Annual Report
for John Hancock Variable Series Trust I
December 31, 2003
[LOGO] John Hancock
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Not FDIC Insured Not Bank Guaranteed May Lose Value
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Not a Deposit Not Insured by Any Federal Government Agency
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Inception: May 1, 1998
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Small/Mid Cap CORE(SM) Fund
Goldman Sachs Asset Management, L.P. Jones/Brown/Pinter
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.. In 2003, the Fund returned 45.15% underperforming its benchmark, the
Russell 2500 Index.
.. The Fund underperformed its benchmark due to unfavorable stock selection
and sector allocation exposures. Stock selection detracted especially
within the information technology and consumer discretionary sectors.
.. The CORE themes (Momentum, Valuation, Profitability, Earnings Quality,
Analyst Sentiment and Management Impact) had mixed results for the year,
but were positive overall. Valuation was the biggest positive contributor
to excess returns for 2003, as inexpensive companies outperformed their
more richly valued industry counterparts. Profitability also contributed
positively as owning companies with strong profit margins and operating
efficiency proved to be beneficial. Management Impact, Earnings Quality and
Momentum modestly boosted relative returns, while Analyst Sentiment was the
only theme to detract for the year.
.. Positive absolute performance was driven mainly by strong returns in the
Financial and Information Technology sectors.
.. The Fund seeks to maintain size and sector weightings similar to its
benchmark. The manager seeks to add value versus the Russell 2500 Index by
overweighting stocks that are more likely to beat the benchmark, while
underweighting stocks that are believed to lag the Index.
.. The manager employs a CORE approach -- computer optimized, research
enhanced -- using quantitative techniques to identify cheap stocks with
good momentum, companies about which fundamental research analysts are
becoming more positive, and that have strong profit margins and sustainable
earnings that employ their capital to enhance shareholder value.
[CHART]
Line Chart
Historical Fund Return
$10,000
Investment made 4/30/98
(Fund Inception Date)
Small/Mid Cap Russell
CORE(SM) Fund 2500(TM) Index
------------- --------------
4/30/98 10,000.00 10,000.00
06/30/1998 9,721.11 9,547.44
07/31/1998 9,039.64 8,891.53
08/31/1998 7,377.35 7,214.59
09/30/1998 7,776.24 7,726.83
10/30/1998 7,960.07 8,149.48
11/30/1998 8,422.14 8,552.88
12/31/1998 9,018.54 9,071.19
01/29/1999 8,940.19 9,055.77
02/26/1999 8,305.30 8,460.80
03/31/1999 8,438.16 8,641.86
04/30/1999 9,171.89 9,415.31
05/28/1999 9,250.51 9,561.25
06/30/1999 9,810.43 10,058.43
07/30/1999 9,647.63 9,860.28
08/31/1999 9,346.73 9,551.66
09/30/1999 9,224.22 9,409.34
10/29/1999 9,430.02 9,615.40
11/30/1999 9,887.43 10,158.67
12/31/1999 10,870.98 11,260.89
01/31/2000 10,456.08 11,001.89
02/29/2000 11,807.00 12,590.56
03/31/2000 11,699.80 12,397.92
04/28/2000 11,257.23 11,730.91
05/31/2000 10,720.20 11,167.83
06/30/2000 11,414.25 11,901.56
07/31/2000 11,266.93 11,598.07
08/31/2000 12,208.17 12,596.66
09/29/2000 11,765.57 12,187.27
10/31/2000 11,467.29 11,853.34
11/30/2000 10,396.42 10,810.24
12/29/2000 11,374.55 11,741.01
01/31/2001 11,642.32 12,127.29
02/28/2001 10,940.08 11,346.29
03/30/2001 10,295.97 10,723.38
04/30/2001 11,153.18 11,670.25
05/31/2001 11,433.38 12,021.53
06/30/2001 11,546.24 12,192.23
07/31/2001 11,242.21 11,755.75
08/31/2001 10,944.71 11,370.16
09/28/2001 9,571.68 9,898.86
10/31/2001 9,991.95 10,410.63
11/30/2001 10,814.32 11,252.85
12/31/2001 11,435.35 11,884.14
01/31/2002 11,422.93 11,736.78
02/28/2002 11,362.86 11,531.38
03/30/2002 12,211.41 12,328.20
04/30/2002 12,368.07 12,297.38
05/31/2002 11,981.00 11,937.07
06/30/2002 11,396.59 11,265.01
07/31/2002 9,983.60 9,921.09
08/31/2002 10,115.87 9,950.86
09/28/2002 9,327.27 9,162.75
10/31/2002 9,531.91 9,461.46
11/30/2002 10,096.93 10,233.51
12/31/2002 9,698.01 9,770.95
01/31/2003 9,440.15 9,511.04
02/28/2003 9,165.75 9,282.78
03/30/2003 9,203.10 9,370.96
04/30/2003 9,969.24 10,205.92
05/31/2003 10,953.05 11,209.16
06/30/2003 11,168.58 11,423.25
07/31/2003 11,739.43 12,037.83
08/31/2003 12,180.83 12,595.18
09/28/2003 12,136.15 12,423.88
10/31/2003 13,152.78 13,405.37
11/30/2003 13,783.61 13,909.41
12/31/2003 14,076.75 14,216.81
Value on 12/31/03:
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$14,077 Small/Mid Cap CORE (SM) Fund
$14,217 Russell 2500(TM) Index
MORNINGSTAR CATEGORY+:
.. Mid Cap Blend
MORNINGSTAR RISK+:
.. Average (VL/VUL)
.. Average (VA)
MORNINGSTAR RATING+:
.. **** (VL/VUL)
.. **** (VA)
TOP TEN HOLDINGS (as of December 31, 2003)
% of
Assets
------
Sunoco, Inc. 1.6%
Northeast Utilities 1.5%
Bank Hawaii Corp. 1.5%
R.J. Reynolds Tobacco Holdings, Inc. 1.5%
HRPT Properties Trust 1.5%
LandAmerica Financial Group, Inc. 1.4%
Silicon Valley Bancshares 1.4%
Kos Pharmaceuticals, Inc. 1.4%
United Stationers, Inc. 1.2%
ITT Educational Services, Inc. 1.2%
AVERAGE ANNUAL TOTAL RETURNS*
Small/Mid Cap Russell 2500(TM)
CORE(SM) Fund Index
------------- ----------------
1 Year 45.15% 45.50%
3 Years 7.36 6.59
5 Years 9.31 9.40
Since Inception (5/1/98) 6.21 6.41
SECTOR/INDUSTRY ALLOCATION (as of December 31, 2003)
% of % of
Assets Assets
------ ------
Financials 20.84% Energy 5.13%
Information Technology 17.84% Consumer Staples 5.03%
Consumer Discretionary 16.97% Telecommunication Services 2.62%
Industrials 14.46% Materials 2.59%
Health Care 11.99% Utilities 2.53%
* 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. Small-company investing
entails special risks as outlined in the prospectus. The performance of the
fund on this page is reported net of Trust level charges (i.e. investment
management fees and operating expenses). It does not reflect expense and
charges of the applicable separate accounts and variable products, all of
which vary to a considerable extent and are described in your product
prospectus. 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 136 VL/VUL subaccounts and 299 VA subaccounts in the
Morningstar Mid Cap Blend category. This represents the Morningstar 3 year
rating.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
ASSETS
Long term investments at cost (including $11,397 of securities
loaned (Note B)) ................................................ $ 77,628
Net unrealized appreciation on investments ......................... 14,928
Short-term investments at value .................................... 13,035
--------
Total investments ............................................ 105,591
Cash ............................................................... 83
Futures Segregation ................................................ 84
Receivables for:
Dividends ....................................................... 78
--------
Total assets ....................................................... 105,836
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LIABILITIES
Payables for:
Fund shares purchased ........................................... 77
Futures contracts variation margin .............................. 20
Collateral for securities on loan ............................... 11,835
Other liabilities ............................................... 2
--------
Total liabilities .................................................. 11,934
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Net assets ......................................................... $ 93,902
========
Shares of beneficial interest outstanding .......................... 8,555
--------
Net asset value per share .......................................... $ 10.98
========
Composition of net assets:
Capital paid-in ................................................. $ 79,046
Accumulated net realized loss on investments,
futures and foreign currency transactions .................... (118)
Net unrealized appreciation of:
Investments .................................................. 14,928
Futures ...................................................... 46
--------
Net assets ......................................................... $ 93,902
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2003
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(000's Omitted)
INVESTMENT INCOME
Interest ...................................................... $ 17
Dividends ..................................................... 976
Securities lending ............................................ 66
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Total investment income ............................................. 1,059
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EXPENSES
Investment advisory fee ....................................... 695
Auditors fees ................................................. 8
Custodian fees ................................................ 72
Legal fees .................................................... 4
Printing & mailing fees ....................................... 5
Trustees' fees ................................................ 2
Other fees .................................................... 2
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Total expenses ...................................................... 788
Less expenses reimbursed ...................................... (27)
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Net expenses ........................................................ 761
-------
Net investment income ............................................... 298
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REALIZED AND UNREALIZED GAIN
Net realized gain on:
Investments ................................................... 7,364
Financial futures contracts ................................... 413
Change in unrealized appreciation on:
Investments ................................................... 18,452
Futures ....................................................... 48
-------
Net realized and unrealized gain .................................... 26,277
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Net increase in net assets resulting from
operations ....................................................... $26,575
=======
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 ................................................. $ 298 $ 229
Net realized gain (loss) .............................................. 7,777 (3,813)
Change in net unrealized appreciation (depreciation) .................. 18,500 (4,661)
-------- --------
Net increase (decrease) in net assets resulting from operations .... 26,575 (8,245)
Distributions to shareholders from:
Net investment income ................................................. (308) (227)
Realized gains ........................................................ (7,773)
Capital paid-in ....................................................... (2)
-------- --------
Decrease in net assets resulting from distributions ................ (8,081) (229)
From fund share transactions:
Proceeds from shares sold ............................................. 57,643 53,157
Distributions reinvested .............................................. 8,081 229
Payment for shares redeemed ........................................... (38,459) (43,215)
-------- --------
Increase in net assets from fund share transactions ................ 27,265 10,171
-------- --------
NET INCREASE IN NET ASSETS ............................................... 45,759 1,697
NET ASSETS
Beginning of Period ................................................... 48,143 46,446
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End of Period ......................................................... $ 93,902 $ 48,143
======== ========
Analysis of fund share transactions:
Sold .................................................................. 5,991 5,734
Reinvested ............................................................ 744 26
Redeemed .............................................................. (3,991) (4,680)
-------- --------
Net increase in fund shares outstanding .................................. 2,744 1,080
======== ========
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
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Selected data for each share of beneficial interest outstanding throughout the
period indicated:
Small Mid Cap CORE Fund
-----------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------
2003 2002 2001 2000 1999
------- ------- ------- ------- -------
Net Assets Value at Beginning of Period ..................... $ 8.28 $ 9.82 $ 9.82 $ 9.82 $ 9.02
Income from Investment Operations:
Net Investment Income .................................... 0.04 0.04 0.05 0.05 0.02
Net Realized and Unrealized Gain (Loss) on
Investments(a) ........................................ 3.69 (1.54) 0.39 1.77
------- ------- ------- ------- -------
Total From Investment Operations ......................... 3.73 (1.50) 0.05 0.44 1.79
Less Distributions: .........................................
Distribution from Net Investment Income .................. (0.04) (0.04) (0.05) (0.05) (0.03)
Distribution from Net Realized Gains on Investments ...... (0.99) (0.32) (0.96)
Distribution from Excess of Net Investment Income/Gains... (0.05)
Distribution from Capital Paid-in ........................ (0.02)
------- ------- ------- ------- -------
Total Distributions ...................................... (1.03) (0.04) (0.05) (0.44) (0.99)
------- ------- ------- ------- -------
Net Assets Value at End of Period ........................... $ 10.98 $ 8.28 $ 9.82 $ 9.82 $ 9.82
======= ======= ======= ======= =======
Total Investment Return(b) .................................. 45.15% (15.19)% 0.53% 4.63% 20.54%
Ratios/Supplemental Data:
Ratio of Operating Expenses to Average Net Assets ........ 1.15%(c) 0.96%(c) 0.90%(c) 0.90%(c) 0.94%(c)
Ratio of Net Investment Income to Average Net Assets ..... 0.45% 0.50% 0.52% 0.56% 0.30%
Portfolio Turnover Rate .................................. 125.00% 125.11% 96.88% 94.78% 109.12%
Net Assets End of Period (000s Omitted) ..................... $93,902 $48,143 $46,446 $21,636 $ 8,248
(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) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made the expense ratio would have been 1.19%, 1.12%, 1.15%, 1.23%, and
2.24%, for the years ended December 31, 2003, 2002, 2001, 2000, and 1999,
respectively.
SCHEDULE OF INVESTMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
-------------- -------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 1.3%
Curtiss Wright Corp..................................... 13,000 $ 585
Engineered Support Systems, Inc. * ..................... 7,200 396
Esterline Technologies Corp. * ......................... 2,800 75
Kaman Corp. - Cl. A .................................... 4,000 51
Sequa Corp. - Cl. A .................................... 2,000 98
------
1,205
Airlines - 0.3%
Alaska Air Group, Inc. * ............................... 7,900 216
America West Holdings Corp. - Cl. B * .................. 6,700 83
------
299
Auto Components - 0.7%
Autoliv, Inc. .......................................... 11,500 433
Dura Automotive Systems, Inc. * ........................ 6,300 81
Goodyear Tire & Rubber Co. * ........................... 12,500 98
------
612
Automobiles - 0.3%
Lithia Motors, Inc. - Cl. A * .......................... 9,400 237
Banks - 6.2%
Associated Banc-Corp. .................................. 7,550 322
BancorpSouth, Inc. ..................................... 3,175 75
Bank Hawaii Corp. ...................................... 32,800 1,384
Brookline Bancorp, Inc. ................................ 5,600 86
City National Corp. .................................... 1,400 87
Commerce Bancshares, Inc. .............................. 6,173 303
Community Bank Systems, Inc. * ......................... 1,700 83
Corus Bankshares, Inc. ................................. 4,600 145
First Citizens BancShares, Inc. - Cl. A ................ 1,200 146
Flagstar Bancorp, Inc. ................................. 19,300 413
Hancock Holding Co. .................................... 1,550 84
Hibernia Corp. - Cl. A ................................. 14,700 345
Independence Community Bank Corp. ...................... 2,200 79
IndyMac Mortgage Holdings, Inc. ........................ 5,900 176
International Bancshares Corp. ......................... 2,200 104
Omega Financial Corp. .................................. 600 23
PFF Bancorp, Inc. * .................................... 7,080 257
R&G Financial Corp. - Cl. B ............................ 6,800 271
Silicon Valley Bancshares * ............................ 35,700 1,288
Texas Regional Bancshares, Inc. ........................ 1,750 65
Trustmark Corp. ........................................ 3,200 94
United Community Financial Corp. ....................... 1,900 22
------
5,852
Biotechnology - 3.5%
Affymetrix, Inc. * ..................................... 32,900 810
Applera Corp. - Celera Genomics Group * ................ 6,400 89
Gene Logic, Inc. * ..................................... 17,700 92
General Probe, Inc. * .................................. 7,800 284
IDEXX Laboratories, Inc. * ............................. 14,300 662
Invitrogen Corp. * ..................................... 3,000 210
Neurocrine Biosciences, Inc. * ......................... 13,900 758
Biotechnology - Continued
Vicuron Pharmaceuticals, Inc. * ........................ 22,300 $ 416
------
3,321
Building Products - 1.3%
Griffon Corp. * ........................................ 19,300 391
Lennox International, Inc. ............................. 8,300 139
Universal Forest Products, Inc. ........................ 6,900 222
USG Corp. .............................................. 13,300 220
York International Corp. ............................... 7,900 291
------
1,263
Chemicals - 0.5%
Arch Chemicals, Inc. ................................... 4,500 115
Central Garden & Pet Co. ............................... 4,200 118
Lubrizol Corp. ......................................... 2,300 75
PolyOne Corp. .......................................... 18,800 120
------
428
Commercial Services & Supplies - 9.1%
Arbitron, Inc. * ....................................... 20,000 834
CDI Corp. * ............................................ 2,600 85
Consolidated Graphics, Inc. * .......................... 3,000 95
Convergys Corp. * ...................................... 54,900 959
CSG Systems International, Inc. * ...................... 27,500 343
Decode Genetics, Inc. .................................. 20,100 165
Deluxe Corp. * ......................................... 22,200 918
Factset Research Systems, Inc. ......................... 7,400 283
Gabelli Asset Management, Inc. - Cl. A * ............... 9,600 382
Ikon Office Solutions, Inc. * .......................... 11,500 136
ITT Educational Services, Inc. * ....................... 23,000 1,080
Memberworks, Inc. ...................................... 4,400 120
MPS Group, Inc. * ...................................... 28,100 263
NCO Group, Inc. * ...................................... 2,800 64
Pre-Paid Legal Services, Inc. * ........................ 14,900 389
Ruddick Corp. .......................................... 5,000 89
Standard Register Co. .................................. 3,000 50
StarTek, Inc. * ........................................ 2,200 90
Steelcase, Inc. - Cl. A ................................ 6,400 92
TeleTech Holdings, Inc. * .............................. 12,000 136
Unifirst Corp. ......................................... 4,900 116
United Stationers, Inc. * .............................. 28,200 1,154
Ventana Medical Systems, Inc ........................... 4,700 185
Watsco, Inc. ........................................... 15,500 352
West Corp. * ........................................... 8,000 186
------
8,566
Communications Equipment - 4.2%
Advanced Fibre Communications, Inc. * .................. 22,000 443
Aspect Communications Corp. * .......................... 42,200 665
Audiovox Corp. - Cl. A * ............................... 31,100 399
Avaya, Inc. * .......................................... 76,200 986
Brocade Communications Systems, Inc. * ................. 16,600 96
Computer Network Technology * .......................... 20,700 197
Metro One Telecom, Inc. * .............................. 24,500 64
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Communications Equipment - Continued
Omnicell, Inc. ........................................... 4,600 $ 75
Plantronics, Inc. * ...................................... 8,900 291
Scientific-Atlanta, Inc. * ............................... 27,300 745
------
3,961
Computers & Peripherals - 2.4%
Electronics for Imaging, Inc. ............................ 3,600 94
Gateway, Inc. * .......................................... 18,200 84
InFocus Corp. * .......................................... 18,200 176
Maxtor Corp. * ........................................... 15,300 170
NCR Corp. * .............................................. 14,700 570
Safeguard Scientifics, Inc. * ............................ 20,200 81
SanDisk Corp. * .......................................... 12,100 740
Storage Technology Corp. * ............................... 11,700 301
------
2,216
Construction & Engineering - 0.8%
CCC Information Services Group * ......................... 5,000 85
Quanta Services, Inc. * .................................. 21,900 160
Spherion Corporation * ................................... 26,400 258
Washington Group International, Inc. * ................... 7,300 248
------
751
Construction Materials - 1.0%
AMCOL International Corp. ................................ 9,100 185
Carlisle Cos., Inc. ...................................... 1,800 109
Charles River Associates, Inc. * ......................... 2,300 74
Teledyne Technologies, Inc. * ............................ 5,400 102
USEC, Inc. ............................................... 11,300 95
WSFS Financial Corp. * ................................... 7,700 345
------
910
Containers & Packaging - 0.4%
Chesapeake Corp. ......................................... 8,800 233
Owens-Illinois, Inc. * ................................... 13,600 162
------
395
Distributors - 0.6%
Handleman Co. * .......................................... 28,500 585
Diversified Financials - 4.0%
AmeriCredit Corp. * ...................................... 33,200 529
BlackRock, Inc. * ........................................ 11,300 600
Doral Financial Corp. .................................... 24,600 794
Friedman Billings Ramsey Group - Cl. A ................... 10,300 238
LaBranche & Co., Inc. * .................................. 9,000 105
New Century Financial Corp. .............................. 25,400 1,008
Novastar Financial, Inc. ................................. 2,000 86
Nuveen Investments, Inc. - Cl. A ......................... 13,600 362
------
3,722
Diversified Telecommunication Services - 1.1%
IDT Corp. * .............................................. 25,500 565
Time Warner Telecom, Inc. - Cl. A * ...................... 43,500 440
------
1,005
Electric Utilities - 0.8%
Avista Corp. ............................................. 18,100 $ 328
Duquesne Light Holdings, Inc. ............................ 5,300 97
El Paso Electric Co. * ................................... 6,700 89
Great Plains Energy, Inc. ................................ 2,600 83
PNM Resources, Inc. ...................................... 1,600 45
Puget Energy, Inc. ....................................... 3,700 88
------
730
Electric/Gas - 1.5%
Northeast Utilities ...................................... 69,800 1,408
Electrical Equipment - 0.1%
The Genlyte Corp. * ...................................... 1,600 93
Electronic Equipment & Instruments - 3.5%
Anixter International, Inc. * ............................ 12,900 334
Artesyn Technologies, Inc. ............................... 48,100 410
Avnet, Inc. .............................................. 45,344 982
Belden, Inc. * ........................................... 3,200 67
Cypress Semiconductor Corp. * ............................ 13,900 297
Franklin Electric Co., Inc. .............................. 1,500 91
Harman International Industries, Inc. * .................. 1,400 104
Methode Electronics, Inc. - Cl. A ........................ 5,300 65
PerkinElmer, Inc. * ...................................... 5,300 90
Sanmina Corp. * .......................................... 69,000 870
------
3,310
Energy Equipment & Services - 1.0%
Tetra Technologies, Inc. * ............................... 4,500 109
Universal Compression Holdings, Inc. * ................... 15,600 408
Veritas DGC, Inc. * ...................................... 43,600 457
------
974
Food & Drug Retailing - 1.9%
Charming Shoppes, Inc. * ................................. 44,300 239
Longs Drug Stores Corp. .................................. 7,500 186
Nash Finch Co. ........................................... 9,900 221
Pathmark Stores, Inc. * .................................. 8,300 63
SuperValu, Inc. * ........................................ 32,700 935
The Great Atlantic & Pacific Tea Co., Inc. * ............. 12,300 103
------
1,747
Food Products - 1.2%
Flowers Foods, Inc. * .................................... 6,200 160
Pilgrims Pride Corp. - Cl. B ............................. 9,800 160
Ralcorp Holdings, Inc. * ................................. 6,700 210
USANA Health Sciences .................................... 19,700 603
------
1,133
Gas Utilities - 0.1%
Southwest Gas Corp. ...................................... 4,900 110
Health Care Equipment & Supplies - 1.1%
Advanced Medium Optics, Inc. * ........................... 15,600 307
Alaris Medical, Inc. * ................................... 13,300 202
Cytyc Corp. * ............................................ 9,600 132
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Health Care Equipment & Supplies - Continued
Dade Behring Holdings, Inc. .............................. 8,300 $ 297
Haemonetics Corp. * ...................................... 4,400 105
------
1,043
Health Care Providers & Services - 3.6%
Apria Healthcare Group, Inc. * ........................... 9,000 256
eResearch Technology, Inc. * ............................. 21,900 557
Humana, Inc. * ........................................... 37,400 855
Kindred Healthcare, Inc. * ............................... 6,000 312
Manor Care, Inc. * ....................................... 2,900 100
Select Medium Corp. * .................................... 20,800 339
U.S. Oncology, Inc. * .................................... 91,400 983
------
3,402
Home Equity Loan - 0.5%
CompuCredit Corp. * ...................................... 23,800 506
Hotels Restaurants & Leisure - 1.6%
CBRL Group, Inc. * ....................................... 8,200 314
Choice Hotels, Inc. ...................................... 15,700 553
Dave & Busters, Inc. ..................................... 6,500 82
P.F. Chang's China Bistro, Inc. * ........................ 2,900 148
Papa John's International, Inc. * ........................ 7,000 234
Park Place Entertainment Corp. * ......................... 12,400 134
Ryan's Family Steak Houses, Inc. * ....................... 4,200 64
------
1,529
Household Durables - 0.7%
NVR, Inc. * .............................................. 1,350 629
Industrial Conglomerates - 0.7%
Enpro Industries, Inc. * ................................. 12,900 180
Regal Entertainment Group - Cl. A ........................ 23,500 482
------
662
Insurance - 3.2%
American Financial Group, Inc. ........................... 7,400 196
American Medical Security Group, Inc. * .................. 3,500 78
American National Insurance Co. .......................... 1,000 84
Amerus Group Co. * ....................................... 2,300 80
LandAmerica Financial Group, Inc. ........................ 25,000 1,307
National Western Life Insurance Co. * .................... 900 139
Protective Life Corp. .................................... 8,900 301
Stewart Information Services Corp. * ..................... 19,100 775
The Midland Co. .......................................... 1,800 43
------
3,003
Internet & Catalog Retail - 0.1%
Priceline.com, Inc. * .................................... 7,300 131
Internet Software & Services - 1.3%
EarthLink, Inc. * ........................................ 23,900 239
eCollege.com * ........................................... 6,100 113
Internet Security System, Inc. * ......................... 19,700 371
J2 Global Communications, Inc. * ......................... 2,600 64
United Online, Inc. * .................................... 23,000 $ 386
------
1,173
IT Consulting & Services - 0.3%
UNOVA, Inc. * ............................................ 12,000 275
Leisure Equipment & Products - 0.2%
Arctic Cat, Inc. ......................................... 3,600 89
K2, Inc. ................................................. 5,600 85
------
174
Machinery - 1.7%
Applied Industrial Technologies, Inc. .................... 13,400 320
Briggs & Stratton Corp. .................................. 3,600 242
Cummins Engine Co., Inc. ................................. 9,400 460
NACCO Industries, Inc. - Cl. A ........................... 5,900 528
Stewart & Stevenson Services, Inc. ....................... 1,200 17
------
1,567
Marine - 0.2%
Overseas Shipholding Group, Inc. ......................... 5,300 180
Media - 3.2%
Advo, Inc. * ............................................. 2,700 86
Cox Radio, Inc. - Cl. A * ................................ 31,400 792
Hearst-Argyle Television, Inc. * ......................... 38,200 1,053
Insight Communications Company, Inc. * ................... 9,900 102
McClatchy Newspapers, Inc. - Cl. A ....................... 1,600 110
Netflix Common, Inc. ..................................... 2,600 142
Pulitzer, Inc. ........................................... 11,100 600
World Wrestling Federation Entertainment, Inc. * ......... 9,400 123
------
3,008
Metals & Mining - 1.6%
Carpenter Technology Corp. * ............................. 10,400 307
Coeur D'Alene Mines Corp. ................................ 16,500 95
Commercial Metals Co. .................................... 7,600 231
Reliance Steel & Aluminum Co. * .......................... 3,000 100
Ryerson Tull, Inc. ....................................... 17,300 198
Schnitzer Steel Industries, Inc. - Cl. A ................. 9,600 581
------
1,512
Multiline Retail - 3.1%
Big Lots, Inc. * ......................................... 9,100 129
Footstar, Inc. * ......................................... 15,000 58
Insight Enterprises, Inc. * .............................. 19,600 368
Saks, Inc. * ............................................. 62,600 942
Shopko Stores, Inc. * .................................... 33,500 511
Stage Stores, Inc. * ..................................... 21,300 594
Zale Corp. * ............................................. 5,900 314
------
2,916
Oil & Gas - 3.9%
Houston Exploration Co. * ................................ 10,500 383
Oneok, Inc. .............................................. 4,200 93
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Oil & Gas - Continued
Patina Oil & Gas Corp. .................................. 13,275 $ 650
Stone Energy Corp. * .................................... 2,700 115
Sunoco, Inc. * .......................................... 29,400 1,504
Tesoro Petroleum Corp. * ................................ 49,800 725
Vintage Petroleum, Inc. ................................. 17,700 213
-------
3,683
Paper & Forest Products - 0.8%
Boise Cascade Corp. * ................................... 24,000 789
Personal Products - 0.6%
Nu Skin Enterprises, Inc. - Cl. A * ..................... 26,300 450
Perrigo Co. * ........................................... 6,000 94
-------
544
Pharmaceuticals - 3.0%
American Pharmaceutical Partners, Inc. *................. 18,650 627
Endo Pharmaceuticals Holdings * ......................... 17,800 343
Enzon, Inc. * ........................................... 18,000 216
Kos Pharmaceuticals, Inc. * ............................. 29,400 1,265
LANNETT Co., Inc. * ..................................... 3,550 60
Pharmaceutical Resources, Inc. * ........................ 4,700 306
-------
2,817
Real Estate Investment Trust - 5.1%
AMLI Residential Properties Trust ....................... 2,100 56
Arden Realty Group, Inc. ................................ 35,400 1,074
CarrAmerica Realty Corp. ................................ 2,900 86
Commercial Net Lease Realty, Inc. ....................... 4,900 87
Entertainment Properties Trust .......................... 6,700 233
FelCor Lodging Trust, Inc. .............................. 8,500 94
Glenborough Realty Trust, Inc. .......................... 4,600 92
Healthcare Realty Trust, Inc. ........................... 4,300 154
HRPT Properties Trust ................................... 133,400 1,346
LTC Properties .......................................... 10,500 155
Mack-Cali Realty LP * ................................... 20,400 849
National Health, Inc. ................................... 5,000 124
PAN Pacific Retail Properties, Inc. ..................... 2,200 105
Regency Centers Corp. ................................... 2,100 84
Senior Housing Trust .................................... 12,100 208
-------
4,747
Real Estate Operations - 1.1%
La Quinta Corp. - Cl. B ................................. 53,700 344
LNR Property Corp. ...................................... 10,400 515
Redwood Trust, Inc. ..................................... 4,300 219
-------
1,078
Road & Rail - 1.3%
Florida East Coast Industries, Inc. ..................... 2,900 96
Hunt Jersey Transport Services, Inc. .................... 17,600 475
Landstar Systems, Inc. * ................................ 1,600 61
Ryder System, Inc. ...................................... 15,000 512
Werner Enterprises, Inc. * .............................. 4,800 94
-------
1,238
Semiconductor Equipment & Products - 2.5%
Amkor Technologies, Inc. * .............................. 5,900 $ 107
Atmel Corp. * ........................................... 29,600 178
International Rectifier Corp. * ......................... 2,200 109
LSI Logic Corp. * ....................................... 85,800 761
Photronics, Inc. * ...................................... 23,000 458
Silicon Laboratories, Inc. * ............................ 16,600 718
-------
2,331
Software - 2.9%
Ascential Software Corp. ................................ 10,800 280
FileNet Corp. * ......................................... 12,100 328
Group 1 Software, Inc. .................................. 13,600 240
Gtech Holdings Corp. .................................... 13,100 648
Keane, Inc. * ........................................... 14,300 209
Kronos, Inc. * .......................................... 7,050 279
QAD, Inc. * ............................................. 7,100 87
SeaChange International, Inc. ........................... 11,500 177
Sohu.com, Inc ........................................... 4,100 123
Sybase, Inc. * .......................................... 6,200 128
Tradestation Group, Inc. ................................ 20,300 180
-------
2,679
Specialty Retail - 2.8%
Blockbuster, Inc. - Cl. A ............................... 33,400 599
Brookstone, Inc. * ...................................... 4,800 102
Hughes Supply, Inc. ..................................... 2,100 104
Movie Gallery, Inc. * ................................... 9,900 185
Petco Animal Supplies, Inc. * ........................... 25,900 789
Select Comfort Corp. * .................................. 14,000 347
Sonic Automotive, Inc. - Cl. A * ........................ 4,800 110
The Finish Line - Cl. A * ............................... 13,900 417
-------
2,653
Textiles & Apparel - 0.7%
Brown Shoe Co., Inc. * .................................. 2,700 103
K-Swiss, Inc. - Cl. A ................................... 9,400 226
Unifi, Inc. * ........................................... 45,000 290
-------
619
Tobacco - 1.5%
R.J. Reynolds Tobacco Holdings, Inc. .................... 23,400 1,361
Trading Companies & Distributors - 0.1%
ACETO Corp. ............................................. 4,700 120
Wireless Telecommunications Services - 1.4%
Telephone and Data Systems, Inc. ........................ 10,800 676
United States Cellular Corp. * .......................... 19,100 678
-------
1,354
-------
TOTAL COMMON STOCK- .................................. 98.6% 92,556
SCHEDULE OF INVESTMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
SMALL/MID CAP CORE FUND
Par Market
Name of Issuer Value Value
-------------- ------- --------
(000's) (000's)
INVESTMENT COMPANIES HELD
AS COLLATERAL ON LOANED
SECURITIES - 12.5%
State Street Navigator Securities Lending
Portfolio .......................................... $11,835 $ 11,835
SHORT-TERM INVESTMENTS - 1.3%
Investment in joint repurchase agreement with
Goldman Sachs & Co., 0.995% due 01/02/04 ........... 1,200 1,200
------- --------
TOTAL INVESTMENTS- ........................... 112.4% 105,591
Payables, less cash and receivables- ............ (12.4)% (11,689)
------- --------
NET ASSETS- ............................... 100.0% $ 93,902
======= ========
* Non-income producing security.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Small/Mid Cap CORE 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: Common stocks and other such securities traded on
national exchanges are normally valued on the basis of closing prices.
Securities traded in the over-the-counter market and securities with no sales on
the day of valuation are normally valued at their last available bid price.
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 repurchase agreements: The Fund, along with other registered
investment companies having a management contract with Goldman Sachs Asset
Management (GSAM), may participate in a joint repurchase agreement pursuant to
an exemptive order issued by the Securities and Exchange Commission. Aggregate
cash balances are invested in one or more repurchase agreements, whose
underlying securities are obligations of the U.S. Government and/or its
agencies. The Fund's custodian bank receives delivery of the underlying
securities for the joint repurchase agreement on the Fund's behalf. GSAM is
responsible for ensuring that the agreement is fully collateralized at all
times.
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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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 each 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 Expenses
- --------------------------- ---------------- -----------------
$328 1.77% $--
Securities lending: The Fund has entered into an agreement with SSBT to
lend its securities to certain qualified brokers who pay the Fund's negotiated
lender fees. This loan is collateralized at all times with cash or securities
with a market value at least equal to the market value of the securities on
loan. Cash collateral is invested in a short-term instrument. As with other
extensions of credit, the Fund may bear the risk of delay of the loaned
securities in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. At December 31, 2003, the market
value of the securities loaned and the market value of the collateral for the
Fund was as follows:
Value of Securities Loaned Value of Collateral
- -------------------------- -------------------
$11,397 $11,835
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, open financial
futures contracts for the Fund were follows:
Open Expiration Unrealized
Contracts Position Month Gain
--------- -------- ---------- ----------
Russell E Mini 2000 Index 30 Long March 04 $46
===
At December 31, 2003, the Fund had deposited $84 in cash in segregated
accounts to cover initial margin requirements on open financial futures
contracts.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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. At December 31, 2003, the Fund had
no open forward foreign currency contracts.
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 no capital loss carryforwards on a
tax basis to be applied against any future taxable gains.
In addition, from the period November 1, 2003 through December 31, 2003,
the Fund incurred no net realized capital losses.
Dividends, Interest and Distributions: Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis. 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:
Excess Over
First $100 Million $100 Million
- ------------------ ------------
1.05% 1.00%
In the event that normal operating expenses of the Fund, exclusive of
investment advisory fees, taxes, interest,
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES--Continued
brokerage commissions and extraordinary expenses, shall exceed 0.10% of the
Fund's daily net asset value, John Han-cock 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 $27 to the Fund.
John Hancock has entered into a Sub-Advisory Agreement with Goldman Sachs
Asset Management, with respect to the Fund. Goldman Sachs Asset Management 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.
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
- --------- --------------------
$100,712 $81,381
The identified cost of investments owned by the Fund (including earned discount
on corporate short-term notes, commercial paper and collateral for securities
lending) 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
- ---------- ------------ ------------ --------------
$90,735 $15,922 $(1,066) $14,856
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. 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. These differences primarily
relate to certain securities sold at a loss and to certain distributions
received from investments in Real Estate Investment Trust. Additionally, as a
result, net investment income (loss) and net realized gain (loss) on
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2003
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of 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
- ------------- ------------- ------------- --------------
$-- $-- $-- $14,856
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 $6,248 $594 $1,239
2002 226 -- 2
Included in the Fund's 2003 distributions from ordinary income is $2,609 in
excess of investment company taxable income, which in accordance with applicable
US tax law, is taxable to shareholders as ordinary income distributions.
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
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
Disinterested Trustees--Continued
Positions Held Principal Occupation(s)
Name, Address and Age With Trust During Past Five Years
- -------------------------------- --------------------- --------------------------------
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
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, Senior Vice President, Signator
John Hancock Place President 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 Compliance Specialist, John
John Hancock Place Officer 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
- --------------------------- ------------------------ ------------------------------------
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
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 Small/Mid Cap CORE 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
Small/Mid Cap CORE 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.
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