Regulatory Filings • Jun 29, 2015
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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
Ticker: HTD Semiannual report 4/30/15
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 President and Chief Executive Officer John Hancock Investments
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 Tax-Advantaged Dividend Income Fund
Table of contents
| 2 | Your fund at a glance |
|---|---|
| 4 | Discussion of fund performance |
| 8 | Fund's investments |
| 13 | Financial statements |
| 17 | Financial highlights |
| 18 | Notes to financial statements |
| 27 | Additional information |
| 27 | Shareholder meeting |
| 28 | More information |
1
Your fund at a glance
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
Discussion of fund performance
An interview with Portfolio Manager Gregory K. Phelps, John Hancock Asset Management a division of Manulife Asset Management (US) LLC
Gregory K. Phelps Portfolio Manager John Hancock Asset Management
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
"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."
inflation will remain benign as well, in part due to slumping oil and other commodity prices. Even when interest-rate hikes begin, we believe they will occur in small and gradual increments. Against a stable to moderately rising-rate environment, we think there's a good chance demand for preferreds and utility common stocks will remain solid. Investors wary of putting more money into common stocksin light of heightened market volatility and rising valuationsmay turn to preferreds and utility common stocks. Furthermore, the yields on preferreds and utility common stocks ended the quarter at levels that were attractive relative to the broader equity market and corporate bonds, which could further enhance the appeal of dividend-paying investments.
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
"Against a stable to moderately rising-rate environment, we think there's a good chance demand for preferreds and utility common stocks will remain solid."
as a result. UIL Holdings Corp. was another top performer, buoyed by news that it was being acquired by a Spanish utility company.
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 (%)
| 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. |
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
| ● | 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 |
The views expressed in this report are exclusively those of Gregory K. Phelps, John Hancock Asset Management, and are subject to change. They are not meant as investment advice. Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund's investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.
7
Fund's investments
| 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 |
8 SEE NOTES TO FINANCIAL STATEMENTS
| 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 |
SEE NOTES TO FINANCIAL STATEMENTS 9
| 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 |
10 SEE NOTES TO FINANCIAL STATEMENTS
| 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 |
SEE NOTES TO FINANCIAL STATEMENTS 11
| 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. |
12 SEE NOTES TO FINANCIAL STATEMENTS
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 4-30-15 (unaudited)
| 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 |
SEE NOTES TO FINANCIAL STATEMENTS 13
STATEMENT OF OPERATIONS For the six months ended 4-30-15 (unaudited)
| 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 |
14 SEE NOTES TO FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
| 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 |
SEE NOTES TO FINANCIAL STATEMENTS 15
STATEMENT OF CASH FLOWS For the six months ended 4-30-15 (unaudited)
| 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 |
16 SEE NOTES TO FINANCIAL STATEMENTS
Financial highlights
| COMMON SHARES Period Ended | 4-30-15 1 | 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 income 2 | 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 reductions 9 | 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 debt 10 | $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. |
SEE NOTES TO FINANCIAL STATEMENTS 17
Notes to financial statements (unaudited)
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:
| 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 | ) | |
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
| 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 | ) |
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 .
| Outstanding, beginning of period | Number of contracts — 770 | Premiums received — $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 | ) |
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 .
| 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 | ) |
(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:
| 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 | ) |
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 :
| 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 | ) |
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 :
| Risk | Statement of operations location | Futures contracts | Written options | Swap contracts | Total |
|---|---|---|---|---|---|
| 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 |
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
ADDITIONAL INFORMATION
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:
| 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 |
Shareholder meeting
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.
| Total votes for the nominee | Total 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 |
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
More information
Trustees James M. Oates, Chairperson 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 Officers Andrew G. Arnott President John J. Danello Senior Vice President, Secretary, and Chief Legal Officer Francis V. Knox, Jr. Chief Compliance Officer Charles A. Rizzo Chief Financial Officer Salvatore Schiavone Treasurer Investment advisor John Hancock Advisers, LLC Subadvisors John Hancock Asset Management a division of Manulife Asset Management (US) LLC Analytic Investors, 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 Non-Independent Trustee #Effective 3-10-15
| You can also contact us: | |
|---|---|
| 800-852-0218 jhinvestments.com | Regular mail: Computershare P.O. Box 30170 College Station, TX 77842-3170 |
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.
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.
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 protect wealth since 1862. Today, we are one of America's strongest and most-recognized brands.
A better way to invest
As a manager of managers, we search the world to find proven portfolio teams with specialized expertise for every fund we offer, then apply vigorous investment oversight to ensure they continue to meet our uncompromising standards.
Results for investors
Our unique approach to asset management has led to a diverse set of investments deeply rooted in investor needs, along with strong risk-adjusted returns across asset classes.
| ● | |
|---|---|
| MF230744 | P13SA 4/15 6/15 |
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. (b) 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)
| | | | Total number of — shares purchased | Maximum number
of — 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 | | |
| *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
| By: | /s/ Andrew
Arnott |
| --- | --- |
| | Andrew
Arnott |
| | President |
| Date: | June 23,
2015 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Andrew
Arnott |
| --- | --- |
| | Andrew
Arnott |
| | President |
| Date: | June 23,
2015 |
| By: | /s/ Charles A.
Rizzo |
| --- | --- |
| | Charles A.
Rizzo |
| | Chief
Financial Officer |
| Date: | June 23,
2015 |
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