| 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- 05908 | |
| John Hancock Patriot Premium Dividend Fund II | |
| (Exact name of registrant as specified in charter) | |
| 601 Congress Street, Boston, Massachusetts 02210 | |
| (Address of principal executive offices) (Zip code) | |
| Salvatore Schiavone, Treasurer | |
| 601 Congress Street | |
| Boston, Massachusetts 02210 | |
| (Name and address of agent for service) | |
| Registrant's telephone number, including area code: 617-663-4497 | |
| Date of fiscal year end: | October 31 |
| Date of reporting period: | January 31, 2010 |
ITEM 1. SCHEDULE OF INVESTMENTS
Patriot Premium Dividend Fund II
Securities owned by the Fund on
January 31, 2010 (Unaudited)
| Shares | Value | |
| Preferred Stocks 104.87% | $560,553,900 | |
| (Cost $616,753,773) | ||
| Consumer Discretionary 1.22% | 6,510,253 | |
| Media 1.22 % | ||
| Comcast Corp., 7.000% (Z) | 42,530 | 1,067,503 |
| Viacom, Inc., 6.850% (Z) | 225,000 | 5,442,750 |
| Consumer Staples 2.94% | 15,704,519 | |
| Food & Staples Retailing 2.94 % | ||
| Ocean Spray Cranberries, Inc., 6.250%, Series A (S)(Z) | 224,250 | 15,704,519 |
| Energy 4.92% | 26,307,240 | |
| Oil, Gas & Consumable Fuels 4.92 % | ||
| Nexen, Inc., 7.350% (Z) | 822,000 | 19,497,840 |
| Southern Union Company, 7.550% (Z) | 270,000 | 6,809,400 |
| Financials 46.73% | 249,779,333 | |
| Capital Markets 1.82 % | ||
| Credit Suisse Guernsey, 7.900% (Z) | 165,300 | 4,259,781 |
| Goldman Sachs Group, Inc., 6.200%, Series B (Z) | 137,500 | 3,419,625 |
| Lehman Brothers Holdings, Inc., 5.940%, Depositary Shares, Series | ||
| C (I) | 43,000 | 4,300 |
| Lehman Brothers Holdings, Inc., 5.670%, Depositary Shares, Series | ||
| D (I) | 553,600 | 110,720 |
| Morgan Stanley Capital Trust III, 6.250% (Z) | 90,000 | 1,926,900 |
| Commercial Banks 7.35 % | ||
| Santander Finance Preferred SA Unipersonal, 10.500%, Series 10 | ||
| (Z) | 150,000 | 4,230,000 |
| Sovereign Bancorp, Inc., 7.300%, Depositary Shares, Series C (Z) | 456,000 | 11,400,000 |
| Wells Fargo & Company, 8.000% (Z) | 925,000 | 23,680,000 |
| Consumer Finance 7.55 % | ||
| HSBC Finance Corp., 6.360%, Depositary Shares, Series B (Z) | 35,600 | 767,536 |
| HSBC Holdings PLC, 6.200%, Series A (Z) | 25,000 | 550,000 |
| HSBC USA, Inc., 2.858% (Z) | 499,000 | 22,125,660 |
| SLM Corp., 6.970%, Series A (Z) | 445,500 | 16,920,090 |
| Diversified Financial Services 21.10 % | ||
| Bank of America Corp., 8.625% (Z) | 102,000 | 2,503,080 |
| Bank of America Corp., 6.375% (Z) | 1,160,000 | 22,944,800 |
| Bank of America Corp., 6.625% (Z) | 360,000 | 7,380,000 |
| Bank of America Corp., 8.200% (Z) | 35,000 | 823,900 |
| Bank of America Corp., 6.204%, Depositary Shares, Series D (Z) | 960,000 | 18,921,600 |
| Citigroup Capital VII, 7.125% | 35,000 | 729,400 |
| Deutsche Bank Contingent Capital Trust II, 6.550% (Z) | 285,275 | 6,270,343 |
| Deutsche Bank Contingent Capital Trust III, 7.600% (Z) | 580,400 | 14,109,524 |
| JPMorgan Chase & Company, 5.720%, Series F (Z) | 328,760 | 15,872,533 |
| JPMorgan Chase & Company, 6.150%, Series E (Z) | 209,100 | 10,350,450 |
| JPMorgan Chase & Company, 5.490%, Series G (Z) | 278,000 | 12,865,840 |
| Insurance 6.11 % | ||
| MetLife, Inc., 6.500%, Series B (Z) | 1,055,000 | 25,193,400 |
| 2 |
Patriot Premium Dividend Fund II
Securities owned by the Fund on
January 31, 2010 (Unaudited)
| Shares | Value | |
| Financials (continued) | ||
| Principal Financial Group, 6.518%, Series B (Z) | 160,000 | $3,368,000 |
| Prudential PLC, 6.750% (Z) | 176,100 | 4,078,476 |
| Real Estate Investment Trusts 2.76 % | ||
| Kimco Realty Company, 6.650%, Depositary Shares, Series F (Z) | 200,000 | 4,250,000 |
| Public Storage, Inc., 6.450%, Depositary Shares, Series X (Z) | 48,000 | 1,061,280 |
| Public Storage, Inc., 6.750% (Z) | 60,000 | 1,389,600 |
| Public Storage, Inc., 6.950% (Z) | 190,000 | 4,493,500 |
| Public Storage, Inc., 6.125% (Z) | 70,000 | 1,587,600 |
| Wachovia Preferred Funding Corp., 7.250%, Series A | 85,500 | 1,957,095 |
| Thrifts & Mortgage Finance 0.04 % | ||
| Federal Home Loan Mortgage Corp., (8.375% to 12/31/12 then | ||
| higher of 3 month LIBOR + 416 bps or 7.875%) Series Z (I) | 55,000 | 58,850 |
| Federal National Mortgage Association, (8.25% to 12/31/10 then | ||
| higher of 3 month LIBOR + 423 bps or 7.75%) Series S (I) | 159,500 | 175,450 |
| Industrials 1.82% | 9,711,000 | |
| Road & Rail 1.82 % | ||
| AMERCO, Inc., 8.500%, Series A (Z) | 390,000 | 9,711,000 |
| Telecommunication Services 2.23% | 11,928,300 | |
| Diversified Telecommunication Services 0.00 % | ||
| Touch America Holdings, Inc., 6.875% (I) | 161,778 | — |
| Wireless Telecommunication Services 2.23 % | ||
| Telephone & Data Systems, Inc., 6.625% (Z) | 252,100 | 5,798,300 |
| United States Cellular Corp., 7.500% (Z) | 250,000 | 6,130,000 |
| Utilities 45.01% | 240,613,255 | |
| Electric Utilities 32.90 % | ||
| Alabama Power Company, 5.200% (Z) | 1,172,500 | 27,788,250 |
| Baltimore Gas & Electric Company, 6.990%, Series 1995 (Z) | 134,000 | 13,345,569 |
| Carolina Power & Light Company, 5.440% (Z) | 11,382 | 990,590 |
| Duquesne Light Company, 6.500% (Z) | 519,900 | 24,971,473 |
| Entergy Arkansas, Inc., 6.450% (Z) | 350,000 | 7,700,000 |
| Entergy Mississippi, Inc., 6.250% | 667,000 | 13,944,502 |
| FPC Capital I, 7.100%, Series A (Z) | 242,500 | 6,130,400 |
| Georgia Power Company, 6.000%, Series R (Z) | 80,000 | 2,008,000 |
| HECO Capital Trust III, 6.500% (Z) | 181,000 | 4,318,660 |
| NSTAR Electric Company, 4.780% (Z) | 100,000 | 7,618,750 |
| PPL Electric Utilities Corp., 6.250%, Depositary Shares (Z) | 1,000,000 | 24,593,800 |
| PPL Electric Utilities Corp., 4.400% | 29,780 | 2,278,170 |
| PPL Electric Utilities Corp., 4.600% (Z) | 3,917 | 257,345 |
| PPL Energy Supply, LLC, 7.000% (Z) | 272,500 | 6,995,075 |
| Southern California Edison Company, 6.000%, Series C (Z) | 80,000 | 7,097,504 |
| Southern California Edison Company, 6.125% (Z) | 195,000 | 17,501,250 |
| Westar Energy, Inc., 6.100% (Z) | 333,700 | 8,309,130 |
| Gas Utilities 0.44 % | ||
| Southwest Gas Capital II, 7.700% (Z) | 93,601 | 2,359,681 |
| Independent Power Producers & Energy Traders 1.84 % | ||
| Baltimore Gas & Electric Company, 6.700%, Series 1993 (Z) | 20,250 | 1,999,056 |
| 3 |
Patriot Premium Dividend Fund II
Securities owned by the Fund on
January 31, 2010 (Unaudited)
| Shares | Value | |
| Utilities (continued) | ||
| Constellation Energy Group, Inc., 8.625%, Series A (Z) | 305,000 | $7,838,500 |
| Multi-Utilities 9.83 % | ||
| BGE Capital Trust II, 6.200% (Z) | 616,000 | 13,533,520 |
| Central Illinois Light Company, 4.640% (Z) | 7,460 | 507,514 |
| Interstate Power & Light Company, 8.375%, Series B (Z) | 132,800 | 3,764,880 |
| Interstate Power & Light Company, 7.100%, Series C (Z) | 176,600 | 4,512,130 |
| Public Service Electric & Gas Company, 4.300%, Series C (Z) | 8,280 | 605,848 |
| Public Service Electric & Gas Company, 6.920% (Z) | 131,425 | 13,085,002 |
| Public Service Electric & Gas Company, 4.180%, Series B | 53,677 | 3,819,119 |
| Sempra Energy Corp., 4.360% (Z) | 38,500 | 2,810,500 |
| Sempra Energy Corp., 4.750% (Z) | 12,610 | 1,023,774 |
| Union Electric Company, 3.700% (Z) | 12,262 | 757,945 |
| Virginia Electric & Power Company, 6.980% (Z) | 45,500 | 4,467,531 |
| Xcel Energy, Inc., 4.080%, Series B (Z) | 8,610 | 602,700 |
| Xcel Energy, Inc., 4.110%, Series D (Z) | 33,691 | 2,361,739 |
| Xcel Energy, Inc., 4.160%, Series E (Z) | 9,410 | 715,348 |
| Shares | Value | |
| Common Stocks 42.48% | $227,088,863 | |
| (Cost $248,011,940) | ||
| Energy 1.65% | 8,798,300 | |
| Oil, Gas & Consumable Fuels 1.65 % | ||
| BP PLC, SADR | 55,000 | 3,086,600 |
| Chevron Corp. | 35,000 | 2,524,200 |
| Spectra Energy Corp. | 150,000 | 3,187,500 |
| Industrials 0.39% | 2,090,400 | |
| Industrial Conglomerates 0.39 % | ||
| General Electric Company (Z) | 130,000 | 2,090,400 |
| Telecommunication Services 3.28% | 17,534,600 | |
| Diversified Telecommunication Services 3.28 % | ||
| AT&T, Inc. (Z) | 355,000 | 9,002,800 |
| Verizon Communications, Inc. (Z) | 290,000 | 8,531,800 |
| Utilities 37.16% | 198,665,563 | |
| Electric Utilities 9.07 % | ||
| American Electric Power Company, Inc. (Z) | 200,000 | 6,930,000 |
| Duke Energy Corp. (Z) | 355,000 | 5,868,150 |
| Entergy Corp. | 105,000 | 8,012,550 |
| Northeast Utilities (Z) | 190,000 | 4,810,800 |
| PNM Resources, Inc. (Z) | 500,000 | 5,815,000 |
| Progress Energy, Inc. (Z) | 350,000 | 13,639,500 |
| Progress Energy, Inc., (Z) (I) | 337,750 | 50,663 |
| Southern Company | 105,000 | 3,360,000 |
| Gas Utilities 0.56 % | ||
| Atmos Energy Corp. | 70,000 | 1,933,400 |
| ONEOK, Inc. | 25,000 | 1,054,750 |
| 4 |
Patriot Premium Dividend Fund II
Securities owned by the Fund on
January 31, 2010 (Unaudited)
| Shares | Value | ||||
| Utilities (continued) | |||||
| Multi-Utilities 27.53 % | |||||
| Alliant Energy Corp. (Z) | 440,000 | $13,728,000 | |||
| Ameren Corp. (Z) | 80,000 | 2,044,000 | |||
| Black Hills Corp. | 95,000 | 2,468,100 | |||
| CH Energy Group, Inc. | 586,000 | 23,176,300 | |||
| Consolidated Edison, Inc. (Z) | 85,000 | 3,717,900 | |||
| Dominion Resources, Inc. (Z) | 190,000 | 7,117,400 | |||
| DTE Energy Company (Z) | 435,000 | 18,287,400 | |||
| Integrys Energy Group, Inc. (Z) | 240,000 | 10,044,000 | |||
| NiSource, Inc. (Z) | 490,000 | 6,982,500 | |||
| NSTAR (Z) | 545,000 | 18,715,300 | |||
| OGE Energy Corp. (Z) | 255,000 | 9,236,100 | |||
| Public Service Enterprise Group, Inc. | 65,000 | 1,988,350 | |||
| TECO Energy, Inc. (Z) | 570,000 | 8,874,900 | |||
| Vectren Corp. (Z) | 220,000 | 5,121,600 | |||
| Xcel Energy, Inc. (Z) | 755,000 | 15,688,900 | |||
| Maturity | Par value | ||||
| Yield* | date | Value | |||
| Short-Term Investments 3.55% | $18,999,973 | ||||
| (Cost $18,999,973) | |||||
| Commercial Paper 0.56% | 3,000,000 | ||||
| Chevron Funding Corp. | 0.040% | 02/01/10 | $3,000,000 | 3,000,000 | |
| U.S. Government 2.99% | 15,999,973 | ||||
| U.S. Treasury Bill, | |||||
| Note | 0.010% | 02/25/10 | 16,000,000 | 15,999,973 | |
| Total investments (Cost $883,224,426)† 150.90% | $806,642,736 | ||||
| Other assets and liabilities, net (50.90%) | ($272,081,359) | ||||
| Total net assets 100.00% | $534,561,377 | ||||
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the Fund.
SADR Sponsored American Depositary Receipts
(I) Non-income producing security.
(S) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration.
(Z) All or a portion of this security is segregated as collateral pursuant to the Committed Facility Agreement. Total collateral value at January 31, 2010 was $655,027,629
* Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end.
† At January 31, 2010, the aggregate cost of investment securities for federal income tax purposes was $886,040,121. Net unrealized depreciation aggregated $79,397,385, of which $25,659,614 related to appreciated investment securities and $105,056,999 related to depreciated investment securities.
| 5 |
Notes to the Schedule of Investments (Unaudited)
Security valuation
Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. Equity securities held by the Fund are valued at the last sale price or official closing price (closing bid price or last evaluated price if no sale has occurred) as of the close of business on the principal securities exchange (domestic or foreign) on which they trade. Debt obligations are valued based on the evaluated prices provided by an independent pricing service, which utilizes both dealer-supplied quotes and electronic data processing techniques, which take into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Securities traded only in the over-the-counter market are valued at the last bid price quoted by brokers making markets in the securities at the close of trading. Equity and debt obligations, for which there are no prices available from an independent pricing service, are valued based on bid quotations or evaluated prices, as applicable, obtained from broker-dealers or fair valued as described below. Certain short-term debt investments are valued at amortized cost. John Hancock Collateral Investment Trust (JHCIT), an affiliated registered investment company managed by MFC Global Investment Management (U.S.), LLC, is valued at its net asset value each business day. JHCIT is a floating rate fund investing in money market instruments as part of the securities lending program.
Other portfolio assets and securities where market quotations are not readily available are valued at fair value as determined in good faith by the Fund’s Pricing Committee in accordance with procedures adopted by the Board of Trustees. Generally, trading in non-U.S. securities is substantially completed each day at various times prior to the close of trading on the NYSE. The values of such securities used in computing the net asset value of the Fund’s shares are generally determined as of such times. Occasionally, significant events that affect the values of such securities may occur between the times at which such values are generally determined and the close of the NYSE. Upon such an occurrence, these securities will be valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees.
Fair value measurements
The Fund uses a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three-tier hierarchy of inputs and the valuation techniques used are summarized below:
Level 1 — Exchange-traded prices in active markets for identical securities. This technique is used for exchange-traded domestic common and preferred equities, certain foreign equities, warrants and rights.
Level 2 — Prices determined using significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these techniques are received from independent pricing vendors and are based on an evaluation of the inputs described. These techniques are used for certain domestic preferred equities, certain foreign equities, unlisted rights and warrants, and fixed-income securities.
Level 3 — Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable, such as when there is little or no market activity for an investment, unobservable inputs may be used. Unobservable inputs reflect the Fund’s Pricing Committee’s own assumptions about the factors that market participants would use in pricing an investment and would be based on the best information available. Securities using this technique are generally thinly traded or privately placed, and may be valued using broker quotes, which may include the use of the brokers’ own judgments about the assumptions that market participants would use.
| 6 |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the Fund’s investments as of January 31, 2010, by major security category or security type:
| Level 2 | Level 3 | |||
| Total Market | Level 1 | Significant | Significant | |
| Value at | Quoted | Observable | Unobservable | |
| 01/31/10 | Price | Inputs | Inputs | |
| Consumer Discretionary | $6,510,253 | $6,510,253 | — | — |
| Consumer Staples | 15,704,519 | — | $15,704,519 | — |
| Energy | 35,105,540 | 35,105,540 | — | — |
| Financials | 249,779,333 | 249,775,033 | 4,300 | — |
| Industrials | 11,801,400 | 11,801,400 | — | — |
| Telecommunication Services | 29,462,900 | 29,462,900 | — | — |
| Utilities | 439,278,818 | 299,417,213 | 139,861,605 | — |
| Short-Term Investments | 18,999,973 | — | 18,999,973 | — |
| Total Inestments in Securities | $806,642,736 | $632,072,339 | $174,570,397 | — |
| 7 |
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 Patriot Premium Dividend Fund II
By: /s/ Keith F. Hartstein
_____________________
Keith F. Hartstein
President and Chief Executive Officer
Date: March 22, 2010
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: March 22, 2010
By: /s/ Charles A. Rizzo
_____________________
Charles A. Rizzo
Chief Financial Officer
Date: March 22, 2010