UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811- 21416
John Hancock Tax-Advantaged Dividend Income Fund
(Exact name of registrant as specified in charter)
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: 617-543-9634
Date of fiscal year end: |
October 31 |
Date of reporting period: |
October 31, 2022 |
ITEM 1. REPORT TO STOCKHOLDERS
Annual report
John Hancock
Tax-Advantaged Dividend
Income Fund
Closed-end U.S. equity
Ticker: HTD
October 31, 2022
Managed distribution plan
On September 19, 2016, the fund
adopted a managed distribution plan (Plan). Under the Plan, the fund makes monthly distributions of an amount equal to $0.1380 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 net asset value (NAV) is presented in the "Financial
highlights" section.
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. stock market suffered
sizable losses and high volatility during the 12 months ended October 31, 2022. Persistently high inflation prompted the U.S. Federal Reserve (Fed) to tighten monetary policy aggressively, leading to a sharp rise in
bond yields. Russia’s invasion of Ukraine, which exacerbated stress in global supply chains, also weighed heavily on sentiment. The market rallied in July and October when encouraging data—including easing
consumer demand—spurred hope that the Fed would soon be able to dial back its interest-rate hikes.
While nearly all market
segments lost ground in the sell-off, mega-cap U.S. technology-related stocks were hit particularly hard. On the other hand, energy stocks held up reasonably well in the downturn thanks to the rally in crude oil
prices.
In these uncertain times, your
financial professional can assist with positioning your portfolio so that it’s sufficiently diversified to help 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
Global Head of Retail,
Manulife Investment Management
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
Tax-Advantaged Dividend Income Fund
| 1
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
INVESTMENT OBJECTIVE
The fund seeks to provide a high
level of after-tax total return from dividend income and capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF
10/31/2022 (%)
The Primary Blended Index is 55%
ICE BofA U.S. All Capital Securities Index and 45% S&P 500 Utilities Index.
The Intercontinental Exchange
(ICE) Bank of America (BofA) U.S. All Capital Securities Index tracks all fixed-to floating-rate, perpetual callable and capital securities of the ICE BofA U.S. Corporate Index.
The S&P 500 Utilities Index
tracks the performance 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, 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 increase 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.
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 2
|
PERFORMANCE HIGHLIGHTS OVER THE
LAST TWELVE MONTHS
Rising interest
rates weighed on absolute performance
Dividend-producing investments, like most asset classes, produced negative results amid rising interest rates.
The fund outpaced
its comparative index
The fund posted a
loss but outperformed the 55% ICE BofA U.S. All Capital Securities Index and 45% S&P 500 Utilities Index.
Positioning within
the utilities sector contributed most
Security
selection among utilities followed by underweighting the banking sector and overweighting the energy sector were leading factors driving relative outperformance.
PORTFOLIO COMPOSITION AS OF
10/31/2022 (% of total investments)
SECTOR COMPOSITION AS OF
10/31/2022 (% of total investments)
| 3
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
Management’s discussion of fund
performance
How would you describe the
investment backdrop during the 12 months ended October 31, 2022, and how did the fund perform?
Like most asset classes,
dividend-producing investments delivered negative results, dragged lower by rising interest rates as the U.S. Federal Reserve tightened monetary policy to battle inflation. Against this challenging investment
backdrop, the fund produced a modestly negative return that outpaced a blended comparative index.
What elements of the fund’s
positioning contributed to outperformance?
The fund benefited from security
selection in regulated utilities, which performed comparatively well as investors gravitated to attractively valued industry segments deemed defensive holdings in times of economic and market uncertainty. One of the
fund’s top individual performers was utility company Constellation Energy Corp., the nation’s largest producer of clean, carbon-free renewable energy. Additionally, an overweight allocation to energy,
which outperformed the index, as well as security selection within the sector also contributed. A key contributor in this category was The Williams Companies, Inc., whose core business of natural gas processing and
transportation produced strong financial results as the price of that commodity increased. Another individual standout was energy exploration and production company BP PLC, which was bolstered by rising oil prices.
Elsewhere,
| TOP 10 ISSUERS AS OF 10/31/2022 (% of total investments)
|
| NiSource, Inc.
| 4.4
|
| CenterPoint Energy, Inc.
| 3.4
|
| American Electric Power Company, Inc.
| 3.3
|
| NextEra Energy, Inc.
| 3.1
|
| The Williams Companies, Inc.
| 2.9
|
| Dominion Energy, Inc.
| 2.8
|
| The Southern Company
| 2.6
|
| Bank of America Corp.
| 2.6
|
| Duke Energy Corp.
| 2.5
|
| The AES Corp.
| 2.4
|
| TOTAL
| 30.0
|
| Cash and cash equivalents are not included.
|
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 4
|
interest-rate hedges on short U.S. Treasury
futures were the biggest contributor to relative performance, producing gains as interest rates rose.
What detracted from relative
performance?
An overweight allocation to
communication services companies detracted most from performance as the sector lagged amid concern about the industry’s ability to increase subscribers in a postpandemic environment. Specifically, holdings in
Verizon Communications, Inc. performed poorly as rivals offered cheaper plans to wireless subscribers. An overweight in consumer cyclical companies, which proved vulnerable to rising inflation, also detracted from
relative performance. Among the fund’s biggest individual detractors was PacWest Bancorp, which didn’t benefit as much as other banks from the difference in interest banks pay clients and the amount of
interest they receive from reinvesting clients’ cash in higher-yielding securities. Another significant individual detractor was entertainment company Paramount Global, which struggled amid stiff competition in
the entertainment streaming wars.
Can you tell us about changes to the
portfolio management team?
Effective March 31, 2022, Caryn E.
Rothman, CFA, was added to the team. Effective June 30, 2022, James Gearhart, CFA, and Jonas Grazulis, CFA, were added to the team. Effective December 31, 2022, Bradley L. Lutz, CFA, will be leaving the team.
The views expressed in
this report are exclusively those of the portfolio management team at Manulife Investment Management (US) LLC, and are subject to change. They are not meant as investment advice. Please note that the holdings
discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current
and future portfolio holdings are subject to risk.
| 5
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
TOTAL RETURNS FOR THE PERIOD
ENDED OCTOBER 31, 2022
| Average annual total returns (%)
| Cumulative total returns (%)
|
|
| 1-Year
| 5-Year
| 10-Year
| 5-year
| 10-Year
|
| At Net asset value
| -3.21
| 5.06
| 8.73
| 28.00
| 130.98
|
| At Market price
| -0.66
| 5.78
| 9.54
| 32.44
| 148.84
|
| Primary Blended Index
| -8.14
| 4.07
| 6.80
| 22.05
| 93.14
|
| Secondary Blended Index
| -7.10
| 4.02
| 6.49
| 21.78
| 87.57
|
Performance figures assume all
distributions have been reinvested.
The returns reflect past results
and should not be considered indicative of future performance. 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 when shares need to be 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.
The performance table above and
the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares. The fund’s performance results reflect any applicable fee waivers
or expense reductions, without which the expenses would increase and results would have been less favorable.
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 6
|
This chart shows what happened to a
hypothetical $10,000 investment in John Hancock Tax-Advantaged Dividend Income Fund for the periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in two
blended indexes.
Prior to April 30, 2022, the
fund’s primary benchmark was the Secondary Blended Index. Effective April 30, 2022, the fund’s primary benchmark is the Primary Blended Index. The Primary Blended Index better reflects the universe of
investment opportunities based on the fund’s investment strategy.
The Primary Blended Index is 55%
ICE BofA U.S. All Capital Securities Index and 45% S&P 500 Utilities Index.
The Secondary Blended Index is
55% ICE BofA Preferred Stock DRD Eligible Index and 45% S&P 500 Utilities Index.
The Intercontinental Exchange
(ICE) Bank of America (BofA) U.S. All Capital Securities Index tracks all fixed-to floating-rate, perpetual callable and capital securities of the ICE BofA U.S. Corporate Index.
The S&P 500 Utilities Index
tracks the performance of companies in the S&P 500 Index that are primarily involved in water, electrical power, and natural gas distribution industries.
The Intercontinental Exchange
(ICE) Bank of America (BofA) Preferred Stock Dividend Received Deduction (DRD) Eligible Index tracks investment-grade fixed-rate U.S. dollar-denominated preferred securities and fixed-to-floating-rate securities.
It is not possible to invest
directly in an index. Index figures do not reflect expenses, which would result in lower returns.
The returns reflect past results
and should not be considered indicative of future performance.
| 7
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
AS OF
10-31-22
|
|
|
|
| Shares
| Value
|
| Common stocks 90.0% (59.5% of Total investments)
|
| $723,727,041
|
| (Cost $527,878,959)
|
|
|
|
|
|
| Communication services 2.4%
|
|
|
|
| 19,337,609
|
| Diversified telecommunication services 2.4%
|
|
|
| AT&T, Inc.
|
|
|
| 550,000
| 10,026,500
|
| Verizon Communications, Inc. (A)(B)
|
|
|
| 249,160
| 9,311,109
|
| Consumer staples 1.2%
|
|
|
|
| 9,919,800
|
| Tobacco 1.2%
|
|
|
| Philip Morris International, Inc. (A)(B)
|
|
|
| 108,000
| 9,919,800
|
| Energy 15.4%
|
|
|
|
| 124,029,354
|
| Oil, gas and consumable fuels 15.4%
|
|
|
| BP PLC, ADR
|
|
|
| 845,450
| 28,136,576
|
| DT Midstream, Inc.
|
|
|
| 90,000
| 5,373,000
|
| Enbridge, Inc.
|
|
|
| 347,106
| 13,519,779
|
| Equitrans Midstream Corp.
|
|
|
| 420,000
| 3,536,400
|
| Kinder Morgan, Inc.
|
|
|
| 1,105,000
| 20,022,600
|
| ONEOK, Inc.
|
|
|
| 305,000
| 18,092,600
|
| The Williams Companies, Inc. (B)
|
|
|
| 1,080,000
| 35,348,399
|
| Financials 7.0%
|
|
|
|
| 55,971,051
|
| Banks 4.4%
|
|
|
| Huntington Bancshares, Inc. (A)(B)
|
|
|
| 1,000,000
| 15,180,000
|
| PacWest Bancorp
|
|
|
| 309,459
| 7,693,151
|
| Umpqua Holdings Corp.
|
|
|
| 635,000
| 12,623,800
|
| Capital markets 2.6%
|
|
|
| Ares Management Corp., Class A (A)(B)
|
|
|
| 270,000
| 20,474,100
|
| Utilities 64.0%
|
|
|
|
| 514,469,227
|
| Electric utilities 31.2%
|
|
|
| Alliant Energy Corp.
|
|
|
| 360,000
| 18,781,200
|
| American Electric Power Company, Inc.
|
|
|
| 375,000
| 32,970,000
|
| Constellation Energy Corp. (A)(B)
|
|
|
| 150,000
| 14,181,000
|
| Duke Energy Corp. (A)(B)
|
|
|
| 270,000
| 25,158,600
|
| Entergy Corp. (A)(B)
|
|
|
| 218,000
| 23,356,520
|
| Eversource Energy (A)(B)
|
|
|
| 238,227
| 18,171,956
|
| Exelon Corp.
|
|
|
| 195,000
| 7,525,050
|
| FirstEnergy Corp. (A)(B)
|
|
|
| 510,000
| 19,232,100
|
| OGE Energy Corp. (A)(B)
|
|
|
| 610,000
| 22,344,300
|
| Pinnacle West Capital Corp.
|
|
|
| 50,000
| 3,360,500
|
| PPL Corp. (A)(B)
|
|
|
| 775,000
| 20,529,750
|
| The Southern Company
|
|
|
| 489,925
| 32,080,289
|
| Xcel Energy, Inc.
|
|
|
| 207,000
| 13,477,770
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 8
|
|
|
|
|
| Shares
| Value
|
| Utilities (continued)
|
|
|
|
|
|
| Gas utilities 3.4%
|
|
|
| Spire, Inc. (A)(B)
|
|
|
| 235,000
| $16,405,350
|
| UGI Corp. (A)(B)
|
|
|
| 310,000
| 10,952,300
|
| Independent power and renewable electricity producers 3.8%
|
|
|
| NextEra Energy Partners LP
|
|
|
| 125,000
| 9,258,750
|
| The AES Corp. (B)
|
|
|
| 800,000
| 20,928,000
|
| Multi-utilities 25.6%
|
|
|
| Algonquin Power & Utilities Corp.
|
|
|
| 275,000
| 10,356,500
|
| Ameren Corp. (A)(B)
|
|
|
| 330,000
| 26,901,600
|
| Black Hills Corp. (A)(B)
|
|
|
| 394,775
| 25,806,442
|
| CenterPoint Energy, Inc.
|
|
|
| 1,120,923
| 32,069,607
|
| Dominion Energy, Inc. (A)(B)
|
|
|
| 389,814
| 27,275,286
|
| DTE Energy Company (A)(B)
|
|
|
| 180,000
| 20,179,800
|
| National Grid PLC, ADR (A)(B)
|
|
|
| 201,583
| 11,010,463
|
| NiSource, Inc.
|
|
|
| 875,000
| 22,478,750
|
| Public Service Enterprise Group, Inc. (A)(B)
|
|
|
| 275,000
| 15,419,250
|
|
|
| Sempra Energy (A)(B)
|
|
|
| 94,462
| 14,258,094
|
| Preferred securities 30.0% (19.8% of Total investments)
|
| $240,944,531
|
| (Cost $261,403,321)
|
|
|
|
|
|
| Communication services 1.8%
|
|
|
|
| 14,490,686
|
| Media 0.8%
|
|
| Paramount Global, 5.750%
|
| 215,000
| 6,245,750
|
| Wireless telecommunication services 1.0%
|
|
| Telephone & Data Systems, Inc., 6.625% (B)
|
| 410,400
| 8,244,936
|
| Energy 0.6%
|
|
|
|
| 4,987,500
|
| Oil, gas and consumable fuels 0.6%
|
|
| Enbridge, Inc., 6.375% (6.375% to 4-15-23, then 3 month LIBOR + 3.593%) (B)
|
| 210,000
| 4,987,500
|
| Financials 10.5%
|
|
|
|
| 84,495,762
|
| Banks 6.7%
|
|
| Bank of America Corp., 7.250%
|
| 7,000
| 8,123,220
|
| Citigroup, Inc., 7.125% (7.125% to 9-30-23, then 3 month LIBOR + 4.040%) (B)
|
| 210,854
| 5,262,916
|
| Fifth Third Bancorp, 6.000% (B)
|
| 400,000
| 8,736,000
|
| First Republic Bank, 4.000% (B)
|
| 332,000
| 4,983,320
|
| PacWest Bancorp, 7.750% (7.750% to 9-1-27, then 5 Year CMT + 4.820%) (B)
|
| 353,000
| 8,761,460
|
| Synovus Financial Corp., 6.300% (6.300% to 6-21-23, then 3 month LIBOR + 3.352%) (B)
|
| 188,000
| 4,399,200
|
| The PNC Financial Services Group, Inc., 6.850% (3 month LIBOR + 4.068%) (B)(C)
|
| 40,000
| 1,018,000
|
| Wells Fargo & Company, 7.500%
|
| 11,000
| 12,820,830
|
| 9
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
|
|
|
| Shares
| Value
|
| Financials (continued)
|
|
|
|
|
|
| Capital markets 2.0%
|
|
| Morgan Stanley, 6.375% (6.375% to 10-15-24, then 3 month LIBOR + 3.708%) (B)
|
| 220,000
| $5,343,800
|
| Morgan Stanley, 7.125% (7.125% to 10-15-23, then 3 month LIBOR + 4.320%) (B)
|
| 395,862
| 9,916,343
|
| State Street Corp., 5.900% (5.900% to 3-15-24, then 3 month LIBOR + 3.108%)
|
| 25,000
| 609,250
|
| Insurance 1.8%
|
|
| American Equity Investment Life Holding Company, 6.625% (6.625% to 9-1-25, then 5 Year CMT + 6.297%) (B)
|
| 164,125
| 3,801,135
|
| Athene Holding, Ltd., Series A, 6.350% (6.350% to 6-30-29, then 3 month LIBOR + 4.253%)
|
| 355,787
| 8,471,288
|
| Brighthouse Financial, Inc., 6.600% (B)
|
| 100,000
| 2,249,000
|
| Health care 1.3%
|
|
|
|
| 10,235,400
|
| Health care equipment and supplies 1.3%
|
|
| Becton, Dickinson and Company, 6.000%
|
| 210,000
| 10,235,400
|
| Utilities 15.8%
|
|
|
|
| 126,735,183
|
| Electric utilities 8.3%
|
|
| American Electric Power Company, Inc., 6.125%
|
| 148,100
| 7,363,532
|
| Duke Energy Corp., 5.750% (B)
|
| 200,000
| 4,726,000
|
| NextEra Energy, Inc., 5.279%
|
| 115,000
| 5,685,600
|
| NextEra Energy, Inc., 6.219%
|
| 330,350
| 15,939,388
|
| NextEra Energy, Inc., 6.926%
|
| 142,850
| 6,642,525
|
| PG&E Corp., 5.500%
|
| 105,000
| 14,082,600
|
| SCE Trust II, 5.100% (B)
|
| 591,973
| 11,099,494
|
| SCE Trust VI, 5.000% (B)
|
| 44,652
| 765,782
|
| Gas utilities 2.2%
|
|
| South Jersey Industries, Inc., 8.750%
|
| 120,750
| 8,331,750
|
| Spire, Inc., 5.900% (B)
|
| 219,650
| 5,029,985
|
| Spire, Inc., 7.500%
|
| 91,500
| 4,644,540
|
| Independent power and renewable electricity producers 1.1%
|
|
| The AES Corp., 6.875%
|
| 90,000
| 8,865,900
|
| Multi-utilities 4.2%
|
|
| Algonquin Power & Utilities Corp., 6.200% (6.200% to 7-1-24, then 3 month LIBOR + 4.010%) (B)
|
| 200,000
| 4,534,000
|
| Integrys Holding, Inc., 6.000% (6.000% to 8-1-23, then 3 month LIBOR + 3.220%) (B)
|
| 210,000
| 4,830,000
|
| NiSource, Inc., 6.500% (6.500% to 3-15-24, then 5 Year CMT + 3.632%) (B)
|
| 250,000
| 6,177,500
|
| NiSource, Inc., 7.750%
|
| 167,100
| 17,039,187
|
| Sempra Energy, 5.750% (B)
|
| 45,000
| 977,400
|
|
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 10
|
|
| Rate (%)
| Maturity date
|
| Par value^
| Value
|
| Corporate bonds 28.2% (18.6% of Total investments)
|
| $226,528,934
|
| (Cost $254,453,206)
|
|
|
|
|
|
| Consumer discretionary 1.8%
|
|
|
| 14,712,503
|
| Automobiles 1.8%
|
|
|
|
| General Motors Financial Company, Inc. (5.700% to 9-30-30, then 5 Year CMT + 4.997%) (A)(B)(D)
| 5.700
| 09-30-30
|
| 10,750,000
| 9,137,500
|
| General Motors Financial Company, Inc. (6.500% to 9-30-28, then 3 month LIBOR + 3.436%) (D)
| 6.500
| 09-30-28
|
| 6,600,000
| 5,575,003
|
| Financials 20.3%
|
|
|
| 162,934,552
|
| Banks 15.3%
|
|
|
|
| Bank of America Corp. (5.875% to 3-15-28, then 3 month LIBOR + 2.931%) (B)(D)
| 5.875
| 03-15-28
|
| 10,025,000
| 8,629,019
|
| Bank of America Corp. (6.125% to 4-27-27, then 5 Year CMT + 3.231%) (B)(D)
| 6.125
| 04-27-27
|
| 15,690,000
| 14,827,050
|
| BNP Paribas SA (7.375% to 8-19-25, then 5 Year U.S. Swap Rate + 5.150%) (D)
| 7.375
| 08-19-25
|
| 13,000,000
| 12,597,906
|
| Citizens Financial Group, Inc. (6.000% to 7-6-23, then 3 month LIBOR + 3.003%) (D)
| 6.000
| 07-06-23
|
| 13,000,000
| 11,927,386
|
| Citizens Financial Group, Inc. (6.375% to 4-6-24, then 3 month LIBOR + 3.157%) (D)
| 6.375
| 04-06-24
|
| 13,500,000
| 12,308,674
|
| CoBank ACB (6.450% to 10-1-27, then 5 Year CMT + 3.487%) (D)
| 6.450
| 10-01-27
|
| 5,000,000
| 4,850,035
|
| Comerica, Inc. (5.625% to 7-1-25, then 5 Year CMT + 5.291%) (A)(B)(D)
| 5.625
| 07-01-25
|
| 5,000,000
| 4,856,500
|
| Huntington Bancshares, Inc. (5.625% to 7-15-30, then 10 Year CMT + 4.945%) (A)(B)(D)
| 5.625
| 07-15-30
|
| 5,000,000
| 4,544,232
|
| Huntington Bancshares, Inc. (5.700% to 4-15-23, then 3 month LIBOR + 2.880%) (D)
| 5.700
| 04-15-23
|
| 3,000,000
| 2,730,000
|
| JPMorgan Chase & Co. (6.750% to 2-1-24, then 3 month LIBOR + 3.780%) (B)(D)
| 6.750
| 02-01-24
|
| 3,999,000
| 3,999,000
|
| Lloyds Banking Group PLC (7.500% to 6-27-24, then 5 Year U.S. Swap Rate + 4.760%) (D)
| 7.500
| 06-27-24
|
| 11,500,000
| 10,964,948
|
| NatWest Group PLC (8.000% to 8-10-25, then 5 Year U.S. Swap Rate + 5.720%) (A)(B)(D)
| 8.000
| 08-10-25
|
| 8,624,000
| 8,128,551
|
| SVB Financial Group (4.100% to 2-15-31, then 10 Year CMT + 3.064%) (D)
| 4.100
| 02-15-31
|
| 9,000,000
| 5,532,612
|
| The PNC Financial Services Group, Inc. (6.000% to 5-15-27, then 5 Year CMT + 3.000%) (B)(D)
| 6.000
| 05-15-27
|
| 14,000,000
| 12,985,000
|
| The PNC Financial Services Group, Inc. (3 month LIBOR + 3.678%) (B)(C)(D)
| 6.460
| 02-01-23
|
| 2,613,000
| 2,606,413
|
| 11
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
|
| Rate (%)
| Maturity date
|
| Par value^
| Value
|
| Financials (continued)
|
|
|
|
|
| Banks (continued)
|
|
|
|
| Wells Fargo & Company (5.900% to 6-15-24, then 3 month LIBOR + 3.110%) (D)
| 5.900
| 06-15-24
|
| 2,000,000
| $1,813,750
|
| Capital markets 0.8%
|
|
|
|
| The Charles Schwab Corp. (5.375% to 6-1-25, then 5 Year CMT + 4.971%) (A)(B)(D)
| 5.375
| 06-01-25
|
| 6,400,000
| 6,248,000
|
| Consumer finance 1.9%
|
|
|
|
| American Express Company (3.550% to 9-15-26, then 5 Year CMT + 2.854%) (D)
| 3.550
| 09-15-26
|
| 10,500,000
| 8,098,125
|
| Discover Financial Services (6.125% to 6-23-25, then 5 Year CMT + 5.783%) (D)
| 6.125
| 06-23-25
|
| 7,200,000
| 6,917,038
|
| Insurance 2.3%
|
|
|
|
| Markel Corp. (6.000% to 6-1-25, then 5 Year CMT + 5.662%) (D)
| 6.000
| 06-01-25
|
| 6,500,000
| 6,223,397
|
| MetLife, Inc. (5.875% to 3-15-28, then 3 month LIBOR + 2.959%) (D)
| 5.875
| 03-15-28
|
| 1,000,000
| 897,041
|
| SBL Holdings, Inc. (7.000% to 5-13-25, then 5 Year CMT + 5.580%) (A)(B)(D)(E)
| 7.000
| 05-13-25
|
| 13,975,000
| 11,249,875
|
| Utilities 6.1%
|
|
|
| 48,881,879
|
| Electric utilities 1.4%
|
|
|
|
| Edison International (5.000% to 12-15-26, then 5 Year CMT + 3.901%) (D)
| 5.000
| 12-15-26
|
| 3,952,000
| 3,201,120
|
| Edison International (5.375% to 3-15-26, then 5 Year CMT + 4.698%) (D)
| 5.375
| 03-15-26
|
| 9,500,000
| 7,751,050
|
| Independent power and renewable electricity producers 1.5%
|
|
|
|
| Vistra Corp. (7.000% to 12-15-26, then 5 Year CMT + 5.740%) (D)(E)
| 7.000
| 12-15-26
|
| 5,000,000
| 4,423,024
|
| Vistra Corp. (8.000% to 10-15-26, then 5 Year CMT + 6.930%) (D)(E)
| 8.000
| 10-15-26
|
| 8,210,000
| 7,799,500
|
| Multi-utilities 3.2%
|
|
|
|
| CenterPoint Energy, Inc. (6.125% to 9-1-23, then 3 month LIBOR + 3.270%) (A)(B)(D)
| 6.125
| 09-01-23
|
| 10,750,000
| 10,096,220
|
| Dominion Energy, Inc. (4.350% to 1-15-27, then 5 Year CMT + 3.195%) (D)
| 4.350
| 01-15-27
|
| 8,500,000
| 7,031,965
|
| NiSource, Inc. (5.650% to 6-15-23, then 5 Year CMT + 2.843%) (D)
| 5.650
| 06-15-23
|
| 9,325,000
| 8,579,000
|
|
|
|
|
| Yield (%)
|
| Shares
| Value
|
| Short-term investments 3.1% (2.1% of Total investments)
| $24,949,536
|
| (Cost $24,951,129)
|
|
|
|
|
|
| Short-term funds 3.1%
|
|
|
|
| 24,949,536
|
| John Hancock Collateral Trust (F)
|
| 3.1986(G)
|
| 2,497,201
| 24,949,536
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 12
|
|
|
| Total investments (Cost $1,068,686,615) 151.3%
|
|
| $1,216,150,042
|
| Other assets and liabilities, net (51.3%)
|
|
| (412,087,959)
|
| Total net assets 100.0%
|
|
| $804,062,083
|
| 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
|
| CMT
| Constant Maturity Treasury
|
| LIBOR
| London Interbank Offered Rate
|
| (A)
| All or a portion of this security is on loan as of 10-31-22, and is a component of the fund’s leverage under the Liquidity Agreement.
|
| (B)
| All or a portion of this security is pledged as collateral pursuant to the Liquidity Agreement. Total collateral value at 10-31-22 was $498,638,892. A portion of the securities pledged as collateral
were loaned pursuant to the Liquidity Agreement. The value of securities on loan amounted to $300,746,581.
|
| (C)
| Variable rate obligation. The coupon rate shown represents the rate at period end.
|
| (D)
| Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date.
|
| (E)
| 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.
|
| (F)
| Investment is an affiliate of the fund, the advisor and/or subadvisor.
|
| (G)
| The rate shown is the annualized seven-day yield as of 10-31-22.
|
| 13
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
DERIVATIVES
FUTURES
| Open contracts
| Number of
contracts
| Position
| Expiration
date
| Notional
basis^
| Notional
value^
| Unrealized
appreciation
(depreciation)
|
| 10-Year U.S. Treasury Note Futures
| 440
| Short
| Dec 2022
| $(51,860,762)
| $(48,661,250)
| $3,199,512
|
|
|
|
|
|
|
| $3,199,512
|
^ Notional basis refers to the
contractual amount agreed upon at inception of open contracts; notional value represents the current value of the open contract.
At 10-31-22, the aggregate cost
of investments for federal income tax purposes was $1,076,616,542. Net unrealized appreciation aggregated to $142,733,012, of which $224,500,498 related to gross unrealized appreciation and $81,767,486 related to
gross unrealized depreciation.
See Notes to financial statements
regarding investment transactions and other derivatives information.
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 14
|
STATEMENT OF ASSETS AND
LIABILITIES 10-31-22
| Assets
|
|
| Unaffiliated investments, at value (Cost $1,043,735,486)
| $1,191,200,506
|
| Affiliated investments, at value (Cost $24,951,129)
| 24,949,536
|
| Total investments, at value (Cost $1,068,686,615)
| 1,216,150,042
|
| Receivable for futures variation margin
| 178,788
|
| Cash
| 105,964
|
| Collateral held at broker for futures contracts
| 1,784,612
|
| Dividends and interest receivable
| 4,473,285
|
| Receivable for investments sold
| 1,921,943
|
| Other assets
| 32,357
|
| Total assets
| 1,224,646,991
|
| Liabilities
|
|
| Liquidity agreement
| 418,900,000
|
| Interest payable
| 1,473,918
|
| Payable to affiliates
|
|
| Accounting and legal services fees
| 49,945
|
| Trustees’ fees
| 804
|
| Other liabilities and accrued expenses
| 160,241
|
| Total liabilities
| 420,584,908
|
| Net assets
| $804,062,083
|
| Net assets consist of
|
|
| Paid-in capital
| $660,366,581
|
| Total distributable earnings (loss)
| 143,695,502
|
| Net assets
| $804,062,083
|
|
|
| Net asset value per share
|
|
| Based on 35,422,882 shares of beneficial interest outstanding - unlimited number of shares authorized with
no par value
| $22.70
|
| 15
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
STATEMENT OF OPERATIONS For the year ended 10-31-22
| Investment income
|
|
| Dividends
| $44,188,944
|
| Interest
| 12,846,932
|
| Dividends from affiliated investments
| 105,936
|
| Less foreign taxes withheld
| (274,580)
|
| Total investment income
| 56,867,232
|
| Expenses
|
|
| Investment management fees
| 9,623,792
|
| Interest expense
| 7,896,507
|
| Accounting and legal services fees
| 137,304
|
| Transfer agent fees
| 19,883
|
| Trustees’ fees
| 39,649
|
| Custodian fees
| 111,756
|
| Printing and postage
| 44,569
|
| Professional fees
| 138,811
|
| Stock exchange listing fees
| 34,491
|
| Other
| 34,924
|
| Total expenses
| 18,081,686
|
| Less expense reductions
| (107,475)
|
| Net expenses
| 17,974,211
|
| Net investment income
| 38,893,021
|
| Realized and unrealized gain (loss)
|
|
| Net realized gain (loss) on
|
|
| Unaffiliated investments and foreign currency transactions
| 5,652,931
|
| Affiliated investments
| (439)
|
| Futures contracts
| 14,270,610
|
| Swap contracts
| (1,088,613)
|
|
| 18,834,489
|
| Change in net unrealized appreciation (depreciation) of
|
|
| Unaffiliated investments
| (87,221,776)
|
| Affiliated investments
| (1,593)
|
| Futures contracts
| 958,014
|
| Swap contracts
| 1,965,114
|
|
| (84,300,241)
|
| Net realized and unrealized loss
| (65,465,752)
|
| Decrease in net assets from operations
| $(26,572,731)
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 16
|
STATEMENTS OF CHANGES IN NET
ASSETS
|
| Year ended
10-31-22
| Year ended
10-31-21
|
| Increase (decrease) in net assets
|
|
|
| From operations
|
|
|
| Net investment income
| $38,893,021
| $43,734,471
|
| Net realized gain
| 18,834,489
| 15,068,416
|
| Change in net unrealized appreciation (depreciation)
| (84,300,241)
| 122,806,947
|
| Increase (decrease) in net assets resulting from operations
| (26,572,731)
| 181,609,834
|
| Distributions to shareholders
|
|
|
| From earnings
| (58,650,757)
| (59,364,247)
|
| Total distributions
| (58,650,757)
| (59,364,247)
|
| Fund share transactions
|
|
|
| Issued pursuant to Dividend Reinvestment Plan
| 323,918
| 211,547
|
| Total increase (decrease)
| (84,899,570)
| 122,457,134
|
| Net assets
|
|
|
| Beginning of year
| 888,961,653
| 766,504,519
|
| End of year
| $804,062,083
| $888,961,653
|
| Share activity
|
|
|
| Shares outstanding
|
|
|
| Beginning of year
| 35,409,405
| 35,400,819
|
| Issued pursuant to Dividend Reinvestment Plan
| 13,477
| 8,586
|
| End of year
| 35,422,882
| 35,409,405
|
| 17
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
STATEMENT OF CASH FLOWS For the year ended 10-31-22
|
|
|
| Cash flows from operating activities
|
|
| Net decrease in net assets from operations
| $(26,572,731)
|
| Adjustments to reconcile net decrease in net assets from operations to net cash provided by operating
activities:
|
|
| Long-term investments purchased
| (134,198,114)
|
| Long-term investments sold
| 142,505,745
|
| Net purchases and sales of short-term investments
| (10,893,854)
|
| Net amortization of premium (discount)
| 576,095
|
| (Increase) Decrease in assets:
|
|
| Receivable for futures variation margin
| (132,808)
|
| Receivable for centrally cleared swaps
| 442,977
|
| Collateral held at broker for futures contracts
| (100,000)
|
| Dividends and interest receivable
| (221,468)
|
| Receivable for investments sold
| (1,067,251)
|
| Other assets
| 1,070
|
| Increase (Decrease) in liabilities:
|
|
| Interest payable
| 1,217,931
|
| Payable to affiliates
| 1,543
|
| Other liabilities and accrued expenses
| (123,430)
|
| Net change in unrealized (appreciation) depreciation on:
|
|
| Investments
| 87,223,369
|
| Net realized (gain) loss on:
|
|
| Investments
| (5,655,723)
|
| Proceeds received as return of capital
| 5,429,260
|
| Net cash provided by operating activities
| $58,432,611
|
| Cash flows provided by (used in) financing activities
|
|
| Distributions to shareholders
| $(58,326,839)
|
| Net cash used in financing activities
| $(58,326,839)
|
| Net increase in cash
| $105,772
|
| Cash at beginning of year
| $192
|
| Cash at end of year
| $105,964
|
| Supplemental disclosure of cash flow information:
|
|
| Cash paid for interest
| $(6,678,576)
|
| Noncash financing activities not included herein consists of reinvestment of distributions
| $323,918
|
| SEE NOTES TO FINANCIAL STATEMENTS
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 18
|
| Period ended
| 10-31-22
| 10-31-21
| 10-31-20
| 10-31-19
| 10-31-18
|
| Per share operating performance
|
|
|
|
|
|
| Net asset value, beginning of period
| $25.11
| $21.65
| $26.84
| $24.34
| $26.42
|
| Net investment income1
| 1.10
| 1.24
| 1.27
| 1.17
| 1.33
|
| Net realized and unrealized gain (loss) on investments
| (1.85)
| 3.90
| (4.80)
| 3.39
| (1.22)
|
| Total from investment operations
| (0.75)
| 5.14
| (3.53)
| 4.56
| 0.11
|
| Less distributions
|
|
|
|
|
|
| From net investment income
| (1.66)
| (1.66)
| (1.66)
| (1.65)
| (1.66)
|
| From net realized gain
| —
| (0.02)
| —
| (0.41)
| (0.53)
|
| Total distributions
| (1.66)
| (1.68)
| (1.66)
| (2.06)
| (2.19)
|
| Net asset value, end of period
| $22.70
| $25.11
| $21.65
| $26.84
| $24.34
|
| Per share market value, end of period
| $22.76
| $24.53
| $18.99
| $27.44
| $22.37
|
| Total return at net asset value (%)2,3
| (3.21)
| 24.68
| (12.71)
| 20.34
| 0.97
|
| Total return at market value (%)2
| (0.66)
| 38.86
| (25.11)
| 33.87
| (4.23)
|
| Ratios and supplemental data
|
|
|
|
|
|
| Net assets, end of period (in millions)
| $804
| $889
| $767
| $950
| $861
|
| Ratios (as a percentage of average net assets):
|
|
|
|
|
|
| Expenses before reductions
| 2.05
| 1.56
| 1.97
| 2.62
| 2.45
|
| Expenses including reductions4
| 2.04
| 1.55
| 1.96
| 2.61
| 2.44
|
| Net investment income
| 4.41
| 5.13
| 5.53
| 4.63
| 5.40
|
| Portfolio turnover (%)
| 11
| 15
| 20
| 13
| 24
|
| Senior securities
|
|
|
|
|
|
| Total debt outstanding end of period (in millions)
| $419
| $419
| $419
| $428
| $428
|
| Asset coverage per $1,000 of debt5
| $2,919
| $3,122
| $2,830
| $3,220
| $3,012
|
| 1
| Based on average daily shares outstanding.
|
| 2
| 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.
|
| 3
| Total returns would have been lower had certain expenses not been reduced during the applicable periods.
|
| 4
| Expenses including reductions excluding interest expense were 1.14%, 1.19%, 1.22%, 1.18% and 1.20% for the periods ended 10-31-22, 10-31-21, 10-31-20, 10-31-19 and 10-31-18,
respectively.
|
| 5
| 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.
|
| 19
| JOHN HANCOCK Tax-Advantaged Dividend Income Fund | ANNUAL REPORT
| SEE NOTES TO FINANCIAL STATEMENTS
|
Notes to financial statements
Note 1—Organization
John Hancock Tax-Advantaged Dividend
Income Fund (the fund) is a closed-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act).
Note 2—Significant accounting policies
The financial statements have been
prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial
statements. Actual results could differ from those estimates and those differences could be significant. The fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.
Events or transactions occurring
after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting
policies of the fund:
Security valuation. Investments are stated at value as of the 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 Advisor’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. Investments by the fund in open-end
mutual funds, including John Hancock Collateral Trust (JHCT), are valued at their respective NAVs each business day. 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 whose settlement prices are determined as of the close of the NYSE are typically valued based on the settlement price
while other futures contracts are typically valued at the last traded price on the exchange on which they trade.
In certain instances, the Pricing
Committee of the Advisor 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 Pricing Committee following procedures established by the Advisor and adopted 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 Advisor’s assumptions in determining the fair value of investments. Factors used in
determining value may include
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| ANNUAL REPORT | JOHN HANCOCK Tax-Advantaged Dividend Income Fund
| 20
|
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 October 31, 2022, by major security category or type:
|
| Total
value at
10-31-22
| Level 1
quoted
price
| Level 2
significant
observable
inputs
| Level 3
significant
unobservable
inputs
|
| Investments in securities:
|
|
|
|
|
| Assets
|
|
|
|
|
| Common stocks
| $723,727,041
| $723,727,041
| —
| —
|
| Preferred securities
|
|
|
|
|
| Communication services
| 14,490,686
| 14,490,686
| —
| —
|
| Energy
| 4,987,500
| 4,987,500
| —
| —
|
| Financials
| 84,495,762
| 84,495,762
| —
| —
|
| Health care
| 10,235,400
| 10,235,400
| —
| —
|
| Utilities
| 126,735,183
| 117,260,643
| $9,474,540
| —
|
| Corporate bonds
| 226,528,934
| —
| 226,528,934
| —
|
| Short-term investments
| 24,949,536
| 24,949,536
| —
| —
|
| Total investments in securities
| $1,216,150,042
| $980,146,568
| $236,003,474
| —
|
| Derivatives:
|
|
|
|
|
| Assets
|
|
|
|
|
| Futures
| $3,199,512
| $3,199,512
| —
| —
|
The fund holds liabilities for which
the fair value approximates the carrying amount for financial statement purposes. As of October 31, 2022, the liability for the fund’s Liquidity agreement on the Statement of assets and liabilities is
categorized as Level 2 within the disclosure hierarchy.
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
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 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.
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.
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| JOHN HANCOCK Tax-Advantaged Dividend Income Fund | ANNUAL REPORT
|
|
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 repatriations 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.
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, 2022, 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 on September 19, 2016. Under the current Plan, the fund makes monthly distributions of an amount equal to $0.1380 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.
|
| ANNUAL REPORT | JOHN HANCOCK Tax-Advantaged Dividend Income Fund
| 22
|
The tax character of distributions
for the years ended October 31, 2022 and 2021 was as follows:
|
| October 31, 2022
| October 31, 2021
|
| Ordinary income
| $46,077,724
| $42,590,955
|
| Long-term capital gains
| 12,573,033
| 16,773,292
|
| Total
| $58,650,757
| $59,364,247
|
As of October 31, 2022, the
components of distributable earnings on a tax basis consisted of $962,489 of undistributed long-term capital gains.
Such distributions and distributable
earnings, 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.
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, derivative transactions, amortization and accretion on debt securities, contingent payment debt instruments and dividend
redesignation.
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.
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, if any, 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. Receivable for futures
variation margin is included on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to
| 23
| JOHN HANCOCK Tax-Advantaged Dividend Income Fund | ANNUAL REPORT
|
|
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 year ended October 31,
2022, the fund used futures contracts to manage against changes in interest rates. The fund held futures contracts with USD notional values ranging from $48.7 million to $128.1 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 produce losses 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.
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 year ended October 31,
2022, the fund used interest rate swap contracts to manage against changes in the liquidity agreement interest rates. The fund held interest rate swaps with total USD notional amounts ranging up to $107 million, as
measured at each quarter end. There were no open interest rate swap contracts as of October 31, 2022.
Fair value of derivative instruments
by risk category
The table below summarizes the fair
value of derivatives held by the fund at October 31, 2022 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 margin1
| Futures
| $3,199,512
| —
|
| 1
| Reflects cumulative appreciation/depreciation on open futures as disclosed in the Derivatives section of Fund’s investments. Only the year end variation margin
receivable/payable is separately reported on the Statement of assets and liabilities.
|
|
| ANNUAL REPORT | JOHN HANCOCK Tax-Advantaged Dividend Income Fund
| 24
|
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 year ended October 31, 2022:
|
| Statement of operations location - Net realized gain (loss) on:
|
| Risk
| Futures contracts
| Swap contracts
| Total
|
| Interest rate
| $14,270,610
| $(1,088,613)
| $13,181,997
|
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 year ended October 31, 2022:
|
| Statement of operations location - Change in net unrealized appreciation (depreciation) of:
|
| Risk
| Futures contracts
| Swap contracts
| Total
|
| Interest rate
| $958,014
| $1,965,114
| $2,923,128
|
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 Investment Management
LLC (the Advisor) serves as investment advisor for the fund. The Advisor is an indirect, principally owned subsidiary of John Hancock Life Insurance Company (U.S.A.), which in turn is a 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 0.74% of the
fund’s average daily managed assets (net assets plus borrowings under the Liquidity Agreement) (see Note 8). 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
year ended October 31, 2022, this waiver amounted to 0.01% of the fund’s average daily net assets. This arrangement expires on July 31, 2024, 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 $107,475 for the year ended October 31, 2022.
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 year ended October 31, 2022, were equivalent to a net annual effective rate of 0.73% of the fund’s average daily
managed net assets.
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| JOHN HANCOCK Tax-Advantaged Dividend Income Fund | ANNUAL REPORT
|
|
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, compliance, 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 year ended
October 31, 2022, amounted to an annual rate of 0.01% of the fund’s average daily managed net 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 2007, the Board of
Trustees approved a share repurchase plan, which is subsequently reviewed by the Board of Trustees each year in December. Under the current share repurchase plan, the fund may purchase in the open market, between
January 1, 2022 and December 31, 2022, up to 10% of its outstanding common shares as of December 31, 2021. The share repurchase plan will remain in effect between January 1, 2022 and December 31, 2022.
During the years ended October 31,
2022 and 2021, 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, if any, are included on the Financial highlights.
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 $427.9 million (maximum facility amount) through a line of credit, securities lending and
reverse repurchase agreements. The amounts outstanding at October 31, 2022 are shown in
|
| ANNUAL REPORT | JOHN HANCOCK Tax-Advantaged Dividend Income Fund
| 26
|
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. As of October 31, 2022, the LA balance of $418,900,000 was comprised of $109,746,742 from the line of credit and $309,153,258 cash received by SSB from securities lending or Reverse Repo transactions.
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 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.
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 October 31, 2022, the fund had an aggregate balance of
$418,900,000 at an interest rate of 4.43%, which is reflected in the Liquidity agreement on the Statement of assets and liabilities. During the year ended October 31, 2022, the average balance of the LA and the
effective average interest rate were $418,900,000 and 1.89%, 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. The
ICE Benchmark Administration Limited, the administrator of LIBOR, ceased publishing most LIBOR maturities, including some US LIBOR maturities, on December 31, 2021, and is expected to cease publishing the remaining
and most liquid US LIBOR maturities on June 30, 2023. It is expected that market participants such as
| 27
| JOHN HANCOCK Tax-Advantaged Dividend Income Fund | ANNUAL REPORT
|
|
the fund and SSB will transition to the use of
alternative reference or benchmark rates prior to the applicable LIBOR publication cessation date. However, although regulators have encouraged the development and adoption of alternative rates, such as the Secured
Overnight Financing Rate ("SOFR"), there is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate.
Although the transition process away
from LIBOR has become increasingly well-defined in advance of the anticipated discontinuation dates, the impact on the LA remains uncertain. 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. To facilitate the transition of legacy derivatives contracts referencing LIBOR, the International Swaps and Derivatives Association, Inc. launched a protocol to
incorporate fallback provisions. However, 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. Certain proposed replacement rates to LIBOR, such as SOFR, which is a broad measure of secured
overnight US Treasury repo rates, are materially different from LIBOR, and changes in the applicable spread for financial instruments transitioning away from LIBOR will need to be made to accommodate the differences.
Furthermore, the risks associated with the expected discontinuation of LIBOR and transition to replacement rates may be exacerbated if an orderly transition to an alternative reference rate is not completed in a
timely manner.
As market participants transition
away from LIBOR, LIBOR’s usefulness may deteriorate. 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 $134,198,114 and $142,505,745, respectively, for the year ended October 31, 2022.
Note 11—Industry or sector risk
The fund may invest 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.
Note 12—Investment in affiliated underlying funds
The fund may invest in affiliated
underlying funds that are managed by the Advisor and its affiliates. Information regarding the fund’s fiscal year to date purchases and sales of the affiliated underlying funds as well as income and capital
gains earned by the fund, if any, is as follows:
|
| ANNUAL REPORT | JOHN HANCOCK Tax-Advantaged Dividend Income Fund
| 28
|
|
|
|
|
|
|
|
| Dividends and distributions
|
| Affiliate
| Ending
share
amount
| Beginning
value
| Cost of
purchases
| Proceeds
from shares
sold
| Realized
gain
(loss)
| Change in
unrealized
appreciation
(depreciation)
| Income
distributions
received
| Capital gain
distributions
received
| Ending
value
|
| John Hancock Collateral Trust
| 2,497,201
| —
| $61,110,803
| $(36,159,235)
| $(439)
| $(1,593)
| $105,936
| —
| $24,949,536
|
Note 13—Coronavirus (COVID-19) pandemic
The 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, which may lead to less
liquidity in certain instruments, industries, sectors or the markets generally, and may ultimately affect fund performance.
Note 14—New accounting pronouncement
In March 2020, the Financial
Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU), ASU 2020-04, which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of
modifications due to the planned discontinuation of the LIBOR and other IBOR-based reference rates as of the end of 2021. The temporary relief provided by ASU 2020-04 is effective for certain reference rate-related
contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management expects that the adoption of the guidance will not have a material impact to the financial statements.
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| JOHN HANCOCK Tax-Advantaged Dividend Income Fund | ANNUAL REPORT
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Report of Independent Registered
Public Accounting Firm
To the Board of Trustees and
Shareholders of John Hancock Tax-Advantaged Dividend Income Fund
Opinion on the Financial Statements
We have audited the accompanying
statement of assets and liabilities, including the fund’s investments, of John Hancock Tax-Advantaged Dividend Income Fund (the "Fund") as of October 31, 2022, the related statements of operations and cash flows
for the year ended October 31, 2022, the statements of changes in net assets for each of the two years in the period ended October 31, 2022, including the related notes, and the financial highlights for each of the
five years in the period ended October 31, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Fund as of October 31, 2022, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period ended October 31, 2022 and
the financial highlights for each of the five years in the period ended October 31, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these
financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2022 by correspondence with the custodian, transfer agent and brokers. We believe that
our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 2022
We have served as the auditor of one
or more investment companies in the John Hancock group of funds since 1988.
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(Unaudited)
For federal income tax purposes, the
following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended October 31, 2022.
The fund reports the maximum amount
allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount
allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
The fund reports the maximum amount
allowable as Section 163(j) Interest Dividends.
The fund paid $12,573,033 in long
term capital gain dividends.
The fund reports the maximum amount
allowable of its Section 199A dividends as defined in Proposed Treasury Regulation §1.199A-3(d).
Eligible shareholders will be mailed
a 2022 Form 1099-DIV in early 2023. This will reflect the tax character of all distributions paid in calendar year 2022.
Please consult a tax advisor regarding
the tax consequences of your investment in the fund.
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| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
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Investment objective, principal
investment strategies, and principal risks
Unaudited
Investment Objectives
The fund’s investment
objective is to provide a high level of after-tax total return from dividend income and capital appreciation.
Principal Investment Strategies
Under normal circumstances, the fund
will invest at least 80% of its assets (net assets plus borrowing for investment purposes) in dividend-paying common and preferred securities that the Advisor believes at the time of acquisition are eligible to pay
tax-advantaged dividends. This is a non-fundamental policy and may be changed by the Board of Trustees of the fund provided that shareholders are provided with at least 60 days prior written notice of any change as
required by the rules under the 1940 Act. Tax-advantaged dividends generally include dividends from domestic corporations and dividends from foreign corporations that meet certain specified criteria. The fund
generally can pass the tax treatment of tax advantaged dividends it receives through to its common shareholders, provided certain holding period and other requirements are satisfied by the shareholders. There
can be no assurance as to the portion of the fund’s dividends that will be tax-advantaged.
The fund may invest the remainder of
its assets in equity securities and in investment grade and below investment grade fixed income securities, including debt instruments and real estate investment trusts, that
generate income taxed at ordinary income rather than long-term capital gain rates. For any year, so long as the fund’s ordinary income,
tax-exempt income (if any), and net realized short-term capital gains in excess of net long-term capital losses are fully offset by expenses of the fund, all of the fund’s income
distributions would be characterized as tax-advantaged dividends. Although the fund intends to invest at least 80% of its assets in equity
securities that pay tax-advantaged dividends and to satisfy the holding period and other requirements, a portion of the
fund’s income distributions may be taxable at higher federal income tax rates applicable to ordinary income.
The fund may invest its portfolio of
equity securities in companies of any market capitalization. In selecting securities for the fund’s portfolio, the Advisor focuses on dividend-paying common and preferred securities that produce an attractive
level of tax-advantaged income. The Advisor also considers a security’s potential for capital appreciation. The Advisor generally uses a value approach in selecting the fund’s equity investments. Using
this investment style, the Advisor seeks securities selling at what the Advisor believes are substantial discounts to their underlying values and then holds these securities until the market values reflect their
intrinsic values. The Advisor evaluates a security’s potential value, including the attractiveness of its market valuation, based on the company’s assets and prospects for earnings growth. The fund may
seek to enhance the level of dividend income it receives by engaging in dividend capture trading.
Debt securities in which the fund
may invest include: securities issued or guaranteed by the U.S. government, its agencies or instrumentalities and custodial receipts therefor; securities issued or guaranteed by a foreign government or any of its
political subdivisions, authorities, agencies or instrumentalities or by international or supranational entities; corporate debt securities including notes, bonds and debentures; certificates of deposit and
bankers’ acceptances issued or guaranteed by, or time deposits maintained at, banks (including U.S. or foreign branches of U.S. banks or U.S. or foreign branches of foreign banks) having total assets of more
than $1 billion; commercial paper; and mortgage related securities. The fund may, from time to time, invest up to 20% of its total assets in preferred stocks and other fixed income securities
rated below investment grade at the time of acquisition (that, is rated BB, Ba or lower as determined by S&P, Fitch or Moody’s) or, if unrated, determined to be of comparable credit quality by the Advisor.
The below investment grade securities in which the fund invests may be rated as low as Cc or Ca, provided that no more than 5% of
the fund’s total assets will be invested in securities rated below B at the time of investment.
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The fund concentrates its
investments in securities issued by corporations in the utilities sector. The fund may invest up to 40% of its net assets in securities of corporate and government issuers located outside the United States that are
traded or denominated in U.S. dollars. The fund may also invest up to 20% of its total assets in illiquid securities.
The fund may also invest in
derivatives such as futures contracts, options, options on futures contracts, equity swaps, and reverse repurchase agreements. In addition, the fund may invest in repurchase agreements. The fund may sell a security
short if it owns at least an equal amount of the security sold short or another security convertible or exchangeable for an equal amount of the security sold short without payment of further compensation (a short sale
against-the-box). The fund may invest in the securities of other investment companies to the extent that such investments are consistent with the
fund’s investment objective and principal investment strategies and permissible under the 1940 Act.
The fund may engage in portfolio
trading, may issue preferred shares, borrow or issue short-term debt securities, and enter into reverse repurchase agreements to obtain investment leverage either alone and/or in combination with other forms of
investment leverage or for temporary purposes. The fund utilizes a liquidity agreement to increase its assets available for investments, and may also seek to obtain additional income or portfolio leverage by making
secured loans of its portfolio securities with a value of up to 33 1/3% of its total assets.
The Advisor may also take into
consideration environmental, social, and/or governance (“ESG”) factors, alongside other relevant factors, as part of its investment selection process. The ESG characteristics utilized in the fund’s
investment process may change over time and one or more characteristics may not be relevant with respect to all issuers that are eligible fund investments.
Principal 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.
The fund’s main risks are
listed below in alphabetical order, not in order of importance.
Changing distribution level &
return of capital risk. There is no guarantee prior distribution levels will be maintained, and distributions may include a substantial tax return of capital. A return of capital is the return of all or a portion
of a shareholder’s investment in the fund.
Concentration risk. Because the fund may focus on one or more industries or sectors of the economy, its performance depends in large part on the performance of those industries or sectors. As a result, the
value of an investment may fluctuate more widely since it is more susceptible to market, economic, political, regulatory, and other conditions and risks affecting those industries or sectors than a fund that invests
more broadly across industries and sectors.
Credit and counterparty risk. The issuer or guarantor of a fixed-income security, the counterparty to an over-the-counter derivatives contract, or a borrower of fund securities may not make timely payments or otherwise
honor its obligations. U.S. government securities are subject to varying degrees of credit risk depending upon the nature of their support. A downgrade or default affecting any of the fund’s securities could
affect the fund’s performance.
Cybersecurity and operational
risk. Cybersecurity breaches 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 a fund’s securities may negatively impact performance. Operational risk may arise from human error, error by third parties,
communication errors, or technology failures, among other causes.
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| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
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Economic and market events risk. Events in the U.S. and global financial markets, including actions taken by the U.S. Federal Reserve or foreign central banks to stimulate or stabilize economic growth, may at times
result in unusually high market volatility, which could negatively impact performance. Reduced liquidity in credit and fixed-income markets could adversely affect issuers worldwide. Financial institutions could suffer
losses as interest rates rise or economic conditions deteriorate.
As a result of continued political
tensions and armed conflicts, including the Russian invasion of Ukraine commencing in February of 2022, the extent and ultimate result of which are unknown at this time, the United States and the European Union, along
with the regulatory bodies of a number of countries, have imposed economic sanctions on certain Russian corporate entities and individuals, and certain sectors of Russia’s economy, which may result in, among
other things, the continued devaluation of Russian currency, a downgrade in the country’s credit rating, and/or a decline in the value and liquidity of Russian securities, property or interests. These sanctions
could also result in the immediate freeze of Russian securities and/or funds invested in prohibited assets, impairing the ability of a fund to buy, sell, receive or deliver those securities and/or assets. Economic
sanctions and other actions against Russian institutions, companies, and individuals resulting from the ongoing conflict may also have a substantial negative impact on other economies and securities markets both
regionally and globally, as well as on companies with operations in the conflict region, the extent to which is unknown at this time.
A widespread health crisis such as a
global pandemic could cause substantial market volatility, exchange trading suspensions and closures, and affect fund performance. For example, the coronavirus disease (COVID-19) has resulted and may continue to
result in significant disruptions to global business activity and market volatility due to disruptions in market access, resource availability, facilities operations, imposition of tariffs, export controls and supply
chain disruption, among others. 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 preexisting political, social, and economic risks. Any such impact could adversely affect the fund’s performance, resulting in losses to your investment.
Equity securities risk. The price of equity securities may decline due to changes in a company’s financial condition or overall market conditions. Securities the manager believes are undervalued may never
realize their full potential value, and in certain markets value stocks may underperform the market as a whole.
ESG integration risk. The manager considers ESG factors that it deems relevant or additive, along with other material factors and analysis, when managing the fund. The portion of the fund’s investments
for which the manager considers these ESG factors may vary, and could increase or decrease over time. In certain situations, the extent to which these ESG factors may be applied according to the manager’s
integrated investment process may not include U.S. Treasuries, government securities, or other asset classes. ESG factors may include, but are not limited to, matters regarding board diversity, climate change
policies, and supply chain and human rights policies. Incorporating ESG criteria and investing in instruments that have certain ESG characteristics, as determined by the manager, carries the risk that the fund may
perform differently, including underperforming funds that do not utilize ESG criteria or funds that utilize different ESG criteria. Integration of ESG factors into the fund’s investment process may result in a
manager making different investments for the fund than for a fund with a similar investment universe and/or investment style that does not incorporate such considerations in its investment strategy or processes, and
the fund’s investment performance may be affected. Because ESG factors are one of many considerations for the fund, the manager may nonetheless include companies with low ESG scores or exclude companies with
high ESG scores in the fund’s investments.
Fixed-income securities risk. A rise in interest rates typically causes bond prices to fall. The longer the average maturity or duration of the bonds held by a fund, the more sensitive it will likely be to
interest-rate fluctuations. An issuer may not make all interest payment or repay all or any of the principal borrowed. Changes in a security’s credit qualify may adversely affect fund performance. Additionally,
the value of inflation-indexed securities is subject to the effects of changes in market interest rates caused by factors other than inflation (“real interest rates”). Generally, when real interest rates
rise, the value of inflation-indexed securities will fall and the fund’s value may decline as a result of this exposure to these securities.
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Foreign securities risk. Less information may be publicly available regarding foreign issuers, including foreign government issuers. Foreign securities may be subject to foreign taxes and may be more volatile than
U.S. securities. Currency fluctuations and political and economic developments may adversely impact the value of foreign securities. If applicable, depositary receipts are subject to most of the risks associated with
investing in foreign securities directly because the value of a depositary receipt is dependent upon the market price of the underlying foreign equity security. Depositary receipts are also subject to liquidity
risk.
Hedging, derivatives, and other
strategic transactions risk. Hedging, derivatives, and other strategic transactions may increase a fund’s volatility and could produce disproportionate losses, potentially more than the fund’s principal
investment. Risks of these transactions are different from and possibly greater than risks of investing directly in securities and other traditional instruments. Under certain market conditions, derivatives could
become harder to value or sell and may become subject to liquidity risk (i.e., the inability to enter into closing transactions). Derivatives and other strategic transactions that the fund intends to utilize include:
futures contracts, options, options on futures contracts, equity swaps, and reverse repurchase agreements. Futures contracts, options, and swaps generally are subject to counterparty risk. In addition, swaps may be
subject to interest-rate and settlement risk, and the risk of default of the underlying reference obligation. An event of default or insolvency of the counterparty to a reverse repurchase agreement could result in
delays or restrictions with respect to the fund’s ability to dispose of the underlying securities. In addition, a reverse repurchase agreement may be considered a form of leverage and may, therefore, increase
fluctuations in the fund’s NAV.
Illiquid and restricted
securities risk. Illiquid and restricted securities may be difficult to value and may involve greater risks than liquid securities. Illiquidity may have an adverse impact on a particular security’s
market price and the fund’s ability to sell the security.
Investment company securities
risk. The fund may invest in securities of other investment companies. Fund shareholders indirectly bear their proportionate share of the expenses of each such investment company. The total
return on such investments will be reduced by the operating expenses and fees of such other investment companies, including advisory fees.
Large company risk. Larger companies may grow more slowly than smaller companies or be slower to respond to business developments. Large-capitalization securities may underperform the market as a
whole.
Leveraging risk. Issuing preferred shares or using derivatives may result in a leveraged portfolio. Leveraging long exposures increases a fund’s losses when the value of its investments declines.
Some derivatives have the potential for unlimited loss, regardless of the size of the initial investment. The fund also utilizes a Liquidity Agreement to increase its assets available for investment. See “Note 7
—Leverage risk” above.
LIBOR discontinuation risk. The publication of the London Interbank Offered Rate (LIBOR), which many debt securities, derivatives and other financial instruments use as the reference or benchmark rate for interest
rate calculations, was discontinued for certain maturities as of December 31, 2021, and is expected to be discontinued on June 30, 2023 for the remaining maturities. The transition process away from LIBOR may lead to
increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates, and the eventual use of an alternative reference rate may adversely affect the fund’s performance. In
addition, the usefulness of LIBOR may deteriorate in the period leading up to its discontinuation, which could adversely affect the liquidity or market value of securities that use LIBOR.
Liquidity risk. The extent (if at all) to which a security may be sold or a derivative position closed without negatively impacting its market value may be impaired by reduced market activity or
participation, legal restrictions, or other economic and market impediments. Widespread selling of fixed-income securities to satisfy redemptions during periods of reduced demand may adversely impact the price or
salability of such securities.
Lower-rated and high-yield
fixed-income securities risk. Lower-rated and high-yield fixed-income securities (junk bonds) are subject to greater credit quality risk, risk of default, and price volatility than higher-rated fixed-income securities,
may be considered speculative, and can be difficult to resell.
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Mortgage-backed and asset-backed
securities risk. Mortgage-backed and asset-backed securities are subject to different combinations of prepayment, extension, interest-rate, and other market risks. Factors that impact the value of these
securities include interest rate changes, the reliability of available information, credit quality or enhancement, and market perception.
Preferred and convertible securities
risk. Preferred stock dividends are payable only if declared by the issuer’s board. Preferred stock may be subject to redemption provisions. The market values of convertible securities
tend to fall as interest rates rise and rise as interest rates fall. Convertible preferred stock’s value can depend heavily upon the underlying common stock’s value.
Real estate investment trust
risk. REITs, pooled investment vehicles that typically invest in real estate directly or in loans collateralized by real estate, carry risks associated with owning real estate, including the
potential for a decline in value due to economic or market conditions.
Small and mid-sized company
risk. Small and mid-sized companies are generally less established and may be more volatile than larger companies. Small and/or mid-capitalization securities may underperform the market as a
whole.
U.S. Government agency
obligations risk. U.S. government-sponsored entities such as Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks,
although chartered or sponsored by Congress, are not funded by congressional appropriations and the debt securities that they issue are neither guaranteed nor issued by the U.S. government. Such debt securities are
subject to the risk of default on the payment of interest and/or principal, similar to the debt securities of private issuers. The maximum potential liability of the issuers of some U.S. government obligations may
greatly exceed their current resources, including any legal right to support from the U.S. government. Although the U.S. government has provided financial support to Fannie Mae and Freddie Mac in the past, there can
be no assurance that it will support these or other government-sponsored entities in the future.
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ADDITIONAL INFORMATION
Unaudited
The fund is a closed-end,
diversified management investment company, common shares of which were initially offered to the public on February 25, 2004, and are publicly traded on the New York Stock Exchange (the NYSE).
Dividends and distributions
During the year ended October 31,
2022, distributions from net investment income totaling $1.6560 per share were paid to shareholders. The dates of payments and the amounts per share were as follows:
| Payment Date
| Income Distributions
|
| November 30, 2021
| $0.1380
|
| December 31, 2021
| 0.1380
|
| January 31, 2022
| 0.1380
|
| February 28, 2022
| 0.1380
|
| March 31, 2022
| 0.1380
|
| April 29, 2022
| 0.1380
|
| May 31, 2022
| 0.1380
|
| June 30, 2022
| 0.1380
|
| July 29, 2022
| 0.1380
|
| August 31, 2022
| 0.1380
|
| September 30, 2022
| 0.1380
|
| October 31, 2022
| 0.1380
|
| Total
| $1.6560
|
Dividend reinvestment plan
The fund’s Dividend
Reinvestment Plan (the Plan) provides that distributions of dividends and capital gains are automatically reinvested in common shares of the fund by Computershare Trust Company, N.A. (the Plan Agent). Every
shareholder holding at least one full share of the fund is entitled to participate in the Plan. In addition, every shareholder who became a shareholder of the fund after June 30, 2011, and holds at least one full
share of the fund will be automatically enrolled in the Plan. Shareholders may withdraw from the Plan at any time and shareholders who do not participate in the Plan will receive all distributions in cash.
If the fund declares a dividend or
distribution payable either in cash or in common shares of the fund and the market price of shares on the payment date for the distribution or dividend equals or exceeds the fund’s net asset value per share
(NAV), the fund will issue common shares to participants at a value equal to the higher of NAV or 95% of the market price. The number of additional shares to be credited to each participant’s account will be
determined by dividing the dollar amount of the distribution or dividend by the higher of NAV or 95% of the market price. If the market price is lower than NAV, or if dividends or distributions are payable only in
cash, then participants will receive shares purchased by the Plan Agent on participants’ behalf on the NYSE or otherwise on the open market. If the market price exceeds NAV before the Plan Agent has completed
its purchases, the average per share purchase price may exceed NAV, resulting in fewer shares being acquired than if the fund had issued new shares.
There are no brokerage charges with
respect to common shares issued directly by the fund. However, whenever shares are purchased or sold on the NYSE or otherwise on the open market, each participant will pay a pro rata portion of brokerage trading fees,
currently $0.05 per share purchased or sold. Brokerage trading fees will be deducted from amounts to be invested.
The reinvestment of dividends and
net capital gains distributions does not relieve participants of any income tax that may be payable on such dividends or distributions.
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| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
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Shareholders participating in the
Plan may buy additional shares of the fund through the Plan at any time in amounts of at least $50 per investment, up to a maximum of $10,000, with a total calendar year limit of $100,000. Shareholders will be charged
a $5 transaction fee plus $0.05 per share brokerage trading fee for each order. Purchases of additional shares of the fund will be made on the open market. Shareholders who elect to utilize monthly electronic fund
transfers to buy additional shares of the fund will be charged a $2 transaction fee plus $0.05 per share brokerage trading fee for each automatic purchase. Shareholders can also sell fund shares held in the Plan
account at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan Agent’s website at www.computershare.com/investor. The Plan Agent will mail a check (less applicable brokerage
trading fees) on settlement date. Pursuant to regulatory changes, effective September 5, 2017, the settlement date is changed from three business days after the shares have been sold to two business days after the
shares have been sold. If shareholders choose to sell shares through their stockbroker, they will need to request that the Plan Agent electronically transfer those shares to their stockbroker through the Direct
Registration System.
Shareholders participating in the
Plan may withdraw from the Plan at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan Agent’s website at www.computershare.com/investor. Such termination will be effective
immediately if the notice is received by the Plan Agent prior to any dividend or distribution record date; otherwise, such termination will be effective on the first trading day after the payment date for such
dividend or distribution, with respect to any subsequent dividend or distribution. If shareholders withdraw from the Plan, their shares will be credited to their account; or, if they wish, the Plan Agent will sell
their full and fractional shares and send the shareholders the proceeds, less a transaction fee of $5 and less brokerage trading fees of $0.05 per share. If a shareholder does not maintain at least one whole share of
common stock in the Plan account, the Plan Agent may terminate such shareholder’s participation in the Plan after written notice. Upon termination, shareholders will be sent a check for the cash value of any
fractional share in the Plan account, less any applicable broker commissions and taxes.
Shareholders who hold at least one
full share of the fund may join the Plan by notifying the Plan Agent by telephone, in writing or by visiting the Plan Agent’s website at www.computershare.com/investor. If received in proper form by the Plan
Agent before the record date of a dividend, the election will be effective with respect to all dividends paid after such record date. If shareholders wish to participate in the Plan and their shares are held in the
name of a brokerage firm, bank or other nominee, shareholders should contact their nominee to see if it will participate in the Plan. If shareholders wish to participate in the Plan, but their brokerage firm, bank or
other nominee is unable to participate on their behalf, they will need to request that their shares be re-registered in their own name, or they will not be able to participate. The Plan Agent will administer the Plan
on the basis of the number of shares certified from time to time by shareholders as representing the total amount registered in their name and held for their account by their nominee.
Experience under the Plan may
indicate that changes are desirable. Accordingly, the fund and the Plan Agent reserve the right to amend or terminate the Plan. Participants generally will receive written notice at least 90 days before the effective
date of any amendment. In the case of termination, participants will receive written notice at least 90 days before the record date for the payment of any dividend or distribution by the fund.
All correspondence or requests for
additional information about the Plan should be directed to Computershare Trust Company, N.A., at the address stated below, or by calling 800-852-0218, 201-680-6578 (For International Telephone Inquiries) and
800-952-9245 (For the Hearing Impaired (TDD)).
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:
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| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
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Regular Mail:
Computershare
P.O. Box 43006
Providence, RI 02940-3078
Registered or Overnight Mail:
Computershare
150 Royall Street, Suite 101
Canton, MA 02021
If your shares are held with a
brokerage firm, you should contact that firm, bank or other nominee for assistance.
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EVALUATION OF ADVISORY AND
SUBADVISORY AGREEMENTS BY THE BOARD OF TRUSTEES
This section describes the
evaluation by the Board of Trustees (the Board) of John Hancock Tax-Advantaged Dividend Income Fund (the fund) of the Advisory Agreement (the Advisory Agreement) with John Hancock Investment Management LLC (the
Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Manulife Investment Management (US) LLC (the Subadvisor). The Advisory Agreement and Subadvisory Agreement are collectively referred to as
the Agreements. Prior to the June 21-23, 2022 videoconference1 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the
Agreements at the videoconference meeting held on May 24-25, 2022. The Trustees who are not “interested persons” of the Trust as defined by the Investment Company Act of 1940, as amended (the 1940
Act) (the Independent Trustees) also met separately to evaluate and discuss the information presented, including with counsel to the Independent Trustees and a third-party consulting firm.
Approval of Advisory and Subadvisory
Agreements
At videoconference meetings held on
June 21-23, 2022, the Board, including the Trustees who are not parties to any Agreement or considered to be interested persons of the fund under the 1940 Act, reapproved for an annual period the continuation of the
Advisory Agreement between the fund and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory
Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense
information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and other pertinent information, such as the
market premium and discount information, and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the
Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of
providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given
to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board noted that the evaluation process with respect to the Advisor and the Subadvisor is an
ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board (including its various committees) at prior meetings with respect to the services
provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect
to the fund. The information received and considered by the Board in connection with the May and June meetings and throughout the year was both written and oral. The Board noted the affiliation of the Subadvisor with
the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates. The
Board considered the Advisory Agreement and Subadvisory Agreement separately in the course of its review. In doing so, the Board noted the respective roles of the Advisor and Subadvisor in providing services to the
fund.
1On June 19, 2020, as a result of health and safety measures put in place to combat the global COVID-19 pandemic, the Securities and Exchange Commission issued an exemptive order
(the “Order”) pursuant to Sections 6(c) and 38(a) of the Investment Company Act of 1940, as amended (the “1940 Act”), that temporarily exempts registered investment management companies from
the in-person voting requirements under the 1940 Act, subject to certain requirements, including that votes taken pursuant to the Order are ratified at the next in-person meeting. The Board determined that reliance on
the Order was necessary or appropriate due to the circumstances related to current or potential effects of COVID-19 and therefore, the Board’s May and June meetings were held via videoconference in reliance on
the Order. This exemptive order supersedes, in part, a similar earlier exemptive order issued by the SEC.
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 40
|
Throughout the process, the Board
asked questions of and requested additional information from management. The Board is assisted by counsel for the fund and the Independent Trustees are also separately assisted by independent legal counsel throughout
the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed
the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement
with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends
prevailing generally in the economy, the securities markets, and the industry) and did not treat any single factor as determinative, and each Trustee may have attributed different weights to different factors. The
Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations
throughout the year.
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the
Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV.
The Board also noted that on a regular basis it receives and reviews information from the fund’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant
to Rule 38a-1 under the 1940 Act. The Board observed that the scope of services provided by the Advisor, and of the undertakings required of the Advisor in connection with those services, including maintaining and
monitoring its own and the fund’s compliance programs, risk management programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other
developments. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services
provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers. The Board also considered the significant risks assumed by the
Advisor in connection with the services provided to the fund including entrepreneurial risk in sponsoring new funds and ongoing risks including investment, operational, enterprise, litigation, regulatory and
compliance risk with respect to all funds.
The Board also considered the
differences between the Advisor’s services to the fund and the services it provides to other clients that are not closed-end funds, including, for example, the differences in services related to the regulatory
and legal obligations of closed-end funds.
In considering the nature, extent,
and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through
Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the fund and of the other funds in the John Hancock group of funds complex (the John
Hancock Fund Complex).
In the course of their deliberations
regarding the Advisory Agreement, the Board considered, among other things:
| (a)
| the skills and competency with which the Advisor has in the past managed the fund’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment
performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the
Advisor’s timeliness in responding to performance issues;
|
| (b)
| the background, qualifications and skills of the Advisor’s personnel;
|
| 41
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
| (c)
| the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and fund industry developments;
|
| (d)
| the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund, as well as the Advisor’s oversight of any securities lending activity, its
monitoring of class action litigation and collection of class action settlements on behalf of the fund, and bringing loss recovery actions on behalf of the fund;
|
| (e)
| the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund;
|
| (f)
| the Advisor’s initiatives intended to improve various aspects of the fund’s operations and investor experience with the fund; and
|
| (g)
| the Advisor’s reputation and experience in serving as an investment advisor to the fund and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety
of investments.
|
The Board concluded that the Advisor
may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection
with the consideration of the Advisory Agreement, the Board:
| (a)
| reviewed information prepared by management regarding the fund’s performance;
|
| (b)
| considered the comparative performance of an applicable benchmark index;
|
| (c)
| considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data;
|
| (d)
| took into account the Advisor’s analysis of the fund’s performance; and
|
| (e)
| considered the fund’s share performance and premium/discount information.
|
The Board noted that while it found
the data provided by the independent third-party generally useful it recognized its limitations, including in particular that the data may vary depending on the end date selected and the results of the performance
comparisons may vary depending on the selection of the peer group. The Board noted that, based on its net asset value, the fund outperformed its benchmark index for the one-, three- and ten-year periods and
underperformed its benchmark index for the five- year period ended December 31, 2021. The Board also noted that, based on its net asset value, the fund outperformed its peer group median for the one-year period and
underperformed its peer group median for the three-, five- and ten-year periods ended December 31, 2021. The Board took into account management’s discussion of the factors that contributed to the fund’s
performance relative to its benchmark index for the five-year period and its peer group median for the three-, five- and ten-year periods including the impact of past and current market conditions on the fund’s
strategy and management’s outlook for the fund. The Board concluded that the fund’s performance is being monitored and reasonably addressed, where appropriate. The Board noted that the fund’s longer
term performance in part reflects that of a previous subadvisor and that the fund’s investment strategy was changed in August 2021.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of fund data, including, among other data, the fund’s contractual and net management fees
(and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund in light of the nature, extent and quality of the
management and advisory and subadvisory services provided by the Advisor and the Subadvisor. The Board considered the fund’s ranking within a smaller
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 42
|
group of peer funds chosen by the independent
third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees
include both advisory and administrative costs.
The Board also took into account the
impact of leverage on fund expenses. The Board took into account the management fee structure, including that management fees for the fund were based on the fund’s total managed assets, which are attributable to
common stock and borrowings. The Board noted that net management fees and net total expenses for the fund are lower than the peer group median.
The Board also took into account
management’s discussion with respect to the overall management fee and the fees of the Subadvisor, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee, in each
case in light of the services rendered for those amounts and the risks undertaken by the Advisor. The Board also noted that the Advisor pays the subadvisory fees. In addition, the Board took into account that
management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board reviewed information provided by the Advisor concerning the investment
advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any
differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to
the fund is reasonable in light of the nature, extent and quality of the services provided to the fund under the Advisory Agreement.
Profitability/Fall out benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisor) from the Advisor’s relationship
with the fund, the Board:
| (a)
| reviewed financial information of the Advisor;
|
| (b)
| reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;
|
| (c)
| received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole and with respect to the fund;
|
| (d)
| received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data and considered that the advisor hired an independent third-party consultant to provide an
analysis of the Advisor’s allocation methodologies;
|
| (e)
| considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;
|
| (f)
| noted that the Subadvisor is an affiliate of the Advisor;
|
| (g)
| noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;
|
| (h)
| noted that the subadvisory fees for the fund are paid by the Advisor;
|
| (i)
| considered the Advisor’s ongoing costs and expenditures necessary to improve services, meet new regulatory and compliance requirements, and adapt to the other challenges impacting the fund industry; and
|
| (j)
| considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the risks that it assumes as Advisor, including
entrepreneurial, operational, reputational, litigation and regulatory risk.
|
Based upon its review, the Board
concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.
| 43
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
Economies of scale. In considering the extent to which the fund may realize any economies of scale and whether fee levels reflect these economies of scale for the benefit of the fund shareholders, the Board
noted that the fund has a limited ability to increase its assets as a closed-end fund. The Board took into account management’s discussions of the current advisory fee structure, and, as noted above, the
services the Advisor provides in performing its functions under the Advisory Agreement and in supervising the Subadvisor.
The Board also considered potential
economies of scale that may be realized by the fund as part of the John Hancock Fund Complex. Among them, the Board noted that the Advisor has contractually agreed to waive a portion of its management fee and/or
reimburse expenses for certain funds of the John Hancock Fund 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. The Board also considered the Advisor’s overall operations and
its ongoing investment in its business in order to expand the scale of, and improve the quality of, its operations that benefit the fund. The Board determined that the management fee structure for the fund was
reasonable.
Approval of Subadvisory Agreement
In making its determination with
respect to approval of the Subadvisory Agreement, the Board reviewed:
| (1)
| information relating to the Subadvisor’s business, including current subadvisory services to the fund (and other funds in the John Hancock Fund Complex);
|
| (2)
| the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds;
|
| (3)
| the subadvisory fees for the fund and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and
|
| (4)
| information relating to the nature and scope of any material relationships and their significance to the fund’s Advisor and the Subadvisor.
|
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took
into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the
Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the
Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board
also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or
investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its
operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the fund’s CCO and his staff conduct regular, periodic compliance reviews with the
Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with
the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the
Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is
consistent with the fund’s investment objective, the selection of investment securities and the placement of
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 44
|
orders for the purchase and sale of such
securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices,
including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the
Subadvisory Agreement are paid by the Advisor and not the fund.The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the
Subadvisory Agreement.
In addition, the Board considered
other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in
the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays subadvisory fees to the Subadvisor. As noted above, the Board also considered the
fund’s subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the
extent available. The Board noted that the limited size of the Lipper peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor
with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group median and the benchmark index and noted that the Board reviews information
about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance
of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as
applicable.
The Board’s decision to
approve the Subadvisory Agreement was based on a number of determinations, including the following:
| (1)
| the Subadvisor has extensive experience and demonstrated skills as a manager;
|
| (2)
| the fund’s performance, based on net asset value, and is being monitored and reasonably addressed where appropriate; and
|
| (3)
| the subadvisory fees are reasonable in relation to the level and quality of services being provided under the Subadvisory Agreement.
|
* * *
Based on the Board’s
evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the
Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement
for an additional one-year period.
| 45
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
This chart
provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the
Trustees.
| Independent Trustees
|
|
|
Name, year of birth
Position(s) held with fund
Principal occupation(s) and other
directorships during past 5 years
| Trustee
of the
Trust
since1
| Number of John
Hancock funds
overseen by
Trustee
|
| Hassell H. McClellan, Born: 1945
| 2012
| 183
|
| Trustee and Chairperson of the Board
|
|
|
| Director/Trustee, Virtus Funds (2008-2020); Director, The Barnes Group (2010-2021); Associate Professor, The Wallace E. Carroll School of Management,
Boston College (retired 2013). Trustee (since 2005) and Chairperson of the Board (since 2017) of various trusts within the John Hancock Fund Complex.
|
| James R. Boyle, Born: 1959
| 2015
| 183
|
| Trustee
|
|
|
| Foresters Financial, Chief Executive Officer (2018–2022) and board member (2017–2022). Manulife Financial and John Hancock, more than 20
years, retiring in 2012 as Chief Executive Officer, John Hancock and Senior Executive Vice President, Manulife Financial. Trustee of various trusts within the John Hancock Fund Complex (2005–2014 and since
2015).
|
| Peter S. Burgess,2 Born: 1942
| 2012
| 183
|
| Trustee
|
|
|
| Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public
accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (2004-2021); Director, Symetra Financial Corporation (2010–2016); Director, PMA Capital Corporation (2004–2010). Trustee
of various trusts within the John Hancock Fund Complex (since 2005).
|
| William H. Cunningham,2 Born: 1944
| 2004
| 183
|
| Trustee
|
|
|
| Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of
Texas, Austin, Texas; Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000). Trustee of various trusts within the John Hancock Fund Complex (since 1986).
|
| Noni L. Ellison,* Born: 1971
| 2022
| 183
|
| Trustee
|
|
|
| Senior Vice President, General Counsel & Corporate Secretary, Tractor Supply Company (rural lifestyle retailer) (since 2021); General Counsel,
Chief Compliance Officer & Corporate Secretary, Carestream Dental, L.L.C.(2017–2021); Associate General Counsel & Assistant Corporate Secretary, W.W. Grainger, Inc. (global industrial supplier)
(2015–2017); Board Member, Goodwill of North Georgia, 2018 (FY2019)–2020 (FY2021); Board Member, Howard University School of Law Board of Visitors (since 2021); Board Member, University of Chicago Law
School Board of Visitors (since 2016); Board member, Children’s Healthcare of Atlanta Foundation Board (2021–present). Trustee of various trusts within the John Hancock Fund Complex (since 2022).
|
| Grace K. Fey, Born: 1946
| 2012
| 183
|
| Trustee
|
|
|
| Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988–2007); Director,
Fiduciary Trust (since 2009). Trustee of various trusts within the John Hancock Fund Complex (since 2008).
|
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 46
|
| Independent Trustees (continued)
|
|
|
Name, year of birth
Position(s) held with fund
Principal occupation(s) and other
directorships during past 5 years
| Trustee
of the
Trust
since1
| Number of John
Hancock funds
overseen by
Trustee
|
| Dean C. Garfield,* Born: 1968
| 2022
| 183
|
| Trustee
|
|
|
| Vice President, Netflix, Inc. (since 2019); President & Chief Executive Officer, Information Technology Industry Council (2009–2019); NYU
School of Law Board of Trustees (since 2021); Member, U.S. Department of Transportation, Advisory Committee on Automation (since 2021); President of the United States Trade Advisory Council (2010–2018); Board
Member, College for Every Student (2017–2021); Board Member, The Seed School of Washington, D.C. (2012–2017). Trustee of various trusts within the John Hancock Fund Complex (since 2022)
|
| Deborah C. Jackson, Born: 1952
| 2008
| 183
|
| Trustee
|
|
|
| President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, Amwell Corporation (since 2020); Board of Directors,
Massachusetts Women’s Forum (2018-2020); Board of Directors, National Association of Corporate Directors/New England (2015-2020); Chief Executive Officer, American Red Cross of Massachusetts Bay
(2002–2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of Boston Stock Exchange (2002–2008);
Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007–2011). Trustee of various trusts within the John Hancock Fund Complex (since 2008).
|
| Patricia Lizarraga,2,* Born: 1966
| 2022
| 183
|
| Trustee
|
|
|
| Founder, Chief Executive Officer, Hypatia Capital Group (advisory and asset management company) (since 2007); Independent Director, Audit Committee
Chair, and Risk Committee Member, Credicorp, Ltd. (since 2017); Independent Director, Audit Committee Chair, Banco De Credito Del Peru (since 2017); Trustee, Museum of Art of Lima (since 2009). Trustee of various
trusts within the John Hancock Fund Complex (since 2022).
|
| Steven R. Pruchansky, Born: 1944
| 2004
| 183
|
| Trustee and Vice Chairperson of the Board
|
|
|
| Managing Director, Pru Realty (since 2017); Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (2014-2020); Director and
President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC
(2014-2017); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992), Chairperson of the Board
(2011–2012), and Vice Chairperson of the Board (since 2012) of various trusts within the John Hancock Fund Complex.
|
| Frances G. Rathke,2 Born: 1960
| 2020
| 183
|
| Trustee
|
|
|
| Director, Audit Committee Chair, Oatly Group AB (plant-based drink company) (since 2021); Director, Audit Committee Chair and Compensation Committee Member, Green
Mountain Power Corporation (since 2016); Director, Treasurer and Finance & Audit Committee Chair, Flynn Center for Performing Arts (since 2016); Director and Audit Committee Chair, Planet Fitness (since 2016);
Chief Financial Officer and Treasurer, Keurig Green Mountain, Inc. (2003-retired 2015). Trustee of various trusts within the John Hancock Fund Complex (since 2020).
|
| 47
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
| Independent Trustees (continued)
|
|
|
Name, year of birth
Position(s) held with fund
Principal occupation(s) and other
directorships during past 5 years
| Trustee
of the
Trust
since1
| Number of John
Hancock funds
overseen by
Trustee
|
| Gregory A. Russo, Born: 1949
| 2008
| 183
|
| Trustee
|
|
|
| Director and Audit Committee Chairman (2012-2020), and Member, Audit Committee and Finance Committee (2011-2020), NCH Healthcare System, Inc. (holding company for
multi-entity healthcare system); Director and Member (2012-2018), and Finance Committee Chairman (2014-2018), The Moorings, Inc. (nonprofit continuing care community); Global Vice Chairman, Risk & Regulatory
Matters, KPMG LLP (KPMG) (2002–2006); Vice Chairman, Industrial Markets, KPMG (1998–2002). Trustee of various trusts within the John Hancock Fund Complex (since 2008).
|
| Non-Independent Trustees3
|
|
|
Name, year of birth
Position(s) held with fund
Principal occupation(s) and other
directorships during past 5 years
| Trustee
of the
Trust
since1
| Number of John
Hancock funds
overseen by
Trustee
|
| Andrew G. Arnott, Born: 1971
| 2017
| 183
|
| President and Non-Independent Trustee
|
|
|
| Global Head of Retail for Manulife (since 2022); Head of Wealth and Asset Management, United States and Europe, for John Hancock and Manulife (since
2018); Director and Executive Vice President, John Hancock Investment Management LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Variable Trust Advisers LLC (since
2006, including prior positions); President, John Hancock Investment Management Distributors LLC (since 2004, including prior positions); President of various trusts within the John Hancock Fund Complex (since 2007,
including prior positions). Trustee of various trusts within the John Hancock Fund Complex (since 2017).
|
| Marianne Harrison, Born: 1963
| 2018
| 183
|
| Non-Independent Trustee
|
|
|
| President and CEO, John Hancock (since 2017); President and CEO, Manulife Canadian Division (2013–2017); Member, Board of Directors, Boston
Medical Center (since 2021); Member, Board of Directors, CAE Inc. (since 2019); Member, Board of Directors, MA Competitive Partnership Board (since 2018); Member, Board of Directors, American Council of Life Insurers
(ACLI) (since 2018); Member, Board of Directors, Communitech, an industry-led innovation center that fosters technology companies in Canada (2017-2019); Member, Board of Directors, Manulife Assurance Canada (2015-2017);
Board Member, St. Mary’s General Hospital Foundation (2014-2017); Member, Board of Directors, Manulife Bank of Canada (2013- 2017); Member, Standing Committee of the Canadian Life & Health Assurance
Association (2013-2017); Member, Board of Directors, John Hancock USA, John Hancock Life & Health, John Hancock New York (2012–2013 and since 2017). Trustee of various trusts within the John Hancock Fund
Complex (since 2018).
|
| Paul Lorentz,† Born: 1968
| 2022
| 183
|
| Non-Independent Trustee
|
|
|
| Global Head, Manulife Wealth and Asset Management (since 2017); General Manager, Manulife, Individual Wealth Management and Insurance (2013–2017); President,
Manulife Investments (2010–2016). Trustee of various trusts within the John Hancock Fund Complex (since 2022).
|
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 48
|
| Principal officers who are not Trustees
|
|
Name, year of birth
Position(s) held with fund
Principal occupation(s)
during past 5 years
| Current
Position(s)
with the
Trust
since
|
| Charles A. Rizzo, Born: 1957
| 2007
|
| Chief Financial Officer
|
|
| Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Investment Management LLC and John Hancock Variable
Trust Advisers LLC (since 2008); Chief Financial Officer of various trusts within the John Hancock Fund Complex (since 2007).
|
| Salvatore Schiavone, Born: 1965
| 2010
|
| Treasurer
|
|
| Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Investment Management LLC and John Hancock
Variable Trust Advisers LLC (since 2007); Treasurer of various trusts within the John Hancock Fund Complex (since 2007, including prior positions).
|
| Christopher (Kit) Sechler, Born: 1973
| 2018
|
| Secretary and Chief Legal Officer
|
|
| Vice President and Deputy Chief Counsel, John Hancock Investment Management (since 2015); Assistant Vice President and Senior Counsel
(2009–2015), John Hancock Investment Management; Assistant Secretary of John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2009); Chief Legal Officer and Secretary of
various trusts within the John Hancock Fund Complex (since 2009, including prior positions).
|
| Trevor Swanberg, Born: 1979
| 2020
|
| Chief Compliance Officer
|
|
| Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2020); Deputy Chief Compliance Officer, John Hancock
Investment Management LLC and John Hancock Variable Trust Advisers LLC (2019–2020); Assistant Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC
(2016–2019); Vice President, State Street Global Advisors (2015–2016); Chief Compliance Officer of various trusts within the John Hancock Fund Complex (since 2016, including prior positions).
|
The business
address for all Trustees and Officers is 200 Berkeley Street, Boston, Massachusetts 02116-5023.
The Fund does
not make available copies of its Statement of Additional Information because the Fund’s shares are not continuously offered and the Statement of Additional Information has not been updated since the Fund’s
last public offering, therefore the information contained in the Statement of Additional Information may be outdated.
| 1
| Mr. Boyle, Dr. Cunningham, Ms. Fey, Dr. McClellan and Mr. Russo serve as Trustees for a term expiring in 2023; Mr. Burgess, Ms. Harrison and Ms. Rathke serve as Trustees for a term expiring in 2024; Mr.
Arnott, Ms. Jackson and Mr. Pruchansky serve as Trustees for a term expiring in 2025; Ms. Ellison, Mr. Garfield, Ms. Lizarraga, and Mr. Lorentz will stand for election in 2023. Mr. Boyle has served as Trustee at
various times prior to the date listed in the table.
|
| 2
| Member of the Audit Committee.
|
| 3
| The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain of its affiliates.
|
| *
| Appointed to serve as Independent Trustee effective as of September 20, 2022.
|
| †
| Appointed to serve as Non-Independent Trustee effective as of September 20, 2022.
|
| 49
| JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND | ANNUAL REPORT
|
|
Trustees
Hassell H. McClellan, Chairperson
Steven R. Pruchansky, Vice Chairperson
Andrew G. Arnott†
James R. Boyle
Peter S. Burgess*
William H. Cunningham*
Grace K. Fey
Noni L. Ellison^
Dean C. Garfield^
Marianne Harrison†
Deborah C. Jackson
Patricia Lizarraga*,^
Paul Lorentz‡
Frances G. Rathke*
Gregory A. Russo
Officers
Andrew G. Arnott
President
Charles A. Rizzo
Chief Financial Officer
Salvatore Schiavone
Treasurer
Christopher (Kit) Sechler
Secretary and Chief Legal Officer
Trevor Swanberg
Chief Compliance Officer
Investment advisor
John Hancock Investment Management
LLC
Subadvisor
Manulife Investment Management (US)
LLC (Manulife IM (US))
Portfolio Managers
Joseph H. Bozoyan, CFA
James Gearhart, CFA
Jonas Grazulis, CFA
Bradley L. Lutz, CFA
Caryn E. Rothman, CFA
Custodian
State Street Bank and Trust
Company
Transfer agent
Computershare Shareowner Services,
LLC
Legal counsel
K&L Gates LLP
Independent registered public
accounting firm
PricewaterhouseCoopers LLP
Stock symbol
Listed New York Stock Exchange:
HTD
† Non-Independent Trustee
* Member of the Audit Committee
^ Appointed to serve as Independent
Trustee effective as of September 20, 2022.
‡ Appointed to serve as
Non-Independent Trustee effective as of September 20, 2022.
The fund’s proxy
voting policies and procedures, as well as the fund 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
| Regular mail:
| Express mail:
|
| jhinvestments.com
| Computershare
P.O. Box 43006
Providence, RI 02940-3078
| Computershare
150 Royall St., Suite 101
Canton, MA 02021
|
|
| ANNUAL REPORT | JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
| 50
|
John Hancock family of funds
U.S. 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
Mid Cap Growth
New Opportunities
Regional Bank
Small Cap Core
Small Cap Growth
Small Cap Value
U.S. Global Leaders Growth
U.S. Growth
INTERNATIONAL EQUITY FUNDS
Disciplined Value International
Emerging Markets
Emerging Markets Equity
Fundamental Global Franchise
Global Environmental
Opportunities
Global Equity
Global Shareholder Yield
Global Thematic Opportunities
International Dynamic Growth
International Growth
International Small Company
FIXED-INCOME FUNDS
Bond
California Municipal Bond
Emerging Markets Debt
Floating Rate Income
Government Income
High Yield
High Yield Municipal Bond
Income
Investment Grade Bond
Money Market
Municipal Opportunities
Opportunistic Fixed Income
Short Duration Bond
Short Duration Municipal
Opportunities
Strategic Income Opportunities
ALTERNATIVE FUNDS
Absolute Return Currency
Alternative Asset Allocation
Diversified Macro
Infrastructure
Multi-Asset Absolute Return
Real Estate Securities
Seaport Long/Short
A fund’s investment
objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial
professional, call John Hancock Investment Management at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
EXCHANGE-TRADED FUNDS
John Hancock Corporate Bond ETF
John Hancock Mortgage-Backed
Securities ETF
John Hancock Multifactor Developed
International ETF
John Hancock Multifactor Emerging
Markets ETF
John Hancock Multifactor Large Cap
ETF
John Hancock Multifactor Mid Cap
ETF
John Hancock Multifactor Small Cap
ETF
John Hancock Preferred Income ETF
John Hancock U.S. High Dividend
ETF
ENVIRONMENTAL,SOCIAL, AND
GOVERNANCE FUNDS
ESG Core Bond
ESG International Equity
ESG Large Cap Core
ASSET ALLOCATION/TARGET DATE FUNDS
Balanced
Multi-Asset High Income
Multi-Index Lifetime Portfolios
Multi-Index Preservation
Portfolios
Multimanager Lifestyle
Portfolios
Multimanager Lifetime Portfolios
CLOSED-END FUNDS
Asset-Based Lending
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 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 Manulife Investment Management (US) LLC or Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Investment Management Distributors LLC, Manulife
Investment Management (US) 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.
A trusted brand
John Hancock Investment Management
is a premier asset manager
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.
“A trusted brand” is
based on a survey of 6,651 respondents conducted by Medallia between 3/18/20 and 5/13/20.
John Hancock Investment Management
LLC, 200 Berkeley Street, Boston, MA 02116-5010, 800-225-5291, jhinvestments.com
Manulife Investment Management, the
Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by its affiliates under license.
12/2022
ITEM 2. CODE OF ETHICS.
As of the end of the period, October 31, 2022, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer and Chief Financial Officer (respectively, the principal executive officer, the principal financial officer, the "Covered Officers"). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Frances G. Rathke is the audit committee financial expert, effective March 25, 2022, and is "independent", pursuant to general instructions on Form N-CSR Item 3
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees for John Hancock Tax-Advantaged Dividend Income Fund billed for professional services rendered by the principal accountant(s) for the audit of the registrant's annual financial statements or services that are normally provided by the accountant(s) in connection with statutory and regulatory filings or engagements amounted to $46,045 for the fiscal year ended October 31, 2022 and $43,656 for the fiscal period ended October 31, 2021. These fees were billed to the registrant and were approved by the registrant's audit committee.
(b) Audit-Related Services
The aggregate fees for John Hancock Tax-Advantaged Dividend Income Fund billed for audit- related fees amounted to $5 for the fiscal year ended October 31, 2022 and $207 for the fiscal year ended October 31, 2021 billed to the registrant or to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant ("control affiliates"). The nature of the services provided was related to a software licensing fee and internal controls review.
(c) Tax Fees
The aggregate fees for John Hancock Tax-Advantaged Dividend Income Fund billed for professional services rendered by the principal accountant(s) for the tax compliance, tax advice and tax planning ("tax fees") amounted to $4,110 for the fiscal year ended October 31, 2022 and $3,914 for the fiscal year ended October 31, 2021. The nature of the services comprising the tax fees was the review of the registrant's tax returns and tax distribution requirements. These fees were billed to the registrant and were approved by the registrant's audit committee.
(d) All Other Fees
The all other fees for John Hancock Tax-Advantaged Dividend Income Fund billed to the registrant for products and services provided by the principal accountant were $163 for the fiscal year ended October 31, 2022 and $271 for the fiscal year ended October 31, 2021 billed to control affiliates for products and services provided by the principal accountant. The nature of the services
comprising all other fees is advisory services provided to the investment manager. These fees were approved by the registrant's audit committee.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the "Auditor") relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust's Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of audit-related and non-audit services by
the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per instance/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per instance/per fund are subject to specific pre-approval by the Audit Committee.
All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.
(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
Audit-Related Fees, Tax Fees and All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
(f)According to the registrant's principal accountant, for the fiscal period ended October 31, 2022, the percentage of hours spent on the audit of the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons who were not full-time, permanent employees of principal accountant was less than 50%.
(g)The aggregate non-audit fees billed by the registrant's accountant(s) for services rendered to the registrant and rendered to the registrant's control affiliates for each of the last two fiscal years of the registrant were $1,198,914 for the fiscal year ended October 31, 2022 and $1,211,415 for the fiscal year ended October 31, 2021.
(h)The audit committee of the registrant has considered the non-audit services provided by the registrant's principal accountant(s) to the control affiliates and has determined that the services that were not pre-approved are compatible with maintaining the principal accountant(s)' independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee comprised of independent trustees. The members of the audit committee are as follows:
Frances G. Rathke – Chairperson, effective March 25, 2022
Peter S. Burgess
William H. Cunningham
Patricia Lizarraga, effective September 20, 2022
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.
See attached exhibit - Proxy Voting Policies and Procedures.
ITEM 8.
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Information about the portfolio managers
Management Biographies
Below is a list of the Manulife Investment Management (US) LLC ("Manulife IM (US)") portfolio managers who share joint responsibility for the day-to-day investment management of the Fund. It provides a brief summary of their business careers over the past five years. The information provided is as of the filing date of this N-CSR.
Joseph H. Bozoyan, CFA
Managing Director and Portfolio Manager
Manulife Investment Management (US) LLC since 2015
Began business career in 1993
Managed the Fund since 2015
Bradley L. Lutz, CFA
Managing Director and Portfolio Manager
Manulife Investment Management (US) LLC since 2002
Began business career in 1992
Managed the Fund since 2017
Caryn E. Rothman, CFA
Senior Managing Director and Portfolio Manager
Manulife Investment Management (US) LLC since 1996
Managed the Fund since 2022
Began business career in 1996
James Gearhart, CFA
Managing Director and Associate Portfolio Manager
Manulife Investment Management (US) LLC since 2022
Managed the Fund since 2022
Began business career in 2011
Jonas Grazulis, CFA
Managing Director and Associate Portfolio Manager
Manulife Investment Management (US) LLC since 2022
Managed the Fund since 2022
Began business career in 2011
Other Accounts the Portfolio Managers are Managing
The table below indicates for each portfolio manager information about the accounts over which the portfolio manager has day-to-day investment responsibility. All information on the number of accounts and total assets in the table is as of October 31, 2022. For purposes of the table, "Other Pooled Investment Vehicles" may include investment partnerships and group trusts, and "Other Accounts" may include separate accounts for institutions or individuals, insurance company general or separate accounts, pension funds and other similar institutional accounts.
|
|
|
Registered Investment
|
|
Other Pooled Investment
|
|
|
|
|
|
|
|
Companies
|
|
Vehicles
|
|
Other Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Total
|
|
|
|
Total
|
|
|
|
Total
|
|
|
|
|
Assets
|
|
Number of
|
|
Assets
|
|
Number of
|
|
Assets
|
|
|
|
Accounts
|
|
$Million
|
|
Accounts
|
|
$Million
|
|
Accounts
|
|
$Million
|
|
Joseph H.
|
|
5
|
|
2,949
|
|
2
|
|
276
|
|
1
|
|
20
|
|
Bozoyan, CFA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley L. Lutz,
|
|
11
|
|
8,969
|
|
49
|
|
15,053
|
|
16
|
|
3,059
|
|
CFA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caryn E. Rothman,
|
|
8
|
|
4,419
|
|
14
|
|
2,291
|
|
4
|
|
285
|
|
CFA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Gearhart,
|
|
7
|
|
4,302
|
|
12
|
|
1,703
|
|
1
|
|
20
|
|
CFA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonas Grazulis,
|
|
7
|
|
4,302
|
|
12
|
|
1,703
|
|
1
|
|
20
|
|
CFA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number and value of accounts within the total accounts that are subject to a performance-based advisory fee: 0.
Conflicts of Interest. When a portfolio manager is responsible for the management of more than one account, the potential arises for the portfolio manager to favor one account over another. The principal types of potential conflicts of interest that may arise are discussed below. For the reasons outlined below, the Fund does not believe that any material conflicts are likely to arise out of a portfolio manager's responsibility for the management of the Fund as well as one or more other accounts. The Advisor and Subadvisor have adopted procedures that are intended to monitor compliance with the policies referred to in the following paragraphs. Generally, the risks of such conflicts of interests are increased to the extent that a portfolio manager has a financial incentive to favor one account over another. The Advisor and Subadvisor have structured their compensation arrangements in a manner that is intended to limit such potential for conflicts of interests. See "Compensation of Portfolio Managers" below.
•A portfolio manager could favor one account over another in allocating new investment opportunities that have limited supply, such as initial public offerings and private placements. If, for example, an initial public offering that was expected to appreciate in value significantly shortly after the offering was allocated to a single account, that account may be expected to have better investment performance than other accounts that did not receive an allocation on the initial public offering. The Subadvisor has policies that require a portfolio manager to allocate such investment opportunities in an equitable manner and generally to allocate such investments proportionately among all accounts with similar investment objectives.
•A portfolio manager could favor one account over another in the order in which trades for the accounts are placed. If a portfolio manager determines to purchase a security for more than one account in an aggregate amount that may influence the market price of the security, accounts that purchased or sold the security first may receive a more favorable price than accounts that made subsequent transactions. The less liquid the market for the security or the greater the percentage that the proposed aggregate purchases or sales represent of average daily trading volume, the greater the potential for accounts that make subsequent purchases or sales to receive a less favorable price. When a portfolio manager intends to trade the same security for more than one account, the policies of the Subadvisor generally require that such trades be "bunched," which
means that the trades for the individual accounts are aggregated and each account receives the same price. There are some types of accounts as to which bunching may not be possible for contractual reasons (such as directed brokerage arrangements). Circumstances may also arise where the trader believes that bunching the orders may not result in the best possible price. Where those accounts or circumstances are involved, the Subadvisor will place the order in a manner intended to result in as favorable a price as possible for such client.
•A portfolio manager could favor an account if the portfolio manager's compensation is tied to the performance of that account rather than all accounts managed by the portfolio manager. If, for example, the portfolio manager receives a bonus based upon the performance of certain accounts relative to a benchmark while other accounts are disregarded for this purpose, the portfolio manager will have a financial incentive to seek to have the accounts that determine the portfolio manager's bonus achieve the best possible performance to the possible detriment of other accounts. Similarly, if the Subadvisor receives a performance-based advisory fee, the portfolio manager may favor that account, whether or not the performance of that account directly determines the portfolio manager's compensation. The investment performance on specific accounts is not a factor in determining the portfolio manager's compensation. See "Compensation of Portfolio Managers" below. Neither the Advisor nor the Subadvisor receives a performance-based fee with respect to any of the accounts managed by the portfolio managers.
•A portfolio manager could favor an account if the portfolio manager has a beneficial interest in the account, in order to benefit a large client or to compensate a client that had poor returns. For example, if the portfolio manager held an interest in an investment partnership that was one of the accounts managed by the portfolio manager, the portfolio manager would have an economic incentive to favor the account in which the portfolio manager held an interest. The Subadvisor imposes certain trading restrictions and reporting requirements for accounts in which a portfolio manager or certain family members have a personal interest in order to confirm that such accounts are not favored over other accounts.
•If the different accounts have materially and potentially conflicting investment objectives or strategies, a conflict of interest may arise. For example, if a portfolio manager purchases a security for one account and sells the same security short for another account, such trading pattern could disadvantage either the account that is long or short. In making portfolio manager assignments, the Subadvisor seeks to avoid such potentially conflicting situations. However, where a portfolio manager is responsible for accounts with differing investment objectives and policies, it is possible that the portfolio manager will conclude that it is in the best interest of one account to sell a portfolio security while another account continues to hold or increase the holding in such security.
Compensation of Portfolio Managers. The Subadvisor has adopted a system of compensation for portfolio managers and others involved in the investment process that is applied systematically among investment professionals. At the Subadvisor, the structure of compensation of investment professionals is currently composed of the following basic components: base salary and short- and long-term incentives. The following describes each component of the compensation package for the individuals identified as a portfolio manager for the Funds.
•Base salary. Base compensation is fixed and normally reevaluated on an annual basis. The Subadvisor seeks to set compensation at market rates, taking into account the experience and responsibilities of the investment professional.
•Incentives. Only investment professionals are eligible to participate in the short-and long-term incentive plan. Under the plan, investment professionals are eligible for an annual cash award. The plan is intended to provide a competitive level of annual bonus compensation that is tied to the investment professional achieving superior investment performance and aligns the financial incentives of the Subadvisor and the investment professional. Any bonus under the plan is completely discretionary, with a maximum annual bonus that may be well in excess of base salary. Payout of a portion of this bonus may be deferred for up to five years. While the amount of any bonus is discretionary, the following factors are generally used in determining bonuses under the plan:
•Investment Performance: The investment performance of all accounts managed by the investment professional over one, three and five-year periods are considered and no specific benchmark is used to measure performance. With respect to fixed income accounts, relative yields are also used to measure performance.
•Financial Performance: The profitability of the Subadvisor and its parent company are also considered in determining bonus awards.
•Non-Investment Performance: To a lesser extent, intangible contributions, including the investment professional's support of client service and sales activities, new fund/strategy idea generation, professional growth and development, and management, where applicable, are also evaluated when determining bonus awards.
•In addition to the above, compensation may also include a revenue component for an investment team derived from a number of factors including, but not limited to, client assets under management, investment performance, and firm metrics.
•Manulife Equity Awards. A limited number of senior investment professionals may receive options to purchase shares of Manulife Financial stock. Generally, such option would permit the investment professional to purchase a set amount of stock at the market price on the date of grant. The option can be exercised for a set period (normally a number of years or until termination of employment) and the investment professional would exercise the option if the market value of Manulife Financial stock increases. Some investment professionals may receive restricted stock grants, where the investment professional is entitled to receive the stock at no or nominal cost, provided that the stock is forgone if the investment professional's employment is terminated prior to a vesting date.
•Deferred Incentives. Investment professionals may receive deferred incentives which are fully invested in strategies managed by the team/individual as well as other Manulife Asset Management strategies.
The Subadvisor also permits investment professionals to participate on a voluntary basis in a deferred compensation plan, under which the investment professional may elect on an annual basis to defer receipt of a portion of their compensation until retirement. Participation in the plan is voluntary.
Share Ownership by Portfolio Managers. The following table indicates as of October 31, 2022, the value of shares beneficially owned by the portfolio managers in the Fund.
|
|
Range of Beneficial Ownership
|
|
Portfolio Manager
|
in the Fund
|
|
Joseph H. Bozoyan, CFA
|
$50,001-$100,000
|
|
|
|
|
$10,001-$50,000
|
|
Bradley L. Lutz, CFA
|
|
|
Caryn E. Rothman, CFA
|
$0
|
|
|
|
|
James Gearhart, CFA
|
$0
|
|
|
|
|
Jonas Grazulis, CFA
|
$0
|
|
|
|
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
(a)Not applicable
(b) REGISTRANT PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
Maximum
|
|
|
|
|
Total number of
|
number of
|
|
|
|
|
shares
|
shares that
|
|
|
Total number of
|
|
purchased as
|
may yet be
|
|
|
Average price per
|
part of publicly
|
purchased
|
|
|
shares
|
announced
|
under the
|
|
Period
|
purchased
|
share
|
plans*
|
plans*
|
|
Nov-21
|
-
|
-
|
-
|
3,540,082
|
|
Dec-21
|
-
|
-
|
-
|
3,540,082
|
|
Jan-22
|
-
|
-
|
-
|
3,541,821
|
|
Feb-22
|
-
|
-
|
-
|
3,541,821
|
|
Mar-22
|
-
|
-
|
-
|
3,541,821
|
|
Apr-22
|
-
|
-
|
-
|
3,541,821
|
|
May-22
|
-
|
-
|
-
|
3,541,821
|
|
Jun-22
|
-
|
-
|
-
|
3,541,821
|
|
Jul-22
|
-
|
-
|
-
|
3,541,821
|
|
Aug-22
|
-
|
-
|
-
|
3,541,821
|
|
Sep-22
|
-
|
-
|
-
|
3,541,821
|
|
Oct-22
|
-
|
-
|
-
|
3,541,821
|
|
Total
|
-
|
-
|
-
|
|
*In December 2007, the Board of Trustees approved a share repurchase plan, which is subsequently reviewed 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, 2021. The current share repurchase plan will
remain in effect between January 1, 2022 and December 31, 2022.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a)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 and Governance 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 8 to financial statements in Item 1.
ITEM 13. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) 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) Proxy Voting Policies and Procedures are attached.
(c)(2) Submission of Matters to a Vote of Security Holders is attached. See attached "John Hancock Funds – Nominating and Governance Committee Charter".
(c)(3) Registrant's notice to shareholders pursuant to Registrant's 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 Registrant's 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 Tax-Advantaged Dividend Income Fund
|
By:
|
/s/ Andrew Arnott
|
|
|
------------------------------
|
|
|
Andrew Arnott
|
|
|
President
|
|
Date:
|
December 14, 2022
|
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:
|
December 14, 2022
|
|
By:
|
/s/ Charles A. Rizzo
|
|
|
--------------------------------
|
|
|
Charles A. Rizzo
|
|
|
Chief Financial Officer
|
|
Date:
|
December 14, 2022
|
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