UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06685
John Hancock Patriot Global Dividend Fund
(Exact name of registrant as specified in charter)
601 Congress Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip code)
Alfred P. Ouellette
Senior Attorney and Assistant Secretary
601 Congress Street
Boston, Massachusetts 02110
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-663-4324
Date of fiscal year end: July 31
Date of reporting period: July 31, 2005
ITEM 1. REPORT TO SHAREHOLDERS.
JOHN HANCOCK
Patriot Global
Dividend Fund
7.31.2005
Annual Report
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of Keith F. Hartstein, President and Chief Executive Officer of
John Hancock Funds, LLC, flush left next to first paragraph.]
CEO CORNER
Table of contents
Your fund at a glance
page 1
Managers' report
page 2
Fund's investments
page 6
Financial statements
page 10
Trustees & officers
page 27
For more information
page 33
To Our Shareholders,
I am pleased to be writing to you as the new President and Chief Executive
Officer of John Hancock Funds, LLC, following the departure of James A.
Shepherdson to pursue other opportunities. In addition, on July 25, 2005,
your fund's Board of Trustees appointed me to the roles of President and
Chief Executive Officer of your fund.
As a means of introduction, I have been involved in the mutual fund
industry since 1985. I have been with John Hancock Funds for the last
15 years, most recently as executive vice president of retail sales and
marketing and a member of the company's executive and investment
committees. In my former capacity, I was responsible for all aspects of
the distribution and marketing of John Hancock Funds' open-end and
closed-end mutual funds. Outside of John Hancock, I have served as
Chairman of the Investment Company Institute (ICI) Sales Force Marketing
Committee since September 2003.
It is an exciting time to be at John Hancock Funds, and I am grateful for
the opportunity to lead and shape its future growth. With the acquisition
of John Hancock by Manulife Financial Corporation in April 2004, we are
receiving broad support toward the goal of providing our shareholders with
excellent investment opportunities and a more complete lineup of choices
for the discerning investor.
As you may have read, John Hancock recently entered into an agreement with
GMO, a Boston-based institutional money manager, to acquire eight of their
mutual funds. In addition, we are in the process of adding five "Lifestyle
Portfolio" funds-of-funds that blend multiple fund offerings from internal
and external money managers to create a broadly diversified asset
allocation portfolio. Look for more information about these exciting
additions to the John Hancock family of funds in your fourth quarter
shareholder newsletter.
Although there has been a change in executive-level management, rest
assured that the one thing that never wavers is John Hancock Funds'
commitment to placing the needs of shareholders above all else. We are all
dedicated to the task of working with you and your financial advisors to
help you reach your long-term financial goals.
Sincerely,
/S/ Keith F. Hartstein
Keith F. Hartstein,
President and Chief Executive Officer
This commentary reflects the CEO's views as of July 31, 2005. They are
subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks to
provide high current
income, consistent
with modest growth
in capital, by nor-
mally investing at
least 80% of its
assets in dividend-
paying securities.
Over the last twelve months
* Dividend-paying securities posted strong gains, overcoming scattered
bouts of weakness during the year.
* The Fund's comparatively large stake in strong-performing utility common
stocks helped it to outpace its Lipper peer group average.
* Preferred-stock holdings mostly posted positive gains, although
lower-coupon securities lagged.
[Bar chart with heading "John Hancock Patriot Global Dividend Fund." Under
the heading is a note that reads "Fund performance for the year ended July
31, 2005." The chart is scaled in increments of 8% with 0% at the bottom
and 24% at the top. The first bar represents the Fund's 21.53% net asset
value. The second bar represents the Fund's 13.03% market value. The
third bar represents the Fund's 6.30% yield on closing market price. The
first note below the chart reads "The total returns for the Fund include
all distributions reinvested. The performance data contained within this
material represents past performance, which does not guarantee future
results." The second note below the chart reads "The yield on closing
market price is calculated by dividing the current annualized distribution
per share by the closing market price."]
Top 10 issuers
5.0% Lehman Brothers Holdings, Inc.
4.2% Bear Stearns Cos., Inc.
3.3% CH Energy Group, Inc.
3.2% HSBC USA, Inc.
3.1% South Carolina Electric & Gas Co.
3.1% Sierra Pacific Power Co.
3.0% DTE Energy Co.
3.0% Alabama Power Co.
3.0% Energy East Corp.
2.9% MetLife, Inc.
As a percentage of net assets plus the value of preferred shares on
July 31, 2005.
1
BY GREGORY K. PHELPS AND MARK T. MALONEY FOR THE PORTFOLIO
MANAGEMENT TEAM
MANAGERS'
REPORT
JOHN HANCOCK
Patriot Global
Dividend Fund
Dividend-paying securities posted strong gains for the 12-month period
ended July 31, 2005, overcoming scattered bouts of weakness during the
year. Preferred stocks -- which are the primary emphasis of John Hancock
Patriot Global Dividend Fund -- began the period just after the Federal
Reserve Board began to raise short-term interest rates, which triggered an
early summer Treasury market sell-off that put pressure on preferred-stock
prices. Because preferreds make fixed payments in the form of dividends,
much like bonds pay in interest, their prices tend to follow those of U.S.
Treasury securities. Despite evidence of a strengthening economy and
additional rate hikes throughout the remainder of 2004, preferred-stock
prices moved higher, responding to investors' confidence that even though
the Fed might continue its campaign of raising interest rates, those rate
hikes would be small and measured, given the potential for high oil prices
and rising interest rates themselves to dampen future economic growth.
Preferred stocks were further boosted by strong demand, as investors
continued to seek dividend-paying securities.
"Dividend-paying securities
posted strong gains for the
12-month period ended
July 31, 2005..."
Utility common stocks
Among dividend-paying stocks, utility common stocks were the clear victors
during the past 12 months, and ended the period as one of the overall stock
market's best-performing industry groups. There was robust investor demand
for utility common stocks due to their high dividend payouts, which were
very attractive in a period when fixed-income investments offered investors
low interest rates. Additionally, investors became increasingly bullish on
the group in response to utility companies' strides to reduce their debt
2
levels and improve their balance sheets. Utility commons really surged in
the final months of the period, due to the announcement of planned mergers
of several large well-known players, which fueled speculation that more
merger and acquisition activity was on the horizon. The passage of a
national energy bill by Congress reinforced that sentiment.
[Photos of Greg Phelps and Mark Maloney flush right next to first
paragraph.]
Performance
For the 12 months ended July 31, 2005, John Hancock Patriot Global
Dividend Fund returned 21.53% at net asset value and 13.03% at market
value. The difference in the Fund's net asset value (NAV) performance and
its market performance stems from the fact that the market share price is
subject to the dynamics of secondary market trading, which could cause it
to trade at a discount or premium to the Fund's NAV share price at any
time. By comparison, the average income and preferred stock closed-end
fund returned 16.94% at net asset value, according to Lipper, Inc. The
main factor driving the Fund's outperformance versus its Lipper peer group
average was our larger stake in utility common stocks. They, as measured
by the Dow Jones Utility Average -- which tracks the performance of 15
electric and natural gas utilities -- returned 46.29% for the year,
dramatically outpacing the broader stock market, as measured by the
Standard & Poor's 500 Index's return of 14.05%.
"Among dividend-paying stocks,
utility common stocks were the
clear victors during the past 12
months..."
Chart-topping utility common stocks
Given the sector's overall strength, it's not surprising that many of our
utility common stock holdings also were our best performers during the
year. Among the best was NSTAR, which transmits and delivers electricity
to customers in eastern and central Massachusetts. It also was powered by
company-specific developments, including the settlement of a contentious
strike, the company's effecting a two-for-one stock split and continued
financial improvement. Another chart topper was Cinergy Corp., which
performed well throughout the year but got an added kick from the news
that Duke Energy would acquire the company.
3
Preferred-stock holdings: leaders and laggards
Among our preferred-stock holdings, Sierra Pacific Power Company was a
winner. It was helped by colder weather earlier this year and an increase
in rates that became effective late last year. On the flip side were our
holdings in Lehman Brothers, which tread water during the period because
they carried yields below those offered by newly issued securities, which
muted demand for the securities.
[Table at top left-hand side of page entitled "Industry distribution1."
The first listing is Multi-utilities & unregulated power 35%, the second is
Electric utilities 19%, the third is Oil & gas exploration & production
10%, the fourth is Investment banking & brokerage 9%, the fifth is Other
diversified financial services 4%, the sixth is Regional banks 3%, the
seventh is Life & health insurance 3%, the eighth is Consumer finance 3%,
the ninth is Diversified banks 3%, the tenth is Trucking 2%, the eleventh
is Agricultural products 2%, the twelfth is Gas utilities 2%, the
thirteenth is Integrated telecommunication services 2% and the fourteenth
is All others 3%.]
Supply glut = opportunity
In the final months of the period, there was a glut of newly issued
preferred stocks, as companies rushed to lock in low interest rates. That
influx of supply temporarily weighed on preferred-stock prices and
afforded us the opportunity to buy some attractively valued,
tax-advantaged issues with relatively high coupons. Among our purchases
was Entergy Mississippi, an electric utility company with an improving
credit profile, and insurance giant MetLife, which carried coupons of
6.25% and 6.50%, respectively.
[Pie chart in middle of page with heading "Portfolio diversification1" The
chart is divided into three sections (from top to right): Preferred stocks
66%, Common stocks 33% and Short-term investments 1%.]
A word about dividends
Issuers exercising their call provisions to benefit from falling interest
rates last year caused the supply of preferred stocks to shrink, and
virtually every week other issuers continued to announce additional calls
of preferred stocks. From a technical standpoint, calls largely have been
beneficial for the preferred-stock 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-stock holdings
and either reinvest the proceeds in securities that carried lower dividend
yields or hold onto cash or equivalents. At the same time, rising
short-term rates forced the cost of leverage higher. The resulting
downward pressure on the Fund's
4
dividend income, coupled with the rising cost of leverage, caused us to de
clare a new monthly dividend on March 29, 2005. The new dividend amount of
$0.069 equates to an annualized yield of 6.68%, based on the Fund's closing
market price as of March 28, 2005.
[Table at top of page entitled "Scorecard." The header for the left column
is "Investment" and the header for the right column is "Period's
performance...and what's behind the numbers." The first listing is NSTAR
followed by an up arrow with the phrase "Investors cheer improving
financial results, strike settlement, stock split." The second listing is
Cinergy followed by an up arrow with the phrase "Rallies on news that Duke
Energy plans to acquire it." The third listing is Lehman Brothers followed
by a down arrow with the phrase "Low coupon unattractive amid higher-coupon
new issues."]
Outlook
After chalking up substantial gains over the past two years, the utilities
sector has shown no signs of retreat. Utilities continue to reap the
benefits of their efforts to repair their balance sheets, improve cash
flows, whittle down debts and return to their core competencies by
shedding non-regulated business. And with utilities looking to consolidate
and cut costs, we believe that more merger and acquisition activity is
likely, which we expect to provide a good under pinning for utility
stocks. The passage of the national energy bill by Congress late in the
period is a significant positive for utilities as it provides incentives
for investment that will help regulated earnings growth and it repeals
anachronistic legislation, potentially opening the door to more
consolidation in the industry. Finally, there remains a strong appetite
for dividends, with utility stocks being a primary beneficiary of that
trend. That said, given their strong recent gains, some moderation in
utility stock performance is likely in the cards.
"The passage of the national energy
bill by Congress late in the period is a
significant positive for utilities..."
This commentary reflects the views of the portfolio management team
through the end of the Fund's period discussed in this report. The team's
statements reflect their own opinions. As such they are in no way
guarantees of future events and are not intended to be used as investment
advice or a recommendation regarding any specific security. They are also
subject to change at any time as market and other conditions warrant.
The Fund normally will invest at least 25% of its managed assets in
securities of companies in the utilities industry. Such an investment
concentration makes the Fund more susceptible than a more broadly
diversified fund to factors adversely affecting the utilities industry.
Sector investing is subject to greater risks than the market as a whole.
1 As a percentage of the Fund's portfolio on July 31, 2005.
5
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
July 31, 2005
This schedule is divided into three main categories: common stocks,
preferred securities and short-term investments. Common stocks and
preferred securities are further broken down by industry group. Short-term
investments, which represent the Fund's cash position, are listed last.
Issuer Shares Value
Common stocks 49.36% $59,632,865
(Cost $52,701,484)
Electric Utilities 3.15% 3,809,725
Cinergy Corp. 50,000 2,207,500
Great Plains Energy, Inc. 10,750 348,945
Progress Energy, Inc. 28,000 1,249,080
Progress Energy, Inc. (Contingent Value Obligation) (B)(I) 35,000 4,200
Gas Utilities 1.84% 2,221,139
Atmos Energy Corp. 7,900 230,364
National Fuel Gas Co. 8,000 243,200
Peoples Energy Corp. 40,500 1,747,575
Integrated Telecommunication Services 2.76% 3,334,002
SBC Communications, Inc. 94,850 2,319,083
Verizon Communications, Inc. 29,650 1,014,919
Multi-Utilities & Unregulated Power 41.61% 50,267,999
Alliant Energy Corp. 118,420 3,446,022
Ameren Corp. 30,000 1,668,600
CH Energy Group, Inc. 120,900 5,942,235
Dominion Resources, Inc. 47,500 3,508,350
DTE Energy Co. 116,900 5,494,300
Duke Energy Corp. 58,000 1,713,320
Energy East Corp. 194,000 5,406,780
KeySpan Corp. 102,000 4,150,380
NiSource, Inc. 44,000 1,068,760
NSTAR 158,000 4,792,140
OGE Energy Corp. 5,200 157,976
Public Service Enterprise Group, Inc. 16,000 1,028,800
Sierra Pacific Resources (I) 234,000 3,037,320
See notes to
financial statements.
6
FINANCIAL STATEMENTS
Issuer Shares Value
Multi-Utilities & Unregulated Power (continued)
TECO Energy, Inc. 143,700 $2,724,552
WPS Resources Corp. 60,400 3,488,704
Xcel Energy, Inc. 136,000 2,639,760
Credit
Issuer, description rating (A) Shares Value
Preferred securities 97.99% $118,375,007
(Cost $113,571,277)
Agricultural Products 3.19% 3,855,937
Ocean Spray Cranberries, Inc., 6.25%, Ser A (S) BB+ 45,000 3,855,937
Broadcasting & Cable TV 2.00% 2,419,032
Shaw Communications, Inc., 8.50% (Canada) B+ 95,200 2,419,032
Consumer Finance 4.26% 5,143,720
SLM Corp., 6.97%, Ser A BBB+ 92,000 5,143,720
Diversified Banks 3.82% 4,609,340
Bank of America Corp., 6.75%, Depositary Shares, Ser VI A 77,100 4,117,140
Royal Bank of Scotland Group Plc, 5.75%,
Ser L (United Kingdom) A 20,000 492,200
Electric Utilities 25.35% 30,623,556
Alabama Power Co., 5.20% BBB+ 220,000 5,478,000
Central Illinois Light Co., 4.64% Baa2 7,460 699,375
Central Maine Power Co., 4.75% (G) Baa2 11,015 941,782
Connecticut Light & Power Co., 3.90%, Ser 1949 Baa3 27,255 1,016,952
Duquesne Light Co., 6.50% BB+ 100,000 5,245,000
Entergy Mississippi, Inc., 6.25% BB+ 78,000 1,969,500
Interstate Power & Light Co., 7.10%, Ser C BBB- 25,000 691,407
Interstate Power & Light Co., 8.375%, Ser B BBB- 36,800 1,251,200
Massachusetts Electric Co., 4.76% BBB+ 6,166 627,198
Northern Indiana Public Service Co., 7.50% BB+ 22,845 2,328,762
PSI Energy, Inc., 6.875% BBB- 46,000 4,799,180
Sierra Pacific Power Co., 7.80%, Ser 1 (Class A) CCC+ 220,800 5,575,200
Gas Utilities 1.24% 1,498,750
Southern Union Co., 7.55% BB+ 55,000 1,498,750
Integrated Oil & Gas 0.83% 1,000,400
Coastal Finance I, 8.375% CCC 40,000 1,000,400
See notes to
financial statements.
7
FINANCIAL STATEMENTS
Credit
Issuer, description rating (A) Shares Value
Integrated Telecommunication Services 0.00% $1,393
Touch America Holdings, Inc., $6.875 (B)(G)(H) D 13,928 1,393
Investment Banking & Brokerage 13.73% 16,581,635
Bear Stearns Cos., Inc. (The), 5.49%, Depositary Shares, Ser G BBB 56,000 2,800,000
Bear Stearns Cos., Inc. (The), 5.72%, Depositary Shares, Ser F BBB 92,000 4,705,800
Lehman Brothers Holdings, Inc., 5.67%, Depositary Shares, Ser D BBB+ 147,950 7,663,810
Lehman Brothers Holdings, Inc., 5.94%, Depositary Shares, Ser C BBB+ 28,100 1,412,025
Life & Health Insurance 4.39% 5,304,600
MetLife, Inc., 6.50%, Ser B BBB 210,000 5,304,600
Multi-Utilities & Unregulated Power 10.02% 12,110,018
Baltimore Gas & Electric Co., 6.99%, Ser 1995 Baa1 10,000 1,045,625
Energy East Capital Trust I, 8.25% BBB- 55,700 1,435,389
Public Service Electric & Gas Co., 4.18%, Ser B BB+ 40,000 3,280,000
Public Service Electric & Gas Co., 6.92% BB+ 7,000 730,407
South Carolina Electric & Gas Co., 6.52% Baa1 55,000 5,618,597
Oil & Gas Exploration & Production 14.68% 17,734,913
Anadarko Petroleum Corp., 5.46%, Depositary Shares, Ser B BBB- 52,300 5,133,574
Apache Corp., 5.68%, Depositary Shares, Ser B BBB 48,075 4,879,613
Devon Energy Corp., 6.49%, Ser A BB+ 50,000 5,192,190
Nexen, Inc., 7.35% (Canada) BB+ 96,400 2,529,536
Other Diversified Financial Services 6.33% 7,650,900
Citigroup, Inc., 6.231%, Depositary Shares, Ser H A 85,200 4,536,900
JPMorgan Chase & Co., 6.625%, Depositary Shares, Ser H A- 60,000 3,114,000
Regional Banks 4.74% 5,726,013
HSBC USA, Inc., $2.8575 (G) A1 108,550 5,726,013
Trucking 3.41% 4,114,800
AMERCO, 8.50%, Ser A CCC+ 162,000 4,114,800
See notes to
financial statements.
8
FINANCIAL STATEMENTS
Interest Par value
Issuer, maturity date rate (000) Value
Short-term investments 2.02% $2,444,000
(Cost $2,444,000)
Commercial Paper 2.02% 2,444,000
ChevronTexaco Funding Corp., 08-01-05 3.150% $2,444 2,444,000
Total investments 149.37% $180,451,872
Other assets and liabilities, net 0.35% $421,748
Fund preferred shares and accrued dividends (49.72%) ($60,062,950)
Total net assets 100.00% $120,810,670
(A) Credit ratings are unaudited and are rated by Moody's Investors Service
where Standard & Poor's ratings are not available, unless indicated
otherwise.
(B) This security is fair valued in good faith under procedures established
by the Board of Trustees.
(G) Security rated internally by John Hancock Advisers, LLC.
(H) Non-income-producing issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(I) Non-income-producing security.
(S) This security is 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 $3,855,937 or 3.19% of the Fund's net
assets as of July 31, 2005.
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.
9
FINANCIAL STATEMENTS
ASSETS AND
LIABILITIES
July 31, 2005
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes. You'll
also find the net
asset value for each
common share.
Assets
Investments at value (cost $168,716,761) $180,451,872
Cash 25
Dividends receivable 642,467
Other assets 24,036
Total assets 181,118,400
Liabilities
Payable to affiliates
Management fees 122,603
Other 22,988
Other payables and accrued expenses 99,189
Total liabilities 244,780
Dutch Auction Rate Transferable Securities preferred
shares (DARTS) including accrued dividends,
unlimited number of shares of beneficial interest
authorized with no par value, 600 shares issued,
liquidation preference of $100,000 per share 60,062,950
Net assets
Common shares capital paid-in 113,203,974
Accumulated net realized loss on investments (5,336,635)
Net unrealized appreciation of investments 11,735,111
Accumulated net investment income 1,208,220
Net assets applicable to common shares $120,810,670
Net asset value per common share
Based on 8,344,700 shares of beneficial interest
outstanding -- unlimited number of shares
authorized with no par value $14.48
See notes to
financial statements.
10
FINANCIAL STATEMENTS
OPERATIONS
For the year ended
July 31, 2005
This 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.
Investment income
Dividends $10,318,751
Interest 130,423
Total investment income 10,449,174
Expenses
Investment management fees 1,403,201
Administration fees 263,100
DARTS auction fees 159,583
Federal excise tax 73,009
Printing 49,083
Professional fees 47,798
Miscellaneous 41,112
Custodian fees 37,591
Transfer agent fees 37,146
Registration and filing fees 23,825
Trustees' fees 11,392
Interest 125
Total expenses 2,146,965
Net investment income 8,302,209
Realized and unrealized gain (loss)
Net realized loss on investments (4,534,944)
Change in net unrealized appreciation (depreciation)
of investments 19,618,715
Net realized and unrealized gain 15,083,771
Distributions to DARTS (1,379,117)
Increase in net assets from operations $22,006,863
See notes to
financial statements.
11
FINANCIAL STATEMENTS
CHANGES IN
NET ASSETS
These Statements
of Changes in Net
Assets show how
the value of the
Fund's net assets
has changed
during the last
two periods. The
difference reflects
earnings less
expenses, any
investment
gains and losses
and distributions,
if any, paid to
shareholders.
Year Year
ended ended
7-31-04 7-31-05
Increase (decrease) in net assets
From operations
Net investment income $7,816,293 $8,302,209
Net realized gain (loss) 159,828 (4,534,944)
Change in net unrealized
appreciation (depreciation) 4,175,481 19,618,715
Distributions to DARTS (673,278) (1,379,117)
Increase in net assets resulting
from operations 11,478,324 22,006,863
Distributions to common shareholders
From net investment income (8,111,049) (7,710,503)
Net assets
Beginning of period 103,147,035 106,514,310
End of period 1 $106,514,310 $120,810,670
1 Includes accumulated net investment income of $1,922,519 and $1,208,220,
respectively.
See notes to
financial statements.
12
FINANCIAL HIGHLIGHTS
FINANCIAL
HIGHLIGHTS
COMMON SHARES
The Financial Highlights show how the Fund's net asset value for a share
has changed since the end of the previous period.
Period ended 7-31-01 7-31-02 7-31-03 7-31-04 7-31-05
Per share operating performance
Net asset value,
beginning of period $12.66 $13.82 $11.62 $12.36 $12.76
Net investment income 1 1.18 1.12 0.98 0.94 0.99
Net realized and unrealized
gain (loss) on investments 1.27 (2.20) 0.84 0.51 1.82
Distributions to DARTS (0.32) (0.15) (0.11) (0.08) (0.17)
Total from investment operations 2.13 (1.23) 1.71 1.37 2.64
Less distributions to
common shareholders
From net investment income (0.97) (0.97) (0.97) (0.97) (0.92)
Net asset value, end of period $13.82 $11.62 $12.36 $12.76 $14.48
Per share market value,
end of period $12.66 $11.13 $12.40 $12.45 $13.14
Total return at market value 2 (%) 22.53 (5.06) 20.79 8.31 13.03
Ratios and supplemental data
Net assets applicable to common
shares, end of period (in millions) $115 $97 $103 $107 $121
Ratio of expenses to average
net assets 3 (%) 1.87 1.94 2.03 1.90 1.86
Ratio of net investment income
to average net assets 4 (%) 8.57 8.44 8.35 7.23 7.19
Portfolio turnover (%) 26 17 5 7 19
Senior securities
Total value of DARTS outstanding
(in millions) $60 $60 $60 $60 $60
Involuntary liquidation preference
per unit (in thousands) $100 $100 $100 $100 $100
Average market value
per unit (in thousands) $100 $100 $100 $100 $100
Asset coverage per unit 5 $290,681 $254,633 $271,743 $275,341 $300,181
See notes to
financial statements.
13
FINANCIAL HIGHLIGHTS
Notes to Financial Highlights
1 Based on the average of the shares outstanding.
2 Assumes dividend reinvestment.
3 Ratios calculated on the basis of expenses relative to the average net
assets of common shares. Without the exclusion of preferred shares, the
ratios of expenses would have been 1.23%, 1.26%, 1.26%, 1.22% and 1.22%,
respectively.
4 Ratios calculated on the basis of net investment income relative to the
average net assets of common shares. Without the exclusion of preferred
shares, the ratios of net investment income would have been 5.63%, 5.48%,
5.18%, 4.65% and 4.73%, respectively.
5 Calculated by subtracting the Fund's total liabilities from the Fund's
total assets and dividing such amount by the number of DARTS outstanding
as of the applicable 1940 Act Evaluation Date, which may differ from the
financial reporting date.
See notes to
financial statements.
14
NOTES TO
STATEMENTS
Note A
Accounting policies
John Hancock Patriot Global Dividend Fund (the "Fund") is a diversified
closed-end 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 which have a remaining maturity
of 60 days or less may be valued at amortized cost, which approximates
market value. The Fund determines the net asset value of the common shares
each business day.
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.
Expenses
The majority of the expenses are directly identifiable to an individual
fund. Expenses that are not readily identifiable to a specific fund are
allocated in such a manner as deemed equitable, taking into consideration,
among other things, the nature and type of expense and the relative size of
the funds.
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 that is distributed to
shareholders. Therefore, no federal income tax provision is required. For
federal income tax purposes, the Fund has $617,550 of a capital loss
carryforward available, to the extent provided by regulations, to offset
future net realized capital gains. To the extent that such carryforward is
used by the Fund, no capital gain distributions will be made. The loss
carryforward expires as follows: July 31, 2011 -- $573,041 and July 31,
2012 -- $44,509. Net capital losses of $4,683,953 that are attributable to
security transactions incurred after October 31, 2004, are treated as
arising on August 1, 2005, the first day of the Fund's next taxable year.
Dividends, interest and distributions
Dividend income on investment securities is recorded on the ex-dividend
date or, in the case of some foreign securities, on the date thereafter
when the Fund identifies the dividend. Interest income on investment
securities is recorded on the accrual basis. The Fund may place a security
on non-accrual status and reduce related investment income by ceasing
current accruals or writing off interest, or dividends
15
receivable, when the collection of income has become doubtful. Foreign
income may be subject to foreign withholding taxes, which are accrued as
applicable.
The Fund records distributions to shareholders from net investment income
and net realized gains on the ex-dividend date. During the year ended July
31, 2004, the tax character of distributions paid was as follows: ordinary
income $8,784,327. During the year ended July 31, 2005, the tax character
of distributions paid was as follows: ordinary income $9,089,620.
As of July 31, 2005, the components of distributable earnings on a tax
basis included $1,208,687 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are
determined in conformity with income tax regulations, which may differ from
accounting principles generally accepted in the United States of America.
Distributions in excess of tax basis earnings and profits, if any, are
reported in the Fund's financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of America,
incorporates estimates made by management in determining the reported
amount of assets, liabilities, revenues and expenses of the Fund. Actual
results could differ from these estimates.
Note B
Management fee and transactions
with affiliates and others
The Fund has an investment management contract with John Hancock Advisers,
LLC (the "Adviser"), a wholly owned subsidiary of John Hancock Financial
Services, Inc. Under the investment management contract, the Fund pays a
monthly management fee to the Adviser at an annual rate of 0.80% of the
Fund's average weekly net asset value plus the value attributable to the
preferred shares (collectively "managed assets").
The Fund has an administrative agreement with the Adviser under which the
Adviser oversees the custodial, auditing, valuation, accounting, legal,
stock transfer and dividend disbursing services and maintains Fund
communications with the shareholders. The Fund pays the Adviser a monthly
administration fee at an annual rate of 0.15% of the Fund's average weekly
managed assets. The compensation for the year amounted to $263,100. The
Fund also paid the Adviser the amount of $68 for certain publishing
services, included in the printing fees and the amount of $2,641 for
certain compliance costs, included in the miscellaneous expenses.
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 investments,
as well as any unrealized gains or losses. The Deferred Compensation Plan
investments had no impact on the operations of the Fund.
The Fund is listed for trading on the New York Stock Exchange ("NYSE") and
has filed with the NYSE its chief executive officer certification regarding
compliance with the NYSE's listing standards. The Fund also files with the
Securities and Exchange Commission the certification of its chief executive
officer and chief accounting officer required by Section 302 of the
Sarbanes-Oxley Act.
16
Note C
Fund share
transactions
Common shares
The Fund had no common shares transactions during the last two fiscal
periods.
Dutch Auction Rate
Transferable Securities
preferred shares
The Fund issued 600 shares of Dutch Auction Rate Transferable Securities
preferred shares ("DARTS") on October 16, 1992, in a public offering. The
underwriting discount was recorded as a reduction of the capital of common
shares.
Dividends on the DARTS, which accrue daily, are cumulative at a rate that
was established at the offering of the DARTS and has been reset every 49
days thereafter by an auction. Dividend rates on DARTS ranged from 1.42% to
3.25% during the year ended July 31, 2005. Accrued dividends on DARTS are
included in the value of DARTS on the Fund's Statement of Assets and
Liabilities.
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, as defined in the Funds' by-laws.
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 shareholders 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 shareholders.
Note D
Investment
transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. government, during the
year ended July 31, 2005, aggregated $32,457,117 and $31,929,404,
respectively.
The cost of investments owned on July 31, 2005, including short-term
investments, for federal income tax purposes, was $168,751,896. Gross
unrealized appreciation and depreciation of investments aggregated
$15,887,795 and $4,187,819, respectively, resulting in net unrealized
appreciation of $11,699,976. The difference between book basis and tax
basis net unrealized appreciation of investments is attributable primarily
to the tax deferral of losses on certain sales of securities.
Note E
Reclassification
of accounts
During the year ended July 31, 2005, the Fund reclassified amounts to
reflect a decrease in accumulated net realized loss on investments of $273,
an increase in accumulated net investment income of $73,112 and a decrease
in capital paid-in of $73,385. This represents the amount necessary to
report these balances on a tax basis, excluding certain temporary
differences, as of July 31, 2005. 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 certain
differences in the computation of distributable income and capital gains
under federal tax rules versus accounting principles generally accepted in
the United States of America, book and tax differences in accounting for
deferred compensation and federal excise tax. The calculation of net
investment income per share in the Fund's Financial Highlights excludes
these adjustments.
17
Change in
Independent Auditor (unaudited)
Based on the recommendation of the Audit Committee of the Fund, the Board
of Trustees has determined not to retain Deloitte & Touche LLP as the
Fund's Independent Registered Public Accounting Firm and voted to appoint
PricewaterhouseCoopers LLP for the fiscal year ended July 31, 2006. During
the two most recent fiscal years, Deloitte & Touche LLP's audit reports
contained no adverse opinion or disclaimer of opinion; nor were their
reports qualified as to uncertainty, audit scope or accounting principles.
Further, there were no disagreements between the Fund and Deloitte & Touche
LLP on accounting principles, financial statements disclosures or audit
scope, which, if not resolved to the satisfaction of Deloitte & Touche LLP,
would have caused them to make reference to the disagreement in their
reports.
18
AUDITORS'
REPORT
Report of Deloitte
& Touche LLP,
Independent
Registered Public
Accounting Firm
To the Board of Trustees and Shareholders of
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, 2005, and the related statement
of operations for the year then ended, and the statements of changes in net
assets for the years ended July 31, 2004 and 2005 and the financial
highlights for each of the years in the five-year period ended July 31,
2005. 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.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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. The Fund is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned at July 31, 2005, by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Fund as of July 31, 2005, and the results of its operations, the
changes in its net assets and its financial highlights for the respective
stated periods in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 12, 2005
19
TAX INFORMATION
Unaudited
For federal income tax purposes, the following information is furnished
with respect to the distributions of the Fund, if any, paid during its
taxable year ended July 31, 2005.
With respect to the ordinary dividends paid by the Fund for the fiscal year
ended July 31, 2005, 100% of the dividends qualify for the corporate
dividends-received deduction.
The Fund hereby designates the maximum amount allowable of its net taxable
income as qualified dividend income as provided in the Jobs and Growth Tax
Relief Reconciliation Act of 2003. This amount will be reflected on Form
1099-DIV for the calendar year 2005.
Shareholders will be mailed a 2005 U.S. Treasury Department Form 1099-DIV
in January 2006. This will reflect the total of all distributions that are
taxable for calendar year 2005.
20
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, 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. This 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.
On November 20, 2001, the Fund's Trustees approved the following investment
policy investment restriction change, effective December 15, 2001. Under
normal circumstances, the Fund will invest at least 80% of its assets in
dividend-paying securities. The "Assets" are defined as net assets,
including the liquidation preference amount of the DARTS, plus borrowings
for investment purposes. The Fund will notify shareholders at least 60 days
prior to any change in this 80% investment policy.
By-laws
In November 2002, the Board of Trustees adopted several amendments to the
Fund's by-laws, including provisions relating to the calling of a special
meeting and requiring advance notice of shareholder proposals or nominees
for Trustee. The advance notice provisions in the by-laws require
shareholders to notify the Fund in writing of any proposal that they intend
to present at an annual meeting of shareholders, including any nominations
for Trustee, between 90 and 120 days prior to the first anniversary of the
mailing date of the notice from the prior year's annual meeting of
shareholders. The notification must be in the form prescribed by the
by-laws. The advance notice provisions provide the Fund and its Trustees
with the opportunity to thoughtfully consider and address the matters
proposed before the Fund prepares and mails its proxy statement to
shareholders. Other amendments set forth the procedures that must be
followed in order for a shareholder to call a special meeting of
shareholders. Please contact the Secretary of the Fund for additional
information about the advance notice requirements or the other amendments
to the by-laws.
On December 16, 2003, the Trustees approved the following change to the
Fund's by-laws. The auction preferred shares section of the Fund's by-laws
was changed to update the rating agency requirements in keeping with recent
changes to the agencies' basic maintenance reporting requirements for
leveraged closed-end funds. By-laws now require an independent accountant's
confirmation only once per year, at the Fund's fiscal year end, and changes
to the agencies' basic maintenance reporting requirements that include
modifications to the eligible assets and their respective discount factors.
These revisions bring the Fund's by-laws in line with current rating agency
requirements.
On September 14, 2004, the Trustees approved an amendment to the Fund's
by-laws increasing the maximum
21
applicable dividend rate ceiling on the preferred shares to conform with
the modern calculation methodology used by the industry and other John
Hancock funds.
Dividends and
distributions
During the year ended July 31, 2005, dividends from net investment income
totaling $0.924 per share were paid to shareholders. The dates of payments
and the amounts per share are as follows:
INCOME
PAYMENT DATE DIVIDEND
----------------------------------
August 31, 2004 $0.081
September 30, 2004 0.081
October 29, 2004 0.081
November 30, 2004 0.081
December 31, 2004 0.081
January 31, 2005 0.081
February 28, 2005 0.081
March 31, 2005 0.081
April 29, 2005 0.069
May 31, 2005 0.069
June 30, 2005 0.069
July 29, 2005 0.069
Dividend
reinvestment plan
The Fund offers its shareholders 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 Mellon Investor Services, as Plan Agent for the
common shareholders (the "Plan Agent"), 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 an 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.
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.
Participants in the Plan may withdraw from the Plan at any time by
contacting the Plan Agent by telephone, in writing or by visiting the Plan
Agent's Web site at www.melloninvestor.com. Such withdrawal will be
effective immediately if received prior to dividend record dates;
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. The Plan Agent will hold common shares in the account of each
Plan participant in non-certificated form, in the name of the participant.
Proxy material relating to the shareholders' meetings of the Fund will
include those shares purchased, as well as shares held pursuant to the
Plan.
The reinvestment of dividends and distributions will not relieve
participants of any
22
federal income tax that may be payable or required to be withheld on such
dividends or distributions. Participants under the Plan will receive tax
information annually. The amount of dividend to be reported on the 1099-DIV
should be the amount of cash used by the Plan Agent to purchase shares in
the open market, including the amount of cash allocated to brokerage
commissions paid on such purchases.
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 after at least 90 days' written notice to
all shareholders of the Fund. All correspondence or additional information
concerning the Plan should be directed to the Plan Agent, Mellon Bank,
N.A., c/o Mellon Investor Services, P.O. Box 3338, South Hackensack, NJ
07606-1938 (Telephone: 1-800-852-0218).
Shareholder
communication
and assistance
If you have any questions concerning the 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:
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Telephone: 1-800-852-0218
If your shares are held with a brokerage firm, you should contact that
firm, bank or other nominee for assistance.
Shareholder meeting
On March 7, 2005, the Annual Meeting of the Fund was held to elect five
Trustees and to ratify the actions of the Trustees in selecting independent
auditors for the Fund.
Proxies covering 8,040,154 shares of beneficial interest were voted at the
meeting. The common shareholders elected the following Trustees to serve
until their respective successors are duly elected and qualified, with the
votes for each Trustee tabulated as follows:
WITHHELD
FOR AUTHORITY
--------------------------------------------------------------------------
James F. Carlin 8,006,277 33,452
Richard P. Chapman, Jr. 7,992,455 47,274
William H. Cunningham 7,994,079 45,650
James A. Shepherdson* 7,999,551 40,178
* Mr. James A. Shepherdson resigned effective July 15, 2005.
The preferred shareholders elected Patti McGill Peterson as Trustee of the
Fund until her successor is duly elected and qualified, with the votes
tabulated as follows: 425 FOR, 0 AGAINST and 0 ABSTAINING.
The common and preferred shareholders also ratified the Trustees' selection
of Deloitte & Touche LLP as the Fund's independent auditors for the fiscal
year ending July 31, 2005, with the votes tabulated as follows: 7,979,825
FOR, 23,430 AGAINST and 36,899 ABSTAINING.
23
Board Consideration
of and Continuation
of Investment
Advisory Agreement:
John Hancock Patriot
Global Dividend Fund
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
requires the Board of Trustees (the "Board") of John Hancock Patriot Global
Dividend Fund (the "Fund"), including a majority of the Trustees who have
no direct or indirect interest in the investment advisory agreement and are
not "interested persons" of the Fund, as defined in the 1940 Act (the
"Independent Trustees"), annually to review and consider the continuation
of the investment advisory agreement (the "Advisory Agreement") with John
Hancock Advisers, LLC (the "Adviser") for the Fund.
At meetings held on May 19-20 and June 6-7, 2005, the Board, including the
Independent Trustees, considered the factors and reached the conclusions
described below relating to the selection of the Adviser and the
continuation of the Advisory Agreement. During such meetings, the Board's
Contracts/Operations Committee and the Independent Trustees also met in
executive sessions with their independent legal counsel. In evaluating the
Advisory Agreement, the Board, including the Contracts/Operations Committee
and the Independent Trustees, reviewed a broad range of information
requested for this purpose by the Independent Trustees, including but not
limited to the following: (i) the investment performance of the Fund and a
broader universe of relevant funds (the "Universe") selected by Lipper Inc.
("Lipper"), an independent provider of investment company data, for a range
of periods, (ii) advisory and other fees incurred by, and the expense
ratios of, the Fund and a peer group of comparable funds selected by Lipper
(the "Peer Group"), (iii) the advisory fees of comparable portfolios of
other clients of the Adviser, (iv) the Adviser's financial results and
condition, including its and certain of its affiliates' profitability from
services performed for the Fund, (v) breakpoints in the Fund's and the Peer
Group's fees and a study undertaken at the direction of the Independent
Trustees as to the allocation of the benefits of economies of scale between
the Fund and the Adviser, (vi) the Adviser's record of compliance with
applicable laws and regulations, with the Fund's investment policies and
restrictions, and with the Fund's Code of Ethics and the structure and
responsibilities of the Adviser's compliance department, (vii) the
background and experience of senior management and investment
professionals, and (viii) the nature, cost and character of advisory and
non-investment management services provided by the Adviser and its
affiliates.
Nature, Extent and Quality
of Services
The Board considered the ability of the Adviser, based on its resources,
reputation and other attributes, to attract and retain qualified investment
professionals, including research, advisory, and supervisory personnel. The
Board further considered the compliance programs and compliance records of
the Adviser. In addition, the Board took into account the administrative
services provided to the Fund by the Adviser and its affiliates.
Based on the above factors, together with those referenced below, the Board
concluded that, within the context of its full deliberations, the nature,
extent and quality of the investment advisory services provided to the Fund
by the Adviser were sufficient to support renewal of the Advisory
Agreement.
Fund Performance
The Board considered the performance results for the Fund over various time
periods. The Board also considered these results in comparison to the
performance of the Universe, as well as the Fund's
24
benchmark indices. Lipper determined the Universe for the Fund. The Board
reviewed with a representative of Lipper the methodology used by Lipper to
select the funds in the Universe and the Peer Group.
The Board noted that the performance of the Fund was higher than or not
appreciably below the median and average performance of its Universe and
one of its benchmark indices, the Lipper Closed-End Income and Preferred
Funds Index, for the time periods under review. The Board noted that,
except for the one-year period ended December 31, 2004, the Fund's
performance was either above or not appreciably below the performance of
the Fund's other benchmark index, Dow Jones Utility Average Index, for the
time periods under review. The Adviser provided information to the Board
regarding factors contributing to the Fund's performance results, as well
as the Adviser's outlook and investment strategy for the near future. The
Board indicated its intent to continue to monitor the Fund's performance
trends.
Investment Advisory Fee
Rates and Expenses
The Board reviewed and considered the contractual investment advisory fee
rate payable by the Fund to the Adviser for investment advisory services
(the "Advisory Agreement Rate"). The Board received and considered
information comparing the Advisory Agreement Rate and the actual management
fee expense ratio with fees for the Peer Group. The Board noted that the
Advisory Agreement Rate was at the high end of the range of other funds in
the Peer Group, but noted that the Peer Group included very few funds. The
Board also noted that the actual management fee expense ratio was higher
than the median rate of the Peer Group. The Adviser explained that, in its
view, the actual management fee expense ratio reported by Lipper is
overstated because the Lipper analysis excludes amounts attributable to
redeemable preferred shares from the denominator or asset base when
converting dollars actually paid into a ratio. The Board received a more
detailed analysis provided by the Adviser, which showed that the actual
management fee expense ratio is in line with the industry average of other
similar funds when adjusted for leverage by including amounts attributable
to redeemable preferred shares in the asset base.
The Board received and considered information regarding the Fund's total
operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, non-management fees, transfer agent
fees and custodian fees, including and excluding investment-related
expenses. The Board also considered comparisons of these expenses to the
Peer Group and the Universe. The Board noted that the total operating
expense ratio of the Fund was higher than the Peer Group's and Universe's
median total operating expense ratio. The Board considered the additional
analysis provided by the Adviser, and noted that the actual total operating
expense ratio is in line with the industry average of other similar funds
when adjusted for leverage by including amounts attributable to redeemable
preferred shares in the asset base.
The Adviser also discussed the Lipper data and rankings, and other relevant
information, for the Fund. Based on the above-referenced considerations and
other factors, the Board concluded that the Fund's overall expense results
and performance supported the re-approval of the Advisory Agreement.
Profitability
The Board received and considered a detailed profitability analysis of the
Adviser based on the Advisory Agreement, as well as on other relationships
between the Fund and the Adviser and its affiliates. The Board concluded
that, in light of the costs of providing investment management and other
services to the Fund, the profits and
25
other ancillary benefits reported by the Adviser were not unreasonable.
Economies of Scale
The Board received and considered general information regarding economies
of scale with respect to the management of the Fund, including the Fund's
ability to appropriately benefit from economies of scale under the Fund's
fee structure. The Board recognized the inherent limitations of any
analysis of economies of scale, stemming largely from the Board's
understanding that most of the Adviser's costs are not specific to
individual Funds, but rather are incurred across a variety of products and
services.
The Board observed that the Advisory Agreement did not offer breakpoints.
However, the Board considered the limited relevance of economies of scale
in the context of a closed-end fund that, unlike an open-end fund, does not
continuously offer its shares, and concluded that the fees were fair and
equitable based on relevant factors, including the Fund's total expenses
ranking relative to its Peer Group.
Information About
Services to Other Clients
The Board also received information about the nature, extent and quality of
services and fee rates offered by the Adviser to its other clients,
including other registered investment companies, institutional investors
and separate accounts. The Board concluded that the Advisory Agreement Rate
was not unreasonable, taking into account fee rates offered to others by
the Adviser and giving effect to differences in services covered by such
fee rates.
Other Benefits to
the Adviser
The Board received information regarding potential "fall-out" or ancillary
benefits received by the Adviser and its affiliates as a result of the
Adviser's relationship with the Fund. Such benefits could include, among
others, benefits directly attributable to the relationship of the Adviser
with the Fund and benefits potentially derived from an increase in the
business of the Adviser as a result of its relationship with the Fund (such
as the ability to market to shareholders other financial products offered
by the Adviser and its affiliates).
The Board also considered the effectiveness of the Adviser's and the Fund's
policies and procedures for complying with the requirements of the federal
securities laws, including those relating to best execution of portfolio
transactions and brokerage allocation.
Other Factors and
Broader Review
As discussed above, the Board reviewed detailed materials received from the
Adviser as part of the annual re-approval process under Section 15(c) of
the 1940 Act. The Board also regularly reviews and assesses the quality of
the services that the Fund receives throughout the year. In this regard,
the Board reviews reports of the Adviser at least quarterly, which include,
among other things, a detailed portfolio review, detailed fund performance
reports and compliance reports. In addition, the Board meets with portfolio
managers and senior investment officers at various times throughout the
year.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the
Board concluded that approval of the continuation of the Advisory Agreement
for the Fund was in the best interest of the Fund and its shareholders.
Accordingly, the Board unanimously approved the continuation of the
Advisory Agreement.
26
TRUSTEES
& OFFICERS
This chart provides information about the Trustees and Officers who oversee
your John Hancock fund. Officers elected by the Trustees manage the
day-to-day operations of the Fund and execute policies formulated by the
Trustees.
Independent Trustees
Name, age Number of
Position(s) held with Fund Trustee John Hancock
Principal occupation(s) and other of Fund funds overseen
directorships during past 5 years since 1 by Trustee
Charles L. Ladner, 2 Born: 1938 1992 51
Independent Chairman (since 2004); Chairman and Trustee, Dunwoody
Village, Inc. (retirement services) (until 2003); Senior Vice President and
Chief Financial Officer, UGI Corporation (public utility holding company)
(retired 1998); Vice President and Director for AmeriGas, Inc. (retired
1998); Director of AmeriGas Partners, L.P. (until 1997) (gas distribution);
Director, EnergyNorth, Inc. (until 1995); Director, Parks and History
Association (since 2001).
James F. Carlin, Born: 1940 1992 51
Director and Treasurer, Alpha Analytical Inc. (analytical laboratory) (since 1985);
Part Owner and Treasurer, Lawrence Carlin Insurance Agency, Inc. (since 1995);
Part Owner and Vice President, Mone Lawrence Carlin Insurance Agency, Inc.
(since 1996); Director and Treasurer, Rizzo Associates (engineering) (until 2000);
Chairman and CEO, Carlin Consolidated, Inc. (management/investments) (since
1987); Director and Partner, Proctor Carlin & Co., Inc. (until 1999); Trustee,
Massachusetts Health and Education Tax Exempt Trust (since 1993); Director of
the following: Uno Restaurant Corp. (until 2001), Arbella Mutual (insurance)
(until 2000), HealthPlan Services, Inc. (until 1999), Flagship Healthcare, Inc. (until
1999), Carlin Insurance Agency, Inc. (until 1999); Chairman, Massachusetts
Board of Higher Education (until 1999).
Richard P. Chapman, Jr., 2 Born: 1935 2005 51
President and Chief Executive Officer, Brookline Bancorp Inc. (lending)
(since 1972); Director, Lumber Insurance Co. (insurance) (until 2000);
Chairman and Director, Northeast Retirement Services, Inc. (retirement
administration) (since 1998).
William H. Cunningham, Born: 1944 1995 51
Former Chancellor, University of Texas System and former President of the
University of Texas, Austin, Texas; Chairman and CEO, IBT Technologies
(until 2001); Director of the following: The University of Texas Investment
Management Company (until 2000), Hire.com (until 2004), STC Broadcasting,
Inc. and Sunrise Television Corp. (electronic manufacturing) (until 2001),
Symtx, Inc. (electronic manufacturing) (since 2001), Adorno/Rogers Technology,
Inc. (until 2004), Pinnacle Foods Corporation (until 2003), rateGenius (Internet
27
Independent Trustees (continued)
Name, age Number of
Position(s) held with Fund Trustee John Hancock
Principal occupation(s) and other of Fund funds overseen
directorships during past 5 years since 1 by Trustee
William H. Cunningham, Born: 1944 (continued) 1995 51
service) (until 2003), Jefferson-Pilot Corporation (diversified life insurance
company) (since 1985), New Century Equity Holdings (formerly Billing Concepts)
(until 2001), eCertain (until 2001), ClassMap.com (until 2001), Agile Ventures
(until 2001), LBJ Foundation (until 2000), Golfsmith International, Inc.
(until 2000), Metamor Worldwide (until 2000), AskRed.com (until 2001),
Southwest Airlines (since 2000) and Introgen (since 2000); Advisory Director,
Q Investments (until 2003); Advisory Director, Chase Bank (formerly Texas
Commerce Bank -- Austin) (since 1988), LIN Television (since 2002), WilTel
Communications (until 2003) and Hayes Lemmerz International, Inc.
(diversified automotive parts supply company) (since 2003).
Ronald R. Dion, Born: 1946 1998 51
Chairman and Chief Executive Officer, R.M. Bradley & Co., Inc.; Director,
The New England Council and Massachusetts Roundtable; Trustee, North
Shore Medical Center; Director, Boston Stock Exchange; Director, BJ's
Wholesale Club, Inc. and a corporator of the Eastern Bank; Trustee,
Emmanuel College; Director, Boston Municipal Research Bureau; Member
of the Advisory Board, Carroll Graduate School of Management at
Boston College.
John A. Moore, 2 Born: 1939 2002 51
President and Chief Executive Officer, Institute for Evaluating Health
Risks, (nonprofit institution) (until 2001); Chief Scientist, Sciences
International (health research) (until 2003); Principal, Hollyhouse
(consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002).
Patti McGill Peterson, 2 Born: 1943 2002 51
Executive Director, Council for International Exchange of Scholars and
Vice President, Institute of International Education (since 1998);
Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until
1998); Former President of Wells College and St. Lawrence University;
Director, Niagara Mohawk Power Corporation (until 2003); Director, Ford
Foundation, International Fellowships Program (since 2002); Director,
Lois Roth Endowment (since 2002); Director, Council for International
Educational Exchange (since 2003).
Steven R. Pruchansky, Born: 1944 1992 51
Chairman and Chief Executive Officer, Greenscapes of Southwest
Florida, Inc. (since 2000); Director and President, Greenscapes of
Southwest Florida, Inc. (until 2000); Managing Director, JonJames, LLC
(real estate) (since 2001); Director, First Signature Bank & Trust Company
(until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell
Building Corp. (until 1991).
28
Principal officers who are not Trustees
Name, age
Position(s) held with Fund Officer
Principal occupation(s) and of Fund
directorships during past 5 years since
Keith F. Hartstein, Born: 1956 2005
President and Chief Executive Officer
Senior Vice President, Manulife Financial Corporation (since 2004); Director,
President and Chief Executive Officer, John Hancock Advisers, LLC (the
"Adviser") and The Berkeley Financial Group, LLC ("The Berkeley Group")
(holding company); Director, President and Chief Executive Officer, John
Hancock Funds, LLC. ("John Hancock Funds"); Director, President and Chief
Executive Officer, Sovereign Asset Management Corporation ("SAMCorp.");
Director, John Hancock Signature Services, Inc.; President, John Hancock Trust;
Chairman and President, NM Capital Management, Inc. (NM Capital) (since
2005); Chairman, Investment Company Institute Sales Force Marketing
Committee (since 2003); Executive Vice President, John Hancock Funds, LLC
(until 2005).
William H. King, Born: 1952 1992
Vice President and Treasurer
Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer
of each of the John Hancock funds; Assistant Treasurer of each of the John
Hancock funds (until 2001).
Francis V. Knox, Jr., Born: 1947 2005
Vice President and Chief Compliance Officer
Vice President and Chief Compliance Officer for John Hancock Investment
Company, John Hancock Life Insurance Company (U.S.A.), John Hancock Life
Insurance Company and John Hancock Funds (since 2005); Fidelity Investments --
Vice President and Assistant Treasurer, Fidelity Group of Funds (until 2004);
Fidelity Investments -- Vice President and Ethics & Compliance Officer (until 2001).
The business address for all Trustees and Officers is 601 Congress Street,
Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the Fund includes additional
information about members of the Board of Trustees of the Fund and is
available, without charge, upon request, by calling 1-800-225-5291.
1 Each Trustee serves until resignation, retirement age or until his or her
successor is elected.
2 Member of Audit Committee.
29
30
31
32
For more information
The Fund's proxy voting policies, procedures and records are available
without charge, upon request:
By phone On the Fund's Web site On the SEC's Web site
1-800-225-5291 www.jhfunds.com/proxy www.sec.gov
Investment adviser
John Hancock Advisers, LLC
601 Congress Street
Boston, MA 02210-2805
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Transfer agent and
dividend disburser
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Transfer agent for DARTS
Deutsche Bank Trust
Company Americas
280 Park Avenue
New York, NY 10017
Legal counsel
Wilmer Cutler Pickering
Hale and Dorr LLP
60 State Street
Boston, MA 02109-1803
Independent registered
public accounting firm
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
Stock symbol
Listed New York
Stock Exchange:
PGD
For shareholder assistance
refer to page 23
How to contact us
Internet www.jhfunds.com
Mail Regular mail:
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Phone Customer service representatives 1-800-852-0218
Portfolio commentary 1-800-344-7054
24-hour automated information 1-800-843-0090
TDD line 1-800-231-5469
A listing of month-end portfolio holdings is available on our Web site,
www.jhfunds.com. A more detailed portfolio holdings summary is available on
a quarterly basis 60 days after the fiscal quarter on our Web site or upon
request by calling 1-800-225-5291, or on the Securities and Exchange
Commission's Web site, www.sec.gov.
33
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-852-0218
1-800-843-0090 EASI-Line
1-800-231-5469 (TDD)
www.jhfunds.com
PRESORTED
STANDARD
U. S. POSTAGE
PAID
MIS
P400A 7/05
9/05
ITEM 2. CODE OF ETHICS.
As of the end of the period, July 31, 2005, the registrant has adopted a
code of ethics, as defined in Item 2 of Form N-CSR, that applies to its
Chief Executive Officer, Chief Financial Officer and Treasurer
(respectively, the principal executive officer, the principal financial
officer and the principal accounting officer, the "Senior Financial
Officers"). A copy of the code of ethics is filed as an exhibit to this
Form N-CSR.
The code of ethics was amended effective February 1, 2005 to address new
Rule 204A-1 under the Investment Advisers Act of 1940 and to make other
related changes.
The most significant amendments were:
(a) Broadening of the General Principles of the code to cover compliance
with all federal securities laws.
(b) Eliminating the interim requirements (since the first quarter of 2004)
for access persons to preclear their personal trades of John Hancock mutual
funds. This was replaced by post-trade reporting and a 30 day hold
requirement for all employees.
(c) A new requirement for "heightened preclearance" with investment
supervisors by any access person trading in a personal position worth
$100,000 or more.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Charles L. Ladner is the audit committee financial expert and is
"independent", pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the
principal accountant(s) for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant(s) in
connection with statutory and regulatory filings or engagements amounted to
$31,250 for the fiscal year ended July 31, 2004 and $33,000 for the fiscal
year ended July 31, 2005. These fees were billed to the registrant and were
approved by the registrant's audit committee.
(b) Audit-Related Services
There were no audit-related fees during the fiscal year ended July 31, 2004
and fiscal year ended July 31, 2005 billed to the registrant or to the
registrant's investment adviser (not including any sub-adviser whose role
is primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant ("control affiliates").
(c) Tax Fees
The aggregate fees billed for professional services rendered by the
principal accountant(s) for the tax compliance, tax advice and tax planning
("tax fees") amounted to $2,250 for the fiscal year ended July 31, 2004 and
$2,400 for the fiscal year ended July 31, 2005. The nature of the services
comprising the tax fees was the review of the registrant's income tax
returns and tax distribution requirements. These fees were billed to the
registrant and were approved by the registrant's audit committee. There
were no tax fees billed to the control affiliates.
(d) All Other Fees
The all other fees billed to the registrant for products and services
provided by the principal accountant were $4,000 for the fiscal year ended
July 31, 2004 and $4,000 for the fiscal year ended July 31, 2005. There
were no other fees during the fiscal year ended July 31, 2004 and July 31,
2005 billed to control affiliates for products and services provided by the
principal accountant. The nature of the services comprising the all other
fees was related to the principal accountant's report on the registrant's
Eligible Asset Coverage. These fees were approved by the registrant's audit
committee.
(e)(1) See attachment "Approval of Audit, Audit-related, Tax and Other
Services", with the audit committee pre-approval policies and procedures.
(e)(2) There were no fees that were approved by the audit committee
pursuant to the de minimis exception for the fiscal years ended July 31,
2004 and July 31, 2005 on behalf of the registrant or on behalf of the
control affiliates that relate directly to the operations and financial
reporting of the registrant.
(f) According to the registrant's principal accountant, for the fiscal year
ended July 31, 2005, the percentage of hours spent on the audit of the
registrant's financial statements for the most recent fiscal year that were
attributed to work performed by persons who were not full-time, permanent
employees of principal accountant was less than 50%.
(g) The aggregate non-audit fees billed by the registrant's accountant(s)
for services rendered to the registrant and rendered to the registrant's
control affiliates for each of the last two fiscal years of the registrant
were $24,550 for the fiscal year ended July 31, 2004, and $71,400 for the
fiscal year ended July 31, 2005.
(h) The audit committee of the registrant has considered the non-audit
services provided by the registrant's principal accountant(s) to the
control affiliates and has determined that the services that were not
pre-approved are compatible with maintaining the principal accountant(s)'
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee
comprised of independent trustees. The members of the audit committee are
as follows:
Charles L. Ladner - Chairman
Richard P. Chapman, Jr.
Dr. John A. Moore
Patti McGill Peterson
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
See attached Exhibit "Proxy Voting Policies and Procedures".
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The registrant has adopted procedures by which shareholders may
recommend nominees to the registrant's Board of Trustees. A copy of the
procedures is filed as an exhibit to this Form N-CSR. See attached "John
Hancock Funds - Administration Committee Charter".
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls
and procedures as conducted within 90 days of the filing date of this Form
N-CSR, the registrant's principal executive officer and principal financial
officer have concluded that those disclosure controls and procedures
provide reasonable assurance that the material information required to be
disclosed by the registrant on this report is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal half-year (the registrant's second fiscal half-year in the case of
an annual report) that have materially affected, or are reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive
officer and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company
Act of 1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive
officer and principal financial officer, as required by 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
and Rule 30a-2(b) under the Investment Company Act of 1940, are attached.
The certifications furnished pursuant to this paragraph are not deemed to
be "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, or otherwise subject to the liability of that section. Such
certifications are not deemed to be incorporated by reference into any
filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Registrant specifically incorporates
them by reference.
(c)(1) Proxy Voting Policies and Procedures are attached.
(c)(2) Submission of Matters to a Vote of Security Holders is attached. See
attached "John Hancock Funds - Administration Committee Charter".
(c)(3) Approval of Audit, Audit-related, Tax and Other Services is
attached.
(c)(4) Contact person at the registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Patriot Global Dividend Fund
By: /s/ Keith F. Hartstein
-------------------------------------
Keith F. Hartstein
President and Chief Executive Officer
Date: September 30, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ Keith F. Hartstein
-------------------------------------
Keith F. Hartstein
President and Chief Executive Officer
Date: September 30, 2005
By: /s/ John G. Vrysen
-------------------------------------
John G. Vrysen
Executive Vice President and Chief Financial Officer
Date: September 30, 2005