John Hancock
Financial Opportunities Fund
Quarterly portfolio holdings 9/30/2023
Fund’s investments |
As of 9-30-23 (unaudited)
Shares | Value | ||||
Common stocks 115.3% (92.0% of Total investments) | $556,726,695 | ||||
(Cost $443,095,578) | |||||
Financials 114.7% | 553,758,939 | ||||
Banks 101.4% | |||||
1st Source Corp. | 120,335 | 5,064,900 | |||
Alpine Banks of Colorado | 175,439 | 4,657,905 | |||
American Business Bank (A) | 74,896 | 2,317,282 | |||
American National Bankshares, Inc. | 84,377 | 3,201,263 | |||
American Riviera Bancorp (A) | 218,459 | 3,451,652 | |||
Ameris Bancorp | 217,592 | 8,353,357 | |||
Atlantic Union Bankshares Corp. | 168,647 | 4,853,661 | |||
Avidbank Holdings, Inc. (A) | 197,070 | 4,148,324 | |||
Avidbank Holdings, Inc. (A) | 60,000 | 1,263,000 | |||
Bank of America Corp. (B)(C) | 317,982 | 8,706,347 | |||
Bank of Idaho Holding Company (A) | 150,000 | 3,975,000 | |||
Bank of Marin Bancorp (C) | 189,583 | 3,465,577 | |||
Bank7 Corp. | 116,363 | 2,619,331 | |||
Banner Corp. | 66,503 | 2,818,397 | |||
Bar Harbor Bankshares | 142,394 | 3,364,770 | |||
BayCom Corp. | 173,874 | 3,340,120 | |||
Bremer Financial Corp. (D)(E) | 41,667 | 3,394,180 | |||
Business First Bancshares, Inc. | 182,458 | 3,422,912 | |||
C&F Financial Corp. | 37,912 | 2,032,083 | |||
California BanCorp (A) | 121,815 | 2,448,482 | |||
Cambridge Bancorp (B)(C) | 84,073 | 5,236,907 | |||
Camden National Corp. | 68,551 | 1,934,509 | |||
CB Financial Services, Inc. | 57,155 | 1,239,120 | |||
Central Pacific Financial Corp. | 144,201 | 2,405,273 | |||
Central Valley Community Bancorp | 126,760 | 1,788,584 | |||
Citizens Community Bancorp, Inc. | 169,116 | 1,623,514 | |||
Citizens Financial Group, Inc. (B)(C) | 300,555 | 8,054,874 | |||
Civista Bancshares, Inc. | 183,001 | 2,836,516 | |||
Coastal Financial Corp. (A) | 132,503 | 5,685,704 | |||
Codorus Valley Bancorp, Inc. | 99,915 | 1,862,416 | |||
Colony Bankcorp, Inc. | 86,996 | 869,525 | |||
Columbia Banking System, Inc. | 236,837 | 4,807,791 | |||
Comerica, Inc. | 157,035 | 6,524,804 | |||
Community Heritage Financial, Inc. | 141,197 | 2,139,135 | |||
ConnectOne Bancorp, Inc. | 85,763 | 1,529,154 | |||
Cullen/Frost Bankers, Inc. | 87,349 | 7,967,102 | |||
CVB Financial Corp. | 222,784 | 3,691,531 | |||
Eagle Bancorp Montana, Inc. | 127,715 | 1,509,591 | |||
East West Bancorp, Inc. | 57,098 | 3,009,636 | |||
Enterprise Bancorp, Inc. | 74,904 | 2,050,872 | |||
Equity Bancshares, Inc., Class A | 147,255 | 3,544,428 | |||
ESSA Bancorp, Inc. | 94,578 | 1,419,616 | |||
Evans Bancorp, Inc. | 69,760 | 1,869,568 | |||
Farmers & Merchants Bancorp, Inc. (B)(C) | 114,822 | 2,012,830 | |||
Farmers National Banc Corp. | 162,398 | 1,877,321 | |||
FFB Bancorp (A) | 82,186 | 5,669,190 | |||
Fifth Third Bancorp (B)(C) | 349,526 | 8,853,494 | |||
First Business Financial Services, Inc. | 91,858 | 2,756,659 | |||
First Commonwealth Financial Corp. | 311,718 | 3,806,077 | |||
First Community Corp. | 132,912 | 2,295,390 |
2 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | QUARTERLY REPORT | SEE NOTES TO FUND’S INVESTMENTS |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
First Financial Bancorp | 361,650 | $7,088,340 | |||
First Horizon Corp. | 348,843 | 3,844,250 | |||
First Interstate BancSystem, Inc., Class A | 129,540 | 3,230,728 | |||
First Merchants Corp. | 152,194 | 4,234,037 | |||
First Mid Bancshares, Inc. | 76,166 | 2,022,969 | |||
First Northwest Bancorp | 62,446 | 766,212 | |||
First Reliance Bancshares, Inc. (A)(F) | 426,454 | 3,070,511 | |||
Flushing Financial Corp. | 63,037 | 827,676 | |||
German American Bancorp, Inc. | 124,124 | 3,362,519 | |||
Great Southern Bancorp, Inc. | 40,257 | 1,929,115 | |||
Hancock Whitney Corp. | 232,823 | 8,612,123 | |||
HBT Financial, Inc. | 209,443 | 3,820,240 | |||
Heritage Commerce Corp. | 513,678 | 4,350,853 | |||
Heritage Financial Corp. | 90,346 | 1,473,543 | |||
Horizon Bancorp, Inc. | 404,294 | 4,317,860 | |||
Huntington Bancshares, Inc. (B)(C) | 861,100 | 8,955,440 | |||
InBankshares Corp. (A) | 207,676 | 1,557,570 | |||
Independent Bank Corp. (Massachusetts) (C) | 85,080 | 4,176,577 | |||
Independent Bank Corp. (Michigan) | 163,971 | 3,007,228 | |||
JPMorgan Chase & Co. (C) | 61,167 | 8,870,438 | |||
KeyCorp | 673,808 | 7,250,174 | |||
Landmark Bancorp, Inc. | 61,696 | 1,122,867 | |||
Live Oak Bancshares, Inc. | 110,051 | 3,185,976 | |||
M&T Bank Corp. (B)(C) | 76,596 | 9,685,555 | |||
Metrocity Bankshares, Inc. | 65,263 | 1,284,376 | |||
Mid Penn Bancorp, Inc. | 71,323 | 1,435,732 | |||
MidWestOne Financial Group, Inc. | 133,914 | 2,722,472 | |||
NBT Bancorp, Inc. | 104,324 | 3,306,028 | |||
New York Community Bancorp, Inc. (B)(C) | 454,005 | 5,148,417 | |||
Nicolet Bankshares, Inc. (B)(C) | 94,784 | 6,614,028 | |||
Northrim BanCorp, Inc. | 96,619 | 3,828,045 | |||
Ohio Valley Banc Corp. | 79,347 | 1,940,034 | |||
Old National Bancorp (B)(C) | 359,938 | 5,233,499 | |||
Old Second Bancorp, Inc. | 314,959 | 4,286,592 | |||
OP Bancorp | 170,717 | 1,562,061 | |||
Orange County Bancorp, Inc. | 43,740 | 1,888,256 | |||
Pinnacle Financial Partners, Inc. | 118,671 | 7,955,704 | |||
Plumas Bancorp | 54,412 | 1,857,626 | |||
Popular, Inc. (B)(C) | 141,157 | 8,894,303 | |||
Premier Financial Corp. | 348,147 | 5,939,388 | |||
Prime Meridian Holding Company | 125,087 | 2,758,168 | |||
Private Bancorp of America, Inc. (A) | 116,752 | 3,632,155 | |||
Provident Financial Holdings, Inc. | 106,084 | 1,388,640 | |||
QCR Holdings, Inc. | 75,459 | 3,661,271 | |||
Red River Bancshares, Inc. | 58,027 | 2,666,921 | |||
Regions Financial Corp. (B)(C) | 510,976 | 8,788,787 | |||
Renasant Corp. | 144,643 | 3,788,200 | |||
Riverview Bancorp, Inc. | 368,806 | 2,050,561 | |||
SB Financial Group, Inc. (C) | 257,156 | 3,528,180 | |||
Shore Bancshares, Inc. | 406,028 | 4,271,415 | |||
Sierra Bancorp | 163,038 | 3,091,200 | |||
South Atlantic Bancshares, Inc. | 289,568 | 2,950,698 | |||
Southern California Bancorp (A)(B)(C) | 261,632 | 3,665,464 |
SEE NOTES TO FUND’S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 3 |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
Southern Missouri Bancorp, Inc. (B)(C) | 104,786 | $4,054,170 | |||
SouthState Corp. (B)(C) | 91,599 | 6,170,109 | |||
SpareBank 1 SR-Bank ASA | 127,986 | 1,465,715 | |||
Stock Yards Bancorp, Inc. | 79,829 | 3,136,481 | |||
Synovus Financial Corp. | 228,255 | 6,345,489 | |||
The First Bancorp, Inc. | 242,896 | 5,708,056 | |||
The First Bancshares, Inc. | 195,710 | 5,278,299 | |||
The PNC Financial Services Group, Inc. (B)(C) | 70,978 | 8,713,969 | |||
Timberland Bancorp, Inc. | 113,266 | 3,069,509 | |||
TriCo Bancshares | 202,161 | 6,475,217 | |||
Truist Financial Corp. | 215,638 | 6,169,403 | |||
U.S. Bancorp (B)(C) | 247,292 | 8,175,474 | |||
United BanCorp of Alabama, Inc., Class A | 168,566 | 6,472,934 | |||
Virginia National Bankshares Corp. | 82,690 | 2,509,642 | |||
Walden Mutual (A)(D)(E) | 100,000 | 629,990 | |||
Westamerica BanCorp | 112,746 | 4,876,265 | |||
Western Alliance Bancorp | 46,427 | 2,134,249 | |||
WSFS Financial Corp. | 246,216 | 8,986,884 | |||
WTB Financial Corp., Class B | 10,170 | 2,669,625 | |||
Zions Bancorp NA | 226,397 | 7,898,991 | |||
Capital markets 8.8% | |||||
Ares Management Corp., Class A (B)(C) | 90,014 | 9,259,740 | |||
Brookfield Corp. (B)(C) | 124,500 | 3,893,115 | |||
KKR & Company, Inc. (B)(C) | 151,905 | 9,357,348 | |||
Oaktree Specialty Lending Company (B)(C) | 266,364 | 5,359,244 | |||
Onex Corp. | 105,066 | 6,175,166 | |||
Sixth Street Specialty Lending, Inc. | 217,057 | 4,436,645 | |||
The Carlyle Group, Inc. | 139,865 | 4,218,328 | |||
Consumer finance 1.3% | |||||
Discover Financial Services (B)(C) | 54,395 | 4,712,239 | |||
LendingClub Corp. (A) | 260,870 | 1,591,307 | |||
Financial services 1.3% | |||||
Eurazeo SE | 101,170 | 6,020,126 | |||
Insurance 1.9% | |||||
Assured Guaranty, Ltd. | 91,766 | 5,553,678 | |||
Skyward Specialty Insurance Group, Inc. (A) | 130,513 | 3,570,836 | |||
Real estate 0.6% | 2,967,756 | ||||
Industrial REITs 0.6% | |||||
Plymouth Industrial REIT, Inc. | 141,659 | 2,967,756 | |||
Preferred securities 6.2% (4.9% of Total investments) | $30,049,701 | ||||
(Cost $32,068,669) | |||||
Financials 5.4% | 26,161,467 | ||||
Banks 5.0% | |||||
Atlantic Union Bankshares Corp., 6.875% | 124,375 | 2,559,638 | |||
CNB Financial Corp., 7.125% | 69,615 | 1,635,256 | |||
First Business Financial Services, Inc., 7.000% (7.000% to 3-15-27, then 3 month CME Term SOFR + 5.390%) (E)(G) | 4,000 | 3,152,090 | |||
First Merchants Corp., 7.500% | 50,000 | 1,180,000 | |||
Midland States Bancorp, Inc., 7.750% (7.750% to 9-30-27, then 5 Year CMT + 4.713%) | 120,000 | 2,886,000 | |||
Northpointe Bancshares, Inc., 8.250% (8.250% to 12-30-25, then SOFR + 7.990%) (A)(G) | 160,000 | 3,536,000 | |||
Pinnacle Financial Partners, Inc., 6.750% | 71,825 | 1,630,428 |
4 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | QUARTERLY REPORT | SEE NOTES TO FUND’S INVESTMENTS |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
Synovus Financial Corp., 5.875% (5.875% to 7-1-24, then 5 Year CMT + 4.127%) | 77,222 | $1,662,590 | |||
Tectonic Financial, Inc., 9.000% (9.000% to 5-15-24, then 3 month LIBOR + 6.720%) | 186,840 | 1,868,400 | |||
United Community Banks, Inc., 6.875% | 86,596 | 1,949,709 | |||
Washington Federal, Inc., 4.875% | 61,050 | 800,976 | |||
WesBanco, Inc., 6.750% (6.750% to 11-15-25, then 5 Year CMT + 6.557%) | 50,000 | 1,160,000 | |||
Mortgage real estate investment trusts 0.4% | |||||
Invesco Mortgage Capital, Inc., 7.750% (7.750% to 12-27-24, then 3 month LIBOR + 5.180%) | 99,000 | 2,140,380 | |||
Real estate 0.8% | 3,888,234 | ||||
Hotel and resort REITs 0.5% | |||||
Sotherly Hotels, Inc., 8.000% | 44,519 | 1,046,197 | |||
Sotherly Hotels, Inc., 8.250% | 59,188 | 1,363,692 | |||
Office REITs 0.3% | |||||
Hudson Pacific Properties, Inc., 4.750% | 118,838 | 1,478,345 | |||
Rate (%) | Maturity date | Par value^ | Value | ||
Corporate bonds 2.5% (2.0% of Total investments) | $11,944,070 | ||||
(Cost $11,927,668) | |||||
Financials 2.2% | 10,422,840 | ||||
Banks 2.2% | |||||
BNP Paribas SA (7.750% to 8-16-29, then 5 Year CMT + 4.899%) (G)(H) | 7.750 | 08-16-29 | 2,903,000 | 2,755,715 | |
BNP Paribas SA (9.250% to 11-17-27, then 5 Year CMT + 4.969%) (G)(H) | 9.250 | 11-17-27 | 832,000 | 851,203 | |
Cullen/Frost Capital Trust II (3 month LIBOR + 1.550%) (I) | 7.221 | 03-01-34 | 3,000,000 | 2,550,111 | |
Synovus Financial Corp. (5.900% to 2-7-24, then 5 Year U.S. Swap Rate + 3.379%) | 5.900 | 02-07-29 | 2,000,000 | 1,861,386 | |
University Bancorp, Inc. (8.250% to 1-31-28, then 3 month CME Term SOFR + 4.870%) (G) | 8.250 | 01-31-33 | 2,500,000 | 2,404,425 | |
Real estate 0.3% | 1,521,230 | ||||
Retail REITs 0.3% | |||||
The Necessity Retail REIT, Inc. (G) | 4.500 | 09-30-28 | 2,000,000 | 1,521,230 | |
Convertible bonds 1.1% (0.9% of Total investments) | $5,516,343 | ||||
(Cost $5,563,735) | |||||
Financials 1.1% | 5,516,343 | ||||
Mortgage real estate investment trusts 1.1% | |||||
Blackstone Mortgage Trust, Inc. | 5.500 | 03-15-27 | 2,000,000 | 1,778,750 | |
Redwood Trust, Inc. | 7.750 | 06-15-27 | 4,179,000 | 3,737,593 | |
Certificate of deposit 0.0% (0.0% of Total investments) | $79,970 | ||||
(Cost $79,970) | |||||
East Boston Savings Bank (E) | 0.150 | 11-01-23 | 1,938 | 1,938 | |
Eastern Savings Bank FSB | 0.200 | 04-24-25 | 1,970 | 1,970 | |
First Bank Richmond NA (E) | 3.500 | 12-05-25 | 22,466 | 22,466 | |
First Federal of Northern Michigan | 0.250 | 01-09-24 | 3,065 | 3,065 | |
First National Bank | 0.400 | 06-17-24 | 1,368 | 1,368 | |
First Savings Bank of Perkasie | 0.747 | 04-07-25 | 5,201 | 5,201 | |
Home National Bank | 1.900 | 11-06-23 | 21,615 | 21,615 | |
Hudson United Bank | 4.250 | 04-24-25 | 2,296 | 2,296 | |
Machias Savings Bank | 1.010 | 05-31-24 | 2,023 | 2,023 | |
Midstates Bank NA | 0.520 | 06-03-24 | 2,066 | 2,066 | |
Milford Federal Savings and Loan Bank | 0.500 | 10-30-23 | 2,070 | 2,070 | |
Newburyport Five Cents Savings Bank | 0.300 | 10-18-24 | 2,183 | 2,183 | |
Newtown Savings Bank | 0.250 | 06-03-24 | 2,001 | 2,001 |
SEE NOTES TO FUND’S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 5 |
Rate (%) | Maturity date | Par value^ | Value | ||
Newtown Savings Bank (E) | 0.250 | 08-29-24 | 3,905 | $3,905 | |
Salem Five Bancorp (E) | 0.250 | 12-19-23 | 1,752 | 1,752 | |
Sunshine Federal Savings and Loan Association | 0.500 | 05-12-25 | 2,108 | 2,108 | |
The Milford Bank | 0.100 | 06-12-25 | 1,943 | 1,943 |
Yield (%) | Shares | Value | |||
Short-term investments 0.2% (0.2% of Total investments) | $942,238 | ||||
(Cost $942,257) | |||||
Short-term funds 0.2% | 942,238 | ||||
John Hancock Collateral Trust (J) | 5.2943(K) | 94,264 | 942,238 |
Total investments (Cost $493,677,877) 125.3% | $605,259,017 | ||||
Other assets and liabilities, net (25.3%) | (122,265,813) | ||||
Total net assets 100.0% | $482,993,204 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund unless otherwise indicated. | |
^All par values are denominated in U.S. dollars unless otherwise indicated. | |
Security Abbreviations and Legend | |
CME | Chicago Mercantile Exchange |
CMT | Constant Maturity Treasury |
LIBOR | London Interbank Offered Rate |
SOFR | Secured Overnight Financing Rate |
(A) | Non-income producing security. |
(B) | All or a portion of this security is on loan as of 9-30-23, and is a component of the fund’s leverage under the Liquidity Agreement. |
(C) | All or a portion of this security is pledged as collateral pursuant to the Liquidity Agreement. Total collateral value at 9-30-23 was $132,185,703. A portion of the securities pledged as collateral were loaned pursuant to the Liquidity Agreement. The value of securities on loan amounted to $112,562,392. |
(D) | Restricted security as to resale, excluding 144A securities. For more information on this security refer to the Notes to fund’s investments. |
(E) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
(F) | The fund owns 5% or more of the outstanding voting shares of the issuer and the security is considered an affiliate of the fund. For more information on this security refer to the Notes to fund’s investments. |
(G) | 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. |
(H) | Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date. |
(I) | Variable rate obligation. The coupon rate shown represents the rate at period end. |
(J) | Investment is an affiliate of the fund, the advisor and/or subadvisor. |
(K) | The rate shown is the annualized seven-day yield as of 9-30-23. |
6 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | QUARTERLY REPORT | SEE NOTES TO FUND’S INVESTMENTS |
DERIVATIVES
SWAPS
Interest rate swaps | ||||||||||
Counterparty (OTC)/ Centrally cleared | Notional amount | Currency | Payments made | Payments received | Fixed payment frequency | Floating payment frequency | Maturity date | Unamortized upfront payment paid (received) | Unrealized appreciation (depreciation) | Value |
Centrally cleared | 10,000,000 | USD | Fixed 3.356% | USD Compounded SOFR(a) | Semi-Annual | Quarterly | May 2028 | — | $371,276 | $371,276 |
Centrally cleared | 15,000,000 | USD | Fixed 1.220% | USD Compounded SOFR + 0.262%(a) | Semi-Annual | Quarterly | Mar 2030 | $(4,229) | 2,856,884 | 2,852,655 |
Centrally cleared | 25,000,000 | USD | Fixed 1.136% | USD Compounded SOFR + 0.262%(a) | Semi-Annual | Quarterly | Mar 2030 | (6,757) | 4,875,014 | 4,868,257 |
Centrally cleared | 25,000,000 | USD | Fixed 1.077% | USD Compounded SOFR + 0.262%(a) | Semi-Annual | Quarterly | Mar 2030 | (6,640) | 4,955,149 | 4,948,509 |
$(17,626) | $13,058,323 | $13,040,697 |
(a) | At 9-30-23, the overnight SOFR was 5.310%. |
Derivatives Currency Abbreviations | |
USD | U.S. Dollar |
Derivatives Abbreviations | |
OTC | Over-the-counter |
SOFR | Secured Overnight Financing Rate |
SEE NOTES TO FUND’S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 7 |
Notes to Fund’s investments (unaudited) |
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 Advisor’s Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Equity securities, including exchange-traded or closed-end funds, are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds, including John Hancock Collateral Trust (JHCT), are valued at their respective NAVs each business day. Debt obligations are typically valued based on evaluated prices provided by an independent pricing vendor. Independent pricing vendors utilize matrix pricing, which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Swaps are generally valued using evaluated prices obtained from an independent pricing vendor. Foreign securities and currencies are valued in U.S. dollars based on foreign currency exchange rates supplied by an independent pricing vendor.
In certain instances, the Pricing Committee of the Advisor 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 Pricing Committee following procedures established by the Advisor and adopted 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 Pricing Committee, following procedures established by the Advisor and adopted by the Board of Trustees. The Advisor 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, including registered investment companies. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the Advisor’s 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 September 30, 2023, by major security category or type:
Total value at 9-30-23 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | |
Investments in securities: | ||||
Assets | ||||
Common stocks | ||||
Financials | ||||
Banks | $489,611,167 | $484,121,282 | $1,465,715 | $4,024,170 |
Capital markets | 42,699,586 | 42,699,586 | — | — |
Consumer finance | 6,303,546 | 6,303,546 | — | — |
Financial services | 6,020,126 | — | 6,020,126 | — |
Insurance | 9,124,514 | 9,124,514 | — | — |
Real estate | ||||
Industrial REITs | 2,967,756 | 2,967,756 | — | — |
Preferred securities | ||||
Financials | ||||
Banks | 24,021,087 | 17,332,997 | 3,536,000 | 3,152,090 |
Mortgage real estate investment trusts | 2,140,380 | 2,140,380 | — | — |
Real estate | ||||
Hotel and resort REITs | 2,409,889 | 2,409,889 | — | — |
Office REITs | 1,478,345 | 1,478,345 | — | — |
8 | | |
Total value at 9-30-23 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | |
(continued) | ||||
Corporate bonds | $11,944,070 | — | $11,944,070 | — |
Convertible bonds | 5,516,343 | — | 5,516,343 | — |
Certificate of deposit | 79,970 | — | 49,909 | $30,061 |
Short-term investments | 942,238 | $942,238 | — | — |
Total investments in securities | $605,259,017 | $569,520,533 | $28,532,163 | $7,206,321 |
Derivatives: | ||||
Assets | ||||
Swap contracts | $13,040,697 | — | $13,040,697 | — |
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value. Transfers into or out of Level 3, if any, represent the beginning value of any security or instrument where a change in the level has occurred from the beginning to the end of the period and in all cases were transferred into or out of Level 2. Securities were transferred into Level 3 because of a lack of observable market data which resulted from an absence of market activity for these securities.
Common stocks | Preferred securities | Certificate of deposit | Total | |
Balance as of 12-31-22 | $6,139,314 | $3,574,533 | $4,265 | $9,718,112 |
Realized gain (loss) | — | — | — | — |
Change in unrealized appreciation (depreciation) | (2,115,144) | (422,443) | — | (2,537,587) |
Purchases | — | — | 28,123 | 28,123 |
Sales | — | — | (4,265) | (4,265) |
Transfers into Level 3 | — | — | 1,938 | 1,938 |
Transfers out of Level 3 | — | — | — | — |
Balance as of 9-30-23 | $4,024,170 | $3,152,090 | $30,061 | $7,206,321 |
Change in unrealized appreciation (depreciation) at period end1 | $(2,115,144) | $(422,443) | — | $(2,537,587) |
1 | Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at period end. |
The valuation techniques and significant amounts of unobservable inputs used in the fair value measurement of the fund’s Level 3 securities are outlined in the table below.
Fair Value at 9-30-23 | Valuation technique | Significant unobservable inputs | Input/Range | |
Common stocks | $3,394,180 | Market Comparable | Price/Book Value multiple Discount | 0.84x 18% |
629,990 | Market Comparable | Price/Book Value multiple Implied multiple premium Discount | 0.81x 19.41% 18% | |
$4,024,170 | ||||
Preferred securities | $3,152,090 | Bond Comparable | Benchmark Option Adjusted Spread (OAS) Implied OAS premium | 473.91 2% |
Certificate of deposit | $30,061 | Transactions Indicative of Value | Prior/recent transactions | $100 |
Total | $7,206,321 | |||
A change to unobservable inputs of the fund’s Level 3 securities as of September 30, 2023 could have resulted in changes to the fair value measurement, as follows:
Significant Unobservable Input | Impact to Valuation if input had increased | Impact to Valuation if input had decreased |
Benchmark Option Adjusted Spread (OAS) | Increase | Decrease |
Discount | Decrease | Increase |
Implied multiple premium | Increase | Decrease |
Implied OAS premium | Increase | Decrease |
| | 9 |
Significant Unobservable Input | Impact to Valuation if input had increased | Impact to Valuation if input had decreased |
Price/Book Value multiple | Increase | Decrease |
Prior/recent transactions | Increase | Decrease |
Investment in affiliated underlying funds. The fund may invest in affiliated underlying funds that are managed by the Advisor and its affiliates. Information regarding the fund’s fiscal year to date purchases and sales of the affiliated underlying funds as well as income and capital gains earned by the fund, if any, is as follows:
Dividends and distributions | |||||||||
Affiliate | Ending share amount | Beginning value | Cost of purchases | Proceeds from shares sold | Realized gain (loss) | Change in unrealized appreciation (depreciation) | Income distributions received | Capital gain distributions received | Ending value |
John Hancock Collateral Trust | 94,264 | $1,253,479 | $81,319,664 | $(81,628,985) | $(1,574) | $(346) | $159,077 | — | $942,238 |
Restricted securities. The fund may hold restricted securities which are restricted as to resale and the fund has limited rights to registration under the Securities Act of 1933. Disposal may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. The following table summarizes the restricted securities held at September 30, 2023:
Issuer, Description | Original acquisition date | Acquisition cost | Beginning share amount | Shares purchased | Shares sold | Ending share amount | Value as a percentage of net assets | Ending value |
Bremer Financial Corp. | 10-25-19 | $5,000,040 | 41,667 | — | — | 41,667 | 0.7% | $3,394,180 |
Walden Mutual | 9-1-22 | 1,000,000 | 100,000 | — | — | 100,000 | 0.1% | 629,990 |
$4,024,170 |
Transactions in securities of affiliated issuers. Affiliated issuers, as defined by the 1940 Act, are those in which the fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the fund’s transactions in the securities of these issuers during the period ended September 30, 2023, is set forth below:
Dividends and distributions | |||||||||
Affiliate | Ending share amount | Beginning value | Cost of purchases | Proceeds from shares sold | Realized gain (loss) | Change in unrealized appreciation (depreciation) | Income distributions received | Capital gain distributions received | Ending value |
First Reliance Bancshares, Inc. | 426,454 | $3,697,356 | — | — | — | $(626,845) | — | — | $3,070,511 |
For additional information on the fund’s significant accounting policies and risks, please refer to the fund’s most recent semiannual or annual shareholder report and prospectus.
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