The latest report from your
Fund's management team
ANNUAL REPORT
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[GRAPHIC OMITTED]
Patriot Global
Dividend Fund
JULY 31, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
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TRUSTEES
Edward J. Boudreau, Jr.
Stephen L. Brown
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
32-36 Duke Street
St. James SWIY6DF
London, U.K.
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
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116-5022
Listed New York Stock Exchange Symbol: PGD
For Shareholder Assistance
Refer to Page 16
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=============================CHAIRMAN'S MESSAGE=================================
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting ready
to celebrate this historic transition to a new millennium. At John Hancock
Funds, we share the excitement, but we aren't popping the champagne corks just
yet. Rather, we are staying on the course that we set more than two years ago to
ensure that the transition to a new millennium is a smooth one for our
shareholders.
As many already know, the Year 2000 has created more than the prospect of New
Year's festivities of epic proportions. It has also presented the world with a
challenge: making sure that older computers, and any equipment powered by
computer chips, can properly read and process the date "00" as 2000, not 1900.
Much has been written about how the world will weather the change. Some view it
as a non-event, while others see the potential for disruptions. How much
disruption, and for how long, depends on whom you talk to.
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[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
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As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an important
issue to be dealt with and we have made it a top priority. Two years ago, John
Hancock Funds put a full-time team of experts on the case and established a
company-wide program to evaluate all computer applications and to modify or
replace those that needed changing.
These modifications and replacements for all mission-critical systems are done
and successfully compliance tested. The rest of 1999 will be spent completing
the few remaining non mission-critical systems, testing with our business
partners and continuing to participate in industry testing. We have also
established additional contingency plans beyond our regular ones to prepare for
any challenges that the Year 2000 might present. In the end, John Hancock will
spend approximately $90-$95 million to ensure we make a successful transition to
the Year 2000.
No one knows how the dawning of the new millennium will unfold. Although we
cannot make any ironclad assurances, we are confident that the steps we have
taken will provide shareholders with as smooth a transition as possible. Once
that occurs, we will happily raise our glasses to toast the New Year, future
prosperity and our hopes to serve you well into the 2000's.
Sincerely,
/s/Edward J. Boudreau, Jr.
- --------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
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By Gregory K. Phelps, for the Portfolio Management Team
John Hancock Patriot
Global Dividend Fund
Interest-rate fears depress preferred stocks
--------------------------------------------
Fears of higher interest rates muted the one-year returns of preferred stocks,
one of the main components of John Hancock Patriot Global Dividend Fund. Because
they pay fixed, relatively high dividends, preferred stocks often behave like
bonds, falling in price as interest rates rise and vice versa.
The first half of the fiscal year was no picnic. That's when investors
shunned many types of fixed-income-like securities in favor of ultra-safe U.S.
Treasury securities amid global economic turmoil. But the second half was
downright unpleasant, despite healthy corporate profitability which should have
boosted preferred stocks.
With each passing day there was mounting evidence that the economy
wasn't slowing, and that inflation might be headed higher. The period ended on a
particularly sour note when Federal Reserve Chairman Alan Greenspan warned that
mounting wage pressures could prompt his agency to enact further interest-rate
hikes.
While interest-rate jitters were the main problem for preferred stocks,
they also faced another challenge. To lock in current, relatively low interest
rates, and to avoid problems associated with the Y2K bug, corporations issued
near-record levels of debt and preferred stock during the first seven months of
1999, placing additional pressure on the already-strained preferred-stock
market.
Utilities seesaw
Utility common stocks, which made up 31% of the Fund's net assets, performed
reasonably well in the first half of the period. Amid global
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[A 3 1/2" x 2 1/2" 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."]
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"The poor performance of preferred stocks... resulted in disappointing returns."
3
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================================================================================
John Hancock Funds - Patriot Global Dividend Fund
"...the Fund has been forced to surrender to calls some of its higher-yielding
preferred stocks..."
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[Pie chart at top left hand column with heading "Portfolio Diversification." The
chart is divided into five sections (from top to left): Oil & Gas 4%, Short-Term
Investments & Other 10%, Preferred Stock Utilities 17%, Common Stock Utilities
31% and Banks & Financials 38%. A note below the chart reads "As a percentage of
net assets on July 31, 1999."]
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uncertainty, electric-company stocks were helped by their safe-haven reputation
in the third quarter of 1998, only to slump in late 1998 and early 1999 when
investors became more sanguine. Utility common stocks flickered again this
summer in response to fears of higher interest rates, and wound up producing
solid results for the year.
Fund performance
The poor performance of preferred stocks -which made up roughly two-thirds of
John Hancock Patriot Global Dividend Fund during the past year - resulted in
disappointing returns. For the 12 months ended July 31, 1999, the Fund had a
total return of 0.39% at net asset value. For the same period, the 30-year U.S.
Treasury bond returned -2.53% and the Dow Jones Utility Average - an index of
utility common stocks - returned 17.02%.
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[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 CMP Group
followed by an up arrow with the phrase "Taken over by Energy East." The second
listing is Potomac Electric Power followed by an up arrow with the phrase
"Planned sale of generating plants; success in telecom." The third listing is K
N Energy followed by a down arrow with the phrase "Bungled merger with stronger
competitor." A note below the table reads "See `Schedule of Investments.'
Investment holdings are subject to change."]
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Performance review
Generally speaking, our preferred-stock holdings performed in line with the
overall preferred-stock segment of the market. However, older, higher-yielding
securities such as Merrill Lynch, El Paso Tennessee Pipeline and Australia and
New Zealand Banking Group held in the best.
Among our best-performing common-stock electric utility holdings was electric
company CMP Group. The stock staged a sizable rally on news that it was to be
taken over by Energy East. Another strong performer was Potomac Electric Power,
which was boosted by its plans to sell its high-risk power generation operation,
as well as by investor enthusiasm for its joint venture with fiber-optic company
RCN Corp. Oil and gas pipeline company K N Energy's stock price fell after its
failed attempt to merge with Sempra Energy.
Focus on call protection, DRD-eligible stocks
Throughout the period, we maintained our long-term focus on DRD-eligible
preferred stocks and on those that carry good call protection. DRD-eligible
preferred stocks offer distinct tax advantages to corporate investors and, as
such, remain in fairly constant demand. Call protection means issuers can't
redeem their preferred stocks before a specified date, as they often do when
interest rates fall. Even though rates appear to be on the rise now, we think
that they will eventually resume their long-term trend downward and that call
protection will therefore be an important contributor to our performance.
A word about dividends
Issuers exercising their call provisions to benefit from falling interest rates
last year caused the supply of DRD-eligible preferred stocks to
4
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John Hancock Funds - Patriot Global Dividend Fund
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[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the year ended July 31, 1999." The chart is
scaled in increments of 5% with -5% at the bottom and 20% at the top. The first
bar represents the 0.39% total return for John Hancock Patriot Global Dividend
Fund. The second bar represents the -2.53% total return for 30-Year Treasury
Bond. The third bar represents the 17.02% 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."]
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shrink considerably. From a technical standpoint, calls largely have been
beneficial for the DRD- eligible preferred market because they have reduced
available supply. By the same token, however, the Fund has been forced to
surrender to calls some of its higher-yielding preferred stocks and reinvest the
proceeds in securities that carried lower dividend yields. The resulting
downward pressure on the Fund's dividend caused the Fund to reduce its monthly
dividend in June.
Financial stocks: source of call protection
The financial services sector - made up of brokerages, banks and insurers - is
one area we turn to for well call-protected, DRD-eligible preferred stocks. But
there are other reasons why we favor financial services companies, including our
anticipation of additional merger and acquisition activity to boost the
industry.
Recent additions
Recently, we've added to our stake in preferred stocks. After coming under
severe pressure for nearly a year now, we believed that preferred stocks offered
increasingly attractive levels of income, as well as the potential for capital
appreciation - all at relatively cheap prices. In our view, the relatively large
supply of preferred stocks that has hit the market this year should abate,
allowing for more normal supply and demand conditions and, ultimately, better
preferred-stock performance.
Outlook
We remain optimistic about the prospects for utility stocks. To the extent that
investors become concerned about the sustainability of corporate earnings growth
for the stock market as a whole, utility stocks could benefit. Evidence of a
slowing U.S. economy - which could emerge later this year if interest rates keep
rising - would likely stir demand for economically resistant utility stocks,
especially given how cheap they are on a historical basis relative to other
segments of the market. That, plus ongoing industry consolidation, a favorable
regulatory environment and their strong financial shape should, in our view,
position utility common stocks to perform well in the months to come. We also
believe that the attractively priced preferred market could be in for a
reasonably good period ahead. Supply and demand conditions should turn more
favorable, as issuers curtail their new issuance and investors look for
relatively cheap, high-yielding investments.
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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.
"...the relatively large supply of preferred stocks that has hit the market this
year should abate..."
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 July 31, 1999. You'll also
find the net asset value for each Common Share as of that date.
Statement of Assets and Liabilities
July 31, 1999
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Assets:
Investments at value - Note C:
Preferred stocks (cost - $115,321,329)......................... $114,692,326
Common stocks (cost - $51,164,379) ............................ 54,663,449
Short-term investments (cost - $31,977,062) ................... 31,977,062
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201,332,837
Receivable for investments sold ................................ 1,011,741
Dividend receivable ............................................ 576,886
Other assets ................................................... 27,909
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Total Assets ............................ 202,949,373
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Liabilities:
Payable for investments purchased .............................. 331,284
DARTS dividend payable - Note A ................................ 167,314
Common shares dividend payable ................................. 53,017
Federal taxes payable - Note A ................................. 48,460
Payable upon return of securities on loan - Note A ............. 25,141,680
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ....................................... 149,998
Accounts payable and accrued expenses .......................... 118,348
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Total Liabilities ....................... 26,010,101
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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
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Common Shares - Without par value, unlimited
number of shares of beneficial interest authorized,
8,344,700 shares issued and outstanding ....................... 113,802,243
Accumulated net realized loss on investments ................... (756,610)
Net unrealized appreciation of investments ..................... 2,870,067
Undistributed net investment income ............................ 1,023,572
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Net Assets applicable to
Common Shares ($14.01 per
share based on 8,344,700
shares outstanding) ..................... 116,939,272
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Net Assets .............................. $176,939,272
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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
Year ended July 31, 1999
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Investment Income:
Dividends (net of foreign withholding taxes of $9,282) ......... $12,053,930
Interest ....................................................... 236,797
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12,290,727
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Expenses:
Investment management fee - Note B ............................ 1,468,606
Administration fee - Note B ................................... 275,364
DARTS and auction fees ........................................ 169,824
Federal excise tax ............................................ 105,154
Custodian fee ................................................. 56,559
Auditing fee .................................................. 54,431
Printing ...................................................... 47,734
Compliance systems fee ........................................ 42,120
Transfer agent fee ............................................ 27,030
Registration and filing fees .................................. 16,350
Miscellaneous ................................................. 11,582
Trustees' fees ................................................ 10,274
Legal fees .................................................... 2,434
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Total Expenses .......................... 2,287,462
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Net Investment Income ................... 10,003,265
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Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments sold (net of federal
taxes of $48,460) ............................................. 595,625
Change in net unrealized appreciation/depreciation
of investments ................................................ (8,817,817)
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Net Realized and Unrealized
Loss on Investments ..................... (8,222,192)
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Net Increase in Net Assets
Resulting from Operations ............... $1,781,073
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Distribution to DARTS ................... (2,383,285)
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Net Decrease in Net Assets
Applicable to Common
Shareholders Resulting from
Operations Less DARTS
Distributions ........................... ($602,212)
=======================================================
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Global Dividend Fund
Statement of Changes in Net Assets
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<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------
1998 1999
------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ........................................................................... $10,850,453 $10,003,265
Net realized gain on investments sold ........................................................... 3,446,142 595,625
Change in net unrealized appreciation/depreciation of investments ............................... 3,650,344 (8,817,817)
-------------- --------------
Net Increase in Net Assets Resulting from Operations ........................................... 17,946,939 1,781,073
-------------- --------------
Distributions to Shareholders:
DARTS ($4,149 and $3,972 per share, respectively) - Note A ...................................... (2,489,567) (2,383,285)
Common Shares - Note A
Dividends from accumulated net investment income ($1.0500 and $1.0434 per share, respectively) . (8,761,302) (8,706,985)
-------------- --------------
Total Distributions to Shareholders ........................................................... (11,250,869) (11,090,270)
-------------- --------------
Net Assets:
Beginning of period ............................................................................. 179,552,399 186,248,469
-------------- --------------
End of period (including undistributed net investment income of
$2,007,056 and $1,023,572, respectively) ....................................................... $186,248,469 $176,939,272
============== ==============
Analysis of Common Shareholder Transactions:
YEAR ENDED JULY 31,
------------------------------------------------------
1998 1999
----------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ---------- ----------- -----------
Beginning of period .................................................... 8,344,700 $113,971,522 8,344,700 $113,816,397
Reclassification of net realized long-term gains retained on
investments sold (net of federal income taxes of none and
$48,460, respectively) - Note D ...................................... - - - 89,997
Reclassification of capital accounts - Note D........................... - (155,125) - (104,151)
---------- ------------ ---------- ------------
End of period........................................................... 8,344,700 $113,816,397 8,344,700 $113,802,243
========== ============ ========== ============
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:
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YEAR ENDED JULY 31,
--------------------------------------------------------------
1995 1996 1997 1998 1999
--------- --------- --------- --------- ------------
Common Shares
Per Share Operating Performance
Net Asset Value, Beginning of Period................................ $12.31 $13.04 $13.26 $14.33 $15.13
--------- --------- --------- --------- ---------
Net Investment Income .............................................. 1.55 1.43 1.41(1) 1.30(1) 1.20(1)
Net Realized and Unrealized Gain (Loss) on Investments ............. 0.67 0.15 1.01 0.85 (0.99)
--------- --------- --------- --------- ---------
Total from Investment Operations ................................. 2.22 1.58 2.42 2.15 0.21
--------- --------- --------- --------- ---------
Less Distributions:
Dividends to DARTS Shareholders ................................... (0.33) (0.31) (0.30) (0.30) (0.29)
Dividends from Accumulated Net Investment Income to
Common Shareholders .............................................. (1.16) (1.05) (1.05) (1.05) (1.04)
--------- --------- --------- --------- ---------
Total Distributions .............................................. (1.49) (1.36) (1.35) (1.35) (1.33)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ..................................... $13.04 $13.26 $14.33 $15.13 $14.01
========= ========= ========= ========= =========
Per Share Market Value, End of Period .............................. $12.250 $12.375 $12.938 $13.188 $11.188
Total Investment Return at Market Value (6) ........................ 13.12% 9.65% 13.53% 10.30% (8.02%)
Ratios and Supplemental Data
Net Assets Applicable to Common Shares, End of Period (000s omitted) $108,824 $110,651 $119,552 $126,248 $116,939
Ratio of Expenses to Average Net Assets (2) ........................ 2.00% 1.95% 1.93% 1.85% 1.85%
Ratio of Net Investment Income to Average Net Assets (3) ........... 12.72% 10.60% 10.14% 8.72% 8.09%
Portfolio Turnover Rate ............................................ 96% 38% 28% 43% 38%
Senior Securities
Total DARTS Outstanding (000s omitted) ............................. $60,000 $60,000 $60,000 $60,000 $60,000
Asset Coverage per Unit (4) ........................................ $278,812 $283,164 $295,948 $310,691 $296,112
Involuntary Liquidation Preference per Unit (5) .................... $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
</TABLE>
(1) Based on the average of the 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 1.26%, 1.27%,
1.27%, 1.25% and 1.25%, 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 8.01%, 6.91%, 6.69%, 5.86% and 5.45%, 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) 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 since the end of the previous period. It also
shows the total investment return for the period based on the market value of
the Fund shares. Additionally, important relationships between some items
presented in the financial statements are expressed in ratio form, as well as
information about the DARTS.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Global Dividend Fund
Schedule of Investments
July 31, 1999
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The Schedule of Investments is a complete list of all securities owned by the
Patriot Global Dividend Fund on July 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 (2.54%)
Ocean Spray Cranberries, Inc., 6.25% (R)... 45,000 $4,500,000
----------
Automobile/Trucks (1.76%)
General Motors Corp., 9.12%,
Depositary Shares, Ser G ................. 113,414 3,104,708
----------
Banks - Foreign (2.91%)
Australia and New Zealand Banking Group
Ltd., 9.125% (Australia) ................. 99,900 2,709,787
Banco Bilbao Vizcaya International
(Gibraltar) Ltd., 9.75% (Spain) .......... 91,200 2,433,900
----------
5,143,687
----------
Banks - United States (13.83%)
ABN AMRO North America, Inc., 6.59%,
Ser H (R) ................................ 5,000 5,087,500
ABN AMRO North America, Inc., 8.75%,
Ser A (R) ................................ 540 592,650
Chase Manhattan Corp., 10.84%,
Ser C .................................... 179,700 5,155,144
Fleet Financial Group, Inc., 6.75%,
Ser VI ................................... 40,000 2,140,000
Fleet Financial Group, Inc., 9.35%,
Depositary Shares ........................ 185,000 4,775,313
J.P. Morgan & Company, Inc., 6.625%,
Depositary Shares, Ser H ................. 60,000 3,270,000
Republic New York Corp., $2.8575 .......... 72,000 3,456,000
----------
24,476,607
----------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Broker Services (13.53%)
Bear Stearns Cos., Inc., 5.49%,
Ser G .................................... 98,500 $4,137,000
Bear Stearns Cos., Inc., 5.72%,
Ser F .................................... 46,000 2,018,250
Lehman Brothers Holdings, Inc., 5.67%,
Depositary Shares, Ser D ................. 144,950 5,942,950
Lehman Brothers Holdings, Inc., 5.94%,
Ser C .................................... 31,100 1,376,175
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A ................. 168,000 5,166,000
Morgan Stanley Group, Inc., 7.75%,
Depositary Shares ........................ 100,000 5,300,000
----------
23,940,375
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Conglomerates (0.75%)
Grand Metropolitan Delaware, L.P., 9.42%,
Gtd Ser A ................................ 51,000 1,335,563
----------
Equipment Leasing (2.36%)
AMERCO, 8.50%,
Ser A .................................... 162,000 4,171,500
----------
Finance (5.23%)
Citigroup, Inc., 6.231%,
Depositary Shares, Ser H ................. 85,200 4,126,875
Citigroup, Inc., 8.40%,
Depositary Shares, Ser K ................. 191,000 5,121,188
----------
9,248,063
----------
Media (1.36%)
Shaw Communications, Inc., 8.45%,
Ser A (Canada) ........................... 99,600 2,402,850
----------
Oil & Gas (3.86%)
Anadarko Petroleum Corp., 5.46%,
Depositary Shares ........................ 5,000 425,625
Lasmo America Ltd., 8.15% (R) ............. 20,000 2,060,000
PennzEnergy Co., 6.49%, Ser A ............ 50,000 4,350,000
----------
6,835,625
----------
Utilities (16.69%)
Alabama Power Co., 5.20% .................. 210,000 4,725,000
Avista Corp., $1.24, Ser L, Conv .......... 124,000 2,077,000
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)
Baltimore Gas & Electric Co., 6.99%,
Ser 1995 ................................. 10,000 $1,100,000
El Paso Tennessee Pipeline Co., 8.25%,
Ser A .................................... 146,000 7,920,500
Entergy London Capital, L.P., 8.625%,
Ser A .................................... 67,500 1,628,437
Pacific Enterprises, $4.50 ................ 16,110 1,286,786
PSI Energy, Inc., 6.875% .................. 42,500 4,590,000
Public Service Electric & Gas Co., 6.92% .. 7,000 755,125
South Carolina Electric & Gas Co., 6.52% .. 25,000 2,640,625
TDS Capital Trust II, 8.04% ............... 118,000 2,809,875
----------
29,533,348
----------
TOTAL PREFERRED STOCKS
(Cost $115,321,329) (64.82%) 114,692,326
-------- -----------
COMMON STOCKS
Utilities (30.90%)
Alliant Energy Corp. ...................... 127,420 3,679,252
Ameren Corp. .............................. 20,000 780,000
BEC Energy ................................ 70,000 2,983,750
Central Hudson Gas & Electric ............. 31,800 1,331,625
CMP Group, Inc. ........................... 70,000 1,855,000
Conectiv, Inc. ............................ 110,500 2,534,594
Consolidated Edison, Inc. ................. 51,000 2,218,500
Dominion Resources, Inc. .................. 47,500 2,092,969
DTE Energy Co. ............................ 79,900 3,126,087
Duke Energy Corp. ......................... 25,000 1,323,437
Eastern Enterprises ....................... 50,200 1,954,662
Edison International ...................... 60,000 1,518,750
Florida Progress Corp. .................... 35,000 1,432,813
Hawaiian Electric Industries, Inc. ........ 27,000 963,562
KeySpan Corp. ............................. 54,000 1,498,500
K N Energy, Inc. .......................... 42,500 828,750
LG&E Energy Corp. ......................... 71,500 1,546,188
MCN Energy Group, Inc. .................... 20,000 426,250
New England Electric System ............... 66,150 3,427,397
Northern States Power Co. ................. 40,000 900,000
PacifiCorp ................................ 10,000 182,500
Potomac Electric Power Co. ................ 100,000 2,868,750
Public Service Enterprise Group, Inc. ..... 65,000 2,620,312
Puget Sound Energy, Inc. .................. 112,800 2,629,650
Reliant Energy, Inc. ...................... 69,600 1,909,650
Sempra Energy ............................. 33,000 732,188
Sierra Pacific Resources .................. 38,000 988,000
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Utilities (continued)
Southern Co. .............................. 20,000 $528,750
Teco Energy, Inc. ......................... 94,700 1,929,513
Western Resources, Inc. ................... 80,400 2,100,450
WPS Resources Corp. ....................... 60,400 1,751,600
-------- ----------
TOTAL COMMON STOCKS
(Cost $51,164,379) (30.90%) 54,663,449
-------- ----------
INTEREST PAR VALUE
RATE (000s OMITTED)
--------- --------------
SHORT-TERM INVESTMENTS
Commercial Paper (3.86%)
Chevron USA, Inc., 08-01-99..... 4.95% $6,836 6,835,382
-----------
Cash Equivalents (14.21%)
Navigator Securities Lending Prime Portfolio* 25,142 25,141,680
-----------
TOTAL SHORT-TERM INVESTMENTS (18.07%) 31,977,062
-------- -----------
TOTAL INVESTMENTS (113.79%) 201,332,837
-------- -----------
OTHER ASSETS AND LIABILITIES, NET (13.79%) (24,393,565)
-------- -----------
TOTAL NET ASSETS (100.00%) $176,939,272
======== ============
(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 $12,240,150 or 6.92% of net assets as of
July 31, 1999.
* Represents investment of security lending collateral - Note A.
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
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==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Patriot Global Dividend Fund
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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders.
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, which 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, 1999, which have no effect on
the Fund's net assets, net investment income or net realized gains. The Fund has
the option and has chosen to retain and pay the applicable federal income tax on
$138,457 of its net long-term capital gain for the fiscal period ended July 31,
1999.
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.
SECURITIES LENDING The Fund loaned its securities to certain qualified brokers
who paid the Fund negotiated lender fees. These fees are included in interest
income. The loans were collateralized at all times with cash or securities with
a market value at least equal to the market value of the securities on loan. As
with other extensions of credit, the Fund may bear the risk of delay of the
loaned securities in recovery or even loss of rights in the collateral should
the borrower of the securities fail financially. At July 31, 1999, the Fund
loaned securities having a market value of $24,280,704 collateralized by cash in
the amount of $25,141,680, which was invested in a short-term instrument.
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 3.546% to 4.250%
during the year ended July 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. All or some of 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., Mr. Stephen L. Brown, 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. The investment had no
impact on the operations of the Fund.
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 year
ended July 31, 1999, aggregated $67,003,867 and $74,646,638, respectively. There
were no purchases or sales of obligations of the U.S. government and its
agencies during the year ended July 31, 1999.
The cost of investments owned at July 31, 1999 (including short-term
investments) for federal income tax purposes was $199,282,605. Gross unrealized
appreciation and depreciation of investments aggregated $8,000,850 and
$5,950,618, respectively, resulting in net unrealized appreciation of
$2,050,232.
NOTE D -
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended July 31, 1999, the Fund has reclassified amounts to
reflect an increase in undistributed net investment income of $103,521, a
decrease in accumulated net realized loss on investments of $630 and a decrease
in capital paid-in of $104,151. This represents the amount necessary to report
these balances on a tax basis, excluding certain temporary differences, as of
July 31, 1999. In addition, pursuant to Internal Revenue Code Section
852(b)(3)(D), the Fund has reclassified $89,997 from accumulated net realized
gain on investments to capital paid-in. This amount represents the retained
long-term capital gains, net of federal income tax payable. Additional
adjustments may be needed in subsequent reporting periods. These
reclassifications, which have no impact on the net asset value of the Fund, are
primarily attributable to book/tax differences in accounting for deferred
compensation and federal excise tax. The calculation of net investment income
per share in the financial highlights excludes these adjustments.
12
<PAGE>
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John Hancock Funds - Patriot Global Dividend Fund
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
John Hancock Patriot Global Dividend Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of John Hancock Patriot Global Dividend Fund (the
"Fund") as of July 31, 1999, the related statement of operations for the year
then ended, the statement of changes in net assets for the years ended 1998 and
1999 and the financial highlights for each of the years in the three-year period
ended July 31, 1999. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the years in the two-year period
ended July 31, 1996 were audited by other auditors whose report, dated September
6, 1996, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at July 31,
1999 by correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of the Fund at
July 31, 1999, the results of its operations, the changes in its net assets, and
its financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 3, 1999
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund for its fiscal year ended July 31,
1999.
All of the dividends paid for the fiscal year are taxable as ordinary
income. Distributions to preferred and common shareholders were 100% qualified
for the dividends received deduction available to corporations.
Shareholders will be mailed a 1999 U.S. Treasury Department Form
1099-DIV in January 2000. This will reflect the total of all distributions which
are taxable for calendar year 1999.
The Fund has chosen to retain (and pay federal corporate income tax on)
a portion of net long-term capital gains for its fiscal period ended July 31,
1999.
Within 60 days of the Fund's fiscal year end, the Fund will mail to its
shareholders of record on July 31, 1999 a designation, on Internal Revenue
Service (IRS) Form 2439, of that portion of the undistributed capital gains for
the year to be included in a shareholder's 1999 taxable income as long-term
capital gains. Form 2439 will also show their portion of the tax paid by the
Fund on these gains. The portion of the taxes paid may be credited against any
federal income tax due. These gains will not be reported on Form 1099-DIV, the
form on which the Fund would ordinarily report income taxable to a shareholder.
To reflect the Fund's retention of capital gains and payment of the
related tax and their pass through to shareholders as described above,
shareholders are entitled to increase the adjusted tax basis of their shares by
the excess of the capital gains included in their income over their share of the
tax paid by the Fund on such gains as reported on Form 2439, as provided in
Internal Revenue Code (IRC) Section 852(b)(3).
Trustees for Individual Retirement Accounts (IRAs) and organizations
which are exempt from federal income tax under IRC Section 501(a) (and to which
IRC Section 511 does not apply) should claim a refund by filing Form 990-T with
the IRS. Record owners who are not the actual owners (nominees) will also be
required to report the amounts shown on Form 2439 to the actual owners within 90
days of the Fund's fiscal year (on or before October 31, 1999) and the IRS in
the manner required by the instructions of Form 2439. A trustee or custodian of
an IRA should not send a copy of Form 2439 to the owner of the IRA.
13
<PAGE>
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John Hancock Funds - Patriot Global Dividend Fund
State tax consequences may differ from those described above and may
vary from state to state. Therefore, shareholders should consult their state tax
advisers for specific information regarding their particular situations.
Non-resident aliens may also have different tax consequences and should consult
their tax adviser.
14
<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 02110, 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.
15
<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 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 and 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.
SHAREHOLDER MEETING
On March 18, 1999, the Annual Meeting of John Hancock Patriot Global Dividend
Fund (the "Fund") was held to elect five Trustees and to ratify the action of
the Trustees in selecting independent auditors for the Fund.
The common shareholders elected the following Trustees to serve until
their respective successors are duly elected and qualified, with the votes
tabulated as follows:
WITHHELD
FOR AUTHORITY
--- ---------
Stephen L. Brown 7,726,280 119,379
James F. Carlin 7,732,997 112,662
William H. Cunningham 7,723,436 122,222
John P. Toolan 7,725,946 119,712
The preferred shareholders elected Harold R. Hiser, Jr. to serve until
his successor is duly elected and qualified, with votes tabulated as follows:
450 FOR and 0 WITHHELD AUTHORITY.
The shareholders also ratified the Trustees' selection of Deloitte &
Touche LLP as the Fund's independent auditors for the fiscal year ended July 31,
1999, with the votes tabulated as follows: 7,723,391 FOR, 51,894 AGAINST and
70,823 ABSTAINING.
16
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======================================NOTES=====================================
John Hancock Funds - Patriot Global Dividend Fund
17
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Patriot Global Dividend Fund
18
<PAGE>
======================================NOTES=====================================
John Hancock Funds - Patriot Global Dividend Fund
19
<PAGE>
================================================================================
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