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- 22441
John Hancock Hedged Equity & Income Fund (Exact name of registrant as specified in charter)
200 Berkeley Street, Boston, Massachusetts 02116 (Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
200 Berkeley Street
Boston, Massachusetts 02116
(Name and address of agent for service) Registrant's telephone number, including area code: 617-543-9634
Date of fiscal year end: |
December 31 |
Date of reporting period: |
December 31, 2023 |
ITEM 1. REPORT TO STOCKHOLDERS
Annual report
John Hancock
Hedged Equity & Income Fund
Closed-end international
equity
Ticker: HEQ
December 31, 2023
Managed distribution plan
The fund has adopted a managed
distribution plan (Plan). Under the Plan, the fund currently makes quarterly distributions of an amount equal to $0.2500 per share, which will be paid quarterly until further notice. The fund may make additional
distributions: (i) for purposes of not incurring federal income tax at the fund level of investment company taxable income and net capital gain, if any, not included in such regular distributions; and (ii) for
purposes of not incurring federal excise tax on ordinary income and capital gain net income, if any, not included in such regular distributions.
The Plan provides that the Board of
Trustees of the fund may amend the terms of the Plan or terminate the Plan at any time without prior notice to the fund’s shareholders. The Plan is subject to periodic review by the fund’s Board of
Trustees.
You should not draw any conclusions
about the fund’s investment performance from the amount of the fund’s distributions or from the terms of the fund’s Plan. The fund’s total return at net asset value (NAV) is presented in the
"Financial highlights" section.
With each distribution that does not
consist solely of net income, the fund will issue a notice to shareholders and an accompanying press release that will provide detailed information regarding the amount and composition of the distribution and other
related information. The amounts and sources of distributions reported in the notice to shareholders are only estimates and are not provided for tax reporting purposes. The actual amounts and sources of the amounts
for tax reporting purposes will depend upon the fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV
for the calendar year that will tell you how to report these distributions for federal income-tax purposes. The fund may, at times, distribute more than its net investment income and net realized capital gains;
therefore, a portion of your distribution may result in a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of
capital does not necessarily reflect the fund’s investment performance and should not be confused with "yield" or "income".
A message to shareholders
Dear shareholder,
Global equities delivered
robust gains during the 12 months ended December 31, 2023, as investors were encouraged by economic data and corporate earnings results that exceeded the depressed expectations in place at the start of the year. In
addition, major central banks slowed the pace of interest rate increases as inflation waned. Late in the year, investors began to anticipate that the U.S. Federal Reserve and other central banks would begin to cut
rates in 2024, a favorable shift that propelled equities sharply higher in November and December.
Much of the return for the
major world indexes came from a narrow group of mega-cap U.S. technology stocks. The European markets also outperformed, as the ongoing conflict in Ukraine had less of an impact on economic growth than investors had
anticipated. On the other hand, the emerging markets lagged. Although a number of countries in the asset class posted strong returns, China’s sizable underperformance depressed headline index results. Canada
also trailed its developed-market peers, largely due to a smaller representation of the growth stocks that led the markets higher in 2023.
In these uncertain times, your
financial professional can assist with positioning your portfolio so that it’s sufficiently diversified to help meet your long-term objectives and to withstand the inevitable bouts of market volatility along the
way.
On behalf of everyone at John
Hancock Investment Management, I’d like to take this opportunity to welcome new shareholders and thank existing shareholders for the continued trust you’ve placed in us.
Sincerely,
Kristie M. Feinberg
Head of Wealth and Asset
Management,
United States and Europe
Manulife Investment Management
President and CEO,
John Hancock Investment Management
This commentary reflects the CEO’s views as
of this report’s period end and are subject to change at any time. Diversification does not guarantee investment returns and does not eliminate risk of loss. All investments entail risks, including the possible
loss of principal. For more up-to-date information, you can visit our website at jhinvestments.com.
John Hancock
Hedged Equity & Income Fund
| 1
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
INVESTMENT OBJECTIVE
The fund seeks to provide total
return with a focus on current income and gains and also consisting of long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS
OF 12/31/2023 (%)
The MSCI All Country World Index
(ACWI) tracks the performance of publicly traded large- and mid-cap stocks of companies in both developed and emerging markets.
It is not possible to invest
directly in an index. Index figures do not reflect expenses, which would result in lower returns.
The performance data contained
within this material represents past performance, which does not guarantee future results.
Investment returns and principal
value will fluctuate and a shareholder may sustain losses. Further, the fund’s performance at net asset value (NAV) is different from the fund’s performance at closing market price because the closing
market price is subject to the dynamics of secondary market trading. Market risk may increase when shares are purchased at a premium to NAV or sold at a discount to NAV. Current month-end performance may be higher or
lower than the performance cited. The fund’s most recent performance can be found at jhinvestments.com or by calling 800-852-0218.
|
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 2
|
PERFORMANCE HIGHLIGHTS OVER THE
LAST TWELVE MONTHS
Equities rose on
solid growth, easing inflation and moderating yields
Markets
delivered strong gains, supported by resilient economic growth, consumer spending and labor markets as well as signs of slowing inflation that reversed a sharp climb in bond yields early in the period.
The fund’s
equity strategy detracted from relative results
The fund had a
positive absolute return at net asset value but underperformed its comparative index, the MSCI All Country World Index, due largely to an underweight to the information technology sector, an overweight to the
utilities sector, and security selection in information technology, healthcare, and communication services sectors.
The fund’s
beta hedge strategy also hurt performance
The fund’s
hedging strategy, which is designed to reduce equity exposure by selling equity index futures, detracted from absolute results as global markets moved higher over the year.
SECTOR COMPOSITION AS OF
12/31/2023 (% of net assets)
| 3
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
Management’s discussion of fund
performance
What factors affected global equity
markets during the 12 months ended December 31, 2023?
Equities advanced in the first half
of 2023 as economic growth, consumer spending and labor markets were surprisingly resilient against a backdrop of sweeping sanctions against Russia, a reshaping of global energy flows, and a banking crisis that
rekindled fears of a global recession. Although major central banks continued to raise interest rates amid persistent inflation, declining energy prices helped reduce headline inflation in most countries. Stocks fell
in the third quarter as market sentiment was dented by concerns about the health of China’s economy, increasing energy prices, and rising government bond yields amid the prospect of an extended period of high
interest rates. In a potential step toward phasing out Japan’s ultra-easy monetary policy, the Bank of Japan (BOJ) allowed greater flexibility for government bond yields to fluctuate but ultimately held rates
stable. Equities rebounded in the fourth quarter as the U.S. Federal Reserve surprised markets by signaling lower interest rates in 2024, sparking a rally that rippled across the globe and increasing speculation for
sharp reductions in policy rates across developed markets in 2024.
TOP 10 HOLDINGS
AS OF 12/31/2023 (% of net assets)
|
| Merck & Company, Inc.
| 1.9
|
| TotalEnergies SE
| 1.8
|
| Johnson & Johnson
| 1.8
|
| Philip Morris International, Inc.
| 1.6
|
| Pfizer, Inc.
| 1.2
|
| Cisco Systems, Inc.
| 1.2
|
| Rio Tinto PLC
| 1.2
|
| The Home Depot, Inc.
| 1.1
|
| AXA SA
| 1.1
|
| Texas Instruments, Inc.
| 1.0
|
| TOTAL
| 13.9
|
| Cash and cash equivalents are not included.
|
COUNTRY COMPOSITION
AS OF 12/31/2023 (% of net assets)
|
| United States
| 42.5
|
| Japan
| 10.2
|
| United Kingdom
| 9.9
|
| France
| 5.8
|
| Canada
| 3.9
|
| South Korea
| 3.8
|
| Switzerland
| 3.6
|
| Germany
| 3.2
|
| Spain
| 2.1
|
| Australia
| 2.0
|
| Other countries
| 13.0
|
| TOTAL
| 100.0
|
|
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 4
|
The fund underperformed versus its
comparative index for the period. What led to these results?
Performance was negatively impacted
by the fund’s equity and beta hedge strategies. Within the fund’s equity strategy, both security selection and sector allocation detracted from relative performance. In particular, an underweight
allocation to the information technology sector and an overweight allocation to the utilities sector, both natural byproducts of the portfolio’s equity income focus, detracted the most. Security selection was
weakest in the information technology, healthcare, and communication services sectors. On the positive side, security selection in the financials and utilities sectors contributed to relative performance.
The fund’s hedging
strategies, which are designed to generate extra income and reduce equity exposure through selling futures on the major global stock indexes, detracted from absolute results as global markets increased over the
year.
The primary relative detractors
were an underweight exposure to U.S. graphic processing unit chipmaker NVIDIA Corp. and an overweight exposure to U.S. pharmaceutical developer Pfizer, Inc. The top relative contributors were our overweight exposures
to U.S. alternative asset manager Ares Management Corp. and Swiss investment bank UBS Group AG, both in the financials sector.
The views expressed in
this report are exclusively those of Gregg R. Thomas, CFA, and Roberto J. Isch, CFA, Wellington Management Company LLP, and are subject to change. They are not meant as investment advice. Please note that the holdings
discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current
and future portfolio holdings are subject to risk.
| 5
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
TOTAL RETURNS FOR THE PERIOD
ENDED DECEMBER 31, 2023
| Average annual total returns (%)
| Cumulative total returns (%)
|
|
| 1-Year
| 5-Year
| 10-Year
| 5-year
| 10-Year
|
| At Net asset value
| 9.53
| 6.01
| 4.74
| 33.87
| 58.90
|
| At Market price
| -3.21
| 5.08
| 4.63
| 28.10
| 57.29
|
| MSCI ACWI
| 22.20
| 11.72
| 7.93
| 74.04
| 114.40
|
Performance figures assume all
distributions have been reinvested.
The returns reflect past results
and should not be considered indicative of future performance. Investment returns and principal value will fluctuate and a shareholder may sustain losses. Further, the fund’s performance at net asset value (NAV)
is different from the fund’s performance at closing market price because the closing market price is subject to the dynamics of secondary market trading. Market risk may be augmented when shares are purchased at
a premium to NAV or when shares need to be sold at a discount to NAV. Current month-end performance may be higher or lower than the performance cited. The fund’s most recent performance can be found at
jhinvestments.com or by calling 800-852-0218.
The performance table above and
the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares. The fund’s performance results reflect any applicable fee waivers
or expense reductions, without which the expenses would increase and results would have been less favorable.
|
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 6
|
This chart shows what happened to a
hypothetical $10,000 investment in John Hancock Hedged Equity & Income Fund for the periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in the MSCI
ACWI.
The MSCI All Country World Index
(ACWI) tracks the performance of publicly traded large- and mid-cap stocks of companies in both developed and emerging markets.
It is not possible to invest
directly in an index. Index figures do not reflect expenses, which would result in lower returns.
The returns reflect past results
and should not be considered indicative of future performance.
| 7
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
AS OF
12-31-23
|
|
|
|
| Shares
| Value
|
| Common stocks 96.9%
|
|
|
|
| $136,707,728
|
| (Cost $135,531,363)
|
|
|
|
|
|
| Communication services 3.6%
|
|
| 5,133,022
|
| Diversified telecommunication services 1.7%
|
|
|
|
| AT&T, Inc.
|
|
| 25,571
| 429,081
|
| BCE, Inc.
|
|
| 2,820
| 111,029
|
| BT Group PLC
|
|
| 46,846
| 73,810
|
| Koninklijke KPN NV
|
|
| 132,430
| 456,238
|
| KT Corp.
|
|
| 3,152
| 84,044
|
| Magyar Telekom Telecommunications PLC
|
|
| 14,958
| 29,419
|
| Orange Polska SA
|
|
| 26,144
| 54,111
|
| Orange SA
|
|
| 8,917
| 101,633
|
| Proximus SADP
|
|
| 7,341
| 69,015
|
| Spark New Zealand, Ltd.
|
|
| 16,435
| 53,805
|
| Telefonica Brasil SA
|
|
| 8,971
| 98,542
|
| Telenor ASA
|
|
| 8,144
| 93,466
|
| Verizon Communications, Inc.
|
|
| 20,785
| 783,595
|
| Entertainment 0.0%
|
|
|
|
| Avex, Inc.
|
|
| 3,020
| 29,263
|
| DeNA Company, Ltd.
|
|
| 3,450
| 33,644
|
| Interactive media and services 0.0%
|
|
|
|
| Baidu, Inc., Class A (A)
|
|
| 719
| 10,703
|
| Media 0.9%
|
|
|
|
| Comcast Corp., Class A
|
|
| 1,694
| 74,282
|
| Hakuhodo DY Holdings, Inc.
|
|
| 6,470
| 49,444
|
| Megacable Holdings SAB de CV, Series CPO
|
|
| 17,889
| 39,874
|
| Metropole Television SA
|
|
| 2,773
| 39,629
|
| Nippon Television Holdings, Inc.
|
|
| 5,660
| 61,673
|
| Omnicom Group, Inc.
|
|
| 2,527
| 218,611
|
| RTL Group SA
|
|
| 1,350
| 52,139
|
| Television Francaise 1 SA
|
|
| 6,381
| 50,293
|
| TV Asahi Holdings Corp.
|
|
| 4,240
| 48,221
|
| WPP PLC
|
|
| 62,618
| 598,120
|
| Wireless telecommunication services 1.0%
|
|
|
|
| KDDI Corp.
|
|
| 19,492
| 618,257
|
| MTN Group, Ltd.
|
|
| 6,729
| 42,445
|
| Turkcell Iletisim Hizmetleri AS
|
|
| 275,294
| 523,324
|
| Vodacom Group, Ltd.
|
|
| 35,389
| 205,312
|
| Consumer discretionary 7.8%
|
|
| 11,000,834
|
| Automobile components 0.9%
|
|
|
|
| Continental AG
|
|
| 778
| 66,077
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 8
|
|
|
|
|
| Shares
| Value
|
| Consumer discretionary (continued)
|
|
|
|
| Automobile components (continued)
|
|
|
|
| Hankook Tire & Technology Company, Ltd. (A)
|
|
| 17,820
| $626,317
|
| Hyundai Mobis Company, Ltd.
|
|
| 510
| 93,439
|
| NOK Corp.
|
|
| 2,155
| 28,641
|
| Nokian Renkaat OYJ
|
|
| 5,024
| 45,914
|
| Stanley Electric Company, Ltd.
|
|
| 3,538
| 66,375
|
| Sumitomo Electric Industries, Ltd.
|
|
| 6,450
| 81,841
|
| Sumitomo Rubber Industries, Ltd.
|
|
| 5,180
| 56,094
|
| Tachi-S Company, Ltd.
|
|
| 2,370
| 30,152
|
| Tokai Rika Company, Ltd.
|
|
| 2,710
| 41,657
|
| Toyota Boshoku Corp.
|
|
| 1,030
| 16,287
|
| TS Tech Company, Ltd.
|
|
| 3,710
| 44,779
|
| Unipres Corp.
|
|
| 3,620
| 24,394
|
| Valeo SE
|
|
| 4,260
| 65,841
|
| Automobiles 2.0%
|
|
|
|
| Bayerische Motoren Werke AG
|
|
| 3,070
| 341,604
|
| Dongfeng Motor Group Company, Ltd., H Shares
|
|
| 58,779
| 29,291
|
| Great Wall Motor Company, Ltd., H Shares
|
|
| 38,683
| 50,286
|
| Hero MotoCorp, Ltd.
|
|
| 3,433
| 170,912
|
| Honda Motor Company, Ltd.
|
|
| 4,130
| 42,602
|
| Isuzu Motors, Ltd.
|
|
| 78,611
| 1,007,767
|
| Mercedes-Benz Group AG
|
|
| 1,017
| 70,171
|
| Nissan Motor Company, Ltd.
|
|
| 22,180
| 86,722
|
| Renault SA
|
|
| 1,699
| 69,489
|
| Stellantis NV
|
|
| 2,411
| 56,491
|
| Subaru Corp.
|
|
| 3,604
| 65,735
|
| Toyota Motor Corp.
|
|
| 13,919
| 255,048
|
| Yamaha Motor Company, Ltd.
|
|
| 65,673
| 584,382
|
| Broadline retail 0.1%
|
|
|
|
| Alibaba Group Holding, Ltd.
|
|
| 5,653
| 54,453
|
| ASKUL Corp.
|
|
| 3,590
| 54,604
|
| Seria Company, Ltd.
|
|
| 2,910
| 54,278
|
| Distributors 0.1%
|
|
|
|
| LKQ Corp.
|
|
| 3,813
| 182,223
|
| Diversified consumer services 0.0%
|
|
|
|
| Benesse Holdings, Inc.
|
|
| 360
| 6,651
|
| Hotels, restaurants and leisure 1.6%
|
|
|
|
| Darden Restaurants, Inc.
|
|
| 4,644
| 763,009
|
| McDonald’s Corp.
|
|
| 1,339
| 397,027
|
| OPAP SA
|
|
| 29,846
| 506,322
|
| Sodexo SA
|
|
| 4,966
| 546,699
|
| Household durables 1.0%
|
|
|
|
| Coway Company, Ltd. (A)
|
|
| 1,374
| 60,771
|
| 9
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
|
|
|
| Shares
| Value
|
| Consumer discretionary (continued)
|
|
|
|
| Household durables (continued)
|
|
|
|
| Crest Nicholson Holdings PLC
|
|
| 12,937
| $35,772
|
| De’ Longhi SpA
|
|
| 928
| 31,313
|
| Garmin, Ltd.
|
|
| 507
| 65,170
|
| Nikon Corp.
|
|
| 3,045
| 30,055
|
| Rinnai Corp.
|
|
| 2,930
| 67,794
|
| Sekisui House, Ltd.
|
|
| 47,795
| 1,059,434
|
| Specialty retail 2.0%
|
|
|
|
| CECONOMY AG (A)
|
|
| 7,366
| 20,131
|
| Industria de Diseno Textil SA
|
|
| 18,971
| 827,782
|
| Kingfisher PLC
|
|
| 21,555
| 66,786
|
| Mr. Price Group, Ltd.
|
|
| 12,689
| 108,895
|
| The Home Depot, Inc.
|
|
| 4,538
| 1,572,644
|
| Tractor Supply Company
|
|
| 677
| 145,575
|
| Xebio Holdings Company, Ltd.
|
|
| 3,685
| 24,951
|
| Textiles, apparel and luxury goods 0.1%
|
|
|
|
| Burberry Group PLC
|
|
| 3,358
| 60,568
|
| Sanyo Shokai, Ltd.
|
|
| 760
| 12,750
|
| The Swatch Group AG, Bearer Shares
|
|
| 389
| 105,843
|
| Yue Yuen Industrial Holdings, Ltd.
|
|
| 18,971
| 21,026
|
| Consumer staples 8.7%
|
|
| 12,256,100
|
| Beverages 1.1%
|
|
|
|
| Cia Cervecerias Unidas SA, ADR
|
|
| 1,264
| 15,851
|
| Coca-Cola Icecek AS
|
|
| 2,803
| 49,847
|
| Embotelladora Andina SA, Series B, ADR
|
|
| 3,274
| 48,815
|
| Keurig Dr. Pepper, Inc.
|
|
| 6,492
| 216,313
|
| Kirin Holdings Company, Ltd.
|
|
| 5,420
| 79,350
|
| PepsiCo, Inc.
|
|
| 2,094
| 355,645
|
| Pernod Ricard SA
|
|
| 1,316
| 232,566
|
| The Coca-Cola Company
|
|
| 8,100
| 477,333
|
| Consumer staples distribution and retail 0.8%
|
|
|
|
| Atacadao SA
|
|
| 28,336
| 72,613
|
| Carrefour SA
|
|
| 4,875
| 89,284
|
| Clicks Group, Ltd.
|
|
| 33,093
| 593,118
|
| J Sainsbury PLC
|
|
| 11,910
| 45,918
|
| Sundrug Company, Ltd.
|
|
| 391
| 12,550
|
| Tsuruha Holdings, Inc.
|
|
| 815
| 74,607
|
| Walgreens Boots Alliance, Inc.
|
|
| 7,957
| 207,757
|
| Food products 1.9%
|
|
|
|
| Archer-Daniels-Midland Company
|
|
| 2,777
| 200,555
|
| Associated British Foods PLC
|
|
| 20,146
| 607,181
|
| Astral Foods, Ltd.
|
|
| 3,499
| 28,039
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 10
|
|
|
|
|
| Shares
| Value
|
| Consumer staples (continued)
|
|
|
|
| Food products (continued)
|
|
|
|
| Conagra Brands, Inc.
|
|
| 12,041
| $345,095
|
| General Mills, Inc.
|
|
| 1,262
| 82,207
|
| Kellanova
|
|
| 5,356
| 299,454
|
| Nestle SA
|
|
| 5,936
| 688,100
|
| Perusahaan Perkebunan London Sumatra Indonesia Tbk PT
|
|
| 195,282
| 11,285
|
| Thai Union Group PCL
|
|
| 100,912
| 44,284
|
| The Kraft Heinz Company
|
|
| 7,204
| 266,404
|
| Ulker Biskuvi Sanayi AS (A)
|
|
| 16,551
| 45,949
|
| WH Group, Ltd. (B)
|
|
| 124,227
| 80,226
|
| Household products 1.0%
|
|
|
|
| Colgate-Palmolive Company
|
|
| 3,806
| 303,376
|
| Kimberly-Clark Corp.
|
|
| 402
| 48,847
|
| The Procter & Gamble Company
|
|
| 7,438
| 1,089,965
|
| Personal care products 1.2%
|
|
|
|
| Kenvue, Inc.
|
|
| 30,450
| 655,589
|
| Unilever PLC
|
|
| 15,439
| 747,417
|
| Unilever PLC, ADR
|
|
| 5,478
| 265,573
|
| Tobacco 2.7%
|
|
|
|
| Altria Group, Inc.
|
|
| 14,846
| 598,888
|
| British American Tobacco PLC
|
|
| 16,300
| 476,925
|
| Japan Tobacco, Inc.
|
|
| 21,523
| 555,836
|
| Philip Morris International, Inc.
|
|
| 23,845
| 2,243,338
|
| Energy 9.0%
|
|
| 12,743,233
|
| Energy equipment and services 0.2%
|
|
|
|
| Baker Hughes Company
|
|
| 4,432
| 151,486
|
| Fugro NV (A)
|
|
| 2,288
| 43,869
|
| John Wood Group PLC (A)
|
|
| 19,507
| 42,635
|
| Trican Well Service, Ltd.
|
|
| 7,250
| 22,543
|
| Oil, gas and consumable fuels 8.8%
|
|
|
|
| ARC Resources, Ltd.
|
|
| 2,729
| 40,511
|
| BP PLC
|
|
| 35,318
| 209,367
|
| Canadian Natural Resources, Ltd.
|
|
| 7,908
| 518,089
|
| Chevron Corp.
|
|
| 5,765
| 859,907
|
| Coal India, Ltd.
|
|
| 61,421
| 277,500
|
| ConocoPhillips
|
|
| 3,436
| 398,817
|
| Coterra Energy, Inc.
|
|
| 38,643
| 986,169
|
| Diamondback Energy, Inc.
|
|
| 1,145
| 177,567
|
| Enbridge, Inc.
|
|
| 25,870
| 931,285
|
| Eni SpA
|
|
| 21,086
| 357,648
|
| EOG Resources, Inc.
|
|
| 7,165
| 866,607
|
| Equinor ASA
|
|
| 35,531
| 1,126,047
|
| 11
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
|
|
|
| Shares
| Value
|
| Energy (continued)
|
|
|
|
| Oil, gas and consumable fuels (continued)
|
|
|
|
| Exxon Mobil Corp.
|
|
| 10,784
| $1,078,184
|
| Oil & Natural Gas Corp., Ltd.
|
|
| 44,993
| 111,017
|
| Oil India, Ltd.
|
|
| 16,049
| 71,900
|
| OMV AG
|
|
| 4,584
| 201,112
|
| ORLEN SA
|
|
| 18,813
| 313,237
|
| Phillips 66
|
|
| 1,435
| 191,056
|
| Pioneer Natural Resources Company
|
|
| 200
| 44,976
|
| Repsol SA
|
|
| 36,001
| 534,036
|
| Shell PLC
|
|
| 11,433
| 374,249
|
| TotalEnergies SE
|
|
| 37,647
| 2,559,957
|
| Ultrapar Participacoes SA
|
|
| 4,701
| 25,502
|
| Woodside Energy Group, Ltd.
|
|
| 8,384
| 177,042
|
| Yankuang Energy Group Company, Ltd., H Shares
|
|
| 26,770
| 50,918
|
| Financials 22.5%
|
|
| 31,688,092
|
| Banks 8.9%
|
|
|
|
| ABN AMRO Bank NV (B)
|
|
| 6,926
| 104,157
|
| AIB Group PLC
|
|
| 14,780
| 63,299
|
| Banco Bilbao Vizcaya Argentaria SA
|
|
| 12,944
| 117,975
|
| Banco Bradesco SA, ADR
|
|
| 32,462
| 113,617
|
| Banco do Brasil SA
|
|
| 4,961
| 56,553
|
| Bank Mandiri Persero Tbk PT
|
|
| 416,954
| 163,795
|
| Bank of America Corp.
|
|
| 24,276
| 817,373
|
| Bank of Beijing Company, Ltd., Class A
|
|
| 105,600
| 67,440
|
| Bank of Chengdu Company, Ltd., Class A
|
|
| 25,700
| 40,802
|
| Bank of Ireland Group PLC
|
|
| 7,319
| 66,445
|
| Bank of Jiangsu Company, Ltd., Class A
|
|
| 88,600
| 83,575
|
| BNP Paribas SA
|
|
| 2,134
| 148,197
|
| BPER Banca
|
|
| 20,710
| 69,436
|
| CaixaBank SA
|
|
| 12,819
| 52,793
|
| Canara Bank
|
|
| 10,487
| 55,010
|
| CIMB Group Holdings BHD
|
|
| 50,945
| 64,862
|
| Dah Sing Financial Holdings, Ltd.
|
|
| 8,765
| 17,954
|
| DGB Financial Group, Inc. (A)
|
|
| 6,182
| 40,649
|
| DNB Bank ASA
|
|
| 36,728
| 780,883
|
| Erste Group Bank AG
|
|
| 2,771
| 112,239
|
| FinecoBank SpA
|
|
| 55,160
| 829,836
|
| HSBC Holdings PLC
|
|
| 84,140
| 680,689
|
| Huntington Bancshares, Inc.
|
|
| 7,295
| 92,792
|
| Industrial Bank of Korea (A)
|
|
| 51,559
| 473,905
|
| ING Groep NV
|
|
| 8,206
| 123,045
|
| JPMorgan Chase & Co.
|
|
| 8,252
| 1,403,665
|
| Kasikornbank PCL
|
|
| 25,158
| 99,385
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 12
|
|
|
|
|
| Shares
| Value
|
| Financials (continued)
|
|
|
|
| Banks (continued)
|
|
|
|
| Kasikornbank PCL, NVDR
|
|
| 1,593
| $6,293
|
| KB Financial Group, Inc.
|
|
| 2,759
| 115,110
|
| M&T Bank Corp.
|
|
| 3,812
| 522,549
|
| Mitsubishi UFJ Financial Group, Inc.
|
|
| 102,044
| 875,755
|
| Mizuho Financial Group, Inc.
|
|
| 12,567
| 214,366
|
| New York Community Bancorp, Inc.
|
|
| 17,924
| 183,363
|
| Regions Financial Corp.
|
|
| 10,214
| 197,947
|
| Resona Holdings, Inc.
|
|
| 13,630
| 69,095
|
| Royal Bank of Canada
|
|
| 9,291
| 939,583
|
| Sberbank of Russia PJSC, ADR (A)(C)
|
|
| 3,353
| 1,174
|
| Security Bank Corp.
|
|
| 19,906
| 25,704
|
| Shinhan Financial Group Company, Ltd.
|
|
| 6,351
| 196,904
|
| Societe Generale SA
|
|
| 4,804
| 127,812
|
| Standard Bank Group, Ltd.
|
|
| 5,688
| 64,848
|
| Standard Chartered PLC
|
|
| 17,335
| 147,107
|
| Sumitomo Mitsui Trust Holdings, Inc.
|
|
| 5,920
| 113,379
|
| The Bank of Nova Scotia
|
|
| 16,803
| 817,926
|
| The Tochigi Bank, Ltd.
|
|
| 7,490
| 16,419
|
| Truist Financial Corp.
|
|
| 10,056
| 371,268
|
| U.S. Bancorp
|
|
| 9,954
| 430,809
|
| Unicaja Banco SA (B)
|
|
| 39,371
| 38,774
|
| UniCredit SpA
|
|
| 7,916
| 215,550
|
| VTB Bank PJSC, GDR (A)(C)
|
|
| 55,420
| 1,108
|
| Wells Fargo & Company
|
|
| 3,275
| 161,196
|
| Capital markets 4.1%
|
|
|
|
| Ares Management Corp., Class A
|
|
| 10,673
| 1,269,233
|
| BlackRock, Inc.
|
|
| 595
| 483,021
|
| CME Group, Inc.
|
|
| 2,118
| 446,051
|
| Korea Investment Holdings Company, Ltd. (A)
|
|
| 12,248
| 580,108
|
| Mirae Asset Securities Company, Ltd. (A)
|
|
| 100,362
| 592,659
|
| Morgan Stanley
|
|
| 2,434
| 226,971
|
| Nomura Holdings, Inc.
|
|
| 11,053
| 49,778
|
| St. James’s Place PLC
|
|
| 5,354
| 46,581
|
| The Blackstone Group, Inc.
|
|
| 3,915
| 512,552
|
| The Carlyle Group, Inc.
|
|
| 1,616
| 65,755
|
| The Goldman Sachs Group, Inc.
|
|
| 551
| 212,559
|
| UBS Group AG
|
|
| 39,963
| 1,241,313
|
| Consumer finance 0.0%
|
|
|
|
| Vanquis Banking Group PLC
|
|
| 9,481
| 15,612
|
| Financial services 0.4%
|
|
|
|
| Equitable Holdings, Inc.
|
|
| 4,205
| 140,027
|
| Fidelity National Information Services, Inc.
|
|
| 1,123
| 67,459
|
| 13
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
|
|
|
| Shares
| Value
|
| Financials (continued)
|
|
|
|
| Financial services (continued)
|
|
|
|
| FirstRand, Ltd.
|
|
| 93,816
| $376,388
|
| Insurance 8.8%
|
|
|
|
| Admiral Group PLC
|
|
| 8,458
| 289,166
|
| Ageas SA/NV
|
|
| 1,830
| 79,551
|
| Allianz SE
|
|
| 2,782
| 743,465
|
| American Financial Group, Inc.
|
|
| 1,363
| 162,047
|
| American International Group, Inc.
|
|
| 3,128
| 211,922
|
| Assicurazioni Generali SpA
|
|
| 7,190
| 151,907
|
| Aviva PLC
|
|
| 26,246
| 145,230
|
| AXA SA
|
|
| 46,633
| 1,522,868
|
| Caixa Seguridade Participacoes SA
|
|
| 26,265
| 69,798
|
| China Reinsurance Group Corp., H Shares
|
|
| 506,252
| 29,492
|
| Chubb, Ltd.
|
|
| 647
| 146,222
|
| CNA Financial Corp.
|
|
| 8,925
| 377,617
|
| Dai-ichi Life Holdings, Inc.
|
|
| 4,675
| 99,170
|
| Fairfax Financial Holdings, Ltd.
|
|
| 629
| 580,324
|
| Fidelity National Financial, Inc.
|
|
| 12,369
| 631,066
|
| Legal & General Group PLC
|
|
| 140,654
| 449,486
|
| MetLife, Inc.
|
|
| 4,382
| 289,782
|
| MS&AD Insurance Group Holdings, Inc.
|
|
| 3,010
| 118,350
|
| Muenchener Rueckversicherungs-Gesellschaft AG
|
|
| 590
| 244,740
|
| NN Group NV
|
|
| 2,484
| 98,170
|
| Old Mutual, Ltd.
|
|
| 91,031
| 64,782
|
| Phoenix Group Holdings PLC
|
|
| 74,032
| 504,094
|
| PICC Property & Casualty Company, Ltd., H Shares
|
|
| 440,000
| 523,608
|
| Samsung Life Insurance Company, Ltd.
|
|
| 10,005
| 535,260
|
| Sanlam, Ltd.
|
|
| 25,365
| 101,177
|
| Sun Life Financial, Inc.
|
|
| 10,952
| 567,995
|
| Suncorp Group, Ltd.
|
|
| 67,589
| 640,025
|
| T&D Holdings, Inc.
|
|
| 8,485
| 134,703
|
| Talanx AG
|
|
| 14,728
| 1,052,540
|
| Tokio Marine Holdings, Inc.
|
|
| 34,169
| 850,841
|
| Tongyang Life Insurance Company, Ltd. (A)
|
|
| 4,127
| 14,487
|
| Tryg A/S
|
|
| 16,928
| 368,391
|
| Zurich Insurance Group AG
|
|
| 1,152
| 602,297
|
| Mortgage real estate investment trusts 0.3%
|
|
|
|
| Annaly Capital Management, Inc.
|
|
| 18,949
| 367,042
|
| Health care 9.1%
|
|
| 12,803,196
|
| Biotechnology 0.7%
|
|
|
|
| AbbVie, Inc.
|
|
| 3,946
| 611,512
|
| Amgen, Inc.
|
|
| 520
| 149,770
|
| Gilead Sciences, Inc.
|
|
| 3,251
| 263,364
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 14
|
|
|
|
|
| Shares
| Value
|
| Health care (continued)
|
|
|
|
| Health care equipment and supplies 0.3%
|
|
|
|
| Koninklijke Philips NV (A)
|
|
| 5,897
| $138,003
|
| Medtronic PLC
|
|
| 2,893
| 238,325
|
| Paramount Bed Holdings Company, Ltd.
|
|
| 1,510
| 29,617
|
| Health care providers and services 0.3%
|
|
|
|
| Alfresa Holdings Corp.
|
|
| 2,850
| 48,382
|
| BML, Inc.
|
|
| 1,420
| 30,166
|
| CVS Health Corp.
|
|
| 1,677
| 132,416
|
| Fresenius SE & Company KGaA
|
|
| 3,270
| 101,355
|
| Netcare, Ltd.
|
|
| 59,910
| 46,588
|
| Pharmaceuticals 7.8%
|
|
|
|
| Almirall SA
|
|
| 4,833
| 44,997
|
| AstraZeneca PLC
|
|
| 5,920
| 798,548
|
| AstraZeneca PLC, ADR
|
|
| 3,541
| 238,486
|
| Bristol-Myers Squibb Company
|
|
| 9,899
| 507,918
|
| Eisai Company, Ltd.
|
|
| 560
| 27,883
|
| Genomma Lab Internacional SAB de CV, Class B
|
|
| 60,153
| 50,089
|
| GSK PLC
|
|
| 11,282
| 208,369
|
| Johnson & Johnson
|
|
| 15,914
| 2,494,360
|
| Kissei Pharmaceutical Company, Ltd.
|
|
| 960
| 20,993
|
| Merck & Company, Inc.
|
|
| 24,061
| 2,623,112
|
| Novartis AG
|
|
| 12,373
| 1,249,803
|
| Ono Pharmaceutical Company, Ltd.
|
|
| 3,410
| 60,662
|
| Pfizer, Inc.
|
|
| 60,016
| 1,727,861
|
| Roche Holding AG
|
|
| 2,684
| 780,221
|
| Sandoz Group AG (A)
|
|
| 532
| 17,117
|
| Sanofi SA
|
|
| 773
| 76,815
|
| Takeda Pharmaceutical Company, Ltd.
|
|
| 3,015
| 86,464
|
| Industrials 9.8%
|
|
| 13,762,205
|
| Aerospace and defense 2.0%
|
|
|
|
| Austal, Ltd.
|
|
| 23,072
| 31,880
|
| Babcock International Group PLC
|
|
| 9,756
| 49,049
|
| BAE Systems PLC
|
|
| 80,300
| 1,136,582
|
| General Dynamics Corp.
|
|
| 1,106
| 287,195
|
| L3Harris Technologies, Inc.
|
|
| 853
| 179,659
|
| Lockheed Martin Corp.
|
|
| 2,142
| 970,840
|
| RTX Corp.
|
|
| 1,291
| 108,625
|
| Air freight and logistics 0.8%
|
|
|
|
| bpost SA
|
|
| 3,353
| 17,286
|
| Nippon Express Holdings, Inc.
|
|
| 10,591
| 600,933
|
| United Parcel Service, Inc., Class B
|
|
| 2,644
| 415,716
|
| Yamato Holdings Company, Ltd.
|
|
| 4,860
| 89,684
|
| 15
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
|
|
|
| Shares
| Value
|
| Industrials (continued)
|
|
|
|
| Building products 0.9%
|
|
|
|
| AGC, Inc.
|
|
| 15,284
| $566,492
|
| Cie de Saint-Gobain SA
|
|
| 1,857
| 136,949
|
| Johnson Controls International PLC
|
|
| 10,624
| 612,367
|
| Commercial services and supplies 0.1%
|
|
|
|
| Aeon Delight Company, Ltd.
|
|
| 1,639
| 41,353
|
| Prosegur Cia de Seguridad SA
|
|
| 14,768
| 28,690
|
| Construction and engineering 1.2%
|
|
|
|
| ACS Actividades de Construccion y Servicios SA
|
|
| 13,188
| 585,743
|
| Bouygues SA
|
|
| 12,677
| 478,293
|
| Chiyoda Corp. (A)
|
|
| 4,795
| 11,572
|
| Gamuda BHD
|
|
| 567,170
| 566,446
|
| Implenia AG
|
|
| 312
| 11,325
|
| JGC Holdings Corp.
|
|
| 4,715
| 54,265
|
| Electrical equipment 0.2%
|
|
|
|
| Cosel Company, Ltd.
|
|
| 3,110
| 30,256
|
| Emerson Electric Company
|
|
| 2,866
| 278,948
|
| Ushio, Inc.
|
|
| 2,040
| 29,252
|
| Zumtobel Group AG
|
|
| 1,814
| 12,582
|
| Ground transportation 0.1%
|
|
|
|
| ALD SA (B)
|
|
| 6,942
| 49,567
|
| Canadian National Railway Company
|
|
| 1,241
| 155,985
|
| Industrial conglomerates 0.9%
|
|
|
|
| 3M Company
|
|
| 2,431
| 265,757
|
| CK Hutchison Holdings, Ltd.
|
|
| 13,910
| 74,733
|
| Honeywell International, Inc.
|
|
| 642
| 134,634
|
| Siemens AG
|
|
| 3,931
| 737,492
|
| Machinery 2.1%
|
|
|
|
| Amada Company, Ltd.
|
|
| 4,790
| 49,792
|
| Daimler Truck Holding AG
|
|
| 3,121
| 117,237
|
| Deere & Company
|
|
| 1,398
| 559,018
|
| Doosan Bobcat, Inc.
|
|
| 16,851
| 656,402
|
| Duerr AG
|
|
| 1,572
| 37,067
|
| Hino Motors, Ltd. (A)
|
|
| 8,750
| 28,655
|
| Hisaka Works, Ltd.
|
|
| 2,040
| 13,329
|
| Kone OYJ, B Shares
|
|
| 1,455
| 72,781
|
| Kubota Corp.
|
|
| 7,660
| 114,961
|
| Makino Milling Machine Company, Ltd.
|
|
| 622
| 25,827
|
| Makita Corp.
|
|
| 2,617
| 71,982
|
| OKUMA Corp.
|
|
| 611
| 26,244
|
| OSG Corp.
|
|
| 3,570
| 51,061
|
| PACCAR, Inc.
|
|
| 6,632
| 647,615
|
| SKF AB, B Shares
|
|
| 6,581
| 131,887
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 16
|
|
|
|
|
| Shares
| Value
|
| Industrials (continued)
|
|
|
|
| Machinery (continued)
|
|
|
|
| Stanley Black & Decker, Inc.
|
|
| 2,029
| $199,045
|
| Sumitomo Heavy Industries, Ltd.
|
|
| 2,250
| 56,554
|
| Tadano, Ltd.
|
|
| 3,590
| 29,909
|
| THK Company, Ltd.
|
|
| 3,630
| 70,934
|
| Tsubakimoto Chain Company
|
|
| 500
| 14,313
|
| Passenger airlines 0.1%
|
|
|
|
| easyJet PLC (A)
|
|
| 12,693
| 82,343
|
| Japan Airlines Company, Ltd.
|
|
| 2,640
| 51,863
|
| Professional services 0.8%
|
|
|
|
| Adecco Group AG
|
|
| 2,229
| 109,474
|
| Bureau Veritas SA
|
|
| 26,389
| 667,635
|
| Hays PLC
|
|
| 37,864
| 52,694
|
| Pagegroup PLC
|
|
| 7,609
| 47,248
|
| Paychex, Inc.
|
|
| 2,090
| 248,940
|
| SThree PLC
|
|
| 4,134
| 21,914
|
| Trading companies and distributors 0.4%
|
|
|
|
| Mitsui & Company, Ltd.
|
|
| 1,327
| 49,715
|
| Sumitomo Corp.
|
|
| 20,052
| 436,365
|
| Travis Perkins PLC
|
|
| 4,652
| 49,028
|
| Transportation infrastructure 0.2%
|
|
|
|
| Atlas Arteria, Ltd.
|
|
| 55,935
| 220,223
|
| Information technology 10.9%
|
|
| 15,397,964
|
| Communications equipment 1.3%
|
|
|
|
| Cisco Systems, Inc.
|
|
| 34,080
| 1,721,722
|
| Nokia OYJ
|
|
| 19,670
| 66,995
|
| Telefonaktiebolaget LM Ericsson, B Shares
|
|
| 15,450
| 97,230
|
| Electronic equipment, instruments and components 0.7%
|
|
|
|
| Alps Alpine Company, Ltd.
|
|
| 4,330
| 37,638
|
| Amano Corp.
|
|
| 15,622
| 369,837
|
| Corning, Inc.
|
|
| 6,428
| 195,733
|
| E Ink Holdings, Inc.
|
|
| 11,683
| 74,807
|
| Foxconn Technology Company, Ltd.
|
|
| 19,710
| 34,051
|
| Hon Hai Precision Industry Company, Ltd.
|
|
| 16,204
| 55,130
|
| Maxell, Ltd.
|
|
| 3,390
| 37,431
|
| Nippon Chemi-Con Corp. (A)
|
|
| 2,510
| 23,293
|
| PAX Global Technology, Ltd.
|
|
| 23,114
| 17,905
|
| Sunny Optical Technology Group Company, Ltd.
|
|
| 6,170
| 56,091
|
| IT services 1.9%
|
|
|
|
| Accenture PLC, Class A
|
|
| 580
| 203,528
|
| IBM Corp.
|
|
| 5,164
| 844,572
|
| Infosys, Ltd.
|
|
| 10,169
| 188,203
|
| 17
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
|
|
|
| Shares
| Value
|
| Information technology (continued)
|
|
|
|
| IT services (continued)
|
|
|
|
| Obic Company, Ltd.
|
|
| 313
| $53,853
|
| Otsuka Corp.
|
|
| 15,980
| 657,656
|
| Samsung SDS Company, Ltd. (A)
|
|
| 4,303
| 565,880
|
| SCSK Corp.
|
|
| 5,055
| 100,081
|
| Semiconductors and semiconductor equipment 4.0%
|
|
|
|
| ams AG (A)
|
|
| 23,145
| 58,341
|
| Analog Devices, Inc.
|
|
| 3,191
| 633,605
|
| ASMPT, Ltd.
|
|
| 5,399
| 51,483
|
| Broadcom, Inc.
|
|
| 1,038
| 1,158,668
|
| Globalwafers Company, Ltd.
|
|
| 27,998
| 534,316
|
| Intel Corp.
|
|
| 1,306
| 65,627
|
| Microchip Technology, Inc.
|
|
| 1,006
| 90,721
|
| Miraial Company, Ltd.
|
|
| 1,540
| 15,622
|
| NVIDIA Corp.
|
|
| 453
| 224,335
|
| NXP Semiconductors NV
|
|
| 860
| 197,525
|
| Qualcomm, Inc.
|
|
| 3,922
| 567,239
|
| Taiwan Semiconductor Manufacturing Company, Ltd.
|
|
| 34,000
| 651,832
|
| Texas Instruments, Inc.
|
|
| 8,477
| 1,444,989
|
| Software 1.2%
|
|
|
|
| Shanghai Baosight Software Company, Ltd., Class B
|
|
| 202,300
| 428,918
|
| The Sage Group PLC
|
|
| 65,871
| 983,375
|
| TOTVS SA
|
|
| 11,226
| 77,856
|
| Trend Micro, Inc.
|
|
| 4,513
| 240,859
|
| Technology hardware, storage and peripherals 1.8%
|
|
|
|
| Apple, Inc.
|
|
| 1,283
| 247,016
|
| Canon, Inc.
|
|
| 43,495
| 1,115,808
|
| Catcher Technology Company, Ltd.
|
|
| 8,178
| 51,640
|
| Chicony Electronics Company, Ltd.
|
|
| 18,051
| 102,860
|
| HP, Inc.
|
|
| 19,657
| 591,479
|
| Lenovo Group, Ltd.
|
|
| 43,933
| 61,482
|
| Quadient SA
|
|
| 2,139
| 45,469
|
| Samsung Electronics Company, Ltd.
|
|
| 1,037
| 62,943
|
| Seagate Technology Holdings PLC
|
|
| 2,243
| 191,485
|
| Wiwynn Corp.
|
|
| 1,703
| 100,835
|
| Materials 4.8%
|
|
| 6,832,015
|
| Chemicals 1.2%
|
|
|
|
| BASF SE
|
|
| 6,359
| 342,414
|
| Celanese Corp.
|
|
| 816
| 126,782
|
| China BlueChemical, Ltd., H Shares
|
|
| 61,962
| 15,634
|
| Evonik Industries AG
|
|
| 3,972
| 81,144
|
| International Flavors & Fragrances, Inc.
|
|
| 2,655
| 214,975
|
| KH Neochem Company, Ltd.
|
|
| 2,450
| 39,331
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 18
|
|
|
|
|
| Shares
| Value
|
| Materials (continued)
|
|
|
|
| Chemicals (continued)
|
|
|
|
| LyondellBasell Industries NV, Class A
|
|
| 2,716
| $258,237
|
| Mitsubishi Gas Chemical Company, Inc.
|
|
| 4,670
| 74,558
|
| Nissan Chemical Corp.
|
|
| 2,289
| 89,131
|
| PPG Industries, Inc.
|
|
| 996
| 148,952
|
| Yara International ASA
|
|
| 8,986
| 319,242
|
| Construction materials 0.3%
|
|
|
|
| Heidelberg Materials AG
|
|
| 1,659
| 148,295
|
| Holcim, Ltd. (A)
|
|
| 1,131
| 88,830
|
| Imerys SA
|
|
| 1,010
| 31,847
|
| Semen Indonesia Persero Tbk PT
|
|
| 101,959
| 42,375
|
| Taiheiyo Cement Corp.
|
|
| 2,120
| 43,597
|
| Vicat SACA
|
|
| 902
| 32,760
|
| Containers and packaging 0.3%
|
|
|
|
| Amcor PLC, CHESS Depositary Interest
|
|
| 50,314
| 487,485
|
| Nampak, Ltd. (A)
|
|
| 555
| 5,643
|
| Metals and mining 2.8%
|
|
|
|
| African Rainbow Minerals, Ltd.
|
|
| 7,817
| 85,417
|
| Anglo American Platinum, Ltd.
|
|
| 1,298
| 68,128
|
| Anglo American PLC
|
|
| 2,497
| 62,492
|
| Barrick Gold Corp.
|
|
| 4,883
| 88,222
|
| Barrick Gold Corp. (New York Stock Exchange)
|
|
| 9,658
| 174,713
|
| BHP Group, Ltd.
|
|
| 20,692
| 706,934
|
| Centamin PLC
|
|
| 30,961
| 39,318
|
| Centerra Gold, Inc.
|
|
| 6,261
| 37,376
|
| Dowa Holdings Company, Ltd.
|
|
| 1,630
| 59,411
|
| Endeavour Mining PLC
|
|
| 1,977
| 44,417
|
| Fortescue, Ltd.
|
|
| 11,570
| 228,130
|
| Fresnillo PLC
|
|
| 5,552
| 42,039
|
| Maruichi Steel Tube, Ltd.
|
|
| 1,590
| 41,273
|
| Neturen Company, Ltd.
|
|
| 2,980
| 20,290
|
| Norsk Hydro ASA
|
|
| 2,083
| 14,001
|
| OceanaGold Corp.
|
|
| 15,854
| 30,391
|
| Rio Tinto PLC
|
|
| 21,672
| 1,611,986
|
| Rio Tinto PLC, ADR
|
|
| 4,082
| 303,946
|
| Rio Tinto, Ltd.
|
|
| 2,617
| 242,328
|
| Zijin Mining Group Company, Ltd., H Shares
|
|
| 31,920
| 52,035
|
| Paper and forest products 0.2%
|
|
|
|
| Mondi PLC
|
|
| 4,385
| 85,791
|
| UPM-Kymmene OYJ
|
|
| 5,359
| 202,145
|
| 19
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
|
|
|
| Shares
| Value
|
| Real estate 3.1%
|
|
| $4,341,001
|
| Diversified REITs 0.6%
|
|
|
|
| Land Securities Group PLC
|
|
| 5,136
| 46,093
|
| Stockland
|
|
| 141,999
| 430,631
|
| The British Land Company PLC
|
|
| 7,496
| 38,108
|
| WP Carey, Inc.
|
|
| 3,929
| 254,638
|
| Health care REITs 0.1%
|
|
|
|
| Welltower, Inc.
|
|
| 1,097
| 98,916
|
| Hotel and resort REITs 0.1%
|
|
|
|
| Host Hotels & Resorts, Inc.
|
|
| 8,015
| 156,052
|
| Office REITs 0.4%
|
|
|
|
| Nippon Building Fund, Inc.
|
|
| 135
| 584,399
|
| Real estate management and development 0.1%
|
|
|
|
| CK Asset Holdings, Ltd.
|
|
| 12,804
| 64,264
|
| Daito Trust Construction Company, Ltd.
|
|
| 498
| 57,642
|
| Mitsubishi Estate Company, Ltd.
|
|
| 5,700
| 78,136
|
| Retail REITs 0.1%
|
|
|
|
| Simon Property Group, Inc.
|
|
| 1,427
| 203,547
|
| Specialized REITs 1.7%
|
|
|
|
| Crown Castle, Inc.
|
|
| 9,963
| 1,147,638
|
| Digital Realty Trust, Inc.
|
|
| 606
| 81,555
|
| Gaming and Leisure Properties, Inc.
|
|
| 5,668
| 279,716
|
| Iron Mountain, Inc.
|
|
| 8,767
| 613,515
|
| Weyerhaeuser Company
|
|
| 5,929
| 206,151
|
| Utilities 7.6%
|
|
| 10,750,066
|
| Electric utilities 4.7%
|
|
|
|
| American Electric Power Company, Inc.
|
|
| 3,785
| 307,418
|
| Avangrid, Inc.
|
|
| 3,426
| 111,037
|
| CEZ AS
|
|
| 4,239
| 181,697
|
| Duke Energy Corp.
|
|
| 12,839
| 1,245,897
|
| Edison International
|
|
| 8,824
| 630,828
|
| Exelon Corp.
|
|
| 25,822
| 927,010
|
| Iberdrola SA
|
|
| 51,940
| 681,286
|
| NextEra Energy, Inc.
|
|
| 2,231
| 135,511
|
| NRG Energy, Inc.
|
|
| 11,340
| 586,278
|
| Power Grid Corp. of India, Ltd.
|
|
| 202,160
| 574,486
|
| PPL Corp.
|
|
| 5,555
| 150,541
|
| SSE PLC
|
|
| 23,935
| 565,009
|
| Terna - Rete Elettrica Nazionale
|
|
| 40,727
| 339,771
|
| The Southern Company
|
|
| 2,093
| 146,761
|
| Gas utilities 0.8%
|
|
|
|
| AltaGas, Ltd.
|
|
| 26,623
| 558,961
|
| APA Group
|
|
| 9,154
| 53,272
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 20
|
|
|
|
|
| Shares
| Value
|
| Utilities (continued)
|
|
|
|
| Gas utilities (continued)
|
|
|
|
| Atmos Energy Corp.
|
|
| 4,444
| $515,060
|
| Independent power and renewable electricity producers 0.1%
|
|
|
|
| Ratch Group PCL
|
|
| 161,458
| 148,893
|
| Multi-utilities 2.0%
|
|
|
|
| Dominion Energy, Inc.
|
|
| 5,122
| 240,734
|
| Engie SA
|
|
| 64,514
| 1,136,498
|
| National Grid PLC
|
|
| 87,969
| 1,185,058
|
| Sempra
|
|
| 3,500
| 261,555
|
| Water utilities 0.0%
|
|
|
|
|
|
| Cia de Saneamento Basico do Estado de Sao Paulo
|
|
| 4,327
| 66,505
|
| Preferred securities 0.8%
|
|
|
|
| $1,180,832
|
| (Cost $914,930)
|
|
|
|
|
|
| Consumer discretionary 0.7%
|
|
| 971,115
|
| Automobiles 0.7%
|
|
|
|
| Bayerische Motoren Werke AG
|
| 1,201
| 119,503
|
| Hyundai Motor Company
|
| 4,931
| 433,698
|
| Hyundai Motor Company, 2nd Preferred
|
| 3,339
| 295,644
|
| Volkswagen AG
|
| 992
| 122,270
|
| Consumer staples 0.1%
|
|
| 82,292
|
| Household products 0.1%
|
|
|
|
| Henkel AG & Company KGaA
|
| 1,023
| 82,292
|
| Energy 0.0%
|
|
| 73,815
|
| Oil, gas and consumable fuels 0.0%
|
|
|
|
| Raizen SA
|
| 89,000
| 73,815
|
| Materials 0.0%
|
|
| 53,610
|
| Chemicals 0.0%
|
|
|
|
|
|
| FUCHS SE
|
| 1,205
| 53,610
|
| Exchange-traded funds 0.1%
|
|
|
|
| $115,655
|
| (Cost $110,231)
|
|
|
|
|
|
| iShares Core MSCI EAFE ETF
|
|
|
| 1,644
| 115,655
|
| Closed-end funds 0.0%
|
|
|
|
| $18,981
|
| (Cost $8,650)
|
|
|
|
|
|
| Sprott Physical Uranium Trust (A)
|
|
|
| 890
| 18,981
|
|
|
|
|
|
|
| Par value^
| Value
|
| Escrow certificates 0.0%
|
|
|
|
| $0
|
| (Cost $194)
|
|
|
|
|
|
| Texas Competitive Electric Holdings Company LLC (A)(C)
|
|
|
| 500,000
| 0
|
| 21
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
|
|
|
| Par value^
| Value
|
| Short-term investments 0.2%
|
|
|
|
| $300,000
|
| (Cost $300,000)
|
|
|
|
|
|
| Repurchase agreement 0.2%
|
|
|
|
| 300,000
|
| Goldman Sachs Tri-Party Repurchase Agreement dated 12-29-23 at 5.300% to be repurchased at $300,177 on
1-2-24, collateralized by $315,400 U.S. Treasury Notes, 2.000% - 3.000% due 10-31-25 to 11-15-26 (valued at $306,015)
|
|
|
| 300,000
| 300,000
|
|
|
| Total investments (Cost $136,865,368) 98.0%
|
|
| $138,323,196
|
| Other assets and liabilities, net 2.0%
|
|
|
| 2,812,702
|
| Total net assets 100.0%
|
|
|
|
| $141,135,898
|
| 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
|
| ADR
| American Depositary Receipt
|
| GDR
| Global Depositary Receipt
|
| NVDR
| Non-Voting Depositary Receipt
|
| (A)
| Non-income producing security.
|
| (B)
| 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.
|
| (C)
| Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. Refer to Note 2 to the financial statements.
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 22
|
DERIVATIVES
FUTURES
| Open contracts
| Number of
contracts
| Position
| Expiration
date
| Notional
basis^
| Notional
value^
| Unrealized
appreciation
(depreciation)
|
| S&P 500 E-Mini Index Futures
| 30
| Long
| Mar 2024
| $6,962,302
| $7,230,000
| $267,698
|
| Euro STOXX 50 Index Futures
| 292
| Short
| Mar 2024
| (14,761,417)
| (14,644,517)
| 116,900
|
| FTSE 100 Index Futures
| 79
| Short
| Mar 2024
| (7,630,990)
| (7,810,591)
| (179,601)
|
| MSCI EAFE Index Futures
| 41
| Short
| Mar 2024
| (4,453,871)
| (4,617,420)
| (163,549)
|
| MSCI Emerging Markets Index Futures
| 32
| Short
| Mar 2024
| (1,581,487)
| (1,653,920)
| (72,433)
|
| TOPIX Index Futures
| 31
| Short
| Mar 2024
| (5,225,510)
| (5,201,844)
| 23,666
|
|
|
|
|
|
|
| $(7,319)
|
^ Notional basis refers to the
contractual amount agreed upon at inception of open contracts; notional value represents the current value of the open contract.
FORWARD FOREIGN CURRENCY CONTRACTS
| Contract to buy
| Contract to sell
| Counterparty (OTC)
| Contractual
settlement
date
| Unrealized
appreciation
| Unrealized
depreciation
|
| USD
| 2,534,432
| CAD
| 3,435,000
| GSI
| 3/20/2024
| —
| $(60,655)
|
| USD
| 3,121,301
| CHF
| 2,720,000
| BNP
| 3/20/2024
| —
| (138,178)
|
| USD
| 10,956,453
| EUR
| 9,955,000
| DB
| 3/20/2024
| —
| (67,160)
|
| USD
| 9,549,041
| GBP
| 7,483,000
| MSI
| 3/20/2024
| $7,226
| —
|
| USD
| 5,952,665
| JPY
| 856,200,000
| MSI
| 3/21/2024
| —
| (192,238)
|
| USD
| 2,557,227
| NOK
| 26,800,000
| MSI
| 3/20/2024
| —
| (85,083)
|
|
|
|
|
|
|
| $7,226
| $(543,314)
|
| Derivatives Currency Abbreviations
|
| CAD
| Canadian Dollar
|
| CHF
| Swiss Franc
|
| EUR
| Euro
|
| GBP
| Pound Sterling
|
| JPY
| Japanese Yen
|
| NOK
| Norwegian Krone
|
| USD
| U.S. Dollar
|
| Derivatives Abbreviations
|
| BNP
| BNP Paribas
|
| DB
| Deutsche Bank AG
|
| GSI
| Goldman Sachs International
|
| MSI
| Morgan Stanley & Co. International PLC
|
| OTC
| Over-the-counter
|
At 12-31-23, the aggregate cost
of investments for federal income tax purposes was $136,672,056. Net unrealized appreciation aggregated to $1,107,733, of which $9,767,087 related to gross unrealized appreciation and $8,659,354 related to gross
unrealized depreciation.
See Notes to financial statements
regarding investment transactions and other derivatives information.
| 23
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
STATEMENT OF ASSETS AND
LIABILITIES 12-31-23
| Assets
|
|
| Unaffiliated investments, at value (Cost $136,865,368)
| $138,323,196
|
| Unrealized appreciation on forward foreign currency contracts
| 7,226
|
| Cash
| 73,309
|
| Foreign currency, at value (Cost $42,080)
| 39,716
|
| Collateral held at broker for futures contracts
| 2,192,324
|
| Collateral segregated at custodian for OTC derivative contracts
| 600,000
|
| Dividends and interest receivable
| 645,852
|
| Receivable for investments sold
| 534,276
|
| Other assets
| 2,579
|
| Total assets
| 142,418,478
|
| Liabilities
|
|
| Unrealized depreciation on forward foreign currency contracts
| 543,314
|
| Payable for futures variation margin
| 36,821
|
| Foreign capital gains tax payable
| 38,516
|
| Payable for investments purchased
| 574,503
|
| Payable to affiliates
|
|
| Accounting and legal services fees
| 5,068
|
| Other liabilities and accrued expenses
| 84,358
|
| Total liabilities
| 1,282,580
|
| Net assets
| $141,135,898
|
| Net assets consist of
|
|
| Paid-in capital
| $159,585,761
|
| Total distributable earnings (loss)
| (18,449,863)
|
| Net assets
| $141,135,898
|
|
|
| Net asset value per share
|
|
| Based on 12,151,242 shares of beneficial interest outstanding - unlimited number of shares authorized with
$0.01 par value
| $11.61
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK Hedged Equity & Income Fund
| 24
|
STATEMENT OF OPERATIONS For the year ended 12-31-23
| Investment income
|
|
| Dividends
| $8,587,350
|
| Interest
| 183,295
|
| Less foreign taxes withheld
| (763,996)
|
| Total investment income
| 8,006,649
|
| Expenses
|
|
| Investment management fees
| 1,337,188
|
| Accounting and legal services fees
| 30,808
|
| Transfer agent fees
| 15,063
|
| Trustees’ fees
| 44,714
|
| Custodian fees
| 84,008
|
| Printing and postage
| 95,174
|
| Professional fees
| 88,517
|
| Stock exchange listing fees
| 23,750
|
| Other
| 18,470
|
| Total expenses
| 1,737,692
|
| Less expense reductions
| (10,214)
|
| Net expenses
| 1,727,478
|
| Net investment income
| 6,279,171
|
| Realized and unrealized gain (loss)
|
|
| Net realized gain (loss) on
|
|
| Unaffiliated investments and foreign currency transactions
| 1,793,9441
|
| Futures contracts
| (2,094,834)
|
| Forward foreign currency contracts
| 93,766
|
|
| (207,124)
|
| Change in net unrealized appreciation (depreciation) of
|
|
| Unaffiliated investments and translation of assets and liabilities in foreign currencies
| 6,126,106
|
| Futures contracts
| (373,612)
|
| Forward foreign currency contracts
| (280,465)
|
|
| 5,472,029
|
| Net realized and unrealized gain
| 5,264,905
|
| Increase in net assets from operations
| $11,544,076
|
|
|
| 1
| Net of foreign capital gains taxes of $96,048.
|
| 25
| JOHN HANCOCK Hedged Equity & Income Fund | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
STATEMENTS OF CHANGES IN NET
ASSETS
|
| Year ended
12-31-23
| Year ended
12-31-22
|
| Increase (decrease) in net assets
|
|
|
| From operations
|
|
|
| Net investment income
| $6,279,171
| $6,802,074
|
| Net realized gain (loss)
| (207,124)
| 3,675,689
|
| Change in net unrealized appreciation (depreciation)
| 5,472,029
| (12,196,389)
|
| Increase (decrease) in net assets resulting from operations
| 11,544,076
| (1,718,626)
|
| Distributions to shareholders
|
|
|
| From earnings
| (6,559,517)
| (9,282,645)
|
| From tax return of capital
| (6,634,123)
| (4,899,088)
|
| Total distributions
| (13,193,640)
| (14,181,733)
|
| Fund share transactions
|
|
|
| Issued pursuant to Dividend Reinvestment Plan
| 85,767
| 81,403
|
| Repurchased
| (830,615)
| —
|
| Total from fund share transactions
| (744,848)
| 81,403
|
| Total decrease
| (2,394,412)
| (15,818,956)
|
| Net assets
|
|
|
| Beginning of year
| 143,530,310
| 159,349,266
|
| End of year
| $141,135,898
| $143,530,310
|
| Share activity
|
|
|
| Shares outstanding
|
|
|
| Beginning of year
| 12,231,087
| 12,223,813
|
| Issued pursuant to Dividend Reinvestment Plan
| 7,458
| 7,274
|
| Shares repurchased
| (87,303)
| —
|
| End of year
| 12,151,242
| 12,231,087
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK Hedged Equity & Income Fund
| 26
|
| Period ended
| 12-31-23
| 12-31-22
| 12-31-21
| 12-31-20
| 12-31-19
|
| Per share operating performance
|
|
|
|
|
|
| Net asset value, beginning of period
| $11.73
| $13.04
| $12.76
| $14.85
| $14.46
|
| Net investment income1
| 0.51
| 0.56
| 0.53
| 0.39
| 0.59
|
| Net realized and unrealized gain (loss) on investments
| 0.44
| (0.71)
| 0.91
| (1.15)
| 1.30
|
| Total from investment operations
| 0.95
| (0.15)
| 1.44
| (0.76)
| 1.89
|
| Less distributions
|
|
|
|
|
|
| From net investment income
| (0.54)
| (0.76)
| (0.62)
| (0.42)
| (0.67)
|
| From tax return of capital
| (0.54)
| (0.40)
| (0.54)
| (0.91)
| (0.83)
|
| Total distributions
| (1.08)
| (1.16)
| (1.16)
| (1.33)
| (1.50)
|
| Anti-dilutive impact of repurchase plan
| 0.012
| —
| —
| —
| —
|
| Net asset value, end of period
| $11.61
| $11.73
| $13.04
| $12.76
| $14.85
|
| Per share market value, end of period
| $10.05
| $11.50
| $13.00
| $11.44
| $14.91
|
| Total return at net asset value (%)3,4
| 9.53
| (0.96)
| 11.69
| (2.99)
| 13.89
|
| Total return at market value (%)3
| (3.21)
| (2.68)
| 24.20
| (13.37)
| 26.41
|
| Ratios and supplemental data
|
|
|
|
|
|
| Net assets, end of period (in millions)
| $141
| $144
| $159
| $156
| $182
|
| Ratios (as a percentage of average net assets):
|
|
|
|
|
|
| Expenses before reductions
| 1.23
| 1.17
| 1.17
| 1.18
| 1.15
|
| Expenses including reductions
| 1.23
| 1.16
| 1.16
| 1.18
| 1.14
|
| Net investment income
| 4.46
| 4.52
| 3.98
| 3.14
| 3.97
|
| Portfolio turnover (%)
| 124
| 163
| 120
| 117
| 125
|
| 1
| Based on average daily shares outstanding.
|
| 2
| The repurchase plan was completed at an average repurchase price of $9.51 for 87,303 shares for the period ended 12-31-23.
|
| 3
| Total return based on net asset value reflects changes in the fund’s net asset value during each period. Total return based on market value reflects changes in market value.
Each figure assumes that distributions from income, capital gains and tax return of capital, if any, were reinvested.
|
| 4
| Total returns would have been lower had certain expenses not been reduced during the applicable periods.
|
| 27
| JOHN HANCOCK Hedged Equity & Income Fund | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
Notes to financial statements
Note 1—Organization
John Hancock Hedged Equity &
Income Fund (the fund) is a closed-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act).
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 Valuation Policies and Procedures of the Advisor, John Hancock Investment Management LLC.
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. 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. Futures contracts whose settlement prices are determined as
of the close of the NYSE are typically valued based on the settlement price while other futures contracts are typically valued at the last traded price on the exchange on which they trade. Foreign equity index futures
that trade in the electronic trading market subsequent to the close of regular trading may be valued at the last traded price in the electronic trading market as of 4:00 P.M. ET, or may be fair valued based on fair
value adjustment factors provided by an independent pricing vendor in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE. Forward foreign currency
contracts are valued at the prevailing forward rates which are based on foreign currency exchange spot rates and forward points supplied by an independent pricing vendor. Foreign securities and currencies are valued
in U.S. dollars based on foreign currency exchange rates supplied by an independent pricing vendor.
In certain instances, the Pricing
Committee 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
|
| ANNUAL REPORT | JOHN HANCOCK Hedged Equity & Income Fund
| 28
|
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 December 31, 2023, by major security category or type:
|
| Total
value at
12-31-23
| Level 1
quoted
price
| Level 2
significant
observable
inputs
| Level 3
significant
unobservable
inputs
|
| Investments in securities:
|
|
|
|
|
| Assets
|
|
|
|
|
| Common stocks
|
|
|
|
|
| Communication services
| $5,133,022
| $1,656,472
| $3,476,550
| —
|
| Consumer discretionary
| 11,000,834
| 3,125,648
| 7,875,186
| —
|
| Consumer staples
| 12,256,100
| 7,721,005
| 4,535,095
| —
|
| Energy
| 12,743,233
| 6,267,197
| 6,476,036
| —
|
| Financials
| 31,688,092
| 12,809,733
| 18,876,077
| $2,282
|
| Health care
| 12,803,196
| 9,037,213
| 3,765,983
| —
|
| Industrials
| 13,762,205
| 5,064,344
| 8,697,861
| —
|
| Information technology
| 15,397,964
| 8,378,244
| 7,019,720
| —
|
| Materials
| 6,832,015
| 1,428,011
| 5,404,004
| —
|
| Real estate
| 4,341,001
| 3,041,728
| 1,299,273
| —
|
| Utilities
| 10,750,066
| 5,817,591
| 4,932,475
| —
|
| Preferred securities
|
|
|
|
|
| Consumer discretionary
| 971,115
| —
| 971,115
| —
|
| Consumer staples
| 82,292
| —
| 82,292
| —
|
| Energy
| 73,815
| 73,815
| —
| —
|
| Materials
| 53,610
| —
| 53,610
| —
|
| Exchange-traded funds
| 115,655
| 115,655
| —
| —
|
| Closed-end funds
| 18,981
| 18,981
| —
| —
|
| Escrow certificates
| —
| —
| —
| —
|
| Short-term investments
| 300,000
| —
| 300,000
| —
|
| Total investments in securities
| $138,323,196
| $64,555,637
| $73,765,277
| $2,282
|
| 29
| JOHN HANCOCK Hedged Equity & Income Fund | ANNUAL REPORT
|
|
|
| Total
value at
12-31-23
| Level 1
quoted
price
| Level 2
significant
observable
inputs
| Level 3
significant
unobservable
inputs
|
| Derivatives:
|
|
|
|
|
| Assets
|
|
|
|
|
| Futures
| $408,264
| $408,264
| —
| —
|
| Forward foreign currency contracts
| 7,226
| —
| $7,226
| —
|
| Liabilities
|
|
|
|
|
| Futures
| (415,583)
| (415,583)
| —
| —
|
| Forward foreign currency contracts
| (543,314)
| —
| (543,314)
| —
|
| Level 3 includes securities valued at $0. Refer to Fund’s investments.
|
Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the fund’s custodian,
or for tri-party repurchase agreements, collateral is held at a third-party custodian bank in a segregated account for the benefit of the fund. The collateral amount is marked-to-market and monitored on a daily basis
to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in
the Fund’s investments as part of the caption related to the repurchase agreement.
Repurchase agreements are typically
governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions
traded under the MRA and net amounts owed. Absent an event of default, assets and liabilities resulting from repurchase agreements are not offset in the Statement of assets and liabilities. In the event of a default
by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay claims resulting from close-out
of the transactions.
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 their 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.
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 ex-date, except for dividends of certain foreign securities where the dividend may not be known until after the ex-date. In
those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Non-cash dividends, if any, are recorded at the fair market value of the securities received.
Distributions received on securities that represent a tax return of capital and/or capital gain, if any, are recorded as a reduction of cost of investments and/or as a realized gain, if amounts are estimable. Gains
and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Foreign investing. Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of
securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is
reflected as a component of the realized and unrealized gains (losses) on investments. Foreign investments are subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar
value of securities denominated in that currency.
|
| ANNUAL REPORT | JOHN HANCOCK Hedged Equity & Income Fund
| 30
|
Funds that invest internationally
generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions,
regulations, market practices (including higher transaction costs), accounting standards and other factors.
Foreign taxes. The fund may be subject to withholding tax on income, capital gains or repatriations imposed by certain countries, a portion of which may be recoverable. Foreign taxes are accrued based
upon the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Taxes are accrued based on gains realized by the fund as a result of certain foreign security
sales. In certain circumstances, estimated taxes are accrued based on unrealized appreciation of such securities. Investment income is recorded net of foreign withholding taxes.
Overdrafts. Pursuant to the custodian agreement, the fund’s custodian may, in its discretion, advance funds to the fund to make properly authorized payments. When such payments result in an
overdraft, the fund is obligated to repay the custodian for any overdraft, including any costs or expenses associated with the overdraft. The custodian may have a lien, security interest or security entitlement in any
fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to
a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the 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 December 31, 2023, the fund has a short-term capital loss carryforward of $14,646,101 and a long-term capital loss carryforward of $4,881,265 available to offset future net realized capital gains. These
carryforwards do not expire.
As of December 31, 2023, 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.
Managed distribution plan. The fund has adopted a managed distribution plan (Plan). As of June 30, 2023, under the current Plan, the fund makes quarterly distributions of an amount equal to $0.2500 per share,
effective with the September 29, 2023 distribution, which will be paid quarterly until further notice.The previous quarterly distribution was $0.2900 per share.
Distributions under the Plan may
consist of net investment income, net realized capital gains and, to the extent necessary, return of capital. Return of capital distributions may be necessary when the fund’s net investment income and net
capital gains are insufficient to meet the minimum distribution. In addition, the fund may also make additional distributions for the purpose of not incurring federal income and excise taxes.
The Board of Trustees may terminate
or reduce the amount paid under the Plan at any time. The termination or reduction may have an adverse effect on the market price of the fund’s shares.
Distribution of income and
gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends quarterly pursuant to
the Managed Distribution Plan described above. Capital gain distributions, if any, are typically distributed annually.
| 31
| JOHN HANCOCK Hedged Equity & Income Fund | ANNUAL REPORT
|
|
The tax character of distributions
for the years ended December 31, 2023 and 2022 was as follows:
|
| December 31, 2023
| December 31, 2022
|
| Ordinary income
| $6,559,517
| $9,282,645
|
| Return of capital
| 6,634,123
| 4,899,088
|
| Total
| $13,193,640
| $14,181,733
|
As of December 31, 2023, there were
no distributable earnings on a tax basis.
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 investments in passive foreign investment companies, derivative transactions, capital gains tax and wash sale loss deferrals.
Note 3—Derivative instruments
The fund may invest in derivatives
in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the over-the-counter (OTC) market, on a regulated exchange or through a clearing facility. The
risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty
or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other
referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor
its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Derivatives which are typically
traded through the OTC market are regulated by the Commodity Futures Trading Commission (the CFTC). Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential
counterparties and, if applicable, designated clearing organizations. The fund attempts to reduce its exposure to counterparty risk for derivatives traded in the OTC market, whenever possible, by entering into an
International Swaps and Derivatives Association (ISDA) Master Agreement with each of its OTC counterparties. The ISDA gives each party to the agreement the right to terminate all transactions traded under the
agreement if there is certain deterioration in the credit quality or contractual default of the other party, as defined in the ISDA. Upon an event of default or a termination of the ISDA, the non-defaulting party has
the right to close out all transactions and to net amounts owed.
As defined by the ISDA, the fund may
have collateral agreements with certain counterparties to mitigate counterparty risk on OTC derivatives. Subject to established minimum levels, collateral for OTC transactions is generally determined based on the net
aggregate unrealized gain or loss on contracts with a particular counterparty. Collateral pledged to the fund, if any, is held in a segregated account by a third-party agent or held by the custodian bank for the
benefit of the fund and can be in the form of cash or debt securities issued by the U.S. government or related agencies; collateral posted by the fund, if any, for OTC transactions is held in a segregated account at
the fund’s custodian and is noted in the accompanying Fund’s investments, or if cash is posted, on the Statement of assets and liabilities. The fund’s risk of loss due to counterparty risk is equal
to the asset value of outstanding contracts offset by collateral received.
Certain derivatives are traded or
cleared on an exchange or central clearinghouse. Exchange-traded or centrally-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.
|
| ANNUAL REPORT | JOHN HANCOCK Hedged Equity & Income Fund
| 32
|
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. Futures are traded on an exchange and
cleared through a central clearinghouse. Risks related to the use of futures contracts include possible illiquidity of the futures markets and 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 set by the broker and is generally based on a percentage of the contract
value. The margin deposit must then be maintained at the established level over the life of the contract. Cash that has been pledged by the fund, if any, is detailed in the Statement of assets and liabilities as
Collateral held at broker for futures contracts. Securities pledged by the fund, if any, are identified in the Fund’s investments. Subsequent payments, referred to as variation margin, are made or received by
the fund periodically and are based on changes in the market value of open futures contracts. Futures contracts are marked-to-market daily and unrealized gain or loss is recorded by the fund. Payable for futures
variation margin is included on the Statement of assets and liabilities. 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 December 31,
2023, the fund used futures contracts to manage against changes in certain securities markets. The fund held futures contracts with USD notional values ranging from $32.7 million to $41.2 million, as measured at each
quarter end.
Forward foreign currency
contracts. A forward foreign currency contract is an agreement between two parties to buy and sell specific currencies at a price that is set on the date of the contract. The forward contract calls
for delivery of the currencies on a future date that is specified in the contract. Forwards are typically traded OTC. Risks related to the use of forwards include the possible failure of counterparties to meet the
terms of the forward agreement, the failure of the counterparties to timely post collateral if applicable, and the risk that currency movements will not favor the fund thereby reducing the fund’s total return,
and the potential for losses in excess of the amounts recognized on the Statement of assets and liabilities.
The market value of a forward
foreign currency contract fluctuates with changes in foreign currency exchange rates. Forward foreign currency contracts are marked-to-market daily and the change in value is recorded by the fund as an unrealized gain
or loss. Realized gains or losses, equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed, are recorded upon delivery or receipt of the currency or
settlement with the counterparty.
During the year ended December 31,
2023, the fund used forward foreign currency contracts to manage against changes in foreign currency exchange rates and to gain exposure to foreign currencies. The fund held forward foreign currency contracts with USD
notional values ranging from $27.1 million to $36.8 million, as measured at each quarter end.
Fair value of derivative instruments
by risk category
The table below summarizes the fair
value of derivatives held by the fund at December 31, 2023 by risk category:
| Risk
| Statement of assets
and liabilities
location
| Financial
instruments
location
| Assets
derivatives
fair value
| Liabilities
derivatives
fair value
|
| Equity
| Receivable/payable for futures variation margin1
| Futures
| $408,264
| $(415,583)
|
| Currency
| Unrealized appreciation (depreciation) on forward foreign currency contracts
| Forward foreign currency contracts
| 7,226
| (543,314)
|
|
|
|
| $415,490
| $(958,897)
|
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| JOHN HANCOCK Hedged Equity & Income Fund | ANNUAL REPORT
|
|
| 1
| Reflects cumulative appreciation/depreciation on open futures as disclosed in the Derivatives section of Fund’s investments. Only the year end variation margin
receivable/payable is separately reported on the Statement of assets and liabilities.
|
For financial reporting purposes,
the fund does not offset OTC derivative assets or liabilities that are subject to master netting arrangements, as defined by the ISDAs, in the Statement of assets and liabilities. In the event of default by the
counterparty or a termination of the agreement, the ISDA allows an offset of amounts across the various transactions between the fund and the applicable counterparty.
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 December 31, 2023:
|
| Statement of operations location - Net realized gain (loss) on:
|
| Risk
| Futures contracts
| Forward foreign
currency contracts
| Total
|
| Currency
| —
| $93,766
| $93,766
|
| Equity
| $(2,094,834)
| —
| (2,094,834)
|
| Total
| $(2,094,834)
| $93,766
| $(2,001,068)
|
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 December 31, 2023:
|
| Statement of operations location - Change in net unrealized appreciation (depreciation) of:
|
| Risk
| Futures contracts
| Forward foreign
currency contracts
| Total
|
| Currency
| —
| $(280,465)
| $(280,465)
|
| Equity
| $(373,612)
| —
| (373,612)
|
| Total
| $(373,612)
| $(280,465)
| $(654,077)
|
Note 4—Guarantees and indemnifications
Under the fund’s
organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund
enters into contracts with service providers that contain general indemnification clauses. The 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 Investment Management
LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, principally owned subsidiary of John Hancock Life Insurance Company (U.S.A.), which in turn is a subsidiary of Manulife
Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor equivalent on an annual basis to 0.95% of the
fund’s average daily gross assets. The Advisor has a subadvisory agreement with Wellington Management Company LLP. 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
managed 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
|
| ANNUAL REPORT | JOHN HANCOCK Hedged Equity & Income Fund
| 34
|
net assets of each fund. During the year ended
December 31, 2023, this waiver amounted to 0.01% of the fund’s average daily net assets. This arrangement expires on July 31, 2025, unless renewed by mutual agreement of the fund and the Advisor based upon a
determination that this is appropriate under the circumstances at that time.
The expense reductions described
above amounted to $10,214 for the year ended December 31, 2023.
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 December 31, 2023, were equivalent to a net annual effective rate of 0.94% of the fund’s average
daily managed net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, compliance, accounting and
recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred, for
the year ended December 31, 2023, amounted to an annual rate of 0.02% of the fund’s average daily managed net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. These Trustees receive from the fund and the other John Hancock closed-end funds an annual
retainer. In addition, Trustee out-of-pocket expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 6—Fund share transactions
On December 6, 2011, the Board of
Trustees approved a share repurchase plan, which is subsequently reviewed by the Board of Trustees each year in December. Under the current share repurchase plan, the fund may purchase in the open market, between
January 1, 2024 and December 31, 2024, up to 10% of its outstanding common shares as of December 31, 2023. The share repurchase plan will remain in effect between January 1, 2024 and December 31, 2024.
During the year ended December 31,
2023, the fund repurchased 0.71% of common shares. The weighted average discount per share on the repurchase amounted to 14.04% for the year ended December 31, 2023. During the year ended December 31, 2022, the
fund had no activity under the repurchase program. Shares repurchased and corresponding dollar amounts are included on the Statements of changes in net assets. The anti-dilutive impacts of these share repurchases
are included on the Financial highlights.
Note 7—Purchase and sale of securities
Purchases and sales of securities,
other than short-term investments, amounted to $168,940,563 and $178,776,481, respectively, for the year ended December 31, 2023.
| 35
| JOHN HANCOCK Hedged Equity & Income Fund | ANNUAL REPORT
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Report of Independent Registered
Public Accounting Firm
To the Board of Trustees and
Shareholders of John Hancock Hedged Equity & Income Fund
Opinion on the Financial Statements
We have audited the accompanying
statement of assets and liabilities, including the fund’s investments, of John Hancock Hedged Equity & Income Fund (the "Fund") as of December 31, 2023, the related statement of operations for the year ended
December 31, 2023, the statements of changes in net assets for each of the two years in the period ended December 31, 2023, including the related notes, and the financial highlights for each of the five years in the
period ended December 31, 2023 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Fund as of December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2023 and the financial highlights for each
of the five years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these
financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023 by correspondence with the custodian, transfer agent and brokers; when replies
were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 16, 2024
We have served as the auditor of one
or more investment companies in the John Hancock group of funds since 1988.
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| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 36
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(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 December 31, 2023.
The fund reports the maximum amount
allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount
allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
The fund reports the maximum amount
allowable as Section 163(j) Interest Dividends.
Income derived from foreign sources
was $6,588,128. The fund intends to pass through foreign tax credits of $851,796.
The fund reports the maximum amount
allowable of its Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
Eligible shareholders will be mailed
a 2023 Form 1099-DIV in early 2024. This will reflect the tax character of all distributions paid in calendar year 2023.
Please consult a tax advisor regarding
the tax consequences of your investment in the fund.
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| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
Investment objective, principal
investment strategies, and principal risks
Unaudited
Investment Objective
The fund’s investment
objective is to provide total return with a focus on current income and gains and also consisting of long-term capital appreciation.
Principal Investment Strategies
Under normal circumstances, the fund
will invest at least 80% of its net assets (assets plus borrowings for investment purposes) in equity and equity-related securities, including common stock, preferred stock, depositary receipts (including American
Depositary Receipts and Global Depositary Receipts), index-related securities (including exchange traded funds (“ETFs”), options on equity securities and equity indexes, real estate investment structures
(including real estate investment trusts (“REITs”)), convertible securities, private placements, convertible preferred stock, rights, warrants, derivatives linked to equity securities or indexes and other
similar equity equivalents. The fund may invest in listed and unlisted domestic and foreign equity and equity-related securities or instruments. These equity and equity-related instruments may include equity
securities of, or derivatives linked to, foreign issuers and indexes (including emerging market issuers or indexes). The fund may invest in foreign issuers and foreign-currency securities without any limitation. The
fund will notify shareholders at least 60 days prior to any change in this 80% policy.
The fund uses an equity strategy
(the “Equity Strategy”) and an actively managed option overlay strategy (the “Option Strategy”) to pursue its investment objective. By combining these two strategies, the fund seeks to provide
investors with a portfolio that will generate attractive long-term total returns with significant downside equity market protection.
The Equity Strategy will seek to
provide broad-based exposure to equity markets, while emphasizing downside equity market protection. The goal of the Equity Strategy is a broadly diversified equity portfolio that is generally fully invested and seeks
value across all market capitalization ranges, industries and sectors that seeks to participate in and capture the broader equity market returns in rising market conditions, while limiting losses relative to the
broader equity markets in declining market circumstances through an effective combination of equity investment strategies.
The Option Strategy will pursue two
goals: (i) to generate earnings for current distribution from option premiums; and (ii) downside equity market protection (through the use of U.S. equity index put options). The Option Strategy will seek to enhance
risk-adjusted returns, generate earnings from option premiums and reduce overall portfolio volatility. The fund expects to write index call options on a substantial portion of the fund’s common stock portfolio,
although this amount is expected to vary over time based upon U.S. equity market conditions and other factors, including the Advisor’s and Subadvisor’s assessment of market conditions and the liquidity
needs of the fund to meet quarterly distributions.
The fund anticipates writing index
call options on the S&P 500 Index (the “S&P 500”) with a typical expiration of approximately one month and with call strikes typically set slightly “out-of-the-money” (ranging from
approximately 0%-7% above the then-current value of the index). The fund typically will limit notional exposure of the index call options from 0%-50% of the value of the fund’s portfolio securities. In certain
circumstances or market conditions (including to meet distribution payments), the Subadvisor may write index call options on a lower percentage of the fund’s portfolio.
The Option Strategy typically will
maintain an overall short position on the S&P 500 through its use of index call options. In certain circumstances, the fund may trade out of its index option positions during an intra-month period to lock in a
gain, to limit risk, or to meet distribution payments. The Subadvisor retains the discretion to write call options on indices other than the S&P 500 if it deems this appropriate in particular market circumstances
or based upon the fund’s stock holdings. A meaningful portion of the fund’s stock holdings will normally consist of
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| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 38
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stocks not included in the indices on which it
writes call options. The fund expects to primarily use listed/exchange-traded options contracts but may also use over-the-counter (“OTC”) options. OTC options may be utilized to obtain exposure to specific
strike prices, expiration dates and/or exposure to underlying indices not available in the exchange-traded options market. The fund may also invest in derivatives such as futures contracts and foreign currency forward
contracts.
The fund may also invest up to 20%
of its net assets (plus borrowings for investment purposes) in fixed-income securities and fixed-income related instruments. These fixed-income securities may include non-investment grade (“high yield” or
“junk bond”) instruments.”
The manager may also take into
consideration environmental, social, and/or governance (ESG) factors, alongside other relevant factors, as part of its investment selection process. The ESG characteristics utilized in the fund’s investment
process may change over time and one or more characteristics may not be relevant with respect to all issuers that are eligible fund investments.
Principal Risks
As is the case with all
exchange-listed closed-end funds, shares of this fund may trade at a discount or a premium to the fund’s net asset value (NAV). An investment in the fund is subject to investment and market risks, including the
possible loss of the entire principal invested.
The fund’s main risks are
listed below in alphabetical order, not in order of importance.
Changing distribution level &
return of capital risk. There is no guarantee prior distribution levels will be maintained, and distributions may include a substantial tax return of capital. A return of capital is the return of all or a portion
of a shareholder’s investment in the fund. For the fiscal year ended December 31, 2023, the fund’s aggregate distributions included a return of capital of $0.54 per share, or 50.28% of aggregate
distributions, which could impact the tax treatment of a subsequent sale of fund shares.
Credit and counterparty risk. The issuer or guarantor of a fixed-income security, the counterparty to an over-the-counter derivatives contract, or a borrower of fund securities may not make timely payments or otherwise
honor its obligations. A downgrade or default affecting any of the fund’s securities could affect the fund’s performance.
Economic and market events risk. Events in the U.S. and global financial markets, including actions taken by the U.S. Federal Reserve or foreign central banks to stimulate or stabilize economic growth, may at times result
in unusually high market volatility, which could negatively impact performance. Reduced liquidity in credit and fixed-income markets could adversely affect issuers worldwide. Financial institutions could suffer losses
as interest rates rise or economic conditions deteriorate.
Equity securities risk. The price of equity securities may decline due to changes in a company’s financial condition or overall market conditions. Securities the manager believes are undervalued may never
realize their full potential value, and in certain markets value stocks may underperform the market as a whole.
ESG integration risk. The manager considers ESG factors that it deems relevant or additive, along with other material factors and analysis, when managing the fund. The portion of the fund’s investments
for which the manager considers these ESG factors may vary, and could increase or decrease over time. In certain situations, the extent to which these ESG factors may be applied according to the manager’s
integrated investment process may not include U.S. Treasuries, government securities, or other asset classes. ESG factors may include, but are not limited to, matters regarding board diversity, climate change
policies, and supply chain and human rights policies. Incorporating ESG criteria and making investment decisions based on certain ESG characteristics, as determined by the Advisor, carries the risk that the fund may
perform differently, including underperforming funds that do not utilize ESG criteria or funds that utilize different ESG criteria. Integration of ESG factors into the fund’s investment process may result in a
manager making different investments for the fund than for a fund with a similar investment universe and/or investment style that does not incorporate such considerations in its investment
| 39
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
strategy or processes, and the fund’s
investment performance may be affected. Because ESG factors are one of many considerations for the fund, the manager may nonetheless include companies with low ESG characteristics or exclude companies with high ESG
characteristics in the fund’s investments.
Exchange-traded funds (ETFs)
risk. The risks of owning shares of an ETF include the risks of owning the underlying securities the ETF holds. Lack of liquidity in an ETF could result in the ETF being more volatile than its
underlying securities. An ETF’s shares could trade at a significant premium or discount to its NAV. A fund bears ETF fees and expenses indirectly.
Fixed-income securities risk. A rise in interest rates typically causes bond prices to fall. The longer the average maturity or duration of the bonds held by a fund, the more sensitive it will likely be to
interest-rate fluctuations. An issuer may not make all interest payment or repay all or any of the principal borrowed. Changes in a security’s credit qualify may adversely affect fund
performance. Additionally, the value of inflation-indexed securities is subject to the effects of changes in market interest rates caused by factors other than inflation (“real interest rates”).
Generally, when real interest rates rise, the value of inflation-indexed securities will fall and the fund’s value may decline as a result of this exposure to these securities.
Foreign securities risk. Less information may be publicly available regarding foreign issuers, including foreign government issuers. Foreign securities may be subject to foreign taxes and may be more volatile than
U.S. securities. Currency fluctuations and political and economic developments may adversely impact the value of foreign securities. The risks of investing in foreign securities are magnified in emerging markets. If
applicable, depositary receipts are subject to most of the risks associated with investing in foreign securities directly because the value of a depositary receipt is dependent upon the market price of the underlying
foreign equity security. Depositary receipts are also subject to liquidity risk.
Hedging, derivatives, and other
strategic transactions risk. Hedging, derivatives, and other strategic transactions may increase a fund’s volatility and could produce disproportionate losses, potentially more than the fund’s principal
investment. Risks of these transactions are different from and possibly greater than risks of investing directly in securities and other traditional instruments. Under certain market conditions, derivatives could
become harder to value or sell and may become subject to liquidity risk (i.e., the inability to enter into closing transactions). Derivatives and other strategic transactions that the fund intends to utilize include:
foreign currency forward contracts, futures contracts and options. Foreign currency forward contracts, futures contracts and options generally are subject to counterparty risk. Derivatives associated with foreign
currency transactions are subject to currency risk.
Illiquid and restricted
securities risk. Illiquid and restricted securities may be difficult to value and may involve greater risks than liquid securities. Illiquidity may have an adverse impact on a particular security’s
market price and the fund’s ability to sell the security.
Large company risk. Larger companies may grow more slowly than smaller companies or be slower to respond to business developments. Large-capitalization securities may underperform the market as a
whole.
LIBOR discontinuation risk. The official publication of the London Interbank Offered Rate (LIBOR), which many debt securities, derivatives and other financial instruments traditionally utilized as the reference or
benchmark rate for interest rate calculations, was discontinued as of June 30, 2023. However, a subset of British pound sterling and U.S. dollar LIBOR settings will continue to be published on a
“synthetic” basis. The synthetic publication of the three-month sterling LIBOR will continue until March 31, 2024, and the publication of the one-, three- and six-month U.S. dollar LIBOR will continue
until September 30, 2024. The discontinuation of LIBOR and a transition to replacement rates may lead to volatility and illiquidity in markets and may adversely affect the fund’s performance.
Liquidity risk. The extent (if at all) to which a security may be sold or a derivative position closed without negatively impacting its market value may be impaired by reduced market activity or
participation, legal restrictions, or other economic and market impediments.
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| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
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Lower-rated and high-yield
fixed-income securities risk. Lower-rated and high-yield fixed-income securities (junk bonds) are subject to greater credit quality risk, risk of default, and price volatility than higher-rated fixed-income securities,
may be considered speculative, and can be difficult to resell.
Operational and cybersecurity
risk. Cybersecurity breaches may allow an unauthorized party to gain access to fund assets, customer data, or proprietary information, or cause a fund or its service providers to suffer data
corruption or lose operational functionality. Similar incidents affecting issuers of a fund’s securities may negatively impact performance. Operational risk may arise from human error, error by third parties,
communication errors, or technology failures, among other causes.
Preferred and convertible securities
risk. Preferred stock dividends are payable only if declared by the issuer’s board. Preferred stock may be subject to redemption provisions. The market values of convertible securities
tend to fall as interest rates rise and rise as interest rates fall. Convertible preferred stock’s value can depend heavily upon the underlying common stock’s value.
Real estate investment trust
risk. REITs, pooled investment vehicles that typically invest in real estate directly or in loans collateralized by real estate, carry risks associated with owning real estate, including the
potential for a decline in value due to economic or market conditions.
Real estate securities risk. Securities of companies in the real estate industry carry risks associated with owning real estate, including the potential for a decline in value due to economic or market
conditions.
Small and mid-sized company
risk. Small and mid-sized companies are generally less established and may be more volatile than larger companies. Small and/or mid-capitalization securities may underperform the market as a
whole.
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| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
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ADDITIONAL INFORMATION
Unaudited
The fund is a closed-end,
diversified management investment company, common shares of which were initially offered to the public on May 26, 2011 and are publicly traded on the New York Stock Exchange (the NYSE).
Dividends and distributions
During the year ended December 31,
2023, distributions from net investment income totaling $0.5370 per share and tax return of capital totaling $0.5430 per share were paid to shareholders. The dates of payments and the amounts per share were
as follows:
| Payment Date
| Income Distributions
|
| March 31, 2023
| $0.2900
|
| June 30, 2023
| 0.2900
|
| September 29, 2023
| 0.2500
|
| December 29, 2023
| 0.2500
|
| Total
| $1.0800
|
Dividend reinvestment plan
The fund’s Dividend
Reinvestment Plan (the Plan) provides that distributions of dividends and capital gains are automatically reinvested in common shares of the fund by Computershare Trust Company, N.A. (the Plan Agent). Every
shareholder holding at least one full share of the fund is entitled to participate in the Plan. In addition, every shareholder who became a shareholder of the fund after June 30, 2011, and holds at least one full
share of the fund will be automatically enrolled in the Plan. Shareholders may withdraw from the Plan at any time and shareholders who do not participate in the Plan will receive all distributions in cash.
If the fund declares a dividend or
distribution payable either in cash or in common shares of the fund and the market price of shares on the payment date for the distribution or dividend equals or exceeds the fund’s net asset value per share
(NAV), the fund will issue common shares to participants at a value equal to the higher of NAV or 95% of the market price. The number of additional shares to be credited to each participant’s account will be
determined by dividing the dollar amount of the distribution or dividend by the higher of NAV or 95% of the market price. If the market price is lower than NAV, or if dividends or distributions are payable only in
cash, then participants will receive shares purchased by the Plan Agent on participants’ behalf on the NYSE or otherwise on the open market. If the market price exceeds NAV before the Plan Agent has completed
its purchases, the average per share purchase price may exceed NAV, resulting in fewer shares being acquired than if the fund had issued new shares.
There are no brokerage charges with
respect to common shares issued directly by the fund. However, whenever shares are purchased or sold on the NYSE or otherwise on the open market, each participant will pay a pro rata portion of brokerage trading fees,
currently $0.05 per share purchased or sold. Brokerage trading fees will be deducted from amounts to be invested.
The reinvestment of dividends and
net capital gains distributions does not relieve participants of any income tax that may be payable on such dividends or distributions.
Shareholders participating in the
Plan may buy additional shares of the fund through the Plan at any time in amounts of at least $50 per investment, up to a maximum of $10,000, with a total calendar year limit of $100,000. Shareholders will be charged
a $5 transaction fee plus $0.05 per share brokerage trading fee for each order. Purchases of additional shares of the fund will be made on the open market. Shareholders who elect to utilize monthly electronic fund
transfers to buy additional shares of the fund will be charged a $2 transaction fee plus $0.05 per share brokerage trading fee for each automatic purchase. Shareholders can also sell fund shares held in the Plan
account at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan
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| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 42
|
Agent’s website at
www.computershare.com/investor. The Plan Agent will mail a check (less applicable brokerage trading fees) on settlement date. Pursuant to regulatory changes, effective September 5, 2017, the settlement date is changed
from three business days after the shares have been sold to two business days after the shares have been sold. If shareholders choose to sell shares through their stockbroker, they will need to request that the Plan
Agent electronically transfer those shares to their stockbroker through the Direct Registration System.
Shareholders participating in the
Plan may withdraw from the Plan at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan Agent’s website at www.computershare.com/investor. Such termination will be effective
immediately if the notice is received by the Plan Agent prior to any dividend or distribution record date; otherwise, such termination will be effective on the first trading day after the payment date for such
dividend or distribution, with respect to any subsequent dividend or distribution. If shareholders withdraw from the Plan, their shares will be credited to their account; or, if they wish, the Plan Agent will sell
their full and fractional shares and send the shareholders the proceeds, less a transaction fee of $5 and less brokerage trading fees of $0.05 per share. If a shareholder does not maintain at least one whole share of
common stock in the Plan account, the Plan Agent may terminate such shareholder’s participation in the Plan after written notice. Upon termination, shareholders will be sent a check for the cash value of any
fractional share in the Plan account, less any applicable broker commissions and taxes.
Shareholders who hold at least one
full share of the fund may join the Plan by notifying the Plan Agent by telephone, in writing or by visiting the Plan Agent’s website at www.computershare.com/investor. If received in proper form by the Plan
Agent before the record date of a dividend, the election will be effective with respect to all dividends paid after such record date. If shareholders wish to participate in the Plan and their shares are held in the
name of a brokerage firm, bank or other nominee, shareholders should contact their nominee to see if it will participate in the Plan. If shareholders wish to participate in the Plan, but their brokerage firm, bank or
other nominee is unable to participate on their behalf, they will need to request that their shares be re-registered in their own name, or they will not be able to participate. The Plan Agent will administer the Plan
on the basis of the number of shares certified from time to time by shareholders as representing the total amount registered in their name and held for their account by their nominee.
Experience under the Plan may
indicate that changes are desirable. Accordingly, the fund and the Plan Agent reserve the right to amend or terminate the Plan. Participants generally will receive written notice at least 90 days before the effective
date of any amendment. In the case of termination, participants will receive written notice at least 90 days before the record date for the payment of any dividend or distribution by the fund.
All correspondence or requests for
additional information about the Plan should be directed to Computershare Trust Company, N.A., at the address stated below, or by calling 800-852-0218, 201-680-6578 (For International Telephone Inquiries) and
800-952-9245 (For the Hearing Impaired (TDD)).
Shareholder communication and
assistance
If you have any questions concerning
the fund, we will be pleased to assist you. If you hold shares in your own name and not with a brokerage firm, please address all notices, correspondence, questions or other communications regarding the fund to the
transfer agent at:
Regular Mail:
Computershare
P.O. Box 43006
Providence, RI 02940-3078
Registered or Overnight Mail:
Computershare
150 Royall Street, Suite 101
Canton, MA 02021
If your shares are held with a
brokerage firm, you should contact that firm, bank or other nominee for assistance.
| 43
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
This chart
provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the
Trustees.
| Independent Trustees
|
|
|
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,2 Born: 1945
| 2012
| 182
|
| Trustee and Chairperson of the Board
|
|
|
| Director/Trustee, Virtus Funds (2008-2020); Director, The Barnes Group (2010-2021); Associate Professor, The Wallace E. Carroll School of Management,
Boston College (retired 2013). Trustee (since 2005) and Chairperson of the Board (since 2017) of various trusts within the John Hancock Fund Complex.
|
| James R. Boyle, Born: 1959
| 2015
| 178
|
| Trustee
|
|
|
| Board Member, United of Omaha Life Insurance Company (since 2022). Board Member, Mutual of Omaha Investor Services, Inc. (since 2022). Foresters
Financial, Chief Executive Officer (2018–2022) and board member (2017–2022). Manulife Financial and John Hancock, more than 20 years, retiring in 2012 as Chief Executive Officer, John Hancock and Senior
Executive Vice President, Manulife Financial. Trustee of various trusts within the John Hancock Fund Complex (2005–2014 and since 2015).
|
| William H. Cunningham,3 Born: 1944
| 2011
| 180
|
| 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; Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000). Trustee of various trusts within the John Hancock Fund Complex (since 1986).
|
| Noni L. Ellison, Born: 1971
| 2022
| 178
|
| Trustee
|
|
|
| Senior Vice President, General Counsel & Corporate Secretary, Tractor Supply Company (rural lifestyle retailer) (since 2021); General Counsel,
Chief Compliance Officer & Corporate Secretary, Carestream Dental, L.L.C. (2017–2021); Associate General Counsel & Assistant Corporate Secretary, W.W. Grainger, Inc. (global industrial supplier)
(2015–2017); Board Member, Goodwill of North Georgia, 2018 (FY2019)–2020 (FY2021); Board Member, Howard University School of Law Board of Visitors (since 2021); Board Member, University of Chicago Law
School Board of Visitors (since 2016); Board member, Children’s Healthcare of Atlanta Foundation Board (2021–2023). Trustee of various trusts within the John Hancock Fund Complex (since 2022).
|
| Grace K. Fey, Born: 1946
| 2012
| 182
|
| 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 of various trusts within the John Hancock Fund Complex (since 2008).
|
| Dean C. Garfield, Born: 1968
| 2022
| 178
|
| Trustee
|
|
|
| Vice President, Netflix, Inc. (since 2019); President & Chief Executive Officer, Information Technology Industry Council (2009–2019); NYU School of Law Board of
Trustees (since 2021); Member, U.S. Department of Transportation, Advisory Committee on Automation (since 2021); President of the United States Trade Advisory Council (2010–2018); Board Member, College for Every
Student (2017–2021); Board Member, The Seed School of Washington, D.C. (2012–2017); Advisory Board Member of the Block Center for Technology and Society (since 2019). Trustee of various trusts within the
John Hancock Fund Complex (since 2022).
|
|
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 44
|
| Independent Trustees (continued)
|
|
|
Name, year of birth
Position(s) held with fund
Principal occupation(s) and other
directorships during past 5 years
| Trustee
of the
Trust
since1
| Number of John
Hancock funds
overseen by
Trustee
|
| Deborah C. Jackson, Born: 1952
| 2011
| 180
|
| Trustee
|
|
|
| President, Cambridge College, Cambridge, Massachusetts (2011-2023); Board of Directors, Amwell Corporation (since 2020); Board of Directors,
Massachusetts Women’s Forum (2018-2020); Board of Directors, National Association of Corporate Directors/New England (2015-2020); 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 Boston Stock Exchange (2002–2008);
Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007–2011). Trustee of various trusts within the John Hancock Fund Complex (since 2008).
|
| Steven R. Pruchansky, Born: 1944
| 2011
| 178
|
| Trustee and Vice Chairperson of the Board
|
|
|
| Managing Director, Pru Realty (since 2017); Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (2014-2020); 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
(2014-2017); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992), Chairperson of the Board
(2011–2012), and Vice Chairperson of the Board (since 2012) of various trusts within the John Hancock Fund Complex.
|
| Frances G. Rathke,3 Born: 1960
| 2020
| 178
|
| Trustee
|
|
|
| Director, Audit Committee Chair, Oatly Group AB (plant-based drink company) (since 2021); Director, Audit Committee Chair and Compensation Committee
Member, Green Mountain Power Corporation (since 2016); Director, Treasurer and Finance & Audit Committee Chair, Flynn Center for Performing Arts (since 2016); Director and Audit Committee Chair, Planet Fitness
(since 2016); Chief Financial Officer and Treasurer, Keurig Green Mountain, Inc. (2003-retired 2015). Trustee of various trusts within the John Hancock Fund Complex (since 2020).
|
| Gregory A. Russo, Born: 1949
| 2011
| 178
|
| Trustee
|
|
|
| Director and Audit Committee Chairman (2012-2020), and Member, Audit Committee and Finance Committee (2011-2020), NCH Healthcare System, Inc. (holding company for
multi-entity healthcare system); Director and Member (2012-2018), and Finance Committee Chairman (2014-2018), The Moorings, Inc. (nonprofit continuing care community); Global Vice Chairman, Risk & Regulatory
Matters, KPMG LLP (KPMG) (2002–2006); Vice Chairman, Industrial Markets, KPMG (1998–2002). Trustee of various trusts within the John Hancock Fund Complex (since 2008).
|
| 45
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
| 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
|
| Andrew G. Arnott, Born: 1971
| 2017
| 180
|
| Non-Independent Trustee
|
|
|
| Global Head of Retail for Manulife (since 2022); Head of Wealth and Asset Management, United States and Europe, for John Hancock and Manulife
(2018-2023); Director and Chairman, John Hancock Investment Management LLC (2005-2023, including prior positions); Director and Chairman, John Hancock Variable Trust Advisers LLC (2006-2023, including prior positions);
Director and Chairman, John Hancock Investment Management Distributors LLC (2004-2023, including prior positions); President of various trusts within the John Hancock Fund Complex (2007-2023, including prior
positions). Trustee of various trusts within the John Hancock Fund Complex (since 2017).
|
| Paul Lorentz, Born: 1968
| 2022
| 178
|
| Non-Independent Trustee
|
|
|
| Global Head, Manulife Wealth and Asset Management (since 2017); General Manager, Manulife, Individual Wealth Management and Insurance (2013–2017); President,
Manulife Investments (2010–2016). Trustee of various trusts within the John Hancock Fund Complex (since 2022).
|
| Principal officers who are not Trustees
|
|
Name, year of birth
Position(s) held with fund
Principal occupation(s)
during past 5 years
| Current
Position(s)
with the
Trust
since
|
| Kristie M. Feinberg, Born: 1975
| 2023
|
| President
|
|
| Head of Wealth and Asset Management, United States and Europe, for John Hancock and Manulife (since 2023); Director and Chairman, John Hancock
Investment Management LLC (since 2023); Director and Chairman, John Hancock Variable Trust Advisers LLC (since 2023); Director and Chairman, John Hancock Investment Management Distributors LLC (since 2023); CFO and
Global Head of Strategy, Manulife Investment Management (2021-2023, including prior positions); CFO Americas & Global Head of Treasury, Invesco, Ltd., Invesco US (2019-2020, including prior positions); Senior Vice
President, Corporate Treasurer and Business Controller, Oppenheimer Funds (2001-2019, including prior positions); President of various trusts within the John Hancock Fund Complex (since 2023).
|
| Charles A. Rizzo, Born: 1957
| 2011
|
| Chief Financial Officer
|
|
| Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Investment Management LLC and John Hancock Variable
Trust Advisers LLC (since 2008); Chief Financial Officer of various trusts within the John Hancock Fund Complex (since 2007).
|
| Salvatore Schiavone, Born: 1965
| 2011
|
| Treasurer
|
|
| Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers
LLC (since 2007); Treasurer of various trusts within the John Hancock Fund Complex (since 2007, including prior positions).
|
|
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 46
|
| Principal officers who are not Trustees (continued)
|
|
Name, year of birth
Position(s) held with fund
Principal occupation(s)
during past 5 years
| Current
Position(s)
with the
Trust
since
|
| Christopher (Kit) Sechler, Born: 1973
| 2018
|
| Secretary and Chief Legal Officer
|
|
| Vice President and Deputy Chief Counsel, John Hancock Investment Management (since 2015); Assistant Vice President and Senior Counsel
(2009–2015), John Hancock Investment Management; Assistant Secretary of John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2009); Chief Legal Officer and Secretary of
various trusts within the John Hancock Fund Complex (since 2009, including prior positions).
|
| Trevor Swanberg, Born: 1979
| 2020
|
| Chief Compliance Officer
|
|
| Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2020); Deputy Chief Compliance Officer, John Hancock
Investment Management LLC and John Hancock Variable Trust Advisers LLC (2019–2020); Assistant Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC
(2016–2019); Vice President, State Street Global Advisors (2015–2016); Chief Compliance Officer of various trusts within the John Hancock Fund Complex (since 2016, including prior positions).
|
The business
address for all Trustees and Officers is 200 Berkeley Street, Boston, Massachusetts 02116-5023.
The Fund does
not make available copies of its Statement of Additional Information because the Fund’s shares are not continuously offered and the Statement of Additional Information has not been updated since the Fund’s
last public offering, therefore the information contained in the Statement of Additional Information may be outdated.
| 1
| Ms. Ellison and Ms. Rathke serve as Trustees for a term expiring in 2024; Mr. Arnott, Mr. Garfield, Ms. Jackson, and Mr. Pruchansky serve as Trustees for a term expiring in 2025; Mr. Boyle, Dr.
Cunningham, Ms. Fey, Mr. Lorentz, Dr. McClellan and Mr. Russo serve as Trustees for a term expiring in 2026; Mr. Boyle has served as Trustee at various times prior to date listed in the table.
|
| 2
| Member of the Audit Committee as of September 26, 2023.
|
| 3
| Member of the Audit Committee.
|
| 4
| The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain of its affiliates.
|
|
|
|
|
|
|
| 47
| JOHN HANCOCK HEDGED EQUITY & INCOME FUND | ANNUAL REPORT
|
|
Trustees
Hassell H. McClellan, Chairpersonπ
Steven R. Pruchansky, Vice Chairperson
Andrew G. Arnott†
James R. Boyle
William H. Cunningham*
Noni L. Ellison
Grace K. Fey
Dean C. Garfield
Deborah C. Jackson
Paul Lorentz†
Frances G. Rathke*
Gregory A. Russo
Officers
Kristie M. Feinberg#
President
Charles A. Rizzo
Chief Financial Officer
Salvatore Schiavone
Treasurer
Christopher (Kit) Sechler
Secretary and Chief Legal Officer
Trevor Swanberg
Chief Compliance Officer
Investment advisor
John Hancock Investment Management
LLC
Subadvisor
Wellington Management Company LLP
Portfolio Managers
Robert J. Isch, CFA
Gregg R. Thomas, CFA
Custodian
State Street Bank and Trust
Company
Transfer agent
Computershare Shareowner Services,
LLC
Legal counsel
K&L Gates LLP
Independent registered public
accounting firm
PricewaterhouseCoopers LLP
Stock symbol
Listed New York Stock Exchange:
HEQ
π Member of the Audit Committee as of September 26, 2023.
† Non-Independent Trustee
* Member of the Audit Committee
# Effective June 29, 2023.
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.
All of the fund’s
holdings as of the end of the third month of every fiscal quarter are filed with the SEC on Form N-PORT within 60 days of the end of the fiscal quarter. The fund’s Form N-PORT filings are available on our
website and the SEC’s website, sec.gov.
We make this information
on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com or by calling 800-852-0218.
The report is certified
under the Sarbanes-Oxley Act, which requires closed-end funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in
all material respects.
| You can also contact us:
|
|
|
| 800-852-0218
| Regular mail:
| Express mail:
|
| jhinvestments.com
| Computershare
P.O. Box 43006
Providence, RI 02940-3078
| Computershare
150 Royall St., Suite 101
Canton, MA 02021
|
|
| ANNUAL REPORT | JOHN HANCOCK HEDGED EQUITY & INCOME FUND
| 48
|
John Hancock family of funds
U.S. EQUITY FUNDS
Blue Chip Growth
Classic Value
Disciplined Value
Disciplined Value Mid Cap
Equity Income
Financial Industries
Fundamental All Cap Core
Fundamental Large Cap Core
Mid Cap Growth
New Opportunities
Regional Bank
Small Cap Core
Small Cap Dynamic Growth
Small Cap Value
U.S. Global Leaders Growth
U.S. Growth
INTERNATIONAL EQUITY FUNDS
Disciplined Value International
Emerging Markets
Emerging Markets Equity
Fundamental Global Franchise
Global Environmental
Opportunities
Global Equity
Global Shareholder Yield
Global Thematic Opportunities
International Dynamic Growth
International Growth
International Small Company
FIXED-INCOME FUNDS
Bond
California Municipal Bond
Emerging Markets Debt
Floating Rate Income
Government Income
High Yield
High Yield Municipal Bond
Income
Investment Grade Bond
Money Market
Municipal Opportunities
Opportunistic Fixed Income
Short Duration Bond
Short Duration Municipal
Opportunities
Strategic Income Opportunities
ALTERNATIVE FUNDS
Alternative Asset Allocation
Diversified Macro
Infrastructure
Multi-Asset Absolute Return
Real Estate Securities
Seaport Long/Short
The fund’s
investment objectives, risks, charges, and expenses are included in the prospectus and should be considered carefully before investing. For a prospectus, contact your financial professional, call John Hancock
Investment Management at 800-852-0218, or visit the fund’s website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
The John Hancock funds are
distributed by John Hancock Investment Management Distributors LLC. Member FINRA SIPC.
EXCHANGE-TRADED FUNDS
Corporate Bond ETF
Disciplined Value International
Select ETF
Dynamic Municipal Bond ETF
Fundamental All Cap Core ETF
International High Dividend ETF
Mortgage-Backed Securities ETF
Multifactor Developed International
ETF
Multifactor Emerging Markets ETF
Multifactor Large Cap ETF
Multifactor Mid Cap ETF
Multifactor Small Cap ETF
Preferred Income ETF
U.S. High Dividend ETF
ASSET ALLOCATION/TARGET DATE FUNDS
Balanced
Multi-Asset High Income
Lifestyle Blend Portfolios
Lifetime Blend Portfolios
Multimanager Lifestyle
Portfolios
Multimanager Lifetime Portfolios
ENVIRONMENTAL, SOCIAL, AND
GOVERNANCE FUNDS
ESG Core Bond
ESG International Equity
ESG Large Cap Core
CLOSED-END FUNDS
Asset-Based Lending
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 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 Manulife Investment Management (US) LLC or Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Investment Management Distributors LLC, Manulife
Investment Management (US) 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.
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 Investment Management
LLC, 200 Berkeley Street, Boston, MA 02116-5010, 800-225-5291, jhinvestments.com
Manulife Investment Management, the
Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by its affiliates under license.
2/2024
ITEM 2. CODE OF ETHICS.
As of the end of the period, December 31, 2023, 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 "Covered Officers"). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Frances G. Rathke 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(s) for John Hancock Hedged Equity & Income Fund for the audit of the registrant's annual financial statements or services that are normally provided by the accountant(s) in connection with statutory and regulatory filings or engagements amounted to $53,951 for the year ended December 31, 2023 and $51,788 for the year ended December 31, 2022. These fees were billed to the registrant and were approved by the registrant's audit committee.
(b) Audit-Related Services
The aggregate fees for John Hancock Hedged Equity & Income Fund for audit-related fees amounted to $12 for the fiscal year ended December 31, 2023 and $5 for the fiscal year ended December 31, 2022. These fees were 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 that provides ongoing services to the registrant ("control affiliates"). The nature of the services provided was related to software licensing fee.
(c) Tax Fees
The aggregate fees billed for John Hancock Hedged Equity & Income Fund for professional services rendered by the principal accountant(s) for the tax compliance, tax advice and tax planning ("tax fees") amounted to $4,339 for the fiscal year ended December 31, 2023 and $4,192 for the fiscal year ended December 31, 2022. 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.
(d) All Other Fees
The all other fees for John Hancock Hedged Equity & Income Fund billed to the registrant or control affiliates for products and services provided by the principal accountant were $369 for the year ended December 31, 2023 and $163 and for the year ended December 31, 2022. The nature of the services comprising all other fees is advisory services provided to the investment manager. These fees were approved by the registrant's audit committee.
(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 December 31, 2023, 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(s) for services rendered to the registrant and rendered to the registrant's control affiliates of the registrant were $1,370,147 for the year ended December 31, 2023 and $1,328,471 for the year ended December 31, 2022.
(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.
(i)Not applicable.
(j)Not applicable.
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:
Frances G. Rathke – Chairperson William H. Cunningham
Hassell H. McClellan, effective September 26, 2023
ITEM 6. SCHEDULE OF INVESTMENTS.
(a)Not applicable.
(b)Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END MANAGEMENT INVESTMENT COMPANIES.
See attached exhibit "Proxy Voting Policies and Procedures".
ITEM 8.
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Information about the Wellington Management Company LLP ("Wellington Management") portfolio managers
Management Biographies
Below is a list of the portfolio managers who share joint responsibility for the day-to-day investment management of the Fund. It provides a brief summary of their business careers over the past five years. The information provided is as of the filing date of this N-CSR.
Gregg R. Thomas, CFA
Senior Managing Director and Director of Investment Strategy,
Wellington Management Company LLP since 2002
On Fund team since its inception (2011)
Roberto J. Isch, CFA
Senior Managing Director and Portfolio Manager,
Wellington Management Company LLP since 2012
Joined Fund team in 2019
Other Accounts the Portfolio Managers are Managing
The table below indicates for each portfolio manager information about the accounts over which the portfolio manager has day-to-day investment responsibility. All information on the number of accounts and total assets in the table is as of December 31, 2023. For purposes of the table, "Other Pooled Investment Vehicles" may include investment partnerships and group trusts, and "Other Accounts" may include separate accounts for institutions or individuals, insurance company general or separate accounts, pension funds and other similar institutional accounts.
|
PORTFOLIO
|
|
Registered Investment
|
|
Other Pooled Investment
|
|
|
|
|
|
MANAGER
|
|
|
|
Other Accounts
|
|
|
Companies
|
|
Vehicles
|
|
|
|
NAME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Total
|
|
Number of
|
|
|
Total
|
|
Number of
|
|
Total
|
|
|
|
|
Assets
|
|
|
|
Assets
|
|
|
Assets
|
|
|
|
Accounts
|
|
|
Accounts
|
|
|
|
Accounts
|
|
|
|
|
|
$Million
|
|
|
|
$Million
|
|
|
$Million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregg R.
|
|
7
|
|
10,844
|
|
11
|
|
|
2,973
|
|
6
|
|
3,511
|
|
Thomas, CFA
|
|
0*
|
|
0*
|
|
0*
|
|
|
0*
|
|
0*
|
|
0*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roberto J.
|
|
3
|
|
480
|
|
12
|
|
|
4,534
|
|
5
|
|
1,915
|
|
Isch, CFA
|
|
0*
|
|
0*
|
|
8*
|
|
|
3,078*
|
|
0*
|
|
0*
|
Note: (*) represents the number and value of accounts, within the total accounts that are subject to a performance-based advisory fee.
Conflicts of Interest. Individual investment professionals at Wellington Management manage multiple accounts for multiple clients. These accounts may include mutual funds, separate accounts (assets managed on behalf of institutions, such as pension funds, insurance companies, foundations, or
separately managed account programs sponsored by financial intermediaries), bank common trust accounts, and hedge funds. The Fund's managers listed in the prospectus who are primarily responsible for the day-to-day management of the Fund ("Investment Professionals") generally manage accounts in several different investment styles. These accounts may have investment objectives, strategies, time horizons, tax considerations and risk profiles that differ from those of the Fund. The Investment Professionals make investment decisions for each account, including the Fund, based on the investment objectives, policies, practices, benchmarks, cash flows, tax and other relevant investment considerations applicable to that account. Consequently, Investment Professionals may purchase or sell securities, including IPOs, for one account and not another account, and the performance of securities purchased for one account may vary from the performance of securities purchased for other accounts. Alternatively, these accounts may be managed in a similar fashion to the Fund and thus the accounts may have similar, and in some cases nearly identical, objectives, strategies and/or holdings to that of the Fund.
An Investment Professional or other investment professionals at Wellington Management may place transactions on behalf of other accounts that are directly or indirectly contrary to investment decisions made on behalf of the Fund, or make investment decisions that are similar to those made for the Fund, both of which have the potential to adversely impact the Fund depending on market conditions. For example, an investment professional may purchase a security in one account while appropriately selling that same security in another account. Similarly, an Investment Professional may purchase the same security for the Fund and one or more other accounts at or about the same time. In those instances the other accounts will have access to their respective holdings prior to the public disclosure of the Fund's holdings. In addition, some of these accounts have fee structures, including performance fees, which are or have the potential to be higher, in some cases significantly higher, than the fees Wellington Management receives for managing the Fund. Mr. Isch manages accounts which pay performance allocations to Wellington Management or its affiliates. Because incentive payments paid by Wellington Management to the Investment Professionals are tied to revenues earned by Wellington Management and, where noted, to the performance achieved by the manager in each account, the incentives associated with any given account may be significantly higher or lower than those associated with other accounts managed by an Investment Professional. Therefore, portfolio managers and other investment team members have an incentive to favor accounts that have the potential to provide a higher incentive compensation for them as individuals. Wellington Management manages the conflict created by these incentive arrangements through policies on the allocation of investment opportunities, including the allocation of equity IPOs, as well as after-the-fact monitoring the review of client accounts to assess dispersion among accounts with similar mandates. Finally, the Investment Professionals may hold shares or investments in the other pooled investment vehicles and/or other accounts identified above.
Wellington Management's goal is to meet its fiduciary obligation to treat all clients fairly and provide high quality investment services to all of its clients. Wellington Management has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, which it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, Wellington Management monitors a variety of areas, including compliance with primary account guidelines, the allocation of IPOs, and compliance with the firm's Code of Ethics, and places additional investment restrictions on investment professionals who manage hedge funds and certain other accounts. Furthermore, senior investment and business personnel at Wellington Management periodically review the performance of Wellington Management's investment professionals. Although Wellington Management does not track the time an investment professional spends on a single account, Wellington Management does periodically assess whether an investment professional has adequate time and resources to effectively manage the investment professional's various client mandates.
Compensation Wellington Management receives a fee based on the assets under management of the Fund as set forth in the Subadvisory Agreement between Wellington Management and the Adviser on
behalf of the Fund. Wellington Management pays its investment professionals out of its total revenues, including the advisory fees earned with respect to the Fund. The following information relates to the fiscal year ended December 31, 2023. Wellington Management's compensation structure is designed to attract and retain high-caliber investment professional's necessary to deliver high quality investment management services to its clients. Wellington Management's compensation of the Fund's manager listed in the Prospectus who is primarily responsible for the day-to-day management of the Fund (the "Investment Professional") includes a base salary. The base salary for each Investment Professional who is a partner (a "Partner") of Wellington Management Group LLP, the ultimate holding company of Wellington Management, is generally a fixed amount that is determined by the managing partners of Wellington Management Group LLP. The Investment Professionals may also be eligible for bonus payments based on their overall contribution to Wellington Management's business operations. Senior management at Wellington Management may reward individuals as it deems appropriate based on other factors. Each Partner is eligible to participate in a Partner-funded tax qualified retirement plan, the contributions to which are made pursuant to an actuarial formula. Messrs. Thomas and Isch are Partners.
Each Portfolio Manager's incentive payment relating to the Hedged Equity & Income Fund Fund is linked to the gross pre-tax performance of the Fund managed by the Portfolio Managers compared to the MSCI All Country World Index over one, three and five year periods, with an emphasis on five year results. Wellington Management applies similar incentive compensation structures (although the benchmarks or peer groups, time periods and rates may differ) to other accounts managed by these Portfolio Managers, including accounts with performance fees.
Share Ownership by Portfolio Managers. The following table indicates as of December 31, 2023, the value of shares beneficially owned by the portfolio managers in the Fund.
|
|
Range of
|
|
Portfolio Manager
|
Beneficial
|
|
Ownership
|
|
|
|
|
Gregg R. Thomas, CFA
|
None
|
|
|
|
Roberto J. Isch, CFA
|
None
|
|
|
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
|
|
REGISTRANT PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
Maximum
|
|
|
|
|
|
Number of
|
|
|
Total
|
Average
|
Total Number of
|
Shares that May
|
|
|
Shares Purchased
|
Yet Be
|
|
|
Number of Shares
|
Price per
|
as Part of Publicly
|
Purchased
|
|
Period
|
Purchased
|
Share
|
Announced Plans*
|
Under the Plans
|
|
Jan 23
|
-
|
-
|
-
|
1,223,109
|
|
Feb 23
|
1,223,109
|
|
-
|
-
|
-
|
|
Mar 23
|
1,223,109
|
|
-
|
-
|
-
|
|
|
|
|
Apr 23
|
-
|
-
|
-
|
1,223,109
|
|
May 23
|
1,223,109
|
|
-
|
-
|
-
|
|
Jun 23
|
1,223,109
|
|
-
|
-
|
-
|
|
Jul 23
|
1,223,109
|
|
-
|
-
|
-
|
|
Aug 23
|
1,223,109
|
|
-
|
-
|
-
|
|
Sep 23
|
1,223,109
|
|
-
|
-
|
-
|
|
Oct 23
|
1,135,806
|
|
87,303
|
9.51
|
87,303
|
|
Nov 23
|
1,135,806
|
|
-
|
-
|
-
|
|
Dec 23
|
-
|
-
|
-
|
1,135,806
|
|
Total
|
|
|
87,303
|
|
87,303
|
|
|
|
|
|
*On December 6, 2011, the Board of Trustees approved a share repurchase plan which was subsequently reviewed by the Board of Trustees each year in December. Under the current share repurchase plan, the Fund may purchase in the open market up to 10% of its outstanding common shares as of December 31, 2023 (shares that may yet be purchased under the current plan are 1,215,124 shares). The current plan is in effect between January 1, 2024 and December 31, 2024.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a)The registrant has adopted procedures by which shareholders may recommend nominees to the 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 and Governance 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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Code of Ethics for Covered 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)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 SecuritiesAct of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c)(1) Proxy Voting Policies and Procedures are attached.
(c)(2) Submission of Matters to a Vote of Security Holders is attached. See attached "John Hancock Funds - Governance Committee Charter".
(c)(3) Registrant's notice to shareholders pursuant to Registrant's exemptive order granting an exemption from Section 19(b) of the Investment Company Act of 1940, as amended and Rule 19b-1 thereunder regarding distributions made pursuant to the Registrant's Managed Distribution Plan.
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 Hedged Equity & Income Fund
|
By:
|
/s/ Kristie M. Feinberg
|
|
|
------------------------------
|
|
|
Kristie M. Feinberg
|
|
|
President
|
|
Date:
|
February 16, 2024
|
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/ Kristie M. Feinberg
|
|
|
------------------------------
|
|
|
Kristie M. Feinberg
|
|
|
President
|
|
Date:
|
February 16, 2024
|
|
By:
|
/s/ Charles A. Rizzo
|
|
|
--------------------------------
|
|
|
Charles A. Rizzo
|
|
|
Chief Financial Officer
|
|
Date:
|
February 16, 2024
|
JOHN HANCOCK VARIABLE INSURANCE TRUST
JOHN HANCOCK FUNDS
JOHN HANCOCK FUNDS II
JOHN HANCOCK EXCHANGE-TRADED FUND TRUST
SARBANES-OXLEY CODE OF ETHICS
FOR
PRINCIPAL EXECUTIVE, PRINCIPAL FINANCIAL OFFICER & TREASURER
I.Covered Officers/Purpose of the Code
This code of ethics (this "Code") for John Hancock Variable Insurance Trust, John Hancock Funds1, and John Hancock Funds II, John Hancock Exchange-Traded Fund Trust and, each a registered management investment company under the Investment Company Act of 1940, as amended ("1940 Act"), which may issue shares in separate and distinct series (each investment company and series thereunder to be hereinafter referred to as a "Fund"), applies to each Fund's Principal Executive Officer ("President"), Principal Financial Officer ("Chief Financial Officer") and Treasurer ("Treasurer") (the "Covered Officers" as set forth in Exhibit A) for the purpose of promoting:
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Fund;
compliance with applicable laws and governmental rules and regulations;
the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and
accountability for adherence to the Code.
1John Hancock Funds includes the following trusts: John Hancock Financial Opportunities Fund; John Hancock Bond Trust; John Hancock California Tax-Free Income Fund; John Hancock Capital Series; John Hancock Funds III; John Hancock Income Securities Trust; John Hancock Investment Trust; John Hancock Investment Trust II; John Hancock Investors Trust; John Hancock Municipal Securities Trust; John Hancock Premium Dividend Fund ; John Hancock Preferred Income Fund; John Hancock Preferred Income Fund II; John Hancock Preferred Income Fund III; John Hancock Sovereign Bond Fund; John Hancock Strategic Series; John Hancock Tax-Advantaged Dividend Income Fund; John Hancock Tax-Advantaged Global Shareholder Yield Fund; John Hancock Hedged Equity and Income Fund; and John Hancock Collateral Trust.
Each of the Covered Officers should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.
II.Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview
A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund. Certain conflicts of interest arise out of the relationships between the Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the "Investment Company Act") and the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" of the Fund. Each of the Covered Officers is an officer or employee of the investment adviser or a service provider ("Service Provider") to the Fund. The Fund's, the investment adviser's and the Service Provider's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.
Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the investment adviser and the Service Provider of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund, for the investment adviser or for the Service Provider), be involved in establishing policies and implementing decisions which will have different effects on the investment adviser, the Service Provider and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the investment adviser and the Service Provider and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if such participation is performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, it will be deemed to have been handled ethically. In addition, it is recognized by the Fund's Board of Trustees/Directors (the "Board") that the Covered Officers may also be officers or employees of one or more other investment companies covered by other Codes.
Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but the Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund.
***
2 of 6
Each Covered Officer must:
not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;
not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than for the benefit of the Fund; and
not use material non-public knowledge of portfolio transactions made or contemplated for the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions.
Additionally, conflicts of interest may arise in other situations, the propriety of which may be discussed, if material, with the Fund's Chief Compliance Officer ("CCO"). Examples of these include:
serve as a director/trustee on the board of any public or private company;
the receipt of any non-nominal gifts;
the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety (or other formulation as the Fund already uses in another code of conduct);
any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than its investment adviser, any sub-adviser, principal underwriter, administrator or any affiliated person thereof; and
a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership.
III.Disclosure & Compliance
Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Fund;
Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's directors and auditors, and to governmental regulators and self- regulatory organizations;
3 of 6
Each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Fund and the Fund's adviser or any sub-adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and
It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.
IV. Reporting & Accountability
Each Covered Officer must:
upon adoption of the Code (or thereafter as applicable, upon becoming an Covered Officer), affirm in writing to the Fund's CCO that he/she has received, read, and understands the Code;
annually thereafter affirm to the Fund's CCO that he/she has complied with the requirements of the Code;
not retaliate against any employee or Covered Officer or their affiliated persons for reports of potential violations that are made in good faith;
notify the Fund's CCO promptly if he/she knows of any violation of this Code (Note: failure to do so is itself a violation of this Code); and
report at least annually any change in his/her affiliations from the prior year.
The Fund's CCO is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers sought by the Principal Executive Officer will be considered by the Fund's Board or the Compliance Committee thereof (the "Committee").
The Fund will follow these procedures in investigating and enforcing this Code:
the Fund's CCO will take all appropriate action to investigate any potential violations reported to him/her;
if, after such investigation, the CCO believes that no violation has occurred, the CCO is not required to take any further action;
any matter that the CCO believes is a violation will be reported to the Board or, if applicable, Compliance Committee;
if the Board or, if applicable, Compliance Committee concurs that a violation has occurred, the Board, either upon its determination of a violation or upon
4 of 6
recommendation of the Compliance Committee, if applicable, will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the Service Provider or the investment adviser or its board; or a recommendation to dismiss the Registrant's Executive Officer;
the Board, or if applicable the Compliance Committee, will be responsible for granting waivers, as appropriate; and
any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.
V.Other Policies & Procedures
This Code shall be the sole code of ethics adopted by the Fund for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Fund, the Fund's adviser, any sub- adviser, principal underwriter or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Fund's and its investment adviser's codes of ethics under Rule 204A-1 under the Investment Advisers Act and Rule 17j-1 under the Investment Company Act, respectively, are separate requirements applying to the Covered Officers and others and are not part of this Code.
VI. Amendments
Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Fund's Board, including a majority of independent directors.
VII. Confidentiality
All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Fund's Board and its counsel, the investment adviser and the relevant Service Providers.
VIII. Internal Use
The Code is intended solely for the internal use by the Fund and does not constitute an admission, by or on behalf of the Fund, as to any fact, circumstance, or legal conclusion.
5 of 6
Exhibit A
Persons Covered by this Code of Ethics
(As of June 29, 2023)
John Hancock Variable Insurance Trust
Principal Executive Officer and President – Kristie Feinberg
Principal Financial Officer and Chief Financial Officer – Charles Rizzo
Treasurer – Salvatore Schiavone
John Hancock Funds
Principal Executive Officer and President – Kristie Feinberg
Principal Financial Officer and Chief Financial Officer – Charles Rizzo
Treasurer – Salvatore Schiavone
John Hancock Funds II
Principal Executive Officer and President – Kristie Feinberg
Principal Financial Officer and Chief Financial Officer – Charles Rizzo
Treasurer – Salvatore Schiavone
John Hancock Exchange-Traded Trust
Principal Executive Officer and President – Kristie Feinberg
Principal Financial Officer and Chief Financial Officer – Charles Rizzo
Treasurer – Salvatore Schiavone
6 of 6
CERTIFICATION
I, Kristie M. Feinberg, certify that:
1.I have reviewed this report on Form N-CSR of the John Hancock Hedged Equity & Income Fund (the "registrant");
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and
5.The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 16, 2024 |
/s/ Kristie M. Feinberg |
|
Kristie M. Feinberg |
|
President |
CERTIFICATION
I, Charles A. Rizzo, certify that:
1.I have reviewed this report on Form N-CSR of the John Hancock Hedged Equity & Income Fund (the "registrant");
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and
5.The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 16, 2024 |
/s/ Charles A. Rizzo |
|
Charles A. Rizzo |
|
Chief Financial Officer |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002*
In connection with the attached Report of John Hancock Hedged Equity & Income Fund (the "registrant") on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the registrant does hereby certify that, to the best of such officer's knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant as of, and for, the periods presented in the Report.
/s/ Kristie M. Feinberg Kristie M. Feinberg President
Dated: February 16, 2024
/s/ Charles A. Rizzo Charles A. Rizzo Chief Financial Officer
Dated: February 16, 2024
A signed original of this written statement, required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
*These certifications are being furnished solely pursuant to 18 U.S.C. Section 1350 and are not being filed as part of this Form N-CSR or as a separate disclosure document.
WELLINGTON MANAGEMENT COMPANY
Wellington Management
2023 Global Proxy Voting Guidelines
"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""".""".."..""
WELLINGTON'S PHILOSOPHY
Wellington Management are long-term stewards of clients' assets and aim to vote proxies for which we have voting authority in the best interest of clients.
These guidelines are based on Wellington Management's fiduciary obligation to act in the best interest of its clients as shareholders and while written to apply globally, we consider differences in local practice, cultures, and law to make informed decisions.
It should be noted that the following are guidelines, and not rigid rules, and Wellington Management reserves the right in all cases to deviate from the general direction set out below where doing so is judged to represent the best interest of its clients.
OUR APPROACH TO STEWARDSHIP
The goal of our stewardship activities is to support decisions that we believe will deliver sustainable, competitive investment returns for our clients.
The mechanisms we use to implement our stewardship activities vary by asset class. Engagement applies to all our investments across equity and credit, in both private and public markets. Proxy voting applies mostly to public equities.
Stewardship extends to any area that may affect the long-term sustainability of an investment, including the considerations of environmental, social, and governance (ESG) issues. Stewardship can be accomplished through research and constructive dialogue with company management and boards, by monitoring company behavior through informed active ownership, and by emphasizing management accountability for important issues via our proxy votes, which have long been part of Wellington's investment ethos. Please refer to our Engagement Policy for more information on how engagement is conducted at Wellington.
OUR APPROACH TO VOTING
We vote proxies in what we consider to be the best interests of our clients. Our approach to voting is investment-led and serves as an influential component of our engagement and escalation strategy. The Investment Stewardship Committee, a cross- functional group of experienced professionals, oversees Wellington Management's stewardship activities with regards to proxy voting and engagement practices.
Generally, issues which can be addressed by the proxy voting guidance below are voted by means of standing instructions communicated to our primary voting agent. Some votes warrant analysis of specific facts and circumstances and therefore are reviewed individually. We examine such proxy proposals on their merits and take voting action in a manner that best serves the interests of our clients. While manual votes are often resolved by ESG analysts, grounded in their sector and company research, each portfolio manager is empowered to make a final decision for their relevant client portfolio(s), absent a material conflict of interest. Proactive portfolio manager input is sought under certain circumstances, which may include consideration of position size and proposal subject matter and nature. Where portfolio manager input is proactively sought, deliberation across the firm may occur. This collaboration does not prioritize consensus across the firm above all other interests but rather seeks to inform portfolio managers' decisions by allowing them to consider multiple perspectives. Consistent with our community-of- boutiques model, portfolio managers may occasionally arrive at different voting conclusions for their clients, resulting
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in different decisions for the same vote. Robust voting procedures and the deliberation that occurs before a vote decision are aligned with our role as active owners and fiduciaries for our clients.
When voting on shareholder proposals, we consider the spirit of the proposal, not just the letter, and generally support proposals addressing material issues even when management has been responsive to our engagement on the issue. In this way, we seek to align our voting with our engagement activities. If our views differ from any specific suggestions in the proposals, we may provide clarification via direct engagement.
Please refer to our Global Proxy Policy and Procedures for further background on the process and governance of our voting approach.
Detailed below are the principles which we consider when deciding how to vote.
VOTING GUIDELINES
BOARD COMPOSITION AND ROLE OF DIRECTORS
Effective boards should act in shareholders' best economic interests and possess the relevant skills to implement the company's strategy.
We consider shareholders' ability to elect directors annually an important right and accordingly, generally support proposals to enable annual director elections and declassify boards.
We may withhold votes from directors for being unresponsive to shareholders or for failing to make progress on material issues. We may also withhold votes from directors who fail to implement shareholder proposals that have received majority support or have implemented poison pills without shareholder approval.
Time commitments
We expect directors to have the time and energy to fully commit to their board-related responsibilities and not be over-stretched with multiple external directorships. We reserve the right to vote against directors when serving on five or more public company boards; and public company executives when serving on three or more public company boards, including their own.
We consider the roles of board chair and chair of the audit committee as equivalent to an additional board seat when evaluating the overboarding matrix for non-executives. We may take into consideration that certain directorships, such as Special Purpose Acquisition Companies (SPACs) and investment companies, are usually less demanding.
Directors should also attend at least 75% of scheduled board meetings and we may vote against their re-election unless they disclose a valid reason.
Succession planning and board refreshment
We do not have specific voting policies relating to director age or tenure. We prefer to take a holistic view, evaluating whether the company is balancing the perspectives of new directors with the institutional knowledge of longer-serving board members. Succession planning is a key topic during many of our board engagements.
We expect companies to refresh their board membership every five years and may vote against the chair of the nominating committee for failure to implement. We believe a degree of director turnover allows companies to strengthen board diversity and add new skillsets to the board to enhance their oversight and adapt to evolving strategies.
Boards should offer transparency around their process to evaluate director performance and independence, conducting a rigorous regular evaluation of the board, key committees as well as individual directors, which is
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responsive to shareholder input. We believe externally facilitated board evaluations may contribute to companies retaining an appropriate mix of skills, experience and diversity on their boards over time.
In certain markets companies are governed by multi-tiered boards, with each tier having different responsibilities. We hold supervisory board members to similar standards, subject to prevailing local governance best practices.
Board independence
In our view, boards perform best when composed of an appropriate combination of executive and non-executive (in particular independent non-executive) directors to challenge and counsel management.
To determine appropriate minimum levels of board independence, we look to prevailing market best practices; two- thirds in the US, for example, and majority in the UK and France. In Japan, we will consider voting against the board chair (or most senior executive on the ballot) in cases where the board is less than one-third independent.
In addition to the overall independence at the board level, we also consider the independence of audit, compensation, and nominating committees. Where independence falls short of our expectations, we may withhold approval for non- independent directors or those responsible for the board composition. We typically vote in support of shareholder proposals calling for improved independence.
We believe that having an independent chair is the preferred structure for board leadership. Having an independent chair avoids the inherent conflict of self-oversight and helps ensure robust debate and diversity of thought in the boardroom. We will generally support proposals to separate the chair and CEO or establish a lead director but may support the involvement of an outgoing CEO as executive chair for a limited period to ensure a smooth transition to new management.
Board diversity
We believe boards which reflect a wide range of perspectives are best positioned to create shareholder value. Appointing boards that thoughtfully debate company strategy and direction is not possible unless boards elect highly qualified and diverse directors. By setting a leadership example, diverse boardrooms encourage an organizational culture that promotes diverse thinkers, enabling better strategic decisions and the navigation of increasingly complex issues facing companies today.
We think it is not in shareholders' best interests for the full board to be comprised of directors from the same industry, gender, race, nationality, or ethnic group. We expect for our portfolio companies to be thoughtful and intentional in considering the widest possible pool of skilled candidates who bring diverse perspectives into the boardroom. We encourage companies to disclose the composition of their board and to communicate their ambitions and strategies for creating and fostering a diverse board.
We reserve the right to vote against the re-election of the Nominating/Governance Committee Chair when the board is not meeting local market standards from a diversity perspective or when the gender-diverse representation is below 20% at companies in major indices. Outside of these major indices and absent a market-defined standard, we may vote against the reelection of the Nominating/Governance Committee Chair where no gender-diverse directors are represented on a board.
We reserve the right to vote against the reelection of the Nominating/Governance Committee Chair at US large cap and FTSE 100 companies that failed to appoint at least one director from a minority ethnic group and provide clear and compelling reason why it has been unable to do so. We will continue to engage on ethnic diversity of the board in other markets and may vote against the re-election of directors where we fail to see improvements.
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Majority vote on election of directors
Because we believe the election of directors by a majority of votes cast is the appropriate standard, we will generally support proposals that seek to adopt such a standard. Our support will typically extend to situations where the relevant company has an existing resignation policy for directors that receive a majority of ''withhold'' votes. We believe majority voting should be defined in the company's charter and not simply in its corporate governance policy.
Generally, we oppose proposals that fail to provide for the exceptional use of a plurality standard in the case of contested elections. Further, we will not support proposals that seek to adopt a standard of majority of votes outstanding (total votes eligible as opposed to votes cast). We likely will support shareholder and management proposals to remove existing supermajority vote requirements.
We generally support proposals to remove existing supermajority vote requirements.
Contested director elections
We approach contested director elections on a case-by-case basis, considering the specific circumstances of each situation to determine what we believe to be in the best interest of our clients. In each case, we welcome the opportunity to engage with both the company and the proponent to ensure that we understand both perspectives and are making an informed decision on our clients' behalf.
COMPENSATION
Executive compensation plans establish the incentive structure that plays a role in strategy-setting, decision-making, and risk management. While design and structure vary widely, we believe the most effective compensation plans attract and retain high- caliber executives, foster a culture of performance and accountability, and align management's interests with those of long-term shareholders.
Due to each company's unique circumstances and wide range of plan structures, Wellington determines support for a compensation plan on a case-by-case basis. We support plans that we believe lead to long-term value creation for our clients and the right to vote on compensation plans annually.
In evaluating compensation plans, we consider the following attributes in the context of the company's business, size, industry, and geographic location:
Alignment — We believe in pay-for-performance and encourage plan structures that align executive compensation with shareholder experience. We compare total compensation to performance metrics on an absolute and relative basis over various timeframes, and we look for a strong positive correlation. To ensure shareholder alignment, executives should maintain meaningful equity ownership in the company while they are employed, and for a period thereafter.
Transparency — We expect compensation committees to articulate the decision-making process and rationale behind the plan structure, and to provide adequate disclosure so shareholders can evaluate actual compensation relative to the committee's intentions. Disclosure should include how metrics, targets, and timeframes are chosen, and detail desired outcomes. We also seek to understand how the compensation committee determines the target level of compensation and constructs the peer group for benchmarking purposes.
Structure — The plan should be clear and comprehensible. We look for a mix of cash versus equity, fixed versus variable, and short- versus long-term pay that incentivizes appropriate risk-taking and aligns with industry practice. Performance targets should be achievable but rigorous, and equity awards should be subject to performance and/or vesting periods of at least three years, to discourage executives from managing the business with a near-term focus. Unless otherwise specified by local market regulators, performance-based compensation should be based primarily
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on quantitative financial and non-financial criteria such as ESG-related criteria. There is scope, however, for qualitative criteria related to strategic, individual, or ESG goals, that are critical to the business. Qualitative goals may be acceptable if a compensation committee has demonstrated a fair and consistent approach to evaluating qualitative performance and applying discretion over time.
Accountability — Compensation committees should be able to use discretion, positive and negative, to ensure compensation aligns with performance and provide a cogent explanation to shareholders. We generally oppose one- time awards aimed at retention or achieving a pre-determined goal. Barring an extenuating circumstance, we view retesting provisions unfavorably.
Approving equity incentive plans
A well-designed equity incentive plan facilitates the alignment of interests of long-term shareholders, management, employees, and directors. We evaluate equity-based compensation plans on a case-by-case basis, considering projected plan costs, plan features, and grant practices. We will reconsider our support for a plan if we believe these factors, on balance, are not in the best interest of shareholders. Specific items of concern may include excessive cost or dilution, unfavorable change-in-control features, insufficient performance conditions, holding/vesting periods, or stock ownership requirements, repricing stock options/stock appreciation rights (SARs) without prior shareholder approval, or automatic share replenishment (an ''evergreen'' feature).
Employee stock purchase plans
We generally support employee stock purchase plans, as they may align employees' interests with those of shareholders. That said, we typically vote against plans that do not offer shares to a broad group of employees (e.g., if only executives can participate) or plans that offer shares at a significant discount.
Non-executive director compensation
We expect companies to disclose non-executive director compensation and we prefer the use of an annual retainer or fee, delivered as cash, equity, or a combination. We do not believe non-executive directors should receive performance-based compensation, as this creates a potential conflict of interest. Non-executive directors oversee executive compensation plans; their objectivity is compromised if they design a plan that they also participate in.
Severance arrangements
We are mindful of the board's need for flexibility in recruitment and retention but will oppose excessively generous arrangements unless agreements encourage management to negotiate in shareholders' best interest. We generally support proposals calling for shareholder ratification of severance arrangements.
Retirement bonuses (Japan)
Misaligned compensation which is based on tenure and seniority may compromise director independence. We generally vote against directors and statutory auditors if retirement bonuses are given to outgoing directors.
Claw-back policies
We believe companies should be able to recoup incentive compensation from members of management who received awards based on fraudulent activities, accounting misstatements, or breaches in standards of conduct that lead to corporate reputational damage. We generally support shareholder proposals requesting that a company establish a robust claw-back provision if existing policies do not cover these circumstances. We also support proposals seeking greater transparency about the application of claw back policies.
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Audit quality and oversight
Scrutiny of auditors, particularly audit quality and oversight, has been increasing. When we assess financial statement reporting and audit quality, we will generally support management's choice of auditors, unless the auditors have demonstrated failure to act in shareholders' best economic interest. We also pay close attention to the non-audit services provided by auditors and consider the potential for the revenue from those services to create conflicts of interest that could compromise the integrity of financial statement audits.
SHAREHOLDER RIGHTS
Shareholder rights plans
Also known as poison pills, these plans can enable boards of directors to negotiate higher takeover prices on behalf of shareholders. Such plans also may be misused, however, as a means of entrenching management. Consequently, we may support plans that include a shareholder approval requirement, a sunset provision, or a permitted bid feature (e.g., bids that are made for all shares and demonstrate evidence of financing must be submitted to a shareholder vote).
Because boards generally have the authority to adopt shareholder rights plans without shareholder approval, we are equally vigilant in our assessment of requests for authorization of blank-check preferred shares.
Multiple voting rights
We generally support one share, one vote structures. The growing practice of going public with a dual-class share structure can raise governance and performance concerns. In our view, dual-class shares can create misalignment between shareholders' economic stake and their voting power and can grant control to a small number of insiders who may make decisions that are not in the interests of all shareholders.
We generally prefer that companies dispense with dual-class share structures but we recognize that newly listed companies may benefit from a premium by building in some protection for founders for a limited time after their IPO. The Council of Institutional Investors, a nonprofit association of pension funds, endowments, and foundations, recommends that newly public companies that adopt structures with unequal voting rights do away with the structure within seven years of going public. We believe such sunset clauses are a reasonable compromise between founders seeking to defend against takeover attempts in pivotal early years, and shareholders demanding a mechanism for holding management accountable, especially in the event of leadership changes.
Similarly, we generally do not support the introduction of loyalty shares, which grant increased voting rights to investors who hold shares over multiple years.
Proxy access
We believe shareholders should have the right to nominate director candidates on the management's proxy card. We will generally support shareholder proposals seeking proxy access unless the existing policy is already in-line with market norms.
Special meeting rights
We believe the right to call a special meeting is a shareholder right, and we will generally support such proposals to establish this right at companies that lack this facility. We will generally support proposals lowering thresholds where the current level exceeds 15% and the shareholder proposals calls for a 10%+ threshold, taking into consideration the make-up of the existing shareholder base and the company's general responsiveness to shareholders. If shareholders are granted the right to call special meetings, we generally do not support written consent.
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CAPITAL STRUCTURE AND CAPITAL ALLOCATION
Mergers and acquisitions
We approach votes to approve mergers and acquisitions on a case-by-case basis, considering the specific circumstances of each proposal to determine what we believe to be in the best interest of our clients.
Increases in authorized common stock
We generally support requests for increases up to 100% of the shares with preemption rights. Exceptions will be made when the company has clearly articulated a reasonable need for a greater increase. Conversely, at companies trading in less liquid markets, we may impose a lower threshold. When companies seek to issue shares without preemptive rights, we consider potential dilution and generally support requests when dilution is below 20%. For issuance with preemptive rights, we review on a case-by-case basis, considering the size of issuance relative to peers.
Capital allocation (Japan)
We hold board chairs accountable for persistently low returns on equity (ROE) in Japan, using a five-year average ROE of below 5% as a guide. Our assessment of a company's capital stewardship complements our assessment of board effectiveness without dictating specific capital allocation decisions. We may make exceptions where ROE is improving, where a long-cycle business warrants a different standard, or where new management is in place, and we feel they should not be punished for the past CEO/Chair's record.
Cross-shareholdings (Japan)
Cross-shareholdings reduce management accountability by creating a cushion of cross-over investor support. We may vote against the highest-ranking director up for re-election for companies where management has allocated a significant portion (20% or more) of net assets to cross-shareholdings. When considering this issue, we will take into account a company's trajectory in reducing cross-shareholdings over time as well as legitimate business reasons given to retain specific shareholdings.
ENVIRONMENTAL TOPICS
We assess portfolio companies' performance on environmental issues we deem to be material to long-term financial performance and communicate our expectations for best practice.
Climate change
As an asset manager entrusted with investing on our clients' behalf, we aim to assess, monitor, and manage the potential effects of climate change on our investment processes and portfolios, as well as on our business operations. Proxy voting is a key tool we use for managing climate risks, as part of our stewardship escalation process.
We expect companies facing material climate risks to have credible transition plans communicated using the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). Appropriate reporting on climate readiness will help stakeholders understand companies' willingness and ability to adapt to or mitigate climate- related risks. In addition to the voting policies specifically mentioned, we may also vote against directors at companies where climate plans and disclosures meaningfully lag our expectations for those companies.
Emissions disclosure
We encourage all companies to disclose Scope 1, 2, and 3 emissions. While we recognize the challenges associated with collecting Scope 3 emissions data, this disclosure is necessary for us to fully understand the transition risks applicable to an issuer. Disclosure of both overall categories of Scope 3 emissions ---upstream and downstream ---with context and granularity from companies about the most significant Scope 3 sources, enhances our ability to evaluate investment risks and opportunities. We encourage companies to adopt emerging global standards for measurement and disclosure of emissions such as those being developed by the International Sustainability Standards Board (ISSB)
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and believe companies will benefit from acting now and consequently evolving their approach in line with emerging global standards.
We view disclosure of Scope 1 and 2 emissions as a minimum expectation where measurement practices are well- defined and attainable. We will generally vote against the re-election of the Chair of MSCI World companies, Climate Action 100+ companies, as well as companies assessed by the Transition Pathway Initiative (TPI) which do not disclose Scope 1 and 2 emissions, have not made a commitment to do so in the next year and where emissions intensity is material. We will expand this expectation to large cap companies in Emerging Markets in 2024.
Net-zero targets
As an outcome of enterprise risk management and strategic planning to reduce the potential financial impacts of climate change, we encourage companies to set a credible, science-based decarbonization glidepath, with an interim and long- term target, that comprises all categories of material emissions and is consistent with the ambition to achieve net zero emissions by 2050 or sooner. For Climate Action 100+ companies we reserve the right to vote against the company chair where quantitative emission reduction targets have not been defined. We consider it to be best practice for companies to pursue validation from the Science Based Targets initiative (SBTi).
We generally support shareholder proposals asking for improved disclosure on climate risk management and we generally support those that request alignment of business strategies with the Paris Agreement or similar language. We also generally support proposals asking for board oversight of political contributions and lobbying activities or those asking for improved disclosures where material inconsistencies in reporting and strategy may exist, especially as it relates to climate strategy.
Other environmental shareholder proposals
For other environmental proposals covering themes including biodiversity, natural capital, deforestation, water usage, (plastic) packaging as well as palm oil, we take a case-by-case approach and will generally support proposals calling for companies to provide disclosure where this is additive to the company's existing efforts, the proposed information pertains to a material impact and in our view is of benefit to investors. When voting on any shareholder proposals, we consider the spirit of the proposal, not just the letter, and generally support proposals addressing material issues even when management has been responsive to our engagement on the issue.
SOCIAL TOPICS
Corporate culture, human capital, and diversity, equity, & inclusion
Through engagement we emphasize to management the importance of how they invest in and cultivate their human capital to perpetuate a strong culture. We assess culture holistically from an alignment of management incentives, responsiveness to employee feedback, evidence of an equitable and sound talent management strategy and commitment to diversity, equity, and inclusion. We value transparency and use of key performance indicators.
A well-articulated culture statement and talent attraction, retention and development strategy suggest that a company appreciates culture and talent as competitive advantages that can drive long-term value creation. It also sends a strong message when management compensation is linked, when appropriate, to employee satisfaction. If the company conducts regular employee
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feedback they receive. We consider workplace locations and how a company balances attracting talent with the costs of operating in desirable cities.
We maintain that a deliberate human capital management strategy should foster a collaborative, productive workplace in which all talent can thrive. One ongoing engagement issue that pertains to human capital management is diversity, equity, and inclusion. We seek to better understand how and to what extent a company's approach to diversity is integrated with talent management at all levels. A sound long-term plan holds more weight than a company's current demographics, so we look for a demonstrable diversity, equity, and inclusion (DEI) strategy that
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seeks to improve metrics over time and align management incentives accordingly. We expect companies in the US to publicly disclose their EEO-1 reporting and their strategy to create an inclusive, diverse, and equitable workplace. We see DEI practices as a material input to long-term performance, so as our clients' fiduciaries, we seek to better understand how and to what extent a company's approach to diversity is integrated with talent management at all levels. This is only possible when there is consistent, robust disclosure in place.
Gender and racial pay equity are important parts of our assessment of a company's diversity efforts. Pay equity can impact shareholder value by exposing a company to challenges with recruiting & retaining talent, job dissatisfaction, workforce turnover, and costly lawsuits. Consequently, we may support proposals asking for improved transparency on a company's gender and/or racial pay gap if existing disclosures are lagging best practice and if the company has not articulated its efforts to eliminate disparities and promote equal opportunities for women and minorities to advance to senior roles.
We believe diversity among directors, leaders, and employees contributes positively to shareholder value by imbuing a company with myriad perspectives that help it better navigate complex challenges. A strong culture of diversity and inclusion begins in the boardroom. See the Board Diversity section above for more on our approach.
Stakeholders and risk management
In recent years, discourse on opioids, firearms, and sexual harassment has brought the potential for social externalities -----the negative effects that companies can have on society through their products, cultures, or policies -----
into sharp focus. These nuanced, often misunderstood issues can affect the value of corporate securities.
In our engagement with companies facing these risks, we encourage companies to disclose risk management strategies that acknowledge their societal impacts. When a company faces litigation or negative press, we inquire about lessons learned and request evidence of substantive changes that aim to prevent recurrence and mitigate downside risk. In these cases, we may also support proposals requesting enhanced disclosure on actions taken by management, including racial equity audits.
Human rights
Following the 2015 passage of the UK's Modern Slavery Act, a handful of countries have passed laws requiring companies to report on how they are addressing risks related to human rights abuses in their global supply chains. While human rights have been a part of our research and engagement in this context, we seek to assess companies' exposures to these risks, determine the sectors for which this risk is most material (highest possibility of supply-chain exposure), enhance our own engagement questions, and potentially work with external data providers to gain insights on specific companies or industries. To help us assess company practices and drive more substantive engagement with companies on this issue, we will generally support proposals requesting enhanced disclosure on companies' approach to mitigating the risk of human rights violations in their business.
Cybersecurity
Robust cybersecurity practices are imperative for maintaining customer trust, preserving brand strength, and mitigating regulatory risk. Companies that fail to strengthen their cybersecurity platforms may end up bearing large costs. Through engagement, we aim to compare companies' approaches to cyber threats, regardless of region or sector, to distinguish businesses that lag from those that are better prepared.
Political contributions and lobbying
We generally support proposals asking for board oversight of a company's political contributions and lobbying activities or those asking for improved disclosures where material inconsistencies in reporting and strategy may exist. In assessing shareholder proposals focused on lobbying, we also focus on the level of transparency of existing disclosures and whether companies clearly explain how they will respond if policy engagement of trade association membership to which they belong do not align with company policy.
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Important Information
Wellington Management Company LLP (WMC) is an independently owned investment adviser registered with the US Securities and Exchange Commission (SEC). WMC is also registered with the US Commodity Futures Trading Commission (CFTC) as a commodity trading advisor (CTA) and serves as a CTA to certain clients including commodity pools operated by registered commodity pool operators. WMC provides commodity trading advice to all other clients in reliance on exemptions from CTA registration. WMC, along with its affiliates (collectively, Wellington Management), provides investment management and investment advisory services to institutions around the world. Located in Boston, Massachusetts, Wellington Management also has offices in Chicago, Illinois; Radnor, Pennsylvania; San Francisco, California; Frankfurt; Hong Kong; London; Luxembourg; Madrid, Milan; Shanghai; Singapore; Sydney; Tokyo; Toronto; and Zurich.
This material is prepared for, and authorized for internal use by, designated institutional and professional investors and their consultants or for such other use as may be authorized by Wellington Management. This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management. This material is not intended to constitute investment advice or an offer to sell, or the solicitation of an offer to purchase shares or other securities. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients.
©2022 Wellington Management Company LLP. All rights reserved.
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JOHN HANCOCK FUNDS1
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
Overall Role and Responsibility
The Nominating and Governance Committee (the "Committee") of each of the Trusts shall (1) make determinations and recommendations to the Board of Trustees (the "Board") regarding issues related to (a) the composition of the Board and (b) corporate governance matters applicable to the Trustees who are not "interested persons" as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), of any of the Trusts, or of any Fund's investment adviser, subadviser or principal underwriter and who are "independent" as defined in the rules of the New York Stock Exchange ("NYSE") (the "Independent Trustees") and (2) discharge such additional duties, responsibilities and functions as are delegated to it from time to time.
Membership
The Nominating and Governance Committee (the "Committee") shall be composed of all of the Independent Trustees of the Board. One member of the Committee shall be appointed by the Board as Chair of the Committee. The chair shall be responsible for leadership of the Committee, including scheduling meetings or reviewing and approving the schedule for them, preparing agendas or reviewing and approving them before meetings, presiding over meetings of the Committee and making reports to the full Board, as appropriate.
Structure, Operations and Governance
Meetings and Actions by Written Consent. The Committee shall meet as often as required or as the Committee deems appropriate, with or without management present. Meetings may be called and notice given by the Committee chair or a majority of the members of the Committee. Members may attend meetings in person or by telephone. The Committee may act by written consent to the extent permitted by law and the Funds' governing documents. The Committee shall report to the Board on any significant action it takes not later than the next following Board meeting.
Required Vote and Quorum. The affirmative vote of a majority of the members of the Committee participating in any meeting of the Committee at which a quorum is present is necessary for the adoption of any resolution. At least a majority of the Committee members present at the meeting in person or by telephone shall constitute a quorum for the transaction of business.
1"John Hancock Funds" includes each trust and series as may be amended from time to time (each individually, a "Trust," and collectively, the "Trusts," and each series thereof, a "Portfolio" or "Fund," and collectively, the "Portfolios" or "Funds").
Delegation to Subcommittees. The Committee may delegate any portion of its authority to a subcommittee of one or more members.
Appropriate Resources and Authority. The Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority to retain special counsel and other advisers, experts or consultants, at the Funds' expense, as it determines necessary or appropriate to carry out its duties and responsibilities. In addition, the Committee shall have direct access to such officers of and service providers to the Funds as it deems desirable.
Review of Charter. The Committee Charter shall be approved by at least a majority of the Independent Trustees of the Trust. The Committee shall review and assess the adequacy of this Charter periodically and, where necessary or as it deems desirable, will recommend changes to the Board for its approval. The Board may amend this Charter at any time in response to recommendations from the Committee or on its own motion.
Executive Sessions. The Committee may meet privately and may invite non-members to attend such meetings. The Committee may meet with representatives of the Investment Management Services department of the Funds' advisers, internal legal counsel of the Funds' advisers, members of the John Hancock Funds Risk & Investment Operations Committee (the "RIO Committee") and with representatives of the Funds' service providers, including the subadvisers, to discuss matters that relate to the areas for which the Committee has responsibility.
Specific Duties and Responsibilities
The Committee shall have the following duties and powers, to be exercised at such times and in such manner as the Committee shall determine:
1.Except where a Trust is legally required to nominate individuals recommended by another, to identify individuals qualified to serve as Independent Trustees of the Trusts, and to consider and recommend to the full Board nominations of individuals to serve as Trustees.
2.To consider, as it deems necessary or appropriate, the criteria for persons to fill existing or newly created Trustee vacancies. The Committee shall use the criteria and principles set forth in Annex A to guide its Trustee selection process.
3.To consider and recommend changes to the Board regarding the size, structure, and composition of the Board.
4.To evaluate, from time to time, and determine changes to the retirement policies for the Independent Trustees, as appropriate.
5.To periodically review the Board's committee structure and, in collaboration with the Chairs of the various Committees, the charters of the Board's committees, and
recommend to the Board of Trustees changes to the committee structure and charters as it deems appropriate.
6.To retain and terminate any firm(s) to be used to identify or evaluate or assist in identifying or evaluating potential Independent Board nominees, subject to the Board's sole authority to approve the firm's fees and other retention terms.
7.To consider and determine the amount of compensation to be paid by the Trusts to the Independent Trustees, including the compensation of the Chair of the Board or any Vice-Chair of the Board and of Committee Chairs, and to address compensation-related matters. The Chair of the Board has been granted the authority to approve special compensation to Independent Trustees in recognition of any significant amount of additional time and service to the Trusts provided by them, subject to ratification of any such special compensation by the Committee at the next regular meeting of the Committee.
8.To coordinate and administer an annual self-evaluation of the Board, which will include, at a minimum, a review of its effectiveness in overseeing the number of Funds in the Fund complex and the effectiveness of its committee structure.
9.To review the Board Governance Procedures and recommend to the Board of Trustees changes to the Procedures as the Committee deems appropriate.
10.To report its activities to the full Board and to make such recommendations with respect to the matters described above and other matters as the Committee may deem necessary or appropriate.
Additional Responsibilities
The Committee will also perform other tasks assigned to it from time to time by the Chair of the Board or by the Board, and will report findings and recommendations to the Board, as appropriate.
Last revised: December 12, 2018
ANNEX A
The Committee may take into account a wide variety of factors in considering Trustee candidates, including (but not limited to) the criteria set forth below. The Committee may determine that a candidate who does not satisfy these criteria in one or more respects should nevertheless be considered as a nominee if the Committee finds that the criteria satisfied by the candidate and the candidate's other qualifications demonstrate the appropriate level of fitness to serve.
General Criteria
1.Nominees should have a reputation for integrity, honesty and adherence to high ethical standards, and such other personal characteristics as a capacity for leadership and the ability to work well with others.
2.Nominees should have business, professional, academic, financial, accounting or other experience and qualifications which demonstrate that they will make a valuable contribution as Trustees.
3.Nominees should have a commitment to understand the Funds, and the responsibilities of a trustee/director of an investment company and to regularly attend and participate in meetings of the Board and its committees.
4.Nominees should have the ability to understand the sometimes conflicting interests of the various constituencies of the Funds, including shareholders and the investment adviser, and to act in the interests of all shareholders.
5.Nominees should not have, nor appear to have, a conflict of interest that would impair their ability to represent the interests of all the shareholders and to fulfill the responsibilities of a trustee.
6.Nominees should have experience on corporate or other institutional bodies having oversight responsibilities.
It is the intent of the Committee that at least one Independent Trustee be an "audit committee financial expert" as that term is defined in Item 3 of Form N-CSR.
Application of Criteria to Current Trustees
The re-nomination of current Trustees should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above based on, among other things, the current Trustee's contribution to the Board and any committee on which he or she serves.
Review of Nominations
1.The Committee believes that it is in the best interests of each Trust and its shareholders to obtain highly-qualified candidates to serve as members of the Board.
2.In nominating candidates who would be Independent Trustees, the Committee believes that no particular qualities or skills nor any specific minimum qualifications or disqualifications are controlling or paramount. The Committee shall take into consideration any such factors as it deems appropriate; however, the appropriate mix of skills, expertise and attributes needed to maintain an effective board are sought in the applicant pool as part of every search the Board undertakes for new trustees, including but not limited to the diversity of thought, as well as of gender, race, ethnic background and geographic origin. These factors may also include (but are not limited to) the person's character, integrity, judgment, skill and experience with investment companies and other organizations of comparable purpose, complexity and size and subject to similar legal restrictions and oversight; the interplay of the candidate's experience with the experience of other Board members; and the extent to which the candidate would be a desirable addition to the Board and any Committees thereof. Other factors that the Committee may take into consideration include a person's availability and commitment to attend meetings and perform his or her responsibilities; whether or not the person has or had any relationships that might impair or appear to impair his or her independence, such as any business, financial or family relationships with Fund management, the investment adviser and/or any subadviser of the Funds, as applicable, Fund service providers, or their affiliates or with Fund shareholders. The Committee will strive to achieve a group that reflects a diversity of experiences in respect of industries, professions and other experiences, and that is diversified as to thought, gender, race, ethnic background and geographic origin.
3.While the Committee is solely responsible for the selection and recommendation to the Board of Independent Trustee candidates, the Committee may consider nominees recommended by any source, including shareholders, management, legal counsel and Board members, as it deems appropriate. The Committee may retain a professional search firm or a consultant to assist the Committee in a search for a qualified candidate. Any recommendations from shareholders shall be directed to the Secretary of the relevant Trust at such address as is set forth in the Trust's disclosure documents. Recommendations from management may be submitted to the Committee Chair. All recommendations shall include all information relating to such person that is required to be disclosed in solicitations of proxies for the election of Board members and as specified
in the relevant Trust's By-Laws, and must be accompanied by a written consent of the proposed candidate to stand for election if nominated for the Board and to serve if elected by shareholders.
4.Any shareholder nomination must be submitted in compliance with all of the pertinent provisions of Rule 14a-8 under the Securities Exchange Act of 1934 in order to be considered by the Committee. In evaluating a nominee recommended by a shareholder, the Committee, in addition to the criteria discussed above, may consider the objectives of the shareholder in submitting that nomination and whether such objectives are consistent with the interests of all shareholders. If the Board determines to include a shareholder's candidate among the slate of its designated nominees, the candidate's name will be placed on the Trust's proxy card. If the Board determines not to include such candidate among its designated nominees, and the shareholder has satisfied the requirements of Rule 14a-8, the shareholder's candidate will be treated as a nominee of the shareholder who originally nominated the candidate. In that case, the candidate will not be named on the proxy card distributed with the Trust's proxy statement.
5.As long as a current Independent Trustee continues, in the opinion of the Committee, to satisfy the criteria listed above, the Committee generally would favor the re-nomination of a current Trustee rather than a new candidate. Consequently, while the Committee will consider nominees recommended by shareholders to serve as trustees, the Committee may only act upon such recommendations if there is a vacancy on the Board, or the Committee determines that the selection of a new or additional Trustee is in the best interests of the relevant Trust. In the event that a vacancy arises or a change in Board membership is determined to be advisable, the Committee will, in addition to any shareholder recommendations, consider candidates identified by other means as discussed in this Annex A.
6.With respect to candidates for Independent Trustee, a biography of each candidate shall be acquired and shall be reviewed by counsel to the Independent Trustees and counsel to the Trust to determine the candidate's eligibility to serve as an Independent Trustee.
7.The Committee may from time to time establish specific requirements and/or additional factors to be considered for Independent Trustee candidates as it deems necessary or appropriate.
8.After its consideration of relevant factors, the Committee shall present its recommendation(s) to the full Board for its consideration.
John Hancock Hedged Equity & Income Fund
Notification of Sources of Distribution
This notice provides shareholders of the John Hancock Hedged Equity & Income Fund (NYSE: HEQ) with important information concerning the distribution declared on June 30, 2023, and payable on September 29, 2023. No action is required on your part.
Distribution Period: |
September 2023 |
Distribution Amount Per Common Share: |
$0.2500 |
The following table sets forth the estimated sources of the current distribution, payable September 29, 2023, and the cumulative distributions paid this fiscal year to date from the following sources: net investment income; net realized short term capital gains; net realized long term capital gains; and return of capital or other capital source. All amounts are expressed on a per common share basis and as a percentage of the distribution amount.
|
|
|
|
For the fiscal year-to-date period |
|
For the period 7/1/2023-09/30/2023 |
|
1/1/2023-09/30/2023 1 |
|
|
|
|
|
|
% Breakdown |
|
|
% Breakdown |
|
|
|
of the Total |
|
Current |
of the Current |
|
Total Cumulative |
Cumulative |
Source |
Distribution ($) |
Distribution |
|
Distributions ($) |
Distributions |
Net Investment Income |
0.1128 |
45% |
|
0.4400 |
|
53% |
Net Realized Short- |
|
|
|
|
|
|
Term Capital Gains |
0.0000 |
0% |
|
0.0000 |
|
0% |
Net Realized Long- |
|
|
|
|
|
|
Term Capital Gains |
0.0200 |
8% |
|
0.0000 |
|
0% |
Return of Capital or |
|
|
|
|
|
|
Other Capital Source |
0.1172 |
47% |
|
0.3898 |
|
47% |
Total per common share |
0.2500 |
100% |
|
0.8298 |
|
100% |
|
|
|
|
|
|
Average annual total return (in relation to NAV) for the 5 years ended on August 31, 2023 |
3.27% |
Annualized current distribution rate expressed as a percentage of NAV as of August 31, 2023 |
8.64% |
Cumulative total return (in relation to NAV) for the fiscal year through August 31, 2023 |
3.80% |
|
|
|
|
|
|
Cumulative fiscal year-to-date distribution rate expressed as a percentage of NAV as of |
|
August 31, 2023 |
|
|
|
|
|
7.17% |
You should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's managed distribution plan.
1The Fund's current fiscal year began on January 1, 2023 and will end on December 31, 2023.
The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
The Fund has declared the September 2023 distribution pursuant to the Fund's managed distribution plan (the "Plan"). Under the Plan, the Fund makes fixed quarterly distributions in the amount of $0.2500 per share, which will continue to be paid quarterly until further notice.
If you have questions or need additional information, please contact your financial professional or call the John Hancock Investment Management Closed-End Fund Information Line at 1-800-843-0090, Monday through Friday between 8:00 a.m. and 7:00 p.m., Eastern Time.
John Hancock Hedged Equity & Income Fund
Notification of Sources of Distribution
This notice provides shareholders of the John Hancock Hedged Equity & Income Fund (NYSE: HEQ) with important information concerning the distribution declared on December 1, 2023, and payable on December 29, 2023. No action is required on your part.
Distribution Period: |
December 2023 |
Distribution Amount Per Common Share: |
$0.2500 |
The following table sets forth the estimated sources of the current distribution, payable December 29, 2023, and the cumulative distributions paid this fiscal year to date from the following sources: net investment income; net realized short term capital gains; net realized long term capital gains; and return of capital or other capital source. All amounts are expressed on a per common share basis and as a percentage of the distribution amount.
|
|
|
|
For the fiscal year-to-date period |
|
For the period 10/1/2023-12/31/2023 |
|
1/1/2023-12/31/2023 1 |
|
|
|
|
|
|
% Breakdown |
|
|
% Breakdown |
|
|
|
of the Total |
|
Current |
of the Current |
|
Total Cumulative |
Cumulative |
Source |
Distribution ($) |
Distribution |
|
Distributions ($) |
Distributions |
Net Investment Income |
0.0666 |
27% |
|
0.5045 |
|
46% |
Net Realized Short- |
|
|
|
|
|
|
Term Capital Gains |
0.0000 |
0% |
|
0.0000 |
|
0% |
Net Realized Long- |
|
|
|
|
|
|
Term Capital Gains |
0.0160 |
6% |
|
0.0000 |
|
0% |
Return of Capital or |
|
|
|
|
|
|
Other Capital Source |
0.1674 |
67% |
|
0.5813 |
|
54% |
Total per common share |
0.2500 |
100% |
|
1.0858 |
|
100% |
|
|
|
|
|
|
Average annual total return (in relation to NAV) for the 5 years ended on November 30, 2023 |
4.30% |
Annualized current distribution rate expressed as a percentage of NAV as of November 30, |
|
2023 |
|
|
|
|
|
8.70% |
Cumulative total return (in relation to NAV) for the fiscal year through November 30, 2023 |
5.77% |
|
|
|
|
|
|
Cumulative fiscal year-to-date distribution rate expressed as a percentage of NAV as of |
|
November 30, 2023 |
|
|
|
|
|
9.45% |
You should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's managed distribution plan.
1The Fund's current fiscal year began on January 1, 2023 and will end on December 31, 2023.
The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
The Fund has declared the December 2023 distribution pursuant to the Fund's managed distribution plan (the "Plan"). Under the Plan, the Fund makes fixed quarterly distributions in the amount of $0.2500 per share, which will continue to be paid quarterly until further notice.
If you have questions or need additional information, please contact your financial professional or call the John Hancock Investment Management Closed-End Fund Information Line at 1-800-843-0090, Monday through Friday between 8:00 a.m. and 7:00 p.m., Eastern Time.
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