Annual Report
for John Hancock Variable Series Trust I
December 31, 2003
[LOGO] John Hancock
- --------------------------------------------------------------------------------
Not FDIC Insured Not Bank Guaranteed May Lose Value
- --------------------------------------------------------------------------------
Not a Deposit Not Insured by Any Federal Government Agency
- --------------------------------------------------------------------------------
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Overseas Equity Fund (Formerly Global Balanced Fund)
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
.. In 2003, the Fund returned 39.85% underperforming its custom benchmark.
.. On May 1st, the Fund's name and strategy were changed, with no change in
sub-adviser. The Fund now invests primarily in foreign large and mid sized
equities, while previously, it invested globally in equity and fixed income
securities.
.. Since May 1st, the Fund underperformed its benchmark primarily due to a
modest cash exposure during the year. The Fund's performance did benefit
from both favorable stock selection and country allocation decisions.
.. The Fund's exposures to selected sectors -- financials and information
technology and countries -- Japan, UK and France -- contributed the most to
absolute performance.
.. The top contributing stocks to absolute returns included Tokyo Electron and
Sanofi-Synthelabo, while the key detractors included Yahoo Japan and
Holcim.
.. The manager employs a multiple portfolio manager system, with each
portfolio managed by several portfolio managers and research analysts. The
manager selects securities using proprietary fundamental research
Fundamental research seeks to uncover companies that are undervalued and
asset rich.
[CHART]
Line Chart
Historical Fund Return
$10,000
Investment made 5/1/96
(Fund Inception Date)
Overseas Equity
Overseas Equity Fund Benchmark (1)
-------------------- ---------------
5/01/1996 10,000.00 $10,000.00
5/31/1996 9,992.36 9,892.00
6/30/1996 10,054.88 9,940.47
7/31/1996 9,955.81 9,849.02
8/31/1996 10,007.29 9,898.26
9/30/1996 10,256.56 10,067.52
10/31/1996 10,314.89 10,084.64
11/30/1996 10,677.97 10,397.26
12/31/1996 10,672.71 10,279.77
1/31/1997 10,508.77 9,927.18
2/28/1997 10,623.91 9,985.75
3/31/1997 10,567.65 9,971.77
4/30/1997 10,507.44 9,941.85
5/31/1997 11,089.20 10,497.60
6/30/1997 11,433.44 10,909.11
7/31/1997 11,471.15 10,940.74
8/31/1997 10,985.68 10,435.28
9/30/1997 11,470.48 10,906.96
10/31/1997 11,127.39 10,459.77
11/30/1997 10,966.64 10,291.37
12/31/1997 10,955.08 10,320.18
1/31/1998 11,195.12 10,631.85
2/28/1998 11,630.17 11,135.80
3/31/1998 11,807.71 11,310.64
4/30/1998 11,952.21 11,456.54
5/31/1998 11,952.24 11,413.01
6/30/1998 11,914.86 11,439.26
7/31/1998 11,962.23 11,494.17
8/31/1998 11,270.31 10,651.64
9/30/1998 11,435.01 10,700.64
10/31/1998 12,220.68 11,596.29
11/30/1998 12,442.76 11,897.79
12/31/1998 12,925.42 12,314.21
1/31/1999 12,913.81 12,250.18
2/28/1999 12,390.27 11,901.05
3/31/1999 12,558.03 12,234.28
4/30/1999 12,777.95 12,570.72
5/31/1999 12,313.42 12,071.66
6/30/1999 12,412.46 12,279.29
7/31/1999 12,784.63 12,662.41
8/31/1999 12,771.50 12,715.59
9/30/1999 12,780.73 12,889.79
10/31/1999 12,911.64 13,210.75
11/30/1999 12,991.88 13,449.87
12/31/1999 13,586.49 14,251.48
1/31/2000 12,794.33 13,540.33
2/29/2000 12,820.00 13,717.71
3/31/2000 13,194.62 14,254.07
4/30/2000 12,656.58 13,557.05
5/31/2000 12,722.96 13,394.36
6/30/2000 12,990.79 13,796.19
7/31/2000 12,724.74 13,470.60
8/31/2000 12,891.86 13,694.21
9/30/2000 12,570.54 13,247.78
10/31/2000 12,497.20 13,047.74
11/30/2000 11,946.29 12,677.18
12/31/2000 12,352.52 12,982.70
1/31/2001 12,722.52 13,126.81
2/28/2001 12,056.81 12,459.97
3/31/2001 11,553.80 11,827.00
4/30/2001 12,268.78 12,336.75
5/31/2001 12,111.70 12,229.42
6/30/2001 11,830.12 11,955.48
7/31/2001 11,776.35 11,981.78
8/31/2001 11,572.93 11,818.83
9/30/2001 10,739.32 11,229.07
10/31/2001 11,059.83 11,394.14
11/30/2001 11,559.96 11,735.96
12/31/2001 11,556.31 11,659.68
1/31/2002 11,211.51 11,362.36
2/28/2002 11,159.40 11,328.27
3/31/2002 11,544.13 11,617.14
4/30/2002 11,450.07 11,549.76
5/31/2002 11,571.51 11,696.44
6/30/2002 11,203.91 11,497.60
7/31/2002 10,559.42 10,961.81
8/31/2002 10,512.74 11,051.70
9/30/2002 9,863.12 10,372.02
10/31/2002 10,462.47 10,815.94
11/30/2002 11,085.89 11,172.87
12/31/2002 10,826.48 11,074.55
1/31/2003 10,667.10 10,933.90
2/28/2003 10,631.95 10,882.51
3/31/2003 10,582.62 10,878.16
4/30/2003 11,238.69 11,513.44
5/31/2003 11,827.00 12,221.52
6/30/2003 12,129.88 12,523.39
7/31/2003 12,513.22 12,828.96
8/31/2003 12,866.20 13,140.71
9/30/2003 13,152.75 13,548.07
10/31/2003 14,016.47 14,393.47
11/30/2003 14,219.35 14,715.88
12/31/2003 15,140.71 15,866.66
Value on 12/31/03:
- ------------------
$15,141 Overseas Equity Fund
$15,867 Overseas Equity Benchmark(1)
MORNINGSTAR CATEGORY+:
.. Foreign Large Blend
MORNINGSTAR RISK+:
.. Low (VL/VUL)
.. Low (VA)
MORNINGSTAR RATING+:
.. ***** (VL/VUL)
.. ***** (VA)
TOP TEN HOLDINGS (as of December 31, 2003)
% of
Assets
------
Vodafone 3.5%
AstraZeneca Group PLC 3.3%
Sanofi-Synthelabo SA 3.3%
Royal Dutch Petroleum Co. 2.8%
Novartis AG 1.8%
BNP Paribas 1.7%
ABN Amro Holding NV 1.5%
Mitsubishi 1.4%
Heineken 1.4%
Koninklijke 1.4%
AVERAGE ANNUAL TOTAL RETURNS*
Overseas
Equity Overseas Equity
Fund Benchmark(1)
-------- ---------------
1 Year 39.85% 43.27%
3 Years 7.02 6.92
5 Years 3.21 5.20
Since Inception (5/1/96) 5.55 6.21
DIVERSIFICATION BY REGION AND COUNTRY(3)
(as of December 31, 2003)
% of
Assets
------
Europe
(excluding U.K.) 44.0%
Japan 21.0%
United Kingdom (U.K.) 15.3%
Pacific Basin
(excluding Japan) 6.3%
United States 6.2%
Other 4.1%
Canada 3.6%
DIVERSIFICATION BY REGION(4)
Developed Markets 97%
Emerging Markets 3%
(1) Overseas Equity Composite Index: 65% MSCI World Index Excluding US, and 35%
Citigroup Non-US Govt. Bond Index, Unhedged, May 1996 to April 2000, then
60% MSCI World / 40% Citigroup World Government Bond, Unhedged, May 2000 to
April 2003 and then MSCI EAFE Index May 2003 to present.
* Total returns are for the period ended December 31, 2003. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. There are special risks associated with
international investing including currency fluctuations, political and
economic instability, foreign taxation and different accounting standards,
as outlined in the current prospectus. The performance of the fund on this
page is reported net of Trust level charges (i.e. investment management
fees and operating expenses). It does not reflect expense and charges of
the applicable separate accounts and variable products, all of which vary
to a considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
+ Source: MorningStar, Inc. Data as of 12/31/03. VL represents Variable Life
subaccounts, VUL represents Variable Universal Life subaccounts and VA
represents Variable Annuity subaccounts Hancock VL/VUL subaccounts were
rated against 367 VL/VUL subaccounts and 570 VA subaccounts in the
Morningstar Foreign Large Blend category. This represents the Morningstar 3
year rating.
(3) Calculations based upon country in which security is traded (listed).
(4) Calculations based upon country in which security is domiciled.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
ASSETS
Long term investments at cost ....................................... $37,218
Net unrealized appreciation of investments .......................... 9,647
Short-term investments at value ..................................... 2,977
-------
Total investments ............................................. 49,842
Cash ................................................................ 22
Foreign currency at value (cost $42) ................................ 42
Receivable for:
Investments sold ................................................. 232
Fund shares sold ................................................. 84
Interest ......................................................... 2
Dividends ........................................................ 41
Unrealized appreciation in forward currency
contracts ..................................................... 27
Other assets ..................................................... 6
-------
Total assets ........................................................ 50,298
-------
LIABILITIES
Payables for:
Investments purchased ............................................ 1,058
Unrealized depreciation in forward currency
contracts ..................................................... 61
Other liabilities ................................................ 3
-------
Total liabilities ................................................... 1,122
-------
Net assets .......................................................... $49,176
=======
Shares of beneficial interest outstanding ........................... 4,718
-------
Net asset value per share ........................................... $ 10.42
=======
Composition of net assets:
Capital paid-in .................................................. $43,341
Accumulated net realized loss on investments,
futures and foreign currency transactions ..................... (3,773)
Undistributed net investment loss ................................ (5)
Net unrealized appreciation (depreciation) of:
Investments ................................................... 9,647
Translation of assets and liabilities in foreign
currencies ................................................. (34)
-------
Net assets .......................................................... $49,176
=======
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
INVESTMENT INCOME
Interest ...................................................... $ 157
Dividends ..................................................... 556
-------
Total investment income ............................................. 713
-------
EXPENSES
Investment advisory fee ....................................... 377
Auditors fees ................................................. 5
Custodian fees ................................................ 110
Legal fees .................................................... 2
Printing & mailing fees ....................................... 3
Trustees' fees ................................................ 1
Other fees .................................................... 2
-------
Total expenses ...................................................... 500
Less expenses reimbursed ...................................... (87)
Less custodian expense reduction offset by
commission recapture arrangement (Note C) .................. (1)
-------
Net expenses ........................................................ 412
-------
Net investment income ............................................... 301
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments ................................................... (450)
Foreign currency transactions ................................. 941
Change in unrealized appreciation (depreciation) on:
Investments ................................................... 11,946
Translation of assets and liabilities in foreign
currencies ................................................. (73)
-------
Net realized and unrealized gain .................................... 12,364
-------
Net increase in net assets resulting from
operations ....................................................... $12,665
=======
See notes to financial statements.
STATEMENT OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2003 2002
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ............................................... $ 301 $ 372
Net realized gain (loss) ............................................ 491 (2,154)
Change in net unrealized appreciation (depreciation) ................ 11,873 (104)
-------- --------
Net increase (decrease) in net assets resulting from operations .. 12,665 (1,886)
Distributions to shareholders from:
Net investment income ............................................... (1,633) (374)
Realized gains ...................................................... (1,073)
-------- --------
Decrease in net assets resulting from distributions .............. (2,706) (374)
From fund share transactions:
Proceeds from shares sold ........................................... 26,834 14,757
Distributions reinvested ............................................ 2,706 374
Payment for shares redeemed ......................................... (20,259) (14,225)
-------- --------
Increase in net assets from fund share transactions .............. 9,281 906
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS .................................. 19,240 (1,354)
NET ASSETS
Beginning of Period ................................................. 29,936 31,290
-------- --------
End of Period ....................................................... $ 49,176 $ 29,936
======== ========
Analysis of fund share transactions:
Sold ................................................................ 2,962 1,868
Reinvested .......................................................... 270 46
Redeemed ............................................................ (2,292) (1,788)
-------- --------
Net increase in fund shares outstanding ................................ 940 126
======== ========
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
period indicated:
Overseas Equity Fund
--------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------------
2003 2002 2001 2000(c) 1999
------- ------- ------- ------- -------
Net Assets Value at Beginning of Period ................... $ 7.92 $ 8.57 $ 9.27 $ 10.71 $ 11.12
Income from Investment Operations:
Net Investment Income .................................. 0.09 0.10 0.11 0.23 0.29
Net Realized and Unrealized Gain (Loss) on
Investments(a) ...................................... 3.03 (0.65) (0.70) (1.20) 0.25
------- ------- ------- ------ -------
Total From Investment Operations ....................... 3.12 (0.55) (0.59) (0.97) 0.54
Less Distributions:
Distribution from Net Investment Income ................ (0.37) (0.10) (0.24) (0.29)
Distribution from Net Realized Gains on Investments .... (0.25) (0.01) (0.44)
Distribution from Excess of Net Investment
Income/Gains ........................................ (0.10) (0.16)
Distribution from Capital Paid-in ...................... (0.11) (0.12) (0.06)
------- ------- ------- ------- -------
Total Distributions .................................... (0.62) (0.10) (0.11) (0.47) (0.95)
------- ------- ------- ------- -------
Net Assets Value at End of Period ......................... $ 10.42 $ 7.92 $ 8.57 $ 9.27 $ 10.71
======= ======= ======= ======= =======
Total Investment Return(b) ................................ 39.85% (6.32)% (6.45)% (9.08)% 5.11%
Ratios/Supplemental Data:
Ratio of Operating Expenses to Average Net Assets ...... 1.15%(d)(f) 1.15%(d) 1.15%(d) 0.98%(d) 1.00%(d)
Ratio of Net Investment Income to Average Net Assets ... 0.84% 1.28% 1.30%(e) 2.32% 2.73%
Portfolio Turnover Rate ................................ 89.10% 71.20% 53.11% 204.98% 131.21%
Net Assets End of Period (000s Omitted) ................... $49,176 $29,936 $31,290 $28,527 $31,577
(a) The amount shown at this caption for each share outstanding throughout the
year may not accord with the change in the aggregate gains and losses in
the portfolio securities for the year because of the timing of the
purchases and withdrawals of the shares in relation to the fluctuating
market values of the portfolio.
(b) The performance does not reflect expenses and charges of the applicable
separate accounts and variable products, all of which vary to a
considerable extent and are described in your product's prospectus.
(c) The Fund entered into a new sub-advisory agreement with Capital Guardian
Trust Company during the period shown.
(d) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made the expense ratio would have been 1.39%, 1.45%, 1.36%, 1.27%, and
1.31%, for the years ended December 31, 2003, 2002, 2001, 2000, and 1999,
respectively.
(e) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 1.38% for the years ended December 31, 2001.
(f) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
SCHEDULE OF INVESTMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
OVERSEAS EQUITY FUND
Market
Name of Issuer Shares Value
-------------- -------- -------
(000's)
COMMON STOCK
Australia - 3.1%
Amcor, Ltd. (BE) ...................................... $ 3,400 $ 21
Australia & New Zealand Banking Group,
Ltd. (JP) .......................................... 13,127 175
Brambles Industries, Ltd. (BO) ........................ 16,000 64
Foster's Brewing Group, Ltd. (JG) ..................... 55,900 189
National Australia Bank, Ltd. (JP) .................... 8,800 198
News Corp., Ltd. (JA) ................................. 8,719 79
QBE Insurance Group, Ltd. (JR) ........................ 20,400 163
Wesfarmers (BL) ....................................... 7,400 148
Westpac Banking Corp., Ltd. (JP) ...................... 7,000 84
WMC Resources, Ltd. (BB) .............................. 33,000 140
WMC, Ltd. (BF) ........................................ 31,000 153
Woolworth's, Ltd. (JF) ................................ 14,000 124
------
1,538
Austria - 0.1%
Erste Bank (JP) ....................................... 400 49
Canada - 3.4%
Abitibi Consolidated, Inc. (BG) ....................... 17,900 144
Alcan Aluminum, Ltd. (BF) ............................. 2,800 131
BCE, Inc. (J1) ........................................ 10,400 233
Bombardier, Inc. - C1. B (BH) ......................... 69,500 294
Great West Lifeco, Inc. (JR) .......................... 1,900 67
Inco, Ltd. (BF) ....................................... 3,500 140
Manulife Financial Corp. (JR) ......................... 2,200 71
Suncor Energy , Inc. (BB) ............................. 6,400 161
TELUS Corp. (J1) ...................................... 12,800 240
Thomson Corp. (BZ) .................................... 5,500 200
------
1,681
Denmark - 0.4%
Novo Nordisk AS (JO) .................................. 3,600 146
Tele Danmark AS (J1) .................................. 800 29
------
175
Finland - 0.9%
Nokia Oyj (JW) ........................................ 17,900 309
UPM-Kymmene Corp. (BG) ................................ 7,100 136
------
445
France - 11.5%
Accor SA (BZ) ......................................... 4,900 222
Air Liquide (BC) ...................................... 1,900 335
BNP Paribas (JP) ...................................... 12,300 773
Bouygues SA (J2) ...................................... 11,100 388
Carrefour SA (JF) ..................................... 2,500 137
Essilor International (JL) ............................ 3,100 160
France Telecom (J1) ................................... 8,800 251
Groupe Danone (JH) .................................... 2,000 326
L'Oreal SA (JK) ....................................... 2,700 221
Renault (BV) .......................................... 6,600 455
Sanofi-Synthelabo SA (JO) ............................. 20,500 1,542
Schneider SA (BK) ..................................... 3,200 209
Societe Generale - Cl. A (JP) ......................... 1,200 106
STMicroelectronics (J0) ............................... $ 3,100 $ 84
Vivendi Universal SA (JA) ............................. 18,400 447
------
5,656
Germany - 5.1%
Allianz AG (JR) ....................................... 2,700 340
Bayerische Motoren Werke AG (BV) ...................... 3,400 157
DaimlerChrysler AG (BV) ............................... 7,700 359
Deutsche Bank AG (JP) ................................. 3,800 315
Deutsche Boerse AG (JQ) ............................... 1,122 61
Infineon Technologies AG (J0) ......................... 7,300 101
Muenchener Rueckversicherungs-
Gesellschaft AG (JR) ............................... 2,828 343
SAP AG (JV) ........................................... 1,300 218
Siemens AG (BL) ....................................... 6,200 496
Thyssen Krupp AG (BF) ................................. 5,500 109
------
2,499
Hong Kong - 1.8%
Cheung Kong Holdings, Ltd. (JS) ....................... 18,000 142
Hang Lung Properties (JS) ............................. 110,000 141
Hang Seng Bank, Ltd. (JP) ............................. 6,200 81
Hutchison Whampoa, Ltd. (BL) .......................... 10,000 73
Johnson Electric Holdings, Ltd. (BK) .................. 44,000 56
Li & Fung, Ltd. (BO) .................................. 116,000 199
Sun Hung Kai Properties, Ltd. (JS) .................... 11,000 91
Swire Pacific, Ltd. - Cl. A (JQ) ...................... 17,000 105
------
888
Italy - 0.9%
Assicurazioni Generali (JR) ........................... 3,100 82
ENI (BB) .............................................. 14,200 268
UniCredito Italiano SpA (JP) .......................... 17,400 94
------
444
Japan - 20.0%
Advantest (J0) ........................................ 2,000 159
Aiful Corp. (JQ) ...................................... 1,600 117
Canon, Inc. (JZ) ...................................... 4,000 186
Dai-Nippon Printng Co., Ltd. (BO) ..................... 10,000 140
Daiwa House Industry Co., Ltd. (BW) ................... 9,000 96
Daiwa Securities Group, Inc. (JQ) ..................... 12,000 82
Fanuc, Ltd. (BM) ...................................... 3,200 192
Fuji Photo Film (BX) .................................. 3,000 97
Hirose Electric Co., Ltd. (JY) ........................ 2,100 241
Honda Motor Co. (BV) .................................. 2,000 89
Hoya Corp. (JY) ....................................... 2,400 220
Japan Airlines (BQ) ................................... 52,000 137
Jusco Co., Ltd. (JD) .................................. 13,000 436
Kansai Electric Power Co., Inc. (J3) .................. 9,700 170
Millea Holdings, Inc. (JR) ............................ 15 196
Mitsubishi Corp. (BN) ................................. 23,000 244
Mitsubishi Estate Co., Ltd. (JS) ...................... 27,000 256
Mitsubishi Heavy Industries, Ltd. (BM) ................ 33,000 92
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
OVERSEAS EQUITY FUND
Market
Name of Issuer Shares Value
-------------- -------- -------
(000's)
COMMON STOCK - Continued
Japan - Continued
Mitsubishi Motor (BV) ................................. $ 33,000 $ 67
Mitsui Fudosan Co., Ltd. (JS) ......................... 17,000 154
Mitsui Marine & Fire Insurance Co., Ltd. (JR) ......... 33,000 271
Murata Manufacturing Co., Ltd. (JY) ................... 2,700 146
NEC Corp. (JX) ........................................ 73,000 538
Nidec Corp. (JY) ...................................... 900 86
Nikko Securities Co., Ltd. (JQ) ....................... 23,000 128
Nikon Corp. (J0) ...................................... 5,000 75
Nintendo Corp., Ltd. (BW) ............................. 1,300 121
Nippon Steel Co. (BF) ................................. 62,000 133
Nissan Motor Acceptance Corp. (BV) .................... 36,000 411
Nitto Denko Corp. (BK) ................................ 4,900 261
Nomura Securities Co., Ltd. (JQ) ...................... 11,000 187
Orix Corp. (JQ) ....................................... 3,500 289
Ricoh Co., Ltd. (JZ) .................................. 6,000 118
Rohm Co., Ltd. (J0) ................................... 2,600 305
Sankyo Co., Ltd. (JO) ................................. 12,000 226
Sekisui House, Ltd. (BW) .............................. 21,000 217
Shimamura Co., Ltd. (JE) .............................. 1,400 95
Shin-Etsu Chemical Co. (BC) ........................... 2,600 106
Shionogi & Co., Ltd. (JO) ............................. 18,000 335
SMC Corp. (BM) ........................................ 1,500 187
Softbank Corp. (JT) ................................... 1,000 31
Sumitomo Chemical Co. (BC) ............................ 39,000 161
Sumitomo Forestry Co. (BG) ............................ 6,000 51
Suzuki Motor Corp. (BV) ............................... 23,000 340
Taiyo Yuden Co., Ltd. (JY) ............................ 9,000 118
Tokyo Electron, Ltd. (J0) ............................. 7,500 570
Toray Industries, Inc. (BC) ........................... 14,000 59
Tostem Corp. (BI) ..................................... 6,000 116
Toyota Motor Corp. (BV) ............................... 7,300 247
Yahoo Japan Corp. (JT) ................................ 20 269
Yamanouchi Pharmaceutical Co., Ltd. (JO) .............. 3,000 93
Yamato Transport Co., Ltd. (BP) ....................... 7,000 82
Yasuda F & M Insurance (JR) ........................... 12,000 99
------
9,842
Netherlands - 8.8%
ABN Amro Holding NV (JP) .............................. 30,148 705
Aegon NV (JR) ......................................... 13,763 203
ASM Lithography Holding NV (J0) ....................... 4,500 89
Elsevier NV (JA) ...................................... 13,200 164
Heineken Holding (JG) ................................. 900 31
Heineken NV (JG) ...................................... 16,300 620
ING Groep NV (JQ) ..................................... 17,447 406
Koninklijke (Royal) Philips Electronics NV
(JY) ............................................... 3,600 105
Koninklijke KPN NV (JY) ............................... 57,900 446
Koninklijke Numica NV (JY) ............................ 2,900 80
Royal Dutch Petroleum Co. (BB) ........................ 22,800 1,201
TNT Post Group NV (BP) ................................ 3,800 89
VNU NV (JA) ........................................... $ 6,327 $ 200
------
4,339
New Zealand - 0.0%
Telecom Corp. of New Zealand, Ltd. (J1) ............... 436 1
Norway - 1.8%
Den Norske Bank (JP) .................................. 16,000 107
Norsk Hydro ASA (BL) .................................. 7,025 433
Norske Skogindustrier ASA - Cl. A (BG) ................ 2,700 51
Statoil ASA (BB) ...................................... 25,400 285
------
876
Singapore - 1.0%
DBS Group Holdings, Ltd. (JP) ......................... 4,000 35
Hong Kong Land Holdings, Ltd. (JS) .................... 56,000 95
Singapore Technology Engineering, Ltd. ................
(BH) ............................................... 75,000 90
Singapore Telecommunications, Ltd. (J1) ............... 117,000 135
United Overseas Bank, Ltd. (JP) ....................... 6,000 47
Venture Manufacturing, Ltd. (JY) ...................... 9,000 106
------
508
Spain - 2.9%
Banco Bilbao Vizcaya SA (JP) .......................... 39,800 549
Inditex (JE) .......................................... 14,300 290
Repsol SA (BB) ........................................ 6,200 121
Telefonica SA (J1) .................................... 30,853 453
------
1,413
Sweden - 3.3%
Assa Abloy (BI) ....................................... 20,200 240
AstraZeneca Group plc (BO) ............................ 16,200 789
ForeningsSparbanken AB (JP) ........................... 18,100 356
Sandvik AB (BM) ....................................... 2,500 86
Svenska Handelsbanken, Inc. (JP) ...................... 6,000 123
------
1,594
Switzerland - 9.3%
ABB, Ltd. (BK) ........................................ 22,218 112
Credit Suisse Group (JP) .............................. 4,063 149
Holcim (BD) ........................................... 8,391 391
Nestle SA (JH) ........................................ 2,309 577
Novartis AG (JO) ...................................... 18,678 848
Richemont (JQ) ........................................ 20,336 488
Roche Holdings AG (JO) ................................ 3,033 306
Serono SA (JN) ........................................ 134 95
Swiss Reinsurance Co. (JR) ............................ 8,404 567
Swisscom AG (J1) ...................................... 1,581 521
Synthes-Stratec, Inc. (JL) ............................ 126 125
UBS AG (JP) ........................................... 5,628 385
------
4,564
United Kingdom - 14.6%
Anglo American plc (BF) ............................... 4,400 95
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
OVERSEAS EQUITY FUND
Market
Name of Issuer Shares Value
-------------- -------- -------
(000's)
COMMON STOCK - Continued
United Kingdom - Continued
Arm Holdings plc (J0) ................................. $ 14,000 $ 32
AstraZeneca Group plc (JO) ............................ 11,100 531
Barclays (JP) ......................................... 30,200 269
BG Group plc (BB) ..................................... 92,100 471
Billiton plc (BF) ..................................... 62,655 546
British Aerospace plc (BH) ............................ 20,000 60
Centrica plc (J4) ..................................... 39,500 149
CRH (BD) .............................................. 7,900 162
Diageo plc (JG) ....................................... 13,000 170
HBOS (JP) ............................................. 24,800 320
HSBC Holdings plc (JP) ................................ 29,900 469
National Grid Group (JY) .............................. 30,600 219
Pearson plc (JA) ...................................... 29,800 331
Prudential Corp. (JR) ................................. 11,700 99
Reckitt Benckiser (JJ) ................................ 3,800 86
Rio Tinto plc (BF) .................................... 3,400 94
Royal Bank of Scotland Group (JP) ..................... 20,400 599
Smith & Nephew (JL) ................................... 14,600 122
Smiths Group (BL) ..................................... 9,900 117
Standard Chartered plc (JP) ........................... 21,300 351
Unilever plc (JK) ..................................... 50,900 473
Vodafone AirTouch plc (J2) ............................ 485,538 1,200
Wolseley (BN) ......................................... 6,600 93
Xstrata (BF) .......................................... 10,900 122
-------
7,180
United States - 5.9%
America Movil SA de CV - ADR Ser. L (J2) .............. 2,400 66
AstraZeneca Group Plc - ADR (JO) ...................... 5,000 242
Companhia Vale Do Rio Doce - ADR (BF) ................. 1,800 105
DBS Group Holdings, Ltd. - ADR 144A (a)(JP) ........... 2,000 17
Nokia Oyj - ADR (JW) .................................. 4,500 77
Royal Dutch Petroleum Co. (BB) ........................ 2,000 105
Samsung Electronics - 144A (a) (JY) ................... 2,850 536
Sap Aktiengesellschaft - ADR (JV) ..................... 3,200 133
Sony Corp. (JY) ....................................... 3,500 121
STMicroelectronics NV (J0) ............................ 5,200 140
Taiwan Semiconductor Manufacturing Co.,
Ltd. - ADR (J0) .................................... 48,864 500
Telefonos de Mexico SA - ADR (J1) ..................... 1,700 56
The Thomson Corp. (JA) ................................ 10,400 377
Vodafone Group plc (J1) ............................... 17,100 428
Yukos Corp. - ADR (BB) ................................ 300 13
-------
2,916
-------
TOTAL COMMON STOCK- 94.8% 46,608
Par Market
Name of Issuer Value Value
-------------- -------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS
Supra National - 0.5%
SMFG Finance (FB)
2.25% due 07/11/05 ................................. $ 12,000 $ 204
2.25% due 07/11/05 ................................. 6,000 53
-------
TOTAL PUBLICLY-TRADED BONDS- 0.5% 257
SHORT-TERM INVESTMENTS - 6.1%
Investment in joint trading account
(Note B)
1.061% due 01/02/04 ................................ 2,977 2,977
-------- -------
TOTAL INVESTMENTS- .............................. 101.4% 49,842
Payables, less cash and receivables- ............ (1.4)% (666)
-------- -------
NET ASSETS- ..................................... 100.0% $49,176
======== =======
(a) Pursuant to Rule 144A under the Securities Act of 1993, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2003, securities aggregated
$553 or 1.1% of net assets of the Portfolio.
ADR-American Depository Receipts.
GDR-Global Depository Receipts.
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED)
% of
Industry Market Long-Term
Industry Abbreviation Value Investments
-------- ------------ ------ -----------
(000s)
Banks .................................... JP $6,355 13.6%
Pharmaceuticals .......................... JO 4,269 9.1%
Oil & Gas ................................ BB 2,764 5.9%
Insurance ................................ JR 2,501 5.3%
Electronic Equipment & Instruments ....... JY 2,424 5.2%
Diversified Telecommunication Services ... J1 2,347 5.0%
Automobiles .............................. BV 2,126 4.5%
Semiconductor Equipment & Products ....... J0 2,056 4.4%
Diversified Financials ................... JQ 1,864 4.0%
Wireless Telecommunications Services ..... J2 1,654 3.5%
Metals & Mining .......................... BF 1,628 3.5%
Media .................................... JA 1,597 3.4%
Industrial Conglomerates ................. BL 1,267 2.7%
Commercial Services & Supplies ........... BO 1,192 2.5%
Beverages ................................ JG 1,011 2.2%
Food Products ............................ JH 903 1.9%
Real Estate Investment Trust ............. JS 879 1.9%
Personal Products ........................ JK 694 1.5%
Chemicals ................................ BC 661 1.4%
Electrical Equipment ..................... BK 638 1.4%
Machinery ................................ BM 557 1.2%
Construction Materials ................... BD 552 1.2%
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
OVERSEAS EQUITY FUND
% of
Industry Market Long-Term
Industry Abbreviation Value Investments
-------- ------------ ------- -----------
(000s)
Computers & Peripherals ................. JX $ 538 1.1%
Aerospace & Defense ..................... BH 444 0.9%
Multiline Retail ........................ JD 436 0.9%
Household Durables ...................... BW 434 0.9%
Hotels Restaurants & Leisure ............ BZ 422 0.9%
Health Care Equipment & Supplies ........ JL 407 0.9%
Communications Equipment ................ JW 386 0.8%
Specialty Retail ........................ JE 385 0.8%
Paper & Forest Products ................. BG 381 0.8%
Building Products ....................... BI 356 0.8%
Software ................................ JV 351 0.8%
Trading Companies & Distributors ........ BN 337 0.7%
Office Electronics ...................... JZ 305 0.7%
Internet Software & Services ............ JT 299 0.6%
Food & Drug Retailing ................... JF 261 0.6%
Finance ................................. FB 257 0.5%
Air Freight & Couriers .................. BP 171 0.4%
Electric Utilities ...................... J3 170 0.4%
Gas Utilities ........................... J4 149 0.3%
Airlines ................................ BQ 137 0.3%
Leisure Equipment & Products ............ BX 97 0.2%
Biotechnology ........................... JN 96 0.2%
Household Products ...................... JJ 86 0.2%
Containers & Packaging .................. BE 21 0.0%
------- -----
$46,865 100.0%
======= =====
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE A--ORGANIZATION
John Hancock Overseas Equity Fund, (formerly John Hancock Global Balanced
Fund), (the "Fund") is a diversified series of John Hancock Variable Series
Trust I (the "Trust"), an open-end investment management company registered
under the Investment Company Act of 1940. The Trust is organized as a
Massachusetts business trust and consists of thirty different funds as of
December 31, 2003. The results of this Fund are included in this report. The
results of the other Funds in the Trust are presented under separate cover. The
Trust may add or delete Funds in the future to accommodate various investment
objectives. The Trust has issued shares of beneficial interest exclusively to
John Hancock Variable Life Account U ("JHVLAU"), John Hancock Variable Life
Account V ("JHVLAV"), John Hancock Variable Life Account S ("JHVLAS"), and John
Hancock Variable Annuity Account I ("JHVAAI") to fund policies and contracts
issued by the John Hancock Variable Life Insurance Company ("JHVLICO"), and to
John Hancock Variable Annuity Account U ("JHVAAU"), John Hancock Variable
Annuity Account V ("JHVAAV"), John Hancock Variable Life Account UV ("JHVLAUV"),
John Hancock Variable Annuity Account H ("JHVAAH"), and John Hancock Variable
Annuity Account JF ("JHVAAJF") to fund contracts and policies issued by John
Hancock Life Insurance Company ("John Hancock" or "JHLICO"), to John Hancock
Variable Life Account PPM-1 ("PPM-1"), and to John Hancock Variable Life Account
PPM-2 ("PPM-2").
NOTE B--ACCOUNTING POLICIES
Valuation of investments: Investments in securities traded on national
securities exchanges in the United States or on equivalent foreign exchanges are
normally valued at the last quoted sales price on such exchanges as of the close
of business on the date of which assets are valued. Securities traded in the
over-the-counter market and securities traded with no sales on the day of
valuation are normally valued at their last available bid price. All Fund
securities initially expressed in terms of foreign currencies have been
translated into U.S. Dollars as described in "Currency Translation" below.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Fair value pricing, determined in good faith by the Board of Trustees, may
be used by the Fund when current market values are unavailable or when an event
occurs after the close of the exchange on which the Fund's portfolio securities
are principally traded that is likely to have changed the value of the
securities. The use of fair value pricing by the Fund may cause the net asset
value of its shares to differ significantly from the net asset value that would
be calculated using current market values. Securities for which prices are not
available from an independent pricing service, but where an active market
exists, are valued using market quotations obtained from one or more dealers
that make markets in the securities.
Investment security transactions are recorded on the date of purchase or
sale.
Repurchase agreements: The Fund may enter into repurchase agreements which
are contracts under which the Fund would acquire a security for a relatively
short period (usually not more than 7 days) subject to the obligation of the
seller to repurchase and the Fund to resell such security at a fixed time and
price (representing the Fund's cost plus interest). The Fund will enter into
repurchase agreements only with member banks of the Federal Reserve System and
with "primary dealers" in United States Government Securities. The underlying
securities, which represent the collateral of the agreement, must be marked to
market daily to ensure that each repurchase agreement is fully collateralized at
all times. The Fund will not invest more than 10% of its net assets in
repurchase agreements maturing in more than 7 days.
Joint trading account: Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the order permits the Fund to pool daily
uninvested cash balances into a joint account for the purpose of investing the
cash balances in short-term repurchase agreements, commercial paper and other
short-term investments which in no event will have a maturity in excess of 7
days. Joint account holdings as of December 31, 2003 are as follows:
Name of Issuer Market Value
- -------------- ------------
Alpine Securitization Corp., 1.12%, due 01/07/04 $29,995
Alpine Securitization Corp., 1.12%, due 01/06/04 19,998
Barclays US Fund, 1.10%, due 01/05/04 29,997
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Market
Name of Issuer Value
- -------------- --------
Cargill Asia Pacific, 1.06%, due 01/02/04 $ 20,000
Cargill Asia Pacific, 1.05%, due 01/02/04 25,000
Danske Corp., 1.07%, due 01/05/04 49,996
Greenwich CPL Holding Funding, 0.95%, due 01/02/04 17,654
Merrill Lynch & Co., Inc., 1.04%, due 01/05/04 18,838
Merrill Lynch & Co., Inc., 1.05%, due 01/06/04 31,156
Mortgage Int. Networking, 0.98%, due 01/02/04 50,000
Three Pillars Funding Corp., 1.08%, due 01/06/04 49,994
UBS Finance LLC, 1.02%, due 01/02/04 3,917
UBS Finance LLC, 1.05%, due 01/02/04 4,088
UBS Finance LLC, 0.96%, due 01/02/04 35,000
--------
Joint Trading Account Totals $385,633
========
Currency translation: All assets or liabilities initially expressed in
terms of foreign currencies are translated into U.S. dollars based on London
currency exchange quotations as of 5:00 p.m., London time, on the date of any
determination of the net asset value of the Fund. Unrealized exchange
adjustments are included in unrealized appreciation (depreciation) of
investments. Transactions affecting statement of operations accounts and net
realized gain (loss) on investments are translated at the rates prevailing at
the dates of transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gains or losses
from investments.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward foreign
currency contracts, disposition of foreign currencies, currency gains and losses
realized between trade and settlement dates of security transactions, and the
difference between the amounts of net investment income accrued and the U.S.
dollar amount actually received. Net unrealized foreign exchange gains and
losses arise from changes in the value of assets and liabilities other than
investments in securities, resulting from changes in the exchange rate.
Expenses: Expenses directly attributable to the Fund are charged to the
Fund. Expenses not directly attributed to the Fund are allocated on the basis of
relative net assets of the Fund.
Bank borrowings: The Fund is 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
has entered into syndicated line of credit agreements with State Street Bank and
Trust Company ("SSBT"), the Trust's record keeper and custodian and the Bank of
New York. These agreements enable the Fund to participate in an unsecured line
of credit, which permits borrowings up to $125 and $75 million, respectively.
Interest is charged to the Fund, based on its borrowing. In addition, a
commitment fee is charged to the Fund based on the average daily unused portion
of the line of credit and is allocated among the participating Funds in the
Trust. Interest expense paid under the line of credit is included under the
caption "Other fees" in the Statement of Operations.
The Fund had borrowings under the line of credit during the year ended
December 31, 2003 as follows:
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$301 1.66% $--
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Financial futures contracts: The Fund may buy and sell financial futures
contracts to hedge against the effects of fluctuations in interest rates and
other market conditions. At the time the Fund enters into a financial futures
contract, it will be required to deposit with its custodian a specified amount
of cash or U.S. government securities, known as "initial margin". Each day, the
futures contract is valued at the official settlement price of the Chicago Board
of Trade or U.S. commodities exchange. Daily adjustments, called variation
margin, arising from this "mark to market", are recorded by the Fund as
unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or a loss. Risks
of entering into futures contracts include the possibility that there may be an
illiquid market and/or that a change in the value of the contract may not
correlate with changes in the value of the underlying securities. In addition,
the Fund could be prevented from opening or realizing the benefits of closing
out futures positions because of position limits or limits on daily price
fluctuations imposed by an exchange.At December 31, 2003, the Fund had no open
financial futures contracts.
Forward foreign currency contracts: The Fund may use forward foreign
currency contracts to facilitate transactions in foreign securities and to
manage the Fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the Fund's investments against currency fluctuations. Neither type of
forward foreign currency transaction will eliminate fluctuations in the prices
of the Fund's securities or prevent loss if the price of such securities should
decline. The U.S. dollar value of a forward foreign currency contract is
determined using forward exchange rates supplied by a quotation service.
Realized gain (loss) on the purchases and sales of forward foreign currency
contracts is recognized on settlement date.
As of December 31, 2003, the Fund had open forward foreign currency
contracts which contractually obligate the Fund to deliver or receive currencies
at a specified date, as follows:
Principal Amount Unrealized
Covered by Contract Expiration Month Gain (Loss)
------------------- ---------------- -----------
Currency Purchased
- ------------------
Swiss Franc 202 January 04 $ 27
====
Currency Sold
- -------------
Swiss Franc 211 January 04 $(18)
Swiss Franc 301 May 04 (31)
Japanese Yen 140 March 04 (12)
----
$(61)
====
Federal income taxes: The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to
shareholders. Therefore, no federal income tax provision is required.
As of December 31, 2003, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $478, $2,241 and $1,032 which expire in 2009, 2010 and 2011,
respectively.
In addition, from the period November 1, 2003 through December 31, 2003,
the Fund incurred approximately $37 in net realized currency losses. As
permitted by tax regulations, the Fund intends to elect to defer these losses
and treat them as arising in the fiscal year ending on December 31, 2004.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Dividends, Interest and Distributions: Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis. Dividend
income for the Fund is shown net of foreign taxes withheld of $55. Realized
gains and losses from security transactions are determined on the basis of
identified cost.
Dividends of net investment income will be declared and distributed monthly
by the Fund. The Fund will distribute all of its net realized capital gains
annually, at the end of its fiscal year.
Estimates: The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 5, 2003, the Board of Trustees of the Trust renewed its
Investment Advisory Agreement with John Hancock. For its services, John Hancock
receives monthly compensation at the following rate on an annual basis of the
Fund's net assets:
Between Between
$150 Million and $300 Million and Excess Over
First $150 Million $300 Million $500 Million $500 Million
- ------------------ ---------------- ---------------- ------------
1.05% 0.95% 0.80% 0.75%
In the event that normal operating expenses of the Fund, exclusive of
investment advisory fees, taxes, interest, brokerage commissions and
extraordinary expenses, shall exceed 0.10% of the Fund's daily net asset value,
John Hancock and JHVLICO will reimburse the Fund for such excess. Accordingly,
for the year ended December 31, 2003, the reimbursements paid from John Hancock
and JHVLICO were $87 to the Fund.
The Fund entered into a commission recapture program, which enables it to
pay some of its operational expenses by recouping a portion of the commissions
it pays to a broker that is not a related party of the Fund. Expenses paid
through this program may include costs of custodial, transfer agency or
accounting services. The impact of this arrangement was a reduction of $1.
John Hancock has entered into a Sub-Advisory Agreement with Capital
Guardian Trust Company, with respect to the Fund. Capital Guardian Trust Company
is an affiliate of John Hancock, and under its supervision, is responsible for
the day-to-day investment management of the Fund.
Signator Investors, Inc., a wholly owned subsidiary of John Hancock is the
principal underwriter and transfer agent of the Trust. Certain officers and
trustees of the Trust are officers and directors of JHVLICO, JHVLAU, JHVLAV,
JHVLAS, JHVAAI, JHVLAUV, JHVAAV, JHVAAU, JHVAAH, JHVAAJF, PPM-1, and PPM-2, and
some are also officers of John Hancock. Fees for independent trustees are paid
by the Trust.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities and obligations of the U.S. government, for the Fund for
the year ended December 31, 2003 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$36,265 $30,303
The identified cost of investments owned by the Fund (including earned
discount on corporate short-term notes, and commercial paper) and their
respective gross unrealized appreciation and depreciation for Federal income tax
purposes at December 31, 2003 were as follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$40,215 $9,900 $(273) $9,627
Distribution of Income and Gains: Distributions of net investment income,
if any, are made at least annually. Net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed, and, therefore, will be distributed to
shareholders at least annually. Earnings and profits distributed to shareholders
on redemption of fund shares may be utilized by the Fund, to the extent
permissible, as part of the Fund's dividends-paid deduction on its federal
income tax returns.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. These differences primarily relate to certain
securities sold at a loss, premium amortization and market discount accretion on
debt securities and investments in passive foreign investment companies and
foreign currency denominated investments. Additionally, as a result, net
investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such
period. Accordingly, the Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
At December 31, 2003, the Fund's components of distributable earnings on a
tax basis were as follows:
Undistributed Undistributed
Ordinary Net Long-Term Capital Loss Net Unrealized
Income Capital Gain Carryforwards Appreciation
- ------------- ------------- ------------- --------------
$-- $-- $3,751 $9,627
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
NOTE D--INVESTMENT TRANSACTIONS--Continued
In addition, the tax character of distributions paid by the Fund are
summarized as follows:
Distributions from Distributions from
Year Ordinary Income Long-Term Capital Gain Return of Capital
- ---- ------------------ ---------------------- -----------------
2003 $1,620 $-- $1,086
2002 374 -- --
NOTE E--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED)
The Board of Trustees of the Trust is responsible for overall management of
the Trust. The Board may exercise all powers of the Trust, except those powers
which are conferred solely upon or reserved to the shareholders. The Trust's
Statement of Additional Information (SAI) includes additional information about
the Trustees and is available without charge, upon request, by calling toll-free
at 1-800-576-2227.
The following table provides information about the members of the Board of
Trustees and the officers of the Trust:
Disinterested Trustees
Positions Held Principal Occupation(s)
Name, Address and Age With Trust During Past Five Years
- -------------------------------- -------------- -----------------------------------
Elizabeth G. Cook (age 66) Trustee Expressive Arts Therapist, Dana-
c/o John Hancock Variable Series Farber Cancer Institute; President,
Trust I The Advertising Club of Greater
John Hancock Place Boston
Boston, Massachusetts 02117
Diane C. Kessler (age 57) Trustee Executive Director, Massachusetts
c/o John Hancock Variable Series Council of Churches
Trust I
John Hancock Place
Boston, Massachusetts 02117
Robert Verdonck (age 58) Trustee President and Chief
c/o John Hancock Variable Series Executive Officer, East Boston
Trust I Savings Bank
John Hancock Place
Boston, Massachusetts 02117
Hassell H. McClellan (age 58) Trustee Associate Professor and Graduate
c/o John Hancock Variable Series Dean, The Graduate School of the
Trust I Wallace G. Carroll School of
John Hancock Place Management, Boston College
Boston, Massachusetts 02117
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
NOTE E--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED)--Continued
Trustees Affiliated with the Trust and Officers of the Trust
Positions Held Principal Occupation(s)
Name, Address and Age With Trust During Past Five Years
- ------------------------------ ---------------------------- -----------------------------------
Michele G. Van Leer* (age 46) Chairman and Trustee Senior Vice President, Product
John Hancock Place Management, John Hancock Life
Boston, Massachusetts 02117 Insurance Company; Vice Chairman,
President & Director, John Hancock
Variable Life Insurance Company
Kathleen F. Driscoll* (age 47) Vice Chairman, President Senior Vice President, Signator
John Hancock Place and Trustee Brokerage, John Hancock Life
Boston, Massachusetts 02117 Insurance Company; Vice President
Corporate Communications, John
Hancock Life Insurance Company
Jude A. Curtis (age 45) Compliance Officer Vice President and Chief Investment
John Hancock Place Compliance Officer, John Hancock
Boston, Massachusetts 02117 Life Insurance Company; formerly
Second Vice President and Counsel,
Office of Business Conduct; John
Hancock Life Insurance Company;
formerly a Partner at Hale and Dorr
LLP (law firm)
Janet Wang (age 35) Assistant Compliance Officer Compliance Specialist, John
John Hancock Place Hancock Life Insurance Company
Boston, Massachusetts 02117
Raymond F. Skiba (age 58) Treasurer Director of Fund Operations, John
John Hancock Place Hancock Life Insurance Company
Boston, Massachusetts 02117
Gladys C. Millan (age 57) Assistant Treasurer Manager of Fund Operations, John
John Hancock Place Hancock Life Insurance Company
Boston, Massachusetts 02117
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
NOTE E--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED)--Continued
Trustee Affiliated with the Trust and Officers of the Trust--Continued
Positions Held Principal Occupation(s)
Name, Address and Age With Trust During Past Five Years
- --------------------------- ------------------- ------------------------------------
Karen Q. Visconti (age 50) Secretary Director, Product & Market
John Hancock Place Management, John Hancock Life
Boston, Massachusetts 02117 Insurance Company
Arnold R. Bergman (age 53) Assistant Secretary Senior Counsel, Law Department,
John Hancock Place John Hancock Life Insurance
Boston, Massachusetts 02117 company; formerly Vice President,
General Counsel and Secretary, First
Variable Life Insurance Company
*Trustee who is an "interested person" as defined in the 1940 Act, due to
her position with John Hancock Life Insurance Company (or its affiliates), the
ultimate controlling parent of the investment advisor.
Because the Trust does not hold regular annual shareholders meetings, each
Trustee holds office for an indefinite term until his successor is duly elected
and qualified or until he dies, retires, resigns, is removed or becomes
disqualified. None of the Trustees is a director of other complexes except noted
above.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Contractowners, Policyholders, and
Board of Trustees of
John Hancock Variable Series Trust I
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Overseas Equity Fund (formerly,
Global Balanced Fund) (a portfolio included in the series of John Hancock
Variable Series Trust I {the "Trust"}) as of December 31, 2003, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 2003, by correspondence with the custodian and brokers,
or by other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Overseas Equity Fund of John Hancock Variable Series Trust I at December 31,
2003, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 6, 2004
Officers and Trustees Investment Adviser
Michele G. Van Leer, John Hancock Life Insurance Company
Chairman of the Board of Trustees John Hancock Place
Kathleen F. Driscoll, P.O. Box 111
President and Vice Chairman Boston, MA 02117
of the Board of Trustees
Elizabeth G. Cook, Trustee
Reverend Diane C. Kessler, Trustee
Hassell H. McClellan, Trustee Independent Auditors
Robert F. Verdonck, Trustee Ernst & Young LLP
Karen Q. Visconti, Secretary 200 Clarendon Street
Arnold R. Bergman, Assistant Secretary Boston, MA 02116
Raymond F. Skiba, Treasurer
Gladys C. Millan, Assistant Treasurer
Ronald J. Bocage, Chief Legal Officer
Jude A. Curtis, Compliance Officer
Janet Wang, Assistant Compliance Officer
Sub-Investment Advisers
Capital Guardian Trust Company Pacific Investment Management Company LLC
Los Angeles, CA 90071 Newport Beach, CA 92660
Declaration Management & Research LLC RREEF America LLC
McLean, VA 22102 Chicago, IL 60611
Fidelity Management & Research Company SSgA Funds Management, Inc.
Boston, MA 02109 Boston, MA 02110
Goldman Sachs Asset Management, LP Standish Mellon Asset
New York, NY 10005 Management Company LLC
Pittsburgh, PA 15258
Independence Investment LLC T. Rowe Price Associates, Inc.
Boston, MA 02109 Baltimore, MD 21202
John Hancock Advisers, LLC T. Rowe Price International, Inc.
Boston, MA 02199 Baltimore, MD 21202
Morgan Stanley Investment Management Inc. Wellington Management Company, LLP
New York, NY 10020 Boston, MA 02109
The John Hancock Variable Series Trust I consists of funds used as investment
options for various John Hancock variable life and variable annuity contracts.
Investors are not able to invest directly in the John Hancock Variable Series
Trust I.
If the total investment return for any fund for any given year appears unusually
high, the return may be attributable to unusually favorable market conditions
which will probably not be sustainable. For instance, a high total investment
return may reflect participation in IPOs, "hot" industries (e.g.,
internet-related companies), private placements, and/or leveraging investment
techniques during the period indicated. There is no assurance that any of those
methods, or any other investment technique will continue to have the same impact
on the fund's total investment returns.
All of the funds (except bond funds and equity index funds) may participate in
initial public offerings (IPOs). Under certain market conditions, such
participation could significantly improve a fund's total investment return.
There is no assurance that such market conditions will continue and provide the
same favorable impact on future investment returns.
Please refer to the prospectus for your product for additional information about
the investment options available. Variable life insurance and variable annuities
are sold by prospectus. These reports may be used as sales literature when
preceeded or accompanied by the funds' prospectus, which detail charges,
investment objectives, and operating policies.
Insurance products are issued by John Hancock Life Insurance Company, or John
Hancock Variable Life Insurance Company* (*not licensed in New York), Boston, MA
02117. Securities products are distributed by Signator Investors, Inc., Member
NASD, SIPC, 197 Clarendon Street, Boston, MA 02116.
John Hancock [GRAPHIC]
[LOGO]
WORLDWIDE SPONSOR
[LOGO] IMSA
INSURANCE
MARKETPLACE
STANDARD
ASSOCIATION