SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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JOHN HANCOCK TAX-ADVANTAGED DIVIDEND INCOME FUND
(Name of Registrant as Specified in Its Charter)
________________________________________________________________________
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John Hancock Tax-Advantaged Dividend Income Fund
601 Congress Street [JOHN HANCOCK LOGO]
11th Floor
Boston, MA 02210-2805
February 28, 2008
Dear Shareholder:
Your Fund's Board asks you to vote to reelect James F. Carlin and
William H. Cunningham at the March 31, 2008 Annual Meeting by returning THE
ENCLOSED GOLD PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Your Fund invests in dividend-paying common and preferred stocks to pursue
an attractive after-tax total return with distributions that qualify for a
maximum 15% Federal income tax rate. From its beginning in 2004, the Fund's
shares were marketed to long-term investors. Recently, there have been rapid
purchases and sales by hedge funds, including a hedge fund whose manager is now
trying to unseat MESSRS. CARLIN AND CUNNINGHAM with two dissident candidates.
These dissidents seem singularly intent on temporarily reducing the market
discount to NAV at which shares trade by conducting a large tender offer that
your Board believes would allow speculative short-term traders to exit their
positions at the expense of long-term investors and may jeopardize the Fund's
ability to sustain its current attractive, tax-advantaged distribution rate.
YOUR BOARD'S MANAGEMENT While market discounts are common among closed-end
funds, your Board has long been focused on the Fund's discount, and has already
taken several steps to narrow it, with strategies that it believes benefit ALL
shareholders:
- Managed distribution plan that enhances a fund's regular
distribution rate by including long-term capital gains can reduce
the market discount. A fund must obtain an exemptive order from
the SEC to adopt such a plan. The SEC announced that it would
begin accepting applications for such orders on December 1, 2006.
Less than a week later, your Board approved filing an
application. Unfortunately, despite your Board's proactivity,
over fourteen months later, the SEC still has not granted any
orders.
- For at least the past year, the Board has been exploring ways to
enhance yield, including asking management to study investment
strategy changes. This dialogue led the Board to propose the two
strategy changes described in the Fund's proxy statement. Another
strategy change to increase the Fund's ability to invest in
foreign securities has already been approved.
- The Board has adopted a new level distribution plan that
increases regular distributions without the need for an SEC order
(on an annualized basis, the increased distributions are expected
to qualify for the maximum 15% Federal income tax rate and equate
to a NAV distribution rate of 7.66% and a market value
distribution rate of 8.42% based on the Fund's January 31, 2008
NAV and market value; these rates will vary over time). An 8%
distribution taxed at 15% is comparable to a 10% distribution
taxed at the maximum Federal rate.
- The Board has introduced an open-market share repurchase program
(by buying back shares at a discount, the Fund enhances liquidity
for those who want to sell their shares and enhances the Fund
share's NAV for those who don't).
Since these steps were announced, the discount has narrowed from 12.83% as
of December 4, 2007 to 5.69% as of February 11, 2008 and 7.19% as of February
27, 2008.
Messrs. Carlin and Cunningham are highly qualified and experienced in
overseeing closed-end funds. They have a proven track record of protecting the
long-term interests of ALL stockholders. They actively supported each of these
actions, and have been vigilant in monitoring compliance with the
investment mandate and the benefits to common shareholders from the preferred
stock. Thanks to the continued leadership of the existing Board, the net expense
ratio paid by Fund shareholders is consistently below the median of its peers.
A HEDGE FUND CHALLENGE You may have recently received a proxy statement
from a hedge fund manager called Western Investment nominating two individuals
to replace Messrs. Carlin and Cunningham as Trustees. Your Board does not
believe their interests align with those of long-term Fund investors. One of the
dissident candidates manages hedge funds that acquired most of their Fund shares
just before the proxy contest was launched, through a complicated series of
purchases and sales. This hedge fund manager also holds a large leveraged
derivatives position in the Fund's shares. This is not the first closed-end fund
against which this hedge fund manager has initiated a proxy contest shortly
after acquiring a sizeable stake. Your Fund was never designed as a vehicle for
speculative short-term trading purposes.
One of the dissident candidates reports no registered fund board experience
and the other reports less than a year's experience on the board of a competitor
fund, which could even conflict with services to your Fund.
Western Investment has not criticized the existing Board's oversight of
investment mandates, compliance, performance, expense management, or other
matters. Instead, Western Investment has made only one proposal and seemingly
seeks the election of the dissidents to promote that proposal. Specifically,
Western Investment would like your Board to authorize a self tender for 25% to
30% of your Fund at 95% of its NAV. A one-time self tender would likely increase
the trading price of shares only for a brief time - long enough for Western
Investment to reap a sizable short-term profit on a derivative position in
614,360 Fund shares that will expire on May 5, 2008 and on the additional
ownership position that the hedge funds acquired just before this proxy contest
began.
The Board believes that a 25% to 30% self tender will not create a
sustainable discount reduction, but will adversely affect long-term investors
who would shoulder the disruptive effects and costs of the forced liquidation of
over a quarter of the Fund's investments to pay for the self tender. This is
also likely to present potentially significant adverse tax consequences for
common shareholders in a Fund that is designed to be tax advantaged. A self
tender that significantly shrinks the size of the Fund can lead to less
diversification, decreased economies of scale, higher expense ratios, and forced
changes to the Fund's leverage and investment strategies.
SUMMARY The Board believes that your Fund's operations and investment
policies should remain focused on pursuing sustainable tax-advantaged returns
for all investors, rather than short-term windfalls that benefit hedge funds and
other short-term investors. Its actions are - and have been - consistent with
achieving these goals.
The Board's Nominating Committee unanimously determined that the reelection
of Mr. Carlin and Mr. Cunningham to the Board is the best choice for your Fund
and ALL shareholders.
YOUR VOTE IS IMPORTANT Please demonstrate your support for the re-election
of two experienced Trustees of your Fund by signing, dating and mailing the
enclosed GOLD proxy card.
Very truly yours,
/s/ Keith Hartstein
Keith Hartstein
President
VOTING INSTRUCTIONS
YOUR VOTE IS IMPORTANT: Your Board of Trustees recommends that you vote to
re-elect the two experienced Trustees of your Fund by signing, dating and
mailing the enclosed GOLD proxy card. By now, you probably received a proxy
statement and a WHITE proxy card from Western Investment, the hedge fund firm
that has initiated this proxy contest against your Board of Trustees. Please
note:
IF YOU HOLD YOUR SHARES IN A BROKERAGE OR BANK ACCOUNT (IN "STREET
NAME"), YOUR BROKER OR BANK CANNOT VOTE YOUR SHARES THIS YEAR (AS IT
HAS IN PAST ROUTINE ANNUAL MEETINGS) UNLESS YOU COMPLETE, SIGN AND
RETURN THE ENCLOSED GOLD PROXY VOTING FORM. IF YOU HOLD YOUR SHARES IN
"STREET NAME", YOU CAN ALSO VOTE BY TELEPHONE AT 1-800-454-8683 OR
INTERNET AT WWW.PROXYVOTE.COM (PLEASE CONSULT THE GOLD PROXY CARD AND
THE MATERIALS YOU RECEIVE FROM YOUR BROKER OR BANK FOR FURTHER
INFORMATION).
PLEASE DO NOT SEND BACK ANY WHITE CARD YOU RECEIVE, EVEN TO VOTE
AGAINST THE DISSIDENT SLATE. DOING SO WILL CANCEL ANY PRIOR VOTE YOU
CAST FOR YOUR CURRENT BOARD. PLEASE RETURN ONLY THE GOLD PROXY CARD.
IF YOU HAVE ALREADY RETURNED A WHITE PROXY CARD, YOU HAVE THE RIGHT TO
CHANGE YOUR VOTE. YOU CAN STILL SUPPORT YOUR BOARD BY RETURNING A GOLD
PROXY CARD. ONLY YOUR LATEST DATED PROXY CARD WILL COUNT.
On Behalf of the Board of Trustees, your Fund has filed a proxy statement with
the Securities and Exchange Commission regarding the matters to be acted upon at
the 2008 Annual Meeting. Shareholders are urged to carefully review the proxy
statement and your Fund's other proxy materials, when available, because they
contain important information. Among other things, the proxy statement provides
information about your Fund and its Trustees, who may be deemed to be
participants in the solicitation of proxies in favor of the Board's nominees,
and additional information about the solicitation. This letter may be deemed to
be solicitation material with respect to the proxy statement. Investors may
obtain a free copy of the proxy statement and other proxy materials (when
available) at the Securities and Exchange Commission's web site at www.sec.gov.
Investors may also obtain free copies of the proxy statement and other documents
filed by your Fund in connection with the Annual Meeting by directing a request
to:
The Altman Group
1200 Wall Street West
Lyndhurst, NJ 07071
(866) 745-0264
(toll free)
PLEASE VOTE THE GOLD CARD TO SUPPORT YOUR FUND'S LONG-TERM INVESTMENT
STRATEGIES OF TAX-ADVANTAGED DIVIDEND INCOME.