<PAGE> 1
JOHN HANCOCK FUNDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PATRIOT
GLOBAL
DIVIDEND
FUND
SEMI-ANNUAL REPORT
January 31, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Thomas W.L. Cameron
James F. Carlin*
William H. Cunningham
Charles F. Fretz*
Harold R. Hiser, Jr.*
Charles L. Ladner*
Leo E. Linbeck, Jr.
Patricia P. McCarter*
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman J. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Andrew F. St. Pierre
President
Anne C. Hodsdon
Executive Vice President
Michael P. DiCarlo
Senior Vice President
Thomas H. Drohan
Senior Vice President and Secretary
James K. Ho
Senior Vice President
James B. Little
Senior Vice President and
Chief Financial Officer
John A. Morin
Vice President and Compliance Officer
Susan S. Newton
Vice President and Assistant Secretary
James J. Stokowski
Vice President and Treasurer
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
INVESTMENT SUB-ADVISER
John Hancock Advisers International Limited
34 Dover Street
London, England W1X3RA
CUSTODIAN AND TRANSFER AGENT FOR
COMMON SHAREHOLDERS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT FOR DARTS
Chemical Bank
450 West 33rd Street
New York, New York10001
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
[A 1 1/4" x 1" photo of Edward J Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
Now that we are into 1995, early returns on New Year's resolutions
are coming in. Dieting and saving money - Americans' long-time favorites -
are often the most difficult resolutions to keep. This year, however,
Congress may give savers an additional
incentive to stick to their guns.
Both the Republicans and Democrats want to revive Individual
Retirement Accounts (IRAs). In an effort to encourage savings, IRAs were
made available to all working Americans in 1981. Anyone with earned income
could contribute up to $2,000 annually. The contributions were fully tax-
deductible, and the earnings weren't taxed until withdrawal. IRAs became the
most successful savings program in the U.S., drawing in more than $250
billion and 13 million new participants by 1985.
Sweeping tax reforms in 1986, however, changed all that. As it
stands now, the full deduction only applies to individuals who earn less
than $25,000, married couples who earn less than $40,000 and people without
employer-sponsored retirement plans. The result of this congressional
tinkering: the number of IRA contributors declined dramatically, from 16.2
million in 1985 to 4.2 million in 1992.
Legislators are now taking a closer look at expanding the
accessibility of IRAs once again. Several proposals are on the table: (1)
the Republicans' "Contract with America" includes the American Dream Savings
Account, a type of IRA; (2) President Clinton has proposed expanding
eligibility by raising income limits; and (3) several congressional
representatives have introduced legislation to restore the universal
availability of a fully tax-deductible IRA.
We enthusiastically support restoring IRAs to their original luster.
Not only will it provide a tax break to middle-income Americans, but it will
go a long way toward raising the nation's dangerously low personal savings
rate, which is the lowest of any major industrialized country. There's an
increasing awareness that Social Security and pension plans will no longer
provide for the retirement needs of middle-income Americans. Increasing IRA
accessibility for more working individuals and families is one of the most
sensible ways to help Americans take responsibility for their future
financial needs. We urge you to support the expanded IRA by
contacting your congressional representative or senator.
Sincerely,
/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY ANDREW F. ST. PIERRE,
PRESIDENT AND PORTFOLIO MANAGER
PATRIOT GLOBAL
DIVIDEND FUND
RISING INTEREST RATES TAKE THEIR TOLL;
STABILITY SHOULD RETURN IN 1995
Rising interest rates and fears of inflation made life difficult for
bond investors in 1994. The downturn started with the Federal Reserve's first
interest-rate increase on February 4, 1994. Five subsequent rate hikes kept
bonds under pressure through the end of the year. Since the start of 1995,
however, bond prices have rebounded, thanks to some evidence that the U.S.
economy may be slowing down. The Federal Reserve's most recent half-point
interest-rate increase on February 1, 1995 helped reinforce that likelihood.
[A 2 1/2" x 3 1/2" photo of Andrew F. St. Pierre at bottom right. Caption
reads: "Andrew F. St. Pierre, Portfolio Manager."]
John Hancock Patriot Global Dividend Fund - because of its focus on
dividend-paying common and preferred stocks - is sensitive to movements in the
bond market. As a result, its ride was somewhat choppy during the last six
months. Despite this, the Fund managed to post solid returns. For the six
months ended January 31, 1995, Patriot Global Dividend Fund had a total return
of 4.64% at net asset value. By comparison, the 30-year Treasury bond had a
total return of -0.73% and the Dow Jones Utility Average, a total return of
3.61%.1
[CAPTION]
"Rising interest rates and fears of inflation made life difficult."
Andrew F. St. Pierre, Portfolio Manager
3
<PAGE> 4
John Hancock Funds - Patriot Global Dividend Fund
[Pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into four sections. Going from left to right:
Industrials 18%; Financials 33%; Cash and Other 7%; and Utilities 42%. A
footnote below states "As a percentage of net assets on January 31, 1995."]
SHIFT TO OFFENSE
With interest rates rising, we remained defensive for most of 1994 - taking
on extra credit risk, while trying to minimize our interest-rate risk.
Credit risk is the risk that an issuer will be unable to meet its interest
and principal payments. Interest-rate risk is the risk that rising rates
will hurt bond prices. When the economy is expanding - as was the case in
1994 - it makes more sense to assume more credit risk. That's because as
corporate cash flows improve, companies find themselves better able to pay
their debt, thereby diminishing the risk of default. As a result, we
minimized our holdings in interest-rate sensitive utilities and diversified
into more economically-sensitive financial and industrial names.
With interest rates appearing to be close to their peak and
utilities looking oversold in November, however, we started to shift to a
more offensive strategy. We increased interest-rate risk by upping our stake
in utilities and reduced credit risk by cutting back on financials and
industrials. What follows is a sector-by-sector rundown of the Fund's
investments.
[Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investments"; the header for the right column is "Recent
performance ... and what's behind the numbers. The first listing is Baltimore
Gas & Electric followed by an up arrow and the phrase "Bounce back in electric
utilities." The second listing is Grand Metropolitan followed by an up arrow
and the phrase "Better interest-rate environment for preferreds." The third
listing is SCE Corp. followed by a down arrow and the phrase "Pressure for
retail wheeling in California." Footnote below reads: "See "Schedule of
Investments." Investment holdings are subject to change."]
*UTILITIES. The utility market's woes are well-known. Fears of deregulation,
coupled with rising interest rates, drove the stocks down through the third
quarter of 1994. From there, utilities traded in a volatile range - rallying
briefly as investors hunted for bargains and then falling back on weakness in
the bond market. After bottoming out in November, utility stocks staged a
comeback, rising steadily through the end of January.
With utility stocks looking undervalued by late fall, we believed
that the bulk of the decline was over and some extremely attractive bargains
were emerging. As a result, we stepped in and started to add gradually to
our exposure. By the end of January, utility stocks accounted for 42% of the
Fund's assets, up from 34% six months ago. Instead of focusing on preferred
stock utilities - as we did in 1994 - we turned our attention to common
stock utilities. That's primarily because common stock utilities were hit
hardest in last year's downturn and offered the best value.
*Financials. To increase our utility exposure, one area we cut back was our
financial holdings. At the end of January, financial stocks totaled 33% of
assets versus 40% six months ago. The bulk of our financial holdings are still
in domestic and foreign banks. On the foreign side, we still own Yankee
preferred stocks - that is, dollar-denominated securities from foreign issuers.
During the last six months, however,
[CAPTION]
"...WE STARTED TO SHIFT TO A MORE OFFENSIVE STRATEGY."
4
<PAGE> 5
John Hancock Funds - Patriot Global Dividend Fund
[Bar chart with heading "Fund Performance" at top of left hand column. Under
the heading is the footnote: "For six months ended January 31, 1995." The
chart is scaled in increments of 3% from bottom to top, with 6% at the top
and -6% at the bottom. Within the chart, there are three solid bars. The
first represents the 4.64% total return for John Hancock Patriot Global
Dividend Fund. The second represents the 3.61% total return for the Dow Jones
Utility Average. The third represents the -0.73% total return for the 30-year
Treasury Bond. Footnote below reads: "The total return for John Hancock
Patriot Global Dividend Fund is at net asset value with all distributions
reinvested. The Dow Jones Utility Average is an unmanaged index, which
measures the performance of the utility industry in the United States."
we've made some adjustments to our holdings. We've pared our weighting
in England, while boosting our stake in other European countries such as Spain
and France.
On the domestic side, we own a mix of money center and regional
banks. Even though interest rates have risen, most banks have been able to
maintain healthy net interest margins - that is, the gap between deposit
rates and lending rates. Because the recent rate hikes have been accompanied
by strong commerical and consumer loan growth, many banks have been able to
book higher-yielding assets to offset any increase in deposit costs. So even
though bank earnings may not match their spectacular growth rates of the
last few years, they should continue to be strong.
*INDUSTRIALS: We've also recently trimmed our holdings in industrial stocks
to 18% from 22% six months ago. We still own auto stocks like Ford and
General Motors, but will probably start to reduce those positions over the
next few months. In our view, much of the pent-up demand has been filled.
That, coupled with signs of a moderating economy, suggest to us that auto
sales could be close to peaking.
Two groups, however, where we see attractive opportunities are paper
and energy. Both have been out of favor for the last several years and are
extremely undervalued. Top holdings include paper manufacturer Bowater Inc.
and oil and gas companies Lasmo and Elf Overseas.
OUTLOOK
1995 is likely to be a better year for bonds - and therefore, John Hancock
Patriot Global Dividend Fund. Whether or not the Federal Reserve will be
successful in engineering a "soft landing" (that is, a moderately growing
economy with little inflation) remains to be seen. But there's no doubt that
sooner or later the Fed's aggressive interest-rate hikes will achieve their
intended effect of slowing the U.S. economy. In fact, we're already seeing
signs that growth may be starting to cool off. As that phenomenon continues,
we're likely to see inflation worries abate and interest rates stabilize.
Against that backdrop, the dividend-paying stocks the Fund emphasizes should
start to perform better.
_________________________________________________________
1 Source: Salomon Brothers Asset Management
[CAPTION]
"1995 is likely to be better year."
5
<PAGE> 6
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET ON
JANUARY 31, 1995. YOU'LL ALSO FIND THE NET ASSET VALUE PER SHARE FOR EACH
COMMON SHARE, AS OF THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
ASSETS:
Investments at value - Note C:
Preferred stocks and units (cost - $98,328,490)......... $ 94,188,322
Common stocks (cost - $53,249,363)...................... 49,819,675
Capital securities (cost - $7,448,750).................. 7,174,875
Short-term notes (cost - $5,234,000).................... 5,234,000
------------
156,416,872
Cash...................................................... 498
Receivable for investments sold........................... 9,160,937
Interest receivable....................................... 1,200
Dividends receivable...................................... 1,314,968
Deferred organization expenses - Note A................... 63,239
Other assets.............................................. 40,075
------------
Total Assets 166,997,789
---------------------------------------------------------
LIABILITIES:
DARTS dividend payable - Note A........................... 15,667
Payable for investments purchased......................... 4,744,750
Payable to John Hancock Advisers, Inc. and
affiliates - Note B..................................... 151,654
Accounts payable and accrued expenses..................... 52,733
------------
Total Liabilities.................... 4,964,804
---------------------------------------------------------
NET ASSETS:
Dutch Auction Rate Transferable Securities Preferred
Shares (DARTS) - Without par value, unlimited number
of shares of beneficial interest authorized, 600 shares
issued, liquidation preference of $100,000
per share - Note A...................................... $ 60,000,000
------------
Common Shares - Without par value, unlimited number
of shares of beneficial interest authorized, 8,344,700
shares issued and outstanding........................... 114,176,121
Accumulated net realized loss on investments.............. ( 3,572,501)
Net unrealized depreciation of investments................ ( 7,843,731)
Distributions in excess of net investment income.......... ( 726,904)
------------
Net Assets Applicable to
Common Shares ($12.23 per share
based on 8,344,700
shares outstanding).................. 102,032,985
---------------------------------------------------------
Net Assets........................... $162,032,985
=========================================================
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED
AND EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS AND
(LOSSES) FOR THE PERIOD STATED.
<TABLE>
Statement of Operations
Six months ended January 31, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
Investment Income:
Dividends (net of foreign withholding taxes of
$71,858 and including $34,748 received from
affiliated issuers).............................. $6,753,748
Interest........................................... 266,050
----------
7,019,798
----------
Expenses:
Investment management fee - Note B 638,480
Administration fee - Note B...................... 119,715
DARTS and auction fees........................... 92,983
Custodian fee.................................... 30,953
Auditing fee..................................... 29,629
Printing......................................... 26,570
Trustees' fees................................... 23,264
Transfer agent fee............................... 16,732
Miscellaneous.................................... 16,035
Organization expense - Note A.................... 12,773
Legal fees....................................... 9,882
Registration and filing fees..................... 9,666
Federal excise tax............................... 3,324
----------
Total Expenses................ 1,030,006
----------------------------------------------------------
Net Investment Income......... 5,989,792
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments sold ( 3,173,524)
Change in net unrealized appreciation/depreciation
of investments..................................... 2,905,031
----------
Net Realized and Unrealized
Loss on Investments........ ( 268,493)
----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations... $5,721,299
==========================================================
Distributions to DARTS........ (1,216,733)
----------------------------------------------------------
Net Increase in Net Assets
Applicable to Common
Shareholders Resulting from
Operations Less DARTS
Distributions................. $4,504,566
==========================================================
</TABLE>
See notes to financial statements.
6
<PAGE> 7
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1995 JULY 31,
(UNAUDITED) 1994
---------------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................................................... $ 5,989,792 $ 11,281,223
Net realized loss on investments sold......................................... (3,173,524) (356,644)
Change in net unrealized appreciation/depreciation of investments............. 2,905,031 (20,718,594)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations............. 5,721,299 (9,794,015)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
DARTS ($2,028 and $3,517 per share, respectively ) - Note A................... (1,216,733) (2,110,130)
Common Shares - Note A
Dividends from accumulated net investment income ($0.5720 and $1.1106 per
share, respectively)...................................................... (4,773,059) (9,267,332)
Distributions from net realized short-term gain on investments sold (none
and $0.5361 per share, respectively)...................................... -- (4,473,538)
Distributions in excess of accumulated net investment income ($0.0466 and
$0.0405 per share, respectively).......................................... (388,803) (338,101)
------------ ------------
Total Distributions to Shareholders..................................... (6,378,595) (16,189,101)
------------ ------------
NET ASSETS:
Beginning of period........................................................... 162,690,281 188,673,397
------------ ------------
End of period (including distributions in excess of net investment income of
$726,904 and $338,101, respectively......................................... $162,032,985 $162,690,281
============ ============
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1995 JULY 31,
* ANALYSIS OF COMMON SHARE TRANSACTIONS: (UNAUDITED) 1994
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Beginning of period.................................. 8,344,700 $114,176,121 8,344,700 $114,220,602
Reclassification of capital accounts - Note A........ -- -- -- (44,481)
End of period........................................ 8,344,700 $114,176,121 8,344,700 $114,176,121
========= ============ ========= ============
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS, AND ANY INCREASE DUE TO SALE OF COMMON SHARES AND DARTS. THE
FOOTNOTE ILLUSTRATES ANY RECLASSIFICATIONS OF SHARE CAPITAL AMOUNTS, THE NUMBER
OF COMMON SHARES AND DARTS SOLD AND OUTSTANDING AT THE END OF THE LAST TWO
PERIODS, ALONG WITH THE CORRESPONDING DOLLAR VALUE.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a Common Share outstanding throughout the periods
indicated, investment returns, key ratios and supplemental data are listed
as follows:
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 1995 YEAR ENDED JULY 31
---------------- ----------------------------------
(UNAUDITED) 1994 1993
---------------- ----------------------------------
COMMON SHARES
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.............................. $ 12.31 $ 15.42 $ 13.95(a)
-------------- ------------- ---------------
Net Investment Income............................................. 0.72 1.35 1.21
Net Realized and Unrealized Gain (Loss) on Investments............ ( 0.03) ( 2.52) 1.73
-------------- ------------ ---------------
Total from Investment Operations............................. 0.69 ( 1.17) 2.94
-------------- ------------ ---------------
Less Distributions:
Dividends to DARTS Shareholders.............................. ( 0.15) ( 0.25) ( 0.17)
Dividends from Accumulated Net Investment Income to Common
Shareholders ( 0.57) ( 1.11) ( 1.03)
Distributions to Common Shareholders from Net Realized
Short-term Gain on Investments............................. ----- ( 0.54) ----
Distributions in Excess of Accumulated Net Investment Income. ( 0.05) ( 0.04) ----
-------------- ------------ ---------------
Total Distributions...................................... ( 0.77) ( 1.94) ( 1.20)
-------------- ------------ ---------------
DARTS and Common Shares Offering Costs............................ ---- ---- ( 0.14)
-------------- ------------ ---------------
DARTS Underwriting Discounts...................................... ---- ---- ( 0.13)
-------------- ------------ ---------------
Net Asset Value, End of Period.................................... $ 12.23 $ 12.31 $ 15.42
============== ============ ===============
Per Share Market Value, End of Period............................. $ 11.50 $ 12.00 $ 15.00
Total Investment Return at Market Value........................... 1.40% ( 10.06%) 7.26%
RATIOS AND SUPPLEMENTAL DATA
Net Assets Applicable to Common Shares, End of Period............. $ 102,032,985 $102,690,281 $ 128,673,397
Ratio of Expenses to Average Net Assets *......................... 1.29%(b) 1.27% 1.22%
Ratio of Net Investment Income to Average Net Assets*............. 7.51%(b) 6.42% 6.06%
Portfolio Turnover Rate........................................... 35% 39% 98%
SENIOR SECURITIES
Total DARTS Outstanding........................................... $ 60,000,000 $ 60,000,000 $ 60,000,000
Asset Coverage per Unit (c)....................................... $ 263,955 $ 267,019 $ 311,065
Involuntary Liquidation Preference per Unit (d)................... $ 100,000 $ 100,000 $ 100,000
Approximate Market Value per Unit (d)............................. $ 100,000 $ 100,000 $ 100,000
<FN>
* Ratios calculated on the basis of expenses and net investment income applicable to both common and preferred shares
relative to the average net assets for both common and preferred shares.
(a) Initial investment to commence operations.
(b) On an annualized basis.
(c) Calculated by subtracting the Fund's total liabilities (not including the DARTS) from the Fund's total assets and dividing
such amount by the number of DARTS outstanding, as of the applicable 1940 Act Evaluation Date.
The FINANCIAL HIGHLIGHTS summarizes the impact of the following factors on a single Common Share for the period indicated: the
net investment income, gains (losses) and distributions of the Fund. It shows how the Fund's net asset value for a Common Share
has changed during the period. It also shows the total investment return for the period based on the market value of the
Fund shares. Additionally, important relationships between some items presented in the financial statements are expressed in
ratio form, as well as information about the DARTS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
FUND ON JANUARY 31, 1995. IT'S DIVIDED INTO FOUR MAIN CATEGORIES: PREFERRED
STOCKS AND UNITS, COMMON STOCKS, CAPITAL SECURITIES AND SHORT-TERM INVESTMENTS.
THE STOCKS ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS. UNDER EACH INDUSTRY GROUP
IS A LIST OF THE STOCKS OWNED BY THE FUND. SHORT-TERM INVESTMENTS, WHICH
REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED LAST.
<TABLE>
SCHEDULE OF INVESTMENTS
January 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
PREFERRED STOCKS AND UNITS
AUTO/TRUCK (3.47%)
Ford Motor Co., 8.25%,
Depositary Shares, Ser B............................. 60,000 $ 1,492,500
General Motors Corp., 9.125%,
Depositary Shares, Ser B............................. 159,500 4,127,063
-----------
5,619,563
-----------
BANKS - FOREIGN (10.96%)
Allied Irish Banks, PLC, 11.875%,
American Depositary Receipt
("ADR") (Ireland).................................... 144,500 3,847,313
Banco Bilbao Vizcaya International
(Gibraltar) Ltd., 9.75%, Gtd Ser A,
ADR (Spain).......................................... 56,200 1,419,050
Banesto Holdings Ltd., 10.50%,
Gtd Ser A (Guernsey) (R)............................. 85,050 2,136,881
Barclays Bank PLC, 11.50%, Ser D Units,
ADR (United Kingdom)................................. 90,000 2,542,500
Extecapital Ltd., 9.125%, Gtd Ser A
(Cayman Islands)..................................... 75,000 1,753,125
Indosuez Holdings S.C.A., 10.375%,
Gtd Ser A, ADR (Luxembourg) (R)...................... 157,100 3,927,500
Royal Bank of Scotland Group PLC,
11.25%, Ser A (United Kingdom)....................... 45,000 1,186,875
Santander Overseas Bank, Inc., 8.70%,
Gtd Ser B (Puerto Rico).............................. 41,600 941,200
-----------
17,754,444
-----------
BANKS - U.S. (2.47%)
ABN-Amro North America, Adjustable Rate
Preferred ("ARP"), Ser B, (R)....................... 500 436,900
Chase Manhattan Corp., ARP, Ser N..................... 32,000 716,000
Chemical Banking Corp., ARP, Ser L.................... 15,000 1,312,500
Citicorp , ARP, Ser 18................................ 10,000 223,750
First Interstate Bancorp., 9.875%,
Depositary Shares, Ser F............................ 50,000* 1,312,500
-----------
4,001,650
-----------
COMPUTER SERVICES (0.39%)
Comdisco Inc., 8.75%, Ser A........................... 25,800 628,875
-----------
CONGLOMERATES (0.81%)
Grand Metropolitan Delaware Co., 9.42%,
Gtd Ser A............................................. 51,000* 1,306,875
-----------
EQUIPMENT LEASING (0.26%)
AMERCO, 8.50%, Ser A................................... 20,000 422,500
-----------
FINANCIAL SERVICES (8.56%)
Ford Holdings Inc., 8.00%,
Depositary Shares, Ser B............................. 85,000* 2,018,750
Ford Holdings Inc., 8.10%,
Depositary Shares, Ser D............................. 30,000* 720,000
Household International Co., 9.50%
Depositary Shares, Ser 89-A.......................... 100,000 2,600,000
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A............................. 30,000* 780,000
Morgan Stanley Group Inc., 8.88%,
Depositary Shares.................................... 37,000 925,000
Salomon Inc., 9.50%, Depositary Shares,
Ser C................................................ 60,000 1,522,500
SunAmerica Inc., 9.25%, Ser B.......................... 207,000 5,304,375
-----------
13,870,625
-----------
INSURANCE (6.09%)
American Life Holding Co., $2.16....................... 102,765 2,119,528
Aon Corp., 8.00%....................................... 80,000 1,890,000
NWNL Cos., Inc.10.00%,
Depositary Shares.................................... 37,000* 948,125
Progressive Corp. , 9.375%, Ser A...................... 51,000 1,294,125
Travelers Inc., 9.25%,
Depositary Shares, Ser B............................. 140,460 3,616,845
-----------
9,868,623
-----------
OIL & GAS (10.15%)
Elf Overseas Ltd., 8.50%, Gtd Ser A
(Cayman Islands)..................................... 150,000 3,600,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
NUMBER OF
ISSUER, DESCRIPTION SHARES MARKET VALUE
- ------------------- ------ ------------
[S] [C] [C]
OIL & GAS (CONTINUED)
ENSERCH Corp., ARP, Ser F.............. 25,000 $ 518,750
Enterprise Oil PLC, 10.50%, Ser A, ADR
(United Kingdom)...................... 197,498 4,690,577
Lasmo PLC, 10.00%, Ser A, ADR
(United Kingdom)...................... 130,000 2,795,000
Phillips Gas Co., 9.32%, Ser A......... 190,000 4,845,000
-----------
16,449,327
-----------
PAPER PRODUCTS & CONTAINTERS (2.13%)
Bowater Inc., 8.40%,
Depositary Shares, Ser C.............. 150,000* 3,450,000
-----------
RETAIL (1.32%)
McDonald's Corp., 7.72%,
Depositary Shares, Ser E.............. 84,840 2,142,210
-----------
UTILITIES (11.52%)
Baltimore Gas & Electric Co., 8.625%,
Ser 1990.............................. 10,000 1,052,500
Central Maine Power Co., 7.999%, Ser A 10,000 828,750
Central Maine Power Co., 8.875%, (R)... 16,000 1,344,000
Columbus Southern Power Co., 9.50%,
Ser 02/01/15.......................... 10,000* 1,060,000
Commonwealth Edison Co., $8.40, Ser A.. 23,875 2,101,000
Duke Power Co., 7.85%, Ser S........... 10,000 968,100
Duke Power Co., 6.75%, Ser X........... 7,000 627,375
Florida Power & Light Co., 7.28%, Ser F 20,000* 1,798,400
Gulf States Utilities Co., $9.96....... 7,500* 761,250
Houston Lighting & Power Co., $8.12.... 10,506 1,033,055
Indianapolis Power & Light Co., 8.20%.. 10,350* 1,029,825
MCN Michigan Limited Partnership,
9.375%, Gtd Ser A..................... 25,000* 634,375
Niagara Mohawk Power Corp., 9.50%...... 41,000* 1,030,125
Public Service Electric & Gas Co.,
9.375%, Ser A......................... 30,000* 776,250
Public Service Co. of New Hampshire,
10.60%, Ser A......................... 50,000* 1,288,000
Southern California Gas Co., 7.75%..... 80,000 1,800,000
Texas Utilities Electric Co., $ 1.875,
Depositary Shares, Ser A.............. 25,000 540,625
-----------
18,673,630
-----------
TOTAL PREFERRED STOCKS AND UNITS
(Cost $98,328,490) (58.13%) 94,188,322
----- -----------
COMMON STOCKS
UTILITIES (30.74%)
Allegheny Power System, Inc............ 150,000 $ 3,581,250
Baltimore Gas & Electric Co............ 135,000* 3,273,750
Carolina Power & Light Co.............. 100,000 2,837,500
CINergy Corp. (formerly Cincinnati
Gas & Electric Co.)................... 45,000 1,108,125
Consolidated Edison Co. of NY, Inc..... 81,000 2,288,250
Delmarva Power & Light Co.............. 50,000 962,500
Dominion Resources, Inc. of VA......... 85,000 3,240,625
FPL Group, Inc......................... 60,000 2,197,500
General Public Utilities Corp.......... 100,000 2,825,000
Houston Industries, Inc................ 69,800 2,783,275
Idaho Power Co......................... 50,000 1,231,250
New York State Electric & Gas Corp..... 65,000 1,356,875
PacifiCorp............................. 107,100 2,088,450
Public Service Co. of CO............... 75,000 2,268,750
Public Service Enterprise Group, Inc... 150,000 4,331,250
Puget Sound Power & Light Co........... 137,800 2,876,575
SCECORP................................ 30,000 491,250
Southern Co............................ 120,000 2,505,000
Texas Utilities Co..................... 100,000 3,475,000
Unicom Corp............................ 35,000* 910,000
Western Resources, Inc................. 100,000 3,187,500
-----------
49,819,675
-----------
TOTAL COMMON STOCKS
(Cost $53,249,363) (30.74%) 49,819,675
----- -----------
CAPITAL SECURITIES
BANKS (4.43%)
A/S Eksportfinans, 8.70%, Capital
Securities (Norway).................... 59,000 1,408,625
Australia and New Zealand Banking
Group Ltd., 9.125%, Capital Securities
(Australia)........................... 190,000 4,726,250
National Westminster Bank PLC,
10.64%, Ser A, Capital Securities
United Kingdom)...................... 40,000 1,040,000
-----------
TOTAL CAPITAL SECURITIES
(Cost $7,448,750) (4.43%) 7,174,875
---- -----------
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
<TABLE>
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
INTEREST PAR VALUE
ISSUER, DESCRIPTION RATE 000'S OMITTED MARKET VALUE
- ------------------- ---- ------------- ------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS
COMMERCIAL PAPER
Prudential Funding Corp.
02-01-95..................... 5.75% $ 2,496 $ 2,738,000
Chevron Oil Finance Co.
02-02-95..................... 5.50 2,738 2,496,000
-------------
TOTAL SHORT-TERM INVESTMENTS ( 3.23%) 5,234,000
------- -------------
TOTAL INVESTMENTS (96.53%) $ 156,416,872
======= =============
<FN>
* Securities, other than short-term investments, newly added to the portfolio during the period
ended January 31, 1995.
(R) 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. See Note A of the Notes to Financial Statements for valuation policy.
Rule 144A securities amounted to $7,845,281 as of January 31, 1995.
Parenthetical disclosure of a foreign country in the security description represents country of
foreign issuer, however, security is U.S. dollar denominated.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Patriot Global Dividend Fund (the "Fund") is a closed-end,
diversified management investment company, registered under the Investment
Company Act of 1940. Significant accounting policies of the Fund are as
follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on
the basis of market quotations, valuations provided by independent pricing
services, or at fair value as determined in good faith in accordance with
procedures approved by the Trustees. Short-term debt investments maturing
within 60 days are valued at amortized cost which approximates market value.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date
of purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investment, to its shareholders. Therefore, no federal
income tax provision is required. For federal income tax purposes, the Fund
has $10,379 of a capital loss carryforward available, to the extent provided
by regulations, to offset future net realized capital gains. If such
carryforward is used by the Fund, no capital gains distributions will be
made. The carryforward expires July 31, 2002.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date. Interest income on
investment securities is recorded on the accrual basis.
The Fund records all dividends and distributions to shareholders
from net investment income and realized gains on the ex-dividend date. Such
distributions are determined in conformity with federal income tax
regulations.
DEFERRED ORGANIZATION EXPENSES Expenses incurred in connection with the
organization of the Fund have been capitalized and are being charged ratably
to the Fund's operations over a five-year period that began with the
commencement of the investment operations of the Fund.
DUTCH AUCTION RATE TRANSFERABLE SECURITIES PREFERRED SHARES (DARTS) The Fund
issued 600 shares of DARTS on October 16, 1992 in a public offering. The
underwriting discount was recorded as a reduction of the capital of the
Common Shares. Dividends on the DARTS, which accrue daily, are cumulative at
a rate which was established at the offering of the DARTS and have been
reset every 49 days thereafter by an auction. Dividend rates ranged from
3.48% to 4.70% during the period ended January 31, 1995.
The DARTS are redeemable at the option of the Fund, at a redemption
price equal to $100,000 per share, plus accumulated and unpaid dividends on any
dividend payment date. The DARTS are also subject to mandatory redemption at a
redemption price equal to $100,000 per share, plus accumulated and unpaid
dividends, if the Fund is in default on its asset coverage requirements with
respect to the DARTS. If the dividends on the DARTS shall remain unpaid in an
amount equal to two full years' dividends, the holders of the DARTS, as a
class, have the right to elect a majority of the Board of Trustees. In general,
the holders of the DARTS and the Common Shares have equal voting rights of one
vote per share, except that the holders of the DARTS, as a class, vote to elect
two members of the Board of Trustees, and separate class votes are required on
certain matters that affect the respective interests of the DARTS and Common
Shares. The DARTS have a liquidation preference of $100,000 per share, plus
accumulated and unpaid dividends. The Fund is required to maintain certain
asset coverage with respect to the DARTS, as defined in the Fund's By-Laws.
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the investment management contract, the Fund pays a monthly management
fee to John Hancock Advisers, Inc. (the "Adviser"), a wholly-owned
subsidiary of The Berkeley Financial Group, for a
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
continuous investment program equivalent, on an annual basis, to the sum of
.80 of 1% of the Fund's average weekly net assets.
In addition, the Adviser has a sub-investment management contract
with John Hancock Advisers International Limited (the "Sub-Adviser"), a
wholly-owned subsidiary of the Adviser. Under the Sub-Advisory Agreement
between the Adviser and the Sub-Adviser, the Sub-Adviser will furnish the
Adviser with international portfolio management assistance. The Adviser pays
the Sub-Adviser a monthly management fee equivalent, on an annual basis, to
.05 of 1% of the Fund's average weekly net assets.
The Fund has entered into an administrative agreement with Mitchell
Hutchins Asset Management Inc. (the "Administrator"), under which the
Administrator, if requested by the Adviser, assists in preparing financial
information and reports, providing information for tax reporting purposes,
compliance, calculation of net asset values, etc. The Fund pays the
Administrator a monthly fee equivalent, on an annual basis, to the sum of
.15 of 1% of the Fund's average weekly net assets, with a minimum annual fee
of $125,000. The Administrator is an affiliate of Paine-Webber Incorporated,
which acted as an underwriter of the Fund's Common Shares.
Each unaffiliated Trustee is entitled as compensation for his or her
services, to an annual fee plus remuneration for attendance at various
meetings.
Messrs. Edward J. Boudreau, Jr. and Richard S. Scipione are directors
and/or officers of the Adviser and/or its affiliates, as well as Trustees of
the Fund. The compensation of unaffiliated Trustees is borne by the Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
investments, during the period ended January 31, 1995, aggregated
$52,472,595 and $52,868,006, respectively.
The cost of long-term investments owned at January 31, 1995 for
federal income tax purposes was $159,415,202. Gross unrealized appreciation
and depreciation of investments aggregated $1,014,639 and $9,246,969,
respectively, resulting in net unrealized depreciation of $8,232,330 for
federal income tax purposes.
13
<PAGE> 14
John Hancock Funds - Patriot Global Dividend Fund
INVESTMENT OBJECTIVE AND POLICY
The Fund's investment objective is to provide a high level of current
income, consistent with modest growth of capital, for holders of its Common
Shares of beneficial interest. The Fund will pursue its objective by investing
in a diversified portfolio of dividend paying preferred and common stocks of
domestic and foreign issuers, as well as debt obligations, with the Fund
investing only in U.S. dollar denominated securities.
The Fund's non-fundamental investment policy with respect to the
quality of ratings of its portfolio investments was changed by a vote of the
Fund's Trustees on September 13, 1994. The new policy, which became
effective October 15, 1994, stipulates that preferred stocks and debt
obligations in which the Fund will invest will be rated investment grade (at
least "BBB" by S&P or "Baa" by Moody's) at the time of investment or will be
preferred stocks of issuers of investment grade senior debt, some of which
may have speculative characteristics, or, if not rated, will be of
comparable quality as determined by the Adviser. The Fund will invest in
common stocks of issuers whose senior debt is rated investment grade or, in
the case of issuers that have no rated senior debt outstanding, whose senior
debt is considered by the Adviser to be of comparable quality. The new
policy supersedes the requirement that at least 80% of the Fund's total
assets consist of preferred stocks and debt obligations rated "A" or higher
and dividend paying common stocks whose issuers have senior debt rated "A"
or higher.
DIVIDEND REINVESTMENT PLAN
The Fund provides shareholders with a Dividend Reinvestment Plan (the
"Plan") which offers the opportunity to earn compounded yields. Each holder
of Common Shares will automatically have all distributions of dividends and
capital gains reinvested by State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02210, as agent for the common
shareholders, unless an election is made to receive cash. Holders of Common
Shares who elect not to participate in the Plan will receive all
distributions in cash, paid by check, mailed directly to the shareholder of
record (or if the Common Shares are held in street or other nominee name
then to the nominee) by the Plan Agent, as dividend disbursing agent.
Shareholders whose shares are held in the name of a broker or nominee should
contact the broker or nominee to determine whether and how they may
participate in the Plan.
The Plan Agent serves as agent for the holders of Common Shares in
administering the Plan. After the Fund declares a dividend or makes a
capital gain distribution, the Plan Agent will, as agent for the
participants, receive the cash payment and use it to buy Common Shares in
the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts. The Fund will not issue any new shares in connection
with the Plan.
Participants in the Plan may withdraw from the Plan upon written
notice to the Plan Agent. Such withdrawal will be effective immediately if
received not less than ten days prior to a dividend record date; otherwise,
it will be effective for all subsequent dividend record dates. When a
participant withdraws from the Plan or upon termination of the Plan as
provided below, certificates for whole Common Shares credited to his or her
account under the Plan will be issued and a cash payment will be made for
any fraction of a share credited to such account.
The Plan Agent maintains each shareholder's account in the Plan and
furnishes monthly written confirmations of all transactions in the accounts,
including information needed by the shareholders for personal and tax
records. Common Shares in the account of each Plan participant will be held
by the Plan Agent in non-certificated form in the name of the participant.
Proxy material relating the shareholder's meetings of the Fund will include
those shares purchased as well as shares held pursuant to the Plan.
The Plan Agent's fees for the handling of reinvestment of dividends
and other distributions will be paid by the Fund. Each participant will pay
a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of
dividends and distributions. The cost per share of the
14
<PAGE> 15
shares purchased for each participant's account will be the average cost,
including brokerage commissions, of any shares purchased on the open market.
There are no other charges to participants for reinvesting dividends or capital
gain distributions, except for certain brokerage commissions, as described
above.
The automatic reinvestment of dividends and distributions will not
relieve participants of any federal income tax that may be payable or required
to be withheld on such dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of
the change sent to all shareholders of the Fund at least 90 days before the
record date for the dividend or distribution. The Plan may be amended or
terminated by the Plan Agent at least 90 days after written notice to all
shareholders of the Fund. All correspondence or additional information
concerning the Plan should be directed to the Plan Agent, State Street Bank and
Trust Company, at P.O. Box 8209, Boston, Massachusetts 02266-8209 (telephone
1-800-426-5523).
15
<PAGE> 16
----------------
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT COMPANY U.S. Postage
101 Huntington Avenue, Boston, MA 02199-7603 PAID
So. Hackensack
Permit No. 750
----------------
[A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the page.
A box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."]
[A recycled logo in lower left hand corner with the caption "Printed on
Recycled Paper."
JHD P4OSA 1/95
