Retirement Living Portfolios
ASSET ALLOCATION
Redefining diversification in your portfolio
Three things to know about asset allocation
Selecting the mix of assets in your portfolio may be the dominant contributor to total return—more so than the choice of individual holdings. In fact, an influential, decade-long study of 82 large pension plans revealed that this asset mix explained, on average, nearly 92% of the variation in total return (Brinson, Singer, and Beebower, 1991).
2008
2009
2010
2011
2012
2013
2014
Investmentgrade bonds 5.24%
High-yield bonds 57.51%
U.S. small-cap equity 26.85%
Investmentgrade bonds 7.84%
International equity 17.39%
U.S. small-cap equity 38.82%
U.S. large-cap equity 13.24%
Alternatives 11.42%
U.S. small-cap equity 18.37%
Alternatives 7.21%
Cash 1.80%
International equity 42.14%
U.S. large-cap equity 16.10%
High-yield bonds 4.38%
U.S. large-cap equity 16.42%
U.S. large-cap equity 33.11%
Investmentgrade bonds 5.97%
fared well, despite volatility
Diversified Diversified portfolio portfolio 7.48% 7.48%
U.S. large-cap equity 15.46%
Investmentgrade bonds 6.97%
Alternatives –16.14%
Diversified Diversified portfolio portfolio 29.70% 29.70%
Diversified Diversified portfolio portfolio 15.32% 15.32%
U.S. large-cap equity 1.50%
U.S. small-cap equity 16.35%
International equity 15.78%
U.S. small-cap equity 4.89%
Growth of $10,000 for diversified portfolios
large-cap U.S. U S llarge arge-cap cap equity 6.27%
Diversified Diversified portfolio portfolio 14.84% 14.84%
Diversified Diversified portfolio portfolio 6.31% 6.31%
High-yield H igh-yield bondss –26.39%
U.S. U S large-cap large-cap large cap equity 28.43%
High-yield bonds bondds 15.19%
Alternatives 0.22%
High-yield bonds 15.59%
Diversified Diversified portfolio portfolio 14.77% 14.77%
Diversified Diversified portfolio portfolio 4.18% 4.18%
U.S. small-cap equity 4.55%
Alternatives 12.25%
U.S. U S large-cap large-cap large arge cap equity 5.77%
Diversified Diversified portfolio portfolio –26.75% –26.75%
U.S. small-cap equity 27.17%
Alternatives 13.18%
Cash 0.08%
Diversified Diversified portfolio portfolio 13.03% 13.03%
High-yield H igh-yield bonds 7.42%
High-yield bonds 2.50%
Cash 3.00%
High-yield bonds 11.72%
Cash 4.74%
U.S. U S ssmall-cap mallll cap mall-cap equity –33.79%
Alternatives 18.15%
International equity 11.60%
Diversified Diversified portfolio portfolio –0.48% –0.48%
Alternatives 7.54%
Alternatives 0.38%
Alternatives 1.57%
Hi High-yield h i ld bbonds d 2.74%
C Cashh 4.76%
Hi High-yield h i ld bbonds d 2.24%
U.S. large-cap equity –37.60%
Investmentgrade bonds 5.93%
Investmentgrade bonds 6.54%
U.S. U S small-cap small-cap mallll cap equity –4.18%
Investmentgrade bonds 4.21%
Cash C h 0.05%
Cash C h 0.03%
Investmentgrade bonds 2.43%
Investmentgrade bonds 4.33%
U.S. small-cap equity –1.57%
International equity –45.24%
Cash 0.16%
Cash 0.13%
International equity –13.33%
Cash 0.07%
Investmentgrade bonds –2.02%
International equity –3.44%
Stay diversified Those who stayed invested in a diversified portfolio throughout the last decade along the way.
$19K
$10K
2014
The mix matters
WORST PERFORMER
3
2007 International equity 17.12%
2011
Capital markets are dynamic, and today’s asset class leader may be tomorrow’s laggard. A diversified investment approach that includes a range of asset classes can help investors pursue their long-term financial goals while managing the risks along the way.
2006 International equity 27.16%
2009
Markets are unpredictable
2005 International equity 17.11%
2007
2
Annual returns of asset class categories
2005
While stocks have significant appreciation and wealth-building potential, bonds can generate steady income. Cash can buffer the effect of market losses, while alternative investments can help improve a portfolio’s diversification potential.
There’s no telling which asset class will be the best performing from year to year
2003
Different assets play different roles
BEST PERFORMER
1
Asset class diversification can provide you with exposure to the strongest performers in any given year while helping you avoid owning too much of the weakest.
Source: John Hancock Investments, as of 12/31/14.
The investment universe is expanding
Today, there are over 100
58 2
112
The number of fund categories
The number of fund categories
tracked by Morningstar
tracked by Morningstar
in 2003
TODAY
Morningstar categories, which now include niche styles and alternative investments. This variety of asset classes and specialized managers presents new opportunities for investors.
Source: Morningstar, as of 12/31/14. Static categories, those currently without description and without funds, are omitted from this figure.
Source: Morningstar, as of 12/31/14. Investment-grade bonds is represented by the Barclays U.S. Aggregate Bond Index, which tracks the performance of U.S. investment-grade bonds in government, asset-backed, and corporate debt markets. High-yield bonds is represented by the Bank of America Merrill Lynch U.S. High Yield Master II Index, which tracks the performance of globally issued, U.S. dollar-denominated high-yield bonds. Cash is represented by the Citigroup 3-Month U.S. Treasury Bill Index, which is a market-valueweighted index that tracks the performance of three-month U.S. Treasury debt. International equity is represented by the MSCI All Country (AC) World ex-USA Index, which tracks the performance of publicly traded large- and mid-cap stocks of companies in developed and emerging markets outside the United States. Total returns are calculated gross of foreign withholding tax on dividends. U.S. small-cap equity is represented by the Russell 2000 Index, which tracks the performance of 2,000 publicly traded small-cap companies in the United States. U.S. large-cap equity is represented by the Russell 1000 Index, which tracks the performance of 1,000 publicly traded large-cap companies in the United States. Alternatives is represented by an equally weighted combination of the HFRI Macro Index, the HFRI Equity Market Neutral Index, the HFRI Merger Arbitrage Index, the Morningstar real estate funds category average, the Morningstar emerging markets bond funds category average, and the Morningstar Long-Only Commodity Index. Diversified portfolio is represented by the average return of the six asset classes in the chart above, excluding cash. It does not represent any specific index. Annual returns are based on calendar years. Indexes are unmanaged and do not take transaction costs or fees into consideration. It is not possible to invest directly in an index. Performance figures assume reinvestment of dividends and capital gains. This chart is for illustrative purposes only and does not represent the performance of any John Hancock fund. Past performance does not guarantee future results. Diversification does not guarantee a profit or eliminate the risk of a loss.
3
Asset allocation at John Hancock Investments A leader in multi-asset portfolios
A better way to invest
Our expertise in multi-asset investing dates back to 1995, with our first suite of portfolios employing multiple asset managers. Since then, we have been at the forefront of portfolio design, introducing a wide array of new and alternative strategies into our asset allocation portfolios to strengthen their diversification benefits for individual and institutional investors.
As a manager of managers, we search the world to find proven portfolio management teams with specialized expertise for every fund we offer, then apply vigorous investment oversight to ensure they continue to meet our uncompromising standards.
³ A pioneer in manager-of-managers approach to asset allocation since 1995
³ Over 165 professionals dedicated to investment manager research and oversight
³ Heritage of innovation, embracing alternative investments since 1997
³ Over 250 meetings each year to identify proven managers
³ Asset allocation portfolios represent nearly half of our business today
³ More than 100 in-person oversight meetings with managers annually
At John Hancock Investments, our history of asset allocation leadership and innovation spans two decades
Our asset allocation portfolios bring together some of the best investment teams from around the world
1995 Multimanager asset allocation portfolios for retirement plans
2005
2009
Target-risk portfolios for individuals
Alternative Asset Allocation Fund
2006
2010
Target-date retirement portfolios
Retirement Choices Portfolios
SFUNDS LAUNCHED TUNDERLYING EXPOSURES INTRODUCED
1997
2003
Real estate investment trusts
Natural resources, international small caps
2010
2013
Long/short currency
Hedge fund of funds
2007 Emerging-market equity, floating-rate debt
2011 Global absolute return
TODAY
Asset allocation $58 billion
4
Source: John Hancock Investments, as of 3/31/15.
Our asset allocation franchise represents nearly half of the $130 billion in client assets under management Q Q Q Q
A sset allocation U .S. equity F ixed income A lternative
Q C losed end Q International equity Q O ther
Representative list of asset managers as of 3/31/15. All logos are the property of their respective owners.
5
Our investment approach puts the best to work in each portfolio
The industry-leading team we’ve hired at John Hancock Asset Management is one of the five largest managers of asset allocation funds in the United States.*
Our philosophy: a deeper level of diversification
A time-tested process
We believe diversification should extend beyond asset classes to include multiple investment styles and multiple managers. Refining the techniques of diversification, this approach harnesses expert ideas from independent investment teams across the world. Our oversight process ensures that each manager adheres to its assignment and that each mandate behaves according to our expectations.
The portfolio management team follows a consistent, battle-proven process that has endured over multiple market cycles. Managing multi-asset portfolios for over two decades, this global team combines macroeconomic research, fundamental analysis, and robust risk management. Implementing this process with different specialized managers enables the team to add or remove portfolio exposures with an unparalleled degree of precision.
Our method delivers three layers of diversification to shareholders of our asset allocation portfolios Representative U.S. large-cap equity portion of John Hancock Retirement Living through 2030 Portfolio
Develop global market outlook
Q Oversight
Examine core asset markets and beyond, including alternative investment strategies and targeted regional and sector exposures
Monitoring each portfolio team for
Analyze macroeconomic and fundamental factors
the repeatability of its investment
Forecast expected returns to identify the best market opportunities
process and management of risk
Oversight by John Hancock Investments
Q Multiple asset classes
Select asset classes and strategies
Both within and beyond
Tailor search criteria so each underlying investment serves a specific purpose
traditional equity and
Craft an asset roster, contingent upon expected returns, risks, and correlations
fixed income
U.S. large-cap equity
Gr o w
QMultiple styles Continual exposure to a variety of strategies, as different characteristics go in and out of favor
Build portfolios Jennison
GMO
Optimize asset, strategy, and manager mix with proprietary methodology Boston Partners
T. Rowe Price JHAM
Q Multiple managers
Design a multimanager approach, searching worldwide for required expertise
th
Core
Wellington
Allocate capital to funds, aiming to maximize return per unit of risk Create an enduring portfolio of funds implementing the desired long-run asset mix
Barrow Hanley
A diversity of approaches from some of the world’s
Review, monitor, adjust, and repeat
best managers
Manage asset mix actively to exploit short-term market dislocations Introduce asset classes, strategies, and managers as new opportunities surface Eliminate positions and managers as valuations wax and conviction wanes Revisit long-term strategic asset allocation
Source: John Hancock Investments, as of 3/31/15.
6
* Source: Strategic Insight, as of 12/31/14. Includes lifestyle and lifecycle mutual fund assets and variable product assets.
7
Inside John Hancock Retirement Living Portfolios Retirement investing through a target-date approach simplifies asset allocation for defined contribution plan participants. In target-date portfolios, the asset mix changes over time, becoming more conservative as a participant’s prospective retirement date draws closer.
Each portfolio’s allocation is actively managed around the glide path and implemented with over 20 different specialized managers. John Hancock Retirement Living Portfolios as of 3/31/15 Maximizing wealth accumulation potential
Glide path construction
0% % 100%
We designed the glide path, the change in target asset allocation over time, for plan participants who expect to remain invested in the portfolio throughout their retirement years. The glide path’s dual objective is:
throughout the retirement years—that is, to reduce longevity risk
Allocation
³ T o make the wealth last long enough to support living expenses
1 BEF O
80
³ To maximize wealth accumulation prior to retirement and
Minimizing longevity risk
RE
Glide path’s equity allocation RET IRE ME NT
60
2
1
Begins at: 95%
2
At retirement: 50%
3
Stabilizes at at: 25%
40
An equity-oriented bias supports the mandate’s dual aim over a seven-decade investment horizon.
3 20
Maximizing wealth accumulation potential
B efore choosing the preretirement glide path, we created dozens of possible trajectories.
W e conducted scenario analysis, including thousands of simulations, and then examined the capital growth potential of each route to retirement.
We incorporated proprietary risk and return projections in
0 2055
2050
2045
2040
2035
2030
Equity Q U.S. large-cap equity
wealth under the widest range of scenarios, along several points of an investor’s lifecycle.
Managed by: Barrow Hanley, Boston Partners, Franklin Templeton, GMO, Jennison, JHAM, T. Rowe Price, Wellington
Q International equity Managed by: Baillie Gifford, DFA, Epoch, Franklin Templeton, GMO, Invesco, JHAM
Q U.S. mid-cap equity Managed by: Invesco, JHAM, T. Rowe Price, Wellington
Minimizing longevity risk
Q Emerging-market equity Managed by: DFA
W e built dozens of trajectory candidates before selecting the glide path’s postretirement target allocations as well.
U sing a range of return and withdrawal assumptions for each potential path, we analyzed the expected shortfall or surplus and the dispersion statistics from the simulations.
8
Q U.S. small-cap equity
We view longevity risk as the greatest threat to retirement worked backward, modeling the postretirement glide path before determining the glide
judgment, allowed us to select the glide path that minimizes the
path for the preretirement years.
Source: John Hancock Investments, as of 3/31/15.
2015
2010
RETIREMENT
Managed by: Invesco, JHAM, T. Rowe Price, Wellington
Fixed income Q Multi-sector bond Managed by: JHAM, Stone Harbor, T. Rowe Price
Q Intermediate-term bond Managed by: Declaration/JHAM, PIMCO, Wells Capital
Q Bank loan Managed by: WAMCO
Q High-yield bond
Alternative and specialty Q Sector equity Managed by: Allianz/T. Rowe Price, DeAWM, Jennison, JHAM, T. Rowe Price
Q A bsolute return Managed by: First Quadrant, Standard Life
Q Long/short equity Managed by: Boston Partners
Managed by: JHAM, WAMCO, Wells Capital
Q Global bond Managed by: JHAM, PIMCO
Q Emerging-market debt Managed by: JHAM
Q Inflation-protected bond Managed by: PIMCO
security, and we deliberately
T his quantitative scenario analysis, along with our own qualitative risk of running out of money during retirement.
2020
for the initial years.
Integrating this quantitative analysis with decades of practical experience, we selected the preretirement glide path with the highest likelihood of generating the greatest
2025
Portfolios
structuring the asset allocation
Portfolio performance depends on the advisor’s skill in determining asset class allocations, the mix of underlying funds, and the performance of those underlying funds. The underlying funds’ performance may be lower than the performance of the asset class that they were selected to represent. The portfolio is subject to the same risks as the underlying funds and exchange-traded funds (ETFs) in which it invests: Stocks and bonds can decline due to adverse issuer, market, regulatory, or economic developments; foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability; the securities of small companies are subject to higher volatility than those of larger, more established companies; and high-yield bonds are subject to additional risks, such as increased risk of default. Owning an ETF generally reflects the risks of owning the underlying securities it is designed to track, which may cause lack of liquidity, more volatility, and increased management fees. Hedging and other strategic transactions may increase volatility of a portfolio and could result in a significant loss. Certain market conditions, including reduced trading volume, heightened volatility, and rising interest rates, may impair liquidity, the ability of the fund to sell securities or close derivative positions at advantageous prices. Each portfolio’s name refers to the approximate retirement year of the investors for whom the portfolio’s asset allocation strategy is designed. The portfolios with dates farther off initially allocate more aggressively to stock funds. As a portfolio approaches or passes its target date, the allocation will gradually migrate to more conservative, fixed-income funds. The principal value of each portfolio is not guaranteed and you could lose money at any time, including at, or after, the target date. Please see the portfolios’ prospectuses for additional risks. 9
Retirement Living Portfolios’ results over time Average annual total returns as of 3/31/15 (%)
Expense ratios as of 3/31/15 (%) QTD
1 year
3 year
5 year
John Hancock Retirement Living through 2010 Portfolio
10/30/06
Managed by John Hancock Asset Management
Class R6
1.95
4.52
7.64
7.25
4.28
Class R1
1.86
3.75
6.84
6.96
4.43
2.12 1.92
4.84 4.16
8.40 7.59
7.84 7.49
John Hancock Retirement Living through 2015 Portfolio
10/30/06
Managed by John Hancock Asset Management
Class R6 Class R1 John Hancock Retirement Living through 2020 Portfolio Class R6 Class R1
2.21 2.03
5.43 4.65
9.32 8.54
8.47 8.10
John Hancock Retirement Living through 2025 Portfolio 2.32 2.14
5.97 5.19
10.34 9.55
9.15 8.75
John Hancock Retirement Living through 2030 Portfolio 2.47 2.29
6.44 5.58
11.07 10.26
9.62 9.21
John Hancock Retirement Living through 2035 Portfolio 2.57 2.41
6.64 5.80
11.48 10.69
9.85 9.52
2.59 2.43
6.58 5.83
11.60 10.75
9.84 9.56
2.61 2.45
6.65 5.81
11.61 10.77
9.86 9.55
2.56 2.39
6.62 5.85
11.62 10.81
— —
John Hancock Retirement Living through 2040 Portfolio
John Hancock Retirement Living through 2045 Portfolio
John Hancock Retirement Living through 2050 Portfolio
Class R1
Class R2
Class R3
Class R4
Class R5
Class R6
JLAAX
JLADX
JLAEX
JLAFX
JLAGX
JLAHX
JLAIX
1.30
1.64
1.39
1.54
1.24
0.94
Net (what you pay) John Hancock Retirement Living through 2015 Portfolio Gross
1.03
1.34
1.09
1.24
0.84
0.64
0.59
JLBAX
JLBDX
JLBKX
JLBFX
JLBGX
JLBHX
JLBJX
Net (what you pay) John Hancock Retirement Living through 2020 Portfolio Gross
1.05
1.36
1.11
1.26
0.86
0.66
0.61
JLDAX
JLDDX
JLDEX
JLDFX
JLDGX
JLDHX
JLDIX
1.28
1.61
1.36
1.51
1.21
0.92
0.86
Net (what you pay) John Hancock Retirement Living through 2025 Portfolio Gross
1.06
1.37
1.12
1.27
0.87
0.67
0.62
JLEAX
JLEDX
JLEEX
JLEFX
JLEGX
JLEHX
JLEIX
1.27
1.62
1.37
1.51
1.21
0.91
0.87
Net (what you pay) John Hancock Retirement Living through 2030 Portfolio Gross
1.07
1.39
1.14
1.29
0.89
0.69
0.64
JLFAX
JLFDX
JLFEX
JLFFX
JLFGX
JLFHX
JLFIX
1.30
1.62
1.37
1.52
1.23
0.93
0.88
Net (what you pay) John Hancock Retirement Living through 2035 Portfolio Gross
1.10
1.40
1.15
1.30
0.90
0.70
0.65
JLHAX
JLHDX
JLHEX
JLHFX
JLHGX
JLHHX
JLHIX
1.29
1.62
1.37
1.53
1.23
0.92
0.88
Net (what you pay) John Hancock Retirement Living through 2040 Portfolio Gross
1.09
1.40
1.15
1.30
0.90
0.70
0.65
JLIAX
JLIDX
JLIEX
JLIFX
JLIGX
JLIHX
JLIIX
1.28
1.64
1.38
1.52
1.23
0.93
0.88
Net (what you pay) John Hancock Retirement Living through 2045 Portfolio Gross
1.08
1.41
1.16
1.31
0.91
0.71
0.66
JLJAX
JLJDX
JLJEX
JLJFX
JLJGX
JLJHX
JLJIX
1.30
1.63
1.40
1.54
1.24
0.94
0.89
Net (what you pay) John Hancock Retirement Living through 2050 Portfolio Gross
1.10
1.42
1.17
1.32
0.92
0.72
0.67
JLKAX
JLKDX
JLKEX
JLKFX
JLKGX
JLKHX
JLKRX
1.37
1.72
1.47
1.61
1.31
1.02
0.96
Net (what you pay) John Hancock Retirement Living through 2055 Portfolio Gross Net (what you pay)
1.29
1.61
1.37
1.51
1.21
0.92
0.88
0.87
1.10
1.42
1.17
1.32
0.92
0.72
0.67
JLKLX
JLKMX
JLKNX
JLKPX
JLKQX
JLKSX
JLKTX
3.87 1.12
4.20 1.43
3.95 1.18
4.10 1.33
3.80 0.93
3.50 0.73
3.45 0.68
4.83 5.03
Ask your financial advisor how John Hancock Retirement Living
4/29/11
Managed by John Hancock Asset Management
Class R6 Class R1
4.84 5.05
Class A John Hancock Retirement Living through 2010 Portfolio Gross
10/30/06
Managed by John Hancock Asset Management
Class R6 Class R1
4.91 5.01 10/30/06
Managed by John Hancock Asset Management
Class R6 Class R1
4.79 4.77 10/30/06
Managed by John Hancock Asset Management
Class R6 Class R1
4.74 4.69 10/30/06
Managed by John Hancock Asset Management
Class R6 Class R1
4.66 4.64 10/30/06
Managed by John Hancock Asset Management
Class R6 Class R1
4.41 4.49 10/30/06
Managed by John Hancock Asset Management
8.30 7.67
Ask your advisor
Portfolios can help your plan's participants pursue their financial goals today and throughout retirement.
John Hancock Retirement Living through 2055 Portfolio
3/26/14
Managed by John Hancock Asset Management
10
Life of fund
Class R6 Class R1
2.53 2.43
6.52 5.82
— —
— —
7.77 7.07
S&P 500 Index1 Barclays U.S. Aggregate Bond Index1
0.95
12.73
16.11
14.47
—
1.61
5.72
3.10
4.41
—
1 The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The Barclays U.S. Aggregate Bond Index tracks the performance of U.S. investment-grade bonds in government, asset-backed, and corporate debt markets. It is not possible to invest directly in an index.
“Net (what you pay)” represents the effect of a contractual fee waiver and/or expense reimbursement through 12/31/15 for all share classes shown, and is subject to change.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will vary. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling 800-225-5291. 11
John Hancock Investments A trusted brand John Hancock has helped individuals and institutions build and protect wealth since 1862. Today, we are one of America’s strongest and most-recognized brands.
A better way to invest As a manager of managers, we search the world to find proven portfolio teams with specialized expertise for every fund we offer, then apply vigorous investment oversight to ensure they continue to meet our uncompromising standards.
Results for investors Our unique approach to asset management has led to a diverse set of investments deeply rooted in investor needs, along with strong risk-adjusted returns across asset classes.
A portfolio’s investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the portfolio. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
Connect with John Hancock Investments: @JH_Investments | jhinvestmentsblog.com
John Hancock Funds, LLC Member FINRA, SIPC 601 Congress Street Boston, MA 02210-2805 800-225-5291
jhinvestments.com
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY. MF216959
PIAABR-RL 5/15
