| 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- 21202
| John Hancock Preferred Income Fund
II (Exact name of registrant as specified in charter) |
| 601 Congress Street, Boston,
Massachusetts 02210 (Address of principal executive offices) (Zip code) |
Alfred P. Ouellette, Senior Attorney and Assistant Secretary
601 Congress Street
Boston, Massachusetts 02210
(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: | April 30, 2006 |
ITEM 1. SCHEDULE OF INVESTMENTS
| John Hancock Preferred Income Fund II Securities owned by the Fund on April 30, 2006 (unaudited) |
| Interest | Maturity | Credit | Par value | ||||
| Issuer, description | rate (%) | date | rating (A) | ($000) | Value | ||
| Bonds 1.26% | $9,427,165 | ||||||
| (Cost $9,990,100) | |||||||
| Electric Utilities 1.26% | 9,427,165 | ||||||
|
| |||||||
| Black Hills Corp., | |||||||
| Note | 6.500 | 05-15-13 | BBB- | 5,000 | 4,920,855 | ||
| Entergy Gulf States, Inc., | |||||||
| 1st Mtg Bond | 6.200 | 07-01-33 | BBB+ | 5,000 | 4,506,310 | ||
| Credit | Par value | ||||||
| Issuer, description | rating (A) | ($000) | Value | ||||
| Capital preferred securities 12.81% | $95,945,790 | ||||||
| (Cost $91,773,049) | |||||||
| Asset Management & Custody Banks 0.66% | 4,948,794 | ||||||
|
| |||||||
| BNY Capital, 7.97%, Ser B, 12-31-26 | A- | 4,700 | 4,948,794 | ||||
Diversified Banks 0.53% |
3,940,000 | ||||||
|
| |||||||
| Lloyds TSB Bank Plc, 6.90%, 11-29-49 | |||||||
| (United Kingdom) | A+ | 4,000 | 3,940,000 | ||||
Diversified Financial Services 1.67% |
12,557,988 | ||||||
|
| |||||||
| JPM Capital Trust I, 7.54%, 01-15-27 | A- | 12,000 | 12,557,988 | ||||
Electric Utilities 3.32% |
24,863,375 | ||||||
|
| |||||||
| DPL Capital Trust II, 8.125%, 09-01-31 | B+ | 22,150 | 24,863,375 | ||||
Gas Utilities 2.90% |
21,687,631 | ||||||
|
| |||||||
| KN Capital Trust I, 8.56%, Ser B, 04-15-27 | BB+ | 10,000 | 10,591,020 | ||||
| KN Capital Trust III, 7.63%, 04-15-28 | BB+ | 10,673 | 11,096,611 | ||||
Integrated Telecommunication Services 1.32% |
9,909,679 | ||||||
|
| |||||||
| TCI Communications Financing Trust III, 9.65%, | |||||||
| 03-31-27 | BBB- | 9,243 | 9,909,679 | ||||
Multi-Utilities & Unregulated Power 1.94% |
14,530,799 | ||||||
|
| |||||||
| Dominion Resources Capital I, | |||||||
| 7.83%, 12-01-27 | BBB- | 8,450 | 8,934,439 | ||||
| Dominion Resources Capital III, | |||||||
| 8.40%, 01-15-31 | BBB- | 5,000 | 5,596,360 | ||||
Regional Banks 0.47% |
3,507,524 | ||||||
|
| |||||||
| Summit Capital Trust I, 8.40%, | |||||||
| Ser B, 03-15-27 | A | 3,300 | 3,507,524 | ||||
Page 1
John Hancock
Preferred Income Fund II
Securities owned by the Fund on April 30, 2006 (unaudited)
| Issuer | Shares | Value |
| Common stocks 5.18% | $38,755,594 | |
| (Cost $27,747,037) | ||
| Electric Utilities 1.28% | 9,568,800 | |
|
| ||
| FPL Group, Inc. | 180,000 | 7,128,000 |
| Scottish Power Plc, American Depositary Receipt | ||
| (ADR) (United Kingdom) | 60,000 | 2,440,800 |
Gas Utilities 2.17% |
16,235,738 | |
|
| ||
| ONEOK, Inc. | 491,843 | 16,235,738 |
Multi-Utilities & Unregulated Power 1.73% |
12,951,056 | |
|
| ||
| Alliant Energy Corp. | 220,000 | 7,031,200 |
| CH Energy Group, Inc. | 40,000 | 1,891,200 |
| DTE Energy Co. | 98,790 | 4,028,656 |
| Credit | ||||
| Issuer, description | rating (A) | Shares | Value | |
| Preferred stocks 80.55% | $603,064,425 | |||
| (Cost $626,016,062) | ||||
| Agricultural Products 1.64% | 12,290,000 | |||
|
| ||||
| Ocean Spray Cranberries, Inc., 6.25%, Ser A (S) | BB+ | 160,000 | 12,290,000 | |
| Asset Management & Custody Banks 0.12% | 892,000 | |||
|
| ||||
| BNY Capital V, 5.95%, Ser F | A- | 40,000 | 892,000 | |
| Automobile Manufacturers 1.82% | 13,653,134 | |||
|
| ||||
| Ford Motor Co., 7.50% | BB- | 40,000 | 680,800 | |
| General Motors Corp., 7.25%, Ser 04-15-41 | B | 87,900 | 1,393,215 | |
| General Motors Corp., 7.25%, Ser 07-15-41 | B | 210,500 | 3,319,585 | |
| General Motors Corp., 7.25%, Ser 02-15-52 | B | 447,300 | 7,080,759 | |
| General Motors Corp., 7.375%, Ser 10-01-51 | B | 73,125 | 1,178,775 | |
| Consumer Finance 2.50% | 18,688,117 | |||
|
| ||||
| CIT Group, Inc., 6.35%, Ser A | BBB+ | 60,000 | 1,506,600 | |
| Ford Motor Credit Co., 7.375% | BBB- | 24,800 | 497,488 | |
| Ford Motor Credit Co., 7.60% | Ba2 | 100,000 | 2,037,000 | |
| HSBC Finance Corp., 6.00% | A | 72,200 | 1,636,052 | |
| HSBC Finance Corp., 6.36%, Depositary Shares, | ||||
| Ser B | BBB+ | 143,200 | 3,584,296 | |
| HSBC Finance Corp., 6.875% | A | 349,100 | 8,678,626 | |
| SLM Corp., 6.00% | A | 33,500 | 748,055 | |
| Diversified Banks 8.85% | 66,260,967 | |||
|
| ||||
| BAC Capital Trust IV, 5.875% | A | 51,150 | 1,126,834 | |
| Comerica Capital Trust I, 7.60% | BBB+ | 120,400 | 3,032,876 | |
| Fleet Capital Trust VII, 7.20% | A | 459,900 | 11,612,475 | |
| Fleet Capital Trust VIII, 7.20% | A | 310,000 | 7,833,700 | |
Page 2
| John Hancock Preferred Income Fund II Securities owned by the Fund on April 30, 2006 (unaudited) |
| HSBC Holdings Plc, 6.20%, Ser A (United Kingdom) | A- | 249,600 | 5,798,208 |
| Republic New York Corp., 6.25%, Ser HSBC | A | 50,000 | 1,170,000 |
| Royal Bank of Scotland Group Plc, 5.75%, Ser L | |||
| (United Kingdom) | A | 450,500 | 9,929,020 |
| Santander Finance Preferred SA, Unipersonal, | |||
| 6.41%, Ser 1 (Spain) | BBB+ | 225,000 | 5,467,500 |
| USB Capital III, 7.75% | A | 134,300 | 3,357,500 |
| USB Capital IV, 7.35% | A | 152,800 | 3,827,640 |
| USB Capital V, 7.25% | A | 252,000 | 6,360,480 |
| USB Capital VIII, 6.35%, Ser 1 | A | 78,000 | 1,835,340 |
| Wells Fargo Capital Trust IV, 7.00% | A | 140,800 | 3,545,344 |
| Wells Fargo Capital Trust VI, 6.95% | A- | 50,000 | 1,253,000 |
| Wells Fargo Capital Trust VII, 5.85% | A | 5,000 | 111,050 |
| Diversified Financial Services 5.62% | 42,087,429 | ||
|
| |||
| ABN AMRO Capital Funding Trust V, 5.90% | A | 373,600 | 8,357,432 |
| ABN AMRO Capital Funding Trust VII, 6.08% | A | 336,000 | 7,785,120 |
| Citigroup Capital IX, 6.00% | A | 40,000 | 925,600 |
| Citigroup Capital VII, 7.125% | A | 113,700 | 2,876,610 |
| Citigroup Capital VIII, 6.95% | A | 529,000 | 13,209,130 |
| General Electric Capital Corp., 6.10% | AAA | 22,863 | 546,197 |
| JPMorgan Chase Capital IX, 7.50%, Ser I | A- | 73,800 | 1,845,000 |
| JPMorgan Chase Capital X, 7.00%, Ser J | A1 | 259,000 | 6,542,340 |
| Electric Utilities 13.47% | 100,857,395 | ||
|
| |||
| Boston Edison Co., 4.78% | BBB+ | 15,143 | 1,258,535 |
| Cleveland Electric Financing Trust I, 9.00% | BB | 210,000 | 5,386,500 |
| Entergy Mississippi, Inc., 7.25% | A- | 109,000 | 2,765,330 |
| FPC Capital I, 7.10%, Ser A | BB+ | 564,603 | 14,171,535 |
| FPL Group Capital Trust I, 5.875% | BBB+ | 441,800 | 9,896,320 |
| Georgia Power Capital Trust V, 7.125% | BBB+ | 232,300 | 5,849,314 |
| Georgia Power Capital Trust VII, 5.875% | BBB+ | 116,500 | 2,580,475 |
| Great Plains Energy, Inc., 8.00%, Conv | BBB- | 559,100 | 13,278,625 |
| HECO Capital Trust III, 6.50% | BBB- | 120,000 | 2,977,200 |
| Interstate Power & Light Co., 8.375%, Ser B | Baa3 | 700,000 | 22,260,000 |
| Northern States Power Co., 8.00% | BBB- | 175,800 | 4,500,480 |
| NVP Capital III, 7.75% | CCC+ | 108,500 | 2,755,900 |
| PPL Electrical Utilities Corp., 6.25%, Depositary | |||
| Shares | BBB | 130,000 | 3,250,000 |
| Southern California Edison Co., 6.125% | BBB- | 10,000 | 1,012,813 |
| Southern Co. Capital Trust VI, 7.125% | BBB+ | 37,100 | 933,436 |
| Virginia Power Capital Trust, 7.375% | BB+ | 318,219 | 7,980,932 |
| Gas Utilities 2.02% | 15,096,288 | ||
|
| |||
| AGL Capital Trust II, 8.00% | BBB | 41,000 | 1,022,950 |
| Southern Union Co., 7.55% | BB+ | 229,500 | 5,921,100 |
| Southwest Gas Capital II, 7.70% | BB | 257,900 | 6,736,348 |
| Vectren Utillity Holdings, Inc., 7.25% | A- | 56,500 | 1,415,890 |
| Hotels, Resorts & Cruise Lines 0.42% | 3,126,250 | ||
|
| |||
| Hilton Hotels Corp., 8.00% | BBB- | 125,000 | 3,126,250 |
Page 3
| John Hancock | |||
| Preferred Income Fund II | |||
| Securities owned by the Fund on | |||
| April 30, 2006 (unaudited) | |||
| Integrated Telecommunication Services 2.99% | 22,370,618 | ||
|
|
|||
| Telephone & Data Systems, Inc., 6.625% | A- | 155,000 | 3,541,750 |
| Telephone & Data Systems, Inc., 7.60%, Ser A | A- | 605,967 | 15,094,638 |
| Verizon New England, Inc., 7.00%, Ser B | A3 | 150,150 | 3,734,230 |
| Investment Banking & Brokerage 8.98% | 67,245,885 | ||
|
|
|||
| Bear Stearns Cos., Inc. (The), 6.15%, Depositary | |||
| Shares, Ser E | BBB | 248,600 | 12,579,160 |
| Goldman Sachs Group, Inc., 6.20% | A- | 140,000 | 3,456,600 |
| Lehman Brothers Holdings Capital Trust III, | |||
| 6.375%, Ser K | BBB+ | 177,000 | 4,171,890 |
| Lehman Brothers Holdings Capital Trust V, 6.00%, | |||
| Ser M | A- | 50,000 | 1,107,500 |
| Lehman Brothers Holdings, Inc., 5.94%, Depositary | |||
| Shares, Ser C | A- | 145,200 | 7,165,620 |
| Merrill Lynch Preferred Capital Trust III, 7.00% | A- | 360,400 | 9,074,872 |
| Merrill Lynch Preferred Capital Trust IV, 7.12% | A- | 167,400 | 4,236,894 |
| Merrill Lynch Preferred Capital Trust V, 7.28% | A- | 273,200 | 6,928,352 |
| Morgan Stanley Capital Trust II, 7.25% | A- | 35,000 | 874,650 |
| Morgan Stanley Capital Trust III, 6.25% | A- | 248,779 | 5,761,722 |
| Morgan Stanley Capital Trust IV, 6.25% | A- | 57,000 | 1,309,860 |
| Morgan Stanley Capital Trust V, 5.75% | A1 | 311,500 | 6,700,365 |
| Morgan Stanley Capital Trust VI, 6.60% | A- | 160,000 | 3,878,400 |
| Life & Health Insurance 1.28% | 9,613,353 | ||
|
|
|||
| PLC Capital Trust IV, 7.25% | BBB+ | 331,075 | 8,316,604 |
| Prudential Plc, 6.50% (United Kingdom) | A | 53,807 | 1,296,749 |
| Multi-Line Insurance 6.60% | 49,396,241 | ||
|
|
|||
| AEGON NV, 6.375% (Netherlands) | A- | 355,000 | 8,495,150 |
| AEGON NV, 6.50% (Netherlands) | A- | 40,000 | 966,400 |
| ING Groep NV, 7.05% (Netherlands) | A | 774,700 | 19,630,898 |
| MetLife, Inc., 6.375%, Ser B, Conv | BBB+ | 8,390 | 235,088 |
| MetLife, Inc., 6.50%, Ser B | BBB | 799,550 | 20,068,705 |
| Multi-Utilities & Unregulated Power 10.93% | 81,847,974 | ||
|
|
|||
| Baltimore Gas & Electric Co., 6.99%, Ser 1995 | Baa1 | 39,870 | 4,151,464 |
| BGE Capital Trust II, 6.20% | BBB- | 645,000 | 15,067,200 |
| Consumers Energy Co. Financing IV, 9.00% | Ba2 | 217,000 | 5,490,100 |
| Dominion CNG Capital Trust I, 7.80% | BB+ | 150,000 | 3,759,000 |
| DTE Energy Trust I, 7.80% | BB+ | 253,000 | 6,375,600 |
| Energy East Capital Trust I, 8.25% | BBB- | 424,800 | 10,649,736 |
| PNM Resources, Inc., 6.75%, Conv | BBB- | 90,000 | 4,375,800 |
| PSEG Funding Trust II, 8.75% | BB+ | 680,000 | 17,795,600 |
| Public Service Electric & Gas Co., 4.18%, Ser B | BB+ | 7,900 | 635,950 |
| Puget Sound Energy Capital Trust II, 8.40% | BB | 232,060 | 5,861,836 |
| South Carolina Electric & Gas Co., 6.52% | Baa1 | 15,000 | 1,511,250 |
| TECO Capital Trust I, 8.50% | B | 245,212 | 6,174,438 |
Page 4
| John Hancock Preferred Income Fund II Securities owned by the Fund on April 30, 2006 (unaudited) |
| Oil & Gas Exploration & Production 4.40% | 32,937,116 | ||||
|
| |||||
| Apache Corp., 5.68%, Depositary Shares, Ser B | BBB | 25,000 | 2,508,595 | ||
| Devon Energy Corp., 6.49%, Ser A | BB+ | 32,355 | 3,281,001 | ||
| Nexen, Inc., 7.35% (Canada) | BB+ | 1,068,800 | 27,147,520 | ||
| Real Estate Management & Development 4.47% | 33,447,308 | ||||
|
| |||||
| Duke Realty Corp., 6.50%, Depositary Shares, Ser K | BBB | 110,000 | 2,582,800 | ||
| Duke Realty Corp., 6.60%, Depositary Shares, Ser L | BBB | 109,840 | 2,610,897 | ||
| Duke Realty Corp., 6.625%, Depositary Shares, | |||||
| Ser J | BBB | 449,400 | 10,704,708 | ||
| Duke Realty Corp., 7.99%, Depositary Shares, Ser B | BBB | 10,650 | 550,805 | ||
| Kimco Realty Co., 6.65%, Depositary Shares, Ser F | BBB+ | 37,030 | 895,756 | ||
| Public Storage, Inc., 6.45%, Depositary Shares, | |||||
| Ser X | BBB+ | 30,000 | 671,700 | ||
| Public Storage, Inc., 7.50%, Depositary Shares, | |||||
| Ser V | BBB+ | 307,100 | 7,745,062 | ||
| Public Storage, Inc., 8.00%, Depositary Shares, | |||||
| Ser R | BBB+ | 304,500 | 7,685,580 | ||
| Regional Banks 2.38% | 17,793,125 | ||||
|
| |||||
| PFGI Capital Corp., 7.75% | A- | 686,000 | 17,793,125 | ||
| Reinsurance 0.11% | 828,000 | ||||
|
| |||||
| RenaissanceRe Holdings Ltd., 6.08%, Ser C | |||||
| (Bermuda) | BBB | 40,000 | 828,000 | ||
| Thrifts & Mortgage Finance .40% | 10,480,960 | ||||
|
| |||||
| Abbey National Plc, 7.25% (United Kingdom) | A- | 275,620 | 6,887,744 | ||
| Abbey National Plc, 7.375% (United Kingdom) | A- | 140,800 | 3,593,216 | ||
| Wireless Telecommunication Services 0.55% | 4,152,265 | ||||
|
| |||||
| United States Cellular, 7.50% | A- | 165,100 | 4,152,265 | ||
| Maturity | Credit | Par value | |||
| Issuer, description | date | rating (A) | ($000) | Value | |
| Short-term investments 0.20% | $1,500,000 | ||||
| (Cost $1,499,613) | |||||
| Government U.S. Agency 0.20% | 1,500,000 | ||||
|
| |||||
| Federal Home Loan Bank, | |||||
| Disc Note | 05-01-06 | AAA | 1,500 | 1,500,000 | |
| Total investments | 100.00% | $748,692,974 | |||
Page 5
| John Hancock Preferred Income Fund II Financial futures contracts April 30, 2006 (unaudited) |
| Number of | ||||
| Open contracts | contracts | Position | Expiration | Appreciation |
|
| ||||
| U.S. 10-year Treasury Note | 360 | Short | June 2006 | $635,917 |
Financial futures contracts
| John Hancock | ||||
| Preferred Income Fund II | ||||
| Interest rate swap contracts | ||||
| April 30, 2006 (unaudited) | ||||
| Rate type | ||||
|
|
||||
| Notional | Payments made | Payments received | Termination | Appreciation |
| amount | by Fund | by Fund | date | (depreciation) |
|
|
||||
| $63,500,000 | 2.56% (a) | 3-month LIBOR | June 2008 | $3,406,203 |
|
|
||||
| (a) Fixed rate | ||||
Interest rate swap contracts
|
John Hancock Preferred Income Fund II Footnotes to Schedule of Investments April 30, 2006 (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 $12,290,000 or 1.64% of the Fund's net assets as of April 30, 2006.
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 total investments of the Fund.
The cost of investments owned on April 30, 2006, including short-term investments, was $757,025,861. Gross unrealized appreciation and depreciation of investments aggregated $24,153,484 and $32,486,371, respectively, resulting in net unrealized depreciation of $8,332,887.
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 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 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 financial 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 II
|
By: /s/ Keith F. Hartstein ------------------------------------- Keith F. Hartstein President and Chief Executive Officer |
Date: June 27, 2006
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: June 27, 2006
|
By: /s/ John G. Vrysen ------------------------------------- John G. Vrysen Executive Vice President and Chief Financial Officer |
Date: June 27, 2006