fees and that such fees are negotiated at arm's length with respect to the Subadvisor. The Board also took into account that management has agreed to implement an overall fee waiver across a number of funds in the complex, including the New Fund, which is discussed further below. The Board also noted that the Advisor has contractually agreed to waive fees and/or reimburse expenses with respect to the New
Fund for a specified period. The Board concluded that the advisory fees to be paid by the New Fund are reasonable in relation to the nature, extent and quality of the services expected to be provided.
Profitability/Indirect Benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor's relationship with the New Fund, the Board:
(a) | noted that because the New Fund was not yet in existence, no actual revenue, cost or profitability data was available for the Board to review; |
(b) | reviewed and considered information presented by the Advisor regarding the advisory fees and advisory spreads prior to distribution, operations and overhead for the New Fund; |
(c) | noted that the Advisor will derive reputational and other indirect benefits from providing advisory services to the New Fund; |
(d) | noted that the subadvisory fee for the New Fund will be paid by Advisor and was negotiated at arm's length; |
(e) | noted that the Advisor will also pay the Subadvisor a license fee in connection with the New Fund's use of the Underlying Index; and |
(f) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it will provide to the New Fund and the entrepreneurial risk that it assumes as Advisor. |
Based upon its review, the Board concluded that the anticipated level of profitability, if any, of the Advisor and its affiliates from their relationship with the New Fund is reasonable and not excessive.
Economies of Scale. In considering the extent to which economies of scale would be realized if the New Fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee and/or reimburse or pay operating expenses of the New Fund to reduce operating expenses for a specified period of time, and further considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the New Fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund; |
(b) | reviewed the New Fund's advisory fee structure and concluded that: (i) the New Fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the New Fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the New Fund to benefit from economies of scale if the New Fund grows. The Board also took into account management's discussion of the New Fund's advisory fee structure; and |
(c) | the Board also considered the potential effect of the New Fund's future growth in size on its performance and fees. The Board also noted that if the New Fund's assets increase over time, the New Fund may realize other economies of scale and the Board would consider whether additional breakpoints would be appropriate at that time. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(a) | information relating to the Subadvisor's business, including current subadvisory services (to other funds in the John Hancock family of funds); |
(b) | the simulated performance of the Underlying Index developed by the Subadvisor as compared to applicable benchmarks; |
(c) | the proposed advisory fee and total expense ratio for the New Fund, including any breakpoints, and comparable fee information prepared by an independent third party provider of fund data; and |
(d) | information relating to the nature and scope of any material relationships and their significance to the New Fund's Advisor and Subadvisor. |
Nature, Extent, and Quality of Services. With respect to the services to be provided by the Subadvisor, the Board members received and reviewed information provided to the Board by the Subadvisor with respect to the New Fund and took into account information presented throughout the past year with respect to Funds in the complex managed by the Advisor and subadvised by the Subadvisor, including other exchange-traded funds. In this regard, the Board members considered the Subadvisor's current level of staffing and its overall resources, as well as considered information relating to the Subadvisor's compensation program. The Board members reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who will provide services to the New Fund. The Board members also considered the Subadvisor's risk assessment and monitoring processes. The Board members noted that the Advisor conducts regular periodic reviews of the Subadvisor and its operations in regard to the Funds, including regarding investment processes and organizational and staffing matters. The Board members also noted that the Funds' CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which include evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed by it to assure compliance with the federal securities laws. The Board members also took into account the financial condition of the Subadvisor. The Board considered the Subadvisor's investment processes and philosophies. The Board took into account that the New Fund will seek performance that closely corresponds to its Underlying Index, which was developed by, and will be maintained, by, the Subadvisor.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the New Fund. The Board members also considered information and took into account any other potential conflicts of interests the Advisor might have in connection with the Subadvisory Agreement.
The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm's length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a factor in the Board's consideration of the Subadvisory Agreement.
The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships with respect to the Subadvisor, which include arrangements in which the Subadvisor will serve as the index provider for the New Fund and for other exchange-traded funds in the complex, as well as arrangements in which the Subadvisor or its affiliates provide advisory, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, including other exchange-traded funds, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the New Fund, such as the opportunity to provide advisory services to additional John Hancock Funds and reputational benefits.
Subadvisory fees. The Board considered that the New Fund will pay advisory fees to the Advisor and that, in turn, the Advisor will pay subadvisory fees to the Subadvisor. The Board considered the New Fund's fees and expenses as compared to similarly situated exchange-traded funds deemed to be comparable to the New Fund. The Board also considered that the Subadvisor receives additional compensation from the Advisor in connection with its role as index provider for the New Fund.
Subadvisor performance. The Board considered the New Fund's investment strategy and processes, including the fact that the New Fund will seek performance that closely corresponds to its Underlying Index and that its Underlying Index has been developed by, and will be maintained by, the Subadvisor. The Board also considered simulated performance of the Underlying Index as compared to applicable benchmarks. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | The Subadvisor has extensive experience and demonstrated skills as a manager, and currently subadvises other Funds in the complex, including other exchange-traded funds, and the Board is generally satisfied with the Subadvisor's management of these Funds, and may reasonably be expected to provide a high quality of investment management services to the New Fund; |
(2) | the proposed subadvisory fees are reasonable in relation to the level and quality of services to be provided; and |
(3) | subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the New Fund in order to permit shareholders to benefit from economies of scale if and as the New Fund grows. |
* * *
Based on the Board's evaluation of all factors that it deemed to be material, including those factors described above, and assisted by the advice of independent legal counsel, the Board, including the Independent Trustees, concluded that approval of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the New Fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2015 | 227 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2015 | 227 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
Peter S. Burgess,2 Born: 1942 | 2015 | 227 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2015 | 227 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Grace K. Fey, Born: 1946 | 2015 | 227 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Theron S. Hoffman,2 Born: 1947 | 2015 | 227 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2015 | 227 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts, (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2015 | 227 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2015 | 227 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2015 | 227 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
James R. Boyle, Born: 1959 | 2015 | 227 |
Non-Independent Trustee Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Craig Bromley, Born: 1966 | 2015 | 227 |
Non-Independent Trustee President, John Hancock Financial Service (since 2012); Senior Executive Vice President and General Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive Officer, Manulife Insurance Company (Manulife Japan) (2005-2012, including prior positions). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Warren A. Thomson, Born: 1955 | 2015 | 227 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2014 |
President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2014 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2014 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2014 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson# Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Dimensional Fund Advisors LP Principal distributor Foreside Fund Services, LLC Custodian State Street Bank and Trust Company Transfer agent State Street Bank and Trust Company Legal counsel Dechert LLP Independent registered public accounting firm PricewaterhouseCoopers LLP Stock Symbol NYSE Arca: JHMD |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 1-1-17
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com/etf or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com/etf | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value New Opportunities Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC (Foreside), and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP. Mutual funds and certain closed-end funds are distributed by John Hancock Funds, LLC. Member FINRA/SIPC.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no representation as to the advisability of investing in the John Hancock Multifactor ETFs (Multifactor ETFs). Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP guarantees the accuracy and/or the completeness of the John Hancock Dimensional Indexes (the "Indexes") or any data included therein, and neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP shall have any liability for any errors, omissions, or interruptions therein. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any warranty, express or implied, as to results to be obtained by the Multifactor ETFs, owners of the shares of the Multifactor ETFs or any other person or entity from the use of the Indexes, trading based on the Indexes, or any data included therein, either in connection with the Multifactor ETFs or for any other use. Neither John Hancock Advisers, LLC nor Dimensional Fund Advisors LP makes any express or implied warranties, and expressly disclaim all warranties of merchantability or fitness for a particular purpose or use with respect to the Indexes or any data included therein. Without limiting any of the foregoing, in no event shall either John Hancock Advisers, LLC or Dimensional Fund Advisors LP have any liability for any special, punitive, direct, indirect or consequential damages (including lost profits) arising out of matters relating to the use of the Indexes, even if notified of the possibility of such damages.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Investments 601 Congress Street n Boston, MA 02210 800-225-5291 n jhinvestments.com/etf | |
This report is for the information of the shareholders of John Hancock Multifactor Developed International ETF. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
JHAN-2017-05-12-0622 | 890A 4/17 6/17 |
ITEM 2. CODE OF ETHICS.
As of the end of the period, April 30, 2017, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer, Chief Financial Officer and Treasurer (respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the “Senior Financial Officers”). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Peter S. Burgess is the audit committee financial expert and is “independent”, pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the principal accountant for the audits of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements amounted to the following for the fiscal period ended April 30, 2017 and April 30, 2016. These fees were billed to the registrant and were approved by the registrant’s audit committee.
Fund | April 30, 2017 | April 30, 2016 | ||
John Hancock Multifactor Consumer Discretionary ETF | $ | 14,000 | $ | 14,000 |
John Hancock Multifactor Financials ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Healthcare ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Large Cap ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Mid Cap ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Technology ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Materials ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Energy ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Consumer Staples ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Industrials ETF | 14,000 | 14,000 | ||
John Hancock Multifactor Utilities ETF | 14,000 | 14,000 | ||
John Hancock Developed International ETF | 14,000 | - | ||
Total | $ | 168,000 | $ | 154,000 |
(b) Audit-Related Services
Audit-related service fees for assurance and related services by the principal accountant are billed to the registrant or to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser (“control affiliates”) that provides ongoing services to the registrant. The nature of the services provided was affiliated service provider internal controls reviews.
Fund | April 30, 2017 | April 30, 2016 | ||
John Hancock Multifactor Consumer Discretionary ETF | $ | 0 | $ | 0 |
John Hancock Multifactor Financials ETF | 0 | 0 | ||
John Hancock Multifactor Healthcare ETF | 0 | 0 | ||
John Hancock Multifactor Large Cap ETF | 0 | 3,500 | ||
John Hancock Multifactor Mid Cap ETF | 0 | 0 | ||
John Hancock Multifactor Technology ETF | 0 | 0 | ||
John Hancock Multifactor Materials ETF | 0 | 0 | ||
John Hancock Multifactor Energy ETF | 0 | 0 | ||
John Hancock Multifactor Consumer Staples ETF | 0 | 0 | ||
John Hancock Multifactor Industrials ETF | 0 | 0 | ||
John Hancock Multifactor Utilities ETF | 0 | 0 | ||
John Hancock Multifactor Developed ETF | - | |||
Total | $ | 0 | $ | 3,500 |
In addition, amounts billed to control affiliates for service provider internal controls reviews were $106,517 for the fiscal period ended April 30, 2017 and $103,474 for the fiscal period ended April 30, 2016.
(c) Tax Fees
The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning (“tax fees”) amounted to the following for the fiscal period ended April 30, 2017 and for the fiscal period ended April 30, 2016. The nature of the services comprising the tax fees was the review of the registrant’s tax returns and tax distribution requirements. These fees were billed to the registrant and were approved by the registrant’s audit committee.
Fund | April 30, 2017 | April 30, 2016 | ||
John Hancock Multifactor Consumer Discretionary ETF | $ | 1,596 | $ | 1,000 |
John Hancock Multifactor Financials ETF | 1,047 | 1,000 | ||
John Hancock Multifactor Healthcare ETF | 1,237 | 1,000 | ||
John Hancock Multifactor Large Cap ETF | 2,061 | 1,000 | ||
John Hancock Multifactor Mid Cap ETF | 2,061 | 1,000 | ||
John Hancock Multifactor Technology ETF | 1,047 | 1,000 | ||
John Hancock Multifactor Materials ETF | 1,047 | 1,000 | ||
John Hancock Multifactor Energy ETF | 1,047 | 1,000 | ||
John Hancock Multifactor Consumer Staples ETF | 1,047 | 1,000 | ||
John Hancock Multifactor Industrials ETF | 1,167 | 1,000 | ||
John Hancock Multifactor Utilities ETF | 1,047 | 1,000 | ||
John Hancock Multifactor Developed International ETF | - | |||
Total | $ | 15,451 | $ | 11,000 |
(d) All Other Fees
Other fees billed for professional services rendered by the principal accountant to the registrant or to the control affiliates for the fiscal period ended April 30, 2017 and for the fiscal period ended April 30, 2016 amounted to the following:
Fund | April 30, 2017 | April 30, 2016 | ||
John Hancock Multifactor Consumer Discretionary ETF | $ | 832 | $ | 109 |
John Hancock Multifactor Financials ETF | 832 | 109 | ||
John Hancock Multifactor Healthcare ETF | 832 | 109 | ||
John Hancock Multifactor Large Cap ETF | 832 | 109 | ||
John Hancock Multifactor Mid Cap ETF | 832 | 109 | ||
John Hancock Multifactor Technology ETF | 832 | 109 | ||
John Hancock Multifactor Materials ETF | 832 | 0 | ||
John Hancock Multifactor Energy ETF | 832 | 0 | ||
John Hancock Multifactor Consumer Staples ETF | 832 | 0 | ||
John Hancock Multifactor Industrials ETF | 832 | 0 | ||
John Hancock Multifactor Utilities ETF | 832 | 0 | ||
John Hancock Multifactor Developed International ETF | 832 | - | ||
Total | $ | 9,984 | $ | 654 |
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The trust’s Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the “Auditor”) relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust’s Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of audit-related and non-audit services by the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per instance/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per instance/per fund are subject to specific pre-approval by the Audit Committee.
All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.
(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
Audit-Related Fees, Tax Fees and All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
(f) According to the registrant’s principal accountant, for the fiscal period ended April 30, 2016, the percentage of hours spent on the audit of the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons who were not full-time, permanent employees of principal accountant was less than 50%.
(g) The aggregate non-audit fees billed by the registrant's accountant for non- audit services rendered to the registrant and rendered to the registrant's control affiliates for the fiscal period ended April 30, 2017 and April 30, 2016 amounted to the following:
Trust | April 30, 2017 | April 30, 2016 | ||
John Hancock Exchange-Traded Fund Trust | $ | 6,454,571 | $ | 5,754,230 |
(h) The audit committee of the registrant has considered the non-audit services provided by the registrant’s principal accountant(s) to the control affiliates and has determined that the services that were not pre-approved are compatible with maintaining the principal accountant(s)' independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee comprised of independent trustees. The members of the audit committee are as follows:
Peter S. Burgess - Chairman
Charles L. Bardelis
Theron S. Hoffman
ITEM 6. SCHEDULE OF INVESTMENTS.
(a) Not applicable.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has adopted procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached “John Hancock Funds – Nominating, Governance and Administration Committee Charter.”
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached “John Hancock Funds – Nominating, Governance and Administration Committee Charter.”
(c)(2) Contact person at the registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Exchange-Traded Fund Trust
By: | /s/ Andrew Arnott | |
Andrew Arnott | ||
President | ||
Date: | June 14, 2017 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Andrew Arnott | |
Andrew Arnott | ||
President | ||
Date: | June 14, 2017 |
By: | /s/ Charles A. Rizzo | |
Charles A. Rizzo | ||
Chief Financial Officer | ||
Date: | June 14, 2017 |