---------------------------
The latest report from your
Fund's management team
---------------------------
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Patriot Premium
Dividend Fund I
MARCH 31, 2000
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
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TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman and Chief Executive Officer
Osbert M. Hood
Executive Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
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
Bankers Trust Company
4 Albany Street
New York, New York 10005
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
Listed New York Stock Exchange Symbol: PDF
For shareholder assistance
refer to page 14
-----------------------------------------------
==================================CEO CORNER====================================
DEAR FELLOW SHAREHOLDERS:
Over the last 12 months, New Economy technology stocks dominated the
business-news headlines and the stock market's performance. Red-hot tech stocks
pushed the NASDAQ Composite Index to the stratosphere, as investors
single-mindedly pursued anything technology related. But after setting a new
high on March 10 amid significantly heightened volatility, the tables started to
turn rapidly. Concerns about Microsoft's antitrust ruling and out-of-sight
valuation levels finally triggered waves of selling that sent the index down by
25% in a month, while Old Economy blue-chip stocks began to make a comeback.
In this same period, fixed-income securities of all types, including bonds and
preferred stocks, struggled as interest rates rose on fears that the roaring
U.S. economy and the rebound of many others around the world would spark an
inflation outbreak. Money-market fund investors benefited each time the Federal
Reserve raised short-term rates, which it did five times in the last year to try
to rein in the economy.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman and Chief Executive Officer,
flush right next to second paragraph.]
- --------------------------------------------------------------------------------
While the battle between old and new rages on, several things are clear: More
than ever, diversification and a long-term investment perspective are two of an
investor's best allies. Since not all parts of your portfolio will perform
equally well all the time, we believe it is important to allocate your assets
among different types of investments and funds that target a variety of stock-
and bond-market segments. This strategy, executed under the guidance of a
seasoned investment professional, could provide you with a better chance of both
realizing longer-term results and weathering the market's changing conditions.
Sincerely,
/s/Maureen R. Ford
- ------------------
MAUREEN R. FORD, VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Gregory K. Phelps for the Portfolio Management Team
John Hancock Patriot
Premium Dividend Fund I
Utility stocks rebound while preferreds languish
------------------------------------------------
Emerging from the very dim months of late 1999, utility common stocks brightened
considerably in the first quarter of 2000. At the beginning of the period last
October, investors worried that the Federal Reserve would raise interest rates
as the stronger-than-expected economy fanned fears of inflation. Utility stock
prices tend to be quite sensitive to interest-rate movements, falling when
interest rates rise because they pay fixed incomes in the form of dividends. On
another front, utility commons unsuccessfully battled an unprecedented deluge of
"tax-loss selling." Simply put, investors were dumping 1999's poorest performers
at a loss to offset capital gains incurred elsewhere in their portfolios.
Perhaps more damaging was the fact that utility stocks failed to gain the
attention of investors, who were almost exclusively focused on high-flying
telecommunications, media and technology stocks.
February and March brought much better news for utility stocks. First,
year-end tax-loss selling ended. Another pivotal event occurred when the U.S.
Treasury started to buy back some of its long-maturity outstanding debt. The
ensuing decline in 30-year Treasury bond yields helped perk up
interest-rate-driven utility stocks. Additionally, U.K.-based PowerGen announced
its intention to purchase LG&E Energy, and National Grid closed on its
acquisition of New England Electric Systems. These transactions signaled the
potential beginnings of another round of utility mergers and acquisitions.
Finally, the technology sector suffered a significant sell-off in March, with
some bargain-hunting investors seeking harbor in
- --------------------------------------------------------------------------------
[A 3" x 2" photo at bottom right side of page of John Hancock Patriot Premium
Dividend Fund I. Caption below reads "Fund management team members (l-r):
Sylvester Marquardt, Mark Maloney, Beverly Cleathero and Gregory Phelps."]
- --------------------------------------------------------------------------------
"Preferred stocks, on the other hand, remained dreary throughout the past six
months..."
3
<PAGE>
================================================================================
John Hancock Funds - Patriot Premium Dividend Fund I
"...we remained intensely focused on adding utility common stocks..."
- --------------------------------------------------------------------------------
[Pie chart at top left hand column with heading "Portfolio Diversification." The
chart is divided into five sections (from top to left): Short-Term Investments &
Other 3%, Industrials 9%, Financials 17%, Utility Common Stock 34% and Utility
Preferred Stock 37%. A note below the chart reads "As a percentage of net assets
on March 31, 2000."]
- --------------------------------------------------------------------------------
utility stocks. In March alone, the Dow Jones Utility Average rose 4.17%.
Preferred stocks, on the other hand, remained dreary throughout the
past six months, troubled by year-end tax-loss selling, interest-rate jitters
and most important, perhaps, lack of demand. But unlike utility commons, demand
for preferred stocks also remained weak in the first three months of 2000,
causing their prices to tread water. In the wake of inflationary worries,
investors shunned virtually all fixed-income investments, with the sole
exception of long-term Treasuries.
Performance review
The recent strong performance of many of our utility common stocks - which made
up roughly one-third of John Hancock Patriot Premium Dividend Fund I - was the
main reason the Fund outpaced its peers and the Dow Jones Utility
- --------------------------------------------------------------------------------
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is Avista
followed by an up arrow with the phrase "Fuel cell biz causes buzz." The second
listing is LG&E Energy followed by an up arrow with the phrase "Acquisition
target." The third listing is Western Resources followed by a down arrow with
the phrase "Credit rating downgraded." A note below the table reads "See
`Schedule of Investments.' Investment holdings are subject to change."]
- --------------------------------------------------------------------------------
Average. For the six months ended March 31, 2000, the Fund returned 2.17% at net
asset value. By comparison, the average income and preferred stock closed-end
fund returned -0.77%, according to Lipper, Inc. Additionally, the Fund beat the
Dow Jones Utility Average, which returned -0.04%.
Our best performers during the period were the stocks of companies that
were being acquired. Our holdings in LG&E Energy got a significant boost when it
was announced that the company would be acquired by U.K.-based PowerGen, while
our holdings in New England Electric Systems were bought out at a nice price
when its long-awaited acquisition by National Grid was consummated.
Other good performers included Avista, formerly known as Washington
Water Power. It rose in response to its successful Internet business. In
addition, the company is a leader in fuel cells, which produce low-cost
electricity without pollution and are generating a lot of excitement. More
recently, the company announced that it would convert its outstanding preferred
stock to common stock by the end of March, which it did. In contrast, Western
Resources drastically underperformed the utility group due to its inability to
complete a planned merger and problems with its Protection One home security
business. The company's credit rating was downgraded in response.
Although most of our preferreds were flat to down, one very bright spot
was Shaw Communications, which was upgraded to investment-grade status during
the period. The higher rating came in recognition of the strength of Shaw's
fiber- optic, broadband and Internet businesses.
Growing biz lines = opportunities
During the past six months, we remained intensely focused on adding utility
common stocks, because
4
<PAGE>
================================================================================
John Hancock Funds - Patriot Premium Dividend Fund I
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the six months ended March 31, 2000." The
chart is scaled in increments of 1% with -1% at the bottom and 3% at the top.
The first bar represents the 2.17% total return for John Hancock Patriot Premium
Dividend Fund I. The second bar represents the -0.77% total return for Average
income and preferred stock closed-end fund. The third bar represents the -0.04%
total return for Dow Jones Utility Average. A note below the chart reads "The
total return for John Hancock Patriot Premium Dividend Fund I is at net asset
value with all distributions reinvested. The average income and preferred stock
closed-end fund is tracked by Lipper, Inc. The Dow Jones Utility Average is an
unmanaged index that measures the performance of the utility industry in the
United States."]
- --------------------------------------------------------------------------------
they were cheap relative to their historic value and offered attractive yields.
We continued to place an emphasis on utilities such as Avista and DTE Energy
with fast-growing, non-regulated businesses such as fuel cells. Other utilities
that held our attention were those pursuing high-growth fiber-optic and
broadband businesses as a way to boost their earnings, such as NSTAR, Potomac
Electric Power, Montana Power, CMP Group and Kansas City Power and Light. We
also favored Alliant Energy, due to its large holdings in a competitive local
exchange carrier that has been grabbing small-company phone business away from
bigger competitors. We also occasionally looked for utility stocks that offered
the potential for strong returns resulting from a takeover or merger.
Financials
Anticipated merger and acquisition activity and relatively high yields were the
main reasons we continued to hold on to some preferreds in the financial sector,
namely Lehman Brothers and Bear Stearns. With the repeal of the Glass-Steagall
Act,which once prevented banks, insurers and securities brokers from merging, we
believe the stage is set for many of our financial services holdings to be
merged into, or acquired by, higher-rated entities.
Outlook
The preferred-stock market suffered from an overabundance of supply and weak
demand in 1999, a situation we don't believe will correct itself until interest
rates stabilize. On that front, our view is that the Federal Reserve may be
nearing the end of its tightening activities. That view is based on the fact
that we're beginning to see some evidence, although it's very subtle at this
point, that the economy could be slowing. New-home sales have leveled off,
existing-home sales have declined, auto sales have flattened and consumer
confidence has declined. To the extent that investors recognize the value that
preferred stocks now offer relative to U.S. Treasury securities, preferreds will
benefit.
As for utility common stocks, we're much more optimistic. We anticipate
continued consolidation in the utility industry, which will likely be favorable
for the group. We are particularly bullish on the companies that offer
non-regulated services like broadband and fiber optics. We believe that
investors may find these companies increasingly attractive alternatives to some
of the much more expensive telecommunications and technology companies.
- --------------------------------------------------------------------------------
This commentary reflects the views of the portfolio management team through the
end of the Fund's period discussed in this report. Of course, the team's views
are subject to change as market and other conditions warrant.
"We anticipate continued consolidation in the utility industry..."
5
<PAGE>
=============================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,
2000. You'll also find the net asset value per share, for each Common Share, as
of that date.
Statement of Assets and Liabilities
March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Preferred stocks (cost - $145,566,902) ..................... $136,949,978
Common stocks (cost - $61,633,940) ......................... 73,509,857
Short-term investments (cost - $2,300,106) ................. 2,300,106
---------------
212,759,941
Receivable for investments sold ............................. 2,352,061
Dividends receivable ........................................ 753,977
Other assets ................................................ 33,302
---------------
Total Assets ...................... 215,899,281
---------------------------------------------------
Liabilities:
Payable for investments purchased ........................... 1,362,203
DARTS dividend payable ...................................... 44,240
Payable to John Hancock Advisers, Inc.
and affiliates - Note B .................................... 256,422
Accounts payable and accrued expenses ....................... 31,494
---------------
Total Liabilities ................. 1,694,359
---------------------------------------------------
Net Assets:
Dutch Auction Rate Transferable Securities Preferred
Shares 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, 14,979,601 shares
issued and outstanding ..................................... 140,817,977
Accumulated net realized gain on investments ................ 1,951,355
Net unrealized appreciation of investments .................. 3,261,185
Distributions in excess of net investment income ............ (325,595)
---------------
Net Assets Applicable to
Common Shares ($9.73 per
share based on 14,979,601
shares outstanding) ............... 145,704,922
---------------
Net Assets ........................ $214,204,922
===================================================
The Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund. It also shows net gains and losses
for the period stated.
Statement of Operations
Six months ended March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividends ................................................... $7,631,632
Interest .................................................... 44,847
---------------
7,676,479
---------------
Expenses:
Investment management fee - Note B ......................... 909,081
Administration fee - Note B ................................ 105,051
DARTS and auction fees ..................................... 97,785
Transfer agent fee ......................................... 30,891
Custodian fee .............................................. 30,474
Printing and postage ....................................... 26,085
Auditing fee ............................................... 25,587
Miscellaneous .............................................. 20,976
Trustees' fees ............................................. 4,461
Legal fees ................................................. 1,251
---------------
Total Expenses .................... 1,251,642
---------------------------------------------------
Net Investment Income ............. 6,424,837
---------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments sold ....................... 2,191,308
Change in net unrealized appreciation/depreciation
of investments ............................................. (4,923,328)
---------------
Net Realized and Unrealized
Loss on Investments ............... (2,732,020)
---------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ......... 3,692,817
===================================================
Distribution to DARTS
Shareholders ...................... (1,512,323)
---------------------------------------------------
Net Increase in Net Assets
Applicable to Common
Shareholders Resulting from
Operations Less DARTS
Distributions ..................... $2,180,494
===================================================
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Premium Dividend Fund I
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MARCH 31, 2000
SEPTEMBER 30, 1999 (UNAUDITED)
------------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ..................................................................... $12,470,665 $6,424,837
Net realized gain on investments sold ..................................................... 555,291 2,191,308
Change in net unrealized appreciation/(depreciation) of investments ....................... (14,208,639) (4,923,328)
--------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations .......................... (1,182,683) 3,692,817
--------------- --------------
Distributions to Shareholders:
DARTS ($3,912 and $2,208 per share, respectively) - Note A ................................ (2,679,551) (1,512,323)
Common Shares - Note A
Dividends from net investment income ($0.6537 and $0.3240 per share, respectively) ....... (9,791,114) (4,852,851)
Distributions in excess of net investment income ($0.0330 and none per share, respectively) (494,459) -
--------------- --------------
Total Distributions to Shareholders ..................................................... (12,965,124) (6,365,174)
--------------- --------------
Net Assets:
Beginning of period ....................................................................... 231,025,086 216,877,279
--------------- --------------
End of period (including distributions in excess of net investment income of
$385,258 and $325,595, respectively) ..................................................... $216,877,279 $214,204,922
=============== ==============
Analysis of Common Shareholder Transactions:
SIX MONTHS ENDED
YEAR ENDED MARCH 31, 2000
SEPTEMBER 30, 1999 (UNAUDITED)
--------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ----------- ----------- ------------
Shares outstanding, beginning of period ...................... 14,979,601 $140,700,663 14,979,601 $140,817,977
Reclassification of net realized long-term gains retained on
investments sold
(net of federal income taxes of $63,731 and none,
respectively) - Note A ...................................... - 118,358 - -
Reclassification of capital accounts ......................... - (1,044) - -
------------ ------------- ------------ --------------
Shares outstanding, end of period ............................ 14,979,601 $140,817,977 14,979,601 $140,817,977
============ ============= ============ ==============
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 capital accounts and the number of Common
Shares outstanding at the end of the last two periods, along with the
corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Premium Dividend Fund I
Financial Highlights
Selected data for a Common Share outstanding throughout the periods indicated,
investment returns, key ratios and supplemental data are listed as follows:
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED
----------------------------------------------------- MARCH 31, 2000
1995 1996 1997 1998 1999 (UNAUDITED)
---------- --------- --------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
COMMON SHARES
Per Share Operating Performance
Net Asset Value, Beginning of Period.................. $7.93 $9.17 $9.02 $9.88 $10.85 $9.91
--------- -------- --------- -------- --------- ----------
Net Investment Income (6) ............................ 0.95 0.94 0.98 0.87 0.83 0.43
Net Realized and Unrealized Gain (Loss) on Investments 1.30 (0.10) 0.82 0.99 (0.90) (0.19)
--------- -------- --------- -------- --------- ----------
Total from Investment Operations .................... 2.25 0.84 1.80 1.86 (0.07) 0.24
--------- -------- --------- -------- --------- ----------
Less Distributions:
Dividends to DARTS Shareholders ...................... (0.21) (0.19) (0.19) (0.19) (0.18) (0.10)
Dividends from Accumulated Net Investment Income to
Common Shareholders ................................. (0.80) (0.74) (0.75) (0.70) (0.66) (0.32)
Distributions in Excess of Accumulated Net Investment
Income to Common Shareholders ....................... - (0.06) - (0.00)(5) (0.03) -
--------- -------- --------- -------- --------- ----------
Total Distributions ................................. (1.01) (0.99) (0.94) (0.89) (0.87) (0.42)
--------- -------- --------- -------- -------- ----------
Net Asset Value, End of Period ....................... $9.17 $9.02 $9.88 $10.85 $9.91 $9.73
========= ======== ========= ======== ======== ==========
Per Share Market Value, End of Period ................ $9.000 $9.125 $9.375 $10.188 $8.813 $8.000
Total Investment Return at Market Value .............. 23.68% 10.58% 11.35% 16.57% (7.01%) (5.53%)(6)
Ratios and Supplemental Data
Net Assets Applicable to Common Shares, End of Period
(000s omitted) ...................................... $135,939 $133,925 $148,008 $162,525 $148,377 $145,705
Ratio of Expenses to Average Net Assets (1) .......... 2.06% 1.87% 1.87% 1.65% 1.66% 1.77%(7)
Ratio of Net Investment Income to Average Net Assets (2) 11.33% 10.12% 10.35% 8.26% 7.92% 9.07%(7)
Portfolio Turnover Rate .............................. 74% 57% 56% 32% 18% 13%
Senior Securities
Total DARTS Outstanding (000s omitted) ............... $68,500 $68,500 $68,500 $68,500 $68,500 $68,500
Asset Coverage per Unit (3) .......................... $290,238 $294,044 $308,832 $330,525 $323,124 $295,032
Involuntary Liquidation Preference per Unit (4) ...... $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Approximate Market Value per Unit (4) ................ $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
(1) Ratios calculated on the basis of expenses applicable to common
shares relative to the average net assets of common shares. Without the
exclusion of preferred shares, the ratio of expenses would have been
1.32%, 1.24%, 1.26%, 1.15%, 1.15% and 1.19%, respectively.
(2) Ratios calculated on the basis of net investment income applicable
to common shares relative to the average net assets of common shares.
Without the exclusion of preferred shares, the ratio of net investment
income would have been 7.29%, 6.75%, 6.97%. 5.75%, 5.52% and 6.12%,
respectively.
(3) 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.
(4) Plus accumulated and unpaid dividends.
(5) Less than $0.01 per share.
(6) Not annualized.
(7) Annualized. The Financial Highlights summarizes the impact of the
following factors on a single share for each period indicated: net
investment income, gains (losses), dividends and total investment
return of the Fund. It shows how the Fund's net asset value for a share
has changed since the end of the previous period. Additionally,
important relationships between some items presented in the financial
statements are expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Premium Dividend Fund I
Schedule of Investments
March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Patriot Premium Dividend Fund I on March 31, 2000. It's divided into three main
categories: preferred stocks, common stocks and short-term investments. The
stocks are further broken down by industry group. 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.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- ------
PREFERRED STOCKS
Agricultural Operations (1.32%)
Ocean Spray Cranberries, Inc.,
6.25% (R)..................................... 35,000 $2,826,250
----------
Automobile / Trucks (1.91%)
General Motors Corp., 9.12%,
Depositary Shares, Ser G .................... 160,000 4,080,000
----------
Banks - Foreign (2.02%)
Australia and New Zealand Banking Group
Ltd., 9.125% (Australia) .................... 173,000 4,325,000
----------
Banks - United States (3.59%)
Chase Manhattan Corp., 10.84%, Ser C ......... 107,075 2,897,717
HSBC USA, Inc., $2.8575 ...................... 20,000 790,000
J.P. Morgan & Co., Inc., 6.625%,
Depositary Shares, Ser H .................... 80,000 3,990,000
----------
7,677,717
----------
Broker Services (6.09%)
Bear Stearns Cos., Inc., 5.49%, Ser G ........ 64,500 2,390,531
Lehman Brothers Holdings, Inc., 5.67%,
Depositary Shares, Ser D .................... 123,700 4,453,200
Lehman Brothers Holdings, Inc., 5.94%,
Ser C ....................................... 68,000 2,856,000
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A .................... 90,000 2,570,625
Morgan Stanley Group, Inc., 7.75%,
Depositary Shares ........................... 15,000 778,125
----------
13,048,481
----------
Diversified Operations (0.42%)
Grand Metropolitan Delaware, L.P.,
9.42%, Gtd Ser A ............................ 35,420 907,637
----------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- ------
Finance (2.53%)
Citigroup, Inc., 8.40%,
Depositary Shares, Ser K .................... 175,000 $4,550,000
SI Financing Trust I, 9.50%,
Gtd Pfd Sec & Purchase Contract ............. 34,200 867,825
----------
5,417,825
----------
Leasing Companies (1.06%)
AMERCO, 8.50%, Ser A ......................... 90,000 2,272,500
----------
Media (0.86%)
Shaw Communications, Inc., 8.45%,
Ser A (Canada) .............................. 89,453 1,844,968
----------
Oil & Gas (7.55%)
Anadarko Petroleum Corp., 5.46%,
Depositary Shares ........................... 45,278 3,393,586
Coastal Finance I, 8.375% .................... 190,000 4,251,250
Devon Energy Corp., 6.49%, Ser A ............. 50,000 4,219,600
Lasmo America Ltd., 8.15% (R) ............... 40,000 4,320,000
----------
16,184,436
----------
Utilities (36.58%)
Alabama Power Co., 5.20% ..................... 225,000 4,640,625
Baltimore Gas & Electric Co., 6.99%,
Ser 1995 .................................... 34,000 3,476,500
Boston Edison Co., 4.25% ..................... 39,643 2,517,331
El Paso Tennessee Pipeline Co., 8.25%,
Ser A ....................................... 182,000 9,361,625
Florida Power & Light Co., 6.75%, Ser U ...... 42,000 4,179,000
FPC Capital I, 7.10%, Ser A .................. 40,000 800,000
Hawaiian Electric Industries Capital Trust I,
8.36% ....................................... 100,000 2,225,000
Idaho Power Co., 7.07% ....................... 13,000 1,306,240
MCN Michigan, L.P., 9.375%, Ser A ............ 211,700 5,027,875
Massachusetts Electric Co., 6.99% ............ 13,500 1,383,750
Monongahela Power Co., 7.73%, Ser L .......... 34,500 3,574,994
Montana Power Capital I, 8.45%, Ser A ........ 40,000 960,000
Montana Power Co., $6.875 .................... 22,500 2,291,445
PSI Energy, Inc., 6.875% ..................... 37,000 3,737,000
Public Service Electric & Gas Co.,
6.92% ....................................... 25,800 2,626,879
Puget Sound Energy, Inc., 7.45%, Ser II ...... 124,000 3,410,000
Sierra Pacific Power Capital I, 8.60% ........ 28,000 644,000
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Premium Dividend Fund I
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- ------
Utilities (continued)
Sierra Pacific Power Co., 7.80%, Ser 1
(Class A) ................................... 50,000 $1,318,750
South Carolina Electric & Gas Co.,
6.52% ....................................... 50,000 4,887,500
Southern Union Financing I, 9.48% ............ 185,000 4,440,000
TDS Capital Trust I, 8.50% ................... 164,935 3,473,943
TDS Capital Trust II, 8.04% .................. 114,400 2,295,150
TXU Electric Co., $1.875,
Depositary Shares, Ser A .................... 25,300 623,013
TXU Electric Co., $7.98 ...................... 36,000 3,783,996
UtiliCorp Capital, L.P., 8.875%, Ser A ....... 184,256 4,353,048
Virginia Electric & Power Co., $7.05 ......... 10,000 1,027,500
----------
78,365,164
----------
TOTAL PREFERRED STOCKS
(Cost $145,566,902) (63.93%) 136,949,978
------- -----------
COMMON STOCKS
Utilities (34.32%)
Alliant Energy Corp. ......................... 150,380 4,577,191
Avista Corp. ................................. 45,128 1,838,966
CH Energy Group, Inc. ........................ 127,300 3,866,737
CMP Group, Inc. .............................. 30,000 873,750
Consolidated Edison, Inc. .................... 55,000 1,595,000
DTE Energy Co. ............................... 109,000 3,161,000
Dominion Resources, Inc. ..................... 64,300 2,471,531
Eastern Enterprises .......................... 50,600 3,029,675
Florida Progress Corp. ....................... 69,000 3,165,375
Hawaiian Electric Industries, Inc. ........... 27,000 858,938
Kansas City Power & Light Co. ................ 53,000 1,537,000
KeySpan Corp. ................................ 59,000 1,629,875
LG&E Energy Corp. ............................ 104,100 2,381,288
Montana Power Co. ............................ 216,600 13,862,400
NSTAR ........................................ 175,000 7,350,000
Northern States Power Co. .................... 20,000 397,500
OGE Energy Corp. ............................. 130,000 2,494,375
Potomac Electric Power Co. ................... 199,000 4,502,375
Puget Sound Energy, Inc. ..................... 216,900 4,812,469
Reliant Energy, Inc. ......................... 93,500 2,191,406
Sierra Pacific Resources ..................... 146,600 1,832,500
TECO Energy, Inc. ............................ 144,000 2,799,000
WPS Resources Corp. .......................... 28,400 736,625
Western Resources, Inc. ...................... 97,700 1,544,881
----------
TOTAL COMMON STOCKS
(Cost $61,633,940) (34.32%) 73,509,857
-------- ----------
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE
- ------------------- -------- -------------- ------
SHORT-TERM INVESTMENTS
Oil & Gas (1.07%)
Chevron USA, Inc.,
Discount Commercial Paper
04-03-00......................... 5.95% $2,301 $2,300,106
------------
TOTAL SHORT-TERM INVESTMENTS (1.07%) 2,300,106
----------- ------------
TOTAL INVESTMENTS (99.32%) 212,759,941
----------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.68%) 1,444,981
----------- ------------
TOTAL NET ASSETS (100.00%) $214,204,922
=========== ============
</TABLE>
Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer; however, security is U.S. dollar
denominated.
(R) These securities are exempt from registration under Rule 144A of
the Securities Act of 1933. These securities may be resold, normally to
qualified insitutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $7,146,250 or 3.34% of
net assets as of March 31, 2000.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
========================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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders.
DIVIDENDS, INTEREST AND DISTRIBUTIONS 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, 1999, which have no effect on the Fund's net
assets, net investment income or net realized gains.
The Fund has the option and has chosen to retain and pay the applicable
federal income tax on $182,089 of its net long-term capital gain for the fiscal
year ended September 30, 1999.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities, revenues
and expenses of the Fund. Actual results could differ from these estimates.
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
has been reset every 49 days thereafter by auction. Dividend rates ranged from
4.03% to 4.85% during the period ended March 31, 2000.
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 respect to the DARTS, as defined in the Fund's By-Laws.
11
<PAGE>
========================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, Inc., for a continuous investment program equivalent,
on an annual basis, to the sum of 0.50% of the Fund's average weekly net assets,
plus 5.00% of the Fund's weekly gross income. The Adviser's total fee is limited
to a maximum amount equal to 1.00% annually of the Fund's average weekly net
assets. For the period ended March 31, 2000, 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 0.10% 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.
Mr. Stephen L. Brown, Ms. Maureen R. Ford and Mr. 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. 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 makes investments into other John Hancock Funds, as
applicable, to cover its liability for the deferred compensation. Investments to
cover the Fund's deferred compensation liability are recorded on the Fund's
books as an other asset. The deferred compensation liability and the related
other asset are always equal and are marked to market on a periodic basis to
reflect any income earned by the investment as well as any unrealized gains or
losses. The investment had no impact on the operations of the Fund.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended March 31, 2000, aggregated $27,640,526 and $30,294,041, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended March 31, 2000.
The cost of long-term investments owned at March 31, 2000 (including
short-term investments) for federal income tax purposes was $209,869,689. Gross
unrealized appreciation and depreciation of investments aggregated $19,476,733
and $16,586,481, respectively, resulting in net unrealized appreciation of
$2,890,252 for federal tax purposes.
12
<PAGE>
================================================================================
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.
The Fund's non-fundamental investment policy, with respect to the
quality of ratings of its portfolio investments, was changed by a vote of the
Fund's Trustees on September 13, 1994. The new policy, which became effective
October 15,1994, stipulates that preferred stocks and debt obligations in which
the Fund will invest will be rated investment grade (at least "BBB" by S&P or
"Baa" by Moody's) at the time of investment or will be preferred stocks of
issuers of investment-grade senior debt, some of which may have speculative
characteristics, or, if not rated, will be of comparable quality as determined
by the Adviser. The Fund will invest in common stocks of issuers whose senior
debt is rated investment grade or, in the case of issuers who have no rated
senior debt outstanding, whose senior debt is considered by the Adviser to be of
comparable quality.
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 participants' 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 to 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
13
<PAGE>
================================================================================
John Hancock Funds - Patriot Premium Dividend Fund I
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. 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 P.O. Box
8209, Boston, Massachusetts 02266-8209 (telephone 1-800-426-5523).
SHAREHOLDER COMMUNICATION AND ASSISTANCE
If you have any questions concerning the John Hancock Patriot Premium Dividend
Fund I, we will be pleased to assist you. If you hold shares in your own name
and not with a brokerage firm, please address all notices, correspondence,
questions or other communications regarding the Fund to the transfer agent at:
State Street Bank and Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
Telephone: (800) 426-5523
If your shares are held with a brokerage firm, you should contact that firm,
bank or other nominee for assistance.
SHAREHOLDER MEETING (UNAUDITED)
On March 16, 2000, the Annual Meeting of John Hancock Patriot Premium Dividend
Fund I (the "Fund") was held to elect four Trustees and to ratify the actions of
the Trustees in selecting independent auditors for the Fund.
The common shareholders elected the following Trustees to serve until their
respective successors are duly elected and qualified, with the votes tabulated
as follows:
WITHHELD
FOR AUTHORITY
--- ---------
Maureen R. Ford 12,576,668 182,387
Charles L. Ladner 12,577,988 181,068
The preferred shareholders elected Ronald R. Dion and Richard S.
Scipione to serve until their respective successors are duly elected and
qualified, with the votes tabulated as follows: 472 FOR and 0 WITHHELD
AUTHORITY.
The shareholders also ratified the Trustees' selection of Deloitte &
Touche LLP as the Fund's independent auditors for the fiscal year ending
September 30, 2000, with the votes tabulated as follows: 12,631,706 FOR, 57,928
AGAINST and 69,943 ABSTAINING.
14
<PAGE>
=====================================NOTES======================================
John Hancock Funds - Patriot Premium Dividend Fund I
15
<PAGE>
================================================================================
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