-----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, O7rr2UvoalvarHQmzkKNp4Z1wvNunvnXSNpOqa+CoNuyrWYqOgxdI5yL9mkKOdal cjydUDC3OJmsG2sGCOSQ1g== 0000863328-03-000003.txt : 20030828 0000863328-03-000003.hdr.sgml : 20030828 20030828104249 ACCESSION NUMBER: 0000863328-03-000003 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030828 EFFECTIVENESS DATE: 20030828 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN PATRIOT SELECT DIVIDEND TRUST CENTRAL INDEX KEY: 0000863328 IRS NUMBER: 043090916 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06107 FILM NUMBER: 03869980 BUSINESS ADDRESS: STREET 1: 101 HUNTINGTON AVENUE CITY: BOSTON STATE: MA ZIP: 02199-7603 BUSINESS PHONE: 6173751700 MAIL ADDRESS: STREET 1: 101 HUNGTINTON AVENUE CITY: BOSTON STATE: MA ZIP: 02199-7603 FORMER COMPANY: FORMER CONFORMED NAME: PATRIOT SELECT DIVIDEND TRUST DATE OF NAME CHANGE: 19920703 N-CSR 1 patriotselect.txt JH PATRIOT SELECT DIVIDEND TRUST ITEM 1. REPORT TO STOCKHOLDERS John Hancock Patriot Select Divend Trust ANNUAL REPORT 6.30.03 [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 Maureen R. Ford, Chairman and 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 Trustees & officers page 23 For your information page 29 Dear Fellow Shareholders, The stock market made a strong recovery in the first half of 2003. Historically low interest rates, improving corporate earnings and government stimulus in the form of tax cuts gave investors hope that the economy would soon begin to strengthen. Most of the market's move up occurred in the second quarter, and the breadth of the rally was enormous. As a result, the major indexes were able to wipe out their first-quarter losses and post solid gains for the first six months of the year. With technology leading the way, the tech-heavy Nasdaq Composite Index rose 21.51% through June, the Dow Jones Industrial Average was up 9.02% and the Standard & Poor's 500 Index returned 11.75%. With falling interest rates, bonds also did well, continuing their upward trend for a fourth consecutive year. High yield bonds led the pack, returning 18.49% in the first half as measured by the Lehman High Yield Index. After the jarring stock-market losses of the last three years, it's a welcome relief for investors to be reminded that the market is indeed cyclical, and does move up -- not just down. And mutual fund investors will finally like what they see in their second-quarter statements: positive results. With the exception of bear funds, which bet on the market going down, every fund category tracked by Morningstar, Inc. and Lipper, Inc. posted double-digit gains in the quarter. Whether this rally can be sustained depends in large part on whether the economy actually does rebound, and by how much, and how corporate earnings fare. It will also depend on how soon a lot of the investors still sitting on the sidelines decide to get back into the stock market. No matter what happens next, the dramatic reversal in the stock market's fortunes, and other economic improvements, could be signals that it's time for investors to review their portfolios with their investment professionals to make sure they are well-positioned to meet their long-term investment objectives. Sincerely, /S/ MAUREEN R. FORD Maureen R. Ford, Chairman and Chief Executive Officer This commentary reflects the chairman's views as of June 30, 2003. 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, by invest- ing in a diversified portfolio of dividend-paying securities. The Fund will normally invest more than 65% of its total assets in securities of companies in the utilities industry. Over the last twelve months * Preferred stocks performed well as interest rates fell and a dividend-tax cut loomed. * Utility common stocks staged a second-half rally as demand strengthened. * The Fund benefited from good security selection. [Bar chart with heading "John Hancock Patriot Select Dividend Trust. "Under the heading is a note that reads "Fund performance for the year ended June 30, 2003." The chart is scaled in increments of 3% with 0% at the bottom and 9% at the top. The first bar represents the 8.33% total return for John Hancock Patriot Select Dividend Trust. A note below the chart reads "The total return for the Fund is at net asset value with all distributions reinvested."] Top 10 issuers 4.5% Puget Energy, Inc. 4.3% Energy East Corp. 4.3% NSTAR 3.6% Lehman Brothers 3.6% El Paso Tennessee Pipeline Co. 3.6% Citigroup, Inc. 3.5% Bear Stearns Companies, Inc. 3.3% TDS Capital Trust 3.2% TXU US Holdings Co. 3.0% CH Energy Group, Inc. As a percentage of net assets plus value of preferred shares on June 30, 2003. MANAGERS' REPORT BY GREGORY K. PHELPS AND MARK T. MALONEY, FOR THE PORTFOLIO MANAGEMENT TEAM John Hancock Patriot Select Dividend Trust During the 12 months ended June 30, 2003, preferred stocks -- which make up the bulk of John Hancock Patriot Select Dividend Trust -- performed quite well amid increasingly favorable conditions for the group. Much of the fuel behind the preferred- stock rally was action by the Federal Reserve Board, which lowered interest rates by a half-percentage-point in November 2002, and by a quarter-point in June 2003. Falling interest rates tend to help preferreds because preferred stocks pay dividends at a fixed rate like the interest on a bond. As a result, they tend to rally when interest rates drop, just as bonds do. Also boosting preferred stocks was demand from income-seeking individual investors and income-oriented mutual funds looking for significantly higher yields than what companies paid on their bonds and common stocks. The yields on many preferred stocks, which generally ranged from 6% to 7.5%, continued to outstrip by a fairly wide margin the yields available on Treasury and corporate bonds, as well as the dividends paid on common stocks. Demand also strengthened in response to President Bush's proposed dividend tax-cut package, which was passed in June. "...preferred stocks... performed quite well amid increasingly favorable conditions for the group." UTILITIES IMPROVE The performance of utility common stocks, which made up about one-third of the Fund's investments at the end of the period, steadily improved during the year. When the period began, utility stocks remained under pressure, mired in the remnants of the Enron debacle. But by early 2003, utility stocks began an encouraging rally that extended through the end of the period. A return of investor confidence in utilities was set off by a growing sense that the sector had become undervalued relative to the market as a whole and relative to its historic value. Dividend tax relief also helped. Utilities historically have offered consistently high dividends, positioning them to benefit once the tax relief was enacted. Furthermore, investors liked the fact that many utility companies had begun cleaning up their balance sheets, renewing or extending financing and ridding themselves of money-losing unregulated subsidiaries -- such as energy trading -- that caused them pain in the post-Enron environment. [Photos of Greg Phelps and Mark Maloney flush right next to first paragraph.] FUND PERFORMANCE For the 12 months ended June 30, 2003, John Hancock Patriot Select Dividend Trust returned 8.33% at net asset value. By comparison, the average income and preferred stock closed-end fund returned 12.75%, 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 -3.92%, and the broader stock market, as measured by the Standard & Poor's 500 Index, returned 0.25%. FINANCIALS, UTILITIES PERFORM Some of the Fund's best performers were preferred stocks issued by financial services companies, which benefited from a combination of positive trends. Banks and other lenders, such as student loan giant SLM Corp., were helped by attractive lending spreads, meaning they could borrow money at relatively low rates and lend it out at higher rates. Brokers, such as Bear Stearns, got a mild boost from the improved equity market, which, in turn, fostered more trading revenues. Bear Stearns also was helped by the fact that it posted better financial results than many of its other broker competitors and by speculation that it is a takeover candidate. "Some of the Fund's best performers were preferred stocks issued by financial services companies..." [Table at top left-hand side of page entitled "Top five industry groups 1." The first listing is Utilities 68%, the second is Broker services 8%, the third Finance 6%, the fourth Oil & gas 6%, and the fifth Banks -- United States 5%.] Among utility stocks, we saw winners in both the preferred and common stock categories. Our holdings in the preferred stock of Alabama Power, a wholly owned subsidiary of Southern Company, posted strong gains in response to investors' enthusiasm over the company's "back-to-basics" approach. Likewise, investors cheered Alliant Energy Corp.'s moves to sell some of its non-utility businesses as part of a plan to pay down debt, helping boost our common-stock holdings in that company. The common stock of Chicago-based gas utility Peoples Energy also was among our list of top performers, due in part to strong pricing of oil and gas. [Pie chart in middle of page with heading "Portfolio diversification 1" The chart is divided into two sections (from top to left): Preferred stocks 73% and Common stocks 27%.] In contrast, AMERCO, the parent company of truck-rental company U-Haul, was a disappointment. The company struggled during the year, in part due to credit-rating downgrades, which in turn led to questions about its management's strategies. Despite these problems, we continued to hold onto our stake in AMERCO because we believe that this well-known franchise is on course to reduce its debt and strengthen its balance sheet -- moves that, if successful, potentially could put the company on firmer footing. [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 SLM Corp. followed by an up arrow with the phrase "Student loan provider benefits from falling interest rates." The second listing is Alabama Power followed by an up arrow with the phrase "Renewed focus on electric business boosts investor confidence." The third listing is AMERCO followed by a down arrow with the phrase "Credit-rating downgrade fosters speculation about company's future."] OUTLOOK For the remainder of 2003, we're fairly optimistic about the outlook for preferred and utility common stocks. Much of our optimism stems from our macroeconomic outlook, which calls for a continually sluggish economy coupled with sustained low interest rates. This could continue to prompt strong demand for relatively high-yielding preferred and utility common stocks. The dividend tax relief enacted in June -- which cut the dividend tax rate from a maximum of 38.6% to 15% -- also could help boost demand for many stocks that pay high dividends. Utility common stocks have other factors going for them as well, including the potential for more stable credit ratings, attractive valuations and the possible elimination of an anachronistic law limiting utility mergers. "...we're fairly optimistic about the outlook for preferred and utility common 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 to factors adversely affecting the utilities industry than a broader diversified fund. Sector investing is subject to greater risks than the market as a whole. 1 As a percentage of the Fund's portfolio on June 30, 2003. FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on June 30, 2003 This schedule is divided into two main categories: preferred stocks and common stocks. Preferred and common stocks are further broken down by industry group.
SHARES ISSUER, DESCRIPTION VALUE PREFERRED STOCKS 109.70% $149,836,667 (Cost $147,533,889) Agricultural Operations 2.72% 3,720,000 40,000 Ocean Spray Cranberries, Inc., 6.25%, Ser A (R) 3,720,000 Banks -- United States 8.29% 11,322,000 99,000 FleetBoston Financial Corp., 6.75%, Depositary Shares, Ser VI 5,544,000 108,000 HSBC USA, Inc., $2.8575 5,778,000 Broker Services 12.43% 16,972,025 116,400 Bear Stearns Companies, Inc., 5.49%, Ser G 6,046,980 23,000 Bear Stearns Companies, Inc., 6.15%, Ser E 1,229,580 129,689 Lehman Brothers Holdings, Inc., 5.67%, Depositary Shares, Ser D 6,841,095 13,000 Lehman Brothers Holdings, Inc., 5.94%, Ser C 682,500 77,650 Merrill Lynch & Co., Inc., 9.00%, Depositary Shares, Ser A 2,171,870 Diversified Operations 0.61% 839,052 30,600 Grand Metropolitan Delaware, L.P., 9.42%, Gtd Ser A 839,052 Finance 9.40% 12,835,780 44,000 Citigroup, Inc., 6.213%, Ser G 2,367,200 92,400 Citigroup, Inc., 6.231%, Depositary Shares, Ser H 5,077,380 92,000 SLM Corp., 6.97%, Ser A 5,391,200 Leasing Companies 1.25% 1,711,500 105,000 AMERCO, 8.50%, Ser A 1,711,500 Media 3.07% 4,188,375 67,500 Shaw Communications, Inc., 8.45%, Ser A (Canada) 1,649,025 102,600 Shaw Communications, Inc., 8.50% (Canada) 2,539,350 Oil & Gas 9.20% 12,565,364 25,900 Anadarko Petroleum Corp., 5.46%, Depositary Shares 2,654,750 40,174 Apache Corp., 5.68%, Depositary Shares, Ser B 4,239,614 53,500 Devon Energy Corp., 6.49%, Ser A 5,671,000 Telecommunications 1.22% 1,666,500 50,500 Touch America Holdings, Inc., $6.875 1,666,500 Utilities 61.51% 84,016,071 225,000 Alabama Power Co., 5.20% 5,928,750 40,000 Baltimore Gas & Electric Co., 6.99%, Ser 1995 4,180,000 55,315 Boston Edison Co., 4.25% 4,701,775 78,300 Coastal Finance I, 8.375% 1,706,157 183,500 El Paso Tennessee Pipeline Co., 8.25%, Ser A 7,523,500 147,000 Energy East Capital Trust I, 8.25% 4,064,550 87,100 Entergy Gulf States Capital 1, 8.75%, Ser A 2,212,340 25,000 Florida Power & Light Co., 6.75%, Ser U 2,605,000 50,000 Hawaiian Electric Industries Capital Trust I, 8.36% 1,323,500 13,500 Massachusetts Electric Co., 6.99% 1,410,750 50,000 Monongahela Power Co., 7.73%, Ser L 4,650,000 16,400 Potomac Electric Power Co., $2.28 Ser 1965 688,288 30,000 PSEG Funding Trust II, 8.75% 831,300 48,000 PSI Energy, Inc., 6.875% 5,040,000 26,375 Public Service Electric & Gas Co., 6.92% 2,710,031 205,140 Puget Sound Energy, Inc., 7.45%, Ser II 5,251,584 9,264 Rochester Gas & Electric Co., 4.10%, Ser H 583,632 11,392 Rochester Gas & Electric Corp., 4.75%, Ser I 977,933 205,600 Sierra Pacific Power Co., 7.80%, Ser 1 (Class A) 4,214,800 55,000 South Carolina Electric & Gas Co., 6.52% 5,747,500 59,000 Southern Union Financing I, 9.48% 1,524,560 196,700 TDS Capital Trust I, 8.50% 4,974,543 70,500 TDS Capital Trust II, 8.04% 1,769,550 106,000 TXU US Holdings Co., $1.875, Depositary Shares, Ser A 2,650,000 36,000 TXU US Holdings Co., $1.805, Depositary Shares, Ser B 898,920 29,200 TXU US Holdings Co., $7.98 3,036,508 10,500 Virginia Electric & Power Co., $6.98 1,092,000 10,000 Virginia Electric & Power Co., $7.05 1,040,000 6,500 Wisconsin Public Service Corp., 6.76% 678,600 COMMON STOCKS 41.27% 56,365,213 (Cost $66,378,073) Telecommunications 0.01% 11,808 196,800 Touch America Holdings, Inc.* 11,808 Utilities 41.26% 56,353,405 158,000 Alliant Energy Corp. 3,006,740 190,000 Aquila, Inc. 490,200 139,800 CH Energy Group, Inc. 6,291,000 46,000 Dominion Resources, Inc. 2,956,420 99,000 DPL, Inc. 1,578,060 133,900 DTE Energy Co. 5,173,896 70,000 Duke Energy Corp. 1,396,500 232,000 Energy East Corp. 4,816,320 129,000 KeySpan Corp. 4,573,050 34,000 NiSource, Inc. 646,000 207,000 Northeast Utilities 3,465,180 91,000 NSTAR 4,145,050 93,092 OGE Energy Corp. 1,989,376 27,500 Peoples Energy Corp. 1,179,475 54,000 Progress Energy, Inc. 2,370,600 20,000 Progress Energy, Inc.* (Contingent Value Obligation) 2,400 170,500 Puget Energy, Inc. 4,069,835 271,500 Sierra Pacific Resources* 1,612,710 176,750 TECO Energy, Inc. 2,119,233 48,000 WPS Resources Corp. 1,929,600 169,000 Xcel Energy, Inc. 2,541,760 TOTAL INVESTMENTS 150.97% $206,201,880 OTHER ASSETS AND LIABILITIES, NET (50.97%) ($69,618,814) TOTAL NET ASSETS 100.00% $136,583,066 * Non-income-producing security (R) These securities are exempt from registration under rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $3,720,000 or 2.72% of net assets as of June 30, 2003. 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.
ASSETS AND LIABILITIES June 30, 2003 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 $213,911,962) $206,201,880 Dividends receivable 735,991 Other assets 42,202 Total assets 206,980,073 LIABILITIES Due to custodian 124,021 Payable to affiliates Management fee 145,738 Administration fee 24,867 Other payables and accrued expenses 90,827 Total liabilities 385,453 Auction Market Preferred Shares (AMPS), at value, unlimited number of shares of beneficial interest authorized with no par value, 700 shares issued, liquidation preference of $100,000 per share 70,011,554 NET ASSETS Common shares capital paid-in 142,306,741 Accumulated net realized loss on investments (414,358) Net unrealized depreciation of investments (7,710,082) Accumulated net investment income 2,400,765 Net assets applicable to common shares $136,583,066 NET ASSET VALUE PER COMMON SHARE Based on 9,945,720 shares of beneficial interest outstanding -- unlimited number of shares authorized with no par value $13.73 See notes to financial statements. OPERATIONS For the year ended June 30, 2003 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 $13,064,499 Interest 27,740 Total investment income 13,092,239 EXPENSES Investment management fee 1,555,845 Administration fee 291,721 AMPS auction fee 184,931 Federal excise tax 89,890 Auditing fee 52,800 Custodian fee 45,837 Printing 43,930 Transfer agent fee 40,998 Registration and filing fee 40,725 Trustees' fee 13,042 Legal fee 3,578 Interest expense 368 Total expenses 2,363,665 Net investment income 10,728,574 REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on investments (153,364) Change in net unrealized appreciation (depreciation) of investments 856,632 Net realized and unrealized gain 703,268 Distributions to AMPS (1,013,193) Increase in net assets from operations $10,418,649 See notes to financial statements. CHANGES IN NET ASSETS This Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous period. The dif- ference reflects earnings less expenses, any investment gains and losses, distributions paid to share- holders, if any, and any increase due to the sale of common shares. YEAR YEAR ENDED ENDED 6-30-02 6-30-03 INCREASE IN NET ASSETS From operations Net investment income $11,662,019 $10,728,574 Net realized loss (211,634) (153,364) Change in net unrealized appreciation (depreciation) (15,801,539) 856,632 Distributions to AMPS (1,449,527) (1,013,193) Increase (decrease) in net assets resulting from operations (5,800,681) 10,418,649 Distributions to common shareholder From net investment income (10,678,061) (10,716,598) From Fund share transactions 212,653 594,672 NET ASSETS APPLICABLE TO COMMON SHARES Beginning of period 152,552,432 136,286,343 End of period 1 $136,286,343 $136,583,066 1 Includes accumulated net investment income of $3,310,964 and $2,400,765, respectively. See notes to financial statements.
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 6-30-99 6-30-00 6-30-01 6-30-02 6-30-03 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $17.07 $16.00 $13.97 $15.43 $13.77 Net investment income 1 1.26 1.27 1.34 1.18 1.08 Net realized and unrealized gain (loss) on investments (0.80) (1.91) 1.52 (1.61) 0.06 Distributions to AMPS (0.29) (0.31) (0.32) (0.15) (0.10) Total from investment operations 0.17 (0.95) 2.54 (0.58) 1.04 Less distributions to common shareholders From net investment income (1.24) (1.08) (1.08) (1.08) (1.08) Net asset value, end of period $16.00 $13.97 $15.43 $13.77 $13.73 Per share market value, end of period $13.81 $12.38 $14.80 $13.69 $14.72 Total return at market value 2 (%) (3.56) (2.46) 29.40 (0.45) 16.82 RATIOS AND SUPPLEMENTAL DATA Net assets applicable to common shares, end of period (in millions) $159 $138 $153 $136 $137 Ratio of expenses to average net assets 3 (%) 1.72 1.74 1.77 1.77 1.90 Ratio of net investment income to average net assets 4 (%) 7.51 8.57 8.22 7.99 8.62 Portfolio turnover (%) 30 20 13 15 2 SENIOR SECURITIES Total value of AMPS outstanding (in millions) $70 $70 $70 $70 $70 Involuntary liquidation preference per unit (in thousands) $100 $100 $100 $100 $100 Approximate market value per unit (in thousands) $100 $100 $100 $100 $100 Asset coverage per unit 5 $329,508 $299,106 $316,086 $290,311 $294,629
1 Based on the average of the shares outstanding. 2 Assumes dividend reinvestment. 3 Ratios calculated on the basis of expenses applicable to common shares relative to the average net assets of common shares. Without the exclusion of preferred shares, the ratio of expenses would have been 1.21%, 1.18%, 1.21%, 1.20% and 1.22%, respectively. 4 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 5.28%, 5.79%, 5.61%, 5.40% and 5.52%, respectively. 5 Calculated by subtracting the Fund's total liabilities from the Fund's total assets and dividing such amount by the number of AMPS outstanding as of the applicable 1940 Act Evaluation Date, which may differ from the financial reporting date. See notes to financial statements. FINANCIAL HIGHLIGHTS NOTES TO STATEMENTS NOTE A Accounting policies John Hancock Patriot Select Dividend Trust (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. 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 $386,472 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 loss carryforward expires as follows: June 30, 2010 -- $116, 663 and June 30, 2011 -- $269, 809. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be 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. 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. During the year ended June 30, 2003, the tax character of distributions paid was as follows: ordinary income $11,729,791. As of June 30, 2003, the components of distributable earnings on a tax basis included $2,406,537 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 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 0.80% of the Fund's average weekly net assets plus the value attributable to the AMPS. 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 0.15% of the Fund's average weekly net assets plus the value attributable to the AMPS. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investment as well as any unrealized gains or losses. The 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 6-30-02 YEAR ENDED 6-30-03 SHARES AMOUNT SHARES AMOUNT Beginning of period 9,885,027 $141,701,513 9,899,636 $141,805,115 Distributions reinvested 14,609 212,653 46,084 594,672 Reclassification of capital accounts -- (109,051) -- (93,046) End of period 9,899,636 $141,805,115 9,945,720 $142,306,741 Auction Market Preferred Shares Series A The Fund issued 700 shares of Dutch Auction Market Preferred Shares Series A ("AMPS") on August 30, 1990, in a public offering. The underwriting discount was recorded as a reduction of the capital of common shares. Dividends on the AMPS, which accrue daily, are cumulative at a rate that was established at the offering of the AMPS and has been reset every 49 days thereafter by an auction. Dividend rates on AMPS ranged from 0.99% to 1.65% during the year ended June 30, 2003. Accrued dividends on AMPS are included in the value of AMPS on the Fund's Statement of Assets and Liabilities. The AMPS 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 AMPS 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 AMPS, as defined in the Fund's by-laws. If the dividends on the AMPS shall remain unpaid in an amount equal to two full years' dividends, the holders of the AMPS, as a class, have the right to elect a majority of the Board of Trustees. In general, the holders of the AMPS and the common shareholders have equal voting rights of one vote per share, except that the holders of the AMPS, 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 AMPS and common shares. NOTE D Investment transactions Purchases and proceeds from sales of securities, other than short-term securities and obligations of the U.S. government, during the year ended June 30, 2003, aggregated $6,864,445 and $4,297,905, respectively. The cost of investments owned on June 30, 2003, including short-term investments, for federal income tax purposes was $213,939,848. Gross unrealized appreciation and depreciation of investments aggregated $15,909,732 and $23,647,700, respectively, resulting in net unrealized depreciation of $7,737,968. The difference between book basis and tax basis net unrealized depreciation of investments is attributable primarily to the tax deferral of losses on wash sales. NOTE E Reclassification of accounts During the year ended June 30, 2003, the Fund reclassified amounts to reflect a decrease in accumulated net realized loss on investments of $2,028, an increase in accumulated net investment income of $91,018 and a decrease in capital paid-in of $93,046. This represents the amount necessary to report these balances on a tax basis, excluding certain temporary differences as of June 30, 2003. 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 Financial Highlights excludes these adjustments. AUDITORS' REPORT Report of Deloitte & Touche LLP, Independent Auditors To The Board of Trustees and Shareholders of John Hancock Patriot Select Dividend Trust, We have audited the accompanying statement of assets and liabilities of John Hancock Patriot Select Dividend Trust (the "Fund") including the schedule of investments, as of June 30, 2003, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. 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 auditing standards generally accepted in the United State of America. 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 June 30, 2003, by correspondence with the custodian. 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 John Hancock Patriot Select Dividend Trust as of June 30, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. /S/ DELOITTE & TOUCHE LLP Boston, Massachusetts August 7, 2003 TAX INFORMATION Unaudited For federal income tax purposes, the following information is furnished with respect to the distributions of the Fund paid during its taxable year ended June 30, 2003. With respect to the ordinary dividends paid by the Fund for the fiscal year ended June 30, 2003, 100% of the dividends qualify 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 2003. If the Fund paid dividends during the fiscal year end, shareholders will be mailed a 2003 U.S. Treasury Department Form 1099-DIV in January 2004. This will reflect the total of all distributions that are taxable for calendar year 2003. INVESTMENT OBJECTIVE AND POLICY The Fund's investment objective is to provide a high current income, consistent with modest growth of capital. The Fund seeks to achieve its investment objective by investing in preferred stocks that, in the opinion of the Adviser, may be undervalued relative to similar securities in the marketplace. The Fund's non-fundamental investment policy, with respect to the quality of ratings of its portfolio investments, was changed by a vote of the Fund's Trustees on September 13, 1994. The new policy, which became effective October 15, 1994, stipulates that preferred stocks and debt obligations in which the Fund will invest will be rated investment grade (at least "BBB" by S&P or "Baa" by Moody's) at the time of investment or will be preferred stocks of issuers of investment grade senior debt, some of which may have speculative characteristics, or, if not rated, will be of comparable quality as determined by the Adviser. The Fund will invest in common stocks of issuers whose senior debt is rated investment grade or, in the case of issuers that have no rated senior debt outstanding, whose senior debt is considered by the Adviser to be of comparable quality. 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 AMPS plus borrowings for investment purposes. The Fund will notify shareholders at least 60 days prior to any change in this 80% investment policy. 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 not less than ten days prior to a dividend record date; otherwise, it will be effective for all subsequent dividend record dates. When a participant withdraws from the Plan or upon termination of the Plan, as provided below, certificates for whole common shares credited to his or her account under the Plan will be issued and a cash payment will be made for any fraction of a share credited to such account. The Plan Agent maintains each shareholder's account in the Plan and furnishes monthly written confirmations of all transactions in the accounts, including information needed by the shareholders for personal and tax records. 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. SHAREHOLDER MEETINGS 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 which 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, which 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 March 20, 2003, the Annual Meeting of the Fund was held to elect four Trustees and to ratify the actions of the Trustees in selecting independent auditors for the Fund. Proxies covering 9,467,798 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 - ----------------------------------------------------------------------- Maureen R. Ford 9,358,779 109,019 Charles L. Ladner 9,356,887 110,911 Dr. John Moore 9,355,389 112,409 The preferred shareholders elected Ronald R. Dion to serve until his successor is duly elected and qualified, with the votes tabulated as follows: 402 FOR and 0 WITHHELD AUTHORITY. The shareholders also ratified the Trustees' selection of Deloitte & Touche LLP as the Fund's independent Auditors for the fiscal year ending June 30, 2003, with the votes tabulated as follows: 9,339,584 FOR, 64,994 AGAINST and 63,622 ABSTAINING. TRUSTEES & OFFICERS Unaudited 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 NUMBER OF NAME, AGE TRUSTEE JOHN HANCOCK PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE James F. Carlin, Born: 1940 1990 31 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 31 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 (since 2000), STC Broadcasting, Inc. and Sunrise Television Corp. (until 2001), Symtx, Inc. (since 2001), Adorno/ Rogers Technology, Inc. (since 2001), Pinnacle Foods Corporation (since 2001), rateGenius (since 2001), LaQuinta Motor Inns, Inc. (hotel management company) (until 1998), 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, Q Investments (since 2000); Advisory Director, Chase Bank (formerly Texas Commerce Bank -- Austin) (since 1988), LIN Television (since 2002) and WilTel Communications (since 2002). Ronald R. Dion, Born: 1946 1998 31 Chairman and Chief Executive Officer, R.M. Bradley & Co., Inc.; Director, The New England Council and Massachusetts Roundtable; Trustee, North Shore Medical Center; Director, BJ's Wholesale Club, Inc. and a corporator of the Eastern Bank; Trustee, Emmanuel College. Charles L. Ladner 2, Born: 1938 1992 31 Chairman and Trustee, Dunwoody Village, Inc. (retirement services); 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). Patti McGill Peterson 2, Born: 1943 2002 29 Executive Director, Council for International Exchange of Scholars (since 1998); Vice President, Institute of International Education (since 1998); Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until 1997); President Emerita of Wells College and St. Lawrence University; Director, Niagara Mohawk Power Corporation (electric utility). John A. Moore 2, Born: 1939 2002 29 President and Chief Executive Officer, Institute for Evaluating Health Risks, (nonprofit institution) (until 2001); Senior Scientist, Sciences International (health research) (since 1998); Principal, Hollyhouse (consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002). Steven Pruchansky, Born: 1944 1992 31 Chairman and Chief Executive Officer, Mast Holdings, Inc. (since 2000); Director and President, Mast Holdings, 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 31 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 31 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). INTERESTED 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 John M. DeCiccio, Born: 1948 2001 52 Trustee Executive Vice President and Chief Investment Officer, John Hancock Financial Services, Inc.; Director, Executive Vice President and Chief Investment Officer, John Hancock Life Insurance Company; Chairman of the Committee of Finance of John Hancock Life Insurance Company; Director, John Hancock Subsidiaries LLC (Subsidiaries, LLC), Hancock Natural Resource Group, Independence Investment LLC, Declaration Management & Research LLC, John Hancock Advisers, LLC (the "Adviser"), The Berkeley Financial Group, LLC ("The Berkeley Group"), John Hancock Funds, LLC ("John Hancock Funds") and Massachusetts Business Develop- ment Corporation; Director, John Hancock Insurance Agency, Inc. ("Insurance Agency, Inc.") (until 1999). Maureen R. Ford, Born: 1955 2000 52 Trustee, Chairman, President and Chief Executive Officer Executive Vice President, John Hancock Financial Services, Inc., John Hancock Life Insurance Company; Chairman, Director, President and Chief Executive Officer, the Adviser and The Berkeley Group; Chairman, Director, President and Chief Executive Officer, John Hancock Funds; Chairman, Director and Chief Executive Officer, Sovereign Asset Management Corporation ("SAMCorp."); Director, Independence Investment LLC, Subsidiaries LLC and John Hancock Signature Services, Inc.; Senior Vice President, MassMutual Insurance Co. (until 1999). 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 L. Braman, Born: 1953 2000 Executive Vice President and Chief Investment Officer Executive Vice President and Chief Investment Officer, the Adviser and each of the John Hancock funds; Director, SAMCorp.; Executive Vice President and Chief Investment Officer, Baring Asset Management, London U.K. (until 2000). Richard A. Brown, Born: 1949 2000 Senior Vice President and Chief Financial Officer Senior Vice President, Chief Financial Officer and Treasurer, the Adviser, John Hancock Funds, and The Berkeley Group; Second Vice President and Senior Associate Controller, Corporate Tax Department, John Hancock Financial Services, Inc. (until 2001). Thomas H. Connors, Born: 1959 1992 Vice President and Compliance Officer Vice President and Compliance Officer, the Adviser and each of the John Hancock funds; Vice President, John Hancock Funds. 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 Interested Trustees hold positions with the Fund's investment adviser, underwriter and certain other affiliates. FOR YOUR INFORMATION INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York 1 Wall Street New York, New York 10286 TRANSFER AGENT FOR COMMON SHAREHOLDERS Mellon Investor Services 85 Challenger Road Overpeck Centre Ridgefield Park, New Jersey 07660 TRANSFER AGENT FOR AMPS 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 INDEPENDENT AUDITORS Deloitte & Touche LLP 200 Berkeley Street Boston, Massachusetts 02116-5022 STOCK SYMBOL Listed New York Stock Exchange: DIV For shareholder assistance refer to page 21 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 http://www.sec.gov PRESORTED STANDARD U. S. POSTAGE PAID MIS [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 P300A 6/03 8/03 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 at this time. ITEM 6. [RESERVED] 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. [RESERVED] ITEM 9. 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 10. EXHIBITS. (a) Not applicable at this time. (b)(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)(2) 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) Proxy Voting Policies and Procedures 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. By: - ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Date: August 27, 2003 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: - ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Date: August 27, 2003 By: - ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Date: August 27, 2003 EX-99.CERT 3 certification.txt CERTIFICATION CERTIFICATION I, Maureen R. Ford, certify that 1. I have reviewed this report on Form N-CSR of the John Hancock Patriot Select Dividend Trust (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: _____________ _________________________ Maureen R. Ford Chairman, 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 Select Dividend Trust (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: _____________ _________________________ Richard A. Brown Senior Vice President and Chief Financial Officer EX-99.906 CERT 4 patriotselect906.txt CERTIFICATION 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 Select Dividend Trust (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. - ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Dated: August 27, 2003 - ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Dated: August 27, 2003 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-1 5 proxyvotingpolicies.txt ITEM 7 EXHIBIT John Hancock Advisers, LLC Sovereign Asset Management Corporation Proxy Voting Guidelines We believe in placing our clients' interests first. Before we invest in a particular stock or bond, our team of portfolio managers and research analysts look closely at the company by examining its earnings history, its management team and its place in the market. Once we invest, we monitor all our clients' holdings, to ensure that they maintain their potential to produce results for investors. As part of our active investment management strategy, we keep a close eye on each company we invest in. Routinely, companies issue proxies by which they ask investors like us to vote for or against a change, such as a new management team, a new business procedure or an acquisition. We base our decisions on how to vote these proxies with the goal of maximizing the value of our clients' investments. Currently, John Hancock Advisers, LLC ("JHA") and Sovereign Asset Management Corporation ("Sovereign") manage open-end funds, closed-end funds and portfolios for institutions and high-net-worth investors. Occasionally, we utilize the expertise of an outside asset manager by means of a subadvisory agreement. In all cases, JHA or Sovereign makes the final decision as to how to vote our clients' proxies. There is one exception, however, and that pertains to our international accounts. The investment management team for international investments votes the proxies for the accounts they manage. Unless voting is specifically retained by the named fiduciary of the client, JHA and Sovereign will vote proxies for ERISA clients. In order to ensure a consistent, balanced approach across all our investment teams, we have established a proxy oversight group comprised of associates from our investment, operations and legal teams. The group has developed a set of policies and procedures that detail the standards for how JHA and Sovereign vote proxies. The guidelines of JHA have been approved and adopted by each fund client's board of trustees who have voted to delegate proxy voting authority to their investment adviser, JHA. JHA and Sovereign's other clients have granted us the authority to vote proxies in our advisory contracts or comparable documents. JHA and Sovereign have hired a third party proxy voting service which has been instructed to vote all proxies in accordance with our established guidelines except as otherwise instructed. In evaluating proxy issues, our proxy oversight group may consider information from many sources, including the portfolio manager, management of a company presenting a proposal, shareholder groups, and independent proxy research services. Proxies for securities on loan through securities lending programs will generally not be voted, however a decision may be made to recall a security for voting purposes if the issue is material. Below are the guidelines we adhere to when voting proxies. Please keep in mind that these are purely guidelines. Our actual votes will be driven by the particular circumstances of each proxy. From time to time votes may ultimately be cast on a case-by-case basis, taking into consideration relevant facts and circumstances at the time of the vote. Decisions on these matters (case-by-case, abstention, recall) will normally be made by a portfolio manager under the supervision of the chief investment officer and the proxy oversight group. We may abstain from voting a proxy if we conclude that the effect on our clients' economic interests or the value of the portfolio holding is indeterminable or insignificant. Proxy Voting Guidelines Board of Directors We believe good corporate governance evolves from an independent board. We support the election of uncontested director nominees, but will withhold our vote for any nominee attending less than 75% of the board and committee meetings during the previous fiscal year. Contested elections will be considered on a case by case basis by the proxy oversight group, taking into account the nominee's qualifications. We will support management's ability to set the size of the board of directors and to fill vacancies without shareholder approval but will not support a board that has fewer than 3 directors or allows for the removal of a director without cause. We will support declassification of a board and block efforts to adopt a classified board structure. This structure typically divides the board into classes with each class serving a staggered term. In addition, we support proposals for board indemnification and limitation of director liability, as long as they are consistent with corporate law and shareholders' interests. We believe that this is necessary to attract qualified board members. Selection of Auditors We believe an independent audit committee can best determine an auditor's qualifications. We will vote for management proposals to ratify the board's selection of auditors, and for proposals to increase the independence of audit committees. Capitalization We will vote for a proposal to increase or decrease authorized common or preferred stock and the issuance of common stock, but will vote against a proposal to issue or convert preferred or multiple classes of stock if the board has unlimited rights to set the terms and conditions of the shares, or if the shares have voting rights inferior or superior to those of other shareholders. In addition, we will support a management proposal to: create or restore preemptive rights; approve a stock repurchase program; approve a stock split or reverse stock split; and, approve the issuance or exercise of stock warrants Acquisitions, mergers and corporate restructuring Proposals to merge with or acquire another company will be voted on a case-by-case basis, as will proposals for recapitalization, restructuring, leveraged buyout, sale of assets, bankruptcy or liquidation. We will vote against a reincorporation proposal if it would reduce shareholder rights. We will vote against a management proposal to ratify or adopt a poison pill or to establish a supermajority voting provision to approve a merger or other business combination. We would however support a management proposal to opt out of a state takeover statutory provision, to spin-off certain operations or divisions and to establish a fair price provision. Corporate Structure and Shareholder Rights In general, we support proposals that foster good corporate governance procedures and that provide shareholders with voting power equal to their equity interest in the company. To preserve shareholder rights, we will vote against a management proposal to restrict shareholders' right to: call a special meeting and to eliminate a shareholders' right to act by written consent. In addition, we will not support a management proposal to adopt a supermajority vote requirement to change certain by-law or charter provisions or a non-technical amendment to by-laws or a charter that reduces shareholder rights. Equity-based compensation Equity-based compensation is designed to attract, retain and motivate talented executives and independent directors, but should not be so significant as to materially dilute shareholders' interests. We will vote against the adoption or amendment of a stock option plan if the: * plan dilution is more than 10% of outstanding common stock, * plan allows for non-qualified options to be priced at less than 85% of the fair market value on the grant date, * company allows or has allowed the re-pricing or replacement of underwater options in the past fiscal year (or the exchange of underwater options). With respect to the adoption or amendment of employee stock purchase plans or a stock award plan, we will vote against management if: * the plan allows stock to be purchased at less than 85% of fair market value; * this plan dilutes outstanding common equity greater than 10% * all stock purchase plans, including the proposed plan, exceed 15% of outstanding common equity. Other Business For routine business matters which are the subject of many proxy related questions, we will vote with management proposals to: * change the company name; * approve other business; * adjourn meetings; * make technical amendments to the by-laws or charters; * approve financial statements; * approve an employment agreement or contract. Shareholder Proposals Shareholders are permitted per SEC regulations to submit proposals for inclusion in a company's proxy statement. We will generally vote against shareholder proposals and in accordance with the recommendation of management except as follows where we will vote for proposals: * calling for shareholder ratification of auditors; * calling for auditors to attend annual meetings; * seeking to increase board independence; * requiring minimum stock ownership by directors; * seeking to create a nominating committee or to increase the independence of the nominating committee; * seeking to increase the independence of the audit committee. Corporate and social policy issues We believe that "ordinary business matters" are primarily the responsibility of management and should be approved solely by the corporation's board of directors. Proposals in this category, initiated primarily by shareholders, typically request that the company disclose or amend certain business practices. We generally vote against business practice proposals and abstain on social policy issues, though we may make exceptions in certain instances where we believe a proposal has substantial economic implications. John Hancock Advisers, LLC Sovereign Asset Management Corporation Proxy Voting Procedures The role of the proxy voting service John Hancock Advisers, LLC ("JHA") and Sovereign Asset Management Corporation ("Sovereign") have hired a proxy voting service to assist with the voting of client proxies. The proxy service coordinates with client custodians to ensure that proxies are received for securities held in client accounts and acted on in a timely manner. The proxy service votes all proxies received in accordance with the proxy voting guidelines established and adopted by JHA and Sovereign. When it is unclear how to apply a particular proxy voting guideline or when a particular proposal is not covered by the guidelines, the proxy voting service will contact the proxy oversight group coordinator for a resolution. The role of the proxy oversight group and coordinator The coordinator will interact directly with the proxy voting service to resolve any issues the proxy voting service brings to the attention of JHA or Sovereign. When a question arises regarding how a proxy should be voted the coordinator contacts the firm's investment professionals and the proxy oversight group for a resolution. In addition the coordinator ensures that the proxy voting service receives responses in a timely manner. Also, the coordinator is responsible for identifying whether, when a voting issue arises, there is a potential conflict of interest situation and then escalating the issue to the firm's Executive Committee. For securities out on loan as part of a securities lending program, if a decision is made to vote a proxy, the coordinator will manage the return/recall of the securities so the proxy can be voted. The role of mutual fund trustees The boards of trustees of our mutual fund clients have reviewed and adopted the proxy voting guidelines of the funds' investment adviser, JHA. The trustees will periodically review the proxy voting guidelines and suggest changes they deem advisable. Conflicts of interest Conflicts of interest are resolved in the best interest of clients. With respect to potential conflicts of interest, proxies will be voted in accordance with JHA's or Sovereign's predetermined policies. If application of the predetermined policy is unclear or does not address a particular proposal, a special internal review by the JHA Executive Committee or Sovereign Executive Committee will determine the vote. After voting, a report will be made to the client (in the case of an investment company, to the fund's board of trustees), if requested. An example of a conflict of interest created with respect to a proxy solicitation is when JHA or Sovereign must vote the proxies of companies that they provide investment advice to or are currently seeking to provide investment advice to, such as to pension plans. S:\Corporate Secretary\PROXY\2003 Proxy Voting Policy Summary.doc -----END PRIVACY-ENHANCED MESSAGE-----