August 25, 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 Select Dividend Trust (the "Registrant")
File No. 811-06107
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 June 30, 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 SHAREHOLDERS.
JOHN HANCOCK
Patriot Select
Dividend Trust
6.30.2004
Annual Report
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of James A. Shepherdson, Chairman, President and Chief Executive
Officer of John Hancock Funds, LLC 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 22
For your information
page 25
To Our Shareholders,
I am pleased to be writing to you as Chairman, President and Chief
Executive Officer of John Hancock Funds, LLC.
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. 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 of John Hancock Funds, LLC in order to
pursue personal interests, and I was named her replacement. 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.
Additionally, on May 12, 2004, your fund's Board of Trustees appointed
me to the roles of Trustee, President and Chief Executive Officer of
your fund. On June 15, 2004, the board also appointed Charles L. Ladner
as independent Chairman of the Board of Trustees, a position previously
held by Ms. Goldfarb. This appointment came just in advance of new SEC
regulations requiring all mutual funds to have independent chairmen.
As to our backgrounds, I have been in the investment business for over
25 years, most recently as President of Retirement Services at John
Hancock Financial Services. My responsibilities included developing and
directing the sale of John Hancock's variable and fixed annuity products
through a diverse distribution network of banks and broker-dealers --
including wirehouses, regional brokerage houses and financial planners.
Mr. Ladner has served as an independent member of John Hancock Funds'
Board of Trustees since 1992 and formerly held the position of Senior
Vice President and Chief Financial Officer of UGI Corporation, a public
utility holding company in Valley Forge, PA, until his retirement in
1998. He brings a wealth of knowledge, experience and leadership and we
are delighted to have him serve as Chairman.
Although there has been change in executive-level management, the one
thing that never wavers 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 advisor to help you reach
your long-term financial goals.
Sincerely,
/S/ JAMES A. SHEPHERDSON
James A. Shepherdson,
Chief Executive Officer
This commentary reflects the CEO's views as of June 30, 2004. They are
subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks to
provide high cur-
rent income,
consistent with
modest growth of
capital, by invest-
ing at least 80%
of its assets in
a diversified
portfolio of divi-
dend-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 were volatile in response to shifting views about the
direction of the economy, inflation and interest rates.
* The Fund's performance lagged its peer group due to a larger stake in
fixed-income preferred stocks amid strong utility common stock
performance.
* High-quality, tax-advantaged securities helped the Fund's performance.
[Bar chart with heading "John Hancock Patriot Select Dividend Trust" Under
the heading is a note that reads "Fund performance for the six months ended
June 30, 2004." The chart is scaled in increments of 2% with 0% at the
bottom and 6% at the top. The bar represents the 5.17% total return for the
Fund. A note below the chart reads "The total return for the Fund is at net
asset value with all distributions reinvested."]
Top 10 issuers
4.8% Energy East Corp.
4.3% Baltimore Gas & Electric Co.
4.3% NSTAR
3.9% El Paso Tennessee Pipeline Co.
3.5% Citigroup, Inc.
3.3% Sierra Pacific Power Co.
3.2% CH Energy Group, Inc.
3.2% Bear Stearns Companies, Inc.
3.1% Lehman Brothers Holdings, Inc.
3.1% DTE Energy Co.
As a percentage of net assets plus the value of preferred shares on
June 30, 2004.
1
BY GREGORY K. PHELPS AND MARK T. MALONEY FOR THE PORTFOLIO MANAGEMENT TEAM
MANAGERS'
REPORT
JOHN HANCOCK
Patriot Select Dividend Trust
Preferred stocks -- which are the primary emphasis of John Hancock
Patriot Select Dividend Trust -- were on a proverbial roller-coaster
ride during the 12 months ended June 30, 2004, fluctuating in response
to changing expectations about the economy, inflation and interest
rates. Preferred stocks began the period on somewhat of a weak footing
when the U.S. Treasury market suffered a steep decline due to growing
concerns that the Federal Reserve Board would be forced to hike interest
rates sooner rather than later in order to cool faster-than-expected
economic growth. Because preferreds make fixed payments in the form of
dividends, their prices, like bonds', tend to move in the opposite
direction of interest rates.
Preferreds and bonds regained their footing later in the summer of 2003
when the economy and inflation concerns briefly cooled and the Fed
reassured investors that it wasn't in any hurry to raise rates. Strong
economic data caused preferreds to lapse into negative territory again
in the fall, but weaker-than-expected employment data and comments from
the Fed indicating that interest rate hikes were still distant triggered
a winter rally. In the spring, the preferred market sold off once more
when a string of stronger-than-expected economic reports and Fed
Chairman Alan Greenspan's Congressional testimony convinced investors
that the Fed would raise interest rates sooner than expected. But June
2004 found preferreds stabilizing even as investors anticipated the
quarter-point rate hike that came on the last day of the period, because
they were reassured by comments from the Fed suggesting it would take a
"measured" approach to subsequent rate hikes.
"Preferred stocks...were
on a proverbial roller-
coaster ride during the
12 months ended
June 30, 2004..."
2
[Photos of Greg Phelps and Mark Maloney flush right at top of page.]
Utility common stocks enjoyed much more favorable conditions and
produced far better returns than preferreds for the year, defying
historical trends by doing well when interest rates were on the rise.
Some of their success owed to the 2003 reduction in taxes that
individuals pay on most stock dividends. Utilities traditionally have
offered consistently high dividends over the years, and those with
dividends subject to tax relief benefited the most during the period.
Another factor aiding the group was its overall improved financial
condition, the result of utilities' efforts to reduce debt, improve
their balance sheets and shed money-losing unregulated subsidiaries.
PERFORMANCE
For the 12 months ended June 30, 2004, John Hancock Patriot Select
Dividend Trust returned 5.17% at net asset value. By comparison, the
average income and preferred stock closed-end fund returned 7.07%,
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 15.06%, and the broader stock market,
as measured by the Standard & Poor's 500 Index, returned 19.10%.
The Fund's relative underperformance stems from its emphasis on
fixed-income preferred stocks in a period when utility common stocks
performed better. That said, the Fund did have its share of winners
among utility common stocks, including our holdings in Dominion
Resources. The company, a fully integrated gas and electric holding
company, benefited from strong results from its regulated electric
operation as well as improving trends in its gas operations due to
rising energy prices. Higher oil and natural gas prices also helped
boost our holdings in People's Energy Corporation, a holding company
whose income is derived principally from its regulated utility
subsidiaries, which are primarily engaged in the sale and transportation
of natural gas to residential, commercial and industrial customers in
Chicago and the northeast section of Illinois. A disappointment among
our utility common stock
"In an otherwise lackluster
year for preferred stocks,
those that offered a combi
nation of high quality and
tax advantages ... generally
outperformed..."
3
holdings was Kansas City-based Aquila, a multinational 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 the company's challenges in fighting its way back, we
continued to hold on to our stake in Aquila because we believe management
is making positive steps toward reducing debt, strengthening its balance
sheet and putting energy-trading-related problems behind it.
[Table at top left-hand side of page entitled "Top five industry groups 1."
The first listing is Utilities 67%, the second is Oil & gas 8%, the third
is Broker services 7%, the fourth is Finance 6% and the fifth is Banks -
United States 5%.]
TAX-ADVANTAGED PREFERREDS OUTPERFORM
In an otherwise lackluster year for preferred stocks, those that offered
a combination of high quality and tax advantages under the recent
reduction in the federal tax on dividends generally outperformed their
fully taxable counterparts. A good example was our stake in Citigroup, a
global financial services company providing consumers, corporations,
governments and institutions with a broad range of financial products
and services, including consumer banking and credit, corporate and
investment banking, insurance, securities brokerage and asset
management. SLM, more commonly known as Sallie Mae, whose primary
business is to originate, acquire and hold student loans, was another
high-quality tax-advantaged holding that did well.
[Pie chart at middle of page with heading "Portfolio diversification As a
percentage of net assets on 6-30-04." The chart is divided into three
sections (from top to left): Preferred stocks 62%, Common stocks 34% and
Short-term investments 4%.]
OUTLOOK
In our view, it's quite clear that the Fed is leaning toward future rate
increases given the recent spate of surprisingly strong employment and
other economic data. In anticipation of rates moving higher, the bond
and preferred stock markets seem to
4
have already factored in as much as three-quarters of a percentage point
interest rate rise. Beyond what the market currently anticipates, only
time will tell what the direction of interest rates and the performance of
preferred stocks will be. On the one hand, if the economy continues to
strengthen and there's more upward pressure on interest rates, preferreds
could continue to struggle. On the other hand, there are some
crosscurrents that could forestall any additional interest rate hikes
beyond those the market currently anticipates. Chief among those
offsetting factors are higher interest rates themselves, which, coupled
with high energy prices, may slow consumer spending. In addition, the
positive effects of last year's income tax cuts and home loan refinancing
are behind us, which may limit consumption going forward. As for utility
common stocks, we remain optimistic about their prospects. The utility
companies' improving financial health should continue to catch the eye of
investors looking for high dividend-paying stocks.
[Table at top of page entitled "SCORECARD." The header for the left column
is "INVESTMENT" and the header for the right column is "PERIOD'S
PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is
Citigroup followed by an up arrow with the phrase "Solid performer due to
high quality and tax advantages." The second listing is Dominion Resources
followed by an up arrow with the phrase "Rising energy prices help boost
financial performance." The third listing is Aquila followed by a down
arrow with the phrase "Lingering problems with energy trading cause
concern."]
"In our view, it's quite
clear that the Fed is
leaning toward future
rate increases..."
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 more broadly 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, 2004.
5
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
June 30, 2004
This schedule is divided into three main categories: preferred stocks,
common stocks and short-term investments. Preferred and common stocks
are further broken down by industry group. Short-term investments, which
represent the Fund's cash position, are listed last.
CREDIT
ISSUER RATING* SHARES VALUE
PREFERRED STOCKS 94.50% $126,082,698
(Cost $131,845,849)
Agricultural Operations 2.10% 2,800,000
Ocean Spray Cranberries, Inc., 6.25%, Ser A (R) BB+ 40,000 2,800,000
Banks -- United States 7.75% 10,342,800
Bank of America Corp., 6.75%, Depositary Shares, Ser VI A- 99,000 5,266,800
HSBC USA, Inc., $2.8575 A1 108,000 5,076,000
Broker Services 11.09% 14,793,341
Bear Stearns Companies, Inc., 5.49%, Ser G A3 116,400 5,278,740
Bear Stearns Companies, Inc., 6.15%, Ser E BBB 23,000 1,153,450
Lehman Brothers Holdings, Inc., 5.67%,
Depositary Shares, Ser D BBB+ 125,600 5,714,800
Lehman Brothers Holdings, Inc., 5.94%, Ser C BBB+ 13,000 614,250
Merrill Lynch & Co., Inc., 9.00%, Depositary Shares, Ser A A- 77,650 2,032,101
Finance 8.90% 11,880,804
Citigroup, Inc., 6.213%, Ser G Aa3 44,000 2,255,440
Citigroup, Inc., 6.231%, Depositary Shares, Ser H Aa3 92,400 4,750,284
SLM Corp., 6.97%, Ser A BBB+ 92,000 4,875,080
Leasing Companies 0.29% 389,620
AMERCO, 8.50%, Ser A CCC+ 15,400 389,620
Media 1.33% 1,769,050
Shaw Communications, Inc., 8.45%, Ser A (Canada) B+ 45,500 1,142,050
Shaw Communications, Inc., 8.50% (Canada) B+ 25,000 627,000
Oil & Gas 11.60% 15,472,935
Anadarko Petroleum Corp., 5.46%, Depositary Shares Baa3 47,700 4,498,110
Apache Corp., 5.68%, Depositary Shares, Ser B Baa2 48,174 4,809,875
Devon Energy Corp., 6.49%, Ser A BB+ 53,500 5,398,150
Nexen, Inc., 7.35% (Canada) BBB- 30,000 766,800
Telecommunications 0.19% 252,500
Touch America Holdings, Inc., $6.875 BBB- 50,500 252,500
See notes to
financial statements.
6
FINANCIAL STATEMENTS
CREDIT
ISSUER RATING* SHARES VALUE
Utilities 51.25% $68,381,648
Alabama Power Co., 5.20% BBB+ 225,000 5,278,500
Baltimore Gas & Electric Co., 6.99%, Ser 1995 Baa1 40,000 4,234,000
BGE Capital Trust II, 6.20% BBB- 190,000 4,544,800
Boston Edison Co., 4.25% BBB+ 57,588 4,203,924
Coastal Finance I, 8.375% CCC- 78,300 1,734,345
Duquesne Light Co., 6.50% BB+ 32,000 1,592,000
El Paso Tennessee Pipeline Co., 8.25%, Ser A CCC- 183,500 7,913,437
Energy East Capital Trust I, 8.25% BBB- 147,000 3,836,700
Entergy Gulf States Capital 1, 8.75%, Ser A BB 87,100 2,199,275
Idaho Power Co., 7.68%, Ser 1st BBB 7,000 729,532
Monongahela Power Co., 7.73%, Ser L CCC+ 50,000 4,562,500
Northern Indiana Public Service Co., 4.22% BB+ 11,251 791,438
Potomac Electric Power Co., $2.28 Ser 1965 Baa3 16,400 683,675
PSEG Funding Trust II, 8.75% BB+ 30,000 811,200
PSI Energy, Inc., 6.875% BBB- 48,000 4,896,000
Public Service Electric & Gas Co., 6.92% BB+ 30,627 3,182,338
Sierra Pacific Power Co., 7.80%, Ser 1 (Class A) CCC+ 205,600 4,523,200
South Carolina Electric & Gas Co., 6.52% Baa1 55,000 5,704,534
Southern Union Co., 7.55% Ba2 155,000 4,092,000
Virginia Electric & Power Co., $6.98 BBB 10,500 1,092,656
Virginia Electric & Power Co., $7.05 BBB 10,000 1,041,250
Wisconsin Public Service Corp., 6.76% A 7,000 734,344
ISSUER SHARES VALUE
COMMON STOCKS 51.12% $68,203,330
(Cost $72,582,284)
Telecommunications 0.00% 600
Touch America Holdings, Inc.** 100,000 600
Utilities 51.12% 68,202,730
Alliant Energy Corp. 158,000 4,120,640
Ameren Corp. 75,400 3,239,184
Aquila, Inc. 190,000 676,400
CH Energy Group, Inc. 141,550 6,573,582
Cinergy Corp. 16,000 608,000
Consolidated Edison, Inc. 45,000 1,789,200
Dominion Resources, Inc. 46,000 2,901,680
DTE Energy Co. 155,900 6,320,186
Duke Energy Corp. 70,000 1,420,300
Energy East Corp. 242,000 5,868,500
KeySpan Corp. 161,850 5,939,895
National Fuel Gas Co. 52,150 1,303,750
NiSource, Inc. 97,850 2,017,667
NSTAR 94,000 4,500,720
OGE Energy Corp. 96,092 2,447,463
See notes to
financial statements.
7
FINANCIAL STATEMENTS
ISSUER SHARES VALUE
Utilities (continued)
Peoples Energy Corp. 41,800 1,761,870
Progress Energy, Inc. 64,000 2,819,200
Progress Energy, Inc.**(l) (Contingent Value Obligation) 20,000 5,800
Puget Energy, Inc. 170,500 3,735,655
Sierra Pacific Resources** 271,500 2,093,265
TECO Energy, Inc. 176,750 2,119,233
Vectren Corp. 30,000 752,700
WPS Resources Corp. 51,000 2,363,850
Xcel Energy, Inc. 169,000 2,823,990
INTEREST PAR VALUE
ISSUER, MATURITY DATE RATE (000s OMITTED)
SHORT-TERM INVESTMENTS 6.53% $8,719,000
(Cost $8,719,000)
Commercial Paper 6.53%
ChevronTexaco Corp., Due 07-01-04 1.15% $8,719 8,719,000
TOTAL INVESTMENTS 152.15% $203,005,028
OTHER ASSETS AND LIABILITIES, NET 52.15% ($69,579,114)
TOTAL NET ASSETS 100.00% $133,425,914
* Credit ratings are unaudited and are rated by Standard & Poor's
where available, or Moody's Investors Service.
** Non-income-producing security.
(l) This security is fair valued in good faith under procedures
established by the Board of Trustees.
(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 $2,800,000 or 2.10% of
the Fund's net assets as of June 30, 2004.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
The percentage shown for each investment category is the total value
of that category as a percentage of the net assets of the Fund.
See notes to
financial statements.
8
FINANCIAL STATEMENTS
ASSETS AND
LIABILITIES
June 30, 2004
This Statement
of Assets and
Liabilities is the
Fund's balance
sheet. It shows
the value of
what the Fund
owns, is due
and owes.
You'll also find
the net asset
value for each
common share.
ASSETS
Investments at value (cost $213,147,133) $203,005,028
Cash 297
Dividends receivable 738,257
Other assets 43,014
Total assets 203,786,596
LIABILITIES
Payable to affiliates
Management fees 152,488
Other 26,133
Other payable and accrued expenses 110,556
Total liabilities 289,177
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 70,071,505
NET ASSETS
Common shares capital paid-in 142,823,677
Accumulated net realized gain on investments 222,855
Net unrealized depreciation of investments (10,142,105)
Accumulated net investment income 521,487
Net assets applicable to common shares $133,425,914
NET ASSET VALUE PER COMMON SHARE
Based on 9,985,999 shares of beneficial interest
outstanding -- unlimited number of shares authorized
with no par value $13.36
See notes to
financial statements.
9
FINANCIAL STATEMENTS
OPERATIONS
For the year ended
June 30, 2004
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 $11,977,798
Interest 48,147
Total investment income 12,025,945
EXPENSES
Investment management fees 1,650,629
Administration fees 309,493
AMPS auction fees 185,417
Professional fees 51,530
Registration and filing fees 47,325
Printing 43,807
Transfer agent fees 41,919
Custodian fees 41,542
Federal excise tax 40,376
Trustees' fees 12,937
Interest 235
Total expenses 2,425,210
Net investment income 9,600,735
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments 636,979
Change in net unrealized appreciation (depreciation)
of investments (2,432,023)
Net realized and unrealized loss (1,795,044)
Distributions to AMPS (751,663)
Increase in net assets from operations $7,054,028
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 sale of
common shares.
YEAR YEAR
ENDED ENDED
6-30-03 6-30-04
INCREASE IN NET ASSETS
From operations
Net investment income $10,728,574 $9,600,735
Net realized gain (loss) (153,364) 636,979
Change in net unrealized
appreciation (depreciation) 856,632 (2,432,023)
Distributions to AMPS (1,013,193) (751,663)
Increase in net assets
resulting from operations 10,418,649 7,054,028
Distributions to common shareholders
From net investment income (10,716,598) (10,769,063)
From Fund share transactions 594,672 557,883
NET ASSETS
Beginning of period 136,286,343 136,583,066
End of period 1 $136,583,066 $133,425,914
1 Includes accumulated net investment income of $2,400,765 and
$521,487, respectively.
See notes to
financial statements.
11
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 6-30-00 6-30-01 6-30-02 6-30-03 6-30-04
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $16.00 $13.97 $15.43 $13.77 $13.73
Net investment income 1 1.27 1.34 1.18 1.08 0.96
Net realized and unrealized
gain (loss) on investments (1.91) 1.52 (1.61) 0.06 (0.17)
Distributions to AMPS (0.31) (0.32) (0.15) (0.10) (0.08)
Total from investment operations (0.95) 2.54 (0.58) 1.04 0.71
Less distributions to
common shareholders
From net investment income (1.08) (1.08) (1.08) (1.08) (1.08)
Net asset value, end of period $13.97 $15.43 $13.77 $13.73 $13.36
Per share market value, end of period $12.38 $14.80 $13.69 $14.72 $13.65
Total return at market value 2 (%) (2.46) 29.40 (0.45) 16.82 0.23
RATIOS AND SUPPLEMENTAL DATA
Net assets applicable to common shares,
end of period (in millions) $138 $153 $136 $137 $133
Ratio of expenses to average net assets 3 (%) 1.74 1.77 1.77 1.90 1.78
Ratio of net investment income
to average net assets 4 (%) 8.57 8.22 7.99 8.62 7.04
Portfolio turnover (%) 20 13 15 2 18
SENIOR SECURITIES
Total AMPS outstanding (in millions) $70 $70 $70 $70 $70
Involuntary liquidation preference
per unit (in thousands) $100 $100 $100 $100 $100
Average market value per unit
(in thousands) $100 $100 $100 $100 $100
Asset coverage per unit 5 $299,106 $316,086 $290,311 $294,629 $288,521
1 Based on the average of the shares outstanding.
2 Assumes dividend reinvestment.
3 Ratios calculated on the basis of expenses relative to the average net
assets of common shares. Without the exclusion of preferred shares, the
ratio of expenses would have been 1.18%, 1.21%, 1.20%, 1.22% and 1.18%,
respectively.
4 Ratios calculated on the basis of net investment income relative to
the average net assets of common shares. Without the exclusion of
preferred shares, the ratio of net investment income would have been
5.79%, 5.61%, 5.40%, 5.52% and 4.65%, 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.
12
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.
Expenses
The majority of the 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.
The Fund paid $40,376 of federal excise tax due to calendar year
distribution requirements.
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 shareholders from net investment
income and net realized gains on the ex-dividend date. During the year
ended June 30, 2004, the tax character of distributions paid was as
follows: ordinary income -- $11,520,726. During the year ended June 30,
2003, and the tax character of distributions paid was as follows:
ordinary income -- $11,729,791.
As of June 30, 2004, the components of distributable earnings on a tax
basis included $848,322 of undistributed ordinary income.
13
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 John Hancock
Financial Services, Inc. Under the investment management contract, the
Fund pays a monthly management fee to the Adviser at an annual rate of
0.80% of the Fund's average weekly net assets plus the value
attributable to the preferred shares (collectively, "managed assets").
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 managed assets, which amounted to $309,493 during the
year ended June 30, 2004. The Fund also paid the Adviser the amount of
$429 for certain publishing services, included in the printing fees.
Mr. James A. Shepherdson is the 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 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 years, along with the corresponding dollar value.
YEAR ENDED 6-30-03 YEAR ENDED 6-30-04
SHARES AMOUNT SHARES AMOUNT
Beginning of period 9,899,636 $141,805,115 9,945,720 $142,306,741
Distributions reinvested 46,084 594,672 40,279 557,883
Reclassification of capital accounts -- (93,046) -- (40,947)
End of period 9,945,720 $142,306,741 9,985,999 $142,823,677
14
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 dis count 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 1.27% during the year ended June 30, 2004. 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 shareholders.
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, 2004, aggregated $35,336,153 and $45,456,960, respectively.
The cost of investments owned on June 30, 2004, including short-term
investments, for federal income tax purposes was $213,150,320. Gross
unrealized appreciation and depreciation of investments aggregated
$11,654,620 and $21,799,912, respectively, resulting in net unrealized
depreciation of $10,145,292. The difference between book basis and tax
basis net unrealized depreciation of investments is attributable
primarily to the tax deferral of losses on certain sales of securities.
NOTE E
Reclassification of
accounts
During the year ended June 30, 2004, the Fund reclassified amounts to
reflect an increase in accumulated net realized gain on investments of
$234, an increase in accumulated net investment income of $40,713 and a
decrease in capital paid-in of $40,947. This represents the amount
necessary to report these balances on a tax basis, excluding certain
temporary differences, as of June 30, 2004. Additional adjustments may
be needed in subsequent reporting periods. These reclassifications,
which have no impact on the net asset value of the Fund, are primarily
attributable to certain differences in the computation of distributable
income and capital gains under federal tax rules versus accounting
principles generally accepted in the United States of America, and book
and tax differences in accounting for deferred compensation and federal
excise tax. The calculation of net investment income (loss) per share in
the Fund's Financial Highlights excludes these adjustments.
15
AUDITORS'
REPORT
Report of
Deloitte & Touche
LLP, Independent
Registered Public
Accounting Firm
To The Board of Trustees and Shareholders of John
Hancock Patriot Select Dividend Trust,
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of John Hancock Patriot Select
Dividend Trust (the "Fund") as of June 30, 2004, and the related
statement of operations for the year then ended, the statement of
changes in net assets for the years ended June 30, 2004 and 2003 and the
financial highlights for each of the years in the five year period ended
June 30, 2004. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at June 30, 2004 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 Fund as of June 30, 2004, the results of its
operations for the year then ended, the changes in its net assets for
the years ended June 30, 2004 and 2003, and its financial highlights for
each of the years in the five year period ended June 30, 2004, in
conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 5, 2004
16
TAX
INFORMATION
Unaudited
For federal income tax purposes, the following information is furnished
with respect to the distributions of the Fund, if any, paid during its
taxable year ended June 30, 2004.
With respect to the ordinary dividends paid by the Fund for the fiscal
year ended June 30, 2004, 100% of the dividends qualifies for the
corporate dividends-received deduction.
The Fund hereby designates the maximum amount allowable of its net
taxable income as qualified dividend income as provided in the Jobs and
Growth Tax Relief Reconciliation Tax Act of 2003. This amount will be
reflected on Form 1099-DIV for the calendar year 2004.
Shareholders will be mailed a 2004 U.S. Treasury Department Form
1099-DIV in January 2005. This will reflect the total of all
distributions that are taxable for calendar year 2004.
17
INVESTMENT
OBJECTIVE
AND POLICY
The Fund's investment objective is to provide 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, 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 and 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.
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 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.
Effective December 16, 2003, the Trustees approved additional changes to
the Fund's by-laws. The auction preferred shares section of the Fund's
by-laws was changed to update the rating agency requirements in keeping
with recent changes to the agencies' basic maintenance reporting
requirements for leveraged closed-end funds. By-laws now require an
independent accountants' confirmation only once per year, at the Fund's
fiscal year end, and changes to the agencies' basic maintenance
reporting requirements that include modifications to the eligible assets
and their respective 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 opportunity to earn compounded yields. Each holder of
common shares
18
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 10 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.
19
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.
20
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 9,470,684 shares of beneficial interest were voted at
the meeting. The common shareholders elected the following Trustees to
serve until their respective successors are duly elected and qualified
(there were no current nominees for election by the preferred
shareholders), with the votes tabulated as follows:
WITHHELD
FOR AUTHORITY
---------------------------------------------------------
Patti McGill Peterson 9,291,884 178,439
Steven Pruchansky 9,309,572 160,751
Norman H. Smith 9,297,372 172,951
The common and preferred shareholders also ratified the Trustees'
selection of Deloitte & Touche LLP as the Fund's independent auditors
for the fiscal year ending June 30, 2004, with the votes tabulated as
follows: 9,303,679 FOR, 84,877 AGAINST and 82,128 ABSTAINING.
21
TRUSTEES
& OFFICERS
This chart provides information about the Trustees and Officers who
oversee your John Hancock fund. Officers elected by the Trustees manage
the day-to-day operations of the Fund and execute policies formulated by
the Trustees.
INDEPENDENT TRUSTEES
NAME, AGE NUMBER OF
POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
Charles L. Ladner, 2 Born: 1938 1992 49
Independent Chairman (since 2004); Chairman and Trustee, Dunwoody
Village, Inc. (retirement services) (until 2003); Senior Vice President and
Chief Financial Officer, UGI Corporation (Public Utility Holding Company)
(retired 1998); Vice President and Director for AmeriGas, Inc. (retired
1998); Director of AmeriGas Partners, L.P. (until 1997) (gas distribution);
Director, EnergyNorth, Inc. (until 1995); Director, Parks and History
Association (since 2001).
James F. Carlin, Born: 1940 1990 29
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 29
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).
22
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
Ronald R. Dion, Born: 1946 1998 29
Chairman and Chief Executive Officer, R.M. Bradley & Co., Inc.; Director,
The New England Council and Massachusetts Roundtable; Trustee, North
Shore Medical Center; Director, Boston Stock Exchange; Director, BJ's
Wholesale Club, Inc. and a corporator of the Eastern Bank; Trustee,
Emmanuel College.
John A. Moore, 2 Born: 1939 2002 30
President and Chief Executive Officer, Institute for Evaluating Health
Risks (nonprofit institution) (until 2001); Chief Scientist, Sciences
International (health research) (until 2003); Principal, Hollyhouse
(consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002).
Patti McGill Peterson, 2 Born: 1943 2002 30
Executive Director, Council for International Exchange of Scholars (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); Director,
Ford Foundation, International Fellowships Program (since 2002); Director,
Lois Roth Endowment (since 2002); Director, Council for International
Educational Exchange (since 2003); and Advisory Board, UNCF, Global
Partnerships Center (since 2002).
Steven Pruchansky, Born: 1944 1992 29
Chairman and Chief Executive Officer, Greenscapes of Southwest
Florida, Inc. (since 2000); Director and President, Greenscapes of
Southwest Florida, Inc. (until 2000); Managing Director, JonJames, LLC
(real estate) (since 2001); Director, First Signature Bank & Trust Company
(until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell
Building Corp. (until 1991).
Norman H. Smith, Born: 1933 1992 29
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 29
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).
23
NON-INDEPENDENT TRUSTEES 3
NAME, AGE NUMBER OF
POSITION(S) HELD WITH FUND TRUSTEE JOHN HANCOCK
PRINCIPAL OCCUPATION(S) AND OTHER OF FUND FUNDS OVERSEEN
DIRECTORSHIPS DURING PAST 5 YEARS SINCE 1 BY TRUSTEE
James A. Shepherdson, Born: 1952 2004 49
President and Chief Executive Officer
Executive Vice President, Manulife Financial Corporation; Chairman,
Director, President and Chief Executive Officer, John Hancock Advisers,
LLC and The Berkeley Group; Chairman, Director, President and Chief
Executive Officer, John Hancock Funds, LLC; Chairman, President,
Director and Chief Executive Officer, Sovereign Asset Management
Corporation ("SAMCorp"); President, John Hancock Retirement
Services, John Hancock Life Insurance Company (until 2004); Chairman,
Essex Corporation (until 2004); Co-Chief Executive Officer, MetLife
Investors Group (until 2003); Senior Vice President, AXA/Equitable
Insurance Company (until 2000).
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
NAME, AGE
POSITION(S) HELD WITH FUND OFFICER
PRINCIPAL OCCUPATION(S) AND OF FUND
DIRECTORSHIPS DURING PAST 5 YEARS SINCE
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).
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.
24
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
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116-5022
STOCK SYMBOL
Listed New York Stock Exchange:
DIV
For shareholder assistance
refer to page 20
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 proxy 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
25
[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
---------------
P300A 6/04
8/04
ITEM 2. CODE OF ETHICS.
As of the end of the period, June 30, 2004, the registrant has adopted a
code of ethics, as defined in Item 2 of Form N-CSR, that applies to its
Chief Executive Officer, Chief Financial Officer and Treasurer
(respectively, the principal executive officer, the principal financial
officer and the principal accounting officer, the "Senior Financial
Officers"). A copy of the code of ethics is filed as an exhibit to this
Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Charles L. Ladner is the audit committee financial expert and is
"independent", pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the
principal accountant(s) for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant(s) in
connection with statutory and regulatory filings or engagements amounted to
$29,750 for the fiscal year ended June 30, 2003 and $31,250 for the fiscal
year ended June 30, 2004. These fees were billed to the registrant and were
approved by the registrant's audit committee.
(b) Audit-Related Services
There were no audit-related fees during the fiscal year ended June 30, 2003
and fiscal year ended June 30, 2004 billed to the registrant or to the
registrant's investment adviser (not including any sub-adviser whose role
is primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant ("control affiliates").
(c) Tax Fees
The aggregate fees billed for professional services rendered by the
principal accountant(s) for the tax compliance, tax advice and tax planning
("tax fees") amounted to $2,100 for the fiscal year ended June 30, 2003 and
$2,250 for the fiscal year ended June 30, 2004. The nature of the services
comprising the tax fees was the review of the registrant's income tax
returns and tax distribution requirements. These fees were billed to the
registrant and were approved by the registrant's audit committee. There
were no tax fees billed to the control affiliates.
(d) All Other Fees
The all other fees billed to the registrant for products and services
provided by the principal accountant were $21,700 for the fiscal year ended
June 30, 2003 and $4,000 for the fiscal year ended June 30, 2004. There
were no other fees during the fiscal year ended June 30, 2003 and June 30,
2004 billed to control affiliates for products and services provided by the
principal accountant. The nature of the services comprising the all other
fees was related to the principal accountant's report on the registrant's
Eligible Asset Coverage. These fees were approved by the registrant's audit
committee.
(e) (1) See attachment "Approval of Audit, Audit-related, Tax and Other
Services", with the audit committee pre-approval policies and procedures.
(e)(2) There were no fees that were approved by the audit committee
pursuant to the de minimis exception for the fiscal years ended June 30,
2003 and June 30, 2004 on behalf of the registrant or on behalf of the
control affiliates that relate directly to the operations and financial
reporting of the registrant.
(f) According to the registrant's principal accountant, for the fiscal year
ended June 30, 2004, the percentage of hours spent on the audit of the
registrant's financial statements for the most recent fiscal year that were
attributed to work performed by persons who were not full-time, permanent
employees of principal accountant was less than 50%.
(g) The aggregate non-audit fees billed by the registrant's accountant(s)
for services rendered to the registrant and rendered to the registrant's
control affiliates for each of the last two fiscal years of the registrant
were $79,213 for the fiscal year ended June 30, 2003, and $16,638 for the
fiscal year ended June 30, 2004.
(h) The audit committee of the registrant has considered the non-audit
services provided by the registrant's principal accountant(s) to the
control affiliates and has determined that the services that were not
pre-approved are compatible with maintaining the principal accountant(s)'
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee
comprised of independent trustees. The members of the audit committee are
as follows:
Charles L. Ladner
Dr. John A. Moore
Patti McGill Peterson
John P. Toolan
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
See attached Exhibit "Proxy Voting Policies and Procedures".
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) 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) Code of Ethics for Senior Financial Officers is attached.
(a)(2) 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) Proxy Voting Policies and Procedures are attached.
(c)(2) Submission of Matters to a Vote of Security Holders is attached. See
attached "John Hancock Funds - Administration Committee Charter".
(c)(3) Approval of Audit, Audit-related, Tax and Other Services is
attached.
(c)(4) 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 Select Dividend Trust
By:
------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: August 25, 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: August 25, 2004
By:
-----------------------
Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: August 25, 2004