a_preferredincomefundtwo.htm

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 Counsel 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, 2007 

 

ITEM 1. SCHEDULE OF INVESTMENTS 

 


John Hancock
Preferred Income Fund II
Securities owned by the Fund on

April 30, 2007 (unaudited)

  Interest  Maturity  Credit  Par value   
Issuer, description  rate  date  rating (A)  (000)  Value 
Bonds 2.67%          $20,580,381 
(Cost $20,533,892)           
 
Electric Utilities 1.28%          9,855,525 
Black Hills Corp.,           
Note  6.500%  05-15-13  BBB-  5,000  5,078,350 
Entergy Gulf States, Inc.,           
1st Mtg Bond  6.200  07-01-33  BBB+  5,000  4,777,175 
Gas Utilities 1.39%          10,724,856 
Southern Union Co.,           
Jr Sub Note (P)  7.200  11-01-66  BB  10,550  10,724,856 
     
      Credit  Par value   
Issuer, description, maturity date      rating (A)  (000)  Value 
Capital preferred securities  10.20%        $78,527,397 
(Cost $72,286,552)           
 
Asset Management & Custody Banks  0.64%        4,892,023 
BNY Capital I, 7.97%, Ser B, 12-31-26      A-  $4,700  4,892,023 
Diversified Banks 0.52%          4,014,640 
Lloyds TSB Bank Plc, 6.90%, 11-29-49 (United Kingdom)    A+  4,000  4,014,640 
Electric Utilities 3.50%          26,967,625 
DPL Capital Trust II, 8.125%, 09-01-31      BB-  22,150  26,967,625 
Gas Utilities 3.25%          25,016,078 
KN Capital Trust I, 8.56%, Ser B, 04-15-27    B-  14,000  14,512,288 
KN Capital Trust III, 7.63%, 04-15-28      B-  10,673  10,503,790 
Multi-Utilities 1.90%          14,645,941 
Dominion Resources Capital Trust I, 7.83%,12-01-27    BB+  8,450  8,619,701 
Dominion Resources Capital Trust III, 8.40%, 01-15-31    BB+  5,000  6,026,240 
Thrifts & Mortgage Finance 0.39%          2,991,090 
Sovereign Capital Trust V, 7.75%, 05-22-36    BB+  111,400  2,991,090 

Page 1

John Hancock
Preferred Income Fund II
Securities owned by the Fund on

April 30, 2007 (unaudited)

Issuer      Shares  Value 
Common stocks  2.77%      $21,316,543 
(Cost $15,069,131)         
 
Electric Utilities 0.99%      7,641,840 
Great Plains Energy, Inc.      234,125  7,641,840 
Integrated Oil & Gas 0.28%      2,119,503 
BP Plc, American Depositary Receipt (United Kingdom)    31,484  2,119,503 
Multi-Utilities 1.50%        11,555,200 
Alliant Energy Corp.      220,000  9,636,000 
CH Energy Group, Inc.      40,000  1,919,200 
      
    Credit     
Issuer, description    rating (A)  Shares  Value 
Preferred stocks  79.26%      $610,502,414 
(Cost $608,926,027)         
 
Agricultural Products  1.81%      13,935,008 
Ocean Spray Cranberries, Inc., 6.25%, Ser A (S)  BB+  160,000  13,935,008 
Automobile Manufacturers 2.07%      15,956,738 
General Motors Corp., 7.25%, Ser 04-15-41  B-  87,900  1,711,413 
General Motors Corp., 7.25%, Ser 07-15-41  B-  210,500  4,117,380 
General Motors Corp., 7.25%, Ser 02-15-52  B-  447,300  8,691,039 
General Motors Corp., 7.375%, Ser 10-01-51  B-  73,125  1,436,906 
Broadcasting & Cable TV 1.79%      13,754,846 
Comcast Corp., 7.00%    BBB+  40,000  1,038,000 
Comcast Corp., 7.00%, Ser B  BBB+  492,901  12,716,846 
Consumer Finance 2.70%      20,822,831 
HSBC Finance Corp., 6.00%  AA-  72,200  1,788,394 
HSBC Finance Corp., 6.36%, Depositary Shares, Ser B  A  143,200  3,708,880 
HSBC Finance Corp., 6.875%  AA-  349,100  8,884,595 
SLM Corp., 6.00%    A  176,800  3,772,912 
SLM Corp., 6.97%, Ser A  BBB+  53,900  2,668,050 

Page 2

John Hancock
Preferred Income Fund II
Securities owned by the Fund on

April 30, 2007 (unaudited)

Diversified Banks 5.04%      38,862,170 
BAC Capital Trust IV, 5.875%  A+  51,150  1,221,974 
Fleet Capital Trust VIII, 7.20%  A  310,000  7,870,900 
HSBC Holdings Plc, 6.20%, Ser A (United Kingdom)  A  249,600  6,324,864 
Republic New York Corp., 6.25%, Ser HSBC  A  50,000  1,238,500 
Royal Bank of Scotland Group Plc, 5.75%, Ser L (United Kingdom)  A  450,500  10,821,010 
Santander Finance Preferred SA Unipersonal, 6.41%, Ser 1 (Spain)  A+  225,000  5,737,500 
USB Capital VIII, 6.35%, Ser 1  A+  83,000  2,072,510 
Wells Fargo Capital Trust IV, 7.00%  AA-  140,800  3,574,912 
 
Diversified Financial Services 6.95%      53,532,894 
Abbey National Plc, 7.375%, Ser C (United Kingdom)  A+  140,800  3,572,096 
ABN AMRO Capital Funding Trust V, 5.90%  A  373,600  9,018,704 
ABN AMRO Capital Funding Trust VII, 6.08%  A  345,000  8,583,600 
Citigroup Capital VII, 7.125%  A+  222,200  5,648,324 
Citigroup Capital VIII, 6.95%  A+  538,500  13,624,050 
DB Capital Funding VIII, 6.375%  A  254,200  6,507,520 
JPMorgan Chase Capital X, 7.00%, Ser J  A-  259,000  6,578,600 
 
Electric Utilities 14.00%      107,869,228 
Cleveland Electric Financing Trust I, 9.00%  BB+  210,000  5,476,800 
Duquesne Light Co., 6.50%  BB+  96,550  4,846,810 
Entergy Mississippi, Inc., 7.25%  A-  109,000  2,783,860 
FPC Capital I, 7.10%, Ser A  BB+  597,003  15,187,756 
FPL Group Capital Trust I, 5.875%  BBB+  441,800  10,682,724 
Georgia Power Capital Trust V, 7.125%  BBB+  259,300  6,523,988 
Georgia Power Capital Trust VII, 5.875%  BBB+  116,500  2,790,175 
HECO Capital Trust III, 6.50%  BBB-  120,000  3,073,200 
Interstate Power & Light Co., 8.375%, Ser B  Baa2  700,000  22,968,750 
Northern States Power Co., 8.00%  BBB-  175,800  4,518,060 
NSTAR Electric Co., 4.78%  A-  15,143  1,362,870 
PPL Electric Utilities Corp., 6.25%, Depositary Shares  BBB  130,000  3,416,569 
PPL Energy Supply LLC, 7.00%  BBB  475,570  12,302,996 
Southern California Edison Co., 6.00%, Ser C  BBB-  20,000  1,994,376 
Southern California Edison Co., 6.125%  BBB-  10,000  997,500 
Southern Co. Capital Trust VI, 7.125%  BBB+  37,100  936,404 
Virginia Power Capital Trust, 7.375%  BB+  318,219  8,006,390 
 
Gas Utilities 1.63%      12,542,735 
Southern Union Co., 7.55%  BB  229,500  5,909,625 
Southwest Gas Capital II, 7.70%  BB  258,500  6,633,110 
 
Hotels, Resorts & Cruise Lines 0.42%      3,203,750 
Hilton Hotels Corp., 8.00%  BB+  125,000  3,203,750 
 
Integrated Telecommunication Services 0.54%      4,146,250 
Verizon New England, Inc., 7.00%, Ser B  A3  165,850  4,146,250 

Page 3

John Hancock
Preferred Income Fund II
Securities owned by the Fund on

April 30, 2007 (unaudited)

Investment Banking & Brokerage 8.92%      68,702,633 
Bear Stearns Cos., Inc. (The), 6.15%, Depositary Shares, Ser E  BBB+  248,600  12,648,768 
Goldman Sachs Group, Inc., 6.20%, Ser B  A  140,000  3,592,400 
Lehman Brothers Holdings Capital Trust III, 6.375%, Ser K  A-  177,000  4,440,930 
Lehman Brothers Holdings Capital Trust V, 6.00%, Ser M  A-  10,000  241,700 
Lehman Brothers Holdings, Inc., 5.94%, Depositary Shares, Ser C  A-  145,200  7,441,500 
Merrill Lynch Preferred Capital Trust III, 7.00%  A  360,400  9,150,556 
Merrill Lynch Preferred Capital Trust IV, 7.12%  A  167,400  4,277,070 
Merrill Lynch Preferred Capital Trust V, 7.28%  A  273,200  7,023,972 
Morgan Stanley Capital Trust II, 7.25%  A-  35,000  878,500 
Morgan Stanley Capital Trust III, 6.25%  A-  248,779  6,172,207 
Morgan Stanley Capital Trust IV, 6.25%  A-  57,000  1,404,480 
Morgan Stanley Capital Trust V, 5.75%  A1  311,500  7,382,550 
Morgan Stanley Capital Trust VI, 6.60%  A-  160,000  4,048,000 
 
Life & Health Insurance 1.71%      13,196,167 
Phoenix Cos., Inc. (The), 7.45%  BBB-  94,800  2,376,636 
PLC Capital Trust IV, 7.25%  BBB+  331,075  8,356,333 
Prudential Plc, 6.50% (United Kingdom)  A-  95,807  2,463,198 
 
Movies & Entertainment 2.10%      16,168,363 
Viacom, Inc., 6.85%  BBB  643,645  16,168,363 
 
Multi-Line Insurance 6.63%      51,054,352 
Aegon NV, 6.375% (Netherlands)  A-  355,000  9,219,350 
Aegon NV, 6.50% (Netherlands)  A-  44,100  1,128,960 
ING Groep NV, 7.05% (Netherlands)  A  774,700  19,661,886 
MetLife, Inc., 6.50%, Ser B  BBB  799,550  21,044,156 
 
Multi-Utilities 8.28%      63,744,839 
Baltimore Gas & Electric Co., 6.99%, Ser 1995  Ba1  39,870  4,102,874 
BGE Capital Trust II, 6.20%  BBB-  670,600  16,503,466 
Dominion CNG Capital Trust I, 7.80%  BB+  150,000  3,765,000 
DTE Energy Trust I, 7.80%  BB+  313,000  7,881,340 
PNM Resources, Inc., 6.75%, Conv  BBB-  217,400  11,843,952 
PSEG Funding Trust II, 8.75%  BB+  680,000  17,476,000 
Public Service Electric & Gas Co., 4.18%, Ser B  BB+  7,900  657,675 
South Carolina Electric & Gas Co., 6.52%  Baa1  15,000  1,514,532 
 
Oil & Gas Exploration & Production 4.13%      31,779,926 
Chesapeake Energy Corp., 6.25%, Conv (G)  B+  4,850  1,319,200 
Devon Energy Corp., 6.49%, Ser A  BB+  32,355  3,259,766 
Nexen, Inc., 7.35% (Canada)  BB+  1,068,800  27,200,960 

Page 4

John Hancock
Preferred Income Fund II
Securities owned by the Fund on

April 30, 2007 (unaudited)

Real Estate Management & Development 3.37%      25,974,897 
Duke Realty Corp., 6.50%, Depositary Shares, Ser K  BBB  110,000  2,777,500 
Duke Realty Corp., 6.60%, Depositary Shares, Ser L  BBB  109,840  2,793,231 
Duke Realty Corp., 6.625%, Depositary Shares, Ser J  BBB  449,400  11,347,350 
Duke Realty Corp., 7.99%, Depositary Shares, Ser B  BBB  10,650  531,502 
Public Storage, Inc., 6.45%, Depositary Shares, Ser X  BBB+  30,000  743,400 
Public Storage, Inc., 7.50%, Depositary Shares, Ser V  BBB+  307,100  7,781,914 
Regional Banks 2.30%      17,728,847 
PFGI Capital Corp., 7.75%  A  686,000  17,728,847 
Reinsurance 0.12%      948,400 
RenaissanceRe Holdings Ltd., 6.08%, Ser C (Bermuda)  BBB  40,000  948,400 
Specialized Finance 0.65%      5,016,298 
CIT Group, Inc., 6.35%, Ser A  BBB+  60,000  1,559,400 
Repsol International Capital Ltd., 7.45%, Ser A (Cayman Islands)  BB+  136,313  3,456,898 
Wireless Telecommunication Services 4.10%      31,561,242 
Telephone & Data Systems, Inc., 6.625%  BB+  155,000  3,799,050 
Telephone & Data Systems, Inc., 7.60%  BB+  605,967  15,137,056 
United States Cellular, 7.50%  BB+  502,393  12,625,136 

  Maturity  Par value   
Issuer, description  date  (000)  Value 
U.S. government & agencies securities 5.10%      $39,300,000 
(Cost $39,300,000)       
 
Government U.S. Agency 5.10%      39,300,000 
Discount Note  05-01-07  $39,300  39,300,000 
 
Total investments (Cost $756,115,602)  100.00%    $770,226,735 

Page 5

John Hancock
Preferred Income Fund II
Financial futures contracts
April 30, 2007 (unaudited)

  Number of        Appreciation 
Open contracts  contracts  Position  Expiration  (depreciation) 
 
U.S. 10-year Treasury Note  720  Short  June 2007  $373,921 

Financial futures contracts

John Hancock
Preferred Income Fund II
Interest rate swap contracts
April 30, 2007 (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  $1,799,791 

(a) Fixed rate

Interest rate swap contracts

John Hancock
Preferred Income Fund II
Footnotes to Schedule of Investments
April 30, 2007 (unaudited)

(A) Credit ratings are unaudited and are rated by Moody's Investors Service where Standard & Poor's ratings are not available unless indicated otherwise.

(G) Security rated internally by John Hancock Advisers, LLC.

(P) Represents rate in effect on April 30, 2007.

(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 $13,935,008 or 1.81% of the Fund's total investments as of April 30, 2007.

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, 2007, including short-term investments, was $756,115,602. Gross unrealized appreciation and depreciation of investments aggregated $27,279,522 and $13,168,389, respectively, resulting in net unrealized appreciation of $14,111,133.

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 29, 2007

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 29, 2007

By: /s/ Charles A. Rizzo
-------------------------------------
Charles A. Rizzo
Chief Financial Officer

Date: June 29, 2007