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)
601 Congress Street, Boston, Massachusetts
02210
(Address of
principal executive offices) (Zip code)
Alfred E. Ouellette, Senior Attorney and Assistant Secretary
|
601 Congress Street
|
Registrant's telephone number, including area code: 617-663-4324
| Date of fiscal year end: | May 31 |
| Date of reporting period: | August 31, 2005 |
ITEM 1. SCHEDULE OF INVESTMENTS
| John Hancock | |||||
| Preferred Income Fund III | |||||
| Securities owned by the Fund on | |||||
| August 31, 2005 (unaudited) | |||||
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate (%) | date | rating (A) | ($000) | Value |
| Bonds 6.84% | $75,634,804 | ||||
| (Cost $71,398,157) | |||||
Automobile Manufacturers 0.20% |
2,202,981 | ||||
|
| |||||
| Ford Motor Co., | |||||
| Note | 7.450 | 07-16-31 | BB+ | 2,755 | 2,202,981 |
Consumer Finance 0.26% |
2,775,444 | ||||
|
| |||||
| General Motors Acceptance Corp., | |||||
| Bond | 8.000 | 11-01-31 | BB | 3,000 | 2,775,444 |
Electric Utilities 3.66% |
40,529,483 | ||||
|
| |||||
| Black Hills Corp., | |||||
| Note | 6.500 | 05-15-13 | BBB- | 15,000 | 15,978,690 |
| DPL, Inc., Sr Note | |||||
| Sr Note | 6.875 | 09-01-11 | BB- | 5,036 | 5,514,420 |
| Entergy Gulf States, Inc., | |||||
| 1st Mtg Bond | 6.200 | 07-01-33 | BBB+ | 15,000 | 15,388,305 |
| Kentucky Power Co., | |||||
| Sr Note, Ser D | 5.625 | 12-01-32 | BBB | 3,565 | 3,648,068 |
Integrated Oil & Gas 0.54% |
5,967,965 | ||||
|
| |||||
| Amerada Hess Corp., | |||||
| Note | 7.125 | 03-15-33 | BBB- | 5,000 | 5,967,965 |
Multi-Utilities & Unregulated Power 1.11% |
12,270,878 | ||||
|
| |||||
| DTE Energy Co., | |||||
| Sr Note | 6.375 | 04-15-33 | BBB- | 7,500 | 8,189,415 |
| TECO Energy, Inc., | |||||
| Note | 7.000 | 05-01-12 | BB | 3,810 | 4,081,463 |
Oil & Gas Refining, Marketing & Transportation 1.07% |
11,888,053 | ||||
|
| |||||
| Valero Energy Corp., | |||||
| Note | 7.500 | 04-15-32 | BBB- | 9,500 | 11,888,053 |
| Credit | Par value | ||||
| Issuer, description, maturity date | rating (A) | ($000) | Value | ||
| Capital preferred securities 8.03% | $88,854,979 | ||||
| (Cost $88,538,386) | |||||
| Diversified Banks 3.20% | 35,386,700 | ||||
|
| |||||
| Credit Agricole Preferred Funding Trust, | |||||
| 7.00%, 01-29-49 | A | 9,000 | 9,416,700 | ||
| Lloyds TSB Bank Plc, 6.90%, 11-29-49 (United | |||||
| Kingdom) | A+ | 25,000 | 25,970,000 | ||
Page 1
| John Hancock | ||||
| Preferred Income Fund III | ||||
| Securities owned by the Fund on | ||||
| August 31, 2005 (unaudited) | ||||
| Electric Utilities 0.69% | 7,625,625 | |||
|
| ||||
| DPL Capital Trust II, 8.125%, 09-01-31 | B+ | 6,225 | 7,625,625 | |
Gas Utilities 0.53% |
5,809,767 | |||
|
| ||||
| KN Capital Trust III, 7.63%, 04-15-28 | BB+ | 4,960 | 5,809,767 | |
Integrated Telecommunication Services 1.45% |
16,033,839 | |||
|
| ||||
| TCI Communications Financing Trust III, | ||||
| 9.65%, 03-31-27 | BBB- | 14,210 | 16,033,839 | |
Investment Banking & Brokerage 0.93% |
10,300,000 | |||
|
| ||||
| HBOS Capital Funding L.P., 6.85%, 03-29-49 | ||||
| (United Kingdom) | A | 10,000 | 10,300,000 | |
Multi-Utilities & Unregulated Power 0.90% |
10,009,165 | |||
|
| ||||
| Dominion Resources Capital Trust I, 7.83%, | ||||
| 12-01-27 | BBB- | 9,097 | 10,009,165 | |
Other Diversified Financial Services 0.33% |
3,689,883 | |||
|
| ||||
| JPM Capital Trust I, 7.54%, 01-15-27 | A- | 3,447 | 3,689,883 | |
| Issuer | Shares | Value | ||
| Common stocks 3.17% | $35,058,946 | |||
| (Cost $34,098,183) | ||||
| Electric Utilities 1.35% | 14,930,274 | |||
|
| ||||
| American Electric Power Co., Inc. | 294,378 | 10,944,974 | ||
| Scottish Power Plc, American Depositary | ||||
| Receipt (United Kingdom) | 110,000 | 3,985,300 | ||
Multi-Utilities & Unregulated Power 1.82% |
20,128,672 | |||
|
| ||||
| CH Energy Group, Inc. | 20,600 | 990,860 | ||
| DTE Energy Co. | 304,016 | 13,914,812 | ||
| TECO Energy, Inc. | 300,000 | 5,223,000 | ||
| Credit | ||||
| Issuer, description | rating (A) | Shares | Value | |
| Preferred stocks 81.60% | $902,671,717 | |||
| (Cost $883,840,154) | ||||
Agricultural Products 1.52% |
16,830,937 | |||
|
| ||||
| Ocean Spray Cranberries, Inc., 6.25%, Ser A | ||||
| (S) | BB+ | 195,000 | 16,830,937 | |
Asset Management & Custody Banks 0.39% |
4,277,765 | |||
|
| ||||
| BNY Capital V, 5.95%, Ser F | A- | 170,361 | 4,277,765 | |
Page 2
| John Hancock | |||
| Preferred Income Fund III | |||
| Securities owned by the Fund on | |||
| August 31, 2005 (unaudited) | |||
| Automobile Manufacturers 2.66% | 29,459,909 | ||
|
|
|||
| Ford Motor Co., 7.50% | BB+ | 771,385 | 16,569,350 |
| General Motors Corp., 7.25%, Ser 07-15-41 | BB | 55,641 | 1,061,630 |
| General Motors Corp., 7.375%, Ser 05-15-48 | Ba2 | 593,194 | 11,383,393 |
| General Motors Corp., 7.375%, Ser 10-01-51 | BB | 22,100 | 445,536 |
| Broadcasting & Cable TV 0.35% | 3,884,387 | ||
|
|
|||
| Shaw Communications, Inc., 8.50% (Canada) | B+ | 150,850 | 3,884,387 |
| Consumer Finance 2.40% | 26,542,471 | ||
|
|
|||
| CIT Group, Inc., 6.35%, Ser A | BBB+ | 70,000 | 1,808,100 |
| Ford Motor Credit Co., 7.60% | Baa3 | 25,000 | 542,000 |
| Household Finance Corp., 6.875% | A | 636,118 | 16,609,041 |
| HSBC Finance Corp., 6.36%, Depositary Shares, | |||
| Ser B | BBB+ | 250,000 | 6,477,500 |
| SLM Corp., 6.97%, Ser A | BBB+ | 19,800 | 1,105,830 |
| Diversified Banks 6.23% | 68,953,783 | ||
|
|
|||
| BAC Capital Trust II, 7.00% | A | 94,600 | 2,445,410 |
| BAC Capital Trust III, 7.00% | A | 22,000 | 571,340 |
| BAC Capital Trust IV, 5.875% | A | 406,400 | 10,115,296 |
| Royal Bank of Scotland Group Plc, 5.75%, | |||
| Ser L (United Kingdom) | A | 960,000 | 23,750,400 |
| Santander Finance Preferred S.A. Unipersonal, | |||
| 6.41%, Ser 1 (Spain) | BBB+ | 100,000 | 2,650,000 |
| USB Capital IV, 7.35% | A- | 59,100 | 1,523,007 |
| USB Capital V, 7.25% | A- | 60,700 | 1,589,126 |
| Wachovia Preferred Funding Corp., 7.25%, Ser A | A- | 674,800 | 19,420,744 |
| Wells Fargo Capital Trust IV, 7.00% | A | 187,800 | 4,785,144 |
| Wells Fargo Capital Trust VII, 5.85% | A | 84,200 | 2,103,316 |
| Electric Utilities 12.89% | 142,628,898 | ||
|
|
|||
| Cleveland Electric Financing Trust I, 9.00% | BB | 27,400 | 731,580 |
| Consolidated Edison, Inc., $5.00, Ser A | BBB+ | 30,000 | 2,730,000 |
| Consolidated Edison, Inc., 7.25% | A- | 56,000 | 1,472,800 |
| Entergy Mississippi, Inc., 7.25% | A- | 63,918 | 1,645,249 |
| FPC Capital I, 7.10%, Ser A | BB+ | 684,200 | 17,187,104 |
| FPL Group Capital Trust I, 5.875% | BBB+ | 470,000 | 11,858,100 |
| FPL Group, Inc., 8.00%, Conv | A- | 112,000 | 7,228,480 |
| Georgia Power Capital Trust V, 7.125% | BBB+ | 132,200 | 3,455,708 |
| Georgia Power Co., 6.00%, Ser R | A | 730,000 | 18,556,600 |
| Great Plains Energy, Inc., 8.00%, Conv | BBB- | 639,300 | 18,140,137 |
| HECO Capital Trust III, 6.50% | BBB- | 130,000 | 3,445,000 |
| Interstate Power & Light Co., 7.10%, Ser C | BBB- | 354,900 | 9,830,730 |
| Interstate Power & Light Co., 8.375%, Ser B | BBB- | 54,500 | 1,798,500 |
| Monongahela Power Co., $7.73, Ser L | B | 65,557 | 6,588,478 |
| Northern States Power Co., 8.00% | BBB- | 74,550 | 1,997,940 |
| NVP Capital I, 8.20%, Ser A | CCC+ | 56,300 | 1,431,146 |
| NVP Capital III, 7.75% | CCC+ | 379,705 | 9,629,319 |
| Sierra Pacific Power Co., 7.80%, Ser 1 (Class | |||
| A) | CCC+ | 73,507 | 1,856,052 |
| TXU Corp., 8.125%, Conv | Ba1 | 170,000 | 13,200,500 |
| Virginia Power Capital Trust, 7.375% | BBB- | 376,500 | 9,845,475 |
Page 3
| John Hancock | |||
| Preferred Income Fund III | |||
| Securities owned by the Fund on | |||
| August 31, 2005 (unaudited) | |||
| Gas Utilities 3.12% | 34,460,919 | ||
|
|
|||
| Laclede Capital Trust I, 7.70% | BBB+ | 63,300 | 1,677,450 |
| SEMCO Capital Trust I, 10.25% | B- | 45,376 | 1,140,299 |
| Southern Union Co., 7.55% | BB+ | 350,000 | 9,485,000 |
| Southwest Gas Capital II, 7.70% | BB | 810,250 | 21,552,650 |
| Vectren Utillity Holdings, Inc., 7.25% | A- | 23,200 | 605,520 |
| Hotels, Resorts & Cruise Lines 0.28% | 3,064,624 | ||
|
|
|||
| Hilton Hotels Corp., 8.00% | BBB- | 118,600 | 3,064,624 |
| Integrated Oil & Gas 1.41% | 15,575,000 | ||
|
|
|||
| Coastal Finance I, 8.375% | CCC | 623,000 | 15,575,000 |
| Integrated Telecommunication Services 2.34% | 25,854,437 | ||
|
|
|||
| Telephone & Data Systems, Inc., 6.625% | A- | 437,900 | 11,275,925 |
| Telephone & Data Systems, Inc., 7.60%, Ser A | A- | 415,576 | 10,809,132 |
| Verizon New England, Inc., 7.00%, Ser B | A3 | 146,100 | 3,769,380 |
| Investment Banking & Brokerage 8.93% | 98,810,733 | ||
|
|
|||
| Fleet Capital Trust VII, 7.20% | A | 61,604 | 1,600,472 |
| Fleet Capital Trust IX, 6.00% | A | 469,200 | 11,786,304 |
| Lehman Brothers Holdings Capital Trust III, | |||
| 6.375%, Ser K | BBB+ | 793,400 | 20,549,060 |
| Lehman Brothers Holdings, Inc., 5.67%, | |||
| Depositary Shares, Ser D | BBB+ | 142,500 | 7,160,625 |
| Merrill Lynch Preferred Capital Trust III, | |||
| 7.00% | A- | 417,017 | 10,984,228 |
| Merrill Lynch Preferred Capital Trust IV, | |||
| 7.12% | A- | 232,700 | 6,173,531 |
| Merrill Lynch Preferred Capital Trust V, 7.28% | A- | 373,700 | 9,962,842 |
| Morgan Stanley Capital Trust III, 6.25% | A- | 764,025 | 19,222,869 |
| Morgan Stanley Capital Trust IV, 6.25% | A- | 393,925 | 9,970,242 |
| Morgan Stanley Capital Trust V, 5.75% | A1 | 57,400 | 1,400,560 |
| Life & Health Insurance 2.14% | 23,689,986 | ||
|
|
|||
| Lincoln National Capital VI, 6.75%, Ser F | BBB | 304,000 | 7,995,200 |
| Phoenix Cos., Inc. (The), 7.45% | BBB | 387,849 | 10,080,196 |
| PLC Capital Trust IV, 7.25% | BBB+ | 120,600 | 3,177,810 |
| PLC Capital Trust V, 6.125% | BBB+ | 66,000 | 1,658,580 |
| Prudential Plc, 6.50% (United Kingdom) | A | 30,000 | 778,200 |
| Multi-Line Insurance 5.88% | 65,083,017 | ||
|
|
|||
| AEGON N.V., 6.375% (Netherlands) | A- | 135,000 | 3,491,100 |
| ING Groep N.V., 7.05% (Netherlands) | A | 603,970 | 15,799,855 |
| ING Groep N.V., 7.20% (Netherlands) | A | 641,000 | 16,839,070 |
| MetLife, Inc., 6.375%, Ser B, Conv | BBB+ | 11,680 | 322,485 |
| MetLife, Inc., 6.50%, Ser B | BBB | 1,108,850 | 28,630,507 |
Page 4
| John Hancock | |||
| Preferred Income Fund III | |||
| Securities owned by the Fund on | |||
| August 31, 2005 (unaudited) | |||
| Multi-Utilities & Unregulated Power 8.46% | 93,610,157 | ||
|
|
|||
| Aquila, Inc., 7.875% | B2 | 218,707 | 5,480,797 |
| Avista Corp., $6.95, Ser K | BB- | 147,176 | 15,122,334 |
| BGE Capital Trust II, 6.20% | BBB- | 592,728 | 15,114,564 |
| Consumers Energy Co. Financing IV, 9.00% | Ba2 | 189,700 | 4,951,170 |
| DTE Energy Trust I, 7.80% | BB+ | 106,500 | 2,783,910 |
| Energy East Capital Trust I, 8.25% | BBB- | 179,900 | 4,654,013 |
| Enterprise Capital Trust I, 7.44%, Ser A | BB+ | 68,200 | 1,731,598 |
| Enterprise Capital Trust III, 7.25%, Ser C | BB+ | 104,100 | 2,648,304 |
| ONEOK, Inc., 8.50%, Conv | BBB+ | 197,600 | 8,107,528 |
| PSEG Funding Trust II, 8.75% | BB+ | 462,275 | 12,670,958 |
| Public Service Electric & Gas Co., 5.05%, | |||
| Ser D | BB+ | 30,000 | 2,670,000 |
| Public Service Enterprise Group, Inc., | |||
| 10.25%, Conv | BBB- | 105,600 | 8,494,464 |
| Puget Sound Energy Capital Trust II, 8.40% | BB | 185,600 | 4,810,752 |
| TECO Capital Trust I, 8.50% | B | 171,700 | 4,369,765 |
| Oil & Gas Exploration & Production 3.95% | 43,631,561 | ||
|
|
|||
| Anadarko Petroleum Corp., 5.46%, Depositary | |||
| Shares, Ser B | BBB- | 24,600 | 2,440,782 |
| Apache Corp., 5.68%, Depositary Shares, Ser B | BBB | 27,500 | 2,819,611 |
| Devon Energy Corp., 6.49%, Ser A | BB+ | 25,250 | 2,648,094 |
| Nexen, Inc., 7.35% (Canada) | BB+ | 1,360,879 | 35,723,074 |
| Other Diversified Financial Services 9.50% | 105,124,240 | ||
|
|
|||
| ABN AMRO Capital Funding Trust V, 5.90% | A | 867,400 | 21,685,000 |
| ABN AMRO Capital Funding Trust VI, 6.25% | A | 400,000 | 10,544,000 |
| Citigroup Capital VII, 7.125% | A | 30,042 | 768,174 |
| Citigroup Capital VIII, 6.95% | A | 220,200 | 5,696,574 |
| Citigroup Capital IX, 6.00% | A | 384,700 | 9,682,899 |
| Citigroup Capital X, 6.10% | A | 720,000 | 18,309,600 |
| General Electric Capital Corp., 5.875% | AAA | 325,930 | 8,294,918 |
| General Electric Capital Corp., 6.10% | AAA | 94,747 | 2,443,525 |
| JPMorgan Chase Capital XI, 5.875%, Ser K | A- | 1,030,000 | 25,544,000 |
| JPMorgan Chase Capital XIV, 6.20%, Ser N | A- | 25,000 | 629,750 |
| JPMorgan Chase Capital XVI, 6.35% | A- | 60,000 | 1,525,800 |
| Real Estate Investment Trusts 4.91% | 54,318,545 | ||
|
|
|||
| Duke Realty Corp., 6.50%, Depositary Shares, | |||
| Ser K | BBB | 145,000 | 3,640,950 |
| Duke Realty Corp., 6.60%, Depositary Shares, | |||
| Ser L | BBB | 103,500 | 2,612,340 |
| 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 | 9,922,702 |
| Public Storage, Inc., 6.18%, Depositary | |||
| Shares, Ser D | BBB+ | 20,000 | 484,600 |
| Public Storage, Inc., 6.50%, Depositary | |||
| Shares, Ser W | BBB+ | 450,000 | 11,385,000 |
| Public Storage, Inc., 7.50%, Depositary | |||
| Shares, Ser V | BBB+ | 184,530 | 4,862,366 |
Page 5
| John Hancock | ||||||
| Preferred Income Fund III | ||||||
| Securities owned by the Fund on | ||||||
| August 31, 2005 (unaudited) | ||||||
| Public Storage, Inc., 7.625%, Depositary | ||||||
| Shares, Ser T | BBB+ | 25,500 | 668,100 | |||
| Public Storage, Inc., 8.00%, Depositary | ||||||
| Shares, Ser R | BBB+ | 177,100 | 4,624,081 | |||
Regional Banks 2.49% |
27,479,462 | |||||
|
| ||||||
| National Commerce Capital Trust II, 7.70% | A- | 86,800 | 2,279,368 | |||
| PFGI Capital Corp., 7.75% | A- | 926,900 | 25,200,094 | |||
Reinsurance 0.28% |
3,067,200 | |||||
|
| ||||||
| RenaissanceRe Holdings Ltd., 6.08%, Ser C | ||||||
| (Bermuda) | BBB+ | 127,800 | 3,067,200 | |||
Thrifts & Mortgage Finance 1.18% |
13,072,314 | |||||
|
| ||||||
| Abbey National Plc, 7.25% (United Kingdom) | A- | 163,265 | 4,204,074 | |||
| Abbey National Plc, 7.375% (United Kingdom) | A- | 339,000 | 8,868,240 | |||
Wireless Telecommunication Services 0.29% |
3,251,372 | |||||
|
| ||||||
| United States Cellular, 7.50% | A- | 119,800 | 3,251,372 | |||
| Interest | Maturity | Credit | Par value | |||
| Issuer, description | rate (%) | date | rating (A) | ($000) | Value | |
| Short-term investments 0.36% | $4,000,000 | |||||
| (Cost $4,000,000) | ||||||
Government U.S. Agency 0.36% |
4,000,000 | |||||
|
| ||||||
| Federal Home Loan Bank, Disc Note | 3.150 | 09-01-05 | AAA | 4,000 | 4,000,000 | |
| Total investments 100.00% | $1,106,220,446 | |||||
Page 6
| John Hancock | |||
| Preferred Income Fund III | |||
| Financial futures contracts | |||
| August 31, 2005 (unaudited) | |||
| Number of | |||
| Open contracts | contracts | Position Expiration | Depreciation |
|
|
|||
| U.S. 10-Year Treasury Note | 1,100 | Short Dec-05 | ($1,565,179) |
Financial futures contracts
| John Hancock | ||||
| Preferred Income Fund III | ||||
| Interest rate swap contracts | ||||
| August 31, 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 | Apr 09 | $289,512 |
|
| ||||
| (a) Fixed rate | ||||
Interest rate swap contracts
| John Hancock |
| Preferred Income Fund III |
Footnotes to Schedule of Investments
| August 31, 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 $16,830,937 or 1.52% of the Fund's total investments as of August 31, 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 August 31, 2005, including short-term investments, was $1,081,874,880. Gross unrealized appreciation and depreciation of investments aggregated $41,460,487 and $17,114,921, respectively, resulting in net unrealized appreciation of $24,345,566. | |
Footnotes to Schedule of Investments - Page 1
|
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.
(b) 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: /s/ Keith F. Hartstein ------------------------------------- Keith F. Hartstein President and Chief Executive Officer Date: October 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: /s/ Keith F. Hartstein ------------------------------------- Keith F. Hartstein President and Chief Executive Officer Date: October 27, 2005 |
By: /s/ John G. Vrysen
-------------------------------------
John G. Vrysen
Executive Vice President and Chief Financial Officer
|
Date: October 27, 2005 |