John Hancock Funds
Patriot
Global
Dividend
Fund
SEMI-ANNUAL REPORT
January 31, 1996
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
Thomas H. Drohan
Vice President and Secretary
James B. Little
Senior Vice President and
Chief Financial Officer
John A. Morin
Vice President and Compliance Officer
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 & Trust Company
225 Frankln Street
Boston, Massachusetts 02110
TRANSFER AGENT FOR DARTS
Chemical Bank
450 West 33rd Street
New York, New York 10001
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
Listed: New York Stock Exchange Symbol: PGD
John Hancock Closed-End Funds:
1-800-843-0090
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
The stock market's record-breaking, whirlwind performance in 1995 will
be a tough act to follow in 1996. In fact, we've already seen greater
market volatility this year, particularly among last year's leaders --
technology stocks. That's to be expected after a year that saw market
indexes soar, including the Standard & Poor's 500-Stock Index's 37%
advance. While many of the same economic conditions that fostered the
stellar 1995 market are still in place - slow economic growth, muted
inflation and decent corporate earnings - it would be unrealistic to
expect the market to stage a repeat in 1996. The old saying "trees don't
grow to the sky" comes to mind. Shareholders would do well to temper
expectations of investment returns and perhaps revisit their investment
allocations with their financial advisor to determine if rebalancing
their portfolio makes sense.
No matter how you scale back your market expectations, you should always
be able to count on consistent customer service performance. At John
Hancock Funds, we never stop working to find ways to sustain and improve
the quality of information and assistance we provide you. Our commitment
to this task is no less than John Hancock's loyalty was to his fledgling
country when he is said to have uttered, "if it does the public good,
burn Boston." We won't go that far, of course, but we share our
namesake's dedication to putting the public before all else.
In our case, that public is you, our shareholders. We take very
seriously the role you have entrusted to us, that of helping you achieve
your financial goals. Part of that will always involve good customer
service. So please do not hesitate to call your Customer Service
Representative at 1-800-225-5291 if you have any questions or need
information. We take pride in helping you with the same spirit that John
Hancock displayed at the dawning of America.
Sincerely,
/s/EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
By Gregory K. Phelps, for the Portfolio Management Team
John Hancock
Patriot Global
Dividend Fund
Soaring bond market lifts preferred stocks; positive
regulatory outlook and merger activity fuel utilities
The last six months brought nearly ideal market conditions for Patriot
Global Dividend Fund. Moderate economic growth, tame inflation and
falling interest rates powered a strong bull market in U.S. Treasury
bonds. Because of their fixed yields, preferred stocks followed
Treasuries in their upward climb, benefiting the Fund's 75% stake in
preferred stocks. In particular, our preferred stocks that are eligible
for the dividends received deduction (DRD) performed well. DRDs offer
special tax advantages to corporations. With their supply drying up
quickly, demand has been unusually strong and that's driven DRD-eligible
preferreds way up. One side note, however. A proposal by the Clinton
administration to reduce the corporate tax benefit for DRD securities
temporarily derailed the DRD rally in December, even though we think its
chances of survival are slight in the long term. However, with the
Federal Reserve's interest-rate cut in January, the group has regained
much of its lost ground.
The strong resurgence in utility stocks, which also tend to follow the
bond market closely, buoyed performance as well. But the group was also
lifted by several other factors. Utility investors breathed a collective
sigh of relief as closely watched California regulators relaxed their
aggressive stance on deregulation. In addition, extreme weather, both
hot and cold, increased demand. What's more, a few key mergers fueled
takeover speculation throughout the industry, pushing utility shares
higher.
A 1 3/4" x 3 1/2" photo of the Patriot Management Team at bottom right.
Caption reads "The Patriot Management Team: Laura Provost, Gregory
Phelps and Andrew St. Pierre".
The Patriot Management Team: Laura Provost, Gregory
Phelps and Andrew St. Pierre
"The last
six months
brought
nearly ideal
market
conditions..."
Chart with the heading "Top Sectors" at top left hand column. The chart
lists five holdings: 1) Utilities 41%; 2) Financials 33%; 3) Industrials
24%. A footnote below states "As a percentage of net assets on January
31, 1996."
"We're
looking for
preferred
stocks with
above-average
yields
and call
protection."
For the six months ended January 31, 1996, John Hancock Patriot Global
Dividend Fund posted a total return of 12.48% at net asset value.(1)
That compared to a total return of 14.02% for the 30-year Treasury bond
and 16.74% for the Dow Jones Utility Average. While the Fund shares
common traits with these benchmarks, its results may vary occasionally
because neither is a perfect match. For example, in this period, the
Fund lagged the benchmarks because of Clinton's DRD proposal and its
large position in so-called "cushion-preferred" stocks. With their high
yields that cushion them against sharp price fluctuations, (making them
valuable long-term holds), these stocks also tend not to move in step
with 30-year Treasury bonds as much as other preferred stocks do. Owning
so many may have lowered the Fund's total return somewhat during the
period.
Becoming more defensive
In the last several months, we've been shifting the portfolio to a more
defensive posture. After such a big run-up in 1995, we're not likely to
see preferred stocks and utility shares repeat their spectacular
performance. Returns will likely come more from income than price gains.
Given that, we're looking for preferred stocks with above-average yields
and call protection. Above-average yields translate into higher income
for the Fund, and call protection allows us to lock in that income by
preventing issuers from redeeming preferreds for a set time period.
We're also targeting issues with DRD eligibility, which currently make
up 82% of the Fund's net assets. The supply of DRD securities has shrunk
as many companies have found cheaper financing alternatives that don't
require tax breaks to corporate investors. For utility companies in
particular, cost-containment pressures are keeping their capital
expenditures down and DRDs out. In addition to a significant decline in
new DRD issues, the supply has shrunk further as companies redeem DRDs
that are callable. As DRDs become scarcer, they should become more
valuable. What follows is a sector-by sector look at the Fund's
investments.
(bullet)Utilities. The environment for utilities continues to look
bright. Low inflation and falling interest rates provide an excellent
backdrop for capital-intensive utilities to not only refinance debt, but
to borrow inexpensively. Furthermore, the improved regulatory climate is
giving utilities more time to adapt to an increasingly competitive
environment.
At the end of January, electric utility stocks, both common and
preferred, totaled 41% of the Fund's net assets. We like preferred
stocks for their fixed, and generally higher, dividend payouts, as
opposed to common stocks whose dividends fluctuate. Generally, our
utility common stocks are those we believe have sustainable dividend
payouts. Given our more defensive posture currently, we've focused on
those utilities with sustainable and above-average yields. One recent
addition is IES Industries. This Cedar Rapids, Iowa utility has an
above-average dividend yield and is a low-cost electric generator.
What's more, it is merging with the financially strong Wisconsin Power &
Light, which should help keep its dividend relatively high. Another new
holding is PSI Energy. It offers a 6.875% coupon, DRD eligibility and
eight years of call protection.
Table entitled "Scorecard" at bottom of left hand column. The header for
the left column is "Investment"; the header for the right column is
"Recent performance ... and what's behind the numbers. The first listing
is Coastal Corp. followed by an up arrow and the phrase "Improving
earnings/bright oil and gas outlook." The second listing is Fleet
Financial Group followed by an up arrow and the phrase "High
yield/recent credit upgrade." The third listing is Ford Holdings
followed by a down arrow and the phrase "Called when issuer
reorganized." Footnote below reads: "See "Schedule of Investments."
Investment holdings are subject to change."
Bar chart with heading "Fund Performance" at top of left hand column.
Under the heading is the footnote: "For the six months ended January 31,
1996." The chart is scaled in increments of 5% from bottom to top, with
20% at the top and 0% at the bottom. Within the chart, there are three
solid bars. The first represents the 12.48% total return for John
Hancock Patriot Global Dividend Fund. The second represents the 16.74%
total return for the Dow Jones Utility Average. The third represents the
14.02% 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.(1) The Dow Jones Utility
Average is an unmanaged index, which measures the performance of the
utility industry in The United States."
(bullet)Financials. Approximately 33% of the Fund's net assets are in
financial stocks, including foreign and domestic banks, investment
management firms and insurance companies. Again, we've emphasized
securities with higher-than-average yields, DRD eligibility and good
call protection. One of our top performers has been Fleet Financial
Group. Our original holding was in Shawmut National, which offered a
9.35% yield, DRD eligibility and five years of call protection. After
Shawmut's merger with Fleet was completed in November, the security
received a new name and a credit upgrade. Source One Mortgage Services
is a recent addition to our financial holdings. The preferred has an
8.42% coupon and is DRD eligible. And once Source One's merger with
Mellon Bank Corp. goes through, the issue will likely get a credit
upgrade.
(bullet)Industrials. We also experienced positive credit stories in the
industrial arena. One of our longtime holdings, Ford Motor Company, was
upgraded in 1995. Coastal Corp., an oil and gas company, may follow
Ford's footsteps. Rising oil and gas prices, increased demand and
aggressive cost cutting have helped Coastal report higher-than-expected
earnings. If that trend continues -- and we expect it will -- Coastal
could be upgraded this year. All told, industrial stocks totaled 24% of
the Fund's net assets at the end of January.
A look ahead
As we mentioned earlier, we aren't likely to see a repeat of 1995's
stunning returns, so investors should temper their expectations for
1996. Having said that, though, there are several reasons to be
optimistic. Inflation is still under control and is likely to stay that
way for the remainder of the year. Furthermore, interest rates are still
trending lower. The Federal Reserve recently cut short-term rates, and
we believe there's still at least one more rate cut to come in 1996.
Against that backdrop, preferred and utility stocks should continue to
perform well. However, most of their returns -- as we explained earlier
- -- are likely to come from income and not big price gains as they did
last year.
- ------------------------------------------------------------------------
This commentary reflects the views of the portfolio management team
through the end of the Fund's period discussed in this report. Of
course, the team's views are subject to change as market and other
conditions warrant.
(1) Source: Lipper Analytical Services, Inc.
"...we aren't
likely to
see a repeat
of 1995's
stunning
returns..."
<TABLE>
<CAPTION>
Financial Statements
John Hancock Funds - Patriot Global Dividend Fund
The Statement of Assets and Liabilities is the Fund's balance sheet and shows the value of what the
Fund owns, is due and owes on January 31, 1996. You'll also find the net asset value per share, for
each Common Share, as of that date.
Statement of Assets and Liabilities
January 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Preferred stocks (cost - $130,155,221) $133,728,476
Common stocks (cost - $36,283,827) 39,482,150
Capital securities (cost - $2,155,000) 2,190,000
Short-term investments (cost - $3,178,548) 3,178,548
------------
178,579,174
Receivable for investments sold 99,400
Dividends receivable 811,318
Deferred organization expenses - Note A 30,547
Other assets 40,180
------------
Total Assets 179,560,619
---------------------------------------------------
Liabilities:
DARTS dividend payable - Note A 173,200
Payable for investments purchased 1,512,012
Payable to John Hancock Advisers, Inc. and
affiliates - Note B 183,339
Accounts payable and accrued expenses 44,033
------------
Total Liabilities 1,912,584
---------------------------------------------------
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 114,172,797
Accumulated net realized loss on investments (4,146,100)
Net unrealized appreciation of investments 6,806,578
Undistributed net investment income 814,760
------------
Net Assets Applicable to
Common Shares ($14.10 per
share based on 8,344,700
shares outstanding) 117,648,035
---------------------------------------------------
Net Assets $177,648,035
===================================================
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income earned and expenses incurred in
operating the Fund. It also shows net gains for the period stated.
Statement of Operations
Six months ended January 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Dividends (net of foreign withholding taxes of $93,383) $ 7,099,012
Interest 93,018
-----------
7,192,030
-----------
Expenses:
Investment management fee - Note B 697,555
Administration fee - Note B 130,791
DARTS and auction fees 97,477
Printing 28,069
Auditing fee 26,664
Custodian fee 24,197
Organization expense - Note A 20,128
Trustees' fees 13,472
Transfer agent fee 13,465
Registration and filing fees 11,983
Miscellaneous 4,253
Legal fees 3,980
-----------
Total Expenses 1,072,034
-------------------------------------------------------------------
Net Investment Income 6,119,996
-------------------------------------------------------------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold 1,921,430
Change in net unrealized appreciation/depreciation
of investments 6,518,711
-----------
Net Realized and Unrealized Gain
on Investments 8,440,141
-------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $14,560,137
===================================================================
Distributions to DARTS (1,355,212)
-------------------------------------------------------------------
Net Increase in Net Assets
Applicable to Common
Shareholders Resulting from
Operations Less DARTS
Distributions $13,204,925
-------------------------------------------------------------------
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
January 31, 1996 July 31,
(UNAUDITED) 1995
------------ -----------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $ 6,119,996 $ 12,980,745
Net realized gain (loss) on investments sold 1,921,430 (5,444,639)
Change in net unrealized appreciation/depreciation of investments 6,518,711 11,036,629
------------ -------------
Net Increase in Net Assets Resulting from Operations 14,560,137 18,572,735
------------ -------------
Distributions to Shareholders:
DARTS ($2,259 and $4,610 per share, respectively ) - Note A (1,355,212) (2,766,286)
Common Shares - Note A
Dividends from accumulated net investment income ($0.5250 and $1.1592 per share, respectively) (4,380,774) (9,672,846)
------------ -------------
Total Distributions to Shareholders (5,735,986) (12,439,132)
------------ -------------
Net Assets:
Beginning of period 168,823,884 162,690,281
------------ -------------
End of period (including undistributed net investment income of $814,760 and $430,750, respectively) $177,648,035 $168,823,884
============ ============
Analysis of Common Shareholder Transactions:
SIX MONTHS ENDED
January 31, 1996 YEAR ENDED
(UNAUDITED) July 31, 1995
--------------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Beginning of period 8,344,700 $114,172,797 8,344,700 $114,176,121
Reclassification of capital accounts -- -- -- (3,324)
---------- ------------ --------- ------------
End of period 8,344,700 $114,172,797 8,344,700 $114,172,797
========== ============ ========= ============
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 and distributions paid to shareholders. The footnote illustrates
any reclassifications of capital amounts, the number of Common Shares
outstanding at the beginning and end of the period, for the last two
periods, along with the corresponding dollar value.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a Common Share outstanding throughout the period
indicated, investment returns, key ratios and supplemental data are as
follows:
- ----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31,
January 31, 1996 -------------------------------------
(UNAUDITED) 1995 1994 1993*
---------- -------- ------- ---------
<S> <C> <C> <C> <C>
Common Shares
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 13.04 $ 12.31 $ 15.42 $ 13.95(a)
-------- -------- ------- ---------
Net Investment Income 0.73 1.55 1.35 1.21
Net Realized and Unrealized Gain (Loss) on Investments 1.02 0.67 ( 2.52) 1.73
-------- -------- ------- ---------
Total from Investment Operations 1.75 2.22 ( 1.17) 2.94
-------- -------- ------- ---------
Less Distributions:
Dividends to DARTS Shareholders ( 0.16) ( 0.33) ( 0.25) ( 0.17)
Dividends from Accumulated Net Investment Income to
Common Shareholders ( 0.53) ( 1.16) ( 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 -- -- ( 0.04) --
-------- -------- ------- ---------
Total Distributions ( 0.69) ( 1.49) ( 1.94) ( 1.20)
-------- -------- ------- ---------
DARTS and Common Shares Offering Costs -- -- -- ( 0.14)
-------- -------- ------- ---------
DARTS Underwriting Discount -- -- -- ( 0.13)
-------- -------- ------- ---------
Net Asset Value, End of Period $ 14.10 $ 13.04 $ 12.31 $ 15.42
======== ======== ======== =========
Per Share Market Value, End of Period $ 13.125 $12.250 $ 12.000 $ 15.000
Total Investment Return at Market Value 11.59%(e) 13.12% ( 10.06%) 7.26%
Ratios and Supplemental Data
Net Assets Applicable to Common Shares, End of Period (000's omitted) $117,648 $108,824 $102,690 $128,673
Ratio of Expenses to Average Net Assets** 1.23%(d) 1.26% 1.27% 1.22%
Ratio of Net Investment Income to Average Net Assets** 7.02%(d) 8.01% 6.42% 6.06%
Portfolio Turnover Rate 29% 96% 39% 98%
Senior Securities
Total DARTS Outstanding (000'S omitted) $ 60,000 $ 60,000 $ 60,000 $ 60,000
Asset Coverage per Unit (b) $293,064 $278,812 $267,019 $311,065
Involuntary Liquidation Preference per Unit (c) $100,000 $100,000 $100,000 $100,000
Approximate Market Value per Unit (c) $100,000 $100,000 $100,000 $100,000
* For the period August 1, 1992 (commencement of operations) to July 31, 1993.
** Ratios calculated on the basis of expenses and net investment income applicable to both the common and preferred shares
relative to the average net assets for both common and preferred shares.
(a) Initial price to commence operations.
(b) 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.
(c) Plus accumulated and unpaid dividends.
(d) On an annualized basis.
(e) Not annualized.
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 changes during the
periods. It also shows the total investment return for the periods 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.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Schedule of Investments is a complete list of all securities owned
by the Fund on January 31, 1996. It's divided into four main categories:
preferred stocks, common stocks, capital securities and short-term
investments. The preferred and common stocks and capital securities 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.
Schedule of Investments
January 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------------------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------------------------------------------ -------------------- ------------
<S> <C> <C>
PREFERRED STOCKS
Auto/Truck (4.88%)
Ford Motor Co., 8.25%,
Depositary Shares, Ser B 130,000 $ 3,591,250
General Motors Corp., 9.125%,
Depositary Shares, Ser B 184,500 5,073,750
------------
8,665,000
------------
Banks - Foreign (6.05%)
Banco Bilbao Vizcaya International
(Gibraltar) Ltd., 9.75%, Gtd Ser A,
American Depositary Receipt ("ADR")
(Spain) 91,200 2,622,000
Indosuez Holdings S.C.A., 10.375%,
Gtd Ser A, ADR (Luxembourg) (R) 157,100 4,182,787
Royal Bank of Scotland Group PLC,
11.25%, Ser A (United Kingdom) 105,000 2,848,125
Santander Overseas Bank, Inc., 8.70%,
Gtd Ser B (Puerto Rico) 41,600 1,097,200
------------
10,750,112
------------
Banks - U.S. (10.48%)
Bank of Boston Corp., 8.60%,
Depositary Shares, Ser E 152,300 4,054,988
Chase Manhattan Corp., 10.84%, Ser I 141,600 4,336,500
Chase Manhattan Corp., 9.08%, Ser J 25,000 656,250
Citicorp, 7.75%, Depositary Shares,
Ser 22 60,300 1,582,875
First Interstate Bancorp., 9.875%,
Depositary Shares, Ser F 65,000 1,698,125
Fleet Financial Group, Inc., Adjustable Rate
Preferred ("ARP") (formerly Shawmut
National Corp.) 43,750 1,941,406
Fleet Financial Group, Inc., 9.35%,
Depositary Shares, (formerly
Shawmut National Corp.) 155,000 4,340,000
------------
18,610,144
------------
Computer Services (0.38%)
Comdisco Inc., 8.75%, Ser A 25,800 677,250
------------
Conglomerates (0.82%)
Grand Metropolitan Delaware Co., 9.42%,
Gtd Ser A 51,000 1,466,250
------------
Equipment Leasing (0.28%)
AMERCO, 8.50%, Ser A 20,000 495,000
------------
Financial Services (9.04%)
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A 145,000 4,277,500
Morgan Stanley Group Inc., 8.88%,
Depositary Shares 37,000 948,125
Reliastar Financial Corp., 10.00%,
Depositary Shares 37,000 957,375
Salomon Inc., 8.08%, Depositary Shares,
Ser D 51,068 1,302,234
Salomon Inc., 9.50%, Depositary Shares,
Ser C 60,000 1,530,000
Source One Mortgage Services Corp.,
8.42%, Ser A 60,000 1,582,500
SunAmerica Inc., 9.25%, Ser B 207,000 5,459,625
------------
16,057,359
------------
Insurance (6.38%)
American Life Holding Co., $2.16 102,765 2,543,434
Aon Corp., 8.00% 80,000 2,070,000
Progressive Corp. , 9.375%, Ser A 85,500 2,180,250
Travelers Group, Inc., 9.25%,
Depositary Shares, Ser D 170,460 4,538,498
------------
11,332,182
------------
Oil & Gas (12.74%)
Coastal Corp., $2.125, Ser H 175,100 4,618,262
Elf Overseas Ltd., 8.50%, Gtd Ser A
(Cayman Islands) 150,000 3,993,750
ENSERCH Corp., ARP, Ser F 25,000 515,625
Enterprise Oil PLC, 10.50%, Ser A, ADR
(United Kingdom) 197,498 5,233,697
Lasmo PLC, 10.00%, Ser A, ADR
(United Kingdom) 130,000 3,266,250
Phillips Gas Co., 9.32%, Ser A 190,000 5,011,250
------------
22,638,834
------------
Paper Products & Containers (5.50%)
Boise Cascade Corp., 9.40%,
Depositary Shares, Ser F 150,000 3,975,000
Bowater Inc., 8.40%, Depositary Shares,
Ser C 225,000 5,793,750
------------
9,768,750
------------
Utilities (18.73%)
Baltimore Gas & Electric, 6.99% 10,000 1,032,500
Central Maine Power Co., 7.999%, Ser A 10,000 973,750
Central Maine Power Co., 8.875%, (R) 16,000 1,432,000
Commonwealth Edison Co., $8.40, Ser A 39,275 3,947,138
Commonwealth Edison Co., $8.40, Ser B 7,137 712,808
Duke Power Co., 7.85%, Ser S 27,410 2,994,542
Duke Power Co., 7.00%, Ser W 9,700 1,012,438
Gulf States Utilities Co., $9.96 7,500 765,000
Houston Lighting & Power Co., $8.12 13,006 1,326,612
Indianapolis Power & Light Co., 8.20% 10,350 1,045,350
Jersey Central Power & Light Co., 7.52%,
Ser K 28,000 2,908,500
Narragansett Electric Co., 6.95% 32,000 1,600,000
PSI Energy, Inc., 6.875% 42,500 4,292,500
Pacificorp, $1.98, Ser 1992 30,500 785,375
Public Service Electric & Gas, Co., 6.92% 7,000 684,250
Sierra Pacific Power, Co., 7.80%, Ser 1 50,000 1,337,500
Southern California Gas Co., 7.75% 94,075 2,398,912
Texas Utilities Electric Co., $1.875,
Depositary Shares, Ser A 48,000 1,302,000
Texas Utilities Electric Co., $1.805,
Depositary Shares, Ser B 107,581 2,716,420
------------
33,267,595
------------
TOTAL PREFERRED STOCKS
(Cost $130,155,221) (75.28%) 133,728,476
---------- ------------
COMMON STOCKS
Utilities (22.22%)
Allegheny Power System, Inc. 150,000 4,537,500
Boston Edison Co. 40,000 1,175,000
CINergy Corp. 45,000 1,400,625
Consolidated Edison Co. of NY, Inc. 51,000 1,721,250
Delmarva Power & Light Co. 50,000 1,131,250
Dominion Resources, Inc. of VA 55,000 2,358,125
Houston Industries, Inc. 139,600 3,350,400
IES Industries, Inc. 33,000 940,500
Idaho Power Co. 50,000 1,537,500
Northeast Utilities 50,000 1,181,250
Oklahoma Gas & Electric Co. 65,000 2,730,000
PECO Energy Co. 40,000 1,230,000
Potomac Electric Power Co. 100,000 2,700,000
Public Service Enterprise Group, Inc. 129,000 4,031,250
Puget Sound Power & Light Co. 137,800 3,445,000
Southern Co. 60,000 1,522,500
Southwestern Public Service Co. 30,000 986,250
Texas Utilities Co. 50,000 2,043,750
Washington Water Power Co. 80,000 1,460,000
------------
TOTAL COMMON STOCKS
(Cost $36,283,827) (22.22%) 39,482,150
---------- ------------
CAPITAL SECURITIES
Banks (1.23%)
Australia and New Zealand Banking
Group Ltd., 9.125% (Australia) 40,000 1,110,000
National Westminster Bank PLC, 10.64%,
Ser A (United Kingdom) 40,000 1,080,000
------------
TOTAL CAPITAL SECURITIES
(Cost $2,155,000) (1.23%) 2,190,000
---------- ------------
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- -------------------- ----------- --------------- -------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Commercial Paper (1.79%)
Prudential Funding Corp.
02-01-96 5.65% $ 3,179 $ 3,178,548
------------
TOTAL SHORT-TERM INVESTMENTS (1.79%) 3,178,548
---------- ------------
TOTAL INVESTMENTS (100.52%) $178,579,174
========== ============
(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 $5,614,787 as of
January 31, 1996.
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.
See notes to financial statements.
</TABLE>
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 investments, to its
shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, the Fund has $4,194,460 of a capital
loss carryforward available, to the extent provided by regulations, to
offset future net realized capital gains. If such carryforwards are used
by the Fund, no capital gains distributions will be made. The
carryforwards expire as follow: July 31, 2002 -- $10,379 and July 31,
2003 -- $4,184,081.
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. Due to permanent book/tax differences in accounting for
certain transactions, this has the potential for treating certain
distributions as return of capital as opposed to distributions of net
investment income or realized capital gains. The Fund has adjusted for
the cumulative effect of such permanent book/tax differences through
July 31, 1995, which has no effect on the Fund's net assets, net
investment income or net realized gains.
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 4.30% to 4.57% during the period ended
January 31, 1996.
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 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.
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. Effective with the fees paid for 1995, the unaffiliated Trustees
may elect to defer for tax purposes their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan. The
Fund makes investments into other John Hancock Funds, as applicable, to
cover its liability for the deferred compensation. Investments to cover
the Fund's deferred compensation liability are recorded on the Fund's
books as an other asset. The deferred compensation liability and the
investment to cover the liability are marked to market on a periodic
basis to reflect income earned by the investment and income earned by
the investment is recorded on the Fund's books.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations
of the U.S. government and its agencies and short-term securities,
during the period ended January 31, 1996, aggregated $53,272,820 and
$49,500,881, respectively. There were no purchases or sales of
obligations of the U.S. government and its agencies during the period
ended January 31, 1996.
The cost of investments owned at January 31, 1996 (including short-term
investments) for Federal income tax purposes was $173,727,901. Gross
unrealized appreciation and depreciation of investments aggregated
$7,282,306 and $2,431,033, respectively, resulting in net unrealized
appreciation of $4,851,273.
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 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).
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."
101 Huntington Avenue,
Boston, MA 02199-7603
A recycled logo in lower left hand corner with the caption "
Printed on Recycled Paper."
JHD P40SA 1/96
3/96
