UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-5615
John Hancock Patriot Premium Dividend Fund I
(Exact name of registrant as specified in charter)
101 Huntington Avenue, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip code)
Susan S. Newton, Secretary
101 Huntington Avenue
Boston, Massachusetts 02199
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-375-1702
Date of fiscal year end: September 30
Date of reporting period: September 30, 2004
ITEM 1. REPORT TO SHAREHOLDERS.
JOHN HANCOCK
Patriot Premium
Dividend Fund I
9.30.2004
Annual Report
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of James A Shepherdson, Chief Executive Officer, flush left next
to first paragraph.]
CEO CORNER
Table of contents
Your fund at a glance
page 1
Managers' report
page 2
Fund's investments
page 6
Financial statements
page 11
Trustees & officers
page 26
For more information
page 29
Dear Fellow Shareholders,
The stock market has made little, if any, headway so far in 2004, as it
has wrestled with a variety of uncertainties. Questions about the
continuing strength of the economy and the effects of rising interest
rates, and expectations for corporate earnings growth, kept investors
jittery. In addition, crude oil prices at levels beyond historic highs,
geopolitical issues and a closely contested U.S. presidential race all
weighed on the market.
As a result, the Standard & Poor's 500 Index is up just 1.51%
year-to-date through September, while the Dow Jones Industrial Average
and the Nasdaq Composite Index have lost ground slightly, returning
-2.06% and -5.00%, respectively. Despite the Federal Reserve's three
hikes in short-term interest rates from historic lows, bonds still
managed to outperform stocks, with the Lehman Brothers Aggregate Bond
Index up 3.35%.
In news closer to home, we are pleased to announce that on June 15,
2004, your fund's Board of Trustees appointed Charles L. Ladner as
independent Chairman of the Board of Trustees, a position previously
held by John Hancock Funds LLC's former Chairman and Chief Executive
Officer, Maureen Ford Goldfarb. This appointment came in advance of new
SEC regulations requiring all mutual funds to have independent chairmen.
Mr. Ladner has served as an independent member of John Hancock Funds'
Board of Trustees since 1992 and formerly held the position of Senior
Vice President and Chief Financial Officer of UGI Corporation, a public
utility holding company in Valley Forge, PA, until his retirement in
1998. He brings a wealth of knowledge, experience and leadership and we
are delighted to have him serve as Chairman.
Sincerely,
/S/ JAMES A. SHEPHERDSON
James A. Shepherdson,
Chief Executive Officer
This commentary reflects the CEO's views as of September 30, 2004. They
are subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks to
provide high current
income, consistent
with modest growth
of capital, for hold-
ers of its common
shares by investing
at least 80% of its
assets in dividend-
paying securities.
Over the last twelve months
* Preferred stocks were volatile in response to shifting views about the
direction of the economy, inflation and interest rates.
* The Fund's performance was helped by its holdings in utility common
stocks, although one holding in that group proved particularly
disappointing.
* High-quality, fully taxable preferred holdings helped the Fund's
performance.
[Bar chart with heading "John Hancock Patriot Premium Dividend Fund I."
Under the heading is a note that reads "Fund performance for the year ended
September 30, 2004." The chart is scaled in increments of 5% with 0% at the
bottom and 15% at the top. The first bar represents the 13.40% net asset
value for John Hancock Patriot Premium Dividend Fund I. The second bar
represents the 9.76% market value for John Hancock Patriot Premium Dividend
Fund I. A note below the chart reads "The total returns for the Fund
include the reinvestment of all distributions. The performance data
contained within this material represents past performance, which does not
guarantee future results."]
Top 10 issuers
7.3% NSTAR
5.6% Energy East Corp.
4.6% Lehman Brothers Holdings, Inc.
4.4% Shaw Communications, Inc.
4.0% Baltimore Gas & Electric Co.
3.4% El Paso Tennessee Pipeline Co.
3.4% Sierra Pacific Power Co.
3.1% CH Energy Group, Inc.
2.8% South Carolina Electric & Gas Co.
2.6% Alabama Power Co.
As a percentage of net assets plus value of preferred shares on
September 30, 2004.
1
BY GREGORY K. PHELPS AND MARK T. MALONEY FOR THE PORTFOLIO MANAGEMENT TEAM
MANAGERS'
REPORT
JOHN HANCOCK
Patriot Premium Dividend Fund I
Preferred stocks -- which are the primary emphasis of John Hancock
Patriot Premium Dividend Fund I -- were on a proverbial roller-coaster
ride during the 12 months ended September 30, 2004, fluctuating in
response to changing expectations about the economy, inflation and
interest rates. Preferred stocks began the period on somewhat of a weak
footing when faster-than-expected economic growth fanned fears of higher
interest rates and caused preferreds to lapse into negative territory.
Because preferreds make fixed payments in the form of dividends, their
prices, like bonds, tend to move in the opposite direction of
expectations for potential interest rates moves. Later, a wintertime
preferred stock rally was triggered by weaker-than-expected employment
data and comments from the Fed indicating that interest rate hikes were
still distant. In the spring, the preferred market sold off once more
when a string of stronger-than-expected economic reports and Fed
Chairman Alan Greenspan's Congressional testimony convinced investors
that the Fed would raise interest rates sooner than expected. But in the
final three months of the period, preferreds stabilized and later
rallied as investors anticipated three rate hikes, followed by
reassuring comments from the Fed suggesting it would take a "measured"
approach to subsequent rate hikes.
"Preferred stocks ... were on a
proverbial roller-coaster ride
during the 12 months ended
September 30, 2004..."
Utility commons outperform
Utility common stocks enjoyed much more favorable conditions and
produced far better returns than preferreds for the year, defying
historical trends by doing well when interest rates were on the rise.
Some of their success owed to the 2003 reduction in taxes individuals
pay on most stock dividends. Utilities traditionally have offered
consistently high dividends over the years, and those with dividends
subject to tax relief benefited the most during the period. Another
2
factor aiding the group was its overall improved financial condition,
the result of utilities' efforts to reduce debt, improve their balance
sheets and shed money-losing unregulated subsidiaries.
[Photos of Greg Phelps and Mark Maloney flush right next to first paragraph.]
Performance
For the 12 months ended September 30, 2004, John Hancock Patriot Premium
Dividend Fund I posted total returns of 13.40% at net asset value and
9.76% at market value. The difference in the Fund's net asset value
(NAV) performance and its market performance stems from the fact that
the market share price is subject to the dynamics of secondary market
trading, which could cause it to trade at a discount or premium to the
Fund's NAV share price at any time. By comparison, the average income
and preferred stock closed-end fund returned 12.30% at net asset value,
according to Lipper, Inc. In the same 12-month period, the Dow Jones
Utility Average -- which tracks the performance of 15 electric and
natural gas utilities -- returned 22.34%, and the broader stock market,
as measured by the Standard & Poor's 500 Index, returned 13.86%.
Performance boosters
Among the Fund's best performers for the year were some utility common
stocks, including our holdings in Dominion Resources. The company, a
fully integrated gas and electric holding company, benefited from strong
results from its regulated electric operation and from improving trends
in its gas operations due to rising energy prices. Our holdings in
Ameren Corp., an electric and natural gas utility serving Missouri and
Southern Illinois, also benefited performance. Investors liked the
company's acquisition of Illinois Power, which will add to the company's
stable regulated operations, further supporting an attractive dividend
payout. A disappointment among our utility common holdings was
Kansas-City based Aquila, an electric and gas energy provider that has
been punished by investors after retreating from the wholesale
energy-trading markets. Despite the company's challenges in fighting its
way back, we continue to maintain our stake in Aquila because it has
taken a number of positive steps to rebuild its balance sheet. It has
extracted itself from money-losing gas supply
"Among the Fund's best performers
for the year were some utility
common stocks..."
3
contracts and executed a successful common and preferred stock offering,
the proceeds of which were used to retire high-cost debt, lowering
interest costs.
[Table at top left-hand side of page entitled "Top five industry groups1."
The first listing is Electric utilities 58%, the second is Investment
banking & brokerage 11%, the third is Gas utilities 8%, the fourth is Oil &
gas exploration & production 8%, and the fifth is Broadcasting & cable TV 4%.]
Preferreds
Even in a period when tax policy favored tax-advantaged preferred
stocks, a number of our fully taxable preferred holdings were our best
performers due to the combination of a lack of supply and rising demand.
Standouts included our holdings in Baltimore Gas & Electric, which
benefited from the fact that it was a relatively scarce, higher-quality
issue with good call protection, meaning that it couldn't be redeemed by
its issuer for a stated period of time. Another investment-grade holding
that benefited from scarcity was HECO Capital Trust, which is issued by
Hawaiian Electric. In addition, we enjoyed good gains from Coastal
Finance, a subsidiary of El Paso Corporation, which rallied as El Paso
sold non-core assets, paid down debt and improved its balance sheet.
[Pie chart in middle of page with heading "Portfolio diversification1" The
chart is divided into three sections (from top to right): Preferred stocks
64%, Common stocks 32% and Short-term investments 4%.]
Outlook
There's been a kind of disconnect between recent Fed actions and the
bond and preferred markets' reactions over the past several months.
Contrary to historical patterns, bonds and preferreds have recently
rallied as rates rose. In our view, this counter-intuitive reaction
suggests that the bond market may be forecasting that high and rising
oil prices, plus the recent interest rate increases themselves, may be
the catalysts for slower economic growth down the road. Moreover, it
appears that there are some other crosscurrents that could work against
the economy, namely a slowdown in consumer
4
consumption as home loan refinancings slow, and the potential lack of
new tax cuts to spur spending. That said, the Fed has indicated that it
is leaning toward future rate increases. If the economy strengthens and
there is more upward pressure on interest rates than the market
currently anticipates, preferreds could undergo a period of lackluster
performance. On the other hand, stable or falling rates would likely
bode well for preferreds. As for utility common stocks, we remain
optimistic about their prospects. The utility companies' improving
financial health should continue to catch the eye of investors looking
for high dividend-paying defensive stocks.
[Table at top of page entitled "SCORECARD." The header for the left column
is "INVESTMENT" and the header for the right column is "PERIOD'S
PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is Coastal
Finance followed by an up arrow with the phrase "Parent company's moves
help subsidiary." The second listing is Dominion Resources by an up arrow
with the phrase "Rising energy prices help boost financial performance."
The third listing is Aquila, Inc. followed by a down arrow with the phrase
"Residual problems with energy trading."]
"... stable or falling rates would likely
bode well for preferreds."
This commentary reflects the views of the portfolio management team
through the end of the Fund's period discussed in this report. The
managers' statements reflect their own opinions. As such, they are in no
way guarantees of future events, and are not intended to be used as
investment advice or a recommendation regarding any specific security.
They are also subject to change at any time as market and other
conditions warrant.
The Fund normally will invest more than 65% of its managed assets in
securities of companies in the utilities industry. Such an investment
concentration makes the Fund more susceptible than a more broadly
diversified fund to factors adversely affecting the utilities industry.
Sector investing is subject to greater risks than the market as a whole.
1 As a percentage of the Fund's portfolio on September 30, 2004.
5
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
September 30, 2004
This schedule is divided into three main categories: common stocks,
preferred stocks, and short-term investments. The stocks are further
broken down by industry group. Short-term investments, which represent
the Fund's cash position, are listed last.
Issuer Shares Value
Common stocks 47.24% $66,653,009
(Cost $68,185,502)
Electric Utilities 41.25% 58,196,556
Alliant Energy Corp. 150,380 3,741,454
Ameren Corp. 45,900 2,118,285
Aquila, Inc. (I) 180,000 561,600
CH Energy Group, Inc. 141,350 6,473,830
Consolidated Edison, Inc. 32,000 1,345,280
Dominion Resources, Inc. 64,300 4,195,575
DTE Energy Co. 126,000 5,315,940
Duke Energy Corp. 40,000 915,600
Energy East Corp. 257,000 6,471,260
NiSource, Inc. 67,600 1,420,276
NSTAR 175,000 8,592,500
Progress Energy, Inc. 52,500 2,222,850
Progress Energy, Inc. (Contingent Value Obligation) (B)(I) 69,000 11,040
Public Service Enterprise Group, Inc. 16,000 681,600
Puget Energy, Inc. 216,900 4,923,630
Sierra Pacific Resources (I) 246,600 2,207,070
TECO Energy, Inc. 173,000 2,340,690
WPS Resources Corp. 40,400 1,817,596
Xcel Energy, Inc. 164,000 2,840,480
Gas Utilities 5.99% 8,456,000
KeySpan Corp. 136,450 5,348,840
National Fuel Gas Co. 47,150 1,335,760
Peoples Energy Corp. 42,500 1,771,400
Telecommunication Services 0.00% 453
Touch America Holdings, Inc. (I) 151,000 453
See notes to
financial statements.
6
FINANCIAL STATEMENTS
Credit
Issuer, description rating (A) Shares Value
Preferred stocks 95.90% $135,289,267
(Cost $136,922,424)
Agricultural Products 1.86% 2,625,000
Ocean Spray Cranberries, Inc., 6.25%, Ser A (S) BB+ 35,000 2,625,000
Broadcasting & Cable TV 6.46% 9,116,875
Shaw Communications, Inc., 8.45%, Ser A (Canada) B+ 177,500 4,464,125
Shaw Communications, Inc., 8.50% (Canada) B+ 185,000 4,652,750
Consumer Finance 0.49% 687,000
SLM Corp., 6.97%, Ser A BBB+ 12,000 687,000
Diversified Banks 1.68% 2,373,738
Royal Bank of Scotland Group Plc, 5.75%, Ser B
(United Kingdom) A 100,200 2,373,738
Electric Utilities 45.15% 63,698,591
Alabama Power Co., 5.20% BBB+ 225,000 5,512,500
Baltimore Gas & Electric Co., 6.99%, Ser 1995 Baa1 34,000 3,581,689
BGE Capital Trust II, 6.20% A3 190,000 4,769,000
Boston Edison Co., 4.25% BBB+ 57,879 4,514,562
Boston Edison Co., 4.78% BBB+ 24,668 2,183,118
Duquesne Light Co., 6.50% BB+ 20,000 1,030,000
Energy East Capital Trust I, 8.25% BBB- 200,000 5,338,000
FPC Capital I, 7.10%, Ser A BB+ 54,500 1,375,580
Georgia Power Co., 6.00%, Ser R A 213,800 5,233,824
Great Plains Energy, Inc., 4.35% BB+ 23,638 1,855,583
Great Plains Energy, Inc., 4.50% BB+ 12,510 960,518
HECO Capital Trust III, 6.50% BBB- 45,000 1,165,050
Monongahela Power Co., $7.73, Ser L CCC+ 34,500 3,286,125
PPL Electric Utilities Corp., 4.60% BBB 3,670 286,719
PSEG Funding Trust II, 8.75% BB+ 60,000 1,653,600
PSI Energy, Inc., 6.875% BBB- 37,000 3,885,000
Public Service Electric & Gas Co., 4.30%, Ser C BB+ 6,560 492,000
Public Service Electric & Gas Co., 6.92% BB+ 26,800 2,783,014
Sierra Pacific Power Co., 7.80%, Ser 1 (Class A) CCC+ 210,000 4,830,000
South Carolina Electric & Gas Co., 6.52% Baa1 55,000 5,793,909
TECO Capital Trust I, 8.50% Ba3 25,000 650,250
Virginia Electric & Power Co., $7.05 BBB 10,200 1,062,075
Xcel Energy, Inc., $4.11, Ser D BB+ 19,550 1,456,475
See notes to
financial statements.
7
FINANCIAL STATEMENTS
Credit
Issuer, description rating (A) Shares Value
Gas Utilities 6.20% $8,742,375
El Paso Tennessee Pipeline Co., 8.25%, Ser A CCC- 156,400 7,125,975
Southern Union Co., 7.55% BB+ 60,000 1,616,400
Integrated Oil & Gas 3.66% 5,160,000
Coastal Finance I, 8.375% CCC- 215,000 5,160,000
Investment Banking & Brokerage 16.52% 23,310,630
Bear Stearns Cos., Inc. (The), 5.72%, Ser F BBB 102,460 5,071,770
JP Morgan Chase & Co., 6.625%, Ser H A- 72,000 3,891,600
Lehman Brothers Holdings, Inc., 5.67%,
Depositary Shares, Ser D BBB+ 102,700 5,114,460
Lehman Brothers Holdings, Inc., 5.94%,
Depositary Shares, Ser C BBB+ 90,400 4,587,800
Merril Lynch & Co., Inc., 9.00%, Depositary Shares, Ser A A- 90,000 2,295,000
Morgan Stanley Capital Trust V, 5.75% A1 100,000 2,350,000
Oil and Gas Exploration & Production 12.17% 17,167,108
Anadarko Petroleum Corp., 5.46%, Depositary Shares, Ser B BBB- 45,278 4,489,314
Apache Corp., 5.68%, Depositary Shares, Ser B BBB 25,000 2,535,937
Devon Energy Corp., 6.49%, Ser A BBB- 50,000 5,231,250
Nexen, Inc., 7.35% (Canada) BBB- 183,300 4,910,607
Regional Banks 1.64% 2,306,250
HSBC USA, Inc., $2.8575 A1 45,000 2,306,250
Telecommunication Services 0.07% 101,700
Touch America Holdings, Inc., $6.875 (I) N/R 50,850 101,700
Interest Par value
Issuer, description, maturity date rate (000) Value
Short-term investments 5.54% $7,812,000
(Cost $7,812,000)
Commercial Paper 5.54% 7,812,000
ChevronTexaco Corp., 10-01-04 1.700% $7,812 7,812,000
Total investments 148.68% $209,754,276
Other assets and liabilities, net (48.68%) ($68,682,422)
Total net assets 100.00% $141,071,854
See notes to
financial statements.
8
FINANCIAL STATEMENTS
Notes to Schedule of Investments
(A) Credit ratings are unaudited and are rated by Moody's Investors
Service where Standard & Poor's ratings are not available.
(B) This security is fair-valued in good faith under procedures
established by the Board of Trustees.
(I) Non-income-producing security.
(S) This security is exempt from registration under rule 144A of the
Securities Act of 1933. Such security may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $2,625,000 or 1.86% of
net assets as of September 30, 2004.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
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.
9
FINANCIAL STATEMENTS
PORTFOLIO
CONCENTRATION
September 30, 2004
This table shows the
percentages of the
Fund's investments
aggregated by
various industries.
Industry distribution Value as a percentage of
Fund's total investments
Agricultural Products 1.25%
Broadcasting & Cable TV 4.35
Consumer Finance 0.33
Diversified Banks 1.13
Electric Utilities 58.11
Gas Utilities 8.20
Integrated Oil & Gas 2.46
Investment Banking & Brokerage 11.11
Oil & Gas Exploration & Production 8.19
Regional Banks 1.10
Telecommunication Services 0.05
Short-term investments 3.72
Total investments 100.00%
See notes to
financial statements.
10
FINANCIAL STATEMENTS
ASSETS AND
LIABILITIES
September 30, 2004
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows the
value of what the
Fund owns, is due
and owes. You'll
also find the net
asset value for each
common share.
Assets
Investments, at value (cost $212,919,926) $209,754,276
Cash 141
Dividends receivable 647,651
Other assets 42,414
Total assets 210,444,482
Liabilities
Payable for investments purchased 505,000
Payable to affiliates
Management fees 166,712
Other 16,150
Other payables and accrued expenses 78,769
Total liabilities 766,631
Dutch Auction Rate Transferable Securities preferred
shares Series A (DARTS), at value, unlimited number
of shares of beneficial interest authorized with no par
value, 685 shares issued, liquidation preference of
$100,000 per share 68,605,997
Net assets
Common shares capital paid-in 142,897,046
Accumulated net realized loss on investments (12,705)
Net unrealized depreciation of investments (3,165,650)
Accumulated net investment income 1,353,163
Net assets applicable to common shares $141,071,854
Net asset value per common share
Based on 15,255,559 shares of beneficial interest
outstanding -- unlimited number of shares authorized
with no par value $9.25
See notes to
financial statements.
11
FINANCIAL STATEMENTS
OPERATIONS
For the year ended
September 30, 2004
This 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.
Investment income
Dividends $12,090,311
Interest 61,222
Total investment income 12,151,533
Expenses
Investment management fees 1,643,299
Administration fees 207,188
DARTS auction fees 178,750
Federal excise tax 88,645
Transfer agent fees 46,943
Professional fees 44,060
Custodian fees 42,684
Printing 38,632
Miscellaneous 34,726
Registration and filing fees 24,217
Trustees' fees 12,538
Total expenses 2,361,682
Net investment income 9,789,851
Realized and unrealized gain
Net realized gain on investments 66,438
Change in net unrealized appreciation (depreciation)
of investments 8,308,808
Net realized and unrealized gain 8,375,246
Distributions to DARTS (836,184)
Increase in net assets from operations $17,328,913
See notes to
financial statements.
12
FINANCIAL STATEMENTS
CHANGES IN
NET ASSETS
These Statements
of Changes in Net
Assets show how
the value of the
Fund's net assets
has changed
during the last
two periods. The
difference reflects
earnings less
expenses, any
investment gains
and losses and
distributions,
if any, paid to
shareholders and
any increase due
to reinvestment
of distributions.
Year Year
ended ended
9-30-03 9-30-04
Increase (decrease) in net assets
From operations
Net investment income $10,484,062 $9,789,851
Net realized gain 510,730 66,438
Change in net unrealized
appreciation (depreciation) 7,579,644 8,308,808
Distributions to DARTS (906,591) (836,184)
Increase in net assets
resulting from operations 17,667,845 17,328,913
Distributions to common shareholders
From net investment income (9,775,707) (10,919,843)
From Fund share transactions 1,062,637 1,037,662
Net assets
Beginning of period 124,670,347 133,625,122
End of period 1 $133,625,122 $141,071,854
1 Includes accumulated net investment income of $3,235,866 and $1,353,163,
respectively.
See notes to
financial statements.
13
FINANCIAL HIGHLIGHTS
FINANCIAL
HIGHLIGHTS
COMMON SHARES
The Financial Highlights show how the Fund's net asset value for a share
has changed since the end of the previous period.
Period ended 9-30-00 9-30-01 9-30-02 9-30-03 9-30-04
Per share operating performance
Net asset value,
beginning of period $9.91 $10.13 $9.74 $8.30 $8.82
Net investment income 1 0.85 0.83 0.78 0.69 0.64
Net realized and unrealized
gain (loss) on investments 0.23 (0.39) (1.49) 0.54 0.56
Distributions to DARTS (0.21) (0.18) (0.08) (0.06) (0.05)
Total from investment operations 0.87 0.26 (0.79) 1.17 1.15
Less distributions to
common shareholders
From net investment income (0.65) (0.65) (0.65) (0.65) (0.72)
Net asset value, end of period $10.13 $9.74 $8.30 $8.82 $9.25
Per share market value,
end of period $8.25 $8.75 $9.15 $9.24 $9.38
Total return at market value 2 (%) 1.19 13.79 12.03 8.91 9.76
Ratios and supplemental data
Net assets applicable to common
shares, end of period (in millions) $152 $146 $125 $134 $141
Ratio of expenses to average
net assets 3 (%) 1.75 1.72 1.79 1.90 1.70
Ratio of net investment income to
average net assets 4 (%) 8.94 8.35 8.42 8.33 7.06
Portfolio turnover (%) 19 23 11 10 16
Senior securities
Total value of DARTS outstanding
(in millions) $68 $68 $68 $69 $69
Involuntary liquidation preference
per unit (in thousands) $100 $100 $100 $100 $100
Average market value per unit
(in thousands) $100 $100 $100 $100 $100
Asset coverage per unit 5 $315,176 $318,208 $280,462 $287,811 $304,418
See notes to
financial statements.
14
FINANCIAL HIGHLIGHTS
Notes to Financial Highlights
1 Based on the average of the shares outstanding.
2 Assumes dividend reinvestment.
3 Ratios calculated on the basis of expenses relative to the average net
assets of common shares. Without the exclusion of preferred shares, the
ratio of expenses would have been 1.18%, 1.18%, 1.20%, 1.23% and 1.14%,
respectively.
4 Ratios calculated on the basis of net investment income relative to
the average net assets of common shares. Without the exclusion of
preferred shares, the ratio of net investment income would have been
6.03%, 5.72%, 5.65%, 5.39% and 4.73%, respectively.
5 Calculated by subtracting the Fund's total liabilities from the Fund's
total assets and dividing such amount by the number of DARTS outstanding
as of the applicable 1940 Act Evaluation Date, which may differ from the
financial reporting date.
See notes to
financial statements.
15
NOTES TO
STATEMENTS
Note A
Accounting policies
John Hancock Patriot Premium Dividend Fund I (the "Fund") is a
diversified closed-end management investment company registered under
the Investment Company Act of 1940.
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. The Fund determines the net asset value of the
common shares each business day.
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.
Expenses
The majority of expenses are directly identifiable to an individual
fund. Expenses that are not readily identifiable to a specific fund are
allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and
the relative size of the funds.
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 that is distributed to
shareholders. Therefore, no federal income tax provision is required.
Dividends, interest
and distributions
Dividend income on investment securities is recorded on the ex-dividend
date or, in the case of some foreign securities, on the date thereafter
when the Fund identifies the dividend. Interest income on investment
securities is recorded on the accrual basis. Foreign income may be
subject to foreign withholding taxes, which are accrued as applicable.
The Fund records distributions from net investment income and net
realized gains on the ex-dividend date. During the year ended September
30, 2003 the tax character of distributions paid was as follows:
ordinary income $10,682,298. During the year ended September 30, 2004,
the tax character of distributions paid was as follows: ordinary income
$11,756,027.
As of September 30, 2004, the components of distributable earnings on a
tax basis included $1,500,578 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are
determined in conformity with income tax regulations, which may differ
from accounting principles generally accepted in the United States of
America. Distributions in excess of tax
16
basis earnings and profits, if any, are reported in the Fund's financial
statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of
America, incorporates estimates made by management in determining the
reported amount of assets, liabilities, revenues and expenses of the
Fund. Actual results could differ from these estimates.
Note B
Management fee and
transactions with
affiliates and others
The Fund has an investment management contract with John Hancock
Advisers, LLC (the "Adviser"), a wholly owned subsidiary of John Hancock
Financial Services, Inc. Under the investment management contract, the
Fund pays a monthly management fee to the Adviser at an annual rate of
0.50% of the Fund's average weekly net asset value and the value
attributable to the Dutch Auction Rate Transferable Securities
preferred shares (collectively, "managed 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
managed assets. For the year ended September 30, 2004, the advisory fee
incurred did not exceed the maximum advisory fee allowed.
The Fund has 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 with shareholders. The Fund pays the Adviser a
monthly administration fee at an annual rate of 0.10% of the Fund's
average weekly managed assets. The compensation for the year amounted to
$207,188. The Fund also paid the Adviser the amount of $821 for certain
publishing services, included in the printing fees.
Mr. James A. Shepherdson is a director and/or officer of the Adviser
and/or its affiliates, as well as Trustee 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 investments, as well
as any unrealized gains or losses. The Deferred Compensation Plan
investments had no impact on the operations of the Fund.
17
Note C
Fund share transactions
This listing illustrates the Fund's common shares, dividend
reinvestments, reclassification of the Fund's capital accounts and the
number of common shares outstanding at the beginning and end of the last
two periods, along with the corresponding dollar value.
Year ended 9-30-03 Year ended 9-30-04
Shares Amount Shares Amount
Beginning of period 15,017,782 $141,016,976 15,142,247 $141,943,091
Dividends reinvested 124,465 1,062,637 113,312 1,037,662
Reclassification of
capital accounts -- (136,522) -- (83,707)
End of period 15,142,247 $141,943,091 15,255,559 $142,897,046
Dutch Auction Rate
Transferable Securities
preferred shares Series A
The Fund issued 685 shares of Dutch Auction Rate Transferable Securities
preferred shares Series A ("DARTS") in a public offering. The
underwriting discount was recorded as a reduction of the capital of
common shares.
Dividends on the DARTS, which accrue daily, are cumulative at a rate
that was established at the offering of the DARTS and has been reset
every 49 days thereafter by an auction. Dividend rates on DARTS ranged
from 1.04% to 1.64% during the year ended September 30, 2004. Accrued
dividends on DARTS are included in the value of DARTS on the Fund's
Statement of Assets and Liabilities.
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, as defined in the
Fund's by-laws. If the dividends 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 shareholders 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 shareholders.
Note D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other
than short-term securities and obligations of the U.S. government,
during the year ended September 30, 2004, aggregated $36,633,393 and
$32,186,090, respectively.
The cost of investments owned on September 30, 2004, including
short-term investments, for federal income tax purposes, was
$212,943,311. Gross unrealized appreciation and depreciation of
investments aggregated $17,076,294 and $20,265,329, respectively,
resulting in net unrealized depreciation of $3,189,035. The difference
between book basis and tax basis net unrealized depreciation of
investments is attributable primarily to the tax deferral of losses on
certain sales of securities.
18
Note E
Reclassification of accounts
During the year ended September 30, 2004, the Fund reclassified amounts
to reflect a decrease in accumulated net realized loss on investments of
$234, an increase in accumulated net investment income of $83,473 and a
decrease in capital paid-in of $83,707. This represents the amounts
necessary to report these balances on a tax basis, excluding certain
temporary differences, as of Septem ber 30, 2004. Additional adjustments
may be needed in subsequent reporting periods. These reclassifications,
which have no impact on the net asset value of the Fund, are primarily
attributable to certain differences in the computation of distributable
income and capital gains under federal tax rules versus accounting
principles generally accepted in the United States of America, and book
and tax differences in accounting for deferred compensation and federal
excise tax. The calculation of net investment income per share in the
Fund's Financial Highlights excludes these adjustments.
19
AUDITORS'
REPORT
Report of Deloitte
& Touche LLP,
Independent
Registered Public
Accounting Firm
To the Board of Trustees and Shareholders of
John Hancock Patriot Premium Dividend Fund I,
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of John Hancock Patriot Premium
Dividend Fund I (the "Fund") as of September 30, 2004, and the related
statement of operations for the year then ended, the statement of
changes in net assets for the years ended September 30, 2004 and 2003
and the financial highlights for each of the years in the five-year
period ended September 30, 2004. These financial statements and
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at September 30, 2004 by correspondence
with the custodian and brokers; where replies were not received from
brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of September 30, 2004, the results of
its operations, the changes in its net assets and its financial
highlights for the respective stated periods in conformity with
accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
November 12, 2004
20
TAX
INFORMATION
Unaudited
For federal income tax purposes, the following information is furnished
with respect to the distributions of the Fund, if any, paid during its
taxable year ended September 30, 2004.
With respect to the ordinary dividends paid by the Fund for the fiscal
year ended September 30, 2004, 88.12% of the dividends qualifies for the
corporate dividends-received deduction.
The Fund hereby designates the maximum amount allowable of its net
taxable income as qualified dividend income as provided in the Jobs and
Growth Tax Relief Reconciliation Act of 2003. This amount will be
reflected on Form 1099-DIV for the calendar year 2004.
Shareholders will be mailed a 2004 U.S. Treasury Department Form
1099-DIV in January 2005. This will reflect the total of all
distributions that are taxable for calendar year 2004.
21
Investment
objective
and policy
The Fund's investment objective is to provide a high current income
consistent with modest growth of capital for holders of its common
shares of beneficial interest. The Fund will pursue its objective by
investing in a diversified portfolio of dividend-paying preferred and
common stocks.
The Fund's non-fundamental investment policy with respect to the quality
of ratings of its portfolio investments, which was changed by a vote of
the Fund's Trustees on September 13, 1994 and 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 that have no rated senior debt outstanding, whose
senior debt is considered by the Adviser to be of comparable quality.
This revised policy supersedes the requirement that at least 80% of the
Fund's total assets consist of preferred stocks and debt obligations
rated "A" or higher and dividend-paying common stocks whose issuers have
senior debt rated "A" or higher.
On November 20, 2001, the Fund's Trustees approved the following
investment policy investment restriction change, effective December 15,
2001. Under normal circumstances, the Fund will invest at least 80% of
its assets in dividend-paying securities. The "Assets" are defined as
net assets including the liquidation preference amount of the DARTS plus
borrowings for investment purposes. The Fund will notify shareholders at
least 60 days prior to any change in this 80% investment policy.
By-laws
In November 2002, the Board of Trustees adopted several amendments to
the Fund's by-laws, including provisions relating to the calling of a
special meeting and requiring advance notice of shareholder proposals or
nominees for Trustee. The advance notice provisions in the by-laws
require shareholders to notify the Fund in writing of any proposal that
they intend to present at an annual meeting of shareholders, including
any nominations for Trustee, between 90 and 120 days prior to the first
anniversary of the mailing date of the notice from the prior year's
annual meeting of shareholders. The notification must be in the form
prescribed by the by-laws. The advance notice provisions provide the
Fund and its Trustees with the opportunity to thoughtfully consider and
address the matters proposed before the Fund prepares and mails its
proxy statement to shareholders. Other amendments set forth the
procedures that must be followed in order for a shareholder to call a
special meeting of shareholders. Please contact the Secretary of the
Fund for additional information about the advance notice requirements or
the other amendments to the by-laws.
On December 16, 2003, the Trustees approved the following change to the
Fund's by-laws. The auction preferred section of the Fund's by-laws was
changed to update the rating agency requirements, in keeping with recent
changes to the agencies' basic maintenance reporting requirements for
leveraged closed-end funds. By-laws now require an independent
accountant's confirmation only once per year, at the Fund's fiscal year
end, and changes to the agencies' basic maintenance reporting
requirements that include modifications to
22
the eligible assets and their respective discount factors. These
revisions bring the Fund's by-laws in line with current rating agency
requirements.
On September 14, 2004, the Trustees approved an amendment to the Fund's
by-laws increasing the maximum applicable dividend rate ceiling on the
preferred shares to conform with the modern calculation methodology used
by the industry and other John Hancock funds.
Dividend reinvestment plan
The Fund offers its shareholders 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 Mellon Investor Services, as
Plan agent for the common shareholders (the "Plan Agent"), 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 a 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, non-participants 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 of 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.
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. 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 will be no brokerage charges with respect to common shares
issued directly by the Fund. There are no other charges to participants
for reinvesting dividends or capital gain distributions.
Participants in the Plan may withdraw from the Plan at any time by
contacting the Plan Agent by telephone, in writing or by visiting the
Plan Agent's Web site at www.melloninvestor.com. Such withdrawal will be
effective immediately if received 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
23
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. The Plan Agent will hold common shares in the account
of each Plan participant in non-certificated form in the name of the
participant. Proxy material relating to the shareholders' meetings of
the Fund will include those shares purchased, as well as shares held
pursuant to the Plan.
The 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 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 by the Plan Agent to
purchase shares in the open market, 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, Mellon Bank, N.A., c/o Mellon Investor Services, P.O. Box
3338, South Hackensack, NJ 07606-1938 (telephone 1-800-852-0218).
Shareholder
communication
and assistance
If you have any questions concerning the Fund, 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:
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Telephone 1-800-852-0218
If your shares are held with a brokerage firm, you should contact that
firm, bank or other nominee for assistance.
24
Shareholder meeting
On March 18, 2004, the Annual Meeting of the Fund was held to elect
three Trustees and to ratify the actions of the Trustees in selecting
independent auditors for the Fund.
Proxies covering 14,044,515 shares of beneficial interest were voted at
the meeting. The common shareholders elected the following Trustees to
serve until their respective successors are duly elected and qualified
(there were no current nominees for election by the preferred
shareholders), with the votes tabulated as follows:
WITHHELD
FOR AUTHORITY
-------------------------------------------------------------
Patti McGill Peterson 13,833,353 210,665
Steven Pruchansky 13,885,053 158,965
Norman H. Smith 13,856,705 187,313
The common and preferred shareholders also ratified the Trustees'
selection of Deloitte & Touche LLP as the Fund's independent auditors
for the fiscal year ending September 30, 2004, with the votes tabulated
as follows: 13,842,853 FOR, 64,146 AGAINST and 137,516 ABSTAINING.
25
TRUSTEES
& OFFICERS
This chart provides information about the Trustees and Officers who
oversee your John Hancock fund. Officers elected by the Trustees manage
the day-to-day operations of the Fund and execute policies formulated by
the Trustees.
Independent Trustees
Name, age Number of
Position(s) held with Fund Trustee John Hancock
Principal occupation(s) and other of Fund funds overseen
directorships during past 5 years since 1 by Trustee
Charles L. Ladner,2 Born: 1938 1992 48
Independent Chairman (since 2004); Chairman and Trustee, Dunwoody
Village, Inc. (retirement services) (until 2003); Senior Vice President and
Chief Financial Officer, UGI Corporation (Public Utility Holding Company)
(retired 1998); Vice President and Director for AmeriGas, Inc. (retired
1998); Director of AmeriGas Partners, L.P. (until 1997) (gas distribution);
Director, EnergyNorth, Inc. (until 1995); Director, Parks and History
Association (since 2001).
James F. Carlin, Born: 1940 1988 28
Director and Treasurer, Alpha Analytical Inc. (analytical laboratory) (since
1985); Part Owner and Treasurer, Lawrence Carlin Insurance Agency, Inc. (since
1995); Part Owner and Vice President, Mone Lawrence Carlin Insurance
Agency, Inc. (since 1996); Director and Treasurer, Rizzo Associates (until 2000);
Chairman and CEO, Carlin Consolidated, Inc. (management/investments)
(since 1987); Director and Partner, Proctor Carlin & Co., Inc. (until 1999); Trustee,
Massachusetts Health and Education Tax Exempt Trust (since 1993); Director
of the following: Uno Restaurant Corp. (until 2001), Arbella Mutual (insurance)
(until 2000), HealthPlan Services, Inc. (until 1999), Flagship Healthcare, Inc.
(until 1999), Carlin Insurance Agency, Inc. (until 1999); Chairman,
Massachusetts Board of Higher Education (until 1999).
William H. Cunningham, Born: 1944 1995 28
Former Chancellor, University of Texas System and former President of the
University of Texas, Austin, Texas; Chairman and CEO, IBT Technologies
(until 2001); Director of the following: The University of Texas Investment
Management Company (until 2000), Hire.com (until 2004), STC Broadcasting,
Inc. and Sunrise Television Corp. (electronic manufacturing) (until 2001),
Symtx, Inc. (since 2001), Adorno/Rogers Technology, Inc. (until 2004),
Pinnacle Foods Corporation (until 2003), rateGenius (Internet service)
(until 2003), Jefferson-Pilot Corporation (diversified life insurance company)
(since 1985), New Century Equity Holdings (formerly Billing Concepts)
(until 2001), eCertain (until 2001), ClassMap.com (until 2001), Agile
Ventures (until 2001), LBJ Foundation (until 2000), Golfsmith International,
Inc. (until 2000), Metamor Worldwide (until 2000), AskRed.com (until 2001),
Southwest Airlines (since 2000) and Introgen (since 2000); Advisory Director,
26
Independent Trustees (continued)
Name, age Number of
Position(s) held with Fund Trustee John Hancock
Principal occupation(s) and other of Fund funds overseen
directorships during past 5 years since 1 by Trustee
William H. Cunningham, Born: 1944 (continued) 1995 28
Q Investments (until 2003); Advisory Director, Chase Bank (formerly Texas
Commerce Bank -- Austin) (since 1988), LIN Television (since 2002), WilTel
Communications (until 2003) and Hayes Lemmerz International, Inc.
(diversified automotive parts supply company) (since 2003).
Ronald R. Dion, Born: 1946 1998 28
Chairman and Chief Executive Officer, R.M. Bradley & Co., Inc.; Director,
The New England Council and Massachusetts Roundtable; Trustee, North
Shore Medical Center; Director, Boston Stock Exchange; Director, BJ's
Wholesale Club, Inc. and a corporator of the Eastern Bank; Trustee,
Emmanuel College.
John A. Moore,2 Born: 1939 2002 30
President and Chief Executive Officer, Institute for Evaluating Health
Risks, (nonprofit institution) (until 2001); Chief Scientist, Sciences
International (health research) (until 2003); Principal, Hollyhouse
(consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002).
Patti McGill Peterson,2 Born: 1943 2002 30
Executive Director, Council for International Exchange of Scholars and
Vice President, Institute of International Education (since 1998);
Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until
1998); Former President of Wells College and St. Lawrence University;
Director, Niagara Mohawk Power Corporation (until 2003); Director, Ford
Foundation, International Fellowships Program (since 2002); Director,
Lois Roth Endowment (since 2002); Director, Council for International
Educational Exchange (since 2003).
Steven Pruchansky, Born: 1944 1992 28
Chairman and Chief Executive Officer, Greenscapes of Southwest
Florida, Inc. (since 2000); Director and President, Greenscapes of
Southwest Florida, Inc. (until 2000); Managing Director, JonJames, LLC
(real estate) (since 2001); Director, First Signature Bank & Trust Company
(until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell
Building Corp. (until 1991).
Norman H. Smith, Born: 1933 1992 28
Lieutenant General, United States Marine Corps; Deputy Chief of Staff for
Manpower and Reserve Affairs, Headquarters Marine Corps; Commanding
General III Marine Expeditionary Force/3rd Marine Division (retired 1991).
John P. Toolan,2 Born: 1930 1993 28
Director, The Smith Barney Muni Bond Funds, The Smith Barney Tax-Free
Money Funds, Inc., Vantage Money Market Funds (mutual funds), The
Inefficient-Market Fund, Inc. (closed-end investment company); Chairman,
Smith Barney Trust Company of Florida (retired 1991); Director, Smith
Barney, Inc., Mutual Management Company and Smith Barney Advisers, Inc.
(investment advisers) (retired 1991); Senior Executive Vice President, Director
and member of the Executive Committee, Smith Barney, Harris Upham & Co.,
Incorporated (investment bankers) (until 1991).
27
Non-Independent Trustees 3
Name, age Number of
Position(s) held with Fund Trustee John Hancock
Principal occupation(s) and other of Fund funds overseen
directorships during past 5 years since 1 by Trustee
James A. Shepherdson, Born: 1952 2004 48
President and Chief Executive Officer
Executive Vice President, Manulife Financial Corporation; Chairman,
Director, President and Chief Executive Officer, John Hancock Advisers,
LLC and The Berkeley Group; Chairman, Director, President and Chief
Executive Officer, John Hancock Funds, LLC; Chairman, President,
Director and Chief Executive Officer, Sovereign Asset Management
Corporation ("SAMCorp"); President, John Hancock Retirement
Services, John Hancock Life Insurance Company (until 2004); Chairman,
Essex Corporation (until 2004); Co-Chief Executive Officer, MetLife
Investors Group (until 2003); Senior Vice President, AXA/Equitable
Insurance Company (until 2000).
Principal officers who are not Trustees
Name, age
Position(s) held with Fund Officer
Principal occupation(s) and of Fund
directorships during past 5 years since
William H. King, Born: 1952 1992
Vice President and Treasurer
Vice President and Assistant Treasurer, the Adviser; Vice President and Treasurer of each
of the John Hancock funds; Assistant Treasurer of each of the John Hancock funds (until 2001).
Susan S. Newton, Born: 1950 1992
Senior Vice President, Secretary and Chief Legal Officer
Senior Vice President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each
of the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice President,
Signature Services (until 2000); Director, Senior Vice President and Secretary, NM Capital.
The business address for all Trustees and Officers is 101 Huntington
Avenue, Boston, Massachusetts 02199.
The Statement of Additional Information of the Fund includes additional
information about members of the Board of Trustees of the Fund and is
available, without charge, upon request, by calling 1-800-225-5291.
1 Each Trustee serves until resignation, retirement age or until his or
her successor is elected.
2 Member of Audit Committee.
3 Non-independent Trustees hold positions with the Fund's investment
adviser, underwriter and certain other affiliates.
28
For more information
The Fund's proxy voting policies, procedures and records are available
without charge, upon request:
By phone On the Fund's Web site On the SEC's Web site
1-800-225-5291 www.jhfunds.com/proxy www.sec.gov
Investment adviser
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, MA 02199-7603
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Transfer agent and
dividend disburser
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Transfer agent for DARTS
Deutsche Bank Trust
Company Americas
280 Park Avenue
New York, NY 10017
Legal counsel
Wilmer Cutler Pickering
Hale and Dorr LLP
60 State Street
Boston, MA 02109-1803
Independent registered
public accounting firm
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
Stock symbol
Listed New York Stock Exchange: PDF
For shareholder assistance refer to page 24
How to contact us
Internet www.jhfunds.com
Mail Regular mail:
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Phone Customer service representatives 1-800-852-0218
Portfolio commentary 1-800-344-7054
24-hour automated information 1-800-843-0090
TDD line 1-800-231-5469
A listing of month-end portfolio holdings is available on our Web site,
www.jhfunds.com. A more detailed portfolio holdings summary is available
on a quarterly basis 60 days after the fiscal quarte r on our Web site
or upon request by calling 1-800-225-5291, or on the Securities and
Exchange Commission's Web site, www.sec.gov.
29
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-852-0218
1-800-843-0090 EASI-Line
1-800-231-5469 (TDD)
www.jhfunds.com
PRESORTED
STANDARD
U. S. POSTAGE
PAID
MIS
P100A 9/04
11/04
ITEM 2. CODE OF ETHICS.
As of the end of the period, September 30, 2004, the registrant has adopted
a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its
Chief Executive Officer, Chief Financial Officer and Treasurer
(respectively, the principal executive officer, the principal financial
officer and the principal accounting officer, the "Senior Financial
Officers"). A copy of the code of ethics is filed as an exhibit to this
Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Charles L. Ladner is the audit committee financial expert and is
"independent", pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the
principal accountant(s) for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant(s) in
connection with statutory and regulatory filings or engagements amounted to
$29,750 for the fiscal year ended September 30, 2003 and $31,250 for the
fiscal year ended September 30, 2004. These fees were billed to the
registrant and were approved by the registrant's audit committee.
(b) Audit-Related Services
There were no audit-related fees during the fiscal year ended September 30,
2003 and fiscal year ended September 30, 2004 billed to the registrant or
to the registrant's investment adviser (not including any sub-adviser whose
role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling,
controlled by, or under common control with the adviser that provides
ongoing services to the registrant ("control affiliates").
(c) Tax Fees
The aggregate fees billed for professional services rendered by the
principal accountant(s) for the tax compliance, tax advice and tax planning
("tax fees") amounted to $2,100 for the fiscal year ended September 30,
2003 and $2,250 for the fiscal year ended September 30, 2004. The nature of
the services comprising the tax fees was the review of the registrant's
income tax returns and tax distribution requirements. These fees were
billed to the registrant and were approved by the registrant's audit
committee. There were no tax fees billed to the control affiliates.
(d) All Other Fees
The all other fees billed to the registrant for products and services
provided by the principal accountant were $21,700 for the fiscal year ended
September 30, 2003 and $4,000 for the fiscal year ended September 30, 2004.
There were no other fees during the fiscal year ended September 30, 2003
and September 30, 2004 billed to control affiliates for products and
services provided by the principal accountant. The nature of the services
comprising the all other fees was related to the principal accountant's
report on the registrant's Eligible Asset Coverage. These fees were
approved by the registrant's audit committee.
(e) (1) See attachment "Approval of Audit, Audit-related, Tax and Other
Services", with the audit committee pre-approval policies and procedures.
(e)(2) There were no fees that were approved by the audit committee
pursuant to the de minimis exception for the fiscal years ended September
30, 2003 and September 30, 2004 on behalf of the registrant or on behalf of
the control affiliates that relate directly to the operations and financial
reporting of the registrant.
(f) According to the registrant's principal accountant, for the fiscal year
ended September 30, 2004, the percentage of hours spent on the audit of the
registrant's financial statements for the most recent fiscal year that were
attributed to work performed by persons who were not full-time, permanent
employees of principal accountant was less than 50%.
(g) The aggregate non-audit fees billed by the registrant's accountant(s)
for services rendered to the registrant and rendered to the registrant's
control affiliates for each of the last two fiscal years of the registrant
were $149,700 for the fiscal year ended September 30, 2003, and $2,250 for
the fiscal year ended September 30, 2004.
(h) The audit committee of the registrant has considered the non-audit
services provided by the registrant's principal accountant(s) to the
control affiliates and has determined that the services that were not
pre-approved are compatible with maintaining the principal accountant(s)'
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee
comprised of independent trustees. The members of the audit committee are
as follows:
Charles L. Ladner
Dr. John A. Moore
Patti McGill Peterson
John P. Toolan
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
See attached Exhibit "Proxy Voting Policies and Procedures".
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) There were no material changes to previously disclosed John Hancock
Funds - Administration Committee Charter.
ITEM 10. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form
N-CSR, the registrant's principal executive officer and principal accounting
officer have concluded that those disclosure controls and procedures
provide reasonable assurance that the material information required to be
disclosed by the registrant on this report is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal half-year (the registrant's second fiscal half-year in the case of
an annual report) that have materially affected, or are reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive
officer and principal accounting officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company
Act of 1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive
officer and principal accounting officer, as required by 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
and Rule 30a-2(b) under the Investment Company Act of 1940, are attached.
The certifications furnished pursuant to this paragraph are not deemed to
be "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, or otherwise subject to the liability of that section. Such
certifications are not deemed to be incorporated by reference into any
filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Registrant specifically incorporates
them by reference.
(c)(1) Proxy Voting Policies and Procedures are attached.
(c)(2) Approval of Audit, Audit-related, Tax and Other Services is
attached.
(c)(3) Contact person at the registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Patriot Premium Dividend Fund I
By:
------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: November 23, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By:
------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: November 23, 2004
By:
------------------------------
William H. King
Vice President and Treasurer
Date: November 23, 2004