---------------------------
The latest report from your
Fund's management team
---------------------------
ANNUAL REPORT
--------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Patriot Select
Dividend Trust
JUNE 30, 2000
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
------------------------------------------
TRUSTEES
Stephen L. Brown
James F. Carlin*
William H. Cunningham
Ronald R. Dion*
Maureen R. Ford
Charles L. Ladner
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)
John P. Toolan
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and
Chief Executive Officer
Osbert M. Hood
Executive Vice President and
Chief Financial Officer
William L. Braman
Executive Vice President and
Chief Investment Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
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
Bankers Trust Company
Four Albany Street
New York, NY 10005
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116-5022
Listed New York Stock Exchange Symbol: DIV
For shareholder assistance
refer to page 15
-------------------------------------------------
===================================CEO CORNER===================================
DEAR FELLOW SHAREHOLDERS:
After four years of spectacular returns, the stock market succumbed in the first
six months of 2000 largely to the pressures of rising interest rates, as the
Federal Reserve kept up its campaign to fight inflation. The red-hot economy has
begun to show signs of slowing, and investors are no longer blind to the real
possibility that rising rates could slow corporate profits. The result was
flat-to-negative results for the three main stock-market indexes through June.
Bonds also suffered during this period, since their prices generally move in the
opposite direction of rates.
But there was good news, too. The Treasury market, where shrinking supply
bolstered prices thanks to the government's efforts to retire some of its debt,
performed well. And the Fed appears closer to the end of its tightening cycle,
which will be a strong positive if it can slow the economy to a level that
supports corporate earnings growth but keeps inflation at bay. The picture on
the global economy is brighter and technology continues to dominate as the
driver of ever-improving corporate productivity.
--------------------------------------------------------------------------------
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and Chief
Executive Officer, flush right next to second paragraph.]
--------------------------------------------------------------------------------
No matter what happens next in the financial markets, these past several months
only served to reinforce some of the important lessons for investors: Diversify,
invest in line with your tolerance for risk and maintain a long-term
perspective.
Since not all parts of your portfolio will perform equally well all the time, it
is important to allocate your assets among different types of investments and
funds that target a variety of stock- and bond-market segments. This strategy,
executed under the guidance of a seasoned investment professional, could provide
you with a better chance of both realizing longer-term results and weathering
the market's changing conditions.
Sincerely,
/s/Maureen R. Ford
------------------
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Gregory K. Phelps, for the Portfolio Management Team
John Hancock Patriot
Select Dividend Trust
Preferred stocks struggle as interest rates climb;
--------------------------------------------------
utility stocks rebound
----------------------
Preferred stocks remained under pressure during the last 12 months, as worries
about inflation and a string of interest-rate hikes muted returns. Because of
their high, mostly fixed dividends, preferred stocks tend to be quite sensitive
to interest-rate movements. In an effort to put the breaks on the robust U.S.
economy's growth and a sky-high stock market, the Federal Reserve made six
short-term interest-rate increases during the past year. The most recent rate
hike was a half-percentage-point increase in May, the largest rate hike in five
years. As short-term interest rates soared, preferred-stock prices moved lower.
Although June brought more uncertainty over whether the Fed would raise interest
rates, it didn't do so and preferreds perked up a bit at month's end, as
investors opportunistically looked to them for their bargain prices and high
yields.
After suffering through a dismal 1999, utility common stocks - which
make up roughly one third of the Fund - did reasonably well in the first two
months of 2000. This dramatic turnaround can be explained in part by the fact
that utilities are among a few stock-market sectors that pay handsome dividends,
which have resulted in yields that are quite high from a historical perspective.
At the same time, utilities began to shed their traditional reputation as being
supersensitive to interest-rate changes. In fact, utilities no longer need to
borrow large amounts to fund the building of new generating capacity. Some
investors
--------------------------------------------------------------------------------
[A 3" x 2" photo at bottom right side of page of John Hancock Patriot Select
Dividend Trust. Caption below reads "Fund management team members (l-r): Mark
Maloney, Beverly Cleathero and Gregory Phelps."]
--------------------------------------------------------------------------------
"...worries about inflation and a string of interest-rate hikes muted returns."
3
<PAGE>
================================================================================
John Hancock Funds - Patriot Select Dividend Trust
"...strong individual performers, especially among our utitlity common stocks."
--------------------------------------------------------------------------------
[Pie chart at top left hand column with heading "Portfolio Diversification." The
chart is divided into five sections (from top to left): Short-Term Investments &
Other 3%, Industrials 7%, Financials 21%, Utility Common Stocks 34% and Utility
Preferred Stocks 35%. A note below the chart reads "As a percentage of net
assets on June 30, 2000."]
--------------------------------------------------------------------------------
began to embrace the notion that deregulation was unlocking value for many
utilities. In addition, weary investors were seeking a safer haven from the
volatility that marked the tech sector - and even some blue-chip stocks - during
the first six months of the new millennium. Furthermore, many utility stocks
were viewed favorably as bargains after years of underperforming the stock
market overall. Finally, the summer had barely begun when there were signs that
electricity might be in short supply in some areas of the country, resulting in
higher prices for power in deregulated open markets such as California.
Performance review
The losses suffered by preferred stocks, which made up 66% of John Hancock
Patriot Select Dividend Trust at the end of the period, held the Fund back over
the last year. For the 12 months
--------------------------------------------------------------------------------
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is TDS Capital
followed by an up arrow with the phrase "Credit upgraded to investment-grade
status." The second listing is LG&E Energy Corp. followed by an up arrow with
the phrase "Acquisition target." The third listing is Western Resources followed
by a down arrow with the phrase "Credit rating downgraded." A note below the
table reads "See `Schedule of Investments.' Investment holdings are subject to
change."]
--------------------------------------------------------------------------------
ended June 30, 2000, the Fund returned -4.94% at net asset value. During the
same period, the Dow Jones Utility Average - which tracks the performance of 15
electric and natural gas companies - returned 0.81%.
Utility commons stand out
Although the Fund's overall result was disappointing, we had some strong
individual performers, especially among our utility common stocks. Electric
utility company DPL rose substantially when well-known leveraged-buyout shop KKR
made a significant investment in the company. The stock was also bolstered by
the company's buyback of its own shares. The common stock of LG&E Energy Corp.
got a significant boost when it was announced that the company would be acquired
by U.K.-based PowerGen. Potomac Electric Power was another good performer,
thanks to the company's sale of its power-generating assets, the growth of its
fiber-optic business and its stock buyback plan. In contrast, Western Resources
drastically underperformed the utility group due to its inability to complete a
planned merger and problems with its Protection One home security business. The
company's credit rating was downgraded in response.
Most of our preferreds were lackluster, in line with the preferred
market as a whole, but there were a couple of bright spots. One was Telephone
and Data Systems (TDS Capital), which was upgraded to investment-grade status
during the period. The higher rating came in recognition of the strength of TDS'
wireless telephone business.
Growing biz lines = opportunities
Because they were cheap relative to their historic value, we've been adding more
utility common
4
<PAGE>
================================================================================
John Hancock Funds - Patriot Select Dividend Trust
--------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the year ended June 30, 2000." The chart is
scaled in increments of 1% with -5% at the bottom and 1% at the top. The first
bar represents the -4.94% total return for John Hancock Patriot Select Dividend
Trust. The second bar represents the 0.81% total return for Dow Jones Utility
Average. A note below the chart 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 that measures the
performance of the utility industry in the United States."]
--------------------------------------------------------------------------------
stocks to the Fund's portfolio. We continued to place an emphasis on utilities
pursuing high-growth fiber-optic and broadband businesses as a way to boost
their earnings, such as NSTAR, Potomac Electric and Kansas City Power & Light
Co. We also favored Alliant Energy Corp., due to its large holdings in a
competitive local exchange carrier that has been grabbing small-company phone
business away from bigger competitors. We also occasionally looked for utility
stocks that offered the potential for strong returns resulting from being taken
over or merging.
Financials stay
Anticipated merger and acquisition activity, coupled with relatively high
yields, were the main reasons why we continued to hold onto preferreds in the
financial sector, including Morgan Stanley, Lehman Brothers and Bear Stearns.
With the repeal of the Glass-Steagall Act - which once prevented banks, insurers
and securities brokers from merging - we believe the stage is set for many of
our financial services holdings to be merged or acquired.
Outlook
We believe that the Federal Reserve may be nearing the end of its tightening
activities. That viewpoint is based on the fact that we're beginning to see
growing evidence that the economy is slowing. New-home sales have leveled off,
existing-home sales have declined, auto sales have flattened and employment
growth recently slowed. To the extent that investors recognize the value that
preferred stocks now offer relative to U.S. Treasury securities, preferreds will
benefit. We began to see evidence of this at the end of the period.
As for utility common stocks, we're optimistic. We anticipate continued
consolidation in the industry, which will likely be favorable for the group. We
are particularly bullish on the companies that offer unregulated services like
broadband, fiber optics and others. We believe that investors may find these
companies increasingly attractive alternatives to some of the much more
expensive telecommunications and technology companies.
--------------------------------------------------------------------------------
This commentary reflects the views of the portfolio management team through the
end of the Fund's period discussed in this report. Of course, the team's views
are subject to change as market and other conditions warrant.
"...the Federal Reserve may be nearing the end of its tightening activities."
5
<PAGE>
=============================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, 2000. You'll also
find the net asset value and the maximum offering price per share as of that
date.
Statement of Assets and Liabilities
June 30, 2000
--------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Preferred stocks (cost - $146,428,879) ........................ $136,408,891
Common stocks (cost - $67,088,626) ............................ 70,397,442
Short-term investments (cost - $987,640) ...................... 987,640
-------------
207,793,973
Cash ........................................................... 317
Dividends receivable ........................................... 872,773
Other assets ................................................... 35,285
-------------
Total Assets .................. 208,702,348
---------------------------------------------
Liabilities:
AMPS dividend payable .......................................... 362,052
Common Share dividend payable .................................. 100
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ....................................... 188,930
Accounts payable and accrued expenses .......................... 62,417
-------------
Total Liabilities ............. 613,499
---------------------------------------------
Net Assets:
Auction Market Preferred Shares Stock
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 ...................... 141,818,941
Accumulated net realized gain on investments ................... 1,301,980
Net unrealized depreciation of investments ..................... (6,711,172)
Undistributed net investment income ............................ 1,679,100
-------------
Net Assets Applicable to Common Shares:
($13.97 per share based on 9,885,027
shares outstanding) ........................................... 138,088,849
-------------
Net Assets .................... $208,088,849
=============================================
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.
Statement of Operations
Year ended June 30, 2000
--------------------------------------------------------------------------------
Investment Income:
Dividends ...................................................... $14,992,007
Interest ....................................................... 101,229
-------------
15,093,236
-------------
Expenses:
Investment management fee - Note B ............................ 1,730,471
Administration fee - Note B ................................... 324,463
AMPS and auction fees ......................................... 184,931
Federal excise tax ............................................ 68,554
Custodian fee ................................................. 62,952
Printing and postage .......................................... 48,800
Auditing fee .................................................. 48,550
Transfer agent fee ............................................ 44,476
Miscellaneous ................................................. 35,808
Trustees' fees ................................................ 8,645
Legal fees .................................................... 1,866
-------------
Total Expenses ................ 2,559,516
---------------------------------------------
Net Investment Income ......... 12,533,720
---------------------------------------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments sold .......................... 1,452,674
Change in net unrealized appreciation/depreciation
of investments ................................................ (20,328,352)
-------------
Net Realized and Unrealized
Loss on Investments ........... (18,875,678)
---------------------------------------------
Net Decrease in Net Assets
Resulting from Operations ..... (6,341,958)
---------------------------------------------
Distribution to AMPS
Shareholders .................. (3,093,728)
---------------------------------------------
Net Decrease in Net Assets
Applicable to Common
Shareholders Resulting from
Operations Less AMPS
Distributions ................. ($9,435,686)
=============================================
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Select Dividend Trust
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------
1999 2000
--------------------- ---------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income ........................................................ $12,408,063 $12,533,720
Net realized gain on investments sold ........................................ 2,038,353 1,452,674
Change in net unrealized appreciation/depreciation of investments ............ (9,897,925) (20,328,352)
--------------- ---------------
Net Increase (Decrease) in Net Assets Resulting from Operations ............. 4,548,491 (6,341,958)
--------------- ---------------
Distributions to Shareholders:
AMPS ($4,121 and $4,420 per share, respectively) - Note A .................... (2,885,045) (3,093,728)
Common Shares - Note A
Dividends from net investment income ($1.1264 and
$1.0800 per share, respectively) ........................................... (11,134,302) (10,674,632)
Distribution in excess of net investment income ($0.1107 and
none per share, respectively) .............................................. (1,094,209) -
--------------- ---------------
Total Distributions to Shareholders ....................................... (15,113,556) (13,768,360)
--------------- ---------------
Net Assets:
Beginning of period .......................................................... 238,764,232 228,199,167
--------------- ---------------
End of period (including undistributed net investment income of $2,291,663 and
$1,054,684, respectively) ................................................... $228,199,167 $208,088,849
=============== ===============
Analysis of Common Shareholder Transactions:
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1999 2000
--------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period ......................... 9,885,027 $140,538,208 9,885,027 $141,881,450
Reclassification of net realized long-term gains retained on
investments sold (net of federal income taxes of $798,703 and
none, respectively) .......................................... - 1,483,305 - -
Reclassification of capital accounts - Note D .................. - (140,063) - (62,509)
------------ ------------- ----------- -------------
Shares outstanding, end of period .............................. 9,885,027 $141,881,450 9,885,027 $141,818,941
============ ============= =========== =============
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 and distributions paid
to shareholders. The footnote illustrates any reclassifications of capital
amounts and the number of Common Shares outstanding at the beginning and end of
the period for the last two periods, along with the corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Select Dividend Trust
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
--------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1996 1997 1998 1999 2000
------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Common Shares
Per Share Operating Performance
Net Asset Value, Beginning of Period ............................... $14.56 $15.05 $15.60 $17.07 $16.00
--------- --------- --------- --------- ---------
Net Investment Income .............................................. 1.50 1.42 1.38 1.26 1.27
Net Realized and Unrealized Gain (Loss) on Investments ............. 0.53 0.65 1.62 (0.80) (1.91)
--------- --------- --------- --------- ---------
Total from Investment Operations .................................. 2.03 2.07 3.00 0.46 (0.64)
--------- --------- --------- --------- ---------
Less Distributions:
Dividends to AMPS Shareholders ..................................... (0.30) (0.28) (0.29) (0.29) (0.31)
Distributions to Common Shareholders from Net Investment Income .... (1.13) (1.24) (1.24) (1.13) (1.08)
Distributions to Common Shareholders in Excess of Net Investment Income - - - (0.11) -
Distributions to Common Shareholders from Net Realized Short-Term Gain
on Investments .................................................... (0.11) - - - -
--------- --------- --------- --------- ---------
Total Distributions ............................................... (1.54) (1.52) (1.53) (1.53) (1.39)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ..................................... $15.05 $15.60 $17.07 $16.00 $13.97
========= ========= ========= ========= =========
Per Share Market Value, End of Period .............................. $14.250 $14.313 $15.500 $13.813 $12.375
Total Investment Return at Market Value ............................ 11.83% 9.38% 17.26% (3.56%) (2.46%)
Ratios and Supplemental Data
Net Assets Applicable to Common Shares, End of Period (000s omitted) $148,731 $154,214 $168,764 $158,199 $138,089
Ratio of Expenses to Average Net Assets(1) ......................... 1.85% 1.81% 1.68% 1.72% 1.74%
Ratio of Net Investment Income to Average Net Assets(2) ............ 10.00% 9.33% 8.38% 7.51% 8.57%
Portfolio Turnover Rate ............................................ 49% 47% 41% 30% 20%
Senior Securities
Total AMPS Outstanding (000s omitted) .............................. $70,000 $70,000 $70,000 $70,000 $70,000
Asset Coverage per Unit(3) ......................................... $306,112 $318,281 $338,876 $329,508 $299,106
Involuntary Liquidation Preference per Unit(4) ..................... $100,000 $100,000 $100,000 $100,000 $100,000
Approximate Market Value per Unit(4) ............................... $100,000 $100,000 $100,000 $100,000 $100,000
(1) Ratios calculated on the basis of expenses applicable to the common shares
relative to the average net assets of common shares. Without the exclusion of
preferred shares, the ratio of expenses would have been 1.25%, 1.24%, 1.18%,
1.21% and 1.18%, respectively.
(2) Ratios calculated on the basis of net investment income applicable to common
shares relative to the average net assets of common shares. Without the
exclusion of preferred shares, the ratio of net investment income would have
been 6.79%, 6.36%, 5.86%, 5.28% and 5.79%, respectively.
(3) 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.
(4) Plus accumulated and unpaid dividends.
The Financial Highlights summarizes the impact of the following factors on a
single share for each period indicated: net investment income, gains (losses),
distributions and total investment return of the Fund. It shows how the Fund's
net asset value for a share has changed since the end of the previous period.
Additionally, important relationships between some items presented in the
financial statements are expressed in ratio form.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Select Dividend Trust
Schedule of Investments
June 30, 2000
--------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Patriot Select Dividend Trust on June 30, 2000. It's divided into three main
categories: preferred and common stocks and short-term investments. The stocks
are further broken down by industry group. Short-term investments, which
represent the Fund's "cash" position, are listed last.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- -----
PREFERRED STOCKS
Agricultural Operations (1.40%)
Ocean Spray Cranberries, Inc., 6.25%,
Ser A (R) ................................. 40,000 $2,920,000
----------
Automobile/Trucks (2.08%)
General Motors Corp., 9.12%,
Depositary Shares, Ser G .................. 170,000 4,335,000
----------
Banks - United States (4.28%)
Chase Manhattan Corp., 10.84%,
Ser C ..................................... 77,300 2,087,100
FleetBoston Financial Corp., 6.75%,
Ser VI .................................... 99,000 4,851,000
HSBC USA, Inc., $2.8575 .................... 50,000 1,975,000
----------
8,913,100
----------
Broker Services (7.74%)
Bear Stearns Companies, Inc., 5.49%,
Ser G ..................................... 116,400 4,197,675
Lehman Brothers Holdings, Inc., 5.67%,
Depositary Shares, Ser D .................. 129,689 4,879,549
Lehman Brothers Holdings, Inc., 5.94%,
Ser C ..................................... 13,000 526,500
Merrill Lynch & Co., Inc., 9.00%,
Depositary Shares, Ser A .................. 107,650 3,068,025
Morgan Stanley Group, Inc., 7.75%,
Depositary Shares 66,000 3,432,000
----------
16,103,749
----------
Diversified Operations (0.31%)
Grand Metropolitan Delaware, L.P.,
9.42%, Gtd Ser A .......................... 25,000 645,313
----------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- -----
Finance (7.71%)
Citigroup, Inc., 6.213%, Ser G ............. 44,000 $1,980,000
Citigroup, Inc., 6.231%,
Depositary Shares, Ser H .................. 92,400 4,146,450
Citigroup, Inc., 8.40%,
Depositary Shares, Ser K .................. 165,000 4,145,625
SI Financing Trust I, 9.50%,
Gtd Pfd Sec & Purchase Contract ........... 41,700 1,052,925
SLM Holding Corp., 6.97% ................... 100,000 4,712,500
----------
16,037,500
----------
Leasing Companies (1.26%)
AMERCO, 8.50%, Ser A ....................... 105,000 2,611,875
----------
Oil & Gas (5.33%)
Apache Corp., 5.68%,
Depositary Shares, Ser B .................. 36,174 2,694,963
Devon Energy Corp., 6.49%, Ser A ........... 51,000 4,395,690
Lasmo America Ltd., 8.15% (R) .............. 40,000 4,000,000
----------
11,090,653
----------
Utilities (35.44%)
Alabama Power Co., 5.20% ................... 225,000 4,331,250
Baltimore Gas & Electric Co., 6.99%,
Ser 1995 .................................. 40,000 3,818,000
Boston Edison Co., 4.25% ................... 42,989 2,579,340
El Paso Tennessee Pipeline Co., 8.25%,
Ser A ..................................... 183,500 9,358,500
Entergy Gulf States Capital 1, 8.75%,
Ser A ..................................... 87,100 1,986,969
Florida Power & Light Co., 6.75%,
Ser U ..................................... 25,000 2,326,500
FPC Capital I, 7.10%, Ser A ................ 53,000 1,099,750
Hawaiian Electric Industries Capital
Trust I, 8.36% ............................ 50,000 1,196,875
Indianapolis Power & Light Co., 5.65% ..... 15,000 1,218,750
Massachusetts Electric Co., 6.99% .......... 13,500 1,303,290
MCN Michigan, L.P., 9.375%, Ser A .......... 29,800 737,550
Monongahela Power Co., 7.73%, Ser L ........ 44,000 4,532,000
Montana Power Co., $6.875 .................. 36,500 3,358,000
PSI Energy, Inc., 6.875% ................... 48,000 4,464,000
Public Service Electric & Gas Co.,
6.92% ..................................... 14,625 1,345,500
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - Patriot Select Dividend Trust
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- -----
Utilities (continued)
Puget Sound Energy, Inc., 7.45%, Ser II .... 165,140 $4,334,925
Sierra Pacific Power Capital I, 8.60% ...... 30,000 721,875
Sierra Pacific Power Co., 7.80%,
Ser 1 (Class A) ........................... 183,600 4,727,700
South Carolina Electric & Gas Co.,
6.52% ..................................... 50,000 4,522,500
Southern Union Financing I, 9.48% .......... 59,000 1,419,688
TDS Capital Trust I, 8.50% ................. 169,200 3,764,700
TDS Capital Trust II, 8.04% ................ 70,500 1,458,469
Texas Utilities Electric Co., $1.875,
Depositary Shares, Ser A .................. 102,000 2,499,000
Texas Utilities Electric Co., $7.98 ........ 29,200 2,993,000
UtiliCorp Capital, L.P., 8.875%, Ser A ..... 70,000 1,684,375
Virginia Electric & Power Co., $6.98 ....... 10,500 1,003,695
Virginia Electric & Power Co., $7.05 ....... 10,000 965,500
----------
73,751,701
----------
TOTAL PREFERRED STOCKS
(Cost $146,428,879) (65.55%) 136,408,891
------- -----------
COMMON STOCKS
Utilities (33.83%)
Alliant Energy Corp. ....................... 158,000 4,108,000
Ameren Corp. ............................... 30,000 1,012,500
CH Energy Group, Inc. ...................... 139,800 4,744,462
CMP Group, Inc. ............................ 36,250 1,062,578
Conectiv, Inc. (Class A) ................... 33,350 812,906
Consolidated Edison, Inc. .................. 55,000 1,629,375
Dominion Resources, Inc. ................... 46,000 1,972,250
DPL, Inc. .................................. 121,000 2,654,437
DTE Energy Co. ............................. 133,900 4,092,319
Duke Energy Corp. .......................... 22,500 1,268,437
Eastern Enterprises ........................ 44,400 2,797,200
Energy East Corp. .......................... 24,000 457,500
Florida Progress Corp. ..................... 20,000 937,500
Kansas City Power & Light Co. .............. 110,000 2,475,000
KeySpan Corp. .............................. 55,000 1,691,250
LG&E Energy Corp. .......................... 108,150 2,582,081
Montana Power Co. .......................... 176,800 6,243,250
Northern States Power Co. .................. 55,000 1,110,312
NSTAR ...................................... 75,000 3,051,563
OGE Energy Corp. ........................... 205,000 3,792,500
Potomac Electric Power Co. ................. 164,800 4,120,000
Puget Sound Energy, Inc. ................... 170,500 3,633,781
Reliant Energy, Inc. ....................... 94,700 2,799,569
Sierra Pacific Resources ................... 284,000 3,567,750
TECO Energy, Inc. .......................... 162,750 3,265,172
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
------------------- ---------------- -----
Utilities (continued)
UtiliCorp United, Inc. ..................... 105,000 $2,086,875
Western Resources, Inc. .................... 83,000 1,286,500
WPS Resources Corp. ........................ 38,000 1,142,375
-----------
TOTAL COMMON STOCKS
(Cost $67,088,626) (33.83%) 70,397,442
--------- -----------
INTEREST PAR VALUE
RATE (000s OMITTED)
----------- ----------------
SHORT-TERM INVESTMENTS
Commercial Paper (0.48%)
Chevron USA, Inc.,
Due 07-03-00 .................. 6.55% $988 987,640
-----------
TOTAL SHORT-TERM INVESTMENTS (0.48%) 987,640
-------- ------------
TOTAL INVESTMENTS (99.86%) 207,793,973
-------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.14%) 294,876
-------- ------------
TOTAL NET ASSETS (100.00%) $208,088,849
======== ============
(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 $6,920,000 or 3.33% of net assets as of June 30, 2000.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
==========================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 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.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders. Additionally, net capital losses of $2,579 attributable to
security transactions incurred after October 31, 1999 are treated as arising on
the first day (July 1, 2000) of the Fund's next taxable year.
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, 2000, which have no effect on the Fund's net
assets, net investment income or net realized gains.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities, revenues
and expenses of the Fund. Actual results could differ from these estimates.
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 has been reset
every 49 days thereafter by an auction. Dividend rates ranged from 3.82% to
5.00% during the year ended June 30, 2000.
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
11
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Patriot Select Dividend Trust
"Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, Inc., for
a continuous investment program equivalent, on an annual basis, to the sum of
0.80% of the Fund's average weekly net assets.
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 the Fund's
communications services with the shareholders. The Adviser receives a monthly
administration fee equivalent, on an annual basis, to the sum of 0.15% of the
Fund's average weekly net assets.
Each unaffiliated Trustee is entitled, as compensation for his or her
services, to an annual fee plus remuneration for attendance at various meetings.
Mr. Stephen L. Brown, Ms. Maureen R. Ford and Mr. 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. 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.
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 year
ended June 30, 2000, aggregated $45,700,052 and $43,215,264, respectively. There
were no purchases or sales of obligations of the U.S. government and its
agencies during the year ended June 30, 2000.
The cost of investments owned at June 30, 2000 (including the
short-term investments) for federal income tax purposes was $214,556,512. Gross
unrealized appreciation and depreciation of investments aggregated $10,478,881
and $17,241,420, respectively, resulting in net unrealized depreciation of
$6,762,539.
NOTE D -
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended June 30, 2000, the Fund has reclassified amounts to
reflect an increase in net investment income of $622,077, a decrease in
accumulated net realized gain on investments of $559,568 and a decrease in
capital paid-in of $62,509. This represents the amount necessary to report these
balances on a tax basis, excluding certain temporary differences, as of June 30,
2000. 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 non-deductible federal excise tax. The
calculation of net investment income per share in the financial highlights
excludes these adjustments.
12
<PAGE>
================================================================================
John Hancock Funds - Patriot Select Dividend Trust
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
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, 2000, the related statement of operations for the year
then ended, the statement of changes in net assets for the years ended June 30,
2000 and 1999, and the financial highlights for each of the years in the
five-year period ended June 30, 2000. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at June 30, 2000 by correspondence with the custodian and
brokers. 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, such financial statements and financial highlights
present fairly, in all material respects, the financial position of the Fund at
June 30, 2000, the results of its operations, the changes in its net assets, and
its financial highlights for the respective stated periods in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 1, 2000
TAX INFORMATION NOTICE (UNAUDITED)
For federal income tax purposes, the following information is furnished with
respect to the dividends of the Fund paid during its taxable year ended June 30,
2000.
All the dividends paid for the fiscal year are taxable as ordinary
income. Distributions to preferred and common shareholders were 96.97% qualified
for the dividends received deduction available to corporations.
Shareholders will be mailed a 2000 U.S. Treasury Department Form
1099-DIV in January 2001. This will reflect the tax character of all
distributions for calendar year 2000.
13
<PAGE>
================================================================================
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.
The Fund's non-fundamental investment policy, with respect to the
quality of ratings of its portfolio investments, was changed by a vote of the
Fund's Trustees on September 13, 1994. The new policy, which became effective
October 15, 1994, stipulates that the 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 who have no rated
senior debt outstanding, whose senior debt is considered by the Adviser to be of
comparable quality.
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 participants' accounts. Such purchases will be
made promptly after the payable date for such a 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 to 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
14
<PAGE>
================================================================================
John Hancock Funds - Patriot Select Dividend Trust
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 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).
SHAREHOLDER COMMUNICATION AND ASSISTANCE
If you have any questions concerning John Hancock Patriot Select Dividend Trust,
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:
State Street Bank and Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
Telephone: (800) 426-5523
If your shares are held with a brokerage firm, you should contact that firm,
bank or other nominee for assistance.
SHAREHOLDER MEETING
On March 16, 2000, the Annual Meeting of John Hancock Patriot Select Dividend
Trust (the "Fund") was held to elect four Trustees and to ratify the actions of
the Trustees in selecting independent auditors for the Fund.
The common shareholders elected the following Trustees to serve until
their respective successors are duly elected and qualified, with the votes
tabulated as follows:
WITHHELD
FOR AUTHORITY
--- ---------
Maureen R. Ford 8,657,079 155,382
Charles L. Ladner 8,658,480 153,981
The preferred shareholders elected Ronald R. Dion and Richard S.
Scipione to serve until their respective successors are duly elected and
qualified, with votes tabulated as follows: 590 FOR and 0 WITHHELD AUTHORITY.
The shareholders also ratified the Trustees' selection of Deloitte &
Touche LLP as the Fund's independent auditors for the fiscal year ended June 30,
2000, with the votes tabulated as follows: 8,679,659 FOR, 67,950 AGAINST and
65,442 ABSTAINING.
15
<PAGE>
================================================================================
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