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 811-22056 | |
John Hancock Tax-Advantaged Global Shareholder Yield Fund | |
(Exact name of registrant as specified in charter) | |
601 Congress Street, Boston, Massachusetts 02210 | |
(Address of principal executive offices) (Zip code) | |
Salvatore Schiavone | |
Treasurer | |
601 Congress Street | |
Boston, Massachusetts 02210 | |
(Name and address of agent for service) | |
Registrant's telephone number, including area code: 617-663-4497 | |
Date of fiscal year end: | October 31 |
Date of reporting period: | April 30, 2014 |
ITEM 1. REPORTS TO STOCKHOLDERS.
Portfolio summary
Top 10 Holdings (21.3% of Net Assets on 4-30-14)1,2 | ||||
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Yara International ASA | 2.7% | GlaxoSmithKline PLC | 1.9% | |
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Muenchener Rueckversicherungs AG | 2.6% | Centrica PLC | 1.9% | |
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BASF SE | 2.3% | Imperial Tobacco Group PLC | 1.9% | |
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Vinci SA | 2.2% | National Grid PLC | 1.9% | |
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Total SA | 2.1% | Swisscom AG | 1.8% | |
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Sector Composition1,3 | ||||
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Utilities | 18.0% | Health Care | 7.1% | |
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Consumer Staples | 15.5% | Energy | 7.0% | |
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Telecommunication Services | 14.3% | Consumer Discretionary | 6.5% | |
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Financials | 9.8% | Information Technology | 3.1% | |
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Industrials | 8.0% | Short-Term Investments & Other | 2.8% | |
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Materials | 7.9% | |||
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Top 10 Countries (94.5% of Net Assets on 4-30-14)1,2,3 | ||||
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United States | 38.4% | Canada | 4.1% | |
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United Kingdom | 18.1% | Switzerland | 4.1% | |
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Germany | 9.3% | Australia | 3.2% | |
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France | 8.7% | Netherlands | 2.2% | |
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Norway | 4.7% | Italy | 1.7% | |
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1
6 Tax-Advantaged Global Shareholder Yield Fund | Semiannual report |
Fund’s investments
As of 4-30-14 (unaudited)
Shares | Value | |
Common Stocks 96.4% | $120,580,620 | |
| ||
(Cost $114,378,527) | ||
Australia 3.2% | 3,965,363 | |
BHP Billiton, Ltd. | 19,850 | 699,049 |
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Commonwealth Bank of Australia | 9,162 | 673,965 |
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Telstra Corp., Ltd. | 317,600 | 1,544,205 |
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Westpac Banking Corp. | 32,000 | 1,048,144 |
Belgium 1.1% | 1,406,046 | |
Anheuser-Busch InBev NV | 12,900 | 1,406,046 |
Canada 4.1% | 5,177,106 | |
BCE, Inc. | 50,000 | 2,226,176 |
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Potash Corp. of Saskatchewan, Inc. | 26,800 | 969,088 |
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Rogers Communications, Inc., Class B | 19,100 | 758,563 |
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Shaw Communications, Inc., Class B | 50,500 | 1,223,279 |
France 8.7% | 10,848,179 | |
Electricite de France SA | 46,200 | 1,774,122 |
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Sanofi | 8,950 | 965,883 |
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SCOR SE | 41,400 | 1,514,940 |
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Total SA | 36,100 | 2,582,744 |
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Vinci SA | 35,900 | 2,710,677 |
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Vivendi SA | 48,380 | 1,299,813 |
Germany 9.3% | 11,643,346 | |
Allianz SE | 5,400 | 939,761 |
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BASF SE | 24,830 | 2,880,422 |
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Daimler AG | 18,700 | 1,740,954 |
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Deutsche Post AG | 18,000 | 679,193 |
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Deutsche Telekom AG | 124,840 | 2,097,444 |
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Muenchener Rueckversicherungs AG | 14,300 | 3,305,572 |
Italy 1.7% | 2,115,606 | |
Terna Rete Elettrica Nazionale SpA | 390,500 | 2,115,606 |
Netherlands 2.2% | 2,703,055 | |
Royal Dutch Shell PLC, ADR (C) | 25,280 | 1,990,547 |
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Wolters Kluwer NV | 25,560 | 712,508 |
Norway 4.7% | 5,945,477 | |
Orkla ASA | 160,200 | 1,324,948 |
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Statoil ASA | 39,300 | 1,198,076 |
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Yara International ASA | 72,400 | 3,422,453 |
See notes to financial statements | Semiannual report | Tax-Advantaged Global Shareholder Yield Fund | 7 |
Shares | Value | |
Philippines 0.6% | $715,950 | |
Philippine Long Distance Telephone Company, ADR (C) | 11,100 | 715,950 |
Sweden 1.0% | 1,277,618 | |
Svenska Handelsbanken AB, Class A | 25,400 | 1,277,618 |
Switzerland 4.1% | 5,091,940 | |
Nestle SA | 9,400 | 726,472 |
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Novartis AG | 13,500 | 1,173,589 |
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Roche Holding AG | 3,000 | 880,038 |
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Swisscom AG | 3,800 | 2,311,841 |
United Kingdom 18.1% | 22,604,107 | |
AstraZeneca PLC, ADR (C) | 10,253 | 810,500 |
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BAE Systems PLC | 297,300 | 2,011,374 |
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British American Tobacco PLC | 24,200 | 1,397,427 |
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Centrica PLC | 428,900 | 2,391,991 |
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Compass Group PLC | 43,400 | 691,316 |
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Diageo PLC, ADR | 4,500 | 552,510 |
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GlaxoSmithKline PLC | 86,600 | 2,392,804 |
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Imperial Tobacco Group PLC | 54,600 | 2,359,505 |
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National Grid PLC | 164,300 | 2,335,236 |
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Pearson PLC | 54,600 | 1,023,857 |
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Severn Trent PLC | 24,300 | 757,467 |
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SSE PLC | 53,500 | 1,379,578 |
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Unilever PLC | 20,870 | 933,579 |
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United Utilities Group PLC | 130,000 | 1,748,632 |
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Vodafone Group PLC | 316,472 | 1,201,520 |
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WM Morrison Supermarkets PLC | 181,700 | 616,811 |
United States 37.6% | 47,086,827 | |
AbbVie, Inc. (C) | 17,200 | 895,776 |
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Altria Group, Inc. | 56,100 | 2,250,171 |
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Ameren Corp. (C) | 33,300 | 1,375,623 |
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Apple, Inc. | 1,500 | 885,135 |
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Arthur J. Gallagher & Company (C) | 14,900 | 670,798 |
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AT&T, Inc. (C) | 55,600 | 1,984,920 |
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Automatic Data Processing, Inc. (C) | 9,300 | 725,028 |
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CenturyLink, Inc. | 48,700 | 1,700,117 |
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CME Group, Inc. (C) | 12,160 | 855,942 |
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ConocoPhillips (C) | 15,800 | 1,174,098 |
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Deere & Company | 7,200 | 672,048 |
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Diamond Offshore Drilling, Inc. (C) | 32,800 | 1,791,208 |
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Dominion Resources, Inc. (C) | 9,800 | 710,892 |
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Duke Energy Corp. (C) | 26,850 | 2,000,057 |
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E.I. du Pont de Nemours & Company | 10,950 | 737,154 |
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Emerson Electric Company | 10,600 | 722,708 |
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Integrys Energy Group, Inc. (C) | 12,600 | 772,128 |
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Johnson & Johnson | 7,300 | 739,417 |
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Kimberly-Clark Corp. (C) | 8,900 | 999,025 |
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KLA–Tencor Corp. (C) | 10,300 | 659,097 |
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Lockheed Martin Corp. (C) | 9,400 | 1,542,916 |
8 | Tax-Advantaged Global Shareholder Yield Fund | Semiannual report | See notes to financial statements |
Shares | Value | ||
United States (continued) | |||
Lorillard, Inc. (C) | 38,050 | $2,260,931 | |
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Mattel, Inc. (C) | 28,840 | 1,130,961 | |
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McDonald’s Corp. | 7,800 | 790,764 | |
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Merck & Company, Inc. (C) | 16,500 | 966,240 | |
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Microchip Technology, Inc. (C) | 17,900 | 850,966 | |
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Microsoft Corp. (C) | 19,500 | 787,800 | |
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PepsiCo, Inc. (C) | 7,400 | 635,586 | |
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Philip Morris International, Inc. | 14,500 | 1,238,735 | |
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PPL Corp. (C) | 57,400 | 1,913,716 | |
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R.R. Donnelley & Sons Company (C) | 53,200 | 936,320 | |
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Regal Entertainment Group, Class A (C) | 45,800 | 861,040 | |
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Reynolds American, Inc. (C) | 34,790 | 1,963,200 | |
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TECO Energy, Inc. (C) | 81,000 | 1,454,760 | |
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The Coca-Cola Company | 17,400 | 709,746 | |
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The Dow Chemical Company (C) | 23,200 | 1,157,680 | |
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The Southern Company (C) | 39,980 | 1,832,283 | |
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Verizon Communications, Inc. | 15,259 | 716,725 | |
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Verizon Communications, Inc. (C) | 28,980 | 1,354,235 | |
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Waste Management, Inc. (C) | 15,700 | 697,865 | |
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Wells Fargo & Company | 19,400 | 963,016 | |
Preferred Securities 0.8% | $981,212 | ||
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(Cost $854,267) | |||
United States 0.8% | 981,212 | ||
MetLife, Inc., Series B, 6.500% (C) | 38,600 | 981,212 | |
Yield (%) | Shares | Value | |
Short-Term Investments 3.1% | $3,920,511 | ||
| |||
(Cost $3,920,511) | |||
Money Market Funds 1.5% | 1,919,511 | ||
State Street Institutional Treasury Money | |||
Market Fund | 0.0000 (Y) | 1,919,511 | 1,919,511 |
Par value | Value | ||
Repurchase Agreement 1.6% | 2,001,000 | ||
Repurchase Agreement with State Street Corp. dated 4-30-14 at | |||
0.000% to be repurchased at $2,001,000 on 5-1-14, collateralized | |||
by $2,060,000 U.S. Treasury Notes, 1.375% due 12-31-18 (valued | |||
at $2,044,550, including interest) | $2,001,000 | 2,001,000 | |
Total investments (Cost $119,153,305)† 100.3% | $125,482,343 | ||
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Other assets and liabilities, net (0.3%) | ($387,281) | ||
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Total net assets 100.0% | $125,095,062 | ||
|
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund.
See notes to financial statements | Semiannual report | Tax-Advantaged Global Shareholder Yield Fund | 9 |
Notes to Schedule of Investments
ADR | American Depositary Receipts |
(C) | A portion of this security is segregated as collateral for options. Total collateral value of 4-30-14 was $30,142,086. |
(Y) | The rate shown is the annualized seven-day yield as of 4-30-14. |
† | At 4-30-14, the aggregate cost of investment securities for federal income tax purposes was $119,842,270. Net unrealized appreciation aggregated $5,640,073, of which $7,537,717 related to appreciated investment securities and $1,897,644 related to depreciated investment securities. |
The fund had the following sector composition as a percentage of net assets on 4-30-14: | |||
Utilities | 18.0% | ||
Consumer Staples | 15.5% | ||
Telecommunication Services | 14.3% | ||
Financials | 9.8% | ||
Industrials | 8.0% | ||
Materials | 7.9% | ||
Health Care | 7.1% | ||
Energy | 7.0% | ||
Consumer Discretionary | 6.5% | ||
Information Technology | 3.1% | ||
Short-Term Investments & Other | 2.8% | ||
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Total | 100.0% |
10 | Tax-Advantaged Global Shareholder Yield Fund | Semiannual report | See notes to financial statements |
F I N A N C I A L S T A T E M E N T S
Financial statements
Statement of assets and liabilities 4-30-14 (unaudited)
This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value for each common share.
Assets | |
| |
Investments, at value (Cost $119,153,305) | $125,482,343 |
Cash | 35,482 |
Foreign currency, at value (Cost $117,428) | 117,496 |
Receivable for investments sold | 6,266,732 |
Receivable for fund shares sold | 48,859 |
Dividends receivable | 821,219 |
Other receivables and prepaid expenses | 124,628 |
Total assets | 132,896,759 |
Liabilities | |
| |
Payable for investments purchased | 7,117,597 |
Written options, at value (Premium received $712,626) | 622,500 |
Payable to affiliates | |
Accounting and legal services fees | 3,549 |
Other liabilities and accrued expenses | 58,051 |
Total liabilities | 7,801,697 |
Net assets | $125,095,062 |
Net assets consist of | |
| |
Paid-in capital | $144,189,645 |
Accumulated distributions in excess of net investment income | (1,958,812) |
Accumulated net realized gain (loss) on investments, written options and | |
foreign currency transactions | (23,583,550) |
Net unrealized appreciation (depreciation) on investments, written options | |
and translation of assets and liabilities in foreign currencies | 6,447,779 |
Net assets | $125,095,062 |
Net asset value per share | |
| |
Based on 9,941,752 shares of beneficial interest outstanding — unlimited | |
number of shares authorized with $0.01 par value | $12.58 |
See notes to financial statements | Semiannual report | Tax-Advantaged Global Shareholder Yield Fund | 11 |
F I N A N C I A L S T A T E M E N T S
Statement of operations For the six-month period ended 4-30-14
(unaudited)
This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.
Investment income | |
| |
Dividends | $5,284,431 |
Interest | 3,957 |
Less foreign taxes withheld | (186,607) |
Total investment income | 5,101,781 |
Expenses | |
| |
Investment management fees | 588,886 |
Accounting and legal services fees | 11,189 |
Transfer agent fees | 13,345 |
Trustees’ fees | 20,328 |
Printing and postage | 20,759 |
Professional fees | 74,223 |
Custodian fees | 31,268 |
Stock exchange listing fees | 7,837 |
Other | 17,847 |
Total expenses | 785,682 |
Net investment income | 4,316,099 |
Realized and unrealized gain (loss) | |
| |
Net realized gain (loss) on | |
Investments | 12,218,751 |
Written options | (388,100) |
Foreign currency transactions | (12,192) |
11,818,459 | |
Change in net unrealized appreciation (depreciation) of | |
Investments | (6,709,610) |
Written options | 125,360 |
Translation of assets and liabilities in foreign currencies | 8,225 |
(6,576,025) | |
Net realized and unrealized gain | 5,242,434 |
Increase in net assets from operations | $9,558,533 |
12 | Tax-Advantaged Global Shareholder Yield Fund | Semiannual report | See notes to financial statements |
F I N A N C I A L S T A T E M E N T S
Statements of changes in net assets
These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.
Six months | ||
ended | Year | |
4-30-14 | ended | |
(Unaudited) | 10-31-13 | |
Increase (decrease) in net assets | ||
| ||
From operations | ||
Net investment income | $4,316,099 | $5,173,508 |
Net realized gain | 11,818,459 | 2,853,357 |
Change in net unrealized appreciation (depreciation) | (6,576,025) | 7,985,109 |
Increase in net assets resulting from operations | 9,558,533 | 16,011,974 |
Distributions to shareholders | ||
From net investment income | (6,287,578)1 | (7,579,874) |
From tax return of capital | — | (4,761,490) |
Total distributions | (6,287,578) | (12,341,364) |
From fund share transactions | ||
Issued in shelf offering | 2,011,639 | 3,209,720 |
Issued pursuant to Dividend Reinvestment Plan | 86,666 | 220,893 |
Total from fund share transactions | 2,098,305 | 3,430,613 |
Total increase | 5,369,260 | 7,101,223 |
Net assets | ||
| ||
Beginning of period | 119,725,802 | 112,624,579 |
End of period | $125,095,062 | $119,725,802 |
Undistributed (accumulated distributions in excess of) net | ||
investment income | ($1,958,812) | $12,667 |
Share activity | ||
| ||
Shares outstanding | ||
Beginning of period | 9,774,773 | 9,496,556 |
Issued in shelf offering | 159,873 | 259,460 |
Issued pursuant to Dividend Reinvestment Plan | 7,106 | 18,757 |
End of period | 9,941,752 | 9,774,773 |
1
See notes to financial statements | Semiannual report | Tax-Advantaged Global Shareholder Yield Fund | 13 |
Financial highlights
The Financial highlights show how the fund’s net asset value for a share has changed during the period.
COMMON SHARES Period ended | 4-30-141 | 10-31-13 | 10-31-12 | 10-31-11 | 10-31-10 | 10-31-09 |
Per share operating performance | ||||||
| ||||||
Net asset value, beginning of period | $12.25 | $11.86 | $12.12 | $12.98 | $12.53 | $12.92 |
Net investment income2 | 0.443 | 0.54 | 0.57 | 0.64 | 0.64 | 0.72 |
Net realized and unrealized gain (loss) | ||||||
on investments | 0.52 | 1.12 | 0.45 | (0.06) | 1.25 | 0.42 |
Total from investment operations | 0.96 | 1.66 | 1.02 | 0.58 | 1.89 | 1.14 |
Less distributions to | ||||||
common shareholders | ||||||
From net investment income | (0.64)4 | (0.79) | (0.75) | (0.72) | (0.62) | (0.70) |
From tax return of capital | — | (0.49) | (0.53) | (0.72) | (0.82) | (0.83) |
Total distributions | (0.64) | (1.28) | (1.28) | (1.44) | (1.44) | (1.53) |
Anti-dilutive impact of shelf offering | 0.01 | 0.01 | — | — | — | — |
Anti-dilutive impact of repurchase plan | — | — | — | — | — | —5,6 |
Offering costs related to common shares | — | — | — | — | — | —5 |
Net asset value, end of period | $12.58 | $12.25 | $11.86 | $12.12 | $12.98 | $12.53 |
Per share market value, end of period | $13.21 | $12.64 | $12.37 | $12.39 | $13.66 | $11.33 |
Total return at net asset value (%)7 | 8.158 | 15.01 | 8.49 | 4.62 | 16.33 | 11.05 |
Total return at market value (%)7 | 10.068 | 13.78 | 10.69 | 1.63 | 35.39 | 17.94 |
Ratios and supplemental data | ||||||
| ||||||
Net assets applicable to common shares, | ||||||
end of period (in millions) | $125 | $120 | $113 | $115 | $122 | $117 |
Ratios (as a percentage of average | ||||||
net assets): | ||||||
Expenses | 1.339 | 1.37 | 1.27 | 1.28 | 1.25 | 1.29 |
Net investment income | 6.463,9 | 4.52 | 4.76 | 5.12 | 5.15 | 6.01 |
Portfolio turnover (%) | 116 | 126 | 98 | 95 | 96 | 126 |
1 Six months ended 4-30-14. Unaudited.
2 Based on the average daily shares outstanding.
3 Net investment income (loss) per share and ratio of net investment income (loss) to average net assets reflect a
special dividend received by the fund which amounted to $0.10 and 0.85% (unannualized), respectively.
4 A portion of the distributions may be deemed a tax return of capital at year end.
5 Less than $0.005 per shares.
6 The repurchase plan was completed at a average repurchase price of $11.09 for 17,400 shares. The redemption for
the year ended 10-31-09 was $192,000 and had a less than $0.005 NAV impact.
7 Total return based on net asset value reflects changes in the fund’s net asset value during each period. Total
return based on market value reflects changes in market value. Each figure assumes that dividend and capital gain
distributions, if any, were reinvested. These figures will differ depending upon the level of any discount from or
premium to net asset value at which the fund’s shares traded during the period.
8 Annualized.
9 Not annualized.
14 | Tax-Advantaged Global Shareholder Yield Fund | Semiannual report | See notes to financial statements |
Notes to financial statements
(unaudited)
Note 1 — Organization
John Hancock Tax-Advantaged Global Shareholder Yield 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).
In 2012, the fund filed a registration statement with the Securities and Exchange Commission, registering an additional 1,200,000 common shares through an equity shelf offering program. Under this program, the fund, subject to market conditions, may raise additional equity capital from time to time by offering new common shares at a price equal to or above the fund’s net asset value per common share.
Note 2 — Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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. Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:
Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds are valued at their respective net asset values each business day. Options listed on an exchange are valued at the mean of the most recent bid and ask prices from the exchange where the option was acquired or most likely will be sold. Unlisted options are valued using evaluated prices obtained from an independent pricing vendor. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost.
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. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund’s Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.
Semiannual report | Tax-Advantaged Global Shareholder Yield Fund 15 |
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund’s investments as of April 30, 2014, by major security category or type:
LEVEL 3 | ||||
LEVEL 2 | SIGNIFICANT | |||
TOTAL MARKET | LEVEL 1 | SIGNIFICANT | UNOBSERVABLE | |
VALUE AT 4-30-14 | QUOTED PRICE | OBSERVABLE INPUTS | INPUTS | |
| ||||
Common Stocks | ||||
Australia | $3,965,363 | — | $3,965,363 | — |
Belgium | 1,406,046 | — | 1,406,046 | — |
Canada | 5,177,106 | $5,177,106 | — | — |
France | 10,848,179 | — | 10,848,179 | — |
Germany | 11,643,346 | — | 11,643,346 | — |
Italy | 2,115,606 | — | 2,115,606 | — |
Netherlands | 2,703,055 | 1,990,547 | 712,508 | — |
Norway | 5,945,477 | — | 5,945,477 | — |
Philippines | 715,950 | 715,950 | — | — |
Sweden | 1,277,618 | — | 1,277,618 | — |
Switzerland | 5,091,940 | — | 5,091,940 | — |
United Kingdom | 22,604,107 | 1,363,010 | 21,241,097 | — |
United States | 47,086,827 | 46,370,102 | 716,725 | — |
Preferred Securities | ||||
United States | 981,212 | 981,212 | — | — |
Short-Term Investments | 3,920,511 | 1,919,511 | 2,001,000 | — |
| ||||
Total Investments in | ||||
Securities | $125,482,343 | $58,517,438 | $66,964,905 | — |
Other Financial | ||||
Instruments: | ||||
Written Options | ($622,500) | ($622,500) | — | — |
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.
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, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event
16 Tax-Advantaged Global Shareholder Yield Fund | Semiannual report |
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. 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.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Foreign currency translation. 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.
Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also 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.
Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.
Overdrafts. Pursuant to the custodian agreement, the fund’s custodian may, in its discretion, advance funds to the fund to make properly authorized payments. When such payments result in an overdraft, the fund is obligated to repay the custodian for any overdraft, including any costs or expenses associated with the overdraft. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
Semiannual report | Tax-Advantaged Global Shareholder Yield Fund 17 |
Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
For federal income tax purposes, as of October 31, 2013, the fund has a capital loss carryforward of $34,785,386 available to offset future net realized capital gains. The loss carryforward expires as follows: October 31, 2017 — $32,045,535 and October 31, 2018 — $2,739,851.
As of October 31, 2013, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends quarterly and capital gain distributions, if any, annually.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Material 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. A portion of the distributions paid may be deemed a tax return of capital for the year ended October 31, 2014.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to wash sale loss deferrals and characterization of distributions.
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 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 options are traded or cleared on an exchange or central clearinghouse. Exchange-traded or 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.
Options. There are two types of options, put options and call options. Options are traded either OTC or on an exchange. A call option gives the purchaser of the option the right to buy (and the seller the obligation to sell) the underlying instrument at the exercise price. A put option gives
18 Tax-Advantaged Global Shareholder Yield Fund | Semiannual report |
the purchaser of the option the right to sell (and the writer the obligation to buy) the underlying instrument at the exercise price. Writing puts and buying calls may increase the fund’s exposure to changes in the value of the underlying instrument. Buying puts and writing calls may decrease the fund’s exposure to such changes. Risks related to the use of options include the loss of premiums, possible illiquidity of the options markets, trading restrictions imposed by an exchange and movements in underlying security values, and for written options, potential losses in excess of the amounts recognized on the Statement of assets and liabilities. In addition, OTC options are subject to the risks of all OTC derivatives contracts.
When the fund purchases an option, the premium paid by the fund is included in the Fund’s investments and subsequently “marked-to-market” to reflect current market value. If the purchased option expires, the fund realizes a loss equal to the cost of the option. If the fund enters into a closing sale transaction, the fund realizes a gain or loss, depending on whether proceeds from the closing sale are greater or less than the original cost. When the fund writes an option, the premium received is included as a liability and subsequently “marked-to-market” to reflect the current market value of the option written. Premiums received from writing options that expire unexercised are recorded as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option on a security is exercised, the premium received reduces the cost basis of the securities purchased by the fund.
During the six months ended April 30, 2014, the fund wrote option contracts to hedge against anticipated changes in securities markets and to generate potential income. The following tables summarize the fund’s written options activities during the six months ended April 30, 2014 and the contracts held at April 30, 2014.
NUMBER OF | PREMIUMS | |
CONTRACTS | RECEIVED | |
| ||
Outstanding, beginning of period | 385 | $762,841 |
Options written | 2,170 | 3,485,091 |
Option closed | (1,555) | (2,945,913) |
Options expired | (630) | (589,393) |
Outstanding, end of period | 370 | $712,626 |
EXERCISE | EXPIRATION | NUMBER OF | ||||
OPTIONS | PRICE | DATE | CONTRACTS | PREMIUM | VALUE | |
| ||||||
Calls | ||||||
Russell 2000 Index | $1,130 | May 2014 | 190 | $476,765 | ($304,950) | |
S&P 500 Index | 1,855 | May 2014 | 85 | 221,783 | (304,725) | |
S&P 500 Index | 1,930 | May 2014 | 95 | 14,078 | (12,825) | |
Total | 370 | $712,626 | ($622,500) |
Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held by the fund at April 30, 2014 by risk category:
FINANCIAL | ASSET | LIABILITY | ||
STATEMENT OF ASSETS AND | INSTRUMENTS | DERIVATIVES | DERIVATIVES | |
RISK | LIABILITIES LOCATION | LOCATION | FAIR VALUE | FAIR VALUE |
| ||||
Equity contracts | Payable for written options, | Written options | — | ($622,500) |
at value |
Semiannual report | Tax-Advantaged Global Shareholder Yield Fund 19 |
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, 2014:
STATEMENT OF OPERATIONS | ||
RISK | LOCATION | WRITTEN OPTIONS |
| ||
Equity contracts | Net realized gain (loss) | ($388,100) |
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, 2014:
STATEMENT OF OPERATIONS | ||
RISK | LOCATION | WRITTEN OPTIONS |
| ||
Equity contracts | Change in unrealized | $125,360 |
appreciation (depreciation) |
Note 4 — Guarantees and indemnifications
Under the fund’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 5 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as distributor for the common shares offered through the equity shelf offering. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment advisory agreement with the Advisor under which the fund pays a daily management fee to the Advisor equal to 1.00% annually of the fund’s average daily gross assets. Under the advisory agreement, gross assets of the fund means total assets of the fund (including any form of investment leverage) minus the sum of accrued expenses incurred in the normal course of operations. The Advisor has subadvisory agreements with Epoch Investment Partners, Inc. and Analytic Investors, LLC. The fund is not responsible for payment of the subadvisory fees.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the six months ended April 30, 2014 amounted to an annual rate of 0.02% of the fund’s average daily net assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. Each independent Trustee receives from the fund and the other John Hancock closed-end funds an annual retainer. In addition, Trustee out-of-pocket expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
20 Tax-Advantaged Global Shareholder Yield Fund | Semiannual report |
Distributor. The fund will compensate the Distributor with respect to sales of the common shares offered through the equity shelf offering at a commission rate of 1% of the gross proceeds of the sale of common shares, a portion of which is allocated to the selling dealers. During the six months ended April 30, 2014, compensation to the Distributor was $20,525. The Distributor has an agreement with a sub-placement agent in the sale of common shares. The fund is not responsible for payment of commissions to the sub-placement agent.
Note 6 — Fund share transactions
Transactions in common shares for the six months ended April 30, 2014 and the year ended October 31, 2013 are presented on the Statement of changes in net assets. Proceeds received in connection with the shelf offering are net of commissions and offering costs. Total offering costs of $153,573 have been prepaid by the fund. These costs are deducted from proceeds as shares are issued. To date, $53,675 has been deducted from proceeds of shares issued and the remaining $99,898 is included in Other receivables and prepaid expenses on the Statement of assets and liabilities.
Note 7 — Purchase and sale of securities
Purchases and sales of securities, other than short-term securities, amounted to $136,209,351 and $135,750,009, respectively, for the six months ended April 30, 2014.
Semiannual report | Tax-Advantaged Global Shareholder Yield Fund 21 |
Additional information
Unaudited
Investment objective and policy
The fund is a diversified, closed-end management investment company, common shares of which were initially offered to the public in 2007. The fund’s investment objective is to provide total return consisting of a high level of current income and gains and long term capital appreciation. In pursuing its investment objective of total return, the fund will seek to emphasize high current income. The fund will seek to achieve favorable after-tax returns for its shareholders by seeking to minimize the U.S. federal income tax consequences on income and gains generated by the fund. Under normal market conditions, the fund will invest at least 80% of its total assets in a diversified portfolio of dividend-paying securities of issuers located throughout the world. The fund writes (sells) call options on a variety of both U.S. and non-U.S. broad-based indices.
Dividends and distributions
During the six months ended April 30, 2014, distributions from net investment income totaling $0.6400 per share were paid to shareholders. The dates of payments and the amounts per share were as follows:
INCOME | |||||
PAYMENT DATE | DISTRIBUTIONS* | ||||
|
|||||
December 31, 2013 | $0.3200 | ||||
March 31, 2014 | 0.3200 | ||||
Total | $0.6400 |
*A portion of the distributions may be deemed a tax return of capital at year end.
Shareholder communication and assistance
If you have any questions concerning the fund, we will be pleased to assist you. If you hold shares in your own name and not with a brokerage firm, please address all notices, correspondence, questions or other communications regarding the fund to the transfer agent at:
Computershare
P.O. Box 30170
College Station, TX 77842-3170
Telephone: 800-852-0218
If your shares are held with a brokerage firm, you should contact that firm, bank or other nominee for assistance.
22 Tax-Advantaged Global Shareholder Yield Fund | Semiannual report |
Portfolio manager changes
The portfolio management team at Epoch Investment Partners, Inc. (“Epoch”) has changed. Effective March 1, 2014, John Tobin and Kera Van Valen were added as portfolio managers of the fund. They join the current portfolio management team at Epoch, William W. Priest, Eric Sappenfield and Michael A. Welhoelter, who have served as portfolio managers of the fund since its inception. Below is a brief summary of Mr. Tobin’s and Ms. Van Valen’s business careers during the past five years.
John Tobin, CFA
• Director, Portfolio Manager, and Senior Analyst, Epoch Investment Partners, Inc. since 2012
• Lecturer in the Economics Department, Fordham University (2009–2012)
• Senior Vice President, HSBC Global Asset Management (2005–2009)
• Began business career in 1981
• Joined fund team in 2014
Kera Van Valen, CFA
• Director, Portfolio Manager, and Senior Analyst, Epoch Investment Partners, Inc. since 2005
• Began business career in 2001
• Joined fund team in 2014
Shareholder meeting
The fund held its Annual Meeting of Shareholders on February 18, 2014. The following proposal was considered by the shareholders:
Proposal: Election of four (4) Trustees to serve for a three-year term ending at the 2017 Annual Meeting of Shareholders. Each Trustee was re-elected by the fund’s shareholders and the votes cast with respect to each Trustee are set forth below.
VOTES FOR | VOTES WITHHELD | |
| ||
Independent Trustees | ||
William H. Cunningham | 7,727,708.172 | 145,697.655 |
Grace K. Fey | 7,702,271.895 | 171,133.932 |
Hassell H. McClellan | 7,732,439.241 | 140,966.586 |
Gregory A. Russo | 7,722,818.419 | 150,587.408 |
Trustees whose term of office continued after the Annual Meeting of Shareholders because they were not up for election are: Charles L. Bardelis, Craig Bromley, Peter S. Burgess, Theron S. Hoffman, Deborah C. Jackson, James M. Oates, Steven R. Pruchansky and Warren A. Thomson.
Semiannual report | Tax-Advantaged Global Shareholder Yield Fund 23 |
More information
Trustees | Officers | Investment advisor |
James M. Oates, | Andrew G. Arnott | John Hancock Advisers, LLC |
Chairperson | President | |
Steven R. Pruchansky, | Subadvisors | |
Vice Chairperson | John J. Danello# | Epoch Investment Partners, Inc. |
Charles L. Bardelis* | Senior Vice President, Secretary | Analytic Investors, LLC |
Craig Bromley† | and Chief Legal Officer | |
Peter S. Burgess* | Custodian | |
William H. Cunningham | Francis V. Knox, Jr. | State Street Bank and |
Grace K. Fey | Chief Compliance Officer | Trust Company |
Theron S. Hoffman* | ||
Deborah C. Jackson | Charles A. Rizzo | Transfer agent |
Hassell H. McClellan | Chief Financial Officer | Computershare Shareowner |
Gregory A. Russo | Services, LLC | |
Warren A. Thomson† | Salvatore Schiavone | |
Treasurer | Legal counsel | |
*Member of the | K&L Gates LLP | |
Audit Committee | ||
†Non-Independent Trustee | Stock symbol | |
#Effective 5-29-14 | Listed New York Stock | |
Exchange: HTY | ||
For shareholder assistance refer to page 22 | ||
You can also contact us: | ||
800-852-0218 | Regular mail: | |
jhinvestments.com | Computershare | |
P.O. Box 30170 | ||
College Station, TX 77842-3170 |
The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund’s complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund’s Form N-Q is available on our website and the SEC’s website, sec.gov, and can be reviewed and copied (for a fee) at the SEC’s Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC’s Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com or by calling 800-852-0218.
The report is certified under the Sarbanes-Oxley Act, which requires closed-end funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in all material respects.
24 Tax-Advantaged Global Shareholder Yield Fund | Semiannual report |
PRESORTED | ||
STANDARD | ||
U.S. POSTAGE | ||
PAID | ||
MIS |
800-852-0218
800-231-5469 TDD
800-843-0090 EASI-Line
jhinvestments.com
P14SA 4/14 | |
MF184404 | 6/14 |
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.
Not applicable.
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 registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached John Hancock Funds Nominating, Governance and Administration Committee Charter.
(c)(2) Contact person at the registrant.
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Tax-Advantaged Global Shareholder Yield Fund
By: | /s/ Andrew Arnott |
________________ | |
Andrew Arnott | |
President | |
Date: | June 5, 2014 |
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 5, 2014 |
By: | /s/ Charles A. Rizzo |
________________ | |
Charles A. Rizzo | |
Chief Financial Officer | |
Date: | June 5, 2014 |