-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RGv1A4xHRB80ZjlHbDAwONF2176fYvQYl9+5vFl0T8qa0e8lCXh6pKnNQYRxK4bx 9XLFNY1CCgskiRS5hn9Q/Q== 0000868549-04-000001.txt : 20040526 0000868549-04-000001.hdr.sgml : 20040526 20040526143922 ACCESSION NUMBER: 0000868549-04-000001 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040526 EFFECTIVENESS DATE: 20040526 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN PATRIOT PREMIUM DIVIDEND FUND I CENTRAL INDEX KEY: 0000868549 IRS NUMBER: 043044078 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06182 FILM NUMBER: 04832133 BUSINESS ADDRESS: STREET 1: 101 HUNTINGTON AVENUE CITY: BOSTON STATE: MA ZIP: 02199-7603 BUSINESS PHONE: 6173751702 MAIL ADDRESS: STREET 1: 101 HUNTINGTON AVE CITY: BOSTON STATE: MA ZIP: 02199-7603 FORMER COMPANY: FORMER CONFORMED NAME: PATRIOT PREMIUM DIVIDEND FUND I DATE OF NAME CHANGE: 19920703 N-CSR 1 patriotdiv1.txt JH PATRIOT PREMIUM DIVIDEND FUND I May 17, 2004 EDGAR United States Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Form N-CSR John Hancock Patriot Premium Dividend Fund I (the "Registrant") File No. 811-5615 Ladies and Gentlemen: Enclosed herewith for filing pursuant to the Investment Company Act of 1940 and the Securities Exchange Act of 1934 is the Registrant's Form N-CSR filing for the period ending March 31, 2004. If you have any questions or comments regarding this filing, please contact the undersigned at (617) 375-1513. Sincerely, /s/Alfred P. Ouellette Alfred P. Ouellette Senior Attorney and Assistant Secretary ITEM 1. REPORT TO STOCKHOLDERS. JOHN HANCOCK Patriot Premium Dividend Fund I 3.31.2004 Semiannual 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.] WELCOME Table of contents Your fund at a glance page 1 Managers' report page 2 Fund's investments page 6 Financial statements page 9 For your information page 21 To Our Shareholders, I am pleased to be writing to you as Chairman, President and Chief Executive Officer of John Hancock Funds. As you may know, John Hancock Financial Services, Inc. -- the parent company of John Hancock Funds -- was acquired by Manulife Financial Corporation on April 28, 2004. The merger combines two exceptionally strong companies into a single, integrated, global market leader whose scale and capital will create an industry pacesetter strengthening our company's leadership in markets around the world. Although this change has no impact on the mutual funds you have invested in, it did bring with it some changes in the executive-level management of John Hancock Funds. Specifically, Maureen Ford Goldfarb has decided to step down as chairman, president and chief executive officer in order to pursue personal interests. Since her appointment in January 2000, Maureen has provided John Hancock Funds with strong leadership and steady guidance through several years of extremely turbulent market and industry conditions. Effective May 12, 2004, I have been appointed by your Board of Trustees to the roles of Trustee, President and Chief Executive Officer of your fund. I have been in the investment business for over 25 years, most recently as President of Retirement Services at John Hancock Financial Services. In that role, my responsibilities included developing and directing the sale of John Hancock's variable and fixed annuity businesses through a diverse distribution network of banks and broker/dealers -- including wirehouses, regional brokerage houses and financial planners. Prior to joining John Hancock, I served as Co-Chief Executive Officer of MetLife Investors Group, a subsidiary of MetLife, Inc. In that capacity my responsibilities included the design, manufacture and distribution of MetLife's annuity and life insurance products sold through third-party channels. Although there has been a change in executive-level management, the one thing that never waivers is John Hancock Funds' commitment to placing the needs of our shareholders above all else. We are all dedicated to the task of working with you and your financial advisors to help you reach your long-term financial goals. It is the foundation of our relationship with you. Sincerely, /S/ JAMES A. SHEPHERDSON James A. Shepherdson, Chief Executive Officer This commentary reflects the CEO's views as of March 31, 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 holders of its common shares by investing at least 80% of its assets in dividend-paying securities. Over the last six months * A dividend tax cut and bond rally helped buoy demand for preferred and utility common stocks. * The Fund benefited from advantageous security selection among preferred stocks. * A significant stake in utility common stocks also aided performance. [Bar chart with heading "John Hancock Patriot Premium Dividend Fund I." Under the heading is a note that reads "Fund performance for the six months ended March 31, 2004." The chart is scaled in increments of 7% with 0% at the bottom and 14% at the top. The bar represents 13.75% total return for John Hancock Patriot Premium Dividend Fund I. A note below the chart reads "The total return for the Fund is at net asset value with all distributions reinvested."] Top 10 issuers 7.4% NSTAR 5.6% Energy East Corp. 4.8% Lehman Brothers Holdings, Inc., 4.2% Shaw Communications, Inc. 4.0% Baltimore Gas & Electric Co. 3.3% El Paso Tennessee Pipeline Co. 3.2% CH Energy Group, Inc. 3.1% Sierra Pacific Power Co. 2.8% South Carolina Electric & Gas Co. 2.7% Alabama Power Co. As a percentage of net assets plus value of preferred shares on March 31, 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 -- posted strong returns during the six-month period ended March 31, 2004, fueled in large part by favorable supply and demand conditions. An increasing number of companies that issued preferred stocks in years when interest rates were higher redeemed those older preferred stocks to take advantage of the lower interest rates that prevailed during much of the period. Those redemptions resulted in a reduced net supply of preferred stocks. At the same time, demand burgeoned as individual and institutional investors increasingly sought out higher yielding alternatives to most fixed-income securities and common stocks. Demand got an added boost from the passage of President Bush's dividend tax-cut package, which greatly reduced the taxes individuals pay on most stock dividends. The preferred market was also helped by a Treasury market rally in early March, which was sparked by a string of weak monthly employment reports that showed job creation was well below expectations. "Preferred stocks...posted strong returns during the six-month period ended March 31, 2004..." Utility common stocks -- the Fund's other area of focus -- also staged a significant rally during the period. Part of investors' renewed optimism was in reaction to efforts by utilities to reduce debt, improve their financing and shed money-losing unregulated subsidiaries. Like preferreds, utility common stocks also benefited from strong demand in response to dividend tax relief. Utilities have traditionally offered consistently high dividends over the years. PERFORMANCE For the six months ended March 31, 2004, John Hancock Patriot Premium Dividend Fund I returned 13.75% at net asset value. 2 By comparison, the average income and preferred stock closed-end fund returned 11.49%, according to Lipper, Inc. In the same six-month period, the Dow Jones Utility Average -- which tracks the performance of 15 electric and natural gas utilities -- returned 14.34%, and the broader stock market, as measured by the Standard & Poor's 500 Index, returned 14.07%. [Photos of Greg Phelps and Mark Maloney flush right at top of page.] LEADERS AND LAGGARDS Within the preferred-stock category, some of our best-performing holdings were those issued by financial services companies. Lehman Brothers, for example, performed quite well, fueled by strength in bond trading and underwriting, stock sales and mergers. Merrill Lynch also performed well, thanks to its strong credit rating compared with its brokerage services group peers and enhanced earnings consistency, resulting from what the company termed "a diversity of revenues from multiple asset classes, client segments and geographic regions." Bear Stearns benefited from increased revenues and cost controls, which resulted in substantial improvement in the company's profitability. ENERGY STRONG Preferred stocks issued by oil and natural gas companies also posted strong returns during the period. In the post-September 11 era, energy prices stayed high and, late in the period, began to climb, in part because of a so-called "risk premium" for potential attacks, both here and abroad. Those high energy prices, in turn, helped boost the fortunes of holdings such as Anadarko Petroleum, Apache, Devon Energy and Nexen. "Preferred stocks issued by oil and natural gas com panies also posted strong returns..." High energy prices also helped some of our utility common stocks, particularly Dominion Resources, which has significant oil and gas operations. It also enjoyed strong results from its regulated electric operation. The common stock of electric utility Alliant Energy also performed well, boosted in large part by investors' enthusiasm over the company's back-to-basics approach. 3 A disappointment during the period was Kansas City-based Aquila, a multi-national energy provider that has been trying to regain financial stability after retreating from the wholesale energy-trading markets that caused so many utilities pain in 2002. Despite these problems, we continued to hold onto our stake in Aquila because we believe the company is making positive steps toward reducing its debt, strengthening its balance sheet and putting its energy-trading problems behind it. [Table at top left-hand side of page entitled "Top five industry groups 1." The first listing is Utilities 70%, the second is Broker services 8%, the third is Oil & gas 8%, the fourth is Media 4% and the fifth is Banks--United States 3%.] OUTLOOK In our view, the first half of 2004 likely will continue to favor preferred and utility stocks. First off, we believe that both sectors will keep on benefiting from the favorable supply and demand conditions that boosted their prospects over the past six months. Our interest-rate forecast -- which calls for continued low interest rates over the near term -- also should help preferreds because they pay dividends at a fixed rate like the interest on a bond and, as such, tend to perform best when rates decline or stabilize at relatively low levels, just as bonds do. [Pie chart in middle of page with heading "Portfolio diversification 1." The chart is divided into three segments (from top to left): Preferred stocks 65%, Common stocks 33% and Short-term investments 2%.] Although the economy has heated up, we don't think that the Federal Reserve Board will raise interest rates until the current recovery deepens and sustains itself for a longer period of time. Granted, longer-term bond yields could rise as investors worry about the prospects of future inflation, but the expected lack of a near-term interest-rate hike would keep short-term interest rates low, thereby making preferred stocks an attractive alternative to shorter-term, lower yielding money market and Treasury securities. Furthermore, we believe that investors' 4 appetite for preferred stocks and utility common stocks -- many of which benefit from the new lower federal tax on dividends -- could remain strong. In addition to robust demand, utility common stocks appear to have other factors working in their favor. Chief among them are the potential for more stable credit ratings and dividend payments. [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 Lehman Brothers followed by an up arrow with the phrase "Stock rallies amid strong earnings growth." The second listing is Dominion Resources followed by an up arrow with the phrase "High energy prices help boost profits." The third listing is Aquila followed by a down arrow with the phrase "Lingering problems with energy trading causes concern."] "In our view, the first half of 2004 likely will continue to favor preferred and utility stocks." This commentary reflects the views of the portfolio management team through the end of the Fund's period discussed in this report. The team's 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 broader 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 March 31, 2004. 5 FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on March 31, 2004 (unaudited) This schedule is divided into three main categories: preferred stocks, common 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.
CREDIT ISSUER, DESCRIPTION RATING* SHARES VALUE PREFERRED STOCKS 96.02% $140,537,326 (Cost $137,706,311) Agricultural Operations 1.88% 2,747,500 Ocean Spray Cranberries, Inc., 6.25%, Ser A (R) BB+ 35,000 2,747,500 Banks -- Foreign 1.70% 2,492,976 Royal Bank of Scotland Group Plc, 5.75%, Ser B (United Kingdom) A1 100,200 2,492,976 Banks -- United States 4.41% 6,458,400 HSBC USA, Inc., $2.8575 A1 45,000 2,430,000 J.P. Morgan Chase & Co., 6.625%, Ser H A1 72,000 4,028,400 Broker Services 12.23% 17,900,896 Bear Stearns Cos., Inc. (The), 5.72%, Ser F A3 102,460 5,230,583 Lehman Brothers Holdings, Inc., 5.67%, Depositary Shares, Ser D A3 102,700 5,462,613 Lehman Brothers Holdings, Inc., 5.94%, Depositary Shares, Ser C BBB+ 90,400 4,791,200 Merrill Lynch & Co., Inc., 9.00%, Depositary Shares, Ser A A- 90,000 2,416,500 Finance 2.17% 3,177,000 Morgan Stanley Capital Trust V, 5.75% A1 100,000 2,475,000 SLM Corp., 6.97%, Ser A BBB+ 12,000 702,000 Leasing Companies 0.88% 1,291,500 AMERCO, 8.50%, Ser A D 50,000 1,291,500 Media 6.24% 9,129,750 Shaw Communications, Inc., 8.45%, Ser A (Canada) B+ 177,500 4,465,900 Shaw Communications, Inc., 8.50% (Canada) B+ 185,000 4,663,850 Oil & Gas 11.58% 16,943,436 Anadarko Petroleum Corp., 5.46%, Depositary Shares, Ser B Baa3 45,278 4,686,273 Apache Corp., 5.68%, Depositary Shares, Ser B Baa2 25,000 2,601,563 Devon Energy Corp., 6.49%, Ser A B 50,000 5,350,000 Nexen, Inc., 7.35% (Canada) BBB- 160,000 4,305,600 See notes to financial statements. 6 FINANCIAL STATEMENTS CREDIT ISSUER, DESCRIPTION RATING* SHARES VALUE Telecommunications 0.90% $1,322,100 Touch America Holdings, Inc., $6.875 BBB- 50,850 1,322,100 Utilities 54.03% 79,073,768 Alabama Power Co., 5.20% BBB+ 225,000 5,850,000 Baltimore Gas & Electric Co., 6.99%, Ser 1995 Baa1 34,000 3,706,000 BGE Capital Trust II, 6.20% BBB 190,000 4,928,600 Boston Edison Co., 4.25% A3 57,879 4,786,593 Boston Edison Co., 4.78% A3 24,668 2,281,790 Coastal Finance I, 8.375% CCC- 215,000 4,803,100 El Paso Tennessee Pipeline Co., 8.25%, Ser A CCC 156,400 7,184,625 Energy East Capital Trust I, 8.25% BBB- 200,000 5,518,000 FPC Capital I, 7.10%, Ser A BB+ 34,500 871,125 Georgia Power Co., 6.00%, Ser R A 213,800 5,469,004 Great Plains Energy, Inc., 4.35% Ba1 23,638 1,805,943 Great Plains Energy, Inc., 4.50% BBB 12,510 988,290 Hawaiian Electric Industries Capital Trust I, 8.36% BB+ 100,000 2,504,000 Idaho Power Co., 7.07% Baa2 13,000 1,364,594 Monongahela Power Co., $7.73, Ser L CCC+ 34,500 3,260,250 PPL Electric Utilities Corp., 4.60% Baa3 3,670 305,298 PSEG Funding Trust II, 8.75% Baa3 60,000 1,713,000 PSI Energy, Inc., 6.875% BBB- 37,000 3,857,250 Public Service Electric & Gas Co., 4.30%, Ser C BB+ 6,560 516,600 Public Service Electric & Gas Co., 6.92% BB+ 26,800 2,786,364 Sierra Pacific Power Co., 7.80%, Ser 1 (Class A) Caa1 210,000 4,777,500 South Carolina Electric & Gas Co., 6.52% Baa1 55,000 5,965,784 Southern Union Co., 7.55% Ba2 40,000 1,104,000 TECO Capital Trust I, 8.50% Ba3 25,000 664,750 Virginia Electric & Power Co., $7.05 BBB 10,200 1,062,713 Xcel Energy, Inc., $4.11, Ser D BB+ 13,500 998,595 COMMON STOCKS 48.21% $70,557,245 (Cost $71,617,089) Telecommunications 0.00% 2,000 Touch America Holdings, Inc.** 200,000 2,000 Utilities 48.21% 70,555,245 Alliant Energy Corp. 150,380 3,918,903 Ameren Corp. 35,900 1,654,631 Aquila, Inc.** 180,000 847,800 CH Energy Group, Inc. 141,350 6,938,871 Consolidated Edison, Inc. 32,000 1,411,200 Dominion Resources, Inc. 64,300 4,134,490 DTE Energy Co. 126,000 5,184,900 Duke Energy Corp. 40,000 904,000 Energy East Corp. 257,000 6,517,520 See notes to financial statements. 7 FINANCIAL STATEMENTS ISSUER, DESCRIPTION SHARES VALUE Utilities (continued) KeySpan Corp. 136,450 $5,215,119 National Fuel Gas Co. 47,150 1,159,890 NiSource, Inc. 67,600 1,436,500 Northeast Utilities 209,450 3,906,243 NSTAR 175,000 8,876,000 Peoples Energy Corp. 42,500 1,897,625 Progress Energy, Inc. 52,500 2,471,700 Progress Energy, Inc.** (Contingent Value Obligation) (l) 69,000 20,010 Puget Energy, Inc. 216,900 4,852,053 Sierra Pacific Resources** 246,600 1,824,840 TECO Energy, Inc. 173,000 2,530,990 WPS Resources Corp. 40,400 1,931,120 Xcel Energy, Inc. 164,000 2,920,840 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 2.40% $3,519,000 (Cost $3,519,000) Oil & Gas 2.40% Chevron USA, Inc., Discount Commercial Paper, 04-01-04 0.87% $3,519 3,519,000 TOTAL INVESTMENTS 146.63% $214,613,571 OTHER ASSETS AND LIABILITIES, NET (46.63%) ($68,247,906) TOTAL NET ASSETS 100.00% $146,365,665
* Credit ratings are unaudited and rated by Standard & Poor's where available, or Moody's Investors Service. ** Non-income-producing security. (l) This security is valued in good faith under procedures established by the Board of Trustees. (R) This security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $2,747,500 or 1.88% of net assets as of March 31, 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. 8 FINANCIAL STATEMENTS ASSETS AND LIABILITIES March 31, 2004 (unaudited) 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 $212,842,400) $214,613,571 Cash 886 Dividends receivable 611,785 Other assets 41,345 Total assets 215,267,587 LIABILITIES Payable to affiliates Management fee 181,312 Other 18,352 Other payables and accrued expenses 107,830 Total liabilities 307,494 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 68,594,428 NET ASSETS Common shares capital paid-in 142,621,828 Accumulated net realized gain on investments 322,385 Net unrealized appreciation of investments 1,771,171 Accumulated net investment income 1,650,281 Net assets applicable to common shares $146,365,665 NET ASSET VALUE PER COMMON SHARE Based on 15,215,682 shares of beneficial interest outstanding -- unlimited number of shares authorized with no par value $9.62 See notes to financial statements. 9 FINANCIAL STATEMENTS OPERATIONS For the period ended March 31, 2004 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in oper ating the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Dividends (net of foreign withholding taxes of $4,330) $5,983,130 Interest 23,443 Total investment income 6,006,573 EXPENSES Investment management fee 822,995 Administration fee 104,577 DARTS auction fee 91,366 Federal excise tax 88,645 Printing 23,733 Transfer agent fee 22,885 Custodian fee 22,484 Auditing fee 19,449 Registration and filing fee 17,123 Miscellaneous 12,875 Trustees' fee 6,268 Legal fee 1,917 Total expenses 1,234,317 Net investment income 4,772,256 REALIZED AND UNREALIZED GAIN Net realized gain on investments 401,762 Change in net unrealized appreciation (depreciation) of investments 13,245,629 Net realized and unrealized gain 13,647,391 Distributions to DARTS (375,878) Increase in net assets from operations $18,043,769 1 Semiannual period from 10-1-03 through 3-31-04. See notes to financial statements. 10 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 dif- ference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and any increase due to the reinvestment of common shares. YEAR PERIOD ENDED ENDED 9-30-03 3-31-04 1 INCREASE IN NET ASSETS From operations Net investment income $10,484,062 $4,772,256 Net realized gain 510,730 401,762 Change in net unrealized appreciation (depreciation) 7,579,644 13,245,629 Distributions to DARTS (906,591) (375,878) Increase in net assets resulting from operations 17,667,845 18,043,769 Distributions to common shareholders From net investment income (9,775,707) (5,981,963) From Fund share transactions 1,062,637 678,737 NET ASSETS Beginning of period 124,670,347 133,625,122 End of period 2 $133,625,122 $146,365,665 1 Semiannual period from 10-1-03 through 3-31-04. Unaudited. 2 Includes accumulated net investment income of $3,235,866 and $1,650,281, respectively. See notes to financial statements. 12 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 9-30-99 9-30-00 9-30-01 9-30-02 9-30-03 3-31-04 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.85 $9.91 $10.13 $9.74 $8.30 $8.82 Net investment income 2 0.83 0.85 0.83 0.78 0.69 0.31 Net realized and unrealized gain (loss) on investments (0.90) 0.23 (0.39) (1.49) 0.54 0.91 Distribution to DARTS (0.18) (0.21) (0.18) (0.08) (0.06) (0.03) Total from investment operations (0.25) 0.87 0.26 (0.79) 1.17 1.19 Less distributions to common shareholders From net investment income (0.69) (0.65) (0.65) (0.65) (0.65) (0.39) Net asset value, end of period $9.91 $10.13 $9.74 $8.30 $8.82 $9.62 Per share market value, end of period $8.81 $8.25 $8.75 $9.15 $9.24 $9.69 Total return at market value 3 (%) (7.01) 1.19 13.79 12.03 8.91 9.37 4 RATIOS AND SUPPLEMENTAL DATA Net assets applicable to common shares, end of period (in millions) $148 $152 $146 $125 $134 $146 Ratio of expenses to average net assets 5 (%) 1.66 1.75 1.72 1.79 1.90 1.76 6 Ratio of net investment income to average net assets 7 (%) 7.92 8.94 8.35 8.42 8.33 6.79 6 Portfolio turnover (%) 18 19 23 11 10 11 SENIOR SECURITIES Total value of DARTS outstanding (in millions) $68 $68 $68 $68 $69 $69 Involuntary liquidation preference per unit (in thousands) $100 $100 $100 $100 $100 $100 Average market value per unit (in thousands) $100 $100 $100 $100 $100 $100 Asset coverage per unit 8 $323,124 $315,176 $318,208 $280,462 $287,811 $311,642
See notes to financial statements. 12 FINANCIAL HIGHLIGHTS Notes to Financial Highlights 1 Semiannual period from 10-1-03 through 3-31-04. Unaudited. 2 Based on the average of the shares outstanding. 3 Assumes dividend reinvestment. 4 Not annualized. 5 Ratios calculated on the basis of expenses applicable to the common shares relative to the average net assets of common shares. Without the exclusion of preferred shares, the ratio of expenses would have been 1.15%, 1.18%, 1.18%, 1.20%, 1.23% and 1.18%, respectively. 6 Annualized. 7 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 5.52%, 6.03%, 5.72%, 5.65%, 5.39% and 4.56%, respectively. 8 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. 13 NOTES TO STATEMENTS Unaudited 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. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. 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 sizes 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. For federal income tax purposes, the Fund has $55,954 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The entire amount of the loss carryforward expires September 30, 2010. 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 to common and preferred shareholders from net investment income and net realized gains on the ex-dividend date. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the 14 United States of America. Distributions in excess of tax 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 The Berkeley Financial Group, LLC. 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 attributable to the DARTS, 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 asset value and the value attributable to the preferred shares. For the period ended March 31, 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 net asset value plus the value attributable to the preferred shares. 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. NOTE C Fund share transactions Common shares 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 PERIOD ENDED 3-31-04 1 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 73,435 678,737 Reclassification of capital accounts -- (136,522) -- -- End of period 15,142,247 $141,943,091 15,215,682 $142,621,828 1 Semiannual period from 10-1-03 through 3-31-04. Unaudited.
15 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 1.14% during the period ended March 31, 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 period ended March 31, 2004, aggregated $31,372,938 and $23,045,485, respectively. The cost of investments owned on March 31, 2004, including short-term investments, for federal income tax purposes, was $212,865,785. Gross unrealized appreciation and depreciation of investments aggregated $20,829,474 and $19,081,688, respectively, resulting in net unrealized appreciation of $1,747,786. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on certain sales of securities. 16 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. Effective December 16, 2003, the Trustees approved additional changes to the Fund's by-laws. The changes included updating the leveraged rating agency requirements, in keeping with recent changes to the agencies' basic maintenance reporting requirements for leveraged closed-end funds. In addition, changes were made to reflect recent updates that Moody's made to some of their eligible asset and discount factors. These revisions bring the Fund's by-laws in line with current rating agency requirements. DIVIDEND REINVESTMENT PLAN The Fund offers its shareholders a Dividend Reinvestment Plan (the "Plan"), which offers the 17 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 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 18 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. 19 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 14,044,018 common 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, 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 Proxies covering 497 DARTS were voted at the meeting. The common and preferred shareholders ratified the Trustees' selection of Deloitte & Touche LLP as the Fund's independent auditor for the fiscal year ending September 30, 2004, with votes tabulated as follows: 13,842,852 FOR, 64,146 AGAINST and 137,517 ABSTAINING. 20 FOR YOUR INFORMATION TRUSTEES James F. Carlin William H. Cunningham Ronald R. Dion Charles L. Ladner* Patti McGill Peterson* Dr. John A. Moore* Steven R. Pruchansky James A. Shepherdson Lt. Gen. Norman H. Smith, USMC (Ret.) John P. Toolan* *Members of the Audit Committee OFFICERS James A. Shepherdson President and Chief Executive Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT AND DIVIDEND DISBURSER Mellon Investor Services 85 Challenger Road Overpeck Centre Ridgefield Park, New Jersey 07660 TRANSFER AGENT FOR DARTS Deutsche Bank Trust Company Americas 280 Park Avenue New York, New York 10017 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 STOCK SYMBOL Listed New York Stock Exchange: PDF For shareholder assistance refer to page 19 HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail Mellon Investor Services 85 Challenger Road Overpeck Centre Ridgefield Park, NJ 07660 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 The Fund's voting policies and procedures are available without charge, upon request: By phone 1-800-225-5291 On the Fund's Web site www.jhfunds.com/proxy On the SEC's Web site www.sec.gov 21 [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 - --------------- P10SA 3/04 5/04 ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. 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) The registrant has adopted procedures by which shareholders may recommend nominees to the registrant's Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached "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 financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's 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) Separate certifications for the registrant's principal executive officer and principal financial 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 financial 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) Submission of Matters to a Vote of Security Holders is attached. See attached "John Hancock Funds - Administration Committee Charter". (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: May 17, 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: May 17, 2004 By: - ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Date: May 17, 2004 EX-99.CERT 2 certification.txt CERTIFICATION CERTIFICATION I, James A. Shepherdson, certify that: 1. I have reviewed this report on Form N-CSR of the John Hancock Patriot Premium Dividend Fund I (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change 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 has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 17, 2004 - ------------------------- James A. Shepherdson President and Chief Executive Officer CERTIFICATION I, Richard A. Brown, certify that: 1. I have reviewed this report on Form N-CSR of the John Hancock Patriot Premium Dividend Fund I (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change 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 has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 17, 2004 - ------------------------- Richard A. Brown Senior Vice President and Chief Financial Officer EX-99.906 CERT 3 certification906.txt CERTIFICATION 906 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the attached Report of John Hancock Patriot Premium Dividend Fund I (the "registrant") on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the registrant does hereby certify that, to the best of such officer's knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant as of, and for, the periods presented in the Report. - ------------------------ James A. Shepherdson President and Chief Executive Officer Dated: May 17, 2004 - ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Dated: May 17, 2004 A signed original of this written statement, required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request. EX-99 4 admincommitteecharter.txt ADMINISTRATION COMMITTEE CHARTER JOHN HANCOCK FUNDS ADMINISTRATION COMMITTEE CHARTER A. Composition. The Administration Committee shall be composed of all Trustees who are both "independent" as defined in the rules of the New York Stock Exchange and are not "interested persons" as defined in the Investment Company Act of 1940 of John Hancock Adviser LLC or of the Trust (the "Independent Trustees"). B. Overview. The overall charter of the Administration Committee is: (i) to review and comment on complex-wide matters to facilitate uniformity among the funds; (ii) to select and nominate Independent Trustees to be added to the Board; (iii) to oversee liaison between management and the Independent Trustees; (iv) to review the performance of the Independent Trustees as appropriate; (v) to review matters relating to the Independent Trustees, such as compensation, retirement arrangements, Committee assignments and the like; (vi) to consider matters of general corporate governance applicable to the Independent Trustees, and (vii) when appropriate, to oversee the assignment of tasks to other Committees. C. Nomination of Independent Trustees 1. Selection of Trustee Nominees. Except where the funds are legally required to provide third parties with the ability to nominate trustees, the Administration Committee shall be responsible for (i) identifying individuals qualified to become Independent Trustees and (ii) recommending to the Board of Trustees the persons to be nominated for election as Independent Trustees at any meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board by the death, resignation or removal of an Independent Trustee. Persons to serve as Trustees who are not Independent Trustees shall be nominated by the Board. 2. Criteria for Selecting Trustees. The Administration Committee shall use the criteria and the principles set forth on Annex A, as revised from time to time, to guide its trustee selection process. The Administration Committee shall periodically review the requisite skills and criteria for Independent Trustees as well as the composition of the Board as a whole. The Committee shall adopt, and periodically review and revise as it deems appropriate, procedures regarding trustee candidates recommended by shareholders. The current policy is attached as Annex A. D. Other Specific Responsibilities. The Administration Committee shall have the following duties and powers, to be exercised at such times and in such manner as the Committee shall deem necessary or appropriate: 1. To consider the allocation of activities among the various Committees and the full Board, to suggest to the Committees the degree of detail in their reports to the full Board, and to establish membership and rotation policies for Committees. 2. To consider the number of funds under supervision by the Independent Trustees and the ability of the Independent Trustees to discharge successfully their fiduciary duties and to pursue self-education in mutual fund matters. 3. To propose the amount of compensation to be paid by the funds to the Independent Trustees and to address compensation-related matters, such as expense reimbursement policies. 4. To evaluate, from time to time, the time, energy, expertise, knowledge, judgment and personal skills which Independent Trustees brings to the Board and to consider retirement policies for the Independent Trustees. 5. To participate in the development of agendas for Board and Committee meetings. 6. To consider, evaluate and make recommendations regarding the type and amount of fidelity bond, and director and officer and/or errors and omission insurance coverage, for the funds, the Board and the Independent Trustees, as applicable. 7. To consider, evaluate and make recommendations and necessary findings regarding independent legal counsel and any other advisers, experts or consultants, that may be engaged from time to time, other than as may be engaged directly by another Committee. 8. To evaluate feedback from shareholders as appropriate. Annex A includes procedures for shareholders to communicate with the members of the Administration Committee. E. Additional Responsibilities. The Committee will also perform other tasks assigned to it from time to time by full Board, and will report findings and recommendations to the full Board, as appropriate. F. Governance. One member of the Committee shall be appointed as chair. The chair shall be responsible for leadership of the Committee, including scheduling meetings or reviewing and approving the schedule for them, preparing agendas or reviewing and approving them before meetings, presiding over meetings, and making reports to the full Board, as appropriate. G. Miscellaneous. The Committee shall meet as often as it deems appropriate, with or without management, as circumstances require. The Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority to retain special counsel and other advisers, experts or consultants, at the funds' expense, as it determines necessary to carry out its duties. The Committee shall have direct access to such officers of and service providers to the funds as it deems desirable. H. Review. The Committee shall review this Charter periodically and recommend such changes to the full Board as it deems desirable. ANNEX A General Criteria 1. Nominees should have a reputation for integrity, honesty and adherence to high ethical standards. 2. Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Fund(s) and should be willing and able to contribute positively to the decision-making process of the Fund(s). 3. Nominees should have a commitment to understand the Fund(s), and the responsibilities of a Trustee/Director of an investment company and to regularly attend and participate in meetings of the Board and its committees. 4. Nominees should have the ability to understand the sometimes conflicting interests of the various constituencies of the Fund, including shareholders and the management company, and to act in the interests of all shareholders. 5. Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee's ability to represent the interests of all the shareholders and to fulfill the responsibilities of a director /trustee. 6. Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law. The value of diversity on the Board should be considered. Application of Criteria to Existing The renomination of existing Trustees should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above. In addition, the Administrative Committee shall consider the existing trustees' performance on the Board and any committee. Review of Shareholder Nominations Any shareholder recommendation must be submitted in compliance with all of the pertinent provisions of Rule 14a-8 under the Securities Exchange Act of 1934 to be considered by the Administration Committee. In evaluating a nominee recommended by a shareholder, the Administration Committee, in addition to the criteria discussed above, may consider the objectives of the shareholder in submitting that nomination and whether such objectives are consistent with the interests of all shareholders. If the Board determines to include a shareholder's candidate among the slate of nominees, the candidate's name will be placed on the Fund's proxy card. If the Administration Committee or the Board determines not to include such candidate among the Board's designated nominees and the shareholder has satisfied the requirements of Rule 14a-8, the shareholder's candidate will be treated as a nominee of the shareholder who originally nominated the candidate. In that case, the candidate will not be named on the proxy card dis tributed with the Fund's proxy statement. As long as an existing Independent Trustee continues, in the opinion of the Administration Committee, to satisfy the criteria listed above, the Committee generally would favor the re-nomination of an existing Trustee rather than a new candidate. Consequently, while the Administration Committee will consider nominees recommended by shareholders to serve as trustees, the Administration Committee may only act upon such recommendations if there is a vacancy on the Board or the Administration Committee determines that the selection of a new or additional Independent Trustee is in the best interests of the Fund. In the event that a vacancy arises or a change in Board membership is determined to be advisable, the Administration Committee will, in addition to any shareholder recommendations, consider candidates identified by other means, including candidates proposed by members of the Administration Committee. While it has not done so in the past, the Administration Committee may retain a consultant to assist the Committee in a search for a qualified candidate Communications from shareholders Shareholders may communicate with the members of the Board as a group or individually. Any such communication should be sent to the Board or an individual Trustee c/o the secretary of the Fund at the address on the notice of this meeting. The Secretary may determine not to forward any letter to the members of the Board that does not relate to the business of the Fund. s/corpsec/meetings/committeecharters/Admincommitteecharter04Feb - -5- 2/13/04 EX-99 5 auditpolicy.txt AUDIT POLICY John Hancock Funds Approval of Audit, Audit-Related, Tax and Other Services Policy Statement December 2003 Table of Contents ----------------- Approval of Audit, Audit-Related, Tax and Other Services Provided by the Independent Auditor Section I - Policy Purpose and Applicability Section II - Policy Summary Section III - Policy Detail John Hancock Funds Approval of Audit, Audit-Related, Tax and Other Services Provided by the Independent Auditor Section I - Policy Purpose and Applicability John Hancock Funds recognize the importance of maintaining the independence of our outside auditors. We believe that maintaining independence is a shared responsibility involving management, the audit committee and the independent auditors. The Funds recognize that the independent audit firm: 1) possesses knowledge of the Funds, 2) is able to incorporate certain services into the scope of its audit, thereby avoiding redundant work, cost and disruption of Fund personnel and processes, and 3) has expertise that has value to the Funds. As a result, there are situations where it is desirable to utilize the audit firm for services in addition to the annual audit. Consequently, this policy, which is intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and procedures to be followed by the Funds when retaining the independent audit firm to perform audit, audit-related tax and other services under those circumstances, while also maintaining independence. Approval of a service in accordance with these policies for a Fund shall also constitute approval for any other Fund whose pre-approval is required pursuant to Rule 210.2-01(c)(7)(ii). In addition to the procedures set forth in this policy, any non-audit services that may be provided consistently with Rule 210.2-01 may be approved by the Audit Committee itself and any pre-approval that may be waived in accordance with Rule 210.2-01(c)(7)(i)(C) is hereby waived. John Hancock Funds Approval of Audit, Audit-Related, Tax and Other Services Provided by the Independent Auditor Section II - Policy Summary Four categories of services have been defined by the Funds within the policy to provide a consistent, efficient and practical framework for assessment, decision-making, approval and reporting. Following is a summary of the key provisions of the policy (see Section III for the Policy Detail): I. Audit Services - specified services directly related to performing the independent audit of the Funds. o Consistent with current practice, management will submit to the Audit Committee for pre-approval the scope and estimated fees associated with the current year audit at the appropriate Audit Committee meeting. II. Audit-Related Services - specified services that are related extensions of audit services and are logically performed by the auditors. o Individual project/services included on the pre-approved list (see Section III) are pre-approved in an amount per year/per Fund up to $50,000. o Additional services exceeding the specified pre-approved limits, or adding service types to the pre-approved list, require specific Audit Committee approval. III. Tax Services - specified services related to tax matters. Using PwC & D&T for these matters creates efficiencies, minimizes disruption, or preserves confidentiality. o Individual project/service included on the pre-approved list are pre-approved in an amount per year/per Fund up to $50,000 for individual projects. o Additional services exceeding the specified pre-approved limits, or adding service types to the pre-approved list, requires specific Audit Committee approval. IV. Other Services - (a) "Synergistic": specified services for which utilizing PwC and D&T creates efficiencies, minimizes disruption, or preserves confidentiality, or (b) "Unique Qualifications": specified services for which management has determined that PwC and D&T possesses unique or superior qualifications to provide these services. o Individual project/service included on the pre-approved list) are pre-approved in an amount per year/per Fund up to $10,000 for individual projects. o Additional services exceeding the specified pre-approved limits, or adding service types to the pre-approved list, requires specific Audit Committee approval. "Restricted" Non-Audit Services - includes nine specific restricted services identified in Rule 210.2-01(c)(4). o These services may not be performed by PwC and D&T, with the exception of the certain services (see prohibited services on page 7) that may be permitted if they would not be subject to audit at the Fund's level by the firm providing the service. John Hancock Funds Approval of Audit, Audit-Related, Tax and Other Services Provided by the Independent Auditor Section III - Policy Detail
- ------------------------------------------------------------------------------------------------------------------------------------ Service Service Category Specific Pre-Approved Audit Committee Audit Committee Category Description Service Subcategories Approval Policy Reporting Policy - ------------------------------------------------------------------------------------------------------------------------------------ I. Audit Services Services that are directly o Accounting research o "One-time" pre-approval o A summary of all such related to performing the assistance (e.g. new for the audit period for services and related independent audit of the products, securities, all pre-approved fees reported at each Funds and investment specific service regularly scheduled strategies) subcategories Audit Committee meeting. o SEC consultation, registration statements, and reporting o Tax accrual related matters (e.g. review of tax qualifications and distributions) o Implementation of new accounting standards o Compliance letters (e.g. rating agency letters) o Regulatory reviews and assistance regarding financial matters o Semi-annual reviews (if requested) o Comfort letters for closed end offerings - ------------------------------------------------------------------------------------------------------------------------------------ II. Audit-Related Services which are not o AICPA attest and o "One-time" pre-approval o A summary of all such Services prohibited under Rule agreed-upon procedures for the fund fiscal year services and related 210.2-01(C)(4) (the (e.g. fund mergers, within a specified fees (including "Rule")and are related liquidation procedures dollar limit of $50,000 comparison to specified extensions of the audit and related comfort for all pre-approved dollar limits) reported services support the letters and review of specific service at each regularly audit, or use the preferred Shares' Basic subcategories scheduled Audit knowledge/expertise gained Maintenance Report) Committee meeting. from the audit procedures o Specific approval is as a foundation to o Technology control needed to exceed the complete the project. In assessments pre-approved dollar most cases, if the limit for these services Audit-Related Services are o Financial reporting (see general Audit not performed by the Audit control assessments Committee approval firm, the scope of the policy below for details Audit Services would o Enterprise security on obtaining specific likely increase. The architecture assessment approvals) Services are typically well-defined and governed o Attestation related to o Specific approval is by accounting professional compliance under needed to utilize PwC & standards (AICPA, SEC, (AIMR-PPS) standards. D&T for Audit-Related etc.) Services not denoted as "pre-approved" to the left, or to add a specific service subcategory as "pre-approved" - ------------------------------------------------------------------------------------------------------------------------------------
Section III - Policy Detail, continued
- ------------------------------------------------------------------------------------------------------------------------------------ Service Service Category Specific Pre-Approved Audit Committee Audit Committee Category Description Service Subcategories Approval Policy Reporting Policy - ------------------------------------------------------------------------------------------------------------------------------------ III. Tax Services Services which are not o Tax planning and support o "One-time" pre-approval o A summary of all such prohibited by the Rule, if for the fund fiscal year services and related fund management determines o Tax controversy within a specified fees (including that utilizing PwC and D&T assistance dollar limit of $50,000 comparison to specified to provide these services for individual projects dollar limits) reported creates significant o Tax compliance, tax at each regularly synergy in the form of returns, excise tax o Specific approval is scheduled Audit efficiency, minimized returns and support needed to exceed the Committee meeting disruption, or the ability pre-approved dollar to maintain a desired o Tax opinions limits for these level of confidentiality. services (see general o Tax research assistance Audit Committee approval (e.g. new products, policy below for details securities and on obtaining specific investment strategies) approvals) o Withholding tax filing o Specific approval is needed to utilize PwC & D&T for tax services not denoted as pre-approved to the left, or to add a specific service subcategory as "pre-approved" - ------------------------------------------------------------------------------------------------------------------------------------
Section III - Policy Detail, continued
- ------------------------------------------------------------------------------------------------------------------------------------ Service Service Category Specific Pre-Approved Audit Committee Audit Committee Category Description Service Subcategories Approval Policy Reporting Policy - ------------------------------------------------------------------------------------------------------------------------------------ IV. Other Services Services which are not o Business Risk Management o "One-time" pre-approval o A summary of all such prohibited by the Rule, if support for the fund fiscal year services and related a. Synergistic, Fund management determines within a specified fees (including unique that utilizing PwC or D&T o Other control and dollar limit ($10,000 comparison to specified qualifications to provide these services regulatory compliance for individual projects dollar limits) reported creates significant projects for all pre-approved at each regularly synergy in the form of specific service scheduled Audit efficiency, minimized subcategories Committee meeting disruption, the ability to maintain a desired level o Specific approval is of confidentiality, or needed to exceed the where PwC or D&T posses pre-approved dollar unique or superior limits for these qualifications to provide services (see general these services, resulting Audit Committee approval in superior value and policy below for details results for the Fund. on obtaining specific approvals) o Specific approval is needed to utilize PwC or D&T for "Synergistic" or "Unique Qualifications" Other Services not denoted as pre-approved to the left, or to add a specific service subcategory as "pre-approved" - ------------------------------------------------------------------------------------------------------------------------------------
Section III - Policy Detail, continued
- ------------------------------------------------------------------------------------------------------------------------------------ Service Service Category Specific Prohibited Audit Committee Audit Committee Category Description Service Subcategories Approval Policy Reporting Policy - ------------------------------------------------------------------------------------------------------------------------------------ Prohibited Services which result in 1. Bookkeeping or other o These services are not o A summary of all Services the auditors losing services related to the to be performed with the services and related independence status under accounting records or exception of the (*) fees reported at each the Rule. financial statements of services (see regularly scheduled the audit client* subcategories 1 through Audit Committee meeting 5 on the left), that may will serve as continual 2. Financial information be permitted if they confirmation that has systems design and would not be subject to not provided any implementation* audit procedures at the restricted services. audit client (as defined 3. Appraisal or valuation in Rule 2-01(f)(4)) services, fairness* level by the firm opinions, or providing the service. contribution-in-kind reports 4. Actuarial services (i.e., setting actuarial reserves versus actuarial audit work)* 5. Internal audit outsourcing services* 6. Management functions or human resources 7. Broker or dealer, investment advisor, or investment banking services 8. Legal services and expert services unrelated to the audit 9. Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible - ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- General Audit Committee Approval Policy: o Management will continue to evaluate all individual projects on a monthly basis, and all individual projects greater than $50,000 are evaluated and approved by the Fund's CFO prior to the engagement letter being signed and the project starting o For all projects, management and PwC and D&T will each make an assessment to determine that any proposed projects will not impair independence. o Potential services will be classified into the four non-restricted service categories and the "Approval of Audit, Audit-Related, Tax and Other Services" Policy above will be applied. Any services outside the specific pre-approved service subcategories set forth above must be specifically approved by the Audit Committee. o At each regularly scheduled Audit Committee meeting, the Audit Committee shall review a report summarizing the services by service category, including fees, provided by the Audit firm as set forth in the above policy. - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----