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FINAL REPORT
John Hancock V.A. Financial Industries Fund
April 30, 2003
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John Hancock V.A. Financial Industries Fund
Schedule of Investments
4-30-03 (unaudited)
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ISSUER SHARES VALUE
COMMON STOCKS
Banks - Midwest 5.58%
Fifth Third Bancorp 62,342 $ 3,072,837
-----------
Banks - Money Center 14.83%
Bank of America Corp. 57,500 4,257,875
Citigroup, Inc. 87,000 3,414,750
Wachovia Corp. 13,000 496,730
-----------
8,169,355
-----------
Banks - Northeast 4.40%
M&T Bank Corp. 1,500 126,705
State Street Corp. 65,500 2,294,465
-----------
2,421,170
-----------
Banks - Southeast 5.02%
BB&T Corp. 80,900 2,637,340
National Commerce Financial Corp. 3,000 61,020
SouthTrust Corp. 2,500 67,153
-----------
2,765,513
-----------
Banks - Superregional 16.89%
Bank of New York Co., Inc. (The) 68,000 1,798,600
Bank One Corp. 11,500 414,575
Charter One Financial, Inc. 2,100 61,005
Mellon Financial Corp. 46,500 1,229,925
PNC Financial Services Group 18,344 805,302
SunTrust Banks, Inc. 6,500 371,930
U.S. Bancorp 17,500 387,625
Washington Mutual, Inc. 10,000 395,000
Wells Fargo & Co. 79,500 3,836,670
-----------
9,300,632
-----------
Banks - West 0.36%
Zions Bancorp 4,000 197,080
-----------
Broker Services 12.81%
Goldman Sachs Group, Inc. 34,700 2,633,730
Legg Mason, Inc. 47,000 2,552,100
Merrill Lynch & Co., Inc. 45,500 1,867,775
-----------
7,053,605
-----------
Diversified Operations 3.50%
General Electric Co. 65,500 1,928,975
-----------
Finance - Consumer Loans 3.28%
MBNA Corp. 95,475 1,804,477
-----------
Finance - Investment Management 1.27%
Amvescap Plc (United Kingdom) 129,000 700,997
-----------
Finance - Services Misc. 4.87%
American Express Co. 70,900 2,684,274
-----------
Insurance - Brokers 5.67%
Marsh & McLennan Cos., Inc. 59,600 2,841,728
Willis Group Holdings Ltd.* 8,975 279,930
-----------
3,121,658
-----------
Insurance - Diversified 3.60%
Berkshire Hathaway, Inc.* 850 1,982,200
-----------
Insurance - Property & Casualty 5.44%
American International Group, Inc. 51,704 2,996,247
-----------
Mortgage & Real Estate Services 11.80%
Fannie Mae 51,000 3,691,890
Freddie Mac 48,500 2,808,150
-----------
6,500,040
-----------
TOTAL COMMON STOCKS 99.32%
(Cost $59,978,965) 54,699,060
-----------
TOTAL INVESTMENTS 99.32% 54,699,060
-----------
OTHER ASSETS AND LIABILITIES, NET 0.68% 374,791
-----------
TOTAL NET ASSETS 100.00% $55,073,851
===========
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer.
The percentage shown for each investment category is the total of that category
as a percentage of the net assets of the the Fund.
See notes to financial statements.
1
John Hancock V.A. Financial Industries Fund
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ASSETS AND ASSETS
LIABILITIES ---------------------------------------------------------------------------------------------------
Final report Investments at value (Cost $59,978,965) $54,699,060
4-30-03 * Cash 303,701
(unaudited) Dividends and interest receivable 110,645
Other assets 1,890
Total assets 55,115,296
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LIABILITIES
---------------------------------------------------------------------------------------------------
Payable to affiliates 36,223
Other payables and accrued expenses 5,222
Total liabilities 41,445
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NET ASSETS
---------------------------------------------------------------------------------------------------
Capital paid-in 73,440,622
Accumulated net realized loss on investments and foreign currency transactions (13,086,919)
Net unrealized depreciation of investments and translation of assets and liabilities
in foreign currencies (5,279,224)
Distributions in excess of net investment income (628)
Net assets $55,073,851
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NET ASSET VALUE PER SHARE
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Based on 4,641,425 shares of beneficial interest outstanding
- unlimited number of shares authorized with no par value $11.87
* The net assets of V.A.Financial Industries Fund (the "Fund") were merged into
the Financial Industries Fund of the John Hancock Variable Series Trust I as
of the close of business on April 30, 2003, and the Fund was subsequently
terminated. The Statement of Assets and Liabilities reflects the Fund's
position prior to the transfer of net assets and the termination of the Fund.
See Note A to financial statements.
See notes to financial statements.
2
John Hancock V.A. Financial Industries Fund
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OPERATIONS INVESTMENT INCOME
Period --------------------------------------------------------------------------
1-1-03 through Dividends (net of foreign withholding taxes of $1,462) $382,604
4-30-03 * Interest (includes securities lending income of $111) 2,422
(unaudited) Total investment income 385,026
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EXPENSES
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Investment management fee 140,827
Accounting and legal services fee 5,281
Custodian fee 3,349
Trustees' fee 2,583
Interest expense 446
Legal fee 157
Total expenses 152,643
Net investment income 232,383
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REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------
Net realized gain (loss) on
Investments (1,212,623)
Foreign currency transactions 815
Change in unrealized appreciation (depreciation) of
Investments 2,229,800
Translation of assets and liabilities in foreign currencies (383)
Net realized and unrealized gain 1,017,609
Increase in net assets from operations $1,249,992
* The net assets of V.A.Financial Industries Fund (the "Fund") were merged into
the Financial Industries Fund of the John Hancock Variable Series Trust I as
of the close of business on April 30, 2003, and the Fund was subsequently
terminated. The Statement of Operations reflects the Fund's position prior to
the transfer of net assets and the termination of the Fund. See Note A to
financial statements.
See notes to financial statements.
3
John Hancock V.A. Financial Industries Fund
Period from
Year 1-1-03 to
Ended 4-30-03 *
12-31-02 (unaudited)
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CHANGES IN INCREASE (DECREASE) IN NET ASSETS
NET ASSETS -------------------------------------------------------------------------------------------------
From operations
Net investment income $ 638,753 $ 232,383
Net realized loss (7,403,779) (1,211,808)
Change in net unrealized appreciation (depreciation) (9,486,140) 2,229,417
Increase (decrease) in net assets resulting from operations (16,251,166) 1,249,992
Distributions to shareholders
From net investment income (641,124) (233,198)
From Fund share transactions (14,653,108) (3,317,813)
-------------------------------------------------------------------------------------------------
NET ASSETS
-------------------------------------------------------------------------------------------------
Beginning of period 88,920,268 57,374,870
End of period (1) $ 57,374,870 $ 55,073,851
* The net assets of V.A.Financial Industries Fund (the "Fund") were merged
into the Financial Industries Fund of the John Hancock Variable Series Trust
I as of the close of business on April 30, 2003, and the Fund was
subsequently terminated. The Statements of Changes in Net Assets reflect the
Fund's position prior to the transfer of net assets and the termination of
the Fund. See Note A to financial statements.
(1) Includes distributions in excess of net investment income of $628 and $628,
respectively.
See notes to financial statements.
4
John Hancock V.A. Financial Industries Fund
Financial Highlights
PERIOD ENDED 12-31-98 12-31-99 12-31-00 12-31-01 12-31-02 4-30-03(1)
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PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $13.44 $14.45 $14.46 $18.34 $14.56 $11.60
Net investment income (2) 0.18 0.11 0.06 0.11 0.12 0.05
Net realized and unrealized gain (loss) on investments 0.97 0.06 3.87 (3.33) (2.95) 0.27
Total from investment operations 1.15 0.17 3.93 (3.22) (2.83) 0.32
Less distributions
From net investment income (0.14) (0.10) (0.05) (0.09) (0.13) (0.05)
From net realized gain --(3) (0.05) -- (0.47) -- --
Tax return of capital -- (0.01) -- -- -- --
(0.14) (0.16) (0.05) (0.56) (0.13) (0.05)
Net asset value, end of period $14.45 $14.46 $18.34 $14.56 $11.60 $11.87(4)
Total return (5) (%) 8.55 1.23 27.16 (17.51) (19.46) 2.76(6)
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RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $55 $49 $71 $89 $57 $55
Ratio of expenses to average net assets (%) 0.92 0.90 0.90 0.89 0.90 0.87(7)
Ratio of net investment income to average net assets (%) 1.25 0.77 0.36 0.71 0.87 1.32(7)
Portfolio turnover (%) 38 72 41 97(8) 2 0
(1) Period from 1-1-03 through 4-30-03. Unaudited.
(2) Based on the average of the shares outstanding.
(3) Less than $0.01 per share.
(4) Net assets value per share before the merger of assets to the Financial
Industries Fund of the John Hancock Variable Series Trust I and the
termination of the Fund. See Note A to financial statements.
(5) Assumes dividend reinvestment.
(6) Not annualized.
(7) Annualized.
(8) Excludes merger activity
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
NOTE A
Accounting policies
John Hancock V.A. Financial Industries Fund (the "Fund") was a diversified
series of John Hancock Declaration Trust ("the Trust"), an open-end management
investment company registered under the Investment Company Act of 1940,
organized as a Massachusetts business trust in 1995. The Trustees may have
authorized the creation of additional series from time to time to satisfy
various investment objectives. An insurance company issuing a Variable Contract
that participated in the Trust would vote shares of the Fund held by the
insurance company's separate accounts as required by law. In accordance with
current law and interpretations thereof, participating insurance companies were
required to request voting instructions from policy owners and voted shares of
the Fund in proportion to the voting instructions received.
The investment objective of the Fund was to seek capital appreciation. The Fund
has one class of shares with equal rights as to voting, redemption, dividends
and liquidation.
On April 16, 2003 the shareholders of the Fund approved an Agreement and Plan of
Reorganization, which provided for the transfer of substantially all of the
assets and liabilities of the Fund to the Financial Industries Fund of the John
Hancock Variable Series Trust I (the "Acquiring Fund") in exchange solely for
shares of beneficial interest of the Acquiring Fund.
After this transaction and as of the close of business on April 30, 2003, the
Fund will be terminated. The financial statements presented herein reflect the
position of the Fund prior to the exchange of net assets and termination of the
Fund.
Significant accounting policies of the Funds were as follows:
Valuation of investments
Securities in the Fund's portfolio were valued on the basis of market
quotations, valuations provided by independent pricing services or, if
quotations were not readily available, or the value had been materially affected
by events occurring after the closing of a foreign market, at fair value as
determined in good faith in accordance with procedures approved by the Trustees.
Short-term debt investments maturing within 60 days were valued at amortized
cost, which approximated market value. Investments in AIM Cash Investment Trust
were valued at their net asset value each business day. All portfolio
transactions initially expressed in terms of foreign currencies were translated
into U.S. dollars as described in "Foreign currency translation" below.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
the Fund, along with other registered investment companies having a management
contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned
subsidiary of The Berkeley Financial Group, LLC, may have participated in a
joint repurchase agreement transaction. Aggregate cash balances were invested in
one or more large repurchase agreements, whose underlying securities were
obligations of the U.S. government and/or its agencies. The Fund's custodian
bank received delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser was responsible for ensuring that the agreement was
fully collateralized at all times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign currencies
were 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 Fund. Transactions affecting statement of operations accounts and
net realized gain (loss) on investments were translated at the rates prevailing
at the dates of the transactions.
6
The Fund did 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 were
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign currency exchange gains or losses arose from sales
of foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arose from changes in the
value of assets and liabilities other than investments in securities, resulting
from changes in the exchange rates.
Investment transactions
Investment transactions were recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments were determined
on the identified cost basis. Capital gains realized on some foreign securities
were subject to foreign taxes, which were accrued as applicable.
Expenses
The majority of the expenses were directly identifiable to an individual fund.
Expenses which were not readily identifiable to a specific fund were allocated
in such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
Bank borrowings
The Fund was 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 Fund had entered into a
syndicated line of credit agreement with various banks. This agreement enabled
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks, which permitted borrowings up to $250 million,
collectively. Interest was charged to each fund, based on its borrowing. In
addition, a commitment fee was charged to each fund based on the average daily
unused portion of the line of credit and was allocated among the participating
funds. The Funds had no borrowing activity under the line of credit during the
period ended April 30, 2003.
Securities lending
The Fund may have lent securities to certain qualified brokers who paid the Fund
negotiated lender fees. These fees were included in interest income. The loans
were collateralized at all times with cash or securities with a market value at
least equal to the market value of the securities on loan. As with other
extensions of credit, the Fund would have borne the risk of delay of the loaned
securities in recovery or even loss of rights in the collateral, should the
borrower of the securities have failed financially. There were no securities
loaned as of April 30, 2003.
Federal income taxes
The Fund qualified as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and was not a subject to
federal income tax on taxable income that was distributed to shareholders.
Therefore, no federal income tax provision was required as of April 30, 2003,
the Fund's final tax year. As of April 30, 2003, the Fund's final tax year, for
federal income tax purposes, the Fund had $12,903,311 of a capital loss
carryforward, expiring as follows: December 31, 2008 - $1,143,472, December 31,
2010 - $9,571,154 and April 30, 2011 - $2,188,685. The unused capital loss
carryforward as of April 30, 2003, was transferred to the Acquiring Fund and
will be available, to the extent provided by regulations, to offset future net
capital gains of the Acquiring Fund.
7
Dividends, interest and distributions
Dividend income on investment securities was recorded on the ex-dividend date
or, in the case of some foreign securities, on the date thereafter when the Fund
identified the dividend. Interest income on investment securities was recorded
on the accrual basis. Foreign income may have been subject to foreign
withholding taxes, which were accrued as applicable.
The Fund recorded distributions to shareholders from net investment income and
realized gains on the ex-dividend date. During the period ended April 30, 2003,
the tax character of distributions paid by the Funds were as follows: ordinary
income $233,198.
As of April 30, 2003, the Fund had no distributable earnings on a tax basis.
Such distributions and distributable earnings, on a tax basis, were determined
in conformity with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, were reported in the Fund's
financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Funds. Actual results could differ
from these estimates.
NOTE B
Management fee and transactions with affiliates and others
The Fund had an investment management contract with the Adviser. Under the
investment management contract, the Fund paid a monthly management fee to the
Adviser at an annual rate of 0.80% of the Fund's average daily net asset value.
The Adviser had agreed to limit the Fund's expenses, excluding the management
fee, to 0.25% of Fund's average daily net assets. There was no expense reduction
during the period ended April 30, 2003.
The Fund had an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Fund. The compensation for the period was at an
annual rate of approximately 0.02% of the average net assets of the Fund.
Ms. Maureen R. Ford and Mr. John M. DeCiccio were directors and/or officers of
the Adviser and its affiliates, as well as Trustees of the Fund. The
compensation of unaffiliated Trustees was borne by the Fund. The unaffiliated
Trustees could elect to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund made investments into other John Hancock funds, as applicable, to cover
its liability for the deferred compensation. Investments to cover the Fund's
deferred compensation liability were recorded on the Fund's books as other
assets. The deferred compensation liability and the related other assets were
always equal and were marked to market on a periodic basis to reflect any income
earned by the investments as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations of the
Fund.
8
NOTE C
Fund share transactions
This listing illustrates the number of Fund shares sold, reinvested and
repurchased during the last two periods, along with the corresponding dollar
value.
Period from 1-1-03 to 4-30-03
Year Ended 12-31-02 (unaudited)
Shares Amount Shares Amount
Shares sold 672,740 $8,600,419 79,794 $919,822
Distributions reinvested 53,471 641,124 19,713 233,199
Repurchased (1,890,878) (23,894,651) (402,369) (4,470,834)
- -------------------------------------------------------------------------------------------
Net decrease (1,164,667) ($14,653,108) (302,862) ($3,317,813)
- -------------------------------------------------------------------------------------------
NOTE D
Investment transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. government, during the period
ended April 30, 2003, aggregated to none and $1,940,739, respectively.
The cost of investments owned on April 30, 2003, including short-term
investments, for federal income tax purposes was $60,162,574. Gross unrealized
appreciation and depreciation of investments aggregated $3,179,952 and
$8,643,466, respectively, resulting in net unrealized depreciation of
$5,463,514. The difference between book basis and tax basis net unrealized
depreciation of investments is attributable primarily to the tax deferral of
losses on wash sales.
NOTE E
Shareholder meeting
On April 16, 2003, at a Special Shareholder Meeting, the shareholders of the
Fund approved an Agreement and Plan of Reorganization between the Fund and the
Acquiring Fund.
The number of votes cast for and against the Agreement and Plan of
Reorganization and that abstained from voting were as follows: 4,259,338 FOR,
126,010 AGAINST and 361,423 ABSTAINED.
The Agreement and Plan of Reorganization provided for the transfer of
substantially all of the assets and liabilities of the Fund to the Acquiring
Fund in exchange solely for shares of beneficial interest of the Acquiring Fund.
After this transaction and as of the close of business on April 30, 2003, the
Fund was terminated. The financial statements presented herein reflect the
position of the Fund prior to the exchange of net assets and the termination of
the Fund.
NOTE F
Reclassification of accounts
During the period ended April 30, 2003, the Fund reclassified amounts to reflect
an increase in accumulated net realized loss on investments of $815 and a
decrease in distributions in excess of net investment income of $815. This
represents the amount necessary to report these balances on a tax basis,
excluding certain temporary differences, as of April 30, 2003. These
reclassifications, which had no impact on the net asset value of the Fund, were
primarily attributable to certain differences in the computation of
distributable income and capital gains under federal tax rules versus accounting
principles generally accepted in the United States of
9
America. The calculation of net investment income (loss) per share in the
financial highlights excludes these adjustments.
TAX INFORMATION NOTICE
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund, if any, paid during its taxable period
ended April 30, 2003.
With respect to the ordinary dividends paid by the Fund for the fiscal period
ended April 30, 2003, 100% of the dividends qualify for the corporate
dividends-received deduction.
Shareholders will be mailed a 2003 U.S. Treasury Department Form 1099-DIV in
January 2004. This will reflect the total of all distributions that are taxable
for the calendar year 2003.
10
John Hancock Funds - V.A. Financial Industries Fund
Trustees
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
* Members of the Audit Committee
Officers
Maureen R. Ford
Chairman, President and Chief Executive Officer
William L. Braman
Executive Vice President and
Chief Investment Officer
Richard A. Brown
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Senior Vice President and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
Investment Adviser
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, LLC
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Transfer Agent
John Hancock Signature Services, Inc.
529 Main Street
Charlestown, MA 02129
Legal Counsel
Hale and Dorr
60 State Street
Boston, Massachusetts 02109-1803
Custodian
The Bank of New York
One Wall Street
New York, New York 10286
11
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FINAL REPORT
John Hancock
VA Relative Value Fund
VA Sovereign Investors Fund
VA Strategic Income Fund
VA Technology Fund
April 25, 2003
- --------------------------------------------------------------------------------
John Hancock V.A. Relative Value Fund
Schedule of Investments
April 25, 2003 (Unaudited)
ISSUER SHARES VALUE
- ------------------------------------------------------------ ------ -----------
COMMON STOCKS
Advertising (0.50%)
Omnicom Group, Inc. 2,300 $ 142,922
-----------
Banks - United States (5.79%)
Bank of America Corp. 10,500 762,090
State Street Corp. 8,350 287,407
Wells Fargo & Co. 13,000 616,460
-----------
1,665,957
-----------
Beverages (2.55%)
Anheuser-Busch Cos., Inc. 3,100 149,575
Coca-Cola Co. (The) 14,800 583,416
-----------
732,991
-----------
Broker Services (1.69%)
Goldman Sachs Group, Inc. (The) 6,400 485,568
-----------
Computers (13.40%)
Cisco Systems, Inc.* 32,000 459,520
Dell Computer Corp.* 9,500 276,545
Electronic Data Systems Corp. 15,000 253,500
Hewlett-Packard Co. 17,000 269,450
International Business Machines Corp. 11,250 943,650
Lexmark International, Inc.* 4,400 300,696
Microsoft Corp. 53,700 1,354,314
-----------
3,857,675
-----------
Cosmetics & Personal Care (4.99%)
Avon Products, Inc. 3,500 200,095
Colgate-Palmolive Co. 4,000 226,720
Estee Lauder Cos., Inc. (The) (Class A) 4,700 142,410
Gillette Co. (The) 8,000 243,280
Procter & Gamble Co. (The) 7,000 623,980
-----------
1,436,485
-----------
Diversified Operations (2.73%)
3M Co. 6,400 786,560
-----------
Electronics (9.63%)
Applied Materials, Inc.* 21,000 297,990
General Electric Co. 52,500 1,528,275
Intel Corp. 23,500 429,345
KLA-Tencor Corp.* 4,000 155,760
Texas Instruments, Inc. 19,700 362,283
-----------
2,773,653
-----------
See notes to financial statements. 1
ISSUER SHARES VALUE
- ------------------------------------------------------------ ------ -----------
Finance (4.74%)
American Express Co. 8,500 $ 311,865
Citigroup, Inc. 20,900 803,605
Merrill Lynch & Co., Inc. 6,200 250,108
-----------
1,365,578
-----------
Food (1.05%)
Kraft Foods, Inc. (Class A) 10,000 301,500
-----------
Household (2.46%)
Newell Rubbermaid, Inc. 22,985 707,708
-----------
Insurance (6.61%)
Ambac Financial Group, Inc. 4,000 224,000
American International Group, Inc. 6,500 355,875
CIGNA Corp. 12,100 591,085
Travelers Property Casualty Corp. (Class A) 45,594 730,872
-----------
1,901,832
-----------
Leisure (1.19%)
Mattel, Inc. 16,000 342,080
-----------
Media (6.15%)
Clear Channel Communications, Inc.* 11,000 405,350
Comcast Corp. (Class A)* 22,300 707,356
Gannett Co., Inc. 4,000 298,680
New York Times Co. (The) (Class A) 3,300 149,325
Viacom, Inc. (Class B)* 5,000 209,500
-----------
1,770,211
-----------
Medical (16.49%)
Aetna, Inc. 10,250 496,305
Bard (C.R.), Inc. 4,100 255,963
Baxter International, Inc. 3,660 78,946
Biovail Corp. (Canada)* 5,000 215,900
Gilead Sciences, Inc.* 8,700 401,418
IDEC Pharmaceuticals Corp.* 5,000 161,000
Johnson & Johnson 8,900 500,269
Medtronic, Inc. 9,248 444,644
Merck & Co., Inc. 10,900 618,575
Novartis AG, American Depositary Receipt (ADR) (Switzerland) 15,000 586,200
Pfizer, Inc. 20,300 616,511
St. Jude Medical, Inc. 4,000 209,000
UnitedHealth Group, Inc. 1,803 163,532
-----------
4,748,263
-----------
See notes to financial statements. 2
ISSUER SHARES VALUE
- ------------------------------------------------------------ ------ -----------
Office (1.48%)
Avery Dennison Corp. 8,000 $ 426,400
-----------
Oil & Gas (4.44%)
Anadarko Petroleum Corp. 3,300 151,800
BJ Services Co.* 7,500 284,850
Exxon Mobil Corp. 24,200 841,918
-----------
1,278,568
-----------
Retail (7.92%)
Bed Bath & Beyond, Inc.* 15,000 568,800
Lowe's Cos., Inc. 7,500 333,150
McDonald's Corp. 21,000 332,010
Wal-Mart Stores, Inc. 19,000 1,045,000
-----------
2,278,960
-----------
Telecommunications (4.50%)
Nokia Corp., (ADR) (Finland) 41,800 668,800
SBC Communications, Inc. 5,500 121,660
Verizon Communications, Inc. 14,000 504,840
-----------
1,295,300
-----------
TOTAL COMMON STOCKS (98.31%)
(Cost $27,452,934) 28,298,211
-----------
TOTAL INVESTMENTS (98.31%) 28,298,211
-----------
OTHER ASSETS AND LIABILITIES, NET (1.69%) 487,439
-----------
TOTAL NET ASSETS (100.00%) $28,785,650
===========
*Non-income producing security.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer.
The percentage shown for each investment category is the total of that category
as a percentage of the net assets of the Fund.
See notes to financial statements. 3
John Hancock V.A. Sovereign Investors Fund
Schedule of Investments
April 25, 2003 (Unaudited)
ISSUER SHARES VALUE
- ---------------------------------------------------------- ------ -----------
COMMON STOCKS
Advertising (1.81%)
Omnicom Group, Inc. 11,000 $ 683,540
-----------
Banks - United States (10.31%)
Bank of America Corp. 17,000 1,233,860
Bank of New York Co., Inc. (The) 19,000 482,980
Citigroup, Inc. 19,225 739,201
State Street Corp. 6,000 206,520
U.S. Bancorp 17,000 377,230
Wells Fargo & Co. 18,000 853,560
-----------
3,893,351
-----------
Beverages (2.18%)
Coca-Cola Co. (The) 9,000 354,780
PepsiCo, Inc. 11,000 469,150
-----------
823,930
-----------
Business Services - Misc (0.31%)
H&R Block, Inc. 3,100 118,110
-----------
Chemicals (3.32%)
Air Products & Chemicals, Inc. 14,000 577,640
Praxair, Inc. 12,000 675,960
-----------
1,253,600
-----------
Computers (10.70%)
Cisco Systems, Inc.* 66,000 947,760
Hewlett-Packard Co. 40,000 634,000
International Business Machines Corp. 20,000 1,677,600
Microsoft Corp. 31,000 781,820
-----------
4,041,180
-----------
Cosmetics & Personal Care (3.03%)
Avon Products, Inc. 20,000 1,143,400
-----------
Diversified Operations (8.18%)
3M Co. 8,000 983,200
Emerson Electric Co. 11,937 593,985
General Electric Co. 38,000 1,106,180
Illinois Tool Works, Inc. 6,500 406,965
-----------
3,090,330
-----------
Finance (2.89%)
MBNA Corp. 27,191 504,393
Morgan Stanley Dean Witter & Co. 13,000 585,130
-----------
1,089,523
-----------
See notes to financial statements. 4
ISSUER SHARES VALUE
- ---------------------------------------------------------- ------ -----------
Food (1.28%)
Kraft Foods, Inc. (Class A) 10,000 $ 301,500
Unilever NV (NY Reg Shares) (Netherlands) 3,000 183,660
-----------
485,160
-----------
Insurance (6.63%)
AFLAC, Inc. 17,000 527,340
American International Group, Inc. 17,093 935,842
Hartford Financial Services Group, Inc. (The) 8,000 318,880
Travelers Property Casualty Corp. (Class A) 44,933 720,276
-----------
2,502,338
-----------
Media (0.89%)
Viacom, Inc. (Class B)* 8,000 335,200
-----------
Medical (12.40%)
Abbott Laboratories 21,000 829,290
Cardinal Health, Inc. 11,000 590,370
Johnson & Johnson 32,000 1,798,720
Medtronic, Inc. 10,000 480,800
Merck & Co., Inc. 5,000 283,750
Pfizer, Inc. 23,000 698,510
-----------
4,681,440
-----------
Mortgage Banking (4.48%)
Fannie Mae 13,000 935,610
Freddie Mac 13,000 755,300
-----------
1,690,910
-----------
Office (1.48%)
Avery Dennison Corp. 10,500 559,650
-----------
Oil & Gas (8.27%)
Anadarko Petroleum Corp. 8,000 368,000
BP Plc American Depositary Receipts (ADR) (United Kingdom) 22,000 842,820
ChevronTexaco Corp. 11,000 697,400
Exxon Mobil Corp. 34,868 1,213,058
-----------
3,121,278
-----------
Retail (4.63%)
Family Dollar Stores, Inc. 10,000 331,700
Lowe's Cos., Inc. 11,000 488,620
SYSCO Corp. 9,000 248,670
Target Corp. 21,000 679,350
-----------
1,748,340
-----------
Soap & Cleaning Products (3.82%)
Colgate-Palmolive Co. 10,500 595,140
Procter & Gamble Co. (The) 9,500 846,830
-----------
1,441,970
-----------
See notes to financial statements. 5
ISSUER SHARES VALUE
- ---------------------------------------------------------- ------ -----------
Telecommunications (1.83%)
Nokia Oyj (ADR) (Finland) 15,000 $ 240,000
Verizon Communications, Inc. 12,500 450,750
-----------
690,750
-----------
Tobacco (1.40%)
Altria Group, Inc. 17,000 527,170
-----------
Utilities (1.56%)
SBC Communications, Inc. 26,703 590,670
-----------
TOTAL COMMON STOCKS (91.40%)
(Cost $34,927,072) 34,511,840
-----------
TOTAL INVESTMENTS (91.40%) 34,511,840
-----------
OTHER ASSETS AND LIABILITIES, NET (8.60%) 3,248,397
-----------
TOTAL NET ASSETS (100.00%) $37,760,237
===========
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
See notes to financial statements. 6
John Hancock V.A. Strategic Income Fund
Schedule of Investments
April 25, 2003 (Unaudited)
INTEREST CREDIT PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE RATING * (000'S OMITTED) VALUE
- --------------------------------------------------------- -------- -------- --------------- --------
BONDS
Agricultural Operations (0.00%)
Iowa Select Farms L.P./ISF Finance, Inc.,
Jr Sec Sub Note, Payment-In-Kind, 12-01-06 (R) 10.750% B- $ 6 $ 3,344
--------
Automobile / Trucks (0.02%)
J.B. Poindexter & Co., Inc.,
Sr Note 05-15-04 12.500 B- 25 18,156
--------
Banks - United States (0.27%)
Colonial Bank,
Sub Note 06-01-11 9.375 BBB- 200 223,949
--------
Chemicals (0.24%)
Nova Chemicals Corp.,
Sr Note (Canada) 05-15-06 7.000 BB+ 200 199,500
--------
Containers (0.85%)
BWAY Corp.,
Sr Sub Note 10-15-10 (R) 10.000 B- 75 76,500
Kappa Beheer B.V.,
Gtd Sr Sub Note (Netherlands) 07-15-09 (E) 10.625 B 75 80,250
Owens-Brockway Glass Container, Inc.,
Sr Sec Note 02-15-09 8.875 BB 280 298,900
Vicap S.A. de C.V.,
Gtd Sr Note (Mexico) 05-15-07 11.375 B+ 300 250,500
--------
706,150
--------
Cosmetics & Personal Care (0.01%)
Global Health Sciences, Inc.,
Gtd Sr Note 05-01-08 (B) 11.000 D 75 7,500
--------
Energy (0.18%)
Great Lakes Acquisition Corp.,
Sr Disc Deb, Step Coupon (13.125%, 05-15-03) 05-15-09 (A) Zero B- 200 98,000
Great Lakes Carbon Corp.,
Gtd Sr Sub Note 05-15-08 10.250 B- 59 48,380
--------
146,380
--------
Food (0.37%)
Dean Foods Co.,
Sr Note 08-01-07 8.150 BB- 200 216,500
Del Monte Corp.,
Sr Sub Note 12-15-12 (R) 8.625 B 63 67,725
RAB Holdings, Inc.,
Sr Note 05-01-08 (R) 13.000 Ca 120 21,600
--------
305,825
--------
See notes to financial statements. 7
INTEREST CREDIT PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE RATING * (000'S OMITTED) VALUE
- --------------------------------------------------------- -------- -------- --------------- -----------
Government - Foreign (9.99%)
Chile, Republic of,
Note (Chile) 01-11-12 7.125% A- $ 600 $ 682,860
Colombia, Republic of,
Bond (Colombia) 02-25-20 11.750 BB 400 468,000
Note (Colombia) 04-09-11 9.750 BBB 673 741,792
Mexican, United States,
Bond (Mexico) 09-15-16 11.375 BBB- 200 281,500
Note (Mexico) 01-14-11 8.375 BB+ 800 941,200
Note (Mexico) 08-15-31 8.300 BBB- 600 662,700
Panama, Republic of,
Bond (Panama) 02-08-11 9.625 BB 700 791,000
Bond (Panama) 01-16-23 9.375 BB 150 160,500
Peru, Republic of,
Note (Peru) 01-15-08 9.125 BB- 275 298,375
Russia, Federation of,
Unsub Note (Russia) 07-24-18 11.000 BB 1,805 2,389,820
Unsub Note (Russia) 06-24-28 12.750 B 600 908,700
-----------
8,326,447
-----------
Government - U.S. (59.08%)
United States Treasury,
Bond 08-15-05 6.500 AAA 400 443,375
Bond 08-15-05 10.750 AAA 400 481,484
Bond 02-15-16 9.250 AAA 615 912,362
Bond 08-15-19 8.125 AAA 3,265 4,558,502
Bond 02-15-31 5.375 AAA 9,000 9,760,779
Note 08-15-04 7.250 AAA 2,240 2,412,549
Note 03-31-05 1.625 AAA 9,000 9,017,226
Note 05-15-05 6.500 AAA 1,300 1,428,527
Note 08-15-07 6.125 AAA 940 1,073,436
Note 02-15-08 3.000 AAA 9,000 9,075,582
Note 08-15-11 5.000 AAA 1,000 1,092,617
Note 02-15-13 3.875 AAA 9,000 8,990,154
-----------
49,246,593
-----------
Government - U.S. Agencies (1.57%)
Government National Mortgage Assn.,
30 Yr Pass Thru Ctf 05-01-32 6.000 AAA 1,250 1,305,469
-----------
Leisure (5.21%)
Chukchansi Economic Development Authority,
Sr Note 06-15-09 (R) 14.500 Caa1 275 286,000
Coast Hotels and Casinos, Inc.,
Sr Sub Deb 04-01-09 9.500 B 300 322,500
Fitzgeralds Gaming Corp.,
Gtd Sr Sec Note Ser B 12-15-04 (B) 12.250 D 50 1,500
Hockey Co. (The)/Sport Maska, Inc.,
Unit (Sr Sec Note & Sr Sec Note) (Canada) 04-15-09 11.250 B 410 446,900
Isle of Capri Casinos, Inc,
Sr Sub Note 03-15-12 9.000 B 300 318,750
Jacobs Entertaiment, Inc.,
Sr Sec Note 02-01-09 11.875 B 300 313,500
See notes to financial statements. 8
INTEREST CREDIT PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE RATING * (000'S OMITTED) VALUE
- ------------------------------------------------------------- -------- -------- --------------- ----------
Leisure - Cont
Jupiters Ltd.,
Sr Note (Australia) 03-01-06 8.500% BB+ $ 300 $ 324,000
Majestic Investor Holding LLC/Majestic Investor Capital Co.,
Gtd Sr Sec Note 11-30-07 11.653 B 300 294,000
Mandalay Resort Group,
Sr Sub Note 02-15-10 9.375 BB- 100 107,750
Mohegan Tribal Gaming Authority,
Sr Sub Note 04-01-12 8.000 BB- 400 421,000
Penn National Gaming, Inc.,
Sr Sub Note 03-01-08 11.125 B- 225 248,063
Station Casinos, Inc.,
Sr Note 02-15-08 8.375 BB- 200 214,500
Sun International Hotels Ltd.,
Gtd Sr Sub Note (Bahamas) 08-15-11 8.875 B+ 65 68,575
Turning Stone Casino Resort Enterprise,
Sr Note 12-15-10 (R) 9.125 B+ 200 210,500
Waterford Gaming LLC
Sr Note 03-15-10 (R) 9.500 B+ 416 445,120
Wynn Las Vegas LLC,
2nd Mtg Note 11-01-10 12.000 CCC+ 300 321,000
----------
4,343,658
----------
Linen Supply & Related (0.29%)
Coinmach Corp.,
Sr Note 02-01-10 9.000 B 225 239,063
----------
Media (4.13%)
Allbritton Communications Co.,
Sr Sub Note 12-15-12 7.750 B- 200 208,000
Sr Sub Note 12-15-12 (R) 7.750 B- 150 156,000
CSC Holdings, Inc.,
Sr Sub Deb 05-15-16 10.500 B+ 200 224,500
Sr Sub Deb 04-01-23 9.875 B+ 100 105,250
Garden State Newspapers, Inc.,
Sr Sub Note Ser B 10-01-09 8.750 B+ 200 206,000
Sr Sub Note 07-01-11 8.625 B+ 335 345,887
Grupo Televisa SA,
Note (Mexico) 09-13-11 8.000 BBB- 300 323,250
Sr Note (Mexico) 03-11-32 8.500 BBB- 350 346,500
Hollinger International Publishing, Inc.,
Sr Note 12-15-10 (R) 9.000 B 300 320,250
Innova S. de R.L.,
Sr Note (Mexico) 04-01-07 12.875 B- 600 585,000
Paxson Communications Corp.,
Gtd Sr Sub Note 07-15-08 10.750 B- 205 225,500
Sinclair Broadcast Group, Inc.,
Gtd Sr Sub Note 03-15-12 8.000 B 375 393,750
----------
3,439,887
----------
See notes to financial statements. 9
INTEREST CREDIT PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE RATING * (000'S OMITTED) VALUE
- ---------------------------------------------------------- -------- -------- --------------- ----------
Medical (0.38%)
Advanced Medical Optics, Inc.,
Sr Sub Note 07-15-10 9.250% B $ 300 $ 317,250
----------
Metal (0.00%)
Golden Northwest Aluminum, Inc.,
1st Mtg Note 12-15-06 12.000 CC 25 2,375
----------
Oil & Gas (3.80%)
Chesapeake Energy Corp.,
Gtd Sr Note 01-15-15 7.750 B+ 200 211,000
Sr Note 04-01-11 8.125 B+ 300 322,500
Comstock Resources, Inc.,
Gtd Sr Note 05-01-07 11.250 B- 350 374,500
Key Energy Services, Inc.,
Sr Sub Note Ser B 01-15-09 14.000 B+ 68 76,840
OAO Siberian Oil Co.,
Bond (Russia) 02-13-07 11.500 Ba3 335 381,900
Ocean Rig Norway A.S.,
Sr Sec Note (Norway) 06-01-08 10.250 CCC 255 229,500
Parker Drilling Co.,
Gtd Sr Note 11-15-09 10.125 B+ 300 318,000
Pemex Project Funding Master Trust,
Bond (Mexico) 12-15-14 7.375 BBB- 225 241,594
Note (Mexico) 02-15-08 8.500 BBB- 400 460,000
Note (Mexico) 02-01-09 7.875 BBB- 350 394,975
Western Oil Sands, Inc.,
Sr Sec Note (Canada) 05-01-12 8.375 BB+ 150 160,500
----------
3,171,309
----------
Paper & Paper Products (1.58%)
APP China Group Ltd.,
Sr Disc Note (Indonesia) 03-15-10 (B) (R) 14.000 D 250 77,500
APP Finance (VII) Mauritius Ltd.,
Gtd Note (Indonesia) 04-30-03 (B) (R) 3.500 D 10 700
Corporacion Durango S.A. de C.V.,
Sr Note (Mexico) 08-01-06 (B) 13.125 CC 631 309,190
Longview Fibre Co.,
Sr Sub Note 01-15-09 10.000 B+ 250 270,000
MDP Acquisitions Plc,
Sr Note (Ireland) 10-01-12 (R) 9.625 B 200 217,500
Stone Container Corp.,
Sr Note 02-01-11 9.750 B 200 223,000
Sr Note 07-01-12 8.375 B 200 216,500
----------
1,314,390
----------
Steel (0.02%)
Metallurg Holdings, Inc.,
Sr Disc Note, Step Coupon (12.75%, 07-15-03) 07-15-08 (A) Zero CCC 50 17,000
----------
See notes to financial statements. 10
INTEREST CREDIT PAR VALUE
ISSUER, DESCRIPTION, MATURITY DATE RATE RATING * (000'S OMITTED) VALUE
- -------------------------------------------------------------- -------- -------- --------------- ----------
Telecommunications (1.63%)
AT&T Broadband Corp.,
Gtd Note 03-15-13 8.375% BBB $ 260 $ 314,399
Grupo Iusacell S.A. de C.V.,
Sr Note (Mexico) 12-01-06 14.250 CCC- 300 81,000
Mobile Telesystems Finance S.A.,
Gtd Bond (Luxembourg) 12-21-04 10.950 B+ 250 266,875
PanAmSat Corp.,
Gtd Sr Note 02-01-12 8.500 B- 300 324,750
PTC International Finance B.V.,
Gtd Sr Sub Disc Note, Step Coupon (Netherlands) 07-01-07 10.750 B+ 90 94,500
TeleCorp PCS, Inc.,
Sr Sub Disc Note, Step Coupon (11.625%, 04-15-04) 04-15-09 (A) Zero BBB 118 118,590
Tritel PCS, Inc.,
Gtd Note, Step Coupon (12.75%, 05-15-04) 05-15-09 Zero BBB 52 52,260
VoiceStream Wireless Corp.,
Sr Note 09-15-09 11.500 BBB+ 100 107,000
-----------
1,359,374
-----------
Transport (0.46%)
Cenargo International Plc,
1st Mtg Note (United Kingdom) 06-15-08 9.750 B+ 20 8,440
North American Van Lines, Inc.,
Sr Sub Note 12-01-09 13.375 B- 350 367,500
Pacific & Atlantic Holdings, Inc.,
Sr Sec Note (Greece) 12-31-07 (B) (R) 10.500 CC 26 9,927
-----------
385,867
-----------
Utilities (1.02%)
Midland Funding Corp. II,
Deb Ser A 07-23-05 11.750 BB- 200 213,000
Deb Ser B 07-23-06 13.250 BB- 150 168,750
Monterrey Power S.A. de C.V.,
Sr Sec Bond (Mexico) 11-15-09 (R) 9.625 BBB- 158 184,750
Niagara Mohawk Power Corp.,
Sec Fac Bond 01-01-18 8.770 A 141 146,876
Salton Sea Funding Corp.,
Gtd Sr Sec Note, Ser F, 11-30-18 7.475 BB 98 90,982
Sr Sec Note, Ser C, 05-30-10 7.840 BB 50 49,207
-----------
853,565
-----------
Waste Disposal Service & Equip (0.56%)
Allied Waste North America, Inc.,
Gtd Sr Sec Note 09-01-12 (R) 9.250 BB- 185 203,500
Gtd Sr Sub Note Ser B 08-01-09 10.000 B+ 250 265,000
-----------
468,500
-----------
TOTAL BONDS (91.66%)
(Cost $73,743,284) 76,401,551
-----------
See notes to financial statements. 11
ISSUER SHARES VALUE
- ------------------------------------------------------ ------- -----------
PREFERRED STOCKS
Machinery (0.00%)
Glasstech, Inc., Ser A, * 1 $ 1,000
-----------
Media (0.25%)
CSC Holdings, Inc., 11.75%, Ser H, 2,000 209,500
-----------
Paper & Paper Products (0.11%)
Smurfit-Stone Container Corp., 7.00%, Ser A, 4,100 92,660
-----------
Telecommunications (0.00%)
Metrocall Holdings, Inc., 15.00%, Ser A, 220 770
-----------
Transport (0.00%)
Pacific & Atlantic Holdings, Inc., 7.50%, (Greece) ** 1,400 0
-----------
TOTAL PREFERRED STOCKS (0.36%)
(Cost $507,223) 303,930
-----------
WARRANTS
Leisure (0.00%)
Sunterra Corp., ** 152 8
-----------
TOTAL WARRANTS (0.00%)
(Cost $0) 8
-----------
TOTAL INVESTMENTS (92.02%) 76,705,489
-----------
OTHER ASSETS AND LIABILITIES, NET (7.98%) 6,652,413
-----------
TOTAL NET ASSETS (100.00%) $83,357,902
===========
* Credit ratings are rated by Moody's Investors Service or John Hancock
Advisers, LLC. where Standard & Poor's ratings are not available.
** Non-income producing security.
(A) Cash interest will be paid on this obligation at the stated rate beginning
on the stated date.
(B) Non-income producing issuer, filed for protection under Federal Bankruptcy
Code or is in default on interest payment.
(E) Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer; however, security is Euro denominated.
(R) These securities are exempt from registration under rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to qualified
institutional buyers, in transactions exempt from registration. Rule 144A
securities amounted to $2,280,916 or 2.74% of the fund's net assets as of
April 25, 2003.
Parenthetical disclosure of a foreign country in the security description
represents country of foreign issuer, however, security is U. S. dollar
denominated, unless stated otherwise.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
See notes to financial statements. 12
Portfolio Concentration
4/25/2003 (Unaudited)
VALUE
AS A PERCENTAGE
OF FUND'S
COUNTRY DIVERSIFICATION NET ASSETS
- ----------------------------- ----------
Australia 0.39%
Bahamas 0.08
Canada 0.97
Chile 0.82
Colombia 1.45
Greece 0.01
Indonesia 0.09
Ireland 0.26
Luxembourg 0.32
Mexico 6.07
Netherlands 0.21
Norway 0.28
Panama 1.14
Peru 0.36
Russia 4.42
United Kingdom 0.01
United States 75.14
-----
TOTAL INVESTMENTS 92.02%
=====
VALUE
AS A PERCENTAGE
OF FUND'S
QUALITY DISTRIBUTION NET ASSETS
- ----------------------------- ----------
AAA 60.65%
A 1.00
BBB 5.34
BB 9.72
B 13.32
CCC 1.12
CC 0.41
D 0.10
-----
TOTAL BONDS 91.66%
=====
See notes to financial statements. 13
John Hancock V.A. Technology Fund
Schedule of Investments
April 25, 2003 (Unaudited)
ISSUER SHARES VALUE
- -------------------------------------------------- ------ -----------
COMMON STOCKS
Computer- Internet Security (1.33%)
Networks Associates, Inc.* 15,400 $ 166,320
-----------
Computer- Internet Services (6.62%)
Amazon.com, Inc.* 12,100 350,779
Ariba, Inc.* 25,000 96,500
eBay, Inc* 2,900 271,150
First Data Corp. 1,600 60,176
Pinnacor, Inc.* 28,000 46,200
-----------
824,805
-----------
Computer- Memory Devices (6.83%)
EMC Corp.* 45,000 396,000
Emulex Corp.* 3,350 63,281
Western Digital Corp.* 42,350 391,737
-----------
851,018
-----------
Computer- Micro/Macro (9.69%)
Dell Computer Corp.* 22,950 668,075
Hewlett-Packard Co. 12,907 204,576
International Business Machines Corp. 4,000 335,520
-----------
1,208,171
-----------
Computer- Networking (3.55%)
Cisco Systems, Inc.* 28,700 412,132
Extreme Networks, Inc.* 8,000 30,880
-----------
443,012
-----------
Computer- Services (4.01%)
Affiliated Computer Services, Inc. (Class A)* 5,242 253,241
Unisys Corp.* 24,550 245,991
-----------
499,232
-----------
See notes to financial statements. 14
ISSUER SHARES VALUE
- -------------------------------------------------- ------ -----------
Computer- Software (18.78%)
BEA Systems, Inc.* 36,200 $ 365,620
Borland Software Corp.* 21,750 180,525
Citrix Systems, Inc.* 24,150 431,802
i2 Technologies, Inc.* 5,750 4,226
Mercury Interactive Corp.* 13,350 449,895
Microsoft Corp.* 22,000 554,840
Parametric Technology Corp.* 25,150 74,947
SeeBeyond Technology Corp.* 12,000 28,200
Siebel Systems, Inc.* 18,250 155,308
Vignette Corp.* 52,150 95,435
-----------
2,340,798
-----------
Electronics- Components Misc. (3.81%)
Flextronics International Ltd.* (Singapore) 42,500 354,875
Solectron Corp.* 38,000 120,080
-----------
474,955
-----------
Electronics- Semiconductor Components (22.92%)
Advanced Micro Devices, Inc.* 22,700 171,158
Agere Systems, Inc. (Class A)* 36,013 56,901
Amkor Technology, Inc.* 36,000 221,760
Applied Materials, Inc.* 27,000 383,130
ASML Holding N.V.* (Netherlands) 10,000 77,900
Cray, Inc.* 3,150 23,688
Cypress Semiconductor Corp* 36,000 297,000
Integrated Device Technology, Inc.* 24,550 239,362
Intel Corp. 4,800 87,696
KLA-Tencor Corp.* 10,000 389,400
Micron Technology, Inc. 24,000 208,560
MKS Instruments, Inc.* 13,200 180,325
RF Micro Devices, Inc.* 20,000 99,000
Taiwan Semiconductor Manufacturing Co. Ltd.*
American Depositary Receipt (ADR) (Taiwan) 40,556 307,414
Vitesse Semiconductor Corp.* 39,750 112,493
-----------
2,855,787
-----------
Fiber Optics (2.50%)
Aeroflex, Inc.* 33,000 158,070
Finisar Corp.* 35,900 28,361
JDS Uniphase Corp.* 40,000 124,800
-----------
311,231
-----------
Media- Cable TV (2.35%)
AOL Time Warner, Inc.* 22,000 293,040
-----------
See notes to financial statements. 15
ISSUER SHARES VALUE
- -------------------------------------------------- ------ -----------
Telecom- Equipment (7.18%)
Lucent Technologies, Inc. 18,032 $ 31,015
Nokia Corp. (ADR) (Finland) 26,000 416,000
QUALCOMM, Inc.* 11,000 342,210
UTStarcom, Inc.* 5,100 105,366
-----------
894,591
-----------
Telecom- Services (4.46%)
AT&T Wireless Services, Inc.* 40,202 267,343
Nextel Communications, Inc. (Class A)* 12,000 167,040
Primus Telecommunications Group, Inc. * 40,000 121,200
-----------
555,583
-----------
TOTAL INVESTMENTS (94.03%)
(Cost $19,799,721) 11,718,543
-----------
OTHER ASSETS AND LIABILITIES, NET (5.97%) 743,614
-----------
TOTAL NET ASSETS (100.00%) $12,462,157
===========
*Non-income producing security.
Parenthetical disclosure of a foreign country in the security description
represents country of a foreign issuer.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
See notes to financial statements. 16
Portfolio Concentration
4/25/2003 (Unaudited)
VALUE
AS A PERCENTAGE
OF FUND'S
COUNTRY DIVERSIFICATION NET ASSETS
- ----------------------- ----------
Finland 3.34%
Netherlands 0.62
Singapore 2.85
Taiwan 2.47
United States 84.75
-----
94.03%
=====
See notes to financial statements. 17
John Hancock Funds
Statements of Assets and Liabilities
V.A. Relative V.A. Sovereign V.A. Strategic V.A. Technology
Final Report - April 25, 2003* (Unaudited) Value Fund Investors Fund Income Fund Fund
- ------------------------------------------------------------------ ------------- -------------- -------------- ---------------
ASSETS
Investments at value (cost - $27,452,934, $34,927,072, $74,250,507
and $19,799,721, respectively) $ 28,298,211 $ 34,511,840 $ 76,705,489 $ 11,718,543
Cash 491,959 3,237,021 6,899,101 769,494
Receivable for forward foreign currency exchange contracts -- -- 231,915 --
Receivable for investments sold -- -- 16,220 --
Dividends and interest receivable 13,586 35,494 976,979 --
Other assets 848 1,244 1,047 193
------------- ------------- ------------- -------------
Total assets 28,804,604 37,785,599 84,830,751 12,488,230
----------------------------------------------- ------------- ------------- ------------- -------------
LIABILITIES
Payable for investments purchased -- -- 1,305,729 --
Payable for forward foreign currency exchange contracts -- -- 114,147 --
Payable to affiliates 12,272 16,227 35,120 6,772
Other payables and accrued expenses 6,682 9,135 17,853 19,301
------------- ------------- ------------- -------------
Total liabilities 18,954 25,362 1,472,849 26,073
----------------------------------------------- ------------- ------------- ------------- -------------
NET ASSETS
Capital paid-in 63,472,052 51,128,882 89,259,452 36,064,626
Accumulated net realized loss on investments, futures
and foreign currency transactions (35,531,275) (12,952,791) (8,352,191) (15,521,180)
Net unrealized appreciation (depreciation) of investments,
futures and translation of assets and liabilities
in foreign currencies 845,277 (415,232) 2,572,750 (8,081,178)
Distributions in excess of net investment income,
accumulated net investment loss (404) (622) (122,109) (111)
------------- ------------- ------------- -------------
Net assets $ 28,785,650 $ 37,760,237 $ 83,357,902 $ 12,462,157
=============================================== ============= ============= ============= =============
NET ASSET VALUE PER SHARE
Based on 5,035,600, 3,325,193, 9,543,324 and 5,306,783, shares,
respectively, of beneficial interest outstanding - unlimited
number of shares authorized with no par value $5.72 $11.36 $8.73 $2.35
============= ============= ============= =============
* The net assets of V.A. Relative Value Fund, V.A. Sovereign Investors Fund,
V.A. Strategic Income Fund and V.A. Technology Fund (each a "Fund,"
collectively, the "Funds") were merged into the Growth & Income Fund, Growth &
Income Fund, Active Bond Fund and Large Cap Growth Fund (each a series of John
Hancock Variable Series Trust I), respectively, as of the close of business on
April 25, 2003, and the Funds were subsequently terminated. The Statements of
Assets and Liabilities reflect the Funds' position prior to the transfer of net
assets and the termination of the Funds. See Note A to financial statements.
See notes to financial statements. 18
John Hancock Funds
Statements of Operations
V.A. Relative V.A. Sovereign V.A. Strategic V.A. Technology
Period from January 1, 2003 to April 25, 2003* (Unaudited) Value Fund Investors Fund Income Fund Fund
- --------------------------------------------------------------- ------------- -------------- -------------- ---------------
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $2,327, $1,600,
none, and $1,184, respectively) $ 126,796 $ 226,750 $ 7,953 $ 10,653
Interest (including securities lending income of $2,186, 1,573,
none, 1,925 and net of foreign withholding taxes of none,
none, $1,263 and none respectively.) 6,042 11,422 1,544,150 3,824
------------- -------------- -------------- ---------------
Total investment income 132,838 238,172 1,552,103 14,477
----------------------------------------------- ------------- -------------- -------------- ---------------
EXPENSES
Investment management fee 54,745 72,000 147,234 30,190
Auditing fee 3,000 3,000 -- 3,000
Accounting and legal services fee 2,738 3,600 7,263 1,132
Custodian fee 2,403 6,355 21,776 4,611
Trustees' fee 1,534 1,822 3,378 650
Miscellaneous 322 983 2,439 136
Interest expense 129 -- -- --
Printing 40 2,971 1,298 27
Legal fees 11 111 61 56
------------- -------------- -------------- ---------------
Total expenses 64,922 90,842 183,449 39,802
Net investment income (loss) 67,916 147,330 1,368,654 (25,325)
----------------------------------------------- ------------- -------------- -------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on
Investments (3,398,905) (348,649) 487,332 (1,523,800)
Foreign currency transactions -- -- (264,111) --
Futures contracts -- -- (250,718) --
Change in net unrealized appreciation (depreciation) of
Investments 3,988,651 366,102 2,191,046 2,380,470
Translation of assets and liabilities in foreign currencies -- -- 336,597 --
Futures contracts -- -- 175,146 --
------------- -------------- -------------- ---------------
Net realized and unrealized gain 589,746 17,453 2,675,292 856,670
----------------------------------------------- ------------- -------------- -------------- ---------------
Increase in net assets from operations $ 657,662 $ 164,783 $ 4,043,946 $ 831,345
=============================================== ============= ============== ============== ===============
* The net assets of V.A. Relative Value Fund, V.A. Sovereign Investors Fund,
V.A. Strategic Income Fund and V.A. Technology Fund (each a "Fund,"
collectively, the "Funds") were merged into the Growth & Income Fund, Growth &
Income Fund, Active Bond Fund and Large Cap Growth Fund (each a series of John
Hancock Variable Series Trust I), respectively, as of the close of business on
April 25, 2003, and the Funds were subsequently terminated. The Statements of
Operations reflect the Funds' position prior to the transfer of net assets and
the termination of the Funds. See Note A to financial statements.
See notes to financial statements. 19
John Hancock Funds
Statements of Changes in Net Assets V.A. Relative Value Fund V.A. Sovereign Investors Fund
----------------------------------- -----------------------------------
Period from Period from
Year ended January 1, 2003 Year ended January 1, 2003
December 31, to April 25, 2003* December 31, to April 25, 2003*
2002 (Unaudited) 2002 (Unaudited)
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss) $ 231,351 $ 67,916 $ 587,384 $ 147,330
Net realized loss (30,228,452) (3,398,905) (7,329,394) (348,649)
Change in net unrealized appreciation (depreciation) 3,472,659 3,988,651 (6,254,784) 366,102
----------------------------------- -----------------------------------
Increase (decrease) in net assets resulting from
operations (26,524,442) 657,662 (12,996,794) 164,783
----------------------------------- -----------------------------------
Distributions to shareholders
From net investment income (241,442) (70,439) (586,103) (148,780)
From net realized gain (91,252) -- -- --
----------------------------------- -----------------------------------
Total distributions to shareholders (332,694) (70,439) (586,103) (148,780)
----------------------------------- -----------------------------------
From Fund share transactions
Shares sold 6,871,313 494,645 1,666,677 554,892
Distributions reinvested 332,694 70,439 586,103 148,780
Shares repurchased (13,882,101) (2,897,429) (13,406,996) (2,677,099)
----------------------------------- -----------------------------------
Net increase (decrease) (6,678,094) (2,332,345) (11,154,216) (1,973,427)
----------------------------------- -----------------------------------
Net assets
Beginning of period 64,066,002 30,530,772 64,454,774 39,717,661
End of period ** $ 30,530,772 $ 28,785,650 $ 39,717,661 $ 37,760,237
=================================== ===================================
ANALYSIS OF FUND SHARE TRANSACTIONS
Shares sold 890,182 88,285 134,022 48,695
Distributions reinvested 55,738 12,579 47,254 13,274
Shares repurchased (2,070,610) (530,640) (1,097,904) (242,433)
----------------------------------- -----------------------------------
Net increase (decrease) (1,124,690) (429,776) (916,628) (180,464)
=================================== ===================================
Statements of Changes in Net Assets V.A. Strategic Income Fund V.A. Technology Fund
----------------------------------- ----------------------------------
Period from Period from
Year ended January 1, 2003 Year ended January 1, 2003
December 31, to April 25, 2003* December 31, to April 25, 2003*
2002 (Unaudited) 2002 (Unaudited)
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income (loss) $ 4,470,846 $ 1,368,654 ($ 112,536) ($ 25,325)
Net realized loss (3,346,771) (27,497) (8,959,455) (1,523,800)
Change in net unrealized appreciation (depreciation) 4,202,640 2,702,789 (1,481,498) 2,380,470
----------------------------------- ----------------------------------
Increase (decrease) in net assets resulting from
operations 5,326,715 4,043,946 (10,553,489) 831,345
----------------------------------- ----------------------------------
Distributions to shareholders
From net investment income (5,159,826) (3,562,151) -- --
From net realized gain -- -- -- --
----------------------------------- ----------------------------------
Total distributions to shareholders (5,159,826) (3,562,151) -- --
----------------------------------- ----------------------------------
From Fund share transactions
Shares sold 12,603,802 10,217,466 9,245,936 2,489,153
Distributions reinvested 5,146,792 3,575,185 -- --
Shares repurchased (14,041,496) (3,686,929) (8,444,185) (3,035,938)
----------------------------------- ----------------------------------
Net increase (decrease) 3,709,098 10,105,722 801,751 (546,785)
----------------------------------- ----------------------------------
Net assets
Beginning of period 68,894,398 72,770,385 21,929,335 12,177,597
End of period ** $ 72,770,385 $ 83,357,902 $ 12,177,597 $ 12,462,157
=================================== ==================================
ANALYSIS OF FUND SHARE TRANSACTIONS
Shares sold 1,492,861 1,154,790 3,610,219 1,082,133
Distributions reinvested 649,945 407,905 -- --
Shares repurchased (1,714,317) (417,489) (3,368,742) (1,364,967)
----------------------------------- ----------------------------------
Net increase (decrease) 428,489 1,145,206 241,477 (282,834)
=================================== ==================================
* The net assets of V.A. Relative Value Fund, V.A. Sovereign Investors Fund,
V.A. Strategic Income Fund and V.A. Technology Fund (each a "Fund,"
collectively, the "Funds") were merged into the Growth & Income Fund, Growth &
Income Fund, Active Bond Fund and Large Cap Growth Fund (each a series of John
Hancock Variable Series Trust I), respectively, as of the close of business on
April 25, 2003, and the Funds were subsequently terminated. The Statements of
Changes in Net Assets reflect the Funds' position prior to the transfer of net
assets and the termination of the Funds. See Note A to financial statements.
** Includes undistributed (distributions in excess of) net investment income
(accumulated net investment loss) of $2,119, ($404), $828, ($622), $224,075,
($122,109), ($111) and ($111), respectively.
See notes to financial statements. 20
John Hancock V.A. Relative Value Fund
Financial Highlights
- --------------------------------------------------------------------------------
Period ended 12-31-98(1) 12-31-99 12-31-00 12-31-01 12-31-02 4-25-03(2)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $12.03 $18.03 $10.64 $9.72 $5.59
Net investment income (3) 0.11 0.10 0.02 0.02 0.04 0.01
Net realized and unrealized gain (loss) on investments 2.02 6.65 (0.80) (0.32) (4.11) 0.13
Total from investment operations 2.13 6.75 (0.78) (0.30) (4.07) 0.14
Less distributions
From net investment income (0.10) (0.10) (0.02) (0.02) (0.04) (0.01)
From net realized gain -- (0.65) (6.59) (0.60) (0.02) --
(0.10) (0.75) (6.61) (0.62) (0.06) (0.01)
Net asset value, end of period $12.03 $18.03 $10.64 $9.72 $5.59 $5.72(4)
Total return (5) (%) 21.39(6,7) 56.65 (4.80) (2.81) (41.93) 2.58(6)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $17 $39 $39 $64 $31 $29
Ratio of expenses to average net assets (%) 0.85(8) 0.77 0.79 0.74 0.73 0.71(8)
Ratio of adjusted expenses to average net assets (9) (%) 1.03(8) -- -- -- -- --
Ratio of net investment income to average net assets (%) 1.17(8) 0.66 0.13 0.23 0.53 0.74(8)
Portfolio turnover (%) 242 166 164 59 136 63
(1) Began operations on 1-6-98.
(2) Final period from 1-1-03 through 4-25-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Net assets value per share before the merger of assets to the Growth &
Income Fund of John Hancock Variable Series Trust I and the termination of
the Fund. See Note A to financial statements.
(5) Assumes dividend reinvestment.
(6) Not annualized.
(7) Total return would have been lower had certain expenses not been reduced
during the period shown.
(8) Annualized.
(9) Does not take into consideration expense reductions during the period shown.
See notes to financial statements. 21
John Hancock V.A. Sovereign Investors Fund
Financial Highlights
- --------------------------------------------------------------------------------
Period ended 12-31-98 12-31-99 12-31-00 12-31-01 12-31-02 4-25-03(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $13.59 $15.61 $15.96 $15.69 $14.57 $11.33
Net investment income (2) 0.27 0.24 0.21 0.24 0.15 0.04
Net realized and unrealized gain (loss) on investments 2.00 0.35 (0.27) (1.12) (3.24) 0.03
Total from investment operations 2.27 0.59 (0.06) (0.88) (3.09) 0.07
Less distributions
From net investment income (0.25) (0.24) (0.21) (0.24) (0.15) (0.04)
Tax return of capital -- --(3) -- -- -- --
(0.25) (0.24) (0.21) (0.24) (0.15) (0.04)
Net asset value, end of period $15.61 $15.96 $15.69 $14.57 $11.33 $11.36(4)
Total return (5) (%) 16.88 3.84 (0.33) (5.56) (21.29) 0.66(6)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $34 $50 $55 $64 $40 $38
Ratio of expenses to average net assets (%) 0.74 0.70 0.72 0.70 0.71 0.76(7)
Ratio of net investment income to average net assets (%) 1.88 1.57 1.37 1.63 1.14 1.23(7)
Portfolio turnover (%) 19 26 46 77 41 11
(1) Final period from 1-1-03 through 4-25-03. Unaudited.
(2) Based on the average of the shares outstanding.
(3) Less than $0.01 per share.
(4) Net assets value per share before the merger of assets to the Growth &
Income Fund of John Hancock Variable Series Trust I and the termination of
the Fund. See Note A to financial statements.
(5) Assumes dividend reinvestment.
(6) Not annualized.
(7) Annualized
See notes to financial statements. 22
John Hancock VA Strategic Income Fund
Financial Highlights
- --------------------------------------------------------------------------------
Period ended 12-31-98 12-31-99 12-31-00 12-31-01(1) 12-31-02(1) 4-25-03(1,2)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.47 $10.10 $9.77 $8.97 $8.64 $8.67
Net investment income (3) 0.85 0.80 0.83 0.65 0.53 0.16
Net realized and unrealized gain (loss) on investments (0.35) (0.33) (0.71) (0.26) 0.11 0.29
Total from investment operations 0.50 0.47 0.12 0.39 0.64 0.45
Less distributions
From net investment income (0.85) (0.80) (0.83) (0.72) (0.61) (0.39)
From net realized gain (0.02) -- (0.09) -- -- --
(0.87) (0.80) (0.92) (0.72) (0.61) (0.39)
Net asset value, end of period $10.10 $9.77 $8.97 $8.64 $8.67 $8.73(4)
Total return (5) (%) 4.92(7) 4.82(7) 1.40 4.58 7.87 5.27(6)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $15 $22 $34 $69 $73 $83
Ratio of expenses to average net assets (%) 0.85 0.85 0.76 0.71 0.80 0.75(8)
Ratio of adjusted expenses to average net assets (9) (%) 0.93 0.87 -- -- -- --
Ratio of net investment income to average net assets (%) 8.19 8.06 8.91 7.16 6.28 5.58(8)
Portfolio turnover (%) 2 53(9) 53 101(10) 73 61
(1) As required, effective January 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies, as
revised, relating to amortization of premiums and accretion of discounts on
debt securities. The effect of this change on per share amounts for the
year ended December 31, 2001 was to decrease net investment income per
share by $0.07, decrease net realized and unrealized losses per share by
$0.07, and, had the Fund not made these changes to amortization and
accretion, the ratio of net investment income to average net assets would
have been 8.00%. The effect of this change for the year ended December 31,
2002 was to decrease net investment income per share by $0.07, increase net
realized and unrealized gains per share by $0.07 and had the Fund not made
these changes to amortization and accretion, the ratio of net investment
income to average net assets would have been 7.08%.
The effect of this change for the final period ended April 25, 2003 was to
decrease net investment income per share by $0.01, decrease net realized
and unrealized gains per share by $0.01 and had the Fund not made these
changes to amortization and accretion, the annualized ratio of net
investment income to average net assets would have been 6.02%. Per share
ratios and supplemental data for periods prior to January 1, 2001 have not
been restated to reflect this change in presentation.
(2) Final period from 1-1-03 through 4-25-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Net assets value per share before the merger of assets to the Active Bond
Fund of John Hancock Variable Series Trust I and the termination of the
Fund. See Note A to financial statements.
(5) Assumes dividend reinvestment.
(6) Not annualized.
(7) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(8) Annualized.
(9) Does not take into consideration expense reductions during the periods
shown.
(10) Excludes merger activity.
See notes to financial statements. 23
John Hancock V.A. Technology Fund
Financial Highlights
Period Ended 12-31-00(1) 12-31-01 12-31-02 4-25-03(2)
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $7.33 $4.10 $2.18
Net investment income (loss) (3) 0.03 (0.02) (0.02) --
Net realized and unrealized gain (loss) on investments (2.69) (3.21) (1.90) 0.17
Total from investment operations (2.66) (3.23) (1.92) 0.17
Less distributions
From net investment income (0.01) --(4) -- --
Net asset value, end of period $7.33 $4.10 $2.18 $2.35(5)
Total return (6) (%) (26.56)(7,8) (44.06)(8) (46.83) 7.80(7)
- -------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions) $14 $22 $12 $12
Ratio of expenses to average net assets (%) 1.05(9) 1.05 1.04 1.05(9)
Ratio of adjusted expenses to average net assets (10) (%) 1.99(9) 1.08 -- --
Ratio of net investment income (loss) to average net assets (%) 0.62(9) (0.45) (0.70) (0.67)(9)
Portfolio turnover (%) 75 29 47 9
(1) Began operations on 5-1-00.
(2) Final period from 1-1-03 through 4-25-03. Unaudited.
(3) Based on the average of the shares outstanding.
(4) Less than 0.01 per share.
(5) Net assets value per share before the merger of assets to the Large Cap
Growth Fund of John Hancock Variable Series Trust I and the termination of
the Fund. See Note A to financial statements.
(6) Assumes dividend reinvestment.
(7) Not annualized.
(8) Total returns would have been lower had certain expenses not been reduced
during the periods shown.
(9) Annualized.
(10) Does not take into consideration expense reductions during the periods
shown.
See notes to financial statements. 24
31
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
NOTE A
Organization
John Hancock V.A. Relative Value Fund ("V.A. Relative Value"), John Hancock V.A.
Sovereign Investors Fund ("V.A. Sovereign Investors"), John Hancock V.A.
Strategic Income Fund ("V.A. Strategic Income") and John Hancock V.A. Technology
Fund ("V.A. Technology"), (each a "Fund," and collectively, the "Funds") were
diversified series of John Hancock Declaration Trust (the "Trust"), an open-end
management investment company registered under the Investment Company Act of
1940. The Trustees may have authorized the creation of additional series from
time to time to satisfy various investment objectives. An insurance company
issuing a Variable Contract that participated in the Trust would vote shares of
the Funds held by the insurance company's separate accounts as required by law.
In accordance with current law and interpretations thereof, participating
insurance companies were required to request voting instructions from policy
owners and voted shares of the Funds in proportion to the voting instructions
received.
The investment objective of the V.A. Relative Value Fund was to seek long-term
capital appreciation. The investment objective of the V.A. Sovereign Investors
Fund was to seek long-term growth of capital and income without assuming undue
market risks. The investment objective of the V.A. Strategic Income Fund was to
seek a high level of current income. The investment objective of the V.A.
Technology Fund was to seek long-term growth of capital.
On April 16, 2003 the shareholders of each Fund approved an Agreement and Plan
of Reorganization, which provided for the transfer of substantially all of the
assets and liabilities of each Fund to the corresponding Acquiring Fund in
exchange solely for shares of beneficial interest of the Acquiring Fund as
follows:
ACQUIRED FUND ACQUIRING FUND*
------------- ---------------
VA Relative Value Fund Growth & Income Fund
VA Sovereign Investors Fund Growth & Income Fund
VA Strategic Income Fund Active Bond Fund
VA Technology Fund Large Cap Growth Fund
* Each a series of John Hancock Variable Series Trust I
After this transaction and as of the close of business on April 25, 2003, the
Funds will be terminated. The financial statements presented herein reflect the
position of the Funds prior to the exchange of net assets and termination of the
Funds.
Significant accounting policies of the Funds were as follows:
Valuation of investments
Securities in the Funds' portfolios were valued on the basis of market
quotations, valuations provided by independent pricing services or, if
quotations were not readily available, or the value had been materially affected
by events occurring after the closing of a foreign market, at fair value as
determined in good faith in accordance with procedures approved by the Trustees.
Short-term debt investments maturing within 60 days were valued at amortized
cost, which approximated market value. Investments in AIM Cash Investment Trust
were valued at their net asset value each business day. All portfolio
transactions initially expressed in terms of foreign currencies were translated
into U.S. dollars as described in "Foreign currency translation" below.
Joint repurchase agreement
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
each Fund, along with other registered investment companies having a management
contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned
subsidiary of The Berkeley Financial Group, LLC, may have participated in a
joint repurchase agreement transaction. Aggregate cash balances were invested
25
in one or more large repurchase agreements, whose underlying securities were
obligations of the U.S. government and/or its agencies. The Funds' custodian
bank received delivery of the underlying securities for the joint account on
each Fund's behalf. The Adviser was responsible for ensuring that the agreement
was fully collateralized at all times.
Foreign currency translation
All assets or liabilities initially expressed in terms of foreign currencies
were 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. Transactions affecting statements of operations accounts and
net realized gains (losses) on investments were translated at the rates
prevailing at the dates of the transactions.
The Funds did 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 were
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign currency exchange gains or losses arose from sales
of foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Funds' books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arose from changes in the
value of assets and liabilities other than investments in securities, resulting
from changes in the exchange rates.
Investment transactions
Investment transactions were recorded as of the date of purchase, sale or
maturity. Net realized gains and losses on sales of investments were determined
on the identified cost basis. Capital gains realized on some foreign securities
were subject to foreign taxes, which were accrued as applicable.
Discount and premium on securities
The Funds accreted discount and amortized premium from par value on securities
from either the date of issue or the date of purchase over the life of the
security.
Expenses
The majority of the expenses were directly identifiable to an individual fund.
Expenses which were not readily identifiable to a specific fund were allocated
in such a manner as deemed equitable, taking into consideration, among other
things, the nature and type of expense and the relative sizes of the funds.
Bank borrowings
The Funds were 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 had entered into a
syndicated line of credit agreement with various banks. This agreement enabled
the Funds to participate with other funds managed by the Adviser in an unsecured
line of credit with banks, which permitted borrowings up to $250 million,
collectively. Interest was charged to each fund, based on its borrowing. In
addition, a commitment fee was charged to each fund based on the average daily
unused portion of the line of credit and was allocated among the participating
funds. The Funds had no borrowing activity under the line of credit during the
period ended April 25, 2003.
Securities lending
The Funds may have lent securities to certain qualified brokers who paid the
Funds negotiated lender fees. These fees were included in interest income. The
loans were collateralized at all times with cash or securities with a market
value at least equal to the market value of the securities on loan. As with
other extensions of credit, the Funds would have borne the risk of delay of the
loaned securities in recovery or even loss of rights in the collateral, should
the
26
borrower of the securities have failed financially. There were no securities
loaned as of April 25, 2003.
Financial futures contracts
The Funds may have bought and sold financial futures contracts. Buying futures
tends to increase the Funds' exposure to the underlying instruments. Selling
futures tends to decrease Funds' exposure to the underlying instruments or hedge
other Funds' instruments. At the time Funds entered into financial futures
contracts, they were required to deposit with their custodian a specified amount
of cash or U.S. government securities, known as "initial margin," equal to a
certain percentage of the value of the financial futures contracts being traded.
Each day, the futures contracts were valued at the official settlement price of
the board of trade or U.S. commodities exchange on which they traded. Subsequent
payments to and from the broker, known as "variation margin," were made on a
daily basis as the market price of the financial futures contracts fluctuated.
Daily variation margin adjustments, arising from this "mark to market," were
recorded by the Funds as unrealized gains or losses.
When the contracts were closed, the Funds recognized gains or losses. Risks of
entering into futures contracts included the possibility that there may have
been an illiquid market and/or that a change in the value of the contracts may
have not correlated with changes in the value of the underlying securities. In
addition, the Funds could have been prevented from opening or realizing the
benefits of closing out futures positions because of position limits or limits
on daily price fluctuation imposed by an exchange.
For federal income tax purposes, the amount, character and timing of the Funds'
gains and/or losses may have been affected as a result of futures contracts. The
Funds had no open financial futures contracts on April 25, 2003.
Forward foreign currency exchange contracts
The Funds could have entered into forward foreign currency exchange contracts as
a hedge against the effect of fluctuations in currency exchange rates. A forward
foreign currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date at a set price. The aggregate principal
amounts of the contracts were marked to market daily at the applicable foreign
currency exchange rates. Any resulting unrealized gains and losses were included
in the determination of the Funds' daily net assets. The Funds recorded realized
gains and losses at the time the forward foreign currency exchange contracts
were closed out. Risks could have arisen upon entering these contracts from the
potential inability of counterparties to meet the terms of the contracts and
from unanticipated movements in the value of foreign currencies relative to the
U.S. dollar. These contracts involved market or credit risk in excess of the
unrealized gain or loss reflected in the Funds' Statements of Assets and
Liabilities. The Funds may have also purchased and sold forward contracts to
facilitate the settlement of foreign currency denominated portfolio
transactions, under which they intended to take delivery of the foreign
currency. Such contracts normally involved no market risk if they were offset by
the currency amount of the underlying transactions.
The VA Strategic Income Fund had the following open forward foreign currency
exchange contracts on April 25, 2003:
PRINCIPAL AMOUNT APPRECIATION
CURRENCY COVERED BY CONTRACT EXPIRATION MONTH (DEPRECIATION)
-------- ------------------- ---------------- --------------
BUYS
Euro 2,600,000 April 03 $104,358
Euro 1,634,000 May 03 50,115
Pound Sterling 1,293,000 April 03 27,039
Pound Sterling 300,000 April 03 (73)
$181,439
SELLS
Euro 2,600,000 April 03 (62,880)
Euro 1,634,000 May 03 (51,194)
Pound Sterling 1,593,000 April 03 50,403
($63,671)
27
Federal income taxes
Each Fund qualified as a "regulated investment company" by complying with the
applicable provisions of the Internal Revenue Code and was not a subject to
federal income tax on taxable income that was distributed to shareholders.
Therefore, no federal income tax provision was required as of April 25, 2003,
the Funds' final tax year.
As of April 25, 2003, the Funds' final tax year end, for federal income tax
purposes, the Funds had the following capital loss carryforwards available:
TOTAL CAPITAL CAPITAL LOSS CAPITAL LOSS CAPITAL LOSS CAPITAL LOSS CAPITAL LOSS CAPITAL LOSS
LOSS CARRY- CARRY-FORWARD CARRY-FORWARD CARRY-FORWARD CARRY-FORWARD CARRY-FORWARD CARRY-FORWARD
FORWARD AS EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
FUND OF 4/25/2003 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011
- ---- ------------ ---------- ---------- ---------- ---------- ---------- ----------
VA Relative Value $35,142,592 -- -- -- -- $31,801,591 $3,341,001
VA Sovereign Investors 12,902,962 $157,877 $101,159 $1,206,695 $3,153,775 7,849,188 434,268
VA Strategic Income 8,859,263 4,130 136,493 1,506,009 1,757,056 3,265,011 2,190,564
VA Technology 15,331,439 -- -- 14,000 3,708,037 9,184,799 2,424,603
The unused capital loss carryforwards as of April 25, 2003 were transferred to
the Acquiring Funds and will be available, to the extent provided by
regulations, to offset future net capital gains of the Acquiring Funds. Expired
capital loss carryforwards will be reclassified to capital paid-in in the year
of expiration.
Dividends, interest and distributions
Dividend income on investment securities was recorded on the ex-dividend date
or, in the case of some foreign securities, on the date thereafter when the
Funds identified the dividend. Interest income on investment securities was
recorded on the accrual basis. Foreign income may have been subject to foreign
withholding taxes, which were accrued as applicable. The Funds may have placed
debt obligations on non-accrual status and reduced related interest income by
ceasing current accruals and writing off interest receivables when the
collection of interest had become doubtful.
The Funds recorded distributions to shareholders from net investment income and
realized gains on the ex-dividend date. During the period ended April 25, 2003,
the tax character of distributions paid by the Funds was as follows:
FUND ORDINARY INCOME
- ---- ---------------
VA Relative Value $70,439
VA Sovereign Investors 148,780
VA Strategic Income 3,562,151
As of April 25, 2003, the Funds had no distributable earnings on a tax basis.
Such distributions and distributable earnings, on a tax basis, were determined
in conformity with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America. Distributions in
excess of tax basis earnings and profits, if any, were reported in the Fund's
financial statements as a return of capital.
Use of estimates
The preparation of these financial statements, in accordance with accounting
principles generally accepted in the United States of America, incorporates
estimates made by management in determining the reported amount of assets,
liabilities, revenues and expenses of the Funds. Actual results could differ
from these estimates.
28
NOTE B
Management fee and transactions with affiliates and others
Each Fund had an investment management contract with the Adviser. Under the
investment management contracts, each Fund paid a monthly management fee to the
Adviser at the following annual rates:
FUND RATE
- ---- ----
VA Relative Value 0.60% of average daily net asset value
VA Sovereign Investors 0.60% of average daily net asset value
VA Strategic Income 0.60% of average daily net asset value
VA Technology 0.80% of average daily net asset value
V.A. Technology Fund and the Adviser had a subadvisory contract with American
Fund Advisors, Inc. The Fund was not responsible for payment of the subadvisory
fees.
The Adviser had agreed to limit each Funds' expenses, excluding the management
fee, to 0.25% of each Fund's average daily net assets. There were no expense
reductions for the period ended April 25, 2003.
The Funds had a distribution agreement with John Hancock Funds, LLC ("JH
Funds"), a wholly owned subsidiary of the Adviser. During the period ended April
25, 2003, all sales of shares of beneficial interest were sold at net asset
value. JH Funds paid all expenses of printing prospectuses and other sales
literature, all fees and expenses in connection with qualification as a dealer
in various states, and all other expenses in connection with the sale and
offering for sale of the shares of the Funds which had not been herein
specifically allocated to the Trust.
The Funds had an agreement with the Adviser to perform necessary tax, accounting
and legal services for the Funds. The compensation for the period was at an
annual rate of approximately 0.03% of the average net assets of each Fund.
Ms. Maureen R. Ford and Mr. John M. DeCiccio were directors and/or officers of
the Adviser and its affiliates, as well as Trustees of the Funds. The
compensation of unaffiliated Trustees was borne by the Funds. The unaffiliated
Trustees may have elected to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Funds made investments into other John Hancock funds, as applicable, to
cover their liability for the deferred compensation. Investments to cover the
Funds' deferred compensation liability were recorded on the Funds' books as
other assets. The deferred compensation liability and the related other assets
were always equal and were marked to market on a periodic basis to reflect any
income earned by the investments as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations of the
Funds.
NOTE C
Investment transactions
Purchases and proceeds from sales or maturities of securities, other than
short-term securities and obligations of the U.S. Government, during the period
ended April 25, 2003 were as follows:
SALES or
FUND PURCHASES MATURITIES
- ---- --------- ----------
VA Relative Value $12,677,420 $13,104,901
VA Sovereign Investors 3,983,640 7,803,466
VA Strategic Income 46,149,285 44,524,183
VA Technology 1,068,328 1,872,046
Purchases and proceeds from maturities of obligations of U.S. government for VA
Strategic Income Fund aggregated $36,495,352 and none, respectively, during the
period ended April 25, 2003.
29
The cost of investments owned on April 25, 2003, including short-term
investments, and gross unrealized appreciation and depreciation of investments
for federal income tax purposes were as follows:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
FUND COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ---- ---- ------------ ------------ --------------
VA Relative Value $27,841,617 $1,523,447 ($1,066,853) $456,594
VA Sovereign Investors 34,976,901 3,392,735 (3,857,796) (465,061)
VA Strategic Income 74,529,752 3,528,809 (1,353,072) 2,175,737
VA Technology 19,989,462 1,030,929 (9,301,848) (8,270,919)
The difference between book basis and tax basis net unrealized appreciation
(depreciation) of investments was attributable primarily to the tax deferral of
losses on wash sales.
NOTE D
Reclassification of accounts
During the period ended April 25, 2003, the following reclassifications had been
made in each Fund's capital balances to report these balances on a tax basis,
excluding certain temporary differences as of April 25, 2003:
DISTRIBUTIONS IN EXCESS
OF NET INVESTMENT ACCUMULATED
FUND CAPITAL PAID-IN INCOME (LOSS) NET REALIZED LOSS
- ---- --------------- ------------- -----------------
VA Strategic Income $258,313 $1,847,313 ($2,105,626)
VA Technology (25,325) 25,325 --
These reclassifications, which had no impact on the net asset value of the
Funds, were primarily attributable to certain differences in the treatment of
net operating losses, amortization of premiums and accretion of discounts on
debt securities, foreign currency gains and losses and return of capital under
federal tax rules versus accounting principles generally accepted in the United
States of America. The calculation of net investment income (loss) per share in
the Financial Highlights excludes these adjustments.
NOTE E
Change in accounting principle
Effective January 1, 2001, the VA Strategic Income Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies, as revised,
relating to the amortization of premiums and accretion of discounts on debt
securities. The cumulative effect of this accounting change had no impact on the
total net assets of the VA Strategic Income Fund, but resulted in a $230,438
reduction in the cost of investments and a corresponding decrease in net
unrealized depreciation of investments, based on securities held as of December
31, 2000. The effect of this change for the year ended December 31, 2001 was to
decrease net investment income by $417,884, increase unrealized depreciation of
investments by $47,891 and decrease net realized loss on investments by
$465,775. The effect of this change for the year ended December 31, 2002, was to
decrease net investment income by $572,194, decrease unrealized depreciation of
investments by $181,307 and decrease net realized loss on investments by
$390,887.
The effect of this change for the period ended April 25, 2003, was to decrease
net investment income by $107,707, decrease unrealized appreciation of
investments by $84,609 and increase net realized gain on investments by
$192,316. The VA Strategic Income Fund's financial highlights for prior periods
have not been restated to reflect this change in presentation.
30
NOTE F
Shareholder meeting
On April 16, 2003, at a Special Shareholder Meeting, the shareholders of the
Funds approved the following Agreements and Plans of Reorganization between the
Funds and the Acquiring Funds:
ACQUIRED FUND ACQUIRING FUND*
------------- ---------------
VA Relative Value Fund Growth & Income Fund
VA Sovereign Investors Fund Growth & Income Fund
VA Strategic Income Fund Active Bond Fund
VA Technology Fund Large Cap Growth Fund
* Each a series of John Hancock Variable Series Trust I
With respect to each proposal to approve the Agreements and Plans of
Reorganization, the number of votes cast for and against and that abstained from
voting were as follows:
FUND FOR AGAINST ABSTAINED
- ---- --- ------- ---------
VA Relative Value 4,677,758 108,519 108,519
VA Sovereign Investors 2,780,244 113,554 113,553
VA Strategic Income 7,655,031 231,364 231,364
VA Technology 4,561,836 274,833 410,223
Each Agreement and Plan of Reorganization provided for the transfer of
substantially all of the assets and liabilities of each Fund to the
corresponding Acquiring Fund in exchange solely for shares of beneficial
interest of the Acquiring Fund. After these transactions and as of the close of
business on April 25, 2003, the Funds were terminated. The financial statements
presented herein reflect the position of the Funds prior to the exchange of net
assets and termination of the Funds.
NOTE G
Tax information notice
For federal income tax purposes, the following information is furnished with
respect to the taxable distributions of the Funds for the period ended April 25,
2003.
With respect to the ordinary dividends paid by the Funds for the period ended
April 25, 2003, the percentage of the dividend distribution qualified for the
dividends received deduction available to corporations are as follows:
VA Relative Value Fund 100.00%
VA Sovereign Investors Fund 100.00%
VA Strategic Income Fund 0.22%
VA Technology Fund 0.00%
31
John Hancock Funds - Declaration Trust
Trustees
Dennis S. Aronowitz
Richard P. Chapman, Jr.
William J. Cosgrove
John M. DeCiccio
Richard A. Farrell
Maureen R. Ford
William F. Glavin*
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt
* Members of the Audit Committee
Officers
Maureen R. Ford
Chairman, President and Chief Executive Officer
William L. Braman
Executive Vice President and
Chief Investment Officer
Richard A. Brown
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Senior Vice President and Secretary
William H. King
Vice President and Treasurer
Thomas H. Connors
Vice President and
Compliance Officer
Investment Adviser
John Hancock Advisers, LLC.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, LLC.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Transfer Agent
John Hancock Signature Services, Inc.
529 Main Street
Charlestown, MA 02129
Legal Counsel
Hale and Dorr
60 State Street
Boston, Massachusetts 02109-1803
Custodian
The Bank of New York
One Wall Street
New York, New York 10286
Sub-Investment Adviser
American Fund Advisors, Inc.
1415 Kellum Place
Garden City, NY 11530
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By:
-----------------------
Maureen R. Ford
Chairman, President and Chief Executive Officer
Date: June 24, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:
-----------------------
Maureen R. Ford
Chairman, President and Chief Executive Officer
Date: June 24, 2003
By:
-----------------------
Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: June 24, 2003