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Name Title John Hancock Investments Date. Three things to know about market volatility We are going to live with it for a while A traditional asset mix.

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Presentation on theme: "Name Title John Hancock Investments Date. Three things to know about market volatility We are going to live with it for a while A traditional asset mix."— Presentation transcript:

1 Name Title John Hancock Investments Date

2 Three things to know about market volatility We are going to live with it for a while A traditional asset mix was no match for it in Cash is not the answer for long-term investors 2

3 3 Source: FactSet, John Hancock Investments, as of It is not possible to invest directly in an index. See slides 15 and 16 for index definitions. The level of stock market volatility in recent years is unprecedented S&P 500 Index, 1950 through 2013 (trading days per year with greater than +/–2% returns) We are going to live with it for a while 1 Korean War begins Soviets launch Sputnik Warsaw Pact signed Cuban missile crisis Vietnam War escalates President Kennedy assassinated Oil crisis Iran hostage crisis President Nixon resigns Unemployment hits 10% Asian currency crisis Black Monday stock market crash Long-Term Capital Management collapses President Clinton impeached Tech bubble bursts Enron, WorldCom bankruptcies September 11 terrorist attacks Lehman Brothers bankruptcy European sovereign debt crisis begins European sovereign debt crisis begins U.S. debt downgraded U.S. debt downgraded RECESSION 7/53–5/54 RECESSION 8/57–4/58 RECESSION 4/60–2/61 RECESSION 1/80–7/80 RECESSION 7/81–11/82 RECESSION 12/69–11/70 RECESSION 11/73–3/75 RECESSION 7/90–3/91 RECESSION 3/01–11/01 RECESSION 12/07–6/

4 Nowhere to hide Source: FactSet, as of Please see slides 15 and 16 for index definitions. Diversification does not guarantee investment returns and does not eliminate the risk of loss. A traditional asset mix was no match for it in 2008 Total returns by asset class (2008) 2 4 Emerging- market stocks Int’l small cap Global REITs Natural resources Int’l stocks U.S. real estate U.S. stocks Bank loans High- yield bonds TIPS U.S. bonds –10% –20% –30% –40% –50% –60%

5 How long does it take to recover from losses? Assuming10% loss20% loss30% loss40% loss 1% yearly return11 years23 years36 years51 years 3% yearly return4 years8 years13 years18 years 5% yearly return3 years5 years8 years12 years 7% yearly return2 years4 years6 years9 years Cash is not the answer for long-term investors 3 5 Source: John Hancock Investments. For illustration purposes only.

6 Half of the biggest market swings since 1950 occurred in the past 10 years Investors face a choice: Double-down Try to rebuild account values through more aggressive strategies Retreat Preserve assets with ultraconservative— and low return—investments Invest smarter Take advantage of investments and strategies to pursue positive returns with less volatility Source: FactSet, as of 12/31/13. Since 1950, 23 of the top 50 daily gains and 27 of the top 50 daily losses in the S&P 500 Index occurred between 2004 and

7 Consider alternatives to traditional markets Alternatives have generated returns independent of traditional markets Source: Morningstar Direct, as of 9/30/14. The diversified alternatives portfolio is represented by an equal-weighted blend of all nine alternative categories shown in the above chart. Please see slides 15 and 16 for index and asset class definitions. It is not possible to invest directly in an index. Diversification does ensure a profit or protect against a loss. Standard deviation measures performance fluctuation, may not be indicative of future risk, and is not a predictor of returns. Correlation is a statistical measure that describes how investments move in relation to each other, which ranges from –1.00 to The closer the number is to 1.00 or –1.00, the more closely the two investments are related. Past performance does not guarantee future results. Growth of $100,000 (12/31/99 to 9/30/14) Diversified alternatives portfolio Annual total return Standard deviation Correlation Over the past 14 years, a diversified portfolio of alternative investments would have outperformed the S&P 500 Index with less volatility. 7.75%8.41%0.77 S&P 500 Index Annual total return Standard deviation Correlation Stocks have been quite volatile during the past 14 years –with only modest returns. 3.98%15.37%1.00 Global REITs Emerging-market bonds Commodities Gold Emerging-market stocks Relative value Macro strategies Merger arbitrage Market neutral 7

8 The benefits of being different Many alternative assets and strategies have shown low correlation to stocks Global REITs Real estate investment trusts that typically own and operate income-producing property 0.63 Emerging-market bonds Debt securities issued by developing countries, frequently with different economic drivers and rates of inflation than developed nations 0.53 Commodities Markets where contracts for raw materials such as wheat are exchanged 0.33 Gold A commodity traditionally used as a store of value and a hedge against inflation 0.06 Emerging-market stocks Stocks of nations experiencing rapid growth and industrialization, often with a nascent but growing middle class 0.78 Relative value A strategy predicated on realization of a valuation discrepancy in the relationship between multiple securities 0.58 Macro strategies Top-down strategies in which the investment process is predicated on movements in underlying economic variables 0.20 Merger arbitrage A strategy focused on securities of companies that are engaged in a corporate transaction 0.55 Market neutral An investment strategy that hedges out specific market risks 0.25 Source: Morningstar Direct, as of 9/30/14. Please see slides 15 and 16 for asset class definitions. It is in not possible to invest directly in an index. Diversification does ensure a profit or protect against a loss. Past performance does not guarantee future results. Correlation 8

9 The average university endowment had a 53% allocation to alternative investments in 2013 Endowment asset allocation in % Alternative strategies 18% International equities 16% Domestic equities 10% Fixed income 3% Short-term securities Survey of 831 universities Source: National Association of College and University Business Officers, What institutional investors have known for some time Manage volatility Make their annual payouts to retirees Build assets Defined benefit plans, university endowments, and other institutional investors have used alternatives for years as a way to help: 9

10 Annual return 4.98%5.72% Sharpe ratio¹ Standard deviation %8.30% Ending value of $100,000 invested 1/00 through 9/14 $204,770$227,162 Adding alternatives can help dampen portfolio volatility Traditional portfolio plus alternatives Traditional portfolio Source: FactSet and Morningstar Direct, as of 9/30/14. Diversified alternatives is represented by an equal-weighted blend of all nine alternative categories shown on slides 7 and 8. Please see slides 15 and 16 for index and asset class definitions. It is not possible to invest directly in an index. Performance figures assume reinvestment of dividends and capital gains. This chart is for illustrative purposes only and does not represent the performance of any John Hancock fund. Diversification does ensure a profit or protect against a loss. Past performance does not guarantee future results. 1 Sharpe ratio is a measure of excess return per unit of risk, as defined by standard deviation. A higher Sharpe ratio suggests better risk-adjusted performance. 2 Standard deviation measures performance fluctuation—generally, the higher the standard deviation, the greater the expected volatility. Stocks Bonds Diversified alternatives A portfolio that included alternatives produced higher risk-adjusted returns 10 Performance results since 2000

11 Investing in alternatives with John Hancock Investments The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will vary. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling John Hancock Global Absolute Return Strategies Fund (JHAAX) Managed by Standard Life Investments Why this fund? The fund combines a variety of asset classes and strategies to seek to profit from inefficiencies in global markets while providing positive absolute returns over a full market cycle. Average annual total returns as of 9/30/14 (%) 1 year3 year5 year10 year Life of fund 12/19/11 Class A (without sales charge) 6.82———5.63 Class A (with 5% maximum sales charge) 1.48———3.70 Expense ratio: 1.78% 11

12 Investing in alternatives with John Hancock Investments The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will vary. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling Prior to 1/31/14, the fund was named John Hancock Currency Strategies Fund. John Hancock Absolute Return Currency Fund (JCUAX) Managed by First Quadrant Why this fund? The fund uses long and short currency positions to pursue positive absolute returns with low overall correlation to stock and bond markets. Average annual total returns as of 9/30/14¹ (%) 1 year3 year5 year10 year Life of fund 8/2/10 Class A (without sales charge) ––1.57 Class A (with 3% maximum sales charge) ––0.83 Expense ratio: 1.53% 12

13 Investing in alternatives with John Hancock Investments The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will vary. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling John Hancock Technical Opportunities Fund (JTCAX) Managed by Wellington Management Why this fund? This fund uses a flexible investment approach, with an unconstrained bottom-up stock selection process based on technical analysis. Average annual total returns as of 9/30/14¹ (%) 1 year3 year5 year10 year Life of fund 8/3/09 Class A (without sales charge) –9.69 Class A (with 5% maximum sales charge) –8.60 Expense ratio: 1.76% 13

14 Investing in alternatives with John Hancock Investments The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will vary. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling Performance information prior to 12/20/10 reflects an allocation to a different mix of underlying funds and would have been different if the fund had been allocated to its current mix of underlying funds. 2 Represents the effect of a fee waiver and/or expense reimbursement through 12/31/14 for Class A shares, and is subject to change. John Hancock Alternative Asset Allocation Fund (JAAAX) Managed by John Hancock Asset Management Why this fund? This one-stop solution invests in a diversified portfolio of more than 15 distinct alternative asset classes and strategies to help dampen volatility when combined with more traditional investments Average annual total returns as of 9/30/14¹ (%) 1 year3 year5 year10 year Life of fund 1/2/09 Class A (without sales charge) –10.65 Class A (with 5% maximum sales charge) ─ –9.66 Net expense ratio (what you pay): 1.69% 2 Gross expense ratio: 1.80% 14

15 Index and term definitions Bank loans are represented by the Barclays U.S. High-Yield Loan Index, which tracks the performance of U.S. dollar-denominated, below-investment-grade-rated corporate debt publicly issued in the U.S. domestic market. Commodities are represented by the Morningstar Commodities Index, a broadly representative benchmark of commodities traded via futures contracts on U.S. exchanges. Emerging-market bonds are represented by the J.P. Morgan Emerging Markets Bond Index (EMBI) Global Index, a market- capitalization-weighted index that tracks the performance of U.S. dollar-denominated Brady bonds, Eurobonds, and traded loans issued by sovereign and quasisovereign entities. Emerging-market stocks are represented on slide 4 by the MSCI Emerging Markets Index and by the MSCI Emerging Markets Investable Market Index on slides 7 and 8, both of which are designed to track the performance of publicly traded large- and mid- cap emerging-market stocks. Global real estate investment trusts (REITs) are represented on slide 4 by the Dow Jones Wilshire Global REIT Index, a measure of the types of global real estate securities that represent the ownership and operation of commercial or residential real estate, and on slides 7 and 8 by the FTSE NAREIT All REITs Index, a market-capitalization-weighted index that includes all tax-qualified REITs. Gold is represented by the Morningstar Gold Commodity Index, a subset of the Morningstar Commodities Index. High-yield bonds are represented by the Bank of America Merrill Lynch U.S. High Yield Master II Index, which tracks the performance of globally issued, U.S. dollar-denominated high-yield bonds. International small cap is represented by the MSCI Europe, Australasia, and Far East (EAFE) Small Cap Index tracks the performance of publicly traded small-cap stocks of companies in those regions. Total returns are calculated gross of foreign withholding tax on dividends. International stocks are represented by the MSCI Europe, Australasia, and Far East (EAFE) Growth Index tracks the performance of publicly traded growth-oriented large- and mid-cap stocks of companies in those regions. Total returns are calculated gross of foreign withholding tax on dividends. Macro strategies are represented by the HFRI Macro Index, which involves making leveraged bets on anticipated price movements of stock markets, interest rates, foreign exchange, and physical commodities. It is not possible to invest directly in an index. Past performance does not guarantee future results. 15

16 Index and term definitions Market neutral strategies are represented by the HFRI Equity Market Neutral Index, which seeks to profit by exploiting pricing inefficiencies between related equity securities, neutralizing exposure to market risk by combining long and short positions. Merger arbitrage strategies are represented by the HFRI Merger Arbitrage Index, sometimes called risk arbitrage, which involves investment in event-driven situations such as leveraged buyouts, mergers, and hostile takeovers. Natural resources are represented by the MSCI Natural Resources Index, which features equity securities of companies engaged in the natural resources industry. Relative value strategies are represented by the HFRI Relative Value Index, which maintains positions predicated on realization of a valuation discrepancy in the relationship between multiple securities. TIPS (Treasury Inflation Protected Securities) are represented by the Barclays U.S. Treasury U.S. TIPS Index, an unmanaged index that consists of inflation-protected securities issued by the U.S. Treasury. U.S. bonds are represented by the Barclays U.S. Aggregate Bond Index, which tracks the performance of U.S. investment-grade bonds in government, asset-backed, and corporate debt markets. U.S. stocks are represented by the S&P 500 Index, which tracks the performance of 500 of the largest publicly traded companies in the United States. U.S. real estate is represented by the FTSE NAREIT Equity REIT Index, an unmanaged index consisting of the most actively traded REITs. A diversified alternatives portfolio, an equal weighting of all of the above indexes. It is not possible to invest directly in an index. Past performance does not guarantee future results. 16

17 A word about risk Absolute return funds are not designed to outperform stocks and bonds in strong markets. They employ certain techniques intended to reduce risk and volatility and provide protection against a decline in assets. There is no guarantee that the fund will achieve its objectives. The use of hedging and derivatives may increase volatility and costs. The issuer or grantor of a security, or counterparty to a transaction, may be unable or unwilling to make principal, interest, or settlement payments. Currency transactions are affected by fluctuations in exchange rates, which may adversely affect the U.S. dollar value of a fund’s investments. Illiquid securities may be difficult to sell at a price approximating their value. Investments in higher-yielding, lower- rated securities include a higher risk of default. Absolute Return Currency Fund will use currency transactions to seek to achieve gains. However, losses could exceed the amount invested in the currency instruments. Technical Opportunities Fund may invest its assets in a small number of issuers. Performance could suffer significantly from adverse events affecting these issuers. A portfolio concentrated in one sector or that holds a limited number of securities may fluctuate more than a diversified portfolio. Frequent trading may increase fund transaction costs. Owning an ETF generally reflects the risks of owning the underlying securities it is designed to track. The fund may invest in IPOs, which are frequently volatile in price and may lead to increased portfolio turnover. The fund can invest up to 100% of its assets in cash, which may cause the fund to not meet its investment objective. Alternative Asset Allocation Fund’s performance depends on the advisor’s skill in determining the strategic asset class allocations, the mix of underlying funds, and the performance of those underlying funds. The underlying funds’ performance may be lower than the performance of the asset class they were selected to represent. The fund is subject to the same risks as the underlying funds in which it invests: Stocks and bonds can decline due to adverse issuer, market, regulatory, or economic developments; foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability; the securities of small-capitalization companies are subject to higher volatility than larger, more established companies; and high-yield bonds are subject to additional risks, such as increased risk of default. Fixed-income investments are subject to interest-rate and credit risk; their value will normally decline as interest rates rise or if a creditor is unable or unwilling to make principal or interest payments. 17

18 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 Investments at , or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money. John Hancock Funds, LLC ▪ Member FINRA, SIPC 601 Congress Street ▪ Boston, MA ▪ ▪ jhinvestments.com NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY. MF204444DPCPPT 10/14 18


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