SEMIANNUAL Report
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Patriot Global Dividend Fund
JANUARY 31, 1998
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
- --------------------------------------------------------------------------------
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
-----------------------------------------------
===============================CHAIRMAN'S MESSAGE==============================
DEAR FELLOW SHAREHOLDERS:
The stock market astounded many in 1997 by producing a record-breaking third
straight year of 20%-plus returns. Bond investors also enjoyed the benefits of a
strong economy with no inflation. After such a remarkable peformance, many are
wondering what the markets will do for an encore in 1998.
With only one month of the year under our belts as the Fund's period closed, no
one was making any bets, especially given the rapid mood swings that occurred in
January. While news on the domestic inflation and economic fronts remained good,
investors were still trying to determine how much of the Asian financial crisis
would filter through the U.S. economy and corporate profits. Each week, it
seemed, investors either had on their rose colored glasses, or had taken them
off. In February, fears seemed to dissipate, but the jury still appears to be
out.
[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
In the face of such uncertainty, a trusted investment professional can be
your best ally. Now, more than ever, your investment professional can help you
take the emotion out of investment decisions. At a time when your instincts
might have you react to the heat of the market's moment, your investment
professional can serve as an objective voice to put current events in a
longer-term perspective. He or she can also help you evaluate your investments
in any market environment to ensure that they fit your risk tolerance and time
horizons. On an ongoing basis, your investment professional is there for you to
check out new investment ideas or to get an informed opinion about current
economic and market conditions.
We encourage you to take advantage of this important resource. Working together,
you can draw up a detailed road map to help reach your financial destination
regardless of the conditions along the way.
Sincerely,
/s/Edward J. Boudreau, Jr.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Gregory K. Phelps for the Portfolio Management Team
John Hancock Patriot
Global Dividend Fund
Strong bond market propels income-producing stocks
Income-producing stocks turned in a good performance over the past six months,
thanks to an outstanding bond market, fueled by currency and economic turmoil in
Southeast Asia and very low inflation indicators in the U.S. Because of their
relatively large dividends, income-producing stocks tend to react to
interest-rate moves in much the same way as fixed-coupon paying bonds: Their
prices tend to rise as interest rates fall, and vice versa.
Although the period began on a sour note when investors pushed bond prices lower
over fears of rising inflation, the bond market staged an impressive rally
throughout the remainder of the period. Despite 20-year lows in the nation's
unemployment level, U.S. economic growth wasn't robust enough to incite
inflation -- which income-oriented investors dislike because it eats away at the
value of their distributions. Furthermore, the Federal Reserve Board's refusal
to hike rates, and the potential for Southeast Asia's economic problems to
curtail growth in the United States, cheered investors who pushed bond yields
lower and bond prices higher.
"...the bond market staged an impressive rally..."
For the six-month period ended January 31, 1998, John Hancock Patriot Global
Dividend Fund had a total return of 10.11% at net asset value. By comparison,
the 30-year Treasury bond returned 9.14% and the Dow Jones Utility Average
returned 14.25% for the same six-month period.
[A 1 3/4" x 3 1/2" photo of the Patriot Management Team at bottom right. Caption
reads "Fund management team members (l -r): Susan Kelly, Gregory Phelps, Mark
Maloney and Pam Kustas".]
3
<PAGE>
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 five sections. Going from top to right: Other
3%; Utilities 42%; Banks & Financials 41%; Industrials 11%; Oil & Gas 3%. A
footnote below states "As a percentage of net assets on January 31, 1998."]
"...we continued to focus on maximizing yield..."
Strategy review
Throughout the period, we continued to focus on maximizing yield and maintaining
a stable net asset value. The centerpiece of that strategy was our emphasis on
preferred stocks, which totaled 78% of the Fund's net assets at the end of the
period. Preferreds tend to be less volatile than either common stocks or
Treasury bonds. That's particularly true of "cushion" preferreds, which offer
above-average yields that cushion them against price swings. Overall, the Fund's
emphasis on preferred and cushion-preferred stocks had a mixed impact on
performance. While they augmented the Fund's yield, their price gains didn't
keep pace with their common stock brethren, particularly in the utility sector.
While the common stocks of utility companies posted some of their most
impressive returns in decades, preferred utility stocks experienced only
moderate gains.
[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 Ford Motor
Company followed by an up arrow and the phrase "Tender offer at attractive
premium." The second listing is DTE Energy followed by an up arrow and the
phrase "Favorable state regulatory environment." The third listing is PECO
Energy followed by a down arrow and the phrase "Competition forces dividend
cut." Footnote below reads: "See "Schedule of Investments." Investment holdings
are subject to change."]
We also continued our preference for securities eligible for the
dividends-received deduction (DRD). The supply of DRD-eligible securities --
which carry tax advantages for corporate investors -- has dwindled over the past
several years, while demand for them has remained quite strong. That favorable
supply/demand scenario has provided a positive backdrop for DRD securities.
Our emphasis on domestically-oriented companies and foreign companies in
developed, industrialized nations -- including Australia, Spain, Luxembourg and
the United Kingdom -- shielded us from the problems that plagued Southeast Asian
and Latin American stocks. Because all of our foreign holdings are denominated
in U.S. dollars, we also were able to sidestep the fallout caused by the weak
performance of foreign currencies relative to the greenback.
Winners and laggards
Many of our best performers were from the electric utility and financial sectors
- -- which together made up the vast majority of the Fund's investments at the end
of the period. Our electric holdings were buoyed by a more favorable legislative
environment and investors' growing appetite for domestically-oriented companies.
On the legislative front, several influential states set the stage for national
competition. They offered up plans to allow more competition from out-of-state
electric providers without stranding in-state utilities with costs incurred in
previous expansions. Additionally, the "Asian contagion" set off a flight to
safety, whereby investors favored companies such as electric providers that they
4
<PAGE>
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 the six months ended January 31, 1998." The chart
is scaled in increments of 3% from bottom to top, with 15% at the top and 0% at
the bottom. Within the chart, there are three solid bars. The first represents
the 10.11% total return for John Hancock Patriot Global Dividend Fund. The
second represents the 9.14% total return for the the 30-year Treasury Bond.
third represents the 14.25% total return for the Dow Jones Utility Average.
Footnote below reads: "Total returns for John Hancock Patriot Global Dividend
Fund are 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."]
viewed as being immunized against a slowing U.S. economy, should that slowdown
occur. The rally in electric stocks proceeded nearly uninterrupted until
January, when investors shifted their focus to faster-growing stocks. Among our
electric utility standouts was DTE Energy. Michigan's regulatory environment is
relatively favorable, which prevents DTE Energy from having to cut electric
rates dramatically. What's more, the stock rose during the period thanks to the
company's strong cash flow and plans for an aggressive stock repurchase program.
Lower interest rates, a buoyant stock market and a wave of consolidation boosted
many of our financial services holdings. For example, our investment in Bear
Stearns Companies preferred stock was among our biggest gainers during the
period. The securities are DRD-eligible, have 10 years of call protection --
which means they can't be redeemed prematurely by the company -- and carry an
attractive 6.15% coupon. One of our largest holdings was also one of our biggest
winners. The preferred stock of Ford Motor Co. saw price gains thanks to the
company's tender -- or offer to buy -- our holdings at a very attractive price.
"Our outlook is reasonably optimistic."
On the flip side, our detractors were limited to our small holdings in the
common stock of PECO Energy. A competitor pushed for lower electric rates in
Pennsylvania, forcing PECO to cut its dividend and curtail its plans for an
aggressive stock repurchase program. However, we continued to hold on to PECO
because we believe that its stock price has been punished unfairly given its
business prospects.
Outlook
Our outlook is reasonably optimistic. In our view, there currently is no impetus
for the Federal Reserve Board to raise interest rates in an effort to stave off
inflation. What inflationary steam there was in the U.S. economy in 1997 seems
to have been cooled by recent events in Southeast Asia. Stable interest rates
would likely bode well for both the bond market and income-producing stocks. If
we experience a meaningful slowdown in economic growth, the Fed might actually
lower interest rates later this year, providing an even more attractive backdrop
for income-producing stocks.
- --------------------------------------------------------------------------------
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.
5
<PAGE>
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, 1998. You'll
also find the net asset value for each common share.
Statement of Assets and Liabilities January 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Preferred stocks (cost - $135,406,723).............. $145,028,792
Common stocks (cost - $34,306,336).................. 39,809,498
Short-term investments (cost - $1,280,236).......... 1,280,236
------------
186,118,526
Receivable for investments sold..................... 2,539,365
Dividends receivable................................ 893,786
Other assets........................................ 13,957
------------
Total Assets............................. 189,565,634
----------------------------------------------------------
Liabilities:
Payable for investments purchased................... 2,542,313
DARTS dividend payable - Note A..................... 131,333
Common shares dividend payable...................... 77,827
Payable to John Hancock Advisers, Inc
and affiliates - Note B............................. 13,956
Accounts payable and accrued expenses............... 293,066
------------
Total Liabilities........................ 3,058,495
----------------------------------------------------------
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 outstanding.............................. 113,971,522
Accumulated net realized loss on investments...... (4,413,359)
Net unrealized appreciation of investments....... 15,127,087
Undistributed net investment income................. 1,821,889
------------
Net Assets applicable to
Common Shares ($15.16 per
share based on 8,344,700
shares outstanding)........ 126,507,139
------------
Net Assets $186,507,139
============================================
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, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividends (net of foreign withholding taxes of $22,416) $6,797,749
Interest............................................... 74,925
------------
6,872,674
------------
Expenses:
Investment management fee - Note B.................... 33,378
Administration fee - Note B........................... 37,508
DARTS and auction fees................................ 14,191
Custodian fee......................................... 40,437
Printing.............................................. 38,976
Auditing fee.......................................... 33,271
Transfer agent fee.................................... 17,210
Miscellaneous......................................... 11,293
Registration and filing fees.......................... 10,505
Trustees' fees........................................ 10,479
Legal fees............................................ 954
------------
Total Expenses.............. 1,148,202
-------------------------------------------
Net Investment Income....... 5,724,472
-------------------------------------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments sold................ (209,580)
Change in net unrealized appreciation/depreciation
of investments...................................... 7,089,547
---------
Net Realized and Unrealized
Gain on Investments......... 6,879,967
-------------------------------------------
Net Increase in Net Assets
Resulting from Operations... $12,604,439
===========================================
Distribution to DARTS....... (1,269,037)
-------------------------------------------
Net Increase in Net Assets
Applicable to Common
Shareholders Resulting from
Operations Less DARTS
Distributions............... $11,335,402
============================================
See Notes to Financial Statements.
6
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, 1998
JULY 31, 1997 (UNAUDITED)
------------- ----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income...................................................... $11,760,317 $5,724,472
Net realized gain (loss) on investments sold............................... 246,639 (209,580)
Change in net unrealized appreciation/depreciation of investments.......... 8,142,488 7,089,547
----------- ----------
Net Increase in Net Assets Resulting from Operations 20,149,444 12,604,439
----------- ----------
Distributions to Shareholders:
DARTS ($4,144 and $2,115 per share, respectively) - Note A................. (2,486,179) (1,269,037)
Common Shares - Note A
Dividends from accumulated net investment income ($1.0500 and $0.5250 per
share, respectively)...................................................... (8,761,434) (4,380,662)
----------- -----------
Total Distributions to Shareholders....................................... (11,247,613) (5,649,699)
----------- ----------
Net Assets:*
Beginning of period........................................................ 170,650,568 179,552,399
----------- -----------
End of period (including undistributed net investment income
of $1,747,116 and $1,821,889, respectively)............................... $179,552,399 $186,507,139
============ ============
*Analysis of Common Shareholder Transactions:
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, 1998
JULY 31, 1997 (UNAUDITED)
---------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------- ---------- ----------
<S> <C> <C> <S> <C>
Beginning of period.................................. 8,344,700 $114,080,324 8,344,700 $113,971,522
Reclassification of capital accounts................. -- (108,802) -- --
--------- ----------- --------- -----------
End of period........................................ 8,344,700 $113,971,522 8,344,700 $113,971,522
========= =========== ========= ===========
</TABLE>
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 the 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.
7
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
Financial Highlights
Selected data for a Common Share outstanding throughout each period indicated,
investment returns, key ratios, and supplemental data are listed as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31, SIX MONTHS ENDED
--------------------------------------------------------------------- JANUARY 31, 1998
1993(1) 1994 1995 1996 1997 (UNAUDITED)
--------- --------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Common Shares
Per Share Operating Performance
Net Asset Value, Beginning of Period........ $13.95 $15.42 $12.31 $13.04 $13.26 $14.33
--------- --------- --------- --------- --------- ---------
Net Investment Income....................... 1.21 1.35 1.55 1.43 1.41(2) 0.69(2)
Net Realized and Unrealized Gain (Loss)
on Investments.............................. 1.73 (2.52) 0.67 0.15 1.01 0.82
--------- --------- --------- --------- --------- ---------
Total from Investment Operations............ 2.94 (1.17) 2.22 1.58 2.42 1.51
--------- --------- --------- --------- --------- ---------
Less Distributions:
Dividends to DARTS Shareholders............. (0.17) (0.25) (0.33) (0.31) (0.30) (0.15)
Dividends from Accumulated Net Investment Income
to Common Shareholders...................... (1.03) (1.11) (1.16) (1.05) (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) (1.35) (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 $14.33 $15.16
========= ========= ========= ========= ========= =========
Per Share Market Value, End of Period........ $15.000 $12.000 $12.250 $12.375 $12.938 $13.438
Total Investment Return at Market Value...... 7.26% (10.06%) 13.12% 9.65% 13.53% 8.10%(7)
Ratios and Supplemental Data
Net Assets Applicable to Common Shares,
End of Period (000s omitted)............... $128,673 $102,690 $108,824 $110,651 $119,552 $126,507
Ratio of Expenses to Average Net Assets (3). 1.22% 1.27% 1.26% 1.27% 1.27% 1.25%(8)
Ratio of Net Investment Income to Average
Net Assets (3)............................. 6.06% 6.42% 8.01% 6.91% 6.69% 6.25%(8)
Portfolio Turnover Rate.................... 98% 39% 96% 38% 28% 17%
Average Brokerage Commission Rate (6)........ N/A N/A N/A N/A $0.0647 $0.0700
Senior Securities
Total DARTS Outstanding (000s omitted).... $60,000 $60,000 $60,000 $60,000 $60,000 $60,000
Asset Coverage per Unit (4)................ $311,065 $267,019 $278,812 $283,164 $295,948 $309,217
Involuntary Liquidation Preference
per Unit (5)............................... $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Approximate Market Value per Unit (5)...... $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
(1) For the period August 1, 1992 (commencement of operations) to July 31, 1993.
(2) Based on the average shares outstanding at the end of each month.
(3) 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.
(4) 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.
(5) Plus accumulated and unpaid dividends.
(6) Per portfolio share traded. Required for fiscal years that began
September 1, 1995, or later.
(7) Not Annualized.
(8) Annualized.
</TABLE>
The Financial Highlights summarizes the impact of the following factors on a
single Common Share for each 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 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.
8
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
Schedule of Investments
January 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Patriot Global Dividend Fund on January 31, 1998. It's divided into three main
categories: preferred stocks, common stocks and short-term investments. The
preferred and common 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 DESCRIPRION NUMBER OF SHARES VALUE
- ------------------ ---------------- -----
PREFERRED STOCKS
Automobile/Trucks (7.37%)
Ford Motor Co., 8.25%,
Depositary Shares, Ser B........... 180,000 5,625,000
General Motors Corp., 9.12%,
Depositary Shares, Ser G........... 113,414 3,267,741
General Motors Corp., 9.125%,
Depositary Shares, Ser B........... 184,500 4,843,125
--------------------
13,735,866
--------------------
Banks - Foreign (6.33%)
Australia and New Zealand Banking
Group Ltd., 9.125% (Australia).... 99,900 2,772,225
Banco Bilbao Vizcaya International
(Gibraltar) Ltd., 9.75%, American
Depositary Receipt (ADR) (Spain).. 91,200 2,536,500
Indosuez Holdings S.C.A., 10.375%,
Gtd Ser A, ADR (Luxembourg), (R).. 157,100 4,339,888
National Westminster Bank PLC,
10.64 %, Ser A (United Kingdom)... 40,000 1,077,500
Santander Overseas Bank, Inc.,
8.70% Gtd Ser B................... 41,600 1,086,800
--------------------
11,812,913
--------------------
Banks - United States (12.92%)
ABN AMRO North America, Inc.,
6.59%, Ser H, (R).................. 5,000 5,450,000
ABN AMRO North America, Inc.,
8.75%, Ser A, (R)................. 540 631,800
Chase Manhattan Corp., 10.84%,
Ser C.............................. 179,700 5,537,006
Banks - United States (continued)
Citicorp, 7.75%, Depositary Shares,
Ser 22............................. 70,300 $1,898,100
Fleet Financial Group, Inc., 6.75%,
Ser VI............................. 40,000 2,200,000
Fleet Financial Group, Inc., 9.35%,
Depositary Shares.................. 185,000 5,099,063
J.P. Morgan & Company Inc., 6.625%,
Depositary Shares, Ser H........... 60,000 3,285,000
--------------------
24,100,969
--------------------
Broker Services (8.40%)
Bear Stearns Companies, Inc., 6.15%,
Ser E.............................. 93,000 4,766,250
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A........... 168,000 5,386,500
Morgan Stanley Group, Inc., 7.75%,
Depositary Shares.................. 100,000 5,512,500
--------------------
15,665,250
--------------------
Conglomerates (0.78%)
Grand Metropolitan Delaware, L.P.,
9.42%, Gtd Ser A................... 51,000 1,459,875
--------------------
Equipment Leasing (2.34%)
AMERCO, 8.50%, Ser A................ 162,000 4,353,750
--------------------
Financial Services (2.14%)
Entergy London Cap L.P., 8.625%..... 60,000 1,533,750
MBNA Corp., 7.50%, Ser A........... 92,000 2,449,500
--------------------
3,983,250
--------------------
Insurance (8.50%)
Provident Companies, Inc., 8.10%,
Depositary Shares................... 60,000 1,503,750
Travelers Group, Inc., 6.213%....... 90,000 4,657,500
Travelers Group, Inc., 6.231%,
Depositary Shares, Ser H........... 85,200 4,334,550
Travelers Group, Inc., 8.40%,
Depositary Shares, Ser K........... 191,000 5,359,938
--------------------
15,855,738
--------------------
See Notes to Financial Statements.
9
<PAGE>
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
MARKET
ISSUER DESCRIPTION NUMBER OF SHARES VALUE
- ------------------ ---------------- -----
Media (1.37%)
Shaw Communications Inc., 8.45%,
Series A (Canada).................. 99,600 $2,546,025
-----------
Oil & Gas (2.67%)
Elf Overseas Ltd., 8.50%, Gtd Ser A
(Cayman Islands).................. 113,000 2,966,250
Lasmo PLC, 10.00%, Ser A, ADR
(United Kingdom)................... 77,000 2,021,250
-----------
4,987,500
-----------
Paper & Paper Products (3.99%)
Boise Cascade Corp., 9.40%,
Depositary Shares, Ser F.......... 62,000 1,557,750
Bowater Inc., 8.40%,
Depositary Shares, Ser C........... 225,000 5,892,188
-----------
7,449,938
-----------
Utilities (20.95%)
Baltimore Gas & Electric Co.,
6.99%, Ser 1995.................... 10,000 1,145,000
Coastal Corp.,
$2.125, Ser H...................... 175,100 4,475,992
Commonwealth Edison Co.,
$8.40, Ser A....................... 46,775 4,733,044
Commonwealth Edison Co.,
$8.40, Ser B....................... 12,165 1,230,944
Consumers Energy Co.,
$2.08 (Class A).................... 74,014 1,938,242
Duke Power Co.,
7.00%, Ser W....................... 9,700 1,117,632
Duke Power Co.,
7.85%, Ser S....................... 27,410 3,246,989
El Paso Tennessee Pipeline Co.,
8.25%, Ser A....................... 146,000 8,212,500
Jersey Central Power & Light Co.,
7.52%, Ser K....................... 28,000 2,898,000
Narragansett Electric Co.,
6.95%.............................. 32,000 1,792,000
PSI Energy, Inc., 6.875%............ 42,500 4,728,125
Public Service Electric & Gas Co.,
6.92%.............................. 7,000 771,750
South Carolina Electric & Gas Co.,
6.52%.............................. 25,000 2,787,500
-----------
39,077,718
-----------
TOTAL PREFERRED STOCKS
(Cost $135,406,723) (77.76%) 145,028,792
------ -----------
MARKET
ISSUER DESCRIPTION NUMBER OF SHARES VALUE
- ------------------ ---------------- ------
COMMON STOCKS
Utilities (21.34%)
Allegheny Energy Inc................ 57,200 $1,751,750
Boston Edison Co.................... 55,000 2,048,750
Consolidated Edison Inc............. 51,000 2,106,938
Delmarva Power & Light Co........... 110,500 2,368,844
Dominion Resources, Inc............. 35,500 1,415,563
DTE Energy Corp..................... 49,900 1,790,163
Florida Progress Corp. ............. 35,000 1,340,938
Houston Industries, Inc. ........... 69,600 1,818,300
IES Industries, Inc................. 73,000 2,678,188
KeySpan Energy Corp................. 29,000 987,813
MidAmerican Energy Holdings Co. .... 255,000 5,275,313
Nevada Power Co. ................... 38,000 940,500
PECO Energy Co. .................... 40,000 757,500
Potomac Electric Power Co. ......... 85,000 2,114,375
Public Service Enterprise Group, Inc. 129,000 3,999,000
Puget Sound Energy, Inc. ........... 187,800 5,258,400
Washington Water Power Co. ......... 80,000 1,740,000
WPL Holdings Inc. .................. 44,200 1,417,163
-----------
TOTAL COMMON STOCKS
(Cost $34,306,336) (21.34%) 39,809,498
------ ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
---- --------------
SHORT-TERM INVESTMENTS
Commercial Paper (0.69%)
Chevron USA Inc., 02-01-98 5.55% $1,280 1,280,236
------------
TOTAL SHORT-TERM INVESTMENTS (0.69%) 1,280,236
-------- ------------
TOTAL INVESTMENTS (99.79%) 186,118,526
-------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.21%) 388,613
-------- ------------
TOTAL NET ASSETS (100.00%) $186,507,139
======== ============
NOTES TO THE SCHEDULE OF INVESTMENTS
(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 $10,421,688 or 5.59% of net assets as of
January 31, 1998.
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.
10
<PAGE>
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 $3,204,405 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 January 31, 1998, which has no effect on the Fund's net assets, net
investment income or net realized gains.
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.
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 has been reset every 49
days thereafter by an auction. Dividend rates ranged from 3.94% to 4.26% during
the period ended January 31, 1998.
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
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Patriot Global Dividend Fund
Berkeley Financial Group, for a continuous investment program equivalent, on an
annual basis, to the sum of 0.80% 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 0.05% 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 0.15% of the Fund's average
weekly net assets, with a minimum annual fee of $125,000. The Administrator is
an affiliate of PaineWebber 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.
Mr. Edward J. Boudreau, Jr., Ms. Anne C. Hodsdon and Mr. 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. 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, 1998, the Fund's investment to cover the deferred
compensation liability had unrealized appreciation of $1,856.
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, 1998, aggregated $30,330,112 and $29,689,905, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended January 31, 1998. The cost of investments owned
at January 31, 1998 (including short-term investments) for federal income tax
purposes was $172,586,744. Gross unrealized appreciation and depreciation of
investments aggregated $14,339,209 and $807,427, respectively, resulting in net
unrealized appreciation of $13,531,782.
12
<PAGE>
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 on 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 to
the shareholders' 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.
13
<PAGE>
John Hancock Funds - Patriot Global Dividend Fund
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).
14
<PAGE>
NOTES
John Hancock Funds - Patriot Global Dividend Fund
15
<PAGE>
[LOGO] JOHN HANCOCK FUNDS --------------------
A Global Investment Management Firm Bulk Rate
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 U.S. Postage
1-800-843-0990 PAID
INTERNET: www.jhancock.com/funds S. Hackendack, NJ
Permit No. 750
--------------------
[LOGO] Printed on Recycled Paper P40SA 1/98
3/98
