UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-8568
John Hancock Financial Opportunities Fund
(Exact name of registrant as specified in charter)
601 Congress Street, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
601 Congress Street
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-663-4497
Date of fiscal year end: | December 31 |
Date of reporting period: | March 31, 2018 |
ITEM 1. SCHEDULE OF INVESTMENTS
John Hancock
Financial Opportunities Fund
Fund’s investments |
Shares | Value | ||||
Common stocks 105.9% (91.7% of Total investments) | $737,818,641 | ||||
(Cost $376,537,141) | |||||
Financials 104.4% | 727,303,937 | ||||
Banks 93.4% | |||||
1st Source Corp. | 121,706 | 6,160,758 | |||
Access National Corp. | 81,825 | 2,334,467 | |||
Ameris Bancorp | 226,471 | 11,980,316 | |||
Atlantic Capital Bancshares, Inc. (A) | 241,667 | 4,374,173 | |||
Avidbank Holdings, Inc. (A) | 200,000 | 4,950,000 | |||
Bank of America Corp. (B) | 432,436 | 12,968,756 | |||
Bank of Commerce Holdings | 40,374 | 470,357 | |||
Bank of Marin Bancorp | 58,731 | 4,049,502 | |||
Bar Harbor Bankshares | 129,698 | 3,595,229 | |||
BB&T Corp. | 346,799 | 18,047,420 | |||
Berkshire Hills Bancorp, Inc. | 338,903 | 12,861,369 | |||
Bryn Mawr Bank Corp. | 80,000 | 3,516,000 | |||
Cambridge Bancorp | 9,795 | 854,614 | |||
Camden National Corp. | 55,164 | 2,454,798 | |||
Carolina Financial Corp. | 70,982 | 2,788,173 | |||
Chemical Financial Corp. (B)(C) | 217,502 | 11,893,009 | |||
Citigroup, Inc. (B) | 49,519 | 3,342,533 | |||
Citizens Financial Group, Inc. | 493,538 | 20,718,725 | |||
City Holding Company | 39,363 | 2,698,727 | |||
Civista Bancshares, Inc. (B)(C) | 81,213 | 1,856,529 | |||
Columbia Banking System, Inc. (B)(C) | 119,363 | 5,007,278 | |||
Comerica, Inc. | 167,706 | 16,088,037 | |||
Commerce Bancshares, Inc. (B)(C) | 115,985 | 6,948,661 | |||
Communities First Financial Corp. (A) | 115,523 | 2,420,207 | |||
Community Bank System, Inc. (B)(C) | 39,951 | 2,139,776 | |||
County Bancorp, Inc. | 62,184 | 1,816,395 | |||
Cullen/Frost Bankers, Inc. (B)(C) | 178,964 | 18,982,711 | |||
DNB Financial Corp. | 78,515 | 2,799,060 | |||
Eagle Bancorp Montana, Inc. | 82,912 | 1,720,424 | |||
Equity Bancshares, Inc., Class A (A) | 130,915 | 5,126,631 | |||
Evans Bancorp, Inc. | 69,760 | 3,156,640 | |||
FCB Financial Holdings, Inc., Class A (A) | 188,399 | 9,627,189 | |||
Fifth Third Bancorp | 452,067 | 14,353,127 | |||
First Bancorp, Inc. | 266,499 | 7,456,642 | |||
First Business Financial Services, Inc. | 60,700 | 1,527,212 | |||
First Citizens BancShares, Inc., Class A | 15,038 | 6,214,303 | |||
First Community Corp. | 136,228 | 3,119,621 | |||
First Connecticut Bancorp, Inc. | 202,450 | 5,182,720 | |||
First Financial Bancorp (B)(C) | 146,045 | 4,286,421 | |||
First Hawaiian, Inc. | 160,968 | 4,479,739 | |||
First Merchants Corp. | 118,683 | 4,949,081 | |||
First Security Group, Inc. (A) | 83,942 | 2,266,434 | |||
Flushing Financial Corp. | 139,050 | 3,748,788 | |||
FNB Corp. (B)(C) | 706,188 | 9,498,229 | |||
German American Bancorp, Inc. (B)(C) | 60,090 | 2,004,002 | |||
Glacier Bancorp, Inc. (B)(C) | 201,918 | 7,749,613 | |||
Great Southern Bancorp, Inc. | 40,257 | 2,010,837 | |||
Great Western Bancorp, Inc. (B)(C) | 159,455 | 6,421,253 | |||
Hamilton State Bancshares, Inc. (D) | 500,000 | 4,579,575 | |||
Hancock Holding Company | 245,752 | 12,705,378 |
2 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | QUARTERLY REPORT | SEE NOTES TO FUND'S INVESTMENTS |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
Heritage Commerce Corp. | 371,642 | $6,124,660 | |||
Heritage Financial Corp. | 194,590 | 5,954,454 | |||
HomeTown Bankshares Corp. (A) | 174,720 | 2,087,904 | |||
Horizon Bancorp | 269,724 | 8,094,417 | |||
Howard Bancorp, Inc. (A) | 136,118 | 2,695,136 | |||
Independent Bank Corp. (MA) | 173,570 | 12,418,934 | |||
Independent Bank Corp. (MI) | 125,407 | 2,871,820 | |||
JPMorgan Chase & Co. (B) | 203,805 | 22,412,436 | |||
KeyCorp | 738,141 | 14,430,657 | |||
M&T Bank Corp. | 117,579 | 21,676,864 | |||
Mackinac Financial Corp. | 40,000 | 646,400 | |||
MainSource Financial Group, Inc. | 185,504 | 7,540,738 | |||
MB Financial, Inc. (B)(C) | 183,150 | 7,413,912 | |||
MidWestOne Financial Group, Inc. | 31,763 | 1,057,390 | |||
MutualFirst Financial, Inc. | 100,539 | 3,644,539 | |||
National Commerce Corp. (A) | 71,147 | 3,098,452 | |||
Nicolet Bankshares, Inc. (A) | 29,792 | 1,640,645 | |||
Northrim BanCorp, Inc. | 99,739 | 3,445,982 | |||
Old National Bancorp (B)(C) | 419,575 | 7,090,818 | |||
Old Second Bancorp, Inc. | 202,363 | 2,812,846 | |||
OP Bancorp (A) | 26,189 | 326,053 | |||
Pacific Premier Bancorp, Inc. (A)(B)(C) | 169,865 | 6,828,573 | |||
PacWest Bancorp | 123,139 | 6,099,075 | |||
Park National Corp. (B)(C) | 42,113 | 4,369,645 | |||
Peoples Bancorp, Inc. | 122,945 | 4,358,400 | |||
Pinnacle Financial Partners, Inc. (B)(C) | 114,502 | 7,351,028 | |||
Presidio Bank (A) | 13,781 | 366,575 | |||
Prime Meridian Holding Company | 83,010 | 1,643,598 | |||
QCR Holdings, Inc. | 48,822 | 2,189,667 | |||
Regions Financial Corp. | 701,530 | 13,034,427 | |||
Renasant Corp. | 159,629 | 6,793,810 | |||
SBT Bancorp, Inc. | 37,879 | 1,170,461 | |||
Shore Bancshares, Inc. | 183,579 | 3,462,300 | |||
South Atlantic Bancshares, Inc. (A) | 265,755 | 4,119,203 | |||
South State Corp. | 82,030 | 6,997,159 | |||
Southern First Bancshares, Inc. (A) | 131,586 | 5,855,577 | |||
State Bank Financial Corp. | 53,182 | 1,595,992 | |||
Stock Yards Bancorp, Inc. | 66,324 | 2,327,972 | |||
SunTrust Banks, Inc. | 278,451 | 18,945,806 | |||
The Community Financial Corp. (B)(C) | 32,029 | 1,192,119 | |||
The First Bancshares, Inc. | 210,000 | 6,772,500 | |||
The First of Long Island Corp. | 57,322 | 1,573,489 | |||
The PNC Financial Services Group, Inc. (B)(C) | 146,047 | 22,088,148 | |||
Towne Bank | 157,856 | 4,514,682 | |||
TriCo Bancshares | 202,536 | 7,538,390 | |||
U.S. Bancorp | 310,100 | 15,660,050 | |||
Union Bankshares Corp. | 164,127 | 6,025,102 | |||
United Bankshares, Inc. (B)(C) | 112,955 | 3,981,664 | |||
United Community Banks, Inc. | 111,192 | 3,519,227 | |||
Washington Trust Bancorp, Inc. | 123,905 | 6,659,894 | |||
Wells Fargo & Company (B) | 229,099 | 12,007,079 | |||
Zions Bancorporation (B)(C) | 265,769 | 14,013,999 |
SEE NOTES TO FUND'S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 3 |
Shares | Value | ||||
Financials (continued) | |||||
Capital markets 4.1% | |||||
Ares Management LP | 38,057 | $814,420 | |||
Intermediate Capital Group PLC | 336,897 | 4,653,266 | |||
KKR & Company LP | 355,776 | 7,222,253 | |||
Oaktree Specialty Lending Corp. | 837,762 | 3,526,978 | |||
The Blackstone Group LP | 243,005 | 7,764,010 | |||
TPG Specialty Lending, Inc. (B)(C) | 243,379 | 4,346,749 | |||
Consumer finance 0.7% | |||||
Capital One Financial Corp. | 47,914 | 4,591,119 | |||
Insurance 0.4% | |||||
Gjensidige Forsikring ASA | 165,452 | 3,043,033 | |||
Thrifts and mortgage finance 5.8% | |||||
BSB Bancorp, Inc. (A) | 177,195 | 5,422,167 | |||
First Defiance Financial Corp. | 110,515 | 6,334,720 | |||
Provident Financial Holdings, Inc. | 97,339 | 1,760,863 | |||
Provident Financial Services, Inc. | 155,989 | 3,991,759 | |||
Southern Missouri Bancorp, Inc. | 112,188 | 4,106,081 | |||
United Community Financial Corp. | 634,588 | 6,257,038 | |||
Westbury Bancorp, Inc. (A) | 88,349 | 1,964,882 | |||
WSFS Financial Corp. | 222,599 | 10,662,492 | |||
Information technology 0.5% | 3,420,812 | ||||
IT services 0.5% | |||||
EVERTEC, Inc. | 209,224 | 3,420,812 | |||
Real estate 1.0% | 7,093,892 | ||||
Equity real estate investment trusts 1.0% | |||||
Park Hotels & Resorts, Inc. (B)(C) | 50,154 | 1,355,161 | |||
Simon Property Group, Inc. (B) | 37,180 | 5,738,731 | |||
Preferred securities 3.5% (3.0% of Total investments) | $24,524,585 | ||||
(Cost $21,988,751) | |||||
Financials 2.0% | 14,323,768 | ||||
Banks 0.9% | |||||
OFG Bancorp, Series C, 8.750% | 1,671 | 1,676,932 | |||
SB Financial Group, Inc., 6.500% | 250,000 | 4,558,625 | |||
Capital markets 0.8% | |||||
JMP Group, Inc., 8.000% | 82,428 | 2,085,428 | |||
THL Credit, Inc., 6.750% | 136,266 | 3,474,783 | |||
Mortgage real estate investment trusts 0.3% | |||||
Arbor Realty Trust, Inc., 7.375% | 100,000 | 2,528,000 | |||
Real estate 1.5% | 10,200,817 | ||||
Equity real estate investment trusts 1.5% | |||||
American Homes 4 Rent (5.500% to 3-31-21, then 10.000% thereafter) | 100,000 | 2,825,000 | |||
Bluerock Residential Growth REIT, Inc., 8.250% | 84,140 | 2,101,817 | |||
Invesco Mortgage Capital, Inc. (7.750% to 12-27-24, then 3 month LIBOR + 5.180%) | 150,000 | 3,777,000 | |||
Sotherly Hotels, Inc., 8.000% | 60,000 | 1,497,000 | |||
Investment companies 0.6% (0.5% of Total investments) | $3,990,201 | ||||
(Cost $4,323,234) | |||||
Eagle Point Credit Company, Inc. (B)(C) | 219,967 | 3,990,201 |
4 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | QUARTERLY REPORT | SEE NOTES TO FUND'S INVESTMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Corporate bonds 5.4% (4.7% of Total investments) | $37,809,756 | ||||
(Cost $36,368,620) | |||||
Financials 5.4% | 37,809,756 | ||||
Banks 4.5% | |||||
Avidbank Holdings, Inc. (6.875% to 11-15-20, then 3 month LIBOR + 5.367%) (E) | 6.875 | 11-15-25 | 3,000,000 | 3,075,000 | |
Cadence BanCorp (6.500% to 3-11-20, then 3 month LIBOR + 4.663%) (E) | 6.500 | 03-11-25 | 5,000,000 | 5,150,000 | |
First Business Financial Services, Inc. (D) | 6.500 | 09-01-24 | 5,000,000 | 5,032,854 | |
Northeast Bancorp (6.750% to 7-1-21, then 3 month LIBOR + 5.570%) (E) | 6.750 | 07-01-26 | 5,000,000 | 5,127,892 | |
Old Second Bancorp, Inc. (5.750% to 12-31-21, then 3 month LIBOR + 3.850%) | 5.750 | 12-31-26 | 1,366,000 | 1,421,255 | |
Popular, Inc. | 7.000 | 07-01-19 | 6,000,000 | 6,120,000 | |
VantageSouth Bancshares, Inc. (D) | 7.625 | 08-12-23 | 5,000,000 | 5,555,744 | |
Thrifts and mortgage finance 0.9% | |||||
Flagstar Bancorp, Inc. | 6.125 | 07-15-21 | 6,000,000 | 6,327,011 | |
Certificate of deposit 0.0% (0.0% of Total investments) | $78,980 | ||||
(Cost $78,980) | |||||
Country Bank for Savings | 1.000 | 08-27-18 | 2,016 | 2,016 | |
First Bank Richmond | 0.990 | 12-05-19 | 21,010 | 21,010 | |
First Bank System, Inc. | 0.600 | 04-03-19 | 5,015 | 5,015 | |
First Federal Savings Bank of Louisiana | 1.000 | 01-07-19 | 3,045 | 3,045 | |
Home Banks | 1.739 | 11-04-21 | 18,927 | 18,927 | |
Hudson Savings | 0.800 | 04-23-19 | 2,188 | 2,188 | |
Machias Savings Bank | 0.500 | 05-29-18 | 1,975 | 1,975 | |
Midstate Federal Savings and Loan | 0.500 | 05-30-18 | 2,019 | 2,019 | |
Milford Federal Savings and Loan Bank | 0.250 | 06-10-19 | 1,913 | 1,913 | |
Milford Federal Savings and Loan Bank | 0.300 | 04-24-18 | 2,040 | 2,040 | |
Mount McKinley Savings Bank | 0.500 | 12-03-18 | 1,700 | 1,700 | |
Mt. Washington Bank | 0.650 | 10-31-19 | 1,924 | 1,924 | |
MutualOne Bank | 0.900 | 09-09-19 | 4,084 | 4,084 | |
Newburyport Five Cent Savings Bank | 0.700 | 10-19-18 | 2,093 | 2,093 | |
Newton Savings Bank | 0.450 | 05-30-18 | 1,955 | 1,955 | |
OBA Federal Savings and Loan | 0.400 | 12-17-18 | 1,346 | 1,346 | |
Plymouth Savings Bank | 0.200 | 04-22-19 | 1,946 | 1,946 | |
Salem Five Cents Savings Bank | 0.250 | 12-17-18 | 1,739 | 1,739 | |
Sunshine Federal Savings and Loan Association | 0.500 | 05-10-19 | 2,045 | 2,045 |
Yield* (%) | Maturity date | Par value^ | Value | ||
Short-term investments 0.1% (0.1% of Total investments) | $736,981 | ||||
(Cost $736,981) | |||||
U.S. Government Agency 0.1% | 553,981 | ||||
Federal Agricultural Mortgage Corp. Discount Note | 1.500 | 04-02-18 | 58,000 | 57,998 | |
Federal Home Loan Bank Discount Note | 1.200 | 04-02-18 | 396,000 | 395,987 | |
Federal Home Loan Bank Discount Note | 1.400 | 04-02-18 | 100,000 | 99,996 |
Par value^ | Value | ||||
Repurchase agreement 0.0% | 183,000 | ||||
Repurchase Agreement with State Street Corp. dated 3-29-18 at 0.740% to be repurchased at $183,015 on 4-2-18, collateralized by $190,000 U.S. Treasury Notes, 2.125% due 8-31-20 (valued at $189,225, including interest) | 183,000 | 183,000 |
Total investments (Cost $440,033,707) 115.5% | $804,959,144 | ||||
Other assets and liabilities, net (15.5%) | (108,113,329) | ||||
Total net assets 100.0% | $696,845,815 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund unless otherwise indicated. | |
^All par values are denominated in U.S. dollars unless otherwise indicated. |
SEE NOTES TO FUND'S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 5 |
Security Abbreviations and Legend | |
LIBOR | London Interbank Offered Rate |
(A) | Non-income producing security. |
(B) | All or a portion of this security is pledged as collateral pursuant to the Liquidity Agreement. Total collateral value at 3-31-18 was $120,148,544. A portion of the securities pledged as collateral were loaned pursuant to the Liquidity Agreement. The value of securities on loan amounted to $97,003,769. |
(C) | A portion of this security is on loan as of 3-31-18, and is a component of the fund's leverage under the Liquidity Agreement. |
(D) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
(E) | 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. |
* | 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. |
6 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | QUARTERLY REPORT | SEE NOTES TO FUND'S INVESTMENTS |
Interest rate swaps | ||||||||||
Counterparty
(OTC)/ Centrally cleared |
Notional
amount |
Currency | Payments
made |
Payments
received |
Fixed
payment frequency |
Floating
payment frequency |
Maturity
date |
Unamortized
upfront payment paid (received) |
Unrealized
appreciation (depreciation) |
Value |
Centrally cleared | 10,000,000 | USD | Fixed 1.427% | 3 Month LIBOR(a) | Semi-Annual | Quarterly | Aug 2019 | — | $145,764 | $145,764 |
Centrally cleared | 5,000,000 | USD | Fixed 1.295% | 3 Month LIBOR(a) | Semi-Annual | Quarterly | Aug 2019 | — | 82,142 | 82,142 |
Centrally cleared | 5,000,000 | USD | Fixed 1.594% | 3 Month LIBOR(a) | Semi-Annual | Quarterly | Dec 2020 | — | 114,925 | 114,925 |
Centrally cleared | 5,000,000 | USD | Fixed 1.790% | 3 Month LIBOR(a) | Semi-Annual | Quarterly | Aug 2022 | — | 188,867 | 188,867 |
— | $531,698 | $531,698 |
(a) | At 3-31-18, the 3 month LIBOR was 2.312% |
Derivatives Currency Abbreviations | |
USD | U.S. Dollar |
Derivatives Abbreviations | |
LIBOR | London Interbank Offered Rate |
SEE NOTES TO FUND'S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 7 |
Notes to Fund's investments (unaudited)
Security valuation. Investments are stated at value as of the scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value may be determined as of the regularly scheduled close of the NYSE pursuant to the fund's Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Debt obligations are valued based on the evaluated prices provided by an independent pricing vendor or from broker-dealers. Independent pricing vendors utilize matrix pricing which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Swaps are valued using evaluated prices obtained from an independent pricing vendor. Foreign securities are valued in U.S. dollars based on foreign currency exchange rates supplied by an independent pricing vendor.
In certain instances, the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market.
Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund's Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the scheduled daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund's Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund's investments as of March 31, 2018, by major security category or type:
Total value at 3-31-18 |
Level 1 quoted price |
Level 2 significant observable inputs |
Level 3 significant unobservable inputs |
||
Investments in securities: | |||||
Assets | |||||
Common stocks | |||||
Financials | $727,303,937 | $706,998,828 | $15,725,534 | $4,579,575 | |
Information technology | 3,420,812 | 3,420,812 | | | |
Real estate | 7,093,892 | 7,093,892 | | | |
Preferred securities | |||||
Financials | 14,323,768 | 8,088,211 | 6,235,557 | | |
Real estate | 10,200,817 | 10,200,817 | | | |
Investment companies | 3,990,201 | 3,990,201 | | | |
Corporate bonds | |||||
Financials | 37,809,756 | | 27,221,158 | 10,588,598 | |
Certificate of deposit | 78,980 | | 78,980 | | |
Short-term investments | 736,981 | | 736,981 | | |
Total investments in securities | $804,959,144 | $739,792,761 | $49,998,210 | $15,168,173 | |
Derivatives: | |||||
Assets | |||||
Swap contracts | $531,698 | | $531,698 | |
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
Investments in securities | Common stocks | Corporate bonds | Total | ||||||||
Balance as of 12-31-17 | $4,029,900 | $10,740,175 | $14,770,075 | ||||||||
Realized gain (loss) | | | | ||||||||
Change in unrealized appreciation (depreciation) | 549,675 | (151,577 | ) | $398,098 | |||||||
Purchases | | | | ||||||||
Sales | | | | ||||||||
Transfers into Level 3 | | | | ||||||||
Transfers out of Level 3 | | | |||||||||
Balance as of 3-31-18 | $4,579,575 | $10,588,598 | $15,168,173 | ||||||||
Change in unrealized appreciation (depreciation) at period end* | $549,675 | ($151,577 | ) | $398,098 |
*Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at the period end.
The valuation techniques and significant amounts of unobservable inputs used in the fair value measurement of the fund's Level 3 securities are outlined in the table below:
Fair value at 3-31-18 |
Valuation technique |
Significant unobservable inputs |
Input/range | |
Common stocks | $4,579,575 | Market Approach |
Expected future value Discount |
9.39x 2.5% |
Corporate bonds | $10,588,598 | Market Approach |
Yield | 522bps - 600bps (weighted average 559bps) |
Total | $15,168,173 |
A change to unobservable inputs of a fund's Level 3 securities may result in changes to the fair value measurement, as follows:
Significant unobservable input | Impact to valuation if input increases |
Impact to valuation if input decreases |
|
Discount | Decrease | Increase | |
Expected future value | Increase | Decrease | |
Yield | Decrease | Increase |
Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the fund's custodian. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in the Fund's investments as part of the caption related to the repurchase agreement.
Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, assets and liabilities resulting from repurchase agreements are not offset. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.
Derivative instruments. The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the over-the-counter (OTC) market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Interest rate swaps. Interest rate swaps represent an agreement between the fund and a counterparty to exchange cash flows based on the difference between two interest rates applied to a notional amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other. The fund settles accrued net interest receivable or payable under the swap contracts at specified, future intervals. Swap agreements are privately negotiated in the OTC market or may be executed on a registered commodities exchange (centrally cleared swaps). Swaps are marked-to-market daily and the change in value is recorded as unrealized appreciation/depreciation of swap contracts. A termination payment by the counterparty or the fund is recorded as realized gain or loss, as well as the net periodic payments received or paid by the fund. The value of the swap will typically impose collateral posting obligations on the party that is considered out-of-the-money on the swap.
During the period ended March 31, 2018, the fund used interest rate swaps to manage against anticipated interest rate changes.
Transactions in securities of affiliated issuers. Affiliated issuers, as defined by the 1940 Act, are those in which the fund's holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the fund's transactions in the securities of these issuers during the period ended March 31, 2018, is set forth below:
Dividends and distributions | ||||||||||||||||||||||||||||||||||||||
Affiliate | Beginning share amount |
Shares purchased |
Shares sold |
Ending share amount |
Income distributions received |
Capital gain distributions received |
Realized gain (loss) |
Change in unrealized appreciation (depreciation) | Ending value |
|||||||||||||||||||||||||||||
First Colebrook Bancorp, Inc. | 48,750 | | (48,750 | ) | | $4,388 | | $1,207,870 | ($1,160,250 | ) | |
For additional information on the fund's significant accounting policies, please refer to the fund's most recent semiannual or annual shareholder report.
More information
How to contact us | ||
Internet | www.jhinvestments.com | |
Computershare P.O. Box 30170 College Station, TX 77842-3170 |
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Phone | Customer service representatives Portfolio commentary 24-hour automated information TDD line |
800-852-0218 800-344-7054 800-843-0090 800-231-5469 |
P9Q1 | 03/18 | |
This report is for the information of the shareholders of John Hancock Financial Opportunities Fund. | 5/18 |
ITEM 2. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-Q, the registrant's principal executive officer and principal accounting officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 3. EXHIBITS.
Separate certifications for the registrant's principal executive officer and principal accounting officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
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 Financial Opportunities Fund
By: | /s/ Andrew Arnott |
Andrew Arnott | |
President | |
Date: | May 10, 2018 |
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: | May 10, 2018 |
By: | /s/ Charles A. Rizzo |
Charles A. Rizzo | |
Chief Financial Officer | |
Date: | May 10, 2018 |