John Hancock

Hedged Equity & Income Fund

Ticker: HEQ
Semiannual report 6/30/17

Managed distribution plan

The fund has adopted a managed distribution plan (Plan). Under the Plan, the fund makes quarterly distributions of an amount equal to $0.376 per share, which will be paid quarterly until further notice. The fund may make additional distributions: (i) for purposes of not incurring federal income tax at the fund level of investment company taxable income and net capital gain, if any, not included in such regular distributions; and (ii) for purposes of not incurring federal excise tax on ordinary income and capital gain net income, if any, not included in such regular distributions.

The Plan provides that the Board of Trustees of the fund may amend the terms of the Plan or terminate the Plan at any time without prior notice to the fund's shareholders. The Plan is subject to periodic review by the fund's Board of Trustees.

You should not draw any conclusions about the fund's investment performance from the amount of the fund's distributions or from the terms of the fund's Plan. The fund's total return at NAV is presented in the Financial highlights section.

With each distribution that does not consist solely of net income, the fund will issue a notice to shareholders and an accompanying press release that will provide detailed information regarding the amount and composition of the distribution and other related information. The amounts and sources of distributions reported in the notice to shareholders are only estimates and are not provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. The fund may, at times, distribute more than its net investment income and net realized capital gains; therefore, a portion of your distribution may result in a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the fund is paid back to you. A return of capital does not necessarily reflect the fund's investment performance and should not be confused with yield or income.

Dear shareholder,

Global financial markets extended their run of positive performance in recent months, with particular strength coming from outside the United States. Overseas markets generally have been attracting investors with their lower valuations and improving corporate fundamentals, while monetary policy remains extremely accommodative. U.S. stocks also generated positive returns so far this year and have benefited from stronger-than-expected corporate earnings. Fixed-income results were more muted, although standout returns came from convertible securities and emerging-market bonds. Interest-rate sensitive bonds in the United States remain most vulnerable, as the U.S. Federal Reserve withdraws economic stimulus and follows through with interest rate increases as is expected.

Advancing the interests of fund shareholders

One of our primary goals is to advance the interests of our fund shareholders wherever possible. To that end, we recently announced our third round of expense reductions this year, targeting six mutual funds and two closed-end funds that together represent more than $6.9 billion in assets under management. Details can be found at jhinvestments.com.

Recently, we learned that fund researcher Morningstar, Inc. formally recognized our shareholder friendly initiatives by upgrading our parent pillar rating—a key component of the Morningstar Analyst Rating system—to positive, the highest possible rating. The firm evaluates select funds and their parent firms based on intensive research, including on-site due diligence. They focused on such factors as whether our portfolio managers invest meaningfully in the funds they manage, the quality of our risk management, our corporate culture, and our commitment to recognizing shareholder interests—in other words, how good we are as stewards of investor capital. We're pleased to be recognized by Morningstar in this way and to continue our work of furthering the interests of our fund shareholders. 

On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and to thank existing shareholders for the continued trust you've placed in us.

Sincerely,

Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments

This commentary reflects the CEO's views, which are subject to change at any time. Investing involves risks, including the potential loss of principal. Diversification does not guarantee a profit or eliminate the risk of a loss. For more up-to-date information, please visit our website at jhinvestments.com.

John Hancock
Hedged Equity & Income Fund

Table of contents

INVESTMENT OBJECTIVE

The fund seeks to provide total return with a focus on current income and gains and also consisting of long-term capital appreciation.

AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/17 (%)

The MSCI All Country World Index (gross of foreign withholding tax on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.

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.

The fund's performance at net asset value (NAV) is different from the fund's performance at closing market price because the closing market price is subject to the dynamics of secondary market trading. If a shareholder purchases shares at a time when the market price is at a premium to the NAV or sells shares at a time when the market price is at a discount to the NAV, the shareholder may sustain losses.

The performance data contained within this material represents past performance, which does not guarantee future results.

PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS

Improving earnings, global growth boosted equities

Global stocks maintained their positive trajectory during the first half of the year, bolstered by solid global growth and improving corporate earnings.

The fund's equity and high-yield exposure hurt relative results

The fund had a positive absolute return but underperformed a comparative index, the MSCI All Country (AC) World Index, owing primarily to the negative impact of equity sector allocations and high-yield bond exposure.

Hedging strategies also detracted from performance

In another strong period for U.S. and global equities, the fund's covered call writing and beta hedge strategies had negative impacts on relative results.

PORTFOLIO COMPOSITION AS OF 6/30/17 (%)

A note about risks

As is the case with all closed-end funds, shares of this fund may trade at a discount or a premium to the fund's net asset value (NAV). An investment in the fund is subject to investment and market risks, including the possible loss of the entire principal invested. There is no guarantee prior distribution levels will be maintained, and distributions may include a substantial return of capital. For the fiscal year ended December 31, 2016, the fund's aggregate distributions included a return of capital of $0.85 per share, or 56.8% of aggregate distributions. A return of capital is the return of all or a portion of a shareholder's investment in the fund. The fund's prospectus includes additional information regarding returns of capital and the risks associated with distributions made by the fund, including potential tax implications. Fixed-income investments are subject to interest-rate risk; their value will normally decline as interest rates rise. An issuer of securities held by the fund may default, have its credit rating downgraded, or otherwise perform poorly, which may affect fund performance. Derivatives transactions, including hedging and other strategic transactions, may increase a fund's volatility and could produce disproportionate losses, potentially more than the fund's principal investment. Liquidity—the extent to which a security may be sold or a derivative position closed without negatively affecting its market value—may be impaired by reduced trading volume, heightened volatility, rising interest rates, and other market conditions. Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. Investments in higher-yielding, lower-rated securities include a higher risk of default. The primary risks associated with the use of futures contracts and options are imperfect correlation, unanticipated market movement, and counterparty risk.

An interview with Portfolio Manager Kent M. Stahl, CFA, Wellington Management Company LLP

What were the main factors driving market performance during the six months ended June 30, 2017?

Global equities ended the first half of the year with an 11.82% gain, as measured by the fund's comparative index, the MSCI All Country World Index. In the first quarter, despite escalating European political risk and uncertainty surrounding President Trump's protectionist trade agenda, investors bid up risk assets amid increasing optimism about global economic growth. Solid fourth-quarter European GDP growth and strengthening global manufacturing data helped to boost risk appetites. On the monetary policy front, the market was unfazed by the U.S. Federal Reserve (Fed) raising rates by 0.25% in March, a well-telegraphed move. While risks stemming from the Trump administration's ambitious U.S. legislative agenda and European elections were top of mind, economic data releases across most major economies remained robust, helping the rally to roll on.

In the second quarter, despite heightened geopolitical risk and European political uncertainty, risk assets remained resilient as solid global economic data and strong year-over-year corporate earnings growth bolstered investors' optimism. Market participants breathed a sigh of relief in May after independent centrist Emmanuel Macron won the French presidential election by a large margin, a victory widely seen as supportive for the stability of the European Union. Continued evidence of an upswing in global growth helped to maintain bullish sentiment. European growth indicators signaled strong regional momentum. In Asia, Chinese manufacturing and services data surprised to the upside. Meanwhile, U.S. fiscal stimulus hopes faded near the end of the quarter after a vote on the healthcare reform bill was delayed due to insufficient support from Senate Republicans. Investors appeared to be increasingly aware that the Trump administration may have greater difficulty advancing its agenda. The Fed raised rates by another 0.25% in June.

During the six-month period, non-U.S. equities outperformed U.S. equities, and emerging-market equities outperformed their developed-market counterparts. Within the MSCI All Country World Index, 10 sectors posted positive returns; the information technology, healthcare, and industrials sectors gained the most, while the energy sector declined.

The fund underperformed for the period. What trends detracted from performance?

The fund posted positive total returns at net asset value, but underperformed a comparative index. The shortfall resulted from the fund's high-yield bond strategy and equity strategy. Its option overlay and beta hedge strategy also detracted from relative performance, as the S&P 500 Index and MSCI EAFE Index advanced during the period.

Allocation among sectors in the fund's equity strategy, a result of the bottom-up stock selection process, detracted from relative results, most notably due to an overweight exposure to energy, the worst-performing sector in the index, and an underweight exposure to information technology, the best-performing sector in the index. Stock selection was additive, particularly within the consumer staples, industrials, and financials sectors. This was partially offset by weaker selection in the information technology, healthcare, and materials sectors.

Which specific holdings and strategies had the biggest negative impact?

Within the equity strategy, detractors from relative performance during the period included three U.S.-based companies, semiconductor manufacturer QUALCOMM, Inc., semiconductor chip designer and manufacturer Intel Corp., and integrated oil and gas firm Chevron Corp.

SECTOR COMPOSITION AS OF 6/30/17 (%)

Written calls on the S&P 500 Index detracted from relative results. The fund received premiums from writing calls during the period, although the premiums collected were not enough to offset the losses on the calls given rising U.S. equity market over the period. The beta hedge, which is designed to reduce equity exposure through selling futures on the S&P 500 Index and the MSCI EAFE Index, also detracted from results as both indexes rose during the period.

Additionally, the fund held exposure to global high-yield fixed income to help aid overall income-generating capabilities. This allocation detracted from relative performance.

What securities and strategies contributed to relative performance?

Within the equity strategy, Catcher Technology Company, Ltd., a Taiwan-based manufacturer of casings for mobile devices, Unilever NV, a Netherlands-based maker of personal and household care products, and Philip Morris International, Inc., a U.S.-based global tobacco company, were among the top contributors.

How was the fund positioned at the end of the period?

The equity portfolio was overweight in the utilities, telecommunication services, energy, real estate, financials, and materials sectors, while underweight in the information technology, consumer discretionary, healthcare, consumer staples, and industrials sectors. From a regional standpoint, the fund had overweight exposure to Europe (including the United Kingdom) and Japan, while underweight in the emerging markets, Pacific basin (excluding Japan), and North America.

We expect to see a continuation of pro-cyclical growth outside the United States, as growth in the U.S. slows. For the first time in several years, non-U.S. markets are leading global equity returns. Macroeconomic factors have been a significant driver of equity returns in Europe, while U.S. and Japanese markets have been driven more by equity risk factors and fundamentals. We expect to see

TOP 10 HOLDINGS AS OF 6/30/17 (%)

From a factor perspective, we expect growth to outperform safety and low volatility factors across geographies. Market breadth in emerging markets remains narrow, as there is a relatively small number of stocks that are meaningfully contributing to emerging-market performance. However, we anticipate that market participation will broaden with an increasing number of stocks contributing to performance. As a result, we expect to see continued improvement in the environment.

MANAGED BY

	Kent M. Stahl, CFA On the fund since 2011 Investing since 1985
	Gregg R. Thomas, CFA On the fund since 2011 Investing since 1993

COUNTRY COMPOSITION AS OF 6/30/17 (%)