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- 5979
John Hancock California Tax-Free 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: 617-663-4497
Date of fiscal year end: | May 31 | |
Date of reporting period: | November 30, 2019 |
ITEM 1. REPORTS TO STOCKHOLDERS.
John Hancock
California Tax-Free Income Fund
Semiannual report
11/30/19
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund's shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change, and you do not need to take any action. You may elect to receive shareholder reports and other communications electronically by calling John Hancock Investment Management at 800-225-5291 (Class A, Class B and Class C shares) or 888-972-8696 (Class I and Class R6 shares) or by contacting your financial intermediary.
You may elect to receive all reports in paper, free of charge, at any time. You can inform John Hancock Investment Management or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions listed above. Your election to receive reports in paper will apply to all funds held with John Hancock Investment Management or your financial intermediary.
A message to shareholders
Dear shareholder,
It was a volatile time for bond investors during the six months ended November 30, 2019, although most market segments delivered attractive absolute returns for the period. Uncertainty surrounding trade with China, the impeachment inquiry against President Trump, and the broader health of the global economy led to some dramatic swings in performance. The trend in longer-term yields was decidedly downward, leading to several periods where the U.S. Treasury yield curve was inverted. Three times in 2019in July, September, and Octoberthe U.S. Federal Reserve stepped in with reductions in short-term interest rates in an attempt to shore up the economy.
While the economic fundamentals in the United States appear fairly solidwith a strong labor market, low inflation and interest rates, and a confident consumer basethe outlook for the global economy is less certain. Subsequent to period end, President Trump was impeached by the House of Representatives; it remains to be seen how the Senate and financial markets will react. We feel confident in saying there are sure to be patches of market turbulence in the months ahead. As always, your best resource in unpredictable markets is your financial advisor, who can help position your portfolio so that it's sufficiently diversified to meet your 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,
Andrew G. Arnott
President and CEO,
John Hancock Investment Management
Head of Wealth and Asset Management,
United States and Europe
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
California Tax-Free Income Fund
INVESTMENT OBJECTIVE
The fund seeks a high level of current income, consistent with preservation of capital, that is exempt from federal and California personal income taxes.
AVERAGE ANNUAL TOTAL RETURNS AS OF 11/30/19 (%)
The Bloomberg Barclays California Municipal Bond Index is an unmanaged index comprising California investment-grade municipal bonds.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
Figures from Morningstar, Inc. include reinvested distributions and do not take into account sales charges. Actual load-adjusted performance is lower.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative. Performance of the other share classes will vary based on the difference in the fees and expenses of those classes. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current month-end performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
SECTOR COMPOSITION AS OF
11/30/19 (%)
TOTAL RETURNS FOR THE PERIOD ENDED
NOVEMBER 30, 2019
Average annual total returns (%) with maximum sales charge |
Cumulative total returns (%) with maximum sales charge |
SEC 30-day yield (%) subsidized |
SEC 30-day yield (%) unsubsidized1 |
Tax- equivalent subsidized yield (%)2 |
|||||||||
1-year | 5-year | 10-year | 6-month | 5-year | 10-year | as of 11-30-19 |
as of 11-30-19 |
as of 11-30-19 |
|||||
Class A | 3.96 | 2.65 | 4.56 | -1.71 | 13.98 | 56.26 | 1.65 | 1.65 | 3.21 | ||||
Class B | 2.60 | 2.36 | 4.36 | -2.87 | 12.36 | 53.21 | 0.98 | 0.88 | 1.91 | ||||
Class C | 6.50 | 2.72 | 4.19 | 1.04 | 14.36 | 50.80 | 0.98 | 0.88 | 1.91 | ||||
Class I3,4 | 8.47 | 3.58 | 5.04 | 2.49 | 19.21 | 63.45 | 1.87 | 1.87 | 3.64 | ||||
Class R63,4 | 8.59 | 3.58 | 5.04 | 2.60 | 19.20 | 63.44 | 1.90 | 1.89 | 3.70 | ||||
Index 1 | 8.54 | 3.57 | 4.87 | 2.47 | 19.18 | 60.81 | | | | ||||
Index 2 | 8.49 | 3.57 | 4.34 | 2.39 | 19.17 | 53.00 | | | |
Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 4.0% and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The returns for Class A shares have been adjusted to reflect the reduction in the maximum sales charge from 4.5% to 4.0%, effective 2-3-14. The Class B shares' CDSC declines annually between years 1 to 6 according to the following schedule: 5%, 4%, 3%, 3%, 2%, 1%. No sales charge will be assessed after the sixth year. Class C shares sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I and Class R6 shares.
The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from those disclosed in the Financial highlights tables in this report. Net expenses reflect contractual expense limitations in effect until September 30, 2020 and are subject to change. Had the contractual fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Class A | Class B | Class C | Class I | Class R6 | |
Gross (%) | 0.86 | 1.71 | 1.71 | 0.71 | 0.68 |
Net (%) | 0.85 | 1.60 | 1.60 | 0.70 | 0.67 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
| Index 1 is the Bloomberg Barclays California Municipal Bond Index; Index 2 is the Bloomberg Barclays Municipal Bond Index. |
See the following page for footnotes.
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock California Tax-Free Income Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
Start date | With maximum sales charge ($) |
Without sales charge ($) |
Index 1 ($) | Index 2 ($) | |
Class B5 | 11-30-09 | 15,321 | 15,321 | 16,081 | 15,300 |
Class C5 | 11-30-09 | 15,080 | 15,080 | 16,081 | 15,300 |
Class I3,4 | 11-30-09 | 16,345 | 16,345 | 16,081 | 15,300 |
Class R63,4 | 11-30-09 | 16,344 | 16,344 | 16,081 | 15,300 |
The values shown in the chart for Class A shares with maximum sales charge have been adjusted to reflect the reduction in the Class A shares' maximum sales charge from 4.5% to 4.0%, which became effective on 2-3-14.
The Bloomberg Barclays California Municipal Bond Index is an unmanaged index composed of California investment-grade municipal bonds.
The Bloomberg Barclays Municipal Bond Index is an unmanaged index representative of the tax-exempt bond market.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
Footnotes related to performance pages
1 | Unsubsidized yield reflects what the yield would have been without the effect of reimbursements and waivers. |
2 | Tax-equivalent yield is based on the maximum federal income tax rate of 40.8% and a state tax rate of 13.3%. |
3 | Class I shares and Class R6 shares were first offered on 2-13-17 and 8-30-17, respectively. Returns prior to these dates are those of Class A shares that have not been adjusted for class-specific expenses; otherwise, returns would vary. |
4 | For certain type of investors, as described in the fund's prospectus. |
5 | The contingent deferred sales charge is not applicable. |
Your expenses |
SEMIANNUAL REPORT | JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND | 7 |
Account
value on 6-1-2019 |
Ending
value on 11-30-2019 |
Expenses
paid during period ended 11-30-20191 |
Annualized
expense ratio | ||
Class A | Actual expenses/actual returns | $1,000.00 | $1,024.20 | $4.20 | 0.83% |
Hypothetical example | 1,000.00 | 1,020.90 | 4.19 | 0.83% | |
Class B | Actual expenses/actual returns | 1,000.00 | 1,021.30 | 7.98 | 1.58% |
Hypothetical example | 1,000.00 | 1,017.10 | 7.97 | 1.58% | |
Class C | Actual expenses/actual returns | 1,000.00 | 1,020.40 | 7.98 | 1.58% |
Hypothetical example | 1,000.00 | 1,017.10 | 7.97 | 1.58% | |
Class I | Actual expenses/actual returns | 1,000.00 | 1,024.90 | 3.44 | 0.68% |
Hypothetical example | 1,000.00 | 1,021.60 | 3.44 | 0.68% | |
Class R6 | Actual expenses/actual returns | 1,000.00 | 1,026.00 | 3.34 | 0.66% |
Hypothetical example | 1,000.00 | 1,021.70 | 3.34 | 0.66% |
1 | Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
8 | JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND | SEMIANNUAL REPORT |
Fund’s investments |
Rate (%) | Maturity date | Par value^ | Value | ||
Municipal bonds 98.2% | $212,237,698 | ||||
(Cost $196,912,930) | |||||
California 97.3% | 210,249,392 | ||||
ABAG
Finance Authority for Nonprofit Corps. Sharp HealthCare, Series A |
5.000 | 08-01-43 | 2,000,000 | 2,228,300 | |
Burbank
Unified School District Convertible Capital Appreciation Election 2013, GO (0.000% to 8-1-23, then 4.500% thereafter) |
0.000 | 08-01-37 | 1,770,000 | 1,788,886 | |
California
Community Housing Agency Annadel Apartments, Series A (A) |
5.000 | 04-01-49 | 1,000,000 | 1,110,060 | |
California
Community Housing Agency Verdant at Green Valley Project, Series A (A) |
5.000 | 08-01-49 | 1,000,000 | 1,129,890 | |
California
County Tobacco Securitization Agency Fresno County Funding Corp. |
6.000 | 06-01-35 | 1,765,000 | 1,766,165 | |
California
County Tobacco Securitization Agency Kern County Tobacco Funding Corp. |
5.000 | 06-01-40 | 1,500,000 | 1,591,545 | |
California
County Tobacco Securitization Agency Public Improvements |
5.250 | 06-01-21 | 2,020,000 | 2,048,341 | |
California
Educational Facilities Authority Pepperdine University |
5.000 | 10-01-49 | 2,550,000 | 2,981,511 | |
California
Educational Facilities Authority University of Redlands, Series A |
5.000 | 10-01-35 | 1,000,000 | 1,147,700 | |
California
Health Facilities Financing Authority Children's Hospital, Series A |
5.000 | 08-15-47 | 1,000,000 | 1,169,620 | |
California
Health Facilities Financing Authority City of Hope Obligated Group |
4.000 | 11-15-45 | 1,000,000 | 1,121,820 | |
California
Health Facilities Financing Authority El Camino Hospital |
5.000 | 02-01-42 | 1,000,000 | 1,180,860 | |
California
Health Facilities Financing Authority El Camino Hospital |
5.000 | 02-01-47 | 1,425,000 | 1,671,896 | |
California
Health Facilities Financing Authority Lucile Packard Children's Hospital, Series B |
5.000 | 08-15-55 | 1,000,000 | 1,173,750 | |
California
Health Facilities Financing Authority Lucile Salter Packard Children's Hospital, Series A |
5.000 | 08-15-43 | 1,000,000 | 1,126,770 | |
California
Health Facilities Financing Authority Sutter Health, Series A |
5.000 | 08-15-43 | 1,000,000 | 1,160,880 | |
California
Housing Finance Series A |
4.250 | 01-15-35 | 996,626 | 1,161,369 | |
California
Municipal Finance Authority Channing House Project, Series A (B) |
4.000 | 05-15-40 | 1,500,000 | 1,668,645 | |
California
Municipal Finance Authority Collegiate Housing Foundation Davis-I, LLC, West Village Student Housing Project |
5.000 | 05-15-33 | 1,000,000 | 1,220,610 | |
California
Municipal Finance Authority HumanGood Obligated Group, Series A |
5.000 | 10-01-44 | 1,000,000 | 1,166,170 | |
California
Municipal Finance Authority LINXS APM Project, Series A, AMT |
5.000 | 12-31-47 | 1,000,000 | 1,165,730 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND | 9 |
Rate (%) | Maturity date | Par value^ | Value | ||
California (continued) | |||||
California
Municipal Finance Authority Paradise Valley Estates Project, Series A (B) |
5.000 | 01-01-49 | 1,500,000 | $1,776,000 | |
California
Municipal Finance Authority Retirement Housing Foundation Obligation Group, Series A |
5.000 | 11-15-31 | 1,500,000 | 1,941,885 | |
California
Municipal Finance Authority United Airlines, Inc. Project, AMT |
4.000 | 07-15-29 | 1,000,000 | 1,134,590 | |
California
Municipal Finance Authority William Jessup University |
5.000 | 08-01-39 | 1,500,000 | 1,716,090 | |
California
Municipal Finance Authority Wineville School Project, Series A (B) |
5.000 | 10-01-42 | 2,000,000 | 2,303,160 | |
California
Pollution Control Financing Authority Calplant I Project, AMT (A) |
7.500 | 07-01-32 | 1,300,000 | 1,358,019 | |
California
Pollution Control Financing Authority San Diego County Water Authority Desalination Project Pipeline (A) |
5.000 | 07-01-39 | 1,000,000 | 1,204,600 | |
California
Pollution Control Financing Authority San Diego County Water Authority Desalination Project Pipeline (A) |
5.000 | 11-21-45 | 1,500,000 | 1,790,745 | |
California
Pollution Control Financing Authority Waste Management, Inc., Series A1, AMT |
3.375 | 07-01-25 | 1,000,000 | 1,083,080 | |
California
Pollution Control Financing Authority Waste Management, Inc., Series A3, AMT |
4.300 | 07-01-40 | 4,675,000 | 5,268,632 | |
California
Public Finance Authority Henry Mayo Newhall Hospital |
5.000 | 10-15-47 | 2,000,000 | 2,251,860 | |
California
Public Finance Authority Trinity Classical Academy, Series A (A) |
5.000 | 07-01-44 | 110,000 | 115,990 | |
California
Public Finance Authority Trinity Classical Academy, Series A (A) |
5.000 | 07-01-54 | 325,000 | 340,096 | |
California
School Finance Authority Aspire Public Schools (A) |
5.000 | 08-01-46 | 3,275,000 | 3,630,141 | |
California
School Finance Authority Granada Hills Charter High School Obligated Group (A) |
5.000 | 07-01-43 | 1,000,000 | 1,139,300 | |
California
School Finance Authority Kipp LA Project, Series A (A) |
5.000 | 07-01-47 | 1,500,000 | 1,728,540 | |
California
State Public Works Board Various Capital Projects, Series A |
5.000 | 04-01-37 | 1,000,000 | 1,081,110 | |
California
State Public Works Board Various Correctional Facilities, Series A |
5.000 | 09-01-39 | 2,500,000 | 2,876,500 | |
California
State University College and University Revenue, Series A |
5.000 | 11-01-44 | 2,000,000 | 2,285,100 | |
California
Statewide Communities Development Authority Adventist Health System, Series A |
5.000 | 03-01-48 | 1,885,000 | 2,241,208 | |
California
Statewide Communities Development Authority CHF Irvine LLC |
5.000 | 05-15-40 | 2,735,000 | 3,145,879 |
10 | JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
California (continued) | |||||
California
Statewide Communities Development Authority Front Porch Communities and Services, Series A |
5.000 | 04-01-47 | 500,000 | $582,595 | |
California
Statewide Communities Development Authority Infrastructure Program Revenue, Series B |
5.000 | 09-02-44 | 1,000,000 | 1,065,480 | |
California
Statewide Communities Development Authority Los Angeles Jewish Homes, Series A (B) |
5.000 | 08-01-44 | 2,625,000 | 2,915,798 | |
California
Statewide Communities Development Authority Redlands Community Hospital OB |
5.000 | 10-01-46 | 2,000,000 | 2,300,940 | |
California
Statewide Communities Development Authority Redwoods Project (B) |
5.375 | 11-15-44 | 1,500,000 | 1,713,855 | |
California
Statewide Financing Authority Tobacco Settlement, Security A |
6.000 | 05-01-37 | 2,500,000 | 2,516,900 | |
California
Statewide Financing Authority Tobacco Settlement, Security B |
6.000 | 05-01-37 | 3,000,000 | 3,020,280 | |
City
of Belmont Library Project, Series A (B) |
5.750 | 08-01-24 | 1,000,000 | 1,128,550 | |
City
of Irvine Community Facilities District |
5.000 | 09-01-49 | 2,000,000 | 2,205,100 | |
City
of La Verne Brethren Hillcrest Homes |
5.000 | 05-15-36 | 750,000 | 794,888 | |
City
of Long Beach Alamitos Bay Marina Project |
5.000 | 05-15-45 | 1,000,000 | 1,128,660 | |
City
of Long Beach District 6-Pike Project |
6.250 | 10-01-26 | 2,035,000 | 2,038,073 | |
City
of Long Beach Series A |
5.000 | 05-15-49 | 2,000,000 | 2,477,020 | |
City
of Los Angeles Department of Airports Los Angeles International Airport, AMT |
5.000 | 05-15-43 | 2,000,000 | 2,433,020 | |
City
of San Clemente Community Facilities District, Series 2006-1 |
5.000 | 09-01-46 | 1,980,000 | 2,227,619 | |
City
of San Francisco Public Utilities Commission Green Bonds, Series A |
5.000 | 11-01-45 | 1,500,000 | 1,747,125 | |
City
of San Mateo Community Facilities District, Series 2008-1 Bay Meadows |
5.500 | 09-01-44 | 2,000,000 | 2,155,340 | |
Foothill-Eastern
Transportation Corridor Agency Highway Revenue Tolls, Series A |
5.750 | 01-15-46 | 5,000,000 | 5,761,700 | |
Golden
State Tobacco Securitization Corp. Series A |
5.000 | 06-01-40 | 5,000,000 | 5,783,150 | |
Golden
State Tobacco Securitization Corp. Series A |
5.000 | 06-01-45 | 3,250,000 | 3,737,858 | |
Golden
State Tobacco Securitization Corp. Series A-1 |
3.500 | 06-01-36 | 1,000,000 | 1,018,370 | |
Golden
State Tobacco Securitization Corp. Series A-2 |
5.000 | 06-01-47 | 1,610,000 | 1,655,772 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND | 11 |
Rate (%) | Maturity date | Par value^ | Value | ||
California (continued) | |||||
Inland
Valley Development Agency Series A |
5.000 | 09-01-44 | 2,500,000 | $2,800,475 | |
Lancaster
School District School Improvements (B)(C) |
1.172 | 04-01-22 | 1,380,000 | 1,342,409 | |
Los
Angeles Community Facilities District Cascades Business Park |
6.400 | 09-01-22 | 240,000 | 241,243 | |
Los
Angeles County Public Works Financing Authority Series D |
5.000 | 12-01-45 | 3,000,000 | 3,511,020 | |
Los
Angeles County Regional Financing Authority Montecedro, Inc. Project, Series A (B) |
5.000 | 11-15-44 | 1,355,000 | 1,489,972 | |
Los
Angeles Department of Water & Power Power Systems, Series D |
5.000 | 07-01-44 | 1,000,000 | 1,143,470 | |
Marin
Healthcare District Election of 2013, GO |
4.000 | 08-01-45 | 1,000,000 | 1,080,530 | |
Morgan
Hill Redevelopment Successor Agency Series A |
5.000 | 09-01-33 | 1,750,000 | 1,977,553 | |
M-S-R
Energy Authority Natural Gas Revenue, Series B |
6.500 | 11-01-39 | 1,500,000 | 2,321,805 | |
Norman
Y. Mineta San Jose International Airport SJC Series A, AMT |
5.000 | 03-01-47 | 3,000,000 | 3,507,840 | |
Oakland
Unified School District/Alameda County Series A, GO |
5.000 | 08-01-40 | 1,500,000 | 1,738,560 | |
Orange
County Community Facilities District 2017-1 Esencia Village, Series A |
5.000 | 08-15-47 | 2,000,000 | 2,361,280 | |
Pacifica
School District Series C, GO (B)(C) |
1.774 | 08-01-26 | 1,000,000 | 887,830 | |
Port
of Los Angeles Series A, AMT |
5.000 | 08-01-44 | 2,000,000 | 2,267,800 | |
River
Islands Public Financing Authority Community Facilities District, Series 2003-1 |
5.000 | 09-01-48 | 1,250,000 | 1,405,938 | |
River
Islands Public Financing Authority Community Facilities District, Series 2003-1 |
5.500 | 09-01-45 | 2,000,000 | 2,168,660 | |
Riverside
County Transportation Commission Senior Lien, Series A |
5.750 | 06-01-48 | 1,000,000 | 1,116,000 | |
San
Diego County Regional Airport Authority Consol Rental Car Facilities, Series A |
5.000 | 07-01-44 | 4,925,000 | 5,626,074 | |
San
Diego Public Facilities Financing Authority Series A |
5.000 | 10-15-44 | 1,000,000 | 1,171,810 | |
San
Diego Unified School District Series I, GO (C) |
3.706 | 07-01-39 | 1,250,000 | 606,550 | |
San
Francisco City & County Airport Commission Special Facilities Lease, SFO Fuel Company LLC, Series A, AMT |
5.000 | 01-01-47 | 2,000,000 | 2,397,400 | |
San
Francisco City & County Redevelopment Successor Agency Department of General Services Lease, No. 6, Mission Bay South, Series A |
5.150 | 08-01-35 | 1,250,000 | 1,256,150 |
12 | JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
California (continued) | |||||
San
Francisco City & County Redevelopment Successor Agency Mission Bay Project, Series A |
5.000 | 08-01-43 | 1,000,000 | $1,129,620 | |
San
Joaquin Hills Transportation Corridor Agency Highway Revenue Tolls, Escrowed to Maturity (C) |
1.121 | 01-01-22 | 6,500,000 | 6,348,285 | |
San
Joaquin Hills Transportation Corridor Agency Highway Revenue Tolls, Series A |
5.000 | 01-15-44 | 2,500,000 | 2,829,350 | |
San
Mateo Joint Powers Financing Authority Capital Projects Program (B) |
5.000 | 07-01-21 | 1,815,000 | 1,890,577 | |
Santa
Ana Financing Authority Police Administration & Holding Facility, Series A (B) |
6.250 | 07-01-24 | 5,000,000 | 5,635,900 | |
Santa
Ana Financing Authority Prerefunded, Police Administration & Holding Facility, Series A (B) |
6.250 | 07-01-24 | 5,000,000 | 5,673,050 | |
Santa
Margarita Water District Community Facilities District, Number 2013-1 |
5.625 | 09-01-43 | 745,000 | 823,411 | |
South
Orange County Public Financing Authority Series A |
5.000 | 08-15-33 | 1,000,000 | 1,073,950 | |
South
Orange County Public Financing Authority Series A |
5.000 | 08-15-34 | 450,000 | 483,030 | |
Southern
California Public Power Authority Apex Power Project, Series A |
5.000 | 07-01-38 | 1,000,000 | 1,152,830 | |
Southern
California Public Power Authority Natural Gas Project Revenue, Series A |
5.250 | 11-01-26 | 2,000,000 | 2,420,300 | |
State
of California Construction Bonds, GO |
5.000 | 10-01-49 | 1,000,000 | 1,256,570 | |
State
of California Various Purpose, GO |
5.000 | 04-01-32 | 2,000,000 | 2,709,580 | |
State
of California Various Purpose-Bid Group B, GO |
5.000 | 08-01-36 | 1,000,000 | 1,250,820 | |
Stockton
Public Financing Authority Delta Water Supply Project, Series A |
6.250 | 10-01-40 | 1,150,000 | 1,373,767 | |
Sweetwater
Union High School District Ad Valorem Property Tax, GO |
4.000 | 08-01-42 | 500,000 | 542,480 | |
Turlock
Irrigation District Electricity, Power & Light Revenues (D) |
5.000 | 01-01-41 | 1,000,000 | 1,221,820 | |
University
of California Series AZ |
5.000 | 05-15-48 | 4,000,000 | 4,881,040 | |
West
Covina Community Development Commission Successor Agency Fashion Plaza |
6.000 | 09-01-22 | 2,215,000 | 2,387,947 | |
William
S. Hart Union High School Community Facilities District, Series 2015-1 |
5.000 | 09-01-47 | 1,000,000 | 1,143,560 | |
Puerto Rico 0.9% | 1,988,306 | ||||
Puerto
Rico Sales Tax Financing Corp. Series A-1 |
4.750 | 07-01-53 | 1,926,000 | 1,988,306 | |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND | 13 |
Yield* (%) | Maturity date | Par value^ | Value | ||
Short-term investments 1.3% | $2,761,000 | ||||
(Cost $2,760,957) | |||||
U.S. Government Agency 0.5% | 994,000 | ||||
Federal Home Loan Bank Discount Note | 1.530 | 12-02-19 | 791,000 | 791,000 | |
Federal Home Loan Mortgage Corp. Discount Note | 1.530 | 12-02-19 | 203,000 | 203,000 |
Par value^ | Value | ||||
Repurchase agreement 0.8% | $1,767,000 | ||||
Barclays Tri-Party Repurchase Agreement dated 11-29-19 at 1.600% to be repurchased at $1,767,236 on 12-2-19, collateralized by $1,554,900 U.S. Treasury Bonds, 3.000% due 5-15-45 (maturity value of $1,802,617) | 1,767,000 | 1,767,000 | |||
Total investments (Cost $199,673,887) 99.5% | $214,998,698 | ||||
Other assets and liabilities, net 0.5% | 1,187,147 | ||||
Total net assets 100.0% | $216,185,845 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | |
^All par values are denominated in U.S. dollars unless otherwise indicated. | |
Security Abbreviations and Legend | |
AMT | Interest earned from these securities may be considered a tax preference item for purpose of the Federal Alternative Minimum Tax. |
GO | General Obligation |
(A) | 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. |
(B) | Bond is insured by one or more of the companies listed in the insurance coverage table below. |
(C) | Zero coupon bonds are issued at a discount from their principal amount in lieu of paying interest periodically. Rate shown is the effective yield at period end. |
(D) | Security purchased or sold on a when-issued or delayed delivery basis. |
* | Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end. |
Insurance coverage | As
a % of total investments |
National Public Finance Guarantee Corp. | 6.6 |
California Mortgage Insurance | 4.4 |
Build America Mutual Assurance Company | 1.1 |
Assured Guaranty Municipal Corp. | 0.6 |
Ambac Financial Group, Inc. | 0.5 |
TOTAL | 13.2 |
14 | JOHN HANCOCK CALIFORNIA TAX-FREE INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Financial statements |
Assets | |
Unaffiliated investments, at value (Cost $199,673,887) | $214,998,698 |
Cash | 62,614 |
Interest receivable | 2,575,053 |
Receivable for fund shares sold | 212,743 |
Other assets | 14,894 |
Total assets | 217,864,002 |
Liabilities | |
Distributions payable | 64,449 |
Payable for delayed delivery securities purchased | 1,211,320 |
Payable for fund shares repurchased | 197,566 |
Payable to affiliates | |
Investment management fees | 97,737 |
Accounting and legal services fees | 27,144 |
Transfer agent fees | 7,262 |
Distribution and service fees | 22,264 |
Trustees' fees | 331 |
Other liabilities and accrued expenses | 50,084 |
Total liabilities | 1,678,157 |
Net assets | $216,185,845 |
Net assets consist of | |
Paid-in capital | $197,578,121 |
Total distributable earnings (loss) | 18,607,724 |
Net assets | $216,185,845 |
Net asset value per share | |
Based on net asset value and shares outstanding - the fund has an unlimited number of shares authorized with no par value | |
Class A ($181,023,616 ÷ 16,416,046 shares)1 | $11.03 |
Class B ($368,387 ÷ 33,383 shares)1 | $11.04 |
Class C ($17,773,477 ÷ 1,611,751 shares)1 | $11.03 |
Class I ($12,105,314 ÷ 1,097,253 shares) | $11.03 |
Class R6 ($4,915,051 ÷ 445,356 shares) | $11.04 |
Maximum offering price per share | |
Class A (net asset value per share ÷ 96%)2 | $11.49 |
1 | Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. |
2 | On single retail sales of less than $100,000. On sales of $100,000 or more and on group sales the offering price is reduced. |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK California Tax-Free Income Fund | 15 |
Investment income | |
Interest | $4,322,495 |
Expenses | |
Investment management fees | 592,753 |
Distribution and service fees | 229,539 |
Accounting and legal services fees | 23,443 |
Transfer agent fees | 43,918 |
Trustees' fees | 1,965 |
Custodian fees | 22,084 |
State registration fees | 6,473 |
Printing and postage | 20,245 |
Professional fees | 26,942 |
Other | 8,219 |
Total expenses | 975,581 |
Less expense reductions | (17,419) |
Net expenses | 958,162 |
Net investment income | 3,364,333 |
Realized and unrealized gain (loss) | |
Net realized gain (loss) on | |
Unaffiliated investments | 389,708 |
389,708 | |
Change in net unrealized appreciation (depreciation) of | |
Unaffiliated investments | 1,314,865 |
1,314,865 | |
Net realized and unrealized gain | 1,704,573 |
Increase in net assets from operations | $5,068,906 |
16 | JOHN HANCOCK California Tax-Free Income Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Six
months ended 11-30-19 (unaudited) |
Year
ended 5-31-19 | |
Increase (decrease) in net assets | ||
From operations | ||
Net investment income | $3,364,333 | $6,875,934 |
Net realized gain | 389,708 | 1,195,778 |
Change in net unrealized appreciation (depreciation) | 1,314,865 | 2,813,074 |
Increase in net assets resulting from operations | 5,068,906 | 10,884,786 |
Distributions to shareholders | ||
From earnings | ||
Class A | (2,836,377) | (5,986,856) |
Class B | (4,560) | (13,485) |
Class C | (221,329) | (524,922) |
Class I | (199,854) | (383,200) |
Class R6 | (69,985) | (95,093) |
Total distributions | (3,332,105) | (7,003,556) |
From fund share transactions | 4,766,111 | (7,928,934) |
Total increase (decrease) | 6,502,912 | (4,047,704) |
Net assets | ||
Beginning of period | 209,682,933 | 213,730,637 |
End of period | $216,185,845 | $209,682,933 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK California Tax-Free Income Fund | 17 |
Financial highlights |
CLASS A SHARES Period ended | 11-30-19 1 | 5-31-19 | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 |
Per share operating performance | ||||||
Net asset value, beginning of period | $10.94 | $10.73 | $10.90 | $11.22 | $10.91 | $10.95 |
Net investment income2 | 0.18 | 0.36 | 0.36 | 0.37 | 0.39 | 0.42 |
Net realized and unrealized gain (loss) on investments | 0.08 | 0.22 | (0.16) | (0.30) | 0.32 | (0.04) |
Total from investment operations | 0.26 | 0.58 | 0.20 | 0.07 | 0.71 | 0.38 |
Less distributions | ||||||
From net investment income | (0.17) | (0.36) | (0.37) | (0.39) | (0.40) | (0.42) |
From net realized gain | — | (0.01) | — | — | — | — |
Total distributions | (0.17) | (0.37) | (0.37) | (0.39) | (0.40) | (0.42) |
Net asset value, end of period | $11.03 | $10.94 | $10.73 | $10.90 | $11.22 | $10.91 |
Total return (%)3,4 | 2.42 5 | 5.57 | 1.85 | 0.63 | 6.63 | 3.53 |
Ratios and supplemental data | ||||||
Net assets, end of period (in millions) | $181 | $176 | $181 | $213 | $254 | $235 |
Ratios (as a percentage of average net assets): | ||||||
Expenses before reductions | 0.84 6 | 0.86 | 0.85 | 0.83 | 0.84 | 0.83 |
Expenses including reductions | 0.83 6 | 0.85 | 0.84 | 0.83 | 0.83 | 0.82 |
Net investment income | 3.18 6 | 3.42 | 3.37 | 3.35 | 3.53 | 3.78 |
Portfolio turnover (%) | 7 | 22 | 9 | 17 | 20 | 19 |
1 | Six months ended 11-30-19. Unaudited. |
2 | Based on average daily shares outstanding. |
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
4 | Does not reflect the effect of sales charges, if any. |
5 | Not annualized. |
6 | Annualized. |
18 | JOHN HANCOCK California Tax-Free Income Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
CLASS B SHARES Period ended | 11-30-19 1 | 5-31-19 | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 |
Per share operating performance | ||||||
Net asset value, beginning of period | $10.94 | $10.73 | $10.91 | $11.23 | $10.91 | $10.95 |
Net investment income2 | 0.13 | 0.28 | 0.28 | 0.28 | 0.31 | 0.34 |
Net realized and unrealized gain (loss) on investments | 0.10 | 0.22 | (0.17) | (0.30) | 0.33 | (0.04) |
Total from investment operations | 0.23 | 0.50 | 0.11 | (0.02) | 0.64 | 0.30 |
Less distributions | ||||||
From net investment income | (0.13) | (0.28) | (0.29) | (0.30) | (0.32) | (0.34) |
From net realized gain | — | (0.01) | — | — | — | — |
Total distributions | (0.13) | (0.29) | (0.29) | (0.30) | (0.32) | (0.34) |
Net asset value, end of period | $11.04 | $10.94 | $10.73 | $10.91 | $11.23 | $10.91 |
Total return (%)3,4 | 2.13 5 | 4.78 | 1.00 | (0.12) | 5.93 | 2.76 |
Ratios and supplemental data | ||||||
Net assets, end of period (in millions) | $— 6 | $— 6 | $1 | $1 | $2 | $2 |
Ratios (as a percentage of average net assets): | ||||||
Expenses before reductions | 1.69 7 | 1.71 | 1.70 | 1.69 | 1.69 | 1.68 |
Expenses including reductions | 1.58 7 | 1.60 | 1.59 | 1.58 | 1.58 | 1.58 |
Net investment income | 2.43 7 | 2.67 | 2.61 | 2.59 | 2.78 | 3.04 |
Portfolio turnover (%) | 7 | 22 | 9 | 17 | 20 | 19 |
1 | Six months ended 11-30-19. Unaudited. |
2 | Based on average daily shares outstanding. |
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
4 | Does not reflect the effect of sales charges, if any. |
5 | Not annualized. |
6 | Less than $500,000. |
7 | Annualized. |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK California Tax-Free Income Fund | 19 |
CLASS C SHARES Period ended | 11-30-19 1 | 5-31-19 | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 |
Per share operating performance | ||||||
Net asset value, beginning of period | $10.94 | $10.73 | $10.90 | $11.22 | $10.91 | $10.95 |
Net investment income2 | 0.13 | 0.28 | 0.28 | 0.29 | 0.31 | 0.33 |
Net realized and unrealized gain (loss) on investments | 0.09 | 0.22 | (0.16) | (0.31) | 0.32 | (0.03) |
Total from investment operations | 0.22 | 0.50 | 0.12 | (0.02) | 0.63 | 0.30 |
Less distributions | ||||||
From net investment income | (0.13) | (0.28) | (0.29) | (0.30) | (0.32) | (0.34) |
From net realized gain | — | (0.01) | — | — | — | — |
Total distributions | (0.13) | (0.29) | (0.29) | (0.30) | (0.32) | (0.34) |
Net asset value, end of period | $11.03 | $10.94 | $10.73 | $10.90 | $11.22 | $10.91 |
Total return (%)3,4 | 2.04 5 | 4.78 | 1.09 | (0.13) | 5.83 | 2.76 |
Ratios and supplemental data | ||||||
Net assets, end of period (in millions) | $18 | $19 | $21 | $30 | $36 | $34 |
Ratios (as a percentage of average net assets): | ||||||
Expenses before reductions | 1.69 6 | 1.71 | 1.70 | 1.68 | 1.69 | 1.68 |
Expenses including reductions | 1.58 6 | 1.60 | 1.59 | 1.58 | 1.58 | 1.57 |
Net investment income | 2.43 6 | 2.67 | 2.62 | 2.60 | 2.78 | 3.03 |
Portfolio turnover (%) | 7 | 22 | 9 | 17 | 20 | 19 |
1 | Six months ended 11-30-19. Unaudited. |
2 | Based on average daily shares outstanding. |
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
4 | Does not reflect the effect of sales charges, if any. |
5 | Not annualized. |
6 | Annualized. |
20 | JOHN HANCOCK California Tax-Free Income Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
CLASS I SHARES Period ended | 11-30-19 1 | 5-31-19 | 5-31-18 | 5-31-17 2 |
Per share operating performance | ||||
Net asset value, beginning of period | $10.94 | $10.73 | $10.91 | $10.70 |
Net investment income3 | 0.18 | 0.38 | 0.38 | 0.12 |
Net realized and unrealized gain (loss) on investments | 0.09 | 0.22 | (0.17) | 0.21 |
Total from investment operations | 0.27 | 0.60 | 0.21 | 0.33 |
Less distributions | ||||
From net investment income | (0.18) | (0.38) | (0.39) | (0.12) |
From net realized gain | — | (0.01) | — | — |
Total distributions | (0.18) | (0.39) | (0.39) | (0.12) |
Net asset value, end of period | $11.03 | $10.94 | $10.73 | $10.91 |
Total return (%)4 | 2.49 5 | 5.72 | 1.91 | 3.09 5 |
Ratios and supplemental data | ||||
Net assets, end of period (in millions) | $12 | $10 | $10 | $5 |
Ratios (as a percentage of average net assets): | ||||
Expenses before reductions | 0.69 6 | 0.71 | 0.70 | 0.67 6 |
Expenses including reductions | 0.68 6 | 0.70 | 0.69 | 0.66 6 |
Net investment income | 3.32 6 | 3.58 | 3.53 | 3.76 6 |
Portfolio turnover (%) | 7 | 22 | 9 | 17 7 |
1 | Six months ended 11-30-19. Unaudited. |
2 | The inception date for Class I shares is 2-13-17. |
3 | Based on average daily shares outstanding. |
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
5 | Not annualized. |
6 | Annualized. |
7 | Portfolio turnover is shown for the period from 6-1-16 to 5-31-17. |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK California Tax-Free Income Fund | 21 |
CLASS R6 SHARES Period ended | 11-30-19 1 | 5-31-19 | 5-31-18 2 |
Per share operating performance | |||
Net asset value, beginning of period | $10.94 | $10.73 | $10.95 |
Net investment income3 | 0.18 | 0.38 | 0.29 |
Net realized and unrealized gain (loss) on investments | 0.10 | 0.22 | (0.22) |
Total from investment operations | 0.28 | 0.60 | 0.07 |
Less distributions | |||
From net investment income | (0.18) | (0.38) | (0.29) |
From net realized gain | — | (0.01) | — |
Total distributions | (0.18) | (0.39) | (0.29) |
Net asset value, end of period | $11.04 | $10.94 | $10.73 |
Total return (%)4 | 2.60 5 | 5.76 | 0.66 5 |
Ratios and supplemental data | |||
Net assets, end of period (in millions) | $5 | $4 | $2 |
Ratios (as a percentage of average net assets): | |||
Expenses before reductions | 0.66 6 | 0.68 | 0.68 6 |
Expenses including reductions | 0.66 6 | 0.67 | 0.67 6 |
Net investment income | 3.35 6 | 3.58 | 3.56 6 |
Portfolio turnover (%) | 7 | 22 | 9 7 |
1 | Six months ended 11-30-19. Unaudited. |
2 | The inception date for Class R6 shares is 8-30-17. |
3 | Based on average daily shares outstanding. |
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
5 | Not annualized. |
6 | Annualized. |
7 | Portfolio turnover is shown for the period from 6-1-17 to 5-31-18. |
22 | JOHN HANCOCK California Tax-Free Income Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Notes to financial statements (unaudited) |
SEMIANNUAL REPORT | JOHN HANCOCK California Tax-Free Income Fund | 23 |
24 | JOHN HANCOCK California Tax-Free Income Fund | SEMIANNUAL REPORT |
SEMIANNUAL REPORT | JOHN HANCOCK California Tax-Free Income Fund | 25 |
26 | JOHN HANCOCK California Tax-Free Income Fund | SEMIANNUAL REPORT |
Class | Rule 12b-1 Fee |
Class A | 0.15% |
Class B | 1.00% |
Class C | 1.00% |
SEMIANNUAL REPORT | JOHN HANCOCK California Tax-Free Income Fund | 27 |
Class | Distribution and service fees | Transfer agent fees |
Class A | $135,230 | $37,241 |
Class B | 1,903 | 79 |
Class C | 92,406 | 3,817 |
Class I | — | 2,511 |
Class R6 | — | 270 |
Total | $229,539 | $43,918 |
Six Months Ended 11-30-19 | Year Ended 5-31-19 | |||
Shares | Amount | Shares | Amount | |
Class A shares | ||||
Sold | 1,153,952 | $12,720,079 | 1,485,306 | $15,841,456 |
Distributions reinvested | 222,694 | 2,459,187 | 486,236 | 5,184,585 |
Repurchased | (1,051,599) | (11,602,088) | (2,729,594) | (29,030,019) |
Net increase (decrease) | 325,047 | $3,577,178 | (758,052) | $(8,003,978) |
Class B shares | ||||
Distributions reinvested | 411 | $4,552 | 1,180 | $12,592 |
Repurchased | (8,778) | (96,321) | (10,172) | (108,962) |
Net decrease | (8,367) | $(91,769) | (8,992) | $(96,370) |
Class C shares | ||||
Sold | 54,043 | $597,870 | 170,291 | $1,816,298 |
Distributions reinvested | 17,949 | 198,192 | 44,213 | 471,363 |
Repurchased | (202,354) | (2,227,636) | (414,613) | (4,418,882) |
Net decrease | (130,362) | $(1,431,574) | (200,109) | $(2,131,221) |
28 | JOHN HANCOCK California Tax-Free Income Fund | SEMIANNUAL REPORT |
Six Months Ended 11-30-19 | Year Ended 5-31-19 | |||
Shares | Amount | Shares | Amount | |
Class I shares | ||||
Sold | 324,557 | $3,598,703 | 402,220 | $4,291,234 |
Distributions reinvested | 17,637 | 194,849 | 34,749 | 370,533 |
Repurchased | (195,241) | (2,150,410) | (379,555) | (4,028,096) |
Net increase | 146,953 | $1,643,142 | 57,414 | $633,671 |
Class R6 shares | ||||
Sold | 103,285 | $1,140,393 | 208,519 | $2,218,628 |
Distributions reinvested | 6,333 | 69,985 | 8,894 | 95,093 |
Repurchased | (12,786) | (141,244) | (60,709) | (644,757) |
Net increase | 96,832 | $1,069,134 | 156,704 | $1,668,964 |
Total net increase (decrease) | 430,103 | $4,766,111 | (753,035) | $(7,928,934) |
SEMIANNUAL REPORT | JOHN HANCOCK California Tax-Free Income Fund | 29 |
CONTINUATION OF INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS
Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock California Tax-Free Income Fund (the Trust) of the Advisory Agreement (the Advisory Agreement)with John Hancock Investment Management, LLC (the Advisor, formerly John Hancock Advisers, LLC) and the Subadvisory Agreement (the Subadvisory Agreement) with Manulife Investment (US) LLC (the Subadvisor, formerly John Hancock Asset Management a division of Manulife Asset Management (US) LLC), for John Hancock California Tax-Free Income Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-26, 2019 in person meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 28-30, 2019.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 23-26, 2019, the Board, including the Trustees who are not parties to any Agreement or considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board noted that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board (including its various committees) at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The information received and considered by the Board in connection with the May and June meetings and throughout the year was both written and oral. The Board noted the affiliation of the Subadvisor with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor's affiliates, including distribution services. The Board considered the Advisory Agreement and the Subadvisory Agreement separately in the course of its review. In doing so, the Board noted the respective roles of the Advisor and Subadvisor in providing services to the fund.
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements
and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and did not treat any single factor as determinative, and each Trustee may have attributed different weights to different factors. The Board's conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board's ongoing regular review of fund performance and operations throughout the year.
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor's compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust's Chief Compliance Officer (CCO) regarding the fund's compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board observed that the scope of services provided by the Advisor, and of the undertakings required of the Advisor in connection with those services, including maintaining and monitoring its own and the fund's compliance programs, risk management programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other developments. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and third-party service providers. The Board also considered the significant risks assumed by the Advisor in connection with the services provided to the fund including entrepreneurial risk in sponsoring new funds and ongoing risks including investment, operational, enterprise, litigation, regulatory and compliance risks with respect to all funds.
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management and the quality of the performance of the Advisor's duties, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a Trustee of the Trust and of the other trusts in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Trust's affairs and its subadvisory relationship, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor's timeliness in responding to performance issues; | |||||||
(b) | the background, qualifications and skills of the Advisor's personnel; | |||||||
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and fund industry developments; |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the fund, as well as the Advisor's oversight of any securities lending activity, its monitoring of class action litigation and collection of class action settlements on behalf of the fund, and bringing loss recovery actions on behalf of the fund; | |||||||
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; | |||||||
(f) | the Advisor's initiatives intended to improve various aspects of the Trust's operations and investor experience with the fund; and | |||||||
(g) | the Advisor's reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund's performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) | reviewed information prepared by management regarding the fund's performance; | |
(b) | considered the comparative performance of an applicable benchmark index; | |
(c) | considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and | |
(d) | took into account the Advisor's analysis of the fund's performance and its plans and recommendations regarding the Trust's subadvisory arrangements generally. |
The Board noted that while it found the data provided by the independent third-party generally useful it recognized its limitations, including in particular that the data may vary depending on the end date selected and the results of the performance comparisons may vary depending on the selection of the peer group. The Board noted that the fund outperformed its benchmark index for the five- and ten-year periods and underperformed its benchmark index for the one- and three-year periods ended December 31, 2018. The Board also noted that the fund outperformed its peer group average for the ten-year period and underperformed its peer group average for the one-, three- and five-year period ended December 31, 2018. The Board took into account management's discussion of the fund's performance, including the favorable performance relative to the benchmark index for the five- and ten-year periods and to the peer group for the ten-year period. The Board concluded that the fund's performance is being monitored and reasonable addressed, where appropriate.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of fund data, including, among other data, the fund's contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund in light of the nature, extent and quality of the management and advisory and subadvisory services provided by the Advisor and the Subadvisor. The Board considered the fund's ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund's ranking within a broader group of funds. In comparing the fund's contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees and net total expenses for the fund are higher than the peer group median.
The Board took into account management's discussion of the fund's expenses. The Board also took into account management's discussion with respect to the overall management fee and the fees of the Subadvisor, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee, in each case in light of the services rendered for those amounts and the risks undertaken by the Advisor. The Board also noted that the Advisor pays the subadvisory fee. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund's operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduce management fees as assets increase. The Board also noted that the fund's distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board noted that the fund has a voluntary fee waiver and/or expense reimbursement, which reduces certain expenses of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisor's and Subadvisor's services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable in light of the nature, extent and quality of the services provided to the fund under the Advisory Agreement.
Profitability/Fall out benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisor) from the Advisor's relationship with the Trust, the Board:
(a) | reviewed financial information of the Advisor; | |||||||
(b) | reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; | |||||||
(c) | received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole and with respect to the fund; | |||||||
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data and considered that the Advisor hired an independent third-party consultant to provide an analysis of the Advisor's allocation methodologies; | |||||||
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability information reviewed by the Board; | |||||||
(f) | considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; | |||||||
(g) | noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund's distributor also receives Rule 12b-1 payments to support distribution of the fund; | |||||||
(h) | noted that the fund's Subadvisor is an affiliate of the Advisor; | |||||||
(i) | noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; |
(j) | noted that the subadvisory fee for the fund is paid by the Advisor; | |||||||
(k) | considered the Advisor's ongoing costs and expenditures necessary to improve services, meet new regulatory and compliance requirements, and adapt to other challenges impacting the fund industry; and | |||||||
(l) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the risks that it assumes as Advisor, including entrepreneurial, operational, reputational, litigation and regulatory risk. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.
Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund; | |
(b) | reviewed the fund's advisory fee structure and concluded that: (i) the fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management's discussion of the fund's advisory fee structure; and | |
(c) | the Board also considered the effect of the fund's growth in size on its performance and fees. The Board also noted that if the fund's assets increase over time, the fund may realize other economies of scale. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) | information relating to the Subadvisor's business, including current subadvisory services to the Trust (and other funds in the John Hancock Fund Complex); | |
(2) | the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; and | |
(3) | the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third-party provider of fund data. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor's Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor's current level of staffing and its overall resources, as well as received information relating to the Subadvisor's compensation program.
The Board reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor's compliance program and any disciplinary history. The Board also considered the Subadvisor's risk assessment and monitoring process. The Board reviewed the Subadvisor's regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust's CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisor's investment process and philosophy. The Board took into account that the Subadvisor's responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund's investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor's brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund's subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third-party provider of fund data, to the extent available. The Board also noted that the limited size of the Lipper peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund's performance as compared to the fund's peer group and the benchmark index and noted that the Board reviews information about the fund's performance results at its regularly scheduled meetings. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance. The Board also noted the Subadvisor's long-term performance record for similar accounts, as applicable.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager; | |
(2) | the performance of the fund is being monitored and reasonably addressed, where appropriate | |
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided under the Subadvisory Agreement; and | |
(4) | noted that the subadvisory fees are paid by the Advisor not the fund and that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. | |
* * * |
Based on the Board's evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
Trustees Hassell H. McClellan, Chairperson Officers Andrew G. Arnott Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone Christopher (Kit) Sechler |
Investment advisor John Hancock Investment Management LLC Subadvisor Manulife Investment Management (US) LLC Portfolio Managers Dennis DiCicco Principal distributor John Hancock Investment Management Distributors LLC Custodian State Street Bank and Trust Company Transfer agent John Hancock Signature Services, Inc. Legal counsel K&L Gates LLP |
* Member of the Audit Committee
Non-Independent Trustee
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 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com |
Regular mail: John Hancock Signature Services, Inc. |
Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC 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 New Opportunities Regional Bank Small Cap Core Small Cap Growth Small Cap Value U.S. Global Leaders Growth U.S. Quality Growth GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Global Thematic Opportunities International Dynamic Growth International Growth International Small Company |
INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Bond Short Duration Credit Opportunities Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Alternative Risk Premia Disciplined Alternative Yield Diversified Macro Infrastructure Multi-Asset Absolute Return Seaport Long/Short |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investment Management at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Balanced Income Allocation Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios Retirement Income 2040 EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Emerging Markets ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Media and John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Small Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF |
ENVIRONMENTAL, SOCIAL, AND ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market
price (not NAV), and are not individually redeemed
from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and
are subadvised by Dimensional Fund Advisors LP.
Foreside is not affiliated with John Hancock Investment Management
Distributors LLC or Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP receives compensation from John Hancock
in connection with licensing rights to the
John Hancock Dimensional indexes. Dimensional Fund Advisors LP does
not sponsor, endorse, or sell, and makes no
representation as to the advisability of investing in, John Hancock
Multifactor ETFs.
John Hancock Investment Management
A trusted brand
John Hancock Investment Management is a premier asset manager
representing one of America's most trusted brands, with a heritage of
financial stewardship dating back to 1862. Helping our shareholders
pursue their financial goals is at the core of everything we do. It's why
we support the role of professional financial advice and operate with
the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising
standards and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide
a diverse set of investments backed by some of the world's best
managers, along with strong risk-adjusted returns across asset classes.
John Hancock Investment Management Distributors LLC
n Member FINRA, SIPC
200 Berkeley Street
n Boston, MA 02116-5010
n 800-225-5291
n jhinvestments.com
This report is for the information of the shareholders of John Hancock California Tax-Free Income Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
MF1028727 | 53SA 11/19 1/20 |
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(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 NCSR. See attached “John Hancock Funds – Nominating and Governance Committee Charter”.
ITEM 11. CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in this Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Such disclosure and procedures include controls and procedures designed to ensure that such information is accumulated and communicated to the registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Within 90 days prior to the filing date of this Form N-CSR, the registrant had carried out an evaluation, under the supervision and with the participation of the registrant’s management, including the registrant’s principal executive officer and the registrant’s principal financial officer, of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures relating to information required to be disclosed on Form N-CSR. Based on such evaluation, the registrant’s principal executive officer and principal financial officer concluded that the registrant’s disclosure controls and procedures are operating effectively to ensure that:
(i) information required to be disclosed in this Form N-CSR is recorded, processed, summarized
and reported within the periods specified in the rules and forms of the Securities and Exchange
Commission, and
(ii) information is accumulated and communicated to the registrant’s management, including its
principal executive officer and principal financial officer, as appropriate, to allow timely decisions
regarding required disclosure.
(b) CHANGE IN REGISTRANT’S INTERNAL CONTROL: Not applicable.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached “John Hancock Funds – Nominating and Governance Committee Charter”.
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 California Tax-Free Income Fund
By: | /s/ Andrew Arnott | |
Andrew Arnott | ||
President | ||
Date: | January 7, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Andrew Arnott | |
Andrew Arnott | ||
President | ||
Date: | January 7, 2020 | |
By: | /s/ Charles A. Rizzo | |
Charles A. Rizzo | ||
Chief Financial Officer | ||
Date: | January 7, 2020 |
CERTIFICATION
I, Andrew Arnott, certify that:
1. I have reviewed this report on Form N-CSR of the John Hancock California Tax-Free Income Fund;
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(s) 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 second fiscal quarter of 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(s) 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: | January 7, 2020 | /s/ Andrew Arnott | ||
Andrew Arnott | ||||
President |
CERTIFICATION
I, Charles A. Rizzo, certify that:
1. I have reviewed this report on Form N-CSR of the John Hancock California Tax-Free Income Fund;
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(s) 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 second fiscal quarter of 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(s) 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: | January 7, 2020 | /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 California Tax-Free 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/ Andrew Arnott | |
Andrew Arnott | |
President |
Dated: January 7, 2020
/s/ Charles A. Rizzo | |
Charles A. Rizzo | |
Chief Financial Officer |
Dated: January 7, 2020
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.
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”).
1
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. |
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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.
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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. |
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