Certified Semi-annual Shareholder Report for Management Investment Companies (n-csrs)
June 29 2020 - 2:53PM
Edgar (US Regulatory)
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- 05908
John Hancock Premium Dividend Fund
(Exact name of registrant as specified in charter)
200 Berkeley Street, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
200 Berkeley Street
Boston, Massachusetts 02116
(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, 2020
|
ITEM 1. REPORTS TO STOCKHOLDERS.
John Hancock
Premium Dividend Fund
Ticker: PDT
Semiannual report
4/30/2020
Beginning on
January 1, 2021, as permitted by regulations adopted by the Securities and Exchange
Commission, paper copies of the fund's shareholder reports such as
this one will no longer be sent by mail, unless you specifically
request paper copies of the reports from the transfer agent or from
your financial intermediary. Instead, the reports will be made
available on our website, and you will be notified by mail each time
a report is posted and be provided with a website link to access
the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you do
not need to take any action. You may elect to receive shareholder
reports and other communications electronically by calling the
transfer agent, Computershare, at 800-852-0218, by going to
"Communication Preferences" at computershare.com/investor, or by
contacting your financial intermediary.
You may elect to receive all reports in paper, free of charge, at any
time. You can inform the transfer agent or your financial
intermediary that you wish to continue receiving paper copies of your
shareholder reports by following the instructions listed above. Your
election to receive reports in paper will apply to all funds held
with John Hancock Investment Management or your financial
intermediary.
Managed distribution plan
The fund has adopted a managed distribution plan (Plan). Under the
Plan, the fund makes monthly distributions of an amount equal to
$0.0975 per share, which will be paid monthly until further notice.
The fund may make additional distributions (i) for purposes of not
incurring federal income tax on investment company taxable income and
net capital gain, if any, not included in such regular distributions
and (ii) for purposes of not incurring federal excise tax on ordinary
income and capital gain net income, if any, not included in such
regular monthly distributions.
The Plan provides that the Board of Trustees of the fund may amend
the terms of the Plan or terminate the Plan at any time without prior
notice to the fund's shareholders. The Plan is subject to periodic
review by the fund's Board of Trustees.
You should not draw any conclusions about the fund's investment
performance from the amount of the fund's distributions or from the
terms of the Plan. The fund's total return at NAV is presented in the
Financial highlights.
With each distribution that does not consist solely of net investment
income, the fund will issue a notice to shareholders and an
accompanying press release that will provide detailed information
regarding the amount and composition of the distribution and other
related information. The amounts and sources of distributions
reported in the notice to shareholders are only estimates and are not
being provided for tax reporting purposes. The actual amounts and
sources of the amounts for tax reporting purposes will depend upon
the fund's investment experience during the remainder of its fiscal
year and may be subject to changes based on tax regulations. The fund
will send you a Form 1099-DIV for the calendar year that will tell
you how to report these distributions for federal income tax
purposes. The fund may at times distribute more than its net
investment income and net realized capital gains; therefore, a
portion of your distribution may result in a return of capital. A
return of capital may occur, for example, when some or all of the
money that you invested in the fund is paid back to you. A return of
capital does not necessarily reflect the fund's investment
performance and should not be confused with "yield" or "income."
A message to shareholders
Dear shareholder,
The U.S. financial markets were on pace to deliver strong returns
during the 6 months ended
April 30, 2020, until heightened fears over the coronavirus (COVID-19) sent markets
tumbling during the latter half of February and early March.
In response to the sell-off, the U.S. Federal Reserve acted quickly
with a broad array of actions to limit the economic damage from the
pandemic, including up to $2.3 trillion in lending to support
households, employers, financial markets, and state and local
governments. These steps, along with the passage of an estimated $2
trillion federal economic stimulus bill, helped lift the markets
during the final month of the period.
The continued spread of COVID-19, trade disputes, rising
unemployment, and other geopolitical tensions may continue to create
uncertainty among businesses and investors. Your financial
professional can help position your portfolio so that it's sufficiently diversified to seek
to meet your long-term objectives and to withstand the inevitable
bouts of market volatility along the way.
On behalf of everyone at John Hancock Investment Management, I'd like
to take this opportunity to welcome new shareholders and thank
existing shareholders for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and CEO,
John Hancock Investment Management
Head of Wealth and Asset Management,
United States and Europe
This commentary reflects the CEO's views as of this report's period
end and are subject to change at any time. Diversification does not
guarantee investment returns and does not eliminate risk of loss. All
investments entail risks, including the possible loss of principal.
For more up-to-date information, you can visit our website at
jhinvestments.com.
John Hancock
Premium Dividend Fund
Table of contents
|
|
|
2
|
|
Your fund at a glance
|
3
|
|
Portfolio summary
|
5
|
|
Fund's investments
|
12
|
|
Financial statements
|
16
|
|
Financial highlights
|
18
|
|
Notes to financial statements
|
28
|
|
Additional information
|
29
|
|
Shareholder meeting
|
30
|
|
More information
|
SEMIANNUAL REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 1
INVESTMENT OBJECTIVE
The fund seeks to provide high current income, consistent with modest
growth of capital.
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/2020 (%)
The blended index is 70% ICE Bank of America Preferred Stock DRD
Eligible Index and 30% S&P 500 Utilities Index.
The ICE Bank of America 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,
Dividend Received Deduction (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. Index figures do
not reflect expenses or sales charges, which would result in lower
returns.
The performance data contained within this material represents past
performance, which does not guarantee future results.
Investment returns and principal value will fluctuate and a
shareholder may sustain losses. Further, the fund's performance at
net asset value (NAV) is different from the fund's performance at
closing market price because the closing market price is subject to
the dynamics of secondary market trading. Market risk may be
augmented when shares are purchased at a premium to NAV or sold at a
discount to NAV. Current month-end performance may be higher or lower
than the performance cited. The fund's most recent performance can be
found at jhinvestments.com or by calling 800-852-0218.
SEMIANNUAL REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 2
PORTFOLIO COMPOSITION AS OF 4/30/2020 (%)
SECTOR COMPOSITION AS OF
4/30/2020 (%)
COUNTRY COMPOSITION AS OF 4/30/2020 (%)
|
|
United States
|
86.6
|
United Kingdom
|
5.2
|
Canada
|
4.3
|
France
|
3.2
|
Bermuda
|
0.7
|
TOTAL
|
100.0
|
As a percentage of total investments.
|
|
SEMIANNUAL REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 3
TOP 10 ISSUERS AS OF 4/30/2020 (%)
|
|
PPL Corp.
|
4.7
|
Dominion Energy, Inc.
|
4.3
|
CenterPoint Energy, Inc.
|
4.2
|
Duke Energy Corp.
|
3.3
|
BNP Paribas SA
|
3.2
|
DTE Energy Company
|
3.2
|
Interstate Power & Light Company
|
3.2
|
Southern California Edison Company
|
2.8
|
JPMorgan Chase & Co.
|
2.6
|
Algonquin Power & Utilities Corp.
|
2.5
|
TOTAL
|
34.0
|
As a percentage of total investments.
|
Cash and cash equivalents are not included.
|
A note about risks
As is the case with all exchange-listed 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. The value of a company's equity securities is subject to
changes in its financial condition and overall market and economic
conditions. Fixed-income investments are subject to interest-rate and
credit risk; their value will normally decline as interest rates rise
or if an issuer, grantor, or counterparty is unable or unwilling to
make principal, interest, or settlement payments. Investments in
higher-yielding, lower-rated securities are subject to 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. Liquiditythe extent to which a security
may be sold or a derivative position closed without negatively
affecting its market valuemay be impaired by reduced trading volume,
heightened volatility, rising interest rates, and other market
conditions. 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. The fund will normally invest at least 25% of its
managed assets in securities of companies in the utilities industry.
Such an investment focus makes the fund more susceptible to factors
adversely affecting the utilities industry than a more broadly
diversified fund. Sector investing is subject to greater risks than
the market as a whole. Derivatives transactions, such as hedging and
other strategic transactions, may increase a fund's volatility and
could produce disproportionate losses, potentially more than the
fund's principal investment. Cybersecurity incidents may allow an
unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause a fund or its service providers to
suffer data corruption or lose operational functionality. Similar
incidents affecting issuers of fund securities may negatively affect
performance.
A widespread health crisis such as a global pandemic could cause
substantial market volatility, exchange trading suspensions and
closures, impact the ability to complete redemptions, and affect fund
performance. For example, the novel coronavirus disease (COVID-19)
has resulted in significant disruptions to global business activity.
The impact of a health crisis and other epidemics and pandemics that
may arise in the future, could affect the global economy in ways that
cannot necessarily be foreseen at the present time. A health crisis
may exacerbate other pre-existing political, social, and economic
risks. Any such impact could adversely affect the funds' performance,
resulting in losses to your investment.
SEMIANNUAL REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 4
AS OF 4-30-20 (unaudited)
|
|
|
|
Shares
|
Value
|
Preferred
securities 84.1% (51.7% of Total investments)
|
|
|
$497,374,634
|
(Cost
$521,579,317)
|
|
|
|
|
|
Communication
services 3.4%
|
|
|
|
20,140,600
|
Diversified
telecommunication services 0.4%
|
|
|
|
|
Qwest
Corp., 6.125%
|
|
|
|
107,500
|
2,416,600
|
Wireless
telecommunication services 3.0%
|
|
|
|
|
Telephone
& Data Systems, Inc., 5.875%
|
|
|
|
100,000
|
2,386,000
|
Telephone
& Data Systems, Inc., 6.625%
|
|
|
|
285,000
|
6,677,550
|
Telephone
& Data Systems, Inc., 6.875%
|
|
|
|
170,000
|
4,018,800
|
United
States Cellular Corp., 6.950%
|
|
|
|
185,000
|
4,641,650
|
Consumer
discretionary 1.1%
|
|
|
|
6,504,300
|
Internet
and direct marketing retail 1.1%
|
|
|
|
|
QVC,
Inc., 6.250%
|
|
|
|
330,000
|
6,504,300
|
Consumer
staples 2.6%
|
|
|
|
15,249,000
|
Food
products 2.6%
|
|
|
|
|
Ocean
Spray Cranberries, Inc., 6.250% (A)
|
|
|
|
224,250
|
15,249,000
|
Energy
3.7%
|
|
|
|
22,159,800
|
Oil,
gas and consumable fuels 3.7%
|
|
|
|
|
Enbridge,
Inc., Series B (6.375% to 4-15-23, then 3 month LIBOR + 3.593%)
|
|
|
|
210,000
|
4,937,100
|
Sempra
Energy, 6.750% (B)
|
|
|
|
170,000
|
17,222,700
|
Financials
20.5%
|
|
|
|
121,270,381
|
Banks
11.8%
|
|
|
|
|
Citigroup,
Inc. (7.125% to 9-30-23, then 3 month LIBOR + 4.040%)
|
|
|
|
240,650
|
6,579,371
|
JPMorgan
Chase & Co., 6.100%
|
|
|
|
650,000
|
16,776,500
|
Synovus
Financial Corp. (6.300% to 6-21-23, then 3 month LIBOR + 3.352%) (B)(C)
|
|
|
|
188,000
|
4,277,000
|
The
PNC Financial Services Group, Inc., 5.375%
|
|
|
|
180,000
|
4,599,000
|
The
PNC Financial Services Group, Inc. (6.125% to 5-1-22, then 3 month LIBOR + 4.067%)
|
|
|
|
311,600
|
8,213,776
|
Truist
Financial Corp., Series F, 5.200% (B)(C)
|
|
|
|
130,000
|
3,276,000
|
Truist
Financial Corp., Series G, 5.200%
|
|
|
|
110,000
|
2,796,200
|
U.S.
Bancorp, 5.150%
|
|
|
|
500,000
|
12,855,000
|
U.S.
Bancorp (6.500% to 1-15-22, then 3 month LIBOR + 4.468%)
|
|
|
|
351,000
|
9,480,510
|
Wells
Fargo & Company, 6.000%
|
|
|
|
33,825
|
863,891
|
Capital
markets 5.1%
|
|
|
|
|
Morgan
Stanley (6.375% to 10-15-24, then 3 month LIBOR + 3.708%)
|
|
|
|
249,227
|
6,691,745
|
Morgan
Stanley (7.125% to 10-15-23, then 3 month LIBOR + 4.320%) (B)(C)
|
|
|
|
430,025
|
11,696,680
|
5
|
JOHN HANCOCK PREMIUM
DIVIDEND FUND | SEMIANNUAL REPORT
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
|
|
|
|
Shares
|
Value
|
Financials
(continued)
|
|
|
|
|
Capital
markets (continued)
|
|
|
|
|
State
Street Corp. (5.900% to 3-15-24, then 3 month LIBOR + 3.108%)
|
|
|
|
25,000
|
$653,500
|
The
Bank of New York Mellon Corp., 5.200% (B)(C)
|
|
|
|
442,000
|
11,328,460
|
Insurance
3.6%
|
|
|
|
|
Athene
Holding, Ltd., Series A (6.350% to 6-30-29, then 3 month LIBOR + 4.253%)
|
|
|
|
284,213
|
6,897,850
|
Brighthouse
Financial, Inc., 6.600%
|
|
|
|
125,485
|
3,133,360
|
Prudential
Financial, Inc., 5.750%
|
|
|
|
50,000
|
1,264,000
|
Prudential
PLC, 6.750%
|
|
|
|
150,000
|
3,835,500
|
W.R.
Berkley Corp., 5.625%
|
|
|
|
240,351
|
6,052,038
|
Information
technology 2.8%
|
|
|
|
16,279,040
|
Semiconductors
and semiconductor equipment 2.8%
|
|
|
|
|
Broadcom,
Inc., 8.000% (B)
|
|
|
|
16,000
|
16,279,040
|
Real
estate 2.3%
|
|
|
|
13,834,875
|
Equity
real estate investment trusts 2.3%
|
|
|
|
|
American
Homes 4 Rent, Series D, 6.500%
|
|
|
|
148,468
|
3,733,970
|
Diversified
Healthcare Trust, 5.625%
|
|
|
|
554,690
|
10,100,905
|
Utilities
47.7%
|
|
|
|
281,936,638
|
Electric
utilities 24.9%
|
|
|
|
|
Duke
Energy Corp., 5.125%
|
|
|
|
192,458
|
4,855,715
|
Duke
Energy Corp., 5.750%
|
|
|
|
160,000
|
4,414,400
|
Interstate
Power & Light Company, 5.100%
|
|
|
|
1,204,700
|
30,960,790
|
NextEra
Energy Capital Holdings, Inc., 5.125%
|
|
|
|
185,000
|
4,674,950
|
NextEra
Energy, Inc., 5.279% (B)
|
|
|
|
280,000
|
12,093,200
|
NSTAR
Electric Company, 4.250%
|
|
|
|
13,347
|
1,272,903
|
NSTAR
Electric Company, 4.780%
|
|
|
|
100,000
|
10,005,000
|
PPL
Capital Funding, Inc., 5.900%
|
|
|
|
1,150,320
|
28,907,542
|
SCE
Trust II, 5.100%
|
|
|
|
1,097,000
|
25,691,740
|
The
Southern Company, 6.750% (B)
|
|
|
|
485,000
|
22,959,900
|
Union
Electric Company, 3.700%
|
|
|
|
12,262
|
1,138,961
|
Gas
utilities 2.8%
|
|
|
|
|
South
Jersey Industries, Inc., 7.250% (B)
|
|
|
|
259,200
|
11,614,752
|
Spire,
Inc., 5.900%
|
|
|
|
183,775
|
4,912,306
|
Multi-utilities
20.0%
|
|
|
|
|
Algonquin
Power & Utilities Corp. (6.200% to 7-1-24, then 3 month LIBOR + 4.010%) (B)(C)
|
|
|
|
300,000
|
8,199,000
|
Algonquin
Power & Utilities Corp. (6.875% to 10-17-23, then 3 month LIBOR + 3.677%)
|
|
|
|
571,150
|
15,763,740
|
CenterPoint
Energy, Inc., 7.000%
|
|
|
|
950,000
|
32,148,000
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
SEMIANNUAL
REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND
|
6
|
|
|
|
|
Shares
|
Value
|
Utilities
(continued)
|
|
|
|
|
Multi-utilities
(continued)
|
|
|
|
|
Dominion
Energy, Inc., 7.250% (B)
|
|
|
|
314,850
|
$30,927,716
|
DTE
Energy Company, 5.250%
|
|
|
|
184,987
|
4,650,573
|
DTE
Energy Company, 6.250% (B)
|
|
|
|
237,000
|
9,906,600
|
Integrys
Holding, Inc. (6.000% to 8-1-23, then 3 month LIBOR + 3.220%)
|
|
|
|
352,044
|
8,801,100
|
NiSource,
Inc. (6.500% to 3-15-24, then 5 Year CMT + 3.632%)
|
|
|
|
250,000
|
6,892,500
|
|
Sempra
Energy, 5.750%
|
|
|
|
45,000
|
1,145,250
|
Common
stocks 54.3% (33.3% of Total investments)
|
|
|
$320,696,825
|
(Cost
$272,907,405)
|
|
|
|
|
|
Communication
services 4.5%
|
|
|
|
26,267,950
|
Diversified
telecommunication services 4.5%
|
|
|
|
|
AT&T,
Inc. (B)(C)
|
|
|
|
485,000
|
14,777,950
|
Verizon
Communications, Inc. (B)(C)
|
|
|
|
200,000
|
11,490,000
|
Consumer
staples 1.2%
|
|
|
|
6,863,200
|
Tobacco
1.2%
|
|
|
|
|
Philip
Morris International, Inc. (B)(C)
|
|
|
|
92,000
|
6,863,200
|
Energy
11.0%
|
|
|
|
65,097,761
|
Oil,
gas and consumable fuels 11.0%
|
|
|
|
|
BP
PLC, ADR
|
|
|
|
705,950
|
16,801,610
|
Enbridge,
Inc.
|
|
|
|
281,200
|
8,627,216
|
Kinder
Morgan, Inc.
|
|
|
|
819,001
|
12,473,385
|
ONEOK,
Inc. (B)(C)
|
|
|
|
310,000
|
9,278,300
|
The
Williams Companies, Inc. (B)(C)
|
|
|
|
925,000
|
17,917,250
|
Financials
3.7%
|
|
|
|
22,074,800
|
Banks
1.0%
|
|
|
|
|
PacWest
Bancorp (B)(C)
|
|
|
|
295,000
|
5,970,800
|
Capital
markets 2.7%
|
|
|
|
|
Ares
Management Corp., Class A
|
|
|
|
480,000
|
16,104,000
|
Utilities
33.9%
|
|
|
|
200,393,114
|
Electric
utilities 23.5%
|
|
|
|
|
Alliant
Energy Corp.
|
|
|
|
329,000
|
15,972,950
|
American
Electric Power Company, Inc. (B)(C)
|
|
|
|
200,000
|
16,622,000
|
Duke
Energy Corp. (B)(C)
|
|
|
|
270,000
|
22,858,198
|
Entergy
Corp. (B)(C)
|
|
|
|
60,000
|
5,730,600
|
Eversource
Energy (B)(C)
|
|
|
|
238,264
|
19,227,905
|
FirstEnergy
Corp. (B)(C)
|
|
|
|
300,000
|
12,381,000
|
OGE
Energy Corp. (B)(C)
|
|
|
|
400,000
|
12,608,000
|
Pinnacle
West Capital Corp.
|
|
|
|
50,000
|
3,849,500
|
7
|
JOHN HANCOCK PREMIUM
DIVIDEND FUND | SEMIANNUAL REPORT
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
|
|
|
|
Shares
|
Value
|
Utilities
(continued)
|
|
|
|
|
Electric
utilities (continued)
|
|
|
|
|
PPL
Corp. (B)(C)
|
|
|
|
660,000
|
$16,777,200
|
Xcel
Energy, Inc. (B)(C)
|
|
|
|
200,000
|
12,712,000
|
Gas
utilities 0.2%
|
|
|
|
|
UGI
Corp.
|
|
|
|
40,000
|
1,207,200
|
Multi-utilities
10.2%
|
|
|
|
|
Black
Hills Corp. (B)(C)
|
|
|
|
200,000
|
12,388,000
|
Dominion
Energy, Inc. (B)(C)
|
|
|
|
140,000
|
10,798,200
|
DTE
Energy Company
|
|
|
|
160,000
|
16,598,400
|
National
Grid PLC, ADR (B)(C)
|
|
|
|
164,166
|
9,613,561
|
NiSource,
Inc.
|
|
|
|
440,000
|
11,048,400
|
|
|
Rate
(%)
|
Maturity
date
|
|
Par
value^
|
Value
|
Corporate
bonds 21.0% (12.9% of Total investments)
|
|
|
$123,635,841
|
(Cost
$133,645,761)
|
|
|
|
|
|
Consumer
discretionary 1.4%
|
|
|
|
8,137,260
|
Automobiles
1.4%
|
|
|
|
|
General
Motors Financial Company, Inc. (6.500% to 9-30-28, then 3 month LIBOR + 3.436%) (B)(C)(D)
|
6.500
|
09-30-28
|
|
10,046,000
|
8,137,260
|
Energy
0.6%
|
|
|
|
3,662,000
|
Oil,
gas and consumable fuels 0.6%
|
|
|
|
|
Enbridge,
Inc. (6.250% to 3-1-28, then 3 month LIBOR + 3.641%) (B)
|
6.250
|
03-01-78
|
|
4,000,000
|
3,662,000
|
Financials
16.9%
|
|
|
|
99,652,778
|
Banks
14.7%
|
|
|
|
|
Bank
of America Corp. (5.875% to 3-15-28, then 3 month LIBOR + 2.931%) (B)(D)
|
5.875
|
03-15-28
|
|
4,500,000
|
4,590,765
|
BNP
Paribas SA (7.000% to 8-16-28, then 5 Year U.S. Swap Rate + 3.980%) (A)(B)(D)
|
7.000
|
08-16-28
|
|
15,590,000
|
16,252,575
|
BNP
Paribas SA (7.375% to 8-19-25, then 5 Year U.S. Swap Rate + 5.150%) (B)(C)(D)
|
7.375
|
08-19-25
|
|
14,400,000
|
14,958,000
|
Citigroup,
Inc. (6.125% to 11-15-20, then 3 month LIBOR + 4.478%) (D)
|
6.125
|
11-15-20
|
|
1,136,000
|
1,102,374
|
Citizens
Financial Group, Inc. (6.000% to 7-6-23, then 3 month LIBOR + 3.003%) (B)(D)
|
6.000
|
07-06-23
|
|
18,000,000
|
15,390,000
|
Citizens
Financial Group, Inc. (6.375% to 4-6-24, then 3 month LIBOR + 3.157%) (B)(D)
|
6.375
|
04-06-24
|
|
2,500,000
|
2,362,500
|
HSBC
Holdings PLC (6.500% to 3-23-28, then 5 Year ICE Swap Rate + 3.606%) (B)(D)
|
6.500
|
03-23-28
|
|
10,000,000
|
9,921,200
|
Huntington
Bancshares, Inc. (5.700% to 4-15-23, then 3 month LIBOR + 2.880%) (B)(D)
|
5.700
|
04-15-23
|
|
3,000,000
|
2,640,000
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
SEMIANNUAL
REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND
|
8
|
|
Rate
(%)
|
Maturity
date
|
|
Par
value^
|
Value
|
Financials
(continued)
|
|
|
|
|
Banks
(continued)
|
|
|
|
|
JPMorgan
Chase & Co. (6.750% to 2-1-24, then 3 month LIBOR + 3.780%) (B)(D)
|
6.750
|
02-01-24
|
|
7,334,000
|
$7,873,636
|
Lloyds
Banking Group PLC (7.500% to 6-27-24, then 5 Year U.S. Swap Rate + 4.760%) (B)(C)(D)
|
7.500
|
06-27-24
|
|
9,750,000
|
9,555,000
|
Wells
Fargo & Company (5.900% to 6-15-24, then 3 month LIBOR + 3.110%) (B)(C)(D)
|
5.900
|
06-15-24
|
|
2,000,000
|
2,030,000
|
Capital
markets 0.9%
|
|
|
|
|
The
Charles Schwab Corp. (5.375% to 6-1-25, then 5 Year CMT + 4.971%) (D)
|
5.375
|
06-01-25
|
|
5,300,000
|
5,498,750
|
Insurance
1.3%
|
|
|
|
|
SBL
Holdings, Inc. (7.000% to 5-13-25, then 5 Year CMT + 5.580%) (A)(D)
|
7.000
|
05-13-25
|
|
11,549,000
|
7,477,978
|
Utilities
2.1%
|
|
|
|
12,183,803
|
Electric
utilities 0.3%
|
|
|
|
|
Southern
California Edison Company (6.250% to 2-1-22, then 3 month LIBOR + 4.199%) (B)(D)
|
6.250
|
02-01-22
|
|
1,750,000
|
1,671,303
|
Multi-utilities
1.8%
|
|
|
|
|
CenterPoint
Energy, Inc. (6.125% to 9-1-23, then 3 month LIBOR + 3.270%) (B)(C)(D)
|
6.125
|
09-01-23
|
|
9,000,000
|
8,212,500
|
NiSource,
Inc. (5.650% to 6-15-23, then 5 Year CMT + 2.843%) (B)(D)
|
5.650
|
06-15-23
|
|
2,500,000
|
2,300,000
|
|
|
Yield*
(%)
|
Maturity
date
|
|
Par
value^
|
Value
|
Short-term
investments 3.4% (2.1% of Total investments)
|
|
|
$20,181,000
|
(Cost
$20,181,000)
|
|
|
|
|
|
U.S.
Government Agency 0.3%
|
|
|
|
1,938,000
|
Federal
Agricultural Mortgage Corp. Discount Note
|
0.010
|
05-01-20
|
|
1,938,000
|
1,938,000
|
|
|
|
|
Par
value^
|
Value
|
Repurchase
agreement 3.1%
|
|
|
|
|
18,243,000
|
|
Repurchase
Agreement with State Street Corp. dated 4-30-20 at 0.000% to be repurchased at $18,243,000 on 5-1-20, collateralized by $18,250,000 U.S. Treasury Notes, 1.500% due 9-30-21 (valued at $18,612,664)
|
|
|
|
18,243,000
|
18,243,000
|
|
Total
investments (Cost $948,313,483) 162.8%
|
|
|
|
$961,888,300
|
Other
assets and liabilities, net (62.8%)
|
|
|
|
(370,868,522)
|
Total
net assets 100.0%
|
|
|
|
|
$591,019,778
|
The percentage shown
for each investment category is the total value of the category as a percentage of the net assets of the fund unless otherwise indicated.
|
^All
par values are denominated in U.S. dollars unless otherwise indicated.
|
9
|
JOHN HANCOCK PREMIUM
DIVIDEND FUND | SEMIANNUAL REPORT
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
Security
Abbreviations and Legend
|
ADR
|
American
Depositary Receipt
|
CMT
|
Constant
Maturity Treasury
|
ICE
|
Intercontinental
Exchange
|
LIBOR
|
London
Interbank Offered Rate
|
(A)
|
These
securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration.
|
(B)
|
All or a
portion of this security is pledged as collateral pursuant to the Liquidity Agreement. Total collateral value at 4-30-20 was $420,968,404. A portion of the securities pledged as collateral were loaned pursuant to the Liquidity Agreement. The value
of securities on loan amounted to $222,412,738.
|
(C)
|
All or a
portion of this security is on loan as of 4-30-20, and is a component of the fund's leverage under the Liquidity Agreement.
|
(D)
|
Perpetual
bonds have no stated maturity date. Date shown as maturity date is next call date.
|
*
|
Yield
represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end.
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
SEMIANNUAL
REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND
|
10
|
DERIVATIVES
FUTURES
Open
contracts
|
Number
of
contracts
|
Position
|
Expiration
date
|
Notional
basis^
|
Notional
value^
|
Unrealized
appreciation
(depreciation)
|
10-Year
U.S. Treasury Note Futures
|
860
|
Short
|
Jun
2020
|
$(113,316,593)
|
$(119,593,750)
|
$(6,277,157)
|
|
|
|
|
|
|
$(6,277,157)
|
^ Notional basis refers to the
contractual amount agreed upon at inception of open contracts; notional value represents the current value of the open contract.
SWAPS
Interest
rate swaps
|
Counterparty
(OTC)/
Centrally cleared
|
Notional
amount
|
Currency
|
Payments
made
|
Payments
received
|
Fixed
payment
frequency
|
Floating
payment
frequency
|
Maturity
date
|
Unamortized
upfront
payment paid
(received)
|
Unrealized
appreciation
(depreciation)
|
Value
|
Centrally
cleared
|
96,000,000
|
USD
|
Fixed
2.136%
|
USD
3 month LIBOR BBA(a)
|
Semi-Annual
|
Quarterly
|
Oct
2022
|
—
|
$(4,258,908)
|
$(4,258,908)
|
|
|
|
|
|
|
|
|
—
|
$(4,258,908)
|
$(4,258,908)
|
(a)
|
At 4-30-20, the 3 month LIBOR
was 0.556%.
|
Derivatives
Currency Abbreviations
|
USD
|
U.S.
Dollar
|
Derivatives
Abbreviations
|
BBA
|
The
British Banker's Association
|
LIBOR
|
London
Interbank Offered Rate
|
OTC
|
Over-the-counter
|
At 4-30-20, the aggregate cost of
investments for federal income tax purposes was $949,422,588. Net unrealized appreciation aggregated to $1,929,647, of which $105,007,145 related to gross unrealized appreciation and $103,077,498 related to gross unrealized depreciation.
See Notes to financial statements regarding investment
transactions and other derivatives information.
11
|
JOHN HANCOCK PREMIUM
DIVIDEND FUND | SEMIANNUAL REPORT
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
STATEMENT OF ASSETS AND LIABILITIES 4-30-20 (unaudited)
Assets
|
|
Unaffiliated
investments, at value (Cost $948,313,483)
|
$961,888,300
|
Receivable
for centrally cleared swaps
|
1,123,620
|
Cash
|
143,426
|
Collateral
held at broker for futures contracts
|
1,719,953
|
Dividends
and interest receivable
|
3,643,244
|
Other
assets
|
50,993
|
Total
assets
|
968,569,536
|
Liabilities
|
|
Payable
for futures variation margin
|
80,625
|
Liquidity
agreement
|
373,700,000
|
Payable
for investments purchased
|
3,120,051
|
Interest
payable
|
413,986
|
Payable
to affiliates
|
|
Administrative
services fees
|
82,988
|
Trustees'
fees
|
788
|
Other
liabilities and accrued expenses
|
151,320
|
Total
liabilities
|
377,549,758
|
Net
assets
|
$591,019,778
|
Net
assets consist of
|
|
Paid-in
capital
|
$599,279,550
|
Total
distributable earnings (loss)
|
(8,259,772)
|
Net
assets
|
$591,019,778
|
|
Net
asset value per share
|
|
Based
on 48,644,267 shares of beneficial interest outstanding - unlimited number of shares authorized with no par value
|
$12.15
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
SEMIANNUAL
REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND
|
12
|
STATEMENT OF OPERATIONS For
the six months ended 4-30-20 (unaudited)
Investment
income
|
|
Dividends
|
$25,951,362
|
Interest
|
3,574,777
|
Less
foreign taxes withheld
|
(84,630)
|
Total
investment income
|
29,441,509
|
Expenses
|
|
Investment
management fees
|
4,228,005
|
Interest
expense
|
3,924,847
|
Administrative
services fees
|
543,379
|
Transfer
agent fees
|
58,021
|
Trustees'
fees
|
20,741
|
Custodian
fees
|
47,828
|
Printing
and postage
|
138,461
|
Professional
fees
|
48,468
|
Stock
exchange listing fees
|
23,574
|
Other
|
18,041
|
Total
expenses
|
9,051,365
|
Less
expense reductions
|
(38,941)
|
Net
expenses
|
9,012,424
|
Net
investment income
|
20,429,085
|
Realized
and unrealized gain (loss)
|
|
Net
realized gain (loss) on
|
|
Unaffiliated
investments and foreign currency transactions
|
(1,237,992)
|
Futures
contracts
|
(320,254)
|
Swap
contracts
|
(113,939)
|
|
(1,672,185)
|
Change
in net unrealized appreciation (depreciation) of
|
|
Unaffiliated
investments
|
(153,272,077)
|
Futures
contracts
|
(7,256,271)
|
Swap
contracts
|
(2,490,602)
|
|
(163,018,950)
|
Net
realized and unrealized loss
|
(164,691,135)
|
Decrease
in net assets from operations
|
$(144,262,050)
|
13
|
JOHN HANCOCK PREMIUM
DIVIDEND FUND | SEMIANNUAL REPORT
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Six
months ended
4-30-20
(unaudited)
|
Year
ended
10-31-19
|
Increase
(decrease) in net assets
|
|
|
From
operations
|
|
|
Net
investment income
|
$20,429,085
|
$34,857,443
|
Net
realized gain (loss)
|
(1,672,185)
|
24,348,795
|
Change
in net unrealized appreciation (depreciation)
|
(163,018,950)
|
67,197,324
|
Increase
(decrease) in net assets resulting from operations
|
(144,262,050)
|
126,403,562
|
Distributions
to shareholders
|
|
|
From
earnings
|
(30,087,303)
|
(58,438,580)
|
Total
distributions
|
(30,087,303)
|
(58,438,580)
|
Fund
share transactions
|
|
|
Issued
pursuant to Dividend Reinvestment Plan
|
892,878
|
1,505,561
|
Total
increase (decrease)
|
(173,456,475)
|
69,470,543
|
Net
assets
|
|
|
Beginning
of period
|
764,476,253
|
695,005,710
|
End
of period
|
$591,019,778
|
$764,476,253
|
Share
activity
|
|
|
Shares
outstanding
|
|
|
Beginning
of period
|
48,583,189
|
48,489,036
|
Issued
pursuant to Dividend Reinvestment Plan
|
61,078
|
94,153
|
End
of period
|
48,644,267
|
48,583,189
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
SEMIANNUAL
REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND
|
14
|
STATEMENT OF CASH FLOWS For
the six months ended 4-30-20 (unaudited)
|
|
Cash
flows from operating activities
|
|
Net
decrease in net assets from operations
|
$(144,262,050)
|
Adjustments
to reconcile net decrease in net assets from operations to net cash provided by operating activities:
|
|
Long-term
investments purchased
|
(81,574,629)
|
Long-term
investments sold
|
125,650,855
|
Net
purchases and sales in short-term investments
|
(4,748,312)
|
Net
amortization of premium (discount)
|
452,106
|
(Increase)
Decrease in assets:
|
|
Receivable
for centrally cleared swaps
|
(262,968)
|
Collateral
held at broker for futures contracts
|
(566,971)
|
Dividends
and interest receivable
|
(165,820)
|
Other
assets
|
(22,438)
|
Increase
(Decrease) in liabilities:
|
|
Payable
for futures variation margin
|
(618,125)
|
Payable
for investments purchased
|
(8,729,949)
|
Interest
payable
|
(413,819)
|
Payable
to affiliates
|
(14,086)
|
Other
liabilities and accrued expenses
|
(35,136)
|
Net
change in unrealized (appreciation) depreciation on:
|
|
Investments
|
153,272,077
|
Net
realized (gain) loss on:
|
|
Investments
|
1,236,339
|
Net
cash provided by operating activities
|
$39,197,074
|
Cash
flows provided by (used in) financing activities
|
|
Distributions
to shareholders
|
$(29,194,425)
|
Borrowings
from liquidity agreement
|
(10,000,000)
|
Net
cash used in financing activities
|
$(39,194,425)
|
Net
increase in cash
|
$2,649
|
Cash
at beginning of period
|
$140,777
|
Cash
at end of period
|
$143,426
|
Supplemental
disclosure of cash flow information:
|
|
Cash
paid for interest
|
$(4,338,666)
|
Noncash
financing activities not included herein consists of reinvestment distributions
|
$892,878
|
15
|
JOHN HANCOCK PREMIUM
DIVIDEND FUND | SEMIANNUAL REPORT
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
Period
ended
|
4-30-20
1
|
10-31-19
|
10-31-18
|
10-31-17
|
10-31-16
|
10-31-15
|
Per
share operating performance
|
|
|
|
|
|
|
Net
asset value, beginning of period
|
$15.74
|
$14.33
|
$15.95
|
$16.17
|
$15.14
|
$15.43
|
Net
investment income2
|
0.42
|
0.72
|
0.85
|
1.11
|
0.98
|
0.97
|
Net
realized and unrealized gain (loss) on investments
|
(3.39)
|
1.89
|
(0.77)
|
0.14
|
1.16
|
(0.21)
|
Total
from investment operations
|
(2.97)
|
2.61
|
0.08
|
1.25
|
2.14
|
0.76
|
Less
distributions
|
|
|
|
|
|
|
From
net investment income
|
(0.59)
|
(1.17)
|
(1.17)
|
(1.17)
|
(0.97)
|
(0.89)
|
From
net realized gain
|
(0.03)
|
(0.03)
|
(0.53)
|
(0.30)
|
(0.14)
|
(0.20)
|
Total
distributions
|
(0.62)
|
(1.20)
|
(1.70)
|
(1.47)
|
(1.11)
|
(1.09)
|
Anti-dilutive
impact of repurchase plan
|
—
|
—
|
—
|
—
|
—
3,4
|
0.04
4
|
Net
asset value, end of period
|
$12.15
|
$15.74
|
$14.33
|
$15.95
|
$16.17
|
$15.14
|
Per
share market value, end of period
|
$13.39
|
$17.69
|
$15.65
|
$16.97
|
$14.96
|
$13.68
|
Total
return at net asset value (%)5,6
|
(19.43)
7
|
18.52
|
0.19
|
8.26
|
14.83
|
6.18
|
Total
return at market value (%)5
|
(21.05)
7
|
22.04
|
2.84
|
24.50
|
17.58
|
8.29
|
Ratios
and supplemental data
|
|
|
|
|
|
|
Net
assets, end of period (in millions)
|
$591
|
$764
|
$695
|
$771
|
$781
|
$733
|
Ratios
(as a percentage of average net assets):
|
|
|
|
|
|
|
Expenses
before reductions
|
2.57
8
|
3.01
|
2.80
|
2.28
|
1.95
|
1.86
|
Expenses
including reductions9
|
2.56
8
|
3.00
|
2.79
|
2.27
|
1.94
|
1.85
|
Net
investment income
|
5.81
8
|
4.79
|
5.75
|
7.00
|
6.14
|
6.38
|
Portfolio
turnover (%)
|
8
|
18
|
24
|
14
|
19
|
15
|
Senior
securities
|
|
|
|
|
|
|
Total
debt outstanding end of period (in millions)
|
$374
|
$384
|
$384
|
$384
|
$384
|
$384
|
Asset
coverage per $1,000 of debt10
|
$2,582
|
$2,992
|
$2,811
|
$3,009
|
$3,035
|
$2,909
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
SEMIANNUAL
REPORT | JOHN HANCOCK Premium Dividend Fund
|
16
|
1
|
Six
months ended 4-30-20. Unaudited.
|
2
|
Based
on average daily shares outstanding.
|
3
|
Less
than $0.005 per share.
|
4
|
The
repurchase plan was completed at an average repurchase price of $13.27 and $13.41 for 105,700 and 1,218,436 shares for the periods ended 10-31-16 and 10-31-15, respectively.
|
5
|
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 distributions from income, capital gains and tax
return of capital, if any, were reinvested.
|
6
|
Total
returns would have been lower had certain expenses not been reduced during the applicable periods.
|
7
|
Not
annualized.
|
8
|
Annualized.
|
9
|
Expenses
including reductions excluding interest expense were 1.45% (annualized), 1.41%, 1.44%, 1.45, 1.40% and 1.41% for the periods ended 4-30-20, 10-31-19, 10-31-18, 10-31-17, 10-31-16 and 10-31-15, 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.
|
17
|
JOHN HANCOCK Premium
Dividend Fund | SEMIANNUAL REPORT
|
SEE NOTES TO FINANCIAL
STATEMENTS
|
Notes to financial statements
(unaudited)
Note 1—Organization
John
Hancock Premium Dividend 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 scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing
at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the fund's Valuation Policies and Procedures.
In order to value the securities, the fund uses the following
valuation techniques: Equity securities, including exchange-traded or closed-end funds, are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. In the event there were no
sales during the day or closing prices are not available, the securities are valued using the last available bid price. Debt obligations are typically valued based on evaluated prices provided by an independent pricing vendor. 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. Futures contracts are typically valued at the last traded price on the exchange on which they trade. Swaps are generally valued using evaluated prices obtained from an independent pricing vendor.
In certain instances, the Pricing Committee may determine to
value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading
occurred as normal on another exchange or market.
Other
portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund's Pricing Committee following procedures established by the Board of Trustees. The
frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.
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, including registered investment companies. 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
|
SEMIANNUAL
REPORT | JOHN HANCOCK Premium Dividend Fund
|
18
|
methodology used for valuing securities are not necessarily an
indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input
classification of the fund's investments as of April 30, 2020, by major security category or type:
|
Total
value at
4-30-20
|
Level
1
quoted
price
|
Level
2
significant
observable
inputs
|
Level
3
significant
unobservable
inputs
|
Investments
in securities:
|
|
|
|
|
Assets
|
|
|
|
|
Preferred
securities
|
|
|
|
|
Communication
services
|
$20,140,600
|
$20,140,600
|
—
|
—
|
Consumer
discretionary
|
6,504,300
|
6,504,300
|
—
|
—
|
Consumer
staples
|
15,249,000
|
—
|
$15,249,000
|
—
|
Energy
|
22,159,800
|
22,159,800
|
—
|
—
|
Financials
|
121,270,381
|
121,270,381
|
—
|
—
|
Information
technology
|
16,279,040
|
16,279,040
|
—
|
—
|
Real
estate
|
13,834,875
|
13,834,875
|
—
|
—
|
Utilities
|
281,936,638
|
261,991,577
|
19,945,061
|
—
|
Common
stocks
|
320,696,825
|
320,696,825
|
—
|
—
|
Corporate
bonds
|
123,635,841
|
—
|
123,635,841
|
—
|
Short-term
investments
|
20,181,000
|
—
|
20,181,000
|
—
|
Total
investments in securities
|
$961,888,300
|
$782,877,398
|
$179,010,902
|
—
|
Derivatives:
|
|
|
|
|
Liabilities
|
|
|
|
|
Futures
|
$(6,277,157)
|
$(6,277,157)
|
—
|
—
|
Swap
contracts
|
(4,258,908)
|
—
|
$(4,258,908)
|
—
|
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, or for tri-party repurchase
agreements, collateral is held at a third-party custodian bank in a segregated account for the benefit of the fund. 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 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 NAV 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
19
|
JOHN HANCOCK Premium
Dividend Fund | SEMIANNUAL REPORT
|
|
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 certain 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. Non-cash dividends, if any, are recorded at the fair market value of the
securities received. Distributions received on securities that represent a tax return of capital and/or capital gain, if any, are recorded as a reduction of cost of investments and/or as a realized gain, if amounts are estimable. Gains and losses on
securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Real estate investment trusts.
The fund may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of the fiscal year as a reduction of cost of investments and/or as a realized
gain. As a result, the fund will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.
Foreign investing. Assets,
including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments. Foreign
investments are subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.
Funds that invest internationally generally carry more risk
than funds that invest strictly in U.S. securities. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors.
Foreign taxes. The fund may be
subject to withholding tax on income, capital gains or repatriation taxes imposed by certain countries, a portion of which may be recoverable. Foreign taxes are accrued based upon the fund's understanding of the tax rules and rates that exist in the
foreign markets in which it invests. Taxes are accrued based on gains realized by the fund as a result of certain foreign security sales. In certain circumstances, estimated taxes are accrued based on unrealized appreciation of such securities.
Investment income is recorded net of foreign withholding taxes.
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.
Statement of cash flows. A Statement of cash flows is presented when a fund has a significant amount of borrowing during the period, based on the average total borrowing in relation to total assets, or when a certain percentage of the
fund’s investments is classified as Level 3 in the fair value hierarchy. 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 collateral on
derivative contracts, if any.
|
SEMIANNUAL
REPORT | JOHN HANCOCK Premium Dividend Fund
|
20
|
Change in accounting principle.
Accounting Standards Update (ASU) 2017-08, Premium Amortization on Purchased Callable Debt Securities, shortens the premium amortization period for
purchased non contingently callable debt securities and is effective for public companies with fiscal years beginning after December 15, 2018. Adoption of the ASU did not have a material impact to the fund.
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.
As of
October 31, 2019, 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.
Managed distribution plan. The fund has adopted a managed distribution plan (Plan) on September 29, 2014. Under the current Plan, the fund makes monthly distributions of an amount equal to $0.0975 per share, which will be paid monthly until
further notice.
Distributions under the Plan may consist of net investment
income, net realized capital gains and, to the extent necessary, return of capital. Return of capital distributions may be necessary when the fund’s net investment income and net capital gains are insufficient to meet the minimum distribution.
In addition, the fund may also make additional distributions for the purpose of not incurring federal income and excise taxes.
The Board of Trustees may terminate or reduce the amount paid
under the Plan at any time. The termination or reduction may have an adverse effect on the market price of the fund’s shares.
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 under the managed distribution plan described
above. Capital gain distributions, if any, are typically distributed annually.
Such distributions, on a tax basis, are determined in
conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital. The final determination of tax
characteristics of the fund's distribution will occur at the end of the year and will subsequently be reported to shareholders.
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, characterization of distributions, contingent payment debt instruments and derivative transactions.
Note 3—Derivative instruments
The fund may invest in derivatives in order to meet its
investment objective. Derivatives include a variety of different instruments that may be traded in the over-the-counter (OTC) market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the
structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives
involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC
derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Certain derivatives are traded or cleared on an exchange or
central clearinghouse. Exchange-traded or centrally-cleared transactions generally present less counterparty risk to a fund than OTC transactions. The exchange or clearinghouse 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.
21
|
JOHN HANCOCK Premium
Dividend Fund | SEMIANNUAL REPORT
|
|
Centrally-cleared swap contracts are subject to clearinghouse
rules, including initial and variation margin requirements, daily settlement of obligations and the clearinghouse guarantee of payments to the broker. There is, however, still counterparty risk due to the potential insolvency of the broker with
respect to any margin held in the brokers’ customer accounts. While clearing members are required to segregate customer assets from their own assets, in the event of insolvency, there may be a shortfall in the amount of margin held by the
broker for its clients. Collateral or margin requirements for centrally-cleared derivatives are set by the broker or applicable clearinghouse. Margin for centrally-cleared transactions is detailed in the Statement of assets and liabilities as
Receivable/Payable for centrally-cleared swaps. Securities pledged by the fund for centrally-cleared transactions, if any, are identified in the Fund's investments.
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. Futures are traded on an exchange and cleared through a central clearinghouse. Risks related to the use of futures
contracts include possible illiquidity of the futures markets and 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 set by the broker and is generally based on a percentage of the contract value. The margin deposit must then be maintained at the established
level over the life of the contract. Cash that has been pledged by the fund is detailed in the Statement of assets and liabilities as Collateral held at broker for futures contracts. Securities pledged by the fund, if any, are identified in the
Fund's investments. Subsequent payments, referred to as variation margin, are made or received by the fund periodically and are based on changes in the market value of open futures contracts. Futures contracts are marked-to-market daily 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, 2020, the fund used
futures contracts to manage against anticipated interest rate changes. The fund held futures contracts with USD notional values ranging from $112.1 million to $119.6 million, as measured at each quarter end.
Swaps. Swap agreements are
agreements between the fund and a counterparty to exchange cash flows, assets, foreign currencies or market-linked returns at specified intervals. Swap agreements are privately negotiated in the OTC market (OTC swaps) 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 a component of unrealized appreciation/depreciation of swap contracts. The value of the swap will typically impose
collateral posting obligations on the party that is considered out-of-the-money on the swap.
Upfront payments made/received by the fund, if any, are
amortized/accreted for financial reporting purposes, with the unamortized/unaccreted portion included in the Statement of assets and liabilities. 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.
Entering into swap agreements involves, to varying degrees,
elements of credit, market and documentation risk that may provide outcomes 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. In addition to interest rate risk, market risks may also impact the swap. The fund may also
suffer losses if it is unable to terminate or assign outstanding swaps or reduce its exposure through offsetting transactions.
|
SEMIANNUAL
REPORT | JOHN HANCOCK Premium Dividend Fund
|
22
|
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.
During the six months ended April 30, 2020, the fund used
interest rate swap contracts to manage against anticipated interest rate changes. The notional values at the period end are representative of the fund's exposure throughout the period. The notional values at the period end are representative of the
fund's exposure throughout the period. No new interest rate swap positions were entered into or closed during the six months ended April 30, 2020.
Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held
by the fund at April 30, 2020 by risk category:
Risk
|
Statement
of assets
and liabilities
location
|
Financial
instruments
location
|
Assets
derivatives
fair value
|
Liabilities
derivatives
fair value
|
Interest
rate
|
Receivable/payable
for futures variation margin
|
Futures
1
|
—
|
$(6,277,157)
|
Interest
rate
|
Swap
contracts, at value
|
Interest
rate swaps2
|
—
|
(4,258,908)
|
|
|
|
—
|
$(10,536,065)
|
1
|
Reflects cumulative
appreciation/depreciation on futures as disclosed in Fund's investments. Only the period end variation margin is separately disclosed on the Statement of assets and liabilities.
|
2
|
Reflects
cumulative value of swap contracts. Receivable/payable for centrally cleared swaps, which includes value and margin, are shown separately 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, 2020:
|
Statement
of operations location - Net realized gain (loss) on:
|
Risk
|
Futures
contracts
|
Swap
contracts
|
Total
|
Interest
rate
|
$(320,254)
|
$(113,939)
|
$(434,193)
|
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, 2020:
|
Statement
of operations location - Change in net unrealized appreciation (depreciation) of:
|
Risk
|
Futures
contracts
|
Swap
contracts
|
Total
|
Interest
rate
|
$(7,256,271)
|
$(2,490,602)
|
$(9,746,873)
|
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.
23
|
JOHN HANCOCK Premium
Dividend Fund | SEMIANNUAL REPORT
|
|
Note 5—Fees and transactions with affiliates
John Hancock Investment Management 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, equivalent on an annual basis to 0.50% of the fund’s average daily managed assets (net assets plus borrowing under the
Liquidity Agreement) (see Note 8). In addition, the fund pays to the Advisor 5.00% of the fund’s daily gross income, which amounted to $1,520,367 for the six months ended April 30, 2020. The Advisor has a subadvisory agreement with Manulife
Investment Management (US) LLC, an indirectly owned subsidiary of MFC and an affiliate of the Advisor. 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 group of funds 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, 2020, this waiver amounted to 0.01% of the fund’s average
daily net assets on an annualized basis. This arrangement expires on July 31, 2021, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.
The expense reductions described above amounted to $38,941 for
the six months ended April 30, 2020.
Expenses waived or
reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the
waivers and reimbursements as described above, incurred for the six months ended April 30, 2020, were equivalent to a net annual effective rate of 0.77% of the fund's average daily managed net assets.
Administrative services. The
fund has an administrative agreement with the Advisor under which the Advisor oversees the custodial, auditing, valuation, accounting, legal, compliance, stock transfer and dividend disbursing services and other operational activities and maintains
fund communications with shareholders. The fund pays the Advisor a monthly administration fee at an annual rate of 0.10% of the fund’s average weekly managed assets.
Trustee expenses. The fund
compensates each Trustee who is not an employee of the Advisor or its affiliates. These Trustees receive 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.
Note 6—Fund share transactions
On December 17, 2014, the Board of Trustees approved a share
repurchase plan, which is 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, 2019. The current share repurchase plan will remain in effect between January 1, 2020 and December 31, 2020.
During the six months ended April 30, 2020 and the year ended
October 31, 2019, the fund had no activities under the repurchase program. Shares repurchased and corresponding dollar amounts, if any, are included on the Statements of changes in net assets. The anti-dilutive impacts of these share repurchases are
included on the Financial highlights.
|
SEMIANNUAL
REPORT | JOHN HANCOCK Premium Dividend Fund
|
24
|
Note 7—Leverage risk
The fund
utilizes a Liquidity Agreement (LA) to increase its assets available for investment. When the fund leverages its assets, shareholders bear the expenses associated with the LA 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 shares, including:
•
|
the likelihood of greater
volatility of NAV and market price of shares;
|
•
|
fluctuations in the interest
rate paid for the use of the LA;
|
•
|
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. The use of securities lending to obtain leverage in the fund’s investments may subject the fund to greater risk of loss than would reinvestment of collateral in short term highly rated investments.
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 LA 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—Liquidity Agreement
The
fund has entered into a Liquidity Agreement (LA) with State Street Bank and Trust Company (SSB) that allows it to borrow or otherwise access up to $383.7 million (maximum facility amount) through a line of credit, securities lending and reverse
repurchase agreements. The amounts outstanding at April 30, 2020 are shown in the Statement of assets and liabilities as the Liquidity agreement.
The fund pledges its assets as collateral to secure obligations
under the LA. The fund retains the risks and rewards of the ownership of assets pledged to secure obligations under the LA and makes these assets available for securities lending and reverse repurchase transactions with SSB acting as the
fund’s authorized agent for these transactions. All transactions initiated through SSB are required to be secured with cash collateral received from the securities borrower (the Borrower) or cash is received from the reverse repurchase
agreement (Reverse Repo) counterparties. Securities lending transactions will be secured with cash collateral in amounts at least equal to 100% of the market value of the securities utilized in these transactions. Cash received by SSB from
securities lending or Reverse Repo transactions is credited against the amounts borrowed under the line of credit.
Upon return of securities by the Borrower or Reverse Repo
counterparty, SSB will return the cash collateral to the Borrower or proceeds from the Reverse Repo, as applicable, which will eliminate the credit against the line of credit and will cause the drawdowns under the line of credit to increase by the
amounts returned. Income earned on the loaned securities is retained by SSB, and any interest due on the reverse repurchase agreements is paid by SSB.
SSB has indemnified the fund for certain losses that may arise
if the Borrower or a Reverse Repo Counterparty fails to return securities when due. With respect to securities lending transactions, upon a default of the securities borrower, SSB uses the collateral received from the Borrower to purchase
replacement securities of the same issue, type, class and series. If the value of the collateral is less than the purchase cost of replacement securities, SSB is responsible for satisfying the shortfall but only to the extent that the shortfall is
not due to any of the fund’s losses on the reinvested cash collateral. Although the risk of the loss of the securities is mitigated by receiving collateral
25
|
JOHN HANCOCK Premium
Dividend Fund | SEMIANNUAL REPORT
|
|
from the Borrower or proceeds from the Reverse Repo
counterparty and through SSB indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the Borrower or Reverse Repo counterparty fails to return the securities on a timely basis.
Under normal circumstances, interest charged is at the
rate of one month LIBOR (London Interbank Offered Rate) plus 0.625% and is payable monthly on the aggregate balance of the drawdowns outstanding under the LA. As of April 30, 2020, the fund had an aggregate balance of $373,700,000 at an interest
rate of 0.95%, which is reflected in the Liquidity agreement on the Statement of assets and liabilities. During the six months ended April 30, 2020, the average balance of the LA and the effective average interest rate were $381,667,033 and 2.06%,
respectively.
The fund may terminate the LA with 60
days’ notice. If certain asset coverage and collateral requirements, or other covenants are not met, the LA could be deemed in default and result in termination. Absent a default or facility termination event, SSB is required to provide the
fund with 360 days’ notice prior to terminating the LA.
Due to the anticipated discontinuation of LIBOR, as discussed
in Note 9, the LA may be amended to remove LIBOR as the reference rate for interest and to replace LIBOR with an alternative reference rate for interest mutually agreed upon by the fund and SSB. However, there remains uncertainty regarding the
future utilization of LIBOR and the nature of any replacement rate and the potential effect of a transition away from LIBOR on the fund and/or the LA cannot yet be fully determined.
Note 9—LIBOR Discontinuation Risk
The LA utilizes LIBOR as the reference or benchmark rate for
interest rate calculations. LIBOR is a measure of the average interest rate at which major global banks can borrow from one another. Following allegations of rate manipulation and concerns regarding its thin liquidity, in July 2017, the U.K.
Financial Conduct Authority, which regulates LIBOR, announced that it will stop encouraging banks to provide the quotations needed to sustain LIBOR after 2021. This event will likely cause LIBOR to cease to be published. Before then, it is expected
that market participants such as the fund and SSB will transition to the use of different reference or benchmark rates. However, although regulators have suggested alternative rates, there is currently no definitive information regarding the future
utilization of LIBOR or of any replacement rate.
It is
uncertain what impact the discontinuation of LIBOR will have on the use of LIBOR as a reference rate in the LA. It is expected that market participants will amend financial instruments referencing LIBOR, such as the LA, to include fallback
provisions and other measures that contemplate the discontinuation of LIBOR or other similar market disruption events, but neither the effect of the transition process nor the viability of such measures is known. In addition, there are obstacles to
converting certain longer term securities and transactions to a new benchmark or benchmarks and the effectiveness of one alternative reference rate versus multiple alternative reference rates in new or existing financial instruments and products has
not been determined. As market participants transition away from LIBOR, LIBOR's usefulness may deteriorate, which could occur prior to the end of 2021. The transition process may lead to increased volatility and illiquidity in markets that currently
rely on LIBOR to determine interest rates. LIBOR's deterioration may adversely affect the liquidity and/or market value of securities that use LIBOR as a benchmark interest rate. The use of an alternative reference rate, or the transition process to
an alternative reference rate, may result in increases to the interest paid by the fund pursuant to the LA and, therefore, may adversely affect the fund's performance.
Note 10—Purchase and sale of securities
Purchases and sales of securities, other than short-term
investments, amounted to $81,574,629 and $125,650,855, respectively, for the six months ended April 30, 2020.
|
SEMIANNUAL
REPORT | JOHN HANCOCK Premium Dividend Fund
|
26
|
Note 11—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 NAV 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. Financial services companies can be hurt by economic declines, changes in interest rates
regulatory and market impacts.
Note 12—Coronavirus (COVID-19) pandemic
The novel COVID-19 disease has resulted in significant
disruptions to global business activity. A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange trading suspensions and closures, impact the ability to complete redemptions, and affect fund
performance.
27
|
JOHN HANCOCK Premium
Dividend Fund | SEMIANNUAL REPORT
|
|
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
December 15, 1989, and are publicly traded on the New York Stock Exchange (the NYSE).
The fund's investment objective is to provide high current income,
consistent with modest growth of capital. The fund will pursue its
objective by investing in a diversified portfolio comprised primarily
of dividend paying preferred securities and common equity securities.
The fund utilizes a liquidity agreement to increase its assets
available for investments.
Under normal circumstances, the fund will invest at least 80% of its
assets in dividend paying securities. The fund will notify
shareholders at least 60 days prior to any change in this 80%
investment policy.
Dividends and distributions
During the six months ended
April 30, 2020, distributions from net investment income totaling $0.5850 per share
and distributions from capital gains totaling $0.0342 per share were
paid to shareholders. The dates of payments and the amounts per share
were as follows:
|
|
|
|
|
|
|
Payment date
|
|
|
Income distributions
|
|
|
November 29, 2019
|
|
|
$0.0975
|
|
|
December 19, 2019
|
|
|
0.0975
|
|
|
January 31, 2020
|
|
|
0.0975
|
|
|
February 28, 2020
|
|
|
0.0975
|
|
|
March 31, 2020
|
|
|
0.0975
|
|
|
April 30, 2020
|
|
|
0.0975
|
|
|
Total
|
|
|
$0.5850
|
|
|
|
Payment date
|
Additional distributions
|
December 31, 2019
|
0.0342
|
Total
|
$0.6192
|
SEMIANNUAL REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 28
Shareholder meeting
The fund held its Annual Meeting of Shareholders on Monday,
February 3, 2020. The following proposal was considered by the shareholders:
Proposal: To elect five (5) Trustees (James R. Boyle, William H. Cunningham,
Grace K. Fey, Hassell H. McClellan and Gregory A. Russo) to serve for
a three-year term ending at the 2023 Annual Meeting of Shareholders.
|
|
|
|
Total votes
for the nominee
|
Total votes withheld
from the nominee
|
Independent Trustees
|
|
|
James R. Boyle
|
36,757,109.514
|
642,807.290
|
William H. Cunningham
|
36,636,098.170
|
763,818.634
|
Grace K. Fey
|
36,478,897.929
|
921,018.875
|
Hassell H. McClellan
|
36,543,765.553
|
856,151.251
|
Gregory A. Russo
|
36,530,539.472
|
869,377.332
|
Trustees whose term of office continued after the Annual Meeting of
Shareholders because they were not up for election are: Charles L.
Bardelis, Peter S. Burgess, Marianne Harrison, Andrew G. Arnott,
Deborah C. Jackson, James M. Oates and Steven R. Pruchansky.
SEMIANNUAL REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 29
|
|
Trustees
Hassell H. McClellan, Chairperson
Steven R. Pruchansky, Vice Chairperson
Andrew G. Arnott
Charles L. Bardelis*
James R. Boyle
Peter S. Burgess*
William H. Cunningham
Grace K. Fey
Marianne Harrison
Deborah C. Jackson
James M. Oates*
Gregory A. Russo
Officers
Andrew G. Arnott
President
Francis V. Knox, Jr.
Chief Compliance Officer
Charles A. Rizzo
Chief Financial Officer
Salvatore Schiavone
Treasurer
Christopher (Kit) Sechler
Secretary and Chief Legal Officer
|
Investment advisor
John Hancock Investment Management LLC
Subadvisor
Manulife Investment Management (US) LLC
Portfolio Managers
Joseph H. Bozoyan, CFA
Brad Lutz, CFA
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: PDT
|
* Member of the Audit Committee
Non-Independent Trustee
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.
All of the fund's holdings as of the end of the third month of every
fiscal quarter are filed with the SEC on Form N-PORT within 60 days
of the end of the fiscal quarter. The fund's Form N-PORT filings are
available on our website and the SEC's website, sec.gov.
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.
|
|
|
|
|
You can also contact us:
|
|
800-852-0218
jhinvestments.com
|
Regular mail:
Computershare
P.O. Box 505000
Louisville, KY 40233
|
Express mail:
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
|
SEMIANNUAL REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 30
John Hancock family of funds
|
|
|
DOMESTIC EQUITY FUNDS
Blue Chip Growth
Classic Value
Disciplined Value
Disciplined Value Mid Cap
Equity Income
Financial Industries
Fundamental All Cap Core
Fundamental Large Cap Core
New Opportunities
Regional Bank
Small Cap Core
Small Cap Growth
Small Cap Value
U.S. Global Leaders Growth
U.S. Quality Growth
GLOBAL AND INTERNATIONAL EQUITY FUNDS
Disciplined Value International
Emerging Markets
Emerging Markets Equity
Fundamental Global Franchise
Global Equity
Global Shareholder Yield
Global Thematic Opportunities
International Dynamic Growth
International Growth
International Small Company
|
|
INCOME FUNDS
Bond
California Tax-Free Income
Emerging Markets Debt
Floating Rate Income
Government Income
High Yield
High Yield Municipal Bond
Income
Investment Grade Bond
Money Market
Short Duration Bond
Short Duration Credit Opportunities
Strategic Income Opportunities
Tax-Free Bond
ALTERNATIVE AND SPECIALTY FUNDS
Absolute Return Currency
Alternative Asset Allocation
Alternative Risk Premia
Diversified Macro
Infrastructure
Multi-Asset Absolute Return
Seaport Long/Short
|
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 Investment Management at 800-852-0218, or visit the
fund's website at jhinvestments.com. Please read the prospectus
carefully before investing or sending money.
The John Hancock funds are distributed by John Hancock Investment
Management Distributors LLC. Member FINRA SIPC.
|
|
|
ASSET ALLOCATION
Balanced
Multi-Asset High Income
Multi-Index Lifetime Portfolios
Multi-Index Preservation Portfolios
Multimanager Lifestyle Portfolios
Multimanager Lifetime Portfolios
Retirement Income 2040
EXCHANGE-TRADED FUNDS
John Hancock Multifactor Consumer Discretionary ETF
John Hancock Multifactor Consumer Staples ETF
John Hancock Multifactor Developed International ETF
John Hancock Multifactor Emerging Markets ETF
John Hancock Multifactor Energy ETF
John Hancock Multifactor Financials ETF
John Hancock Multifactor Healthcare ETF
John Hancock Multifactor Industrials ETF
John Hancock Multifactor Large Cap ETF
John Hancock Multifactor Materials ETF
John Hancock Multifactor Media and
Communications ETF
John Hancock Multifactor Mid Cap ETF
John Hancock Multifactor Small Cap ETF
John Hancock Multifactor Technology ETF
John Hancock Multifactor Utilities ETF
|
|
ENVIRONMENTAL, SOCIAL, AND
GOVERNANCE FUNDS
ESG All Cap Core
ESG Core Bond
ESG International Equity
ESG Large Cap Core
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
|
John Hancock Multifactor ETF shares are bought and sold at market
price (not NAV), and are not individually redeemed
from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and
are subadvised by Dimensional Fund Advisors LP.
Foreside is not affiliated with John Hancock Investment Management
Distributors LLC or Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP receives compensation from John Hancock
in connection with licensing rights to the
John Hancock Dimensional indexes. Dimensional Fund Advisors LP does
not sponsor, endorse, or sell, and makes no
representation as to the advisability of investing in, John Hancock
Multifactor ETFs.
John Hancock Investment Management
A trusted brand
John Hancock Investment Management is a premier asset manager
representing one of America's most trusted brands, with a heritage of
financial stewardship dating back to 1862. Helping our shareholders
pursue their financial goals is at the core of everything we do. It's why
we support the role of professional financial advice and operate with
the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising
standards and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide
a diverse set of investments backed by some of the world's best
managers, along with strong risk-adjusted returns across asset classes.
John Hancock Investment Management LLC
200 Berkeley Street
n Boston, MA 02116-5010
n 800-225-5291
n jhinvestments.com
|
|
MF1182627
|
P2SA 4/20
6/2020
|
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
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) (b)
|
|
|
Total number of
|
Maximum number of
|
|
|
|
shares purchased
|
shares that may yet
|
|
Total number of
|
Average price per
|
as part of publicly
|
be purchased under
|
Period
|
shares purchased
|
share
|
announced plans*
|
the plans
|
Nov-19
|
-
|
-
|
-
|
4,864,427
|
Dec-19
|
-
|
-
|
-
|
4,864,427
|
Jan-20
|
-
|
-
|
-
|
4,864,427*
|
Feb-20
|
-
|
-
|
-
|
4,864,427
|
Mar-20
|
-
|
-
|
-
|
4,864,427
|
Apr-20
|
-
|
-
|
-
|
4,864,427
|
Total
|
-
|
-
|
|
|
|
|
|
|
|
* In December 17, 2014, the Board of Trustees approved a share repurchase plan, which has been subsequently reviewed and approved by the Board of Trustees. 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, 2019. The current share plan will remain in effect between January 1, 2020 and December 31, 2020.
|
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has adopted procedures by which shareholders may recommend nominees to the registrant’s 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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES
FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
The Fund did not participate directly in securities lending activities. See Note 7 to financial statements in Item 1.
ITEM 13. 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)(1) 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) Registrants notice to shareholders pursuant to Registrants exemptive order granting an exemption from Section 19(b) of the Investment Company Act of 1940, as amended and Rule 19b-1 thereunder regarding distributions made pursuant to the Registrants Managed Distribution Plan.
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 Premium Dividend Fund
By:
|
/s/ Andrew Arnott
|
|
|
Andrew Arnott
|
|
|
President
|
|
|
|
|
|
Date:
|
June 25, 2020
|
|
|
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 25, 2020
|
|
|
By:
|
/s/ Charles A. Rizzo
|
|
|
Charles A. Rizzo
|
|
|
Chief Financial Officer
|
|
|
|
|
|
Date:
|
June 25, 2020
|
John Hancock Premium Div... (NYSE:PDT)
Historical Stock Chart
From Mar 2024 to Apr 2024
John Hancock Premium Div... (NYSE:PDT)
Historical Stock Chart
From Apr 2023 to Apr 2024