J.HNCK TAX ADV : John Hancock Tax-Advantaged Dividend Income Fund Announces Implementation of Options Strategy
07/27/2009| 11:55am US/Eastern
BOSTON, July 27 /PRNewswire-FirstCall/ -- John Hancock Tax-Advantaged Dividend Income Fund (NYSE: HTD) (the "Fund") is pleased to announce that it has implemented a covered call options strategy ("options strategy"). The options strategy will be managed by Analytic Investors, LLC (formerly known as Analytic Investors, Inc.), which was approved by the Fund's shareholders on April 28, 2009 as the Fund's subadviser. The Fund's Board of Trustees believes that the options strategy has the potential to enhance shareholder value over the long-term.
The goal of the options strategy is to seek to enhance risk-adjusted returns, reduce overall portfolio volatility and generate tax-advantaged gains for current distributions from options premiums. There is no guarantee that the Fund will achieve its options strategy goal. The option strategy will be accomplished by primarily writing (selling) call index options on a variety of both U.S. and non-U.S. broad-based securities indices that also qualify for favorable federal income tax treatment as "section 1256 contracts" under the Internal Revenue Code. The Fund's investment objective is to provide a high level of after-tax total return from dividend income and gains and capital appreciation.
The Fund will be limited to writing options on no more than 30% of its total assets. The Fund's Adviser believes that limiting the options strategy to 30% of total assets will allow the balance of the Fund's assets to continue to participate in potential market appreciation and the realization of capital gains and total return. The amount of the value of the Fund's assets that will be subject to index call options is expected to vary over time based upon U.S. and foreign equity market conditions and other factors. In this regard, the Adviser may decide to discontinue the options strategy for the Fund at any time in the Adviser's sole discretion.
The Fund's option strategy will be managed by Analytic Investors, LLC, which also manages a similar options strategy for John Hancock Tax-Advantaged Global Shareholder Yield Fund (NYSE: HTY) that was launched in September 2007. Subadvisory fees payable to Analytic Investors, LLC will be borne by the Adviser, not the Fund, and thus will not result in higher advisory fees for Fund shareholders.
Analytic Investors, LLC, was founded in 1970 as one of the first independent counsel firms specializing in the creation and continuous management of options strategies of both equity and debt portfolios for fiduciaries and other long-term investors. Analytic serves mutual funds, pensions, profit-sharing plans, endowments, foundations, corporate investment portfolios, mutual savings banks and insurance companies. Analytic has approximately $8.7 billion of assets under management as of December 31, 2008. Analytic is a subsidiary of Old Mutual Asset Management ("OMAM".) OMAM is a subsidiary of OM Group (U.K.) Limited, which is a subsidiary of Old Mutual plc, a multi-national financial services firm headquartered in London.
In addition, the Fund will continue its share repurchase plan, which was previously announced in December 2008. The share repurchase plan was adopted by the Board of Trustees to help enhance shareholder value and potentially decrease the discount between the market price and the net asset value ("NAV") of the Fund's common shares.
Under the repurchase plan the Fund may purchase, in the open market, up to 10% of its outstanding common shares through December 31, 2009. The plan allows the Fund to acquire its own shares in the open market at a discount to NAV, which is intended to increase the NAV per share. It could also have the benefit of providing additional liquidity in the trading of the common shares. There is no assurance that the Fund will purchase shares at any specific discount levels or in any specific amounts. The Fund's repurchase activity will be disclosed in its shareholder report for the relevant fiscal period. There is no assurance that the market price of the Fund's shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases.
The Fund's investment objective is to provide a high level of after-tax total return from dividend income and gains and capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in dividend-paying common and preferred securities that the Adviser believes at the time of acquisition are eligible to pay dividends which, for individual shareholders, qualify for U.S. federal income taxation at rates applicable to long-term capital gains, which currently are taxed at a maximum rate of 15%.
Statements in this press release that are not historical facts are forward-looking statements as defined by the United States securities laws. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to uncertainties and other factors which are, in some cases, beyond the fund's control and could cause actual results to differ materially from those set forth in the forward-looking statements.
About John Hancock Funds
The Boston-based mutual fund business unit of John Hancock Financial, John Hancock Funds manages more than $35.8 billion in open-end funds, closed-end funds, private accounts, retirement plans and related party assets for individual and institutional investors at March 31, 2009.
About John Hancock Financial and Manulife Financial Corporation
John Hancock Financial is a unit of Manulife Financial Corporation (the Company), a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and in most of Asia, and primarily as John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$405 billion (US$322 billion) at March 31, 2009.
Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '0945' on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers a broad range of financial products and services, including life insurance, fixed and variable annuities, fixed products, mutual funds, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at www.johnhancock.com.
SOURCE John Hancock Funds