John Hancock Funds
Patriot
Global
Dividend
Fund
SEMI-ANNUAL REPORT
January 31, 1997
TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles F. Fretz*
Harold R. Hiser, Jr.*
Anne C. Hodsdon
Charles L. Ladner*
Leo E. Linbeck, Jr.*
Patricia P. McCarter*
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. 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
Anne C. Hodsdon
President
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Second Vice President and Compliance Officer
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
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
LEGAL COUNSEL
Hale and Dorr LLP
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:
Most analysts agree that the Social Security system will run out of
money by the year 2030 unless Congress makes some changes. Although it
seems a long way off, the issue is serious enough that at least one
group has already studied the problem, and experts and politicians alike
have weighed in with a slew of prescriptions. Legislative action could
be in the offing in 1997.
The problem stems from demographic and societal changes. The number
of retirees collecting Social Security is growing rapidly, while the
number of workers supporting the system is shrinking. Consider this: in
1950, there were 16 workers paying into the Social Security system for
each retiree collecting benefits. Today, there are three workers for
each retiree and by 2019 there will be two. Starting then, the Social
Security Administration estimates that the amount paid out in Social
Security benefits will start to be greater than the amount collected in
Social Security taxes. Compounding the issue is the fact that people are
retiring earlier and living longer.
The state of the system has already left many people, especially younger
and middle-aged workers, feeling insecure about Social Security. A
recent survey by the Employee Benefits Research Institute (EBRI) found
that 79% of current workers polled had little confidence in the ability
of Social Security to maintain the same level of benefits as those
received by today's retirees. Instead, they said they expect to use
their own savings or employer-sponsored pensions for their retirement.
Yet, remarkably, another EBRI survey revealed that only slightly more
than half of America's current workers are saving money for retirement.
Fewer than half own IRAs or participate in employer-sponsored pension or
savings plans.
No matter how Social Security's problems get solved, one thing is clear.
Americans need to rely on themselves for accumulating the bulk of their
retirement savings. There's no law that says you should have to reduce
your standard of living once you stop working. So we encourage you to
save all that you can now, so you can live the way you'd like to later.
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
Market volatility keeps investors on edge;
defensive strategy remains intact
The ups and downs continued for income investors during the past six
months. Early in the period, worries about inflation and a runaway
economy kept long-term bond yields hovering around their 7% highs for
the year -- and prices at their lows. Then in September, investors'
fears dissipated as economic reports showed that growth was moderating
and inflation was still under control. The good news sparked a bond
market rally, which drove bond yields back down to 6.4% by the end of
November.
Market jitters, however, cut the rally short in December, pushing the
30-year Treasury back up to 6.64% by year-end. With stronger economic
indicators -- such as housing starts -- once again rekindling fears of
inflation and a possible interest-rate hike by the Federal Reserve Bank,
bonds remained under pressure throughout January. The 30-year Treasury
bond ended the period with a yield of 6.8%.
"The ups
and downs
continued
for income
investors
during the
past six
months."
A 2 1/4" x 3 1/2" photo of the Patriot management team, bottom
right. Caption reads: "The Patriot Global Dividend Fund management
team: (l-r) Beverly Cleathero, Gregory Phelps and Laura Provost."
Defensive strategy protects against market volatility
To protect against the volatile interest-rate environment, we maintained
our defensive strategy throughout the period. As always, our primary
focus remained on preferred stocks -- which comprised more than 80% of
the Fund's assets. Because they tend to be less volatile, preferred
stocks weathered the market's volatility better than common stocks and
Treasuries. In particular, our strong emphasis on "cushion" preferreds
paid off. Their above-average yields helped cushion the Fund against
price swings.
A pie chart with the heading "Portfolio Diversification" at top of
left hand column. The chart is divided into five sections. Going
from top left to right: Other 2%, Utilities 33%, Oil & Gas 13%,
Banks & Financials 41%, Industrials 11%. A footnote states: "As a
percentage of net assets on January 31, 1997."
"...we
continued
to target
issues with
good call
protection..."
A secondary focus was on preferred stocks eligible for the dividends-
received deduction (DRD). DRD-eligible securities offer special tax
advantages to corporations. The supply of DRDs has become increasingly
limited, while demand has remained unusually strong. The result has been
rapidly rising prices. After the Federal Reserve's October announcement
giving banks more flexibility to issue non-DRD securities, we're likely
to see that upward trend continue. Finally, we continued to target
issues with good call protection -- a feature which prevents issuers
from redeeming bonds for a set period of time. The advantage of strong
call protection is that it allows the Fund to lock in attractive yields,
especially on the cushion preferreds.
Table entitled "Scorecard" at bottom 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 "El Paso Tennessee Pipeline" followed by an up arrow and
the phrase "Attractive merger with El Paso Natural Gas". The second
listing is "MBNA" followed by an up arrow and the phrase "Improving
credit profile." The third listing is "Central Maine Power" followed
by a down arrow and the phrase "High costs/nuclear plant problems."
Footnote below reads: "See "Schedule of Investments." Investment
holdings are subject to change."
Overall, this defensive strategy helped John Hancock Patriot Global
Dividend Fund post solid gains, even in a volatile market environment.
For the six months ended January 31, 1997, the Fund posted a total
return of 9.78% at net asset value. By comparison, the 30-year Treasury
bond only returned 4.10%. Because of its small weighting in utility
stocks, however, the Fund underperformed the Dow Jones Utility Average,
which returned 16.38% for the same period.
Utilities
We've trimmed our utility holdings to 33% of the Fund's assets, from 38%
six months ago. Although utility stocks bounced back with the bond
market's fall rally, other factors kept the group under pressure during
the period. Fears of increased industry competition heated up as
regulators started to push more aggressively for lower utility rates.
What's more, increasing problems at nuclear plants dimmed investor
sentiment.
Central Maine Power, for example, was a disappointment. Not only is this
high-cost producer vulnerable to increasing competition, but its nuclear
plant is experiencing operating troubles. The good news, however, is
that the security offers an attractive yield and DRD-eligibility. In
addition, it's trading at a discount and will likely be redeemed at face
value in the next few years. Given that, we've held our position in the
stock.
Not all utility stocks were short-circuited, however. Boston Edison, for
example, shone brightly. In addition to its solid relationship with
state regulators, the company has strengthened its balance sheet and
formed key strategic alliances with telecommunications and natural gas
companies.
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, 1997." The chart is scaled in increments of 3% from top
to bottom with 18% at the top and 0% at the bottom. Within the
chart, there are three solid bars. The first represents the 9.78%
total return for John Hancock Patriot Global Dividend Fund. The
second represents the 4.10% total return for the 30-year Treasury
Bond. The third represents the 16.38% total return for the Dow Jones
Utility Average. 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."
Financials
Financial stocks -- such as banks, insurance companies, brokerage firms
and leasing companies -- totaled 41% of the Fund's assets at the end of
the period. Top performers included Fleet Financial and MBNA. Fleet
Financial, a Boston-based bank, boasts 10 years of call protection and
DRD-eligibility. The Fed's October announcement (as mentioned above)
gave the stock an extra boost. MBNA, one of the largest credit card
issuers, is also DRD-eligible with five years of call protection. On top
of that, decreasing concerns about default risk have fueled the stock's
performance over the last six months.
Industrials: Focus on oil and gas
In the industrial area, our focus has been on opportunities in oil and
gas. With prices likely to remain stable or increase, we're optimistic
about the prospects for the sector. We recently bought a new issue from
Tenneco which represents the merger between Tenneco's and El Paso's
natural gas operations. Not only is the issue DRD-eligible, but it
offers an attractive 8.25% coupon and five years of call protection.
Another favorite is Coastal Corp. an oil/gas exploration and refining
company. On top of its attractive yield, good call protection and DRD
eligibility, the issue recently received a credit upgrade from the
Standard & Poor's rating agency.
Outlook
Looking ahead, we do not believe that the volatility is necessarily
over. Fears of an overheating economy could surface again easily and
quickly. Although inflation isn't likely to be a big problem, we
wouldn't be surprised if the Federal Reserve lifted short-term rates to
keep the economy and inflation in check. With uncertainty still looming
over the market, the Fund will maintain its defensive posture in the
months ahead. We will keep our focus on DRD-eligible preferreds, which
will allow the Fund to continue to benefit from their growing scarcity.
In addition, we will keep our emphasis on cushion preferreds with good
call protection. Overall, this defensive strategy should allow the Fund
to maximize yield, while preserving its net asset value.
"...we do not
believe that
the volatility
is necessarily
over."
Footnote reads:
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.
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
<TABLE>
<CAPTION>
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, 1997. You'll
also find the net asset value per share as of that date.
Statement of Assets and Liabilities
January 31, 1997 (Unaudited)
- ----------------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Preferred stocks (cost - $140,932,620) $145,085,237
Common stocks (cost - $27,979,418) 29,048,120
Short-term investments (cost - $2,236,033) 2,236,033
------------
176,369,390
Dividends receivable 824,845
Deferred organization expenses - Note A 5,210
Other assets 26,718
------------
Total Assets 177,226,163
- ----------------------------------------------------------------------------
Liabilities:
Common Share dividend payable 85,987
Payable to John Hancock Advisers, Inc. and affiliates -
Note B 132,295
Accounts payable and accrued expenses 67,301
------------
Total Liabilities 285,583
- ----------------------------------------------------------------------------
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 114,080,324
Accumulated net realized loss on investments ( 3,809,593)
Net unrealized appreciation of investments 5,222,238
Undistributed net investment income 1,447,611
------------
Net Assets Applicable to
Common Shares ($14.01 per
share based on 8,344,700
shares outstanding) 116,940,580
------------
Net Assets $176,940,580
============================================================================
See notes to financial statements.
</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 (losses) for
the period stated.
Statement of Operations
Six months ended January 31, 1997 (Unaudited)
- -----------------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding taxes
of $58,585) $ 6,957,672
Interest 65,964
-----------
7,023,636
-----------
Expenses:
Investment management fee - Note B 703,141
Administration fee - Note B 131,839
DARTS and auction fees 93,345
Auditing fee 25,446
Custodian fee 24,982
Printing 22,814
Organization expense - Note A 20,128
Transfer agent fee 11,997
Miscellaneous 9,120
Trustees' fee 8,057
Registration and filing fees 7,478
Legal fees 3,561
-----------
Total Expenses 1,061,908
- -----------------------------------------------------------------------------
Net Investment Income 5,961,728
- -----------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments sold 646,683
Change in net unrealized appreciation/depreciation
of investments 5,327,186
-----------
Net Realized and Unrealized Gain
on Investments 5,973,869
- -----------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $11,935,597
- -----------------------------------------------------------------------------
Distributions to DARTS ( 1,264,834)
- -----------------------------------------------------------------------------
Net Increase in Net Assets
Applicable to Common
Shareholders Resulting from
Operations Less DARTS
Distributions $10,670,763
=============================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, 1997
JULY 31, 1996 (UNAUDITED)
------------- ----------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $ 11,950,555 $ 5,961,728
Net realized gain on investments sold 1,611,254 646,683
Change in net unrealized appreciation/depreciation of investments ( 392,815) 5,327,186
------------ ------------
Net Increase in Net Assets Resulting from Operations 13,168,994 11,935,597
------------ ------------
Distributions to Shareholders:
DARTS ($4,301 and $2,108 per share, respectively ) - Note A ( 2,580,803) ( 1,264,834)
Common Shares - Note A
Dividends from accumulated net investment income ($1.0500
and $0.5250 per share, respectively) ( 8,761,507) ( 4,380,751)
------------ ------------
Total Distributions to Shareholders ( 11,342,310) ( 5,645,585)
------------ ------------
Net Assets:
Beginning of period 168,823,884 170,650,568
------------ ------------
End of period (including undistributed net investment income
of $1,131,468 and $1,447,611, respectively) $170,650,568 $176,940,580
============ ============
Analysis of Common Shareholder Transactions:
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, 1997
JULY 31, 1996 (UNAUDITED)
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ------------
Beginning of period 8,344,700 $114,172,797 8,344,700 $114,080,324
Reclassification of capital accounts -- ( 92,473) -- --
--------- ------------ --------- ------------
Shares outstanding end of period 8,344,700 $114,080,324 8,344,700 $114,080,324
========= ============ ========= ============
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 reclassification 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.
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 listed as follows:
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JULY 31, SIX MONTHS ENDED
--------------------------------------------------- JANUARY 31, 1997
1993* 1994 1995 1996 (UNAUDITED)
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Common Shares
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 13.95(a) $ 15.42 $ 12.31 $ 13.04 $ 13.26
-------- -------- -------- -------- --------
Net Investment Income 1.21 1.35 1.55 1.43 0.71
Net Realized and Unrealized Gain
(Loss) on Investments 1.73 ( 2.52) 0.67 0.15 0.72
-------- -------- -------- -------- --------
Total from Investment Operations 2.94 ( 1.17) 2.22 1.58 1.43
-------- -------- -------- -------- --------
Less Distributions:
Dividends to DARTS Shareholders ( 0.17) ( 0.25) ( 0.33) ( 0.31) ( 0.15)
Dividends from Accumulated
Net Investment Income to
Common Shareholders ( 1.03) ( 1.11) ( 1.16) ( 1.05) ( 0.53)
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 ( 1.20) ( 1.94) ( 1.49) ( 1.36) ( 0.68)
-------- -------- -------- -------- --------
DARTS and Common Shares Offering Costs ( 0.14) -- -- -- --
-------- -------- -------- -------- --------
DARTS Underwriting Discounts ( 0.13) -- -- -- --
-------- -------- -------- -------- --------
Net Asset Value, End of Period $ 15.42 $ 12.31 $ 13.04 $ 13.26 $ 14.01
======== ======== ======== ======== ========
Per Share Market Value, End of Period $ 15.000 $ 12.000 $ 12.250 $ 12.375 $ 12.25
Total Investment Return at Market Value 7.26% ( 10.06%) 13.12% 9.65% 3.17%
Ratios and Supplemental Data
Net Assets Applicable to Common Shares,
End of Period (000's omitted) $128,673 $102,690 $108,824 $110,651 $116,941
Ratio of Expenses to Average Net Assets** 1.22% 1.27% 1.26% 1.27% 1.21%(d)
Ratio of Net Investment Income
to Average Net Assets** 6.06% 6.42% 8.01% 6.91% 6.78%(d)
Portfolio Turnover Rate 98% 39% 96% 38% 16%
Average Brokerage Commission Rate (e) N/A N/A N/A N/A $ 0.0692
Senior Securities
Total DARTS Outstanding (000's omitted) $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
Asset Coverage per Unit (b) $311,065 $267,019 $278,812 $283,164 $292,110
Involuntary Liquidation
Preference per Unit (c) $100,000 $100,000 $100,000 $100,000 $100,000
Approximate Market Value per Unit (c) $100,000 $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) Annualized.
(e) Per portfolio share traded. Required for fiscal years that began September 1, 1995 or later.
The Financial Highlights summarizes the impact of the following factors on a single Common Share for the period
indicated: 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 periods. It also shows the total investment return for each 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.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
January 31, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the Patriot Global Dividend
Fund on January 31, 1997. It's divided into three main categories: preferred stocks, common stocks 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.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCK
Auto/Truck (5.58%)
Ford Motor Co., 8.25%,
Depositary Shares, Ser B 180,000 $4,927,500
General Motors Corp., 9.125%,
Depositary Shares, Ser B 184,500 4,935,375
------------
9,862,875
------------
Banks - Foreign (5.69%)
Australia and New Zealand Banking
Group Ltd., 9.125% (Australia) 40,000 1,095,000
Banco Bilbao Vizcaya International
(Gibraltar) Ltd., 9.75%, Gtd Ser A,
American Depository Receipt ("ADR")
(Spain) 91,200 2,576,400
Indosuez Holdings S.C.A., 10.375%,
Gtd Ser A, ADR (Luxembourg), (R) 157,100 4,241,700
National Westminster Bank PLC, 10.64%,
Ser A (United Kingdom) 40,000 1,075,000
Santander Overseas Bank, Inc.,
8.70%, Gtd Ser B 41,600 1,076,400
------------
10,064,500
------------
Banks - U.S. (11.92%)
Bank of Boston Corp., 8.60%,
Depositary Shares, Ser E 152,300 3,940,763
Chase Manhattan Corp., 10.84%,
Ser C 141,600 4,318,800
Citicorp, 7.75%, Depositary Shares,
Ser 22 60,300 1,590,413
Fleet Financial Group, Inc., 6.75%,
Ser VI 40,000 2,040,000
Fleet Financial Group, Inc., 9.35%,
Depositary Shares 185,000 5,203,125
J.P. Morgan & Company, Inc., 6.625%,
Depositary Shares, Ser H 60,000 3,007,500
LaSalle National Corp., 8.75%,
Ser K, (R) 19,000 997,500
------------
21,098,101
------------
Conglomerates (0.80%)
Grand Metropolitan Delaware Co.,
9.42%, Gtd Ser A 51,000 1,415,250
------------
Equipment Leasing (1.38%)
AMERCO, 8.50%, Ser A 70,000 1,785,000
Comdisco, Inc., 8.75%, Ser A 25,800 661,125
------------
2,446,125
------------
Financial Services (14.97%)
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A 200,000 5,875,000
Morgan Stanley Group Inc., 7.75%,
Depositary Shares 100,000 5,287,500
Salomon Inc., 8.08%, Depositary
Shares, Ser D 51,068 1,302,234
Salomon Inc., 8.40%, Depositary
Shares, Ser E 191,000 4,966,000
MBNA Corp., 7.50%, Series A 80,000 2,090,000
Source One Mortgage Services Corp.,
8.42%, Ser A 60,700 1,585,788
SunAmerica, Inc., 9.25%, Ser B 207,000 5,382,000
------------
26,488,522
------------
Insurance (6.02%)
American Life Holding Co., $2.16 102,765 2,684,736
Aon Corp., 8.00% 80,000 2,040,000
Provident Companies, Inc., 8.10%,
Depositary Shares 60,000 1,530,000
Travelers Group, Inc., 9.25%,
Depositary Shares, Ser D 170,460 4,389,345
------------
10,644,081
------------
Oil & Gas (13.03%)
Coastal Corp., $2.125, Ser H 175,100 4,530,713
El Paso Tennessee Pipeline Co.,
8.25%, Ser A 119,000 6,188,000
Elf Overseas Ltd., 8.50%, Gtd Ser A
(Cayman Islands) 113,000 3,022,750
Enterprise Oil PLC, 10.50%, Ser A, ADR
(United Kingdom) 92,498 2,451,197
Lasmo PLC, 10.00%, Ser A, ADR
(United Kingdom) 77,000 1,973,125
Phillips Gas Co., 9.32%, Ser A 190,000 4,892,500
------------
23,058,285
------------
Paper Products & Containers (5.67%)
Boise Cascade Corp., 9.40%,
Depositary Shares, Ser F 163,000 4,238,000
Bowater Inc., 8.40%, Depositary
Shares, Ser C 225,000 5,793,750
------------
10,031,750
------------
Utilities (16.94%)
Baltimore Gas & Electric Co., 6.99%,
Ser 1995 10,000 1,043,750
Capita Preferred Trust, 9.06% 40,000 1,015,000
Central Maine Power Co., 7.999%,
Ser A 10,000 965,000
Central Maine Power Co., 8.875%, (R) 9,600 939,600
Commonwealth Edison Co., $8.40,
Ser A 46,775 4,700,888
Commonwealth Edison Co., $8.40,
Ser B 13,381 1,364,862
Duke Power Co., 7.00% Ser W 9,700 1,025,775
Duke Power Co., 7.85%, Ser S 27,410 2,980,838
Entergy Gulf States Inc., $9.96 7,500 770,625
Houston Lighting & Power Co., $8.12 13,006 1,333,115
Indianapolis Power & Light Co., 8.20% 10,350 1,051,819
Jersey Central Power & Light Co.,
7.52%, Ser K 28,000 2,877,000
Narragansett Electric Co., 6.95% 32,000 1,656,000
Pacificorp, $1.98, Ser 1992 30,500 766,313
PSI Energy, Inc., 6.875% 42,500 4,377,500
Public Service Electric & Gas Co., 6.92% 7,000 708,750
Southern California Gas Co., 7.75% 94,075 2,398,913
------------
29,975,748
------------
TOTAL PREFERRED STOCKS
(Cost $140,932,620) ( 82.00%) 145,085,237
------- ------------
COMMON STOCKS
Utilities (16.42%)
Allegheny Power System, Inc. 115,000 3,521,875
Boston Edison Co. 40,000 1,085,000
Consolidated Edison Co. of NY, Inc. 51,000 1,581,000
Delmarva Power & Light Co. 50,000 975,000
Houston Industries, Inc. 69,600 1,574,700
IES Industries, Inc. 73,000 2,235,625
MidAmerican Energy Holdings Co. 255,000 4,143,750
OGE Energy Corp. 35,000 1,491,875
PECO Energy Co. 40,000 920,000
Potomac Electric Power Co. 70,000 1,732,500
Public Service Enterprise Group, Inc. 129,000 3,531,375
Puget Sound Power & Light Co. 187,800 4,765,420
Washington Water Power Co. 80,000 1,490,000
------------
TOTAL COMMON STOCKS
(Cost $27,979,418) ( 16.42%) 29,048,120
------- ------------
INTEREST PAR VALUE
RATE (000'S OMITTED)
---------- -------------
SHORT-TERM INVESTMENTS (1.26%)
Commercial Paper
Prudential Funding Corp.,
02-03-97 5.41% 2,237 2,236,033
------------
TOTAL SHORT-TERM INVESTMENTS ( 1.26%) 2,236,033
------- ------------
TOTAL INVESTMENTS ( 99.68%) $176,369,390
======= ============
(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.
Rule 144A securities amounted to $6,178,800 as of January 31, 1997.
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
(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 $3,221,160 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. 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, 1996, 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.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues, and expenses of the Fund. Actual results
may differ from these estimates.
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 3.87% to 4.12% during the period ended
January 31, 1997.
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 "Subadviser"), a
wholly-owned subsidiary of the Adviser. Under the Subadvisory Agreement
between the Adviser and the Subadviser, the Subadviser will furnish the
Adviser with international portfolio management assistance. The Adviser
pays the Subadviser 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., Anne C. Hodsdon, Thomas W.L. Cameron 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 related other asset are always
equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses. At
January 31, 1997, the Fund's investment to cover the deferred
compensation liability had unrealized appreciation of $919.
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, 1997, aggregated $26,686,530 and
$27,632,412, respectively. There were no purchases or sales of
obligations of the U.S. Government and its agencies during the period
ended January 31, 1997.
The cost of investments owned at January 31, 1997 (including short-term
investments) for Federal income tax purposes was $171,148,071. Gross
unrealized appreciation and depreciation of investments aggregated
$6,747,854 and $1,526,535, respectively, resulting in net unrealized
depreciation of $5,221,319.
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).
John Hancock Funds - Patriot Global Dividend Fund
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