<PAGE> 1
JOHN HANCOCK FUNDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PATRIOT
SELECT
DIVIDEND
TRUST
ANNUAL REPORT
June 30, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Thomas W. L. Cameron
James F. Carlin*
William H. Cunningham
Charles F. Fretz*
Harold R. Hiser, Jr.*
Charles L. Ladner*
Leo E. Linbeck, Jr.
Patricia P. McCarter*
Steven R. Pruchansky*
Lt. Gen. Norman J. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Andrew F. St. Pierre
President
Anne C. Hodsdon
Executive Vice President
Michael P. DiCarlo
Senior Vice President
Thomas H. Drohan
Senior Vice President and Secretary
James K. Ho
Senior Vice President
James B. Little
Senior Vice President and
Chief Financial Officer
John A. Morin
Vice President and Compliance Officer
Susan S. Newton
Vice President and Assistant Secretary
James J. Stokowski
Vice President and Treasurer
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN AND TRANSFER AGENT FOR COMMON SHAREHOLDERS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT FOR AUCTION MARKET
PREFERRED SHARES
Chemical Bank
450 West 33rd Street
New York, NY 10001
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen llp
One International Place
Boston, Massachusetts 02110-2604
Listed:New York Stock Exchange Symbol:DIV
John Hancock Closed-End Funds: 1-800-843-0090
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
Educating shareholders has always been one of the most important
responsibilities of an investment company. But that challenge has taken on new
significance in the past several years. Looking at the most recent statistics,
you can see why. According to the Investment Company Institute, the mutual fund
industry now manages more than $2.3 trillion for investors. More than half of
that money has come into mutual funds in just the last four years. Today, there
are more than 95 million mutual fund shareholder accounts. That's up from 12
million in 1980. These are people, perhaps like you, who are investing in mutual
funds to save for a home, to send their children to college or to build a nest
egg for a comfortable retirement. This explosive growth, coupled with the
growing complexity of the financial landscape, has made all of us in the mutual
fund industry work harder to inform our shareholders.
At John Hancock Funds, we strive to educate you about all aspects of your
fund: the performance, the strategies and the holdings. We want you to fully
understand what you own. We want you to have realistic expectations of the
potential rewards as well as the potential risks of your investment. These
shareholder reports -- which we send you twice a year -- are the best way to
give you the most in-depth and up-to-date information.
In the message that follows, the portfolio manager gives a candid commentary
on the market environment; the factors that affected performance; the Fund's
current investment strategies; and the outlook for the months ahead. The ensuing
financial statements provide a comprehensive look at the fund's statistics and
holdings. We've included explanations of what each financial statement shows and
how it is used.
We hope you find these shareholder reports a useful tool in evaluating your
investments. Of course, if you have any questions or need more information, feel
free to call us toll-free at 1-800-843-0900, from 8:30 a.m. to 5:00 p.m. eastern
time, Monday through Friday.
Sincerely,
/s/ Edward J. Boudreau, Jr.
---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
2
<PAGE> 3
BY ANDREW F. ST. PIERRE, PRESIDENT AND PORTFOLIO MANAGER
JOHN HANCOCK
PATRIOT SELECT
DIVIDEND TRUST
Falling rates, low inflation and improved regulatory climate
for utilities spark second-half surge
Last year at this time, John Hancock Patriot Select Dividend Trust was coping as
best it could with extremely challenging conditions for income investors. The
economy was heating up, interest rates were climbing and inflation fears were
growing. Utility stocks -- about 66% of the Fund's net assets -- had recently
come under extreme pressure due to regulatory concerns. Reflecting the turmoil
in the market, the Fund was up less than 2% halfway through the period. The
second half of the period, however, was a different story altogether. The
economy slowed down, inflation fears subsided, the Federal Reserve stopped
raising interest rates and regulatory fears diminished. As we adopted a more
aggressive posture to capitalize on market conditions, the Fund rallied sharply,
making up for the lackluster first half. The upshot for John Hancock Patriot
Select Dividend Trust was a total return of 21.29% at net asset value for the
year ended June 30, 1995. By comparison, the Dow Jones Utility Index had a total
return of 21.84%.
"THE ECONOMY SLOWED DOWN, INFLATION FEARS SUBSIDED..."
[A 2 1/2" x 3 3/4" photo of Andrew F. St. Pierre at bottom right. Photo caption
reads: "Andrew F. St. Pierre, Portfolio Manager."]
3
<PAGE> 4
John Hancock Funds - Patriot Select Dividend Trust
[Pie chart with heading "Portfolio Diversification" at top of left hand column.
The chart is divided into five sections. Going from top left to right: Preferred
Stock Utilities 35%; Financials 18%; Industrials 13%; Short-Term Investments and
other 3%; Common Stock Utilities 31%. Footnote below states: "As a percentage of
net assets on June 30, 1995."]
THE TURNING POINT
In late January 1995, we began repositioning the Fund to benefit from a
falling-rate environment. That included boosting the Fund's stake in preferred
stocks -- from 56% of net assets a year ago to 63% at the end of June. Preferred
stocks, with their fixed payouts, closely track the Treasury market. As
Treasuries rallied in the spring, preferreds climbed with them. Also, we took
advantage of depressed values and abundant supply to add high-quality securities
at bargain prices. In doing so, we looked for two main characteristics. The
first is call protection, which simply means the issuer can't redeem the
security before its term expires. The second is DRD eligibility. DRD stands for
dividend received deduction. Securities that are DRD-eligible offer distinct tax
advantages to corporate investors. And because they're not as commonly available
as they once were, they've become more valuable. Many of the DRD-eligible
securities we began acquiring in January have been top performers.
[Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investment"; the header for the right column is "Recent
performance...and what's behind the numbers." The first listing is "Public
Service Electric & Gas" followed by an up arrow and the phrase "Good call
protection." The second listing is "Bowater" followed by an up arrow and the
phrase "Higher prices for forest products." The third listing is "Gulf States
Utilities" followed by a down arrow and the phrase "Credit rating downgraded."
Footnote below reads: "See "Schedule of Investments." Investment holdings are
subject to change."]
As the economic landscape changed for the better, so did the regulatory
outlook. Electric utilities had been under a cloud ever since passage of the
National Energy Policy Act of 1992, which established guidelines to encourage
more competition. In April 1994, California regulators announced plans to move
quickly toward implementing one of the Act's central aims: retail competition
among electricity providers. That cast a pall over the whole industry and sent
utility stocks reeling. But here again, there's been a remarkable turnaround in
recent months. After much bickering among lawmakers, environmentalists,
consumers and the utilities themselves, the regulators adopted a more moderate
stance, and investors began snapping up utility stocks again.
As the utility sector rallied, we focused on preferred stocks. In February,
for example, we sold some of the Fund's common shares of Public Service Electric
& Gas and bought preferred shares from the same issuer carrying DRD eligibility
and 10-year call protection. The transaction immediately brought the Fund more
yield and later resulted in a substantial price gain as well. In late March, we
invested in another preferred utility issue -- also DRD-eligible with 10-year
call protection -- from Monongahela Power Co. Later, when the issuer's corporate
parent, Allegheny Power, called some of its DRD-eligible preferreds, the
non-callables from Monongahela Power rallied. On the down side, we lost money on
a high-yielding issue of DRD-eligible preferreds
"...WE BEGAN REPOSITIONING THE FUND TO BENEFIT
FROM A FALLING-RATE ENVIRONMENT."
4
<PAGE> 5
John Hancock Funds - Patriot Select Dividend Trust
[Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the year ended June 30, 1995." The chart is scaled
in increments of 5% from bottom to top, with 25% at the top and 0% at the
bottom. Within the chart there are two solid bars. The first represents the
21.29% total return for John Hancock Patriot Select Dividend Trust. The second
represents the 21.84% total return of the Dow Jones Utility Average. Footnote
below reads: "The total return for John Hancock Patriot Select Dividend Trust is
at net asset value with all distributions reinvested. The Dow Jones Utility
Average is an unmanaged index which measures the performance of the utility
industry in the United States.(1)"]
from Gulf States Utilities, whose credit rating dropped below investment grade.
SUCCESS IN OTHER SECTORS
Higher-yielding preferred stocks in sectors other than utilities have been among
the Fund's best performing securities in recent months. Almost 20% of the Fund's
total assets were spread among various financial subsectors at the end of June,
mainly foreign and domestic banks. The Fund's shares in Bank of Boston
preferreds benefited from a recent credit upgrade by Moody's; the securities
have two years of call protection remaining and an attractive yield. Another of
the Fund's bank holdings that provided both an attractive yield and good call
protection was Shawmut National, which recently announced plans to merge with
Fleet. Once the merger goes through, existing Shawmut securities will be
upgraded to single A. Finally, in October 1994, Merrill Lynch issued a
DRD-eligible preferred security with 10-year call protection that lately has
been among the Fund's top performers.
Industrial securities comprised another 13% of the Fund's total assets.
Significant holdings included Bowater Inc., a forest products company that has
profited lately from rising prices for lumber, liner board and paper, making it
a likely candidate for an eventual credit upgrade. Higher commodity prices have
also played a part in the recent success of Lasmo PLC, a British oil and gas
company whose preferred stock offers an attractive double-digit yield.
OUTLOOK REMAINS FAVORABLE
We've had a pretty good run so far in 1995. By the end of June, the Fund's total
return year-to-date was 19.75% at net asset value. That suggests that it might
be a good idea to lower our expectations going forward. On the other hand,
numerous positive factors remain in place, including the likelihood of stable or
falling interest rates in the months ahead; the improved regulatory outlook for
utilities; and continued strong demand for DRD-eligible preferreds. In early
July, shortly after the period ended, the Fed announced a
quarter-percentage-point reduction in the federal funds rate. This move is
significant because it translates directly into lower borrowing costs for the
leveraged portion of the Fund. Overall, the prospects for income investors are
still attractive and seem likely to remain so in the months ahead.
--------------------------------------------------------------------------------
(1) Source: Lipper Analytical Services
"...THE PROSPECTS FOR INCOME INVESTORS ARE STILL ATTRACTIVE..."
5
<PAGE> 6
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Select Dividend Trust
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON JUNE 30, 1995. YOU'LL ALSO
FIND THE NET ASSET VALUE PER SHARE, FOR EACH COMMON SHARE, AS OF THAT DATE.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
--------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Preferred stocks (cost - $130,902,541) ...................... $135,463,446
Common stocks (cost - $67,678,791) ........................... 66,635,544
Capital securities (cost - $3,375,000) ...................... 3,525,625
Trust originated preferred securities
(cost - $1,250,000) ........................................ 1,256,500
Short-term investments (cost - $4,626,445) ................... 4,626,445
------------
211,507,560
Cash ........................................................... 298
Receivable for investments sold ................................ 2,575,500
Dividends receivable ........................................... 2,038,488
Deferred organization expenses - Note A ........................ 1,250
Other assets ................................................... 510
------------
Total Assets ................................ 216,123,606
------------------------------------------------------------
LIABILITIES:
AMPS dividend payable - Note A ................................. 204,167
Payable for investments purchased .............................. 1,808,800
Payable to John Hancock Advisers, Inc. - Note B ................ 167,963
Accounts payable and accrued expenses .......................... 28,612
------------
Total Liabilities ........................... 2,209,542
------------------------------------------------------------
NET ASSETS:
Auction Market Preferred Shares Series A (AMPS)
Without par value, unlimited number of shares of
beneficial interest authorized, 700 shares issued,
liquidation preference of $100,000 per share -
Note A ....................................................... 70,000,000
------------
Common Shares - Without par value, unlimited number
of shares of beneficial interest authorized, 9,885,027
shares issued and outstanding ................................ 137,984,373
Accumulated net realized gain on investments ................... 261,072
Net unrealized appreciation of investments ..................... 3,674,783
Undistributed net investment income ............................ 1,993,836
------------
Net Assets Applicable to
Common Shares ($14.56 per
share based on 9,885,027
shares outstanding) ......................... 143,914,064
------------------------------------------------------------
Net Assets .................................. $213,914,064
============================================================
</TABLE>
THE 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.
<TABLE>
STATEMENT OF OPERATIONS
Year ended June 30, 1995
--------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $38,754) $18,351,671
Interest ......................................................... 290,280
----------
18,641,951
----------
Expenses:
Investment management fee - Note B ............................. 1,612,618
Administration fee - Note B .................................... 302,366
AMPS and auction fees .......................................... 203,120
Federal excise tax ............................................. 146,346
Custodian fee .................................................. 66,929
Printing ....................................................... 62,263
Auditing fee ................................................... 54,725
Transfer agent fee ............................................. 45,827
Trustees' fees ................................................. 33,603
Miscellaneous .................................................. 32,450
Legal fees ..................................................... 15,877
Organization expense - Note A .................................. 15,000
................................................................... ----------
Total Expenses ................................ 2,591,124
------------------------------------------------------------
Net Investment Income ......................... 16,050,827
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments sold ............................ 526,217
Change in net unrealized appreciation/depreciation
of investments ................................................. 12,371,740
-----------
Net Realized and Unrealized
Gain on Investments ........................... 12,897,957
------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ..................... 28,948,784
------------------------------------------------------------
Distributions to AMPS ......................... (2,962,344)
------------------------------------------------------------
Net Increase in Net Assets Applicable
to Common Shareholders Resulting
from Operations Less AMPS
Distributions ................................. $25,986,440
============================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 7
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Select Dividend Trust
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION> YEAR ENDED JUNE 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ......................................................................... $ 16,050,827 $ 13,236,959
Net realized gain (loss) on investments sold .................................................. 526,217 (265,145)
Change in net unrealized appreciation/depreciation of investments ............................. 12,371,740 (34,074,576)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations ............................. 28,948,784 (21,102,762)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
AMPS ($4,232 and $3,128 per share, respectively) - Note A ..................................... (2,962,344) (2,189,528)
Common Shares - Note A
Dividends from net investment income ($1.2371 and $1.2973 per share, respectively) .......... (12,229,041) (12,815,164)
Distributions from net realized short-term gain on investments sold
(none and $0.5119 per share, respectively)................................................. -- (5,052,615)
------------ ------------
Total Distributions to Shareholders ........................................................ (15,191,385) (20,057,307)
------------ ------------
FROM FUND SHARE TRANSACTIONS *
Value of shares issued to common shareholders in reinvestment of distributions ................ -- 804,586
------------ ------------
NET ASSETS:
Beginning of period ........................................................................... 200,156,665 240,512,148
------------ ------------
End of period (including undistributed net investment income of $1,993,836 and
$988,048, respectively)...................................................................... $213,914,064 $200,156,665
============ ============
</TABLE>
<TABLE>
* ANALYSIS OF COMMON SHAREHOLDER TRANSACTIONS:
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1995 1994
----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period .............................. 9,885,027 $138,130,719 9,840,156 $137,469,390
Shares issued to common shareholders for reinvestment.................
of distributions -- -- 44,871 804,586
Reclassification of capital accounts - Note D ........................ -- (146,346) -- (143,257)
--------- ------------ ---------- ------------
Shares outstanding, end of period .................................... 9,885,027 $137,984,373 9,885,027 $138,130,719
========= ============ ========== ============
</TABLE>
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, DISTRIBUTIONS PAID TO
SHAREHOLDERS, AND ANY INCREASE DUE TO REINVESTMENT OF DISTRIBUTIONS IN THE FUND.
THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES OUTSTANDING AT THE BEGINNING
OF THE PERIOD, REINVESTED AND OUTSTANDING AT THE END OF THE PERIOD, FOR THE LAST
TWO PERIODS, ALONG WITH THE CORRESPONDING DOLLAR VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Select Dividend Trust
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios, and supplemental data are as
follows:
--------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
COMMON SHARES
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ..................... $ 13.17 $ 17.33 $ 15.78
------------ ------------ ------------
Net Investment Income .................................... 1.62 1.34 1.31
Net Realized and Unrealized Gain (Loss) on Investments.... 1.31 (3.47) 2.11
------------ ------------ ------------
Total from Investment Operations ...................... 2.93 (2.13) 3.42
------------ ------------ ------------
Less Distributions:
Dividends to AMPS Shareholders .......................... (0.30) (0.22) (0.22)
Dividends to Common Shareholders from
Net Investment Income ................................. (1.24) (1.30) (1.08)
Distributions to Common Shareholders from Net Realized
Short-term Gain on Investments ........................ -- (0.51) (0.57)
------------ ------------ ------------
Total Distributions ................................... (1.54) (2.03) (1.87)
------------ ------------ ------------
AMPS Underwriting Discount ............................... -- -- --
------------ ------------ ------------
Net Asset Value, End of Period ........................... $ 14.56 $ 13.17 $ 17.33
============ ============ ============
Per Share Market Value, End of Period .................... $ 13.875 $ 12.750 $ 18.250
Total Investment Return at Market Value .................. 19.73% (21.60%) 19.14%
RATIOS AND SUPPLEMENTAL DATA
Net Assets Applicable to Common Shares, End of Period .... $143,914,064 $130,156,665 $170,512,148
Ratio of Expenses to Average Net Assets ** ............... 1.29% 1.30% 1.52%
Ratio of Net Investment Income to Average Net Assets **... 7.96% 5.83% 5.50%
Portfolio Turnover Rate .................................. 107% 39% 53%
SENIOR SECURITIES
Total AMPS Outstanding ................................... $ 70,000,000 $ 70,000,000 $ 70,000,000
Asset Coverage per Unit (d) .............................. $ 305,754 $ 285,137 $ 339,312
Involuntary Liquidation Preference per Unit (e) .......... $ 100,000 $ 100,000 $ 100,000
Approximate Market Value per Unit (e) .................... $ 100,000 $ 100,000 $ 100,000
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------
1992(A) 1991*
------- -----
<S> <C> <C>
COMMON SHARES
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ..................... $ 14.08 $ 13.86(b)
------------ ------------
Net Investment Income .................................... 1.45 1.25
Net Realized and Unrealized Gain (Loss) on Investments.... 2.16 0.62
------------ ------------
Total from Investment Operations ...................... 3.61 1.87
------------ ------------
Less Distributions:
Dividends to AMPS Shareholders .......................... (0.26) (0.28)
Dividends to Common Shareholders from
Net Investment Income ................................. (1.09) (0.85)
Distributions to Common Shareholders from Net Realized
Short-term Gain on Investments ........................ (0.56) (0.39)
------------ ------------
Total Distributions ................................... (1.91) (1.52)
------------ ------------
AMPS Underwriting Discount ............................... -- (0.13)
------------ ------------
Net Asset Value, End of Period ........................... $ 15.78 $ 14.08
============ ============
Per Share Market Value, End of Period .................... $ 16.875 $ 15.000
Total Investment Return at Market Value .................. 25.01% 9.08%
RATIOS AND SUPPLEMENTAL DATA
Net Assets Applicable to Common Shares, End of Period .... $153,274,968 $135,781,333
Ratio of Expenses to Average Net Assets ** ............... 1.42% 1.39%(c)
Ratio of Net Investment Income to Average Net Assets **... 6.75% 7.16%(c)
Portfolio Turnover Rate .................................. 85% 209%
SENIOR SECURITIES
Total AMPS Outstanding ................................... $ 70,000,000 $ 70,000,000
Asset Coverage per Unit (d) .............................. $ 316,361 $ 290,817
Involuntary Liquidation Preference per Unit (e) .......... $ 100,000 $ 100,000
Approximate Market Value per Unit (e) .................... $ 100,000 $ 100,000
<FN>
* For the period July 31, 1990 (commencement of operations) to June 30, 1991.
** Ratios calculated on the basis of expenses and net investment income
applicable to both the common and preferred shares relative to the average
net assets for both common and preferred shares.
(a) Prior to the assumption of the advisory contract on May 6, 1992 by John
Hancock Advisers, Inc., the Fund was advised by Patriot Advisers, Inc.
(b) Initial capitalization, net of offering expenses.
(c) On an annualized basis.
(d) Calculated by subtracting the Fund's total liabilities (not including the
AMPS) from the Fund's total assets and dividing such amount by the number
of AMPS outstanding as of the applicable 1940 Act Evaluation Date.
(e) Plus accumulated and unpaid dividends.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Select Dividend Trust
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
FUND ON JUNE 30, 1995. IT'S DIVIDED INTO FIVE MAIN CATEGORIES: PREFERRED STOCKS,
COMMON STOCKS, CAPITAL SECURITIES, TRUST ORIGINATED PREFERRED SECURITIES AND
SHORT-TERM INVESTMENTS. THE STOCKS, CAPITAL SECURITIES AND TRUST ORIGINATED
PREFERRED SECURITIES ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS. UNDER EACH
INDUSTRY GROUP IS A LIST OF THE STOCKS OWNED BY THE FUND. SHORT-TERM
INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED LAST.
<TABLE>
SCHEDULE OF INVESTMENTS
June 30, 1995
--------------------------------------------------------------------------------
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- ------
<S> <C> <C>
PREFERRED STOCKS
AUTO/TRUCK (2.68%)
Ford Motor Company, 8.25%,
Depositary Shares, Ser B ................. 60,000* $ 1,620,000
General Motors Corp.,
Depositary Shares, 9.12%, Ser G .......... 150,000 4,106,250
-----------
5,726,250
-----------
BANKS - FOREIGN (0.78%)
Banesto Holdings Ltd., 10.50%,
Gtd Ser A, (Guernsey) (R) ................ 32,205 817,202
Santander Overseas Bank, Inc., 10.64%,
Ser A (Puerto Rico) ...................... 31,700* 855,900
-----------
1,673,102
-----------
BANKS - U.S. (10.35%)
Ahmanson, H. F. & Co., 9.60%,
Depositary Shares, Ser B ................. 105,065* 2,731,690
Bank of Boston Corp., 8.60%,
Depositary Shares, Ser E ................. 144,886 3,748,925
BankAmerica Corp., 8.16%, Ser L ............ 48,000* 1,218,000
Chase Manhattan Corp., 9.76%, Ser H ........ 22,000 610,500
Chase Manhattan Corp., 10.84%, Ser I ....... 42,000* 1,270,500
Citicorp, 7.75%, Depositary Shares,
Ser 22 ................................... 32,500* 817,700
First Fidelity Bancorporation, 10.64%,
Depositary Shares, Ser F ................. 60,000 1,590,000
First Interstate Bancorp., 9.875%,
Depositary Shares, Ser F ................. 95,000* 2,505,625
LaSalle National Corp., 8.75%, Ser K (R) ... 62,000 3,224,000
Mellon Bank Corp., 9.60%, Ser I ............ 54,800* 1,452,200
Shawmut National Corp., 9.35%,
Depositary Shares ........................ 110,000* 2,970,000
-----------
22,139,140
-----------
CONGLOMERATE/DIVERSIFIED (0.32%)
Grand Metropolitan Delaware, 9.42%
Gtd Ser A ................................ 25,000* 693,750
-----------
FINANCIAL SERVICES (0.96%)
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A ................. 30,000* 828,750
Salomon Inc., 8.08%,
Depositary Shares, Ser D ................. 50,000 1,237,500
-----------
2,066,250
-----------
INSURANCE (3.46%)
American Life Holding Co., $2.16 ........... 40,000 $ 950,000
Progressive Corp., 9.375%, Ser A ........... 62,000 1,596,500
Provident Life and Accident
Insurance Co. of America, 8.10%,
Depositary Shares ........................ 41,500 1,047,875
SunAmerica Inc., 9.25%, Ser B .............. 100,000 2,637,500
Travelers Group, Inc., 9.25%,
Depositary Shares, Ser D ................. 44,000* 1,160,500
-----------
7,392,375
-----------
LEASING (0.68%)
AMERCO, 8.50%, Ser A ....................... 65,000 1,454,375
-----------
OIL & GAS (6.41%)
Coastal Corp., $2.125, Ser H ............... 120,000 3,015,000
Elf Overseas Ltd., 8.50%, Gtd Ser A
(Cayman Islands) ......................... 150,000 3,881,250
ENSERCH Corp., ARP, Ser F .................. 25,000 518,750
Enterprise Oil PLC,10.50%, Ser A, ADR
(United Kingdom) ......................... 24,500 621,687
Lasmo PLC, 10.00%, Ser A, ADR
(United Kingdom) ......................... 138,000 3,294,750
Phillips Gas Co., 9.32%, Ser A ............. 88,000 2,376,000
-----------
13,707,437
-----------
PAPER (2.03%)
Boise Cascade Corp., 9.40%, Ser F .......... 50,000 1,293,750
Bowater Inc., 8.40%,
Depositary Shares, Ser C ................. 120,000* 3,045,000
-----------
4,338,750
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Select Dividend Trust
<TABLE>
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- ------
<S> <C> <C>
PUBLISHING (0.35%)
Newscorp Overseas Ltd., 8.625%, Ser A
(Cayman Islands) ........................ 30,000 $ 746,250
------------
UTILITIES (35.31%)
Appalachian Power Co., 7.40% .............. 10,680* 1,066,665
Baltimore Gas & Electric Co., 7.78%,
Ser 1973 ................................ 9,040* 894,960
CL & P Capital, 9.30%, Ser A .............. 35,000* 927,500
Central Maine Power, 7.999%, Ser A ........ 10,000 950,000
Central Maine Power, 8.875% (R) ........... 16,000 1,548,000
Columbus Southern Power Co., 9.50%,
Ser 02/01/15 ............................ 10,000* 1,072,500
Commonwealth Edison Co., $8.38 ............ 20,000 1,970,000
Consolidated Edison Co. of NY, Inc.,
5.75%, Ser E ............................ 57,600 4,511,232
Detroit Edison Co., 7.68% ................. 6,990 688,515
Detroit Edison Co., 7.75% ................. 60,000 1,492,500
Florida Power & Light Co., 7.28%, Ser F ... 25,236 2,510,982
Florida Power Corp., 7.76% ................ 30,460 3,099,305
GTE Florida, Inc., $8.16 .................. 25,000 2,600,000
GTE North, Inc., $7.60, Ser IND ........... 10,000 1,001,600
Georgia Power Co., $7.80 .................. 11,280* 1,116,720
Gulf States Utilities Co., $8.52 .......... 45,500* 4,390,750
Gulf States Utilities Co., $9.96 .......... 9,800* 988,575
Gulf States Utilities Co., ARP,
Depositary Shares, Ser B ................ 30,120* 1,457,055
Houston Lighting & Power Co., $7.52 ....... 6,966 703,566
Houston Lighting & Power Co., $8.12 ....... 21,700 2,194,087
Jersey Central Power & Light Co.,
7.52% Ser K ............................. 6,500* 664,625
Massachusetts Electric Co., 6.99% ......... 13,500* 1,350,000
MCN Michigan Co., Limited Partnership,
9.375%, Ser A ........................... 50,000* 1,325,000
Monongahela Power Co., $7.73, Ser L ....... 44,000* 4,601,080
Narragansett Electric Co., 6.95% .......... 14,900* 745,000
New York State Electric & Gas Co.,
8.95%, Ser 01/01/16 ..................... 65,000* 1,698,125
PacifiCorp, 8.375%, Ser A ................. 40,000* 1,010,000
PSI Energy, Inc., 7.44% ................... 122,000* 3,034,750
Public Service Electric & Gas Co.,6.80%, .. 25,000* 2,275,000
Public Service Electric & Gas Co., 6.92% .. 10,000* 935,000
Public Service Electric & Gas Co., 7.40% .. 49,208 4,822,384
Sierra Pacific Power Co., 7.80%,
Ser 1, Class A .......................... 183,600* 4,742,388
Tampa Electric Co., 7.44%, Ser F .......... 12,550 1,242,450
Texas Utilities Electric Co., $7.24 ....... 9,500 883,500
Texas Utilities Electric Co., $7.50 ....... 25,000 593,750
Texas Utilities Electric Co., $7.98 ....... 26,000 2,596,750
Texas Utilities Electric Co., $8.20 ....... 25,000 631,250
Utilicorp Capital, 8.875%, Ser A .......... 70,000* 1,793,750
Virginia Electric & Power Co., $7.20 ...... 22,231 2,167,522
Washington Natural Gas Co.,
8.50%, Ser III .......................... 51,000* 1,326,000
Western Massachusetts Electric Co.,
7.72%, Ser B ............................ 19,077* 1,902,931
------------
75,525,767
------------
TOTAL PREFERRED STOCKS
(Cost $130,902,541) .......... (63.33%) 135,463,446
------ ------------
COMMON STOCKS
UTILITIES (31.15%)
Allegheny Power System, Inc .................. 36,000 846,000
American Electric Power Co., Inc ............. 156,000 5,479,500
Boston Edison Co ............................. 175,000 4,571,875
Carolina Power & Light Co .................... 30,000* 907,500
CINergy Corp. (formerly Cincinnati Gas &
Electric Co.) .............................. 97,000 2,546,250
Consolidated Edison Co. of NY, Inc ........... 184,000 5,428,000
DPL, Inc ..................................... 250,000 5,531,250
Delmarva Power & Light Co .................... 92,500* 1,896,250
Dominion Resources, Inc. of VA ............... 131,500 4,799,750
Florida Progress Corp ........................ 104,250 3,257,813
Houston Industries, Inc ...................... 120,400 5,071,850
Idaho Power Co ............................... 45,000 1,136,250
New England Electric System .................. 82,000 2,829,000
Northeast Utilities .......................... 90,000* 2,025,000
Oklahoma Gas & Electric Co ................... 60,000* 2,107,500
PECO Energy Co ............................... 76,000 2,099,500
Potomac Electric Power Co .................... 164,300* 3,532,450
Public Service Enterprise Group, Inc ......... 71,084 1,972,581
Puget Sound Power & Light Co ................. 140,500 3,213,938
Scana Corp ................................... 37,200 832,350
Southern Co .................................. 75,000 1,678,125
Southwestern Public Service Co ............... 67,000* 1,976,500
Texas Utilities Co ........................... 67,500 2,320,312
Washington Water Power Co .................... 36,000* 576,000
----------
TOTAL COMMON STOCKS
(Cost $67,678,791) ............. (31.15%) 66,635,544
------ ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
FINANCIAL STATEMENTS
John Hancock Funds - Patriot Select Dividend Trust
<TABLE>
<CAPTION>
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- ------
<S> <C> <C>
CAPITAL SECURITIES
BANKS - FOREIGN (1.65%)
A/S Eksportfinans, 8.70% Capital
Securities (Norway)........... 35,000 $ 888,125
Australia and New Zealand Banking
Group Ltd., 9.125%, Capital
Securities (Australia)........ 100,000 2,637,500
------------
TOTAL CAPITAL SECURITIES
(Cost $3,375,000) (1.65%) 3,525,625
----- ------------
TRUST ORIGINATED PREFERRED SECURITIES
OIL & GAS (0.59%)
Southern Union Financing, 9.48%,
Ser 5/17/25................... 50,000* 1,256,500
------------
TOTAL TRUST ORIGINATED
PREFERRED SECURITIES
(Cost $1,250,000) (0.59%) 1,256,500
----- ------------
</TABLE>
<TABLE>
<CAPTION>
INTEREST PAR VALUE
ISSUER, DESCRIPTION RATE (000'S OMITTED) MARKET VALUE
------------------- ---- --------------- ------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
COMMERCIAL PAPER (2.16%)
Prudential Funding Corp.
07-03-95...................... 6.05% 4,628 $ 4,626,445
------------
TOTAL SHORT-TERM INVESTMENTS (2.16%) 4,626,445
------ ------------
TOTAL INVESTMENTS (98.88%) $211,507,560
====== ============
<FN>
* Securities, other than short-term investments, newly added to the portfolio
during the period ended June 30, 1995.
(R) The 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. See Note A
of the Notes to Financial Statements for valuation policy. Rule 144A
securities amounted to $5,589,202 as of June 30, 1995.
</TABLE>
Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer, however, security is U.S. dollar
denominated.
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.
11
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Patriot Select Dividend Trust
NOTE A --
ACCOUNTING POLICIES
John Hancock Patriot Select Dividend Trust (the "Fund") is a closed-end,
diversified management investment company, registered under the Investment
Company Act of 1940. Prior to January 1, 1995, the Fund was known as Patriot
Select Dividend Trust. Significant accounting policies of the Fund are as
follows:
VALUATION 0F INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments, to its shareholders.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date. Interest income on investment securities is
recorded on the accrual basis.
The Fund records all dividends and distributions to shareholders from net
investment income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with federal income tax regulations. Due to
permanent book/tax differences in accounting for certain transactions, this has
the potential for treating certain distributions as return of capital as opposed
to distributions of net investment income or realized capital gains. The Fund
has adjusted for the cumulative effect of such permanent book/tax differences
through June 30, 1995, which has no effect on the Fund's net assets, net
investment income or net realized gains.
DEFERRED ORGANIZATION EXPENSES Expenses incurred in connection with the
organization of the Fund have been capitalized and are being charged ratably to
the Fund's operations over a five-year period that began with the commencement
of the investment operation of the Fund.
AUCTION MARKET PREFERRED SHARES SERIES A (AMPS) The Fund issued 700 shares of
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 the Common Shares. Dividends on the AMPS, which accrue daily, are cumulative
at a rate which was established at the offering of the AMPS and have been reset
every 49 days thereafter by an auction. Dividend rates ranged from 3.45% to
4.60% during the period ended June 30, 1995.
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. 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 Shares 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. The AMPS have a liquidation preference of $100,000 per share, plus
accumulated and unpaid dividends. The Fund is required to maintain certain asset
coverage with respect to the AMPS, as defined in the Fund's By-Laws.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to John Hancock Advisers, Inc. (the "Adviser"), a wholly-owned
subsidiary of The Berkeley Financial
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Patriot Select Dividend Trust
Group, for a continuous investment program equivalent, on an annual basis, to
the sum of .80 of 1% of the Fund's average weekly net asset value.
The Fund has entered into an administrative agreement with the Adviser under
which the Adviser oversees the custodial, auditing, valuation, accounting,
legal, stock transfer and dividend disbursing services and maintains Fund
communications services with the shareholders. The Adviser receives a monthly
administration fee equivalent, on an annual basis, to the sum of .15 of 1% of
the Fund's average weekly net asset value.
Each unaffiliated Trustee is entitled, as compensation for his or her
services, to an annual fee plus remuneration for attendance at various meetings.
Messrs. Edward J. Boudreau, Jr. and Richard S. Scipione are directors and/or
officers of the Adviser and/or its affiliates, as well as Trustees of the Fund.
The compensation of unaffiliated Trustees is borne by the Fund. Effective with
the fees paid for 1995, 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 will make investments into other John
Hancock Funds, as applicable, to cover its liability with regard to the deferred
compensation. Investments to cover the Fund's deferred compensation liability
will be recorded on the Fund's books as an other asset. The deferred
compensation liability will be marked to market on a periodic basis and income
earned by the investment will be recorded on the Fund's books.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended June 30, 1995, aggregated $207,959,463 and $213,018,895, respectively.
Purchases and proceeds from sales of obligations of the U.S. government and its
agencies, during the period ended June 30, 1995, aggregated $4,784,125 and
$4,815,516, respectively.
The cost of investments owned at June 30, 1995 (including the short-term
investments) for Federal income tax purposes was $208,722,908. Gross unrealized
appreciation and depreciation of investments aggregated $6,911,964 and
$4,127,312, respectively, resulting in net unrealized appreciation of
$2,784,652.
NOTE D --
RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with Statement of Position 93-2, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to present
undistributed net investment income or accumulated net realized gains and losses
on a tax basis, which is considered to be more informative to the shareholder.
As of June 30, 1995, the Fund has reclassified $146,346 of Federal excise taxes
from undistributed net investment income to Common Shares capital.
13
<PAGE> 14
John Hancock Funds - Patriot Select Dividend Trust
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees 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, 1995, the related statement of operations for the
year then ended, and the statement of changes in net assets and the financial
highlights for the periods presented. 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 generally accepted auditing
standards. 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 as of June
30, 1995 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 John
Hancock Patriot Select Dividend Trust as of June 30, 1995, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the periods presented, in conformity with generally
accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
August 4, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the taxable distributions of the Fund during its fiscal year ended
June 30, 1995.
The Board of Trustees of the Fund declared dividends on the Common Shares
from undistributed net investment income amounting to $1.24 per share, for the
year ended June 30, 1995. Distributions to preferred and common shareholders
were 97.4% qualified for the dividends received deductions. Preferred
shareholders received additional dividends of $37.55 per share as of June 30,
1995 so that their net after-tax return for all dividends including the
additional dividends was the same as if all regular dividends were 100%
qualified for the dividends received deduction, as defined in the Fund's
By-Laws. Shareholders will be mailed a 1995 U.S. Treasury Department Form
1099-DIV in January 1996 representing their proportionate share.
14
<PAGE> 15
John Hancock Funds - Patriot Select Dividend Trust
INVESTMENT OBJECTIVE AND POLICY
The Fund's investment objective is to provide high current income, consistent
with modest growth of capital for holders of its common shares. The Fund will
pursue its objective by investing in a diversified portfolio of dividend-paying
preferred and common equity securities.
DIVIDEND REINVESTMENT PLAN
The Fund provides shareholders with a Dividend Reinvestment Plan ("the Plan")
which offers the opportunity to earn compounded yields. Each holder of common
shares will automatically have all distributions of dividends and capital gains
reinvested by State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, 02210, as agent for the common shareholders unless an election is
made to receive cash. Holders of Common Shares who elect not to participate in
the Plan will receive all distributions in cash, paid by check, mailed directly
to the shareholder of record (or if the Common Shares are held in street or
other nominee name then to the nominee) by the Plan Agent, as dividend
disbursing agent. Shareholders whose shares are held in the name of a broker or
nominee should contact the broker or nominee to determine whether and how they
may participate in the Plan.
If the Fund declares a dividend payable either in Common Shares or in cash,
nonparticipants will receive cash and participants in the Plan will receive the
equivalent in Common Shares. If the market price of the Common Shares on the
payment date for the dividend is equal to or exceeds their net asset value as
determined on the payment date, participants will be issued Common Shares (out
of authorized but unissued shares) at a value equal to the higher of net asset
value or 95% of the market price. If the net asset value exceeds the market
price of the Common Shares at such time, or if the Board of Trustees declares a
dividend payable only in cash, the Plan Agent will, as agent for Plan
participants, buy shares in the open market, on the New York Stock Exchange or
elsewhere, for the 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, except where necessary to comply with federal securities laws.
If, before the Plan Agent has completed its purchases, the market price exceeds
the net asset value of the Common Shares, the average per share purchase price
paid by the Plan Agent may exceed the net asset value of the Common Shares,
resulting in the acquisition of fewer shares than if the dividend had been paid
in shares issued by the Fund.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent. Such withdrawal will be effective immediately if received not
less than ten days prior to a dividend record date; otherwise, it will be
effective for all subsequent dividend record dates. When a participant withdraws
from the Plan or upon termination of the Plan as provided below, certificates
for whole Common Shares credited to his or her account under the Plan will be
issued and a cash payment will be made for any fraction of a Share credited to
such account.
The Plan Agent maintains each shareholder's account in the Plan and furnishes
monthly written confirmations of all transactions in the accounts, including
information needed by the shareholders for personal and tax records. Common
shares in the account of each Plan participant will be held by the Plan Agent in
non-certificated form in the name of the participant. Proxy material relating
the shareholder's meetings of the Fund will include those shares purchased as
well as shares held pursuant to the Plan.
There will be no brokerage charges with respect to Common Shares issued
directly by the Fund. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open market
purchases in connection with the reinvestment of dividends and distributions. In
each case, the cost per share of the shares purchased for each participant's
account will be the average cost, including brokerage commissions, of any shares
purchased on the open market plus the cost of any shares issued by the Fund.
There are no other charges to participants for reinvesting dividends or capital
gain distributions, except for certain brokerage commissions, as described
above.
The automatic reinvestment of dividends and distributions will not relieve
participants of any federal income tax that may be payable or required to be
withheld on such dividends or distributions. Participants
15
<PAGE> 16
John Hancock Funds - Patriot Select Dividend Trust
under the Plan will receive tax information annually. The amount of dividend to
be reported on Form 1099-DIV should be (1) in the case of shares issued by the
Fund, the fair market value of such shares on the dividend payment date and (2)
in the case of shares purchased by the Plan agent in the open market, the amount
of cash used to purchase them (including the amount of cash allocated to
brokerage commissions paid on such purchases).
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Fund at least 90 days before the record
date for the dividend or distribution. The Plan may be amended or terminated by
the Plan Agent at least 90 days after written notice to all shareholders of the
Fund. All correspondence or additional information concerning the Plan should be
directed to the Plan Agent, State Street Bank and Trust Company, at P.O. Box
8209, Boston, Massachusetts 02266-8209 (telephone 1-800-426-5523).
16
<PAGE> 17
NOTES
John Hancock Funds - Patriot Select Dividend Trust
17
<PAGE> 18
NOTES
John Hancock Funds - Patriot Select Dividend Trust
18
<PAGE> 19
NOTES
John Hancock Funds - Patriot Select Dividend Trust
19
<PAGE> 20
[LOGO] JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FIRM U.S. Postage
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 PAID
So. Hackensack
Permit No. 750
[A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below reads
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JHD P300A 6/95
