a_taxadvandivinc.htm
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
 
FORM N-Q 
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED 
MANAGEMENT INVESTMENT COMPANIES 
 
Investment Company Act file number 811- 21416 
 
John Hancock Tax-Advantaged Dividend Income Fund 
(Exact name of registrant as specified in charter) 
 
601 Congress Street, Boston, Massachusetts 02210 
(Address of principal executive offices) (Zip code) 
 
Salvatore Schiavone, Treasurer 
 
601 Congress Street 
 
Boston, Massachusetts 02210 
(Name and address of agent for service) 
 
Registrant's telephone number, including area code: 617-663-4497 
 
Date of fiscal year end:  October 31 
 
Date of reporting period:  January 31, 2013 

 

ITEM 1. SCHEDULE OF INVESTMENTS





Tax-Advantaged Dividend Income Fund
As of 1-31-13 (Unaudited)

  Shares  Value 
 
Common Stocks 77.1% (51.5% of Total Investments)    $599,887,525 

(Cost $489,504,694)     
 
Energy 8.8%    68,588,380 

 
Oil, Gas & Consumable Fuels 8.8%     
BP PLC, ADR  187,500  8,347,500 
Chevron Corp.  50,000  5,757,500 
ConocoPhillips (Z)  142,500  8,265,000 
Royal Dutch Shell PLC, ADR  69,000  4,865,880 
Spectra Energy Corp. (Z)  1,000,000  27,780,000 
Total SA, ADR (Z)  250,000  13,572,500 
 
Industrials 0.3%    2,228,000 

 
Industrial Conglomerates 0.3%     
General Electric Company (Z)  100,000  2,228,000 
 
Materials 0.4%    2,890,500 

 
Metals & Mining 0.4%     
Freeport-McMoRan Copper & Gold, Inc. (Z)  82,000  2,890,500 
 
Telecommunication Services 4.5%    35,527,720 

 
Diversified Telecommunication Services 2.9%     
AT&T, Inc. (Z)  385,000  13,394,150 
Verizon Communications, Inc. (Z)  225,000  9,812,250 
 
Wireless Telecommunication Services 1.6%     
Vodafone Group PLC, ADR (Z)  451,000  12,321,320 
 
Utilities 63.1%    490,652,925 

 
Electric Utilities 25.3%     
American Electric Power Company, Inc. (Z)  590,000  26,721,100 
Duke Energy Corp.  310,000  21,309,400 
Entergy Corp. (Z)  204,500  13,210,700 
FirstEnergy Corp. (Z)  540,000  21,864,600 
Northeast Utilities  657,500  26,779,975 
NV Energy, Inc.  40,000  757,200 
OGE Energy Corp.  555,000  32,584,050 
The Southern Company (Z)  375,000  16,586,250 
UIL Holdings Corp. (C)(Z)  510,000  18,977,100 
Xcel Energy, Inc. (Z)  635,000  17,640,300 
 
Gas Utilities 8.3%     
AGL Resources, Inc.  90,000  3,762,000 
Atmos Energy Corp.  715,000  26,712,400 
Northwest Natural Gas Company  85,000  3,860,700 
ONEOK, Inc. (C)(Z)  640,000  30,086,400 
 
Multi-Utilities 29.5%     
Alliant Energy Corp.  160,000  7,334,400 
Ameren Corp. (Z)  555,000  18,004,200 
Black Hills Corp. (Z)  597,000  24,088,950 
CH Energy Group, Inc.  377,000  24,505,000 
Dominion Resources, Inc. (Z)  420,000  22,726,200 
DTE Energy Company  485,000  30,705,350 
Integrys Energy Group, Inc. (Z)  485,000  26,524,650 
National Grid PLC, ADR  200,000  10,984,000 
NiSource, Inc. (Z)  785,000  21,218,550 

 

1

 



Tax-Advantaged Dividend Income Fund
As of 1-31-13 (Unaudited)

  Shares  Value 
 
Utilities (continued)     

Public Service Enterprise Group, Inc. (Z)  360,000  $11,224,800 
TECO Energy, Inc.  425,000  7,552,250 
Vectren Corp. (Z)  790,000  24,932,400 
 
 
 
  Shares  Value 
 
Preferred Securities 71.8% (48.0% of Total Investments)    $558,210,563 

(Cost $517,299,685)     
 
Energy 3.7%    28,686,250 

 
Oil, Gas & Consumable Fuels 3.7%     
Apache Corp., Series D, 6.000%  125,000  5,916,250 
Nexen, Inc., 7.350% (C)(Z)  900,000  22,770,000 
 
Financials 47.7%    371,023,311 

 
Capital Markets 5.3%     
Bank of New York Mellon Corp., 5.200% (Z)  420,000  10,521,000 
State Street Corp., 5.250%  635,000  15,932,150 
The Goldman Sachs Group, Inc., 5.950% (Z)  509,000  12,572,300 
The Goldman Sachs Group, Inc., Series B, 6.200% (Z)  92,500  2,341,175 
 
Commercial Banks 16.1%     
Barclays Bank PLC, Series 3, 7.100%  30,000  759,900 
Barclays Bank PLC, Series 5, 8.125% (Z)  505,000  13,064,350 
BB&T Corp., 5.625% (Z)  507,500  12,915,875 
BB&T Corp., 5.200%  225,000  5,553,000 
HSBC Holdings PLC, 8.000% (C)(Z)  325,000  9,041,500 
HSBC Holdings PLC, 8.125% (Z)  50,000  1,274,000 
PNC Financial Services Group, Inc., 5.375%  362,500  9,116,875 
PNC Financial Services Group, Inc. (6.125% to 05/01/2022, then 3     
month LIBOR + 4.067%)  40,000  1,082,400 
Royal Bank of Scotland Group PLC, Series L, 5.750% (Z)  855,000  19,972,800 
Santander Finance Preferred SA Unipersonal, Series 10, 10.500%     
(Z)  277,000  7,683,980 
Santander Finance Preferred SA, Series 1, 6.410%  15,500  381,455 
Santander Holdings USA, Inc., Series C, 7.300%  111,610  2,814,804 
US Bancorp (6.500% to 1-15-22, then 3 month LIBOR + 4.468%)  204,500  5,873,240 
Wells Fargo & Company, 8.000% (Z)  1,207,000  35,751,340 
 
Consumer Finance 2.1%     
HSBC Finance Corp., Depositary Shares, Series B, 6.360% (Z)  505,000  12,751,250 
SLM Corp., Series A, 6.970% (Z)  74,000  3,585,300 
 
Diversified Financial Services 20.9%     
Bank of America Corp., 6.700% (Z)  500,000  12,665,000 
Bank of America Corp., 6.375% (Z)  139,000  3,502,800 
Bank of America Corp., 6.625% (Z)  355,000  9,425,250 
Bank of America Corp., 8.200% (Z)  135,000  3,424,950 
Bank of America Corp., Depositary Shares, Series D, 6.204% (Z)  230,000  5,796,000 
Bank of America Corp., Series MER, 8.625% (C)(Z)  652,800  16,861,824 
Citigroup Capital VIII, 6.950% (Z)  535,000  13,583,650 
Citigroup, Inc., 8.125%  270,400  8,106,592 
Deutsche Bank Capital Funding Trust VIII, 6.375% (Z)  282,000  7,151,520 
Deutsche Bank Contingent Capital Trust II, 6.550%  310,000  8,320,400 
Deutsche Bank Contingent Capital Trust III, 7.600% (Z)  797,893  22,213,341 
ING Groep NV, 7.050%  140,000  3,550,400 

 

2

 



Tax-Advantaged Dividend Income Fund
As of 1-31-13 (Unaudited)

      Shares  Value 
 
Financials (continued)         

ING Groep NV, 6.200% (Z)      109,100  $2,711,135 
JPMorgan Chase & Company, 5.500% (Z)      820,000  20,475,400 
JPMorgan Chase & Company, 8.625% (Z)      140,000  3,607,800 
RBS Capital Funding Trust VII, 6.080% (I)      983,000  21,114,840 
 
Insurance 3.3%         
MetLife, Inc., Series B, 6.500% (Z)      995,500  25,415,115 
 
Thrifts & Mortgage Finance 0.0%         
Federal National Mortgage Association, Series S, 8.250% (I)      60,000  108,600 
 
Telecommunication Services 2.6%        20,460,120 

 
Diversified Telecommunication Services 1.7%         
Qwest Corp., 7.500% (Z)      120,000  3,264,000 
Qwest Corp., 7.375% (Z)      366,000  9,907,620 
 
Wireless Telecommunication Services 0.9%         
Telephone & Data Systems, Inc., 6.875% (Z)      243,000  6,488,100 
United States Cellular Corp., 6.950%      30,000  800,400 
 
Utilities 17.8%        138,040,882 

 
Electric Utilities 14.5%         
Alabama Power Company, Class A, 5.300%      186,780  4,830,131 
Carolina Power & Light Company, 5.440%      111,493  11,302,603 
Duquesne Light Company, 6.500%      427,000  21,563,500 
Entergy Arkansas, Inc., 4.560%      9,388  882,179 
Entergy Arkansas, Inc., 6.450%      135,000  3,412,976 
Entergy Mississippi, Inc., 4.920%      8,190  788,799 
Entergy Mississippi, Inc., 6.250%      197,500  4,949,844 
Interstate Power & Light Company, Series B, 8.375% (Z)      230,000  5,922,500 
Mississippi Power Company, 5.250%      262,500  6,706,875 
NextEra Energy Capital Holdings, Inc., 5.700%      72,500  1,923,425 
PPL Corp., 9.500% (C)(Z)      285,000  15,407,100 
SCE Trust I, 5.625%      55,000  1,421,750 
SCE Trust II, 5.100% (I)      769,300  18,963,245 
Southern California Edison Company, 6.125% (Z)      25,000  2,522,750 
Southern California Edison Company, Series C, 6.000% (Q)      117,000  11,773,125 
 
Independent Power Producers & Energy Traders 2.0%         
Constellation Energy Group, Inc., Series A, 8.625% (Z)      600,000  15,486,000 
 
Multi-Utilities 1.3%         
BGE Capital Trust II, 6.200% (Z)      160,500  4,102,380 
DTE Energy Company, 5.250%      100,000  2,560,000 
DTE Energy Company, 6.500%      130,000  3,521,700 
 
    Maturity     
  Rate (%)  date  Par value  Value 
 
Corporate Bonds 0.4% (0.3% of Total Investments)        $3,314,550 

(Cost $3,000,000)         
 
Utilities 0.4%        3,314,550 

Southern California Edison Company (6.25% to 2-1-22, then         
3 month LIBOR + 4.199%) (Q)  6.250  02/01/22  $3,000,000  3,314,550 

 

3

 



Tax-Advantaged Dividend Income Fund
As of 1-31-13 (Unaudited)

  Par Value  Value 
Short-Term Investments 0.3% (0.2% of Total Investments)    $2,451,000 

(Cost $2,451,000)     
 
Repurchase Agreement 0.3%    2,451,000 

Repurchase Agreement with State Street Corp. dated 1-31-13 at 0.010% to be     
repurchased at $2,451,001 on 2-01-13, collateralized by $2,420,000 U.S. Treasury     
Notes, 1.500% due 6-30-16 (valued at $2,504,785, including interest)  2,451,000  2,451,000 
 
Total investments (Cost $1,012,255,379)† 149.6%    $1,163,863,638 

Other assets and liabilities, net (49.6%)    ($386,129,033) 

Total net assets 100.0%    $777,734,605 

The percentage shown for each investment category is the total value the category as a percentage of the net assets of the Fund.

ADR American Depositary Receipts

LIBOR London Interbank Offered Rate

(C) All or a portion of this security is segregated as collateral for options overlay. Total collateral value at 1-31-13 was $108,774,424.

(I) Non-income producing security.

(Q) Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date.

(Z) A portion of this security is segregated as collateral pursuant to the Committed Facility Agreement. Total collateral value at 1-31-13 was $671,025,730.

† At 1-31-13, the aggregate cost of investment securities for federal income tax purposes was $1,020,204,981. Net unrealized appreciation aggregated $143,658,657, of which $167,751,041 related to appreciated investment securities and $24,092,384 related to depreciated investment securities.

4

 



Tax-Advantaged Dividend Income Fund
As of 1-31-13 (Unaudited)

Notes to the Schedule of Investments (Unaudited)

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the Fund uses the following valuation techniques: Equity securities held by the Fund are valued at the last sale price or official closing price on the principal securities exchange on which they trade. In the event there were no sales during the day or closing prices are not available, then securities are valued using the last quoted bid or evaluated price. Debt obligations are valued based on the evaluated prices provided by an independent pricing service, which utilizes both dealer-supplied and electronic data processing techniques, taking 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. Options listed on an exchange are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. For options not listed on an exchange, an independent pricing source is used to value the options at the mean between the last bid and ask prices. Swaps are marked-to-market daily based upon values from third party vendors, which may include a registered commodities exchange, or broker quotations. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing service. Certain securities traded only in the over-the-counter market are valued at the last bid price quoted by brokers making markets in the securities at the close of trading. Certain short-term securities are valued at amortized cost. Other portfolio securities and assets, where market quotations are not readily available, are valued at fair value, as determined in good faith by the Fund’s Pricing Committee, following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted.

The Fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the Fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.Securities with a market value of approximately $10,665,000 at the beginning of the year were transferred from Level 2 to Level 1 during the period since quoted prices in active markets for identical securities became available.

The following is a summary of the values by input classification of the Fund’s investments as of January 31, 2013, by major security category or type:

      Level 2  Level 3 
  Total Market    Significant  Significant 
  Value at  Level 1 Quoted  Observable  Unobservable 
  01-31-13  Price  Inputs  Inputs 
Common Stocks         
Energy  $68,588,380  $68,588,380     
Industrials  2,228,000  2,228,000     
Materials  2,890,500  2,890,500     
Telecommunication Services  35,527,720  35,527,720     
Utilities  490,652,925  490,652,925     
Preferred Securities         
Energy  28,686,250  28,686,250     
Financials  371,023,311  371,023,311     
Telecommunication Services  20,460,120  20,460,120     
Utilities  138,040,882  104,931,356  $33,109,526   
Corporate Bonds         
 
 
 

5

 

 



Tax-Advantaged Dividend Income Fund
As of 1-31-13 (Unaudited)

Utilities  3,314,550    3,314,550   
Short-Term Investments  2,451,000    2,451,000   
Total Investments in Securities  $1,163,863,638  $1,124,988,562  $38,875,076   
Other Financial Instruments         
Written Options  ($1,642,450)  ($1,642,450)     
Interest Rate Swaps  ($2,372,929)    ($2,372,929)   

 

Repurchase agreements. The Fund may enter into repurchase agreements. When the Fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the Fund’s custodian. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline.

Options. There are two types of options, a put option and a call option. A call option gives the purchaser of the option the right to buy (and the seller the obligation to sell) the underlying instrument at the exercise price. A put option gives the purchaser of the option the right to sell (and the writer the obligation to buy) the underlying instrument at the exercise price. Writing puts and buying calls may increase the Fund’s exposure to changes in the value of the underlying instrument. Buying puts and writing calls may decrease the Fund’s exposure to such changes. Risks related to the use of options include the loss of the premium, possible illiquidity of the options markets, trading restrictions imposed by an exchange and movements in underlying security values. In addition, over-the-counter options are subject to the risks of all over-the-counter derivatives contracts.

Options are traded either over-the-counter or on an exchange. When the Fund purchases an option, the premium paid by the Fund is included in the Portfolio of Investments and subsequently “marked-to-market” to reflect current market value. When the Fund writes an option, the premium received is included as a liability and subsequently “marked-to-market” to reflect current market value of the option written.

During the period ended January 31, 2013, the Fund wrote option contracts to hedge against anticipated changes in securities markets. The following tables summarize the Fund’s written options activities during the period ended January 31, 2013 and the contracts held at January 31, 2013.

  NUMBER OF   
  CONTRACTS  PREMIUM RECEIVED 

Outstanding, beginning of period  5,295  $609,525 
 
Options written  11,586  5,901,308 
Options closed  (5,100)  (432,666) 
Options expired  (7,211)  (5,133,426) 
Outstanding, end of period  4,570  $944,741 

 

6

 



Tax-Advantaged Dividend Income Fund

As of 1-31-13 (Unaudited)

  EXERCISE  EXPIRATION  NUMBER OF     
OPTIONS  PRICE  DATE  CONTRACTS  PREMIUM  VALUE 

CALLS           
Dow Jones Industrial Average Index  $136  Feb 2013  3,080  $369,052  ($893,200) 
Nasdaq 100 Mini Index  275  Feb 2013  500  130,981  (86,500) 
Russell 200 Index  890  Feb 2013  35  43,644  (63,350) 
S&P 500 Index  670  Feb 2013  635  388,596  (584,200) 
S&P 500 Index  1,550  Feb 2013  320  12,468  (15,200) 
Total      4,570  $944,741  ($1,642,450) 

Interest rate swaps. Interest rate swaps represent an agreement between a Fund and 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. Upfront payments made/received by the Fund are amortized/accreted for financial reporting purposes. Swaps are marked-to-market daily based upon values from third party vendors or broker quotations, and the change in value is recorded as unrealized appreciation/depreciation of swap contracts. A termination payment by the counterparty or the Fund is recorded as realized gain or loss, as well as the net periodic payments received or paid by the Fund.

During the period ended January 31, 2013, the Fund used interest rate swaps in anticipation of rising interest rates. The following table summarizes the interest rate swap contracts held as of January 31, 2013.

COUNTERPARTY  USD  PAYMENTS  PAYMENTS     
  NOTIONAL  MADE BY  RECEIVED BY  MATURITY  MARKET 
  AMOUNT  FUND  FUND  DATE  VALUE 

Morgan Stanley           
Capital Services  $86,000,000  Fixed 1.4625%  3 Month LIBOR (a)  Aug 2016  ($2,390,310) 
Morgan Stanley           
Capital Services  $86,000,000  Fixed 0.875%  3 Month LIBOR (a)  Jul 2017  17,381 
 
Totals          ($2,372,929) 

(a) At January 31, 2013 the 3 month LIBOR rate was 0.29800%

For additional information on the Fund's significant accounting policies, please refer to the Fund's most recent semiannual or annual shareholder report.

7

 





ITEM 2. CONTROLS AND PROCEDURES.

(a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-Q, the registrant's principal executive officer and principal accounting officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

(b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

ITEM 3. EXHIBITS.

Separate certifications for the registrant's principal executive officer and principal accounting officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.



SIGNATURES 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

John Hancock Tax-Advantaged Dividend Income Fund

By:  /s/ Hugh McHaffie 
  ------------------------------- 
Hugh McHaffie 
  President 
 
Date:  March 14, 2013 

 

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/ Hugh McHaffie 
  ------------------------------- 
Hugh McHaffie 
  President 
 
 
Date:  March 14, 2013 
 
 
By:  /s/ Charles A. Rizzo 
  -------------------------------- 
Charles A. Rizzo 
  Chief Financial Officer 
 
 
Date:  March 14, 2013