UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS
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)
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: | July 31, 2017 |
ITEM 1. SCHEDULE OF INVESTMENTS
John Hancock
Premium Dividend Fund
| Fund’s investments |
As of 7-31-17 (unaudited)
| Shares | Value | |||
| Preferred securities 98.3% (66.2% of Total investments) | $771,120,944 | |||
| (Cost $737,273,176) | ||||
| Consumer staples 2.6% | 20,715,094 | |||
| Food and staples retailing 2.6% | ||||
| Ocean Spray Cranberries, Inc., 6.250% (A) | 224,250 | 20,715,094 | ||
| Energy 5.8% | 45,730,910 | |||
| Oil, gas and consumable fuels 5.8% | ||||
| Kinder Morgan, Inc., 9.750% (B)(C) | 1,033,000 | 45,730,910 | ||
| Financials 49.4% | 387,206,290 | |||
| Banks 29.8% | ||||
| Bank of America Corp., 6.375% (C) | 980,000 | 25,352,600 | ||
| Bank of America Corp., 6.625% (C) | 360,000 | 9,288,000 | ||
| Bank of America Corp., Depositary Shares, Series D, 6.204% (C) | 630,000 | 16,304,400 | ||
| Barclays Bank PLC, Series 5, 8.125% | 360,000 | 9,709,200 | ||
| BB&T Corp., 5.625% (C) | 770,000 | 19,519,500 | ||
| BB&T Corp. (Callable 11-1-17), 5.200% (C) | 205,000 | 5,129,100 | ||
| BB&T Corp. (Callable 6-1-18), 5.200% (C) | 110,000 | 2,763,200 | ||
| Citigroup, Inc. (6.875% to 11-15-23, then 3 month LIBOR + 4.130%) (C) | 137,223 | 4,112,573 | ||
| Citigroup, Inc. (7.125% to 9-30-23, then 3 month LIBOR + 4.040%) (C) | 240,650 | 7,156,931 | ||
| Citigroup, Inc., Depositary Shares, Series AA, 8.125% (C) | 338,830 | 9,385,591 | ||
| JPMorgan Chase & Co., 5.450% (C) | 490,000 | 12,504,800 | ||
| JPMorgan Chase & Co., 5.500% (C) | 200,000 | 5,028,000 | ||
| JPMorgan Chase & Co., 6.100% (C) | 650,000 | 17,394,000 | ||
| JPMorgan Chase & Co., 6.300% (C) | 245,000 | 6,588,050 | ||
| JPMorgan Chase & Co., 6.700% (C) | 35,000 | 940,100 | ||
| Santander Holdings USA, Inc., Series C, 7.300% | 500,000 | 13,125,000 | ||
| The PNC Financial Services Group, Inc., 5.375% (C) | 180,000 | 4,635,000 | ||
| The PNC Financial Services Group, Inc. (6.125% to 5-1-22, then 3 month LIBOR | ||||
| + 4.067%) (C) | 311,600 | 9,058,212 | ||
| U.S. Bancorp, 5.150% (C) | 500,000 | 13,055,000 | ||
| U.S. Bancorp (6.500% to 1-15-22, then 3 month LIBOR + 4.468%) (C) | 351,000 | 10,473,840 | ||
| Wells Fargo & Company, 6.000% (C) | 205,000 | 5,407,900 | ||
| Wells Fargo & Company, 8.000% (C) | 1,017,000 | 26,380,980 | ||
| Capital markets 16.4% | ||||
| Deutsche Bank Contingent Capital Trust II, 6.550% (C) | 241,725 | 6,205,081 | ||
| Deutsche Bank Contingent Capital Trust III, 7.600% (C) | 510,000 | 13,418,100 | ||
| Morgan Stanley, 6.625% (C) | 842,557 | 23,069,211 | ||
| Morgan Stanley (6.375% to 10-15-24, then 3 month LIBOR + 3.708%) (C) | 249,227 | 7,180,230 | ||
| Morgan Stanley (7.125% to 10-15-23, then 3 month LIBOR + 4.320%) (C) | 300,000 | 8,985,000 | ||
| State Street Corp., 5.250% (C) | 1,015,000 | 25,811,450 | ||
| State Street Corp., 6.000% (C) | 80,000 | 2,142,400 | ||
| State Street Corp. (5.900% to 3-15-24, then 3 month LIBOR + 3.108%) (C) | 25,000 | 713,750 | ||
| The Bank of New York Mellon Corp., 5.200% (C) | 442,000 | 11,138,400 | ||
| The Goldman Sachs Group, Inc., 5.950% (C) | 920,000 | 23,552,000 | ||
| The Goldman Sachs Group, Inc., Series B, 6.200% (C) | 250,000 | 6,547,500 | ||
| Consumer finance 1.4% | ||||
| Capital One Financial Corp., 6.000% (C) | 136,000 | 3,444,880 | ||
| Capital One Financial Corp., 6.200% (C) | 80,000 | 2,128,000 | ||
| Capital One Financial Corp., 6.250% (C) | 87,047 | 2,302,393 | ||
| Capital One Financial Corp., 6.700% (C) | 112,650 | 3,097,875 | ||
| Insurance 1.8% | ||||
| Aegon NV, 6.500% (C) | 75,000 | 1,968,750 |
| SEE NOTES TO FUND’S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 2 |
| Shares | Value | |||
| Financials (continued) | ||||
| Insurance (continued) | ||||
| Prudential Financial, Inc., 5.750% (C) | 50,000 | $1,306,500 | ||
| Prudential PLC, 6.750% (C) | 175,000 | 4,725,000 | ||
| W.R. Berkley Corp., 5.625% (C) | 240,351 | 6,157,793 | ||
| Health care 3.9% | 30,747,598 | |||
| Pharmaceuticals 3.9% | ||||
| Teva Pharmaceutical Industries, Ltd., 7.000% (C) | 52,650 | 30,747,598 | ||
| Industrials 0.4% | 3,437,100 | |||
| Machinery 0.4% | ||||
| Stanley Black & Decker, Inc., 5.750% (C) | 135,000 | 3,437,100 | ||
| Real estate 2.3% | 17,629,639 | |||
| Equity real estate investment trusts 2.3% | ||||
| Crown Castle International Corp., Series A, 6.875% (C) | 2,000 | 2,134,454 | ||
| Senior Housing Properties Trust, 5.625% | 554,690 | 13,894,985 | ||
| Ventas Realty LP, 5.450% (C) | 63,000 | 1,600,200 | ||
| Telecommunication services 3.0% | 23,536,700 | |||
| Diversified telecommunication services 0.5% | ||||
| Qwest Corp., 6.125% | 107,500 | 2,706,850 | ||
| Verizon Communications, Inc., 5.900% (C) | 60,000 | 1,600,200 | ||
| Wireless telecommunication services 2.5% | ||||
| Telephone & Data Systems, Inc., 5.875% | 100,000 | 2,514,000 | ||
| Telephone & Data Systems, Inc., 6.625% | 285,000 | 7,447,050 | ||
| Telephone & Data Systems, Inc., 6.875% | 170,000 | 4,443,800 | ||
| United States Cellular Corp., 6.950% | 185,000 | 4,824,800 | ||
| Utilities 30.9% | 242,117,613 | |||
| Electric utilities 22.8% | ||||
| Duke Energy Corp., 5.125% (C) | 192,458 | 4,905,754 | ||
| Great Plains Energy, Inc., 7.000% | 626,000 | 34,930,800 | ||
| HECO Capital Trust III, 6.500% | 181,000 | 4,899,670 | ||
| Interstate Power & Light Company, 5.100% | 1,340,000 | 34,585,400 | ||
| NextEra Energy Capital Holdings, Inc., 5.125% (C) | 185,000 | 4,689,750 | ||
| NextEra Energy Capital Holdings, Inc., 5.700% (C) | 320,000 | 8,160,000 | ||
| NextEra Energy, Inc., 6.123% (C) | 30,000 | 1,666,800 | ||
| NSTAR Electric Company, 4.250% | 13,347 | 1,297,328 | ||
| NSTAR Electric Company, 4.780% | 100,000 | 9,881,000 | ||
| PPL Capital Funding, Inc., 5.900% (C) | 1,450,320 | 37,345,740 | ||
| SCE Trust II, 5.100% (B)(C) | 1,208,500 | 30,744,240 | ||
| The Southern Company, 6.250% (C) | 155,000 | 4,212,900 | ||
| Union Electric Company, 3.700% | 12,262 | 1,192,480 | ||
| Multi-utilities 8.1% | ||||
| BGE Capital Trust II, 6.200% | 690,000 | 18,071,100 | ||
| Dominion Energy, Inc., 6.750% (C) | 593,000 | 30,231,140 | ||
| DTE Energy Company, 5.250% (C) | 235,000 | 6,018,350 | ||
| Integrys Holding, Inc. (6.000% to 8-1-23, then 3 month LIBOR + 3.220%) | 352,044 | 9,285,161 | ||
| Common stocks 48.6% (32.7% of Total investments) | $381,312,251 | |||
| (Cost $251,514,050) | ||||
| Energy 6.9% | 54,594,575 | |||
| Oil, gas and consumable fuels 6.9% | ||||
| BP PLC, ADR (B)(C) | 715,950 | 25,158,483 |
| SEE NOTES TO FUND’S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 3 |
| Shares | Value | ||||||||
| Energy (continued) | |||||||||
| Oil, gas and consumable fuels (continued) | |||||||||
| Chevron Corp. | 67,000 | $7,315,730 | |||||||
| Enbridge, Inc. | 101,200 | 4,195,752 | |||||||
| ONEOK, Inc. (B)(C) | 115,000 | 6,505,550 | |||||||
| Royal Dutch Shell PLC, ADR, Class A (B)(C) | 202,000 | 11,419,060 | |||||||
| Telecommunication services 5.1% | 39,821,600 | ||||||||
| Diversified telecommunication services 4.4% | |||||||||
| AT&T, Inc. | 550,000 | 21,450,000 | |||||||
| Verizon Communications, Inc. | 260,000 | 12,584,000 | |||||||
| Wireless telecommunication services 0.7% | |||||||||
| Vodafone Group PLC, ADR (B)(C) | 195,000 | 5,787,600 | |||||||
| Utilities 36.6% | 286,896,076 | ||||||||
| Electric utilities 19.9% | |||||||||
| Alliant Energy Corp. | 800,000 | 32,424,000 | |||||||
| American Electric Power Company, Inc. (B)(C) | 200,000 | 14,108,000 | |||||||
| Avangrid, Inc. (B)(C) | 381,500 | 17,327,730 | |||||||
| Duke Energy Corp. | 285,000 | 24,259,200 | |||||||
| Entergy Corp. | 60,000 | 4,603,200 | |||||||
| Eversource Energy (B)(C) | 380,000 | 23,100,200 | |||||||
| OGE Energy Corp. | 400,000 | 14,344,000 | |||||||
| Pinnacle West Capital Corp. | 50,000 | 4,336,500 | |||||||
| PPL Corp. (B)(C) | 150,000 | 5,749,500 | |||||||
| The Southern Company | 100,000 | 4,793,000 | |||||||
| Xcel Energy, Inc. | 240,000 | 11,354,400 | |||||||
| Gas utilities 0.4% | |||||||||
| ONE Gas, Inc. | 42,500 | 3,093,150 | |||||||
| Multi-utilities 16.3% | |||||||||
| Black Hills Corp. (B)(C) | 200,000 | 13,932,000 | |||||||
| CenterPoint Energy, Inc. | 1,025,000 | 28,894,750 | |||||||
| Dominion Energy, Inc. (B)(C) | 240,000 | 18,523,200 | |||||||
| DTE Energy Company | 250,000 | 26,765,000 | |||||||
| National Grid PLC, ADR (B)(C) | 238,333 | 14,898,196 | |||||||
| NiSource, Inc. | 440,000 | 11,466,400 | |||||||
| Vectren Corp. | 215,000 | 12,923,650 | |||||||
| Yield* (%) | Maturity date | Par value^ | Value | ||||||
| Short-term investments 1.7% (1.1% of Total investments) | $13,335,000 | ||||||||
| (Cost $13,335,000) | |||||||||
| U.S. Government Agency 1.5% | 11,994,000 | ||||||||
| Federal Agricultural Mortgage Corp. Discount Note | 0.800 | 08-01-17 | 2,399,000 | 2,399,000 | |||||
| Federal Home Loan Bank Discount Note | 0.617 | 08-01-17 | 9,595,000 | 9,595,000 | |||||
| Par value^ | Value | ||||||||
| Repurchase agreement 0.2% | 1,341,000 | ||||||||
| Repurchase Agreement with State Street Corp. dated 7-31-17 at 0.340% to be | |||||||||
| repurchased at $1,341,013 on 8-1-17, collateralized by $1,355,000 | |||||||||
| U.S. Treasury Notes, 2.125% due 2-29-24 (valued at $1,372,375, including | |||||||||
| interest) | 1,341,000 | 1,341,000 | |||||||
| Total investments (Cost $1,002,122,226)† 148.6% | $1,165,768,195 | ||||||||
| Other assets and liabilities, net (48.6%) | (381,149,468 | ) | |||||||
| Total net assets 100.0% | $784,618,727 |
| SEE NOTES TO FUND’S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 4 |
| 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. | ||
| Security Abbreviations and Legend | ||
| ADR | American Depositary Receipt | |
| 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) | A portion of this security is on loan as of 7-31-17, and is a component of the fund’s leverage under the Liquidity Agreement. | |
| (C) | All or a portion of this security is pledged as collateral pursuant to the Liquidity Agreement. Total collateral value at 7-31-17 was $638,688,944. A portion of the securities pledged as collateral were loaned pursuant to the Liquidity Agreement. The value of securities on loan amounted to $123,574,549. | |
| * | 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. | |
| † | At 7-31-17, the aggregate cost of investment securities for federal income tax purposes was $1,003,248,418. Net unrealized appreciation aggregated to $162,519,777, of which $180,014,014 related to appreciated investment securities and $17,494,237 related to depreciated investment securities. | |
| SEE NOTES TO FUND’S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 5 |
DERIVATIVES
FUTURES
| Unrealized | ||||||||||||
| Number of | Expiration | Notional | Notional | appreciation | ||||||||
| Open contracts | contracts | Position | date | basis* | value* | (depreciation) | ||||||
| 10-Year U.S. Treasury Note Futures | 860 | Short | Sep 2017 | $(108,149,904) | $(108,265,938) | $(116,034) | ||||||
| $(116,034) |
* Notional basis refers to the contractual
amount agreed upon at inception of open contracts; notional value represents the
current value of the open contract.
OTC is an
abbreviation for over-the-counter. See Notes to Fund’s investments regarding
investment transactions and other derivatives information.
| SEE NOTES TO FUND’S INVESTMENTS | QUARTERLY REPORT | JOHN HANCOCK PREMIUM DIVIDEND FUND 6 |
Notes to Fund's investments (unaudited)
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 held by the fund 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. Futures contracts are valued at settlement prices, which are the official closing prices published by the exchange on which they trade.
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. 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 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 July 31, 2017, by major security category or type:
| Total value at Date |
Level 1 quoted price |
Level 2 significant observable inputs |
Level 3 significant unobservable inputs |
||||||||||||||
| Preferred securities | |||||||||||||||||
| Consumer staples | $20,715,094 | — | $20,715,094 | — | |||||||||||||
| Energy | 45,730,910 | $45,730,910 | — | — | |||||||||||||
| Financials | 387,206,290 | 387,206,290 | — | — | |||||||||||||
| Health care | 30,747,598 | 30,747,598 | — | — | |||||||||||||
| Industrials | 3,437,100 | 3,437,100 | — | — | |||||||||||||
| Real estate | 17,629,639 | 17,629,639 | — | — | |||||||||||||
| Telecommunication services | 23,536,700 | 21,936,500 | 1,600,200 | — | |||||||||||||
| Utilities | 242,117,613 | 231,639,972 | 10,477,641 | — | |||||||||||||
| Common stocks | 381,312,251 | 381,312,251 | — | — | |||||||||||||
| Short-term investments | 13,335,000 | — | 13,335,000 | — | |||||||||||||
| Total investments in securities | $1,165,768,195 | $1,119,640,260 | $46,127,935 | — | |||||||||||||
| Other financial instruments: | |||||||||||||||||
| Futures | $(116,034 | ) | $(116,034 | ) | — | — | |||||||||||
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 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.
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.
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 and contract prices that can be highly volatile and imperfectly correlated to movements in the underlying financial instrument. 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.
During the period ended July 31, 2017, the fund used futures contracts to hedge against anticipated interest rate changes.
For additional information on the fund's significant accounting policies, please refer to the fund's most recent semiannual or annual shareholder report.
More information
| How to contact us | ||
| Internet | www.jhinvestments.com | |
| Computershare P.O. Box 30170 College Station, TX 77842-3170 |
||
| Phone | Customer service representatives Portfolio commentary 24-hour automated information TDD line |
800-852-0218 800-344-7054 800-843-0090 800-231-5469 |
| P2Q3 | 07/17 | |
| This report is for the information of the shareholders of John Hancock Premium Dividend Fund. | 9/17 |
ITEM 2. 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-Q, the registrant’s principal executive officer and principal accounting 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 last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 3. EXHIBITS.
Separate certifications for the registrant’s principal executive officer and principal accounting officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
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 G. Arnott | |
| Andrew G. Arnott | ||
| President | ||
| Date: | September 13, 2017 | |
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 G. Arnott | |
| Andrew G. Arnott | ||
| President | ||
| Date: | September 13, 2017 | |
| By: | /s/ Charles A. Rizzo | |
| Charles A. Rizzo | ||
| Chief Financial Officer | ||
| Date: | September 13, 2017 | |