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- 21416
John Hancock Tax-Advantaged Dividend Income 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: | October 31 |
Date of reporting period: | April 30, 2015 |
ITEM 1. REPORT TO SHAREHOLDERS.
John Hancock Tax-Advantaged Dividend Income Fund A message to shareholders Dear fellow shareholder, U.S. economic growth continued, despite recent weakness caused
largely by the harsh winter weather. The market expansion that began
in 2009 so far remains intact. Positive economic and business news
has translated into good news for U.S. investors, with continued
solid results for a range of U.S. equity indexes in recent months.
Many fixed-income indexes have also seen positive returns in this
environment. Outside of the United States, economies are struggling to replicate
the kind of success we have enjoyed at home. Central banks across
Europe and Asia have announced dramatic monetary policy measures to
promote economic activitysimilar to the monetary policy activity of
the U.S. Federal Reserve in recent years. As was the case in the
United States beginning in 2009, many international markets have
rallied in advance of sustained economic progress. China's stock
market in particular has delivered extraordinary gains. In fact, our
network of asset managers and research firms believes that government
and central bank stimulus may prove to be the biggest driver of
international market returns in 2015. While maintaining adequate portfolio diversification is vital in any
market environment, we believe it is especially important today given
the unprecedented central bank interventions of the past few years
and the very real geopolitical risk around the world. The uncertainty
of today's global financial markets is one of the reasons we at John
Hancock Investments believe it is important for long-term portfolios
to have exposure to a diverse range of investments. Now may be a good
time to discuss the resilience of your portfolio with your financial
advisor. 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 This commentary reflects the CEO's views as of April 30, 2015. They
are subject to change at any time. For more up-to-date information,
you can visit our website at jhinvestments.com. John Hancock 1 INVESTMENT OBJECTIVE The fund seeks to provide a high level of after-tax total return from
dividend income and gains and capital appreciation. AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/15 (%)
The index shown is a blended index that is 55% Bank of America
Merrill Lynch Preferred Stock DRD Eligible Index and 45% S&P 500
Utilities Index. The Bank of America Merrill Lynch Preferred Stock DRD Eligible Index
consists of investment-grade fixed rate U.S. dollar denominated
preferred securities and fixed-to-floating rate securities. The index
includes securities having a minimum remaining term of at least one
year, both Dividend Received Deduction (DRD) eligible and non-DRD
eligible preferred stock and senior debt. The S&P 500 Utilities Index is a capitalization-weighted index that
consists of companies in the S&P 500 Index that are primarily
involved in water, electrical power, and natural gas distribution
industries. It is not possible to invest directly in an index. The fund's most recent performance and current annualized
distribution rate can be found at www.jhinvestments.com. The performance data contained within this material represents past
performance, which does not guarantee future results. 2 PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS Most dividend-paying stocks posted modest gains Amid heightened volatility in global financial markets,
dividend-paying securities benefited from strong demand and limited
supply. Utilities holdings performed well The fund benefited from holdings in the utilities sector, the source
of some of its best performers. Energy companies detracted The collapse in oil prices led to weak performance of the fund's
energy sector investments. PORTFOLIO COMPOSITION AS OF 4/30/15 (%)
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, which may
increase the potential tax gain or reduce the potential tax loss of a
subsequent sale of shares of the fund. Fixed-income investments are
subject to interest-rate and credit risk; their value will normally
decline as interest rates rise or if a creditor, grantor, or
counterparty is unable or unwilling to make principal, interest, or
settlement payments. Investments in higher-yielding, lower-rated
securities include a higher risk of default. An issuer of securities
held by the fund may default, have its credit rating downgraded, or
otherwise perform poorly, which may affect fund performance. Certain
market conditions, including reduced trading volume, heightened
volatility, and rising interest rates, may impair liquidity, the
ability of the fund to sell securities or close derivative positions
at advantageous prices. The fund's use of leverage creates additional
risks, including greater volatility of the fund's NAV, market price,
and returns. There is no assurance that the fund's leverage strategy
will be successful. Focusing on a particular industry or sector may
increase the fund's volatility and make it more susceptible to
market, economic, and regulatory risks as well as other factors
affecting those industries or sectors. 3 An interview with Portfolio Manager Gregory K. Phelps, John Hancock
Asset Management a division of Manulife Asset Management (US) LLC Gregory K. Phelps Most dividend-paying securities posted modest gains during the
six-month period ended April 30, 2015. What factors drove this performance? Amid heightened volatility in global financial markets,
dividend-paying preferred securities benefited throughout much of the
six-month period from strong demand and limited supply. Early in the
period, many preferred securitiesa key area of emphasis for the
fundwithstood growing uncertainty about the strength of the global
economy and occasional concern that the U.S. Federal Reserve (Fed)
might raise interest rates sooner than anticipated. In the final two
months of 2014, preferred securities performed well relative to
common stocks, as declining long-term U.S. Treasury and European
government bond yields helped further bolster demand for preferred
securities. Demand was also fueled by investors seeking a haven from
equity market volatility amid weakening global economic growth and
the collapse in oil and other commodity prices. This trend continued
into 2015. Continued volatility hit common stocks, as investors grappled with
concerns about the impact of a stronger dollar and lower oil prices
on corporate earnings growth. Meanwhile, U.S. Treasury bond yields
slumped, with the 30-year yield hitting a record all-time low since
the government began auctioning off its debt in 1977. Furthermore,
the Fed announced it would probably not raise interest rates until
mid- to late 2015 at the earliest, which provided further support for
preferreds. Together, equity market volatility, low government bond
yields, and the receding threat of imminent U.S. interest-rate hikes
continued to support demand for preferred securities. Throughout the
period, the supply of preferreds remained constrained. What's your outlook for dividend-paying securities? Although we think it's unlikely that dividend-paying securities will
produce the types of gains during 2015 that they enjoyed in 2014, we
believe they have a lot working in their favor. We don't expect the
Fed to raise interest rates before the latter part of 2015, given the
stubborn economic weakness in Europe, a slowdown in U.S. growth, and
flagging economies in emerging markets. We expect 4 What holdings contributed to performance? The utilities sector was the source of many of the fund's best
performers during the six-month period, with preferred securities
holdings issued by SCE Trust II and PPL Capital Funding, Inc. among
the leaders. Each generated better-than-average price gains, helped
by strong demand for the securities from investors seeking
higher-yielding securities from industries not highly correlated with
the larger economic cycle. While investors' appetite for
higher-yielding investments boosted demand, the comparative lack of
supply of these issues also helped. Many utilities redeemed their
outstanding preferred shares years ago, and those still outstanding
benefited from relative scarcity SECTOR COMPOSITION AS OF 4/30/15 (%)
5 What hurt the fund's performance? Holdings in the common stocks of oil companies, including Royal Dutch
Shell PLC, Chevron Corp., and ConocoPhillips, detracted, suffering
price declines for the six-month period as oil prices slumped. While
these stocks staged a partial rebound late in the period when oil
prices moved higher, the holdings still suffered losses for the
six-month period overall. Where are you finding opportunities of late? Although we took advantage of opportunities to purchase a few new
positions we felt were attractively valued, there weren't any major
changes to the portfolio during the period. That said, we trimmed
positions in UIL and Integrys Energy Group, Inc.another company that
benefited from a takeover in 2014and used the funds to add to some
of the utility common stocks that we viewed as attractive valuations.
Still, utility exposure ended the period slightly lower than it had
been six months ago. TOP 10 ISSUERS AS OF 4/30/15 (%)
6 Can you tell us about an upcoming management change? Effective August 31, 2015, Mark T. Maloney will be retiring. We have promoted Joseph Bozoyan,
CFA, to replace him. Joe was most recently a senior investment
analyst with John Hancock Investments who provided research on all
strategies managed by the intrinsic value team. We look forward to
working with Joe, and we wish Mark the best. MANAGED BY
7 Fund's investments
Financial statements STATEMENT OF ASSETS AND LIABILITIES 4-30-15 (unaudited)
STATEMENT OF OPERATIONS For the six months ended 4-30-15 (unaudited)
STATEMENTS OF CHANGES IN NET ASSETS
STATEMENT OF CASH FLOWS For the six months ended 4-30-15 (unaudited)
Financial highlights
Note 1 Organization John Hancock Tax-Advantaged Dividend Income Fund (the fund) is a
closed-end management investment company organized as a Massachusetts
business trust and registered under the Investment Company Act of
1940, as amended (the 1940 Act). Note 2 Significant accounting policies The financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of
America (US GAAP), which require management to make certain estimates
and assumptions as of the date of the financial statements. Actual
results could differ from those estimates and those differences could
be significant. The fund qualifies as an investment company under
Topic 946 of Accounting Standards Codification of US GAAP. Events or transactions occurring after the end of the fiscal period
through the date that the financial statements were issued have been
evaluated in the preparation of the financial statements. The
following summarizes the significant accounting policies of the fund: Security valuation. Investments are stated at value as of the close of regular trading on
the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In order to value the securities, the fund uses the
following valuation techniques: Equity securities held by the fund
are valued at the last sale price or official closing price on the
exchange where the security was acquired or most likely will be sold.
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. Options listed on an exchange are valued at the mean
of the most recent bid and ask prices from the exchange where the
option was acquired or most likely will be sold. Swaps are valued
using evaluated prices obtained from an independent pricing vendor.
Futures contracts are valued at settlement prices, which are the
official closing prices published by the exchange on which they
trade. Foreign securities and currencies are valued in U.S. dollars,
based on foreign currency exchange rates supplied by an independent
pricing vendor. Securities that trade only in the over-the-counter
(OTC) market are valued using bid prices. 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. 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 may result in transfers
into or out of an assigned level within the disclosure hierarchy. 18 The following is a summary of the values by input classification of
the fund's investments as of April 30, 2015, by major security category or type:
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 Statement of assets and liabilities. 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. Security transactions and related investment income. Investment security transactions are accounted for on a trade date
plus one basis for daily net asset value calculations. However, for
financial reporting purposes, investment transactions are reported on
trade date. Interest income is accrued as earned. Interest income
includes coupon interest and amortization/accretion of
premiums/discounts on debt securities. Debt obligations may be placed
in a non-accrual status and related interest income may be reduced by
stopping current accruals and writing off interest receivable when
the collection of all or a portion of interest has become doubtful.
Dividend income is recorded on the ex-date, except for dividends of
foreign securities where the dividend may not be known until after
the ex-date. In those cases, dividend income, net of withholding
taxes, is recorded when the fund becomes aware of the dividends.
Foreign taxes are provided for based on the fund's understanding of
the tax rules and rates that exist in the foreign markets in which it
invests. Gains and losses on securities sold are determined on the
basis of identified cost and may include proceeds from litigation. 19 Foreign taxes. The fund may be subject to withholding tax on income and/or capital
gains or repatriation taxes imposed by certain countries in which the
fund invests. Taxes are accrued based upon investment income,
realized gains or unrealized appreciation. Overdrafts. Pursuant to the custodian agreement, the fund's custodian may, in its
discretion, advance funds to the fund to make properly authorized
payments. When such payments result in an overdraft, the fund is
obligated to repay the custodian for any overdraft, including any
costs or expenses associated with the overdraft. The custodian may
have a lien, security interest or security entitlement in any fund
property that is not otherwise segregated or pledged, to the maximum
extent permitted by law, to the extent of any overdraft. Expenses. Within the John Hancock group of funds complex, expenses that are
directly attributable to an individual fund are allocated to such
fund. Expenses that are not readily attributable to a specific fund
are allocated among all funds in an equitable manner, taking into
consideration, among other things, the nature and type of expense and
the fund's relative net assets. Expense estimates are accrued in the
period to which they relate and adjustments are made when actual
amounts are known. Federal income taxes. The fund intends to continue to qualify as a regulated investment
company by complying with the applicable provisions of the Internal
Revenue Code and will not be subject to federal income tax on taxable
income that is distributed to shareholders. Therefore, no federal
income tax provision is required. Under the Regulated Investment Company Modernization Act of 2010, the
fund is permitted to carry forward capital losses incurred in taxable
years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those taxable
years will be required to be utilized prior to the losses incurred in
pre-enactment taxable years. As a result of this ordering rule,
pre-enactment capital loss carryforwards may be more likely to expire
unused. Additionally, post-enactment capital losses that are carried
forward will retain their character as either short-term or long-term
capital losses rather than being considered all short-term as under
previous law. For federal income tax purposes, as of October 31, 2014, the fund has a capital loss carryforward of $34,125,301 available
to offset future net realized capital gains, which expires on October 31, 2017. As of October 31, 2014, the fund had no uncertain tax positions that would require
financial statement recognition, derecognition or disclosure. The
fund's federal tax returns are subject to examination by the Internal
Revenue Service for a period of three years. Distribution of income and gains. Distributions to shareholders from net investment income and net
realized gains, if any, are recorded on the ex-date. The fund
generally declares and pays dividends monthly and capital gain
distributions, if any, annually. Such distributions, on a tax basis, are determined in conformity with
income tax regulations, which may differ from US GAAP. Capital accounts within the financial statements are adjusted for
permanent book-tax differences. These adjustments have no impact on
net assets or the results of operations. Temporary book-tax
differences, if any, will reverse in a subsequent period. Book-tax
differences are primarily attributable to wash sale loss deferrals
and derivative transactions. Statement of cash flows. Information on financial transactions that have been settled through
the receipt and disbursement of cash is presented in the Statement of
cash flows. The cash amount shown in the Statement of cash flows is
the amount included in the fund's Statement of assets and liabilities
and represents the cash on hand at the fund's custodian and does not
include any short-term investments or cash segregated at the
custodian for swap contracts and at broker for futures contracts. 20 Note 3 Derivative instruments The fund may invest in derivatives in order to meet its investment
objectives. Derivatives include a variety of different instruments
that may be traded in the 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. Certain swaps are typically traded through the OTC market and may be
regulated by the Commodity Futures Trading Commission (the CFTC).
Derivative counterparty risk is managed through an ongoing evaluation
of the creditworthiness of all potential counterparties and, if
applicable, designated clearing organizations. The fund attempts to
reduce its exposure to counterparty risk for derivatives traded in
the OTC market, whenever possible, by entering into an International
Swaps and Derivatives Association (ISDA) Master Agreement with each
of its OTC counterparties. The ISDA gives each party to the agreement
the right to terminate all transactions traded under the agreement if
there is certain deterioration in the credit quality or contractual
default of the other party, as defined in the ISDA. Upon an event of
default or a termination of the ISDA, the non-defaulting party has
the right to close out all transactions and to net amounts owed. As defined by the ISDA, the fund may have collateral agreements with
certain counterparties to mitigate counterparty risk on OTC
derivatives. Subject to established minimum levels, collateral for
OTC transactions is generally determined based on the net aggregate
unrealized gain or loss on contracts with a particular counterparty.
Collateral pledged to the fund is held in a segregated account by a
third-party agent or held by the custodian bank for the benefit of
the fund and can be in the form of cash or debt securities issued by
the U.S. government or related agencies; collateral posted by the
fund for OTC transactions is held in a segregated account at the
fund's custodian and is noted in the accompanying Fund's investments,
or if cash is posted, on the Statement of assets and liabilities. The
fund's maximum risk of loss due to counterparty risk is equal to the
asset value of outstanding contracts offset by collateral received. Futures and certain options are traded or cleared on an exchange.
Exchange-traded transactions generally present less counterparty risk
to a fund than OTC transactions. The exchange stands between the fund
and the broker to the contract and therefore, credit risk is
generally limited to the failure of the exchange or clearinghouse and
the clearing member. Futures. A futures contract is a contractual agreement to buy or sell a
particular currency or financial instrument at a pre-determined price
in the future. Risks related to the use of futures contracts include
possible illiquidity of the futures markets, contract prices that can
be highly volatile and imperfectly correlated to movements in the
underlying financial instrument and potential losses in excess of the
amounts recognized on the Statement of assets and liabilities. Use of
long futures contracts subjects the fund to the risk of loss up to
the notional value of the futures contracts. Use of short futures
contracts subjects the fund to unlimited risk of loss. Upon entering into a futures contract, the fund is required to
deposit initial margin with the broker in the form of cash or
securities. The amount of required margin is generally based on a
percentage of the contract value; this amount is the initial margin
for the trade. The margin deposit must then be maintained at the
established level over the life of the contract. Futures margin
receivable / payable is included on the Statement of assets and
liabilities. Futures contracts are marked-to-market daily and an
appropriate payable or receivable for the change in value (variation
margin) and unrealized gain or loss is recorded by the fund. When the
contract is closed, the fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was
opened and the value at the time it was closed. During the six months ended April 30, 2015, the fund used futures contracts to manage against anticipated
interest rate changes. During the six months ended April 30, 2015, the fund held futures contracts with notional values ranging from
$123.8 million to $128.3 million, as measured at each quarter end.
The following table summarizes the contracts held at April 30, 2015. 21
Notional basis refers to the contractual amount agreed upon at
inception of open contracts; notional value represents the current
value of the open contract. Options. There are two types of options, put options and call options.
Options are traded either over-the-counter or on an exchange. A call
option gives the purchaser of the option the right to buy (and the
seller the obligation to sell) the underlying instrument at the
exercise price. A put option gives the purchaser of the option the
right to sell (and the writer the obligation to buy) the underlying
instrument at the exercise price. Writing puts and buying calls may
increase the fund's exposure to changes in the value of the
underlying instrument. Buying puts and writing calls may decrease the
fund's exposure to such changes. Risks related to the use of options
include the loss of premiums, possible illiquidity of the options
markets, trading restrictions imposed by an exchange and movements in
underlying security values, and for written options, potential losses
in excess of the amounts recognized on the Statement of assets and
liabilities. In addition, over-the-counter options are subject to the
risks of all over-the-counter derivatives contracts. When the fund purchases an option, the premium paid by the fund is
included in the Fund's investments and subsequently
"marked-to-market" to reflect current market value. If the purchased
option expires, the fund realizes a loss equal to the cost of the
option. If the fund enters into a closing sale transaction, the fund
realizes a gain or loss, depending on whether proceeds from the
closing sale are greater or less than the original cost. When the
fund writes an option, the premium received is included as a
liability and subsequently "marked-to-market" to reflect the current
market value of the option written. Premiums received from writing
options that expire unexercised are recorded as realized gains.
Premiums received from writing options which are exercised or are
closed are added to or offset against the proceeds or amount paid on
the transaction to determine the realized gain or loss. If a put
option on a security is exercised, the premium received reduces the
cost basis of the securities purchased by the fund. During the six months ended April 30, 2015, the fund wrote option contracts to hedge against anticipated
changes in securities markets and to generate potential income. The
following tables summarize the fund's written options activities
during the six months ended April 30, 2015 and the contracts held at April 30, 2015.
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 22 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. Entering into swap agreements involves, to varying degrees, elements
of credit, market and documentation risk that may amount to values
that are in excess of the amounts recognized on the Statement of
assets and liabilities. Such risks involve the possibility that there
will be no liquid market for the swap, or that a counterparty may
default on its obligation or delay payment under the swap terms. The
counterparty may disagree or contest the terms of the swap. Market
risks may also accompany the swap, including interest rate risk. The
fund may also suffer losses if it is unable to terminate or assign
outstanding swaps or reduce its exposure through offsetting
transactions. During the six months ended April 30, 2015, the fund used interest rate swaps to manage against anticipated
interest rate changes. The following table summarizes the interest
rate swap contracts held as of April 30, 2015.
(a) At 4-30-15, the 3-Month LIBOR rate was 0.27875% No interest rate swap positions were entered into or closed during
the six months ended April 30, 2015. Fair value of derivative instruments by risk category The table below summarizes the fair value of derivatives held by the fund at April 30, 2015 by risk category:
Reflects cumulative appreciation/depreciation on futures as
disclosed in Note 3. Only the period end variation margin is
separately disclosed on the Statement of assets and liabilities. Effect of derivative instruments on the Statement of operations The table below summarizes the net realized gain (loss) included in
the net increase (decrease) in net assets from operations, classified
by derivative instrument and risk category, for the six months ended April 30, 2015:
23 The table below summarizes the net change in unrealized appreciation
(depreciation) included in the net increase (decrease) in net assets
from operations, classified by derivative instrument and risk
category, for the six months ended April 30, 2015:
Note 4 Guarantees and indemnifications Under the fund's organizational documents, its Officers and Trustees
are indemnified against certain liabilities arising out of the
performance of their duties to the fund. Additionally, in the normal
course of business, the fund enters into contracts with service
providers that contain general indemnification clauses. The fund's
maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the fund that have not
yet occurred. The risk of material loss from such claims is
considered remote. Note 5 Fees and transactions with affiliates John Hancock Advisers, LLC (the Advisor) serves as investment advisor
for the fund. The Advisor is an indirect, wholly owned subsidiary of
Manulife Financial Corporation (MFC). Management fee. The fund has an investment management agreement with the Advisor
under which the fund pays a daily management fee to the Advisor on an
annual basis, equal to 0.75% of the fund's average daily managed
assets (net assets plus borrowings under the Credit Facility
Agreement) (see Note 8). The Advisor has a subadvisory agreement with
John Hancock Asset Management a division of Manulife Asset Management
(US) LLC, an indirectly owned subsidiary of MFC and an affiliate of
the Advisor, and a subadvisory agreement with Analytic Investors,
LLC. The fund is not responsible for payment of the subadvisory fees. The Advisor has contractually agreed to waive a portion of its
management fee and/or reimburse expenses for certain funds of the
John Hancock complex, including the fund (the participating
portfolios). 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. During the six
months ended April 30, 2015, this waiver amounted to 0.01% of the fund's average net assets on
an annualized basis. This arrangement may be amended or terminated at
any time by the Advisor upon notice to the fund and with the approval
of the Board of Trustees. The expense reductions described above amounted to $49,420 for the
six months ended April 30, 2015. The investment management fees, including the impact of the waivers
and reimbursements as described above, incurred for the six months
ended April 30, 2015 were equivalent to a net annual effective rate of 0.74% of the
fund's average daily managed assets. Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for
all expenses associated with providing the administrative, financial,
legal, accounting and recordkeeping services to the fund, including
the preparation of all tax returns, periodic reports to shareholders
and regulatory reports, among other services. These accounting and
legal services fees incurred for the six months ended April 30, 2015 amounted to an annual rate of 0.01% of the fund's average daily managed assets. Trustee expenses. The fund compensates each Trustee who is not an employee of the
Advisor or its affiliates. Each independent Trustee receives from the
fund and the other John Hancock closed-end funds an annual retainer.
In addition, Trustee out-of-pocket expenses are allocated to each
fund based on its net assets relative to other funds within the John
Hancock group of funds complex. 24 Note 6 Fund share transactions In
December 2007, the Board of Trustees approved a share repurchase
plan, which was subsequently reviewed and approved by the Board of
Trustees each year in December. Under the current share repurchase
plan, the fund may purchase in the open market up to 10% of its
outstanding common shares as of December 31, 2014. The current share repurchase plan will remain in effect between January 1, 2015 and December 31, 2015. During the six months ended April 30, 2015, there were no shared repurchased. For the year ended October 31, 2014, the fund repurchased 1.30% of its common shares outstanding under
the repurchase plan. The weighted average discount per share on these
repurchases amount to 11.10% for the year ended October 31, 2014. Shares repurchased and corresponding dollar amounts are included on
the Statement of changes in net assets. The anti-dilutive impacts of
these share repurchases are included in the Financial highlights. Note 7 Leverage risks The fund utilizes a Credit Facility Agreement (CFA) to increase its
assets available for investment. When the fund leverages its assets,
common shareholders bear the fees associated with the CFA and have
potential to benefit or be disadvantaged from the use of leverage.
The Advisor's fee is also increased in dollar terms from the use of
leverage. Consequently, the fund and the Advisor may have differing
interests in determining whether to leverage the fund's assets.
Leverage creates risks that may adversely affect the return for the
holders of common shares, including: the likelihood of greater volatility of net asset value and market
price of common shares; fluctuations in the interest rate paid for the use of the credit facility; increased operating costs, which may reduce the fund's total return; the potential for a decline in the value of an investment acquired
through leverage, while the fund's obligations under such leverage
remains fixed; and the fund is more likely to have to sell securities in a volatile
market in order to meet asset coverage or other debt compliance
requirements. To the extent the income or capital appreciation derived from
securities purchased with funds received from leverage exceeds the
cost of leverage, the fund's return will be greater than if leverage
had not been used, conversely, returns would be lower if the cost of
the leverage exceeds the income or capital appreciation derived. In addition to the risks created by the fund's use of leverage, the
fund is subject to the risk that it would be unable to timely, or at
all, obtain replacement financing if the CFA is terminated. Were this
to happen, the fund would be required to de-leverage, selling
securities at a potentially inopportune time and incurring tax
consequences. Further, the fund's ability to generate income from the
use of leverage would be adversely affected. Note 8 Credit facility agreement The fund has entered into a CFA with Credit Suisse Securities (USA)
LLC (CSSU), pursuant to which the fund borrows money to increase its
assets available for investment. In accordance with the 1940 Act, the
fund's borrowings under the CFA will not exceed 33 1/3% of the fund's
managed assets (net assets plus borrowings) at the time of any
borrowing. The fund pledges a portion of its assets as collateral to secure
borrowings under the CFA. Such pledged assets are held in a special
custody account with the fund's custodian. The amount of assets
required to be pledged by the fund is determined in accordance with
the CFA. The fund retains the benefits of ownership of assets pledged
to secure borrowings under the CFA. Interest charged is at the rate
of one month LIBOR (London Interbank Offered Rate) plus 0.70% and is
payable monthly. Prior to January 1, 2015, the interest rate payable under the CFA was at the rate of three
month LIBOR plus 0.41% (paid monthly). As of April 30, 2015, the fund had borrowings of $427,900,000 at an interest rate of
0.88%, which is reflected in the Credit facility agreement payable on
the Statement of assets and liabilities. During the six months ended April 30, 2015, the average borrowings under the CFA and the effective average
interest rate were $427,900,000 and 0.81%, respectively. 25 The fund may terminate the CFA with CSSU at any time. If certain
asset coverage and collateral requirements or other covenants are not
met, the CFA could be deemed in default and result in termination.
Absent a default or facility termination event, CSSU generally is
required to provide the fund with 270 calendar days' notice before
terminating or amending the CFA. Note 9 Purchase and sale of securities Purchases and sales of securities, other than short-term investments,
amounted to $37,042,595 and $56,829,980, respectively, for the six
months ended April 30, 2015. Note 10 Industry or sector risk The fund generally invests a large percentage of its assets in one or
more particular industries or sectors of the economy. If a large
percentage of the fund's assets are economically tied to a single or
small number of industries or sectors of the economy, the fund will
be less diversified than a more broadly diversified fund, and it may
cause the fund to underperform if that industry or sector
underperforms. In addition, focusing on a particular industry or
sector may make the fund's net asset value more volatile. Further, a
fund that invests in particular industries or sectors is particularly
susceptible to the impact of market, economic, regulatory and other
factors affecting those industries or sectors. 26 Unaudited Investment objective and policy The fund is a closed-end, diversified management investment company,
common shares of which were initially offered to the public on February 25, 2004 and are publicly traded on the New York Stock Exchange (the NYSE).
The fund's investment objective is to provide a high level of
after-tax total return from dividend income and gains and capital
appreciation. The fund utilizes a credit facility agreement to
increase its assets available for investments. Under normal market conditions, the fund will invest at least 80% of
its assets (net assets plus borrowings for investment purposes) in
dividend-paying common and preferred securities that the Subadvisor
believes at the time of acquisition are eligible to pay dividends
which, for individual shareholders, qualify for U.S. federal income
taxation at rates applicable to long-term capital gains, which are
currently taxed to noncorporate taxpayers at a maximum rate of 20%
(15% or 0% for individuals in certain tax brackets) (tax-advantaged
dividends). Tax-advantaged dividends generally include dividends from
domestic corporations and dividends from foreign corporations that
meet certain specified criteria. The fund generally can pass the tax
treatment of tax-advantaged dividends it receives through to its
common shareholders. The fund may write (sell) covered call index
options on up to 30% of the value of the fund's total assets. Dividends and distributions During the six months ended April 30, 2015, distributions from net investment income totaling $0.726 per share
were paid to shareholders. The dates of payments and the amounts per
share were as follows:
The fund held its Annual Meeting of Shareholders on January 26, 2015. The following proposal was considered by the shareholders: Proposal: Election of four (4) Trustees to serve for a three-year term ending
at the 2018 Annual Meeting of Shareholders. Each Trustee was
re-elected by the fund's shareholders and the votes cast with respect
to each Trustee are set forth below.
Trustees whose term of office continued after the Annual Meeting of
Shareholders because they were not up for election are: James R.
Boyle, Craig Bromley, William H. Cunningham, Grace K. Fey, Deborah C.
Jackson, Hassell H. McClellan, James M. Oates, Steven R. Pruchansky
and Gregory A. Russo. The Board appointed Mr. Boyle to serve as a
Non-Independent Trustee on March 10, 2015. 27
Trustees James M. Oates, Chairperson Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone Investment advisor John Hancock Advisers, LLC Subadvisors John Hancock Asset Management a division of Manulife Asset Management (US) LLC Custodian State Street Bank and Trust Company Transfer agent Computershare Shareowner Services, LLC Legal counsel K&L Gates LLP Stock symbol Listed New York Stock Exchange: HTD *Member of the Audit Committee
Regular mail: Computershare The fund's proxy voting policies and procedures, as well as the
fund's 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. The fund's complete list of portfolio holdings, for the first and
third fiscal quarters, is filed with the SEC on Form N-Q. The fund's
Form N-Q is available on our website and the SEC's website, sec.gov,
and can be reviewed and copied (for a fee) at the SEC's Public
Reference Room in Washington, DC. Call 800-SEC-0330 to receive
information on the operation of the SEC's Public Reference Room. 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 800-852-0218.
28 Family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity-Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value Large Cap Equity New Opportunities Select Growth Small Cap Equity Small Cap Value Small Company Strategic Growth U.S. Equity U.S. Global Leaders Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Global Equity Global Opportunities Global Shareholder Yield Greater China Opportunities International Core International Growth International Small Company International Value Equity INCOME FUNDS Bond California Tax-Free Income Core High Yield Emerging Markets Debt Floating Rate Income Focused High Yield Global Income Government Income High Yield Municipal Bond INCOME FUNDS (continued) Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Equity Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Natural Resources Redwood Regional Bank Seaport Technical Opportunities ASSET ALLOCATION Income Allocation Fund Lifestyle Aggressive Portfolio Lifestyle Balanced Portfolio Lifestyle Conservative Portfolio Lifestyle Growth Portfolio Lifestyle Moderate Portfolio Retirement Choices Portfolios (2010-2055) Retirement Living Portfolios (2010-2055) Retirement Living II Portfolios (2010-2055) 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 The fund's investment objectives, risks, charges, and expenses are
included in the prospectus and should be considered carefully before
investing. For a prospectus, contact your financial professional,
call John Hancock Investments at 800-852-0218, or visit the fund's
website at jhinvestments.com. Please read the prospectus carefully
before investing or sending money. John Hancock Investments A trusted brand John Hancock has helped individuals and institutions build and A better way to invest As a manager of managers, we search the world to find proven Results for investors Our unique approach to asset management has led to a diverse set
ITEM 2. CODE OF ETHICS.
Not applicable.
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. (a) 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. (a) Not applicable. (b) *In December 2007, the Trustees approved a share repurchase plan, which has been
subsequently reviewed and approved by the Board of Trustees each year in December. Under
the current share repurchase plan, the Fund may purchase in the open market up to 10% of its
outstanding common shares as of December 31, 2014. The current share repurchase plan will
remain in effect between January 1, 2015 and December 31, 2015. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The registrant has adopted procedures by which shareholders may recommend nominees to the registrants Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached John Hancock Funds Nominating, Governance and Administration Committee Charter. ITEM 11. 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-CSR, the registrant's principal executive
officer and principal financial 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 most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) 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) 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, Governance and Administration Committee Charter. (c)(2) Contact person at the registrant. 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 Tax-Advantaged Dividend Income Fund 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.
Ticker: HTD Semiannual report 4/30/15
President and Chief Executive Officer
John Hancock Investments
Tax-Advantaged Dividend Income Fund
Portfolio Manager
John Hancock Asset Management
Royal Bank of Scotland
3.5
PPL Corp.
3.3
Wells Fargo & Company
3.1
SCE Trust
2.9
Interstate Power & Light Company
2.8
MetLife, Inc.
2.8
Morgan Stanley
2.8
Spectra Energy Corp.
2.7
American Electric Power Company, Inc.
2.6
NiSource, Inc.
2.6
Total
29.1
As a percentage of total investments.
Cash and cash equivalents are not included.
Gregory K. Phelps, JHAM
On the fund since inception
Investing since 1981
Mark T. Maloney, JHAM
On the fund since inception
Investing since 1976
Gregory McMurran, Analytic Investors
On the fund since 2009
Investing since 1976
Dennis Bein, CFA, Analytic Investors
On the fund since 2009
Investing since 1992
Harindra de Silva, Ph.D., CFA, Analytic Investors
On the fund since 2009
Investing since 1988
As of 4-30-15 (unaudited)
Shares
Value
Common stocks 70.4% (47.4% of Total investments)
$617,635,832
(Cost $439,859,014)
Energy 11.3%
99,415,438
Oil, gas and consumable fuels 11.3%
BP PLC, ADR
187,500
8,092,500
Chevron Corp. (Z)
40,000
4,442,400
ConocoPhillips (Z)
145,000
9,848,400
Kinder Morgan, Inc. (Z)
129,345
5,555,368
ONEOK, Inc. (Z)
515,000
24,771,500
Royal Dutch Shell PLC, ADR, Class A (Z)
139,000
8,816,770
Spectra Energy Corp. (Z)
930,000
34,642,500
Total SA, ADR (Z)
60,000
3,246,000
Materials 0.2%
1,512,550
Metals and mining 0.2%
Freeport-McMoRan, Inc.
65,000
1,512,550
Telecommunication services 3.7%
32,055,830
Diversified telecommunication services 2.8%
AT&T, Inc. (Z)
390,000
13,509,600
Verizon Communications, Inc. (Z)
214,160
10,802,230
Wireless telecommunication services 0.9%
Vodafone Group PLC, ADR (Z)
220,000
7,744,000
Utilities 55.2%
484,652,014
Electric utilities 22.8%
American Electric Power Company, Inc. (Z)
590,000
33,553,300
Duke Energy Corp. (Z)
310,000
24,046,700
Eversource Energy
657,500
32,059,700
FirstEnergy Corp. (Z)
582,500
20,917,575
OGE Energy Corp. (C)
540,000
17,647,200
Pinnacle West Capital Corp. (Z)
50,000
3,060,000
PPL Corp. (Z)
500,000
17,015,000
The Southern Company (Z)
375,000
16,612,500
UIL Holdings Corp. (C)
425,000
21,199,000
Xcel Energy, Inc. (Z)
405,000
13,733,550
Gas utilities 5.3%
AGL Resources, Inc. (Z)
100,550
5,054,649
Atmos Energy Corp.
570,000
30,780,000
Northwest Natural Gas Company (Z)
85,000
3,969,500
ONE Gas, Inc.
173,015
7,261,440
Multi-utilities 27.1%
Alliant Energy Corp.
160,000
9,675,200
Shares
Value
Utilities (continued)
Multi-utilities (continued)
Ameren Corp. (Z)
540,000
$22,107,600
Black Hills Corp.
440,000
21,687,600
CenterPoint Energy, Inc.
670,000
14,049,900
Dominion Resources, Inc. (Z)
400,000
28,672,000
DTE Energy Company (Z)
250,000
19,907,500
Integrys Energy Group, Inc.
278,000
20,321,800
National Grid PLC, ADR (Z)
230,000
15,508,900
NiSource, Inc. (Z)
770,000
33,433,400
Public Service Enterprise Group, Inc. (Z)
170,000
7,061,800
TECO Energy, Inc. (Z)
660,000
12,507,000
Vectren Corp. (Z)
760,000
32,809,200
Preferred securities 75.6% (50.9% of Total investments)
$663,294,706
(Cost $627,825,602)
Financials 50.8%
446,214,415
Banks 30.8%
Bank of America Corp., 6.375% (Z)
139,000
3,562,570
Bank of America Corp., 6.625% (Z)
355,000
9,325,850
Bank of America Corp., Depositary Shares, Series D, 6.204%
230,000
5,888,000
Barclays Bank PLC, Series 5, 8.125% (Z)
505,000
13,200,700
BB&T Corp., 5.625%
600,000
14,826,000
BB&T Corp. (Callable 11-1-17), 5.200%
263,900
6,386,380
BB&T Corp. (Callable 6-1-18), 5.200% (Z)
480,000
11,635,200
Citigroup, Inc., Depositary Shares, Series AA, 8.125% (Z)
270,400
7,979,504
HSBC Finance Corp., Depositary Shares, Series B, 6.360% (Z)
700,000
17,724,000
HSBC Holdings PLC, 8.000% (C)
325,000
8,534,500
HSBC Holdings PLC, 8.125% (Z)
50,000
1,317,500
HSBC USA, Inc., 6.500% (Z)
19,500
496,860
ING Groep NV, 6.200% (Z)
109,100
2,756,957
ING Groep NV, 7.050% (Z)
150,000
3,838,500
JPMorgan Chase & Co., 5.450% (Z)
245,000
5,990,250
JPMorgan Chase & Co., 5.500% (Z)
987,500
24,292,500
JPMorgan Chase & Co., 6.700% (Z)
30,000
805,500
RBS Capital Funding Trust VII, 6.080% (Z)
983,000
24,466,870
Royal Bank of Scotland Group PLC, Series L, 5.750% (Z)
855,000
20,913,300
Santander Finance Preferred SAU, Series 1, 6.410% (Z)
15,500
395,870
Santander Holdings USA, Inc., Series C, 7.300% (Z)
110,000
2,816,000
The PNC Financial Services Group, Inc., 5.375% (C)
475,000
11,803,750
The PNC Financial Services Group, Inc. (6.125% to 5-1-22, then 3 month LIBOR + 4.067%) (Z)
40,000
1,122,400
U.S. Bancorp, 5.150% (C)(Z)
835,000
20,783,150
U.S. Bancorp (6.500% to 1-15-22, then 3 month LIBOR + 4.468%) (Z)
296,000
8,814,880
Shares
Value
Financials (continued)
Banks (continued)
Wells Fargo & Company, 6.000% (Z)
215,000
$5,497,550
Wells Fargo & Company, 8.000%
1,207,000
34,966,790
Capital markets 14.9%
Deutsche Bank Contingent Capital Trust II, 6.550% (C)
310,000
8,311,100
Deutsche Bank Contingent Capital Trust III, 7.600% (Z)
797,893
22,420,793
Morgan Stanley, 6.625%
957,915
25,001,582
Morgan Stanley (6.375% to 10-15-24, then 3 month LIBOR + 3.708%) (Z)
100,000
2,610,000
Morgan Stanley (7.125% to 10-15-23, then 3 month LIBOR + 4.320%)
300,000
8,505,000
State Street Corp., 5.250% (Z)
915,000
22,655,400
State Street Corp., 6.000%
100,000
2,550,000
State Street Corp. (5.900% to 3-15-24, then 3 month LIBOR + 3.108%)
25,000
673,250
The Bank of New York Mellon Corp., 5.200% (Z)
435,000
10,831,500
The Goldman Sachs Group, Inc., 5.950% (C)
860,000
21,697,800
The Goldman Sachs Group, Inc., Series B, 6.200% (Z)
215,000
5,445,950
Consumer finance 0.4%
SLM Corp., Series A, 6.970% (Z)
74,000
3,648,200
Insurance 4.5%
Aegon NV, 6.500%
96,512
2,488,079
MetLife, Inc., Series B, 6.500% (Z)
1,415,000
36,337,200
Prudential Financial, Inc., 5.750%
40,000
1,021,600
Real estate investment trusts 0.2%
Ventas Realty LP, 5.450% (Z)
63,000
1,575,630
Thrifts and mortgage finance 0.0%
Federal National Mortgage Association, Series S, 8.250% (I)
60,000
300,000
Industrials 0.4%
3,163,750
Machinery 0.4%
Stanley Black & Decker, Inc., 5.750% (Z)
125,000
3,163,750
Telecommunication services 5.6%
49,174,500
Diversified telecommunication services 3.8%
Qwest Corp., 6.125% (Z)
730,000
18,447,100
Qwest Corp., 7.375% (Z)
366,000
9,596,520
Qwest Corp., 7.500% (Z)
120,000
3,192,000
Verizon Communications, Inc., 5.900% (Z)
73,000
1,957,130
Wireless telecommunication services 1.8%
Telephone & Data Systems, Inc., 5.875%
340,000
8,292,600
Telephone & Data Systems, Inc., 6.625% (Z)
30,000
758,100
Telephone & Data Systems, Inc., 6.875% (Z)
243,000
6,160,050
United States Cellular Corp., 6.950% (Z)
30,000
771,000
Shares
Value
Utilities 18.8%
$164,742,041
Electric utilities 16.4%
Alabama Power Company, Class A, 5.300% (C)
197,550
4,966,407
Duke Energy Corp., 5.125% (Z)
240,000
6,024,000
Entergy Arkansas, Inc., 4.560%
9,388
921,784
Entergy Arkansas, Inc., 6.450%
135,000
3,408,750
Entergy Mississippi, Inc., 4.920%
8,190
757,063
Entergy Mississippi, Inc., 6.250%
197,500
4,918,993
Gulf Power Company, 5.600%
99,005
9,922,341
Interstate Power & Light Company, 5.100%
1,460,000
36,894,200
Mississippi Power Company, 5.250%
267,500
6,830,613
NextEra Energy Capital Holdings, Inc., 5.000% (Z)
110,000
2,647,700
NextEra Energy Capital Holdings, Inc., 5.125% (Z)
25,000
613,250
NextEra Energy Capital Holdings, Inc., 5.700% (Z)
230,000
5,828,200
PPL Capital Funding, Inc., 5.900% (Z)
1,010,000
25,381,300
SCE Trust I, 5.625%
140,000
3,533,600
SCE Trust II, 5.100%
1,275,000
30,995,250
Multi-utilities 2.4%
BGE Capital Trust II, 6.200% (Z)
250,000
6,362,500
DTE Energy Company, 5.250%
165,000
4,136,550
DTE Energy Company, 6.500% (Z)
175,000
4,660,250
Integrys Energy Group, Inc. (6.000% to 8-1-23, then 3 month LIBOR + 3.220%) (Z)
217,000
5,939,290
Rate (%)
Maturity date
Par value^
Value
Corporate bonds 0.4% (0.3% of Total investments)
$3,378,210
(Cost $3,000,000)
Utilities 0.4%
3,378,210
Electric utilities 0.4%
Southern California Edison Company (6.250% to 2-1-22, then 3 month LIBOR + 4.199%) (Q)
6.250
02-01-22
3,000,000
3,378,210
Par value
Value
Short-term investments 2.1% (1.4% of Total investments)
$18,729,000
(Cost $18,729,000)
Repurchase agreement 2.1%
18,729,000
Repurchase Agreement with State Street Corp. dated 4-30-15 at 0.000% to be repurchased at $18,729,000 on 5-1-15, collateralized by $19,060,000 Federal National Mortgage
Association, 1.670% due 2-10-20 (valued at $19,107,609, including interest)
18,729,000
18,729,000
Total investments (Cost $1,089,413,616) 148.5%
$1,303,037,748
Other assets and liabilities, net (48.5%)
($425,622,802
)
Total net assets 100.0%
$877,414,946
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.
Key to Security Abbreviations and Legend
ADR
American Depositary Receipts
LIBOR
London Interbank Offered Rate
(C)
All or a portion of this security is segregated as collateral for
options. Total collateral value at 4-30-15 was $109,983,684.
(I)
Non-income producing security.
(Q)
Perpetual bonds have no stated maturity date. Date shown as maturity
date is next call date.
(Z)
A portion of this security is segregated as collateral pursuant to
the Committed Facility Agreement. Total collateral value at 4-30-15 was $761,234,534.
At 4-30-15, the aggregate cost of investment securities for federal income tax
purposes was $1,096,227,585. Net unrealized appreciation aggregated
$206,810,163, of which $219,246,955 related to appreciated investment
securities and $12,436,792 related to depreciated investment
securities.
Assets
Investments, at value (Cost $1,089,413,616)
$1,303,037,748
Cash
1,242
Cash held at broker for futures contracts
1,323,000
Cash segregated at custodian for swap contracts
1,470,000
Receivable for investments sold
1,722,737
Dividends and interest receivable
2,220,330
Receivable for futures variation margin
137,817
Other receivables and prepaid expenses
23,796
Total assets
1,309,936,670
Liabilities
Credit facility agreement payable
427,900,000
Payable for investments purchased
1,716,295
Written options, at value (premium received $1,785,185)
1,039,875
Swap contracts, at value
1,416,952
Interest payable
314,224
Payable to affiliates
Accounting and legal services fees
2,266
Transfer agent fees
3,513
Trustees' fees
2,670
Other liabilities and accrued expenses
125,929
Total liabilities
432,521,724
Net assets
$877,414,946
Net assets consist of
Paid-in capital
$692,331,989
Undistributed net investment income
8,506,701
Accumulated net realized gain (loss) on investments, futures
contracts, options written and swap agreements
(36,063,256
)
Net unrealized appreciation (depreciation) on investments, futures
contracts, options written and swap agreements
212,639,512
Net assets
$877,414,946
Net asset value per share
Based on 37,052,501 shares of beneficial interest outstanding
unlimited number of shares authorized with no par value
$23.68
Investment income
Dividends
$31,720,975
Interest
93,750
Less foreign taxes withheld
(35,077
)
Total investment income
31,779,648
Expenses
Investment management fees
4,879,421
Accounting and legal services fees
88,626
Transfer agent fees
12,305
Trustees' fees
43,071
Printing and postage
51,402
Professional fees
38,463
Custodian fees
49,141
Stock exchange listing fees
15,999
Interest expense
1,717,643
Other
69,870
Total expenses
6,965,941
Less expense reductions
(49,420
)
Net expenses
6,916,521
Net investment income
24,863,127
Realized and unrealized gain (loss)
Net realized gain (loss) on
Investments
10,072,179
Futures contracts
(3,853,189
)
Written options
(9,217,700
)
Swap contracts
(788,683
)
(3,787,393
)
Change in net unrealized appreciation (depreciation) of
Investments
(8,119,253
)
Futures contracts
591,513
Written options
8,057,167
Swap contracts
42,404
571,831
Net realized and unrealized loss
(3,215,562
)
Increase in net assets from operations
$21,647,565
Six months ended 4-30-15
Year ended 10-31-14
(unaudited)
Increase (decrease) in net assets
From operations
Net investment income
$24,863,127
$57,044,755
Net realized gain (loss)
(3,787,393
)
13,578,807
Change in net unrealized appreciation (depreciation)
571,831
96,329,484
Increase in net assets resulting from operations
21,647,565
166,953,046
Distributions to shareholders
From net investment income
(26,900,116
)
(50,259,970
)
From fund share transactions
Repurchased
(9,175,619
)
Total increase (decrease)
(5,252,551
)
107,517,457
Net assets
Beginning of period
882,667,497
775,150,040
End of period
$877,414,946
$882,667,497
Undistributed net investment income
$8,506,701
$10,543,690
Share activity
Shares outstanding
Beginning of period
37,052,501
37,541,388
Shares repurchased
(488,887
)
End of period
37,052,501
37,052,501
Cash flows from operating activities
Net increase in net assets from operations
$21,647,565
Adjustments to reconcile net increase in net assets from operations
to net cash provided by operating activities:
Long-term investments purchased
(37,042,595)
Long-term investments sold
56,829,980
Increase in short-term investments
(3,799,000)
Increase in cash held at broker for futures contracts
(147,000)
Increase in cash segregated at custodian for swap contracts
(250,000)
Increase in receivable for investments sold
(1,722,737)
Decrease in dividends and interest receivable
290,685
Increase in unrealized appreciation/depreciation of swap contracts
(42,404)
Decrease in future variation margin
122,491
Increase in other receivables and prepaid expenses
(7,828)
Increase in payable for investments purchased
1,716,295
Decrease in payable for written options
(8,789,375)
Decrease in payable to affiliates
(5,142)
Decrease in other liabilities and accrued expenses
(25,583)
Increase in interest payable
77,659
Net change in unrealized (appreciation) depreciation on investments
8,119,253
Net realized gain on investments
(10,072,179)
Net cash provided by operating activities
$26,900,085
Cash flows from financing activities
Distributions to common shareholders
($26,900,116)
Net cash used in financing activities
($26,900,116
)
Net decrease in cash
($31
)
Cash at beginning of period
$1,273
Cash at end of period
$1,242
Supplemental disclosure of cash flow information:
Cash paid for interest
$1,639,984
COMMON SHARES Period Ended
4-30-151
10-31-14
10-31-13
10-31-12
10-31-11
10-31-10
Per share operating performance
Net asset value, beginning of period
$23.82
$20.65
$20.49
$18.27
$16.58
$12.87
Net investment income2
0.67
1.54
1.30
1.20
1.20
1.10
Net realized and unrealized gain (loss) on investments
(0.08
)
2.95
0.03
2.20
1.60
3.69
Total from investment operations
0.59
4.49
1.33
3.40
2.80
4.79
Less distributions to common shareholders
From net investment income
(0.73
)
(1.35
)
(1.18
)
(1.18
)
(1.12
)
(1.09
)
Anti-dilutive impact of repurchase plan
0.03
3
0.01
3
0.01
3
0.01
3
Net asset value, end of period
$23.68
$23.82
$20.65
$20.49
$18.27
$16.58
Per share market value, end of period
$21.35
$21.84
$18.34
$19.07
$16.64
$15.41
Total return at net asset value (%)4,5
2.76
6
23.42
7.28
19.64
18.16
39.49
Total return at market value (%)4
1.05
6
27.41
2.37
22.25
15.79
47.01
Ratios and supplemental data
Net assets applicable to common shares, end of period (in millions)
$877
$883
$775
$773
$690
$630
Ratios (as a percentage of average net assets):
Expenses before reductions
1.59
7
1.56
1.59
1.65
1.77
8
2.03
Expenses including reductions9
1.58
7
1.55
1.59
1.62
1.56
8
1.86
Net investment income
5.67
7
6.95
6.29
6.19
6.98
7.37
Portfolio turnover (%)
3
7
23
12
16
20
Total debt outstanding end of period (in millions)
$428
$428
$419
$390
$344
$311
Asset coverage per $1,000 of debt10
$3,051
$3,063
$2,850
$2,981
$3,005
$3,030
1
Six months ended 4-30-15. Unaudited.
2
Based on average daily shares outstanding.
3
The repurchase plan was completed at an average repurchase price of
$18.77, $18.09, $15.28 and $13.80, respectively, for 488,887 shares,
193,358 shares, 276,671 shares and 302,900 shares, respectively. The
repurchases for the periods ended 10-31-14, 10-31-13, 10-31-11 and
10-31-10 were $9,175,619, $3,496,915, $4,227,969 and $4,178,919,
respectively.
4
Total return based on net asset value reflects changes in the fund's
net asset value during each period. Total return based on market
value reflects changes in market value. Each figure assumes that
dividend and capital gain distributions, if any, were reinvested.
These figures will differ depending upon the level of any discount
from or premium to net asset value at which the fund's shares traded
during the period.
5
Total returns would have been lower had certain expenses not been
reduced during the applicable periods.
6
Not annualized.
7
Annualized.
8
Includes non-recurring litigation fees which represent 0.02% and
0.14% of average net assets for the years ended 10-31-11 and
10-31-10, respectively. Insurance recovery expense reduction for the
year ended 10-31-11 represents 0.11% of average net assets.
9
Expenses including reductions excluding interest expense were 1.19%,
1.22%, 1.23%, 1.17%, 1.03%, and 1.22% for the periods ended 4-30-15,
10-31-14, 10-31-13, 10-31-12, 10-31-11, and 10-31-10, respectively.
10
Asset coverage equals the total net assets plus borrowings divided by
the borrowings of the fund outstanding at period end (Note 8). As
debt outstanding changes, the level of invested assets may change
accordingly. Asset coverage ratio provides a measure of leverage.
Total
market value
at 4-30-15
Level 1
quoted price
Level 2
significant
observable
inputs
Level 3
significant
unobservable
inputs
Common stocks
Energy
$99,415,438
$99,415,438
Materials
1,512,550
1,512,550
Telecommunication services
32,055,830
32,055,830
Utilities
484,652,014
484,652,014
Preferred securities
Financials
446,214,415
446,214,415
Industrials
3,163,750
3,163,750
Telecommunication services
49,174,500
47,217,370
$1,957,130
Utilities
164,742,041
144,813,110
19,928,931
Corporate bonds
3,378,210
3,378,210
Short-term investments
18,729,000
18,729,000
Total investments in securities
$1,303,037,748
$1,259,044,477
$43,993,271
Other financial instruments:
Futures
($312,978
)
($312,978
)
Written options
($1,039,875
)
($1,039,875
)
Interest rate swaps
($1,416,952
)
($1,416,952
)
Open contracts
Number of
contracts
Position
Expiration
date
Notional
basis
Notional
value
Unrealized
appreciation
(depreciation)
10-Year U.S. Treasury
Note Futures
980
Short
Jun 2015
($125,494,522
)
($125,807,500
)
($312,978
)
Number of contracts
Premiums received
Outstanding, beginning of period
770
$2,517,393
Options written
3,820
9,986,992
Option closed
(3,410
)
(10,416,797
)
Options exercised
Options expired
(295
)
(302,403
)
Outstanding, end of period
885
$1,785,185
Name of issuer
Exercise price
Expiration date
Number of contracts
Premium
Value
Calls
Russell 2000 Index
$1,255
May 2015
445
$817,447
($141,287
)
S&P 500 Index
2,290
May 2015
245
32,330
(613
)
S&P 500 Index
2,090
Jul 2015
195
935,408
(897,975
)
Total
885
$1,785,185
($1,039,875
)
Counterparty
USD notional
amount
Payments made
by fund
Payments received
by fund
Termination
date
Market value
Morgan Stanley
Capital Services
$86,000,000
Fixed 1.4625%
3-Month LIBOR (a)
Aug 2016
($1,220,033
)
Morgan Stanley
Capital Services
86,000,000
Fixed 0.8750%
3-Month LIBOR (a)
Jul 2017
(196,919
)
Total
$172,000,000
($1,416,952
)
Risk
Statement of assets
and liabilities location
Financial
instruments location
Asset derivatives
fair value
Liability derivatives
fair value
Interest rate contracts
Receivable/payable for futures
Futures
($312,978
)
Equity contracts
Written options, at value
Written options
(1,039,875
)
Interest rate contracts
Swap contracts, at value
Interest rate swaps
(1,416,952
)
Total
($2,769,805
)
Risk
Statement of
operations location
Futures
contracts
Written
options
Swap
contracts
Total
Interest rate contracts
Net realized gain (loss)
($3,853,189
)
($788,683
)
($4,641,872
)
Equity contracts
Net realized gain (loss)
($9,217,700
)
(9,217,700
)
Total
($3,853,189
)
($9,217,700
)
($788,683
)
($13,859,572
)
Risk
Statement of
operations locationFutures
contractsWritten
optionsSwap
contractsTotal
Interest rate contracts
Change in unrealized
appreciation (depreciation)$591,513
$42,404
$633,917
Equity contracts
Change in unrealized
appreciation (depreciation)
$8,057,167
8,057,167
Total
$591,513
$8,057,167
$42,404
$8,691,084
Payment Date
Income Distributions
November 28, 2014
$0.1210
December 18, 2014
0.1210
January 30, 2015
0.1210
February 27, 2015
0.1210
March 31, 2015
0.1210
April 30, 2015
0.1210
Total
$0.7260
Total votes
for the nomineeTotal votes withheld
from the nominee
Independent Trustees
Charles L. Bardelis
29,557,523.517
473,850.930
Peter S. Burgess
29,520,848.517
510,525.930
Theron S. Hoffman
29,550,436.517
480,937.930
Non-Independent Trustee
Warren A. Thomson
29,527,010.517
504,363.930
Steven R. Pruchansky, Vice Chairperson
Charles L. Bardelis*
James R. Boyle#
Craig Bromley
Peter S. Burgess*
William H. Cunningham
Grace K. Fey
Theron S. Hoffman*
Deborah C. Jackson
Hassell H. McClellan
Gregory A. Russo
Warren A. Thomson
President
Senior Vice President, Secretary,
and Chief Legal Officer
Chief Compliance Officer
Chief Financial Officer
Treasurer
Analytic Investors, LLC
Non-Independent Trustee
#Effective 3-10-15
You can also contact us:
800-852-0218
jhinvestments.com
P.O. Box 30170
College Station, TX 77842-3170
The report is certified under the Sarbanes-Oxley Act, which requires
closed-end funds and other public companies to affirm that, to the
best of their knowledge, the information in their financial reports
is fairly and accurately stated in all material respects.
protect wealth since 1862. Today, we are one of America's strongest
and most-recognized brands.
portfolio teams with specialized expertise for every fund we offer,
then apply vigorous investment oversight to ensure they continue
to meet our uncompromising standards.
of investments deeply rooted in investor needs, along with strong
risk-adjusted returns across asset classes.
John Hancock Advisers, LLC
601 Congress Street n Boston, MA 02210-2805
800-843-0090 n jhinvestments.com
MF230744
P13SA 4/15
6/15
(b) Not applicable.
Total number of
Maximum number
of
shares purchased
shares that may
yet
Total number of
Average price
as part of publicly
be purchased
under
Period
shares
purchased
per
share
announced
plans*
the plans
Nov-14
-
-
-
3,499,000
Dec-14
86,024
17.261
259,720
3,705,250*
Jan-15
21,700
18.536
281,420
3,705,250
Feb-15
70,125
19.305
351,545
3,705,250
Mar-15
72.231
19.719
423,776
3,705,250
Apr-15
28,626
20.728
452,402
3,705,250
Total
452,402
$18.617
By:
/s/ Andrew
Arnott
Andrew
Arnott
President
Date:
June 23,
2015
By:
/s/ Andrew
Arnott
Andrew
Arnott
President
Date:
June 23,
2015
By: | /s/ Charles A. Rizzo |
Charles A. Rizzo | |
Chief Financial Officer | |
Date: | June 23, 2015 |