<PAGE> 1
JOHN HANCOCK FUNDS
- --------------------------------------------------------------------------------
PATRIOT
PREMIUM
DIVIDEND
FUND I
SEMI-ANNUAL REPORT
March 31, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Thomas W.L. Cameron
James F. Carlin*
William H. Cunningham
Charles F. Fretz*
Harold R. Hiser, Jr.*
Charles L. Ladner*
Leo E. Linbeck, Jr.
Patricia P. McCarter*
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman J. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Andrew F. St. Pierre
President
Anne C. Hodsdon
Executive Vice President
Michael P. DiCarlo
Senior Vice President
Thomas H. Drohan
Senior Vice President and Secretary
James K. Ho
Senior Vice President
James B. Little
Senior Vice President and
Chief Financial Officer
John A. Morin
Vice President and Compliance Officer
Susan S. Newton
Vice President and Assistant Secretary
James J. Stokowski
Vice President and Treasurer
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN AND TRANSFER AGENT FOR COMMON SHAREHOLDERS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT FOR DARTS
Chemical Bank
450 West 33rd Street
New York, New York 10001
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
Now that we are into 1995, returns on New Year's resolutions are coming in.
Dieting and saving money -- Americans' long-time favorites -- are often the most
difficult resolutions to keep. This year, however, Congress may give savers an
additional incentive to stick to their guns.
Both the Republicans and Democrats want to revive Individual Retirement
Accounts (IRAs). In an effort to encourage savings, IRAs were made available to
all working Americans in 1981. Anyone with earned income could contribute up to
$2,000 annually. The contributions were fully tax-deductible, and the earnings
weren't taxed until withdrawal. IRAs became the most successful savings program
in the U.S., drawing in more than $250 billion and 13 million new participants
by 1985.
Sweeping tax reforms in 1986, however, changed all that. As it stands now,
the full deduction only applies to individuals who earn less than $25,000,
married couples who earn less than $40,000 and people without employer-sponsored
retirement plans. The result of this congressional tinkering: the number of IRA
contributors declined dramatically, from 16.2 million in 1985 to 4.2 million in
1992.
Legislators are now taking a closer look at expanding the accessibility of
IRAs once again. Several proposals are on the table: (1) the Republicans'
"Contract with America" includes the American Dream Savings Account, a type of
IRA; (2) President Clinton has proposed expanding eligibility by raising income
limits; and (3) several congressional representatives have introduced
legislation to restore the universal availability of a fully tax-deductible IRA.
We enthusiastically support restoring IRAs to their original luster. Not only
will it provide a tax break to middle-income Americans, but it will go a long
way toward raising the nation's dangerously low personal savings rate, which is
the lowest of any major industrialized country. There's an increasing awareness
that Social Security and pension plans will no longer provide for the retirement
needs of middle-income Americans. Increasing IRA accessibility for more working
individuals and families is one of the most sensible ways to help Americans take
responsibility for their future financial needs. We urge you to support the
expanded IRA by contacting your congressional representative or senator.
Sincerely,
/s/ Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY ANDREW F. ST. PIERRE,
SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER
PATRIOT PREMIUM
DIVIDEND FUND I
Bond Market Rebound, Rise in Utility Stocks
Trigger Fund Performance
Rising interest rates and fears of inflation made life difficult for bond
investors in 1994. The downturn started with the Federal Reserve's first
interest-rate increase on February 4, 1994. Five subsequent rate hikes kept
bonds under pressure for most of the year. Yields peaked in November with the
long-term Treasury bond hitting 8.16%. From there, the bond market moved
sideways, finishing the year with one of its worst performances since the Great
Depression.
The New Year, however, brought good tidings for bonds. Prices rebounded
sharply in the first quarter, thanks to evidence that the Fed's efforts are
slowing the economy without killing it. The Fed's last half-point increase
on February 1, 1995 reinforced investors' belief in the "soft-landing"
scenario. Utility stocks, which totaled more than 65% of the Fund's assets, also
staged a strong comeback in the first quarter. That's not surprising since
utility stocks are particularly sensitive to movements in the bond market and
were extremely undervalued. After jumping sharply in January and February, the
group suffered from a bout of profit-taking in early March, but still ended the
quarter with solid gains.
The rising bond market also lifted preferred stocks, which
[A 2 1/2" x 3 1/4" photo of Andrew F. St. Pierre at bottom center. Caption
reads: "Andrew F. St. Pierre, Portfolio Manager."]
[CAPTION]
"UTILITY STOCKS...STAGED A STRONG COMEBACK IN THE FIRST QUARTER."
3
<PAGE> 4
John Hancock Funds - Patriot Premium Dividend Fund I
[Pie chart with the heading "Portfolio Diversification" at top of left hand
column. The chart is divided into five sections. Going from left to right:
Common Stock Utilities 44%; Financials 16%; Industrials 14%; 4) Short-Term
Investments & Other 3%; and Preferred Stock Utilities 23%. A footnote below
states "As a percentage of net assets on March 31, 1995."]
made up slightly more than 50% of the Fund's assets. (That percentage also
includes some utility preferred stocks.) Because of their fixed yields,
preferred stocks also tend to follow the bond market closely.
John Hancock Patriot Premium Dividend Fund I -- because of its focus on
utility stocks and preferred stocks -- benefited from the rallies in both the
bond market and the utility market. For the six months ended March 31, 1995, the
Fund had a total return of 8.70% at net asset value. By comparison, the Dow
Jones Utility Average had a total return of 6.98% and the average
income-oriented, closed-end equity fund had a total return of 3.79%, according
to Lipper Analytical Services.
STAYING CAUTIOUS
Because John Hancock Patriot Premium Dividend Fund I is leveraged, the dramatic
rise in short-term interest rates has impacted its income. So more than ever,
we've stayed focused on our primary goal of maintaining the Fund's monthly
dividend to provide shareholders with the steady income they've come to expect.
As it was throughout 1994, our strategy has remained cautious with a focus on
higher-yielding issues.
Our utility holdings are split between common stocks (44%) and preferred
stocks (23%). Within the common stock sector, we've built a sizable position in
high-yielding utilities. Our emphasis is on quality companies with steady
dividends. Recent additions include Northeast Utilities and Potomac Electric
Power. We've also maintained a core position in utilities -- including Southern
Co. and Florida Progress -- with strong growth prospects but relatively low
yields. These companies have progressive managements, strong competitive
positions and low cost structures. Within the preferred sector, we've upped our
stake in "cushion" preferreds. Their above-average yields cushion their prices
against rising interest rates, hence their names. New holdings include Columbus
Southern Power and Houston Lighting & Power.
With our non-utility holdings, which total nearly 30% of the Fund's assets,
we own a mix of industrial and financial stocks. As with the utility preferreds,
our focus here is on the higher-yielding cushion preferreds. Our paper stocks --
Boise Cascade and Bowater -- have been among our best performers. Strong demand
and rising paper prices have boosted the stocks in the last six months. Auto
stocks like Ford and General
[Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investment"; the header for the right column is "Recent
performance...and what's behind the numbers." The first listing is Boston
Edison followed by an up arrow and the phrase "Successfully engineered rate
agreements." The second listing is New England Electric System followed by an
up arrow and the phrase "Increasing cost efficiencies." The third listing is
Central Maine Power followed by a flat arrow and the phrase "Slow recovery."
Footnote below reads: See "Schedule of Investments." Investment holdings are
subject to change."]
[CAPTION]
"...OUR STRATEGY HAS REMAINED CAUTIOUS..."
4
<PAGE> 5
John Hancock Funds - Patriot Premium Dividend Fund I
[Bar chart with heading "Fund Performance" at top of left hand column. Under
the heading is the footnote: "For the six months ended March 31, 1995." The
chart is scaled in increments of 5% from bottom to top, with 10% at the top and
0% at the bottom. Within the chart, there are three solid bars. The first
represent the 8.70% total return for John Hancock Patriot Premium Dividend Fund
I. The second represents the 6.98% total return for Dow Jones Utility Average.
The third represents the 3.79% total return for the average income-oriented,
closed-end equity fund. Footnote below reads: "The total return for John Hancock
Patriot Premium Dividend Fund I is at net asset value with all distributions
reinvested. The average income-oriented, closed-end equity fund is tracked by
Lipper Analytical Services. The Dow Jones Utility Average is an unmanaged
index, which measures the performance of the utility industry in the United
States."](1)
Motors and energy stocks like Lasmo and Enterprise Oil have also done well
recently. In the financial arena, the bulk of our holdings remain in domestic
banks. Because the recent interest-rate hikes have been accompanied by strong
commercial and consumer loan growth, many banks have been able to book
higher-yielding assets to offset any increase in deposit costs. So even though
bank earnings may not match their spectacular growth rates of the last few
years, they should continue to be strong.
A LOOK AHEAD
Whether or not the Federal Reserve will actually be successful in engineering a
soft landing remains to be seen. According to most economic indicators, the
economy appears to be cooling off and inflation seems to be well-contained.
Having said that, though, it's possible that the Fed could boost short-term
interest rates one last time. But in our view, any increase will be relatively
small -- probably one half of a percentage point. Given that, we'll stick with
our cautious strategy until it's clear that the Fed is done raising rates.
Looking ahead, we believe bonds are likely to do well for the rest of the
year, although they probably won't match their strong first-quarter pace. With
the economy slowing and inflation worries abating, interest rates are likely to
remain relatively stable. At the end of March, the yield on the 30-year Treasury
bond stood at 7.43%. We expect it to trade in a range of 7.25% to 7.75% for the
next several months. Against that backdrop, the dividend-paying stocks the Fund
emphasizes should perform well.
- --------------------------------------------------------------------------------
(1) Source: Lipper Analytical Services
[CAPTION]
"...INTEREST RATES ARE LIKELY TO REMAIN RELATIVELY STABLE."
5
<PAGE> 6
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Premium Dividend Fund I
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET ON MARCH 31,
1995. YOU'LL ALSO FIND THE NET ASSET VALUE PER SHARE, FOR EACH COMMON SHARE, AS
OF THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Preferred stocks (cost - $98,725,544)...................... $ 98,099,696
Common stocks (cost - $96,532,637)......................... 82,688,297
Capital securities (cost - $4,375,000)..................... 4,350,000
Short-term investments (cost - $4,596,000)................. 4,596,000
------------
189,733,993
Cash......................................................... 195
Receivable for investments sold.............................. 169,384
Interest receivable.......................................... 1,000
Dividends receivable......................................... 1,939,257
Deferred organization expenses - Note A...................... 4,242
Other assets................................................. 3,486
------------
Total Assets.............................. 191,851,557
----------------------------------------------------------
LIABILITIES:
DARTS dividend payable....................................... 342,472
Common Share dividend payable................................ 983,675
Payable for investments purchased............................ 747,796
Payable to John Hancock Advisers, Inc. - Note B.............. 180,276
Accounts payable and accrued expenses........................ 4,162
------------
Total Liabilities......................... 2,258,381
----------------------------------------------------------
NET ASSETS:
Dutch Auction Rate Transferable Securities Preferred
Stock Series A (DARTS) - Without par value, unlimited
number of shares of beneficial interest authorized, 685
shares issued, liquidation preference of $100,000 per
share - Note A............................................. 68,500,000
------------
Common Shares - Without par value, unlimited number
of shares of beneficial interest authorized, 14,747,752
shares issued and outstanding.............................. 137,141,794
Accumulated net realized loss on investments................. (2,026,511)
Net unrealized depreciation of investments................... (14,495,188)
Undistributed net investment income.......................... 473,081
------------
Net Assets Applicable to
Common Shares ($8.21 per
share based on 14,747,752
shares outstanding)....................... 121,093,176
----------------------------------------------------------
Total Net Assets.......................... $189,593,176
==========================================================
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINS (LOSSES) FOR
THE PERIOD STATED.
<TABLE>
STATEMENT OF OPERATIONS
Six months ended March 31, 1995 (Unaudited)
- -----------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $11,016)...... $ 8,151,476
Interest..................................................... 119,035
-----------
8,270,511
-----------
Expenses:
Investment management fee - Note B......................... 870,176
DARTS and auction fees..................................... 98,174
Administration fee - Note B................................ 92,838
Transfer agent fee......................................... 37,968
Printing................................................... 35,377
Custodian fee.............................................. 30,070
Auditing fee............................................... 25,852
Miscellaneous.............................................. 24,406
Trustees' fees............................................. 14,952
Organization expense - Note A.............................. 7,758
Legal fees................................................. 6,201
-----------
Total Expenses............................ 1,243,772
---------------------------------------------------------
Net Investment Income..................... 7,026,739
---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments sold........................ (603,042)
Change in net unrealized appreciation/depreciation
of investments............................................. 5,127,356
----------
Net Realized and Unrealized
Gain on Investments....................... 4,524,314
---------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations................. 11,551,053
=========================================================
Distributions to DARTS.................... (1,525,852)
---------------------------------------------------------
Net Increase in Net Assets
Applicable to Common Shareholders
Resulting from Operations
Less DARTS Distributions $10,025,201
=========================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 7
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Premium Dividend Fund I
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1995 SEPTEMBER 30,
(UNAUDITED) 1994
---------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.......................................................................... $ 7,026,739 $ 12,969,885
Net realized loss on investments sold.......................................................... (603,042) (1,423,469)
Change in net unrealized appreciation/depreciation of investments.............................. 5,127,356 (40,093,062)
Net Increase (Decrease) in Net Assets Resulting from Operations.............................. 11,551,053 (28,546,646)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
DARTS ($2,228 and $3,070 per share, respectively) - Note A..................................... (1,525,852) (2,102,717)
Common Shares - Note A
Dividends from net investment income ($0.4002 and $0.9993) per share respectively)........... (5,880,879) (14,533,485)
Distributions from net realized gain on investments sold (none and $0.2499 per
share respectively)......................................................................... -- (3,634,142)
------------ ------------
Total Distributions to Shareholders......................................................... (7,406,731) (20,270,344)
------------ ------------
FROM FUND SHARE TRANSACTIONS
Value of shares issued to common shareholders in reinvestment of distributions *............... 825,967 1,256,928
------------ ------------
NET ASSETS:
Beginning of period............................................................................ 184,622,887 232,182,949
------------ ------------
End of period (including undistributed net investment income of $473,081 and $853,073
respectively)................................................................................. $189,593,176 $184,622,887
============ ============
* ANALYSIS OF COMMON SHAREHOLDER TRANSACTIONS:
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1995 (UNAUDITED) SEPTEMBER 30, 1994
------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares outstanding beginning of period................................ 14,645,024 $136,315,827 14,498,442 $135,067,998
Shares issued to common shareholders for reinvestment of
distributions........................................................ 102,728 825,967 146,582 1,256,928
Reclassification of undistributed net investment income -
Note D............................................................... -- -- -- (9,099)
---------- ------------ ----------- ------------
Shares outstanding end of period...................................... 14,747,752 $137,141,794 14,645,024 $136,315,827
========== ============ =========== ============
</TABLE>
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS, AND ANY INCREASE DUE TO REINVESTMENT OF DISTRIBUTIONS. THE
FOOTNOTE ILLUSTRATES ANY RECLASSIFICATIONS OF SHARE CAPITAL AMOUNTS, THE NUMBER
OF COMMON SHARES OUTSTANDING AT THE BEGINNING OF THE PERIOD, REINVESTED AND
OUTSTANDING AT THE END OF THE PERIOD, FOR THE LAST TWO PERIODS, ALONG WITH THE
CORRESPONDING DOLLAR VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Premium Dividend Fund I
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a Common Share outstanding throughout the periods indicated,
investment returns, key ratios and supplemental data are listed as follows:
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 1995 YEAR ENDED SEPTEMBER 30,
-------------- --------------------------------------------
COMMON SHARES (UNAUDITED) 1994 1993 1992(a)
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period............... $ 7.93 $ 11.29 $ 10.47 $ 9.54
------------ ------------ ------------ ------------
Net Investment Income.............................. 0.47 0.89 0.90 0.92
Net Realized and Unrealized Gain (Loss)
on Investments................................... 0.31 (2.86) 1.25 0.95
------------ ------------ ------------ ------------
Total from Investment Operations................. 0.78 (1.97) 2.15 1.87
------------ ------------ ------------ ------------
Less Distributions:
Dividends to DARTS Shareholders.................... (0.10) (0.14) (0.13) (0.14)
Dividends from Accumulated Net Investment
Income to Common Shareholders.................... (0.40) (1.00) (0.64) (0.54)
Distributions from Net Realized Short-term
Capital Gains on Investments to
Common Shareholders.............................. -- (0.25) (0.56) (0.26)
Distributions from Capital in Excess of
Par Value to Common Shareholders................. -- -- -- --
------------ ------------ ------------ ------------
Total Distributions................................ (0.50) (1.39) (1.33) (0.94)
------------ ------------ ------------ ------------
Net Asset Value, End of Period..................... $ 8.21 $ 7.93 $ 11.29 $ 10.47
============ ============ ============ ============
Per Share Market Value, End of Period.............. $ 8.375 $ 8.000 $ 10.875 $ 10.500
Total Investment Return at Market Value............ 10.01% (16.05%) 15.66% 26.52%
RATIOS AND SUPPLEMENTAL DATA
Net Assets Applicable to Common Shares,
End of Period.................................... $121,093,176 $116,122,887 $163,682,949 $151,458,764
Ratio of Expenses to Average Net Assets *.......... 1.34%(d) 1.29% 1.40% 1.37%
Ratio of Net Investment Income to
Average Net Assets *............................. 7.57%(d) 6.42% 5.62% 6.46%
Portfolio Turnover Rate............................ 43% 56% 69% 100%
SENIOR SECURITIES
Total DARTS Outstanding............................ $ 68,500,000 $ 68,500,000 $ 68,500,000 $ 68,500,000
Asset Coverage per Unit (b)........................ $ 275,004 $ 271,736 $ 342,383 $ 318,829
Involuntary Liquidation Preference per Unit (c).... $ 100,000 $ 100,000 $ 100,000 $ 100,000
Approximate Market Value per Unit (c).............. $ 100,000 $ 100,000 $ 100,000 $ 100,000
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------
COMMON SHARES 1991 1990
-------------- ------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period............... $ 7.77 $ 9.74
-------------- ------------
Net Investment Income.............................. 1.00 1.06
Net Realized and Unrealized Gain (Loss)
on Investments................................... 1.86 (1.59)
-------------- ------------
Total from Investment Operations................. 2.86 (0.53)
-------------- ------------
Less Distributions:
Dividends to DARTS Shareholders.................... (0.25) (0.24)
Dividends from Accumulated Net Investment
Income to Common Shareholders.................... (0.65) (0.82)
Distributions from Net Realized Short-term
Capital Gains on Investments to
Common Shareholders.............................. (0.19) (0.22)
Distributions from Capital in Excess of
Par Value to Common Shareholders................. -- (0.16)
-------------- ------------
Total Distributions................................ (1.09) (1.44)
-------------- ------------
Net Asset Value, End of Period..................... $ 9.54 $ 7.77
============== ============
Per Share Market Value, End of Period.............. $ 9.000 $ 9.125
Total Investment Return at Market Value............ 8.40% 1.92%
RATIOS AND SUPPLEMENTAL DATA
Net Assets Applicable to Common Shares,
End of Period.................................... $ 137,346,639 $111,484,384
Ratio of Expenses to Average Net Assets *.......... 1.48% 1.34%
Ratio of Net Investment Income to
Average Net Assets *............................. 7.53% 8.31%
Portfolio Turnover Rate............................ 101% 124%
SENIOR SECURITIES
Total DARTS Outstanding............................ $ 68,500,000 $ 68,500,000
Asset Coverage per Unit (b)........................ $ 290,615 $ 264,478
Involuntary Liquidation Preference per Unit (c).... $ 100,000 $ 100,000
Approximate Market Value per Unit (c).............. $ 100,000 $ 100,000
<FN>
* Ratios calculated on the basis of expenses and net investment income
applicable to both common and preferred shares relative to the average net
assets for both common and preferred shares.
(a) Prior to the assumption of the advisory contract on May 6, 1992 by John
Hancock Advisers, Inc., the Fund was advised by Patriot Advisers, Inc.
(b) Calculated by subtracting the Fund's total liabilities (not including the
DARTS) from the Fund's total assets and dividing such amount by the number
of DARTS outstanding as of the applicable 1940 Act Evaluation Date.
(c) Plus accumulated and unpaid dividends.
(d) On an annualized basis.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Premium Dividend Fund I
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
FUND ON MARCH 31, 1995. IT'S DIVIDED INTO FOUR MAIN CATEGORIES: PREFERRED
STOCKS, COMMON STOCKS, CAPITAL SECURITIES AND SHORT-TERM INVESTMENTS. THE STOCKS
ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS. UNDER EACH INDUSTRY GROUP IS A LIST
OF THE STOCKS OWNED BY THE FUND. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE
FUND'S "CASH" POSITION, ARE LISTED LAST.
<TABLE>
SCHEDULE OF INVESTMENTS
March 31, 1995 (Unaudited)
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
PREFERRED STOCKS
AUTO/TRUCK (2.19%)
Ford Motor Co., 8.25%,
Depositary Shares, Ser B................ 60,000* $ 1,552,500
General Motors Corp., 9.12%,
Depositary Shares, Ser G................ 100,000 2,600,000
-----------
4,152,500
-----------
BANKS - FOREIGN (0.68%)
Banesto Holdings Ltd., 10.50%,
Gtd Ser A (Guernsey) (R)................ 50,000 1,300,000
-----------
BANKS - U.S. (9.97%)
Ahmanson, H.F. & Co., 9.60%,
Depositary Shares, Ser B................ 106,300* 2,763,800
Bank of Boston Corp., 8.60%,
Depositary Shares, Ser E................ 148,654 3,734,932
BankAmerica Corp., 9.00%, Ser H 30,000* 768,750
BankAmerica Corp., 9.625%, Ser F 60,000 1,552,500
Chase Manhattan Corp., 9.76%, Ser H 21,000 569,625
Chase Manhattan Corp., Adjustable Rate
Preferred ("ARP"), Ser N................ 48,000 1,038,000
Chemical Banking Corp., ARP, Ser L 15,000 1,308,750
Citicorp, ARP, Depositary Shares,
Ser 18.................................. 10,000 213,750
First Fidelity Bancorporation, 10.64%,
Depositary Shares, Ser F................ 30,000 795,000
First Interstate Bancorp, 9.875%,
Depositary Shares, Ser F................ 65,000 1,690,000
LaSalle National Corp., 8.75%, Ser K (R).. 60,000 3,022,500
Mellon Bank Corp., 9.60%, Ser I........... 55,000* 1,443,750
-----------
18,901,357
-----------
COMPUTER SERVICES (0.40%)
Comdisco, Inc., 8.75%, Ser A.............. 30,900 757,050
-----------
CONGLOMERATE (0.83%)
Grand Metropolitan PLC, 9.42%, Ser A...... 60,420* 1,586,025
-----------
EQUIPMENT LEASING (0.90%)
AMERCO, 8.50%, Ser A...................... 80,000 1,700,000
-----------
FINANCIAL SERVICES (1.72%)
Merrill Lynch & Co., 9.00%,
Depositary Shares, Ser A................ 30,000* 795,000
Morgan Stanley Group, Inc., 8.88%,
Depositary Shares....................... 30,000 765,000
Salomon, Inc., 8.08%, Depositary
Shares, Ser D........................... 50,000 $ 1,168,750
Santander Finance Ltd., 7.90%,
Gtd Ser B (Cayman Islands).............. 25,000 528,125
-----------
3,256,875
-----------
INSURANCE (3.15%)
Progressive Corp., 9.375%, Ser A.......... 60,000 1,522,500
Provident Life & Accident Insurance Co.
of America, 8.10%, Depositary Shares.... 81,500 2,006,938
SunAmerica, Inc., 9.25%, Ser B............ 50,000 1,300,000
Travelers, Inc., 9.25%, Depositary
Shares, Ser D........................... 44,000* 1,138,500
-----------
5,967,938
-----------
OIL & GAS (5.78%)
Coastal Corp., $2.125, Ser H.............. 50,000* 1,206,250
Elf Overseas Ltd., 8.50%,
Gtd Ser A (Cayman Islands).............. 150,000 3,693,750
ENSERCH Corp., ARP, Depositary
Shares, Ser F........................... 25,000 512,500
Enterprise Oil PLC, 10.50%,
American Depositary Receipt
("ADR"), Ser A (United Kingdom)......... 24,000 588,000
Lasmo PLC, 10.00%, ADR, Ser A
(United Kingdom)........................ 117,500 2,673,125
Phillips Gas Co., 9.32%, Ser A............ 86,100 2,281,650
-----------
10,955,275
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Premium Dividend Fund I
<TABLE>
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
PAPER (2.42%)
Boise Cascade Corp., 9.40%, Ser F........... 85,000 $ 2,146,250
Bowater, Inc., 8.40%, Depositary
Shares, Ser C............................. 100,000 2,450,000
-----------
4,596,250
-----------
PUBLISHING (0.37%)
Newscorp Overseas Ltd., 8.625%,
Gtd Ser A (Cayman Islands)................ 30,000 697,500
-----------
UTILITIES (23.33%)
Central Maine Power Co., 7.999%, Ser A...... 10,000 895,000
Central Maine Power Co., 8.875% (R)......... 16,000 1,456,000
Cincinnati Gas & Electric Co., 7.44%........ 12,000 1,080,000
Columbus Southern Power
Corp., 7.875%............................. 20,000 2,032,500
Columbus Southern Power
Corp., 9.50%.............................. 7,000* 759,500
Commonwealth Edison Co., $7.24.............. 7,500 611,250
Commonwealth Edison Co., $8.40, Ser A....... 23,873 2,196,316
Connecticut Light & Power Capital
Corp., 9.30%, Ser A....................... 61,050* 1,556,775
Detroit Edison Co., 7.36%................... 15,300 1,331,100
Detroit Edison Co., 7.75%................... 60,000 1,432,500
Duke Power Co., 7.85%, Ser S................ 20,000 1,997,500
Florida Power & Light Co., 7.28%, Ser F..... 31,697 2,924,048
Florida Power Corp., 7.40%.................. 6,474 611,793
Florida Power Corp., 7.76%.................. 13,600 1,348,100
GTE Florida, Inc., 8.16%.................... 25,000 2,550,000
GTE North, Inc., $7.60, Ser IND............. 11,000 1,080,750
Gulf States Utilities Co., $8.52............ 18,996 1,792,747
Gulf States Utilities Co., $9.96............ 8,900* 887,775
Gulf States Utilities Co., ARP,
Depositary Shares, Ser B.................. 27,386 1,355,607
Houston Lighting & Power Co., $8.12......... 10,000* 998,750
MCN Michigan LTD Partnership,
9.375%, Ser A............................. 50,000* 1,293,750
Mononahela Power Co., $7.73, Ser L.......... 16,000* 1,600,000
New York State Electric & Gas
Corp., 8.95%.............................. 47,000* 1,210,250
PSI Energy, Inc., 7.44%..................... 56,000* 1,295,000
Public Servic Co. of NH, 10.60%, Ser A...... 25,000* 640,625
Public Service Electric & Gas Co., 6.92%.... 34,000* 2,851,750
Public Service Electric & Gas Co., 7.70%.... 18,728 1,732,340
San Diego Gas & Electric Co., $7.20......... 7,600 623,200
Texas Utilities Electric Co., $1.875,
Depositary Shares, Ser A.................. 25,000 556,250
Texas Utilities Electric Co., $7.98......... 26,000 2,492,750
Washington Natural Gas Co.,
8.50%, Ser III............................ 45,000 $ 1,035,000
-----------
44,228,926
-----------
TOTAL PREFERRED STOCKS
(Cost $98,725,544) ( 51.74%) 98,099,696
------- -----------
COMMON STOCKS
UTILITIES (43.61%)
American Electric Power Co., Inc............ 110,000 3,492,500
Boston Edison Co............................ 175,000 4,200,000
Carolina Power & Light Co. ................. 30,000* 813,750
Central & South West Corp................... 168,000 4,074,000
Central Maine Power Co...................... 126,100 1,387,100
Cinergy Corp. (formerly Cincinnati Gas &
Electric Co.)............................. 225,000 5,596,875
Consolidated Edison Co. of NY, Inc.......... 162,000 4,414,500
DPL, Inc.................................... 250,000 5,218,750
Dominion Resources, Inc. of VA.............. 152,000 5,472,000
Entergy Corp................................ 37,475 782,291
Florida Progress Corp....................... 135,150 4,071,394
Houston Industries, Inc..................... 66,400 2,531,500
New England Electric System................. 207,000 6,391,125
Northeast Utilities Co...................... 65,000* 1,381,250
Pacific Gas and Electric Co. ............... 249,000 6,193,875
Peco Energy Co.............................. 100,000 2,512,500
Potomac Electric Power Co. ................. 74,400* 1,404,300
Public Service Enterprise Group, Inc........ 133,500 3,654,562
Puget Sound Power & Light Co. .............. 126,900 2,664,900
SCECORP..................................... 30,000 468,750
Scana Corp.................................. 105,000 4,383,750
Southern Co. ............................... 225,000 4,584,375
Texas Utilities Co. ........................ 131,000 4,159,250
Unicom Corp................................. 96,000 2,280,000
Washington Water Power Co. ................. 37,000* 555,000
-----------
TOTAL COMMON STOCKS
(Cost $96,532,637) (43.61%) 82,688,297
------- -----------
CAPITAL SECURITIES
BANKS - FOREIGN (2.30%)
A/S Eksportfinans, 8.70%, Capital
Securities (Norway)....................... 75,000 1,837,500
Australia and New Zealand Banking
Group Ltd., 9.125%, Capital Securities
(Australia)............................... 100,000 2,512,500
-----------
TOTAL CAPITAL SECURITIES
(Cost $4,375,000) (2.30%) 4,350,000
------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Premium Dividend Fund I
<TABLE>
<CAPTION>
INTEREST PAR VALUE
ISSUER, DESCRIPTION RATE (000 OMITTED) MARKET VALUE
- ------------------- -------- ------------- ------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
COMMERCIAL PAPER (2.42%)
Prudential Funding Corp.
04-03-95................................................. 5.95% 698 $ 698,000
Prudential Funding Corp.
04-04-95................................................. 6.03 3,898 3,898,000
------------
TOTAL SHORT-TERM INVESTMENTS (2.42%) 4,596,000
-------- ------------
TOTAL INVESTMENTS (100.07%) $189,733,993
======== ============
</TABLE>
* Securities, other than short-term investments, newly added to the portfolio
during the period ended March 31, 1995.
Parenthetical disclosure of a foreign country in the security description
represents country of 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 net assets of the Fund.
The securities indicated by (R) 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. See Note A of
the Notes to Financial Statements for valuation policy. Rule 144A securities
amounted to $5,778,500 as of March 31, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Patriot Premium Dividend Fund I
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
Patriot Premium Dividend Fund I (the "Fund") is a diversified closed-end
management investment company, registered under the Investment Company Act of
1940, as amended. Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services,
or at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, the Fund has $1,300,401 of a capital
loss carryforward available, to the extent provided by regulations, to offset
future net realized capital gains. If such carryforward is used by the Fund, no
capital gains distributions will be made. The carryforward expires September 30,
2002.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date. Interest income on investment securities is
recorded on the accrual basis.
The Fund records all dividends and distributions to shareholders from net
investment income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with federal income tax regulations. Due to
permanent book/tax differences in accounting for certain transactions, this has
the potential for treating certain distributions as return of capital as opposed
to distributions of net investment income or realized capital gains. The Fund
has adjusted for the cumulative effect of such permanent book/tax differences
through September 30, 1994, which has no effect on the Fund's net assets, net
investment income or net realized gains.
DEFERRED ORGANIZATION EXPENSES Expenses incurred in connection with the
organization and reorganization of the Fund have been capitalized and are being
charged ratably to the Fund's operations over a five-year period that began with
the commencement of the investment operations of the Fund and from the effective
date of the reorganization.
DUTCH AUCTION RATE TRANSFERABLE SECURITIES PREFERRED STOCK SERIES A (DARTS) The
Fund issued 685 shares of Dutch Auction Rate Transferable Securities Preferred
Stock Series A (DARTS) concurrently with the issuance of its Common Shares in
the public offering. The underwriting discount was recorded as a reduction of
the capital of the Common Shares. Dividends on the DARTS, which accrue daily,
are cumulative at a rate which was established at the offering of the DARTS and
have been reset every 49 days thereafter by auction. Dividend rates ranged from
3.82% to 4.94% during the period ended March 31, 1995.
The DARTS are redeemable at the option of the Fund, at a redemption price
equal to $100,000 per share, plus accumulated and unpaid dividends on any
dividend payment date. The DARTS are also subject to mandatory redemption at a
redemption price equal to $100,000 per share, plus accumulated and unpaid
dividends, if the Fund is in default on its asset coverage requirements with
respect to the DARTS. If the dividend on the DARTS shall remain unpaid in an
amount equal to two full years' dividends, the holders of the DARTS, as a class,
have the right to elect a majority of the Board of Trustees. In general, the
holders of the DARTS and the Common Shares have equal voting rights of one vote
per share, except that the holders of the DARTS, as a class, vote to elect two
members of the Board of Trustees, and separate class votes are required on
certain matters that affect the respective interests of the DARTS and Common
Shares. The DARTS have a liquidation preference of $100,000 per share, plus
accumulated and unpaid dividends. The Fund is required to maintain certain asset
coverage with respects to the DARTS, as defined in the Fund's By-Laws.
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Patriot Premium Dividend Fund I
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the investment management contract, the Fund pays a monthly management
fee to John Hancock Advisers, Inc. (the "Adviser"), a wholly-owned subsidiary
of The Berkeley Financial Group, for a continuous investment program equivalent
on an annual basis, to the sum of .50 of 1% of the Fund's average weekly net
assets, plus 5% of the Fund's weekly gross income. The Adviser's total fee is
limited to a maximum amount equal to 1% annually of the Fund's average weekly
net assets. For the period ended March 31, 1995, the advisory fee incurred did
not exceed the maximum advisory fee allowed.
The Fund has entered into an administrative agreement with the Adviser under
which the Adviser oversees the custodial, auditing, valuation, accounting,
legal, stock transfer and dividend disbursing services and maintains Fund
communications services with the shareholders. The Adviser receives a monthly
administration fee equivalent, on an annual basis, to .10 of 1% of the Fund's
average weekly net assets.
Each unaffiliated Trustee is entitled, as compensation for his or her
services, to an annual fee plus remuneration for attendance at various meetings.
Messrs. Edward J. Boudreau, Jr. and Richard S. Scipione are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of the Fund.
The compensation of unaffiliated Trustees is borne by the Fund. Effective with
the fees paid for 1995, the unaffiliated Trustees may elect to defer for tax
purposes their receipt of this compensation under the John Hancock Group of
Funds Deferred Compensation Plan. The Fund will make investments into other John
Hancock Funds, as applicable, to cover its liability with regard to the deferred
compensation. Investments to cover the Fund's deferred compensation liability
will be recorded on the Fund's books as an other asset. The deferred
compensation liability will be marked to market on a periodic basis and income
earned by the investment will be recorded on the Fund's books.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended March 31, 1995, aggregated $79,626,982 and
$79,688,935, respectively.
The cost of long-term investments owned at March 31, 1995 for Federal income
tax purposes was $200,080,685. Gross unrealized appreciation and depreciation of
investments aggregated $2,602,549 and $17,545,241, respectively, resulting in
net unrealized depreciation of $14,942,692 for federal tax purposes.
13
<PAGE> 14
John Hancock Funds - Patriot Premium Dividend Fund I
INVESTMENT OBJECTIVE AND POLICY
The Fund's investment objective is to provide high current income, consistent
with modest growth of capital for holders of its common shares. The Fund will
pursue its objective by investing in a diversified portfolio of dividend-paying
preferred and common equity securities.
DIVIDEND REINVESTMENT PLAN
The Fund provides shareholders with a Dividend Reinvestment Plan ("the Plan")
which offers the opportunity to earn compounded yields. Each holder of Common
Shares will automatically have all distributions of dividends and capital gains
reinvested by State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, 02210, as agent for the common shareholders unless an election is
made to receive cash. Holders of Common Shares who elect not to participate in
the Plan will receive all distributions in cash, paid by check, mailed directly
to the shareholder of record (or if the Common Shares are held in street or
other nominee name then to the nominee) by the Plan Agent, as dividend
disbursing agent. Shareholders whose shares are held in the name of a broker or
nominee should contact the broker or nominee to determine whether and how they
may participate in the Plan.
If the Fund declares a dividend payable either in Common Shares or in cash,
nonparticipants will receive cash and participants in the Plan will receive the
equivalent in Common Shares. If the market price of the Common Shares on the
payment date for the dividend is equal to or exceeds their net asset value as
determined on the payment date, participants will be issued Common Shares (out
of authorized but unissued shares) at a value equal to the higher of net asset
value or 95% of the market price. If the net asset value exceeds the market
price of the Common Shares at such time, or if the Board of Trustees declares a
dividend payable only in cash, the Plan Agent will, as agent for Plan
participants, buy shares in the open market, on the New York Stock Exchange or
elsewhere, for the participant's accounts. Such purchases will be made promptly
after the payable date for such dividend and, in any event, prior to the next
ex-dividend date, after such date except where necessary to comply with federal
securities laws. If, before the Plan Agent has completed its purchases, the
market price exceeds the net asset value of the Common Shares, the average per
share purchase price paid by the Plan Agent may exceed the net asset value of
the Common Shares, resulting in the acquisition of fewer shares than if the
dividend had been paid in shares issued by the Fund.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent. Such withdrawal will be effective immediately if received not
less than ten days prior to a dividend record date; otherwise, it will be
effective for all subsequent dividend record dates. When a participant withdraws
from the Plan or upon termination of the Plan as provided below, certificates
for whole Common Shares credited to his or her account under the Plan will be
issued and a cash payment will be made for any fraction of a Share credited to
such account.
The Plan Agent maintains each shareholder's account in the Plan and furnishes
monthly written confirmations of all transactions in the accounts, including
information needed by the shareholders for personal and tax records. Common
Shares in the account of each Plan participant will be held by the Plan Agent in
non-certificated form in the name of the participant. Proxy material relating
the shareholder's meetings of the Fund will include those shares purchased as
well as shares held pursuant to the Plan.
There will be no brokerage charges with respect to Common Shares issued
directly by the Fund. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open market
purchases in connection with the reinvestment of dividends and distributions. In
each case, the cost per share of the shares purchased for each participant's
account will be the average cost, including brokerage commissions, of any shares
purchased on the open market plus the cost of any shares issued by the Fund.
There are no other charges to participants for reinvesting dividends or capital
gain distributions, except for certain brokerage commissions, as described
above.
14
<PAGE> 15
John Hancock Funds - Patriot Premium Dividend Fund I
The automatic reinvestment of dividends and distributions will not relieve
participants of any federal income tax that may be payable or required to be
withheld on such dividends or distributions. Participants under the Plan will
receive tax information annually. The amount of dividend to be reported on Form
1099-DIV should be (1) in the case of shares issued by the Fund, the fair market
value of such shares on the dividend payment date and (2) in the case of shares
purchased by the Plan Agent in the open market, the amount of cash used to
purchase them (including the amount of cash allocated to brokerage commissions
paid on such purchases).
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Fund at least 90 days before the record
date for the dividend or distribution. The Plan may be amended or terminated by
the Plan Agent after at least 90 days written notice to all shareholders of the
Fund. All correspondence or additional information concerning the Plan should be
directed to the Plan Agent, State Street Bank and Trust Company, at 225 Franklin
Street, Boston, Massachusetts 02110 (telephone 1-800-426-5523).
15
<PAGE> 16
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FUND U.S. Postage
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 PAID
So. Hackensack
Permit No. 750
[A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."]
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Recycled Paper."]
JHF P10SA 03/95
