UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21287
John Hancock Preferred Income Fund III
(Exact name of registrant as specified in charter)
101 Huntington Avenue, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip code)
Susan S. Newton, Secretary
101 Huntington Avenue
Boston, Massachusetts 02199
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-375-1702
Date of fiscal year end: May 31
Date of reporting period: February 28, 2005
ITEM 1. SCHEDULE OF INVESTMENTS
JOHN HANCOCK
Preferred Income Fund III
2.28.2005
Quarterly Portfolio Holdings
[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."]
John Hancock
Preferred Income Fund III
Securities owned by the Fund on
February 28, 2005 (unaudited)
Interest Maturity Credit Par value
Issuer, description rate (%) date rating (A) ($000) Value
---------------------------------------------------------------------------------------------------------------------------------
Bonds 6.93% $76,987,236
(Cost $73,583,972)
Automobile Manufacturers 0.24% 2,656,363
Ford Motor Co.,
Note 7.450 07-16-2031 BBB- 2,755 2,656,363
Consumer Finance 0.27% 3,009,375
General Motors Acceptance Corp.,
Bond 8.000 11-01-2031 BBB- 3,000 3,009,375
Electric Utilities 3.75% 41,663,137
Black Hills Corp.,
Note 6.500 05-15-2013 BBB- 15,000 15,320,715
DPL, Inc.,
Sr Note 6.875 09-01-2011 B+ 7,000 7,696,220
Entergy Gulf States, Inc.,
1st Mtg Bond 6.200 07-01-2033 BBB 15,000 15,146,370
Kentucky Power Co.,
Sr Note, Ser D 5.625 12-01-2032 BBB 3,565 3,499,832
Integrated Oil & Gas 0.52% 5,751,075
Amerada Hess Corp.,
Note 7.125 03-15-2033 BBB- 5,000 5,751,075
Multi-Utilities & Unregulated Power 1.09% 12,168,953
DTE Energy Co.,
Sr Note 6.375 04-15-2033 BBB- 7,500 7,977,953
TECO Energy, Inc.,
Note 7.000 05-01-2012 BB 3,810 4,191,000
Oil & Gas Refining & Marketing & Transportation 1.06% 11,738,333
Valero Energy Corp.,
Note 7.500 04-15-2032 BBB 9,500 11,738,333
Credit Par value
Issuer, description, maturity date rating (A) ($000) Value
---------------------------------------------------------------------------------------------------------------------------------
Capital preferred securities 8.04% $89,437,215
(Cost $88,535,738)
Diversified Banks 3.21% 35,724,700
Credit Agricole Preferred Funding Trust, 7.00%,
01-29-49 A 9,000 9,524,700
Lloyds TSB Bank Plc, 6.90%, 11-29-49 (United
Kingdom) A+ 25,000 26,200,000
Electric Utilities 0.68% 7,617,140
DPL Capital Trust II, 8.125%, 09-1-31 B 6,225 7,617,140
Gas Utilities 0.52% 5,732,247
KN Capital Trust III, 7.63%, 04-15-28 BB+ 4,960 5,732,247
Integrated Telecommunication Services 1.46% 16,172,344
TCI Communications Financing Trust III, 9.65%,
03-31-27 BB+ 14,210 16,172,344
Investment Banking & Brokerage 0.94% 10,505,560
HBOS Capital Funding L.P., 6.850%, 03-29-49
(United Kingdom) A 10,000 10,505,560
Multi-Utilities & Unregulated Power 0.90% 9,973,915
Dominion Resources Capital Trust I, 7.83%, 12-01-27 BBB- 9,097 9,973,915
Other Diversified Financial Services 0.33% 3,711,309
JPM Capital Trust I, 7.54%, 01-15-27 A- 3,447 3,711,309
Issuer Shares Value
---------------------------------------------------------------------------------------------------------------------------------
Common stocks 3.08% $34,274,348
(Cost $31,095,298)
Electric Utilities 2.10% 23,312,612
CH Energy Group, Inc. 20,600 950,690
Cinergy Corp. 157,860 6,385,437
OGE Energy Corp. 30,000 778,500
Progress Energy, Inc. 121,000 5,244,140
Scottish Power Plc, American Depositary Receipt
(United Kingdom) 313,014 9,953,845
Multi-Utilities & Unregulated Power 0.98% 10,961,736
Duke Energy Corp. 182,041 4,913,287
TECO Energy, Inc. 380,645 6,048,449
Credit
Issuer, description rating (A) Shares Value
---------------------------------------------------------------------------------------------------------------------------------
Preferred stocks 81.54% $906,949,339
(Cost $883,253,945)
Agricultural Products 1.44% 16,038,750
Ocean Spray Cranberries, Inc., 6.25%, Ser A (S) BB+ 195,000 16,038,750
Asset Management & Custody Banks 0.38% 4,262,432
BNY Capital V, 5.95%, Ser F A- 170,361 4,262,432
Automobile Manufacturers 3.22% 35,840,007
Ford Motor Co., 7.50% BBB- 771,385 19,438,902
General Motors Corp., 7.25%, Ser 07-15-41 BBB- 55,641 1,353,189
General Motors Corp., 7.375%, Ser 05-15-48 Baa2 593,194 14,503,593
General Motors Corp., 7.375%, Ser 10-01-51 BBB- 22,100 544,323
Broadcasting & Cable TV 0.34% 3,860,252
Shaw Communications, Inc., 8.50% (Canada) B+ 150,850 3,860,252
Consumer Finance 1.68% 18,691,839
Ford Motor Credit Co., 7.60% A3 25,000 642,500
Household Finance Corp., 6.875% A 636,118 16,920,739
SLM Corp., 6.97%, Ser A BBB+ 19,800 1,128,600
Diversified Banks 7.47% 83,035,011
BAC Capital Trust II, 7.00% A 83,300 2,180,794
BAC Capital Trust III, 7.00% A- 22,000 580,140
BAC Capital Trust IV, 5.875% A 406,400 10,143,744
Banco Santander, 6.41%, Ser 1 (Spain) BBB+ 100,000 2,635,000
Fleet Capital Trust VII, 7.20% A 61,604 1,622,033
Fleet Capital Trust IX, 6.00% A 469,200 11,870,760
Royal Bank of Scotland Group Plc, 5.75%, Ser L
(United Kingdom) A 960,000 23,760,000
USB Capital IV, 7.35% A- 59,100 1,551,375
USB Capital V, 7.25% A- 60,700 1,608,550
Wachovia Preferred Funding Corp., 7.25%, Ser A BBB+ 674,800 19,521,964
Wells Fargo Capital Trust IV, 7.00% A 187,800 4,867,776
Wells Fargo Capital Trust VII, 5.85% A 107,500 2,692,875
Electric Utilities 15.21% 169,170,085
Ameren Corp., 9.75%, Conv BBB+ 220,100 6,085,765
American Electric Power Co., Inc., 9.25%, Conv BBB 240,800 10,595,200
Cleveland Electric Financing Trust I, 9.00% BB 27,400 751,582
Consolidated Edison, Inc., $5.00, Ser A BBB+ 30,000 2,703,000
Consolidated Edison, Inc., 7.25% A- 56,000 1,504,160
Detroit Edison Co., 7.375% BB+ 25,700 650,210
Entergy Mississippi, Inc., 7.25% A- 63,918 1,703,415
FPC Capital I, 7.10%, Ser A BB+ 641,700 16,113,087
FPL Group Capital Trust I, 5.875% BBB+ 478,254 12,071,131
FPL Group, Inc., 8.00%, Conv A- 112,000 6,909,280
Georgia Power Capital Trust V, 7.125% BBB+ 132,200 3,507,266
Georgia Power Co., 6.00%, Ser R A 737,085 18,950,455
Great Plains Energy, Inc., 8.00%, Conv BBB- 602,000 16,254,000
HECO Capital Trust III, 6.50% BBB- 130,000 3,489,200
Interstate Power & Light Co., 7.10%, Ser C BBB- 354,900 9,881,765
Interstate Power & Light Co., 8.375%, Ser B BBB- 54,500 1,869,895
Monongahela Power Co., $7.73, Ser L B- 65,557 6,490,143
Northern States Power Co., 8.00% BBB- 74,550 2,035,215
NVP Capital I, 8.20%, Ser A CCC+ 56,300 1,435,650
NVP Capital III, 7.75% CCC+ 379,305 9,531,935
Sierra Pacific Power Co., 7.80%, Ser 1 (Class A) CCC+ 73,507 1,865,240
TXU Corp., 7.24%, Ser B BB+ 150 15,375,000
TXU Corp., 8.125%, Conv Ba1 170,000 10,764,400
Virginia Power Capital Trust, 7.375% BBB- 325,900 8,633,091
Gas Utilities 5.55% 61,706,996
El Paso Tennessee Pipeline Co., 8.25%, Ser A CCC- 367,700 18,488,434
KeySpan Corp., 8.75%, Conv A 148,200 7,568,574
Laclede Capital Trust I, 7.70% BBB+ 63,300 1,718,595
SEMCO Capital Trust I, 10.25% B- 60,500 1,560,900
Southern Union Co., 7.55% BB+ 350,000 9,684,500
Southwest Gas Capital II, 7.70% BB 810,250 22,079,313
Vectren Utillity Holdings, Inc., 7.25% A- 23,200 606,680
Hotels, Resorts & Cruise Lines 0.28% 3,115,622
Hilton Hotels Corp., 8.00% BBB- 118,600 3,115,622
Integrated Oil & Gas 1.08% 12,012,840
Coastal Finance I, 8.375% CCC- 476,700 12,012,840
Integrated Telecommunication Services 1.29% 14,314,205
Telephone & Data Systems, Inc., 7.60%, Ser A A- 415,576 11,000,297
Verizon New England, Inc., 7.00%, Ser B A2 126,100 3,313,908
Investment Banking & Brokerage 9.04% 100,463,249
Bear Stearns Cos., Inc. (The), 5.49%, Depositary
Shares, Ser G BBB 296,032 14,949,616
Lehman Brothers Holdings Capital Trust III, 6.375%
Ser K BBB+ 793,400 20,469,720
Lehman Brothers Holdings, Inc., 5.67%, Depositary
Shares, Ser D BBB+ 142,500 7,267,500
Merrill Lynch Preferred Capital Trust III, 7.00% A- 387,017 10,383,666
Merrill Lynch Preferred Capital Trust IV, 7.12% A- 222,700 6,010,673
Merrill Lynch Preferred Capital Trust V, 7.28% A- 356,700 9,734,343
Morgan Stanley Capital Trust III, 6.25% A- 764,025 19,390,955
Morgan Stanley Capital Trust IV, 6.25% A- 393,925 10,072,662
Morgan Stanley Capital Trust V, 5.75% A1 88,713 2,184,114
Life & Health Insurance 2.04% 22,744,122
Lincoln National Capital VI, 6.75%, Ser F BBB 294,000 7,793,940
Phoenix Cos., Inc. (The), 7.45% BBB 387,849 10,084,074
PLC Capital Trust IV, 7.25% BBB+ 120,600 3,205,548
PLC Capital Trust V, 6.125% BBB+ 66,000 1,660,560
Multi-Line Insurance 2.96% 32,928,601
ING Groep N.V., 7.20% (Netherlands) A- 641,000 17,044,190
ING Groep N.V., 7.05% (Netherlands) A- 603,970 15,884,411
Multi-Utilities & Unregulated Power 9.60% 106,738,968
Aquila, Inc., 7.875% B2 218,707 5,445,804
Avista Corp., $6.95, Ser K BB- 147,176 15,269,510
BGE Capital Trust II, 6.20% BBB- 592,728 15,144,200
Consumers Energy Co. Financing IV, 9.00% Ba2 189,700 5,095,342
DTE Energy Co., 8.75%, Conv BBB- 569,000 14,395,700
DTE Energy Trust I, 7.80% BB+ 106,500 2,811,600
Energy East Capital Trust I, 8.25% BBB- 179,900 4,733,169
Enterprise Capital Trust I, 7.44%, Ser A BB+ 68,200 1,736,372
Enterprise Capital Trust III, 7.25%, Ser C BB+ 104,100 2,647,263
ONEOK, Inc., 8.50%, Conv BBB+ 197,600 7,151,144
PSEG Funding Trust II, 8.75% BB+ 462,275 12,966,814
Public Service Electric & Gas Co., 5.05%, Ser D BB+ 30,000 2,707,500
Public Service Enterprise Group, Inc., 10.25%, Conv BBB- 105,600 7,296,960
Puget Sound Energy Capital Trust II, 8.40% BB 185,600 4,890,560
TECO Capital Trust I, 8.50% B 171,700 4,447,030
Oil & Gas Exploration & Production 3.66% 40,720,157
Anadarko Petroleum Corp., 5.46%, Depositary
Shares, Ser B BBB- 24,600 2,435,400
Apache Corp., 5.68%, Depositary Shares, Ser B BBB 27,500 2,832,500
Devon Energy Corp., 6.49%, Ser A BB+ 25,250 2,665,453
Nexen, Inc., 7.35% (Canada) BB+ 1,216,579 32,786,804
Other Diversified Financial Services 9.51% 105,825,511
ABN AMRO Capital Funding Trust V, 5.90% A 867,400 21,459,476
ABN AMRO Capital Funding Trust VI, 6.25% A 400,000 10,312,000
Citigroup Capital VII, 7.125% A 30,042 779,590
Citigroup Capital VIII, 6.95% A 220,200 5,758,230
Citigroup Capital X, 6.10% A 720,000 18,302,400
Citigroup Capital IX, 6.00% A 384,700 9,667,511
General Electric Capital Corp., 5.875% AAA 370,930 9,399,366
General Electric Capital Corp., 6.10% AAA 94,747 2,419,838
J.P. Morgan Chase Capital XI, 5.875%, Ser K A- 1,035,000 25,554,150
J.P. Morgan Chase Capital XII, 6.25%, Ser L A- 60,000 1,537,200
J.P. Morgan Chase Capital XIV, 6.20%, Ser N A- 25,000 635,750
Real Estate Investment Trusts 4.85% 53,968,524
Duke Realty Corp., 6.50%, Depositary Shares, Ser K BBB 145,000 3,636,600
Duke Realty Corp., 6.60%, Depositary Shares, Ser L BBB 103,000 2,595,600
Duke Realty Corp., 6.625%, Depositary Shares, Ser J BBB 638,100 16,118,406
Kimco Realty Co., 6.65%, Depositary Shares, Ser F BBB+ 384,750 9,857,295
Public Storage, Inc., 6.50%, Depositary Shares,
Ser W BBB+ 450,000 11,484,000
Public Storage, Inc., 7.50%, Depositary Shares,
Ser V BBB+ 184,530 4,902,962
Public Storage, Inc., 7.625%, Depositary Shares,
Ser T BBB+ 25,500 669,885
Public Storage, Inc., 8.00%, Depositary Shares,
Ser R BBB+ 177,100 4,703,776
Regional Banks 0.21% 2,322,768
National Commerce Capital Trust II, 7.70% A- 86,800 2,322,768
Reinsurance 0.28% 3,133,656
RenaissanceRe Holdings Ltd., 6.08%, Ser C (Bermuda) BBB+ 127,800 3,133,656
Thrifts & Mortgage Finance 1.19% 13,186,712
Abbey National Plc, 7.25% (United Kingdom) A- 163,265 4,271,012
Abbey National Plc, 7.375% (United Kingdom) A- 339,000 8,915,700
Wireless Telecommunication Services 0.26% 2,869,032
United States Cellular, 7.50% A- 103,800 2,869,032
Interest Maturity Credit Par value
Issuer, description rate (%) date rating (A) ($000) Value
---------------------------------------------------------------------------------------------------------------------------------
Short-term investments 0.41% $4,600,000
(Cost $4,600,000)
Government U.S. Agency 0.41% 4,600,000
Federal Home Loan Bank, Disc Note 2.510% 03-01-2005 AAA 4,600 4,600,000
Total investments 100.00% $1,112,248,138
John Hancock
Preferred Income Fund III
Financial futures contracts
February 28, 2005 (unaudited)
Number of
Open contracts contracts Position Expiration Appreciation
----------------------------------------------------------------------------------------------------------
U.S. Treasury 10-Year Note 900 Short Jun 05 $809,325
John Hancock
Preferred Income Fund III
Interest rate swap contracts
February 28, 2005 (unaudited)
---------------------------------------------------------------------------------------------------------
Rate type
--------------------------------------------------
Notional Payments made Payments received Termination
amount by Fund by Fund date Appreciation
$35,000,000 4.00% (a) 3-month LIBOR April 09 $40,254
(a) Fixed rate
John Hancock
Preferred Income Fund III
Footnotes to Schedule of Investments
February 28, 2005 (unaudited)
(A) Credit ratings are unaudited and are rated by Moody's Investors
Service where Standard & Poor's ratings are not available.
(S) This security is exempt from registration under rule 144A of the
Securities Act of 1933. Such security may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $16,038,750 or 1.44% of
the Fund's total investments as of February 28, 2005.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
The percentage shown for each investment category is the total value
of that category as a percentage of the total investments of the Fund.
The cost of investments owned on February 28, 2005, including
short-term investments, was $1,081,068,953. Gross unrealized
appreciation and depreciation of investments aggregated $38,257,464
and $7,078,279, respectively, resulting in net unrealized appreciation
of $31,179,185.
For more information
Trustees
Charles L. Ladner, Chairman*
James F. Carlin
Richard P. Chapman, Jr.*
William H. Cunningham
Ronald R. Dion
Dr. John A. Moore*
Patti McGill Peterson*
Steven R. Pruchansky
James A. Shepherdson
Lt. Gen. Norman H. Smith, USMC (Ret.)
*Members of the Audit Committee
Officers
James A. Shepherdson
President and Chief Executive Officer
Susan S. Newton
Senior Vice President and Secretary
William H. King
Vice President and Treasurer
Investment Adviser
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Custodian
The Bank of New York
One Wall Street
New York, New York 10286
Transfer Agent and Dividend Disburser
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, New Jersey 07660
Transfer Agent for APS
Deutsche Bank Trust Company Americas
280 Park Avenue
New York, New York 10017
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
Stock Symbol
Listed New York Stock Exchange: HPS
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
This report is for the information of the shareholders
of John Hancock Preferred Income Fund III.
P12Q3 2/05
4/05
ITEM 2. 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-Q,
the registrant's principal executive officer and principal accounting
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.
(d) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 3. EXHIBITS.
Separate certifications for the registrant's principal executive officer
and principal accounting officer, as required by Rule 30a-2(a) under the
Investment Company Act of 1940, are attached.
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 Preferred Income Fund III
By:
------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: April 27, 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:
------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: April 27, 2005
By:
------------------------------
William H. King
Vice President and Treasurer
Date: April 27, 2005