SEMIANNUAL Report
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Patriot Global
Dividend Fund
JANUARY 31, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
----------------------------------------------
TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin
William H. Cunningham*
Ronald R. Dion*
Harold R. Hiser, Jr.
Anne C. Hodsdon
Charles L. Ladner
Leo E. Linbeck, Jr.
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
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
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
For Shareholder Assistance
Refer to Page 14
----------------------------------------------
==============================CHAIRMAN'S MESSAGE================================
DEAR FELLOW SHAREHOLDERS:
Nineteen ninety-eight was a year that gave even veteran financial
market investors pause - and not a little heartburn. The stock market produced a
record fourth straight year of double-digit returns, but volatility was
breathtaking along the way. With the exception of the U.S. Treasury market, even
bonds - considered a safer alternative to stocks - went on a roller coaster
ride.
One lesson came through loud and clear this year: sticking out the
tough times paid off. After reaching new highs in mid-July, stocks plunged in
August in one of their worst sell-offs in years. The average U.S.
diversified-equity mutual fund fell 16.8% in the month of August alone. For many
mutual fund investors, it was the largest one-month loss they had ever
experienced, since the average equity fund had only had three such double-digit
monthly losses in the previous 20 years, most recently in October 1987. This
year, in a dramatic reversal of fortune, the market staged a stunning rebound in
the fourth quarter. The average U.S. diversified-equity fund made up all its
August lost ground and then some, returning 18.8% between October and December.
The result for the year: an average 14.52% return, as calculated by Lipper
Analytical Services, Inc.
- --------------------------------------------------------------------------------
[A 1 1/4" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
- --------------------------------------------------------------------------------
Given the dramatic swings, investors who tried to time the market's ups
and downs encountered a sharp whipsaw. We are very encouraged to report that an
overwhelming majority of mutual fund investors sat tight during this summer of
discontent; some even used the market's drop to pick up bargains. It was a clear
sign that long-term investors are willing to accept the reality of shorter-term
volatility.
As we begin 1999, volatility remains on many investors' minds. But at
this time of year, many investors' thoughts also turn to more taxing matters. In
our view, now is a perfect time to focus on how much of your hard-earned money
you are able to keep. Part of a good tax-planning strategy should involve a
review of your portfolio to ensure that you are taking advantage of all
available ways to minimize and defer your tax payments - in an effort to
maximize investment returns.
We encourage you to work with your investment professional to consider
the various options. These include focusing on tax-exempt funds, contributing
the maximum to retirement plans, establishing or adding to IRAs and funding a
variable annuity. After all, while it's every American's responsibility to pay
taxes, there's no reason to pay more than your fair share.
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 U.S. economy, weakening bond market
mute preferred-stock gains
Preferred stocks struggled for a number of reasons during the past six months.
They initially were held back by persistent worries about future corporate
profitability and investors' avoidance of nearly all fixed-income paying
securities outside of U.S. Treasuries. Because of their fixed dividends,
preferred stocks generally take on bond-like characteristics and often mimic the
bond market's performance. Even though a summer flight to safety and three
interest-rate cuts by the Federal Reserve prompted an amazingly strong U.S.
Treasury bond market rally from August through October, preferreds didn't follow
suit because of those profit concerns. With the onset of winter, preferred
stocks resumed their bond-like performance and languished when economic data
suggested that the U.S. economy grew at an unexpectedly fast pace, one that
observers believed would make it difficult for the Fed to lower interest rates
further.
Utility common stocks, another focus for the Fund, generally enjoyed
better performance than their preferred-stock counterparts during the period,
although they lagged other segments of the stock market. Early on, utility
stocks benefited from a long list of investor concerns that hurt many other
industries. Chief among those worries were Russia's default on its government
debt, Japan's inability to lift itself and the rest of Asia out of a recession,
the impending presidential impeachment hearings, hedge fund losses and future
U.S. economic growth. Those concerns prompted investors to increasingly seek out
utility stocks because they offered a haven from global turmoil, predictable
earnings growth and relatively high yields. So far in 1999, however, utility
common stocks have taken a back seat to faster-growing companies.
- --------------------------------------------------------------------------------
[A 3" x 2" photo at bottom right side of page of John Hancock Patriot Global
Dividend Fund . Caption below reads "Fund management team members (l-r):
Sylvester Marquardt, Mark Maloney, Beverly Cleathero and Gregory Phelps."]
- --------------------------------------------------------------------------------
"Preferred stocks struggled for a number of reasons during the past six months."
3
<PAGE>
================================================================================
John Hancock Funds - Patriot Global Dividend Fund
"... a continued emphasis on preferred stocks eligible for the 'dividends
received deduction.'"
- --------------------------------------------------------------------------------
[Pie chart at top left hand column with heading "Portfolio Diversification." The
chart is divided into five sections (from top to left): Oil & Gas 5%,
Industrials 5%, Short-Term Investments & Other 6%, Banks & Financials 38% and
Utilities 46%. A note below the chart reads "As a percentage of net assets on
January 31, 1999."]
- --------------------------------------------------------------------------------
Performance and strategy explained
For the six-month period ended January 31, 1999, John Hancock Patriot Global
Dividend Fund had a total return of 1.31% at net asset value. In contrast, the
30-year Treasury bond "...a continued emphasis on preferred stocks eligible for
the `dividends-received deduction.'" returned 11.04% and the Dow Jones Utility
Average - an index of utility common stocks - posted a 10.65% gain for the
six-month period.
One of our primary strategies throughout the past six months - as well
as over the past several years - was a continued emphasis on preferred stocks
eligible for the "dividends-received deduction." Known as DRD-eligible
securities, these preferred stocks have become increasingly scarce over the past
several years, as issuers redeemed or bought them back in order to cut their
financing costs. Although the available supply of them continued to shrink
during the most recent six-month period, DRD-eligible securities didn't fare
that well because the demand for them was rather weak when investors'
preferences tilted toward relatively cheap municipal bonds and their tax
advantages. The DRD-eligible market got a lift in December 1998, however, from
the redemption by Commonwealth Edison of a large number of its DRD-eligible
securities, which helped to curtail supply further.
- --------------------------------------------------------------------------------
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is Natural gas
stocks followed by a down arrow with the phrase "Falling gas prices, warm
winter." The second listing is New England Electric System followed by an up
arrow with the phrase "Set to be acquired." The third listing is Fleet Financial
Group followed by an up arrow with the phrase "Record-setting earnings." A note
below the table reads "See `Schedule of Investments.' Investment holdings are
subject to change."]
- --------------------------------------------------------------------------------
Among our top-performing DRD-eligible securities were those issued by
Fleet Financial Group, which reported record earnings in 1998 despite turbulence
in the financial markets. Another strong performer was New England Electric
System, whose common stock rallied on the news that it would be taken over by
U.K.-based National Grid. We stayed on the sidelines immediately after the
announcement, buying New England Electric System only after it had faded back a
bit following the news of the acquisition. This enabled us to pay a price well
below that which National Grid agreed to pay for the company. Alabama Power also
fared nicely during the period due to the scarcity of investment-grade
DRD-eligible utility stocks.
Our worst performers during the period were natural gas common stocks,
which buckled under the weight of falling commodity prices and lower demand due
to a warmer-than-normal 1998-99 winter. One company that shrugged off those
negative trends was pipeline concern The Williams Cos. It was helped by stronger
earnings thanks to the efficiencies it wrung out of an earlier acquisition, and
also by news that it was going to do an initial public offering of stock for its
fiber optic network business.
4
<PAGE>
================================================================================
John Hancock Funds - Patriot Global Dividend Fund
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the six months ended January 31, 1999." The
chart is scaled in increments of 3% with 0% at the bottom and 15% at the top.
The first bar represents the 1.31% total return for John Hancock Patriot Global
Dividend Fund. The second bar represents the 11.04% total return for 30-Year
Treasury Bond. The third bar represents the 10.65% total return for Dow Jones
Utility Average. A note below the chart 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 that measures
the performance of the utility industry in the United States."]
- --------------------------------------------------------------------------------
Protecting against calls
A key element of our investment strategy involved insulating the Fund from
inopportune redemptions by issuers, known as "calls." Like homeowners,
preferred-stock issuers like to cut their borrowing costs by refinancing when
interest rates fall. When they do, they redeem, or "call away" older preferred
stocks with relatively higher interest rates, and replace them with newly issued
securities at lower prevailing rates. While this refinancing process is good for
the homeowner and the preferred-stock issuer, it can mean trouble for
preferred-stock investors who may be forced to surrender a high-yielding
security and reinvest the proceeds at lower interest rates. That's why we look
for stocks with good call protection, meaning those that aren't slated to be
called until some relatively far-off date, or those that can't be called at all
prior to their maturity.
Outlook
Using history as a guide, we know that at the end of the period utility common
stock were extremely cheap relative to other industry groups. As proof of that
phenomenon, the Standard & Poor's Utilities Group was selling at about 55% of
the broad S&P Index's price-to-earnings multiple, even cheaper than six months
ago when we thought they were selling at compelling prices. Given utility
companies' strong financial health, a continued favorable legislative backdrop
and attractive valuations, we believe that utility stocks may be poised for a
bounce back as they return to a more typical price-to-earnings ratio to the
overall market. As for DRD-eligible preferred stocks, we believe they will
continue to benefit from continued favorable supply and demand conditions,
despite periodic lapses.
- --------------------------------------------------------------------------------
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.
"...we believe that utility stocks may be poised for a bounce back..."
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, 1999. You'll
also find the net asset value for each Common Share as of that date.
Statement of Assets and Liabilities
January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Preferred stocks (cost - $120,986,198)...................... $124,968,715
Common stocks (cost - $51,238,098).......................... 54,482,913
Short-term investments (cost - $4,866,569).................. 4,866,569
------------
184,318,197
Dividend receivable.......................................... 644,102
Other assets................................................. 21,929
------------
Total Assets........................ 184,984,228
---------------------------------------------------
Liabilities:
Payable for investments purchased............................ 783,302
DARTS dividend payable - Note A.............................. 290,500
Common Shares dividend payable............................... 63,853
Payable to John Hancock Advisers, Inc.
and affiliates - Note B..................................... 181,786
Accounts payable and accrued expenses........................ 84,320
-----------
Total Liabilities................... 1,403,761
---------------------------------------------------
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..................... 113,816,397
Accumulated net realized gain on investments................. 1,271,173
Net unrealized appreciation of investments................... 7,229,188
Undistributed net investment income.......................... 1,263,709
-----------
Net Assets applicable to
Common Shares ($14.81 per
share based on 8,344,700
shares outstanding)................. 123,580,467
------------
Net Assets.......................... $183,580,467
===================================================
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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividends (net of foreign withholding taxes of $9,282)....... $5,980,392
Interest..................................................... 60,163
----------
6,040,555
----------
Expenses:
Investment management fee - Note B.......................... 753,241
Administration fee - Note B................................. 141,233
DARTS and auction fees...................................... 86,882
Miscellaneous............................................... 33,577
Custodian fee............................................... 30,351
Auditing fee................................................ 28,491
Printing.................................................... 24,578
Transfer agent fee.......................................... 13,965
Registration and filing fees................................ 8,803
Trustees' fees.............................................. 5,911
Legal fees.................................................. 1,121
----------
Total Expenses...................... 1,128,153
---------------------------------------------------
Net Investment Income............... 4,912,402
---------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments sold........................ 2,534,041
Change in net unrealized appreciation/depreciation
of investments.............................................. (4,458,696)
-----------
Net Realized and Unrealized
Loss on Investments................. (1,924,655)
---------------------------------------------------
Net Increase in Net Assets
Resulting from Operations........... $2,987,747
===================================================
Distribution to DARTS............... (1,275,128)
---------------------------------------------------
Net Increase in Net Assets
Applicable to Common
Shareholders Resulting from
Operations Less DARTS
Distributions....................... $1,712,619
===================================================
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, 1999
JULY 31, 1998 (UNAUDITED)
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income....................................................... $10,850,453 $4,912,402
Net realized gain on investments sold....................................... 3,446,142 2,534,041
Change in net unrealized appreciation/depreciation of investments........... 3,650,344 (4,458,696)
------------ ------------
Net Increase in Net Assets Resulting from Operations...................... 17,946,939 2,987,747
------------ ------------
Distributions to Shareholders:
DARTS ($4,149 and $2,125 per share, respectively) - Note A ................. (2,489,567) (1,275,128)
Common Shares - Note A:
Dividends from accumulated net investment income ($1.0500 and
$0.5250 per share, respectively).......................................... (8,761,302) (4,380,621)
------------ ------------
Total Distributions to Shareholders...................................... (11,250,869) (5,655,749)
------------ ------------
Net Assets:
Beginning of period......................................................... 179,552,399 186,248,469
------------ ------------
End of period (including undistributed net investment income of
$2,007,056 and $1,263,709, respectively)..................................... $186,248,469 $183,580,467
============ =============
Analysis of Common Shareholder Transactions:
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, 1999
JULY 31, 1998 (UNAUDITED)
------------- -----------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Beginning of period........................... 8,344,700 $113,971,522 8,344,700 $113,816,397
Reclassification of undistributed net
investment income............................. - (155,125) - -
--------- ------------ --------- ------------
End of period................................. 8,344,700 $113,816,397 8,344,700 $113,816,397
========= ============ ========= ============
</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, 1999
1994 1995 1996 1997 1998 (UNAUDITED)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Common Shares
Per Share Operating Performance
Net Asset Value, Beginning of Period............................ $15.42 $12.31 $13.04 $13.26 $14.33 $15.13
--------- --------- --------- --------- --------- ---------
Net Investment Income........................................... 1.35 1.55 1.43 1.41(1) 1.30(1) 0.59(1)
Net Realized and Unrealized Gain (Loss) on Investments.......... (2.52) 0.67 0.15 1.01 0.85 (0.23)
--------- --------- --------- --------- --------- ---------
Total from Investment Operations.............................. (1.17) 2.22 1.58 2.42 2.15 0.36
--------- --------- --------- --------- --------- ---------
Less Distributions:
Dividends to DARTS Shareholders................................ (0.25) (0.33) (0.31) (0.30) (0.30) (0.15)
Dividends from Accumulated Net Investment Income to
Common Shareholders........................................... (1.11) (1.16) (1.05) (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........................................... (1.94) (1.49) (1.36) (1.35) (1.35) (0.68)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period.................................. $12.31 $13.04 $13.26 $14.33 $15.13 $14.81
========= ========= ========= ========= ========= =========
Per Share Market Value, End of Period........................... $12.000 $12.250 $12.375 $12.938 $13.188 $13.250
Total Investment Return at Market Value (8)..................... (10.06%) 13.12% 9.65% 13.53% 10.30% 4.45%(6)
Ratios and Supplemental Data
Net Assets Applicable to Common Shares, End of
Period (000s omitted).......................................... $102,690 $108,824 $110,651 $119,552 $126,248 $123,580
Ratio of Expenses to Average Net Assets (2)..................... 1.93% 2.00% 1.95% 1.93% 1.85% 1.77%(7)
Ratio of Net Investment Income to Average Net Assets (3)........ 9.72% 12.72% 10.60% 10.14% 8.72% 7.69%(7)
Portfolio Turnover Rate......................................... 39% 96% 38% 28% 43% 15%
Senior Securities
Total DARTS Outstanding (000s omitted).......................... $60,000 $60,000 $60,000 $60,000 $60,000 $60,000
Asset Coverage per Unit (4)..................................... $267,019 $278,812 $283,164 $295,948 $310,691 $306,877
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
</TABLE>
(1) Based on the average shares outstanding at the end of each month.
(2) Ratios calculated on the basis of expenses applicable to common shares
relative to the average net assets of common shares. Without the exclusion
of preferred shares, the ratio of expenses would have been 1.27%, 1.26%,
1.27%, 1.27%, 1.25% and 1.20%, respectively.
(3) Ratios calculated on the basis of net investment income applicable to common
shares relative to the average net assets of common shares. Without the
exclusion of preferred shares, the ratio of net investment income would have
been 6.42%, 8.01%, 6.91%, 6.69%, 5.86% and 5.22%, respectively.
(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) Not annualized.
(7) Annualized.
(8) Assumes dividend reinvestment.
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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Patriot Global Dividend Fund on January 31, 1999. 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, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
PREFERRED STOCKS
Agricultural Operations (2.48%)
Ocean Spray Cranberries, Inc., 6.25% (R)... 45,000 $4,545,000
----------
Automobile/Trucks (2.92%)
General Motors Corp., 9.12%,
Depositary Shares, Ser G.................. 113,414 3,225,211
General Motors Corp., 9.125%,
Depositary Shares, Ser B.................. 84,500 2,144,188
----------
5,369,399
----------
Banks - Foreign (2.88%)
Australia and New Zealand Banking
Group Ltd., 9.125% (Australia)............ 99,900 2,772,225
Banco Bilbao Vizcaya International
(Gibraltar) Ltd., 9.75% (Spain)........... 91,200 2,513,700
----------
5,285,925
----------
Banks - United States (12.26%)
ABN AMRO North America, Inc., 6.59%,
Ser H (R)................................. 5,000 5,325,000
ABN AMRO North America, Inc., 8.75%,
Ser A (R)................................. 540 626,400
Chase Manhattan Corp., 10.84%, Ser C....... 179,700 5,368,538
Fleet Financial Group, Inc., 6.75%, Ser VI. 40,000 2,220,000
Fleet Financial Group, Inc., 9.35%,
Depositary Shares......................... 185,000 4,914,063
J.P. Morgan & Company, Inc., 6.625%,
Depositary Shares, Ser H.................. 60,000 3,292,500
Republic New York Corp., $2.8575........... 15,000 765,000
----------
22,511,501
----------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Broker Services (12.70%)
Bear Stearns Companies, Inc., 5.49%,
Ser G..................................... 42,500 $1,870,000
Bear Stearns Companies, Inc., 6.15%,
Ser E..................................... 93,000 4,580,250
Lehman Brothers Holdings, Inc., 5.67%,
Depositary Shares, Ser D.................. 144,950 6,232,850
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A.................. 168,000 5,239,500
Morgan Stanley Group, Inc., 7.75%,
Depositary Shares......................... 100,000 5,400,000
----------
23,322,600
----------
Conglomerates (0.79%)
Grand Metropolitan Delaware, L.P., 9.42%,
Gtd Ser A................................. 51,000 1,456,688
----------
Equipment Leasing (2.33%)
AMERCO, 8.50%, Ser A ...................... 162,000 4,272,750
----------
Financial Services (7.86%)
Citigroup, Inc., 6.213%, Ser G............. 90,000 4,725,000
Citigroup, Inc., 6.231%,
Depositary Shares, Ser H.................. 85,200 4,462,350
Citigroup, Inc., 8.40%,
Depositary Shares, Ser K.................. 191,000 5,240,563
----------
14,427,913
----------
Media (2.46%)
Lasmo America, Ltd., 8.15% (R)............ 20,000 2,040,000
Shaw Communications, Inc., 8.45%,
Ser A (Canada)............................ 99,600 2,471,325
----------
4,511,325
----------
Oil & Gas (5.19%)
Anadarko Petroleum Corp., 5.46%,
Depositary Shares......................... 50,627 4,531,116
PennzEnergy Co., 6.49%, Ser A.............. 50,000 5,000,000
----------
9,531,116
----------
Utilities (16.20%)
Alabama Power Co., 5.20%................... 210,000 5,302,500
Avista Corp., $1.24, Ser L, Conv........... 124,000 2,309,500
Baltimore Gas & Electric Co., 6.99%,
Ser 1995.................................. 10,000 1,180,000
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
==========================FINANCIAL STATEMENTS==================================
John Hancock Funds - Patriot Global Dividend Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Utilities (continued)
El Paso Tennessee Pipeline Co., 8.25%,
Ser A ................................... 146,000 $8,011,750
Entergy London Capital, L.P., 8.625%,
Ser A.................................... 60,000 1,567,500
PSI Energy, Inc., 6.875%.................. 42,500 4,791,874
Public Service Electric & Gas Co., 6.92%.. 7,000 789,250
South Carolina Electric & Gas Co., 6.52%.. 25,000 2,846,874
TDS Capital Trust II, 8.04%............... 118,000 2,935,250
----------
29,734,498
----------
TOTAL PREFERRED STOCKS
(Cost $120,986,198) (68.07%) 124,968,715
------- -----------
COMMON STOCKS
Utilities (29.68%)
BEC Energy................................ 65,000 2,486,250
Conectiv, Inc. ........................... 110,500 2,486,250
Consolidated Edison, Inc. ................ 51,000 2,521,313
Dominion Resources, Inc. ................. 47,500 2,125,625
DTE Energy Co. ........................... 59,900 2,425,950
Duke Energy Corp. ........................ 20,000 1,236,250
Eastern Enterprises ...................... 37,700 1,517,425
Edison International ..................... 60,000 1,668,750
Florida Progress Corp. ................... 35,000 1,456,875
Houston Industries, Inc. ................. 69,600 2,114,100
Interstate Energy Corp. .................. 127,420 3,663,325
K N Energy, Inc. ......................... 42,500 839,375
KeySpan Energy ........................... 159,120 4,306,185
LG&E Energy Corp. ........................ 91,400 2,410,675
MCN Energy Group, Inc. ................... 80,000 1,420,000
MidAmerican Energy Holdings Co. .......... 85,000 2,279,063
Nevada Power Co. ......................... 38,000 940,500
New England Electric System............... 20,000 978,750
PacifiCorp................................ 54,000 1,110,375
Potomac Electric Power Co................. 100,000 2,331,250
Public Service Enterprise Group, Inc. .... 65,000 2,579,687
Puget Sound Energy, Inc. ................. 187,800 4,730,213
Sempra Energy ............................ 133,086 3,060,977
Southern Co. (The)........................ 20,000 538,750
UtiliCorp United, Inc. .................. 60,000 2,100,000
Williams Cos., Inc. (The) ................ 35,000 1,155,000
----------
TOTAL COMMON STOCKS
(Cost $51,238,098) (29.68%) 54,482,913
------- ----------
ITEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000s OMITED) VALUE
- ------------------- ---- ------------- -----
SHORT-TERM INVESTMENTS
Commercial Paper (2.65%)
Chevron USA, Inc., 02-01-99.... 4.63% $4,867 $4,866,569
-----------
TOTAL SHORT-TERM INVESTMENTS (2.65%) 4,866,569
--------- -----------
TOTAL INVESTMENTS (100.40%) 184,318,197
--------- -----------
OTHER ASSETS AND LIABILITIES, NET (0.40%) (737,730)
--------- -------------
TOTAL NET ASSETS (100.00%) $183,580,467
========== =============
(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 $12,536,400 or 6.83% of
net assets as of January 31, 1999.
Parenthetical disclosure of a foreign country in the security description
represents country of a 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
(UNAUDTIED)
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 $303,910 of a capital
loss carryforward available, to the extent provided by regulations, to offset
future net realized capital gains. To the extent 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, 1998, which have 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 4.10% to 4.25% during
the period ended January 31, 1999.
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.
11
<PAGE>
=========================NOTES TO FINANCIAL STATEMENTS==========================
John Hancock Funds - Patriot Global Dividend Fund
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, Inc., 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, 1999, 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, 1999, aggregated $27,871,110 and $31,665,249, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended January 31, 1999.
The cost of investments owned at January 31, 1999 (including short-term
investments) for federal income tax purposes was $178,255,548. Gross unrealized
appreciation and depreciation of investments aggregated $10,810,319 and
$4,747,670, respectively, resulting in net unrealized appreciation of
$6,062,649.
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 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 to 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.
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).
YEAR 2000 COMPLIANCE
The Adviser and the Fund's service providers are taking steps to address any
year 2000-related computer problems. However, there is some risk that these
problems could disrupt the Fund's operations or financial markets generally.
SHAREHOLDER COMMUNICATION AND ASSISTANCE
If you have any questions concerning the John Hancock Patriot Global Dividend
Fund, we will be pleased to assist you. If you hold shares in your own name and
not with a brokerage firm, please address all notices, correspondence, questions
or other communications regarding the Fund to the transfer agent at:
State Street Bank & Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
Telephone: (800) 426-5523
If your shares are held with a brokerage firm, you should contact that firm,
bank or other nominee for assistance.
14
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Patriot Global Dividend Fund
15
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS -----------------
A Global Investment Management Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-843-0090 S. Hackensack, NJ
INTERNET: www.jhancock.com/funds Permit No. 750
-----------------
[LOGO] Printed on Recycled Paper P40SA 1/99
3/99
