Securities Act Registration No. 333-_______
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[_]Pre-Effective Amendment No. __ [_]Post Effective Amendment No. __
(Check appropriate box or boxes)
John Hancock Variable Series Trust I
(Exact Name of Registrant as Specified in Declaration of Trust)
197 Clarendon Street
Boston, Massachusetts 02117
(Address of Principal Executive Offices)
Registrant's Telephone Number: (617) 572-9196
Name and Address of Agent for Service: Copy to:
ARNOLD R. BERGMAN, ESQUIRE THOMAS C. LAUERMAN, ESQUIRE
John Hancock Life Insurance Company Foley & Lardner
197 Clarendon Street 3000 K Street, N.W.
Boston, MA 02117 Suite 500
Washington, D.C. 20007
Approximate Date of Proposed Public Offering: As soon as practicable after this
registration statement becomes effective under the Securities Act of 1933. It is
proposed that this filing will become effective on July 31, 2002 pursuant to
Rule 488 under the Act.
Pursuant to Rule 429 under the Act, the prospectus in this registration
statement also relates to registrant's currently effective registration
statement on Form N-1A, File No. 33-2081. No filing fee is due, in reliance on
Section 24(f) of the Act.
The title of the securities being registered is "shares of beneficial interest."
Important Information
[John Hancock logo] July __, 2002
Dear Contract or Certificate Owner:
I am writing to ask for your vote on important matters concerning your
investment in certain funds within your John Hancock variable annuity or
variable life insurance contract.
The funds' trustees are proposing the merger of the International Opportunities
B Fund (formerly the "International Equity" Fund) in the John Hancock Variable
Series Trust I (the "Acquired Fund") into a similar fund in the John Hancock
Variable Series Trust I named the International Opportunities Fund (the
"Acquiring Fund"), as described in the enclosed proxy materials and summarized
in the questions and answers on the following pages.
The Board of Trustees considered the following matters, among others, in
approving the proposal:
... The main purpose of combining the funds is to enable them to be managed
more effectively and efficiently. In particular, the Acquired Fund has not
grown large enough to be operated as economically and as effectively as is
desirable on a long-term basis. Nor does the Acquired Fund have prospects
for improving its growth rate for the foreseeable future.
... The combination of the Acquired Fund and the acquiring fund will not result
in any increase in the total fees and other expenses borne by any
shareholder. In fact, on a continuing basis, shareholders can expect to
benefit from lower overall expenses than if the two funds remained
separate. Combining the Funds will not result in any dilution of the value
of your interest or that of any shareholder of either Fund.
... The investment objectives and policies of the combining funds are the same.
... Both Funds are currently managed in the same way by the same sub-investment
adviser.
The Fund merger proposal has been unanimously approved by the Funds' Board of
Trustees, who believe the merger will benefit you. This includes all of the
trustees who are independent of John Hancock. The enclosed proxy statement
contains further explanation and important details of the reorganizations, which
I strongly encourage you to read before voting.
YOUR VOTE MAKES A DIFFERENCE!
No matter what size your investment may be, your vote is important. Please read
the enclosed materials, and complete, sign and return the enclosed proxy
ballot(s) to us immediately. Your prompt response will help avoid the need for
additional mailings. For your convenience, we have provided a postage-paid
envelope. If you have any questions or need additional information, please
contact your Investment Professional or call a John Hancock Service
Representative at 1-800-824-0335, Monday through Friday between 8:00 A.M. and
8:00 P.M. Eastern Time. I thank you for your prompt vote on this matter.
Sincerely,
Michele G. Van Leer
Chairman
Insurance products are issued by John Hancock Life Insurance Company or John
Hancock Variable Life Insurance Company* (*not licensed in New York), Boston, MA
02117. Securities products are distributed by Signator Investors, Inc., Member
NASD, SIPC.
Q&A FUND MERGER PROXY
Q: What are the changes being proposed?
A: Generally, this proposal would merge two funds to create a single combined
fund which will have significantly more assets and offer a greater opportunity
for future growth.
Q: Will this change affect the value of my contract? Will there be any tax
implications?
A: No. There will be no impact on the value of your investment in your variable
life insurance or variable annuity contract and there are no tax implications
(no Form 1099R will be generated)
Q: Will the transfer count towards the 12 free transfers allowed per contract
year?
A: No, the merger transfer will be free and it will not count toward your
allowable 12 free transfers per year.
Q: What if I do not want to have any units of the International Opportunities B
Fund transferred to the proposed Acquiring Fund?
A: Prior to the merger, you may contact an Annuity Service Representative at
1-800-732-5543 or a Life Service Representative at 1-800-732-5543, Monday
through Friday between 8:00 A.M. - 7:00 P.M. Eastern Time and request a transfer
to another investment option or Fixed Account (if available in your state).
Please consult your Investment Professional prior to reallocating your assets.
Q: How do I vote?
A: Follow two simple steps:
STEP 1: First, read the accompanying proxy statement/prospectus.
STEP 2: Second, complete the enclosed voting card and return it in the enclosed
postage-paid envelope. If you have more than one card, you need to complete,
sign and mail each one.
Q: Does my vote make a difference?
A: Whether you are a large or small investor, your vote is important, and we
urge you to participate in this process to ensure that John Hancock represents
your wishes when it casts votes at the shareholder meeting. The Funds' Board
voted unanimously to recommend these changes, and your approval is needed to
implement the changes.
INTERNATIONAL OPPORTUNITIES B FUND*
(a separate investment fund of John
Hancock Variable Series Trust I)
197 Clarendon Street, Boston, MA 02117,
TOLL FREE NUMBER: 1-800-732-5443
NOTICE OF MEETING OF SHAREHOLDERS
SCHEDULED FOR SEPTEMBER XX, 2002
This is the formal agenda for the Fund's shareholders meeting. It tells
what matters will be voted on and the time and place of the meeting. You are
receiving this notice because you own a variable annuity or variable life
insurance contract or certificate that was participating in the International
Opportunities B Fund as of the record date for the meeting. The insurance
company that issued your contract or certificate will vote the Fund shares
attributable to your contract or certificate in accordance with your
instructions.
To the shareholders of the International Opportunities B Fund:
A shareholders meeting for your Fund will be held at 197 Clarendon Street,
Boston, Massachusetts on Wednesday, September XX, 2002 at 11:00 a.m., Eastern
Time, to consider the following:
1. A proposal to combine the International Opportunities B Fund with the
International Opportunities Fund of John Hancock Variable Series Trust
I. Shareholders in the the International Opportunities B Fund would
receive International Opportunities Fund shares having the same value
as their prior the International Opportunities B Fund shares. The
Funds' Board of Trustees recommends that shareholders vote FOR this
proposal.
2. Any other business that may properly come before the meeting.
Shareholders of record as of the close of business on July 25, 2002 are
entitled to vote at the meeting and any related follow-up meetings
(adjournments).
Whether or not you expect to attend the meeting, please complete and return
the enclosed proxy card (voting instruction card). If contract and certificate
owners do not return their proxies in sufficient numbers, your Fund could incur
the cost of extra solicitations.
By order of the Board of Trustees,
Michele G. Van Leer
Chairman, Board of Trustees
July XX, 2002
- --------------------
* Known as the International Equity Fund prior to May 1, 2002.
INTERNATIONAL OPPORTUNITIES B FUND*
(the "Acquired Fund")
and
INTERNATIONAL OPPORTUNITIES FUND
(the "Acquiring Fund" )
Each a separate investment fund of
John Hancock Variable Series Trust I ,
197 Clarendon Street, Boston, MA 02117,
toll free number: 1-800-732-5443
COMBINED PROXY STATEMENT AND PROSPECTUS
Dated: July __, 2002
This combined Proxy Statement/Prospectus is being furnished to you in
connection with a Special Meeting of Shareholders of the "Acquired Fund" (i.e.,
International Opportunities B Fund). The meeting is for the purpose of approving
a proposed combination of the Acquired Fund with the "Acquiring Fund" (i.e.,
International Opportunities Fund).
Shareholders in the Acquired Fund on the record date of the meeting can
vote on the proposal.
This Proxy Statement/Prospectus contains information a shareholder of the
Acquired Fund should know before voting. Please read it and retain it for future
reference.
How to Get More Information:
The Trust is a series-type open-end management investment company, and has
filed with the Securities and Exchange Commission (the "SEC") a Statement of
Additional Information, dated June xx, 2002, relating to the proposed
combination of the Acquired and Acquiring Funds. The Statement of Additional
Information is incorporated by reference into this Proxy Statement/Prospectus. A
prospectus for the Acquired Fund, dated May 1, 2002, (the "Acquired Fund
Prospectus") also is on file with the SEC and is incorporated into this Proxy
Statement/Prospectus by reference. You can request a free copy of either of
these documents, using the address or toll-free number shown above.
The SEC maintains a web site at http://www.sec.gov where you can find the
prospectus and statement of additional information mentioned above and other
information about the Acquired and Acquiring Funds.
The Securities and Exchange Commission has not approved or disapproved the
securities described in this Proxy Statement/Prospectus, and has not passed on
the accuracy or the adequacy of this Proxy Statement/Prospectus. Anyone who
tells you otherwise is committing a federal crime.
- --------------------
* Known as the International Equity Fund prior to May 1, 2002.
CONTENTS OF THIS PROXY STATEMENT/PROSPECTUS
Page No.
Synoposis of the Proposed Combination....................................... 3
Board Consideration of the Combination...................................... 4
Reasons for Combining the Funds............................................. 4
Further Comparison of the Acquiring Fund and the Acquired Fund.............. 4
Voting Procedures and Conduct of the Shareholders' Meeting.................. 10
Capitalization of the Fund.................................................. 11
Distribution of Fund Shares................................................. 12
Net Asset and Share Valuations.............................................. 12
Agreement and Plan of Reorganization........................................ 12
Information Filed with the Securities and Exchange Commission............... 13
Appendix A - Basic Information About the Acquiring Fund..................... A-1
Appendix B - Performance Information Pertaining to the Acquiring Fund....... B-1
Appendix C - Share Ownership Information.................................... C-1
PROPOSAL TO COMBINE
INTERNATIONAL OPPORTUNITIES B FUND (the "Acquired Fund") AND
INTERNATIONAL OPPORTUNITIES FUND (the "Acquiring Fund")
Synopsis of the Proposed Combination
The International Opportunities B Fund (the "Acquired Fund") and the
International Opportunities Fund (the "Acquiring Fund") are very similar Funds:
. Each is a separate investment fund of John Hancock Variable Series
Trust I (the "Trust"), which is a Massachusetts Business Trust;
. Each shares the same investment goals, policies and strategies;
. Each has the same investment adviser and (for day-to-day portfolio
management) the same sub-adviser, who manages the Funds in
substantially the same manner; and
. Each is subject to substantially the same risks. These include
primarily additional risks involved in investments in foreign
securities, including potentially inadequate or inaccurate financial
information and economic, social, or political instability, lack of
liquidity, foreign ownership limits and restrictions on removing
currency; the significantly higher degree of foreign risk associated
with investments in emerging market countries; the risk that the value
of the Fund's assets may fall (as well as rise) due to changes in
securities market conditions; the risk that the Funds' portfolio
managers will be unsuccessful in making investment decisions that
achieve their intended results; and the risk that the "large/mid
cap"oriented equity investments that the Funds focus on will fall out
of favor and underperform other types of securities. Investments in
certain "derivative" instruments and initial public offerings are a
secondary risk of the Funds. (Please refer to the material for the
International Opportunities Fund in Appendix A at the end of this
Proxy Statement/Prospectus for additional information about these risk
factors, which are substantially the same for both Funds.)
Because these two Funds are so similar, the main purpose of combining
them is to enable the Funds to be managed more effectively and efficiently. In
particular, the Acquired Fund has not grown large enough to be operated as
effectively and efficiently, as is desirable on a long-term basis. Nor does the
Acquired Fund have prospects for increased growth for the foreseeable future.
The combination of the Acquired Fund and the Acquiring Fund will not
result in any increase in the total fees and expenses borne by any shareholder.
In fact, shareholders can expect to benefit from lower levels of fees and
expenses than if the two Funds remained separate. Combining the Funds will not
result in any dilution of the value of your interest or that of any shareholder
of either Fund.
3
Fees and Expenses
The following table shows each Fund's fees and expenses for the twelve
months ended December 31, 2001, as well as on a "pro-forma" basis as if the
combination had occurred at the beginning of that period.
International International Pro-Forma of Combined
Opportunities B Fund Opportunities Fund Acquired Fund and
(Acquired Fund) (Acquiring Fund) Acquiring Fund
-------------------- ------------------ ---------------------
Type of Fee or Expense/1/
-------------------------
Sales Charge Imposed on Purchases........... None None None
Deferred Sales Charge....................... None None None
Sales Charge Imposed on Reinvested
Dividends................................. None None None
Redemption Fee.............................. None None None
Exchange Fee................................ None None None
Maximum Account Fee......................... None None None
Distribution or Service (12b-1) Fees/4/..... None None None
Investment Management Fees.................. 1.20%/2/ 1.14%/2/ 1.12%
Other Expenses (Before Reimbursement/4/).... .21%/3/ .25%/3/ .23%
Total Annual Fund Operating Expenses
(Before Reimbursement/4/)......... 1.41%/2/ 1.39%/3/ 1.35%
Reimbursement from Investment Manager/4/.... .11% .15% .13%
Total Annual Fund Operating Expenses
(After Reimbursement/4/).......... 1.30%/2/ 1.24%/3/ 1.22%
- ---------------------
/1/ The fees and expenses shown are expressed as an annual percentage of the
Fund's average daily net assets.
/2/ Restated to reflect a .20% investment management fee increase effective as
of October 1, 2001.
/3/ Restated to reflect a .30% investment management fee increase, effective
October 1, 2001.
/4/ The expense reimbursement is pursuant to a commitment in each Fund's
investment management agreement that the investment manager will reimburse
the Fund for most Other Expenses that exceed .10% per annum.
The Other Expenses (Before Reimbursement) shown in the table include
expenses of the Trust that were allocated on an asset-weighted basis among all
the funds in the Trust for the twelve months ended December 31, 2001. The
difference in the Other Expenses (Before Reimbursement) between the Acquired
Fund and the Acquiring Fund reflects the relatively greater amount of expenses
allocated to the Acquiring Fund throughout the period.
Examples of Fund Expenses
The following examples are intended to help you compare the cost of
investing in the Acquired Fund with the cost of investing in the Acquiring Fund.
The examples assume that Fund expenses continue at the rates shown in the table
above.
4
The examples assume that a shareholder invests $10,000 in each
alternative for the time periods indicated and then redeems all of the
shareholder's shares at the end of those periods. The examples also assume that
the shareholder's investment has a 5% return each year. (The examples do not
reflect the fees and expenses associated with variable annuity and variable life
insurance contracts for which the Funds serve as investment vehicles.) Although
your actual returns may be higher or lower, based on these assumptions your cost
would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
The Acquired Fund
(International Opportunities B Fund).... $10,370 $11,151 $11,991 $14,378
The Acquiring Fund
(International Opportunities Fund)...... $10,376 $11,171 $12,027 $14,466
Pro-Forma of Acquired
Fund and Acquiring
Fund Combined.......................... $10,377 $11,174 $12,032 $14,478
Terms of Proposed Combination
In the combination, the Acquiring Fund will acquire all of the Acquired
Fund's assets and assume all of its liabilities. Also, the Acquiring Fund will
issue its shares in place of all then outstanding shares of the Acquired Fund.
The combination has been structured as a tax-free reorganization. Therefore, the
combination will have no direct or indirect tax consequences for you.
Although each Fund's share of expenses relating to the combination is
expected to be approximately $20,000, John Hancock Life Insurance Company ("John
Hancock") is expected to bear those expenses, rather than the Funds. This is
because John Hancock bears most Fund operating expenses over a certain amount,
and this includes the type of costs incurred in the combination. It is expected
that the Funds' expenses will already exceed this expense "cap" and that,
therefore, the combination will not result in any actual additional costs for
either the Acquired Fund or the Acquiring Fund.
The combination will take place at the Funds' regular net asset values
per share. This means that the value of each shareholder's account after the
combination will be exactly the same as if the combination had not occurred.
Information about calculation of net asset values and per share values appears
under "Net Asset and Share Valuations." Nor will there be any change in the
rates of any charges the insurance company imposes under your contract or
certificate.
The Trust's Board of Trustees has unanimously approved and recommends
the combination of the Funds as being in the best interests of the Acquired Fund
and its shareholders.
5
Board Consideration of the Combination
The Trust's Board of Trustees has determined that combining the
Acquired Fund with the Acquiring Fund is in the best interests of the Acquired
Fund and its shareholders, and the Board of Trustees unanimously recommends
approval of the combination by the shareholders of the Acquired Fund at the
meeting.
The Trustees considered this matter at a Board meeting held on June 12,
2002. The factors relevant to the Trustees' conclusions included the following:
. The fact that the Acquired Fund and the Acquiring Fund are now
identical, except that, at the time of the Board meeting, the
Acquired Fund had approximately $32 million of assets, while
the Acquiring Fund had approximately $95 million.
. The fact that, due to its small size, the Acquired Fund is
less economic to operate, and there are no reasonable
prospects for the Acquired Fund, by itself, to remedy this.
. The fact that a combination with the Acquiring Fund would
address this problem in a way that permits the shareholders of
the Acquired Fund to continue to have the same investment
program, as well as the expected future benefits of lower fee
and expense levels and more effective management.
. The performance record of the Acquiring Fund since its
commencement of operations on May 1, 1996. Information about
this performance is set forth in Appendixes A and B at the end
of this Proxy Statement/Prospectus. The Acquired Fund's
performance record was less relevant to the Board, for two
reasons. First, almost all of that performance was achieved by
a sub-adviser that has now been terminated and that used
somewhat different investment program. Second, because the
investment program and sub-adviser of the two Funds are now
the same, the future performance of the two Funds should not
differ, except to the extent that the Acquired Fund cannot be
managed as efficiently and effectively due to its smaller
size.
. The fact that the combination will not in any way disadvantage
either Fund and that, under applicable expense reimbursement
arrangements, John Hancock is expected to effectively bear all
costs of the proposed combination.
. The fact that you will not suffer any tax consequences,
dilution or other disadvantages from the proposed combination.
. The fact that any advantage resulting to the Funds' investment
manager or sub-investment manager from the combination will
not be at the expense of either Fund or owners participating
in that Fund.
Reasons for Combining the Funds
Recent Developments
6
As of May 1, 2002, upon John Hancock's recommendation, changes were
made in the Acquired Fund's investment program. Most importantly, Goldman Sachs
Asset Management, a unit of the Investment Management Division of Goldman Sachs
and Co., was replaced as the Fund's sub-adviser.
Also as of May 1, 2002, the Trustees, consistent with a recommendation
of John Hancock, appointed T. Rowe Price International, Inc. ("T. Rowe
International") to take over as the sub-adviser to the Acquired Fund and
approved a new sub-investment management agreement for the Fund with T. Rowe
International on an interim basis.
Among the reasons why John Hancock and the Trust's Board of Trustees
selected T. Rowe International as the Acquired Fund's new sub-adviser was their
favorable evaluation of T. Rowe International's service to the Trust's
International Opportunities Fund. (T. Rowe International has been the
sub-adviser to that Fund since its inception on May 1, 1996.) The overall
investment goal and strategy of the Acquired Fund did not change when T. Rowe
International assumed its sub-advisory responsibilities. T. Rowe International,
however, did bring its own unique capabilities to management of the Fund.
(Further information on this appears in Appendix A at the end of this Proxy
Statement/Prospectus.) In particular, T. Rowe International's diversification
among countries and regions results more from stock selection than did the prior
sub-adviser's. Also, T. Rowe International may invest more in emerging markets.
Accordingly, since taking over as the Acquired Fund's sub-adviser, T.
Rowe International has sought to manage the Acquired Fund in the same way as it
manages the International Opportunities Fund. To reflect this new approach, the
Acquired Fund was renamed "International Opportunities B Fund."
Because the Acquired Fund and the Acquiring Fund are now substantially
identical (except for their relative sizes), John Hancock and its affiliated
life insurance company have stopped offering the Acquired Fund as an investment
option under its variable life insurance and variable annuity contracts. This
means that the Acquired Fund has no practical means of increasing sales of its
shares. See "Distribution of Fund Shares."
Potential Benefits from Combining the Funds
The proposed combination addresses the problem that the Acquired Fund
is currently too small to be economic and has poor prospects for increasing its
size through sales of additional shares. Because, as discussed above, the
Acquired Fund is now substantially similar to the International Opportunities
Fund, it is possible to combine these two funds without disrupting their
investment program or incurring any additional brokerage commissions or other
portfolio "turnover" costs. As a result of the combination, Acquired Fund
shareholders will be part of a significantly larger Fund that can be operated
more economically and effectively.
A larger size can permit a Fund to negotiate lower prices for certain
items. For example, the investment management fees that the Funds pay to John
Hancock are subject to automatic reductions (commonly referred to as "break
points") as a Fund's assets increase. Thus, once the Acquired Fund's assets are
added to those of the Acquiring Fund, the percentage of such assets paid as
investment management fees will be lower than the rate the Acquired Fund would
have paid on its assets alone. The Acquired Fund's shareholders will directly
benefit from such cost reductions.
7
Combining the Funds will also make available certain efficiencies that
may reduce the level of other operating expenses below what the Acquired Fund
alone would pay. This increases the likelihood those expenses will in the future
fall below the Fund's .10% expense cap. Acquired Fund shareholders would
directly benefit from this.
Similarly, with more assets to invest, the combined Funds should in
some cases be able to negotiate prices and commission rates on portfolio
transactions that are more favorable than the Acquired Fund alone could achieve.
In addition, it is more difficult to achieve what the sub-adviser
regards as an optimal level of diversification for investments of the Acquired
Fund than would be the case for the combined Funds. This is because the Acquired
Fund has a much smaller amount of assets than the combined Funds will have.]
Further Comparison of the Acquiring Fund and the Acquired Fund
Investment Goal
The Acquiring Fund and the Acquired Fund share the same investment
goal: long-term capital appreciation.
The investment goal of both Funds is "non-fundamental," which means
that it may be changed by the Board of Trustees without shareholder approval.
Investment Strategies
The investment strategies for the Acquiring Fund and the Acquired Fund
are identical. Both invest primarily in a diversified mix of common stocks of
large established and medium- sized foreign companies located ouside the U.S.,
primarily in developed countries and in emerging markets to a lesser extent.
T. Rowe International uses substantially the same personnel and
analytical techniques in managing each of these Funds.
For additional details about the Funds' investment strategies, please
refer to Appendix A at the end of this Proxy Statement/Prospectus.
Fundamental Investment Restrictions
The investment restrictions adopted by each Fund as "fundamental" are
set forth under the caption "The Funds' Fundamental Investment Restrictions" in
Attachment 1 to the Statement of Additional Information referred to on the front
cover page of this Proxy Statement/Prospectus. A "fundamental" investment
restriction is one that cannot be changed without approval of the Fund's
shareholders.
In minor respects, the Acquiring Fund's fundamental investment
restrictions are narrower than those of Acquired Fund. This means that the
Acquired Fund theoretically could engage in certain practices that the Acquiring
Fund could not. In practice, however, the sub-adviser has ample latitude to
implement the Funds' investment program, under either set of restrictions.
Accordingly, John Hancock does not regard these differences as material.
8
Investment Advisory Services
John Hancock serves as investment adviser to both the Acquired Fund and
the Acquiring Fund. In this capacity, John Hancock advises each Fund in
connection with policy decisions; administers the Funds' day-to-day operations;
provides the Funds with personnel, office space, equipment and supplies;
maintains Fund records; and supervises the activities of the Funds' sub-adviser
and other service providers.
The Acquired Fund pays investment management fees to John Hancock
pursuant to the following fee schedule: 1.20% per annum of the first $50,000,000
of the Fund's average daily net assets; 1.05% of the next $150,000,000; and
1.00% of any additional amounts. The Acquiring Fund pays investment management
fees to John Hancock pursuant to the following fee schedule: 1.30 % per annum of
the first $20,000,000 of the Fund's average daily net assets; 1.15% of the next
$30,000,000 million; and 1.05% of any additional amounts.1 The Acquired Fund
currently has less than $50,000,000 of assets, while the combined assets of the
Acquired Fund and the Acquiring Fund will exceed $100,000,000. Therefore, the
effective fee rate will be lower for Acquired Fund shareholders after the
combination.
In the investment management agreements of both the Acquiring and
Acquired Funds, John Hancock has committed to reimburse each Fund for most of
its operating expenses (other than investment management fees) in excess of .10%
per annum of the Fund's average daily net assets.
T. Rowe International serves as sub-adviser for each Fund. In this
capacity T. Rowe International has primary responsibility for making investment
decisions for the Funds' investment portfolios and placing orders with brokers
and dealers to implement those decisions.
T. Rowe International receives its compensation from John Hancock, and
the Funds pay no sub-management fees over and above the management fee they pay
to John Hancock. T. Rowe International receives sub-management fees from John
Hancock at the following rates for the Acquiring Fund: .75% per annum of the
first $20,000,000 of the Fund's average daily net assets; .60% of the next
$30,000,000; .50% of the next $150,000,000 million; 50% of all of the Fund's
average daily assets when the average daily net assets are equal to or greater
than $200,000,000 but less than $500,000,000; and .45% of all of the Fund's
average daily net assets when the Fund's average daily net assets are
$500,000,000 or more.
Tax Considerations
The tax treatment of two Funds is identical. Both seek to qualify as
regulated investment companies under sub-chapter M of the Internal Revenue Code.
This means that neither Fund expects to pay any federal income taxes. You should
refer to the prospectus for your variable annuity or variable life insurance
contract for a discussion of the tax consequences of that contract for you.
9
VOTING PROCEDURES AND CONDUCT
OF THE SHAREHOLDERS' MEETING
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of voting instructions by the management of John Hancock Variable
Series Trust I (the "Trust") for use at the Special Meeting of Shareholders of
the Trust's International Opportunities B Fund (the "Acquired Fund") discussed
in this Proxy Statement/Prospectus. The meeting will be held at the offices of
John Hancock Life Insurance Company ("John Hancock"), 197 Clarendon Street,
Boston, Massachusetts 02117, on September 25, 2002 at 11:00 A.M. Boston time.
Solicitation of Voting Instructions (i.e., "Proxies")
This solicitation is being made of all shares of the Acquired Fund that
are attributable to variable annuity or variable life insurance contracts
(together with any certificates of interest thereunder, "Contracts") that are
supported by John Hancock Variable Life Accounts U, V, UV and S; and John
Hancock Variable Annuity Accounts U, V, JF, H and I (collectively, the
"Accounts"). Each Fund, is, in the first instance, responsible for the costs
properly attributable to discharging its role in connection with the proposed
combination. However, it is expected that John Hancock will be required to
reimburse the Funds for all of such costs, under the expense reimbursement
arrangement currently contained in the Funds' investment management agreements.
(The nature and estimated amount of such costs are set out above in the
discussion of the Proposal.) All other expenses also will be borne by the
issuing insurance companies (the "Insurance Companies"). In addition to
solicitations by mail, regular employees of John Hancock may solicit voting
instructions in person or by telephone; such employees will not be compensated
for such services. Solicitation materials were first made available to Contract
owners on or about August __, 2002.
Voting Instructions
Although the Insurance Companies, through the Accounts, legally own all
of the Trust's shares, they will vote all of such shares in accordance with
instructions given by Contract owners, as discussed below. For this purpose, the
owner of a variable annuity contract during the period after annuity payments
have commenced is the annuitant.
Any authorized voting instructions will also be valid for any
adjournment of the meeting and will be revocable only at the direction of the
Contract owner executing them. If insufficient affirmative votes are obtained to
approve any matter, the meeting may be adjourned to permit the solicitation of
additional votes. Shares will be voted for any such adjournment in the
discretion of the applicable insurance company. Whether a Proposal is approved
depends upon whether a sufficient number of votes are cast for the Proposal.
Accordingly, an instruction to abstain from voting on any proposal has the same
practical effect as an instruction to vote against that Proposal.
Any person giving voting instructions may revoke them at any time prior
to their exercise by submitting a superseding voting instruction form or a
notice of revocation to the Trust. In addition, although mere attendance at the
meeting will not revoke voting instructions, a Contract owner present at the
meeting may withdraw his/her voting instruction form and vote in person. The
Insurance Companies will vote the Acquired Fund's shares in accordance with all
properly executed and unrevoked voting instructions received in time for the
meeting.
10
The Insurance Companies will vote the shares of the Acquired Fund held
in their respective Accounts that are attributable to Contracts in accordance
with the voting instructions received from the owners of those Contracts. An
Account's shares in the Acquired Fund that are not attributable to Contracts or
for which no timely voting instructions are received will be represented and
voted by the Insurance Companies in the same proportion as the voting
instructions that are received from all owners of Contracts participating in the
Fund through that Account. (Acquired Fund shares that are not attributable to
Contracts include, for example, any shares purchased with contributions made as
"seed money" to the Fund by an Insurance Company.)
Please refer to Appendix C to Proxy Statement/Prospectus if you wish
additional information about the number of shares of the Acquired Fund that are
outstanding or that are attributable to an Insurance Company (rather than to
Contract owners).
Required Vote
In order for the shareholders to approve one of the Proposals in this
Proxy Statement/Prospectus, the Proposal must receive the favorable vote of more
than 50% of the outstanding shares of the relevant Acquired Fund, or, if less,
67% or more of that Fund's shares present or represented at the meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE
AND RETURN THE ENCLOSED FORM OF VOTING INSTRUCTIONS. YOU MAY STILL VOTE IN
PERSON IF YOU ATTEND THE MEETING.
CAPITALIZATION OF THE FUNDS
The following table sets forth as of December 31, 2001: (i) the
capitalization of the Acquired Fund, (ii) the capitalization of the Acquiring
Fund, and (iii) the pro forma capitalization of the Acquired Fund as adjusted to
give effect to the combination of the two Funds:
- ---------------------------------------------------------------------------------------------------------------------
Acquired Fund Acquiring Fund Pro-Forma Acquired
(International (International Fund and Acquiring
Opportunities B) Opportunities) Fund
---------------- -------------- -------------------
Net Assets....................................... $29,915,000 83,591,000 $113,506,000
Shares Outstanding...............................
Net Asset Value Per Share........................ $7.55 $9.30 $9.30
- ---------------------------------------------------------------------------------------------------------------------
At May 31, 2002, the net assets of each Fund were as follows:
Acquired Fund Acquiring Fund
- ------------- --------------
International Opportunities B - $31,702,624 International Opportunities - $95,218,618
11
DISTRIBUTION OF FUND SHARES
The shares of the Acquired Fund and of the Acquiring Fund are identical
shares of beneficial interest in the Trust, except that they each represent an
interest in a different investment portfolio (series) of the Trust.
Each Fund currently sells its shares exclusively to separate investment
accounts of the Insurance Companies to support variable annuity contracts and
variable life insurance contracts (and any certificates thereunder) issued by
those companies. These Accounts buy or redeem shares of the Fund based on (1) a
Contract owner's instruction to invest or receive back monies under a Contract
(such as making a premium payment or surrendering a Contract) and (2) the
operation of a Contract (such as deduction of Contract fees and charges).
Therefore, the "distribution" (marketing) of shares of both the
Acquired Funds and the Acquiring Funds is highly dependent on the efforts and
willingness of the Insurance Companies to promote the offer and sale of the
Funds as investment options under variable annuity and variable life insurance
contracts they issue.
Any dividends or distributions that either Fund pays on its shares are
automatically reinvested in additional shares and thus enhance the value of
Contracts invested in these Funds.
NET ASSET AND SHARE VALUATIONS
Each Fund sells and buys back its shares at the net asset value per
share ("NAV") next computed after receipt by an Account of a Contract owner's
instructions. Each Fund calculates its NAV:
. by dividing its net assets by the number of its outstanding
shares,
. once daily as of the close of regular trading on the New York
Stock Exchange (generally at 4 p.m., New York City time) on
each day the Exchange is open.
The Funds can be expected to hold securities primarily listed on
foreign exchanges that trade on weekends or other days when the Trust does not
calculate NAV. Consequently, NAV may change on days when Contract owners will
not be able to instruct a separate account to buy or redeem fund shares.
The Funds value their securities based on market quotations, amortized
cost, valuations of independent pricing services, or fair value determined in
accordance with procedures approved by the Trust's Trustees. A Fund may value
securities at fair value where, for example, market quotations are not readily
available, or the value of securities has been materially affected after the
closing of a foreign market.
AGREEMENT AND PLAN OF REORGANIZATION
To implement the proposed combination, the Funds have entered into an
Agreement and Plan of Reorganization (the "Plan") that sets forth the terms and
conditions of the combination. The Plan can be terminated at any time as to any
combination by mutual agreement of the parties. Also, the Plan provides that
each combination is subject to a prior condition that the shareholders of the
Acquired Fund in that combination approve the transaction.
12
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This Proxy Statement/Prospectus and the related Statement of Additional
Information do not contain all the information set forth in the registration
statements and the exhibits relating thereto and annual reports that the Trust
has filed with the SEC pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940.
The Trust and each of its investment portfolios, including the Acquired
Fund and the Acquiring Fund, are subject to the informational requirements of
the Investment Company Act of 1940 and in accordance therewith file reports and
other information with the SEC. Reports, proxy statements, registration
statements and other information filed by those entities (including the Trust's
Form N-14 Registration Statement of which this Proxy Statement/Prospectus is a
part) may be inspected without charge and copied at the prescribed rates at the
public reference facilities maintained by the SEC at Room 1014, Judiciary Plaza,
450 Fifth Street, NW, Washington, DC 20549, and at the following regional
offices of the SEC: 1401 Brickell Avenue, Suite 200, Miami, Florida 33131; 500
West Madison Street, 14th Floor, Chicago, Illinois 60661; 1801 California
Street, Suite 4800, Denver, Colorado 80202; and 5670 Wilshire Blvd., 11th Floor,
Los Angeles, California 90036. The SEC also maintains a web site at
http://www.sec.gov that contains information regarding Trust and other
registrants that file electronically with the SEC.
13
APPENDIX A - Basic Information About the Acquiring Fund
A-1
International Opportunities Fund
GOAL AND STRATEGY
This is an international stock fund that seeks long-term capital appreciation.
The Fund primarily invests in a diversified mix of common stocks of large
established and medium-sized foreign companies located outside the U.S., pri-
marily in developed countries and in emerging markets to a lesser extent.
The manager selects stocks using proprietary fundamental research that identi-
fies companies that:
... are capable of achieving sustainable above-average, long-term earnings
growth;
... are reasonably priced relative to present or anticipated earnings, cash flow,
or book value; and
... have attractive valuations relative to opportunities in large, mid or small
cap companies.
The Fund's country and regional exposures are primarily a result of stock
selection, although the Fund maintains broad diversification across countries
and regions.
The manager selects stocks that have growth characteristics such as:
... leading market position or technological leadership;
... attractive business niche;
... healthy balance sheets with relatively low debt;
... strong competitive advantage;
... strength of management; and
... earnings growth and cash flow sufficient to support growing dividends.
The Fund invests in at least 3 different countries other than the U.S., but
normally invests in 15 to 45 countries.
The Fund will invest no more than 20% of its assets in emerging market stocks.
The Fund normally invests in 150 to 250 stocks and normally has 10% or less
(usually lower) of its assets in cash and cash equivalents. The Fund may invest
in initial public offerings (IPOs).
Although the Fund may employ foreign currency hedging techniques, the Fund nor-
mally maintains the currency exposure of the underlying equity investments.
The Fund also may purchase other types of securities that are not primary
investment vehicles, for example: American Depositary Receipts (ADRs), Global
Depositary Receipts (GDRs), European Depositary Receipts (EDRs), certain
Exchange Traded Funds (ETFs), and certain derivatives (investments whose value
is based on indices or other securities).
In abnormal market conditions, the Fund may take temporary defensive measures--
such as holding unusually large amounts of cash and cash equivalents--that are
inconsistent with the Fund's primary investment strategy. In taking those mea-
sures, the Fund may not achieve its investment goal.
- --------------------------------------------------------------------------------
SUBADVISER
T. Rowe Price International, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Managing since 1979
Managing Fund since May, 1996
Managed approximately $26 billion in assets at the end of 2001
FUND MANAGERS
Management by Investment Advisory Group overseen by:
David J. L. Warren
- -----------------
Portfolio Manager of subadviser
Joined subadviser in 1983
John R. Ford
- -----------------
Portfolio Manager of subadviser
Joined subadviser in 1982
James B. M. Seddon
- -----------------
Portfolio Manager of subadvisor
Joined subadviser in 1987
Mark Bickford-Smith
- -----------------
Portfolio Manager of subadvisor
Joined subadviser in 1995
PAST PERFORMANCE
The graph shows how the fund's total return has varied from year to year, while
the table shows performance over time (along with a broad-based market index
for reference). This information may help provide an indication of the fund's
risks and potential rewards. All figures assume dividend reinvestment. Past
performance does not indicate future results. The performance figures below do
not reflect the deduction of fees and charges payable under the variable
contracts. Such fees and charges would cause the investment returns under the
contracts to be less than that shown below.
Year-by-year total returns -- calendar years
[CHART]
1997 1.95%
1998 15.92%
1999 34.01%
2000 -16.36%
2001 -20.93%
Best quarter: up 24.44%, fourth quarter 1999 Worst quarter: down 15.00%, first
quarter 2001
Average annual total returns(/1/) -- for periods ending 12/31/2001*
Fund Index
1 year -20.93% -19.50%
5 years 0.93% 0.89%
Life of fund 1.98% 0.83%
Index:MSCI All Country World Free Index, Excluding U.S.
* Began operations on May 1, 1996.
A-2
MAIN RISKS
Primary
Foreign Risk: The Fund's foreign securities will pose special risks, due to
limited government regulation, lack of public information, economic, political
and social instability and foreign currency rate fluctuations. Factors such as
lack of liquidity, foreign ownership limits and restrictions on removing cur-
rency also pose special risks. All foreign securities have some degree of for-
eign risk. However, to the extent the Fund invests in emerging market coun-
tries, it will have a significantly higher degree of foreign risk than if it
invested exclusively in developed or newly-industrialized countries.
Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up and
down in value more than bonds. If the Fund's investments are concentrated in
certain sectors, the Fund's performance could be worse than the overall market.
Manager Risk: The manager and its strategy may fail to produce the intended
results. The Fund could underperform its peers or lose money if the manager's
investment strategy does not perform as expected.
Investment Category Risk: The returns of the Fund's specific equity investment
category may lag the returns of the overall stock market. For example, the
Fund's "large/mid cap" approach carries the risk that in certain markets
large/mid cap stocks will underperform small cap stocks.
Secondary
Derivatives Risk: Certain derivative instruments (such as options, futures and
swaps) can produce disproportionate gains or losses. They are generally consid-
ered more risky than direct investments. Also, in a down market, derivatives
could become harder to value or sell at a fair price.
Initial Public Offering Risk: The Fund has the ability to invest in initial
public offerings (IPOs) and a significant portion of the Fund's return may at
times be attributable to its investment in IPOs. IPOs could have a substantial
impact on performance, either positive or negative, particularly on a fund with
a small asset base. Also, the Fund's investments in IPOs may be subject to more
erratic price movements than the overall equity market.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated)
The following financial highlights have been audited by Ernst & Young LLP.
Period ended December 31: 1997 1998 1999 2000 2001
Net asset value,
beginning of period $ 10.60 $ 10.63 $ 12.21 $ 15.17 $ 11.85
Income from investment
operations:
Net investment income
(loss) 0.10 0.11 0.10 0.07 0.06
Net realized and
unrealized gain (loss)
on investments* 0.11 1.57 3.95 (2.57) (2.53)
Total from investment
operations 0.21 1.68 4.05 (2.50) (2.47)
Less distributions:
Distributions from net
investment income and
capital paid in (0.10) (0.10) (0.11) (0.15) (0.08)
Distributions from net
realized gain on
investments sold (0.08) -- (0.94) (0.62) --
Distributions in excess
of income & gains -- -- (0.04) (0.05) --
Total distributions (0.18) (0.10) (1.09) (0.82) (0.08)
Net asset value, end of
period $ 10.63 $ 12.21 $ 15.17 $ 11.85 $ 9.30
Total investment return 1.95% 15.92% 34.01% (16.36)%(1) (20.93)%
Ratios and supplemental
data
Net assets, end of period
(000s omitted) $30,631 $64,250 $79,794 $120,034 $ 83,591
Ratio of expenses to
average net assets (%)** 1.22% 1.16% 1.02% 0.93% 1.00%
Ratio of net investment
income (loss) to average
net assets (%) 0.65% 0.89% 0.77% 0.47% 0.64%
Turnover rate (%) 21.09% 18.67% 34.02% 37.92%(1) 33.31%
* The amount shown may not accord with the change in the aggregate gains and
losses in the fund securities for the period because of the timing of pur-
chases and withdrawals of shares in relation to the fluctuation in market
values of the fund.
** Expense ratio is net of expense reimbursement. Had such reimbursement not
been made the expense ratio would have been 1.57%, 1.46%, 1.15%, 1.09% and
1.16% for the years ended December 31, 1997, 1998, 1999, 2000 and 2001,
respectively.
(1) Excludes merger activity.
A-3
APPENDIX B - Performance Information Pertaining to the Acquiring Fund
B-1
Inception: May 1, 1996
INTERNATIONAL OPPORTUNITIES FUND
T. ROWE PRICE INTERNATIONAL, INC.
Warren/Ford/Seddon/Bickford-Smith
The fund ended 2001 on a high note, posting a solid gain in the final quarter
outperforming its benchmark--the MSCI All Country World Free ex-US benchmark.
Fourth-quarter results, however, could not overcome earlier weakness, and the
fund ended the year with a loss of more than 20%, underperforming its benchmark.
In the fourth quarter, the fund was able to make up some lost ground against
the benchmark by underweighting Japan, which did poorly, and overweighting the
stronger markets of South Korea, Sweden, and Brazil. Successful stock selection
in the fourth quarter overall also added value.
A combination of monetary easing and tax-reductions in the U.S. should help
stimulate economic growth worldwide, leading to positive stock market results in
2002. We expect these results to be moderate, however, until the corporate
earnings picture comes more clearly into focus later this year. Outside the
U.S., Europe is probably in the best shape in that the consumer has been less
extended than in the U.S. and is less exposed to equity markets. The arrival of
the euro as the official currency throughout most of Europe could help bolster
it against the powerful U.S. greenback.
Much of what happens in Japan depends on the ability of the government to,
finally, implement much-needed economic reforms. In Latin America, the Argentine
crisis has not led to any immediate fallout as Argentina's slow-motion
disintegration gave Latin American and emerging market countries plenty of time
to prepare.
[CHART]
International
Opportunities MCSI All Country World
Fund Free Ex. US Index
------------- ----------------------
4/30/1996 $10,000.00 $10,000.00
5/31/1996 10,024.34 9,850.00
6/30/1996 10,129.22 9,900.24
7/31/1996 9,819.73 9,571.55
8/31/1996 9,971.07 9,628.02
9/30/1996 10,190.88 9,866.79
10/31/1996 10,150.25 9,768.13
11/30/1996 10,608.68 10,145.18
12/31/1996 10,672.04 10,027.49
1/31/1997 10,544.32 9,842.99
2/28/1997 10,671.97 10,023.11
3/31/1997 10,659.18 10,002.06
4/30/1997 10,701.19 10,086.08
5/31/1997 11,332.27 10,709.40
6/30/1997 11,796.26 11,300.56
7/31/1997 12,113.19 11,528.83
8/31/1997 10,992.06 10,621.51
9/30/1997 11,718.58 11,196.14
10/31/1997 10,863.43 10,243.35
11/30/1997 10,858.72 10,115.30
12/31/1997 10,880.04 10,231.63
1/31/1998 11,254.02 10,537.56
2/28/1998 11,932.03 11,240.41
3/31/1998 12,345.90 11,629.33
4/30/1998 12,435.38 11,713.06
5/31/1998 12,390.74 11,501.05
6/30/1998 12,416.32 11,457.35
7/31/1998 12,560.24 11,566.19
8/31/1998 10,980.00 9,935.36
9/30/1998 10,715.43 9,725.72
10/31/1998 11,680.61 10,744.01
11/30/1998 12,199.09 11,320.96
12/31/1998 12,611.66 11,711.53
1/31/1999 12,484.38 11,698.65
2/28/1999 12,268.43 11,436.60
3/31/1999 12,769.42 11,988.99
4/30/1999 13,241.38 12,588.44
5/31/1999 12,623.31 11,996.78
6/30/1999 13,112.65 12,548.63
7/31/1999 13,358.88 12,843.53
8/31/1999 13,495.21 12,888.48
9/30/1999 13,581.86 12,976.12
10/31/1999 14,038.51 13,458.83
11/30/1999 15,021.61 13,997.19
12/31/1999 16,900.78 15,332.52
1/31/2000 15,834.00 14,499.96
2/29/2000 16,711.59 14,891.46
3/31/2000 16,885.48 15,451.38
4/30/2000 15,946.30 14,589.19
5/31/2000 15,446.42 14,215.71
6/30/2000 16,250.95 14,821.30
7/31/2000 15,693.05 14,235.86
8/31/2000 16,033.54 14,412.38
9/30/2000 15,020.47 13,612.49
10/31/2000 14,413.93 13,179.62
11/30/2000 13,655.62 12,587.85
12/31/2000 14,136.02 13,018.36
1/31/2001 14,305.54 13,213.63
2/28/2001 13,024.07 12,167.11
3/31/2001 12,015.17 11,306.90
4/30/2001 12,974.65 12,075.77
5/31/2001 12,412.32 11,742.48
6/30/2001 11,876.69 11,291.56
7/31/2001 11,594.56 11,040.89
8/31/2001 11,302.99 10,767.08
9/30/2001 10,116.79 9,624.69
10/31/2001 10,444.29 9,894.18
11/30/2001 10,925.81 10,346.35
12/31/2001 11,177.39 10,479.81
TOP TEN HOLDINGS (as of December 31, 2001)
six months ago
% of % of
Investments Investments
GlaxoSmithKline PLC 3.8% 4.0%
Total Fina SA 2.6% 2.4%
Vodafone AirTouch PLC 2.4% 2.4%
Royal Bank of Scotland Group 2.2% 2.1%
Reed International PLC 2.1% 2.2%
Nestle SA 2.0% 2.0%
ING Groep NV 1.8% 1.9%
Shell Transport & Trading Co. PLC 1.8% 1.8%
Nokia Oyj 1.7% 1.6%
Koninklijke (Royal) Philips Electronics N.V. 1.6% 1.6%
AVERAGE ANNUAL TOTAL RETURNS*
MSCI All Country
Intl. Opportunities World Free Ex. MorningStar
Fund US Index Peer Group+
------------------- ---------------- -----------
1 Year -20.93% -19.50% -21.42%
3 Years -3.94 -3.64 -2.15
5 Years 0.93 0.89 1.93
Since Inception
(5/1/96) 1.98 0.83 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Financial 24.1% Energy 7.8%
Technology 21.3% Consumer Staple 7.2%
Capital Equipment 12.9% Retail 4.1%
Health Care 10.0% Basic Material 2.5%
Consumer Cyclical 8.3% Utility 1.8%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. There are special risks associated with
international investing including currency fluctuations, political and
economic instability, foreign taxation and different accounting standards, as
outlined in the current prospectus. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for the sub-accounts of all variable annuity and
life products within the Morningstar variable universe having a Foreign Stock,
Large Cap investment category.
APPENDIX C - Share Ownership Information
As of the close of business on July 25 __, 2002 (the record date for the
shareholders meeting), there were _______ shares outstanding of the
International Opportunities B Fund.
Each share is entitled to one vote, and fractional votes will be counted.
The number of the Fund's shares attributable to each owner of a variable life
insurance contract or certificate ("VLI Contract") is determined by dividing, as
of the record date of the shareholders meeting, the VLI Contract's cash (or
account) value (less any outstanding indebtedness) in the applicable Account
subaccount corresponding to the Fund by the net asset value of one share of the
Fund as of that same date. The number of the Fund's shares attributable to each
owner of a variable annuity contract or certificate ("VA Contract") is
determined by dividing, as of the record date of the meeting, the value of the
"accumulation shares" under the VA Contract (or, for each Contract under which
annuity payments have commenced, the amount of the Contract's reserves) in the
applicable Account subaccount by the net asset value of one share of the Fund as
of that same date.
As of the close of business on July 25 __, 2002, the Insurance Companies had in
the aggregate _____ shares of the International Opportunities B Fund and ____
shares of International Opportunities Fund, representing their contributions and
other amounts in the Accounts that are in excess of the amounts attributable to
their outstanding Contracts. The Insurance Companies are directly or indirectly
wholly-owned by John Hancock Financial Services, Inc., 200 Clarendon Street,
Boston, MA 02117.
No Contract owner had voting authority over as much as 5% of any of the Fund's
shares as of the record date. Nor did the Trust's officers and Trustees,
collectively, have such authority over as much as 1% of either Fund's shares.
INTERNATIONAL OPPORTUNITIES B FUND*
(the "Acquired Fund")
and
INTERNATIONAL OPPORTUNITIES FUND
(the "Acquiring Fund")
Each a separate investment fund of
John Hancock Variable Series Trust I,
197 Clarendon Street, Boston, MA 02117
(Toll free number: 1-800-732-5443)
STATEMENT OF ADDITIONAL INFORMATION
Dated: July __, 2002
This Statement of Additional Information ("SAI") is not a prospectus, but you
should read it in conjunction with the Combined Proxy Statement and Prospectus
dated July __, 2002 of the above-listed Acquired Fund and Acquiring Fund, for
use in connection with the Special Meeting of Shareholders of the Acquired Fund
to be held on September 25, 2002. The Acquired Fund and the Acquiring Fund are
separate investment funds (series) of John Hancock Variable Series Trust I (the
"Trust").
For a free copy of the Combined Proxy Statement and Prospectus, please contact
the Trust at the address or phone number shown above.
This Statement of Additional Information consists of this cover page and the
following documents, each of which is attached hereto:
Attachment 1. Statement of Additional Information for the Trust dated
May 1, 2002.
Attachment 2. Annual Report of the Trust for the period ended
December 31, 2001.
Attachment 3. Pro-forma financial statements relating to the proposed
combination of the International Opportunities B Fund
with the International Opportunities Fund
* Known as the International Equity Fund prior to May 1, 2002.
JOHN HANCOCK
VARIABLE SERIES TRUST I
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2002
This Statement of Additional Information (sometimes referred to herein as
the "SAI") is not a prospectus. It is intended that this Statement of
Additional Information be read in conjunction with the Prospectus of John
Hancock Variable Series Trust I, dated May 1, 2002. A copy of the Prospectus
may be obtained from John Hancock Variable Series Trust I, John Hancock Place,
P.O. Box 111, Boston, Massachusetts 02117, telephone number 1-800-REAL LIFE.
This Statement of Additional Information relates to all twenty eight of the
Trust's current "Funds."
THE TRUST'S FINANCIAL STATEMENTS AND INVESTMENT PERFORMANCE INFORMATION
The Trust's financial statements appearing in its Annual Report to contract
holders and the report of Ernst & Young LLP, independent auditors of the Trust,
which appears therein, are incorporated by reference into this Statement of
Additional Information. The information about the total investment returns
achieved by the Trust's various Funds, is also incorporated herein by reference.
No other portions of the Annual Report are incorporated by reference. A free
copy of the Annual Report to contract holders may be obtained by writing to the
address or calling the number above.
1
TABLE OF CONTENTS
Page in this
Statement of
Additional
Information
-----------
A. What Is the Trust? 4
B. The Trust's Business History 4
C. The Funds' Investment Activities and Their Risks 5
1. Investing in Money Market Instruments 9
2. Investing in Other Fixed Income Obligations 9
3. Investing in Equity Securities 11
4. Investing in Real Estate Securities 12
5. Investing in Foreign Securities 13
6. Using Forward Exchange Contracts to Manage Currency 14
Exposure
7. Using Options on Currencies to Manage Currency Exposure 15
8. Using Currency Futures Contracts and Options
Thereon to Manage Currency Exposure 16
9. Using Certain Other Derivative Instruments to Manage
Currency Exposure 16
10. Using Foreign Currency Exposure Management Strategies
(General Considerations and Risks) 16
11. Reallocating a Fund's Assets Among Asset Classes 17
12. Adopting a Temporary Defensive Strategy 17
13. Investing With an Index-Based Objective 17
14. Investing on a Non-Diversified Basis 19
15. Using Options (Generally) 20
16. Using Options on Securities in Certain Conservative
Investment Strategies 21
17. Using Financial Futures Contracts, Options on Such Contracts
and Options on Stock Indexes (General Considerations) 22
18. Using Financial Futures, Options Thereon, and Stock Index
Options for Certain Hedging - Type Strategies 24
19. Using Options and Futures in Potentially More Aggressive
Strategies 25
20. Limiting the Funds' Exposure to Certain Futures and Option
Transactions 26
21. Using Other Types of Derivative Instruments 27
22. Investing In Other Investment Companies 28
23. Purchasing "When Issued" Securities and Forward
Commitments 29
24. Short-Term Trading 29
25. Entering Into Repurchase Agreements 30
26. Participating in Joint Trading Accounts 30
27. Lending of Fund Securities 30
28. Using Reverse Repurchase Agreements and Mortgages
"Dollar Rolls" 31
29. Investing in Rule 144A and Illiquid Securities 31
30. Investing in Preferred Stock, Convertible Securities
and Warrants 31
31. Investing in Initial Public Offerings ("IPOs") 32
2
TABLE OF CONTENTS - CONTINUED
Page in this
Statement of
Additional
Information
-----------
D. The Funds' Fundamental Investment Restrictions 32
E. Board of Trustees and Officers of the Trust 35
F. Investment Advisory Arrangements 39
1. The Trust's Investment Advisory Arrangements With
John Hancock 39
2. The Trust's Arrangements With Subadvisers 41
3. Dollar Amounts of Advisory Fees, Subadvisory Fees, and
Expense Reimbursements 44
4. Basis of Trustee Approval of Continuance of Advisory
Agreements 45
G. Arrangements With Other Service Providers 48
1. Underwriting and Indemnity Agreement 48
2. Custody of the Trust's Assets 48
3. Subadministration Agreement With State Street Bank 49
4. Independent Auditors 49
H. Portfolio Transactions and Brokerage Allocation 49
I. Codes of Ethics 53
J. Features of the Trust's Shares 54
K. Shareholder Meetings and Voting Rights 54
L. Sales and Redemptions of Fund Shares 56
M. Computing the Funds' Net Asset Value 57
N. Taxes 58
O. Information About Fund Performance 58
P. Legal Matters 59
Q. Reports to Contractholders 59
Appendix A - Corporate Bond Ratings 60
3
A. WHAT IS THE TRUST?
John Hancock Variable Series Trust I (the "Trust"), and each of the Funds
of the Trust, is an open-end management investment company. With the exception
of the Managed, Growth & Income, Large Cap Growth, Large Cap Aggressive Growth,
Multi Cap Growth, Real Estate Equity, Global Balanced and Global Bond Funds,
each of the Funds is a "diversified" Fund within the meaning of the Investment
Company Act of 1940 (the "Investment Company Act").
Shares of the Trust are currently sold to John Hancock Variable Life
Accounts U, V, and S to support variable life insurance policies issued by John
Hancock Variable Life Insurance Company ("JHVLICO"); John Hancock Variable
Annuity Accounts U and V to support variable annuity contracts issued by John
Hancock Life Insurance Company ("John Hancock"); John Hancock Variable Annuity
Accounts I and JF to support variable annuity contracts issued by JHVLICO; and
John Hancock Variable Life Insurance Account UV to support variable life
insurance policies issued by John Hancock. It is anticipated that, in the
future, Trust shares may be sold to other separate investment accounts of
JHVLICO and John Hancock and to separate investment accounts of other insurance
companies (which may or may not be affiliated with John Hancock). Each of these
separate investment accounts is hereinafter referred to as a "Separate Account."
Because the Separate Accounts currently own all of the Trust's shares,
those Separate Accounts (or John Hancock and JHVLICO) may be deemed to control
the Trust. John Hancock and JHVLICO, in turn, are both directly or indirectly
controlled by John Hancock Financial Services, Inc., a publicly-traded holding
company. The Trust issues a separate series of shares of beneficial interest
for each Fund. Each share issued with respect to a Fund has a pro rata interest
in the net assets of that Fund. The assets of each Fund are charged with the
liabilities of that Fund and a proportionate share of the general liabilities of
the Trust.
B. THE TRUST'S BUSINESS HISTORY
The Trust is, in part, a successor to three Separate Accounts of JHVLICO,
as well as the six Separate Accounts of John Hancock described below. On March
28, 1986, all of the investment assets and related liabilities of the Variable
Life Stock, Bond, and Money Market Accounts were transferred to what are now the
Growth & Income, Active Bond and Money Market Funds of the Trust, respectively,
in exchange for shares of those Funds.
On February 20, 1987, all of the investment assets and related liabilities
of six Variable Annuity Stock, Bond and Money Market Accounts were transferred
to what are now the Growth & Income, Active Bond and Money Market Funds of the
Trust, respectively, in exchange for shares of these Funds. The Trust itself
was incorporated on September 23, 1985, under the laws of the State of Maryland
and was reorganized as a Massachusetts business trust effective April 29, 1988.
Over the years, several Funds have been re-named as follows:
Year of
Current Fune Name Prior Name(s) Change
- ----------------- ------------- -------
Active Bond Sovereign Bond 2000
Bond 1996
Global Balanced International Balanced 2000
Global Bond Strategic Bond 1999
Growth & Income Stock 1996
International Equity Index International Equities 1998
International 1995
Global 1994
4
Year of
Current Fund Name - continued Prior Name(s) - continued Change
- ----------------------------- ------------------------- -------
Large Cap Growth Select Stock 1995
Short-Term Bond Short-Term U.S. Government 1998
Small/Mid Cap Growth Diversified Mid Cap Growth 1999
Special Opportunities 1998
Small Cap Equity Small Cap Value 2000
Fundamental Growth Fundamental Mid Cap Growth 2000
Small Cap Value Small/Mid Cap Value 2001
International Opportunities B International Equity 2002
Fundamental Value Large/Mid Cap Value 2002
Multi Cap Growth Mid Cap Growth 2002
C. THE FUNDS' INVESTMENT ACTIVITIES AND THEIR RISKS
The following table provides an overview of many (but not all) of the types of
investments in which a Fund may invest. A Fund's ability to invest in any
type of investment shown in the table, however, may be limited with respect to
the amount of the investment, the particular form of the investment, and the
nature of the investment transaction.
Each column heading contains a reference to one or more sub sections of this
Section Part C that describe the investment in question in more detail and, in
some instances, describe additional limitations and procedures that apply when a
fund engages in the otherwise permitted investment activity.
The policies reflected in the tables (as well as those set out in subsections 1.
through - 31. of this Section Part C) are not fundamental, unless they are
described as such under Section Part D, "The Funds' Fundamental Investment
Restrictions". That they are not "fundamental" means that they can be changed
without notice and without shareholder approval. Also, the policies reflected
in the table below (and in said subsections 1. through - 31.) cannot take
account of every circumstance that may arise. Exceptions may be made in
particular cases, therefore.
5
Other
Equity
Preferreds,
High Yield Other Debt Warrants
Money Market Fixed Income Bonds Instruments Repurchase Real Estate and
Instruments Securities (Section (Section 2.e Agreements Securities Equity Convertibles)
(Section 1) (Section 2.c) 2.d) and 2.f) (Section 25) (Section 4) Securities (Sections 3
and 30)
- -----------------------------------------------------------------------------------------------------------------------------------
Equity Index o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Growth & Income o o (1) o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Value o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Value CORE o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth o o (1) o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Aggressive
Growth o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Fundamental Value o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Fundamental Growth o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Multi Cap Growth o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap CORE o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap Growth o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Small Cap Equity o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Small Cap Value o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
International Equity
Index o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
International
Opportunities o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
International
Opportunities B o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Real Estate Equity o o o (1) o (2) o o
- -----------------------------------------------------------------------------------------------------------------------------------
Health Sciences o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Managed o o o o o (1) o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Global Balanced o o o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond o o o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Bond Index o o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Active Bond o o o o o (1) o o o
- -----------------------------------------------------------------------------------------------------------------------------------
High Yield Bond o o o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Global Bond o o o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
Money Market o o o (1) o o o
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Limited to repurchase agreements of less than 7 days.
(2) Only this fund can invest in real estate master limited partnerships and
---
commercial mortgages or interests therein. However, only this fund is
prohibited from investing in securities collateralized by pools of residential
- ----------
mortgages or interests in such pools.
6
Forward
Currency
Contracts
and
Foreign Foreign Foreign Stock Index
Investments Investment Currency Write Purchase and Interest Write
in in Futures Options on Options on Rate Futures Stock Purchase
Developed Emerging (Sections Securities Securities (Sections Index Stock Index
Markets Markets 6.a, 6.b, (Sections (Sections 18.b, 18.c, Options Options
Countries (Section 7, 8, 16 and 16 and 19. 18.e, 18.f, (Section (Sections
(Section 5) 5.e) 18.d, 18.e) 19.b) b) and 19.e) 19.b) 18.e)
- ----------------------------------------------------------------------------------------------------------------------------------
Equity Index o (3) o (5) o (6) o (7) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Growth & Income o (3) o (3) o (5) o (6) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Value o o (4) o (5) o (6) o (7) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Value CORE o (3) o o o (7) o o
- ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth o (3) o (5) o (6) o o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Aggressive Growth o (3) o (5) o (6) o (7) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Fundamental Value o (3) o (5) o (6) o (7) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Fundamental Growth o (3) o (3) o (5) o (6) o (7) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Multi Cap Growth o o (3) o o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap CORE o (3) o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap Growth o (3) o o (6) o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Small Cap Equity o (3) o (3) o (5) o (6) o (7) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Small Cap Value o (3) o (5) o (6) o o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth o (3) o (3) o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
International Equity Index o o o (4) o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
International Opportunities o o o o (5) o (6) o (7) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
International Opportunities B o o o o (5) o (6) o o o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity o o o o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Real Estate Equity o o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Health Sciences o o o (5) o (6) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
Managed o o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Global Balanced o o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond o (3) o (3) (6) o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Bond Index o (3) o (3) o (6) o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Active Bond o (3) o (3) o (7)
- ----------------------------------------------------------------------------------------------------------------------------------
High Yield Bond o o o (4) o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Global Bond o o o o o o o o
- ----------------------------------------------------------------------------------------------------------------------------------
Money Market o (3)
- ----------------------------------------------------------------------------------------------------------------------------------
(3) Limited to U.S dollar denominated investments or investments traded
primarily in U.S. dollars (including ADRs).
(4) Limited as described in Section 6.
(5) Limited to covered call options.
(6) Limited to protective put options.
(7) Limited to activities described in Section 18.
7
Reverse
OTC and Repurchase
Foreign Swaps, Agreements Other
Exchange Caps, When Issued and IPOs and Investment
Traded Floors and Securities Mortgage 144A Companies
Options Collars and Forward Dollar Securities and Accounts Joint Trading
(Section (Sections Commitments Rolls (Sections (Section Accounts
19.cd) 9 and 21.a) (Section 23) (Section 28) 29 and 31) 22.ab) (Section 26)
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Index o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Growth & Income o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Value o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Value CORE o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Aggressive Growth o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Fundamental Value o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Fundamental Growth o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Multi Cap Growth o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap CORE o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap Growth o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Equity o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Value o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Index o o (8)(9) o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
International Opportunities o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
International Opportunities B o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity o o (9) o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Real Estate Equity o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Health Sciences o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Managed o o (10) o o (12) o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Global Balanced o o (8)(9) o o (12) o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond o o o o (14) o o
- ------------------------------------------------------------------------------------------------------------------------------------
Bond Index o o o (12) o (14) o o
- ------------------------------------------------------------------------------------------------------------------------------------
Active Bond o o (12) o (14) o o
- ------------------------------------------------------------------------------------------------------------------------------------
High Yield Bond o o (8)(9) o o (14) o o
- ------------------------------------------------------------------------------------------------------------------------------------
Global Bond o o (9)(11) o o (12) o (14) o o
- ------------------------------------------------------------------------------------------------------------------------------------
Money Market o (13) o (14) o o
- ------------------------------------------------------------------------------------------------------------------------------------
(10) Use limited to currency swaps and, for hedging purposes, equity swaps.
(11) Use limited to currency management purposes.
(12) Mortgage dollar rolls only.
(13) Reverse repurchase agreements only.
(14) 144 seurities only.
8
1. INVESTING IN MONEY MARKET INSTRUMENTS
The Money Market Fund invests exclusively in "money market" instruments;
all the other Funds may invest in these instruments to some extent. These are
high quality, short-term fixed income obligations. Because of their nature,
money market instruments generally do not carry significant risks of loss, but
do have some credit and interest rate risk. The principal risk is that a Fund's
return on money market instruments will be less than it would have earned on a
riskier investment.
2. INVESTING IN OTHER FIXED INCOME OBLIGATIONS
A. OVERVIEW: The following Funds invest primarily in non-money market fixed
income (i.e., "debt") securities: the Short-Term Bond, Bond Index, Active Bond,
High Yield Bond and Global Bond Funds. The Managed and Global Balanced Funds can
vary their holdings of these securities within a broad range. The Large Cap
Value Fund may also invest in non-money market debt to a limited extent.
Various types of risk associated with these securities are discussed in the
balance of this Section 2.
B. INTEREST RATE RISK: In general, debt securities with longer maturities
than money market instruments have exposure to interest rate risk. Changes in
generally prevailing market interest rates alter a debt security's market value
and introduce volatility into the rate of return of a Fund that invests in such
securities. When prevailing interest rates go up, the market value of debt
securities tends to go down and vice versa. This sensitivity of the market
value of a debt security to changes in interest rates is generally related to
the "duration" of the instrument. The market value of a shorter-term fixed
income security is generally less sensitive to interest rate moves than that of
a longer-term security. For example, the interest rate risk of the Short-Term
Bond Fund, although moderate, is below that of traditional intermediate or long-
term bond portfolios.
C. CREDIT RISK: The value of a fixed income security may also change as a
result of market perceptions regarding its credit risk: i.e., the ability of
the borrower to repay its debts. The market value of a fixed income security
can fall when the market perceives the borrower to be less credit worthy.
Conversely, the market value of a fixed income security can increase due to its
borrower being perceived as financially stronger. All Funds that invest in debt
securities, including money market securities, may have some exposure to credit
risk.
Even some U.S. Government obligations have a degree of credit risk. "U.S.
Government obligations" are bills, certificates of indebtedness, notes and bonds
issued or guaranteed as to principal or interest by the United States or by
agencies or authorities controlled or supervised by and acting as
instrumentalities of the U.S. Government and established under the authority
granted by Congress. Some obligations of U.S. Government agencies, authorities,
and other instrumentalities are supported by the full faith and credit of the
U.S. Treasury; others by the right of the issuer to borrow from the Treasury;
and others only by the credit of the issuing agency, authority, or other
instrumentality. These latter types of obligations, therefore, do have a degree
of credit risk. U.S. Government obligations are used most in the Bond Index,
Active Bond, and Global Bond Funds. All of the other Funds may also invest in
U.S. Government obligations to some extent.
Securities having one of the four highest rating categories for debt
securities as defined by Moody's Investors Services, Inc. (Aaa, Aa, A, or Baa)
or Standard and Poor's Corporation (AAA, AA, A, or BBB) or, if unrated,
determined to be of comparable quality by the subadviser, are referred to as
"investment grade." The meanings of such ratings are set forth in Appendix A to
this Statement of Additional Information. Lower-rated bonds have more credit
risk than higher rated bonds.
D. RISK OF LOWER-QUALITY INSTRUMENTS: High-yield bonds (or "junk" bonds)
are debt securities rated below "investment grade" as defined above. The value
of these lower rated securities generally is more subject to credit risk than is
the case for higher rated securities, and their values tend to respond more to
changes in interest rates or changes in market perceptions regarding their
credit risk.
9
Investments in companies issuing high yield securities are considered to be
more speculative than higher quality instruments. As such, these securities
typically pay a higher interest rate than investment grade securities.
Issuers of high yield securities are typically in weak financial health,
and their ability to pay back principal and interest on the bonds they issue is
uncertain. Some of these issuers may be in default or bankruptcy. Compared
with issuers of investment-grade bonds, they are more likely to encounter
financial difficulties and to be materially affected by these difficulties when
they do encounter them.
High yield bond markets may react strongly to adverse news about an issuer
or the economy, or to the perception or expectations of adverse news. These
debt securities may also have less liquid markets than higher rated securities.
Judgment plays a greater role in valuing high yield securities than in the
case of other securities for which more extensive quotations and last-sale
information are available. Adverse publicity and changing investor perceptions
may affect the ability of outside pricing services used by a Fund to value its
portfolio securities, and the ability of the Fund to dispose of its lower-rated
bonds.
Past experience may not provide an accurate indication of future
performance of high yield securities, especially during periods of economic
recession. The market prices of high yield securities may decline significantly
in periods of general economic difficulty, which may follow periods of rising
interest rates. During an economic downturn, the ability of issuers of lower-
rated debt to service their payment obligations, meet projected goals, or obtain
additional financing may be impaired. In fact, in 2001, the percentage of high
yield securities that defaulted reached the highest level in ten years. In some
cases, a Fund may find it necessary, at its own expense or in conjunction with
others, to pursue litigation or otherwise exercise its rights as a security
holder to seek to protect the interests of security holders, if it determines
this to be in the interest of Fund investors.
All fixed income and balanced Funds (other than the Money Market Fund) may
at times have some exposure to high yield securities. The High Yield Bond Fund
invests primarily in these securities. The only other Fund most likely to
invest a significant portion of its assets in high yield securities is the
Active Bond Fund. The Managed, Short-Term Bond, Global Bond and Global Balanced
Funds may also invest in high yield securities to some extent. In contrast, the
Bond Index Fund will not invest in debt securities that are not at least
investment grade at the time of purchase, but could end up holding high yield
securities if downgraded to below investment graded after already having been
purchased for the Fund..
Although not customarily referred to as "high yield" securities or "junk
bonds," debt securities that fall in the lowest rating within the investment
grade category are considered medium grade securities that have some speculative
characteristics. Accordingly, to a lesser degree, they may present the same
risks discussed above with respect to high yield securities.
The considerations discussed above for lower-rated debt securities also are
applicable to lower quality unrated debt instruments of all types, including
loans and other direct indebtedness of businesses with poor credit standing.
Unrated debt instruments are not necessarily of lower quality than rated
securities, but they may not be attractive to as many buyers.
E. PREPAYMENT/CALL RISK: Prepayment risk is the risk that the obligor on a
debt security may repay or "call" the debt before it is due. Most mortgage
backed securities, asset backed securities, other public bond debt securities
and 144A securities that a Fund might own are exposed to this risk. U.S.
Government securities typically have minimal exposure to this risk.
Prepayment/call is most likely to occur when interest rates have declined and a
borrower can refinance the debt at a lower interest rate level. Generally, a
Fund reinvests the proceeds resulting from prepayments in a lower yielding
instrument. This results in a decrease in the Fund's current yield. The values
of securities that are subject to prepayment/call risk also tend to increase
less in response to declining interest rates and decrease more in response to
increasing interest rates than would the value of otherwise similar securities
that do not have prepayment or "call" features.
10
All Funds that invest in debt securities may at times have some exposure to
prepayment/call risk. The Funds most likely to invest a significant portion of
their assets in debt securities with prepayment/call features are the Managed,
Global Balanced, Short-Term Bond, Bond Index, Active Bond, High Yield Bond and
Global Bond Funds.
F. RISKS OF "ZERO COUPON" INSTRUMENTS: All of the Funds may, in varying
degrees, invest in debt instruments that provide for payment of interest at the
maturity date of the instrument (or payment of interest in the form of
additional securities), rather than payment of interest in cash periodically
over the life of the instrument. The values of such instruments tend to respond
more to changes in interest rates than do otherwise comparable debt obligations
that provide for periodic interest payments. The Funds most likely to invest a
significant amount of their assets in instruments that are subject to this
volatility risk are the Managed, Global Balanced, Short-Term Bond, Bond Index,
Active Bond,, High Yield Bond and Global Bond Funds. However, all Funds that
invest in debt securities may at times have some exposure to this risk.
3. INVESTING IN EQUITY SECURITIES
A. OVERVIEW: All of the Funds intend to invest to some degree in common
stock or other equity securities, except for the Short-Term Bond, Bond Index,
and Money Market Funds. All of the Funds that invest in equity securities expect
to make such securities their primary investment (except for the Managed, Global
Balanced, Active Bond, Global Bond and High Yield Bond Funds, which may
nevertheless do so in the discretion of their subadvisers). Though investing in
equity securities, the Managed, Global Balanced and Funds also expect, under
normal conditions, to invest a substantial amount of their assets in debt
obligations. The Active Bond, Global Bond and High Yield Bond Funds will invest
in equity securities only to a limited extent and will invest primarily in debt
obligations.
General risks of investing in equity securities are discussed in the
balance of this Section 3.
B. EQUITY RISK: Investments in common stock or other equity securities
historically have offered a higher rate of return than money market instruments
or longer term debt securities. However, the risk associated with equity
securities also tend to be higher, because the investment performance of equity
securities depends upon factors which are difficult to predict. The fundamental
risk associated with any equity portfolio is the risk that the value of the
investments it holds might decrease in value. Equity security values may
fluctuate in response to the activities of an individual company or in response
to general market, interest rate, and/or economic conditions.
C. MARKET CAPITALIZATION RISK: One indication of the relative risk of a
common stock investment is the size of the company, which is typically defined
by reference to its "market capitalization." Market capitalization is computed
by multiplying the current market price of a share of the company's stock by the
total number of its shares outstanding.
Investing in larger capitalization companies generally involves a lesser
degree of risk than investing in smaller capitalization companies. Conversely,
investing in the equity securities of smaller companies generally involves
greater risks and potential rewards than investing in larger, more established
companies. Small capitalization companies, in particular, often have limited
product lines, markets or financial resources, and they may depend upon a small
group of relatively inexperienced managers. Investments in such companies can
be both more volatile and more speculative. These securities may have limited
marketability and are subject to more abrupt or erratic market movements than
securities of larger companies or the market in general.
The U.S. equity securities of the Equity Index, Large Cap Value, Large Cap
Value CORE, Large Cap Growth and Large Cap Aggressive Growth Funds are generally
expected to represent primarily companies that qualify as large cap issuers.
These Funds also may invest in the equity securities of companies that qualify
as small and mid cap issuers.
The U.S. equity securities of the Growth & Income, Fundamental Value,
Fundamental Growth, Managed, and Global Balanced Funds are generally expected
to represent primarily large and mid cap issuers. These Funds also may invest
in the equity securities of companies that qualify as small cap issuers.
11
The U.S. equity securities of the Small/Mid Cap Growth and Small/Mid Cap
CORE Funds are generally expected to represent companies that qualify as small
cap and mid cap issuers. These Funds also may invest in the equity securities of
companies that qualify as large cap issuers.
The U.S. equity securities of the Small Cap Equity, Small Cap Value and
Small Cap Growth Funds are generally expected to represent primarily companies
that qualify as small cap issuers. Although these Funds also may invest
significant amounts in the equity securities of companies that qualify as mid
cap issuers, it is expected that they would rarely invest in the equity
securities of companies that qualify only as large cap issuers.
The Multi Cap Growth Fund has broad latitude to invest in companies of any
size. The Real Estate Equity and Health Sciences Funds have broad latitude to
invest in companies of any size, depending on the market capitalization of the
respective sectors covered by those Funds.
Three capitalization levels are currently used by the Trust for non-U.S.
equities: large, medium ("mid"), and small.
o Large cap: Companies having a capitalization greater than $5 billion
o Mid cap: Companies having a capitalization between $1 billion and $5
billion
0 Small cap: Companies having a capitalization less than $1 billion
The non-U.S. equity securities of the International Equity Index Fund are
generally expected to represent primarily non-U.S. companies that qualify as
large cap issuers. This Fund also may invest in the equity securities of non-
U.S. companies that qualify as small and mid cap issuers.
The non-U.S. equity securities of the International Opportunities,
International Opportunities B and Global Balanced Funds are generally expected
to represent primarily non-U.S. companies that qualify as large and mid cap
issuers. These Funds also may invest in the equity securities of non-U.S.
companies that qualify as small cap issuers.
The Emerging Markets Equity has broad latitude to invest in companies of any
size.
4. INVESTING IN REAL ESTATE SECURITIES
A. OVERVIEW: The Real Estate Equity Fund invests primarily in companies
with activities related to the real estate industry, such as real estate
investment trusts ("REITs") that own commercial and multifamily residential real
estate, real estate operating companies ("REOCs") that derive the majority of
their revenue, income or asset value from real estate and other companies
engaged in non-real estate businesses but whose real estate holdings are
significant in relation to the market value of their common stock.
The securities purchased will be principally common stock (and securities
convertible into or with rights to purchase common stock) but a portion of the
Fund may be invested in preferred stock. The Fund may also invest in commercial
mortgage securities (debt obligations secured by commercial property),
collateralized mortgage obligations (mortgage pass through securities secured by
commercial mortgage pools) and master limited partnerships from time to time,
but does not do so on the date of this Statement of Additional Information.
In addition to the Real Estate Equity Fund, all of the other Funds may have
some exposure to real estate risks through investments in companies engaged in
real estate related businesses or investments in debt instruments secured by
mortgage pools.
B. RISKS OF REAL ESTATE SECURITIES: Generally speaking, real estate
securities may be affected by risks similar to those resulting from the direct
ownership of real estate, as well as by market risks due to changes in interest
rates and by the overall volatility of the equity markets. The market value of
shares in equity real estate investment trusts and commercial property
companies, in particular, is heavily dependent upon the value of their
underlying properties. Overbuilding, declines in local or regional economic
conditions, financial difficulties on the part of
12
major tenants and increases in real estate taxes and operating expenses all
could decrease the value of the real estate investments.
5. INVESTING IN FOREIGN SECURITIES
A. OVERVIEW: Investments in foreign securities may be made in a foreign-
denominated security, or in the form of American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") or
other U.S. dollar denominated securities representing underlying shares of
foreign securities. ADRs, EDRs, GDRs and other securities representing
underlying shares of foreign securities may not necessarily be denominated in
the same currency as the securities into which they may be converted, but rather
in the currency of the market in which they are traded. ADRs are receipts,
typically issued by an American bank or trust company, which evidence ownership
of underlying securities issued by a foreign corporation. EDRs are receipts
issued in Europe by banks or depositories which evidence a similar ownership
arrangement. GDRs are receipts issued in two or more markets by banks or
depositaries which evidence a similar ownership arrangement. Generally, ADRs are
designed for use in U.S. securities markets, EDRs for use in European securities
markets, and GDRs for use in multiple securities markets.
Investments in debt securities issued by foreign issuers may be made in
foreign-denominated debt instruments or in the form of U.S. dollar denominated
debt securities issued by foreign issuers and publicly traded in the United
States ("Yankees") or in Europe ("Eurobonds").
The International Equity Index, International Opportunities, International
Opportunities B and Emerging Markets Equity Funds invest primarily in foreign
securities, including foreign-denominated securities. The Health Sciences,
Global Balanced and Global Bond Funds invest a significant portion of their
assets in foreign securities, including foreign-denominated securities. To a
lesser extent, the Large Cap Value, Multi Cap Growth, Real Estate Equity,
Managed, and High Yield Bond Funds may also invest in foreign securities,
including foreign-denominated securities.
The following Funds may invest in ADRs and other U.S. dollar denominated
foreign securities to a limited extent: Equity Index, Growth & Income, Large
Cap Value CORE, Large Cap Growth, Large Cap Aggressive Growth , Fundamental
Value, Fundamental Growth, Small/Mid Cap CORE , Small/Mid Cap Growth, Small Cap
Equity, Small Cap Value, and Small Cap Growth.
The Short-Term Bond, Bond Index, Active Bond, and Money Market Funds may
invest in foreign debt securities denominated in U.S. dollars (i.e., Yankees and
Eurobonds).
The Emerging Markets Equity Fund invests primarily in developing countries
commonly known as "emerging markets." To a lesser extent, the Health Sciences,
International Equity Index, International Opportunities, International
Opportunities B, Managed, Global Balanced, High Yield Bond, and Global Bond
Funds may also invest in emerging markets securities denominated in U.S. dollars
or any other currency. The Growth & Income, Fundamental Growth, Multi-cap
Growth, Small Cap Equity, Small Cap Growth, Short-Term Bond, Bond Index, Active
Bond Funds may invest in emerging markets securities only if denominated in U.S.
dollars.
Risks of investing in foreign securities are discussed in the paragraphs
that follow:
B. CURRENCY RISKS: When a Fund buys foreign-issued securities, it usually
must pay for those securities in the local currency. Therefore, the Fund must
convert funds into the local currency to the extent necessary for this purpose.
Similarly, when a Fund sells a foreign security, it may receive payment in the
local currency. Therefore, if the Fund does not wish to continue to hold that
currency, it must enter into a transaction disposing of it.
In these ways, therefore, a Fund may temporarily hold foreign currency in
order to facilitate the purchase and sale of foreign securities. This exposes
the fund to the risk that the foreign currency's value could, while the Fund was
temporarily holding that currency, decline relative to the U.S. dollar. This
could result in a loss to the Fund, because the Fund's assets and shares are
valued in U.S. dollars. On the other hand, the Fund could experience gains
13
if the foreign currency's value, relative to the U.S. dollar, increases during
the period when the Fund holds that currency.
More fundamentally, however, because the Fund values its assets and shares
in U.S. dollars, the Fund's gains and/or losses on investments that are
denominated or traded in foreign currencies will depend in part on changes in
the value of that currency relative to the U.S. dollar. This exposes the Fund
to the risk of loss if that foreign currency loses value, as well as the
possibility of gains if that currency gains value, relative to the U.S. dollar.
The Funds may (but are not required to) employ certain strategies to limit
their risks or otherwise manage their exposure to foreign currencies. Such
currency management techniques, as well as the risks that those techniques
themselves present, are discussed in Sections 6. - 10. below.
Also, a risk exists that a foreign country may have or implement
restrictions on transactions in its currency that prevent a Fund from
effectively managing or reducing its exposure to that currency, even after the
Fund has disposed of any securities denominated or traded in that currency.
C. POLITICAL AND ECONOMIC RISK: Foreign securities often are subject to
heightened political and economic risks, particularly in emerging markets or
other underdeveloped or developing countries, which may have relatively unstable
governments and economies based on only a few industries. Foreign governments
may take over the assets or operations of a company, may impose additional
taxes, or may place limits on the removal of the Fund's assets from that
country. However, investments in foreign securities also offer the opportunity
to diversify holdings and to invest in economies whose growth may outpace that
of the United States.
D. REGULATORY RISK: Generally, there is less government supervision of
foreign markets. Foreign issuers generally are not subject to uniform
accounting, auditing, and financial reporting standards and practices applicable
to domestic issuers. There may be less publicly available information about
foreign issuers than domestic issuers. These risks may be greater in emerging
markets or other underdeveloped or developing countries.
E. MARKET RISK: Foreign securities markets, particularly those of emerging
markets or other underdeveloped or developing countries, may be less liquid and
more volatile than domestic markets. Certain markets may require payment for
securities a Fund purchases before delivery of these securities to the Fund, and
delays may be encountered in settling securities transactions. In some foreign
markets, there may be limited protection against failures by other parties to
complete their transactions with a Fund. There may be limited legal recourse
against an issuer in the event of a default on a debt instrument held by a Fund.
F. TRANSACTION COSTS: Transaction costs of buying and selling foreign
securities, including brokerage, tax, and custody costs, are generally higher
than those involved in domestic transactions. This is particularly likely for
investments in emerging markets, or other underdeveloped or developing
countries.
6. USING FORWARD EXCHANGE CONTRACTS TO MANAGE CURRENCY EXPOSURE
A. TRANSACTION HEDGING AND PORTFOLIO HEDGING: When a Fund anticipates
having to purchase or sell a foreign currency to facilitate a foreign securities
transaction, it may wish to "lock in" the current exchange rate for that
currency (vis-a-vis the U.S. dollar) and thus avoid (in whole or in part)
exposure to further changes in that rate that could occur prior to when the
purchase or sale proceeds are actually paid. This is called "transaction
hedging."
(I) A Fund can do transaction hedging by purchasing or selling foreign
currencies in the "spot" (i.e., cash) market. Alternatively, the following Funds
may use "forward" currency foreign exchange purchase or sale contracts for
transaction hedging: the Large Cap Value, Multi Cap Growth, International Equity
Index, International Opportunities, International Opportunities B, International
Opportunities Emerging Markets Equity, Health Sciences, Managed, Global
Balanced, High Yield Bond and Global Bond Funds. In a forward exchange contract,
the Fund purchases or sells a specific amount of foreign currency, at a price
set and time set in the contract, which may be any fixed number of days in the
future.
14
(II) These same Funds may also use forward foreign exchange contracts to
reduce their exposure to changes (relative to the U.S. dollar) in the value of a
foreign currency during a period of time when the Fund owns securities that are
denominated, exposed to or traded in that currency. This is called "portfolio
hedging." Except as described in the paragraph immediately below for certain
funds, the Funds may not engage in portfolio hedging with respect to the
currency of a particular country to an extent greater than the aggregate market
value (at the time of establishing the hedge) of securities held by that Fund
which are denominated in, exposed to or traded primarily in that particular
foreign currency. The Funds may or may not attempt to hedge some or all of their
foreign portfolio positions. Rather, they will enter into such transactions only
to the extent, if any, deemed appropriate by their subadvisers. Furthermore, no
Fund will use forward foreign currency exchange contracts for the purpose of
leveraging the Fund's currency exposure.
(III) For purposes of transaction hedging or portfolio hedging, the
Multi Cap Growth, International Equity Index, International Opportunities,
International Opportunities B, Emerging Markets Equity, Health Sciences,
Managed, Global Balanced, and Global Bond Funds may use forward exchange
contracts on a "proxy" currency, instead of the currency being hedged. A proxy
currency is one that the subadviser believes will bear a close relationship to
the currency being hedged and believes will approximately equal the performance
of such currency relative to the U.S. dollar. Nevertheless, changes in the value
of the currency being hedged may not correspond to changes in the value of the
proxy currency as expected, which could result in the currency hedge being more
favorable or less favorable to the Fund than the subadviser had expected.
B. OTHER TECHNIQUES FOR MANAGING CURRENCY EXPOSURE: The Multi Cap Growth,
International Equity Index, International Opportunities, International
Opportunities B, International Opportunities Emerging Markets Equity, Health
Sciences, Managed, Global Balanced, and Global Bond Funds may use additional
techniques when their subadvisers believe that the currency of a particular
country may suffer a significant decline against the U.S. dollar or against
another currency. In that case, these Funds may enter into a forward currency
contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or all
of the Fund's securities denominated in, traded in, or exposed to such foreign
currency. The currency contract may call for the Fund to receive a currency
other than U.S. dollars, for example, if such other currency is believed to be
undervalued or necessary to bring the Fund's overall exposure to various
currencies into a more desirable balance. This is called "cross hedging".
For similar purposes, the Multi Cap Growth, International Opportunities,
International Opportunities B, Emerging Markets Equity, Health Sciences,
Managed, Global Balanced, and Global Bond Funds may also enter into contracts to
purchase, for a fixed amount of U.S. dollars, or other appropriate currency, an
amount of foreign currency corresponding to the value of some of the Fund's
securities.
C. ASSET SEGREGATION REQUIREMENTS FOR FORWARD EXCHANGE CONTRACTS: A Fund
may "cover" its obligations under outstanding forward currency sale contracts by
maintaining portfolio securities denominated, exposed to or traded in the
currency of such contracts or of an appropriate proxy currency. To the extent a
Fund does not thus cover all of its forward currency sales positions with its
portfolio securities, or if it has outstanding any forward currency purchase
contracts, the Fund's custodian will segregate cash or liquid assets in an
amount at all times at least equal to the amount of the Fund's obligation under
each such contract; provided that, as to any such contracts that settles on a
"net" basis, the Fund may consider its obligation to be the net amount that it
owes under that contract. If the value of the portfolio securities used to cover
a position or the value of the assets in the segregated account declines, the
Fund will find additional "cover" or additional cash or liquid assets will be
placed in the account so that the value of the account will at least equal the
required amount described in the preceding sentence.
7. USING OPTIONS ON CURRENCIES TO MANAGE CURRENCY EXPOSURE
A. OVERVIEW: The Multi Cap Growth, International Equity Index,
International Opportunities, International Opportunities B, International
Opportunities Emerging Markets Equity, Health Sciences, Managed, Global
Balanced, High Yield Bond and Global Bond Funds may also purchase and write put
and call options on foreign currencies for the same purposes and to the same
extent as those Funds could use forward foreign exchange contracts (as discussed
in Section 6. above). This could include options traded on U.S. and foreign
exchanges, as well as those traded in "over-the-counter" markets.
15
The characteristics and risks of these currency option transactions are
similar to those discussed in Sections 15. - 16. below with respect to put and
call options on securities.
Call options on foreign currencies written by a Fund will be "covered,"
which means that the Fund will own at all times at least an equal amount of, or
an offsetting position in, the underlying foreign currency.
B. ASSET SEGREGATION REQUIREMENT FOR CURRENCY PUT OPTIONS WRITTEN BY A
FUND: With respect to put options on foreign currencies written by a Fund, the
Fund will establish a segregated account with its custodian bank consisting of
cash or liquid securities in an amount equal at all times to the amount the Fund
would be required to deliver upon exercise of the put.
8. USING CURRENCY FUTURES CONTRACTS AND OPTIONS THEREON TO MANAGE CURRENCY
EXPOSURE.
Any Fund may use currency futures contracts and options thereon for the
same purposes and to the same extent as that Fund could use forward foreign
exchange contracts (as discussed in Section 6. above). The characteristics and
risks of such futures and options transactions are similar to those discussed in
Sections 16. - 19. below for other transactions in futures contracts and options
thereon. All transactions in currency futures and options thereon also would be
subject to the applicable limitations in Section 20. below.
9. USING CERTAIN OTHER DERIVATIVE INSTRUMENTS TO MANAGE CURRENCY EXPOSURE
As discussed in Section 21. below, several of the Funds may use certain
"swaps," "caps," "floors," and "collars" for the same purposes as those Funds
could use forward foreign exchange contracts (as discussed in Section 6. above).
The characteristics and risks of such "derivative" transactions, as discussed in
Section 21., are generally also applicable when such instruments are used for
currency management purposes.
10. USING FOREIGN CURRENCY EXPOSURE MANAGEMENT STRATEGIES (GENERAL
CONSIDERATIONS AND RISKS)
The foreign currency management techniques discussed in Sections 6. - 9.
above do not eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. The Funds are not
obligated to try to hedge against any change in the value of any currency. Even
if a Fund wished to do so, there is no assurance that market conditions would be
such as to make such hedging possible.
Moreover, even where a Fund establishes positions designed to manage its
foreign currency exposure, there is no assurance that this will be beneficial to
the Fund. Such positions may cause a Fund to forego gains that it otherwise
could have achieved or incur costs and losses that it would not otherwise have
incurred. (In general the cost to the Funds of engaging in foreign currency
management transactions varies with such factors as the currency involved, the
type and duration of the instrument being used for this purpose, and the market
conditions then prevailing.) It is entirely possible, therefore, that any
effort to manage a Fund's currency exposure could have a negative effect on the
Fund's investment performance.
In general, the more foreign securities a given Fund invests in, the
greater its currency management activities are likely to be. Also, the Multi
Cap Growth, International Equity Index, International Opportunities,
International Opportunities B, International Opportunities Emerging Markets
Equity, Health Sciences, Managed, Global Balanced, and Global Bond Funds may use
certain of these same types of instruments in currency management strategies
that expose those Funds to currencies other than the U.S. dollar. Although this
would not be done for the purpose of "leveraging" the Fund's overall exposure to
fluctuations in currency values, such strategies could expose those Funds to
greater risks of loss and greater volatility than they otherwise would
experience.
16
11. REALLOCATING A FUND'S ASSETS AMONG ASSET CLASSES
The continual reallocation of assets among the major asset classes (e.g.,
stocks, bonds, and cash) involves the risk that the subadviser may reduce the
Fund's holdings in an asset class whose value increases unexpectedly, or may
increase the Fund's holdings in an asset class just prior to that asset class
experiencing a loss of value. The Managed and Global Balanced Funds tend to
exercise broad discretion in reallocating assets across asset classes. The
Global Bond Fund intends to exercise discretion to reallocate assets across
domestic and international asset classes.
All of the other Funds, with the exception of the Money Market Fund,
generally allow the subadviser some latitude to allocate across asset classes.
Nevertheless, this latitude is expected to be exercised to a lesser degree than
in the case of the Managed, Global Balanced, and Global Bond Funds.
12. ADOPTING A TEMPORARY DEFENSIVE STRATEGY
All of the Funds, except the Money Market Fund, may (but are not required
to) adopt a defensive investment posture if the subadviser believes the
investment environment for the Fund is negative. Such a defensive posture would
involve reallocating some or all of a Fund's assets in a manner different from
that contemplated by its primary investment objective and strategies.
The Funds are limited only by their fundamental investment restrictions as
to the types of investments they could use temporarily for defensive purposes.
Thus, for example, a small cap equity Fund might temporarily invest in stocks of
larger cap companies or in high quality, short term debt securities. A bond Fund
might shorten maturities or tighten its investment quality parameters. An
international Fund might, for example, limit the countries it would invest in or
temporarily invest only in high quality, short-term debt securities in the
United States.
There can be no assurance that the transaction costs and lost investment
opportunities will not outweigh any benefits to a Fund that attempts to adopt a
defensive strategy.
13. INVESTING WITH AN INDEX-BASED OBJECTIVE
The Equity Index, International Equity Index, and Bond Index Funds expect
to invest substantially all of their assets in equity or debt securities within
their investment objectives and policies at all times. Accordingly, these Funds
may carry more risk in times of declining markets than Funds that are more
likely to adopt a defensive investment posture in such circumstances by
reallocating their assets in a manner different from that contemplated by their
primary investment objective and strategies.
Investments in the Equity Index, International Equity Index, and Bond Index
Funds each involve the risk that the Fund will be unable to match the
performance of its corresponding target index. Each Fund's ability to do so is
affected by (a) the size and timing of cash flows into and out of that Fund, (b)
the level of the Fund's expenses, including commissions and "spreads," on its
portfolio transactions, other portfolio management expenses, and other operating
expenses, and (c) the degree of success of the techniques employed by the Fund's
subadviser. Further, if the size of a Fund limits the number of issues that the
Fund can purchase, or that size is relatively small in relation to cash flows,
there is a greater possibility that the Fund may be unable to match the
performance of the corresponding target index.
THE S&P 500 INDEX: The S&P 500 is an index that is constructed by the
Standard & Poor's Corporation ("Standard & Poor's" or "S&P"), which chooses
stocks on the basis of market values and industry diversification. Most of the
largest 500 companies listed on U.S. stock exchanges are included in the index.
Additional stocks that are not among the 500 largest stocks, by market value,
may be included in the S&P 500 for diversification purposes. The index is
capitalization weighted -- that is, stocks with a larger capitalization (shares
outstanding times current price) have a greater weight in the index. Selection
of a stock for inclusion in the S&P 500 Index in no way implies an opinion by
S&P as to its attractiveness as an investment.
17
The Trust and the insurance products supported by the Trust are not
sponsored, endorsed, sold or promoted by Standard & Poor's. Standard & Poor's
makes no representation or warranty, express or implied, to the owners of the
insurance products supported by the Trust or to any member of the public
regarding the advisability of investing in the Trust or such insurance products.
Standard & Poor's only relationship to the Trust is the licensing of Standard &
Poor's "marks" and the S&P 500 Index, which is determined, composed and
calculated by Standard & Poor's without regard to the Fund or the Trust.
"Standard & Poor's," "S&P ," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of McGraw-Hill, Inc. and have been licensed for use by the Trust. In
determining, composing, or calculating the S&P 500 Index, S&P has no obligation
to take into consideration the needs of the Trust or those of the owners of the
insurance products supported by the Trust. S&P is not responsible for and has
not participated in the determination of the prices and amount of the insurance
products supported by the Trust or the timing of the issuance or sale of such
products or in the determination or calculation of the equations by which such
products are to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing, or trading of such products.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE TRUST, OWNERS OF THE PRODUCTS
SUPPORTED BY THE TRUST, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
THE LEHMAN BROTHERS AGGREGATE BOND INDEXES: The Lehman Brothers Aggregate
Bond Index (the "Aggregate Bond Index") is intended to measure the performance
of the domestic, investment grade, fixed-rate investment grade debt market
including government and corporate securities, agency mortgage pass-through
securities, commercial mortgage-backed securities and asset-backed securities.
The Aggregate Bond Index covers those securities in the Lehman Brothers
Government/Credit Index (the "Government/Credit Index"), plus those covered by
the Lehman Mortgage-Backed Securities Index ("MBS Index"), the Lehman Commercial
Mortgage-Backed Securities (ERISA Eligible) Index ("CMBS (ERISA Eligible)
Index"), and the Lehman Asset-Backed Securities Index ("ABS Index"). The
Government/Credit Index is composed of (1) all public obligations of the U.S.
Government, its agencies and instrumentalities (excluding "flower" bonds and
pass-through issues, such as GNMA certificates) and (2) all publicly issued,
fixed-rate, non-convertible, investment grade, U.S. dollar-denominated, SEC-
registered obligations of domestic corporations, foreign governments and
supranational organizations.
The MBS Index covers fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association, the Federal Home Loan Mortgage
Association, and the Federal National Mortgage Association. The CMBS (ERISA
Eligible) Index covers ERISA-Eligible CMBS securities. The ABS Index covers
several subsectors -- including credit and charge cards, auto, utilities and
home equity loans -- and includes pass-through, "bullet," and controlled
amortization structures.
All securities in the index generally have at least $150 million par amount
outstanding and at least 1 year remaining to maturity.
All non-government issues in the Aggregate Bond Index are rated at least
Baa by Moody's Investors Service, Inc. ("Moody's") or, if unrated by Moody's,
BBB by Standard & Poor's Ratings Group ("Standard & Poor's").
All securities in the Aggregate Bond Index issued by non-U.S. entities are
denominated in U.S. dollars.
18
Lehman Brothers, Inc. is neither a sponsor of nor in any other way
affiliated with the Trust or the insurance products supported by the Trust.
Inclusion of a security in the Aggregate Bond Index in no way implies an opinion
of Lehman Brothers, Inc. as to its attractiveness or appropriateness as an
investment.
THE MSCI EAFE GDP INDEX AND MSCI EMERGING MARKETS FREE ("EMF") INDEX: The
MSCI EAFE GDP Index weights countries such that a country with a larger GDP will
have a greater weight in the index. Stocks within those countries are
capitalization weighted; that is, stocks with a larger capitalization have a
greater weight in the index. The MSCI EMF Index is a market capitalization
weighted index composed primarily of companies representative of the market
structure of Emerging Market countries in Europe, Latin America, and the Pacific
Basin. The MSCI EMF Index excludes closed markets and those shares in otherwise
free markets that are not purchasable by foreigners.
The Trust and the insurance products supported by the Trust are not
sponsored, endorsed, sold or promoted by Morgan Stanley Capital International
("MSCI"). MSCI makes no representation or warranty, express or implied, to the
owners of the Trust, or any member of the public regarding the advisability of
investing in funds generally or in the Trust or any Fund particularly, or the
ability of the MSCI EAFE GDP or MSCI EMF Indexes to track general stock market
performance. MSCI is the licensor of certain trademarks, service marks and
trade names of MSCI and of the MSCI EAFE GDP Index, which is determined,
composed and calculated by MSCI without regard to the Trust. "Morgan Stanley
Capital International" is a service mark of Morgan Stanley & Co., Incorporated,
that has been licensed for use by the Trust.
MSCI has no obligation to take the needs of the Trust or the owners of
insurance products supported by the Trust into consideration in determining,
composing or calculating the MSCI EAFE GDP or MSCI EMF Indexes. MSCI is not
responsible for and has not participated in the determination of the prices or
amounts of insurance products supported by the Trust or the timing of the
issuance and sale of such products, or in the determination or calculation of
the equations by which such products are convertible into cash. MSCI has no
obligation or liability to owners of the Trust or of the insurance products
supported by the Trust in connection with the administration, marketing or
trading of any Fund of the Trust.
ALTHOUGH MSCI OBTAINS INFORMATION FOR INCLUSION IN OR FOR USE IN THE
CALCULATION OF THE INDEX FROM SOURCES WHICH MSCI CONSIDERS RELIABLE, NEITHER
MSCI NOR ANY OTHER PARTY GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE
INDEX OR ANY DATA INCLUDED THEREIN. NEITHER MSCI NOR ANY OTHER PARTY MAKES ANY
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY OWNERS OF THE
TRUST, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA
INCLUDED THEREIN. NEITHER MSCI NOR ANY OTHER PARTY MAKES ANY EXPRESS OR IMPLIED
WARRANTIES, AND MSCI HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX OR
ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT
SHALL MSCI OR ANY OTHER PARTY HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT,
SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS)
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
14. INVESTING ON A NON-DIVERSIFIED BASIS
The Large Cap Growth, Large Cap Aggressive Growth, Growth & Income, Multi
Cap Growth, Real Estate Equity, Health Sciences, Managed, Global Balanced and
Global Bond Funds are "non-diversified Funds." Non-diversified Funds are less
restricted in the extent to which they may invest more than 5% of their assets
in any issuer or purchase more than 10% of the voting securities of any issuer.
Because a relatively high percentage of a non-diversified Fund's assets may be
invested in the obligations of a single issuer or a limited number of issuers,
the value of that Fund's shares may be more volatile and more susceptible to any
single economic, political, or regulatory event, or to credit and market risks
associated with a single issuer, than would the shares of a diversified Fund.
19
15. USING OPTIONS (GENERALLY)
A. OVERVIEW: Most of the Funds may, in varying degrees, use options on the
following (which, for simplicity, may be referred to as the "subject" of an
option): currencies, securities, equity indexes, interest rate indexes, and
financial futures contracts. This Section 15. discusses certain characteristics
and risks that are generally common to all of these types of options. The Funds'
use of specific types is discussed in Sections 7. - 8. above and 16. -20. below,
including characteristics and risks peculiar to those types of options or the
Funds' use of them.
B. PURCHASING "CALL" OPTIONS: If a Fund (or anyone else) "purchases" a
"call" option, it pays a purchase price (often called a "premium") plus, in most
cases, a commission to the broker through whom the purchase was made. In return
the Fund (or other purchaser) has the right (but not the obligation), at or
before a specified future time (called the "expiration date"), to acquire a
specified amount of the option's subject (or the economic equivalent thereof) at
a specified price (called the "strike price" or "exercise price"). If the
purchaser of an option decides to exercise this right, we say the option has
been "exercised." If an option is never exercised before its expiration date, it
expires unexercised.
A Fund (or other purchasers of a call option) may profit in one of two
ways. First, the Fund may be able to exercise the call option at a date when the
value of the option's subject exceeds the purchase price of the option
(including any brokerage commission) plus the exercise price. Whether the Fund
will be able to do this depends on how favorable those prices were and how the
value of the option's subject has changed since the option was purchased.
Secondly, a Fund may profit from purchasing an option if the Fund is able
to sell the option (unexercised) at a profit sometime before its expiration
date. (As a practical matter, such a sale would generally be accomplished by
having the Fund sell (i.e., "write") an option identical to the option it owns,
thereby "netting out" the Fund's exposure to the position.) Whether such a
profit will be possible, of course depends on whether the then market price for
the option (less any commission payable on the sale) exceeds the option's
purchase price (including any related commission). In this regard, one of the
general risks of purchasing options is that, for a variety of reasons, the
market price of an option usually does not vary in the same way or to the same
extent as the value of the option's subject varies. Therefore, a Fund can lose
money purchasing a call option, even if the value of the option's subject
increases.
The basic risk in purchasing an option is that, if the Fund never exercises
or sells the option at a profit, the Fund will lose the entire purchase price of
the option (plus any related commissions). That is the maximum amount the Fund
could lose, however.
C. SELLING OR "WRITING" CALL OPTIONS: Selling an option is commonly
referred to as "writing" an option. If the Fund (or anyone else) sells
("writes") a call option, it receives the premium (less any commission) paid by
the option's purchaser and has the obligation to sell the option's subject to
the purchaser at the exercise price if the purchaser exercises the option before
it expires.
The Fund can make a profit writing a call option if the purchaser fails to
exercise the option (which usually would happen only if the value of the
option's subject were below the exercise price). In this case, the option's
purchase price (net of any commissions) would be a profit to the Fund.
Alternatively, a Fund could profit from writing a call option if it is able
to subsequently purchase an identical option that would close out the Fund's
position at a profit. This could be done only if the market price of the option
then exceeded the Fund's purchase price by an amount greater than any
commissions payable by the Fund on the purchase and sale transactions. There is
a risk, however, that a Fund may be unable to do this, even if the value of the
call option's subject has declined. This is because, as noted above, the value
of an option does not vary in identical fashion to the value of the option's
subject.
The risk of writing a call option is that, if the value of the option's
subject exceeds the option's exercise price, the option is almost sure to be
exercised. In that case, the Fund will suffer a loss to the extent that the
premium it received for writing the option (net of any commissions), plus the
exercise price it receives are less than the value of
20
the option's subject at the time of exercise. Therefore, the higher the value of
the option's subject rises, the greater the Fund's potential loss on an option
it has written. A Fund could cut off its further exposure in such a case by
purchasing an identical call option that would close out its position. The Fund
would, however, probably realize a loss on the transaction, because the purchase
price it would have to pay for that call option would probably have increased to
reflect the increasing value of the option's subject.
D. WRITING OPTIONS ON A "COVERED" BASIS. One way for a Fund to limit its
risk exposure on call options it has written is to "cover." A call option may be
considered "covered" if, as long as the option is outstanding, the writer
(seller) of the option owns assets that are identical to, or have the same or
similar investment characteristics to, the option's subject. In such a case, if
the value of the option's subject increases, the losses that the Fund will incur
on the call option it has written will tend to be offset by gains that Fund
earns on the assets it is holding to "cover" the option.
Naturally, the more similar the assets held by the fund are to the option's
subject, the more assurance the Fund will have that its losses on call options
it has written will be "covered." How similar those assets must be varies
depending on the Fund and the type of covered option involved. More details in
this regard can be found in Sections 16. - 19. below.
E. PURCHASING AND SELLING (WRITING) "PUT" OPTIONS: A "put" option is the
same as a call option, except that a Fund (or any other person) that purchases a
put option, by paying the purchase price ("premium") has the right to sell
(rather than buy) the option's subject for a stated exercise ("strike") price.
Conversely, the seller (writer) of a put option receives the premium (net of any
commissions) but has the obligation to purchase the option's subject at its
exercise price if the option is exercised.
Thus, if a Fund purchases a put option, its maximum potential loss would
equal the purchase price (plus any commissions thereon). On the other hand, if
a Fund sells (writes) a put option, the Fund could experience continuing losses
while the option is outstanding, to the extent that the value of the subject of
the option continues to decline. If the subject lost its value entirely, the
Fund's maximum loss would equal the exercise price less the premium (net of any
commissions) that the Fund received initially for writing the option. Because
of this risk exposure, a Fund that writes a put option may seek to "cover" that
option with other assets that it owns. More details about this can be found in
Section 16. - 19. below.
F. ACCOUNTING FOR OPTIONS: The value of any option that the Fund has
purchased, and the amount of the Fund's obligation under any outstanding option
it has written, will vary as market prices change. These variations are
reflected daily in the Fund's calculation of its net asset value, so that such
value always reflects the estimated impact of current market conditions on all
of the Fund's option positions.
16. USING OPTIONS ON SECURITIES IN CERTAIN CONSERVATIVE INVESTMENT STRATEGIES
A. OVERVIEW: Except as otherwise noted below, the general discussion of
options in Section 15. above applies to this Section 16.
Each of the Funds may write covered call options that are traded on
national securities exchanges, except for the Growth & Income, Real Estate
Equity, Active Bond and Money Market Funds. By "covered" we mean that the Fund
will actually own the securities that are the subject of the option.
The same Funds may purchase "protective" put options that are traded on
national securities exchanges. By "protective", we mean that the Fund will
actually own the securities that are the subject of the option. If the market
value of such underlying securities remains above the option's exercise price,
the Fund will, in effect, lose the premium it has paid for the option. The
Fund, however, avoids the risk of loss on the underlying securities, to the
extent that the market value of the underlying securities falls below the
exercise price of the put option.
B. LIQUIDITY RISK: The Funds intend to write and purchase options only if
the subadviser believes that adequate liquidity exists. If for any reason a Fund
cannot, however, close out its open option position when deemed advisable, the
Fund's investment performance could be adversely affected.
21
17. USING FINANCIAL FUTURES CONTRACTS, OPTIONS ON SUCH CONTRACTS AND OPTIONS ON
STOCK INDEXES (GENERAL CONSIDERATIONS)
A. OVERVIEW: Most of the Funds may, in varying degrees use financial
futures contracts, options on such futures and options on stock indexes. This
Section 17 discusses certain characteristics and risks that generally pertain to
these instruments, regardless of the specific use to which they are put. The
Funds' specific uses are discussed in Sections 7. - 8. above and 18. - 20.
below, including specific risks related to those risks.
B. FINANCIAL FUTURES CONTRACTS: Financial futures contracts consist of
interest rate futures contracts, stock index futures contracts, and currency
futures contracts.
An interest rate futures contract is a contract to buy or sell specified
debt securities at a future time for a fixed price. A public market currently
exists for interest rate futures contracts on United States Treasury Bills,
United States Treasury Notes, bank certificates of deposit, and various other
domestic or foreign instruments and indexes.
Stock index futures contracts bind purchaser and seller to delivery at a
future date specified in the contract of a cash amount equal to a multiple of
the difference between the value of a specified stock index on that date and
settlement price specified by the contract. That is, the seller of the futures
contract must pay and the purchaser would receive a multiple of any excess of
the value of the index over the settlement price, and the purchaser must pay and
the seller would receive a multiple of any excess of the settlement price over
the value of the index. A public market currently exists for stock index
futures contracts based on the Standard & Poor's 500 Stock Index, the Standard &
Poor's Midcap Index, the New York Stock Exchange Composite Index, the Value Line
Stock Index, and various other domestic or foreign indexes.
A currency futures contract is a contract to buy or sell a specified amount
of another currency at a future time for a fixed price.
C. OPTIONS ON FINANCIAL FUTURES CONTRACTS: The writer of an option on a
financial futures contract agrees to assume a position in such financial futures
contract having a specified price, if the purchaser exercises the option and
thereby assumes the opposite position in the financial futures contract. If the
option purchaser would assume the sale side of the futures contract upon
exercise of the option, the option is commonly called a "put" option. If the
option writer would assume the purchase side, it is commonly called a "call"
option. As with other types of options, the party that writes the option
receives a premium for doing so, and the party that purchases an option pays a
premium therefor. However, there is no exercise (or strike) price, as such.
Rather, if the value of the futures contract moves against the writer of the
option, so that the option is (or is likely to be) exercised, the option writer,
in effect, has the obligation to pay those losses.
More specifically, an option written by a Fund on a financial futures
contract requires the Fund to pay any amount by which the fluctuating price of
the underlying debt instrument or index exceeds (in the case of a call option)
or is less than (in the case of a put option) the price specified in the futures
contract to which the option relates. Therefore, if the price of the debt
instrument or stock index on which the futures contract is based increases (in
the case of a call option written by a Fund) or decreases (in the case of a put
option written by a Fund), the Fund may incur losses that exceed the amount of
the premium received by the Fund for writing the option.
D. STOCK INDEX OPTIONS: After payment of a specified premium at the time a
stock index option is entered into, the purchaser of a stock index call option
obtains the right to receive a sum of money upon exercise of the option equal to
a multiple of the excess of a specified stock index on the exercise date over
the exercise or "strike" price specified by the option. The purchaser of a put
option obtains the right to receive a sum of money upon exercise of the option
equal to a multiple of any excess of the strike price over the stock index. The
writer of a call or put stock index option receives a premium, but has the
obligation, upon exercise of the option, to pay a multiple of the difference
between the index and the strike price. Thus, if the price of the stock index on
which an index option is based increases (in the case of a call option written
by a Fund) or decreases (in the case of a put option written by a Fund), the
Fund may incur losses that exceed the premium it received for writing the
option.
22
Stock indexes for which options are currently traded include the Standard &
Poor's 100 and Standard & Poor's 500 Indexes.
E. MARGIN REQUIREMENTS FOR FUTURES AND OPTIONS: When futures contracts are
traded, both buyer and seller are required to post an initial margin of cash or
U.S. Treasury Bills equaling as much as 5 to 10 percent or more of the contract
settlement price. The nature of the margin requirements in futures transactions
differs from traditional margin payments made in securities transactions in that
margins for futures contracts do not involve the borrowing of funds by the
customer to finance the transaction. Instead, a customer's margin on a futures
contract represents a good faith deposit securing the customer's contractual
obligations under the futures contract. If the market moves against the Trust,
so that a Fund has a net loss on its outstanding futures contracts for a given
day, the Fund generally will be required to post additional margin to that
extent. The margin deposit is returned, assuming the Trust's obligations have
been met, when the futures contract is terminated.
Similar margin requirements will apply in connection with any transactions
in which a Fund writes any options. This includes options on indexes and
futures contracts, as well as other types of options.
F. CERTAIN RISKS: Financial futures, options thereon, and stock index
options, if used by a Fund, will in most cases be based on securities or stock
indexes the components of which are not identical to the portfolio securities
owned or intended to be acquired by the Fund and in connection with which such
instruments are used. Furthermore, due to supply and demand imbalances and other
market factors, the price movements of financial futures, options thereon, and
stock index options do not necessarily correspond exactly to the price movements
of the securities, currencies, or stock index on which such instruments are
based. These factors increase the difficulty of implementing a successful
strategy using futures and options contracts.
The Funds generally will not take delivery of debt instruments pursuant to
purchasing an interest rate futures contract, nor make a delivery of debt
instruments pursuant to selling an interest rate futures contract. Nor will the
Funds necessarily take delivery of or deliver currencies in connection with
currency futures contracts. Instead, a Fund will more typically close out such
futures positions by entering into closing futures contract transactions.
Similarly, a Fund may wish to close out an option on a futures contract or an
option on an index by entering into an offsetting position in those instruments.
Generally speaking, entering into closing transactions such as described
immediately above would not affect gains and losses of the Fund resulting from
market action prior to such closing transactions. Moreover, there is a risk
that, at the time a Fund wishes to enter into such a closing transaction,
trading in futures or options could be interrupted, for example, because of
supply and demand imbalances arising from a lack of either buyers or sellers.
The futures and options exchanges also may suspend trading after the price has
risen or fallen more than the maximum amount specified by the exchange.
Exercise of options could also be restricted or delayed because of regulatory
restrictions or other factors. Although the subadvisers will seek to avoid
situations where these factors would be likely to cause a problem for the Trust,
in some cases they could adversely affect particular Fund transactions in these
instruments.
G. ASSET SEGREGATION REQUIREMENT FOR CERTAIN FUTURES AND OPTIONS POSITIONS:
A Fund will maintain at all times in a segregated account with its custodian
cash or liquid securities at least equal to the sum of the purchase prices of
all of the Fund's open futures purchase positions, plus the current value of the
securities underlying all of the Fund's open futures sales positions that are
maintained for purposes other than bona fide hedging, plus the exercise price of
all outstanding put options on futures contracts written by the Fund, minus the
amount of margin deposits with respect thereto as marked to market each day.
23
18. USING FINANCIAL FUTURES, OPTIONS THEREON, AND STOCK INDEX OPTIONS FOR
CERTAIN HEDGING-TYPE STRATEGIES
A. OVERVIEW: This Section 18. should be read against the background of the
generally applicable information about options, futures and related risks that
appears in Sections 15. and 17. above.
This Section 18. covers all Funds, except the Money Market Fund.
Specifically, except for the Money Market Fund, all Funds may use exchange-
traded financial futures contracts and options thereon, and, except for the
Active Bond Fund, they also may purchase exchange-traded put or call options on
stock indexes, for the purposes discussed below.
It should be emphasized that none of the Funds is required to use any of
these strategies, and doing so is not a principal investment strategy of any of
the Portfolios. Therefore, it should not be assumed that any particular Fund
will ever necessarily use any of these strategies to a significant extent.
B. HEDGING WITH FINANCIAL FUTURES CONTRACTS AGAINST MARKET CHANGES: All
Funds covered by this Section 18. (except the Equity Index Fund) may use certain
financial futures contracts as a hedge to protect against possible changes in
interest rates and security prices.
Thus, for example, to hedge against the possibility that interest rates or
other factors may result in a general decline in prices of equity securities of
a type owned by them, these Funds (other than the Equity Index Fund) may sell
stock index futures contracts. Similarly, to hedge against the possibility that
increases in interest rates may adversely affect the market values of debt
securities held by them, these Funds (other than the Equity Index and Large Cap
Value CORE Funds) may enter into interest rate futures sale contracts.
C. ESTABLISHING MARKET EXPOSURE AND MANAGING CASH FLOW WITH FINANCIAL
FUTURES CONTRACTS: On the other hand, purchasing futures contracts could enable
a Fund to take the approximate economic equivalent of a substantial position in
bonds or equity securities. Thus, all of the Funds - - with the exception of the
Money Market Fund - - may purchase and sell stock index and interest rate
futures to maintain market exposure and manage cash flows.
D. MANAGING FOREIGN CURRENCY EXPOSURE WITH FOREIGN CURRENCY FUTURES
CONTRACTS: Any Fund may use foreign currency futures contracts to the same
extent and in the same manner as it is authorized to use forward foreign
exchange contracts in Section 6. above.
E. USING OPTIONS ON FUTURES CONTRACTS AND OPTIONS ON STOCK INDEXES FOR THE
FOREGOING PURPOSES: Each Fund that this Section 18. authorizes to use financial
futures contracts also may purchase options on appropriate financial futures
contracts and (except for the Growth & Income, Real Estate Equity, Health
Sciences, Active Bond and Money Market Funds) stock indexes for any purpose and
to the extent that it could use financial futures contracts as discussed in a. -
d. above.
F. LIMITATIONS ON "LONG" POSITIONS FOR CERTAIN FUNDS: The Large Cap Value
CORE Fund may not purchase financial futures contracts, except for currency
futures. The following limitation applies to the Equity Index, Large Cap
Aggressive Growth, Growth & Income, Fundamental Value, Fundamental Growth, Real
Estate Equity, and Managed Funds: These Funds may purchase financial futures
contracts, purchase call options on financial futures options or purchase call
options on equity indexes only if (a) they intend to purchase securities (or, in
the case of the Equity Index, Large Cap Aggressive Growth, Growth & Income,
Fundamental Value, Fundamental Growth and Real Estate Equity Funds, wish to
establish or maintain market exposure to securities that the Fund would be
authorized to purchase) and (b) the value of such securities is expected to
change by approximately the same amount as the value of the futures or options
contracts being used to hedge them.
G. RISKS OF HEDGING-TYPE STRATEGIES: If, after a Fund establishes a hedge
position, the value of the securities or currency being hedged moves in the
opposite direction from that anticipated, the Fund as a whole will perform less
well than it would have had it not entered into the futures or option
transaction.
24
The success of the Funds in using hedging-type techniques depends, among
other things, on the subadviser's ability to predict the direction and
volatility of price movements in the futures or options markets, as well as the
securities markets and, in some cases, currency markets, and on the subadviser's
ability to select the proper type, time and duration of option or futures
contracts. Certain of the subadvisers have limited experience in utilizing
these hedging-type techniques, and there can be no assurance that these
techniques will produce their intended result.
The prices of the futures and options contracts used for hedging-type
strategies may not vary as contemplated in relation to changes in the price of
the securities or currencies being hedged. Accordingly, there is a risk that
transactions in these instruments, if used by a Fund, may not in fact offset the
impact of adverse market developments in the manner or to the extent
contemplated or that such transactions may result in losses to the Fund which
would not be offset by gains with respect to corresponding portfolio securities
owned or to be purchased by that Fund. Hedging-type transactions also may be
more, rather than less, favorable to a Fund than originally anticipated.
19. USING OPTIONS AND FUTURES IN POTENTIALLY MORE AGGRESSIVE STRATEGIES
A. OVERVIEW: This Section 19. should be read against the background of the
generally applicable information about options, futures, and related risks that
appears in Section 15., 17. and 18. above.
This Section 19. applies only to the Large Cap Value CORE, Large Cap
Growth, Growth & Income, Multi Cap Growth, Small/Mid Cap CORE, Small/Mid Cap
Growth, Small Cap Growth, International Equity Index, International
Opportunities B, Emerging Markets Equity, Real Estate Equity, Managed, Global
Balanced, Short-Term Bond, Bond Index, High Yield Bond, and Global Bond Funds.
The option and futures strategies discussed in this Section are in addition to
those discussed for those (and other) Funds in Sections 7., 8., 16., and 18.
above.
B. WRITING CERTAIN TYPES OF OPTIONS: The Large Cap Value CORE, Multi Cap
Growth, Small/Mid Cap CORE, Small/Mid Cap Growth, Small Cap Growth,
International Equity Index, International Opportunities B, Emerging Markets
Equity, Managed, Global Balanced, Short-Term Bond, Bond Index, High Yield Bond,
and Global Bond Funds may write "covered" put options on securities. In
addition, these same Funds may also write covered put and call options on
indexes composed of securities in which the Fund may invest. Such index options
may be written in any manner that the Fund in question is authorized to write
options on specific securities it owns.
A put option written by a Fund will be deemed to be "covered" if the Fund
maintains in a segregated account with its custodian cash or liquid securities
with a value at all times at least equal to the exercise price of the put. Put
and call options written by Funds will also be considered to be "covered" to the
extent that the Fund's liabilities under these options are fully offset by its
rights under put or call options purchased by the Fund.
C. PURCHASING CERTAIN TYPES OF OPTIONS. Each of the Large Cap Value
CORE, Multi Cap Growth, Small/Mid Cap CORE, Small Cap Growth, International
Equity Index, International Opportunities, International Opportunities B,
Emerging Markets Equity, Managed, Global Balanced, High Yield Bond, and Global
Bond Funds may purchase put and call options on securities in which each may
invest, without specific restriction as to the circumstances of such purchases.
Similarly, each of these Funds, as well as the Small/Mid Cap Growth and Short-
Term Bond Funds, may purchase put and call options on indexes composed of
securities in which the Fund may invest, without specific restriction on the
circumstances of such purchases.
Option purchases of the type covered in the preceding paragraph would have
to be consistent with the Fund's investment objective. Also, each of the above-
listed Funds is subject to the limitation on certain futures and options
transactions described in Section 20.
D. USING OPTIONS TRADED OVER-THE-COUNTER OR ON FOREIGN EXCHANGES: The
Growth & Income, Large Cap Value CORE, Multi Cap Growth, Small/Mid Cap CORE,
Small/Mid Cap Growth, Small Cap Growth, International Equity Index,
International Opportunities, International Opportunities B, Emerging Markets
Equity, Health Sciences, Real Estate Equity, Managed, Global Balanced, Short-
Term Bond, Bond Index, High Yield Bond, and Global Bond Funds may also use
options on securities and options on indexes that are traded "over-the-counter"
or on foreign exchanges, in any manner and to the same extent that they would be
permitted to use such options that
25
were traded on domestic exchanges. These Funds will engage in over-the-counter
options only with member banks of the Federal Reserve System and primary dealers
in U.S. Government securities. These Funds will treat over-the-counter options
they have purchased and assets used to cover over-the-counter options they have
written as illiquid securities. However, with respect to options written with
primary dealers in U.S. Government securities pursuant to an agreement requiring
a closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the formula price.
E. USING FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS FOR CERTAIN
PURPOSES: The Growth & Income, Large Cap Value CORE, Large Cap Growth, Multi Cap
Growth, Small/Mid Cap CORE, Small/Mid Cap Growth, Small Cap Value, Small Cap
Growth, International Opportunities B, International Equity Index, Emerging
Markets Equity, Health Sciences, Real Estate Equity, Managed, Global Balanced,
Short-Term Bond, Bond Index, Active Bond, High Yield Bond, and Global Bond Funds
may use futures contracts on securities or on market indexes, and options on
such futures contracts, without specific restriction on the purposes of such
transactions. Nevertheless, such transactions would have to be consistent with
the Fund's investment objective.
There is no specific overall limit on the amount of the assets these Funds
may devote to financial futures contracts and options thereon, even if such
contracts are not limited to hedging-type transactions. Nevertheless (except
through the purchase of options, as discussed below) the Funds will not use
these techniques for purpose of "leveraging" the Fund's exposure to the
securities underlying any futures contract or option thereon or its exposure to
foreign currencies. Although this limitation does not apply to options on
futures contracts that are purchased by a Fund, the total amount of assets on
deposit as margin to secure options on futures contracts that are not used for
bona fide hedging purposes plus the amount of premiums paid by a Fund for such
options is (pursuant to the restrictions set forth in Section 20. below) limited
to 5% of the Fund's net assets.
F. RISKS OF POTENTIALLY MORE AGGRESSIVE OPTIONS AND FUTURES STRATEGIES: As
outlined above, the Funds discussed in this Section 19. may engage in types of
options and futures transactions not permitted to the other Funds, including
over-the-counter options, writing covered put options, and more types of
transactions that are not solely for hedging-type purposes or that otherwise may
be more speculative. Also, even as to options and futures transactions of a type
that are permitted to other Funds, these Funds are, in certain cases, not as
limited regarding the amount of their assets that may be so employed.
Accordingly, to the extent that these Funds exercise their broader authority to
enter into options and futures transactions, they may incur greater risks than
the other Funds.
20. LIMITING THE FUNDS' EXPOSURE TO CERTAIN FUTURES AND OPTION TRANSACTIONS.
The Equity Index, Large Cap Value, Small Cap Equity, and International
Opportunities Funds will not enter into any financial futures contract or
purchase any option thereon, if, immediately thereafter, the total amount of the
Fund's assets required by commodities exchanges to be on deposit as margin to
secure its obligations under futures contracts, plus the amount of premiums paid
by the Fund for outstanding options to purchase futures contracts, exceeds 5% of
the market value of the Fund's total assets.
The following limitation applies to all of the Funds that can invest in
financial futures contracts or options thereon, other than the Equity Index,
Large Cap Value, Small Cap Equity, and International Opportunities Funds: No
such other Fund may purchase, sell or write futures contracts or options thereon
other than for "bona fide" hedging purposes (as defined by the U.S. Commodity
Futures Trading Commission) if immediately thereafter the Fund's initial margin
deposits on such outstanding non-hedging futures and options positions, plus the
amount of premiums paid by the Fund for such outstanding non-hedging options on
futures contracts, exceeds 5% of the market value of the Fund's net assets. For
the purpose of this calculation, any amount by which an option is "in the money"
at the time of its purchase is excluded from the premium paid therefor.
Nor will any of the Large Cap Value, Large Cap Value CORE, Large Cap
Growth, Small Cap Equity, or International Opportunities B Funds enter into any
transaction in interest rate, stock index or currency futures, or options
thereon, or stock index options, if the value of the securities being hedged by
all of such instruments would immediately thereafter be more than one-third of
the value of the Fund's total assets.
26
Nor will any Fund consider as "hedging" any transaction that is intended to
leverage the Fund's investment exposure to the type of security being hedged or
to leverage the Fund's currency exposure.
21. USING OTHER TYPES OF DERIVATIVE INSTRUMENTS
A. OVERVIEW: The International Equity Index, Global Balanced, and High
Yield Bond Funds may engage in "swap" transactions (specifically interest rate,
currency and index swaps) and in the purchase or sale of related "caps,"
"floors," or "collars." The Emerging Markets Equity Fund may also engage in
those transactions and, in addition, may engage in equity swap transactions. The
Managed Fund may invest up to 10% of its total assets (at the time the swap is
entered into) in currency and equity swaps for hedging purposes or for currency
management strategies permitted to it under Section 6 above. The International
Opportunities and International Opportunities B Fund may invest up to 10% of its
total assets (at the time the swap is entered into) in currency and equity
swaps, although it will use currency swaps only for hedging purposes. The Global
Bond Fund may also use these derivative instruments, but only for currency
management strategies permitted to it under Section 6. above.
The nature and risks of these types of transactions are discussed further
in the paragraphs that follow.
B. INTEREST RATE SWAPS: In a typical interest rate swap agreement, one
party agrees to make payments equal to a floating interest rate on a specified
amount (the "notional amount") in return for payments equal to a fixed interest
rate on the same amount for a specified period. If a swap agreement provides for
payments in different currencies, the parties might agree to exchange the
notional amount as well.
Provided the contract so permits, a Fund will usually enter into swaps on a
"net" basis: that is, the two payment streams are netted out in a cash
settlement on the payment date or dates specified in the instrument, with the
Fund receiving or paying, as the case may be, only the net amount of the two
payments.
C. INTEREST RATE CAPS, FLOORS AND COLLARS: The purchaser of an interest
rate cap or floor, upon payment of a fee, has the right to receive payments (and
the seller of the cap is obligated to make payments) to the extent a specified
interest rate exceeds (in the case of a cap) or is less than (in the case of a
floor) a specified level over a specified period of time or at specified dates.
The purchaser of an interest rate collar, upon payment of a fee, has the right
to receive payments (and the seller of the collar is obligated to make payments)
to the extent that a specified interest rate falls outside an agreed upon range
over a specified period of time or at specified dates.
D. CURRENCY, INDEX AND EQUITY SWAPS, CAPS, FLOORS AND COLLARS: Currency,
index, and equity swaps, caps, floors, and collars are similar to those for
interest rates described in the two preceding paragraphs above, except that,
rather than being determined by variations in specified interest rates, the
obligations of the parties are determined by variations in a specified currency,
interest rate index, or equity index, as the case may be.
E. RISKS AND PURPOSES OF THESE OTHER DERIVATIVES: The amount of a Fund's
potential gain or loss on any swap transaction is not subject to any fixed
limit. Nor is there any fixed limit on the Fund's potential loss if it sells a
cap, floor or collar. If a Fund buys a cap, floor or collar, however, the Fund's
potential loss is limited to the amount of the fee that it has paid.
Swaps, caps, floors and collars tend to be more volatile than many other
types of investments. Nevertheless, a Fund will use these techniques only as a
risk management tool and not for purposes of leveraging the Fund's market
exposure or its exposure to changing interest rates, security values or currency
values. Rather, a Fund will use these transactions only to preserve a return or
spread on a particular investment or portion of its investments, to protect
against currency fluctuations, as a duration management technique, to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date, or to gain exposure to certain markets in the most economical
way possible. Nor will a Fund sell interest rate caps, floors or collars if it
does not own securities providing the interest that the Fund may be required to
pay under such derivative instruments. Finally, of course, a Fund may use these
derivative instruments only in ways that are consistent with its investment
objective.
The use of swaps, caps, floors and collars involves investment techniques
and risks different from those associated with other portfolio security
transactions. If the subadviser is incorrect in its forecasts of market values,
27
interest rates, currency rates and other applicable factors, the investment
performance of a Fund might be less favorable than if these techniques had not
been used.
These instruments are typically not traded on exchanges. Accordingly,
there is a heightened risk that the other party to certain of these instruments
will not perform its obligations to the Fund. None of the Funds will enter into
any swap, cap, floor, or collar, unless the other party to the transaction is
deemed creditworthy by the subadviser.
There also is a risk that a Fund may be unable to enter into offsetting
positions to terminate its exposure or liquidate its investment under certain of
these instruments when it wishes to do so. Such occurrences could result in
losses to the Fund. In recent years, the swap market has become relatively
liquid. Caps, floors and collars are more recent innovations for which
standardized documentation has not yet been fully developed and, for that
reason, they are less liquid than swaps.
The liquidity of swaps, caps, floors and collars will be determined by the
subadviser based on various factors, including (1) the frequency of trades and
quotations, (2) the number of dealers and prospective purchasers in the
marketplace, (3) dealer undertakings to make a market, (4) the nature of the
instrument (including any demand or tender features) and (5) the nature of the
marketplace for trades (including the ability to assign or offset a Fund's
rights and obligations relating to the investment). Such determinations will
govern whether the instrument will be deemed within the Fund's 15% restriction
on investments in securities that are not readily marketable.
F. SEGREGATION REQUIREMENTS FOR THESE DERIVATIVES: Each Fund will maintain
cash or liquid debt securities in a segregated account with its custodian in an
amount sufficient at all times to cover its current obligations under swaps,
caps, floors and collars. If a Fund enters into a swap agreement on a net basis,
it will segregate assets with a daily value at least equal to the excess, if
any, of the Fund's accrued obligations under the swap agreement over the accrued
amount the Fund is entitled to receive under the agreement. If a Fund enters
into a swap agreement on other than a net basis, or sells a cap, floor or
collar, it will segregate assets with a daily value at least equal to the full
amount of the Fund's accrued obligations under the agreement.
22. INVESTING IN OTHER INVESTMENT COMPANIES
A. OVERVIEW: Each Fund may invest up to 10% of its total assets in shares
of other investment companies investing exclusively in securities in which that
Fund may otherwise invest. Such investments may involve the payment of
substantial premiums above the net asset value of those investment companies'
portfolio securities and are subject to limitations under the Investment Company
Act of 1940. As a shareholder in an investment company, a Fund would bear its
ratable share of that investment company's expenses, including advisory and
administration fees, except as specifically stated otherwise in the paragraphs
that follow.
B. INVESTING IN PASSIVE FOREIGN INVESTMENT COMPANIES: Because of
restrictions on direct investment by U.S. entities in certain countries, other
investment companies may provide the most practical (or only) way for a Fund to
invest in certain markets. A Fund may incur tax liability to the extent it
invests in the stock of a foreign issuer that is a "passive foreign investment
company," regardless of whether such "passive foreign investment company" makes
distributions to the Fund.
The International Equity Index Fund is likely to invest in closed-end
investment companies known as "country funds" or passive foreign investment
companies. (A "closed end" company is one whose shares can generally be disposed
of only in market transactions, as opposed to redemptions. An "open end" company
is one whose shares are freely redeemable.)
C. INVESTING IN EXCHANGE TRADED FUNDS: All Funds (other than the Money
Market Fund) may invest in certain forms of Exchange Traded Funds ("ETFs"),
provided such investment is consistent with the Fund's investment objectives.
ETFs are registered open-end investment companies whose shares can be bought and
sold on various exchanges in the same way as stocks. ETFs may be used for
several reasons, including but not limited to: facilitating the handling of cash
flows or trading, or reducing transaction costs. There are various forms of
ETFs, but the ones that are most commonly used at the current time are iShares
(formerly called World Equity Benchmark Shares or "WEBS") and SPDRs (Standard
and Poor's Depository Receipts).
28
(I) INVESTING IN ISHARES: iSharessm are shares of an open-end investment
company that invests substantially all of its assets in securities included in
various indices. iSharessm are listed on the AMEX and were initially offered to
the public in 1996. The market prices of iSharessm are expected to fluctuate in
accordance with both changes in the NAVs of their underlying indices and supply
and demand of iSharessm on the AMEX. To date, iSharessm have traded at
relatively modest discounts and premiums to the NAVs. However, iShares have a
limited operating history and information is lacking regarding the actual
performance and trading liquidity of iSharessm for extended periods or over
complete market cycles. In addition, there is no assurance that the requirements
of the AMEX necessary to maintain the listing of iSharessm will continue to be
met or will remain unchanged. In the event substantial market or other
disruptions affecting iSharessm should occur in the future, the liquidity and
value of a Fund's shares could also be substantially and adversely affected. If
such disruptions were to occur, a Fund could be required to reconsider the use
of iSharessm as part of its investment strategy.
(II) INVESTING IN SPDRS: SPDRs are American Stock Exchange-traded
securities that represent ownership in the SPDR Trust, a trust which has been
established to accumulate and hold a portfolio of common stocks that is intended
to track the price performance and dividend yield of the S&P 500. This trust is
a regulated investment company that is sponsored by a subsidiary of the American
Stock Exchange.
D. INVESTING IN MONEY MARKET FUND SHARES: A Fund may also invest in money
market funds managed by its subadviser in reliance upon an exemptive order
received by its subadviser from the SEC. Such exemptive orders may permit funds
managed by the subadviser to invest in money market funds managed by it, to an
extent in excess of amounts otherwise permitted by the Investment Company Act.
The subadviser to the Multi Cap Growth Fund will remit the fees it receives from
money market funds it manages, to the extent such fees are based on the Multi
Cap Growth Fund's assets, to the Multi Cap Growth Fund. Nor are the Large Cap
Value, Small Cap Value,, International Opportunities, and International
Opportunities B, Funds charged any investment management fees for investments in
money market funds managed by their subadvisers.
23. PURCHASING "WHEN ISSUED" SECURITIES AND FORWARD COMMITMENTS
A. OVERVIEW: All Funds (other than the Large Cap Growth, Growth & Income,
Real Estate Equity, and Money Market Funds) may purchase securities on a when
issued or delayed delivery basis. When such transactions are negotiated, the
price of such securities is fixed at the time of commitment, but delivery and
payment for the securities may take place a month or more after the date of the
commitment to purchase. The securities so purchased are subject to market
fluctuations, and no interest accrues to the purchaser during this period.
In addition, these Funds may make contracts to purchase securities for a
fixed price at a future date beyond customary settlement time ("forward
commitments"), because new issues of securities are typically offered to
investors on that basis. Forward commitments involve a risk of loss if the
value of the security to be purchased declines prior to the settlement date.
This risk is in addition to the risk of decline in value of the Fund's other
assets. Although a Fund will enter into such contracts with the intention of
acquiring the securities, the Fund may dispose of a commitment prior to
settlement if its subadviser deems it appropriate to do so.
B. ASSET SEGREGATION REQUIREMENT FOR THESE TRANSACTIONS. Each Fund will
maintain in a segregated account with its custodian cash or liquid securities
that at all times equal the amount of its when issued and forward commitments.
24. SHORT-TERM TRADING
All Funds can use short-term trading of securities as a means of managing
their portfolios to achieve their investment objectives. As used herein,
"short-term trading" means the purchase and subsequent sale of a security after
it has been held for a relatively brief period of time. A Fund may engage in
short-term trading to the extent that the subadviser believes the transactions,
net of costs (including commissions, if any), will benefit the Fund. Generally
speaking, short-term trading can be expected to generate expenses for a Fund
that would not be incurred by a Fund that did not engage in that practice.
29
25. ENTERING INTO REPURCHASE AGREEMENTS
All of the Funds may enter into repurchase agreements.
A repurchase agreement is a contract under which a Fund would acquire a
security for a relatively short period (e.g., 7 days), subject to the seller's
obligation to repurchase the security at a fixed time and price (representing
the Fund's cost plus interest). Repurchase agreements will be entered into only
with member banks of the Federal Reserve System and with "primary dealers" in
U.S. Government securities.
The Large Cap Growth, Growth & Income, Real Estate Equity, Managed, Active
Bond, and Money Market Funds may not invest in repurchase agreements maturing in
more than 7 days. No other Fund will invest in repurchase agreements maturing
in more than 7 days if that investment, together with any other investments
deemed "illiquid," would exceed 15% of the Fund's net assets.
Each Fund has a procedure providing that the securities serving as
collateral for each repurchase agreement must be delivered to the Fund's
custodian or sub-custodian, either physically or in book-entry form, and that
the collateral must be marked-to-market daily to ensure that each repurchase
agreement is fully "collateralized" at all times. In the event of a bankruptcy
or other default by a seller of a repurchase agreement, however, the Fund could
experience delays in liquidating the underlying securities and could experience
losses (including the possible decline in the value of the underlying securities
during the period while the Fund seeks to enforce its rights thereto, possible
subnormal levels of income and lack of access to income during this period, and
expenses of enforcing its rights).
26. PARTICIPATING IN JOINT TRADING ACCOUNTS
John Hancock has established a "joint trading account" that all Funds, in
the discretion of their subadvisers, can use to invest relatively small amounts
of cash on a more favorable basis than they could do individually. John Hancock
is responsible for investing the aggregate cash balances in the joint trading
account into one or more repurchase agreements, as described in Section 25.
above, or in other money market instruments. The joint trading account was
established pursuant to an order of the SEC and all of the Funds (except the
Large Cap Value CORE, Multi Cap Growth Fund, Small/Mid Cap CORE, Small Cap
Growth, and Money Market Funds) regularly participate in it.
Each Fund is also free to participate in any similar joint trading account
that its subadviser operates for mutual fund assets managed by it. These other
joint trading accounts would be operated pursuant to their own SEC exemptive
orders, and the following Funds regularly participate in such other joint
trading accounts: the Large Cap Value CORE, Multi Cap Growth, Small/Mid Cap
CORE, Small/Mid Cap Growth, and Small Cap Growth Funds.
In each case, the subadviser that operates one of these joint trading
accounts is responsible for ensuring that all repurchase agreements acquired
through these accounts are at all times fully collateralized.
27. LENDING OF FUND SECURITIES
In order to generate additional income, all Funds may, and most do, lend
securities from their portfolios to brokers, dealers and financial institutions
such as banks and trust companies. Such loans will be secured by collateral
consisting of cash or U.S. Government securities, which will be maintained in an
amount equal to at least 100% of the current market value of the loaned
securities. During the period of the loan, the Fund receives the income (if any)
on the loaned securities, as well as additional compensation for making the
loan. Cash collateral may be invested in short-term securities, which will
increase the current income of the Fund. Such loans will not be for more than 60
days and will be terminable by the Fund at any time. The Fund will have the
right to regain record ownership of loaned securities in order to exercise
rights of a holder thereof including receiving interest or other distributions
or exercising voting rights. The Fund may pay reasonable fees to persons
unaffiliated with the Fund for services in arranging such loans.
Lending of portfolio securities involves a risk of failure by the borrower
to return the loaned securities, in which event the Fund may incur a loss.
However, most of the Funds' loans of securities are pursuant to an
30
arrangement with State Street Bank & Trust Company, the Trust's primary
custodian. Under these arrangements, State Street Bank & Trust Company
guarantees the Trust against any loss or damages that any Fund incurs as a
result of the borrower failing to return the Fund's securities in accordance
with the terms of the loan. No Fund will lend portfolio securities having a
total value in excess of 33 1/3% of its total assets.
28. USING REVERSE REPURCHASE AGREEMENTS AND MORTGAGE "DOLLAR ROLLS"
A. OVERVIEW: The Short-Term Bond and Money Market Funds may enter into
reverse repurchase agreements to facilitate portfolio liquidity, or in arbitrage
transactions (discussed below). In a reverse repurchase agreement, the Fund
sells a security and enters into an agreement to repurchase the security at a
specified future date, but at a lower price. The Fund generally retains the
right to interest and principal payments on the security, as well as use of the
proceeds while the repurchase agreement is outstanding.
The Managed, Global Balanced, Short-Term Bond, Bond Index, Active Bond, and
Global Bond Funds may enter into mortgage dollar rolls, in which the Fund sells
mortgage-backed securities for delivery in the current month and simultaneously
contracts to purchase substantially similar securities at a specified future
date and price. While the Fund foregoes principal and interest paid on the
mortgage-backed securities during the "roll" period, the Fund is compensated by
the difference between the current sale price and the lower price for the future
purchase as well as by any return earned on the proceeds of the initial sale.
The mortgage dollar rolls and reverse repurchase agreements entered into by
a Fund may be used as arbitrage transactions in which the Fund will maintain an
offsetting position in investment-grade debt obligations or repurchase
agreements that mature on or before the settlement date of the related mortgage
dollar roll or reverse repurchase agreement. Since the Fund will receive
interest on the securities or repurchase agreements in which it invests the
transaction proceeds, such transactions could be considered to involve financial
leverage. However, since such securities or repurchase agreements will be high
quality and will mature on or before the settlement date of the mortgage dollar
roll or reverse repurchase agreement, the Trust does not believe that such
arbitrage transactions present the risks to the Fund that are generally
associated with financial leverage.
B. ASSET SEGREGATION REQUIREMENTS FOR REVERSE REPURCHASE AGREEMENTS AND
MORTGAGE DOLLAR ROLLS: Each Fund will set aside in a segregated account with its
custodian liquid assets that at all times are at least equal to its obligations
under outstanding reverse repurchase agreements and mortgage dollar rolls it has
entered into.
29. INVESTING IN RULE 144A AND ILLIQUID SECURITIES
All Funds may purchase unregistered securities that are eligible for resale
to "qualified institutional buyers" pursuant to Rule 144A under the Securities
Act of 1933. Case-by-case determinations are made whether each issue of Rule
144A securities owned by the Fund is an illiquid security.
If illiquid, a Rule 144A security may not be purchased by the Money Market
Fund. Nor may the Money Market Fund purchase any other investments that are
deemed to be illiquid, if the total of all its illiquid assets would be more
than 10% of its net assets. Each Fund other than the Money Market Fund,
however, may purchase illiquid Rule 144A securities, or other illiquid assets
if, and only if, the total of all the Fund's illiquid assets would not thereby
be made to exceed 15% of the Fund's net assets.
30. INVESTING IN PREFERRED STOCK, CONVERTIBLE SECURITIES AND WARRANTS
Investments may be made in debt or preferred equity securities and those
convertible into, or exchangeable for, equity securities. Traditionally,
convertible securities have paid dividends or interest at rates higher than
common stocks but lower than nonconvertible securities. They generally
participate in the appreciation or depreciation of the underlying stock into
which they are convertible, but to a lesser degree. In recent years,
convertibles have been developed which combine higher or lower current income
with options and other features. Warrants are options to buy a stated number of
shares of common stock at a specified price anytime during the life of the
warrants (generally, two or more years).
31
31. INVESTING IN INITIAL PUBLIC OFFERINGS ("IPOS")
Almost all Funds of the Trust have the ability to invest in IPOs. IPO
investments may be more volatile than other types of investments and a Fund's
investments in IPOs may be subject to more erratic price movements than the
overall equity market. IPOs could have a substantial impact on performance,
either positive or negative, particularly on a fund with a small asset base. The
actual effect of IPOs on performance depends on a variety of factors, including
the number of IPOs the Fund invests in, whether and to what extent a security
purchased in an IPO appreciates in value, and the asset base of the Fund. There
is no guarantee that a Fund's investments in IPOs, if any, will continue to have
a similar impact on the Fund's performance in the future.
D. THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS
The Funds' investment objectives and strategies may, in general, be changed
without the approval of shareholders.
In a few cases, however, the Investment Company Act requires such approval.
In addition, the Trust has adopted as "fundamental" the below-listed
restrictions relating to the investment of each Fund's assets. That these
restrictions are "fundamental" policies means that they may not be changed for
any Fund without the approval of a majority of the outstanding voting shares of
each affected Fund. (The term "majority of the outstanding voting shares" means
the lesser of (1) 67% of the shares represented at a meeting at which more than
50% of the outstanding shares are represented or (2) more than 50% of the
outstanding shares.)
To the extent the Trust's prospectus or this Statement of Additional
Information anywhere sets forth investment restrictions more restrictive than
the fundamental restrictions described below, the more restrictive limitation
controls; but any such more restrictive limitation may be changed without any
shareholder approval, subject to the below fundamental restrictions.
As a matter of fundamental policy, no Fund will:
(1) Purchase real estate or any interest therein, except through the
purchase of corporate or certain government securities (including securities
secured by a mortgage or a leasehold interest or other interest in real estate).
A security issued by a real estate or mortgage investment trust or an interest
in a pool of real estate mortgage loans is not treated as an interest in real
estate. Investments of the type permitted in the Real Estate Equity Fund are not
deemed interests in real estate for the purposes of this restriction.
(2) Make loans, other than through the acquisition of obligations in which
the Fund may invest consistent with its objective and investment policies,
except that each Fund may lend portfolio securities not having a value in excess
of 33 1/3% of the Fund's total assets.
(3) Invest in commodities or in commodity contracts or in puts, calls or a
combination of both, except that
(A) the Equity Index, Large Cap Value, Large Cap Growth, Large Cap
Value CORE, Large Cap Aggressive Growth, Fundamental Value, Multi Cap
Growth, Fundamental Growth, Small Cap Value, Small/Mid Cap Growth,
Small/Mid Cap CORE, Small Cap Equity, Small Cap Growth, International
Equity Index, International Opportunities, International Opportunities B,
Emerging Markets Equity, Health Sciences, Managed, Global Balanced, Short-
Term Bond, Bond Index, High Yield Bond and Global Bond Funds may
(i) write call options on, and purchase put options covered by,
securities held by them and purchase and sell options to close out
positions thus established, provided that no such covered call or put
option position will be established in the Large Cap Growth Fund if
more than one-third of the Fund's total assets would immediately
thereafter be subject to such call and put options,
32
(ii) purchase options on stock indexes and write such options to
close out positions previously established, and
(iii) enter into financial futures contracts or purchase options on
such contracts, and effect offsetting transactions to close out such
positions previously established; provided that, (a) as to the Large
Cap Value, Large Cap Growth, and Small Cap Equity Funds, no position
in financial futures, options thereon or options on securities indexes
will be established if, immediately thereafter, the then-current
aggregate value of all securities owned or to be acquired by the Fund
which are hedged by such instruments exceeds one-third of the value of
its total assets and (b) as to the Equity Index, Large Cap Value,
Small Cap Equity, and International Opportunities Funds, no futures
position or position in options on futures will be established if,
immediately thereafter, the total of the initial margin deposits
required by commodities exchanges with respect to all open futures
positions at the time such positions were established, plus the sum of
the premiums paid for all unexpired options on futures contracts would
exceed 5% of the Fund's total assets;
(B) with respect to the Equity Index, Large Cap Value, Large Cap Value
CORE, Large Cap Aggressive Growth, Fundamental Value, Multi Cap Growth,
Fundamental Growth, Small/Mid Cap CORE, Small/Mid Cap Growth, Small Cap
Equity, Small Cap Value, Small Cap Growth, International Equity Index,
International Opportunities, International Opportunities B, Emerging
Markets Equity, Health Sciences, Managed, Global Balanced, Short-Term Bond,
Bond Index, Active Bond, High Yield Bond, and Global Bond Funds, forward
foreign exchange contracts, forward commitments, and when issued securities
are not deemed to be commodities or commodity contracts or puts or calls
for the purpose of this restriction;
(C) the Large Cap Value CORE, Large Cap Aggressive Growth, Fundamental
Value, Multi Cap Growth, Small/Mid Cap Growth, Small/Mid Cap CORE, Small
Cap Growth, International Equity Index, International Opportunities B,
Emerging Markets Equity, Health Sciences, Managed, Global Balanced, Short-
Term Bond, Bond Index, High Yield Bond, and Global Bond Funds may, in
addition to the activities permitted in (A) and (B) above,
(i) write put and call options on securities and market indexes, if
such positions are covered by other securities or outstanding put and
call positions of the Fund, and purchase put and call options to close
out any positions thus established, and
(ii) enter into futures contracts on securities or market indexes,
or purchase or write put or call options on such futures contracts,
for hedging or speculative (non-hedging) purposes, and enter into
offsetting transactions to close out any positions thus established;
provided that none of these Funds may purchase, sell or write such
futures or options other than for bona fide hedging purposes if
immediately thereafter the Fund's margin deposits on such non-hedging
positions, plus the amount of premiums paid for outstanding options on
futures contracts that are not for bona fide hedging purposes (less
any amount by which any such option is "in the money" at the time of
purchase) exceeds 5% of the market value of the Fund's net assets;
(D) the Large Cap Growth and Active Bond Funds may enter into futures
contracts and purchase or write options thereon to the same extent as is
permitted in (C)(ii), above, with respect to the Funds listed therein, and
the Growth & Income and Real Estate Equity Funds may enter into futures
contracts and purchase or write options thereon to the same extent as if
permitted in (A)(iii) and (C)(ii) above; and
(E) the Equity Index, Large Cap Value, Large Cap Value CORE, Large Cap
Aggressive Growth, Fundamental Value, Multi Cap Growth, Fundamental Growth,
Small/Mid Cap CORE, Small Cap Equity, Small Cap Value, Small Cap Growth,
International Equity Index, International Opportunities, International
Opportunities B, Emerging Markets Equity, Health Sciences, and Managed,
Global Balanced, High Yield Bond, and Global Bond Funds may purchase or
write put or call options on foreign currencies, may purchase put or call
options on securities, and may enter into closing transactions with respect
to any of such options.
33
(4) Engage in the underwriting of securities of other issuers, except to
the extent the Fund may be deemed an underwriter in selling as part of an
offering registered under the Securities Act of 1933 securities which it has
acquired.
(5) Borrow money, except from banks as a temporary measure where such
borrowings would not exceed 5% of the market value of total assets of the Fund
as of the time each such borrowing is made, or 10% as to the Large Cap Value
CORE, Large Cap Aggressive Growth, Fundamental Value, Fundamental Growth,
Small/Mid Cap CORE, Small Cap Value, International Equity Index, International
Opportunities B, Emerging Markets Equity, Health Sciences, Bond Index, and High
Yield Bond Funds, subject to a non-fundamental policy that none of these Funds
will make additional investments at any time when such borrowings plus any
amounts payable by the Fund under reverse repurchase agreements exceed 5% of
that Fund's total assets.
(6) Except as set forth in the following sentence, neither the Growth &
Income, nor the Large Cap Growth, Real Estate Equity, Managed, Active Bond, or
Money Market Funds may purchase securities which are subject to legal or
contractual delays in or restrictions on resale. The Growth & Income, Large Cap
Growth, Real Estate Equity, Managed and Active Bond Funds may, however, purchase
restricted securities, including those eligible for resale to "qualified
institutional buyers" pursuant to Rule 144A under the Securities Act of 1933,
subject to a non fundamental restriction limiting all illiquid securities held
by each Fund to not more than 15% of the Trust's net assets.
(7) Purchase securities on margin, except for short-term credits as may be
necessary for the clearance of purchases or sales of securities, or effect a
short sale of any security. Neither the use of futures contracts as permitted by
restriction (3), above nor the use of option contracts as permitted by
restriction (3) above, shall be deemed to be the purchase of a security on
margin.
(8) Invest for the purpose of exercising control over or management of any
company.
(9) Unless received as a dividend or as a result of an offer of exchange
approved by the Securities and Exchange Commission ("SEC") or of a plan of
reorganization, purchase or otherwise acquire any security issued by an
investment company if the Fund would immediately thereafter own (a) more than 3%
of the outstanding voting stock of the investment company, (b) securities of the
investment company having an aggregate value in excess of 5% of the Fund's total
assets, (c) securities of investment companies having an aggregate value in
excess of 10% of the Fund's total assets, or (d) together with investment
companies having the same investment adviser as the Fund (and companies
controlled by such investment companies), more than 10% of the outstanding
voting stock of any registered closed-end investment company. A real estate or
mortgage investment trust is not considered an investment company. This
restriction (9) does not apply to the Equity Index, Large Cap Value, Large Cap
Value CORE, Large Cap Aggressive Growth, Fundamental Value, Multi Cap Growth,
Fundamental Growth, Small/Mid Cap CORE, Small Cap Equity, Small Cap Value, Small
Cap Growth, Health Sciences, International Opportunities, International
Opportunities B, Emerging Markets Equity, Global Balanced, Bond Index, High
Yield Bond, or Global Bond Funds.
(10) Purchase securities of any issuer, if (a) with respect to 75% of the
market value of its total assets, more than 5% of the Fund's total assets taken
at market value would at the time be invested in the securities of such issuer,
unless such issuer is the United States Government or its agency or
instrumentality, or (b) such purchase would result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund. This
restriction (10) does not apply to the Growth & Income, Large Cap Growth, Large
Cap Aggressive Growth, Multi Cap Growth, Real Estate Equity, Health Sciences,
Managed, Global Balanced, or Global Bond Funds.
(11) Issue senior securities. For the purposes of this restriction, the
following shall not be deemed to be the issuance of a senior security: the use
of futures contracts as permitted by restriction (3), above; the use of option
contracts as permitted by restriction (3), above; or the use of foreign currency
contracts.
The Equity Index, Large Cap Value, Large Cap Value CORE, Large Cap
Aggressive Growth, Fundamental Value, Multi Cap Growth, Fundamental Growth,
Small/Mid Cap Growth, Small/Mid Cap CORE, Small Cap Equity,
34
Small Cap Value, Small Cap Growth, International Equity Index, International
Opportunities, International Opportunities B, Emerging Markets Equity, Global
Balanced, Short-Term Bond, Bond Index, Active Bond, High Yield Bond, and Global
Bond Funds will not purchase the securities of issuers conducting their
principal business activity in the same industry if, immediately after such
purchase, the value of the Fund's investments in such industry would exceed 25%
of its total assets taken at market value. For the purpose of this restriction,
telephone, water, gas and electric public utilities are each regarded as
separate industries, and wholly-owned finance companies are considered to be in
the industry of their parents if their activities are primarily related to
financing the activities of their parent. In conformity with its understanding
of current interpretations of the Investment Company Act by the staff of the
SEC, the Trust, as a non-fundamental policy, interprets this limitation not to
apply to securities issued by the Federal government, or state and local
governments within the U.S., or political subdivisions thereof; but this
exception does not apply to securities of foreign government entities. If these
interpretations change, however, the Trust may modify its practices to conform
to such changes.
For purposes of any restrictions or limitation to which the Trust is
subject, no Fund, by entering into any futures contract or acquiring or writing
any option thereon or on any security or market index, shall be deemed:
(i) to have acquired or invested in any securities of any exchange or
clearing corporation for any such instrument or
(ii) to have acquired or invested in any debt obligations or in any
stocks comprising indexes on which such instrument is based, but which the Fund
does not hold directly in its portfolio.
E. BOARD OF TRUSTEES AND OFFICERS OF THE TRUST
The Board of Trustees of the Trust is responsible for overall management of
the Trust. The Board may exercise all powers of the Trust, except those powers
which are conferred solely upon or reserved to the shareholders. The Board has
three standing committees, which are discussed below.
The Governance Committee of the Board consists of the Trust's four
independent Trustees: Ms. Cook, Ms. Kessler, Mr. Verdonck and Mr. McClellan. The
Governance Committee assists the Board of Trustees by considering and making
recommendations on such matters as the Board's structure, composition, manner of
operations, and effectiveness; and the compensation and continuing education of
independent Trustees. This committee also gives particular consideration to
certain matters that involve actual or potential conflicts of interest between
the Trust and its service providers. The terms of the Trust's advisory
agreements are one important example of this. This committee met four times in
2001.
The Nominating Committee of the Board also consists of the Trust's four
independent Trustees. This committee is responsible for the selection and
nomination of candidates to be independent Trustees. Although the Nominating
Committee may receive input from John Hancock in this regard, the committee
controls the selection and nominating process. The extent of this committee's
activities in a given year will vary somewhat, depending on how many vacancies
for the office of independent trustee need to be filled. The Nominating
Committee did not meet during 2001.
The Audit Committee of the Board consists of the following independent
Trustees: Ms. Cook, Mr. McClellan and Mr. Verdonck. The Audit Committee assists
the Board in fulfilling its oversight responsibilities relating to the quality
and objectivity of financial reporting, the effectiveness and efficiency of
operations (including internal controls), and compliance with applicable laws
and regulations. Among other things, the Audit Committee seeks to maintain good
communication among the Trustees, the Trust's independent auditors and the
Trust's management. Each year, the committee evaluates and makes a
recommendation to the Board of Trustees as to the independent auditors to be
retained by the Trust to audit the Trust's financial statements. The committee
also reviews with such auditors the scope of the audit to be performed and the
results of such audit. The Audit Committee met three times during 2001.
Each of the above-described committees has authority to retain, at the
Trust's expense, legal counsel and such other experts as the committee deems
advisable to help discharge its functions.
35
The following table provides information about the members of the Board of
Trustees and the officers of the Trust:
Name, Address and Position with Term of Principal Occupation Number Other
Age Trust Office During Past 5 Years of JHVST Directorships
--- -------------- ------- -------------------- Funds Held by
Overseen Trustees
by ------------
Trustees
--------
Interested Trustees:
Michele G. Van Leer Chairman and Indefinite Senior Vice President, 28 None
(age 44) Trustee (Commenced Product Management, John
John Hancock Place September 1998) Hancock Life Insurance
Boston, Company; President and
Massachusetts 02117 Director John Hancock
Variable Life Insurance
Company
Kathleen F. Driscoll Vice Chairman, Indefinite Vice President, Signator 28 None
(age 45) President and (Commenced June, Brokerage, John Hancock
John Hancock Place Trustee 2001) Life Insurance Company,
Boston, Vice President, Corporate
Massachusetts 02117 Communications, John
Hancock Life Insurance
Company
Independent Trustees:
Elizabeth G. Cook Trustee Indefinite Expressive Arts Therapist, 28 None
(age 64) (Commenced April Dana Farber Cancer
c/o John Hancock 1993) Institute; President, The
Variable Series Advertising Club of
Trust I, John Greater Boston
Hancock Place,
Boston,
Massachusetts 02117
Diane C. Kessler Trustee Indefinite Executive Director, 28 None
(age 55) (Commenced April Massachusetts Council of
c/o John Hancock 1999) Churches
Variable Series
Trust I, John
Hancock Place,
Boston,
Massachusetts 02117
- --------------
* Mrs. Van Leer and Ms. Driscoll are the only Trustees who are "interested
persons" as defined in the Investment Company Act
36
Name, Address and Position with Term of Principal Occupation Number Other
Age Trust Office During Past 5 Years of JHVST Directorships
--- -------------- ------- -------------------- Funds Held by
Overseen Trustees
by ------------
Trustees
--------
Robert F. Verdonck Trustee Indefinite President and Chief 28 None
(age 56) (Commenced April Executive Officer, East
c/o John Hancock 1999) Boston Savings Bank
Variable Series
Trust I, John
Hancock Place,
Boston,
Massachusetts 02117
Hassell H. McClellan Trustee Indefinite Professor and Graduate 28 None
(age 56) (Commenced Dean, The Graduate School
c/o John Hancock February, 2001) of the Wallace G. Carroll
Variable Series School of Management,
Trust I, John Boston College
Hancock Place,
Boston,
Massachusetts 02117
Other Officers
Jude A. Curtis Compliance Indefinite Second Vice President and N/A N/A
(age 43) Officer (Commenced June, Chief Investment
John Hancock Place 2000) Compliance Officer, John
Boston, Hancock Life Insurance
Massachusetts 02117 Company; formerly Second
Vice President and
Counsel, Office of
Business Conduct; John
Hancock Life Insurance
Company; formerly a
Partner at Hale and Dorr
LLP (law firm)
Maryellen Carney Asst. Compliance Indefinite Compliance Specialist, N/A N/A
(age 36) Officer (Commenced June, John Hancock Life
John Hancock Place 1999) Insurance Company;
Boston, formerly Investment
Massachusetts 02117 Company and Investment
Adviser Examiner, U.S.
Securities & Exchange
Commission, Fort Worth
Office and Boston Office
37
Name, Address and Position with Term of Principal Occupation Number Other
Age Trust Office During Past 5 Years of JHVST Directorships
--- -------------- ------- -------------------- Funds Held by
Overseen Trustees
by ------------
Trustees
--------
Raymond F. Skiba Treasurer Indefinite Director of Fund N/A N/A
(age 56) (Commenced Operations, John Hancock
John Hancock Place February, 1986) Life Insurance Company
Boston,
Massachusetts 02117
Karen Q. Visconti Secretary Indefinite Senior Marketing N/A N/A
(age 48) (Commenced August, Consultant, Life Product
John Hancock Place 1999) Management, John Hancock
Boston, Life Insurance Company
Massachusetts 02117
Arnold R. Bergman Assistant Indefinite Counsel, Law Department, N/A N/A
(age 51) John Secretary (Commenced John Hancock Life
Hancock Place, December, 1999) Insurance company;
Boston, formerly Vice President,
Massachusetts 02117 General Counsel and
Secretary, First Variable
Life Insurance Company
Certain members of the Trust's Board of Trustees may own either variable
annuity contracts or variable life insurance policies that are supported by one
of the Separate Accounts and, in that sense, have an interest in shares of the
Trust.
The names and range of each Trustee's interest in any Fund as of
December 31, 2001 are set forth in the table below
NAME OF TRUSTEE Dollar Range of Interest in DOLLAR RANGE OF INTEREST IN
ANY FUND ALL FUNDS
Interested Trustees:
Michele G. Van Leer 0 0
Kathleen F. Driscoll $ 10,000-$50,000 $ 10,000-$50,000
Independent Trustees:
Elizabeth G. Cook $50,000-$100,000 $50,000-$100,000
Diane C. Kessler $ 10,000-$50,000 $ 10,000-$50,000
Robert F. Verdonck $ 1,000-$10,000 $ 1,000-$10,000
Hassell H. McClellan 0 0
Compensation paid by the Trust to its current disinterested Trustees during
2001 was as follows:
Ms. Cook $61,000
Ms. Kessler $53,000
Mr. Verdonck $59,000
Mr. McClellan $57,000
38
The Trust paid no compensation to any other officer or Trustee. The Trustees'
fees are allocated among the Trust's Funds in proportion to their relative net
assets. The average aggregate net assets for all of the Funds totaled
approximately $10.3 billion for the year 2001.
F. INVESTMENT ADVISORY ARRANGEMENTS
1. THE TRUST'S INVESTMENT ADVISORY ARRANGEMENTS WITH JOHN HANCOCK
John Hancock, the Trust's investment adviser, is a Massachusetts
corporation. Until February 1, 2000, John Hancock was a mutual life insurance
company. Now, it is a subsidiary of John Hancock Financial Services, Inc., a
publicly-traded holding company. John Hancock provides advisory services to the
Funds pursuant to several investment advisory agreements. The Trust is party to
each of these investment advisory agreements with John Hancock.
The Trust pays John Hancock investment advisory fees at the following
rates:
John Hancock's Investment Advisory Fee
As an Annual Percentage of Each Portion
Fund of the Fund's Average Daily Net Assets
- --------------------------------------- ------------------------------------------------------
Equity Index .15% of first $75 million; .14% of next $50 million;
.13% above $125 million
Large Cap Value .75%
Large Cap Value CORE .75% of first $50 million; .65% of next $150 million;
.60% above $200 million
Large Cap Growth .40% of first $500 million; .35% of next $500 million;
.30% above $1 billion
Large Cap Aggressive Growth 1.00% of first $10 million; .875% of next $10 million;
.75% above $20 million
Growth & Income .71% of first $150 million; .69% of next $150 million;
.67% above $300 million
Fundamental Value .95% of first $25 million; .85% of next $25 million; .75% of next $50
million; 65% above $100 million
Multi Cap Growth 1.00% of first $100 million; .90% above $100 million
Fundamental Growth .90% of first $250 million; .85% above $250 million
Small/Mid Cap CORE .80% of first $50 million; .70% above $50 million
Small/Mid Cap Growth 1.00% of first $50 million; .95% of next $150 million;
.90% above $200 million
Small Cap Equity .90% of first $150 million; .75% of next $150 million;
.65% of next $200 million; .60% above $500 million
39
Small Cap Value .95%
Small Cap Growth 1.05%
International Equity Index .18% of first $100 million; .15% of next $100 million;
.11% above $200 million
International Opportunities 1.30% of first $20 million; 1.15% of next $30 million;
1.05% above $50 million
International Opportunities B 1.20% of first $50 million; 1.05% of next $150 million;
1.00% above $200 million
Emerging Markets Equity 1.65% of first $10 million; 1.45% of next $140 million;
1.35% above $150 million
Real Estate Equity 1.10% of first $50 million; 1.00% of the next $50 million;
.90% of the next $100 million; .80% above $200 million
Health Sciences 1.00% of first $250 million; .95% above $250 million
Managed .74% of first $500 million; .68% of next $500 million;
.65% above $1 billion
Global Balanced 1.05% of first $150 million; .95% of next $150 million;
.80% of next $200 million; .75% above $500 million
Short-Term Bond .60%
Bond Index .15% of first $100 million; .13% of next $150 million;
.11% above $250 million
Active Bond .70% of first $100 million; .65% of next $150 million;
.61% of next $250 million; .58% of next $500 million;
.55% above $1 billion
High Yield Bond .80% of first $100 million; .70% above $100 million
Global Bond .85% of first $150 million; .80% of next $150 million;
.75 of next $200 million; .70% above $500 million
Money Market .25%
Under its investment advisory agreements with the Trust, John Hancock
advises the Trust in connection with policy and strategy decisions; provides
administration of much of the Trust's day-to-day operations; serves as the
Trust's transfer agent and dividend disbursing agent; prepares the Trust's
financial statements; maintains records required by the Investment Company Act
of 1940; and supervises activities of the subadvisers (discussed below) and of
other service providers to the Trust. John Hancock also provides the Trust with
office space, supplies and other facilities required for the business of the
Trust. John Hancock pays the compensation of Trust officers and employees and
the expenses of clerical services relating to the administration of the Trust.
To the extent that any administrative or legal services for the Trust are
provided by John Hancock's Law Department, however, John Hancock charges the
Trust separately, and the Trust pays such charges in accordance with the terms
of the investment advisory agreements.
40
All other expenses not expressly assumed by John Hancock under the
investment advisory agreements are paid by the Trust. These include, but are not
limited to, the Trust's taxes (if any); custodian fees; auditing fees; brokerage
commissions; advisory fees; the compensation of Trustees who are not affiliated
with John Hancock; the Trust's fidelity bond coverage; the costs of printing and
distributing annual and semi-annual reports and voting materials to holders of
variable annuity contracts and variable life insurance policies that participate
in the Trust; tabulating votes; fees for certain accounting, valuation, and
compliance services; legal fees; SEC registration costs; proxy costs; costs of
organizing any new Funds; and other expenses related to the Trust's operations.
2. THE TRUST'S ARRANGEMENTS WITH SUBADVISERS
Set forth below are the names to the Funds' subadvisers and certain persons
who may control them.
Subadviser Subadviser's General Nature
and the Funds Controlling of
It Manages Person Basis of Control Control Person's Business
- -------------- ------------ ---------------- -------------------------
1. Independence Investment LLC John Hancock Indirectly owns 100% Financial services holding
(Managed, Growth & Income, Financial Services of voting stock company
Large Cap Growth, Real Estate Inc.
Equity, Short-Term Bond, and
International Equity Index John Hancock Indirectly owns Life insurance and other
Funds) Life Insurance 100% of voting stock financial services provided
Company directly or through subsidiaries
2. John Hancock Advisers, LLC
(Small Cap Growth, and Active Same as 1. above.
Bond)
3. SSgA Funds Management, Inc. State Street Owns 100% of the Financial services holding
(Equity Index Fund) Corporation subadviser company
4. T. Rowe Price Associates, Inc. T. Rowe price Owns 100% of the Publicly traded financial
(Large Cap Value and Small Cap Group, Inc. subadviser services holding company
Value Funds)
5. Janus Capital Management, LLC Stilwell Indirectly owns 92% of Publicly traded financial
(Multi Cap Growth Fund) Financial, Inc. the subadviser services asset management
company
6. Goldman Sachs Asset Management The Goldman Sachs The subadviser is a Publicly traded global
(Small/Mid Cap CORE, and Large Group Inc. unit of the Investment investment banking and
Cap Value CORE, and Management Division of securities firm
International Equity Funds) Goldman, Sachs & Co.,
a subsidiary of
Goldman Saks Group Inc.
41
Subadviser Subadviser's General Nature
and the Funds Controlling of
It Manages Person Basis of Control Control Person's Business
- -------------- ------------ ---------------- -------------------------
7. T. Rowe Price International, T. Rowe Price Indirectly owns 100% Publicly traded financial
Inc. (International Group, Inc. of the subadviser services holding company
Opportunities and
International Opportunities
B Funds)
8. Morgan Stanley Investment Morgan Stanley Directly owns 100% of Publicly traded financial
Management Inc. (Emerging Dean Witter & Co. voting stock services company
Markets Equity and Real Estate
Equity Funds)
9. Mellon Bond Associates, LLP Mellon Financial Directly owns 100% of Bank holding company
(Bond Index Fund) Corporation the subadviser
10. Wellington Management Company, Laurie A. Gabriel; Managing Partners Investment management
LLP (High Yield Bond, Small/Mid Duncan M.
Cap Growth, Fundamental Value, McFarland;
and Money Market Funds) John R. Ryan
11. Alliance Capital Management, AXA Financial, AXA and its Life insurance and other
L.P. (Large Cap Aggressive Inc. ("AXA") subsidiaries owned (as financial services
Growth) of 12/31/01) 51.7% of
the outstanding units
of limited partnership
interests in the
subadviser
12. Capital Guardian Trust Company The Capital The subadviser is an Financial services holding
(Managed, Small Cap Equity, Guardian Group indirect wholly owned company
Global Balanced and Global Bond Companies, Inc. subsidiary of CGCI
Funds) ("CGCI")
13. Putnam Investment Management, Marsh & McLennan The subadviser is an Publicly owned holding company
LLC Companies, Inc indirect wholly owned whose principal businesses are
(Growth & Income, Fundamental (Marsh") subsidiary of Marsh international insurance and
Growth and Health Sciences reinsurance brokerage,
Funds) employment benefit counseling
and investment management
42
Set forth below are the sub-advisory fees that John Hancock pays the subadvisers
for each Fund. THE BELOW FEES ARE PAID BY JOHN HANCOCK AND NOT BY THE FUNDS.
Subadvisory Fees Payable by John Hancock,
Fund as a Percentage of Each Fund's Average Daily Net Assets
- ---- -------------------------------------------------------
Equity Index .05% of first $50 million; .04% of next $50 million;
.02% of next $300 million; and .01% above $400 million
Large Cap Value .40% of first $500 million; and .35% above $500 million
Large Cap Value CORE .40% of first $50 million; .30% of next $150 million;
.25% of next $800 million; and .20% above $1 billion
Large Cap Growth .30% of first $500 million; .2625% of next $500 million;
and .225% above $1 billion
Large Cap Aggressive .75% of first $10 million; .625% of next $10 million;
Growth and .50% above $20 million
Growth & Income Assets managed by Independence Investment, LLC: .1875%
Assets managed by Putnam Investment Management, LLC;
.50% of first $150 million; .45% of next $150 million;
and .35% above $300 million
Fundamental Value .60% of first $25 million; .50% of next $25 million;
.40% of next $50 million; and .30% above $100 million
Multi Cap Growth .55% of first $100 million; .50% of the next $400 million;
and .45% above $500 million
Fundamental Growth .50% of first $250 million; and .45% above $250 million
Small/Mid Cap CORE .60% of first $50 million; and .50% above $50 million
Small/Mid Cap Growth .50% of first $50 million; .45% of next $150 million;
and .40% above $200 million
Small Cap Equity .65% of first $150 million; .50% of next $150 million;
.40% of next $200 million; and .35% above $500 million
Small Cap Value .60% of the first $500 million; and .55% above $500 million
Small Cap Growth .50%
International Equity Index .125% of first $100 million; .10% of next $100 million;
and .06% above $200 million
International .75% of first $20 million; .60% of next $30 million;
Opportunities .50% of next $150 million; .50% of all assets when the
Fund is more than $200 million but less than $500 million;
.45% of all assets above $500 million
International .60% of first $50 million; .55% of next $150 million;
Opportunities B and .50% above $200 million
Emerging Markets Equity 1.10% of first $10 million; .90% of next $140 million;
and .80% above $150 million.
43
Subadvisory Fees Payable by John Hancock,
Fund as a Percentage of Each Fund's Average Daily Net Assets
- ---- -------------------------------------------------------
Real Estate Equity Assets managed by Independence Investment LLC:
.30% of first $300 million; .25% of next $500 million;
and .20% above $800 million Assets managed by Morgan Stanley
Investment Management Inc.: .70% of first $50 million;
.60% of next $50 million; .50% of next $100 million;
and .40% above $200 million
Health Sciences .55% of first $250 million; and .50% above $250 million
Managed Assets managed by Independence Investment LLC:
.30% of first $500 million; .2625% of next $500 million; and .2250%
above $1 billion Assets managed by Capital Guardian Trust Company:
.50% of first $150 million; .45% of next $150 million;
.30% of next $200 million; and .25% above $500 million
Global Balanced .65% of first $150 million; .55% of next $150 million;
.40 of next $200 million; and .35% above $500 million
Short-Term Bond .19% of first $250 million; .17% of next $250 million;
and .15% above $500 million
Bond Index .07% of first $100 million; .06% of next $150 million;
.03% of next $250 million; and .01% above $500 million
Active Bond .25% of first $100 million; .20% of next $150 million;
.16% of next $250 million; .125% of next $500 million;
and .10% above $1 billion
High Yield Bond .45%
Global Bond .40% of first $150 million; .35% of next $150 million;
.30% of next $200 million; and .25% above $500 million
Money Market .09% of first $250 million; .05% of next $500 million;
and .02% above $750 million
3. DOLLAR AMOUNTS OF ADVISORY FEES, SUBADVISORY FEES AND EXPENSE
REIMBURSEMENTS
Set out below are the dollar amounts of advisory fees that the Trust paid
to John Hancock and the subadvisory fees that John Hancock paid to subadvisers
for the past three years:
Fund Investment Adviser Subadvisers*
- ---- ------------------ -------------
2001 2000 1999 2001 2000 1999
---------- ---------- ---------- --------- --------- ---------
Managed............................ 18,129,438 12,069,024 10,789,553 7,509,704 7,988,141 8,001,416
Growth & Income.................... 18,378,237 12,188,384 9,806,770 6,378,814 7,674,810 7,269,220
Equity Index....................... 638,853 682,347 448,044 184,656 252,856 181,624
Large Cap Value.................... 1,654,981 1,222,357 1,087,807 892,337 811,804 710,068
Large Cap Value CORE............... 278,769 81,748 13,622 148,487 43,874 6,990
Large Cap Growth................... 3,319,872 4,955,653 4,378,106 2,489,889 3,756,913 3,250,179
Large Cap Aggressive
Growth.......................... 272,132 214,471 38,421 193,921 156,294 27,498
Fundamental Value.................. 342,746 87,948 16,857 208,657 55,933 10,259
Multi Cap Growth................... 2,410,233 4,303,524 1,646,277 1,535,019 3,001,588 1,119,977
Real Estate Equity................. 1,556,143 946,388 835,184 758,395 473,629 413,496
Health Sciences.................... 163,858 - - - - 90,120 - - - -
Small/Mid Cap Growth............... 1,403,338 1,382,046 1,360,053 848,219 939,041 902,527
Fundamental Growth................. 327,064 249,227 17,491 181,703 144,847 9,805
44
Fund Investment Adviser Subadvisers*
- ---- ------------------ -------------
2001 2000 1999 2001 2000 1999
---------- ---------- ---------- --------- --------- ---------
Small/Mid Cap CORE................. 218,743 131.301 47,616 164,053 99,006 35,177
Small Cap Equity................... 619,083 602,274 512,633 459,131 409,844 348,363
Small Cap Value.................... 559,231 126,890 15,837 353,196 87,204 10,454
Small Cap Growth................... 1,533,746 1,965,285 732,594 937,017 1.319,650 478,916
Global Balanced.................... 291,727 261,293 253,044 187,638 149,889 147,136
International Equity Index......... 261,569 354,066 313,649 179,380 240,625 210,822
International Opportunities B 218,738 139,438 35,992 123,235 84,469 20,788
International Opportunities........ 844,115 819,520 582,128 547,558 589,537 409,561
Emerging Markets Equity............ 364,553 523,867 182,265 272,023 408,779 145,114
Short-Term Bond.................... 468,356 220,826 216,170 225,303 114,279 135,464
Bond Index......................... 135,751 72,662 48,433 66,937 39,093 25,498
Active Bond........................ 5,236,730 2,573,480 2,214,912 1,389,019 1,534,969 1,643,765
Global Bond........................ 518,629 467,803 488,070 239,893 290,135 306,570
High Yield Bond.................... 260,006 159,282 111,177 175,704 123,619 84,425
Money Market....................... 1,319,703 1,038,533 965,427 650,891 1,038,533 953,183
* Paying these fees to the sub-advisers is solely the responsibility of John
Hancock and not the Trust.
Under the investment advisory agreements, for any fiscal year in which the
normal operating costs and expenses of any Fund, exclusive of the investment
advisory fee, interest, brokerage commissions, taxes and extraordinary expenses
outside the control of John Hancock exceed 0.10% of that Fund's average daily
net assets, John Hancock will reimburse that Fund in an amount equal to such
excess. These reimbursements have been as follows for the past three years.
FUND 2001 2000 1999
- ---- ------- ------- -------
Equity Index........................................ - - -- 275,336
Large Cap Value CORE................................ 10,830 26,638 5,824
Large Cap Aggressive Growth......................... 29,164 11,479 3,504
Fundamental Value................................... 79,742 28,895 6,512
Small/Mid Cap Growth................................ 4,000 -- 1,790
Small Cap Equity.................................... 7,794 23,198 6,224
Small Cap Value..................................... 16,492 32,214 9,254
Small Cap Growth.................................... 50,542 -- - -
Global Balanced..................................... 58,591 85,676 91,146
International Equity Index.......................... 202,794 195,833 21,900
International Opportunities B....................... 21,991 92,396 21,901
International Opportunities......................... 143,444 154,310 92,017
Global Bond......................................... 2,284 63,735 1,445
Fundamental Growth.................................. 67,599 10,455 2,888
Small/Mid Cap CORE.................................. 68,521 53,769 77,179
Emerging Markets Equity............................. 733,661 499,569 294,354
Bond Index.......................................... - - 11,335 17,185
High Yield Bond..................................... 38,330 29,620 42,314
Active Bond......................................... - - 201,827 --
4. BASIS OF TRUSTEE APPROVAL OF CONTINUANCE OF ADVISORY ARRANGEMENTS
The Trust's Board of Trustees, at a meeting on February 6, 2002, approved
the continuance of the Trust's investment management agreements ("advisory
agreements") with John Hancock and the Trust's sub-investment management
agreements ("sub-advisory agreements") with sub-advisers. In the process, the
Board evaluated,
45
among other things, written and oral information provided by John Hancock in
response to a request of the Trustees. In addition, the Board's Trust Governance
Committee, composed exclusively of the Board's independent Trustees, met prior
to the Board meeting and evaluated written information provided in advance to
the Board by John Hancock.
During the year, the Board devotes a substantial portion of each of its
five regularly scheduled meetings to an ongoing review and evaluation of John
Hancock and the sub-advisers. This ongoing process is based primarily on written
and oral reports by John Hancock, in-person presentations by the Trust's sub-
advisers on a rotating basis, and answers to questions addressed by the Trustees
to representatives of John Hancock and the sub-advisers. In this connection, the
Trustees receive information from John Hancock regarding John Hancock's
performance of its functions, including monitoring and evaluation of each sub-
adviser. This information relates to such matters as the nature, scope and
quality of the services provided by the sub-advisers to the Trust, and includes,
among other things, (i) the investment performance of each sub-adviser, (ii) any
recommendation by John Hancock to terminate, replace or add a sub-adviser, and
(iii) any recommendation by John Hancock to change any advisory or sub-advisory
fee .
The Trust Governance Committee schedules four meetings a year pursuant to a
Charter that empowers the Committee to meet separately from management in
connection with consideration of the advisory and sub-advisory agreements. The
Charter also empowers the Committee, in any case it deems advisable, to retain
special counsel or other experts or consultants, at the expense of the Trust or
any Fund, to further the interests of the Trust.
The Board generally schedules its meeting in February of each year to
consider whether or not to approve continuing the advisory and sub-advisory
agreements for another year. The Board considers, as applicable, factors bearing
on the nature, scope, quality, cost and profitability of the services provided
to the Trust under these agreements, with a view toward making a business
judgment whether each agreement, including the fee, is, under all of the
circumstances, in the best interest of the Trust.
In approving the agreements at their February 6, 2002 meeting, the Trustees
considered various factors, and, in their business judgment, reached various
conclusions, principally including the following:
o The Trustees reviewed the nature and scope of the various management and
administrative services that John Hancock provides to the Trust,
including, among other things, John Hancock's functions in overseeing,
monitoring and reporting on the Trust's 13 sub-advisers. The Trustees
also reviewed the nature and scope of the portfolio management services
that the sub-advisers provide to the various Funds.
o The Trustees assessed the quality of John Hancock's services and each
sub-adviser's services, on such bases as investment performance and
expense experience for each Fund, on both an absolute basis and a
comparative basis (against benchmarks and certain investment performance
data of similar funds prepared at John Hancock's request by an
unaffiliated company) over current and multi-year periods. Given that
similar funds may allocate other operating expenses (non-advisory fees)
differently between the fund and its adviser than does a Fund of the
Trust, the Trustees concluded that a comparison of aggregate fees and
expenses can be more meaningful than comparison of advisory fees only
and/or comparison of other operating expenses only.
o Furthermore, the Trustees considered that John Hancock and its insurance
company affiliates (the "Insurers") impose fees and charges at the
separate account level under the variable insurance products and that
some of these fees and charges, like the Funds' advisory fees, are
computed as a percentage of net assets invested. Therefore, the Trustees
concluded that a comparison of Trust operating expenses aggregated with
certain such asset-based charges imposed at the separate account level
could be meaningful, even though the Trustees are not responsible for
the fees and charges deducted by the Insurers under the variable
insurance products. Therefore, the Trustees considered expense
information for each Fund, both on an absolute basis and a comparative
basis (against data for similar funds underlying variable insurance
products that was compiled at John Hancock's request by an unaffiliated
company) that also included certain of such charges at the separate
account level.
46
o The Trustees reviewed a schedule of the advisory fee and sub-advisory
fee for each Fund and concluded that most of the Funds have breakpoints
that can pass along a portion of any economies of scale to the contract
owners. The Trustees will consider instituting or accentuating
breakpoints for each Fund or seeking a fee reduction if the Fund's
assets continue to increase and further economies of scale result.
o The Trustees considered the above-mentioned analysis of similar fund
advisory fee and expense data. Based on that analysis, the Trustees
concluded that, while comparative data are not to be relied on
exclusively, the aggregate advisory fees and other expenses of each Fund
are within the range paid by similar funds. The Trustees also considered
the fact that John Hancock has undertaken to reimburse the Funds for
certain operating expenses in excess of a stated rate and that, for
2001, John Hancock reimbursed 16 of the Funds pursuant to this
undertaking.
o The Trustees considered that, in addition to the advisory fees received
by John Hancock from the Trust, the Insurers derive benefits by having
the Trust serve as the underlying funding medium for variable insurance
products offered by the Insurers, which are subject to fees and charges
payable to the Insurers. In this regard, the Trustees considered
representations from John Hancock that (i) those fees and charges, in
the aggregate, are reasonable in relation to the services rendered,
expenses expected to be incurred, and risks assumed by the Insurers,
(ii) those fees and charges do not duplicate fees and expenses paid by
the Trust, and (iii) the advisory fees make no specific allowance to
provide monies to finance distribution of either Trust shares or
variable insurance products (although John Hancock may use profits
realized from the advisory fees for any lawful purpose). While the
Trustees are not responsible for the fees and charges deducted by the
Insurers under the variable insurance products funded through the Trust,
the Trustees concluded that, under all the circumstances, any such
benefits to John Hancock did not appear to be inconsistent with the best
interest of each Fund.
o The Trustees considered that, in addition to the sub-advisory fees
received by sub-advisers from John Hancock, sub-advisers in some cases
receive benefits through soft dollar arrangements by which brokers
provide research and certain other services to sub-advisers in return
for being allocated Trust "brokerage" transactions. The Trustees
considered: (i) information provided by John Hancock about the extent
and nature of such practice by each Fund as applicable; (ii)
representations of sub-advisers regarding the appropriateness of their
practices and (iii) an ongoing study and assessment by an unaffiliated
company of the degree to which each Fund is receiving "best execution."
Under all the circumstances, the Trustees concluded that each Fund's
practices in this regard did not appear to be inconsistent with the best
interest of the Fund.
o The Trustees considered certain information from John Hancock about the
overall profitability to John Hancock and its affiliates of the variable
insurance products funded through the Trust, including information about
profits to John Hancock from serving as the Trust's primary investment
adviser. They also considered information they had received from John
Hancock about the difficulties of quantifying the cost and profitability
of the advisory function separately from the aggregate cost and
profitability of all of the functions performed by John Hancock and its
affiliates to develop, offer, and maintain the products, including the
cost of processing orders for the purchase and redemption of Trust
shares. The Trustees concluded that, particularly in view of the
interdependence of the Fund and the variable insurance products that it
supports, the aggregate profitability information the Trustees had
received was appropriate for purposes of their deliberations.
o The Trustees considered the fact that: (i) John Hancock pays the
sub-advisory fees to the sub-advisers; (ii) John Hancock and a Fund
generally have a common interest in negotiating the sub-advisory fees
downward; (iii) in some cases, John Hancock has succeeded in negotiating
a sub-advisory fee rate that is less than the average rate that a sub-
adviser charges to similar funds; and (iv) the sub-advisers have less
influence over the management of their respective Funds than a primary
adviser to a retail mutual fund normally would (including any influence
with respect to the level of their sub-advisory fees). In light of,
among other things, the particular characteristics of the adviser/sub-
adviser relationship, the Trustees
47
concluded that the profitability information mentioned above concerning
the Insurers was appropriate for purposes of their deliberations over
continuation of both the advisory and sub-advisory agreements.
In connection with their deliberations, the Board and the Trust Governance
Committee received legal advice from outside counsel to the Trust regarding the
standards and methodology of evaluation articulated by the SEC, the courts and
the industry for mutual funds selling shares to the public and the applicability
of those standards and that methodology to mutual funds - like the Trust -
selling shares to life insurance company separate accounts. Such legal counsel,
through its representation of John Hancock on certain matters in which the Trust
does not have a direct interest, is also familiar with the Insurers' variable
insurance products and separate accounts funded through the Trust. The Trustees
considered advice of such legal counsel that mutual funds selling shares to life
insurance companies differed, in certain respects, from mutual funds selling
shares to the public and that, consequently, the standards and methodology of
evaluation developed for the latter did not necessarily apply to the former in
all respects. The Trustees considered, for example, the fact that SEC rules
would permit John Hancock to "veto" Trustee or contract owner proposals for an
adviser other than John Hancock under specified circumstances and that the 1940
Act would permit John Hancock to seek SEC approval to substitute another mutual
fund for the Trust if the Trustees were to select an adviser other than John
Hancock.
The Trustees also took into account the fact that John Hancock affords
contract owners the privilege of instructing John Hancock how to vote the Trust
shares held by John Hancock and that, pursuant to the process, the contract
owners, had voted to approve the advisory agreement and each of the sub-advisory
agreements.
The foregoing discussion of the material factors considered and conclusions
reached by the Trustees is not intended to be all-inclusive. The Trustees
reviewed a large variety of factors and considered a significant amount of
information, including information received on an ongoing basis at meetings of
the Board, the Trust Governance Committee, and the Audit Committee and
otherwise. In view of the broad scope and variety of these factors and
information, the Board did not find it practicable to, and did not, make
specific assessments of, quantify, or otherwise assign relative weights to the
specific factors considered in reaching the Board's conclusions and
determinations to approve the continuance of the Trust's advisory agreement and
each sub-advisory agreement. The approval determinations were made on the basis
of each Trustee's business judgment after consideration of all of the factors
taken as a whole, though individual Trustees may have given different weights to
different factors and assigned various degrees of materiality to various
conclusions.
As a result of their consideration, the Trustees, in the exercise of their
business judgment, approved the continuation each such agreement as being in the
best interest of each Fund to which it relates.
G. ARRANGEMENTS WITH OTHER SERVICE PROVIDERS TO THE TRUST
1. UNDERWRITING AND INDEMNITY AGREEMENT
Pursuant to an Underwriting and Indemnity Agreement, Signator Investors,
Inc. ("Signator") serves as the Trust's principal underwriter, and John Hancock
provides certain indemnities to the Trust and its Trustees. Neither Signator nor
John Hancock receives any additional compensation from the Trust for the
services and indemnities they provide pursuant to the Underwriting and Indemnity
Agreement. The offering of the Trust's shares through Signator is a continuous
offering on a "best efforts" basis. Signator is a wholly-owned subsidiary of
John Hancock and is located at 197 Clarendon Street, Boston, MA 02117.
2. CUSTODY OF THE TRUST'S ASSETS
State Street Bank and Trust Company ("State Street Bank") is the primary
custodian of the assets of all Funds. State Street Bank's principal business
address is 225 Franklin Street, Boston MA 02110. The primary custodian's duties
include safeguarding and controlling the Trust's cash and investments, handling
the receipt and delivery of securities, and collecting interest and dividends on
the Trust's investments. Fund securities purchased in the United States are
maintained in the custody of State Street Bank, although such securities may be
deposited in the book-
48
entry system of the Federal Reserve System, with Depository Trust Company, or
with other qualified domestic book-entry systems or depositories. Also, pursuant
to its agreement with the Trust, State Street Bank provides certain accounting
and recordkeeping services to the Trust and generally values the Trust's assets
by computing each Fund's net asset value each day. The Trust compensates State
Street Bank for these functions through the payment of an annual custody asset
fee of .01% of the total net assets of the Trust, allocated to each Fund based
on the percentage of that Fund's total net assets to the total net assets of the
Trust; miscellaneous transaction charges ranging from $7.00 to $25.00; global
asset and transaction fees that vary by the country in which a Fund's assets are
held or traded; a monthly accounting fee charge that is allocated to each Fund
based on the percentage of that Fund's total net assets to the total net assets
of the Trust; valuation and monthly quote charges; special service fees for
activities of a non-recurring nature; and reimbursement of specified out-of-
pocket expenses.
Foreign securities are generally held through subcustodian banks and
depositories around the world with whom State Street Bank has relationships. In
some cases, Funds whose securities are held in this manner may be exposed to
greater risks of loss. This is because the soundness of such foreign entities,
as well as foreign regulatory practices and procedures, may provide less
protection to security holders than is available in the U.S.
In certain circumstances, brokers may have access to assets that a Fund
posts as "margin" in connection with futures and options transactions. In the
event of a broker's insolvency or bankruptcy, a Fund could experience a delay or
incur costs in recovering such assets or might recover less than the full amount
due. Also the value of such assets could decline by the time the Trust could
effect such recovery.
If on any day a Fund experiences net realized or unrealized gains with
respect to financial futures contracts held through a given broker, it will be
entitled immediately to receive from the broker the net amount of such gains.
The Trust will request payment of such amounts promptly after notification by
the broker that such amounts are due. Thereupon, these assets will be deposited
in the Trust's general or segregated account with its primary custodian, as
appropriate.
3. SUBADMINISTRATION AGREEMENT WITH STATE STREET BANK
Pursuant to a subadministration agreement, with the Trust, State Street
Bank also provides assistance to John Hancock and the subadvisers in computing
total return information for the Trust and in monitoring each Fund's compliance
with the Fund's investment objectives and restrictions, as well as compliance
with certain other applicable legal requirements, . The Trust compensates State
Street Bank for these services through payment of an annual fee that accrues
daily and is billed monthly in arrears. The annual fee is based on the average
net assets of the Trust and is 0.012% of the first $1 billion of average net
assets, 0.0075% of the next $1 of average net assets, and 0.0025% of average net
assets after that. Each Fund is allocated the greater of a minimum monthly Fund
fee or the basis point annual fee, based on the pro-rata total net asset value
of that Fund. The minimum monthly Fund fee is $1,333.
4. INDEPENDENT AUDITORS
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts, are the
independent auditors of the Trust. Ernst & Young audits the financial statements
of the Trust, prepares the Trust's tax returns, and renders other advice to the
Trust concerning accounting and tax matters. Ernst & Young also meets
periodically with the Trust's Board and with the Audit Committee of the Board to
discuss matters within the scope of Ernst & Young's activities with respect to
the Trust.
H. PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
The Funds pay brokers' commissions, transfer taxes, and other fees relating
to their specific portfolio transactions. (Investments in debt securities are,
however, generally traded on a "net" basis through issuers or dealers acting for
their own account as principals and not as brokers. Therefore, no brokerage
commissions are payable on most such transactions, although the price to the
Trust usually reflects a dealer "spread" or "mark-up.")
49
AMOUNTS OF BROKERAGE PAID
Brokerage commissions paid by the Funds were as follows for the past three
years:
FUND 2001 2000 1999
- ---- --------- --------- ---------
Managed............................................. 2,387,899 2,765,087 2,390,067
Growth & Income..................................... 4,394,341 5,189,868 4,747,539
Equity Index........................................ 96,080 64,982 61,865
Large Cap Value..................................... 164,776 155,165 110,393
Large Cap Value CORE................................ 40,010 13,326 3,240
Large Cap Growth.................................... 1,042,938 1,695,781 1,389,454
Large Cap Aggressive Growth......................... 64,914 33,476 11,885
Fundamental Value................................... 635,553 19,805 390,510
Multi Cap Growth.................................... 483,126 486,217 245,913
Real Estate Equity.................................. 171,319 341,413 122,021
Fundamental Growth.................................. 56,725 40,554 3,082
Small/Mid Cap CORE.................................. 33,593 29,151 12,371
Small/Mid Cap Growth................................ 362,533 214,360 621,068
Small Cap Equity.................................... 89,478 325,733 284,381
Small Cap Value..................................... 130,951 142,364 21,848
Small Cap Growth.................................... 268,016 236,981 146,206
Global Balanced..................................... 21,248 76,975 47,678
International Equity Index.......................... 43,092 87,614 133,746
International Opportunities......................... 128,826 277,851 74,940
International Opportunities B....................... 80,159 36,616
Emerging Markets Equity............................. 158,236 236,636 189,025
Bond Index.......................................... 3,312 1,770 598
Global Bond......................................... 0 5,910
High Yield Bond..................................... 88 200
Health Sciences..................................... 28,279
HOW BROKERS AND DEALERS ARE SELECTED
Orders for the purchase and sale of Fund portfolio investments are placed
by the respective subadvisers to the Funds. The subadvisers use their best
efforts to obtain best available price (including brokerage commissions and
other transaction costs) and most favorable execution for all transactions. The
subadvisers select brokers and dealers to execute Fund portfolio transactions
primarily on the basis of their execution capability and trading expertise.
Consideration is also given to such factors as the price of the security, the
rate of the commission, the size and difficulty of the order, the
confidentiality of trades, the reliability, integrity, financial condition, and
operational capabilities of competing brokers or dealers, and the brokerage and
research services which they provide. Applicability of specific criteria will
vary depending on the nature of the transaction, the market in which it is
effected, and the extent to which it is possible to select from among multiple
brokers or dealers capable of effecting the transaction.
It is not the policy of the subadvisers to seek the lowest available commission
if, in their reasonable judgment, there is a material risk that the total cost
or proceeds from the transaction might be less favorable than may be obtainable
elsewhere.
RESEARCH AND STATISTICAL SERVICES FURNISHED BY BROKERS AND DEALERS
Research and statistical assistance typically furnished by brokers or
dealers includes analysts' reports on companies and industries, market
forecasts, and economic analyses. Brokers or dealers may also provide reports on
pertinent federal and state legislative developments and changes in accounting
practices; direct access by telephone
50
or meetings with leading research analysts throughout the financial community,
corporate management personnel, industry experts, leading economists and
government officials; comparative performance and evaluation and technical
performance measurement services; portfolio optimization software; availability
of economic advice; quotation services; and services from recognized experts on
investment matters of particular interest to the subadviser. In addition, the
foregoing services may comprise the use of or be delivered by computer systems
whose software and hardware components may be provided to the subadviser as part
of the services. In any case in which the foregoing systems can be used for both
research and non-research purposes, the subadviser makes an appropriate
allocation of those uses and will permit brokers and dealers to provide only the
portion of the systems to be used for research services. Costs which are
allocable to non-research purposes will be paid directly by the subadviser.
Research and statistical services furnished by brokers and dealers handling
the Funds' transactions may be used by the subadvisers for the benefit of all of
the accounts managed by them and not all of such research and statistical
services may be used by the subadvisers in connection with the Funds.
RELATIONSHIP BETWEEN BROKERAGE COMMISSIONS AND RESEARCH AND STATISTICAL SERVICES
FURNISHED BY BROKERS AND DEALERS
When the subadvisers reasonably determine that more than one broker or
dealer can offer the brokerage and execution services needed to obtain best
available price and most favorable execution, consideration may be given to
selecting the brokers or dealers who supply research and statistical services to
the subadvisers. In receiving these services, which are designed to augment the
subadvisers' own internal research capabilities, the subadvisers comply with
Section 28(e) of the Securities Exchange Act of 1934. This means that the sub-
advisers' traders for the Funds, on the basis of their experience and judgement,
evaluate the overall reasonableness of any broker's commissions in light of all
of the brokerage and research services the broker provides. If the trader for a
Fund concludes that the commission rate is reasonable, and the other
requirements of Section 28(e) are met, the law protects the sub-adviser from any
legal liability that might otherwise result from causing the Fund to pay the
broker a commission in excess of what another broker would have charged.
The subadvisers of the Funds will not at any time make a commitment pursuant to
an agreement with a broker because of research services provided. The sub-
advisers do, however, have internal procedures that seek to direct certain
amounts to broker-dealers that provide research and statistical services of a
type covered by Section 28(e). These internal procedures do not mandate that any
amount of business be directed to any broker-dealer, and in no event will a
broker-dealer be used unless the sub-adviser believes that the broker-dealer
also will provide the best available price and most favorable execution, as
discussed above. During 2001, the amount of transactions, of each Fund directed
to brokers who are included in these internal arrangements, and the related
amounts of commission were as follows:
Fund Dollar Amount Dollar Amount
- ---- of Transactions of Commissions
--------------- --------------
Managed............................................. 874,725,522 480,850
Growth & Income..................................... 548,555,439 1,237,781
Large Cap Value..................................... 12,633,806 16,848
Large Cap Growth.................................... 384,351,913 229,887
Large Cap Aggressive Growth......................... 16,288,422 16,920
Fundamental Value................................... 67,980,088 36,012
Multi Cap Growth.................................... 4,877,365 10,926
Real Estate Equity.................................. 13,038,134 49,437
Fundamental Growth.................................. 24,674,591 23,962
Small/Mid Cap Growth................................ 42,079,549 50,250
Small Cap Value..................................... 3,528,235 5,981
Small Cap Growth.................................... 46,980,820 33,365
International Opportunities......................... 3,511,500 7,373
Emerging Markets Equity............................. 4,661,904 11,959
Health Sciences..................................... 1,619,801 2,457
51
Evaluations of the overall reasonableness of any broker's commissions are
made by the subadvisers' traders for the Funds on the basis of their experience
and judgment. To the extent permitted by Section 28(e) of the Securities
Exchange Act of 1934, such traders are authorized to pay a brokerage commission
on a particular transaction in excess of what another broker might have charged
in recognition of the value of the broker's brokerage or research services.
BROKERAGE TRANSACTIONS IN FOREIGN MARKETS
Brokerage transactions in securities of companies domiciled in countries
other than the United States are anticipated to be normally conducted on the
stock exchanges or other markets of those countries in which the particular
security is traded. Fixed commissions on foreign stock exchange transactions are
generally higher than negotiated commissions available in the United States.
Moreover, there is generally less government supervision and regulation of
foreign stock exchanges and broker-dealers than in the United States. Settlement
periods in non-U.S. markets may differ from the normal settlement period in the
United States.
SIMULTANEOUS TRANSACTIONS WITH OTHER ACCOUNTS
The subadvisers also perform investment advisory services for a number of
other accounts and clients, none of which is given preference over the Trust in
allocating investment opportunities. When opportunities occur which are
consistent with the investment objective of more than one account, it is the
policy of each subadviser to avoid favoring any one account over another.
Accordingly, investment opportunities in such cases are allocated in a manner
deemed equitable by the subadvisers to the particular accounts involved. The
allocation may be based, for example, on such factors as the accounts'
respective investment objectives and then current investment and cash positions.
Subject to these requirements, Trust orders may be combined with orders of other
accounts or clients advised by any of the subadvisers at share prices which are
approximately averaged.
The subadvisers' allocation policies recognize that no rigid formula will
always lead to a fair and reasonable result, and that a degree of flexibility to
adjust to specific circumstances is necessary. Therefore, under certain
circumstances, allocation on a basis other than strictly pro rata or based on
order size is permitted if it is believed that such allocation is fair and
reasonable.
USE OF BROKERS WHO ARE AFFILIATED WITH A SUBADVISER
A Fund may place portfolio transactions through certain brokers who are
affiliated with the Fund's subadviser. The Trust has implemented special
procedures governing the circumstances of these transactions. In addition to
complying with any applicable provisions of the Trust's procedures, these
transactions must comply with all applicable legal requirements, including,
where applicable, Rule 17e-1 under the Investment Company Act. Among other
things, that rule requires the commissions or other compensation paid to the
affiliated broker to be reasonable and fair compared to those in similar
transactions between unrelated parties.
Set forth below is information about transactions by each Fund with affiliated
brokers in reliance on Rule 17e-1 for each of the past three years:
Amount of Commission
Name Nature of Broker's Paid by Fund
of Affiliation with -------------------------------------
Fund Affiliated Broker Fund's Sub-Adviser 2001 2000 1999
- ---- ------------------ ------------------ ------ ------ ------
International Ord Minnett Group Wholly-owned subsidiary of $ 0 $ 0 $ 34
Opportunities Ltd. sub-adviser's parent
International Jardine Fleming & Co. Wholly-owned subsidiary of $ 0 $ 518 $ 710
Opportunities sub-adviser's parent
52
Amount of Commission
Name Nature of Broker's Paid by Fund
of Affiliation with -------------------------------------
Fund Affiliated Broker Fund's Sub-Adviser 2001 2000 1999
- ---- ------------------ ------------------ ------ ------ ------
International Robert Fleming Wholly-owned subsidiary of $ 0 $ 527 $1,166
Opportunities Securities, Ltd. sub-adviser's parent
International Jardine Fleming & Co. Wholly-owned subsidiary of $ 0 $4,485 $ 0
Opportunities sub-adviser's parent
International Robert Fleming Wholly-owned subsidiary of $ 0 $ 77 $ 0
Opportunities Securities, Ltd sub-adviser's parent
Large Cap Value CORE Goldman, Sachs & Co. Dual operating division of $ 0 $ 0 $ 96
sub-adviser's parent
Large Cap Value Neuberger Berman LLC Affiliated broker of Trust $ 0 $ 190 $ 0
affiliated sub-adviser
Small/Mid Cap CORE Goldman, Sachs & Co. Dual operating division of $ 0 $ 753 $ 120
parent of sub-adviser
International Equity Goldman, Sachs & Co. Dual operating division of $3,141 $ 128 $ 0
parent of sub-adviser
Emerging Markets Equity Morgan Stanley Asia Wholly-owned subsidiary of $ 163 $1,785 $2,779
Limited sub-adviser's parent
Emerging Markets Equity Morgan Stanley India Wholly-owned subsidiary of $ 162 $ 0 $ 0
Limited sub-adviser's parent
Emerging Markets Equity Morgan Stanley & Co. Wholly-owned subsidiary of $2,120 $ 0 $ 0
sub-adviser's parent
Emerging Markets Equity Morgan Stanley Wholly-owned subsidiary of $ 0 $ 880 $3,276
International Limited sub-adviser's parent
For 2001, the total dollar amount of such transactions through affiliated
brokers as a percentage of all brokerage-type transactions 3.92% for the
International Equity Fund, and 1.54% of the Emerging Markets Equity Fund. For
2000, the total dollar amount of such transactions through affiliated brokers as
a percentage of all brokerage-type transactions was 5.13% for the International
Opportunities Fund, 4.98% for the International Opportunities II Fund, 3.89% for
the Large/Mid Cap Value II Fund, 0.82% for the Large Cap Value Fund, 2.26% for
the Small/Mid Cap CORE Fund, 1.84% for the International Equity Fund, and 1.82%
of the Emerging Markets Equity Fund.
I. CODES OF ETHICS
Employees of John Hancock Life Insurance Company, the Trust, and the sub-
advisers to the Trust and officers and Trustees of the Trust are subject to
restrictions on engaging in personal securities transactions. These restrictions
are set forth in the John Hancock Insider Information Policy and Procedures, the
Variable Series Trust Code of Ethics, and the Codes of Ethics of the sub-
advisers to the various Funds of the Trust ("Sub-Advisers' Codes of Ethics"),
(combined, "Codes"). The Codes, in accordance with rule 17j-1 of the Investment
Company Act of 1940, as amended, contain provisions and requirements designed to
identify and address certain conflicts of interest between personal investment
activities of employees of the adviser and sub-advisers to the Funds and the
interests of the Funds. These Codes do not prohibit personnel from investing in
securities that may be purchased or held by the Funds within the Trust. However,
the Codes, consistent with standards recommended by the Investment Company
Institute's Advisory Group on Personal Investing and requirements established by
rule 17j-1, among other things, prohibit personal securities investments without
pre-clearance for certain employees, impose time periods during which personal
transactions may not be made in certain securities by employees with access to
investment information, and require the timely submission to compliance
personnel of broker confirmations and quarterly reporting of personal securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process. The
Variable Series Trust Code of Ethics incorporates and applies its restrictions
to officers and Trustees of the Trust who are affiliated with John Hancock Life
Insurance Company. The Variable Series Trust Code of Ethics does not prohibit
unaffiliated Trustees from investing in securities that may be held by the
Trust; however, the Variable Series Trust Code of Ethics does regulate the
personal securities transactions of unaffiliated Trustees of the Trust,
including limiting the time periods
53
during which they may personally buy and sell certain securities about which
they may receive information. The Trust's Trustees, in compliance with rule 17j-
1, have approved the Variable Series Trust Codes of Ethics and the Sub-Advisers'
Codes of Ethics and are required to approve any material changes to the Variable
Series Trust Code of Ethics as well as to the Sub-Advisers' Codes of Ethics. The
Trustees also provide continuing oversight of personal investment policies and
annually evaluate the implementation and effectiveness of the Codes. The Codes
are on public file with, and are available from, the Securities and Exchange
Commission.
J. FEATURES OF THE TRUST'S SHARES
The shares of beneficial interest of the Trust currently are divided into
28 series, each corresponding to one of the Trust's 28 Funds. The Trust has the
right to establish additional series and issue additional shares without the
consent of its shareholders.
If the holders of variable annuity contracts and variable life
insurance policies show minimal interest in any Fund, the Trust's Board of
Trustees, by majority vote, may eliminate the Fund or substitute shares of
another investment company. Any such action by the Board would be subject to
compliance with any requirements for governmental approvals or exemptions or for
shareholder approval. The holders of variable annuity contracts and variable
life insurance policies participating in any such Fund will be notified in
writing of the Trust's intention to eliminate the Fund and given 30 days to
transfer amounts from such Fund to other Funds without incurring any transaction
fee. Amounts not transferred or withdrawn would automatically be transferred,
at the discretion of the Fund's management.
The assets received by the Trust for the issuance or sale of shares of each
Fund and all income, earnings, profits, and proceeds thereof are specifically
allocated to that Fund. They constitute the underlying assets of each Fund, are
segregated on the books of the Trust, and are to be charged with the expenses of
such Fund. Any assets which are not clearly allocable to a particular Fund or
Funds are allocated in a manner determined by the Board of Trustees. Accrued
liabilities which are not clearly allocable to one or more Funds would generally
be allocated among the Funds in proportion to their relative net assets before
adjustment for such unallocated liabilities.
Each issued and outstanding share in a Fund is entitled to participate
equally in dividends and distributions declared with respect to such Fund and in
the net assets of such Fund upon liquidation or dissolution remaining after
satisfaction of outstanding liabilities.
A dividend from the net investment income of the Money Market Fund will be
declared and distributed daily. Dividends from net investment income of the
other Funds will be declared and distributed monthly. The Trust will distribute
all of its net realized capital gains annually. Dividends and capital gains
distributions will normally be reinvested in additional full or fractional
shares of the Fund to which they relate and will be appropriately credited to
investment performance under the variable life insurance policies and variable
annuity contracts participating in that Fund.
The shares of each Fund, when issued, will be fully paid and non-
assessable, and will have no preference, preemptive, exchange or similar rights.
Shares do not have cumulative voting rights.
K. SHAREHOLDER MEETINGS AND VOTING RIGHTS
Under the Trust's Declaration of Trust, the Trust is not required to hold
an annual shareholders' meeting. Normally, for example, there will be no
shareholders meetings for the purpose of electing Trustees.
In addition, it is expected that the Trustees generally will elect their
own successors and appoint Trustees to fill any vacancy, so long as, after
filling the vacancy, at least two-thirds of the Trustees then in office have
been elected by the shareholders.
Notwithstanding the above, if at any time less than a majority of Trustees
in office have been elected by the shareholders, the Trustees must call a
special shareholders' meeting promptly. Also the Trustees will promptly call
54
a meeting of shareholders for the purpose of voting upon the question of removal
of any Trustee or all of the Trustees, if requested in writing to do so by
holders of 10% or more of the outstanding shares. In this regard, whenever ten
or more shareholders who have been such for at least six months and who hold in
the aggregate either shares having a net asset value of at least $25,000 or at
least 1% of the outstanding shares, whichever is less, apply to the Trustees in
writing stating that they wish to communicate with other shareholders with a
view to obtaining signatures to a request for a shareholders' meeting, for
consideration of the removal of any or all of the Trustees and accompanied by
the material which they wish to transmit, the Trustees will within five business
days after receipt either afford to such applicants access to the Trust's
shareholder list or inform such applicants as to the approximate number of
shareholders of record, and the approximate cost of mailing the material. If the
Trustees elect the latter, the Trustees, upon written request of such
applicants, accompanied by the material to be mailed and the reasonable expenses
of mailing, shall promptly mail such material to all shareholders of record,
unless within five business days the Trustees shall mail to such applicants and
file with the SEC, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that, in
their opinion, either such material is misleading or in violation of applicable
law and specifying the basis of such opinion.
At any shareholders' meeting, all shares of the Trust of whatever class are
entitled to one vote, and the votes of all classes are cast on an aggregate
basis, except on matters where the interests of the Funds differ. Where the
interests of the Funds differ, the voting is on a Fund-by-Fund basis. Approval
or disapproval by the shareholders in one Fund on such a matter would not
generally be a prerequisite of approval or disapproval by shareholders in
another Fund; and shareholders in a Fund not affected by a matter generally
would not be entitled to vote on that matter. Examples of matters which would
require a Fund-by-Fund vote are changes in the fundamental investment policy of
a particular Fund and approval of investment management or sub-investment
management agreements.
55
L. SALES AND REDEMPTIONS OF FUND SHARES
"SEED MONEY" SHARES
Typically, when a new Fund is added to the Trust, John Hancock (or one of
its affiliates) initially purchases a substantial amount of that Fund's shares
to provide the new fund with a reasonable asset base with which to commence
operations. For example, the most recent such contributions of "seed money" to
currently available funds have been as follows:
"Seed Money" Date
Shares Purchased by of
Fund John Hancock Purchase
- ---- ------------ --------
Equity Index 15,000,000 5/1/98
Large Cap Value CORE 5,000,000 8/31/99
Large Cap Aggressive Growth 10,000,000 8/31/99
Fundamental Value 5,000,000 8/31/99
Fundamental Growth 5,000,000 8/31/99
Small/Mid Cap CORE 5,000,000 5/1/98
Small Cap Value 5,000,000 8/31/99
Health Sciences 20,000,000 5/1/01
International Opportunities 15,000,000 5/1/98
Global Balanced 20,000,000 5/1/96
International Opportunities B 10,000,000 8/31/99
Emerging Markets Equity 10,000,000 5/1/98
Bond Index 25,000,000 5/1/98
High Yield Bond 10,000,000 5/1/98
John Hancock (or its affiliate) may redeem these shares (and thus withdraw
its seed money investment) at some time. However, before withdrawing any part of
their interests in any Fund, John Hancock (or its affiliate) will consider any
possible adverse impact the withdrawal might have on that Fund.
Purchases and redemptions of seed money shares are made at the applicable
Fund's net asset value per share (with no additions or deductions for charges)
next computed after the purchase or redemption order is placed.
As of April 30, 2002, only the following Funds still have seed money that
has not been withdrawn: Fundamental Growth, Health Sciences, Global Balanced,
International Opportunities B and Emerging Markets Equity.
SHARES SOLD AND REDEEMED IN CONNECTION WITH TRANSACTIONS UNDER VARIABLE ANNUITY
CONTRACTS AND VARIABLE LIFE INSURANCE POLICIES
Fund shares are sold at their net asset value as next determined after
receipt of net premiums by the Separate Account, without the addition of any
selling commission or sales load.
Shares are redeemed at their net asset value as next determined after
receipt of net surrender requests by the Separate Account. No fee is charged on
redemption. Redemption payments will usually be paid within seven days after
receipt of the redemption request, except that the right of redemption may be
suspended or payments postponed whenever permitted by applicable law and
regulations. Redemptions are normally made in cash, but the Trust reserves the
right, at its discretion, to make full or partial payment by assignment to the
appropriate Separate Account of portfolio securities at their value used in
determining the redemption price. In such cases, the Separate Account would
incur brokerage costs should it wish to liquidate these portfolio securities.
Trust shares are also sold and redeemed as a result of transfer requests,
loans, loan repayments, and similar Separate Account transactions, in each case
without any sales load or commission or at the net asset value per share
computed for the day as of which such Separate Account transactions are
effected.
56
M. COMPUTING THE FUNDS' NET ASSET VALUE
Each Fund determines its net asset value per share once daily as of the
close of the customary trading session of the New York Stock Exchange
("Exchange") on each business day of the Fund. The Exchange generally closes at
4:00 p.m. Eastern Standard Time. However, ETFs and certain derivative
instruments may be valued using prices as late as 4:15 p.m. Eastern Standard
Time. In the event the Exchange closes at any time other than 4:00 p.m. Eastern
Standard Time on a particular day, each Fund will determine its net asset value
per share as of the close of the Exchange on that day.
The net asset value per share of each Fund is determined by adding the
value of all portfolio securities and other assets, deducting all portfolio
liabilities, and dividing by the number of outstanding shares. All Trust
expenses will be accrued daily for this purpose.
Short-term investments with a remaining maturity of 60 days or less, and
all investments of the Money Market Fund, are valued at "amortized cost," which
approximates market value. This involves valuing a security at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates. While this
method provides certainty in valuation, it may result in periods during which
the value of an instrument, as determined by amortized cost, is higher or lower
than the price the Fund would receive upon the sale of the instrument.
The Board of Trustees has established procedures designed to stabilize the
Money Market Fund's price per share, as computed for the purpose of sales and
redemptions, at $1. There can be no assurance, however, that the Fund will at
all times be able to maintain a constant $1 net asset value per share. Such
procedures include review of the Fund's holdings at such intervals as is deemed
appropriate to determine whether the Fund's net asset value, calculated by using
available market quotations, deviates from $1 per share and, if so, whether such
deviation may result in material dilution, or is otherwise unfair to existing
shareholders. In the event that it is determined that such a deviation exists,
the Board of Trustees will take such corrective action as it regards as
necessary and appropriate. Such action may cause losses or gains to be recorded
for the Fund, including decreases or increases in the Fund's net asset value per
share.
Securities and call and put options that are listed on a stock exchange are
normally valued at the closing sales price. If there were no sales during the
day, they are normally valued at the last previous sale or bid price reported,
as are equity securities that are traded in the over-the-counter market.
Non-exchange traded debt securities (other than certain short-term
investments) are valued on the basis of valuations furnished by a pricing
service which uses electronic data processing techniques, without exclusive
reliance upon quoted prices.
Any other security for which market quotations are not readily available,
and any other property for which valuation is not otherwise available, is valued
at fair value as determined in good faith by, or under the direction of, the
Board of Trustees.
Financial futures contracts, options thereon and options on stock indexes
are valued at the last trade price of the day. In the absence of a trade on a
given day, the value generally is used which is established by the exchange on
which the instrument is traded.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day on which the New York Stock Exchange is open. The values
of such securities used in computing net asset value per share are normally
determined as of such times. Trading of these securities may not take place on
every New York Stock Exchange business day and may take place on days which are
not business days in New York. The Trust calculates net asset value per share as
of the close of regular trading on the New York Stock Exchange on each day on
which that exchange is open. Therefore, such calculation does not take place
contemporaneously with the determination of the prices of many of the Funds'
securities used in such calculation. If events affecting the value of such
securities
57
occur between the time when their price is determined and the time as of which
the Fund's net asset value is calculated, such securities may be valued at fair
value by or under the direction of the Board of Trustees.
N. TAXES
The Trust intends that each Fund qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code ("Code"). This requires that
each Fund comply with certain requirements as to the nature of its income and
amounts of dividends and other distributions it pays. Also, in order to qualify
under Subchapter M, at the end of each quarter of a Fund's taxable year, (i) at
least 50% of the market value of the Fund's assets must be represented by cash
and cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities, with such other securities limited,
in respect of any one issuer, to an amount that does not exceed 10% of the
voting securities of such issuer or 5% of the value of the Fund's total assets;
and (ii) not more than 25% of the value of its assets may be invested in the
securities (other than U.S. Government securities and securities of other RICs)
of any one issuer or two or more issuers which the Fund controls and which are
engaged in the same, similar or related trades or businesses.
The Trust also intends that each Fund comply with certain other
diversification requirements, promulgated under Section 817(h) of the Code.
Under these requirements, no more than 55% of the total value of the assets of
each Fund may be represented by any one investment, no more than 70% by any two
investments, no more than 80% by three investments and no more than 90% by four
investments. Generally, for these purposes, all securities of the same issuer
are treated as one investment. In the context of U.S. Government securities
(including any security that is issued, guaranteed or insured by the United
States or an instrumentality of the United States), each U.S. Government agency
or instrumentality is treated as a separate issuer.
Assuming the Funds qualify as regulated investment companies under
Subchapter M, they will not owe any income taxes. On the other hand, if a Fund
fails to qualify under Subchapter M, it may incur income tax liabilities, which
will negatively affect its investment performance.
Also, qualification under Subchapter M, as well as compliance with the
Section 817(h) diversification requirements, (among other things) are necessary
to secure the tax treatment intended for most holders of variable annuity
contracts and variable life insurance policies that are supported by the Trust.
Therefore, any such failure to qualify under Subchapter M or to meet the
diversification standards under Section 817(h) could have serious adverse
consequences for such investors.
For a discussion of these and other tax implications of owning a variable
annuity contract or a variable life insurance policy for which the Fund serves
as the investment medium, please refer to the Prospectus for such contract or
policy attached at the front of this Prospectus.
Those Funds that invest substantial amounts of their assets in foreign
securities may be able to make an election to pass through to the insurance
company issuing the variable annuity contract or a variable life insurance
policy any taxes withheld by foreign taxing jurisdictions on foreign source
income. Such an election will result in additional taxable income and income tax
to the insurance company. The amount of additional income tax, however, may be
more than offset by credits for the foreign taxes withheld, which are also
passed through.
O. INFORMATION ABOUT FUND PERFORMANCE
HOW MONEY MARKET FUND YIELDS ARE CALCULATED
The Money Market Fund may advertise investment performance figures,
including its current yield and its effective yield.
The Money Market Fund's yield is its current investment income,
expressed in annualized terms. The current yield is based on a specified seven-
calendar-day period. It is computed by (1) determining the net change
(exclusive of capital changes) in the value of a hypothetical pre-existing
account having a balance of one share at the beginning
58
of the period, (2) dividing the net change in account value by the value of the
account at the beginning of the base period to get the base period return, then
(3) multiplying the base period return by 52.15 (365 divided by 7). The
resulting yield figure is carried to the nearest hundredth of one percent.
The calculations include the value of additional shares purchased with any
dividends paid on the original share and the value of dividends declared on both
the original share and any such additional shares. The capital changes excluded
from the calculation are realized capital gains and losses from the sale of
securities and unrealized appreciation and depreciation.
Compound (effective) yield for the Fund will be computed by dividing the
seven-day annualized yield (determined as above) by 365, adding 1 to the
quotient, raising the sum to the 365th power, and subtracting 1 from the result.
For the seven-day period ending December 31, 2001, the Money Market Fund's
current yield was 1.77%; its effective yield was 1.79%.
The Fund's yield will fluctuate depending upon market conditions, the type,
quality, and maturity of the instruments in the Fund, and its expenses.
CHARGES UNDER VARIABLE LIFE INSURANCE AND VARIABLE ANNUITY POLICIES
Yield and total return quotations do not reflect any charges imposed on any
Separate Account or otherwise imposed pursuant to the variable life insurance
policies and variable annuity contracts that are supported by the Funds. (Those
charges are discussed in the prospectus for such policies or contracts.)
Therefore, the yield or total return of any Fund is not comparable to that of a
publicly available fund. Nor should yield or total return quotations be
considered representative of the Fund's yield or total return in any future
period.
P. LEGAL MATTERS
The law firm of Foley & Lardner of Washington, D.C., advises the Trust on
certain legal matters relating to the Federal securities laws.
Q. REPORTS TO CONTRACTHOLDERS
Annual and semi-annual reports containing financial statements of the
Trust, as well as any materials soliciting voting instructions for Trust shares,
will be sent to variable life insurance and annuity contractowners having an
interest in the Trust.
59
APPENDIX A
- ----------
CORPORATE BOND RATINGS
Moody's Investors Service, Inc., describes its ratings for corporate bonds
as follows:
o Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
o Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
or fluctuation of protection elements may be of greater amplitude, or
there may be other elements present which make the long term risks
appear somewhat larger than in Aaa securities.
o Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment some time in
the future.
o Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
o Bonds which are rated Ba have speculative elements and their future
cannot be considered as well assured. The protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Bonds in this class are
characterized by uncertainty of position.
o Bonds which are rated B generally lack characteristics of a desirable
investment; assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
o Bonds which are rated Caa are of poor standing. Issues may be in default
or there may be present elements of danger with respect to principal or
interest.
o Bonds which are rated Ca are speculative in a high degree. They are
often in default or have other marked shortcomings.
o Bonds which are rated C are the lowest rated class of bonds. They can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.
Standard & Poor's Corporation describes its ratings for corporate bonds as
follows:
o AAA -- This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay
principal and interest.
60
o AA -- Bonds rated AA also qualify as high-quality obligations. Capacity
to pay principal and interest is very strong, and in the majority of
instances, they differ from AAA issues only in small degree.
o A -- Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
o BBB -- Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and interest
for bonds in this category than for bonds in the A category.
o BB, B, CCC, CC, C -- Bonds rated in these categories are regarded, on
balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and C the
highest degree of speculation. While this debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
o C1 -- This rating is reserved for income bonds on which no interest is
being paid.
o D -- Bonds rated D are in default and payment of interest and/or
repayment of principal is in arrears.
61
John Hancock
Annual Report
December 31, 2001
[LOGO] John Hancock
[LOGO] Independence INVESTMENT
[LOGO] Alliance Capital
[LOGO] Capital Guardian
Investment Vision [LOGO] Goldman Sachs
The Variable Series | Variable Series Trust [LOGO] JANUS
[LOGO] Mellon Bond
[LOGO] Morgan Stanley
[LOGO] PUTNAM INVESTMENTS
[LOGO] SSgA
[LOGO] T.RowePrice
[LOGO] WELLINGTON MANAGEMENT
Insurance Products:
... Are NOT FDIC insured; NOT insured by the FDIC,
NCUSIF, or any other federal entity;
... Are NOT deposits or other obligations of any bank
and are NOT guaranteed by any bank; and
... Are subject to investment risk, including the possible
loss of principal investment.
Dear Shareholder,
- --------------------------------------------------------------------------------
Since our last report to you six months age, the world has become a very
different place. The tragic events of September 11 have had a substantial
impact, not only on the security Americans feel at home, but also on our
economic security. The damage to consumer and business confidence that followed
generated a dramatic drop in demand during this economic cycle.
Most economic data now suggest that the worst is behind us, with indicators of
confidence already back to their pre-September levels. Inventories have been
reduced, and layoffs appear to have peaked. Nevertheless, while most forecasts
anticipate a recovery to begin in the first or second quarter of 2002, the rate
of economic growth may be moderate at best.
With the instability of the past year, we would all do well to remember two
fundamentals of investing -- asset allocation and a focus on the long term. By
remaining diversified, over time, across asset classes and investment products,
you allow your overall portfolio to benefit from thriving sectors of the
economy. At the same time, you position it to capitalize on sectors that are
beginning to rebound. Asset allocation and a long-term focus have brought our
partnership -- you as an investor, and us as you investment team -- considerable
success in the past. And these strategies will see us through leaner periods as
well.
As the economy approaches recovery, you should make sure that the fund choices
in your variable life and/or annuity policies are still appropriate for your
needs and goals. The lineup of funds and fund companies available to you through
the Variable Series Trust is stronger today than it's ever been, With these
tools at you disposal, now might be an ideal time to contact your registered
representative, who can help you decide whether to make adjustments to your
portfolio or keep it as is.
No matter what the coming year brings, we'll be here to help you protect against
risk and take advantage of opportunities. As always, thank you for choosing John
Hancock.
[PHOTO] Michele G. Van Leer
Chairman
[PHOTO] Kathleen F. Driscoll
President and Vice Chairman
Sincerely,
/s/ Michele G. Van Leer /s/ Kathleen F. Driscoll
Michele G. Van Leer Kathleen F. Driscoll
Chairman President and Vice Chairman
ECONOMIC OVERVIEW
JOHN HANCOCK ECONOMIC RESEARCH
Economic Overview
2001 brought the end of the longest economic expansion in US history, and for
many investors it was the second negative year in a row. Recession, terrorism
and war made this a year not to be repeated.
Although the recession is officially judged to have started in March, there is
still debate about whether the initial downturn would have qualified as a
recession without the slide following the terrorist attacks. The damage to
consumer and business confidence after September 11 certainly generated the
steepest drop in demand during this economic cycle.
Most economic data now suggest that the worst is behind us, with indicators of
confidence already back to their pre-September levels. Inventories have been
worked down, layoffs have peaked, and there is some sign that the precipitous
drop in business capital spending has bottomed out. Consensus forecasts now
anticipate real economic growth starting in the first or second quarter of 2002,
and accelerating to a healthy if unexciting pace in the second half of the year.
The timing and strength of the recovery are still very uncertain, as usual for a
turning point in the economy. Some amount of stimulus can be counted on from
government spending and last year's tax cuts, and an upturn in the inventory
cycle is due, but the other big components of GDP are subject to unpredictable
forces affecting the spending mood of both consumers and businesses.
Past experience suggests that business spending will stabilize and start to
recover as demand creeps back up and equipment needs replacing. Meanwhile,
consumers will continue to respond to affordable mortgages and car loans,
creating a steady undercurrent of positive spending growth.
NOTE: The portfolio management discussions set forth on pages 1 through 32 of
this Report are provided by John Hancock Life Insurance Company, in its role
as adviser to the Funds, based upon consultations with the portfolio managers.
The risks to this outlook are substantial. Consumer spending never collapsed, so
there is little scope for a dramatic rebound. Even a small drop in confidence
due to layoffs, terrorism, oil prices or any other cause could dampen spending
enough to prolong the recession. Business spending probably does not have much
further to fall, but any rebound would be limited if consumers were retrenching.
Financial Markets
The Federal Reserve cut short-term interest rates a record 11 times during 2001,
and a final cut in early 2002 is still possible. If the recovery proceeds
according to expectations, both short and long-term rates will move up during
2002, though we do not anticipate that the Fed will actually tighten until the
unemployment rate starts to drop in the second half of the year. Corporate bonds
will eventually benefit from reduced credit risk, but this may be a slow process
as defaults tend to lag the economic cycle.
The outlook for equity markets is even less clear than for the economy. The
economic recovery should bring a rebound in corporate profits, but this
expectation is already built into today's stock prices. The reality of a
fiercely competitive world, rapid technical change, and relatively slow growth
of the workforce implies that the share of profits in national income may be
under pressure. With national income on a trend of at best 6% nominal growth,
there are substantial risks that earnings will in aggregate be disappointing.
The biggest single cloud hanging over the outlook is the huge US trade deficit,
financed by a continuing inflow of foreign capital. Any sudden change in that
flow would disrupt financial markets, drive down the dollar, raise US inflation,
and make us all worse off. The trigger could be improved investment
opportunities overseas, or weakening faith in the US as the world's only safe
haven. For now there are no signs of such a shift, but it remains an
ever-present concern.
1
Inception: March 29, 1986
GROWTH & INCOME FUND
INDEPENDENCE INVESTMENT LLC
P. McManus & T. Spicer
PUTNAM INVESTMENTS
C. Beth Cotner
Growth & Income Fund
The Fund employs a multi-style and multi-manager approach with two
sub-advisers, each of which employs its own investment approach and
independently manages its portion of the Fund. The two managers employ a
distinct and complementary investment strategy. This unique multi-manager
approach seeks to produce more consistent investment returns over market cycles
and to reduce the risk of any one manager or strategy being out of favor in
certain market environments.
The Fund uses three distinct investment styles intended to complement each
another: growth, value and blend. The allocation across styles as of year-end
2001 is approximately: growth at 20%, value 20% and blend 60%.
Independence manages two portions of the Fund, including a value and a blend
style. II selects stocks using a combination of fundamental equity research and
quantitative tools and focuses on large cap stocks that are undervalued relative
to the stock's history and have improving earnings growth prospects.
Putnam manages the growth style portion of the Fund. Putnam selects stocks
using a systematic screening approach and fundamental equity research and
focuses on large and mid cap stocks with opportunities for above average growth.
As of December 31, 2001, Independence managed approximately 80% and Putnam
managed approximately 20% of the Fund's assets. For 2001, the fund performed
- -15.44%, just below the overall benchmark's performance of -11.87%.
Independence Investment LLC
We are pleased to report that each portion of the Fund managed by Independence
outperformed its benchmark. The blend portion outperformed its benchmark--the
S&P 500(R) Index--for the fourth quarter and 1-year periods. The value portion
outperformed its benchmark--the Russell 1000(TM) Value Index--for the fourth
quarter. Independence's value added in the fourth quarter and the 1 year period
was achieved through favorable stock selection broadly across most sectors.
After a sustained period of weakness, Technology was the best performing
sector during the quarter. Semiconductor names were particularly strong, driven
by comments from Intel, Taiwan Semiconductor (not held), and Xilinx confirming a
bottom in the recent sharp declines in industry revenues. This also benefited
our holdings in semiconductor capital equipment names. Performance of selected
software and hardware stocks was also strong.
In Retail, there was a large divergence in fourth quarter sales results as the
strong got stronger and the weak got weaker. In general, discounters tended to
perform well, as shoppers became more value conscious in this period of economic
weakness. Helped both by strength in home refinancings and an increased nesting
mentality in reaction to September 11th, select home retailer holdings also
performed well.
In sum, we are pleased to report consistent, value-added results during the
fourth quarter and during this volatile year. As always, we continue to make
enhancements to our process, which have served us well over the last couple of
years, and we look forward to 2002, which we expect to be a better year for the
stock market.
Putnam Investments
This portion of the Fund underperformed its benchmark--the Russell 1000(R)/
Growth Index--for the 1 year period and outperformed for the fourth quarter. For
the 1 year period, performance was negatively impacted by the weak technology
sector, an area that was particularly hard-hit by the slowing U.S. economy.
Software was especially beleaguered during this period; demand generally
maintains its strength due to the high return-on-investment associated with a
customer's technology purchase. This year, however, the U.S. economic downturn
was severe enough to prompt companies to cut even these high
return-on-investment purchases, resulting in an unexpected and steep drop off in
software demand. Stock selection in and an overweight of the software industry
(BEA Systems, Micromuse) hindered performance, as did an underweight in computer
industry names (IBM). /
In health care, lagging biotechnology holdings (Genentech) detracted from
performance due to concerns over valuations within the industry. Consumer
cyclicals, in particular, retail cyclicals, detracted from relative performance
due to an underweight in this stronger area.
2
Inception: March 29, 1986
GROWTH & INCOME FUND
INDEPENDENCE INVESTMENT LLC
P. McManus & T. Spicer
PUTNAM INVESTMENTS
C. Beth Cotner
The Fund did benefit from the consumer staples sector especially overweighting
broadcasting (Echostar), as investors turned to this area in the prospect of
economic recovery. Strength in conglomerates (Tyco) also contributed to relative
performance.
On an individual company level, we continue to believe that the
best-performing stocks will be those that offer a combination of earnings growth
and financial stability. We determine sector allocation through our bottom-up
stock selection process, where we seek strong growing companies with excellent
prospects. The Fund is overweight in health care (pharmaceuticals and
biotechnology) and consumer staples (broadcasting entertainment and services)
and underweight in technology (computers and software), conglomerates, energy,
and basic materials.
[CHART]
Growth & Income Fund S&P 500(R) Index
-------------------- -------------
12/31/1991 $10,000.00 $10,000.00
1/31/1992 9,824.90 9,814.00
2/28/1992 9,941.24 9,939.62
3/31/1992 9,774.09 9,744.80
4/30/1992 10,084.34 10,028.38
5/29/1992 10,183.36 10,082.53
6/30/1992 10,108.32 9,936.33
7/31/1992 10,109.41 10,336.77
8/31/1992 10,249.99 10,127.96
9/30/1992 10,364.86 10,244.44
10/30/1992 10,347.20 10,281.32
11/30/1992 10,750.08 10,627.80
12/31/1992 10,889.84 10,767.02
1/29/1993 11,002.26 10,845.62
2/26/1993 11,155.94 10,992.04
3/31/1993 11,501.53 11,228.36
4/30/1993 11,194.72 10,953.27
5/28/1993 11,485.06 11,249.01
6/30/1993 11,598.45 11,286.13
7/30/1993 11,534.99 11,233.08
8/31/1993 12,000.16 11,661.07
9/30/1993 12,021.03 11,574.77
10/29/1993 12,226.21 11,809.74
11/30/1993 12,117.15 11,698.73
12/31/1993 12,341.44 11,842.62
1/31/1994 12,707.96 12,239.35
2/28/1994 12,338.11 11,908.89
3/31/1994 11,860.02 11,390.85
4/29/1994 12,066.12 11,538.93
5/31/1994 12,112.30 11,727.02
6/30/1994 11,892.92 11,437.36
7/29/1994 12,213.84 11,815.94
8/31/1994 12,668.39 12,296.85
9/30/1994 12,294.47 12,000.49
10/31/1994 12,490.55 12,275.30
11/30/1994 12,075.99 11,824.80
12/30/1994 12,272.87 11,997.44
1/31/1995 12,525.65 12,309.38
2/28/1995 13,019.98 12,786.98
3/31/1995 13,308.06 13,165.47
4/28/1995 13,696.19 13,548.59
5/31/1995 14,151.90 14,083.76
6/30/1995 14,474.35 14,414.73
7/31/1995 14,936.20 14,894.74
8/31/1995 15,033.62 14,934.95
9/29/1995 15,685.16 15,560.73
10/31/1995 15,582.56 15,506.27
11/30/1995 16,239.61 16,188.54
12/29/1995 16,471.85 16,488.03
1/31/1996 16,910.41 17,055.22
2/29/1996 17,128.99 17,218.95
3/29/1996 17,348.01 17,384.25
4/30/1996 17,543.43 17,639.80
5/31/1996 17,949.58 18,094.90
6/28/1996 18,047.73 18,169.09
7/31/1996 17,195.13 17,360.57
8/30/1996 17,604.87 17,728.61
9/30/1996 18,422.26 18,724.96
10/31/1996 18,872.79 19,238.02
11/29/1996 20,128.49 20,698.19
12/31/1996 19,782.24 20,292.51
1/31/1997 20,800.54 21,552.67
2/28/1997 20,914.56 21,727.25
3/31/1997 20,099.73 20,823.39
4/30/1997 21,074.09 22,066.55
5/30/1997 22,217.02 23,421.44
6/30/1997 23,093.18 24,466.03
7/31/1997 25,156.77 26,408.64
8/29/1997 23,882.42 24,940.32
9/30/1997 25,271.44 26,307.04
10/31/1997 24,320.94 25,428.39
11/28/1997 25,235.91 26,605.72
12/31/1997 25,675.23 27,063.34
1/31/1998 25,952.58 27,363.75
2/27/1998 28,071.01 29,336.67
3/31/1998 29,640.72 30,838.71
4/30/1998 29,722.72 31,150.18
5/29/1998 29,398.05 30,614.40
6/30/1998 30,645.80 31,857.34
7/31/1998 30,288.24 31,519.65
8/31/1998 25,638.36 26,961.91
9/30/1998 26,953.81 28,690.17
10/30/1998 29,356.38 31,022.68
11/30/1998 31,113.81 32,902.66
12/31/1998 33,441.10 34,797.85
1/29/1999 34,563.14 36,252.40
2/26/1999 33,489.80 35,124.95
3/31/1999 34,481.13 36,529.95
4/30/1999 35,934.17 37,943.66
5/28/1999 34,886.34 37,048.19
6/30/1999 37,291.87 39,104.36
7/30/1999 36,015.31 37,884.30
8/31/1999 35,589.27 37,694.88
9/30/1999 34,607.44 36,662.04
10/29/1999 36,631.75 38,982.75
11/30/1999 37,056.28 39,774.10
12/31/1999 38,867.22 42,116.79
1/31/2000 36,498.53 40,002.53
2/29/2000 35,581.89 39,246.48
3/31/2000 39,564.70 43,084.79
4/28/2000 38,596.55 41,787.94
5/31/2000 38,088.13 40,931.28
6/30/2000 38,697.50 41,938.19
7/31/2000 38,226.98 41,283.96
8/31/2000 40,592.29 43,847.69
9/29/2000 38,138.63 41,532.53
10/31/2000 38,231.76 41,358.10
11/30/2000 33,837.68 38,099.08
12/29/2000 27,717.19 38,285.76
1/31/2001 34,764.19 39,644.91
2/28/2001 31,116.77 36,029.29
3/30/2001 28,563.75 33,748.64
4/30/2001 31,308.77 36,370.91
5/31/2001 31,366.86 36,614.59
6/30/2001 30,642.38 35,724.86
7/31/2001 29,905.51 35,374.76
8/31/2001 27,836.80 33,160.30
9/28/2001 25,435.92 30,480.94
10/31/2001 26,246.98 31,063.13
11/30/2001 28,281.06 33,445.67
12/31/2001 28,497.18 33,739.99
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Citigroup, Inc. 3.2% 3.1%
Pfizer, Inc. 3.1% 3.8%
Microsoft Corp. 3.1% 3.0%
Intel Corp. 2.8% 2.9%
General Electric Co. 2.5% 2.4%
Exxon Mobil Corp. 2.5% 2.4%
American International Group, Inc. 2.1% 2.3%
Tyco International, Ltd. 1.9% 2.1%
American Home Products Corp. 1.8% 2.0%
Philip Morris Cos., Inc. 1.7% 1.8%
AVERAGE ANNUAL TOTAL RETURNS*
Growth & Income S&P 500 MorningStar
Fund Index(1) Peer Group+
--------------- -------- -----------
1 Year -15.44% -11.87% -14.06
3 Years -5.12 -1.02 -1.72
5 Years 7.62 10.70 9.18
10 Years 11.06 12.93 11.87
TOP TEN SECTORS (as of December 31, 2001)
% of % of
Investments Investments
Technology 23.2% Consumer Staple 6.9%
Financial 16.7% Energy 6.3%
Health Care 15.3% Consumer Cyclical 5.2%
Capital Equipment 8.6% Utility 4.9%
Retail 7.9% Basic Material 3.0%
(1)"Standard & Poor's 500" is a trademark of the McGraw-Hill Companies, Inc. and
has been licensed for use by John Hancock Life Insurance Company. The product
is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the product.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the Fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
additional risks associated with a nondiversified fund, as outlined in the
current prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for all variable annuity and life
sub-accounts within the Morningstar variable universe having a Large Blend
investment category.
3
Inception: May 1, 1996
EQUITY INDEX FUND
SSgA FUNDS MANAGEMENT, INC.
J. Tucker & J. May
The Fund performed in line with the benchmark--the S&P 500(R) Index--for the
fourth quarter and 1 year period. The S&P 500(R) Index had a strong rebound in
the fourth quarter of 2001. The index rose 10.69% during the quarter, by far the
best quarterly performance of 2001. For the year 2001, the S&P 500 fell 11.87%,
its second straight year in the red.
The Equity Index Fund attempts to track the performance of The S&P 500(R)
Index by fully replicating the index. The fund attempts to match the index
holdings and weights for each security in order to provide returns close to the
index return.
[CHART]
Equity Index Fund S&P 500* Index
----------------- --------------
5/1/1996 10,000.00 10,000.00
5/31/1996 10,210.21 10,258.00
6/30/1996 10,231.27 10,300.06
7/31/1996 9,825.37 9,841.71
8/31/1996 9,970.93 10,050.35
9/30/1996 10,509.35 10,615.18
10/31/1996 10,787.24 10,906.03
11/30/1996 11,561.33 11,733.80
12/31/1996 11,423.37 11,503.82
1/31/1997 12,132.53 12,218.21
2/28/1997 12,220.87 12,317.18
3/31/1997 11,735.83 11,804.78
4/30/1997 12,408.96 12,509.53
5/31/1997 13,119.43 13,277.61
6/30/1997 13,727.15 13,869.79
7/31/1997 14,820.68 14,971.05
8/31/1997 13,993.35 14,138.66
9/30/1997 14,755.87 14,913.46
10/31/1997 14,266.68 14,415.35
11/30/1997 14,887.35 15,082.78
12/31/1997 15,168.85 15,342.21
1/31/1998 15,336.19 15,512.51
2/28/1998 16,441.16 16,630.96
3/31/1998 17,279.50 17,482.46
4/30/1998 17,454.65 17,659.04
5/31/1998 17,150.87 17,355.30
6/30/1998 17,849.77 18,059.92
7/31/1998 17,664.21 17,868.49
8/31/1998 15,095.58 15,284.71
9/30/1998 16,066.65 16,264.46
10/31/1998 17,368.66 17,586.76
11/30/1998 18,418.96 18,652.51
12/31/1998 19,484.37 19,726.90
1/31/1999 20,295.65 20,551.48
2/28/1999 19,668.88 19,912.33
3/31/1999 20,463.80 20,708.82
4/30/1999 21,252.00 21,510.26
5/31/1999 20,743.26 21,002.61
6/30/1999 21,904.36 22,168.26
7/31/1999 21,220.30 21,476.61
8/31/1999 21,115.14 21,369.23
9/30/1999 20,540.56 20,783.71
10/31/1999 21,833.37 22,099.32
11/30/1999 22,274.39 22,547.93
12/31/1999 23,592.37 23,876.01
1/31/2000 22,400.10 22,677.43
2/29/2000 21,977.89 22,248.83
3/31/2000 24,119.90 24,424.76
4/30/2000 23,394.26 23,689.58
5/31/2000 22,909.53 23,203.94
6/30/2000 23,474.64 23,774.76
7/31/2000 23,107.54 23,403.87
8/31/2000 24,545.85 24,857.25
9/30/2000 23,244.68 23,544.79
10/31/2000 23,145.58 23,445.90
11/30/2000 21,325.98 21,598.37
12/31/2000 21,433.41 21,704.20
1/31/2001 22,190.96 22,474.70
2/28/2001 20,163.63 20,425.00
3/31/2001 18,884.26 19,132.10
4/30/2001 20,349.88 20,618.67
5/31/2001 20,490.26 20,756.81
6/30/2001 19,989.35 20,252.42
7/31/2001 19,791.38 20,053.95
8/31/2001 18,550.00 18,798.57
9/30/2001 17,054.83 17,279.65
10/31/2001 17,378.41 17,609.69
11/30/2001 18,705.83 18,960.35
12/31/2001 18,866.25 19,127.20
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
General Electric Co. 3.8% 3.7%
Microsoft Corp. 3.4% 3.3%
Exxon Mobil Corp. 2.6% 2.5%
Citigroup, Inc. 2.5% 2.3%
Wal-Mart Stores, Inc. 2.5% 2.4%
Pfizer, Inc. 2.4% 2.6%
Intel Corp. 2.0% 2.1%
International Business Machines Corp. 2.0% 1.9%
American International Group,
Inc. 2.0% 2.1%
Johnson & Johnson 1.7% 1.7%
AVERAGE ANNUAL TOTAL RETURNS*
Equity Index S&P 500 MorningStar
Fund(1) Index(2) Peer Group+
------------ -------- -----------
1 Year -11.98% -11.87% -14.06%
3 Years -1.07 -1.02 -1.72
5 Years 10.55 10.70 9.18
Since Inception (5/1/96) 11.84 12.13 N/A
TOP TEN SECTORS (as of December 31, 2001)
% of % of
Investments Investments
Technology 20.6% Consumer Staple 7.0%
Financial 17.4% Energy 6.7%
Health Care 13.6% Consumer Cyclical 6.6%
Capital Equipment 9.9% Utility 5.9%
Retail 7.4% Basic Material 3.1%
(1)Returns reflect waiver of advisory fee, reimbursement of all non-advisory
fund expenses, and extra-ordinary capital contributions of $84,000 in 1996
and $250,000 in 1997.
(2)"Standard & Poor's 500" is a trademark of McGraw-Hill Companies, Inc. and has
been licensed for use by John Hancock Life Insurance Company. The product is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in the
product.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund does not
reflect expense and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described in
your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for all the variable annuity and
life sub-accounts within the Morningstar variable universe having a Large
Blend investment category.
4
Inception: May 1, 1996
LARGE CAP VALUE FUND
T. ROWE PRICE ASSOCIATES, INC.
Brian C. Rogers
The fund outperformed its benchmark--the Russell 1000(R) Value Index--for the
1 year period and the fourth quarter. At the end of the year, financial stocks
composed the largest segment in the fund, followed by consumer cyclicals,
capital equipment, and energy. Chevron Texaco, Exxon Mobil, Honeywell
International, BP, and Union Pacific were our top five holdings.
Stocks limped across the finish line in 2001. The major market indices inched
higher in December, continuing the rally that began two weeks after the
terrorist attacks on September 11, although the rally ran out of steam at
year-end. From their September troughs, the S&P 500 climbed 19% through the end
of the year, the Dow Jones Industrial Average rose 22%, and the Nasdaq Composite
surged 37%. The picture was different for the year overall. The S&P 500 and
Nasdaq Composite concluded their worst two-year performances in nearly three
decades, while the Dow suffered its first back-to-back losses since 1977-8. The
fund, however, outpaced the indexes and managed a slight gain for the year.
Looking ahead to 2002, we are looking for a pickup in economic activity by
mid-year. The Fed appears willing to ease further if necessary, and the fiscal
stimulus engendered by recent and future tax cuts should boost economic results
in the year ahead. We anticipate gains in the market overall, and we are bullish
about the prospects for the equity income sectors in which we invest. However,
because of the sharp recovery in most markets during the fourth quarter, the
gains are likely to be modest until the corporate earnings environment comes
into better focus later in 2002.
[CHART]
Large Cap Value Fund Russell 1000(R) Value Index
-------------------- ---------------------------
4/30/1996 10,000.00 10,000.00
5/31/1996 10,190.10 10,125.00
6/30/1996 10,255.44 10,133.10
7/31/1996 9,976.73 9,750.07
8/31/1996 10,186.40 10,028.92
9/30/1996 10,618.31 10,428.07
10/31/1996 10,859.97 10,831.64
11/30/1996 11,451.49 11,616.93
12/31/1996 11,390.49 11,468.24
1/31/1997 11,698.63 12,024.44
2/28/1997 11,978.55 12,201.20
3/31/1997 11,723.70 11,761.96
4/30/1997 12,015.78 12,255.96
5/31/1997 12,581.98 12,941.07
6/30/1997 13,059.33 13,496.24
7/31/1997 13,805.38 14,511.16
8/31/1997 13,446.75 13,994.56
9/30/1997 14,081.22 14,839.84
10/31/1997 13,702.79 14,425.80
11/30/1997 14,220.24 15,063.42
12/31/1997 14,643.15 15,503.28
1/31/1998 14,538.38 15,283.13
2/28/1998 15,249.44 16,311.68
3/31/1998 15,953.52 17,309.96
4/30/1998 15,868.52 17,425.94
5/31/1998 15,597.70 17,168.03
6/30/1998 15,560.91 17,387.78
7/31/1998 15,106.21 17,081.76
8/31/1998 13,634.12 14,539.99
9/30/1998 14,372.95 15,374.59
10/31/1998 15,260.79 16,566.12
11/30/1998 15,883.54 17,338.10
12/31/1998 15,998.55 17,927.60
1/31/1999 15,599.14 18,071.02
2/28/1999 15,469.51 17,816.21
3/31/1999 15,888.98 18,185.01
4/30/1999 17,600.38 19,883.49
5/31/1999 17,468.51 19,664.77
6/30/1999 17,931.74 20,235.05
7/31/1999 17,537.40 19,642.16
8/31/1999 17,002.92 18,913.44
9/30/1999 16,393.18 18,251.47
10/31/1999 16,973.31 19,302.75
11/30/1999 16,677.76 19,152.19
12/31/1999 16,523.23 19,244.12
1/31/2000 15,751.49 18,616.76
2/29/2000 14,460.48 17,233.54
3/31/2000 16,066.35 19,336.03
4/30/2000 16,208.49 19,111.73
5/31/2000 16,986.85 19,312.41
6/30/2000 16,140.25 18,429.83
7/31/2000 16,307.88 18,660.20
8/31/2000 17,099.71 19,697.71
9/30/2000 17,217.75 19,878.93
10/31/2000 18,042.94 20,367.95
11/30/2000 17,844.82 19,612.30
12/31/2000 18,666.73 20,594.87
1/31/2001 18,862.89 20,675.19
2/28/2001 18,596.01 20,100.42
3/31/2001 18,091.65 19,390.88
4/30/2001 18,860.08 20,341.03
5/31/2001 19,493.18 20,798.71
6/30/2001 19,103.75 20,336.97
7/31/2001 19,164.93 20,294.27
8/31/2001 18,812.38 19,480.47
9/30/2001 17,549.96 18,109.04
10/31/2001 17,546.13 17,953.30
11/30/2001 18,572.03 18,996.39
12/31/2001 18,899.46 19,442.81
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
ChevronTexaco Corp. 2.6% 2.6%
Exxon Mobil Corp. 2.3% 2.3%
Honeywell International, Inc. 1.9% 1.9%
BP Amoco PLC 1.9% 1.9%
Union Pacific Corp. 1.8% 1.8%
American Home Products Corp. 1.7% 1.7%
Lockheed Martin Corp. 1.6% 1.6%
FleetBoston Financial Corp. 1.6% 1.7%
Verizon Communications 1.6% 1.6%
Waste Management, Inc. 1.6% 1.5%
AVERAGE ANNUAL TOTAL RETURNS*
Large Cap Russell 1000(R) MorningStar
Value Fund Value Index Peer Group+
---------- --------------- -----------
1 Year 1.25% -5.59% -4.54
3 Years 5.71 2.74 3.03
5 Years 10.66 11.14 8.97
Since Inception (5/1/96) 11.87 12.45 N/A
TOP TEN SECTORS (as of December 31, 2001)
% of % of
Investments Investments
Financial 19.9% Utility 8.4%
Consumer Cyclical 11.6% Technology 7.9%
Capital Equipment 11.4% Basic Material 7.2%
Energy 11.2% Health Care 6.2%
Consumer Staple 9.1% Retail 3.4%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the Morningstar variable universe having a Large Value investment
category.
5
Inception: August 31, 1999
LARGE CAP VALUE CORE/SM/ FUND
GOLDMAN SACHS ASSET MANAGEMENT
Brown/Jones/Pinter
During the one-year period, the Fund returned -4.75%, outperforming its
benchmark--the Russell 1000(R) Value Index.
The Fund's strategy is a well-defined investment process that has historically
provided consistent, risk-managed performance. The diversification of our models
typically adds value because, when one theme doesn't work, others usually do.
For example, when momentum stocks underperform, value stocks typically advance
more than average.
For the year, the CORE themes ended on a positive note, with Profitability
leading the positive contributions to excess return. Valuation also posted
strong returns, and Earnings Quality followed closely behind. Momentum and
Fundamental Research were both down for the year. Strong stock selection within
the Energy and Consumer Services sectors helped returns, though we lagged the
benchmark in the Utilities and Health Care sectors.
Looking ahead, we continue to believe that cheaper stocks should outpace more
expensive ones and good momentum stocks should do better than poor momentum
stocks. We also prefer names favored by fundamental research analysts and with
strong profit margin and sustainable earnings. As such, we anticipate remaining
fully invested and expect that the value we add over time will be due to stock
selection, as opposed to sector or size allocations.
[CHART]
Large Cap Value CORE/SM/ Fund Russell 1000/R/ Value Index
----------------------------- ---------------------------
8/31/1999 10,001.30 10,000.00
9/30/1999 9,710.99 9,650.00
10/31/1999 10,331.58 10,205.84
11/30/1999 10,222.01 10,126.23
12/31/1999 10,357.99 10,174.84
1/31/2000 9,966.70 9,843.14
2/29/2000 9,306.14 9,111.80
3/31/2000 10,353.69 10,223.43
4/30/2000 10,235.53 10,104.84
5/31/2000 10,315.02 10,210.94
6/30/2000 9,925.40 9,744.30
7/31/2000 10,094.18 9,866.11
8/31/2000 10,735.04 10,414.66
9/30/2000 10,780.50 10,510.48
10/31/2000 10,929.67 10,769.04
11/30/2000 10,420.97 10,369.50
12/31/2000 10,888.02 10,889.02
1/31/2001 10,869.92 10,931.48
2/28/2001 10,559.13 10,627.59
3/31/2001 10,161.18 10,252.43
4/30/2001 10,769.26 10,754.80
5/31/2001 11,024.65 10,996.79
6/30/2001 10,815.74 10,752.66
7/31/2001 10,813.92 10,730.08
8/31/2001 10,328.29 10,299.80
9/30/2001 9,640.82 9,574.70
10/31/2001 9,619.47 9,492.35
11/30/2001 10,113.73 10,043.86
12/31/2001 10,370.41 10,279.89
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
investments % of investments
Exxon Mobil Corp. 4.1% 4.7%
Citigroup, Inc. 4.0% 4.0%
Bank of America Corp. 2.8% 2.9%
Procter & Gamble Co. 2.4% 2.5%
Verizon Communications 2.2% 2.3%
JP Morgan Chase & Co. 1.8% 0.7%
Federal National Mortgage Assoc. 1.8% 1.9%
Merck & Co., Inc. 1.7% 0.5%
General Motors Corp. 1.6% 1.7%
AT&T Corp. 1.2% 1.2%
AVERAGE ANNUAL TOTAL RETURNS*
Large Cap Russell 1000(R) MorningStar
Value CORE/SM/ Fund Value Index Peer Group+
----------------- --------------- -----------
1 Year -4.75% -5.59% -4.54%
Since Inception
(8/31/99) 1.57 1.19 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
investments investments
Financial 27.6% Consumer Staple 7.0%
Technology 11.0% Health Care 6.3%
Consumer Cyclical 10.9% Capital Equipment 5.4%
Energy 9.7% Basic Material 4.4%
Utility 9.3% Retail 3.9%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all the variable annuity and life sub-accounts
within the MorningStar variable universe having a Large Value investment
style.
6
Inception: March 29, 1986
LARGE CAP GROWTH FUND
INDEPENDENCE INVESTMENT LLC
Mark C. Lapman
Despite negative economic news, the market rebounded strongly in the fourth
quarter, anticipating a potential economic recovery in the second half of 2002.
There was a notable resurgence in growth stocks, and although the market
continued to be volatile, we are pleased to report that your portfolio
outperformed the Russell 1000(R) Growth Index for the fourth quarter as well as
for the year.
Strong stock selection broadly across most sectors was the primary driver of
outperformance in the quarter and the 1 year period. For the quarter, after a
sustained period of weakness, technology was the best performing sector in the
Russell 1000(R) Growth Index. Semiconductor names were particularly strong and
our holdings in select semiconductor capital equipment names performed well.
Performance of selected software and hardware stocks, was also strong.
In retailing, there was a large divergence in fourth quarter sales results as
the strong got stronger and the weak got weaker. Selected retailers benefited at
the expense of other retailers. Helped both by strength in home refinancings and
an increased nesting mentality in reaction to September 11th, selected home
retailer holdings also performed well.
In sum, we are pleased to report consistent, value-added results during the
fourth quarter and during this volatile year. As always, we continue to make
enhancements to our process, which have served us well over the last couple of
years, and we look forward to 2002, which we expect to be a better year for the
stock market.
[CHART]
Large Cap Growth Fund Russell 1000(R) Growth Index
----------------------- -------------------------------
12/31/1991 $10,000.00 $10,000.00
1/31/1992 $9,847.54 $9,758.00
2/28/1992 $9,958.41 $9,772.64
3/31/1992 $9,780.64 $9,505.84
4/30/1992 $10,089.22 $9,574.29
5/29/1992 $10,205.56 $9,645.14
6/30/1992 $10,123.84 $9,403.04
7/31/1992 $10,485.86 $9,824.30
8/31/1992 $10,290.18 $9,704.44
9/30/1992 $10,391.83 $9,817.01
10/30/1992 $10,404.71 $9,964.27
11/30/1992 $10,790.18 $10,397.72
12/31/1992 $10,994.01 $10,500.65
1/29/1993 $11,097.58 $10,379.90
2/26/1993 $11,299.85 $10,215.89
3/31/1993 $11,642.36 $10,413.06
4/30/1993 $11,222.81 $9,996.54
5/28/1993 $11,559.05 $10,346.42
6/30/1993 $11,727.63 $10,251.23
7/30/1993 $11,637.24 $10,067.73
8/31/1993 $12,141.97 $10,480.51
9/30/1993 $12,293.09 $10,402.95
10/29/1993 $12,478.42 $10,692.16
11/30/1993 $12,341.59 $10,621.59
12/31/1993 $12,511.72 $10,805.34
1/31/1994 $12,891.60 $11,054.94
2/28/1994 $12,492.26 $10,853.74
3/31/1994 $12,088.24 $10,329.51
4/29/1994 $12,325.62 $10,378.06
5/31/1994 $12,285.71 $10,534.77
6/30/1994 $12,101.93 $10,223.99
7/29/1994 $12,404.49 $10,573.65
8/31/1994 $12,838.48 $11,162.60
9/30/1994 $12,453.74 $11,009.67
10/31/1994 $12,572.34 $11,269.50
11/30/1994 $12,205.33 $10,908.88
12/30/1994 $12,388.57 $11,092.15
1/31/1995 $12,620.85 $11,328.41
2/28/1995 $13,098.64 $11,803.07
3/31/1995 $13,395.38 $12,148.90
4/28/1995 $13,726.49 $12,414.96
5/31/1995 $14,193.48 $12,848.24
6/30/1995 $14,432.05 $13,344.19
7/31/1995 $14,899.34 $13,899.31
8/31/1995 $15,013.67 $13,914.59
9/29/1995 $15,623.06 $14,556.06
10/31/1995 $15,443.31 $14,566.25
11/30/1995 $16,084.60 $15,132.87
12/29/1995 $16,308.81 $15,219.13
1/31/1996 $16,691.08 $15,728.97
2/29/1996 $16,887.90 $16,016.81
3/29/1996 $17,101.89 $16,037.63
4/30/1996 $17,389.87 $16,459.42
5/31/1996 $17,773.85 $17,033.86
6/28/1996 $17,753.70 $17,057.70
7/31/1996 $16,573.57 $16,058.12
8/30/1996 $17,102.58 $16,472.42
9/30/1996 $18,149.55 $17,671.62
10/31/1996 $18,283.75 $17,777.64
11/29/1996 $19,610.54 $19,112.75
12/31/1996 $19,288.27 $18,738.14
1/31/1997 $20,391.94 $20,051.68
2/28/1997 $20,543.10 $19,915.33
3/31/1997 $19,576.39 $18,837.91
4/30/1997 $20,611.78 $20,088.75
5/30/1997 $21,798.26 $21,539.15
6/30/1997 $22,661.27 $22,400.72
7/31/1997 $24,848.32 $24,380.94
8/29/1997 $23,611.50 $22,954.66
9/30/1997 $25,082.27 $24,084.03
10/31/1997 $24,071.76 $23,192.92
11/28/1997 $24,966.23 $24,178.62
12/31/1997 $25,246.95 $24,449.42
1/31/1998 $25,921.76 $25,180.46
2/27/1998 $28,374.36 $27,074.03
3/31/1998 $29,980.07 $28,154.28
4/30/1998 $30,207.27 $28,542.81
5/29/1998 $29,555.50 $27,732.19
6/30/1998 $31,023.58 $29,429.40
7/31/1998 $30,873.05 $29,235.17
8/31/1998 $26,038.54 $24,846.97
9/30/1998 $27,561.85 $26,755.22
10/30/1998 $29,638.70 $28,906.34
11/30/1998 $31,993.11 $31,106.11
12/31/1998 $35,222.20 $33,911.88
1/29/1999 $37,182.91 $35,902.51
2/26/1999 $35,392.79 $34,261.76
3/31/1999 $36,883.08 $36,067.36
4/30/1999 $37,426.71 $36,114.24
5/28/1999 $36,343.81 $35,005.54
6/30/1999 $39,050.32 $37,455.93
7/30/1999 $37,757.78 $36,264.83
8/31/1999 $37,973.90 $36,855.94
9/30/1999 $37,103.46 $36,081.97
10/29/1999 $39,278.69 $38,806.16
11/30/1999 $40,603.84 $40,897.81
12/31/1999 $43,699.65 $45,151.18
1/31/2000 $41,084.62 $43,033.59
2/29/2000 $42,383.14 $45,137.93
3/31/2000 $46,903.49 $48,369.81
4/28/2000 $45,309.91 $46,067.41
5/31/2000 $43,669.59 $43,745.61
6/30/2000 $46,196.14 $47,061.53
7/31/2000 $44,694.65 $45,099.06
8/31/2000 $49,056.42 $49,180.53
9/29/2000 $43,917.51 $44,528.05
10/31/2000 $42,612.05 $42,421.87
11/30/2000 $36,937.27 $36,168.89
12/29/2000 $35,883.63 $35,025.95
1/31/2001 $37,962.46 $37,446.24
2/28/2001 $31,889.34 $31,087.87
3/30/2001 $28,331.14 $27,705.51
4/30/2001 $32,226.75 $31,210.26
5/31/2001 $31,845.82 $30,751.47
6/30/2001 $31,180.62 $30,038.03
7/31/2001 $30,232.08 $29,287.08
8/31/2001 $28,045.30 $26,891.40
9/28/2001 $25,373.93 $24,207.64
10/31/2001 $26,912.10 $25,478.54
11/30/2001 $29,494.59 $27,927.03
12/31/2001 $29,572.72 $27,873.96
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
General Electric Co. 6.6% 6.4%
Pfizer, Inc. 6.3% 6.9%
Microsoft Corp. 5.5% 5.4%
Intel Corp. 4.8% 5.1%
American Home Products Corp. 3.2% 3.2%
Cisco Systems, Inc. 3.0% 1.8%
American International Group, Inc. 2.6% 2.8%
Home Depot, Inc. 2.6% 2.4%
Johnson & Johnson 2.5% 2.4%
Lowe's Cos., Inc. 2.2% 2.2%
AVERAGE ANNUAL TOTAL RETURNS*
Large Cap Russell 1000(R) MorningStar
Growth Fund Growth Index Peer Group+
----------- --------------- -----------
1 Year -17.54% -20.42% -23.84%
3 Years -5.64 -6.33 -2.54
5 Years 8.94 8.27 8.78
10 Years 11.46 10.79 11.28
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Technology 33.9% Consumer Cyclical 5.2%
Health Care 26.0% Consumer Staple 2.9%
Retail 11.1% Energy 1.3%
Capital Equipment 10.7% Governmental 1.2%
Financial 6.9% Basic Material 0.5%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus. There are additional
risks associated with a nondiversified fund, as outlined in the current
prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the Morningstar variable universe having a Large Growth investment
category. Prior to May 1996 (concurrent with the Fund's strategy change), the
peer group represents the Large Cap Growth investment category.
7
Inception: August 31, 1999
LARGE CAP AGGRESSIVE GROWTH FUND
ALLIANCE CAPITAL MANAGEMENT L.P.
J. Fogarty/A. Harrison
For the year, the Fund returned -14.69% outperforming its benchmark--the
Russell 1000(R) Growth Index . For the 1 year period, outperformance compared to
the Russell 1000(R) Growth Index is due to both favorable stock selection
specifically in financial services and consumer discretionary (retail) as well
as sector allocation decisions (overweight financials and underweight
technology).
Financial services performed well in 2001, as they were able to generate larger
lending profits assisted by the eleven-interest rate cuts by the U.S. Federal
Reserve. Within consumer discretionary, discount retailer and home improvement
stores rose as many consumers shifted buying trends to lower price point and "do
it yourself" retailers. Despite consumer confidence dropping immediately after
September 11, consumer confidence rebounded in time for many retailers to
experience better than expected holiday sales.
We continue to be encouraged by the recent positive economic data released in
2001 that indicate that the economy has bottomed and is poised for growth.
Despite these positive data points, we will keep a watchful eye on slowing
overseas economies and any signs of consumer spending weakening. We are also
attentive to the possibility that share prices may be ahead of earnings
prospects on a short-term basis. We respect the belief that the market's recent
rally may be tested early in 2002 when companies may begin to warn that results
may disappoint or fail to meet expectations, particularly in the technology
sector. We also recognize that notwithstanding the optimistic outlook for a
recovery in 2002, it is important to acknowledge that the months following the
September 11 attacks may have exhibited more variability, for instance in
economic data, than under "normal" circumstances.
We feel the best approach is to continue positioning the Fund in a "barbell"
fashion, with steady growth stocks at one extreme and higher growth and more
cyclical (technology and brokerage) stocks at the other extreme.
[CHART]
Large Cap Aggressive Growth Fund Russell 1000(R) Growth Index
-------------------------------- ----------------------------
8/31/1999 10,000.00 10,000.00
9/30/1999 9,947.52 9,790.00
10/31/1999 10,811.20 10,529.15
11/30/1999 11,538.65 11,097.72
12/31/1999 12,017.99 12,251.88
1/31/2000 11,465.11 11,677.27
2/29/2000 11,568.56 12,248.29
3/31/2000 12,833.21 13,125.26
4/30/2000 12,363.75 12,500.50
5/31/2000 11,692.21 11,870.48
6/30/2000 12,284.41 12,770.26
7/31/2000 12,150.59 12,237.74
8/31/2000 12,933.21 13,345.25
9/30/2000 11,513.32 12,082.79
10/31/2000 11,116.10 11,511.28
11/30/2000 9,850.35 9,814.51
12/31/2000 9,761.80 9,504.38
1/31/2001 10,390.26 10,161.13
2/28/2001 8,771.05 8,435.77
3/31/2001 8,017.74 7,517.96
4/30/2001 8,817.90 8,468.98
5/31/2001 8,853.13 8,344.48
6/30/2001 8,515.21 8,150.89
7/31/2001 8,402.89 7,947.12
8/31/2001 7,741.86 7,297.05
9/30/2001 7,248.77 6,568.80
10/31/2001 7,531.95 6,913.66
11/30/2001 8,238.03 7,578.07
12/31/2001 8,327.36 7,563.67
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
investments % of investment
Pfizer, Inc. 5.5% 6.0%
General Electric Co. 5.5% 5.6%
Tyco International, Ltd. 5.2% 5.8%
MBNA Corp. 4.7% 4.6%
Kohl's Corp. 4.6% 4.5%
Citigroup, Inc. 4.5% 4.6%
Nokia Oyj 4.3% 4.0%
Home Depot, Inc. 4.1% 3.8%
Federal Home Loan Mortgage Corp. 3.9% 3.9%
Microsoft Corp. 3.7% 3.6%
AVERAGE ANNUAL TOTAL RETURNS*
Large Cap Aggressive Russell 1000(R) MorningStar
Growth Fund Growth Index Peer Group+
-------------------- --------------- -----------
1 Year -14.69% -20.42% -23.84%
Since Inception
(8/31/99) -7.52 -11.28 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Technology 24.6% Capital Equipment 11.7%
Health Care 18.9% Consumer Cyclical 7.8%
Financial 16.2% Governmental 5.8%
Retail 13.5% Consumer Staple 1.5%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. The performance of the fund on this page is
reported net of Trust level changes (i.e. investment management fees and
operating expenses). It does not reflect expenses and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
additional risks associated with a nondiversified fund, as outlined in the
current prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the MorningStar variable universe having a Large Growth investment
category.
8
Inception: August 31, 1999
LARGE/MID CAP VALUE FUND
WELLINGTON MANAGEMENT COMPANY, LLP
D. Chu/L. Gabriel
For the year, the Large/Mid Cap Value Fund declined 7.0%, underperforming its
benchmark--the Russell 1000(R) Value Index.
The past year was another tough one for the equity markets but among the larger
cap stocks value again outperformed growth. The Russell 1000(R) Value Index lost
5.6% during the year outperforming by a wide margin the Russell 1000(R) Growth
Index which fell 20.4%. The Fund's investment approach uses fundamental, or
"bottom-up," security analysis to focus on stock selection within industries.
Rather than making significant sector bets, industry weights are kept similar to
those of the Russell 1000(R) Value Index. Stock selection during the year was
strongest within the Financial and Industrial sectors, particularly in the Banks
and Capital Goods areas. Conversely, stock selection detracted from
benchmark-relative results in the Utilities, Telecommunications, and Health Care
Equipment and Consumer Staples sectors.
While economic weakness may linger for a few months, the bottom of this
recession seems very near. The combination of monetary and fiscal stimulus,
falling energy bills, and more stable financial markets gives us confidence that
recovery will emerge by spring. We forecast annual average real GDP growth of
just 0.7% for 2002, but the economy should be growing at an annual rate near 3%
by year end. In this environment, inflation will head lower. While the Federal
Reserve may soon be through cutting interest rates, it will be some time before
they contemplate tightening policy.
Though we still need to acknowledge the geopolitical risks that confront the
world post-September 11, we are optimistic that the US economy and financial
markets can weather the uncertainties. Our conviction in an improving US economy
has risen since last quarter, and we are now more confident that an economic
recovery will begin to show signs by mid-2002. The recession that now officially
began in March 2001 will turn out to be one of the mildest on record.
[CHART]
Russell 1000(R) Value Index Large/Mid Cap Value Fund
--------------------------- ------------------------
31-Aug-1999 10,000.00 10,000.00
30-Sep-1999 9,650.00 9,787.13
31-Oct-1999 10,205.84 10,352.08
30-Nov-1999 10,126.23 10,294.94
31-Dec-1999 10,174.84 10,472.48
31-Jan-2000 9,843.14 10,030.71
29-Feb-2000 9,111.80 9,613.85
31-Mar-2000 10,223.43 10,829.48
30-Apr-2000 10,104.84 10,444.72
31-May-2000 10,210.94 10,607.42
30-Jun-2000 9,744.30 10,217.67
31-Jul-2000 9,866.11 10,451.75
31-Aug-2000 10,414.66 11,178.92
30-Sep-2000 10,510.48 11,404.89
31-Oct-2000 10,769.04 11,709.97
30-Nov-2000 10,369.50 11,229.41
31-Dec-2000 10,889.02 11,877.02
31-Jan-2001 10,931.48 11,882.92
28-Feb-2001 10,627.59 11,470.78
31-Mar-2001 10,252.43 11,162.22
30-Apr-2001 10,754.80 11,708.70
31-May-2001 10,996.79 11,919.45
30-Jun-2001 10,752.66 11,613.28
31-Jul-2001 10,730.08 11,579.16
31-Aug-2001 10,299.80 11,157.46
30-Sep-2001 9,574.70 10,311.48
31-Oct-2001 9,492.35 10,346.72
30-Nov-2001 10,043.86 10,818.25
31-Dec-2001 10,279.89 11,046.47
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Citigroup, Inc. 5.4% 5.3%
Exxon Mobil Corp. 5.3% 5.3%
Verizon Communications 3.4% 3.7%
Federal National Mortgage Assoc. 3.3% 2.8%
Merrill Lynch & Co., Inc. 2.8% 2.7%
ChevronTexaco Corp. 2.5% 2.5%
Tyco International, Ltd. 2.4% 2.3%
Procter & Gamble Co. 2.4% 2.4%
MBIA, Inc. 2.0% 1.9%
PNC Bank Corp. 1.9% 1.7%
AVERAGE ANNUAL TOTAL RETURNS*
Large/Mid Cap Russell 1000(R) MorningStar
Value Fund Value Index Peer Group+
------------- --------------- -----------
1 Year -6.99% -5.59% .01%
Since Inception
(8/31/99) 4.35 1.19 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Financial 26.2% Consumer Staple 7.6%
Energy 10.9% Capital Equipment 6.6%
Technology 10.6% Basic Material 5.8%
Utility 8.6% Health Care 5.5%
Consumer Cyclical 8.3% Retail 4.9%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. Small-company investing entails special risks
as outlined in the prospectus. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the MorningStar variable universe having a 50% weighting of the Large
Cap Value category and a 50% weighting of the Mid Cap Value category.
9
Inception: August 31, 1999
FUNDAMENTAL GROWTH FUND
PUTNAM INVESTMENTS
Eric M. Wetlaufer
The Fund lagged the benchmark Russell Mid Cap(TM) Growth Index, returning
- -32.23% for the 12-month period.
For the 1 year period, the greatest hindrance to relative performance for the
year was the technology sector, followed by health care. In the electronics
segment within technology, several of the Fund's semiconductor holdings lagged
the market (PMC Sierra) as a dramatic drop in demand made this a challenging
period for the industry. Software (Tibco, Micromuse) also hindered returns.
Software demand generally maintains its strength due to the high
return-on-investment associated with a customer's technology purchase. This
year, however, the U.S. economic downturn was severe enough to prompt companies
to cut even these high return-on-investment purchases, resulting in an
unexpected and steep drop off in software demand. In the health-care sector,
weakness in pharmaceutical holdings also restrained performance (Shire
Pharmaceuticals, Inhale Therapeutic).
Stock selection in the utilities sector was the greatest contributor to
relative performance during the year due to robust results from independent
power producers (Calpine, Mirant). Underweighting weak communications services
benefited relative performance, combined with adept stock selection within the
sector (Telephone and Data Systems).
We believe that the rebound in global equity markets since mid-September
heralds the onset of a healthier investment climate for stocks in 2002.
Prospects for a U.S.-led upturn in economic growth appear to be improving, which
should lead to a recovery in corporate profits.
Looking ahead, the Fund's current positioning, while driven by our bottom-up
process, includes overweights in the financial (regional banks, credit cards)
and consumer staples (restaurants, food distribution) sectors and underweights
in consumer cyclicals and health care.
[CHART]
Fundamental Growth Fund Russell Mid Cap(TM) Growth Index
----------------------- --------------------------------
31-Aug-99 10,000.00 10,000.00
30-Sep-99 10,000.46 9,915.00
31-Oct-99 10,835.61 10,681.43
30-Nov-99 12,529.18 11,788.03
31-Dec-99 15,457.31 13,828.53
31-Jan-00 15,971.69 13,825.77
29-Feb-00 22,029.65 16,731.94
31-Mar-00 18,800.95 16,748.68
30-Apr-00 16,531.98 15,122.38
31-May-00 14,460.68 14,019.96
30-Jun-00 18,224.49 15,507.48
31-Jul-00 17,401.55 14,525.85
31-Aug-00 18,979.45 16,716.35
30-Sep-00 18,950.32 15,898.92
31-Oct-00 17,464.99 14,811.43
30-Nov-00 13,822.29 11,592.91
31-Dec-00 14,988.72 12,203.86
31-Jan-01 15,137.52 12,900.70
28-Feb-01 12,556.69 10,668.88
31-Mar-01 10,435.26 9,142.16
30-Apr-01 12,128.32 10,666.16
31-May-01 12,013.25 10,616.03
30-Jun-01 11,811.06 10,621.33
31-Jul-01 10,738.12 9,905.46
31-Aug-01 9,931.85 9,187.31
30-Sep-01 8,117.67 7,668.65
31-Oct-01 8,823.48 8,474.62
30-Nov-01 9,770.93 9,387.34
31-Dec-01 10,157.18 9,744.06
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Convergys Corp. 2.8% 2.6%
PerkinElmer, Inc. 2.7% 2.0%
Starbucks Corp. 2.6% 2.4%
MedImmune, Inc. 2.2% 2.2%
TJX Cos., Inc. 2.0% 2.0%
Interpublic Group Cos., Inc. 2.0% 2.0%
Peregrine Systems, Inc. 1.9% 2.1%
Univision Communications, Inc. 1.8% 1.7%
Lamar Advertising Co. 1.7% 1.6%
Veritas Software Corp. 1.7% 1.9%
AVERAGE ANNUAL TOTAL RETURNS*
Fundamental Russell Mid Cap(TM) MorningStar
Growth Fund Growth Index Peer Group+
----------- ------------------- -----------
1 Year -32.23% -20.16% -24.05%
Since Inception
(8/31/99) 0.67 -1.11 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Technology 35.4% Capital Equipment 5.7%
Health Care 21.7% Consumer Cyclical 5.7%
Financial 11.5% Consumer Staple 2.9%
Retail 9.2% Transportation 1.2%
Energy 5.9% Utility 0.7%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. Small-company investing entails special risks
as outlined in the prospectus. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the MorningStar variable universe having a Mid Cap Growth investment
category.
10
Inception: May 1, 1996
MID CAP GROWTH FUND
JANUS
James P. Goff
For the year, the Mid Cap Growth Fund declined 36.93%. This compares with a
20.16% drop in the Russell Mid Cap(TM) Growth Index.
There is no question this year's performance, even within the context of a
very difficult market environment, has been disappointing. Despite the negative
performance, most of our holdings met or exceeded our original earnings
expectations throughout the latter part of the year in spite of the fundamental
changes brought on by an economic recession and the events of September 11.
Over the past year we've modified the growth criteria used when selecting
companies for the Fund. During the fourth quarter, we also lowered the growth
"hurdle rate" from 20% to 15% in the current growth environment--a rate that can
better allow us to maintain sufficient balance in the Fund.
We are also finding new investments across a broad range of industries and
themes. New holdings such as energy service provider Kinder Morgan, transaction
processing concern Concord EFS and advanced graphics chip-maker NVIDIA reflect
this effort. We still remain committed to some of our longer-term holdings--one
such position being cellular tower operator Crown Castle, which lost ground
during the year.
We believe the Fund is well positioned regardless of the economic climate.
While periods such as this are difficult to navigate, we look forward to the
coming months with a growing sense of optimism.
[CHART]
Mid Cap Russell Mid Cap(TM)
Growth Fund Growth Index
----------- -------------------
4/30/1996 $10,000.00 $10,000.00
5/31/1996 10,251.79 10,204.00
6/30/1996 10,020.18 9,895.84
7/31/1996 9,186.41 9,127.92
8/31/1996 9,881.14 9,621.74
9/30/1996 10,473.40 10,232.72
10/31/1996 10,325.04 10,113.00
11/30/1996 10,408.08 10,708.66
12/31/1996 10,268.97 10,528.75
1/31/1997 9,993.70 10,994.12
2/28/1997 9,826.76 10,752.25
3/31/1997 9,079.40 10,144.75
4/30/1997 9,186.08 10,393.30
5/31/1997 10,176.45 11,324.53
6/30/1997 10,693.34 11,638.22
7/31/1997 10,906.54 12,752.00
8/31/1997 10,949.96 12,627.03
9/30/1997 11,734.37 13,265.96
10/31/1997 11,385.11 12,601.34
11/30/1997 11,546.73 12,733.65
12/31/1997 11,979.95 12,900.46
1/31/1998 11,743.17 12,668.25
2/28/1998 12,727.51 13,859.07
3/31/1998 13,428.86 14,439.76
4/30/1998 13,655.58 14,636.14
5/31/1998 13,098.04 14,034.60
6/30/1998 14,210.98 14,431.78
7/31/1998 14,045.44 13,814.10
8/31/1998 11,448.27 11,176.99
9/30/1998 12,369.61 12,021.97
10/31/1998 13,332.17 12,906.78
11/30/1998 14,294.91 13,776.70
12/31/1998 16,660.12 15,203.97
1/31/1999 17,538.89 15,660.08
2/28/1999 16,892.48 14,894.31
3/31/1999 19,063.51 15,723.92
4/30/1999 20,312.55 16,440.93
5/31/1999 20,063.39 16,228.84
6/30/1999 21,163.77 17,361.62
7/31/1999 20,863.44 16,809.52
8/31/1999 21,976.72 16,634.70
9/30/1999 22,827.71 16,493.30
10/31/1999 26,426.65 17,768.23
11/30/1999 29,295.09 19,609.02
12/31/1999 36,370.29 23,003.35
1/31/2000 37,510.20 22,998.75
2/29/2000 44,728.65 27,833.08
3/31/2000 37,360.82 27,860.91
4/30/2000 32,525.11 25,155.62
5/31/2000 30,324.75 23,321.77
6/30/2000 34,861.83 25,796.22
7/31/2000 32,535.05 24,163.31
8/31/2000 36,542.95 27,807.14
9/30/2000 32,968.18 26,447.37
10/31/2000 30,025.02 24,638.37
11/30/2000 21,906.15 19,284.45
12/31/2000 23,328.44 20,300.75
1/31/2001 24,488.20 21,459.92
2/28/2001 18,721.01 17,747.35
3/31/2001 15,605.98 15,207.71
4/30/2001 18,494.59 17,742.83
5/31/2001 18,247.59 17,659.44
6/30/2001 17,498.57 17,668.27
7/31/2001 16,632.90 16,477.43
8/31/2001 15,129.92 15,282.81
9/30/2001 12,868.42 12,756.57
10/31/2001 13,665.54 14,097.28
11/30/2001 14,500.75 15,615.56
12/31/2001 14,712.74 16,208.95
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Kinder Morgan, Inc. 4.6% 3.5%
Apollo Group, Inc. 4.5% 5.4%
Cree, Inc. 4.1% 3.4%
Crown Castle International Corp. 3.7% 3.7%
Human Genome Sciences, Inc. 3.2% 4.0%
Hanover Compressor Co. 2.8% 3.2%
Enzon, Inc. 2.8% 2.8%
NVIDIA Corp. 2.8% 1.1%
Andrx Corp. 2.7% 2.8%
University of Phoenix Online 2.5% 2.4%
AVERAGE ANNUAL TOTAL RETURNS*
Mid Cap Russell Mid Cap(TM) MorningStar
Growth Fund Growth Index Peer Group+
----------- ------------------- -----------
1 Year -36.93% -20.16% -24.05%
3 Years -4.06 2.16 1.87
5 Years 7.46 9.01 8.53
Since Inception (5/1/96) 7.04 8.90 N/A
TOP SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Health Care 33.1% Energy 9.1%
Technology 21.6% Consumer Cyclical 4.1%
Capital Equipment 15.2% Transportation 3.9%
Financial 10.8% Retail 2.3%
* Total returns are for the period ended December 31, 2001. Returns represents
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus. There are additional
risks associated with a nondiversified fund, as outlined in the current
prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the MorningStar variable universe having a Mid Cap Growth investment
category.
11
Inception: May 1, 1998
SMALL/MID CAP CORE/SM/ FUND
GOLDMAN SACHS ASSET MANAGEMENT
Jones/Brown/Pinter
During the one-year reporting period the Small/Mid Cap CORE Fund returned of
0.53%, underperforming its benchmark the Russell 2500(TM) Index.
The Fund's strategy is a well-defined investment process that has historically
provided consistent, risk-managed performance. The diversification of our models
typically adds value because, when one theme doesn't work, others usually do.
For example, when momentum stocks underperform, value stocks typically advance
more than average.
In the Fund, the CORE themes resulted in positive returns for 2001. Of the
themes, Profitability contributed the most to positive excess returns. Valuation
also posted strong returns. Earnings Quality helped out too, though Momentum and
Fundamental Research both ended on a negative note. Small negative exposures to
certain risk factors, namely Size and Volatility, also helped returns. Stock
selection was strongest within the Consumer Services sector, and struggled the
most within the Financial sector.
Looking ahead, we continue to believe that cheaper stocks should outpace more
expensive ones and good momentum stocks should do better than poor momentum
stocks. We also expect companies that are favored by fundamental research
analysts and that have strong profit margins and sustainable earnings to
outperform their peers. As such, we anticipate remaining fully invested and
expect that the value we add over time will be due to stock selection, as
opposed to sector or size allocations.
[CHART]
Small/Mid Cap Russell
CORE(TM) Fund 2500(TM) Index
------------- -----------------------
4/30/1998 $10,000.00 $10,000.00
5/29/1998 9,576.53 9,536.00
6/30/1998 9,721.11 9,547.44
7/31/1998 9,039.64 8,891.53
8/31/1998 7,377.35 7,214.59
9/30/1998 7,776.24 7,726.83
10/30/1998 7,960.07 8,149.48
11/30/1998 8,422.14 8,552.88
12/31/1998 9,018.54 9,071.19
1/29/1999 8,940.19 9,055.77
2/26/1999 8,305.30 8,460.80
3/31/1999 8,438.16 8,641.86
4/30/1999 9,171.89 9,415.31
5/28/1999 9,250.51 9,561.25
6/30/1999 9,810.43 10,058.43
7/30/1999 9,647.63 9,861.29
8/31/1999 9,346.73 9,552.63
9/30/1999 9,224.22 9,410.30
10/29/1999 9,430.02 9,616.38
11/30/1999 9,887.43 10,159.71
12/31/1999 10,870.98 11,262.03
1/31/2000 10,456.08 11,003.01
2/29/2000 11,807.00 12,591.84
3/31/2000 11,699.80 12,399.19
4/28/2000 11,257.23 11,732.11
5/31/2000 10,720.20 11,168.97
6/30/2000 11,414.25 11,902.77
7/31/2000 11,266.93 11,599.25
8/31/2000 12,208.17 12,597.95
9/29/2000 11,765.57 12,188.51
10/31/2000 11,467.29 11,854.55
11/30/2000 10,396.42 10,811.35
12/29/2000 11,374.55 11,742.20
1/31/2001 11,642.32 12,128.52
2/28/2001 10,940.08 11,347.45
3/30/2001 10,295.97 10,724.47
4/30/2001 11,153.18 11,671.44
5/31/2001 11,433.38 12,022.75
6/30/2001 11,546.24 12,193.48
7/31/2001 11,242.21 11,756.95
8/31/2001 10,944.71 11,371.32
9/28/2001 9,571.68 9,899.87
10/31/2001 9,991.95 10,411.70
11/30/2001 10,814.32 11,254.00
12/31/2001 11,435.35 11,884.00
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Tech Data Corp. 1.1% 0.7%
Aetna US Healthcare, Inc. 1.0% 0.4%
Diagnostic Products Corp. 0.9% 0.6%
Arrow Electronics, Inc. 0.9% 0.7%
Mohawk Industries, Inc. 0.8% 0.2%
Cephalon, Inc. 0.8% 0.6%
Public Storage, Inc. 0.8% 0.5%
Sherwin-Williams Co. 0.8% 1.0%
Deluxe Corp. 0.7% 0.5%
Amerisource Bergen Corp. 0.7% 0.9%
AVERAGE ANNUAL TOTAL RETURNS*
Small/Mid Cap Russell 2500(TM) MorningStar
CORE/SM/ Fund Index Peer Group+
------------- ---------------- -----------
1 Year 0.53% 1.22% -0.55%
3 Years 8.24 9.42 7.24
Since Inception (5/1/98) 3.72 4.82 N/A
TOP TEN SECTOR CLASSIFICATION
(as of December 31, 2001)
% of % of
Investments Investments
Financial 21.4% Basic Material 5.3%
Technology 18.9% Retail 5.0%
Capital Equipment 12.6% Energy 4.7%
Consumer Cyclical 12.2% Consumer Staple 3.3%
Health Care 12.1% Utility 2.4%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. Small-company investing entails special risks
as outlined in the prospectus. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for the sub-accounts of all variable annuity and
life products within the Morningstar variable universe. The peer group
represents a 50% weighting of the Mid Cap Blend category and a 50% weighting
of the Small Cap Blend style for periods since May 1999.
12
Inception: May 1, 1994
SMALL/MID CAP GROWTH FUND
WELLINGTON MANAGEMENT COMPANY, LLP
J. Harrington/F. Boggan
For the year, the Fund gained 2.83% outperforming its benchmark--the Russell
2500(TM) Growth Index (-10.82%).
In a difficult equity market the Fund delivered positive returns for the second
consecutive year. The past year the Fund derived significant benefits from its
stock selection including several holdings that were subjects of announced
mergers/acquisitions. Select Health Care and Consumer Discretionary holdings
boosted performance. Holding higher-quality companies with strong balance sheets
and low debt as well as having minimal exposure to telecom also aided relative
performance. Conversely, stock selection in Utilities and to a lesser degree in
Technology detracted from results.
We remain steadfast in our belief that continued strong relative performance
should come from a focus on high-quality growth companies selected individually
on the basis of our fundamental research. Therefore, our industry over and
under-weights will remain moderate, and will be a reflection of where we find
the most compelling stock ideas on a bottom-up basis. In identifying new
investments for the Fund we continue to focus on quality growth companies
selling at what we believe are attractive valuations.
The fundamental deterioration to the economy that took place in the wake of the
September 11th tragedies officially pushed the U.S. economy into a recession.
While the economy may stay weak for a few more months, there is anecdotal
evidence that the bottom of this recession is near. The combination of monetary
and fiscal stimulus, lower energy prices, and the strength in the U.S. equity
markets gives us confidence that the economy will begin to grow later this year.
Initial signs of strength can be detected in the auto, housing, and personal
computer industries.
The outlook for small and mid cap stocks should continue to be quite favorable
for the year ahead as small and mid cap stocks have historically outperformed
the broad market in periods following a recession. We are also beginning to see
signs of institutions increasing their asset allocation towards small and mid
cap stocks. The Small/Mid Cap Growth Fund continues to focus on quality growth
companies, with strong balance sheets, and proven management teams. The Fund's
large positions in the Information Technology and Health Care sectors leave it
well-positioned to benefit from renewed economic growth during 2002.
[CHART]
Small/Mid Small/Mid Cap
Cap Growth Fund Growth Benchmark (1)
----------------- ----------------------
4/30/1994 10,000.00 10,000.00
5/31/1994 10,019.50 10,015.00
6/30/1994 10,043.35 9,584.36
7/31/1994 10,066.44 9,849.84
8/31/1994 10,359.03 10,436.89
9/30/1994 10,093.81 10,264.68
10/31/1994 10,262.89 10,442.26
11/30/1994 9,992.18 9,981.76
12/31/1994 10,055.96 10,121.50
1/31/1995 9,933.79 10,242.96
2/28/1995 10,282.83 10,787.89
3/31/1995 10,797.79 11,216.17
4/30/1995 11,069.02 11,310.38
5/31/1995 11,087.25 11,588.62
6/30/1995 11,652.14 12,115.90
7/31/1995 12,564.26 12,877.99
8/31/1995 12,807.23 13,019.65
9/30/1995 12,763.70 13,309.99
10/31/1995 12,360.78 12,973.24
11/30/1995 13,159.52 13,553.15
12/31/1995 13,672.48 13,559.92
1/31/1996 14,150.52 13,799.93
2/29/1996 14,611.97 14,321.57
3/31/1996 14,938.62 14,434.71
4/30/1996 16,010.85 15,131.91
5/31/1996 16,455.41 15,440.60
6/30/1996 16,237.46 14,974.29
7/31/1996 14,615.06 13,812.29
8/31/1996 15,484.22 14,559.53
9/30/1996 16,410.87 15,484.06
10/31/1996 16,925.95 15,302.90
11/30/1996 17,438.18 16,204.24
12/31/1996 17,819.82 15,932.01
1/31/1997 17,845.10 16,636.20
2/28/1997 16,823.68 16,270.21
3/31/1997 15,824.55 15,350.94
4/30/1997 15,365.29 15,727.04
5/31/1997 16,487.26 17,136.18
6/30/1997 16,713.17 17,610.85
7/31/1997 18,027.97 19,296.21
8/31/1997 17,686.10 19,107.11
9/30/1997 19,024.95 20,073.93
10/31/1997 18,621.68 19,068.23
11/30/1997 18,188.04 19,268.44
12/31/1997 18,432.25 19,520.86
1/31/1998 18,106.11 19,169.48
2/28/1998 19,665.51 20,971.41
3/31/1998 20,641.16 21,850.12
4/30/1998 20,584.01 22,147.28
5/31/1998 19,647.64 21,237.03
6/30/1998 20,388.83 21,838.03
7/31/1998 19,268.32 20,903.37
8/31/1998 15,226.95 16,912.91
9/30/1998 16,009.11 18,191.53
10/31/1998 16,873.70 19,530.43
11/30/1998 17,602.01 20,846.78
12/31/1998 19,466.01 23,006.50
1/31/1999 19,609.73 23,696.70
2/28/1999 18,153.72 22,537.93
3/31/1999 19,356.11 23,793.29
4/30/1999 20,434.97 24,878.27
5/31/1999 20,604.07 25,134.51
6/30/1999 21,477.65 26,911.52
7/31/1999 20,969.83 26,362.53
8/31/1999 19,347.71 25,793.10
9/30/1999 18,728.16 25,978.81
10/31/1999 18,829.07 27,243.97
11/30/1999 19,018.61 30,461.49
12/31/1999 20,467.92 36,206.52
1/31/2000 19,750.02 36,003.77
2/29/2000 20,275.43 45,238.73
3/31/2000 21,919.10 41,687.49
4/30/2000 21,322.30 37,627.13
5/31/2000 20,907.34 34,278.32
6/30/2000 22,219.14 38,809.91
7/31/2000 22,048.37 35,627.50
8/31/2000 23,960.82 40,269.76
9/30/2000 23,370.44 37,664.31
10/31/2000 23,160.63 35,336.65
11/30/2000 21,058.07 28,601.49
12/31/2000 22,361.15 30,374.78
1/31/2001 23,322.26 32,343.06
2/28/2001 21,729.27 27,352.53
3/31/2001 19,942.94 24,327.34
4/30/2001 22,007.63 28,034.83
5/31/2001 22,357.04 28,847.84
6/30/2001 22,754.01 29,502.68
7/31/2001 22,233.97 27,328.33
8/31/2001 21,517.27 25,511.00
9/30/2001 18,714.13 21,515.98
10/31/2001 20,316.30 23,637.45
11/30/2001 21,992.76 25,679.73
12/31/2001 22,993.59 27,087.00
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Laboratory Corporation of America
Holdings 2.7% 2.3%
Constellation Brands, Inc. 2.7% 2.1%
Veeco Instruments Inc. 2.6% 2.4%
Darden Restaurants, Inc. 2.4% 2.2%
Laboratory Corporation of America
Holdings 2.2% 2.3%
Trigon Healthcare, Inc. 2.2% 1.9%
Investment Technology Group, Inc. 2.2% 1.9%
Lattice Semiconductor Corp. 2.1% 2.1%
Ambac Financial Group, Inc. 2.1% 2.3%
Pactiv Corp. 2.1% 2.2%
AVERAGE ANNUAL TOTAL RETURNS*
Small/Mid Small/Mid
Cap Growth Cap Growth MorningStar
Fund Benchmark(1) Peer Group+
---------- ------------ -----------
1 Year 2.83% -10.82% -18.71%
3 Years 5.71 5.60 6.02
5 Years 5.23 11.20 10.31
Since Inception (5/1/94) 11.48 13.88 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Technology 32.5% Energy 4.4%
Health Care 22.4% Consumer Staple 4.1%
Financial 11.8% Capital Equipment 4.4%
Retail 10.7% Utility 2.4%
Consumer Cyclical 5.5% Transportation 1.1%
(1) The Small/Mid Cap Growth Fund benchmark is the Russell Mid Cap Growth Index
from May 1994 to April 1999 and the Russell 2500 Growth Index May
1999-present.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions, and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate that shares, when redeemed, may be worth more or
less than their original cost. Small company investing entails special
risks as discussed in the prospectus. The performance of the fund on this
page is reported net of Trust level charges (i.e. investment management
fees and operating expenses). It does not reflect expense and charges of
the applicable separate accounts and variable products, all of which vary
to a considerable extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for the sub-accounts of all
variable annuity and life products within the Morningstar variable
universe. The peer group represents a 50% weighting of the Mid Cap Growth
category and a 50% weighting of the Small Cap Growth category. Prior to May
1999, the peer group represents the Mid Cap Growth investment category.
13
Inception: May 1, 1996
SMALL CAP EQUITY FUND
CAPITAL GUARDIAN TRUST COMPANY
Management Team
The Fund returned -3.78% for the 1 year period, underperforming its
benchmark--the Russell 2000(R) Index.
The fund's large position in technology-related companies hurt returns in
2001. The hardest hit were several Internet-related companies, as advertising
rates ratcheted down, negatively affecting revenue projections, and concerns
grew over the growing list of dot-com companies announcing closures. A number of
holdings in the telecommunications and telecom equipment areas also tumbled.
Being underweight in financials, also hindered results.
As the market has become more discriminating we have pared back the list of
fund holdings significantly, concentrating on higher conviction names within
each sector with a focus on market-leading companies attractively valued within
the context of their industries.
Prior to September 11th, we had been adding to our technology holdings at what
we thought were very attractive valuations on signs that we were near a bottom
and demand was beginning to pick up, especially for next-generation technology.
However, the September terrorist attacks significantly changed the recovery
horizon for this sector. With consumer confidence falling, exposure to the
consumer discretionary area hurt in the latter part of September, though it had
been additive previously.
Low oil prices and interest rates, along with tax cuts and increased
government spending, all point toward an economic recovery in 2002. This should
be especially beneficial to small-cap stocks, which tend to be more
operationally and financially leveraged to economic growth. Incremental spending
has a significant impact on small companies, especially cyclical ones.
Meanwhile, small-cap valuations are currently around two-thirds that of large
caps. Small caps, therefore, have the potential to outperform large caps in 2002
as they have in the early stages of previous recoveries.
[CHART]
Small Cap Small Cap Equity
Equity Fund Benchmark (1)
----------- ----------------
4/30/1996 $10,000.00 $10,000.00
5/31/1996 10,231.73 10,253.00
6/30/1996 10,126.04 10,132.01
7/31/1996 9,630.09 9,592.99
8/31/1996 10,161.38 10,009.33
9/30/1996 10,449.97 10,282.58
10/31/1996 10,340.15 10,401.86
11/30/1996 10,678.01 10,961.48
12/31/1996 11,033.49 11,317.73
1/31/1997 11,114.52 11,492.02
2/28/1997 10,927.45 11,601.20
3/31/1997 10,594.17 11,290.28
4/30/1997 10,831.29 11,456.25
5/31/1997 11,818.21 12,368.17
6/30/1997 12,512.51 12,994.00
7/31/1997 13,256.14 13,539.75
8/31/1997 13,389.29 13,755.03
9/30/1997 14,242.08 14,669.74
10/31/1997 13,761.11 14,270.72
11/30/1997 13,862.77 14,427.70
12/31/1997 13,855.26 14,916.80
1/31/1998 13,513.54 14,646.80
2/28/1998 14,524.23 15,531.47
3/31/1998 15,129.82 16,162.05
4/30/1998 15,213.56 16,241.24
5/31/1998 14,450.38 15,666.30
6/30/1998 14,449.78 15,578.57
7/31/1998 13,262.11 14,358.77
8/31/1998 10,895.23 12,110.18
9/30/1998 11,407.11 12,794.41
10/31/1998 11,726.51 13,174.40
11/30/1998 12,312.68 13,531.43
12/31/1998 13,029.17 13,956.32
1/31/1999 12,708.23 13,639.51
2/28/1999 11,869.37 12,707.93
3/31/1999 11,818.92 12,602.45
4/30/1999 12,612.00 13,753.06
5/31/1999 12,790.33 14,175.28
6/30/1999 13,622.04 14,688.42
7/31/1999 13,436.12 14,340.31
8/31/1999 12,841.31 13,816.89
9/30/1999 12,612.59 13,540.55
10/31/1999 12,358.41 13,269.74
11/30/1999 12,260.42 13,338.74
12/31/1999 12,582.73 13,748.24
1/31/2000 11,847.60 13,389.41
2/29/2000 12,338.26 14,207.50
3/31/2000 12,566.66 14,274.28
4/30/2000 12,779.68 14,358.50
5/31/2000 12,662.80 14,138.81
6/30/2000 12,732.80 14,551.66
7/31/2000 12,995.66 15,036.24
8/31/2000 13,753.86 15,708.35
9/30/2000 13,766.35 15,618.82
10/31/2000 13,760.05 15,562.59
11/30/2000 10,725.63 13,964.31
12/31/2000 11,463.94 15,163.85
1/31/2001 13,016.00 15,953.88
2/28/2001 11,049.57 14,907.31
3/31/2001 10,136.03 14,178.34
4/30/2001 11,309.76 15,287.09
5/31/2001 11,648.62 15,663.15
6/30/2001 11,925.17 16,203.53
7/31/2001 11,168.88 15,326.92
8/31/2001 10,641.88 14,831.86
9/30/2001 8,692.54 12,835.49
10/31/2001 9,418.37 13,586.37
11/30/2001 10,217.98 14,637.95
12/31/2001 11,031.01 15,541.11
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Ferro Corp. 1.5% 1.5%
Dreyer's Grand Ice Cream, Inc. 1.5% 1.6%
American Capital Strategies, Ltd. 1.4% 1.4%
Cymer, Inc. 1.3% 1.2%
Speedway Motorsports, Inc. 1.3% 1.2%
LTX Corp. 1.3% 1.5%
Armor Holdings, Inc. 1.2% 1.1%
Electro Scientific Industries, Inc. 1.1% 1.2%
Briggs & Stratton Corp. 1.1% 0.9%
Kulicke and Soffa Industries 1.1% 0.3%
AVERAGE ANNUAL TOTAL RETURNS*
Small Cap Small Cap Equity MorningStar
Equity Fund Benchmark(1) Peer Group+
----------- ---------------- -----------
1 Year -3.78% 2.49% 5.88%
3 Years -5.40 3.65 9.48
5 Years .01 6.55 8.75
Since Inception (5/1/96) 1.74 8.09 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Technology 26.3% Retail 4.8%
Financial 16.4% Consumer Staple 4.6%
Consumer Cyclical 15.1% Basic Material 4.2%
Capital Equipment 11.4% Energy 2.6%
Health Care 11.4% Utility 2.5%
(1)The Small Cap Equity Benchmark is the Russell 2000 Value Index, May 1996 thru
October 2000, and the Russell 2000 Index November 2000 to present.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. Small-company investing entails special risks
as outlined in the prospectus. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for the sub-accounts of all variable annuity and
life products within the Morningstar variable universe having a Small Cap
Blend investment category. Prior to November 2000, the peer group represents
the Small Cap Value investment category.
14
Inception: August 31,1999
SMALL CAP VALUE FUND
T. ROWE PRICE ASSOCIATES, INC.
Preston G. Athey
The Fund outperformed its benchmark--the Russell 2000(R) Value Index--for the
1 year period and underperformed in the fourth quarter.
Small-cap value stocks were among the few bastions of strength in an otherwise
dreadful year for equity investors. The Russell 2000(R) Index managed a small
2.49% gain. However, the performance variance between the value and growth
components of the index was cavernous. The Russell 2000(R) Growth Index declined
9.23%, while the Russell 2000(R) Value Index gained 14.02%.
The fund's 10-largest stocks generated exceptional 12-month results, advancing
more than 30% on average. Brown and Brown, the fund's largest individual
holding, gained 57%, but Insituform Technologies declined 36%.
The economy should turn around in 2002, as the Federal Reserve's yearlong easy
money policy initiatives grab hold of the economy. In small ways, the market has
already started to reflect the modest economic growth we expect in 2002 and
should continue to perform reasonably well.
[CHART]
Small Cap Small Cap Value
Value Fund Fund Benchmark (1)
---------- ------------------
31-Aug-1999 10,001.18 10,000.00
30-Sep-1999 9,560.11 9,685.00
31-Oct-1999 9,442.56 9,694.69
30-Nov-1999 9,942.06 9,748.01
31-Dec-1999 10,508.24 10,080.41
31-Jan-2000 9,755.79 9,661.07
29-Feb-2000 9,775.43 9,828.20
31-Mar-2000 11,917.95 10,551.56
30-Apr-2000 12,265.51 10,547.34
31-May-2000 12,275.08 10,528.35
30-Jun-2000 12,414.03 10,488.35
31-Jul-2000 12,368.00 10,715.94
31-Aug-2000 13,857.01 11,277.46
30-Sep-2000 13,472.03 11,209.79
31-Oct-2000 13,914.54 11,203.07
30-Nov-2000 12,935.92 11,060.79
31-Dec-2000 14,101.31 12,175.72
31-Jan-2001 14,699.69 12,511.77
28-Feb-2001 14,807.89 12,494.25
31-Mar-2001 14,644.98 12,294.34
30-Apr-2001 16,013.47 12,863.57
31-May-2001 16,431.16 13,194.16
30-Jun-2001 16,674.51 13,724.57
31-Jul-2001 16,433.98 13,417.14
31-Aug-2001 15,999.10 13,370.18
30-Sep-2001 14,537.76 11,894.11
31-Oct-2001 15,075.16 12,204.55
30-Nov-2001 15,775.72 13,082.05
31-Dec-2001 16,794.27 13,882.68
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Brown & Brown 3.0% 3.4%
Ruby Tuesday, Inc. 2.6% 2.6%
XTO Energy, Inc. 2.6% 2.7%
Freds, Inc. 2.4% 2.1%
Insituform Technologies, Inc. 2.2% 2.0%
Mathews International Corp. 1.9% 2.2%
Allied Capital Corp. 1.9% 1.9%
Community First Bankshares, Inc. 1.7% 1.7%
Texas Regional Bancshares, Inc. 1.7% 1.7%
Rare Hospitality International, Inc. 1.6% 1.4%
AVERAGE ANNUAL TOTAL RETURNS*
Small Cap Small Cap Value MorningStar
Value Fund Benchmark (1) Peer Group+
---------- --------------- -----------
1 Year 19.10% 14.02% 14.05%
Since Inception (8/31/99) 24.84 15.10 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Financial 30.1% Consumer Cyclical 8.3%
Capital Equipment 17.4% Basic Material 4.1%
Energy 10.1% Utility 4.0%
Retail 9.8% Health Care 3.9%
Technology 9.3% Transportation 2.3%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Small-company investing entails special
risks as outlined in the prospectus. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for all variable annuity and life
sub-accounts within the Morningstar variable universe having a 50% weighting
of the Mid Cap Value investment category and a 50% weighting of the Small Cap
Value category prior to 1/01; and Small Cap Value investment style.
(1)The Small Cap Value benchmark is the Russell 2500 Value Index from September
1999 to December 2000 and the Russell 2500 Value Index January 2001-present.
15
Inception: May 1,1996
SMALL CAP GROWTH FUND
JOHN HANCOCK ADVISERS, INC.
Bernice Behar
For the year, the fund returned -12.61%, underperforming its benchmark--the
Russell 2000(R) Growth Index.
The fund entered 2001 defensively positioned due to the economic deterioration
seen in late 2000. For most of 2001, technology stocks suffered due to concerns
surrounding the slowdown in capital spending and downward earnings revisions. In
the second half of 2001, we began positioning the fund more aggressively by
selectively adding technology exposure and decreasing exposure to more defensive
areas. In the fourth quarter, the technology sector rebounded as investors began
anticipating the sector bottoming and improvement to occur by year end. On a
relative basis, our stock selection and sector allocation decisions in this
sector throughout 2001 contributed to performance.
Consumer staples stocks performed well in 2001 as they benefited from
investors' flight to defensive holdings during the year. The sector consists of
companies offering products consumers tend to purchase regardless of the
economic environment. We overweighted this sector during 2001 in anticipation of
a weak economy. In light of this, we thought it prudent to maintain a healthy
exposure to sectors typically delivering reliable earnings growth.
Healthcare detracted from performance overall in 2001. Our overweighted
position in the services segment at the beginning of 2001 aided performance, as
this area tends to exhibit defensive characteristics. As part of our effort to
decrease the fund's defensive qualities in the second half of 2001, we shifted
our exposure from the services segment towards the growthier biotechnology area
which disappointed in late 2001 due to a spate of bad news surrounding decreased
FDA approvals for new drugs/therapies.
Our energy holdings and overweight to this sector detracted from performance in
2001. We began 2001 with a positive outlook for energy, expecting the sector to
provide solid earnings growth in a sluggish economy. However, a
weaker-than-expected economy, fuel switching and declining natural gas prices
all undermined energy stocks' performance. In response, we brought the fund's
energy weighting to approximately that of the benchmark's by the end of the
third quarter.
[CHART]
Small Cap Russell 2000(R)
Growth Growth Index
--------- ---------------
30-Apr-1996 10,000.00 10,000.00
31-May-1996 10,599.17 10,513.00
30-Jun-1996 10,294.35 9,829.66
31-Jul-1996 9,480.13 8,629.45
31-Aug-1996 10,298.31 9,268.03
30-Sep-1996 11,150.77 9,745.34
31-Oct-1996 10,169.74 9,325.31
30-Nov-1996 9,976.02 9,584.56
31-Dec-1996 9,950.35 9,771.46
31-Jan-1997 10,302.13 10,015.74
28-Feb-1997 9,637.66 9,410.79
31-Mar-1997 8,962.47 8,746.39
30-Apr-1997 8,762.88 8,644.93
31-May-1997 9,780.55 9,944.26
30-Jun-1997 10,513.55 10,281.38
31-Jul-1997 11,205.43 10,807.78
31-Aug-1997 11,571.21 11,132.02
30-Sep-1997 12,817.44 12,020.35
31-Oct-1997 11,834.46 11,297.93
30-Nov-1997 11,387.43 11,029.04
31-Dec-1997 11,369.73 11,035.65
31-Jan-1998 11,170.39 10,888.88
28-Feb-1998 12,061.95 11,850.37
31-Mar-1998 12,788.45 12,348.08
30-Apr-1998 12,730.11 12,423.41
31-May-1998 11,855.75 11,521.47
30-Jun-1998 12,365.90 11,638.99
31-Jul-1998 11,536.94 10,667.13
31-Aug-1998 8,965.63 8,205.16
30-Sep-1998 9,700.92 9,037.16
31-Oct-1998 10,229.85 9,508.90
30-Nov-1998 11,423.75 10,246.79
31-Dec-1998 13,017.10 11,174.12
31-Jan-1999 13,455.51 11,676.96
28-Feb-1999 12,383.65 10,608.52
31-Mar-1999 13,340.57 10,986.18
30-Apr-1999 13,872.71 11,956.26
31-May-1999 13,625.86 11,975.39
30-Jun-1999 14,903.15 12,606.49
31-Jul-1999 15,022.06 12,216.95
31-Aug-1999 14,919.53 11,760.04
30-Sep-1999 15,235.62 11,987.01
31-Oct-1999 16,337.24 12,293.88
30-Nov-1999 18,479.13 13,593.34
31-Dec-1999 22,179.09 15,988.49
31-Jan-2000 21,633.01 15,839.79
29-Feb-2000 27,927.54 19,525.71
31-Mar-2000 25,551.01 17,473.56
30-Apr-2000 21,938.96 15,708.73
31-May-2000 19,337.93 14,332.65
30-Jun-2000 23,397.89 16,184.42
31-Jul-2000 21,152.78 14,797.42
31-Aug-2000 23,672.80 16,354.11
30-Sep-2000 22,477.94 15,541.31
31-Oct-2000 20,010.12 14,279.35
30-Nov-2000 16,003.54 11,686.22
31-Dec-2000 17,425.36 12,401.42
31-Jan-2001 17,633.46 13,404.69
28-Feb-2001 15,433.43 11,566.91
31-Mar-2001 13,803.45 10,515.48
30-Apr-2001 15,698.64 11,802.57
31-May-2001 15,755.91 12,076.39
30-Jun-2001 16,042.64 12,406.08
31-Jul-2001 15,121.09 11,347.84
31-Aug-2001 14,224.44 10,638.60
30-Sep-2001 11,826.21 8,922.59
31-Oct-2001 13,088.50 9,780.95
30-Nov-2001 14,356.80 10,597.66
31-Dec-2001 15,227.42 11,257.89
TOP TEN HOLDINGS (as of December 31, 2001)
six months ago
% of % of
Investments Investments
Wilson Greatbatch Technologies, Inc. 1.4% 1.2%
Corporate Executive Board Co. 1.3% 1.3%
LTX Corp. 1.3% 1.3%
Secure Computing Corp. 1.2% 1.4%
Aeroflex, Inc. 1.2% 1.1%
Overture Services, Inc. 1.2% 1.0%
Tweeter Home Entertainment Group, Inc. 1.1% 1.0%
Performance Food Group Co. 1.1% 1.1%
NPS Pharmaceuticals, Inc. 1.1% 1.1%
Scholastic Corp. 1.1% 1.0%
AVERAGE ANNUAL TOTAL RETURNS *
Small Cap Russell 2000(R) MorningStar
Growth Fund Growth Index Peer Group+
----------- --------------- -----------
1 Year -12.61% -9.22% -13.34%
3 Years 5.37 .25 8.10
5 Years 8.88 2.87 7.48
Since Inception (5/1/96) 7.70 2.11 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Technology 32.4% Energy 7.1%
Health Care 18.3% Capital Equipment 5.6%
Financial 11.9% Consumer Staple 3.3%
Consumer Cyclical 10.4% Utility 1.4%
Retail 8.8% Transportation 0.9%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. Small-company investing entails special risks
as outlined in the prospectus. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for the sub-accounts of all variable annuity and
life products within the Morningstar variable universe having a Small Growth
investment category.
16
Inception: May 2, 1988
INTERNATIONAL EQUITY INDEX FUND
INDEPENDENCE INVESTMENT LLC
B. Greenleaf/D. Nolan
The Fund returned +7.42% and -20.30% in the fourth quarter and 1 year
respectively, modestly underperforming its custom blended benchmark. The
magnitude of the contribution to return from both country and stock selection
during the fourth quarter was small due to the Fund's tight tracking of its
custom benchmark.
The European region within the MSCI EAFE Index climbed 10%. Individual market
returns in the MSCI EAFE European Index ranged from +49% in Finland to -1% in
Austria. Overall, the best performing sector this quarter was information
technology while the weakest performer was energy. The Pacific region within the
MSCI EAFE Index returned -1% ranging from 22% in Hong Kong -6% in Japan.
In the fourth quarter the MSCI Emerging Markets Free Index (MSCI EMF) climbed
27%, outperforming the MSCI EAFE Index by 20%. Individual market returns for the
fourth quarter of 2001 ranged from +81% in Turkey to -17% in Egypt. After an
extremely volatile year, the MSCI EMF Index posted a loss of 2.5% for the
calendar year 2001.
Currencies across the developed markets during the last quarter of 2001
weakened slightly. The worst currency was the Japanese Yen, which deteriorated
9% of its value against the US dollar during the fourth quarter. Currencies
across the emerging markets remained quite stable during the fourth quarter of
2001, with the exception of the South African Rand and the Brazilian Real.
[CHART]
International Equity International Equity
Index Fund Index Benchmark(1)
-------------------- --------------------
12/31/1991 $10,000.00 $10,000.00
1/31/1992 9,975.34 9,789.00
2/28/1992 9,957.05 9,441.49
3/31/1992 9,500.91 8,821.18
4/30/1992 9,474.65 8,865.29
5/29/1992 9,742.69 9,461.92
6/30/1992 9,557.54 9,016.27
7/31/1992 9,503.11 8,788.16
8/31/1992 9,398.20 9,342.69
9/30/1992 9,364.75 9,161.44
10/30/1992 9,314.98 8,683.21
11/30/1992 9,704.39 8,767.44
12/31/1992 9,835.27 8,815.66
1/29/1993 9,894.69 8,817.42
2/26/1993 9,844.91 9,086.36
3/31/1993 10,171.55 9,881.41
4/30/1993 10,234.37 10,822.12
5/28/1993 10,754.26 11,053.72
6/30/1993 10,659.68 10,883.49
7/30/1993 10,847.11 11,266.59
8/31/1993 11,454.44 11,877.24
9/30/1993 11,604.85 11,612.37
10/29/1993 12,352.27 11,972.36
11/30/1993 11,890.55 10,928.37
12/31/1993 13,011.75 11,719.58
1/31/1994 13,101.21 12,713.40
2/28/1994 12,948.55 12,680.35
3/31/1994 12,273.30 12,136.36
4/29/1994 12,504.49 12,654.58
5/31/1994 12,650.67 12,584.98
6/30/1994 12,324.54 12,766.21
7/29/1994 12,607.96 12,891.32
8/31/1994 13,191.63 13,199.42
9/30/1994 12,917.39 12,786.28
10/31/1994 13,176.31 13,214.62
11/30/1994 12,313.94 12,582.96
12/30/1994 12,197.42 12,664.75
1/31/1995 11,516.04 12,180.95
2/28/1995 11,712.19 12,149.28
3/31/1995 12,137.54 12,911.04
4/28/1995 12,503.18 13,400.37
5/31/1995 12,759.13 13,243.59
6/30/1995 12,636.28 13,014.47
7/31/1995 13,338.05 13,827.88
8/31/1995 12,958.94 13,303.80
9/29/1995 13,142.60 13,567.22
10/31/1995 12,914.74 13,206.33
11/30/1995 12,974.66 13,577.43
12/29/1995 13,175.09 14,127.31
1/31/1996 13,382.72 14,188.06
2/29/1996 13,534.39 14,239.14
3/29/1996 13,663.70 14,545.28
4/30/1996 14,169.79 14,971.46
5/31/1996 14,025.88 14,698.98
6/28/1996 14,056.99 14,785.70
7/31/1996 13,460.72 14,356.91
8/30/1996 13,566.43 14,391.37
9/30/1996 13,820.04 14,777.06
10/31/1996 13,734.56 14,629.29
11/29/1996 14,349.08 15,214.46
12/31/1996 14,385.43 15,022.76
1/31/1997 14,136.89 14,499.97
2/28/1997 14,189.93 14,740.67
3/31/1997 13,926.09 14,798.15
4/30/1997 14,025.16 14,879.54
5/30/1997 15,206.56 15,851.18
6/30/1997 15,993.96 16,729.33
7/31/1997 16,497.15 17,003.69
8/29/1997 14,699.52 15,736.92
9/30/1997 15,762.13 16,621.33
10/31/1997 13,626.28 15,348.14
11/28/1997 13,621.72 15,194.66
12/31/1997 13,662.44 15,331.41
1/31/1998 13,672.36 16,036.66
2/27/1998 14,722.01 17,069.42
3/31/1998 15,318.89 17,598.57
4/30/1998 15,728.54 17,741.12
5/29/1998 15,821.99 17,996.59
6/30/1998 16,013.82 18,169.36
7/31/1998 16,144.33 18,411.01
8/31/1998 14,090.81 15,989.96
9/30/1998 13,652.40 15,548.64
10/30/1998 15,130.01 17,283.87
11/30/1998 15,863.36 18,184.35
12/31/1998 16,506.81 18,920.82
1/29/1999 16,543.08 18,945.42
2/26/1999 15,983.11 18,354.32
3/31/1999 16,821.34 19,325.26
4/30/1999 17,465.08 20,106.01
5/28/1999 16,619.25 19,056.47
6/30/1999 17,476.14 20,018.82
7/30/1999 17,886.03 20,517.29
8/31/1999 18,049.51 20,660.91
9/30/1999 18,176.60 20,915.04
10/29/1999 18,785.63 21,611.51
11/30/1999 19,614.70 22,506.23
12/31/1999 21,602.46 24,763.61
1/31/2000 20,335.02 23,550.19
2/29/2000 21,028.01 24,367.38
3/31/2000 21,594.97 25,035.05
4/28/2000 20,206.79 23,420.29
5/31/2000 19,816.69 22,858.20
6/30/2000 20,512.95 23,838.82
7/31/2000 19,538.28 22,642.11
8/31/2000 19,726.81 22,882.11
9/29/2000 18,771.66 21,728.86
10/31/2000 18,152.29 21,016.15
11/30/2000 17,361.96 20,078.83
12/29/2000 17,839.59 20,572.77
1/31/2001 18,198.44 21,027.43
2/28/2001 16,935.16 19,597.56
3/30/2001 15,751.96 18,274.73
4/30/2001 16,831.48 19,455.27
5/31/2001 16,298.10 18,861.89
6/30/2001 15,739.09 18,192.29
7/31/2001 15,337.18 17,717.47
8/31/2001 14,975.59 17,278.08
9/28/2001 13,236.51 15,291.10
10/31/2001 13,559.77 15,705.49
11/30/2001 14,179.26 16,394.96
12/31/2001 14,218.77 16,453.98
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
ISHARES, Inc. 1.7% N/A
Toyota Motor Corp. 1.5% 1.8%
Siemens AG 1.3% 1.1%
Total Fina SA 1.3% 1.1%
ENI 1.2% 1.2%
Allianz AG 1.2% 1.2%
Vodafone AirTouch PLC 1.1% 1.1%
BP Amoco PLC 1.1% 1.1%
Telefonica SA 1.1% 1.1%
Telecom Italia Mobile SpA 1.0% 1.2%
AVERAGE ANNUAL TOTAL RETURNS*
International International Equity MorningStar
Equity Index Fund Index Benchmark (1) Peer Group+
----------------- -------------------- -----------
1 Year -20.30% -20.02% -21.42%
3 Years -4.85 -4.55 -2.15
5 Years -0.23 1.84 1.93
10 Years 3.58 5.11 7.02
TOP TEN COUNTRIES (as of December 31, 2001)
% of % of
Country Investments Investments
Japan 26.9% Spain 4.1%
Germany 11.9% United States 2.9%
United Kingdom 10.5% Netherlands 2.9%
France 8.8% Australia 2.7%
Italy 7.7% Belgium 1.7%
(1)The International Equity Benchmark represents the MSCI EAFE from May 1988 to
April 1998 and then MSCI EAFE GDP weighted from May 1998 to June 1999 and now
90% MSCI EAFE GDP 10% MSCI Emerging Markets Free from July 1999 to present.
* Total returns are for the period ended December 31, 2001, returns represent
past performance, assume reinvestment of all distributions, and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
special risks associated with international investing, including currency
fluctuations, political and economic instability, foreign taxation and
different accounting standards, as outlined in the current prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for the sub-accounts of all
variable annuity and life products within the MorningStar variable universe
having a Foreign Stock, Large Cap category.
17
Inception: May 1, 1996
INTERNATIONAL OPPORTUNITIES FUND
T. ROWE PRICE INTERNATIONAL, INC.
Warren/Ford/Seddon/Bickford-Smith
The fund ended 2001 on a high note, posting a solid gain in the final quarter
outperforming its benchmark--the MSCI All Country World Free ex-US benchmark.
Fourth-quarter results, however, could not overcome earlier weakness, and the
fund ended the year with a loss of more than 20%, underperforming its benchmark.
In the fourth quarter, the fund was able to make up some lost ground against
the benchmark by underweighting Japan, which did poorly, and overweighting the
stronger markets of South Korea, Sweden, and Brazil. Successful stock selection
in the fourth quarter overall also added value.
A combination of monetary easing and tax-reductions in the U.S. should help
stimulate economic growth worldwide, leading to positive stock market results in
2002. We expect these results to be moderate, however, until the corporate
earnings picture comes more clearly into focus later this year. Outside the
U.S., Europe is probably in the best shape in that the consumer has been less
extended than in the U.S. and is less exposed to equity markets. The arrival of
the euro as the official currency throughout most of Europe could help bolster
it against the powerful U.S. greenback.
Much of what happens in Japan depends on the ability of the government to,
finally, implement much-needed economic reforms. In Latin America, the Argentine
crisis has not led to any immediate fallout as Argentina's slow-motion
disintegration gave Latin American and emerging market countries plenty of time
to prepare.
[CHART]
International
Opportunities MCSI All Country World
Fund Free Ex. US Index
------------- ----------------------
4/30/1996 $10,000.00 $10,000.00
5/31/1996 10,024.34 9,850.00
6/30/1996 10,129.22 9,900.24
7/31/1996 9,819.73 9,571.55
8/31/1996 9,971.07 9,628.02
9/30/1996 10,190.88 9,866.79
10/31/1996 10,150.25 9,768.13
11/30/1996 10,608.68 10,145.18
12/31/1996 10,672.04 10,027.49
1/31/1997 10,544.32 9,842.99
2/28/1997 10,671.97 10,023.11
3/31/1997 10,659.18 10,002.06
4/30/1997 10,701.19 10,086.08
5/31/1997 11,332.27 10,709.40
6/30/1997 11,796.26 11,300.56
7/31/1997 12,113.19 11,528.83
8/31/1997 10,992.06 10,621.51
9/30/1997 11,718.58 11,196.14
10/31/1997 10,863.43 10,243.35
11/30/1997 10,858.72 10,115.30
12/31/1997 10,880.04 10,231.63
1/31/1998 11,254.02 10,537.56
2/28/1998 11,932.03 11,240.41
3/31/1998 12,345.90 11,629.33
4/30/1998 12,435.38 11,713.06
5/31/1998 12,390.74 11,501.05
6/30/1998 12,416.32 11,457.35
7/31/1998 12,560.24 11,566.19
8/31/1998 10,980.00 9,935.36
9/30/1998 10,715.43 9,725.72
10/31/1998 11,680.61 10,744.01
11/30/1998 12,199.09 11,320.96
12/31/1998 12,611.66 11,711.53
1/31/1999 12,484.38 11,698.65
2/28/1999 12,268.43 11,436.60
3/31/1999 12,769.42 11,988.99
4/30/1999 13,241.38 12,588.44
5/31/1999 12,623.31 11,996.78
6/30/1999 13,112.65 12,548.63
7/31/1999 13,358.88 12,843.53
8/31/1999 13,495.21 12,888.48
9/30/1999 13,581.86 12,976.12
10/31/1999 14,038.51 13,458.83
11/30/1999 15,021.61 13,997.19
12/31/1999 16,900.78 15,332.52
1/31/2000 15,834.00 14,499.96
2/29/2000 16,711.59 14,891.46
3/31/2000 16,885.48 15,451.38
4/30/2000 15,946.30 14,589.19
5/31/2000 15,446.42 14,215.71
6/30/2000 16,250.95 14,821.30
7/31/2000 15,693.05 14,235.86
8/31/2000 16,033.54 14,412.38
9/30/2000 15,020.47 13,612.49
10/31/2000 14,413.93 13,179.62
11/30/2000 13,655.62 12,587.85
12/31/2000 14,136.02 13,018.36
1/31/2001 14,305.54 13,213.63
2/28/2001 13,024.07 12,167.11
3/31/2001 12,015.17 11,306.90
4/30/2001 12,974.65 12,075.77
5/31/2001 12,412.32 11,742.48
6/30/2001 11,876.69 11,291.56
7/31/2001 11,594.56 11,040.89
8/31/2001 11,302.99 10,767.08
9/30/2001 10,116.79 9,624.69
10/31/2001 10,444.29 9,894.18
11/30/2001 10,925.81 10,346.35
12/31/2001 11,177.39 10,479.81
TOP TEN HOLDINGS (as of December 31, 2001)
six months ago
% of % of
Investments Investments
GlaxoSmithKline PLC 3.8% 4.0%
Total Fina SA 2.6% 2.4%
Vodafone AirTouch PLC 2.4% 2.4%
Royal Bank of Scotland Group 2.2% 2.1%
Reed International PLC 2.1% 2.2%
Nestle SA 2.0% 2.0%
ING Groep NV 1.8% 1.9%
Shell Transport & Trading Co. PLC 1.8% 1.8%
Nokia Oyj 1.7% 1.6%
Koninklijke (Royal) Philips Electronics N.V. 1.6% 1.6%
AVERAGE ANNUAL TOTAL RETURNS*
MSCI All Country
Intl. Opportunities World Free Ex. MorningStar
Fund US Index Peer Group+
------------------- ---------------- -----------
1 Year -20.93% -19.50% -21.42%
3 Years -3.94 -3.64 -2.15
5 Years 0.93 0.89 1.93
Since Inception
(5/1/96) 1.98 0.83 N/A
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of % of
Investments Investments
Financial 24.1% Energy 7.8%
Technology 21.3% Consumer Staple 7.2%
Capital Equipment 12.9% Retail 4.1%
Health Care 10.0% Basic Material 2.5%
Consumer Cyclical 8.3% Utility 1.8%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. There are special risks associated with
international investing including currency fluctuations, political and
economic instability, foreign taxation and different accounting standards, as
outlined in the current prospectus. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for the sub-accounts of all variable annuity and
life products within the Morningstar variable universe having a Foreign Stock,
Large Cap investment category.
18
Inception: August 31, 1999
INTERNATIONAL EQUITY FUND
GOLDMAN SACHS ASSET MANAGEMENT
Maeda/Noble/Orchard
During the one-year period the Fund returned -22.86% underperforming its
benchmark--the MSCI EAFE Index. As these returns indicate, it has been an
extremely challenging period in the financial markets.
In many ways, the international equity markets mirrored that of the U.S.
Throughout the year, investors dealt with slowing economic growth and the
resulting sluggish business environment. The Technology sector was initially the
weakest performing segment, due to weakening end-market demand, significant
inventory build-up and downward earnings revisions. As economic growth slowed
even further, more industries began to report a decline in business, and the
stock market decline broadened.
For the 1 year, in this environment, Defensive sectors outperformed at the
expense of more economically sensitive cyclical sectors. As such, our overweight
position in Consumer Cyclicals and our underweight in Utilities detracted from
performance. Our underweight in Energy also hurt results, as the oil price
remained resilient for much of the year. On a more positive note, our
overweights in Consumer Staples and our underweight in Industrials contributed
positively to performance.
Looking ahead, we believe that low interest rates and relatively low levels of
taxation should help to further stimulate corporate and consumer spending in the
coming months, and that equity markets will continue to outperform as a result.
However, the recent rally means that sector themes will probably be less
important than company specifics, as companies that fail to meet their numbers
going forward are more likely to be harshly punished by the market. As such, our
bottom-up strategy should benefit us greatly, as we continue to focus on strong
and well-managed franchises with proven track records.
[CHART]
International International Equity Fund
Equity Fund MSCI EAFE Index
------------- -------------------------
31-Aug-1999 10,001.23 10,000.00
30-Sep-1999 9,935.73 10,103.00
31-Oct-1999 10,307.81 10,483.88
30-Nov-1999 11,104.10 10,850.82
31-Dec-1999 12,149.28 11,826.31
31-Jan-2000 11,523.58 11,076.52
29-Feb-2000 12,105.95 11,376.69
31-Mar-2000 12,439.96 11,820.38
30-Apr-2000 11,838.37 11,201.00
31-May-2000 11,566.83 10,929.93
30-Jun-2000 11,851.50 11,359.48
31-Jul-2000 11,411.38 10,885.79
31-Aug-2000 11,366.34 10,982.67
30-Sep-2000 10,813.82 10,450.01
31-Oct-2000 10,580.34 10,205.48
30-Nov-2000 10,129.48 9,824.82
31-Dec-2000 10,403.30 10,176.55
31-Jan-2001 10,375.25 10,171.46
28-Feb-2001 9,505.51 9,409.62
31-Mar-2001 8,848.98 8,786.70
30-Apr-2001 9,510.71 9,402.65
31-May-2001 9,220.73 9,078.26
30-Jun-2001 8,889.09 8,710.59
31-Jul-2001 8,671.26 8,552.92
31-Aug-2001 8,325.92 8,338.25
30-Sep-2001 7,518.08 7,495.25
31-Oct-2001 7,757.45 7,687.13
30-Nov-2001 7,965.30 7,970.78
31-Dec-2001 8,025.06 8,018.61
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
investments % of investments
Vodafone AirTouch PLC 3.9% 3.5%
Glaxo SmithKline PLC 3.4% 3.7%
Total Fina SA 3.4% 3.1%
Nestle SA 3.2% 3.3%
Takeda Chemical Industries 2.7% 3.5%
Bank of Ireland 2.5% 1.7%
Barclay's PLC 2.5% 2.4%
NovartisS AG 2.4% 0.2%
Muenchener Rueckversicherungs-
Gesellschaft AG 2.4% 2.5%
Tesco PLC 2.3% 2.5%
AVERAGE ANNUAL TOTAL RETURNS*
International MSCI EAFE MorningStar
Equity Fund Index Peer Group+
------------- --------- -----------
1 Year -22.86% -21.21% -21.42%
Since Inception (8/31/99) -8.97 -9.03 N/A
TOP TEN COUNTRIES (as of December 31, 2001)
% of % of
investments investments
United Kingdom 27.5% Italy 5.0%
Japan 21.6% Netherlands 4.9%
Switzerland 10.3% Spain 3.6%
France 9.3% Hong Kong 2.4%
Germany 6.7% Sweden 2.2%
* Total returns are for the period ended December 31, 2001, returns represent
past performance, assume reinvestment of all distributions, and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus. There are special risks
associated with international investing, including currency fluctuations,
political and economic instability, foreign taxation and different accounting
standards, as outlined in the current prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the Morningstar variable universe having a Foreign Stock, Large Cap
investment category.
19
Inception: May 1, 1998
EMERGING MARKETS EQUITY FUND
MORGAN STANLEY INVESTMENT MANAGEMENT
Meyer/Ramachandran
For the 1 year period, the Fund returned -3.63% underperforming its
benchmark--the MSCI Emerging Markets Free Index.
Global Emerging Market equities--as measured by the MSCI Emerging Markets Free
Index--returned +26.6% in the fourth quarter rebounding from the sharp downturn
that followed the events of September 11. Emerging Market equities hit a low on
September 21, 2001 and since then they have rallied 29.6% through the end of the
year. Fueled by encouraging US economic data, market sentiment improved as
expectations grew for a US-led global economic recovery in 2002. Global monetary
easing, success in Afghanistan, and the fall in energy prices have all helped to
support an economic recovery story in the US.
In terms of portfolio positioning, the quality growth exposure we have been
noting since mid September as part of our barbell strategy benefited the
portfolio. Overall no major country allocation changes were made during the
quarter. However our decision, following MSCI changes, to maintain the
portfolio's absolute weights in Mexico, Malaysia and Chile led to increase in
their relative weights within the portfolio. On a sector basis, in South Africa
where the local currency depreciated 24.9% in the fourth quarter, we shifted
from domestic oriented companies such as banks in favor of export-oriented
commodity stocks that are expected to benefit from a weak currency.
While we remain positive in the intermediate and long-term, we think a trading
range environment is likely near-term given our expectations that the pace of
the recent rally will slow and potentially reverse in order to be in line with
fundamentals. Nevertheless, this near-term trading environment does not change
our positive long-term posture given the strong liquidity, cheap valuations and
corporate restructuring which should continue to support selected Emerging
Market countries. We believe the cyclical bottom is forming in the US and as a
result maintain our global view that the turnaround in growth (and thus Emerging
Markets) has begun to point to an (anemic) recovery.
[CHART]
Emerging Markets MSCI Emerging Markets
Equity Fund Free Index
---------------- ---------------------
30-Apr-1998 10,000.00 10,000.00
31-May-1998 8,687.98 8,630.00
30-Jun-1998 7,960.03 7,724.71
31-Jul-1998 8,533.05 7,969.59
31-Aug-1998 5,844.62 5,665.58
30-Sep-1998 6,556.15 6,024.78
31-Oct-1998 7,080.77 6,659.19
30-Nov-1998 7,667.81 7,213.23
31-Dec-1998 7,113.31 7,108.64
31-Jan-1999 6,933.57 6,994.19
28-Feb-1999 6,732.04 7,062.03
31-Mar-1999 7,577.83 7,992.81
30-Apr-1999 8,290.44 8,981.52
31-May-1999 7,990.48 8,929.43
30-Jun-1999 9,228.06 9,942.92
31-Jul-1999 8,932.36 9,672.47
31-Aug-1999 8,752.42 9,760.49
30-Sep-1999 8,575.24 9,430.58
31-Oct-1999 9,055.88 9,631.46
30-Nov-1999 10,560.14 10,495.40
31-Dec-1999 12,901.29 11,830.41
31-Jan-2000 12,556.47 11,901.39
29-Feb-2000 13,603.32 12,058.49
31-Mar-2000 13,829.75 12,117.58
30-Apr-2000 12,047.85 10,968.83
31-May-2000 11,235.00 10,515.82
30-Jun-2000 12,012.47 10,885.98
31-Jul-2000 11,066.32 10,326.44
31-Aug-2000 11,162.35 10,377.04
30-Sep-2000 9,707.19 9,471.12
31-Oct-2000 8,762.37 8,784.46
30-Nov-2000 7,692.06 8,016.70
31-Dec-2000 7,726.21 8,209.91
31-Jan-2001 8,827.46 9,340.41
28-Feb-2001 7,938.17 8,609.06
31-Mar-2001 7,092.43 7,763.65
30-Apr-2001 7,533.72 8,147.17
31-May-2001 7,613.46 8,244.12
30-Jun-2001 7,488.06 8,075.12
31-Jul-2001 7,035.61 7,564.77
31-Aug-2001 6,855.90 7,489.88
30-Sep-2001 5,800.53 6,330.45
31-Oct-2001 6,216.98 6,723.57
30-Nov-2001 6,947.56 7,425.51
31-Dec-2001 7,445.52 8,015.09
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
investments % of investments
Samsung Electronics 5.6% 4.8%
Taiwan Semiconductor 4.4% 4.1%
Telefonos De Mexico, SA 3.4% 3.5%
Anglo American PLC 3.2% 2.9%
China Telecom (Hong Kong), Ltd. 3.0% 3.4%
SK Telecom Co., Ltd. 2.5% 3.1%
RAO Unified Energy Systems 2.5% 2.4%
United Microelectronics Corp. 2.2% 1.9%
America Movil SA de CV 2.0% 1.9%
Teva Pharmaceutical Industries, Ltd. 2.0% 1.3%
AVERAGE ANNUAL TOTAL RETURNS*
Emerging Markets MSCI Emerging MorningStar
Equity Fund(1) Markets Free Index Peer Group+
---------------- ------------------ -----------
1 Year -3.63% -2.37% -3.38%
3 Years 1.53 4.08 3.35
Since Inception
(5/1/98) -7.71 -5.86 N/A
TOP TEN COUNTRIES (as of December 31, 2001)
% of % of
Investments Investments
United States 26.5% Hong Kong 5.8%
South Korea 19.5% Brazil 5.0%
Taiwan 13.4% Mexico 3.5%
South Africa 7.8% Malaysia 3.2%
India 5.9% Turkey 2.7%
(1)Returns reflect extra-ordinary capital contribution of $445,000 in June 1999.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. International investing entails special
risks as outlined in the prospectus. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for the sub-accounts of all
variable annuity and the life products within the Morningstar variable
universe having a Diversified Emerging Markets investment category.
20
Inception: May 1, 2001
HEALTH SCIENCES FUND
PUTNAM INVESTMENTS
Margaret Smith
The Fund returned -1.85% outperforming the S&P 500(R) Index but trailing the
Goldman Sachs Health Care Index since its inception on May 1, 2001.
Since inception, in pharmaceuticals, the selection of robust holdings such as
Sepracor aided performance. Stock selection in health-care services (Quest
Diagnostics, Trigon Healthcare, McKesson Corporation) also contributed to
performance. Biotechnology, a segment that suffered due to valuation concerns
(Waters, Applied Biosystems, Amgen), detracted from results despite significant
contributions by select holdings (Gilead Sciences). Holdings within the retail
staples area (CVS) also hindered results somewhat, due to concerns over 2001
profits, pharmacist shortages, and decreased non-pharmacy sales.
In the immediate aftermath of September 11, the health-care sector as a whole
benefited from a shift in investor sentiment toward defensive, non-cyclical
areas of the equity market. However, this scenario reversed itself in the fourth
quarter as growing optimism regarding a U.S. economic recovery and positive news
from Afghanistan enticed investors back into higher-risk, cyclical market
sectors. This trend benefited the Fund's biotechnology and medical technology
holdings but hurt pharmaceutical and health-care services stocks.
Looking ahead, the Fund is focusing on health-care services, an area in which
we continue to see attractive investment opportunities, which should benefit
from a more favorable hiring market. Recruitment has been difficult in the past,
particularly in terms of registered nurses. We are also looking at
pharmaceuticals, where valuations of select companies are currently depressed.
The Fund remains diversified within the health-care sector and we continue to
seek strong companies with growing earnings and solid management. Historical
Fund Return
[CHART]
Health Sciences GSSI Health Care S&P 500/R/
Fund Index/2/ Index/1/
-------------- ---------------- ----------
4/30/2001 $10,000 $10,000 $10,000
5/31/2001 10,241 10,666 10,849
6/30/2001 10,198 10,397 10,585
7/31/2001 10,189 10,682 10,481
8/31/2001 9,836 10,409 9,825
9/30/2001 9,632 10,328 9,031
10/31/2001 9,591 10,342 9,204
11/30/2001 9,927 10,895 9,910
12/31/2001 9,815 10,242 9,277
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Pfizer, Inc. 6.9% 7.8%
Johnson & Johnson 6.0% 6.2%
Amgen, Inc. 4.6% 4.9%
Medtronic, Inc. 4.3% 4.0%
American Home Products Corp. 4.3% 4.4%
AstraZeneca Group PLC 4.1% 3.3%
Pharmacia Corp. 4.0% 4.4%
Schering-Plough Corp. 4.0% 4.2%
Merck & Co., Inc. 3.8% 4.6%
Eli Lilly & Co. 3.5% 3.6%
AVERAGE ANNUAL TOTAL RETURNS*
Health GSSI
Sciences S&P 500 Health Care
Fund Index(1) Index(2)
-------- -------- -----------
Since Inception (5/1/01) -1.85% 3.66% -10.65%
TOP SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of
Investments
Health Care 90.5%
Capital Equipment 4.6%
Financial 2.9%
Technology 1.5%
Retail 0.5%
(1)"S&P 500" is an unmanaged stock index commonly used as a broad measure of
stock market performance.
(2)The Goldman Sachs Healthcare Index is a modified capitalization weighted
index that measures the performance of US healthcare stocks. The index has a
maximum individual stock weighting which is currently 7.5%. The index
includes companies in the following categories: providers of healthcare
related services, researchers, manufacturers and distributors of
pharmaceuticals, drugs and related sciences, and medical supplies,
instruments and products.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original costs. Sector investing entails special risks as
discussed in the prospectus. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
additional risks associated with a nondiversified fund, as outlined in the
current prospectus.
21
Inception: May 16, 1988
REAL ESTATE EQUITY FUND
INDEPENDENCE INVESTMENT LLC
J. DeSantis/T. Spicer
MORGAN STANLEY INVESTMENT MANAGEMENT, INC.
T. Bigman/D. Funke
The Real Estate Equity Fund is a multi-manager fund with two sub-advisers each
of which employs its own independent investment approach in managing its portion
of the Fund. The two managers employ a distinct and complementary investment
strategy. The multi-manager approach seeks to produce more consistent investment
returns over market cycles and to reduce the risk of any one manager or strategy
being out of favor in certain market environments.
Independence Investment LLC (II LLC) selects real estate stocks using a
combination of bottom-up fundamental equity research and quantitative tools. II
LLC Real estate stocks are purchased that are undervalued relative to the
stock's history and have improving earnings growth prospects.
Morgan Stanley Investment Management (MSIM) uses a combination of top down
market analysis to identify undervalued real estate property sectors and
geographic regions and fundamental, bottom-up equity and real estate research to
select stocks that are attractively priced relative to the underlying real
estate value.
As of December 31, 2001, II LLC managed approximately 48% and MSIM managed
approximately 52% of the Fund's assets. For the year, the Fund returned 6.61%
versus 10.49% for the Wilshire Real Estate Securities Index.
Independence Investment LLC
The REIT sector ended up being one of the few bright spots having positive
returns. REITs benefited by having attributes of both value and small cap stocks
as these styles outperformed for the year. For the fourth quarter and the year
of 2001, this portion of the Fund underperformed its benchmark--the Wilshire
Real Estate Securities Index. In the fourth quarter, sector allocation was the
main contributor to the negative relative performance. With sector bets kept to
a minimum, a modest underweight in Hotels was all that was needed as the
property-type rebounded significantly from its 9/11 lows. We believe this run-up
is unjustified and may be short-lived as the companies report. Even though yield
was not as much of an issue this quarter, it was the dominant theme that hurt
relative performance throughout the year.
With REITs displaying the qualities of a late-cycle cyclical, the expectation
is that their recovery will lag that of a broader economic revival. However, we
do see a number of factors in place that will lend support to the group. These
include consistent revenues, predictable growth, high and increasing dividends,
S&P index inclusion, favorable press, and better comparability to the broader
equity markets with the adoption of operating EPS. All of this has, and should
continue to bring new investors to the group.
There are a couple of storm clouds on the horizon to keep an eye on. If we
were to return to growth investing, predictable REITs would not look so
attractive and would most likely underperform. Another risk is the potential of
a rising interest rate environment as the economy improves. Given that scenario,
we would expect that those investors who came into REITs for yield would exit it
just as fast if other higher yielding alternatives were to materialize. Although
this exodus may hurt the sector, dedicated REIT investors focused on the
fundamentals should benefit. That said, we will continue to focus on those
companies that are the leaders in their respective property-types, operate in
areas with high barriers to entry, maintain financial flexibility, and have
proven management teams at their helms.
Morgan Stanley Investment Management, Inc.
In the fourth quarter of 2001 and 1 year periods, this portion of the Fund
underperformed the benchmark--the Wilshire Real Estate Securities Index.
In the fourth quarter, stock selection positively affected performance while
sector allocation was a negative. Overweights in the apartment and office
sectors and an underweight in hotels were the major detractors. This was
partially mitigated by overweights in the regional mall sector. Stock selection
achieved the largest contributions in the hotel and diversified sectors.
In the fourth quarter, the top-down weightings in the portfolio reflected some
modest adjustments to the more defensive stance that we established at the
beginning of the year, as a result of weakening economic fundamentals. We
increased our overweight to the mall sector as these stocks have continued to
present a defensive alternative based on an expectation that occupancies will
remain favorable. We continued to reduce our overweight to the office sector as
there does not appear to be any visibility with regard to a return in demand. We
also modestly increased our relative weighting to hotels, given the dramatic
price declines. We remain most comfortable with companies that own properties
with long-term leases with high quality tenants.
22
Inception: May 16, 1988
REAL ESTATE EQUITY FUND
INDEPENDENCE INVESTMENT LLC
J. DeSantis/T. Spicer
MORGAN STANLEY INVESTMENT MANAGEMENT, INC.
T. Bigman/D. Funke
The private real estate markets have weakened as a result, we believe, of a
continued reduction in demand. Property value estimates are based upon the
current weakened levels of occupancy. With a dramatic slowdown in new supply,
when the economy does recover, we expect to see occupancy rates recover. Thus,
the property values should also recover. The consensus of sell-side analysts
have predicted that the sector may provide a total return of 7% to 10% in 2002.
Our own estimates are at the lower end of that range, with the caveat that a
continuation of the favorable funds flow to the sector may allow for an upside
to this range.
[CHART]
Real Estate Wilshire Real Estate
Equity Fund Securities Index
----------- --------------------
31 Dec 91 10,000.00 10,000.00
31 Jan 92 10,397.14 10,471.00
28 Feb 92 10,285.46 10,442.73
31 Mar 92 10,253.73 10,217.17
30 Apr 92 10,117.08 10,047.56
29 May 92 10,412.46 10,087.75
30 Jun 92 10,149.30 9,784.11
31 Jul 92 10,448.54 9,820.31
31 Aug 92 10,479.67 9,672.02
30 Sep 92 10,739.15 10,039.56
30 Oct 92 10,930.53 10,146.98
30 Nov 92 11,059.53 10,234.25
31 Dec 92 11,600.77 10,735.73
29 Jan 93 12,498.70 11,481.86
26 Feb 93 13,048.58 12,037.58
31 Mar 93 13,964.21 12,845.30
30 Apr 93 13,195.37 12,116.97
28 May 93 12,983.16 11,926.74
30 Jun 93 13,246.36 12,239.22
30 Jul 93 13,426.69 12,487.67
31 Aug 93 13,515.32 12,747.42
30 Sep 93 14,305.62 13,327.43
29 Oct 93 14,039.18 12,951.59
30 Nov 93 13,434.55 12,386.90
31 Dec 93 13,606.71 12,372.04
31 Jan 94 13,929.29 12,743.20
28 Feb 94 14,506.56 13,264.40
31 Mar 94 14,071.07 12,650.25
29 Apr 94 14,163.93 12,791.94
31 May 94 14,451.12 13,058.01
30 Jun 94 14,068.68 12,800.77
29 Jul 94 13,988.51 12,830.21
31 Aug 94 14,008.48 12,821.23
30 Sep 94 13,929.96 12,607.11
31 Oct 94 13,333.07 12,145.69
30 Nov 94 12,882.74 11,670.80
30 Dec 94 13,996.45 12,575.28
31 Jan 95 13,513.05 12,169.10
28 Feb 95 13,797.32 12,549.99
31 Mar 95 14,238.49 12,622.78
28 Apr 95 13,657.50 12,531.90
31 May 95 14,238.49 12,946.71
30 Jun 95 14,464.33 13,171.98
31 Jul 95 14,737.72 13,384.05
31 Aug 95 14,839.68 13,547.33
29 Sep 95 15,193.81 13,796.60
31 Oct 95 14,682.48 13,368.91
30 Nov 95 14,742.30 13,507.95
29 Dec 95 15,719.77 14,291.41
31 Jan 96 15,902.58 14,488.63
29 Feb 96 16,069.76 14,775.50
29 Mar 96 16,214.19 14,895.18
30 Apr 96 16,159.20 14,962.21
31 May 96 16,460.14 15,295.87
28 Jun 96 16,802.95 15,601.79
31 Jul 96 15,750.07 15,462.93
30 Aug 96 17,456.34 16,120.11
30 Sep 96 17,939.05 16,523.11
31 Oct 96 18,405.59 16,970.89
29 Nov 96 19,042.53 17,675.18
31 Dec 96 20,917.82 19,561.12
31 Jan 97 21,147.70 19,840.84
28 Feb 97 21,130.69 19,852.75
31 Mar 97 21,009.09 19,920.25
30 Apr 97 20,376.75 19,276.82
30 May 97 21,014.85 19,851.27
30 Jun 97 22,093.01 20,835.89
31 Jul 97 22,687.20 21,521.40
29 Aug 97 22,542.99 21,362.14
30 Sep 97 24,502.39 23,468.44
31 Oct 97 23,619.26 22,471.04
28 Nov 97 23,920.33 22,922.70
31 Dec 97 24,520.35 23,433.88
31 Jan 98 23,824.06 23,103.46
27 Feb 98 23,402.27 22,807.74
31 Mar 98 23,991.43 23,257.05
30 Apr 98 23,241.45 22,524.45
29 May 98 23,080.50 22,308.22
30 Jun 98 23,007.64 22,189.98
31 Jul 98 21,450.79 20,645.56
31 Aug 98 19,515.66 18,500.49
30 Sep 98 20,860.55 19,536.52
30 Oct 98 20,339.92 19,268.86
30 Nov 98 20,628.52 19,631.12
31 Dec 98 20,423.78 19,350.39
29 Jan 99 19,864.63 18,930.49
26 Feb 99 19,378.93 18,780.94
31 Mar 99 19,282.23 18,679.52
30 Apr 99 21,324.45 20,670.76
28 May 99 21,883.56 21,020.10
30 Jun 99 21,653.35 20,662.75
30 Jul 99 20,931.12 19,871.37
31 Aug 99 20,836.15 19,573.30
30 Sep 99 19,844.76 18,690.54
29 Oct 99 19,428.42 18,342.90
30 Nov 99 19,275.14 18,054.92
31 Dec 99 20,079.39 18,733.78
31 Jan 00 20,106.96 18,810.59
29 Feb 00 19,678.95 18,451.31
31 Mar 00 20,734.44 19,259.48
28 Apr 00 21,951.70 20,632.68
31 May 00 22,250.70 20,880.27
30 Jun 00 22,824.83 21,583.93
31 Jul 00 25,079.40 23,522.17
31 Aug 00 24,257.88 22,675.37
29 Sep 00 25,320.32 23,412.32
31 Oct 00 24,214.08 22,396.23
30 Nov 00 24,735.82 22,900.14
29 Dec 00 26,363.13 24,491.70
31 Jan 01 26,180.41 24,736.62
28 Feb 01 25,722.21 24,222.10
30 Mar 01 25,540.16 24,241.47
30 Apr 01 26,029.17 24,818.42
31 May 01 26,581.57 25,513.34
30 Jun 01 27,931.17 26,893.61
31 Jul 01 27,459.48 26,355.74
31 Aug 01 28,516.49 27,275.55
28 Sep 01 26,866.11 25,658.11
31 Oct 01 25,881.29 24,698.50
30 Nov 01 27,433.39 26,298.96
31 Dec 01 27,040.70 27,061.63
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Equity Office Properties Trust 10.3% 10.5%
Simon Property Group, Inc. 6.0% 5.7%
Avalonbay Communities, Inc. 5.4% 5.7%
Archstone Communities Trust 5.2% 5.4%
Equity Residential Properties Trust 5.2% 5.8%
Public Storage, Inc. 4.8% 4.9%
Starwood Hotels & Resorts
Worldwide, Inc. 3.8% 3.6%
Vornado Realty Trust 3.7% 3.6%
Boston Properties, Inc. 3.3% 3.3%
AMB Property Corp. 2.8% 2.7%
AVERAGE ANNUAL TOTAL RETURNS*
Real Estate Wilshire Real MorningStar
Equity Fund Estate Securities Index Peer Group+
----------- ----------------------- -----------
1 Year 6.61% 10.49% 7.97%
3 Years 11.23% 11.83% 10.10%
5 Years 6.08% 6.71% 6.39%
10 Years 10.89% 10.47% 10.21%
TOP INDUSTRY CLASSIFICATIONS
(as of December 31, 2001)
% of
Investments
Real Estate Investment Trust 100.0%
Real Estate Development N/A
Real Estate Operations N/A
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original costs. Sector investing and a nondiversified fund
entails special risks as discussed in the prospectus. The performance of the
fund on this page is reported net of Trust level charges (i.e. investment
management fees and operating expenses). It does not reflect expense and
charges of the applicable separate accounts and variable products, all of
which vary to a considerable extent and are described in your product
prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for all variable annuity and life
sub-accounts within the MorningStar variable universe having a Specialty
Stock Real Estate investment category.
(1)Wilshire Real Estate Securities Index is a market-capitalization weighted
index which measures the performance of real estate securities. The index
contains performance data on five major categories of property: office,
retail, industrial, apartment and miscellaneous.
23
Inception: March 29, 1986
MANAGED FUND
INDEPENDENCE INVESTMENT LLC
J. Forrelli/J. Shallcross
CAPITAL GUARDIAN TRUST COMPANY
Management Team
The Managed Fund is a multi-manager fund with two sub-advisers, each of which
employs its own investment approach and independently manages its portion of the
Fund. The two managers employ a distinct and complementary investment strategy.
The multi-manager approach seeks to produce more consistent investment returns
over market cycles and to reduce the risk of any one manager or strategy being
out of favor in certain market environments.
Independence has a normal target mix of 60% stocks and 40% bonds and selects
stocks and bonds using a combination of fundamental equity research and
quantitative tools. Capital Guardian has a normal target of 70% stocks and 30%
bonds and selects stocks and bonds using a fundamental, research-driven
approach. Capital Guardian also employs a multiple-manager approach by which
each portfolio manager and the research analysts as a group each manage a
separate portion of the portfolio to capture the highest conviction ideas of the
investment team.
As of December 31, 2001, II LLC managed approximately 80% and Capital Guardian
managed approximately 20% of the Fund's assets. The Fund returned -2.84%
compared to -3.72% for the benchmark.
Independence Investment LLC
Despite negative economic news, the equity market rebounded strongly in the
fourth quarter, anticipating a potential economic recovery in the second half of
2002. The market continued to be volatile, and we are pleased to report that
this portion of the Fund outperformed its benchmark during the fourth quarter as
well as for the year.
Strong stock selection broadly across most sectors was the primary driver of
outperformance in the quarter and the 1 year period. With the big rebound in
technology, performance of selected software and hardware stocks was strong. In
retailing, selected companies, benefited at the expense of other retailers.
Helped both by strength in home refinancings and an increased nesting mentality
in reaction to September 11th, select home retailer holdings also performed
well.
The domestic fixed income strategy was in line with the Lehman Aggregate index
during the 4/th/ quarter and 1 year. During the quarter, the portfolio benefited
from overweights in the Credit and CMBS sectors, which outperformed Treasury
securities. On the other hand, slight overweight positions in the ABS and MBS
sectors subtracted moderately from performance. Overall, the larger holdings of
higher yielding "spread" sector assets added modestly to performance versus the
Lehman Aggregate index.
Capital Guardian Trust Company
In a global environment of slowing economic growth and falling interest rates,
bonds outperformed stocks for the year despite equity markets' fourth-quarter
rebound from post-September 11 lows. Small stocks also outperformed large stocks
on a global basis. In fixed income, high-grade corporate bonds largely
outperformed government paper despite a deterioration in corporate credit
quality.
Our overweight position in equities throughout the year hurt performance on an
absolute basis, but on a relative basis, this portion of the Fund finished ahead
of the benchmark. Stock selection in large-cap equities was helpful. The fund
holds a number of financial, food, healthcare, and specialty retail stocks that
provided strong positive results. Avoiding many of the largest stocks in the
index was also beneficial. Within the information technology sector, the fund
was not immune to the sell-off, but it did hold a number of stocks, including
several semiconductor-related names, that ended the year solidly in the black.
Unlike large caps, our small-cap holdings underperformed.
The fixed-income fund's large exposure to corporate securities helped early in
the year and hurt late in the year as equities rallied to finish the year on a
positive note.
While stock prices may have outpaced their fundamentals in the fourth quarter,
we still expect to overweight them in the fund given the likelihood of an
improving environment for corporate profits and a deteriorating environment for
bonds. Within the fund's equity exposure, we expect to continue overweighting
small caps, which tend to outperform in the early stages of economic
improvement.
24
Inception: March 29, 1986
MANAGED FUND
INDEPENDENCE INVESTMENT LLC
J. Forelli/J. Shallcross
CAPITAL GUARDIAN TRUST COMPANY
Management Team
[CHART]
Managed Fund Managed Benchmark (1)
------------ ---------------------
12/31/1991 $10,000.00 $10,000.00
1/31/1992 9,845.12 9,839.00
2/28/1992 9,914.26 9,933.45
3/31/1992 9,786.82 9,808.29
4/30/1992 9,993.77 9,986.80
5/29/1992 10,136.32 10,107.64
6/30/1992 10,166.41 10,104.61
7/31/1992 10,449.10 10,411.79
8/31/1992 10,369.89 10,359.73
9/30/1992 10,500.20 10,480.94
10/30/1992 10,402.06 10,430.63
11/30/1992 10,609.16 10,607.95
12/31/1992 10,771.16 10,761.77
1/29/1993 10,909.24 10,904.90
2/26/1993 11,075.06 11,073.93
3/31/1993 11,274.93 11,216.78
4/30/1993 11,106.63 11,119.19
5/28/1993 11,273.34 11,277.09
6/30/1993 11,441.79 11,397.75
7/30/1993 11,429.03 11,403.45
8/31/1993 11,816.03 11,720.47
9/30/1993 11,861.94 11,693.51
10/29/1993 11,998.47 11,833.83
11/30/1993 11,884.61 11,727.33
12/31/1993 12,021.06 11,830.53
1/31/1994 12,301.76 12,108.55
2/28/1994 11,976.14 11,839.74
3/31/1994 11,624.65 11,436.00
4/29/1994 11,684.55 11,464.59
5/31/1994 11,686.17 11,557.45
6/30/1994 11,570.36 11,402.58
7/29/1994 11,830.89 11,704.75
8/31/1994 12,014.65 11,950.55
9/30/1994 11,761.05 11,718.71
10/31/1994 11,812.43 11,847.62
11/30/1994 11,629.89 11,616.59
12/30/1994 11,752.81 11,740.89
1/31/1995 11,973.58 12,009.75
2/28/1995 12,332.20 12,385.66
3/31/1995 12,492.99 12,606.12
4/28/1995 12,770.70 12,878.41
5/31/1995 13,260.29 13,381.96
6/30/1995 13,454.73 13,588.04
7/31/1995 13,668.47 13,800.02
8/31/1995 13,832.24 13,902.14
9/29/1995 14,242.11 14,260.81
10/31/1995 14,270.13 14,327.84
11/30/1995 14,728.53 14,750.51
12/29/1995 14,937.08 14,989.47
1/31/1996 15,167.22 15,296.75
2/29/1996 15,104.12 15,237.09
3/29/1996 15,121.00 15,256.90
4/30/1996 15,151.58 15,327.08
5/31/1996 15,333.25 15,509.48
6/28/1996 15,479.65 15,645.96
7/31/1996 15,140.40 15,318.96
8/30/1996 15,270.05 15,469.08
9/30/1996 15,749.27 16,038.35
10/31/1996 16,133.05 16,436.10
11/29/1996 16,751.96 17,200.38
12/31/1996 16,537.75 16,952.69
1/31/1997 16,929.67 17,505.35
2/28/1997 16,988.38 17,598.13
3/31/1997 16,592.15 17,133.54
4/30/1997 17,041.05 17,774.33
5/30/1997 17,535.17 18,405.32
6/30/1997 18,009.89 18,926.19
7/31/1997 19,028.42 19,933.06
8/29/1997 18,489.84 19,295.21
9/30/1997 19,110.71 19,966.68
10/31/1997 18,920.50 19,778.99
11/28/1997 19,373.54 20,281.38
12/31/1997 19,633.08 20,557.21
1/31/1998 19,850.85 20,799.78
2/27/1998 20,751.94 21,694.17
3/31/1998 21,519.30 22,390.55
4/30/1998 21,665.23 22,571.92
5/29/1998 21,594.70 22,425.20
6/30/1998 22,201.80 23,048.62
7/31/1998 21,972.49 22,919.55
8/31/1998 19,914.81 21,081.40
9/30/1998 20,599.11 22,089.09
10/30/1998 21,695.16 23,120.65
11/30/1998 22,601.14 24,013.11
12/31/1998 23,641.64 24,872.78
1/29/1999 24,000.62 25,566.73
2/26/1999 23,347.07 24,912.22
3/31/1999 23,844.49 25,564.92
4/30/1999 24,531.09 26,191.26
5/28/1999 24,143.45 25,727.68
6/30/1999 25,000.71 26,550.96
7/30/1999 24,476.30 26,009.32
8/31/1999 24,323.07 25,926.09
9/30/1999 24,014.66 25,620.16
10/29/1999 24,943.53 26,629.60
11/30/1999 25,103.46 26,954.48
12/31/1999 25,793.30 27,854.76
1/31/2000 24,828.50 26,977.33
2/29/2000 24,491.02 26,801.98
3/31/2000 26,254.92 28,517.31
4/28/2000 25,866.04 27,969.78
5/31/2000 25,641.87 27,620.15
6/30/2000 26,106.49 28,258.18
7/31/2000 25,965.90 28,097.11
8/31/2000 27,153.97 29,308.09
9/29/2000 26,315.31 28,452.30
10/31/2000 26,452.28 28,455.14
11/30/2000 25,335.50 27,297.02
12/29/2000 25,799.87 27,580.91
1/31/2001 26,447.56 28,347.66
2/28/2001 25,197.15 26,896.26
3/30/2001 24,231.36 25,927.99
4/30/2001 25,585.57 27,092.16
5/31/2001 25,755.23 27,265.55
6/30/2001 25,353.20 26,908.37
7/31/2001 25,342.55 26,991.78
8/31/2001 24,459.57 26,101.06
9/28/2001 23,253.30 24,957.83
10/31/2001 23,808.68 25,451.99
11/30/2001 24,921.72 26,482.80
12/31/2001 24,892.52 26,554.30
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Federal National Mortgage Assoc. 14.6% 13.5%
U.S. Treasury 3.6% 3.6%
Pfizer, Inc. 2.7% 2.9%
General Electric Co. 2.0% 1.7%
Microsoft Corp. 2.0% 1.9%
Citigroup, Inc. 1.9% 1.8%
Exxon Mobil Corp. 1.7% 1.6%
Wal-Mart Stores, Inc. 1.4% 1.1%
Intel Corp. 1.4% 1.4%
American International Group, Inc. 1.3% 1.3%
AVERAGE ANNUAL TOTAL RETURNS*
Managed Managed MorningStar
Fund Benchmark(1) Peer Group+
------- ------------ -----------
1 Year -2.84% -3.72% -4.38%
3 years 1.97 2.20 2.49
5 years 8.67 9.39 8.17
10 Years 9.63 10.26 9.36
TOP TEN SECTOR CLASSIFICATIONS
(as of December 31, 2001)
% of % of
Investments Investments
Governmental 19.6% Capital Equipment 6.1%
Financial 19.2% Retail 5.7%
Technology 15.4% Energy 5.1%
Health Care 11.3% Consumer Staple 4.4%
Consumer Cyclical 6.4% Utility 4.2%
(1)The Managed Benchmark represents 50% S&P 500/50% Lehman Brothers Aggregate
Bond from April 1986 to December 1997, then 60% S&P 500/40% Lehman Brothers
Aggregate Bond from 1998 to present.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
additional risks associated with a nondiversified fund, as outlined in the
current prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for all variable annuity and life
sub-accounts within the Morningstar variable universe having a Domestic
Hybrid investment category.
25
Inception: May 1, 1996
GLOBAL BALANCED FUND
CAPITAL GUARDIAN TRUST COMPANY
Management Team
For the 1 year period, the Fund returned -6.45%, outperforming its customized
benchmark (-10.19%).
For the 1 year period, the Fund's performance benefited largely from favorable
stock selection. Global stock markets ended 2001 on a positive note with a
powerful rally in the fourth quarter, but still ended the year deep in the red.
Among developed markets, non-U.S. stocks in aggregate fared about the same as
those in the U.S. during the quarter. Digging a little deeper, stocks from
continental Europe and from the Pacific, excluding Japan, had the best returns.
Stocks in the United Kingdom along with a small group of other European markets
lagged, while Japan reported negative results. Returns for small-cap stocks were
better than large caps in the U.S. and worse than large caps outside the U.S.
Emerging markets stocks, as a group, had the best results of all.
Bonds, on the other hand, had a seesaw year. Yields fell early on, then rose
as economic growth in 2002 appeared more likely. Total returns for the period
were flat in the U.S., though they ended the year with solid gains. Non-U.S.
bonds had mildly positive total returns in local currency and negative returns
when translated to U.S. dollars.
Prior to September 11, our investment funds and our asset allocation decisions
reflected a belief that an economic upturn would soon be in view. The terrorist
attacks, however, have postponed that recovery. As a result, our overweighting
in equities, along with the increased exposure to cyclical holdings within our
equity funds, contributed to underperformance during the third quarter.
While stocks have come a long way in a short period of time, we continue to
overweight them relative to bonds. Near-term earnings expectations are low, but
stocks should benefit from a number of positive influences including low
interest rates, low oil prices, and the significant liquidity that has been
injected into the global financial system. We think it is likely the economies
of North America, Europe, and Asia, excluding Japan, will return to growth over
the course of 2002. Within our equity allocation we favor non-U.S. stocks where
valuations appear more attractive.
[CHART]
Global Balanced Composite
Global Balanced Fund Benchmark (1)
-------------------- -------------------------
4/30/1996 10,000.00 10,000.00
5/31/1996 9,992.36 9,892.00
6/30/1996 10,054.88 9,940.47
7/31/1996 9,955.81 9,849.02
8/31/1996 10,007.29 9,898.26
9/30/1996 10,256.56 10,067.52
10/31/1996 10,314.89 10,084.64
11/30/1996 10,677.97 10,397.26
12/31/1996 10,672.71 10,279.77
1/31/1997 10,508.77 9,927.18
2/28/1997 10,623.91 9,985.75
3/31/1997 10,567.65 9,971.77
4/30/1997 10,507.44 9,941.85
5/31/1997 11,089.20 10,497.60
6/30/1997 11,433.44 10,909.11
7/31/1997 11,471.15 10,940.74
8/31/1997 10,985.68 10,435.28
9/30/1997 11,470.48 10,906.96
10/31/1997 11,127.39 10,459.77
11/30/1997 10,966.64 10,291.37
12/31/1997 10,955.08 10,320.18
1/31/1998 11,195.12 10,631.85
2/28/1998 11,630.17 11,135.80
3/31/1998 11,807.71 11,310.64
4/30/1998 11,952.21 11,456.54
5/31/1998 11,952.24 11,413.01
6/30/1998 11,914.86 11,439.26
7/31/1998 11,962.23 11,494.17
8/31/1998 11,270.31 10,651.64
9/30/1998 11,435.01 10,700.64
10/31/1998 12,220.68 11,596.29
11/30/1998 12,442.76 11,897.79
12/31/1998 12,925.42 12,314.21
1/31/1999 12,913.81 12,250.18
2/28/1999 12,390.27 11,901.05
3/31/1999 12,558.03 12,234.28
4/30/1999 12,777.95 12,570.72
5/31/1999 12,313.42 12,071.66
6/30/1999 12,412.46 12,279.29
7/31/1999 12,784.63 12,662.41
8/31/1999 12,771.50 12,715.59
9/30/1999 12,780.73 12,889.79
10/31/1999 12,911.64 13,210.75
11/30/1999 12,991.88 13,449.87
12/31/1999 13,586.49 14,251.48
1/31/2000 12,794.33 13,540.33
2/29/2000 12,820.00 13,717.71
3/31/2000 13,194.62 14,254.07
4/30/2000 12,656.58 13,557.05
5/31/2000 12,722.96 13,394.36
6/30/2000 12,990.79 13,796.19
7/31/2000 12,724.74 13,470.60
8/31/2000 12,891.86 13,694.21
9/30/2000 12,570.54 13,247.78
10/31/2000 12,497.20 13,047.74
11/30/2000 11,946.29 12,677.18
12/31/2000 12,352.52 12,982.70
1/31/2001 12,722.52 13,126.81
2/28/2001 12,056.81 12,459.97
3/31/2001 11,553.80 11,827.00
4/30/2001 12,268.78 12,336.75
5/31/2001 12,111.70 12,229.42
6/30/2001 11,830.12 11,955.48
7/31/2001 11,776.35 11,981.78
8/31/2001 11,572.93 11,818.83
9/30/2001 10,739.32 11,229.07
10/31/2001 11,059.83 11,394.14
11/30/2001 11,559.96 11,735.96
12/31/2001 11,556.31 11,659.68
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
investments % of investments
Republic of Germany 10.3% 4.4%
U.S. Treasury 6.5% 9.2%
Netherlands Government 3.4% 3.6%
Government of Japan 2.9% 3.2%
Federal National Mortgage Assoc. 2.4% 2.6%
AstraZeneca Group PLC 2.1% 2.2%
Nokia Oyj 1.9% 1.8%
Vodafone AirTouch PLC 1.4% 1.5%
Government of Canada 1.3% 0.8%
European Investment Bank 1.2% 1.4%
AVERAGE ANNUAL TOTAL RETURNS*
Global Balanced
Global Balanced Composite MorningStar
Fund Benchmark (1) Peer Group+
--------------- --------------- -----------
1 Year -6.45% -10.19% -8.10%
3 Years -3.66 -1.80 1.44
5 Years 1.60 2.55 5.47
Since Inception (5/1/96) 2.58 2.75 N/A
TOP TEN COUNTRIES (as of December 31, 2001)
% of % of
Investments Investments
United States 42.6% Germany 11.4%
Japan 9.3% United Kingdom 7.2%
Netherlands 5.6% Supra National 4.9%
France 3.3% Switzerland 2.9%
Canada 2.5% Finland 2.1%
(1)International Balanced Composite Index: 65% MSCI World Index Excluding US,
and 35% Salomon Brothers Non-US Govt. Bond Index, unhedged, May 1996 to
April 2000, and 60% MSCI World / 40% Salomon Brothers World Government Bond,
Unhedged, May 2000-present.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. There are special risks associated with a
nondiversified fund and with international investing including currency
fluctuations, political and economic instability, foreign taxation and
different accounting standards, as outlined in the current prospectus. The
performance of the fund on this page is reported net of Trust level charges
(i.e. investment management fees and operating expenses). It does not reflect
expense and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described in
your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for the sub-accounts of all
variable annuity and life products within the Morningstar variable universe
having a 60% World Stock, Large Cap, 10% Intermediate Term-Bond category and
a 30% weighting of the International Bond category. Prior to May 2000
(concurrent with the Fund's strategy change), the peer group represents the
International Hybrid investment category.
26
Inception: May 1, 1994
SHORT-TERM BOND FUND
INDEPENDENCE INVESTMENT LLC
James Shallcross
Fixed income markets finished this most calamitous year quietly amidst early
signs that the recession could be ending. Accordingly, interest rates increased
20-30 bps with the intermediate part of the yield curve underperforming.
Investors are beginning to once again favor spread sector assets over Treasuries
as the robust valuations combined with diminished absolute return expectations
make relative value analysis relevant once more. Corporates, CMBS and ABS all
modestly outperformed Treasuries, with Agency Debentures and MBS underperforming
slightly. The benchmark cyclical corporate sectors such as Autos and Telecom and
BBB-rated industrials posted much of the excess return, with the higher rated
defensive issue actually lagging Treasury returns for the most part.
For the year, all sectors except MBS handily outperformed Treasuries, with the
Corporate sector posting its best relative performance since the early 1990s.
MBS suffered from spikes in both prepayments and implied volatility.
Interestingly, MBS performed better as Treasuries rallied than when they backed
up, which is the exact opposite of historic experience. The huge institutions
that dominate this market are causing increasingly larger dislocations in
valuation as their market share continues to grow.
The fund returned 0.41% in the 4th Quarter and 8.09% for the 1 year
underperforming the benchmark in both periods. For the quarter, an extremely
small exposure to short Enron debentures subtracted 8 basis points in return
despite being liquidated 50 points higher than current trading levels.
Additionally, other energy names hindered performance as the entire sector
traded down in the ensuing Enron debacle. These exposures were opportunistically
liquidated during the quarter to guard against further deterioration. On a more
positive note, exposure to defensive names added to performance. Performance for
the quarter was also hampered by a slightly longer duration exposure versus the
index, although over time this will likely benefit portfolio performance.
[CHART]
Short-Term Bond Fund Short-Term Bond Benchmark (1)
-------------------- -----------------------------
4/30/1994 10,000.00 10,000.00
5/31/1994 9,999.10 10,013.00
6/30/1994 10,010.06 10,032.02
7/31/1994 10,109.04 10,137.36
8/31/1994 10,129.77 10,170.81
9/30/1994 10,075.07 10,116.91
10/31/1994 10,077.64 10,129.05
11/30/1994 10,032.42 10,074.35
12/31/1994 10,033.45 10,101.55
1/31/1995 10,171.65 10,258.13
2/28/1995 10,323.89 10,431.49
3/31/1995 10,367.20 10,488.88
4/30/1995 10,462.04 10,596.90
5/31/1995 10,693.65 10,843.81
6/30/1995 10,768.78 10,907.78
7/31/1995 10,779.52 10,935.05
8/31/1995 10,844.29 11,010.51
9/30/1995 10,892.08 11,072.16
10/31/1995 10,995.70 11,180.67
11/30/1995 11,097.85 11,300.30
12/31/1995 11,186.64 11,399.75
1/31/1996 11,272.67 11,502.35
2/29/1996 11,183.40 11,419.53
3/31/1996 11,142.92 11,385.27
4/30/1996 11,123.65 11,373.88
5/31/1996 11,123.35 11,380.71
6/30/1996 11,211.29 11,476.31
7/31/1996 11,237.60 11,516.47
8/31/1996 11,259.93 11,544.11
9/30/1996 11,392.29 11,668.79
10/31/1996 11,527.48 11,827.49
11/30/1996 11,607.29 11,939.85
12/31/1996 11,590.50 11,910.00
1/31/1997 11,642.19 11,963.59
2/28/1997 11,661.20 11,982.73
3/31/1997 11,631.38 11,953.97
4/30/1997 11,727.48 12,067.54
5/31/1997 11,804.67 12,154.42
6/30/1997 11,894.39 12,248.01
7/31/1997 12,057.70 12,425.61
8/31/1997 12,033.34 12,408.21
9/30/1997 12,137.82 12,522.37
10/31/1997 12,241.06 12,636.32
11/30/1997 12,247.10 12,662.86
12/31/1997 12,333.56 12,757.83
1/31/1998 12,464.31 12,905.82
2/28/1998 12,460.42 12,903.24
3/31/1998 12,503.49 12,952.27
4/30/1998 12,558.72 13,013.15
5/31/1998 12,622.10 13,088.62
6/30/1998 12,678.91 13,155.38
7/31/1998 12,737.07 13,215.89
8/31/1998 12,872.29 13,338.80
9/30/1998 13,006.90 13,522.87
10/31/1998 12,999.01 13,553.98
11/30/1998 13,019.40 13,590.57
12/31/1998 13,050.91 13,644.93
1/31/1999 13,080.52 13,721.35
2/28/1999 13,035.23 13,673.32
3/31/1999 13,105.11 13,781.34
4/30/1999 13,154.00 13,840.60
5/31/1999 13,122.05 13,823.99
6/30/1999 13,164.57 13,866.85
7/31/1999 13,191.85 13,895.97
8/31/1999 13,224.82 13,926.54
9/30/1999 13,326.59 14,028.20
10/31/1999 13,363.46 14,078.70
11/30/1999 13,411.79 14,119.53
12/31/1999 13,437.82 14,139.30
1/31/2000 13,435.28 14,146.37
2/29/2000 13,530.22 14,248.22
3/31/2000 13,598.40 14,318.04
4/30/2000 13,629.54 14,329.49
5/31/2000 13,678.74 14,379.65
6/30/2000 13,841.10 14,542.14
7/31/2000 13,928.19 14,651.20
8/31/2000 14,031.28 14,774.27
9/30/2000 14,151.78 14,905.76
10/31/2000 14,182.44 14,950.48
11/30/2000 14,329.97 15,080.55
12/31/2000 14,509.63 15,258.50
1/31/2001 14,709.17 15,493.48
2/28/2001 14,825.98 15,617.43
3/31/2001 14,933.75 15,745.49
4/30/2001 14,979.29 15,800.60
5/31/2001 15,065.25 15,909.63
6/30/2001 15,123.33 15,974.85
7/31/2001 15,312.86 16,190.52
8/31/2001 15,412.82 16,308.71
9/30/2001 15,619.98 16,517.46
10/31/2001 15,762.34 16,682.63
11/30/2001 15,701.56 16,635.92
12/31/2001 15,683.64 16,645.90
% of six months ago
Investments % of Investments
U.S. Treasury 18.6% 15.6%
Federal National Mortgage Assoc. 14.6% 15.0%
Chase Funding Loan Acquisition Trust 3.1% 3.2%
Ford Motor Credit Co. 2.9% 3.0%
General Electric Capital Corp. 2.4% 2.5%
General Motors Acceptance Corp. 2.3% 2.3%
First Union Corp. 2.3% 2.3%
Premier Auto Trust 2.3% 2.4%
Province of Ontario 2.2% 2.2%
Advanta Mortgage Loan Trust 1.8% 1.8%
AVERAGE ANNUAL TOTAL RETURNS*
Short-Term Short-Term MorningStar
Bond Fund Bond Benchmark (1) Peer Group+
---------- ------------------ -----------
1 Year 8.09 9.09% 7.22%
3 Years 6.32 6.85 6.67
5 Years 6.24 6.92 6.18
Since Inception (5/1/94) 6.04 6.87 N/A
FUND COMPOSITION (as of December 31, 2001)
Credit Quality Duration
Short Term 4.25% (less than)1 Year 28.19%
AAA 56.18% 1-3 Years 50.79%
AA 9.15% 3-5 Years 21.02%
A 15.78% 5-10 Years 0.00%
BBB 14.30%
BB 0.34%
(1)Short-Term Bond Index represents the Merrill Lynch 1-5 Year Government Bond
from May 1994 to April 1998, 65% Lehman Brothers 1-3 Year Credit Bond. 35%
Lehman Brothers 1-3 year Government Bond Index, May 1998 to present.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for all variable annuity and life
sub-accounts within the Morningstar variable universe having a Short-Term
Bond Investment category. Prior to May 1998 (concurrent with the Fund's
strategy change), the peer group represents the Short-Term Government Bond
category.
27
Inception: May 1, 1998
BOND INDEX FUND
MELLON BOND ASSOCIATES, LLP
Gregory Curran
The Fund returned 7.76% for the 1 year period, underperforming its benchmark,
the Lehman Brothers Aggregate Index.
October began with uncertainty surrounding the aftermath of the September 11
attacks and the state of the economy. The Treasury department made a surprise
announcement to suspend the 30-year Treasury auction cycle. The end of the
30-year bond auction was not the only surprise, as the Treasury also held an
unscheduled reopening of the 10-year note. Illiquidity began after the September
11 attack. As expected, the Federal Reserve Open Market Committee acted to lower
the target for the Fed Funds and Discount Rates by another 50 basis points. The
economy was insensitive to the Fed's actions. . Corporate spreads drifted wider
in light of geopolitical tension and economic weakness. The mortgage sector
suffered modestly as it anticipated large refinancing wave, resulting from the
drop in interest rates.
After October's surprise announcement of the suspension of the 30-year
Treasury, yields began to rise again in November. Spreads remained wide, but low
rates spurred corporate issuance. Separately, Argentina's financial distress
provided some strength to U.S. Treasuries. Generally, the tide was against
Treasuries until late in the month. Even with benchmark rates higher, the
mortgage market expected another strong refinancing wave. After performing well
through mid-month, mortgages sold off near the end of the month. Economic
statistics showed threat productivity improved, the labor market showed signs of
bottoming, consumer confidence remained low and commodity prices were down.
Industrial production dropped. On the flip side, retail sales were unexpectedly
strong driven by auto sales, which were driven in turn by the 0% financing
incentives. Toward the end of November, market sentiment turned toward economic
recovery. Credit risk reared up forcefully in November as Enron went from a
strong triple-B rated to bankruptcy preparation. Treasury yields backed up 50 to
80 basis points during the month.
Investors sensed an economic recovery in December. December was characterized
by light trading volume, year-end fine-tuning and low corporate issuance. The
Enron debacle and bankruptcy filing left investors with a new sense of risk.
Nonetheless, the corporate sector finished the year strongly as spreads resumed
their tightening. The back up in rates meant mortgage investors could breath
more easily as prepayment fears subsided. Spread sectors performed well relative
to Treasuries. The Federal Reserve cut rates by 25 basis points this time.
Treasury yields raised twenty to thirty basis points during December. As a
result of the Federal Reserve's actions, the Treasury yield curve stipend
dramatically during 2001 as short end yields dropped about 200 basis points and
the long end yields were about unchanged.
[CHART]
Bond Index Fund Bond Index Benchmark
--------------- --------------------
4/30/1998 $10,000.00 $10,000.00
5/31/1998 10,101.92 10,107.00
6/30/1998 10,210.82 10,210.09
7/31/1998 10,220.22 10,218.26
8/31/1998 10,461.38 10,417.52
9/30/1998 10,756.83 10,715.46
10/31/1998 10,688.56 10,639.38
11/30/1998 10,703.12 10,703.21
12/31/1998 10,720.00 10,728.90
1/31/1999 10,794.75 10,805.08
2/28/1999 10,520.80 10,547.92
3/31/1999 10,584.46 10,600.65
4/30/1999 10,608.95 10,627.16
5/31/1999 10,484.98 10,517.70
6/30/1999 10,449.87 10,485.09
7/31/1999 10,419.87 10,455.73
8/31/1999 10,413.57 10,447.37
9/30/1999 10,497.22 10,541.40
10/31/1999 10,513.95 10,568.80
11/30/1999 10,512.84 10,562.46
12/31/1999 10,444.55 10,498.03
1/31/2000 10,424.87 10,494.88
2/29/2000 10,551.45 10,626.07
3/31/2000 10,713.16 10,779.08
4/30/2000 10,665.75 10,726.27
5/31/2000 10,639.83 10,716.61
6/30/2000 10,855.08 10,935.23
7/31/2000 10,956.44 11,051.14
8/31/2000 11,122.46 11,206.96
9/30/2000 11,165.15 11,249.55
10/31/2000 11,244.42 11,320.42
11/30/2000 11,445.41 11,514.00
12/31/2000 11,677.63 11,740.83
1/31/2001 11,840.38 11,938.07
2/28/2001 11,941.71 12,041.94
3/31/2001 11,992.74 12,102.15
4/30/2001 11,938.07 12,051.32
5/31/2001 12,008.36 12,123.62
6/30/2001 12,046.59 12,169.69
7/31/2001 12,310.04 12,442.30
8/31/2001 12,436.14 12,585.38
9/30/2001 12,595.00 12,731.37
10/31/2001 12,850.08 12,997.46
11/30/2001 12,670.29 12,818.09
12/31/2001 12,583.53 12,736.06
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
U.S. Treasury 22.3% 21.5%
Federal National Mortgage Assoc. 19.5% 19.8%
Federal Home Loan Mortgage Corp. 17.3% 16.2%
Government National Mortgage Assoc. 8.3% 6.7%
Federal Home Loan Corp. 1.7% 1.8%
Federal Home Loan Bank Discount
Note 1.2% 1.2%
Morgan Stanley Capital, Inc. 0.9% 1.0%
Ford Motor Credit Co. 0.6% 0.7%
International Bank of Reconstruction
& Development 0.6% 0.6%
United Mexican States 0.6% 0.6%
AVERAGE ANNUAL TOTAL RETURNS*
Bond Index Bond Index MorningStar
Fund Benchmark(1) Peer Group+
---------- ------------ -----------
1 Year 7.76% 8.48% 7.03%
3 Years 5.49 5.88 5.01
Since Inception (5/1/98) 6.46 6.82 N/A
FUND COMPOSITION (as of December 31, 2001)
Credit Quality Duration
Short Term 2.42% (less than)1 Year 2.42%
AAA 74.3% 1-3 Years 13.04%
AA 4.5% 3-5 Years 16.55%
A 11.1% 5-10 Years 54.61%
BBB 7.7% (greater than)10 Years 13.30%
(1)The benchmark is the Lehman Brothers Government/Credit Bond Index from May
1998 through January 2001, and the Lehman Brother Aggregate Bond Index from
February 2001-present.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data are as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for all variable annuity and life
sub-accounts within the MorningStar variable universe having a
Intermediate-Term Bond investment category.
28
Inception: March 29, 1986
ACTIVE BOND FUND
JOHN HANCOCK ADVISERS, INC.
James HoJames K. Ho
During the year the Fund returned 7.48%, underperformed its benchmark--the
Lehman Brothers Aggregate Bond Index.
As high yield bonds were the worst performing sector during 2001, the fund's
overweight position relative to the index detracted from performance results.
Offsetting negative results, the fund's overweight position in investment grade
corporate bonds and underweight position in Treasuries relative to the index
added to performance results during the year.
With the Fed near the end of its easing cycle, we expect that the yield curve
will flatten and rates will move moderately higher. We are currently maintaining
a slightly shorter duration and a curve neutral position, as the curve has
already flattened considerably.
Looking ahead we expect a very gradual economic recovery during 2002. Most
spread sectors should provide positive excess returns versus Treasuries in 2002.
As the economy shows more signs of recovery throughout 2002, we will begin to
take additional risks in more cyclical corporate credits such as paper, autos,
and consumer finance. Our neutral weighting in mortgage backed securities is
likely to increase, and we will emphasize agency passthrough securities with
coupons of 6.5%-7.5%.
[CHART]
Lehman Brothers
Active Bond Fund Aggregate Bond Index
---------------- --------------------
12/31/1991 10,000.00 10,000.00
1/31/1992 9,903.14 9,852.00
2/28/1992 9,929.01 9,904.22
3/31/1992 9,904.11 9,849.74
4/30/1992 9,968.10 9,908.84
5/29/1992 10,134.37 10,101.07
6/30/1992 10,266.47 10,249.56
7/31/1992 10,513.92 10,511.95
8/31/1992 10,628.16 10,605.50
9/30/1992 10,771.30 10,749.74
10/30/1992 10,639.72 10,585.27
11/30/1992 10,606.90 10,575.74
12/31/1992 10,765.90 10,757.64
1/29/1993 10,958.22 10,992.16
2/26/1993 11,186.14 11,220.80
3/31/1993 11,247.89 11,258.95
4/30/1993 11,317.76 11,345.64
5/28/1993 11,312.26 11,339.97
6/30/1993 11,543.95 11,597.39
7/30/1993 11,641.64 11,671.61
8/31/1993 11,887.83 11,940.06
9/30/1993 11,946.60 11,981.85
10/29/1993 11,959.30 12,030.97
11/30/1993 11,869.45 11,895.02
12/31/1993 11,924.91 11,947.36
1/31/1994 12,098.92 12,126.57
2/28/1994 11,876.99 11,862.21
3/31/1994 11,625.11 11,571.59
4/29/1994 11,520.67 11,475.54
5/31/1994 11,501.29 11,454.89
6/30/1994 11,490.03 11,428.54
7/29/1994 11,675.88 11,657.11
8/31/1994 11,704.33 11,661.77
9/30/1994 11,567.87 11,485.68
10/31/1994 11,548.99 11,473.05
11/30/1994 11,527.77 11,452.40
12/31/1994 11,618.51 11,527.98
1/31/1995 11,840.36 11,749.32
2/28/1995 12,123.64 12,021.90
3/31/1995 12,217.90 12,102.45
4/28/1995 12,394.64 12,270.67
5/31/1995 12,927.39 12,784.81
6/30/1995 13,038.92 12,887.09
7/31/1995 12,982.76 12,836.83
8/31/1995 13,132.84 13,001.15
9/29/1995 13,264.44 13,133.76
10/31/1995 13,480.39 13,326.82
11/30/1995 13,681.64 13,546.72
12/31/1995 13,890.01 13,745.85
1/31/1996 13,971.75 13,831.08
2/29/1996 13,703.35 13,537.86
3/29/1996 13,619.61 13,424.14
4/30/1996 13,550.74 13,331.51
5/31/1996 13,547.47 13,308.85
6/28/1996 13,684.92 13,487.19
7/31/1996 13,728.68 13,518.21
8/30/1996 13,738.65 13,485.77
9/30/1996 13,987.16 13,725.81
10/31/1996 14,284.65 14,045.62
11/29/1996 14,508.72 14,304.06
12/31/1996 14,460.01 14,145.29
1/31/1997 14,513.72 14,162.26
2/28/1997 14,582.31 14,192.00
3/31/1997 14,428.15 14,023.12
4/30/1997 14,624.91 14,227.86
5/30/1997 14,789.42 14,360.17
6/30/1997 14,983.25 14,532.50
7/31/1997 15,432.55 14,977.19
8/29/1997 15,281.27 14,809.45
9/30/1997 15,528.73 15,041.95
10/31/1997 15,662.80 15,282.63
11/28/1997 15,749.17 15,363.62
12/31/1997 15,921.45 15,524.94
1/31/1998 16,139.59 15,743.84
2/27/1998 16,126.27 15,712.36
3/31/1998 16,217.60 15,761.06
4/30/1998 16,296.41 15,839.87
5/29/1998 16,441.62 16,009.36
6/30/1998 16,599.25 16,172.65
7/31/1998 16,630.22 16,185.59
8/31/1998 16,793.85 16,501.21
9/30/1998 17,178.46 16,973.14
10/30/1998 17,017.93 16,852.63
11/30/1998 17,181.52 16,953.75
12/31/1998 17,232.28 16,994.44
1/29/1999 17,390.52 17,115.10
2/26/1999 17,034.25 16,707.76
3/31/1999 17,155.59 16,791.30
4/30/1999 17,209.39 16,833.28
5/28/1999 17,023.38 16,659.89
6/30/1999 16,980.84 16,608.25
7/30/1999 16,946.24 16,561.75
8/31/1999 16,912.88 16,548.50
9/30/1999 17,063.71 16,697.43
10/29/1999 17,098.37 16,759.21
11/30/1999 17,158.38 16,757.54
12/31/1999 17,070.10 16,677.10
1/31/2000 16,999.08 16,622.07
2/29/2000 17,190.12 16,823.19
3/31/2000 17,363.76 17,045.26
4/28/2000 17,296.86 16,995.83
5/31/2000 17,281.57 16,987.33
6/30/2000 17,644.11 17,340.67
7/31/2000 17,785.36 17,498.47
8/31/2000 18,055.28 17,752.19
9/29/2000 18,156.69 17,864.03
10/31/2000 18,253.06 17,981.94
11/30/2000 18,495.87 18,276.84
12/31/2000 18,854.06 18,616.79
1/31/2001 19,163.39 18,920.24
2/28/2001 19,322.59 19,084.85
3/30/2001 19,411.73 19,180.27
4/30/2001 19,342.90 19,099.72
5/31/2001 19,476.93 19,214.31
6/30/2001 19,537.65 19,287.33
7/31/2001 19,978.71 19,719.36
8/31/2001 20,180.11 19,946.14
9/28/2001 20,174.80 20,177.51
10/31/2001 20,553.42 20,599.22
11/30/2001 20,396.50 20,314.95
12/31/2001 20,079.93 20,184.94
TOP TEN HOLDINGS (as of December 31, 2001)
six months ago
% of % of
investments investments
Government National Mortgage Assoc. 16.2% 17.3%
Federal National Mortgage Assoc. 14.0% 13.1%
U.S. Treasury 11.4% 10.4%
Ford Motor Credit Co. 1.5% 1.7%
Morgan Stanley Dean Witter Capital 0.9% 0.9%
GMAC Commercial Mortgage
Securities, Inc. 0.9% 0.9%
UCFC Home Equity Loan 0.9% 0.8%
Amresco Residential Securities 0.8% 0.9%
Occidental Petroleum Corp. 0.8% 0.6%
Standard Credit Card Master Trust 0.8% 0.8%
AVERAGE ANNUAL TOTAL RETURNS*
Lehman Brothers
Active Bond Aggregate Bond MorningStar
Fund Index Peer Group+
----------- --------------- -----------
1 Year 7.48% 8.42% 7.03%
3 Years 5.55 5.90 5.01
5 Years 6.98 7.37 6.17
10 Years 7.32 6.92 6.88
FUND COMPOSITION (as of December 31, 2001)
Credit Quality Duration
Short Term 5.20% (less than)1 Year 6.00%
AAA 49.20% 1-3 Years 12.30%
AA 2.70% 3-5 Years 32.50%
A 12.70% 5-10 Years 34.60%
BBB 21.80% (greater than)10 Years 14.60%
BB 5.70%
B 2.20%
NR/NA .50%
* Total returns are for the period ended December 31, 2001, returns represent
past performance, assume reinvestment of all distributions, and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the Morningstar variable universe having an Intermediate Term Bond
investment category.
29
Inception: May 1, 1998
HIGH YIELD BOND FUND
WELLINGTON MANAGEMENT COMPANY, LLP
Crawford/Smith/McEvoy
For the year, the Fund gained 2.13% compared with the Fund's benchmark--the
Lehman High Yield Index, which returned 5.28%.
In the high yield marketplace the past year was characterized by record-level
default rates. The Wireline Telecommunication and Internet sectors were
particularly hard hit. Many investment-grade corporations saw their bond ratings
slide to speculative grades. Due to their size, these "fallen angels" now make
up a significant portion of the Index. The Fund's successes came from security
selection particularly in the Health Care and Food & Lodging sectors. Technology
and Auto-related holdings detracted from performance as did having a slightly
lower quality portfolio than the Index.
The most attractive opportunity we see in the high yield market currently is
in the Utility sector. Many power producers saw their bonds fall in value
following the bankruptcy of Enron. We view Enron more as a power broker than a
power producer. Therefore, we added to the Fund's utility names late in the
fourth quarter by focusing on diversified, well-funded companies, which derive a
majority of cash flow from power production rather than power brokerage. These
additions make Utilities one of the top 5 industries in the Fund along with
Cable, Media & Entertainment, Health Care and Energy.
The current yields in the high yield market compensate investors for even
higher levels than the current 8-9% default rate. Our focus continues to be on
minimizing credit losses in order to capture the attractive yields available in
the high yield market. Given the excessive amounts of liquidity that the US has
injected into the system, we are forecasting a stronger economy starting in the
second half of 2002. We are encouraged that a stronger economy, combined with a
higher quality high yield market (46% of Lehman HY Index is now BB rated versus
37% at end of 2000) may lead to high yield returns that exceed the average
coupon for the first time in five years.
[CHART]
High Yield Bond Fund L/B High Yield Bond Index
-------------------- -------------------------
4/30/1998 $10,000.00 $10,000.00
5/31/1998 9,987.31 10,035.00
6/30/1998 10,027.82 10,071.13
7/31/1998 10,075.24 10,128.53
8/31/1998 9,309.43 9,569.44
9/30/1998 9,280.19 9,612.50
10/31/1998 9,120.03 9,415.44
11/30/1998 9,801.83 9,806.18
12/31/1998 9,702.20 9,816.97
1/31/1999 9,818.61 9,962.26
2/28/1999 9,884.14 9,903.48
3/31/1999 10,061.52 9,997.57
4/30/1999 10,214.22 10,191.52
5/31/1999 9,992.19 10,053.93
6/30/1999 9,989.47 10,032.82
7/31/1999 9,993.43 10,072.95
8/31/1999 9,924.64 9,961.14
9/30/1999 9,874.20 9,889.42
10/31/1999 9,806.38 9,824.15
11/30/1999 10,089.82 9,940.08
12/31/1999 10,199.91 10,051.41
1/31/2000 10,132.31 10,008.19
2/29/2000 10,123.13 10,027.20
3/31/2000 9,876.13 9,816.63
4/30/2000 9,945.34 9,832.34
5/31/2000 9,777.19 9,731.06
6/30/2000 10,006.87 9,929.58
7/31/2000 10,121.22 10,005.04
8/31/2000 10,203.41 10,073.08
9/30/2000 9,974.55 9,985.44
10/31/2000 9,577.98 9,665.91
11/30/2000 9,016.41 9,283.14
12/31/2000 9,096.94 9,462.30
1/31/2001 9,829.10 10,171.03
2/28/2001 10,014.56 10,306.30
3/31/2001 9,866.19 10,063.07
4/30/2001 9,755.62 9,938.29
5/31/2001 9,951.58 10,117.18
6/30/2001 9,581.92 9,833.90
7/31/2001 9,725.16 9,978.46
8/31/2001 9,796.45 10,096.20
9/30/2001 8,865.46 9,417.74
10/31/2001 9,025.98 9,650.36
11/30/2001 9,357.65 10,002.59
12/31/2001 9,291.13 9,961.58
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Nextel Communications, Inc. 2.2% 2.5%
Calpine Corp. 2.1% 1.9%
Alaris Medical Systems, Inc. 2.0% 2.2%
EchoStar DBS Corp. 2.0% 1.9%
Allied Waste North America 1.8% 1.5%
Quebecor Media, Inc. 1.7% 1.6%
Lyondell Chemical Co. 1.6% 1.7%
Clark Refining & Marketing, Inc. 1.6% 1.5%
Amkor Technologies, Inc. 1.6% N/A
CSC Holdings, Inc. 1.6% 1.6%
AVERAGE ANNUAL TOTAL RETURNS*
High Yield L/B High-Yield MorningStar
Bond Fund Bond Index Peer Group+
---------- -------------- -----------
1 Year 2.13% 5.28% 0.99%
3 Years -1.43 0.49 -1.11
Since Inception (5/1/98) -1.98 -0.10 N/A
FUND COMPOSITION (as of December 31, 2001)
Credit Quality Duration
Short Term 7.72% (less than)1 Year 7.72%
BBB 2.26% 1-3 Years 2.46%
BB 28.92% 3-5 Years 11.90%
B 47.51% 5-10 Years 76.96%
Below B 12.09% (greater than)10 Years .84%
NR/NA 1.50% Equity/Other .12%
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus. There are special risks
associated with investing in high yield bonds, as outlined in the current
prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from reliable
sources, data completeness and accuracy cannot be guaranteed. Represents an
average annual total return for all variable annuity and life sub-accounts
within the MorningStar variable universe having a High Yield investment
category.
30
Inception: May 1, 1996
GLOBAL BOND FUND
Capital Guardian Trust Company
Management Team
2001 proved to be a roller coaster ride for fixed-income investors as changing
perceptions of the prospects of economic recovery played havoc on bond prices.
The collapse of Enron was the biggest negative event in a year in which 700
companies around the world were downgraded and defaults were at a 10-year high.
At the same time, demand was strong, particularly in Europe, and issuance surged
from 2000's levels.
The Fund returned -1.45% for the 1 year period, underperforming its
benchmark--the Salomon Brothers World Government Bond Index, Unhedged.
The Fund benefited from currency and country decisions while duration and
sector decision detracted. We remained overweight euro-denominated securities,
which, for dollar-based investors, was something of a drag on returns.
Nevertheless, we believe the euro remains cheap relative to the U.S. dollar.
At the beginning of the third quarter we were overweight U.S. bonds and the
dollar. Early in the quarter we began to reduce the dollar exposure by moving
overweight in the European markets and less underweight in Japan. Prior to
September we were actually reducing U.S. duration with a view that Fed easing
was almost complete. However, we changed that view after September 11 when the
steepening of the U.S. yield curve gave us the opportunity to raise duration.
While we believe it's highly likely there will be a global economic recovery
next year, we don't believe it's an absolute certainty. As such, we still see
opportunities in fixed-income markets, particularly those outside the United
States. With the U.S. market trading significantly off its earlier highs, and
the Fed close to the end of its easing cycle, we see more potential overseas.
[CHART]
Global Bond Fund Global Bond Benchmark (1)
---------------- -------------------------
4/30/1996 $10,000.00 $10,000.00
5/31/1996 9,983.20 10,002.00
6/30/1996 10,068.31 10,123.02
7/31/1996 10,102.86 10,162.50
8/31/1996 10,111.98 10,183.85
9/30/1996 10,297.03 10,371.23
10/31/1996 10,489.94 10,586.95
11/30/1996 10,674.48 10,775.40
12/31/1996 10,671.49 10,704.28
1/31/1997 10,722.54 10,763.15
2/28/1997 10,754.51 10,800.82
3/31/1997 10,634.45 10,697.14
4/30/1997 10,760.52 10,846.90
5/31/1997 10,870.77 10,938.01
6/30/1997 11,020.78 11,082.39
7/31/1997 11,261.56 11,350.59
8/31/1997 11,193.90 11,281.35
9/30/1997 11,395.94 11,456.21
10/31/1997 11,458.96 11,599.41
11/30/1997 11,518.08 11,660.89
12/31/1997 11,637.30 11,786.83
1/31/1998 11,774.15 11,938.88
2/28/1998 11,794.60 11,957.98
3/31/1998 11,843.53 12,015.38
4/30/1998 11,898.89 12,077.86
5/31/1998 12,011.80 12,205.88
6/30/1998 12,100.95 12,296.20
7/31/1998 12,132.81 12,344.16
8/31/1998 12,315.35 12,556.48
9/30/1998 12,623.67 12,851.56
10/31/1998 12,538.26 12,796.29
11/30/1998 12,639.21 12,885.87
12/31/1998 12,702.48 12,910.35
1/31/1999 12,811.39 13,018.80
2/28/1999 12,563.89 12,826.12
3/31/1999 12,667.30 12,917.19
4/30/1999 12,704.36 12,989.52
5/31/1999 12,577.16 12,911.59
6/30/1999 12,446.11 12,765.68
7/31/1999 12,561.54 12,738.88
8/31/1999 12,511.52 12,752.89
9/30/1999 12,435.31 12,817.93
10/31/1999 12,429.96 12,843.56
11/30/1999 12,454.41 12,887.23
12/31/1999 12,428.11 12,888.52
1/31/2000 12,394.66 12,898.83
2/29/2000 12,496.24 13,029.11
3/31/2000 12,673.26 13,245.39
4/30/2000 12,670.06 13,278.51
5/31/2000 12,738.74 13,356.85
6/30/2000 12,827.03 13,473.06
7/31/2000 12,902.83 13,575.45
8/31/2000 12,936.48 13,637.90
9/30/2000 13,004.50 13,717.00
10/31/2000 13,112.96 13,832.22
11/30/2000 13,319.01 14,107.48
12/31/2000 13,919.44 14,612.53
1/31/2001 13,912.11 14,593.53
2/28/2001 13,914.92 14,587.70
3/31/2001 13,482.06 14,167.57
4/30/2001 13,456.13 14,116.57
5/31/2001 13,356.10 14,074.22
6/30/2001 13,268.16 13,944.73
7/31/2001 13,612.00 14,296.14
8/31/2001 14,147.37 14,833.68
9/30/2001 14,167.64 14,941.96
10/31/2001 14,244.47 15,060.00
11/30/2001 14,108.06 14,849.16
12/31/2001 13,717.29 14,467.54
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
U.S. Treasury 8.5% 9.1%
Government of Japan 8.1% 8.1%
Federal National Mortgage Assoc. 7.6% 8.0%
Federal Republic of Germany 13.0% 5.3%
Government of France 5.2% 5.0%
Republic of Finland 4.7% 4.6%
Kingdom of Spain 4.4% 4.3%
European Investment Bank 3.0% 3.6%
Kredit Fuer Wiederaufbau 2.8% 2.7%
Kingdom of Netherlands 2.6% 3.5%
AVERAGE ANNUAL TOTAL RETURN*
Global Global Bond MorningStar
Bond Fund Benchmark (1) Peer Group+
--------- ------------- -----------
1 Year -1.45% -0.99% 3.54%
3 Years 2.60 3.87 2.43
5 Years 5.15 6.21 4.60
Since Inception (5/1/96) 5.73 6.73 N/A
FUND COMPOSITION (as of December 31, 2001)
Credit Quality Duration
Short Term 5.16% (less than)1 Year 5.42%
AAA 14.12% 1-3 Years 10.98%
A .60% 3-5 Years 25.75%
BBB 5.09% 5-10 Years 56.71%
BB .12% (greater than)10 Years 1.14%
B 1.72%
Foreign Currency 73.11%
(1)Global Bond Benchmark: 75% Lehman Brothers Aggregate Bond and 25% J.P. Morgan
Non-US Government Bond Index, Hedged, from May 1996 to April 1999, the J.P.
Morgan Global Bond Index (Hedged), May 1999 to October 2000, and the Salomon
Brothers World Government Bond Index, Unhedged, November 2000 to present.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. There are special risks associated with a
nondiversified fund and with international investing including currency
fluctuations, political and economic instability, foreign taxation and
different accounting standards, as outlined in the current prospectus. The
performance of the fund on this page is reported net of Trust level changes
(i.e. investment management fees and operating expenses). It does not reflect
expense and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described in
your product prospectus.
+ Source: MorningStar, Inc. Data as of 12/31/01. Although gathered from
reliable sources, data completeness and accuracy cannot be guaranteed.
Represents an average annual total return for all variable annuity and life
sub-accounts within the MorningStar variable universe having a 75%
International Bond and 25% Intermediate Term Bond category. Prior to May
1999, (concurrent with the Fund's strategy change), the peer group represents
a 75% Intermediate-Term Bond and 25% International Bond category.
31
Inception: March 29, 1986
MONEY MARKET FUND
WELLINGTON MANAGEMENT COMPANY, LLP
John C. Keogh
Wellington Management Company, LLP, began managing the Money Market Fund on
May 1, 2001. For the 1 year period, the Fund returned 3.93%.
The Fed's rate reductions, which began on the first business day of 2001,
totaled 475 basis points over the course of the year, from 6.50% to its current
target rate of 1.75%. As a percentage, this represents a 73% decline in
short-term rates. The last time we saw a decline of that magnitude was in 1958.
Lower interest rates and credit deterioration played a significant role in the
investment of funds as the universe of acceptable issuers shrank materially over
the year. As corporate treasurers sought to extend their debt and as others were
forced out of the commercial paper market for credit reasons, the amount of
commercial paper outstanding fell by 11%. Yields fell as this shrinking universe
of commercial paper met head-on with a record level of money market fund assets,
which exceeded $2.25 trillion.
As always, our primary focus has been avoiding credit mistakes. We believe
that in the current environment it is very difficult to be too cautious. There
will be plenty of time to catch up in healthier credit environments, but now is
a time for patience.
The powerful combination of stimulative fiscal and monetary policies should
extend the economic recovery which, we believe, began late in the fourth quarter
of 2001. While recovery is under way, it is not robust and we are not
forecasting a rapid return to restrictive Fed policy. In fact, rising
unemployment, low levels of capacity utilization, and continued anecdotal
evidence of poor pricing power by manufacturers and retailers suggest that there
is still slack in the system and that inflation should not be a near term
problem. This makes Fed tightening very unlikely in the near term. Therefore, we
will continue to invest with the expectation that the market will remain
relatively flat through the first part of 2002, while looking to the later part
of the year for broad economic recovery to take shape, bringing higher interest
rates with it.
[CHART]
Money Market Fund
-----------------
12/31/1991 $10,000.00
1/31/1992 10,035.40
2/29/1992 10,064.40
3/31/1992 10,098.62
4/30/1992 10,131.34
5/31/1992 10,162.04
6/30/1992 10,196.39
7/31/1992 10,228.61
8/31/1992 10,259.19
9/30/1992 10,287.81
10/31/1992 10,306.43
11/30/1992 10,334.26
12/31/1992 10,363.71
1/31/1993 10,390.34
2/28/1993 10,414.97
3/31/1993 10,443.51
4/30/1993 10,469.20
5/31/1993 10,492.65
6/30/1993 10,520.88
7/31/1993 10,546.76
8/31/1993 10,574.50
9/30/1993 10,600.41
10/31/1993 10,625.00
11/30/1993 10,652.73
12/31/1993 10,680.32
1/31/1994 10,708.30
2/28/1994 10,733.25
3/31/1994 10,761.59
4/30/1994 10,789.03
5/31/1994 10,822.04
6/30/1994 10,857.86
7/31/1994 10,893.58
8/31/1994 10,936.50
9/30/1994 10,977.95
10/31/1994 11,016.48
11/30/1994 11,060.55
12/31/1994 11,111.21
1/31/1995 11,163.77
2/28/1995 11,212.67
3/31/1995 11,267.95
4/30/1995 11,317.75
5/31/1995 11,376.26
6/30/1995 11,429.50
7/31/1995 11,484.02
8/31/1995 11,537.88
9/30/1995 11,588.42
10/31/1995 11,644.16
11/30/1995 11,697.26
12/31/1995 11,752.94
1/31/1996 11,807.47
2/29/1996 11,856.23
3/31/1996 11,903.65
4/30/1996 11,956.26
5/31/1996 12,007.91
6/30/1996 12,055.10
7/31/1996 12,111.53
8/31/1996 12,163.24
9/30/1996 12,216.96
10/31/1996 12,270.76
11/30/1996 12,316.98
12/31/1996 12,378.36
1/31/1997 12,433.03
2/28/1997 12,482.38
3/31/1997 12,537.01
4/30/1997 12,591.37
5/31/1997 12,646.54
6/30/1997 12,704.14
7/31/1997 12,761.90
8/31/1997 12,816.11
9/30/1997 12,876.37
10/31/1997 12,935.22
11/30/1997 12,988.59
12/31/1997 13,052.47
1/31/1998 13,112.66
2/28/1998 13,164.75
3/31/1998 13,224.56
4/30/1998 13,282.78
5/31/1998 13,343.18
6/30/1998 13,401.78
7/31/1998 13,462.54
8/31/1998 13,523.63
9/30/1998 13,582.95
10/31/1998 13,643.28
11/30/1998 13,700.52
12/31/1998 13,759.33
1/31/1999 13,816.78
2/28/1999 13,867.35
3/31/1999 13,922.28
4/30/1999 13,975.12
5/31/1999 14,030.30
6/30/1999 14,084.44
7/31/1999 14,141.94
8/31/1999 14,201.06
9/30/1999 14,259.98
10/31/1999 14,322.67
11/30/1999 14,385.35
12/31/1999 14,453.97
1/31/2000 14,523.44
2/29/2000 14,587.95
3/31/2000 14,657.59
4/30/2000 14,726.95
5/31/2000 14,802.71
6/30/2000 14,879.43
7/31/2000 14,959.98
8/31/2000 15,041.14
9/30/2000 15,119.86
10/31/2000 15,199.62
11/30/2000 15,279.98
12/31/2000 15,363.01
1/31/2001 15,443.28
2/28/2001 15,510.27
3/31/2001 15,578.27
4/30/2001 15,639.83
5/31/2001 15,697.87
6/30/2001 15,750.29
7/31/2001 15,797.14
8/31/2001 15,841.57
9/30/2001 15,881.47
10/31/2001 15,915.85
11/30/2001 15,942.58
12/31/2001 15,966.73
TOP TEN HOLDINGS (as of December 31, 2001)
% of six months ago
Investments % of Investments
Federal National Mortgage Assoc. 14.5% 20.5%
Federal Home Loan Mortgage Corp. 12.2% 3.3%
Federal Home Loan Bank 3.5% 2.1%
SBC Warburg Repo 3.3% N/A
Corporate Asset Fund 3.3% N/A
President & Fellows Harvard Co. 2.8% N/A
Falcon Asset Securitization 2.8% N/A
New York Life Capital Corp. 2.5% 1.6%
Halifax PLC 2.5% 2.8%
Montana Blanc Capital Corp. 2.3% 1.5%
AVERAGE ANNUAL TOTAL RETURNS*
Money Market
Fund(1)
------------
1 Year 3.93%
3 Years 5.08
5 Years 5.22
10 Years 4.79
TOP SECTOR CLASSIFICATIONS (as of December 31, 2001)
% of
Investments
Financial 50.9%
Governmental 34.9%
Health Care 4.0%
Consumer Staple 3.8%
Repo 3.3%
Consumer Cyclical 2.2%
Technology 0.9%
The Money Market Fund is neither insured nor guaranteed by the U.S. Government
and there is no guarantee the fund will be able to maintain a stable net asset
value of $1.00/share.
(1)Returns reflect extra-ordinary capital contribution of $284,471 in October
2000.
* Total returns are for the period ended December 31, 2001. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the applicable
separate accounts and variable products, all of which vary to a considerable
extent and are described in your product prospectus.
32
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
Emerging
Large Cap Fundamental Active Markets
Growth Growth Bond Equity
--------- ----------- ---------- --------
ASSETS
Long term investments at cost....................................................... $ 774,965 $ 38,455 $ 876,355 $ 28,542
Net unrealized appreciation (depreciation) of investments........................... (11,949) (1,601) 10,879 (919)
Short-term investments at value..................................................... 9,186 883 66,528 2,493
--------- -------- ---------- --------
Total investments................................................................ 772,202 37,737 953,762 30,116
Cash................................................................................ 446 127
Foreign currency at value (cost $0, $0, $0, $64, $2, $27, $0, and $0, respectively). 64
Receivable for:
Investments sold.................................................................. 89 79
Fund shares sold.................................................................. 140
Interest.......................................................................... 11,501
Dividends......................................................................... 593 13 84 48
Futures contracts variation margin................................................
Securities on loan................................................................ 20,808 8,653 79,472
Other assets...................................................................... 701
--------- -------- ---------- --------
Total assets........................................................................ 793,603 46,632 1,045,966 30,434
--------- -------- ---------- --------
LIABILITIES
Payables for:
Investments purchased............................................................. 72 17,161 669
Fund shares purchased............................................................. 1,574 1,798 673
Futures contracts variation margin................................................
Securities on loan................................................................ 20,808 8,653 79,472
Unrealized depreciation in forward currency contracts............................. 134
Other liabilities................................................................. 306 10 21 2
--------- -------- ---------- --------
Total liabilities................................................................... 22,688 8,735 98,452 1,478
--------- -------- ---------- --------
Net assets.......................................................................... $ 770,915 $ 37,897 $ 947,514 $ 28,956
========= ======== ========== ========
Shares of beneficial interest outstanding........................................... 49,599 4,467 99,179 4,497
--------- -------- ---------- --------
Net asset value per share........................................................... $ 15.54 $ 8.48 $ 9.55 $ 6.44
========= ======== ========== ========
Composition of net assets:
Capital paid-in................................................................... $ 993,306 $ 65,800 $ 954,762 $ 46,626
Accumulated net realized gain (loss) on investments, futures and foreign currency
transactions..................................................................... (210,909) (26,302) (23,773) (16,699)
Undistributed (distribution in excess of) net investment income (loss)............ 467 5,646 82
Net unrealized appreciation (depreciation) of:
Investments...................................................................... (11,949) (1,601) 10,879 (919)
Futures..........................................................................
Translation of assets and liabilities in foreign currencies...................... (134)
--------- -------- ---------- --------
Net assets.......................................................................... $ 770,915 $ 37,897 $ 974,514 $ 28,956
========= ======== ========== ========
International International Small Cap
Equity Index Equity Growth
------------- ------------- ---------
ASSETS
Long term investments at cost....................................................... $146,772 $29,460 $181,446
Net unrealized appreciation (depreciation) of investments........................... (27,202) (1,417) 2,373
Short-term investments at value..................................................... 2,883 1,500 6,714
-------- ------- --------
Total investments................................................................ 122,453 29,543 190,533
Cash................................................................................ 43 197
Foreign currency at value (cost $0, $0, $0, $64, $2, $27, $0, and $0, respectively). 2 27
Receivable for:
Investments sold.................................................................. 12 59 67
Fund shares sold.................................................................. 216
Interest..........................................................................
Dividends......................................................................... 123 39 11
Futures contracts variation margin................................................ 25
Securities on loan................................................................ 21,999 45,014
Other assets...................................................................... 6
-------- ------- --------
Total assets........................................................................ 144,589 29,958 235,822
-------- ------- --------
LIABILITIES
Payables for:
Investments purchased............................................................. 11 303
Fund shares purchased............................................................. 509 1,085
Futures contracts variation margin................................................ 16
Securities on loan................................................................ 21,999 45,014
Unrealized depreciation in forward currency contracts............................. 45 1
Other liabilities................................................................. 31 19
-------- ------- --------
Total liabilities................................................................... 22,569 43 46,421
-------- ------- --------
Net assets.......................................................................... $122,020 $29,915 $189,401
======== ======= ========
Shares of beneficial interest outstanding........................................... 10,106 3,962 16,088
-------- ------- --------
Net asset value per share........................................................... $ 12.07 $ 7.55 $ 11.77
======== ======= ========
Composition of net assets:
Capital paid-in................................................................... $156,690 $37,979 $244,134
Accumulated net realized gain (loss) on investments, futures and foreign currency
transactions..................................................................... (7,288) (6,646) (57,106)
Undistributed (distribution in excess of) net investment income (loss)............ (147)
Net unrealized appreciation (depreciation) of:
Investments...................................................................... (27,202) (1,417) 2,373
Futures.......................................................................... 13
Translation of assets and liabilities in foreign currencies...................... (46) (1)
-------- ------- --------
Net assets.......................................................................... $122,020 $29,915 $189,401
======== ======= ========
Health
Sciences
--------
ASSETS
Long term investments at cost....................................................... $28,919
Net unrealized appreciation (depreciation) of investments........................... (169)
Short-term investments at value..................................................... 1,540
-------
Total investments................................................................ 30,290
Cash................................................................................
Foreign currency at value (cost $0, $0, $0, $64, $2, $27, $0, and $0, respectively).
Receivable for:
Investments sold..................................................................
Fund shares sold.................................................................. 59
Interest..........................................................................
Dividends......................................................................... 17
Futures contracts variation margin................................................
Securities on loan................................................................
Other assets......................................................................
-------
Total assets........................................................................ 30,336
-------
LIABILITIES
Payables for:
Investments purchased............................................................. 491
Fund shares purchased.............................................................
Futures contracts variation margin................................................
Securities on loan................................................................
Unrealized depreciation in forward currency contracts.............................
Other liabilities................................................................. 2
-------
Total liabilities................................................................... 493
-------
Net assets.......................................................................... $29,873
=======
Shares of beneficial interest outstanding........................................... 3,046
-------
Net asset value per share........................................................... $ 9.81
=======
Composition of net assets:
Capital paid-in................................................................... $30,326
Accumulated net realized gain (loss) on investments, futures and foreign currency
transactions..................................................................... (284)
Undistributed (distribution in excess of) net investment income (loss)............
Net unrealized appreciation (depreciation) of:
Investments...................................................................... (169)
Futures..........................................................................
Translation of assets and liabilities in foreign currencies......................
-------
Net assets.......................................................................... $29,873
=======
See notes to financial statements.
33
STATEMENT OF ASSETS AND LIABILITIES--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
Global Mid Cap Large Cap Large Cap
Balanced Growth Value Value CORE
-------- --------- --------- ----------
ASSETS
Long term investments at cost........................................................ $29,815 $ 244,689 $236,279 $59,970
Net unrealized appreciation (depreciation) of investments............................ (2,203) (23,288) 11,850 (725)
Short-term investments at value...................................................... 3,303 24,699 11,887 1,400
------- --------- -------- -------
Total investments................................................................. 30,915 246,100 260,016 60,645
Cash................................................................................. 36 193
Foreign currency at value (cost $5, $0, $0, $0, $0, $0, $0, $0, and $0, respectively) 5
Receivable for:
Investments sold...................................................................
Fund shares sold................................................................... 615
Interest........................................................................... 333
Dividends.......................................................................... 20 28 353 54
Futures contracts variation margin.................................................
Securities on loan................................................................. 57,807 12,418
Unrealized appreciation in forward currency contracts.............................. 47
Other assets....................................................................... 5
------- --------- -------- -------
Total assets......................................................................... 31,320 303,971 273,402 60,897
------- --------- -------- -------
LIABILITIES
Payables for:
Due to custodian...................................................................
Investments purchased.............................................................. 26 260
Fund shares purchased.............................................................. 2 213 53
Futures contracts variation margin................................................. 6
Securities on loan................................................................. 57,807 12,418
Unrealized depreciation in forward currency contracts..............................
Other liabilities.................................................................. 2 52 78 6
------- --------- -------- -------
Total liabilities.................................................................... 30 58,072 12,756 65
------- --------- -------- -------
Net assets........................................................................... $31,290 $ 245,899 $260,646 $60,832
======= ========= ======== =======
Shares of beneficial interest outstanding............................................ 3,652 24,992 18,414 6,186
------- --------- -------- -------
Net asset value per share............................................................ $ 8.57 $ 9.84 $ 14.15 $ 9.83
======= ========= ======== =======
Composition of net assets:
Capital paid-in.................................................................... $34,232 $ 493,667 $248,136 $62,660
Accumulated net realized gain (loss) on investments, futures and foreign currency
transactions...................................................................... (697) (224,490) 562 (1,100)
Undistributed (distribution in excess of) net investment income (loss)............. (89) (98)
Net unrealized appreciation (depreciation) of:
Investments....................................................................... (2,203) (23,288) 11,850 (725)
Futures........................................................................... (3)
Translation of assets and liabilities in foreign currencies....................... 47
------- --------- -------- -------
Net assets........................................................................... $31,290 $ 245,899 $260,646 $60,832
======= ========= ======== =======
Large/Mid Money Small/Mid Cap Bond
Cap Value Market Growth Index
--------- -------- ------------- --------
ASSETS
Long term investments at cost........................................................ $157,785 $165,827 $122,306
Net unrealized appreciation (depreciation) of investments............................ (1,009) 13,497 1,571
Short-term investments at value...................................................... 6,120 $722,797 5,648 5,583
-------- -------- -------- --------
Total investments................................................................. 162,896 722,797 184,972 129,460
Cash................................................................................. 2 1
Foreign currency at value (cost $5, $0, $0, $0, $0, $0, $0, $0, and $0,
respectively) Receivable for:
Investments sold................................................................... 321 1,105
Fund shares sold................................................................... 22,429 61 834
Interest........................................................................... 358 1,556
Dividends.......................................................................... 74 24
Futures contracts variation margin.................................................
Securities on loan................................................................. 33,368 28,264
Unrealized appreciation in forward currency contracts..............................
Other assets....................................................................... 91 191
-------- -------- -------- --------
Total assets......................................................................... 163,384 745,776 219,530 160,114
-------- -------- -------- --------
LIABILITIES
Payables for:
Due to custodian...................................................................
Investments purchased.............................................................. 1,403 910 2,473
Fund shares purchased.............................................................. 206
Futures contracts variation margin................................................. 8
Securities on loan................................................................. 33,368 28,264
Unrealized depreciation in forward currency contracts..............................
Other liabilities.................................................................. 57 260 20 19
-------- -------- -------- --------
Total liabilities.................................................................... 1,674 260 34,298 30,756
-------- -------- -------- --------
Net assets........................................................................... $161,710 $745,516 $185,232 $129,358
======== ======== ======== ========
Shares of beneficial interest outstanding............................................ 15,165 745,516 13,145 13,083
-------- -------- -------- --------
Net asset value per share............................................................ $ 10.66 $ 1.00 $ 14.09 $ 9.89
======== ======== ======== ========
Composition of net assets:
Capital paid-in.................................................................... $165,198 $745,516 $176,411 $127,959
Accumulated net realized gain (loss) on investments, futures and foreign currency
transactions...................................................................... (2,490) (89) (4,676) (172)
Undistributed (distribution in excess of) net investment income (loss)............. 22 89
Net unrealized appreciation (depreciation) of:
Investments....................................................................... (1,009) 13,497 1,571
Futures........................................................................... (11)
Translation of assets and liabilities in foreign currencies.......................
-------- -------- -------- --------
Net assets........................................................................... $161,710 $745,516 $185,232 $129,358
======== ======== ======== ========
See notes to financial statements.
34
STATEMENT OF ASSETS AND LIABILITIES--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
Large Cap
Aggressive Small/Mid Cap Small Cap
Growth CORE Value
---------- ------------- ---------
ASSETS
Long term investments at cost....................................................... $39,954 $45,242 $ 89,409
Net unrealized appreciation (depreciation) of investments........................... (938) 1,135 7,699
Short-term investments at value..................................................... 676 2,100 6,117
------- ------- --------
Total investments................................................................ 39,692 48,477 103,225
Cash................................................................................ 220 16
Foreign currency at value (cost $0, $0, $0, $0, $0, $1, $0, and $0, respectively)...
Receivable for:
Investments sold.................................................................. 40 164 30
Fund shares sold.................................................................. 71 321 854
Interest..........................................................................
Dividends......................................................................... 30 38 91
Securities on loan................................................................ 7,685
Other assets......................................................................
------- ------- --------
Total assets........................................................................ 47,518 49,220 104,216
------- ------- --------
LIABILITIES
Payables for:
Investments purchased............................................................. 89 2,771 970
Fund shares purchased.............................................................
Futures contracts variation margin................................................ 14
Securities on loan................................................................ 7,685
Unrealized depreciation in forward currency contracts.............................
Other liabilities................................................................. 6 3 8
------- ------- --------
Total liabilities................................................................... 7,780 2,774 992
------- ------- --------
Net assets.......................................................................... $39,738 $46,446 $103,224
======= ======= ========
Shares of beneficial interest outstanding........................................... 4,895 4,731 7,501
------- ------- --------
Net asset value per share........................................................... $ 8.12 $ 9.82 $ 13.76
======= ======= ========
Composition of net assets:
Capital paid-in................................................................... $47,961 $45,512 $ 95,239
Accumulated net realized gain (loss) on investments, futures and foreign currency
transactions..................................................................... (7,285) (201) 262
Undistributed (distribution in excess of) net investment income (loss)............ 2
Net unrealized appreciation (depreciation) of:
Investments...................................................................... (938) 1,135 7,699
Futures.......................................................................... 22
Translation of assets and liabilities in foreign currencies......................
------- ------- --------
Net assets.......................................................................... $39,738 $46,446 $103,224
======= ======= ========
Real Estate Growth &
Equity Income Managed
----------- ---------- ----------
ASSETS
Long term investments at cost....................................................... $142,569 $2,335,549 $2,330,917
Net unrealized appreciation (depreciation) of investments........................... 17,674 116,044 152,303
Short-term investments at value..................................................... 3,138 25,806 314,056
-------- ---------- ----------
Total investments................................................................ 163,381 2,477,399 2,797,276
Cash................................................................................ 1 8,103
Foreign currency at value (cost $0, $0, $0, $0, $0, $1, $0, and $0, respectively)... 1
Receivable for:
Investments sold.................................................................. 1,610 900
Fund shares sold..................................................................
Interest.......................................................................... 8,303
Dividends......................................................................... 918 2,219 1,579
Securities on loan................................................................ 44,245 121,114
Other assets...................................................................... 29 27
-------- ---------- ----------
Total assets........................................................................ 164,299 2,525,503 2,937,303
-------- ---------- ----------
LIABILITIES
Payables for:
Investments purchased............................................................. 9 186 281,407
Fund shares purchased............................................................. 600 3,840 6,420
Futures contracts variation margin................................................
Securities on loan................................................................ 44,245 121,114
Unrealized depreciation in forward currency contracts............................. 928
Other liabilities................................................................. 37 913 731
-------- ---------- ----------
Total liabilities................................................................... 646 49,184 410,600
-------- ---------- ----------
Net assets.......................................................................... $163,653 $2,476,319 $2,526,703
======== ========== ==========
Shares of beneficial interest outstanding........................................... 12,081 207,533 193,167
-------- ---------- ----------
Net asset value per share........................................................... $ 13.55 $ 11.93 $ 13.08
======== ========== ==========
Composition of net assets:
Capital paid-in................................................................... $143,481 $2,854,001 $2,439,588
Accumulated net realized gain (loss) on investments, futures and foreign currency
transactions..................................................................... 516 (493,942) (93,173)
Undistributed (distribution in excess of) net investment income (loss)............ 1,982 216 32,913
Net unrealized appreciation (depreciation) of:
Investments...................................................................... 17,674 116,044 152,303
Futures..........................................................................
Translation of assets and liabilities in foreign currencies...................... (927)
-------- ---------- ----------
Net assets.......................................................................... $163,653 $2,476,319 $2,526,703
======== ========== ==========
Short-Term Small Cap
Bond Equity
---------- ---------
ASSETS
Long term investments at cost....................................................... $139,890 $ 76,014
Net unrealized appreciation (depreciation) of investments........................... 2,207 (5,724)
Short-term investments at value..................................................... 6,349 2,819
-------- --------
Total investments................................................................ 148,446 73,109
Cash................................................................................
Foreign currency at value (cost $0, $0, $0, $0, $0, $1, $0, and $0, respectively)...
Receivable for:
Investments sold.................................................................. 49
Fund shares sold..................................................................
Interest.......................................................................... 1,393
Dividends......................................................................... 73
Securities on loan................................................................ 36,552 17,644
Other assets......................................................................
-------- --------
Total assets........................................................................ 186,391 90,875
-------- --------
LIABILITIES
Payables for:
Investments purchased............................................................. 973
Fund shares purchased............................................................. 354 1,062
Futures contracts variation margin................................................
Securities on loan................................................................ 36,552 17,644
Unrealized depreciation in forward currency contracts.............................
Other liabilities................................................................. 35 3
-------- --------
Total liabilities................................................................... 36,941 19,682
-------- --------
Net assets.......................................................................... $149,450 $ 71,193
======== ========
Shares of beneficial interest outstanding........................................... 14,781 8,098
-------- --------
Net asset value per share........................................................... $ 10.11 $ 8.79
======== ========
Composition of net assets:
Capital paid-in................................................................... $148,430 $ 65,464
Accumulated net realized gain (loss) on investments, futures and foreign currency
transactions..................................................................... (1,257) (11,451)
Undistributed (distribution in excess of) net investment income (loss)............ (70) 2
Net unrealized appreciation (depreciation) of:
Investments...................................................................... 2,207 (5,724)
Futures..........................................................................
Translation of assets and liabilities in foreign currencies......................
-------- --------
Net assets.......................................................................... $149,450 $ 71,193
======== ========
See notes to financial statements.
35
STATEMENT OF ASSETS AND LIABILITIES--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
International Equity HighYield Global
Opportunities Index Bond Bond
------------- -------- --------- -------
ASSETS
Long term investments at cost............ $103,729 $593,194 $52,934 $45,610
Net unrealized appreciation
(depreciation) of investments........... (18,551) (65,978) (7,035) (71)
Short-term investments at value.......... 1,953 15,906 3,832 1,462
-------- -------- ------- -------
Total investments..................... 87,131 543,122 49,731 47,001
Cash..................................... 68
Foreign currency at value (cost $649,
$0, $0, and $10, respectively).......... 649 10
Receivable for:
Investments sold........................ 9 3
Fund shares sold........................ 126
Interest................................ 1,410 1,274
Dividends............................... 100 525
Futures contracts variation margin......
Securities on loan...................... 9,120 3,011
Unrealized appreciation in forward
currency contracts....................
Other assets............................ 6
-------- -------- ------- -------
Total assets............................. 97,000 543,721 51,276 51,299
-------- -------- ------- -------
LIABILITIES
Payables for:
Due to custodian........................
Investments purchased................... 3,100
Fund shares purchased................... 4,281 1,487 412
Futures contracts variation margin...... 141
Securities on loan...................... 9,120 3,011
Unrealized depreciation in forward
currency contracts.................... 2 224
Other liabilities....................... 6 202 2 6
-------- -------- ------- -------
Total liabilities........................ 13,409 4,930 2 3,653
-------- -------- ------- -------
Net assets............................... $ 83,591 $538,791 $51,274 $47,646
======== ======== ======= =======
Shares of beneficial interest
outstanding............................. 8,987 36,280 7,507 4,893
-------- -------- ------- -------
Net asset value per share................ $ 9.30 $ 14.85 $ 6.83 $ 9.74
======== ======== ======= =======
Composition of net assets:
Capital paid-in......................... $111,656 $611,375 $61,590 $50,208
Accumulated net realized gain (loss)
on investments, futures and foreign
currency transactions................. (9,512) (6,703) (3,284) (2,779)
Undistributed (distribution in excess
of) net investment income (loss)...... 3 512
Net unrealized appreciation (depreciation) of:
Investments........................... (18,551) (65,978) (7,035) (71)
Futures............................... 97
Translation of assets and
liabilities in foreign currencies.... (2) (224)
-------- -------- ------- -------
Net assets............................... $ 83,591 $538,791 $51,274 $47,646
======== ======== ======= =======
See notes to financial statements.
36
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
Large Cap Fundamental Active Emerging International
Growth Growth Bond Markets Equity Equity Index
--------- ----------- ------- -------------- -------------
INVESTMENT INCOME
Interest...................................................... $ 353 $ 58 $56,172 $ 67 $ 153
Dividends..................................................... 5,151 116 161 541 2,578
Securities lending............................................ 95 21 162 238
--------- -------- ------- -------- --------
Total investment income......................................... 5,599 195 56,945 608 2,969
--------- -------- ------- -------- --------
EXPENSES
Investment advisory fee....................................... 3,320 327 5,237 364 262
Auditors fees................................................. 81 3 71 2 14
Custodian fees................................................ 126 86 244 729 281
Fidelity bond fees............................................ 1 1
Legal fees.................................................... 53 2 48 2 10
Printing & mailing fees....................................... 12 89 23 36
Trustees' fees................................................ 21 1 18 1 4
Other fees.................................................... 12 8 5 6
--------- -------- ------- -------- --------
Total expenses.................................................. 3,614 431 5,716 1,126 613
Less expenses reimbursed...................................... (67) (734) (203)
--------- -------- ------- -------- --------
Net expenses.................................................... 3,614 364 5,716 392 410
--------- -------- ------- -------- --------
Net investment income (loss).................................... 1,985 (169) 50,779 216 2,559
--------- -------- ------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments.................................................. (170,555) (20,009) 15,343 (13,207) (6,433)
Financial futures contracts.................................. (871)
Foreign currency transactions................................ (139) (434)
Change in unrealized appreciation (depreciation) on:
Investments.................................................. (26,354) 4,341 (4,949) 11,916 (31,970)
Financial futures contracts.................................. 183
Translation of assets and liabilities in foreign currencies.. (136) (93)
--------- -------- ------- -------- --------
Net realized and unrealized gain (loss)......................... (196,909) (15,668) 10,394 (1,566) (39,618)
--------- -------- ------- -------- --------
Net increase (decrease) in net assets resulting from operations. $(194,924) $(15,837) $61,173 $ (1,350) $(37,059)
========= ======== ======= ======== ========
International Small Cap Health
Equity Growth Sciences*
------------- --------- ---------
INVESTMENT INCOME
Interest...................................................... $ 46 $ 219 $ 27
Dividends..................................................... 289 181 127
Securities lending............................................ 292
------- -------- -----
Total investment income......................................... 335 692 154
------- -------- -----
EXPENSES
Investment advisory fee....................................... 219 1,534 164
Auditors fees................................................. 2 17 2
Custodian fees................................................ 18 92 23
Fidelity bond fees............................................
Legal fees.................................................... 1 11 1
Printing & mailing fees....................................... 21 105 3
Trustees' fees................................................ 5 1
Other fees.................................................... 1 1
------- -------- -----
Total expenses.................................................. 262 1,765 194
Less expenses reimbursed...................................... (22) (51) (14)
------- -------- -----
Net expenses.................................................... 240 1,714 180
------- -------- -----
Net investment income (loss).................................... 95 (1,022) (26)
------- -------- -----
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments.................................................. (4,132) (40,555) (284)
Financial futures contracts.................................. (86)
Foreign currency transactions................................ (22)
Change in unrealized appreciation (depreciation) on:
Investments.................................................. (718) 11,615 (169)
Financial futures contracts.................................. 23
Translation of assets and liabilities in foreign currencies.. 1
------- -------- -----
Net realized and unrealized gain (loss)......................... (4,934) (28,940) (453)
------- -------- -----
Net increase (decrease) in net assets resulting from operations. $(4,839) $(29,962) $(479)
======= ======== =====
(*) Commenced operations on May 1, 2001. See notes to financial statements.
37
STATEMENT OF OPERATIONS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
Global Mid Cap Large Cap Large Cap Large/Mid Cap Money
Balanced Growth Value Value CORE Value Market
-------- --------- --------- ---------- ------------- -------
INVESTMENT INCOME
Interest...................................................... $ 478 $ 787 $ 377 $ 47 $ 57 $21,355
Dividends..................................................... 201 290 4,875 633 672
Securities lending............................................ 202 22
------- --------- ------- ------- ------- -------
Total investment income......................................... 679 1,279 5,274 680 729 21,355
------- --------- ------- ------- ------- -------
EXPENSES
Investment advisory fee....................................... 292 2,410 1,655 279 343 1,319
Auditors fees................................................. 2 26 19 3 2 43
Custodian fees................................................ 79 89 60 34 59 114
Fidelity bond fees............................................ 1
Legal fees.................................................... 2 18 12 2 2 29
Printing & mailing fees....................................... 2 135 85 8 54 187
Trustees' fees................................................ 1 7 5 1 1 11
Other fees.................................................... 2 2 5
------- --------- ------- ------- ------- -------
Total expenses.................................................. 378 2,687 1,838 327 461 1,709
Less expenses reimbursed...................................... (59) (11) (80)
------- --------- ------- ------- ------- -------
Net expenses.................................................... 319 2,687 1,838 316 381 1,709
------- --------- ------- ------- ------- -------
Net investment income (loss).................................... 360 (1,408) 3,436 364 348 19,646
------- --------- ------- ------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments.................................................. (464) (183,155) 4,078 (758) (1,103)
Financial futures contracts.................................. (124) (214) (166)
Change in unrealized appreciation (depreciation) on:
Investments.................................................. (1,686) 36,046 (4,226) (1,422) (2,540)
Financial futures contracts.................................. (3) (11)
Translation of assets and liabilities in foreign currencies.. 29
------- --------- ------- ------- ------- -------
Net realized and unrealized gain (loss)......................... (2,245) (147,109) (148) (2,397) (3,820)
------- --------- ------- ------- ------- -------
Net increase (decrease) in net assets resulting from operations. $(1,885) $(148,517) $ 3,288 $(2,033) $(3,472) $19,646
======= ========= ======= ======= ======= =======
Small/Mid Cap Bond
Growth Index
------------- ------
INVESTMENT INCOME
Interest...................................................... $ 247 $5,442
Dividends..................................................... 537
Securities lending............................................ 106 43
------- ------
Total investment income......................................... 890 5,485
------- ------
EXPENSES
Investment advisory fee....................................... 1,403 136
Auditors fees................................................. 15 7
Custodian fees................................................ 67 57
Fidelity bond fees............................................
Legal fees.................................................... 10 5
Printing & mailing fees....................................... 89 12
Trustees' fees................................................ 4 2
Other fees.................................................... 2 1
------- ------
Total expenses.................................................. 1,590 220
Less expenses reimbursed...................................... (4)
------- ------
Net expenses.................................................... 1,586 220
------- ------
Net investment income (loss).................................... (696) 5,265
------- ------
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments.................................................. (4,700) 759
Financial futures contracts..................................
Change in unrealized appreciation (depreciation) on:
Investments.................................................. 9,988 195
Financial futures contracts..................................
Translation of assets and liabilities in foreign currencies..
------- ------
Net realized and unrealized gain (loss)......................... 5,288 954
------- ------
Net increase (decrease) in net assets resulting from operations. $ 4,592 $6,219
======= ======
See notes to financial statements.
38
STATEMENT OF OPERATIONS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
Large Cap Small/Mid Cap Small Cap Real Estate Growth &
Aggressive Growth CORE Value Equity Income
----------------- ------------- --------- ----------- ---------
INVESTMENT INCOME
Interest...................................................... $ 49 $ 32 $ 114 $ 139 $ 1,475
Dividends..................................................... 224 357 1,015 9,310 31,293
Securities lending............................................ 12 224
------- ----- ------ ------- ---------
Total investment income......................................... 285 389 1,129 9,449 32,992
------- ----- ------ ------- ---------
EXPENSES
Investment advisory fee....................................... 272 219 559 1,556 18,378
Auditors fees................................................. 3 2 4 13 242
Custodian fees................................................ 51 87 53 61 684
Fidelity bond fees............................................ 4
Legal fees.................................................... 2 1 3 9 162
Printing & mailing fees....................................... 4 4 14 32 195
Trustees' fees................................................ 1 1 4 62
Other fees.................................................... 1 1 1 19
------- ----- ------ ------- ---------
Total expenses.................................................. 333 315 634 1,676 19,746
Less expenses reimbursed...................................... (29) (69) (16)
------- ----- ------ ------- ---------
Net expenses.................................................... 304 246 618 1,676 19,746
------- ----- ------ ------- ---------
Net investment income (loss).................................... (19) 143 511 7,773 13,246
------- ----- ------ ------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments.................................................. (6,465) (156) 840 5,122 (453,534)
Financial futures contracts.................................. 66 (19)
Foreign currency transactions................................ 1
Change in unrealized appreciation (depreciation) on:
Investments.................................................. 2,147 854 7,842 (3,409) (51,250)
Financial futures contracts.................................. (32) 22 (1)
Translation of assets and liabilities in foreign currencies..
------- ----- ------ ------- ---------
Net realized and unrealized gain (loss)......................... (4,318) 732 8,685 1,713 (504,784)
------- ----- ------ ------- ---------
Net increase (decrease) in net assets resulting from operations. $(4,337) $ 875 $9,196 $ 9,486 $(491,538)
======= ===== ====== ======= =========
Short-Term Small Cap
Managed Bond Equity
--------- ---------- ---------
INVESTMENT INCOME
Interest...................................................... $ 53,393 $6,660 $ 87
Dividends..................................................... 22,227 591
Securities lending............................................ 470 69 56
--------- ------ --------
Total investment income......................................... 76,090 6,729 734
--------- ------ --------
EXPENSES
Investment advisory fee....................................... 18,129 468 619
Auditors fees................................................. 235 9 6
Custodian fees................................................ 752 36 62
Fidelity bond fees............................................ 4
Legal fees.................................................... 158 6 4
Printing & mailing fees....................................... 217 42 5
Trustees' fees................................................ 61 3 1
Other fees.................................................... 23 2 1
--------- ------ --------
Total expenses.................................................. 19,579 566 698
Less expenses reimbursed...................................... (8)
--------- ------ --------
Net expenses.................................................... 19,579 566 690
--------- ------ --------
Net investment income (loss).................................... 56,511 6,163 44
--------- ------ --------
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments.................................................. (112,925) 872 (11,331)
Financial futures contracts.................................. 1,701
Foreign currency transactions................................ 8,243
Change in unrealized appreciation (depreciation) on:
Investments.................................................. (42,653) 1,584 7,970
Financial futures contracts.................................. (1,645)
Translation of assets and liabilities in foreign currencies.. 3,993
--------- ------ --------
Net realized and unrealized gain (loss)......................... (143,286) 2,456 (3,361)
--------- ------ --------
Net increase (decrease) in net assets resulting from operations. $ (86,775) $8,619 $ (3,317)
========= ====== ========
See notes to financial statements.
39
STATEMENT OF OPERATIONS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
International Equity High Yield Global
Opportunities Index Bond Bond
------------- -------- ---------- -------
INVESTMENT INCOME
Interest...................................................... $ 118 $ 643 $ 4,164 $ 2,843
Dividends..................................................... 1,327 6,527 11
Securities lending............................................ 94 14
-------- -------- ------- -------
Total investment income......................................... 1,539 7,170 4,175 2,857
-------- -------- ------- -------
EXPENSES
Investment advisory fee....................................... 844 684 260 519
Auditors fees................................................. 8 44 3 5
Custodian fees................................................ 191 188 46 52
Fidelity bond fees............................................ 1
Legal fees.................................................... 6 29 2 4
Printing & mailing fees....................................... 26 79 23
Trustees' fees................................................ 2 11 1 2
Other fees.................................................... 4 10 1 1
-------- -------- ------- -------
Total expenses.................................................. 1,081 1,046 336 583
Less expenses reimbursed...................................... (143) (38) (2)
-------- -------- ------- -------
Net expenses.................................................... 938 1,046 298 581
-------- -------- ------- -------
Net investment income (loss).................................... 601 6,124 3,877 2,276
-------- -------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments.................................................. (9,027) 14,886 (2,487) 1,189
Financial futures contracts.................................. (3,137)
Foreign currency transactions................................ (162) (1,568)
Change in unrealized appreciation (depreciation) on:
Investments.................................................. (14,518) (81,314) (1,683) (2,970)
Financial futures contracts.................................. 670
Translation of assets and liabilities in foreign currencies.. 6 99
-------- -------- ------- -------
Net realized and unrealized gain (loss)......................... (23,701) (68,895) (4,170) (3,250)
-------- -------- ------- -------
Net increase (decrease) in net assets resulting from operations. $(23,100) $(62,771) $ (293) $ (974)
======== ======== ======= =======
See notes to financial statements.
40
STATEMENT OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(000's Omitted)
Large Cap Growth Fundamental Growth
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 1,985 $ 1,410 $ (169) $ (109)
Net realized gain (loss).......................................... (170,555) 101,421 (20,009) 2,219
Change in net unrealized appreciation (depreciation) of
Investments...................................................... (26,354) (356,204) 4,341 (8,121)
---------- ---------- -------- --------
Net increase (decrease) in net assets resulting from operations.. (194,924) (253,373) (15,837) (6,011)
Distributions to shareholders from:
Net investment income............................................. (1,518) (2,000)
In excess of net investment income................................
Realized gains.................................................... (137,737) (2,478)
In excess of realized gain........................................ (40,230) (2,097)
Capital paid-in................................................... (3,418) (111)
---------- ---------- -------- --------
Decrease in net assets resulting from distributions.............. (1,518) (183,385) (4,686)
From fund share transactions:
Proceeds from shares sold......................................... 122,592 206,257 15,212 76,255
Shares issued in reorganization................................... 4,720
Distributions reinvested.......................................... 1,518 183,384 4,686
Payment for shares redeemed....................................... (303,540) (188,569) (12,312) (33,305)
---------- ---------- -------- --------
Increase (decrease) in net assets from fund share transactions... (179,430) 201,072 7,620 47,636
---------- ---------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS............................... (375,872) (235,686) (8,217) 36,939
NET ASSETS
Beginning of Period............................................... 1,146,787 1,382,473 46,114 9,175
---------- ---------- -------- --------
End of Period..................................................... $ 770,915 $1,146,787 $ 37,897 $ 46,114
========== ========== ======== ========
Analysis of fund share transactions:
Sold.............................................................. 7,744 7,547 1,669 4,670
Issued in reorganization.......................................... 554
Reinvested........................................................ 102 9,625 383
Redeemed.......................................................... (18,966) (7,033) (1,440) (2,005)
---------- ---------- -------- --------
Net increase (decrease) in fund shares outstanding.................. (11,120) 10,139 783 3,048
========== ========== ======== ========
Active Bond Emerging Markets Equity
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 50,779 $ 57,674 $ 216 $ (120)
Net realized gain (loss).......................................... 15,343 (11,679) (13,346) (614)
Change in net unrealized appreciation (depreciation) of
Investments...................................................... (4,949) 36,028 11,780 (20,977)
--------- --------- -------- --------
Net increase (decrease) in net assets resulting from operations.. 61,173 82,023 (1,350) (21,711)
Distributions to shareholders from:
Net investment income............................................. (51,604) (53,480)
In excess of net investment income................................
Realized gains.................................................... (2,658)
In excess of realized gain........................................
Capital paid-in................................................... (65) (47)
--------- --------- -------- --------
Decrease in net assets resulting from distributions.............. (51,604) (53,480) (65) (2,705)
From fund share transactions:
Proceeds from shares sold......................................... 193,838 95,188 36,173 59,279
Shares issued in reorganization................................... 77,902
Distributions reinvested.......................................... 51,604 53,480 65 2,705
Payment for shares redeemed....................................... (227,698) (185,198) (36,877) (39,154)
--------- --------- -------- --------
Increase (decrease) in net assets from fund share transactions... 95,646 (36,530) (639) 22,830
--------- --------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS............................... 105,215 (7,987) (2,054) (1,586)
NET ASSETS
Beginning of Period............................................... 842,299 850,286 31,010 32,596
--------- --------- -------- --------
End of Period..................................................... $ 947,514 $ 842,299 $ 28,956 $ 31,010
========= ========= ======== ========
Analysis of fund share transactions:
Sold.............................................................. 20,141 10,355 5,789 5,177
Issued in reorganization.......................................... 8,180
Reinvested........................................................ 5,380 5,823 12 408
Redeemed.......................................................... (23,719) (20,181) (5,933) (3,614)
--------- --------- -------- --------
Net increase (decrease) in fund shares outstanding.................. 9,982 (4,003) (132) 1,971
========= ========= ======== ========
See notes to financial statements.
41
STATEMENT OF CHANGES IN NET ASSETS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(000's Omitted)
International Equity Index International Equity
------------------------- ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 2,559 $ 2,860 $ 95 $ 74
Net realized gain (loss).......................................... (7,738) 6,657 (4,240) 454
Change in net unrealized appreciation (depreciation) of
Investments...................................................... (31,880) (51,585) (694) (2,697)
-------- -------- ------- -------
Net increase (decrease) in net assets resulting from operations.. (37,059) (42,068) (4,839) (2,169)
Distributions to shareholders from:
Net investment income............................................. (1,958) (2,257) (94) (47)
In excess of net investment income................................
Realized gains.................................................... (7,138) (471)
In excess of realized gain........................................ (58)
Capital paid-in................................................... (594) (916) (24)
-------- -------- ------- -------
Decrease in net assets resulting from distributions.............. (2,552) (10,311) (118) (576)
From fund share transactions:
Proceeds from shares sold......................................... 33,664 61,181 25,519 13,293
Shares issued in reorganization................................... 1,981
Distributions reinvested.......................................... 2,552 10,313 118 576
Payment for shares redeemed....................................... (69,597) (68,120) (8,462) (7,838)
-------- -------- ------- -------
Increase (decrease) in net assets from fund share transactions... (33,381) 3,374 19,156 6,031
-------- -------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS............................... (72,992) (49,005) 14,199 3,286
NET ASSETS
Beginning of Period............................................... 195,012 244,017 15,716 12,430
-------- -------- ------- -------
End of Period..................................................... $122,020 $195,012 $29,915 $15,716
======== ======== ======= =======
Analysis of fund share transactions:
Sold.............................................................. 2,623 3,450 3,048 1,223
Issued in reorganization.......................................... 268
Reinvested........................................................ 190 651 14 59
Redeemed.......................................................... (5,375) (3,854) (963) (727)
-------- -------- ------- -------
Net increase (decrease) in fund shares outstanding.................. (2,562) 247 2,367 555
======== ======== ======= =======
Small Cap Growth Health Sciences
------------------------ ---------------
Period from
Year Ended Year Ended May 1, 2001 (*)
December 31, December 31, to December 31,
2001 2000 2001
------------ ------------ ---------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ (1,022) $ (1,308) $ (26)
Net realized gain (loss).......................................... (40,555) (9,498) (284)
Change in net unrealized appreciation (depreciation) of
Investments...................................................... 11,615 (67,925) (169)
--------- --------- -------
Net increase (decrease) in net assets resulting from operations.. (29,962) (78,731) (479)
Distributions to shareholders from:
Net investment income.............................................
In excess of net investment income................................
Realized gains.................................................... (1,933)
In excess of realized gain........................................
Capital paid-in................................................... (20,976) (16)
--------- --------- -------
Decrease in net assets resulting from distributions.............. (22,909) (16)
From fund share transactions:
Proceeds from shares sold......................................... 81,975 239,410 30,688
Shares issued in reorganization................................... 10,743
Distributions reinvested.......................................... 22,968 16
Payment for shares redeemed....................................... (107,897) (105,766) (336)
--------- --------- -------
Increase (decrease) in net assets from fund share transactions... (15,179) 156,612 30,368
--------- --------- -------
NET INCREASE (DECREASE) IN NET ASSETS............................... (45,141) 54,972 29,873
NET ASSETS
Beginning of Period............................................... 234,542 179,570
--------- --------- -------
End of Period..................................................... $ 189,401 $ 234,542 $29,873
========= ========= =======
Analysis of fund share transactions:
Sold.............................................................. 7,185 11,984 3,079
Issued in reorganization.......................................... 904
Reinvested........................................................ 1,788 2
Redeemed.......................................................... (9,410) (5,757) (35)
--------- --------- -------
Net increase (decrease) in fund shares outstanding.................. (1,321) 8,015 3,046
========= ========= =======
(*) Commencement of operations.
See notes to financial statements.
42
STATEMENT OF CHANGES IN NET ASSETS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(000's Omitted)
Global Balanced Mid Cap Growth
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 360 $ 688 $ (1,408) $ (2,311)
Net realized gain (loss).......................................... (588) (789) (183,155) (7,215)
Change in net unrealized appreciation (depreciation) of
Investments...................................................... (1,657) (2,738) 36,046 (229,686)
------- ------- --------- ---------
Net increase (decrease) in net assets resulting from operations.. (1,885) (2,839) (148,517) (239,212)
Distributions to shareholders from:
Net investment income............................................. (355) (703)
In excess of net investment income................................
Realized gains.................................................... (41) (8,563)
In excess of realized gain........................................ (283) (33,799)
Capital paid-in................................................... (355) (22,185)
------- ------- --------- ---------
Decrease in net assets resulting from distributions.............. (355) (1,382) (64,547)
From fund share transactions:
Proceeds from shares sold......................................... 13,556 8,360 136,156 311,599
Shares issued in reorganization...................................
Distributions reinvested.......................................... 355 1,382 64,547
Payment for shares redeemed....................................... (8,908) (8,571) (135,728) (131,336)
------- ------- --------- ---------
Increase (decrease) in net assets from fund share transactions... 5,003 1,171 428 244,810
------- ------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS............................... 2,763 (3,050) (148,089) (58,949)
NET ASSETS
Beginning of Period............................................... 28,527 31,577 393,988 452,937
------- ------- --------- ---------
End of Period..................................................... $31,290 $28,527 $ 245,899 $ 393,988
======= ======= ========= =========
Analysis of fund share transactions:
Sold.............................................................. 1,552 848 11,975 10,835
Issued in reorganization..........................................
Reinvested........................................................ 40 145 4,228
Redeemed.......................................................... (1,016) (867) (12,237) (5,305)
------- ------- --------- ---------
Net increase (decrease) in fund shares outstanding.................. 576 126 (262) 9,758
======= ======= ========= =========
Large Cap Value Large Cap Value CORE
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 3,436 $ 3,416 $ 364 $ 168
Net realized gain (loss).......................................... 4,078 7,226 (972) 79
Change in net unrealized appreciation (depreciation) of
Investments...................................................... (4,226) 11,967 (1,425) 619
-------- -------- ------- -------
Net increase (decrease) in net assets resulting from operations.. 3,288 22,609 (2,033) 866
Distributions to shareholders from:
Net investment income............................................. (3,428) (3,459) (364) (169)
In excess of net investment income................................ (6)
Realized gains.................................................... (3,273) (7,200) (93)
In excess of realized gain........................................ (131) (59)
Capital paid-in................................................... (90) (14)
-------- -------- ------- -------
Decrease in net assets resulting from distributions.............. (6,701) (10,886) (364) (335)
From fund share transactions:
Proceeds from shares sold......................................... 143,863 73,820 41,157 11,275
Shares issued in reorganization................................... 6,577
Distributions reinvested.......................................... 6,701 10,886 364 335
Payment for shares redeemed....................................... (91,040) (47,743) (3,033) (348)
-------- -------- ------- -------
Increase (decrease) in net assets from fund share transactions... 59,524 36,963 45,065 11,262
-------- -------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS............................... 56,111 48,686 42,668 11,793
NET ASSETS
Beginning of Period............................................... 204,535 155,849 18,164 6,371
-------- -------- ------- -------
End of Period..................................................... $260,646 $204,535 $60,832 $18,164
======== ======== ======= =======
Analysis of fund share transactions:
Sold.............................................................. 10,119 5,462 4,056 1,118
Issued in reorganization.......................................... 673
Reinvested........................................................ 473 780 37 33
Redeemed.......................................................... (6,403) (3,569) (323) (35)
-------- -------- ------- -------
Net increase (decrease) in fund shares outstanding.................. 4,189 2,673 4,443 1,116
======== ======== ======= =======
See notes to financial statements.
43
STATEMENT OF CHANGES IN NET ASSETS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(000's Omitted)
Large/Mid Cap Value Money Market
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 348 $ 90 $ 19,646 $ 24,827
Net realized gain (loss).......................................... (1,269) 103
Change in net unrealized appreciation (depreciation) of
Investments...................................................... (2,551) 1,310
-------- ------- --------- ---------
Net increase (decrease) in net assets resulting from operations.. (3,472) 1,503 19,646 24,827
Distributions to shareholders from:
Net investment income............................................. (348) (91) (19,646) (25,112)
In excess of net investment income................................
Realized gains.................................................... (106)
In excess of realized gain........................................ (71)
Capital paid-in...................................................
-------- ------- --------- ---------
Decrease in net assets resulting from distributions.............. (348) (268) (19,646) (25,112)
Capital contributions 284
From fund share transactions:.......................................
Proceeds from shares sold......................................... 58,803 8,712 808,300 582,795
Shares issued in reorganization................................... 102,164 130,550
Distributions reinvested.......................................... 348 268 19,646 25,121
Payment for shares redeemed....................................... (11,513) (588) (709,833) (562,297)
-------- ------- --------- ---------
Increase (decrease) in net assets from fund share transactions... 149,802 8,392 248,663 45,619
-------- ------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS............................... 145,982 9,627 248,663 45,618
NET ASSETS
Beginning of Period............................................... 15,728 6,101 496,853 451,235
-------- ------- --------- ---------
End of Period..................................................... $161,710 $15,728 $ 745,516 $ 496,853
======== ======= ========= =========
Analysis of fund share transactions:
Sold.............................................................. 5,182 806 808,300 58,279
Issued in 10 for 1 stock split.................................... 447,168
Issued in reorganization.......................................... 9,640 130,550
Reinvested........................................................ 32 24 19,646 2,512
Redeemed.......................................................... (1,049) (56) (709,833) (56,230)
-------- ------- --------- ---------
Net increase (decrease) in fund shares outstanding.................. 13,805 774 695,831 4,561
======== ======= ========= =========
Small/Mid Cap Growth Bond Index
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ (696) $ (366) $ 5,265 $ 3,295
Net realized gain (loss).......................................... (4,700) 18,384 759 (532)
Change in net unrealized appreciation (depreciation) of
Investments...................................................... 9,988 (2,257) 195 2,964
-------- -------- -------- --------
Net increase (decrease) in net assets resulting from operations.. 4,592 15,761 6,219 5,727
Distributions to shareholders from:
Net investment income............................................. (5,371) (3,317)
In excess of net investment income................................
Realized gains.................................................... (17,683) (207)
In excess of realized gain........................................ (1,947)
Capital paid-in...................................................
-------- -------- -------- --------
Decrease in net assets resulting from distributions.............. (19,630) (5,578) (3,317)
Capital contributions
From fund share transactions:.......................................
Proceeds from shares sold......................................... 64,594 35,984 123,885 45,465
Shares issued in reorganization...................................
Distributions reinvested.......................................... 19,630 5,578 1,488
Payment for shares redeemed....................................... (73,964) (43,666) (65,514) (23,031)
-------- -------- -------- --------
Increase (decrease) in net assets from fund share transactions... (9,370) 11,948 63,949 23,922
-------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS............................... (4,778) 8,079 64,590 26,332
NET ASSETS
Beginning of Period............................................... 190,010 181,931 64,768 38,436
-------- -------- -------- --------
End of Period..................................................... $185,232 $190,010 $129,358 $ 64,768
======== ======== ======== ========
Analysis of fund share transactions:
Sold.............................................................. 4,850 2,392 12,513 4,808
Issued in 10 for 1 stock split....................................
Issued in reorganization..........................................
Reinvested........................................................ 1,474 563 158
Redeemed.......................................................... (5,571) (2,963) (6,641) (2,443)
-------- -------- -------- --------
Net increase (decrease) in fund shares outstanding.................. (721) 903 6,435 2,523
======== ======== ======== ========
See notes to financial statements.
44
STATEMENT OF CHANGES IN NET ASSETS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(000's Omitted)
Large Cap Aggressive Growth Small/Mid Cap CORE
-------------------------- ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ (19) $ (88) $ 143 $ 91
Net realized gain (loss).......................................... (6,465) (648) (90) 669
Change in net unrealized appreciation (depreciation) of
Investments...................................................... 2,147 (5,205) 822 (536)
-------- ------- -------- -------
Net increase (decrease) in net assets resulting from operations.. (4,337) (5,941) 875 224
Distributions to shareholders from:
Net investment income............................................. (143) (90)
In excess of net investment income................................
Realized gains.................................................... (28) (671)
In excess of realized gain........................................ (168) (102)
Capital paid-in................................................... (284) (53)
-------- ------- -------- -------
Decrease in net assets resulting from distributions.............. (480) (143) (916)
From fund share transactions:
Proceeds from shares sold......................................... 31,123 24,586 36,196 22,514
Shares issued in reorganization...................................
Distributions reinvested.......................................... 481 143 669
Payment for shares redeemed....................................... (13,292) (7,476) (12,261) (9,103)
-------- ------- -------- -------
Increase (decrease) in net assets from fund share transactions... 17,831 17,591 24,078 14,080
-------- ------- -------- -------
NET INCREASE (DECREASE) IN NET ASSETS............................... 13,494 11,170 24,810 13,388
NET ASSETS
Beginning of Period............................................... 26,244 15,074 21,636 8,248
-------- ------- -------- -------
End of Period..................................................... $ 39,738 $26,244 $ 46,446 $21,636
======== ======= ======== =======
Analysis of fund share transactions:
Sold.............................................................. 3,742 2,136 3,812 2,174
Issued in reorganization..........................................
Reinvested........................................................ 51 15 70
Redeemed.......................................................... (1,605) (692) (1,300) (880)
-------- ------- -------- -------
Net increase (decrease) in fund shares outstanding.................. 2,137 1,495 2,527 1,364
======== ======= ======== =======
Small Cap Value Real Estate Equity
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 511 $ 18 $ 7,773 $ 8,456
Net realized gain (loss).......................................... 821 3,781 5,123 4,057
Change in net unrealized appreciation (depreciation) of
Investments...................................................... 7,864 (223) (3,410) 25,634
-------- ------- --------- --------
Net increase (decrease) in net assets resulting from operations.. 9,196 3,576 9,486 38,147
Distributions to shareholders from:
Net investment income............................................. (510) (17) (6,732) (8,456)
In excess of net investment income................................ (404)
Realized gains.................................................... (564) (3,779) (4,879) (649)
In excess of realized gain........................................ (3,328)
Capital paid-in................................................... (1,440)
-------- ------- --------- --------
Decrease in net assets resulting from distributions.............. (1,074) (3,796) (11,611) (14,277)
From fund share transactions:
Proceeds from shares sold......................................... 92,515 21,624 73,008 51,873
Shares issued in reorganization...................................
Distributions reinvested.......................................... 1,074 3,796 11,611 14,277
Payment for shares redeemed....................................... (27,923) (1,334) (77,652) (57,423)
-------- ------- --------- --------
Increase (decrease) in net assets from fund share transactions... 65,666 24,086 6,967 8,727
-------- ------- --------- --------
NET INCREASE (DECREASE) IN NET ASSETS............................... 73,788 23,866 4,842 32,597
NET ASSETS
Beginning of Period............................................... 29,436 5,570 158,811 126,214
-------- ------- --------- --------
End of Period..................................................... $103,224 $29,436 $ 163,653 $158,811
======== ======= ========= ========
Analysis of fund share transactions:
Sold.............................................................. 7,099 1,733 5,313 4,031
Issued in reorganization..........................................
Reinvested........................................................ 80 339 852 1,085
Redeemed.......................................................... (2,193) (107) (5,701) (4,499)
-------- ------- --------- --------
Net increase (decrease) in fund shares outstanding.................. 4,986 1,965 464 617
======== ======= ========= ========
See notes to financial statements.
45
STATEMENT OF CHANGES IN NET ASSETS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(000's Omitted)
Growth & Income Managed
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 13,246 $ 32,578 $ 56,511 $ 91,310
Net realized gain (loss).......................................... (453,534) 445,349 (102,981) 237,169
Change in net unrealized appreciation (depreciation) of
investments...................................................... (51,250) (990,353) (40,305) (328,984)
---------- ---------- ----------- ----------
Net increase (decrease) in net assets resulting from operations.. (491,538) (512,426) (86,775) (505)
Distributions to shareholders from:
Net investment income............................................. (13,030) (33,412) (57,251) (93,117)
In excess of net investment income................................
Realized gains.................................................... (519,555) (13,282) (235,437)
In excess of realized gain........................................ (25,745)
Capital paid-in................................................... (44,762)
---------- ---------- ----------- ----------
Decrease in net assets resulting from distributions.............. (13,030) (623,474) (70,533) (328,554)
From fund share transactions:
Proceeds from shares sold......................................... 311,376 110,896 704,451 66,759
Shares issued in reorganization................................... 59,218 16,164
Distributions reinvested.......................................... 13,030 623,473 70,533 328,531
Payment for shares redeemed....................................... (727,725) (492,322) (1,102,931) (501,356)
---------- ---------- ----------- ----------
Increase (decrease) in net assets from fund share transactions... (344,101) 242,047 (311,783) (106,066)
---------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS............................... (848,669) (893,853) (469,091) (435,125)
NET ASSETS
Beginning of Period............................................... 3,324,988 4,218,841 2,995,794 3,430,919
---------- ---------- ----------- ----------
End of Period..................................................... $2,476,319 $3,324,988 $ 2,526,703 $2,995,794
========== ========== =========== ==========
Analysis of fund share transactions:
Sold.............................................................. 25,462 5,816 52,990 4,373
Issued in reorganization.......................................... 4,976 1,253
Reinvested........................................................ 1,064 43,333 5,344 23,203
Redeemed.......................................................... (58,433) (25,508) (83,108) (32,979)
---------- ---------- ----------- ----------
Net increase (decrease) in fund shares outstanding.................. (26,931) 23,641 (23,521) (5,403)
========== ========== =========== ==========
Short-Term Bond Small Cap Equity
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss)...................................... $ 6,163 $ 4,615 $ 44 $ 920
Net realized gain (loss).......................................... 872 (582) (11,331) 4,551
Change in net unrealized appreciation (depreciation) of
investments...................................................... 1,584 1,702 7,970 (12,268)
-------- -------- -------- --------
Net increase (decrease) in net assets resulting from operations.. 8,619 5,735 (3,317) (6,797)
Distributions to shareholders from:
Net investment income............................................. (6,318) (4,591) (42) (1,004)
In excess of net investment income................................
Realized gains.................................................... (990)
In excess of realized gain........................................ (1,431)
Capital paid-in................................................... (2,130)
-------- -------- -------- --------
Decrease in net assets resulting from distributions.............. (6,318) (4,591) (42) (5,555)
From fund share transactions:
Proceeds from shares sold......................................... 115,976 29,529 46,272 33,823
Shares issued in reorganization...................................
Distributions reinvested.......................................... 6,318 4,591 42 5,555
Payment for shares redeemed....................................... (55,254) (23,999) (41,793) (25,895)
-------- -------- -------- --------
Increase (decrease) in net assets from fund share transactions... 67,040 10,121 4,521 13,483
-------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS............................... 69,341 11,265 1,162 1,131
NET ASSETS
Beginning of Period............................................... 80,109 68,844 70,031 68,900
-------- -------- -------- --------
End of Period..................................................... $149,450 $ 80,109 $ 71,193 $ 70,031
======== ======== ======== ========
Analysis of fund share transactions:
Sold.............................................................. 11,522 3,035 5,345 3,114
Issued in reorganization..........................................
Reinvested........................................................ 628 472 4 614
Redeemed.......................................................... (5,491) (2,466) (4,912) (2,378)
-------- -------- -------- --------
Net increase (decrease) in fund shares outstanding.................. 6,659 1,041 437 1,350
======== ======== ======== ========
See notes to financial statements.
46
STATEMENT OF CHANGES IN NET ASSETS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(000's Omitted)
International Opportunities Equity Index
-------------------------- ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income............................................. $ 601 $ 465 $ 6,124 $ 5,723
Net realized gain (loss).......................................... (9,189) 4,855 11,749 18,724
Change in net unrealized appreciation (depreciation) of
investments...................................................... (14,512) (22,688) (80,644) (77,249)
--------- -------- --------- --------
Net increase (decrease) in net assets resulting from operations.. (23,100) (17,368) (62,771) (52,802)
Distributions to shareholders from:
Net investment income............................................. (455) (423) (6,122) (5,292)
In excess of net investment income................................
Realized gains.................................................... (4,722) (17,290) (20,438)
In excess of realized gain........................................ (390) (231)
Capital paid-in................................................... (246) (749) (555)
--------- -------- --------- --------
Decrease in net assets resulting from distributions.............. (701) (6,284) (23,412) (26,516)
From fund share transactions:
Proceeds from shares sold......................................... 96,153 81,609 278,829 226,311
Shares issued in reorganization................................... 22,528 15,141
Distributions reinvested.......................................... 701 6,285 23,412 26,516
Payment for shares redeemed....................................... (109,496) (46,530) (218,067) (99,146)
--------- -------- --------- --------
Increase (decrease) in net assets from fund share transactions... (12,642) 63,892 99,315 153,681
--------- -------- --------- --------
NET INCREASE (DECREASE) IN NET ASSETS............................... (36,443) 40,240 13,132 74,363
NET ASSETS
Beginning of Period............................................... 120,034 79,794 525,659 451,296
--------- -------- --------- --------
End of Period..................................................... $ 83,591 $120,034 $ 538,791 $525,659
========= ======== ========= ========
Analysis of fund share transactions:
Sold.............................................................. 9,857 5,776 17,585 11,361
Issued in reorganization.......................................... 1,947 1,009
Reinvested........................................................ 68 536 1,555 1,473
Redeemed.......................................................... (11,066) (3,390) (13,662) (5,101)
--------- -------- --------- --------
Net increase (decrease) in fund shares outstanding.................. (1,141) 4,869 6,487 7,733
========= ======== ========= ========
High Yield Bond Global Bond
------------------------ ------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income............................................. $ 3,877 $ 2,175 $ 2,276 $ 3,081
Net realized gain (loss).......................................... (2,487) (518) (379) (126)
Change in net unrealized appreciation (depreciation) of
investments...................................................... (1,683) (4,604) (2,871) 4,415
-------- -------- -------- --------
Net increase (decrease) in net assets resulting from operations.. (293) (2,947) (974) 7,370
Distributions to shareholders from:
Net investment income............................................. (3,490) (2,186) (2,242) (4,040)
In excess of net investment income................................
Realized gains....................................................
In excess of realized gain........................................
Capital paid-in...................................................
-------- -------- -------- --------
Decrease in net assets resulting from distributions.............. (3,490) (2,186) (2,242) (4,040)
From fund share transactions:
Proceeds from shares sold......................................... 85,962 22,157 28,530 11,709
Shares issued in reorganization...................................
Distributions reinvested.......................................... 3,490 2,227 2,242 4,046
Payment for shares redeemed....................................... (60,373) (13,194) (48,383) (21,603)
-------- -------- -------- --------
Increase (decrease) in net assets from fund share transactions... 29,079 11,190 (17,611) (5,848)
-------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS............................... 25,296 6,057 (20,827) (2,518)
NET ASSETS
Beginning of Period............................................... 25,978 19,921 68,473 70,991
-------- -------- -------- --------
End of Period..................................................... $ 51,274 $ 25,978 $ 47,646 $ 68,473
======== ======== ======== ========
Analysis of fund share transactions:
Sold.............................................................. 11,506 2,663 2,771 1,168
Issued in reorganization..........................................
Reinvested........................................................ 481 273 227 401
Redeemed.......................................................... (8,023) (1,610) (4,728) (2,176)
-------- -------- -------- --------
Net increase (decrease) in fund shares outstanding.................. 3,964 1,326 (1,730) (607)
======== ======== ======== ========
See notes to financial statements.
47
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Income from Investment Operations
--------------------------------------- -------------------------
Net Realized
Net Assets Net and Total Distribution Distribution
Value at Investment Unrealized From From Net From Net
Beginning Income Gain (Loss) Investment Investment Gains on
of Period Gain (Loss) on Investments(a) Operations Income Investments
---------- ----------- ----------------- ---------- ------------ ------------
Large Cap Growth
- ----------------
Year Ended December 31,
2001................... $18.89 $ 0.04 $(3.36) $(3.32) $(0.03) $ --
2000................... 27.33 0.03 (4.89) (4.86) (0.04) (2.69)
1999................... 26.19 0.09 6.03 6.12 (0.09) (4.89)
1998................... 20.82 0.14 8.05 8.19 (0.14) (2.68)
1997................... 17.49 0.17 5.21 5.38 (0.17) (1.88)
- ---------------------------------------------------------------------------------------------------------
Fundamental Growth
- ------------------
Year Ended December 31,
2001................... 12.52 (0.03) (4.01) (4.04) -- --
2000(e)................ 14.42 (0.02) (0.44) (0.46) -- (0.76)
Period from August 31, to
December 31, 1999(g).... 10.00 (0.02) 5.34 5.32 -- (0.90)
- ---------------------------------------------------------------------------------------------------------
Active Bond
- -----------
Year Ended December 31,
2001................... 9.44 0.58 0.11 0.69 (0.58) --
2000................... 9.12 0.64 0.28 0.92 (0.60) --
1999................... 9.92 0.67 (0.76) (0.09) (0.71) --
1998................... 9.95 0.69 0.11 0.80 (0.69) (0.14)
1997................... 9.77 0.71 0.24 0.95 (0.71) (0.06)
- ---------------------------------------------------------------------------------------------------------
Emerging Markets Equity
- -----------------------
Year Ended December 31,
2001................... 6.70 0.05 (0.29) (0.24) -- --
2000................... 12.26 (0.02) (4.91) (4.93) -- (0.62)
1999(k)................ 7.09 0.03 5.35 5.38 (0.01) (0.10)
Period from May 1, to
December 31, 1988(g).... 10.00 0.03 (2.91) (2.88) (0.02) --
- ---------------------------------------------------------------------------------------------------------
International Equity Index
- --------------------------
Year Ended December 31,
2001................... 15.39 0.22 (3.32) (3.10) (0.17) --
2000................... 19.64 0.23 (3.64) (3.41) (0.18) (0.59)
1999................... 15.56 0.21 4.51 4.72 (0.21) (0.38)
1998................... 15.20 0.23 2.91 3.14 (0.23) (2.55)
1997................... 16.83 0.13 (0.97) (0.84) (0.13) (0.66)
- ---------------------------------------------------------------------------------------------------------
Distribution in Distribution Net Assets
Excess of From Value at Total
Net Investment Capital Total Capital End Investment
Income/Gains Paid-in Distributions Contributions of Period Return(b)
--------------- ------------ ------------- ------------- ---------- ----------
Large Cap Growth
- ----------------
Year Ended December 31,
2001................... $ -- $ -- $(0.03) -- $15.54 (17.54)%
2000................... (0.78) (0.07) (3.58) -- 18.89 (17.89)%
1999................... -- -- (4.98) -- 27.33 24.07%
1998................... -- -- (2.82) -- 26.19 39.51%
1997................... -- -- (2.05) -- 20.82 30.89%
- -------------------------------------------------------------------------------------------------------------
Fundamental Growth
- ------------------
Year Ended December 31,
2001................... -- -- -- -- 8.48 (32.23)%
2000(e)................ (0.65) (0.03) (1.44) -- 12.52 (3.03)%
Period from August 31, to
December 31, 1999(g).... -- -- (0.90) -- 14.42 54.57%(c)
- -------------------------------------------------------------------------------------------------------------
Active Bond
- -----------
Year Ended December 31,
2001................... -- -- (0.58) -- 9.55 7.48%
2000................... -- -- (0.60) -- 9.44 10.45%
1999................... -- -- (0.71) -- 9.12 (0.94)%
1998................... -- -- (0.83) -- 9.92 8.23%
1997................... -- -- (0.77) -- 9.95 10.11%
- -------------------------------------------------------------------------------------------------------------
Emerging Markets Equity
- -----------------------
Year Ended December 31,
2001................... -- (0.02) (0.02) -- 6.44 (3.63)%
2000................... -- (0.01) (0.63) -- 6.70 (40.11)%
1999(k)................ (0.42) -- (0.53) 0.32 12.26 81.37%(l)
Period from May 1, to
December 31, 1988(g).... -- (0.01) (0.03) -- 7.09 (28.87)%(c)
- -------------------------------------------------------------------------------------------------------------
International Equity Index
- --------------------------
Year Ended December 31,
2001................... -- (0.05) (0.22) -- 12.07 (20.30)%
2000................... -- (0.07) (0.84) -- 15.39 (17.42)%
1999................... (0.05) -- (0.64) -- 19.64 30.87%
1998................... -- -- (2.78) -- 15.56 20.82%
1997................... -- -- (0.79) -- 15.20 (5.03)%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
----------------------------------------------------
Net
Operating Investment
Net Assets Expenses to Income (Loss) Portfolio
End of Period Average to Average Turnover
(000s Omitted) Net Assets Net Assets Rate
-------------- ----------- ------------- ---------
Large Cap Growth
- ----------------
Year Ended December 31,
2001................... $ 770,915 0.41% 0.23% 63.96%
2000................... 1,146,787 0.46% 0.10% 89.30%
1999................... 1,382,473 0.39% 0.33% 37.42%
1998................... 1,126,764 0.41% 0.59% 56.41%
1997................... 754,398 0.44% 0.86% 83.82%
- -----------------------------------------------------------------------------------
Fundamental Growth
- ------------------
Year Ended December 31,
2001................... 37,897 1.00%(f) (0.46)% 118.01%(5)
2000(e)................ 46,114 0.96%(f) (0.38)% 250.46%
Period from August 31, to
December 31, 1999(g).... 9,175 0.95%(d)(f) (0.55%)(d) 61.66%(c)
- -----------------------------------------------------------------------------------
Active Bond
- -----------
Year Ended December 31,
2001................... 947,514 0.67% 5.97%(11) 206.80%(5)
2000................... 842,299 0.41%(h) 6.98% 224.24%
1999................... 850,286 0.28% 6.97% 182.90%
1998................... 907,121 0.29% 6.84% 228.74%
1997................... 803,770 0.31% 7.18% 138.29%
- -----------------------------------------------------------------------------------
Emerging Markets Equity
- -----------------------
Year Ended December 31,
2001................... 28,956 1.40%(d)(j) 0.77% 120.72%
2000................... 31,010 1.32%(j) (0.28)% 103.90%
1999(k)................ 32,596 1.39%(j) 0.19% 196.32%
Period from May 1, to
December 31, 1988(g).... 7,310 1.55%(d)(j) 0.51%(d) 53.95%(c)
- -----------------------------------------------------------------------------------
International Equity Index
- --------------------------
Year Ended December 31,
2001................... 122,020 0.27%(m) 1.66% 8.31%
2000................... 195,012 0.28%(m) 1.40% 14.86%
1999................... 244,017 0.31%(m) 1.26% 19.01%
1998................... 173,137 0.56%(m) 1.45% 158.63%
1997................... 152,359 0.79% 0.78% 83.13%
- -----------------------------------------------------------------------------------
48
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Income from Investment Operations
--------------------------------------- -------------------------
Net Realized
Net Assets Net and Total Distribution Distribution
Value at Investment Unrealized From From Net From Net
Beginning Income Gain (Loss) Investment Investment Gains on
of Period Gain (Loss) on Investments(a) Operations Income Investments
---------- ----------- ----------------- ---------- ------------ ------------
International Equity
- --------------------
Year Ended December 31,
2001................... $ 9.85 $ 0.05 $ (2.29) $ (2.24) $(0.05) $ --
2000................... 11.95 0.06 (1.78) (1.72) (0.04) (0.30)
Period from August 31, to
December 31, 1999(g).... 10.00 0.01 2.12 2.13 (0.01) (0.17)
- ---------------------------------------------------------------------------------------------------------
Small Cap Growth
- ----------------
Year Ended December 31,
2001................... 13.47 (0.08) (1.62) (1.70) -- --
2000................... 19.12 (0.02) (4.16) (4.18) -- (0.12)
1999................... 12.99 (0.21) 9.06 8.85 -- (2.72)
1998................... 11.34 (0.05) 1.70 1.65 -- --
1997................... 9.93 (0.02) 1.44 1.42 -- --
- ---------------------------------------------------------------------------------------------------------
Health Sciences
- ---------------
Period from May 1, to
December 31, 2001(g).... 10.00 (0.00) (0.18) (0.18) (0.11) --
- ---------------------------------------------------------------------------------------------------------
Global Balanced
- ---------------
Year Ended December 31,
2001................... 9.27 0.11 (0.70) (0.59) -- --
2000(q)................ 10.71 0.23 (1.20) (0.97) (0.24) (0.01)
1999................... 11.12 0.29 0.25 0.54 (0.29) (0.44)
1998................... 10.11 0.34 1.44 1.78 (0.34) (0.42)
1997................... 10.39 0.33 (0.05) 0.28 (0.33) (0.22)
- ---------------------------------------------------------------------------------------------------------
Mid Cap Growth
- --------------
Year Ended December 31,
2001................... 15.60 (0.06) (5.70) (5.76) -- --
2000................... 29.22 (0.05) (10.49) (10.54) -- (0.41)
1999................... 15.12 (0.19) 17.70 17.51 -- (3.41)
1998................... 11.93 (0.09) 4.75 4.66 -- (1.32)
1997................... 10.22 (0.02) 1.73 1.71 -- --
- ---------------------------------------------------------------------------------------------------------
Distribution in Distribution Net Assets
Excess of From Value at Total
Net Investment Capital Total Capital End Investment
Income/Gains Paid-in Distributions Contributions of Period Return(b)
--------------- ------------ ------------- ------------- ---------- ----------
International Equity
- --------------------
Year Ended December 31,
2001................... $ -- $(0.01) $(0.06) $-- $ 7.55 (22.86)%
2000................... (0.04) -- (0.38) -- 9.85 (14.37)%
Period from August 31, to
December 31, 1999(g).... -- -- (0.18) -- 11.95 21.49%(c)
- -------------------------------------------------------------------------------------------------------------
Small Cap Growth
- ----------------
Year Ended December 31,
2001................... -- -- -- -- 11.77 (12.61)%
2000................... -- (1.35) (1.47) -- 13.47 (21.43)%
1999................... -- -- (2.72) -- 19.12 70.38%
1998................... -- -- -- -- 12.99 14.49%
1997................... -- (0.01) (0.01) -- 11.34 14.26%
- -------------------------------------------------------------------------------------------------------------
Health Sciences
- ---------------
Period from May 1, to
December 31, 2001(g).... -- (0.01) (0.01) -- 9.81 (1.85)%(c)
- -------------------------------------------------------------------------------------------------------------
Global Balanced
- ---------------
Year Ended December 31,
2001................... -- (0.11) (0.11) -- 8.57 (6.45)%
2000(q)................ (0.10) (0.12) (0.47) -- 9.27 (9.08)%
1999................... (0.16) (0.06) (0.95) -- 10.71 5.11%
1998................... -- (0.01) (0.77) -- 11.12 17.99%
1997................... -- (0.01) (0.56) -- 10.11 2.65%
- -------------------------------------------------------------------------------------------------------------
Mid Cap Growth
- --------------
Year Ended December 31,
2001................... -- -- -- -- 9.84 (36.93)%
2000................... (1.61) (1.06) (3.08) -- 15.60 (35.86)%
1999................... -- -- (3.41) -- 29.22 118.31%
1998................... -- (0.15) (1.47) -- 15.12 39.07%
1997................... -- -- -- -- 11.93 16.66%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
----------------------------------------------------
Net
Operating Investment
Net Assets Expenses to Income (Loss) Portfolio
End of Period Average to Average Turnover
(000s Omitted) Net Assets Net Assets Rate
-------------- ----------- ------------- ---------
International Equity
- --------------------
Year Ended December 31,
2001................... $ 29,915 1.16%(n) 0.46% 82.88%(5)
2000................... 15,716 1.10%(n) 0.53% 75.41%
Period from August 31, to
December 31, 1999(g).... 12,430 1.10%(d)(n) 0.21%(d) 26.76%(c)
- -----------------------------------------------------------------------------------
Small Cap Growth
- ----------------
Year Ended December 31,
2001................... 189,401 0.91%(o) (0.55)% 91.48%(5)
2000................... 234,542 0.82% (0.50)% 97.73%
1999................... 179,570 0.89% (0.70)% 113.11%
1998................... 74,849 1.00%(o) (0.65)% 101.16%
1997................... 48,761 1.00%(o) (0.28)% 86.23%
- -----------------------------------------------------------------------------------
Health Sciences
- ---------------
Period from May 1, to
December 31, 2001(g).... 29,873 1.10%(d)(i) (0.16)%(d) 37.76%(c)
- -----------------------------------------------------------------------------------
Global Balanced
- ---------------
Year Ended December 31,
2001................... 31,290 1.15%(p) 1.30%(12) 53.11%
2000(q)................ 28,527 0.98%(p) 2.32% 204.98%
1999................... 31,577 1.00%(p) 2.73% 131.21%
1998................... 30,416 1.10%(p) 3.20% 103.55%
1997................... 25,420 1.10%(p) 3.18% 81.04%
- -----------------------------------------------------------------------------------
Mid Cap Growth
- --------------
Year Ended December 31,
2001................... 245,899 0.94% (0.49)% 111.69%
2000................... 393,988 0.85% (0.43)% 140.94%
1999................... 452,937 0.93% (0.68)% 106.06%
1998................... 94,085 1.10%(r) (0.64)% 137.01%
1997................... 40,235 1.10%(r) (0.26)% 124.04%
- -----------------------------------------------------------------------------------
49
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Income from Investment Operations
--------------------------------------- -------------------------
Net Realized
Net Assets Net and Total Distribution Distribution
Value at Investment Unrealized From From Net From Net
Beginning Income Gain (Loss) Investment Investment Gains on
of Period Gain (Loss) on Investments(a) Operations Income Investments
---------- ----------- ----------------- ---------- ------------ ------------
Large Cap Value
- ---------------
Year Ended December 31,
2001................... $14.38 $ 0.22 $(0.05) $ 0.17 $(0.22) $(0.18)
2000................... 13.49 0.27 1.45 1.72 (0.28) (0.53)
1999................... 14.02 0.27 0.18 0.45 (0.27) (0.71)
1998................... 13.57 0.28 0.96 1.24 (0.28) (0.51)
1997................... 11.09 0.29 2.84 3.13 (0.29) (0.36)
- ---------------------------------------------------------------------------------------------------------
Large Cap Value CORE
- --------------------
Year Ended December 31,
2001................... 10.42 0.09 (0.58) (0.49) (0.09) --
2000................... 10.16 0.15 0.36 0.51 (0.15) (0.06)
Period from August 31, to
December 31, 1999(g).... 10.00 0.04 0.31 0.35 (0.03) (0.14)
- ---------------------------------------------------------------------------------------------------------
Large/Mid Cap Value
- -------------------
Year Ended December 31,
2001................... 11.57 0.10 (0.91) (0.81) (0.10) --
2000................... 10.42 0.09 1.30 1.39 (0.10) (0.08)
Period from August 31,
to December 31, 1999(g). 10.00 0.03 0.45 0.48 (0.03) (0.02)
- ---------------------------------------------------------------------------------------------------------
Money Market
- ------------
Year Ended December 31,
2001(10)............... 1.00 0.04 -- 0.04 (0.04) --
2000(10)............... 1.00 0.06 -- 0.06 (0.06) --
1999(10)............... 1.00 0.04 -- 0.04 (0.04) --
1998(10)............... 1.00 0.05 -- 0.05 (0.05) --
1997(10)............... 1.00 0.05 -- 0.05 (0.05) --
- ---------------------------------------------------------------------------------------------------------
Small/Mid Cap Growth
- --------------------
Year Ended December 31,
2001................... 13.70 (0.06) 0.45 0.39 -- --
2000................... 14.03 (0.02) 1.27 1.25 -- (1.43)
1999................... 15.94 (0.07) 0.74 0.67 -- (2.41)
1998................... 15.39 (0.02) 0.88 0.86 -- (0.31)
1997................... 16.52 0.01 0.56 0.57 (0.01) (1.69)
- ---------------------------------------------------------------------------------------------------------
Distribution in Distribution Net Assets
Excess of From Value at Total
Net Investment Capital Total Capital End Investment
Income/Gains Paid-in Distributions Contributions of Period Return(b)
--------------- ------------ ------------- ------------- ---------- ----------
Large Cap Value
- ---------------
Year Ended December 31,
2001................... $ -- $ -- $(0.40) $-- $14.15 1.25%
2000................... (0.01) (0.01) (0.83) -- 14.38 12.97%
1999................... -- -- (0.98) -- 13.49 3.28%
1998................... -- -- (0.79) -- 14.02 9.26%
1997................... -- -- (0.65) -- 13.57 28.56%
- -----------------------------------------------------------------------------------------------------------
Large Cap Value CORE
- --------------------
Year Ended December 31,
2001................... -- -- (0.09) -- 9.83 (4.75)%
2000................... (0.03) (0.01) (0.25) -- 10.42 5.12%
Period from August 31, to
December 31, 1999(g).... (0.01) (0.01) (0.19) -- 10.16 3.58%(c)
- -----------------------------------------------------------------------------------------------------------
Large/Mid Cap Value
- -------------------
Year Ended December 31,
2001................... -- -- (0.10) -- 10.66 (6.99)%
2000................... (0.06) -- (0.24) -- 11.57 13.41%
Period from August 31,
to December 31, 1999(g). (0.01) -- (0.06) -- 10.42 4.72%(c)
- -----------------------------------------------------------------------------------------------------------
Money Market
- ------------
Year Ended December 31,
2001(10)............... -- -- (0.04) -- 1.00 3.93%
2000(10)............... -- -- (0.06) -- 1.00 6.29%(u)
1999(10)............... -- -- (0.04) -- 1.00 5.05%
1998(10)............... -- -- (0.05) -- 1.00 5.40%
1997(10)............... -- -- (0.05) -- 1.00 5.38%
- -----------------------------------------------------------------------------------------------------------
Small/Mid Cap Growth
- --------------------
Year Ended December 31,
2001................... -- -- -- -- 14.09 2.83%
2000................... (0.15) -- (1.58) -- 13.70 9.25%
1999................... -- (0.17) (2.58) -- 14.03 5.15%
1998................... -- -- (0.31) -- 15.94 5.61%
1997................... -- -- (1.70) -- 15.39 3.44%
- -----------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
---------------------------------------------------
Net
Operating Investment
Net Assets Expenses to Income (Loss) Portfolio
End of Period Average to Average Turnover
(000s Omitted) Net Assets Net Assets Rate
-------------- ----------- ------------- ---------
Large Cap Value
- ---------------
Year Ended December 31,
2001................... $260,646 0.82% 1.54% 18.19%
2000................... 204,535 0.78% 2.04% 42.12%
1999................... 155,849 0.85% 1.88% 32.62%
1998................... 123,365 0.92% 2.08% 18.46%
1997................... 73,269 1.00%(18) 2.42% 19.21%
- ----------------------------------------------------------------------------------
Large Cap Value CORE
- --------------------
Year Ended December 31,
2001................... 60,832 0.85%(s) 0.98% 74.91%(5)
2000................... 18,164 0.85%(s) 1.54% 59.15%
Period from August 31, to
December 31, 1999(g).... 6,371 0.85%(d)(s) 1.13%(d) 30.90%(c)
- ----------------------------------------------------------------------------------
Large/Mid Cap Value
- -------------------
Year Ended December 31,
2001................... 161,710 0.99%(t) 0.91% 85.20%(5)
2000................... 15,728 1.05%(t) 0.97% 86.97%
Period from August 31,
to December 31, 1999(g). 6,101 1.05%(d)(t) 0.94%(d) 23.03%(c)
- ----------------------------------------------------------------------------------
Money Market
- ------------
Year Ended December 31,
2001(10)............... 745,516 0.32% 3.72% n/a
2000(10)............... 496,853 0.29% 6.05% n/a
1999(10)............... 451,235 0.31% 4.95% n/a
1998(10)............... 395,195 0.31% 5.29% n/a
1997(10)............... 229,443 0.33% 5.32% n/a
- ----------------------------------------------------------------------------------
Small/Mid Cap Growth
- --------------------
Year Ended December 31,
2001................... 185,232 0.91%(1) (0.40)% 113.73%
2000................... 190,010 0.85% (0.20)% 103.19%
1999................... 181,931 0.85% (0.27)% 172.58%
1998................... 193,332 0.89% (0.11)% 162.21%
1997................... 213,612 0.85% 0.09% 331.19%
- ----------------------------------------------------------------------------------
50
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Income from Investment Operations
--------------------------------------- -------------------------
Net Realized
Net Assets Net and Total Distribution Distribution
Value at Investment Unrealized From From Net From Net
Beginning Income Gain (Loss) Investment Investment Gains on
of Period Gain (Loss) on Investments(a) Operations Income Investments
---------- ----------- ----------------- ---------- ------------ ------------
Bond Index
- ----------
Year Ended December 31,
2001.................... $ 9.74 $ 0.57 $ 0.17 $ 0.74 $(0.58) $(0.01)
2000.................... 9.32 0.62 0.43 1.05 (0.63)
1999.................... 10.19 0.63 (0.89) (0.26) (0.61) --
Period from May 1, to
December 31, 1998 (g).... 10.00 0.42 0.29 0.71 (0.42) (0.10)
- ----------------------------------------------------------------------------------------------------------
Large Cap Aggressive Growth
- ---------------------------
Year Ended December 31,
2001.................... 9.52 0.01 (1.41) (1.40) -- --
2000.................... 11.94 (0.03) (2.21) (2.24) -- (0.01)
Period from August 31, to
December 31, 1999 (g).... 10.00 (0.01) 2.03 2.02 -- (0.08)
- ----------------------------------------------------------------------------------------------------------
Small/Mid Cap CORE
- ------------------
Year Ended December 31,
2001.................... 9.82 0.05 -- 0.05 (0.05) --
2000.................... 9.82 0.05 0.39 0.44 (0.05) (0.32)
1999.................... 9.02 0.02 1.77 1.79 (0.03) (0.96)
Period from May 1, to
December 31, 1998 (g).... 10.00 -- (0.98) (0.98) -- --
- ----------------------------------------------------------------------------------------------------------
Small Cap Value
- ---------------
Year Ended December 31,
2001.................... 11.70 0.09 2.14 2.23 (0.09) (0.08)
2000.................... 10.13 0.01 3.37 3.38 (0.01) (1.80)
Period from August 31, to
December 31, 1999 (g).... 10.00 -- 0.49 0.49 -- (0.36)
- ----------------------------------------------------------------------------------------------------------
Real Estate Equity
- ------------------
Year Ended December 31,
2001.................... 13.67 0.67 0.21 0.88 (0.58) (0.42)
2000 (k)................ 11.47 0.76 2.73 3.49 (0.76) (0.06)
1999.................... 12.46 0.78 (0.99) (0.21) (0.78) --
1998.................... 15.91 0.77 (3.38) (2.61) (0.70) (0.14)
1997.................... 14.64 0.77 1.68 2.45 (0.71) (0.41)
- ----------------------------------------------------------------------------------------------------------
Distribution in Distribution Net Assets
Excess of From Value at Total
Net Investment Capital Total Capital End Investment
Income/Gains Paid-in Distributions Contributions of Period Return(b)
--------------- ------------ ------------- ------------- ---------- ----------
Bond Index
- ----------
Year Ended December 31,
2001.................... -- $(0.59) -- $ 9.89 7.76%
2000.................... -- -- (0.63) -- 9.74 11.81%
1999.................... -- -- (0.61) -- 9.32 (2.57)%
Period from May 1, to
December 31, 1998 (g).... -- -- (0.52) -- 10.19 7.20%(c)
- --------------------------------------------------------------------------------------------------------------
Large Cap Aggressive Growth
- ---------------------------
Year Ended December 31,
2001.................... -- -- -- -- 8.12 (14.69)%
2000.................... $(0.06) $(0.11) (0.18) -- 9.52 (18.77)%
Period from August 31, to
December 31, 1999 (g).... -- -- (0.08) -- 11.94 20.18%(c)
- --------------------------------------------------------------------------------------------------------------
Small/Mid Cap CORE
- ------------------
Year Ended December 31,
2001.................... -- -- (0.05) -- 9.82 0.53%
2000.................... (0.05) (0.02) (0.44) -- 9.82 4.63%
1999.................... -- -- (0.99) -- 9.82 20.54%
Period from May 1, to
December 31, 1998 (g).... -- -- -- -- 9.02 (9.81)%(c)
- --------------------------------------------------------------------------------------------------------------
Small Cap Value
- ---------------
Year Ended December 31,
2001.................... -- -- (0.17) -- 13.76 19.10%
2000.................... -- -- (1.81) -- 11.70 34.19%
Period from August 31, to
December 31, 1999 (g).... -- -- (0.36) -- 10.13 5.08%(c)
- --------------------------------------------------------------------------------------------------------------
Real Estate Equity
- ------------------
Year Ended December 31,
2001.................... -- -- (1.00) -- 13.55 (6.61)%
2000 (k)................ (0.17) (0.30) (1.29) -- 13.67 31.29%
1999.................... -- -- (0.78) -- 11.47 (1.69)%
1998.................... -- -- (0.84) -- 12.46 (16.71)%
1997.................... -- (0.06) (1.18) -- 15.91 17.22%
- --------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
----------------------------------------------------
Net
Operating Investment
Net Assets Expenses to Income (Loss) Portfolio
End of Period Average to Average Turnover
(000s Omitted) Net Assets Net Assets Rate
-------------- ----------- ------------- ---------
Bond Index
- ----------
Year Ended December 31,
2001.................... $129,358 0.24% 5.77%(13) 68.70%
2000.................... 64,768 0.25%(v) 6.80% 40.46%
1999.................... 38,436 0.29%(v) 6.56% 17.06%
Period from May 1, to
December 31, 1998 (g).... 28,001 0.40%(d)(v) 6.17%(d) 21.09%(c)
- ------------------------------------------------------------------------------------
Large Cap Aggressive Growth
- ---------------------------
Year Ended December 31,
2001.................... 39,738 0.97%(w) (0.06)% 87.90%
2000.................... 26,244 1.00%(w) (0.37)% 75.97%
Period from August 31, to
December 31, 1999 (g).... 15,074 1.08%(d)(w) (0.39)%(d) 18.97%(c)
- ------------------------------------------------------------------------------------
Small/Mid Cap CORE
- ------------------
Year Ended December 31,
2001.................... 46,446 0.90%(x) 0.52% 96.88%
2000.................... 21,636 0.90%(x) 0.56% 94.78%
1999.................... 8,248 0.94%(x) 0.30% 109.12%
Period from May 1, to
December 31, 1998 (g).... 5,015 1.05%(d)(x) (0.01)%(d) 60.51%(c)
- ------------------------------------------------------------------------------------
Small Cap Value
- ---------------
Year Ended December 31,
2001.................... 103,224 1.05%(z) 0.87% 60.36%
2000.................... 29,436 1.05%(z) 0.13% 220.80%
Period from August 31, to
December 31, 1999 (g).... 5,570 1.05%(d)(z) (0.12)%(d) 51.97%(c)
- ------------------------------------------------------------------------------------
Real Estate Equity
- ------------------
Year Ended December 31,
2001.................... 163,653 1.07% 4.97% 29.07%
2000 (k)................ 158,811 0.76% 5.99% 58.81%
1999.................... 126,214 0.70% 6.38% 12.95%
1998.................... 152,789 0.69% 5.48% 22.69%
1997.................... 204,131 0.69% 5.12% 20.04%
- ------------------------------------------------------------------------------------
51
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Income from Investment Operations
--------------------------------------- -------------------------
Net Realized
Net Assets Net and Total Distribution Distribution
Value at Investment Unrealized From From Net From Net
Beginning Income Gain (Loss) Investment Investment Gains on
of Period Gain (Loss) on Investments(a) Operations Income Investments
---------- ----------- ----------------- ---------- ------------ ------------
Growth & Income
- ---------------
Year Ended December 31,
2001.................... $14.18 $0.06 $(2.25) $(2.19) $(0.06) --
2000 (e)................ 20.01 0.17 (2.77) (2.60) (0.17) (2.69)
1999.................... 19.49 0.20 2.88 3.08 (0.20) (2.36)
1998.................... 16.61 0.23 4.75 4.98 (0.23) (1.87)
1997.................... 14.65 0.27 4.07 4.34 (0.27) (2.11)
- ----------------------------------------------------------------------------------------------------------
Managed
- -------
Year Ended December 31,
2001.................... 13.82 0.28 (0.67) (0.39) (0.28) (0.07)
2000 (q)................ 15.45 0.44 (0.45) (0.01) (0.44) (1.18)
1999.................... 15.64 0.44 0.94 1.38 (0.43) (1.14)
1998.................... 14.35 0.46 2.43 2.89 (0.46) (1.09)
1997.................... 13.35 0.59 1.86 2.45 (0.59) (0.78)
- ----------------------------------------------------------------------------------------------------------
Short-Term Bond
- ---------------
Year Ended December 31,
2001.................... 9.86 0.52 0.26 0.78 (0.53) --
2000.................... 9.72 0.61 0.14 0.75 (0.61) --
1999.................... 10.05 0.61 (0.33) 0.28 (0.61) --
1998.................... 10.08 0.61 (0.03) 0.58 (0.61) --
1997.................... 10.05 0.59 0.03 0.62 (0.59) --
- ----------------------------------------------------------------------------------------------------------
Small Cap Equity
- ----------------
Year Ended December 31,
2001.................... 9.14 0.01 (0.35) (0.34) (0.01) --
2000 (q)................ 10.92 0.14 (1.13) (0.99) (0.15) (0.14)
1999.................... 11.59 0.09 (0.50) (0.41) (0.07) (0.01)
1998.................... 12.40 0.07 (0.81) (0.74) (0.07) --
1997.................... 10.73 0.08 2.66 2.74 (0.08) (0.99)
- ----------------------------------------------------------------------------------------------------------
International Opportunities
- ---------------------------
Year Ended December 31,
2001.................... 11.85 0.06 (2.53) (2.47) (0.05) --
2000 (4)................ 15.17 0.07 (2.57) (2.50) (0.06) (0.62)
1999.................... 12.21 0.10 3.95 4.05 (0.11) (0.94)
1998.................... 10.63 0.11 1.57 1.68 (0.10) --
1997.................... 10.60 0.10 0.11 0.21 (0.10) (0.08)
- ----------------------------------------------------------------------------------------------------------
Distribution in Distribution Net Assets
Excess of From Value at Total
Net Investment Capital Total Capital End Investment
Income/Gains Paid-in Distributions Contributions of Period Return(b)
--------------- ------------ ------------- ------------- ---------- ----------
Growth & Income
- ---------------
Year Ended December 31,
2001.................... -- -- $(0.06) -- $11.93 (15.44)%
2000 (e)................ (0.14) (0.23) (3.23) -- 14.18 (13.10)%
1999.................... -- -- (2.56) -- 20.01 16.23%
1998.................... -- -- (2.10) -- 19.49 30.25%
1997.................... -- -- (2.38) -- 16.61 29.79%
- --------------------------------------------------------------------------------------------------------------
Managed
- -------
Year Ended December 31,
2001.................... -- -- (0.35) -- 13.08 (2.84)%
2000 (q)................ -- -- (1.62) -- 13.82 0.03%
1999.................... -- -- (1.57) -- 15.45 9.10%
1998.................... -- (0.05) (1.60) -- 15.64 20.42%
1997.................... -- (0.08) (1.45) -- 14.35 18.72%
- --------------------------------------------------------------------------------------------------------------
Short-Term Bond
- ---------------
Year Ended December 31,
2001.................... -- -- (0.53) -- 10.11 8.09%
2000.................... -- -- (0.61) -- 9.86 7.98%
1999.................... -- -- (0.61) -- 9.72 2.96%
1998.................... -- -- (0.61) -- 10.05 5.82%
1997.................... -- -- (0.59) -- 10.08 6.41%
- --------------------------------------------------------------------------------------------------------------
Small Cap Equity
- ----------------
Year Ended December 31,
2001.................... -- -- (0.01) -- 8.79 (3.78)%
2000 (q)................ (0.20) (0.30) (0.79) -- 9.14 (8.89)%
1999.................... (0.18) -- (0.26) -- 10.92 (3.43)%
1998.................... -- -- (0.07) -- 11.59 5.96%
1997.................... -- -- (1.07) -- 12.40 25.57%
- --------------------------------------------------------------------------------------------------------------
International Opportunities
- ---------------------------
Year Ended December 31,
2001.................... -- (0.03) (0.08) -- 9.30 (20.93)%
2000 (4)................ (0.05) (0.09) (0.82) -- 11.85 (16.36)%(5)
1999.................... (0.04) -- (1.09) -- 15.17 34.01%
1998.................... -- -- (0.10) -- 12.21 15.92%
1997.................... -- -- (0.18) -- 10.63 1.95%
- --------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
------------------------------------------------
Net
Operating Investment
Net Assets Expenses to Income (Loss) Portfolio
End of Period Average to Average Turnover
(000s Omitted) Net Assets Net Assets Rate
-------------- ----------- ------------- ---------
Growth & Income
- ---------------
Year Ended December 31,
2001.................... $2,476,319 0.72% 0.49% 104.47%(5)
2000 (e)................ 3,324,988 0.40% 0.84% 112.94%
1999.................... 4,218,841 0.28% 0.98% 70.16%
1998.................... 3,670,785 0.27% 1.24% 48.45%
1997.................... 2,785,964 0.28% 1.61% 74.56%
- --------------------------------------------------------------------------------
Managed
- -------
Year Ended December 31,
2001.................... 2,526,703 0.73% 2.10%(14) 190.73%(5)
2000 (q)................ 2,995,794 0.46% 2.86% 210.35%
1999.................... 3,430,919 0.36% 2.75% 203.86%
1998.................... 3,301,910 0.36% 2.99% 160.57%
1997.................... 2,800,127 0.37% 4.18% 200.41%
- --------------------------------------------------------------------------------
Short-Term Bond
- ---------------
Year Ended December 31,
2001.................... 149,450 0.48% 5.20%(15) 86.39%
2000.................... 80,109 0.36% 6.27% 52.68%
1999.................... 68,844 0.43% 6.25% 100.04%
1998.................... 77,194 0.53% 6.17% 184.50%
1997.................... 51,120 0.57% 5.67% 108.29%
- --------------------------------------------------------------------------------
Small Cap Equity
- ----------------
Year Ended December 31,
2001.................... 71,193 1.00%(2) 0.06% 60.73%
2000 (q)................ 70,031 0.92%(2) 1.25% 189.57%
1999.................... 68,900 0.95%(2) 0.78% 117.33%
1998.................... 64,095 1.05%(2) 0.63% 100.83%
1997.................... 43,261 1.05%(2) 0.68% 126.10%
- --------------------------------------------------------------------------------
International Opportunities
- ---------------------------
Year Ended December 31,
2001.................... 83,591 1.00%(3) 0.64% 33.31%
2000 (4)................ 120,034 0.93%(3) 0.47% 37.92%(5)
1999.................... 79,794 1.02%(3) 0.77% 34.02%
1998.................... 64,250 1.16%(3) 0.89% 18.67%
1997.................... 30,631 1.22%(3) 0.65% 21.09%
- --------------------------------------------------------------------------------
52
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Income from Investment Operations
--------------------------------------- -------------------------
Net Realized
Net Assets Net and Total Distribution Distribution
Value at Investment Unrealized From From Net From Net
Beginning Income Gain (Loss) Investment Investment Gains on
of Period Gain (Loss) on Investments(a) Operations Income Investments
---------- ----------- ----------------- ---------- ------------ ------------
Equity Index
- ------------
Year Ended December 31,
2001................. $17.64 $0.19 $(2.30) $(2.11) $(0.19) $(0.49)
2000................. 20.46 0.22 (2.09) (1.87) (0.22) (0.72)
1999................. 17.70 0.27 3.41 3.68 (0.26) (0.66)
1998................. 14.21 0.25 3.76 4.01 (0.24) (0.28)
1997................. 11.10 0.24 3.41 3.65 (0.24) (0.25)
- -------------------------------------------------------------------------------------------------------
High Yield Bond
- ---------------
Year Ended December 31,
2001................. 7.33 0.73 (0.55) 0.18 (0.68) --
2000................. 8.99 0.73 (1.65) (0.92) (0.74) --
1999................. 9.23 0.72 (0.26) 0.46 (0.70) --
Period from May 1, to
December 31, 1998 (g). 10.00 0.46 (0.76) (0.30) (0.46) (0.01)
- -------------------------------------------------------------------------------------------------------
Global Bond
- -----------
Year Ended December 31,
2001................. 10.34 0.38 (0.53) (0.15) (0.45) --
2000 (q)............. 9.82 0.48 0.67 1.15 (0.63) --
1999................. 10.60 0.48 (0.70) (0.22) (0.56) --
1998................. 10.24 0.54 0.38 0.92 (0.29) (0.09)
1997................. 10.16 0.59 0.30 0.89 (0.61) (0.15)
Distribution in Distribution Net Assets
Excess of From Value at Total
Net Investment Capital Total Capital End Investment
Income/Gains Paid-in Distributions Contributions of Period Return(b)
--------------- ------------ ------------- ------------- ---------- ----------
Equity Index
- ------------
Year Ended December 31,
2001................. -- $ -- $(0.68) -- $14.85 (11.98)%
2000................. -- (0.01) (0.95) -- 17.64 (9.15)%
1999................. -- -- (0.92) -- 20.46 21.08%
1998................. -- -- (0.52) -- 17.70 28.45%
1997................. -- (0.05) (0.54) -- 14.21 32.79%(7)
- -----------------------------------------------------------------------------------------------------------
High Yield Bond
- ---------------
Year Ended December 31,
2001................. -- -- (0.68) -- 6.83 2.13%
2000................. -- -- (0.74) -- 7.33 (10.81)%
1999................. -- -- (0.70) -- 8.99 5.13%
Period from May 1, to
December 31, 1998 (g). -- -- (0.47) -- 9.23 (2.98)%(c)
- -----------------------------------------------------------------------------------------------------------
Global Bond
- -----------
Year Ended December 31,
2001................. -- -- (0.45) -- 9.74 (1.45)%
2000 (q)............. -- -- (0.63) -- 10.34 12.00%
1999................. -- -- (0.56) -- 9.82 (2.16)%
1998................. -- (0.18) (0.56) -- 10.60 9.15%
1997................. -- (0.05) (0.81) -- 10.24 9.05%
Ratios/Supplemental Data
----------------------------------------------------
Net
Operating Investment
Net Assets Expenses to Income (Loss) Portfolio
End of Period Average to Average Turnover
(000s Omitted) Net Assets Net Assets Rate
-------------- ----------- ------------- ---------
Equity Index
- ------------
Year Ended December 31,
2001................. $538,791 0.20% 1.20% 17.61%(5)
2000................. 525,659 0.19% 1.12% 34.11%
1999................. 451,296 0.00%(6) 1.42% 55.24%
1998................. 232,578 0.00%(6) 1.59% 43.31%
1997................. 101,390 0.00%(6) 1.97% 64.56%
- ---------------------------------------------------------------------------------
High Yield Bond
- ---------------
Year Ended December 31,
2001................. 51,274 0.80%(8) 10.39%(16) 32.50%
2000................. 25,978 0.75%(8) 8.88% 21.94%
1999................. 19,921 0.80%(8) 7.94% 38.62%
Period from May 1, to
December 31, 1998 (g). 14,789 0.90%(d)(8) 7.43%(d) 17.67%(c)
- ---------------------------------------------------------------------------------
Global Bond
- -----------
Year Ended December 31,
2001................. 47,646 0.95%(9) 3.73%(17) 41.75%
2000 (q)............. 68,473 0.81%(9) 4.71% 259.60%
1999................. 70,991 0.83%(9) 4.70% 332.06%
1998................. 66,791 0.95%(9) 5.27% 186.70%
1997................. 28,647 1.00%(9) 5.80% 69.38%
(a) The amount shown at this caption for each fund share outstanding throughout
the year may not accord with the change in the aggregate gains and losses in
the portfolio securities for the year because of the timing of the purchases
and withdrawals of the fund shares in relation to the fluctuating market
values of the portfolio.
(b) The performance of the Funds shown on this page does not reflect expenses
and charges of the applicable separate accounts and variable products, all
of which vary to a considerable extent and are described in your product's
prospectus.
(c) Not annualized.
(d) Annualized.
(e) The Fund entered into a new sub-advisory agreement with Putnam Investment
Management, Inc. during the period shown.
(f) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.19%, 1.00%, and 1.09%
for the years ended December 31, 2001, 2000, and 1999, respectively.
53
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(g) Commencement of investment operations.
(h) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .44% for the year ended
December 31, 2000.
(i) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.19% for the year ended
December 31, 2001.
(j) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 4.02%, 2.49%, 3.44%, and
3.69% for the years ended December 31, 2001, 2000, 1999, and 1998,
respectively.
(k) The Fund entered into a new sub-advisory agreement with Morgan Stanley
Investment Management, Inc. during the period shown.
(l) The total investment return includes the effect of the capital contribution
of $.32 per share. The total investment return without the capital
contribution would have been 79.02%.
(m) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .40%, .37%, .38%, and
.63% for the years ended December 31, 2001, 2000, 1999, and 1998,
respectively.
(n) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.27%, 1.76%, and 1.71%
for the years ended December 31, 2001, 2000, and 1999, respectively.
(o) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .94%, 1.05%, and 1.12%,
for the years ended December 31, 2001, 1998, and 1997, respectively.
(p) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.36%, 1.27%, 1.31%,
1.82%, and 1.56% for the years ended December 31, 2001, 2000, 1999, 1998,
and 1997, respectively.
(q) The Fund entered into a new sub-advisory agreement with Capital Guardian
Trust Company during the period shown.
(r) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.13%, and 1.42%, for
the years ended December 31, 1998, and 1997, respectively.
(s) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .88%, 1.09%, and 1.17%,
for the years ended December 31, 2001, 2000 and 1999, respectively.
(t) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.20%, 1.36%, and 1.42%,
for the years ended December 31, 2001, 2000, and 1999, respectively.
(u) The total investment return includes the effect of the capital contribution
of $0.01 per share. The total investment return without the capital
contribution would have been 6.18%.
(v) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .27%, .35%, and .71%,
for the years ended December 31, 2000, 1999, and 1998, respectively.
(w) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.06%, 1.05%, and 1.17%,
for the years ended December 31, 2001, 2000, and 1999, respectively.
(x) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.15%, 1.23%, 2.24%, and
4.55%, for the years ended December 31, 2001, 2000, 1999, and 1998,
respectively.
(y) The Fund entered into a new sub-advisory agreement with T. Rowe Price
Associates, Inc. during the period shown.
(z) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.08%, 1.29%, and 1.61%,
for the years ended December 31, 2001, 2000 and 1999, respectively.
54
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
(1) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .91% for the year ended
December 31, 2001.
(2) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.02%, .95%, .96%,
1.08%, and 1.30%, for the years ended December 31, 2001, 2000, 1999, 1998,
and 1997 respectively.
(3) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.16%, 1.09%, 1.15%,
1.46%, and 1.57%, for the years ended December 31, 2001, 2000, 1999, 1998,
and 1997, respectively.
(4) The Fund entered into a new sub-advisory agreement with T. Rowe Price
International, Inc. during the period shown.
(5) Excludes merger activity.
(6) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .22%, .34%, .and 65%,,
for the years ended December 31, 1999, 1998, and 1997, respectively.
(7) The total investment return includes the effect of the capital contribution
of $.04 per share. The total investment return without the capital
contribution would have been 32.47%.
(8) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .90%, .87%, 1.04%, and
2.03%, for the years ended December 31, 2001, 2000, 1999, and 1998,
respectively.
(9) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been .95%, .91%, .84%,
1.02%, and 1.32%, for the years ended December 31, 2001, 2000, 1999, 1998,
and 1997, respectively.
(10) Per share amounts have been restated to reflect a 10-for-1 stock split
effective May 1, 2001.
(11) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 6.28% for the year ended December 31, 2001.
(12) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 1.38% for the year ended December 31, 2001.
(13) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 6.37% for the year ended December 31, 2001.
(14) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 2.29% for the year ended December 31, 2001.
(15) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 5.32% for the year ended December 31, 2001.
(16) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 9.35% for the year ended December 31, 2001.
(17) Had the Fund not amortized premiums on debt securities, the annual ratio of
net investment income to average net assets would have been 3.96% for the
year ended December 31, 2001.
(18) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the annual expense ratio would have been 1.06% for the year
ended December 31, 1997.
55
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 0.5%
Boeing Co. .......................................... 96,800 $ 3,754
Chemical - 0.5%
Praxair, Inc. ....................................... 65,000 3,591
Commercial Services - 1.2%
Convergys Corp. ..................................... 60,000 2,250
Omnicom Group, Inc. ................................. 78,100 6,978
--------
9,228
Computer Equipment - 9.1%
Dell Computer Corp. ................................. 563,600 15,319
CDW Computer Centers, Inc. .......................... 85,100 4,571
Intel Corp. ......................................... 1,169,800 36,790
International Business Machines Corp. ............... 113,100 13,680
--------
70,360
Computer Software & Services - 12.5%
Cadence Design Systems, Inc. * ...................... 221,800 4,862
Electronic Data Systems Corp. ....................... 83,000 5,690
First Data Corp. .................................... 186,900 14,662
Fiserv, Inc. ........................................ 42,700 1,807
Intuit, Inc. * ...................................... 153,000 6,545
Microsoft Corp. ..................................... 632,100 41,877
Network Assoc., Inc. ................................ 175,100 4,526
Oracle Corp. * ...................................... 605,700 8,365
Peoplesoft, Inc. .................................... 207,700 8,349
--------
96,683
Consumer Miscellaneous - 0.9%
Black & Decker Corp. ................................ 181,400 6,844
Cosmetic & Personal Care - 0.6%
Gillette Co. ........................................ 129,000 4,309
Diversified Operations - 8.0%
Danaher Corp. ....................................... 98,200 5,923
General Electric Co. ................................ 1,253,800 50,252
Tyco International, Ltd. ............................ 90,000 5,301
--------
61,476
Electric Power - 0.2%
UtiliCorp United, Inc. .............................. 57,800 1,455
Electronic Products & Services - 7.4%
Analog Devices, Inc. * .............................. 81,700 3,627
Applied Materials, Inc. * ........................... 146,000 5,854
Applied Micro Circuits Corp. ........................ 130,000 1,472
Cisco Systems, Inc. * ............................... 1,269,600 22,992
KLA-Tencor Corp. * .................................. 25,300 1,254
Linear Technology Corp. ............................. 101,100 3,947
Maxim Integrated Products, Inc. * ................... 51,300 2,694
Novellus Systems, Inc. * ............................ 36,600 1,444
Tech Data Corp. ..................................... 52,500 2,272
Texas Instruments, Inc. ............................. 249,600 6,989
Xilinx, Inc. * ...................................... 110,500 4,315
-------
56,860
Energy - Alternative Source - 0.3%
El Paso Corp. ....................................... 47,500 2,119
Financial Services - 2.0%
Citigroup, Inc. ..................................... 150,000 7,572
Concord EFS, Inc. ................................... 127,500 4,180
Hartford Financial Services Group, Inc. ............. 62,700 3,939
--------
15,691
Food, Beverage & Tobacco - 2.3%
Archer Daniels Midland Co. .......................... 180,810 2,595
PepsiCo, Inc. ....................................... 70,000 3,408
Philip Morris Cos., Inc. ............................ 265,700 12,182
--------
18,185
Health Care Products - 22.4%
Abbott Laboratories ................................. 200,000 11,150
Allergan, Inc. ...................................... 155,400 11,663
American Home Products Corp. ........................ 400,100 24,550
Aviron .............................................. 60,000 2,984
Baxter International, Inc. .......................... 110,000 5,899
Bristol-Myers Squibb Co. ............................ 36,500 1,862
Johnson & Johnson ................................... 317,300 18,752
King Pharmaceuticals, Inc. .......................... 181,200 7,634
Laboratory Corporation of America
Holdings .......................................... 70,700 5,716
Merck & Co., Inc. ................................... 114,900 6,756
Pfizer, Inc. ........................................ 1,200,000 47,820
Pharmacia Corp. ..................................... 302,800 12,914
Schering-Plough Corp. ............................... 212,200 7,599
Trigon Healthcare, Inc. ............................. 71,400 4,959
UnitedHealth Group, Inc. ............................ 31,900 2,258
--------
172,516
Health Care Services - 3.3%
First Health Group Corp. ............................ 156,900 3,882
Health Management Assoc., Inc. - Cl. A .............. 110,900 2,040
Lincare Holdings, Inc. .............................. 273,400 7,833
Tenet Healthcare Corp. .............................. 132,900 7,804
Universal Health Services, Inc. - Cl. B * ........... 93,500 4,000
--------
25,559
Insurance - 4.2%
American International Group, Inc. .................. 252,600 20,056
Everest Re Group, Ltd. .............................. 25,000 1,768
Lincoln National Corp. .............................. 88,500 4,298
PartnerRe, Ltd. ..................................... 84,500 4,563
Radian Group, Inc. .................................. 48,000 2,062
--------
32,747
Leisure & Recreation - 0.4%
Sabre Group Holdings, Inc. .......................... 66,900 2,833
56
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Media - TV / Radio - 4.3%
AOL Time Warner, Inc. * ............................ 510,900 $ 16,400
Arbitron, Inc. ..................................... 88,700 3,029
Liberty Media Corp. - Ser. A ....................... 216,500 3,031
Viacom, Inc. - Cl. B * ............................. 159,400 7,038
Westwood One, Inc. ................................. 121,900 3,663
---------
33,161
Oil - 0.7%
Baker Hughes, Inc. ................................. 145,800 5,317
Oil & Natural Gas Exploration & Production - 0.3%
Noble Drilling Corp. * ............................. 80,000 2,723
Personal & Commercial Lending - 1.1%
MBNA Corp. ......................................... 246,300 8,670
Retail - Department Stores - 11.0%
Bed Bath & Beyond, Inc. ............................ 249,900 8,472
Family Dollar Stores, Inc. ......................... 160,100 4,800
Home Depot, Inc. ................................... 388,800 19,833
Kohl's Corp. ....................................... 165,900 11,686
Lowe's Cos., Inc. .................................. 365,000 16,940
Target Corp. ....................................... 99,000 4,064
TJX Cos., Inc. ..................................... 77,100 3,073
Wal-Mart Stores, Inc. .............................. 272,500 15,682
---------
84,550
Telecommunication Equipment - 1.8%
Nokia Oyj - ADR .................................... 99,800 2,448
Qualcomm, Inc. ..................................... 224,200 11,322
---------
13,770
Telecommunication Services - 2.8%
AT&T Wireless Group ................................ 292,600 4,205
Motorola, Inc. ..................................... 221,700 3,330
Nextel Communications, Inc. - Cl. A ................ 311,100 3,409
Sprint PCS ......................................... 360,700 8,805
Verizon Communications ............................. 32,300 1,533
---------
21,282
U.S. Government Agencies - 1.2%
Federal National Mortgage Assoc. ................... 117,400 9,332
---------
TOTAL COMMON STOCK- 99.0% 763,016
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 1.2%
Investment in joint trading account
(Note B)
2.055% due 01/02/02 .............................. $ 9,186 9,186
-------- ---------
TOTAL INVESTMENTS- 100.2% 772,202
Cash and Receivables, less payables- (0.2)% (1,287)
-------- ---------
NET ASSETS- 100.0% $ 770,915
======== =========
ADR-American Depository Receipt.
* Non-income producing security.
See notes to financial statements.
57
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
FUNDAMENTAL GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 0.5%
Northrop Grumman Corp. .................................. 1,900 $ 192
Auto & Truck Parts - 1.0%
Lear Corp. .............................................. 10,200 389
Bank - 3.2%
Charter One Financial, Inc. ............................. 5,745 156
M & T Bank Corp. ........................................ 4,250 310
North Fork Bancorporation, Inc. ......................... 5,100 163
Zions Bancorp ........................................... 11,200 589
-------
1,218
Brokerage & Investment Management - 0.5%
Legg Mason, Inc. ........................................ 3,536 177
Business Services - 0.5%
The Dun & Bradstreet Corp. * ............................ 4,300 171
Commercial Sevices - 7.8%
Celestica, Inc. ......................................... 7,334 296
Convergys Corp. * ....................................... 27,400 1,027
Ecolab, Inc. ............................................ 6,400 258
Interpublic Group Cos., Inc. ............................ 24,700 730
Lamar Advertising Co. ................................... 15,050 637
-------
2,948
Computer Equipment - 2.8%
Brocade Communications Systems, Inc. * .................. 7,300 242
McData Corp. ............................................ 7,900 193
Veritas Software Corp. .................................. 13,900 623
-------
1,058
Computer Software & Services - 11.0%
Adobe Systems, Inc. ..................................... 17,000 528
Affiliated Computer Services, Inc. - Cl. A .............. 3,640 386
DST Systems, Inc. ....................................... 4,900 244
Extreme Networks, Inc. .................................. 16,900 218
Fiserv, Inc. ............................................ 5,075 215
Internet Security System, Inc. .......................... 7,300 234
Juniper Networks, Inc. .................................. 4,900 93
NetIQ Corp. ............................................. 9,100 321
Peregrine Systems, Inc. ................................. 46,800 694
Retek, Inc. ............................................. 6,200 185
Siebel Systems, Inc. .................................... 3,000 84
SunGard Data Systems, Inc. .............................. 14,900 431
VeriSign, Inc. .......................................... 13,900 529
-------
4,162
Computers - 1.0%
CDW Computer Centers, Inc. .............................. 6,900 371
Cosmetic & Personal Care - 1.3%
Estee Lauder Co., Inc. - Cl. A .......................... 15,400 494
Electrical Equipment - 0.8%
Micrel, Inc. ............................................ 11,750 308
Electronic Products & Services - 15.2%
Applera Corporation - Applied Biosystems
Group ................................................. 10,652 418
Atmel Corp. * ........................................... 1,400 10
Cytyc Corp. ............................................. 15,100 394
Emulex Corp. * .......................................... 12,400 490
Integrated Device Technology, Inc. ...................... 11,000 293
Jabil Circuit, Inc. ..................................... 12,100 275
KLA-Tencor Corp. * ...................................... 5,350 265
Lam Research Corp. ...................................... 7,800 181
Linear Technology Corp. ................................. 6,700 262
LSI Logic Corp. ......................................... 19,500 308
Novellus Systems, Inc. .................................. 8,800 347
PerkinElmer, Inc. ....................................... 28,700 1,005
QLogic Corp. * .......................................... 11,800 525
Semtech Corp. ........................................... 5,950 212
Symbol Technologies, Inc. ............................... 10,500 167
Waters Corp. * .......................................... 15,323 594
-------
5,746
Financial Services - 2.4%
AmeriCredit Corp. ....................................... 16,200 511
Metris Cos., Inc. ....................................... 15,400 396
-------
907
Food, Beverage & Tobacco - 1.5%
Sysco Corp. ............................................. 22,200 582
Health Care Products - 16.2%
Abgenix, Inc. * ......................................... 4,000 135
Amerisource Bergen Corp. ................................ 9,087 577
Andrx Corp. * ........................................... 8,300 584
Genzyme Corp. ........................................... 7,000 419
Gilead Sciences, Inc. * ................................. 6,350 417
Guidant Corp. ........................................... 7,000 349
IDEXX Laboratories, Inc. * .............................. 7,000 200
Invitrogen Corp. ........................................ 6,050 375
Ivax Corp. .............................................. 8,625 174
King Pharmaceuticals, Inc. .............................. 13,405 565
Laboratory Corporation of America Holdings .............. 6,890 557
MedImmune, Inc. * ....................................... 17,440 808
Millennium Pharmaceuticals, Inc. * ...................... 9,800 240
Protein Design Labs, Inc. * ............................. 7,600 249
Shire Pharmaceuticals Group Place - ADR ................. 8,400 307
Stryker Corp. ........................................... 3,050 178
-------
6,134
Health Care Services - 4.9%
Idec Pharmaceuticals Corp. .............................. 7,100 490
Lincare Holdings, Inc. .................................. 14,100 404
Quest Diagnostics, Inc. * ............................... 5,400 387
Universal Health Services, Inc. - Cl. B ................. 4,400 188
Zimmer Holdings, Inc. ................................... 13,200 403
-------
1,872
58
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
FUNDAMENTAL GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Insurance - 1.0%
Ace, Ltd. * ......................................... 9,700 $ 389
Leisure & Recreation - 2.1%
Four Seasons Hotels, Inc. ........................... 5,200 243
International Game Technology ....................... 8,064 551
--------
794
Media - TV / Radio - 1.8%
Univision Communications, Inc. - Cl. A * ............ 16,700 676
Oil & Natural Gas Exploration & Production - 3.7%
Burlington Resources, Inc. .......................... 9,300 349
Murphy Oil Corp. .................................... 5,050 424
Ultramar Diamond Shamrock Corp. ..................... 5,900 292
Valero Energy Corp. ................................. 8,600 328
--------
1,393
Oil - Equipment & Service - 2.1%
Cooper Cameron Corp. ................................ 6,800 275
Smith International, Inc. ........................... 9,700 520
--------
795
Personal & Commercial Lending - 0.7%
USA Education, Inc. ................................. 3,187 268
Real Estate Investment Trust - 1.0%
Boston Properties, Inc. ............................. 10,100 384
Retail - Department Stores - 5.9%
Bed Bath & Beyond, Inc. ............................. 5,800 197
Best Buy Co., Inc. .................................. 2,500 186
Family Dollar Stores, Inc. .......................... 16,100 483
RadioShack Corp. .................................... 4,500 135
Talbots, Inc. ....................................... 7,700 279
Tiffany & Co. ....................................... 6,300 198
TJX Cos., Inc. ...................................... 18,712 746
--------
2,224
Retail - Food - 3.1%
Darden Restaurants, Inc. ............................ 5,850 207
Starbucks Corp. * ................................... 50,000 953
--------
1,160
Shoe & Apparel Manufacturing - 0.6%
Columbia Sportswear Co. ............................. 6,950 231
Telecommunication Equipment - 1.8%
Jack Henry & Associates, Inc. ....................... 3,400 74
L-3 Communications Holdings, Corp. .................. 2,700 243
PMC-Sierra, Inc. .................................... 17,500 372
--------
689
Telecommunication Services - 1.1%
Broadcom Corp. - Cl. A .............................. 10,500 429
Telephone - 0.7%
Telephone and Data Systems, Inc. .................... 2,900 260
Transportation Services - 1.1%
Global Santa Fe Corp. ............................... 15,168 $ 433
--------
TOTAL COMMON STOCK- 97.3% 36,854
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 2.3%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ............................... $ 883 883
------- --------
TOTAL INVESTMENTS- 99.6% 37,737
Cash and Receivables, less payables- 0.4% 160
------- --------
NET ASSETS- 100.0% $ 37,897
======= ========
ADR-American Depository Receipt.
* Non-income producing security.
See notes to financial statements.
59
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS
Aerospace & Defense - 0.8%
Lockheed Martin Corp. - Bonds
8.5% due 12/01/29 ...................................... $ 3,620 $ 4,322
Systems 2001 LLC CTF Cl. B 144A (a)
7.156% due 12/15/11 .................................... 3,369 3,468
-------
7,790
Agricultural Operations - 0.2%
Cargill, Inc.
6.25% due 05/01/06 ..................................... 2,205 2,255
Automobile - 0.9%
Daimler Chrysler Auto Trust - Notes Ser.
2000 Cl. A4
6.16% due 01/08/06 ..................................... 4,630 4,855
Delphi Automotive Systems Corp. - Sr. Notes
6.55% due 06/15/06 ..................................... 1,990 1,992
Ford Motor Co.
7.45% due 07/16/31 ..................................... 1,760 1,613
-------
8,460
Bank - 3.6%
Abbey National First Capital - Sr. Sub. Notes
8.2% due 10/15/04 ...................................... 4,640 5,104
Barclays Bank plc 144A (a)
7.375% due 12/15/49 .................................... 3,205 3,317
BNP Paribus Capital Trust - Sub 144A (a)
9.003% due 12/29/49 .................................... 1,760 1,981
Colonial Bank Montgomery - Sub. Notes
9.375% due 06/01/11 .................................... 1,835 1,936
International Bank of Reconstruction &
Development - Debs.
8.25% due 09/01/16 ..................................... 2,150 2,571
RBSG Capital Corp. - Notes
10.125% due 03/01/04 ................................... 5,385 6,012
Royal Bank of Scotland Group plc
8.817% due 03/31/49 .................................... 1,900 2,101
Royal Bank of Scotland plc
7.648% due 08/31/49 .................................... 2,260 2,280
Skandinaviska Enskida Banken - Sub Notes 144A (a)
6.5% due 12/29/49 ...................................... 2,200 2,248
United Bank National Association of Minneapolis
6.375% due 08/01/11 .................................... 2,415 2,436
Zions Bancorp - Sub Notes 144A (a)
6.5% due 10/15/11 ...................................... 1,835 1,797
Zions Financial Corp. - Notes
6.95% due 05/15/11 ..................................... 2,625 2,667
-------
34,450
Beverages - 0.3%
Earthgrains Co.
8.375% due 08/01/03 .................................... 2,915 3,157
PUBLICLY-TRADED BONDS - Continued
Brokerage & Investment Management - 1.1%
Morgan Stanley Capital, Inc. - CTF 1997-
WF1 A1 144A (a)
6.83% due 10/15/06 ..................................... $ 168 $ 176
Morgan Stanley Capital, Inc. Ser. 1999-
CAM1 Cl. A3
6.92% due 11/15/08 ..................................... 140 148
Morgan Stanley Dean Witter Capital 2001
CTF Cl. A1
4.57% due 12/18/32 ..................................... 8,299 8,224
Salomon, Inc. - Notes
5.875% due 03/15/06 .................................... 1,620 1,658
-------
10,206
Chemical - 0.4%
Akzo Nobel, Inc. - Bonds 144A (a)
6.0% due 11/15/03 ...................................... 1,675 1,736
NOVA Chemicals Corp.- Notes
7.0% due 05/15/06 ...................................... 1,805 1,703
-------
3,439
Chemicals - 0.2%
Equistar Chemical - Notes
8.5% due 02/15/04 ...................................... 1,795 1,791
Commercial Sevices - 0.4%
Cendent Corp.- Notes 144A (a)
6.875% due 08/15/06 .................................... 3,555 3,434
Construction - 0.4%
Jet Equipment Trust
10.91% due 08/15/14 .................................... 2,100 1,856
Vulcan Materials - Notes
6.4% due 02/01/06 ...................................... 1,435 1,468
-------
3,324
Container - 0.2%
Stone Container Corp. - Sr. Notes
9.75% due 02/01/11 ..................................... 1,460 1,569
Cosmetic & Personal Care - 0.2%
International Flavors & Fragrances, Inc. - Notes
6.45% due 05/15/06 ..................................... 1,730 1,750
Diversified Operations - 0.0%
Bombardier Capital, Inc. - Notes 144A (a)
6.0% due 01/15/02 ...................................... 30 30
Iberdrola - Notes 144A (a)
7.5% due 10/01/02 ...................................... 35 36
-------
66
Electric Power - 5.5%
AES Corp. - Sr. Notes
9.5% due 06/01/09 ...................................... 1,145 1,019
60
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Electric Power - Continued
AES Corp. - Sr. Sub. Notes
10.25% due 07/15/06 .................................... $ 2,253 $ 1,983
AES Eastern Energy
9.0% due 01/02/17 ...................................... 2,155 2,128
Beaver Valley Funding Corp. - Debs.
9.0% due 06/01/17 ...................................... 2,388 2,637
BVPS II Funding Corp. - Coll. Lease Bonds
8.89% due 06/01/17 ..................................... 2,469 2,732
CalEnergy Co., Inc. - Bonds
8.48% due 09/15/28 ..................................... 2,745 2,967
Calpine Canada Energy
8.5% due 05/01/08 ...................................... 250 226
Calpine Corp. - Sr. Notes
10.5% due 05/15/06 ..................................... 1,220 1,146
Cleveland Electric Illuminating Co. - 1st
Mtge.
9.5% due 05/15/05 ...................................... 5,820 5,920
CMS Energy Corp. - Sr. Notes
6.75% due 01/15/04 ..................................... 2,095 2,011
8.125% due 05/15/02 .................................... 2,710 2,710
CMS Energy Corp.
9.875% due 10/15/07 .................................... 200 211
Dominion Resources, Inc.
8.125% due 06/15/10 .................................... 2,740 3,019
Exelon Generation Co. LLC - Sr. Notes
144A (a)
6.95% due 06/15/11 ..................................... 2,700 2,738
Long Island Lighting Co. - Debs.
8.2% due 03/15/23 ...................................... 3,275 3,247
Monterrey Power SA de CV - Sec. Bonds
144A (a)
9.625% due 11/15/09 .................................... 650 689
Niagara Mohawk Power Corp. - Debs.
8.77% due 01/01/18 ..................................... 3,891 3,990
PNPP II Funding Corp. - Debs.
9.12% due 05/30/16 ..................................... 2,495 2,665
PSEG Energy Holdings, Inc. - Sr. Notes
8.625% due 02/15/08 .................................... 1,730 1,749
Sierra Pacific Resources - Notes
8.75% due 05/15/05 ..................................... 1,170 1,236
Waterford 3 Funding Entergy
8.09% due 01/02/17 ..................................... 4,192 4,211
XCEL Energy, Inc. - Sr. Notes
7.0% due 12/01/10 ...................................... 2,835 2,863
--------
52,097
Electrical Equipment - 0.3%
HQI Transelec Chile SA
7.875% due 04/15/11 .................................... 2,990 3,026
Electronic Products & Services - 0.5%
Pinnacle Partners
8.83% due 08/15/04 ..................................... 2,455 2,508
Pinnacle West Capital Corp. - Sr. Notes
6.4% due 04/01/06 ...................................... 2,445 2,457
-------
4,965
Entertainment & Recreation - 0.6%
British Sky Broadcasting
8.2% due 07/15/09 ...................................... 3,670 3,766
TCI Communications, Inc. - Debs.
7.875% due 02/15/26 .................................... 1,955 2,020
--------
5,786
Financial Services - 6.3%
American Express Credit Corp.
7.2% due 09/17/07 ...................................... 4,490 4,846
Asset Securitization Coopreative Corp. - Ser.
1997-D4 Cl. A1B
7.4% due 04/14/29 ...................................... 4,560 4,842
Bank of New York Institution Capital -
144A (a)
7.78% due 12/01/26 ..................................... 3,400 3,459
BSCH Issuances, Ltd. - Sub. Notes
7.625% due 09/14/10 .................................... 1,865 1,966
Citigroup, Inc.
6.5% due 01/18/11 ...................................... 1,960 2,016
ERAC USA Finance Co. - Notes 144A (a)
6.625% due 02/15/05 .................................... 919 909
7.35% due 06/15/08 ..................................... 1,870 1,866
ERAC USA Finance Co.
7.95% due 12/15/09 ..................................... 2,050 2,058
Goldman Sachs Group, Inc.
6.875% due 01/15/11 .................................... 2,755 2,822
HSBC Capital Funding LP - Ser. 144A (a)
9.547% due 12/31/49 .................................... 3,090 3,576
ING Capital Funding Trust III
8.439% due 12/31/49 .................................... 1,820 1,986
ISTAR Financial, Inc. - Sr. Notes
8.75% due 08/15/08 ..................................... 700 704
JP Morgan Finance Corp. Pass thru Certs.
1997-C5 CL. AZ
7.069% due 09/15/29 .................................... 3,303 3,472
Midland Funding Corp. II - Debs.
11.75% due 07/23/05 .................................... 5,185 5,704
Pemex Project Funding Trust - Notes
9.125% due 10/13/10 .................................... 3,590 3,809
Qwest Capital Funding - Notes
7.25% due 02/15/11 ..................................... 2,790 2,719
Salomon Brothers Mortgage Securities VII
6.75% due 07/25/24 ..................................... 860 861
Saxon Assets Securities Trust
7.965% due 06/25/15 .................................... 67 67
Sun Canada Financial Co. - Bonds 144A (a)
6.625% due 12/15/07 .................................... 3,760 3,687
Tiers Fixed Rate Certificates CTF 144A (a)
7.2% due 06/15/04 ...................................... 3,360 2,761
61
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Financial Services - Continued
UBS Preferred Funding TRI
8.622% due 10/29/49 ................................... $ 2,895 $ 3,221
URC Holdings Corp. - Sr. Notes 144A (a)
7.875% due 06/30/06 ................................... 1,865 2,032
WMC Finance USA, Ltd.
6.5% due 11/15/03 ..................................... 80 83
--------
59,466
Food, Beverage & Tobacco - 0.8%
Canandaigua Brands, Inc. - Sr. Sub. Notes
8.75% due 12/15/03 .................................... 2,395 2,401
Conagra, Inc. - Notes
6.75% due 09/15/11 .................................... 2,730 2,789
Conagra, Inc. - Notes
7.4% due 09/15/04 ..................................... 1,830 1,967
--------
7,157
Foreign Governmental - 0.7%
Republic of Chile
7.125% due 01/11/12 ................................... 1,820 1,853
Hydro-Quebec - Debs. Ser. IF
7.375% due 02/01/03 ................................... 1,000 1,040
Province of Quebec - Debs.
7.5% due 09/15/29 ..................................... 840 937
Republic of Columbia
9.75% due 04/09/11 .................................... 2,414 2,528
--------
6,358
Health Care Products - 0.3%
Fresenius Medical Capital Trust II
7.875% due 02/01/08 ................................... 1,750 1,750
Fresenius Medical Capital Trust IV
7.875% due 06/15/11 ................................... 1,465 1,458
--------
3,208
Health Care Services - 1.1%
Dynacare, Inc. - Sr. Notes
10.75% due 01/15/06 ................................... 2,162 2,248
HCA-The Healthcare Corp. - Notes
7.125% due 06/01/06 ................................... 2,710 2,755
8.75% due 09/01/10 .................................... 1,380 1,508
Healthsouth Corp. - Sr. Notes
8.5% due 02/01/08 ..................................... 1,355 1,416
Quest Diagnostics, Inc. - Sr. Notes
6.75% due 07/12/06 .................................... 1,810 1,861
Triad Hospitals, Inc. - Sr. Notes Ser. B
8.75% due 05/01/09 .................................... 895 940
--------
10,728
Insurance - 1.1%
AXA - Sub Notes
8.6% due 12/15/30 ..................................... 2,620 2,927
Equitable Life Assurance Society USA -
Notes 144A (a)
6.95% due 12/01/05 .................................... 1,470 1,549
Mass. Mutual Life Insurance Co. - Notes
144A (a)
7.625% due 11/15/23 ................................... 2,645 2,752
The MONY Group, Inc. - Sr. Notes
7.45% due 12/15/05 .................................... 2,635 2,740
------
9,968
Leisure & Recreation - 0.5%
Harrahs Operating Co., Inc.
7.875% due 12/15/05 ................................... 1,320 1,363
HarrahsOperating, Inc. - Sr. Notes
7.125% due 06/01/07 ................................... 2,520 2,550
Sabre Group Holdings, Inc. - Notes
7.35% due 08/01/11 .................................... 905 852
------
4,765
Media - TV / Radio - 4.3%
Adelphia Communications Corp. - Sr. Notes
8.125% due 07/15/03 ................................... 1,440 1,433
9.25% due 10/01/02 .................................... 2,477 2,489
AOL Time Warner, Inc.
7.625% due 04/15/31 ................................... 2,695 2,851
Charter Communications Holdings LLC - Sr.
Notes
10.0% due 05/15/11 .................................... 1,870 1,898
11.125% due 01/15/11 .................................. 680 719
Clear Channel Communications, Inc. - Sr.
Notes
7.875% due 06/15/05 ................................... 3,570 3,783
Comcast Cable Communications
6.75% due 01/30/11 .................................... 2,730 2,742
Continental Cablevision - Sr. Notes
8.3% due 05/15/06 ..................................... 3,065 3,330
EchoStar DBS Corp. - Sr. Notes
9.375% due 02/01/09 ................................... 1,435 1,478
Grupo Televisa SA De CV - Sr. Notes
144A (a)
8.0% due 09/13/11 ..................................... 1,105 1,110
Lenfest Communications, Inc.
8.375% due 11/01/05 ................................... 1,730 1,881
Mediacom LLC - Sr. Notes
9.5% due 01/15/13 ..................................... 1,435 1,492
News America Holdings, Inc. - Debs.
8.25% due 08/10/18 .................................... 1,235 1,275
News America, Inc. - Sr. Debs.
7.3% due 04/30/28 ..................................... 1,650 1,537
Rogers Cablesystems - Sr. Notes
10.0% due 03/15/05 .................................... 1,205 1,308
Time Warner, Inc. - Debs.
9.125% due 01/15/13 ................................... 2,166 2,567
62
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Media - TV / Radio - Continued
Univision Communications, Inc. Sr. Notes
7.85% due 07/15/11 ....................................... $ 2,675 $ 2,768
Viacom, Inc. - 144A (a)
6.4% due 01/30/06 ........................................ 2,735 2,822
Viacom, Inc.
7.875% due 07/30/30 ...................................... 2,700 2,982
-------
40,465
Metal Production & Fabrication - 0.1%
Yanacocha Receivables - Pass thru Certs.
144A (a)
8.4% due 06/15/05 ........................................ 1,206 1,212
Municipals - 0.3%
New Hampshire State - Taxable Pease Dev.
Auth.
7.7% due 07/01/12 ........................................ 3,000 3,227
Natural Gas Distribution - 0.5%
Keyspan Corp. - Notes
7.625% due 11/15/10 ...................................... 2,670 2,890
Louis Dreyfus Natural Gas Corp.
6.875% due 12/01/07 ...................................... 1,730 1,792
-------
4,682
Oil - 0.4%
TOSCO Corp.
8.125% due 02/15/30 ...................................... 3,590 4,111
Oil & Natural Gas Exploration & Production - 2.8%
Alberta Energy, Ltd. - Notes
7.375% due 11/01/31 ...................................... 1,870 1,826
Alberta Energy, Ltd. - Notes
8.125% due 09/15/30 ...................................... 2,025 2,155
Amerada Hess Corp. - Notes
6.65% due 08/15/11 ....................................... 3,175 3,161
Anadarko Petroleum Corp.
7.0% due 10/15/06 ........................................ 50 53
Apache Finance of Canada
7.75% due 12/15/29 ....................................... 1,865 2,047
Forest Oil Corp. - Sr. Notes
8.0% due 06/15/08 ........................................ 1,100 1,103
Occidental Petroleum Corp. - Notes
5.875% due 01/15/07 ...................................... 1,850 1,844
6.75% due 01/15/12 ....................................... 1,760 1,768
Occidental Petroleum Corp. - Sr. Debs.
10.125% due 09/15/09 ..................................... 3,015 3,535
Ocean Energy, Inc.
8.875% due 07/15/07 ...................................... 1,345 1,406
Petroleum Geo-Services ASA - Sr. Notes
7.125% due 03/30/28 ...................................... 910 657
Snyder Oil Corp.
8.75% due 06/15/07 ....................................... 825 862
Union Pacific Resources Group, Inc. - Debs.
7.15% due 05/15/28 ....................................... 2,760 2,654
Valero Energy Corp. - Notes
7.375% due 03/15/06 ...................................... 2,015 2,117
8.375% due 06/15/05 ...................................... 1,095 1,191
-------
26,379
Oil - Equipment & Service - 0.1%
Humpuss Funding Corp. - 144A (a)
7.72% due 12/15/09 ....................................... 955 785
Paper & Forest Products - 1.1%
Georgia Pacific Corp. - Notes
7.5% due 05/15/06 ........................................ 1,680 1,671
International Paper Co.
8.125% due 07/08/05 ...................................... 2,960 3,200
Stora Enso Corp. - Notes
7.375% due 05/15/11 ...................................... 2,935 3,096
Weyerhaeuser Co. - Notes
6.0% due 08/01/06 ........................................ 2,670 2,679
-------
10,646
Personal & Commercial Lending - 7.4%
Citibank Credit Card Master Trust Ser. 1997-2
CL. A
6.55% due 02/15/04 ....................................... 130 131
Commercial Mortgage Acceptance Corp. -
Ser. 1991-C1 A1
6.79% due 08/15/08 ....................................... 3,046 3,196
Conti Mortgage Home Equity Loan Ser.
1995-C1 A5
8.1% due 08/15/25 ........................................ 232 232
CS First Boston Mortgage Securities Corp. -
Ser. 1998-C1 A1A
6.26% due 12/17/07 ....................................... 5,043 5,230
Deutsche Mortgage & Asset Receiving Corp. -
Ser. 1998-C1 Cl. C
6.861% due 03/15/08 ...................................... 2,265 2,313
EQCC Home Equity Loan Trust
6.57% due 02/15/29 ....................................... 2,265 2,343
Ford Motor Credit Co. - Notes
6.875% due 02/01/06 ...................................... 2,355 2,358
Ford Motor Credit Co.
7.25% due 01/15/03 ....................................... 8,505 8,778
7.25% due 10/25/11 ....................................... 2,145 2,087
General Motors Acceptance Corp.
7.25% due 03/02/11 ....................................... 1,740 1,747
7.5% due 07/15/05 ........................................ 2,925 3,075
GMAC Commercial Mortgage Securities, Inc.
1997-C1 A2
6.853% due 07/15/29 ...................................... 7,425 7,796
GMAC Commercial Securities, Inc.
6.411% due 11/15/07 ...................................... 218 226
Household Financial Corp. - Notes
8.0% due 05/09/05 ........................................ 3,330 3,571
63
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Personal & Commercial Lending - Continued
LB Commercial Conduit Mortgage Trust -
Ser. 1999-C1
6.41% due 08/15/07 ..................................... $ 3,228 $ 3,359
MBNA Master Credit Card Trust II
7.35% due 07/16/07 ..................................... 4,575 4,931
Money Store Home Equity Trust - Ser. 1997-
C1 DAF7
6.485% due 12/15/28 .................................... 3,905 4,039
Standard Credit Card Master Trust
8.25% due 01/07/07 ..................................... 6,455 7,137
UCFC Home Equity Loan
7.18% due 02/15/25 ..................................... 1,920 1,997
UCFC Home Equity Loan - Ser. 1997-A1 A8
7.22% due 06/15/28 ..................................... 5,532 5,794
UCFC Loan Trust - Ser. 1997-B CL. A
6.9% due 10/15/28 ...................................... 53 56
-------
70,396
Pollution Control - 0.3%
Republic Services, Inc.
6.75% due 08/15/11 ..................................... 2,670 2,674
Precious Metals/Gems/Stones - 0.2%
Newmont Mining Corp. - Notes
8.625% due 05/15/11 .................................... 1,855 1,901
Real Estate Development - 0.1%
EOP Operating LP
6.625% due 02/15/05 .................................... 1,175 1,216
Real Estate Investment Trust - 2.1%
American Health Properties, Inc. - Notes
7.5% due 01/15/07 ...................................... 1,370 1,388
Amresco Residential Securities
6.51% due 08/25/27 ..................................... 7,054 7,278
Cabot Industrial Properties LP - Notes
7.125% due 05/01/04 .................................... 2,025 2,116
Camden Property Trust - Sr. Notes
7.0% due 04/15/04 ...................................... 2,200 2,294
Healthcare Realty Trust, Inc. - Sr. Notes
8.125% due 05/01/11 .................................... 1,830 1,893
IMC Home Equity Loan Trust - Ser. 1998-1
A4
6.6% due 03/20/25 ...................................... 3,295 3,398
Liberty Property LP - Notes
6.6% due 06/05/02 ...................................... 1,935 1,970
-------
20,337
Real Estate Operations - 0.2%
HMH Properties, Inc. - Ser. A
7.875% due 08/01/05 .................................... 1,625 1,544
Retail - Department Stores - 0.2%
Toys "R" Us, Inc. - Notes 144A (a)
7.625% due 08/01/11 .................................... 1,770 1,710
Retail - Food - 0.3%
The Kroger Co.
6.8% due 04/01/11 ...................................... 2,945 3,021
Retailers - Food & Drug - 0.3%
Delhaize America, Inc. - Notes
8.125% due 04/15/11 .................................... 2,695 2,958
Telecommunication Services - 3.4%
AT&T Wireless, Inc. - Sr. Notes
8.75% due 03/01/31 ..................................... 3,520 3,989
Cingular Wireless LLC - Sr. Notes 144A (a)
7.125% due 12/15/31 .................................... 1,755 1,787
Citizens Communications Co. - Notes
8.5% due 05/15/06 ...................................... 3,455 3,694
Deutsche Telekom International Finance
7.75% due 06/15/05 ..................................... 1,740 1,884
8.25% due 06/15/30 ..................................... 2,805 3,113
Singapore Telecommunications - Notes
144A (a)
7.375% due 12/01/31 .................................... 2,035 2,073
Tellus Corp. - Notes
8.0% due 06/01/11 ...................................... 2,710 2,876
Verizon Global Funding Corp. - Notes
7.75% due 12/01/30 ..................................... 3,635 4,046
Voicestream Wireless Corp.
11.5% due 09/15/09 ..................................... 1,560 1,794
Worldcom, Inc.
8.0% due 05/15/06 ...................................... 3,375 3,593
Worldcom, Inc. - Notes
8.25% due 05/15/31 ..................................... 2,760 2,917
-------
31,766
Telephone - 1.9%
AT&T Corp. USD - Sr. Notes 144A (a)
8.0% due 11/15/31 ...................................... 2,205 2,308
LCI International, Inc. - Sr. Notes
7.25% due 06/15/07 ..................................... 2,235 2,278
Metronet Communications Corp. - Sr. Disc.
Notes
0.0% due 11/01/07 ...................................... 1,845 1,170
MetroNet Communications Corp. - Sr. Notes
12.0% due 08/15/07 ..................................... 1,785 1,261
Sprint Capital Corp.
6.875% due 11/15/28 .................................... 3,570 3,281
Sprint Capital Corp. - Notes
7.125% due 01/30/06 .................................... 3,570 3,721
Telefonos De Mexico SA - Sr. Notes
8.25% due 01/26/06 ..................................... 3,625 3,797
-------
17,816
Transportation Services - 1.5%
America West Airlines, Inc. - Pass thru Certs.
6.93% due 01/02/08 ..................................... 1,501 1,463
Burlington Northern Santa Fe Corp.
7.95% due 08/15/30 ..................................... 3,585 3,991
64
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Transportation Services - Continued
Continental Airlines - Pass thru Certs. Ser.
1999-1 Cl. A
6.545% due 02/02/19 .................................... $ 56 $ 48
Continental Airlines, Inc. - Pass thru Certs.
7.206% due 06/30/04 .................................... 2,252 2,165
Delta Airlines, Inc.
7.7% due 12/15/05 ...................................... 195 178
Northwest Airlines Corp. - Ser. 1996-1
8.97% due 01/02/15 ..................................... 206 176
NWA Trust - Sr. Notes
9.25% due 06/21/14 ..................................... 2,184 1,686
Railcar Trust - Pass thru Notes Ser. 1992-1
7.75% due 06/01/04 ..................................... 1,298 1,361
U.S. Air, Inc. - Pass thru Certs. Ser. 1990-A1
11.2% due 03/19/05 ..................................... 1,005 797
United Air Lines
7.032% due 10/01/10 .................................... 2,290 2,178
United Airlines - Ser. 2000-1 Cl. A1
7.783% due 01/01/14 .................................... 69 66
-------
14,109
U.S. Government Agencies - 28.3%
Federal Home Loan Mortgage Corp.
6.0% due 01/01/29 ...................................... 162 159
7.5% due 01/01/30 ...................................... 59 61
Federal National Mortgage Assoc.
5.5% due 12/01/14 ...................................... 7,644 7,577
5.5% due 04/01/16 ...................................... 66 65
5.5% due 11/01/16 ...................................... 3,655 3,593
6.0% due 09/01/14 ...................................... 7,843 7,917
6.0% due 04/01/16 ...................................... 113 113
6.0% due 05/01/16 ...................................... 4,370 4,381
6.0% due 06/01/16 ...................................... 523 524
6.0% due 11/01/28 ...................................... 57 56
6.0% due 05/01/16 ...................................... 3,269 3,277
6.0% due 04/01/31 ...................................... 2,020 1,975
6.5% due 12/01/12 ...................................... 23 23
6.5% due 09/01/13 ...................................... 75 77
6.5% due 07/01/14 ...................................... 6,833 7,000
6.5% due 11/01/14 ...................................... 100 103
6.5% due 01/01/15 ...................................... 46 47
6.5% due 02/01/15 ...................................... 73 74
6.5% due 06/01/15 ...................................... 391 398
6.5% due 05/01/16 ...................................... 2,477 2524
6.5% due 11/01/28 ...................................... 8,275 8,293
6.5% due 10/01/31 ...................................... 2,451 2,451
6.5% due 11/01/31 ...................................... 8,894 8,894
Federal National Mortgage Assoc. Ser. 1997-
M8 Cl.A
6.94% due 01/25/22 ..................................... 1,313 1,380
Federal National Mortgage Assoc.
7.0% due 09/01/10 ...................................... 2,883 2,996
7.0% due 11/01/14 ...................................... 4,197 4,341
7.0% due 02/01/16 ...................................... 4,790 4,954
7.0% due 07/01/16 ...................................... 853 883
7.0% due 03/01/30 ...................................... 4,619 4,706
7.0% due 11/01/31 ...................................... 111 114
7.0% due 12/01/31 ...................................... 2,032 2,070
7.0% due 01/01/32 ...................................... 6,372 6,491
7.5% due 06/01/30 ...................................... 719 742
7.5% due 07/01/30 ...................................... 42 44
7.5% due 01/25/31 ...................................... 16,000 16,510
7.5% due 02/01/31 ...................................... 10,473 10,807
8.0% due 12/01/29 ...................................... 83 87
8.0% due 04/01/30 ...................................... 4,356 4,565
8.0% due 06/01/30 ...................................... 4,015 4,208
8.5% due 11/01/31 ...................................... 82 88
Government National Mortgage Assoc.
6.0% due 02/15/29 ...................................... 94 92
6.0% due 05/15/31 ...................................... 9,267 9,096
6.5% due 07/15/28 ...................................... 12,283 12,325
6.5% due 09/15/28 ...................................... 3,641 3,653
6.5% due 01/15/29 ...................................... 2,383 2,391
6.5% due 02/15/29 ...................................... 3,233 3,245
6.5% due 05/15/29 ...................................... 164 165
6.5% due 06/15/29 ...................................... 21,827 21,901
6.5% due 08/15/29 ...................................... 5,811 5,831
6.5% due 09/15/29 ...................................... 2,434 2,443
6.5% due 03/15/31 ...................................... 4,078 4,092
6.5% due 08/15/31 ...................................... 5,703 5,723
6.5% due 09/15/31 ...................................... 4,490 4,506
6.5% due 12/15/31 ...................................... 4,625 4,641
7.0% due 09/15/25 ...................................... 1,586 1,626
7.0% due 08/15/28 ...................................... 4,246 4,338
7.0% due 11/15/28 ...................................... 2 2
7.0% due 12/15/28 ...................................... 3,472 3,546
7.0% due 07/15/29 ...................................... 15 15
7.0% due 08/15/29 ...................................... 570 582
7.0% due 09/15/29 ...................................... 11,700 11,948
7.0% due 02/15/31 ...................................... 1,429 1,460
7.0% due 04/15/31 ...................................... 4,133 4,220
7.0% due 06/15/31 ...................................... 7 7
7.0% due 07/15/31 ...................................... 3,224 3,293
7.5% due 09/15/29 ...................................... 10,399 10,764
7.5% due 12/15/29 ...................................... 5,292 5,478
7.5% due 07/15/30 ...................................... 28 29
8.0% due 05/15/25 ...................................... 187 197
8.0% due 06/15/25 ...................................... 185 195
8.0% due 09/15/25 ...................................... 289 305
8.0% due 01/15/26 ...................................... 172 181
8.0% due 07/15/26 ...................................... 11 12
8.0% due 08/15/27 ...................................... 990 1,040
8.0% due 06/15/30 ...................................... 63 66
8.0% due 07/15/30 ...................................... 3,311 3,467
8.0% due 09/15/30 ...................................... 124 129
8.5% due 09/15/21 ...................................... 359 386
8.5% due 01/15/31 ...................................... 8,361 8,866
9.0% due 05/15/21 ...................................... 363 393
65
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
9.0% due 08/15/21 ................................. $ 346 $ 374
9.5% due 06/15/16 ................................. 311 344
---------
267,935
U.S. Governmental - 11.2%
U.S. Treasury - Bonds
5.375% due 02/15/31 ............................... 16,575 16,334
6.875% due 08/15/25 ............................... 4,035 4,601
U.S. Treasury - Notes
3.375% due 01/15/07 ............................... 17,545 17,589
5.625% due 05/15/08 ............................... 4,865 5,097
5.75% due 08/15/03 ................................ 1,405 1,472
5.75% due 08/15/10 ................................ 17,065 17,902
7.0% due 07/15/06 ................................. 18,382 20,323
7.5% due 02/15/05 ................................. 20,311 22,466
---------
105,784
---------
TOTAL PUBLICLY-TRADED BONDS- 93.4% 883,889
Shares
PREFERRED STOCK
Media - TV / Radio - 0.3%
CSC Holdings, Inc. - Ser. M ....................... 14 1,443
CSC Holdings, Inc. - Ser. H ....................... 16 1,661
---------
TOTAL PREFERRED STOCK- 0.3% 3,104
WARRANTS
Telephone - 0.0%
MetroNet Communications Corp. - CW07 144A (a)
expires 08/15/07 (Cost $58) ....................... 2 241
---------
TOTAL WARRANTS- 0.0% 241
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 7.0%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ............................. $ 66,528 66,528
-------- ---------
TOTAL INVESTMENTS- 100.7% 953,762
Cash and Receivables, less payables- (0.7)% (6,248)
-------- ---------
NET ASSETS- 100.0% $ 947,514
======== =========
(a) Pursuant to Rule 144A under the Securities Act of 1993, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2001, securities aggregated
$56,423 or 6.0% of net assets of the Portfolio.
See notes to financial statements.
66
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EMERGING MARKETS EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Brazil - 0.1%
Centrais Electricas Brasileiras SA (U1) ............... 2,148,000 $ 31
Czech Republic - 0.1%
SPT Telecom AS (T1) ................................... 2,600 27
Hong Kong - 5.5%
Aluminum Corp. of China (C2) .......................... 412,000 72
Beijing Capital International (F1) .................... 189,000 45
Beijing Datang Power Generation Co.,
Ltd. (U1) ........................................... 140,000 44
China Merchants Holdings International
Co., Ltd. (M4) ...................................... 77,000 49
China Petroleum (OD) .................................. 370,000 51
China Telecom (Hong Kong), Ltd. (T1) .................. 238,000 838
Citic Pacific, Ltd. (24) .............................. 51,000 114
CNOOC, Ltd. (OG) ...................................... 149,000 140
Denway Motors, Ltd. (A2) .............................. 198,300 62
Huaneng Power International (U1) ...................... 90,000 54
Legend Holdings (25) .................................. 28,000 14
PetroChina Company, Ltd. (OG) ......................... 262,000 46
Travelesky Technology, Ltd. (23) ...................... 77,000 60
-------
1,589
Hungary - 1.2%
Gedeon Richter Rt. (H2) ............................... 1,789 98
Magyar Tavkozlesi Rt. (U3) ............................ 15,000 50
MOL Magyar Olaj-es Gazipari Rt. (OG) .................. 3,543 64
OTP Bank Rt. (B0) ..................................... 2,084 125
-------
337
India - 5.6%
Bharat Heavy Electricals, Ltd. (B3) ................... 22,700 66
Bharat Petroleum Corp., Ltd. (OD) ..................... 11,800 46
BSES, Ltd. * (U1) ..................................... 7,000 29
Cipla, Ltd. (H2) ...................................... 2,353 56
Colgate Palmolive (S1) ................................ 11,051 38
Container Corp. of India, Ltd. (T3) ................... 24,092 73
Dabur India, Ltd. (H2) ................................ 22,000 31
Dr. Reddys Labs (H2) .................................. 4,100 79
Gujarat Ambuja Cements Ltd. (24) ...................... 15,250 60
HDFC Bank Ltd. (B0) ................................... 9,750 46
Hero Honda Motors, Ltd. * (M4) ........................ 26,750 139
Hindustan Lever Ltd. (M4) ............................. 44,250 205
Hindustan Petroleum Corp., Ltd. (OG) .................. 13,500 39
Housing Development Financing Corp.,
Ltd. (LR) ........................................... 8,304 114
Indialnfo, Ltd. (23) .................................. 10,639 4
Infosys Technologies, Ltd. * (23) ..................... 1,690 143
ITC, Ltd. * (F2) ...................................... 2,250 32
Mahanagar Telephone Nigam, Ltd. (T1) . ................ 34,250 90
Ranbaxy Laboratories, Ltd. * (H2) ..................... 3,000 43
Reliance Industries, Inc. (C1) ........................ 10,000 63
State Bank of India * (B0) ............................ 26,600 101
Strides Arcolab, Ltd. DEMAT (H2) ...................... 2,500 3
Tata Ironsteel (A5) ................................... 21,000 38
Tata Power Co. (U1) ................................... 13,100 33
Wipro Ltd. * (27) ..................................... 600 20
Zee Telefilms Ltd. (ME) ............................... 16,992 39
-------
1,630
Indonesia - 1.2%
Astra International (A3) .............................. 403,500 76
HM Sampoerna (F2) ..................................... 473,000 145
Telekomunikasi Indiana Ser. B (T1) .................... 404,000 124
-------
345
Israel - 0.4%
Elbit Systems, Ltd. (02) .............................. 1,100 21
Teva pharmaceutical Industries, Ltd. (H2) ............. 1,490 91
-------
112
Malaysia - 3.0%
British American Tobacco (Malaysia)
Berhad (F2) ......................................... 13,000 126
Digi Swisscom (T1) .................................... 38,578 51
Gamuda Berhad (24) .................................... 65,000 77
IJM Corporation Berhad (24) ........................... 18,000 20
Magnum Corp. Berhad (50) .............................. 144,000 81
Malayan Banking Berhad (B0) ........................... 52,000 114
Malaysian Pacific Industries (EP) ..................... 9,000 37
Public Bank Berhad (B0) ............................... 113,300 75
Resorts World Berhad (50) ............................. 33,000 53
Technology Resources Industries Berhad
(T1) ................................................ 98,000 75
Telekom Malaysia Berhad (T1) .......................... 33,000 89
Tenaga Nasional Berhad (U1) ........................... 26,000 73
-------
871
Mexico - 3.4%
Alfa, SA * (27) ....................................... 44,590 49
Cemex SA de CV - CPO (24) ............................. 42,098 212
Cifra SA de CV - Ser. V (R4) .......................... 71,772 196
Fomento Economico Mexicano SA de CV
(F2) ................................................ 11,099 38
Grupo Aeroportuario del Sureste SA de
CV * (T3) ........................................... 18,100 27
Grupo Carso SA de CV - Ser. A1 (27) ................... 16,700 56
Grupo Financiero Bancomer SA de CV -
Cl. O (F1) .......................................... 165,850 151
Grupo Modelo SA de CV - Ser. C (F2) ................... 9,100 20
Grupo Sanborns SA - Ser. B1 * (R4) .................... 2,725 5
Kimberly-Clark de Mexico SA de CV
(P1) ................................................ 57,930 174
Wal-Mart de Mexico SA de CV - Ser. C *
(R4) ................................................ 20,700 49
-------
977
Poland - 0.8%
Bank Polska Kasa Opieki SA * (B0) ..................... 6,544 132
KGHM Polska Miedz (C3) ................................ 7,568 25
67
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EMERGING MARKETS EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Poland - Continued
Polski Koncern Nafto (OG) ............................ 13,245 $ 63
Telekomunikacja PLN 3 * (T1) ......................... 5,662 20
-------
240
South Africa - 7.4%
Anglo American Platinum Corp., Ltd.
(C2) ............................................... 10,418 386
Anglo American plc (C2) .............................. 30,477 466
AngloGold, Ltd. (01) ................................. 2,110 74
Barlow, Ltd. (27) .................................... 27,030 132
Bidvest Group, Ltd. (27) ............................. 17,765 65
FirstRand, Ltd. (F1) ................................. 31,160 19
Gold Fields Mining (C2) .............................. 20,000 96
Harmony Gold Mining (C2) ............................. 6,400 42
Impala Platinum Holdings, Ltd. (C2) .................. 3,419 160
Liberty Life Association of Africa, Ltd.
(47) ............................................... 5,520 25
M-Cell, Ltd. (T1) .................................... 27,310 30
Nedcor, Ltd. (F1) .................................... 40
Sanlam, Ltd. * (47) .................................. 96,690 74
Sappi, Ltd. (R2) ..................................... 6,400 64
Sasol, Ltd. (OG) ..................................... 37,063 326
South African Breweries PLC (F2) ..................... 21,730 143
Standard Bank Investment Corp., Ltd.
(B0) ............................................... 19,550 51
-------
2,153
South Korea - 18.2%
Cheil Communications, Inc. (L2) ...................... 1,130 117
Good Morning Securities Co., Ltd. (I2) ............... 13,570 60
Hana Bank (B0) ....................................... 4,284 55
Humax Co., Ltd. * (HP) ............................... 10,855 263
Hyundai Mobis (A3) ................................... 18,880 273
Hyundai Motor Co., Ltd. (A3) ......................... 10,310 212
Kookmin Bank (B0) .................................... 11,685 445
Kookmin Credit Card Co. (LR) ......................... 3,130 120
Korea Electric Power Corp. (U1) ...................... 6,050 100
LG Construction Co. (24) ............................. 18,990 205
LG Electronics (EP) .................................. 10,660 202
LG Household & Health (H1) ........................... 2,750 61
LG Investment & Securities Co., Ltd. (F1) ............ 7,390 84
Pohang Iron & Steel Co., Ltd. (A5) ................... 3,110 290
Samsung Electro-Mechanics Co. (EP) ................... 5,510 184
Samsung Electronics (EP) ............................. 6,750 1,439
Samsung Securities Co., Ltd. (EP) .................... 2,900 106
Shinhan Financial (F1) ............................... 21,460 288
Shinsegaeco, Ltd. (R4) ............................... 380 40
SK Telecom Co., Ltd. (T1) ............................ 3,220 659
Tongyang Cement Co. (24) ............................. 2,050 53
Yuhan Corp. (H2) ..................................... 524 25
-------
5,281
Taiwan - 12.8%
Accton Technologies, Inc. (25) ....................... 63,000 162
Advanced Semiconductor Engineering,
Inc. (EP) .......................................... 36,000 33
Ambit Microsystems Corp. (25) ........................ 22,600 104
Asustek Computer (25) ................................ 33,750 148
AU Optronics Corp. (EP) .............................. 76,000 81
Bank Sinopac * (B0) .................................. 205,100 86
China Steel Corp. (A5) ............................... 92,740 36
Chinatrust Commercial Bank (B0) ...................... 399,027 240
Formosa Chemical & Fibre (C1) ........................ 166,560 112
Fubon Financial Holdings (F1) ........................ 125,336 109
Hon Hai Precision Industry Co., Ltd. Cl. G
* (EP) ............................................. 52,200 239
President Chain Store Corp. (R4) ..................... 29,200 62
Quanta Computer, Inc. (25) ........................... 35,500 116
Siliconware Precision (23) ........................... 121,790 108
Sunplus Technology (EP) .............................. 19,450 60
Taipei Bank (B0) ..................................... 85,000 64
Taiwan Cellular Corp. * (T1) ......................... 92,168 123
Taiwan Semiconductor (EP) ............................ 484,800 1,214
United Microelectronics Corp. (EP) ................... 413,250 603
-------
3,700
Thailand - 1.0%
Advanced Information Services (T1) ................... 90,600 84
Delta Electronics (EP) ............................... 50,720 33
PTT Exploration & Production Public
Co., Ltd. (OG) ..................................... 23,400 59
Shin Corp. (T1) ...................................... 233,800 82
SIAM Cement Co. (24) ................................. 3,800 40
-------
298
Turkey - 2.6%
Akbank TAS (B0) ...................................... 22,458,600 71
Aksigorta (47) ....................................... 8,087,000 67
Arcelik AS (HP) ...................................... 2,151,000 23
Haci Omer Sabanci Holding AG (I2) .................... 14,596,000 79
Koc Holding AS (27) .................................. 774,000 20
Netas Northern Electric
Telekomunikasyon AS (TE) ........................... 1,369,639 48
Tupras-Turkiye Petrol Rafinerileri AS
(OG) ............................................... 5,517,400 46
Turkcell Iletisim Hizmetleri AS (T1) ................. 11,076,693 95
Turkiye Garanti Bankasi AS (B0) ...................... 17,381,000 32
Turkiye Is Bankasi (Isbank) - Cl. C (B0) ............. 7,703,000 43
Vestel Elektronik Sanayi ve Ticaret AS
(EP) ............................................... 21,836,620 55
Yapi ve Kredi Bankasi AS (B0) ........................ 58,101,567 177
-------
756
United Kingdom - 1.7%
Anglo American PLC (C2) .............................. 28,008 424
68
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EMERGING MARKETS EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
United Kingdom - Continued
South African Breweries plc * (F2) ..................... 9,119 $ 62
-------
486
United States - 25.3%
Alvarion, Ltd. (TE) .................................... 3,060 11
America Movil SA de CV - ADR Ser. L
(T1) ................................................. 28,300 551
Anglogold, Ltd. - ADR (C2) ............................. 2,490 45
Banco Bradesco SA - ADR (B0) ........................... 2,580 66
Brasil Telecom Participacoes SA (T1) ................... 3,560 148
Cemex SA de CV - ADR Participation
Certs. (24) .......................................... 1,149 28
Centrais Electricas Brasileirias SA - ADR
Cl. B (U1) ........................................... 200 1
Check Point Software Technologies, Ltd.
(23) ................................................. 2,071 83
Companhia De Bebidas ADR (F2) .......................... 10,360 210
Companhia Energetica de Minas Gerias -
ADR (U1) ............................................. 4,640 66
Companhia Vale do Rio Doce - ADR (T1) .................. 1,491 35
Compania de Telecomunicaciones de
Chile SA (U3) ........................................ 7,440 100
ECI Telecommunications, Ltd. (ME) ...................... 27,973 150
Embraer - Empresa Brasileira de
Aeronautica SA (02) .................................. 2,862 63
Enersis SA ADR - ADR (U1) .............................. 1,900 25
Fomento Economico Mexicano SA de CV
- ADR (F2) ........................................... 7,763 268
Gedeon Richter, Ltd. - GDR (H2) ........................ 1,167 64
Grupo Aeroportuario Sur - ADR (T3) ..................... 6,100 94
Grupo Financiero BBVA Bancomer, SA
de CV (F1) ........................................... 8,300 152
Grupo Televisa SA - GDR (ME) ........................... 6,786 293
Harmony Gold Mining, Ltd. - ADR (C2) ................... 2,393 16
HDFC Bank, Ltd. - ADR (B0) ............................. 3,300 46
Hon Hai Precision Industry Co., Ltd. -
GDR (EP) ............................................. 3,920 40
ITC, Ltd. - GDR (F2) ................................... 2,000 31
Korea Electric Power Corp. - ADR (U1) .................. 3,850 35
Korea Telecom Corp. - ADR (T1) ......................... 8,220 167
Korea Tobacco & Ginseng Corp. GDR
144A (a) (F1) ........................................ 8,200 61
LuKoil Holding - ADR (OG) .............................. 3,537 173
Magyar Tavkozlesi Rt. - ADR (U3) ....................... 2,934 50
Mahanagar Telephone Nigam Ltd. (U3) .................... 5,500 29
Marvell Technology Group, Ltd. (EP) .................... 1 0
Mobile Systems - ADR (T1) .............................. 2,000 71
Mol Magyar Olaj es Gazipari Right (OG) ................. 110 2
OAO Gazprom - ADR (U2) ................................. 2,100 21
OTP Bank Rt. (B0) ...................................... 1,270 76
Petroleo Brasileiro SA (OG) ............................ 13,450 313
Petroleo Brasileiro SA ADR - ADR (OG) .................. 8,925 198
RADVision, Ltd. (23) ................................... 7,707 59
Radware, Ltd. (23) ..................................... 4,625 60
RAO Unified Energy Systems - GDR
(U1) ................................................. 43,196 680
Sappi, Ltd. ADR (P1) ................................... 2,060 21
SK Telecom Co., Ltd. - ADR (T1) ........................ 1,700 37
State Bank of India - GDR (B0) ......................... 1,500 13
Surgutneftegaz (OD) .................................... 880 18
Surgutneftegaz - ADR (OD) .............................. 32,927 515
Tele Celular Sul Participacoes SA - ADR
(T1) ................................................. 2,798 46
Tele Norte Leste Participacoes SA - ADR
(T1) ................................................. 2,000 31
Telefonos De Mexico, SA - ADR (T1) ..................... 26,950 944
Telekomunikacja Polska - GDR (T1) ...................... 29,065 102
Telemig Celular Participacoes SA - ADR
(T1) ................................................. 697 26
Telesp Celular Participacoes SA - ADR
(T1) ................................................. 3,164 29
Teva Pharmaceutical Industries, Ltd. -
ADR (H2) ............................................. 7,407 457
TTI Team Telecom International, Ltd.
(T1) ................................................. 6,371 159
Turkcell Iletisim Hizmetleri AS - ADR
(T1) ................................................. 473 10
Unibanco - Uniao de Bancos Brasileiros
SA - GDR (B0) ........................................ 4,364 97
Vimpel-Communications - ADR (T1) ....................... 1,200 31
Votorantim Celulose e Papel SA - ADR
(P1) ................................................. 4,800 85
Wal-Mart de Mexico SA de CV - ADR
(R4) ................................................. 3,016 82
Wipro, Ltd. (27) ....................................... 1,050 38
Yapi ve Kredi Bankasi AS - GDR (B0) .................... 1,567 5
-------
7,327
-------
TOTAL COMMON STOCK- 90.3% 26,160
PREFERRED STOCK
Brazil - 4.7%
Banco Bradesco SA (B0) ................................. 9,071 49
Banco Itau SA (B0) ..................................... 2,570 196
Brasil Telecom SA (T1) ................................. 12,454 71
Celular CRT Participacoes (T1) ......................... 795 172
Centrais Electricas Brasileires SA (U1) ................ 3,197 43
Compahnia de Bebidas das Americas (F2) ................. 190 39
Companhia Energetica de Minas Gerais
(U1) ................................................. 7,837 112
Companhia Vale do Rio Doce (C2) ........................ 13,797 321
Embratel Participacoes SA (U3) ......................... 8,835 38
Petroleo Brasileiro SA - Petrobras (OD) ................ 5,310 117
Tele Celular Sul Participacoes SA (T1) ................. 14,949 36
Tele Centro Sul Participacoes SA (T1) .................. 9,356 74
Telemar Norte Leste (T1) ............................... 2,771 72
69
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
EMERGING MARKETS EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
PREFERRED STOCK - Continued
Telemig Celular Participacoes SA (T1) ............. 11,616 $ 21
---------
1,361
South Korea - 0.4%
Samsung Electronics (EP) .......................... 1,170 102
---------
TOTAL PREFERRED STOCK- 5.1% 1,463
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 8.6%
John Hancock Joint Account (Note B)
2.055% due 01/02/02 ............................. $ 2,493 2,493
-------- ---------
TOTAL INVESTMENTS- 104.0% 30,116
Cash and Receivables, less payables- (4.0)% (1,160)
-------- ---------
NET ASSETS- 100.0% $ 28,956
======== =========
ADR-American Depository Receipt.
* Non-income producing security.
GDR-Global Depository Receipt
(a)Pursuant to Rule 144A under the Securities Act of 1993, these securities may
be resold in transactions exempt from registration, normally to qualified
institutional buyers. At December 31, 2001, securities aggregated $61 or .21% of
net assets of the Portfolio.
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED)
Market % of
Industry Value Long-Term
Industry Abbreviation (000s) Investments
Electronic Products & Services ....... EP $ 3,629 13.0%
Telecommunication Services ........... T1 3,574 13.0%
Bank ................................. B0 2,402 9.0%
Aerospace & Defense .................. 2 882 7.0%
Metals & Mining ...................... C2 665 6.0%
Oil & Natural Gas Exploration &
Production ........................ OG 1,470 5.0%
Telephone ............................ U3 1,327 5.0%
Electric Power ....................... U1 1,327 5.0%
Food, Beverage & Tobacco ............. F2 1,176 4.0%
Financial Services ................... F1 804 3.0%
Construction ......................... 24 768 2.7%
Oil .................................. OD 696 2.5%
Computer Equipment ................... 25 635 2.4%
Automobile ........................... A3 561 2.0%
Computer Software & Services ......... 23 516 1.9%
Media - TV / Radio ................... ME 483 1.8%
Retail - Department Stores ........... R4 434 1.6%
Consumer Miscellaneous ............... M4 394 1.4%
Health Care Products ................. H2 388 1.0%
Precious Metals/Gems/Stones .......... C3 386 1.4%
Diversified Operations ............... 27 381 1.4%
Steel ................................ A5 364 1.3%
Household Appliances /
Furnishings ....................... HP 286 1.0%
Paper & Forest Products .............. P1 280 1.0%
Personal & Commercial Lending ........ LR 234 1.0%
Transportation Services .............. T3 195 0.7%
Chemical ............................. C1 175 0.6%
--------- -----------
$ 27,623 100.0%
========= ===========
70
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- ------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Argentina - 0.2%
Banco Frances SA (B0) ............................ 10,000 $ 29
GPO Finance Galicia (F1) ......................... 40,460 19
IRSA Inversiones y Representaciones
SA (R2) .......................................... 29,022 21
PC Holdings SA - Cl. B (F1) ...................... 53,132 92
Siderar SAIC - Cl. A (A5) ........................ 1,303 1
Siderca SAIC (A5) ................................ 35,000 81
-------
243
Australia - 2.4%
AMP Diversified Property Trust (R3) .............. 106,700 141
AMP, Ltd. * (47) ................................. 23,500 222
Aristocrat Leisure Limited (50) .................. 13,100 44
Brambles Industries, Ltd. (27) ................... 2,890 15
Broken Hill Proprietary Co., Ltd. (27) ........... 43,785 235
Coles Myer, Ltd. (R4) ............................ 36,200 156
CSL, Ltd. (H1) ................................... 2,600 69
CSR, Ltd. (24) ................................... 31,200 108
Foster's Brewing Group, Ltd. (F2) ................ 39,000 97
General Property Trust (R3) ...................... 53,300 77
Lend Lease Corp. (F1) ............................ 5,100 34
National Australia Bank, Ltd. (B0) ............... 20,700 338
News Corp., Ltd. (ME) ............................ 29,300 234
Onesteel. Ltd. (A5) .............................. 8,775 5
Orica, Ltd. (27) ................................. 8,400 31
Pacific Dunlop, Ltd. (27) ........................ 59,000 31
Paperlinx (P1) ................................... 4,800 12
QBE Insurance Group, Ltd. (47) ................... 9,400 37
Rio Tinto, Ltd. (C3) ............................. 6,900 131
Santos, Ltd. (OG) ................................ 18,500 59
Tabcorp Holdings, Ltd. (50) ...................... 16,400 83
Telstra Corp., Ltd. (T1) ......................... 88,200 246
Westfield Trust (R3) ............................. 54,000 96
Westpac Banking Corp., Ltd. (B0) ................. 19,900 160
WMC, Ltd. (27) ................................... 26,300 129
Woolworth's, Ltd. (R4) ........................... 30,300 174
-------
2,964
Austria - 1.1%
Bohler-Uddeholm AG (A5) .......................... 1,500 60
BWT AG (65) ...................................... 2,000 44
Erste Bank NPV (B0) .............................. 2,400 127
Flughafen Wien AG (T3) ........................... 4,000 107
Mayr-Melnhof Karton Ag (P1) ...................... 1,800 85
Oesterreichische
Elektrizitaetswirtschafts AG (U1) ................ 3,900 292
OMV AG (OG) ...................................... 3,000 251
RHI AG (27) ...................................... 2,900 19
Telekom Austria NPV (T1) ......................... 25,198 209
VA Technologie AG (E3) ........................... 2,100 46
Wienerberger Baustoffindustrie AG
(24) ............................................. 7,200 101
-------
1,341
Belgium - 1.7%
Barco NV (EP) .................................... 559 20
BarcoNet NV * (EP) ............................... 1,118 6
Bekaert NV (MM) .................................. 890 34
Colruyt, NV (P5) ................................. 1,870 82
Compagnie Maritime Belge SA (T3) ................. 1,621 74
D' Ieteren SA (A3) ............................... 190 31
Delhaize SA (P5) ................................. 1,255 65
Electrabel SA (U1) ............................... 1,536 320
Fortis NPV (27) .................................. 20,292 527
GPE Bruxelles (27) ............................... 4,265 224
Heidelberger Zement AG (24) ...................... 1,048 0
Interbrew NPV (F2) ............................... 2,636 72
KBC Bancassurance Holding NV (B0) ................ 7,640 256
NV Union Miniere SA * (C2) ....................... 1,461 58
Solvay SA (F1) ................................... 2,115 127
UCB SA (H2) ...................................... 4,500 182
-------
2,078
Brazil - 0.2%
Centrais Electricas Brasileiras SA (U1) .......... 1,477,000 21
Companhia de Bebidas das Americas *
(F2) ........................................... 128,000 24
Petrol Brasilieros (0D) .......................... 5,500 125
Tele Norte Leste Participacoes SA (U3) ........... 3,196,000 42
-------
212
Czech Republic - 0.2%
Ceska Sporitelna AS (B0) ......................... 3,100 26
Ceske Energeticke Zavody AS (U1) ................. 21,600 47
Komercni Banka AS (B0) ........................... 1,700 49
SPT Telecom AS (T1) .............................. 6,300 64
-------
186
Denmark - 0.9%
AS Dampskibsselskabet Svendborg -
Cl. B (T3) ..................................... 18 164
Dampskibsselskabet AF 1912 - Cl. B
(T3) ........................................... 15 102
Danisco AS (F2) .................................. 1,250 45
Danske Bank (B0) ................................. 11,500 185
ISS AS (B1) ...................................... 1,650 81
Novo Nordisk AS (H2) ............................. 8,250 337
Novozymes AS - Ser. B * (OG) ..................... 1,450 29
Tele Danmark AS (T1) ............................. 4,150 148
Vestas Wind Systems AS (DI) ...................... 2,500 68
-------
1,159
Finland - 0.9%
Nokia Oyj (H2) ................................... 36,000 928
Sampo Insurance Co. plc (47) ..................... 4,700 37
Sonera Oyj (T1) .................................. 7,788 39
UPM-Kymmene Corp. * (P1) ......................... 2,100 70
-------
1,074
71
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
France - 8.6%
Accor SA (50) ................................ 992 $ 36
Air Liquide (C1) ............................. 1,306 183
Alcatel (TE) ................................. 18,887 323
AXA (47) ..................................... 23,551 492
Banque Nationale de Paris (B0) ............... 6,348 568
Bouygues SA (24) ............................. 4,696 154
Cap Gemini SA (B1) ........................... 1,622 117
Carrefour SA (P5) ............................ 8,586 446
Casino Guichard-Perrachon SA (P5) ............ 1,636 126
Club Mediterranee SA (50) .................... 838 31
Compagnie de St. Gobain (24) ................. 1,240 187
Dassault Systemes SA (23) .................... 1,995 96
Essilor International (27) ................... 1,880 57
France Telecom (T1) .......................... 11,292 451
Groupe Danone (S1) ........................... 1,897 231
Imercys (24) ................................. 178 17
L'Oreal SA (S1) .............................. 9,329 672
Lafarge SA (24) .............................. 1,850 173
Lagardere S.C.A. (27) ........................ 2,436 102
LVMH (Louis Vuitton Moet Hennessy) (F2) ...... 4,983 203
Michelin (A2) ................................ 1,649 54
Pernod Ricard (F2) ........................... 369 29
Peugoet SA (A3) .............................. 4,133 176
Pinault-Printemps-Redoute SA (R4) ............ 1,465 189
Rhone-Poulenc SA (B0) ........................ 11,027 783
Sagem SA (EP) ................................ 627 38
Sanofi-Synthelabo SA * (H2) .................. 9,205 687
Schneider SA (M1) ............................ 2,599 125
Societe BIC SA (B1) .......................... 1,234 42
Societe Generale - Cl. A (B0) ................ 6,189 346
STMicroelectronics (EP) ...................... 12,166 390
SUEZ (27) .................................... 14,029 425
Thomson CFS (EP) ............................. 2,736 94
Total Fina SA - Cl. B (OG) ................... 10,553 1,507
Unibail SA (R3) .............................. 932 47
Usinor SA (A5) ............................... 3,397 42
Valeo SA (A2) ................................ 1,489 59
Vivendi Universal SA (27) .................... 15,051 824
-------
10,522
Germany - 11.6%
Adidas-Salomon AG (L1) ....................... 1,620 121
Allianz AG - Reg. (47) ....................... 5,930 1,404
BASF AG (C1) ................................. 16,160 601
Bayer AG (C1) ................................ 17,330 552
Bayerische Vereinsbank AG (B0) ............... 13,222 404
Beiersdorf AG (S1) ........................... 2,220 252
DaimlerChrysler AG (A3) ...................... 26,144 1,125
Deutsche Bank AG (B0) ........................ 16,050 1,134
Deutsche Telekom AG (U3) ..................... 72,240 1,241
Deutshe Post (B9) ............................ 1,324 18
Douglas Holding AG (S1) ...................... 1,090 30
E.On AG (27) ................................. 18,998 984
Epcos AG (EP) ................................ 1,246 62
Fresenius Medical Care AG (H1) ............... 2,350 145
Heidelberg Zement * (24) ..................... 1,878 90
Infineon Technologies AG (EP) ................ 3,429 70
Kamps AG (F2) ................................ 2,666 21
Karstadt AG (R4) ............................. 3,250 129
Linde AG (E3) ................................ 3,300 134
Lufthansa AG (T3) ............................ 4,730 62
MAN AG (27) .................................. 3,900 83
Merck KGAA (H2) .............................. 2,360 87
Metro AG * (R4) 7,450 264
Muenchener Rueckversicherungs-
Gesellschaft AG - Reg. (47) ................ 3,910 1,061
Preussag AG (27) ............................. 6,400 157
RWE AG (U1) .................................. 14,500 545
SAP AG (23) .................................. 7,880 1,026
Schering AG (H2) ............................. 4,890 259
SGL Carbon AG (C1) 1,190 24
Siemens AG (27) .............................. 23,840 1,578
Thyssen Krupp AG (24) 5,696 83
Volkswagen AG (A3) ........................... 5,985 280
WCM Beteiligungs-und Grundbesitz
AG (27) .................................... 8,076 88
-------
14,114
Greece - 0.6%
Alpha Credit Bank (B0) ....................... 3,993 71
Aluminum Co. of Greece (C2) .................. 470 14
Bank of Piraeus (B0) ......................... 6,942 62
Commercial Bank of Greece (B0) ............... 2,627 87
EFG Eurobank * (B0) .......................... 3,211 45
Hellenic Bottling Co. SA (F2) ................ 63 1
Hellenic Telecommunication
Organization SA (T1) ....................... 3,042 49
Intracom SA (TE) ............................. 3,016 39
Lambrakis Publishing (L2) .................... 2,408 9
National Bank of Greece SA (B0) .............. 9,789 233
Panafon Hellenic Telecom SA (T1) ............. 7,597 39
Titan Cement Co. SA (24) ..................... 1,400 50
Viohalco ORD (27) ............................ 3,099 25
-------
724
Hong Kong - 1.7%
Beijing Datang Power Generation Co.,
Ltd. (U1) .................................. 165,000 52
Cathay Pacific Airways (T3) .................. 20,000 26
China Southern Airlines Company Ltd.
* (T3) ..................................... 97,000 28
China Telecom (Hong Kong), Ltd. (T1) ......... 114,000 401
Citic Pacific, Ltd. (E3) ..................... 34,000 76
CLP Holdings, Ltd. (U1) ...................... 30,600 117
Guangshen Railway Co., Ltd. (T3) ............. 329,000 54
Hang Seng Bank, Ltd. (B0) .................... 19,500 215
72
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Hong Kong - Continued
Henderson Land Development Co.,
Ltd. (R2) ................................... 22,000 $ 100
HSBC Holdings plc (B0) ........................ 4,900 57
Hutchison Whampoa, Ltd. (B1) .................. 28,500 276
Johnson Electric Holdings, Ltd. (U1) .......... 7,000 7
Legend Holdings (25) .......................... 122,000 62
Li & Fung, Ltd. (B1) .......................... 36,000 41
New World Development Co., Ltd. (R2) .......... 48,000 42
Pacific Century Cyberworks, Ltd. * (TE) ....... 159,380 44
Sun Hung Kai Properties, Ltd. (R3) ............ 29,000 234
Swire Pacific, Ltd. - Cl. A (27) .............. 23,500 128
Wharf (Holdings), Ltd. (27) ................... 36,000 88
-------
2,048
Hungary - 0.4%
Gedeon Richter Rt. (H1) ....................... 900 49
Magyar Tavkozlesi Rt. (U3) .................... 36,200 119
MOL Magyar Olaj-es Gazipari Rt. (OG) .......... 7,500 136
OTP Bank Rt. (B0) ............................. 2,300 138
-------
442
India - 0.0%
Mahindra & Mahindra, Ltd. - GDR (A3) .......... 16,500 28
Ireland - 0.6%
Allied Irish Banks plc (B0) ................... 10,300 119
CRH plc (E3) .................................. 5,600 99
Elan Corp. (H2) ............................... 4,050 187
Irish Life & Permanent plc (F1) ............... 9,553 97
Jefferson Smurfit Group plc (B2) .............. 39,900 87
Kerry Group plc (F2) .......................... 5,800 71
Ryanair Holdings * (T3) ....................... 12,468 79
-------
739
Israel - 0.5%
Bank Hapoalim (B0) ............................ 43,700 94
Bezeq Israeli Telecommunication
Corp., Ltd. (U3) ............................ 75,700 102
IDB Holding Corp., Ltd. (I2) .................. 5,100 140
Makteshim-Agan Industries, Ltd. * (C1) ........ 26,900 55
Teva pharmaceutical Industries, Ltd. (H2) ..... 2,900 178
-------
569
Italy - 7.5%
Alitalia SpA (T3) ............................. 50,000 45
Assicurazioni Generali (47) ................... 38,132 1,059
Autogrill SpA (P5) ............................ 10,001 93
Autostrade SpA (A3) ........................... 28,175 196
Banca Intesa SpA (B0) ......................... 203,200 482
Banca Popolare di Milano (B0) ................. 18,100 63
BCA Di Roma (B0) .............................. 15,000 30
Benetton Group SpA (R4) ....................... 10,397 118
Bipop-Carire SpA (B0) ......................... 39,856 66
Bulgari SpA (R4) .............................. 8,900 69
Enel SpA * (U1) ............................... 111,599 629
ENI EUR1 (OD) ................................. 116,900 1,465
Fiat SpA (A3) ................................. 15,350 234
Fiat SpA - RNC (A3) ........................... 720 7
Italcementi SpA (24) .......................... 10,920 86
Italgas (U2) .................................. 12,650 119
La Rinascente SpA (24) ........................ 10,500 37
Mediaset SpA (L2) ............................. 23,200 169
Mediobanca SpA (I2) ........................... 19,500 218
Mondadori (Arnoldo) Editore SpA (L2) .......... 10,800 68
Parmalat Finanziaria (F2) ..................... 35,352 95
Pirelli SpA (27) .............................. 71,100 125
Riunione Adriatica di Sicorta SpA (47) ........ 21,129 249
Riunione Adriatica di Sicorta SpA - RNC (47) .. 2,920 29
San Paolo-IMI SpA (B0) ........................ 43,680 468
Seat Pagine Gialle SpA (L2) ................... 86,577 70
Telecom Italia Mobile SpA (T1) ................ 217,600 1,214
Telecom Italia Mobile SpA - RNC (T1) .......... 8,200 31
Telecom Italia SpA (T1) ....................... 105,050 898
Telecom Italia SpA - RNC (T1) ................. 25,450 136
Tiscali SpA (27) .............................. 4,669 42
UniCredito Italiano SpA (B0) .................. 146,600 588
-------
9,198
Japan - 26.3%
77 Bank, Ltd. (B0) ............................ 18,000 80
Acom Co., Ltd. (LR) ........................... 3,200 233
Advantest (EP) ................................ 2,400 136
Ajinomoto Co., Inc. (F2) ...................... 18,000 176
Alps Electric Co. (EP) ........................ 6,000 41
Amada Co., Ltd (M1) ........................... 11,000 44
Asahi Bank, Ltd. (B0) ......................... 67,000 42
Asahi Breweries, Ltd. (F2) .................... 13,000 117
Asahi Chemical Industry Co., Ltd. (C1) ........ 39,000 137
Asahi Glass Co., Ltd. (HP) .................... 30,000 177
Asatsu DK (B9) ................................ 1,000 20
Bank of Yokohama, Ltd. (B0) ................... 22,000 77
Benesse Corp. (B1) ............................ 2,600 67
Bridgestone Corp. (A2) ........................ 21,000 222
Canon, Inc. (B1) .............................. 18,000 620
Casio Computer Co. (EP) ....................... 9,000 39
Central Japan Railway Co. (T3) ................ 55 356
Chugai Pharmaceutical Co., Ltd. (H2) .......... 4,000 46
Citizen Watch Co., Ltd. (R4) .................. 10,000 50
Credit Saison Co., Ltd. (F1) .................. 3,600 70
CSK Corp. (23) ................................ 2,100 49
Dai-Ichi Pharmaceutical Co., Ltd. (H2) ........ 7,000 136
Dai-Nippon Ink & Chemicals, Inc. (C1) ......... 24,000 34
Dai-Nippon Printng Co., Ltd. (B1) ............. 19,000 190
73
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Japan - Continued
Daicel Chemical Industries, Ltd. (C1) ............... 10,000 $ 29
Daiei, Inc. (M4) .................................... 9,000 5
Daikin Industries, Ltd. (24) ........................ 5,000 78
Dainippon Screen Manufacturing Co., Ltd. (B3) ....... 7,000 22
Daito Trust Construction Co., Ltd. (R1) ............. 3,600 55
Daiwa Bank Holdings NPV (B0) ........................ 52,000 33
Daiwa House Industry Co., Ltd. (I1) ................. 16,000 91
Daiwa Securities Group, Inc. (I2) ................... 30,000 158
Denki Kagaku Kogyo (EP) ............................. 3,000 7
Denso Corp. (EP) .................................... 19,000 252
East Japan Railway Co. (T3) ......................... 96 464
Ebara Corp. (M1) .................................... 9,000 54
Eisai Co. Ltd. (H2) ................................. 8,000 199
Fanuc, Ltd. (B3) .................................... 3,900 166
Fast Retailing Co. (R4) ............................. 300 27
FUJI Machine Manufacturing Co, LTD. (M1) ............ 1,000 13
Fuji Photo Film (50) ................................ 10,000 357
Fuji Soft ABC, Inc. (23) ............................ 1,000 40
Fuji Television Network, Inc. (ME) .................. 11 44
Fujikura (B3) ....................................... 11,000 41
Fujitsu, Ltd. (B3) .................................. 46,000 335
Furukawa Electric Co. (TE) .......................... 16,000 85
Hirose Electric Co., Ltd. (EP) ...................... 1,200 82
Hitachi, Ltd. (EP) .................................. 77,000 564
Honda Motor Co. (A3) ................................ 19,700 786
Hoya Corp. (EP) ..................................... 3,000 179
Isetan Co., Ltd. (R4) ............................... 7,000 72
Ishikawajima-Harima Heavy Industries
Co., Ltd. (27) .................................... 28,000 44
Ito-Yokado Co., Ltd. (R4) ........................... 10,000 452
Itochu Corp. (27) ................................... 34,000 77
Japan Airlines Co., Ltd. (T3) ....................... 24,000 58
Japan Energy Corp. (OG) ............................. 26,000 29
Japan Tobacco, Inc. (F2) ............................ 41 258
JGC Corp. (DI) ...................................... 5,000 37
Joyo Bank, Ltd. (B0) ................................ 29,000 80
Jusco Co., Ltd. * (R4) .............................. 8,000 181
Kajima Corp. (24) ................................... 25,000 68
Kamigumi Co., Ltd. (T3) ............................. 2,000 8
Kanebo (27) ......................................... 5,000 8
Kaneka Corp. (C1) ................................... 5,000 30
Kansai Electric Power Co., Inc. (U1) ................ 5,200 74
KAO Corp. (S1) ...................................... 16,000 333
Kawasaki Heavy Industry, Ltd. (27) .................. 37,000 34
Kawasaki Kisen (T3) ................................. 23,000 31
Kawasaki Steel Corp. (A5) ........................... 87,000 88
Keihin Electric Express Railway Co., Ltd. (T3) ...... 17,000 64
Kinden Corp. (E3) ................................... 12,000 56
Kinki Nippon Railway (T3) ........................... 36,000 115
Kirin Brewery Co. (F2) .............................. 21,000 150
Kokuyo Co. (B1) ..................................... 6,000 50
Komatsu, Ltd. (M1) .................................. 28,000 100
Komori Corp. (M1) ................................... 3,000 34
Konami Co., Ltd. (25) ............................... 3,500 104
Konica Corp. (50) ................................... 11,000 65
Kubota Corp. (M1) ................................... 40,000 105
Kuraray Co., Ltd. (L1) .............................. 10,000 64
Kurita Water Industries, Ltd. (65) .................. 3,000 37
Kyocera Corp. (EP) .................................. 4,100 268
Kyowa Hakko Kogyo Co., Ltd. (H2) .................... 9,000 43
Makita Corp. (M4) ................................... 8,000 39
Marubeni Corp. (27) ................................. 22,000 13
Marui Co., Ltd. (R4) ................................ 10,000 118
Matsushita Communication Industries (T1) ............ 600 16
Matsushita Electric Industrial Co. (EP) ............. 45,000 578
Meitic Corp. (25) ................................... 1,000 24
Minebea Co., Ltd. (C1) .............................. 4,000 22
Mitsubishi Chemical Corp. (C1) ...................... 56,000 119
Mitsubishi Corp. (27) ............................... 34,000 221
Mitsubishi Electric Corp. (EP) ...................... 56,000 217
Mitsubishi Estate Co., Ltd. (R1) .................... 30,000 220
Mitsubishi Gas Co. (U2) ............................. 5,000 7
Mitsubishi Heavy Industries, Ltd. (M1) .............. 74,000 198
Mitsubishi Logistcs Corp. (T3) ...................... 7,000 50
Mitsubishi Materials Corp. (C3) ..................... 39,000 53
Mitsubishi Paper Mills (P1) ......................... 13,000 19
Mitsubishi Rayon Co., Ltd. (L1) ..................... 23,000 60
Mitsubishi Tokyo Finance (F1) ....................... 152 1,020
Mitsui & Co., Ltd. (27) ............................. 31,000 154
Mitsui Engineering & Shipbuilding
Co., Ltd. (24) .................................... 15,000 15
Mitsui Fudosan Co., Ltd. (R1) ....................... 21,000 160
Mitsui Marine & Fire Insurance Co.,
Ltd. (47) ......................................... 30,000 141
Mitsui Mining & Smelting Co., Ltd. (C2) ............. 17,000 56
Mitsukoshi, Ltd. (R4) ............................... 14,000 39
Mizuho Holdings, Inc. * (F1) ........................ 193 393
Mori Seiki Co., Ltd. (M1) ........................... 5,000 30
Murata Manufacturing Co., Ltd. (EP) ................. 5,200 312
NAMCO, Ltd. (50) .................................... 2,600 50
NEC Corp. (25) ...................................... 41,000 418
NGK Insulators (A2) ................................. 11,000 81
NGK Spark Plug Co. (A2) ............................. 7,000 50
Nidec Corp. (M1) .................................... 1,800 95
Nikko Securities Co., Ltd. (I2) ..................... 6,000 27
Nikon Corp. (50) .................................... 10,000 77
Nintendo Corp., Ltd. (50) ........................... 3,200 561
Nippon Comsys Corp. (E3) ............................ 4,000 21
Nippon Express Co., Ltd. (T3) ....................... 28,000 95
Nippon Mitsubishi Oil Co., Ltd. (OG) ................ 29,000 111
Nippon Sheet Glass Co., Ltd. (27) ................... 11,000 35
Nippon Steel Co. (A5) ............................... 133,000 192
74
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Japan - Continued
Nippon Telegraph & Telephone Corp. (U3) ......... 200 $ 652
Nippon Unipac Holding, Co. * (P1) ............... 27 121
Nippon Yusen Kabushiki Kaisha (T3) . ............ 40,000 121
Nissan Motor Acceptance Corp. (A3) . ............ 81,000 430
Nitto Denko Corp. (EP) .......................... 4,000 92
Nomura Securities Co., Ltd. (I2) ................ 39,000 500
NSK, Ltd. (C2) .................................. 13,000 45
NTN Corp. (MM) .................................. 9,000 15
NTT DATA Corp. (B9) ............................. 13 46
NTT Mobile Communications
Network, Inc. (T1) ............................ 45 529
Obayashi Corp. (24) ............................. 16,000 45
Oji Paper Co. (P1) .............................. 27,000 107
Olympus Optical Co. (50) ........................ 6,000 86
Omron Corp. (EP) ................................ 8,000 107
Onward Kashiyama Co., Ltd. (L1) ................. 7,000 67
Oriental Land Co., Ltd. (50) .................... 2,400 165
Orix Corp. (F1) ................................. 1,100 99
Osaka Gas Co. (U2) .............................. 51,000 122
Pioneer Corp. (EP) .............................. 5,000 109
Promise Co., Ltd. (F2) .......................... 2,600 141
Ricoh Co., Ltd. (EP) ............................ 4,000 74
Rohm Co., Ltd. (EP) ............................. 2,400 312
Sankyo Co., Ltd. (H2) ........................... 12,000 206
Sanrio Co., Ltd. * (M4) ......................... 3,000 24
Sanyo Electric Co. (EP) ......................... 47,000 222
Secom Co. (B1) .................................. 4,500 226
Sega Enterprises (M4) ........................... 4,300 86
Sekisui Chemical Co. (C1) ....................... 20,000 53
Sekisui House, Ltd. (24) ........................ 21,000 152
Seven-Eleven Japan (P5) ......................... 4,000 146
Sharp Corp. (EP) ................................ 30,000 351
Shimamura Co., Ltd. (R4) ........................ 1,000 59
Shimano, Inc. (50) .............................. 5,000 57
Shimizu Corp. (24) .............................. 19,000 64
Shin-Etsu Chemical Co. (C1) ..................... 9,000 324
Shionogi & Co., Ltd. (H2) ....................... 6,000 103
Shiseido Co., Ltd. (C1) ......................... 14,000 129
Shizuoka Bank, Ltd. (B0) ........................ 19,000 144
Showa Denko (B1) ................................ 23,000 25
Showa Shell Sekiyu K.K. (OG) .................... 12,000 64
Skylark Co., Ltd. (F2) .......................... 3,000 50
SMC Corp. (M1) .................................. 1,900 193
Softbank Corp. (23) ............................. 6,800 110
Sony Corp. (EP) ................................. 20,200 924
Sumitomo Bank (B0) .............................. 116,000 491
Sumitomo Chemical Co. (C1) ...................... 39,000 132
Sumitomo Corp. (27) ............................. 20,000 92
Sumitomo Electric Industries (TE) ............... 19,000 133
Sumitomo Heavy Industry (M1) .................... 23,000 12
Sumitomo Metal Industries (A5) .................. 102,000 33
Sumitomo Metal Mining Co. (C3) .................. 17,000 57
Sumitomo Osaka Cement (24) ...................... 5,000 7
Sumitomo Trust & Banking (06) ................... 4,000 16
Taiheiyo Cement (24) ............................ 17,000 26
Taisho Pharmaceutical Co., Ltd. (H2) ............ 9,000 141
Taiyo Yuden Co., Ltd. (EP) ...................... 4,000 61
Takara Shuzo Co., Ltd. (F2) ..................... 4,000 34
Takashimaya Co. (R4) ............................ 9,000 53
Takeda Chemical Industries (C1) ................. 21,000 951
Takefuji Corp. (LR) ............................. 2,980 216
TDK Corp. (EP) .................................. 600 28
Teijin, Ltd. (L1) ............................... 25,000 96
Teikoku Oil Co., Ltd. (OG) ...................... 15,000 55
Terumo Corp. (H2) ............................... 4,000 52
The Bank of Fukuoka, Ltd. (B0) .................. 8,000 27
The Chuo Mitsui Trust and Banking
Co., Ltd. (B0) ................................ 17,000 17
TIS, Inc. (B1) .................................. 1,000 24
Tobu Railway Co., Ltd. (T3) ..................... 29,000 76
Toda Corp. (27) ................................. 3,000 8
Toho Co., Ltd. (ME) ............................. 500 54
Tohoku Electric Power (U1) ...................... 9,100 125
Tokio Marine & Fire Insurance Co. (47) .......... 37,000 271
Tokyo Broadcasting (ME) ......................... 3,000 46
Tokyo Electric Power (U1) ....................... 32,600 694
Tokyo Electron, Ltd. (EP) ....................... 4,300 211
Tokyo Gas Co. (U2) .............................. 27,000 72
Tokyu Corp. (T3) ................................ 26,000 78
Toppan Printing Co. (M4) ........................ 20,000 185
Toray Industries, Inc. (L1) ..................... 33,000 80
Toshiba Corp. (EP) .............................. 72,000 247
Tosoh Corp. (C1) ................................ 5,000 10
Tostem Corp. (24) ............................... 9,000 122
Toto, Ltd. (HP) ................................. 13,000 62
Toyo Seikan Kaisha, Ltd. (B2) ................... 5,000 64
Toyota Motor Corp. (A3) ......................... 72,100 1,827
Trans Cosmos, Inc. (23) ......................... 700 18
Trend Micro, Inc. (EP) .......................... 1,000 24
Ube Industries (C1) ............................. 21,000 21
UFJ Holdings, Inc. (F1) ......................... 13 29
Uni-Charm Corp. (P1) ............................ 2,500 52
UNY Co., Ltd. (R4) .............................. 7,000 71
Wacoal Corp. (L1) ............................... 8,000 64
World Co., LTD. (L1) ............................ 1,400 42
Yakult Honsha Co. (F2) .......................... 2,000 15
Yamaha Corp. (50) ............................... 6,000 44
Yamanouchi Pharmaceutical Co., Ltd. (H2) ........ 8,000 211
Yamato Transport Co., Ltd. (T3) ................. 12,000 226
Yokogawa Electric (EP) .......................... 8,000 64
-------
32,213
Malaysia - 0.7%
Berjaya Sports Toto Berhad (50) ................. 28,000 47
Commerce Asset Holdings (B0) .................... 22,000 43
75
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Malaysia - Continued
Gamuda Berhad (24) .................................. 22,000 $ 26
IJM Corporation Berhad (24) ......................... 19,000 21
Magnum Corp. Berhad (50) ............................ 99,000 55
Malayan Banking Berhad (B0) ......................... 53,000 116
Malaysia International Shipping Berhad (T3) ......... 52,000 94
Public Bank Berhad (F1) ............................. 58,400 41
Resorts World Berhad (50) ........................... 35,000 57
RHB Capital Berhad (B0) ............................. 41,000 25
Sime Darby Berhad (F1) .............................. 68,000 88
Telekom Malaysia Berhad (T1) ........................ 40,000 108
Tenaga Nasional Berhad (U1) ......................... 44,000 124
YTL Corp., Berhad (27) .............................. 23,460 30
-------
875
Mexico - 1.1%
America Movil SA de CV - Ser. L (T1) ................ 100,000 96
Cemex SA de CV - CPO * (24) ......................... 27,000 136
Cifra SA de CV - Ser. V (R4) ........................ 58,000 158
Fomento Economico Mexicano SA de
CV (F2) ........................................... 20,000 68
Grupo Carso SA de CV - Ser. A1 (27) ................. 24,000 80
Grupo Financiero Bancomer SA de CV
- Cl. O (F1) ...................................... 126,000 115
Grupo Modelo SA de CV - Ser. C (F2) ................. 52,000 116
Grupo Televisa SA * (ME) ............................ 53,000 112
Kimberly-Clark de Mexico SA de CV (P1) .............. 32,000 96
Nuevo Grupo Mexico (C2) ............................. 18,000 18
Telephonos de Mexico SA - Ser. L (U3) ............... 200,000 347
Wal-Mart de Mexico SA de CV - Ser. C (R4) ........... 25,000 59
-------
1,401
Netherlands - 2.8%
ABN Amro Holding NV (B0) ............................ 17,300 279
Aegon NV (47) ....................................... 11,400 308
Akzo Nobel NV (C1) .................................. 670 30
ASM Lithography Holding NV (25) ..................... 5,100 89
Elsevier NV (L2) .................................... 9,300 110
Heineken NV (F2) .................................... 2,968 113
ING Groep NV (47) ................................... 17,000 433
Koninklije KPN NV (T1) .............................. 11,420 58
Koninklijke (Royal) Philips Electronics
NV (EP) ........................................... 13,256 394
Koninklijke Ahold NV (P5) ........................... 7,000 204
Royal Dutch Petroleum Co. (OD) ...................... 18,350 929
TNT Post Group NV (T3) .............................. 5,610 121
Unilever NV - CVA (S1) .............................. 5,419 318
Wolters Kluwer NV - CVA (L2) ........................ 2,300 52
-------
3,438
New Zealand - 0.6%
Carter Holt Harvey, Ltd. (P1) ....................... 75,200 53
Contact Energy Limited (U1) ......................... 62,600 104
Fisher & Paykel AP NPV (HP) ......................... 12,649 53
Fisher & Paykel Industries, Inc. (HP) . ............. 8,443 60
Fletcher Building (24) .............................. 73,900 91
Telecom Corp. of New Zealand, Ltd. (T1) ............. 111,100 231
The Warehouse Group Limited (R4) .................... 29,000 80
-------
672
Norway - 1.3%
Bergesen d.y. ASA - Cl. A (T3) ...................... 4,300 76
Den Norske Bank (B0) ................................ 39,760 179
Elkem ASA (C2) ...................................... 4,400 73
Frontlinel, Ltd. (T3) ............................... 1,800 19
Kvaerner plc (24) ................................... 7,600 7
Merkantildata ASA (23) .............................. 9,800 12
Norsk Hydro ASA (27) ................................ 11,140 467
Norske Skogindustrier ASA - Cl. A (P1) .............. 7,600 143
Opticom AS (EP) ..................................... 160 7
Orkla ASA (27) ...................................... 11,820 200
Petroleum Geo-Services ASA (OG) ..................... 6,240 48
SMEDVIG (OD) ........................................ 3,600 29
Smedvig ASA - B Shares (OD) ......................... 4,600 31
Statoil ASA (OD) .................................... 6,920 47
Storebrand ASA (47) ................................. 16,140 93
Tandberg ASA (27) ................................... 1,960 44
Telenor AS (T1) ..................................... 11,120 48
Tomra Systems ASA (65) .............................. 10,000 96
-------
1,619
Philippines - 0.1%
Ayala Land, Inc. (R2) ............................... 36,460 3
Metropolitan Bank & Trust Co. (B0) .................. 13,090 52
Philippine Long Distance Telephone
Co. (U3) .......................................... 3,200 26
SM Prime Holdings, Inc. (R2) ........................ 545,000 67
-------
148
Portugal - 0.7%
Banco Comercial Portgues, SA (B0) ................... 33,000 134
BPI-SGPS, SA - Registered Shares (I2) ............... 32,490 65
Brisa-Auto Estradas de Portugal, SA (24) ............ 16,750 71
Electricidade de Portugal, SA (U1) .................. 67,500 147
Jeronimo Martins, SGPS, SA (P5) ..................... 3,600 30
Portugal Telecom, SA (T1) ........................... 46,000 358
Sonae SGPS, SA (R4) ................................. 87,600 63
-------
868
76
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Singapore - 0.5%
Chartered Semiconductor
Manufacturing (EP) ................................... 12,000 $ 32
City Developments, Ltd. (R2) ........................... 29,000 95
Cycle & Carriage, Ltd. (A3) ............................ 14,000 23
DBS Group Holdings, Ltd. (F2) .......................... 17,000 127
Neptune Orient Lines, Ltd. (T3) ........................ 14,000 7
Oversea-Chinese Banking Corp., Ltd. (B0) ............... 16,000 95
Singapore Airlines (T3) ................................ 6,000 36
Singapore Telecommunications, Ltd. (T1) ................ 101,000 96
United Overseas Bank, Ltd. (B0) ........................ 13,448 93
-------
604
South Africa - 1.1%
Anglo American Platinum Corp., Ltd. (C3) ............... 5,000 185
Anglo American plc (C3) ................................ 24,500 374
AngloGold, Ltd. (C3) ................................... 900 32
Barlow, Ltd. (27) ...................................... 11,700 57
Dimension Data Holdings plc (23) ....................... 28,883 34
FirstRand, Ltd. (F1) ................................... 57,900 36
Foschini, Ltd. * (R4) .................................. 37,100 22
Gold Fields Mining (C3) ................................ 4,100 20
Impala Platinum Holdings, Ltd. (C2) .................... 2,000 94
Imperial Holdings, Ltd. (27) ........................... 10,091 47
Investec Group, Ltd. (I2) .............................. 2,300 31
Liberty Life Association of Africa, Ltd. (47) .......... 12,400 57
M-Cell, Ltd. (T1) ...................................... 40,200 44
Nampak, Ltd. (B2) ...................................... 25,500 25
Nedcor, Ltd. (F1) ...................................... 6,600 68
Sappi, Ltd. (R2) ....................................... 9,800 98
Sasol, Ltd. (OG) ....................................... 12,800 113
-------
1,337
South Korea - 1.7%
Cheil Jedang Corp. (F2) ................................ 1,246 47
Hyundai Motor Co., Ltd. (A3) ........................... 5,530 114
Kookmin Bank (B0) ...................................... 5,699 217
Korea Electric Power Corp. (U1) ........................ 10,880 180
Korea Telecom Corp. * (T1) ............................. 920 35
LG Chemicals, Ltd. (C1) ................................ 1,543 10
LG Chemical (C1) ....................................... 3,055 51
LG Electronics (EP) .................................... 3,990 76
LG Household & Health (H1) ............................. 740 16
LG Investment & Securities Co., Ltd. (F1) .............. 1,570 18
Pohang Iron & Steel Co., Ltd. (A5) ..................... 1,230 115
Samsung Corp. (EP) ..................................... 6,120 34
Samsung Display Devices Co. (EP) ....................... 1,410 62
Samsung Electro-Mechanics Co. (EP) ..................... 2,030 68
Samsung Electronics (EP) ............................... 3,050 650
Samsung Fire & Marine Insurance (47) ................... 1,562 67
Samsung Securities Co., Ltd. (F1) ...................... 540 20
Shinhan Financial (F1) ................................. 2,460 33
SK Telecom Co., Ltd. (T1) .............................. 1,260 258
-------
2,071
Spain - 4.0%
ACS, Actividades de Construccion y
Servicios, SA * (24) ................................. 2,419 59
Autopistas Concesionaria Espanola SA (T3) .............. 13,503 135
Banco Bilbao Vizcaya SA (B0) ........................... 66,673 825
Banco Santander Central Hispano SA (B0) ................ 108,100 906
Endesa SA (U1) ......................................... 18,500 289
Fomento de Construcciones y Contratas
SA (24) .............................................. 4,000 83
Gas Natural SDG SA - E Shares (U2) ..................... 10,500 175
Grupo Dragados SA (24) ................................. 2,600 35
Iberdrola SA (U1) ...................................... 19,900 259
Repsol SA (OG) ......................................... 30,000 437
Sol Melia SA (50) ...................................... 5,700 43
Tabacalera SA - Cl. A (F2) ............................. 7,714 131
Telefonica SA (U3) ..................................... 99,579 1,332
Union Electrica Fenosa SA (U1) ......................... 8,400 136
Vallehermoso SA (R2) ................................... 8,700 54
Zeltia SA (27) ......................................... 2,464 19
-------
4,918
Sweden - 1.7%
Drott AB - B Shares (R1) ............................... 5,400 56
Electrolux AB - Ser. B (HP) ............................ 3,100 46
Hennes & Mauritz AB - B Shares (R4) .................... 10,300 214
NetCom Systems, Inc. - Cl. B (T1) ...................... 1,732 63
Nordic Baltic Holding AB (B0) .......................... 34,928 186
SANDVIK AB (M1) ........................................ 4,350 93
Securitas AB - B Shares (B1) ........................... 8,250 157
Skand Enskilda Banken - Cl. A (B0) ..................... 10,200 93
Skandia Forsakrings AB (47) ............................ 13,900 101
Skanska AB - Ser. B (24) ............................... 4,400 29
Svenska Cellulosa AB - Cl. B (P1) ...................... 3,100 85
Svenska Handelsbanken, Inc. - A Shares (B0) ............ 6,350 94
Telefonaktiebolaget LM Ericsson AB * (T1) .............. 121,300 661
Telia AB (T1) .......................................... 17,050 76
Volvo AB (A3) .......................................... 5,750 97
-------
2,051
Switzerland - 1.6%
ABB, Ltd. * (E3) ....................................... 8,672 84
Adecco SA (24) ......................................... 600 33
Credit Suisse Group (LR) ............................... 6,280 268
Givaudan (S1) .......................................... 55 17
77
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Switzerland - Continued
Nestle SA (F2) ..................................... 1,460 $ 311
NovartisS AG (H2) .................................. 11,270 407
Roche Holdings AG (H2) ............................. 3,113 233
Swiss Reinsurance Co. (47) ......................... 600 60
Swisscom AG - Reg. (U3) ............................ 360 100
Syngenta AG * (C1) ................................. 547 28
UBS AG (B0) ........................................ 5,928 299
Zurich Finance (F1) ................................ 323 76
-------
1,916
Thailand - 0.2%
Advanced Information Services (B9) ................. 65,700 61
PTT Exploration & Production Public
Co., Ltd. (OG) ................................... 22,200 56
Siam Cement Public Co., Ltd. (24) .................. 4,000 48
Siam City Cement Public Co., Ltd. (24) ............. 3,800 12
TelecomAsia Corp. Public Co., Ltd. *
(U3) ............................................. 113,200 26
-------
203
Turkey - 0.2%
Arcelik AS (HP) .................................... 3,934,500 41
Tupras-Turkiye Petrol Rafinerileri AS
(OG) ............................................. 3,380,150 28
Turkiye Garanti Bankasi AS (B0) .................... 26,634,345 49
Turkiye Is Bankasi (Isbank) - Cl. C
(B0) ............................................. 14,914,592 83
Yapi ve Kredi Bankasi AS (B0) ...................... 18,317,805 56
-------
257
United Kingdom - 10.3%
Airtours plc (50) .................................. 11,300 41
Amvescap plc (B0) .................................. 5,300 76
Arm Holdings plc * (B3) ............................ 9,700 51
AstraZeneca Group plc (H2) ......................... 12,739 574
Barclay's plc (B0) ................................. 12,900 427
Barratt Developments plc (24) ...................... 1,400 9
Bass plc (U1) ...................................... 13,600 134
BG Group plc (U2) .................................. 33,066 135
BOC Group plc (C1) ................................. 6,300 97
Boots Co. plc (P4) ................................. 6,600 56
BP Amoco plc (OG) .................................. 172,100 1,336
Brambles Industries (27) ........................... 7,600 38
British Aerospace plc (02) ......................... 24,663 111
British Airport Authority plc (T3) ................. 11,700 94
British Airways plc (T3) ........................... 4,300 12
British American Tobacco plc * (F2) ................ 17,400 147
British Land Co. plc (R1) .......................... 9,000 61
British Sky Broadcast plc (ME) ..................... 12,100 133
BT Group (T1) ...................................... 68,700 253
Cadbury Schweppes plc (F2) ......................... 17,900 114
Canary Wharf Group * (R3) .......................... 8,900 58
Carlton Communications plc (ME) .................... 13,900 49
Centrica plc * (U2) ................................ 37,600 121
CGU plc (47) ....................................... 20,600 253
Compass Group plc * (F2) ........................... 25,122 188
Diageo plc (F2) .................................... 24,600 281
Dixons Group plc * (TE) ............................ 23,200 79
EMI Group plc (50) ................................. 9,000 47
GKN (A2) ........................................... 7,600 29
GlaxoSmithKline plc * (H2) ......................... 48,492 1,215
Granada Compass plc (50) ........................... 25,122 52
Hanson plc (24) .................................... 8,990 62
Hays plc (27) ...................................... 14,400 44
HBOS (B0) .......................................... 21,800 252
Hilton Group plc (50) .............................. 27,700 85
HSBC Holdings plc (B0) ............................. 73,000 855
Imperial Chemical Industries plc (C1) .............. 7,100 39
Invensys plc (27) .................................. 38,785 67
J Sainsbury plc (27) ............................... 18,100 96
Kingfisher plc (24) ................................ 13,454 78
Land Securities plc (R1) ........................... 8,400 96
Lattice Group * (EP) ............................... 31,766 72
Legal & General Group plc (B9) ..................... 58,600 135
Lloyds TSB Group plc (B0) .......................... 43,400 471
Logica plc (23) .................................... 5,300 49
Marks & Spencer plc (R4) ........................... 21,700 114
Misys plc (25) ..................................... 6,300 30
National Grid Group plc (U1) ....................... 14,900 93
National Power plc (U1) ............................ 14,200 42
Nycomed Amersham plc (H2) .......................... 5,700 55
P&O Princess Cruises plc * (50) .................... 7,200 42
Pearson plc (ME) ................................... 8,100 93
Peninsular & Oriental Steam
Navigation Co. (T3) .............................. 6,800 23
Prudential Corp. (47) .............................. 19,300 223
Rank Group plc (27) ................................ 18,400 62
Reed International plc (L2) ........................ 9,400 78
Rentokil Initial plc (27) .......................... 26,700 107
Reuters Group plc (ME) ............................. 12,500 124
Rio Tinto plc - Reg. (27) .......................... 5,300 101
Royal Bank of Scotland Group (B0) .................. 15,500 377
Schroders (B0) ..................................... 3,150 39
Scottish Power plc (U1) ............................ 17,100 94
Shell Transport & Trading Co. plc (OG) ............. 8,300 57
Slough Estates Finance plc * (R2) .................. 8,000 39
Tesco plc (F2) ..................................... 55,900 202
The Great Universal Stores plc (R4) ................ 11,900 111
The Sage Group plc (ME) ............................ 15,700 52
Unilever plc (M4) .................................. 20,503 168
United Utilities plc (A4) .......................... 10,400 93
Vodafone AirTouch plc (T1) ......................... 511,221 1,336
WPP Group plc * (B1) ............................... 7,500 83
-------
12,510
78
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
United States - 2.9%
Bajaj Auto, Ltd. - GDR (A3) .......................... 5,900 $ 49
Banco Santiago SA - ADR (B0) ......................... 2,900 65
Check Point Software Technologies,
Ltd. (23) .......................................... 4,200 168
Compania Cervecerias Unidas SA -
ADR (F2) ........................................... 3,900 69
Compania de Telecomunicaciones de
Chile SA (U3) ...................................... 8,000 108
EIH, Ltd. - GDR (R1) ................................. 6,700 33
Embotelladora Andina SA - ADR (F2) ................... 6,100 59
Empresa Nacional de Electricidad SA -
ADR (U1) ........................................... 10,100 105
Enersis SA - ADR (U1) ................................ 3,700 49
Grasim Industries, Ltd. - GDR (27) ................... 7,100 40
Great Eastern Shipping Co. - GDR (T3) ................ 15,420 37
Gujarat Ambuja Cements, Ltd. - GDR
(24) ............................................... 19,000 75
Hindalco Industries, Ltd. - GDR (C2) ................. 4,900 63
Huaneng Power International, Inc. -
ADR (U1) ........................................... 1,800 43
Indian Hotels Co., Ltd. - GDR (R1) ................... 6,700 35
ISHARES , Inc. (F1) .................................. 188,539 2,032
ITC, Ltd. - GDR (F2) ................................. 5,900 91
Larsen & Toubro, Ltd. - GDR (27) ..................... 8,600 66
Madeco SA - ADR (C2) ................................. 15,200 39
Ranbaxy Laboratories, Ltd. - GDR
(H2) ............................................... 4,100 64
Reliance Industries, Ltd. - GDR (C1) ................. 11,000 150
Tata Engineering and Locomotive Co.,
Ltd. - GDR (A3) .................................... 26,400 52
-------
3,492
-------
TOTAL COMMON STOCK- ........................ 96.9% 118,234
PREFERRED STOCK
Australia - 0.2%
News Corp., Ltd ...................................... 31,300 209
Brazil - 0.8%
Aracruz Celulose SA (T1) ............................. 32 54
Banco Bradesco SA (B0) ............................... 20,293 110
Banco Itau SA (B0) ................................... 1,380 105
Centrais Electricas Brasileires SA (U1) .............. 6437 87
Compahnia de Bebidas das Americas
(F2) ............................................... 505 104
Companhia Energetica de Minas Gerais
(U1) ............................................... 6,565 94
Companhia Vale do Rio Doce (C2) ...................... 6 130
Embratel Participacoes SA (U3) ....................... 6,417 28
Empresa Bras De Aerona (27) .......................... 2 11
Petroleo Brasileiro SA - Petrobras (OG) .............. 5 105
Tele Centro Sul Participacoes SA (T1) ................ 6,634 52
Tele Norte Leste Participacoes SA (T1) ............... 5,381 85
Telesp Celular Participacoes SA (T1) ................. 8,056 30
Telesp Participacoes SA (T1) ......................... 1,500 20
--------
1,015
Germany - 0.1%
Volkswagen AG (A3) ................................... 3,212 100
Thailand - 0.0%
Siam Commercial Bank Public Co.
(B0) ............................................... 27,200 10
--------
TOTAL PREFERRED STOCK- ..................... 1.1% 1,334
WARRANTS
Mexico - 0.0%
Cemex SA (24)
expires 12/21/04 (Cost $1) ........................... 2,000 1
--------
TOTAL WARRANTS- ..................... 0.0% 1
RIGHTS
Norway - 0.0%
Kvaerner (24)
expires 01/22/02 (Cost $0) ........................... 13,363 1
Thailand - 0.0%
TelecomAsia (U3)
expires 04/03/02 (Cost $0) ........................... 35,747 0
-------
TOTAL RIGHTS-0.0% ................ 0.00% 1
Par
Value
(000's)
SHORT-TERM INVESTMENTS
John Hancock Joint Account
2.054% due 01/02/02 ................................ $ 2,584 2,584
U.S. Treasury Bills
1.58% due 03/28/02 ................................. 299 299
--------
TOTAL SHORT-TERM INVESTMENTS- ............... 2.4% 2,883
--------- --------
TOTAL INVESTMENTS- ............... 100.4% 122,453
Cash and receivables, less payables- ............... (0.4)% (433)
--------- --------
NET ASSETS- ............... 100.0% $122,020
========= ========
ADR-American Depository Receipt.
*Non-income producing security.
GDR-Global Depository Receipt.
See notes to financial statements.
79
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED)
Market % of
Industry Value Long-Term
Industry Abbreviation (000s) Investments
Bank .............................. B0 $ 14,966 12.4%
Telecommunication Services ........ T1 8,284 7.0%
Diversified Operations ............ 27 7,545 6.3%
Electronic Products & Services .... EP 7,487 6.3%
Health Care Products .............. H2 6,745 5.7%
Insurance ......................... 47 6,598 5.5%
Automobile ........................ A3 4,950 4.2%
Electric Power .................... U1 4,897 4.1%
Telephone ......................... U3 4,280 3.6%
Chemical .......................... C1 3,809 3.2%
Food, Beverage & Tobacco .......... F2 3,731 3.1%
Brokerage & Investment
Management ..................... I2 3,171 2.6%
Oil & Natural Gas Exploration &
Production ..................... OG 3,059 2.6%
Transportation Services ........... T3 3,052 2.6%
Retail - Department Stores ........ R4 3,043 2.6%
Financial Services ................ F1 2,963 2.6%
Construction ...................... 24 2,554 2.2%
Oil - Equipment & Service ......... O1 2,381 2.0%
Leisure & Recreation .............. 50 2,125 1.7%
Commercial Sevices ................ B1 1,948 1.6%
Oil ............................... OD 1630 1.3%
Computer Software & Services ...... 23 1602 1.4%
Aerospace & Defense ............... 2 1555 1.3%
Retail - Food ..................... P5 1,190 1.0%
--------- -----------
$ 119,570 100.0%
========= ===========
80
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Australia - 1.6%
Australia & New Zealand Banking Group,
Ltd. (B0) ........................................... 10,217 $ 93
Brambles Industries, Ltd. (27) ........................ 1 0
Broken Hill Proprietary Co., Ltd. (27) ................ 36,224 195
News Corp., Ltd. (ME) ................................. 2,900 23
Tabcorp Holdings, Ltd. (50) ........................... 6,933 35
Woolworth's, Ltd. (R4) ................................ 25,319 146
-------
492
Belgium - 0.5%
Interbrew NPV (F2) .................................... 4,666 128
UCB SA (H2) ........................................... 400 16
-------
144
Canada - 0.1%
Loblaw Co., Ltd. (02) ................................. 700 23
Nortel Networks Corp. (TE) ............................ 2 0
-------
23
Denmark - 0.2%
Group 4 Falck (27) .................................... 403 45
Novo Nordisk AS (H2) .................................. 300 12
-------
57
Finland - 2.0%
Nokia Oyj (H2) ........................................ 22,451 579
Stora Enso Oyj - R Shares (P1) ........................ 800 10
-------
589
France - 8.7%
Alcatel (TE) .......................................... 3,059 52
AXA (47) .............................................. 768 16
Banque Nationale de Paris (B0) ........................ 594 53
Castorama Dubois, Inc. (R4) ........................... 2,055 106
EADS, Inc. (27) ....................................... 12,119 147
L'Oreal SA (S1) ....................................... 200 14
Lafarge SA (24) ....................................... 6,087 568
Pernod Ricard (F2) .................................... 1,005 78
Rhone-Poulenc SA (B0) ................................. 300 21
Sanofi-Synthelabo SA (H2) ............................. 300 22
Schneider SA (M1) ..................................... 7,375 355
STMicroelectronics (EP) ............................... 300 10
Total Fina SA - Cl. B (OG) ............................ 6,591 941
Vivendi Universal SA (27) ............................. 4,063 223
-------
2,606
Germany - 6.2%
Allianz AG - Reg. (47) ................................ 189 45
BASF AG (C1) .......................................... 400 15
Bayerische Motoren Werke AG (A3) ...................... 16,886 589
Deutsche Bank AG (B0) ................................. 398 28
E.On AG (27) .......................................... 400 21
Fresenius Medical Care AG (H2) ........................ 300 19
Infineon Technologies AG (EP) ......................... 700 14
Lufthansa AG (T3) ..................................... 900 12
Muenchener Rueckversicherungs-
Gesellschaft AG - Reg. (47) ......................... 2,499 678
SAP AG (23) ........................................... 2,782 362
Siemens AG (27) ....................................... 1,288 85
-------
1,868
Hong Kong - 2.3%
CLP Holdings, Ltd. (U1) ............................... 2,500 10
Hang Seng Bank, Ltd. (B0) ............................. 22,600 249
Hong Kong Electric HKD1 (U1) .......................... 7,000 26
Hutchison Whampoa, Ltd. (B1) .......................... 39,700 384
Sun Hung Kai Properties, Ltd. (R3) .................... 1,000 8
-------
677
Ireland - 0.0%
Bank of Ireland (B0) .................................. 900 8
Italy - 4.7%
Autostrade SpA (A3) ................................... 2,400 17
Banca Nazionale del Lavoro (B0) ....................... 3,700 7
ENI (OD) .............................................. 2,900 36
Mediaset SpA (ME) ..................................... 48,800 357
Snam Retegas (OG) ..................................... 102,700 272
Telecom Italia Mobile SpA (T1) ........................ 11,500 64
Telecom Italia SpA (T1) ............................... 27,483 235
UniCredito Italiano SpA (B0) .......................... 102,500 411
-------
1,399
Japan - 20.3%
Bandai Co. (R4) ....................................... 4,000 121
Banyu Pharmaceutical Co., Ltd. (H2) ................... 16,000 238
Canon, Inc. (B1) ...................................... 9,000 310
Circle K Japan Co., Ltd. (P5) ......................... 9,400 243
Daiwa Securities Group, Inc. (I2) ..................... 40,000 210
Fuji Photo Film (50) .................................. 6,000 214
Honda Motor Co. (A3) .................................. 13,900 555
Hoya Corp. (EP) ....................................... 2,000 120
Isetan Co., Ltd. (R4) ................................. 9,000 92
Japan Airlines Co., Ltd. (T3) ......................... 3,000 7
KAO Corp. (S1) ........................................ 13,000 270
Keyence Corp. (EP) .................................... 1,300 216
Mitsui Marine & Fire Insurance Co., Ltd.
(47) ................................................ 46,000 216
Mitsui O.S.K. Lines, Ltd. (T3) ........................ 31,000 62
Mizuho Holdings, Inc. * (F1) .......................... 8 16
Murata Manufacturing Co., Ltd. (EP) ................... 300 18
NEC Corp. (25) ........................................ 1,000 10
NGK Insulators (A2) ................................... 22,000 163
Nintendo Corp., Ltd. (50) ............................. 100 18
Nippon Steel Co. (A5) ................................. 12,000 17
Nippon Telegraph & Telephone Corp. (U3) ............... 6 20
Nomura Securities Co., Ltd. (I2) ...................... 1,000 13
Ricoh Co., Ltd. (EP) .................................. 16,000 298
Santen Pharmaceutical Co., Ltd. (H2) .................. 3,000 34
81
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Japan - Continued
Sanyo Electric Co. (EP) ................................ 7,000 $ 33
Secom Co. (B1) ......................................... 500 25
Sharp Corp. (EP) ....................................... 16,000 187
Shin-Etsu Chemical Co. (C1) ............................ 6,100 219
Skylark Co., Ltd. (F2) ................................. 6,000 101
SMC Corp. (M1) ......................................... 600 61
Sony Corp. (EP) ........................................ 400 18
Sumitomo Bank (B0) ..................................... 3,000 13
Sumitomo Corp. (27) .................................... 1,000 5
Sumitomo Trust & Banking (B0) .......................... 22,000 89
Suzuki Motor Corp. (A3) ................................ 2,000 22
Taisho Pharmaceutical Co., Ltd. (H2) ................... 16,000 252
Takeda Chemical Industries (C2) ........................ 17,000 769
Tokyo Electric Power (U1) .............................. 5,800 124
Tokyo Electron, Ltd. (EP) .............................. 200 10
Tokyo Gas Co. (U2) ..................................... 80,000 214
Toppan Forms Co., Ltd. (B1) ............................ 10,900 183
Toyota Motor Corp. (A3) ................................ 8,100 205
UFJ Holdings, Inc. (F1) ................................ 5 11
Yoshinoyad & Co. (F2) .................................. 33 46
-------
6,068
Netherlands - 4.6%
Aegon NV (47) .......................................... 662 18
Akzo Nobel NV (C1) ..................................... 530 24
ASM Lithography Holding NV (25) ........................ 8,714 151
Fortis NPV (27) ........................................ 1,100 29
Gucci Group NV (L1) .................................... 2,691 229
ING Groep NV (47) ...................................... 16,880 430
Koninklijke (Royal) Philips Electronics NV
(EP) ................................................. 1,329 39
Royal Dutch Petroleum Co. (OD) ......................... 503 25
Unilever NV - CVA (S1) ................................. 1,836 108
VNU NV (L2) ............................................ 10,576 325
-------
1,378
Portugal - 0.2%
Electricidade de Portugal, SA (U1) ..................... 17,717 38
Portugal Telecom SA (T1) ............................... 1,900 15
-------
53
Singapore - 0.1%
Singapore Technology Engineering, Ltd.
(E3) ................................................. 9,000 11
Singapore Telecommunications, Ltd. (T1) ................ 11,000 11
United Overseas Bank, Ltd. (B0) ........................ 1,000 7
-------
29
Spain - 3.3%
Acerinox SA (A5) ....................................... 4,565 152
Banco Bilbao Vizcaya SA (B0) ........................... 9,272 115
Banco Popular Espanol SA (B0) .......................... 600 20
Banco Santander Central Hispano SA (B0) ................ 10,471 88
Inditex (R4) ........................................... 16,905 322
Telefonica SA (U3) ..................................... 22,553 302
------
999
Sweden - 2.0%
Securitas AB - B Shares (B1) ........................... 10,644 203
Skandia Forsakrings AB (47) ............................ 40,795 296
Svenska Handelsbanken, Inc. - A Shares
(B0) ................................................. 800 12
Telefonaktiebolaget LM Ericsson AB * (T1) .............. 17,614 96
-------
607
Switzerland - 9.6%
Adecco SA (24) ......................................... 5,405 294
Converuim Holdings (F1) ................................ 7,057 343
Credit Suisse Group (LR) ............................... 400 17
Nestle SA (F2) ......................................... 4,207 897
Novartis AG (H2) ....................................... 18,978 686
Roche Holdings AG (H2) ................................. 2,825 202
Swiss Reinsurance Co. (47) ............................. 1,957 197
Syngenta AG (C1) ....................................... 1,396 72
UBS AG (B0) ............................................ 3,299 167
-------
2,875
United Kingdom - 25.8%
Abbey National First Capital (B0) ...................... 4,523 64
Allied Irish Banks (B0) ................................ 1,600 18
Amvescap plc (B0) ...................................... 22,709 327
Arm Holdings plc (B3) .................................. 36,332 190
AstraZeneca Group plc (H2) ............................. 281 13
Bank of Ireland (B0) ................................... 72,098 682
Barclay's plc (B0) ..................................... 20,895 691
Bass plc (U1) .......................................... 30,692 303
BG Group plc (U2) ...................................... 5,300 22
BP Amoco plc (O1) ...................................... 51,816 402
British Airport Authority plc (T3) ..................... 18,794 150
British Sky Broadcast plc (ME) ......................... 20,074 221
Centrica plc (U2) ...................................... 6,440 21
Compass Group plc (F2) ................................. 900 7
Diageo plc (F2) ........................................ 4,629 53
Exel ORD (T1) .......................................... 23,492 268
GlaxoSmithKline plc * (H2) ............................. 33,356 836
HSBC Holdings plc (B0) ................................. 2,105 25
Invensys plc (27) ...................................... 4,400 8
Legal & General Group plc (B9) ......................... 18,952 44
Lloyds TSB Group plc (B0) .............................. 2,100 23
Manitoba Group (27) .................................... 300 5
Marks & Spencer plc (R4) ............................... 3,500 18
National Grid Group plc (U1) ........................... 5,407 34
National Power plc (U1) ................................ 126,758 373
P&O Princess Cruises plc (50) .......................... 42,505 247
Reckitt Benckiser plc (S1) ............................. 14,640 213
Rentokil Initial plc (27) .............................. 6,200 25
Royal Bank of Scotland Group (B0) ...................... 1,963 48
Scottish and Southern Energy plc (U1) .................. 5,246 46
82
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
United Kingdom - Continued
Shell Transport & Trading Co. plc (OG) ............. 20,284 $ 139
Shire Pharma Group (H2) ............................ 1,200 15
Smiths Group plc (27) .............................. 43,181 425
Tesco plc (F2) ..................................... 175,045 634
The Great Universal Stores plc (R4) ................ 2,100 20
Unilever plc (M4) .................................. 2,000 16
Vodafone AirTouch plc (T1) ......................... 413,431 1,080
---------
7,706
United States - 1.5%
Elan Corp. plc - ADR (H2) .......................... 5,400 243
Glaxo SmithKline plc - ADR (H2) .................... 2,300 115
Nokia Oyj - ADR (TE) ............................... 800 20
Samsung Electronics 144A (a) (EP) .................. 200 23
SAP AG - ADR (23) .................................. 500 16
Talisman Energy, Inc. COM (U1) ..................... 500 19
Telefonaktiebolaget LM Ericsson AB -
ADR (T1) ......................................... 2,400 12
---------
448
---------
TOTAL COMMON STOCK- 93.7% 28,026
WARRANTS - 0.1%
Armenia - 0.1%
Merri Lyn Infosystem (F1)
expires 10/11/02 (Cost $12) ........................ 200 17
---------
TOTAL WARRANTS- 0.1% 17
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 5.0%
Investments in joint repurchase agreement
with Goldman Sachs & Co., 1.778% due
01/02/02 ......................................... $ 1,500 1,500
------- ---------
TOTAL INVESTMENTS- 98.8% 29,543
Cash and Receivables, less payables- 1.2% 372
------- ---------
NET ASSETS- 100.0% $ 29,915
======= =========
(a) Pursuant to Rule 144A under the Securities Act of 1993, these securities may
be resold in transactions exempt from registration, normally to qualified
institutional buyers. At December 31, 2001, securities aggregated $23 or
.08% of net assets of the Portfolio.
ADR-American Depository Receipt.
*Non-income producing securities.
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED)
Market % of
Industry Value Long-Term
Industry Abbreviation (000s) Investments
Health Care Products ................ H2 $ 3,265 11.5%
Bank ................................ B0 2,578 9.2%
Food, Beverage & Tobacco ............ F2 1,943 6.9%
Insurance ........................... 47 1,897 6.8%
Oil & Natural Gas Exploration &
Production ....................... OG 1,585 5.7%
Telecommunication Services .......... T1 1,513 5.4%
Automobile .......................... A3 1,388 5.0%
Diversified Operations .............. 27 1,211 4.5%
Commercial Sevices .................. B1 1,105 3.9%
Chemical ............................ C1 1,100 3.9%
Aerospace & Defense ................. 2 1,098 3.9%
Retail - Department Stores .......... R4 1,054 3.7%
Electronic Products & Services ...... EP 987 3.5%
Electric Power ...................... U1 955 3.3%
Construction ........................ 24 862 3.0%
Media - TV / Radio .................. ME 600 2.2%
Leisure & Recreation ................ 50 514 1.8%
Cosmetic & Personal Care ............ S1 497 1.8%
Oil - Equipment & Service ........... O1 428 1.5%
Machinery ........................... M1 416 1.5%
Computer Software & Services ........ 23 378 1.4%
Financial Services .................. F1 370 1.3%
Media - Publishing .................. L2 325 1.2%
Telephone ........................... U3 321 1.1%
Retail - Food ....................... P5 243 0.9%
Transportation Services ............. T3 231 0.7%
Brokerage & Investment
Management ....................... I2 223 0.8%
Electrical Equipment ................ B3 190 0.7%
-------- ----------
$28,043 100.0%
======== ==========
83
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Auto & Truck Parts - 0.8%
O'Reilly Automotive, Inc. .......................... 40,100 $ 1,462
Bank - 2.1%
Greater Bay Bancorp ................................ 30,550 873
Southwest Bancorporation of Texas,
Inc. * ........................................... 54,500 1,650
Sterling Bancshares, Inc. .......................... 123,675 1,548
--------
4,071
Brokerage & Investment Management - 1.0%
Affiliated Managers Group, Inc. * .................. 26,250 1,850
Business Services - 5.3%
Advisory Co. ....................................... 35,350 979
Corporate Executive Board Co. * .................... 67,450 2,475
Forrester Research, Inc. * ......................... 64,500 1,299
Management Network Group, Inc. * ................... 71,850 496
On Assignment, Inc. * .............................. 84,000 1,930
Overture Services, Inc. ............................ 59,950 2,124
SmartForce Public Limited Co. - ADR ................ 28,300 700
--------
10,003
Commercial Sevices - 1.8%
Administaff, Inc. .................................. 19,600 537
Cross-Country, Inc. ................................ 28,100 745
Plexus Corp. * ..................................... 34,200 908
University of Phoenix Online ....................... 40,425 1,318
--------
3,508
Computer Equipment - 3.1%
LTX Corp. .......................................... 111,300 2,331
M-Systems Flash Disk Pioneers, Ltd. * .............. 137,200 1,604
McData Corp ........................................ 18,750 459
PRI Automation, Inc. ............................... 68,400 1,399
--------
5,793
Computer Software & Services - 8.9%
Advent Software, Inc. * ............................ 14,100 704
Avocent Corp. ...................................... 47,846 1,160
Borland Software Corp. ............................. 106,300 1,665
Extreme Networks, Inc. ............................. 1,250 16
Interwoven, Inc. ................................... 39,050 380
Lawson Software, Inc. .............................. 47,100 742
Macromedia, Inc. * ................................. 101,800 1,812
Manugistics Group, Inc. ............................ 40,600 856
McAfee.com Corp. ................................... 42,350 1,436
Micromuse, Inc. .................................... 61,200 918
Netegrity, Inc. .................................... 96,400 1,866
Precise Software Solutions Ltd. .................... 61,900 1,279
Secure Computing Corp. * ........................... 110,100 2,263
WebEx Communications, Inc. ......................... 67,250 1,671
--------
16,768
Construction - 0.8%
Ryland Group, Inc. ................................. 20,500 1,501
Consumer Miscellaneous - 2.5%
NetRatings, Inc. * ................................. 107,900 1,692
ScanSource, Inc. ................................... 31,850 1,516
Strayer Education, Inc. ............................ 30,800 1,501
--------
4,709
Diversified Operations - 3.5%
CoorsTek, Inc. ..................................... 34,200 1,089
Herley Industries, Inc. ............................ 81,650 1,388
Tellium, Inc. ...................................... 148,350 925
Universal Compression Holdings ..................... 51,550 1,520
Waste Connections, Inc. ............................ 55,250 1,712
--------
6,634
Electric Power - 1.3%
Wilson Greatbatch Technologies, Inc. * ............. 70,400 2,541
Electrical Equipment - 0.5%
Global Power Equipment Group, Inc. ................. 61,427 924
Electronic Products & Services - 15.9%
Aeroflex, Inc. * ................................... 116,000 2,196
Alliance Imaging, Inc. ............................. 72,100 880
Alpha Industries, Inc. ............................. 51,150 1,115
Atmi, Inc. * ....................................... 47,550 1,134
Axcelis Technologies, Inc. ......................... 75,700 976
Brooks Automation, Inc. * .......................... 33,550 1,364
Cree, Inc. * ....................................... 62,700 1,847
DDI Corp. .......................................... 98,400 968
DRS Technologies, Inc. ............................. 34,800 1,241
DuPont Photomasks, Inc. * .......................... 35,500 1,542
EDO Corp. .......................................... 42,000 1,111
Elantec Semiconductor, Inc. * ...................... 35,050 1,346
Electro Scientific Industries, Inc. * .............. 45,350 1,361
Embarcadero Technologies, Inc. ..................... 58,000 1,404
Microsemi Corp. .................................... 29,750 884
Nanometrics, Inc. * ................................ 61,850 1,200
Pixelworks, Inc. * ................................. 80,950 1,300
PLX Technology, Inc. * ............................. 120,000 1,513
RSA Security, Inc. ................................. 69,000 1,205
Rudolph Technologies, Inc. * ....................... 50,650 1,738
Silicon Storage Technology, Inc. * ................. 95,550 921
Stellent, Inc. ..................................... 61,200 1,809
Ulticom, Inc. ...................................... 99,550 1,001
--------
30,056
Energy - Alternative Source - 1.0%
Evergreen Resources, Inc. .......................... 29,500 1,139
Patterson Uti Energy ............................... 36,400 849
--------
1,988
Food, Beverage & Tobacco - 3.2%
American Italian Pasta Co. ........................... 41,950 1,763
Church & Dwight Co., Inc. ............................ 35,300 940
Dreyer's Grand Ice Cream, Inc. ....................... 7,400 285
Panera Bread Co. Cl. A ............................... 19,200 999
84
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Food, Beverage & Tobacco - Continued
Performance Food Group Co. ........................... 58,300 $ 2,051
--------
6,038
Health Care Products - 12.7%
Alkermes, Inc. ....................................... 42,550 1,122
Angiotech Pharmaceuticals, Inc. ...................... 17,800 992
Bruker Daltonics, Inc. ............................... 48,200 788
Cell Genesys, Inc. ................................... 55,800 1,297
Cell Therapeutics, Inc. .............................. 41,100 992
Cerus Corp. .......................................... 30,450 1,393
Charles River Laboratories ........................... 42,943 1,438
CV Therapeutics, Inc. ................................ 29,600 1,540
Diagnostic Products Corp. ............................ 29,200 1,283
Exelixis, Inc. ....................................... 65,750 1,093
Inhale Therapeutic Systems, Inc. * ................... 66,700 1,237
Integra Lifesciences Corp. ........................... 38,500 1,014
Isis Pharmaceuticals, Inc. ........................... 28,050 622
MID Atlantic Medical Services, Inc. * ................ 55,450 1,259
Myriad Genetics, Inc. ................................ 21,750 1,145
Neurocrine Biosciences, Inc. ......................... 21,000 1,077
Noven Pharmaceuticals, Inc. .......................... 27,550 489
Pharmaceutical Product Development,
Inc. ............................................... 33,050 1,068
Regeneron Pharmaceuticals ............................ 39,150 1,102
Salix Pharmaceuticals, Ltd. .......................... 67,350 1,364
Scios, Inc. .......................................... 6,700 159
Urologix, Inc. * ..................................... 75,450 1,513
--------
23,987
Health Care Services - 3.6%
Accredo Health, Inc. ................................. 49,150 1,951
Covance, Inc. * ...................................... 72,650 1,649
Gene Logic, Inc. ..................................... 40,800 769
Renal Care Group, Inc. ............................... 39,800 1,278
Visible Genetics, Inc. * ............................. 104,950 1,170
--------
6,817
Household Appliances / Furnishings - 0.7%
Ethan Allen Interiors, Inc. .......................... 33,250 1,383
Insurance - 2.9%
HCC Insurance Holdings, Inc. ......................... 33,150 913
Hilb, Rogal & Hamilton Co. ........................... 17,001 953
Philadelphia Consolidated Holding
Corp. * ............................................ 35,750 1,348
Renaissancere Holdings, Ltd. ......................... 9,200 878
Stancorp Financial Group, Inc. ....................... 30,150 1,425
--------
5,517
Machinery - 0.3%
SureBeam Corporation - Cl. A * ....................... 52,400 549
Media - Publishing - 1.0%
Scholastic Corp. * ................................... 39,250 1,975
Media - TV / Radio - 4.8%
Entercom Communications Corp. * ...................... 36,350 1,817
Getty Images, Inc. ................................... 81,000 1,861
Insight Communications Company, Inc. ................. 49,500 1,196
Radio One, Inc. * .................................... 73,500 1,358
Regent Communications, Inc. * ........................ 168,250 1,136
Time Warner Telecom, Inc. - Cl. A .................... 94,350 1,669
--------
9,037
Oil - 0.4%
Pride International, Inc. * .......................... 53,750 812
Oil & Natural Gas Exploration & Production - 4.0%
Newfield Exploration Co. * ........................... 30,400 1,080
NPS Pharmaceuticals, Inc. ............................ 52,700 2,018
Remington Oil & Gas Corp. ............................ 70,350 1,217
Spinnaker Exploration Co. * .......................... 43,300 1,782
Stone Energy Corp. * ................................. 37,550 1,483
--------
7,580
Oil - Equipment & Service - 1.7%
Horizon Organic Holding Corp. * ...................... 40,000 661
Hydril Co. * ......................................... 69,800 1,230
Lone Star Technologies, Inc. * ....................... 49,300 868
Oceaneering International, Inc. * .................... 17,100 378
--------
3,137
Personal & Commercial Lending - 0.6%
Career Education Corp. ............................... 34,350 1,178
Pollution Control - 0.2%
Stericycle, Inc. ..................................... 5,700 347
Retail - Department Stores - 4.5%
99 Cents Only Stores * ............................... 49,183 1,874
Bebe Stores, Inc. .................................... 45,350 846
Freds , Inc. ......................................... 32,900 1,347
Hot Topic, Inc. ...................................... 40,300 1,265
Too, Inc. * .......................................... 38,400 1,056
Tweeter Home Entertainment Group,
Inc. ............................................... 72,850 2,113
--------
8,501
Retail - Drug Stores - 0.7%
Duane Reade, Inc. * .................................. 46,650 1,416
Retail - Food - 3.3%
Applebee's International, Inc. ....................... 46,750 1,599
Buca, Inc. * ......................................... 42,100 682
P.F. Chang's China Bistro, Inc. * .................... 34,800 1,646
Rare Hospitality International, Inc. ................. 8,200 185
Ryan's Family Steak Houses, Inc. ..................... 39,900 864
Whole Foods Market, Inc. * ........................... 30,250 1,318
--------
6,294
Shoe & Apparel Manufacturing - 0.3%
Columbia Sportswear Co. * ............................ 16,125 537
85
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Telecommunication Equipment - 1.2%
Gentner Communications Corp. ................. 42,200 $ 704
Powerwave Technologies, Inc. ................. 86,300 1,491
-----------
2,195
Telecommunication Services - 1.6%
Airgate PCS, Inc. * .......................... 30,750 1,401
Inrange Technologies Corp. Cl. B ............. 62,200 768
Metro One Telecom, Inc. ...................... 28,724 868
-----------
3,037
Transportation Services - 0.9%
Forward Air Corp. * .......................... 49,350 1,674
-----------
TOTAL COMMON STOCK- 97.1% 183,819
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 3.5%
Investment in joint trading account
(Note B)
2.055% due 01/02/02 ........................ $ 6,714 6,714
---------- -----------
TOTAL INVESTMENTS- ............... 100.6% 190,533
Cash and Receivables, less payables- .... (0.6)% (1,132)
---------- -----------
NET ASSETS- ................... 100.0% $ 189,401
========== ===========
ADR-American Depository Receipt.
*Non-income producing security.
See notes to financial statements.
86
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
HEALTH SCIENCES FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Bank - 1.8%
Rhone-Poulenc SA .................................... 7,820 $ 555
Chemical - 0.9%
Takeda Chemical Industries .......................... 6,000 271
Electronic Products & Services - 0.5%
Cytyc Corp. * ....................................... 4,690 122
Waters Corp. * ...................................... 894 35
-------
157
Health Care Products - 83.6%
Abbott Laboratories ................................. 16,505 920
Advance PCS ......................................... 8,300 244
Alkermes, Inc. ...................................... 2,995 79
Allergan, Inc. ...................................... 9,220 692
American Home Products Corp. ........................ 19,990 1,227
Amerisource Bergen Corp. ............................ 3,410 217
Amgen, Inc. ......................................... 23,500 1,326
Andrx Corp. ......................................... 1,700 120
Angiotech Pharmaceuticals, Inc. ..................... 1,920 107
Anthem, Inc. ........................................ 1,100 54
Apogent Technologies, Inc. .......................... 3,715 96
Applera Corporation - Applied Biosystems
Group ............................................. 610 24
AstraZeneca Group plc - ADR ......................... 25,585 1,192
Barr Laboratories, Inc. ............................. 2,685 213
Baxter International, Inc. .......................... 6,500 349
Bristol-Myers Squibb Co. ............................ 19,580 999
Cardinal Health, Inc. ............................... 13,975 904
Cephalon, Inc. * .................................... 42 3
Cerus Corp. ......................................... 265 12
Charles River Laboratories * ........................ 8,310 278
Dai-Ichi Pharmaceutical Co., Ltd. ................... 6,000 117
Elan Corp. plc - ADR ................................ 7,855 354
Eli Lilly & Co. ..................................... 12,820 1,007
Genzyme Corp. * ..................................... 1,870 112
Gilead Sciences, Inc. * ............................. 3,270 215
Glaxo SmithKline plc - ADR .......................... 19,300 961
Guidant Corp. ....................................... 2,800 139
IDEXX Laboratories, Inc. ............................ 600 17
Inhale Therapeutic Systems, Inc. * .................. 315 6
Intermune, Inc. * ................................... 3,770 186
Invitrogen Corp. * .................................. 3,410 211
Ivax Corp. .......................................... 325 7
Johnson & Johnson ................................... 29,270 1,730
King Pharmaceuticals, Inc. * ........................ 3,780 159
Laboratory Corporation of America Holdings .......... 2,125 172
McKesson HBOC, Inc. ................................. 149 6
Medicis Pharmaceutical Corp. - Cl. A ................ 94 6
MedImmune, Inc. * ................................... 8,800 408
Medtronic, Inc. ..................................... 24,250 1,242
Merck & Co., Inc. ................................... 18,690 1,099
Novartis AG ......................................... 17,870 646
NPS Pharmaceuticals, Inc. * ......................... 149 6
Pfizer, Inc. ........................................ 49,880 1,988
Pharmacia Corp. ..................................... 27,145 1,158
Protein Design Labs, Inc. * ......................... 600 20
Qiagen NV ........................................... 5,700 106
ResMed, Inc. ........................................ 45 2
Respironics, Inc. ................................... 6,400 222
Roche Holdings AG ................................... 230 16
Sankyo Co., Ltd. .................................... 2,000 34
Sanofi-Synthelabo SA * .............................. 5,795 432
Schering-Plough Corp. ............................... 32,150 1,151
Scios, Inc. ......................................... 11,450 272
Sepracor, Inc. * .................................... 200 11
Serologicals Corp. .................................. 5,000 107
Shire Pharmaceuticals Group Place - ADR ............. 8,635 316
St. Jude Medical, Inc. .............................. 81 6
Stryker Corp. * ..................................... 2,697 157
Taisho Pharmaceutical Co., Ltd. ..................... 2,200 35
Teva Pharmaceutical Industries, Ltd. - ADR .......... 105 6
Trigon Healthcare, Inc. ............................. 4,900 340
Trimeris, Inc. ...................................... 149 7
UnitedHealth Group, Inc. ............................ 10,135 717
-------
24,965
Health Care Services - 8.0%
Accredo Health, Inc. ................................ 2,600 103
Caremark Rx, Inc. ................................... 20,400 333
Forest Laboratories, Inc. ........................... 235 19
HCA-The Healthcare Corp. ............................ 23,405 902
Idec Pharmaceuticals Corp. .......................... 1,900 131
Quest Diagnostics, Inc. * ........................... 8,655 621
Tenet Healthcare Corp. .............................. 1,400 82
Triad Hospitals, Inc. ............................... 5,445 160
Wellpoint Health Networks, Inc ...................... 40 5
Zimmer Holdings, Inc. ............................... 851 26
-------
2,382
Insurance - 1.0%
Cigna Corp. ......................................... 3,100 287
Retailers - Food & Drug - 0.4%
CVS Corp. ........................................... 3,050 90
Rite Aid Corp. ...................................... 8,170 43
-------
133
-------
TOTAL COMMON STOCK- 96.2% 28,750
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 5.2%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ................................. $ 1,540 1,540
-------- -------
TOTAL INVESTMENTS- 101.4% 30,290
Cash and Receivables, less payables- (1.4)% (417)
-------- -------
NET ASSETS- 100.0% $29,873
======== =======
ADR-American Depository Receipt.
*Non-income producing security.
See notes to financial statements.
87
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GLOBAL BALANCED FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Australia - 1.6%
Australia & New Zealand Banking Group,
Ltd. (B0) ............................................ 3,900 $ 36
Broken Hill Proprietary Co., Ltd. (27) ................. 19,205 103
CSL, Ltd. (H1) ......................................... 6,900 182
Foster's Brewing Group, Ltd. (F2) ...................... 12,600 31
National Australia Bank, Ltd. (B0) ..................... 2,144 35
Publishing & Broadcasting, Ltd. (ME) ................... 6,700 34
Qantas Airways, Ltd. (T3) .............................. 11,210 21
QBE Insurance Group, Ltd. (47) ......................... 17,654 69
-------
511
Canada - 1.1%
Alcan Aluminum, Ltd. (C2) .............................. 1,700 61
Bombardier Inc. - Cl. B (27) ........................... 4,600 48
Investors Group, Inc. (F1) ............................. 6,400 102
Magna International, Inc. (A3) ......................... 800 51
Suncor Energy, Inc. COM NPV (OG) ....................... 400 13
The Thomson Corp. (23) ................................. 1,900 58
-------
333
Denmark - 0.1%
Hampshire Group (L1) ................................... 1,800 46
Finland - 1.1%
Nokia Oyj (H2) ......................................... 13,500 348
France - 1.9%
Accor SA (50) .......................................... 800 29
Bouygues SA (24) ....................................... 3,600 118
Groupe Danone (S1) ..................................... 300 37
JC Decauxsa International NPV (F1) ..................... 1,600 18
Renault (A3) ........................................... 1,000 35
Sanofi-Synthelabo SA (H2) .............................. 3,500 261
Schneider SA (M1) ...................................... 500 24
Societe Television Francaise (ME) ...................... 2,100 53
Vivendi Universal SA (27) .............................. 300 16
-------
591
Germany - 0.3%
DaimlerChrysler AG (A3) ................................ 500 21
Epcos AG (27) .......................................... 800 40
Infineon Technologies AG (EP) .......................... 1,600 33
-------
94
Hong Kong - 1.7%
Cheung Kong (Holdings), Ltd. (R2) ...................... 12,000 125
China Telecom (Hong Kong), Ltd. (T1) ................... 13,500 47
Hutchison Whampoa, Ltd. (B1) ........................... 10,000 97
Johnson Electric Holdings, Ltd. (B3) ................... 44,000 46
Li & Fung, Ltd. (B1) ................................... 48,000 54
Sun Hung Kai Properties, Ltd. (R3) ..................... 7,000 56
Swire Pacific, Ltd. - Cl. A (27) ....................... 18,500 101
-------
526
Ireland - 0.1%
CRH plc (24) ........................................... 2,500 44
Italy - 0.2%
Assicurazioni Generali (47) ............................ 2,000 56
Japan - 5.7%
Acom Co., Ltd. (LR) .................................... 600 44
Advantest (EP) ......................................... 800 45
Aiful Corp. (F1) ....................................... 450 29
Chubu Electric Power (U1) .............................. 1,400 25
Enplas Corp. (EP) ...................................... 1,800 36
Fuji Television Network, Inc. (ME) ..................... 6 24
Hirose Electric Co., Ltd. (EP) ......................... 400 27
Honda Motor Co. (A3) ................................... 1,000 40
Hoya Corp. (EP) ........................................ 600 36
Japan Telecom Co. NPV (T1) ............................. 12 36
Jusco Co., Ltd. (R4) ................................... 2,000 45
Keyence Corp. (EP) ..................................... 200 33
Mitsubishi Estate Co., Ltd. (R1) ....................... 6,000 44
Mitsubishi Heavy Industries, Ltd. (M1) ................. 10,000 27
Mitsui Fudosan Co., Ltd. (R1) .......................... 4,000 31
Mitsui Marine & Fire Insurance Co., Ltd.
(47) ................................................. 16,000 75
Murata Manufacturing Co., Ltd. (EP) .................... 900 54
NEC Corp. (25) ......................................... 9,000 92
Nikko Securities Co., Ltd. (I2) ........................ 5,000 22
Nintendo Corp., Ltd. (50) .............................. 800 140
Nissan Motor Acceptance Corp. (A3) ..................... 15,000 80
Nomura Securities Co., Ltd. (I2) ....................... 4,000 51
NTT Mobile Communications Network,
Inc. (T1) ............................................ 9 106
Orix Corp. (F1) ........................................ 400 36
Promise Co., Ltd. (LR) ................................. 600 32
Rohm Co., Ltd. (EP) .................................... 300 39
Sekisui House, Ltd. (24) ............................... 5,000 36
Shin-Etsu Chemical Co. (C1) ............................ 1,000 36
Shionogi & Co., Ltd. (H2) .............................. 5,000 86
Sony Corp. (EP) ........................................ 1,900 87
Suzuki Motor Corp. (A3) ................................ 7,000 77
Taiyo Yuden Co., Ltd. (EP) ............................. 2,000 30
TDK Corp. (25) ......................................... 1,000 47
Tokyo Electron, Ltd. (EP) .............................. 900 44
Tokyo Seimitsu Co., Ltd. (EP) .......................... 1,000 34
Toray Industries, Inc. (L1) ............................ 12,000 29
UFJ Holdings, Inc. (F1) ................................ 15 33
-------
1,788
Netherlands - 1.9%
Aegon NV (47) .......................................... 7,234 196
ASM Lithography Holding NV (25) ........................ 4,300 75
Heineken NV (F2) ....................................... 3,000 114
Koninklijke (Royal) Philips Electronics NV
(EP) ................................................. 2,000 59
Royal Dutch Petroleum Co. (O1) ......................... 2,200 111
88
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GLOBAL BALANCED FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Netherlands - Continued
Vedior (F1) ............................................ 3,000 $ 36
------
591
Norway - 0.3%
Norsk Hydro ASA (27) ................................... 900 38
Statoil ASA (OD) ....................................... 10,000 68
-------
106
Singapore - 0.7%
DBS Group Holdings, Ltd. (F2) .......................... 4,000 30
Singapore Technology Engineering, Ltd.
(E3) ................................................. 53,000 67
Singapore Telecommunications, Ltd. (T1) ................ 117,000 112
-------
209
Spain - 0.7%
Banco Bilbao Vizcaya SA (B0) ........................... 6,900 85
Inditex (R4) ........................................... 3,500 67
Telefonica SA (U3) ..................................... 5,202 70
-------
222
Sweden - 0.5%
ASSA Abloy (MM) ........................................ 3,400 49
ForeningsSparbanken AB (B0) ............................ 5,400 67
Telefonaktiebolaget LM Ericsson AB (T1) . .............. 7,200 40
-------
156
Switzerland - 2.5%
Credit Suisse Group (LR) ............................... 2,735 117
Holcim (24) ............................................ 528 114
Nestle SA (F2) ......................................... 180 38
Novartis AG (H2) ....................................... 3,963 143
Richemont (F1) ......................................... 4,950 92
Swiss Reinsurance Co. (47) ............................. 1,410 142
Swisscom AG - Reg. (U3) ................................ 337 93
Synthes-Stratec, Inc. (H2) ............................. 70 49
-------
788
United Kingdom - 5.3%
AstraZeneca Group plc (H2) ............................. 12,900 581
British Aerospace plc (02) ............................. 7,100 32
Corus Group (A5) ....................................... 59,000 62
Marks & Spencer plc (R4) ............................... 7,000 37
Pearson plc (ME) ....................................... 2,900 33
Prudential Corp. (47) .................................. 4,600 53
Reuters Group plc (ME) ................................. 5,500 54
Royal Bank of Scotland Group (B0) ...................... 4,600 112
Shell Transport & Trading Co. plc (OG) ................. 17,400 120
Shire Pharma Group (H2) ................................ 2,500 31
Smiths Group plc (27) .................................. 3,600 36
Unilever plc (M4) ...................................... 12,000 98
Vodafone AirTouch plc (T1) ............................. 150,738 394
-------
1,643
United States - 29.5%
Ace, Ltd. (47) ......................................... 400 16
AES Corp. (U1) ......................................... 4,800 78
Agere Systems, Inc. - Cl. A (EP) ....................... 4,400 25
Agilent Technologies, Inc. (EP) ........................ 2,400 68
Air Products & Chemicals, Inc. (C1) .................... 2,300 108
Alcoa, Inc. (C2) ....................................... 900 32
Allstate Corp. (47) .................................... 4,200 142
America Movil SA de CV - ADR Ser. L
(T1) ................................................. 4,100 80
American Greetings Corp. - Cl. A (M4) .................. 5,200 72
AmeriCredit Corp. (LR) ................................. 800 25
Anheuser-Busch Cos., Inc. (F2) ......................... 800 36
AOL Time Warner, Inc. (ME) ............................. 3,500 112
Applera Corporation - Applied Biosystems
Group (EP) ........................................... 2,000 79
Applied Materials, Inc. (EP) ........................... 5,300 213
Applied Micro Circuits Corp. (EP) ...................... 2,800 32
AT&T Corp. (U3) ........................................ 2,000 36
Baker Hughes, Inc. (OD) ................................ 4,700 171
Bank of America Corp. (B0) ............................. 2,200 139
Berkshire Hathaway Inc. - Cl. A (27) ................... 2 151
Cablevision Systems Corp. (ME) ......................... 4,250 105
Cablevision Systems Corp. - Cl. A (ME) ................. 2,700 128
Cadence Design Systems, Inc. (23) ...................... 2,000 44
Campbell Soup Co. (F2) ................................. 3,000 90
Carnival Corp. (50) .................................... 2,400 67
Charter Communications, Inc. - Cl. A (ME) .............. 4,300 71
CheckFree Corp. (23) ................................... 1,900 34
ChevronTexaco Corp. (OG) ............................... 900 81
Cincinnati Financial Corp. (47) ........................ 900 34
Cisco Systems, Inc. (EP) ............................... 12,100 219
Compaq Computer Corp. (25) ............................. 6,200 61
Corning, Inc. (TE) ..................................... 2,300 21
Cox Communications, Inc. - Cl. A (T1) .................. 1,500 63
DaimlerChrysler AG (A3) ................................ 2,900 121
DBS Group Holdings, Ltd. - ADR 144A (a)
(01) ................................................. 2,000 11
Dover Corp. (27) ....................................... 1,600 59
Ecolab, Inc. (B1) ...................................... 1,000 40
Edison International (U3) .............................. 3,000 45
Eli Lilly & Co. (H2) ................................... 500 39
Exxon Mobil Corp. (OG) ................................. 2,800 110
FleetBoston Financial Corp. (B0) ....................... 4,200 153
Fluor Corp. (E3) ....................................... 2,800 105
Gannett Co., Inc. (L2) ................................. 600 40
General Electric Co. (27) .............................. 1,000 40
General Mills, Inc. (F2) ............................... 1,000 52
General Motors Corp. (A2) .............................. 1,400 68
General Motors Corp. - Cl. H (A2) ...................... 6,200 96
Genetech, Inc. (H2) .................................... 1,200 65
Goldman Sachs Group, Inc. (I2) ......................... 500 46
Guidant Corp. (H2) ..................................... 2,100 105
H.J. Heinz Co. (F2) .................................... 1,700 70
89
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GLOBAL BALANCED FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
United States - Continued
Hewlett-Packard Co. (25) ............................. 3,300 $ 68
Household International, Inc. (F1) ................... 2,500 145
Illinois Tool Works, Inc. (27) ....................... 800 54
IMC Global, Inc. (A4) ................................ 3,100 40
Ingersoll-Rand Co. (M1) .............................. 900 38
Intel Corp. (25) ..................................... 2,300 72
International Paper Co. (P1) ......................... 1,300 52
JP Morgan Chase & Co. (B0) ........................... 2,000 73
Juniper Networks, Inc. (25) .......................... 1,400 27
Kellogg Co. (F2) ..................................... 1,300 39
KLA-Tencor Corp. (EP) ................................ 3,600 178
Kraft Foods, Inc. - CL. A (F2) ....................... 2,000 68
Liberty Media Corp. - Ser. A (ME) .................... 10,500 147
Linear Technology Corp. (EP) ......................... 900 35
Lowe's Cos., Inc. (50) ............................... 6,700 311
LuKoil Holding - ADR (OG) ............................ 1,600 78
Macromedia, Inc. (23) ................................ 4,400 78
McDonald's Corp. (P5) ................................ 1,200 32
Medtronic, Inc. (H2) ................................. 1,800 92
Microsoft Corp. (23) ................................. 2,400 159
Motorola, Inc. (EP) .................................. 3,800 57
Navistar International Corp. - Cl. B (A3) ............ 1,300 51
Nike, Inc. - Cl. B (L1) .............................. 900 51
NiSource, Inc. (LR) .................................. 1,700 39
Nokia Oyj - ADR (TE) ................................. 6,900 169
Nortel Networks Corp. (TE) ........................... 3,400 26
Novellus Systems, Inc. (EP) .......................... 1,700 67
NRG Energy, Inc. (OD) ................................ 2,800 43
PepsiCo, Inc. (F2) ................................... 1,600 78
Pfizer, Inc. (H2) .................................... 6,000 239
Philip Morris Cos., Inc. (F2) ........................ 1,000 46
Philips Electronics NV (EP) .......................... 900 26
PMC-Sierra, Inc. (EP) ................................ 1,800 38
Principal Financial Group. (F1) ...................... 300 7
Raytheon Co. (02) .................................... 1,100 36
Robert Half International, Inc. (B9) ................. 1,400 37
Royal Dutch Petroleum Co. - NY Shares
(OD) ............................................... 2,000 98
Samsung Electronics 144A (a) (EP) .................... 290 34
Schlumberger, Ltd. (O1) .............................. 700 38
Sprint PCS (T1) ...................................... 5,000 122
Taiwan Semiconductor Manufacturing Co.,
Ltd. - ADR (EP) .................................... 4,920 84
Telefonos De Mexico, SA - ADR (T1) ................... 4,100 144
Teradyne, Inc. (EP) .................................. 4,400 133
Texas Instruments, Inc. (EP) ......................... 2,700 76
The PMI Group, Inc. (47) ............................. 1,700 114
The Walt Disney Co. (ME) ............................. 1,700 35
TMP Worldwide, Inc. (B1) ............................. 1,400 60
Transocean Sedco Forex, Inc. (OG) .................... 1,000 34
Tyco International, Ltd. (27) ........................ 2,900 171
UAL Corp. (T3) ....................................... 2,700 36
United Parcel Service, Inc. - Cl. B (B9) ............. 700 38
United Technologies Corp. (02) ....................... 1,800 116
Unocal Corp. (OG) .................................... 1,900 69
USA Education, Inc. (LR) ............................. 2,000 168
USA Networks, Inc. (ME) .............................. 3,500 96
VeriSign, Inc. (23) .................................. 1,900 72
Viacom, Inc. - Cl. B (ME) ............................ 800 35
W.W. Grainger, Inc. (02) ............................. 700 34
Wal-Mart Stores, Inc. (R4) ........................... 600 35
Washington Mutual, Inc. (B0) ......................... 9,850 322
Weatherford International, Inc. (O1) ................. 1,200 45
Wells Fargo & Co. (B0) ............................... 2,400 104
Williams Cos., Inc. (OG) ............................. 4,100 105
XL Capital, Ltd. - Cl. A (47) ........................ 1,300 119
-------
9,231
-------
TOTAL COMMON STOCK- 55.2% 17,283
PREFERRED STOCK
Supra National - 0.0%
UFJ International Finance 144A (a) (F1) .............. 2,000,000 7
-------
TOTAL PREFERRED STOCK- 0.0% 7
Par
Value
(000's)
PUBLICLY-TRADED BONDS
Canada - 1.2%
Government of Canada (28)
7.25% due 06/01/07 ................................... $ 530 371
Denmark - 0.5%
Kingdom of Denmark - Bullet Bond (28)
8.0% due 03/15/06 .................................... 1,100 148
Finland - 0.7%
Republic of Finland - Bonds (28)
5.75% due 02/23/11 ................................... 250 232
France - 1.0%
Government of France - Debs. (28)
4.0% due 10/25/09 .................................... 370 310
Germany - 9.8%
Federal Republic of Germany - Bonds (28)
5.25% due 01/04/08 ................................... 750 684
5.25% due 01/04/11 ................................... 2,000 1,811
6.25% due 01/04/30 ................................... 125 124
6.75% due 04/22/03 ................................... 375 347
Kredit Fuer Wiederaufbau (B0)
5.0% due 07/04/11 .................................... 100 88
-------
3,054
Japan - 2.5%
Government of Japan - Bonds (28)
0.9% due 12/22/08 .................................... 30,000 229
1.8% due 03/22/10 .................................... 70,000 562
-------
791
90
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GLOBAL BALANCED FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Luxembourg - 0.8%
KFW International Finance (B0)
1.0% due 12/20/04 ................................... $ 30,000 $ 234
Netherlands - 3.0%
Netherlands Government - Bonds (28)
6.0% due 01/15/06 ................................... 1,000 944
Supra National - 4.3%
Amazon.com (R4)
6.875% due 02/16/10 ................................. 39 14
Bank of Ireland (B0)
6.45% due 02/10/10 .................................. 250 230
British Telecommunications plc (T1)
6.875% due 02/15/11 ................................. 125 116
European Investment Bank - Notes (28)
3.0% due 09/20/06 ................................... 40,000 342
Fixed Link Finance BV (F1)
6.3% due 08/28/25 ................................... 100 145
International Bank of Reconstruction &
Development - Debs. (B0)
4.75% due 12/20/04 .................................. 10,000 87
International-American Development Bank
- Bonds (B0)
1.9% due 07/08/09 ................................... 40,000 326
Kingdom of Spain - Notes (28)
3.1% due 09/20/06 ................................... 10,000 86
-------
1,346
United Kingdom - 1.1%
U.K. Treasury (28)
5.75% due 12/07/09 .................................. 125 189
7.25% due 12/07/07 .................................. 100 161
-------
350
United States - 8.1%
Amazon.Com, Inc. (R4)
4.75% due 02/01/09 .................................. 165 82
Federal National Mortgage Assoc. - Sr.
Notes (G1)
2.125% due 10/09/07 ................................. 40,000 332
Federal National Mortgage Assoc. (G1)
5.25% due 01/15/09 .................................. 340 337
U.S. Treasury - Bonds (29)
5.25% due 02/15/29 .................................. 375 351
U.S. Treasury - Notes (29)
5.75% due 08/15/03 .................................. 1,375 1,440
-------
2,542
-------
TOTAL PUBLICLY-TRADED BONDS- 33.0% 10,322
SHORT-TERM INVESTMENTS - 10.6%
Investment in joint trading account (Note B)
2.055% due 01/02/02 3,303 3,303
------- --------
TOTAL INVESTMENTS- 98.8% 30,915
Cash and Receivables, less payables- 1.2% 375
-------- ---------
NET ASSETS- 100.0% $ 31,290
ADR-American Depository Receipts.
(a) Pursuant to Rule 144A under the Securities Act of 1993, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2001, securities aggregated
$52 or .17% of net assets of the Portfolio.
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED)
Market % of
Industry Value Long-Term
Industry Abbreviation (000s) Investments
Aerospace & Defense ............... 02 $ 401 1.0%
Automobile ........................ A3 560 2.0%
Bank .............................. B0 2,480 9.0%
Brokerage & Investment
Management ..................... I2 120 0.4%
Business Services ................. B9 91 0.3%
Chemical .......................... C1 184 0.6%
Commercial Sevices ................ B1 197 0.7%
Computer Equipment ................ 25 414 1.5%
Computer Software & Services ...... 23 472 2.0%
Construction ...................... 24 559 2.0%
Consumer Miscellaneous ............ M4 170 0.7%
Container ......................... B2 118 0.4%
Diversified Operations ............ 27 817 3.0%
Electric Power .................... U1 187 0.7%
Electrical Equipment .............. B3 30 0.1%
Electronic Products & Services .... EP 1,883 6.8%
Engineering & Construction ........ E3 172 0.6%
Financial Services ................ F1 749 2.8%
Food, Beverage & Tobacco .......... F2 699 2.6%
Foreign Governmental .............. 28 6,197 22.4%
--------- ------------
$27,612 100.0%
========= ============
91
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MID CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Bank - 2.6%
National Commerce Financial Corp. .................. 97,155 $ 2,458
North Fork Bancorporation, Inc. .................... 121,440 3,885
--------
6,343
Brokerage & Investment Management - 0.8%
E*TRADE Group, Inc. * .............................. 184,780 1,894
Business Services - 0.6%
The Dun & Bradstreet Corp. ......................... 35,355 1,409
Commercial Sevices - 11.5%
Apollo Group, Inc. - Cl. A * ....................... 221,098 9,951
Cendant Corp. ...................................... 212,900 4,175
Lamar Advertising Co. * ............................ 110,080 4,661
Plexus Corp. * ..................................... 31,285 831
TMP Worldwide, Inc. * .............................. 71,835 3,082
University of Phoenix Online ....................... 172,207 5,612
--------
28,312
Computer Software & Services - 1.3%
Affiliated Computer Services, Inc. - Cl. A ......... 14,255 1,513
Brocade Communications Systems, Inc. ............... 18,040 598
Cadence Design Systems, Inc. ....................... 51,570 1,130
--------
3,241
Diversified Operations - 2.0%
Amdocs, Ltd. ....................................... 35,785 1,216
Universal Compression Holdings ..................... 127,510 3,760
--------
4,976
Electronic Products & Services - 8.8%
Ciena Corp. ........................................ 70,370 1,007
Cree, Inc. * ....................................... 306,130 9,019
Integrated Device Technology, Inc. * ............... 165,635 4,404
NVIDIA Corp. ....................................... 92,320 6,176
Symbol Technologies, Inc. .......................... 61,345 974
--------
21,580
Energy - Alternative Source - 4.2%
Kinder Morgan, Inc. ................................ 183,360 10,212
Financial Services - 6.6%
Certegy, Inc. ...................................... 75,685 2,590
Concord EFS, Inc. .................................. 161,860 5,306
MGIC Investment Corp. .............................. 40,045 2,471
Paychex, Inc. ...................................... 141,118 4,918
W.R. Berkley Corp. ................................. 18,100 972
--------
16,257
Health Care Products - 23.7%
Abgenix, Inc. ...................................... 75,520 2,540
Andrx Corp. ........................................ 83,695 5,893
Apogent Technologies, Inc. ......................... 92,060 2,375
Biomet, Inc. ....................................... 1,330 41
CuraGen Corp. ...................................... 150,995 3,378
Enzon, Inc. ........................................ 110,675 6,229
Human Genome Sciences, Inc. ........................ 213,160 7,188
Invitrogen Corp. ................................... 59,430 3,680
Laboratory Corporation of America
Holdings ......................................... 57,980 4,688
McKesson HBOC, Inc. ................................ 91,580 3,425
Medarex, Inc. ...................................... 124,400 2,234
Millennium Pharmaceuticals, Inc. ................... 149,265 3,658
OSI Pharmaceuticals, Inc. .......................... 106,155 4,856
Sepracor, Inc. ..................................... 60,035 3,426
St. Jude Medical, Inc. ............................. 58,880 4,572
--------
58,183
Health Care Services - 6.1%
Community Health Systems, Inc. ..................... 64,050 1,633
Forest Laboratories, Inc. .......................... 31,160 2,554
Health Management Assoc., Inc. - Cl. A ............. 278,175 5,119
Manor Care, Inc. ................................... 101,915 2,416
Quest Diagnostics, Inc. ............................ 46,145 3,309
--------
15,031
Insurance - 1.3%
AFLAC, Inc. ........................................ 19,610 482
Everest Re Group, Ltd. ............................. 19,380 1,370
Renaissancere Holdings, Ltd. ....................... 14,330 1,367
--------
3,219
Leisure & Recreation - 2.0%
Electronic Arts, Inc. .............................. 68,250 4,092
Starwood Hotels & Resorts Worldwide, Inc. .......... 30,490 910
--------
5,002
Media - TV/Radio - 3.4%
Charter Communications, Inc. - Cl. A ............... 329,215 5,409
Cox Radio, Inc. - Cl. A * .......................... 54,400 1,386
Entercom Communications Corp. * .................... 28,920 1,446
--------
8,241
Oil - Equipment & Service - 2.5%
Hanover Compressor Co. * ........................... 246,615 6,230
Retail - Department Stores - 2.1%
eBay, Inc. ......................................... 75,505 5,051
Telecommunication Equipment - 3.3%
Crown Castle International Corp. * ................. 763,180 8,151
Telecommunication Services - 3.8%
EchoStar Communications Corp. - Cl. A * ............ 94,355 2,592
SBA Communications Corp. ........................... 134,700 1,754
Western Wireless Corp. - Cl. A * ................... 181,285 5,121
--------
9,467
Transportation Services - 3.4%
Expeditors International of Washington,
Inc. ............................................. 61,640 3,510
92
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MID CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Transportation Services - Continued
Ryanair Holdings plc - ADR ..................... 158,900 $ 5,092
----------
8,602
-----------
TOTAL COMMON STOCK- 90.0% 221,401
Par
Value
(000's)
COMMERCIAL PAPER - 4.9%
Tyco Capital Corp.
1.78% due 01/02/02 ............................... $ 12,000 11,999
SHORT-TERM INVESTMENTS - 5.2%
Federal Home Loan Mortgage Corp.
1.51% due 02/01/02 ............................. 12,700 12,700
--------- -----------
TOTAL INVESTMENTS- 100.1% 246,100
Cash and Receivables, less payables- (0.1)% (201)
--------- -----------
NET ASSETS- 100.0% $ 245,899
--------- ----------
ADR-American Depository Receipt.
*Non-income producing security.
See notes to financial statements.
93
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 2.1%
Lockheed Martin Corp. ............................ 83,900 $ 3,915
Raytheon Co. ..................................... 45,700 1,484
--------
5,399
Auto & Truck Parts - 1.2%
Genuine Parts Co. ................................ 71,700 2,631
TRW, Inc. ........................................ 16,300 604
--------
3,235
Automobile - 0.4%
Ford Motor Co. ................................... 63,500 998
Bank - 6.7%
Bank of America Corp. ............................ 37,200 2,342
Bank One Corp. ................................... 91,200 3,561
FleetBoston Financial Corp. ...................... 106,672 3,894
JP Morgan Chase & Co. ............................ 73,630 2,677
Mercantile Bankshares Corp. ...................... 41,200 1,773
National City Corp. .............................. 48,100 1,406
Wells Fargo & Co. ................................ 40,900 1,777
--------
17,430
Business Services - 1.1%
The Dun & Bradstreet Corp * ...................... 77,700 2,967
Chemical - 2.8%
Dow Chemical Co. ................................. 54,700 1,848
E.I. du Pont de Nemours & Co. .................... 71,900 3,056
Great Lakes Chemical Corp. ....................... 58,400 1,418
Hercules, Inc. ................................... 95,500 955
--------
7,277
Commercial Sevices - 0.6%
R.R. Donnelley & Sons Co. ........................ 55,100 1,636
Computer Equipment - 0.9%
Compaq Computer Corp. ............................ 118,400 1,156
Hewlett-Packard Co. .............................. 58,000 1,191
--------
2,347
Computer Software & Services - 0.9%
Microsoft Corp. .................................. 26,700 1,769
Unisys Corp. * ................................... 44,800 562
--------
2,331
Construction - 0.5%
Stanley Works .................................... 25,900 1,206
Consumer Miscellaneous - 2.1%
Black & Decker Corp. ............................. 23,500 887
Clorox Co. ....................................... 52,700 2,084
Fortune Brands, Inc. ............................. 64,400 2,550
--------
5,521
Cosmetic & Personal Care - 2.9%
Gillette Co. ..................................... 82,500 2,756
International Flavors & Fragrances, Inc. ......... 71,500 2,124
Procter & Gamble Co. ............................. 33,200 2,627
-------
7,507
Diversified Operations - 5.4%
Eaton Corp. ...................................... 19,100 1,421
General Electric Co. ............................. 67,800 2,718
Honeywell International, Inc. .................... 137,800 4,660
Pall Corp. ....................................... 102,100 2,457
Rockwell Collins, Inc. ........................... 104,100 2,030
Textron, Inc. .................................... 16,700 692
--------
13,978
Electric Power - 1.8%
Exelon Corp. ..................................... 36,375 1,742
Firstenergy Corp. ................................ 42,000 1,469
Niagara Mohawk Holdings, Inc. .................... 46,500 824
NiSource, Inc. ................................... 24,700 570
--------
4,605
Electrical Equipment - 0.7%
Cooper Industries, Inc. .......................... 49,800 1,739
Electronic Products & Services - 2.5%
Agere Systems, Inc. - Cl. A ...................... 173,200 986
Hubbell, Inc. - Cl. B ............................ 61,700 1,813
Rockwell International Corp. ..................... 69,500 1,241
Texas Instruments, Inc. .......................... 70,900 1,985
Xerox Corp. ...................................... 38,000 396
--------
6,421
Financial Services - 3.9%
American Express Co. ............................. 85,000 3,034
Citigroup, Inc. .................................. 68,466 3,456
Mellon Financial Corp. ........................... 101,500 3,818
--------
10,308
Food, Beverage & Tobacco - 5.8%
Brown-Forman Corp. - Cl. B ....................... 35,300 2,210
Campbell Soup Co. ................................ 74,900 2,237
General Mills, Inc. .............................. 35,600 1,852
Hershey Foods Corp. .............................. 35,600 2,410
Kellogg Co. ...................................... 14,900 448
McCormick & Co., Inc. ............................ 24,300 1,020
Philip Morris Cos., Inc. ......................... 42,200 1,935
UST, Inc. ........................................ 87,700 3,069
--------
15,181
Health Care Products - 5.9%
Abbott Laboratories .............................. 40,500 2,258
American Home Products Corp. ..................... 67,100 4,117
Becton, Dickinson & Co. .......................... 44,400 1,472
Bristol-Myers Squibb Co. ......................... 51,000 2,601
Merck & Co., Inc. ................................ 46,700 2,746
Schering-Plough Corp. ............................ 63,900 2,288
--------
15,482
94
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Insurance - 5.7%
American International Group, Inc. .................. 31,946 $ 2,537
Aon Corp. ........................................... 39,200 1,392
Chubb Corp. ......................................... 42,700 2,946
Lincoln National Corp. .............................. 30,900 1,501
Prudential Financial, Inc. .......................... 13,100 435
Safeco Corp. ........................................ 73,200 2,280
St. Paul Cos., Inc. ................................. 28,652 1,260
UnumProvident Corp. ................................. 97,700 2,590
--------
14,941
Leisure & Recreation - 2.7%
Eastman Kodak Co. ................................... 69,000 2,031
Hasbro, Inc. ........................................ 119,300 1,936
Starwood Hotels & Resorts Worldwide,
Inc. .............................................. 99,400 2,967
--------
6,934
Media - Publishing - 2.6%
Dow Jones & Co., Inc. ............................... 36,900 2,019
Knight-Ridder, Inc. ................................. 47,800 3,104
Readers Digest Association, Inc. - Cl. A ............ 69,700 1,609
--------
6,732
Media - TV / Radio - 1.5%
McGraw-Hill Cos., Inc. .............................. 11,600 707
The Walt Disney Co. ................................. 161,000 3,336
--------
4,043
Metals & Mining - 1.7%
Inco, Ltd. .......................................... 31,800 539
Minnesota Mining & Manufacturing Co. ................ 31,000 3,665
Phelps Dodge Corp. .................................. 11,800 382
--------
4,586
Oil - 0.4%
Baker Hughes, Inc. .................................. 26,700 974
Oil & Natural Gas Exploration & Production - 9.2%
Amerada Hess Corp. .................................. 43,500 2,719
BP Amoco plc - ADR .................................. 98,732 4,592
ChevronTexaco Corp. ................................. 72,813 6,525
Exxon Mobil Corp. ................................... 146,834 5,771
Unocal Corp. ........................................ 85,100 3,069
USX-Marathon Group .................................. 46,000 1,380
--------
24,056
Oil - Equipment & Service - 1.1%
Royal Dutch Petroleum Co. ........................... 56,700 2,779
Paper & Forest Products - 2.3%
International Paper Co. ............................. 87,170 3,518
Kimberly-Clark Corp. ................................ 28,800 1,722
Mead Corp. .......................................... 25,900 800
--------
6,040
Pollution Control - 1.5%
Waste Management, Inc. .............................. 121,190 3,867
Real Estate Investment Trust - 1.9%
Hilton Hotels Corp. ................................. 128,300 1,401
Rouse Co. ........................................... 57,100 1,673
Simon Property Group, Inc. .......................... 68,300 2,003
--------
5,077
Retail - Department Stores - 2.3%
J.C. Penney Co., Inc. ............................... 45,000 1,210
May Department Stores Co. ........................... 63,350 2,343
Toys "R" Us, Inc. * ................................. 121,700 2,524
--------
6,077
Retail - Food - 0.9%
McDonald's Corp. .................................... 86,800 2,298
Telecommunication Equipment - 0.5%
Corning, Inc. ....................................... 59,500 531
Lucent Technologies, Inc. ........................... 111,300 700
--------
1,231
Telecommunication Services - 2.9%
Motorola, Inc. ...................................... 113,200 1,700
Qwest Communications International, Inc. ............ 141,100 1,994
Verizon Communications .............................. 81,716 3,878
--------
7,572
Telephone - 4.9%
Alltel Corp. ........................................ 55,700 3,438
AT&T Corp. .......................................... 97,700 1,772
BellSouth Corp. ..................................... 61,200 2,335
SBC Communications, Inc. ............................ 90,455 3,543
Sprint Corp. ........................................ 83,900 1,685
--------
12,773
Transportation Services - 2.4%
Norfolk Southern Corp. .............................. 97,500 1,787
Union Pacific Corp. ................................. 77,800 4,435
--------
6,222
U.S. Government Agencies - 1.0%
Federal National Mortgage Assoc. .................... 33,200 2,639
Utilities - Electric - 0.5%
Duke Energy Co. ..................................... 32,000 1,256
Utility - 0.9%
Constellation Energy Group .......................... 87,000 2,310
--------
TOTAL COMMON STOCK- 95.1% 247,975
PREFERRED STOCK
Telecommunication Equipment - 0.1%
Lucent Technologies, Inc. ........................... 135 154
--------
TOTAL PREFERRED STOCK- 0.1% 154
95
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
SHORT-TERM INVESTMENTS - 4.6%
Investment in joint trading account
(Note B)
2.055% due 01/02/02 ..................... $ 11,887 $ 11,887
-------- ---------
TOTAL INVESTMENTS- 99.8% 260,016
Cash and Receivables, less payables- 0.2% 630
-------- ---------
NET ASSETS- 100.0% $ 260,646
======== =========
ADR-American Depository Receipt.
Non-income producing security.
See notes to financial statements.
96
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP VALUE CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 1.8%
Boeing Co. .......................................... 4,400 $ 170
General Dynamics Corp. .............................. 700 56
Lockheed Martin Corp. ............................... 8,700 406
Northrop Grumman Corp. .............................. 2,200 222
United Technologies Corp. ........................... 3,400 220
-------
1,074
Auto & Truck Parts - 2.0%
AutoNation, Inc. .................................... 6,600 81
AutoZone, Inc. ...................................... 3,100 223
Genuine Parts Co. ................................... 5,600 206
Johnson Controls, Inc. .............................. 8,300 670
Visteon Corp. ....................................... 3,600 54
-------
1,234
Automobile - 1.6%
General Motors Corp. ................................ 18,400 894
General Motors Corp. - Cl. H ........................ 3,700 57
-------
951
Bank - 12.2%
Bank of America Corp. ............................... 26,210 1,650
Bank One Corp. ...................................... 12,000 469
BB&T Corporation .................................... 3,800 137
Comerica, Inc. ...................................... 2,900 166
Dime Bancorp, Inc. .................................. 800 29
Fifth Third Bancorp ................................. 2,400 147
Fulton Financial Corp. .............................. 2,100 46
Hudson City Bancorp, Inc. ........................... 7,700 203
Investors Financial Services Corp. .................. 1,100 73
JP Morgan Chase & Co. ............................... 29,600 1,076
M & T Bank Corp. .................................... 5,400 393
National City Corp. ................................. 15,200 445
PNC Bank Corp. ...................................... 3,100 174
Popular, Inc. ....................................... 700 20
SouthTrust Corp. .................................... 6,900 170
State Street Corp. .................................. 1,700 89
Suntrust Banks, Inc. ................................ 8,300 520
Union Planters Corp. ................................ 10,600 478
UnionBanCal Corp. ................................... 1,900 72
US Bancorp .......................................... 3,900 82
Washington Mutual, Inc. ............................. 13,400 438
Wells Fargo & Co. ................................... 8,600 374
Zions Bancorp ....................................... 3,400 179
-------
7,430
Brokerage & Investment Management - 2.3%
Bear Stearns Cos., Inc. ............................. 10,200 598
Lehman Brothers Holdings, Inc. ...................... 5,700 381
Morgan Stanley, Dean Witter, Discover & Co. ......... 7,300 408
-------
1,387
Business Services - 0.8%
Pitney Bowes, Inc. .................................. 12,200 459
Chemical - 2.1%
Ashland, Inc. ....................................... 10,700 493
Cabot Corp. ......................................... 900 32
Dow Chemical Co. .................................... 10,100 341
Engelhard Corp. ..................................... 2,800 78
Lubrizol Corp. ...................................... 4,300 151
OM Group, Inc. ...................................... 1,000 66
Sigma-Aldrich Corp. ................................. 3,600 142
-------
1,303
Commercial Services - 0.3%
Cendant Corp. * ..................................... 3,700 73
H & R Block, Inc. ................................... 1,700 76
R.R. Donnelley & Sons Co. ........................... 1,900 56
-------
205
Computer Equipment - 2.2%
Compaq Computer Corp. ............................... 18,400 179
Dell Computer Corp. ................................. 7,200 196
Gateway, Inc. ....................................... 32,700 263
Hewlett-Packard Co. ................................. 12,100 248
International Business Machines Corp. ............... 3,900 472
-------
1,358
Computer Software & Services - 1.9%
Affiliated Computer Services, Inc. - Cl. A * ........ 1,000 106
EarthLink, Inc. ..................................... 9,700 118
Electronic Data Systems Corp. ....................... 8,800 603
First Data Corp. .................................... 4,110 323
-------
1,150
Construction - 0.6%
Lowe's Cos., Inc. ................................... 8,000 371
Consumer Miscellaneous - 1.1%
Harley-Davidson, Inc. ............................... 2,600 141
Ingram Micro, Inc. - Cl. A .......................... 23,300 404
Sherwin-Williams Co. ................................ 4,700 129
-------
674
Cosmetic & Personal Care - 3.6%
Alberto-Culver Co. - Cl. B .......................... 1,900 85
Avon Products, Inc. ................................. 3,500 163
Colgate-Palmolive Co. ............................... 8,200 473
Procter & Gamble Co. ................................ 18,200 1,440
-------
2,161
Diversified Operations - 2.0%
Danaher Corp. ....................................... 1,300 78
General Electric Co. ................................ 3,000 120
Henry Schein, Inc. .................................. 2,900 107
Honeywell International, Inc. ....................... 1,800 61
ITT Industries, Inc. ................................ 700 35
Kadant, Inc. ........................................ 100 2
97
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP VALUE CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Diversified Operations - Continued
Monsanto Co. ....................................... 9,510 $ 322
Pittston Brink's Group ............................. 2,700 60
Tyco International, Ltd. ........................... 6,100 359
W.W. Grainger, Inc. ................................ 1,800 87
-------
1,231
Electric Power - 5.4%
Allegheny Energy, Inc. ............................. 2,100 76
Consolidated Edison, Inc. .......................... 300 12
Dominion Resources, Inc. ........................... 1,000 60
Duke Energy Co. .................................... 17,300 679
Emerson Electric Co. ............................... 1,100 63
Energy East Corp. .................................. 1,700 32
Entergy Corp. ...................................... 17,500 684
Exelon Corp. ....................................... 1,300 62
Firstenergy Corp. .................................. 600 21
Mirant Corp. * ..................................... 7,900 127
PG & E Corp. ....................................... 3,500 67
Pinnacle West Capital Corp. ........................ 1,800 75
Reliant Resources , Inc. ........................... 11,600 192
Reliant Energy, Inc. ............................... 14,200 377
TXU Corp. .......................................... 4,200 198
UtiliCorp United, Inc. ............................. 16,800 423
Xcel Energy, Inc. .................................. 5,300 147
-------
3,295
Electronic Products & Services - 1.6%
3Com Corp. ......................................... 700 4
Arrow Electronics, Inc. ............................ 5,000 150
Avnet, Inc. ........................................ 4,700 120
AVX Corp. .......................................... 3,910 92
Ball Corp. ......................................... 1,300 92
Cabot Microelectronics Corp. ....................... 800 63
NCR Corp. .......................................... 2,800 103
Progressive Corp. .................................. 700 105
Solectron Corp. * .................................. 4,600 52
Tech Data Corp. .................................... 4,410 191
-------
972
Energy - Alternative Source - 1.7%
Dynegy, Inc. - Cl.A ................................ 11,100 283
El Paso Corp. ...................................... 11,400 509
Massey Energy Co. .................................. 13,000 269
-------
1,061
Financial Services - 7.1%
Cincinnati Financial Corp. ......................... 2,900 111
Citigroup, Inc. .................................... 46,900 2,367
CNA Financial Corp. * .............................. 2,200 64
Federated Investments, Inc. - Cl. B ................ 900 29
Hartford Financial Services Group, Inc. ............ 4,800 302
IndyMac Bancorp, Inc. .............................. 3,800 89
Marshall & Ilsley Corp. ............................ 5,300 335
Merrill Lynch & Co., Inc. .......................... 8,500 443
Nationwide Financial Services - Cl. A .............. 9,600 398
SEI Investments Company ............................ 3,000 135
Wesco Financial Corp. .............................. 200 63
-------
4,336
Food, Beverage & Tobacco - 3.2%
Pepsi Bottling Group, Inc. ......................... 4,200 99
PepsiCo, Inc. ...................................... 7,600 370
Philip Morris Cos., Inc. ........................... 1,400 64
R.J. Reynolds Tobacco Holdings, Inc. * ............. 8,200 462
Sara Lee Corp. ..................................... 10,700 238
Smithfield Foods, Inc. ............................. 9,400 207
SuperValu, Inc. .................................... 3,300 73
Sysco Corp. ........................................ 16,800 440
Tyson Foods, Inc. - Cl. A .......................... 1,927 22
-------
1,975
Health Care Products - 5.9%
Abbott Laboratories ................................ 8,700 485
Bristol-Myers Squibb Co. ........................... 7,500 383
Cardinal Health, Inc. .............................. 7,000 453
Johnson & Johnson .................................. 4,400 260
McKesson HBOC, Inc. ................................ 18,300 684
Merck & Co., Inc. .................................. 17,000 1,000
Perrigo Co. ........................................ 4,600 54
Stryker Corp. ...................................... 2,900 169
UnitedHealth Group, Inc. ........................... 1,300 92
-------
3,580
Health Care Services - 0.5%
Aetna US Healthcare, Inc. .......................... 3,500 115
Caremark Rx, Inc. .................................. 3,600 59
Humana, Inc. ....................................... 5,000 59
SICOR , Inc. ....................................... 3,700 58
-------
291
Household Appliances / Furnishings - 0.2%
Mohawk Industries, Inc. ............................ 1,800 99
Insurance - 2.0%
Allstate Corp. ..................................... 5,500 185
American International Group, Inc. ................. 915 73
American National Insurance Co. .................... 1,100 93
Lincoln National Corp. ............................. 2,700 131
Metlife, Inc. ...................................... 19,900 631
Old Republic International Corp. ................... 2,000 56
The MONY Group, Inc. ............................... 1,400 48
-------
1,217
Leisure & Recreation - 1.1%
Blockbuster, Inc. - Cl. A .......................... 1,600 40
Brunswick Corp. .................................... 1,700 37
Loews Corp. ........................................ 10,400 576
-------
653
98
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP VALUE CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Machinery - 0.3%
Caterpillar, Inc. ..................................... 3,100 $ 162
Tecumseh Products Co. - Cl. A ......................... 900 46
-------
208
Media - Publishing - 0.8%
Banta Corporation ..................................... 2,200 65
McClatchy Newspapers, Inc. - Cl. A .................... 3,100 146
Tribune Co. ........................................... 6,690 250
-------
461
Media - TV / Radio - 2.6%
Charter Communications, Inc. - Cl. A * ................ 2,500 41
Comcast Corp. - Cl. A ................................. 4,000 144
Cox Radio, Inc. - Cl. A ............................... 2,900 74
Fox Entertainment Group, Inc. - Cl. A * ............... 1,700 45
Liberty Media Corp. COM SER A ......................... 29,400 412
The Walt Disney Co. ................................... 13,000 269
Viacom, Inc. - Cl. B .................................. 13,700 605
-------
1,590
Metals & Mining - 0.6%
Alcoa, Inc. ........................................... 3,200 114
Inco, Ltd. ............................................ 3,100 53
Minnesota Mining & Manufacturing Co. .................. 1,500 177
-------
344
Natural Gas Distribution - 0.2%
KeySpan Corp. ......................................... 1,700 59
Nicor, Inc. ........................................... 1,600 67
-------
126
Oil - 1.0%
Anadarko Petroleum Corp. .............................. 3,600 205
Baker Hughes, Inc. .................................... 3,300 120
ONEOK, Inc. ........................................... 11,900 212
Panamsat Corp. ........................................ 3,200 70
-------
607
Oil & Natural Gas Exploration & Production - 6.5%
ChevronTexaco Corp. ................................... 5,235 469
Conoco, Inc. .......................................... 7,200 204
Exxon Mobil Corp. ..................................... 61,200 2,405
Kerr-McGee Corp. ...................................... 900 49
Mitchell Energy & Development Corp. -
Cl. A ............................................... 1,100 58
NRG Energy, Inc. ...................................... 4,900 76
Occidental Petroleum Corp. ............................ 7,500 199
Phillips Petroleum Co. ................................ 4,160 251
Sunoco, Inc. .......................................... 1,600 60
Ultramar Diamond Shamrock Corp. ....................... 700 35
USX-Marathon Group .................................... 4,100 123
-------
3,929
Oil - Equipment & Service - 0.2%
Halliburton Co. ....................................... 8,700 114
Paper & Forest Products - 1.6%
Boise Cascade Corp. ................................... 2,600 $ 89
Georgia-Pacific Corp. ................................. 7,900 218
International Paper Co. ............................... 1,700 69
Temple-Inland, Inc. ................................... 4,500 255
Weyerhaeuser Co. ...................................... 6,400 346
-------
977
Personal & Commercial Lending - 0.8%
Countrywide Credit Industries, Inc. ................... 10,600 434
MBNA Corp. ............................................ 700 25
-------
459
Pollution Control - 0.8%
Waste Management, Inc. ................................ 14,800 472
Real Estate Development - 0.1%
Lennar Corp. .......................................... 1,600 75
Real Estate Investment Trust - 1.5%
AMB Property Corp. .................................... 5,400 140
Archstone Communities Trust ........................... 1,100 29
Avalonbay Communities, Inc. ........................... 3,000 142
Equity Office Properties Trust ........................ 8,500 256
Marriott International, Inc. - Cl. A .................. 3,400 138
Prologis Trust ........................................ 8,100 174
Simon Property Group, Inc. ............................ 600 18
-------
897
Retail - Department Stores - 2.2%
Best Buy Co., Inc. .................................... 4,800 358
Dillard's, Inc. - Cl. A ............................... 3,200 51
Home Depot, Inc. ...................................... 1,400 71
K-mart Corp. .......................................... 24,700 135
Payless ShoeSource, Inc. * ............................ 1,100 62
Sears, Roebuck & Co. .................................. 12,100 576
Target Corp. .......................................... 2,300 94
-------
1,347
Retail - Food - 0.9%
Albertson's, Inc. ..................................... 3,600 113
Interstate Bakeries ................................... 2,700 65
Tricon Global Restaurants, Inc. ....................... 7,900 389
-------
567
Shoe & Apparel Manufacturing - 0.4%
Liz Claiborne, Inc. ................................... 4,700 234
Telecommunication Equipment - 0.3%
Faichild Semiconductor International - Cl. A .......... 4,200 118
L-3 Communications Holdings, Corp. .................... 600 54
Nortel Networks Corp. ................................. 100 1
-------
173
Telecommunication Services - 5.6%
AT&T Wireless Group ................................... 39,800 572
99
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP VALUE CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Telecommunication Services - Continued
BCE, Inc. ......................................... 3,900 $ 89
Clear Channel Communications, Inc. ................ 10,810 550
Motorola, Inc. .................................... 14,900 224
United States Cellular Corp. ...................... 1,600 72
Verizon Communications. ........................... 27,300 1,296
WorldCom, Inc. .................................... 43,000 606
WorldCom, Inc. MCI Group .......................... 100 1
---------
3,410
Telephone - 3.5%
Alltel Corp. ...................................... 3,200 198
AT&T Corp. ........................................ 39,200 711
BellSouth Corp. ................................... 8,900 340
Level 3 Communications, Inc. * .................... 300 1
SBC Communications, Inc. .......................... 15,500 607
Telephone and Data Systems, Inc. .................. 3,100 278
---------
2,135
Transportation Services - 2.2%
Airborne, Inc. .................................... 5,400 80
AMR Corp. ......................................... 2,600 58
Continental Airlines, Inc. - Cl. B ................ 1,200 32
CSX Corp. ......................................... 7,900 277
Delta Air Lines, Inc. ............................. 6,800 199
Norfolk Southern Corp. ............................ 2,800 51
UAL Corp. ......................................... 2,100 28
Union Pacific Corp. ............................... 1,700 97
United Parcel Service, Inc. - Cl. B ............... 10,000 545
---------
1,367
U.S. Government Agencies - 2.1%
Federal Home Loan Mortgage Corp. .................. 3,500 229
Federal National Mortgage Assoc. .................. 13,300 1,057
---------
1,286
---------
TOTAL COMMON STOCK- 97.4% 59,245
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 2.3%
Investment in joint repurchase agreement
with Goldman Sachs & Co., 1.778% due
01/02/02 ........................................ $1,400 1,400
------- --------
TOTAL INVESTMENTS- 99.7% 60,645
Cash and Receivables, less payables- 0.3% 187
-------- --------
NET ASSETS- 100.0% $60,832
======== ========
*Non-income producing security.
See notes to financial statements.
100
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE/MID CAP VALUE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 1.9%
Boeing Co. 21,000 $ 814
Lockheed Martin Corp. 25,900 1,209
Northrop Grumman Corp. 7,300 736
United Technologies Corp. 4,000 259
-------
3,018
Auto & Truck Parts - 0.3%
Lear Corp. 11,400 435
Automobile - 0.7%
Ford Motor Co. 24,370 383
General Motors Corp. 14,300 695
-------
1,078
Bank - 8.3%
Australia & New Zealand Banking
Group, Ltd. - ADR 47,900 2,188
Banknorth Group, Inc. 32,800 739
Commerce Bancshares, Inc. 10,150 396
Golden West Financial Corp. 9,200 541
Hibernia Corp. - Cl. A 20,400 363
JP Morgan Chase & Co. 43,800 1,592
KeyCorp 19,900 484
PNC Bank Corp. 53,000 2,979
UnionBanCal Corp. 74,500 2,831
US Bancorp 5,161 108
Washington Mutual, Inc. 2,350 77
Westpac Banking Corp., Ltd. 28,400 1,149
-------
13,447
Brokerage & Investment Management - 0.4%
Goldman Sachs Group, Inc. 7,800 723
Business Services - 0.3%
Pitney Bowes, Inc. 11,900 448
Chemical - 2.9%
Air Products & Chemicals, Inc. 15,400 722
Ashland, Inc. 13,900 641
E.I. du Pont de Nemours & Co. 45,500 1,934
Rohm & Haas Co. 39,600 1,371
-------
4,668
Commercial Sevices - 0.1%
Aramark Corp. CL B 6,600 178
Computer Equipment - 2.6%
Compaq Computer Corp. 49,600 484
Comverse Technology, Inc. 8,100 181
Hewlett-Packard Co. 49,600 1,019
International Business Machines Corp. 18,400 2,226
Palm, Inc. 91,900 356
-------
4,266
Computer Software & Services - 1.2%
First Data Corp. 23,700 1,859
Consumer Miscellaneous - 0.6%
Avery Dennison Corp. 17,400 984
Container - 0.0%
Smurfit-Stone Container Corp. 3,700 59
Cosmetic & Personal Care - 3.0%
Estee Lauder Cos., Inc. - Cl. A 36,800 1,180
Procter & Gamble Co. 47,300 3,743
-------
4,923
Diversified Operations - 2.4%
ITT Industries, Inc. 3,000 151
Tyco International, Ltd. 63,900 3,764
-------
3,915
Electric Power - 4.1%
Dominion Resources, Inc. 12,800 769
Exelon Corp. 54,012 2,586
Firstenergy Corp. 36,500 1,277
FPL Group, Inc. 17,100 965
Pinnacle West Capital Corp. 24,500 1,025
-------
6,622
Electronic Products & Services - 1.5%
Cisco Systems, Inc. 15,100 273
Conexant Systems, Inc. 32,400 465
Enterasys Networks, Inc. 51,200 453
National Semiconductor Corp. 33,600 1,035
Vitesse Semiconductor Corp. 10,600 132
-------
2,358
Energy - Alternative Source - 1.2%
El Paso Corp. 42,800 1,909
Financial Services - 9.0%
Certegy, Inc. 3,400 116
Citigroup, Inc. 166,966 8,429
Merrill Lynch & Co., Inc. 83,100 4,331
Wachovia Corp. 53,100 1,665
-------
14,541
Food, Beverage & Tobacco - 4.3%
ConAgra, Inc. 88,100 2,094
PepsiCo, Inc. 30,700 1,495
Philip Morris Cos., Inc. 27,700 1,270
R.J. Reynolds Tobacco Holdings, Inc. 37,000 2,083
-------
6,942
Health Care Products - 4.8%
Abbott Laboratories 31,400 1,751
Anthem, Inc. 4,100 203
Becton, Dickinson & Co. 11,700 388
Eli Lilly & Co. 26,500 2,081
McKesson HBOC, Inc. 27,500 1,028
Pharmacia Corp. 55,447 2,365
-------
7,816
101
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE/MID CAP VALUE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Health Care Services - 0.5%
HCA-The Healthcare Corp. 2,200 $ 85
Tenet Healthcare Corp. 11,700 687
-------
772
Insurance - 6.1%
American International Group, Inc. 32,450 2,576
Cigna Corp. 5,200 482
Marsh & McLennan Cos., Inc. 18,300 1,966
MBIA, Inc. 59,850 3,210
XL Capital, Ltd. - Cl. A 18,100 1,654
-------
9,888
Leisure & Recreation - 2.1%
Blockbuster, Inc. - Cl. A 44,100 1,111
Eastman Kodak Co. 18,500 544
MGM Grand, Inc. 16,000 462
Sabre Group Holdings, Inc. 25,100 1,063
Six Flags, Inc. 18,500 285
-------
3,465
Machinery - 1.4%
Caterpillar, Inc. 17,200 899
SPX Corp. 4,600 630
Thermo Electron Corp. 29,700 708
-------
2,237
Media - Publishing - 0.6%
Gannett Co., Inc. 14,200 955
Media - TV / Radio - 3.7%
Adelphia Communications Corp. -
Cl. A 36,900 1,150
E.W. Scripps Co. - Cl. A 15,100 997
Liberty Media Corp. - Ser. A 198,400 2,778
USA Networks, Inc. 35,900 980
-------
5,905
Metals & Mining - 1.5%
Alcoa, Inc. 52,100 1,852
Minnesota Mining & Manufacturing
Co. 4,900 579
-------
2,431
Oil - 0.9%
Dynegy, Inc. - Cl.A 59,200 1,510
Oil & Natural Gas Exploration & Production - 8.4%
ChevronTexaco Corp. 44,600 3,997
Conoco, Inc. 21,600 611
Exxon Mobil Corp. 213,100 8,375
Helmerich & Payne, Inc. 9,000 300
Rowan Cos., Inc. 17,600 341
-------
13,624
Paper & Forest Products - 1.3%
Bowater, Inc. 23,100 1,102
Kimberly-Clark Corp. 14,300 855
Weyerhaeuser Co. 2,000 108
-------
2,065
Real Estate Investment Trust - 1.2%
Equity Office Properties Trust 29,300 881
General Growth Properties 9,700 377
Kimco Realty Corp. 20,250 662
-------
1,920
Real Estate Operations - 0.0%
Security Capital Group, Inc. - Cl. B 2,600 66
Retail - Department Stores - 2.0%
Family Dollar Stores, Inc. 79,000 2,368
Ross Stores, Inc. 29,200 937
-------
3,305
Retail - Food - 2.4%
McDonald's Corp. 66,400 1,758
Safeway, Inc. 49,400 2,062
-------
3,820
Retailers - Food & Drug - 0.4%
CVS Corp. 19,900 589
Telecommunication Services - 5.1%
Clear Channel Communications, Inc. 23,000 1,171
Motorola, Inc. 38,700 581
Verizon Communications 112,600 5,344
WorldCom, Inc. 86,000 1,211
-------
8,307
Telephone - 4.8%
Alltel Corp. 18,800 1,160
AT&T Corp. 128,000 2,322
BellSouth Corp. 23,400 893
Qwest Communications International,
Inc. 69,637 984
SBC Communications, Inc. 38,195 1,496
Sprint Corp. 45,400 912
-------
7,767
Transportation Services - 1.0%
Canadian National Railway Co. 11,700 565
Fedex Corp. 7,200 373
Southwest Airlines Co. 38,400 710
-------
1,648
U.S. Government Agencies - 3.9%
Federal Home Loan Mortgage Corp. 16,900 1,106
Federal National Mortgage Assoc. 65,500 5,207
-------
6,313
-------
TOTAL COMMON STOCK- 96.9% 156,776
102
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE/MID CAP VALUE FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
SHORT-TERM INVESTMENTS
Investment in joint trading account (Note B)
2.055% due 01/02/02 $ 5,927 $ 5,927
U.S. Treasury - Bills
1.806% due 02/05/09 35 35
1.92% due 02/02/07 30 30
1.98% due 02/02/07 128 128
-----------
193
-----------
TOTAL SHORT-TERM INVEST-
MENTS- 3.8% 6,120
-------- -----------
TOTAL INVESTMENTS- 100.7% 162,896
Cash and Receivables, less payables- (0.7)% (1,186)
-------- -----------
NET ASSETS- 100.0% $ 161,710
======== ===========
ADR-American Depository Receipt
See notes to financial statements.
103
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MONEY MARKET FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
COMMERCIAL PAPER
Automobile - 0.8%
American Honda Finance
2.01% due 01/16/02 .................................. $ 6,000 $ 5,995
Bank - 4.5%
Deutsche Bank
2.27% due 01/11/02 .................................. 6,500 6,496
JP Morgan Chase Bank
1.75% due 03/13/02 .................................. 15,000 15,000
LaSalle Bank
2.1% due 01/30/02 ................................... 5,500 5,500
Lasalle National Bank
2.07% due 02/04/02 .................................. 6,000 6,000
--------
32,996
Banks - 3.6%
Abbey National America
2.15% due 01/29/02 .................................. 2,000 1,997
American Centurion Bank
1.83% due 02/20/02 .................................. 15,000 15,000
Dexia Bank
1.79% due 01/14/02 .................................. 10,000 10,000
--------
26,997
Brokerage & Investment Management - 2.8%
Goldman Sachs Group
3.72% due 01/07/02 .................................. 5,000 4,997
1.84% due 02/05/02 .................................. 10,000 9,982
Morgan Stanley Dean Witter
2.03% due 01/22/02 .................................. 6,000 5,993
--------
20,972
Commercial Sevices - 1.3%
Nationwide Anglia Building Society
2.0% due 02/13/02 ................................... 10,000 9,976
Computer Equipment - 0.9%
Toronto Dominion Holdings
1.84% due 02/07/02 .................................. 6,500 6,488
Cosmetic & Personal Care - 1.7%
Proctor & Gamble Co.
2.14% due 01/18/02 .................................. 12,617 12,604
Financial Services - 23.3%
Apreco, Inc.
1.91% due 02/04/02 .................................. 15,000 14,973
Corporate Asset Fund
1.85% due 01/29/02 .................................. 20,000 19,971
Falcon Asset Securitization
1.75% due 01/24/02 .................................. 18,000 17,980
Fleet Funding Corp.
1.79% due 02/08/02 .................................. 11,000 10,979
General Electric Capital Corp.
2.23% due 02/07/02 .................................. 5,000 4,989
1.8% due 03/27/02 ................................... 10,000 9,958
Greyhawk Capital Corp.
2.06% due 01/22/02 .................................. 10,000 9,988
Hartford Financial Services
1.96% due 02/08/02 .................................. 9,000 8,981
International Lease Finance Corp.
2.07% due 01/04/02 .................................. 6,500 6,499
Montana Blanc Capital Corp.
1.98% due 02/04/02 .................................. 7,000 6,987
2.08% due 01/15/02 .................................. 9,099 9,092
Morgan JP Chase
1.9% due 02/14/02 ................................... 6,000 5,986
Peacock Funding Corp.
1.92% due 01/18/02 .................................. 8,340 8,332
Preferred Receivables Funding
1.85% due 02/04/02 .................................. 15,000 14,974
Societe Generale
2.28% due 01/14/02 .................................. 6,500 6,495
Variable Funding Capital
1.75% due 02/11/02 .................................. 11,000 10,978
Wells Fargo & Co.
1.98% due 01/11/02 .................................. 6,500 6,496
--------
173,658
Food, Beverage & Tobacco - 2.0%
Coca Cola Enterprises, Inc.
2.05% due 02/15/02 .................................. 15,000 14,962
Health Care Products - 3.9%
Glaxo plc
2.02% due 02/04/02 .................................. 13,000 12,975
Merck & Co., Inc.
1.78% due 01/31/02 .................................. 8,000 7,988
1.85% due 03/27/02 .................................. 8,000 7,965
--------
28,928
Insurance - 2.4%
New York Life Capital Corp.
1.8% due 02/27/02 ................................... 18,000 17,949
Personal & Commercial Lending - 12.8%
Abbey National Treasury
2.0% due 02/15/02 ................................... 12,000 12,000
American General Finance Corp.
2.29% due 01/04/02 .................................. 6,500 6,499
Edison Asset Secured
1.76% due 02/07/02 .................................. 12,000 11,978
Halifax plc
1.9% due 02/11/02 ................................... 17,000 16,963
Household Financial Corp.
2.25% due 01/25/02 .................................. 3,000 2,996
National Rural Utilities Cooperative Finance
2.05% due 01/18/02 .................................. 10,000 9,990
President & Fellows Harvard Co.
1.74% due 03/18/02 .................................. 20,000 19,927
104
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MONEY MARKET FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
COMMERCIAL PAPER - Continued
Personal & Commercial Lending - Continued
Windmill Funding Corp.
1.77% due 02/01/02 ................................ $ 15,000 $ 14,977
----------
95,330
U.S. Government Agencies - 32.2%
Federal Farm Credit Bank
1.89% due 02/12/02 ................................ 4,714 4,704
2.0% due 03/01/02 ................................. 10,000 10,000
Federal Home Loan Bank
7.817% due 08/20/02 ............................... 13,000 12,999
4.875% due 01/22/02 ............................... 5,250 5,257
5.25% due 04/25/02 ................................ 5,000 5,026
6.75% due 02/01/02 ................................ 2,135 2,140
Federal Home Loan Mortgage Corp. - Notes
1.71% due 03/22/02 ................................ 4,275 4,259
1.81% due 03/07/02 ................................ 60,000 59,804
2.02% due 01/31/02 ................................ 7,000 6,988
2.16% due 04/19/02 ................................ 10,000 9,935
2.28% due 01/10/02 ................................ 4,000 3,998
Federal Home Loan Mortgage Corp.
4.02% due 07/02/02 ................................ 10,000 10,000
Federal National Mortgage Assoc.
1.78% due 03/14/02 ................................ 20,000 19,928
1.81% due 11/29/02 ................................ 8,000 7,998
1.85% due 02/07/02 ................................ 10,000 9,981
2.05% due 01/02/02 ................................ 10,000 9,999
2.19% due 01/17/02 ................................ 25,000 24,976
2.19% due 01/24/02 ................................ 15,000 14,979
2.25% due 01/17/02 ................................ 15,000 14,985
3.77% due 04/19/02 ................................ 2,000 1,977
-----------
239,933
U.S. Governmental - 1.6%
United States Treasury - Notes
1.96% due 01/31/02 ................................ 12,000 11,980
-----------
TOTAL COMMERCIAL PAPER- 93.8% 698,768
-----------
JOINT REPURCHASE AGREEMENT - 3.2%
Investment in joint repurchase agreement
with SBC Warburg, Ltd., 1.69% due 01/02/
02 (Secured by various U.S. Treasury
obligations and U.S. Government Agency
Bonds) .......................................... 24,029 24,029
--------- -----------
TOTAL INVESTMENTS- 97.0% 722,797
Cash and Receivables, less payables- 3.0% 22,719
--------- -----------
NET ASSETS- 100.0% $ 745,516
--------- -----------
See notes to financial statements.
105
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL/MID CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Bank - 2.1%
M & T Bank Corp. .................................. 21,700 $ 1,581
Sovereign Bancorp, Inc. ........................... 190,400 2,330
--------
3,911
Brokerage & Investment Management - 4.0%
Investment Technology Group, Inc. ................. 99,800 3,899
Legg Mason, Inc. .................................. 69,300 3,464
--------
7,363
Commercial Sevices - 2.5%
TMP Worldwide, Inc. ............................... 20,500 879
United Rentals, Inc. .............................. 163,700 3,716
--------
4,595
Computer Equipment - 1.3%
Brocade Communications Systems, Inc. .............. 17,500 580
Lexmark International Group, Inc. - Cl. A ......... 22,900 1,351
Network Appliance, Inc. ........................... 23,000 503
--------
2,434
Computer Software & Services - 12.4%
Affiliated Computer Services, Inc. - Cl. A ........ 23,800 2,526
Agile Software Corp. .............................. 27,000 465
Aspen Technologies, Inc. .......................... 26,500 445
DST Systems, Inc. ................................. 42,200 2,104
i2 Technologies, Inc. ............................. 41,500 328
IMS Health, Inc. .................................. 81,200 1,584
Manhattan Associates, Inc. ........................ 121,700 3,548
Mercury Interactive Corp. ......................... 25,000 849
Parametric Technology Corp. ....................... 46,500 363
Peoplesoft, Inc. .................................. 18,000 724
Rational Software Corp. ........................... 93,800 1,829
SunGard Data Systems, Inc. ........................ 115,000 3,327
Synopsys, Inc. .................................... 19,000 1,122
Trizetto Group, Inc. .............................. 40,500 531
VeriSign, Inc. .................................... 20,000 761
Verity, Inc. ...................................... 126,400 2,560
--------
23,066
Construction - 0.9%
SPX Corp. ......................................... 12,100 1,657
Consumer Miscellaneous - 1.8%
Linens `N Things, Inc. ............................ 134,700 3,435
Container - 0.8%
Bemis Co., Inc. ................................... 30,400 1,495
Diversified Operations - 2.7%
Dionex Corp. ...................................... 44,500 1,135
Ionics, Inc. ...................................... 2,800 84
Pactiv Corp. ...................................... 209,700 3,722
--------
4,941
Electric Power - 2.4%
Calpine Corp. ..................................... 124,600 2,092
Pinnacle West Capital Corp. ....................... 54,700 2,289
-------
4,381
Electronic Products & Services - 13.6%
Cytyc Corp. ....................................... 48,000 1,253
Emulex Corp. ...................................... 16,400 648
Lam Research Corp. ................................ 21,500 499
Lattice Semiconductor Corp. ....................... 185,500 3,816
Microchip Technology, Inc. ........................ 24,000 930
Novellus Systems, Inc. ............................ 49,700 1,961
Optimal Robotics Corp. ............................ 47,700 1,691
QLogic Corp. ...................................... 14,000 623
Sanmina Corp. ..................................... 160,500 3,194
Sonus Networks, Inc. .............................. 70,000 323
Symbol Technologies, Inc. ......................... 139,750 2,219
Triquint Semiconductor, Inc. ...................... 49,400 606
Varian Semiconductor Equipment
Associates, Inc. ................................ 22,500 778
Veeco Instruments Inc. ............................ 129,700 4,676
Waters Corp. ...................................... 50,800 1,968
--------
25,185
Food, Beverage & Tobacco - 4.0%
Constellation Brands, Inc. - Cl. A ................ 112,600 4,825
Pepsi Bottling Group, Inc. ........................ 111,000 2,608
--------
7,433
Health Care Products - 19.9%
Amerisource Bergen Corp. COM ...................... 62,200 3,953
Becton, Dickinson & Co. ........................... 78,700 2,609
Cambrex Corp. ..................................... 14,000 610
Cephalon, Inc. .................................... 16,000 1,209
Core Laboratories NV .............................. 50,400 707
CV Therapeutics, Inc. ............................. 16,000 832
Edwards Lifesciences Corp. ........................ 134,400 3,713
Gilead Sciences, Inc. ............................. 8,000 526
IDEXX Laboratories, Inc. .......................... 95,300 2,717
Incyte Pharmacuticals, Inc. ....................... 7,600 149
Ivax Corp. ........................................ 105,100 2,117
Laboratory Corporation of America
Holdings ........................................ 60,200 4,867
NPS Pharmaceuticals, Inc. ......................... 12,500 479
Patterson Dental Co. .............................. 50,200 2,055
Regeneron Pharmaceuticals ......................... 17,000 479
Respironics, Inc. ................................. 61,200 2,120
Trigon Healthcare, Inc. ........................... 56,300 3,910
Vertex Pharmaceuticals, Inc. ...................... 8,800 216
Watson Pharmaceuticals, Inc. ...................... 113,800 3,572
--------
36,840
Health Care Services - 2.2%
Gene Logic, Inc. .................................. 35,000 660
Health Management Assoc., Inc. - Cl. A ............ 144,400 2,657
106
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL/MID CAP GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Health Care Services - Continued
Idec Pharmaceuticals Corp. ........................ 10,000 $ 689
------
4,006
Housing - 1.6%
D.R. Horton, Inc. ................................. 89,000 2,889
Insurance - 3.8%
Ambac Financial Group, Inc. ....................... 65,000 3,761
Reinsurance Group of America ...................... 99,400 3,308
-------
7,069
Leisure & Recreation - 2.0%
CEC Entertainment, Inc. ........................... 66,900 2,903
Speedway Motorsports, Inc. ........................ 35,800 905
-------
3,808
Oil - 0.8%
Chesapeake Energy Corp. ........................... 212,400 1,404
Oil & Natural Gas Exploration & Production - 1.6%
Helmerich & Payne, Inc. ........................... 13,600 454
Patina Oil & Gas Corporation ...................... 22,800 627
Swift Energy Co. .................................. 92,300 1,864
-------
2,945
Oil - Equipment & Service - 1.5%
Hanover Compressor Co. ............................ 108,700 2,746
Retail - Department Stores - 4.7%
BJ's Wholesale Club, Inc. ......................... 67,000 2,955
Family Dollar Stores, Inc. ........................ 102,800 3,082
Fastenal Co. ...................................... 14,300 950
Staples, Inc. ..................................... 91,300 1,707
-------
8,694
Retail - Food - 2.3%
Darden Restaurants, Inc. .......................... 119,100 4,216
Shoe & Apparel Manufacturing - 2.8%
Columbia Sportswear Co. ........................... 66,100 2,201
Liz Claiborne, Inc. ............................... 61,700 3,070
-------
5,271
Telecommunication Equipment - 4.1%
Ciena Corp. ....................................... 22,000 315
CommScope, Inc. ................................... 126,200 2,684
Faichild Semiconductor International -
Cl. A ........................................... 92,100 2,597
Tekelec, Inc. ..................................... 109,700 1,987
-------
7,583
Transportation Services - 1.1%
EGL, Inc. ......................................... 140,300 1,957
-------
TOTAL COMMON STOCK- 96.9% 179,324
Par Market
Name of Issuer Value Value
(000's) (000's)
SHORT-TERM INVESTMENTS - 3.0%
John Hancock Joint Account
2.055% due 01/02/02 ............................. $ 5,648 $ 5,648
-------- ----------
TOTAL INVESTMENTS- 99.9% 184,972
Cash and Receivables, less payables- 0.1% 260
-------- ----------
NET ASSETS- 100.0% $ 185,232
======== ==========
See notes to financial statements.
107
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS
Aerospace & Defense - 0.4%
Northrop-Grumman Corp. - Debs.
7.75% due 03/01/16 ................................... $ 75 $ 80
Raytheon Co. - Notes
6.75% due 08/15/07 ................................... 200 207
United Technologies Corp.
6.625% due 11/15/04 .................................. 200 213
United Technologies Corp. - Debs.
8.875% due 11/15/19 .................................. 50 61
-------
561
Aerospace/Defense - 1.5%
Boeing Cap. Corp. - Sr. Notes
7.1% due 09/27/05 .................................... 500 526
General Electric Capital Corp.
6.125% due 02/22/11 .................................. 150 152
7.5% due 06/05/03 .................................... 700 741
Lockheed Martin Corp.
8.2% due 12/01/09 .................................... 200 225
United Bank National Association of Minneapolis
6.375% due 08/01/11 .................................. 325 328
-------
1,972
Auto & Truck Parts - 0.3%
TRW, Inc.
7.125% due 06/01/09 .................................. 150 148
Visteon Corp.
7.95% due 08/01/05 ................................... 250 261
-------
409
Automobile - 1.1%
Daimler Chrysler Auto Trust - Notes
6.7% due 03/08/06 .................................... 400 423
Delphi Automotive Systems Corp. - Debs.
7.125% due 05/01/29 .................................. 50 45
Delphi Automotive Systems Corp. - Notes
6.5% due 05/01/09 .................................... 200 191
Ford Motor Co.
6.625% due 02/15/28 .................................. 350 291
General Motors Corp. Sr. Unsec. Notes
7.2% due 01/15/11 .................................... 500 501
-------
1,451
Bank - 3.2%
African Development Bank - Sub. Notes
6.875% due 10/15/15 .................................. 35 37
Asian Development Bank - Bonds
5.5% due 04/23/04 .................................... 270 281
Bank of America Corp. - Sub. Notes
7.8% due 02/15/10 .................................... 350 383
Bank One Corp.
7.875% due 08/01/10 .................................. 300 330
Bank One Corp. - Sr. Notes
5.625% due 02/17/04 .................................. 150 155
BankAmerica Corp. - Sub. Notes
6.5% due 03/15/06 .................................... 150 156
Chase Manhattan Corp. - Sub. Notes
7.125% due 02/01/07 .................................. 225 239
Credit Suisse First Boston, Inc. - Notes
5.875% due 08/01/06 .................................. 500 509
Fleet Boston Corp. - Sub. Notes
7.375% due 12/01/09 .................................. 100 107
Fleet Financial Group, Inc. - Sub. Debs.
6.7% due 07/15/28 .................................... 75 73
HSBC Holdings PLC
7.5% due 07/15/09 .................................... 150 162
InterAmerican Development Bank - Debs.
8.5% due 03/15/11 .................................... 200 238
International Bank of Reconstruction &
Development - Notes
5.0% due 03/28/06 .................................... 750 756
Korea Development Bank
7.375% due 09/17/04 .................................. 120 128
National City Bank of Pennsylvania - Sub.
Notes
7.25% due 10/21/11 ................................... 50 53
Royal Bank of Scotland PLC - Sub. Notes
6.4% due 04/01/09 .................................... 150 152
Wachovia Corp. - Sub. Notes
5.625% due 12/15/08 .................................. 75 73
Wells Fargo Co. - Notes
6.625% due 07/15/04 .................................. 175 186
Wells Fargo Co. - Sub. Notes
6.875% due 04/01/06 .................................. 150 160
-------
4,178
Brokerage & Investment Management - 2.3%
Bear Stearns Co., Inc.
7.625% due 02/01/05 .................................. 250 266
Lehman Brothers Holdings, Inc. - Notes
6.25% due 05/15/06 ................................... 500 512
Merrill Lynch & Co., Inc. - Notes
8.0% due 06/01/07 .................................... 200 221
Morgan Stanley Capital, Inc. - CTF 1998
WFI CL. A1
6.25% due 07/15/07 ................................... 1,107 1,153
Morgan Stanley Dean Witter
7.75% due 06/15/05 ................................... 170 186
Morgan Stanley Group, Inc.
6.75% due 04/15/11 ................................... 250 256
Salomon Brothers Mortgage Securities Inc.
- Pass Through Certificates
7.52% due 12/18/09 ................................... 300 324
-------
2,918
108
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Business Services - 0.1%
Electronic Data Systems Corp.
7.125% due 10/15/09 ................................... $100 $ 105
Chemical - 0.1%
Eastman Chemical - Debs.
7.6% due 02/01/27 ..................................... 50 44
Morton International, Inc. - Debs.
9.25% due 06/01/20 .................................... 40 47
Rohm & Haas Co. - Notes
7.4% due 07/15/09 ..................................... 80 87
-------
178
Computer Equipment - 0.2%
Hewlett - Packard Co. - Notes
7.15% due 06/15/05 .................................... 200 211
International Business Machines Corp. -
Debs.
7.0% due 10/30/25 ..................................... 100 105
-------
316
Consumer Miscellaneous - 0.2%
Fortune Brands, Inc. - Debs.
7.875% due 01/15/23 ................................... 100 109
United Utilities PLC - Notes
6.875% due 08/15/28 ................................... 100 88
-------
197
Cosmetic & Personal Care - 0.2%
Procter & Gamble Co. - Debs.
6.45% due 01/15/26 .................................... 100 100
Unilever Capital
7.125% due 11/01/10 ................................... 200 216
-------
316
Diversified Operations - 0.9%
Abitibi Consolidated, Inc.
8.3% due 08/01/05 ..................................... 250 266
EOP Operating LP - Notes
6.8% due 01/15/09 ..................................... 150 150
Honeywell International, Inc. - Notes
7.5% due 03/01/10 ..................................... 75 81
John Deere Capital Corp. - Notes
6.0% due 02/15/09 ..................................... 60 59
Tyco International Group SA
6.375% due 06/15/05 ................................... 530 546
-------
1,102
Electric Power - 1.0%
CalEnergy Co., Inc. - Bonds
8.48% due 09/15/28 .................................... 60 65
Dominion Resources, Inc.
8.125% due 06/15/10 ................................... 200 220
Duke Energy Co. - 1st Ref. Mtg.
6.75% due 08/01/25 .................................... 100 95
First Energy Corp. - Notes Ser. C
7.375% due 11/15/31 ................................... 145 141
Florida Power & Light Co.
7.75% due 02/01/23 .................................... 50 51
Niagara Mohawk Power Corp.
7.75% due 10/01/08 .................................... 200 214
Ontario Hydro
6.1% due 01/30/08 ..................................... 100 104
South Carolina Electric & Gas - 1st Mtge.
7.5% due 06/15/23 ..................................... 100 97
Tennessee Valley Authority
6.75% due 11/01/25 .................................... 100 105
Virginia Electric Power Co. - 1st Mtge.
7.625% due 07/01/07 ................................... 150 163
-------
1,255
Electronic Products & Services - 0.3%
First Data Corp. - Sr. Notes
5.625% due 11/01/11 ................................... 400 382
Financial Services - 2.8%
Ameritech Capital Funding Corp.
6.875% due 10/15/27 ................................... 60 62
Anardarko Finance Co. SR NT
6.75% due 05/01/11 .................................... 200 204
Associates Corp. of North America
5.5% due 02/15/04 ..................................... 675 699
Chase Commercial Mortgage Securities
Corp. CTF 2000 CL. A2
7.631% due 07/15/32 ................................... 300 326
Citicorp Capital II
8.015% due 02/15/27 ................................... 100 104
Citigroup, Inc. - Notes
6.625% due 01/15/28 ................................... 100 98
Financing Corp.
8.6% due 09/26/19 ..................................... 150 188
Goldman Sachs Group, Inc. - Notes
7.35% due 10/01/09 .................................... 100 105
Hartford Financial Services Group, Inc. -
Sr. Notes
7.75% due 06/15/05 .................................... 150 161
KFW International Finance, Inc. - Sr. Notes
5.25% due 06/28/06 .................................... 300 304
Massachusetts Special Purpose Trust Ser. 1
CTF CL. A5
7.03% due 03/15/12 .................................... 150 160
Newcourt Credit Group, Inc. Ser. B
6.875% due 02/16/05 ................................... 100 106
Qwest Capital Funding - Notes
7.9% due 08/15/10 ..................................... 540 549
Sumitomo Bank International Finance NV -
Notes
8.5% due 06/15/09 ..................................... 100 111
109
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Financial Services - Continued
Washington Mutual Capital I
8.375% due 06/01/27 ................................ $ 60 $ 60
Washington Mutual Finance Corp. - Sr.
Notes
6.25% due 05/15/06 ................................. 300 310
-------
3,547
Food, Beverage & Tobacco - 1.0%
Archer Daniels Midland Co. - Notes
6.25% due 05/15/03 ................................. 275 286
Coca-Cola Enterprises, Inc. - Debs.
8.5% due 02/01/22 .................................. 100 120
Conagra, Inc. - Debs.
9.75% due 03/01/21 ................................. 75 96
Kellogg Co. - Debs. Ser. B
7.45% due 04/01/31 ................................. 100 107
Kraft Foods, Inc. - Notes
4.625% due 11/01/06 ................................ 300 294
Pepsi Bottling Group, Inc. - Sr. Notes
Ser. B
7.0% due 03/01/29 .................................. 100 105
Philip Morris Cos., Inc. - Debs.
8.25% due 10/15/03 ................................. 100 108
SuperValu, Inc. - Notes
7.625% due 09/15/04 ................................ 150 153
-------
1,269
Food, Beverage and Tobacco - 0.1%
Sara Lee Corp. - Notes
6.25% due 09/15/11 ................................. 100 102
Foreign Governmental - 1.4%
Government of Canada
5.25% due 11/05/08 ................................. 125 125
Government of Malaysia - Bonds
8.75% due 06/01/09 ................................. 50 56
Government of New Zealand - Debs.
8.75% due 12/15/06 ................................. 120 139
Hydro-Quebec
8.4% due 01/15/22 .................................. 100 119
Kingdom of Sweden - Debs.
12.0% due 02/01/10 ................................. 75 105
Province of Newfoundland - Debs.
9.0% due 10/15/21 .................................. 60 76
Province of Ontario - Bonds
6.0% due 02/21/06 .................................. 300 312
Province of Quebec - Debs.
7.5% due 07/15/23 .................................. 100 111
Republic of Greece - Notes
6.95% due 03/04/08 ................................. 405 436
Republic of Korea - Unsub.
8.75% due 04/15/03 ................................. 85 91
Spain Kingdom
7.0% due 07/19/05 .................................. 250 270
------
1,840
Health Care Products - 0.3%
Bristol Myers Squibb Co. - Notes
5.75% due 10/01/11 ................................. 300 297
Eli Lilly & Co. - Notes
7.125% due 06/01/25 ................................ 80 86
-------
383
Health Care Services - 0.2%
Abbott Laboratories - Notes
5.625% due 07/01/06 ................................ 250 257
Insurance - 0.4%
Aetna, Inc.
7.625% due 08/15/26 ................................ 100 108
Allstate Corp.
7.2% due 12/01/09 .................................. 150 159
Hartford Life, Inc. - Debs.
7.65% due 06/15/27 ................................. 50 53
Torchmark, Inc. - Debs.
8.25% due 08/15/09 ................................. 100 105
Travelers Property Casualty Corp. - Sr.
Notes
7.75% due 04/15/26 ................................. 50 54
-------
479
Machinery - 0.1%
Caterpillar, Inc. - Debs.
8.0% due 02/15/23 .................................. 50 57
Media - TV / Radio - 0.7%
Comcast Cable Communications - Notes
8.875% due 05/01/17 ................................ 75 86
News America Holdings, Inc. - Debs.
7.7% due 10/30/25 .................................. 100 96
TCI Communciations, Inc. - Sr. Notes
7.125% due 02/15/28 ................................ 70 67
Time Warner Entertainment, Inc. - Sr.
Notes
8.375% due 07/15/33 ................................ 200 227
Viacom, Inc.
7.875% due 07/30/30 ................................ 50 55
Viacom, Inc. - Sr. Notes
7.75% due 06/01/05 ................................. 350 377
-------
908
Metals & Mining - 0.3%
ALCOA, Inc. - Notes
7.375% due 08/01/10 ................................ 200 218
Noranda, Inc. - Debs.
7.0% due 07/15/05 .................................. 200 202
-------
420
110
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Natural Gas Distribution - 0.6%
Keyspan Corp.
7.25% due 11/15/05 ...................................... $ 500 $ 531
Tennessee Gas Pipeline - Bonds
7.5% due 04/01/17 ....................................... 100 95
Williams Cos, Inc. - Notes
7.875% due 09/01/21 ..................................... 150 152
-------
778
Oil - 0.2%
Atlantic Richfield Co. - Notes
5.55% due 04/15/03 ...................................... 75 78
Occidental Petroleum Corp. - Debs.
7.2% due 04/01/28 ....................................... 40 39
Tosco Corp. - Notes
7.625% due 05/15/06 ..................................... 115 124
-------
241
Oil& Natural Gas Exploration & Production - 1.0%
Burlington Resources, Inc - Debs.
9.125% due 10/01/21 ..................................... 90 104
Conoco, Inc. - Sr. Notes
6.95% due 04/15/29 ...................................... 190 193
Norsk Hydro A/S
7.25% due 09/23/27 ...................................... 75 75
Phillips Petroleum Co. - Debs.
6.65% due 07/15/18 ...................................... 50 48
Sempra Energy - Sr. Notes
6.8% due 07/01/04 ....................................... 700 723
Trans-Canada Pipelines
7.7% due 06/15/29 ....................................... 100 103
Union Oil Co. of California
7.5% due 02/15/29 ....................................... 60 62
-------
1,308
Oil - Equipment & Service - 0.1%
Coastal Corp. - Debs.
6.5% due 06/01/08 ....................................... 100 97
Paper & Forest Products - 0.3%
Bowater, Inc. - Debs.
9.0% due 08/01/09 ....................................... 100 109
Champion International Corp. - Debs.
7.35% due 11/01/25 ...................................... 50 48
International Paper Co. - Notes
6.75% due 09/01/11 ...................................... 250 253
Westvaco Corp. - Notes
7.1% due 11/15/09 ....................................... 35 36
-------
446
Personal & Commercial Lending - 3.1%
Aristar, Inc. - Sr. Notes
6.5% due 11/15/03 ....................................... 200 208
CitiFinancial Credit Co. - Notes
5.9% due 09/01/03 ....................................... 150 156
Countrywide Home Loan Corp.
6.25% due 04/15/09 ...................................... 250 248
Ford Motor Credit Co.
6.125% due 01/09/06 ..................................... 800 781
General Motors Acceptance Corp.
5.85% due 01/14/09 ...................................... 500 470
GMAC Commercial Mortgaged Securities,
Inc. CTF 1998-C1 CL. A2
6.7% due 05/15/30 ....................................... 500 515
Household Finance Corp. - Sr. Unsub.
5.875% due 02/01/09 ..................................... 280 266
LB Commercial Conduit Mortgage Trust
1999 Pass Through Certificates
7.325% due 09/15/09 ..................................... 400 429
MBNA Master Credit Card Trust II - Notes
6.5% due 04/15/10 ....................................... 400 421
Standard Credit Card Master Trust
8.25% due 01/07/07 ...................................... 400 442
Toyota Motor Credit Corp. - Notes
5.5% due 12/15/08 ....................................... 60 59
-------
3,995
Real Estate Investment Trust - 0.0%
Spieker Properties, Inc. - Debs.
7.5% due 10/01/27 ....................................... 40 38
Retail - Department Stores - 0.3%
Dayton Hudson Corp. - Debs.
6.75% due 01/01/28 ...................................... 25 25
Federated Department Stores
6.625% due 04/01/11 ..................................... 200 197
Target Corp.
6.35% due 01/15/11 ...................................... 100 103
Wal-Mart Stores, Inc. - Debs.
6.75% due 10/15/23 ...................................... 100 103
-------
428
Retail - Food - 0.3%
Albertson's, Inc. - Notes
6.625% due 06/01/28 ..................................... 50 46
McDonald's Corp. - Sub. Debs.
7.31% due 09/15/27 ...................................... 60 60
Safeway, Inc.
7.25% due 09/15/04 ...................................... 150 160
Safeway, Inc. - Notes
7.5% due 09/15/09 ....................................... 150 163
-------
429
Retailers - Food & Drug - 0.2%
Delhaize America, Inc. - Notes
8.125% due 04/15/11 ..................................... 200 220
Telecommunication Equipment - 0.1%
GTE Corp. - Debs.
6.94% due 04/15/28 ...................................... 100 99
111
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Telecommunication Services - 1.3%
AT&T Canada, Inc. - Sr. Notes
7.65% due 09/15/06 .................................. $ 150 $ 98
AT&T Wireless, Inc. - Sr. Notes
7.875% due 03/01/11 ................................. 200 214
Bell Canada
7.75% due 04/01/06 .................................. 125 134
BellSouth Telecommunications, Inc. - Debs.
7.0% due 10/01/25 ................................... 100 104
British Telecommunications PLC - Notes
8.375% due 12/15/10 ................................. 200 221
Deutsche Telekom International Finance
8.25% due 06/15/30 .................................. 100 111
France Telecom - Sr. Notes 144A (a)
7.2% due 03/01/06 ................................... 350 372
Telefonica Europe BV US - Notes
8.25% due 09/15/30 .................................. 100 110
Vodafone Group PLC
7.75% due 02/15/10 .................................. 100 110
Worldcom, Inc. - Notes
8.25% due 05/15/31 .................................. 150 158
-------
1,632
Telephone - 0.7%
Alltel Corp. - Sr. Notes
7.6% due 04/01/09 ................................... 100 103
MCI Worldcom, Inc. - Sr. Notes
6.4% due 08/15/05 ................................... 600 606
New York Telephone Co. - Debs.
7.25% due 02/15/24 .................................. 100 97
Sprint Capital Corp.
6.875% due 11/15/28 ................................. 150 138
-------
944
Transportation Services - 0.6%
Burlington Northern Railroad Company
6.125% due 03/15/09 ................................. 150 149
Canadian National Railway Co. - Notes
6.375% due 10/15/11 ................................. 300 301
CSX Corp. - Debs.
7.45% due 05/01/07 .................................. 125 134
Norfolk Southern Corp. - Notes
7.35% due 05/15/07 .................................. 125 134
Union Pacific Corp. - Debs.
6.625% due 02/01/29 ................................. 85 82
-------
800
U.S. Government Agencies - 45.9%
Federal Home Loan Bank - Disc. Note
5.125% due 03/06/06 ................................. 1,400 1,425
Federal Home Loan Bank - Sr. Notes
5.8% due 09/02/08 ................................... 225 230
Federal Home Loan Mortgage Corp.
5.5% due 06/01/16 ................................... 488 480
6.0% due 08/01/14 ................................... 955 962
6.0% due 10/01/14 ................................... 516 519
6.0% due 01/25/15 ................................... 500 502
6.0% due 08/01/29 ................................... 948 931
6.0% due 01/25/30 ................................... 1,000 979
6.0% due 07/01/31 ................................... 493 482
6.5% due 11/01/15 ................................... 391 399
6.5% due 07/01/16 ................................... 384 392
6.5% due 01/01/21 ................................... 372 375
6.5% due 09/01/28 ................................... 428 430
6.5% due 06/01/29 ................................... 77 78
6.5% due 07/01/29 ................................... 924 926
6.5% due 11/01/30 ................................... 307 307
6.5% due 12/01/30 ................................... 334 335
6.5% due 03/01/31 ................................... 1,128 1,132
6.5% due 05/01/31 ................................... 567 568
6.5% due 07/01/31 ................................... 194 195
6.5% due 11/01/31 ................................... 1,000 1,001
7.0% due 02/01/16 ................................... 286 296
7.0% due 04/01/29 ................................... 898 916
7.0% due 02/01/30 ................................... 1,223 1,247
7.0% due 05/01/31 ................................... 424 432
7.0% due 07/01/31 ................................... 271 276
7.5% due 02/01/16 ................................... 100 105
7.5% due 09/01/30 ................................... 200 206
7.5% due 11/01/30 ................................... 711 734
8.0% due 02/01/30 ................................... 244 256
8.0% due 09/01/30 ................................... 270 283
Federal Home Loan Mortgage Corp. - Bonds
7.1% due 04/10/07 ................................... 500 550
Federal Home Loan Mortgage Corp. - Debs.
5.0% due 01/15/04 ................................... 1,600 1,652
5.75% due 04/15/08 .................................. 300 308
5.75% due 07/15/03 .................................. 3,000 3,130
6.0% due 06/15/11 ................................... 1,000 1,016
6.875% due 01/15/05 ................................. 150 162
7.0% due 07/15/05 ................................... 655 710
Federal National Mortgage Assoc.
5.5% due 03/01/16 ................................... 188 185
5.5% due 04/01/16 ................................... 94 93
6.0% due 05/01/14 ................................... 190 192
6.0% due 08/01/16 ................................... 337 338
6.0% due 06/01/31 ................................... 695 679
6.0% due 11/01/31 ................................... 998 976
6.25% due 05/15/29 .................................. 965 961
6.375% due 06/15/09 ................................. 1,800 1,897
6.5% due 04/29/09 ................................... 1,500 1,499
6.5% due 07/01/16 ................................... 1,125 1,147
6.5% due 11/01/29 ................................... 623 624
6.5% due 05/01/31 ................................... 278 278
6.5% due 07/01/31 ................................... 392 391
6.5% due 08/01/31 ................................... 492 492
112
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
6.5% due 10/01/31 ................................... $ 969 $ 969
6.5% due 12/25/31 ................................... 1,000 1,000
7.0% due 12/01/15 ................................... 500 517
7.0% due 02/01/31 ................................... 872 889
7.0% due 04/01/31 ................................... 184 188
7.0% due 05/01/31 ................................... 897 913
7.5% due 11/01/30 ................................... 166 171
7.5% due 06/01/31 ................................... 943 974
8.0% due 09/01/31 ................................... 936 981
Federal National Mortgage Assoc. - Notes
4.75% due 11/14/03 .................................. 175 180
6.0% due 02/01/16 ................................... 551 552
6.0% due 01/01/29 ................................... 947 931
6.19% due 02/19/09 .................................. 120 120
6.5% due 02/01/15 ................................... 248 254
6.5% due 12/01/30 ................................... 466 466
6.5% due 01/01/31 ................................... 103 103
6.5% due 02/01/31 ................................... 1,662 1,662
7.0% due 01/01/08 ................................... 118 121
7.0% due 03/01/16 ................................... 229 237
7.0% due 01/01/30 ................................... 1,294 1,319
7.125% due 01/15/30 ................................. 309 343
7.5% due 10/01/15 ................................... 265 277
7.5% due 09/01/30 ................................... 699 721
8.0% due 08/01/30 ................................... 300 314
8.5% due 09/01/30 ................................... 211 224
Government National Mortgage Assoc.
6.0% due 05/15/31 ................................... 398 391
6.5% due 05/15/28 ................................... 949 953
6.5% due 05/15/31 ................................... 596 598
7.0% due 03/15/31 ................................... 1,500 1,532
7.0% due 06/15/31 ................................... 380 388
7.5% due 08/15/29 ................................... 944 977
7.5% due 02/15/30 ................................... 259 268
7.5% due 01/15/31 ................................... 142 147
8.0% due 07/15/31 ................................... 131 137
8.5% due 09/15/30 ................................... 178 189
9.0% due 01/15/31 ................................... 388 413
Government National Mortgage Assoc. -
Notes
6.0% due 07/15/29 ................................... 322 316
6.5% due 01/15/16 ................................... 131 135
6.5% due 05/15/29 ................................... 1,044 1,047
7.0% due 12/15/30 ................................... 1,178 1,203
7.5% due 09/15/30 ................................... 839 868
8.0% due 02/15/31 ................................... 702 735
-------
59,402
U.S. Governmental - 22.0%
U.S. Treasury - Bonds
5.5% due 08/15/28 ................................... 1,200 1,159
PUBLICLY-TRADED BONDS - Continued
U.S. Governmental - Continued
6.5% due 11/15/26 ................................... 1,100 1,205
6.75% due 08/15/26 .................................. 775 874
7.5% due 11/15/16 ................................... 500 591
8.125% due 08/15/21 ................................. 1,100 1,405
8.75% due 08/15/20 .................................. 1,700 2,281
9.125% due 05/15/09 ................................. 750 842
10.75% due 08/15/05 ................................. 600 733
11.25% due 02/15/15 ................................. 260 399
11.75% due 02/15/10 ................................. 250 306
11.75% due 11/15/14 ................................. 465 664
U.S. Treasury - Notes
4.625% due 05/15/06 ................................. 500 507
5.0% due 08/15/11 ................................... 1,045 1,042
5.625% due 05/15/08 ................................. 3,000 3,143
5.75% due 08/15/03 .................................. 2,000 2,095
5.75% due 08/15/10 .................................. 2,250 2,360
6.5% due 10/15/06 ................................... 1,500 1,631
6.75% due 05/15/05 .................................. 2,800 3,044
7.875% due 11/15/04 ................................. 3,050 3,390
United Mexican States - Notes
9.875% due 02/01/10 ................................. 670 747
--------
28,418
--------
TOTAL PUBLICLY-TRADED BONDS- 95.8% 123,877
SHORT-TERM INVESTMENTS - 4.3%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ................................. 5,583 5,583
-------- --------
TOTAL INVESTMENTS- 100.1% 129,460
Cash and Receivables, less payables- (0.1)% (102)
-------- --------
NET ASSETS- 100.0% $129,358
(a)Pursuant to Rule 144A under the Securities Act of 1993, these securities may
be resold in transactions exempt from registration, normally to qualified
institutional buyers. At December 31, 2001, securities aggregated $372 or .29%
of net assets of the Portfolio.
See notes to financial statements.
113
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
LARGE CAP AGGRESSIVE GROWTH FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Brokerage & Investment Management - 1.3%
Goldman Sachs Group, Inc. ............................ 2,500 $ 232
Morgan Stanley, Dean Witter, Discover & Co. .......... 4,900 274
---------
506
Computer Equipment - 2.3%
Dell Computer Corp. .................................. 1,600 43
Intel Corp. .......................................... 23,500 739
International Business Machines Corp. ................ 1,200 145
---------
927
Computer Software & Services - 9.2%
Electronic Data Systems Corp. ........................ 17,900 1,227
First Data Corp. ..................................... 6,400 502
Microsoft Corp. ...................................... 21,900 1,451
Peoplesoft, Inc. ..................................... 5,200 209
Veritas Software Corp. * ............................. 5,500 247
---------
3,636
Consumer Miscellaneous - 0.9%
Harley-Davidson, Inc. ................................ 6,800 369
Cosmetic & Personal Care - 0.7%
Colgate-Palmolive Co. ................................ 4,900 283
Diversified Operations - 10.5%
General Electric Co. ................................. 53,300 2,136
Tyco International, Ltd. ............................. 34,700 2,044
---------
4,180
Electronic Products & Services - 3.7%
Cisco Systems, Inc. * ................................ 52,600 952
Maxim Integrated Products, Inc. ...................... 5,500 289
Texas Instruments, Inc. .............................. 7,500 210
---------
1,451
Financial Services - 8.8%
Citigroup, Inc. ...................................... 35,008 1,767
Concord EFS, Inc. .................................... 11,800 387
Household International, Inc. ........................ 15,800 916
Merrill Lynch & Co., Inc. ............................ 8,000 417
---------
3,487
Food, Beverage & Tobacco - 0.7%
Philip Morris Cos., Inc. ............................. 6,300 289
Health Care Products - 15.4%
American Home Products Corp. ......................... 5,800 356
Anthem, Inc. ......................................... 2,000 99
Baxter International, Inc. ........................... 7,400 397
Cardinal Health, Inc. ................................ 11,900 769
Johnson & Johnson .................................... 12,100 715
Medtronic, Inc. ...................................... 12,800 656
Pfizer, Inc. ......................................... 54,200 2,160
Schering-Plough Corp. ................................ 14,100 505
UnitedHealth Group, Inc. ............................. 6,800 481
---------
6,138
Health Care Services - 3.1%
Tenet Healthcare Corp. ............................... 16,000 939
Wellpoint Health Networks, Inc. ...................... 2,600 304
---------
1,243
Insurance - 2.2%
American International Group, Inc. ................... 10,900 866
Media - TV/Radio - 5.5%
AOL Time Warner, Inc. * .............................. 43,400 1,393
Comcast Corp. - Cl. A * .............................. 6,100 220
Viacom, Inc. - Cl. B * ............................... 12,900 569
---------
2,182
Personal & Commercial Lending - 4.7%
MBNA Corp. ........................................... 52,540 1,849
Retail - Department Stores - 11.9%
Home Depot, Inc. ..................................... 31,600 1,612
Kohl's Corp. ......................................... 25,500 1,796
Target Corp. ......................................... 16,000 657
Wal-Mart Stores, Inc. ................................ 11,800 679
---------
4,744
Retail - Drug Stores - 1.3%
Walgreen Co. ......................................... 15,300 515
Telecommunication Equipment - 4.2%
Nokia Oyj - ADR ...................................... 68,400 1,678
Telecommunication Services - 6.1%
AT&T Wireless Group * ................................ 62,400 897
Clear Channel Communications, Inc. ................... 9,800 499
Sprint PCS ........................................... 21,700 530
Vodafone Group plc ................................... 19,300 495
---------
2,421
U.S. Government Agencies - 5.7%
Federal Home Loan Mortgage Corp. ..................... 23,000 1,504
Federal National Mortgage Assoc. ..................... 9,400 748
---------
2,252
---------
TOTAL COMMON STOCK- 98.2% 39,016
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 1.7%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ................................ $ 676 676
-------- ---------
TOTAL INVESTMENTS- 99.9% 39,692
Cash and Receivables, less payables- 0.1% 46
-------- ---------
NET ASSETS- 100.0% $ 39,738
======== =========
ADR-American Depository Receipt.
*Non-income producing security.
See notes to financial statements.
114
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 0.2%
ABM Industries, Inc. ................................. 3,100 $ 97
Auto & Truck Parts - 1.6%
Arvin Meritor, Inc. .................................. 3,100 61
Autoliv, Inc. ........................................ 3,300 67
AutoZone, Inc. * ..................................... 2,500 180
Cummins Engine Company, Inc. ......................... 1,200 46
Polaris Industries Inc. .............................. 4,800 277
Visteon Corp. ........................................ 8,600 129
-------
760
Automobile - 1.1%
Copart, Inc. ......................................... 1,400 51
Group 1 Automotive, Inc. ............................. 6,600 188
Lithia Motors, Inc. - Cl. A .......................... 3,000 62
Oshkosh Truck Corp. .................................. 900 44
Sonic Automotive, Inc. Cl. A ......................... 4,000 94
United Auto Group, Inc. * ............................ 3,500 90
-------
529
Bank - 5.1%
Associated Banc-Corp. ................................ 5,500 194
BancorpSouth, Inc. ................................... 675 11
Banknorth Group, Inc. ................................ 11,725 264
Capitol Federal Financial ............................ 2,100 44
Cathay Bancorp, Inc. ................................. 800 51
City National Corp. .................................. 4,200 197
Commerce Bancorp, Inc. ............................... 4,800 189
Commerce Bancshares, Inc. ............................ 2,289 89
Compass Bancshares, Inc. ............................. 7,400 209
Corus Bankshares, Inc. ............................... 1,500 68
First Citizens BancShares, Inc. - Cl. A .............. 1,000 98
First Sentinel Bancorp, Inc. ......................... 1,400 17
First Virginia Banks, Inc. ........................... 700 36
Flagstar Bancorp, Inc. ............................... 2,800 56
GBC Bancorp .......................................... 800 24
Hancock Holding Co. .................................. 1,400 60
Hibernia Corp. - Cl. A ............................... 9,900 176
Huntington Bancshares, Inc. .......................... 2,600 45
Investors Financial Services Corp. ................... 1,400 93
NetBank, Inc. * ...................................... 500 5
OceanFirst Financial Corp. ........................... 1,900 46
Omega Financial Corp. ................................ 600 19
PFF Bancorp, Inc. * .................................. 1,700 47
Southwest Bancorporation of Texas, Inc. .............. 1,900 57
TCF Financial Corp. .................................. 5,100 245
United Community Financial Corp. ..................... 1,900 14
-------
2,354
Brokerage & Investment Management - 1.2%
Affiliated Managers Group, Inc. * .................... 1,600 113
E*TRADE Group, Inc. .................................. 8,800 90
Investment Technology Group, Inc. .................... 1,600 62
Jefferies Group, Inc. ................................ 900 38
John Nuveen Co. - Cl. A .............................. 4,350 233
------
536
Business Services - 1.1%
Corrections Corp. of America ......................... 2,600 48
DiamondCluster, Inc. * ............................... 3,800 50
Education Management Corp. ........................... 700 26
Expedia, Inc. - Cl. A ................................ 1,600 65
Global Payments, Inc. ................................ 1,080 37
Harris Corp. ......................................... 1,900 58
Interactive Data Corp. ............................... 1,200 17
ITT Educational Services, Inc. ....................... 3,800 140
Overture Services, Inc. .............................. 1,900 67
-------
508
Chemical - 2.0%
Albemarle Corp. ...................................... 1,800 43
Arch Chemicals, Inc. ................................. 1,800 42
Ashland, Inc. ........................................ 6,000 276
ChemFirst, Inc. ...................................... 1,100 26
Crompton Corp. ....................................... 1,300 12
Cytec Industries, Inc. * ............................. 3,800 103
Engelhard Corp. ...................................... 1,800 50
Great Lakes Chemical Corp. ........................... 2,000 49
H.B. Fuller Co. ...................................... 3,200 92
Lubrizol Corp. ....................................... 1,600 56
Lyondell Chemical Co. ................................ 3,300 47
Sigma-Aldrich Corp. .................................. 2,700 106
-------
902
Commercial Sevices - 3.4%
Administaff, Inc. .................................... 7,400 203
ADVO, Inc. ........................................... 2,400 103
American Woodmark Corp. .............................. 2,200 118
Brady Corp. - Cl. A .................................. 1,600 59
Coinstar, Inc. * ..................................... 2,700 67
Deluxe Corp. ......................................... 8,000 333
Fair Issac & Co., Inc. ............................... 900 57
Paxar Corp. * ........................................ 1,500 21
Plexus Corp. * ....................................... 2,000 53
Power One, Inc. * .................................... 700 7
Quintiles Transnational Corp. ........................ 1,800 29
R.R. Donnelley & Sons Co. ............................ 2,000 59
Renaissance Learning, Inc. ........................... 1,500 46
Rent A Car * ......................................... 1,400 47
Standard Register Co ................................. 2,400 44
Steelcase, Inc. - Cl. A .............................. 4,600 68
Sybase, Inc. * ....................................... 4,400 69
Sylvan Learning Systems, Inc. * ...................... 1,400 31
TeleTech Holdings, Inc. * ............................ 3,500 50
University of Phoenix Online ......................... 1,800 59
Veritas DGC, Inc. .................................... 2,800 52
Wackenhut Corp. - Cl. A .............................. 600 15
-------
1,590
115
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Computer Equipment - 0.8%
CACI International, Inc. - Cl. A ...................... 3,300 $ 130
Globespan Virata, Inc. ................................ 2,400 31
InFocus Corp. ......................................... 2,600 57
Intergraph Corp. ...................................... 800 11
LTX Corp. ............................................. 2,000 42
Mentor Graphics Corp. * ............................... 2,000 47
Mercury Computer Systems, Inc. ........................ 1,500 59
Quantum Corp. - DLT & Storage * ....................... 1,400 14
-------
391
Computer Software - 0.2%
Reynolds & Reynolds Co. - Cl. A ....................... 4,600 112
Computer Software & Services - 5.4%
3Com Corp. ............................................ 9,000 57
Acclaim Entertainment, Inc. ........................... 12,100 64
Actuate Software Corp. ................................ 1,200 6
Acxiom Corp. .......................................... 1,400 24
Advent Software, Inc. ................................. 1,100 55
Affiliated Computer Services, Inc. - Cl. A * . ........ 1,700 180
Art Technology Group, Inc. * .......................... 1,000 4
Ascential Software Corp. .............................. 3,150 13
Aspen Technologies, Inc. .............................. 300 5
Autodesk, Inc. ........................................ 2,100 78
Avant! Corp. * ........................................ 1,600 33
Black Box Corp. ....................................... 1,600 85
Ceridian Corp. * ...................................... 1,800 34
Cerner Corp. .......................................... 1,200 60
CheckFree Corp. ....................................... 2,500 45
Clarent Corp. * ....................................... 600 3
CNet Networks, Inc. ................................... 1,200 11
Cognizant Technology Solutions Corp. .................. 1,600 66
Digex, Inc. * ......................................... 2,500 7
EarthLink, Inc. * ..................................... 9,861 120
Echelon Corp. * ....................................... 3,200 45
EPIQ System, Inc. ..................................... 2,500 48
ESPEED, Inc. .......................................... 2,200 18
Extreme Networks, Inc. ................................ 4,200 54
Factset Research Systems, Inc. ........................ 1,200 42
FileNet Corp. ......................................... 4,300 87
HNC Software, Inc. .................................... 2,200 45
Informatica Corp. * ................................... 2,400 35
Internap Network Services Corp. * ..................... 1,000 1
Internet Security System, Inc. ........................ 1,800 58
Intertrust Technologies Corp. * ....................... 1,200 1
J.D. Edwards & Co. * .................................. 1,200 20
Kana Software, Inc. * ................................. 215 4
Macromedia, Inc. * .................................... 3,600 64
Manhattan Associates, Inc. ............................ 1,900 55
MCSi, Inc. * .......................................... 3,100 73
Network Assoc., Inc. .................................. 4,700 122
Parametric Technology Corp. * ......................... 2,100 16
PEC Solutions, Inc. ................................... 1,700 64
Quest Software, Inc. .................................. 1,600 35
Radiant Systems, Inc. * ............................... 1,100 13
Rainbow Technologies, Inc. * .......................... 1,500 11
Redback Networks, Inc. ................................ 9,500 38
Retek, Inc. * ......................................... 2,245 67
Safeguard Scientifics, Inc. * ......................... 34,300 120
SCM Microsystems, Inc. * .............................. 200 3
SonicWall, Inc. * ..................................... 2,000 39
Synplicity, Inc. ...................................... 1,900 26
Tibco Software, Inc. .................................. 2,000 30
Utstarcom, Inc. ....................................... 2,400 68
Verity, Inc. .......................................... 600 12
VerticalNet, Inc. * ................................... 1,400 2
Vignette Corp. ........................................ 12,800 69
WebEx Communications, Inc. ............................ 2,600 65
WebMethods, Inc. * .................................... 2,600 44
Websense, Inc. ........................................ 1,000 32
Worldcom, Inc. ........................................ 3,519 45
-------
2,521
Construction - 1.2%
Dycom Industries, Inc. * .............................. 4,400 73
EMCOR Group, Inc. * ................................... 2,400 109
Hughes Supply, Inc. ................................... 8,800 272
Kaman Corp. - Cl. A ................................... 1,600 25
NVR, Inc. * ........................................... 400 82
USG Corp. ............................................. 1,300 7
-------
568
Consumer Miscellaneous - 2.7%
Action Performance Cos., Inc. ......................... 1,900 58
Catalina Marketing Corp. .............................. 2,000 69
Concord Camera Corp. .................................. 900 7
Dollar Tree Stores, Inc. .............................. 1,700 53
Harman International Industries, Inc. ................. 700 32
Herbalife International, Inc. - Cl. A ................. 1,100 16
Ingram Micro, Inc. - Cl. A * .......................... 11,400 197
Jakks Pacific, Inc. ................................... 4,100 78
Libbey, Inc. .......................................... 1,200 39
Macrovision Corp. ..................................... 1,300 46
Movie Gallery, Inc. ................................... 2,000 49
Nu Skin Enterprises, Inc. - Cl. A * ................... 5,400 47
Sherwin-Williams Co. .................................. 13,100 360
Toro Co. .............................................. 3,800 171
Vector Group, Ltd ..................................... 1,500 49
-------
1,271
Consumer Services - 0.3%
Service Corp. International ........................... 25,600 128
Container - 0.5%
Bemis Co., Inc. ....................................... 900 44
Chesapeake Corp. ...................................... 3,500 97
Packaging Corp. of America ............................ 3,400 62
116
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Container - Continued
Sealed Air Corp. ................................ 1,200 $ 49
------
252
Cosmetic & Personal Care - 0.3%
Alberto-Culver Co. - Cl. B ...................... 1,600 71
Dial Corp. ...................................... 3,600 62
------
133
Diversified Operations - 2.4%
A.O. Smith Corp. ................................ 2,400 47
Coherent, Inc. * ................................ 1,300 40
FLIR System, Inc. ............................... 1,100 42
Flowserve Corp. ................................. 1,100 29
Foundry Networks, Inc. .......................... 13,300 108
Henry Schein, Inc. * ............................ 4,600 170
NCH Corp. ....................................... 600 31
Nortek, Inc. .................................... 1,800 50
Pittston Brink's Group .......................... 1,200 27
Roper Industries, Inc. .......................... 700 35
SCP Pool Corp. * ................................ 2,550 70
Seachange Intl., Inc. ........................... 1,100 38
Sequa Corp. Cl. A ............................... 1,000 47
The Scotts Co. - Cl A ........................... 2,500 119
The Titan Corp. ................................. 1,800 45
Trinity Industries, Inc. ........................ 1,100 30
Unifirst Corp. .................................. 3,400 77
Universal Compression Holdings .................. 4,100 121
------
1,126
Electric Power - 1.9%
Avista Corp. .................................... 6,300 83
Conectiv, Inc. .................................. 2,600 64
Consol Energy, Inc. ............................. 1,300 32
El Paso Electric Company ........................ 2,500 36
Energy East Corp. ............................... 11,200 213
Montana Power Co. ............................... 3,600 21
Northeast Utilities ............................. 4,200 74
Powell Industries, Inc. ......................... 2,300 43
Public Service Co. of New Mexico ................ 4,000 112
Puget Energy, Inc. .............................. 1,400 31
RGS Energy Group, Inc. .......................... 2,700 101
Westport Resources Corp. ........................ 3,900 68
------
878
Electrical Equipment - 1.4%
American Power Conversion ....................... 4,700 68
Anixter International, Inc. ..................... 5,800 168
Cooper Industries, Inc. ......................... 2,700 94
Franklin Electric Co., Inc. ..................... 800 66
Global Power Equipment Group, Inc. .............. 3,300 50
Micrel, Inc. .................................... 1,800 47
Pentair, Inc. ................................... 1,700 62
The Genlyte Corp. * ............................. 2,200 66
Universal Electronics, Inc. ..................... 1,300 22
Zygo Corp. * .................................... 1,500 24
------
667
Electronic Products & Services - 7.4%
Activision, Inc. ................................ 11,150 290
Advance PCS ..................................... 1,500 44
Akami Technologies, Inc. ........................ 3,700 22
Alliant Energy Corp. ............................ 1,800 55
Alpha Industries, Inc. .......................... 1,100 24
Amkor Technologies, Inc. ........................ 4,700 75
Amphenol Corp. - Cl. A * ........................ 1,000 48
Arrow Electronics, Inc. ......................... 13,700 410
Audiovox Corp. - Cl. A * ........................ 8,600 64
Avnet, Inc. ..................................... 6,344 161
AVX Corp. ....................................... 2,800 66
Axcelis Technologies, Inc. ...................... 1,800 23
Ball Corp. ...................................... 3,400 240
BEI Technologies, Inc. .......................... 1,800 31
Benchmark Electronics, Inc. * ................... 2,300 44
Bruker Daltonics, Inc. .......................... 1,700 28
Cabot Microelectronics Corp. .................... 564 45
Cirrus Logic, Inc. * ............................ 3,200 42
Cognex Corp. .................................... 1,100 28
Conexant Systems, Inc. .......................... 3,500 50
Cree, Inc. ...................................... 1,800 53
Cypress Semiconductor Corp. ..................... 2,600 52
Electronics for Imaging, Inc. ................... 1,300 29
FEI Company * ................................... 3,600 113
Generale Cable Corp. ............................ 3,300 43
Helix Technology Corp. .......................... 1,500 34
II-VI, Inc. * ................................... 2,600 45
Intersil Holding Corp. .......................... 2,600 84
Inverness Medical Innovations, Inc. ............. 200 4
Kopin Corp. ..................................... 3,100 43
Kronos, Inc. .................................... 800 39
Littelfuse, Inc. ................................ 1,000 26
Microchip Technology, Inc. ...................... 1,000 39
Microsemi Corp. ................................. 1,400 42
Moog, Inc. - Cl. A * ............................ 1,950 42
Nanometrics, Inc. ............................... 1,100 21
PerkinElmer, Inc. ............................... 1,300 45
Pioneer Standard Electronics, Inc. .............. 6,200 79
Planar Systems, Inc. ............................ 1,000 21
Rogers Corp. .................................... 2,000 61
Semtech Corp. ................................... 1,200 43
Standard Microsystems Corp. ..................... 2,500 39
Storage Technology Corp. ........................ 1,900 39
Tech Data Corp. ................................. 12,100 524
Therma-Wave, Inc. ............................... 1,900 28
Trimble Navigation, Ltd. * ...................... 300 5
Triquint Semiconductor, Inc. .................... 700 9
Woodhead Industries, Inc. ....................... 1,300 21
-------
3,413
117
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- -------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Energy - Alternative Source - 0.9%
Covanta Energy Corp. ............................. 10,600 $ 48
Massey Energy Co. ................................ 6,000 125
Pride International, Inc. ........................ 10,200 154
Woodward Governor Co. ............................ 1,600 93
-------
420
Engineering & Construction - 0.1%
Insituform Technologies, Inc. - Cl. A ............ 1,900 49
Financial Services - 3.7%
Advanta Corp. - Cl. A ............................ 1,600 16
American Financial Group, Inc. ................... 3,000 74
Ameritrade Holding Corp. * ....................... 1,300 8
Amerus Group Co. ................................. 3,200 115
BlackRock, Inc. * ................................ 4,300 179
Commercial Federal Corp. ......................... 10,000 235
Eaton Vance Corp. * .............................. 2,300 82
Federated Investments, Inc. - Cl. B .............. 2,200 70
IndyMac Bancorp, Inc. ............................ 2,100 49
Labranche & Co., Inc. ............................ 2,300 79
Pacific Century Financial Corp. .................. 5,000 129
Provident Financial Group ........................ 2,000 53
S1 Corp. * ....................................... 3,100 50
SWS Group, Inc. .................................. 3,236 82
The MONY Group, Inc. ............................. 4,500 156
UIL Holding Corp. ................................ 900 46
WesCo Financial Corp. ............................ 300 94
Wilmington Trust Trust Corp. ..................... 3,300 209
-------
1,726
Food, Beverage & Tobacco - 3.1%
Corn Products International, Inc. ................ 1,300 46
Dole Food Company ................................ 3,300 89
Fleming Cos., Inc. ............................... 14,400 266
J.M. Smucker Co. ................................. 1,400 50
Krispy Kreme Doughnuts, Inc. ..................... 2,900 128
McCormick & Co., Inc. ............................ 1,000 42
Nash Finch Co. ................................... 4,400 137
Panera Bread Co. Cl. A ........................... 2,000 104
Performance Food Group Co. ....................... 1,400 49
Pilgrims Pride Corp. - Cl. B ..................... 3,800 51
Smithfield Foods, Inc. * ......................... 7,700 170
SuperValu, Inc. .................................. 8,000 177
Tyson Foods, Inc. - Cl. A ........................ 1,635 19
United Natural Foods, Inc. ....................... 5,100 127
-------
1,455
Foreign Governmental - 0.0%
Interface, Inc. .................................. 2,200 12
Health Care Products - 10.1%
Abgenix, Inc. * .................................. 1,300 44
Affymetrix, Inc. ................................. 2,400 91
Alkermes, Inc. ................................... 2,000 53
Amerisource Bergen Corp. ......................... 5,066 322
Applera Corp. - Celera Genomics Group ............ 2,900 77
Beckman Coulter, Inc. ............................ 1,900 84
Bio-Rad Laboratories, Inc. - Cl. A ............... 1,500 95
C.R. Bard, Inc. .................................. 1,700 110
Celgene Corp. .................................... 3,500 112
Cell Genesys, Inc. * ............................. 1,800 42
Cephalon, Inc. * ................................. 5,000 378
Charles River Laboratories ....................... 1,200 40
Conmed Corp. ..................................... 1,800 36
COR Therapeutics, Inc. * ......................... 5,500 132
Datascope Corp. * ................................ 1,000 34
Diagnostic Products Corp. ........................ 9,500 417
Digene Corp. ..................................... 2,600 77
Enzon, Inc. ...................................... 800 45
First Horizon Pharmaceutical ..................... 5,400 159
Fisher Scientific International, Inc. ............ 3,800 111
Genome Therapeutics Corp. ........................ 2,100 14
GenTek, Inc. ..................................... 2,000 3
Haemonetics Corp. * .............................. 700 24
Hillenbrand Industries, Inc. ..................... 2,300 127
IDEXX Laboratories, Inc. ......................... 1,900 54
Immunogen , Inc. ................................. 600 10
Immunomedics, Inc. ............................... 2,100 43
INAMED Corp. ..................................... 1,100 33
Invitrogen Corp. * ............................... 1,700 105
Kos Pharmaceuticals, Inc. ........................ 1,700 59
Maxim Pharmaceuticals, Inc. * .................... 700 5
Medarex, Inc. .................................... 5,000 90
Medicis Pharmaceutical Corp. - Cl. A ............. 1,300 84
Mentor Corp. Minnesota ........................... 2,400 69
MID Atlantic Medical Services, Inc. .............. 2,000 45
Myriad Genetics, Inc. ............................ 800 42
Owens and Minor, Inc. ............................ 2,700 50
Patterson Dental Co. * ........................... 2,300 94
Perrigo Co. ...................................... 10,100 119
Priority Healthcare Corp. - Cl. B * .............. 4,500 158
Protein Design Labs, Inc. * ...................... 5,600 184
ResMed, Inc. ..................................... 1,100 59
Sangstat Medical Corp. ........................... 2,200 43
Scios, Inc. ...................................... 1,700 40
SICOR, Inc. ...................................... 3,600 56
Steris Corp. ..................................... 8,800 161
Techne Corp. ..................................... 3,300 122
Varian Medical Systems, Inc. * ................... 2,700 192
Varian, Inc. * ................................... 1,000 32
Vertex Pharmaceuticals, Inc. * ................... 3,200 79
Vical Incorporated * ............................. 1,300 16
-------
4,671
Health Care Services - 2.6%
American Healthcorp, Inc. ........................ 3,600 115
Apria Healthcare Group, Inc. * ................... 1,900 47
Arena Pharmaceuticals, Inc. ...................... 3,700 44
Beverly Enterprises, Inc. * ...................... 1,700 15
118
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Health Care Services - Continued
Biosite Diagnostics, Inc. ............................. 1,200 $ 22
Caremark Rx, Inc. * ................................... 10,400 170
Coventry Health Care, Inc. * .......................... 8,100 161
Gene Logic, Inc. ...................................... 1,300 24
Healthnet, Inc. ....................................... 1,800 39
Humana, Inc. * ........................................ 3,700 44
Magellan Health Services, Inc. ........................ 2,500 16
NDC Health Corp. ...................................... 1,900 66
Oxford Health Plans, Inc. * ........................... 2,300 69
PacifiCare Health Systems, Inc. * ..................... 3,800 61
PSS World Med, Inc. ................................... 19,600 160
Renal Care Group, Inc. ................................ 1,400 45
Triad Hospitals, Inc. ................................. 1,600 47
WebMD Corp. * ......................................... 7,600 54
-------
1,199
Household Appliances / Furnishings - 1.3%
Clayton Homes, Inc. ................................... 2,700 46
CompX International, Inc. * ........................... 1,000 13
Energizer Holdings, Inc. .............................. 3,000 57
Lennox International, Inc. ............................ 4,700 46
Mohawk Industries, Inc. * ............................. 6,900 378
Rent-Way, Inc. * ...................................... 7,600 46
United Rentals, Inc. .................................. 1,400 32
-------
618
Housing - 0.3%
Beazer Homes USA, Inc. ................................ 500 37
Winnebago, Industries, Inc. ........................... 2,200 81
-------
118
Insurance - 3.9%
Aetna US Healthcare, Inc. ............................. 13,800 455
Allmerica Financial Corp. ............................. 3,600 160
American National Insurance Co. ....................... 900 76
Arthur J. Gallagher & Co. ............................. 3,700 128
Fidelity National Financial, Inc. ..................... 6,851 170
First American Financial Corp. ........................ 3,200 60
Hilb, Rogal & Hamilton Co. ............................ 1,200 67
LandAmerica Financial Group, Inc. ..................... 2,000 57
National Western Life Insurance Co. ................... 700 78
Old Republic International Corp. ...................... 7,900 221
Protective Life Corp. ................................. 4,900 142
Stancorp Financial Group, Inc. ........................ 1,300 62
The Midland Co. ....................................... 900 39
The PMI Group, Inc. ................................... 1,100 74
-------
1,789
Leisure & Recreation - 1.5%
Alliance Gaming Corp. ................................. 1,700 50
Arctic Cat, Inc. ...................................... 3,200 54
Argosy Gaming Co. ..................................... 2,700 88
Aztar Corp. ........................................... 1,900 35
Blockbuster, Inc. - Cl. A ............................. 2,300 58
Callaway Golf Co. ..................................... 2,300 44
Dover Downs Entertainment ............................. 2,900 44
Hotel Reservations Network, Inc. - Cl. A .............. 2,100 97
Lodgenet Entertainment Corp. .......................... 1,300 22
MeriStar Hospitality Corp. ............................ 3,700 53
Rare Hospitality International, Inc. .................. 1,450 33
Ticketmaster Online-CitySearch, Inc. -
Cl. B * ............................................. 3,800 62
Trendwest Resorts, Inc. * ............................. 1,350 34
World Wrestling Federation Entertainment,
Inc. ................................................ 1,300 17
-------
691
Machinery - 2.1%
AGCO Corp. ............................................ 6,800 107
Applied Industrial Technologies, Inc. ................. 4,700 88
FMC Corp. * ........................................... 800 48
Graco, Inc. ........................................... 1,200 47
Imation Corp. * ....................................... 1,700 37
JLG Industries, Inc. .................................. 2,400 25
Kennametal, Inc. ...................................... 3,600 145
NACCO Industries, Inc. - Cl. A ........................ 1,000 57
SPX Corp. ............................................. 1,100 151
Stewart & Stevenson Services, Inc. .................... 1,200 22
Tecumseh Products Co. - Cl. A ......................... 1,500 76
Zebra Technologies Corp. - Cl. A ...................... 2,800 155
-------
958
Media - Publishing - 1.1%
McClatchy Newspapers, Inc. - Cl. A .................... 3,500 165
Pulitzer, Inc. ........................................ 3,400 173
Readers Digest Association, Inc. - Cl. A .............. 7,800 180
-------
518
Media - TV / Radio - 2.0%
4 Kids Entertainment, Inc. ............................ 2,200 44
Arbitron, Inc. ........................................ 5,300 181
Belo Corp. ............................................ 5,000 94
Cox Radio, Inc. - Cl. A ............................... 4,100 104
Emmis Communications Corp. ............................ 1,600 38
Entercom Communications Corp. * ....................... 900 45
Getty Images, Inc. .................................... 2,600 60
Grey Global Group, Inc. ............................... 70 47
Hearst-Argyle Television, Inc. * ...................... 3,000 65
Hispanic Broadcasting Corp. ........................... 1,100 28
Insight Communications Company, Inc. * ................ 1,600 39
Primedia, Inc. * ...................................... 1,902 8
Sirius Satellite Radio Inc. ........................... 2,700 31
Westwood One, Inc. * .................................. 4,500 135
-------
919
Metal Production & Fabrication - 0.4%
Cleveland Cliffs, Inc. ................................ 3,000 55
Commercial Metals Co. ................................. 1,400 49
119
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Metal Production & Fabrication - Continued
Timken Co. .............................................. 3,900 $ 63
------
167
Metals & Mining - 0.5%
Penn Engineering & Manufacturing Corp. .................. 1,500 25
Phelps Dodge Corp. ...................................... 3,500 114
Precision Castparts Corp. ............................... 2,200 62
Wolverine Tube, Inc. * .................................. 4,400 50
-------
251
Natural Gas Distribution - 1.0%
Nicor, Inc. ............................................. 1,700 71
Peoples Energy Corp. .................................... 2,600 99
Southwest Gas Corp. ..................................... 3,800 85
UGI Corp. ............................................... 6,700 202
-------
457
Oil - 0.9%
C.H. Energy Group, Inc. ................................. 700 30
ONEOK, Inc. ............................................. 10,200 182
Tetra Technologies, Inc. ................................ 2,800 59
Varco International, Inc. ............................... 8,700 130
-------
401
Oil & Natural Gas Exploration & Production - 2.6%
Atwood Oceanics, Inc. ................................... 3,400 118
Patina Oil & Gas Corporation ............................ 2,400 66
Patterson Uti Energy * .................................. 2,900 68
Pogo Producing Co. ...................................... 2,000 52
Spinnaker Exploration Co. ............................... 3,300 136
Sunoco, Inc. ............................................ 5,800 217
Swift Energy Co. ........................................ 2,900 59
Tesoro Petroleum Corp. .................................. 6,200 81
Tom Brown, Inc. ......................................... 1,300 35
Ultramar Diamond Shamrock Corp. ......................... 1,200 59
Valero Energy Corp. ..................................... 1,800 69
Western Gas Resources, Inc. ............................. 4,700 152
XTO Energy, Inc. ........................................ 4,900 86
-------
1,198
Oil - Equipment & Service - 0.3%
Hanover Compressor Co. .................................. 4,800 121
Paper & Forest Products - 1.6%
Boise Cascade Corp. ..................................... 5,000 170
Louisiana-Pacific Corp. ................................. 9,900 84
Mead Corp. .............................................. 2,800 86
Pope & Talbot, Inc. ..................................... 3,200 46
Temple-Inland, Inc. ..................................... 2,000 113
United Stationers, Inc. ................................. 4,300 145
Universal Forest Products, Inc. * ....................... 2,400 50
Westvaco Corp. .......................................... 1,500 43
-------
737
Personal & Commercial Lending - 0.1%
Student Loan Corp. ...................................... 700 56
Pollution Control - 0.6%
Allied Waste Industries, Inc. ........................... 3,600 50
Republic Services, Inc. - Cl. A ......................... 10,500 210
-------
260
Precious Metals/Gems/Stones - 0.1%
Freeport-McMoRan Copper & Gold, Inc. - Cl. B ............ 3,300 44
Real Estate Development - 0.3%
Lennar Corp. ............................................ 1,300 61
The St. Joe Company ..................................... 2,800 78
-------
139
Real Estate Investment Trust - 5.9%
AMB Property Corp. ...................................... 4,700 122
AMLI Residential Properties Trust ....................... 2,200 55
Archstone Communities Trust ............................. 4,000 105
Arden Realty Group, Inc. ................................ 6,400 169
Avalonbay Communities, Inc. ............................. 5,300 251
Boston Properties, Inc. ................................. 1,700 65
CarrAmerica Realty Corp. ................................ 6,200 187
Centerpoint Properties Corp. ............................ 1,900 95
Chelsea Property Group, Inc. ............................ 800 39
Duke Realty Investments, Inc. ........................... 8,500 207
FelCor Lodging Trust, Inc. .............................. 11,800 197
First Industrial LP ..................................... 3,700 115
General Growth Properties ............................... 4,000 155
Glenborough Realty Trust, Inc. .......................... 6,900 134
Healthcare Realty Trust, Inc. ........................... 3,800 106
Highwoods Properties, Inc. .............................. 3,800 99
International Rectifier Corp. * ......................... 1,200 42
iStar Financial, Inc. ................................... 1,800 45
Public Storage, Inc. .................................... 10,800 361
Vornado Realty Trust .................................... 4,300 179
-------
2,728
Real Estate Operations - 0.2%
Crestline Capital Corp. ................................. 2,200 68
HomeStore.com, Inc. * ................................... 1,500 6
Security Capital Group, Inc. - Cl. B * .................. 1,000 25
-------
99
Retail - Department Stores - 3.5%
Barnes & Noble, Inc. .................................... 1,500 44
BJ's Wholesale Club, Inc. ............................... 1,000 44
Cato Corp. - Cl. A ...................................... 1,300 25
Circuit City Stores, Inc. ............................... 10,300 251
Dillard's, Inc. - Cl. A ................................. 3,900 62
Dollar Thrifty Automotive Group, Inc. * ................. 2,200 34
Freds, Inc. ............................................. 2,050 84
Foot Locker, Inc. ....................................... 2,400 38
Handleman Co. ........................................... 2,200 33
120
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Retail - Department Stores - Continued
Hibbett Sporting Goods, Inc. ............................ 800 $ 24
Lands' End, Inc. ........................................ 3,800 191
Michaels Stores, Inc. ................................... 1,000 33
MSC Industrial Direct Co., Inc. - Cl. A ................. 1,400 28
Office Depot, Inc. ...................................... 9,000 167
Payless ShoeSource, Inc. * .............................. 900 51
Pier 1 Imports, Inc. .................................... 2,600 45
Ross Stores, Inc. ....................................... 2,700 87
School Specialty, Inc. .................................. 1,900 44
Shopko Stores, Inc. ..................................... 7,900 75
Spiegel, Inc. - Cl. A ................................... 1,600 7
Talbots, Inc. ........................................... 700 25
The Finish Line - Cl. A ................................. 9,400 144
Tweeter Home Entertainment Group, Inc. .................. 800 23
Value City Department Stores, Inc. * .................... 4,500 21
Wet Seal, Inc. - Cl. A .................................. 2,250 53
-------
1,633
Retail - Drug Stores - 0.1%
Longs Drug Stores Corp. ................................. 1,500 35
Retail - Food - 1.7%
Brinker International, Inc. * ........................... 3,850 115
Darden Restaurants, Inc. ................................ 1,900 67
Interstate Bakeries ..................................... 5,900 143
Landry's Seafood Restaurants, Inc. * .................... 2,800 52
Lone Star Steakhouse & Saloon ........................... 6,100 90
The Great Atlantic & Pacific Tea Co., Inc. ............. 13,500 321
-------
788
Shoe & Apparel Manufacturing - 0.6%
Children's Place Retail Stores, Inc. .................... 1,700 46
Coach, Inc. ............................................. 1,000 39
Columbia Sportswear Co. ................................. 2,900 97
Liz Claiborne, Inc. ..................................... 1,600 80
Skechers USA, Inc. ...................................... 2,000 29
-------
291
Steel - 0.4%
AK Steel Corp. .......................................... 2,800 32
Ryerson Tull, Inc. ...................................... 7,600 84
Shaw Group, Inc. ........................................ 3,300 77
-------
193
Telecommunication Equipment - 2.9%
Adtran, Inc. ............................................ 1,300 33
Advanced Fibre Communications, Inc. ..................... 5,400 95
Andrew Corp. ............................................ 2,800 61
Cable Design Technologies Corp. ......................... 4,050 55
Crown Castle International Corp. ........................ 6,000 64
DMC Stratex Networks, Inc. - Notes * .................... 2,000 16
Faichild Semiconductor International Cl. A ............. 5,400 152
Harmonic, Inc. * ........................................ 517 6
Inter-Tel, Inc. ......................................... 3,800 73
Jack Henry & Associates, Inc. ........................... 5,900 129
L-3 Communications Holdings, Corp. * .................... 700 63
Newport Corp. ........................................... 5,800 112
Plantronics, Inc. ....................................... 7,400 190
Polycom, Inc. * ......................................... 2,700 93
Powerwave Technologies, Inc. ............................ 2,300 40
Somera Communications, Inc. * ........................... 2,400 18
Spectrasite Holdings, Inc. .............................. 1,900 7
Sycamore Networks, Inc. ................................. 9,600 52
Tekelec, Inc. ........................................... 1,400 25
Terayon Communication Systems, Inc. ..................... 5,500 46
World Access, Inc. ...................................... 1,400
-------
1,330
Telecommunication Services - 1.4%
Alamosa Holdings, Inc. .................................. 4,000 48
Allegiance Telecom, Inc. ................................ 7,000 58
Allen Telecom, Inc. ..................................... 1,100 9
Centennial Cellular Corp. - Cl. A * ..................... 1,500 15
Commonwealth Telephone Enterprises, Inc. ................ 1,400 64
Focal Communications Corp. * ............................ 800 1
Greif Bros. Corp. - Cl. A * ............................. 1,000 33
IDT Corp. * ............................................. 400 8
Metro One Telecom, Inc. ................................ 4,000 121
MRV Communications, Inc. ................................ 1,500 6
NMS Communications Corp. ................................ 700 3
RCN Corp. * ............................................. 400 1
SBA Communications Corp. ................................ 4,700 61
TeleCorp PCS, Inc. ...................................... 13,200 165
Travelocity.com ......................................... 1,300 37
WEST Corp. .............................................. 1,600 40
-------
670
Transportation Services - 1.9%
Airborne, Inc. .......................................... 10,900 162
America West Holdings Corp. - Cl. B * ................... 1,300 4
Atlantic Coast Air Lines Holdings Corp. ................. 3,900 91
C.H. Robinson Worldwide, Inc. ........................... 2,200 63
Continental Airlines, Inc. - Cl. B ...................... 2,600 68
Expeditors International of Washington, Inc. ............ 1,700 97
Florida East Coast Industries, Inc. ..................... 2,000 46
Frontier Airlines, Inc. * ............................... 2,400 41
Hunt Jersey Transport Services, Inc. .................... 2,400 56
Ryder System, Inc. ...................................... 3,300 73
SkyWest, Inc. ........................................... 1,700 43
UAL Corp. ............................................... 2,200 30
USFreightways Corp. ..................................... 1,900 60
Wabtec Corp. ............................................ 1,900 23
Yellow Corp. * .......................................... 1,700 43
-------
900
-------
TOTAL COMMON STOCK- 99.9% 46,377
121
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
(000's)
WARRANTS
Telecommunication Services - 0.0%
Focal Communications Corp.
expires 11/07/04 (Cost $0) ........................... 125 $0
-------
TOTAL WARRANTS- 0.0%
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 4.5%
Investments in joint repurchase agreement
with Goldman Sachs & Co.,
1.778% due 01/02/02 ................................ $2,100 2,100
------ -------
TOTAL INVESTMENTS- 104.4% 48,477
Cash and Receivables, less payables- (4.4)% (2,031)
------ -------
NET ASSETS- 100.0% $46,446
====== =======
*Non-income producing securities.
See notes to financial statements.
122
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Auto & Truck Parts - 1.5%
Modine Manufacturing Co. .............................. 22,300 $ 520
TBC Corporation ....................................... 77,300 1,035
-------
1,555
Bank - 5.9%
Community First Bankshares, Inc. ...................... 64,600 1,659
First Republic Bank * ................................. 55,100 1,331
Silicon Valley Bancshares * ........................... 55,700 1,489
Texas Regional Bancshares, Inc. ....................... 42,900 1,624
-------
6,103
Business Services - 4.5%
Electro Rent Corp. * .................................. 107,000 1,379
G & K Services, Inc. - Cl. A .......................... 33,400 1,079
Ishares Russell 2000 .................................. 7,700 985
McGrath Rentcorp. ..................................... 31,500 1,182
-------
4,625
Chemical - 2.1%
Airgas, Inc. * ........................................ 78,100 1,181
Arch Chemicals, Inc. .................................. 44,600 1,035
-------
2,216
Commercial Sevices - 1.3%
Dal Tile International, Inc. .......................... 29,300 681
Unifi, Inc. ........................................... 88,400 641
-------
1,322
Computer Software & Services - 2.6%
Analysts International Corp. .......................... 24,600 101
Packeteer, Inc. ....................................... 76,900 567
Progress Software Corp. ............................... 61,300 1,059
SPSS, Inc. ............................................ 55,700 989
-------
2,716
Construction - 0.8%
Florida Rock Industries, Inc. ......................... 23,200 849
Consumer Miscellaneous - 1.0%
CSS Industries, Inc. .................................. 32,700 1,011
Container - 2.0%
Ivex Packaging Corp. * ................................ 65,000 1,235
Liqui-Box Corp. ....................................... 19,900 821
-------
2,056
Diversified Operations - 7.7%
Ameron International Corp. ............................ 7,700 533
AptarGroup, Inc. ...................................... 40,100 1,405
Culp, Inc. ............................................ 38,500 146
Dan River Inc. * ...................................... 90,100 49
Deltic Timber Corp. ................................... 30,800 844
Landauer, Inc. ........................................ 22,300 755
Layne Christensen Co. * ............................... 32,500 260
Mathews International Corp. * ......................... 75,400 1,853
Myers Industries, Inc. ................................ 44,100 602
Packaged Ice, Inc. * .................................. 93,400 100
SCP Pool Corp. * ...................................... 50,150 1,377
-------
7,924
Electric Power - 0.6%
West Hampshire Energy Services, Inc. .................. 33,400 636
Electronic Products & Services - 5.9%
Analogic Corporation .................................. 31,200 1,202
Atmi, Inc. ............................................ 27,600 658
Brooks Automation, Inc. * ............................. 25,600 1,041
EDO Corp. ............................................. 39,000 1,032
Littelfuse, Inc. * .................................... 39,000 1,023
Methode Electronics, Inc. - Cl. A ..................... 37,900 303
United Technologies Worldwide, Inc. ................... 44,200 865
-------
6,124
Energy - Alternative Source - 1.3%
Woodward Governor Company ............................. 23,400 1,363
Engineering & Construction - 2.1%
Insituform Technologies, Inc. - Cl. A ................. 83,500 2,136
Financial Services - 6.3%
Allied Capital Corp. .................................. 70,200 1,825
American Capital Strategies, Ltd. ..................... 39,000 1,106
First Financial Fund Inc. * ........................... 83,700 1,046
Gladstone Capital Corp. ............................... 21,200 392
Modis Professional Services, Inc. ..................... 89,100 636
Triad Guaranty, Inc. .................................. 40,800 1,480
-------
6,485
Food, Beverage & Tobacco - 0.7%
American Italian Pasta Co. * .......................... 16,700 702
Health Care Products - 3.6%
Bone Care International, Inc. * ....................... 65,600 1,124
Guilford Pharmaceuticals, Inc. ........................ 55,200 662
Owens and Minor, Inc. ................................. 78,000 1,443
Sola International, Inc. * ............................ 27,400 532
-------
3,761
Household Appliances / Furnishings - 1.7%
Aaron Rents, Inc. ..................................... 50,100 817
Aaron Rents, Inc. - Cl. A ............................. 4,200 57
Stanley Furniture Co., Inc. ........................... 35,400 841
-------
1,715
Housing - 1.0%
Skyline Corporation ................................... 33,400 1,077
Insurance - 5.4%
Brown & Brown ......................................... 105,300 2,875
Markel Corp. * ........................................ 5,600 1,006
Ohio Casualty Corp. ................................... 27,800 446
Presidential Life Corp. ............................... 22,300 458
123
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Insurance - Continued
Proassurance Corp. ...................................... 44,200 $ 777
------
5,562
Machinery - 3.2%
Franklin Electric Co., Inc. ............................. 14,500 1,189
IDEX Corp. .............................................. 27,800 959
Thomas Industries, Inc. ................................. 44,600 1,115
-------
3,263
Media - TV / Radio - 0.9%
Saga Communications, Inc. - Cl. A * ..................... 32,200 666
Sinclair Broadcast Group, Inc. .......................... 31,600 299
-------
965
Natural Gas Distribution - 0.8%
Vectren Corp. ........................................... 35,600 854
Oil - 1.4%
Newpark Resources, Inc. * ............................... 65,900 521
Tetra Technologies, Inc. * .............................. 44,200 926
-------
1,447
Oil & Natural Gas Exploration & Production - 5.3%
Atwood Oceanics, Inc. * ................................. 22,100 770
Forest Oil Corp. * ...................................... 38,700 1,092
Penn Virginia Corporation ............................... 33,200 1,132
XTO Energy, Inc. ........................................ 142,700 2,497
-------
5,491
Oil - Equipment & Service - 1.5%
Carbo Ceramics, Inc. .................................... 26,500 1,038
Lone Star Technologies, Inc. ............................ 27,800 489
-------
1,527
Paper & Forest Products - 1.0%
Wausau-Mosinee Paper Corp. .............................. 82,400 997
Real Estate Investment Trust - 6.2%
Glenborough Realty Trust, Inc. .......................... 66,800 1,296
Innkeepers USA Trust .................................... 66,800 655
JP Realty, Inc. ......................................... 44,200 1,051
Kilroy Realty Corp. ..................................... 38,700 1,017
LaSalle Hotel Properties ................................ 50,000 587
Sun Communities, Inc. ................................... 33,400 1,244
Washington Real Estate Investment Trust ................. 22,300 555
-------
6,405
Real Estate Operations - 0.0%
The IT Group, Inc. * .................................... 36,000 2
Retail - Department Stores - 7.8%
Casey's General Stores, Inc. ............................ 72,400 1,079
Freds, Inc. ............................................. 57,900 2,372
Hancock Fabrics, Inc. ................................... 44,600 586
Haverty Furniture Co., Inc. ............................. 89,100 1,475
Ruby Tuesday, Inc. ...................................... 122,500 $ 2,527
-------
8,039
Retail - Food - 1.5%
Rare Hospitality International, Inc. * .................. 66,800 1,506
Shoe & Apparel Manufacturing - 1.1%
Stein Mart, Inc. * ...................................... 133,700 1,118
Steel - 0.8%
Gibraltar Steel Corp. ................................... 44,800 785
Telecommunication Services - 0.2%
Paxson Communications Corp. ............................. 20,600 215
Telephone - 2.3%
Black Hills Corp. ....................................... 17,700 599
Cleco Corp. ............................................. 50,800 1,116
Otter Tail Power Co ..................................... 22,300 650
-------
2,365
Transportation Services - 2.1%
Hub Group Inc. .......................................... 21,700 227
Landstar Systems, Inc. .................................. 20,000 1,450
Midwest Express Holdings, Inc. * ........................ 35,200 514
-------
2,191
-------
TOTAL COMMON STOCK- 94.1% 97,108
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 5.0%
Investment in joint trading account
(Note B)
2.055% due 01/02/02 .................................. $ 5,125 5,125
U.S. Governmental - 0.9%
United States Treasury - Bills
1.865% due 06/06/02 ................................ 992 992
---------
TOTAL SHORT-TERM INVEST-
MENTS- 5.9% 6,117
-------- ---------
TOTAL INVESTMENTS- 100.0% 103,225
Cash and Receivables, less payables- 0.0% (1)
-------- ---------
NET ASSETS- 100.0% $103,224
======== =========
*Non-income producing security.
See notes to financial statements.
124
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
REAL ESTATE EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Real Estate Development - 3.0%
Catellus Development Corp. ............................ 119,100 $ 2,191
Hospitality Properties Trust .......................... 21,600 637
Trizec Hahn Corporation ............................... 130,300 2,046
---------
4,874
Real Estate Investment Trust - 94.2%
Alexandria Real Estate ................................ 29,000 1,192
AMB Property Corp. .................................... 170,000 4,420
AMLI Residential Properties Trust ..................... 51,000 1,286
Apartment Investment & Management Co. ................. 63,100 2,886
Archstone Communities Trust ........................... 316,510 8,324
Arden Realty Group, Inc. .............................. 143,000 3,790
Avalonbay Communities, Inc. ........................... 182,045 8,613
Boston Properties, Inc. ............................... 137,200 5,214
BRE Properties, Inc. .................................. 43,500 1,347
Brookfield Properties Corporation ..................... 214,500 3,689
Camden Property Trust ................................. 62,000 2,275
Capital Automotive .................................... 14,300 284
CarrAmerica Realty Corp. .............................. 141,600 4,262
CBL & Associates Properties, Inc. ..................... 35,100 1,106
Centerpoint Properties Corp. .......................... 24,550 1,223
Chateau Communities, Inc. ............................. 64,200 1,920
Chelsea Property Group, Inc. .......................... 500 25
Colonial Properties Trust ............................. 12,600 393
Cousins Properties, Inc. .............................. 30,600 745
Crescent Real Estate Equities, Inc. ................... 16,700 302
Duke Realty Investments, Inc. ......................... 82,139 1,998
Equity Office Properties Trust ........................ 550,043 16,545
Equity Residential Properties Trust ................... 288,200 8,274
Essex Property Trust, Inc. ............................ 69,200 3,419
Federal Realty Investment Trust ....................... 139,100 3,199
FelCor Lodging Trust, Inc. ............................ 44,000 735
Frontline Capital Group ............................... 121,500 13
General Growth Properties ............................. 95,500 3,705
Health Care Property Investments, Inc. ................ 4,900 177
Hilton Hotels Corp. ................................... 17,600 192
Home Properties of New York, Inc. ..................... 18,300 578
Host Marriott Corp. ................................... 248,700 2,238
Kilroy Realty Corp. ................................... 12,200 321
Kimco Realty Corp. .................................... 75,000 2,452
Koger Equity, Inc. * .................................. 10,700 174
Liberty Property Trust ................................ 81,200 2,424
Mack-Cali Realty Corp. ................................ 14,400 447
Manufactured Home Communities, Inc. ................... 66,000 2,060
MeriStar Hospitality Corp. ............................ 47,450 674
Pan Pacific Retail Properties, Inc. ................... 20,300 583
Post Properties, Inc. ................................. 11,400 405
Prentiss Properties Trust ............................. 51,350 1,410
Prime Group Realty Trust .............................. 12,800 118
Prologis Trust ........................................ 197,259 4,243
PS Business Parks, Inc. ............................... 16,100 507
Public Storage, Inc. .................................. 229,600 7,669
Realty Income Corp. ................................... 40,200 1,182
Reckson Associates Realty Corp. ....................... 18,100 423
Regency Centers Corp. ................................. 34,350 953
Rouse Co .............................................. 69,700 2,042
Shurgard Storage Centers, Inc. ........................ 47,700 1,526
Simon Property Group, Inc. ............................ 325,700 9,553
SL Green Realty Corp. ................................. 73,200 2,248
Starwood Hotels & Resorts Worldwide, Inc. ............. 205,000 6,119
Summit Properties, Inc. ............................... 36,000 901
Sun Communities, Inc. ................................. 15,600 581
Taubman Centers, Inc. ................................. 73,900 1,098
The Macerich Co ....................................... 48,000 1,277
Vornado Realty Trust .................................. 144,400 6,007
Washington Real Estate Investment Trust ............... 35,200 876
Weingarten Realty Investors ........................... 40,500 1,944
Wyndham International, Inc. ........................... 179,800 101
---------
154,687
Real Estate Operations - 0.4%
Security Capital Group, Inc. - Cl. B .................. 26,900 682
---------
TOTAL COMMON STOCK- 97.6% 160,243
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 1.9%
Investment in joint trading account
(Note B)
2.054% due 01/02/02 ................................. $ 3,138 3,138
-------- ---------
TOTAL INVESTMENTS- 99.5% 163,381
Cash and Receivables, less payables- 0.5% 872
-------- ---------
NET ASSETS- 100.0% $ 164,253
======== =========
*Non-income producing security.
See notes to financial statements.
125
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 1.8%
Boeing Co. ............................................ 101,400 $ 3,932
General Dynamics Corp. ................................ 61,050 4,862
Lockheed Martin Corp. ................................. 113,800 5,311
Northrop Grumman Corp. ................................ 34,236 3,452
United Technologies Corp. ............................. 399,600 25,826
--------
43,383
Auto & Truck Parts - 0.6%
B.F. Goodrich Co. ..................................... 99,500 2,649
Johnson Controls, Inc. ................................ 22,600 1,825
Lear Corp. * .......................................... 249,600 9,520
--------
13,994
Automobile - 0.9%
Ford Motor Co. ........................................ 863,550 13,575
General Motors Corp. .................................. 192,200 9,341
--------
22,916
Bank - 6.2%
Bank of America Corp. ................................. 626,600 39,444
Bank of New York Co., Inc. ............................ 213,850 8,725
Charter One Financial, Inc. ........................... 40,665 1,104
Fifth Third Bancorp ................................... 66,200 4,060
First Tennessee National Corp. ........................ 47,400 1,719
JP Morgan Chase & Co. ................................. 511,400 18,589
M & T Bank Corp. ...................................... 28,600 2,084
National Commerce Financial Corp. ..................... 10,500 266
Suntrust Banks, Inc. .................................. 35,300 2,213
TCF Financial Corp. ................................... 233,200 11,189
Union Planters Corp. .................................. 48,700 2,198
US Bancorp ............................................ 1,264,300 26,462
Washington Mutual, Inc. ............................... 550,400 17,998
Wells Fargo & Co. ..................................... 384,400 16,702
--------
152,753
Brokerage & Investment Management - 0.8%
Goldman Sachs Group, Inc. ............................. 85,975 7,974
Lehman Brothers Holdings, Inc. ........................ 16,700 1,116
Morgan Stanley, Dean Witter, Discover & Co. ........... 212,800 11,904
--------
20,994
Business Services - 0.3%
Automatic Data Processing, Inc. ....................... 65,700 3,870
KPMG Consulting, Inc. ................................. 204,000 3,380
--------
7,250
Chemical - 2.8%
Air Products & Chemicals, Inc. ........................ 394,600 18,510
Dow Chemical Co. ...................................... 931,400 31,463
Eastman Chemical Co. .................................. 2,100 82
Praxair, Inc. ......................................... 355,400 19,636
--------
69,691
Commercial Sevices - 0.3%
Celestica, Inc. ....................................... 53,619 2,166
Cendant Corp. ......................................... 49,600 972
Convergys Corp. ....................................... 6,450 242
TMP Worldwide, Inc. ................................... 94,800 4,067
--------
7,447
Computer Equipment - 5.9%
Brocade Communications Systems, Inc. .................. 12,900 427
Dell Computer Corp. * ................................. 1,223,800 33,263
Diebold, Inc. ......................................... 47,700 1,929
Intel Corp. ........................................... 2,150,800 67,643
International Business Machines Corp. ................. 265,700 32,139
McData Corp. .......................................... 84,200 2,063
Network Appliance, Inc. ............................... 35,500 776
Veritas Software Corp. * .............................. 151,100 6,774
--------
145,014
Computer Software & Services - 8.0%
Adobe Systems, Inc. ................................... 2,500 78
Cadence Design Systems, Inc. .......................... 311,400 6,826
Check Point Software Technologies, Ltd. * ............. 79,575 3,174
Computer Sciences Corp. ............................... 137,500 6,735
Electronic Data Systems Corp. * ....................... 241,300 16,541
EMC Corp. ............................................. 65,800 884
First Data Corp. ...................................... 339,250 26,614
Intuit, Inc. .......................................... 262,900 11,247
Juniper Networks, Inc. ................................ 41,600 788
Microsoft Corp. ....................................... 1,138,800 75,446
Network Assoc., Inc. .................................. 345,800 8,939
Oracle Corp. * ........................................ 814,200 11,244
Peoplesoft, Inc. ...................................... 340,850 13,702
Siebel Systems, Inc. * ................................ 70,900 1,984
Sun Microsystems, Inc. ................................ 853,925 10,503
VeriSign, Inc. ........................................ 83,400 3,173
--------
197,878
Computers - 0.2%
CDW Computer Centers, Inc. ............................ 104,550 5,615
Consumer Miscellaneous - 1.8%
Avery Dennison Corp. .................................. 224,300 12,680
Black & Decker Corp. .................................. 101,250 3,820
Harley-Davidson, Inc. ................................. 56,900 3,090
Macrovision Corp. ..................................... 50,400 1,775
Unilever NV - NY Shares ............................... 389,150 22,419
--------
43,784
Cosmetic & Personal Care - 1.5%
Avon Products, Inc. ................................... 269,300 12,522
Colgate-Palmolive Co. ................................. 82,800 4,782
126
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Cosmetic & Personal Care - Continued
Procter & Gamble Co. ................................. 236,600 $ 18,722
--------
36,026
Diversified Operations - 5.8%
Amgen, Inc. .......................................... 140,825 7,948
Danaher Corp. ........................................ 200,850 12,113
General Electric Co. ................................. 1,507,800 60,433
Honeywell International, Inc. ........................ 333,500 11,279
Textron, Inc. ........................................ 76,500 3,172
Tyco International, Ltd. ............................. 778,400 45,848
W.W. Grainger, Inc. .................................. 51,800 2,486
--------
143,279
Electric Power - 2.8%
AES Corp. ............................................ 67,000 1,096
Allegheny Energy, Inc. ............................... 375,450 13,599
Dominion Resources, Inc. ............................. 382,100 22,964
Entergy Corp. ........................................ 255,700 10,000
Mirant Corp. ......................................... 204,200 3,271
NiSource, Inc. ....................................... 509,000 11,738
UtiliCorp United, Inc. ............................... 248,600 6,257
--------
68,925
Electronic Products & Services - 4.5%
Activision, Inc. ..................................... 66,150 1,721
Alpha Industries, Inc. ............................... 84,400 1,840
Analog Devices, Inc. ................................. 102,700 4,559
Applera Corporation - Applied Biosystems Group ....... 106,600 4,186
Applied Materials, Inc. * ............................ 145,300 5,827
Cisco Systems, Inc. .................................. 1,886,600 34,166
Emulex Corp. ......................................... 59,500 2,351
Integrated Device Technology, Inc. ................... 104,300 2,773
Intersil Holding Corp. ............................... 62,100 2,003
Jabil Circuit, Inc. .................................. 82,700 1,879
KLA-Tencor Corp. * ................................... 74,963 3,715
Linear Technology Corp. .............................. 249,700 9,748
Marvell Technology Group, Ltd. * ..................... 68,100 2,439
Maxim Integrated Products, Inc. * .................... 84,500 4,437
Micron Technology, Inc. .............................. 241,100 7,474
Novellus Systems, Inc. ............................... 10,600 418
QLogic Corp. ......................................... 1,800 80
Reynolds & Reynolds Co. - Cl. A ...................... 50,000 1,212
RF Micro Devices, Inc. ............................... 144,000 2,769
Tech Data Corp. ...................................... 39,800 1,723
Tektronix, Inc. ...................................... 288,900 7,448
Teradyne, Inc. ....................................... 19,600 591
Texas Instruments, Inc. .............................. 143,000 4,004
Triquint Semiconductor, Inc. ......................... 5,200 64
Vishay Intertechnology, Inc. ......................... 21,000 410
Xilinx, Inc. * ....................................... 102,700 4,010
--------
111,847
Energy - Alternative Source - 0.5%
El Paso Corp. ........................................ 292,100 13,031
Financial Services - 4.7%
Accenture, Ltd. Cl. A ................................ 93,700 2,522
Citigroup, Inc. ...................................... 1,559,278 78,712
Concord EFS, Inc. .................................... 126,100 4,134
Hartford Financial Services Group, Inc. .............. 433,150 27,215
Wachovia Corp. ....................................... 110,900 3,478
--------
116,061
Food, Beverage & Tobacco - 4.5%
Anheuser-Busch Cos., Inc ............................. 263,500 11,913
Coca-Cola Co. ........................................ 300,000 14,145
ConAgra, Inc. ........................................ 85,800 2,039
Kraft Foods, Inc. .................................... 241,600 8,222
Pepsi Bottling Group, Inc. ........................... 149,900 3,523
PepsiCo, Inc. ........................................ 599,300 29,180
Philip Morris Cos., Inc. ............................. 928,400 42,567
UST, Inc. ............................................ 7,500 262
--------
111,851
Health Care Products - 13.1%
Abbott Laboratories .................................. 359,200 20,025
Allergan, Inc. ....................................... 196,037 14,713
American Home Products Corp. ......................... 708,850 43,495
Andrx Corp. * ........................................ 42,800 3,014
Anthem, Inc. ......................................... 57,800 2,861
Baxter International, Inc. ........................... 92,200 4,945
Eli Lilly & Co. ...................................... 256,100 20,114
Enzon, Inc. .......................................... 63,200 3,557
Invitrogen Corp. ..................................... 38,324 2,373
Johnson & Johnson. ................................... 693,800 41,004
King Pharmaceuticals, Inc. * ......................... 127,983 5,392
Laboratory Corporation of America Holdings ........... 67,000 5,417
McKesson HBOC, Inc. .................................. 58,500 2,188
MedImmune, Inc. * .................................... 82,150 3,808
Medtronic, Inc. ...................................... 136,541 6,992
Merck & Co., Inc. .................................... 175,100 10,296
Pfizer, Inc. ......................................... 1,935,328 77,123
Pharmacia Corp. ...................................... 358,400 15,286
Schering-Plough Corp. ................................ 561,950 20,123
St. Jude Medical, Inc. ............................... 52,700 4,092
Trigon Healthcare, Inc. .............................. 219,100 15,216
UnitedHealth Group, Inc. ............................. 24,900 1,762
Zimmer Holdings, Inc. ................................ 85,200 2,602
--------
326,398
Health Care Services - 1.9%
First Health Group Corp. ............................. 10,100 250
HCA-The Healthcare Corp. ............................. 184,700 7,119
Lincare Holdings, Inc. ............................... 133,100 3,813
Tenet Healthcare Corp. ............................... 529,500 31,092
127
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Health Care Services - Continued
Universal Health Services, Inc. - Cl. B ............... 73,500 $ 3,144
Wellpoint Health Networks, Inc. ....................... 21,400 2,501
--------
47,919
Insurance - 4.7%
AFLAC, Inc. ........................................... 40,000 982
American International Group, Inc. .................... 657,882 52,236
Everest Re Group, Ltd. ................................ 1,000 71
Lincoln National Corp. ................................ 238,800 11,599
Metlife, Inc. ......................................... 479,200 15,181
Protective Life Corp. ................................. 3,600 104
Prudential Financial, Inc. ............................ 46,200 1,533
Radian Group, Inc. .................................... 213,000 9,148
The PMI Group, Inc. ................................... 128,400 8,604
Torchmark, Inc. ....................................... 215,250 8,466
XL Capital, Ltd. - Cl. A .............................. 79,900 7,300
--------
115,224
Leisure & Recreation - 0.1%
Sabre Group Holdings, Inc. ............................ 59,600 2,524
Media - TV / Radio - 3.2%
AOL Time Warner, Inc. * ............................... 768,205 24,659
Clear Channel Communications, Inc. .................... 182,000 9,266
Fox Entertainment Group, Inc. - Cl. A ................. 147,000 3,900
Liberty Media Corp. - Ser. A .......................... 362,600 5,076
The Walt Disney Co. ................................... 491,050 10,175
Viacom, Inc. * ........................................ 563,000 24,856
--------
77,932
Metals & Mining - 0.1%
Precision Castparts Corp. ............................. 57,900 1,636
Natural Gas Distribution - 0.3%
Sempra Energy ......................................... 340,500 8,359
Oil - 0.7%
Baker Hughes, Inc. .................................... 411,300 15,000
EOG Resources, Inc. ................................... 50,700 1,983
--------
16,983
Oil & Natural Gas Exploration & Production - 3.6%
ChevronTexaco Corp. ................................... 189,300 16,963
Exxon Mobil Corp. ..................................... 1,530,312 60,141
Kerr-McGee Corp. ...................................... 27,400 1,502
Rowan Cos., Inc. ...................................... 109,200 2,115
USX-Marathon Group .................................... 285,850 8,576
--------
89,297
Oil - Equipment & Service - 1.1%
Royal Dutch Petroleum Co. - NY Shares ................. 544,900 26,711
Paper & Forest Products - 0.0%
Louisiana-Pacific Corp. ............................... 114,000 962
Personal & Commercial Lending - 0.0%
MBNA Corp. ............................................ 33,200 1,169
Real Estate Investment Trust - 0.1%
Hilton Hotels Corp. ................................... 124,100 1,355
Retail - Department Stores - 7.6%
99 Cents Only Stores .................................. 64,600 2,461
Bed Bath & Beyond, Inc. * ............................. 458,500 15,543
eBay, Inc. ............................................ 37,900 2,536
Family Dollar Stores, Inc. ............................ 9,100 273
Home Depot, Inc. ...................................... 562,306 28,683
J.C. Penney Co., Inc. ................................. 323,100 8,691
Kohl's Corp. .......................................... 273,800 19,286
Lowe's Cos., Inc. ..................................... 709,300 32,919
Office Depot, Inc. .................................... 180,800 3,351
Talbots, Inc. ......................................... 126,200 4,575
Target Corp. .......................................... 344,950 14,160
TJX Cos., Inc. ........................................ 368,000 14,669
Wal-Mart Stores, Inc. ................................. 734,999 42,299
--------
189,446
Retail - Drug Stores - 0.0%
Rite Aid Corp. ........................................ 185,400 938
Retail - Food - 0.1%
Starbucks Corp. * ..................................... 166,600 3,174
Shoe and Apparel Manufacturing - 0.1%
Foot Locker, Inc. ..................................... 174,900 2,737
Steel - 0.1%
AK Steel Corp. ........................................ 178,000 2,026
Telecommunication Equipment - 1.3%
Nokia Oyj - ADR ....................................... 411,000 10,082
PMC-Sierra, Inc. ...................................... 73,400 1,560
Qualcomm, Inc. * ...................................... 385,600 19,473
--------
31,115
Telecommunication Services - 3.1%
AT&T Wireless Group ................................... 210,600 3,027
Broadcom Corp. - Cl. A ................................ 62,350 2,548
EchoStar Communications Corp. - Cl. A * ............... 218,900 6,013
Motorola, Inc. ........................................ 679,300 10,203
Sprint PCS * .......................................... 607,950 14,840
Verizon Communications ................................ 706,850 33,547
WorldCom, Inc. ........................................ 436,200 6,142
--------
76,320
Telephone - 1.5%
SBC Communications, Inc. .............................. 925,850 36,266
Transportation Services - 0.3%
AMR Corp. ............................................. 51,300 1,137
Continental Airlines, Inc. - Cl. B .................... 197,900 5,187
Norfolk Southern Corp. ................................ 62,900 1,152
--------
7,476
128
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
U.S. Government Agencies - 1.5%
Federal Home Loan Mortgage Corp. ........... 5,000 $ 327
Federal National Mortgage Assoc. ........... 473,710 37,660
----------
37,987
Utilities - Electric - 0.6%
Duke Energy Co. ............................ 405,000 15,900
----------
TOTAL COMMON STOCK- 99.0% 2,451,593
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 1.0%
Investment in joint trading account
(Note B)
2.055% due 01/02/02 ...................... $ 25,806 25,806
--------- ----------
TOTAL INVESTMENTS- 100.0% 2,477,399
Cash and Receivables, less payables- 0.0% (1,080)
--------- ----------
NET ASSETS- 100.0% $2,476,319
========= ==========
ADR-American Depository Receipt.
*Non-income producing security.
See notes to financial statements.
129
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 1.4%
Boeing Co. (US) .................................... 263,700 $ 10,226
General Dynamics Corp. (US) ........................ 107,900 8,593
United Technologies Corp. (US) ..................... 267,600 17,295
--------
36,114
Auto & Truck Parts - 0.2%
Lear Corp. (US) .................................... 144,500 5,511
Automobile - 0.9%
Ford Motor Co. (US) ................................ 471,200 7,407
General Motors Corp. (US) .......................... 182,100 8,850
General Motors Corp. - Cl. H (US) .................. 287,700 4,445
Navistar International Corp. - Cl. B
(US) ............................................. 42,700 1,687
--------
22,389
Bank - 3.9%
Bank of America Corp. (US) ......................... 368,100 23,172
Bank of New York Co., Inc. (US) .................... 114,900 4,688
Bank One Corp. (US) ................................ 120,000 4,686
JP Morgan Chase & Co. (US) ......................... 491,700 17,873
TCF Financial Corp. (US) ........................... 104,800 5,028
US Bancorp (US) .................................... 625,200 13,085
Washington Mutual, Inc. (US) ....................... 885,000 28,940
--------
97,472
Business Services - 0.1%
Robert Half International, Inc. (US) ............... 61,000 1,629
Chemical - 1.5%
Air Products & Chemicals, Inc. (US) ................ 219,600 10,301
Dow Chemical Co. (US) .............................. 508,600 17,181
Praxair, Inc. (US) ................................ 198,300 10,956
--------
38,438
Commercial Sevices - 0.1%
Interpublic Group Cos., Inc. (US) .................. 59,200 1,749
Quintiles Transnational Corp. (US) ................. 111,500 1,789
--------
3,538
Computer Equipment - 2.8%
Compaq Computer Corp. (US) ......................... 63,000 615
Dell Computer Corp. (US) ........................... 682,900 18,561
Hewlett-Packard Co. (US) ........................... 24,800 510
Intel Corp. (US) ................................... 1,115,000 35,067
International Business Machines
Corp. (US) ....................................... 101,400 12,265
Veritas Software Corp. (US) ........................ 75,000 3,362
--------
70,380
Computer Software - 0.1%
Reynolds & Reynolds Co. - Cl. A
(US) ............................................. 143,600 3,482
Computer Software & Services - 4.9%
Cadence Design Systems, Inc. (US) .................. 269,300 5,903
CheckFree Corp. (US) ............................... 58,900 1,060
Computer Sciences Corp. (US) ....................... 70,000 3,429
Electronic Data Systems Corp. (US) ................. 113,000 7,746
First Data Corp. (US) .............................. 245,700 19,275
Intuit, Inc. (US) .................................. 183,100 7,833
Macromedia, Inc. (US) .............................. 64,900 1,155
Micromuse, Inc. (US) ............................... 17,100 257
Microsoft Corp. (US) ............................... 738,000 48,892
Network Assoc., Inc. (US) .......................... 272,400 7,042
Oracle Corp. (US) .................................. 757,700 10,464
Peoplesoft, Inc. (US) .............................. 199,300 8,012
SunGard Data Systems, Inc. (US) .................... 44,000 1,273
VeriSign, Inc. (US) ................................ 33,000 1,255
--------
123,596
Computers - 0.2%
CDW Computer Centers, Inc. (US) .................... 107,500 5,774
Construction - 0.9%
Lowe's Cos., Inc. (US) ............................. 497,000 23,066
Consumer Miscellaneous - 1.0%
Avery Dennison Corp. (US) .......................... 106,800 6,038
Black & Decker Corp. (US) .......................... 175,600 6,625
Clorox Co. (US) .................................... 75,700 2,994
Unilever NV - NY Shares (US) ....................... 140,900 8,117
Vivendi Universal - ADR (US) ....................... 15,000 807
--------
24,581
Cosmetic & Personal Care - 0.7%
Avon Products, Inc. (US) ........................... 102,300 4,757
Gillette Co. (US) .................................. 201,700 6,737
Procter & Gamble Co. (US) .......................... 74,508 5,896
--------
17,390
Diversified Operations - 3.5%
Danaher Corp. (US) ................................. 118,500 7,147
General Electric Co. (US) .......................... 1,258,900 50,457
Tyco International, Ltd. (US) ...................... 526,200 30,993
--------
88,597
Electric Power - 1.8%
AES Corp. (US) ..................................... 254,500 4,161
Allegheny Energy, Inc. (US) ........................ 233,400 8,454
Dominion Resources, Inc. (US) ...................... 236,300 14,201
Edison International (US) .......................... 225,200 3,400
Emerson Electric Co. (US) .......................... 59,400 3,392
Mirant Corp. (US) .................................. 85,000 1,362
NiSource, Inc. (US) ................................ 414,400 9,556
--------
44,526
Electronic Products & Services - 3.0%
Agere Systems, Inc. - Cl. A (US) ................... 245,400 1,396
Agilent Technologies, Inc. (US) .................... 33,000 941
Altera Corp. (US) .................................. 60,000 1,273
Analog Devices, Inc. (US) .......................... 101,300 4,497
130
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Electronic Products & Services - Continued
Applera Corporation - Applied
Biosystems Group (US) ........................... 98,000 $ 3,849
Applied Materials, Inc. (US) ...................... 199,476 7,999
Applied Micro Circuits Corp. (US) ................. 110,000 1,245
Cisco Systems, Inc. (US) .......................... 1,556,100 28,181
KLA-Tencor Corp. (US) ............................. 63,000 3,122
Linear Technology Corp. (US) ...................... 173,800 6,785
MIPS Technologies, Inc. - Cl. B (US) .............. 32,300 258
Philips Electronics NV (US) ....................... 123,100 3,583
Tech Data Corp. (US) .............................. 65,000 2,813
Teradyne, Inc. (US) ............................... 58,600 1,766
Texas Instruments, Inc. (US) ...................... 38,000 1,064
Xilinx, Inc. (US) ................................. 164,600 6,428
--------
75,200
Energy - Alternative Source - 0.4%
El Paso Corp. (US) ................................ 222,900 9,944
Engineering & Construction - 0.2%
Fluor Corp. (US) .................................. 109,300 4,088
Financial Services - 3.1%
AmeriCredit Corp. (US) ............................ 68,400 2,158
Citigroup, Inc. (US) .............................. 951,500 48,032
Cincinnati Financial Corp. (US) ................... 94,000 3,586
Concord EFS, Inc. (US) ............................ 130,400 4,275
Hartford Financial Services Group,
Inc. (US) ....................................... 256,900 16,141
Household International, Inc. (US) ................ 75,000 4,345
Principal Financial Group (US) .................... 23,300 559
--------
79,096
Food, Beverage & Tobacco - 3.1%
Anheuser-Busch Cos., Inc. (US) .................... 224,900 10,168
Archer Daniels Midland Co. (US) ................... 344,295 4,941
Campbell Soup Co. (US) ............................ 159,300 4,758
Coca-Cola Co. (US) ................................ 145,700 6,870
General Mills, Inc. (US) .......................... 112,100 5,830
Kellogg Co. (US) .................................. 178,700 5,379
Kraft Foods, Inc. - CL. A (US) .................... 113,400 3,859
PepsiCo, Inc. (US) ................................ 284,384 13,847
Philip Morris Cos., Inc. (US) .................... 491,500 22,535
--------
78,187
Health Care Products - 9.1%
Abbott Laboratories (US) .......................... 296,600 16,535
Allergan, Inc. (US) ............................... 132,200 9,922
American Home Products Corp. (US) ................. 362,100 22,218
AstraZeneca Group PLC - ADR (US) .................. 244,300 11,384
Baxter International, Inc. (US) ................... 156,500 8,393
Becton, Dickinson & Co. (US) ...................... 42,400 1,406
Bristol-Myers Squibb Co. (US) ..................... 76,400 3,896
Genetech, Inc. (US) ............................... 29,200 1,584
Guidant Corp. (US) ................................ 144,400 7,191
Johnson & Johnson (US) ............................ 378,300 22,358
King Pharmaceuticals, Inc. (US) ................... 80,000 3,370
Laboratory Corporation of America
Holdings (US) ................................... 72,600 5,870
Medtronic, Inc. (US) .............................. 296,300 15,174
Merck & Co., Inc. (US) ............................ 90,000 5,292
Pfizer, Inc. (US) ................................. 1,660,400 66,167
Pharmacia Corp. (US) .............................. 280,300 11,955
Schering-Plough Corp. (US) ........................ 88,700 3,176
Trigon Healthcare, Inc. (US) ...................... 122,400 8,501
UnitedHealth Group, Inc. (US) ..................... 89,600 6,341
--------
230,733
Health Care Services - 1.6%
Forest Laboratories, Inc. (US) .................... 121,800 9,982
HCA-The Healthcare Corp. (US) ..................... 212,800 8,201
Tenet Healthcare Corp. (US) ....................... 251,000 14,739
Universal Health Services, Inc. - Cl. B
(US) ............................................ 157,000 6,716
--------
39,638
Insurance - 2.5%
Ace, Ltd. (US) .................................... 25,400 1,020
American International Group, Inc.
(US) ............................................ 396,800 31,506
Lincoln National Corp. (US) ....................... 173,800 8,441
Metlife, Inc. (US) ................................ 105,000 3,326
The PMI Group, Inc. (US) .......................... 35,000 2,345
Torchmark, Inc. (US) .............................. 139,400 5,483
XL Capital, Ltd. - Cl. A (US) ..................... 123,300 11,265
--------
63,386
Leisure & Recreation - 0.3%
Carnival Corp. (US) ............................... 73,100 2,052
Sabre Group Holdings, Inc. (US) ................... 113,900 4,824
--------
6,876
Media - Publishing - 0.0%
Knight-Ridder, Inc. (US) .......................... 9,600 623
Media - TV / Radio - 2.9%
AOL Time Warner, Inc. (US) ........................ 525,950 16,883
Cablevision Systems Corp. (US) .................... 118,950 2,938
Cablevision Systems Corp. - Cl. A
(US) ............................................ 142,400 6,757
Charter Communications, Inc. - Cl. A
(US) ............................................ 90,700 1,490
Clear Channel Communications, Inc.
(US) ............................................ 77,600 3,951
Fox Entertainment Group, Inc. - Cl. A
(US) ............................................ 55,000 1,459
Liberty Media Corp. - Ser. A (US) ................. 735,300 10,294
The Walt Disney Co. (US) .......................... 349,300 7,238
USA Networks, Inc. (US) ........................... 191,600 5,233
Viacom, Inc. - Cl. B (US) ......................... 357,700 15,792
--------
72,035
131
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Metals & Mining - 0.2%
Alcan Aluminum, Ltd. (US) ....................... 110,300 $ 3,963
Alcoa, Inc. (US) ................................ 69,200 2,460
----------
6,423
Natural Gas Distribution - 0.6%
Sempra Energy (US) .............................. 240,700 5,909
Williams Cos., Inc. (US) ........................ 324,700 8,286
----------
14,195
Oil - 0.5%
Baker Hughes, Inc. (US) ......................... 326,100 11,893
Oil & Natural Gas Exploration & Production - 2.7%
ChevronTexaco Corp. (US) ........................ 79,100 7,088
Conoco, Inc. COM (US) ........................... 151,032 4,274
Exxon Mobil Corp. (US) .......................... 1,072,200 42,138
Kinder Morgan Management LLC
(US) .......................................... 68,996 2,615
NRG Energy, Inc. (US) ........................... 104,000 1,612
Shell Transport & Trading Co. (US) .............. 100,600 4,170
Unocal Corp. (US) ............................... 90,500 3,264
USX-Marathon Group (US) ......................... 122,500 3,675
----------
68,836
Oil - Equipment & Service - 0.8%
BJ Services Co. (US) ............................ 47,800 1,551
Royal Dutch Petroleum Co. - NY
Shares (US) ................................... 343,500 16,838
Weatherford International, Inc. (US) ............ 52,300 1,949
----------
20,338
Paper & Forest Products - 0.2%
Kimberly-Clark Corp. (US) ....................... 78,800 4,712
Personal & Commercial Lending - 0.9%
USA Education, Inc. (US) ........................ 285,100 23,954
Real Estate Investment Trust - 0.1%
Equity Office Properties Trust (US) ............. 60,000 1,805
Retail - Department Stores - 3.2%
Amazon.com, Inc. (US) ........................... 240,000 2,597
Bed Bath & Beyond, Inc. (US) .................... 199,600 6,766
Costco Wholesale Corp. (US) ..................... 115,200 5,113
Dollar General Corp. (US) ....................... 126,100 1,879
J.C. Penney Co., Inc. (US) ...................... 135,000 3,632
Kohl's Corp. (US) ............................... 211,200 14,877
Target Corp. (US) ............................... 262,100 10,759
TJX Cos., Inc. (US) ............................. 141,300 5,632
Wal-Mart Stores, Inc. (US) ...................... 498,600 28,694
----------
79,949
Retail - Food - 0.1%
McDonald's Corp. (US) ........................... 93,900 2,486
Retailers - Specialty - 0.9%
Home Depot, Inc. (US) ........................... 448,800 22,893
Telecommunication Equipment - 0.9%
Corning, Inc. (US) .............................. 115,000 1,026
JDS Uniphase Corp. (US) ......................... 69,000 599
Nokia Oyj - ADR (US) ............................ 532,100 13,052
Qualcomm, Inc. (US) ............................. 143,700 7,257
----------
21,934
Telecommunication Services - 2.6%
A T&T Wireless Group COM (US) ................... 519,200 7,461
Broadcom Corp. - Cl. A (US) ..................... 40,000 1,635
Cox Communications, Inc. - Cl. A
(US) .......................................... 44,000 1,844
Motorola, Inc. (US) ............................ 572,300 8,596
Sprint PCS (US) ................................. 495,400 12,093
Verizon Communications (US) ..................... 546,600 25,941
WorldCom, Inc. (US) ............................. 590,900 8,320
----------
65,890
Telephone - 0.9%
AT&T Corp. (US) ................................. 147,200 2,670
SBC Communications, Inc. (US) ................... 530,300 20,772
----------
23,442
Transportation Services - 0.3%
Continental Airlines, Inc. - Cl. B (US) ......... 132,400 3,470
Union Pacific Corp. (US) ........................ 76,032 4,334
----------
7,804
U.S. Government Agencies - 1.0%
Federal National Mortgage Assoc.
(US) .......................................... 330,800 26,299
Utilities - Electric - 0.4%
Duke Energy Co. (US) ............................ 250,600 9,839
----------
TOTAL COMMON STOCK- 66.5% 1,678,981
Par
Value
(000's)
PUBLICLY-TRADED BONDS
Aerospace & Defense - 0.2%
Lockheed Martin Corp. - Bonds (US)
8.5% due 12/01/29 ............................... $ 2,958 3,531
Raytheon Co. - Notes (US)
8.3% due 03/01/10 ............................... 133 148
----------
3,679
Automobile - 0.4%
Ford Motor Co. - Bonds (US)
6.625% due 10/01/28 ............................. 13,084 10,853
7.45% due 07/16/31 .............................. 30 27
----------
10,880
Bank - 1.0%
Bank of America Corp. (US)
7.4% due 01/15/11 ............................... 2,098 2,249
132
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Bank - Continued
Capital One Bank - Sr. Notes (US)
6.875% due 02/01/06 .................................... $ 450 $ 439
Credit Suisse First Boston - Ser. 2001
Cl. A4 (US)
5.435% due 09/15/34 .................................... 7,000 6,624
Credit Suisse First Boston, Inc. (US)
7.29% due 09/15/41 ..................................... 8,062 8,624
J.P. Morgan & Co., Inc. - Sr. Notes
(US)
5.75% due 02/25/04 ..................................... 1,000 1,039
Korea Development Bank - Notes
(US)
7.125% due 04/22/04 .................................... 4,773 5,048
-------
24,023
Brokerage & Investment Management - 0.7%
Bear Stearns Commercial Mortgage
Securities, Inc. - Cl. A1 (US)
6.08% due 02/15/35 ..................................... 3,926 3,993
Gemstone Investor, Ltd. - Sr. Secd.
Notes 144A (a) (US)
7.71% due 10/31/04 ..................................... 525 511
Lehman Brothers Holdings, Inc. -
Notes (US)
6.625% due 04/01/04 .................................... 4,060 4,286
7.75% due 01/15/05 ..................................... 4,000 4,289
Morgan Stanley Group, Inc. (US)
6.75% due 04/15/11 ..................................... 4,880 4,993
Residential Funding and Mortgage
Securities Trust II - Ser. 2001 Cl.
A4 (US)
6.43% due 04/25/16 ..................................... 250 255
-------
18,327
Commercial Services - 0.0%
Hertz Corp. (US)
7.625% due 08/15/07 .................................... 100 102
Computer Equipment - 0.1%
International Business Machines
Corp. - Notes (US)
5.625% due 04/12/04 .................................... 2,900 3,014
Electric Power - 0.0%
First Energy Corp. - Notes Ser. B
(US)
6.45% due 11/15/11 ..................................... 500 488
Financial Services - 3.2%
AIG Sunamerica Global Finance Co. -
Sr. Notes 144A (a) (US)
5.85% due 08/01/08 ..................................... 250 252
Associates Corp. of North America -
Sr. Notes (US)
6.25% due 11/01/08 ..................................... 750 766
Bowater Canada Finance Corp. -
Notes 144A (a) (US)
7.95% due 11/15/11 ..................................... 500 513
Capital One Financial Corp. - Notes
(US)
7.25% due 12/01/03 ..................................... 250 256
Chase Commercial Mortgage
Securities Corp. - Ser. 1997-1 Cl.
A2 (US)
7.37% due 02/19/07 ..................................... 10,722 11,492
Chase Commercial Mortgage
Securities Corp. - Cl. C (US)
7.928% due 07/15/32 .................................... 1,000 1,080
Chase Funding Loan Acquisition
Trust 2001 - Cl. 1A 3 (US)
4.541% due 02/25/23 .................................... 4,000 3,957
CIT Group, Inc. - Notes (US)
6.5% due 02/07/06 ...................................... 4,630 4,759
Credit Suisse First Boston Mortgage
Securities Corp. - Ser. 2001 Pass
Thru Certs. Cl. A1 (US)
3.801% due 09/15/34 .................................... 5,901 5,823
Credit Suisse First Boston Mortgage
Securities Corp. (US)
7.545% due 04/14/62 .................................... 4,533 4,910
Credit Suisse First Boston Mortgage
Securities, Corp. - Ser. 2001 Cl. A2
(US)
5.935% due 01/15/06 .................................... 1,750 1,793
Goldman Sachs Group, Inc. (US)
6.875% due 01/15/11 .................................... 3,405 3,487
Greater Connecticut Consumer Loan
Trust - Notes Cl. A 144A (a) (US)
6.25% due 02/15/20 ..................................... 750 767
Green Tree Financial Corp. - Ser.
1997-6 Cl. A7 (US)
7.14% due 01/15/29 ..................................... 500 528
Green Tree Financial Corp. - Ser.
1996-8 Cl. A6 (US)
7.6% due 10/15/27 ...................................... 7,249 7,640
LB-UBS Commercial Mortgage Trust -
Ser. 2000-C4 Cl. A2 (US)
7.37% due 08/15/26 ..................................... 8,318 8,944
Mortgage Capital Funding, Inc. - Ser.
1996 - MC2 Cl. A1 (US)
6.758% due 02/20/04 .................................... 6,496 6,756
PNC Funding Corp. - Sub. Notes
(US)
7.5% due 11/01/09 ...................................... 4,094 4,392
Qwest Capital Funding - Notes (US)
7.25% due 02/15/11 ..................................... 1,840 1,793
7.75% due 02/15/31 ..................................... 4,900 4,701
133
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Financial Services - Continued
Qwest Capital Funding - Notes (US)
7.9% due 08/15/10 .................................. $ 170 $ 173
Qwest Capital Funding, Inc. - Notes
144A (a) (US)
7.0% due 08/03/09 .................................. 3,746 3,639
Qwest Capital Funding, Inc. - Notes
(US)
7.625% due 08/03/21 ................................ 250 238
7.75% due 08/15/06 ................................. 375 386
Salomon, Inc. - Sr. Notes (US)
7.2% due 02/01/04 .................................. 2,300 2,459
-------
81,504
Food, Beverage & Tobacco - 0.2%
Conagra Foods, Inc. - Notes (US)
7.875% due 09/15/10 ................................ 250 273
Kellogg Co. - Notes Ser. B (US)
6.6% due 04/01/11 .................................. 200 206
Kraft Foods, Inc. - Notes (US)
5.625% due 11/01/11 ................................ 275 267
Nabisco, Inc. - Debs. (US)
7.55% due 06/15/15 ................................. 570 621
Philip Morris Cos., Inc. - Debs. (US)
8.25% due 10/15/03 ................................. 3,055 3,284
-------
4,651
Foreign Governmental - 0.4%
Province of Ontario (US)
7.75% due 06/04/02 ................................. 2,000 2,047
Province of Quebec - Debs (US)
7.5% due 09/15/29 .................................. 3,530 3,935
Quebec Province Canada (US)
5.5% due 04/11/06 .................................. 4,790 4,876
United Mexican States - Notes (US)
8.625% due 03/12/08 ................................ 120 129
-------
10,987
Health Care Services - 0.4%
Columbia/HCA Healthcare Corp.
(US)
6.91% due 06/15/05 ................................. 4,030 4,083
HCA-The Healthcare Co. - Sr. Notes
(US)
7.875% due 02/01/11 ................................ 6,850 7,055
Humana, Inc. - Sr. Notes (US)
7.25% due 08/01/06 ................................. 80 81
-------
11,219
Insurance - 0.1%
Aetna, Inc. - Sr. Notes (US)
7.375% due 03/01/06 ................................ 600 602
Provident Companies, Inc. - Sr. Notes
(US)
7.0% due 07/15/18 .................................. 500 460
Prudential Insurance Co. - Sr. Notes
144A (a) (US)
6.375% due 07/23/06 ................................ 100 103
------
1,165
Leisure & Recreation - 0.0%
HarrahsOperating , Inc. - Sr. Notes
(US)
7.125% due 06/01/07 ................................ 200 202
Royal Caribbean Cruises, Ltd. - Sr.
Notes (US)
7.0% due 10/15/07 .................................. 200 162
Six Flags, Inc. - Sr. Notes (US)
9.5% due 02/01/09 .................................. 500 506
-------
870
Media - TV / Radio - 1.1%
Adelphia Communications Corp.
(US)
10.25% due 06/15/11 ................................ 225 224
Belo Corp. - Sr. Notes (US)
7.125% due 06/01/07 ................................ 566 563
Belo Corp. - Debs. (US)
7.25% due 09/15/27 ................................. 750 605
Belo Corp. - Sr. Debs. (US)
7.75% due 06/01/27 ................................. 20 17
CBS Corp. - Sr. Notes (US)
7.15% due 05/20/05 ................................. 3,525 3,769
Chancellor Media Corp. (US)
8.0% due 11/01/08 .................................. 750 784
Charter Communications Holdings
LLC - Sr. Notes (US)
10.0% due 05/15/11 ................................. 1,000 1,015
10.75% due 10/01/09 ................................ 200 211
Clear Channel Communications, Inc.
(US)
7.65% due 09/15/10 ................................. 250 258
Clear Channel Communications, Inc.
- Sr. Notes (US)
7.875% due 06/15/05 ................................ 140 148
Comcast Cable Communications
(US)
6.75% due 01/30/11 ................................. 500 502
Comcast Cable Communications - Sr.
Notes (US)
7.125% due 06/15/13 ................................ 120 123
Cox Radio, Inc. - Sr. Notes (US)
6.625% due 02/15/06 ................................ 750 761
Fox Sports Networks LLC - Sr. Disc.
Notes (US)
0.0% due 08/15/07 .................................. 750 750
Fox/Liberty Networks LLC - Sr.
Notes (US)
8.875% due 08/15/07 ................................ 950 1,002
134
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Media - TV / Radio - Continued
Liberty Media Corp. - Bonds (US)
7.875% due 07/15/09 ................................ $ 1,000 $ 1,024
News America, Inc. - Debs. (US)
7.125% due 04/08/28 ................................ 3,503 3,196
Time Warner, Inc. (US)
6.625% due 05/15/29 ................................ 3,599 3,365
Time Warner, Inc. - Debs (US)
7.25% due 10/15/17 ................................. 185 189
7.57% due 02/01/24 ................................. 500 521
Time Warner, Inc. - Notes (US)
8.18% due 08/15/07 ................................. 2,075 2,294
Univision Communications, Inc. - Sr.
Notes (US)
7.85% due 07/15/11 ................................. 1,000 1,035
Viacom, Inc. (US)
7.7% due 07/30/10 .................................. 4,800 5,209
Young Broadcasting, Inc. (US)
8.75% due 06/15/07 ................................. 125 113
--------
27,678
Natural Gas Distribution - 0.1%
Florida Gas Transmission Co. (US)
7.625% due 12/01/10 ................................ 750 712
Williams Cos, Inc. - Notes 144A (a)
(US)
3.145% due 07/31/02 ................................ 220 220
Williams Cos, Inc. - Notes (US)
7.125% due 09/01/11 ................................ 200 197
--------
1,129
Oil & Natural Gas Exploration & Production - 0.3%
Coastal Corp. (US)
7.75% due 06/15/10 ................................. 500 509
Conoco Funding Co. - Notes (US)
5.45% due 10/15/06 ................................. 4,460 4,462
6.35% due 10/15/11 ................................. 1,940 1,957
--------
6,928
Oil - Equipment & Service - 0.2%
Consolidated Natural Gas Co. - Sr.
Notes Ser. C (US)
6.25% due 11/01/11 ................................. 3,940 3,856
EL Paso Energy Corp. (US)
7.8% due 08/01/31 .................................. 150 151
--------
4,007
Paper & Forest Products - 0.0%
Georgia Pacific Corp. - Bonds (US)
8.125% due 05/15/11 ................................ 70 69
International Paper Co. - Notes (US)
Structured Assets Securities Corp.
(US) ............................................. 120 121
--------
190
Personal & Commercial Lending - 3.4%
Citibank Credit Card Issuance Trust -
Ser. 2000 Cl. C1 (US)
7.45% due 09/15/07 ................................. 250 265
Credit Based Asset Servicing - Ser.
2000-CB4 Cl. M1 (US)
7.565% due 11/25/31 ................................ 11,531 11,987
CS First Boston Mortgage Securities
Corp. (US)
6.91% due 01/15/08 ................................. 5,532 5,833
EQCC Home Equity Loan Trust (US)
6.223% due 06/25/11 -
Ford Motor Credit Co. - Notes (US)
6.875% due 02/01/06 ................................ 10,180 10,195
Ford Motor Credit Co. (US)
7.25% due 10/25/11 ................................. 90 87
Ford Motor Credit Co. - Bonds (US)
7.375% due 02/01/11 ................................ 30 29
Ford Motor Credit Co. (US)
7.875% due 06/15/10 ................................ 500 507
General Motors Acceptance Corp. -
Notes (US)
6.125% due 09/15/06 ................................ 130 129
6.875% due 09/15/11 ................................ 7,500 7,347
General Motors Acceptance Corp.
(US)
7.5% due 07/15/05 .................................. 6,658 6,999
General Motors Acceptance Corp. -
Notes (US)
8.0% due 11/01/31 .................................. 12,358 12,578
Household Finance Corp. - Notes
(US)
6.0% due 05/01/04 .................................. 500 520
Household Financial Corp. - Notes
(US)
6.375% due 10/15/11 ................................ 6,115 5,916
Household Financial Corp. (US)
6.5% due 01/24/06 .................................. 5,825 5,970
Household Financial Corp. - Notes
(US)
8.0% due 05/09/05 .................................. 250 268
LB Commercial Conduit Mortgage
Trust (US)
5.87% due 10/15/35 ................................. 4,956 5,105
NiSource Finance Corp. (US)
7.875% due 11/15/10 ................................ 625 647
Regional Diversified Funding , Ltd.
(US)
9.25% due 03/15/30 ................................. 1,000 1,023
Residential Asset Mortgage Products,
Inc. - Cl. A2 (US)
5.01% due 01/25/23 ................................. 7,498 7,571
Residential Asset Securities Corp.
(US)
7.18% due 01/25/25 ................................. 2,000 2,058
135
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Personal & Commercial Lending - Continued
Sears Credit Account Master Trust -
Ser. 1998-2 Cl. A (US)
5.25% due 10/16/08 ................................... $ 1,000 $ 1,031
Structured Assets Securities Corp.
(US)
8.538% due 07/15/27 .................................. 408 448
--------
86,513
Pollution Control - 0.0%
Waste Management, Inc. - Sr. Notes
(US)
7.375% due 08/01/10 .................................. 310 319
Real Estate Development - 0.0%
EOP Operating LP (US)
7.75% due 11/15/07 ................................... 200 212
Retail - Department Stores - 0.6%
Dillard Department Stores, Inc. -
Notes (US)
6.625% due 01/15/18 .................................. 400 306
Federated Department Stores (US)
6.625% due 04/01/11 .................................. 375 369
Federated Department Stores, Inc. -
Sr. Notes (US)
6.625% due 09/01/08 .................................. 170 170
Gap, Inc. - Notes 144A (a) (US)
8.8% due 12/15/08 .................................... 460 403
Target Corp. (US)
6.35% due 01/15/11 ................................... 6,640 6,813
Toys "R" Us, Inc. - Notes 144A (a)
(US)
7.625% due 08/01/11 .................................. 400 386
Wal Mart Stores, Inc. - Sr. Unsecd.
Notes (US)
4.375% due 08/01/03 .................................. 3,150 3,205
Wal Mart Stores, Inc. (US)
7.55% due 02/15/30 ................................... 3,405 3,908
--------
15,560
Retail - Food - 0.2%
The Kroger Co. (US)
6.8% due 04/01/11 .................................... 3,175 3,257
The Kroger Co. - Notes (US)
7.5% due 04/01/31 .................................... 185 194
--------
3,451
Retailers - Food & Drug - 0.0%
Delhaize America, Inc. - Debs. (US)
9.0% due 04/15/31 .................................... 100 120
Shoe & Apparel Manufacturing - 0.0%
V.F. Corp. - Notes (US)
8.1% due 10/01/05 .................................... 110 119
Telecommunication Equipment - 0.0%
American Tower Corp. - Sr. Notes(US)
9.375% due 02/01/09 .................................. 900 722
Nortel Networks, Ltd. - Notes (US)
6.125% due 02/15/06 .................................. 125 102
Spectrasite Holdings, Inc. - Sr. Notes
Ser. B (US)
10.75% due 03/15/10 .................................. 500 250
-------
1,074
Telecommunication Services - 0.5%
Centennial Cellular Operating Co. -
Sr. Sub. Notes (US)
10.75% due 12/15/08 .................................. 225 196
Cingular Wireless LLC - Sr. Notes
144A (a) (US)
7.125% due 12/15/31 .................................. 250 255
Crown Castle International Corp. - Sr.
Notes (US)
10.75% due 08/01/11 .................................. 875 853
France Telecom - Notes 144A (a)
(US)
7.75% due 03/01/11 ................................... 400 428
France Telecom SA - Notes 144A (a)
(US)
8.5% due 03/01/31 .................................... 250 285
PCCW-HKTC Cap, Ltd. - Notes (US)
7.75% due 11/15/11 ................................... 40 40
Tellus Corp. NT (US)
7.5% due 06/01/07 .................................... 450 474
8.0% due 06/01/11 .................................... 400 424
Verizon Global Funding Corp. - Notes
(US)
6.75% due 12/01/05 ................................... 5,050 5,325
Worldcom, Inc. - Notes (US)
7.5% due 05/15/11 .................................... 2,015 2,073
8.25% due 05/15/31 ................................... 3,000 3,171
-------
13,524
Telephone - 0.6%
AT&T Corp. - Notes (US)
5.625% due 03/15/04 .................................. 2,000 2,026
AT&T Corp. - Sr. Notes 144A (a)
(US)
8.0% due 11/15/31 .................................... 2,691 2,816
Bellsouth Corp. - Notes (US)
5.0% due 10/15/06 .................................... 3,000 2,978
6.875% due 10/15/31 .................................. 2,210 2,272
CenturyTel, Inc. - Sr. Notes Ser. H
(US)
8.375% due 10/15/10 .................................. 810 856
Sprint Capital Corp. (US)
5.7% due 11/15/03 .................................... 4,500 4,585
-------
15,533
136
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Transportation Services - 0.3%
American Airlines Pass Thru Certs -
Cl. A2 144A (US)
6.817% due 05/23/11 ................................. $ 40 $ 38
American Airlines, Inc. Pass Thru
Certs - Cl. B 144A (a) (US)
8.608% due 04/01/11 ................................. 100 102
Delta Air Lines, Inc. - Ser. 2001-1 Cl.
A2 (US)
7.11% due 03/18/13 .................................. 85 82
International Shipholding Corp. - Sr.
Notes Ser. B (US)
7.75% due 10/15/07 .................................. 625 544
Popular North America, Inc. (US)
6.125% due 10/15/06 ................................. 6,596 6,487
U.S. Airways - Ser. 2000 (US)
7.89% due 03/01/19 .................................. 496 503
-------
7,756
U.S. Government Agencies - 14.2%
Federal Home Loan Bank - Disc.
Note (US)
5.25% due 02/13/04 .................................. 2,000 2,072
Federal Home Loan Corp. (US)
6.0% due 08/01/16 ................................... 1,442 1,448
Federal Home Loan Mortgage Assoc.
Debs. (US)
4.5% due 06/15/03 ................................... 244 250
Federal Home Loan Mortgage Corp.
(US)
5.125% due 10/15/08 ................................. 170 168
Federal Home Loan Mortgage Corp. -
Sr. Notes (US)
5.8% due 09/02/08 ................................... 1,000 1,023
Federal National Mortgage Assoc.
(US)
3.426% due 09/25/26 ................................. 2,350 2,315
4.375% due 10/15/06 ................................. 10,120 9,913
4.625% due 05/15/03 ................................. 3,000 3,080
4.75% due 03/15/04 .................................. 8,000 8,207
6.0% due 12/15/05 ................................... 344 362
6.0% due 05/15/08 ................................... 1,000 1,039
6.0% due 07/01/16 ................................... 1,200 1,203
6.0% due 08/01/16 ................................... 1,449 1,453
6.0% due 01/15/31 ................................... 33,787 33,037
6.5% due 08/01/13 ................................... 1,445 1,480
6.5% due 01/15/16 ................................... 23,244 23,694
6.5% due 01/15/31 ................................... 65,843 65,843
6.5% due 05/01/31 ................................... 4,147 4,147
6.5% due 06/01/31 ................................... 3,567 3,567
6.5% due 09/01/31 ................................... 1,480 1,480
6.625% due 11/15/10 ................................. 11,199 11,902
7.0% due 07/15/05 ................................... 2,670 2,894
7.0% due 09/01/16 ................................... 875 905
7.0% due 11/01/30 ................................... 3,256 3,317
7.0% due 09/01/31 ................................... 1,000 1,019
7.0% due 12/01/31 ................................... 2,500 2,547
Federal National Mortgage Assoc. -
Ser. 2001-50 Cl. BA (US)
7.0% due 10/25/41 ................................... 295 292
Federal National Mortgage Assoc.
(US)
7.0% due 01/15/31 ................................... 51,288 52,250
7.125% due 01/15/30 ................................. 128 142
7.25% due 05/15/30 .................................. 7,200 8,111
7.5% due 01/15/16 ................................... 14,461 15,139
7.5% due 11/01/30 ................................... 2,828 2,918
7.5% due 01/15/31 ................................... 43,730 45,124
7.5% due 07/01/31 ................................... 1,495 1,543
8.0% due 12/01/29 ................................... 988 1,035
8.0% due 01/15/31 ................................... 24,054 25,212
Government National Mortgage
Assoc. (US)
6.0% due 10/15/28 ................................... 3,570 3,505
7.5% due 10/15/30 ................................... 1,875 1,939
7.5% due 01/15/31 ................................... 10,892 11,266
8.0% due 11/15/30 ................................... 1,466 1,534
--------
358,375
U.S. Governmental - 3.6%
U.S. Treasury - Bonds (US)
5.25% due 02/15/29 .................................. 6,354 5,949
5.375% due 02/15/31 ................................. 4,008 3,950
6.25% due 05/15/30 .................................. 440 476
6.625% due 02/15/27 ................................. 203 226
6.75% due 08/15/26 .................................. 9,825 11,076
8.0% due 11/15/21 ................................... 227 287
8.875% due 08/15/17 ................................. 10,390 13,803
U.S. Treasury - Notes (US)
2.75% due 10/31/03 .................................. 12,230 12,203
3.5% due 11/15/06 ................................... 5,355 5,161
4.625% due 05/15/06 ................................. 1,500 1,520
5.0% due 02/15/11 ................................... 185 184
5.0% due 08/15/11 ................................... 13,116 13,075
5.25% due 05/15/04 .................................. 2,670 2,784
5.625% due 02/15/06 ................................. 1,755 1,849
5.625% due 05/15/08 ................................. 1,550 1,624
5.75% due 08/15/10 .................................. 3,300 3,462
5.875% due 02/15/04 ................................. 61 64
6.125% due 08/15/07 ................................. 193 208
6.25% due 02/15/03 .................................. 6,840 7,142
6.25% due 02/15/07 .................................. 4,333 4,678
6.75% due 05/15/05 .................................. 214 233
United Mexican States - Notes (US)
9.875% due 02/01/10 ................................. 125 139
--------
90,093
137
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Utilities - Electric - 0.0%
Progress Energy, Inc. - Sr. Notes (US)
5.85% due 10/30/08 ............................. $ 80 $ 78
Progress Energy, Inc. - Sr. Notes (US)
7.1% due 03/01/11 .............................. 500 520
-------------
598
Utilities - Gas - 0.0%
Edison Mission Energy - Sr. Notes (US)
9.875% due 04/15/11 ............................ 100 103
Peco Energy Co. - 144A (a) (US)
5.95% due 11/01/11 ............................. 50 48
-------------
151
-------------
TOTAL PUBLICLY-TRADED
BONDS- 31.8% 804,239
SHORT-TERM INVESTMENTS - 12.4%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ............................ 314,056 314,056
------- -------------
TOTAL INVESTMENTS- 110.7% 2,797,276
Cash and Receivables, less payables- (10.7)% (270,573)
------- -------------
NET ASSETS- 100.0% $ 2,526,703
======= =============
ADR-American Depository Receipts.
(a) Pursuant to Rule 144A under the Securities Act of 1993, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2001, securities aggregated
$10,766 or .43% of net assets of the Portfolio.
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY COUNTRY
(UNAUDITED)
% of
Market Long-Term
Country Value Invest-
Abbreviation (000s) ments
United States .......... US $ 2,483,220 100.0%
=========== =====
138
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS
Automobile - 3.9%
Ford Credit Auto Owner Trust
7.13% due 07/15/04 ................................... $ 2,500 $ 2,567
Premier Auto Trust
5.82% due 10/08/03 ................................... 3,169 3,228
--------
5,795
Bank - 6.6%
Bank of America Corp. - Notes
4.75% due 10/15/06 ................................... 1,400 1,371
First National Bank Boston - Sub. Notes
7.375% due 09/15/06 .................................. 1,900 2,039
First Union Corp. - Notes
6.95% due 11/01/04 ................................... 500 535
First Union Corp. - Notes
7.55% due 08/18/05 ................................... 2,500 2,706
J.P. Morgan & Co., Inc. - Sr. Notes
5.75% due 02/25/04 ................................... 1,000 1,039
Wells Fargo Co. - Notes
6.625% due 07/15/04 .................................. 2,000 2,122
--------
9,812
Brokerage & Investment Management - 4.2%
Donaldson, Lufkin & Jenrette, Inc. - Sr.
Notes
5.875% due 04/01/02 .................................. 1,900 1,916
Lehman Brothers Holdings, Inc. - Notes
6.625% due 04/01/04 .................................. 470 496
6.625% due 02/05/06 .................................. 600 628
Morgan Stanley Group, Inc.
6.1% due 04/15/06 .................................... 800 825
Residential Funding and Mortgage
Securities Trust II
5.64% due 07/25/14 ................................... 400 408
Residential Funding and Mortgage
Securities Trust II Cl. A2
5.37% due 02/25/15 ................................... 2,000 2,034
--------
6,307
Building Materials - 1.0%
Residential Asset Securities Corp. Ser.
1998 Cl. AI5
6.4% due 12/25/23 .................................... 1,500 1,531
Computer Equipment - 0.3%
International Business Machines Corp. -
Notes
5.625% due 04/12/04 .................................. 500 520
Electric Power - 0.3%
Niagara Mohawk Power Corp. - Sr. Notes
7.25% due 10/01/02 ................................... 499 509
Financial Services - 16.7%
Advanta Mortgage Loan Trust - Ser. 1996-
1 CTF Cl. A7
7.07% due 03/25/27 ................................... 2,500 2,578
Associates Corp. of North America - Sr.
Notes
5.75% due 11/01/03 ................................... 1,450 1,511
Chase Credit Card Master Trust - Cl. A
1998-3
6.0% due 08/15/05 .................................... 1,075 1,114
Chase Funding 2001 - CTF Cl. IA3
5.053% due 02/25/23 .................................. 2,000 1,996
Chase Funding Loan Acquisition Trust
2001 - AD1 Cl. 1A3
4.541% due 02/25/23 .................................. 2,500 2,473
Chase Funding Loan Acquisition Trust
2001- FF1 CTF A2
2.165% due 04/25/31 .................................. 1,934 1,924
CIT Group, Inc. - Sr. Notes
7.5% due 11/14/03 .................................... 1,000 1,063
CIT Group, Inc.
5.625% due 05/17/04 .................................. 1,000 1,030
Citigroup, Inc. - Notes
6.75% due 12/01/05 ................................... 2,000 2,126
Countrywide Asset-Backed Certificates,
Inc. Ser. 2000 -1 AF2
7.74% due 08/25/17 ................................... 1,475 1,486
Credit Suisse First Boston Mortgage
Securities Corp. 2001 Pass thru Certs.
Cl. A1
3.801% due 06/15/06 .................................. 1,967 1,941
General Electric Capital Corp.
7.5% due 05/15/05 .................................... 3,150 3,447
Green Tree Financial Corp. - Ser. 1996-8
Cl. A6
7.6% due 10/15/27 .................................... 634 668
Salomon, Inc. - Sr. Notes
7.2% due 02/01/04 .................................... 500 534
Vanderbilt Finance, Inc. - Ser. 2001-C Cl.
A2
4.235% due 08/07/14 .................................. 1,000 981
--------
24,872
Food, Beverage & Tobacco - 0.5%
Philip Morris Cos., Inc. - Debs.
8.25% due 10/15/03 ................................... 640 688
Foreign Governmental - 3.4%
Province of Ontario
7.75% due 06/04/02 ................................... 3,000 3,070
Quebec Province Canada
5.5% due 04/11/06 .................................... 2,000 2,036
--------
5,106
Health Care Products - 1.3%
Pfizer, Inc. - Notes
3.625% due 11/01/04 .................................. 2,000 1,993
139
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Health Care Services - 1.0%
Columbia/HCA Healthcare Corp.
6.91% due 06/15/05 .................................... $ 500 $ 507
Tenet Healthcare Corp. - Sr. Notes
144A (a)
5.375% due 11/15/06 ................................... 1,000 978
-------
1,485
Media - TV / Radio - 0.8%
Turner Broadcasting Systems, Inc. - Sr.
Notes
7.4% due 02/01/04 ..................................... 1,144 1,217
Oil & Natural Gas Exploration & Production - 2.1%
Amerada Hess Corp. - Notes
5.3% due 08/15/04 ..................................... 1,500 1,534
Conoco, Inc. - Notes
5.9% due 04/15/04 ..................................... 1,550 1,610
-------
3,144
Personal & Commercial Lending - 12.3%
American General Finance Corp.
5.875% due 07/14/06 ................................... 2,000 2,029
Asset Backed Securities Corp. - Series
2000-LB1 Cl. AF2
7.57% due 03/21/24 .................................... 177 182
Citibank Credit Card Issuance Trust - Notes
Ser. 2001 Cl. A8
4.1% due 12/07/06 ..................................... 2,591 2,571
Countrywide Funding Corp.
5.25% due 05/22/03 .................................... 1,000 1,019
Countrywide Funding Corp.
5.25% due 06/15/04 .................................... 500 508
Ford Motor Credit Co. - Notes
6.875% due 02/01/06 ................................... 1,110 1,112
Ford Motor Credit Co. - Sr. Notes
6.125% due 03/20/04 ................................... 1,500 1,538
Ford Motor Credit Co.
6.7% due 07/16/04 ..................................... 1,500 1,521
General Motors Acceptance Corp. - Notes
5.75% due 11/10/03 .................................... 2,000 2,036
General Motors Acceptance Corp. - Notes
7.48% due 02/28/03 .................................... 1,200 1,247
Household Finance Corp. - Notes
6.0% due 05/01/04 ..................................... 2,000 2,079
Money Store Home Equity Trust - Ser.
1996-B Cl. A8
7.91% due 05/15/24 .................................... 2,421 2,528
-------
18,370
Real Estate Development - 0.7%
EOP Operating, Ltd. - Notes
6.375% due 02/15/03 ................................... 1,000 1,030
Real Estate Investment Trust - 1.0%
Spieker Properties, Inc. - Notes
6.95% due 12/15/02 .................................... 1,500 1,547
Retail - Department Stores - 1.7%
Wal Mart Stores, Inc. - Sr. Notes
4.375% due 08/01/03 ................................... 1,250 1,272
5.45% due 08/01/06 .................................... 1,250 1,279
--------
2,551
Retail - Food - 0.8%
Safeway, Inc. - Notes
7.0% due 09/15/02 ..................................... 1,100 1,132
Telecommunication Services - 2.1%
Verizon Global Funding Corp. - Notes
6.75% due 12/01/05 .................................... 1,500 1,582
Verizon Wireless Capital LLC - Notes
144A (a)
5.375% due 12/15/06 ................................... 350 348
Worldcom, Inc. - Sr. Notes
7.55% due 04/01/04 .................................... 1,100 1,156
--------
3,086
Telephone - 1.0%
Sprint Capital Corp.
5.7% due 11/15/03 ..................................... 1,500 1,528
Transportation Services - 1.3%
Popular North America, Inc.
6.125% due 10/15/06 ................................... 2,000 1,967
U.S. Government Agencies - 14.4%
Federal Home Loan Bank
8.0% due 06/01/10 ..................................... 810 848
Federal National Mortgage Assoc.
3.426% due 09/25/26 ................................... 1,500 1,478
4.375% due 10/15/06 ................................... 2,000 1,959
4.75% due 11/14/03 .................................... 3,500 3,600
5.25% due 06/15/06 .................................... 1,400 1,425
6.375% due 10/15/02 ................................... 7,500 7,720
6.5% due 09/01/02 ..................................... 733 743
7.0% due 01/01/03 ..................................... 2,417 2,452
7.0% due 12/01/10 ..................................... 1,255 1,308
--------
21,533
U.S. Governmental - 17.7%
U.S. Treasury - Notes
2.75% due 10/31/03 .................................... 4,639 4,629
4.25% due 11/15/03 .................................... 12,530 12,832
4.625% due 05/15/06 ................................... 500 507
5.875% due 02/15/04 ................................... 2,810 2,965
5.875% due 11/15/04 ................................... 2,130 2,254
140
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Governmental - Continued
5.875% due 11/15/05 ............................. $ 3,000 $ 3,187
-----------
26,374
-----------
TOTAL PUBLICLY-TRADED BONDS- 95.1% 142,097
SHORT-TERM INVESTMENTS - 4.2%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ........................ 6,349 6,349
-------- -----------
TOTAL INVESTMENTS- 99.3% 148,446
Cash and Receivables, less payables- 0.7% 1,004
-------- -----------
NET ASSETS- 100.0% $ 149,450
======== ===========
(a) Pursuant to Rule 144A under the Securities Act of 1993, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2001, securities aggregated
$1,326 or 1.0% of net assets of the Portfolio.
See notes to financial statements.
141
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL CAP EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 1.2%
Armor Holdings, Inc. * .............................. 32,400 $ 874
Auto & Truck Parts - 0.8%
CSK Auto Corp. ...................................... 41,000 408
Cummins Engine Company, Inc. ........................ 5,000 193
-------
601
Automobile - 0.4%
ANC Rental Corp. * .................................. 58,400 2
Oshkosh Truck Corp. ................................. 6,200 302
-------
304
Bank - 4.6%
Citizens Banking Corp. .............................. 7,600 250
Community Bankshares, Inc. .......................... 1,600 30
First Midwest Bancorp, Inc. ......................... 17,750 518
Fulton Financial Corp. .............................. 16,590 362
Net.Bank, Inc. * .................................... 38,900 408
San Juan Basin Royalty Trust ........................ 22,600 217
Southern Financial Bancorp. ......................... 8,800 233
Sterling Bancshares, Inc. ........................... 53,600 671
Waypoint Financial Corp. * .......................... 38,800 585
-------
3,274
Brokerage & Investment Management - 0.5%
Jefferies Group, Inc. ............................... 9,000 381
Business Services - 1.9%
Administaff, Inc. ................................... 6,500 178
Digital Insight Corp. ............................... 23,000 514
Forrester Research, Inc. ............................ 18,000 363
Hotel Reservations Network, Inc. - Cl. A ............ 5,700 262
-------
1,317
Chemical - 2.4%
Ferro Corp. ......................................... 42,000 1,084
NOVA Chemicals Corp. ................................ 10,000 193
OM Group, Inc. ...................................... 4,900 324
Spartech Corp. ...................................... 4,000 82
-------
1,683
Commercial Sevices - 4.7%
ADVO, Inc. .......................................... 8,900 383
Charlotte Russe Holding, Inc. ....................... 24,400 454
Jersey Jill Group, Inc. ............................. 20,000 430
Power One, Inc. ..................................... 36,000 375
Quanta Services, Inc. * ............................. 42,500 656
Steiner Leisure, Ltd. * ............................. 18,500 393
The Scotts Co. - Cl. A .............................. 13,800 657
- ------
3,348
Computer Equipment - 1.8%
LTX Corp. ........................................... 42,000 880
UNOVA, Inc. ......................................... 73,000 423
-------
1,303
Computer Software & Services - 5.1%
Acclaim Entertainment, Inc. ......................... 65,000 345
Click Commerce, Inc. * .............................. 93,800 296
click2learn.com, Inc. * ............................. 31,900 96
CNet Networks, Inc. ................................. 32,300 290
Cognizant Technology Solutions Corp. ................ 9,500 389
Ixia * .............................................. 15,900 204
MatrixOne, Inc. * ................................... 33,200 431
Moldflow Corp. * .................................... 15,300 219
National Information Consortium, Inc. * ............. 61,800 197
Netscreen Technologies, Inc. ........................ 800 18
Pinnacle Systems, Inc. .............................. 62,000 492
Pixar, Inc. ......................................... 4,600 166
Riverdeep Group plc - ADR * ......................... 13,700 230
Witness Systems, Inc. * ............................. 21,100 281
-------
3,654
Consumer Miscellaneous - 1.0%
American Greetings Corp. - Cl. A .................... 22,400 309
NetRatings, Inc. .................................... 25,900 406
-------
715
Consumer Services - 0.6%
Costar Group, Inc. .................................. 19,000 456
Diversified Operations - 2.8%
Gaiam, Inc. Cl. A ................................... 12,200 266
Ionics, Inc. * ...................................... 16,100 484
Libbey, Inc. ........................................ 16,400 535
UCAR International, Inc. ............................ 51,700 553
Wesco International, Inc. * ......................... 23,600 117
-------
1,955
Electric Power - 0.7%
Wilson Greatbatch Technologies, Inc. ................ 14,300 516
Electrical Equipment - 0.5%
Zygo Corp ........................................... 22,600 359
Electronic Products & Services - 14.7%
American Superconductor Corp. * ..................... 26,400 324
ASM International NV * .............................. 26,500 517
Briggs & Stratton Corp. ............................. 18,300 782
Cymer, Inc. * ....................................... 34,200 914
DuPont Photomasks, Inc. ............................. 7,600 330
Electro Scientific Industries, Inc. * ............... 26,900 807
Electroglas, Inc. * ................................. 38,800 573
EMCORE Corp. * ...................................... 40,400 543
Exar, Corp. * ....................................... 34,500 719
FEI Co. ............................................. 5,500 173
Helix Technology Corp. .............................. 25,900 584
Intergraph Corp. .................................... 44,000 605
Logicvision, Inc. ................................... 19,000 242
Microtune, Inc. * ................................... 22,100 519
Monolithic Systems Technology, Inc. ................. 11,200 231
Nanometrics, Inc. * ................................. 22,200 431
Numerical Technologies, Inc. ........................ 12,000 422
142
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL CAP EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Electronic Products & Services - Continued
Power Integrations, Inc. ........................... 10,700 $ 244
Therma-Wave, Inc. * ................................ 39,200 585
TranSwitch Corp. .................................. 50,000 225
Veeco Instruments Inc. * ........................... 19,500 703
-------
10,473
Energy - Alternative Source - 1.8%
Advanced Energy Industries, Inc. ................... 26,900 717
Rayovac Corp. * .................................... 23,100 406
Valence Technology, Inc. ........................... 37,000 125
-------
1,248
Engineering & Construction - 0.6%
York International Corp. ........................... 11,500 438
Financial Services - 3.9%
American Capital Strategies, Ltd. .................. 33,600 953
BOK Financial Corp. ................................ 10,000 315
LendingTree, Inc. * ................................ 62,500 369
Max Re Capital, Ltd. ............................... 19,000 297
Medallion Financial Corp. .......................... 24,000 190
Philadelphia Consolidated Holding Corp. ............ 17,000 641
-------
2,765
Food, Beverage & Tobacco - 4.5%
Corn Products International, Inc. .................. 17,700 624
Dreyer's Grand Ice Cream, Inc. ..................... 27,200 1,047
Flowers Foods, Inc. ................................ 1,800 72
Hain Celestial Group, Inc. ......................... 10,700 294
Robert Mondavi Corp. - Cl. A ....................... 20,000 760
Tootsie Roll Industries, Inc. ...................... 11,000 430
-------
3,227
Health Care Products - 10.3%
3 Dimensional Pharmaceuticals, Inc. * .............. 14,200 121
Aclara Biosciences Inc. * .......................... 40,200 204
American Pharmaceutical Participating .............. 6,400 133
Antigenics, Inc. ................................... 22,800 374
Aviron * ........................................... 10,800 537
Charles River Laboratories * ....................... 1,100 37
ChromaVision Medical Systems, Inc. * ............... 35,600 160
COR Therapeutics, Inc. ............................. 9,000 215
Diversa Corp. ...................................... 28,200 399
Durect Corp. * ..................................... 17,100 198
Exelixis, Inc. * ................................... 45,000 748
ILEX Oncology, Inc. * .............................. 19,600 530
Illumina, Inc. ..................................... 23,500 276
Lexicon Genetics, Inc. * ........................... 32,500 375
LifePoint Hospitals, Inc. .......................... 10,500 357
Scios, Inc. * ...................................... 12,800 304
SICOR, Inc. ........................................ 6,100 96
Tanox, Inc. * ...................................... 17,900 331
Trimeris, Inc. * ................................... 16,800 756
Unilab Corp. ....................................... 25,700 645
Vical Incorporated ................................. 6,700 82
Wright Medium Group, Inc. .......................... 24,400 437
-------
7,315
Health Care Services - 1.0%
Gene Logic, Inc. ................................... 10,700 201
Kendle International, Inc. * ....................... 24,200 488
-------
689
Insurance - 2.0%
First American Financial Corp. ..................... 24,100 452
W.R. Berkley Corp. ................................. 10,400 558
Zenith National Insurance Corp. .................... 14,000 391
-------
1,401
Leisure & Recreation - 3.7%
CEC Entertainment, Inc. ............................ 9,000 391
Four Seasons Hotels, Inc. .......................... 4,500 210
International Speedway Corp. - Cl. A ............... 8,200 321
MeriStar Hospitality Corp. ......................... 28,400 403
Speedway Motorsports, Inc. * ....................... 35,700 903
World Wrestling Federation Entertainment,
Inc. ............................................. 33,100 435
-------
2,663
Machinery - 2.6%
Astec Industries, Inc. ............................. 21,300 308
Columbus McKinnon Corp. ............................ 25,200 258
Gardner Denver Machinery, Inc. ..................... 22,800 509
Kulicke and Soffa Industries ....................... 45,400 779
-------
1,854
Media - Publishing - 0.7%
Banta Corp. ........................................ 12,200 360
Penton Media, Inc. ................................. 16,600 104
-------
464
Media - TV / Radio - 5.8%
Arbitron, Inc. ..................................... 11,600 396
Emmis Communications Corp. ......................... 23,500 556
Entercom Communications Corp. * .................... 7,200 360
Entravision Communications - Cl. A * ............... 28,500 341
Insight Communications Company, Inc. * ............. 29,800 720
Martha Stewart Living Omnimedia, Inc. - Cl. A * .... 19,500 321
Media General, Inc. - Cl. A ........................ 2,400 120
Mediacom Communications Corp. ...................... 22,800 416
Radio One, Inc. - Cl. D * .......................... 34,900 628
Young Broadcasting, Inc. - Cl. A * ................. 15,000 269
-------
4,127
Metals & Mining - 0.2%
Kaiser Aluminum Corp. .............................. 78,100 127
Natural Gas Distribution - 1.7%
Energen Corp. ...................................... 26,600 656
New Jersey Resources Corp. ......................... 4,800 224
143
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
SMALL CAP EQUITY FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Natural Gas Distribution - Continued
Southwest Gas Corp. ................................. 16,200 $ 362
-------
1,242
Oil & Natural Gas Exploration & Production - 0.5%
Penzoil-Quaker State Co. ............................ 22,000 318
Oil - Equipment & Service - 1.4%
Hydril Co. * ........................................ 10,000 176
Newpark Resources, Inc. ............................. 45,000 356
Seacor Smit, Inc. ................................... 9,200 427
-------
959
Paper & Forest Products - 0.7%
Potlatch Corp. ...................................... 16,700 490
Personal & Commercial Lending - 0.2%
America First Mortgage Investments, Inc. ............ 19,000 166
Real Estate Development - 0.5%
Trammell Crow Co. * ................................. 32,400 379
Real Estate Investment Trust - 2.5%
Annaly Mortgage Management, Inc. .................... 39,500 632
Anthracite Capital, Inc. ............................ 34,900 384
Reckson Associates Realty Corp. ..................... 8,500 199
Resources Connection, Inc. .......................... 13,500 355
SL Green Realty Corp. ............................... 7,800 239
-------
1,809
Real Estate Operations - 1.4%
HomeStore.com, Inc. ................................. 159,800 575
Insignia Financial Group, Inc. * .................... 39,700 429
-------
1,004
Retail - Department Stores - 2.8%
Factory 2-U Stores, Inc. * .......................... 14,900 299
Galyans Trading, Inc. ............................... 3,100 44
Genesco, Inc. ....................................... 26,600 552
Ruby Tuesday, Inc. .................................. 33,700 695
School Specialty, Inc. .............................. 17,600 403
-------
1,993
Retail - Food - 0.7%
California Pizza Kitchen, Inc. ...................... 19,900 492
Suprema Specialties, Inc. ........................... 1,600 21
-------
513
Shoe & Apparel Manufacturing - 0.9%
Novel Denim Holdings, Ltd. * ........................ 16,000 187
Stride Rite Corp. ................................... 26,300 172
Vans, Inc. .......................................... 22,000 281
-------
640
Telecommunication Equipment - 2.4%
Advanced Fibre Communications, Inc. * ............... 8,200 145
Alliance Fiber Optic Products, Inc. * ............... 34,700 49
Anaren Micro Circuits, Inc. ......................... 9,900 172
Avanex Corp. * ...................................... 72,600 428
Cable Design Technologies Corp. ..................... 30,000 410
Carrier Access Corp. ................................ 39,900 117
Newport Corp. ....................................... 19,000 366
--------
1,687
Telecommunication Services - 1.5%
Aspect Communications Corp. ......................... 88,400 343
MRV Communications, Inc. ............................ 35,475 150
Multilink Technology Corp. - Cl. A .................. 55,000 356
WEST Corp. .......................................... 8,200 205
-------
1,054
Transportation Services - 0.7%
SkyWest, Inc. ....................................... 8,200 209
Werner Enterprises, Inc. ............................ 12,200 296
-------
505
-------
TOTAL COMMON STOCK- 98.7% 70,290
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 4.0%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ............................... $2,819 2,819
------ -------
TOTAL INVESTMENTS- 102.7% 73,109
Cash and Receivables, less payables- (2.7)% (1,916)
------ -------
NET ASSETS- 100.0% $71,193
====== =======
ADR-American Depository Receipt.
*Non-income producing security.
See notes to financial statements.
144
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Australia - 0.4%
Brambles Industries, Ltd. (27) ...................... 56,146 $ 299
Belgium - 0.7%
DEXIA NPV (B0) ...................................... 19,350 278
Fortis NPV (27) ..................................... 8,110 210
UCB SA (H2) ......................................... 1,180 48
-------
536
Canada - 1.3%
Alcan Aluminum, Ltd. (C2) ........................... 11,292 405
Inco, Ltd. (27) ..................................... 17,800 302
Royal Bank of Canada (B0) ........................... 12,280 400
-------
1,107
Denmark - 0.3%
Novo Nordisk AS (H2) ................................ 2,000 82
Tele Danmark AS (T1) ................................ 5,389 192
-------
274
Egypt - 0.2%
Egypt Mobile Phone (TE) ............................. 16,489 120
Finland - 2.0%
Nokia Oyj (H2) ...................................... 56,264 1,450
Sonera Oyj (T1) ..................................... 43,950 223
-------
1,673
France - 13.8%
Altran Technologies SA (E3) ......................... 1,450 66
AXA (47) ............................................ 29,400 614
Banque Nationale de Paris (B0) ...................... 13,070 1,169
Cap Gemini SA (B1) .................................. 2,146 155
Compagnie de St. Gobain (24) ........................ 3,400 513
Equant (25) ......................................... 1,905 23
Groupe Danone (S1) .................................. 1,890 231
Hermes International (R4) ........................... 1,742 268
L'Oreal SA (S1) ..................................... 841 61
Lafarge SA (24) ..................................... 947 88
LVMH (Louis Vuitton Moet Hennessy) (F2) ............. 1,910 78
Orange SA * (T1) .................................... 31,090 282
Pinault-Printemps-Redoute SA (R4) ................... 639 82
Rhone-Poulenc SA (B0) ............................... 18,509 1,314
Sanofi-Synthelabo SA (H2) ........................... 18,610 1,388
Schneider SA (M1) ................................... 11,145 536
Societe Generale - Cl. A (B0) ....................... 3,992 223
Societe Television Francaise 1 (ME) ................. 18,790 475
Sodexho Alliance SA (F2) ............................ 17,534 749
STMicroelectronics (EP) ............................. 12,195 391
Total Fina SA - Cl. B (OG) .......................... 15,390 2,197
Vivendi Universal SA (27) ........................... 10,613 581
-------
11,484
Germany - 3.6%
Allianz AG - Reg. (47) .............................. 3,238 767
Aventis SA (H2) ..................................... 2,688 187
Bayer AG (C1) ....................................... 4,365 139
Bayerische Vereinsbank AG (B0) ...................... 2,788 85
Deutsche Bank AG (B0) ............................... 5,841 413
Deutsche Telekom AG (U3) ............................ 2,945 51
E.On AG (27) ........................................ 6,922 359
Gehe AG (H2) ........................................ 7,739 300
Rhoen-Klinikum AG (H2) .............................. 2,320 120
SAP AG (24) ......................................... 3,510 457
Siemens AG (27) ..................................... 2,332 154
-------
3,032
Greece - 0.3%
Hellenic Telecommunication Organization
SA (T1) ........................................... 16,290 265
Hong Kong - 2.2%
Cheung Kong (Holdings), Ltd. (R2) ................... 56,000 582
China Unicom, Ltd. (T1) ............................. 70,000 77
Henderson Land Development Co., Ltd.
(R2) .............................................. 58,000 264
HSBC Holdings plc (B0) .............................. 22,000 257
Hutchison Whampoa, Ltd. (B1) ........................ 56,900 551
Li & Fung, Ltd. (B1) ................................ 16,000 18
Sun Hung Kai Properties, Ltd. (R3) .................. 12,000 97
-------
1,846
Hungary - 0.2%
Gedeon Richter Rt. (H1) ............................. 2,850 156
India - 0.8%
Global Tele-Systems, Ltd. (TE) ...................... 3,000 8
HDFC Bank Ltd. (B0) ................................. 25,000 117
Hindustan Lever Ltd. (M4) ........................... 79,000 366
ICICI, Ltd. (F1) .................................... 58,000 53
Reliance Industries, Inc. (C1) ...................... 23,000 146
-------
690
Italy - 5.8%
Alleanza Assicurazioni (47) ......................... 44,650 491
Assicurazioni Generali (47) ......................... 6,280 174
Banca Intesa SpA (B0) ............................... 343,613 860
Bipop-Carire SpA (B0) ............................... 32,500 54
ENI (OD) ............................................ 67,572 847
Mediaset SpA (ME) ................................... 10,000 73
Mediolanum SpA (47) ................................. 20,815 188
Olivetti SpA (B1) ................................... 95,708 123
San Paolo-IMI SpA (B0) .............................. 4,858 52
Telecom Italia Mobile SpA (T1) ...................... 150,220 838
Telecom Italia SpA (T1) ............................. 56,800 485
UniCredito Italiano SpA (B0) ........................ 165,883 666
-------
4,851
Japan - 10.9%
Aiful Corp. (F1) .................................... 1,000 65
Canon, Inc. (B1) .................................... 30,000 1,033
145
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Japan - Continued
Fanuc, Ltd. (B3) .................................... 5,200 $ 221
Fuji Television Network, Inc. (ME) .................. 48 194
Fujisawa Pharmeceutical Co., Ltd. (H2) .............. 17,000 392
Ito-Yokado Co., Ltd. (R4) ........................... 5,000 226
KAO Corp. (S1) ...................................... 8,000 166
Kokuyo Co. (B1) ..................................... 8,000 67
Kyocera Corp. (EP) .................................. 3,800 248
Marui Co., Ltd. (R4) ................................ 26,000 308
Matsushita Communication Industries (T1) ............ 2,000 54
Matsushita Electric Industrial Co. (EP) ............. 43,000 552
Mitsui Fudosan Co., Ltd. (R1) ....................... 44,000 336
Mizuho Holdings, Inc. * (F1) ........................ 155 316
Murata Manufacturing Co., Ltd. (EP) ................. 6,100 366
NEC Corp. (25) ...................................... 17,000 173
Nippon Telegraph & Telephone Corp. (U3) ............. 65 212
Nomura Securities Co., Ltd. (I2) .................... 52,000 667
NTT Mobile Communications Network,
Inc. (T1) ......................................... 51 600
Sankyo Co., Ltd. (H2) ............................... 13,000 223
Seven-Eleven Japan (P5) ............................. 9,000 328
Shin-Etsu Chemical Co. (C1) ......................... 8,400 302
Shiseido Co., Ltd. (C1) ............................. 18,000 166
Sony Corp. (EP) ..................................... 17,000 777
Sumitomo Bank (B0) .................................. 56,000 237
Sumitomo Corp. (27) ................................. 38,000 174
Toshiba Corp. (EP) .................................. 38,000 131
Toyota Motor Corp. (A3) ............................. 4,400 112
UFJ Holdings, Inc. (F1) ............................. 33 73
Yamanouchi Pharmaceutical Co., Ltd. (H2) ............ 15,000 396
-------
9,115
Luxembourg - 0.1%
Society Europeenne des Satellites (ME) .............. 7,670 84
Malaysia - 0.5%
Malayan Banking Berhad (B0) ......................... 103,800 226
Resorts World Berhad (50) ........................... 129,000 209
-------
435
Mexico - 0.7%
Cifra SA de CV - Ser. V (R4) ........................ 108,600 297
Fomento Economico Mexicano SA de CV
(F2) .............................................. 91,000 308
-------
605
Netherlands - 7.9%
Akzo Nobel NV (C1) .................................. 1,390 62
ASM Lithography Holding NV (25) ..................... 26,180 455
Elsevier NV (L2) .................................... 22,190 262
Fortis NPV (27) ..................................... 19,010 493
ING Groep NV (47) ................................... 60,020 1,530
Koninklije KPN NV (T1) .............................. 46,100 234
Koninklijke (Royal) Philips Electronics NV
(EP) .............................................. 46,739 1,389
Koninklijke Ahold NV (P5) ........................... 8,800 256
Royal Dutch Petroleum Co. (OD) ...................... 12,500 633
VNU NV (L2) ......................................... 29,790 915
Wolters Kluwer NV - CVA (L2) ........................ 17,225 393
------
6,622
Norway - 0.4%
Orkla ASA (27) ...................................... 16,750 284
Statoil ASA (OD) .................................... 8,950 61
-------
345
Portugal - 0.3%
Jeronimo Martins SA (P5) ............................ 9,583 79
Portugal Telecom SA (T1) ............................ 27,134 211
-------
290
Singapore - 0.9%
Singapore Press Holdings, Ltd. (L2) ................. 8,000 94
United Overseas Bank, Ltd. (B0) ..................... 94,072 647
-------
741
South Africa - 0.3%
Nedcor, Ltd. (F1) ................................... 23,600 244
South Korea - 2.2%
Kookmin Bank (B0) ................................... 7,420 283
Samsung Electronics (EP) ............................ 4,000 853
Shinhan Financial (F1) .............................. 16,800 225
SK Telecom Co., Ltd. (T1) ........................... 2,300 471
-------
1,832
Spain - 2.7%
Banco Bilbao Vizcaya SA (B0) ........................ 49,290 610
Banco Santander Central Hispano SA (B0) ............. 64,160 537
Endesa SA (U1) ...................................... 20,382 319
Repsol SA (OG) ...................................... 10,115 147
Telefonica SA (U3) .................................. 49,394 661
-------
2,274
Sweden - 3.5%
Electrolux AB - Ser. B (HP) ......................... 15,910 238
Hennes & Mauritz AB - B Shares (R4) ................. 22,460 467
Nordic Baltic Holding AB (B0) ....................... 61,620 327
SANDVIK AB (M1) ..................................... 3,220 69
Securitas AB - B Shares (B1) ........................ 67,328 1,282
Telefonaktiebolaget LM Ericsson AB * (T1) ........... 94,440 515
-------
2,898
Switzerland - 5.4%
Adecco SA (F1) ...................................... 20,700 1,126
Credit Suisse Group (LR) ............................ 4,800 205
Nestle SA (F2) ...................................... 7,920 1,689
Roche Holdings AG (AG) .............................. 6,100 435
Swiss Reinsurance Co. (LR) .......................... 920 93
UBS AG (B0) ......................................... 19,266 973
-------
4,521
146
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Taiwan - 1.9%
Asustek Computer (25) ................................... 49,000 $ 215
Compal Electronics Inc. (EP) ............................ 161,000 204
Hon Hai Precision Insustry Co., Ltd. Cl. G (25) ......... 44,000 201
Taiwan Semiconductor (EP) ............................... 255,400 639
United Microelectronics Corp. (EP) ...................... 213,000 311
--------
1,570
United Kingdom - 26.0%
Abbey National First Capital BV (B0) .................... 18,386 262
AstraZeneca Group plc (H2) .............................. 21,211 955
Autonomy Corp. plc * (23) ............................... 1,500 7
BG Group plc (U2) ....................................... 16,019 65
BP Amoco plc (OD) ....................................... 85,000 660
Brambles Industries (B1) ................................ 66,020 326
Cable & Wireless plc (T1) ............................... 41,270 198
Cadbury Schweppes plc (F2) .............................. 66,477 423
Celltech Group plc * (H2) ............................... 21,473 273
Centrica plc (U2) ....................................... 36,200 117
Compass Group plc * (F1) ................................ 171,730 1,286
David S. Smith Holdings plc (P1) ........................ 18,000 41
Diageo plc (F2) ......................................... 81,912 935
Dimension Data Holdings plc (23) ........................ 12,500 15
Electrocomponents plc (EP) .............................. 49,520 386
Friends Provident plc (B0) .............................. 21,930 64
GKN (A2) ................................................ 5,000 19
GlaxoSmithKline plc * (H2) .............................. 129,681 3,249
Granada Compass plc (50) ................................ 187,576 391
Hays plc (27) ........................................... 93,116 282
Hilton Group plc (50) ................................... 23,000 71
J Sainsbury plc (R4) .................................... 48,640 259
Kingfisher plc (24) ..................................... 49,116 286
Lattice Group * (EP) .................................... 45,322 103
Reckitt Benckiser plc (S1) .............................. 2,000 29
Reed International plc (L2) ............................. 217,000 1,798
Rio Tinto plc - Reg. (27) ............................... 46,989 899
Royal Bank of Scotland Group (B0) ....................... 78,532 1,909
Shell Transport & Trading Co. plc (OG) .................. 219,084 1,503
Standard Chartered plc (B0) ............................. 24,600 293
Tesco plc (F2) .......................................... 128,030 464
Tomkins plc (27) ........................................ 119,506 368
Unilever plc (M4) ....................................... 63,148 518
United Business Media (L2) .............................. 12,193 85
Vodafone AirTouch plc (T1) .............................. 770,844 2,014
Woolworths Group (R4) ................................... 54,028 37
WPP Group plc * (B1) .................................... 106,200 1,174
--------
21,764
United States - 5.4%
America Movil SA de CV - ADR Ser. L (T1) ................ 15,600 304
Celestica, Inc. (B1) .................................... 12,470 504
Check Point Software Technologies, Ltd. (23) ............ 1,857 74
Coca-Cola Co. ADR (F1) .................................. 10,000 201
Companhia Vale do Rio Doce - ADR (27) ................... 9,969 235
Compania Brasileira de Distribuicao Grupo Pao de Acucar
- ADR (P5) ............................................ 17,800 392
Embraer - Empresa Brasileira de Aeronautica SA (02) ..... 7,000 155
Flextronics International Ltd. (EP) ..................... 8,084 194
Grupo Iusacell SA de CV - ADR V (T1) .................... 9,000 36
Grupo Televisa SA - GDR (ME) ............................ 6,923 299
ICICI, Ltd. (F1) ........................................ 28,064 168
Korea Telecom Corp. - ADR (T1) .......................... 21,471 436
LuKoil Holding - ADR (OG) ............................... 2,730 134
Orbotech, Ltd. (EP) ..................................... 8,300 258
Pohang Iron & Steel Co., Ltd. - ADR (A5) ................ 15,503 357
SmartForce Public Limited Co. - ADR (B9) ................ 6,166 153
Telefonica SA (T1) ...................................... 5,269 211
Telefonos De Mexico SA - ADR (T1) ....................... 2,891 102
Teva Pharmaceutical Industries, Ltd. - ADR (H2) ......... 4,600 283
--------
4,496
--------
TOTAL COMMON STOCK- 100.7% 84,169
PREFERRED STOCK
Australia - 0.6%
News Corp., Ltd. (ME) ................................... 77,247 516
Brazil - 0.6%
Petroleo Brasileiro SA - Petrobras (OD) ................. 22,292 493
--------
TOTAL PREFERRED STOCK- 1.2% 1,009
Par
Value
(000's)
COMMERCIAL PAPER - 0.3%
Euro Time Deposit
3.0% due 01/02/02 ..................................... $ 300 265
SHORT-TERM INVESTMENTS - 2.0%
Investment in joint trading account (Note B)
2.055% due 01/02/02 .................................... 1,688 1,688
------- --------
TOTAL INVESTMENTS- 104.2% 87,131
Cash and Receivables, less payables- (4.2)% (3,540)
------- --------
NET ASSETS- 100.0% $83,591
======= ========
ADR-American Depository Receipt.
GDR-Global Depository Receipt.
*Non-Income Producing Security.
See notes to financial statements.
147
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES FUND
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED)
Market % of
Industry Value Long-Term
Industry Abbreviation (000s) Investments
Bank ................................... B0 $12,194 14.6%
Health Care Products ................... H2 9,108 10.7%
Telecommunication Services ............. T1 7,464 8.8%
Electronic Products & Services ......... EP 6,243 7.3%
Food, Beverage & Tobacco ............... F2 6,162 7.3%
Commercial Services .................... B1 5,403 6.1%
Diversified Operations ................. 27 4,103 4.8%
Oil & Natural Gas Exploration &
Production .......................... OG 3,982 4.7%
Insurance .............................. 47 3,763 4.4%
Media - Publishing ..................... L2 3,548 4.2%
Aerospace & Defense .................... 2 3122 3.7%
Construction ........................... 24 2031 2.4%
Retail - Department Stores ............. R4 1,647 1.9%
Media - TV / Radio ..................... ME 1,640 1.9%
Oil .................................... OD 1340 1.6%
Oil - Equipment & Service .............. O1 1,293 1.5%
Financial Services ..................... F1 1144 1.3%
Retail - Food .......................... P5 1,055 1.2%
Telephone .............................. U3 1024 1.2%
Consumer Miscellaneous ................. M4 884 1.0%
Computer Equipment ..................... 25 852 1.0%
Real Estate Development ................ R2 846 1.0%
Chemical ............................... C1 816 1.0%
Leisure & Recreation ................... 50 671 0.8%
Brokerage & Investment Management ...... I2 667 0.8%
Machinery .............................. M1 605 0.7%
Computer Software & Services ........... 23 553 0.6%
Metals & Mining ........................ C2 405 0.5%
Steel .................................. A5 357 0.4%
Real Estate Operations ................. R1 336 0.4%
Electric Power ......................... U1 319 0.4%
Cosmetic & Personal Care ............... S1 256 0.3%
Household Appliances / Furnishings ..... HP 238 0.3%
------- -----------
$85,178 100.0%
======= ===========
148
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK
Aerospace & Defense - 1.2%
Boeing Co. ............................................... 42,437 $ 1,646
General Dynamics Corp. ................................... 10,292 820
Lockheed Martin Corp. .................................... 22,332 1,042
Northrop Grumman Corp. ................................... 5,560 561
Raytheon Co. ............................................. 20,059 651
United Technologies Corp. ................................ 23,385 1,511
-------
6,231
Auto & Truck Parts - 0.4%
AutoZone, Inc. * ......................................... 5,563 399
B.F. Goodrich Co. ........................................ 5,350 142
Cooper Tire & Rubber Co. ................................. 3,306 53
Cummins Engine Company, Inc. ............................. 1,760 68
Dana Corp. ............................................... 6,730 93
Genuine Parts Co. ........................................ 8,900 327
Goodyear Tire & Rubber Co. ............................... 7,831 186
Johnson Controls, Inc. ................................... 4,226 341
Paccar, Inc. ............................................. 3,911 257
TRW, Inc. ................................................ 6,482 240
Visteon Corp. * .......................................... 6,356 96
-------
2,202
Automobile - 0.6%
Delphi Automotive Systems Corp. .......................... 27,883 381
Ford Motor Co. ........................................... 90,797 1,427
General Motors Corp. ..................................... 28,098 1,366
Navistar International Corp. - Cl. B ..................... 2,786 110
-------
3,284
Bank - 6.0%
AmSouth Bancorp. ......................................... 18,739 354
Bank of America Corp. .................................... 79,499 5,004
Bank of New York Co., Inc. ............................... 37,370 1,525
Bank One Corp. ........................................... 59,045 2,306
BB&T Corporation ......................................... 22,937 828
Charter One Financial, Inc. .............................. 10,938 297
Comerica, Inc. ........................................... 8,760 502
Fifth Third Bancorp ...................................... 29,091 1,784
FleetBoston Financial Corp. .............................. 52,995 1,934
Golden West Financial Corp. .............................. 7,810 460
Huntington Bancshares, Inc. .............................. 12,396 213
JP Morgan Chase & Co. .................................... 99,037 3,600
KeyCorp .................................................. 21,217 516
National City Corp. ...................................... 30,674 897
Northern Trust Corp. ..................................... 11,024 664
PNC Bank Corp. ........................................... 14,320 805
Regions Financial Corp. .................................. 11,531 345
SouthTrust Corp. ......................................... 16,733 413
State Street Corp. ....................................... 16,117 842
Suntrust Banks, Inc. ..................................... 14,625 917
Synovus Financial Corp. .................................. 14,572 365
Union Planters Corp. ..................................... 6,799 307
US Bancorp ............................................... 98,790 2,068
Washington Mutual, Inc. .................................. 44,053 1,440
Wells Fargo & Co. ........................................ 85,196 3,702
Zions Bancorp ............................................ 4,434 233
-------
32,321
Brokerage & Investment Management - 1.1%
Bear Stearns Cos., Inc. .................................. 4,969 292
Charles Schwab Corp. ..................................... 68,991 1,067
Franklin Resources, Inc. ................................. 13,185 465
Lehman Brothers Holdings, Inc. ........................... 12,358 826
Morgan Stanley, Dean Witter, Discover & Co. .............. 55,118 3,083
T. Rowe Price Group, Inc. ................................ 6,279 218
-------
5,951
Business Services - 0.7%
Automatic Data Processing, Inc. .......................... 31,308 1,844
Fedex Corp. .............................................. 15,214 789
Pitney Bowes, Inc. ....................................... 12,159 457
Robert Half International, Inc. .......................... 9,055 242
The Dun & Bradstreet Corp. ............................... 7,929 316
-------
3,648
Chemical - 1.1%
Air Products & Chemicals, Inc. ........................... 11,532 541
Ashland, Inc. ............................................ 3,601 166
Dow Chemical Co. ......................................... 45,748 1,545
E.I. du Pont de Nemours & Co. ............................ 51,599 2,193
Eastman Chemical Co. ..................................... 4,112 160
Engelhard Corp. .......................................... 6,290 174
Great Lakes Chemical Corp. ............................... 2,373 58
Hercules, Inc. ........................................... 4,757 48
Praxair, Inc. ............................................ 7,907 437
Rohm & Haas Co. .......................................... 11,247 390
Sigma-Aldrich Corp. ...................................... 3,810 150
-------
5,862
Commercial Services - 0.8%
Cendant Corp. * .......................................... 49,707 975
Convergys Corp. * ........................................ 8,949 336
Deluxe Corp. ............................................. 3,803 158
Ecolab, Inc. ............................................. 6,086 245
Equifax, Inc. ............................................ 7,408 179
H & R Block, Inc. ........................................ 9,366 419
Interpublic Group Cos., Inc. ............................. 18,846 557
Omnicom Group, Inc. ...................................... 9,269 828
Power One, Inc. * ........................................ 3,414 36
Quintiles Transnational Corp. * .......................... 5,070 81
R.R. Donnelley & Sons Co. ................................ 5,571 165
TMP Worldwide, Inc. ...................................... 5,255 225
-------
4,204
Computer Equipment - 5.6%
Apple Computer, Inc. * ................................... 17,908 392
Compaq Computer Corp. .................................... 86,467 844
Comverse Technology, Inc. ................................ 9,670 216
149
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Computer Equipment - Continued
Dell Computer Corp. * ................................... 131,183 $ 3,566
Gateway, Inc. * ......................................... 15,570 125
Hewlett-Packard Co. ..................................... 97,726 2,007
Intel Corp. ............................................. 338,580 10,648
International Business Machines Corp. ................... 86,927 10,515
Lexmark International Group, Inc. - Cl. A * ............. 6,687 395
Network Appliance, Inc. * ............................... 16,673 365
Palm, Inc. .............................................. 25,386 98
Veritas Software Corp. * ................................ 20,163 904
-------
30,075
Computer Software & Services - 6.4%
Adobe Systems, Inc. ..................................... 12,348 383
Autodesk, Inc. .......................................... 2,478 92
BMC Software, Inc. ...................................... 11,854 194
Citrix Systems, Inc. * .................................. 9,069 205
Computer Associates International, Inc. ................. 28,763 992
Computer Sciences Corp. * ............................... 8,345 409
Compuware Corp. * ....................................... 18,035 213
Electronic Data Systems Corp. ........................... 23,881 1,637
EMC Corp. ............................................... 111,822 1,503
First Data Corp. ........................................ 19,370 1,520
Fiserv, Inc. ............................................ 9,181 389
IMS Health, Inc. ........................................ 14,629 285
Intuit, Inc. * .......................................... 10,403 445
Mercury Interactive Corp. * ............................. 4,320 147
Microsoft Corp. ......................................... 271,527 17,989
Novell, Inc. * .......................................... 19,824 91
Oracle Corp. * .......................................... 279,364 3,858
Parametric Technology Corp. * ........................... 12,184 95
Peoplesoft, Inc. ........................................ 15,428 620
Sapient Corp. ........................................... 5,179 40
Siebel Systems, Inc. * .................................. 23,659 662
Sun Microsystems, Inc. * ................................ 164,137 2,019
Unisys Corp. * .......................................... 16,461 206
Yahoo!, Inc. * .......................................... 28,224 501
-------
34,495
Construction - 0.1%
Stanley Works ........................................... 4,524 211
Vulcan Materials Co. .................................... 4,947 237
-------
448
Consumer Miscellaneous - 1.0%
American Greetings Corp. - Cl. A ........................ 2,892 40
Avery Dennison Corp. .................................... 5,360 303
Black & Decker Corp. .................................... 4,000 151
Cintas Corp. ............................................ 8,646 415
Clorox Co. .............................................. 12,044 476
Fortune Brands, Inc. .................................... 7,522 298
Harley-Davidson, Inc. ................................... 15,140 822
Newell Rubbermaid, Inc. ................................. 13,404 370
Parker-Hannifin Corp. ................................... 5,820 267
Sherwin-Williams Co. .................................... 8,228 226
Snap-On, Inc. ........................................... 2,584 $ 87
Tupperware Corp. ........................................ 2,584 50
Unilever NV - NY Shares ................................. 28,813 1,660
-------
5,165
Container - 0.1%
Bemis Co., Inc. ......................................... 2,477 122
Sealed Air Corp. * ...................................... 4,118 168
-------
290
Cosmetic & Personal Care - 1.7%
Alberto-Culver Co. - Cl. B .............................. 2,782 124
Avon Products, Inc. ..................................... 11,845 551
Colgate-Palmolive Co. ................................... 27,816 1,606
Gillette Co. ............................................ 53,134 1,775
International Flavors & Fragrances, Inc. ................ 4,539 135
Procter & Gamble Co. .................................... 65,384 5,174
-------
9,365
Diversified Operations - 6.3%
Amgen, Inc. ............................................. 52,817 2,981
Crane Co. ............................................... 3,037 78
Danaher Corp. ........................................... 7,007 423
Dover Corp. ............................................. 10,496 389
Eaton Corp. ............................................. 3,500 260
General Electric Co. .................................... 500,546 20,062
Honeywell International, Inc. ........................... 41,339 1,398
Illinois Tool Works, Inc. ............................... 15,142 1,025
ITT Industries, Inc. .................................... 4,328 219
Pactiv Corp. ............................................ 7,631 135
Pall Corp. .............................................. 6,679 161
PPG Industries, Inc. .................................... 8,545 442
Rockwell Collins, Inc. .................................. 9,166 179
Textron, Inc. ........................................... 6,905 286
Tyco International, Ltd. ................................ 100,747 5,934
W.W. Grainger, Inc. ..................................... 4,838 232
-------
34,204
Electric Power - 2.2%
AES Corp. * ............................................. 26,192 428
Allegheny Energy, Inc. .................................. 5,981 217
Ameren Corp. ............................................ 6,700 283
American Electric Power Co. ............................. 16,329 711
Calpine Corp. * ......................................... 14,734 247
Cinergy Corp. ........................................... 7,731 258
CMS Energy Corp. ........................................ 6,892 166
Consolidated Edison, Inc. ............................... 10,408 420
Constellation Energy Group .............................. 7,738 205
Dominion Resources, Inc. ................................ 13,374 804
DTE Energy Co. .......................................... 8,340 350
Edison International .................................... 16,038 242
Emerson Electric Co. .................................... 21,323 1,218
Entergy Corp. ........................................... 10,821 423
Exelon Corp. ............................................ 16,216 776
150
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Electric Power - Continued
Firstenergy Corp. ..................................... 15,181 $ 531
FPL Group, Inc. ....................................... 9,056 511
Mirant Corp. .......................................... 20,762 333
Niagara Mohawk Holdings, Inc. ......................... 8,033 142
NiSource, Inc. ........................................ 10,166 234
PG & E Corp. .......................................... 19,463 375
Pinnacle West Capital Corp. ........................... 4,023 168
PPL Corp. ............................................. 7,112 248
Public Services Enterprise Group, Inc. ................ 10,402 439
Reliant Energy, Inc. .................................. 14,657 389
Southern Co. .......................................... 35,220 893
TXU Corp. ............................................. 13,486 636
Xcel Energy, Inc. ..................................... 17,149 476
-------
12,123
Electrical Equipment - 0.1%
American Power Conversion ............................. 10,284 149
Cooper Industries, Inc. ............................... 4,736 165
Molex, Inc. ........................................... 9,834 304
-------
618
Electronic Products & Services - 4.2%
Advanced Micro Devices, Inc. .......................... 17,900 284
Agilent Technologies, Inc. * .......................... 23,138 660
Altera Corp. * ........................................ 19,162 406
Analog Devices, Inc. * ................................ 18,423 818
Applera Corporation - Applied Biosystems
Group ............................................... 10,307 405
Applied Materials, Inc. * ............................. 41,427 1,661
Applied Micro Circuits Corp. * ........................ 14,537 164
Ball Corp. ............................................ 1,440 102
Ciena Corp. ........................................... 16,176 231
Cisco Systems, Inc. * ................................. 370,144 6,703
Conexant Systems, Inc. * .............................. 12,162 174
Jabil Circuit, Inc. * ................................. 9,278 211
KLA-Tencor Corp. * .................................... 9,470 469
Linear Technology Corp. ............................... 15,746 615
LSI Logic Corp. * ..................................... 17,726 280
Maxim Integrated Products, Inc. * ..................... 16,277 855
Micron Technology, Inc. ............................... 29,967 929
National Semiconductor Corp. * ........................ 8,852 272
NCR Corp. ............................................. 4,940 182
Novellus Systems, Inc. * .............................. 7,407 292
NVIDIA Corp. .......................................... 7,203 482
PerkinElmer, Inc. ..................................... 6,478 227
Progressive Corp. ..................................... 3,635 543
QLogic Corp. * ........................................ 4,734 211
Rockwell International Corp. * ........................ 9,166 164
Sanmina Corp. ......................................... 26,565 528
Solectron Corp. * ..................................... 42,370 478
Symbol Technologies, Inc. ............................. 10,629 169
Tektronix, Inc. ....................................... 5,036 130
Teradyne, Inc. * ...................................... 9,454 285
Texas Instruments, Inc. ............................... 86,825 2,431
Thomas & Betts Corp. .................................. 2,585 55
Vitesse Semiconductor Corp. * ......................... 9,367 116
Xerox Corp. ........................................... 37,210 388
Xilinx, Inc. * ........................................ 16,484 644
-------
22,564
Energy - Alternative Source - 0.3%
Dynegy, Inc. - Cl.A ................................... 17,974 458
El Paso Corp. ......................................... 25,903 1,156
-------
1,614
Engineering & Construction - 0.0%
Fluor Corp. * ......................................... 3,715 139
Financial Services - 4.9%
American Express Co. .................................. 67,124 2,396
Capital One Financial Corp. ........................... 11,003 594
Cincinnati Financial Corp. ............................ 8,334 318
Citigroup, Inc. ....................................... 259,503 13,100
Concord EFS, Inc. ..................................... 25,601 839
Hartford Financial Services Group, Inc. ............... 12,445 782
Household International, Inc. ......................... 23,241 1,346
John Hancock Financial Services ....................... 15,448 638
Mellon Financial Corp. ................................ 23,594 888
Merrill Lynch & Co., Inc. ............................. 42,621 2,221
MGIC Investment Corp. ................................. 5,556 343
Paychex, Inc. ......................................... 18,593 648
Providian Financial Corp. * ........................... 14,115 50
Stillwell Financial, Inc. ............................. 11,219 305
Wachovia Corp. COM .................................... 68,885 2,160
-------
26,628
Food, Beverage & Tobacco - 4.7%
Adolph Coors Co. - Cl. B .............................. 1,654 88
Anheuser-Busch Cos., Inc. ............................. 44,405 2,008
Archer Daniels Midland Co. ............................ 32,744 470
Brown-Forman Corp. - Cl. B ............................ 3,400 213
Campbell Soup Co. ..................................... 20,194 603
Coca-Cola Co. ......................................... 125,517 5,918
Coca-Cola Enterprises, Inc. ........................... 22,148 420
ConAgra, Inc. ......................................... 26,681 634
General Mills, Inc. ................................... 18,529 964
H.J. Heinz Co. ........................................ 17,707 728
Hershey Foods Corp. ................................... 6,799 460
Kellogg Co. ........................................... 20,090 605
Pepsi Bottling Group, Inc. ............................ 14,818 348
PepsiCo, Inc. ......................................... 87,891 4,279
Philip Morris Cos., Inc. .............................. 109,399 5,016
Sara Lee Corp. ........................................ 38,844 864
SuperValu, Inc. ....................................... 6,893 152
Sysco Corp. ........................................... 33,978 891
UST, Inc. ............................................. 8,637 302
W.M. Wrigley Jr. Co. .................................. 11,429 587
-------
25,550
151
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Health Care Products - 12.5%
Abbott Laboratories ................................ 78,453 $ 4,374
Allergan, Inc. ..................................... 6,791 510
American Home Products Corp. ....................... 66,612 4,087
Amerisource Bergen Corp. ........................... 5,055 321
Bausch & Lomb, Inc. ................................ 2,878 108
Baxter International, Inc. ......................... 29,762 1,596
Becton, Dickinson & Co. ............................ 12,875 427
Biomet, Inc. ....................................... 13,215 408
Boston Scientific Corp. * .......................... 20,784 501
Bristol-Myers Squibb Co. ........................... 97,726 4,984
C.R. Bard, Inc. .................................... 2,574 166
Cardinal Health, Inc. .............................. 22,798 1,474
Chiron Corp. * ..................................... 9,476 415
Eli Lilly & Co. .................................... 56,735 4,456
Genzyme Corp. ...................................... 10,500 629
Guidant Corp. * .................................... 15,246 759
Immunex Corp. ...................................... 27,077 750
Johnson & Johnson .................................. 154,782 9,148
King Pharmaceuticals, Inc. * ....................... 12,122 511
McKesson HBOC, Inc. ................................ 14,647 548
MedImmune, Inc. * .................................. 10,809 501
Medtronic, Inc. .................................... 61,258 3,137
Merck & Co., Inc. .................................. 114,835 6,752
Millipore Corp. .................................... 2,168 132
Pfizer, Inc. ....................................... 317,056 12,635
Pharmacia Corp. .................................... 64,997 2,772
Schering-Plough Corp. .............................. 74,028 2,651
St. Jude Medical, Inc. ............................. 4,325 336
Stryker Corp. ...................................... 9,785 571
UnitedHealth Group, Inc. ........................... 15,961 1,130
Watson Pharmaceuticals, Inc. * ..................... 5,454 171
Zimmer Holdings, Inc. .............................. 9,373 286
--------
67,246
Health Care Services - 0.8%
Aetna US Healthcare, Inc. .......................... 6,907 228
Biogen, Inc. ....................................... 7,316 419
Forest Laboratories, Inc. .......................... 9,056 742
HCA-The Healthcare Corp. ........................... 25,632 988
Health Management Assoc., Inc. - Cl. A ............. 11,956 220
Healthsouth Corp. * ................................ 20,167 299
Humana, Inc. * ..................................... 7,447 88
Manor Care, Inc. * ................................. 5,065 120
Tenet Healthcare Corp. * ........................... 16,372 961
Wellpoint Health Networks, Inc. * .................. 3,192 373
--------
4,438
Household Appliances / Furnishings - 0.1%
Leggett & Platt, Inc. .............................. 10,285 237
Maytag Corp. ....................................... 3,611 112
Whirlpool Corp. .................................... 3,197 234
--------
583
Housing - 0.2%
Centex Corp. ....................................... 2,886 165
Masco Corp. ........................................ 23,369 573
Pulte Corp. ........................................ 3,186 142
-------
880
Insurance - 3.7%
AFLAC, Inc. ........................................ 26,665 655
Allstate Corp. ..................................... 36,454 1,229
Ambac Financial Group, Inc. ........................ 5,154 298
American International Group, Inc. ................. 131,743 10,460
Aon Corp. .......................................... 13,881 493
Chubb Corp. ........................................ 8,955 618
Cigna Corp. ........................................ 7,418 687
Conseco, Inc. ...................................... 15,882 71
Jefferson-Pilot Corp. .............................. 7,896 365
Lincoln National Corp. ............................. 9,273 450
Marsh & McLennan Cos., Inc. ........................ 13,801 1,483
MBIA, Inc. ......................................... 7,316 392
Metlife, Inc. ...................................... 36,890 1,169
Safeco Corp. ....................................... 6,286 196
St. Paul Cos., Inc. ................................ 10,526 463
Torchmark, Inc. .................................... 6,482 255
UnumProvident Corp. ................................ 12,071 320
XL Capital, Ltd. - Cl. A ........................... 6,594 603
-------
20,207
Leisure & Recreation - 0.6%
Brunswick Corp. .................................... 3,927 86
Carnival Corp. ..................................... 29,950 841
Eastman Kodak Co. .................................. 14,822 436
Harrah's Entertainment, Inc. * ..................... 6,170 228
Hasbro, Inc. ....................................... 9,076 147
International Game Technology ...................... 3,608 247
Loews Corp. ........................................ 9,987 553
Mattel, Inc. ....................................... 21,527 370
Sabre Group Holdings, Inc. * ....................... 6,467 274
Starwood Hotels & Resorts Worldwide,
Inc. ............................................. 9,589 286
-------
3,468
Machinery - 0.4%
Caterpillar, Inc. .................................. 17,499 914
Deere & Co. ........................................ 11,641 508
FMC Corp. * ........................................ 1,445 86
Ingersoll-Rand Co. ................................. 8,645 361
McDermott International, Inc. ...................... 2,189 27
Thermo Electron Corp. * ............................ 8,864 212
-------
2,108
Media - Publishing - 0.4%
Dow Jones & Co., Inc. .............................. 4,126 226
Gannett Co., Inc. .................................. 13,185 887
Knight-Ridder, Inc. ................................ 4,406 286
Meredith Corp. ..................................... 2,272 81
152
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Media - Publishing - Continued
New York Times Co. - Cl. A ............................ 8,032 $ 347
Tribune Co. ........................................... 14,699 550
-------
2,377
Media - TV / Radio - 3.3%
AOL Time Warner, Inc. * ............................... 223,394 7,171
Clear Channel Communications, Inc. .................... 30,154 1,535
Comcast Corp. - Cl. A ................................. 47,874 1,723
McGraw-Hill Cos., Inc. ................................ 9,884 603
The Walt Disney Co. ................................... 103,240 2,139
Univision Communications, Inc. - Cl. A * .............. 10,503 425
Viacom, Inc. - Cl. B * ................................ 89,651 3,958
-------
17,554
Metal Production & Fabrication - 0.0%
Worthington Industries, Inc. .......................... 3,824 54
Metals & Mining - 0.9%
Alcan Aluminum, Ltd. .................................. 16,164 581
Alcoa, Inc. ........................................... 43,243 1,537
Inco, Ltd. ............................................ 9,665 164
Minnesota Mining & Manufacturing Co. .................. 19,776 2,338
Phelps Dodge Corp. .................................... 4,110 133
-------
4,753
Natural Gas Distribution - 0.2%
KeySpan Corp. ......................................... 6,600 229
Nicor, Inc. ........................................... 2,066 86
Peoples Energy Corp. .................................. 1,951 74
Sempra Energy ......................................... 10,004 246
Williams Cos., Inc. ................................... 25,448 649
-------
1,284
Oil - 0.3%
Anadarko Petroleum Corp. .............................. 12,437 707
Baker Hughes, Inc. .................................... 16,688 608
EOG Resources, Inc. ................................... 5,769 226
Kinder Morgan, Inc. ................................... 5,566 310
-------
1,851
Oil & Natural Gas Exploration & Production - 4.6%
Amerada Hess Corp. .................................... 4,330 271
Apache Corp. .......................................... 6,910 345
Burlington Resources, Inc. ............................ 10,618 399
ChevronTexaco Corp. ................................... 53,839 4,825
Conoco, Inc. .......................................... 31,354 887
Devon Energy Corp. .................................... 6,188 239
Exxon Mobil Corp. ..................................... 344,945 13,556
Kerr-McGee Corp. ...................................... 5,115 280
Noble Drilling Corp. * ................................ 6,795 231
Occidental Petroleum Corp. ............................ 18,539 492
Phillips Petroleum Co. ................................ 19,349 1,166
Rowan Cos., Inc. * .................................... 4,137 80
Sunoco, Inc. .......................................... 3,922 146
Teco Energy, Inc. ..................................... 6,597 173
Transocean Sedco Forex, Inc. .......................... 15,698 531
Unocal Corp. .......................................... 12,554 453
USX-Marathon Group .................................... 15,849 475
-------
24,549
Oil - Equipment & Service - 1.4%
Halliburton Co. ....................................... 21,324 279
Nabors Industries, Inc. * ............................. 7,314 251
Royal Dutch Petroleum Co. - NY Shares ................ 107,219 5,256
Schlumberger, Ltd. .................................... 29,234 1,607
-------
7,393
Paper & Forest Products - 0.8%
Boise Cascade Corp. ................................... 2,584 88
Georgia-Pacific Corp. ................................. 11,855 327
International Paper Co. ............................... 24,069 971
Kimberly-Clark Corp. .................................. 26,674 1,595
Louisiana-Pacific Corp. ............................... 4,752 40
Mead Corp. ............................................ 4,544 141
Temple-Inland, Inc. ................................... 2,272 129
Westvaco Corp. ........................................ 5,247 149
Weyerhaeuser Co. ...................................... 10,713 579
Willamette Industries, Inc. ........................... 5,559 290
-------
4,309
Personal & Commercial Lending - 0.5%
Countrywide Credit Industries, Inc. ................... 6,372 261
MBNA Corp. ............................................ 42,714 1,504
USA Education, Inc. ................................... 8,037 675
-------
2,440
Pollution Control - 0.2%
Allied Waste Industries, Inc. * ....................... 9,711 137
Waste Management, Inc. ................................ 31,167 994
-------
1,131
Precious Metals/Gems/Stones - 0.2%
Barrick Gold Corp. .................................... 27,687 442
Freeport-McMoRan Copper & Gold, Inc. -
Cl. B ............................................... 6,509 87
Newmont Mining Corp. .................................. 9,685 185
Placer Dome, Inc. ..................................... 16,127 176
-------
890
Real Estate Development - 0.0%
KB Home ............................................... 2,164 87
Real Estate Investment Trust - 0.3%
Equity Office Properties Trust ........................ 21,090 634
Equity Residential Properties Trust ................... 13,986 402
Hilton Hotels Corp. ................................... 18,036 197
Marriott International, Inc. - Cl. A .................. 12,155 494
-------
1,727
Retail - Department Stores - 5.3%
Bed Bath & Beyond, Inc. * ............................. 14,320 486
153
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Retail - Department Stores - Continued
Best Buy Co., Inc. ................................. 10,505 $ 782
Big Lots, Inc. ..................................... 5,465 57
Circuit City Stores, Inc. .......................... 10,903 283
Costco Wholesale Corp. ............................. 22,854 1,014
CVS Corp. .......................................... 20,072 594
Dillard's, Inc. - Cl. A ............................ 3,724 60
Dollar General Corp. ............................... 16,127 240
Family Dollar Stores, Inc. ......................... 8,250 247
Federated Department Stores, Inc. * ................ 10,087 413
Gap, Inc. .......................................... 42,525 593
J.C. Penney Co., Inc. .............................. 12,783 344
K-mart Corp. * ..................................... 23,613 129
Kohl's Corp. ....................................... 16,984 1,196
Limited, Inc. ...................................... 20,672 304
Lowe's Cos., Inc. .................................. 39,219 1,820
May Department Stores Co. .......................... 15,285 565
Nordstrom, Inc. .................................... 7,195 146
Office Depot, Inc. ................................. 16,048 298
RadioShack Corp. ................................... 9,070 273
Sears, Roebuck & Co. ............................... 16,578 790
Staples, Inc. * .................................... 23,861 446
Target Corp. ....................................... 45,808 1,880
Tiffany & Co. ...................................... 7,112 224
TJX Cos., Inc. ..................................... 13,808 550
Toys "R" Us, Inc. * ................................ 9,587 199
Wal-Mart Stores, Inc. .............................. 224,802 12,937
Walgreen Co. ....................................... 51,380 1,730
-------
28,600
Retail - Food - 1.0%
Albertson's, Inc. .................................. 20,566 648
Darden Restaurants, Inc. ........................... 6,172 219
McDonald's Corp. ................................... 65,181 1,725
Safeway, Inc. * .................................... 25,435 1,062
Starbucks Corp. * .................................. 19,053 363
The Kroger Co. * ................................... 40,379 843
Tricon Global Restaurants, Inc. * .................. 7,264 357
Wendy's International, Inc. ........................ 5,865 171
Winn-Dixie Stores, Inc. ............................ 6,904 98
-------
5,486
Retailers - Specialty - 1.1%
Home Depot, Inc. ................................... 118,244 6,032
Shoe & Apparel Manufacturing - 0.3%
Jones Apparel Group, Inc. .......................... 6,600 219
Liz Claiborne, Inc. ................................ 2,876 143
Nike, Inc. - Cl. B ................................. 13,494 759
Reebok International, Ltd. ......................... 2,485 66
V.F. Corp. ......................................... 5,363 209
-------
1,396
Steel - 0.1%
Allegheny Technologies, Inc. ....................... 3,867 65
Nucor Corp. ........................................ 3,713 197
USX-U.S. Steel Group, Inc. ......................... 3,929 71
------
333
Telecommunication Equipment - 1.1%
ADC Telecommunications, Inc. * ..................... 37,837 174
Andrew Corp. * ..................................... 3,568 78
Corning, Inc. ...................................... 47,553 424
JDS Uniphase Corp. * ............................... 68,191 592
Lucent Technologies, Inc. .......................... 170,978 1,076
Nortel Networks Corp. .............................. 159,934 1,200
PMC-Sierra, Inc. ................................... 7,839 167
Qualcomm, Inc. * ................................... 38,501 1,944
Scientific-Atlanta, Inc. ........................... 8,537 204
Tellabs, Inc. * .................................... 19,795 296
-------
6,155
Telecommunication Services - 2.7%
AT&T Wireless Group COM ............................ 127,549 1,833
Avaya, Inc. * ...................................... 14,515 176
Broadcom Corp. - Cl. A ............................. 13,503 552
Citizens Communications Co. ........................ 14,815 158
Motorola, Inc. ..................................... 112,189 1,685
Nextel Communications, Inc. - Cl. A ................ 41,013 450
Sprint PCS ......................................... 49,063 1,198
Verizon Communications ............................. 137,008 6,502
WorldCom, Inc. * ................................... 149,364 2,103
-------
14,657
Telephone - 3.1%
Alltel Corp. ....................................... 15,555 960
AT&T Corp. ......................................... 177,825 3,226
BellSouth Corp. .................................... 94,326 3,599
CenturyTel, Inc. ................................... 7,405 243
Qwest Communications International, Inc. ........... 83,678 1,182
SBC Communications, Inc. ........................... 169,695 6,647
Sprint Corp. ....................................... 45,289 909
-------
16,766
Transportation Services - 0.6%
AMR Corp. * ........................................ 7,724 171
Burlington Northern Santa Fe Corp. ................. 19,370 553
CSX Corp. .......................................... 10,910 382
Delta Air Lines, Inc. .............................. 5,979 175
Norfolk Southern Corp. ............................. 19,959 366
Ryder System, Inc. ................................. 2,688 59
Southwest Airlines Co. ............................. 37,858 700
U.S. Airways Group, Inc. * ......................... 2,998 19
Union Pacific Corp. ................................ 12,361 705
-------
3,130
U.S. Government Agencies - 1.2%
Federal Home Loan Mortgage Corp. ................... 35,207 2,303
Federal National Mortgage Assoc. ................... 50,455 4,011
-------
6,314
154
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
(000's)
COMMON STOCK - Continued
Utilities - Electric - 0.4%
Duke Energy Co. ...................................... 39,411 $ 1,547
Progress Energy, Inc. ................................ 10,872 490
---------
2,037
---------
TOTAL COMMON STOCK- 97.8% 527,216
Par
Value
000's)
SHORT-TERM INVESTMENTS
Investment in joint trading account
(Note B) - 2.7%
2.055% due 01/02/02 ................................ $ 14,665 14,665
U.S. Treasury Bills - 0.3%
1.66% due 02/03/14 ................................. 1,241 1,241
---------
TOTAL SHORT-TERM INVESTMENTS- 3.0% 15,906
--------- ---------
TOTAL INVESTMENTS- 100.8% 543,122
Cash and Receivables, less payables- (0.8)% (4,331)
--------- ---------
NET ASSETS- 100.0% $ 538,791
========= =========
*Non-income producing security.
See notes to financial statements.
155
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS
Auto & Truck Parts - 3.0%
Accuride Corp. - Sr. Sub. Notes
9.25% due 02/01/08 ................................... $ 450 $ 234
Dana Corp. US - Notes 144A (a)
9.0% due 08/15/11 .................................... 625 575
Hayes Lemmerz International, Inc.-
Sr. Notes 144A (a)
11.875% due 06/15/06 ................................. 150 71
Hayes Lemmerz International, Inc.
9.125% due 07/15/07 .................................. 675 37
Hayes Lemmerz International, Inc. - Ser. B
9.125% due 07/15/07 .................................. 5
LDM Technologies, Inc.
10.75% due 01/15/07 .................................. 135 57
Lear Corp. - Ser. B
8.11% due 05/15/09 ................................... 550 553
Numatics, Inc. - Ser. B
9.625% due 04/01/08 .................................. 100 35
-------
1,562
Automobile - 0.9%
CSK Auto, Inc.- Sr. Notes
12.0% due 06/15/06 ................................... 135 136
Lear Corp. - Ser B.
7.96% due 05/15/05 ................................... 140 142
Navistar International - Sr. Sub Notes Ser. B
8.0% due 02/01/08 .................................... 150 148
Navistar International Corp. - Sr. Notes Ser. B
9.375% due 06/01/06 ................................. 35 37
-------
463
Bank - 0.2%
Western Financial Bank - Sub Notes
8.875% due 08/01/07 .................................. 125 116
Business Services - 0.5%
Xerox Capeurope PLC - Notes
5.875% due 05/15/04 .................................. 300 276
Chemical - 3.7%
Airgas, Inc. Sr. Sub Notes
9.125% due 10/01/11 .................................. 35 37
Georgia Gulf Corp.
10.375% due 11/01/07 ................................. 525 553
Hexcel Corp. - Sr. Sub Notes
9.75% due 01/15/09 ................................... 85 48
IMC Global, Inc. - Notes
7.625% due 11/01/05 .................................. 330 312
IMC Global, Inc. - Sr. Notes 144A (a)
11.25% due 06/01/11 .................................. 50 53
Lyondell Chemical Co. - Debs.
9.8% due 02/01/20 .................................... 110 102
Lyondell Chemical Co. - Sr. Sec. Notes Ser. B
9.875% due 05/01/07 .................................. 345 347
Lyondell Chemical Co. - Sr. Sec. Notes Ser. A
9.625% due 05/01/07 .................................. 300 301
PCI Chemicals Canada, Inc.
9.25% due 10/15/07 .................................. 90 25
Texas Petrochemical Corp. - Sr. Sub. Notes
11.125% due 07/01/06 ................................. 150 123
-------
1,901
Coal - 0.5%
P&L Coal Holdings Corp.
9.625% due 05/15/08 .................................. 242 259
Commercial Sevices - 2.9%
Allied Waste North America
10.0% due 08/01/09 ................................... 725 747
Allied Waste North America - Sr. Notes 144A (a)
8.5% due 12/01/08 .................................... 100 101
American Color Graphics, Inc.
12.75% due 08/01/05 .................................. 250 241
Anthony Crane Rental - Sr. Notes
10.375% due 08/01/08 ................................. 300 81
Pierce Leahy Command Co.
8.125% due 05/15/08 .................................. 75 76
Pierce Leahy Corp. - Sr. Sub. Notes
9.125% due 07/15/07 .................................. 220 237
-------
1,483
Computer Equipment - 0.5%
Seagate Technology, Intl. - 144A (a)
12.5% due 11/15/07 ................................... 210 235
Computer Software & Services - 0.4%
Concentric Network Corp. - Sr. Notes
12.75% due 12/15/07 .................................. 150 19
Exodus Communications, Inc.
10.75% due 12/15/09 .................................. 300 54
Exodus Communications, Inc. - Sr. Notes
11.25% due 07/01/08 .................................. 150 27
11.625% due 07/15/10 ................................. 650 120
-------
220
Consumer Miscellaneous - 1.4%
Hasbro, Inc. - Notes
8.5% due 03/15/06 .................................... 34 34
Lin Holdings Corp. - Sr. Disc. Notes
1.0% due 03/01/08 .................................... 800 504
Resolution Performance Products - Sr. Sub
Notes 144A (a)
13.5% due 11/15/10 ................................... 110 120
Resolution Performance Products Sr. Sub Notes
13.5% due 11/15/10 ................................... 65 71
-------
729
156
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Container - 1.7%
Owens-Ilinois, Inc. - Debs.
7.5% due 05/15/10 ....................................... $ 210 $ 185
Owens-Illinois Inc.
7.85% due 05/15/04 ...................................... 240 230
Owens-Illinois, Inc. - Sr. Notes
7.35% due 05/15/08 ...................................... 35 31
8.1% due 05/15/07 ....................................... 65 59
Stone Container Corp. - Sr. Notes
9.75% due 02/01/11 ...................................... 350 376
-------
881
Convertible - 0.4%
Stone Container Corp. - Sr. Notes
9.25% due 02/01/08 ...................................... 200 212
Cosmetics - 0.9%
Revlon Consumer Products, Inc. - Sr. Secd.
Notes 144A (a)
12.0% due 12/01/05 ...................................... 450 445
Diversified Operations - 2.8%
Beazer Homes USA, Inc. Sr. Notes
8.625% due 05/15/11 ..................................... 565 582
Consumers International - Sr. Notes
10.25% due 04/01/05 ..................................... 350 140
K & F Industries, Inc. - Sr. Sub. Notes
9.25% due 10/15/07 ...................................... 200 199
Noveon, Inc. - Sr. Sub Notes Ser. B
11.0% due 02/28/11 ...................................... 15 16
Pacifica Papers, Inc. - Sr. Notes
10.0% due 03/15/09 ...................................... 195 211
Roller Bearing Co. America, Inc. - Ser. B
9.625% due 06/15/07 ..................................... 30 26
SCG Holdings Corp.
12.0% due 08/01/09 ...................................... 509 178
Tembec Indiana , Inc. - Sr. Notes
8.5% due 02/01/11 ....................................... 15 16
Westinghouse Air Brake Co. - Sr. Notes
9.375% due 06/15/05 ..................................... 45 45
-------
1,413
Electric Power - 4.2%
AES Corp. - Sr. Notes
8.875% due 02/15/11 ..................................... 710 611
AES Corp. - Sr. Sub Notes
8.5% due 11/01/07 ....................................... 50 40
Calpine Corp. - Sr. Notes
8.5% due 02/15/11 ....................................... 1,000 890
8.625% due 08/15/10 ..................................... 100 89
CMS Energy Corp. - Sr. Notes
7.5% due 01/15/09 ....................................... 200 190
Western Resources, Inc.
7.125% due 08/01/09 ..................................... 165 152
Western Resources, Inc. - Sr. Notes
6.875% due 08/01/04 ..................................... 180 170
-------
2,142
Electrical Equipment - 0.3%
Wesco Distribution, Inc. - Ser. B
9.125% due 06/01/08 ..................................... 150 140
Electronic Products & Services - 3.2%
Amkor Technologies, Inc.
9.25% due 02/15/08 ...................................... 775 728
Amkor Technologies, Inc.
9.25% due 05/01/06 ...................................... 50 48
Amkor Technologies, Inc. - Sr. Sub Notes
10.5% due 05/01/09 ...................................... 175 158
Argo-Tech Corp.
8.625% due 10/01/07 ..................................... 515 345
Radiologix, Inc. - Sr. Notes 144A (a)
10.5% due 12/15/08 ...................................... 275 275
ViaSystems, Inc. - Sr. Sub Notes Ser. B
9.75% due 06/01/07 ...................................... 230 69
-------
1,623
Financial Services - 0.4%
Tembec Finance Corp. - Sr. Notes
9.875% due 09/30/05 ..................................... 195 201
Food, Beverage & Tobacco - 1.5%
Aurora Foods, Inc. - Sr. Sub Notes
9.875% due 02/15/07 ..................................... 230 221
Azurix Corp.
10.75% due 02/15/10 ..................................... 145 105
Nash-Finch Co. - Ser. B
8.5% due 05/01/08 ....................................... 225 219
New World Pasta Co.
9.25% due 02/15/09 ...................................... 225 207
-------
752
Foreign - 0.1%
Satelites Mexicanos SA - Sr. Notes
10.125% due 11/01/04 .................................... 125 72
Health Care Products - 4.0%
Alaris Medical Systems, Inc.
9.75% due 12/01/06 ...................................... 950 902
Alaris Medical, Inc. - Sr. Disc. Notes
1.0% due 08/01/08 ....................................... 150 90
Amerisource Bergen Corp. - Sr. Notes 144A (a)
8.125% due 09/01/08 ..................................... 30 31
Conmed Corp.
9.0% due 03/15/08 ....................................... 340 343
MEDIQ, Inc.
11.0% due 06/01/08 ...................................... 125
Owens Illinois, Inc.
7.15% due 05/15/05 ...................................... 380 350
157
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Health Care Products - Continued
Packard Bioscience, Co. - Sr. Sub Notes
9.375% due 03/01/07 ..................................... $ 200 $ 210
Warner Chilcott, Inc.
12.625% due 02/15/08 .................................... 125 141
-------
2,067
Health Care Services - 1.5%
Beverly Enterprises, Inc. - Sr. Notes
9.625% due 04/15/09 ..................................... 130 138
Bio-Rad Laboratories, Inc.
11.625% due 02/15/07 .................................... 107 118
Fisher Scientific International, Inc. - Sr. Sub. Notes
9.0% due 02/01/08 ....................................... 85 88
HCA-The Healthcare Corp. - Notes
8.75% due 09/01/10 ...................................... 65 71
Manor Care, Inc.
8.0% due 03/01/08 ....................................... 25 26
Omnicare, Inc. - Sr. Sub. Notes Ser. B
8.125% due 03/15/11 ..................................... 50 52
Tenet Healthcare Corp. - Sr. Sub. Notes
8.125% due 12/01/08 ..................................... 75 80
Triad Hospitals, Inc. - Sr. Notes Ser. B
8.75% due 05/01/09 ...................................... 50 53
Universal Hospital Services - Sr. Notes
10.25% due 03/01/08 ..................................... 150 146
-------
772
Household Appliances / Furnishings - 0.5%
Sealy Mattress Co. - Ser. B
0.0% due 12/15/07 ....................................... 290 242
Housing - 1.9%
American Standard Cos., Inc.
7.625% due 02/15/10 ..................................... 85 85
Grove Worldwide LLC - Sr. Sub. Notes
9.25% due 05/01/08 ...................................... 85 2
KB Home - Sr. Sub Notes
9.5% due 02/15/11 ....................................... 280 286
Standard Pacific Corp. - Sr. Notes
8.5% due 06/15/07 ....................................... 110 108
8.5% due 04/01/09 ....................................... 220 213
Standard Pacific Corp. - Sr. Notes
9.5% due 09/15/10 ....................................... 275 274
-------
968
Insurance - 0.4%
Conseco, Inc. - Notes
9.0% due 10/15/06 ....................................... 55 24
Conseco, Inc. - Sr. Notes
10.75% due 06/15/08 ..................................... 435 192
-------
216
Leisure & Recreation - 5.0%
John Q. Hammons Hotels
8.875% due 02/15/04 ..................................... 425 412
Mandalay Resort Group - Sr. Sub. Notes 144A (a)
9.375% due 02/15/10 ..................................... 250 249
MGM Mirage, Inc. - Sr. Sub. Notes
8.375% due 02/01/11 ..................................... 575 566
Physician Sales & Service, Inc.
8.5% due 10/01/07 ....................................... 550 550
Station Casinos, Inc. - Sr. Sub. Notes
9.875% due 07/01/10 ..................................... 100 101
Station Casinos, Inc. - Sr. Sub. Notes
8.875% due 12/01/08 ..................................... 420 412
True Temper Sports, Inc. - Sr. Sub. Notes
10.875% due 12/01/08 .................................... 275 279
-------
2,569
Media - Publishing - 0.2%
Sun Media Corp. - Sr. Sub. Notes
9.5% due 05/15/07 ....................................... 100 103
Media - TV / Radio - 14.3%
Adelphia Communications Corp.
9.375% due 11/15/09 ..................................... 50 48
9.875% due 03/01/07 ..................................... 200 197
10.25% due 06/15/11 ..................................... 200 199
Allbritton Communications Co. - Sr. Sub. Debs. Ser. B
9.75% due 11/30/07 ...................................... 50 53
Century Communications Corp. - Cl. A
8.875% due 01/15/07 ..................................... 75 71
Century Communications Corp. - Sr. Disc. Notes
0.0% due 01/15/08 ....................................... 650 315
Charter Communications Holdings LLC - Sr. Notes
8.625% due 04/01/09 ..................................... 525 504
10.0% due 05/15/11 ...................................... 100 102
10.75% due 10/01/09 ..................................... 200 211
Charter Communications Holdings LLC - Sr. Disc. Notes
0.0% due 01/15/11 ....................................... 350 229
Classic Cable, Inc.
10.5% due 03/01/10 ...................................... 560 134
Classic Cable, Inc. - Ser. B
9.375% due 08/01/09 ..................................... 20 5
CSC Holdings, Inc. - Sr. Notes
7.625% due 04/01/11 ..................................... 725 727
EchoStar DBS Corp. - Sr. Notes
9.375% due 02/01/09 ..................................... 875 901
Frontiervision Holding L.P. - Sr. Disc. Notes
1.0% due 09/15/07 ....................................... 200 211
158
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Media - TV / Radio - Continued
Insight Communications Co., Inc. - Sr. Disc. Notes
0.0% due 02/15/11 ...................................... $ 650 $ 383
Lin Television Corp. - Sr. Sub. Notes
8.375% due 03/01/08 .................................... 100 95
Mediacom Broadband LLC - Sr. Notes
11.0% due 07/15/13 ..................................... 200 218
Quebecor Media, Inc. - Sr. Disc. Notes
0.0% due 07/15/11 ...................................... 680 408
Quebecor Media, Inc. - Sr. Notes
11.125% due 07/15/11 ................................... 350 373
Rogers Communications
8.875% due 07/15/07 .................................... 200 202
STC Broadcasting, Inc. - Sr. Sub. Notes
11.0% due 03/15/07 ..................................... 305 253
Telewest Communications - Sr. Notes
9.875% due 02/01/10 .................................... 975 663
Time Warner Telecom, Inc.
10.125% due 02/01/11 ................................... 570 456
United Pan Europe Communications - Sr. Notes Ser. B
11.25% due 02/01/10 .................................... 175 31
United Pan-Europe Comm. - Sr. Notes Ser. B
11.5% due 02/01/10 ..................................... 125 22
Young Broadcasting, Inc. - Sr. Sub. Notes
10.0% due 03/01/11 ..................................... 350 336
-------
7,347
Metals & Mining - 0.8%
Century Aluminum Co. Sr. Secd. 1st Mtg.
11.75% due 04/15/08 .................................... 295 305
Compass Minerals Group, Inc. - Sr. Sub. Notes 144A (a)
10.0% due 08/15/11 ..................................... 70 73
Neenah Corp. - Ser. F
11.125% due 05/01/07 ................................... 40 22
Neenah Corp. - Sr. Sub. Notes
11.125% due 05/01/07 ................................... 10 5
-------
405
Motor Vehicles - 0.3%
United Rentals, Inc. - Sr. Notes
10.75% due 04/15/08 .................................... 150 161
Natural Gas Distribution - 0.9%
Energy Corp. of America - Sr. Sub. Notes
9.5% due 05/15/07 ...................................... 650 448
Oil & Natural Gas Exploration & Production - 4.1%
Clark Refining & Marketing, Inc. - Sr. Notes
8.375% due 11/15/07 .................................... 740 636
8.625% due 08/15/08 .................................... 110 95
Costilla Energy, Inc. - Sr. Notes
10.25% due 10/01/06 .................................... 63 0
Forest Oil Corp. - Sr. Notes
8.0% due 06/15/08 ...................................... 167 167
8.0% due 12/15/11 ...................................... 95 94
Plains Resources, Inc.
10.25% due 03/15/06 .................................... 200 204
Plains Resources, Inc. - Sr. Sub. Notes
10.25% due 03/15/06 .................................... 175 178
Pride International, Inc. - Sr. Notes
9.375% due 05/01/07 .................................... 100 105
10.0% due 06/01/09 ..................................... 100 108
Tesoro Petroleum Corp. - Sr. Sub. Notes 144A (a)
9.625% due 11/01/08 .................................... 135 140
Tesoro Petroleum Corp. Sr. Sub. Notes Ser. B
9.0% due 07/01/08 ...................................... 250 252
Texas Petrochemical Corp. - Sr. Sub. Notes
11.125% due 07/01/06 ................................... 175 144
-------
2,123
Oil - Equipment & Service - 1.9%
ICO, Inc. - Sr. Notes
10.375% due 06/01/07 ................................... 50 38
Parker Drilling Co. - Sr. Notes Ser. D
9.75% due 11/15/06 ..................................... 475 475
Pioneer Natural Resources Co.
9.625% due 04/01/10 .................................... 395 436
------
949
Paper & Forest Products - 1.6%
Caraustar Industries, Inc. - Sr. Sub. Notes
9.875% due 04/01/11 .................................... 475 485
Norsk Skog Canada, Ltd. Sr. Notes 144A (a)
8.625% due 06/15/11 .................................... 175 181
Paperboard Industries International, Inc. - Sr. Notes
8.375% due 09/15/07 .................................... 185 179
-------
845
Real Estate Development - 0.3%
D.R. Horton, Inc.
8.0% due 02/01/09 ...................................... 60 59
Del Webb Corp. - Sr. Sub. Debs.
10.25% due 02/15/10 .................................... 75 81
-------
140
Real Estate Operations - 0.0% IT GROUP, Inc.
11.25% due 04/01/09 .................................... 240 24
Retail - Department Stores - 0.3%
J.C. Penney Co., Inc.
7.6% due 04/01/07 ...................................... 50 49
J.C. Penney Co., Inc. - Notes
7.375% due 08/15/08 .................................... 85 83
-------
132
159
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Retail - Drug Stores - 2.2%
Duane Reade, Inc. - Sr. Sub. Notes
9.25% due 02/15/08 ...................................... $ 500 $ 505
Rite Aid Corp. - Notes
7.125% due 01/15/07 ..................................... 475 385
Rite Aid Corp. - Sr. Notes
11.25% due 07/01/08 ..................................... 250 245
-------
1,135
Shoe & Apparel Manufacturing - 1.2%
Levi Strauss & Co.
11.625% due 01/15/08 .................................... 325 290
Levi Strauss & Co. - Notes
7.0% due 11/01/06 ....................................... 260 205
WestPoint Stevens, Inc. - Sr. Notes
7.875% due 06/15/08 ..................................... 350 112
-------
607
Steel - 2.8%
AK Steel Corp.
7.875% due 02/15/09 ..................................... 550 542
AK Steel Corp. - Sr. Notes
9.125% due 12/15/06 ..................................... 100 103
Algoma Steel, Inc.
12.375% due 07/15/05 .................................... 300 66
Armco, Inc. - Sr. Notes
9.0% due 09/15/07 ....................................... 75 76
Bayou Steel Corp.
9.5% due 05/15/08 ....................................... 10 5
National Steel Corp.
9.875% due 03/01/09 ..................................... 320 109
United States Steel LLC - Sr. Notes 144A (a)
10.75% due 08/01/08 ..................................... 520 502
Weirton Steel Corp. - Sr. Notes
11.375% due 07/01/04 .................................... 375 37
-------
1,440
Telecommunication Equipment - 4.3%
Crown Castle International Corp. - Sr. Disc. Notes
0.0% due 11/15/07 ....................................... 570 493
Fairchild Semiconductor Corp.
10.375% due 10/01/07 .................................... 35 36
Fairchild Semiconductor Corp. - Sr. Sub. Notes
10.125% due 03/15/07 .................................... 250 258
Fairchild Semiconductor Corp. - Sr. Sub. Notes
10.5% due 02/01/09 ...................................... 200 212
L-3 Communications Corp. - Sr. Sub. Notes
8.5% due 05/15/08 ....................................... 35 36
Lucent Technologies, Inc. - Notes
7.25% due 07/15/06 ...................................... 750 645
Marconi plc
7.75% due 09/15/10 ...................................... 400 208
NTL, Inc. - Sr. Notes
10.0% due 02/15/07 ...................................... 100 33
Williams Communications Group, Inc. - Sr. Notes
10.875% due 10/01/09 .................................... 700 287
Winstar Communications, Inc. - Sr. Notes
12.75% due 04/15/10 ..................................... 150 1
-------
2,209
Telecommunication Services - 8.3%
Alaska Communications Holdings, Inc. - Sr. Sub. Notes
9.375% due 05/15/09 ..................................... 85 85
Flag Telecom Holdings, Ltd. - Sr. Notes
11.625% due 03/30/10 .................................... 200 84
Fonda Group, Inc. - Sr. Sub. Notes
9.5% due 03/01/07 ....................................... 125 113
GCI, Inc. - Sr. Notes
9.75% due 08/01/07 ...................................... 585 565
Global Crossing Holdings, Ltd.
9.125% due 11/15/06 ..................................... 550 71
Global Crossing Holdings, Ltd. - Sr. Notes
8.7% due 08/01/07 ....................................... 400 46
GST Telecommunications, Inc. - Sr. Sub. Notes
12.75% due 11/15/07 ..................................... 50
GT Group Telecom - Sr. Disc. Notes
0.0% due 02/01/10 ....................................... 630 85
Hyperion Telecommunications, Inc. - Sr. Disc. Notes
13.0% due 04/15/03 ...................................... 250 8
Hyperion Telecommunications, Inc. - Sr. Notes
12.25% due 09/01/04 ..................................... 190 23
Insight Midwest LP
9.75% due 10/01/09 ...................................... 235 247
Insight Midwest LP Capital, Inc. - Sr. Notes
10.5% due 11/01/10 ...................................... 40 43
KMC Telecom Holdings, Inc. - Sr. Disc. Notes
1.0% due 02/15/08 ....................................... 275 8
McleodUSA, Inc.
8.125% due 02/15/09 ..................................... 175 38
McLeodUSA, Inc. - Sr. Notes
8.375% due 03/15/08 ..................................... 680 146
McLeodUSA, Inc. - Sr. Notes
9.5% due 11/01/08 ....................................... 605 133
Nextel Communications, Inc. - Sr. Disc. Notes
1.0% due 10/31/07 ....................................... 650 458
9.375% due 11/15/09 ..................................... 625 491
Nextel Communications, Inc. - Sr. Notes
9.5% due 02/01/11 ....................................... 100 77
160
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Telecommunication Services - Continued
NTL Communications Corp. - Sr. Notes
1.0% due 10/01/08 ................................ $ 615 $ 149
RCN Corp.
0.0% due 10/15/07 ................................ 39 10
10.0% due 10/15/07 ............................... 125 48
Rogers Cantel Mobile, Inc. - Sr. Secd. Debs.
9.75% due 06/01/16 ............................... 100 99
Rogers Cantel, Inc. - Sr. Secd. Debs.
9.375% due 06/01/08 .............................. 225 233
Rogers Wireless, Inc. Sr. Secd. Notes
9.625% due 05/01/11 .............................. 575 595
Telecommunications Techniques Co.
9.75% due 05/15/08 ............................... 240 72
Time Warner Telecom LLC - Sr. Notes
9.75% due 07/15/08 ............................... 395 320
-------
4,247
Telephone - 0.2%
ITC DeltaCom, Inc. - Sr. Notes
8.875% due 03/01/08 .............................. 125 41
9.75% due 11/15/08 ............................... 75 25
NEXTLINK Communications, Inc. - Sr. Disc.
Notes
1.0% due 04/15/08 ................................ 300 23
-------
89
Transportation Services - 2.8%
Air Canada, Inc. - Sr. Notes
10.25% due 03/15/11 .............................. 555 344
Atlas Air, Inc.
10.75% due 08/01/05 .............................. 185 161
Atlas Air, Inc. - Sr. Notes
9.375% due 11/15/06 .............................. 180 151
Delta Air Lines, Inc. - Notes
7.9% due 12/15/09 ................................ 670 606
Dunlop Standard Aero Holdings - Sr. Notes
11.875% due 05/15/09 ............................. 150 152
-------
1,414
Utilites - Telephone - 0.1%
Flag, Ltd. - Sr. Notes
8.25% due 01/30/08 ............................... 100 70
-------
TOTAL PUBLICLY-TRADED BONDS- 89.4% 45,847
Shares
PREFERRED STOCK
Media - Publishing - 0.1%
Primedia, Inc. ................................... 1,250 51
Telecommunication Services - 0.0%
XO Communications, Inc. .......................... 144 0
-------
TOTAL PREFERRED STOCK- 0.1% 51
WARRANTS
Household Appliances/Furnishings - 0.0%
Mattress Discounters Corp.
expires 07/15/07 (Cost $1) ....................... 75 0
Telecommunication Services - 0.0%
GT Group Telecom, Inc.
expires 02/10/01 (Cost $9) ....................... 180 1
KMC Telecom Holdings, Inc. - WT 144A (a)
expires 01/31/08 (Cost $0) ....................... 250 0
--------
TOTAL WARRANTS- 0.0% 1
Par
Value
(000's)
SHORT-TERM INVESTMENTS - 7.5%
Investment in joint trading account (Note B)
2.055% due 01/02/02 .............................. $ 3,832 3,832
------ --------
TOTAL INVESTMENTS- 97.0% 49,731
Cash and Receivables, less payables- 3.0% 1,543
------- --------
NET ASSETS- 100.0% $ 51,274
(a) Pursuant to Rule 144A under the Securities Act of 1993, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2001, securities aggregated
$4,051 or 8.0% of net assets of the Portfolio
See notes to financial statements.
161
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GLOBAL BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS
Australia - 1.2%
Commonwealth of Australia - Bonds (28)
7.5% due 07/15/05 ................................. $ 1,000 $ 548
Canada - 0.7%
Government of Canada - Bonds (28)
7.0% due 12/01/06 ................................. 125 86
Province of British Columbia - Debs (28)
6.35% due 06/18/31 ................................ 125 80
Tellus Corp. - Notes Ser. CA (T1)
7.5% due 06/01/06 ................................. 250 165
-------
331
Denmark - 1.4%
Danske Kredit (LR)
6.0% due 10/01/29 ................................. 5,886 684
Finland - 4.5%
Republic of Finland - Bonds (28)
5.75% due 02/23/11 ................................ 2,300 2,138
France - 5.0%
Government of France - Bonds (28)
5.25% due 04/25/08 ................................ 1,580 1,445
Government of France - O.A.T. (28)
5.5% due 04/25/07 ................................. 990 919
-------
2,364
Germany - 15.1%
Federal Republic of Germany - Bonds (28)
5.25% due 01/04/08 ................................ 2,750 2,508
Kredit Fuer Wiederaufbau (B0)
5.0% due 07/04/11 ................................. 1,450 1,275
Republic of Germany (28)
5.25% due 01/04/11 ................................ 3,750 3,396
-------
7,179
Greece - 1.3%
Hellenic Republic - Bonds (28)
8.6% due 03/26/08 ................................. 300 319
8.8% due 06/19/07 ................................. 293 310
-------
629
Ireland - 0.3%
Republic of Ireland - Debs. (28)
4.0% due 04/18/10 ................................. 200 165
Japan - 7.7%
Government of Japan - Bonds (28)
0.9% due 12/22/08 ................................. 320,000 2,442
Government of Japan
1.1% due 03/21/11 ................................. 80,000 600
Government of Japan
1.8% due 03/22/10 ................................. 80,000 643
-------
3,685
Luxembourg - 1.3%
Ford Motor Credit Co. (LR)
5.25% due 06/16/08 ................................ 1,460 614
Netherlands - 3.9%
Government of Netherlands - Bonds (28)
6.5% due 04/15/03 ................................. 750 692
Kingdom of Netherlands (28)
5.5% due 07/15/10 ................................. 1,280 1,174
-------
1,866
New Zealand - 0.9%
Government of New Zealand - Bonds (28)
8.0% due 11/15/06 ................................. 1,000 445
Spain - 2.0%
Kingdom of Spain (28)
4.0% due 01/31/10 ................................. 1,150 952
Supra National - 21.2%
Arena Brands Co. (F2)
6.1% due 11/15/62 ................................. 500 469
AT&T Corp. 144A (a)
6.0% due 11/21/06 ................................. 610 538
Bank of Ireland (B0)
6.45% due 02/10/10 ................................ 1,000 922
BAT International Finance (F2)
4.875% due 02/25/09 ............................... 600 502
British Telecommunications plc (T1)
6.875% due 02/15/11 ............................... 1,120 1,044
Daimler Chrysler International Finance Co. (B9)
6.125% due 03/21/06 ............................... 600 542
European Investment Bank - Notes (28)
3.0% due 09/20/06 ................................. 160,000 1,369
FIixed Link Finance BV (F1)
6.3% due 08/28/25 ................................. 250 363
France Telecom (T1)
6.75% due 03/14/08 ................................ 560 519
International-American Development Bank -
Bonds (B0)
1.9% due 07/08/09 ................................. 100,000 815
Kingdom of Spain - Notes (28)
3.1% due 09/20/06 ................................. 120,000 1,030
Koninklijke KPN NV - Notes (T1)
4.75% due 11/05/08 ................................ 630 483
Mannesman Finance BV (M1)
4.75% due 05/27/09 ................................ 750 633
Royal Bank of Scotland PLC (B0)
8.375% due 01/29/07 ............................... 300 482
Standard Charter Bank (B0)
5.375% due 05/06/09 ............................... 450 386
-------
10,097
162
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GLOBAL BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Sweden - 1.0%
Swedish Government (28)
5.0% due 01/28/09 .............................. $ 5,200 $ 491
United Kingdom - 3.0%
Treasury (28)
8.0% due 12/07/15 .............................. 410 770
U.K. Treasury (28)
7.25% due 12/07/07 ............................. 205 330
U.K. Treasury - Bonds (28)
8.5% due 12/07/05 .............................. 200 326
-------
1,426
United States - 25.0%
Adelphia Communications Corp.(ME)
10.25% due 06/15/11 ............................ 50 50
Aetna, Inc. - Sr. Notes (47)
7.375% due 03/01/06 ............................ 100 100
American Tower Corp. - Sr. Notes (TE)
9.375% due 02/01/09 ............................ 225 181
Belo Corp. - Sr. Notes (ME)
7.125% due 06/01/07 ............................ 100 100
Belo Corp. - Debs (ME)
7.25% due 09/15/27 ............................. 425 343
Bowater Canada Finance Corp. - Notes 144A
(B9)
7.95% due 11/15/11 ............................. 100 103
Centennial Cellulat Operating Co. - Sr. Sub.
Notes (T1)
10.75% due 12/15/08 ............................ 50 43
CenturyTel, Inc. - Sr. Notes Ser. H (U3)
8.375% due 10/15/10 ............................ 125 132
Chancellor Media Corp. (ME)
8.0% due 11/01/08 .............................. 125 130
Charter Communications Holdings LLC - Sr.
Notes (ME)
10.0% due 05/15/11 ............................. 375 381
Cingular Wireless LLC - Sr. Notes 144A (T1)
6.5% due 12/15/11 .............................. 125 127
Clear Channel Communications, Inc. (ME)
7.65% due 09/15/10 ............................. 250 258
Comcast Cable Communications (ME)
6.75% due 01/30/11 ............................. 100 100
Credit Suisse First Boston Mortgage
Securities, Corp. - Ser. 2001 Cl. A 2 (B9)
5.935% due 01/15/06 ............................ 100 102
Crown Castle International Corp. - Sr. Notes
(T1)
10.75% due 08/01/11 ............................ 75 73
Dillard Department Stores, Inc. - Notes (R4)
6.625% due 01/15/18 ............................ 75 57
Federal Home Loan Mortgage (G1)
4.5% due 03/15/04 .............................. 740 666
Federal Natioanl Mortgage Assoc. (G1)
7.0% due 12/01/30 .............................. 169 173
Federal National Mortgage Assoc. - Sr. Notes (G1)
2.125% due 10/09/07 ............................ 100,000 829
Federal National Mortgage Assoc. (G1)
5.125% due 02/13/04 ............................ 500 517
6.0% due 05/15/08 .............................. 100 104
6.5% due 08/01/13 .............................. 388 397
Federal National Mortgage Assoc. (G1)
6.5% due 09/01/30 .............................. 468 468
Federal National Mortgage Assoc. (G1)
7.0% due 11/01/30 .............................. 610 622
7.0% due 12/01/30 .............................. 143 146
Federal National Mortgage Assoc. (G1)
7.0% due 09/01/31 .............................. 200 204
Federal National Mortgage Assoc. (G1)
7.5% due 12/01/30 .............................. 182 188
First Energy Corp. - Notes Ser. B (U1)
6.45% due 11/15/11 ............................. 100 98
Fox Sports Networks LLC - Sr. Disc. Notes
(ME)
0.0% due 08/15/07 .............................. 125 124
France Telecom - Notes 144A (a) (T1)
7.75% due 03/01/11 ............................. 100 107
Gap, Inc. - Notes 144A (a) (L1)
8.8% due 12/15/08 .............................. 100 87
Gemstone Investor, Ltd. - Sr. Secd. Notes
144A (a) (F1)
7.71% due 10/31/04 ............................. 100 97
Liberty Media Corp. - Bonds (ME)
7.875% due 07/15/09 ............................ 100 102
Nortel Networks, Ltd. - Notes (TE)
6.125% due 02/15/06 ............................ 125 102
Progress Energy, Inc. - Sr. Notes (U1)
7.1% due 03/01/11 .............................. 100 104
Qwest Capital Funding - Notes (F1)
7.25% due 02/15/11 ............................. 30 29
Qwest Capital Funding GTD - Notes (F1)
7.9% due 08/15/10 .............................. 35 36
Six Flags, Inc. - Sr. Notes (50)
9.5% due 02/01/09 .............................. 100 101
Spectrasite Holdings, Inc. - Sr. Notes Ser. B
(TE)
10.75% due 03/15/10 ............................ 75 37
Tellus Corp. - Notes (T1)
8.0% due 06/01/11 .............................. 75 80
Toys "R" Us, Inc. - Notes 144A (a)
7.625% due 08/01/11 ............................ 100 97
U.S. Treasury - Bonds (29)
5.25% due 02/15/29 ............................. 125 117
U.S. Treasury - Notes (29)
5.75% due 08/15/03 ............................. 1,500 1,571
U.S. Treasury - Notes (29)
6.25% due 02/15/07 ............................. 575 621
163
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
GLOBAL BOND FUND
Par Market
Name of Issuer Value Value
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
United States - Continued
U.S. Treasury - Bonds (29)
7.25% due 05/15/16 ............................... $ 1,000 $ 1,156
8.875% due 08/15/17 .............................. 300 399
Univision Communications, Inc. - Sr. Notes
(ME)
7.85% due 07/15/11 ............................... 100 103
Viacom, Inc. (ME)
7.7% due 07/30/10 ................................ 150 163
---------
11,925
---------
TOTAL PUBLICLY-TRADED BONDS- 95.5% 45,539
SHORT-TERM INVESTMENTS - 3.1%
Investment in joint trading account (Note B)
2.055% due 01/02/02 ............................ 1,462 1,462
-------- ---------
TOTAL INVESTMENTS- 98.6% 47,001
Cash and Receivables, less payables- 1.4% 645
-------- ---------
NET ASSETS- 100.0% $ 47,646
======== =========
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED)
Market % of
Industry Value Long-Term
Industry Abbreviation (000s) Investments
Electric Power ................ U1 $ 104 0.2%
U.S. Governmental ............. 29 3,864 8.5%
U.S. Government Agencies ...... G1 4,314 9.5%
Telephone ..................... U3 670 1.5%
Telecommunication Services .... T1 2641 5.8%
Telecommunication Equipment ... TE 321 0.7%
Retail - Department Stores .... R4 242 0.5%
Personal & Commercial Lending . LR 1,298 2.9%
Media - TV / Radio ............ ME 1,855 4.1%
Machinery ..................... M1 633 1.4%
Leisure & Recreation .......... 50 101 0.2%
Insurance ..................... 47 100 0.2%
Foreign Governmental .......... 28 21,808 47.9%
Food, Beverage & Tobacco ...... F2 971 2.1%
Financial Services ............ F1 1175 2.6%
Electric Power ................ 98 0.2%
Brokerage & Investment
Management ................. I2 97 0.2%
Bank .......................... B0 5,247 11.5%
----------- ------------
$45,539 100.0%
=========== ============
164
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE A--ORGANIZATION
The John Hancock Variable Series Trust I (the "Trust") is a diversified
open-end management investment company registered under the Investment Company
Act of 1940, as amended. The Trust is organized as a Massachusetts business
trust. The Trust consists of twenty-eight funds: Large Cap Growth, Fundamental
Growth, Active Bond, Emerging Markets Equity, International Equity Index,
International Equity, Small Cap Growth, Health Sciences, Global Balanced, Mid
Cap Growth, Large Cap Value, Large Cap Value CORE, Large/Mid Cap Value, Money
Market, Small/Mid Cap Growth, Bond Index, Large Cap Aggressive Growth, Small/Mid
Cap CORE, Small Cap Value (formerly, Small/Mid Cap Value), Real Estate Equity,
Growth & Income, Managed, Short-Term Bond, Small Cap Equity, International
Opportunities, Equity Index, High Yield Bond and Global Bond Funds
(collectively, "the Funds"). The Trust may add or delete Funds in the future to
accommodate various investment objectives. The Trust has issued shares of
beneficial interest exclusively to John Hancock Variable Life Account U
("JHVLAU"), John Hancock Variable Life Account V ("JHVLAV"), John Hancock
Variable Life Account S ("JHVLAS"), and John Hancock Variable Annuity Account I
("JHVAAI") to fund policies and contracts issued by the John Hancock Variable
Life Insurance Company ("JHVLICO"), and to John Hancock Variable Annuity Account
U ("JHVAAU"), John Hancock Variable Annuity Account V ("JHVAAV"), John Hancock
Variable Life Insurance Account UV ("JHVLIAUV"), John Hancock Variable Annuity
Account H ("JHVAAH"), and John Hancock Variable Annuity Account JF ("JHVAAJF")
to fund contracts and policies issued by John Hancock Life Insurance Company
("John Hancock" or "JHLICO"), to John Hancock Variable Life Account PPM-1
("PPM-1"), and to John Hancock Variable Life Account PPM-2 ("PPM-2").
NOTE B--ACCOUNTING POLICIES
Valuation of investments: For the Large Cap Growth, Fundamental Growth,
------------------------
Emerging Markets Equity, Small Cap Growth, Health Sciences, Mid Cap Growth,
Large Cap Value, Large Cap Value CORE, Large/Mid Cap Value, Small/ Mid Cap
Growth, Large Cap Aggressive Growth, Small/Mid Cap CORE, Small Cap Value, Real
Estate Equity, Growth & Income, Managed, Small Cap Equity, and Equity Index
Funds: Common stocks and other such securities traded on national exchanges are
normally valued on the basis of closing prices. Securities traded in the
over-the-counter market and securities with no sales on the day of valuation are
normally valued at their last available bid price.
For the Active Bond, Bond Index, Managed, Short-Term Bond, High Yield
Bond and Global Bond Funds: Debt investment securities having a primary market
over-the-counter are valued on the basis of valuations furnished by a pricing
service which determines valuations for normal institutional size trading units
of debt securities, without exclusive reliance upon quoted prices.
For the Money Market Fund: The Board of Trustees has determined that
the appropriate method for valuing Fund securities is amortized cost, so long as
the average weighted maturity of money market instruments comprising the Fund
does not exceed 90 days. Accordingly, Fund securities are valued at amortized
cost, which approximates market value. The amortized cost method involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the security to the Fund.
For each of the Funds, short-term investments, with a maturity not to
exceed 60 days, are valued at amortized cost, which approximates market value.
For the International Equity Index, International Equity, Global
Balanced and International Opportunities Funds: Investments in securities traded
on national securities exchanges in the United States or on equivalent foreign
exchanges are normally valued at the last quoted sales price on such exchanges
as of the close of business on the date of which assets are valued. Securities
traded in the over-the-counter market and securities traded with no sales on the
day of
165
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
valuation are normally valued at their last available bid price. All Fund
securities initially expressed in terms of foreign currencies have been
translated into U.S. Dollars as described in "Currency Translation" below.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Funds, are
valued at fair value as determined in good faith by the Board of Trustees.
Investment security transactions are recorded on the date of purchase or sale.
Repurchase agreements: The Funds may enter into repurchase agreements which
---------------------
are contracts under which a Fund would acquire a security for a relatively short
period (usually not more than 7 days) subject to the obligation of the seller to
repurchase and the Fund to resell such security at a fixed time and price
(representing the Funds' cost plus interest). A Fund will enter into repurchase
agreements only with member banks of the Federal Reserve System and with
"primary dealers" in United States Government Securities. The underlying
securities, which represent the collateral of the agreement, must be marked to
market daily to ensure that each repurchase agreement is fully collateralized at
all times. A Fund will not invest more than 10% of its net assets in repurchase
agreements maturing in more than 7 days.
Joint repurchase agreements: The Active Bond and Small Cap Growth Funds,
---------------------------
along with other registered investment companies having a management contract
with John Hancock Advisers, Inc. ("Adviser"), an indirect wholly-owned
subsidiary of John Hancock, may participate in a joint repurchase agreement
pursuant to an exemptive order issued by the Securities and Exchange Commission.
Aggregate cash balances are invested in one or more repurchase agreements, whose
underlying securities are obligations of the U.S. Government and/or its
agencies. The Funds' custodian bank receives delivery of the underlying
securities for the joint repurchase agreement on the Funds' behalf. The Adviser
is responsible for ensuring that the agreement is fully collateralized at all
times. The International Equity, Large Cap Value CORE and Small/Mid Cap CORE
Funds, along with other registered investment companies having a management
contract with Goldman Sachs Asset Management, may participate in a joint
repurchase agreement pursuant to an exemptive order issued by the Securities and
Exchange Commission. Aggregate cash balances are invested in one or more
repurchase agreements, whose underlying securities are obligations of the U.S.
Government and/or its agencies. The Funds' custodian bank receives delivery of
the underlying securities for the joint repurchase agreement on the Funds'
behalf. Goldman Sachs Asset Management is responsible for ensuring that the
agreement is fully collateralized at all times.
Joint trading account: Pursuant to an exemptive order issued by the
---------------------
Securities and Exchange Commission, the order permits the Funds to pool daily
uninvested cash balances into a joint account for the purpose of investing the
cash balances in short-term repurchase agreements, commercial paper and other
short-term investments which in no event will have a maturity in excess of 7
days. Joint account holdings as of December 31, 2001 are as follows:
Name of Issuer Market Value
- -------------- ------------
American Express Credit Corp., 1.75%, due 01/07/02 $ 49,309
American General Financial Corp., 2.02%, due 01/04/02 34,028
Barton Capital Corp., 2.1%, due 01/03/02 10,052
Blue Ridge Asset, 2.1%, due 01/03/02 49,998
Eagle Funding Capital Corp., 2.10%, due 01/03/02 8,999
Eagle Funding Capital Corp., 1.90%, due 01/07/02 39,989
Edison Asset Securities, 2.0%, due 01/02/02 50,000
Fleet Funding Corp., 2.0%, due 01/02/02 26,026
Goldman Sachs Group, 2.05%, due 01/04/02 49,994
Moriarty, Ltd., 2.15%, due 01/04/02 49,994
166
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Old Line Funding Corp., 2.15%, due 01/03/02 49,997
Receivables Capital Corp., 2.1%, due 01/02/02 38,691
Salomon Smith Barney Holdings, Inc., 2.0%, due 01/02/02 33,000
Salomon Smith Barney Holdings, Inc., 2.0%, due 01/03/02 11,799
--------
Joint Trading Account Totals (Total Par Value $501,923) $501,876
========
Currency translation: All assets or liabilities initially expressed in
--------------------
terms of foreign currencies are translated into U.S. dollars based on London
currency exchange quotations as of 5:00 p.m., London time, on the date of any
determination of the net asset value of the Funds. Unrealized exchange
adjustments are included in unrealized appreciation (depreciation) of
investments. Transactions affecting statement of operations accounts and net
realized gain (loss) on investments are translated at the rates prevailing at
the dates of transactions.
The Funds do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gains or losses
from investments.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward foreign
currency contracts, disposition of foreign currencies, currency gains and losses
realized between trade and settlement dates of security transactions, and the
difference between the amounts of net investment income accrued and the U.S.
dollar amount actually received. Net unrealized foreign exchange gains and
losses arise from changes in the value of assets and liabilities other than
investments in securities, resulting from changes in the exchange rate.
Discount and premium on debt securities: The Funds accrete discount and
---------------------------------------
amortize premium from par value on securities from either the date of issue or
the date of purchase over the life of the security.
Expenses: Expenses directly attributable to a Fund are charged to that
--------
Fund. Expenses not directly attributed to a Fund are allocated on the basis of
relative net assets.
Bank borrowings: The Funds (except for Money Market and International
---------------
Equity Index Funds) are permitted to have bank borrowings for temporary or
emergency purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. The Funds (excluding
Equity Index) have entered into a syndicated line of credit agreement with State
Street Bank and Trust Company ("SSBT"), the Trust's recordkeeper and custodian.
This agreement enables the Funds to participate in an unsecured line of credit,
which permits borrowings up to $75 million, collectively. Equity Index has
entered into a syndicated line of credit with Fleet Bank. This agreement enables
Equity Index to participate in an unsecured line of credit, which permits
borrowings up to $10 million. Interest is charged to each Fund, based on its
borrowing. In addition, a commitment fee is charged to each Fund based on the
average daily unused portion of the line of credit and is allocated among the
participating Funds. Interest expense paid under the line of credit is included
under the caption "Other fees" in the Statement of Operations. The following
Funds had borrowings under the line of credit during the year ended December 31,
2001:
167
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Fund Loans were Outstanding Interest Rate Interest Expense
- ---- ---------------------- ------------- ----------------
Large Cap Growth $ 1,629 4.61% $ 5
Fundamental Growth 1,188 3.04 1
Large Cap Aggressive
Growth 840 4.93 -
Small/Mid Cap CORE 218 5.64 1
Small Cap Equity 2,053 2.97 1
Small Cap Growth 1,459 2.61 -
Short-Term Bond 1,568 5.95 1
International Opportunities 906 4.46 3
High Yield Bond 113 6.57 -
Global Bond 516 3.31 2
Securities lending: Certain Funds (Large Cap Growth, Fundamental Growth,
------------------
Active Bond, International Equity Index, Small Cap Growth, Mid Cap Growth, Large
Cap Value, Small/Mid Cap Growth, Bond Index, Large Cap Aggressive Growth, Growth
& Income, Managed, Short-Term Bond, Small Cap Equity, International
Opportunities and Global Bond Funds) have entered into an agreement with State
Street Bank & Trust to lend their securities to certain qualified brokers who
pay these Funds negotiated lender fees. These loans are collateralized at all
times with cash or securities with a market value at least equal to the market
value of the securities on loan. Cash collateral is invested in a short-term
instrument. As with other extensions of credit, these Funds may bear the risk of
delay of the loaned securities in recovery or even loss of rights in the
collateral should the borrower of the securities fail financially. At December
31, 2001, the market value of the securities loaned and the market value of the
collateral were as follows:
Fund Value of Securities Loaned Value of Collateral
- ---- -------------------------- -------------------
Large Cap Growth $ 20,808 $ 21,598
Fundamental Growth 8,653 9,147
Active Bond 79,472 80,901
International Equity Index 21,999 22,996
Small Cap Growth 45,014 47,893
Mid Cap Growth 57,807 61,232
Large Cap Value 12,418 13,111
Small/Mid Cap Growth 33,368 35,018
Bond Index 28,264 28,336
Large Cap Aggressive Growth 7,685 8,002
Growth & Income 44,245 45,763
Managed 121,114 122,782
Short-Term Bond 36,552 36,933
Small Cap Equity 17,643 18,520
International Opportunities 9,120 9,498
Global Bond 3,011 3,053
168
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Financial futures contracts: The Large Cap Growth, Active Bond, Emerging
---------------------------
Markets Equity, International Equity Index, International Equity, Small Cap
Growth, Health Sciences, Global Balanced, Mid Cap Growth, Large Cap Value CORE,
Large/Mid Cap Value, Small/Mid Cap Growth, Small Cap Value, Small/Mid Cap CORE,
Real Estate Equity, Growth & Income, Managed, Short-Term Bond, Equity Index,
High Yield Bond and Global Bond Funds may buy and sell financial futures
contracts to hedge against the effects of fluctuations in interest rates and
other market conditions. At the time the Fund enters into a financial futures
contract, it will be required to deposit with its custodian a specified amount
of cash or U.S. government securities, known as "initial margin". Each day, the
futures contract is valued at the official settlement price of the Chicago Board
of Trade or U.S. commodities exchange. Daily adjustments, called variation
margin, arising from this "mark to market", are recorded by the Funds as
unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or a loss. Risk
of entering into futures contracts include the possibility that there may be an
illiquid market and/or that a change in the value of the contract may not
correlate with changes in the value of the underlying securities. In addition,
the Fund could be prevented from opening or realizing the benefits of closing
out futures positions because of position limits or limits on daily price
fluctuations imposed by an exchange. At December 31, 2001, open financial
futures contracts were as follows:
Open Unrealized
Fund Contracts Position Expiration Month Gain (loss)
- ---- --------- -------- ---------------- -----------
INTERNATIONAL EQUITY INDEX
CAC 40 10 Euro Index Futures 13 Long March 02 $ 13
DAX Index Futures 4 Long March 02 6
Nikkei 225 Index Futures 15 Long March 02 (10)
FTSE 100 Index Futures 9 Long March 02 4
------
$ 13
======
LARGE CAP VALUE CORE
S&P Mini 500 Index Futures 12 Long March 02 $ (3)
======
LARGE/MID CAP VALUE
S&P Mini 500 Index Futures 15 Long March 02 $ (11)
======
SMALL CAP VALUE
Russell 2000 Index Futures 6 Long March 02 $ 22
======
EQUITY INDEX
S&P 500 Index Futures 56 Long March 02 $ 97
======
At December 31, 2001, the International Equity Index, Equity Index,
Small/Mid Cap CORE, International Equity, Large Cap Value CORE, Large/Mid Cap
Value and Small Cap Value had deposited $300, $1,245, $200, $25, $185, $35 and
$1,000, respectively, in segregated accounts to cover initial margin
requirements on open financial futures contracts.
Forward foreign currency contracts: The Funds may use forward foreign
----------------------------------
currency contracts to facilitate transactions in foreign securities and to
manage Funds' currency exposure. Contracts to buy generally are used to acquire
exposure to foreign currencies, while contracts to sell are used to hedge the
Funds' investments against currency fluctuations. Neither type of foreign
currency transaction will eliminate fluctuations in the prices of the Funds'
169
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
securities or prevent loss if the price of such securities should decline. The
U.S. dollar value of a forward foreign currency contract is determined using
forward exchange rates supplied by a quotation service. Realized gain (loss) on
the purchases and sales of forward foreign currency contracts is recognized on
settlement date.
As of December 31, 2001 the Emerging Markets Equity, International Equity
Index, Global Balanced, Managed and Global Bond Funds had open forward foreign
currency contracts which contractually obligate the Fund to deliver or receive
currencies at a specified date, as follows:
Principal Amount Unrealized
Fund Covered by Contract Expiration Month Gain(Loss)
- ---- ------------------- ---------------- ----------
EMERGING MARKETS EQUITY
Currency Purchased
- ------------------
Mexican Peso ............................ 7,717 January 02 $ 19
======
Currency Sold
- -------------
Mexican Peso ............................ 15,170 January 02 $(153)
======
INTERNATIONAL EQUITY INDEX
Currency Purchased
- ------------------
Euro .................................... 1,332 March 02 $ (14)
Japanese Yen ............................ 120,300 March 02 (33)
Pound Sterling .......................... 574 March 02 (3)
------
$ (50)
======
Currency Sold
- -------------
Euro .................................... 229 March 02 $ 2
Japanese Yen ............................ 19,600 March 02 3
Pound Sterling .......................... 104 March 02 (1)
------
$ 4
======
GLOBAL BALANCED
Currency Purchased
- ------------------
Swiss Franc ............................. 174 February 02 -
Swiss Franc ............................. 137 March 02 $ (3)
Swiss Franc ............................. 59 June 02 -
Euro .................................... 144 January 02 (1)
Euro .................................... 201 February 02 -
Euro .................................... 452 March 02 9
Euro .................................... 189 April 02 2
Euro .................................... 66 May 02 (2)
Euro .................................... 66 July 02 (1)
Euro .................................... 56 October 02 (1)
------
$ 3
======
Currency Sold
- -------------
Canadian Dollar ......................... 55 January 02 -
Canadian Dollar ......................... 56 February 02 -
Pound Sterling .......................... 17 March 02 $ (1)
170
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Principal Amount Unrealized
Fund Covered by Contract Expiration Month Gain (Loss)
- ---- ------------------- ---------------- -----------
Pound Sterling 118 April 02 (4)
Pound Sterling 41 July 02 -
Hong Kong Dollar 281 June 02 -
Japanese Yen 6,144 January 02 4
Japanese Yen 7,794 February 02 $ 7
Japanese Yen 43,095 March 02 27
Japanese Yen 6,283 April 02 -
Japanese Yen 7,027 May 02 6
Japanese Yen 6,134 October 02 4
Euro 250 January 02 2
Swedish Krona 586 March 02 (1)
-------
$ 44
=======
MANAGED
Currency Purchased
- ------------------
Euro 48,220 February 02 ($622)
Japanese Yen 2,684 February 02 (2,035)
Pound Sterling 10,734 February 02 34
Swiss Franc 70,617 February 02 (906)
-------
($3,529)
=======
Currency Sold
- -------------
Euro 59,186 February 02 $ 195
Japanese Yen 3,554 February 02 2,338
Pound Sterling 10,815 February 02 (151)
Swiss Franc 83,373 February 02 220
-------
$ 2,602
=======
GLOBAL BOND
Currency Purchased
- ------------------
Euro 250 January 02 $ 2
Euro 5,100 February 02 (42)
Euro 470 February 02 (2)
Swiss Franc 498 January 02 3
Japanese Yen 297,428 January 02 (173)
Japanese Yen 44,620 March 02 (6)
-------
($218)
=======
Currency Sold
- -------------
Euro 2,200 January 02 $ 23
Euro 1,700 February 02 (19)
Euro 470 February 02 (2)
171
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
GLOBAL BOND - Continued
Principal Amount Unrealized
Fund Covered by Contract Expiration Month Gain(Loss)
- ---- ------------------- ---------------- ----------
Euro 390 March 02 2
Euro 3,400 November 02 (15)
Japanese Yen 26,925 March 02 16
Pound Sterling 210 January 02 -
Swedish Krona 5,000 January 02 (11)
-----
$ (6)
=====
Federal income taxes: Each of the Funds intends to comply with the
--------------------
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to distribute substantially all of its
taxable income to shareholders. Therefore, no federal income tax provision is
required.
As of December 31, 2001, the Funds had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: Large Cap Growth had $195,795, which expires in 2009; Fundamental
Growth had $633, $3,441 and $20,263 which expire in 2007, 2008 and 2009
respectively; Active Bond had $7,573 and $14,370, which expire in 2007 and 2008,
respectively; Emerging Markets Equity had $13,587, which expires in 2009;
International Equity Index had $2,399, which expires in 2009; International
Equity had $266, $2,071 and $2,540, which expire in 2007, 2008 and 2009
respectively; Small Cap Growth had $2,089, $10,298 and $43,738, which expire in
2007, 2008 and 2009, respectively; Health Sciences had $187, which expires in
2009; Global Balanced had $457, which expires in 2009; Mid Cap Growth had
$207,299, which expires 2009; Large Cap Value Core had $495, which expires in
2009; Large/Mid Cap Value had $410, which expires in 2009; Money Market had $11
and $78, which expire in 2007 and 2008, respectively; Small/Mid Cap Growth had
$663, which expires in 2009; Large Cap Aggressive Growth had $6,402, which
expires in 2009; Small/Mid Cap CORE had $31, which expires in 2009; Growth &
Income had $1,307, $12,242 and $472,417, which expire in 2007, 2008 and 2009,
respectively; Managed had $2,000 and $85,008, which expire in 2008 and 2009,
respectively; Short-Term Bond had $574 and $679, which expire in 2007, and 2008,
respectively; Small Cap Equity had $11,459, which expires in 2009; International
Opportunities had $6,475, which expires in 2009; High Yield Bond had $276, $513,
and $2,210 which expire in 2007, 2008 and 2009, respectively; and Global Bond
had $521 and $2,108, which expire in 2007 and 2008, respectively.
Included in the above, the VST Growth & Income Fund inherited $5,813,
$5,889 and $1,846 from its merger with VA Core Equity Fund, VA Large Cap Growth
Fund and VST Mid Cap Blend Fund, respectively, which may be subject to certain
limitations imposed by Sections 382-384 of the Internal Revenue Code.
Included in the above, the VST Fundamental Growth Fund inherited $4,074
from its merger with VA Mid Cap Growth Fund, which may be subject to certain
limitations imposed by Sections 382-384 of the Internal Revenue Code.
Included in the above, the VST Small Cap Growth Fund inherited $4,131 from
its merger with VA Small Cap Growth Fund, which may be subject to certain
limitations imposed by Sections 382-384 of the Internal Revenue Code.
Included in the above, the VST International Equity Fund inherited $2,336
from its merger with VA International Fund, which may be subject to certain
limitations imposed by Sections 382-384 of the Internal Revenue Code.
Included in the above, the VST Managed Fund inherited $2,000 from its
merger with VST Aggressive Balanced Fund, which may be subject to certain
limitations imposed by Sections 382-384 of the Internal Revenue Code.
Dividends, Interest and Distributions: Dividend income is recorded on the
-------------------------------------
ex-dividend date and interest income is recorded on the accrual basis. Dividend
income for the Emerging Markets Equity, International Equity Index,
International Equity, Health Sciences, Global Balanced, Mid Cap Growth, Large
Cap Value, Large Cap Value Core,
172
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Large/Mid Cap Value, Small/Mid Cap Growth, Large Cap Aggressive Growth,
Small/Mid Cap Core Equity, Real Estate, Growth & Income, Managed, Small Cap
Equity Fund, International Opportunities and Equity Index Funds are shown net of
foreign taxes withheld of $56, $341, $37, $2, $15, $3, $22, $1, $1, $2, $2, $0,
$18, $157, $136, $0, $171 and $29, respectively. Realized gains and losses from
security transactions are determined on the basis of identified cost.
A dividend of its net investment income will be declared and distributed
daily by the Money Market Fund. Dividends of net investment income will be
declared and distributed monthly by all other Funds. Each Fund will distribute
all of its net realized capital gains annually, at the end of its fiscal year.
Estimates: The preparation of the financial statements in conformity with
---------
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
On May 1, 2001, the stable Net Asset Value of the Money Market portfolio
changed from $10 to $1 due to a 10 for 1 stock split. Per share information, for
the periods prior to December 31, 2001, has been restated to reflect the effect
of the change in the Financial Highlights and has been reflected in the capital
share activity on the Statements of Changes in Net Assets.
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 7, 2001, June 13, 2001, December 12, 2001 the Board of Trustees
of the Trust renewed its Investment Advisory Agreement with John Hancock. For
its services, John Hancock receives monthly compensation at the following rates:
For the Large Cap Growth Fund, 0.40% on an annual basis of the first
$500,000 of the net assets of the Fund; 0.35% for net assets between
$500,000 and $1,000,000; and 0.30% for net assets in excess of $1,000,000;
For the Fundamental Growth Fund, 0.90% on an annual basis of the first
$250,000 of the Fund's net assets; and 0.85% for net assets in excess of
$250,000;
For the Active Bond Fund, 0.70% on an annual basis of the first $100,000
of the net assets of the Fund; 0.65% for net assets between $100,000 and
$250,000; 0.61% for net assets between $250,000 and $500,000; 0.58% for net
assets between $500,000 and $1,000,000; and 0.55% for net assets in excess
of $1,000,000;
For the Emerging Markets Equity Fund, 1.65% on an annual basis of the
first $10,000 of the Fund's net assets; 1.45% for net assets between $10,000
and $150,000; and 1.35% for net assets in excess of $150,000;
For the International Equity Index Fund, 0.18% on an annual basis of the
first $100,000 of the Fund's net assets; 0.15% for net assets between
$100,000 and $200,000; and 0.11% for net assets in excess of $200,000;
For the International Equity Fund, 1.20% on an annual basis of the first
$50,000 of the Fund's net assets; 1.05% for net assets between $50,000 and
$200,000; and 1.00% for net assets in excess of $200,000;
For the Small Cap Growth Fund, 1.05% on an annual basis of the Fund's
net assets;
For the Health Sciences Fund, 1.00% on an annual basis of the first
$250,000 of the Fund's net assets; 0.95% of net assets in excess of
$250,000;
For the Global Balanced Fund, 1.05% on an annual basis of the first
$150,000 of the Fund's net assets; 0.95% for net assets between $150,000 and
$300,000; 0.80% for net assets between $300,000 and $500,000; and 0.75%
173
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES--
Continued
for net assets in excess of $500,000;
For the Mid Cap Growth Fund, 1.00% on an annual basis of the first
$100,000 of the Fund's net assets; and 0.90% on an annual basis for net
assets in excess of $100,000;
For the Large Cap Value Fund, 0.75% on an annual basis of the Fund's net
assets;
For the Large Cap Value CORE Fund, 0.75% on an annual basis for the
first $50,000 of the Fund's net assets; 0.65% for net assets between $50,000
and $200,000; and 0.60% in excess of $200,000;
For the Large/Mid Cap Value Fund, 0.95% on an annual basis for the first
$25,000 of the Fund's net assets; 0.85% for net assets between $25,000 and
$50,000; 0.75% for net assets between $50,000 and $100,000; and 0.65% for
net assets in excess of $100,000;
For the Money Market Fund, 0.25% on an annual basis of the Fund's net
assets;
For the Small/Mid Cap Growth Fund, 1.00% on an annual basis of the first
$50,000 of the Fund's net assets; 0.95% for net assets between $50,000 and
$200,000; and 0.90% for net assets in excess of $200,000;
For the Bond Index Fund, 0.15% on an annual basis of the first $100,000
of the Fund's net assets; 0.13% for net assets between $100,000 and
$250,000; and 0.11% for net assets in excess of $250,000;
For the Large Cap Aggressive Growth Fund, 1.00% on an annual basis for
the first $10,000 of the Fund's net assets; 0.875% for net assets between
$10,000 and $20,000; 0.75% for net assets in excess of $20,000;
For the Small/Mid Cap CORE Fund, 0.80% on an annual basis of the first
$50,000 of the Fund's net assets; and 0.70% for net assets in excess of
$50,000;
For the Small Cap Value Fund, 0.95% on an annual basis of the Fund's net
assets;
For the Real Estate Equity Fund, 1.10% on an annual basis of the first
$50,000 of the Fund's net assets, 1.00% for net assets between $50,000 and
$100,000; 0.90% for net assets between $100,000 and $200,000 and 0.80% for
net assets in excess of $200,000;
For the Growth & Income Fund, 0.71% on an annual basis of the first
$150,000 of the Fund's net assets; 0.69% for net assets between $150,000 and
$300,000; and 0.67% for net assets in excess of $300,000;
For the Managed Fund, 0.74% on an annual basis of the first $500,000 of
the Fund's net assets; 0.68% for net assets between $500,000 and $1,000,000;
and 0.65% for net assets in excess of $1,000,000;
For the Short-Term Bond Fund, 0.60% on an annual basis of the Fund's net
assets;
For the Small Cap Equity Fund, 0.90% on an annual basis of the first
$150,000 of the Fund's net assets; 0.75% for net assets between $150,000 and
$200,000; 0.65% for net assets between $200,000 and $500,000; and 0.60% for
net assets in excess of $500,000;
For the International Opportunities Fund, 1.30% on an annual basis of
the first $20,000 of the Fund's net assets; 1.15% for net assets between
$20,000 and $50,000; and 1.05% for net assets in excess of $50,000;
For the Equity Index Fund, 0.15% on an annual basis of the first $75,000
of the Fund's net assets; 0.14% for net assets between $75,000 and $125,000;
and 0.13% for the net assets in excess of $125,000;
For the High Yield Bond Fund, 0.80% on an annual basis of the first
$100,000 of the Fund's net assets; 0.70% for net assets in excess of
$100,000;
For the Global Bond Fund, 0.85% on an annual basis of the first $150,000
of the Fund's net assets; 0.80% for net assets between $150,000 and
$300,000; 0.75% for net assets between $300,000 and 500,000; and 0.70% for
the net assets in excess of $500,000.
In the event that normal operating expenses of each Fund, exclusive of
investment advisory fees, taxes, interest, broker-
174
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
- --Continued
age commissions and extraordinary expenses, shall exceed 0.10% of each Fund's
daily net asset value, John Hancock and JHVLICO will reimburse each Fund for
such excess. Accordingly, for the period ended December 31, 2001, the
reimbursements paid from John Hancock and JHVLICO were $67 to Fundamental
Growth, $734 to Emerging Markets Equity, $203 to International Equity Index, $22
to International Equity, $51 to Small Cap Growth, $14 to Health Sciences, $59 to
Global Balanced, $11 to Large Cap Value CORE, $80 to Large/Mid Cap Value, $4 to
Small/Mid Cap Growth, $29 to Large Cap Aggressive Growth, $69 to Small/Mid Cap
CORE, $16 to Small Cap Value, $8 to Small Cap Equity, $143 to International
Opportunities, $38 to High Yield Bond, and $2 to Global Bond Funds.
During the year ended December 31, 2000, John Hancock voluntarily
contributed approximately $284 to the Money Market Fund. John Hancock received
no shares of beneficial interest or other consideration in exchange for the
contribution, which increased the Funds' net asset values.
John Hancock has entered into Sub-Advisory Agreements with Independence
Investment LLC, formely Independence Investment Associates, Inc., with respect
to the Large Cap Growth, International Equity Index Fund, Real Estate Equity,
Growth & Income, Managed and Short-Term Bond Funds; with Adviser, with respect
to the Active Bond and Small Cap Growth Funds, each of whom is an affiliate of
John Hancock, and, under the supervision of John Hancock, is responsible for the
day-to-day investment management of each of the Funds. John Hancock has also
entered into the Sub-Advisory Agreements with the following Sub-Advisers, each
of whom under the supervision of John Hancock, is responsible for the day-to-day
investment management of each of the Funds:
Fund Sub-Advisers
- ---- ------------
Fundamental Growth Putnam Investment Management, LLC.
Emerging Markets Equity Morgan Stanley Investment Management, Inc.
International Equity Goldman Sachs Asset Management
Health Sciences Putnam Investment Management, LLC
Global Balanced Capital Guardian Trust Company
Mid Cap Growth Janus Capital Corporation
Large Cap Value T. Rowe Price Associates, Inc.
Large Cap Value CORE Goldman Sachs Asset Management
Large/Mid Cap Value Wellington Management Company, LLP
Money Market Wellington Management Company, LLP
Small/Mid Cap Growth Wellington Management Company, LLP
Bond Index Mellon Bond Associates, LLP
Large Cap Aggressive Growth Alliance Capital Management, LLP
Small/Mid Cap CORE Goldman Sachs Asset Management
Small Cap Value T. Rowe Price Associates, Inc.
Real Estate Equity Morgan Stanley Investment Management, Inc.
Growth & Income Putnam Investment Management, LLC
Managed Capital Guardian Trust Company
Small Cap Equity Capital Guardian Trust Company
International Opportunities T. Rowe Price International, Inc.
Equity Index State Street Global Bank & Trust N.A.
High Yield Bond Wellington Management Company, LLP
175
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS
Global Bond Capital Guardian Trust Company
Signator Investors, Inc., a wholly owned subsidiary of John Hancock is the
principal underwriter and transfer agent of the Trust. Certain officers and
trustees of the Trust are officers and directors of JHVLICO, JHVLAU, JHVLAV,
JHVLAS, JHVAAI, JHVLIAUV, JHVAAV, JHVAAU, JHVAAH, JHVAAJF, PPM-1, and PPM-2,
and some are also officers of John Hancock. Fees for independent trustees are
paid by the Trust.
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities and obligations of the U.S. government, for each Fund for
the year ended December 31, 2001 were as follows:
Fund Purchases Sales and Maturities
- ---- --------- --------------------
Large Cap Growth $ 561,067 $ 743,323
Fundamental Growth 51,135 42,168
Active Bond 1,755,838 1,585,307
Emerging Markets Equity 32,559 31,890
International Equity Index 12,582 42,881
International Equity 34,409 16,221
Small Cap Growth 170,591 185,753
Health Sciences 38,113 8,910
Global Balanced 16,633 14,080
Mid Cap Growth 304,323 302,760
Large Cap Value 91,851 38,972
Large Cap Value CORE 72,423 27,177
Large/Mid Cap Value 180,699 35,345
Small/Mid Cap Growth 195,064 201,188
Bond Index 121,221 51,893
Large Cap Aggressive Growth 44,272 26,543
Small/Mid Cap CORE 51,439 26,285
Small Cap Value 94,617 34,137
Real Estate Equity 49,140 44,475
Growth & Income 2,882,408 3,126,904
Managed 5,072,889 5,316,889
Short-Term Bond 159,951 91,537
Small Cap Equity 47,151 40,789
International Opportunities 30,309 36,927
Equity Index 174,513 87,452
High Yield Bond 36,648 11,167
Global Bond 24,576 40,527
The identified cost of investments owned by the Funds (including earned discount
on corporate short-term
176
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
notes, and commercial paper) and their respective gross unrealized appreciation
and depreciation for Federal income tax purposes at December 31, 2001 were as
follows:
Net Unrealized
Identified Unrealized Unrealized Appreciation
Fund Cost Appreciation Depreciation (Depreciation)
- ---- ---- ------------ ------------ ---------------
Large Cap Growth $ 775,021 $ 69,500 $ (81,506) $ (12,006)
Fundamental Growth 40,105 664 (3,916) (3,252)
Active Bond 878,586 18,739 (8,925) 9,814
Emerging Markets Equity 30,930 (73) (3,234) (3,307)
International Equity Index 147,135 8,669 (36,234) (27,565)
International Equity 29,844 445 (2,256) (1,801)
Small Cap Growth 183,330 22,738 (21,249) 1,489
Health Sciences 29,015 1,195 (1,460) (265)
Global Balanced 29,929 1,167 (3,469) (2,302)
Mid Cap Growth 250,732 13,892 (43,223) (29,331)
Large Cap Value 236,740 25,056 (13,667) 11,389
Large Cap Value CORE 60,061 2,478 (3,293) (815)
Large/Mid Cap Value 159,670 5,852 (8,776) (2,924)
Small/Mid Cap Growth 168,015 19,527 (8,219) 11,308
Bond Index 122,478 2,039 (547) 1,492
Large Cap Aggressive Growth 40,819 1,262 (3,065) (1,803)
Small/Mid Cap CORE 45,412 3,980 (3,014) 966
Small Cap Value 89,412 10,920 (3,224) 7,696
Real Estate Equity 143,920 19,427 (3,105) 16,322
Growth & Income 2,343,408 281,146 (172,961) 108,185
Managed 2,341,326 246,447 (104,309) 142,138
Short-Term Bond 139,905 2,594 (496) 2,098
Small Cap Equity 76,014 7,681 (13,405) (5,724)
International Opportunities 104,997 2,347 (22,166) (19,819)
Equity Index 601,665 29,773 (104,222) (74,449)
High Yield Bond 52,963 1,897 (8,522) (6,625)
Global Bond 45,803 1,115 (1,351) (236)
Distribution of Income and Gains: Distributions of net investment income,
--------------------------------
if any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually. Earnings and profits distributed to shareholders on redemption of fund
shares may be utilized by the Fund, to the extent permissible, as part of the
Fund's dividends-paid deduction on it's federal income tax returns.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. These differences primarily relate to investments
in passive foreign investment companies and foreign denominated investments.
Additionally, as a result, net investment income (loss) and net realized gain
(loss) on
177
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of it's capital accounts without impacting the
net asset value of the fund.
At December 31, 2001, the Fund's components of distributable earnings on a
tax basis were as follows:
Undistributed Undistributed net
Fund ordinary income long-term capital gain
- ---- --------------- ----------------------
Large Cap Growth $ 468 $ -
Active Bond 5,646 -
Emerging Markets Equity 82 -
Large Cap Value 598 562
Large/Mid Cap Value 22 -
Money Market 89 -
Bond Index - 72
Small Cap Value 2 262
Real Estate Equity 1,982 516
Growth & Income 216 -
Managed 32,913 -
Short-Term Bond 70 -
Small Cap Equity 2 -
Equity Index - 11,451
High Yield Bond 3 -
Global Bond 512 -
178
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
In addition, during the year ended December 31, 2001, the tax character of
distributions paid by the Fund are summarized as follows:
Distributions from Distributions from
Fund ordinary income long-term capital gain Return of Capital
- ---- --------------- ---------------------- -----------------
Large Cap Growth $ 1,518 $ - $ -
Active Bond 51,604 - -
Emerging Markets Equity - - 65
International Equity Index 1,958 - 594
International Equity 94 - 24
Health Sciences - - 16
Global Balanced - - 355
Large Cap Value 3,428 3,273 -
Large Cap Value CORE 364 - -
Large/Mid Cap Value 348 - -
Money Market 19,646 - -
Bond Index 5,370 207 -
Small/Mid Cap CORE 143 - -
Small Cap Value 510 564 -
Real Estate Equity 6,732 4,879 -
Growth & Income 13,030 - -
Managed 57,251 13,283 -
Short-Term Bond 6,318 - -
Small Cap Equity 42 - -
International Opportunites 455 - 246
Equity Index 6,121 17,290 -
High Yield Bond 3,490 - -
Global Bond 2,243 - -
NOTE E--COMBINATION
On December 6, 2001, shareholders approved the combination of several John
Hancock Funds. The shareholders of the aquiring funds approved the combination
of the funds in the following table:
Acquiring Fund Target Fund
-------------- -----------
VST Active Bond VA Bond Fund
VST Growth & Income VA Core Equity
VST Growth & Income VA Large Cap Growth
VST Fundamental Growth VA Mid Cap Growth
VST Small Cap Growth VA Small Cap Growth
179
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE E--COMBINATION--Continued
These combinations provide for the transfer of substantially all of the
assets and liabilites of the target funds to the acquiring funds in exchange
solely for the fund shares of the acquiring funds. The acquisitions were
accounted for as tax-free exchanges as follows:
Target Fund
Trust shares unrealized Acquiring Fund Acquiring Fund
Acquiring Fund issued by Target Fund appreciation/ net assets prior aggregate net
vs. Target Fund Aquiring Fund net assets (depreciation) to combination after combination
--------------- ------------- ---------- -------------- -------------- -----------------
VST Active Bond
vs. VA Bond 7,379 $ 70,283 $ (24) $ 862,228 $ 932,510
VST Growth &
Income vs. VA Core
Equity 2,924 35,113 4,160 2,454,326 2,489,440
VST Growth &
Income vs. VA Large
Cap Growth 429 5,158 663 2,489,440 2,494,598
VST Fundamental
Growth vs. VA Mid
Cap Growth 554 4,720 602 33,059 37,780
VST Small Cap
Growth vs. VA Small
Cap Growth 904 10,743 1,119 180,456 191,197
On December 13, 2001, shareholders approved the combination of several John
Hancock Funds. The shareholders of the aquiring funds approved the combination
of the funds in the following table:
Acquiring Fund Target Fund
-------------- -----------
VST Active Bond VST Active Bond II
VST Growth & Income VST Mid Cap Blend
VST Managed VST Aggressive Balanced
VST Money Market VA Money Market
VST Equity Index VA 500 Index
VST International Equity VA International
180
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE E--COMBINATION--Continued
These combinations provide for the transfer of substantially all of the
assets and liabilities of the target funds to the acquiring funds in exchange
solely for the fund shares of the acquiring funds. The acquisitions were
accounted for as tax-free exchanges as follows:
Target Fund Acquiring Fund Acquiring Fund
Trust shares unrealized net assets aggregate net
Acquiring Fund issued by Target Fund appreciation/ prior assets
vs. Target Fund Aquiring Fund net assets (depreciation) to combination after combination
--------------- ------------- ---------- ------------ -------------- -----------------
VST Active Bond vs.
VST Active Bond II 801 $ 7,619 $ (26) $ 929,499 $ 937,118
VST Growth &
Income vs.VST Mid
Cap Blend 1,623 18,947 954 2,417,601 2,436,548
VST Managed vs.
VST Aggressive
Balanced 1,253 16,164 (144) 2,482,375 2,498,539
VST Money Market
vs. VA
Money Market 130,550 130,550 - 608,089 738,639
VST Equity Index vs.
VA 500 Index 1,009 15,141 3,209 509,212 524,353
VST International
Equity vs. VA Interna-
tional 268 1,981 (14) 26,223 28,204
On December 18, 2001, shareholders approved the combination of several John
Hancock Funds. The shareholders of the aquiring funds approved the combination
of the funds in the following table:
Acquiring Fund Target Fund
-------------- -----------
VST Large Cap Value Core VST Large Cap Value Core II
VST Large/Mid Cap Value VST Large/Mid Cap Value II
181
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE E--COMBINATION--Continued
These combinations provide for the transfer of substantially all of the
assets and liabilities of the target funds to the acquiring funds in exchange
solely for the fund shares of the acquiring funds. The acquisitions were
accounted for as tax-free exchanges as follows:
Trust shares Target Fund Acquiring Fund Acquiring Fund
Acquiring Fund issued by Target Fund unrealized net assets prior aggregate net assets
vs. Target Fund Aquiring Fund net assets depreciation to combination after combination
--------------- ------------- ---------- ------------ -------------- -----------------
VST Large Cap Value
Core vs. VST Large
Cap Value Core II 675 $ 6,577 $ (129) $ 52,227 $ 58,804
VST Large/Mid Cap
Value vs. VST Large/
Mid Cap Value Core
II 9,640 102,164 (1,911) 57,138 159,302
NOTE F--CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 2001, the Funds adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies, as revised, and began
amortizing premiums and accreting discount on debt securities. Prior to this
date, the Funds did not amortize premiums or accrete discount on debt
securities. The cumulative effect of this accounting change had no impact on the
total net assets of the Funds, but resulted in an increase (decrease) in the
cost of the investments and a corresponding increase (decrease) in unrealized
appreciation (depreciation) on investments, based on securities held as of
December 31, 2000:
Increase decrease)
in the Cost Increase (decrease) in Net
Fund of Investments Unrealized Appreciation
- ---- -------------- -----------------------
Active Bond $ (2,686) $ (2,686)
Global Balanced (23) (23)
Bond Index (490) (490)
Managed (5,148) (5,148)
Short-Term Bond (147) (147)
High Yield Bond 387 387
Global Bond (125) (125)
182
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE F--CHANGE IN ACCOUNTING PRINCIPLE--Continued
The effect of this change in the year ended December 31, 2001 was as
follows:
Increase (decrease) In
Increase (decrease) in Net Net Unrealized Increase (decrease) in
Fund Investment Income Appreciation/Depreciation Net Realized Losses
- ---- -------------------------- ------------------------- ----------------------
Active Bond $ (4,024) $ (1,585) $ (2,439)
Global Balanced (141) (20) (121)
Bond Index (675) (334) (341)
Managed (3,488) (617) (2,871)
Short-Term Bond (820) (372) (448)
High Yield Bond 559 390 169
Global Bond (723) (140) (583)
The effect of this change on the per share operating performance and on the
annualized ratio of net investment income to average net assets in the year
ended December 31, 2001 was as follows:
Increase (decrease) in
Increase (decrease) in Net Realized and Increase (decrease) in Net
Net Investment Income Unrealized Gains Investment Income
Fund Per Share (Losses) Per Share to Average Net Assets
- ---- ---------------------- ---------------------- --------------------------
Active Bond - - (.04)%
Global Balanced - - .03 %
Bond Index - - (.06)%
Managed - - - %
Short-Term Bond $ (0.01) $ (0.01) (.09)%
High Yield Bond 0.06 0.06 1.10 %
Global Bond - - (.03)%
The Statement of Changes in Net Assets and the Financial Highlights for
prior periods have not been restated to reflect this change in presentation.
NOTE G--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust. John Hancock Variable Series Trust I
solicited a vote at special meeting of Contract owners/ Policyholders held on
December 13, 2001 on the following matters:
183
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE G--OTHER MATTERS (UNAUDITED)--Continued
For the Large Cap Value CORE II Fund (formerly, American Leaders For Against Abstain
Large Cap Value Fund): --- ------- -------
To approve a proposal to combine this Fund with the Large Cap Value CORE 99% 0% 1%
Fund of John Hancock Variable Series Trust I. Shareholders in the Large
Cap Value CORE II Fund would receive Large Cap Value CORE Fund
shares having the same value as their prior Large Cap Value CORE II Fund
shares.
For the Large Cap/Mid Value II Fund (formerly, American Mid Cap Value
Fund):
To approve a proposal to combine this Fund with the Large Cap/Mid Value Fund 93% 1% 6%
of John Hancock Variable Series Trust I. Shareholders in the Large/Mid
Cap Value II Fund would receive Large/Mid Cap Value Fund shares having
the same value as their prior Large/Mid Cap Value II Fund shares.
For the Active Bond II Fund (formerly, Core Bond Fund):
To approve a proposal to combine this Fund with the Active Bond Fund of John 94% 0% 6%
Hancock Variable Series Trust I. Shareholders in the Active Bond II Fund
would receive Active Bond Fund shares having the same value as their prior
Active Bond II Fund shares.
For the Aggressive Balanced Fund:
To approve a proposal to combine this Fund with the Managed Fund of John 93% 2% 5%
Hancock Variable Series Trust I. Shareholders in the Aggressive Balanced
Fund would receive Managed Fund shares having the same value as their
prior Aggressive Balanced Fund shares.
For the Mid Cap Blend Fund:
To approve a proposal to combine this Fund with the Growth & Income Fund of 86% 4% 10%
John Hancock Variable Series Trust I. Shareholders in the Mid Cap Blend
Fund would receive Growth & Income Fund shares having the same value
as their prior Mid Cap Blend Fund shares.
John Hancock Variable Series Trust I solicited a vote at special meeting of Contract owners/Policyholders held on
September 14, 2001 on the following matters:
For the Emerging Markets Equity Fund: For Against Abstain
--- ------- -------
To approve an amendment to the current Investment Management Agreement 51% 41% 8%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
184
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE G--OTHER MATTERS (UNAUDITED)--Continued
John Hancock Variable Series Trust I solicited a vote at special meeting of
Contract owners/Policyholders held on September 5, 2001 on the following
matters:
For the Mid Cap Growth Fund: For Against Abstain
--- ------- -------
To approve an amendment to the current Investment Management Agreement 51% 42% 7%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the Small/Mid Cap Growth Fund:
To approve an amendment to the current Investment Management Agreement 54% 38% 8%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the Small Cap Growth Fund:
To approve an amendment to the current Investment Management Agreement 51% 42% 7%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the International Opportunities Fund:
To approve an amendment to the current Investment Management Agreement 57% 38% 5%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the International Equity Fund:
To approve an amendment to the current Investment Management Agreement 56% 33% 11%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the Short-Term Bond Fund:
To approve an amendment to the current Investment Management Agreement 61% 31% 8%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the High Yield Bond Fund:
To approve an amendment to the current Investment Management Agreement 51% 40% 9%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
John Hancock Variable Series Trust I solicited a vote at special meeting of
Contract owners/Policyholders held on April 6, 2001 on the following matters:
For the Active Bond II Fund (formerly, Core Bond Fund): For Against Abstain
--- ----- -----
To approve a new Sub-Investment Management Agreement among the Trust, 92% 0% 8%
John Hancock, and John Hancock Advisers, Inc.
To approve an amendment to the current Investment Management Agreement 52% 40% 8%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
185
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE G--OTHER MATTERS (UNAUDITED)--Continued
For the Large Cap Value Fund: For Against Abstain
--- ------- -------
To approve an amendment to the current Sub-Investment Management Agree- 88% 4% 8%
ment among the Trust, John Hancock, and T. Rowe Price Associates, Inc.,
reflecting a decrease in this Fund's sub-investment advisory fee.
To approve an amendment to the current Investment Management Agreement 68% 23% 19%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the Large Cap Value CORE II Fund (formerly, American Leaders Large Cap Value
Fund):
To approve a new Sub-Investment Management Agreement among the Trust, 100% 0% 0%
John Hancock, and Goldman Sachs Asset Management, a unit of the Invest-
ment Management Division of Goldman, Sachs & Co.
For the Large Cap Value CORE II Fund (formerly, American Leaders Large Cap Value
Fund):
To approve an amendment to the current Investment Management Agreement 80% 19% 1%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the Money Market Fund:
To approve a new Sub-Investment Management Agreement among the Trust, 81% 9% 10%
John Hancock, and Wellington Management Company, LLP.
For the Large/Mid Cap Value II Fund (formerly, Mid Cap Value Fund):
To approve a new Sub-Investment Management Agreement among the Trust, 83% 7% 10%
John Hancock, and Wellington Management Company, LLP.
To approve an amendment to the current Investment management Agreement 69% 21% 10%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
For the Small Cap Value Fund (formerly, Small/Mid Cap Value Fund):
To approve a new Sub-Investment Management Agreement among the Trust, 87% 4% 9%
John Hancock, and T. Rowe Price Associates, Inc.
To approve an amendment to the current Investment Management Agreement 75% 17% 8%
between the Trust and John Hancock, reflecting an increase in this Fund's
investment advisory fee.
NOTE H--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED)
The Board of Trustees of the Trust is responsible for overall management of the
Trust. The Board may exercise all powers of the Trust, except those powers which
are conferred solely upon or reserved to the shareholders. The Trust's Statement
of Additional Information (SAI) includes additional information about the
Trustees and is available without charge, upon request, by calling toll-free at
1-800-REAL-LIFE. The following table provides information about the
186
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2001
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE H--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST--Continued
members of the Board of Trustees and the officers of the Trust:
Positions Held Principal Occupation(s)
Name, Address and Age With Trust During Past Five Years
- ------------------------------ --------------------- -------------------------------
Michele G. Van Leer* (age 43) Chairman and Trustee Senior Vice President, Product
John Hancock Place Management, John Hancock Life
Boston, Massachusetts 02117 Insurance Company; Vice Chairman,
President & Director, John Hancock
Variable Life Insurance Company
Kathleen F. Driscoll* (age 46) Vice Chairman, President Vice President, Signator Brokerage,
John Hancock Place and Trustee John Hancock Life Insurance
Boston, Massachusetts 02117 Company; Vice President Corporate
Communications, John Hancock Life
Insurance Company
Elizabeth G. Cook (age 63) Trustee Expressive Arts Therapist (Clients:
85 East India Row Massachusetts General Hospital,
Boston, Massachusetts 02110 Dana-Farber Cancer Institute);
President, The Advertising Club of
Greater Boston
Diane C. Kessler (age 54) Trustee Executive Director, Massachusetts
325 Parker Street Council of Churches
Newton Centre, Massachusetts
02159
Robert Verdonck (age 55) Trustee Chairman, President and Chief
10 Meridian Street Executive Officer, East Boston Savings
East Boston, Massachusetts 02128 Bank
Hassell H. McClellan (age 55) Trustee Professor and Formerly Graduate
Boston College Dean, The Wallace E. Carroll School
Graduate School of Management of Management, Boston College
140 Commonwealth Avenue Board Member, MA Delta Dental
Chestnut Hill, Massachusetts 02467
Raymond F. Skiba (age 55) Treasurer Director, Fund Operations, John
John Hancock Place Hancock Signature Services, Inc.
Boston, Massachusetts 02117
Karen Q. Visconti (age 47) Secretary Senior Marketing Consultant,
John Hancock Place Product Management, John Hancock
Boston, Massachusetts 02117 Life Insurance Company
* Ms. Van Leer and Ms. Driscoll are the only Trustees who are "interested
persons" as defined in the Investment Company Act.
187
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Contractowners, Policyholders,
and Board of Trustees of
John Hancock Variable Series Trust I
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of John Hancock Variable Series Trust I
(the Trust) (comprising, respectively, the Large Cap Growth, Fundamental Growth,
Active Bond, Emerging Markets Equity, International Equity Index, International
Equity, Small Cap Growth, Health Sciences, Global Balanced, Mid Cap Growth,
Large Cap Value, Large Cap Value CORE, Large/Mid Cap Value, Money Market,
Small/Mid Cap Growth, Bond Index, Large Cap Aggressive Growth, Small/Mid Cap
CORE, Small Cap Value (formerly, Small/Mid Cap Value), Real Estate Equity,
Growth & Income, Managed, Short-Term Bond, Small Cap Equity, International
Opportunities, Equity Index, High Yield Bond, and Global Bond Portfolios) as of
December 31, 2001, and the related statements of operations for the period then
ended, and the statements of changes in net assets and financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Trust'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. 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 December 31, 2001, by correspondence with the custodian or brokers,
or by other appropriate auditing procedures where replies from brokers were not
received. 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
each of the respective portfolios constituting John Hancock Variable Series
Trust I at December 31, 2001, the results of their operations for the period
then ended, and the changes in their net assets and financial highlights for
each of the periods indicated therein, in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 8, 2002
188
OFFICERS AND TRUSTEES INVESTMENT ADVISER
- -----------------------------------------------------------------------------------------------------------------------------------
Michele G. Van Leer, Chairman John Hancock Life Insurance Company
Kathleen F. Driscoll, President and Vice Chairman John Hancock Place
Karen Q. Visconti, Secretary P.O. Box 111
Arnold Bergman, Assistant Secretary Boston, MA 02117
Raymond F. Skiba, Treasurer
Jude A. Curtis, Compliance Officer
Maryellen Carney, Assistant Compliance Officer INDEPENDENT AUDITORS
Patrick F. Smith, Controller ----------------------------------------------------------------
Paula M. Pashko, Assistant Controller Ernst & Young LLP
Elizabeth G. Cook 200 Clarendon Street
Reverend Diane C. Kessler Boston, MA 02116
Hassel H. McClellan
Robert F. Verdonck
SUB-INVESTMENT ADVISERS
- -----------------------------------------------------------------------------------------------------------------------------------
Independence Investment LLC John Hancock Advisers, LLC
53 State Street 101 Huntington Avenue
Boston, MA 02109 Boston, MA 02199
Alliance Capital Management L.P. Putnam Investments
1345 Avenue of the Americas One Post Office Square
New York, NY 10105 Boston, MA 02109
Capital Guardian Trust Company SSgA Funds Management, Inc.
333 South Hope Street Two International Place
Los Angeles, CA 90071 Boston, MA 02110
Goldman Sachs Asset Management T. Rowe Price Associates, Inc.
32 Old Slip 100 East Pratt Street
New York, NY 10005 Baltimore, MD 21202
Janus T. Rowe Price International, Inc.
100 Fillmore Street 100 East Pratt Street
Denver, CO 80206-4928 Baltimore, MD 21202
Mellon Bond Associates, LLP Wellington Management Company, LLP
One Mellon Bank Center, Suite 5400 75 State Street
Pittsburgh, PA 15258-0001 Boston, MA 02109
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, NY 10020
[LOGO] John Hancock
The Variable Series Trust consists of funds used as investment options for
various John Hancock variable life and variable annuity contracts. This report
must be accompanied by the required prospectus and most current quarterly
performance report for the contract offered. Investors are not able to invest
directly in the Variable Series Trust.
Not all of the funds described in this report are available on every product.
Please refer to the prospectus for additional information about the investment
options on your variable product.
If the total investment return for any fund for any given year appears unusually
high, the return may be attributable to unusually favorable market conditions
which will probably not be sustainable. For instance, a high total investment
return may reflect participation in IPOs, 'hot' industries (e.g.
internet-related companies), private placements and/or leveraging investment
techniques during the period indicated. There is no assurance that any of those
methods, or any other investment technique, will continue to have the same
impact on the fund's total investment returns.
All of the funds (except bond funds and equity index funds) may participate in
initial public offerings (IPOs). Under certain market conditions, such
participation could significantly improve a fund's total investment return.
There is no assurance that such market conditions will continue and provide the
same favorable impact on future investment returns.
Insurance products are issued by John Hancock Life Insurance Company, or its
subsidiary John Hancock Variable Life Insurance Company (not licensed in New
York), Boston, MA 02117, and are distributed by Sinator Investors, Inc., Member
NASD, SIPC, 200 Clarendon Street, John Hancock Place, Boston, MA 02117.
Appendix
JOHN HANCOCK V.S.T. INTERNATIONAL OPPORTUNITIES FUND
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
December 31, 2001
Pro forma information is intended to provide the shareholders of the John
Hancock Variable Series Trust ("V.S.T.") International Opportunities Fund and
the John Hancock V.S.T. International Opportunities B Fund with information
about the impact of the proposed merger by indicating how the merger might have
affected information had the merger been consummated as of December 31, 2001.
The pro forma combined statements of assets and liabilities and results of
operations as of December 31, 2001 have been prepared to reflect the merger of
John Hancock V.S.T. International Opportunities Fund and John Hancock V.S.T.
International Opportunities B Fund after giving effect to pro forma adjustments
described in the notes below.
(a) Acquisition by John Hancock V.S.T. International Opportunities of all
assets of John Hancock V.S.T. International Opportunities B Fund and
issuance of John Hancock V.S.T. International Opportunities Fund shares
in exchange for all of the outstanding shares of John Hancock V.S.T.
International Opportunities B Fund.
(b) The investment advisory fee was adjusted to reflect the application of
the fee structure which will be in effect for John Hancock V.S.T.
International Opportunities:
1.30% of the first $20,000,000 of net assets;
1.15% for net assets between $20,000,000 and $50,000,000;
1.05% for net assets in excess of $50,000,000.
(c) The actual expenses incurred by the John Hancock V.S.T. International
Opportunities Fund and the John Hancock V.S.T. International
Opportunities B Fund were reduced to reflect the estimated savings
arising from the merger.
(d) Represents the Adviser's voluntary agreement to limit the funds' other
expenses to an annual rate of 0.10% of the funds' average daily net
assets.
John Hancock V.S.T International Opportunities Fund
Pro-forma combined statement of assets and liabilities
December 31, 2001
(000's omitted)
John Hancock John Hancock
V.S.T. V.S.T.
International International
Opportunities Opportunities B Pro-forma
Fund Fund Adjustments Combined
-------------------------------------------------- -----------
Assets
Long term investments at cost $ 103,729 $ 29,460 $ - $ 133,189
Net unrealized appreciation (depreciation)
of investments (18,551) (1,417) - (19,968)
Short-term investments at value 1,953 1,500 - 3,453
------------ ------------- ------------ -----------
Total investments 87,131 29,543 - 116,674
Cash - 43 - 43
Foreign currency at value 649 27 - 676
Receivable for:
Fund shares sold - 59 - 59
Interest - 216 - 216
Dividends 100 - - 100
Future contracts variation margin - 39 39
Securities on loan 9,120 25 9,145
Other assets - 6 - 6
------------ ------------- ------------ -----------
Total Assets 97,000 29,958 - 126,958
------------ ------------- ------------ -----------
Liabilities
Payables for
Investments purchased - 11 - 11
Fund shares purchased 4,281 - - 4,281
Securities on loan 9,120 - - 9,120
Unrealized depreciation in forward
currency contracts 2 1 - 3
Other liabilities 6 31 - 37
------------ ------------- ------------ -----------
Total Liabilities 13,409 43 - 13,452
------------ ------------- ------------ -----------
Net Assets 83,591 29,915 - 113,506
============ ============= ============ ===========
Net assets
Capital paid-in 111,656 37,979 - 149,635
Accumulated net realized gain (loss) on
investments futures and foreign currency
transactions (9,512) (6,646) - (16,158)
Net unrealized appreciation (depreciation) of
investments, futures and translation of assets and
liabilities in foreign currencies (18,553) (1,418) - (19,971)
------------ ------------- ------------ -----------
83,591 29,915 - 113,506
============ ============= ------------ ===========
Net Assets:
V.S.T. International Opportunities Fund 83,591 - 29,915 (a) 113,506
V.S.T. International Opportunities B Fund - 29,915 (29,915) (a) -
------------ ------------- ------------ -----------
83,591 29,915 - 113,506
============ ============= ============ ===========
Shares Outstanding:
V.S.T. International Opportunities Fund 8,987 - 3,218 (a) 12,205
V.S.T. International Opportunities B Fund - 3,962 (3,962) (a) -
------------ ------------- ------------ -----------
8,987 3,962 (744) 12,205
============ ============== ============ ===========
Net asset value per share:
V.S.T. International Opportunities Fund $ 9.30 - - $ 9.30
V.S.T. International Opportunities B Fund - $7.55 $ (7.55) (a) -
============ ============= ============ ===========
See Notes to Pro-forma Combined Financial Statements
John Hancock V.S.T International Opportunities Fund
Pro-forma combined statement of operations
For the year ended December 31, 2001
(000's omitted)
John Hancock John Hancock
V.S.T. V.S.T.
International International
Opportunities Opportunities B Pro-Forma
Fund Fund Adjustments Combined
-------------- ---------------- ------------- ---------
INVESTMENT INCOME
Interest $ 118 $ 46 $ - $ 164
Dividends 1,327 289 - 1,616
Securities Lending 94 - - 94
------------- -------------- ------------- -----------
Total investment income 1,539 335 - 1,874
------------- -------------- ------------- -----------
EXPENSES
Investment advisory fee 1,062 246 (30) (b) 1,278
Auditing fees 8 2 (2) (c) 8
Custodian fees 191 18 - 209
Legal fees 6 1 (1) (c) 6
Printing & mailing fees 26 21 (21) (c) 26
Trustees' fee 2 - - 2
Other fees 4 1 (1) (c) 4
------------- -------------- ------------- -----------
Total expenses 1,299 289 (55) 1,533
Less expenses reimbursed (143) (22) 28 (d) (137)
------------- -------------- ------------- -----------
Net expenses 1,156 267 (27) 1,396
------------- -------------- ------------- -----------
Net Investment income (loss) 383 68 27 478
------------- -------------- ------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (9,027) (4,132) - (13,159)
Financial futures contracts - (86) - (86)
Foreign currency transactions (162) (22) - (184)
Change in net unrealized appreciation
(depreciation) on:
Investments (14,518) (718) - (15,236)
Futures - 23 - 23
Translation of assets and liabilities in
foreign currencies 6 1 - 7
------------- -------------- ------------- -----------
Net realized and unrealized gain (loss) (23,701) (4,934) - (28,635)
------------- -------------- ------------- -----------
Net increase (decrease) in assets resulting
from operations $ (23,318) $ (4,866) $ 27 $ (28,157)
============= ============== ============= ===========
See Notes to Pro-forma Combined Financial Statements
John Hancock VST International Opportunities & International Opportunities B
Capitalization Table
For the year ended December 31, 2001
(000 omitted)
The following table shows the capitalization of John Hancock VST International
Opportunities Fund and John Hancock VST International Opportunities B Fund as of
December 31, 2001 and the pro forma combined capitalization of both Funds as if
the Reorganization had occurred on that date.
John Hancock V.S.T. John Hancock V.S.T.
International Opportunities International Opportunities B Pro Forma
Fund Fund Combined
Net Assets (000) $83,591 $29,915 $113,506
Net Asset Value per share $ 9.30 $ 7.55 $ 9.30
Shares Outstanding (000) 8,987 3,962 12,205
Schedule of Investments
Decembet 31,2001
The Schedule of Investments is a complete list of all securities owned by the
V.S.T. International Opportunities Fund and the V.S.T International
Opportunities B Fund, combined on December 31, 2001.
------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000's INTEREST SHARES OR (000's SHARES OR (000's
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
COMMON STOCK
Australia - (0.70%)
AUST + NZBANK GRP 10,217 $ 93 10,217 $ 93
BHP BILLITON LTD 36,224 195 36,224 195
BRAMBLES INDS LTD 56,146 $ 299 1 56,147 299
NEWS CORPORATION 2,900 23 2,900 23
TABCORP HLDGS LTD 6,933 35 6,933 35
WOOLWORTHS LTD 25,319 146 25,319 146
---------- --------- ----------
299 492 791
---------- --------- ----------
Belgium - (0.60%)
DEXIA 19,350 278 19,350 278
FORTIS 8,110 210 8,110 210
INTERBREW 4,666 128 4,666 128
UCB 1,180 48 400 16 1,580 64
---------- --------- ----------
536 144 680
---------- --------- ----------
Canada - (1.0%)
ALCAN INC 11,292 405 11,292 405
INCO LTD 17,800 302 17,800 302
LOBLAW COS LTD 700 23 700 23
NORTEL NETWORKS CORP 2 2
ROYAL BK CDA MONTREAL QUE 12,280 400 12,280 400
---------- --------- ----------
1,107 23 1,130
---------- --------- ----------
Denmark - (0.29%)
GROUP 4 FALCK 403 45 403 45
NOVO NORDISK AS 2,000 82 300 12 2,300 94
TDC A/S 5,389 192 5,389 192
---------- --------- ----------
274 57 331
---------- --------- ----------
Egypt - (0.11%)
MOBINIL 16,489 120 16,489 120
---------- ----------
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete of all securities owned by the V.S.T.
International Opportunities Fund and the V.S.T. International Opportunities B
Fund, combined on December 31, 2001.
-----------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
-----------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000'S INTEREST SHARES OR (000'S SHARES OR (000'S
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
---------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
Finland - (1.99%)
NOKIA (AB) OY 56,264 $ 1,450 22,451 $ 579 78,715 $ 2,029
SONERA OYJ 43,950 223 43,950 223
STORA ENSO OYJ 800 10 800 10
-------- -------- --------
1,673 589 2,262
-------- -------- --------
France - (12.41%)
ALCATEL 3,059 52 3,059 52
ALTRAN TECHNOLOGIES 1,450 66 1,450 66
AXA 29,400 614 768 16 30,168 630
BNP PARIBAS 13,070 1,169 594 53 13,664 1,222
CAP GEMINI 2,146 155 2,146 155
CASTORAMADUBOIS 2,055 106 2,055 106
CIE DE STGOBAIN 3,400 513 3,400 513
DANONE 1,890 231 1,890 231
EADS(EUROAERO 12,119 147 12,119 147
EQUANT NV 1,905 23 1,905 23
HERMES INTL 1,742 268 1,742 268
LAFARGE 947 88 6,087 568 7,034 656
LOREAL 841 61 200 14 1,041 75
LVMH MOETHENNESSY 1,910 78 1,910 78
ORANGE SA 31,090 282 31,090 282
PERNOD RICARD 1,005 78 1,005 78
PIN PRINTEMPS REDO 639 82 639 82
Rhone-Poulenc SA 18,509 1,314 300 21 18,809 1,335
SANOFI SYNTHELABO 18,610 1,388 300 22 18,910 1,410
SCHNEIDERELECTRIC 11,145 536 7,375 355 18,520 891
SOC GENERALE 3,992 223 3,992 223
SODEXHO ALLIANCE 17,534 749 17,534 749
STMICROELECTRONICS 12,195 391 300 10 12,495 401
TF1 TV FRANCAISE 18,790 475 18,790 475
TOTAL FINA ELF 15,390 2,197 6,591 941 21,981 3,138
VIVENDI UNIVERSAL 10,613 581 4,063 223 14,676 804
-------- ------- --------
11,484 2,606 14,090
-------- ------- --------
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete of all securities owned by the V.S.T.
International Opportunities Fund and the V.S.T. International Opportunities B
Fund, combined on December 31, 2001.
-----------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
-----------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000'S INTEREST SHARES OR (000'S SHARES OR (000'S
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
-----------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
Germany - (4.32%)
ALLIANZ AG 3,238 $ 767 189 $ 45 3,427 $ 812
AVENTIS SA 2,688 187 2,688 187
BASF AG 400 15 400 15
BAYER AG 4,365 139 4,365 139
BAYER HYPO VEREINS 2,788 85 2,788 85
BAYERISCHE MOTOREN WERKE AG 16,886 589 16,886 589
DEUTSCHE BANK AG 5,841 413 398 28 6,239 441
DEUTSCHE TELEKOM 2,945 51 2,945 51
E ON AG 6,922 359 400 21 7,322 380
FRESENIUSMEDICAL 300 19 300 19
GEHE AG 7,739 300 7,739 300
INFINEON TECHNOLOGIES AG 700 14 700 14
LUFTHANSAAG 900 12 900 12
MUNCHENERRUCKVERS 2,499 678 2,499 678
RHON KLINIKUM AG 2,320 120 2,320 120
SAP AG 3,510 457 2,782 362 6,292 819
SIEMENS AG NPV (REGD) 2,332 154 1,288 85 3,620 239
------- -------- --------
3,032 1,868 4,900
------- -------- --------
Greece - (0.23%)
OTE (HELLENIC TLCM) 16,290 265 16,290 265
------- --------
Hong Kong - (2.22%)
CHEUNG KONG(HLDGS) 56,000 582 56,000 582
CHINA UNICOM 70,000 77 70,000 77
CLP HOLDINGS 2,500 10 2,500 10
HANG SENGBANK 22,600 249 22,600 249
HENDERSONLAND DEV 58,000 264 58,000 264
HONG KONGELECTRIC 7,000 26 7,000 26
HSBC HLDGS 22,000 257 22,000 257
HUTCHISONWHAMPOA 56,900 551 39,700 384 96,600 935
LI + FUNG 16,000 18 16,000 18
SUN HUNG KAI PROPS 12,000 97 1,000 8 13,000 105
------- -------- --------
1,846 677 2,523
------- -------- --------
Schedule of Investments
December 31, 2001
The Schedule of Investments is a complete list of all securities owned by the
V.S.T. International Opportunities Fund and the V.S.T. Opportunities B Fund,
combined on December 21, 2001.
----------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
----------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000'S INTEREST SHARES OR (000'S SHARES OR (000'S
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
----------------------------------------------------------------------------------------------
ISSUER DESCRIPTION
- ------------------
Hungary - (0.14%)
RICHTER GEDEON VEG 2,850 $ 156 2,850 $ 156
-------- --------
India - (0.61%)
GTL LTD 3,000 8 3,000 8
HDFC BANK 25,000 117 25,000 117
HINDUSTANLEVER 79,000 366 79,000 366
ICICI LTD 58,000 53 58,000 53
RELIANCE INDS 23,000 146 23,000 146
-------- --------
690 690
-------- --------
Ireland - (0.01%)
BK OF IRELAND 900 $ 8 900 8
-------- --------
Italy - (5.51%)
ALLEANZA ASSICURAZ 44,650 491 44,650 491
ASSIC GENERALI 6,280 174 6,280 174
AUTOSTRADE SPA 2,400 17 2,400 17
BCA NAZ DEL LAVORO 3,700 7 3,700 7
BIPOP CARIRE 32,500 54 32,500 54
ENI 67,572 847 2,900 36 70,472 883
INTESASBCI 343,613 860 343,613 860
MEDIASET 10,000 73 48,800 357 58,800 430
MEDIOLANUM 20,815 188 20,815 188
OLIVETTI SPA 95,708 123 95,708 123
SAN PAOLOIMI SPA 4,858 52 4,858 52
SNAM RETEGAS 102,700 272 102,700 272
TELECOM ITALIA SPA 56,800 485 27,483 235 84,283 720
TIM SPA 150,220 838 11,500 64 161,720 902
UNICREDITO ITALIAN 165,883 666 102,500 411 268,383 1,077
-------- -------- --------
4,851 1,399 6,250
-------- -------- --------
Schedule of Investments
December 31, 2001
The Schedule of Investments is a complete list of all securities owned by the
V.S.T. International Opportunities Fund and the V.S.T. Opportunities B Fund,
combined on December 21, 2001.
----------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
----------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000'S INTEREST SHARES OR (000'S SHARES OR (000'S
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
----------------------------------------------------------------------------------------------
ISSUER DESCRIPTION
- ------------------
Japan - (13.38%)
AIFUL CORP 1,000 $ 65 1,000 $ 65
BANDAI CO 4,000 $ 121 4,000 121
BANYU PHARM 16,000 238 16,000 238
C+S CO LTD (Circle K Japan) 9,400 243 9,400 243
CANON INC 30,000 1,033 9,000 310 39,000 1,343
DAIWA SECURITIES GROUP INC 40,000 210 40,000 210
FANUC 5,200 221 5,200 221
FUJI PHOTO FILM CO 6,000 214 6,000 214
FUJI TELEVISION NETWORK INC 48 194 48 194
FUJISAWA PHARM CO 17,000 392 17,000 392
HONDA MOTOR CO 13,900 555 13,900 555
HOYA CORP 2,000 120 2,000 120
ISETAN CO 9,000 92 9,000 92
ITO YOKADO CO 5,000 226 5,000 226
JAPAN AIRLINES CO 3,000 7 3,000 7
KAO CORP 8,000 166 13,000 270 21,000 436
KEYENCE CORP 1,300 216 1,300 216
KOKUYO CO 8,000 67 8,000 67
KYOCERA CORP 3,800 248 3,800 248
MARUI CO 26,000 308 26,000 308
MATSUSHITA COMM 2,000 54 2,000 54
MATSUSHITA ELC IND 43,000 552 43,000 552
MITSUI FUDOSAN CO 44,000 336 44,000 336
MITSUI OSK LINES 31,000 62 31,000 62
MITSUI SUMITOMO INSURANCE CO 46,000 216 46,000 216
MIZUHO HLDGS 155 316 8 16 163 332
MURATA MFG CO 6,100 366 300 18 6,400 384
NEC CORP 17,000 173 1,000 10 18,000 183
NGK INSULATORS 22,000 163 22,000 163
NINTENDO CO 100 18 100 18
NIPPON STEEL CORP 12,000 17 12,000 17
NIPPON TEL+TEL CP 65 212 6 20 71 232
NOMURA HOLDINGS 52,000 667 1,000 13 53,000 680
NTT DOCOMO 51 600 51 600
RICOH CO 16,000 298 16,000 298
SANKYO CO 13,000 223 13,000 223
SANTEN PHARM CO 3,000 34 3,000 34
SANYO ELECTRIC CO 7,000 33 7,000 33
SECOM CO 500 25 500 25
SEVEN ELEVEN JAPAN 9,000 328 9,000 328
SHARP CORP 16,000 187 16,000 187
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
V.S.T. International Opportunities Fund and the V.S.T. International
Opportunties B Fund, combined on December 31, 2001.
--------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunites Fund Opportunites B Fund Combined
--------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000's INTEREST SHARES OR (000's SHARES OR (000's
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
--------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
SHIN ETSUCHEM CO 8,400 $ 302 6,100 $ 219 14,500 $ 521
SHISEIDO CO 18,000 166 18,000 166
SKYLARK CO 6,000 101 6,000 101
SMC CORP 600 61 600 61
SONY CORP 17,000 777 400 18 17,400 795
SUMITOMO CORP 38,000 174 1,000 5 39,000 179
SUMITOMO MITSUI 56,000 237 3,000 13 59,000 250
SUMITOMO TRUST+BKG 22,000 89 22,000 89
SUZUKI MOTOR CORP 2,000 22 2,000 22
TAISHO PHARM CO 16,000 252 16,000 252
TAKEDA CHEM INDS 17,000 769 17,000 769
TOKYO ELEC POWER 5,800 124 5,800 124
TOKYO ELECTRON 200 10 200 10
TOKYO GASCO 80,000 214 80,000 214
TOPPAN FORMS 10,900 183 10,900 183
TOSHIBA CORP 38,000 131 38,000 131
TOYOTA MOTOR CORP 4,400 112 8,100 205 12,500 317
UFJ HLDGS 33 73 5 11 38 84
YAMANOUCHI PHARM 15,000 396 15,000 396
YOSHINOYAD+C CO 33 46 33 46
-------- -------- -------
9,115 6,068 15,183
-------- -------- -------
Luxembourg - (0.07%)
SES GLOBAL 7,670 84 7,670 84
-------- -------
Malaysia - (0.38%)
MALAYAN BK BHD 103,800 226 103,800 226
RESORTS WORLD BHD 129,000 209 129,000 209
-------- -------
435 435
-------- -------
Mexico - (0.53%)
FOMENTO ECON MEXICO 91,000 308 91,000 308
WALMART DE MEXICO 108,600 297 108,600 297
-------- -------
605 605
-------- -------
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
V.S.T. International Opportunities Fund and the V.S.T. International
Opportunties B Fund, combined on December 31, 2001.
------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunites Fund Opportunites B Fund Combined
------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000's INTEREST SHARES OR (000's SHARES OR (000's
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
Netherlands - (7.05%)
AEGON NV 662 $ 18 662 $ 18
AHOLD (KON) NV 8,800 $ 256 256 8,800 256
AKZO NOBEL NV 1,390 62 530 24 1,920 86
ASML HOLDING NV 26,180 455 8,714 151 34,894 606
ELSEVIER NV 22,190 262 22,190 262
FORTIS 19,010 493 1,100 29 20,110 522
GUCCI GROUP NV 2,691 229 2,691 229
ING GROEPNV 60,020 1,530 16,880 430 76,900 1,960
KON KPN NV 46,100 234 46,100 234
PHILIPS ELECTRONICS NV 46,739 1,389 1,329 39 48,068 1,428
ROYAL DUTCH PETROL 12,500 633 503 25 13,003 658
UNILEVER NV 1,836 108 1,836 108
VNU NV 29,790 915 10,576 325 40,366 1,240
WOLTERS KLUWER 17,225 393 17,225 393
-------- -------- -------
6,622 1,378 8,000
-------- -------- -------
Norway - (0.30%)
ORKLA ASA 16,750 284 16,750 284
STATOIL ASA 8,950 61 8,950 61
-------- -------
345 345
-------- -------
Portugal - (0.30%)
ELEC DE PORTUGAL 17,717 38 17,717 38
JERONIMO MARTINS SGPS 9,583 79 9,583 79
PORTUGAL TCOM SGPS 27,134 211 27,134 211
PORTUGAL TCOM SGPS 1,900 15 1,900 15
-------- -------- -------
290 53 343
-------- -------- -------
Singapore - (0.68%)
SINGAPOREPRESS HD 8,000 94 8,000 94
SINGAPORETECH ENG 9,000 11 9,000 11
SINGAPORETELECOMM 11,000 11 11,000 11
UNITED O/SEAS BANK 94,072 647 1,000 7 95,072 654
-------- -------- -------
741 29 770
-------- -------- -------
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
V.S.T. International Opportunities Fund and the V.S.T. International
Opportunties B Fund, combined on December 31, 2001.
-------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunites Fund Opportunites B Fund Combined
-------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000's INTEREST SHARES OR (000's SHARES OR (000's
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
-------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
South Africa - (0.22%)
NEDCOR LTD 23,600 $ 244 23,600 $ 244
--------- --------
South Korea - (1.61%)
KOOKMIN BANK 7,420 283 7,420 283
SAMSUNG ELECTRONIC 4,000 853 4,000 853
SHINHAN FINANCIAL 16,800 225 16,800 225
SK TELECOM 2,300 471 2,300 471
--------- --------
1,832 1,832
--------- --------
Spain - (2.88%)
ACERINOX SA 4,565 $ 152 4,565 152
BBVA (BILB VIZ ARG) 49,290 610 9,272 115 58,562 725
BCO POPULAR ESP 600 20 600 20
BCO SANT CENT HISP 64,160 537 10,471 88 74,631 625
ENDESA S.A. 20,382 319 20,382 319
INDITEX 16,905 322 16,905 322
REPSOL YPF SA) 10,115 147 10,115 147
TELEFONICA SA 49,394 661 22,553 302 71,947 963
--------- -------- --------
2,274 999 3,273
--------- -------- --------
Sweeden - (3.09%)
ELECTROLUX AB 15,910 238 15,910 238
ERICSSON (LM) TEL 94,440 515 17,614 96 112,054 611
HENNES + MAURITZ 22,460 467 22,460 467
NORDEA 61,620 327 61,620 327
SANDVIK AB 3,220 69 3,220 69
SECURITAS 67,328 1,282 10,644 203 77,972 1,485
SKANDIA FORSAKRING 40,795 296 40,795 296
SVENSKA HANDELSBANKEN SERIES A 800 12 800 12
--------- -------- --------
2,898 607 3,505
--------- -------- --------
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
V.S.T. International Opportunities Fund and the V.S.T. International
Opportunties B Fund, combined on December 31, 2001.
-------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunites Fund Opportunites B Fund Combined
-------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000's INTEREST SHARES OR (000's SHARES OR (000's
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
-------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
Switzerland - (6.52%)
ADECCO SA 20,700 $ 1,126 5,405 $ 294 26,105 $ 1,420
CONVERUIMHLDGS 7,057 343 7,057 343
CREDIT SUISSE GRP 4,800 205 400 17 5,200 222
NESTLE SA 7,920 1,689 4,207 897 12,127 2,586
NOVARTIS AG 18,978 686 18,978 686
ROCHE HOLDINGS AG 6,100 435 2,825 202 8,925 637
SWISS REINSURANCE 920 93 1,957 197 2,877 290
SYNGENTA AG 1,396 72 1,396 72
UBS AG 19,266 973 3,299 167 22,565 1,140
--------- -------- --------
4,521 2,875 7,396
--------- -------- --------
Taiwan - (1.38%)
ASUSTEK COMPUTER 49,000 215 49,000 215
COMPAL ELECTRONIC 161,000 204 161,000 204
HON HAI PRECISION 44,000 201 44,000 201
TAIWAN SEMICONDUCT 255,400 639 255,400 639
UNITED MICRO ELEC 213,000 311 213,000 311
--------- --------
1,570 1,570
--------- --------
United Kingdom - (25.96%)
ABBEY NATIONAL 18,386 262 4,523 64 22,909 326
ALLIED IRISH BANKS 1,600 18 1,600 18
AMVESCAP 22,709 327 22,709 327
ARM HLDGS 36,332 190 36,332 190
ASTRAZENECA 21,211 955 281 13 21,492 968
AUTONOMY CORP 1,500 7 1,500 7
BAA 18,794 150 18,794 150
BARCLAYS 20,895 691 20,895 691
BG GROUP 16,019 65 5,300 22 21,319 87
BK OF IRELAND 72,098 682 72,098 682
BP PLC 85,000 660 51,816 402 136,816 1,062
BRAMBLES INDUSTRIE 66,020 326 66,020 326
BRITISH SKY BROADCAST 20,074 221 20,074 221
CABLE + WIRELESS 41,270 198 41,270 198
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete of all securities owned by the V.S.T.
International Opportunities Fund and the V.S.T. International Opportunities B
Fund, combined on December 31, 2001
-----------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
-----------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000'S INTEREST SHARES OR (000'S SHARES OR (000'S
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
-----------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
CADBURY SCHWEPPES 66,477 $ 423 66,477 $ 423
CELLTECH GROUP 21,473 273 21,473 273
CENTRICA 36,200 117 6,440 $ 21 42,640 138
COMPASS GROUP 171,730 1,286 900 7 172,630 1,293
DIAGEO 81,912 935 4,629 53 86,541 988
DIMENSIONDATA HLDGS PLC 12,500 15 12,500 15
DS SMITH PLC 18,000 41 18,000 41
ELECTROCOMPONENTS 49,520 386 49,520 386
EXEL 23,492 268 23,492 268
FRIENDS PROVIDENT 21,930 64 21,930 64
GKN 5,000 19 5,000 19
GLAXOSMITHKLINE 129,681 3,249 33,356 836 163,037 4,085
GRANADA PLC 187,576 391 187,576 391
GUS PLC 2,100 20 2,100 20
HAYS 93,116 282 93,116 282
HILTON GROUP 23,000 71 23,000 71
HSBC HLDGS 2,105 25 2,105 25
INTERNATIONAL POWER 126,758 373 126,758 373
INVENSYS 4,400 8 4,400 8
KINGFISHER 49,116 286 49,116 286
LATTICE GROUP 45,322 103 45,322 103
LEGAL + GENERAL GP 18,952 44 18,952 44
LLOYDS TSB GROUP 2,100 23 2,100 23
MAN GROUP 300 5 300 5
MARKS + SPENCER 3,500 18 3,500 18
NATIONAL GRID GRP 5,407 34 5,407 34
P+O PRINCESS CRUIS 42,505 247 42,505 247
RECKITT BENCKISER PLC 2,000 29 14,640 213 16,640 242
REED INTERNATIONAL 217,000 1,798 217,000 1,798
RENTOKIL INITIAL 6,200 25 6,200 25
RIO TINTO 46,989 899 46,989 899
ROYAL BK SCOT GRP 78,532 1,909 1,963 48 80,495 1,957
SAINSBURY(J) 48,640 259 48,640 259
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete of all securities owned by the V.S.T.
International Opportunities Fund and the V.S.T. International Opportunities B
Fund, combined on December 31, 2001.
-----------------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
-----------------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000'S INTEREST SHARES OR (000'S SHARES OR (000'S
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
---------------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
SCOT + SOUTHERN EN 5,246 $ 46 5,246 $ 46
SHELL TRNSPT+TRDG 219,084 $ 1,503 20,284 139 239,368 1,642
SHIRE PHARMA GROUP 1,200 15 1,200 15
SIX CONTINENTS PLC (Bass PLC) 30,692 303 30,692 303
SMITHS GROUP 43,181 425 43,181 425
STANDARD CHARTERED 24,600 293 24,600 293
TESCO 128,030 464 175,045 634 303,075 1,098
TOMKINS 119,506 368 119,506 368
UNILEVER 63,148 518 2,000 16 65,148 534
UTD BUSINESS MEDIA 12,193 85 12,193 85
VODAFONE GROUP 770,844 2,014 413,431 1,080 1,184,275 3,094
WOOLWORTHS GROUP 54,028 37 54,028 37
WPP GROUP 106,200 1,174 106,200 1,174
--------- --------- ---------
21,764 7,706 29,470
--------- --------- ---------
United States - (4.36%)
AMERICA MOVIL S A DEC V - ADR 15,600 304 15,600 304
CELESTICAINC 12,470 504 12,470 504
CHECK POINT SOFTWARE 1,857 74 1,857 74
COCA COLAFEMSA S A CV - ADR 10,000 201 10,000 201
COMPANHIABRASILEIRA DE DISTR - ADR 17,800 392 17,800 392
COMPANHIAVALE DO RIO DOCE - ADR 9,969 235 9,969 235
ELAN PLC - ADR 5,400 243 5,400 243
EMBRAER EMPRESA BRASILEIRA DE 7,000 155 7,000 155
ERICSSON L M TEL CO - ADR 2,400 12 2,400 12
FLEXTRONICS INTERNATIONAL 8,084 194 8,084 194
GLAXOSMITHKLINE PLC - ADR 2,300 115 2,300 115
GRUPO IUSACELL S A DE C V NEW - ADR 9,000 36 9,000 36
GRUPO TELEVISION SA DE CV 6,923 299 6,923 299
ICICI LTD 28,064 168 28,064 168
KOREA TELECOM - ADR 21,471 436 21,471 436
NOKIA CORP - ADR 800 20 800 20
OIL CO LUKOIL - ADR 2,730 134 2,730 134
ORBOTECH LTD 8,300 259 8,300 259
POHANG IRON + STEEL LTD - ADR 15,503 357 15,503 357
SAMSUNG ELECTRS LTD 200 23 200 23
SAP AKTIENGESELLSCHAFT - ADR 500 16 500 16
SMARTFORCE PUB LTD CO - ADR 6,166 153 6,166 153
TALISMAN ENERGY INC 500 19 500 19
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete of all securities owned by the V.S.T.
International Opportunities Fund and the V.S.T. International Opportunities B
Fund, combined on December 31, 2001.
-----------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
-----------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000'S INTEREST SHARES OR (000'S SHARES OR (000'S
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
-----------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
TELEFONICA S A 5,269 $ 211 5,269 $ 211
TELEFONOSDE MEXICO S A - ADR 2,891 101 2,891 101
TEVA PHARMACEUTICAL INDS LTD - ADR 4,600 283 4,600 283
--------- -------- ---------
4,496 448 4,944
--------- -------- ---------
TOTAL COMMON STOCK - (98.85%) 84,169 28,026 112,195
--------- -------- ---------
PREFERRED STOCK
Australia - (0.46%)
NEWS CORPORATION 77,247 516 77,247 516
--------- ---------
Brazil - (0.43%)
PETROL BRASILEIROS 22,292 493 22,292 493
--------- ---------
TOTAL PREFERRED STOCK - (0.89%) 1,009 1,009
--------- ---------
WARRANTS
Armenia
MERRILYNINT LEP WRT INFOSYS (warrants) 200 17 200 17
-------- ---------
TOTAL WARRANTS - (0.02%) 17 17
-------- ---------
PAR VALUE PAR VALUE PAR VALUE
(000's (000's (000's
OMITTED) OMITTED) OMITTED)
--------- --------- ---------
COMMERCIAL PAPER
Euro Time Deposit
3.0% due 01/02/02 $ 300 265 $ 300 265
--------- --------
SHORT-TERM INVESTMENTS
Investment in joint trading account
2.055% due 01/02/02 2.055% 1,688 1,688 1,688 1,688
--------- --------
Investment in a joint repurchase
agreement with Goldman Sachs & Co.,
1.778% due 01/02/02 1.778% $ 1,500 $ 1,500 1,500 1,500
------- --------
TOTAL SHORT TERM INVESTMENTS (3.03%) 1,953 1,500 3,453
--------- ------- --------
Schedule of Investments
December 31, 2001
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete of all securities owned by the V.S.T.
International Opportunities Fund and the V.S.T. International Opportunities B
Fund, combined on December 31, 2001.
-----------------------------------------------------------------------------------------------
John Hancock V.S.T. International John Hancock V.S.T. International
Opportunities Fund Opportunities B Fund Combined
-----------------------------------------------------------------------------------------------
NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE NUMBER OF MARKET VALUE
INTEREST SHARES OR (000'S INTEREST SHARES OR (000'S SHARES OR (000'S
RATE WARRANTS OMITTED) RATE WARRANTS OMITTED) WARRANTS OMITTED)
-----------------------------------------------------------------------------------------------
ISSUER, DESCRIPTION
- -------------------
TOTAL INVESTMENTS (102.79%) $ 87,131 $ 29,543 $ 116,674
---------- --------- -----------
OTHER ASSETS AND LIABILITIES,
NET (2.79%) (3,540) 372 (3,168)
---------- --------- -----------
TOTAL NET ASSETS (100.00%) $ 83,591 $ 29,915 $ 113,506
========== ========= ===========
NOTES TO THE SCHEDULE OF INVESTMENTS
ADR - American Depository Receipts
The percentage shown for each investment category is the total value of that
category as a percentage of the combined net assets of the Funds.
VOTE THIS CARD TODAY!
A PROMPT RESPONSE WILL SAVE THE FUND
THE EXPENSE OF ADDITIONAL MAILINGS
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
JOHN HANCOCK LIFE INSURANCE COMPANY
Please fold and detach card at perforation before mailing.
Please fill in box(es) as shown using black or blue ink or
number 2 pencil. PLEASE DO NOT USE FINE POINT PENS. [X]
If this voting instruction card is properly executed, shares attributable to
your variable annuity contract or variable life insurance policy will be voted
in the manner you direct below. IF THIS CARD IS EXECUTED, BUT YOU GIVE NO
DIRECTION, THE SHARES WILL BE VOTED FOR THE PROPOSAL. THEY WILL BE VOTED IN THE
DISCRETION THE INSURANCE COMPANY UPON ANY BUSINESS THAT MAY PROPERLY COME BEFORE
THE MEETING, OR ANY ADJOURNMENT(S) THEREOF.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal: To combine the International Opportunities B Fund with International
Opportunities Fund.
PLEASE DO NOT FORGET TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
JOHN HANCOCK LIFE INSURANCE COMPANY
VOTE THIS CARD TODAY!
A PROMPT RESPONSE WILL SAVE THE FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing.
INTERNATIONAL OPPORTUNITIES B
A Series of John Hancock Variable Series Trust I
Special Meeting of Shareholders
To Be Held on September 25, 2002
The undersigned, revoking previous instructions, hereby instructs the
above-referenced insurance companies to vote all the shares of beneficial
interest of the above-referenced Fund attributed to the undersigned at the
Special Meeting of Shareholders (the "Meeting") of the Fund to be held at 197
Clarendon Street, Boston, Massachusetts, on Wednesday, September 25, 2002 at
11:00 a.m., Eastern Time, and at any adjournment(s) of the Meeting. Receipt of
the Proxy Statement is hereby acknowledged. If not revoked, this card shall be
voted at the Meeting, as specified on the reverse side.
These voting instructions will be used by the insurance companies in connection
with a proxy solicitation by the trustees of the Fund.
Date_____________________
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
------------------------------------------------------------------
------------------------------------------------------------------
Signature(s)
NOTE: Signature(s) should agree with the name(s) printed hereon.
When signing as attorney, executor, administrator, trustee or
guardian, please give your full name as such. If a corporation,
please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership
name by authorized person.
PART C
OTHER INFORMATION
Item 15. Indemnification
In response to this item and the requirements of Rule 484 under the Securities
Act of 1933, the registrant hereby incorporates by reference its response to
item 25 in Post-Effective Amendment No. 31 to its Form N-1A registration
statement (File No. 33-2081) filed on May 1, 2001.
Item 16. Exhibits
(1) Declaration of Trust of John Hancock Variable Series Trust I, dated February
21, 1988, incorporated by reference from Pre-effective Amendment No. 2 to the
Trust's Form N-14 registration statement (File No. 333-47686), filed on December
6, 2000.
(2) By-Laws of John Hancock Variable Series Trust I, amended and restated as of
September 27, 2000, incorporated by reference from Pre-effective Amendment No. 2
to the Trust's Form N-14 registration statement (File No. 333-47686), filed on
December 6, 2000.
(3) Not Applicable.
(4) Form of Plan and Agreement of Reorganization (filed herewith).
(5) Not Applicable.
(6)(a) Investment Management Agreement dated March 14, 1996 between John
Hancock and the Trust, relating to, inter alia, the International Opportunities
Fund (filed herewith).
(6)(b) Amendment No. 7 dated October 1, 2001 to Investment Management Agreement
dated March 14, 1996, relating to the International Opportunities Fund,
incorporated by reference from Post-Effective Amendment No. 33 to the Trust's
Form N-1A registration statement (File No. 33-2018), filed April 12, 2002.
(6)(c) Amendment dated April 23, 1999 to Investment Management Agreement dated
March 14, 1996, relating to the International Opportunities Fund, incorporated
by reference from Post-Effective Amendment No. 33 to the Trust's Form N-1A
registration statement (File No. 33-2018), filed April 12, 2002.
(6)(d) Sub-Investment Management Agreement dated November 1, 2000, among John
Hancock, the Trust and T. Rowe Price International, Inc., incorporated by
reference from Post-Effective Amendment No. 33 to the Trust's Form N-1A
registration statement (File No. 33-2018), filed April 12, 2002.
(6)(e) Amendment dated July 1, 2001 to Sub-Investment Management Agreement dated
November 1, 2001, relating to the International Opportunities Fund, incorporated
by reference from Post-Effective Amendment No. 33 to the Trust's Form N-1A
registration statement (File No. 33-2018), filed April 12, 2002.
(7) Underwriting and Indemnity Agreement among John Hancock Variable Series
Trust I, Signator Investors, Inc. (formerly named John Hancock Distributors,
Inc.), and John Hancock, incorporated by reference to Post-Effective Amendment
No. 14 to the Trust's Form N-1A registration statement (File No. 33-2081), filed
on February 28, 1997.
(8) Not Applicable.
(9)(a) Custodian Agreement Between John Hancock Variable Series Trust I and
State Street Bank and Trust Company, dated January 30, 1995, relating to the
International Opportunities Fund, incorporated by reference from Pre-Effective
Amendment No. 2 to the Trust's Form N-14 Registration Statement (File No.
333-47686), filed on December 6, 2001.
(9)(b) Amendment dated as of March 18, 1996 to Custodian Agreement dated January
30, 1995, between John Hancock Variable Series Trust I and State Street Bank and
Trust Company, expanding the Agreement to cover certain additional Funds
(including the International Opportunities Fund), filed herewith.
(9)(c) Amendment dated as of December 18, 1998 to Custodian Agreement dated
January 30, 1995, between John Hancock Variable Series Trust I and State Street
Bank and Trust Company, addressing "eligible foreign custodians" within the
meaning of Rule 17f-5, incorporated by reference from Post-Effective Amendment
No. 24 to the Trust's Form N-1A registration statement (File No. 33-2081), filed
on April 6, 2000.
(10) Not Applicable.
(11) Opinion and Consent of Counsel as to Legality of Securities (filed
herewith).
(12) Included in Exhibit (4).
(13) Not Applicable.
(14) Consent of Independent Public Accountants to the incorporation by reference
of their opinion into the Statement of Additional Information (filed herewith).
(15) Not Applicable.
(16) Powers of Attorney for Elizabeth G. Cook, Kathleen F. Driscoll, Diane C.
Kessler, Michele G. Van Leer, Hassell H. McClellan, and Robert F. Verdonck,
incorporated by reference from the Trust's Form N-14 registration statement
(File No. 333-69440), filed on September 14, 2001.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act of 1933, the reoffering
prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to this registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the Registrant, in the City of Boston and Commonwealth of
Massachusetts, on the 1st day of July, 2002.
JOHN HANCOCK VARIABLE SERIES TRUST I
By: /s/ Michele Van Leer
---------------------
Name: Michele G. Van Leer
Title: Chairman of the Board of
Trustees
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the date indicated.
SIGNATURE DATE
By: /s/ Raymond F. Skiba July 1, 2002
--------------------
Raymond F. Skiba
Treasurer (Principal Financial
and Accounting Officer)
By: /s/ Michele Van Leer July 1, 2002
--------------------
Michele G. Van Leer
Chairman of the Board of Trustees
(Principal Executive Officer)
For herself and as attorney-in-fact for:
Elizabeth G. Cook, Trustee
Diane C. Kessler, Trustee
Robert F. Verdonck, Trustee
Hassell H. McClellan, Trustee