UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04490
JOHN HANCOCK VARIABLE SERIES TRUST I
(Exact name of Registrant as specified in charter)
JOHN HANCOCK PLACE
INSURANCE AND SEPARATE ACCOUNTS DEPT. - LAW SECTOR
P.O. BOX 111
BOSTON, MASSACHUSETTS 02117-0111
(Address of principal executive offices)
RONALD J. BOCAGE, ESQ.
JOHN HANCOCK PLACE
INSURANCE AND SEPARATE ACCOUNTS DEPT. - LAW SECTOR
P.O. BOX 111
BOSTON, MASSACHUSETTS 02117-0111
(Name and Address of Agent for Service)
COPIES TO:
THOMAS C. LAUERMAN, ESQ.
FOLEY & LARDNER
3000 K STREET
WASHINGTON, D.C. 20007
Registrant's telephone number, including area code: (617) 572-6000
Date of fiscal year end: 12/31/2004
Date of reporting period: 12/31/2004
ITEM 1. REPORTS TO STOCKHOLDERS.
Annual Report
for John Hancock Variable Series Trust I
December 31, 2004
Not FDIC Insured Not Bank Guaranteed May Lose Value
Not a Deposit Not Insured by Any Federal Government Agency
[LOGO] John Hancock
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Active Bond Fund
John Hancock Advisers, LLC Greene/Matthews
Declaration Management & Research, LLC James Shallcross
Pacific Investment Management Company LLC William H. Gross
- --------------------------------------------------------------------------------
.. The Fund employs a multi-manager approach with three sub-advisers
independently managing a portion of the Fund and each using distinct
investment strategies.
.. John Hancock Advisers, LLC uses proprietary research to identify
undervalued sectors and securities with an emphasis on U.S. credit sectors
including high yield.
.. Declaration Management & Research, LLC uses proprietary research and
quantitative tools in a risk controlled, benchmark-relative approach with
an emphasis on higher quality U.S. investment grade sectors.
.. Pacific Investment Management Company LLC uses proprietary research,
economic analysis and quantitative tools seeking to add value across all
key decisions (duration, sector, security and derivatives) and
opportunistically invests broadly across key fixed income sectors including
high yield and non-U.S. sectors.
Fund Commentary
Overall Performance: For the year 2004, the Active Bond Fund returned +4.75%,
outperforming the +4.34% return of the Lehman Aggregate Bond Index.
John Hancock Advisers, LLC
Environment: Outperformance can be primarily attributed to the portfolio's
overweighting in spread product and underweighting in Treasuries relative to the
index. The portfolio's bias toward corporate bonds, both investment grade and
non-investment grade, and mortgage-backed securities helped relative
performance.
Outlook: We anticipate the Federal Reserve Board will continue raising interest
rates during the first half of 2005. Expecting rising interest rates and a
flatter yield curve, we anticipate maintaining portfolio durations below their
respective benchmarks and positioning the maturity structure to benefit from the
flattening.
We will continue to upgrade the credit quality of the portfolio, focusing on
crossover credits where we anticipate a ratings migration up to investment
grade. We expect to increase our use of floating rate notes as both a defensive
credit play and for yield curve positioning. We are positive on private label
AAA Hybrid Adjustable Rate Mortgages as they offer a significant yield advantage
for a high quality asset. We are currently adding TIPs, as breakeven spreads
between nominals have narrowed.
Declaration Management & Research, LLC
Environment: Corporate bonds were the best performers. The portfolio remained
overweight in corporate credit, and benefited from having a high concentration
in lower rated bonds. Larger weightings in media/cable, telecommunications,
energy, utilities and consumer cyclicals added to performance. Asset Backed
Securities and Commercial Mortgage Backed Securities had strong performance. We
remained overweight and benefited from owning a higher concentration of home
equity bonds.
Outlook: The economy is poised for gradual growth, but there are lingering
issues. The Fed is still in tightening mode. Oil prices remain high, but so far
this has been moderately absorbed by consumers and some industries. The falling
dollar remains a concern. Interest rates will probably trend higher. Corporate
bonds should still benefit from improving fundamentals and positive technicals,
but profit taking could lead to short-term spread widening. The mortgage market
looks relatively expensive and unattractive.
Pacific Investment Management Company LLC
Environment: For the year, bonds displayed unexpected returns, as all fixed
income sectors showed gains. The yield on the 10-year Treasury note fell by 3
basis points, to 4.22% by the end of the year. The Lehman Brothers Aggregate
Bond Index, a widely used index for the high-grade bond market, returned 4.34
percent for the year despite several major headwinds; which included expanding
U.S. fiscal deficits, a falling U.S. dollar and market perceptions, as the year
began, that interest rates were bound to rise from levels near historic lows.
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Active Bond Fund
John Hancock Advisers, LLC Greene/Matthews
Declaration Management & Research, LLC James Shallcross
Pacific Investment Management Company LLC William H. Gross
- --------------------------------------------------------------------------------
Besides these headwinds, fixed income markets had to weather a tightening cycle
by the Federal Reserve that began in June. The central bank raised the federal
funds rate five times during the year for a total of 125 basis points. The
latest move came on December 14, when the Fed hiked rates by 25 basis points to
2.25 percent. Despite this tightening cycle, bond investors were encouraged by
statements from the Fed that it would continue to move at a measured pace.
Investors also understood that the Fed was lifting rates from unusually low
levels that had been set to ward off deflation.
Outlook: Global growth should slow this year as the U.S. recovery cools and
Europe and Japan prove unable to pick up the slack. Higher unit labor costs and
a weaker dollar should create inflationary pressure, but lingering overcapacity
worldwide may limit this effect over a cyclical time frame. The yield on the
benchmark 10-year Treasury should range between 4 and 4 1/2%, with the risk of a
25 basis point breakout on the high side. We should remain defensive and look
for value in an environment where interest rates are low and core bond sectors
have continued to richen. Tactical flexibility will be critical in this setting,
such as shifting between U.S. and non-U.S. bonds or between market sub-sectors
within the U.S.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 12/31/94 (10-Year Period)
Lehman Brothers
Active Bond Fund Aggregate Bond Index
---------------- --------------------
Dec-94 $10,000 $1,0000
Jan-95 10,190 10,198
Feb-95 10,434 10,441
Mar-95 10,515 10,504
Apr-95 10,668 10,651
May-95 11,126 11,064
Jun-95 11,221 11,144
Jul-95 11,173 11,120
Aug-95 11,302 11,254
Sep-95 11,416 11,364
Oct-95 11,602 11,511
Nov-95 11,775 11,684
Dec-95 11,954 11,848
Jan-96 12,025 11,926
Feb-96 11,793 11,718
Mar-96 11,722 11,636
Apr-96 11,663 11,571
May-96 11,660 11,548
Jun-96 11,778 11,703
Jul-96 11,816 11,734
Aug-96 11,824 11,714
Sep-96 12,038 11,918
Oct-96 12,294 12,183
Nov-96 12,487 12,391
Dec-96 12,445 12,276
Jan-97 12,491 12,314
Feb-97 12,550 12,345
Mar-97 12,418 12,208
Apr-97 12,587 12,391
May-97 12,729 12,509
Jun-97 12,895 12,657
Jul-97 13,282 12,999
Aug-97 13,152 12,889
Sep-97 13,365 13,079
Oct-97 13,480 13,269
Nov-97 13,555 13,330
Dec-97 13,703 13,465
Jan-98 13,891 13,637
Feb-98 13,879 13,626
Mar-98 13,958 13,672
Apr-98 14,026 13,744
May-98 14,151 13,874
Jun-98 14,286 13,992
Jul-98 14,313 14,021
Aug-98 14,454 14,250
Sep-98 14,785 14,583
Oct-98 14,647 14,506
Nov-98 14,788 14,589
Dec-98 14,831 14,633
Jan-99 14,967 14,736
Feb-99 14,661 14,479
Mar-99 14,765 14,558
Apr-99 14,811 14,605
May-99 14,651 14,476
Jun-99 14,615 14,430
Jul-99 14,585 14,369
Aug-99 14,556 14,362
Sep-99 14,686 14,529
Oct-99 14,716 14,583
Nov-99 14,768 14,581
Dec-99 14,692 14,511
Jan-00 14,630 14,463
Feb-00 14,795 14,638
Mar-00 14,944 14,831
Apr-00 14,887 14,788
May-00 14,874 14,781
Jun-00 15,186 15,088
Jul-00 15,307 15,226
Aug-00 15,540 15,447
Sep-00 15,627 15,544
Oct-00 15,710 15,646
Nov-00 15,919 15,903
Dec-00 16,227 16,199
Jan-01 16,493 16,463
Feb-01 16,630 16,606
Mar-01 16,707 16,689
Apr-01 16,648 16,619
May-01 16,763 16,719
Jun-01 16,815 16,782
Jul-01 17,195 17,158
Aug-01 17,368 17,356
Sep-01 17,364 17,557
Oct-01 17,690 17,924
Nov-01 17,555 17,676
Dec-01 17,441 17,563
Jan-02 17,552 17,706
Feb-02 17,661 17,877
Mar-02 17,436 17,581
Apr-02 17,715 17,922
May-02 17,820 18,074
Jun-02 17,763 18,231
Jul-02 17,732 18,452
Aug-02 18,073 18,764
Sep-02 18,300 19,068
Oct-02 18,163 18,980
Nov-02 18,329 18,974
Dec-02 18,706 19,367
Jan-03 18,763 19,384
Feb-03 19,049 19,652
Mar-03 19,106 19,636
Apr-03 19,354 19,799
May-03 19,697 20,167
Jun-03 19,717 20,127
Jul-03 19,048 19,451
Aug-03 19,191 19,579
Sep-03 19,751 20,098
Oct-03 19,628 19,911
Nov-03 19,714 19,959
Dec-03 19,917 20,162
Jan-04 20,100 20,324
Feb-04 20,291 20,543
Mar-04 20,462 20,697
Apr-04 19,983 20,159
May-04 19,869 20,079
Jun-04 19,958 20,193
Jul-04 20,168 20,393
Aug-04 20,538 20,782
Sep-04 20,583 20,839
Oct-04 20,769 21,014
Nov-04 20,694 20,846
Dec-04 20,870 21,037
Value on 12/31/04:
- ------------------
$20,870 Active Bond Fund
$21,037 Lehman Brothers Aggregate Bond Index
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Federal National Mortgage Assoc. 22.0%
U.S. Treasury 12.0%
Federal Home Loan Mortgage Corp. 8.7%
Government National Mortgage Assoc. 5.2%
CWMBS, Inc. 3.4%
Bear Stearns 2.5%
Federal Home Loan Bank 1.2%
Bank America Funding Corp. 1.1%
Credit Suisse First Boston 0.9%
Deutsche Telekom International 0.9%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Lehman Brothers
Active Bond Aggregate Bond
Fund Index
----------- ---------------
1 Year 4.75% 4.34%
3 Years 6.17 6.20
5 Years 7.27 7.71
10 Years 7.63 7.72
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND COMPOSITION (as of December 31, 2004)
% of
Credit Quality Assets
- -------------- ------
Government 48.92%
AAA 17.30%
AA 1.31%
A 6.51%
BBB 18.50%
BB 6.25%
B 1.26%
Below B 0.35%
Not rated -0.39%
Weighted Average Yield 4.61%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions, and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Active Bond Fund
John Hancock Advisers, LLC Greene/Matthews
Declaration Management & Research, LLC James Shallcross
Pacific Investment Management Company LLC William H. Gross
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As an Active Bond Fund shareholder, you pay ongoing expenses, such as management
fees; distribution fees (12b-1); and other expenses. Using the information
below, you can estimate how these expenses affect your investment and compare
them with the expenses of other funds. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,045.70
Expense paid per $1,000* $ 3.60
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,021.61
Expense paid per $1,000* $ 3.56
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Active Bond Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $101,608 of securities
loaned (Note B)) .............................................. $ 958,946
Net unrealized appreciation of investments ....................... 13,517
Short-term investments at value .................................. 180,377
----------
Total investments .......................................... 1,152,840
Cash ............................................................. 322
Receivable for:
Investments sold .............................................. 39,427
Interest ...................................................... 9,216
Unrealized appreciation in forward currency contracts ......... 334
Other receivables ............................................. 57
----------
Total assets ..................................................... 1,202,196
----------
LIABILITIES
Payables for:
Investments purchased ......................................... 94,191
Fund shares purchased ......................................... 80
Net payable for swap contracts ................................ 1,725
Accrued operating expenses .................................... 367
Collateral for securities on loan ............................. 103,372
Unrealized depreciation in forward currency contracts ......... 74
Other payables ................................................ 3
----------
Total liabilities ................................................ 199,812
----------
Net assets ....................................................... $1,002,384
==========
Shares outstanding, $0.01 Par Value (unlimited
shares authorized) ............................................ 104,070
----------
Net asset value per share ........................................ $ 9.63
==========
Composition of net assets:
Capital paid-in ............................................... $ 991,201
Accumulated net realized loss on investments, swaps, options
and foreign currency transactions .......................... (2,445)
Undistributed net investment income .............................. 1,515
Net unrealized appreciation (depreciation) of:
Investments ................................................... 13,517
Swap contracts ................................................ (1,725)
Translation of assets and liabilities in foreign currencies ... 321
----------
Net assets ....................................................... $1,002,384
==========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Active Bond Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $42,969
Dividends ........................................................ 470
Securities lending ............................................... 88
-------
Total investment income ............................................. 43,527
=======
EXPENSES
Investment advisory fee .......................................... 6,246
Auditors fees .................................................... 136
Custodian fees ................................................... 378
Fidelity bond fees ............................................... 2
Legal fees ....................................................... 176
Printing & mailing fees .......................................... 119
Trustees' fees ................................................... 32
Other fees ....................................................... 32
-------
Total expenses ...................................................... 7,121
-------
Net investment income ............................................... 36,406
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments and swaps ......................................... 22,158
Foreign currency transactions ................................. (3,216)
Options ....................................................... 684
Change in unrealized appreciation (depreciation) on:
Investments ................................................... (8,427)
Written options ............................................... (29)
Swap contracts ................................................ (1,178)
Translation of assets and liabilities in foreign
currencies ................................................. 1,058
-------
Net realized and unrealized gain .................................... 11,050
-------
Net increase in net assets resulting from operations ................ $47,456
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Active Bond Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ..................................... $ 36,406 $ 46,509
Net realized gain ......................................... 19,626 25,335
Change in net unrealized depreciation ..................... (8,576) (4,192)
---------- ----------
Net increase in net assets resulting from operations ... 47,456 67,652
Distributions to shareholders from:
Net investment income ..................................... (34,958) (46,318)
Realized gains ............................................ (13,106) (25,718)
---------- ----------
Decrease in net assets resulting from distributions .... (48,064) (72,036)
From fund share transactions:
Proceeds from shares sold ................................. 95,482 111,060
Shares issued in reorganization ........................... 83,358
Distributions reinvested .................................. 48,064 72,036
Payment for shares redeemed ............................... (196,163) (193,915)
---------- ----------
Increase (decrease) in net assets from fund
share transactions ..................................... (52,617) 72,539
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ........................ (53,225) 68,155
NET ASSETS
Beginning of Period ....................................... 1,055,609 987,454
---------- ----------
End of Period (including undistributed net investment
income of $1,515 and $0, respectively) ................. $1,002,384 $1,055,609
========== ==========
Analysis of fund share transactions:
Sold ...................................................... 9,860 11,585
Issued in reorganization .................................. 8,433
Reinvested ................................................ 4,982 7,389
Redeemed .................................................. (20,273) (19,743)
---------- ----------
Net increase (decrease) in fund shares outstanding ........... (5,431) 7,664
========== ==========
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Active Bond Fund
--------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------
2004 2003(f) 2002 2001 2000
---------- ---------- -------- -------- --------
Net Assets Value at Beginning of Period ........ $ 9.64 $ 9.70 $ 9.55 $ 9.44 $ 9.12
Income from Investment Operations:
Net Investment Income ....................... 0.34 0.43 0.50 0.58 0.64
Net Realized and Unrealized Gain (Loss) on
Investment(a) ............................ 0.11 0.18 0.18 0.11 0.28
---------- ---------- -------- -------- --------
Total From Investment Operations ............ 0.45 0.61 0.68 0.69 0.92
Less Distributions:
Distribution from Net Investment Income ..... (0.34) (0.43) (0.53) (0.58) (0.60)
Distribution from Net Realized Gains on
Investments .............................. (0.12) (0.24)
---------- ---------- -------- -------- --------
Total Distributions ......................... (0.46) (0.67) (0.53) (0.58) (0.60)
Capital Contributions .......................
---------- ---------- -------- -------- --------
Net Assets Value at End of Period .............. $ 9.63 $ 9.64 $ 9.70 $ 9.55 $ 9.44
========== ========== ======== ======== ========
Total Investment Return(b) ..................... 4.75% 6.48% 7.25% 7.48% 10.45%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ................................... 0.70% 0.70% 0.69% 0.67% 0.41%(d)
Ratio of Net Investment Income to Average Net
Assets ................................... 3.56% 4.42% 5.24% 5.97%(e) 6.98%
Portfolio Turnover Rate ..................... 444.29% 465.90%(c) 290.73% 206.80%(c) 224.24%
Net Assets End of Period (000s Omitted) ........ $1,002,384 $1,055,609 $987,454 $947,514 $842,299
(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) Excludes merger activity.
(d) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the expense ratio would have been .44% for the year ended
December 31, 2000.
(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 6.28% for the years ended December 31, 2001.
(f) The Fund entered into a new sub-advisory agreements with PIMCO and
Declaration Management & Research, LLC during the period shown.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND **
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS
Aerospace & Defense - 0.1%
Bombadier, Inc. - Notes 144A (a) #
6.3% due 05/01/14 - BB ............................... $ 533 $ 462
Bombardier, Inc. - 144A (a)
6.75% due 05/01/12 - BB .............................. 575 522
Jet Equipment Trust - Notes * (c)
10.91% due 08/15/14 - BBB ............................ 2,100 0
-------
984
Air Freight & Couriers - 0.1%
CNF, Inc. - Sr. Debs
6.7% due 05/01/34 - BBB- ............................. 555 591
Airlines - 0.2%
American Airlines, Inc. - Ser. 2001-2 Cl. A2
7.858% due 10/01/11 - A- ............................. 820 847
Continental Airlines - CTF Ser. 1999-1 Cl. A
6.545% due 02/02/19 - A- ............................. 1,071 1,064
Northwest Airlines Corp. - Ser. 1996-1
8.97% due 01/02/15 - CCC+ ............................ 167 113
-------
2,024
Auto Components - 0.0%
Motor Gaming Group, Inc. - Sr. Notes
9.75% due 04/01/10 - B+ .............................. 315 346
Auto Loan - 1.4%
Ford Motor Credit Co. - Bonds
7.75% due 03/15/05 - BBB- ............................ 1,330 1,343
Ford Motor Credit Co. - Global Notes
3.24% due 11/16/06 - BBB- ............................ 1,885 1,883
Ford Motor Credit Co. - Notes
6.875% due 02/01/06 - BBB- ........................... 2,480 2,555
7.375% due 10/28/09 - BBB- ........................... 1,691 1,824
General Motors Acceptance Corp.
2.53% due 04/13/06 - BBB- ............................ 2,800 2,790
6.875% due 08/28/12 - BBB- ........................... 590 602
7.5% due 07/15/05 - BBB- ............................. 500 510
General Motors Acceptance Corp.
1.995% due 05/18/06 - BBB- ........................... 1,900 1,891
General Motors Acceptance Corp. - Bonds
7.25% due 03/02/11 - BBB- ............................ 430 450
General Motors Acceptance Corp. - Sr. Notes
5.625% due 05/15/09 - BBB- ........................... 365 365
-------
14,213
Automobiles - 0.6%
Daimler Chrysler NA Holding Corp. - Sr. Notes
6.5% due 11/15/13 - BBB .............................. 500 542
DaimlerChrysler NA
1.87% due 05/24/06 - BBB ............................. 2,020 2,030
General Motors Corp. - Sr. Debs. #
8.375% due 07/15/33 - BBB- ........................... $1,499 $ 1,553
Hertz Corp. - Notes
7.625% due 06/01/12 - BBB- ........................... 775 849
Hertz Corp. - Sr. Notes
4.7% due 10/02/06 - BBB- ............................. 920 930
-------
5,904
Banks - 3.7%
Banc America Mortgage Securities, Inc. -
Ser. 2004-2 Cl. 5A1
6.5% due 10/25/19 - AAA .............................. 1,866 1,885
Banc America Mortgage Securities, Inc. -
Ser. 2004-D Cl. 2A1
3.649% due 05/25/34 - AAA ............................ 1,766 1,735
Banco Santander Chile - Sr. Notes 144A (a)
2.8% due 12/09/09 - A ................................ 930 931
Bank of New York Institution Capital - Notes 144A (a)
7.78% due 12/01/26 - A- .............................. 2,550 2,779
Bank One Corp. - Notes
6.5% due 02/01/06 - A+ ............................... 700 724
Barclays Bank plc - Notes 144A (a)
6.86% due 06/15/32 - NA .............................. 1,800 2,024
Central American Bank - 144A (a)
6.75% due 04/15/13 - BBB- ............................ 650 718
Colonial Bank Montgomery - Sub. Notes
9.375% due 06/01/11 - BBB- ........................... 1,120 1,329
Corporacion Andina De Fomento - Notes
5.2% due 05/21/13 - A ................................ 750 764
Credit Suisse First Boston - CTF Cl. 2A1
4.671% due 09/25/34 - AAA ............................ 7,439 7,427
Credit Suisse First Boston - Ser. 2003-C3
Cl. F 144A (a)
4.518% due 05/15/38 - BBB+ ........................... 1,190 1,135
Credit Suisse First Boston - Sr. Notes
4.625% due 01/15/08 - A+ ............................. 451 462
CS First Boston Mortgage Securities Corp. - Notes
6.26% due 04/11/30 - AAA ............................. 454 461
Dresdner Bank AG - Sub. Notes
7.25% due 09/15/15 - A- .............................. 600 701
FleetBoston Financial Corp. - Sr. Notes
4.875% due 12/01/06 - A+ ............................. 715 734
HSBC Bank USA
5.875% due 11/01/34 - A+ ............................. 535 542
JP Morgan Chase & Co. - Global Notes
5.125% due 09/15/14 - A .............................. 765 770
JP Morgan Chase & Co. - Sub. Notes
6.75% due 02/01/11 - A ............................... 940 1,056
Key Bank NA
5.8% due 07/01/14 - A- ............................... 680 720
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Banks - Continued
NB Capital Trust IV
8.25% due 04/15/27 - A-............................... $ 930 $ 1,035
Popular North America, Inc.
6.125% due 10/15/06 - BBB+............................ 730 761
Popular North America, Inc.
4.7% due 06/30/09 - BBB+.............................. 610 622
Royal Bank of Scotland plc - Notes
7.648% due 08/31/49 - A............................... 2,220 2,703
Wachovia Bank Commercial Mortgage Trust -
Ser. 2004 C10 Cl A3
4.39% due 02/15/36 - AAA.............................. 2,000 1,987
Wachovia Bank Commercial Trust - Ser. 2003-C8 Cl.
F 144A (a)
5.031% due 11/15/35 - BBB+............................ 600 605
Wachovia Corp. - Sub Notes
5.25% due 08/01/14 - A-............................... 910 933
Westpac Capital Trust III - 144A (a)
5.819% due 12/29/49 - NA.............................. 760 797
Zions Financial Corp. - Notes
6.95% due 05/15/11 - BBB-............................. 656 683
-------
37,023
Beverages - 0.1%
Anheuser Busch Cos., Inc. - Debs.
6.5% due 02/01/43 - A+................................ 550 627
Commonwealth Brands, Inc. - 144A (a)
10.625% due 09/01/08 - B-............................. 365 383
PanAmerican Beverages, Inc. - Sr. Notes Ser. A
7.25% due 07/01/09 - BBB.............................. 430 478
-------
1,488
CMBS - 0.1%
JP Morgan Chase & Co. Commercial Mortgage Securities -
Ser. 2004 FL1 A1 144A (a)
1.71% due 04/16/19 - AAA.............................. 946 947
Commercial Services & Supplies - 0.8%
Allied Waste North America - Notes
10.0% due 08/01/09 - B+............................... 940 988
Cendant Corp. - Notes
6.25% due 01/15/08 - BBB.............................. 1,260 1,345
6.875% due 08/15/06 - BBB............................. 1,280 1,347
Cendant Corp. - Sr. Notes
6.25% due 03/15/10 - BBB.............................. 500 541
7.125% due 03/15/15 - BBB............................. 268 306
D.R. Horton, Inc. - Notes
5.625% due 09/15/14 - BB+............................. 475 473
RPM International, Inc. - Sr. Notes
6.25% due 12/15/13 - BBB.............................. 905 941
Sotheby's Holdings, Inc. - Notes
6.875% due 02/01/09 - BB-............................. 420 423
Teppco Partners - GTD. Sr. Notes
7.625% due 02/15/12 - BBB............................. 615 710
Trinity Indiana Leasing Co. - 144A (a)
7.755% due 02/15/09 - NA ............................. $ 820 $ 873
-------
7,947
Communications Equipment - 0.1%
Corning, Inc. - Notes
6.3% due 03/01/09 - BB+............................... 460 483
8.3% due 04/04/25 - BB+............................... 775 815
-------
1,298
Computers & Peripherals - 0.1%
NCR Corp. - Sr. Notes
7.125% due 06/15/09 - BBB-............................ 515 569
Construction & Engineering - 0.1%
K Hovnanian Enterprises, Inc. - Gtd Sr. Notes 144A (a)
6.25% due 01/15/15 - NA............................... 700 691
KB Home - Sr. Notes
5.75% due 02/01/14 - BB+.............................. 605 601
-------
1,292
Containers & Packaging - 0.2%
BWAY Corp. - Sr. Sub. Notes
10.0% due 10/15/10 - B-............................... 355 380
Owens Brockway Glass Container - Sr. Notes
8.75% due 11/15/12 - BB-.............................. 380 430
Stone Container Corp. - Sr. Notes
8.375% due 07/01/12 - B............................... 790 859
9.75% due 02/01/11 - B................................ 625 685
-------
2,354
Credit Card - 0.9%
Citibank Credit Card Issuance Trust - Notes
4.45% due 04/07/10 - BBB.............................. 2,400 2,428
MBNA Asset Backed Note Trust - Notes 144A (a)
6.65% due 08/15/11 - BBB.............................. 600 651
MBNA Asset Backed Note Trust - Notes Ser. 1998-E 144A (a)
6.6% due 09/15/10 - BBB............................... 1,115 1,196
Midland Funding Corp. II - Bonds Ser. A
11.75% due 07/23/05 - BB-............................. 2,538 2,665
Midland Funding Corp. II - Notes
13.25% due 07/23/06 - BB-............................. 825 907
Sears Credit Account Master Trust II -Ser. 2002-5 Cl. A
2.14% due 11/17/09 - AAA.............................. 1,200 1,201
-------
9,048
Diversified Financials - 2.8%
AXA Financial, Inc. - Sr. Notes
7.75% due 08/01/10 - A................................ 543 633
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Diversified Financials - Continued
Bear Stearns & Co., Inc. - Notes
5.7% due 11/15/14 - A................................. $1,000 $ 1,056
Capital One Financial Corp. - Notes
7.25% due 05/01/06 - BBB-............................. 515 539
CIT Group, Inc.
1.48% due 05/18/07 - A................................ 445 445
CIT Group, Inc. - Sr. Notes
5.0% due 02/13/14 - A................................. 1,030 1,028
Citigroup, Inc. - Sub. Notes
5.625% due 08/27/12 - A+.............................. 1,000 1,065
6.0% due 10/31/33 - A+................................ 1,475 1,527
Deutsche Mortgage & Asset Receiving Corp. - Notes
6.861% due 03/15/08 - NA.............................. 1,855 2,011
ERAC USA Finance Co. - Notes 144A (a)
7.95% due 12/15/09 - BBB+............................. 1,130 1,312
General Electric Capital Corp.
2.97% due 07/26/06 - AAA.............................. 800 797
Goldman Sachs Group, Inc. - Sr. Notes
5.25% due 04/01/13 - A+............................... 1,175 1,205
Hartford Financial Services Group, Inc. - Sr. Notes
4.625% due 07/15/13 - A-.............................. 425 412
Hyatt Equities LC - Notes 144A (a)
6.875% due 06/15/07 - BBB............................. 2,035 2,141
Merrill Lynch & Co, Inc.
5.0% due 01/15/15 - A+................................ 905 902
Morgan Stanley - Sub. Notes
4.75% due 04/01/14 - A................................ 770 750
Morgan Stanley & Co., Inc. - Notes #
4.25% due 05/15/10 - A+............................... 1,665 1,665
Morgan Stanley Capital, Inc. - Ser. 2004 TP13 Cl. A2
3.94% due 09/13/45 - NA............................... 1,375 1,357
Morgan Stanley Dean Witter Capital - Ser. 2001 Cl. A1
4.57% due 12/18/32 - NA............................... 1,263 1,274
Newcourt Credit Group, Inc. - Notes Sr. B
6.875% due 02/16/05 - A............................... 1,455 1,462
Pemex Project Funding Trust - Notes
9.125% due 10/13/10 - BBB-............................ 2,510 3,006
Qwest Captial Funding, Inc. - Notes
7.75% due 08/15/06 - B................................ 955 1,005
TFM SA de CV - Sr. Disc. Debs.
11.75% due 06/15/09 - B............................... 555 564
URC Holdings Corp. - Sr. Notes 144A (a)
7.875% due 06/30/06 - AA-............................. 1,600 1,702
-------
27,858
Diversified Telecommunication Services - 2.6%
AT&T Broadband Corp. - Notes
8.375% due 03/15/13 - BBB............................. 1,199 1,479
AT&T Corp. - Sr. Notes
7.8% due 11/15/11 - BB+............................... $1,060 $ 1,220
Bellsouth Corp. - Notes
5.2% due 09/15/14 - A................................. 260 265
Deutsche Telekom International - Notes
8.5% due 06/15/10 - BBB+.............................. 1,120 1,334
France Telecom
8.25% due 03/14/08 - BBB+............................. 1,700 2,577
France Telecom SA - Notes
8.7% due 03/01/06 - BBB+.............................. 450 472
9.25% due 03/01/11 - BBB+............................. 2,540 3,030
10.0% due 03/01/31 - BBB+............................. 319 432
Innova S DE R.L.
9.375% due 09/19/13 - B+.............................. 485 552
Innova S DE R.L. - Notes #
12.875% due 04/01/07 - B+............................. 285 285
Qwest Corp. - Notes 144A (a)
8.875% due 03/15/12 - BB-............................. 625 722
SBC Communications, Inc. - Notes
5.1% due 09/15/14 - A................................. 570 575
6.15% due 09/15/34 - A................................ 255 263
SBC Communications, Inc. Global Notes
6.45% due 06/15/34 - A................................ 780 836
Sprint Capital Corp.
6.875% due 11/15/28 - BBB-............................ 530 580
Sprint Capital Corp. - Notes
7.125% due 01/30/06 - BBB-............................ 2,380 2,475
8.75% due 03/15/32 - BBB-............................. 346 461
Sprint Capital Corp. - Notes
6.125% due 11/15/08 - BBB-............................ 854 916
Tele-Communications, Inc.
9.8% due 02/01/12 - BBB............................... 465 599
Telecom De Puerto Rico, Inc. - Sr. Notes
6.65% due 05/15/06 - BBB+............................. 1,445 1,499
Telefonosde Mexico - Sr. Notes
8.25% due 01/26/06 - BBB-............................. 3,184 3,343
Verizon Pennsylvania, Inc. - Debs. Ser. A
5.65% due 11/15/11 - A+............................... 1,800 1,895
-------
25,810
Electric Utilities - 1.2%
American Electric Power ,Inc. - Sr. Notes Ser. D
5.25% due 06/01/15 - BBB.............................. 550 555
DTE Energy Co. - Notes
6.45% due 06/01/06 - BBB-............................. 875 911
Empresa Electrica Guacolda SA - Notes 144A (a)
8.625% due 04/30/13 - BBB-............................ 574 655
Empresa Nacional De Electricid - Notes
8.35% due 08/01/13 - BBB-............................. 1,015 1,176
Enersis SA - Notes
7.375% due 01/15/14 - BB+............................. 645 705
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- -------- --------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Electric Utilities - Continued
FirstEnergy Corp. - Notes Ser. B
6.45% due 11/15/11 - BB+ ........................... $ 490 $ 532
FirstEnergy Corp. - Notes Ser. C
7.375% due 11/15/31 - BB+ .......................... 292 333
Pepco Holdings, Inc. - Notes
3.75% due 02/15/06 - BBB ........................... 1,030 1,035
Progress Energy, Inc. - Sr. Notes
6.75% due 03/01/06 - BBB- .......................... 1,637 1,699
Progress Energy, Inc. - Sr. Notes
7.0% due 10/30/31 - BBB- ........................... 325 360
Public Service Co. New Mexico - Sr. Unsec. Notes
4.4% due 09/15/08 - BBB ............................ 680 686
TXU Australia Holdings, Ltd. - GTD
Sr. Notes 144A (a)
6.15% due 11/15/13 - A- ............................ 814 879
TXU Australia Holdings, Ltd. - Sr. Notes
6.75% due 12/01/06 - A- ............................ 455 480
TXU Energy Co. LLC - Sr. Notes
7.0% due 03/15/13 - BBB ............................ 887 991
TXU Energy Co. LLC - Sr. Notes 144A (a)
2.38% due 01/17/06 - BBB ........................... 330 331
Wisconsin Power & Light Co. - Debs.
6.25% due 07/31/34 - BBB+ .......................... 725 774
-------
12,102
Electric/Gas - 1.6%
AES Eastern Energy - Notes
9.0% due 01/02/17 - BB+ ............................ 874 997
EL Paso Electric Co. - Bonds Ser. E
9.4% due 05/01/11 - BBB ............................ 1,225 1,352
Ipalco Enterprises, Inc. - Notes
8.625% due 11/14/11 - BB- .......................... 705 790
Kansas City Power & Light Co. -
Sr. Notes Ser. A
6.0% due 03/15/07 - BBB ............................ 585 611
Monterrey Power SA de CV - Sr. Sec.
Bonds 144A (a)
9.625% due 11/15/09 - BBB- ......................... 677 799
Noram Energy Corp. - Debs
6.5% due 02/01/08 - BBB ............................ 2,275 2,439
Pacific Gas & Electric Co.
6.05% due 03/01/34 - BBB ........................... 750 779
Pacific Gas & Electric Co. - Bonds
1.81% due 04/03/06 - BBB ........................... 1,375 1,376
PNPP II Funding Corp. - Bonds
9.12% due 05/30/16 - BB+ ........................... 924 1,085
PSEG Energy LLC - Sr. Notes
7.75% due 04/16/07 - BB- ........................... 705 745
PSEG Power LLC - Sr. Notes
6.875% due 04/15/06 - BBB .......................... 857 893
Sempra Energy - Notes
4.75% due 05/15/09 - BBB+ .......................... 445 454
Southern California Edison Co. - Ser. 2004B
6.0% due 01/15/34 - BBB ............................ $ 477 $ 507
TXU Corp. - Sr. Notes Ser. R 144A (a)
6.55% due 11/15/34 - BBB- .......................... 700 693
Waterford 3 Funding - Entergy - Bonds
8.09% due 01/02/17 - BBB- .......................... 2,454 2,715
-------
16,235
Electrical Equipment - 0.1%
HQI Transelec Chile SA - Notes
7.875% due 04/15/11 - A- ........................... 985 1,139
Electronic Equipment & Instruments - 0.1%
Ametek, Inc. - Sr. Notes
7.2% due 07/15/08 - BBB ............................ 910 982
Energy Equipment & Services - 0.2%
Salton Sea Funding Corp. - Sr. Notes
Ser. E
8.3% due 05/30/11 - BB ............................. 469 520
Salton Sea Funding Corp. - Sr. Sec.
Bonds. Ser. C
7.84% due 05/30/10 - BB ............................ 1,428 1,518
-------
2,038
Finance - 5.8%
ACE INA Holding, Inc. - GTD. Sr. Notes
5.875% due 06/15/14 - BBB+ ......................... 870 891
AIG SunAmerica Institutional Funding
1.2% due 01/26/05 - AAA ............................ 346,000 3,370
Arch Capital Group, Ltd. - Sr. Notes
7.35% due 05/01/34 - BBB- .......................... 1,215 1,295
Bank America Funding Corp. - Ser.
2004- A Cl. 1A3
5.08% due 09/20/34 - AAA ........................... 10,876 10,834
Beaver Valley Funding Corp.
9.0% due 06/01/17 - BB- ............................ 1,630 1,930
BVPS II Funding Corp. - Bonds
8.89% due 06/01/17 - BB+ ........................... 969 1,143
CNOOC Finance 2003, Ltd. - GTD Notes
144A (a)
5.5% due 05/21/33 - BBB+ ........................... 555 513
Colonial Realty, Ltd. Partnership - Sr. Notes
6.25% due 06/15/14 - BBB- .......................... 565 594
Deutsche Telekom International Finance
6.375% due 07/11/06 - BBB+ ......................... 3,200 4,561
8.75% due 06/15/30 - BBB+ .......................... 2,005 2,647
Doral Financial Corp. - Sr. Notes
2.909% due 07/20/07 - BBB- ......................... 1,580 1,584
Duke Capital LLC. - Sr. Notes
8.0% due 10/01/19 - BBB- ........................... 965 1,178
Duke Capital LLC. - Sr. Notes
6.75% due 02/15/32 - BBB- .......................... 600 653
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Finance - Continued
ERAC USA Finance Co. - Gtd. Notes 144A (a)
6.7% due 06/01/34 - BBB+ ............................. $ 300 $ 326
ESI Tractebel Acquisition Corp. - Ser. B
7.99% due 12/30/11 - BB .............................. 125 132
Financing Corp. - Notes
9.4% due 02/08/18 - NA ............................... 420 602
10.35% due 08/03/18 - NA ............................. 3,025 4,639
Fund American Cos, Inc. - GTD Sr. Notes
5.875% due 05/15/13 - BBB- ........................... 723 736
GCIC Funding Corp. - Bonds 144A (a)
5.129% due 01/15/14 - BBB ............................ 1,065 1,066
General Electric Capital Corp. - Notes
6.75% due 03/15/32 - AAA ............................. 740 866
Glencore Funding LLC - Notes 144A (a)
6.0% due 04/15/14 - BBB- ............................. 1,350 1,306
Household Financial Corp. - Global Notes
4.625% due 01/15/08 - A .............................. 700 717
Household Financial Corp. - Notes
6.375% due 10/15/11 - A .............................. 550 607
HSBC Finance Corp. - Notes
6.75% due 05/15/11 - A ............................... 1,270 1,425
International Lease Finance Corp.
1.0% due 01/15/10 - AA- .............................. 665 665
International Lease Finance Corp. - Notes
5.875% due 05/01/13 - AA- ............................ 800 849
MDP Acquisitions plc - Sr. Notes
9.625% due 10/01/12 - B .............................. 360 401
Meditrust Medium - Notes
7.3% due 01/16/06 - BB- .............................. 520 536
Mizuho Financial Group Cayman, Ltd. -
Sub. Notes 144A (a)
5.79% due 04/15/14 - BBB+ ............................ 532 559
NiSource Finance Corp. - Gtd. Notes
3.2% due 11/01/06 - BBB .............................. 875 867
NiSource Finance Corp. - Sr. Notes #
6.15% due 03/01/13 - BBB ............................. 596 646
Odyssey Re Holdings Corp. - Sr. Notes
7.65% due 11/01/13 - BBB- ............................ 2,000 2,206
Prologis Trust - Sr. Notes
7.05% due 07/15/06 - BBB+ ............................ 490 515
Rabobank Capital Fund II - Notes Ser. 144A (a)
5.26% due 12/31/49 - AA .............................. 325 331
Saint George Funding Co. LLC - 144A (a)
8.485% due 12/31/49 - NA ............................. 1,205 1,377
Tate & Lyle International Finance plc - Notes 144A (a)
5.0% due 11/15/14 - BBB .............................. 425 421
Tobacco Settlement Financing Corp.
6.0% due 06/01/37 - BBB .............................. $1,000 $ 913
5.875% due 05/15/39 - BBB ............................ 315 284
Tobacco Settlement Revenue Management - Ser. B
6.375% due 05/15/30 - BBB ............................ 1,480 1,423
Trinet Corporate Realty Trust, Inc. - Notes
7.7% due 07/15/17 - BB+ .............................. 420 483
UFJ Finance Aruba - GTD Notes
6.75% due 07/15/13 - BBB ............................. 1,000 1,114
WPP Finance UK - Notes 144A (a) #
5.875% due 06/15/14 - BBB+ ........................... 740 770
-------
57,975
Food & Drug Retailing - 0.1%
Delhaize America, Inc. - Notes
8.125% due 04/15/11 - BB+ ............................ 385 450
The Kroger Co. - Sr. Notes
8.15% due 07/15/06 - BBB ............................. 570 609
-------
1,059
Food Products - 0.6%
Corn Products International, Inc. - Sr. Notes
8.45% due 08/15/09 - BBB- ............................ 3,205 3,718
Kraft Foods, Inc. - Global Notes
5.625% due 11/01/11 - BBB+ ........................... 985 1,043
Smithfield Foods, Inc. - Sr. Notes
7.0% due 08/01/11 - BB ............................... 465 495
Tyson Foods, Inc. - Notes
7.25% due 10/01/06 - BBB ............................. 415 440
-------
5,696
Foreign Government - 1.3%
Federal Republic of Brazil
2.063% due 04/15/12 - BB- ............................ 265 252
Republic of Brazil
2.063% due 04/15/09 - BB- ............................ 132 131
8.0% due 04/15/14 - BB- .............................. 2,507 2,565
Republic of Brazil - Ser. L
2.125% due 04/15/06 - BB- ............................ 752 753
Republic of Chile - Notes
1.5% due 01/28/08 - A ................................ 1,200 1,208
Republic of Columbia - Notes
9.75% due 04/09/11 - BB+ ............................. 548 627
Republic of Panama
9.625% due 02/08/11 - BB ............................. 500 591
Republic of Panama - Bonds
9.375% due 01/16/23 - BB ............................. 1,250 1,442
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Foreign Government - Continued
Republic of Peru - Bonds
9.125% due 02/21/12 - BB ............................. $ 490 $ 571
Republic of Peru - Bonds #
9.125% due 01/15/08 - BB ............................. 1,250 1,425
Russian Federation
8.75% due 07/24/05 - BB+ ............................. 1,800 1,850
United Mexican States
8.375% due 01/14/11 - BBB- ........................... 500 587
United Mexican States - Notes Ser. A
8.3% due 08/15/31 - BBB- ............................. 500 586
-------
12,588
Gas Utilities - 0.5%
Kinder Morgan Energy Partners - Sr. Notes
7.3% due 08/15/33 - BBB+ ............................. 615 712
Michigan Consolidated Gas Co. - Sr. Notes
5.7% due 03/15/33 - BBB .............................. 750 750
Southern California Edison Co. - Ser. 2003-B
8.0% due 02/15/07 - BBB ............................ 2,300 2,508
Texas New Mexico Power Co. - Sr. Notes
6.125% due 06/01/08 - BB+ ............................ 870 895
-------
4,865
Health Care Providers & Services - 0.3%
Anthem, Inc. - Notes
3.5% due 09/01/07 - BBB+ ............................. 720 716
Columbia/HCA Healthcare Corp. - Notes
9.0% due 12/15/14 - BB+ .............................. 755 893
Global Health Sciences, Inc. - Sr. Notes * (c)
11.0% due 05/01/08 - NA .............................. 75 2
HCA-The Healthcare Corp. - Notes
8.75% due 09/01/10 - BB+ ............................. 1,000 1,145
-------
2,756
Home Equity Loan - 0.5%
Centex Home Equity Loan Trust - Ser. 2004A CTF Cl. AF 4
4.51% due 09/27/32 - AAA ............................. 1,255 1,251
Contimortgage Home Equity Loan - CTF Cl. A5
8.1% due 08/15/25 - AAA .............................. 78 83
Countrywide Home Loan Corp.
5.5% due 08/01/06 - A ................................ 700 722
Residential Asset Mortgage Products, Inc.
- Ser. 2003-RS10 Cl. AI5
4.91% due 01/25/31 - AAA ............................. 1,260 1,274
Residential Asset Mortgage Products, Inc.
- Ser. 2004-RS7 CTF Cl. A I2
4.0% due 09/25/25 - AAA .............................. 1,410 1,414
-------
4,744
Hotels Restaurants & Leisure - 0.8%
Harrah's Operating Co., Inc. - Notes
7.875% due 12/15/05 - BB+ ............................ $2,300 $ 2,395
Harrah's Operating, Inc. - Sr. Notes
7.125% due 06/01/07 - BBB- ........................... 900 964
Mandalay Resort Group - Sr. Notes
6.375% due 12/15/11 - BB+ ............................ 640 670
Meditrust - Notes
7.0% due 08/15/07 - BB- .............................. 375 393
MGM Mirage, Inc. - Ser. B
6.0% due 10/01/09 - BB+ .............................. 832 857
Mohegan Tribal Gaming Authority - Sr. Sub Notes
8.0% due 04/01/12 - B+ ............................... 400 437
Starwood Hotels & Resorts - Sr. Notes
7.375% due 05/01/07 - BB+ ............................ 590 630
Starwood Hotels & Resorts Worldwide, Inc. - Sr. Notes
7.875% due 05/01/12 - BB+ ............................ 1,000 1,140
Waterford Gaming LLC - Sr. Notes 144A (a)
8.625% due 09/15/12 - B+ ............................. 250 269
Wynn Las Vegas LLC - Bonds 144A (a)
6.625% due 12/01/14 - B+ ............................. 770 762
-------
8,517
Industrial Conglomerates - 0.5%
British Brunswick Holdings, Inc. - Sr. Notes
13.0% due 05/01/08 - NA .............................. 120 7
General Electric Co. - Notes
5.0% due 02/01/13 - AAA .............................. 2,472 2,536
Pacific & Atlantic Holdings, Inc. (c)
1.0% due 05/31/09 - NA ............................... 2 0
Pacific & Atlantic Holdings, Inc. -
Sr. Notes 144A (a) * (c)
10.5% due 12/31/07 - NA .............................. 31 9
Tyco International Group SA - Notes
5.8% due 08/01/06 - BBB .............................. 520 538
6.0% due 11/15/13 - BBB .............................. 1,350 1,471
-------
4,561
Insurance - 1.1%
Allstate Corp. - Sr. Notes
5.35% due 06/01/33 - A+ .............................. 555 526
AON Capital #
8.205% due 01/01/27 - BBB- ........................... 385 406
Assurant, Inc. - Sr. Notes
6.75% due 02/15/34 - BBB+ ............................ 475 514
Cincinnati Financial Corp. - Sr. Notes 144A (a)
6.125% due 11/01/34 - A .............................. 455 460
CNA Financial Corp. - Notes
5.85% due 12/15/14 - BBB- ............................ 560 559
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Insurance - Continued
Endurance Specialty Holdings, Ltd. - Sr. Notes
7.0% due 07/15/34 - BBB .............................. $ 540 $ 556
Marsh & McLennan Cos., Inc. - Sr. Notes #
5.375% due 03/15/07 - BBB+ ........................... 845 862
5.375% due 07/15/14 - BBB ........................... 325 318
Mass. Mutual Life Insurance Co. - Notes 144A (a)
7.625% due 11/15/23 - AA ............................. 2,235 2,758
New York Life Insurance Co. - Notes 144A (a)
5.875% due 05/15/33 - AA- ............................ 755 781
Ohio Casualty Corp. - Notes
7.3% due 06/15/14 - BB ............................... 520 552
Oil Casualty Insurance, Ltd. - Debs. 144A (a)
8.0% due 09/15/34 - BBB .............................. 840 847
W.R. Berkley Corp. - Sr. Notes
6.15% due 08/15/19 - BBB+ ............................ 713 717
Wellpoint Health Networks, Inc. - Notes
6.375% due 01/15/12 - BBB+ ........................... 685 754
Wellpoint, Inc. - Notes 144A (a)
5.0% due 12/15/14 - BBB+ ............................. 425 424
XL Capital, Ltd. - Sr. Notes
5.25% due 09/15/14 - A ............................... 310 311
-------
11,345
Machinery - 0.1%
Case Corp. - Notes
7.25% due 08/01/05 - BB- ............................. 365 374
Caterpillar, Inc. - Sr. Debs.
7.25% due 09/15/09 - A ............................... 700 792
-------
1,166
Media - 1.7%
British Sky Broadcasting Group - GTD Notes
7.3% due 10/15/06 - BBB- ............................. 725 770
Continental Cablevision, Inc. - Sr. Notes
9.5% due 08/01/13 - BBB .............................. 1,372 1,485
Cox Communications, Inc. - Notes #
4.625% due 06/01/13 - BBB- ........................... 310 297
Cox Communications, Inc. - Notes 144A (a)
3.04% due 12/14/07 - BBB- ............................ 450 451
Cox Enterprises, Inc. - Notes 144A (a)
7.875% due 09/15/10 - BB+ ............................ 765 861
Grupo Televisa SA De CV - Notes #
8.0% due 09/13/11 - BBB- ............................. 2,080 2,408
Interpublic Group Cos., Inc. - Notes #
6.25% due 11/15/14 - BB+ ............................. 700 708
Lenfest Communications, Inc. - Notes
8.375% due 11/01/05 - BBB ............................ 1,239 1,291
Liberty Media Corp. - Sr. Debs #
8.25% due 02/01/30 - BBB- ............................ $ 650 $ 739
News America Holdings, Inc.
8.25% due 08/10/18 - BBB- ............................ 1,050 1,302
Rogers Cablesystems - Sr. Notes Ser. B
10.0% due 03/15/05 - BB+ ............................. 1,205 1,223
Shaw Communications, Inc. - Sr. Notes
8.25% due 04/11/10 - BB+ ............................. 695 791
Time Warner, Inc.
6.15% due 05/01/07 - BBB+ ........................... 700 741
Time Warner, Inc. - Debs.
7.7% due 05/01/32 - BBB+ ............................. 800 978
Time Warner, Inc. - Sr. Notes #
9.125% due 01/15/13 - BBB+ ........................... 2,071 2,662
XM Satellite Radio, Inc. - Sr. Sec. Notes
12.0% due 06/15/10 - CCC+ ............................ 394 466
-------
17,173
Metals & Mining - 0.3%
Codelco, Inc. - Notes 144A (a)
5.5% due 10/15/13 - A ................................ 490 510
Freeport McMoran Copper & Gold - Sr. Notes
10.125% due 02/01/10 - B ............................. 460 527
Golden Northwest Aluminum *
12.0% due 12/15/06 - NA .............................. 25 2
Kennametal, Inc. - Sr. Notes
7.2% due 06/15/12 - BBB ............................. 770 850
Metallurgy Holdings, Inc. - Notes
1.0% due 07/15/08 - NA .............................. 50 22
Vedanta Resources plc - Bonds 144A (a)
6.625% due 02/22/10 - BB ............................. 775 778
-------
2,689
Multi-Utilities - 0.2%
Centerpoint Energy Houston - Bonds Ser. K #
6.95% due 03/15/33 - BBB ............................. 545 639
Transalta Corp.
5.75% due 12/15/13 - BBB- ............................ 900 927
-------
1,566
Multiline Retail - 0.2%
J.C. Penney, Inc.
7.65% due 08/15/16 - BB+ ............................. 1,275 1,454
May Department Stores Co. - Sr. Notes
6.7% due 07/15/34 - BBB .............................. 432 454
-------
1,908
Municipal - 1.4%
De Kalb County Georgia Water & Sewage - Ser. A
5.0% due 10/01/35 - AA ............................... 2,200 2,260
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Municipal - Continued
Golden State Securitization
6.75% due 06/01/39 - BBB ............................. $2,675 $ 2,683
Harris County Texas
5.0% due 08/15/33 - AAA .............................. 600 614
Massachusetts Saint - Ser. C
5.5% due 11/01/10 - AAA .............................. 3,800 4,295
University of Texas Permanent University
Fund - Ser. B
4.75% due 07/01/30 - AAA ............................. 4,000 4,000
-------
13,852
Oil & Gas - 1.1%
Amerada Hess Corp. - Notes
7.3% due 08/15/31 - BBB- ............................. 613 684
Chesapeake Energy Corp. - Sr. Notes
7.0% due 08/15/14 - BB- ............................. 365 389
Devon Energy Corp. - Sr. Debs.
7.95% due 04/15/32 - BBB ............................. 750 958
Enterprise Products Operating LP - Sr. Notes
6.875% due 03/01/33 - BB+ ............................ 1,415 1,505
Enterprise Products Operating LP - Sr. Notes 144A (a)
6.65% due 10/15/34 - BB+ ............................. 460 476
Halliburton Co. - Sr. Notes 144A (a)
2.86% due 01/26/07 - BBB ............................. 480 480
Humpuss Funding Corp. - 144A (a)
7.72% due 12/15/09 - NA .............................. 1,166 1,096
LG Caltex Oil Corp. - Notes 144A (a)
5.5% due 08/25/14 - BBB .............................. 471 484
Magellan Midstream Partners LP - Sr. Notes
6.45% due 06/01/14 - BBB ............................. 790 841
Northern Border Pipeline Co. - Sr. Notes
6.25% due 05/01/07 - A- .............................. 610 644
Occidental Petroleum Corp.
10.125% due 09/15/09 - BBB+ .......................... 538 664
Ocean RigNorway AS - Sr. Sec. Notes
10.25% due 06/01/08 - CCC ............................ 255 263
PanEnergy Corp. - Notes
7.0% due 10/15/06 - BBB- ............................. 375 395
Pemex Project Funding Master Trust - Notes
6.125% due 08/15/08 - BBB- ........................... 700 742
Roseton Danskamme - Ser. B
7.67% due 11/08/16 - ................................. 580 555
Valero Energy Corp. - Notes
8.375% due 06/15/05 - BBB ............................ 700 714
XTO Energy, Inc. - Sr. Notes 144A (a)
5.0% due 01/31/15 - BBB- ............................. 435 432
-------
11,322
Other Asset Backed - 3.6%
Ameriquest Mortgage Securities, Inc. - Ser. 2003-IA1
4.965% due 11/25/33 - AAA ............................ $1,125 $ 1,142
Argent Securities, Inc. - Ser. 2004 W1 M3
1.0% due 02/25/34 - A- ............................... 1,600 1,615
Bass Trust - Ser. 2004 CB4 Cl. A3
4.632% due 07/25/08 - AAA ............................ 815 826
Bear Stearns Asset Backed Securities - Ser. 2003
AC4 Cl. A
5.0% due 09/25/33 - AAA .............................. 1,260 1,263
Bear Stearns Asset Backed Securities -
Ser. 2004-AC5 Cl. A1
5.25% due 10/25/34 - AAA ............................. 1,040 1,051
Bear Stearns Asset Backed Securities -
Ser. 2004-HE9 Cl. 1A1
1.0% due 03/25/23 - AAA .............................. 807 807
CWABS, Inc. - CTF Cl. A 1 FLTG
2.15% due 01/25/35 - AAA ............................. 678 678
CWABS, Inc. - Ser. 2004-10 Cl. AF3
3.842% due 02/01/05 - AAA ............................ 1,465 1,448
CWABS, Inc. Ser. 2003-5 Cl. AF 2
3.042% due 04/25/25 - AAA ............................ 1,300 1,298
Equity One ABS, Inc. - Ser. 2003-3 Cl. AF3
3.531% due 12/25/33 - AAA ............................ 900 899
Equity One ABS, Inc. - Ser. 2004-1 Cl. M2
5.115% due 04/25/34 - A .............................. 750 738
Equity One ABS, Inc. - Ser. 2004-1 Cl. M3
5.26% due 04/25/34 - A- .............................. 750 738
Equity One ABS, Inc. - Ser. 2004-2 Cl. AV2
1.55% due 07/25/34 - AAA ............................. 928 926
Homestar Mortgage Acceptance Corp. - Ser. 2004-4 Cl. A1
1.79% due 01/25/22 - AAA ............................. 1,643 1,642
Indymac ABS, Inc. - Ser 2004 A Cl. A2
2.341% due 07/25/34 - AAA ............................ 1,723 1,723
J.P. Morgan Mortgage Trust - Ser. 2004 A2 Cl. 2 A2
4.07% due 05/25/34 - AAA ............................. 1,616 1,590
Long Beach Mortgage Loan Trust - Ser. 2004-1 Cl. M3
1.0% due 03/25/35 - AA- .............................. 1,200 1,200
Morgan Stanley ABS Capital - Ser. 2004 HE9 Cl. A 3A
2.358% due 10/25/34 - AAA ............................ 1,872 1,872
NAAC Reperforming Loan Remic Trust - Ser. 2004-R1
Cl. A2 144A (a)
7.5% due 03/25/34 - AAA .............................. 7,548 8,093
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Other Asset Backed - Continued
Option One Loan Trust - Ser. 2004-1 CTF Cl. M 1
1.7% due 01/25/34 - AA+ .............................. $ 800 $ 801
Renaissance Home Equity Loan Trust - Ser. 2004 4 AF 2 (c)
3.856% due 01/25/35 - NA ............................. 1,795 1,795
Residential Asset Funding and Mortgage
Securities - Ser. 2004 Cl. AII B2
1.32% due 09/25/33 - AAA ............................. 1,685 1,685
Residential Asset Funding and Mortgage
Securities Corp. - Ser. 2001 KS3 Cl. A II
1.33% due 09/25/31 - AAA ............................. 598 598
Residential Asset Securities Corp. - Ser.
2004 KS6 Cl. AII B1
1.22% due 04/25/13 - AAA ............................. 1,496 1,496
Structured Asset Investment Loan Trust -
Ser. 2004-2 Cl. 3 A1
1.95% due 03/25/34 - NA .............................. 630 630
-------
36,554
Other Mortgage - 0.4%
Capital One Secured Note Trust - Notes
2000-3 Cl. C 144A (a)
7.9% due 10/15/10 - BBB .............................. 640 702
Commercial Mortgage Acceptance Corp. - Ser. 1991-C1 A1
6.79% due 06/15/31 - NA .............................. 884 924
LB UBS Commercial Mortgage Trust - CTF A4
4.166% due 04/17/13 - AAA ............................ 1,630 1,575
LB UBS Commercial Mortgage Trust -
Ser. 2003-C5 Cl. K 144A (a)
5.25% due 04/15/37 - BBB- ............................ 1,000 971
-------
4,172
Paper & Forest Products - 0.3%
Donohue Forest Products, Inc. - Sr. Notes
7.625% due 05/15/07 - BB- ............................ 885 910
Longview Fibre Co. - Notes
10.0% due 01/15/09 - B+ .............................. 250 273
Weyerhaeuser Co.
7.125% due 07/15/23 - BBB ............................ 1,430 1,620
-------
2,803
Pharmaceuticals - 0.1%
Medco Health Solutions, Inc. - Sr. Notes
7.25% due 08/15/13 - BBB ............................. 730 815
Real Estate Development - 0.0% Rouse Co. - Notes
5.375% due 11/26/13 - BB+ ............................ 465 446
Real Estate Investment Trust - 1.1%
American Health Properties, Inc. - Notes
7.5% due 01/15/07 - BBB+ ............................. $ 1,405 $ 1,497
Amresco Residential Securities - Notes
6.51% due 08/25/27 - AAA ............................. 1,755 1,798
Boston Properties, Ltd. Partnership - Sr. Notes
6.25% due 01/15/13 - BBB ............................. 800 868
Duke Realty Limited Partnership - Notes
2.781% due 12/22/06 - BBB+ ........................... 1,515 1,514
Health Care Reit, Inc. - Notes
6.0% due 11/15/13 - BBB- ............................. 770 797
Healthcare Realty Trust IN - Sr. Notes
8.125% due 05/01/11 - BBB- ........................... 700 815
iStar Financial, Inc. - Sr. Notes
7.0% due 03/15/08 - BBB- ............................. 410 443
Socgen Real Estate Co. LLC - Ser. A 144A (a)
7.64% due 12/29/49 - A ............................... 1,910 2,095
Spieker Properties, L.P. - Notes
7.125% due 12/01/06 - BBB+ ........................... 1,490 1,594
-------
11,421
Road & Rail - 0.1%
CSX Corp. - Notes
1.0% due 08/03/06 - BBB .............................. 865 865
Specialty Retail - 0.2%
Gap, Inc. - Notes
10.55% due 12/15/08 - BB+ ............................ 550 670
Hughes Supply, Inc. - Sr. Notes 144A (a)
5.5% due 10/15/14 - BBB- ............................. 705 696
Office Depot, Inc. - Sr. Notes
6.25% due 08/15/13 - BBB- ............................ 695 741
-------
2,107
Tobacco - 0.2%
Altria Group, Inc. - Notes
7.0% due 11/04/13 - BBB .............................. 343 372
Philip Morris Cos., Inc. - Notes
6.95% due 06/01/06 - BBB ............................. 1,530 1,589
-------
1,961
U.S. Government Agencies - 35.9%
Federal Home Loan Bank - Bonds
5.0% due 01/01/80 - AAA .............................. 736 748
5.0% due 12/01/17 - AAA .............................. 499 507
5.0% due 04/01/18 - AAA .............................. 10,142 10,308
Federal Home Loan Mortgage Corp. - Bonds
3.972% due 06/01/34 - AAA ............................ 9,762 9,590
4.25% due 03/15/31 - AAA ............................. 1,518 1,514
4.5% due 05/01/19 - AAA .............................. 1,752 1,747
4.5% due 10/01/19 - AAA .............................. 1,602 1,597
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
5.0% due 12/15/28 - AAA .............................. $ 2,880 $ 2,923
5.0% due 08/01/33 - AAA .............................. 4,137 4,117
5.0% due 1/15/2034 - AAA (b) ......................... 2,000 1,986
5.5% due 06/01/24 - AAA .............................. 16,202 16,571
5.5% due 07/15/31 - AAA .............................. 1,117 1,133
6.0% due 10/15/32 - AAA .............................. 3,128 3,176
6.0% due 08/01/34 - AAA .............................. 1,173 1,213
6.0% due 08/01/34 - AAA .............................. 975 1,008
6.0% due 08/01/34 - AAA .............................. 2,960 3,059
6.0% due 09/01/34 - AAA .............................. 3,637 3,759
6.0% due 10/01/34 - AAA .............................. 1,796 1,856
6.5% due 08/01/32 - AAA ..............................
6.5% due 12/01/34 - AAA .............................. 1,215 1,275
Federal Home Loan Mortgage Corp. - Bonds Ser. 2836 Cl. QD
5.0% due 09/15/27 - AAA .............................. 1,960 1,997
Federal Home Loan Mortgage Corp. - Cl. ZA
6.5% due 09/15/31 - AAA .............................. 4,938 5,349
Federal Home Loan Mortgage Corp. - Debs
4.5% due 07/15/13 - AAA .............................. 2,000 2,008
Federal Home Loan Mortgage Corp. - Notes
4.375% due 02/04/10 - AAA ............................ 4,135 4,139
4.5% due 08/01/19 - AAA .............................. 1,263 1,260
4.5% due 11/01/19 - AAA .............................. 975 973
Federal Home Loan Mortgage Corp. - Ser. 2489 Cl. PE
6.0% due 08/15/32 - AAA .............................. 11,000 11,431
Federal Home Loan Mortgage Corp. - Ser. 2640 Cl. WA
3.5% due 03/15/33 - AAA .............................. 640 629
Federal National Mortgage Assoc. - Bonds
4.25% due 03/25/33 - AAA ............................. 556 555
4.5% due 01/25/18 - AAA (b) .......................... 8,895 8,864
4.5% due 07/01/18 - AAA .............................. 10,940 10,930
4.5% due 07/01/19 - AAA .............................. 900 898
4.5% due 10/01/19 - AAA .............................. 1,805 1,800
5.0% due 10/25/16 - AAA .............................. 2,318 2,371
5.0% due 11/01/17 - AAA .............................. 601 611
5.0% due 12/25/17 - AAA (b) .......................... 2,500 2,539
5.0% due 05/01/18 - AAA .............................. 3,812 3,877
5.0% due 06/01/18 - AAA .............................. 2,947 2,997
5.0% due 08/01/19 - AAA .............................. 3,779 3,841
5.0% due 09/01/19 - AAA .............................. 2,092 2,127
5.0% due 10/01/19 - AAA .............................. 3,049 3,100
5.0% due 10/01/19 - AAA .............................. 765 778
5.0% due 10/01/19 - AAA .............................. 5,453 5,544
5.0% due 08/25/27 - AAA .............................. 6,373 6,448
5.0% due 01/25/33 - AAA (b) .......................... 9,500 9,423
5.0% due 08/01/33 - AAA .............................. 4,265 4,240
5.0% due 03/01/34 - AAA .............................. 2,940 2,918
5.0% due 04/01/34 - AAA .............................. $ 2,615 $ 2,600
5.0% due 04/01/34 - AAA .............................. 1,875 1,864
5.5% due 02/01/18 - AAA .............................. 8,193 8,475
5.5% due 11/25/32 - AAA .............................. 2,665 2,729
5.5% due 12/25/32 - AAA (b) .......................... 9,835 9,983
5.5% due 11/01/33 - AAA .............................. 6,888 6,998
5.5% due 01/01/34 - AAA .............................. 13,572 13,790
5.5% due 03/01/34 - AAA .............................. 2,368 2,405
5.5% due 05/01/34 - AAA .............................. 2,144 2,178
5.5% due 09/01/34 - AAA .............................. 8,734 8,872
5.5% due 10/01/34 - AAA .............................. 3,723 3,782
5.5% due 11/01/34 - AAA .............................. 2,147 2,181
6.0% due 09/01/14 - AAA .............................. 924 970
6.0% due 01/25/32 - AAA (b) .......................... 11,040 11,413
6.0% due 03/01/33 - AAA .............................. 6,918 7,163
6.0% due 08/01/34 - AAA .............................. 2,403 2,487
6.5% due 01/25/32 - AAA (b) .......................... 5,520 5,787
6.5% due 11/01/32 - AAA .............................. 782 821
6.5% due 02/01/33 - AAA .............................. 3,339 3,505
6.5% due 09/01/34 - AAA .............................. 2,574 2,701
6.5% due 11/01/34 - AAA .............................. 1,211 1,271
7.0% due 09/01/10 - AAA .............................. 541 574
7.0% due 01/01/12 - AAA .............................. 176 187
7.0% due 02/01/16 - AAA .............................. 549 583
7.0% due 04/01/17 - AAA .............................. 838 888
7.0% due 05/01/17 - AAA .............................. 138 146
Federal National Mortgage Assoc. - Bonds Cl. 2
5.5% due 11/01/33 - AAA .............................. 2,763 598
Federal National Mortgage Assoc. - Bonds Cl. PE
3.5% due 07/25/33 - AAA .............................. 1,213 1,184
Federal National Mortgage Assoc. - Bonds Cl. QZ
5.5% due 11/25/32 - AAA .............................. 1,464 1,431
Federal National Mortgage Assoc. - Bonds Ser. 2002-82
Cl QL
5.0% due 05/25/27 - AAA .............................. 1,540 1,555
Federal National Mortgage Assoc. - Bonds Ser. 2003-49
Cl. JE
3.0% due 04/25/33 - AAA .............................. 1,427 1,373
Federal National Mortgage Assoc. - Bonds Ser. 2003-58 AD
3.25% due 07/25/33 - AAA ............................. 1,635 1,600
Federal National Mortgage Assoc. - Bonds Ser. 2004-11
Cl. 1A
1.22% due 03/25/34 - AAA ............................. 3,579 3,559
Federal National Mortgage Assoc. - Bonds Ser. 2004-W2
Cl. 1A2F
1.44% due 02/25/44 - AAA ............................. 6,171 6,150
Federal National Mortgage Assoc. - Debs
6.625% due 11/15/30 - AAA ............................ 1,000 1,192
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- (000's) (000's)
------- --------
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
Federal National Mortgage Assoc. - Notes
2.5% due 06/15/08 - # AAA ........................... $ 2,000 $ 1,929
3.25% due 08/15/08 - AAA ............................ 2,000 1,974
4.375% due 03/15/13 - AAA ........................... 3,550 3,540
Federal National Mortgage Assoc. - Ser. 2003-116 Cl. FA
1.85% due 11/25/33 - AAA ............................ 8,482 8,528
Government National Mortgage Assoc. - Bonds
5.0% due 05/15/33 - AAA ............................. 33,212 33,275
5.5% due 10/15/33 - AAA ............................. 2,731 2,792
6.0% due 02/15/33 - AAA ............................. 67 69
6.0% due 03/15/33 - AAA ............................. 4,380 4,543
6.0% due 05/15/33 - AAA ............................. 4,081 4,232
6.0% due 12/20/33 - AAA ............................. 721 747
6.5% due 09/15/28 - AAA ............................. 336 355
6.5% due 09/15/29 - AAA ............................. 202 213
6.5% due 08/15/31 - AAA ............................. 442 465
6.5% due 10/15/32 - AAA ............................. 2,914 3,071
6.5% due 01/15/33 - AAA ............................. 85 90
Government National Mortgage Assoc. - Bonds Ser.
2003 Cl. XA
3.75% due 05/16/33 - AAA ............................ 452 445
Small Business Administration - Ser. 2004 20K
4.88% due 11/01/24 - AAA ............................ 800 803
--------
359,800
U.S. Government - 11.6%
U.S. Treasury - Bonds
5.375% due 02/15/31 - # AAA ......................... 9,591 10,371
6.25% due 08/15/23 - # AAA .......................... 3,045 3,565
U.S. Treasury - Notes
0.875% due 04/15/10 - # AAA ......................... 11,385 11,274
1.625% due 02/28/06 - # AAA ......................... 1,589 1,567
2.0% due 01/15/14 - # AAA ........................... 16,011 16,572
2.0% due 07/15/14 - # AAA ........................... 2,066 2,131
2.375% due 08/31/06 - # AAA ......................... 5,500 5,445
3.0% due 02/15/09 - # AAA ........................... 5,546 5,444
3.0% due 07/15/12 - # AAA ........................... 2,229 2,488
3.5% due 12/15/09 - # AAA ........................... 2,115 2,105
3.625% due 07/15/09 - # AAA ......................... 1,571 1,576
3.875% due 01/15/09 - # AAA ......................... 1,746 1,957
4.25% due 01/15/10 - # AAA .......................... 6,920 8,027
4.25% due 11/15/14 - # AAA .......................... 10,024 10,050
4.375% due 08/15/12 - # AAA ......................... 5,100 5,222
4.75% due 05/15/14 - # AAA .......................... 315 328
4.875% due 02/15/12 - # AAA ......................... 20,300 21,456
5.0% due 08/15/11 - # AAA ........................... 6,400 6,813
--------
116,391
Whole Loan CMOs - 9.2%
Ameriquest Mortgage Securities, Inc. - Ser.
2004-X2 Cl. A 144A (a)
1.851% due 06/25/34 - AAA ........................... $ 1,352 $ 1,351
Banc America Commercial Mortgage, Inc. - CTF 144A (a)
5.276% due 03/11/41 - BBB ........................... 1,000 1,001
Banc America Commercial Mortgage, Inc. - Ser.
2004-1 Cl. F 144A (a)
5.279% due 11/10/39 - BBB+ .......................... 650 647
Banc America Commercial Mortgage, Inc. - Ser.
2004-1 Cl. G 144A (a)
5.377% due 11/10/39 - BBB ........................... 650 647
Banc America Commerical Mortgage, Inc. - Ser.
2004-4 Cl. A3
4.128% due 07/10/42 - AAA ........................... 1,635 1,634
Bank One Issuance Trust - Notes
4.54% due 09/15/10 - BBB ............................ 1,300 1,319
Bear Stearns ARM Trust - Ser. 2004 10 Cl. I2A3 (c)
1.0% due 01/25/35 - AAA ............................. 2,382 2,403
Bear Stearns ARM Trust - Ser. 2004-6
CTF Cl. I A1
4.743% due 09/25/34 - AAA ........................... 5,855 5,894
Bear Stearns ARM Trust - Ser. 2004-7 Cl. 1A1
5.036% due 10/25/34 - AAA ........................... 10,288 10,441
Bear Stearns Commercial Mortgage Securities, Inc.
- Ser. 2004-PWR5 Cl. X1 144A (a) *
0.076% due 07/11/42 - NA ............................ 36,450 704
Bear Stearns Commercial Mortgage
Securities, Inc. - Ser. 2004-T16 Cl. X1 (c)
0.12% due 08/13/46 - AAA ............................ 33,695 650
Bear Stearns Trust - Ser. 2004-9 Cl. II A1
5.518% due 08/25/34 - AAA ........................... 715 727
Citigroup Mortgage Loan Trust - Ser. 2004 UST1 Cl. A4
4.426% due 08/25/34 - AAA ........................... 1,061 1,061
Commerce 2004-CNL - Notes Cl. A2 144A (a)
1.0% due 09/15/14 - AAA ............................. 970 972
CWALT, Inc. - Ser. 2004 J7 Cl. 1A2
4.673% due 08/25/34 - AAA ........................... 870 870
CWALT, Inc. - Ser. 2004-24CB Cl. 1 A1
6.0% due 11/25/34 - AAA ............................. 1,883 1,935
CWMBS, Inc. - Ser. 2003-J14 Cl. 2A1
6.25% due 12/25/33 - AAA ............................ 4,037 4,134
CWMBS, Inc. - Ser. 2003-R4 Cl. 1A3 144A (a)
6.0% due 11/25/26 - AAA ............................. 15,500 15,979
CWMBS, Inc. - Ser. 2003-R4 Cl. 2A 144A (a)
6.5% due 01/25/34 - AAA ............................. 6,571 6,814
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- --------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Whole Loan CMOs - Continued
CWMBS, Inc. - Ser. 2004 12 Cl. 11A2
4.431% due 08/25/34 - AAA ........................... $ 6,478 $ 6,539
Global Signal Trust -Ser. 2004-1 Cl. D144A (a)
5.098% due 01/15/34 - BBB ........................... 900 902
Global Signal Trust II - Ser. 2004 2 Cl. D
144A (a) (c)
5.093% due 12/15/14 - NA ............................ 560 560
Greenwich Capital - Ser. 2003-C1 Cl. A4
4.111% due 07/05/12 - AAA ........................... 770 743
Greenwich Capital Commercial Funding
Corp. - Ser. 2003-C2 Cl. A2
4.022% due 07/05/10 - AAA ........................... 1,890 1,887
GS Mortgage Securities Corp. - Ser. 2003-1 Cl. A2
1.79% due 01/25/32 - AAA ............................ 955 963
GS Mortgage Securities Corp. - Ser. 2004 Cl. A2C
1.58% due 05/25/34 - AAA ............................ 1,000 1,002
GS Mortgage Securities Corp. - Ser. 2004-7 Cl. 2A1
4.191% due 06/01/34 - AAA ........................... 1,708 1,685
IMPAC Secured Assets Corp. - Ser. 2004 1 Cl. A3
3.71% due 03/25/34 - AAA ............................ 1,015 1,003
Mellon Residential Funding Corp. - Ser.
2000 TBC2 Cl. A1
1.34% due 06/15/30 - AAA ............................ 998 995
Merrill Lynch Mortgage Investments, Inc.
- Ser. 2004 1 Cl. 2A1
4.779% due 12/25/34 - NA ............................ 1,248 1,253
Merrill Lynch Mortgage Trust - Ser. 2004 Cl. XC (c)
0.059% due 09/12/41 - AAA ........................... 28,900 545
Merrill Lynch Mortgage Trust - Ser. 2004 Cl. A4 *
4.864% due 08/12/39 - NA ............................ 1,620 1,623
Residential Asset Mortgage Products -
Ser. 2004-RS9 Cl. AII1
2.0% due 09/25/13 - AAA ............................. 1,775 1,775
Residential Funding -Ser. 2004-S2 Cl. A1
5.25% due 03/25/34 - AAA ............................ 3,267 3,265
Specialty Underwriting - Ser. 2003 BC4 Cl. A3B
1.0% due 11/25/34 - AAA ............................. 1,825 1,823
Structured Asset Securities Corp. - Ser.
2003 NP3 Cl. A1 144A (a)
1.6% due 11/25/33 - AAA ............................. 723 724
Structured Asset Securities Corp. - Ser.
2004 19XS Cl. A2
4.37% due 10/25/34 - AAA ............................ 1,100 1,093
Structured Asset Securities Corp. - Ser.
2004-16XS Cl. A2
4.91% due 08/25/34 - AAA ............................ 950 954
Structured Asset Securities Corp. - Ser.
2004-6XS Cl. M1
4.92% due 03/25/34 - AA+ ............................ $ 1,100 $ 1,087
Washington Mutual Mortgage Securities
Corp. - Ser. 2004 A1 (c)
4.283% due 01/25/35 - NA ............................ 1,945 1,937
Wells Fargo Mortgage Backed Securities -
Ser. 2004 Z Cl. 11 A1 (c)
4.605% due 12/25/34 - AAA ........................... 1,228 1,234
--------
92,775
--------
Wireless Telecommunications Services - 0.4%
AT&T Wireless Group - Notes
8.125% due 05/01/12 - A ............................. 525 635
AT&T Wireless, Inc. - Notes
7.875% due 03/01/11 - A ............................. 584 688
AT&T Wireless, Inc. - Sr. Notes
8.75% due 03/01/31 - A .............................. 340 459
Mobile Telesystems Finance - Notes 144A (a)
8.375% due 10/14/10 - BB- ........................... 400 406
9.75% due 01/30/08 - BB- ............................ 765 811
Nextel Communications, Inc. - Sr. Notes
5.95% due 03/15/14 - BB ............................. 915 949
--------
3,948
--------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $956,550) 96.7% 970,032
Shares
------
PREFERRED STOCK
Commercial Services & Supplies - 0.0%
Glass Tech., Inc. - Ser. A * (c) .................... 1 1
Electric/Gas - 0.1%
TNP Enterprises, Inc. - Ser. D ...................... 8,840 1,025
U.S. Government Agencies - 0.2%
Federal National Mortgage Assoc. .................... 28,100 1,405
--------
TOTAL PREFERRED STOCK-
(Cost $2,396) 0.3% 2,431
WARRANTS
Commercial Services & Supplies - 0.0%
Sunterra Corp. *
expires 07/26/07 ................................. 152 0
--------
TOTAL WARRANTS-
(Cost $0) 0.0% 0
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
ACTIVE BOND FUND
Par Market
Name of Issuer Value Value
-------------- -------- ----------
(000's) (000's)
COMMERCIAL PAPER
Auto Loan - 0.5%
Ford Motor Credit Co.
2.52% due 04/08/05 ............................. $ 3,900 $ 3,874
General Motors Acceptance Corp.
2.362% due 03/21/05 ............................ 1,400 1,393
----------
5,267
Finance - 0.6%
Rabobank USA Financial Corp.
2.17% due 01/03/05 ............................. 3,500 3,500
UBS Finance Delaware LLC
2.41% due 03/15/05 ............................. 2,400 2,388
----------
5,888
Diversified Financials - 0.7%
Morgan Stanley Group
1.59% due 07/06/05 ............................. 7,200 7,199
----------
TOTAL COMMERCIAL PAPER-
(Cost $18,354) 1.8% 18,354
INVESTMENT COMPANIES HELD
AS COLLATERAL ON LOANED
SECURITIES - 10.3%
State Street Navigator Securities Lending
Portfolio ...................................... 103,372 103,372
SHORT-TERM INVESTMENTS - 5.9%
Investment in joint trading account
2.29% due 01/03/05 (Cost $58,651) .............. 58,651 58,651
-------- ----------
TOTAL INVESTMENTS-
(Cost $1,139,323) 115.0% 1,152,840
Payables, less cash and receivables- (15.0)% (150,456)
-------- ----------
NET ASSETS- 100.0% $1,002,384
======== ==========
# At December 31, 2004 all or portion of this security was out on loan.
(a) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2004, securities aggregated
$86,570 or 8.6% of net assets of the Portfolio.
(b) To Be Announced.
(c) At December 31, 2004 this security was fair valued.
* Non-income producing security. In the case of a bond, generally denotes that
the issuer has defaulted on the payment of principal or interest or has filed
for bankruptcy.
** Bond ratings are not audited.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Active Bond Fund (the "Fund" or "VST Active Bond") 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 twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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 John Hancock Advisers,
Inc. ("Adviser"), an indirect wholly-owned subsidiary of John Hancock, may
participate in a joint repurchase agreement pursuant to an exemptive order
issued by the Securities and Exchange Commission. Aggregate cash balances are
invested in one or more repurchase agreements, whose underlying securities are
obligations of the U.S. Government and/or its agencies. The Fund's custodian
bank receives delivery of the underlying securities for the joint repurchase
agreement on the Fund's behalf. The Adviser is responsible for ensuring that the
agreement is fully collateralized at all times.
Joint trading account: Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the order permits the 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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
Discount and premium on debt securities: The Fund accretes discount and
amortizes premium from par value on securities from either the date of issue or
the date of purchase over the life of the security.
Expenses: Expenses directly attributable to 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, 2004
- --------------------------------------------------------------------------------
(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 $90 and $10 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. For the year ended December
31, 2004, the Fund had no bank borrowings.
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, 2004, 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
- -------------------------- -------------------
$101,608 $103,372
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, 2004, 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 30, 2004, the Fund
had open forward currency contracts which contractually obligate the Fund to
deliver or receive currencies at a specified date as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Principal Amount Unrealized
Currency Purchased Covered by Contract Expiration Month Gain (Loss)
- ------------------ ------------------- ---------------- -----------
Brazilian Real 50 January 05 $ 6
Brazilian Real 31 February 05 2
Brazilian Real 104 March 05 5
Chilean Peso 156 February 05 10
Chilean Peso 102 March 05 7
Euro 529 January 05 9
Pound Sterling 711 January 05 (1)
Hong Kong Dollar 80 January 05 --
Indian Rupee 154 March 05 2
Japanese Yen 7,604 January 05 255
South Korean Won 81 January 05 9
South Korean Won 87 February 05 3
South Korean Won 111 March 05 3
South Korean Won 111 March 05 3
Mexican Peso 29 February 05 1
Mexican Peso 168 March 05 1
Peruvian Nouveau 32 February 05 --
Peruvian Nouveau 105 March 05 1
Polish Zloty 65 February 05 5
Polish Zloty 70 March 05 2
New Russian Ruble 60 January 05 2
New Russian Ruble 30 February 05 1
New Russian Ruble 109 March 05 2
Singapore Dollar 81 January 05 2
Singapore Dollar 82 February 05 --
Singapore Dollar 104 March 05 1
New Taiwan Dollar 31 February 05 1
New Taiwan Dollar 103 March 05 2
----
$334
====
Currency Sold
Euro 8,894 January 05 $(78)
Japanese Yen 2,916 January 05 4
Japanese Yen 682 January 05 1
Swedish Krona 1,012 January 05 (1)
----
$(74)
====
Options: The Fund may use option contracts to manage its exposure to the
bond market and to fluctuations in interest rates and currency values. Option
contracts tend to increase or decrease the Fund's exposure to the underlying
instrument or hedge other fund investments.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
When the Fund purchases an option, the premium paid by the Fund is included
in the Fund's Statement of Assets and Liabilities as an investment and
subsequently "marked to market" to reflect the option's current market value.
Purchased options are valued at the last sale price on the market on which they
are principally traded. If the purchased option expires, the Fund realizes a
loss in the amount of the premium. If the Fund enters into a closing sale
transaction, it realizes a gain or loss, depending on whether the proceeds from
the sale are greater or less than the cost of the option. If the Fund exercises
a call option, the cost of the securities acquired by exercising the call is
increased by the premium paid to buy the call. If the Fund exercises a put
option, it realizes a gain or loss from the sale of the underlying security and
the proceeds from such sale are decreased by the premium originally paid. The
risk associated with purchasing options is limited to the premium originally
paid.
When the Fund writes an option, the premium received by the Fund is
presented in the Fund's Statement of Assets and Liabilities as an asset and an
equivalent liability. The amount of the liability is subsequently "marked to
market" to reflect the current market value of the option written. Written
options are valued at the last sale price or, in the absence of a sale, the last
offering price on the market on which they are principally traded. If an option
expires on its stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the amount of the premium
originally received reduces the cost of the security which the Fund purchases
upon exercise of the option.
The risk in writing a call option is that the Fund relinquishes the
opportunity to profit if the market price of the underlying security increases
and the option is exercised. In writing a put option, the Fund assumes the risk
of incurring a loss if the market price of the underlying security decreases and
the option is exercised. In addition, there is a risk the Fund may not be able
to enter into a closing transaction because of an illiquid secondary market, or
if the counterparties do not preform under the contracts' terms. As of December
31, 2004, the Fund had no written options.
Swap Agreements: The Fund may invest in swap agreements which involve the
exchange of cash payments based on the specified terms and conditions of such
agreements. A swap is an agreement to exchange the return generated by one
investment for the return generated by another instrument. The value of each
swap is determined by the counterparty to the swap agreement using a methodology
which discounts the expected future cash receipts or disbursements related to
the swap. The Fund may also enter into interest rate swap agreements which
involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, (e.g., an exchange of floating rate
payments with respect to a notional amount of principal). Interest rate swaps
are "marked-to-market" daily. Net market value is reported as an asset or a
liability in the Statement of Assets and Liabilities. The cash paid or received
on a swap is recognized as realized gain or loss when such a payment is paid or
received.
Entering into swap agreements involves, to varying degrees, elements of
credit risk, market risk and interest rate risk in excess of the amount
recognized in the Statement of Assets and Liabilities. Such risks involve the
possibility that there is not a liquid market for these agreements, that the
counterparty to the agreements may default on its obligation to perform and that
there may be unfavorable changes in market conditions or interest rates.
Swap agreements which were open for the year ended December 31, 2004 are
summarized as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Net Unrealized
Appreciation
Par Value Interest Rate Swaps Counter Party (Depreciation)
- --------- -------------------------------------- -------------- --------------
61,400 To make or receive semi-annual Morgan Stanley $(601)
payments through 6/15/2010 based on
the difference between (A) the fixed
rate of 4.00% and (B) floating rate of
3 Month LIBOR, adjusted every 3
months.
6,000 To make or receive semi-annual Bank of (59)
payments through 6/15/2010 based on America
the difference between (A) the fixed
rate of 4.00% and (B) floating rate of
3 Month LIBOR, adjusted every 3
months.
9,300 To make or receive semi-annual Barclays (894)
payments through 6/15/2025 based on
the difference between (A) the fixed
rate of 6.0% and (B) floating rate of
3 Month LIBOR, adjusted every 3
months.
3,000 To make or receive monthly payments Citigroup 13
through 4/1/2005 based on floating
rate of 1 Month LIBOR minus 0.35%,
adjusted every month.
7,600 To make or receive semi-annual Bank of (130)
payments through 6/15/2015 based on America
the difference between (A) the fixed
rate of 5.00% and (B) floating rate of
3 Month LIBOR, adjusted every 3
months.
11,100 To make or receive semi-annual Lehman (364)
payments through 6/15/2015 based on Brothers
the difference between (A) the fixed
rate of 5.00% and (B) floating rate of
3 Month LIBOR, adjusted every 3
months.
5,800 To make or receive semi-annual JP Morgan (100)
payments through 6/15/2015 based on
the difference between (A) the fixed
rate of 5.00% and (B) floating rate of
3 Month LIBOR, adjusted every 3
months.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Net Unrealized
Appreciation
Par Value Interest Rate Swaps Counter Party (Depreciation)
- --------- -------------------------------------- ------------- --------------
73,400 To make or receive semi-annual Barclays $ (336)
payments through 6/15/2006 based on
the difference between (A) the fixed
rate of 3.00% and (B) floating rate of
3 Month LIBOR, adjusted every 3
months.
90,000 To make or receive semi-annual Goldman Sachs (412)
payments through 6/15/2006 based on
the difference between (A) the fixed
rate of 3.00% and (B) floating rate of
3 Month LIBOR, adjusted every 3
months.
15,200 To make or receive semi-annual UBS (484)
(GBP) payments through 3/15/2032 based on
the difference between (A) the fixed
rate of 5.00% and (B) floating rate of
6 Month LIBOR, adjusted every 6
months.
19,400 To make or receive semi-annual JP Morgan 1,777
(EURO) payments through 3/15/2032 based on
the difference between (A) the fixed
rate of 6.00% and (B) floating rate of
6 Month EURIBOR, adjusted every 6
months.
196,500 To make or receive semi-annual Barclays (135)
(SEK) payments through 6/17/2008 based on
the difference between (A) the fixed
rate of 4.5% and (B) floating rate of
3 Month STIBOR, adjusted every 3
months.
Net Unrealized
Appreciation
Par Value Credit Default Swaps: Counter Party (Depreciation)
- --------- -------------------------------------- -------------- --------------
1,000 To make annual fixed coupon payments Morgan Stanley $ --
through 5/24/2005 based on the annual
fixed rate of 0.70%. In the event of a
predefined "credit event notice" of
the Russian Federation 5.0%, 3/31/2030
Note, the Fund will receive amounts
specified under the terms of the swap
agreement.
-------
$(1,725)
=======
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $519 and $1,733 which expire in 2007 and 2010, respectively.
Certain of the above losses may be limited under sections 382 - 384 of the
Internal Revenue Code, as amended.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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.
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.
Restricted Securities: Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense, either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such sales. The
Fund's restricted securities are valued at the price provided by dealers in the
secondary market, or, if no market prices are available, at the fair value as
determined in accordance with procedures established by and under general
supervision of the Trustees.
When-Issued and Delayed Delivery Transactions: The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such as that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date. Losses
may occur on these transactions due to changes in market conditions or the
failure of counterparts to perform under the contract.
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 11, 2004, 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:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
- --Continued
Between Between Between
$100 Million and $250 Million and $500 Million and Excess Over
First $100 Million $250 Million $500 Million $1 Billion $1 Billion
- ------------------ ---------------- ---------------- ---------------- -----------
0.70% 0.65% 0.61% 0.58% 0.55%
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. For the year
ended December 31, 2004, there were no reimbursements paid to the Fund.
John Hancock has entered into Sub-Advisory Agreements with Declaration
Management & Research, LLC, and John Hancock Advisers, LLC. Each is an affiliate
of John Hancock, and under John Hancock's supervision, is responsible for a
portion of the day-to-day investment management of the Fund. John Hancock has
also entered into a Sub-Advisory Agreement with Pacific Investment Management
Company, LLC, which under John Hancock's supervision, is also responsible for a
portion of 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, 2004 were as follows:
Purchases Sales and Maturities
- ---------- --------------------
$4,364,652 $4,194,502
As of December 31, 2004, transactions for written options were as follows:
Contracts Premium ($)
--------- -----------
Beginning of period 38,000 329
Options opened 49,700 355
Options closed/expired (87,700) (684)
------- ----
End of period -- --
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$1,140,029 $26,169 $(13,358) $12,811
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $513 $2,252 $12,922
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
- ---- ------------------ ---------------------- -----------------
2004 $39,829 $8,235 $--
2003 66,299 5,737 --
NOTE E--COMBINATION
On April 25, 2003, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
- --------------- --------------------------------
VST Active Bond John Hancock VA Strategic Income
This combination provided for the transfer of substantially all of the
assets and liabilities of the target fund to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The acquisition was accounted
for as a tax-free exchange as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE E--COMBINATION--Continued
Trust Shares Target Fund Acquiring Fund Acquiring Fund
Issued by Target Fund Unrealized Net Assets Prior Aggregate Net Assets
Acquiring Fund Net Assets Appreciation to Combination After Combination
- -------------- ----------- ------------ ---------------- --------------------
8,433 $83,358 $2,176 $1,016,994 $1,100,351
NOTE F--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Active Bond Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Active Bond Fund of John Hancock Variable Series Trust I at December 31, 2004,
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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1998
- --------------------------------------------------------------------------------
Bond Index Fund
Standish Mellon Asset Management Company LLC Gregory Curran
- --------------------------------------------------------------------------------
.. The manager seeks to track the performance of the Fund's benchmark by
investing in a representative sample of securities selected through
proprietary quantitative techniques. Issues are selected to best match the
risk characteristics including price sensitivity, industry, and quality
exposure, of more than 6,900 securities in the benchmark.
Fund Commentary
Performance: For the year 2004, the Bond Index fund returned 4.05%,
underperforming the Lehman Brothers Aggregate Bond Index returning 4.34%.
Environment: The Lehman Brothers Aggregate Index returned 4.34% in 2004. The
yield curve significantly flattened as the 2-year part of the curve increased
over 120 basis points in reaction to Federal Reserve interest rate hikes. The
long end of the curve was down approximately 25 basis points. All spread sectors
outperformed risk-neutral Treasuries. The credit sector had +159 basis points of
excess return followed by asset backed securities and mortgage-backed
securities. The portfolio was positioned to closely match all the risk
characteristics of the Index, which allowed the portfolio to perform in line
with the benchmark before fees and transaction costs.
Outlook: The economic outlook for 2005 is for the U.S. and global economies to
decelerate from the late 2003/2004 global trade boom. Consensus real U.S. GDP
growth is estimated to be 3.5% in 2005, which is achievable, but the risks
remain to the downside. Despite slowing economic growth the Fed is expected to
raise interest rates towards 3% by mid 2005. Credit valuations are tight and
profit growth is slowing. However, an indexed portfolio will not consider these
economic forecasts and instead capture the risk and return of the selected
benchmark. The portfolio will be structured to replicate the characteristics of
the Lehman Brothers Aggregate Bond Index with respect to duration, sector
distribution, quality distribution, coupon, maturity, and yield.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 5/1/98 (Fund Inception Date)
Bond Index Fund Bond Index Benchmark(1)
--------------- -----------------------
4/30/1998 $10,000 $10,000
5/31/1998 10,102 10,107
6/30/1998 10,211 10,210
7/31/1998 10,220 10,218
8/31/1998 10,461 10,418
9/30/1998 10,757 10,715
10/31/1998 10,689 10,639
11/30/1998 10,703 10,703
12/31/1998 10,720 10,729
1/31/1999 10,795 10,805
2/28/1999 10,521 10,548
3/31/1999 10,584 10,601
4/30/1999 10,609 10,627
5/31/1999 10,485 10,518
6/30/1999 10,450 10,485
7/31/1999 10,420 10,456
8/31/1999 10,414 10,447
9/30/1999 10,497 10,541
10/31/1999 10,514 10,569
11/30/1999 10,513 10,562
12/31/1999 10,445 10,498
1/31/2000 10,425 10,495
2/29/2000 10,551 10,626
3/31/2000 10,713 10,779
4/30/2000 10,666 10,726
5/31/2000 10,640 10,717
6/30/2000 10,855 10,935
7/31/2000 10,956 11,051
8/31/2000 11,122 11,207
9/30/2000 11,165 11,250
10/31/2000 11,244 11,320
11/30/2000 11,445 11,514
12/31/2000 11,678 11,741
1/31/2001 11,840 11,938
2/28/2001 11,942 12,042
3/31/2001 11,993 12,102
4/30/2001 11,938 12,051
5/31/2001 12,008 12,124
6/30/2001 12,047 12,170
7/31/2001 12,310 12,442
8/31/2001 12,436 12,585
9/30/2001 12,595 12,731
10/31/2001 12,850 12,997
11/30/2001 12,670 12,818
12/31/2001 12,584 12,736
1/31/2002 12,674 12,839
2/28/2002 12,793 12,964
3/31/2002 12,554 12,749
4/30/2002 12,795 12,996
5/31/2002 12,895 13,106
6/30/2002 13,008 13,220
7/31/2002 13,192 13,380
8/31/2002 13,418 13,606
9/30/2002 13,634 13,827
10/31/2002 13,582 13,763
11/30/2002 13,552 13,759
12/31/2002 13,836 14,044
1/31/2003 13,834 14,057
2/28/2003 14,030 14,251
3/31/2003 14,019 14,239
4/30/2003 14,119 14,357
5/30/2003 14,367 14,624
6/30/2003 14,335 14,595
7/31/2003 13,850 14,105
8/31/2003 13,932 14,198
9/30/2003 14,305 14,574
10/31/2003 14,161 14,439
11/30/2003 14,187 14,473
12/31/2003 14,334 14,621
1/31/2004 14,445 14,738
2/28/2004 14,589 14,897
3/31/2004 14,705 15,009
4/30/2004 14,321 14,618
5/30/2004 14,252 14,560
6/30/2004 14,335 14,643
7/31/2004 14,472 14,788
8/31/2004 14,750 15,070
9/30/2004 14,785 15,111
10/31/2004 14,902 15,238
11/30/2004 14,780 15,116
12/31/2004 14,913 15,255
Value on 12/31/04:
- ------------------
$14,913 Bond Index Fund
$15,255 Bond Index Benchmark (1)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
U.S. Treasury 23.1%
Federal National Mortgage Assoc. 20.5%
Federal Home Loan Mortgage Corp. 17.3%
Government National Mortgage Assoc. 4.2%
Federal Home Loan Bank 2.1%
General Electric 1.5%
JP Morgan Chase & Co. 1.2%
General Motors Acceptance Corp. 1.1%
Morgan Stanley 0.9%
Wells Fargo 0.9%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Bond
Bond Index Fund
Index Fund Benchmark/1/
---------- ------------
1 Year 4.05% 4.34%
3 Years 5.83% 6.20%
5 Years 7.38% 7.76%
Since Inception (5/1/98) 6.17% 6.54%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND COMPOSITION (as of December 31, 2004)
% of
Credit Quality Assets
- -------------- ------
Government 69.44%
AAA 5.48%
AA 1.83%
A 11.96%
BBB 11.30%
Weighted Average Yield 4.49%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
/1/ The Bond Index Fund benchmark represents the Lehman Brothers
Government/Credit Bond Index from May 1998 to January 2001, and the Lehman
Brothers Aggregate Bond Index from February 2001 to present.
Inception: May 1, 1998
- --------------------------------------------------------------------------------
Bond Index Fund
Standish Mellon Asset Management Company LLC Gregory Curran
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Bond Index Fund shareholder, you pay ongoing expenses, such as management
fees; distribution fees (12b-1); and other expenses. Using the information
below, you can estimate how these expenses affect your investment and compare
them with the expenses of other funds. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,040.40
Expense paid per $1,000* $ 1.28
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,023.88
Expense paid per $1,000* $ 1.27
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Bond Index Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $43,674 of securities
loaned (Note B)) ................................................ $193,908
Net unrealized appreciation of investments ......................... 4,215
Short-term investments at value .................................... 47,725
--------
Total investments ............................................... 245,848
Receivable for:
Investments sold ................................................ 256
Fund shares sold ................................................ 48
Interest ........................................................ 2,198
--------
Total assets ....................................................... 248,350
--------
LIABILITIES
Payables for:
Investments purchased ........................................... 1,965
Collateral for securities on loan ............................... 44,410
Accrued operating expenses ...................................... 40
--------
Total liabilities .................................................. 46,415
--------
Net assets ......................................................... $201,935
========
Shares outstanding, $0.01 Par Value (unlimited shares authorized)... 20,091
--------
Net asset value per share .......................................... $ 10.05
========
Composition of net assets:
Capital paid-in ................................................. $197,747
Accumulated net realized loss on investments .................... (27)
Net unrealized appreciation of Investments ...................... 4,215
--------
Net assets ......................................................... $201,935
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Bond Index Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 9,712
Securities lending ............................................... 25
-------
Total investment income ............................................. 9,737
-------
EXPENSES
Investment advisory fee .......................................... 284
Auditors fees .................................................... 27
Custodian fees ................................................... 148
Fidelity Bond fees ............................................... 1
Legal fees ....................................................... 36
Printing & mailing fees .......................................... 36
Trustees' fees ................................................... 6
Other fees ....................................................... 6
-------
Total expenses ...................................................... 544
Less expenses reimbursed ......................................... (47)
-------
Net expenses ........................................................ 497
-------
Net investment income ............................................... 9,240
-------
REALIZED AND UNREALIZED LOSS
Net realized gain on investments ................................. 383
Change in unrealized depreciation on investments ................. (1,593)
-------
Net realized and unrealized loss .................................... (1,210)
-------
Net increase in net assets resulting from operations ................ $ 8,030
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Bond Index Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE(DECREASE) IN NET ASSETS
From operations
Net investment income ............................................... $ 9,240 $ 10,717
Net realized gain (loss) ............................................ 383 207
Change in net unrealized depreciation ............................... (1,593) (3,166)
-------- ---------
Net increase in net assets resulting from operations ............. 8,030 7,758
Distributions to shareholders from:
Net investment income ............................................... (9,237) (9,830)
Realized gains ...................................................... (337) (1,105)
Capital paid-in ..................................................... (91) (689)
-------- ---------
Decrease in net assets resulting from distributions .............. (9,665) (11,624)
From fund share transactions:
Proceeds from shares sold ........................................... 39,016 108,981
Distributions reinvested ............................................ 9,665 11,624
Payment for shares redeemed ......................................... (60,772) (109,173)
-------- ---------
Increase (decrease) in net assets from fund share transactions ... (12,091) 11,432
-------- ---------
NET INCREASE (DECREASE) IN NET ASSETS .................................. (13,726) 7,566
NET ASSETS
Beginning of Period ................................................. 215,661 208,095
-------- ---------
End of Period (including undistributed net investment income of
$0 and $0, respectively) ......................................... $201,935 $ 215,661
======== =========
Analysis of fund share transactions:
Sold ................................................................ 3,865 10,603
Reinvested .......................................................... 962 1,136
Redeemed ............................................................ (6,019) (10,661)
-------- ---------
Net increase (decrease) in fund shares outstanding ..................... (1,192) 1,078
======== =========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year ended indicated:
Bond Index Fund
---------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------
2004 2003(e) 2002(e) 2001 2000
-------- -------- -------- -------- -------
Net Assets Value at Beginning of Period ................... $ 10.13 $ 10.30 $ 9.89 $ 9.74 $ 9.32
Income from Investment Operations:
Net Investment Income .................................. 0.46 0.48 0.54 0.57 0.62
Net Realized and Unrealized Gain (Loss) on
Investment(a) ....................................... (0.06) (0.12) 0.42 0.17 0.43
-------- -------- -------- -------- -------
Total From Investment Operations ....................... 0.40 0.36 0.96 0.74 1.05
Less Distributions:
Distribution from Net Investment Income ................ (0.46) (0.45) (0.53) (0.58) (0.63)
Distribution from Net Realized Gains on Investments .... (0.02) (0.05) (0.01) (0.01)
Capital paid-in ........................................ (f) (0.03) (0.01)
-------- -------- -------- -------- -------
Total Distributions .................................... (0.48) (0.53) (0.55) (0.59) (0.63)
-------- -------- -------- -------- -------
Net Assets Value at End of Period ......................... $ 10.05 $ 10.13 $ 10.30 $ 9.89 $ 9.74
======== ======== ======== ======== =======
Total Investment Return(b) ................................ 4.05% 3.60% 9.95% 7.76% 11.81%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ....... 0.25%(c) 0.24%(c) 0.22%(c) 0.24% 0.25%
Ratio of Net Investment Income to Average Net Assets ... 4.56% 4.73% 5.30% 5.77%(d) 6.80%
Portfolio Turnover Rate ................................ 17.79% 40.22% 57.31% 68.70% 40.46%
Net Assets End of Period (000s Omitted) ................... $201,935 $215,661 $208,095 $129,358 $64,768
(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 .27%, .24%, .25%, and 27%, for
the years ended December 31, 2004, 2003, 2002, and 2000, respectively.
(d) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 6.37% for the years ended December 31, 2001.
(e) Certain amounts in 2003 and 2002 have been reclassified to permit
comparison.
(f) Amount is less than $0.01.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND **
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS
Aerospace & Defense - 0.2% Boeing Corp.
8.75% due 09/15/31 - A .................................. $ 90 $ 126
Northrop-Grumman Corp. - Debs.
7.75% due 03/01/16 - BBB ................................ 75 92
Raytheon Co. - Notes
6.75% due 08/15/07 - BBB- ............................... 200 216
United Technologies Corp. - Debs.
8.875% due 11/15/19 - A ................................. 50 68
-------
502
Auto Loan - 1.2%
Ford Motor Credit Co.
6.125% due 01/09/06 - BBB- .............................. 800 819
Ford Motor Credit Co. - Bonds
7.375% due 02/01/11 - BBB- .............................. 250 270
General Motors Acceptance Corp. - Notes
6.125% due 09/15/06 - BBB- .............................. 400 410
7.75% due 01/19/10 - BBB- ............................... 400 429
8.0% due 11/01/31 - BBB- ................................ 430 442
Toyota Motor Credit Corp. - Notes
5.5% due 12/15/08 - AAA ................................. 60 64
-------
2,434
Automobiles - 0.5%
DaimlerChrysler NA Holding Co.
7.2% due 09/01/09 - BBB ................................. 650 723
Ford Motor Co. - Bonds #
6.625% due 02/15/28 - BBB- .............................. 350 327
-------
1,050
Banks - 5.5%
African Development Bank - Sub. Notes
6.875% due 10/15/15 - AA+ ............................... 35 41
Bank of America Corp. - Sub. Notes
7.8% due 02/15/10 - A ................................... 350 407
Bank One Corp.
7.875% due 08/01/10 - A ................................. 300 350
Bank One Corp. - Notes
6.875% due 08/01/06 - A+ ................................ 1,000 1,055
Bank America Corp. - Sub. Notes
6.5% due 03/15/06 - A ................................... 150 155
Chase Manhattan Corp. - Sub. Notes
7.125% due 02/01/07 - A ................................. 225 242
Credit Suisse First Boston
6.5% due 01/15/12 - A+ .................................. 400 445
Credit Suisse First Boston, Inc. - Notes
5.875% due 08/01/06 - A+ ................................ 500 520
European Investment Bank - Global Notes #
4.625% due 03/01/07 - AAA ............................... 800 821
Fleet Boston Corp. - Sub. Notes
7.375% due 12/01/09 - A ................................. 100 114
Fleet Financial Group, Inc. - Sub. Debs. #
6.7% due 07/15/28 - A ................................... $ 75 $ 84
HSBC Holdings plc
7.5% due 07/15/09 - A ................................... 150 171
InterAmerican Development Bank - Debs.
8.5% due 03/15/11 - AAA ................................. 200 244
Intermediate American Development Bank - Bonds
6.125% due 03/08/06 - AAA ............................... 1,300 1,346
International Bank of Reconstruction &
Development - Notes
5.0% due 03/28/06 - AAA ................................. 750 768
JP Morgan Chase & Co. - Notes
5.25% due 05/30/07 - A+ ................................. 1,000 1,040
NationsBank Corp. - Sub. Notes
7.75% due 08/15/15 - A .................................. 400 480
Royal Bank of Scotland Group plc - Sub. Notes
5.0% due 11/12/13 - A+ .................................. 300 304
Royal Bank of Scotland plc - Sub. Notes
6.4% due 04/01/09 - A+ .................................. 150 163
United Bank National Association of Minneapolis
6.375% due 08/01/11 - A+ ................................ 325 361
Wachovia Corp. - Notes
4.95% due 11/01/06 - A .................................. 1,350 1,388
Wachovia Corp. - Sub. Notes
5.625% due 12/15/08 - A- ................................ 75 80
Wells Fargo Bank NA - Sub. Notes
6.45% due 02/01/11 - AA- ................................ 550 612
-------
11,191
Beverages - 0.4%
Anheuser Busch Cos., Inc.
9.0% due 12/01/09 - A+ .................................. 470 570
Coca-Cola Enterprises, Inc. - Debs. #
8.5% due 02/01/22 - A ................................... 100 133
Pepsi Bottling Group, Inc. - Sr. Notes Ser. B -
7.0% due 03/01/29 - A ................................... 100 121
-------
824
Chemicals - 0.2%
E.I. Du Pont De Nemours
6.5% due 01/15/28 - AA- ................................. 150 173
Eastman Chemical - Debs.
7.6% due 02/01/27 - BBB ................................. 50 59
Rohm & Haas Co. - Notes
7.4% due 07/15/09 - BBB+ ................................ 80 91
-------
323
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
CMBS - 0.2%
JP Morgan Chase & Co. Commercial
Mortgage Securities - Ser. 2004 CIBC8 Cl. A4
4.404% due 01/12/39 - AAA ............................... $ 400 $ 388
Commercial Services & Supplies - 0.3%
First Data Corp. - Sr. Notes
5.625% due 11/01/11 - A+ ................................ 400 430
Honeywell International, Inc. - Notes
7.5% due 03/01/10 - A ................................... 75 86
------
516
Computers & Peripherals - 0.4%
International Business Machines Corp. - Debs.
7.0% due 10/30/25 - A+ .................................. 100 119
International Business Machines Corp. - Notes
4.25% due 09/15/09 - A+ ................................. 600 607
------
726
Credit Card - 0.8%
American Express Co. - Notes #
4.875% due 07/15/13 - A+ ................................ 150 152
MBNA Credit Card Master Note Trust - Ser.
2002-1 Notes Cl. A
4.95% due 06/15/09 - AAA ................................ 1,000 1,032
MBNA Master Credit Card Trust II - Notes
6.5% due 04/15/10 - AAA ................................. 400 433
------
1,617
Diversified Financials - 4.2%
Bear Stearns & Co., Inc. - Notes
5.7% due 11/15/14 - A ................................... 240 253
Chase Commercial Mortgage Securities Corp.
- Ser. 1997-2 Pass Thru Certs Cl. A2
6.6% due 12/19/29 - AAA ................................. 407 433
Chase Commercial Mortgage Securities Corp.
- Ser. 200-2 CTF Cl. A2
7.631% due 07/15/32 - NA ................................ 300 348
Citicorp Capital II
8.015% due 02/15/27 - A ................................. 100 111
Citigroup, Inc. - Notes
6.625% due 01/15/28 - AA- ............................... 100 112
Citigroup, Inc. - Sub. Notes
5.875% due 02/22/33 - A+ ................................ 190 193
Citigroup, Inc. - Sub. Notes 144A (a)
5.0% due 09/15/14 - A+ .................................. 472 474
GE Capital Commercial Mortgage Corp. -
Ser. 2001-2 Cl. A4
6.59% due 08/11/33 - NA ................................. 550 607
Goldman Sachs Capital
6.345% due 02/15/34 - A- ................................ 160 167
Goldman Sachs Group, Inc. - Notes
7.35% due 10/01/09 - A+ ................................. $ 500 $ 569
Hartford Financial Services Group, Inc. - Sr. Notes
7.75% due 06/15/05 - A- ................................. 150 153
Kreditanstalt Fur Wiederaufbau - Notes
3.25% due 03/30/09 - AAA ................................ 500 491
Merrill Lynch & Co., Inc.
5.45% due 07/15/14 - A+ ................................. 170 176
Merrill Lynch & Co., Inc. - Notes
6.875% due 11/15/18 - A+ ................................ 120 139
Morgan Stanley Capital, Inc. - Pass Thru
Certs. Ser. 1999-RM1
6.37% due 12/15/31 - NA ................................. 371 383
Morgan Stanley Group, Inc.
6.1% due 04/15/06 - A+ .................................. 1,065 1,103
Morgan Stanley Group, Inc.
6.75% due 04/15/11 - A+ ................................. 250 280
Prudential Commercial Mortgage Trust - Cl. A2
4.493% due 02/11/36 - AAA ............................... 450 444
Salomon Brothers Commercial & Mortgage
Trust - Ser. 2000-C3 Pass Thru Certs Cl. A2
6.592% due 12/18/33 - AAA ............................... 500 553
Salomon Brothers Mortgage Securities Inc. -
Pass Thru Certs - Ser. 2000-C1 Cl. A2
7.52% due 12/18/09 - AAA ................................ 300 341
Wells Fargo & Co. - Sub. Notes #
6.875% due 04/01/06 - A+ ................................ 1,100 1,147
------
8,477
Diversified Telecommunication Services - 1.2%
BellSouth Corp. - Notes #
6.875% due 10/15/31 - A ................................. 200 227
British Telecommunications plc - Notes
8.375% due 12/15/10 - A- ................................ 200 240
8.875% due 12/15/30 - A- ................................ 130 174
France Telecom SA - Notes
8.7% due 03/01/06 - BBB+ ................................ 350 367
10.0% due 03/01/31 - BBB+ ............................... 100 136
GTE Corp. - Debs.
6.94% due 04/15/28 - A+ ................................. 100 111
Telefonica Europe BV - Notes
8.25% due 09/15/30 - A .................................. 100 134
Verizon Global Funding Corp. - Notes
4.375% due 06/01/13 - # A+ .............................. 370 361
Vodafone Group Plc
7.75% due 02/15/10 - A .................................. 500 580
------
2,330
Electric Utilities - 0.0%
CalEnergy Co., Inc. - Bonds
8.48% due 09/15/28 - BBB- ............................... 60 79
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Electric/Gas - 1.4%
Alabama Power Co. - Sr. Notes
5.5% due 10/15/17 - A ................................... $ 100 $ 104
5.7% due 02/15/33 - A ................................... 80 82
Cincinnati Gas & Electric Co. - Debs
5.7% due 09/15/12 - BBB ................................. 300 318
Constellation Energy Group, Inc. - Notes
7.0% due 04/01/12 - BBB ................................. 240 274
Dominion Resources, Inc.
8.125% due 06/15/10 - BBB+ .............................. 200 235
Duke Energy Co. - Sr. Notes
5.625% due 11/30/12 - BBB ............................... 400 421
Niagara Mohawk Power Corp.
7.75% due 10/01/08 - A- ................................. 200 225
Oncor Electric Delivery Co. - Sr. Sec. Notes
6.375% due 05/01/12 - BBB ............................... 400 441
Ontario Hydro
6.1% due 01/30/08 - AA .................................. 100 107
Progress Energy, Inc. - Sr. Notes
7.1% due 03/01/11 - BBB- ................................ 500 562
------
2,769
Finance - 3.9%
Ameritech Capital Funding Corp.
6.875% due 10/15/27 - A ................................. 60 66
Anardarko Finance Co. - Sr. Notes
6.75% due 05/01/11 - BBB+ ............................... 200 225
Countrywide Funding Corp. #
5.5% due 02/01/07 - A ................................... 200 207
Deutsche Telekom International Finance
8.75% due 06/15/30 - BBB+ ............................... 300 396
Devon Financing Corp. United L C - Notes
6.875% due 09/30/11 - BBB ............................... 400 453
Financing Corp.
8.6% due 09/26/19 - NA .................................. 150 205
General Electric Capital Corp.
6.0% due 06/15/12 - AAA ................................. 950 1,036
General Electric Capital Corp.
6.125% due 02/22/11 - AAA ............................... 1,150 1,260
Household Finance Corp. - Notes
8.0% due 07/15/10 - A ................................... 350 412
Household Finance Corp. - Sr. Unsub. Notes
5.875% due 02/01/09 - A ................................. 280 299
KFW International Finance, Inc. - Sr. Notes
5.25% due 06/28/06 - AAA ................................ 300 310
Lehman Brothers Holdings, Inc. - Notes
6.25% due 05/15/06 - A .................................. 500 520
Marsh & McLennan Cos., Inc. - Sr. Notes
4.85% due 02/15/13 - BBB ................................ 240 228
MBNA Corp. #
5.0% due 06/15/15 - BBB ................................. 250 246
National Rural Utilities Cooperative Finance - Notes
5.75% due 08/28/09 - A .................................. 700 748
Sprint Capital Corp.
6.875% due 11/15/28 - BBB- .............................. $ 150 $ 164
7.625% due 01/30/11 - BBB- .............................. 300 348
Sumitomo Bank International Finance NV - Notes
8.5% due 06/15/09 - BBB+ ................................ 100 117
Verizon Global Funding Corp. - Notes
7.25% due 12/01/10 - A+ ................................. 230 264
Washington Mutual Capital I
8.375% due 06/01/27 - BBB ............................... 60 67
Washington Mutual Finance Corp. - Sr. Notes #
6.25% due 05/15/06 - AA- ................................ 300 311
------
7,882
Financials - 0.1%
Aetna Inc.
7.625% due 08/15/26 - A+ ................................ 100 120
Food & Drug Retailing - 0.4%
Albertson's, Inc. - Notes
6.625% due 06/01/28 - BBB ............................... 50 52
Albertson's, Inc. - Sr. Notes
7.5% due 02/15/11 - BBB ................................. 345 400
CVS Corp. - Notes
4.875% due 09/15/14 - A- ................................ 100 100
Safeway, Inc. - Notes #
5.8% due 08/15/12 - BBB ................................. 150 158
------
710
Food Products - 0.9%
Conagra Foods, Inc. - Notes
7.875% due 09/15/10 - BBB+ .............................. 250 294
Conagra, Inc. - Debs.
9.75% due 03/01/21 - BBB ................................ 75 106
General Mills, Inc. - Notes
6.0% due 02/15/12 - BBB+ ................................ 250 271
Kellogg Co. - Debs. - Ser. B
7.45% due 04/01/31 - BBB+ ............................... 100 126
Kraft Foods, Inc. - Notes
4.625% due 11/01/06 - BBB+ .............................. 300 306
Kraft Foods, Inc. - Notes #
5.25% due 10/01/13 - BBB+ ............................... 325 334
Sara Lee Corp. - Notes
6.25% due 09/15/11 - A+ ................................. 100 111
The Kroger Co.
8.05% due 02/01/10 - BBB ................................ 150 176
------
1,724
Foreign Government - 2.4%
Government of Canada #
5.25% due 11/05/08 - AAA ................................ 125 132
Government of New Zealand - Debs.
8.75% due 12/15/06 - AA+ ................................ 120 132
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Foreign Government - Continued
Hydro-Quebec
8.4% due 01/15/22 - A+ .................................. $ 100 $ 137
Kingdom of Spain
7.0% due 07/19/05 - AAA ................................. 250 256
Malaysia - Bonds
8.75% due 06/01/09 - A- ................................. 50 59
Manitoba Province Canada - Ser. BU
9.625% due 12/01/18 - AA- ............................... 300 438
Province of Ontario - Bonds
6.0% due 02/21/06 - AA .................................. 300 310
Province of Quebec - Debs.
7.5% due 07/15/23 - A+ .................................. 100 127
Province of Quebec #
7.125% due 02/09/24 - A+ ................................ 150 185
Republic of Greece - Notes
6.95% due 03/04/08 - A .................................. 405 445
Republic of Italy - Debs. #
6.875% due 09/27/23 - AA- ............................... 460 548
Republic of Korea - Unsub. Notes #
8.875% due 04/15/08 - A- ................................ 600 697
United Mexican States - Notes
9.875% due 02/01/10 - BBB- .............................. 970 1,192
United Mexican States - Notes Ser. A
8.3% due 08/15/31 - BBB- ................................ 200 234
------
4,892
Gas Utilities - 0.2%
Sempra Energy - Notes
6.0% due 02/01/13 - BBB+ ................................ 400 427
Home Equity Loan - 0.1%
Countrywide Home Loan Corp.
6.25% due 04/15/09 - A .................................. 250 270
Industrial Conglomerates - 0.2%
Tyco International Group SA - Notes
6.0% due 11/15/13 - BBB ................................. 350 381
Insurance - 0.3%
Allstate Corp.
7.2% due 12/01/09 - A+ .................................. 170 193
AXA - Sub Notes
8.6% due 12/15/30 - BBB+ ................................ 120 158
Hartford Life, Inc. - Debs.
7.65% due 06/15/27 - A- ................................. 50 60
Torchmark, Inc. - Debs.
8.25% due 08/15/09 - A+ ................................. 100 114
Travelers Property Casualty Corp. - Sr. Notes
7.75% due 04/15/26 - BBB+ ............................... 50 59
------
584
Machinery - 0.1%
Caterpillar, Inc. - Debs.
8.0% due 02/15/23 - A ................................... 50 64
John Deere Capital Corp. - Global Notes
5.1% due 01/15/13 - A- .................................. 170 175
John Deere Capital Corp. - Notes
6.0% due 02/15/09 - A- .................................. $ 60 $ 65
------
304
Media - 1.4%
Clear Channel Communications, Inc.
7.65% due 09/15/10 - BBB- ............................... 400 455
Comcast Cable Communications - Notes
8.875% due 05/01/17 - BBB ............................... 75 98
News America Holdings, Inc. - Debs.
7.7% due 10/30/25 - BBB- ................................ 100 119
News America Holdings, Inc. - Notes #
8.0% due 10/17/16 - BBB- ................................ 250 305
TCI Communications, Inc. - Sr. Notes
7.125% due 02/15/28 - BBB ............................... 70 79
The Walt Disney Co. - Sr. Notes
6.75% due 03/30/06 - BBB+ ............................... 1,000 1,042
Time Warner Entertainment, Inc. - Sr. Notes
8.375% due 07/15/33 - BBB+ .............................. 200 258
Time Warner, Inc.
7.625% due 04/15/31 - BBB+ .............................. 75 91
Time Warner, Inc. - Debs
7.25% due 10/15/17 - BBB+ ............................... 350 408
Viacom, Inc.
7.875% due 07/30/30 - A- ................................ 50 64
------
2,919
Metals & Mining - 0.1%
ALCOA, Inc. - Notes
7.375% due 08/01/10 - A- ................................ 200 231
Multi-Utilities - 0.2%
United Technologies Corp. - Notes
6.1% due 05/15/12 - A ................................... 180 198
United Utilities plc - Notes #
6.875% due 08/15/28 - BBB+ .............................. 100 112
------
310
Multiline Retail - 0.3%
Federated Department Stores, Inc.
6.625% due 04/01/11 - BBB+ .............................. 200 224
Target Corp. - Notes
7.5% due 08/15/10 - A+ .................................. 100 117
Wal Mart Stores, Inc.
7.55% due 02/15/30 - AA ................................. 110 143
Wal-Mart Stores, Inc. - Debs.
6.75% due 10/15/23 - AA ................................. 100 116
------
600
Municipal - 0.3%
Illinois Saint
5.1% due 06/01/33 - AA .................................. 230 221
Massachusetts Special Purpose Trust - Ser. BEC-1 Cl. A5
7.03% due 03/15/12 - AAA ................................ 150 167
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Municipal - Continued
Tennessee Valley Authority
6.75% due 11/01/25 - AAA ................................ $ 260 $ 310
------
698
Oil & Gas - 0.8%
Chevron Texaco Capital Co. - Notes
3.5% due 09/17/07 - AA .................................. 600 603
Norsk Hydro A/S
7.25% due 09/23/27 - A .................................. 75 90
Occidental Petroleum Corp. - Notes
6.75% due 01/15/12 - BBB+ ............................... 265 301
Pemex Project Funding Master Trust - Notes
7.375% due 12/15/14 - BBB- .............................. 260 289
Phillips Petroleum Co. - Debs.
6.65% due 07/15/18 - A- ................................. 50 57
Tosco Corp.
8.125% due 02/15/30 - A- ................................ 110 147
Union Oil Co. of California #
7.5% due 02/15/29 - BBB+ ................................ 60 72
------
1,559
Other Asset Backed - 0.1%
Detroit Edison Securitization - Bonds Ser. 2001 1 Cl. A6
6.62% due 03/01/16 - AAA ................................ 250 286
Other Mortgage - 1.0%
GMAC Commercial Mortgaged Securities,
Inc. - CTF - Ser. 1998-C1 Cl. A2
6.7% due 05/15/30 - NA .................................. 900 967
LB Commercial Conduit Mortgage Trust -
Ser. 1999-C2 Pass Thru Certs. Cl. A2
7.325% due 09/15/09 - NA ................................ 400 450
LU UBS Commercial Mortgage Trust - Ser. 2000-C5 Pass Thru
Certs. Cl. A1
6.41% due 01/15/10 - AAA ................................ 571 603
------
2,020
Paper & Forest Products - 0.4%
International Paper Co. - Notes
6.75% due 09/01/11 - BBB ................................ 250 280
MeadWestvaco Corp. - Notes #
6.85% due 04/01/12 - BBB ................................ 100 113
Westvaco Corp. - Notes
7.1% due 11/15/09 - BBB+ ................................ 35 39
Weyerhaeuser Co.
7.125% due 07/15/23 - BBB ............................... 130 147
Weyerhaeuser Co. - Notes
6.125% due 03/15/07 - BBB ............................... 198 209
------
788
Personal Products - 0.2%
Procter & Gamble Co. - Debs.
6.45% due 01/15/26 - AA- ................................ 100 114
Unilever Capital
7.125% due 11/01/10 - A+ ................................ $ 200 $ 230
------
344
Pharmaceuticals - 0.6%
Abbott Laboratories - Notes
5.625% due 07/01/06 - AA ................................ 250 259
Bristol Myers Squibb Co. - Notes
5.75% due 10/01/11 - A+ ................................. 300 321
Eli Lilly & Co. - Notes #
7.125% due 06/01/25 - AA ................................ 80 97
Schering Plough Corp. - Sr. Notes
5.3% due 12/01/13 - A- .................................. 250 261
Wyeth - Notes
5.25% due 03/15/13 - A .................................. 200 208
------
1,146
Real Estate Investment Trust - 0.4%
Simon Property Group, Inc. - Notes
6.375% due 11/15/07 - BBB ............................... 700 747
Real Estate Operations - 0.2%
EOP Operating LP - Notes
6.8% due 01/15/09 - BBB+ ................................ 150 164
EOP Operating, Ltd. Partenership - Notes
7.0% due 07/15/11 - BBB+ ................................ 250 282
------
446
Road & Rail - 0.7%
Canadian National Railway Co. - Notes
6.375% due 10/15/11 - BBB+ .............................. 300 333
CSX Corp. - Debs.
7.45% due 05/01/07 - BBB ................................ 125 136
Norfolk Southern Corp. - Notes
7.35% due 05/15/07 - BBB ................................ 855 925
Union Pacific Corp. - Debs.
6.625% due 02/01/29 - BBB ............................... 85 94
------
1,488
Specialty Retail - 0.0%
Dayton Hudson Corp. - Debs. #
6.75% due 01/01/28 - A+ ................................. 25 29
U.S. Government Agencies - 43.5%
Federal Home Loan Bank - Bonds
3.875% due 06/14/13 - # AAA ............................. 1,750 1,689
4.5% due 06/01/18 - AAA ................................. 876 875
Federal Home Loan Bank - Disc. Notes
5.125% due 03/06/06 - AAA ............................... 1,400 1,433
Federal Home Loan Bank - Sr. Notes
5.8% due 09/02/08 - AAA ................................. 225 241
Federal Home Loan Mortgage Corp. - Bonds
4.0% due 09/01/18 - AAA ................................. 225 220
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
4.0% due 10/01/18 - AAA ................................. $ 662 $ 649
4.5% due 08/01/18 - AAA ................................. 1,378 1,377
4.5% due 11/01/18 - AAA ................................. 343 342
4.5% due 04/01/19 - AAA ................................. 267 266
4.5% due 06/01/19 - AAA ................................. 242 241
4.5% due 05/01/24 - AAA ................................. 243 238
4.5% due 08/01/33 - AAA ................................. 331 320
4.5% due 10/01/33 - AAA ................................. 188 181
5.0% due 01/01/18 - AAA ................................. 735 747
5.0% due 02/01/18 - AAA ................................. 881 895
5.0% due 03/01/18 - AAA ................................. 322 327
5.0% due 06/01/23 - AAA ................................. 244 245
5.0% due 04/01/24 - AAA ................................. 381 382
5.0% due 06/01/33 - AAA ................................. 483 481
5.0% due 09/01/33 - AAA ................................. 904 899
5.0% due 10/01/33 - AAA ................................. 1,365 1,358
5.0% due 05/01/34 - AAA ................................. 242 240
5.0% due 06/01/34 - AAA ................................. 237 235
5.0% due 07/01/34 - AAA ................................. 483 480
5.0% due 08/01/34 - AAA ................................. 689 685
5.5% due 06/01/16 - AAA ................................. 190 197
5.5% due 03/01/17 - AAA ................................. 114 118
5.5% due 06/01/17 - AAA ................................. 170 176
5.5% due 01/01/18 - AAA ................................. 307 317
5.5% due 10/01/18 - AAA ................................. 149 154
5.5% due 02/01/23 - AAA ................................. 454 465
5.5% due 04/01/32 - AAA ................................. 128 130
5.5% due 01/01/33 - AAA ................................. 671 683
5.5% due 02/01/33 - AAA ................................. 833 847
5.5% due 04/01/33 - AAA ................................. 845 860
5.5% due 06/01/33 - AAA ................................. 366 373
5.5% due 12/01/33 - AAA ................................. 261 266
5.5% due 01/01/34 - AAA ................................. 349 355
5.5% due 02/01/34 - AAA ................................. 454 461
5.5% due 03/01/34 - AAA ................................. 196 200
5.5% due 05/01/34 - AAA ................................. 235 239
5.5% due 06/01/34 - AAA ................................. 296 301
5.5% due 09/01/34 - AAA ................................. 242 246
5.5% due 12/01/34 - AAA ................................. 400 407
6.0% due 08/01/14 - AAA ................................. 60 63
6.0% due 10/01/14 - AAA ................................. 132 138
6.0% due 07/01/16 - AAA ................................. 100 105
6.0% due 11/01/16 - AAA ................................. 57 60
6.0% due 02/01/17 - AAA ................................. 120 126
6.0% due 02/01/17 - AAA ................................. 105 110
6.0% due 06/01/22 - AAA ................................. 132 137
6.0% due 05/01/29 - AAA ................................. 156 161
6.0% due 08/01/29 - AAA ................................. 110 113
6.0% due 07/01/31 - AAA ................................. 84 87
6.0% due 01/01/32 - AAA ................................. 91 94
6.0% due 02/01/32 - AAA ................................. 523 541
6.0% due 11/01/32 - AAA ................................. 536 555
6.0% due 12/01/32 - AAA ................................. 361 373
6.0% due 02/01/33 - AAA ................................. 216 223
6.0% due 11/01/33 - AAA ................................. $ 199 $ 205
6.0% due 01/01/34 - AAA ................................. 415 429
6.0% due 10/01/34 - AAA ................................. 298 308
6.5% due 11/01/15 - AAA ................................. 16 17
6.5% due 07/01/16 - AAA ................................. 73 78
6.5% due 11/01/16 - AAA ................................. 98 104
6.5% due 05/01/17 - AAA ................................. 58 62
6.5% due 01/01/21 - AAA ................................. 33 35
6.5% due 06/01/21 - AAA ................................. 128 135
6.5% due 09/01/28 - AAA ................................. 33 35
6.5% due 06/01/29 - AAA ................................. 7 7
6.5% due 07/01/29 - AAA ................................. 105 111
6.5% due 11/01/30 - AAA ................................. 44 47
6.5% due 12/01/30 - AAA ................................. 21 22
6.5% due 03/01/31 - AAA ................................. 154 162
6.5% due 05/01/31 - AAA ................................. 175 184
6.5% due 07/01/31 - AAA ................................. 18 19
6.5% due 11/01/31 - AAA ................................. 137 143
6.5% due 12/01/31 - AAA ................................. 282 296
6.5% due 04/01/32 - AAA ................................. 74 78
6.5% due 05/01/32 - AAA ................................. 28 29
6.5% due 08/01/32 - AAA ................................. 316 332
6.5% due 08/01/32 - AAA ................................. 141 148
7.0% due 02/01/16 - AAA ................................. 46 49
7.0% due 04/01/29 - AAA ................................. 125 133
7.0% due 02/01/30 - AAA ................................. 80 85
7.0% due 04/01/31 - AAA ................................. 10 11
7.0% due 05/01/31 - AAA ................................. 36 38
7.0% due 07/01/31 - AAA ................................. 24 26
7.0% due 08/01/31 - AAA ................................. 57 61
7.0% due 04/01/32 - AAA ................................. 122 130
7.1% due 04/10/07 - AAA ................................. 2,500 2,705
7.5% due 02/01/16 - AAA ................................. 16 17
7.5% due 09/01/30 - AAA ................................. 10 10
7.5% due 11/01/30 - AAA ................................. 49 52
7.5% due 03/01/32 - AAA ................................. 95 102
8.0% due 02/01/30 - AAA ................................. 28 30
8.0% due 09/01/30 - AAA ................................. 14 15
8.5% due 10/01/31 - AAA ................................. 44 48
Federal Home Loan Mortgage Corp. - Debs.
5.75% due 04/15/08 - AAA ................................ 2,500 2,670
5.75% due 01/15/12 - AAA ................................ 600 654
6.0% due 06/15/11 - AAA ................................. 1,000 1,102
7.0% due 07/15/05 - AAA ................................. 855 874
6.25% due 07/15/32 - AAA ................................ 50 57
Federal Home Loan Mortgage Corp. - Notes
2.75% due 08/15/06 - AAA ................................ 1,300 1,291
4.0% due 05/01/09 - AAA ................................. 130 130
5.0% due 11/01/07 - AAA ................................. 71 72
5.0% due 10/01/09 - AAA ................................. 93 94
6.0% due 01/01/09 - AAA ................................. 61 62
6.625% due 09/15/09 - AAA ............................... 320 358
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
Federal National Mortgage Assoc. - Bonds
4.0% due 09/01/18 - AAA ................................. $ 196 $ 192
4.0% due 12/01/18 - AAA ................................. 303 297
4.0% due 03/01/19 - AAA ................................. 383 374
4.0% due 04/01/19 - AAA ................................. 97 95
4.5% due 04/01/18 - AAA ................................. 541 541
4.5% due 05/01/18 - AAA ................................. 907 907
4.5% due 10/01/18 - AAA ................................. 745 744
4.5% due 12/01/18 - AAA ................................. 743 742
4.5% due 09/01/33 - AAA ................................. 207 200
4.5% due 10/01/33 - AAA ................................. 516 499
4.5% due 06/01/34 - AAA ................................. 129 125
5.0% due 12/01/17 - AAA ................................. 399 406
5.0% due 04/01/18 - AAA ................................. 799 813
5.0% due 06/01/18 - AAA ................................. 366 373
5.0% due 06/01/19 - AAA ................................. 176 179
5.0% due 07/01/19 - AAA ................................. 941 957
5.0% due 03/01/23 - AAA ................................. 827 841
5.0% due 08/01/23 - AAA ................................. 537 539
5.0% due 11/01/32 - AAA ................................. 395 393
5.0% due 06/01/33 - AAA ................................. 987 981
5.0% due 08/01/33 - AAA ................................. 1,146 1,139
5.0% due 09/01/33 - AAA ................................. 759 755
5.0% due 09/01/33 - AAA ................................. 969 963
5.0% due 12/01/33 - AAA ................................. 591 587
5.0% due 05/01/34 - AAA ................................. 374 372
5.0% due 07/01/34 - AAA ................................. 588 584
5.0% due 11/01/34 - AAA ................................. 400 397
5.5% due 03/01/16 - AAA ................................. 40 42
5.5% due 04/01/16 - AAA ................................. 30 31
5.5% due 02/01/17 - AAA ................................. 203 210
5.5% due 04/01/17 - AAA ................................. 136 141
5.5% due 07/01/17 - AAA ................................. 221 229
5.5% due 09/01/17 - AAA ................................. 360 373
5.5% due 05/01/19 - AAA ................................. 146 151
5.5% due 02/01/23 - AAA ................................. 347 355
5.5% due 01/01/32 - AAA ................................. 665 676
5.5% due 12/01/32 - AAA ................................. 411 418
5.5% due 12/25/32 - AAA (b) ............................. 300 305
5.5% due 02/01/33 - AAA ................................. 440 448
5.5% due 03/01/33 - AAA ................................. 356 362
5.5% due 04/01/33 - AAA ................................. 1,491 1,516
5.5% due 06/01/33 - AAA ................................. 1,008 1,024
5.5% due 08/01/33 - AAA ................................. 1,486 1,510
5.5% due 12/01/33 - AAA ................................. 827 840
5.5% due 01/01/34 - AAA ................................. 724 736
5.5% due 05/01/34 - AAA ................................. 277 282
5.5% due 06/01/34 - AAA ................................. 506 514
5.5% due 08/01/34 - AAA ................................. 281 285
5.5% due 11/01/34 - AAA ................................. 350 355
5.5% due 01/01/35 - AAA ................................. 450 457
6.0% due 05/01/14 - AAA ................................. 28 29
6.0% due 02/01/16 - AAA ................................. $ 86 $ 90
6.0% due 07/01/17 - AAA ................................. 336 352
6.0% due 08/01/17 - AAA ................................. 150 157
6.0% due 01/01/29 - AAA ................................. 122 127
6.0% due 08/01/30 - AAA ................................. 196 203
6.0% due 07/01/31 - AAA ................................. 81 85
6.0% due 11/01/31 - AAA ................................. 247 255
6.0% due 01/01/32 - AAA ................................. 282 292
6.0% due 02/01/32 - AAA ................................. 101 104
6.0% due 03/01/32 - AAA ................................. 304 315
6.0% due 04/01/32 - AAA ................................. 176 182
6.0% due 10/01/32 - AAA ................................. 322 333
6.0% due 12/01/32 - AAA ................................. 173 179
6.0% due 04/01/33 - AAA ................................. 261 270
6.0% due 05/01/33 - AAA ................................. 504 522
6.0% due 02/01/34 - AAA ................................. 229 237
6.0% due 04/01/34 - AAA ................................. 194 200
6.0% due 08/01/34 - AAA ................................. 453 468
6.0% due 09/01/34 - AAA ................................. 385 398
6.125% due 03/15/12 - AAA ............................... 1,000 1,111
6.5% due 02/01/15 - AAA ................................. 31 33
6.5% due 07/01/16 - AAA ................................. 211 224
6.5% due 07/01/17 - AAA ................................. 74 79
6.5% due 03/01/22 - AAA ................................. 182 192
6.5% due 11/01/29 - AAA ................................. 66 69
6.5% due 12/01/30 - AAA ................................. 53 56
6.5% due 01/01/31 - AAA ................................. 5 5
6.5% due 02/01/31 - AAA ................................. 93 97
6.5% due 05/01/31 - AAA .................................
6.5% due 07/01/31 - AAA ................................. 48 50
6.5% due 08/01/31 - AAA ................................. 59 62
6.5% due 12/01/31 - AAA ................................. 114 120
6.5% due 02/01/32 - AAA ................................. 121 127
6.5% due 04/01/32 - AAA ................................. 425 446
6.5% due 05/01/32 - AAA ................................. 513 539
6.5% due 07/01/32 - AAA ................................. 393 413
6.5% due 01/01/34 - AAA ................................. 208 218
7.0% due 12/01/15 - AAA ................................. 56 59
7.0% due 03/01/16 - AAA ................................. 43 45
7.0% due 01/01/30 - AAA ................................. 70 74
7.0% due 02/01/31 - AAA ................................. 77 82
7.0% due 04/01/31 - AAA ................................. 19 20
7.0% due 05/01/31 - AAA ................................. 73 78
7.0% due 08/01/31 - AAA ................................. 119 126
7.0% due 12/01/31 - AAA ................................. 157 167
7.0% due 02/01/32 - AAA ................................. 93 99
7.0% due 05/01/32 - AAA ................................. 44 47
7.0% due 10/01/32 - AAA ................................. 104 111
7.5% due 10/01/15 - AAA ................................. 41 43
7.5% due 09/01/30 - AAA ................................. 99 107
7.5% due 11/01/30 - AAA ................................. 13 13
7.5% due 06/01/31 - AAA ................................. 101 108
7.5% due 08/01/31 - AAA ................................. 110 118
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
8.0% due 08/01/30 - AAA ................................. $ 23 $ 25
8.0% due 09/01/31 - AAA ................................. 115 125
8.5% due 09/01/30 - AAA ................................. 24 26
7.125% due 01/15/30 - AAA ............................... 209 263
7.25% due 05/15/30 - # AAA .............................. 150 192
Federal National Mortgage Assoc. - Debs.
6.375% due 06/15/09 - AAA ............................... 800 883
6.25% due 05/15/29 - AAA ................................ 915 1,041
6.625% due 11/15/30 - AAA ............................... 130 155
Federal National Mortgage Assoc. - Notes
4.0% due 11/01/10 - AAA ................................. 382 380
5.5% due 01/01/09 - AAA ................................. 68 69
6.0% due 10/01/12 - AAA ................................. 90 94
6.625% due 09/15/09 - AAA ............................... 750 837
5.0% due 01/15/07 - # AAA ............................... 400 414
Government National Mortgage Assoc. - Bonds
4.5% due 05/15/19 - AAA ................................. 95 96
4.5% due 08/15/33 - AAA ................................. 178 174
5.0% due 05/15/18 - AAA ................................. 174 178
5.0% due 08/15/33 - AAA ................................. 400 401
5.0% due 09/15/33 - AAA ................................. 171 172
5.0% due 10/15/33 - AAA ................................. 425 426
5.0% due 06/15/34 - AAA ................................. 291 291
5.5% due 11/15/32 - AAA ................................. 867 887
5.5% due 03/15/33 - AAA ................................. 334 341
5.5% due 04/15/33 - AAA ................................. 329 336
5.5% due 09/15/33 - AAA ................................. 326 334
5.5% due 03/15/34 - AAA ................................. 298 305
5.5% due 06/15/34 - AAA ................................. 159 162
5.5% due 11/15/34 - AAA ................................. 250 255
6.0% due 04/15/17 - AAA ................................. 111 117
6.0% due 07/15/29 - AAA ................................. 152 157
6.0% due 05/15/31 - AAA ................................. 166 173
6.0% due 04/15/32 - AAA ................................. 212 220
6.0% due 11/15/32 - AAA ................................. 367 381
6.0% due 01/15/33 - AAA ................................. 187 193
6.0% due 04/15/33 - AAA ................................. 152 158
6.0% due 11/15/33 - AAA ................................. 230 238
6.0% due 01/15/34 - AAA ................................. 109 113
6.0% due 07/15/34 - AAA ................................. 150 155
6.5% due 01/15/16 - AAA ................................. 34 37
6.5% due 05/15/28 - AAA ................................. 164 173
6.5% due 04/15/31 - AAA ................................. 72 76
6.5% due 05/15/31 - AAA ................................. 237 250
6.5% due 08/15/31 - AAA ................................. 27 28
6.5% due 01/15/32 - AAA ................................. 170 180
6.5% due 02/15/32 - AAA ................................. 165 173
6.5% due 05/15/32 - AAA ................................. 150 158
6.5% due 01/15/33 - AAA ................................. 191 201
7.0% due 08/15/29 - AAA ................................. 71 76
7.0% due 12/15/30 - AAA ................................. $ 159 $ 170
7.0% due 03/15/31 - AAA ................................. 179 190
7.0% due 06/15/31 - AAA ................................. 28 30
7.0% due 08/15/31 - AAA ................................. 55 58
7.0% due 09/15/31 - AAA ................................. 99 105
7.0% due 05/15/32 - AAA ................................. 65 69
7.5% due 08/15/29 - AAA ................................. 79 85
7.5% due 09/15/30 - AAA ................................. 46 49
7.5% due 01/15/31 - AAA ................................. 10 10
7.5% due 06/15/32 - AAA ................................. 100 108
8.0% due 02/15/31 - AAA ................................. 55 59
8.0% due 04/15/31 - AAA ................................. 52 56
8.0% due 07/15/31 - AAA ................................. 1 1
8.5% due 09/15/30 - AAA ................................. 7 8
9.0% due 01/15/31 - AAA ................................. 21 23
-------
87,920
U.S. Government - 22.6%
U.S. Treasury - Bonds
5.375% due 02/15/31 - # AAA ............................. 165 178
5.5% due 08/15/28 - # AAA .............................. 270 292
6.125% due 11/15/27 - # AAA ............................ 520 607
6.125% due 08/15/29 - # AAA ............................. 100 117
6.25% due 05/15/30 - # AAA .............................. 2,300 2,750
6.5% due 11/15/26 - AAA ................................. 300 364
6.625% due 02/15/27 - # AAA ............................. 295 364
6.75% due 08/15/26 - # AAA .............................. 775 967
7.25% due 05/15/16 - # AAA .............................. 1,000 1,252
7.5% due 11/15/16 - # AAA ............................... 2,200 2,811
7.875% due 02/15/21 - # AAA ............................. 900 1,216
8.125% due 08/15/19 - # AAA ............................. 1,000 1,365
8.75% due 08/15/20 - # AAA .............................. 1,400 2,024
8.875% due 08/15/17 - # AAA ............................ 1,450 2,055
9.25% due 02/15/16 - AAA ................................ 800 1,142
10.375% due 11/15/12 - # AAA ............................ 3,300 3,934
11.25% due 02/15/15 - # AAA ............................. 260 409
11.75% due 02/15/05 - # AAA ............................. 250 253
11.75% due 11/15/14 - AAA ............................... 465 631
12.0% due 08/15/13 - # AAA .............................. 1,000 1,289
12.75% due 11/15/10 - AAA ............................... 1,000 1,084
13.25% due 05/15/14 - # AAA ............................. 1,200 1,667
U.S. Treasury - Notes
1.25% due 05/31/05 - # AAA .............................. 100 100
2.0% due 05/15/06 - # AAA ............................... 200 198
3.125% due 04/15/09 - AAA ............................... 600 591
3.25% due 08/15/07 - # AAA .............................. 525 526
3.375% due 11/15/08 - # AAA ............................. 2,700 2,693
3.375% due 12/15/08 - # AAA ............................. 1,000 997
4.25% due 08/15/13 - # AAA .............................. 400 403
4.625% due 05/15/06 - # AAA ............................. 100 102
4.75% due 11/15/08 - # AAA .............................. 1,200 1,257
4.75% due 05/15/14 - # AAA .............................. 230 240
5.0% due 02/15/11 - # AAA ............................... 1,100 1,170
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
BOND INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- --------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government - Continued
5.0% due 08/15/11 - # AAA ............................ $ 2,035 $ 2,166
5.5% due 02/15/08 - # AAA ............................ 500 533
6.0% due 08/15/09 - # AAA ............................ 500 551
6.5% due 10/15/06 - # AAA ............................ 5,550 5,883
7.0% due 07/15/06 - # AAA ............................ 1,450 1,537
--------
45,718
Wireless Telecommunications Services - 0.2% AT&T
Wireless, Inc. - Notes
7.875% due 03/01/11 - A .............................. 300 354
--------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $193,908) 98.1% 198,123
INVESTMENT COMPANIES HELD AS COLLATERAL ON LOANED
SECURITIES - 22%
State Street Navigator Securities Lending
Portfolio ......................................... 44,410 44,410
SHORT-TERM INVESTMENTS - 1.6%
Investment in joint trading account
2.29% due 01/03/05
(Cost $3,315) ........................................ 3,315 3,315
------- --------
TOTAL INVESTMENTS-
(Cost $241,633) 121.7% 245,848
Payables, less cash and receivables- (21.7)% (43,913)
------- --------
NET ASSETS- 100.0% $201,935
======= ========
# At December 31, 2004 all or portion of this security was out on loan.
(a) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2004, securities aggregated
$474 or 0.2% of net assets of the Portfolio.
(b) To Be Announced.
** Bond ratings are not audited.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE A--ORGANIZATION
John Hancock Bond Index 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 twenty-three
different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
Discount and premium on debt securities: The Fund accretes discount and
amortizes premium from par value on securities from either the date of issue or
the date of purchase over the life of the security.
Expenses: Expenses directly attributable to 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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$115 2.71% $--
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, 2004, 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
- -------------------------- -------------------
$43,674 $44,410
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, 2004, 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, 2004, 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, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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.
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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Restricted Securities: Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense, either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such sales. The
Fund's restricted securities are valued at the price provided by dealers in the
secondary market, or, if no market prices are available, at the fair value as
determined in accordance with procedures established by and under general
supervision of the Trustees.
When-Issued and Delayed Delivery Transactions: The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such as that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date. Losses
may occur on these transactions due to changes in market conditions or the
failure of counterparts to perform under the contract.
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 11, 2004, 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
$100 Million and Excess Over
First $100 Million $250 Million $250 Million
- ------------------ ---------------- ------------
0.15% 0.13% 0.11%
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, 2004, the reimbursements paid from John
Hancock and JHVLICO were $47 to the Fund.
John Hancock has entered into a Sub-Advisory Agreement with Standish Mellon
Asset Management Company, LLC, which under John Hancock's 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
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$46,456 $35,536
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$241,659 $5,436 $(1,247) $4,189
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss or difference in accretion/amortization. Therefore, the source of
each Fund's distributions may be shown in the accompanying financial statements
as either from, or in excess of, net investment income or net realized gain on
capital transactions, or from capital. The Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund to present the Fund's capital accounts on a tax
basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $-- $4,189
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
- ---- ------------------ ---------------------- -----------------
2004 $9,264 $ 310 $ 91
2003 9,830 1,105 689
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Bond Index Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Bond Index Fund of John Hancock Variable Series Trust I at December 31, 2004,
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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Earnings Growth Fund
Fidelity Management & Research Company Joseph Day
- --------------------------------------------------------------------------------
.. The manager employs a bottom-up research approach to identify companies
with above average, long-term growth potential and that are reasonably
priced.
Fund Commentary
Performance: For the year 2004, the Earnings Growth Fund returned +2.65%,
underperforming the +6.30% return of the Russell 1000 Growth Index.
Environment: The strong fourth-quarter rally helped equities to post solid
returns for 2004 overall, with the S&P 500 Index gaining more than 10%. This
marked the first time since 1999 that the U.S. stock market posted gains two
years in a row. While Technology issues were squarely in positive territory, the
group lagged the broader market, with the technology-heavy NASDAQ Composite
Index gaining 8.6%. Small-caps were particularly strong performers for the year,
with the Russell 2000 Index gaining another 18% following a gain in 2003 of
almost 50%.
The Fund underperformed the Russell 1000 Growth Index for the year. Security
selection in Technology detracted from results, as the portfolio underweighted a
computer hardware company that benefited from the success of its portable
digital music devices. Security selection in Consumer Discretionary also
detracted from the portfolio's performance. On the flip side, an overweighting
in Energy stocks helped relative returns for the year. Specifically, oil service
stocks performed well as the price of oil rose during 2004. The Fund also
benefited from security selection in Consumer Staples stocks.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 5/1/96 (Fund Inception Date)
Earnings Earnings
Growth Fund Growth Benchmark (1)
----------- --------------------
Apr-96 $10,000 $10,000
May-96 10,252 10,204
Jun-96 10,020 9,896
Jul-96 9,186 9,128
Aug-96 9,881 9,622
Sep-96 10,473 10,233
Oct-96 10,325 10,113
Nov-96 10,408 10,709
Dec-96 10,269 10,529
Jan-97 9,994 10,994
Feb-97 9,827 10,752
Mar-97 9,079 10,145
Apr-97 9,186 10,393
May-97 10,176 11,325
Jun-97 10,693 11,638
Jul-97 10,907 12,752
Aug-97 10,950 12,627
Sep-97 11,734 13,266
Oct-97 11,371 12,601
Nov-97 11,547 12,734
Dec-97 11,980 12,900
Jan-98 11,743 12,668
Feb-98 12,727 13,859
Mar-98 13,429 14,440
Apr-98 13,656 14,636
May-98 13,098 14,035
Jun-98 14,211 14,432
Jul-98 14,045 13,814
Aug-98 11,448 11,177
Sep-98 12,370 12,022
Oct-98 13,332 12,907
Nov-98 14,295 13,777
Dec-98 16,660 15,204
Jan-99 17,539 15,660
Feb-99 16,892 14,894
Mar-99 19,063 15,724
Apr-99 20,313 16,441
May-99 20,063 16,229
Jun-99 21,164 17,362
Jul-99 20,863 16,810
Aug-99 21,977 16,635
Sep-99 22,828 16,493
Oct-99 26,427 17,768
Nov-99 29,295 19,609
Dec-99 36,370 23,003
Jan-00 37,510 22,999
Feb-00 44,729 27,833
Mar-00 37,380 27,861
Apr-00 32,525 25,156
May-00 30,325 23,322
Jun-00 34,862 25,796
Jul-00 32,535 24,163
Aug-00 36,543 27,807
Sep-00 32,968 26,447
Oct-00 30,025 24,638
Nov-00 21,906 19,284
Dec-00 23,328 20,301
Jan-01 24,488 21,460
Feb-01 18,721 17,747
Mar-01 15,606 15,208
Apr-01 18,495 17,743
May-01 18,248 17,659
Jun-01 17,499 17,668
Jul-01 16,633 16,477
Aug-01 15,130 15,283
Sep-01 12,868 12,757
Oct-01 13,666 14,097
Nov-01 14,501 15,616
Dec-01 14,713 16,209
Jan-02 13,396 15,682
Feb-02 12,497 14,793
Mar-02 13,256 15,922
Apr-02 12,970 15,079
May-02 12,490 14,715
Jun-02 11,117 13,353
Jul-02 10,118 12,619
Aug-02 10,152 12,657
Sep-02 9,438 11,344
Oct-02 10,094 12,385
Nov-02 10,636 13,057
Dec-02 9,948 12,155
Jan-03 9,803 11,859
Feb-03 9,652 11,805
Mar-03 9,912 12,024
Apr-03 10,462 12,913
May-03 10,924 13,557
Jun-03 10,992 13,745
Jul-03 11,177 14,087
Aug-03 11,433 14,438
Sep-03 11,299 14,283
Oct-03 11,823 15,086
Nov-03 11,917 15,244
Dec-03 12,415 15,772
Jan-04 12,586 16,093
Feb-04 12,660 16,196
Mar-04 12,392 15,895
Apr-04 12,308 15,711
May-04 12,429 16,003
Jun-04 12,627 16,203
Jul-04 12,002 15,288
Aug-04 11,930 15,213
Sep-04 11,945 15,357
Oct-04 12,048 15,597
Nov-04 12,353 16,133
Dec-04 12,743 16,766
Value on 12/31/04:
- ------------------
$12,743 Earnings Growth Fund
$16,766 Earnings Growth Benchmark(1)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Microsoft Corp. 5.2%
Pfizer, Inc. 3.9%
General Electric Co. 3.4%
Intel Corp. 3.4%
Johnson & Johnson 2.9%
Wal-Mart Stores, Inc. 2.7%
Procter & Gamble Co. 2.6%
Cisco Systems, Inc. 2.6%
Gillette Co. 2.5%
Dell, Inc. 2.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Earnings Earnings Growth Fund
Growth Fund Benchmark/1/
----------- --------------------
1 Year 2.65% 6.30%
3 Years -4.67% 1.13%
5 Years -18.92% -6.13%
Since Inception (5/1/96) 2.83% 6.14%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Information Technology 27.8%
Health Care 20.8%
Consumer Discretionary 13.8%
Industrials 11.7%
Consumer Staples 11.6%
Financials 7.2%
Energy 2.7%
Telecommunication Services 2.6%
Materials 0.9%
Governments 0.9%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns
represents past performance, assume reinvestment of all distributions and
are not indicative of future performance. Investment returns and principal
value of fund shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. The performance of the fund on
this page is reported net of Trust level charges (i.e. investment
management fees and operating expenses). It does not reflect expense and
charges of the applicable separate accounts and variable products, all of
which vary to a considerable extent and are described in your product
prospectus. Performance would be lower if expenses and charges of the
separate accounts and products were reflected.
/1/ The Earnings Growth Fund Benchmark represents the Russell Mid Cap Growth
Index from May 1996 to April 2002 and then the Russell 1000 Growth Index
from May 2002 to present.
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Earnings Growth Fund
Fidelity Management & Research Company Joseph Day
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As an Earnings Growth Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,009.30
Expense paid per $1,000* $ 5.36
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,019.80
Expense paid per $1,000* $ 5.39
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Earnings Growth Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $623 of
securities loaned (Note B)) .................................... $ 156,164
Net unrealized appreciation of investments ........................ 24,533
Short-term investments at value ................................... 3,688
---------
Total investments ........................................... 184,385
Receivable for:
Investments sold ............................................... 19
Dividends ...................................................... 152
---------
Total assets ...................................................... 184,556
---------
LIABILITIES
Payables for:
Fund shares purchased .......................................... 130
Collateral for securities on loan .............................. 642
Accrued operating expenses ..................................... 39
---------
Total liabilities ................................................. 811
---------
Net assets ........................................................ $ 183,745
=========
Shares outstanding, $0.01 Par Value (unlimited
shares authorized) ............................................. 22,087
---------
Net asset value per share ......................................... $ 8.32
=========
Composition of net assets:
Capital paid-in ................................................ $ 468,016
Accumulated net realized loss on investments ................... (308,804)
Net unrealized appreciation of investments ..................... 24,533
---------
Net assets ........................................................ $ 183,745
=========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Earnings Growth Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 28
Dividends (net of foreign withholding tax
of $1) ........................................................ 3,312
Securities lending ............................................... 27
-------
Total investment income ............................................. 3,367
-------
EXPENSES
Investment advisory fee .......................................... 1,791
Auditors fees .................................................... 26
Custodian fees ................................................... 71
Legal fees ....................................................... 32
Printing & mailing fees .......................................... 32
Trustees' fees ................................................... 6
Other fees ....................................................... 6
-------
Total expenses ...................................................... 1,964
Less custodian expense reduction offset by
commission recapture arrangement (Note C) ..................... (18)
-------
Net expenses ........................................................ 1,946
-------
Net investment income ............................................... 1,421
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments ................................. 8,176
Change in unrealized depreciation on
investments ................................................... (4,961)
-------
Net realized and unrealized gain .................................... 3,215
-------
Net increase in net assets resulting from
operations ....................................................... $ 4,636
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Earnings Growth Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ............................................... $ 1,421 $ 301
Net realized gain ................................................... 8,176 2,598
Change in net unrealized appreciation (depreciation) ................ (4,961) 36,150
-------- --------
Net increase in net assets resulting from operations ............. 4,636 39,049
Distributions to shareholders from:
Net investment income ............................................... (1,421) (118)
Capital paid-in ..................................................... (3,010)
-------- --------
Decrease in net assets resulting from distributions .............. (1,421) (3,128)
From fund share transactions:
Proceeds from shares sold ........................................... 25,045 40,423
Distributions reinvested ............................................ 1,421 3,128
Payment for shares redeemed ......................................... (42,301) (42,966)
-------- --------
Increase (decrease) in net assets from fund share transactions ... (15,835) 585
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS .................................. (12,620) 36,506
NET ASSETS
Beginning of Period ................................................. 196,365 159,859
-------- --------
End of Period (including undistributed net investment income of
$0 and $0, respectively) ......................................... $183,745 $196,365
======== ========
Analysis of fund share transactions:
Sold ................................................................ 3,063 5,521
Reinvested .......................................................... 176 388
Redeemed ............................................................ (5,194) (5,896)
-------- --------
Net increase (decrease) in fund shares outstanding ..................... (1,955) 13
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Earnings Growth Fund
----------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------
2004 2003(c)(g) 2002 2001 2000
-------- ---------- -------- -------- --------
Net Assets Value at Beginning of Period ........ $ 8.17 $ 6.65 $ 9.84 $ 15.60 $ 29.22
Income from Investment Operations:
Net Investment Income (Loss) ................ 0.04 0.01 (0.04) (0.06) (0.05)
Net Realized and Unrealized Gain (Loss) on
Investment(a) ............................. 0.17 1.64 (3.15) (5.70) (10.49)
-------- -------- -------- -------- --------
Total From Investment Operations ............ 0.21 1.65 (3.19) (5.76) (10.54)
Less Distributions:
Distribution from Net Investment Income ..... (0.06) (f)
Distribution from Net Realized Gains on
Investments .............................. (0.41)
Distribution from Excess of Net Investment
Income/Gains ............................. (1.61)
Distribution from Capital Paid-in ........... (0.13) (1.06)
-------- -------- -------- -------- --------
Total Distributions ......................... (0.06) (0.13) (3.08)
-------- -------- -------- -------- --------
Net Assets Value at End of Period .............. 8.32 $ 8.17 $ 6.65 $ 9.84 $ 15.60
======== ======== ======== ======== ========
Total Investment Return(b) ..................... 2.65% 24.80% (32.39)% (36.93)% (35.86)%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ................................... 1.05%(e) 1.05%(d) 1.04% 0.94% 0.85%
Ratio of Net Investment Income (Loss) to
Average Net Assets ....................... 0.76% 0.17% (0.42)% (0.49)% (0.43)%
Portfolio Turnover Rate ..................... 30.41% 124.28% 192.54% 111.69% 140.94%
Net Assets End of Period (000s Omitted) ........ $183,745 $196,365 $159,859 $245,899 $393,988
(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 Fidelity Management
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 1.07% for the years ended
December 31, 2003.
(e) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(f) Amount less than $0.01.
(g) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EARNINGS GROWTH FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 1.2%
Boeing Co. .............................................. 36,900 $1,910
Precision Castparts Corp. ............................... 4,300 283
------
2,193
Air Freight & Couriers - 1.3%
United Parcel Service, Inc. - Cl. B ..................... 28,900 2,470
Auto Components - 0.2%
Gentex Corp. # .......................................... 8,500 315
Banks - 1.7%
Bank of America Corp. ................................... 32,000 1,504
JP Morgan Chase & Co. ................................... 15,840 618
Silicon Valley Bancshares * ............................. 8,700 390
Wachovia Corp. .......................................... 13,600 715
------
3,227
Beverages - 1.2%
Coca-Cola Co. ........................................... 18,300 762
PepsiCo, Inc. ........................................... 28,800 1,503
------
2,265
Biotechnology - 2.5%
Amgen, Inc. * ........................................... 14,400 924
Biogen IDEC, Inc. * ..................................... 21,600 1,439
Cephalon, Inc. # * ...................................... 6,200 315
Genetech, Inc. * ........................................ 30,400 1,655
Millennium Pharmaceuticals, Inc. * ...................... 18,000 218
------
4,551
Chemicals - 0.9%
Dow Chemical Co. ........................................ 10,700 530
Monsanto Co. ............................................ 7,900 439
Praxair, Inc. ........................................... 15,300 675
------
1,644
Commercial Services & Supplies - 2.4%
Automatic Data Processing, Inc. ......................... 24,200 1,073
Cintas Corp. ............................................ 8,700 382
First Data Corp. ........................................ 20,700 881
Herman Miller, Inc. ..................................... 18,000 497
Paychex, Inc. ........................................... 20,700 705
Waste Management, Inc. .................................. 30,100 901
------
4,439
Communications Equipment - 3.9%
Cisco Systems, Inc. * ................................... 241,415 4,659
Juniper Networks, Inc. * ................................ 19,400 528
Qualcomm, Inc. .......................................... 46,700 1,980
------
7,167
Computers & Peripherals - 5.1%
Dell, Inc. * ............................................ 89,600 3,776
EMC Corp. * ............................................. 129,900 1,931
International Business Machines Corp. ................... 37,300 $3,677
------
9,384
Credit Card - 0.3%
MBNA Corp. .............................................. 20,600 581
Diversified Financials - 2.3%
American Express Co. .................................... 39,800 2,244
Citigroup, Inc. ......................................... 12,003 578
Goldman Sachs Group, Inc. ............................... 5,300 552
Morgan Stanley, Dean Witter, Discover & Co. ............. 14,200 788
------
4,162
Diversified Telecommunication Services - 2.1%
SBC Communications, Inc. ................................ 69,400 1,788
Verizon Communications .................................. 50,500 2,046
------
3,834
Electronic Equipment & Instruments - 0.9%
Amphenol Corp. - Cl. A * ................................ 10,600 389
Molex, Inc. ............................................. 11,700 351
Thermo Electron Corp. * ................................. 13,500 408
Waters Corp. * .......................................... 12,000 562
------
1,710
Energy Equipment & Services - 2.6%
Baker Hughes, Inc. ...................................... 22,100 943
BJ Services Co. ......................................... 19,300 898
Nabors Industries, Ltd. * ............................... 18,600 954
Schlumberger, Ltd. ...................................... 30,100 2,015
------
4,810
Food & Drug Retailing - 1.4%
Sysco Corp. ............................................. 19,600 748
Walgreen Co. ............................................ 46,700 1,792
------
2,540
Food Products - 1.8%
ConAgra, Inc. ........................................... 19,300 568
Hershey Foods Corp. ..................................... 12,900 717
J.M. Smucker Co. ........................................ 17,400 819
Kellogg Co. ............................................. 13,900 621
WM Wrigley Jr. Co. ...................................... 8,300 574
------
3,299
Health Care Equipment & Supplies - 3.0%
Alcon, Inc. ............................................. 7,200 580
Bausch & Lomb, Inc. ..................................... 3,400 219
Baxter International, Inc. .............................. 22,900 791
Becton, Dickinson & Co. ................................. 6,900 392
Medtronic, Inc. ......................................... 51,780 2,572
St. Jude Medical, Inc. * ................................ 22,300 935
------
5,489
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EARNINGS GROWTH FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Health Care Providers & Services - 2.3%
Caremark Rx, Inc. * ..................................... 16,900 $ 666
Quest Diagnostics, Inc. ................................. 4,800 459
UnitedHealth Group, Inc. ................................ 34,480 3,035
-------
4,160
Hotels Restaurants & Leisure - 0.4%
McDonald's Crop. ........................................ 21,600 693
Household Durables - 0.2%
Leggett & Platt, Inc. ................................... 12,400 353
Household Products - 3.9%
Clorox Co. .............................................. 18,700 1,102
Colgate-Palmolive Co. ................................... 24,000 1,228
Procter & Gamble Co. .................................... 86,700 4,775
-------
7,105
Industrial Conglomerates - 5.6%
3M Co. .................................................. 27,300 2,241
General Electric Co. .................................... 169,800 6,198
Honeywell International, Inc. ........................... 15,400 545
Tyco International, Ltd. ................................ 36,300 1,297
-------
10,281
Insurance - 2.8%
AFLAC, Inc. ............................................. 20,370 812
Ambac Financial Group, Inc. ............................. 6,600 542
American International Group, Inc. ...................... 57,200 3,756
-------
5,110
Internet & Catalog Retail - 1.6%
Amazon.com, Inc. * ...................................... 41,410 1,834
eBay, Inc. * ............................................ 9,300 1,081
-------
2,915
Internet Software & Services - 0.9%
McAfee, Inc. * .......................................... 15,300 443
Yahoo, Inc. * ........................................... 32,200 1,213
-------
1,656
IT Consulting & Services - 0.5%
Affiliated Computer Services, Inc. -
Cl. A * ................................................. 16,100 969
Machinery - 1.0%
Danaher Corp. ........................................... 22,200 1,275
Parker-Hannifin Corp. ................................... 7,200 545
-------
1,820
Media - 3.5%
Clear Channel Communications, Inc. ...................... 10,700 358
Comcast Corp. - Cl. A * ................................ 18,800 626
EchoStar Communications Corp. - Cl. A ................... 5,025 167
Fox Entertainment Group, Inc. - Cl. A * ................. 22,500 703
Omnicom Group, Inc. ..................................... 9,100 767
The Walt Disney Co. ..................................... 47,300 1,315
Time Warner, Inc. * ..................................... 50,851 $ 989
Univision Communications, Inc. - Cl. A * ................ 12,800 375
Viacom, Inc. - Cl. B .................................... 19,600 713
XM Satellite Radio Holdings, Inc. - Cl. A* .............. 9,800 369
-------
6,382
Multiline Retail - 4.4%
Big Lots, Inc. * ........................................ 29,700 360
J.C. Penney Co., Inc. ................................... 22,100 915
Kohl's Corp. ............................................ 21,100 1,042
Target Corp. ............................................ 17,900 930
Wal-Mart Stores, Inc. ................................... 91,300 4,823
-------
8,070
Personal Products - 3.1%
Avon Products, Inc. ..................................... 20,960 811
Estee Lauder Cos., Inc. - Cl. A ......................... 10,400 476
Gillette Co. ............................................ 99,200 4,442
-------
5,729
Pharmaceuticals - 12.7%
Abbott Laboratories ..................................... 56,700 2,645
Allergan, Inc. .......................................... 6,100 494
Eli Lilly & Co. ......................................... 12,225 694
Johnson & Johnson ....................................... 83,800 5,315
Merck & Co., Inc. ....................................... 44,200 1,420
Pfizer, Inc. ............................................ 264,324 7,108
Schering-Plough Corp. ................................... 129,800 2,710
Wyeth ................................................... 69,500 2,960
-------
23,346
Semiconductor Equipment & Products - 8.4%
Altera Corp. * .......................................... 43,600 903
Analog Devices, Inc. .................................... 53,000 1,957
Applied Materials, Inc. * ............................... 84,095 1,438
Intel Corp. ............................................. 258,500 6,046
KLA-Tencor Corp. * ...................................... 16,045 748
Linear Technology Corp. ................................. 11,100 430
Texas Instruments, Inc. ................................. 122,475 3,015
Xilinx, Inc. ............................................ 28,800 854
-------
15,391
Software - 7.6%
BEA Systems, Inc. * ..................................... 115,100 1,020
Cadence Design Systems, Inc. * .......................... 43,500 601
Intuit, Inc. * .......................................... 18,900 832
Microsoft Corp. ......................................... 353,410 9,439
National Instruments Corp. .............................. 15,300 417
Oracle Corp. * .......................................... 124,000 1,701
-------
14,010
Specialty Retail - 2.8%
CDW Corp. ............................................... 8,300 551
Gap, Inc. ............................................... 19,100 403
Home Depot, Inc. ........................................ 66,800 2,855
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EARNINGS GROWTH FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Specialty Retail - Continued
Lowe's Cos., Inc. ....................................... 11,900 $ 685
Staples, Inc. ........................................... 21,200 715
--------
5,209
Textiles & Apparel - 0.5%
Nike, Inc. - Cl. B ...................................... 10,800 979
U.S. Government Agencies - 0.9%
Federal Home Loan Mortgage Corp. ........................ 5,100 376
Federal National Mortgage Assoc ......................... 17,509 1,247
--------
1,623
Wireless Telecommunications Services - 0.4%
Nextel Communications, Inc. - Cl. A * ................... 27,200 816
--------
TOTAL COMMON STOCK-
(Cost $156,164) 98.3% 180,697
Par
Value
-------
(000's)
INVESTMENT COMPANIES HELD
AS COLLATERAL ON LOANED
SECURITIES - 0.3%
State Street Navigator Securities Lending
Portfolio .......................................... $ 642 642
SHORT-TERM INVESTMENTS - 1.7%
Investment in joint trading account
2.29% due 01/03/05
(Cost $3,046) ...................................... 3,046 3,046
------ --------
TOTAL INVESTMENTS-
(Cost $159,852) 100.3% 184,385
Payables, less cash and receivables- ............... (0.3)% (640)
------ --------
NET ASSETS- 100.0% $183,745
====== ========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Earnings Growth Fund, (formerly Multi Cap Growth), (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 twenty-three different funds as of December 31,
2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices
as late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at
any time other than 4:00 p.m. Eastern Standard Time on a particular day, the
Fund will determine its net asset value per share as of the close of the
Exchange on that day. Investment security transactions are recorded on the date
of purchase or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including,
but not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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. For year ended December 31,
2004, the Fund had no bank borrowings.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004, 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
- -------------------------- -------------------
$623 $642
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, 2004 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. At December 31, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $199,368, $105,946 and $2,956 which expire in 2009, 2010 and 2011,
respectively.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Dividend and Interest: 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 $1. Realized gains and losses
from security transactions are determined on the basis of identified cost.
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 11, 2004, 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
- ------------------ ------------
1.00% 0.90%
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. For the year
ended December 31, 2004, there were no reimbursements paid 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 in expenses
of $18.
John Hancock has entered into a Sub-Advisory Agreement with Fidelity
Management & Research Company, which under John Hancock's 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, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$56,442 $70,035
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$160,386 $27,387 $(3,388) $23,999
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 it's federal
income tax return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $308,270 $23,999
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
- ---- ------------------ ---------------------- -----------------
2004 $1,421 $-- $ --
2003 118 -- 3,010
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
Included in the Fund's 2004 distributions from ordinary income is $2 in
excess of investment company taxable income, which in accordance with applicable
US tax law, was distributed to shareholders as ordinary income distribution.
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Earnings Growth Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Earnings Growth Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Equity Index Fund
SSgA Funds Management, Inc. J. Tucker/J. May
- --------------------------------------------------------------------------------
.. The manager attempts to track the performance of the S&P 500 Index by using
a full replication strategy in which the Fund invests in each security at
the weight represented within the index. The Fund is broadly diversified
across sectors with sector weights similar to the benchmark.
Fund Commentary
Performance: For the year ending December 31, 2004, the Equity Index Fund
returned +10.70%, underperforming the +10.87% return of its benchmark, the S&P
500 Index.
Environment: U.S. equity prices moved cautiously during the first three quarters
of 2004. Returns on the S&P 500 were relatively flat through September as
investors appeared concerned over Iraq, rising interest rates, rising oil
prices, and the presidential election. In the fourth quarter, the S&P 500
rallied as oil prices fell and the election was completed. Energy stocks were a
strong contributor to the S&P 500 return, aided by the rising price of oil.
While the S&P 500 posted strong returns for the year, its medium and small
counterparts posted even more impressive gains. The S&P MidCap 400 Index rose
16.5% for the year, and the S&P SmallCap Index rose 22.7%.
Outlook: The Equity Index Fund attempts to track the performance of the S&P 500
Index by fully replicating the index, after accounting for expenses. The fund
attempts to match the index holdings and weights for each security in order to
provide returns close to the index return.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 5/1/96 (Fund Inception Date)
Equity Index Fund S&P 500(R) Index (2)
----------------- --------------------
Apr-1996 $10,000 $10,000
May-1996 10,210 10,258
Jun-1996 10,231 10,300
Jul-1996 9,825 9,842
Aug-1996 9,971 10,050
Sep-1996 10,509 10,615
Oct-1996 10,787 10,906
Nov-1996 11,561 11,734
Dec-1996 11,423 11,504
Jan-1997 12,133 12,218
Feb-1997 12,221 12,317
Mar-1997 11,736 11,805
Apr-1997 12,409 12,510
May-1997 13,119 13,278
Jun-1997 13,727 13,870
Jul-1997 14,821 14,971
Aug-1997 13,993 14,139
Sep-1997 14,756 14,913
Oct-1997 14,267 14,415
Nov-1997 14,887 15,082
Dec-1997 15,169 15,342
Jan-1998 15,336 15,512
Feb-1998 16,441 16,631
Mar-1998 17,280 17,482
Apr-1998 17,455 17,658
May-1998 17,151 17,355
Jun-1998 17,850 18,060
Jul-1998 17,664 17,867
Aug-1998 15,096 15,284
Sep-1998 16,067 16,263
Oct-1998 17,369 17,586
Nov-1998 18,419 18,652
Dec-1998 19,485 19,727
Jan-1999 20,296 20,552
Feb-1999 19,669 19,913
Mar-1999 20,464 20,710
Apr-1999 21,252 21,512
May-1999 20,743 21,004
Jun-1999 21,905 22,170
Jul-1999 21,220 21,477
Aug-1999 21,115 21,371
Sep-1999 20,541 20,785
Oct-1999 21,834 22,101
Nov-1999 22,275 22,550
Dec-1999 23,593 23,878
Jan-2000 22,400 22,678
Feb-2000 21,978 22,249
Mar-2000 24,120 24,426
Apr-2000 23,394 23,691
May-2000 22,910 23,205
Jun-2000 23,475 23,777
Jul-2000 23,108 23,405
Aug-2000 24,546 24,859
Sep-2000 23,245 23,546
Oct-2000 23,146 23,447
Nov-2000 21,326 21,598
Dec-2000 21,434 21,704
Jan-2001 22,191 22,474
Feb-2001 20,164 20,425
Mar-2001 18,884 19,131
Apr-2001 20,350 20,618
May-2001 20,490 20,756
Jun-2001 19,989 20,250
Jul-2001 19,792 20,051
Aug-2001 18,550 18,796
Sep-2001 17,055 17,278
Oct-2001 17,379 17,608
Nov-2001 18,706 18,958
Dec-2001 18,866 19,125
Jan-2002 18,590 18,845
Feb-2002 18,229 18,482
Mar-2002 18,908 19,177
Apr-2002 17,756 18,015
May-2002 17,624 17,882
Jun-2002 16,365 16,608
Jul-2002 15,090 15,313
Aug-2002 15,184 15,414
Sep-2002 13,530 13,739
Oct-2002 14,717 14,948
Nov-2002 15,578 15,828
Dec-2002 14,658 14,897
Jan-2003 14,273 14,507
Feb-2003 14,057 14,289
Mar-2003 14,191 14,428
Apr-2003 15,359 15,617
May-2003 16,167 16,440
Jun-2003 16,369 16,650
Jul-2003 16,656 16,943
Aug-2003 16,977 17,274
Sep-2003 16,792 17,090
Oct-2003 17,740 18,058
Nov-2003 17,892 18,217
Dec-2003 18,825 19,172
Jan-2004 19,166 19,525
Feb-2004 19,431 19,796
Mar-2004 19,135 19,497
Apr-2004 18,830 19,191
May-2004 19,087 19,454
Jun-2004 19,454 19,831
Jul-2004 18,807 19,175
Aug-2004 18,883 19,252
Sep-2004 19,083 19,460
Oct-2004 19,373 19,757
Nov-2004 20,156 20,558
Dec-2004 20,841 21,257
Value on 12/31/04:
- -----------------
$20,841 Equity Index Fund
$21,257 S&P 500(R) Index (2)
- --------------------------------------------------------------------------------
Top Ten Holdings (as of December 31, 2004)
% of
Investments
-----------
General Electric Co. 3.4%
Exxon Mobil Corp. 2.9%
Microsoft Corp. 2.6%
Citigroup, Inc. 2.2%
Wal-Mart Stores, Inc. 2.0%
Pfizer, Inc. 1.8%
Bank of America Corp. 1.7%
Johnson & Johnson 1.7%
American International Group, Inc. 1.5%
International Business Machines Corp. 1.5%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Equity Index S&P 500
Fund/1/ Index/2/
------------ --------
1 Year 10.70% 10.87%
3 Years 3.37% 3.59%
5 Years -2.45% -2.30%
Since Inception (5/1/96) 8.83% 9.09%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Financials 19.9%
Information Technology 15.4%
Consumer Discretionary 13.9%
Industrials 12.7%
Health Care 12.2%
Consumer Staples 8.2%
Energy 6.9%
Telecommunication Services 3.3%
Utilities 3.2%
Materials 3.2%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses.) It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
/1/ Returns reflect waiver of advisory fee, reimbursement of all non-advisory
fund expenses, and extra-ordinary capital contributions of $84,000 in 1996
and $250,000 in 1997.
/2/ "Standard & Poor's 500(R)" Index is a trademark of McGraw-Hill Companies,
Inc. and has been licensed for use by John Hancock Life Insurance Company.
The product is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the product. "Standard & Poor 500(R)" Index is
an unmanaged stock index commonly used as a broad measure of stock market
performance.
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Equity Index Fund
SSgA Funds Management, Inc. J. Tucker/J. May
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As an Equity Index Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,071.20
Expense paid per $1,000* $ 1.13
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,024.04
Expense paid per $1,000* $ 1.11
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Equity Index Fund
(000's Omitted)
ASSETS
Long term investments at cost ...................................... $797,537
Net unrealized appreciation of investments ......................... 18,752
Short-term investments at value .................................... 24,612
--------
Total investments ............................................ 840,901
Receivable for:
Fund shares sold ................................................ 102
Dividends ....................................................... 1,058
Other receivables ............................................... 68
--------
Total assets ....................................................... 842,129
--------
LIABILITIES
Payables for:
Investments purchased ........................................... 28
Accrued operating expenses ...................................... 308
Futures contracts variation margin .............................. 21
Other payables .................................................. 23
--------
Total liabilities .................................................. 380
--------
Net assets ......................................................... $841,749
========
Shares outstanding, $0.01 Par Value (unlimited shares authorized) .. 54,576
--------
Net asset value per share .......................................... $ 15.42
========
Composition of net assets:
Capital paid-in ................................................. $856,371
Accumulated net realized loss on investments and futures
transactions ................................................. (33,937)
Net unrealized appreciation of:
Investments .................................................. 18,752
Futures ...................................................... 563
--------
Net assets ......................................................... $841,749
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Equity Index Fund
(000's Omitted)
INVESTMENT INCOME
Interest ........................................................ $ 369
Dividends ....................................................... 14,555
--------
Total investment income ............................................ 14,924
--------
EXPENSES
Investment advisory fee ......................................... 961
Auditors fees ................................................... 88
Custodian fees .................................................. 189
Fidelity Bond fees .............................................. 2
Legal fees ...................................................... 111
Printing & mailing fees ......................................... 111
Trustees' fees .................................................. 21
Other fees ...................................................... 81
--------
Total expenses ..................................................... 1,564
Less custodian expense reduction offset by commission
recapture arrangement (Note C) ............................... (30)
--------
Net expenses ....................................................... 1,534
--------
Net investment income .............................................. 13,390
--------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments .................................................. (3,028)
Financial futures contracts .................................. 2,184
Change in unrealized appreciation (depreciation) on:
Investments .................................................. 67,351
Financial futures contracts .................................. (136)
--------
Net realized and unrealized gain ................................... 66,371
--------
Net increase in net assets resulting from operations ............... $ 79,761
========
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Equity Index Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ..................................... $ 13,390 $ 8,718
Net realized loss ......................................... (844) (1,233)
Change in net unrealized appreciation ..................... 67,215 135,781
--------- --------
Net increase in net assets resulting from operations ... 79,761 143,266
Distributions to shareholders from:
Net investment income ..................................... (13,389) (16,969)
Capital paid-in ........................................... (335)
--------- --------
Decrease in net assets resulting from distributions .... (13,389) (17,304)
From fund share transactions:
Proceeds from shares sold ................................. 263,005 162,921
Distributions reinvested .................................. 13,389 17,304
Payment for shares redeemed ............................... (182,698) (90,764)
--------- --------
Increase in net assets from fund share transactions .... 93,696 89,461
--------- --------
NET INCREASE IN NET ASSETS ................................... 160,068 215,423
NET ASSETS
Beginning of Period ....................................... 681,681 466,258
--------- --------
End of Period (including undistributed net investment
income of $0 and $0, respectively) ..................... $ 841,749 $681,681
========= ========
Analysis of fund share transactions:
Sold ...................................................... 18,445 13,034
Reinvested ................................................ 916 1,303
Redeemed .................................................. (12,844) (7,307)
--------- --------
Net increase in fund shares outstanding ...................... 6,517 7,030
========= ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Equity Index Fund
--------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------
2004 2003(e) 2002 2001 2000
-------- -------- -------- -------- --------
Net Assets Value at Beginning of Period .................. $ 14.18 $ 11.36 $ 14.85 $ 17.64 $ 20.46
Income from Investment Operations:
Net Investment Income ................................. 0.27 0.20 0.16 0.19 0.22
Net Realized and Unrealized Gain (Loss)
on Investment(a) ................................... 1.23 3.00 (3.48) (2.30) (2.09)
-------- -------- -------- -------- --------
Total From Investment Operations ...................... 1.50 3.20 (3.32) (2.11) (1.87)
Less Distributions:
Distribution from Net Investment Income ............... (0.26) (0.37) (0.11) (0.19) (0.22)
Distribution from Net Realized Gains on Investments ... (0.06) (0.49) (0.72)
Distribution from Capital Paid-in ..................... (0.01) (0.01)
-------- -------- -------- -------- --------
Total Distributions ................................... (0.26) (0.38) (0.17) (0.68) (0.95)
-------- -------- -------- -------- --------
Net Assets Value at End of Period ........................ $ 15.42 $ 14.18 $ 11.36 $ 14.85 $ 17.64
======== ======== ======== ======== ========
Total Investment Return(b) ............................... 10.70% 28.42% (22.31)% (11.98)% (9.15)%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ...... 0.22%(c) 0.21%(c) 0.23% 0.20% 0.19%
Ratio of Net Investment Income to Average Net Assets .. 1.85% 1.59% 1.39% 1.20% 1.12%
Portfolio Turnover Rate ............................... 14.37% 4.91% 10.63% 17.61%(d) 34.11%
Net Assets End of Period (000s Omitted) .................. $841,749 $681,681 $466,258 $538,791 $525,659
(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 is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(d) Excludes merger activity.
(e) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 1.6%
B.F. Goodrich Co. ....................................... 8,650 $ 282
Boeing Co. .............................................. 61,137 3,165
General Dynamics Corp. .................................. 14,592 1,526
Lockheed Martin Corp. ................................... 32,432 1,802
Northrop Grumman Corp. .................................. 26,100 1,419
Raytheon Co. ............................................ 32,859 1,276
Rockwell Collins, Inc. .................................. 12,866 507
United Technologies Corp. ............................... 36,785 3,802
-------
13,779
Air Freight & Couriers - 1.1%
Fedex Corp. ............................................. 21,914 2,158
Ryder System, Inc. ...................................... 4,688 224
United Parcel Service, Inc. - Cl. B ..................... 81,300 6,948
-------
9,330
Airlines - 0.1%
Delta Air Lines, Inc. * ................................. 6,679 50
Southwest Airlines Co. .................................. 57,558 937
-------
987
Auto Components - 0.2%
Cooper Tire & Rubber Co. ................................ 5,206 112
Dana Corp. .............................................. 10,930 189
Delphi Automotive Systems Corp. ......................... 40,883 369
Goodyear Tire & Rubber Co. * ............................ 13,231 194
Johnson Controls, Inc. .................................. 13,850 879
Visteon Corp. ........................................... 9,756 95
-------
1,838
Automobiles - 0.6%
Ford Motor Co. .......................................... 133,197 1,950
General Motors Corp. .................................... 41,098 1,646
Harley-Davidson, Inc. ................................... 21,440 1,303
-------
4,899
Banks - 6.7%
AmSouth Bancorp. ........................................ 25,739 667
Bank of America Corp. ................................... 291,190 13,683
Bank of New York Co., Inc. .............................. 56,670 1,894
BB&T Corp. .............................................. 40,337 1,696
Comerica, Inc. .......................................... 12,460 760
Compass Bancshares, Inc. ................................ 8,800 428
Fifth Third Bancorp ..................................... 39,691 1,877
First Horizon National Corp. ............................ 9,000 388
Golden West Financial Corp. ............................. 22,220 1,365
Huntington Bancshares, Inc. ............................. 16,696 414
JP Morgan Chase & Co. ................................... 257,972 10,063
KeyCorp ................................................. 29,617 1,004
M & T Bank Corp. ........................................ 8,500 917
Marshall & Ilsley Corp. ................................. 16,200 716
Mellon Financial Corp. .................................. 30,894 961
National City Corp. ..................................... 48,274 1,813
North Fork Bancorporation, Inc. ......................... 34,050 982
Northern Trust Corp. .................................... 16,024 $ 778
PNC Bank Corp. .......................................... 20,520 1,179
Regions Financial Corp. ................................. 33,608 1,196
Sovereign Bancorp, Inc. ................................. 25,000 564
Suntrust Banks, Inc. .................................... 26,125 1,930
Synovus Financial Corp. ................................. 22,572 645
US Bancorp .............................................. 133,690 4,187
Wachovia Corp. .......................................... 115,852 6,094
Zions Bancorp ........................................... 6,534 444
-------
56,645
Beverages - 2.2%
Adolph Coors Co. - Cl. B ................................ 2,754 209
Anheuser-Busch Cos., Inc. ............................... 56,305 2,856
Brown-Forman Corp. - Cl. B .............................. 8,800 428
Coca-Cola Co. ........................................... 175,117 7,290
Coca-Cola Enterprises, Inc. ............................. 34,148 712
Pepsi Bottling Group, Inc. .............................. 18,518 501
PepsiCo, Inc. ........................................... 122,191 6,378
-------
18,374
Biotechnology - 1.3%
Amgen, Inc. * ........................................... 91,298 5,857
Biogen IDEC, Inc. * ..................................... 24,683 1,644
Chiron Corp. * .......................................... 13,676 456
Genzyme Corp. * ......................................... 16,600 964
Gilead Sciences, Inc. * ................................. 31,300 1,095
MedImmune, Inc. * ....................................... 18,109 491
-------
10,507
Building Products - 0.1%
Masco Corp. ............................................. 31,569 1,153
Chemicals - 1.6%
Air Products & Chemicals, Inc. .......................... 16,532 958
Dow Chemical Co. ........................................ 68,348 3,384
E.I. du Pont de Nemours & Co. ........................... 70,999 3,483
Eastman Chemical Co. .................................... 5,712 330
Ecolab, Inc. ............................................ 18,772 659
Engelhard Corp. ......................................... 8,490 260
Great Lakes Chemical Corp. .............................. 2,573 73
Hercules, Inc. * ........................................ 6,957 103
International Flavors & Fragrances, Inc. ................ 6,839 293
Monsanto Co. ............................................ 19,436 1,080
PPG Industries, Inc. .................................... 12,545 855
Praxair, Inc. ........................................... 23,614 1,043
Rohm & Haas Co. ......................................... 16,347 723
Sigma-Aldrich Corp. ..................................... 5,010 303
-------
13,547
Commercial Services & Supplies - 1.7%
Allied Waste Industries, Inc. * ......................... 21,697 201
Apollo Group, Inc. - Cl. A * ............................ 12,900 1,041
Automatic Data Processing, Inc. ......................... 42,508 1,885
Avery Dennison Corp. .................................... 8,060 483
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Commercial Services & Supplies - Continued
Cendant Corp. ........................................... 76,907 $ 1,798
Cintas Corp. ............................................ 12,446 546
Convergys Corp. * ....................................... 10,749 161
Equifax, Inc. ........................................... 9,908 279
First Data Corp. ........................................ 60,225 2,562
Fiserv, Inc. * .......................................... 14,181 570
H & R Block, Inc. ....................................... 11,966 586
Monster Worldwide, Inc. * ............................... 8,655 291
Paychex, Inc. ........................................... 27,493 937
Pitney Bowes, Inc. ...................................... 16,859 780
R.R. Donnelley & Sons Co. ............................... 15,971 564
Robert Half International, Inc. ......................... 12,555 370
Sabre Group Holdings, Inc. .............................. 9,967 221
Waste Management, Inc. .................................. 42,267 1,266
-------
14,541
Communications Equipment - 2.7%
ADC Telecommunications, Inc. * .......................... 58,737 157
Andrew Corp. * .......................................... 10,368 141
Avaya, Inc. * ........................................... 32,915 566
Ciena Corp. * ........................................... 44,876 150
Cisco Systems, Inc. * ................................... 478,261 9,230
Comverse Technology, Inc. * ............................. 14,270 349
Corning, Inc. * ......................................... 101,453 1,194
JDS Uniphase Corp. * .................................... 104,891 333
L-3 Communications Holdings, Inc. ....................... 7,700 564
Lucent Technologies, Inc. * ............................. 313,778 1,180
Motorola, Inc. .......................................... 171,989 2,958
Qualcomm, Inc. .......................................... 117,202 4,969
Scientific-Atlanta, Inc. ................................ 11,137 368
Tellabs, Inc. * ......................................... 28,695 247
-------
22,406
Computers & Peripherals - 3.8%
Apple Computer, Inc. * .................................. 28,208 1,817
Dell, Inc. * ............................................ 180,183 7,593
EMC Corp. * ............................................. 175,122 2,604
Gateway, Inc. * ......................................... 27,170 163
Hewlett-Packard Co. ..................................... 217,350 4,558
International Business Machines Corp. ................... 119,927 11,822
Lexmark International Group, Inc. - Cl. A * ............. 9,387 798
NCR Corp. * ............................................. 6,840 473
Network Appliance, Inc. * ............................... 26,073 866
NVIDIA Corp. * .......................................... 11,803 278
Sun Microsystems, Inc. * ................................ 242,126 1,303
-------
32,275
Construction & Engineering - 0.1%
American Standard Cos., Inc. * .......................... 15,600 645
Fluor Corp. ............................................. 5,615 306
-------
951
Construction Materials - 0.1%
United States Steel Corp. ............................... 8,229 $ 422
Vulcan Materials Co. .................................... 7,447 406
-------
828
Containers & Packaging - 0.2%
Ball Corp. .............................................. 8,160 359
Bemis Co., Inc. ......................................... 7,554 220
Pactiv Corp. * .......................................... 10,931 276
Sealed Air Corp. * ...................................... 6,118 326
Temple-Inland, Inc. ..................................... 4,072 279
-------
1,460
Credit Card - 0.3%
MBNA Corp. .............................................. 93,071 2,624
Diversified Financials - 7.4%
American Express Co. .................................... 91,324 5,148
Bear Stearns Cos., Inc. ................................. 7,469 764
Capital One Financial Corp. ............................. 17,603 1,482
Charles Schwab Corp. .................................... 99,491 1,190
CIT Group, Inc. ......................................... 15,200 697
Citigroup, Inc. ......................................... 375,727 18,103
Countrywide Credit Industries, Inc. ..................... 40,988 1,517
E*TRADE Group, Inc. * ................................... 27,200 407
Federated Investments, Inc. - Cl. B ..................... 7,900 240
Franklin Resources, Inc. ................................ 18,185 1,267
Goldman Sachs Group, Inc. ............................... 34,900 3,631
Hartford Financial Services Group, Inc. ................. 21,345 1,479
Janus Capgroup, Inc. .................................... 17,419 293
Lehman Brothers Holdings, Inc. .......................... 19,758 1,728
Merrill Lynch & Co., Inc. ............................... 67,507 4,035
Moody's Corp. ........................................... 10,729 932
Morgan Stanley, Dean Witter, Discover & Co. ............. 79,018 4,387
Principal Financial Group. .............................. 22,800 933
Providian Financial Corp. * ............................. 21,315 351
SLM Corp. ............................................... 31,711 1,693
State Street Corp. ...................................... 24,517 1,204
T. Rowe Price Group, Inc. ............................... 9,279 577
Washington Mutual, Inc. ................................. 63,553 2,687
Wells Fargo & Co. ....................................... 121,913 7,577
-------
62,322
Diversified Telecommunication Services - 2.9%
Alltel Corp. ............................................ 22,455 1,320
AT&T Corp. .............................................. 57,885 1,103
BellSouth Corp. ......................................... 131,626 3,658
CenturyTel, Inc. ........................................ 9,805 348
Citizens Communications Co. ............................. 22,715 313
Qwest Communications International, Inc. * .............. 132,184 587
SBC Communications, Inc. ................................ 239,595 6,174
Sprint Corp. ............................................ 105,720 2,627
Verizon Communications .................................. 200,380 8,118
-------
24,248
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Electric Utilities - 2.4%
AES Corp. * .............................................. 47,092 $ 644
Allegheny Energy, Inc. * ................................. 9,981 197
Ameren Corp. ............................................. 14,100 707
American Electric Power Co. .............................. 28,829 990
Calpine Corp. * .......................................... 38,834 153
CenterPoint Energy, Inc. ................................. 22,357 253
Cinergy Corp. ............................................ 13,131 547
CMS Energy Corp. * ....................................... 12,192 127
Consolidated Edison, Inc. ................................ 17,608 770
Constellation Energy Group, Inc. ......................... 12,738 557
Dominion Resources, Inc. ................................. 24,031 1,628
DTE Energy Co. ........................................... 12,640 545
Edison International ..................................... 23,738 760
Entergy Corp. ............................................ 16,538 1,118
Exelon Corp. ............................................. 48,032 2,117
Firstenergy Corp. ........................................ 23,981 947
FPL Group, Inc. .......................................... 13,456 1,006
PG & E Corp. * ........................................... 29,163 970
Pinnacle West Capital Corp. .............................. 6,623 294
PPL Corp. ................................................ 13,712 731
Progress Energy, Inc. .................................... 17,972 813
Public Services Enterprise Group, Inc. ................... 17,302 896
Southern Co. ............................................. 53,720 1,801
Teco Energy, Inc. ........................................ 13,497 207
TXU Corp. ................................................ 17,586 1,135
Xcel Energy, Inc. ........................................ 29,149 530
-------
20,443
Electric/Gas - 0.2%
Duke Energy Co. .......................................... 68,311 1,730
Electrical Equipment - 0.4%
American Power Conversion ................................ 13,984 299
Cooper Industries, Ltd. - Cl. A .......................... 6,936 471
Emerson Electric Co. ..................................... 30,623 2,147
Power One, Inc. * ........................................ 6,714 60
Rockwell International Corp. ............................. 13,466 667
-------
3,644
Electronic Equipment & Instruments - 0.5%
Agilent Technologies, Inc. * ............................. 35,338 852
Broadcom Corp. - Cl. A * ................................. 23,403 755
Jabil Circuit, Inc. * .................................... 14,678 375
Molex, Inc. .............................................. 13,834 415
PerkinElmer, Inc. ........................................ 8,578 193
Sanmina Corp. * .......................................... 37,965 322
Solectron Corp. * ........................................ 69,970 373
Symbol Technologies, Inc. ................................ 17,429 302
Tektronix, Inc. .......................................... 6,636 201
Thermo Electron Corp. * .................................. 11,864 358
Waters Corp. * ........................................... 8,600 402
-------
4,548
Energy Equipment & Services - 0.8%
Baker Hughes, Inc. ....................................... 24,288 $ 1,036
BJ Services Co. .......................................... 11,800 549
Nabors Industries, Ltd. * ................................ 10,814 555
Noble Corp. * ............................................ 9,795 487
Rowan Cos., Inc. * ....................................... 7,437 193
Schlumberger, Ltd. ....................................... 43,034 2,881
Transocean Sedco Forex, Inc. * ........................... 23,398 992
-------
6,693
Finance - 0.2%
Dow Jones & Co., Inc. .................................... 5,726 247
Marsh & McLennan Cos., Inc. .............................. 37,902 1,247
-------
1,494
Food & Drug Retailing - 1.0%
Albertson's, Inc. ........................................ 26,766 639
CVS Corp. ................................................ 29,072 1,310
Safeway, Inc. * .......................................... 32,535 642
SuperValu, Inc. .......................................... 9,893 342
Sysco Corp. .............................................. 46,578 1,778
The Kroger Co. * ......................................... 53,779 943
Walgreen Co. ............................................. 74,580 2,862
-------
8,516
Food Products - 1.3%
Archer Daniels Midland Co. ............................... 47,344 1,056
Campbell Soup Co. ........................................ 29,894 894
ConAgra, Inc. ............................................ 38,481 1,133
General Mills, Inc. ...................................... 25,529 1,269
H.J. Heinz Co. ........................................... 25,407 991
Hershey Foods Corp. ...................................... 17,898 994
Kellogg Co. .............................................. 30,090 1,344
McCormick & Co., Inc. .................................... 10,000 386
Sara Lee Corp. ........................................... 57,761 1,394
WM Wrigley Jr. Co. ....................................... 16,329 1,130
-------
10,591
Gas Utilities - 0.4%
El Paso Corp. ............................................ 46,628 485
KeySpan Corp. ............................................ 11,700 461
Kinder Morgan, Inc. ...................................... 8,966 656
Nicor, Inc. .............................................. 2,666 98
Peoples Energy Corp. ..................................... 2,751 121
Sempra Energy ............................................ 16,904 620
Williams Cos., Inc. ...................................... 38,048 620
-------
3,061
Health Care Equipment & Supplies - 2.1%
Applera Corporation - Applied Biosystems Group ........... 14,707 308
Bausch & Lomb, Inc. ...................................... 3,678 237
Baxter International, Inc. ............................... 44,762 1,546
Becton, Dickinson & Co. .................................. 18,275 1,038
Biomet, Inc. ............................................. 18,515 803
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Health Care Equipment & Supplies - Continued
Boston Scientific Corp. * ............................... 61,268 $ 2,178
C.R. Bard, Inc. ......................................... 7,648 489
Fisher Scientific International, Inc. * ................. 8,400 524
Guidant Corp. ........................................... 22,946 1,654
Hospira, Inc. * ......................................... 11,334 380
IMS Health, Inc. ........................................ 16,987 394
Medtronic, Inc. ......................................... 87,058 4,324
Millipore Corp. * ....................................... 3,568 178
St. Jude Medical, Inc. * ................................ 25,700 1,078
Stryker Corp. ........................................... 29,170 1,408
Zimmer Holdings, Inc. * ................................. 17,815 1,427
-------
17,966
Health Care Providers & Services - 1.7%
Aetna US Healthcare, Inc. ............................... 10,307 1,286
Amerisource Bergen Corp. ................................ 8,155 478
Cardinal Health, Inc. ................................... 31,379 1,825
Caremark Rx, Inc. * ..................................... 31,850 1,256
CIGNA Corp. ............................................. 10,018 817
Express Scripts, Inc. - Cl. A * ......................... 5,600 428
HCA-The Healthcare Corp. ................................ 30,632 1,224
Health Management Assoc., Inc. - Cl. A .................. 17,756 403
Humana, Inc. * .......................................... 11,647 346
Laboratory Corporation of America Holdings * ............ 10,100 503
Manor Care, Inc. ........................................ 6,265 222
McKesson HBOC, Inc. ..................................... 21,347 672
Quest Diagnostics, Inc. ................................. 7,400 707
Tenet Healthcare Corp. * ................................ 33,958 373
UnitedHealth Group, Inc. ................................ 46,822 4,122
-------
14,662
Hotels Restaurants & Leisure - 1.6%
Carnival Corp. .......................................... 46,050 2,654
Darden Restaurants, Inc. ................................ 10,658 296
Harrah's Entertainment, Inc. ............................ 8,170 546
Hilton Hotels Corp. ..................................... 28,036 638
International Game Technology ........................... 25,132 864
Marriott International, Inc. - Cl. A .................... 16,655 1,049
McDonald's Corp. ........................................ 91,481 2,933
Starbucks Corp. * ....................................... 28,953 1,805
Starwood Hotels & Resorts Worldwide, Inc. ............... 15,189 887
Wendy's International, Inc. ............................. 8,265 324
Yum Brands, Inc. ........................................ 21,128 997
-------
12,993
Household Durables - 0.5%
Black & Decker Corp. .................................... 5,800 512
Centex Corp. ............................................ 8,972 535
Fortune Brands, Inc. .................................... 10,522 812
KB Home ................................................. 3,364 351
Leggett & Platt, Inc. ................................... 13,985 398
Maytag Corp. ............................................ 6,111 129
Newell Rubbermaid, Inc. ................................. 20,004 $ 484
Pulte Homes, Inc. ....................................... 9,272 591
Snap-On, Inc. ........................................... 4,184 144
Stanley Works ........................................... 5,924 290
Whirlpool Corp. ......................................... 4,697 325
-------
4,571
Household Products - 1.8%
Clorox Co. .............................................. 11,044 651
Colgate-Palmolive Co. ................................... 38,616 1,975
Kimberly-Clark Corp. .................................... 34,674 2,282
Procter & Gamble Co. .................................... 184,168 10,144
-------
15,052
Industrial Conglomerates - 4.9%
3M Co. .................................................. 55,846 4,583
General Electric Co. .................................... 763,400 27,864
Honeywell International, Inc. ........................... 62,539 2,215
Reynolds American, Inc. ................................. 10,800 849
Textron, Inc. ........................................... 10,105 746
Tyco International, Ltd. ................................ 144,747 5,173
-------
41,430
Insurance - 4.2%
Ace, Ltd. ............................................... 20,700 885
AFLAC, Inc. ............................................. 36,965 1,473
Allstate Corp. .......................................... 48,854 2,527
Ambac Financial Group, Inc. ............................. 7,854 645
American International Group, Inc. ...................... 188,726 12,394
Aon Corp. ............................................... 22,981 548
Chubb Corp. ............................................. 13,955 1,073
Cincinnati Financial Corp. .............................. 12,250 542
Jefferson-Pilot Corp. ................................... 9,896 514
Lincoln National Corp. .................................. 12,773 596
Loews Corp. ............................................. 13,487 948
MBIA, Inc. .............................................. 10,416 659
Metlife, Inc. ........................................... 54,590 2,211
MGIC Investment Corp. ................................... 7,156 493
Progressive Corp. ....................................... 14,305 1,214
Prudential Financial, Inc. .............................. 37,800 2,078
Safeco Corp. ............................................ 9,186 480
St. Paul Cos., Inc. ..................................... 48,694 1,805
Torchmark, Inc. ......................................... 7,982 456
UnumProvident Corp. ..................................... 21,571 387
Wellpoint, Inc. * ....................................... 21,684 2,494
XL Capital, Ltd. - Cl. A ................................ 10,094 784
-------
35,206
Internet & Catalog Retail - 0.7%
eBay, Inc. * ......................................... 47,600 5,535
Internet Software & Services - 0.4%
Yahoo, Inc. * ........................................ 99,044 3,732
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
IT Consulting & Services - 0.4%
Affiliated Computer Services, Inc. - Cl. A * ............ 9,300 $ 560
Computer Sciences Corp. * ............................... 13,745 775
Electronic Data Systems Corp. * ......................... 37,281 861
SunGard Data Systems, Inc. * ............................ 21,000 595
Unisys Corp. * .......................................... 24,361 248
-------
3,039
Leisure Equipment & Products - 0.2%
Brunswick Corp. ......................................... 6,927 343
Eastman Kodak Co. ....................................... 20,822 671
Hasbro, Inc. ............................................ 12,876 250
Mattel, Inc. ............................................ 30,127 587
-------
1,851
Machinery - 1.5%
Caterpillar, Inc. ....................................... 24,999 2,438
Cummings Engine Co., Inc. ............................... 3,260 273
Danaher Corp. ........................................... 22,414 1,287
Deere & Co. ............................................. 18,108 1,347
Dover Corp. ............................................. 14,796 620
Eaton Corp. ............................................. 11,032 798
Illinois Tool Works, Inc. ............................... 20,942 1,941
Ingersoll-Rand Co. - Cl. A .............................. 12,649 1,016
ITT Industries, Inc. .................................... 6,728 568
Navistar International Corp., Inc. - Cl. B * ............ 5,086 224
Paccar, Inc. ............................................ 12,599 1,014
Pall Corp. .............................................. 9,079 263
Parker-Hannifin Corp. ................................... 8,720 660
-------
12,449
Media - 3.8%
Clear Channel Communications, Inc. ...................... 40,254 1,348
Comcast Corp. - Cl. A * ................................. 160,967 5,357
Gannett Co., Inc. ....................................... 17,985 1,469
Interpublic Group Cos., Inc. * .......................... 30,746 412
Knight-Ridder, Inc. ..................................... 5,606 375
McGraw-Hill Cos., Inc. .................................. 13,784 1,262
Meredith Corp. .......................................... 3,672 199
New York Times Co. - Cl. A .............................. 10,732 438
News Corp. - Cl. A * .................................... 185,200 3,456
Omnicom Group, Inc. ..................................... 13,669 1,153
The Walt Disney Co. ..................................... 146,240 4,065
Time Warner, Inc. * ..................................... 329,694 6,409
Tribune Co. ............................................. 23,199 978
Univision Communications, Inc. - Cl. A * ................ 23,503 688
Viacom, Inc. - Cl. B .................................... 122,169 4,446
-------
32,055
Metals & Mining - 0.6%
Alcoa, Inc. ............................................. 63,349 1,990
Allegheny Technologies, Inc. ............................ 7,467 162
Freeport-McMoran Copper & Gold, Inc. - Cl. B ............ 12,909 493
Newmont Mining Corp. .................................... 32,285 $ 1,434
Nucor Corp. ............................................. 11,526 603
Phelps Dodge Corp. ...................................... 6,810 674
-------
5,356
Multi-Utilities - 0.1%
Dynegy, Inc. - Cl. A * .................................. 29,874 138
NiSource, Inc. .......................................... 19,166 437
-------
575
Multiline Retail - 3.2%
Big Lots, Inc. * ........................................ 6,765 82
Costco Wholesale Corp. .................................. 33,554 1,624
Dillard's, Inc. - Cl. A ................................. 6,124 165
Dollar General Corp ..................................... 23,927 497
Family Dollar Stores, Inc. .............................. 12,250 383
Federated Department Stores, Inc. ....................... 11,487 664
J.C. Penney Co., Inc. ................................... 20,983 869
Kohl's Corp. * .......................................... 24,884 1,223
May Department Stores Co. ............................... 21,185 623
Nordstrom, Inc. ......................................... 10,195 476
Sears, Roebuck & Co. .................................... 15,478 790
Target Corp. ............................................ 63,908 3,319
Wal-Mart Stores, Inc. ................................... 305,498 16,136
-------
26,851
Office Electronics - 0.1%
Xerox Corp. * ........................................... 69,210 1,177
Oil & Gas - 5.9%
Amerada Hess Corp. ...................................... 6,656 548
Anadarko Petroleum Corp. ................................ 18,237 1,182
Apache Corp. ............................................ 23,690 1,198
Ashland, Inc. ........................................... 5,201 304
Burlington Resources, Inc. .............................. 28,736 1,250
ChevronTexaco Corp. ..................................... 152,378 8,001
Conoco Phillips ......................................... 49,548 4,302
Devon Energy Corp. ...................................... 35,176 1,369
EOG Resources, Inc. ..................................... 8,569 611
Exxon Mobil Corp. ....................................... 465,745 23,874
Halliburton Co. ......................................... 32,124 1,261
Kerr-McGee Corp. ........................................ 11,015 637
Marathon Oil Corp. ...................................... 25,149 946
Occidental Petroleum Corp. .............................. 28,547 1,666
Sunoco, Inc. ............................................ 5,522 451
Unocal Corp. ............................................ 19,254 833
Valero Energy Corp. ..................................... 18,600 844
XTO Energy, Inc. ........................................ 18,800 665
-------
49,942
Paper & Forest Products - 0.5%
Georgia-Pacific Corp. ................................... 18,755 703
International Paper Co. ................................. 35,369 1,486
Louisiana-Pacific Corp. ................................. 7,452 199
MeadWestvaco Corp. ...................................... 14,733 499
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Paper & Forest Products - Continued
Plum Creek Timber Co., Inc. ............................. 13,300 $ 511
Weyerhaeuser Co. ........................................ 17,435 1,172
-------
4,570
Personal Products - 0.6%
Alberto-Culver Co. - Cl. B .............................. 6,273 305
Avon Products, Inc. ..................................... 34,390 1,331
Gillette Co. ............................................ 70,934 3,176
-------
4,812
Pharmaceuticals - 6.8%
Abbott Laboratories ..................................... 112,542 5,250
Allergan, Inc. .......................................... 9,591 778
Bristol-Myers Squibb Co. ................................ 141,626 3,628
Eli Lilly & Co. ......................................... 81,435 4,621
Forest Laboratories, Inc. * ............................. 26,912 1,207
Johnson & Johnson ....................................... 215,161 13,645
King Pharmaceuticals, Inc. * ............................ 16,622 206
Medco Health Solutions, Inc. * .......................... 19,805 824
Merck & Co., Inc. ....................................... 159,635 5,131
Mylan Laboratories, Inc. ................................ 19,600 347
Pfizer, Inc. ............................................ 542,985 14,601
Schering-Plough Corp. ................................... 107,228 2,239
Watson Pharmaceuticals, Inc. * .......................... 7,954 261
Wyeth ................................................... 95,912 4,085
-------
56,823
Real Estate Investment Trust - 0.5%
Apartment Investment & Management Co. ................... 6,900 266
Archstone Communities Trust ............................. 14,100 540
Equity Office Properties Trust .......................... 29,290 853
Equity Residential Properties Trust ..................... 20,386 738
Prologis Trust .......................................... 13,200 572
Simon Property Group, Inc. .............................. 16,100 1,041
-------
4,010
Road & Rail - 0.5%
Burlington Northern Santa Fe Corp. ...................... 27,070 1,281
CSX Corp. ............................................... 15,610 626
Norfolk Southern Corp. .................................. 28,659 1,037
Union Pacific Corp. ..................................... 18,861 1,268
-------
4,212
Semiconductor Equipment & Products - 2.9%
Advanced Micro Devices, Inc. * .......................... 25,800 568
Altera Corp. * .......................................... 27,062 560
Analog Devices, Inc. .................................... 27,523 1,016
Applied Materials, Inc. * ............................... 123,654 2,114
Applied Micro Circuits Corp. * .......................... 19,737 83
Freescale Semiconductor, Inc. - Cl. B * ................. 28,890 530
Intel Corp. ............................................. 455,540 10,655
KLA-Tencor Corp. * ...................................... 14,270 665
Linear Technology Corp. ................................. 22,346 866
LSI Logic Corp. * ....................................... 24,026 132
Maxim Integrated Products, Inc. ......................... 23,677 $ 1,004
Micron Technology, Inc. * ............................... 44,567 550
National Semiconductor Corp. * .......................... 26,104 469
Novellus Systems, Inc. .................................. 10,207 285
PMC-Sierra, Inc. * ...................................... 12,439 140
QLogic Corp. * .......................................... 6,734 247
Teradyne, Inc. * ........................................ 14,154 242
Texas Instruments, Inc. ................................. 126,025 3,103
Xilinx, Inc. ............................................ 25,284 750
-------
23,979
Software - 4.2%
Adobe Systems, Inc. ..................................... 17,448 1,095
Autodesk, Inc. .......................................... 15,712 596
BMC Software, Inc. * .................................... 16,054 299
Citrix Systems, Inc. * .................................. 12,269 301
Computer Associates International, Inc. ................. 42,663 1,325
Compuware Corp. * ....................................... 27,435 177
Electronic Arts, Inc. ................................... 22,100 1,363
Intuit, Inc. * .......................................... 13,903 612
Mercury Interactive Corp. * ............................. 6,804 310
Microsoft Corp. ......................................... 787,269 21,028
Novell, Inc. * .......................................... 28,124 190
Oracle Corp. * .......................................... 372,464 5,110
Parametric Technology Corp. * ........................... 20,384 120
Siebel Systems, Inc. * .................................. 36,759 386
Symantec Corp. * ........................................ 45,800 1,180
Veritas Software Corp. * ................................ 31,463 898
-------
34,990
Specialty Retail - 2.3%
AutoNation, Inc. * ...................................... 19,400 373
AutoZone, Inc. * ........................................ 6,063 554
Bed Bath & Beyond, Inc. * ............................... 21,920 873
Best Buy Co., Inc. ...................................... 23,707 1,409
Circuit City Stores, Inc. ............................... 14,503 227
Gap, Inc. ............................................... 61,525 1,299
Home Depot, Inc. ........................................ 158,444 6,772
Limited, Inc. ........................................... 25,295 582
Lowe's Cos., Inc. ....................................... 55,119 3,174
Office Depot, Inc. * .................................... 22,848 397
OfficeMax, Inc. ......................................... 6,062 190
RadioShack Corp. ........................................ 11,670 384
Sherwin-Williams Co. .................................... 10,328 461
Staples, Inc. ........................................... 36,261 1,222
Tiffany & Co. ........................................... 10,612 339
TJX Cos., Inc. .......................................... 35,616 895
Toys "R" Us, Inc. * ..................................... 15,587 319
-------
19,470
Textiles & Apparel - 0.5%
Coach, Inc. * ........................................... 13,700 773
Jones Apparel Group, Inc. ............................... 9,100 333
Liz Claiborne, Inc. ..................................... 7,852 331
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Textiles & Apparel - Continued
Nike, Inc. - Cl. B ..................................... 19,194 $ 1,741
Reebok International, Ltd. ............................. 4,285 189
V.F. Corp. ............................................. 8,063 446
--------
3,813
Tobacco - 1.2%
Altria Group, Inc. ..................................... 148,399 9,067
UST, Inc. .............................................. 12,037 579
--------
9,646
Trading Companies & Distributors - 0.1%
Genuine Parts Co. ...................................... 12,700 560
W.W. Grainger, Inc. .................................... 6,638 442
--------
1,002
U.S. Government Agencies - 1.0%
Federal Home Loan Mortgage Corp. ....................... 50,007 3,686
Federal National Mortgage Assoc. ....................... 69,755 4,967
--------
8,653
Unclassified - 0.0%
EEX Corp. .............................................. --
Wireless Telecommunications Services - 0.3%
Nextel Communications, Inc. - Cl. A * .................. 81,113 2,433
--------
TOTAL COMMON STOCK-
(Cost $797,537) 97.0% 816,289
Par
Value
-------
(000's)
SHORT-TERM INVESTMENTS - 2.9%
Investment in joint trading account - 2.7%
2.29% due 01/03/05 ..................................... $22,994 22,994
U.S. Treasury - Bills - 0.2%
2.19% due 03/10/05 ..................................... 1,625 1,618
--------
TOTAL SHORT-TERM INVESTMENTS-
(Cost $24,612) 24,612 24,612
------- --------
TOTAL INVESTMENTS-
(Cost $822,149) 99.9% 840,901
Cash and Receivables, less payables- 0.1% 848
------- --------
NET ASSETS- 100.0% $841,749
======= ========
* Non-income producing security.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Equity Index 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 twenty-three
different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices
as late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at
any time other than 4:00 p.m. Eastern Standard Time on a particular day, the
Fund will determine its net asset value per share as of the close of the
Exchange on that day. Investment security transactions are recorded on the date
of purchase or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including,
but not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 with Bank of New York. This agreement
enables the Fund to participate in an unsecured line of credit, which permits
borrowing up to $10 million. 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. For
the year ended December 31, 2004, the Fund had no bank borrowings.
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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004, open financial
futures contracts for the Fund were as follows:
Open Unrealized
Contracts Position Expiration Month Appreciation
--------- -------- ---------------- ------------
S&P 500 Index Futures 85 Long March 05 $563
====
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, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, of which
$2,698 which expires in 2010.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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.
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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 11, 2004, 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
$75 Million and Excess Over
First $75 Million $125 Million $125 Million
- ----------------- --------------- ------------
0.15% 0.14% 0.13%
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. For the year
ended December 31, 2004, there were no reimbursements paid 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 in expenses
of $30.
John Hancock has entered into a Sub-Advisory Agreement with State Street
Global Advisers Funds Management, Inc., which under John Hancock's 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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$192,982 $101,187
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, 2004 were as follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Depreciation
- ---------- ------------ ------------ --------------
$853,388 $ 84,486 $(96,973) $(12,487)
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
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 return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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 Depreciation
- ------------- ------------- ------------- --------------
$-- $-- $2,698 $(11,924)
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
- ---- ------------------ ---------------------- -----------------
2004 $13,389 $-- $ --
2003 16,964 -- 340
Included in the Fund's 2004 and 2003 distributions from ordinary income are
$135 and $2,856, respectively, in excess of investment company taxable income,
which in accordance with applicable US tax law, were distributed, to
shareholders as ordinary income distributions.
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Equity Index Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Equity Index Fund of John Hancock Variable Series Trust I at December 31, 2004,
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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: April 30, 1997
- --------------------------------------------------------------------------------
Financial Industries Fund
John Hancock Advisers, LLC J. Schmidt/L. Welch
- --------------------------------------------------------------------------------
.. The manager selects stocks using bottom-up fundamental research and focuses
on stocks presenting opportunities based upon market themes, takeover
potential and value relative to balance sheet, earnings and liquidity.
Fund Commentary
Performance: For the year 2004, the Financial Industries Fund returned +8.65%,
underperforming the +10.89% return of the S&P Financial Index.
Environment: The performance of the equity markets was mixed for the year. For
the first three quarters, performance was flat as investors focused their
attention on escalating oil prices, the fall of the U.S. dollar, geopolitical
events, Federal Reserve interest rate increases and uncertainty about the
Presidential election. These concerns left investors stymied regarding the
health of the overall economy and the market. However, during the fourth
quarter, many of these concerns were put to rest as President Bush was
re-elected, oil prices moved sharply lower and investors perceived the Fed rate
increases as necessary, given a slight increase in inflation and the fall of the
U.S. dollar. In this environment, Financials slightly underperformed the market.
For the year, we trailed our benchmark, as our stock selection within the
insurance brokerage, asset management & custody bank and regional banks groups
was negative. Also detracting from our performance was our group overweight of
the insurance brokers. Aiding performance was our stock selection within the
thrifts & mortgage finance, and the multi-line insurance groups.
Outlook: Looking forward, we believe Financials remain attractive, given their
stability of earnings, their ability to mitigate interest rate risk in a rising
interest rate environment, and the continued prospects for consolidation. To
benefit from the current market environment, we have overweighted asset
management & custody banks, and diversified banks--overweighting the market
sensitive groups. We believe these groups are better valued. We have
underweighted life & health insurance companies and regional banks.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 4/30/97 (Fund Inception Date)
Financial S&P 500 Financials
Industries VST S&P 500 TR Sector TR (c) 2004
-------------- ---------- ------------------
Apr-97 $10,000 $10,000 $10,000
May-97 10,600 10,614 10,467
Jun-97 11,240 11,087 11,048
Jul-97 12,460 11,968 12,368
Aug-97 11,930 11,302 11,445
Sep-97 12,990 11,921 12,369
Oct-97 12,620 11,523 12,112
Nov-97 12,840 12,057 12,591
Dec-97 13,505 12,264 13,222
Jan-98 13,334 12,400 12,845
Feb-98 14,409 13,295 14,053
Mar-98 14,972 13,975 14,854
Apr-98 15,043 14,116 15,100
May-98 14,701 13,873 14,736
Jun-98 15,173 14,437 15,354
Jul-98 14,741 14,283 15,356
Aug-98 11,988 12,218 11,815
Sep-98 12,631 13,001 12,053
Oct-98 13,535 14,058 13,515
Nov-98 14,269 14,910 14,436
Dec-98 14,663 15,769 14,733
Jan-99 14,257 16,429 15,045
Feb-99 14,044 15,918 15,246
Mar-99 14,368 16,555 15,830
Apr-99 15,403 17,196 16,903
May-99 15,190 16,790 15,964
Jun-99 15,332 17,722 16,625
Jul-99 14,561 17,169 15,592
Aug-99 13,932 17,084 14,876
Sep-99 13,232 16,616 14,103
Oct-99 14,947 17,667 16,456
Nov-99 14,531 18,026 15,649
Dec-99 14,842 19,088 15,339
Jan-00 14,267 18,129 14,854
Feb-00 12,913 17,786 13,246
Mar-00 15,592 19,526 15,703
Apr-00 14,945 18,938 15,209
May-00 15,797 18,550 16,229
Jun-00 15,694 19,007 15,245
Jul-00 16,823 18,710 16,821
Aug-00 18,291 19,872 18,436
Sep-00 18,825 18,823 18,874
Oct-00 18,886 18,743 18,791
Nov-00 17,706 17,265 17,684
Dec-00 18,873 17,350 19,282
Jan-01 18,183 17,965 19,228
Feb-01 17,195 16,327 17,965
Mar-01 16,300 15,293 17,424
Apr-01 17,051 16,481 18,072
May-01 17,401 16,592 18,801
Jun-01 17,072 16,188 18,794
Jul-01 16,434 16,029 18,490
Aug-01 15,384 15,025 17,363
Sep-01 14,623 13,812 16,338
Oct-01 14,232 14,075 16,035
Nov-01 15,240 15,155 17,180
Dec-01 15,568 15,288 17,556
Jan-02 15,129 15,065 17,281
Feb-02 14,840 14,774 17,030
Mar-02 15,728 15,330 18,162
Apr-02 15,044 14,401 17,677
May-02 14,915 14,295 17,648
Jun-02 14,081 13,276 16,810
Jul-02 13,205 12,241 15,477
Aug-02 13,493 12,322 15,794
Sep-02 11,986 10,983 13,947
Oct-02 12,905 11,949 15,209
Nov-02 13,226 12,653 15,834
Dec-02 12,538 11,909 14,985
Jan-03 12,127 11,597 14,735
Feb-03 11,695 11,423 14,275
Mar-03 11,533 11,533 14,219
Apr-03 12,884 12,484 15,961
May-03 13,650 13,142 16,805
Jun-03 13,686 13,310 16,847
Jul-03 14,237 13,544 17,620
Aug-03 14,193 13,808 17,442
Sep-03 14,185 13,662 17,559
Oct-03 15,173 14,435 18,768
Nov-03 15,146 14,562 18,716
Dec-03 15,802 15,326 19,636
Jan-04 16,219 15,608 20,261
Feb-04 16,573 15,825 20,798
Mar-04 16,359 15,586 20,593
Apr-04 15,686 15,341 19,642
May-04 15,927 15,551 20,004
Jun-04 16,056 15,853 20,103
Jul-04 15,606 15,328 19,691
Aug-04 15,950 15,390 20,353
Sep-04 15,971 15,556 20,179
Oct-04 16,003 15,794 20,282
Nov-04 16,483 16,434 20,881
Dec-04 17,170 16,992 21,774
Value on 12/31/04:
- ------------------
$17,170 Financial Industries Fund
$21,774 Standard & Poor's Financial Index(1)
$16,992 S&P 500(R) Index(2)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Citigroup, Inc. 5.1%
Bank of America Corp. 4.9%
State Street Corp. 4.1%
Berkshire Hathaway, Inc. 3.9%
JP Morgan Chase & Co. 3.8%
Wells Fargo & Co. 3.6%
American Express Co. 3.5%
Federal Home Loan Mortgage Corp. 3.5%
Bank of New York Co., Inc. 3.4%
Goldman Sachs Group, Inc. 3.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Financial S&P 500
Industries Financials S&P 500
Fund Sector/1/ Index/2/
---------- ---------- --------
1 Year 8.65% 10.89% 10.87%
3 Years 3.32% 7.44% 3.59%
5 Years 2.96% 7.26% -2.30%
Since Inception (4/30/97) 7.29% 10.68% 7.16%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Financials 94.9%
Governments 4.5%
Industrials 0.6%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
additional risks associated with a non diversified fund, as outlined in the
current prospectus. Performance would be lower if expenses and charges of
the separate accounts and products were reflected.
/1/ The Standard & Poor's Financial Index is an unmanaged index of financial
sector stocks in the Standard & Poor's 500(R) Index.
/2/ "Standard & Poor's 500(R) Index" is a trademark of McGraw-Hill Companies,
Inc. and has been licensed for use by John Hancock Life Insurance Company.
The product is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the product. "Standard & Poor 500(R)" Index is
an unmanaged stock index commonly used as a broad measure of stock market
performance.
Inception: April 30, 1997
- --------------------------------------------------------------------------------
Financial Industries Fund
John Hancock Advisers, LLC J. Schmidt/L. Welch
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Financial Industries Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes:
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,069.30
Expense paid per $1,000* $ 4.88
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,020.42
Expense paid per $1,000* $ 4.76
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Financial Industries Fund
(000's Omitted)
ASSETS
Long term investments at cost ...................................... $ 52,138
Net unrealized appreciation if investments ......................... 7,597
Short-term investments at value .................................... 1,638
--------
Total investments ............................................ 61,373
Receivable for:
Investments sold ................................................ 45
Dividends ....................................................... 55
Other receivables ............................................... 2
--------
Total assets ....................................................... 61,475
--------
LIABILITIES
Payables for:
Fund shares purchased ........................................... 119
Accrued operating expenses ...................................... 37
Other liabilities ............................................... 1
--------
Total liabilities .................................................. 157
--------
Net assets ......................................................... $ 61,318
========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ..................................................... 3,973
--------
Net asset value per share .......................................... $ 15.44
========
Composition of net assets:
Capital paid-in ................................................. 63,798
Accumulated net realized loss on investments .................... (10,077)
Net unrealized appreciation of investments ...................... 7,597
--------
Net assets ......................................................... $ 61,318
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Financial Industries Fund
(000's Omitted)
INVESTMENT INCOME
Interest .......................................................... $ 14
Dividends (net of foreign withholding tax of $1) .................. 1,221
------
Total investment income .............................................. 1,235
------
EXPENSES
Investment advisory fee ........................................... 492
Auditors fees ..................................................... 7
Custodian fees .................................................... 23
Legal fees ........................................................ 10
Printing & mailing fees ........................................... 37
Trustees' fees .................................................... 2
Other fees ........................................................ 1
------
Total Expenses ....................................................... 572
Less expenses reimbursed .......................................... (19)
Less custodian expense reduction offset by
commission recapture arrangement (Note C) ...................... (11)
------
Net expenses ......................................................... 542
------
Net Investment Income ................................................ 693
------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments .................................. 3,313
Change in unrealized appreciation investments ..................... 937
------
Net realized and unrealized gain ..................................... 4,250
------
Net increase in net assets resulting from
operations ........................................................ $4,943
======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Financial Industries Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income .................................................... $ 693 $ 791
Net realized gain (loss) ................................................. 3,313 (1,519)
Change in net unrealized appreciation .................................... 937 14,169
-------- --------
Net increase in net assets resulting from operations .................. 4,943 13,441
Distributions to shareholders from:
Net investment income .................................................... (693) (787)
Capital paid-in .......................................................... (241)
-------- --------
Decrease in net assets resulting from distributions ................... (693) (1,028)
From fund share transactions:
Proceeds from shares sold ................................................ 5,011 4,734
Distributions reinvested ................................................. 693 1,028
Payment for shares redeemed .............................................. (11,624) (12,562)
-------- --------
Decrease in net assets from fund share transactions ................... (5,920) (6,800)
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS ....................................... (1,670) 5,613
NET ASSETS
Beginning of Period ...................................................... 62,988 57,375
-------- --------
End of Period (including undistributed net investment income of $0 and $0,
respectively) ......................................................... $ 61,318 $ 62,988
======== ========
Analysis of fund share transactions:
Sold ..................................................................... 341 318
Reinvested ............................................................... 48 59
Redeemed ................................................................. (800) (619)
-------- --------
Decrease in fund shares outstanding ......................................... (411) (242)
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Financial Industries Fund
----------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------------
2004 2003(i) 2002 2001 2000
------- ------- ------- ------- -------
Net Assets Value at Beginning of Period .......... $ 14.37 $ 11.60 $ 14.56 $ 18.34 $ 14.46
Income from Investment Operations:
Net Investment Income ......................... 0.16 0.18 0.12 0.11 0.06
Net Realized and Unrealized Gain (Loss) on
Investment(a) .............................. 1.07 2.82 (2.95) (3.33) 3.87
------- ------- ------- ------- -------
Total From Investment Operations .............. 1.23 3.00 (2.83) (3.22) 3.93
Less Distributions:
Distribution from Net Investment Income ....... (0.16) (0.18) (0.13) (0.09) (0.05)
Distribution from Net Realized Gains on
Investments ................................ (0.47)
Distribution from Capital Paid-in ............. (0.05)
------- ------- ------- ------- -------
Total Distributions ........................... (0.16) (0.23) (0.13) (0.56) (0.05)
Capital Contributions .........................
------- ------- ------- ------- -------
Net Assets Value at End of Period ................ $ 15.44 $ 14.37 $ 11.60 $ 14.56 $ 18.34
======= ======= ======= ======= =======
Total Investment Return(b) ....................... 8.65% 26.03%(c) (19.46)% (17.51)% 27.16%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ..................................... 0.90%(g)(h) 0.85%(d) 0.90% 0.89% 0.90%
Ratio of Net Investment Income to Average
Net Assets ................................. 1.13% 1.35%(d) 0.87% 0.71% 0.36%
Portfolio Turnover Rate ....................... 33.27% 50.20%(c)(e) 2.00% 97.00%(e) 41.00%
Net Assets End of Period (000s Omitted) .......... $61,318 $62,988 $57,375 $88,920 $71,367
(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) Not annualized.
(d) Annualized.
(e) Excludes merger activity.
(g) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made the expense ratio would have been 0.93% for the year ended
December 31, 2004.
(h) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(i) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
FINANCIAL INDUSTRIES FUND
Market
Name of Issuer Shares Value
-------------- ------ ---------
(000's)
COMMON STOCK
Banks - 30.6%
Bank of America Corp. .................................. 62,806 $ 2,951
Bank of New York Co., Inc. ............................. 60,500 2,022
Banknorth Group, Inc. .................................. 9,000 330
City National Corp. .................................... 7,500 530
Fifth Third Bancorp .................................... 40,842 1,931
First Horizon National Corp. ........................... 2,500 108
Golden West Financial Corp. ............................ 12,200 749
JP Morgan Chase & Co. .................................. 57,860 2,257
M & T Bank Corp. ....................................... 10,900 1,176
Mellon Financial Corp. ................................. 44,000 1,369
National City Corp. .................................... 8,900 334
North Fork Bancorporation, Inc. ........................ 7,500 216
PNC Bank Corp .......................................... 20,844 1,197
Synovus Financial Corp. ................................ 5,000 143
US Bancorp ............................................. 30,000 940
Wachovia Corp. ......................................... 31,182 1,640
Wintrust Financial Corp. ............................... 2,000 114
Zions Bancorp .......................................... 11,500 782
-------
18,789
Commercial Services & Supplies - 0.6%
Fiserv, Inc. * ......................................... 8,800 354
Credit Card - 2.2%
MBNA Corp. ............................................. 48,975 1,381
Diversified Financials - 34.0%
American Express Co. ................................... 37,000 2,086
Ameritrade Holding Corp. * ............................. 10,000 142
Assured Guaranty, Ltd. ................................. 22,330 439
Bear Stearns Cos., Inc. ................................ 7,400 757
CIT Group, Inc. ........................................ 11,000 504
Citigroup, Inc. ........................................ 63,000 3,035
Countrywide Financial Corp. ............................ 24,500 907
Doral Financial Corp. .................................. 9,000 443
Franklin Resources, Inc. ............................... 3,000 209
Goldman Sachs Group, Inc. .............................. 19,000 1,977
Hartford Financial Services Group, Inc. ................ 11,000 763
Legg Mason, Inc. ....................................... 8,200 601
Lehman Brothers Holdings, Inc. ......................... 15,500 1,356
Merrill Lynch & Co., Inc. .............................. 30,800 1,841
Morgan Stanley, Dean Witter, Discover & Co. ............ 17,600 977
National Financial Partners Corp. ...................... 5,060 196
State Street Corp. ..................................... 50,000 2,456
Wells Fargo & Co. ...................................... 35,000 2,175
-------
20,864
Finance - 0.7%
Marsh & McLennan Cos., Inc. ............................ 12,750 419
Insurance - 24.4%
Ace, Ltd. .............................................. 13,000 556
AFLAC, Inc. ............................................ 5,900 235
Allstate Corp. ......................................... 16,500 853
Ambac Financial Group, Inc. ............................ 8,650 $ 710
American International Group, Inc. ..................... 23,400 1,537
Arch Capital Group, Ltd. * ............................. 29,200 1,130
Axis Capital Holdings, Ltd. ............................ 20,085 549
Berkshire Hathaway, Inc. - Cl. B * ..................... 800 2,349
Conseco, Inc. * ........................................ 32,200 642
Direct General Corp. ................................... 8,500 273
Genworth Financial, Inc. - Cl. A ....................... 21,983 594
Metlife, Inc. .......................................... 11,000 446
PartnerRe, Ltd. ........................................ 21,000 1,301
Prudential Financial, Inc. ............................. 13,500 742
Radian Group, Inc. ..................................... 14,750 785
Renaissancere Holdings, Ltd. ........................... 14,000 729
Scottish Annuity & Life ................................ 22,000 570
Torchmark, Inc. ........................................ 12,900 737
Transatlantic Holdings, Inc. ........................... 3,900 241
-------
14,979
Real Estate Investment Trust - 0.5%
Host Marriott Corp. .................................... 16,000 277
U.S. Government Agencies - 4.4%
Federal Home Loan Mortgage Corp. ....................... 28,000 2,063
Federal National Mortgage Assoc ........................ 8,550 609
-------
2,672
-------
TOTAL COMMON STOCK-
(Cost $52,138) 97.4% 59,735
Par
Value
-------
(000's)
SHORT-TERM INVESTMENTS - 2.7%
Investment in joint trading account
2.29% due 01/03/05
(Cost $1,638) ......................................... $1,638 1,638
------ -------
TOTAL INVESTMENTS-
(Cost $53,776) 100.1% 61,373
Payables, less cash and receivables- (0.1)% (55)
------ -------
NET ASSETS- 100.0% $61,318
====== =======
* Non-income producing security.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Financial Industries Fund (the "Fund" or "VST Financial
Industries") 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 twenty-three different funds as of December 31,
2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices
as late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at
any time other than 4:00 p.m. Eastern Standard Time on a particular day, the
Fund will determine its net asset value per share as of the close of the
Exchange on that day. Investment security transactions are recorded on the date
of purchase or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including,
but not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$58 1.83% $--
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, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $7,576 and $2,372 which expire in 2010 and 2011, respectively. Certain
of the above losses may be limited under sections 382 - 384 of the Internal
Revenue Code, as amended.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $1. Realized gains and losses
from security transactions are determined on the basis of identified cost.
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 11, 2004, 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 rate of 0.80% on an annual basis of the
Fund's net assets.
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, 2004, the reimbursements paid from John
Hancock and JHVLICO were $19 to the Fund.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES--Continued
John Hancock has entered into a Sub-Advisory Agreement with John Hancock
Advisers, LLC, with respect to the Fund. John Hancock Advisers, LLC, is an
affiliate of John Hancock, which under John Hancock's supervision, is
responsible for the day-to-day investment management of 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 in expenses
of $11.
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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$20,152 $25,947
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, 2004 were as follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$53,905 $9,268 $(1,800) $7,468
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 return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $9,948 $7,468
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
- ---- ------------------ ---------------------- -----------------
2004 $693 $-- $ --
2003 787 -- 241
NOTE E--COMBINATION
On April 25, 2003, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
- ------------------------ ------------------------------------
VST Financial Industries John Hancock VA Financial Industries
This combination provided for the transfer of substantially all of the
assets and liabilities of the target fund to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The former VA Financial
Industries was the accounting survivor of this merger and historical performance
for it's periods prior to April 28, 2003 have been used by the surviving fund.
The acquisition was accounted for as a tax-free exchange as follows:
Trust Shares Target Fund Acquiring Fund Acquiring Fund
Issued by Target Fund Unrealized Net Assets Prior Aggregate Net Assets
Acquiring Fund Net Assets Depreciation to Combination After Combination
- -------------- ----------- ------------ ---------------- --------------------
4,640 $55,074 $(5,280) $200 $55,274
NOTE F--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Financial Industries Fund (a
portfolio included in the series of John Hancock Variable Series Trust I {the
"Trust"}) as of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Financial Industries Fund of John Hancock Variable Series Trust I at December
31, 2004, the results of its operations for the year 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: August 31, 1999
- --------------------------------------------------------------------------------
Fundamental Value Fund
Wellington Management Company, LLP C. Duckworth
- --------------------------------------------------------------------------------
.. The manager's strategy is to combine the firm's research analysts' best
ideas within the large-cap value universe using a bottom-up stock selection
process. The Fund is broadly diversified across sectors and industries with
sector weights closely aligned with the benchmark to minimize
industry-specific risk.
Fund Commentary
Performance: For the year 2004, Fundamental Value Fund returned +15.59%,
underperforming the +16.49% return of the Russell 1000 Value Index.
Environment: U.S. markets encountered some volatility in mid-2004 due to
uncertainty about the pace of Federal Reserve interest rate increases, higher
energy prices and concern about the war in Iraq and the threat of domestic
terrorism. A year-end equity market rally marked the conclusion of 2004, as the
Presidential election was decided, oil prices retreated from record highs and
global inflationary pressures remained under control.
Large-cap value stocks generated a higher return than large-cap growth stocks.
All sectors in the Russell 1000 Value Index advanced during the year, with
Energy the strongest.
The portfolio's security selection was positive, driven by outperformance among
Utilities and Financials. Financials is the largest sector, comprising over
one-third of the portfolio and the Index. Security selection was weakest within
Information Technology.
Outlook: The American Job Creation Act allows corporations to repatriate
accumulated un-remitted earnings from foreign subsidiaries at a much reduced tax
rate. This windfall should be the catalyst that reverses the multi-year trend of
accumulating corporate cash balances. Repatriated funds are likely to measure in
the hundreds of billions of dollars, and companies are likely to use this cash
for share repurchases, merger & acquisition activity and increasing their
dividend payments.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 8/31/99 (Fund Inception date)
Fundamental Value Russell 1000(R) Value Index
----------------- ---------------------------
Aug-99 $10,000 $10,000
Sep-99 9,786 9,651
Oct-99 10,351 10,206
Nov-99 10,294 10,126
Dec-99 10,471 10,175
Jan-00 10,030 9,843
Feb-00 9,613 9,112
Mar-00 10,828 10,224
Apr-00 10,443 10,105
May-00 10,606 10,211
Jun-00 10,216 9,744
Jul-00 10,451 9,866
Aug-00 11,178 10,415
Sep-00 11,404 10,511
Oct-00 11,709 10,769
Nov-00 11,228 10,369
Dec-00 11,876 10,889
Jan-01 11,882 10,931
Feb-01 11,469 10,627
Mar-01 11,161 10,251
Apr-01 11,707 10,754
May-01 11,918 10,995
Jun-01 11,612 10,751
Jul-01 11,578 10,729
Aug-01 11,156 10,299
Sep-01 10,310 9,574
Oct-01 10,346 9,492
Nov-01 10,817 10,043
Dec-01 11,045 10,280
Jan-02 10,816 10,201
Feb-02 10,738 10,217
Mar-02 11,193 10,700
Apr-02 10,596 10,333
May-02 10,619 10,385
Jun-02 10,028 9,789
Jul-02 9,157 8,879
Aug-02 9,208 8,946
Sep-02 8,285 7,951
Oct-02 8,954 8,540
Nov-02 9,497 9,078
Dec-02 9,123 8,684
Jan-03 8,863 8,474
Feb-03 8,632 8,248
Mar-03 8,624 8,262
Apr-03 9,361 8,989
May-03 9,983 9,569
Jun-03 10,137 9,689
Jul-03 10,188 9,833
Aug-03 10,398 9,986
Sep-03 10,257 9,889
Oct-03 10,901 10,494
Nov-03 11,035 10,636
Dec-03 11,741 11,292
Jan-04 11,861 11,491
Feb-04 12,128 11,737
Mar-04 12,014 11,634
Apr-04 11,676 11,350
May-04 11,764 11,465
Jun-04 11,967 11,736
Jul-04 11,709 11,571
Aug-04 11,769 11,736
Sep-04 12,053 11,918
Oct-04 12,414 12,116
Nov-04 13,104 12,728
Dec-04 13,572 13,154
Value on 12/31/04:
- ------------------
$13,572 Fundamental Value Fund
$13,154 Russell 1000(R) Value Index
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Assets
------
Citigroup, Inc. 5.1%
Bank of America Corp. 4.7%
Tyco International, Ltd. 2.7%
General Electric Co. 2.5%
Altria Group, Inc. 2.5%
Exelon Corp. 2.0%
UnionBanCal Corp. 2.0%
Valero Energy Corp. 2.0%
Exxon Mobil Corp. 2.0%
Time Warner, Inc. 1.8%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Fundamental Russell 1000(R)
Value Fund Value Index
----------- ---------------
1 Year 15.59% 16.49%
3 Years 7.11% 8.57%
5 Years 5.32% 5.27%
Since Inception (8/31/99) 5.89% 5.28%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Financials 32.1%
Energy 12.2%
Industrials 11.9%
Consumer Discretionary 11.1%
Utilities 6.5%
Telecommunication Services 5.5%
Information Technology 5.3%
Materials 5.1%
Consumer Staples 4.9%
Health Care 3.8%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
Inception: August 31, 1999
- --------------------------------------------------------------------------------
Fundamental Value Fund
Wellington Management Company, LLP C. Duckworth
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Fundamental Value Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,134.10
Expense paid per $1,000* $ 4.54
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,020.88
Expense paid per $1,000* $ 4.30
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Fundamental Value Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $7,932 of securities
loaned (Note B)) ................................................ $175,536
Net unrealized appreciation of investments ......................... 34,640
Short-term investments at value .................................... 11,373
--------
Total investments ............................................ 221,549
Receivable for:
Dividends ....................................................... 330
Other assets .................................................... 4
--------
Total assets ....................................................... 221,883
--------
LIABILITIES
Payables for:
Investments purchased ........................................... 190
Fund shares purchased ........................................... 89
Collateral for securities on loan ............................... 8,140
Foreign dividend tax withholding ................................ 2
Accrued operating expenses ...................................... 16
Futures contracts variation margin .............................. 2
Other liabilities ............................................... 4
--------
Total liabilities .................................................. 8,443
--------
Net assets ......................................................... $213,440
========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ..................................................... 17,016
--------
Net asset value per share .......................................... $ 12.54
========
Composition of net assets:
Capital paid-in ................................................. $191,866
Accumulated net realized loss on investments and futures
transactions ................................................. (13,104)
Net unrealized appreciation of:
Investments .................................................. 34,640
Futures ...................................................... 38
--------
Net assets ......................................................... $213,440
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Fundamental Value Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 74
Dividends (net of foreign withholding tax $32) ................... 3,603
Securities lending ............................................... 12
-------
Total investment income ............................................. 3,689
-------
EXPENSES
Investment advisory fee .......................................... 1,160
Auditors fees .................................................... 19
Custodian fees ................................................... 83
Legal fees ....................................................... 23
Printing & mailing fees .......................................... 98
Trustees' fees ................................................... 4
Other fees ....................................................... 5
-------
Total expenses ...................................................... 1,392
Less expenses reimbursed ......................................... (94)
Less custodian expense reduction offset by commission recapture
arrangement (Note C) .......................................... (43)
-------
Net expenses ........................................................ 1,255
-------
Net investment income ............................................... 2,434
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on:
Investments ................................................... 14,389
Financial futures contracts ................................... 213
Change in unrealized appreciation (depreciation) on:
Investments ................................................... 9,070
Futures ....................................................... (19)
-------
Net realized and unrealized gain .................................... 23,653
-------
Net increase in net assets resulting from
operations ....................................................... $26,087
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Fundamental Value Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ......................... $ 2,434 $ 1,751
Net realized gain (loss) ...................... 14,602 (3,702)
Change in net unrealized appreciation ......... 9,051 32,920
-------- --------
Net increase in net assets resulting from
operations .............................. 26,087 30,969
Distributions to shareholders from:
Net investment income ......................... (2,434) (1,709)
Capital paid-in ............................... (156)
-------- --------
Decrease in net assets resulting from
distributions ........................... (2,434) (1,865)
From fund share transactions:
Proceeds from shares sold ..................... 24,399 32,368
Shares issued in reorganization ............... 56,823
Distributions reinvested ...................... 2,434 1,865
Payment for shares redeemed ................... (32,724) (45,584)
-------- --------
Increase (decrease) in net assets from
fund share transactions ................. 50,932 (11,351)
-------- --------
NET INCREASE IN NET ASSETS ....................... 74,585 17,753
NET ASSETS
Beginning of Period ........................... 138,855 121,102
-------- --------
End of Period (including undistributed net
investment income $0 and $0,
respectively) .............................. $213,440 $138,855
======== ========
Analysis of fund share transactions:
Sold .......................................... 2,162 3,382
Issued in reorganization ...................... 4,933
Reinvested .................................... 212 197
Redeemed ...................................... (2,891) (4,906)
-------- --------
Net decrease in fund shares outstanding .......... 4,416 (1,327)
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Fundamental Value Fund
-------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------
2004 2003(g) 2002(g) 2001 2000
-------- -------- -------- -------- ------
Net Assets Value at Beginning of Period .................. $ 11.02 $ 8.70 $ 10.66 $ 11.57 $ 10.42
Income from Investment Operations:
Net Investment Income ................................. 0.18 0.14 0.12 0.10 0.09
Net Realized and Unrealized Gain (Loss) on
Investment(a) ...................................... 1.52 2.33 (1.96) (0.91) 1.30
-------- -------- -------- -------- -------
Total From Investment Operations ...................... 1.70 2.47 (1.84) (0.81) 1.39
Less Distributions:
Distribution from Net Investment Income ............... (0.18) (0.14) (0.12) (0.10) (0.10)
Distribution from Net Realized Gains on Investments ... (0.08)
Distribution from Excess of Net Investment
Income/Gains ....................................... (0.06)
Distribution from Capital Paid-In ..................... (0.01) (d)
-------- -------- -------- -------- -------
Total Distributions ................................... (0.18) (0.15) (0.12) (0.10) (0.24)
-------- -------- -------- -------- -------
Net Assets Value at End of Period ........................ $ 12.54 $ 11.02 $ 8.70 $ 10.66 $ 11.57
======== ======== ======== ======== =======
Total Investment Return(b) ............................... 15.59% 28.70% (17.40)% (6.99)% 13.41%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ............................................. 0.86%(e)(f) 0.89%(e)(f) 0.85% 0.99%(e) 1.05%(e)
Ratio of Net Investment Income to Average Net
Assets ............................................. 1.61% 1.44% 1.26% 0.91% 0.97%
Portfolio Turnover Rate ............................... 67.76%(c) 69.21% 82.22% 85.20%(c) 86.97%
Net Assets End of Period (000s Omitted) .................. $213,440 $138,855 $121,102 $161,710 $15,728
(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) Excludes merger activity.
(d) Amount is less than $0.01.
(e) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made the expense ratio would have been .92%, .90%, 1.20%, and 1.36%
for the years ended December 31, 2004, 2003, 2001, and 2000, respectively.
(f) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(g) Certain amounts in 2003 and 2002 have been reclassified to permit
comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
FUNDAMENTAL VALUE FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 2.1%
General Dynamics Corp. ................................. 17,900 $ 1,872
Lockheed Martin Corp. .................................. 6,300 350
Precision Castparts Corp. .............................. 5,700 375
United Technologies Corp. .............................. 17,300 1,788
-------
4,385
Airlines - 0.3%
Continental Airlines, Inc. - Cl. B # * ................. 43,900 594
Auto Components - 1.7%
Johnson Controls, Inc. ................................. 13,800 875
Lear Corp. ............................................. 38,300 2,337
TRW Automotive Holdings Corp. * ........................ 24,700 511
-------
3,723
Banks - 13.0%
Bank of America Corp. .................................. 212,172 9,970
City National Corp. .................................... 10,800 763
Comerica, Inc. ......................................... 23,200 1,416
Golden West Financial Corp. ............................ 58,000 3,562
Hibernia Corp. - Cl. A ................................. 111,100 3,279
Northern Trust Corp. ................................... 29,800 1,448
UBS AG # ............................................... 29,800 2,498
UnionBanCal Corp. ...................................... 64,800 4,178
Zions Bancorp .......................................... 9,900 673
-------
27,787
Beverages - 0.7%
Constellation Brands, Inc. - Cl. A * ................... 31,800 1,479
Chemicals - 2.8%
Dow Chemical Co. ....................................... 36,800 1,822
E.I. du Pont de Nemours & Co. .......................... 48,200 2,364
Rohm & Haas Co. ........................................ 41,100 1,818
-------
6,004
Commercial Services & Supplies - 1.1%
Cendant Corp. .......................................... 32,300 755
First Data Corp. ....................................... 28,400 1,208
The Bisys Group, Inc. * ................................ 29,600 487
-------
2,450
Communications Equipment - 0.7%
Avaya, Inc. * .......................................... 31,200 537
Cisco Systems, Inc. * .................................. 21,700 419
Motorola, Inc. ......................................... 24,500 421
Scientific-Atlanta, Inc. ............................... 4,300 142
-------
1,519
Computers & Peripherals - 1.8%
Hewlett-Packard Co. .................................... 52,300 1,097
International Business Machines Corp. .................. 27,200 2,681
-------
3,778
Diversified Financials - 10.8%
Capital One Financial Corp. ............................ 13,300 1,120
Citigroup, Inc. ........................................ 223,266 $10,757
Countrywide Credit Industries, Inc. .................... 41,498 1,536
Eaton Vance Corp. ...................................... 1,000 52
Franklin Resources, Inc. ............................... 22,800 1,588
Goldman Sachs Group, Inc. .............................. 26,200 2,726
Merrill Lynch & Co., Inc. .............................. 62,700 3,748
State Street Corp. ..................................... 32,400 1,591
-------
23,118
Diversified Telecommunication Services - 4.7%
AT&T Corp. ............................................. 61,600 1,174
Citizens Communications Co. ............................ 161,600 2,228
Deutsche Telekom AG - ADR # * .......................... 105,500 2,393
Qwest Communications International, Inc.* .............. 74,300 330
Sprint Corp. ........................................... 22,600 562
Verizon Communications ................................. 81,400 3,297
-------
9,984
Electric Utilities - 5.5%
Entergy Corp. .......................................... 27,900 1,886
Exelon Corp. ........................................... 95,024 4,187
PG & E Corp. * ......................................... 64,900 2,160
TXU Corp. # ............................................ 55,000 3,551
-------
11,784
Electric/Gas - 0.4%
MDU Resources Group, Inc. .............................. 35,900 958
Electronic Equipment & Instruments - 0.3%
Tektronix, Inc. ........................................ 21,200 640
Gas Utilities - 0.5%
UGI Corp. # ............................................ 23,800 974
Health Care Providers & Services - 0.7%
McKesson HBOC, Inc. .................................... 45,600 1,435
Hotels Restaurants & Leisure - 1.1%
McDonald's Corp. ....................................... 75,100 2,408
Household Durables - 0.5%
Lennar Corp. ........................................... 17,200 975
Industrial Conglomerates - 5.1%
General Electric Co. ................................... 144,300 5,267
Tyco International, Ltd. ............................... 160,300 5,729
-------
10,996
Insurance - 5.1%
Ambac Financial Group, Inc. ............................ 5,600 460
American International Group, Inc. ..................... 20,765 1,364
MBIA, Inc. ............................................. 59,550 3,768
Prudential Financial, Inc. ............................. 35,200 1,935
St. Paul Cos., Inc. .................................... 52,700 1,954
UnumProvident Corp. .................................... 8,100 145
Wellpoint, Inc. * ...................................... 10,100 1,161
-------
10,787
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
FUNDAMENTAL VALUE FUND
Market
Name of Issuer Shares Value
-------------- ------- --------
(000's)
COMMON STOCK - Continued
Internet Software & Services - 0.3%
VeriSign, Inc. * ...................................... 18,100 $ 607
Machinery - 1.9%
Deere & Co. ........................................... 10,500 781
Graco, Inc. ........................................... 50,800 1,898
Ingersoll-Rand Co. - Cl. A ............................ 17,600 1,413
--------
4,092
Media - 5.3%
Comcast Corp. - Cl. A *................................ 9,463 315
Comcast Corp. - Cl. A SPL *............................ 55,800 1,832
E.W. Scripps Co. - Cl. A # ............................ 17,800 859
Fox Entertainment Group, Inc. - Cl. A *................ 26,800 838
Gannett Co., Inc. ..................................... 11,700 956
Liberty Media Corp. - Ser. A .......................... 179,200 1,968
McGraw-Hill Cos., Inc. ................................ 8,400 769
Time Warner, Inc. *.................................... 197,100 3,832
--------
11,369
Metals & Mining - 0.8%
Alcoa, Inc. ........................................... 52,100 1,637
Multiline Retail - 0.7%
Costco Wholesale Corp. ................................ 29,400 1,423
Office Electronics - 0.3%
Xerox Corp. # * ....................................... 41,800 711
Oil & Gas - 12.0%
Conoco Phillips ....................................... 42,085 3,654
Exxon Mobil Corp. ..................................... 80,300 4,116
Halliburton Co. ....................................... 67,100 2,633
Noble Energy, Inc. # .................................. 6,100 376
Occidental Petroleum Corp. ............................ 55,000 3,210
Petro-Canada .......................................... 69,600 3,551
Premcor, Inc. ......................................... 41,400 1,746
Pride International, Inc. * ........................... 52,700 1,083
Valero Energy Corp. ................................... 92,000 4,177
Western Gas Resources, Inc. ........................... 35,500 1,038
--------
25,584
Paper & Forest Products - 1.4%
Bowater, Inc. ......................................... 43,400 1,909
Weyerhaeuser Co. ...................................... 16,800 1,129
--------
3,038
Personal Products - 1.7%
Alberto-Culver Co. - Cl. B ............................ 17,500 850
Gillette Co. .......................................... 62,600 2,803
--------
3,653
Pharmaceuticals - 3.1%
Abbott Laboratories ................................... 38,500 1,796
King Pharmaceuticals, Inc. * .......................... 57,600 714
Medco Health Solutions, Inc. * ........................ 17,300 720
Schering-Plough Corp. ................................. 122,300 2,554
Watson Pharmaceuticals, Inc. * ........................ 24,700 $ 810
--------
6,594
Real Estate Investment Trust - 2.7%
General Growth Properties ............................. 84,140 3,043
Kimco Realty Corp. .................................... 47,650 2,763
--------
5,806
Road & Rail - 1.2%
Canadian National Railway Co. ......................... 23,750 1,454
Norfolk Southern Corp. ................................ 28,400 1,028
--------
2,482
Semiconductor Equipment & Products - 0.6%
Fairchild Semiconductor Corp. - Cl. A * ............... 73,300 1,192
Software - 1.3%
Electronic Arts, Inc. * ............................... 8,600 531
Microsoft Corp. ....................................... 83,200 2,222
--------
2,753
Specialty Retail - 1.6%
Abercrombie & Fitch Co. ............................... 13,800 648
Foot Locker, Inc. ..................................... 17,100 460
Michaels Stores, Inc. ................................. 74,200 2,224
--------
3,332
Tobacco - 2.4%
Altria Group, Inc. .................................... 85,400 5,218
U.S. Government Agencies - 1.6%
Federal Home Loan Mortgage Corp. ...................... 45,500 3,353
Wireless Telecommunications Services - 0.7%
Nextel Communications, Inc. - Cl. A * ................. 51,800 1,554
--------
TOTAL COMMON STOCK-
(Cost $175,536) 98.5% 210,176
Par
Value
-------
(000's)
INVESTMENT COMPANIES HELD
AS COLLATERAL ON LOANED
SECURITIES - 3.8%
State Street Navigator Securities Lending
Portfolio .......................................... $ 8,140 8,140
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
FUNDAMENTAL VALUE FUND
Par Market
Name of Issuer Value Value
-------------- ------- --------
(000's) (000's)
SHORT-TERM INVESTMENTS - 1.5%
Investment in joint trading account
2.29% due 01/03/05 .................................... $ 3,068 $ 3,068
U.S. Treasury - Bills
2.075% due 02/03/05 ................................... 70 70
2.138% due 02/10/05 ................................... 25 25
2.171% due 02/24/05 ................................... 35 35
2.212% due 03/03/05 ................................... 35 35
--------
TOTAL SHORT-TERM
INVESTMENTS-
(Cost $3,233) 3,233 3,233
------- --------
TOTAL INVESTMENTS-
(Cost $186,909) 103.8% 221,549
Payables, less cash and receivables- (3.8)% (8,109)
------- --------
NET ASSETS- 100.0% $213,440
======= ========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
ADR-American Depository Receipt.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Fundamental Value Fund (the "Fund" or "VST Fundamental Value")
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 twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$216 2.53% $--
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, 2004, 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
- -------------------------- -------------------
$7,932 $8,140
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, 2004, open financial
futures contracts for the Fund were as follows:
Open Unrealized
Contracts Position Expiration Month Appreciation
--------- -------- ---------------- ------------
S&P Mini 500 Index Futures 41 Long March 05 $38
===
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, 2004, the Fund had
no open forward foreign currency contracts.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $727, $5,281 and $5,961 which expire in 2009, 2010 and 2011,
respectively.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $32. Realized gains and losses
from security transactions are determined on the basis of identified cost.
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 11, 2004, 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
$25 Million and $50 Million and Excess Over
First $25 Million $50 Million $100 Million $100 Million
- ----------------- --------------- --------------- ------------
0.95% 0.85% 0.75% 0.65%
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, 2004, the reimbursements paid from John Hancock and JHVLICO
were $94 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 in expenses
of $43.
John Hancock has entered into a Sub-Advisory Agreement with Wellington
Management Company, LLP, which under John Hancock's supervision, is responsible
for the day-to-day investment management of the Fund.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES--Continued
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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$147,189 $100,532
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$188,006 $34,557 $(1,014) $33,543
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $11,969 $33,543
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
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
- ---- ------------------ ---------------------- -----------------
2004 $2,434 $-- $ --
2003 1,709 -- 156
Included in the Fund's 2004 distributions from ordinary income is $109 in
excess of investment company taxable income, which in accordance with applicable
US tax law, was distributed to shareholders as ordinary income distributions.
NOTE E--COMBINATION
On October 15, 2004, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
- --------------------- -----------------------
VST Fundamental Value VST Fundamental Value B
This combination provided for the transfer of substantially all of the
assets and liabilities of the target fund to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The acquisition was accounted
for as a tax-free exchange as follows:
Trust Shares Target Fund Acquiring Fund Acquiring Fund
Issued by Target Fund Unrealized Net Assets Prior Aggregate Net Assets
Acquiring Fund Net Assets Appreciation to Combination After Combination
- -------------- ----------- ------------ ---------------- --------------------
4,933 $56,823 $4,338 $141,631 $198,453
NOTE F--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust.
John Hancock Variable Series Trust I solicited a vote at a special meeting of
Contract owners/Policyholders held on October 15, 2004 on the following matter:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE F--OTHERS MATTERS (UNAUDITED)--Continued
For Against Abstain
--- ------- -------
To approve, as to the Fundamental Value Fund, a proposal 90% 5% 5%
to combine with the Fundamental Value B Fund of John
Hancock Variable Series Trust I. Shareholders in the
Fundamental Value B Fund would receive Fundamental
Fund shares having the same value as their prior
Value Fundamental Value B Fund shares.
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Fundamental Value Fund (a
portfolio included in the series of John Hancock Variable Series Trust I {the
"Trust"}) as of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Fundamental Value Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Global Bond Fund
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
.. The Fund employs a multiple manager approach with several portfolio
managers managing a portion of the Fund. The managers select securities
using proprietary fundamental research and economic analysis to identify
attractive markets and currencies as well as undervalued sectors and
securities.
Fund Commentary
Performance: For the year 2004, the Global Bond Fund returned +10.63%,
outperforming the +10.36% return of the Citibank World Government Bond Index.
Environment: The portfolio's underweight exposure to Japanese government bonds
and an overweight to Eurozone countries were the top contributors to results for
the year. Within corporates, the portfolio's issue selection within Financials
and Telecommunication Services was positive. There were no significant negative
contributors for the year.
Outlook: We have a long-term negative outlook for the U.S. dollar as its current
account deficit continues to grow. We think the euro is expensive and likely to
remain so, and we believe the yen has room to appreciate. Over the longer term,
we expect U.S. interest rates to move higher as the Federal Reserve continues to
target a more neutral policy. Because the best news in low inflation is behind
us, we expect to have a slightly short duration stance. In the Eurozone and
Japan, however, central banks are not expected to tighten monetary policy in
2005 as corporate and labor market restructuring continues.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 5/1/96 (Fund Inception Date)
Global
Global Bond Bond Benchmark
----------- --------------
Apr-96 10,000 10,000
May-96 9,983 10,002
Jun-96 10,068 10,123
Jul-96 10,103 10,163
Aug-96 10,112 10,184
Sep-96 10,297 10,371
Oct-96 10,490 10,587
Nov-96 10,674 10,775
Dec-96 10,671 10,704
Jan-97 10,723 10,763
Feb-97 10,755 10,801
Mar-97 10,634 10,697
Apr-97 10,761 10,847
May-97 10,871 10,938
Jun-97 11,021 11,082
Jul-97 11,262 11,351
Aug-97 11,194 11,281
Sep-97 11,396 11,456
Oct-97 11,459 11,599
Nov-97 11,518 11,661
Dec-97 11,638 11,787
Jan-98 11,775 11,939
Feb-98 11,795 11,958
Mar-98 11,844 12,015
Apr-98 11,891 12,078
May-98 12,012 12,206
Jun-98 12,101 12,296
Jul-98 12,133 12,344
Aug-98 12,316 12,556
Sep-98 12,624 12,852
Oct-98 12,539 12,796
Nov-98 12,640 12,886
Dec-98 12,703 12,910
Jan-99 12,812 13,019
Feb-99 12,564 12,826
Mar-99 12,668 12,917
Apr-99 12,705 12,990
May-99 12,578 12,912
Jun-99 12,447 12,766
Jul-99 12,562 12,739
Aug-99 12,512 12,753
Sep-99 12,436 12,818
Oct-99 12,430 12,844
Nov-99 12,455 12,887
Dec-99 12,429 12,889
Jan-00 12,395 12,899
Feb-00 12,497 13,029
Mar-00 12,674 13,245
Apr-00 12,671 13,279
May-00 12,739 13,357
Jun-00 12,828 13,473
Jul-00 12,903 13,575
Aug-00 12,937 13,638
Sep-00 13,005 13,717
Oct-00 13,113 13,832
Nov-00 13,320 14,107
Dec-00 13,920 14,613
Jan-01 13,913 14,594
Feb-01 13,915 14,588
Mar-01 13,483 14,168
Apr-01 13,457 14,117
May-01 13,357 14,074
Jun-01 13,269 13,945
Jul-01 13,613 14,296
Aug-01 14,148 14,834
Sep-01 14,168 14,942
Oct-01 14,245 15,060
Nov-01 14,109 14,849
Dec-01 13,718 14,468
Jan-02 13,455 14,200
Feb-02 13,526 14,274
Mar-02 13,490 14,234
Apr-02 13,931 14,743
May-02 14,369 15,161
Jun-02 14,941 15,893
Jul-02 14,998 16,049
Aug-02 15,282 16,329
Sep-02 15,421 16,507
Oct-02 15,410 16,440
Nov-02 15,469 16,461
Dec-02 16,304 17,289
Jan-03 16,566 17,526
Feb-03 16,831 17,771
Mar-03 16,847 17,826
Apr-03 17,090 18,040
May-03 17,909 18,823
Jun-03 17,631 18,518
Jul-03 17,041 17,968
Aug-03 16,958 17,871
Sep-03 17,960 18,885
Oct-03 17,791 18,790
Nov-03 18,112 19,108
Dec-03 18,897 19,870
Jan-04 18,938 19,924
Feb-04 18,978 19,954
Mar-04 19,205 20,241
Apr-04 18,447 19,375
May-04 18,540 19,526
Jun-04 18,558 19,569
Jul-04 18,442 19,469
Aug-04 18,950 19,930
Sep-04 19,160 20,211
Oct-04 19,809 20,809
Nov-04 20,580 21,559
Dec-04 20,907 21,929
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Federal Republic of Germany 15.5%
Government of Japan 13.7%
Government of France 12.7%
U.S. Treasury 8.5%
Kingdom of Spain 4.5%
Kingdom of Sweden 4.1%
Government of Netherlands 2.8%
Republic of Finland 2.8%
U.K. Treasury 2.1%
KFW International Finance, Inc. 2.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Global Bond Global Bond Fund
Fund/1/ Benchmark/2/
----------- ----------------
1 Year 10.63% 10.36%
3 Years 15.08% 14.87%
5 Years 10.96% 11.22%
Since Inception (5/1/96) 8.87% 9.48%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND COMPOSITION (as of December 31, 2004)
% of
Credit Quality Assets
- -------------- ------
Government 12.59%
AAA 53.68%
AA 2.53%
A 19.21%
Weighted Average Yield 3.09%
BBB 11.99%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. There are special risks associated with a
nondiversified fund and with international investing including currency
fluctuations, political and economic instability, foreign taxation and
different accounting standards, as outlined in the current prospectus. The
performance of the fund on this page is reported net of Trust level charges
(i.e. investment management fees and operating expenses). It does not
reflect expense and charges of the applicable separate accounts and
variable products, all of which vary to a considerable extent and are
described in your product prospectus. Performance would be lower if
expenses and charges of the separate accounts and products were reflected.
/1/ Statistics are based on bond assets only, excluding cash.
/2/ The Global Bond Fund benchmark represents 75% Lehman Brothers Aggregate
Bond Index and 25% J.P. Morgan Non-US Government Bond Index, Hedged, from
May 1996 to April 1999, the J.P. Morgan Global Government Bond Index
(Hedged), May 1999 to October 2000, and the Citigroup Government Bond
Index, Unhedged, November 2000 to present.
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Global Bond Fund
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Global Bond Fund shareholder, you pay ongoing expenses, such as management
fees; distribution fees (12b-1); and other expenses. Using the information
below, you can estimate how these expenses affect your investment and compare
them with the expenses of other funds. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,126.50
Expense paid per $1,000* $ 5.90
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,019.59
Expense paid per $1,000* $ 5.60
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Global Bond Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $8,938 of securities
loaned (Note B)) ................................................ 94,592
Net unrealized appreciation of investments ......................... 18,683
Short-term investments at value .................................... 12,367
--------
Total investments ............................................ 125,642
Receivable for:
Interest ........................................................ 2,686
Foreign interest tax expenses ................................... 1
Unrealized appreciation in forward currency contracts ........... 705
--------
Total assets ....................................................... 129,034
--------
LIABILITIES
Payables for:
Fund shares purchased ........................................... 6
Foreign interest tax expenses ................................... 1
Accrued operating expenses ...................................... 87
Collateral for securities on loan ............................... 9,100
Unrealized depreciation in forward currency contracts ........... 1,069
--------
Total liabilities .................................................. 10,263
--------
Net assets ......................................................... $118,771
========
Shares outstanding, $0.01 Par Value
(unlimited shares authorized) ................................... 9,647
--------
Net asset value per share .......................................... $ 12.31
========
Composition of net assets:
Capital paid-in ................................................. $100,107
Accumulated net realized loss on investments and foreign
currency transactions ........................................ (205)
Undistributed net investment income ............................. 365
Net unrealized appreciation (depreciation) of:
Investments .................................................. 18,683
Translation of assets and liabilities in foreign currencies .. (179)
--------
Net assets ......................................................... $118,771
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Global Bond Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 3,797
Securities lending ............................................... 6
-------
Total investment income ............................................. 3,803
-------
EXPENSES
Investment advisory fee .......................................... 922
Auditors fees .................................................... 13
Custodian fees ................................................... 151
Legal fees ....................................................... 18
Printing & mailing fees .......................................... 97
Trustees' fees ................................................... 3
Other fees ....................................................... 3
-------
Total expenses ...................................................... 1,207
Less expenses reimbursed ......................................... (66)
-------
Net expenses ........................................................ 1,141
-------
Net investment income ............................................... 2,662
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on:
Investments ................................................... 875
Foreign currency transactions ................................. 3,036
Change in unrealized appreciation on:
Investments ................................................... 4,365
Translation of assets and liabilities in foreign currencies ... 227
-------
Net realized and unrealized gain .................................... 8,503
-------
Net decrease in net assets resulting from
operations ....................................................... $11,165
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Global Bond Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ..................................... $ 2,662 $ 2,744
Net realized gain ......................................... 3,911 4,561
Change in net unrealized appreciation ..................... 4,592 6,812
-------- --------
Net increase in net assets resulting from operations ... 11,165 14,117
Distributions to shareholders from:
Net investment income ..................................... (6,538) (6,998)
Capital paid-in ........................................... (1,577) (222)
-------- --------
Decrease in net assets resulting from distributions .... (8,115) (7,220)
From fund share transactions:
Proceeds from shares sold ................................. 31,700 73,381
Distributions reinvested .................................. 8,115 7,220
Payment for shares redeemed ............................... (31,389) (58,674)
-------- --------
Increase in net assets from fund share transactions .... 8,426 21,927
-------- --------
NET INCREASE IN NET ASSETS ................................... 11,476 28,824
NET ASSETS
Beginning of Period ....................................... 107,295 78,471
-------- --------
End of Period (including undistributed net
investment income of $365 and $346, respectively) ...... $118,771 $107,295
======== ========
Analysis of fund share transactions:
Sold ...................................................... 2,646 6,269
Reinvested ................................................ 666 598
Redeemed .................................................. (2,630) (4,995)
-------- --------
Net increase in fund shares outstanding ...................... 682 1,872
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Global Bond Fund
-------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------
2004 2003(f) 2002(f) 2001 2000(c)
-------- -------- -------- ------- -------
Net Assets Value at Beginning of Period ............ $ 11.97 $ 11.06 $ 9.74 $ 10.34 $ 9.82
Income from Investment Operations:
Net Investment Income ........................... 0.37 0.40 0.40 0.38 0.48
Net Realized and Unrealized Gain (Loss) on
Investment(a) ................................ 0.87 1.36 1.43 (0.53) 0.67
-------- -------- ------- ------- -------
Total From Investment Operations ................ 1.24 1.76 1.83 (0.15) 1.15
Less Distributions:
Distribution from Net Investment Income ......... (0.73) (0.82) (0.46) (0.45) (0.63)
Distribution from Capital Paid-In ............... (0.17) (0.03) (0.05)
-------- -------- ------- ------- -------
Total Distributions ............................. (0.90) (0.85) (0.51) (0.45) (0.63)
-------- -------- ------- ------- -------
Net Assets Value at End of Period .................. $ 12.31 $ 11.97 $ 11.06 $ 9.74 $ 10.34
======== ======== ======= ======= =======
Total Investment Return(b) ......................... 10.63% 15.91% 18.85% (1.45)% 12.00%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ....................................... 1.05%(d) 0.95%(d) 0.95%(d) 0.95%(d) 0.81%(d)
Ratio of Net Investment Income to Average Net
Assets ....................................... 2.46% 2.85% 3.53% 3.73%(e) 4.71%
Portfolio Turnover Rate ......................... 40.04% 51.09% 64.15% 41.75% 259.60%
Net Assets End of Period (000s Omitted) ............ $118,771 $107,295 $78,471 $47,646 $68,473
(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 1.12%, .98%, 1.01%, .95%, and
.91%, for the years ended December 31, 2004, 2003, 2002, 2001, and 2000,
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 3.96% for the years ended December 31, 2001.
(f) Certain amounts in 2003 and 2002 have been reclassified to permit
comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
GLOBAL BOND FUND **
Par Market
Name of Issuer Value Value
-------------- -------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS
Australia - 0.2%
Government of Australia (FG)
5.75% due 06/15/11 - AAA ............AUD $ 250 $ 200
Canada - 0.9%
Government of Canada (FG)
5.5% due 06/01/10 - AAA .............CAD 650 584
Government of Canada - Bonds (FG)
7.0% due 12/01/06 - AAA ................ 125 112
Government of Canada (FG)
7.25% due 06/01/07 - AAA ............... 250 227
Province of British Columbia - Debs. (FG)
6.35% due 06/18/31 - AA ................ 125 121
-------
1,044
Denmark - 2.8%
NY Kredit (FB) .........................DKK
5.0% due 10/01/35 - NA ................. 6,585 1,202
RealKredit Danmark - Notes (JP)
5.0% due 10/01/35 - NA ................. 11,679 2,130
-------
3,332
Finland - 2.6%
Republic of Finland - Bonds (FB)
5.75% due 02/23/11 - AAA ............EUR 2,030 3,131
France - 12.1%
Government of France (FG)
5.0% due 10/25/11 - AAA .............EUR 3,200 4,765
Government of France - Bonds (FG)
5.25% due 04/25/08 - AAA ............... 6,580 9,589
-------
14,354
Germany - 15.6%
Bayer Hypo Vereins - Bonds (JP)
6.0% due 02/14/14 - BBB+ ............EUR 400 608
Federal Republic of Germany (FG)
4.5% due 07/04/09 - AAA ................ 3,130 4,503
5.25% due 01/04/11 - AAA ............... 4,625 6,947
6.25% due 01/04/30 - AAA ............... 3,250 5,730
Federal Republic of Germany - Bonds (FG)
5.25% due 01/04/08 - AAA ............... 125 182
6.5% due 10/14/05 - AAA ................ 125 175
Kredit Fuer Wiederaufbau (JP)
5.0% due 07/04/11 - AAA ................ 250 372
-------
18,517
Greece - 0.4%
Hellenic Republic - Bonds (FG)
8.8% due 06/19/07 - A ...............EUR 293 454
Ireland - 0.4%
Wal-Mart Stores (JD) * GBP
5.25% due 09/28/35 - NA ................ 250 489
Japan - 13.0%
Government of Japan (FG)
0.5% due 06/20/13 - AA- .............JPY $545,000 $ 4,995
1.8% due 03/22/10 - AA- ................ 300,000 3,096
Government of Japan - Bonds (FG)
0.9% due 12/22/08 - AA- ................ 425,000 4,217
1.1% due 03/21/11 - AA- ................ 320,000 3,169
-------
15,477
Luxembourg - 1.9%
KFW International Finance, Inc. (FB)
1.75% due 03/23/10 - AAA ............EUR 215,000 2,212
Netherlands - 2.7%
Government of Netherlands (FG)
5.5% due 01/15/28 - AAA .............EUR 1,990 3,199
New Zealand - 0.3%
Government of New Zealand - Bonds (FG)
8.0% due 11/15/06 - AAA .............NZD 500 371
Spain - 3.3%
Kingdom of Spain (FG)
6.15% due 01/31/13 - NA .............EUR 2,420 3,880
Supra National - 13.8%
Arena Brands Co. (JG)
6.1% due 11/15/62 - NA ..............EUR 500 776
Bank of America (JP)
3.625% due 03/03/08 - NA ............EUR 250 345
4.75% due 05/06/19 - NA * .............. 400 567
Bank of Ireland (JP)
6.45% due 02/10/10 - NA .............EUR 1,000 1,540
Bayerische Landesbank Girozen (JP)
1.4% due 04/22/13 - AAA .............JPY 60,000 587
BNP Paribas (JP)
5.25% due 01/23/14 - AA- ............EUR 125 183
Daimler Chrysler International Finance Co.
(FB)
6.125% due 03/21/06 - BBB ...........EUR 850 1,195
Deutsche Telekom International Finance
(FB)
7.5% due 05/29/07 - BBB+ ............EUR 125 187
Deutsche Telekom International Finance BV
(FB)
8.125% due 05/29/12 - BBB+ ..........EUR 350 601
E On International Finance (FB)
5.75% due 05/29/09 - AA- ...........EUR 590 881
Edison Spa (J3)
5.125% due 12/10/10 - BBB+ ..........EUR 580 844
Essent NV (EU)
4.5% due 06/25/13 - NA ..............EUR 770 1,077
Federal National Mortgage Assoc. - Bonds
(FD)
2.125% due 10/09/07 - AAA ...........JPY 100,000 1,023
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
GLOBAL BOND FUND
Par Market
Name of Issuer Value Value
-------------- -------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Supra National - Continued
Ford Credit Canada, Ltd. (AL)
4.875% due 05/17/07 - BBB- ............EUR $ 430 $ 595
France Telecom (J1)
8.25% due 03/14/08 - BBB+ .............EUR 250 379
9.0% due 03/14/11 - BBB+ ................. 405 882
GIE Psa Tresorerie - Bonds (BV)
5.875% due 09/27/11 - A- ..............EUR 250 380
HSBC Capital Funding (FB)
8.03% due 12/29/49 - A- ...............EUR 350 597
International-American Development Bank
- Bonds (JP)
1.9% due 07/08/09 - AAA ...............JPY 100,000 1,034
Kingdom of Spain - Notes (FG)
3.1% due 09/20/06 - AAA ...............JPY 120,000 1,228
PLD International Finance LLC (FB) *
4.375% due 04/13/11 - NA ..............EUR 350 486
RWE Finance BV (FB)
6.125% due 10/26/12 - A+ ..............EUR 125 196
Sogerim SA (J1)
7.25% due 04/20/11 - BBB+ .............EUR 125 199
Veolia Environment (J6)
4.875% due 05/28/13 - NA ..............EUR 440 633
-------
16,415
Sweden - 4.6%
Kingdom of Sweden (FG)
5.0% due 01/28/09 - AAA ...............SEK 14,200 2,278
5.25% due 03/15/11 - AAA ................. 14,350 2,352
Spintab - Bonds (JP)
6.0% due 04/20/09 - NA ................... 5,000 825
-------
5,455
United Kingdom - 8.3%
Anglian Water plc (BO)
5.375% due 07/02/09 - A- ..............EUR 400 586
Anglian Water Services Finance plc (FB)
4.625% due 10/07/13 - A- ..............EUR 250 354
British Telecom Plc (J1)
7.125% due 02/15/11 - A- ..............EUR 780 1,249
Cadbury Schweppes (JH) *
4.25% due 06/30/09 - NA ...............EUR 675 942
Imperial Tobacco Finance plc (FB)
6.375% due 09/27/06 - BBB .............EUR 410 588
Koninklijke KPN NV - Notes (JY)
4.75% due 11/05/08 - A- ...............EUR 430 612
National Grid Group Finance (FB)
5.25% due 08/23/06 - A- ...............EUR 410 577
6.125% due 08/23/11 - A- ................. 250 384
Royal Bank of Scotland (JP)
4.875% due 03/26/09 - AA- .............EUR 125 180
Sumitomo Mitsui Banking (JP) *
4.375% due 10/27/14 - NA ..............EUR 250 349
U.K. Treasury (FG)
4.25% due 06/07/32 - AAA ..............GBP 320 595
U.K. Treasury (FG)
7.25% due 12/07/07 - AAA ..............GBP $ 660 $ 1,360
U.K. Treasury - Bonds (FG)
6.0% due 12/07/28 - AAA ...............GBP 50 117
8.5% due 12/07/05 - AAA ...............GBP 150 298
UK Treasury Stock (FG)
5.0% due 09/07/14 - AAA ...............GBP 870 1,727
-------
9,918
United States - 12.5%
Bank Americorp - Sr. Notes (JP)
4.875% due 09/15/12 - A+ ..............USD 400 409
Clear Channel Communications, Inc. (JA)
7.65% due 09/15/10 - BBB- ................ 125 142
Dominion Resources, Inc. - Sr. Notes Ser. B
(EU)
4.125% due 02/15/08 - BBB+ ............... 250 252
Federal National Mortgage Assoc. - Notes
# (FD)
6.0% due 05/15/08 - AAA .................. 900 968
General Motors Acceptance Corp. - Notes (AL)
6.875% due 09/15/11 - BBB- ............... 1,025 1,050
Kellogg Co. - Notes Ser. B (JH)
6.6% due 04/01/11 - BBB+ ................. 500 560
Merrill Lynch Mortgage Investments, Inc. -
Ser. 2004 A1 Cl. 2A1 (OC)
4.67% due 02/25/34 - AAA ................. 289 289
Metlife, Inc. - Debs. (JR)
3.911% due 05/15/05 - A .................. 190 191
News America, Inc. - Sr. Notes (JA)
6.75% due 01/09/38 - BBB- ................ 125 141
NiSource Finance Corp. - Sr. Notes (FB)
6.15% due 03/01/13 - BBB ................. 80 87
Pulte Homes, Inc. - Sr. Notes (BJ)
6.25% due 02/15/13 - BBB- ................ 100 106
8.125% due 03/01/11 - BBB- ............... 25 30
Schering Plough Corp. - Sr. Notes (JO)
5.3% due 12/01/13 - A- ................... 125 131
SLM Corp. (JQ)
5.0% due 04/15/15 - A .................... 375 374
Sprint Capital Corp. (J1)
6.375% due 05/01/09 - BBB- ............... 50 54
6.875% due 11/15/28 - BBB- ............... 50 55
U.S. Treasury - Notes (TN)
1.125% due 06/30/05 - # AAA .............. 1,125 1,117
3.25% due 08/15/07 - # AAA ............... 1,650 1,653
5.0% due 08/15/11 - # AAA ............... 850 905
5.75% due 08/15/10 - # AAA ............... 250 275
6.5% due 02/15/10 - # AAA ................ 500 566
6.875% due 05/15/06 - # AAA .............. 1,750 1,843
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
GLOBAL BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- --------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
United States - Continued
U.S. Treasury - Bonds (TB)
5.25% due 02/15/29 - # AAA ......................USD $ 250 $ 262
6.375% due 08/15/27 - # AAA ........................ 1,250 1,501
8.875% due 08/15/17 - # AAA ........................ 1,050 1,488
Washington Mutual, Inc. (JQ)
5.625% due 01/15/07 - A- ........................... 125 130
Wells Fargo & Co. - Notes (JQ)
3.5% due 04/04/08 - AA- ............................ 250 248
--------
14,827
--------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $94,592) 95.4% 113,275
INVESTMENT COMPANIES HELD AS COLLATERAL
ON LOANED SECURITIES - 7.7%
State Street Navigator Securities Lending
Portfolio .......................................... 9,100 9,100
SHORT-TERM INVESTMENTS - 2.7%
Investment in joint trading account
2.29% due 01/03/05
(Cost $3,267) ...................................... 3,267 3,267
------ --------
TOTAL INVESTMENTS-
(Cost $106,959) 105.8% 125,642
Payables, less cash and receivables- (5.8)% (6,871)
------ --------
NET ASSETS- 100.0% $118,771
====== ========
# At December 31, 2004 all or portion of this security was out on loan.
* Non-income producing security. In the case of a bond, generally denotes
that the issuer has defaulted on the payment of principal or interest or
has filed for bankruptcy.
** Bond ratings are unaudited
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY
Market % of
Industry Value Long-Term
Industry Abbreviation (000s) Investments
- -------------------------------- ------------ -------- -----------
Foreign Governmental ........... FG $ 66,471 58.7%
Finance ........................ FB 12,678 11.2%
Banks .......................... JP 9,129 8.1%
U.S. Treasury Notes ............ TN 6,359 5.6%
U.S. Treasury Bonds ............ TB 3,251 2.9%
Diversified Telecommunication
Services .................... JI 2,818 2.5%
U.S. Government Agencies ....... FD 1,991 1.8%
Auto Loan ...................... AL 1,645 1.4%
Food Products .................. JH 1,502 1.3%
Electric/Gas ................... EU 1,329 1.2%
Electric Utilities ............. J3 844 0.7%
Beverages ...................... JG 776 0.7%
Diversified Financials ......... JQ 752 0.7%
Water Utilities ................ J6 633 0.6%
Electronic Equipment &
Instruments ................. JY 612 0.5%
Commercial Services &
Supplies .................... BO 586 0.5%
Multiline Retail ............... JD 489 0.4%
Automobiles .................... BV 380 0.3%
Whole Loan CMOs ................ OC 289 0.3%
Media .......................... JA 283 0.2%
Insurance ...................... JR 191 0.2%
Construction & Engineering ..... BJ 136 0.1%
Pharmaceuticals ................ JO 131 0.1%
-------- -----
$113,275 100.0%
======== =====
Key to Currency Abbreviations
Australian Dollar .............. AUD
Canadian Dollar ................ CAD
Danish Krone ................... DKK
European Currency .............. EUR
British Pound .................. GBP
Japanese Yen ................... JPY
New Zealand Dollar ............. NZD
Swedish Krone .................. SEK
United States Dollar ........... USD
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Global Bond 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 twenty-three
different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. In the event the Exchange
closes at any time other than 4:00 p.m. Eastern Standard Time on a particular
day, the Fund will determine its net asset value per share as of the close of
the Exchange on that day. All other securities held by the Fund are valued at
the last sale price or official closing price (closing bid price or last
evaluated quote if no sale has occurred) as of the close of business on a
principal securities exchange (domestic or foreign) or, lacking any sales, at
the closing bid price. Investment security transactions are recorded on the date
of purchase or sale.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in Exchange Traded Funds
in a particular foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
-------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
Discount and premium on debt securities: The Fund accretes discount and
amortizes premium from par value on securities from either the date of issue or
the date of purchase over the life of the security.
Expenses: Expenses directly attributable to 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 $90 and $10 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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
The Fund had borrowings under the line of credit during the period ended
December 31, 2004 as follows:
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$220 1.79% $--
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, 2004, 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
- -------------------------- -------------------
$8,938 $9,100
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, 2004, 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, 2004, the Fund
had open forward currency contracts, which contractually obligate the Fund to
deliver or receive currencies at a specified date, as follows:
Unrealized
Principal Amount Appreciation/
Currency Purchased Covered by Contract Expiration Month (Depreciation)
- ------------------ ------------------- ---------------- --------------
Euro 644 January 05 $ 5
Pound Sterling 1,083 January 05 65
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Unrealized
Principal Amount Appreciation/
Covered by Contract Expiration Month (Depreciation)
------------------- ---------------- --------------
Currency Purchased-
Continued
- -------------------
Japanese Yen 3,267 January 05 $ --
Japanese Yen 7,448 January 05 525
Japanese Yen 2,227 February 05 66
Japanese Yen 955 February 05 22
Japanese Yen 762 February 05 22
-------
$ 705
=======
Currency Sold
- -------------
Euro 1,994 January 05 $ (104)
Euro 3,067 January 05 (115)
Euro 7,447 January 05 (811)
Japanese Yen 1,175 January 05 (15)
Japanese Yen 644 January 05 (9)
Japanese Yen 1,108 February 05 (15)
-------
$(1,069)
=======
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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $157 and $1 which expire in 2008 and 2010, respectively.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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.
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 11, 2004, 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:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES--Continued
Between Between
$150 Million and $300 Million and Excess Over
First $150 Million $300 Million $500 Million $500 Million
- ------------------ ---------------- ---------------- ------------
0.85% 0.80% 0.75% 0.70%
For the period from January 1, 2004 to April 30, 2004, John Hancock and JVLICO
agreed to reimburse the Fund for normal operating expenses, exclusive of
investment advisory fees, taxes, interest, brokerage commissions and
extraordinary expenses that exceed 0.10% of the Fund's daily net asset value.
Accordingly, for the period from January 1, 2004 to April 30, 2004 the Fund was
reimbursed $66 by John Hancock and JVLICO. On March 18, 2004, the Fund's
Shareholders approved the removal of John Hancock and JVLICO's respective
obligations to reimburse the Fund for excess operating expenses effective May
1, 2004.
John Hancock has entered into a Sub-Advisory Agreement with Capital
Guardian Trust Company, which under John Hancock's 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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$42,727 $42,579
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$107,006 $18,722 $(86) $18,636
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
based on the Fund's income and capital gains computed on a tax basis, which
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
may differ from income and capital gains recognized according to generally
accepted accounting principles. These differences primarily relate to certain
securities sold at a loss. Therefore, the source of each Fund's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on capital transactions,
or from capital. The Fund may periodically make reclassifications among certain
of its capital accounts without impacting the net asset value of the Fund to
present the Fund's capital accounts on a tax basis.
December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $158 $18,457
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
- ---- ------------------ ---------------------- -----------------
2004 $6,538 $-- $1,577
2003 6,998 -- 222
Included in the Fund's 2004 and 2003 distributions from ordinary income are
$870 and $1,714, respectively, in excess of investment company taxable income,
which in accordance with applicable US tax law, were distributed to shareholders
as ordinary income distributions.
NOTE E--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust.
John Hancock Variable Series Trust I solicited a vote at a special meeting of
Contract owners/Policyholders held on March 18, 2004 on the following matter:
For Against Abstain
--- -------- -------
To approve, as to the Global Bond Fund, an amendment to the 84% 7% 9%
current investment management agreement between the Trust
and John Hancock to eliminate John Hancock's obligation
to reimburse this Fund for certain operating expenses.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE E--OTHER MATTERS (UNAUDITED)--Continued
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Global Bond Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Global Bond Fund of John Hancock Variable Series Trust I at December 31, 2004,
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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Growth & Income Fund
Independence Investment LLC J. Forelli/T. Spicer
T. Rowe Price Associates, Inc. Robert W. Sharps
- --------------------------------------------------------------------------------
.. The Fund employs a multi-style and multi-manager approach with two
sub-advisers independently managing portions of the Fund. The Fund uses
three distinct investment styles intended to complement each other: growth,
value and blend.
.. Independence Investment LLC selects stocks using a combination of
fundamental equity research and quantitative portfolio construction tools.
Stocks are purchased that combine low pricing and improving fundamentals
with favorable valuations and earnings growth prospects.
.. T. Rowe Price Associates, Inc. selects stocks using a bottom-up,
fundamental equity approach, focusing on companies with above-average
earnings growth and cash flow relative to peers and sustainable earnings
momentum.
Fund Commentary
Overall Performance: For the year 2004, the Growth & Income Fund returned
+10.96%, underperforming the +11.39% return of the Russell 1000 Index.
Independence Investment LLC
Environment: The core sleeve of the Growth and Income Fund underperformed
earlier in the year but performed well in the fourth quarter. For 2004, stock
selection in healthcare and industrials was strong while stock selection in
consumer discretionary and financials detracted from performance. Sector
weightings in technology did not help but an underweight in consumer staples
added to performance.
Outlook: Overall, our forecast for U.S. stock performance in 2005 is favorable.
We expect continued recovery in corporate spending, an improved employment
picture, and a healthy consumer driving stocks higher. We are attuned to
potential risks including weakness in the US dollar, accelerating inflation, and
an increase in bond yields.
T. Rowe Price Associates, Inc.
Environment: For the year, the growth sleeve outpaced the Russell 1000 Growth
Index. Large growth underperformed small-cap and value stocks for most of the
year, especially in the third quarter, when semiconductor firms warned of poor
earnings. However, the broad market advanced in the fourth quarter, and some
large growth industries (notably technology) closed the gap on large value. Our
long-term focus on high-quality companies with sustainable growth prospects
contributed to good stock selection and positive sector positioning. Among the
keys to our performance were overweights in the Telecommunications and Energy
fields and an underweight position in the Health Care sector. Health Care stocks
struggled after safety concerns for several blockbuster drugs made headlines.
Yet the portfolio profited in this area by deemphasizing pharmaceuticals in
favor of health care service providers. The Information Technology sector as a
whole declined for the year, largely because of a drop in semiconductor shares
after negative earnings news in the fall. However, our holdings in
semiconductors, as well as in Internet and software stocks, generally fared
better than the Index.
Outlook: We believe the overall environment for large-cap growth stocks is
positive heading into 2005. Valuations in this market segment have not kept up
with a strong expansion in earnings, providing us with numerous solid growth
opportunities at reasonable prices.
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Growth & Income Fund
Independence Investment LLC J. Forelli/T. Spicer
T. Rowe Price Associates, Inc. Robert W. Sharps
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 investment made 12/31/93 (10-year period)
Growth & Income VST VST Growth & Income Benchmark
------------------- -----------------------------
10,000 10,000
Jan-95 10,206 10,260
Feb-95 10,609 10,658
Mar-95 10,844 10,974
Apr-95 11,160 11,293
May-95 11,531 11,739
Jun-95 11,793 12,015
Jul-95 12,169 12,415
Aug-95 12,249 12,448
Sep-95 12,780 12,970
Oct-95 12,697 12,925
Nov-95 13,232 13,493
Dec-95 13,421 13,743
Jan-96 13,778 14,216
Feb-96 13,956 14,352
Mar-96 14,135 14,490
Apr-96 14,294 14,703
May-96 14,625 15,082
Jun-96 14,705 15,144
Jul-96 14,010 14,470
Aug-96 14,344 14,777
Sep-96 15,010 15,607
Oct-96 15,377 16,035
Nov-96 16,400 17,252
Dec-96 16,118 16,914
Jan-97 16,948 17,964
Feb-97 17,041 18,110
Mar-97 16,377 17,357
Apr-97 17,171 18,393
May-97 18,102 19,522
Jun-97 18,816 20,393
Jul-97 20,497 22,012
Aug-97 19,459 20,788
Sep-97 20,591 21,927
Oct-97 19,816 21,195
Nov-97 20,562 22,176
Dec-97 20,928 22,558
Jan-98 21,154 22,808
Feb-98 22,881 24,452
Mar-98 24,161 25,704
Apr-98 24,227 25,964
May-98 23,963 25,517
Jun-98 24,980 26,553
Jul-98 24,688 26,272
Aug-98 20,898 22,473
Sep-98 21,970 23,914
Oct-98 23,929 25,858
Nov-98 25,361 27,425
Dec-98 27,258 29,004
Jan-99 28,173 30,217
Feb-99 27,298 29,277
Mar-99 28,106 30,448
Apr-99 29,290 31,626
May-99 28,436 30,880
Jun-99 30,397 32,594
Jul-99 29,357 31,577
Aug-99 29,009 31,419
Sep-99 28,209 30,558
Oct-99 29,859 32,493
Nov-99 30,205 33,152
Dec-99 31,681 35,105
Jan-00 29,751 33,343
Feb-00 29,003 32,712
Mar-00 32,250 35,912
Apr-00 31,461 34,831
May-00 31,046 34,117
Jun-00 31,543 34,956
Jul-00 31,159 34,411
Aug-00 33,087 36,548
Sep-00 31,087 34,618
Oct-00 31,163 34,472
Nov-00 27,643 31,756
Dec-00 27,530 31,912
Jan-01 28,381 33,044
Feb-01 25,403 30,031
Mar-01 23,319 28,130
Apr-01 25,560 30,316
May-01 25,607 30,519
Jun-01 25,016 29,777
Jul-01 24,414 29,485
Aug-01 22,725 27,639
Sep-01 20,765 25,406
Oct-01 21,427 25,891
Nov-01 23,088 27,877
Dec-01 23,279 28,123
Jan-02 22,956 27,712
Feb-02 22,421 27,177
Mar-02 23,422 28,199
Apr-02 22,304 26,490
May-02 22,119 26,257
Jun-02 20,629 24,319
Jul-02 18,979 22,520
Aug-02 19,106 22,637
Sep-02 17,092 20,206
Oct-02 18,342 21,885
Nov-02 19,195 23,165
Dec-02 18,115 21,854
Jan-03 17,650 21,325
Feb-03 17,429 20,994
Mar-03 17,531 21,213
Apr-03 18,736 22,925
May-03 19,577 24,231
Jun-03 19,684 24,551
Jul-03 20,063 25,040
Aug-03 20,511 25,548
Sep-03 20,316 25,287
Oct-03 21,501 26,769
Nov-03 21,624 27,091
Dec-03 22,526 28,388
Jan-04 22,863 28,928
Feb-04 23,148 29,327
Mar-04 22,897 28,928
Apr-04 22,355 28,404
May-04 22,694 28,813
Jun-04 23,127 29,332
Jul-04 22,293 28,302
Aug-04 22,264 28,441
Sep-04 22,536 28,799
Oct-04 22,925 29,264
Nov-04 24,106 30,517
Dec-04 24,993 31,622
Value on 12/31/04:
- ------------------
24,993 Growth & Income VST
31,622 VST Growth & Income Benchmark
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
General Electric Co. 3.6%
Citigroup, Inc. 3.2%
Exxon Mobil Corp. 2.7%
Microsoft Corp. 2.2%
Bank of America Corp. 2.0%
Johnson & Johnson 1.8%
Altria Group, Inc. 1.6%
Home Depot, Inc. 1.5%
UnitedHealth Group, Inc. 1.5%
The Walt Disney Co. 1.4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Growth & Income Growth & Income
Fund Fund Benchmark/1/
--------------- -----------------
1 Year 10.96% 11.39%
3 Years 2.40 3.99
5 Years -4.63 -2.07
10 Years 9.59 12.20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Financials 22.7%
Information Technology 16.4%
Consumer Discretionary 14.7%
Industrials 12.8%
Health Care 9.9%
Energy 7.8%
Consumer Staples 4.7%
Utilities 3.3%
Telecommunication Services 3.2%
Materials 2.8%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the Fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
/1/ The Growth & Income Fund Benchmark represents the S&P 500 Index from April
1986 to April 2002 and then the Russell 1000 Index from May 2002 to
present.
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Growth & Income Fund
Independence Investment LLC J. Forelli/T. Spicer
T. Rowe Price Associates, Inc. Robert W. Sharps
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Growth & Income Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,080.70
Expense paid per $1,000* $ 3.97
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,021.32
Expense paid per $1,000* $ 3.85
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Growth & Income Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $59,366 of
securities loaned (Note B)) ................................... $1,883,986
Net unrealized appreciation of investments ....................... 304,235
Short-term investments at value .................................. 66,017
----------
Total investments .......................................... 2,254,238
Receivable for:
Dividends ..................................................... 3,404
----------
Total assets ..................................................... 2,257,642
----------
LIABILITIES
Payables for:
Fund shares purchased ......................................... 388
Collateral for securities on loan ............................. 60,534
Foreign dividend tax withholding .............................. 1
Accrued operating expenses .................................... 932
Other payables ................................................ 1
----------
Total liabilities ................................................ 61,856
----------
Net assets ....................................................... $2,195,786
==========
Shares outstanding, $0.01 Par Value (unlimited
shares authorized) ............................................ 177,153
----------
Net asset value per share ........................................ $ 12.39
==========
Composition of net assets:
Capital paid-in ............................................... $2,536,096
Accumulated net realized loss on investments .................. (644,545)
Net unrealized appreciation of investments .................... 304,235
----------
Net assets ....................................................... $2,195,786
==========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Growth & Income Fund
(000's Omitted)
INVESTMENT INCOME
Interest ........................................................ $ 501
Dividends (net of foreign withholding tax of $42) ............... 37,626
Securities lending .............................................. 64
--------
Total investment income ............................................ 38,191
--------
EXPENSES
Investment advisory fee ......................................... 14,215
Auditors fees ................................................... 285
Custodian fees .................................................. 556
Fidelity Bond fees .............................................. 5
Legal fees ...................................................... 348
Printing & mailing fees ......................................... 355
Trustees' fees .................................................. 64
Other fees ...................................................... 69
--------
Total expenses ..................................................... 15,897
Less custodian expense reduction offset by
commission recapture arrangement
(Note C) ..................................................... (902)
--------
Net expenses ....................................................... 14,995
--------
Net investment income .............................................. 23,196
--------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments ................................ 160,195
Change in unrealized appreciation on
investments .................................................. 35,946
--------
Net realized and unrealized gain ................................... 196,141
--------
Net increase in net assets resulting from
operations ...................................................... $219,337
========
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Growth & Income Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ........................................... $ 23,196 $ 18,856
Net realized gain (loss) ........................................ 160,195 (24,691)
Change in net unrealized appreciation ........................... 35,946 429,847
---------- ----------
Net increase in net assets resulting from operations ......... 219,337 424,012
Distributions to shareholders from:
Net investment income ........................................... (23,196) (17,207)
Capital paid-in ................................................. (11,765)
---------- ----------
Decrease in net assets resulting from distributions .......... (23,196) (28,972)
From fund share transactions:
Proceeds from shares sold ....................................... 111,823 104,683
Shares issued in reorganization ................................. 66,546
Distributions reinvested ........................................ 23,196 28,972
Payment for shares redeemed ..................................... (263,395) (229,423)
---------- ----------
Decrease in net assets from fund share transactions .......... (128,376) (29,222)
---------- ----------
NET INCREASE IN NET ASSETS ......................................... 67,765 365,818
NET ASSETS
Beginning of Period ................................................ 2,128,021 1,762,203
---------- ----------
End of Period (including undistributed net investment
income of $0 and $0, respectively) .............................. $2,195,786 $2,128,021
========== ==========
Analysis of fund share transactions:
Sold ............................................................ 9,789 10,526
Issued in reorganization ........................................ 7,117
Reinvested ...................................................... 1,982 2,786
Redeemed ........................................................ (23,048) (23,196)
---------- ----------
Net decrease in fund shares outstanding ............................ (11,277) (2,767)
========== ==========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
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:
Growth & Income Fund
--------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------------
2004 2003(f)(g) 2002 2001 2000(c)
---------- ---------- ---------- ---------- ----------
Net Assets Value at Beginning of Period ........ $ 11.29 $ 9.22 $ 11.93 $ 14.18 $ 20.01
Income from Investment Operations:
Net Investment Income ....................... 0.13 0.10 0.08 0.06 0.17
Net Realized and Unrealized Gain (Loss) on
Investment(a) ............................ 1.10 2.12 (2.71) (2.25) (2.77)
---------- ---------- ---------- ---------- ----------
Total From Investment Operations ............ 1.23 2.22 (2.63) (2.19) (2.60)
Less Distributions:
Distribution from Net Investment Income ..... (0.13) (0.09) (0.08) (0.06) (0.17)
Distribution from Net Realized Gains on
Investments .............................. (2.69)
Distribution from Excess of Net Investment
Income/Gains ............................. (0.14)
Distribution from Capital Paid-in ........... (0.06) (0.23)
---------- ---------- ---------- ---------- ----------
Total Distributions ......................... (0.13) (0.15) (0.08) (0.06) (3.23)
---------- ---------- ---------- ---------- ----------
Net Assets Value at End of Period .............. $ 12.39 $ 11.29 $ 9.22 $ 11.93 $ 14.18
========== ========== ========== ========== ==========
Total Investment Return(b) ..................... 10.96% 24.35% (22.18)% (15.44)% (13.10)%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ................................... 0.76%(e) 0.73%(e) 0.75% 0.72% 0.40%
Ratio of Net Investment Income to Average
Net Assets ............................... 1.10% 1.00% 0.73% 0.49% 0.84%
Portfolio Turnover Rate ..................... 71.15% 91.53%(d) 73.60% 104.47%(d) 112.94%
Net Assets End of Period (000s Omitted) ........ $2,195,786 $2,128,021 $1,762,203 $2,476,319 $3,324,988
(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 Putnam Investment
Management, Inc. during the period shown.
(d) Excludes merger activity.
(e) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(f) The Fund entered into a new Sub-Advisory Agreement with T. Rowe Price
Associates, Inc., during the period shown.
(g) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Market
Name of Issuer Shares Value
-------------- --------- --------
(000's)
COMMON STOCK
Aerospace & Defense - 1.0%
Boeing Co. ........................................... 275,300 $ 14,252
United Defense Industries, Inc. * .................... 92,600 4,375
United Technologies Corp. ............................ 21,400 2,212
--------
20,839
Air Freight & Couriers - 1.3%
Fedex Corp. .......................................... 209,900 20,673
United Parcel Service, Inc. - Cl. B .................. 89,400 7,640
--------
28,313
Airlines - 0.1%
Southwest Airlines Co. ............................... 182,900 2,978
Auto Components - 0.5%
Autoliv, Inc. ........................................ 58,200 2,811
Borg-Warner Automotive, Inc. ......................... 36,800 1,994
Magna International, Inc. - Cl. A .................... 77,000 6,356
--------
11,161
Automobiles - 0.1%
General Motors Corp. # ............................... 51,600 2,067
Banks - 4.4%
Bank of America Corp. ................................ 922,100 43,329
Comerica, Inc. ....................................... 169,900 10,367
JP Morgan Chase & Co. ................................ 128,400 5,009
Suntrust Banks, Inc. ................................. 136,000 10,048
UnionBanCal Corp. .................................... 106,500 6,867
Wachovia Corp. ....................................... 379,900 19,983
--------
95,603
Beverages - 1.0%
Coca-Cola Co. ........................................ 241,200 10,041
Constellation Brands, Inc. - Cl. A * ................. 233,000 10,837
--------
20,878
Biotechnology - 1.8%
Amgen, Inc. * ........................................ 401,100 25,731
Biogen IDEC, Inc. * .................................. 95,000 6,328
Gilead Sciences, Inc. * .............................. 200,200 7,005
--------
39,064
Building Products - 0.2%
Masco Corp. .......................................... 129,100 4,716
Chemicals - 1.7%
Dow Chemical Co. ..................................... 355,100 17,581
Monsanto Co. ......................................... 154,700 8,594
NALCO Holding Co. * .................................. 243,000 4,743
Praxair, Inc. ........................................ 73,000 3,223
Rohm & Haas Co. ...................................... 94,700 4,189
--------
38,330
Commercial Services & Supplies - 1.2%
Apollo Group, Inc. - Cl. A * ......................... 67,100 5,416
Automatic Data Processing, Inc. ...................... 228,500 10,134
Choicepoint, Inc. * .................................. 73,000 $ 3,357
DST Systems, Inc. * .................................. 85,000 4,430
Dun & Bradstreet Corp. * ............................. 53,300 3,179
--------
26,516
Communications Equipment - 3.1%
Cisco Systems, Inc. * ................................ 1,161,900 22,425
Comverse Technology, Inc. * .......................... 236,500 5,782
Corning, Inc. * ...................................... 478,000 5,626
Harris Corp. ......................................... 24,400 1,508
Juniper Networks, Inc. # * ........................... 219,600 5,971
Motorola, Inc. ....................................... 765,600 13,168
Nokia Oyj - ADR ...................................... 475,500 7,451
Qualcomm, Inc. ....................................... 168,000 7,123
--------
69,054
Computers & Peripherals - 3.4%
Apple Computer, Inc. * ............................... 189,400 12,197
Dell, Inc. * ......................................... 681,100 28,702
EMC Corp. * .......................................... 628,400 9,344
International Business Machines Corp. ................ 236,200 23,285
--------
73,528
Construction & Engineering - 0.1%
D.R. Horton, Inc. .................................... 30,300 1,221
Construction Materials - 0.2%
United States Steel Corp. * .......................... 69,200 3,547
Credit Card - 0.7%
MBNA Corp. ........................................... 549,600 15,493
Diversified Financials - 11.1%
American Express Co. ................................. 109,300 6,161
Ameritrade Holding Corp. * ........................... 555,400 7,898
Bear Stearns Cos., Inc. .............................. 103,100 10,548
Capital One Financial Corp. .......................... 205,300 17,288
CIT Group, Inc. ...................................... 257,100 11,780
Citigroup, Inc. ...................................... 1,471,800 70,911
E*TRADE Group, Inc. * ................................ 194,800 2,912
Franklin Resources, Inc. ............................. 73,000 5,085
Goldman Sachs Group, Inc. ............................ 171,000 17,791
Hartford Financial Services Group, Inc. .............. 404,100 28,008
Merrill Lynch & Co., Inc. ............................ 132,400 7,914
Morgan Stanley, Dean Witter, Discover & Co. .......... 422,200 23,441
Providian Financial Corp. * .......................... 86,600 1,426
SLM Corp. ............................................ 135,700 7,245
State Street Corp. ................................... 256,600 12,604
Wells Fargo & Co. .................................... 190,900 11,865
--------
242,877
Diversified Telecommunication Services - 2.3%
BellSouth Corp. ...................................... 121,000 3,362
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Market
Name of Issuer Shares Value
-------------- --------- --------
(000's)
COMMON STOCK - Continued
Diversified Telecommunication Services - Continued
CenturyTel, Inc. ..................................... 131,400 $ 4,661
Citizens Communications Co. .......................... 344,900 4,756
SBC Communications, Inc. ............................. 62,200 1,603
Sprint Corp. ......................................... 314,900 7,825
Verizon Communications ............................... 715,200 28,973
--------
51,180
Electric Utilities - 2.6%
AES Corp. * .......................................... 723,900 9,896
Constellation Energy Group, Inc. ..................... 77,300 3,379
Edison International ................................. 511,900 16,396
Entergy Corp. ........................................ 72,300 4,887
TXU Corp. # .......................................... 332,700 21,479
--------
56,037
Electrical Equipment - 1.1%
Emerson Electric Co. ................................. 87,600 6,141
Rockwell International Corp. ......................... 369,300 18,299
--------
24,440
Electronic Equipment & Instruments - 0.3%
Ingram Micro, Inc. - Cl. A * ......................... 68,800 1,431
Vishay Intertechnology, Inc. * ....................... 367,400 5,518
--------
6,949
Energy Equipment & Services - 1.2%
Baker Hughes, Inc. ................................... 152,300 6,498
National-Oilwell, Inc. # * ........................... 230,000 8,117
Schlumberger, Ltd. ................................... 54,800 3,669
Transocean Sedco Forex, Inc. * ....................... 200,100 8,482
--------
26,766
Food & Drug Retailing - 0.5%
Sysco Corp. .......................................... 177,100 6,760
Walgreen Co. ......................................... 122,100 4,685
--------
11,445
Gas Utilities - 0.8%
Sempra Energy ........................................ 222,600 8,165
Williams Cos., Inc. .................................. 515,000 8,389
--------
16,554
Health Care Equipment & Supplies - 0.6%
Becton, Dickinson & Co. .............................. 143,900 8,173
Medtronic, Inc. ...................................... 106,400 5,285
--------
13,458
Health Care Providers & Services - 3.1%
Aetna US Healthcare, Inc. ............................ 98,400 12,275
Amerisource Bergen Corp. # ........................... 209,800 12,311
Humana, Inc. * ....................................... 358,700 10,650
UnitedHealth Group, Inc. ............................. 371,300 32,686
--------
67,922
Hotels Restaurants & Leisure - 1.4%
Carnival Corp. ....................................... 109,600 $ 6,316
International Game Technology ........................ 336,100 11,555
Las Vegas Sands Corp. * .............................. 4,530 218
Marriott International, Inc. - Cl. A ................. 110,300 6,947
Rogers Communications, Inc. - Cl. B # ................ 247,500 6,472
--------
31,508
Household Durables - 1.7%
Centex Corp. ......................................... 149,900 8,931
Fortune Brands, Inc. ................................. 154,400 11,916
Lennar Corp. ......................................... 22,400 1,270
Newell Rubbermaid, Inc. .............................. 291,400 7,049
Pulte Homes, Inc. .................................... 17,900 1,142
Stanley Works ........................................ 157,400 7,711
--------
38,019
Household Products - 0.9%
Kimberly-Clark Corp. ................................. 197,100 12,971
Procter & Gamble Co. ................................. 112,400 6,191
--------
19,162
Industrial Conglomerates - 5.4%
3M Co. ............................................... 40,300 3,307
General Electric Co. ................................. 2,183,400 79,694
Honeywell International, Inc. ........................ 81,800 2,897
Reynolds American, Inc. # ............................ 108,000 8,489
Textron, Inc. ........................................ 219,500 16,199
Tyco International, Ltd. ............................. 206,700 7,387
--------
117,973
Insurance - 6.5%
AFLAC, Inc. .......................................... 65,300 2,602
Allstate Corp. ....................................... 310,500 16,059
American International Group, Inc. ................... 411,300 27,010
Chubb Corp. .......................................... 52,100 4,006
Everest Re Group, Ltd. ............................... 89,100 7,980
Lincoln National Corp. ............................... 180,200 8,412
Old Republic International Corp. ..................... 87,300 2,209
Protective Life Corp. ................................ 33,800 1,443
Prudential Financial, Inc. ........................... 470,600 25,864
Safeco Corp. # ....................................... 157,900 8,249
St. Paul Cos., Inc. .................................. 217,219 8,052
Wellpoint, Inc. * .................................... 266,300 30,624
--------
142,510
Internet & Catalog Retail - 0.2%
eBay, Inc. * ......................................... 44,200 5,140
Internet Software & Services - 1.0%
Google, Inc. - Cl. A * ............................... 22,900 4,422
IAC / InterActive Corp. # * .......................... 232,400 6,419
McAfee, Inc. * ....................................... 188,000 5,439
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Market
Name of Issuer Shares Value
-------------- --------- --------
(000's)
COMMON STOCK - Continued
Internet Software & Services - Continued
Yahoo, Inc. * ........................................ 161,600 $ 6,089
--------
22,369
IT Consulting & Services - 1.2%
Accenture, Ltd. - Cl. A * ............................ 470,400 12,701
Affiliated Computer Services, Inc. - Cl. A # * ....... 85,600 5,152
Computer Sciences Corp. * ............................ 168,900 9,521
--------
27,374
Leisure Equipment & Products - 0.6%
Brunswick Corp. # .................................... 242,900 12,024
Machinery - 1.1%
Cummings Engine Co., Inc. ............................ 59,800 5,011
Danaher Corp. ........................................ 208,200 11,953
Pall Corp. ........................................... 79,700 2,307
Parker-Hannifin Corp. ................................ 60,000 4,544
--------
23,815
Media - 4.1%
Comcast Corp. - Cl. A * .............................. 777,000 25,858
E.W. Scripps Co. - Cl. A # ........................... 96,600 4,664
EchoStar Communications Corp. - Cl. A ................ 115,400 3,836
Fox Entertainment Group, Inc. - Cl. A * .............. 183,400 5,733
Liberty Media Corp. - Ser. A ......................... 403,700 4,433
McGraw-Hill Cos., Inc. ............................... 72,800 6,664
The Walt Disney Co. .................................. 1,133,000 31,497
Time Warner, Inc. * .................................. 318,500 6,192
Viacom, Inc. - Cl. B ................................. 52,300 1,903
--------
90,780
Metals & Mining - 0.7%
Nucor Corp. .......................................... 187,000 9,788
Phelps Dodge Corp. ................................... 50,800 5,025
--------
14,813
Multiline Retail - 2.2%
Claire's Stores, Inc. ................................ 164,500 3,496
Federated Department Stores, Inc. .................... 264,500 15,285
Kohl's Corp. * ....................................... 70,400 3,462
Nordstrom, Inc. ...................................... 203,600 9,514
Target Corp. ......................................... 115,200 5,982
Wal-Mart Stores, Inc. ................................ 192,200 10,152
--------
47,891
Office Electronics - 0.5%
Xerox Corp. * ........................................ 673,600 11,458
Oil & Gas - 6.5%
Ashland, Inc. * ...................................... 86,700 5,062
BP Amoco plc - ADR ................................... 78,400 4,579
Conoco Phillips ...................................... 351,000 30,477
Devon Energy Corp. ................................... 334,800 13,030
EOG Resources, Inc. .................................. 235,400 $ 16,798
Exxon Mobil Corp. .................................... 1,171,300 60,041
Murphy Oil Corp. ..................................... 169,200 13,612
--------
143,599
Paper & Forest Products - 0.3%
Louisiana-Pacific Corp. .............................. 214,200 5,728
Personal Products - 0.8%
Avon Products, Inc. .................................. 60,100 2,326
Estee Lauder Cos., Inc. - Cl. A ...................... 319,700 14,633
--------
16,959
Pharmaceuticals - 4.3%
Abbott Laboratories .................................. 105,100 4,903
Bristol-Myers Squibb Co. ............................. 37,400 958
Elan Corp. plc - ADR # * ............................. 206,300 5,622
Johnson & Johnson .................................... 617,900 39,187
Merck & Co., Inc. .................................... 767,900 24,680
Pfizer, Inc. ......................................... 743,100 19,982
--------
95,332
Road & Rail - 0.8%
Burlington Northern Santa Fe Corp. ................... 149,400 7,068
Norfolk Southern Corp. ............................... 317,900 11,505
--------
18,573
Semiconductor Equipment & Products - 2.7%
Analog Devices, Inc. ................................. 174,500 6,442
Applied Materials, Inc. * ............................ 758,400 12,969
Applied Micro Circuits Corp. * ....................... 143,300 603
Freescale Semiconductor, Inc. - Cl. B * .............. 98,543 1,809
Intel Corp. .......................................... 744,800 17,421
Maxim Integrated Products, Inc. ...................... 101,100 4,286
Novellus Systems, Inc. ............................... 185,000 5,160
Texas Instruments, Inc. .............................. 134,400 3,309
Xilinx, Inc. ......................................... 254,800 7,555
--------
59,554
Software - 4.0%
Autodesk, Inc. ....................................... 177,000 6,717
Citrix Systems, Inc. * ............................... 175,000 4,293
Mercury Interactive Corp. * .......................... 59,400 2,706
Microsoft Corp. ...................................... 1,766,200 47,175
Oracle Corp. * ....................................... 881,000 12,087
Red Hat, Inc. # * .................................... 289,100 3,860
Symantec Corp. * ..................................... 460,100 11,852
--------
88,690
Specialty Retail - 3.3%
Abercrombie & Fitch Co. .............................. 88,800 4,169
Best Buy Co., Inc. ................................... 202,400 12,027
Circuit City Stores, Inc. ............................ 612,300 9,576
Home Depot, Inc. ..................................... 780,000 33,337
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
Market
Name of Issuer Shares Value
-------------- --------- -----------
(000's)
COMMON STOCK - Continued
Specialty Retail - Continued
Limited, Inc. ..................................... 259,488 $ 5,974
Pacific Sunwear of California, Inc. * ............. 164,200 3,655
Sherwin-Williams Co. .............................. 105,700 4,717
----------
73,455
Textiles & Apparel - 0.4%
Nike, Inc. - Cl. B ................................ 105,300 9,550
Tobacco - 1.6%
Altria Group, Inc. ................................ 561,700 34,320
Trading Companies & Distributors - 0.5%
W.W. Grainger, Inc. ............................... 147,800 9,846
U.S. Government Agencies - 1.7%
Federal Home Loan Mortgage Corp. .................. 250,300 18,447
Federal National Mortgage Assoc. .................. 265,800 18,928
----------
37,375
Wireless Telecommunications Services - 0.9%
Nextel Communications, Inc. - Cl. A * ............. 513,800 15,414
Nextel Partners, Inc. - Cl. A * ................... 207,500 4,054
----------
19,468
----------
TOTAL COMMON STOCK-
(Cost $1,883,986) 99.7% 2,188,221
Par
Value
---------
(000's)
INVESTMENT COMPANIES HELD
AS COLLATERAL ON LOANED SECURITIES - 2.8%
State Street Navigator Securities
Lending Portfolio .............................. $60,534 60,534
SHORT-TERM INVESTMENTS - 0.2%
Investment in joint trading account
2.29% due 01/03/05
(Cost $5,483) .................................. 5,483 5,483
------- ----------
TOTAL INVESTMENTS-
(Cost $1,950,003) 102.7% 2,254,238
Payables, less cash and receivables- (2.7)% (58,452)
------- ----------
NET ASSETS- 100.0% $2,195,786
======= ==========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
ADR- American Depository Receipt.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Growth & Income Fund (the "Fund" or "VST Growth & Income") 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 twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$715 2.34% $1
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, 2004, 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
- -------------------------- -------------------
$59,366 $60,534
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, 2004, 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. At December 31, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $3,395, $343,733, $230,879 and $54,590 which expire in 2008, 2009, 2010
and 2011, respectively.
Certain of the above losses may be limited under sections 382-384 of the
Internal Revenue Code, as amended.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $42. Realized gains and losses
from security transactions are determined on the basis of identified cost.
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 11, 2004, 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
$150 Million and Excess Over
First $150 Million $300 Million $300 Million
- ------------------ ---------------- ------------
0.71% 0.69% 0.67%
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, 2004, there were no reimbursements paid 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 in expenses
of $902.
John Hancock has entered into a Sub-Advisory Agreement with Independence
Investment LLC, an affiliate of John Hancock, which under John Hancock's
supervision, is responsible for a portion of the day-to-day investment
management of the Fund. John Hancock has also entered into a Sub-Advisory
Agreement with T. Rowe Price Associates, Inc., which under John Hancock's
supervision, is also responsible for a portion of 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, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- ---------- --------------------
$1,493,293 $1,616,037
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$1,961,951 $320,544 $(28,257) $292,287
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $632,597 $292,287
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
- ---- ------------------ ---------------------- -----------------
2004 $23,196 $-- $ --
2003 17,207 -- 11,765
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
Included in the Fund's 2004 distributions from ordinary income is $1,226 in
excess of investment company taxable income, which in accordance with applicable
US tax law, was distributed to shareholders as ordinary income distributions.
NOTE E--COMBINATION
On April 25, 2003, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
- ------------------- -----------------------------------
VST Growth & Income John Hancock VA Relative Value
VST Growth & Income John Hancock VA Sovereign Investors
These combinations provided for the transfer of substantially all of the
assets and liabilities of the target funds to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The acquisitions were
accounted for as tax-free exchanges as follows:
Target Fund
Trust Shares Unrealized Acquiring Fund Acquiring Fund
Issued by Target Fund Appreciation/ Net Assets Prior Aggregate Net Assets
Target Fund Acquiring Fund Net Assets (Depreciation) to Combination After Combination
- ----------------- -------------- ----------- -------------- ---------------- --------------------
VA Relative Value 3,079 $28,786 $ 845 $1,744,162 $1,772,947
VA Sovereign
Investors 4,038 37,760 (415) 1,772,947 1,810,708
NOTE F--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Growth & Income Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Growth & Income Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 2001
- --------------------------------------------------------------------------------
Health Sciences Fund
Wellington Management Company, LLP Management Team
- --------------------------------------------------------------------------------
.. The Fund emphasizes bottom-up fundamental analysis, with a focus on
in-depth understanding of medical science, regulatory developments,
reimbursement policy trends, and individual company business franchises.
Generally, holdings will be diversified across sub-sectors of health care,
but at times will be concentrated in sub-sectors that provide the most
compelling opportunities.
Fund Commentary
Performance: For the year 2004, the Health Sciences Trust returned +11.10%,
outperforming the +6.31% return of the Goldman Sachs Health Care Index.
Environment: Health care stocks underperformed the broader market in 2004, with
notably weak performance among large-cap pharmaceutical stocks. The market has
worried about the lack of visibility of product pipelines and low-probability,
though high-risk, patent losses. Generics are challenging the industry, having
moved on from easy patents to now challenging stronger-composition patents.
High-profile patent cases have moved through the courts quite slowly, prolonging
the market's uncertainty.
The portfolio outperformed due to strong stock selection, primarily in
pharmaceuticals, a sub-sector that accounted for roughly half of the Trust's
assets.
Outlook: The pharmaceutical industry maintains tremendous cash flow generating
capability, driven by new product discovery. We continue to seek companies that
are better positioned because of innovative products and can thus generate
greater pricing power inside and outside the United States.
The next couple of years will be difficult for health care service companies
generally speaking, as utilization growth remains moderate and price increases
decelerate. Low utilization growth will be driven by benefit design changes that
push more of the cost onto the consumer and the escalating number of uninsured
in the United States.
Across all sub-sectors in the portfolio, we will continue to seek to accurately
assess a company's position within its own lifecycle and to formulate profitable
non-consensus investment ideas.
Inception: May 1, 2001
- --------------------------------------------------------------------------------
Health Sciences Fund
Wellington Management Company, LLP Management Team
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 4/30/01 (Fund Inception Date)
Goldman Sachs
Health Sciences Fund Health Care Index (1) S&P 500(R) Index (2)
-------------------- --------------------- --------------------
Apr-01 $10,000 $10,000 $10,000
May-01 10,241 10,220 10,067
Jun-01 10,199 9,962 9,822
Jul-01 10,189 10,235 9,725
Aug-01 9,836 9,973 9,117
Sep-01 9,632 9,896 8,380
Oct-01 9,592 9,909 8,540
Nov-01 9,927 10,440 9,195
Dec-01 9,815 10,242 9,276
Jan-02 9,565 9,968 9,141
Feb-02 9,549 9,918 8,964
Mar-02 9,637 10,042 9,301
Apr-02 9,276 9,414 8,737
May-02 9,044 9,231 8,673
Jun-02 8,366 8,353 8,055
Jul-02 8,034 8,170 7,427
Aug-02 7,999 8,229 7,476
Sep-02 7,649 7,789 6,664
Oct-02 7,951 8,151 7,250
Nov-02 8,038 8,370 7,677
Dec-02 7,853 8,080 7,225
Jan-03 7,824 8,085 7,036
Feb-03 7,659 7,945 6,931
Mar-03 7,912 8,187 6,998
Apr-03 8,274 8,564 7,574
May-03 8,998 8,963 7,974
Jun-03 9,223 9,348 8,076
Jul-03 9,267 9,384 8,218
Aug-03 9,180 9,179 8,378
Sep-03 9,385 9,197 8,289
Oct-03 9,612 9,287 8,758
Nov-03 9,860 9,456 8,836
Dec-03 10,345 9,960 9,299
Jan-04 10,745 10,253 9,470
Feb-04 10,825 10,394 9,602
Mar-04 10,703 10,093 9,457
Apr-04 10,819 10,457 9,308
May-04 10,751 10,443 9,436
Jun-04 10,855 10,441 9,619
Jul-04 10,260 9,789 9,300
Aug-04 10,383 9,909 9,338
Sep-04 10,407 9,882 9,438
Oct-04 10,414 9,652 9,583
Nov-04 10,782 9,899 9,971
Dec-04 11,495 10,589 10,310
Value on 12/31/04:
- ------------------
$11,495 Health Sciences Fund
$10,589 Goldman Sachs Health Care Index (1)
$10,310 S&P 500(R) Index (2)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Schering-Plough Corp. 6.5%
AstraZeneca Group plc 5.5%
Abbott Laboratories 5.1%
Medtronic, Inc. 4.4%
Genzyme Corp. 4.2%
Elan Corp. plc 4.1%
McKesson HBOC, Inc. 3.7%
Novartis AG 3.4%
Eli Lilly & Co. 3.3%
PacifiCare Health Systems, Inc. 3.2%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Health
Sciences GSSI Health S&P 500
Fund Care Index/1/ Index/2/
-------- ------------- --------
1 Year 11.10% 6.31% 10.87%
3 Years 5.40% 1.12% 3.59%
Since Inception (5/1/01) 3.86% 1.57% 0.84%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Health Care 98.1%
Consumer Staples 1.0%
Materials 0.9%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original costs. Sector investing entails special risks
as discussed in the prospectus. The performance of the fund on this page is
reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
additional risks associated with a nondiversified fund, as outlined in the
current prospectus. Performance would be lower if expenses and charges of
the separate accounts and products were reflected.
/1/ The Goldman Sachs Healthcare Index is a modified capitalization weighted
index that measures the performance of US healthcare stocks. The index has
a maximum individual stock weighting which is currently 7.5%. The index
includes companies in the following categories: providers of healthcare
related services, researchers, manufacturers and distributors of
pharmaceuticals, drugs and related sciences, and medical supplies,
instruments and products.
/2/ "Standard & Poor's 500(R) Index" is a trademark of McGraw-Hill Companies,
Inc. and has been licensed for use by John Hancock Life Insurance Company.
The product is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the product. "Standard & Poor's 500(R)" Index
is an unmanaged stock index commonly used as a broad measure of stock
market performance.
Inception: May 1, 2001
- --------------------------------------------------------------------------------
Health Sciences Fund
Wellington Management Company, LLP Management Team
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Health Sciences Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,058.80
Expense paid per $1,000* $ 7.03
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,018.31
Expense paid per $1,000* $ 6.89
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Health Sciences Fund
(000's Omitted)
ASSETS
Long term investments at cost ....................................... $20,880
Net unrealized appreciation of investments .......................... 3,447
Short-term investments at value ..................................... 714
-------
Total investments ............................................. 25,041
Receivable for:
Investments sold ................................................. 36
Fund shares sold ................................................. 46
Dividends ........................................................ 12
Foreign dividend tax withholding reclaim ......................... 6
-------
Total assets ........................................................ 25,141
-------
LIABILITIES
Payables for:
Investments purchased ............................................ 86
Accrued operating expenses ....................................... 34
-------
Total liabilities ................................................... 120
-------
Net assets .......................................................... $25,021
=======
Shares outstanding, $0.01 Par Value (unlimited shares authorized) ... 2,235
-------
Net asset value per share ........................................... $ 11.19
=======
Composition of net assets:
Capital paid-in .................................................. $22,059
Accumulated net realized loss on investments and foreign currency
transactions .................................................. (485)
Net unrealized appreciation of:
Investments ................................................... 3,447
-------
Net assets .......................................................... $25,021
=======
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Health Sciences Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 12
Dividends (net of foreign withholding tax of $19) ................ 297
-------
Total investment income ............................................. 309
-------
EXPENSES
Investment advisory fee .......................................... 331
Auditors fees .................................................... 5
Custodian fees ................................................... 48
Legal fees ....................................................... 6
Printing & mailing fees .......................................... 43
Trustees' fees ................................................... 1
Other fees ....................................................... 1
-------
Total expenses ...................................................... 435
Less expenses reimbursed ......................................... (22)
Less custodian expense reduction offset by commission recapture
arrangement (Note C) .......................................... (15)
-------
Net expenses ........................................................ 398
-------
Net investment loss ................................................. (89)
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments ................................................... 4,395
Foreign currency transactions ................................. (12)
Change in unrealized depreciation on investments ................. (1,782)
-------
Net realized and unrealized gain .................................... 2,601
-------
Net increase in net assets resulting from operations ................ $ 2,512
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Health Sciences Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003 (a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ...................................... $ (89) $ (33)
Net realized gain ........................................ 4,383 83
Change in net unrealized appreciation (depreciation) ..... (1,782) 7,514
-------- -------
Net increase in net assets resulting from operations .. 2,512 7,564
Distributions to shareholders from:
Net investment income .................................... (72)
Capital paid-in .......................................... (719)
-------- -------
Decrease in net assets resulting from distributions ... (791)
From fund share transactions:
Proceeds from shares sold ................................ 9,019 11,971
Distributions reinvested ................................. 791
Payment for shares redeemed .............................. (21,328) (7,387)
-------- -------
Increase (decrease) in net assets from fund share
transactions ....................................... (12,309) 5,375
-------- -------
NET INCREASE (DECREASE) IN NET ASSETS ....................... (9,797) 12,148
NET ASSETS
Beginning of Period ...................................... 34,818 22,670
-------- -------
End of Period (including distributions in excess of net
investment income of $0 and $(2), respectively) ....... $ 25,021 $34,818
======== =======
Analysis of fund share transactions:
Sold ..................................................... 863 1,372
Reinvested ............................................... 79
Redeemed ................................................. (2,084) (893)
-------- -------
Net increase in fund shares outstanding ..................... (1,221) 558
======== =======
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Health Sciences Fund
----------------------------------------------------------
Period from
Year Ended December 31, May 1,
------------------------------------- to December 31,
2004 2003(f)(i) 2002 2001 (g)
------- ----------- ------- ---------------
Net Assets Value at Beginning of Period ..... $ 10.07 $ 7.82 $ 9.81 $ 10.00
Income from Investment Operations:
Net Investment Income .................... (0.06) (h) 0.01
Net Realized and Unrealized Gain (Loss)
on Investment(a) ...................... 1.18 2.48 (1.98) (0.18)
------- ------- ------- -------
Total From Investment Operations ......... 1.12 2.48 (1.97) (0.18)
Less Distributions:
Distribution from Net Investment Income .. (0.02) (0.02)
Distribution from Net Realized Gains on
Investments ...........................
Distribution from Capital Paid-in ........ (0.21) (0.01)
------- ------- ------- -------
Total Distributions ...................... (0.23) (0.02) (0.01)
------- ------- ------- -------
Net Assets Value at End of Period ........... $ 11.19 $ 10.07 $ 7.82 $ 9.81
======= ======= ======= =======
Total Investment Return(b) .................. 11.10% 31.74% (19.99)% (1.85)%(c)
Ratios/Supplemental Data:
Ratio of Operating Expense to Average
Net Assets ............................ 1.25%(e)(i) 1.10%(e) 1.07%(e) 1.10%(d)(e)
Ratio of Net Investment Income (Loss)
to Average Net Assets ................. (0.27)% (0.12)% 0.10% (0.16)%(d)
Portfolio Turnover Rate .................. 47.88% 115.75% 98.91% 37.76%(c)
Net Assets End of Period (000s Omitted) ..... $25,021 $34,818 $22,670 $29,873
(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) Not annualized.
(d) Annualized.
(e) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the expense ratio would have been 1.32%, 1.25%, 1.35%, and 1.19%
for the years ended December 31, 2004, 2003, 2002, and 2001, respectively.
(f) The fund entered into a new sub-advisory agreement with Wellington
Management Company during the period shown.
(g) Commencement of investment operations.
(h) Amount is less than $0.01.
(i) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HEALTH SCIENCES FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Biotechnology - 17.4%
Abgenix, Inc. * ......................................... 8,200 $ 85
Amylin Pharmaceuticals, Inc. * .......................... 12,000 280
Applera Corp. - Celera Genomics Group * ................. 23,400 322
Array Biopharma, Inc. * ................................. 7,800 74
Cephalon, Inc. * ........................................ 5,800 295
Ciphergen Biosystems, Inc. * ............................ 16,100 69
CV Therapeutics, Inc. * ................................. 12,000 276
Cytokinetics, Inc. * .................................... 3,400 35
Exelixis, Inc. * ........................................ 22,200 211
Genzyme Corp. * ......................................... 17,798 1,034
Gilead Sciences, Inc. * ................................. 11,300 395
Human Genome Sciences, Inc. * ........................... 22,700 273
ICOS Corp. * ............................................ 4,400 124
Millennium Pharmaceuticals, Inc. * ...................... 27,200 330
Onyx Pharmaceuticals, Inc. * ............................ 2,500 81
OSI Pharmaceuticals, Inc. * ............................. 2,100 157
Regeneron Pharmaceuticals * ............................. 10,100 93
Vertex Pharmaceuticals, Inc. * .......................... 6,100 65
Zymogenetics, Inc. * .................................... 6,400 147
-------
4,346
Chemicals - 0.8%
Bayer AG * .............................................. 6,300 213
Food & Drug Retailing - 1.0%
Rite Aid Corp. * ........................................ 65,200 238
Health Care Equipment & Supplies - 13.3%
Baxter International, Inc. .............................. 15,580 538
Beckman Coulter, Inc. ................................... 3,400 228
Becton, Dickinson & Co. ................................. 4,100 233
Bruker Biosciences Corp. * .............................. 25,000 101
CTI Molecular Imaging, Inc. * ........................... 14,100 200
Edwards Lifesciences Corp. * ............................ 5,900 244
Guidant Corp. ........................................... 1,613 116
Hospira, Inc. * ......................................... 7,473 250
Medtronic, Inc. ......................................... 21,400 1,063
Olympus Optical Co. * ................................... 11,000 234
Terumo Corp. * .......................................... 4,700 126
-------
3,333
Health Care Providers & Services - 11.2%
Aetna US Healthcare, Inc. ............................... 4,100 512
Gambro - Ser. A * ....................................... 2,690 38
McKesson HBOC, Inc. ..................................... 28,300 890
NDC Healthcorp .......................................... 31,500 586
PacifiCare Health Systems, Inc. * ....................... 13,700 774
-------
2,800
Pharmaceuticals - 53.5%
Abbott Laboratories ..................................... 26,334 1,229
AstraZeneca Group plc - ADR ............................. 36,634 1,333
Atherogenics, Inc. * .................................... 8,800 207
Eisai Co. Ltd. * ........................................ 17,300 568
Elan Corp. plc - ADR * .................................. 36,400 992
Eli Lilly & Co. ......................................... 14,227 $ 807
Forest Laboratories, Inc. * ............................. 12,000 538
Fujisawa Pharmeceutical Co., Ltd. * ..................... 22,000 601
King Pharmaceuticals, Inc. * ............................ 32,500 403
Medco Health Solutions, Inc. * .......................... 12,000 499
Medicinesco * ........................................... 13,100 377
Novartis AG * ........................................... 16,575 833
NPS Pharmaceuticals, Inc. * ............................. 5,900 108
Sankyo Co., Ltd. * ...................................... 13,900 313
Sanofi Aventis - ADR .................................... 18,758 751
Schering-Plough Corp. ................................... 76,300 1,593
Schwarz Pharma AG * ..................................... 4,700 212
Shionogi & Co., Ltd. * .................................. 38,000 524
Takeda Chemical Industries * ............................ 4,400 221
UCB SA * ................................................ 4,862 246
Watson Pharmaceuticals, Inc. * .......................... 11,000 361
Wyeth ................................................... 15,995 681
-------
13,397
-------
TOTAL COMMON STOCK-
(Cost $20,880) 97.2% 24,327
Par
Value
-------
(000's)
SHORT-TERM INVESTMENTS - 2.8%
Investment in joint trading account
2.29% due 01/03/05
(Cost $714) ............................................. $ 714 714
------ -------
TOTAL INVESTMENTS-
(Cost $21,594) 100.0% 25,041
Payables, less cash and receivables- (0.0)% (21)
------ -------
NET ASSETS- 100.0% $25,020
====== =======
* Non-income producing security.
ADR-American Depository Receipt.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Health Sciences 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
twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices
as late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at
any time other than 4:00 p.m. Eastern Standard Time on a particular day, the
Fund will determine its net asset value per share as of the close of the
Exchange on that day. Investment security transactions are recorded on the date
of purchase or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including,
but not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$5 1.81% $--
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, 2004, 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. At December 31, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, of $360
which expire in 2011.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $19. Realized gains and losses
from security transactions are determined on the basis of identified cost.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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 11, 2004, 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 $250 Million $250 Million
- ------------------ ------------
1.00% 0.95%
For the period from January 1, 2004 to April 30, 2004, John Hancock and JVLICO
agreed to reimburse the Fund for normal operating expenses, exclusive of
investment advisory fees, taxes, interest, brokerage commissions and
extraordinary expenses that exceed 0.10% of the Fund's daily net asset value.
Accordingly, for the period from January 1, 2004 to April 30, 2004 the Fund was
reimbursed $22 by John Hancock and JVLICO. On March 18, 2004, the Fund's
Shareholders approved the removal of John Hancock and JVLICO's respective
obligations to reimburse the Fund for excess operating expenses effective May 1,
2004.
John Hancock has entered into a Sub-Advisory Agreement with Wellington
Management Company, LLP, which under John Hancock's supervision, is responsible
for the day-to-day investment management of 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 in expenses
of $15.
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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$15,595 $27,839
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
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, 2004 were as follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$21,718 $4,037 $(714) $3,323
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $360 $3,323
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
- ---- ------------------ ---------------------- -----------------
2004 $-- $-- $ --
2003 72 -- 719
NOTE E--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE E--OTHER MATTERS--Continued
John Hancock Variable Series Trust I solicited a vote at a special meeting
of Contract owners/Policyholders held on March 18, 2004 on the following matter:
For Against Abstain
--- ------- -------
To approve, as to the Health Sciences Fund, an amendment 81% 9% 10%
to the current investment mangement agreement between
the Trust and John Hancock to eliminate John Hancock's
obligation to reimburse this Fund for certain
operating expenses.
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Health Sciences Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Health Sciences Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 periods indicated, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1998
- --------------------------------------------------------------------------------
High Yield Bond Fund
Wellington Management Company, LLP Earl E. McEvoy
- --------------------------------------------------------------------------------
.. The manager employs rigorous bottom-up fundamental research, 100% of which
is conducted in-house. The manager continues to focus on capturing the
attractive yields currently available in the high yield market, while
minimizing credit losses, focusing on the upper tier of the high yields
market.
Fund Commentary
Performance: For the year 2004, the High Yield Fund returned +8.15%,
underperforming the +9.90% return of the Lehman Brothers Upper Tier High Yield
Splice (50/50 BB-B) Index.
Environment: High yield default rates dropped significantly during the year,
approaching levels not seen since the high-growth period of the mid-1990s. High
yield companies are enjoying the benefits of a strong economy and have taken
advantage of low interest rates to refinance existing debt and improve their
balance sheets.
We have de-emphasized industries with unresolved structural problems, such as
airlines. This selectivity regarding airlines contributed to underperformance
relative to the benchmark. Underweighting Utilities was also a source of
underperformance. Utilities represent more than 15% of the benchmark and we
struggle with the rationalization of dedicating that amount of the portfolio's
assets to one industry. In any case, we continue to emphasize regulated
utilities within this area, and to deemphasize the merchant energy operators, a
strategy that leads to an underweight relative to the benchmark in Utilities.
Outlook: We expect measured interest rate increases to continue for the
foreseeable future and high yield bonds should continue to fare relatively well
in this environment. We remain constructive in our outlook for the high yield
market despite the fact that spreads and yields are at their tightest levels in
several years. However, spreads do have the potential to remain low for an
extended period of time.
Inception: May 1, 1998
- --------------------------------------------------------------------------------
High Yield Bond Fund
Wellington Management Company, LLP Earl E. McEvoy
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 5/1/98 (Fund Inception Date)
High Yield Bond
High Yield Bond Fund Benchmark/1/
-------------------- ---------------
4/30/1998 410,000 $10,000
5/31/1998 9,987 10,035
6/30/1998 10,028 10,071
7/31/1998 10,075 10,129
8/31/1998 9,309 9,569
9/30/1998 9,280 9,612
10/31/1998 9,120 9,415
11/30/1998 9,802 9,806
12/31/1998 9,702 9,817
1/31/1999 9,875 9,962
2/28/1999 9,884 9,903
3/31/1999 10,061 9,998
4/30/1999 10,214 10,192
5/31/1999 9,992 10,054
6/30/1999 9,989 10,033
7/31/1999 9,993 10,073
8/31/1999 9,924 9,961
9/30/1999 9,874 9,889
10/31/1999 9,806 9,824
11/30/1999 10,089 9,940
12/31/1999 10,200 10,051
1/31/2000 10,132 10,008
2/29/2000 10,123 10,027
3/31/2000 9,876 9,817
4/30/2000 9,945 9,832
5/31/2000 9,777 9,731
6/30/2000 10,006 9,930
7/31/2000 10,121 10,005
8/31/2000 10,203 10,073
9/30/2000 9,974 9,985
10/31/2000 9,578 9,666
11/30/2000 9,016 9,283
12/31/2000 9,097 9,462
1/31/2001 9,829 10,171
2/28/2001 10,014 10,306
3/31/2001 9,866 10,063
4/30/2001 9,755 9,938
5/31/2001 9,951 10,117
6/30/2001 9,582 9,834
7/31/2001 9,725 9,978
8/31/2001 9,796 10,096
9/30/2001 8,865 9,418
10/31/2001 9,026 9,650
11/30/2001 9,357 10,003
12/31/2001 9,291 9,962
1/31/2002 9,363 10,031
2/28/2002 9,265 9,891
3/31/2002 9,532 10,129
4/30/2002 9,707 10,291
5/31/2002 9,631 10,238
6/30/2002 8,874 9,483
7/31/2002 8,388 9,069
8/31/2002 8,491 9,327
9/30/2002 8,214 9,205
10/31/2002 8,225 9,125
11/30/2002 8,825 9,690
12/31/2002 8,872 9,826
1/31/2003 9,006 10,075
2/28/2003 9,109 10,175
3/31/2003 9,244 10,422
4/30/2003 9,588 10,917
5/31/2003 9,576 10,990
6/30/2003 9,762 11,260
7/31/2003 9,600 11,127
8/31/2003 9,657 11,226
9/30/2003 9,875 11,510
10/31/2003 10,031 11,715
11/30/2003 10,128 11,881
12/31/2003 10,336 12,110
1/31/2004 10,437 12,299
2/28/2004 10,444 12,318
3/31/2004 10,525 12,442
4/30/2004 10,453 12,321
5/31/2004 10,255 12,107
6/30/2004 10,387 12,255
7/31/2004 10,517 12,441
8/31/2004 10,700 12,697
9/30/2004 10,832 12,874
10/31/2004 11,026 13,080
11/30/2004 11,077 13,162
12/31/2004 11,179 13,309
Value on 12/31/04:
- ------------------
$11,179 High Yield Bond Fund
$13,309 Lehman Brothers High Yield B/BB Bond Index/1/
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
CSC Holdings, Inc. 1.8%
Nextel Communications, Inc. 1.7%
AES Corp. 1.7%
Georgia Pacific Corp. 1.7%
HCA, Inc. 1.5%
Host Marriott LP 1.5%
Qwest Corp. 1.3%
Williams Cos, Inc. 1.3%
Insight Midwest LP Capital, Inc. 1.1%
AT&T Corp. 1.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
High Yield
High Yield Bond Fund
Bond Fund Benchmark/1/
---------- ------------
1 Year 8.15% 9.90%
3 Years 6.36% 10.14%
5 Years 1.85% 5.77%
Since Inception (5/1/98) 1.68% 4.38%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND COMPOSITION (as of December 31, 2004)
% of
Credit Quality Assets
- -------------- ------
Government 0.08%
BBB 1.33%
BB 38.51%
B 54.27%
Below B 5.31%
Not rated 0.50%
Weighted Average Yield 6.69%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
special risks associated with investing in high yield bonds, as outlined in
the current prospectus. Performance would be lower if expenses and charges
of the separate accounts and products were reflected.
/1/ The High Yield Bond Fund Index represents the Lehman Brothers High Yield
Bond Fund Index: from May 1998 to December 2002 and then 50% Lehman
Brothers B Index and 50% Lehman Brothers BB Index from January 2003 to
present.
Inception: May 1, 1998
- --------------------------------------------------------------------------------
High Yield Bond Fund
Wellington Management Company, LLP Earl E. McEvoy
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a High Yield Bond Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,076.20
Expense paid per $1,000* $ 4.70
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,020.61
Expense paid per $1,000* $ 4.57
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
High Yield Bond Fund
(000's Omitted)
ASSETS
Long term investments at cost ...................................... $ 90,585
Net unrealized appreciation of investments ......................... 4,131
Short-term investments at value .................................... 80
--------
Total investments ............................................ 94,796
Receivable for:
Interest ........................................................ 1,894
--------
Total assets ....................................................... 96,690
--------
LIABILITIES
Payables for:
Fund shares purchased ........................................... 36
Accrued operating expenses ...................................... 15
--------
Total liabilities .................................................. 51
--------
Net assets ......................................................... $ 96,639
========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ..................................................... 14,876
--------
Net asset value per share .......................................... $ 6.50
========
Composition of net assets:
Capital paid-in ................................................. $107,209
Accumulated net realized loss on investments .................... (14,734)
Undistributed net investment income ............................. 33
Net unrealized appreciation of investments ...................... 4,131
--------
Net assets ......................................................... $ 96,639
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
High Yield Bond Fund
(000's Omitted)
INVESTMENT INCOME
Interest ........................................................ $ 7,171
EXPENSES
Investment advisory fee ......................................... 767
Auditors fees ................................................... 12
Custodian fees .................................................. 99
Legal fees ...................................................... 16
Printing & mailing fees ......................................... 15
Trustees' fees .................................................. 3
Other fees ...................................................... 3
-------
Total expenses ..................................................... 915
Less expenses reimbursed ........................................ (52)
-------
Net expenses ....................................................... 863
-------
Net investment income .............................................. 6,308
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments ................................ 2,368
Change in unrealized depreciation on investments ................ (1,184)
-------
Net realized and unrealized loss ................................... 1,184
-------
Net increase in net assets resulting from
operations ...................................................... $ 7,492
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
High Yield Bond Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ........................................................ $ 6,308 $ 5,394
Net realized gain (loss) ..................................................... 2,368 (724)
Change in net unrealized appreciation (depreciation) ......................... (1,184) 7,272
-------- --------
Net increase in net assets resulting from operations ...................... 7,492 11,942
Distributions to shareholders from:
Net investment income ........................................................ (6,337) (5,469)
Capital paid-in .............................................................. (184)
-------- --------
Decrease in net assets resulting from distributions ....................... (6,337) (5,653)
From fund share transactions:
Proceeds from shares sold .................................................... 25,660 109,079
Distributions reinvested ..................................................... 6,337 5,653
Payment for shares redeemed .................................................. (33,529) (84,786)
-------- --------
Increase (decrease) in net assets from fund share transactions ............ (1,532) 29,946
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS ........................................... (377) 36,235
NET ASSETS
Beginning of Period .......................................................... 97,016 60,781
-------- --------
End of Period (including undistributed net investment income of $33 and $0,
respectively) ............................................................. $ 96,639 $ 97,016
======== ========
Analysis of fund share transactions:
Sold ......................................................................... 4,018 17,586
Reinvested ................................................................... 993 909
Redeemed ..................................................................... (5,250) (13,667)
-------- --------
Net increase (decrease) in fund shares outstanding .............................. (239) 4,828
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
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:
High-Yield Bond Fund
-----------------------------------------------------------
Year Ended December 31,
2004 2003(e) 2002 2001 2000
------- -------- ------- ------- -------
Net Assets Value at Beginning of Period ............................ $ 6.42 $ 5.91 $ 6.83 $ 7.33 $ 8.99
Income from Investment Operations:
Net Investment Income ........................................... 0.42 0.42 0.57 0.73 0.73
Net Realized and Unrealized Gain (Loss) on Investment(a) ........ 0.08 0.53 (0.87) (0.55) (1.65)
------- ------- ------- ------- -------
Total From Investment Operations ................................ 0.50 0.95 (0.30) 0.18 (0.92)
Less Distributions:
Distribution from Net Investment Income ......................... (0.42) (0.43) (0.62) (0.68) (0.74)
Distribution from Net Realized Gains on Investments .............
Distribution from Capital Paid-In ............................... (0.01)
------- ------- ------- ------- -------
Total Distributions ............................................. (0.42) (0.44) (0.62) (0.68) (0.74)
------- ------- ------- ------- -------
Net Assets Value at End of Period .................................. $ 6.50 $ 6.42 $ 5.91 $ 6.83 $ 7.33
======= ======= ======= ======= =======
Total Investment Return(b) ......................................... 8.15% 16.51% (4.51)% 2.13% (10.81)%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ................ 0.90%(c) 0.90%(c) 0.90%(c) 0.80%(c) 0.75%
Ratio of Net Investment Income to Average Net Assets ............ 6.59% 6.81% 9.84% 10.39%(d) 8.88%
Portfolio Turnover Rate ......................................... 52.00% 47.82% 89.30% 32.50% 21.94%
Net Assets End of Period (000s Omitted) ............................ $96,639 $97,016 $60,781 $51,274 $25,978
(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 .96%, .95%, .96%, .90%, and
.87%, for the years ended December 31, 2004, 2003, 2002, 2001, and 2000,
respectively.
(d) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 9.35% for the years ended December 31, 2001.
(e) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND **
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS
Aerospace & Defense - 0.7%
Alliant Techsystems, Inc. - Sr. Sub. Notes
8.5% due 05/15/11 - B ................................ $ 95 $ 104
Argo-Tech Corp - Sr. Notes
9.25% due 06/01/11 - B ............................... 110 121
Sequa Corp.
9.0% due 08/01/09 - BB- .............................. 275 311
Sequa Corp. - Sr. Notes
8.875% due 04/01/08 - BB- ............................ 105 115
Transdigm, Inc. - Sr. Sub. Notes
8.375% due 07/15/11 - B- ............................. 10 11
------
662
Airlines - 0.8%
American Airlines, Inc.
7.024% due 04/15/11 - BBB+ ........................... 130 134
Continental Airlines - Ser. 1997-4 Cl. 4A
6.9% due 01/02/18 - A- ............................... 95 95
Continental Airlines, Inc. - Ser. 1999-2 Cl. A2
7.056% due 09/15/09 - A .............................. 170 175
Delta Air Lines, Inc. - CTF Ser. 2001-1 Cl. A2
7.11% due 03/18/13 - A ............................... 265 261
Northwest Airlines - Ser. 2001 Cl. 1A2
6.841% due 10/01/12 - AA+ ............................ 80 80
------
745
Auto Components - 2.8%
Arvinmeritor, Inc. - Notes
8.75% due 03/01/12 - BB+ ............................. 420 483
Cummins, Inc. - Sr. Notes
9.5% due 12/01/10 - BB+ .............................. 45 51
Dura Operating Corp. - Sr. Notes Ser. B
8.625% due 04/15/12 - B .............................. 260 271
Eagle Picher, Inc. - Sr. Notes
9.75% due 09/01/13 - B- .............................. 40 40
R.J. Towercorp - Gtd. Sr. Notes
12.0% due 06/01/13 - CCC+ ............................ 235 182
Tenneco Automotive, Inc. - Sr. Sec. Notes Ser. B
10.25% due 07/15/13 - B- ............................. 205 242
Tenneco Automotive, Inc. - Sr. Sub. Notes 144A (a)
8.625% due 11/15/14 - B- ............................. 120 125
TRW, Inc. - Sr. Notes
9.375% due 02/15/13 - BB- ............................ 376 436
Visteon Corp.
8.25% due 08/01/10 - BB+ ............................. 250 264
Visteon Corp. - Notes
7.0% due 03/10/14 - BB+ .............................. 660 637
------
2,731
Automobiles - 0.6%
Navistar International Corp., Inc. - Sr. Notes
7.5% due 06/15/11 - BB- .............................. 70 75
United Rentals North America, Inc. - Sr. Notes
6.5% due 02/15/12 - BB- .............................. $485 $ 473
------
548
Banks - 0.7%
Chevy Chase Bank - Sub. Debs.
6.875% due 12/01/13 - BB- ............................ 175 180
Western Financial Bank - Sub. Debs.
9.625% due 05/15/12 - BB- ............................ 415 473
------
653
Beverages - 0.5%
Constellation Brands, Inc. - Sr. Sub. Notes
8.125% due 01/15/12 - B+ ............................. 430 470
Building Products - 1.4%
American Standard Cos., Inc.
7.625% due 02/15/10 - BBB- ........................... 305 350
Building Materials Corp. America - Sr. Notes
144A (a)
7.75% due 08/01/14 - B+ .............................. 235 239
Goodman Global Holdings, Inc. - Sr. Sub.
Notes 144A (a)
7.875% due 12/15/12 - B- ............................. 245 243
Koppers, Inc. Pennsylvania - Sr. Sec. Notes
9.875% due 10/15/13 - B .............................. 200 228
Texas Industries, Inc. - Sr. Notes
10.0% due 06/01/11 - BB- ............................. 195 228
Valmont Industries, Inc. - Sr. Sub. Notes
6.875% due 05/01/14 - B+ ............................. 40 41
------
1,329
Chemicals - 4.9%
Acetex Corp. - Sr. Notes
10.875% due 08/01/09 - B+ ............................ 75 82
Airgas, Inc. - Sr. Sub. Notes
9.125% due 10/01/11 - BB- ............................ 335 376
Equistar Chemical - Sr. Notes
10.125% due 09/01/08 - B+ ............................ 58 67
Equistar Chemicals LP - Sr. Notes
10.625% due 05/01/11 - B+ ............................ 155 180
Huntsman LLC - Sr. Sec. Notes
11.625% due 10/15/10 - B ............................. 125 147
IMC Global, Inc. - Sr. Notes
10.875% due 08/01/13 - BB ............................ 470 587
Lubrizol Corp. - Sr. Notes
5.5% due 10/01/14 - BB+ .............................. 80 80
Lyondell Chemical Co.
9.875% due 05/01/07 - B+ ............................. 42 44
Lyondell Chemical Co. - Notes Ser. A
9.625% due 05/01/07 - B+ ............................. 800 880
Methanex Corp. - Sr. Notes
8.75% due 08/15/12 - BBB- ............................ 260 304
Millenium America, Inc. - Sr. Notes
9.25% due 06/15/08 - B+ .............................. 275 314
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Chemicals - Continued
NALCO Co. - Sr. Notes
7.75% due 11/15/11 - B- .............................. $445 $ 479
Nova Chemicals Corp. - Notes
7.0% due 05/15/06 - BB+ .............................. 210 219
Nova Chemicals Corp. - Sr. Notes
6.5% due 01/15/12 - BB+ .............................. 80 85
Omnova Solutions, Inc. - Sr. Sec. Notes
11.25% due 06/01/10 - B+ ............................. 245 276
Resolution Performance Products - Sr. Notes
9.5% due 04/15/10 - CCC+ ............................. 310 336
Rockwood Specialties Group - Sr. Sub. Notes 144A (a)
7.5% due 11/15/14 - B- ............................... 50 52
Union Carbide Chemicals & Plastics
7.875% due 04/01/23 - BBB- ........................... 55 57
Union Carbide Corp. - Debs.
6.79% due 06/01/25 - BBB- ............................ 180 182
------
4,747
Commercial Services & Supplies - 3.8%
Advanstar Communications, Inc. - Sr. Sec. Notes
10.75% due 08/15/10 - B- ............................. 120 135
Affinia Group, Inc. - Sr. Sub. Notes 144A (a)
9.0% due 11/30/14 - B ................................ 70 73
Allied Waste North America, Inc. - Sr. Notes
8.5% due 12/01/08 - BB- .............................. 225 239
8.875% due 04/01/08 - BB- ............................ 355 378
Crystal US Holdings - Sr. Disc. Notes Ser. A 144A (A)
1.0% due 10/01/14 - B- ............................... 385 266
Harvest Operations Corp. - Gtd. Sr. Notes 144A (a)
7.875% due 10/15/11 - B- ............................. 75 76
Iron Mountain, Inc. - Sr. Sub. Notes
8.625% due 04/01/13 - B .............................. 130 138
Iron Mountain, Inc. Delaware - Sr. Sub. Notes
8.25% due 07/01/11 - B ............................... 115 118
Iron Mountain, Inc. Pennsylvania - Sr. Sub. Notes
7.75% due 01/15/15 - B ............................... 145 146
Mail Welli Corp. - Sr. Notes
9.625% due 03/15/12 - B+ ............................. 440 486
National Waterworks, Inc. - Sr. Sub. Notes - Ser. B
10.5% due 12/01/12 - B- .............................. 385 431
Poindexter JB, Inc. - Sr. Notes 144A (a)
8.75% due 03/15/14 - B- .............................. 235 252
SPX Corp. - Sr. Notes
6.25% due 06/15/11 - BB+ ............................. 150 158
7.5% due 01/01/13 - BB+ .............................. 245 267
Trinity Industries, Inc. - Sr. Notes
6.5% due 03/15/14 - BB- .............................. 45 45
Vertis, Inc. - Sr. Notes
9.75% due 04/01/09 - B- .............................. $105 $ 114
10.875% due 06/15/09 - B- ............................ 90 98
WDAC Subsidiary Corp. - Sr. Notes 144A (a)
8.375% due 12/01/14 - CCC+ ........................... 250 247
------
3,667
Construction & Engineering - 2.3%
Beazer Homes USA, Inc. - Sr. Notes
8.625% due 05/15/11 - BB ............................. 390 424
Horton, Inc. - Sr. Sub. Notes
9.375% due 03/15/11 - BB- ............................ 170 188
KB Home - Sr. Sub. Notes
8.625% due 12/15/08 - BB- ............................ 200 226
Meritage Corp. - Sr. Notes
7.0% due 05/01/14 - BB- .............................. 180 187
9.75% due 06/01/11 - BB- ............................. 90 100
Ryland Group, Inc. - Sr. Sub. Notes
9.125% due 06/15/11 - BB+ ............................ 345 383
Standard Pacific Corp. - Sr. Notes
6.5% due 10/01/08 - BB ............................... 310 325
6.875% due 05/15/11 - BB ............................. 110 116
Toll Brothers, Inc.
8.25% due 02/01/11 - BB+ ............................. 220 238
Toll Corp. - Sr. Sub. Notes
8.25% due 12/01/11 - BB+ ............................. 65 72
------
2,259
Containers & Packaging - 2.4%
AEP Industries, Inc. - Sr. Sub. Notes
9.875% due 11/15/07 - B- ............................. 45 46
Anchor Glass Container Corp. - Sr. Notes Ser. B
11.0% due 02/15/13 - B+ .............................. 355 380
Owens Brockway Glass Container - Sr. Notes
8.75% due 11/15/12 - BB- ............................. 490 555
Owens Brockway Glass Container - Sr. Sec. Notes
7.75% due 05/15/11 - BB- ............................. 415 448
Pliant Corp. - Sr. Sec. Notes
11.125% due 09/01/09 - CCC+ .......................... 190 208
Stone Container Corp. - Sr. Notes
9.25% due 02/01/08 - B ............................... 200 221
9.75% due 02/01/11 - B ............................... 435 476
------
2,334
Distributors - 0.8%
ADESA, Inc. - Sr. Sub. Notes
7.625% due 06/15/12 - B+ ............................. 275 290
Owens & Minor
8.5% due 07/15/11 - BB- .............................. 445 491
------
781
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Diversified Financials - 0.5%
E*Trade Financial Corp. - Sr. Notes 144A (a)
8.0% due 06/15/11 - B+ ............................... $ 235 $ 252
Johnson Diversey, Inc. -Sr. Sub. Notes Ser. B
9.625% due 05/15/12 - B .............................. 215 240
Riviera Holdings Corp. - Sr. Sec. Notes
11.0% due 06/15/10 - B ............................... 5 5
------
497
Diversified Telecommunication Services - 5.8%
Alaska Communications Systems - Sr. Notes
9.875% due 08/15/11 - B- ............................. 325 349
American Cellular Corp. - Sr. Notes Ser. B
10.0% due 08/01/11 - B- .............................. 560 480
AT&T Corp. - Sr. Notes
7.8% due 11/15/11 - BB+ .............................. 915 1,053
Centennial Communications Corp. - Sr. Notes
8.125% due 02/01/14 - CCC ............................ 250 257
Fairpoint Communications, Inc. - Sr. Notes
11.875% due 03/01/10 - B ............................. 180 211
GCI, Inc. - Sr. Notes
7.25% due 02/15/14 - B+ .............................. 500 499
GCI, Inc. - Sr. Notes 144A (a)
7.25% due 02/15/14 - B+ .............................. 5 5
Intelsat, Ltd. - Sr. Notes
5.25% due 11/01/08 - BBB+ ............................ 175 171
7.625% due 04/15/12 - BBB+ ........................... 75 73
MasTec, Inc. - Sr. Sub. Notes
7.75% due 02/01/08 - NR .............................. 155 150
MCI, Inc. - Notes
6.688% due 05/01/09 - B+ ............................. 250 259
7.735% due 05/01/14 - B+ ............................. 240 259
Panamsat Corp. - Sr. Notes 144A (a)
9.0% due 08/15/14 - B+ ............................... 130 145
Qwest Communications International, Inc. -
Sr. Notes 144A (a)
7.25% due 02/15/11 - B ............................... 385 398
Qwest Corp. - Notes 144A (a)
8.875% due 03/15/12 - BB- ............................ 1,035 1,195
United West Communications, Inc. - Debs.
6.875% due 09/15/33 - BB- ............................ 80 74
------
5,578
Electric Utilities - 2.9%
AES Corp. - 144A (a)
8.75% due 05/15/13 - B+ .............................. 565 643
AES Corp. - Sr. Notes
9.5% due 06/01/09 - B- ............................... 20 23
AES Corp. Sr. Sec. Notes 144A (a)
9.0% due 05/15/15 - B+ ............................... 825 944
Centerpoint Energy Resources Corp. - Sr. Notes
7.875% due 04/01/13 - BBB ............................ 390 464
Teco Energy, Inc. - Notes
7.0% due 05/01/12 - BB ............................... 25 27
7.2% due 05/01/11 - BB ............................... $ 305 $ 335
Texas Genco LLC - Sr. Notes 144A (a)
6.875% due 12/15/14 - B .............................. 325 336
------
2,772
Electric/Gas - 6.5%
AES Corp.
9.375% due 09/15/10 - B- ............................. 30 35
Aquila, Inc. - Sr. Notes
9.95% due 02/01/11 - B- .............................. 453 513
Avista Corp. - Sr. Notes
9.75% due 06/01/08 - BB+ ............................. 275 319
CMS Energy Corp - Sr. Notes
8.5% due 04/15/11 - B+ ............................... 320 364
DPL, Inc. - Sr. Notes
6.875% due 09/01/11 - B+ ............................. 225 246
Edison Mission Energy - Sr. Notes
9.875% due 04/15/11 - B .............................. 455 538
El Paso Natural Gas Co. - Sr. Notes
7.625% due 08/01/10 - B- ............................. 230 253
EL Paso Production Holding Co. - Sr. Notes
7.75% due 06/01/13 - B- .............................. 525 551
Midwest Generation LLC - Sr. Sec. Notes
8.75% due 05/01/34 - B- .............................. 105 119
Nevada Power Co. - Notes Ser. E
10.875% due 10/15/09 - BB ............................ 355 410
Nevada Power Co. - Notes Ser. G
9.0% due 08/15/13 - BB ............................... 345 404
Nevada Power Co. - Notes Ser. L 144A (a)
5.875% due 01/15/15 - BB ............................. 100 100
NRG Energy, Inc. - Sr. Sec. Notes 144A (a)
8.0% due 12/15/13 - B ................................ 150 163
Reliant Energy, Inc. - Sr. Sec. Notes
6.75% due 12/15/14 - B+ .............................. 330 330
Semco Energy, Inc. - Sr. Notes
7.125% due 05/15/08 - BB- ............................ 165 177
7.75% due 05/15/13 - BB- ............................. 60 65
Southern Natural Gas Co. - Sr. Notes
8.875% due 03/15/10 - B- ............................. 425 479
TNP Enterprises, Inc. - Sr. Sub. Notes
10.25% due 04/01/10 - BB- ............................ 275 293
TXU Corp. - Sr. Notes Ser. P 144A (a)
5.55% due 11/15/14 - BBB- ............................ 250 248
TXU Corp. - Sr. Notes Ser. Q 144A (a)
6.5% due 11/15/24 - BBB- ............................. 250 250
TXU Corp. - Sr. Notes Ser. R 144A (a)
6.55% due 11/15/34 - BBB- ............................ 250 248
Western Resources, Inc. - Sr. Notes
9.75% due 05/01/07 - BB- ............................. 155 174
------
6,279
Electrical Equipment - 0.6%
General Cable Corp. - Sr. Notes
9.5% due 11/15/10 - B ................................ 210 239
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Electrical Equipment - Continued
ITT Corp. - Debs.
7.375% due 11/15/15 - BB+ ............................ $ 30 $ 33
Wesco Distribution, Inc. - Ser. B
9.125% due 06/01/08 - B .............................. 290 300
------
572
Electronic Equipment & Instruments - 1.6%
Itron, Inc. - Sr. Sub. Notes 144A (a)
7.75% due 05/15/12 - B ............................... 35 36
Sanmina SCI Corp. - Sr. Sec. Notes
10.375% due 01/15/10 - BB- ........................... 560 647
Solectron Corp. - Sr. Notes
9.625% due 02/15/09 - B+ ............................. 670 736
Thomas & Betts Corp.
6.39% due 02/10/09 - BBB- ............................ 15 16
Thomas & Betts Corp. - Notes
7.25% due 06/01/13 - BBB- ............................ 65 71
------
1,506
Finance - 6.0%
Alamosa, Inc. - Sr. Notes
8.5% due 01/31/12 - CCC .............................. 20 22
Arch Western Finance LLC - Gtd Sr. Notes 144A (a)
6.75% due 07/01/13 - BB .............................. 240 248
Arch Western Finance LLC - Gtd. Sr. Notes
6.75% due 07/01/13 - BB .............................. 230 237
BCP Caylux Holdings Lux SCA - Sr. Sub. Notes 144A (a)
9.625% due 06/15/14 - B- ............................. 650 730
Borden US Finance Corp. - Sr. Sec. Notes 144A (a)
9.0% due 07/15/14 - B- ............................... 265 293
Bowater Canada Finance Corp. - Notes
7.95% due 11/15/11 - BB .............................. 425 459
Crown European Holdings SA - Sr. Sec. Notes
9.5% due 03/01/11 - B+ ............................... 410 467
10.875% due 03/01/13 - B ............................. 140 166
ELAN Finance plc - Sr. Notes 144A (a)
7.75% due 11/15/11 - B ............................... 195 209
Hampshire Donnelly Finance Corp. - Sr. Sub.
Notes 144A (a)
10.875% due 12/15/12 - B+ ............................ 125 148
Huntsman Advanced Materials LLC - Sr. Sec.
Notes 144A (a)
11.0% due 07/15/10 - B ............................... 60 71
Insight Midwest LP Capital, Inc. - Sr. Notes
10.5% due 11/01/10 - B+ .............................. 965 1,058
MDP Acquisitions plc - Sr. Notes
9.625% due 10/01/12 - B .............................. 370 413
New Asat Finance, Ltd. - Sr. Notes 144A (a)
9.25% due 02/01/11 - B ............................... 325 289
Refco Financial Holdings LLC - Sr. Sub. Notes 144A (a)
9.0% due 08/01/12 - B ................................ $175 $ 191
RH Donnelly Finance Corp. - Sr. Sub. Notes
10.875% due 12/15/12 - B+ ............................ 120 143
Ucar Finance, Inc. - Sr. Notes
10.25% due 02/15/12 - B .............................. 170 196
UGS Corp. - 144A (a)
10.0% due 06/01/12 - B- .............................. 345 393
Universal City Florida Holding Co. - Sr. Notes 144A (a)
8.375% due 05/01/10 - B- ............................. 40 42
------
5,775
Food & Drug Retailing - 0.6%
Rite Aid Corp. Sr. Notes
9.5% due 02/15/11 - B+ ............................... 440 482
Winn Dixie Stores, Inc. - Sr. Notes
8.875% due 04/01/08 - CCC+ ........................... 110 103
------
585
Food Products - 0.7%
Dole Food, Inc. - Sr. Notes
7.25% due 06/15/10 - B+ .............................. 10 10
8.875% due 03/15/11 - B+ ............................. 600 655
United Agricultural Products, Inc. - Sr. Notes 144A (a)
8.25% due 12/15/11 - B ............................... 53 57
------
722
Gas Utilities - 1.3%
NorthWestern Corp. - Sr. Sec. Notes 144A (a)
5.875% due 11/01/14 - BB ............................. 30 31
Williams Cos, Inc. - Notes
7.125% due 09/01/11 - B+ ............................. 305 333
8.125% due 03/15/12 - B+ ............................. 740 856
------
1,220
Health Care Equipment & Supplies - 1.6%
Bio Rad Laboratories, Inc. - Sr. Sub. Notes
7.5% due 08/15/13 - BB- .............................. 55 60
Bio Rad Laboratories, Inc. - Sr. Sub. Notes 144A (a)
6.125% due 12/15/14 - BB- ............................ 60 60
CDRV Investors, Inc. - Sr. Disc. Notes 144A (a)
9.625% due 01/01/15 - B- ............................. 405 249
Fisher Scientific International, Inc. - Sr. Sub. Notes
8.125% due 05/01/12 - BB+ ............................ 578 644
Radiologix, Inc. - Sr. Notes
10.5% due 12/15/08 - B ............................... 325 358
VWR International - Sr. Notes 144A (a)
6.875% due 04/15/12 - B- ............................. 55 58
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Health Care Equipment & Supplies - Continued
VWR International, Inc. - Sr. Sub. Notes 144A (a)
8.0% due 04/15/14 - B- ............................... $ 90 $ 96
------
1,525
Health Care Providers & Services - 3.8%
Coventry Health Care, Inc. - Sr. Notes
8.125% due 02/15/12 - BBB- ........................... 225 246
HCA, Inc. - Notes
5.5% due 12/01/09 - BB+ .............................. 140 140
6.3% due 10/01/12 - BB+ .............................. 930 940
6.375% due 01/15/15 - BB+ ............................ 275 275
HCA, Inc. - Sr. Notes
5.75% due 03/15/14 - BB+ ............................. 55 53
Iasis Healthcare LLC - Sr. Sub. Notes
8.75% due 06/15/14 - B- .............................. 205 224
NDC Healthcorp - Sr. Sub. Notes
10.5% due 12/01/12 - B ............................... 420 454
Neighborcare, Inc. - Sr. Sub. Notes
6.875% due 11/15/13 - B+ ............................. 230 241
Omnicare, Inc. - Sr. Sub. Notes Ser. B
8.125% due 03/15/11 - BB+ ............................ 525 563
Triad Hospitals, Inc. - Sr. Notes
7.0% due 05/15/12 - B+ ............................... 540 568
------
3,704
Hotels Restaurants & Leisure - 8.7%
AMC Entertainment, Inc. - Sr. Notes 144A (a)
8.625% due 08/15/12 - B- ............................. 250 276
AMC Entertainment, Inc. - Sr. Sub. Notes
8.0% due 03/01/14 - CCC+ ............................. 115 114
Argosy Gaming Co. - Sr. Sub. Notes
7.0% due 01/15/14 - B+ ............................... 155 172
AZTAR Corp. - Sr. Sub. Notes
9.0% due 08/15/11 - B+ ............................... 645 713
Boyd Gaming Corp. - Sr. Sub. Notes
7.75% due 12/15/12 - B+ .............................. 165 181
8.75% due 04/15/12 - B+ .............................. 80 89
Hilton Hotels Corp. - Sr. Notes
7.5% due 12/15/17 - BBB- ............................. 55 64
Host Marriott LP - Sr. Notes Ser. I
9.5% due 01/15/07 - B+ ............................... 1,170 1,281
Host Marriott LP - Sr. Notes Ser. J
7.125% due 11/01/13 - B+ ............................. 95 103
Isle Capri Casinos, Inc. - Sr. Sub. Notes
7.0% due 03/01/14 - B ................................ 240 247
Mandalay Resort Group - Sr. Sub. Notes
9.375% due 02/15/10 - BB- ............................ 380 442
Mandalay Resort Group - Sr. Sub. Notes Ser. B
10.25% due 08/01/07 - BB- ............................ 305 345
MGM Mirage, Inc.
8.5% due 09/15/10 - BB+ .............................. 130 149
MGM Mirage, Inc. - Sr. Sub. Notes
8.375% due 02/01/11 - BB- ............................ 700 789
Park Place Entertainment Corp. - Notes
8.5% due 11/15/06 - BB+ .............................. $ 25 $ 27
Caesars Entertainment - Sr. Notes
7.0% due 04/15/13 - BB+ .............................. 410 455
Caesars Entertainment - Sr. Sub. Notes
8.125% due 05/15/11 - BB- ............................ 10 12
8.875% due 09/15/08 - BB- ............................ 425 482
Penn National Gaming, Inc. - Sr. Sub. notes
8.875% due 03/15/10 - B .............................. 55 60
Scientific Games Corp. - Sr. Sub. Notes 144A (a)
6.25% due 12/15/12 - B+ .............................. 100 101
Seneca Gaming Corp. - Sr. Notes
7.25% due 05/01/12 - BB- ............................. 230 243
Speedway Motorsports, Inc. - Sr. Sub. Notes
6.75% due 06/01/13 - B+ .............................. 100 105
Starwood Hotels & Resorts Worldwide, Inc. - Sr. Notes
7.875% due 05/01/12 - BB+ ............................ 620 707
Station Casinos, Inc. - Sr. Sub. Notes
6.5% due 02/01/14 - B+ ............................... 590 606
Virgin River Casino Corp. RBG LLC - Sr. Sec Notes
144A (a)
9.0% due 01/15/12 - B ................................ 220 229
Wynn Las Vegas LLC - Bonds 144A (a)
6.625% due 12/01/14 - B+ ............................. 425 421
------
8,413
Household Products - 0.1%
Church & Dwight Co., Inc. - Sr. Sub. Notes 144A (a)
6.0% due 12/15/12 - B+ ............................... 60 61
Industrial - 0.4%
Jostens IH Corp. - Sr. Sub. Notes 144A (a)
7.625% due 10/01/12 - B- ............................. 35 36
Polypore, Inc. - Sr. Sub. Notes
8.75% due 05/15/12 - CCC+ ............................ 300 312
------
348
Industrial Conglomerates - 0.6%
Invesys plc - Sr. Notes 144A (a)
9.875% due 03/15/11 - B- ............................. 340 365
Tyco International Group SA - Notes
6.75% due 02/15/11 - BBB ............................. 170 191
------
556
Insurance - 0.3%
Provident Companies, Inc. - Sr. Notes
7.0% due 07/15/18 - BB+ .............................. 65 63
Unumprovident Corp. - Notes
6.75% due 12/15/28 - BB+ ............................. 100 91
UnumProvident Corp. - Sr. Debs.
7.375% due 06/15/32 - BB+ ............................ 15 15
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Insurance - Continued
UnumProvident Corp. - Sr. Notes
7.625% due 03/01/11 - BB+ ............................ $ 95 $ 100
------
269
Internet Software & Services - 0.1%
Unisys Corp. - Sr. Notes
6.875% due 03/15/10 - BB+ ............................ 135 145
Leisure Equipment & Products - 0.5%
AMF Bowling Worldwide, Inc. - Sr. Sub Notes
10.0% due 03/01/10 - CCC+ ............................ 225 241
Bombadier Recreational Products - Sr. Sub. Notes
8.375% due 12/15/13 - B- ............................. 230 246
------
487
Machinery - 1.3%
Case New Holland, Inc. - Sr. Notes 144A (a)
9.25% due 08/01/11 - BB- ............................. 410 457
9.25% due 08/01/11 - BB- ............................. 440 491
Cummings Engine Co., Inc. - Notes
7.125% due 03/01/28 - BB+ ............................ 40 41
Douglas Dynamics LLC - Sr. Notes 144A (a)
7.75% due 01/15/12 - B- .............................. 60 61
NMHG Holding Co. - Sr. Notes
10.0% due 05/15/09 - B+ .............................. 165 182
------
1,232
Media - 10.0%
American Media Operations, Inc. - Sr. Sub. Notes
8.875% due 01/15/11 - B- ............................. 285 302
Canwest Media, Inc. - Sr. Sub. Notes
10.625% due 05/15/11 - B- ............................ 280 314
CanWest Media, Inc. - Sr. Sub. Notes 144A (a)
8.0% due 09/15/12 - B- ............................... 155 166
Charter Commercial Holdings II - Sr. Notes
10.25% due 09/15/10 - CCC- ........................... 230 244
Charter Communication Operating LLC - Sr. Notes 144A (a)
8.0% due 04/30/12 - B- ............................... 430 448
Charter Communications Operating LLC - Sr. Notes 144A (a)
8.375% due 04/30/14 - B- ............................. 40 42
Citizens Communications Co. - Notes
9.25% due 05/15/11 - BB+ ............................. 650 765
Corus Entertainment, Inc. - Sr. Sub. Notes
8.75% due 03/01/12 - B+ .............................. 510 559
CSC Holdings, Inc. - Sr. Notes
7.625% due 04/01/11 - BB- ............................ 1,410 1,519
CSC Holdings, Inc. - Sr. Notes 144A (a)
6.75% due 04/15/12 - BB- ............................. 185 190
Dex Media East LLC - Sr. Notes
9.875% due 11/15/09 - B .............................. 170 193
Dex Media West LLC - Sr. Notes
8.5% due 08/15/10 - B ................................ $ 200 $ 223
Direct TV Holdings LLC - Sr. Notes
8.375% due 03/15/13 - BB- ............................ 175 196
EchoStar DBS Corp. - Notes
6.375% due 10/01/11 - BB- ............................ 685 702
Houghton Mifflin Co. - Sr. Notes
8.25% due 02/01/11 - B- .............................. 445 475
L 3 Communications Corp. - Sr. Sub. Notes
6.125% due 07/15/13 - BB- ............................ 270 279
Lamar Media Corp. - Sr. Sub. Notes
7.25% due 01/01/13 - B ............................... 110 119
Liberty Group Operating, Inc. - Sr. Sub. Notes
9.375% due 02/01/08 - CCC+ ........................... 235 239
Lodgenet Entertainment Corp. - Sr. Sub. Notes
9.5% due 06/15/13 - B- ............................... 85 94
Mediacom Broadband LLC - Sr. Notes
11.0% due 07/15/13 - B ............................... 465 500
Mediacom LLC - Sr. Notes
9.5% due 01/15/13 - B ................................ 200 202
Medianews Group, Inc. - Sr. Sub. Notes 144A (a)
6.875% due 10/01/13 - B+ ............................. 220 224
Quebecor Media, Inc. - Sr. Notes
11.125% due 07/15/11 - B ............................. 410 470
Rogers Cable, Inc. - Sr. Sec. 2nd Priority Notes
7.875% due 05/01/12 - BB+ ............................ 35 38
Rogers Cable, Inc. - Sr. Sec. Notes 144A (a)
6.75% due 03/15/15 - BB+ ............................. 70 71
Rogers Cable, Inc. Sr. Notes
6.25% due 06/15/13 - BB+ ............................. 450 452
Shaw Communications, Inc.
7.25% due 04/06/11 - BB+ ............................. 15 17
Shaw Communications, Inc. - Sr. Notes
8.25% due 04/11/10 - BB+ ............................. 260 296
Sinclair Broadcast Group, Inc. - Sr. Sub. Notes
8.0% due 03/15/12 - B ................................ 50 53
8.75% due 12/15/11 - B ............................... 165 180
Videotron Ltee - Sr. Notes
6.875% due 01/15/14 - B+ ............................. 140 145
------
9,717
Metals & Mining - 2.7%
AK Steel Corp.
7.875% due 02/15/09 - B+ ............................. 245 252
Compass Minerals Group, Inc. - Sr. Sub. Notes
10.0% due 08/15/11 - B- .............................. 275 309
Consol Energy, Inc. - Notes
7.875% due 03/01/12 - BB ............................. 200 224
Fastentech, Inc. - Sr. Sub. Notes 144A (a)
11.5% due 05/01/11 - B- .............................. 135 155
Hawk Corp. - Ser. Notes 144A (a)
8.75% due 11/01/14 - B ............................... 135 139
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Metals & Mining - Continued
Kennametal, Inc. - Sr. Notes
7.2% due 06/15/12 - BBB .............................. $ 75 $ 83
Massey Energy Co. - Sr. Notes
6.625% due 11/15/10 - BB ............................. 110 114
Massey Energy Corp. - Notes
6.95% due 03/01/07 - B+ .............................. 190 198
Peabody Energy Corp. - Sr. Notes
6.875% due 03/15/13 - BB- ............................ 360 390
Russel Metals, Inc. - Sr. Notes
6.375% due 03/01/14 - BB- ............................ 45 46
Steel Dynamics, Inc. - Sr. Notes
9.5% due 03/15/09 - B+ ............................... 45 50
9.5% due 03/15/09 - B+ ............................... 155 171
Timken Co. - Notes
5.75% due 02/15/10 - BBB- ............................ 205 211
United States Steel Corp. - Sr. Notes
10.75% due 08/01/08 - BB ............................. 244 289
------
2,631
Multiline Retail - 0.2%
J.C. Penney Co., Inc. - Notes
7.375% due 08/15/08 - BB+ ............................ 195 214
Office Electronics - 1.0%
Xerox Corp.
7.2% due 04/01/16 - B+ ............................... 190 204
Xerox Corp. - Sr. Notes
9.75% due 01/15/09 - B+ .............................. 645 761
------
965
Oil & Gas - 6.0%
ANR Pipeline Co. - Sr. Notes
8.875% due 03/15/10 - B- ............................. 425 480
Chesapeake Energy Corp.
7.5% due 09/15/13 - BB- .............................. 60 65
Chesapeake Energy Corp. - Sr. Notes
7.75% due 01/15/15 - BB- ............................. 35 38
8.125% due 04/01/11 - BB- ............................ 545 590
Encore Acquisition Co. - Sr. Sub. notes
6.25% due 04/15/14 - B ............................... 50 50
8.375% due 06/15/12 - B .............................. 70 78
Evergreen Resources, Inc. - Sr. Sub. Notes
5.875% due 03/15/12 - BBB- ........................... 55 58
EXCO Resources, Inc. - Sr. Notes
7.25% due 01/15/11 - B ............................... 230 246
Forest Oil Corp. - Sr. Notes
8.0% due 06/15/08 - BB- .............................. 102 112
8.0% due 12/15/11 - BB- .............................. 335 384
Giant Industries, Inc. - Sr. Sub. Notes
8.0% due 05/15/14 - B- ............................... 35 37
11.0% due 05/15/12 - B- .............................. 174 201
Key Energy Services, Inc. - Sr. Notes
6.375% due 05/01/13 - B .............................. 50 51
Magnum Hunter Resources, Inc. - Sr. Notes
9.6% due 03/15/12 - B+ ............................... 325 369
Markwest Energy Partners LP - Sr. Notes 144A (a)
6.875% due 11/01/14 - B+ ............................. $ 35 $ 36
Newfield Exploration Co. - Sr. Sub. Notes
8.375% due 08/15/12 - BB- ............................ 215 242
Newfield Exploration Co. - Sr. Sub. Notes 144A (a)
6.625% due 09/01/14 - BB- ............................ 225 238
Parker Drilling Co. - Notes
9.625% due 10/01/13 - B- ............................. 210 236
Petroleum Geo Services ASA - Sr. Notes
10.0% due 11/05/10 - NA .............................. 420 480
Plains Exploration & Production Co. Sr. Notes
7.125% due 06/15/14 - BB- ............................ 105 115
Plains Exploration & Production Co. - Sr. Sub. Notes
8.75% due 07/01/12 - B+ .............................. 45 50
Premcor Refining Group, Inc. - Sr. Notes
6.75% due 02/01/11 - BB- ............................. 155 166
9.5% due 02/01/13 - BB- .............................. 345 403
Pride International, Inc. - Sr. Notes
7.375% due 07/15/14 - BB- ............................ 460 503
Tesoro Petroleum Corp. - Sr. Sec. Notes
8.0% due 04/15/08 - BBB- ............................. 125 136
Western Oil Sands, Inc. - Sr. Sec. Notes
8.375% due 05/01/12 - BB+ ............................ 205 238
Whiting Petroleum Corp. - Sr. Sub. Notes
7.25% due 05/01/12 - B- .............................. 185 194
XTO Energy, Inc. - Sr. Notes
6.25% due 04/15/13 - BBB- ............................ 20 22
------
5,818
Paper & Forest Products - 4.0%
Abitibi-Consolidated, Inc. - Notes
8.55% due 08/01/10 - BB- ............................. 880 955
Ainsworth Lumber Co., Ltd. - Sr. Notes 144A (a)
7.25% due 10/01/12 - B+ .............................. 105 107
Boise Cascade Corp. - Sr. Sub. Notes 144A (a)
7.125% due 10/15/14 - B+ ............................. 115 122
Bowater, Inc. - Notes
6.5% due 06/15/13 - BB ............................... 35 35
Georgia Pacific Corp. - Sr. Notes
8.875% due 02/01/10 - BB+ ............................ 590 686
9.375% due 02/01/13 - BB+ ............................ 780 912
Jefferson Smurfit Corp. - Sr. Notes
8.25% due 10/01/12 - B ............................... 115 126
Longview Fibre Co. - Sr. Sub. Notes
10.0% due 01/15/09 - B+ .............................. 245 268
Neenah Paper, Inc. - Sr. Notes 144A (a)
7.375% due 11/15/14 - B+ ............................. 105 106
Norske Skog Canada, Ltd. - Sr. Notes
7.375% due 03/01/14 - BBB ............................ 425 442
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Paper & Forest Products - Continued
Tembec Industries, Inc. - Sr. Notes
8.5% due 02/01/11 - B ................................ $ 125 $ 126
-------
3,885
Personal Products - 0.3%
Playtex Products, Inc. - Sr. Sec. Notes
8.0% due 03/01/11 - B ................................ 240 262
Pharmaceuticals - 1.5%
AmeriSource Bergen Corp. - Sr. Notes
7.25% due 11/15/12 - BB+ ............................. 535 600
8.125% due 09/01/08 - BB+ ............................ 140 156
Biovail Corp. - Sr. Sub. Notes
7.875% due 04/01/10 - BB- ............................ 515 533
Valeant Pharmaceuticals International - Sr. Notes
7.0% due 12/15/11 - BB- .............................. 140 146
-------
1,435
Real Estate Investment Trust - 1.1%
FelCor Lodging, Ltd. - Sr. Notes
8.5% due 06/01/11 - B- ............................... 400 451
iStar Financial, Inc. - Sr. Notes
8.75% due 08/15/08 - BBB- ............................ 82 93
La Quinta Properties, Inc. - Sr. Notes
7.0% due 08/15/12 - BB- .............................. 55 58
Thomburg Mortgage, Inc. - Sr. Notes
8.0% due 05/15/13 - BB- .............................. 310 328
Ventas Realty, Ltd. - Sr. Notes 144A (a)
6.625% due 10/15/14 - BB ............................. 155 158
-------
1,088
Real Estate Operations - 0.2%
CB Richard Ellis Services, Inc. - Sr. Notes
9.75% due 05/15/10 - B+ .............................. 208 237
Road & Rail - 0.4%
Kansas City Southern Railway Co.
9.5% due 10/01/08 - B+ ............................... 340 386
Kansas City Southern Railway Co. - Sr. Notes
7.5% due 06/15/09 - B+ ............................... 25 26
-------
412
Semiconductor Equipment & Products - 0.6%
Amkor Technology, Inc.
9.25% due 02/15/08 - B ............................... 370 378
Amkor Technologies, Inc. - Sr. Notes
7.75% due 05/15/13 - B ............................... 100 94
Magnachip Semiconductor - Sr. Sub. Notes 144A (a)
8.0% due 12/15/14 - NA ............................... 145 151
-------
623
Specialty Retail - 0.2%
Carrols Corp. - Sr. Sub. Notes 144A (a)
9.0% due 01/15/13 - B- ............................... 25 26
Rite Aid Corp. - Sr. Sec. Notes
8.125% due 05/01/10 - B+ ............................. $ 180 $ 190
Suburban Propane Partners - Sr. Notes
6.875% due 12/15/13 - B .............................. 30 30
-------
246
Tobacco - 0.3%
Dimon, Inc. - Sr. Notes
9.625% due 10/15/11 - BB ............................. 160 175
Standard Commercial Corp. - Sr. Notes
8.0% due 04/15/12 - BB+ .............................. 75 77
-------
252
Wireless Telecommunications Services - 3.9%
American Tower Corp. - Sr. Notes
7.5% due 05/01/12 - CCC .............................. 240 253
Dobson Cellular, Inc. - Sr. Secd. Notes 144A (a)
8.375% due 11/01/11 - B- ............................. 245 255
Nextel Communications, Inc. - Sr. Notes
6.875% due 10/31/13 - BB ............................. 1,510 1,650
Rogers Wireless, Inc. - Sr. Sec. Notes
9.625% due 05/01/11 - BB ............................. 650 764
Rogers Wireless, Inc. - Sr. Sec. Notes 144A (a)
7.5% due 03/15/15 - BB ............................... 265 280
Rural Cellular Corp. - Sr. Sec. Notes
8.25% due 03/15/12 - B- .............................. 95 100
Triton PCS, Inc. - Sr. Notes
8.5% due 06/01/13 - CCC .............................. 255 245
Western Wireless Corp. - Sr. Notes
9.25% due 07/15/13 - CCC ............................. 195 212
-------
3,759
-------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $90,585) 98.0% 94,716
SHORT-TERM INVESTMENTS - 0.1%
Investment in joint trading account
2.29% due 01/03/05
(Cost $80) .............................................. 80 80
------- -------
TOTAL INVESTMENTS-
(Cost $90,665) 98.1% 94,796
Cash and Receivables, less payables- 1.9% 1,843
------- -------
NET ASSETS- 100.0% $96,639
======= =======
(a) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2004, securities aggregated
$15,113 or 15.6% of net assets of the Portfolio.
** Bond ratings are unaudited.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock High Yield Bond (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 twenty-three
different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices
as late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at
any time other than 4:00 p.m. Eastern Standard Time on a particular day, the
Fund will determine its net asset value per share as of the close of the
Exchange on that day. Investment security transactions are recorded on the date
of purchase or sale.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including,
but not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
Discount and premium on debt securities: The Fund accretes discount and
amortizes premium from par value on securities from either the date of issue or
the date of purchase over the life of the security.
Expenses: Expenses directly attributable to 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 $90 and $10 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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
The Fund had borrowings under the line of credit during the year ended
December 31, 2004 as follows:
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$354 1.61% $--
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, 2004, 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. At December 31, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $676, $8,178 and $5,903 which expire in 2009, 2010 and 2011,
respectively.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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.
Restricted Securities: Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense, either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such sales. The
Fund's restricted securities are valued at the price provided by dealers in the
secondary market, or, if no market prices are available, at the fair value as
determined in accordance with procedures established by and under general
supervision of the Trustees.
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 11, 2004, 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
- ------------------ ------------
0.80% 0.70%
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. For the year
ended December 31, 2004, the reimbursements paid from John Hancock and JHVLICO
were $52 to the Fund.
John Hancock has entered into a Sub-Advisory Agreement with Wellington
Management Company, LLP, which under John Hancock's 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
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$49,451 $48,447
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, 2004 were as follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$90,641 $4,476 $(321) $4,155
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss or difference in accretion/amortization. Therefore, the source of
each Fund's distributions may be shown in the accompanying financial statements
as either from, or in excess of, net investment income or net realized gain on
capital transactions, or from capital. The Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund to present the Fund's capital accounts on a tax
basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$33 $-- $14,757 $4,155
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
- ---- ------------------ ---------------------- -----------------
2004 $6,337 $-- $ --
2003 5,469 -- 184
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 High Yield Bond Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
High Yield Bond Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 2, 1988
- --------------------------------------------------------------------------------
International Equity Index Fund
SSgA Funds Management, Inc. J. Francis/J. Beach
- --------------------------------------------------------------------------------
.. The manager employs a passive management strategy by normally investing in
each stock in roughly the same proportion as represented in the Index. The
manager seeks to replicate as closely as possible the aggregate risk
characteristics and country diversification of the Index.
.. On March 25, 2004, the Fund's sub-adviser was changed, with the Fund
continuing to seek to track the performance of the MSCI All Country World
ex-US Index.
Fund Commentary
Performance: For the year ending December 31, 2004, the International Equity
Index Fund returned +20.24%, outperforming the +19.74% return of the MSCI AC
World ex U.S. Index.
From the date of manager inception, March 31, 2004 to year end, the
International Equity Index Fund returned +15.02%, outperforming the +14.21%
return of the MSCI AC World ex U.S. Index./2/
Environment: Uncertainty was the overriding theme for investors during the first
three quarters of 2004. Rising oil prices, terrorist threats, the uncertainty
surrounding the November U.S. elections and the unstable situation in Iraq,
Afghanistan and North Korea gave investors cause for concern. Despite this,
global equities produced modest positive returns early in the year. Global
equities rallied strongly in the fourth quarter as oil prices fell from their
October high of $53 per barrel and investors gained clarity in some of these
other areas.
On a regional basis, Europe was the clear winner for the period since manager
inception. Europe returned +19.7% versus +9.6% for the Americas and +5.61% for
Asia/Pacific. From April to December, 44 of 48 equity markets had positive
returns, with 38 markets posting positive double-digit returns. The Czech
Republic, Hungary, Poland and Austria were the top performers. Large exposure to
banks, oil and telecommunications as well as a significant rise in their
currencies caused these countries to outperform all others. Russia, Finland,
Peru and Taiwan were the only countries with negative returns.
Nine out of 10 sectors produced positive double-digit returns. Utilities,
Energy, Telecommunications and Financials led the way. Mid-year carnage among
the semiconductor stocks caused Information Technology (-4.9%) to be the only
negatively performing sector during this period.
The U.S. dollar continued to fall versus all major currencies during the year,
boosting the returns of U.S. dollar-based investors. European currencies
outperformed their Asian counterparts.
Outlook: Many trends that benefited EAFE markets in the fourth quarter of 2004
remain firmly in place: low short-term interest rates; friendly bond yields;
stabilizing energy costs; and healthy earnings prospects for 2005. No abrupt
policy changes seem imminent at the European Central Bank, the Bank of England,
or the Bank of Japan. The biggest near-term risk as we enter 2005 is probably
one of simple overconfidence. The German VDAX Index, which measures implied
options volatility on the DAX equity benchmark, thus tending to reflect investor
anxiety, finished 2004 near its lowest level in over eight years. In addition,
the sharp plunge of the US dollar in the fourth quarter, even if consistent with
long-term fundamental concerns, also seems vulnerable to consolidation. But in
the absence of exogenous shocks or an unexpected financial dislocation that
forces overextended investors to reduce positions, equity markets should be able
to make additional progress in early 2005. Until cash and bonds offer more
promising returns, solid earnings and decent dividends seem likely to keep
stocks attractive.
Inception: May 2, 1988
- --------------------------------------------------------------------------------
International Equity Index Fund
SSgA Funds Management, Inc. J. Francis/J. Beach
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 12/31/94 (10-Year Period)
International
Equity Index International Equity
Fund Index Fund Benchmark(1)
------------- -----------------------
12/30/1994 $10,000 10,000
1/31/1995 9,441 9,618
2/28/1995 9,603 9,593
3/31/1995 9,951 10,194
4/28/1995 10,251 10,581
5/31/1995 10,461 10,457
6/30/1995 10,360 10,276
7/31/1995 10,935 10,918
8/31/1995 10,625 10,505
9/29/1995 10,776 10,713
10/31/1995 10,588 10,428
11/30/1995 10,637 10,721
12/29/1995 10,802 11,155
1/31/1996 10,972 11,203
2/29/1996 11,096 11,243
3/29/1996 11,202 11,485
4/30/1996 11,617 11,821
5/31/1996 11,499 11,606
6/28/1996 11,525 11,675
7/31/1996 11,036 11,336
8/30/1996 11,123 11,363
9/30/1996 11,331 11,668
10/31/1996 11,261 11,551
11/29/1996 11,764 12,013
12/31/1996 11,794 11,862
1/31/1997 11,590 11,449
2/28/1997 11,634 11,639
3/31/1997 11,418 11,685
4/30/1997 11,499 11,749
5/30/1997 12,467 12,516
6/30/1997 13,113 13,209
7/31/1997 13,525 13,426
8/29/1997 12,052 12,426
9/30/1997 12,923 13,124
10/31/1997 11,172 12,119
11/28/1997 11,168 11,998
12/31/1997 11,202 12,106
1/31/1998 11,211 12,662
2/27/1998 12,071 13,478
3/31/1998 12,561 13,896
4/30/1998 12,896 14,008
5/29/1998 12,973 14,210
6/30/1998 13,130 14,346
7/31/1998 13,237 14,537
8/31/1998 11,554 12,626
9/30/1998 11,194 12,277
10/30/1998 12,406 13,647
11/30/1998 13,007 14,358
12/31/1998 13,535 14,940
1/29/1999 13,564 14,959
2/26/1999 13,105 14,492
3/31/1999 13,793 15,259
4/30/1999 14,320 15,876
5/28/1999 13,627 15,047
6/30/1999 14,329 15,807
7/30/1999 14,665 16,200
8/31/1999 14,800 16,314
9/30/1999 14,904 16,514
10/29/1999 15,403 17,064
11/30/1999 16,083 17,771
12/31/1999 17,713 19,553
1/31/2000 16,674 18,595
2/29/2000 17,242 19,240
3/31/2000 17,707 19,768
4/28/2000 16,568 18,493
5/31/2000 16,249 18,049
6/30/2000 16,819 18,823
7/31/2000 16,020 17,878
8/31/2000 16,175 18,068
9/29/2000 15,392 17,157
10/31/2000 14,884 16,594
11/30/2000 14,236 15,854
12/31/2000 14,627 16,244
1/31/2001 14,922 16,603
2/28/2001 13,886 15,474
3/30/2001 12,916 14,430
4/30/2001 13,801 15,362
5/31/2001 13,363 14,893
6/30/2001 12,905 14,365
7/31/2001 12,576 13,990
8/31/2001 12,279 13,643
9/28/2001 10,853 12,074
10/31/2001 11,118 12,401
11/30/2001 11,626 12,945
12/31/2001 11,659 12,992
1/31/2002 11,106 12,388
2/28/2002 11,250 12,518
3/29/2002 11,930 13,221
4/30/2002 12,024 13,388
5/31/2002 12,182 13,617
6/28/2002 11,705 13,068
7/31/2002 10,555 11,760
8/31/2002 10,545 11,771
9/28/2002 9,343 10,421
10/31/2002 9,700 10,878
11/30/2002 10,212 11,458
12/31/2002 9,889 11,093
1/31/2003 9,577 10,763
2/28/2003 9,393 10,553
3/29/2003 9,133 10,248
4/30/2003 10,000 11,242
5/31/2003 10,612 11,982
6/28/2003 11,002 12,425
7/31/2003 11,330 12,838
8/31/2003 11,735 13,286
9/28/2003 12,053 13,666
10/31/2003 12,788 14,583
11/30/2003 13,068 14,900
12/31/2003 14,040 16,037
1/31/2004 14,283 16,296
2/28/2004 14,627 16,710
3/29/2004 14,676 16,813
4/30/2004 14,212 16,290
5/31/2004 14,254 16,342
6/28/2004 14,560 16,697
7/31/2004 14,140 16,211
8/31/2004 14,291 16,341
9/28/2004 14,706 16,867
10/31/2004 15,232 17,454
11/30/2004 16,216 18,412
12/31/2004 16,881 19,203
Value on 12/31/04:
- ------------------
$16,881 International Equity Index Fund
$19,203 International Equity Index Fund Benchmark(1)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
BP Amoco plc 2.0%
HSBC Holdings plc 1.8%
Vodafone AirTouch plc 1.7%
GlaxoSmithKline plc 1.3%
Total Fina SA 1.2%
Novartis AG 1.2%
Royal Dutch Petroleum Co. 1.1%
Toyota Motor Corp. 1.1%
Nestle SA 1.0%
Royal Bank of Scotland Group 1.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
International International Equity
Equity Index Fund Index Fund Benchmark/1/
----------------- -----------------------
1 Year 20.24% 19.74%
3 Years 13.14% 13.91%
5 Years -0.95% -0.36%
10 Years 5.38% 6.74%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVERSIFICATION BY REGION AND COUNTRY/3/
% of
Assets
------
Europe (excluding U.K.) 38.1%
United Kingdom (U.K.) 20.6%
Japan 18.3%
Pacific Basin (excluding Japan) 12.3%
Other 5.5%
Emerging Markets 3.7%
United States 1.5%
DIVERSIFICATION BY REGION/4/
% of
Assets
------
Developed Markets 91.5%
Emerging Markets 8.5%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions, and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
special risks associated with international investing, including currency
fluctuations, political and economic instability, foreign taxation and
different accounting standards, as outlined in the current prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
/1/ The International Equity Fund Benchmark represents the MSCI EAFE Index from
May 1988 to April 1998 and then MSCI EAFE GDP weighted Index from May 1998
to June 1999 and then 90% MSCI EAFE GDP Index/10% MSCI Emerging Markets
Free Index from July 1999 to October 2003 and now the MSCI All Country
World Free excluding U.S. Index from November 2003 to present.
/2/ Returns are not annualized.
/3/ Calculations based upon country in which security is traded (listed).
/4/ Calculations based upon country in which securities is domiciled.
Inception: May 2, 1988
- --------------------------------------------------------------------------------
International Equity Index Fund
SSgA Funds Management, Inc. J. Francis/J. Beach
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As an International Equity Index Fund shareholder, you pay ongoing expenses,
such as management fees; distribution fees (12b-1); and other expenses. Using
the information below, you can estimate how these expenses affect your
investment and compare them with the expenses of other funds. This example is
intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other
mutual funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns NAV Series Series I Series II
- ------------------- ---------- --------- ---------
Beginning account value 7/1/2004 $1,000.00 $1,000.00 $1,000.00
Ending account value 12/31/2004 $1,159.60 $1,158.30 $1,157.20
Expense paid per $1,000* $ 1.69 $ 3.86 $ 5.18
Hypothetical 5% Fund Returns NAV Series Series I Series II
- ---------------------------- ---------- --------- ---------
Beginning account value 7/1/2004 $1,000.00 $1,000.00 $1,000.00
Ending account value 12/31/2004 $1,023.57 $1,021.56 $1,020.33
Expense paid per $1,000* $ 1.58 $ 3.61 $ 4.85
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
International Equity Index Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $70,514 of
securities loaned (Note B)) ..................................... $234,304
Net unrealized appreciation on investments ......................... 57,727
Short-term investments at value .................................... 83,526
--------
Total investments ............................................ 375,557
Foreign currency at value (cost $522) .............................. 525
Futures segregation (restricted) ................................... 402
Receivable for:
Investments sold ................................................ 54
Dividends ....................................................... 376
Interest ........................................................ 5
Foreign dividend tax withholding reclaim ........................ 21
Futures contracts variation margin .............................. 405
Unrealized appreciation in forward currency
contracts .................................................... 46
--------
Total assets ....................................................... 377,391
--------
LIABILITIES
Payables for:
Investments purchased ........................................... 52
Fund shares purchased ........................................... 328
Collateral for securities on loan ............................... 74,222
Foreign dividend tax withholding ................................ 39
Accrued operating expenses ...................................... 54
Accrued Distribution fees--Series I ............................. 26
Accrued Distribution fees--Series II ............................ 12
Other payables .................................................. 87
Other liabilities ............................................... 10
--------
Total liabilities .................................................. 74,830
--------
Net assets ......................................................... $302,561
========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ..................................................... 18,592
--------
Net asset value per share .......................................... $ 16.27
========
Composition of net assets:
Capital paid-in ................................................. $262,642
Accumulated net realized loss on investments,
futures and foreign currency transactions .................... (18,313)
Undistributed net investment income ............................. 292
Net unrealized appreciation of:
Investments .................................................. 57,727
Futures ...................................................... 206
Translation of assets and liabilities in foreign
currencies ................................................ 7
--------
Net assets ...................................................... $302,561
========
Other Information:
Net Assets:
NAV Series ...................................................... $199,531
Series I ........................................................ $ 77,347
Series II ....................................................... $ 25,683
Shares outstanding, $0.01 par value per share:
NAV Series ...................................................... 12,282
Series I ........................................................ 4,736
Series II ....................................................... 1,574
Net asset value per share:
NAV Series ...................................................... $ 16.25
Series I ........................................................ $ 16.33
Series II ....................................................... $ 16.31
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
International Equity Index Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 163
Dividends (net of foreign withholding tax of $598) ............... 4,794
Securities lending ............................................... 171
-------
Total investment income ............................................. 5,128
-------
EXPENSES
Investment advisory fee .......................................... 345
Distribution fee for Series I (Note C) ........................... 148
Distribution fee for Series II (Note C) .......................... 73
Auditors fees .................................................... 21
Custodian fees ................................................... 225
Legal fees ....................................................... 26
Printing & mailing fees .......................................... 143
Trustees' fees ................................................... 5
Other fees ....................................................... 24
-------
Total expenses ...................................................... 1,010
Less expenses reimbursed ......................................... (123)
Less custodian expense reduction offset by
commission recapture arrangement (Note C) ..................... (2)
-------
Net expenses ........................................................ 885
-------
Net investment income ............................................... 4,243
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments ................................................... 4,946
Financial futures contracts ................................... 10
Foreign currency transactions ................................. 473
Realized Thai Tax ............................................. (33)
Change in unrealized appreciation (depreciation) on:
Investments ................................................... 39,327
Financial futures contracts ................................... 127
Translation of assets and liabilities in foreign
currencies ................................................. (52)
-------
Net realized and unrealized gain .................................... 44,798
-------
Net increase in net assets resulting from operations ................ $49,041
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
International Equity Index Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ......................... $ 4,243 $ 2,614
Net realized gain (loss) ...................... 5,396 (6,337)
Change in net unrealized appreciation ......... 39,402 51,040
-------- --------
Net increase in net assets resulting from
operations .............................. 49,041 47,317
Distributions to shareholders from:
Net investment income ......................... (4,243) (3,685)
Capital paid-in ............................... (479)
-------- --------
Decrease in net assets resulting from
distributions ........................... (4,243) (4,164)
From fund share transactions:
Proceeds from shares sold ..................... 86,214 97,542
Shares issued in reorganization ............... 45,097
Distributions reinvested ...................... 4,243 4,164
Payment for shares redeemed ................... (36,827) (84,740)
-------- --------
Increase in net assets from fund share
transactions ............................ 98,727 16,966
-------- --------
NET INCREASE IN NET ASSETS ....................... 143,525 60,119
NET ASSETS
Beginning of Period ........................... 159,036 98,917
-------- --------
End of Period (including undistributed net
investment income of $292 and
distributions in excess of net investment
income of $(421), respectively) ............ $302,561 $159,036
======== ========
Analysis of fund share transactions:
Sold .......................................... 6,139 9,143
Issued in reorganization ...................... 3,212
Reinvested .................................... 298 358
Redeemed ...................................... (2,565) (7,833)
-------- --------
Net increase in fund shares outstanding .......... 7,084 1,668
======== ========
Other Information:
Year ended Period from May 3, to
December 31, December 31,
2004 2004
------------ --------------------------
Fund share transactions NAV Series Series I(b) Series II(b)
- ----------------------- ------------ ----------- ------------
Dollars
Sold ............................... $ 35,226 $46,472 $ 4,516
Shares issued in reorganization .... 24,566 20,531
Reinvested ......................... 3,802 354 87
Redeemed ........................... (27,401) (6,327) (3,099)
-------- ------- -------
Net increase ....................... $ 11,627 $65,065 $22,035
======== ======= =======
Shares
Sold ............................... 2,436 3,392 311
Issued in reorganization ........... 1,749 1,463
Reinvested ......................... 267 25 6
Redeemed ........................... (1,929) (430) (206)
-------- ------- -------
Net increase ....................... 774 4,736 1,574
======== ======= =======
Distributions
Net investment income .............. $ 3,802 $ 354 $ 87
(a) Certain amounts in 2003 have been reclassified to permit comparison.
(b) Commencement of investment operations.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
International Equity Index--NAV Series
------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------
2004(d) 2003(f) 2002 2001 2000
-------- -------- ------- -------- --------
Net Assets Value at Beginning of Period ........ $ 13.82 $ 10.05 $ 12.07 $ 15.39 $ 19.64
Income from Investment Operations:
Net Investment Income ....................... 0.31 0.24 0.21 0.22 0.23
Net Realized and Unrealized Gain (Loss)
on Investment(a) ......................... 2.44 3.91 (2.02) (3.32) (3.64)
-------- -------- ------- -------- --------
Total From Investment Operations ............ 2.75 4.15 (1.81) (3.10) (3.41)
Less Distributions:
Distribution from Net Investment Income ..... (0.32) (0.34) (0.21) (0.17) (0.18)
Distribution from Net Realized Gains on
Investments .............................. (0.59)
Distribution from Capital Paid-in ........... (0.04) (0.05) (0.07)
-------- -------- ------- -------- --------
Total Distributions ......................... (0.32) (0.38) (0.21) (0.22) (0.84)
-------- -------- ------- -------- --------
Net Assets Value at End of Period .............. $ 16.25 $ 13.82 $ 10.05 $ 12.07 $ 15.39
======== ======== ======= ======== ========
Total Investment Return(b) ..................... 20.24% 41.99% (15.18)% (20.30)% (17.42)%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ................................... 0.30%(c)(e) 0.27%(c) 0.28%(c) 0.27%(c) 0.28%(c)
Ratio of Net Investment Income to Average Net
Assets ................................... 2.13% 2.13% 1.85% 1.66% 1.40%
Portfolio Turnover Rate ..................... 20.27% 37.90% 17.55% 8.31% 14.86%
Net Assets End of Period (000s Omitted) ........ $199,531 $159,036 $98,917 $122,020 $195,012
(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 .38%, .42%, .46%, .40%, and
.37%, for the years ended December 31, 2004, 2003, 2002, 2001, and 2000,
respectively.
(d) The fund entered into a new sub-advisory agreement with SSgA Funds
Management Inc. during the period shown.
(e) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements
(f) Certain amounts in 2003 have been reclassified to permit comparison.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
International International
Equity Index-- Equity Index--
Series I Series II
---------------------- ----------------------
Period from Period from
May 3, to December 31, May 3, to December 31,
2004(c) 2004(c)
---------------------- ----------------------
Net Assets Value at Beginning of Period ......................... $ 13.89 $ 13.89
Income from Investment Operations:
Net Investment Income ........................................ 0.13 0.12
Net Realized and Unrealized Gain on Investment(a) ............ 2.41 2.40
------- -------
Total From Investment Operations ............................. 2.54 2.52
Less Distributions:
Distribution from Net Investment Income ...................... (0.10) (0.10)
------- -------
Total Distributions .......................................... (0.10) (0.10)
------- -------
Net Assets Value at End of Period ............................... $ 16.33 $ 16.31
======= =======
Total Investment Return(b) ...................................... 18.45%(f) 18.29%(f)
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ............. 0.72%(d)(e) 0.91%(d)(e)
Ratio of Net Investment Income (Loss) to Average Net Assets .. 1.40%(e) 1.04%(e)
Portfolio Turnover Rate ...................................... 20.27%(f)(g) 20.27%(f)(g)
Net Assets End of Period (000s Omitted) ......................... $77,347 $25,683
(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) Commencement of investment operations.
(d) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(e) Annualized.
(f) Not annualized.
(g) Excludes merger activity.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Argentina - 0.0%
Telecom Argentina Stet-France
Telecom SA - ADR * (J1) .............................. 2,196 $ 24
Australia - 4.2%
Alumina, Ltd. (BF) ...................................... 32,757 152
Amcor, Ltd. (BE) ........................................ 24,153 139
AMP, Ltd. (JR) .......................................... 52,132 295
Ansell, Ltd. (JL) ....................................... 4,303 30
Aristocrat Leisure Limited # (BZ) ....................... 8,847 69
Australia & New Zealand Banking Group, Ltd.(JP) ......... 52,269 840
Australian Gas & Light Co., Ltd. (J4) ................... 12,501 134
Australian Stock Exchange, Ltd. # (JQ) .................. 2,627 42
BHP Steel (BF) .......................................... 20,679 133
Boral, Ltd. (BD) ........................................ 16,307 87
Brambles Industries, Ltd. # (BO) ........................ 26,443 143
Broken Hill Proprietary Co., Ltd. (BF) .................. 100,297 1,200
Centro Properties Group (JS) ............................ 21,333 96
CFS Gandel Retail Trust (FB) (a) ........................ 1,210 2
CFS Gandel Retail Trust (JS) ............................ 38,298 48
Coca Cola Amatil # (JG) ................................. 13,043 83
Cochlear, Ltd. # (JL) ................................... 1,405 28
Coles Myer, Ltd. # (JF) ................................. 31,020 239
Commonwealth Bank of Australia (JP) ..................... 35,001 877
Commonwealth Property Office (JS) ....................... 37,760 37
Computershare, Ltd. (BO) ................................ 11,036 49
CSL, Ltd. (JO) .......................................... 5,573 127
CSR, Ltd. (BD) .......................................... 24,041 50
DB RReef Trust * (FB) ................................... 68,134 70
Foster's Brewing Group, Ltd. (JG) ....................... 55,001 248
Futuris Corp., Ltd. (JH) ................................ 14,532 24
General Property Trust (JS) ............................. 55,050 161
Harvey Norman Holdings, Ltd. (JD) ....................... 13,516 33
Iluka Resources, Ltd. (BF) .............................. 5,843 29
ING Industrial Fund # (JS) .............................. 16,858 28
Insurance Australia Group (JR) .......................... 44,831 225
Investa Property Group (JS) ............................. 41,015 72
Jame Hardie Industries NV (BD) .......................... 13,110 69
John Fairfax Holdings Ltd. (JA) ......................... 25,244 90
Leighton Holdings, Ltd. # (BJ) .......................... 3,516 34
Lend Lease Corp. (JS) ................................... 10,169 105
Lion Nathan, Ltd. (JG) .................................. 8,421 56
Macquarie Goodman Industrial Trust # (JS) ............... 47,233 87
Macquarie Infrastructure Group # (BT) ................... 54,597 145
Macquariebank, Ltd. (JP) ................................ 6,185 224
Mayne Group, Ltd. (BP) .................................. 18,939 63
Mirvac Group # (JS) ..................................... 20,186 77
National Australia Bank, Ltd. # (JP) .................... 44,076 991
National Mutual Holdings, Ltd. (JR) ..................... 19,596 $ 63
Newcrest Mining, Ltd. (BF) .............................. 9,063 123
Onesteel. Ltd. (BF) ..................................... 14,517 29
Orica, Ltd. (BC) ........................................ 7,645 121
Origin Energy (BB) ...................................... 18,733 101
Pacific Brands Holding Pty., Ltd. (BY) .................. 12,750 32
Paperlinx (BG) .......................................... 11,377 42
Patrick Corp., Ltd. (BT) ................................ 15,436 79
Perpetual Trustees Australia. Ltd. # (JQ) ............... 1,100 54
Publishing & Broadcasting, Ltd. (JA) .................... 3,397 46
Qantas Airways, Ltd. (BQ) ............................... 25,739 74
QBE Insurance Group, Ltd. (JR) .......................... 19,234 230
Rinker Group (BD) ....................................... 26,502 220
Rio Tinto, Ltd. # (BF) .................................. 8,753 267
Santos, Ltd. (BB) ....................................... 16,197 107
Sonic Healthcare, Ltd. (JM) ............................. 6,968 66
Southcorp, Ltd. * (JG) .................................. 16,353 55
Stockland (JS) .......................................... 34,570 162
Stockland Trust Group * (JS) (a) ........................ 1,148 5
Suncorp-Metway, Ltd. (JP) ............................... 15,164 206
Tabcorp Holdings, Ltd. (BZ) ............................. 14,380 194
Telstra Corp., Ltd. # (J1) .............................. 58,383 224
Toll Holdings, Ltd. (BP) ................................ 6,751 67
Transurban Group # (BT) ................................. 14,684 77
Wesfarmers (BL) ......................................... 10,572 328
Westfield Group # (JS) .................................. 40,131 514
Westpac Banking Corp., Ltd. (JP) ........................ 50,968 775
WMC Resources, Ltd. (BF) ................................ 32,612 184
Woodside Petroleum, Ltd. (BB) ........................... 13,134 206
Woolworth's, Ltd. (JF) .................................. 29,149 341
-------
12,723
Austria - 0.3%
Bank Austria Credit (JP) ................................ 1,043 94
Bohler-Uddeholm AG (BF) ................................. 219 28
Erste Bank (JP) ......................................... 3,426 182
Flughafen Wien AG (BT) .................................. 298 22
Immofinanz Immobilien # * (JS) .......................... 6,786 65
Mayr-Melnhof Karton AG (BE) ............................. 119 20
Oesterreichische Elektrizitaetswirtschafts AG (J3) ...... 175 39
OMV AG # (BB) ........................................... 383 115
RHI AG # * (BD) ......................................... 528 16
Telecom Austria (J1) .................................... 7,804 147
VA Technologie AG # * (BM) .............................. 326 26
Voest Alpine AG # (BF) .................................. 730 56
Wienerberger Baustoffindustrie AG # (BI) ................ 1,789 85
-------
895
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Belgium - 1.1%
Agfa Gevaert NV (BX) .................................... 2,768 $ 93
Barco NV (JY) ........................................... 324 30
Bekaert NV (BK) ......................................... 397 32
Belgacom SA * (J1) ...................................... 4,429 191
Cofinimmo SA (JS) ....................................... 131 21
Colruyt NV (JF) ......................................... 506 82
D' Ieteren SA # (JB) .................................... 77 14
Delhaize SA (JF) ........................................ 1,975 150
DEXIA # (JP) ............................................ 17,809 408
Electrabel SA # (J3) .................................... 782 347
Euronav NV (BR) ......................................... 558 14
Fortis (JQ) ............................................. 33,272 917
GPE Bruxelles LAM (JQ) .................................. 1,976 160
Interbew (JG) ........................................... 4,915 190
KBC Bancassurance Holding NV # (JP) ..................... 3,103 237
Mobistar SA * (J1) ...................................... 770 72
NV Union Miniere SA (BF) ................................ 695 65
Omega Pharma SA (JL) .................................... 569 27
Solvay SA (BC) .......................................... 1,812 199
UCB SA # (JO) ........................................... 2,503 127
------
3,376
Brazil - 0.1%
Aracruz Celulose SA - ADR * (BG) ........................ 897 34
Centrais Electricas Brasileiras SA - ADR # * (J3) ....... 3,676 27
Compahnia Vale Do Rio Doce(BF) .......................... 2,700 77
Petrol Brasilieros (BB) ................................. 1,700 68
Souza Cruz (JI) ......................................... 2,100 28
Tele Norte Leste (J1) ................................... 1,500 26
Usinas Siderurgicas de Minas Gerais S/A - ADR # (BF) .... 1,669 34
------
294
Canada - 5.3%
Aber Diamond Corp. * (BF) ............................... 1,300 46
Abitibi Consolidated, Inc. # * (BG) ..................... 10,200 70
Agnico-Eagle Mines, Ltd. # * (BF) ....................... 2,200 30
Agrium, Inc. # * (BC) ................................... 3,800 64
Alcan Aluminum, Ltd. # * (BF) ........................... 10,100 494
Aliant, Inc. * (J1) ..................................... 1,100 25
Angiotech Pharmaceuticals, Inc. * (JO) .................. 2,100 39
ATI Technologies, Inc. * (JX) ........................... 6,600 128
Ballard Power Systems, Inc. # * (BK) .................... 2,000 14
Bank Nova Scotia Halifax # * (JP) ....................... 27,500 930
Bank of Montreal # * (JP) ............................... 13,700 658
Barrick Gold Corp. # * (BF) ............................. 13,700 330
BCE, Inc. # (J1) ........................................ 8,300 200
Biovail Corp. # * (JO) .................................. 3,500 58
Bombardier, Inc. - Cl. B # * (BH) ....................... 39,400 78
Brascan Corp. - Cl. A # * (BL) .......................... 6,300 226
Brookfield Properties Corp. * (JS) ...................... 2,500 93
CAE, Inc. # * (BH) ...................................... 6,300 26
Cameco Corp. # * (BF) ................................... 4,800 $ 167
Canadian Imperial Bank of Commerce # * (JP) ............. 10,000 600
Canadian National Railway Co. * (BS) .................... 7,800 474
Canadian Natural Resources, Ltd. # * (BB) ............... 6,900 294
Canadian Pacific Railway # * (BS) ....................... 4,400 150
Canadian Tire, Ltd. - Cl. A # * (JD) .................... 2,200 103
Celestica, Inc. * (JY) .................................. 5,100 72
CGI Group, Inc. - Cl. A * (JU) .......................... 7,400 49
CI Fund Management, Inc. * (JQ) ......................... 4,200 63
Cognos, Inc. * (JV) ..................................... 2,400 105
Cott Corp. * (JG) ....................................... 1,300 32
CP Ships, Ltd. Common # * (BR) .......................... 2,300 33
Dofasco, Inc. # * (BF) .................................. 2,000 75
Domtar, Inc. # * (BG) ................................... 5,000 60
Enbridge, Inc. # * (J4) ................................. 4,400 218
Encana Corp. # * (BB) ................................... 12,600 716
Fairfax Financial Holdings, Ltd. # * (JR) ............... 400 67
Fairmont Hotels Resorts, Inc. # (BZ) .................... 2,200 76
Falconbridge, Ltd. # * (BF) ............................. 2,100 54
Finning International, Inc. * (BM) ...................... 2,500 73
Four Seasons Hotels, Inc. * (BZ) ........................ 600 49
Glamis Gold, Ltd. * (BF) ................................ 3,700 63
Goldcorp, Inc. # * (BF) ................................. 4,900 74
Great West Lifeco, Inc. # * (JR) ........................ 7,300 162
Hudson's Bay Co. * (JD) ................................. 1,800 20
Husky Energy, Inc. # * (BB) ............................. 3,600 103
IGM Financial, Inc. # * (JQ) ............................ 3,100 94
Imperial Oil, Ltd. # (BB) ............................... 3,400 201
Inco, Ltd. # * (BF) ..................................... 5,000 183
Intrawest Corp. * (BZ) .................................. 1,200 27
Loblaw Co., Ltd. # * (JF) ............................... 3,000 180
Magna International, Inc. # * (BU) ...................... 2,600 213
Manulife Financial Corp. # * (JR) ....................... 22,100 1,018
Masonite International Corp.(BI) ........................ 1,400 48
MDS, Inc. * (JM) ........................................ 4,000 56
Meridian Gold, Inc. * (BF) .............................. 2,600 49
Methanex Corp. * (BC) ................................... 3,100 56
MI Developments, Inc. - Cl. A (JS) ...................... 1,200 36
Molson Cos., Ltd. # * (JG) .............................. 2,900 86
National Bank of Canada # * (JP) ........................ 4,700 194
Nexen, Inc. * (BB) ...................................... 3,600 146
Noranda, Inc. # * (BF) .................................. 4,800 84
Nortel Networks Corp. (JW) .............................. 115,100 398
NOVA Chemicals Corp. # * (BC) ........................... 2,400 113
ONEX Corp. * (JY) ....................................... 3,200 53
Open Text Corp. # * (JT) ................................ 1,000 20
Penn West Petroleum, Ltd. * (BB) ........................ 1,400 92
Petro Canada # * (BB) ................................... 7,200 366
Placer Dome, Inc. # * (BF) .............................. 11,900 223
Potash Corp. of Saskatchewan, Inc. # * (BC) ............. 2,900 240
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Canada - Continued
Power Corp. Canada # * (JQ) ............................. 8,600 $ 222
Power Financial Corp. # * (JQ) .......................... 6,700 178
Precision Drilling Corp. * (BA) ......................... 1,600 100
QLT, Inc. # * (JN) ...................................... 2,700 43
Quebecor World, Ltd. # * (JA) ........................... 2,200 47
Rogers Comunications, Inc. - Cl. B # * (J1) ............. 4,700 123
Royal Bank of Canada # * (JP) ........................... 17,700 945
Shaw Communications, Inc. # * (JA) ...................... 5,500 100
Shell Canada, Ltd. * (BB) ............................... 1,900 126
Shoppers Drug Mart Corp. * (JF) ......................... 5,200 161
SNC-Lavalin Group, Inc. * (BJ) .......................... 1,300 63
Sun Life Financial, Inc. # * (JR) ...................... 16,200 541
Suncor Energy, Inc. # * (BB) ............................ 12,200 430
Talisman Energy, Inc. # * (BB) .......................... 10,400 280
Teck Cominco, Ltd. - Cl. B * (BF) ....................... 5,200 160
Telus Corp. * (J1) ...................................... 1,700 51
Telus Corp. * (J1) ...................................... 4,300 124
Thomson Corp. * (JA) .................................... 6,200 218
Transalta Corp. # * (J5) ................................ 5,400 81
TransCanada Corp. # * (J4) .............................. 13,100 325
TSX Group, Inc. * (FB) .................................. 900 40
Weston George, Ltd. # * (JF) ............................ 1,400 128
-------
16,123
Chile - 0.0%
Sociedad Quimica y Minera de Chile SA - ADR (BC) ........ 736 46
Czech Republic - 0.1%
Ceske Energeticke Zavody AS (J3) ........................ 5,909 90
Komercni Banka AS (JP) .................................. 433 63
Philip Morris Credit AS (JI) ............................ 20 15
SPT Telecom AS (J1) ..................................... 4,591 76
UniPetrol * (BC) ........................................ 2,068 9
Zentiva NV * (JO) ....................................... 380 13
-------
266
Denmark - 0.7%
A P Moller-Maersk A/S - Cl. B (BR) ...................... 32 263
Bang & Olufsen AS - Ser. B (BW) ......................... 300 22
Carlsberg AS # (JG) ..................................... 900 45
Coloplast - Ser. B (JL) ................................. 800 44
Danisco AS (JH) ......................................... 1,500 91
Danske Bank (JP) ........................................ 12,500 382
DSV # (BS) .............................................. 575 39
FLS Industries AS - Cl. B # * (BJ) ...................... 600 11
GN Store Nord # (JW) .................................... 6,500 70
H. Lundbeck AS # (JO) ................................... 1,800 40
ISS AS (BO) ............................................. 1,300 72
Kobenhauns Lufthavne AS (BT) ............................ 145 31
NKT Holdings AS (BK) .................................... 400 12
Novo Nordisk AS (JO) .................................... 7,400 403
Novozymes AS - Ser. B (BC) .............................. 1,600 81
Ostasiatiske Kompagni # (JH) ............................ 600 31
Tele Danmark AS (J1) .................................... 5,300 $ 224
Topdanmark AS * (JR) .................................... 575 45
Vestas Wind Systems AS # * (BK) ......................... 4,833 60
William Demant Holdings AS # * (JL) ..................... 800 37
-------
2,003
Finland - 1.2%
Amer Group, Ltd. (BX) ................................... 2,100 36
ELISA Corp. - Ser. A * (J1) ............................. 3,960 64
Fortum Oyj (BB) ......................................... 9,600 177
KCI Konecranes Oyj (BM) ................................. 350 15
Kesko Oyj # (JF) ........................................ 1,600 39
Kone Oyj - Ser. B (BM) .................................. 1,038 80
Metso OYJ # (BM) ........................................ 2,700 43
Nokia Oyj(JW) ........................................... 132,350 2,082
Nokian Renkaat (BU) ..................................... 275 42
Orion - Ser. B # (JO) ................................... 2,000 32
Outokumpu Oyj (BF) ...................................... 2,400 43
Pohoja Group plc - Ser. D (JR) .......................... 1,519 17
Rautaruukki Oyj (BF) .................................... 2,300 27
Sampo Insurance Co. plc (JR) ............................ 9,500 131
Stora Enso Oyj (BG) ..................................... 17,800 272
Tietoenator Oyj # (JU) .................................. 2,380 75
UPM-Kymmene Corp. (BG) .................................. 14,900 330
Uponor Oyj (BI) ......................................... 1,600 30
Wartsila (BM) ........................................... 1,500 32
-------
3,567
France - 7.6%
Accor SA # (BZ) ......................................... 5,141 224
Air Liquide # (BC) ...................................... 2,981 549
Alcatel # * (JW) ........................................ 32,984 511
Alstom # * (BK) ......................................... 118,908 90
Areclor # (BF) .......................................... 12,917 297
Atos Origin SA # * (JU) ................................. 1,193 81
Autoroutes du Sud de la France # (BT) ................... 1,930 97
AXA # (JR) .............................................. 38,656 951
BNP Paribas # (JP) ...................................... 21,685 1,565
Bouygues SA # (J2) ...................................... 5,568 256
Business Objects # * (JV) ............................... 1,738 44
Caisse National Credit Agricole # (JP) .................. 17,905 538
Cap Gemini SA # * (JU) .................................. 3,361 107
Carrefour SA # (JF) ..................................... 15,627 741
Casino Guichard-Perrachon SA # (JF) ..................... 908 72
CIE De St. Gobain # (BI) ................................ 8,489 509
CNP Assurances # (JR) ................................... 889 63
Dassault Systemes SA # (JV) ............................. 1,491 75
EADS, Inc. # (BH) ....................................... 6,627 192
Essilor International # (JL) ............................ 2,637 206
Euronext NV # (JQ) ...................................... 2,676 81
France Telecom # (J1) ................................... 40,326 1,330
Gecina # (JS) ........................................... 680 67
Groupe Air France # (BQ) ................................ 3,199 61
Groupe Danone # (JH) .................................... 6,586 606
Hermes International # (BY) ............................. 243 48
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
France - Continued
Imerys # (BI) ............................................ 824 $ 69
Klepierre # (JS) ......................................... 583 51
L'Oreal SA #(JK) ......................................... 8,212 621
Lafarge SA # (BD) ........................................ 4,667 449
Lagardere SCA # (JA) ..................................... 3,373 242
LVMH (Louis Vuitton Moet Hennessy) # (BY) ................ 6,618 505
Michelin # (BU) .......................................... 3,865 247
Pernod Ricard # (JG) ..................................... 1,426 218
Peugoet SA # (BV) ........................................ 4,575 289
Piault-Printemps-Redoute SA # (JD) ....................... 1,852 185
Publicis Groupe SA # (JA) ................................ 3,436 111
Renault # (BV) ........................................... 5,064 422
Sanofi-Synthelabo SA # (JO) .............................. 26,712 2,126
Schneider SA # (BK) ...................................... 6,057 420
Societe BIC SA # (BO) .................................... 857 43
Societe Generale - Cl. A # (JP) .......................... 9,089 916
Societe Television Francaise (JA) ........................ 3,292 107
Sodexho Alliance SA # (BZ) ............................... 2,478 75
STMicroelectronics # (J0) ................................ 15,812 307
SUEZ # (J5) .............................................. 21,704 576
Technip SA # (BA) ........................................ 537 99
Thales # (BH) ............................................ 2,004 96
Thomson Multimedia (BW) .................................. 6,506 171
Total Fina SA - Cl. B # (BB) ............................. 15,982 3,477
Unibail SA # (JS) ........................................ 1,157 181
Valeo SA # (BU) .......................................... 1,913 80
Veolia Environment # (J5) ................................ 7,432 268
Vinci SA # (BJ) .......................................... 1,962 262
Vivendi Universal SA # * (JA) ............................ 27,779 883
Zodiac SA # (BH) ......................................... 1,036 48
-------
22,905
Germany - 5.5%
Adidas-Salomon AG # (BY) ................................. 1,247 200
Allianz AG # (JR) ........................................ 8,423 1,113
Altana AG # (JO) ......................................... 1,948 123
BASF AG # (BC) ........................................... 14,288 1,025
Bayer AG # (BC) .......................................... 18,012 608
Bayerische Vereinsbank AG # (JP) ......................... 17,003 384
Beiersdorf AG # (JK) ..................................... 444 51
Celesio AG # (JM) ........................................ 900 73
Commerzbank AG * (JP) .................................... 12,232 251
Continental AG (BU) ...................................... 3,340 211
DaimlerChrysler AG # (BV) ................................ 23,561 1,125
Depfa Bank plc (JP) ...................................... 9,707 162
Deutsche Bank AG # (JP) .................................. 13,394 1,184
Deutsche Boerse AG # (JQ) ................................ 2,913 175
Deutsche Post AG (BP) .................................... 12,136 278
Deutsche Telekom AG # * (J1) ............................. 74,635 1,682
Douglas Holding AG (JE) .................................. 880 31
E.On AG # (J3) ........................................... 17,038 1,547
Epcos AG # * (JY) ........................................ 1,239 18
Fresenius Medical Care AG # (JM) ......................... 909 $ 73
Heidelberg Zement (BD) ................................... 1,683 101
Hypo Real Estate * (JQ) .................................. 3,587 148
Infineon Technologies AG * (J0) .......................... 17,401 188
Karstadt AG # (JD) ....................................... 1,880 19
Linde AG # (BM) .......................................... 2,225 139
Lufthansa AG # * (BQ) .................................... 6,332 90
MAN AG (BM) .............................................. 2,914 112
Marschollek Lauten # (JR) ................................ 1,569 31
Merck KGAA (JO) .......................................... 1,316 90
Metro AG # (JD) .......................................... 3,995 219
Muenchener Rueckversicherungs- Gesellschaft AG # (JR) .... 5,033 616
Puma AG (BY) ............................................. 439 120
Qiagen NV * (JL) ......................................... 3,815 42
RWE AG # (J5) ............................................ 10,758 593
Sagem SA # (JY) .......................................... 2,375 50
SAP AG # (JV) ............................................ 5,622 1,000
Schering AG (JO) ......................................... 4,489 334
Siemens AG # (BK) ........................................ 21,934 1,852
Suedzucker AG # (JH) ..................................... 1,350 28
Thyssen Krupp AG # (BF) .................................. 8,462 186
Tui AG # (BZ) ............................................ 3,297 78
Volkswagen AG # (BV) ..................................... 6,108 276
-------
16,626
Greece - 0.5%
Alpha Credit Bank (JP) ................................... 5,656 196
Bank of Piraeus (JP) ..................................... 4,775 83
Commercial Bank of Greece (JP) ........................... 1,460 46
Cosmote Mobile Telephone (J2) ............................ 3,298 66
Duty Free Shops (JD) ..................................... 490 9
EFG Eurobank (JP) ........................................ 5,270 180
Folli-Folie (BY) ......................................... 400 12
Germanos SA (JE) ......................................... 696 21
Hellenic Bottling Co. SA (JH) ............................ 2,360 57
Hellenic Petroleum SA (BB) ............................... 2,860 31
Hellenic Technodomiki Tev SA (BJ) ........................ 2,404 11
Hellenic Telecommunication Organization SA (J1) .......... 6,960 125
Hyatt Regency Hotel (BZ) ................................. 1,225 14
Intracom SA (JW) ......................................... 1,970 11
National Bank of Greece SA (JP) .......................... 7,502 247
OPAP SA (BZ) ............................................. 4,523 124
Public Power Corp. (J3) .................................. 2,962 82
Technical Olympic SA (BJ) ................................ 2,130 11
Titan Cement Co. (BI) .................................... 1,630 48
Viohalco (BF) ............................................ 2,940 27
-------
1,401
Hong Kong - 2.1%
Aluminum Corp. of China, Ltd. # (BF) ..................... 82,000 49
Angang Steel (BF) ........................................ 28,000 14
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Hong Kong - Continued
Anhui Conch Cement Co., Ltd. # (BD) ..................... 14,000 $ 15
ASM Pacific Technology, Ltd. # (J0) ..................... 4,500 16
Avichina Industry (BV) .................................. 48,000 5
Bank of East Asia, Ltd. # (JP) .......................... 30,792 96
Beijing Capital International (BT) ...................... 32,000 14
Beijing Datang Power Generation Co., Ltd. # (J3) ........ 44,990 34
Beijing Enterprise (BL) ................................. 8,000 12
BOC Hong Kong Holdings, Ltd. (JP) ....................... 85,000 162
Brilliance China Automotive Holdings, Ltd. # (BV) ....... 68,000 13
BYD Co., Ltd. # (BL) .................................... 4,500 12
Cathay Pacific Airways (BQ) ............................. 24,000 45
Cheung Kong Holdings, Ltd.(JS) .......................... 35,000 350
Cheung Kong Infrastructure Holdings, Ltd. # (BD) ........ 10,000 29
China East Airline # * (BQ) ............................. 50,000 11
China Everbright, Ltd. (JQ) ............................. 24,000 12
China Life Insurance Co., Ltd. # * (JR) ................. 221,000 148
China Merchants Holdings International Co., Ltd. #
(BL) ................................................. 34,000 64
China Overseas and Land Invest (JS) ..................... 98,000 24
China Petroleum (BB) .................................... 442,000 181
China Pharma Group(JO) .................................. 22,000 6
China Res Beijing (JS) .................................. 30,000 5
China Resources Enterprise, Ltd. # (JB) ................. 32,000 50
China Shipping Container Lines # * (BR) ................. 69,000 28
China Shipping Development(BR) .......................... 40,620 36
China Southern Airlines Co. Ltd * (BQ) .................. 36,300 14
China Telecom Corp.(J1) ................................. 434,000 159
China Telecom, Ltd.(J2) ................................. 161,699 548
China Travel International # (BZ) ...................... 60,000 19
Citic Pacific, Ltd.(BL) ................................. 36,000 102
CLP Holdings, Ltd. (J3) ................................. 41,900 240
CNOOC, Ltd. (BB) ........................................ 405,000 218
Cofco International, Ltd. # (JH) ........................ 18,000 8
Cosco Pacific, Ltd. (BR) ................................ 34,000 71
Denway Motors, Ltd. # (BV) .............................. 142,000 51
Digital China Holdings * (JY) ........................... 14,000 4
Esprit Holdings, Ltd. (JE) .............................. 20,500 124
Fujian Zijin Minin (BF) ................................. 26,000 12
Giordano International Ltd. (JE) ........................ 38,000 24
Guangshen Railway Co., Ltd.(BS) ......................... 48,990 20
Guangzhou Investment Co., Ltd. (BL) ..................... 96,000 10
Hang Lung Properties # (JS) ............................. 42,000 65
Hang Seng Bank, Ltd. (JP) ............................... 17,600 245
Henderson Land Development Co., Ltd. (JS) ............... 17,000 89
Hong Kong & China Gas Co., Ltd. (J4) .................... 84,490 175
Hong Kong Electric Holding, Ltd. (J3) ................... 32,000 146
Hong Kong Exchange & Clearing, Ltd. # (JQ) .............. 24,000 $ 64
Hopewell Holdings, Ltd. (BL) ............................ 14,000 36
Huadian Power International Corp. (J3) .................. 44,000 13
Huaneng Power International # (J3) ..................... 102,000 76
Hutchison Telecom # * (J1) .............................. 31,000 28
Hutchison Whampoa, Ltd. # (BL) .......................... 48,800 457
Hysan Development Co., Ltd. # (JS) ...................... 15,375 32
Jiangxi Copper Co., Ltd. # (BF) ......................... 22,000 12
Jianssu Expressway Company, Ltd. # (BT) ................. 38,000 17
Johnson Electric Holdings, Ltd. (BK) .................... 35,000 34
Kerry Properties, Ltd. (JS) ............................. 11,156 24
Kingboard Chemical Holding Co., Ltd.(JY) ................ 10,000 21
Legend Holdings # (JX) .................................. 104,899 31
Li & Fung, Ltd.(JB) ..................................... 38,000 64
Maanshan Iron & Steel Co., Ltd. # (BF) .................. 50,000 19
MTR Corp. # (BS) ........................................ 31,867 51
New World Development Co., Ltd. (JS) .................... 53,000 59
Orient Overseas International, Ltd. # (BR) .............. 5,000 19
PCCW, Ltd. # (J1) ....................................... 82,860 52
PetroChina Company, Ltd. # (BB) ......................... 520,000 278
PICC Property & Casualty # * (JR) ....................... 82,000 28
Ping An Insurance * (JR) ................................ 42,500 73
Quinling Motors # (BM) .................................. 42,000 6
Semiconductor Manufacturing * (J0) ...................... 171,000 38
Shanghai Industrial Holdings, Ltd. # (BL) ............... 12,000 26
Shanghai Petrochemical Co., Ltd. (BC) ................... 72,000 27
Shangri-La Asia, Ltd. # (BZ) ............................ 24,249 36
Shenzen Investments (JQ) ................................ 42,000 6
Shenzhen Expressway Co., Ltd. (BT) ...................... 24,000 9
Sino Landco # (JS) ...................................... 22,257 22
Sinopec Beijing Yanhua Petrochemical Co., Ltd. # (BC) ... 32,000 15
Sinotrans, Ltd. (BT) .................................... 44,000 13
Smartone Telecommunication Holdings, Ltd. (J2) .......... 7,500 8
South China MP Group Ltd. (JA) .......................... 24,000 10
Sun Hung Kai Properties, Ltd. (JS) ...................... 30,000 300
Swire Pacific, Ltd. - Cl. A (JQ) ........................ 21,500 180
TCL Communication Equipment # * (JW) .................... 9,600 1
TCL International Holdings, Ltd. # (BW) ................. 44,000 11
Techtronic Industrials # (BM) ........................... 20,000 44
Television Broadcasts (JA) .............................. 7,000 32
Texwinca Holdings # (BY) ................................ 14,000 13
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Hong Kong - Continued
Travelesky Technology, Ltd. (BO) ........................ 10,000 $ 8
Tsingtao Brewery - Ser. H (JG) .......................... 10,000 10
Weiqiao Textile Co., Ltd. # (BY) ........................ 12,000 19
Wharf Holdings, Ltd. # (JS) ............................. 28,000 98
Yanzhou Coal Mining # (BF) .............................. 40,000 57
Yizheng Chemical Fibre Co., Ltd. - Cl. A (BC) ........... 44,000 9
Yue Yuen Industrial Holdings, Ltd. # (JE) ............... 11,500 32
Zhejiang Expressway Co., Ltd # (BT) ..................... 44,000 30
------
6,323
Hungary - 0.1%
Gedeon Richter (JO) ..................................... 386 48
Magyar Tavkozlesi (J1) .................................. 12,959 62
Mol Magyar Olaj-es Gazipari (BB) ........................ 2,093 147
OTP Bank (JP) ........................................... 6,957 213
------
470
India - 0.6%
ABB, Ltd. (BK) .......................................... 277 6
Ashok Leyland (BV) ...................................... 11,340 6
Asian Paints, Ltd. (BC) ................................. 784 6
Associated Cement Companies, Ltd. (BD) .................. 1,118 9
Bajaj Auto, Ltd. (BV) ................................... 800 21
Bank of Baroda (JP) ..................................... 1,258 7
Bharat Heavy Electricals, Ltd. (BK) ..................... 1,601 28
Bharat Petroleum Corp., Ltd. (BB) ....................... 1,635 17
Britannia Industries, Ltd. (JH) ......................... 164 4
Castrol, Ltd. (BB) ...................................... 809 4
Cipla (JO) .............................................. 1,529 11
Colgate Palmolive Co. (JJ) .............................. 889 4
Dr. Reddys Labs (JO) .................................... 1,355 27
Flex Solutions * (BL) ................................... 1,018 15
Gail LD (J4) ............................................ 6,914 37
GlaxoSmithKline Pharmaceuticals (JO) .................... 380 7
Grasim Industries, Ltd. (BL) ............................ 924 28
Gujarat Ambuja Cements Ltd. (BD) ........................ 1,221 11
HDFC Bank Ltd. (JP) ..................................... 4,269 51
Hero Honda Motors, Ltd. (BV) ............................ 2,177 29
Hindlaco Industries (BF) ................................ 1,008 33
Hindustan Lever Ltd. (JJ) ............................... 20,996 70
Hindustan Petroleum Corp., Ltd. (BB) .................... 2,219 21
Housing Development Financing Corp., Ltd. (JQ) .......... 4,683 83
Icici Banking (JP) ...................................... 12,848 110
Indian Hotels Co., Ltd. (BZ) ............................ 443 6
Indian Petrochemical (BC) ............................... 2,097 9
Infosys Technologies, Ltd. (JU) ......................... 4,708 227
ITC, Ltd. (JI) .......................................... 1,889 57
Larsen & Toubro (BJ) .................................... 1,004 23
Mahanagar Telephone Nigam, Ltd. (J1) .................... 5,151 18
Mahindra & Mahindra (BV) ................................ 1,107 $ 14
Maruti Udyog (BV) ....................................... 1,890 20
Moser Baer * (JX) ....................................... 912 5
Nestle India, Ltd. (JH) ................................. 492 7
Oil & Natural Gas (BB) .................................. 4,663 88
Punjab Tractors, Ltd. (BM) .............................. 497 2
Ranbaxy Laboratories, Ltd. (JO) ......................... 1,922 56
Reliance Industries, Inc. (BC) .......................... 17,125 211
Satyam Computer Services, Ltd. (JU) ..................... 6,117 58
State Bank of India (JP) ................................ 2,237 37
Sun Pharmaceutical (JO) ................................. 1,264 16
Tata Ironsteel (BF) ..................................... 3,619 32
Tata Consultancy Services, Ltd. (JU) .................... 1,538 47
Tata Engineering and Locomotive Co., Ltd. (BM) .......... 4,410 51
Tata Power Co. (J3) ..................................... 1,051 10
Tata Tea Ltd. (JH) ...................................... 582 6
Ultratech Cemco * (BI) .................................. 314 2
Videsh Sanchar Nigam, Ltd. (J1) ......................... 1,553 8
Wipro Ltd. * (JU) ....................................... 2,472 43
Zee Telefilms Ltd. (JA) ................................. 5,509 22
------
1,720
Indonesia - 0.1%
Astra International (BV) ................................ 47,000 49
Bank Central Asia (JP) .................................. 104,000 33
Bank Danamon (JP) ....................................... 31,500 15
Bank Mandiri (JP) ....................................... 149,500 31
Bank Rakyat (JP) ........................................ 100,000 31
Bumi Resources Tbk * (BF) ............................... 290,000 25
HM Sampoerna (JI) ....................................... 73,000 52
Indofood Suskes Mak Tbk (JH) ............................ 90,500 8
PT Gudang Garam Tbk (JI) ................................ 14,500 21
PT Telekomunikasi Indonesia - ADR * (J1) ................ 8,229 173
------
438
Ireland - 0.7%
Allied Irish Banks plc (JP) ............................. 24,715 514
Bank of Ireland (JP) .................................... 27,805 461
CRH plc (BD) ............................................ 15,251 407
DCC plc (BL) ............................................ 2,187 49
Eircom Group plc (J1) ................................... 12,556 29
Elan Corp. * (JO) ....................................... 11,125 295
Fyffes plc (JF) ......................................... 8,095 21
Grafton Group * (BI) .................................... 5,853 63
Greencore Group plc (JH) ................................ 3,727 15
Independent Newspapers, Ltd. (JA) ....................... 16,479 52
Irish Life & Permanent plc (JR) ......................... 7,774 145
Kerry Group plc (JH) .................................... 3,756 90
Kingspan Group plc (BI) ................................. 3,014 29
Waterford Wedgewood plc * (BW) .......................... 23,583 2
------
2,172
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Israel - 0.3%
AudioCodes, Ltd. * (JW) ................................. 612 $ 10
Bank Hapoalim (JP) ...................................... 20,565 69
Bank Leumi Le-Israel (JP) ............................... 17,471 48
Bezeq Israeli Telecommunication Corp., Ltd. * (J1) ...... 25,030 29
CLAL Industries (BL) .................................... 1,333 6
CLAL Insurance Enterprises (JR) ......................... 428 9
Discount Investor Corp. (JQ) ............................ 504 13
Elbit Systems, Ltd. (BH) ................................ 419 11
ICL Israel Chemicals, Ltd. (BC) ......................... 13,243 31
IDB Development Corp, Ltd. (JQ) ......................... 631 17
Israel Discount Bank - Ser. A * (JP) .................... 12,114 15
Koor Industries, Ltd. * (BL) ............................ 303 16
Makteshim-Agan Industries, Ltd. (BC) .................... 5,706 31
Migdal Insurance (JR) ................................... 4,413 7
Nice Systems, Ltd. * (JW) ............................... 286 9
Osem Investment, Ltd. (JH) .............................. 796 9
Partner Communications * (J2) ........................... 1,754 15
Retalix, Ltd. * (JV) .................................... 416 9
Strauss Elite, Ltd. - Ser. A * (JH) ..................... 676 7
Supersol, Ltd. * (JF) ................................... 2,619 7
Teva pharmaceutical Industries, Ltd. (JO) ............... 15,958 475
The Israel Corp., Ltd. * (JQ) ........................... 47 10
United Mizrahi Bank (JP) ................................ 2,090 9
-------
862
Italy - 3.4%
Alleanza Assicurazioni # (JR) ........................... 12,111 168
Assicurazioni Generali # (JR) ........................... 25,488 862
Autogrill SpA # * (BZ) .................................. 2,959 49
Autostrade SpA (BT) ..................................... 6,819 182
Banca Antonveneta SpA # * (BL) .......................... 5,997 157
Banca Fideuram # (JQ) ................................... 7,686 40
Banca Intesa SpA (JP) ................................... 86,767 416
Banca Intesa SpA (JP) ................................... 24,140 103
Banca Nazionale del Lavoro # (JP) ....................... 42,734 127
Banca Popolare di Milano (JP) ........................... 10,987 97
BCA Di Roma (JP) ........................................ 37,316 170
BCE Pop Unite * (J1) .................................... 8,926 181
BCP Pop Veron (JP) ...................................... 9,901 200
Benetton Group SpA (BY) ................................. 1,441 19
Bulgari SpA (BY) ........................................ 3,421 42
Edison International # * (J3) ........................... 21,263 45
Enel SpA(J3) ............................................ 97,420 953
ENI # (BB) .............................................. 69,257 1,727
Fiat SpA # * (BV) ....................................... 14,415 115
FinecoGroup # * (JP) .................................... 4,168 32
Finmeccanica SA (BH) .................................... 163,218 147
GR Education L Espresso # (JA) .......................... 4,435 27
Italcementi SpA # (BD) .................................. 1,775 28
Luxottica Group # (JL) .................................. 3,589 73
Mediaset SpA # (JA) ..................................... 15,405 195
Mediobanca SpA # (JP) ................................... 12,493 $ 201
Mediolanum SpA # (JQ) ................................... 6,564 47
Mondadori Editore SpA (JA) .............................. 3,396 39
Monte Paschi Siena # (JP) ............................... 30,594 109
Pirelli & Co. SpA # (BL) ................................ 47,334 64
Riunione Adriatica di Sicorta SpA (JR) .................. 7,867 177
San Paolo-IMI SpA # (JP) ................................ 27,540 395
Seat Pagine Gialle # (JA) ............................... 111,332 51
Snam Rete Gas (J4) ...................................... 24,326 141
T.E.R.N.A # (J3) ........................................ 25,503 73
Telecom Italia (J1) ..................................... 154,510 500
Telecom Italia # (J1) ................................... 219,638 895
Telecom Italia Media # * (JA) ........................... 32,454 15
Telecom Italia Mobile SpA # (J2) ........................ 101,095 753
Tiscali SpA # * (JT) .................................... 4,811 18
UniCredito Italiano SpA (JP) ............................ 117,387 672
-------
10,305
Japan - 17.7%
Acom Co., Ltd. (JQ) ..................................... 2,030 152
Aderans Co., Ltd. (JK) .................................. 900 21
Advantest # (J0) ........................................ 1,900 163
Aeon Co., Ltd. # (JD) ................................... 15,700 261
Aeon Credit Service Co., Ltd. (JQ) ...................... 600 45
Aiful Corp. (JQ) ........................................ 1,150 126
Aisin Seiki Co. (BU) .................................... 4,600 116
Ajinomoto Co., Inc. (JH) ................................ 16,000 190
Alfresa Holdings Corp. # (JL) ........................... 500 18
All Nippon Airways Co., Ltd. # (BQ) ..................... 12,000 42
Alps Electric Co. # (JY) ................................ 5,000 74
Amada Co., Ltd (BM) ..................................... 9,000 50
Amano Corp. (BO) ........................................ 2,000 20
Anritsu Corp. # (JY) .................................... 2,000 15
Aoyama Trading Co. (JE) ................................. 1,300 35
Ariake Japan Co., Ltd. # (JH) ........................... 400 10
Asahi Breweries, Ltd. # (JG) ............................ 10,900 135
Asahi Chemical Industry Co., Ltd. # (BC) ................ 34,000 170
Asahi Glass Co., Ltd. # (BI) ............................ 21,000 231
Asatsu DK # (JA) ........................................ 1,000 28
Autobacs Seven Co. # (JE) ............................... 700 20
Bandai Co. (BX) ......................................... 2,200 50
Bank of Yokohama, Ltd.(JP) .............................. 33,000 208
Benesse Corp. (BO) ...................................... 1,600 56
Bridgestone Corp. # (BU) ................................ 18,000 357
Canon, Inc. (JZ) ........................................ 22,900 1,233
CAPCOM Co. # (JV) ....................................... 1,100 10
Casio Computer Co. # (BW) ............................... 5,300 82
Central Glass Co. (BI) .................................. 4,000 28
Central Japan Railway Co. (BS) .......................... 28 228
Chiba Bank, Ltd. (JP) ................................... 20,000 133
Chubu Electric Power # (J3) ............................. 18,000 431
Chugai Pharmaceutical Co., Ltd. # (JO) .................. 7,100 117
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Japan - Continued
Circle Kingdom Sunkus Co. Ltd. # * (JE) .................. 1,100 $ 28
Citizen Watch Co., Ltd. # (JY) ........................... 7,000 67
Coca Cola West Japan Co., Ltd. # (JG) .................... 1,200 31
Comsys Holdings (BJ) ..................................... 3,000 28
Credit Saison Co., Ltd. (JQ) ............................. 3,600 131
CSK Corp. # (JU) ......................................... 1,700 77
Dai-Ichi Pharmaceutical Co., Ltd. (JO) ................... 6,600 142
Dai-Nippon Ink & Chemicals, Inc. (BC) .................... 17,000 39
Dai-Nippon Printng Co., Ltd. (BO) ........................ 18,000 288
Daicel Chemical Industries, Ltd. (BC) .................... 7,000 40
Daikin Industries, Ltd. # (BM) ........................... 5,500 158
Daimaru, Inc. # (JD) ..................................... 6,000 49
Dainippon Screen Manufacturing Co., Ltd. # (JY) .......... 5,000 31
Daito Trust Construction Co., Ltd. # (BW) ................ 2,500 119
Daiwa House Industry Co., Ltd. (BW) ...................... 14,000 159
Daiwa Securities Group, Inc. # (JQ) ...................... 32,900 237
Denki Kagaku Kogyo (BC) .................................. 10,000 33
Denso Corp. (BU) ......................................... 14,400 385
Dentsu, Inc. # (JA) ...................................... 43 116
Dowa Mining Co. (BF) ..................................... 7,000 45
East Japan Railway Co. (BS) .............................. 92 510
Ebara Corp. # (BM) ....................................... 7,000 32
Eisai Co. Ltd. (JO) ...................................... 6,900 226
Electric Power Development * (J3) ........................ 3,900 109
FamilyMart Co., Ltd. (JF) ................................ 1,600 46
Fanuc, Ltd. (BK) ......................................... 4,000 261
Fast Retailing Co. (JE) .................................. 1,400 106
Fuji Electric Holdings Co. (BK) .......................... 13,000 35
Fuji Photo Film (BX) ..................................... 12,500 455
Fuji Soft ABC, Inc. # (JV) ............................... 800 26
Fuji Television Network, Inc. (JA) ....................... 18 39
Fujikura # (BK) .......................................... 10,000 46
Fujisawa Pharmeceutical Co., Ltd. # (JO) ................. 7,700 210
Fujitsu, Ltd. # (JX) ..................................... 47,000 305
Furukawa Electric Co. # * (BK) ........................... 14,000 77
Goodwill Group, Inc. (BO) ................................ 9 22
Gunze, Ltd. (BY) ......................................... 5,000 23
Hankyu Department Stores (JD) ............................ 4,000 29
Hino Motors, Ltd. # (BM) ................................. 6,000 44
Hirose Electric Co., Ltd. # (JY) ......................... 900 105
Hitachi Cable, Ltd. (BK) ................................. 4,000 19
Hitachi Chemical (JY) .................................... 2,600 46
Hitachi Construction Macinery Co., Ltd. (BM) ............. 3,000 41
Hitachi Credit Corp. # (JQ) .............................. 1,400 29
Hitachi Software (JV) .................................... 700 16
Hitachi, Ltd. (JY) ....................................... 88,000 608
Hogukin Financial Group, Inc. (JQ) ....................... 28,000 76
Hokkaido Electric Power Co., Inc. (J3) ................... 4,600 $ 90
Honda Motor Co. (BV) ..................................... 20,400 1,054
House Foods Corp. # (JH) ................................. 1,700 24
Hoya Corp. # (JY) ........................................ 2,900 327
Isetan Co., Ltd. (JD) .................................... 4,200 49
Ishihara Sangyo Kaisha # (BC) ............................ 7,000 16
Ishikawajima-Harima Heavy Industries Co., Ltd. * (BM) .... 28,000 38
Ito En, Ltd. (JG) ........................................ 700 36
Ito-Yokado Co., Ltd. (JD) ................................ 9,100 381
Itochu Corp. * (BN) ...................................... 38,000 175
Itochu Techno-Sciences Corp. # (JU) ...................... 1,000 40
JAFCO Co., Ltd. (JQ) ..................................... 700 47
Japan Airlines * (BQ) .................................... 20,000 58
Japan Real Estate # (JS) ................................. 6 50
Japan Retail Fund Investment Corp. # (JS) ................ 5 42
Japan Tobacco, Inc. (JI) ................................. 25 285
JFE Holdings, Inc. # (BF) ................................ 14,300 407
JGC Corp. (BJ) ........................................... 5,000 46
Joyo Bank, Ltd. (JP) ..................................... 20,000 97
JSR Corp. (BC) ........................................... 4,700 103
Kajima Corp. # (BJ) ...................................... 25,000 107
Kamigumi Co., Ltd. # (BR) ................................ 6,000 48
Kanebo, Ltd. # * (JK) .................................... 1,100 16
Kaneka Corp. (BC) ........................................ 7,000 79
Kansai Electric Power Co., Inc. (J3) ..................... 19,800 401
Kansai Paint Co., Ltd. (BC) .............................. 5,000 30
KAO Corp. (JJ) ........................................... 14,000 357
Kaken Pharmaceuticals Co., Ltd. # (JO) ................... 3,000 20
Katokichi Co., Ltd. (JH) ................................. 1,100 22
Kawasaki Heavy Industry, Ltd. # (BM) ..................... 30,000 49
Kawasaki Kisen # (BR) .................................... 12,000 77
Keihin Electric Express Railway Co., Ltd. # (BS) ......... 10,000 61
Keio Teito Electric Railway (BS) ......................... 15,000 88
Keyence Corp. (JY) ....................................... 900 201
Kikkoman Corp. (JH) ...................................... 5,000 48
Kinden Corp. (BJ) ........................................ 4,000 30
Kintetsu Corp. (BH) ...................................... 42,000 145
Kirin Brewery Co. # (JG) ................................. 19,000 187
Kobe Steel International # (BF) .......................... 62,000 95
Kokuyo Co. (BO) .......................................... 1,900 23
Komatsu, Ltd. (BM) ....................................... 26,000 181
Komori Corp. (BM) ........................................ 1,000 15
Konami Co., Ltd. # (JV) .................................. 2,100 49
Konica Corp. # (BX) ...................................... 11,500 152
Koyo Seiko Co., Ltd. # (BM) .............................. 3,000 42
Kubota Corp.(BM) ......................................... 29,000 143
Kuraray Co., Ltd. # (BC) ................................. 10,500 94
Kuraya Sanseido, Inc. (JM) ............................... 2,300 26
Kurita Water Industries, Ltd. (BJ) ....................... 2,500 36
Kyocera Corp. (JY) ....................................... 4,400 338
Kyowa Hakko Kogyo Co., Ltd. (JO) ......................... 10,000 75
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Japan - Continued
Kyushu Electric Power (J3) .............................. 10,900 $ 220
Lawson (JF) ............................................. 1,500 55
LeoPalace21 Corp. (JS) .................................. 3,400 60
Mabuchi Motor Co. # (JY) ................................ 800 58
Makita Corp. # (BW) ..................................... 3,000 52
Marubeni Corp. # (BN) ................................... 33,000 91
Marui Co., Ltd. # (JD) .................................. 8,900 119
Matsumotokiyoshi Co., Ltd. # (JF) ....................... 1,000 28
Matsushita Electric Industrial Co. # (BW) ............... 60,000 950
Matsushita Electric Works # (BK) ........................ 8,000 70
Meiji Diaries Corp. (JH) ................................ 6,000 36
Meiji Seika Kaisha, Ltd. # (JH) ......................... 7,000 32
Meitic Corp. (JU) ....................................... 900 33
Millea Holdings, Inc. (JR) .............................. 40 592
Minebea Co., Ltd. # (BM) ................................ 10,000 44
Mitsubishi Chemical Corp. (BC) .......................... 46,000 140
Mitsubishi Corp. # (BN) ................................. 29,800 384
Mitsubishi Electric Corp. (BK) .......................... 46,000 225
Mitsubishi Estate Co., Ltd. # (JS) ...................... 26,000 304
Mitsubishi Gas Co. (BC) ................................. 9,000 42
Mitsubishi Heavy Industries, Ltd. # (BM) ................ 76,000 215
Mitsubishi Logistics Corp. # (BR) ....................... 3,000 29
Mitsubishi Materials Corp. (BF) ......................... 23,000 48
Mitsubishi Rayon Co., Ltd. (BC) ......................... 12,000 44
Mitsubishi Tokyo Finance (JP) ........................... 124 1,255
Mitsui & Co., Ltd. # (BN) ............................... 34,000 304
Mitsui Engineering & Shipbuilding Co., Ltd. (BM) ........ 16,000 27
Mitsui Fudosan Co., Ltd. # (JS) ......................... 19,000 230
Mitsui Mining & Smelting Co., Ltd. (BF) ................. 14,000 62
Mitsui OSK Lines, Ltd. (BR) ............................. 25,000 150
Mitsui Petrochemical Co. (BC) ........................... 17,000 92
Mitsui Sumitomo Insurance Co., Ltd. # (JR) .............. 35,000 303
Mitsui Trust Holdings # (JQ) ............................ 14,000 140
Mitsukoshi, Ltd. # (JD) ................................. 9,000 44
Mitsumi Electric (JX) ................................... 1,700 19
Mizuho Financial GB (JP) ................................ 212 1,065
Murata Manufacturing Co., Ltd. (J0) ..................... 6,100 340
Namco, Ltd. # (BZ) ...................................... 2,000 26
NEC Corp. # (JX) ........................................ 45,000 279
NEC Electronics Corp. # (J0) ............................ 1,000 49
Net One Systems Co., Ltd. (JU) .......................... 14 58
NGK Insulators # (BM) ................................... 7,000 67
NGK Spark Plug Co. (BU) ................................. 5,000 52
Nichii Gakkan Co. # (BO) ................................ 500 16
Nichirei Corp. # (JH) ................................... 7,000 28
Nidec Corp. # (JY) ...................................... 1,300 158
Nikko Cordial Corp. (JQ) ................................ 42,000 222
Nikon Corp. # (J0) ...................................... 8,000 99
Nintendo Corp., Ltd. (BW) ............................... 2,700 $ 338
Nippon Building Fund (JS) ............................... 8 68
Nippon Express Co., Ltd. (BS) ........................... 22,000 108
Nippon Kayaku Co., Ltd. (BC) ............................ 4,000 22
Nippon Light Metal, Inc. # (BF) ......................... 11,000 28
Nippon Meat Packers, Inc. (JH) .......................... 5,000 68
Nippon Mining & Holding (BB) ............................ 21,500 101
Nippon Mitsubishi Oil Co., Ltd. # (BB) .................. 35,000 224
Nippon Sanso Corp. (BC) ................................. 8,000 47
Nippon Sheet Glass Co., Ltd. # (BI) ..................... 9,000 37
Nippon Shokubai Co., Ltd. (BC) .......................... 4,000 35
Nippon Steel Co. (BF) ................................... 166,000 406
Nippon Telegraph & Telephone Corp. (J1) ................. 143 640
Nippon Unipac Holding, Co. (BG) ......................... 25 112
Nippon Yusen Kabushiki Kaisha (BR) ...................... 25,000 134
Nippon Zeon Co., Ltd. # (BC) ............................ 4,000 33
Nishimatsu Construction Co., Ltd. # (BJ) ................ 6,000 21
Nissan Chemical Industries # (BC) ....................... 5,000 39
Nissan Motor Acceptance Corp. # (BV) .................... 68,300 741
Nisshin Seifun Group, Inc. (JH) ......................... 4,000 44
Nisshin Steel Co. (BF) .................................. 20,000 46
Nisshinbo Industries, Inc. (BY) ......................... 4,000 30
Nissin Food Products Co., Ltd. (JH) ..................... 2,100 53
Nitori Co., Ltd. # (JE) ................................. 450 29
Nitto Denko Corp. (BK) .................................. 4,600 252
NOK Corp. # (BU) ........................................ 2,500 78
Nomura Research Institute, Ltd. (JU) .................... 600 56
Nomura Securities Co., Ltd. (JQ) ........................ 51,000 742
NSK, Ltd. (BM) .......................................... 11,000 55
NTN Corp. # (BM) ........................................ 12,000 69
NTT Data Corp. (JU) ..................................... 33 106
NTT Mobile Communications Network, Inc. (J2) ............ 546 1,005
Obayashi Corp. (BJ) ..................................... 16,000 101
OBIC, Co. (JU) .......................................... 200 40
Odakyu Electric Railway (BS) ............................ 17,000 98
Oji Paper Co. (BG) ...................................... 21,000 120
Oki Electric Industry Co. * (JY) ........................ 13,000 56
Okumura Corp. (BJ) ...................................... 4,000 25
Olympus Optical Co. # (JL) .............................. 6,000 128
Omron Corp. (JY) ........................................ 5,900 140
Onward Kashiyama Co., Ltd. (BY) ......................... 4,000 58
Oracle Corp. # (JV) ..................................... 1,000 52
Oriental Land Co., Ltd. # (BZ) .......................... 1,400 97
Orix Corp. (JQ) ......................................... 2,200 298
Osaka Gas Co. (J4) ...................................... 56,000 174
Pioneer Corp. # (BW) .................................... 3,900 76
Promise Co., Ltd. (JQ) .................................. 2,300 164
QP Corp. # (JH) ......................................... 2,800 24
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Japan - Continued
Rakuten, Inc. * (JU) .................................... 117 $ 105
Rakuten, Inc. # (JC) .................................... 13 15
Resona Holdings, Inc. # * (BH) .......................... 123,000 249
Ricoh Co., Ltd. # (JZ) .................................. 18,000 346
Rinnai Corp. # (BW) ..................................... 1,000 27
Rohm Co., Ltd. (JY) ..................................... 2,900 299
Ryohin Keikaku Co., Ltd. (JD) ........................... 600 30
Saizyeria Co., Ltd. # (BZ) .............................. 700 12
Sanden Corp. # (BU) ..................................... 3,000 19
Sanken Electric Co., Ltd. (J0) .......................... 3,000 39
Sankyo Co. (BX) ......................................... 1,200 60
Sankyo Co., Ltd. (JO) ................................... 10,300 232
Sanwa Shutter Corp. (BI) ................................ 5,000 28
Sanyo Electric Co. (BW) ................................. 39,000 134
Sapporo Holdings # (JG) ................................. 7,000 33
Secom Co. (BO) .......................................... 6,000 239
Sega Sammy Holdings, Inc. * (BX) ........................ 1,840 101
Seiko Epson Corp. (J0) .................................. 2,600 115
Seino Transportion (BS) ................................. 4,000 37
Sekisui Chemical Co. # (BW) ............................. 12,000 87
Sekisui House, Ltd. # (BW) .............................. 13,000 151
Seven-Eleven Japan # (JF) ............................... 10,200 321
Sharp Corp. (BW) ........................................ 26,000 423
Shimacu Co. (JE) ........................................ 1,200 30
Shimamura Co., Ltd. # (JE) .............................. 500 36
Shimano, Inc. # (BX) .................................... 1,900 54
Shimizu Corp. (BJ) ...................................... 13,000 65
Shin-Etsu Chemical Co. (BC) ............................. 9,900 405
Shinsei Bank, Ltd. # (JP) ............................... 14,000 95
Shionogi & Co., Ltd. # (JO) ............................. 8,000 110
Shiseido Co., Ltd. (JK) ................................. 9,000 130
Shizuoka Bank, Ltd. # (JP) .............................. 16,000 151
Showa Denko # (BC) ...................................... 26,000 67
Showa Shell Sekiyu KK # (BB) ............................ 3,500 32
Skylark Co., Ltd. # (BZ) ................................ 2,000 34
SMC Corp. (BM) .......................................... 1,500 171
Snow Brand Milk Products Co., Ltd. # * (JH) ............. 3,500 11
Softbank Corp. # (JT) ................................... 6,200 301
Sojitz Holdings Corp. # * (BN) .......................... 4,800 21
Sony Corp. # (BW) ....................................... 25,200 971
Stanley Electric # (BU) ................................. 3,800 65
Sumitomo Bakelite Co., Ltd. (BC) ........................ 5,000 31
Sumitomo Chemical Co. (BC) .............................. 35,000 171
Sumitomo Corp. (BN) ..................................... 24,000 207
Sumitomo Electric Industries (BK) ....................... 18,000 195
Sumitomo Heavy Industry * (BM) .......................... 13,000 48
Sumitomo Metal Industries (BF) .......................... 98,000 133
Sumitomo Metal Mining Co. # (BF) ........................ 15,000 107
Sumitomo Mitsui GR # (JP) ............................... 111 805
Sumitomo Osaka Cement (BD) .............................. 10,000 24
Sumitomo Realty & Development # (JS) .................... 11,000 143
Sumitomo Trust & Banking # (JQ) ......................... 33,000 238
Suruga Bank (JP) ........................................ 5,000 $ 40
Suzuken Co., Ltd. (JM) .................................. 1,200 32
T&D Holdings, Inc. * (JR) ............................... 4,850 231
Taiheiyo Cement (BD) .................................... 20,000 50
Taisei Corp. (BJ) ....................................... 20,000 78
Taisho Pharmaceutical Co., Ltd. (JO) .................... 5,000 109
Taiyo Yuden Co., Ltd. (JY) .............................. 3,000 35
Takara Shuzo Co., Ltd. # (JG) ........................... 4,000 26
Takashimaya Co. # (JD) .................................. 8,000 77
Takeda Chemical Industries (JO) ......................... 24,200 1,216
Takefuji Corp. (JQ) ..................................... 1,870 126
Takuma Co., Ltd. (BM) ................................... 1,000 8
TDK Corp. (JY) .......................................... 3,300 244
Teijin, Ltd. (BC) ....................................... 20,000 87
Teikoku Oil Co., Ltd. # (BB) ............................ 5,000 28
Terumo Corp. (JL) ....................................... 4,800 129
The 77 Bank, Ltd. (JP) .................................. 10,000 70
The Bank of Fukuoka, Ltd. # (JP) ........................ 14,000 92
The Gunma Bank, Ltd. (JP) ............................... 10,000 58
THK Co. # (BM) .......................................... 2,500 49
TIS, Inc. # (JU) ........................................ 900 39
Tobu Railway Co., Ltd. (BS) ............................. 22,000 84
Toda Corp. (BJ) ......................................... 5,000 24
Toho Co., Ltd. (JA) ..................................... 3,500 55
Tohoku Electric Power (J3) .............................. 11,500 206
Tokyo Broadcasting (JA) ................................. 1,000 16
Tokyo Electric Power (J3) ............................... 31,600 774
Tokyo Electron, Ltd. (J0) ............................... 4,700 289
Tokyo Gas Co. # (J4) .................................... 68,000 278
Tokyo Style Co. # (BY) .................................. 2,000 23
Tokyu Corp. # (BS) ...................................... 26,000 140
Tokyu Land Corp. # (JS) ................................. 9,000 37
Tonengeneral Sekiyu # (BB) .............................. 9,000 82
Toppan Printing Co. # (BO) .............................. 15,000 166
Toray Industries, Inc. (BC) ............................. 34,000 159
Toshiba Corp. (JX) ...................................... 79,000 338
Tosoh Corp. ADR # (BC) .................................. 12,000 54
Tostem Corp. (BI) ....................................... 6,900 125
Toto, Ltd. # (BI) ....................................... 9,000 86
Toyo Seikan Kaisha, Ltd. # (BE) ......................... 4,000 74
Toyo Suisan Kaisha # (JH) ............................... 2,000 29
Toyobo Co. (BY) ......................................... 14,000 34
Toyoda Gosei # (BU) ..................................... 1,800 37
Toyota Industries (BU) .................................. 5,300 132
Toyota Motor Corp. (BV) ................................. 78,900 3,203
Trend Micro, Inc. (JV) .................................. 2,500 135
Ube Industries * (BC) ................................... 19,000 32
UFJ Holdings, Inc. * (JP) ............................... 105 635
Uni-Charm Corp. (JJ) .................................... 1,300 62
Uniden Corp. # (JW) ..................................... 2,000 39
UNY Co., Ltd. (JD) ...................................... 4,000 46
Ushio, Inc. (BK) ........................................ 3,000 56
USS Co., Ltd. # (JE) .................................... 690 58
Wacoal Corp. # (BY) ..................................... 2,000 24
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Japan - Continued
West Japan Railway (BS) ................................... 47 $ 189
World Co., Ltd. (BY) ...................................... 1,100 39
Yahoo Japan Corp. # * (JT) ................................ 53 254
Yakult Honsha Co. (JH) .................................... 3,000 53
Yamada Denki Co. # (JE) ................................... 2,000 85
Yamaha Corp. (BX) ......................................... 4,900 75
Yamaha Motor Co. # (BV) ................................... 4,800 72
Yamanouchi Pharmaceutical Co., Ltd. # (JO) ................ 8,500 330
Yamato Transport Co., Ltd. (BP) ........................... 11,000 163
Yamazaki Baking Co., Ltd. # (JH) .......................... 4,000 37
Yasuda F & M Insurance (JR) ............................... 21,000 213
Yokogawa Electric (JY) .................................... 6,000 80
-------
53,472
Malaysia - 0.4%
AMMB Holdings (JQ) ........................................ 25,400 22
Astro All Asia Network plc * (JA) ......................... 15,300 22
Bandar Raya Developments Berhad (BL) ...................... 6,000 3
Berjaya Sports Toto Berhad (BZ) ........................... 10,800 12
British American Tobacco Berhad * (JI) .................... 3,600 43
Cimb Berhad (JP) .......................................... 5,000 7
Commerce Asset Holdings(JP) ............................... 39,800 49
DRB-Hicom Berhad (BV) ..................................... 11,000 6
Edaren Otomobil (JE) ...................................... 2,000 2
EON Capital Berhad (BD) ................................... 2,792 4
Gamuda Berhad (BJ) ........................................ 15,100 21
Genting Berhad (BZ) ....................................... 10,000 50
Golden Hope Plants (JH) ................................... 6,000 6
Guiness Anchor Berhad (JG) ................................ 4,000 5
Highlands & Lowlands Bhd (JH) ............................. 4,000 4
Hong Leong Bank Berhad (JP) ............................... 12,700 18
Hong Leong Credit (JQ) .................................... 6,000 7
Hong Leong Industries Berhad (BL) ......................... 2,000 2
IGB Corp. Berhad (JS) ..................................... 16,000 5
IJM Corporation Berhad (BJ) ............................... 6,000 7
IOI Corp. (JH) ............................................ 17,300 43
IOI Properties (JS) ....................................... 2,000 4
Kuala Lumpur Kepong Berhad (JH) ........................... 7,000 13
LaFarge Malayan Cement Berhad (BD) ........................ 25,000 5
MAA Holdings Berhad (JR) .................................. 3,000 4
Magnum Corp. Berhad (BZ) .................................. 20,000 13
Malakoff Berhad (J3) ...................................... 14,000 26
Malay Airline Systems (BQ) ................................ 5,000 6
Malayan Banking Berhad (JP) ............................... 44,800 139
Malaysia Airport Holdings, Berhad (BT) .................... 8,000 3
Malaysia International Shipping Berhad (BR) ............... 12,800 52
Malaysian Bulk Carriers Berhad (BR) ....................... 7,000 5
Malaysian Oxygen Berhad (BC) .............................. 2,000 6
Malaysian Pacific Industries (J0) ......................... 2,000 8
Maxis Communications Bhd (J2) ............................. 17,300 $ 43
MK Land Holdings Berhad (JS) .............................. 8,000 4
MMC Corp. (BF) ............................................ 8,000 4
Mulpha International Berhad * (JQ) ........................ 23,000 4
Multi-Purpose Holdings Berhad * (JQ) ...................... 16,000 5
Nestle Berhad (JH) ........................................ 2,000 12
New Straits Times Press Berhad * (JA) ..................... 3,000 3
Oriental Holdings Berhad (BV) ............................. 4,000 4
OSK Holdings Berhad (JQ) .................................. 7,000 3
OYL Industries Berhad (BI) ................................ 2,300 23
Petronas Dagangan Berhad (BB) ............................. 3,000 6
Petronas Gas Berhad (J4) .................................. 11,300 21
Plus Expressways Berhad (BT) .............................. 36,100 27
PPB Group Berhad (JH) ..................................... 4,000 7
Proton Holdings Berhad (BU) ............................... 7,000 17
Public Bank Berhad (JQ) ................................... 26,775 54
Resorts World Berhad (BZ) ................................. 13,100 34
RHB Capital Berhad (JP) ................................... 17,000 10
Road Builder, Inc. (BJ) ................................... 8,000 5
Sime Darby Berhad (BL) .................................... 30,800 49
SP Setia (JS) ............................................. 12,000 14
Star Publications (JA) .................................... 4,000 7
TA Enterprise Berhad (JQ) ................................. 18,000 4
Tan Chong Motor Holdings (BV) ............................. 9,000 4
Tanjong plc (BZ) .......................................... 5,000 19
Telekom Malaysia Berhad (J1) .............................. 22,800 70
Tenaga Nasional Berhad (J3) ............................... 21,800 63
Transmile Group Berhad (BP) ............................... 3,000 7
UMW Holdings Berhad (BU) .................................. 4,000 5
Unisem Berhad (J0) ........................................ 2,000 4
YTL Corp., Berhad (J3) .................................... 12,060 17
-------
1,171
Mexico - 0.7%
Alfa, S.A.(BL) ............................................ 9,138 47
America Movil SA de CV - Ser L (J2) ....................... 181,793 477
Cemex SA de CV * (BD) ..................................... 40,376 295
Coca-Cola Femsa, SA - Ser. L NPV (JG) ..................... 7,812 19
Consoricoara SA * (BW) .................................... 4,300 13
Control Common Mexico (JD) ................................ 6,800 8
Corp. GEO SA De CV - Ser. B * (BW) ........................ 9,700 19
Corporacion Interamericana de Entretenimiento SA * (JA) ... 6,763 21
Fomento Economico Mexicano SA de CV(JG) ................... 17,940 94
GPO Continental (JG) ...................................... 4,100 8
Grupo Aeroportuario del Sureste SA de CV (BT) ............. 6,222 17
Grupo Carso SA de CV - Ser. A1 (BL) ....................... 6,978 37
Grupo Financiero Banorte SA (JP) .......................... 9,324 59
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Value
Name of Issuer Shares (000's)
-------------- ------- -------
COMMON STOCK - Continued
Mexico - Continued
Grupo Modelo SA de CV - Ser. C (JG) ..................... 14,825 $ 41
Grupo SA de CV - Ser. A (JH) ............................ 7,946 20
Grupo Televisa SA (JA) .................................. 57,826 174
Industrias Penoles SA (BF) .............................. 1,948 10
Kimberly-Clark de Mexico SA de CV(JJ) ................... 13,426 46
Nuevo Grupo Mexico * (BF) ............................... 9,850 50
Telephonos de Mexico SA - Ser. L (J1) ................... 198,243 380
TV Azteca (JA) .......................................... 33,398 21
Vitro Sa de CV - Ser. A (BE) ............................ 4,500 5
WalMart de Mexico - Ser. V(JE) .......................... 50,114 172
-------
2,033
Monacco - 0.0%
BQE Maroccomm (JP) ...................................... 118 8
ONA (BL) ................................................ 111 12
-------
20
Netherlands - 3.9%
ABN Amro Holding NV (JP) ................................ 43,182 1,139
Aegon NV (JR) ........................................... 38,247 519
Akzo Nobel NV (BC) ...................................... 7,418 315
ASM Lithography Holding NV * (J0) ....................... 13,514 216
Corio NV (JS) ........................................... 1,149 67
DSM NV (BC) ............................................. 2,137 138
Elsevier NV(JA) ......................................... 19,594 266
Getronics NV # * (JU) ................................... 13,351 30
Hagemeyer NV # * (BN) ................................... 13,276 31
Heineken NV (JG) ........................................ 6,686 222
IHC Caland NV (BM) ...................................... 841 53
ING Groep NV (JQ) ....................................... 51,134 1,541
Koninklijke(Royal) Philips Electronics NV (BW) .......... 36,463 963
Koninklijke Ahold NV * (JF) ............................. 43,246 334
Koninklijke KPN NV (J1) ................................. 55,341 524
Koninklijke Numico N.V. * (JH) .......................... 4,017 144
Oce NV (JZ) ............................................. 2,107 32
Randstad Holdings NV (BO) ............................... 1,208 47
Rodamco Europe NV (JS) .................................. 1,203 95
Royal Dutch Petroleum Co. # (BB) ........................ 57,627 3,304
TNT Post Group NV (BP) .................................. 10,538 285
Unilever NV(JH) ......................................... 15,834 1,058
Vedior (BO) ............................................. 4,384 71
VNU NV # (JA) ........................................... 6,717 198
Wereldhave NV (JS) ...................................... 555 60
Wolters Kluwer NV (JA) .................................. 7,651 153
-------
11,805
New Zealand - 0.2%
Auckland International (BT) ............................. 6,406 37
Carter Holt Harvey, Ltd. (BG) ........................... 17,438 26
Contact Energy Limited # (J3) ........................... 7,747 36
Fisher & Paykel AP (BW) ................................. 6,188 19
Fisher & Paykel Industries, Inc. (JL) ................... 12,235 $ 28
Fletcher Building (BD) .................................. 11,515 55
Fletcher Challenge Forests (BG) ......................... 543 1
Independent Newspapers, Ltd. (JA) ....................... 2,928 12
NGC Holdings, Ltd. (J4) ................................. 3,744 8
Sky City Entertainment Group, Ltd. (BZ) ................. 10,903 42
Sky Network Television, Ltd. * (JA) ..................... 2,653 12
Telecom Corp. of New Zealand, Ltd. (J1) ................. 51,474 228
The Warehouse Group, Ltd. (JD) .......................... 3,629 9
Tower, Ltd. * (JR) ...................................... 7,494 12
Waste Management, Inc. (BO) ............................. 2,576 10
-------
535
Norway - 0.5%
Den Norske Bank (JP) .................................... 18,800 185
Frontlinel, Ltd. # (BR) ................................. 1,100 49
Norsk Hydro ASA # (BB) .................................. 4,120 323
Norske Skogindustrier ASA - Cl. A # (BG) ................ 3,050 66
Orkla ASA # (JG) ........................................ 5,450 178
Petroleum Geo-Services SA # * (BB) ...................... 464 29
Schibsted ASA (JA) ...................................... 1,400 40
Smedvig # (BA) .......................................... 850 14
Statoil ASA (BB) ........................................ 15,500 242
Storebrand ASA (JR) ..................................... 6,400 61
Tandberg ASA # (JY) ..................................... 3,775 47
Telenor AS (J1) ......................................... 23,000 208
Tomra Systems ASA # (BM) ................................ 4,700 26
Yara International * (BC) ............................... 5,903 77
-------
1,545
Peru - 0.0%
Credicorp, Ltd. (JP) .................................... 1,076 17
Minas Buenaventura SA (BF) .............................. 1,722 39
Southern Peru Copper Corp. (BF) ......................... 272 13
-------
69
Philippines - 0.0%
Ayala Corp (JQ) ......................................... 90,000 10
Ayala Land, Inc.(JS) .................................... 91,000 12
Bank of the Philippine Islands (JP) ..................... 15,141 14
Globe Telecom, Inc. (J2) ................................ 586 10
Philippine Long Distance Telephone Co. * (J1) ........... 816 20
San Miguel Corp. - Cl. B (JG) ........................... 6,500 9
SM Prime Holdings, Inc. (JS) ............................ 63,000 9
-------
84
Poland - 0.2%
AGORA * (JA) ............................................ 888 17
Bank Pekao SA (JP) ...................................... 1,873 86
Bank Przemyslowo-Handlowy (JP) .......................... 243 41
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Poland - Continued
Bank Zachodni (JP) ....................................... 620 $ 20
BRE Bank SA (JP) ......................................... 245 9
Budimex SA - Ser. B * (BJ) ............................... 325 5
Celuloza Swiecie (BG) .................................... 355 7
Computerland SA * (JX) ................................... 170 6
DEBICA - Ser. A (BU) ..................................... 175 6
Echo Investment * (JS) ................................... 167 5
Globe Trade Center * (BO) ................................ 143 5
Grupa Kety SA (BF) ....................................... 165 7
KGHM Polska Miedz * (BF) ................................. 3,102 32
Orbis SA (BZ) ............................................ 715 6
Polska Groupa Farmaceutyczna (JM) ........................ 260 5
Polski Koncern Nafto (BB) ................................ 8,450 107
Powszechna Kasa OS * (JP) ................................ 11,308 105
Prokom Software SA * (JU) ................................ 272 13
Telekomunikacja (J1) ..................................... 19,753 130
------
612
Portugal - 0.3%
Banco Comercial Portgues SA (JP) ......................... 48,062 123
Banco Espirito Santo SA (JP) ............................. 2,782 50
BPI-SGPS SA (JQ) ......................................... 9,147 37
Brisa-Auto Estradas de Portugal SA (BT) .................. 9,652 88
Cimpor-Cimentos de Portugal (BD) ......................... 5,487 31
Electricidade de Portugal SA (J3) ........................ 58,937 178
Jeronimo Martins SGPS SA * (JF) .......................... 1,007 13
Part Multimedia SGPS (JA) ................................ 1,267 32
Portugal Telecom SA (J1) ................................. 21,888 269
Sonae SGPS SA (BL) ....................................... 24,051 35
------
856
Russia - 0.0%
Rostelecom - ADR # * (J1) ................................ 2,660 29
Singapore - 0.7%
Allgreen Properties, Ltd. (JS) ........................... 13,000 9
Ascendas Real Estate * (JS) .............................. 1,300 1
Ascendas Real Estate Investment Trust # (JS) ............. 13,000 14
Capitaland, Ltd. # (JS) .................................. 26,000 34
CapitaMall Trust (JS) .................................... 16,500 18
Chartered Semiconductor Manufacturing # * (J0) ........... 25,000 15
City Developments, Ltd. (JS) ............................. 13,000 56
Comfort DelGro Corp., Ltd. (BS) .......................... 47,000 45
Creative Technology, Ltd. # (JX) ......................... 1,400 21
Cycle & Carriage, Ltd. (JB) .............................. 3,041 20
Datacraft Asia, Ltd. # * (JW) ........................... 6,000 6
DBS Group Holdings, Ltd. (JP) ............................ 31,000 306
Fraser and Neave, Ltd. (JG) .............................. 4,620 46
Haw Par Value Corp., Ltd. (BL) ........................... 2,490 8
Keppel Corp., Ltd. - Cl. A # (JQ) ........................ 15,000 79
Keppel Land, Ltd. (JS) ................................... 9,000 12
Neptune Orient Lines, Ltd. (BR) .......................... 14,000 26
Oversea-Chinese Banking Corp., Ltd. (JP) ................. 30,000 $ 248
Overseas Union Enterprise, Ltd. (BZ) ..................... 1,000 5
Parkway Holdings, Ltd. (JM) .............................. 15,000 14
Saint Assembly Test Service * (J0) ....................... 28,000 17
Sembcorp Industries, Ltd. (BL) ........................... 25,000 25
Sembcorp Logistics, Ltd. (BT) ............................ 8,000 8
Sembcorp Marine (BM) ..................................... 13,000 11
Singapore Airlines (BQ) .................................. 16,000 112
Singapore Exchange, Ltd. (JQ) ............................ 19,000 21
Singapore Land, Ltd. (JS) ................................ 4,000 12
Singapore Post, Ltd. (BP) ................................ 36,000 20
Singapore Press (JA) ..................................... 44,500 125
Singapore Technology Engineering, Ltd.(BH) ............... 36,000 51
Singapore Telecom (J1) ................................... 183,080 267
SMRT Corp. (BS) .......................................... 17,000 9
United Overseas Bank, Ltd.(JP) ........................... 33,000 279
United Overseas Land, Ltd. (BZ) .......................... 10,000 12
Venture Manufacturing, Ltd. (JY) ......................... 6,000 58
Wing Tai Holdings, Ltd. (JS) ............................. 12,000 7
------
2,017
South Africa - 1.6%
African Bank Investments, Ltd. (JQ) ...................... 12,310 40
Alexander Forbes, Ltd. (JQ) .............................. 9,096 17
Anglo American Platinum Corp., Ltd. (BF) ................. 1,744 64
Anglo American plc (BF) .................................. 39,202 926
Anglogold (BF) ........................................... 3,719 131
Aveng, Ltd. (BJ) ......................................... 11,769 25
AVI, Ltd. (BL) ........................................... 8,722 35
Barlow, Ltd. (BL) ........................................ 5,931 112
Bidvest Group, Ltd. (BL) ................................. 7,094 101
Edgars Consolidated Stores (JE) .......................... 1,307 70
FirstRand, Ltd. (JP) ..................................... 85,775 203
Foschini, Ltd. (JE) ...................................... 5,930 42
Gold Fields Mining (BF) .................................. 11,009 135
Harmony Gold Mining (BF) ................................. 9,598 87
Impala Platinum Holdings, Ltd. (BF) ...................... 1,805 153
Imperial Holdings, Ltd. (JE) ............................. 5,627 104
Investec Ltd. (JQ) ....................................... 971 31
Ispat Iscor, Ltd. (BF) ................................... 5,433 63
JD Group, Ltd. (JE) ...................................... 4,381 53
Liberty Life Association of Africa, Ltd. (JR) ............ 3,345 39
M-Cell, Ltd. (J2) ........................................ 37,754 291
Massmart Holdings, Ltd.(JF) .............................. 5,428 44
Metoz Holdings, Ltd. * (BO) .............................. 46,981 21
Metropolitan Holdings, Ltd. (JR) ......................... 15,632 30
Murray & Roberts Holdings, Ltd. (BL) ..................... 9,733 24
Nampak, Ltd. (BE) ........................................ 15,580 43
Naspers, Ltd. - N Shares (JA) ............................ 8,473 112
Nedcor, Ltd. (JP) ........................................ 5,640 78
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
South Africa - Continued
Network Healthcare Holdings, Ltd. (JM) .................. 31,257 $ 28
Old Mutual plc(JR) ...................................... 109,136 276
Pick'n Pay Stores, Ltd. (JF) ............................ 6,378 26
Reunert, Ltd. (JY) ...................................... 4,999 33
Sanlam, Ltd. (JR) ....................................... 73,747 170
Sappi, Ltd.(BG) ......................................... 6,159 90
Sasol, Ltd.(BB) ......................................... 16,227 348
Shoprite Holdings, Ltd. (JF) ............................ 11,051 25
Spar Group, Ltd. * (JB) ................................. 4,510 17
Standard Bank Group, Ltd. (JQ) .......................... 34,448 401
Steinhoff International Holdings (BW) ................... 22,957 51
Telkom Group, Ltd. (J1) ................................. 7,051 122
Tiger Brands Ltd. (JH) .................................. 4,827 83
Tongaat Hulett Group (JH) ............................... 1,500 14
Truworths International, Ltd. (JE) ...................... 12,417 38
Woolworth's Holdings, Ltd. (JD) ......................... 22,783 46
------
4,842
South Korea - 1.8%
Amorepacific Corp. (JK) ................................. 130 33
Cheil Communications, Inc. (JA) ......................... 110 16
Cheil Industries (BY) ................................... 1,210 19
CJ Corp. (JH) ........................................... 540 37
Dae Duck Electronic (JY) ................................ 1,010 9
Daegu Bank (JP) ......................................... 3,420 24
Daelim Industrial Co., Ltd. (BJ) ........................ 680 35
Daewoo Engineering & Construction (BL) .................. 4,050 25
Daewoo Heavy Industries, Ltd. * (BM) .................... 1,800 14
Daewoo Securities Co. * (JQ) ............................ 2,610 13
Daewoo Shipbuilding & Marine(BM) ........................ 2,600 39
Daishin Securities(JQ) .................................. 1,280 17
Daum Communications Corp. * (JT) ........................ 280 6
Hana Bank (JP) .......................................... 3,650 91
Hanjin Shipping Co., Ltd. (BR) .......................... 1,260 29
Hankook Tire Co., Ltd. (BU) ............................. 2,630 26
Hanwha Chemical (BC) .................................... 1,480 15
Hite Brewery Co. (JG) ................................... 230 19
Honam Petrochemical (BC) ................................ 440 21
Hyosung (BC) ............................................ 620 6
Hyundai Department Store (JD) ........................... 450 15
Hyundai Heavy Industries Co., Ltd. (BM) ................. 1,230 41
Hyundai Industrial & Development (BJ) ................... 1,720 27
Hyundai Mobis (BU) ...................................... 1,620 102
Hyundai Motor Co., Ltd. (BV) ............................ 5,062 271
Hyundai Securities Co. * (JQ) ........................... 3,690 18
Kangwon Land, Inc. (BZ) ................................. 2,890 38
KIA Motors Corp. (BV) ................................... 4,364 46
Kookmin Bank * (JP) ..................................... 8,763 343
Korea Electric Power Corp. (J3) ......................... 7,441 193
Korea Exchange Bank * (JP) .............................. 3,310 27
Korea Telecom Corp. (J1) ................................ 4,050 $ 162
Korean Air Lines * (BQ) ................................. 1,090 20
KT & G Corp. (JI) ....................................... 3,640 109
Kumgang Korea Che (BI) .................................. 140 18
LG Cable & Machinery, Ltd. (BK) ......................... 570 12
LG Chemical (BC) ........................................ 1,332 53
LG Electronics, Inc. (BW) ............................... 2,636 163
LG Engineering & Construction Co. (BJ) .................. 960 26
LG Household & health (JJ) .............................. 300 8
LG Investment & Securities Co., Ltd. * (JQ) ............. 2,635 22
LG Petrochemical (BC) ................................... 730 18
NCsoft Corp. * (JT) ..................................... 330 27
NHN Corp. (JT) .......................................... 371 30
Nong Shimco Co., Ltd. (JH) .............................. 90 22
Pohang Iron & Steel Co., Ltd. (BF) ...................... 2,060 372
Poongsan Corp. (BF) ..................................... 610 7
Pusan Bank (JP) ......................................... 3,240 25
S-Oil Corp. (BB) ........................................ 1,320 85
S1 Corp. (BO) ........................................... 640 23
Samsung Corp. (BN) ...................................... 4,341 54
Samsung Display Devices Co. (JY) ........................ 1,020 111
Samsung Electro-Mechanics Co. (JY) ...................... 1,616 41
Samsung Electronics * (J0) .............................. 3,829 1,666
Samsung Fine Chemicals Co., Ltd. (BC) ................... 450 8
Samsung Fire & Marine Insurance (JR) .................... 1,070 84
Samsung Heavy Industries (BM) ........................... 4,670 29
Samsung Securities Co., Ltd. (JQ) ....................... 1,444 35
Shinhan Financial (JP) .................................. 6,641 150
Shinsegaeco, Ltd. (JD) .................................. 300 82
SK Corp. (BB) ........................................... 2,590 142
SK Telecom Co., Ltd. (J2) ............................... 1,171 223
Yuhan Corp. (JO) ........................................ 178 15
------
5,457
Spain - 3.2%
Abertis Infrastructuras SA # (BT) ....................... 6,929 152
Acciona SA # (BJ) ....................................... 779 69
Acerinox SA # (BF) ...................................... 5,324 85
ACS Actividades de Construccion y Servicos SA # (BJ) .... 7,089 161
Aguas De Barcelona # * (J6) (a) ......................... 14 0
Altadis SA -Ser. A # (JI) ............................... 7,284 332
Amadeus Global Travel - Ser. A # (BO) ................... 8,926 92
Antena 3 TV # * (JA) .................................... 549 40
Banco Bilbao Vizcaya SA # (JP) .......................... 86,766 1,533
Banco Popular Espanol SA # (JP) ......................... 4,312 283
Banco Santander Central Hispano SA # (JP) ............... 159,911 1,976
Cintra Concesiones de Infrae * (BS) ..................... 5,053 55
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Spain - Continued
Corp. Mapfre SA # (JR) .................................. 2,943 $ 43
Endesa SA # (J3) ........................................ 25,559 598
Fomento de Construcciones y Contratas SA # (BJ) ......... 1,172 56
Gamesa Corp. Tecnologica, SA # (BA) ..................... 2,883 40
Gas Natural SDG SA # (J4) ............................... 4,163 128
Grupo Ferrovial SA # (BJ) ............................... 1,726 92
Iberdrola SA # (J3) ..................................... 20,692 524
Iberia Lineas Aereas de Espana SA # (BQ) ................ 11,781 41
Inditex # (JE) .......................................... 5,934 174
Indra Sistemas SA (JU) .................................. 3,278 56
Metrovacesa SA # (JS) ................................... 997 46
NH Hoteles SA (BZ) ...................................... 2,106 28
Promotora de Informaciones SA # (JA) .................... 1,976 42
Repsol SA # (BB) ........................................ 24,558 637
Sociedad General de Aguas de Barcelona SA * (J6) ........ 1,488 31
Soge Cable # * (JA) ..................................... 995 44
Telefonica Publicidad e Informacion SA # (JA) ........... 4,312 40
Telefonica SA (J1) ...................................... 120,085 2,253
Union Electrica Fenosa SA # (J3) ........................ 5,744 150
Vallehermoso SA (JS) .................................... 2,605 43
Zeltia SA # (JN) ........................................ 3,894 27
------
9,871
Sweden - 2.0%
Alfa Laval AB # (BM) .................................... 1,818 29
Assa Abloy # (BI) ....................................... 8,000 136
Atlas Copco AB (BM) ..................................... 1,800 75
Atlas Copco AB - Ser. A (BM) ............................ 3,000 135
Axfood AB (JF) .......................................... 686 23
Billerud # (BE) ......................................... 1,400 25
Capio AB * (JM) ......................................... 1,963 23
Carnegie & Co. (JQ) ..................................... 1,496 19
Castellumab (JS) ........................................ 1,043 37
Electrolux AB - Ser. B # (BW) ........................... 7,500 171
Elekta AB - Ser. B * (JL) ............................... 798 23
Eniro AB Seki # (JA) .................................... 4,444 45
Gambro - Ser. A (JM) .................................... 4,700 67
Gambro - Ser. B (JM) .................................... 2,300 32
Getinge AB - Ser. B (JL) ................................ 4,112 51
Hennes & Mauritz AB # (JE) .............................. 12,650 439
Hoganas AB - Cl. B (BF) ................................. 700 19
Holmen AB - Ser. B (BG) ................................. 1,300 45
Lundlin Petroleum AB * (BB) ............................. 4,477 26
Modern Times Group # * (JA) ............................. 1,350 37
NetCom Systems, Inc. - Cl. B # (J1) ..................... 2,600 102
Nordic Baltic Holding AB (JP) ........................... 58,500 588
Omhex AB # * (JQ) ....................................... 1,600 20
Oriflame Cosmetics SA # * (JK) .......................... 750 17
Sandvik AB (BM) ......................................... 5,900 237
SAS AB # * (BQ) ......................................... 2,400 22
Scania AB - Ser. B (BM) ................................. 2,600 $ 102
Securitas AB # (BO) ..................................... 8,000 137
Skand Enskilda Banken - Cl. A (JP) ...................... 12,600 243
Skandia Forsakrings AB (JR) ............................. 27,000 134
Skanska AB - Ser. B (BJ) ................................ 9,900 118
SKF AB - Ser. B # (BM) .................................. 2,500 111
SSAB Svensktal AB - Ser. A (BF) ......................... 1,600 38
SSAB Svensktal AB - Ser. B (BF) ......................... 800 19
Svenska Cellulosa AB - Cl. B (BG) ....................... 5,200 221
Svenska Handelsbanken, Inc. # (JP) ...................... 13,900 360
Swedish Match # (JI) .................................... 9,000 104
Telefonaktiebolaget LM Ericsson AB * (JW) ............... 385,200 1,224
Telia AB (J1) ........................................... 50,100 299
Trelleborg AB - Ser. B # (BU) ........................... 2,000 34
Volvo AB (BM) ........................................... 6,000 237
Volvo AB - Ser. A (BM) .................................. 2,600 99
Wihlborgs Fastigheter AB (JS) ........................... 2,119 44
WM Data AB - Ser. B # (JU) .............................. 10,000 22
------
5,989
Switzerland - 5.7%
ABB, Ltd. * (BK) ........................................ 53,151 296
Adecco SA (BO) .......................................... 3,726 187
Ciba Specialty Chemicals AG (BC) ........................ 1,962 149
Clariant AG (BC) ........................................ 6,633 107
Credit Suisse Group (JP) ................................ 32,288 1,353
Geberit AG (BI) ......................................... 96 70
Givaudan (BC) ........................................... 206 135
Holcim (BD) ............................................. 4,535 272
Kudelski SA # * (JY) .................................... 879 32
Kuoni Reisen Holding AG - Ser. B (BZ) ................... 80 35
Logitech International SA * (JX) ........................ 1,252 76
Lonza Group AG (BC) ..................................... 1,010 57
Micronas Semiconductor Holdings AG * (J0) ............... 860 42
Nestle SA (JH) .......................................... 11,451 2,986
Nobel Biocare AG (JL) ................................... 663 120
Novartis AG (JO) ........................................ 67,567 3,393
Phonak Holdings AG (JL) ................................. 1,150 38
Richemont (JE) .......................................... 14,759 490
Rieter Holdings AG (BM) ................................. 124 36
Roche Holdings AG (JO) .................................. 19,940 2,287
Serono SA # (JN) ........................................ 183 120
SGS Holdings (BO) ....................................... 125 87
Straumann Holdings (JL) ................................. 210 43
Sulzer AG (BM) .......................................... 93 37
Swatch Group (BY) ....................................... 954 139
Swatch Group AG (BY) .................................... 1,811 54
Swiss Reinsurance Co. (JR) .............................. 9,097 647
Swisscom AG (J1) ........................................ 749 294
Syngenta AG (BC) ........................................ 3,023 320
Synthes, Inc. (JL) ...................................... 1,298 145
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Switzerland - Continued
UBS AG (JP) ............................................. 30,341 $ 2,535
Unaxis Holding AG (J0) .................................. 336 33
Valora Holding AG (JE) .................................. 105 26
Zurich Finance (JR) ..................................... 4,067 676
-------
17,317
Taiwan - 1.5%
Accton Technollogies, Inc. * (JW) ....................... 10,000 5
Acer Communicaton (JX) .................................. 38,279 44
Acer, Inc. (JX) ......................................... 44,233 73
Advanced Semiconductor Engineering, Inc. (J0) ........... 67,376 51
Advantech Co., Ltd. (JX) ................................ 4,099 10
Arima Computer (JX) ..................................... 14,000 4
Asia Cement Corp. (BD) .................................. 20,235 14
Asia Optical Co., Inc. (BX) ............................. 2,297 13
Asustek Computer (JX) ................................... 41,712 111
AU Optronics Corp. (JY) ................................. 87,088 126
BES Engineering Corp. (BJ) .............................. 22,440 5
Cathay Construction (JS) ................................ 23,000 14
Cathay Financial Holding Co., Ltd. (JR) ................. 97,000 198
Chang Hwa Commercial Bank * (JP) ........................ 79,000 55
Cheng Shin Indiana (BU) ................................. 9,864 13
Chi Mei Optoelectronics Corp. (JX) ...................... 52,210 70
China Airlines (BQ) ..................................... 23,650 13
China Dev Fin Holding * (JP) ............................ 197,787 95
China Motor Corp. (BV) .................................. 10,000 13
China Steel Corp. (BF) .................................. 158,095 178
China Trust Finance (JP) ................................ 93,914 112
Chungwa Picture Tubes, Ltd. * (JY) ...................... 82,216 37
Chungwa Telecom Co., Ltd. (J1) .......................... 43,000 85
CMC Magnetics Corp. (JX) ................................ 59,775 31
Compal Electronics, Inc. (JX) ........................... 65,981 66
Compeq Manufacturing Co., Ltd. * (JX) ................... 12,000 4
Continental Engineering (BJ) ............................ 8,000 4
DD Link (JW) ............................................ 8,406 10
Delta Electronics Inc. (JY) ............................. 23,500 41
E. Sun Financial (JP) ................................... 35,879 30
Elite Group Computers (JX) .............................. 9,000 6
Eternal Chemical Co., Ltd. (BC) ......................... 7,000 5
Eva Airways (BQ) ........................................ 18,669 9
Evergreen Marine Corp. (BR) ............................. 13,779 14
Far East Textile (BL) ................................... 46,301 37
First Financial Holding, Co., Ltd. * (JQ) ............... 90,000 77
Formosa Chemical & Fibre (BC) ........................... 26,496 50
Formosa Plastic (BC) .................................... 82,396 141
Formosa Taffeta Co., Ltd. (BY) .......................... 12,240 6
Fu Sheng Industrail Co., Ltd. (BL) ...................... 14,000 21
Fubon Financial Holding Co. (JQ) ........................ 85,000 87
Giant Manufacturing Co., Ltd. (BX) ...................... 3,000 5
Gigabyte Technology Co. (JX) ............................ 8,400 10
Hon Hai Precision Insustry Co., Ltd. - Cl. G (JY) ....... 51,740 $ 239
Hua Nan Financial Holding Co. (JP) ...................... 65,920 56
International Bank of Taipei (JP) ....................... 43,500 35
Inventec Co., Ltd. (JX) ................................. 23,100 12
Kinpo Electronics (JZ) .................................. 16,200 7
Largan Precision Co. (BL) ............................... 2,100 12
Lite on Technology (JX) ................................. 44,712 48
Macronix International Co., Ltd. * (J0) ................. 106,177 24
MediaTek, Inc. (J0) ..................................... 13,628 93
Mega Financial Holding Co., Ltd. (JP) ................... 200,000 138
Micro Star International (JX) ........................... 13,670 10
Nan Ya Plastic Corp. (BC) ............................... 102,723 157
Nien Hsing Textile Co., Ltd. (BY) ....................... 6,000 6
Nien Made Enterprises Co., Ltd. (JH) .................... 3,840 6
Optimax Technology Corp. (JY) ........................... 4,804 12
Oriental Union Chemical Corp. (BC) ...................... 8,000 9
Phoenixtec Power (BK) ................................... 7,000 8
Polaris Securities (JQ) ................................. 18,051 10
Pou Chen Corp. (BY) ..................................... 31,334 28
Premier Image Technology (BX) ........................... 6,300 6
President Chain Store Corp. (JF) ........................ 12,594 20
Prodisc Technology, Inc. (JX) ........................... 11,867 5
Quanta Computer, Inc. (JX) .............................. 37,100 67
Quanta Display, Inc. * (JY) ............................. 53,000 31
Realtek Semiconductor Corp. (J0) ........................ 14,130 16
Ritek Corp. (JX) ........................................ 46,561 17
Sampo Corp. (BW) ........................................ 18,900 4
Shihlin Electric (BK) ................................... 6,000 4
Shin Kong Financial Holding Co., Ltd. (JR) .............. 41,161 40
Siliconware Precision (J0) .............................. 37,111 31
Sinopac Holding (JP) .................................... 70,389 41
Synnex Technology International Corp. (JY) .............. 9,900 15
SYSTEX Corp. (JU) ....................................... 14,718 5
Taishin Financial Holding Co., Ltd. (JP) ................ 71,877 67
Taiwan Cellular Corp. (J2) .............................. 49,000 55
Taiwan Cement (BD) ...................................... 31,840 21
Taiwan Glass Industrial Corp. (BI) ...................... 13,560 13
Taiwan Secom Co. (BO) ................................... 5,000 6
Taiwan Semiconductor (J0) ............................... 367,527 584
Taiwan Styrene Monomer Corp. (BC) ....................... 8,000 6
Tatung * (BL) ........................................... 76,146 30
Teco Electric & Machine (BK) ............................ 28,000 9
Uni-President Enterprises Co. (JH) ...................... 56,000 29
United Microelectronics Corp. (J0) ...................... 333,567 215
Via Technologies Inc. * (J0) ............................ 15,310 8
Walshin Lihwa W&C * (BK) ................................ 51,000 28
Wan Hai Lines, Ltd. (BR) ................................ 10,600 11
Winbond Electronic * (J0) ............................... 80,084 32
WUS Printed Circuit (JY) ................................ 7,212 3
Ya Hsing Indiana Co. (JY) ............................... 11,728 11
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ---------- -------
(000's)
COMMON STOCK - Continued
Taiwan - Continued
Yageo Corp. * (JY) ................................... 38,000 $ 14
Yang Ming Marine (BR) ................................ 25,845 25
Yieh Phuients Co. (BD) ............................... 14,000 10
Yuanta Core Pacific * (JQ) ........................... 47,140 36
Yue Loong Motor Co. (BV) ............................. 17,210 20
Yuen Foong Yu Manufacturing Co., Ltd. (BG) ........... 19,440 11
Zyxel Communication (JW) ............................. 6,600 15
------
4,464
Thailand - 0.2%
Advanced Information Services (J2) ................... 24,700 71
Airports of Thailand * (BT) .......................... 11,700 14
Bangkok Bank (JP) .................................... 7,500 20
Bangkok Bank Co., Ltd. (JP) .......................... 26,200 77
Bangkok Expressway Public Co., Ltd. (BT) ............. 9,700 6
Banpu Co. (BF) ....................................... 2,700 10
Bec World (JA) ....................................... 25,200 10
Charoen Pokphand Public Co., Ltd. (JH) ............... 64,100 6
Delta Electronics (JY) ............................... 10,000 4
Electricity Generating Public Co., Ltd. (J3) ......... 3,400 6
GMM Grammy Public Co., Ltd. (JA) ..................... 6,900 4
Hana Micorelectronic Public Co., Ltd. (JY) ........... 11,500 6
Italian Thai Development Public Co., Ltd. * (BJ) ..... 33,500 8
ITV PCL * (JA) ....................................... 8,400 2
Kasikornbank Public Co., Ltd. * (JP) ................. 5,900 8
Kiatnakin Finance Public Co., Ltd. (JQ) .............. 5,600 5
Kim England Securities, Ltd. (FB) (a) ................ 3,100 3
Krung Thai Bank Public Co., Ltd. (JP) ................ 78,300 18
Land & Houses (BJ) ................................... 65,300 19
Land & Houses Public Co., Ltd. (JS) .................. 30,500 8
National Finance Public Co., Ltd. (BD) ............... 18,300 6
National Petrochemical Public Co., Ltd. (BC) ......... 2,100 7
PTT Exploration & Production Public Co., Ltd. (BB) ... 7,300 56
PTT Public Co. (BB) .................................. 23,500 112
Ratchaburi Electric (J3) ............................. 6,200 3
Sahaviriya Steel (BF) (a) ............................ 111,000 9
Seven Eleven (JE) .................................... 2,500 4
Shin Corp. (J2) ...................................... 28,800 30
Siam Cement Co. (BD) ................................. 8,437 60
Siam City Cement Public Co., Ltd. (BD) ............... 1,300 8
Siam Commercial Bank Public Co. (JP) ................. 15,500 19
Siam Makro (JD) ...................................... 2,400 3
Sino Thai Engineering & Construction (BJ) ............ 13,800 $ 6
TelecomAsia Corp. Public Co., Ltd. * (J1) ............ 37,800 8
Thai Airways International plc (BQ) .................. 14,200 18
Thai Farmers Bank Public Co., Ltd. (JP) .............. 32,300 47
Thai Olefin Public * (BC) ............................ 5,500 9
Thai Union Frozen Products Public Co., Ltd. (JH) ..... 8,400 5
The Siam Cement Public Co., Ltd. (BI) ................ 3,700 23
Tisco Finance plc (JQ) ............................... 8,500 5
------
743
Turkey - 0.2%
Akbank TAS * (JP) .................................... 14,899,355 92
Akrilik Kimya Sanayii SA * (BY) ...................... 308,000 4
Aksigorta * (JR) ..................................... 1,520,000 6
Alarko Holdings * (JQ) ............................... 137,000 4
Anadolu Efes Biracilik ve Malt Sanayii AS * (JG) ..... 1,601,883 32
Arcelik AS * (BW) .................................... 2,270,521 14
Aygaz AZ * (J4) ...................................... 1,848,000 4
CIMSA (BD) ........................................... 1,377,000 5
Dogan Sirketler Grubu Holding AS * (JQ) .............. 7,303,750 16
Dogan Yayin Holding Corp. * (JA) ..................... 2,232,000 10
Eregli Demir ve Celik Fabrikalari T.A.S (BF) ......... 11,198,336 51
Ford Otomotiv Sanayi AS * (BV) ....................... 1,659,934 13
Haci Omer Sabanci Holding AG * (JQ) .................. 6,811,211 27
Hurriyet Gazete * (JA) ............................... 4,139,500 10
Koc Holding AS * (JQ) ................................ 4,482,155 29
Migros Turk T.A.S. * (JF) ............................ 1,463,000 12
T Sise Co. * (BW) .................................... 4,206,625 12
Tofas Otomobil * (BV) ................................ 3,193,000 6
Trakya * (BI) ........................................ 2,261,000 6
Tupras-Turkiye Petrol Rafinerileri A/S * (BB) ........ 2,487,737 25
Turkcell Iletisim Hizmetleri AS * (J2) ............... 5,859,747 41
Turkiye Garanti Bankasi AS * (JP) .................... 11,920,126 38
Turkiye Is Bankasi - Cl. C * (JP) .................... 13,968,769 77
Vestel Elektronik Sanayi ve Ticaret AS * (BW) ........ 2,258,000 9
Yapi ve Kredi Bankasi AS * (JP) ...................... 9,608,380 30
------
573
United Kingdom - 19.9%
3I GROUP (JQ) ........................................ 16,900 216
Aegis Group plc (JA) ................................. 28,822 60
Aggreko plc (BO) ..................................... 6,663 21
Alliance Unichem (JM) ................................ 7,173 104
AMEC plc (BJ) ........................................ 7,702 44
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
United Kingdom - Continued
Amvescap plc (JQ) ...................................... 20,442 $ 126
Anglo American plc (BF) ................................ 1,021 24
ARM Holdings plc (J0) .................................. 26,334 56
Arriva plc (BS) ........................................ 5,876 61
Association British Ports (BT) ......................... 8,519 78
AstraZeneca Group plc (JO) ............................. 45,296 1,639
Balfour Beatty plc (BJ) ................................ 10,767 65
Barclays (JP) .......................................... 175,644 1,972
Barratt Developments plc (BW) .......................... 6,152 70
BBA Group plc (BT) ..................................... 11,712 64
Bellway plc (BW) ....................................... 3,406 53
Berkeley Group Holdings * (BJ) ......................... 2,816 44
BG Group plc (BB) ...................................... 97,165 659
Billiton plc (BF) ...................................... 67,785 793
BOC Group plc (BC) ..................................... 13,417 255
Boots Group (JF) ....................................... 20,920 263
BP Amoco plc (BB) ...................................... 592,194 5,764
BPB (BD) ............................................... 14,214 129
Brambles Industries (BO) ............................... 18,705 93
British Aerospace plc (BH) ............................. 82,266 363
British Airport Authority plc (BT) ..................... 28,893 323
British Airways plc (BQ) ............................... 13,903 63
British American Tobacco plc (JI) ...................... 44,211 760
British Land Co. plc (JS) .............................. 14,430 248
British Sky Broadcast plc (JA) ......................... 33,809 364
BT Group (J1) .......................................... 234,594 912
Bunzl (BO) ............................................. 11,871 99
Cable & Wireless plc(J1) ............................... 66,883 153
Cadbury Schweppes plc(JH) .............................. 56,105 521
Capita Group plc (BO) .................................. 17,224 121
Carnival plc (BZ) ...................................... 4,540 276
Cattles plc (JQ) ....................................... 8,424 59
Centrica (J4) .......................................... 103,957 471
CGU plc (JR) ........................................... 62,126 747
Close Brothers Group plc (JQ) .......................... 3,596 51
Cobham plc (BH) ........................................ 2,834 67
Compass Group plc (BZ) ................................. 58,942 278
Cookson Group plc * (BL) ............................... 43,751 30
Corus Group plc * (BF) ................................. 111,904 108
Daily Mail & General Trust (JA) ........................ 7,843 112
Davis Service (BO) ..................................... 5,245 41
De La Rue plc (BO) ..................................... 4,733 31
Diageo plc (JG) ........................................ 83,973 1,195
Dixons Group plc (JE) .................................. 51,695 151
Electrocomponents plc (BN) ............................. 11,177 61
EMAP plc (JA) .......................................... 7,402 116
EMI Group plc (JA) ..................................... 20,296 103
Enterprise Inns (BZ) ................................... 9,944 151
Exel (BP) .............................................. 7,708 107
Firstgroup (BS) ........................................ 10,517 70
FKI plc (BL) ........................................... 14,956 33
Friends Provident plc (JR) ............................. 55,972 165
George Wimpey plc (BW) ................................. 9,843 76
GKN (BU) ............................................... 18,806 85
GlaxoSmithKline plc (JO) ............................... 160,737 $3,763
Great Portland Estates plc (JS) ........................ 3,306 21
Group 4 Securicor * (BO) ............................... 29,946 80
Hammerson plc (JS) ..................................... 7,096 118
Hanson Building Materials (BD) ......................... 20,409 175
Hays plc (BO) .......................................... 48,586 116
HBOS (JP) .............................................. 105,910 1,721
Hilton Group plc (BZ) .................................. 42,775 233
HMV Group plc (JE) ..................................... 11,615 58
HSBC Holdings plc (JP) ................................. 302,248 5,090
ICAP (JQ) .............................................. 13,694 71
IMI (BM) ............................................... 9,010 68
Imperial Chemical Industries plc (BC) .................. 33,434 154
Imperial Tobacco Group plc (JI) ........................ 19,722 539
Inchcape plc (JB) ...................................... 2,209 83
Intercontinental Hotels (BZ) ........................... 16,938 210
Intertek Group plc (BL) ................................ 4,581 62
Invensys plc * (BM) .................................... 146,432 43
ITV (JA) ............................................... 110,294 222
Johnson Matthey (BF) ................................... 6,237 118
Kelda Group plc (J6) ................................... 9,945 121
Kesa Electricals (JE) .................................. 13,591 74
Kidde plc (BK) ......................................... 21,333 68
Kingfisher (JE) ........................................ 64,670 384
Land Securities SGP (JS) ............................... 12,564 337
Legal & General Group plc (JR) ......................... 174,723 368
Liberty National (JP) .................................. 6,369 118
Lloyds TSB Group plc (JP) .............................. 152,005 1,377
Logica plc (JU) ........................................ 19,306 71
London Stock Exchange (FB) ............................. 7,500 84
Manitoba Group (JQ) .................................... 7,541 213
Marconi Group plc * (JW) ............................... 5,940 64
Marks & Spencer (JD) ................................... 45,006 296
Meggitt plc (BH) ....................................... 12,585 63
MFI Furniture Group (BW) ............................... 15,783 37
Misys plc (JV) ......................................... 14,419 58
Mitchells & Butler (BZ) ................................ 13,419 87
National Express Group (BS) ............................ 4,101 65
National Grid Group (J3) ............................... 84,419 802
National Power plc * (J5) .............................. 38,019 113
Next Group (JD) ........................................ 7,039 223
Novar plc (BI) ......................................... 11,031 40
Pearson plc (JA) ....................................... 21,624 260
Peninsular & Oriental Steam Navigation Co. (BR) ........ 19,050 109
Persimmon plc (BW) ..................................... 7,847 104
Pilkington plc (BI) .................................... 27,334 58
Premier Farnell plc (JY) ............................... 8,500 28
Provident Financial (JQ) ............................... 6,532 84
Prudential Corp. (JR) .................................. 64,039 556
Punch Taverns plc (BZ) ................................. 7,184 95
Rank Group plc (BZ) .................................... 15,289 77
Reckitt Benckiser (JJ) ................................. 16,095 485
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- --------- -------
(000's)
COMMON STOCK - Continued
United Kingdom - Continued
Reed International plc (JA) ........................... 34,135 $ 314
Rentokil Initial plc (BO) ............................. 47,252 134
Reuters Group plc (JA) ................................ 38,619 279
Rexam (BE) ............................................ 15,492 136
Rio Tinto plc (BF) .................................... 29,301 861
RMC Group plc (BD) .................................... 7,566 123
Rolls Royce Group (BH) ................................ 41,874 198
Royal & Sun Alliance Insurance Group (JR) ............. 82,106 122
Royal Bank of Scotland Group (JP) ..................... 85,664 2,875
Ryanair Holdings * (BQ) ............................... 680 5
Sainsbury J plc (JF) .................................. 37,554 195
Schroders (JQ) ........................................ 3,199 46
Scottish & Newcastle (JG) ............................. 22,288 186
Scottish and Southern Energy (J3) ..................... 23,115 386
Scottish Power plc (J3) ............................... 50,379 389
Serco Group plc (BO) .................................. 11,270 52
Severn Trent (J6) ..................................... 9,586 178
Shell Transport & Trading Co. plc (BB) ................ 263,043 2,238
Signet Group (JE) ..................................... 44,166 93
Slough Estates Finance plc (JS) ....................... 10,753 113
Smith & Nephew (JL) ................................... 25,078 256
Smiths Group (BL) ..................................... 15,172 239
South African Breweries plc (JG) ...................... 21,561 357
SSL International plc (JL) ............................ 4,886 29
Stagecoach Group (BS) ................................. 21,318 46
Tate & Lyle (JH) ...................................... 10,539 95
Taylor Woodrow (BW) ................................... 15,717 82
Tesco plc (JF) ........................................ 211,371 1,303
The Great Universal Stores plc (JC) ................... 27,431 493
The Sage Group plc (JV) ............................... 35,956 139
Tomkins plc (BL) ...................................... 19,882 97
Trinity Mirror plc (JA) ............................... 8,297 101
Unilever plc (JH) ..................................... 75,989 745
United Business Media (JA) ............................ 8,633 79
United Utilites - Cl. A (J6) .......................... 7,960 68
United Utilities plc (J5) ............................. 15,471 187
Vodafone AirTouch plc (J2) ............................ 1,804,314 4,883
Whitbread (BZ) ........................................ 8,431 137
William Hill (BZ) ..................................... 10,830 117
Wolseley (BN) ......................................... 15,683 293
WPP Group plc (JA) .................................... 30,694 337
Yell Group plc (JA) ................................... 19,543 165
-------
60,199
United States - 1.5%
Alvarion, Ltd. * (JW) ................................. 998 13
AO Mosenergo - ADR # * (J3) ........................... 2,476 37
Banco Bradesco SA - ADR # * (JP) ...................... 7,287 176
Banco Santander Chile - ADR * (JP) .................... 2,767 94
Brasil Telecom Participacoes SA * (J1) ................ 966 37
Braskem SA - ADR * (BC) ............................... 7,493 382
Centrais Electricas Brasileirias SA - ADR Cl. B # *
(J3) ............................................... 2,207 $ 16
Check Point Software Technologies, Ltd. * (JT) ........ 5,126 126
Companhia De Bebidas ADR (JG) ......................... 4,804 136
Companhia Energetica de Minas Gerias - ADR # * (J3) ... 1,994 49
Companhia Siderurgica Nacional - SA - ADR # * (BF) .... 3,152 60
Companhia Vale do Rio Doce - ADR * (BF) ............... 8,856 214
Companhia Vale Do Rio Doce - ADR * (BF) ............... 6,282 182
Compania Anonima Nacional Telefonos
De Venezuela - ADR * (J1) .......................... 2,697 60
Compania Brasileira de Distribuicao Grupo
Pao de Acucar - ADR * (JF) ......................... 485 12
Compania Cervecerias Unidas SA - ADR * (JG) ........... 470 12
Compania de Telecomunicaciones de Chile SA # * (J1).... 8,006 90
Distribucion y Servicio D&S SA - ADR * (JF) ........... 1,002 18
ECI Telecommunications, Ltd. * (JW) ................... 1,334 11
Embotelladora Andina SA - ADR # * (JG) ................ 935 12
Embotelladora Andina SA - Ser. B * ADR (JG) ........... 1,052 14
Embratel Participacoes SA - ADR # * (J1) .............. 3,384 36
Empresa Brasileira de Aeronautica SA * (BH) ........... 1,584 53
Empresa Nacional de Electricidad SA - ADR # * (J3) .... 6,680 122
Enersis SA - ADR * (J3) ............................... 15,963 136
Gerdeau SA - ADR # * (BF) ............................. 2,792 50
Given Imaging, Ltd. # * (JL) .......................... 316 11
JSC Norilsk Nickel - ADR * (BL) ....................... 1,861 103
Kinross Gold Corp. * (BF) ............................. 7,600 54
Lukoil Holding - ADR (BB) ............................. 2,907 353
M-Systems Flash Disk Pioneers, Ltd.* # (JX) ........... 602 12
Orbotech, Ltd. * (JY) ................................. 835 18
Petrobas Energia Participacoes SA - ADR Cl. B * (JQ)... 2,541 30
Petroleo Brasileiro SA * (BB) ......................... 6,036 242
Petroleo Brasileiro SA - ADR * (BB) ................... 8,385 307
PT Indonesian Satellite Corp. - ADR * (J1) ............ 1,984 62
Radware, Ltd. * (JT) .................................. 401 10
Ryanair Holdings plc - ADR # * (BQ) ................... 881 36
Ship Finance International, Ltd. # * (BR) ............. 247 5
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Market
Name of Issuer Shares Value
-------------- -------- --------
(000's)
COMMON STOCK - Continued
United States - Continued
Surgutneftegaz - ADR * (BB) ........................... 3,038 $ 166
Surgutneftegaz - ADR # * (BB) ......................... 13,139 493
Tele Centro Oeste Celular Participacoes - ADR *
(J2) ............................................... 1,301 13
Tele Norte Leste Participacoes SA - ADR # * (J1) ...... 5,501 93
Telesp Celular Participacoes SA - ADR # * (J2) ........ 4,894 33
Tenaris SA - ADR * (BA) ............................... 1,125 55
Unibanco - Uniao de Bancos Brasileiros SA - GDR *
(JP) ............................................... 1,735 55
Unified Energy Systems Russia - ADR * (J3) ............ 3,060 87
Vina Concha y Toro SA - ADR # * (JG) .................. 371 27
Votorantim Celulose e Papel SA - ADR * (BG) ........... 1,325 21
--------
4,434
--------
TOTAL COMMON STOCK-(Cost $233,368) 96.1% 290,676
PREFERRED STOCK
Brazil - 0.2%
BCO Itau Holdings (JP) ................................ 1,440 217
Caemi Mieracao e Metalurgia SA * (BF) ................. 40,000 34
Compahnia de Bebidas das Americas * (JG) .............. 120,000 33
Companhia Vale do Rio Doce (BF) ....................... 2,400 59
Empresa Bras De Aerona (BH) ........................... 3,200 27
Klabin SA (BG) ........................................ 11,000 22
Petroleo Brasileiro SA - Petrobras (BB) ............... 2,200 80
Sadia SA (JH) ......................................... 11,000 25
Tele Norte Leste (J1) ................................. 1,500 25
Usinas Siderurgicas de Minas SA * (BF) ................ 1,200 24
Votorantim Celulos (BG) ............................... 1,000 16
--------
562
Germany - 0.1%
Fresenius Medical Care AG (JM) ........................ 667 39
Henkel KGAA # (JJ) .................................... 1,639 142
Porsche AG # (BV) .................................... 217 138
Prosiebebensati Medi (JA) ............................. 1,982 36
RWE AG (J5) ........................................... 1,004 46
Volkswagen AG (BV) .................................... 2,925 97
--------
498
New Zealand - 0.0%
Tenon, Ltd. * (BG) .................................... 1,385 2
South Korea - 0.1%
Hyundai Motor Co. (BV) ................................ 1,000 30
LG Electronics, Inc. (BW) ............................. 490 $ 17
Samsung Electronics (BL) .............................. 626 181
--------
228
Switzerland - 0.0%
Schindler Holding AG (BM) ............................. 147 58
Thailand - 0.0%
Siam Commercial Bank Public Co. - (JP) ................ 5,600 7
--------
TOTAL PREFERRED STOCK-(Cost $936) 0.4% 1,355
WARRANTS
Mexico - 0.0% Cemex SA (BI) (a)
expires 12/21/04 ...................................... 137 0
--------
TOTAL WARRANTS-(Cost $0) 0.0% 0
RIGHTS
Ireland - 0.0%
Waterford Wedgewood * (JE) expires 01/07/05 ........... 39,305 0
Taiwan - 0.0%
Oriental Union Chemical * (BC) (a) expires 01/17/05 ... 8,000 0
Thailand - 0.0%
True Corporation Public Co., Ltd * (J1) (a)
expires 04/30/08 ................................... 35,747 0
--------
TOTAL RIGHTS-(Cost $0) 0.0% 0
Par
Value
--------
(000's)
INVESTMENT COMPANIES HELD
AS COLLATERAL ON LOANED
SECURITIES - 24.5%
State Street Navigator Securities
Lending Portfolio .................................. $ 74,222 74,222
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY INDEX FUND
Par Market
Name of Issuer Value Value
-------------- ------- ---------
(000's) (000's)
SHORT-TERM INVESTMENTS - 3.1%
Investment in joint trading account
2.29% due 01/03/05 (Cost $9,304) ................... $9,304 $ 9,304
------ --------
TOTAL INVESTMENTS-(Cost $317,830) 124.1% 375,557
Payables, less cash and receivables- (24.1)% (72,996)
----- --------
NET ASSETS- 100.0% $302,561
===== ========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
(a) At December 31, 2004 this security was fair valued.
ADR-American Depository Receipt
GDR-Global Depository Receipt
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY
% of
Industry Market Long-Term
Industry Abbreviation Value Investments
-------- ------------ -------- -----------
(000s)
Banks .................................. JP $ 51,211 17.6%
Oil & Gas .............................. BB 25,928 8.9%
Pharmaceuticals ........................ JO 18,337 6.3%
Diversified Telecommunication
Services ............................ J1 14,400 4.9%
Insurance .............................. JR 13,421 4.6%
Metals & Mining ........................ BF 11,701 4.0%
Electric Utilities ..................... J3 9,771 3.3%
Diversified Financials ................. JQ 8,991 3.1%
Wireless Telecommunications
Services ............................ J2 8,821 3.0%
Chemicals .............................. BC 8,154 2.8%
Automobiles ............................ BV 8,153 2.8%
Food Products .......................... JH 7,581 2.6%
Media .................................. JA 6,604 2.3%
Household Durables...................... BW 5,652 1.9%
Real Estate ............................ JS 5,377 1.8%
Food & Drug Retailing .................. JF 4,899 1.7%
Semiconductor Equipment & Products ..... J0 4,754 1.6%
Communications Equipment ............... JW 4,479 1.5%
Electrical Equipment ................... BK 4,209 1.4%
Beverages .............................. JG 4,116 1.4%
Electronic Equipment & Instruments ..... JY 4,046 1.4%
Machinery .............................. BM 3,649 1.3%
Hotels Restaurants & Leisure............ BZ 3,164 1.1%
Specialty Retail ....................... JE 3,033 1.0%
Industrial Conglomerates ............... BL 2,968 1.0%
Construction Materials ................. BD 2,778 1.0%
Road & Rail ............................ BS 2,628 1.0%
Commercial Services & Supplies ......... BO 2,619 0.9%
Multiline Retail ....................... JD 2,355 0.8%
Tobacco ................................ JI $ 2,345 0.8%
Auto Components ........................ BU 2,322 0.8%
Gas Utilities .......................... J4 2,114 0.7%
Multi-Utilities ........................ J5 1,864 0.6%
Construction & Engineering ............. BJ 1,818 0.6%
Aerospace & Defense .................... BH 1,814 0.6%
Computers & Peripherals ................ JX 1,808 0.6%
Building Products ...................... BI 1,805 0.6%
Software ............................... JV 1,718 0.6%
Trading Companies & Distributors ....... BN 1,621 0.6%
Office Electronics ..................... JZ 1,618 0.6%
Paper & Forest Products ................ BG 1,568 0.5%
Transportation Infrastructure .......... BT 1,533 0.5%
Health Care Equipment & Supplies ....... JL 1,506 0.5%
Textiles & Apparel ..................... BY 1,497 0.5%
IT Consulting & Services ............... JU 1,438 0.5%
Marine ................................. BR 1,227 0.4%
Household Products ..................... JJ 1,174 0.4%
Leisure Equipment & Products ........... BX 1,100 0.4%
Air Freight & Couriers ................. BP 990 0.3%
Personal Products ...................... JK 889 0.3%
Internet Software & Services ........... JT 792 0.3%
Airlines ............................... BQ 740 0.2%
Health Care Providers & Services ....... JM 638 0.2%
Internet & Catalog Retail .............. JC 508 0.2%
Containers & Packaging ................. BE 442 0.2%
Water Utilities ........................ J6 398 0.1%
Energy Equipment & Services ............ BA 308 0.1%
Distributors ........................... JB 248 0.1%
Finance ................................ FB 199 0.1%
Biotechnology .......................... JN 190 0.1%
-------- -----
$292,031 100.0%
======== =====
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock International Equity Index Fund (the "Fund" or "VST
International Equity Index") 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 twenty-three different funds as of
December 31, 2004. 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").
This Fund offers three classes of shares, Series I and Series II were
offered for the first time on May 3, 2004.
NOTE B--ACCOUNTING POLICIES
Valuation of investments: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. In the event the Exchange
closes at any time other than 4:00 p.m. Eastern Standard Time on a particular
day, the Fund will determine its net asset value per share as of the close of
the Exchange on that day. All other securities held by the Fund are valued at
the last sale price or official closing price (closing bid price or last
evaluated quote if no sale has occurred) as of the close of business on a
principal securities exchange (domestic or foreign) or, lacking any sales, at
the closing bid price. Investment security transactions are recorded on the date
of purchase or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
indexes, a swing in particular foreign market indexes, or a significant price
change in Exchange Traded Funds in a particular foreign market.
Multi-Class Operations: All income, expenses (except class specific
expenses) and realized and unrealized gains (losses) are allocated to each class
based upon the relative net assets of each class. Dividends from net investment
income are determined at a class level and distributions from capital gains are
determined at a Fund level.
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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.
Securities lending: The Fund has entered into an agreement with State
Street Bank and Trust Company ("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, 2004, 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
- -------------------------- -------------------
$70,514 $74,222
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, 2004, open financial
futures contracts for the Fund were as follows:
Open Unrealized
Contracts Position Expiration Month Appreciation
--------- -------- ---------------- ------------
CAC 40 10 Euro Index Futures 22 Long March 05 $ 10
EOE Dutch Stock Index Futures 4 Long January 05 1
OMX 30 Stock Index Futures 42 Long January 05 6
TOPIX Index Futures 19 Long March 05 96
Share Price Index 200 Futures 3 Long March 05 8
S&P Canada 60 Index Futures 8 Long March 05 14
DAX Index Futures 5 Long March 05 10
IBEX 35 Index Futures 5 Long January 05 8
MIB 30 Index Futures 3 Long March 05 7
Hang Seng Stock Index Futures 5 Long January 05 (1)
FTSE 100 Index Futures 30 Long March 05 47
----
$206
====
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(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.
As of December 31, 2004, the Fund had open forward foreign currency
contracts which contractually obligate the Fund to deliver or receive currencies
at a specified date, as follows:
Unrealized
Principal Amount Appreciation/
Currency Purchased Covered by Contract Expiration Month (Depreciation)
- ------------------ ------------------- ---------------- --------------
Australian Dollar 219 March 05 $ 4
Canadian Dollar 637 March 05 17
Euro 2,930 March 05 10
Pound Sterling 2,519 March 05 (4)
Hong Kong Dollar 336 March 05 1
Japanese Yen 1,692 March 05 16
Swedish Krona 441 March 05 2
---
$46
===
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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $1,346, $7,680 and $7,444 which expire in 2009, 2010 and 2011,
respectively.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $598. Realized gains and losses
from security transactions are determined on the basis of identified cost.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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 11, 2004, 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
$100 Million and Excess Over
First $100 Million $200 Million $200 Million
- ------------------ ---------------- ------------
0.18% 0.15% 0.11%
For the period from January 1, 2004 to April 30, 2004, John Hancock and
JVLICO agreed to reimburse the Fund for normal operating expenses, exclusive of
investment advisory fees, taxes, interest, brokerage commissions and
extraordinary expenses that exceed 0.10% of the Fund's daily net asset value.
Accordingly, for the period from January 1, 2004 to April 30, 2004 the Fund was
reimbursed $123 by John Hancock and JVLICO. On March 18, 2004, the Fund's
Shareholders approved the removal of John Hancock and JVLICO's respective
obligations to reimburse the Fund for excess operating expenses effective May 1,
2004.
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 in expenses
of $2.
John Hancock has entered into a Sub-Advisory Agreement with State Street
Global Advisers Funds Managment, Inc., which under John Hancock's 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.
Distribution Plan: In accordance with Rule 12b-1 of the Invesment Company
Act of 1940, the Board of Trustees have approved a Distribution Plan ("the
Plan") for NAV Series, Series I and Series II. Series I shares of the Fund are
subject to a Rule 12b-1 fee of up to .40% of Series I shares' average daily net
assets. Series II shares of the Fund are subject to a Rule 12b-1 fee of up to
..60% of Series II shares' average daily net assets. The distributor may use Rule
12b-1 fees only for any distribution expenses relating to each respective class.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$130,624 $42,921
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$320,400 $61,661 $(6,504) $55,157
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$1,064 $-- $16,470 $55,325
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
- ---- ------------------ ---------------------- -----------------
2004 $4,243 $-- $ --
2003 3,685 -- 479
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE E--COMBINATION
On June 18, 2004, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
- ------------------------------ -----------------------------
VST International Equity Index MIT International Index Trust
These combinations provided for the transfer of substantially all of the
assets and liabilities of the target funds to the acquiring funds in exchange
solely for the fund shares of the acquiring funds. The acquisitions were
accounted for as tax-free exchanges as follows:
Target Fund
Trust Shares Unrealized Acquiring Fund Acquiring Fund
Issued by Target Fund Appreciation/ Net Assets Prior Aggregate Net Assets
Acquiring Fund Acquiring Fund Net Assets (Depreciation) to Combination After Combination
- -------------- -------------- ----------- -------------- ---------------- --------------------
Series I 1,750 $24,566 $ (621) $33,341 $57,907
Series II 1,462 $20,531 $6,020 $ 536 $21,067
NOTE F--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust.
John Hancock Variable Series Trust I solicited a vote at a special meeting of
Contract owners/Policyholders held on
March 18, 2004 on the following matter:
For Against Abstain
--- ------- -------
To approve, as to the International Equity Index Fund, an amendment to the 88% 7% 5%
current investment mangement agreement between the Trust and John Hancock
to eliminate John Hancock's obligation to reimburse this Fund for certain
operating expenses.
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 International Equity Index Fund (a
portfolio included in the series of John Hancock Variable Series Trust I {the
"Trust"}) as of December 31, 2004, 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 the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
International Equity Index Fund of John Hancock Variable Series Trust I at
December 31, 2004, 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 periods indicated therein, in
conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Large Cap Growth Fund
Independence Investment LLC Paul F. McManus
- --------------------------------------------------------------------------------
.. The manager uses both fundamental equity research and quantitative analysis
to construct a portfolio having stocks with both favorable valuations and
improving earnings growth prospects. The Fund is broadly diversified across
sectors with sector weights similar to the benchmark.
Fund Commentary
Performance: For the year ending December 31, 2004, the Large Cap Growth Fund
returned +4.34%, underperforming the Russell 1000(R) Growth Index return of
+6.30%.
Environment: The large cap equity markets struggled through much of 2004, but
finished in positive territory with a very solid fourth quarter. Growth
significantly trailed value as a style. Within the growth style, telecom and
utilities were the strongest performing sectors. Throughout most of the year,
investor sentiment was muted by fears of terrorism, the maturing economic
recovery, higher energy prices, and the uncertainty over the Presidential
election. Oil was the big story of 2004 climbing throughout most of the year to
record high prices. Although energy prices tailed off in time for the holiday
spending season, consumer spending was pinched by higher oil prices. With the
decline in oil prices in Q4, as well as a stronger corporate and consumer
picture, the equity markets regained traction. The Growth Fund underperformed
earlier in the year but performed well in the fourth quarter. For 2004, stock
selection in consumer staples and financials was strong while stock selection in
consumer discretionary and technology detracted from performance. Sector
weightings in healthcare, utilities and energy contributed to performance.
Outlook: Overall, our forecast for U.S. stock performance in 2005 is favorable.
We expect continued recovery in corporate spending, an improved employment
picture, and a healthy consumer to drive stocks higher. We are attuned to
potential risks including weakness in the US dollar, accelerating inflation, and
an increase in bond yields.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 12/31/94 (10-Year Period)
Russell 1000(R)
Large Cap Growth Fund Growth Index
--------------------- ---------------
$10,000 $10,000
Jan-95 10,187 10,213
Feb-95 10,573 10,641
Mar-95 10,812 10,952
Apr-95 11,080 11,192
May-95 11,457 11,582
Jun-95 11,649 12,029
Jul-95 12,026 12,529
Aug-95 12,118 12,543
Sep-95 12,610 13,121
Oct-95 12,465 13,130
Nov-95 12,983 13,640
Dec-95 13,164 13,719
Jan-96 13,472 14,177
Feb-96 13,631 14,437
Mar-96 13,804 14,455
Apr-96 14,036 14,835
May-96 14,346 15,354
Jun-96 14,330 15,375
Jul-96 13,378 14,474
Aug-96 13,805 14,847
Sep-96 14,650 15,929
Oct-96 14,758 16,025
Nov-96 15,829 17,228
Dec-96 15,569 16,891
Jan-97 16,460 18,075
Feb-97 16,582 17,953
Mar-97 15,801 16,981
Apr-97 16,637 18,109
May-97 17,595 19,416
Jun-97 18,291 20,193
Jul-97 20,057 21,979
Aug-97 19,058 20,692
Sep-97 20,246 21,710
Oct-97 19,430 20,908
Nov-97 20,152 21,796
Dec-97 20,388 22,040
Jan-98 20,933 22,699
Feb-98 22,914 24,407
Mar-98 24,210 25,379
Apr-98 24,394 25,731
May-98 23,867 25,000
Jun-98 25,053 26,532
Jul-98 24,931 26,356
Aug-98 21,027 22,401
Sep-98 22,257 24,121
Oct-98 23,935 26,060
Nov-98 25,836 28,042
Dec-98 28,444 30,571
Jan-99 30,027 32,366
Feb-99 28,581 30,888
Mar-99 29,785 32,514
Apr-99 30,224 32,556
May-99 29,349 31,556
Jun-99 31,535 33,766
Jul-99 30,491 32,693
Aug-99 30,666 33,227
Sep-99 29,963 32,529
Oct-99 31,719 34,985
Nov-99 32,789 36,873
Dec-99 35,289 40,708
Jan-00 33,178 38,799
Feb-00 34,226 40,696
Mar-00 37,877 43,609
Apr-00 36,590 41,534
May-00 35,265 39,442
Jun-00 37,305 42,432
Jul-00 36,093 40,663
Aug-00 39,615 44,344
Sep-00 35,465 40,150
Oct-00 34,411 38,250
Nov-00 29,828 32,612
Dec-00 28,978 31,580
Jan-01 30,656 33,762
Feb-01 25,752 28,030
Mar-01 22,879 24,980
Apr-01 26,025 28,139
May-01 25,717 27,725
Jun-01 25,180 27,083
Jul-01 24,414 26,406
Aug-01 22,648 24,247
Sep-01 20,491 21,826
Oct-01 21,733 22,971
Nov-01 23,818 25,178
Dec-01 23,895 25,130
Jan-02 23,647 24,686
Feb-02 22,686 23,662
Mar-02 23,472 24,480
Apr-02 22,002 22,482
May-02 21,500 21,938
Jun-02 19,647 19,909
Jul-02 18,287 18,814
Aug-02 18,351 18,871
Sep-02 16,431 16,913
Oct-02 17,810 18,465
Nov-02 18,445 19,467
Dec-02 17,248 18,123
Jan-03 16,646 17,683
Feb-03 16,644 17,602
Mar-03 16,928 17,929
Apr-03 18,042 19,255
May-03 18,766 20,216
Jun-03 18,864 20,494
Jul-03 19,205 21,004
Aug-03 19,776 21,527
Sep-03 19,677 21,296
Oct-03 20,905 22,492
Nov-03 21,073 22,728
Dec-03 21,666 23,514
Jan-04 21,907 23,994
Feb-04 21,951 24,147
Mar-04 21,495 23,699
Apr-04 21,004 23,423
May-04 21,382 23,860
Jun-04 21,731 24,158
Jul-04 20,417 22,792
Aug-04 20,246 22,680
Sep-04 20,418 22,895
Oct-04 20,906 23,252
Nov-04 21,874 24,052
Dec-04 22,605 24,995
Value on 12/31/04:
- ------------------
$22,605 Large Cap Growth Fund
$24,995 Russell 1000(R) Growth Index
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Microsoft Corp. 3.5%
Johnson & Johnson 3.2%
Intel Corp. 2.7%
Cisco Systems, Inc. 2.7%
Dell, Inc. 2.7%
Procter & Gamble Co. 2.5%
Wal-Mart Stores, Inc. 2.4%
Home Depot, Inc. 2.3%
AES Corp. 2.2%
Yahoo, Inc. 2.2%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Large Cap Russell 1000(R)
Growth Fund Growth Index
----------- ---------------
1 Year 4.34% 6.30%
3 Years -1.83% -0.18%
5 Years -8.52% -9.29%
10 Years 8.50% 9.59%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Information Technology 30.8%
Consumer Discretionary 20.7%
Health Care 12.5%
Financials 12.4%
Industrials 12.2%
Consumer Staples 5.2%
Utilities 2.2%
Governments 1.8%
Energy 1.3%
Materials 0.9%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus. There are
additional risks associated with a nondiversified fund, as outlined in the
current prospectus. Performance would be lower if expenses and charges of
the separate accounts and products were reflected.
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Large Cap Growth Fund
Independence Investment LLC Paul F. McManus
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Large Cap Growth Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,040.30
Expense paid per $1,000* $ 4.73
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,020.50
Expense paid per $1,000* $ 4.68
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Large Cap Growth Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $29,790 of securities
loaned (Note B)) .............................................. $ 588,699
Net unrealized appreciation of investments ....................... 64,505
Short-term investments at value .................................. 40,442
----------
Total investments .......................................... 693,646
Receivable for:
Fund shares sold .............................................. 122
Dividends ..................................................... 526
----------
Total assets ..................................................... 694,294
----------
LIABILITIES
Payables for:
Collateral for securities on loan ............................. 30,542
Accrued operating expenses .................................... 446
Other payables ................................................ 13
----------
Total liabilities ................................................ 31,001
----------
Net assets ....................................................... $ 663,293
==========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ................................................... 45,866
----------
Net asset value per share ........................................ $ 14.46
==========
Composition of net assets:
Capital paid-in ............................................... $1,007,618
Accumulated net realized loss on investments .................. (408,830)
Net unrealized appreciation of investments .................... 64,505
----------
Net assets ....................................................... $ 663,293
==========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Large Cap Growth Fund
(000's Omitted)
INVESTMENT INCOME
Interest ...................................................... $ 274
Dividends ..................................................... 9,100
Securities lending ............................................ 59
-------
Total investment income ............................................. 9,433
-------
EXPENSES
Investment advisory fee ....................................... 4,822
Auditors fees ................................................. 81
Custodian fees ................................................ 143
Fidelity Bond fees ............................................ 1
Legal fees .................................................... 101
Printing & mailing fees ....................................... 244
Trustees' fees ................................................ 19
Other fees .................................................... 22
-------
Total expenses ...................................................... 5,433
Less custodian expense reduction offset by commission
recapture arrangement (Note C) ............................. (480)
-------
Net expenses ........................................................ 4,953
-------
Net investment income ............................................... 4,480
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments ................................. 3,570
Change in unrealized appreciation on Investments ................. 20,299
-------
Net realized and unrealized gain .................................... 23,869
-------
Net increase in net assets resulting from operations ................ $28,349
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Large Cap Growth Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ....................................................... $ 4,480 $ 2,810
Net realized gain (loss) .................................................... 3,570 (28,345)
Change in net unrealized appreciation ....................................... 20,299 144,822
--------- --------
Net increase in net assets resulting from operations ..................... 28,349 119,287
Distributions to shareholders from:
Net investment income ....................................................... (4,480) (1,489)
Capital paid-in ............................................................. -- (2,175)
--------- --------
Decrease in net assets resulting from distributions ...................... (4,480) (3,664)
From fund share transactions:
Proceeds from shares sold ................................................... 77,626 78,014
Shares issued in reorganization ............................................. 51,214 12,462
Distributions reinvested .................................................... 4,480 3,664
Payment for shares redeemed ................................................. (118,297) (81,990)
--------- --------
Increase in net assets from fund share transactions ...................... 15,023 12,150
--------- --------
NET INCREASE IN NET ASSETS ..................................................... 38,892 127,773
NET ASSETS
Beginning of Period ......................................................... 624,401 496,628
--------- --------
End of Period (including undistributed net investment income of $0 and $0,
respectively) ............................................................ $ 663,293 $624,401
========= ========
Analysis of fund share transactions:
Sold ........................................................................ 5,604 5,685
Issued in reorganization .................................................... 3,808 1,083
Reinvested .................................................................. 320 285
Redeemed .................................................................... (8,602) (6,731)
--------- --------
Net increase in fund shares outstanding ........................................ 1,130 322
========= ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Large Cap Growth Fund
--------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------
2004 2003(e) 2002 2001 2000
-------- -------- -------- -------- ----------
Net Assets Value at Beginning of Period ........... $ 13.96 $ 11.18 $ 15.54 $ 18.89 $ 27.33
Income from Investment Operations:
Net Investment Income .......................... 0.10 0.06 0.04 0.04 0.03
Net Realized and Unrealized Gain (Loss) on
Investment(a) ............................... 0.50 2.80 (4.36) (3.36) (4.89)
-------- -------- -------- -------- ----------
Total From Investment Operations ............... 0.60 2.86 (4.32) (3.32) (4.86)
Less Distributions:
Distribution from Net Investment Income ........ (0.10) (0.03) (0.04) (0.03) (0.04)
Distribution from Net Realized Gains on
Investments ................................. (2.69)
Distribution from Excess of Net Investment
Income/Gains ................................ (0.78)
Distribution from Capital Paid-in .............. (0.05) (0.07)
-------- -------- -------- -------- ----------
Total Distributions ............................ (0.10) (0.08) (0.04) (0.03) (3.58)
-------- -------- -------- -------- ----------
Net Assets Value at End of Period ................. $ 14.46 $ 13.96 $ 11.18 $ 15.54 $ 18.89
======== ======== ======== ======== ==========
Total Investment Return(b) ........................ 4.34% 25.62% (27.82)% (17.54)% (17.89)%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ...................................... 0.89%(d) 0.86%(d) 0.55% 0.41% 0.46%
Ratio of Net Investment Income to Average Net
Assets ...................................... 0.74% 0.51% 0.33% 0.23% 0.10%
Portfolio Turnover Rate ........................ 127.93%(c) 99.47%(c) 95.04% 63.96% 89.30%
Net Assets End of Period (000s Omitted) ........... $663,293 $624,401 $496,628 $770,915 $1,146,787
(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) Excludes merger activity.
(d) The Fund is required to calculate an expense ratio without taking into
consideration any expense related to expense offset arrangements.
(e) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
Market
Name of Issuer Shares Value
-------------- --------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 2.7%
Boeing Co. ............................................ 120,900 $ 6,259
United Defense Industries, Inc. * ..................... 204,900 9,682
United Technologies Corp. ............................. 16,700 1,726
-------
17,667
Air Freight & Couriers - 0.8%
Fedex Corp. ........................................... 53,700 5,289
Airlines - 1.3%
JetBlue Airways Corp. # * ............................. 382,100 8,872
Auto Components - 1.0%
Johnson Controls, Inc. ................................ 104,700 6,642
Chemicals - 0.9%
Praxair, Inc. ......................................... 130,700 5,770
Commercial Services & Supplies - 1.0%
Automatic Data Processing, Inc. ....................... 56,900 2,524
ITT Educational Services, Inc. # * .................... 82,300 3,913
-------
6,437
Communications Equipment - 5.5%
Cisco Systems, Inc. * ................................. 913,100 17,623
Motorola, Inc. ........................................ 372,100 6,400
Qualcomm, Inc. ........................................ 294,600 12,491
-------
36,514
Computers & Peripherals - 7.9%
Apple Computer, Inc. * ................................ 162,300 10,452
Dell, Inc. * .......................................... 417,400 17,589
EMC Corp. * ........................................... 505,800 7,521
International Business Machines Corp. ................. 128,700 12,688
Network Appliance, Inc. * ............................. 135,400 4,498
-------
52,748
Diversified Financials - 9.0%
American Express Co. .................................. 205,100 11,561
Bear Stearns Cos., Inc. ............................... 39,500 4,041
BlackRock, Inc. # ..................................... 101,600 7,850
Capital One Financial Corp. ........................... 71,000 5,979
Chicago Mercantile Exchange # ......................... 25,600 5,855
Citigroup, Inc. ....................................... 66,700 3,213
Eaton Vance Corp. ..................................... 95,200 4,965
Goldman Sachs Group, Inc. ............................. 88,600 9,218
SLM Corp. ............................................. 128,000 6,834
-------
59,516
Electric Utilities - 2.2%
AES Corp. * ........................................... 1,061,700 14,513
Electronic Equipment & Instruments - 1.6%
Ametek, Inc. # ........................................ 126,500 4,512
Vishay Intertechnology, Inc. # * ...................... 394,800 5,930
-------
10,442
Finance - 0.7%
First Marblehead Corp. # * ............................ 88,200 $ 4,961
Health Care Equipment & Supplies - 3.5%
C.R. Bard, Inc. ....................................... 104,800 6,705
St. Jude Medical, Inc. * .............................. 176,800 7,413
Stryker Corp. ......................................... 91,600 4,420
Zimmer Holdings, Inc. * ............................... 62,100 4,976
-------
23,514
Health Care Providers & Services - 1.5%
Caremark Rx, Inc. * ................................... 102,700 4,049
UnitedHealth Group, Inc. .............................. 65,100 5,731
-------
9,780
Hotels Restaurants & Leisure - 5.8%
Carnival Corp. ........................................ 190,400 10,973
Las Vegas Sands Corp. * ............................... 96,300 4,622
McDonald's Corp. ...................................... 143,300 4,594
Starwood Hotels & Resorts Worldwide, Inc. ............. 153,700 8,976
Station Casinos, Inc. ................................. 176,500 9,651
-------
38,816
Household Products - 2.5%
Procter & Gamble Co. .................................. 300,700 16,563
Industrial Conglomerates - 2.3%
General Electric Co. .................................. 186,500 6,807
Tyco International, Ltd. .............................. 231,800 8,285
-------
15,092
Insurance - 2.5%
AFLAC, Inc. ........................................... 6,400 255
American International Group, Inc. .................... 179,500 11,788
Wellpoint, Inc. * ..................................... 37,300 4,289
-------
16,332
Internet & Catalog Retail - 1.8%
eBay, Inc. * .......................................... 103,100 11,988
Internet Software & Services - 2.6%
McAfee, Inc. * ........................................ 95,000 2,749
Yahoo, Inc. * ......................................... 384,800 14,499
-------
17,248
IT Consulting & Services - 0.5%
Affiliated Computer Services, Inc. - Cl. A * .......... 55,500 3,341
Machinery - 3.9%
Danaher Corp. # ....................................... 96,200 5,523
Illinois Tool Works, Inc. ............................. 49,000 4,541
Oshkosh Truck Corp. ................................... 111,700 7,638
Pall Corp. ............................................ 288,600 8,355
-------
26,057
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
Market
Name of Issuer Shares Value
-------------- ------- --------
(000's)
COMMON STOCK - Continued
Media - 2.0%
Getty Images, Inc. * ................................... 77,900 $ 5,363
Lamar Advertising Co. - Cl. A * ........................ 93,700 4,009
The Walt Disney Co. .................................... 132,600 3,686
--------
13,058
Multiline Retail - 4.6%
Nordstrom, Inc. ........................................ 145,200 6,785
Target Corp. ........................................... 146,300 7,598
Wal-Mart Stores, Inc. .................................. 300,000 15,846
--------
30,229
Oil & Gas - 1.3%
EOG Resources, Inc. .................................... 72,800 5,195
Murphy Oil Corp. ....................................... 42,000 3,379
--------
8,574
Personal Products - 0.8%
Estee Lauder Cos., Inc. - Cl. A ........................ 114,000 5,218
Pharmaceuticals - 7.3%
Bristol-Myers Squibb Co. ............................... 371,100 9,508
Johnson & Johnson ...................................... 326,300 20,694
Par Pharmaceutical Cos., Inc. # * ...................... 105,800 4,378
Pfizer, Inc. ........................................... 517,200 13,907
--------
48,487
Semiconductor Equipment & Products - 6.0%
Applied Materials, Inc. * .............................. 286,700 4,902
Intel Corp. ............................................ 761,600 17,814
QLogic Corp. * ......................................... 204,800 7,522
Texas Instruments, Inc. ................................ 390,200 9,607
--------
39,845
Software - 6.2%
Gtech Holdings Corp. ................................... 45,500 1,181
Microsoft Corp. ........................................ 847,100 22,626
Oracle Corp. * ......................................... 404,000 5,543
Sap Aktiengesellschaft - ADR # ......................... 66,300 2,931
Symantec Corp. * ....................................... 345,800 8,908
--------
41,189
Specialty Retail - 4.7%
CDW Corp. .............................................. 3,000 199
Chicos Fas, Inc. # * ................................... 64,400 2,932
Home Depot, Inc. ....................................... 351,800 15,036
PETsMart, Inc. ......................................... 222,900 7,919
Sherwin-Williams Co. ................................... 114,400 5,106
--------
31,192
Textiles & Apparel - 0.5%
Coach, Inc. * .......................................... 58,700 3,311
Tobacco - 1.9%
Altria Group, Inc. ..................................... 205,200 12,538
U.S. Government Agencies - 1.7%
Federal Home Loan Mortgage Corp. ....................... 41,500 $ 3,058
Federal National Mortgage Assoc. ....................... 118,000 8,403
--------
11,461
--------
TOTAL COMMON STOCK-
(Cost $588,699) 98.5% 653,204
Par
Value
-------
(000's)
INVESTMENT COMPANIES HELD AS COLLATERAL ON LOANED
SECURITIES - 4.6%
State Street Navigator Securities Lending
Portfolio............................................ $30,542 30,542
SHORT-TERM INVESTMENTS - 1.5%
Investment in joint trading account 2.29% due 01/03/05
(Cost $9,900) ....................................... 9,900 9,900
------- -------
TOTAL INVESTMENTS-
(Cost $629,141) 104.6% 693,646
Payables, less cash and receivables- (4.6)% (30,353)
------- -------
NET ASSETS- 100.0% 663,293
======= =======
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
ADR-American Depository Receipt.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Large Cap Growth Fund (the "Fund" or "VST Large Cap Growth")
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 twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$3,783 1.50% $2
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, 2004, 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
- -------------------------- -------------------
$29,790 $30,542
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, 2004, 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. At December 31, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $64, $9,020, $219,147, $137,940 and $35,899 which expire in 2007, 2008,
2009, 2010, and 2011, respectively.
Certain of the above losses may be limited under sections 382 - 384 of the
Internal Revenue Code, as amended.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred approximately $3,311 in net realized capital 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, 2005.
Dividend and Interest: 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.
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 11, 2004, 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
$500 Million and Excess Over
First $500 Million $1 Billion $1 Billion
- ------------------ ---------------- -----------
0.80% 0.75% 0.70%
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. For the year
ended December 31, 2004, there were no reimbursements paid 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 in expenses
of $480.
John Hancock has entered into a Sub-Advisory Agreement with Independence
Investment LLC, with respect to the Fund. Independence Investment LLC is an
affiliate of John Hancock, which under John Hancock's 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, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$779,415 $771,651
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$632,589 $78,613 $(17,556) $61,057
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 return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $402,070 $61,057
In addition, the tax character of distributions paid by the Fund are
summarized as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
Distributions from Distributions from
Year Ordinary Income Long-Term Capital Gain Return of Capital
- ---- ------------------ ---------------------- -----------------
2004 $4,480 $-- $ --
2003 1,489 -- 2,175
Included in the Fund's 2004 distributions from ordinary income is $667 in
excess of investment company taxable income, which in accordance with applicable
US tax law, was distributed to shareholders as ordinary income distributions.
NOTE E--COMBINATION
On April 25, 2003, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
- -------------------- --------------------------
VST Large Cap Growth John Hancock VA Technology
This combination provided for the transfer of substantially all of the
assets and liabilities of the target fund to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The acquisition was accounted
for as a tax-free exchange as follows:
Trust Shares Target Fund Acquiring Fund Acquiring Fund
Issued by Target Fund Unrealized Net Assets Prior Aggregate Net Assets
Acquiring Fund Net Assets Depreciation to Combination After Combination
- -------------- ----------- ------------ ---------------- --------------------
1,083 $12,462 $(8,081) $504,397 $516,859
On October 15, 2004, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
- -------------------- ----------------------
VST Large Cap Growth VST Fundamental Growth
VST Large Cap Growth VST Large Cap Growth B
These combinations provided for the transfer of substantially all of the
assets and liabilities of the target funds to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The acquisitions were
accounted for as a tax-free exchanges as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE E--COMBINATION--Continued
Trust Shares Target Fund Acquiring Fund Acquiring Fund
Issued by Target Fund Unrealized Net Assets Prior Aggregate Net Assets
Target Fund Acquiring Fund Net Assets Appreciation to Combination After Combination
- --------------- -------------- ----------- ------------ ---------------- --------------------
VST Fundamental
Growth 1,730 $23,265 $ 749 $575,514 $598,779
VST Large Cap
Growth B 2,078 $27,949 $1,045 $598,779 $626,728
NOTE F--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust.
John Hancock Variable Series Trust I solicited a vote at a special meeting of
Contract owners/Policyholders held on October 15, 2004 on the following matters:
For Against Abstain
--- ------- -------
To approve, as to the Large Cap Growth Fund, a proposal to combine with the 91% 3% 6%
Fundamental Growth Fund of John Hancock Variable Series Trust I. Share holders
in the Fundamental Growth Fund would receive Large Cap Growth Fund shares having
the same value as their prior Fundamental Growth Fund shares.
To approve, as to the Large Cap Growth Fund, a proposal to combine with the 89% 2% 9%
Large Cap Growth B Fund of John Hancock Variable Series Trust I. Share holders
in the Large Cap Growth B Fund would receive Large Cap Growth Fund shares having
the same value as their prior Large Cap Growth B Fund shares.
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Large Cap Growth Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Large Cap Growth Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Large Cap Value Fund
T. Rowe Price Associates, Inc. Brian C. Rogers
- --------------------------------------------------------------------------------
.. The Fund employs a bottom-up, value-oriented investment approach, focusing
on companies with above-average dividend yields and low P/E ratios. The
Fund's sector allocations are broadly diversified but are driven primarily
by stock selection.
Fund Commentary
Performance: For the year 2004, the Large Cap Value Fund returned +15.00%,
underperforming the +16.49% return of the Russell 1000 Value Index.
Environment: U.S. stocks posted their second consecutive year of gains for the
first time since 1998-1999. Value shares outstripped growth by an impressive
margin in 2004, while small- and mid-cap stocks outpaced large-company shares.
The past year ended on a positive note as consumer confidence recovered. The
weakness in recent months was most likely related to uncertainty about
employment prospects, spiking oil prices and uneasiness surrounding the
election -- concerns that moderated during the final weeks of the year.
The Fund posted strong absolute results but trailed the Russell 1000 Value Index
for the year due mainly to stock selection in the Financials sector and an
overweight in Consumer Discretionary stocks. Within the Consumer Discretionary
sector, newspaper stocks were hurt because of sluggish advertising trends.
Health Care was another problematic area, as pharmaceutical stocks were
negatively affected by limited growth prospects, generic competitive pressures,
and well-publicized safety problems with high-profile drugs. However, good stock
selection provided a partial offset, adding to relative results.
Outlook: We are cautious heading into 2005. The market is fairly valued, and the
corporate profit outlook appears to be moderating. Earnings have reached record
levels over the past year, and profit growth will likely be pressured by
relatively high energy prices and higher short-term interest rates.
Additionally, the trade and budget deficits, along with the ongoing war in Iraq,
could make for a tougher environment. Nevertheless, we continue to view the
economic environment as favorable. Corporate balance sheets appear strong with
healthy levels of cash, and value stocks should benefit from favorable tax
treatments for dividends and capital gains.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 5/1/96 (Fund Inception date)
Large Cap Value Fund Russell 1000(R) Value Index
-------------------- ---------------------------
Apr-1996 $10,000 $10,000
May-1996 10,190 10,125
Jun-1996 10,255 10,133
Jul-1996 9,977 9,750
Aug-1996 10,186 10,029
Sep-1996 10,618 10,428
Oct-1996 10,860 10,831
Nov-1996 11,451 11,616
Dec-1996 11,391 11,468
Jan-1997 11,699 12,024
Feb-1997 11,979 12,201
Mar-1997 11,724 11,762
Apr-1997 12,016 12,256
May-1997 12,582 12,941
Jun-1997 13,059 13,496
Jul-1997 13,805 14,511
Aug-1997 13,447 13,994
Sep-1997 14,081 14,840
Oct-1997 13,703 14,425
Nov-1997 14,220 15,063
Dec-1997 14,644 15,503
Jan-1998 14,539 15,283
Feb-1998 15,250 16,312
Mar-1998 15,954 17,310
Apr-1998 15,869 17,426
May-1998 15,598 17,167
Jun-1998 15,561 17,387
Jul-1998 15,107 17,081
Aug-1998 13,634 14,539
Sep-1998 14,373 15,373
Oct-1998 15,261 16,564
Nov-1998 15,884 17,336
Dec-1998 15,999 17,926
Jan-1999 15,600 18,069
Feb-1999 15,470 17,814
Mar-1999 15,889 18,183
Apr-1999 17,601 19,881
May-1999 17,469 19,662
Jun-1999 17,932 20,233
Jul-1999 17,538 19,641
Aug-1999 17,003 18,912
Sep-1999 16,394 18,251
Oct-1999 16,974 19,301
Nov-1999 16,678 19,151
Dec-1999 16,524 19,243
Jan-2000 15,752 18,615
Feb-2000 14,461 17,232
Mar-2000 16,067 19,335
Apr-2000 16,209 19,110
May-2000 16,987 19,311
Jun-2000 16,141 18,429
Jul-2000 16,308 18,659
Aug-2000 17,100 19,697
Sep-2000 17,218 19,878
Oct-2000 18,044 20,366
Nov-2000 17,845 19,610
Dec-2000 18,667 20,593
Jan-2001 18,863 20,672
Feb-2001 18,597 20,097
Mar-2001 18,092 19,387
Apr-2001 18,861 20,337
May-2001 19,494 20,794
Jun-2001 19,104 20,333
Jul-2001 19,166 20,290
Aug-2001 18,813 19,477
Sep-2001 17,551 18,106
Oct-2001 17,547 17,950
Nov-2001 18,573 18,994
Dec-2001 18,900 19,441
Jan-2002 18,872 19,291
Feb-2002 19,145 19,323
Mar-2002 19,744 20,237
Apr-2002 19,187 19,543
May-2002 19,399 19,640
Jun-2002 18,172 18,513
Jul-2002 16,596 16,792
Aug-2002 16,778 16,919
Sep-2002 15,033 15,037
Oct-2002 15,970 16,152
Nov-2002 17,102 17,169
Dec-2002 16,397 16,423
Jan-2003 15,898 16,026
Feb-2003 15,365 15,598
Mar-2003 15,395 15,624
Apr-2003 16,750 17,000
May-2003 17,811 18,097
Jun-2003 17,972 18,323
Jul-2003 18,078 18,596
Aug-2003 18,397 18,886
Sep-2003 18,231 18,702
Oct-2003 19,146 19,846
Nov-2003 19,236 20,115
Dec-2003 20,580 21,355
Jan-2004 20,909 21,731
Feb-2004 21,345 22,196
Mar-2004 20,952 22,002
Apr-2004 20,854 21,464
May-2004 20,949 21,683
Jun-2004 21,508 22,196
Jul-2004 21,096 21,883
Aug-2004 21,314 22,194
Sep-2004 21,660 22,538
Oct-2004 21,887 22,913
Nov-2004 22,839 24,071
Dec-2004 23,668 24,877
Value on 12/31/04:
- ------------------
$23,668 Large Cap Value Fund
$24,877 Russell 1000(R) Value Index
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of June 30, 2004)
% of
Investments
-----------
General Electric Co. 2.1%
JP Morgan Chase & Co. 2.0%
Exxon Mobil Corp. 1.9%
ChevronTexaco Corp. 1.8%
Marsh & McLennan Cos., Inc. 1.7%
Viacom, Inc. 1.7%
Merck & Co., Inc. 1.6%
Royal Dutch Petroleum Co. 1.5%
Bank of America Corp. 1.5%
Honeywell International, Inc. 1.5%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Large Cap Russell 1000(R)
Value Fund Value Index
---------- ---------------
1 Year 15.00% 16.49%
3 Years 7.79% 8.57%
5 Years 7.45% 5.27%
Since Inception (5/1/96) 10.44% 11.09%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Financials 19.9%
Consumer Discretionary 16.1%
Industrials 13.5%
Health Care 9.7%
Energy 9.3%
Consumer Staples 7.9%
Materials 6.6%
Telecommunication Services 6.2%
Information Technology 5.2%
Utilities 4.9%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Large Cap Value Fund
T. Rowe Price Associates, Inc. Brian C. Rogers
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Large Cap Value Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,100.40
Expense paid per $1,000* $ 4.36
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,020.99
Expense paid per $1,000* $ 4.19
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Large Cap Value Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $45,773 of
securities loaned (Note B)) ...................................... $370,368
Net unrealized appreciation of investments .......................... 65,663
Short-term investments at value ..................................... 64,560
--------
Total investments ............................................. 500,591
Receivable for:
Investments sold ................................................. 1,787
Fund shares sold ................................................. 178
Interest ......................................................... 51
Dividends ........................................................ 760
Foreign dividend tax withholdings reclaim ........................ 14
--------
Total assets ........................................................ 503,381
--------
LIABILITIES
Payables for:
Investments purchased ............................................ 324
Foreign dividend tax withholding ................................. 1
Collateral for securities on loan ................................ 46,904
Accrued operating expenses ....................................... 138
--------
Total liabilities ................................................... 47,367
--------
Net assets .......................................................... $456,014
========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ..................................................... 28,654
--------
Net asset value per share ........................................... $ 15.91
========
Composition of net assets:
Capital paid-in .................................................. $389,409
Accumulated net realized gain on investments and
foreign currency transactions ................................. 932
Undistributed net investment income .............................. 10
Net unrealized appreciation of investments ....................... 65,663
--------
Net assets .......................................................... $456,014
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Large Cap Value Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 381
Dividends (net of foreign withholding tax of $71) 9,432
Securities lending ............................................... 20
-------
Total investment income ............................................. 9,833
-------
EXPENSES
Investment advisory fee .......................................... 3,043
Auditors fees .................................................... 48
Custodian fees ................................................... 108
Fidelity Bond fees ............................................... 1
Legal fees ....................................................... 61
Printing & mailing fees .......................................... 61
Trustees' fees ................................................... 11
Other fees ....................................................... 13
-------
Total expenses ...................................................... 3,346
Less custodian expense reduction offset by
commission recapture arrangement (Note C) ..................... (44)
-------
Net expenses ........................................................ 3,302
-------
Net investment income ............................................... 6,531
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments ................................................... 14,132
Foreign currency transactions ................................. (27)
Change in unrealized appreciation on:
Investments ................................................... 37,125
-------
Net realized and unrealized gain .................................... 51,230
-------
Net increase in net assets resulting from operations ................ $57,761
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Large Cap Value Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003
------------ ------------
INCREASE (DECREASE) IN NET ASSETS From operations
Net investment income .................................... $ 6,531 $ 5,467
Net realized gain ........................................ 14,105 5,115
Change in net unrealized appreciation .................... 37,125 61,944
-------- --------
Net increase in net assets resulting from operations .. 57,761 72,526
Distributions to shareholders from:
Net investment income .................................... (6,530) (5,790)
Realized gains ........................................... (12,780) (5,006)
-------- --------
Decrease in net assets resulting from distributions ... (19,310) (10,796)
From fund share transactions:
Proceeds from shares sold ................................ 131,687 120,218
Distributions reinvested ................................. 19,310 10,796
Payment for shares redeemed .............................. (98,997) (87,322)
-------- --------
Increase in net assets from fund share transactions ... 52,000 43,692
-------- --------
NET INCREASE IN NET ASSETS .................................. 90,451 105,422
NET ASSETS
Beginning of Period ...................................... 365,563 260,141
-------- --------
End of Period (including undistributed net investment
income of $10 and $123, respectively) ................. $456,014 $365,563
======== ========
Analysis of fund share transactions:
Sold ..................................................... 8,815 9,472
Reinvested ............................................... 1,234 801
Redeemed ................................................. (6,672) (6,839)
-------- --------
Net increase in fund shares outstanding ..................... 3,377 3,434
======== ========
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Large Cap Value Fund
-----------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------
2004 2003 2002 2001 2000
-------- -------- -------- -------- --------
Net Assets Value at Beginning of Period ......................... $ 14.46 $ 11.91 $ 14.15 $ 14.38 $ 13.49
Income from Investment Operations:
Net Investment Income ........................................ 0.24 0.23 0.22 0.22 0.27
Net Realized and Unrealized Gain (Loss) on Investment(a) ..... 1.91 2.76 (2.07) (0.05) 1.45
-------- -------- -------- -------- --------
Total From Investment Operations ............................. 2.15 2.99 (1.85) 0.17 1.72
Less Distributions:
Distribution from Net Investment Income ...................... (0.24) (0.24) (0.22) (0.22) (0.28)
Distribution from Net Realized Gains on Investments .......... (0.46) (0.20) (0.17) (0.18) (0.53)
Distribution from Excess of Net Investment Income/Gains ...... (0.01)
Distribution from Capital Paid-in ............................ (0.01)
-------- -------- -------- -------- --------
Total Distributions .......................................... (0.70) (0.44) (0.39) (0.40) (0.83)
-------- -------- -------- -------- --------
Net Assets Value at End of Period ............................... $ 15.91 $ 14.46 $ 11.91 $ 14.15 $ 14.38
======== ======== ======== ======== ========
Total Investment Return(b) ...................................... 15.00% 25.51% (13.24)% 1.25% 12.97%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ............. 0.83%(c) 0.82%(c) 0.83% 0.82% 0.78%
Ratio of Net Investment Income to Average Net Assets ......... 1.61% 1.83% 1.67% 1.54% 2.04%
Portfolio Turnover Rate ...................................... 26.42% 17.73% 16.04% 18.19% 42.12%
Net Assets End of Period (000s Omitted) ......................... $456,014 $365,563 $260,141 $260,646 $204,535
(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 is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 2.7%
Lockheed Martin Corp. .................................. 77,000 $ 4,277
Raytheon Co. ........................................... 107,800 4,186
Rockwell Collins, Inc. ................................. 97,700 3,853
-------
12,316
Banks - 7.1%
AmSouth Bancorp. # ..................................... 11,700 303
Bank of America Corp. .................................. 136,424 6,411
Bank of Ireland * ...................................... 130,300 2,147
JP Morgan Chase & Co. .................................. 225,286 8,787
Mellon Financial Corp. ................................. 134,100 4,172
Mercantile Bankshares Corp. ............................ 35,700 1,864
National City Corp. .................................... 54,100 2,031
Northern Trust Corp. # ................................. 33,600 1,632
Suntrust Banks, Inc. ................................... 55,500 4,100
Wilmington Trust Corp. ................................. 27,100 980
-------
32,427
Beverages - 1.4%
Coca-Cola Co. .......................................... 144,800 6,028
Coca-Cola Enterprises, Inc. ............................ 6,400 133
-------
6,161
Biotechnology - 0.7%
Chiron Corp. * ......................................... 3,100 104
MedImmune, Inc. * ...................................... 120,000 3,253
-------
3,357
Chemicals - 3.0%
Dow Chemical Co. ....................................... 89,400 4,426
E.I. du Pont de Nemours & Co. .......................... 75,800 3,718
Great Lakes Chemical Corp. ............................. 62,300 1,775
Hercules, Inc. * ....................................... 104,100 1,546
International Flavors & Fragrances, Inc. ............... 50,400 2,159
-------
13,624
Commercial Services & Supplies - 1.4%
Cendant Corp. .......................................... 88,700 2,074
Dun & Bradstreet Corp. * .............................. 6,200 370
Waste Management, Inc. ................................. 134,090 4,014
-------
6,458
Communications Equipment - 1.6%
Lucent Technologies, Inc. # * .......................... 256,000 962
Motorola, Inc. ......................................... 202,200 3,478
Nokia Oyj - ADR ........................................ 186,700 2,926
-------
7,366
Computers & Peripherals - 0.8%
Hewlett-Packard Co. .................................... 179,488 3,764
Construction Materials - 0.5%
Vulcan Materials Co. # ................................. 44,700 2,441
Diversified Financials - 4.2%
American Express Co. ................................... 63,200 3,563
Charles Schwab Corp. ................................... 402,200 $ 4,810
Citigroup, Inc. ........................................ 55,066 2,653
Janus Capgroup, Inc. # ................................. 51,500 866
Morgan Stanley, Dean Witter, Discover & Co. ............ 89,400 4,963
Wells Fargo & Co. ...................................... 32,900 2,045
-------
18,900
Diversified Telecommunication Services - 5.9%
Alltel Corp. ........................................... 70,600 4,149
AT&T Corp. # ........................................... 160,920 3,066
Qwest Communications International, Inc.* ............. 820,100 3,641
SBC Communications, Inc. ............................... 152,555 3,932
Sprint Corp. ........................................... 216,900 5,390
Telus Corp. ............................................ 20,500 617
Telus Corp. ............................................ 29,900 864
Verizon Communications ................................. 132,516 5,368
-------
27,027
Electric Utilities - 2.7%
Constellation Energy Group, Inc. ....................... 77,300 3,379
Firstenergy Corp. ...................................... 61,500 2,430
Progress Energy, Inc. # ................................ 32,000 1,448
Teco Energy, Inc. # .................................... 64,100 983
TXU Corp. # ............................................ 25,200 1,627
Xcel Energy, Inc. # .................................... 122,200 2,224
-------
12,091
Electric/Gas - 1.0%
Duke Energy Co. ........................................ 179,100 4,537
Electrical Equipment - 1.8%
Cooper Industries, Ltd. - Cl. A ........................ 57,400 3,897
Emerson Electric Co. ................................... 26,200 1,837
Rockwell International Corp. ........................... 50,500 2,502
-------
8,236
Electronic Equipment & Instruments - 0.0%
Agilent Technologies, Inc. * ........................... 5,400 130
Energy Equipment & Services - 0.7%
Baker Hughes, Inc. ..................................... 24,900 1,063
Schlumberger, Ltd. ..................................... 31,700 2,122
-------
3,185
Finance - 2.7%
Dow Jones & Co., Inc. # ................................ 114,200 4,918
Marsh & McLennan Cos., Inc. ............................ 229,800 7,560
-------
12,478
Food Products - 2.6%
Campbell Soup Co. ...................................... 126,400 3,778
ConAgra, Inc. .......................................... 63,800 1,879
General Mills, Inc. .................................... 76,700 3,813
Unilever NV * .......................................... 36,100 2,410
-------
11,880
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Health Care Equipment & Supplies - 0.8%
Baxter International, Inc. .............................. 108,100 $ 3,734
Health Care Providers & Services - 1.0%
Cardinal Health, Inc. ................................... 50,400 2,931
CIGNA Corp. ............................................. 16,600 1,354
-------
4,285
Hotels Restaurants & Leisure - 1.9%
Hilton Hotels Corp. ..................................... 127,200 2,893
McDonald's Corp. ........................................ 100,700 3,228
Starwood Hotels & Resorts Worldwide, Inc. ............... 42,400 2,476
-------
8,597
Household Durables - 2.9%
Fortune Brands, Inc. .................................... 46,300 3,573
Newell Rubbermaid, Inc. # ............................... 191,500 4,632
Sony Corp. * ............................................ 58,000 2,236
Whirlpool Corp. ......................................... 38,300 2,651
-------
13,092
Household Products - 2.5%
Clorox Co. .............................................. 32,700 1,927
Colgate-Palmolive Co. ................................... 108,500 5,551
Kimberly-Clark Corp. .................................... 56,400 3,712
-------
11,190
Industrial Conglomerates - 3.4%
General Electric Co. .................................... 252,900 9,231
Honeywell International, Inc. ........................... 179,100 6,342
-------
15,573
Insurance - 4.5%
Chubb Corp. ............................................. 41,200 3,168
Lincoln National Corp. .................................. 76,631 3,577
Safeco Corp. # .......................................... 73,500 3,840
St. Paul Cos., Inc. ..................................... 99,836 3,701
Unumprovident Corp. * ................................... 39,700 1,221
UnumProvident Corp. # ................................... 168,000 3,014
XL Capital, Ltd. - Cl. A ................................ 25,800 2,003
-------
20,524
Leisure Equipment & Products - 2.0%
Eastman Kodak Co. # ..................................... 134,700 4,344
Mattel, Inc. ............................................ 245,100 4,777
-------
9,121
Machinery - 0.7%
Pall Corp. .............................................. 116,400 3,370
Media - 7.2%
Comcast Corp. - Cl. A * ................................. 186,081 6,193
Knight-Ridder, Inc. ..................................... 38,900 2,604
New York Times Co. - Cl. A # ............................ 151,700 6,189
The Walt Disney Co. ..................................... 171,900 4,779
Time Warner, Inc. * ..................................... 295,600 5,746
Viacom, Inc. - Cl. B .................................... 201,400 $ 7,329
-------
32,840
Metals & Mining - 1.0%
Alcoa, Inc. ............................................. 81,300 2,555
Nucor Corp. # ........................................... 34,800 1,821
-------
4,376
Multi-Utilities - 1.0%
NiSource, Inc. .......................................... 205,200 4,674
Multiline Retail - 0.5%
May Department Stores Co. ............................... 74,650 2,195
Oil & Gas - 8.2%
Amerada Hess Corp. ...................................... 57,500 4,737
Anadarko Petroleum Corp. ................................ 48,400 3,137
BP Amoco plc - ADR ...................................... 74,332 4,341
ChevronTexaco Corp. .................................... 151,626 7,962
Exxon Mobil Corp. ....................................... 159,534 8,178
Royal Dutch Petroleum Co. # ............................. 113,700 6,524
Unocal Corp. ............................................ 57,900 2,503
-------
37,382
Paper & Forest Products - 1.8%
International Paper Co. ................................. 127,670 5,362
MeadWestvaco Corp. ...................................... 83,700 2,837
-------
8,199
Pharmaceuticals - 6.8%
Abbott Laboratories ..................................... 76,600 3,573
Bristol-Myers Squibb Co. ................................ 222,900 5,711
Johnson & Johnson ....................................... 92,500 5,866
Merck & Co., Inc. ....................................... 219,500 7,055
Schering-Plough Corp. ................................... 166,500 3,476
Wyeth ................................................... 123,800 5,273
-------
30,954
Real Estate Investment Trust - 0.5%
Simon Property Group, Inc. .............................. 37,900 2,451
Road & Rail - 2.0%
Norfolk Southern Corp. .................................. 88,400 3,199
Union Pacific Corp. ..................................... 86,100 5,790
-------
8,989
Semiconductor Equipment & Products - 1.2%
Freescale Semiconductor, Inc. - Cl. B * ................. 11,242 206
Intel Corp. ............................................. 68,100 1,593
Texas Instruments, Inc. ................................. 154,500 3,804
-------
5,603
Software - 0.9%
Microsoft Corp. ......................................... 157,600 4,209
Specialty Retail - 0.8%
Home Depot, Inc. ........................................ 81,700 3,492
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
Market
Name of Issuer Shares Value
-------------- -------- --------
(000's)
COMMON STOCK - Continued
Tobacco - 1.2%
Altria Group, Inc. ................................... 38,500 $ 2,352
UST, Inc. ............................................ 64,300 3,094
--------
5,446
Trading Companies & Distributors - 0.8%
Genuine Parts Co. .................................... 85,400 3,763
U.S. Government Agencies - 0.7%
Federal National Mortgage Assoc. ..................... 43,800 3,119
--------
TOTAL COMMON STOCK-
(Cost $368,355) 95.1% 433,556
PREFERRED STOCK
Automobiles - 0.1%
Ford Motor Co. Capital Trust II # .................... 766
--------
TOTAL PREFERRED STOCK-
(Cost $725) 0.1% 766
Par
Value
-------
(000's)
PUBLICLY-TRADED BONDS
Communications Equipment - 0.4%
Lucent Technologies, Inc. - Sub. Debs. #
8.0% due 08/01/31 .................................... $ 1,535 1,709
--------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $1,288) 0.4% 1,709
INVESTMENT COMPANIES HELD AS COLLATERAL ON
LOANED SECURITIES - 10.3%
State Street Navigator Securities Lending Portfolio .. 46,904 46,904
SHORT-TERM INVESTMENTS - 3.9%
Investment in joint trading account
2.29% due 01/03/05
(Cost $17,656) .................................... 17,656 17,656
------- --------
TOTAL INVESTMENTS-
(Cost $434,928) 109.8% 500,591
Payables, less cash and receivables- (9.8)% (44,577)
------- --------
NET ASSETS- 100.0% $456,014
======= ========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
ADR-American Depository Receipt.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Large Cap Value 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
twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices
as late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at
any time other than 4:00 p.m. Eastern Standard Time on a particular day, the
Fund will determine its net asset value per share as of the close of the
Exchange on that day. Investment security transactions are recorded on the date
of purchase or sale.
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.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximate market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including,
but not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETFs in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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. For the year ended December
31, 2004, the Fund had no bank borrowings.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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. For the year ended December 31,
2004, 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
- -------------------------- -------------------
$45,773 $46,904
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, 2004, 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, 2004, 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, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $71. Realized gains and losses
from security transactions are determined on the basis of identified cost.
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 11, 2004, 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 rate of 0.75% on an annual basis of the
Fund's net assets.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES--Continued
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. For the year
ended December 31, 2004, there were no reimbursements paid 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 in expenses
of $44.
John Hancock has entered into a Sub-Advisory Agreement with T. Rowe Price
Associates, Inc., which under John Hancock's 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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$133,275 $102,807
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$437,465 $75,257 $(12,131) $63,126
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 return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
shown in the accompanying financial statements as either from, or in excess of,
net investment income or net realized gain on capital transactions, or from
capital. The Fund may periodically make reclassifications among certain of its
capital accounts without impacting the net asset value of the Fund to present
the Fund's capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$899 $2,579 $-- $63,126
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
- ---- ------------------ ---------------------- -----------------
2004 $9,564 $9,746 $--
2003 8,294 2,502 --
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Large Cap Value Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Large Cap Value Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Managed Fund
Independence Investment LLC J. Forelli/J. Shallcross
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
.. The Fund employs a multi-manager approach with two sub-advisers
independently managing a portion of the Fund and each using distinct
investment strategies.
.. Independence Investment LLC has a target mix of 60% stocks and 40% bonds
and selects securities using fundamental research and quantitative
portfolio construction.
.. Capital Guardian Trust Company has a target mix of 70% stocks and 30% bonds
and selects securities using fundamental research and a multiple-manager
system with the fund managed by several portfolio managers and analysts.
Fund Commentary
Overall Performance: For the year ending December 31, 2004, the Managed Fund
returned +8.18%, underperforming the +8.29% return of the combined benchmark 60%
S&P 500 Index/40% Lehman Brothers Aggregate Bond.
Independence Investment LLC
Equity Environment: The large cap equity markets struggled through much of 2004,
but finished in positive territory with a very solid fourth quarter. Throughout
most of the year, investor sentiment was muted by fears of terrorism, the
maturing economic recovery, higher energy prices, and the uncertainty of the
Presidential election. Oil was the big story of 2004 climbing throughout most of
the year to record high prices. Although energy prices tailed off in time for
the holiday spending season, consumer spending was pinched by these prices.
Energy was the best performing sector for the year, followed by utilities. With
the decline in oil prices in Q4, as well as a stronger corporate and consumer
picture, the equity markets regained traction. The Independence portion of the
Managed Fund underperformed earlier in the year but came back strong in the
fourth quarter. For 2004, stock selection in utilities, healthcare and
industrials was strong while stock selection in consumer discretionary detracted
from performance. Sector weightings in technology detracted while an underweight
in consumer staples added to performance.
Equity Outlook: Overall, our forecast for U.S. stock performance in 2005 is
favorable. We expect continued recovery in corporate spending, an improved
employment picture, and a healthy consumer to drive stocks higher. We stay
attuned to potential risks including weakness in the US dollar, accelerating
inflation, and an increase in bond yields.
Fixed Income Environment: Although early signs reminiscent of 1994 emerged in
April, the bond market remained resilient throughout the year. Paradoxically,
long-term interest rates finished the year lower in an interest rate-tightening
environment. The 10-Year Treasury ended the year virtually unchanged in yield,
while short-term rates rose by nearly a full percentage point.
Benign inflation and concerns of chronic fatigue in the labor market kept a lid
on interest rates, while the Federal Reserve lifted short-term rates higher.
Despite some volatile labor market numbers, other cyclical economic indicators
reaffirmed the economy's growth. There were several economic hurdles, notably
investor paranoia over slower growth expectations, higher energy prices, the
falling U.S. dollar, concerns over higher interest rates, geopolitical issues
and slower growth in Asia. However, most spread sectors performed well as
underlying improving fundamentals and strong market technicals pushed spreads
tighter.
Corporate bonds were the best performer. The portfolio remained overweight in
corporate credit, and benefited from having a high concentration in lower rated
bonds. Larger weightings in media/cable, telecommunications, energy, utilities
and consumer cyclicals added to performance. Asset Backed Securities and
Commercial Mortgage Backed Securities had strong performance. We remained
overweight and benefited from owning a higher concentration of home equity
bonds.
Fixed Income Outlook: The economy is poised for gradual growth, but there are
lingering issues. The Fed is still in tightening mode. Oil prices remain high,
but so far this has been moderately absorbed by consumers and some industries.
The falling dollar remains a concern. Interest rates will probably trend higher.
Corporate bonds should still benefit from improving fundamentals and positive
technicals, but profit taking could lead to short-term spread widening. The
mortgage market looks relatively expensive and unattractive.
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Managed Fund
Independence Investment LLC J. Forelli/J. Shallcross
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
Capital Guardian Trust Company
Environment: The fund benefited during the year from being overweight equities
relative to the benchmark weight as stocks outperformed bonds by a wide margin.
The equity portion of the fund benefited from stock selection in financials,
telecomm services and consumer staples as well as from being underweight
information technology, which underperformed the market for the year. From a
market capitalization perspective, being underweight the largest companies in
the index was a major contributor to overall returns as smaller to
mid-capitalization names outperformed the mega-cap stocks for the year.
Detracting from equity returns in 2004 was stock selection in health care,
consumer discretionary and materials.
Within the fixed-income portfolio, the fund benefited from its allocation to
lower-rated bonds and from being bulleted relative to the index along the yield
curve. Detracting somewhat from results within the bond portfolio was issue
selection within automobiles, electronic equipment & instruments and private
label mortgage bonds.
Outlook: Our overweight position in equities is partially due to a somewhat
negative outlook for bonds. We remain concerned about the risk of rising
interest rates in the U.S. and therefore are slightly short duration within bond
portfolios. Goods price inflation has turned positive for the first time in
three years and the Federal Reserve is poised to continue tightening monetary
policy, though it has indicated it will do this in a measured way.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 12/31/93 (10-year period)
Managed Fund Managed Benchmark (1)
------------ ---------------------
12/31/1994 $10,000 $10,000
01/31/1995 10,188 10,229
02/28/1995 10,493 10,549
03/31/1995 10,630 10,737
04/30/1995 10,866 10,969
05/31/1995 11,283 11,398
06/30/1995 11,448 11,573
07/31/1995 11,630 11,754
08/31/1995 11,769 11,841
09/30/1995 12,118 12,146
10/31/1995 12,142 12,203
11/30/1995 12,532 12,563
12/31/1995 12,709 12,767
01/31/1996 12,905 13,029
02/29/1996 12,851 12,978
03/31/1996 12,865 12,995
04/30/1996 12,892 13,054
05/31/1996 13,046 13,210
06/30/1996 13,171 13,326
07/31/1996 12,882 13,048
08/31/1996 12,993 13,175
09/30/1996 13,400 13,660
10/31/1996 13,727 13,999
11/30/1996 14,254 14,650
12/31/1996 14,071 14,439
01/31/1997 14,405 14,910
02/28/1997 14,455 14,989
03/31/1997 14,118 14,593
04/30/1997 14,500 15,139
05/31/1997 14,920 15,676
06/30/1997 15,324 16,120
07/31/1997 16,190 16,977
08/31/1997 15,732 16,434
09/30/1997 16,260 17,006
10/31/1997 16,099 16,846
11/30/1997 16,484 17,274
12/31/1997 16,708 17,509
01/31/1998 16,893 17,716
02/28/1998 17,660 18,477
03/31/1998 18,313 19,071
04/30/1998 18,437 19,225
05/31/1998 18,377 19,100
06/30/1998 18,894 19,631
07/31/1998 18,698 19,521
08/31/1998 16,947 17,956
09/30/1998 17,530 18,814
10/31/1998 18,462 19,692
11/30/1998 19,233 20,453
12/31/1998 20,119 21,185
01/31/1999 20,424 21,776
02/28/1999 19,868 21,218
03/31/1999 20,291 21,774
04/30/1999 20,876 22,308
05/31/1999 20,546 21,913
06/30/1999 21,275 22,614
07/31/1999 20,829 22,153
08/31/1999 20,699 22,082
09/30/1999 20,436 21,821
10/31/1999 21,227 22,681
11/30/1999 21,363 22,958
12/31/1999 21,950 23,725
01/31/2000 21,129 22,977
02/29/2000 20,842 22,828
03/31/2000 22,343 24,289
04/30/2000 22,012 23,823
05/31/2000 21,821 23,525
06/30/2000 22,216 24,068
07/31/2000 22,097 23,931
08/31/2000 23,108 24,962
09/30/2000 22,394 24,234
10/31/2000 22,511 24,236
11/30/2000 21,560 23,250
12/31/2000 21,955 23,491
01/31/2001 22,507 24,144
02/28/2001 21,443 22,908
03/31/2001 20,621 22,084
04/30/2001 21,773 23,075
05/31/2001 21,917 23,223
06/30/2001 21,575 22,919
07/31/2001 21,566 22,990
08/31/2001 20,815 22,231
09/30/2001 19,788 21,257
10/31/2001 20,261 21,678
11/30/2001 21,208 22,556
12/31/2001 21,331 22,617
01/31/2002 21,172 22,493
02/28/2002 20,871 22,319
03/31/2002 21,337 22,674
04/30/2002 20,717 22,026
05/31/2002 20,629 22,004
06/30/2002 19,672 21,139
07/31/2002 18,597 20,253
08/31/2002 18,756 20,470
09/30/2002 17,525 19,268
10/31/2002 18,421 20,251
11/30/2002 19,122 20,964
12/31/2002 18,509 20,398
01/31/2003 18,167 20,084
02/28/2003 18,132 20,013
03/31/2003 18,264 20,124
04/30/2003 19,243 21,186
05/30/2003 19,957 22,014
06/30/2003 20,056 22,166
07/31/2003 20,084 22,102
08/31/2003 20,437 22,418
09/30/2003 20,521 22,512
10/31/2003 21,198 23,192
11/30/2003 21,298 23,336
12/31/2003 22,026 24,164
01/31/2004 22,379 24,507
02/28/2004 22,667 24,819
03/31/2004 22,502 24,667
04/30/2004 21,957 24,179
05/30/2004 22,109 24,339
06/30/2004 22,415 24,677
07/31/2004 21,952 24,284
08/31/2004 22,062 24,527
09/30/2004 22,252 24,714
10/31/2004 22,519 25,024
11/30/2004 23,186 25,552
12/31/2004 23,828 26,167
Value on 12/31/04:
- ------------------
$23,828 Managed Fund
$26,167 Managed Benchmark (1)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Federal National Mortgage Assoc. 11.9%
General Electric Co. 2.4%
U.S. Treasury 2.1%
Citigroup, Inc. 1.8%
Exxon Mobil Corp. 1.6%
Microsoft Corp. 1.5%
Johnson & Johnson 1.5%
Federal Home Loan Mortgage Corp. 1.2%
JP Morgan Chase & Co. 1.1%
Bank of America Corp. 1.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Managed Managed Fund
Fund Benchmark/1/
------- ------------
1 Year 8.18% 8.29%
3 Years 3.76% 4.98%
5 Years 1.66% 1.98%
10 Years 9.07% 10.10%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Financials 25.8%
Governments 15.7%
Consumer Discretionary 10.6%
Information Technology 10.4%
Industrials 9.4%
Health Care 8.8%
Energy 5.9%
Consumer Staples 4.2%
Utilities 4.0%
Telecommunication Services 2.8%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
/1/ The Managed Fund Benchmark represents 50% S&P 500/50% Lehman Brothers
Aggregate Bond Index from April 1986 to December 1997, then 60% S&P 500/40%
Lehman Brothers Aggregate Bond Index from 1998 to present.
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Managed Fund
Independence Investment LLC J. Forelli/J. Shallcross
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Managed Fund shareholder, you pay ongoing expenses, such as management
fees; distribution fees (12b-1); and other expenses. Using the information
below, you can estimate how these expenses affect your investment and compare
them with the expenses of other funds. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,063.00
Expense paid per $1,000* $ 3.94
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,021.32
Expense paid per $1,000* $ 3.86
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Managed Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $90,783 of securities
loaned (Note B)) ............................................. $1,836,426
Net unrealized appreciation of investments ...................... 224,570
Short-term investments at value ................................. 273,080
----------
Total investments ......................................... 2,334,076
Cash ............................................................ 110
Receivable for:
Investments sold ............................................. 1,144
Interest ..................................................... 6,020
Dividends .................................................... 2,297
Foreign dividend tax withholding reclaim ..................... 7
Other receivables ............................................ 2
----------
Total assets .................................................... 2,343,656
----------
LIABILITIES
Payables for:
Investments purchased ........................................ 170,454
Fund shares purchased ........................................ 210
Collateral for securities on loan ............................ 92,803
Accrued operating expenses ................................... 960
Other payables ............................................... 1
----------
Total liabilities ............................................... 264,428
----------
Net assets ...................................................... $2,079,228
==========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) .................................................. 153,060
----------
Net asset value per share ....................................... $ 13.58
==========
Composition of net assets:
Capital paid-in .............................................. $1,961,999
Accumulated net realized loss on investments and futures
transactions .............................................. (107,341)
Net unrealized appreciation of investments ................... 224,570
----------
Net assets ...................................................... $2,079,228
==========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Managed Fund
(000's Omitted)
INVESTMENT INCOME
Interest .................................................. $ 28,801
Dividends (net of foreign withholding tax of $92) ......... 24,496
Securities lending ........................................ 148
----------
Total investment income ......................................... 53,445
----------
EXPENSES
Investment advisory fee ................................... 13,922
Auditors fees ............................................. 279
Custodian fees ............................................ 664
Fidelity Bond fees ........................................ 5
Legal fees ................................................ 344
Printing & mailing fees ................................... 344
Trustees' fees ............................................ 62
Other fees ................................................ 59
----------
Total expenses .................................................. 15,679
Less custodian expense reduction offset by
commission recapture arrangement (Note C) .............. (522)
----------
Net expenses .................................................... 15,157
----------
Net investment income ........................................... 38,288
----------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments ............................................... 105,891
Financial futures contracts ............................... (198)
Change in unrealized appreciation on investments .......... 16,108
----------
Net realized and unrealized gain ................................ 121,801
----------
Net increase in net assets resulting from operations ............ $ 160,089
==========
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Managed Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE(DECREASE) IN NET ASSETS
From operations
Net investment income .................................................... $ 38,288 $ 34,274
Net realized gain (loss) ................................................. 105,693 (6,738)
Change in net unrealized appreciation .................................... 16,108 314,071
---------- ----------
Net increase in net assets resulting from operations .................. 160,089 341,607
Distributions to shareholders from:
Net investment income .................................................... (38,760) (63,275)
Capital paid-in .......................................................... (8,852)
---------- ----------
Decrease in net assets resulting from distributions ................... (38,760) (72,127)
From fund share transactions:
Proceeds from shares sold ................................................ 121,173 80,229
Distributions reinvested ................................................. 38,760 72,127
Payment for shares redeemed .............................................. (272,779) (287,955)
---------- ----------
Decrease in net assets from fund share transactions ................... (112,846) (135,599)
---------- ----------
NET INCREASE IN NET ASSETS .................................................. 8,483 133,881
NET ASSETS
Beginning of Period ...................................................... 2,070,745 1,936,864
---------- ----------
End of Period (including undistributed net investment income of $0 and $0,
respectively) ......................................................... $2,079,228 $2,070,745
========== ==========
Analysis of fund share transactions:
Sold ..................................................................... 9,359 6,753
Reinvested ............................................................... 2,978 5,842
Redeemed ................................................................. (21,099) (24,528)
---------- ----------
Decrease in fund shares outstanding ......................................... (8,762) (11,933)
========== ==========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Managed Fund
------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------
2004 2003(g) 2002 2001 2000(c)
---------- ---------- ---------- ---------- ----------
Net Assets Value at Beginning of Period ....... $ 12.80 $ 11.15 $ 13.08 $ 13.82 $ 15.45
Income from Investment Operations:
Net Investment Income ...................... 0.23 0.21 0.21 0.28 0.44
Net Realized and Unrealized Gain (Loss)
on Investment(a) ........................ 0.80 1.89 (1.93) (0.67) (0.45)
---------- ---------- ---------- ---------- ----------
Total From Investment Operations ........... 1.03 2.10 (1.72) (0.39) (0.01)
Less Distributions:
Distribution from Net Investment
Income .................................. (0.25) (0.39) (0.21) (0.28) (0.44)
Distribution from Net Realized Gains on
Investments ............................. (0.07) (1.18)
Distribution from Capital Paid-In .......... (0.06)
---------- ---------- ---------- ---------- ----------
Total Distributions ........................ (0.25) (0.45) (0.21) (0.35) (1.62)
---------- ---------- ---------- ---------- ----------
Net Assets Value at End of Period ............. $ 13.58 $ 12.80 $ 11.15 $ 13.08 $ 13.82
========== ========== ========== ========== ==========
Total Investment Return(b) .................... 8.18% 19.00% (13.23)% (2.84)% 0.03%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets .................................. 0.77%(f) 0.74%(f) 0.76% 0.73% 0.46%
Ratio of Net Investment Income to Average
Net Assets .............................. 1.87% 1.75% 1.77% 2.10%(d) 2.86%
Portfolio Turnover Rate .................... 234.27% 216.32% 234.62% 190.73%(e) 210.35%
Net Assets End of Period (000s Omitted) ....... $2,079,228 $2,070,745 $1,936,864 $2,526,703 $2,995,794
(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) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 2.29% for the years ended December 31, 2001.
(e) Excludes merger activity.
(f) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(g) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND **
Market
Name of Issuer Shares Value
-------------- --------- --------
(000's)
COMMON STOCK
Aerospace & Defense - 0.6%
Boeing Co. (US) ...................................... 175,800 $ 9,101
General Dynamics Corp. (US) .......................... 4,700 492
Northrop Grumman Corp. (US) .......................... 14,300 777
United Technologies Corp. (US) ....................... 21,000 2,170
--------
12,540
Air Freight & Couriers - 0.6%
Fedex Corp. (US) ..................................... 126,800 12,489
Airlines - 0.0%
Delta Air Lines, Inc. (US) ........................... 3,044 23
Auto Components - 0.2%
Magna International, Inc. - Cl. A (US) ............... 50,400 4,161
Banks - 2.8%
Bank of America Corp. (US) ........................... 488,100 22,936
Comerica, Inc. (US) .................................. 98,700 6,022
JP Morgan Chase & Co. (US) ........................... 221,892 8,656
Suntrust Banks, Inc. # (US) .......................... 64,700 4,780
UnionBanCal Corp. (US) ............................... 50,600 3,263
Wachovia Corp. (US) .................................. 246,900 12,987
--------
58,644
Beverages - 1.2%
Anheuser-Busch Cos., Inc. (US) ....................... 55,900 2,836
Coca-Cola Co. (US) ................................... 217,600 9,058
Constellation Brands, Inc. - Cl. A (US) .............. 107,800 5,014
Pepsi Bottling Group, Inc. (US) ...................... 53,000 1,433
PepsiCo, Inc. (US) ................................... 132,300 6,906
--------
25,247
Biotechnology - 0.8%
Amgen, Inc. (US) * ................................... 248,600 15,948
Biogen IDEC, Inc. (US) * ............................. 9,400 626
ImClone Systems, Inc. # (US) * ....................... 15,700 723
--------
17,297
Building Products - 0.1%
Masco Corp. (US) ..................................... 72,600 2,652
Chemicals - 1.4%
Air Products & Chemicals, Inc. (US) .................. 39,200 2,272
Dow Chemical Co. (US) ................................ 271,800 13,457
E.I. du Pont de Nemours & Co. (US) ................... 69,200 3,394
Monsanto Co. (US) .................................... 85,700 4,761
NALCO Holding Co. (US) * ............................. 142,300 2,778
Rohm & Haas Co. (US) ................................. 57,500 2,543
--------
29,205
Commercial Services & Supplies - 0.6%
Allied Waste Industries, Inc. (US) * ................. 38,400 356
Automatic Data Processing, Inc. (US) ................. 158,200 $ 7,016
DST Systems, Inc. (US) * ............................. 51,500 2,684
Dun & Bradstreet Corp. (US) * ........................ 35,400 2,112
Monster Worldwide, Inc. (US) * ....................... 16,200 545
--------
12,713
Communications Equipment - 2.0%
Cisco Systems, Inc. (US) * ........................... 739,300 14,269
Comverse Technology, Inc. (US) * ..................... 132,000 3,227
JDS Uniphase Corp. # (US) * .......................... 294,000 932
Motorola, Inc. (US) .................................. 548,800 9,439
Nokia Oyj - ADR (US) ................................. 353,100 5,533
Polycom, Inc. (US) * ................................. 42,400 989
Qualcomm, Inc. (US) * ................................ 175,100 7,424
--------
41,813
Computers & Peripherals - 2.2%
Apple Computer, Inc. (US) * .......................... 121,000 7,792
Dell, Inc. (US) * .................................... 298,400 12,575
EMC Corp. (US) * ..................................... 399,400 5,939
International Business Machines Corp. (US) ........... 173,900 17,143
Lexmark International Group, Inc. - Cl. A (US) * ..... 13,500 1,147
Seagate Technology # (US) ............................ 53,400 922
Sun Microsystems, Inc. (US) * ........................ 184,500 993
--------
46,511
Construction & Engineering - 0.4%
American Standard Cos., Inc. (US) * .................. 110,900 4,582
Fluor Corp. # (US) ................................... 81,300 4,432
--------
9,014
Credit Card - 0.4%
MBNA Corp. (US) ...................................... 281,800 7,944
Diversified Financials - 6.1%
AmeriCredit Corp. # (US) * ........................... 46,900 1,147
Bear Stearns Cos., Inc. # (US) * ..................... 58,900 6,026
Capital One Financial Corp. (US) ..................... 113,200 9,533
CIT Group, Inc. (US) ................................. 120,800 5,535
Citigroup, Inc. (US) ................................. 648,400 31,240
Goldman Sachs Group, Inc. (US) ....................... 113,000 11,757
Hartford Financial Services Group, Inc. (US) ......... 212,500 14,728
Morgan Stanley, Dean Witter, Discover & Co. (US) ..... 152,600 8,472
SLM Corp. (US) ....................................... 382,100 20,400
State Street Corp. (US) .............................. 14,900 732
Washington Mutual, Inc. (US) ......................... 229,900 9,720
Wells Fargo & Co. (US) ............................... 127,300 7,912
--------
127,202
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Market
Name of Issuer Shares Value
-------------- --------- --------
(000's)
COMMON STOCK - Continued
Diversified Telecommunication Services - 1.7%
CenturyTel, Inc. # (US) .............................. 71,900 $ 2,550
Citizens Communications Co. (US) ..................... 180,900 2,495
Qwest Communications International, Inc. (US) * ...... 43,800 194
Sprint Corp. (US) .................................... 562,950 13,989
Verizon Communications (US) * ........................ 391,500 15,860
--------
35,088
Electric Utilities - 1.4%
AES Corp. (US) * ..................................... 711,400 9,725
Edison International (US) ............................ 254,600 8,155
TXU Corp. # (US) ..................................... 163,600 10,562
--------
28,442
Electrical Equipment - 0.7%
Cooper Industries, Ltd. - Cl. A (US) ................. 16,400 1,113
Emerson Electric Co. (US) ............................ 68,700 4,816
Rockwell International Corp. (US) .................... 189,200 9,375
--------
15,304
Electronic Equipment & Instruments - 0.4%
Agilent Technologies, Inc. (US) * .................... 33,000 795
Avnet, Inc. (US) * ................................... 64,500 1,176
Flextronics International, Ltd. (US) * ............... 71,800 992
Jabil Circuit, Inc. (US) * ........................... 49,200 1,259
Vishay Intertechnology, Inc. (US) * .................. 240,000 3,605
--------
7,827
Energy Equipment & Services - 1.2%
Baker Hughes, Inc. (US) .............................. 193,600 8,261
BJ Services Co. (US) ................................. 57,500 2,676
National-Oilwell, Inc. # (US) * ...................... 126,800 4,475
Schlumberger, Ltd. (US) .............................. 73,500 4,921
Transocean Sedco Forex, Inc. (US) * .................. 48,200 2,043
Weatherford Bermuda (US) * ........................... 49,700 2,549
--------
24,925
Food & Drug Retailing - 0.1%
Sysco Corp. (US) ..................................... 28,000 1,069
Food Products - 0.3%
Campbell Soup Co. (US) * ............................. 177,700 5,311
Kraft Foods, Inc. - Cl. A (US) ....................... 47,200 1,681
--------
6,992
Gas Utilities - 0.8%
Kinder Morgan Management LLC (US) .................... 88,337 3,595
Kinder Morgan, Inc. (US) ............................. 17,770 1,300
Sempra Energy (US) ................................... 92,200 $ 3,382
Williams Cos., Inc. (US) * ........................... 500,500 8,153
--------
16,430
Health Care Equipment & Supplies - 0.6%
Applera Corporation - Applied Biosystems Group (US) .. 76,200 1,593
Becton, Dickinson & Co. (US) ......................... 120,300 6,833
Boston Scientific Corp. (US) * ....................... 41,900 1,490
Guidant Corp. (US) ................................... 44,700 3,223
--------
13,139
Health Care Providers & Services - 2.0%
Aetna US Healthcare, Inc. (US) ....................... 73,100 9,119
Amerisource Bergen Corp. # (US) * .................... 152,100 8,925
CIGNA Corp. (US) ..................................... 9,500 775
DaVita, Inc. (US) * .................................. 31,500 1,245
Humana, Inc. (US) * .................................. 124,400 3,694
Lincare Holdings, Inc. (US) * ........................ 76,200 3,250
PacifiCare Health Systems, Inc. # (US) * ............. 29,400 1,662
Triad Hospitals, Inc. # (US) * ....................... 23,600 878
United Health Group, Inc. (US) ....................... 138,700 12,210
--------
41,758
Hotels Restaurants & Leisure - 0.4%
Carnival Corp. (US) .................................. 22,100 1,274
Las Vegas Sands Corp. (US) * ......................... 22,550 1,082
Marriott International, Inc. - Cl. A (US) ............ 63,600 4,006
McDonald's Corp. (US) ................................ 38,300 1,228
Starwood Hotels & Resorts Worldwide, Inc. (US) ....... 20,400 1,191
--------
8,781
Household Durables - 1.2%
Centex Corp. (US) .................................... 90,400 5,386
Fortune Brands, Inc. (US) ............................ 118,100 9,115
Newell Rubbermaid, Inc. (US) ......................... 217,000 5,249
Stanley Works (US) ................................... 119,800 5,869
--------
25,619
Household Products - 0.8%
Kimberly-Clark Corp. (US) ............................ 140,000 9,213
Procter & Gamble Co. (US) ............................ 125,700 6,924
--------
16,137
Industrial Conglomerates - 3.5%
General Electric Co. (US) ............................ 1,297,000 47,341
Reynolds American, Inc. # (US) ....................... 83,000 6,524
Textron, Inc. (US) ................................... 141,300 10,428
Tyco International, Ltd. (US) ........................ 228,300 8,159
--------
72,452
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Insurance - 3.8%
Allstate Corp. (US) ..................................... 148,400 $ 7,675
American International Group, Inc. (US) ................. 254,700 16,726
Assurant, Inc. (US) ..................................... 21,700 663
Chubb Corp. (US) ........................................ 19,100 1,469
Everest Re Group, Ltd. (US) ............................. 74,400 6,663
Lincoln National Corp. (US) ............................. 81,800 3,818
Prudential Financial, Inc. (US) ......................... 272,500 14,977
Safeco Corp. (US) * ..................................... 56,700 2,962
St. Paul Travelers Cos., Inc. # (US) .................... 125,000 4,634
The PMI Group, Inc. (US) ................................ 70,000 2,923
Wellpoint, Inc. (US) * .................................. 120,800 13,892
XL Capital, Ltd. - Cl. A (US) ........................... 34,500 2,679
-------
79,081
Internet & Catalog Retail - 0.0%
Amazon.com, Inc. (US) * ................................. 16,900 748
Internet Software & Services - 0.5%
Google, Inc. - Cl. A (US) * ............................. 4,000 772
IAC / InterActive Corp. # (US) * ........................ 169,500 4,682
McAfee, Inc. (US) * ..................................... 122,100 3,532
VeriSign, Inc. (US) * ................................... 19,500 654
-------
9,640
IT Consulting & Services - 0.7%
Accenture, Ltd. - Cl. A (US) * .......................... 154,100 4,161
Affiliated Computer Services, Inc. - Cl. A (US) * ....... 65,900 3,967
Computer Sciences Corp. (US) * .......................... 107,900 6,082
-------
14,210
Leisure Equipment & Products - 0.4%
Brunswick Corp. (US) .................................... 143,700 7,113
Mattel, Inc. (US) * ..................................... 70,400 1,372
-------
8,485
Machinery - 0.8%
Cummings Engine Co., Inc. (US) .......................... 45,900 3,846
Danaher Corp. (US) ...................................... 60,000 3,445
Ingersoll-Rand Co. - Cl. A (US) ......................... 64,900 5,212
Navistar International Corp., Inc. - Cl. B # (US) * ..... 28,500 1,253
Parker-Hannifin Corp. (US) .............................. 46,400 3,514
-------
17,270
Media - 2.3%
Cablevision Systems Corp. - Cl. A # (US) * .............. 110,361 2,748
Clear Channel Communications, Inc. (US) ................. 20,400 683
Comcast Corp. - Cl. A (US) * ............................ 378,500 12,597
Direct TV Group, Inc. (US) * ............................ 150,072 2,512
Knight-Ridder, Inc. (US) ................................ 13,600 911
McGraw-Hill Cos., Inc. (US) ............................. 50,700 4,641
Omnicom Group, Inc. (US) ................................ 16,900 $ 1,425
The Walt Disney Co. (US) * .............................. 656,700 18,256
Time Warner, Inc. (US) * ................................ 239,050 4,647
-------
48,420
Metals & Mining - 0.4%
Alcoa, Inc. (US) ........................................ 20,200 635
Nucor Corp. (US) ........................................ 77,600 4,061
Phelps Dodge Corp. (US) ................................. 38,700 3,828
-------
8,524
Multi-Utilities - 0.0%
NiSource, Inc. (US) ..................................... 30,000 683
Multiline Retail - 1.1%
Costco Wholesale Corp. (US) ............................. 41,500 2,009
Dollar Tree Stores, Inc. (US) * ......................... 97,000 2,782
Federated Department Stores, Inc. (US) .................. 130,400 7,536
Nordstrom, Inc. (US) .................................... 80,700 3,771
Target Corp. (US) ....................................... 23,100 1,199
Wal-Mart Stores, Inc. (US) .............................. 118,000 6,233
-------
23,530
Office Electronics - 0.3%
Xerox Corp. (US) * ...................................... 339,500 5,775
Oil & Gas - 3.8%
Ashland, Inc. (US) ...................................... 66,500 3,882
BP Amoco plc - ADR (US) ................................. 42,800 2,500
Conoco Phillips (US) .................................... 176,800 15,352
Devon Energy Corp. (US) ................................. 132,000 5,138
EOG Resources, Inc. (US) ................................ 88,500 6,315
Equitable Resources, Inc. (US) .......................... 32,900 1,996
Exxon Mobil Corp. (US) .................................. 630,300 32,309
Murphy Oil Corp. (US) ................................... 53,800 4,328
Royal Dutch Petroleum Co. (US) * ........................ 74,500 4,275
Shell Transport & Trading Co. (US) ...................... 24,600 1,264
Unocal Corp. (US) ....................................... 33,400 1,444
-------
78,803
Paper & Forest Products - 0.3%
International Paper Co. (US) ............................ 39,500 1,659
Louisiana-Pacific Corp. # (US) .......................... 163,900 4,383
-------
6,042
Personal Products - 0.4%
Avon Products, Inc. (US) ................................ 29,000 1,122
Estee Lauder Cos., Inc. - Cl. A (US) .................... 176,700 8,088
-------
9,210
Pharmaceuticals - 5.2%
Abbott Laboratories (US) ................................ 85,900 4,007
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Market
Name of Issuer Shares Value
-------------- --------- ----------
(000's)
COMMON STOCK - Continued
Pharmaceuticals - Continued
Allergan, Inc. (US) ............................... 124,600 $ 10,101
AstraZeneca Group plc - ADR (US) .................. 307,000 11,172
Elan Corp. plc - ADR # (US) * ..................... 34,200 932
Eli Lilly & Co. (US) .............................. 96,500 5,476
Forest Laboratories, Inc. (US) * .................. 226,200 10,147
Johnson & Johnson (US) ............................ 487,300 30,905
Medco Health Solutions, Inc. (US) * ............... 20,400 849
Merck & Co., Inc. (US) ............................ 527,500 16,954
Pfizer, Inc. (US) ................................. 596,400 16,037
Sepracor, Inc. # (US) * ........................... 10,100 600
----------
107,180
Real Estate Investment Trust - 0.1%
General Growth Properties (US) .................... 43,230 1,563
Road & Rail - 0.6%
Burlington Northern Santa Fe Corp. (US) ........... 112,000 5,299
Norfolk Southern Corp. (US) ....................... 123,600 4,473
Union Pacific Corp. (US) .......................... 24,700 1,661
----------
11,433
Semiconductor Equipment & Products - 1.5%
Advanced Micro Devices, Inc. # (US) * ............. 140,600 3,096
Applied Materials, Inc. (US) * .................... 482,300 8,247
Freescale Semiconductor, Inc. - Cl. B (US) * ...... 67,772 1,244
Intel Corp. (US) .................................. 272,800 6,381
KLA-Tencor Corp. (US) * ........................... 24,500 1,141
Lam Research Corp. (US) * ......................... 63,300 1,830
Linear Technology Corp. (US) * .................... 26,100 1,012
Micron Technology, Inc. # (US) * .................. 62,200 768
Novellus Systems, Inc. (US) * ..................... 124,900 3,484
Teradyne, Inc. # (US) * ........................... 84,700 1,446
Texas Instruments, Inc. (US) * .................... 114,300 2,814
----------
31,463
Software - 2.7%
Autodesk, Inc. (US) ............................... 127,800 4,850
Cadence Design Systems, Inc. (US) * ............... 71,900 993
Citrix Systems, Inc. (US) * ....................... 125,400 3,076
Microsoft Corp. (US) .............................. 1,179,000 31,491
Oracle Corp. (US) * ............................... 374,400 5,137
Sap Aktiengesellschaft - ADR # (US) ............... 43,700 1,932
Symantec Corp. (US) * ............................. 348,600 8,980
----------
56,459
Specialty Retail - 3.0%
Abercrombie & Fitch Co. (US) ...................... 91,300 4,286
AutoNation, Inc. (US) * ........................... 119,500 2,296
Best Buy Co., Inc. (US) ........................... 104,900 $ 6,233
Circuit City Stores, Inc. (US) .................... 467,800 7,316
Home Depot, Inc. (US) ............................. 479,400 20,489
Limited, Inc. (US) ................................ 278,304 6,407
Lowe's Cos., Inc. (US) ............................ 52,800 3,041
OfficeMax, Inc # (US) ............................. 76,300 2,394
RadioShack Corp. (US) ............................. 81,100 2,667
Sherwin-Williams Co. (US) ......................... 83,300 3,718
Williams-Sonoma, Inc. (US) * ...................... 68,900 2,414
----------
61,261
Textiles & Apparel - 0.4%
Nike, Inc. - Cl. B (US) ........................... 88,400 8,017
Tobacco - 1.0%
Altria Group, Inc. (US) ........................... 335,200 20,481
Trading Companies & Distributors - 0.4%
W.W. Grainger, Inc. (US) .......................... 114,400 7,621
U.S. Government Agencies - 1.0%
Federal Home Loan Mortgage Corp. (US) ............. 123,200 9,080
Federal National Mortgage Assoc. (US) ............. 155,400 11,066
----------
20,146
Wireless Telecommunications Services - 0.4%
American Tower Corp. - Cl. A (US) * ............... 46,900 863
Nextel Communications, Inc. - Cl. A (US) * ........ 212,200 6,366
----------
7,229
----------
TOTAL COMMON STOCK-
(Cost $1,153,136) 65.6% 1,364,692
Par
Value
---------
(000's)
PUBLICLY-TRADED BONDS
Aerospace & Defense - 0.2%
Boeing Capital Corp. - Sr. Notes # (US)
6.5% due 02/15/12 - A ............................. $ 1,797 2,014
Bombadier, Inc. - Notes 144A (a) # (US)
6.3% due 05/01/14 - BB ............................ 1,615 1,401
Systems 2001 LLC - Cl. G 144A (a) (US)
6.664% due 09/15/13 - AAA ......................... 230 254
Systems 2001 LLC - CTF Cl. B 144A (a) (US)
7.156% due 12/15/11 - BBB ......................... 301 326
----------
3,995
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Airlines - 0.0%
Delta Airlines, Inc. - Sr. Notes (US) (c)
8.0% due 12/15/07 - NA .................................. 75 $ 47
Auto Components - 0.0%
Delphi (US)
1.0% due 11/15/33 - B+ .................................. 40 38
TRW Automotive - Sr. Sub. Notes # (US)
11.0% due 02/15/13 - BB- ................................ 45 54
------
92
Auto Loan - 0.5%
Ford Motor Credit Co. - Notes (US)
6.875% due 02/01/06 - BBB- .............................. 953 982
7.375% due 10/28/09 - # BBB- ............................ 120 129
Ford Motor Credit Co. - Bonds (US)
7.375% due 02/01/11 - BBB- .............................. 150 161
Ford Motor Credit Co. (US)
7.875% due 06/15/10 - BBB- .............................. 125 138
General Motors Acceptance Corp. - Sr. Notes # (US)
5.625% due 05/15/09 - # BBB- ............................ 900 900
7.0% due 02/01/12 - BBB- ................................ 900 927
General Motors Acceptance Corp. - Notes (US)
6.125% due 09/15/06 - BBB- .............................. 1,745 1,789
7.75% due 01/19/10 - BBB- ............................... 300 322
8.0% due 11/01/31 - BBB- ................................ 250 257
General Motors Acceptance Corp. (US)
6.875% due 08/28/12 - BBB- .............................. 1,000 1,021
GMAC Commercial Mortgage Securities, Inc. - CTF Cl. H
144A (a) (US)
5.31% due 05/10/36 - BBB- ............................... 3,000 2,995
USAA Auto Owner Trust - Notes Ser. 2004 3 Cl. A3 (US)
3.16% due 02/17/09 - AAA ................................ 275 274
------
9,895
Automobiles - 0.4%
Daimler Chrysler NA Holding Corp. - Sr. Notes (US)
6.5% due 11/15/13 - BBB ................................. 1,040 1,128
DaimlerChrysler NA (US)
1.87% due 05/24/06 - BBB ................................ 1,833 1,842
DaimlerChrysler NA - Notes (US)
3.75% due 06/04/08 - BBB ................................ 100 100
8.0% due 06/15/10 - # BBB ............................... 250 289
DaimlerChrysler NA Holding Co. - Notes (US)
4.75% due 01/15/08 - BBB ................................ $ 125 $ 128
DaimlerChrysler NA Holding Co. (US)
7.2% due 09/01/09 - BBB ................................. 110 122
First Invs Auto Owner Trust - Notes Cl. A
144A (a) (US)
3.46% due 12/15/08 - NA ................................. 16 16
Ford Motor Co. - Bonds (US)
6.625% due 10/01/28 - BBB- .............................. 2,134 1,991
General Motors Corp. - Sr. Debs. (US)
8.375% due 07/15/33 - # BBB- ............................ 2,448 2,536
Hertz Corp. - Notes (US)
1.0% due 08/05/08 - # BBB- .............................. 180 181
Hertz Corp. - Sr. Notes (US)
6.35% due 06/15/10 - BBB- ............................... 155 159
United Rentals North America, Inc. - Sr. Notes (US)
6.5% due 02/15/12 - BB- ................................. 30 29
------
8,521
Banks - 2.1%
Banc America Mortgage Securities, Inc. - Ser. 2004-7
Cl. 6A1 (US)
1.0% due 08/25/19 - AAA ................................. 240 235
Banc America Mortgage Securities, Inc. - Ser. 2003-F
Cl. 2A1 (US)
3.734% due 07/25/33 - AAA ............................... 176 173
Banco Santander Chile - Sr. Notes 144A (a) (US)
2.8% due 12/09/09 - A ................................... 2,270 2,272
Bank of America Corp. - Sr. Notes (US)
7.125% due 09/15/06 - A+ ................................ 250 265
Bank One Corp. - Notes (US)
6.5% due 02/01/06 - A+ .................................. 1,238 1,282
Central American Bank - 144A (a) (US)
6.75% due 04/15/13 - BBB- ............................... 1,350 1,492
Corporacion Andina De Fomento - Notes (US)
5.2% due 05/21/13 - A ................................... 1,330 1,355
6.875% due 03/15/12 - A ................................. 160 180
Credit Suisse First Boston - Ser. 2004 C4 Cl. A4 (US)
1.0% due 10/15/39 - AAA ................................. 150 149
Credit Suisse First Boston - Ser. 2003 (US)
3.727% due 03/25/35 - AAA ............................... 3,642 3,585
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Banks - Continued
Credit Suisse First Boston - Ser. 2003-C3 Cl. F
(US)
4.518% due 05/15/38 - BBB+ .............................. $2,000 $ 1,908
Credit Suisse First Boston - Sr. Notes (US)
4.625% due 01/15/08 - A+ ................................ 1,276 1,308
Credit Suisse First Boston - Ser. 2004
AR1 Cl. II A1 144A (a) (US)
4.832% due 02/25/34 - AAA ............................... 162 161
Credit Suisse First Boston (US)
6.5% due 01/15/12 - A+ .................................. 125 139
Credit Suisse First Boston Mortgage - CTF Cl. II A2
(US)
4.375% due 04/25/33 - AAA ............................... 45 45
Credit Suisse First Boston Mortgage - Cl. A2 (US)
5.935% due 01/15/06 - AAA ............................... 250 255
Credit Suisse First Boston Mortgage - Ser. 2002 CKN2
Cl. A3 (US)
6.133% due 04/15/37 - AAA ............................... 125 136
Credit Suisse First Boston Mortgage - Ser. 2001 CP4
Cl. A4 (US)
6.18% due 12/15/35 - AAA ................................ 275 300
Credit Suisse First Boston Mortgage - CF2 Cl. A3 (US)
6.238% due 02/15/34 - AAA ............................... 250 266
Credit Suisse First Boston Mortgage Securities Corp. -
Cl. A1 (US)
3.801% due 06/15/06 - AAA ............................... 143 143
Credit Suisse First Boston Mortgage Securities Corp. -
Ser. 2004- AR7 Cl. 2A1 (US)
4.912% due 06/25/09 - AAA ............................... 525 528
Credit Suisse First Boston Mortgage Securities Corp.
(US)
7.545% due 04/15/10 - AAA ............................... 1,533 1,750
Credit Suisse First Boston, Inc. - Ser. 2001 CKN5 CTF
Cl. A 4 (US)
5.435% due 09/15/34 - AAA ............................... 250 264
CS First Boston Mortgage Securities Corp. - Cl. A1
(US)
6.91% due 01/15/08 - NA ................................. 3,268 3,438
Development Bank Singapore - Sub Notes 144A (a) (US)
7.125% due 05/15/11 - A- ................................ 100 114
Dresdner Bank AG - Sub. Notes (US)
7.25% due 09/15/15 - A- ................................. 1,395 1,631
First Union Lehman Brothers Bank - Ser. 1998 C2 CTF
Cl. E (US)
6.778% due 05/18/13 - BBB ............................... 2,000 2,213
First Union National Bank Commercial & Mortgage Trust
- CTF Cl. A1 (US)
5.585% due 08/12/10 - AAA ............................... $ 397 $ 417
First Union National Bank Commercial Mortgage Trust -
Ser. 2001 C2 Cl. A1 (US)
6.204% due 01/12/43 - AAA ............................... 507 537
FleetBoston Financial Corp. - Sr. Notes (US)
4.875% due 12/01/06 - A+ ................................ 1,115 1,145
HBOS plc - 144A (a) (US)
3.125% due 01/12/07 - AA ................................ 250 248
5.375% due 11/29/49 - A+ ................................ 190 195
HSBC Bank USA - Sub. Notes # (US)
4.625% due 04/01/14 - A+ ................................ 500 490
Independence Community Bank Corp. - Sub. Notes (US)
1.0% due 04/01/14 - BBB ................................. 80 77
JP Morgan Chase & Co. - Notes (US)
5.25% due 05/30/07 - A+ ................................. 2,739 2,847
5.35% due 03/01/07 - A+ ................................. 2,075 2,154
JP Morgan Chase & Co. - Sub. Notes # (US)
6.75% due 02/01/11 - A .................................. 1,500 1,685
MBNA Ameribank (US)
5.375% due 01/15/08 - BBB+ .............................. 250 261
Popular North America, Inc. (US)
4.7% due 06/30/09 - BBB+ ................................ 1,500 1,529
6.125% due 10/15/06 - BBB+ .............................. 1,439 1,500
RBS Capital Trust IV (US)
1.0% due 09/29/49 - A ................................... 320 322
Wachovia Bank Commercial Mortgage Trust - Ser. 2004
C10 Cl A3 (US)
4.39% due 02/15/36 - AAA ................................ 3,000 2,980
Wachovia Bank Commercial Trust - Ser. 2003-C8 Cl. F
144A (a) (US)
5.031% due 11/15/35 - BBB+ .............................. 1,400 1,411
Zions Bancorp - Sub. Notes (US)
6.0% due 09/15/15 - BBB- ................................ 250 266
-------
43,651
Beverages - 0.1%
Anheuser Busch Cos., Inc. - Debs (US)
6.5% due 02/01/43 - A+ .................................. 1,232 1,404
Building Products - 0.0%
AMH Holdings, Inc. (US)
0.0% due 03/01/14 - B- .................................. 75 54
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Building Products - Continued
Building Materials Corp. America -
Sr. Notes 144A (a) (US)
7.75% due 08/01/14 - B+ ............................... $ 90 $ 92
Jacuzzi Brands, Inc. - Sr. Sec. Notes (US)
9.625% due 07/01/10 - B ................................. 50 55
Nortek, Inc. - Sr. Sub. Notes 144A (a) (US)
8.5% due 09/01/14 - B- .................................. 50 52
------
253
Chemicals - 0.0%
Equistar Chemicals LP - Notes # (US)
8.75% due 02/15/09 - B+ ................................. 55 61
ICI Wilmington, Inc. - Notes (US)
4.375% due 12/01/08 - BBB ............................... 235 236
Lubrizol Corp. - Sr. Notes (US)
4.625% due 10/01/09 - BB+ ............................... 145 145
Millenium America, Inc. - Sr. Notes (US) Sr. Notes (US)
9.25% due 06/15/08 - B+ ................................. 25 29
Yara International ASA - Notes 144A (a) (US)
5.25% due 12/15/14 - BBB ................................ 60 60
------
531
CMBS - 0.1%
Commerce 2003 LNB1 - Ser. 2003-LB1A Cl. A2 (US)
4.084% due 06/10/38 - AAA ............................... 375 360
JP Morgan Chase & Co. Commercial Mortgage Securities
- Ser. 2004 FL1 A1 144A (a) (US)
1.71% due 04/16/19 - AAA ................................ 2,340 2,343
JP Morgan Chase & Co. Commercial Mortgage Securities
Corp. - Ser. 2002-C1 Cl. A3 (US)
1.0% due 07/12/37 - AAA ................................. 370 388
------
3,091
Commercial Services & Supplies - 0.2%
Allied Waste North America, Inc. - Sr. Notes (US)
8.875% due 04/01/08 - BB- ............................... 30 32
Allied Waste North America, Inc. - Sr. Notes (US)
9.25% due 09/01/12 - BB- ................................ 55 60
Cendant Corp. - Sr. Notes (US)
6.25% due 01/15/08 - BBB ................................ 125 134
6.25% due 03/15/10 - BBB ................................ 710 768
Cendant Corp. - Notes (US)
6.875% due 08/15/06 - BBB ............................... $ 150 $ 158
Cendant Corp. - Sr. Notes (US)
7.125% due 03/15/15 - BBB ............................... 734 838
7.375% due 01/15/13 - BBB ............................... 1,417 1,639
D.R. Horton, Inc. - Notes (US)
5.625% due 09/15/14 - BB+ ............................... 1,150 1,144
Iron Mountain, Inc. Pennsylvania - Sr. Sub. Notes (US)
6.625% due 01/01/16 - B ................................. 25 23
Jean Coutu Group PJC, Inc. -
Sr. Sub. Notes 144A (a) # (US)
8.5% due 08/01/14 - B ................................... 15 16
Quintiles Transnational Corp. - Sr. Sub. Notes (US)
10.0% due 10/01/13 - B .................................. 50 56
Synagro Technologies, Inc. -
Sr. Sub. Notes # (US)
9.5% due 04/01/09 - B ................................... 25 27
Waste Management, Inc. -
Sr. Notes (US)
6.375% due 11/15/12 - BBB ............................... 125 139
------
5,034
Communications Equipment - 0.0%
Crown Castle International Corp. - Sr. Notes # (US)
7.5% due 12/01/13 - CCC ................................. 35 38
Construction & Engineering - 0.1%
K Hovnanian Enterprises, Inc. -
Gtd Sr. Notes 144A (a) (US)
6.25% due 01/15/15 - NA ................................. 1,700 1,679
Lennar Corp. - Sr. Notes # (US)
5.95% due 03/01/13 - BBB- ............................... 30 32
Lennar Corp. - Sr. Notes (US)
9.95% due 05/01/10 - BBB- ............................... 30 32
Lyon Williams Homes, Inc. - Sr. Notes (US)
10.75% due 04/01/13 - B ................................. 50 56
MDC Holdings, Inc. - Sr. Notes # (US)
5.5% due 05/15/13 - BBB- ................................ 50 51
Pulte Homes, Inc. - Sr. Notes (US)
6.25% due 02/15/13 - BBB- ............................... 100 106
Pulte Homes, Inc. - Sr. Notes # (US)
7.875% due 08/01/11 - BBB- .............................. 90 104
Pulte Homes, Inc. - Sr. Notes (US)
8.125% due 03/01/11 - BBB- .............................. 25 30
Technical Olympic USA, Inc. - Sr. Sub. Notes (US)
10.375% due 07/01/12 - B- ............................... 50 56
------
2,146
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Construction Materials - 0.0%
Gerdau Ameristeel Corp. - Sr. Notes # (US)
10.375% due 07/15/11 - B+ ............................... $ 10 $ 12
Containers & Packaging - 0.0%
Graphic Packaging International,
Inc. - Sr. Sub. Notes # (US)
9.5% due 08/15/13 - B- .................................. 50 57
Jefferson Smurfit Corp. - Sr. Notes (US)
7.5% due 06/01/13 - B ................................... 35 37
Owens Brockway Glass Container - Sr. Notes (US)
8.75% due 11/15/12 - BB- ................................ 35 40
------
134
Credit Card - 0.1%
Citibank Credit Card Issuance Trust - Cl. A1 Notes (US)
4.95% due 02/09/09 - AAA ................................ 2,000 2,061
MBNA Credit Card Master Note
Trust - Notes Cl. C (US)
6.8% due 07/15/14 - BBB ................................. 500 555
Nordstrom Credit Card Master Note
Trust - Notes Cl. B 144A(a) (US)
2.039% due 10/13/10 - A ................................. 150 150
Pass Through Amortizing Credit
Card Trust - CTF Cl. A3 144A(a) (US)
6.298% due 06/18/12 - A- ................................ 31 32
------
2,798
Diversified Financials - 2.1%
AXA Financial, Inc. - Sr. Notes (US)
7.75% due 08/01/10 - A .................................. 1,068 1,245
Bear Stearns & Co., Inc. - Notes (US)
5.7% due 11/15/14 - A ................................... 2,468 2,607
Capital One Financial Corp. - Notes (US)
7.25% due 05/01/06 - BBB- ............................... 190 199
Chase Commercial Mortgage
Securities Corp. - Ser. 1997-1 Cl. A2 (US)
7.37% due 02/19/07 - AAA ................................ 3,983 4,206
Chase Commercial Mortgage
Securities Corp. - Cl. C (US)
7.928% due 07/15/32 - NA ................................ 1,000 1,175
CIT Group, Inc - Sr. Notes (US)
5.75% due 09/25/07 - A .................................. 1,420 1,493
CIT Group, Inc. (US)
1.48% due 05/18/07 - A .................................. 1,100 1,100
CIT Group, Inc. - Sr. Notes (US)
4.0% due 05/08/08 - A ................................... $ 934 $ 937
Citigroup, Inc. - Sr. Notes (US)
5.0% due 03/06/07 - AA- ................................. 3,000 3,096
Citigroup, Inc. - Sub. Notes 144A (a) (US)
5.0% due 09/15/14 - A+ .................................. 200 201
Citigroup, Inc. - Notes (US)
5.5% due 08/09/06 - AA- ................................. 2,000 2,068
Citigroup, Inc. - Sub. Notes (US)
5.625% due 08/27/12 - A+ ................................ 1,260 1,342
GE Capital Commercial Mortgage
Corp. -Ser. 2002-2 Cl. A3 (US)
5.349% due 08/11/36 - AAA ............................... 150 157
GE Capital Commercial Mortgage
Corp. - Ser. 2001-3 Cl. A2 (US)
6.07% due 06/10/38 - AAA ................................ 250 273
GE Commercial Mortgage Corp. -
2003 C1 144A (a) (US)
5.948% due 01/10/38 - BBB- .............................. 3,000 3,048
General Electric Capital Corp. (US)
5.875% due 02/15/12 - AAA ............................... 2,950 3,192
Goldman Sachs Group, Inc. - Sr. Notes # (US)
4.125% due 01/15/08 - A+ ................................ 1,050 1,063
Goldman Sachs Group, Inc. - Notes (US)
5.0% due 10/01/14 - A+ .................................. 200 200
Goldman Sachs Group, Inc. - Sr. Notes (US)
5.25% due 04/01/13 - A+ ................................. 375 385
Goldman Sachs Group, Inc. # (US)
6.875% due 01/15/11 - A+ ................................ 3,405 3,841
Greater Connecticut Consumer Loan Trust - Notes Cl. A
144A (a) (US)
6.25% due 02/15/20 - AAA ................................ 304 315
Green Tree Financial Corp. - Ser. 1996-8 Cl. A6 (US)
7.6% due 10/15/27 - AAA ................................. 2,732 2,943
Hartford Financial Services Group, Inc. - Sr. Notes (US)
4.625% due 07/15/13 - A- ................................ 1,045 1,012
LaBranche & Co., Inc. - Sr. Notes (US)
9.5% due 05/15/09 - B ................................... 25 26
Morgan Stanley Capital, Inc. - Ser.
2003 Cl. A 144A (a) (US)
1.0% due 07/14/08 - AAA ................................. 97 97
Morgan Stanley Group, Inc. (US)
6.75% due 04/15/11 - A+ ................................. 2,880 3,230
Qwest Capital Funding - Notes # (US)
7.9% due 08/15/10 - B ................................... 45 45
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Diversified Financials - Continued
Salomon Brothers Commercial & Mortgage Trust - Ser.
2000-C3 Pass Thru Certs Cl. A2 (US)
6.592% due 12/18/33 - AAA ............................... $ 120 $ 133
Salomon Brothers Commercial and Mortgage Trust - CTF
2001-C1 Cl. A3 (US)
6.428% due 12/18/35 - AAA ............................... 925 1,019
SLM Corp. (US)
5.0% due 04/15/15 - A ................................... 250 249
Washington Mutual, Inc. - Sr. Notes (US)
4.2% due 01/15/10 - A- .................................. 210 209
Washington Mutual, Inc. # (US)
5.625% due 01/15/07 - A- ................................ 3,050 3,176
Wells Fargo & Co. - Notes # (US)
3.5% due 04/04/08 - AA- ................................. 500 497
-------
44,779
Diversified Telecommunication Services - 0.6%
AT&T Corp. - Debs. (US)
8.35% due 01/15/25 - BB+ ................................ 100 103
Bellsouth Corp. - Notes (US)
4.2% due 09/15/09 - A ................................... 125 125
British Telecommunications plc - Notes (US)
8.875% due 12/15/30 - A- ................................ 40 53
Centennial Communications Corp. - Sr. Notes (US)
8.125% due 02/01/14 - CCC ............................... 10 10
Centennial Communications Corp. - Sr. Notes (US)
10.125% due 06/15/13 - CCC .............................. 40 45
Deutsche Telekom International (US)
8.5% due 06/15/10 - BBB+ ................................ 721 859
France Telecom SA - Notes (US)
9.25% due 03/01/11 - BBB+ ............................... 875 1,044
10.0% due 03/01/31 - BBB+ ............................... 1,150 1,559
National Cable plc - Sr. Notes
144A (a) # (US)
8.75% due 04/15/14 - B- ................................. 25 28
SBC Communications, Inc. - Notes (US)
4.125% due 09/15/09 - A ................................. 40 40
5.1% due 09/15/14 - A ................................... 120 121
SBC Communications, Inc. - Notes (US)
5.625% due 06/15/16 - A ................................. 50 52
Singapore Telecommunications - Notes 144A (a) (US)
6.375% due 12/01/11 - A+ ................................ 75 83
Sprint Capital Corp. - Notes (US)
6.125% due 11/15/08 - BBB- .............................. 1,323 1,419
Sprint Capital Corp. (US)
6.375% due 05/01/09 - BBB- .............................. $ 188 $ 204
6.875% due 11/15/28 - BBB- .............................. 188 206
Sprint Capital Corp. - Notes (US)
8.375% due 03/15/12 - BBB- .............................. 727 886
Sprint Capital Corp. - Notes (US)
8.75% due 03/15/32 - BBB- ............................... 740 986
Telecom Italia Capital - GTD Sr. Notes 144A (a) (US)
4.0% due 01/15/10 - BBB+ ................................ 150 147
Telecom Italia Capital Corp. - GTD Sr. Notes Ser. A (US)
4.0% due 11/15/08 - BBB+ ................................ 250 249
Verizon Global Funding Corp. - Notes (US)
6.75% due 12/01/05 - A+ ................................. 2,169 2,239
Verizon Global Funding Corp. - Global Notes # (US)
7.375% due 09/01/12 - A+ ................................ 927 1,091
Verizon New York, Inc. - Debs. Ser. A # (US)
6.875% due 04/01/12 - A+ ................................ 1,133 1,272
-------
12,821
Electric Utilities - 0.9%
American Electric Power , Inc. - Sr. Notes Ser. D (US)
5.25% due 06/01/15 - BBB ................................ 1,395 1,409
Empresa Nacional De Electricid - Notes (US)
8.35% due 08/01/13 - BBB- ............................... 1,650 1,912
8.625% due 08/01/15 - BBB- .............................. 1,885 2,257
Enersis SA - Notes (US)
7.375% due 01/15/14 - BB+ ............................... 1,325 1,448
FirstEnergy Corp. - Notes Ser. B (US)
6.45% due 11/15/11 - BB+ ................................ 1,054 1,145
FirstEnergy Corp. - Notes Ser. C (US)
7.375% due 11/15/31 - BB+ ............................... 843 963
Progress Energy, Inc. - Sr. Notes (US)
6.75% due 03/01/06 - BBB- ............................... 1,560 1,619
Progress Energy, Inc. - Sr. Notes # (US)
7.0% due 10/30/31 - BBB- ................................ 693 767
Public Service Co. New Mexico - Sr. Unsec. Notes (US)
4.4% due 09/15/08 - BBB ................................. 1,453 1,465
TXU Australia Holdings, Ltd. - GTD Sr. Notes 144A (a)
(US)
6.15% due 11/15/13 - A- ................................. 1,750 1,890
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Electric Utilities - Continued
TXU Energy Co. LLC - Sr. Notes
144A (a) (US)
2.38% due 01/17/06 - BBB ................................ $ 110 $ 110
TXU Energy Co. LLC - Sr. Notes (US)
7.0% due 03/15/13 - BBB ................................. 1,399 1,563
Wisconsin Power & Light Co. - Debs. (US)
6.25% due 07/31/34 - BBB+ ............................... 1,785 1,905
-------
18,453
Electric/Gas - 0.7%
AES Corp. (US)
9.375% due 09/15/10 - B- ................................ 25 29
Dominion Resources, Inc. - Notes (US)
5.7% due 09/17/12 - BBB+ ................................ 200 212
Duke Energy Co. - Bonds (US)
3.75% due 03/05/08 - BBB+ ............................... 665 664
Edison Mission Energy - Sr. Notes # (US)
9.875% due 04/15/11 - B ................................. 150 177
Empresa Nacional De Electricid - Notes (US)
8.5% due 04/01/09 - BBB- ................................ 280 319
Kansas City Power & Light Co. - Sr. Notes Ser. A (US)
6.0% due 03/15/07 - BBB ................................. 1,440 1,505
Oncor Electric Delivery Co. - Sr. Sec. Notes (US)
6.375% due 01/15/15 - BBB ............................... 1,695 1,868
Oncor Electric Delivery Co. - Sr. Sec. Notes (US)
7.0% due 05/01/32 - BBB ................................. 125 144
Pacific Gas & Electric Co. - Bonds (US)
4.2% due 03/01/11 - BBB ................................. 250 247
4.8% due 03/01/14 - BBB ................................. 170 169
Pacific Gas & Electric Co. (US)
6.05% due 03/01/34 - BBB ................................ 1,850 1,921
PSEG Power LLC - Sr. Notes (US)
5.0% due 04/01/14 - BBB ................................. 275 273
6.875% due 04/15/06 - BBB ............................... 1,760 1,835
8.625% due 04/15/31 - BBB ............................... 50 66
Sempra Energy - Notes (US)
4.75% due 05/15/09 - BBB+ ............................... 1,100 1,121
Southern California Edison Co. - Ser. 2004B (US)
6.0% due 01/15/34 - BBB ................................. 1,040 1,105
SP Power Assets, Ltd. - 144A (a) (US)
5.0% due 10/22/13 - AA- ................................. 150 152
TXU Corp. - Sr. Notes Ser. R
144A (a) (US)
6.55% due 11/15/34 - BBB- ............................... 1,700 1,684
United Energy Distribution, Ltd. - Sr. Notes 144A (a)
(US)
4.7% due 04/15/11 - AAA .............................. $ 90 $ 91
-------
13,582
Electronic Equipment & Instruments - 0.0%
Jabil Circuit, Inc. - Sr. Notes # (US)
5.875% due 07/15/10 - BB+ ............................... 210 221
Solectron Corp. - Sr. Notes # (US)
9.625% due 02/15/09 - B+ ................................ 45 49
Stoneridge, Inc. - Sr. Notes (US)
11.5% due 05/01/12 - B+ ................................. 50 58
Viasystems, Inc. - Sr. Sub. Notes (US)
10.5% due 01/15/11 - CCC+ ............................... 40 40
-------
368
Energy Equipment & Services - 0.1%
Enbridge Energy Partners LP - Notes (US)
4.75% due 06/01/13 - BBB ................................ 1,710 1,677
Luscar Coal, Ltd. - Sr. Notes (US)
9.75% due 10/15/11 - BB ................................. 25 28
-------
1,705
Finance - 1.7%
ACE INA Holding, Inc. - GTD. Sr. Notes (US)
5.875% due 06/15/14 - BBB+ .............................. 2,210 2,264
Ahold Finance USA - Gtd. Notes (US)
8.25% due 07/15/10 - BB- ................................ 50 57
Arch Capital Group, Ltd. - Sr. Notes (US)
7.35% due 05/01/34 - BBB- ............................... 1,870 1,994
BCP Caylux Holdings Lux SCA - Sr. Sub. Notes 144A (a)
(US)
9.625% due 06/15/14 - B- ................................ 40 45
Cadbury Schweppes U.S. Finance - Sr. Notes 144A (a) (US)
5.125% due 10/01/13 - BBB ............................... 100 102
California Infras & Ecomomic - Ser. 1997-1 CTF Cl. A6
(US)
6.38% due 09/25/08 - AAA ................................ 286 295
California Infrastructure Development - Ser. 1997-1 CTF
Cl. A7 (US)
6.42% due 09/25/08 - AAA ................................ 272 280
CNOOC Finance 2003, Ltd. - GTD Notes 144A (a) (US)
5.5% due 05/21/33 - BBB+ ................................ 1,345 1,245
Colonial Realty, Ltd. Partnership - Sr. Notes (US)
6.25% due 06/15/14 - BBB- ............................... 1,380 1,451
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Finance - Continued
Concentra Operating Corp. - Sr. Sub. Notes 144A (a) (US)
9.125% due 06/01/12 - B- ................................ $ 25 $ 28
Cullen Frost Captial Trust II - Ser. A (US)
2.86% due 03/01/34 - BBB- ............................... 110 113
Deutsche Telekom International Finance (US)
8.75% due 06/15/30 - BBB+ ............................... 1,046 1,381
Deutsche Telekom International Finance BV - Notes (US)
9.25% due 06/01/32 - BBB+ ............................... 100 142
Devon Financing Corp. United L C - Notes (US)
6.875% due 09/30/11 - BBB ............................... 90 102
Duke Capital LLC. - Sr. Notes (US)
6.75% due 02/15/32 - BBB- ............................... 1,394 1,517
ERAC USA Finance Co. - GTD Notes 144A (a) (US)
6.7% due 06/01/34 - BBB+ ................................ 735 798
ERP Operating, Ltd. - Sr. Notes (US)
4.75% due 06/15/09 - BBB+ ............................... 190 194
Fund American Cos, Inc. - GTD Sr. Notes (US)
5.875% due 05/15/13 - BBB- .............................. 1,670 1,700
General Electric Capital Corp. (US)
6.0% due 06/15/12 - AAA ................................. 70 76
Household Financial Corp. - Global Notes # (US)
4.625% due 01/15/08 - A ................................. 1,432 1,466
HVB Funding Trust III - CTF 144A (a) (US)
9.0% due 10/22/31 - BBB ................................. 80 106
International Lease Finance Corp. (US)
1.0% due 01/15/10 - AA- ................................. 1,615 1,614
International Lease Finance Corp. - Notes (US)
3.5% due 04/01/09 - AA- ................................. 270 263
International Lease Finance Corp. (US)
4.55% due 10/15/09 - AA- ................................ 100 101
International Lease Finance Corp. - Sr. Notes # (US)
4.75% due 07/01/09 - AA- ................................ 515 526
International Lease Finance Corp. - Notes (US)
5.875% due 05/01/13 - AA- ............................... 1,317 1,397
Lehman Brothers Holdings, Inc. (US)
3.6% due 03/13/09 - A ................................... 250 246
Mangrove Bay Trust - 144A (a) (US)
6.102% due 07/15/33 - BBB+ .............................. $ 100 $ 99
MBNA Capital - Ser. B (US)
1.963% due 02/01/27 - BB+ ............................... 325 310
Mizuho Financial Group Cayman, Ltd. - Sub.
Notes 144A (a) (US)
5.79% due 04/15/14 - BBB+ ............................... 755 793
Monumental Global Funding - Sr. Sec. Notes Ser. A 144A
(a) (US)
5.2% due 01/30/07 - AA .................................. 250 259
Monumental Global Funding II - Notes 144A (a) (US)
1.29% due 05/19/06 - AA ................................. 630 629
National Rural Utilities Cooperative Finance - Bonds #
(US)
3.875% due 02/15/08 - A+ ................................ 1,698 1,705
NiSource Finance Corp. - Sr. Notes # (US)
6.15% due 03/01/13 - BBB ................................ 912 989
NiSource Finance Corp. (US)
7.875% due 11/15/10 - BBB ............................... 1,530 1,799
Odyssey Re Holdings Corp. - Sr. Notes (US)
7.65% due 11/01/13 - BBB- ............................... 4,000 4,412
PCCW Hkt Capital, Ltd. (US)
8.0% due 11/15/11 - BBB ................................. 80 93
Pemex Finance, Ltd. - Notes (US)
7.33% due 05/15/12 - AAA ................................ 130 148
Pharma Services Intermediate Holding Corp. - Sr. Disc.
Notes 144A (a) (US)
11.5% due 04/01/14 - B .................................. 75 53
RBS Capital Trust (US)
4.709% due 12/29/49 - A .................................. 80 78
Reliastar Financial Corp. - Notes (US)
6.5% due 11/15/08 - A+ .................................. 160 173
RH Donnelly Finance Corp. - Sr. Sub. Notes (US)
10.875% due 12/15/12 - B+ ............................. 25 30
SB Treasury Co. - 144A (a) (US)
1.0% due 12/29/49 - BBB- ................................ 100 115
Tate & Lyle International Finance plc - Notes 144A (a)
(US)
5.0% due 11/15/14 - BBB ................................. 1,035 1,025
Twin Reefs Pass Through Trust - Notes 144A (a) (US)
3.37% due 12/10/49 - NA ................................. 500 502
UFJ Finance Aruba - GTD Notes (US)
6.75% due 07/15/13 - BBB ................................ 100 111
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Finance - Continued
Vanderbilt Acquisition Loan Trust - Sr. Sub. Notes Cl.
A3 (US)
5.7% due 09/07/23 - AAA ................................. $ 250 $ 257
WestField Cap Corp. , Ltd. - Sr. Notes 144A (a) (US)
4.375% due 11/15/10 - A ................................. 140 138
WPP Finance UK - Notes 144A (a) (US)
5.875% due 06/15/14 - BBB+ .............................. 1,825 1,899
-------
35,120
Food & Drug Retailing - 0.0%
Rite Aid Corp. - Debs. # (US)
6.875% due 08/15/13 - B- ................................ 15 14
Winn Dixie Stores, Inc. - Sr. Notes # (US)
8.875% due 04/01/08 - CCC+ .............................. 50 47
-------
61
Food Products - 0.3%
Burns Philip Capital Property, Ltd. - Sr. Sub. Notes
(US)
10.75% due 02/15/11 - B- ................................ 35 39
Gold Kist, Inc. - Sr. Notes (US)
10.25% due 03/15/14 - B ................................. 33 39
Kellogg Co. - Notes Ser. B (US)
6.6% due 04/01/11 - BBB+ ................................ 200 224
Kraft Foods, Inc. - Notes (US)
5.25% due 06/01/07 - BBB+ ............................... 3,747 3,881
Nabisco, Inc. - Debs. (US)
7.55% due 06/15/15 - A- ................................. 500 602
Smithfield Foods, Inc. - Sr. Notes # (US)
7.0% due 08/01/11 - BB .................................. 1,135 1,209
-------
5,994
Foreign Government - 0.1%
Republic of Chile - Notes (US)
1.5% due 01/28/08 - A ................................... 1,800 1,811
United Mexican States (US)
7.5% due 01/14/12 - BBB- ................................ 60 68
8.375% due 01/14/11 - BBB- .............................. 40 47
United Mexican States (LU)
9.875% due 02/01/10 - BBB- .............................. 95 117
United Mexican States - Bonds (US)
11.375% due 09/15/16 - BBB- ............................. 50 74
-------
2,117
Gas Utilities - 0.2%
Kinder Morgan Energy Partners - Sr. Notes (US)
7.3% due 08/15/33 - BBB+ ................................ 1,480 1,714
Michigan Consolidated Gas Co. - Sr. Notes (US)
5.7% due 03/15/33 - BBB ............................... 1,480 1,479
Williams Cos, Inc. - Notes (US)
8.125% due 03/15/12 - B+ ................................ $ 15 $ 18
-------
3,211
Health Care Equipment & Supplies - 0.0%
Cardinal Health, Inc. - Notes (US)
6.75% due 02/15/11 - BBB ................................ 60 66
Hospira, Inc. - Notes (US)
5.9% due 06/15/14 - BBB ................................. 110 116
-------
182
Health Care Providers & Services - 0.1%
Anthem, Inc. - Notes (US)
3.5% due 09/01/07 - BBB+ ................................ 1,760 1,750
Tenet Healthcare Corp. - Sr. Notes 144A (a) (US)
9.875% due 07/01/14 - B- ................................ 35 38
-------
1,788
Home Equity Loan - 1.2%
Centex Home Equity Loan Trust - Ser. 2004-D Cl. AF4 (US)
1.0% due 06/25/32 - AAA ................................. 160 160
Centex Home Equity Loan Trust - CTF Cl. A5 (US)
6.83% due 07/25/32 - NA ................................. 2,635 2,729
Chase Mortgage Funding - Ser. 2003-2 Cl. IA 3 (US)
2.864% due 03/25/07 - AAA ............................... 100 100
Chase Mortgage Funding Ser. 2003- 1 CTF Cl. IA-3 (US)
3.14% due 07/25/23 - AAA ................................ 66 66
Countrywide Home Loan Corp. (US)
5.5% due 08/01/06 - A ................................... 2,821 2,909
Residential Asset Mortgage Products, Inc. - Cl. AI2 (US)
3.38% due 03/25/29 - AAA ................................ 3,624 3,621
Residential Asset Mortgage Products, Inc. - Ser.
2004-SL2 Cl. AI (US)
6.5% due 10/25/16 - AAA ................................. 5,018 5,155
Residential Funding and Mortgage Securities - Notes Cl.
A7 (US)
6.9% due 01/25/33 - AAA ................................. 9,000 9,521
-------
24,261
Hotels Restaurants & Leisure - 0.3%
AMC Entertainment, Inc. - Sr. Sub. Notes (US)
9.875% due 02/01/12 - CCC+ .............................. 25 27
Boyd Gaming Corp. - Sr. Notes(US)
9.25% due 08/01/09 - BB- ................................ 50 54
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Hotels Restaurants & Leisure - Continued
Buffets, Inc. - Sr. Sub. Notes (US)
11.25% due 07/15/10 - CCC+ .............................. $ 25 $ 27
Carmike Cinemas, Inc. - Sr. Sub. Notes (US)
7.5% due 02/15/14 - CCC+ ................................ 50 51
Circus & Eldorado Circus - Notes # (US)
10.125% due 03/01/12 - B+ ............................... 50 54
Harrah's Operating, Inc. - Sr. Notes (US)
5.5% due 07/01/10 - BBB- ................................ 100 103
Hilton Hotels Corp. - Notes (US)
7.625% due 12/01/12 - BBB- .............................. 40 47
8.25% due 02/15/11 - BBB- ............................... 120 142
Hilton Hotels Trust - Ser. 2000 Cl. B 144A (a) (US)
1.62% due 10/03/10 - A .................................. 95 96
Host Marriott LP - Sr. Notes Ser. J (US)
7.125% due 11/01/13 - B+ ................................ 20 22
Mandalay Resort Group - Sr. Notes # (US)
6.375% due 12/15/11 - BB+ ............................... 1,000 1,047
MGM Mirage, Inc. - Ser. B (US)
6.0% due 10/01/09 - BB+ ................................. 1,820 1,875
Mohegan Tribal Gaming Authority - Sr. Sub. Notes (US)
6.375% due 07/15/09 - B+ ................................ 60 62
Royal Caribbean Cruises, Ltd. (US)
8.75% due 02/02/11 - BB+ ................................ 50 59
Six Flags, Inc. - Sr. Notes # (US)
8.875% due 02/01/10 - CCC ............................... 65 66
Starwood Hotels & Resorts Worldwide, Inc. - Sr. Notes
(US)
7.875% due 05/01/12 - BB+ ............................... 2,300 2,628
-------
6,360
Household Durables - 0.1%
Centex Corp. - Sr. Notes # (US)
4.75% due 01/15/08 - BBB ................................ 40 41
Mohawk Industries, Inc. - Notes (US)
6.5% due 04/15/07 - BBB+ ................................ 1,580 1,678
WCI Communities, Inc. - Sr. Sub. Notes # (US)
9.125% due 05/01/12 - B+ ................................ 80 89
-------
1,808
Industrial Conglomerates - 0.2%
General Electric Co. - Notes (US)
5.0% due 02/01/13 - AAA ................................. 1,790 1,836
Tyco International Group SA - Notes (US)
6.0% due 11/15/13 - BBB ................................. 600 654
Tyco International Group SA - Sr. Notes (US)
6.375% due 10/15/11 - BBB ............................... $1,530 $ 1,689
-------
4,179
Insurance - 0.8%
Aetna Inc. - Sr. Notes (US)
7.375% due 03/01/06 - BBB+ .............................. 100 104
Allstate Corp. - Sr. Notes (US)
5.35% due 06/01/33 - A+ ................................. 1,350 1,280
AON Capital # (US)
8.205% due 01/01/27 - BBB- .............................. 920 971
Assurant, Inc. - Sr. Notes (US)
5.625% due 02/15/14 - BBB+ .............................. 150 155
6.75% due 02/15/34 - BBB+ ............................... 1,150 1,246
CNA Financial Corp. - Notes (US)
5.85% due 12/15/14 - BBB- ............................... 1,590 1,587
Endurance Specialty Holdings, Ltd. - Sr. Notes (US)
7.0% due 07/15/34 - BBB ................................. 1,325 1,364
Marsh & McLennan Cos., Inc. - Sr. Notes (US)
5.375% due 03/15/07 - BBB+ .............................. 2,080 2,122
5.375% due 07/15/14 - # BBB ............................. 800 782
Metlife, Inc. - Debs. (US)
3.911% due 05/15/05 - A ................................. 190 191
Nationwide Mutual Insurance Co. - Notes 144A (a) (US)
7.875% due 04/01/33 - A- ................................ 30 36
North Front Pass Through Trust - 144A (a) (US)
5.81% due 12/15/24 - NA ................................. 250 254
Oil Casualty Insurance, Ltd. - Debs. 144A (a) (US)
8.0% due 09/15/34 - BBB ................................. 2,050 2,067
Prudential Financial , Inc. # (US)
4.75% due 04/01/14 - A- ................................. 195 191
Prudential Insurance Co. - Sr. Notes 144A (a) (US)
6.375% due 07/23/06 - AA- ............................... 350 368
W.R. Berkley Corp. - Sr. Notes (US)
6.15% due 08/15/19 - BBB+ ............................... 1,750 1,759
Wellpoint, Inc. - Notes 144A (a) (US)
3.75% due 12/14/07 - BBB+ ............................... 100 100
5.0% due 12/15/14 - BBB+ ................................ 1,030 1,027
XL Capital, Ltd. - Sr. Notes (US)
5.25% due 09/15/14 - A .................................. 860 862
-------
16,466
Machinery - 0.1%
Caterpillar, Inc. - Sr. Debs. (US)
7.25% due 09/15/09 - A .................................. 1,050 1,188
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Machinery - Continued
Terex Corp. - Sr. Sub. Notes (US)
9.25% due 07/15/11 - B .................................. $ 50 $ 56
-------
1,244
Marine - 0.0%
Overseas Shipholding Group, Inc. - Notes (US)
8.25% due 03/15/13 - BB+ ................................ 50 56
Media - 0.6%
Canwest Media, Inc. - Sr. Sub. Notes (US)
10.625% due 05/15/11 - B- ............................... 25 28
Charter Communication Operating LLC - Sr. Notes 144A (a)
(US)
8.0% due 04/30/12 - B- .................................. 60 63
Cinemark, Inc. - Sr. Disc. Notes (US)
1.0% due 03/15/14 - B- .................................. 25 19
Clear Channel Communications, Inc. - Notes # (US)
5.5% due 09/15/14 - BBB- ................................ 150 151
Clear Channel Communications, Inc. (US)
7.65% due 09/15/10 - BBB- ............................... 125 142
Comcast Corp. - Notes # (US)
7.05% due 03/15/33 - BBB ................................ 1,446 1,655
Cox Communications, Inc. - Notes 144A (a) (US)
4.625% due 01/15/10 - BBB- .............................. 250 249
Cox Communications, Inc. - Notes (US)
4.625% due 06/01/13 - BBB- .............................. 770 737
Cox Communications, Inc. - Notes 144A (a) (US)
5.45% due 12/15/14 - BBB- ............................... 400 400
Dex Media, Inc. - Disc. Notes (US)
1.0% due 11/15/13 - B ................................... 50 39
Fisher Communications, Inc. - Sr. Notes 144A (a) (US)
8.625% due 09/15/14 - B- ................................ 75 81
Interpublic Group Cos., Inc. - Notes # (US)
6.25% due 11/15/14 - BB+ ................................ 1,700 1,719
Liberty Media Corp. - Sr. Notes (US)
2.64% due 09/17/06 - BBB- ............................... 500 506
3.5% due 09/25/06 - BBB- ................................ 20 20
Liberty Media Corp. - Sr. Debs # (US)
8.25% due 02/01/30 - BBB- ............................... 1,215 1,382
News America, Inc. - Sr. Notes (US)
6.75% due 01/09/38 - BBB- ............................... $ 30 $ 34
NextMedia Operating, Inc. - Sr. Sub. Notes (US)
10.75% due 07/01/11 - B- ................................ 50 56
Telenet Group Holding NV - Sr. Disc. Notes 144A (a) (US)
1.0% due 06/15/14 - CCC+ ................................ 50 38
Time Warner, Inc. (US)
6.15% due 05/01/07 - BBB+ ............................... 1,904 2,014
7.625% due 04/15/31 - BBB+ .............................. 130 157
Time Warner, Inc. - Debs. (US)
7.7% due 05/01/32 - BBB+ ................................ 1,815 2,220
Time Warner, Inc. - Notes (US)
8.18% due 08/15/07 - BBB+ ............................... 400 444
Viacom, Inc. (US)
7.875% due 07/30/30 - A- ................................ 1,054 1,354
Young Broadcasting, Inc. - Sr. Sub. Notes # (US)
10.0% due 03/01/11 - CCC+ ............................... 50 53
-------
13,561
Metals & Mining - 0.1%
Alcan Aluminum, Ltd. - Notes (US)
5.2% due 01/15/14 - A- .................................. 50 51
Codelco, Inc. - Notes 144A (a) (US)
5.5% due 10/15/13 - A ................................... 1,054 1,097
Freeport McMoran Copper & Gold - Sr. Notes (US)
10.125% due 02/01/10 - B ................................ 20 23
Ispat Inland ULC - Sr. Sec. Notes (US)
9.75% due 04/01/14 - BBB ................................ 32 40
-------
1,211
Multi-Utilities - 0.1%
Centerpoint Energy Houston - Bonds Ser. K # (US)
6.95% due 03/15/33 - BBB ................................ 1,000 1,172
Multiline Retail - 0.1%
May Department Stores Co. - Sr. Notes (US)
6.7% due 07/15/34 - BBB ................................. 1,075 1,131
Saks, Inc. (US)
7.5% due 12/01/10 - BB .................................. 50 53
-------
1,184
Oil & Gas - 0.8%
Amerada Hess Corp. - Notes (US)
7.3% due 08/15/31 - BBB- ................................ 1,230 1,372
Chesapeake Energy Corp. - Sr. Notes (US)
7.0% due 08/15/14 - BB- ................................. 900 959
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Oil & Gas -- Continued
Devon Energy Corp. - Sr. Debs. (US)
7.95% due 04/15/32 - BBB ................................ $1,480 $ 1,891
Duke Capital LLC. - Sr. Notes # (US)
7.5% due 10/01/09 - BBB- ................................ 70 79
Dynegy, Inc. - Sr. Sec. Notes 144A (a)(US)
10.125% due 07/15/13 - B- ............................... 70 80
Enterprise Products Operating LP - Sr.
Notes (US)
6.875% due 03/01/33 - BB+ ............................... 1,252 1,331
LG Caltex Oil Corp. - Notes 144A (a)(US)
5.5% due 08/25/14 - BBB ................................. 1,167 1,200
Marathon Oil Corp. - Notes (US)
6.8% due 03/15/32 - BBB+ ................................ 1,494 1,675
Newfield Exploration Co. - Sr. Sub. Notes (US)
8.375% due 08/15/12 - BB- ............................... 50 56
Northern Border Pipeline Co. - Sr. Notes (US)
6.25% due 05/01/07 - A- ................................. 1,480 1,563
Peco Energy Transport Trust - Ser. 1999A Cl. A7 (US)
6.13% due 03/01/09 - AAA ................................ 315 337
Pemex Project Funding Master Trust - Sr. Notes
144A (a) (US)
2.82% due 06/15/10 - BBB- ............................... 200 205
Pemex Project Funding Master Trust - Notes (US)
6.125% due 08/15/08 - BBB- .............................. 1,500 1,590
Premcor Refining Group, Inc. - Sr. Notes (US)
7.5% due 06/15/15 - BB- ................................. 45 49
Premcor Refining Group, Inc. - Sr. Sub. Notes # (US)
7.75% due 02/01/12 - B .................................. 25 27
Teppco Partners - Sr. Notes (US)
6.125% due 02/01/13 - BBB ............................... 1,308 1,394
Texas Gas Transmission LLC - Notes (US)
4.6% due 06/01/15 - BBB+ ................................ 1,860 1,776
Union Oil Co. of California (US)
7.5% due 02/15/29 - BBB+ ................................ 80 96
XTO Energy, Inc. - Sr. Notes 144A (a)(US)
5.0% due 01/31/15 - BBB- ................................ 1,050 1,043
-------
16,723
Other Asset Backed - 1.4%
Argent Securities, Inc. - Ser. 2004
W1 M3 (US)
1.0% due 02/25/34 - A- .................................. $3,000 $ 3,029
Bear Stearns Asset Backed Securities - Ser.
2003 AC4 Cl. A (US)
5.0% due 09/25/33 - AAA ................................. 3,071 3,079
Bear Stearns Asset Backed Securities - Ser.
2004-AC5 Cl. A1 (US)
5.25% due 10/25/34 - AAA ................................ 2,519 2,546
CWABS, Inc. - Ser. 2004 12 Cl. 2 AV2 (US)
2.408% due 04/25/35 - AAA ............................... 250 250
CWABS, Inc. Ser. 2003-5 Cl. AF 2 (US)
3.042% due 04/25/25 - AAA ............................... 3,570 3,565
CWABS, Inc. - Ser. 2004-10 Cl. AF3 (US)
3.842% due 02/01/05 - AAA ............................... 3,710 3,667
Drive Time Auto Owner Trust - Notes Ser
2004-A Cl. A3 144A (a)(US)
1.0% due 08/15/08 - NA .................................. 150 148
Equity One ABS, Inc. - Ser. 2004-
2 Cl. AV2 (US)
1.55% due 07/25/34 - AAA ................................ 2,141 2,136
Equity One ABS, Inc. - Ser.
2003-3 Cl. AF3 (US)
3.531% due 12/25/33 - AAA ............................... 1,990 1,987
Equity One ABS, Inc. - Ser. 2004 - 1 Cl. M2 (US)
5.115% due 04/25/34 - A ................................. 1,000 984
Equity One ABS, Inc. - Ser. 2004 - 1 Cl. M3 (US)
5.26% due 04/25/34 - A- ................................. 2,250 2,213
Indymac ABS, Inc. - Ser. 2004 B Cl. AII2 (US)
2.541% due 11/25/34 - AAA ............................... 125 125
Long Beach Mortgage Loan Trust - Ser.
2004-1 Cl. M3 (US)
1.0% due 03/25/35 - AA- ................................. 2,400 2,400
Morgan Stanley ABS Capital - Ser.
2004 OP1 Cl. A2B (US)
2.377% due 11/25/34 - AAA ............................... 250 250
New Century Home Loan Trust - Ser.
2004-A Cl. AII5 (US)
5.25% due 07/25/34 - AAA ................................ 230 232
Option One Loan Trust - Ser.
2004-1 CTF Cl. M 1 (US)
1.7% due 01/25/34 - AA+ ................................. 1,400 1,401
Structured Asset Investment Loan
Trust - Ser 2004 8 Cl. A7 (US)
2.48% due 09/25/34 - NA ................................. 250 249
Structured Asset Investment Loan
Trust - Ser. 2004 8 Cl. A13 (US)
2.481% due 09/25/34 - AAA ............................... 500 500
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Other Asset Backed - Continued
Wells Fargo Home Equity - Cl. AI5 (US)
0.99% due 09/26/34 - AAA ................................ $ 250 $ 251
-------
29,012
Other Mortgage - 0.4%
LB UBS Commercial Mortgage Trust - Ser.
2003-C3 Cl. K 144A (a)(US)
5.18% due 02/17/37 - BBB- ............................... 1,363 1,323
LB UBS Commercial Mortgage
Trust - Ser. 2003-C5 Cl. K
144A (a)(US)
5.25% due 04/15/37 - BBB- ............................... 1,000 971
LB-UBS Commercial Mortgage Trust - Ser.
2000-C4 Cl. A2 (US)
7.37% due 06/15/10 - AAA ................................ 5,318 6,076
-------
8,370
Paper & Forest Products - 0.2%
Abitibi-Consolidated, Inc. - Notes # (US)
8.55% due 08/01/10 - BB- ................................ 30 33
Ainsworth Lumber Co., Ltd. - Sr. Notes (US)
6.75% due 03/15/14 - B+ ................................. 45 44
Georgia Pacific Corp. - Sr. Notes (US)
8.875% due 02/01/10 - BB+ ............................... 10 12
International Paper Co. - Notes (US)
4.0% due 04/01/10 - BBB ................................. 150 147
6.75% due 09/01/11 - BBB ................................ 1,410 1,581
Norske Skogindustrier - Notes 144A (a)(US)
7.625% due 10/15/11 - BBB- .............................. 245 280
Temple Inland, Inc. - Notes (US)
7.875% due 05/01/12 - BBB ............................... 40 47
Weyerhaueser Co. - Debs (US)
7.375% due 03/15/32 - BBB ............................... 2,014 2,388
-------
4,532
Pharmaceuticals - 0.0%
Schering Plough Corp. - Sr. Notes
(US)
5.3% due 12/01/13 - A- .................................. 255 267
Wyeth - Notes (US)
4.375% due 03/01/08 - A ................................. 145 147
-------
414
Real Estate Development - 0.1%
Developers Diversified Realty Co. - Notes (US)
4.625% due 08/01/10 - BBB ............................... 125 124
Rouse Co. - Notes (US)
5.375% due 11/26/13 - BB+ ............................... $1,135 $ 1,089
-------
1,213
Real Estate Investment Trust - 0.3%
Boston Properties, Ltd. Partnership
- Sr. Notes (US)
6.25% due 01/15/13 - BBB ................................ 1,763 1,913
Crescent Real Estate Equities - Notes (US)
1.0% due 09/15/07 - B ................................... 20 22
Duke Realty Limited Partnership - Notes (US)
2.781% due 12/22/06 - BBB+ .............................. 1,035 1,034
Health Care Property Investments, Inc. - Sr.
Notes # (US)
6.45% due 06/25/12 - BBB+ ............................... 973 1,065
Health Care Reit, Inc. - Notes (US)
6.0% due 11/15/13 - BBB- ................................ 785 813
Hospitality Properties Trust - Sr. Notes # (US)
6.75% due 02/15/13 - BBB- ............................... 100 110
IStar Financial, Inc. - Sr. Notes (US)
4.875% due 01/15/09 - BBB- .............................. 1,610 1,634
Price Reit, Inc. (US)
7.5% due 11/05/06 - A- .................................. 125 134
Simon Property Group LP - Notes (US)
5.45% due 03/15/13 - BBB ................................ 100 103
-------
6,828
Real Estate Operations - 0.0%
EOP Operating, Ltd. - Notes (US)
7.5% due 04/19/29 - BBB+ ................................ 50 58
Road & Rail - 0.1%
CSX Corp. - Notes (US)
1.0% due 08/03/06 - BBB ................................. 2,140 2,141
Union Pacific Resources Group, Inc. - Ser.
2002-1 (US)
6.061% due 01/17/23 - A ................................. 50 54
-------
2,195
Semiconductor Equipment & Products - 0.0%
Amkor Technologies, Inc. - Sr. Notes (US)
7.75% due 05/15/13 - B .................................. 25 23
Specialty Retail - 0.1%
Blockbuster, Inc. - Sr. Sub. Notes
144A (a)(US)
9.0% due 09/01/12 - B+ .................................. 25 25
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ----- ------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Specialty Retail - Continued
Hughes Supply, Inc. - Sr. Notes
144A (a) (US)
5.5% due 10/15/14 - BBB - ............................... $ 1,700 $ 1,679
-------
1,704
Telephone - 0.0%
Cincinatti Bell, Inc. - Sr. Notes # (US)
7.25% due 07/15/13 - B - ................................ 25 26
Qwest Services Corp. - Sr. Sub. Sec. Notes 144A (a) (US)
13.5% due 12/15/10 - B .................................. 75 90
Royal KPNNV - Notes (US)
8.375% due 10/01/30 - A - ............................... 40 52
-------
168
Textiles & Apparel - 0.0%
Payless Shoesource, Inc. - Sr. Sub. Notes # (US)
8.25% due 08/01/13 - B .................................. 75 76
Tobacco - 0.0%
Altria Group, Inc. - Notes (US)
7.0% due 11/04/13 - BBB ................................. 700 758
Badger Tobacco (US)
6.125% due 06/01/27 - BBB ............................... 170 169
-------
927
U.S. Government Agencies - 12.3%
Federal Home Loan Bank - Notes (US)
2.5% due 12/15/05 - AAA ................................. 1,375 1,369
2.625% due 07/15/08 - AAA ............................... 370 359
Federal Home Loan Bank - Sr. Notes (US)
5.8% due 09/02/08 - AAA ................................. 1,000 1,071
Federal Home Loan Mortgage Corp. - Notes (US)
1.875% due 02/15/06 - AAA ............................... 500 494
6.625% due 09/15/09 - AAA ............................... 800 895
Federal Home Loan Mortgage Corp. (US)
5.0% due 1/25/2034 - AAA (b) ............................ 8,000 7,942
Federal Home Loan Mortgage Corp. - Bonds (US)
6.0% due 08/01/16 - AAA ................................. 229 240
6.0% due 08/01/17 - AAA ................................. 266 278
6.5% due 03/01/17 - AAA ................................. 133 140
6.5% due 01/15/33 - AAA (b) ............................. 5,000 5,245
5.5% due 01/01/34 - AAA ................................. 928 944
Federal Home Loan Mortgage
Corp. - Debs. (US)
5.875% due 03/21/11 - AAA ............................... 400 432
Federal National Mortgage Assoc. - Bonds (US)
7.5% due 01/25/28 - AAA ................................. $ 91 $ 97
1.0% due 09/01/33 - AAA ................................. 578 576
3.875% due 07/01/33 - AAA ............................... 118 116
4.125% due 04/15/14 - AAA ............................... 2,400 2,326
4.5% due 01/25/18 - AAA (b) ............................. 21,540 21,466
4.5% due 10/01/18 - AAA ................................. 4,353 4,349
5.0% due 12/25/17 - AAA (b) ............................. 13,700 13,914
5.0% due 05/01/18 - AAA ................................. 321 327
5.0% due 10/01/18 - AAA ................................. 870 885
5.0% due 01/25/33 - AAA (b) ............................. 12,100 12,002
5.0% due 03/01/34 - AAA ................................. 6,503 6,465
5.0% due 03/01/34 - AAA ................................. 4,517 4,491
5.5% due 07/01/17 - AAA ................................. 234 242
5.5% due 12/25/17 - AAA (b) ............................. 15,000 15,497
5.5% due 12/25/32 - AAA (b) ............................. 20,500 20,807
5.5% due 06/01/33 - AAA ................................. 2,013 2,045
5.5% due 08/01/33 - AAA ................................. 5,154 5,237
5.5% due 11/01/33 - AAA ................................. 7,653 7,776
5.5% due 12/01/33 - AAA ................................. 1,036 1,052
5.5% due 02/01/34 - AAA ................................. 5,839 5,931
5.5% due 02/01/34 - AAA ................................. 1,239 1,259
6.0% due 07/01/16 - AAA ................................. 171 179
6.0% due 03/01/17 - AAA ................................. 2,027 2,128
6.0% due 01/25/19 - AAA (b) ............................. 11,500 12,046
6.0% due 01/25/32 - AAA (b) ............................. 32,357 33,449
6.0% due 01/01/33 - AAA ................................. 2,756 2,853
6.0% due 03/01/33 - AAA ................................. 2,586 2,678
6.5% due 01/25/17 - AAA (b) ............................. 7,244 7,676
6.5% due 01/25/32 - AAA (b) ............................. 11,543 12,102
6.5% due 04/01/32 - AAA ................................. 763 801
6.5% due 04/01/34 - AAA ................................. 600 629
7.0% due 09/01/16 - AAA ................................. 196 208
7.0% due 11/01/30 - AAA ................................. 52 55
7.0% due 09/01/31 - AAA ................................. 88 93
7.0% due 12/01/31 - AAA ................................. 254 269
7.0% due 04/01/32 - AAA ................................. 47 50
7.0% due 1/25/34 - AAA (b) .............................. 6,080 6,441
7.5% due 11/01/30 - AAA ................................. 42 45
7.5% due 06/01/31 - AAA ................................. 197 211
Federal National Mortgage Assoc. - Notes (US)
2.5% due 06/15/08 - # AAA ............................... 3,000 2,894
4.25% due 07/15/07 - AAA ................................ 7,000 7,147
4.375% due 03/15/13 - AAA ............................... 4,250 4,238
6.0% due 12/15/05 - AAA ................................. 555 571
6.0% due 05/15/08 - AAA ................................. 775 834
6.625% due 11/15/10 - AAA ............................... 2,700 3,051
Federal National Mortgage Assoc. - Bonds Cl. 2 (US)
5.5% due 11/01/33 - AAA ................................. 7,027 1,521
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- ----- ------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
Federal National Mortgage Assoc. - Debs. (US)
6.625% due 11/15/30 - AAA ............................. $ 3,462 $ 4,126
Federal National Mortgage Assoc. -
Bonds Ser. 2001-50 Cl. BA (US)
7.0% due 10/25/41 - AAA ............................... 104 110
Government National Mortgage Assoc. - Bonds (US)
5.0% due 01/15/33 - AAA (b) ........................... 1,075 1,075
5.5% due 01/15/34 - AAA ............................... 948 969
6.0% due 06/15/33 - AAA ............................... 1,779 1,846
8.0% due 11/15/30 - AAA ............................... 131 142
--------
256,706
U.S. Government - 2.1%
U.S. Treasury - Notes (US)
1.125% due 06/30/05 - AAA ............................. 4,000 3,973
1.625% due 02/28/06 - # AAA ........................... 11,772 11,613
3.0% due 02/15/09 - # AAA ............................ 2,751 2,700
3.375% due 10/15/09 - # AAA ........................... 780 772
3.5% due 12/15/09 - # AAA ............................ 835 831
3.625% due 07/15/09 - # AAA ........................... 3,321 3,331
3.875% due 02/15/13 - AAA ............................. 1,020 1,006
4.25% due 11/15/14 - # AAA ............................ 2,730 2,737
5.0% due 02/15/11 - AAA ............................... 2,000 2,128
5.75% due 08/15/10 - AAA .............................. 1,250 1,376
U.S. Treasury - Bonds Inflation Index (US)
3.875% due 04/15/29 - AAA ............................. 313 430
U.S. Treasury - Bonds (US)
5.25% due 02/15/29 - AAA .............................. 3,445 3,614
5.375% due 02/15/31 - # AAA ........................... 2,045 2,211
6.5% due 11/15/26 - AAA ............................... 512 622
7.875% due 02/15/21 - AAA ............................. 1,700 2,297
8.875% due 08/15/17 - AAA ............................. 2,535 3,592
9.25% due 02/15/16 - AAA .............................. 250 357
--------
43,590
Whole Loan CMOs - 1.4%
Banc America Commercial
Mortgage, Inc. -Ser. 2001-3 Cl. A1 (US)
4.89% due 04/11/37 - AAA .............................. 248 254
Banc America Commercial
Mortgage, Inc. - CTF 144A (a)(US)
5.276% due 03/11/41 - BBB ............................. 2,000 2,003
Banc America Commercial
Mortgage, Inc. ADR - Ser. 2004-1
Cl. F 144A (a)(US)
5.279% due 11/10/39 - BBB+ ............................ 1,350 1,344
Banc America Commercial
Mortgage, Inc. - Ser. 2004-1
Cl. G 144A (a)(US)
5.377% due 11/10/39 - BBB ............................. $ 1,350 $ 1,344
Bear Stearns ARM Trust - CTF Cl. II A2 (US)
4.25% due 04/25/33 - AAA .............................. 52 52
Bear Stearns ARM Trust - Ser. 2004-3 Cl. IIA (US)
4.344% due 07/25/34 - AAA ............................. 715 713
Bear Stearns Commercial Mortgage
Securities, Inc. - Ser. 2004 Cl. X1 (US) * (c)
1.0% due 11/11/41 - NA ................................ 92,331 1,545
Bear Stearns ARM Trust - CTF Cl. I1A3 (US) (c)
5.08% due 12/25/34 - AAA .............................. 240 244
CWALT, Inc. - Ser. 2004 J7 Cl. 1A2 (US)
4.673% due 08/25/34 - AAA ............................. 2,120 2,121
CWMBS, Inc. - Ser. 2004-7 Cl. 2A1 (US)
1.0% due 04/25/34 - AAA ............................... 457 449
CWMBS, Inc. -Ser. 2004-12 CHL Cl. 12A1 (US)
4.933% due 08/25/34 - AAA ............................. 1,248 1,266
Greenwich Capital Commercial
Funding Corp. - Ser. 2002-C1 Cl. A2 (US)
4.112% due 01/11/17 - AAA ............................. 504 505
GS Mortgage Securities Corp. - Ser. 2004
Cl. A2C (US)
1.58% due 05/25/34 - AAA .............................. 3,000 3,006
GS Mortgage Securities Corp. II -
Ser. 2004-GG2 Cl. XC 144A (a)(US)
1.0% due 08/01/38 - AAA ............................... 238,892 2,619
JP Morgan Chase Commercial
Mortgage Securities - Ser. 2004 CIBC10
Cl. A2 (US)
3.89% due 11/12/39 - AAA .............................. 375 374
Merrill Lynch Mortgage Investments, Inc. -
Ser. 2004-A4 Cl. A1 (US)
4.302% due 08/25/34 - AAA ............................. 240 237
Merrill Lynch Mortgage Investments, Inc. -
Ser. 2004 A1 Cl. 2A1 (US)
4.67% due 02/25/34 - AAA .............................. 386 385
Merrill Lynch Mortgage Trust -
Ser 2004 Cl. XC (US) * (c)
0.059% due 09/12/41 - AAA ............................. 68,281 1,287
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MANAGED FUND
Par Market
Name of Issuer Value Value
-------------- --------- -----------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Whole Loan CMOs - Continued
Residential Asset Mortgage Products - Ser. 2004
RZ3 Cl. A I4 (US)
4.572% due 05/25/33 - AAA ......................... $ 150 $ 149
Residential Asset Mortgage Products - Ser.
2004-RS9 Cl. AI 4 (US)
4.767% due 10/25/32 - AAA ......................... 250 251
Specialty Underwriting - Ser. 2004 BC4 Cl.
A 2BB (US)
2.37% due 10/25/35 - NA ........................... 250 250
Structured Asset Securities Corp. - Ser. 2004
19XS Cl. A2 (US)
4.37% due 10/25/34 - AAA .......................... 2,700 2,682
Structured Asset Securities Corp. - Ser.
2004-16XS Cl. A2 (US)
4.91% due 08/25/34 - AAA .......................... 2,375 2,384
Structured Asset Securities Corp. - Ser.
2004-6XS Cl. M1 (US)
4.92% due 03/25/34 - AA+ .......................... 2,500 2,471
Structured Assets Securities Corp. 144A (a)(US)
8.517% due 07/15/27 - NA .......................... 59 62
WAMU Mortgage - CTF Cl. A1 (US)
4.39% due 06/25/33 - AAA .......................... 390 391
WAMU Mortgage - Ser. 2004
AR11 Cl. A (US)
4.73% due 10/25/34 - AAA .......................... 724 722
Washington Mutual Mortgage
Securities Corp. - Cl. A6 (US)
4.56% due 03/25/33 - AAA .......................... 32 32
----------
29,142
Wireless Telecommunications Services - 0.1%
American Tower Corp. - Sr. Notes # (US)
7.5% due 05/01/12 - CCC ........................... 70 74
AT&T Wireless, Inc. - Sr. Notes (US)
8.75% due 03/01/31 - A ............................ 767 1,034
Dobson Communications Corp. - Sr. Notes (US)
10.875% due 07/01/10 - CCC ........................ 50 39
Rogers Wireless, Inc. - Sr. Sec. Notes (US)
9.625% due 05/01/11 - BB .......................... 40 47
Triton PCS, Inc. - Sr. Sub. Notes # (US)
8.75% due 11/15/11 - CCC 35 28
Western Wireless Corp. - Sr. Notes (US)
9.25% due 07/15/13 - CCC .......................... $ 70 $ 76
----------
1,298
----------
TOTAL PUBLICLY TRADED BONDS-
(Cost $683,290) 33.5% 696,304
INVESTMENT COMPANIES HELD AS COLLATERAL ON LOANED
SECURITIES - 4.5%
State Street Navigator Securities Lending
Portfolio 92,803 92,803
SHORT-TERM INVESTMENTS - 8.7%
Investment in joint trading account (US) 2.29%
due 01/03/05
(Cost $180,277) ................................ 180,277 180,277
-------- ----------
TOTAL INVESTMENTS-
(Cost $2,109,506) 112.3% 2,334,076
Payables, less cash and receivables- (12.3)% (254,848)
-------- ----------
NET ASSETS- 100.0% $2,079,228
======== ==========
* Non-income producing security. In the case of a bond, generally denotes
that the issuer has defaulted on the payment of principle or interest or
has filed for bankruptcy.
# At December 31, 2004 all or portion of this security was out on loan.
(a) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2004, securities aggregated
$49,945 or 2.4% of net assets of the Portfolio.
(b) To Be Announced.
(c) At December 31, 2004 this security was fair valued.
(d) Less than 1%.
** Bond ratings are not audited
ADR-American Depository Receipts
See notes to financial statements.
SUMMARY OF LONG-TERM SECURITIES BY COUNTRY
Market % of
Country Value Long-Term
Abbreviation (000s) Investments
------------ ---------- -----------
United States ........................ US $2,060,879 100.0%
Luxembourg (d) ....................... LU 117 0.0%
---------- -----
$2,060,996 100.0%
========== =====
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Managed 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 twenty-three
different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
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.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including,
but not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
Discount and premium on debt securities: The Fund accretes discount and
amortizes premium from par value on securities from either the date of issue or
the date of purchase over the life of the security.
Expenses: Expenses directly attributable to 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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$384 1.76% $--
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, 2004, 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
- -------------------------- -------------------
$90,783 $92,803
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, 2004, 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. At December 31, 2004, 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, 2004, the the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $2,000, $76,689 and $23,685 which expire in 2008, 2010 and 2011,
respectively.
Certain of the above losses may be limited under sections 382-384 of the
Internal Revenue Code, as amended.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $92. Realized gains and losses
from security transactions are determined on the basis of identified cost.
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.
Restricted Securities: Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense, either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such sales. The
Fund's restricted securities are valued at the price provided by dealers in the
secondary market, or, if no market prices are available, at the fair value as
determined in accordance with procedures established by and under general
supervision of the Trustees.
When-Issued and Delayed Delivery Transactions: The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such as that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date. Losses
may occur on these transactions due to changes in market conditions or the
failure of counterparts to perform under the contract.
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 11, 2004, 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
$500 Million and Excess Over
First $500 Million $1 Billion $1 Billion
- ------------------ ---------------- -----------
0.74% 0.68% 0.65%
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES--Continued
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, 2004, there were no reimbursements paid 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 in expenses
of $522.
John Hancock has entered into a Sub-Advisory Agreement with Independence
Investment LLC, an affiliate of John Hancock, which under John Hancock's
supervision, is responsible for a portion of the day-to-day investment
management of the Fund. John Hancock has also entered into a Sub-Advisory
Agreement with Capital Guardian Trust Company, which under John Hancock's
supervision, is also responsible for a portion of 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, 2004 were as follows:
Purchases Sales and Maturities
- ---------- --------------------
$4,755,888 $4,846,561
The identified cost of investments owned by the Fund (including earned
discount on corporate short-term notes, commercial paper and collateral held for
securities lending) and their respective gross unrealized appreciation and
depreciation for Federal income tax purposes at December 31, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$2,114,473 $247,840 $(28,236) $219,603
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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $102,374 $219,603
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
- ---- ------------------ ---------------------- -----------------
2004 $38,760 $-- $ --
2003 63,275 -- 8,852
Included in the Fund's 2004 distributions from ordinary income is $1,365 in
excess of investment company taxable income, which in accordance with applicable
US tax law, was distributed to shareholders as ordinary income distributions.
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Managed Fund (a portfolio included
in the series of John Hancock Variable Series Trust I {the "Trust"}) as of
December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Managed Fund of John Hancock Variable Series Trust I at December 31, 2004, 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 U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1994
- --------------------------------------------------------------------------------
Mid Cap Growth Fund (FORMERLY SMALL / MID CAP GROWTH FUND)
Wellington Management Company, LLP Frank J. Boggan
- --------------------------------------------------------------------------------
.. The manager employs fundamental research to identify high quality companies
with above average growth characteristics relative to industry peers. The
Fund emphasizes companies with profitable growth characteristics, strong
balance sheets and attractive valuations. The Fund's sector allocations are
broadly diversified but are driven primarily by stock selection.
.. On May 1, 2004, the Fund's name changed to reflect its primary focus on
primarily mid cap companies. Wellington continues to manage the Fund.
Fund Commentary
Performance: For 2004, the Mid Cap Growth Fund returned +11.67%, underperforming
the +14.53% return of its benchmark, a splice of the Russell 2500 Growth Index
(January to April) and the Russell Midcap Growth Index (from May going forward).
Environment: In the face of much higher oil prices, uncertainty surrounding the
U.S. presidential elections and continued insurgency in Iraq, the economy
continued to exhibit solid growth. We used the stock market's mid-year
volatility to upgrade both the quality and growth potential of the companies in
which we invest.
For the full year, the largest single driver of the Fund's underperformance
versus the blended benchmark was security selection in Information Technology
among Internet software & services holdings. Security selection was detrimental
in the first four months of the year and positive from May to December.
Outlook: We believe that 2005 will be a strong environment for our kind of
investing. It is typical in an economic recovery to see the market reward
survivors early on, followed by a cyclical growth focus thereafter. At this
point in the cycle, we believe investors will reward the Fund's consistent
growth approach in 2005. For example, Consumer Discretionary holdings continue
to represent one of the largest weights in the portfolio. We continue to find
high quality, consistent growth companies in unique spaces within specialty
retail.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 12/31/94 (Fund Inception Date)
Small/Mid Cap Small/Mid Cap
Growth Fund Growth Benchmark(1)
------------- -------------------
Dec-94 $10,000 $10,000
Jan-95 9,879 10,120
Feb-95 10,226 10,658
Mar-95 10,738 11,082
Apr-95 11,008 11,175
May-95 11,026 11,450
Jun-95 11,587 11,970
Jul-95 12,495 12,723
Aug-95 12,736 12,862
Sep-95 12,693 13,149
Oct-95 12,293 12,816
Nov-95 13,087 13,389
Dec-95 13,596 13,396
Jan-96 14,072 13,633
Feb-96 14,531 14,148
Mar-96 14,856 14,260
Apr-96 15,922 14,949
May-96 16,364 15,254
Jun-96 16,147 14,793
Jul-96 14,534 13,645
Aug-96 15,398 14,383
Sep-96 16,320 15,297
Oct-96 16,832 15,118
Nov-96 17,342 16,008
Dec-96 17,721 15,739
Jan-97 17,746 16,435
Feb-97 16,730 16,073
Mar-97 15,737 15,165
Apr-97 15,280 15,537
May-97 16,396 16,929
Jun-97 16,621 17,398
Jul-97 17,928 19,063
Aug-97 17,588 18,876
Sep-97 18,919 19,831
Oct-97 18,518 18,837
Nov-97 18,087 19,035
Dec-97 18,344 19,285
Jan-98 18,019 18,937
Feb-98 19,571 20,718
Mar-98 20,542 21,586
Apr-98 20,485 21,879
May-98 19,554 20,980
Jun-98 20,291 21,574
Jul-98 19,176 20,650
Aug-98 15,154 16,708
Sep-98 15,932 17,971
Oct-98 16,793 19,294
Nov-98 17,518 20,594
Dec-98 19,373 22,728
Jan-99 19,516 23,410
Feb-99 18,067 22,265
Mar-99 19,263 23,505
Apr-99 20,337 24,577
May-99 20,505 24,830
Jun-99 21,375 26,586
Jul-99 20,869 26,043
Aug-99 19,255 25,481
Sep-99 18,638 25,664
Oct-99 18,739 26,914
Nov-99 18,927 30,093
Dec-99 20,370 35,768
Jan-00 19,655 35,568
Feb-00 20,178 44,691
Mar-00 21,814 41,183
Apr-00 21,220 37,172
May-00 20,807 33,863
Jun-00 22,113 38,340
Jul-00 21,943 35,196
Aug-00 23,846 39,782
Sep-00 23,258 37,208
Oct-00 23,050 34,909
Nov-00 20,957 28,255
Dec-00 22,254 30,007
Jan-01 23,211 31,952
Feb-01 21,625 27,022
Mar-01 19,847 24,033
Apr-01 21,902 27,696
May-01 22,250 28,499
Jun-01 22,645 29,146
Jul-01 22,127 26,998
Aug-01 21,414 25,202
Sep-01 18,624 21,256
Oct-01 20,219 23,351
Nov-01 21,887 25,369
Dec-01 22,883 26,762
Jan-02 22,348 25,619
Feb-02 21,454 24,036
Mar-02 23,065 25,971
Apr-02 22,413 25,108
May-02 21,960 23,843
Jun-02 20,670 21,652
Jul-02 18,200 18,963
Aug-02 18,148 18,959
Sep-02 16,480 17,526
Oct-02 17,664 18,533
Nov-02 19,583 20,257
Dec-02 18,049 18,977
Jan-03 17,544 18,563
Feb-03 17,197 18,130
Mar-03 17,186 18,370
Apr-03 18,660 19,972
May-03 20,957 22,089
Jun-03 21,401 22,544
Jul-03 22,856 24,045
Aug-03 24,126 25,334
Sep-03 23,546 24,789
Oct-03 25,754 26,827
Nov-03 26,559 27,734
Dec-03 26,508 27,764
Jan-04 27,536 28,922
Feb-04 27,908 29,191
Mar-04 27,443 29,293
Apr-04 26,217 28,051
May-04 26,707 28,713
Jun-04 27,247 29,169
Jul-04 25,323 27,238
Aug-04 25,030 26,903
Sep-04 26,269 27,907
Oct-04 26,487 28,853
Nov-04 28,330 30,344
Dec-04 29,602 31,797
Value on 12/31/04:
- ------------------
$29,602 Small/Mid Cap Growth Fund
$31,797 Small/Mid Cap Growth Benchmark(1)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Chesapeake Energy Corp. 2.9%
Michaels Stores, Inc. 2.4%
Petco Animal Supplies, Inc. 2.4%
Fisher Scientific International, Inc. 2.3%
Pactiv Corp. 2.3%
Arthur J. Gallagher & Co. 2.2%
Columbia Sportswear Co. 2.1%
ITT Educational Services, Inc. 2.1%
O'Reilly Automotive, Inc. 2.0%
Standard Pacific Corp. 2.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Mid Cap Mid Cap
Growth Growth Fund
Fund Benchmark/1/
------- ------------
1 Year 11.67% 14.53%
3 Years 8.96% 5.92%
5 Years 7.76% -2.33%
10 Years 11.46% 12.26%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Consumer Discretionary 23.9%
Health Care 20.9%
Information Technology 19.1%
Industrials 15.5%
Financials 8.7%
Energy 6.5%
Materials 3.1%
Consumer Staples 1.7%
Telecommunication Services 0.6%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions, and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate that shares, when redeemed, may be worth more or
less than their original cost. Small company investing entails special
risks as discussed in the prospectus. The performance of the fund on this
page is reported net of Trust level charges (i.e. investment management
fees and operating expenses). It does not reflect expense and charges of
the applicable separate accounts and variable products, all of which vary
to a considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
/1/ The Mid Cap Growth Fund benchmark represents the Russell Mid Cap(TM)Growth
Index from May 1994 to April 1999 and the Russell 2500(TM)Growth Index May
1999 to April 2004 and the Russell Mid Cap(TM)Growth Index May 2004 to
present.
Inception: May 1, 1994
- --------------------------------------------------------------------------------
Mid Cap Growth Fund (FORMERLY SMALL / MID CAP GROWTH FUND)
Wellington Management Company, LLP Frank J. Boggan
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Mid Cap Growth Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,086.50
Expense paid per $1,000* $ 5.56
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,019.81
Expense paid per $1,000* $ 5.38
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Mid Cap Growth Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $44,689 of
securities loaned (Note B)) ..................................... $200,926
Net unrealized appreciation of investments ......................... 34,451
Short-term investments at value .................................... 47,676
--------
Total investments ............................................ 283,053
Receivable for:
Investments sold ................................................ 1,886
Dividends ....................................................... 82
--------
Total assets ....................................................... 285,021
--------
LIABILITIES
Payables for:
Investments purchased ........................................... 2,101
Fund shares purchased ........................................... 437
Collateral for securities on loan ............................... 45,837
Accrued operating expenses ...................................... 66
--------
Total liabilities .................................................. 48,441
--------
Net assets ......................................................... $236,580
========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ..................................................... 15,471
--------
Net asset value per share .......................................... $ 15.29
========
Composition of net assets:
Capital paid-in ................................................. $203,498
Accumulated net realized loss on investments .................... (1,369)
Net unrealized appreciation of investments ...................... 34,451
--------
Net assets ......................................................... $236,580
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Mid Cap Growth Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 36
Dividends ........................................................ 704
Securities lending ............................................... 48
-------
Total investment income ............................................. 788
-------
EXPENSES
Investment advisory fee .......................................... 2,058
Auditors fees .................................................... 28
Custodian fees ................................................... 101
Legal fees ....................................................... 35
Printing & mailing fees .......................................... 18
Trustees' fees ................................................... 6
Other fees ....................................................... 10
-------
Total expenses ...................................................... 2,256
Less custodian expense reduction offset by
commission recapture arrangement (Note C) ..................... (61)
-------
Net expenses ........................................................ 2,195
-------
Net investment loss ................................................. (1,407)
-------
REALIZED AND UNREALIZED GAIN
Net realized gain on investments ................................. 25,242
Change in unrealized appreciation on investments ................. 688
-------
Net realized and unrealized gain .................................... 25,930
-------
Net increase in net assets resulting from
operations ....................................................... $24,523
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Mid Cap Growth Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ....................................... $ (1,407) $ (694)
Net realized gain ......................................... 25,242 16,619
Change in net unrealized appreciation ..................... 688 52,166
-------- --------
Net increase in net assets resulting from operations ... 24,523 68,091
Distributions to shareholders from:
Realized gains ............................................ (21,476) (14,419)
-------- --------
Decrease in net assets resulting from distributions .... (21,476) (14,419)
From fund share transactions:
Proceeds from shares sold ................................. 57,643 77,826
Distributions reinvested .................................. 21,476 14,419
Payment for shares redeemed ............................... (68,608) (63,853)
-------- --------
Increase in net assets from fund share transactions .... 10,511 28,392
-------- --------
NET INCREASE IN NET ASSETS ................................... 13,558 82,064
NET ASSETS
Beginning of Period ....................................... 223,022 140,958
-------- --------
End of Period (including undistributed net investment
income of $0 and $0, respectively) ..................... $236,580 $223,022
======== ========
Analysis of fund share transactions:
Sold ...................................................... 3,761 5,839
Reinvested ................................................ 1,418 970
Redeemed .................................................. (4,507) (4,848)
-------- --------
Net increase in fund shares outstanding ...................... 672 1,961
======== ========
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:
Mid Cap Growth Fund
Year Ended December 31,
----------------------------------------------------------------
2004 2003 2002(e) 2001 2000(e)
-------- -------- -------- -------- --------
Net Assets Value at Beginning of Period ...................... $ 15.07 $ 10.98 $ 14.09 $ 13.70 $ 14.03
Income from Investment Operations:
Net Investment Loss ....................................... (0.08) (0.02) (0.09) (0.06) (0.02)
Net Realized and Unrealized Gain (Loss) on Investment(a) .. 1.82 5.15 (2.88) 0.45 1.27
-------- -------- -------- -------- --------
Total From Investment Operations .......................... 1.74 5.13 (2.97) 0.39 1.25
Less Distributions:
Distribution from Net Realized Gains on Investments ....... (1.52) (1.04) (1.42)
Distribution from Capital Paid-in ......................... (0.14) (0.16)
-------- -------- -------- -------- --------
Total Distributions ....................................... (1.52) (1.04) (0.14) (1.58)
-------- -------- -------- -------- --------
Net Assets Value at End of Period ............................ $ 15.29 $ 15.07 $ 10.98 $ 14.09 $ 13.70
======== ======== ======== ======== ========
Total Investment Return(b) ................................... 11.67% 46.87% (21.13)% 2.83% 9.25%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets .......... 1.05%(d) 1.06%(d) 1.07%(c) 0.91%(c) 0.85%
Ratio of Net Investment Loss to Average Net Assets ........ (0.66)% (0.40)% (0.72)% (0.40)% (0.20)%
Portfolio Turnover Rate .................................. 108.72% 124.21% 130.01% 113.73% 103.19%
Net Assets End of Period (000s Omitted) ...................... $236,580 $223,022 $140,958 $185,232 $190,010
(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 annual expense ratio would have been 1.07%, and 0.91% for
the years ended December 31, 2002, and 2001, respectively.
(d) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(e) Certain amounts in 2002 and 2000 have been reclassified to permit
comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MID CAP GROWTH FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 2.6%
Engineered Support Systems, Inc. # ...................... 63,800 $ 3,778
Precision Castparts Corp. ............................... 34,800 2,286
-------
6,064
Beverages - 0.4%
Constellation Brands, Inc. - Cl. A * .................... 21,400 995
Biotechnology - 6.2%
Abgenix, Inc. # * ....................................... 42,700 441
Celgene Corp. # * ....................................... 120,000 3,184
Cephalon, Inc. # * ...................................... 41,200 2,096
Charles River Laboratories * ............................ 45,800 2,107
CV Therapeutics, Inc. # * ............................... 50,000 1,150
Exelixis, Inc. # * ...................................... 86,000 817
Human Genome Sciences, Inc. * ........................... 81,000 974
Incyte Pharmacuticals, Inc. # * ......................... 80,000 799
Millennium Pharmaceuticals, Inc. * ...................... 88,000 1,067
Myriad Genetics, Inc. # * ............................... 38,000 855
Vertex Pharmaceuticals, Inc. # * ........................ 100,000 1,057
-------
14,547
Commercial Services & Supplies - 6.8%
Career Education Corp. * ................................ 94,900 3,796
DST Systems, Inc. * ..................................... 41,600 2,168
ITT Educational Services, Inc. # * ...................... 102,600 4,879
Resources Connection, Inc. # * .......................... 46,600 2,531
Waste Connections, Inc. * ............................... 79,250 2,714
-------
16,088
Communications Equipment - 3.9%
3Com Corp. * ............................................ 90,000 375
Avaya, Inc. * ........................................... 78,000 1,342
Brocade Communications Systems, Inc. * .................. 110,000 840
Emulex Corp. # * ........................................ 80,000 1,347
Foundry Networks, Inc. * ................................ 80,000 1,053
Polycom, Inc. * ......................................... 111,900 2,610
Research in Motion, Ltd. * .............................. 3,500 288
Sonus Networks, Inc. # * ................................ 130,000 745
Utstarcom, Inc. # * ..................................... 29,700 658
-------
9,258
Computers & Peripherals - 1.4%
PalmOne, Inc. # * ....................................... 22,000 694
SanDisk Corp. * ......................................... 108,400 2,707
-------
3,401
Construction & Engineering - 0.4%
D.R. Horton, Inc. ....................................... 20,800 838
Containers & Packaging - 2.3%
Pactiv Corp. * .......................................... 210,900 5,334
Diversified Financials - 5.0%
Ameritrade Holding Corp. * .............................. 12,400 176
E*TRADE Group, Inc. * ................................... 296,900 4,439
Federated Investments, Inc. - Cl. B ..................... 140,800 $ 4,281
Legg Mason, Inc. ........................................ 41,350 3,029
-------
11,925
Electronic Equipment & Instruments - 2.3%
Benchmark Electronics, Inc. * ........................... 80,949 2,760
Symbol Technologies, Inc. ............................... 85,800 1,484
Waters Corp. * .......................................... 25,400 1,189
-------
5,433
Energy Equipment & Services - 1.7%
Ensco International, Inc. ............................... 99,600 3,161
Hanover Compressor Co. # * .............................. 65,000 919
-------
4,080
Food & Drug Retailing - 0.3%
Rite Aid Corp. * ........................................ 165,900 607
Food Products - 1.0%
Hain Celestial Group, Inc. * ............................ 110,600 2,286
Health Care Equipment & Supplies - 6.3%
Cooper Cos, Inc. # ...................................... 43,400 3,064
Diagnostic Products Corp. ............................... 76,900 4,233
Edwards Lifesciences Corp. # * .......................... 56,600 2,335
Fisher Scientific International, Inc. * ................. 85,600 5,340
-------
14,972
Health Care Providers & Services - 6.4%
Coventry Health Care, Inc. * ............................ 78,700 4,178
Healthnet, Inc. * ....................................... 74,100 2,139
Odyssey Healthcare, Inc. # * ............................ 168,600 2,307
PacifiCare Health Systems, Inc. * ....................... 53,400 3,018
Triad Hospitals, Inc. * ................................. 95,600 3,557
-------
15,199
Hotels Restaurants & Leisure - 2.8%
CBRL Group, Inc. ........................................ 81,000 3,390
Harrah's Entertainment, Inc. ............................ 47,900 3,204
-------
6,594
Household Durables - 3.2%
Standard Pacific Corp. .................................. 73,200 4,695
Yankee Candle, Inc. * ................................... 88,600 2,940
-------
7,635
Insurance - 3.6%
Ambac Financial Group, Inc. ............................. 42,800 3,515
Arthur J. Gallagher & Co. ............................... 157,100 5,106
-------
8,621
Internet & Catalog Retail - 0.7%
1-800 Flowers.com., Inc. - Cl. A * ...................... 115,000 967
Overstock.com, Inc. # * ................................. 10,000 690
-------
1,657
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MID CAP GROWTH FUND
Market
Name of Issuer Shares Value
-------------- ------- --------
(000's)
COMMON STOCK - Continued
Internet Software & Services - 2.3%
Ask Jeeves, Inc. # * ................................... 124,500 $ 3,331
Cognizant Technology Solutions Corp. * ................. 49,900 2,112
--------
5,443
Machinery - 2.2%
Graco, Inc. ............................................ 68,600 2,562
Oshkosh Truck Corp. .................................... 31,900 2,181
Parker-Hannifin Corp. .................................. 7,600 576
--------
5,319
Metals & Mining - 0.9%
Freeport-McMoran Copper & Gold, Inc. - Cl. B # ......... 54,200 2,072
Oil & Gas - 4.7%
Chesapeake Energy Corp. # .............................. 416,000 6,864
Plains Exploration & Production Co. * .................. 115,300 2,998
XTO Energy, Inc. ....................................... 37,600 1,330
--------
11,192
Pharmaceuticals - 1.9%
Biovail Corp. # * ...................................... 179,000 2,959
King Pharmaceuticals, Inc. * ........................... 127,700 1,583
--------
4,542
Road & Rail - 1.7%
Yellow Roadway Corp. # * ............................... 74,000 4,123
Semiconductor Equipment & Products - 7.9%
Brooks Automation, Inc. * .............................. 67,000 1,154
Cabot Microelectronics Corp. # * ....................... 59,800 2,395
Fairchild Semiconductor Corp. - Cl. A * ................ 127,800 2,078
FormFactor, Inc. # * ................................... 24,000 651
Integrated Device Technology, Inc. * ................... 80,000 925
International Rectifier Corp. * ........................ 43,400 1,934
Lam Research Corp. * ................................... 82,900 2,396
MPS Group, Inc. * ...................................... 69,500 852
QLogic Corp. * ......................................... 26,700 981
SIRF Technology Holdings, Inc. # * ..................... 25,000 318
Skyworks Solutions, Inc. # * ........................... 76,000 717
Varian Semiconductor Equipment Associates, Inc. # * .... 113,600 4,186
--------
18,587
Software - 1.2%
Ascential Software Corp. * ............................. 49,000 799
Cadence Design Systems, Inc. * ......................... 50,400 696
Dendrite International, Inc. * ......................... 43,100 836
Tibco Software, Inc. * ................................. 35,000 467
--------
2,798
Specialty Retail - 12.7%
CDW Corp. .............................................. 57,400 3,808
Chicos Fas, Inc. * ..................................... 60,200 2,741
Christopher & Banks Corp. # ............................ 30,400 561
Michaels Stores, Inc. .................................. 191,700 5,745
O'Reilly Automotive, Inc. # * .......................... 107,300 $ 4,834
Pacific Sunwear of California, Inc. * .................. 203,400 4,528
Petco Animal Supplies, Inc. * .......................... 144,100 5,689
Urban Outfitters, Inc. * ............................... 45,900 2,038
--------
29,944
Textiles & Apparel - 4.4%
Coach, Inc. * .......................................... 39,500 2,228
Columbia Sportswear Co. # * ............................ 83,600 4,983
Liz Claiborne, Inc. .................................... 75,300 3,179
--------
10,390
Trading Companies & Distributors - 1.8%
Fastenal Co. ........................................... 67,300 4,143
Wireless Telecommunications Services - 0.5%
Nextel Partners, Inc. - Cl. A * ........................ 66,000 1,290
--------
TOTAL COMMON STOCK-
(Cost $200,926) 99.5% 235,377
Par
Value
-------
(000's)
INVESTMENT COMPANIES HELD AS COLLATERAL ON LOANED
SECURITIES - 19.3%
State Street Navigator Securities Lending Portfolio .. $45,837 45,837
SHORT-TERM INVESTMENTS - 0.8%
Investment in joint trading account
2.29% due 01/03/05 (Cost $1,839) .................. 1,839 1,839
------- ---------
TOTAL INVESTMENTS-
(Cost $248,602) 119.6% 283,053
Payables, less cash and receivables- (19.6)% (46,473)
------- ---------
NET ASSETS- 100.0% $236,580
======= ========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Mid Cap Growth Fund, (formerly John Hancock Small/Mid Cap
Growth), (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 twenty-three different funds as of
December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$9,269 1.51% $2
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, 2004, 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
- -------------------------- -------------------
$44,689 $45,837
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, 2004, 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. At December 31, 2004, 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, 2004, 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, 2004, through December 31, 2004,
the Fund incurred no net realized capital losses.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Dividend and Interest: 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.
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 11, 2004, 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
$50 Million and Excess Over
First $50 Million $200 Million $200 Million
- ----------------- --------------- ------------
1.00% 0.95% 0.90%
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. For the year
ended December 31, 2004, there were no reimbursements paid 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 in expenses
of $61.
John Hancock has entered into a Sub-Advisory Agreement with Wellington
Management Company, LLP, which under John Hancock's 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, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$232,200 $243,927
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$251,389 $34,995 $(3,331) $31,664
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 return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$477 $940 $-- $31,664
In addition, the tax character of distributions paid by the Fund are
summarized as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
Distributions from Distributions from
Year Ordinary Income Long-Term Capital Gain Return of Capital
- ---- ------------------ ---------------------- -----------------
2004 $ 9,422 $12,054 $--
2003 10,380 4,039 --
Included in the Fund's 2003 distributions from ordinary income is $5,111 in
excess of investment company taxable income, which in accordance with applicable
US tax law, was distributed to shareholders as ordinary income distributions.
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Mid Cap Growth Fund (formerly
Small/Mid Cap Growth Fund) (a portfolio included in the series of John Hancock
Variable Series Trust I {the "Trust"}) as of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Mid Cap Growth Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1998
- --------------------------------------------------------------------------------
Mid Cap Value B Fund (FORMERLY SMALL/MID CAP CORE(SM) FUND)
T. Rowe Price Associates, Inc. David J. Wallack
- --------------------------------------------------------------------------------
.. The Fund employs a bottom-up, value-oriented investment approach, focusing
on companies with attractive valuations, strong cash flow generation and
sound balance sheets. The Fund's sector allocations are broadly diversified
but are driven primarily by stock selection.
.. On May 1, 2004, the Fund's name, investment strategy and sub-adviser were
changed. T. Rowe Price took over as manager of the Fund.
Fund Commentary
Performance: For the year ending December 31, 2004, the Mid Cap Value B Fund
returned +18.74%, underperforming the +23.60% return of its benchmark, a splice
of the Russell 2500 Index (January through April) and the Russell Mid Cap Value
Index (May through December).
From the date of manager inception, May 1, 2004 to year end, the Mid Cap Value B
Fund returned +17.33%, underperforming the +22.61% return of the Russell Mid Cap
Value Index./2/
Environment: U.S. equity prices registered strong gains from May to December,
largely due to a fourth-quarter rally. Mid-cap stocks outperformed their small-
and large-cap counterparts during the eight-month period. Within the mid-cap
segment, value stocks outpaced growth stocks by a wide margin.
The year ended on a positive note as consumer confidence recovered. The weakness
in recent months was most likely related to uncertainty about employment
prospects, spiking oil prices and uneasiness surrounding the election --
concerns that moderated during the year's final weeks. The Fund posted strong
absolute results, but trailed the Russell Midcap Value Index. Detractors from
relative performance included holdings in the Consumer Discretionary and
Financials sectors. In contrast, the portfolio's Energy and Materials exposures
benefited relative results.
While the Fund's overweight in the Consumer Discretionary sector was favorable,
disappointing stock selection more than offset this benefit. Newspapers
generally suffered due to a lagging recovery and increased competition from
Internet and satellite radio. In Financials, stock selection detracted from
relative performance, as did an underweight in the group, which outperformed the
Index. On the positive side, the portfolio's Energy and Materials holdings
outperformed the benchmark.
Outlook: Mid-cap valuations are now at a premium relative to large caps. The key
to the mid-cap outperformance cycle over large caps is continued relative
earnings strength. Mid-cap growth stocks slightly outperformed their value
counterparts during the fourth quarter, but value maintains a significant
five-year advantage. We continue to find good risk/reward candidates among mid
caps, but they are somewhat harder to come by than in previous years.
Inception: May 1, 1998
- --------------------------------------------------------------------------------
Mid Cap Value B Fund (FORMERLY SMALL/MID CAP CORE(SM) FUND)
T. Rowe Price Associates, Inc. David J. Wallack
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 5/1/98 (Fund Inception Date)
Small/Mid Cap Russell
Core(SM) Fund 2500(TM) Index
------------- --------------
05/1/1998 $10,000 $10,000
06/30/1998 9,577 9,536
07/31/1998 9,721 9,547
08/31/1998 9,040 8,892
09/30/1998 7,377 7,215
10/30/1998 7,776 7,727
11/30/1998 7,960 8,149
12/31/1998 8,422 8,553
01/29/1999 9,019 9,071
02/26/1999 8,940 9,056
03/31/1999 8,305 8,461
04/30/1999 8,438 8,642
05/28/1999 9,172 9,415
06/30/1999 9,251 9,561
07/30/1999 9,810 10,058
08/31/1999 9,686 9,860
09/30/1999 9,347 9,552
10/29/1999 9,224 9,409
11/30/1999 9,430 9,615
12/31/1999 9,887 10,159
01/31/2000 10,871 11,261
02/29/2000 10,456 11,002
03/31/2000 11,807 12,591
04/28/2000 11,700 12,398
05/31/2000 11,257 11,731
06/30/2000 10,720 11,168
07/31/2000 11,414 11,902
08/31/2000 11,267 11,598
09/29/2000 12,208 12,597
10/31/2000 11,766 12,187
11/30/2000 11,467 11,853
12/29/2000 10,396 10,810
01/31/2001 11,375 11,741
02/28/2001 11,642 12,127
03/30/2001 10,940 11,346
04/30/2001 10,296 10,723
05/31/2001 11,153 11,670
06/30/2001 11,433 12,022
07/31/2001 11,546 12,192
08/31/2001 11,242 11,756
09/28/2001 10,945 11,370
10/31/2001 9,572 9,899
11/30/2001 9,992 10,411
12/31/2001 10,814 11,253
01/31/2002 11,435 11,884
02/28/2002 11,423 11,737
03/30/2002 11,363 11,531
04/30/2002 12,211 12,328
05/31/2002 12,368 12,297
06/30/2002 11,981 11,937
07/31/2002 11,397 11,265
08/31/2002 9,984 9,921
09/28/2002 10,116 9,951
10/31/2002 9,327 9,163
11/30/2002 9,532 9,461
12/31/2002 10,097 10,234
01/31/2003 9,698 9,771
02/28/2003 9,440 9,511
03/30/2003 9,166 9,283
04/30/2003 9,203 9,371
05/31/2003 9,969 10,206
06/30/2003 10,953 11,209
07/31/2003 11,169 11,423
08/31/2003 11,739 12,038
09/28/2003 12,181 12,595
10/31/2003 12,136 12,424
11/30/2003 13,153 13,405
12/31/2003 13,784 13,909
01/31/2004 14,077 14,217
02/28/2004 14,897 14,736
03/30/2004 15,031 14,964
04/30/2004 15,058 15,054
05/31/2004 14,246 14,331
06/30/2004 14,437 14,698
07/31/2004 14,905 15,223
08/31/2004 14,371 14,810
09/28/2004 14,442 15,049
10/31/2004 14,914 15,487
11/30/2004 15,204 15,845
12/31/2004 16,123 16,916
16,715 17,571
Value on 12/31/04:
- ------------------
$16,715 Small/Mid Cap Core (SM) Fund
$17,571 Russell 2500(TM) Index
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Diamond Offshore Drilling, Inc. 2.8%
Mattel, Inc. 1.8%
St. Paul Cos., Inc. 1.7%
Marsh & McLennan Cos., Inc. 1.7%
NiSource, Inc. 1.6%
Teco Energy, Inc. 1.6%
Campbell Soup Co. 1.5%
Healthsouth Corp. 1.5%
Lincare Holdings, Inc. 1.4%
Novellus Systems, Inc. 1.4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Mid Cap Mid Cap Value B
Value B Fund Fund Benchmark/1/
------------ -----------------
1 Year 18.74% 23.60%
3 Years 13.49% 13.92%
5 Years 8.99% 9.31%
Since Inception (5/1/98) 8.00% 8.82%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Financials 24.4%
Consumer Discretionary 17.9%
Industrials 13.3%
Health Care 9.9%
Utilities 8.2%
Information Technology 7.9%
Materials 7.0%
Energy 5.9%
Telecommunication Services 2.8%
Consumer Staples 2.7%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. 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.
/1/ The Mid Cap Value B Fund benchmark represents the Russell 2500 Index, May
1998 to April 2004 and then the Russell Mid Cap Value Index, May 2004 to
present.
/2/ Returns are not annualized.
Inception: May 1, 1998
- --------------------------------------------------------------------------------
Mid Cap Value B Fund (FORMERLY SMALL/MID CAP CORE(SM) FUND)
T. Rowe Price Associates, Inc. David J. Wallack
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Mid Cap Value B Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,121.50
Expense paid per $1,000* $ 6.07
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,019.41
Expense paid per $1,000* $ 5.78
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Mid Cap Value B Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $23,680 of
securities loaned (Note B)) ...................................... $151,154
Net unrealized appreciation on investments .......................... 19,851
Short-term investments at value ..................................... 31,858
--------
Total investments ............................................. 202,863
Receivables for:
Investments sold ................................................. 295
Fund shares sold ................................................. 56
Dividends ........................................................ 139
--------
Total assets ........................................................ 203,353
--------
LIABILITIES
Payables for:
Investments purchased ............................................ 118
Collateral for securities on loan ................................ 24,325
Foreign dividend tax withholding ................................. 2
Accrued operating expenses ....................................... 13
--------
Total liabilities ................................................... 24,458
--------
Net assets .......................................................... $178,895
========
Share outstanding, $0.01 Par Value (unlimited shares authorized) .... 15,325
--------
Net asset value per share ........................................... $ 11.67
========
Composition of net assets:
Capital paid-in .................................................. $157,352
Accumulated net realized gain on investments, futures and foreign
currency transactions ......................................... 1,692
Net unrealized appreciation of investments ....................... 19,851
--------
Net assets .......................................................... $178,895
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Mid Cap Value B Fund
(000's Omitted)
INVESTMENT INCOME
Interest ...................................................... $ 63
Dividends (net foreign withholding tax of $6) ................. 1,793
Securities lending ............................................ 52
-------
Total investment income ............................................. 1,908
-------
EXPENSES
Investment advisory fee ....................................... 1,211
Auditors fees ................................................. 12
Custodian fees ................................................ 81
Legal fees .................................................... 16
Printing & mailing fees ....................................... 82
Trustees' fees ................................................ 3
Other fees .................................................... 5
-------
Total expenses ...................................................... 1,410
Less expenses reimbursed ...................................... (83)
Less custodian expense reduction offset by
commission recapture arrangement (Note C) .................. (3)
-------
Net expenses ........................................................ 1,324
-------
Net investment income ............................................... 584
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments ................................................... 19,778
Financial futures contracts ................................... (17)
Foreign currency transactions ................................. 1
Change in unrealized appreciation/(depreciation) on:
Investments ................................................... 2,971
Financial futures contracts ................................... (46)
-------
Net realized and unrealized gain .................................... 22,687
-------
Net increase in net assets resulting from operations ................ $23,271
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Mid Cap Value B Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income $ 584 $ 298
Net realized gain ............................................. 19,762 7,777
Change in net unrealized appreciation ......................... 2,925 18,500
-------- --------
Net increase in net assets resulting from operations ....... 23,271 26,575
Distributions to shareholders from:
Net investment income ......................................... (543) (2,831)
Realized gains ................................................ (17,846) (3,957)
Capital paid-in ............................................... (1,293)
-------- --------
Decrease in net assets resulting from distributions ........ (18,389) (8,081)
From fund share transactions:
Proceeds from shares sold ..................................... 77,790 57,643
Shares issued in reorganization ............................... 35,029
Distributions reinvested ...................................... 18,389 8,081
Payment for shares redeemed ................................... (51,097) (38,459)
-------- --------
Increase in net assets from fund share transactions ........ 80,111 27,265
-------- --------
NET INCREASE IN NET ASSETS ....................................... 84,993 45,759
NET ASSETS
Beginning of Period ........................................... 93,902 48,143
-------- --------
End of Period (including undistributed net investment income
of $0 and $0, respectively) ................................ $178,895 $ 93,902
======== ========
Analysis of fund share transactions:
Sold .......................................................... 6,692 5,991
Issued in reorganization ...................................... 2,966
Reinvested .................................................... 1,590 744
Redeemed ...................................................... (4,478) (3,991)
-------- --------
Net increase in fund shares outstanding .......................... 6,770 2,744
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout
the year end indicated:
Mid Cap Value B Fund
---------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------
2004(e) 2003(i) 2002(i) 2001 2000
-------- ------- ------- ------- -------
Net Assets Value at Beginning of Period ...................... 10.98 8.28 9.82 9.82 9.82
Income from Investment Operations:
Net Investment Income ..................................... 0.06 0.04 0.04 0.05 0.05
Net Realized and Unrealized Gain (Loss) on Investment(a) .. 1.97 3.69 (1.54) 0.39
-------- ------- ------- ------- -------
Total From Investment Operations .......................... 2.03 3.73 (1.50) 0.05 0.44
Less Distributions:
Distribution from Net Investment Income ................... (0.04) (0.37) (0.04) (0.05) (0.05)
Distribution from Net Realized Gains on Investments ....... (1.30) (0.50) (0.32)
Distribution from Excess of Net Investment Income/Gains ... (0.05)
Distribution from Capital Paid-in ......................... (0.16) (h) (0.02)
-------- ------- ------- ------- -------
Total Distributions ....................................... (1.34) (1.03) (0.04) (0.05) (0.44)
-------- ------- ------- ------- -------
Net Assets Value at End of Period ............................ $ 11.67 $ 10.98 $ 8.28 $ 9.82 $ 9.82
======== ======= ======= ======= =======
Total Investment Return(b) ................................... 18.74% 45.15% (15.19)% 0.53% 4.63%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets .......... 1.15%(c)(d) 1.15%(c) 0.96%(c) 0.90%(c) 0.90%(c)
Ratio of Net Investment Income to Average Net Assets ...... 0.50% 0.45% 0.50% 0.52% 0.56%
Portfolio Turnover Rate ................................... 196.48%(f) 125.00% 125.11% 96.88% 94.78%
Net Assets End of Period (000s Omitted) ...................... $178,895 $93,902 $48,143 $46,446 $21,636
(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 1.22%, 1.19%, 1.12%, 1.15%, and
1.23%, for the years ended December 31, 2004, 2003, 2002, 2001, and 2000,
respectively.
(d) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(e) The Fund entered into a new sub-advisory agreement with T. Rowe Price
Associates, Inc., during the period shown.
(f) Excludes merger activity.
(h) Less than $0.01.
(i) Certain amounts in 2003 and 2002 have been reclassified to permit
comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MID CAP VALUE B FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 1.5%
Raytheon Co. ............................................ 40,400 $ 1,569
Rockwell Collins, Inc. .................................. 29,700 1,171
-------
2,740
Airlines - 1.1%
Southwest Airlines Co. .................................. 121,200 1,973
Banks - 5.9%
Citizens Banking Corp. # ................................ 7,100 244
Commerce Bancshares, Inc. ............................... 16,272 817
First Horizon National Corp. ............................ 17,300 746
Huntington Bancshares, Inc. ............................. 58,300 1,445
Northern Trust Corp. .................................... 39,400 1,914
PNC Bank Corp. .......................................... 37,300 2,142
Regions Financial Corp. ................................. 31,500 1,121
Synovus Financial Corp. ................................. 73,300 2,095
-------
10,524
Biotechnology - 3.0%
Chiron Corp. * .......................................... 61,100 2,036
Human Genome Sciences, Inc. # * ......................... 49,000 589
MedImmune, Inc. * ....................................... 85,200 2,310
Vertex Pharmaceuticals, Inc. # * ........................ 44,300 468
-------
5,403
Chemicals - 2.2%
Great Lakes Chemical Corp. .............................. 43,100 1,228
Mosaic Co. * ............................................ 33,000 538
NALCO Holding Co. * ..................................... 113,000 2,206
-------
3,972
Commercial Services & Supplies - 5.9%
Allied Waste Industries, Inc. * ......................... 112,500 1,044
Ceridian Corp. * ........................................ 13,500 247
Equifax, Inc. ........................................... 61,600 1,731
Herman Miller, Inc. # ................................... 30,800 851
Manpower, Inc. .......................................... 47,600 2,299
MoneyGram International, Inc. ........................... 78,000 1,649
ServiceMaster Co. ....................................... 43,500 600
The Bisys Group, Inc. * ................................. 97,000 1,596
Weight Watchers International , Inc. # * ................ 13,600 558
-------
10,575
Communications Equipment - 0.1%
Tellabs, Inc. * ......................................... 20,500 176
Diversified Financials - 3.7%
Ameritrade Holding Corp. * .............................. 63,000 896
Charles Schwab Corp. .................................... 192,300 2,300
Federated Investments, Inc. - Cl. B ..................... 35,100 1,067
Janus Capgroup, Inc. .................................... 97,300 1,635
LaBranche & Co., Inc. # * ............................... 71,200 638
-------
6,536
Diversified Telecommunication Services - 1.6%
AT&T Corp. .............................................. 20,200 385
Qwest Communications International, Inc. * .............. 388,820 $ 1,726
Telus Corp. ............................................. 25,100 726
-------
2,837
Electric Utilities - 4.8%
CMS Energy Corp. * ...................................... 119,500 1,249
El Paso Electric Co. * .................................. 39,300 745
Firstenergy Corp. ....................................... 24,000 948
NRG Energy, Inc. # * ................................... 52,900 1,907
Pinnacle West Capital Corp. ............................. 15,700 697
Teco Energy, Inc. # ..................................... 177,200 2,718
Xcel Energy, Inc. ....................................... 19,500 355
-------
8,619
Electric/Gas - 0.9%
Duke Energy Co. ......................................... 62,300 1,578
Electrical Equipment - 1.2%
Molex, Inc. - Cl. A ..................................... 77,600 2,068
Electronic Equipment & Instruments - 1.5%
AVX Corp. # ............................................. 111,600 1,406
Jabil Circuit, Inc. * ................................... 48,000 1,228
-------
2,634
Energy Equipment & Services - 5.0%
Cooper Cameron Corp. * .................................. 18,700 1,006
Diamond Offshore Drilling, Inc. # ....................... 121,300 4,858
Grant Prideco, Inc. * ................................... 80,000 1,604
Hanover Compressor Co. # * .............................. 77,500 1,095
Petroleum Geo Services ASA - ADR # * .................... 6,700 416
-------
8,979
Finance - 2.8%
Dow Jones & Co., Inc. ................................... 49,900 2,149
Marsh & McLennan Cos., Inc. ............................. 86,500 2,846
-------
4,995
Food & Drug Retailing - 1.0%
Agrium, Inc. ............................................ 13,100 221
Outback Steakhouse, Inc. ................................ 36,000 1,648
-------
1,869
Food Products - 2.5%
Archer Daniels Midland Co. .............................. 11,600 259
Campbell Soup Co. ....................................... 88,300 2,639
H.J. Heinz Co. .......................................... 39,200 1,529
-------
4,427
Gas Utilities - 0.2%
NorthWestern Corp. * .................................... 10,900 305
Health Care Providers & Services - 6.0%
Accredo Health, Inc. * .................................. 7,100 197
Amerisource Bergen Corp. ................................ 36,000 2,112
Community Health Systems, Inc. * ........................ 8,000 223
Healthsouth Corp. # * ................................... 416,500 2,616
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MID CAP VALUE B FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Health Care Providers & Services - Continued
Lincare Holdings, Inc. * ................................ 55,100 $ 2,350
McKesson HBOC, Inc. ..................................... 31,800 1,000
Tenet Healthcare Corp. * ................................ 199,900 2,195
-------
10,693
Household Durables - 1.0%
Newell Rubbermaid, Inc. ................................. 77,200 1,867
Insurance - 10.1%
Aon Corp. ............................................... 70,300 1,677
Axis Capital Holdings, Ltd. ............................. 68,200 1,866
Genworth Financial, Inc. - Cl. A ........................ 70,000 1,890
Jefferson-Pilot Corp. ................................... 27,100 1,408
Loews Corp. ............................................. 9,300 654
Ohio Casualty Corp. # * ................................. 49,700 1,154
Protective Life Corp. ................................... 16,300 696
Radian Group, Inc. ...................................... 24,800 1,320
Safeco Corp. # .......................................... 23,300 1,217
St. Paul Cos., Inc. ..................................... 79,217 2,937
UnumProvident Corp. # ................................... 95,200 1,708
XL Capital, Ltd. - Cl. A ................................ 19,600 1,522
-------
18,049
Internet Software & Services - 0.6%
IAC / InterActive Corp. * ............................... 30,400 840
McAfee, Inc. * .......................................... 8,400 243
-------
1,083
IT Consulting & Services - 1.2%
BearingPoint, Inc. # * .................................. 266,200 2,138
Leisure Equipment & Products - 1.7%
Mattel, Inc. ............................................ 157,200 3,064
Media - 9.2%
Cablevision Systems Corp. - Cl. A * ..................... 77,900 1,940
Cox Radio, Inc. - Cl. A * ............................... 32,900 542
Entercom Communications Corp. * ......................... 55,900 2,006
Hearst-Argyle Television, Inc. .......................... 13,700 361
Meredith Corp. .......................................... 27,600 1,496
New York Times Co. - Cl. A .............................. 47,300 1,930
Pearson plc - ADR # ..................................... 137,200 1,668
Reuters Group plc - ADR # ............................... 27,600 1,185
Scholastic Corp. # * .................................... 47,300 1,748
Tribune Co. ............................................. 40,500 1,707
Univision Communications, Inc. - Cl. A * ................ 32,200 943
Washington Post Co. - Cl. B ............................. 948 932
-------
16,458
Metals & Mining - 0.8%
Meridian Gold, Inc. # * ................................. 72,000 1,366
Multi-Utilities - 1.9%
Dynegy, Inc. - Cl. A # * ................................ 153,100 707
NiSource, Inc. .......................................... 121,700 2,773
-------
3,480
Multiline Retail - 2.3%
Big Lots, Inc. * ........................................ 38,700 $ 469
Dillard's, Inc. - Cl. A ................................. 55,000 1,478
Family Dollar Stores, Inc. .............................. 58,400 1,824
Saks, Inc. .............................................. 29,000 421
-------
4,192
Oil & Gas - 0.5%
Murphy Oil Corp. ........................................ 11,300 909
Paper & Forest Products - 3.7%
Abitibi-Consolidated, Inc. # ............................ 105,200 728
Bowater, Inc. ........................................... 48,600 2,137
Domtar, Inc. ............................................ 148,500 1,792
MeadWestvaco Corp. ...................................... 46,000 1,559
Potlatch Corp. # ........................................ 9,000 455
-------
6,671
Pharmaceuticals - 0.5%
Barr Laboratories, Inc. * ............................... 6,500 296
Valeant Pharmaceuticals International # ................. 20,200 532
-------
828
Real Estate Investment Trust - 0.9%
Apartment Investment & Management Co .................... 30,000 1,156
Equity Office Properties Trust .......................... 18,500 539
-------
1,695
Road & Rail - 3.0%
CSX Corp. ............................................... 55,200 2,212
Laidlaw International, Inc. * ........................... 63,900 1,368
Union Pacific Corp. ..................................... 26,500 1,782
-------
5,362
Semiconductor Equipment & Products - 1.6%
KLA-Tencor Corp. * ...................................... 10,300 480
Novellus Systems, Inc. .................................. 83,100 2,317
-------
2,797
Software - 2.6%
BMC Software, Inc. * .................................... 92,400 1,719
Intuit, Inc. * .......................................... 27,700 1,219
Synopsys, Inc. * ........................................ 88,200 1,730
-------
4,668
Specialty Retail - 1.9%
AnnTaylor Stores Corp. * ................................ 62,700 1,350
Gap, Inc. ............................................... 93,000 1,964
-------
3,314
Textiles & Apparel - 0.0%
Unifi, Inc. # * ........................................ 14,800 57
Wireless Telecommunications Services - 1.1%
Crown Castle International Corp. * ...................... 6,000 100
Telephone and Data Systems, Inc. ........................ 20,000 1,539
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MID CAP VALUE B FUND
Market
Name of Issuer Shares Value
-------------- ------- --------
(000's)
COMMON STOCK - Continued
Wireless Telecommunications Services - Continued
United States Cellular Corp. * ...................... 5,600 $ 250
--------
1,889
--------
TOTAL COMMON STOCK-
(Cost $150,940) 95.5% 170,790
PREFERRED STOCK
Oil & Gas - 0.1%
NRG Energy, Inc. - 144A (a) (b) ..................... 200 204
--------
TOTAL PREFERRED STOCK-
(Cost $204) 0.1% 204
Par
Value
-------
(000's)
PUBLICLY-TRADED BONDS-
Electric Utilities - 0.0%
Xcel Energy, Inc. - Sr. Notes 144A (a)
7.5% due 11/21/07 - BBB- ......................... $ 7,000 11
--------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $10) 0.0% 11
INVESTMENT COMPANIES HELD AS COLLATERAL ON LOANED
SECURITIES - 13.6%
State Street Navigator Securities Lending
Portfolio ........................................ 24,325 24,325
SHORT-TERM INVESTMENTS - 4.2%
Investment in joint trading account
2.29% due 01/03/05
(Cost $7,533) ................................. 7,533 7,533
------- --------
TOTAL INVESTMENTS-
(Cost $183,012) 113.4% 202,863
Payables, less cash and Receivables- (13.4)% (23,968)
------- --------
NET ASSETS- 100.0% $178,895
======= ========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
(a) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2004, securities aggregated
$215 or 0.1% of net assets of the Portfolio.
(b) At December 31, 2004 this security was fair valued.
ADR-American Depository Receipt.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Mid Cap Value B (formerly John Hancock Small/Mid Cap CORE),
(the "Fund" or "VST Mid Cap Value B") 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 twenty-three different funds as of
December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
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.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$3,679 1.49% $1
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004, 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
- -------------------------- -------------------
$23,680 $24,325
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, 2004, 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. At December 31, 2004, 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, 2004, 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, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $6. Realized gains and losses
from security transactions are determined on the basis of identified cost.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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.
Restricted Securities: Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense, either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such sales. The
Fund's restricted securities are valued at the price provided by dealers in the
secondary market, or, if no market prices are available, at the fair value as
determined in accordance with procedures established by and under general
supervision of the Trustees.
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 11, 2004, 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, 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. For the year
ended December 31, 2004, the reimbursements paid from John Hancock and JHVLICO
were $83 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 in expenses
of $3.
As of May 3, 2004, John Hancock has entered into a Sub-Advisory Agreement
with T. Rowe Price Associates, Inc., which under John Hancock's 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, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$274,442 $220,644
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, 2004 were as follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$183,656 $20,588 $(1,381) $19,207
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$1,814 $523 $-- $19,207
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
- ---- ------------------ ---------------------- -----------------
2004 $11,906 $6,483 $ --
2003 6,192 596 1,293
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
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, was distributed to shareholders as ordinary income distributions.
NOTE E--COMBINATION
On October 15, 2004, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
- ------------------- -----------------
VST Mid Cap Value B VST Mid Cap Value
This combination provided for the transfer of substantially all of the
assets and liabilities of the target fund to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The acquisition was accounted
for as a tax-free exchange as follows:
Trust Shares Target Fund Acquiring Fund Acquiring Fund
Issued by Target Fund Unrealized Net Assets Prior Aggregate Net Assets
Acquiring Fund Net Assets Appreciation to Combination After Combination
- -------------- ----------- ------------ ---------------- --------------------
2,966 $35,029 $1,953 $119,985 $155,014
NOTE F--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust.
John Hancock Variable Series Trust I solicited a vote at a special meeting of
Contract owners/Policyholders held on October 15, 2004 on the following matter:
For Against Abstain
--- ------- -------
To approve, as to the Mid Cap Value B Fund, a proposal to combine with the Mid Cap 91% 6% 3%
Value Fund of John Hancock Variable Series Trust I. Shareholders in the Mid Cap
Value Fund would receive Mid Cap Value B Fund shares having the same value as
their prior Mid Cap Value Fund shares.
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Mid Cap Value B (formerly,
Small/Mid Cap CORE Fund) (a portfolio included in the series of John Hancock
Variable Series Trust I {the "Trust"}) as of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Mid Cap Value B Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Money Market Fund
Wellington Management Company, LLP John C. Keogh
- --------------------------------------------------------------------------------
.. The manager combines top down analysis with fundamental bottom-up security
selection. The manager employs rigorous bottom-up fundamental research and
a stringent credit review process to identify securities with stable credit
quality.
Fund Commentary
Performance: For the year 2004, the Money Market Fund returned +1.09%.
Environment: The U.S. economy gained momentum over the course of 2004 and showed
significant acceleration during the latter half of the year. Data released
during the fourth quarter show the economy expanded at a rate of 4% during the
third quarter, faster than previously estimated, suggesting a strong finish to
2004. In light of the improving economic data, Federal Reserve policy makers
began a tightening campaign in June, which led to five increases, bringing the
Fed funds rate to 2.25%. Policy makers reiterated their plan to continue raising
rates at a "measured" pace.
Performance reflects the overall low level of interest rates and the portfolio's
emphasis on commercial paper and U.S. Treasury and Agency securities.
Outlook: As the economy continues to expand and the risk of rising prices grows
in 2005, we believe the Fed will remain on a path of steady tightening. A weaker
dollar and higher oil prices will force the Fed to remain diligent in its effort
to ward off inflation.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 12/31/93 (10-Year Period)
Money Market Fund
-----------------
12/31/1994 $10,000
01/31/1995 10,047
02/28/1995 10,092
03/31/1995 10,141
04/30/1995 10,186
05/31/1995 10,239
06/30/1995 10,287
07/31/1995 10,336
08/31/1995 10,385
09/30/1995 10,431
10/31/1995 10,481
11/30/1995 10,529
12/31/1995 10,574
01/31/1996 10,623
02/29/1996 10,667
03/31/1996 10,710
04/30/1996 10,757
05/31/1996 10,804
06/30/1996 10,846
07/31/1996 10,897
08/31/1996 10,944
09/30/1996 10,992
10/31/1996 11,041
11/30/1996 11,082
12/31/1996 11,138
01/31/1997 11,187
02/28/1997 11,232
03/31/1997 11,281
04/30/1997 11,330
05/31/1997 11,380
06/30/1997 11,431
07/31/1997 11,484
08/31/1997 11,532
09/30/1997 11,587
10/31/1997 11,640
11/30/1997 11,688
12/31/1997 11,746
01/31/1998 11,802
02/28/1998 11,850
03/31/1998 11,903
04/30/1998 11,955
05/31/1998 12,010
06/30/1998 12,063
07/31/1998 12,121
08/31/1998 12,172
09/30/1998 12,226
10/31/1998 12,282
11/30/1998 12,332
12/31/1998 12,385
01/31/1999 12,437
02/28/1999 12,482
03/31/1999 12,532
04/30/1999 12,583
05/31/1999 12,629
06/30/1999 12,678
07/31/1999 12,732
08/31/1999 12,783
09/30/1999 12,837
10/31/1999 12,893
11/30/1999 12,950
12/31/1999 13,010
01/31/2000 13,072
02/29/2000 13,130
03/31/2000 13,197
04/30/2000 13,256
05/31/2000 13,324
06/30/2000 13,398
07/31/2000 13,466
08/31/2000 13,540
09/30/2000 13,613
10/31/2000 13,683
11/30/2000 13,755
12/31/2000 13,830
01/31/2001 13,902
02/28/2001 13,963
03/31/2001 14,026
04/30/2001 14,080
05/31/2001 14,132
06/30/2001 14,179
07/31/2001 14,220
08/31/2001 14,264
09/30/2001 14,296
10/31/2001 14,327
11/30/2001 14,353
12/31/2001 14,374
01/31/2002 14,394
02/28/2002 14,412
03/31/2002 14,431
04/30/2002 14,450
05/31/2002 14,469
06/30/2002 14,486
07/31/2002 14,504
08/31/2002 14,523
09/30/2002 14,539
10/31/2002 14,557
11/30/2002 14,573
12/31/2002 14,587
01/31/2003 14,602
02/28/2003 14,614
03/31/2003 14,626
04/30/2003 14,638
05/31/2003 14,651
06/30/2003 14,662
07/31/2003 14,673
08/31/2003 14,684
09/30/2003 14,694
10/31/2003 14,705
11/31/2003 14,715
12/31/2003 14,726
01/31/2004 14,737
02/28/2004 14,746
03/31/2004 14,756
04/30/2004 14,767
05/31/2004 14,776
06/30/2004 14,787
07/31/2004 14,799
08/31/2004 14,813
09/30/2004 14,828
10/31/2004 14,846
11/31/2004 14,863
12/31/2004 14,886
Value on 12/31/04
- -----------------
$14,886 Money Market Fund
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Federal Home Loan Mortgage Corp. 8.9%
Federal National Mortgage Assoc. 7.5%
Federal Home Loan Bank 4.6%
Travelers Insurance Co. 3.2%
Metlife, Inc. 3.2%
Fortune Brands, Inc. 2.9%
Permanent Financing plc 2.7%
General Electric 2.6%
Morgan Stanley Dean Witter 2.5%
Barclays Bank plc 2.5%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Money Market
Fund/1/
------------
1 Year 1.09%
3 Years 1.17%
5 Years 2.73%
10 Years 4.06%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Commercial Paper 59.84%
Government Agency 21.00%
Variable Rate Securities 19.16%
- --------------------------------------------------------------------------------
The Money Market Fund is neither insured nor guaranteed by the U.S.
Government and there is no guarantee the fund will be able to maintain a
stable net asset value of $1.00/share.
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
/1/ Returns reflect extra-ordinary capital contribution of $284,471 in October
2000.
Inception: March 29, 1986
- --------------------------------------------------------------------------------
Money Market Fund
Wellington Management Company, LLP John C. Keogh
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Money Market Fund shareholder, you pay ongoing expenses, such as management
fees; distribution fees (12b-1); and other expenses. Using the information
below, you can estimate how these expenses affect your investment and compare
them with the expenses of other funds. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,006.70
Expense paid per $1,000* $ 1.74
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,023.41
Expense paid per $1,000* $ 1.75
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Money Market Fund
(000's Omitted)
ASSETS
Short-term investments at value .................................... $471,995
Receivable for:
Interest ........................................................ 614
--------
Total assets ....................................................... 472,609
--------
LIABILITIES
Fund shares purchased ........................................... 174
Accrued operating expenses ...................................... 335
Other payables .................................................. 29
--------
Total liabilities .................................................. 538
--------
Net assets ......................................................... $472,071
========
Shares outstanding, $0.01 Par Value (unlimited shares authorized) .. 472,071
--------
Net asset value per share .......................................... $ 1.00
========
Composition of net assets:
Capital paid-in ................................................. $472,071
Accumulated net realized loss on investments .................... (82)
Undistributed net investment income ............................. 82
--------
Net assets ......................................................... $472,071
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Money Market Fund
(000's Omitted)
INVESTMENT INCOME
Interest ........................................................ $ 8,605
EXPENSES
Investment advisory fee ......................................... 1,553
Auditors fees ................................................... 88
Custodian fees .................................................. 157
Fidelity Bond fees .............................................. 2
Legal fees ...................................................... 116
Printing & mailing fees ......................................... 117
Trustees' fees .................................................. 19
Other fees ...................................................... 19
--------
Total expenses ..................................................... 2,071
--------
Net investment income .............................................. $ 6,534
========
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Money Market Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003
------------ ------------
INCREASE IN NET ASSETS
From operations
Net investment income ......................................... $ 6,534 $ 7,879
Distributions to shareholders from:
Net investment income ......................................... (6,534) (7,879)
--------- ---------
Decrease in net assets resulting from distributions ........ (6,534) (7,879)
From fund share transactions:
Proceeds from shares sold ..................................... 360,686 754,784
Distributions reinvested ...................................... 6,534 7,879
Payment for shares redeemed ................................... (576,782) (999,146)
--------- ---------
Decrease in net assets from fund share transactions ........ (209,562) (236,483)
--------- ---------
NET DECREASE IN NET ASSETS ....................................... (209,562) (236,483)
NET ASSETS
Beginning of Period ........................................... 681,633 918,116
--------- ---------
End of Period (including undistributed net investment income
of $82 and $82, respectively) .............................. $ 472,071 $ 681,633
========= =========
Analysis of fund share transactions:
Sold .......................................................... 360,686 754,784
Reinvested .................................................... 6,534 7,879
Redeemed ...................................................... (576,782) (999,146)
--------- ---------
Net decrease in fund shares outstanding .......................... (209,562) (236,483)
========= =========
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:
Money Market Fund
----------------------------------------------------
Year Ended December 31,
----------------------------------------------------
2004 2003 2002(d) 2001(c) 2000(c)
-------- -------- -------- -------- --------
Net Assets Value at Beginning of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net Investment Income ..................................... 0.01 0.01 0.01 0.04 0.06
-------- -------- -------- -------- --------
Total From Investment Operations .......................... 0.01 0.01 0.01 0.04 0.06
Less Distributions:
Distribution from Net Investment Income ................... (0.01) (0.01) (0.01) (0.04) (0.06)
-------- -------- -------- -------- --------
Total Distributions ....................................... (0.01) (0.01) (0.01) (0.04) (0.06)
-------- -------- -------- -------- --------
Net Assets Value at End of Period ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Investment Return(b) ................................... 1.09% 0.95% 1.48% 3.93% 6.29%(a)
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets .......... 0.33% 0.31% 0.32% 0.32% 0.29%
Ratio of Net Investment Income to Average Net Assets....... 1.05% 0.95% 1.46% 3.72% 6.05%
Portfolio Turnover Rate .................................. n/a n/a n/a n/a n/a
Net Assets End of Period (000s Omitted) ...................... $472,071 $681,633 $918,116 $745,516 $496,853
(a) The total investment return includes the effect of the capital contribution
of $0.01 per share. The total investment return without the capital
contribution would have been 6.18%.
(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) Per share amounts have been restated to reflect a 10-for-1 stock split
effective May 1, 2001.
(d) The fund entered into a new sub-advisory agreement with Wellington
Management Company during the period shown.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MONEY MARKET FUND **
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS
Banks- 0.9%
Chase Manhattan Bank USA
1.05% due 05/11/05 - NA ................................ $ 4,475 $ 4,475
Finance- 1.5%
General Electric Capital Corp.
1.14% due 03/10/17 - AAA ............................... 7,000 7,000
Insurance- 1.7%
Monumental Life Insurance - Notes
1.21% due 11/01/03 - NA ................................ 3,000 3,000
Principle Life Global Funding
2.03% due 03/18/05 - AA ................................ 5,000 5,001
--------
8,001
Other Asset Backed- 1.1%
GE Commercial Equipment Financing LLC -
Notes 2004 A Cl. A1 144A (a)
2.59% due 12/22/05 - NA ................................ 2,000 2,000
GE Commercial Equipment Financing LLC -
Ser. 2004-1 Cl. A1 Fortis Bank
2.051% due 11/20/05 - A-1+ ............................. 3,277 3,277
--------
5,277
U.S. Government Agencies- 21.0%
Federal Home Loan Bank - Notes
1.5% due 03/01/05 - AAA ................................ 6,000 6,000
1.625% due 04/15/05 - AAA .............................. 5,000 5,005
1.66% due 05/16/05 - AAA ............................... 2,800 2,800
Federal Home Loan Bank - Disc. Notes
2.05% due 01/21/05 - AAA ............................... 7,800 7,791
Federal Home Loan Mortgage Corp. - Disc. Notes
2.04% due 01/24/05 - AAA ............................... 8,378 8,367
2.1% due 02/01/05 - AAA ................................ 25,819 25,771
2.245% due 01/11/05 - AAA .............................. 8,000 7,995
Federal National Mortgage Assoc. - Disc. Notes
2.05% due 01/20/05 - AAA ............................... 9,600 9,590
Federal National Mortgage Assoc. - Notes
1.375% due 02/11/05 - AAA .............................. 10,000 9,990
1.375% due 02/14/05 - AAA .............................. 5,500 5,500
1.61% due 05/13/05 - AAA ............................... 1,300 1,300
1.75% due 05/23/05 - AAA ............................... 9,000 9,000
--------
99,109
Whole Loan CMOs- 4.9%
AIRE Valley Mortgages - Notes Ser. 1 Cl. A 144A (a)
1.91% due 09/20/05 - NA ................................ 4,700 4,700
Holmes Financing plc - Notes Ser. 1 Cl. A
1.045% due 04/15/05 - A-1+ ............................. 5,500 5,500
Permanent Financing plc - Notes Ser 1 Cl. A
1.04% due 03/10/05 - A-1+ .............................. 8,500 8,500
Permanent Financing plc - Notes Ser.1 Cl. A
1.34% due 06/10/05 - NA ................................ $ 4,300 $ 4,300
--------
23,000
--------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $146,862) 31.1% 146,862
COMMERCIAL PAPER
Banks - 16.2%
Abbey National NA LLC
2.26% due 02/23/05 ..................................... 10,250 10,216
Barclays Bank plc
2.348% due 03/24/05 .................................... 11,700 11,699
Credit Suisse First Boston
2.35% due 01/20/05 ..................................... 10,000 10,000
Danske Corp.
2.31% due 01/14/05 ..................................... 10,000 9,992
Fortis Bank
2.1% due 01/10/05 ...................................... 5,000 5,000
Svenska Handelsbanken AB
2.13% due 01/13/05 ..................................... 11,500 11,500
Westdeutche Lands
1.32% due 01/27/05 ..................................... 9,973 9,973
Wilmington Trust Co.
2.07% due 01/05/05 ..................................... 8,000 8,000
--------
76,380
Beverages - 4.8%
Fortune Brands, Inc.
2.08% due 01/10/05 ..................................... 5,374 5,371
2.25% due 02/01/05 ..................................... 8,461 8,445
PepsiCo., Inc.
2.26% due 01/20/05 ..................................... 8,864 8,853
--------
22,669
Commercial Services & Supplies - 2.1%
Yale University
2.3% due 02/04/05 ...................................... 10,000 9,978
Diversified Financials - 2.5%
Morgan Stanley Dean Witter
2.23% due 01/24/05 ..................................... 12,000 11,983
Finance - 32.2%
APRECO, Inc.
2.4% due 03/15/05 ...................................... 7,000 6,966
BP Amoco Capital, plc
2.25% due 01/05/05 ..................................... 2,226 2,225
Bradford & Bingley Building Society
2.025% due 01/07/05 .................................... 8,000 8,000
CBA Delaware Finance, Inc.
2.38% due 03/02/05 ..................................... 1,794 1,787
Chariot Funding LLC
2.34% due 01/21/05 ..................................... 7,142 7,133
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
MONEY MARKET FUND
Par Market
Name of Issuer Value Value
-------------- ------- --------
(000's) (000's)
COMMERCIAL PAPER - Continued
Finance - Continued
Diageo Capital plc
2.32% due 02/01/05 ..................................... $ 5,120 $ 5,110
Edison Asset
1.98% due 01/12/05 ..................................... 6,200 6,196
Eureka Securitization
2.26% due 01/24/05 ..................................... 9,500 9,486
Falcon Asset Securitization
2.28% due 01/18/05 ..................................... 8,000 7,991
Jupiter Section
2.25% due 01/12/05 ..................................... 8,000 7,995
Montana Blanc Capital Corp.
2.33% due 01/13/05 ..................................... 10,284 10,276
Nationwide Building Society
2.08% due 01/19/05 ..................................... 5,550 5,544
Nestle Capital Corp.
2.26% due 01/18/05 ..................................... 9,186 9,176
Old Line Funding Corp.
2.25% due 01/10/05 ..................................... 5,019 5,016
2.33% due 01/19/05 ..................................... 4,952 4,946
Preferred Receivables Funding
2.27% due 01/14/05 ..................................... 8,390 8,383
Sheffield Receivables Corp.
2.25% due 01/19/05 ..................................... 9,500 9,489
Societe Generale North America
2.23% due 02/18/05 ..................................... 2,000 1,995
UBS Finance Delaware LLC
2.01% due 01/25/05 ..................................... 1,658 1,657
2.24% due 02/03/05 ..................................... 8,537 8,519
Variable Funding Capital Corp.
2.2% due 01/19/05 ...................................... 1,746 1,744
2.32% due 01/07/05 ..................................... 5,203 5,201
Windmill Funding Corp.
2.29% due 02/16/05 ..................................... 8,114 8,090
Yorktown Capital LLC
2.28% due 01/07/05 ..................................... 9,183 9,180
--------
152,105
Foreign Governmental - 1.9%
Government of Quebec
2.28% due 01/18/05 ..................................... 9,000 8,990
Insurance - 6.4% Metlife, Inc.
2.24% due 02/01/05 ..................................... 15,000 15,000
Travelers Insurance Co.
2.48% due 02/24/05 ..................................... 15,000 15,000
--------
30,000
Personal Products - 0.8%
Kimberly Clark Worldwide, Inc.
2.13% due 01/03/05 ..................................... 3,542 3,542
Pharmaceuticals - 2.0%
Merck & Co., Inc.
2.28% due 01/24/05 $ 9,500 $ 9,486
------- --------
TOTAL COMMERCIAL PAPER-
(Cost $325,133) 68.9% 325,133
------- --------
TOTAL INVESTMENTS-
(Cost $471,995) 100.0% 471,995
Cash and Receivables, less payables- 0.0% 76
------- --------
NET ASSETS- 100.0% $472,071
======= ========
(a) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2004, securities aggregated
$6,700 or 1.4% of net assets of the Portfolio.
** Bond ratings are unaudited.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE A--ORGANIZATION
John Hancock Money Market 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 twenty-three
different funds as of December 31, 2004. 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: The Board of Trustees has determined that the
appropriate method for valuing Fund securities is amortized cost, so long as the
average weighted maturity of money market instruments comprising the Fund does
not exceed 90 days. Accordingly, Fund securities are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and the cost of the security to the Fund. Investment security
transactions are recorded on the date of purchase or sale.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Name of Issuer Market Value
- -------------- ------------
Mortgage Int Network, 2.33%, due 01/03/05 $ 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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.
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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $4 and $78 which expire in 2007 and 2008, respectively.
Dividend and Interest: Interest income is recorded on the accrual basis.
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.
Restricted Securities: Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense, either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such sales. The
Fund's restricted securities are valued at the price provided by dealers in the
secondary market, or, if no market prices are available, at the fair value as
determined in accordance with procedures established by and under general
supervision of the Trustees.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 11, 2004, 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 rate of 0.25% on an annual basis of the
Fund's net assets.
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. For the year
ended December 31, 2004, there were no reimbursements paid to the Fund.
John Hancock has entered into a Sub-Advisory Agreement with Wellington
Management Company, LLP, which under John Hancock's 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
The identified cost of investment of the Fund at December 31, 2004, was
$471,995, which is the same as its tax cost.
Distribution of Income and Gains: Distributions of net investment income
are declared and distributed daily. Net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed, and, therefore, will be distributed to
shareholders at least annually. Earnings and profits distributed to shareholders
on redemption of fund shares may be utilized by the Fund, to the extent
permissible, as part of the Fund's dividends-paid deduction on it's federal
income tax returns.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations. 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, 2004, the Fund's components of distributable earnings on a
tax basis were as follows:
Undistributed Undistributed Net Unrealized
Ordinary Net Long-Term Capital Loss Appreciation/
Income Capital Gain Carryforwards (Depreciation)
- ------------- ------------- ------------- --------------
$82 $-- $82 $--
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
- ---- ------------------ ---------------------- -----------------
2004 $6,534 $-- $--
2003 7,879 -- --
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Money Market Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Money Market Fund of John Hancock Variable Series Trust I at December 31, 2004,
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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Overseas Equity B Fund (FORMERLY INTERNATIONAL OPPORTUNITIES FUND)
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
.. The manager employs a multiple portfolio manager system, with each
portfolio managed by several portfolio managers and research analysts. The
manager selects stocks using proprietary fundamental research. Fundamental
research seeks to uncover companies that are undervalued and asset rich.
.. On May 1, 2004, the Fund's name, investment strategy and sub-adviser were
changed. The Fund now invests primarily in foreign large and mid sized
equities with modest emerging markets exposure. Capital Guardian Trust
Company took over management of the Fund.
Fund Commentary
Performance: For the year ending December 31, 2004, the Overseas Equity B Fund
returned +11.02%, underperforming the +20.04% return of its benchmark, a splice
of the MSCI AC World ex U.S. Index (January through April) and the MSCI EAFE
Index (May through December).
From the date of manager inception, May 1, 2004 to year end, the Overseas Equity
B Fund returned +10.96%, underperforming the +18.17% return of the MSCI EAFE
Index/2/.
Environment: Portfolio results were affected by stock selection in Information
Technology, Financials, Health Care and Consumer Staples. Within these sectors,
the pharmaceuticals industry accounted for both the top absolute detractor and
the top absolute contributor during the period highlighting the importance of
stock selection. The Trust benefited from an overweight and stock selection in
Telecommunication Services, as well as from stock selection in the Materials
sector.
Outlook: We believe the global economy is settling into a sustainable pace of
growth and that energy costs will be less of a factor. In Japan, we still expect
a long-term recovery despite some near-term weakness and we believe we own
stocks that could benefit. In Europe, while we are concerned about domestic
demand and the strong euro, we find some structural improvements related to
business costs, value across markets, and potential restructuring and industrial
consolidation.
We believe the portfolio will benefit from a number of holdings whose earnings
have substantially improved although their stock prices have yet to do so. We
also believe the portfolio is well positioned, with a focus on attractively
valued companies where we anticipate either an improvement in profitability,
growth where the market does not expect it, or rising cash flows being returned
to shareholders through higher dividends and share repurchases.
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Overseas Equity B Fund (FORMERLY INTERNATIONAL OPPORTUNITIES FUND)
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 4/30/96 (Fund Inception Date)
International
Opportunities MCSI All Country World
Fund Free Ex. US Index
------------- ----------------------
Apr-1996 10,000 10,000
May-1996 10,024 9,850
Jun-1996 10,129 9,900
Jul-1996 9,820 9,572
Aug-1996 9,971 9,628
Sep-1996 10,191 9,867
Oct-1996 10,150 9,768
Nov-1996 10,609 10,145
Dec-1996 10,672 10,027
Jan-1997 10,544 9,843
Feb-1997 10,672 10,023
Mar-1997 10,659 10,002
Apr-1997 10,701 10,086
May-1997 11,332 10,709
Jun-1997 11,796 11,301
Jul-1997 12,113 11,529
Aug-1997 10,992 10,622
Sep-1997 11,719 11,196
Oct-1997 10,863 10,243
Nov-1997 10,859 10,115
Dec-1997 10,880 10,232
Jan-1998 11,254 10,538
Feb-1998 11,932 11,240
Mar-1998 12,345 11,629
Apr-1998 12,435 11,713
May-1998 12,390 11,501
Jun-1998 12,416 11,457
Jul-1998 12,560 11,566
Aug-1998 10,980 9,935
Sep-1998 10,715 9,726
Oct-1998 11,680 10,744
Nov-1998 12,199 11,321
Dec-1998 12,611 11,712
Jan-1999 12,484 11,699
Feb-1999 12,268 11,437
Mar-1999 12,769 11,989
Apr-1999 13,241 12,588
May-1999 12,623 11,997
Jun-1999 13,112 12,549
Jul-1999 13,358 12,844
Aug-1999 13,495 12,888
Sep-1999 13,581 12,976
Oct-1999 14,038 13,459
Nov-1999 15,021 13,997
Dec-1999 16,900 15,333
Jan-2000 15,833 14,500
Feb-2000 16,711 14,891
Mar-2000 16,885 15,451
Apr-2000 15,946 14,589
May-2000 15,446 14,216
Jun-2000 16,250 14,821
Jul-2000 15,693 14,236
Aug-2000 16,033 14,412
Sep-2000 15,020 13,612
Oct-2000 14,413 13,180
Nov-2000 13,655 12,588
Dec-2000 14,136 13,018
Jan-2001 14,305 13,214
Feb-2001 13,024 12,167
Mar-2001 12,015 11,307
Apr-2001 12,974 12,076
May-2001 12,412 11,742
Jun-2001 11,876 11,292
Jul-2001 11,594 11,041
Aug-2001 11,303 10,767
Sep-2001 10,116 9,625
Oct-2001 10,444 9,894
Nov-2001 10,925 10,346
Dec-2001 11,177 10,480
Jan-2002 10,698 10,031
Feb-2002 10,793 10,104
Mar-2002 11,351 10,652
Apr-2002 11,270 10,721
May-2002 11,300 10,838
Jun-2002 10,772 10,370
Jul-2002 9,595 9,359
Aug-2002 9,534 9,360
Sep-2002 8,395 8,368
Oct-2002 8,984 8,816
Nov-2002 9,470 9,240
Dec-2002 9,140 8,942
Jan-2003 8,707 8,628
Feb-2003 8,470 8,453
Mar-2003 8,250 8,289
Apr-2003 9,099 9,088
May-2003 9,610 9,667
Jun-2003 9,800 9,935
Jul-2003 10,003 10,199
Aug-2003 10,262 10,503
Sep-2003 10,496 10,797
Oct-2003 11,045 11,496
Nov-2003 11,268 11,747
Dec-2003 12,098 12,643
Jan-2004 12,253 12,847
Feb-2004 12,603 13,173
Mar-2004 12,596 13,255
Apr-2004 12,103 12,843
May-2004 12,007 12,898
Jun-2004 12,103 13,186
Jul-2004 11,701 12,760
Aug-2004 11,783 12,818
Sep-2004 11,925 13,155
Oct-2004 12,301 13,605
Nov-2004 12,940 14,538
Dec-2004 13,430 15,176
Value on 12/31/04:
- ------------------
$13,430 International Opportunities Fund
$15,176 MSCI All Country World Free Ex. US Index
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Vodafone AirTouch plc 3.8%
Sanofi-Synthelabo SA 3.3%
Mitsubishi Corp. 2.4%
Novartis AG 2.2%
Royal Dutch Petroleum Co. 2.1%
BNP Paribas 2.0%
Banco Bilbao Vizcaya SA 1.9%
AstraZeneca Group plc 1.9%
Koninklijke 1.9%
Sumitomo 1.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Overseas Overseas Equity B Fund
Equity B Fund Benchmark/1/
------------- ----------------------
1 Year 11.02% 20.04%
3 Years 6.31% 13.14%
5 Years -4.49% -0.20%
Since Inception (5/1/96) 3.46% 4.93%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Diversification By Region and Country/3/ % of Assets
- ---------------------------------------- -----------
Europe (excluding U.K.) 44.3%
Japan 23.4%
United Kingdom (U.K.) 17.6%
Pacific Basin (excluding Japan) 6.6%
United States 3.5%
Other 3.1%
Emerging Markets 1.5%
Diversification By Region/4/ % of Assets
- ---------------------------- -----------
Developed Markets 98.5%
Emerging Markets 1.5%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. 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.
/1/ The Overseas Equity B Fund benchmark represents the MSCI All Country World
Ex US Index from May 1996 to April 2004 and now the MSCI EAFE Index from
May 2004 to present.
/2/ Returns are not annualized.
/3/ Calculations based upon country in which security is traded (listed).
/4/ Calculations based upon country in which security is domiciled.
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Overseas Equity B Fund (FORMERLY INTERNATIONAL OPPORTUNITIES FUND)
Capital Guardian Trust Company Management Team
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As an Overseas Equity B Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,109.70
Expense paid per $1,000* $ 8.94
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,016.67
Expense paid per $1,000* $ 8.54
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Overseas Equity B Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $57,277 of securities
loaned (Note B)) ................................................ $199,896
Net unrealized appreciation on investments ......................... 33,814
Short-term investments at value .................................... 66,528
--------
Total investments ............................................ 300,238
Foreign currency at value (cost $4,898) ............................ 5,106
Receivable for:
Dividends ....................................................... 203
Foreign dividend tax withholding reclaim ........................ 20
Interest ........................................................ 4
Other receivable ................................................ 34
--------
Total assets ....................................................... 305,605
--------
LIABILITIES
Payables for:
Investment purchased ............................................ 33
Fund shares purchased ........................................... 76
Collateral for securities on loan ............................... 60,216
Foreign dividend tax withholding ................................ 19
Accrued operating expenses ...................................... 335
Unrealized depreciation in forward currency contracts ........... 101
Other payables .................................................. 114
--------
Total liabilities .................................................. 60,894
--------
Net assets ......................................................... $244,711
========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ..................................................... 22,510
--------
Net asset value per share .......................................... $ 10.87
========
Composition of net assets:
Capital paid-in ................................................. $242,443
Accumulated net realized loss on investments and foreign
currency transactions ........................................ (31,578)
Distributions in excess of net investment income ................ (82)
Net unrealized appreciation of:
Investments ..................................................... 33,814
Translation of assets and liabilities in foreign currencies ..... 114
--------
Net assets ......................................................... $244,711
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Overseas Equity B Fund
(000's Omitted)
INVESTMENT INCOME
Interest ...................................................... $ 59
Dividends (net of foreign withholding tax of $312) ............ 2,411
Securities lending ............................................ 67
-------
Total investment income ............................................. 2,537
-------
EXPENSES
Investment advisory fee ....................................... 1,590
Auditors fees ................................................. 16
Custodian fees ................................................ 318
Legal fees .................................................... 21
Printing & mailing fees ....................................... 391
Trustees' fees ................................................ 4
Other fees .................................................... 14
-------
Total expenses ...................................................... 2,354
Less expenses reimbursed ...................................... (158)
Less custodian expense reduction offset by commission
recapture arrangement (Note C) ............................. (10)
-------
Net expenses ........................................................ 2,186
-------
Net investment income ............................................... 351
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments ................................................... 16,793
Foreign currency transactions ................................. (408)
Realized That tax ............................................. (442)
Change in unrealized appreciation on:
Investments ................................................... 6,019
Translation of assets and liabilities in foreign
currencies ................................................. 281
-------
Net realized and unrealized gain .................................... 22,243
-------
Net increase in net assets resulting from operations ................ $22,594
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Overseas Equity B Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ............................................ $ 351 $ 959
Net realized gain (loss) ......................................... 15,943 (5,089)
Change in net unrealized appreciation ............................ 6,300 35,456
-------- ---------
Net increase in net assets resulting from operations .......... 22,594 31,326
Distributions to shareholders from:
Net investment income ............................................ (767) (1,514)
Capital paid-in .................................................. (42)
-------- ---------
Decrease in net assets resulting from distributions ........... (767) (1,556)
From fund share transactions:
Proceeds from shares sold ........................................ 24,688 131,885
Shares issued in reorganization .................................. 112,876
Distributions reinvested ......................................... 767 1,556
Payment for shares redeemed ...................................... (41,412) (124,524)
-------- ---------
Increase in net assets from fund share transactions ........... 96,919 8,917
-------- ---------
NET INCREASE IN NET ASSETS .......................................... 118,746 38,687
NET ASSETS
Beginning of Period .............................................. 125,965 87,278
-------- ---------
End of Period (including distributions in excess of net
investment income of $(82) and $0, respectively) .............. $244,711 $ 125,965
======== =========
Analysis of fund share transactions:
Sold ............................................................. 2,442 16,865
Issued in reorganization ......................................... 11,336
Reinvested ....................................................... 78 188
Redeemed ......................................................... (4,133) (15,816)
-------- ---------
Net increase in fund shares outstanding ............................. 9,723 1,237
======== =========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Overseas Equity B Fund
-----------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------
2004(g) 2003(i) 2002 2001 2000(c)
-------- -------- ------- ------- --------
Net Assets Value at Beginning of Period ................... $ 9.85 $ 7.56 $ 9.30 $ 11.85 $ 15.17
Income from Investment Operations:
Net Investment Income .................................. 0.07 0.08 0.07 0.06 0.07
Net Realized and Unrealized Gain (Loss) on
Investment(a) ....................................... 1.01 2.34 (1.75) (2.53) (2.57)
-------- -------- ------- ------- --------
Total From Investment Operations ....................... 1.08 2.42 (1.68) (2.47) (2.50)
Less Distributions:
Distribution from Net Investment Income ................ (0.06) (0.13) (0.06) (0.05) (0.06)
Distribution from Net Realized Gains on Investments .... (0.62)
Distribution from Excess of Net Investment
Income/Gains ........................................ (0.05)
Distribution from Capital Paid-in ...................... (h) (0.03) (0.09)
-------- -------- ------- ------- --------
Total Distributions .................................... (0.06) (0.13) (0.06) (0.08) (0.82)
-------- -------- ------- ------- --------
Net Assets Value at End of Period ......................... $ 10.87 $ 9.85 $ 7.56 $ 9.30 $ 11.85
======== ======== ======= ======= ========
Total Investment Return(b) ................................ 11.02% 32.36% (18.22)% (20.93)% (16.36)%(d)
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ....... 1.53%(e)(f) 1.23%(e) 1.24%(e) 1.00%(e) 0.93%(e)
Ratio of Net Investment Income to Average Net Assets ... 0.24% 0.95% 0.69% 0.64% 0.47%
Portfolio Turnover Rate ................................ 103.13%(d) 40.85% 78.14%(d) 33.31% 37.92%(d)
Net Assets End of Period (000s Omitted) ................... $244,711 $125,965 $87,278 $83,591 $120,034
(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 T. Rowe Price
Associates, Inc. during the period shown.
(d) Excludes merger activity.
(e) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made the expense ratio would have been 1.64%, 1.44%, 1.55%, 1.16%, and
1.09%, for the years ended December 31, 2004, 2003, 2002, 2001, and 2000,
respectively.
(f) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(g) The Fund entered into a new sub-advisory agreement with Capital Guardian
Trust Co., during the period shown.
(h) Amount less than $0.01.
(i) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
OVERSEAS EQUITY B FUND **
Market
Name of Issuer Shares Value
-------------- ------- --------
(000's)
COMMON STOCK
Australia - 3.5%
Amcor, Ltd. (BE) ........................................ 104,100 $ 597
Australia & New Zealand Banking Group, Ltd. (JP) ........ 33,777 543
Brambles Industries, Ltd. # (BO) ........................ 87,746 476
Broken Hill Proprietary Co., Ltd. (BF) .................. 46,042 551
Foster's Brewing Group, Ltd. (JG) ....................... 109,600 495
Insurance Australia Group (JR) .......................... 152,100 763
News Corp. - Cl. A * (JA) ............................... 35,498 659
Promina Group (JR) ...................................... 186,600 786
QBE Insurance Group, Ltd. (JR) .......................... 81,949 981
Rinker Group (BD) ....................................... 104,274 866
Wesfarmers (BL) ......................................... 18,300 568
WMC Resources, Ltd. (BF) ................................ 76,504 431
Woolworth's, Ltd. (JF) .................................. 75,900 889
--------
8,605
Austria - 0.1%
Telecom Austria (J1) .................................... 11,295 213
Belgium - 0.2%
UCB SA # (JO) ........................................... 10,900 552
Canada - 2.3%
Abitibi Consolidated, Inc. * (BG) ....................... 45,400 312
Alcan Aluminum, Ltd. # * (BF) ........................... 43,702 2,136
Cameco Corp. # * (BF) ................................... 17,100 596
Great West Lifeco, Inc. # * (JR) ........................ 29,200 648
Inco, Ltd. # * (BF) .................................... 3,700 135
Potash Corp. of Saskatchewan, Inc. * (BC) ............... 10,300 854
Telus Corp. * (J1) ...................................... 19,000 572
Telus Corp. * (J1) ...................................... 5,500 159
Thomson Corp. * (JA) .................................... 4,800 169
--------
5,581
Denmark - 0.7%
Novo Nordisk AS (JO) .................................... 17,680 962
Tele Danmark AS (J1) .................................... 16,200 683
--------
1,645
Finland - 0.4%
Nokia Oyj (JW) .......................................... 64,804 1,019
France - 10.9%
Accor SA # (BZ) ......................................... 22,400 977
Air Liquide # (BC) ...................................... 10,150 1,869
BNP Paribas # (JP) ...................................... 63,502 4,582
Bouygues SA # (J2) ...................................... 73,000 3,360
Essilor International # (JL) ............................ 7,000 546
Groupe Danone # (JH) .................................... 19,500 1,794
L'Oreal SA #(JK) ........................................ 13,664 1,033
Michelin # (BU) ......................................... 8,400 537
Renault # (BV) .......................................... 7,600 633
Sanofi-Aventis # (JO) ................................... 97,742 7,780
Schneider SA # (BK) ..................................... 17,565 1,217
Societe Generale - Cl. A # (JP) ......................... 9,222 $ 929
STMicroelectronics # (J0) ............................... 40,556 788
Vivendi Universal SA # * (JA) ........................... 18,713 595
--------
26,640
Germany - 5.8%
Allianz AG # (JR) ....................................... 14,328 1,893
Bayerische Motoren Werke AG (BV) ........................ 13,900 625
Bayerische Vereinsbank AG * (JP) ........................ 58,498 1,323
DaimlerChrysler AG (BV) ................................. 58,900 2,811
Deutsche Bank AG # (JP) ................................. 11,981 1,059
Deutsche Boerse AG (JQ) ................................. 17,970 1,077
E. On AG (J3) ........................................... 12,445 1,130
Infineon Technologies AG # * (J0) ....................... 63,000 681
Muenchener Rueckversicherungs-Gesellschaft AG (JR) ...... 7,100 869
Sanofi-Aventis (JO) ..................................... 833 66
SAP AG (JV) ............................................. 2,080 370
Siemens AG # (BK) ....................................... 19,852 1,676
Volkswagen AG (BV) ...................................... 13,500 610
--------
14,190
Hong Kong - 1.8%
Bank of East Asia, Ltd. # (JP) .......................... 153,800 478
Esprit Holdings, Ltd. (JE) .............................. 115,900 701
Hang Lung Properties # (JS) ............................. 489,000 755
Hang Seng Bank, Ltd. (JP) ............................... 43,600 606
Li & Fung, Ltd. (JB) .................................... 798,000 1,345
Swire Pacific, Ltd. - Cl. A (JQ) ........................ 47,500 397
--------
4,282
India - 0.0%
Indialnfo, Ltd. * (JT) (a) .............................. 10,639 0
Italy - 0.8%
ENI # (BB) .............................................. 62,872 1,568
UniCredito Italiano SpA (JP) ............................ 86,003 492
--------
2,060
Japan - 22.3%
Advantest # (J0) ........................................ 8,200 702
Aeon Co., Ltd. (JD) ..................................... 107,200 1,784
Bridgestone Corp. # (BU) ................................ 7,000 139
Canon, Inc. # (JZ) ...................................... 15,400 829
Chubu Electric Power # (J3) ............................. 6,700 160
Daito Trust Construction Co., Ltd. # (BW) ............... 6,400 303
Daiwa House Industry Co., Ltd. (BW) ..................... 47,000 533
East Japan Railway Co. (BS) ............................. 100 555
Fanuc, Ltd. (BK) ........................................ 17,400 1,135
Furukawa Electric Co. # * (BK) .......................... 128,000 708
Hirose Electric Co., Ltd. (JY) .......................... 3,700 431
Hoya Corp. # (JY) ....................................... 4,300 484
Japan Airlines * (BQ) ................................... 117,000 338
SCHEDULE OF INVESTMENTS - Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
OVERSEAS EQUITY B FUND
Market
Name of Issuer Shares Value
-------------- --------- -------
(000's)
COMMON STOCK - Continued
Japan - Continued
Kansai Electric Power Co., Inc. (J3) .................. 60,400 $ 1,223
Konica Corp. # (BX) ................................... 90,500 1,198
Millea Holdings, Inc. # (JR) .......................... 149 2,205
Mitsubishi Corp. # (BN) ............................... 87,700 1,130
Mitsubishi Estate Co., Ltd. # (JS) .................... 228,000 2,663
Mitsubishi Tokyo Finance (JP) ......................... 191 1,934
Mitsui & Co., Ltd. # (BN) ............................. 53,000 474
Mitsui Fudosan Co., Ltd. # (JS) ....................... 39,000 473
Mitsui Sumitomo Insurance Co., Ltd. # (JR) ............ 158,100 1,370
Mizuho Financial GB (JP) .............................. 108 542
Murata Manufacturing Co., Ltd. (J0) ................... 6,600 368
NEC Corp. (JX) ........................................ 80,000 496
Nidec Corp. # (JY) .................................... 6,300 766
Nikko Cordial Corp. (JQ) .............................. 104,000 550
Nikon Corp. # (J0) .................................... 34,000 419
Nintendo Corp., Ltd. (BW) ............................. 7,200 902
Nippon Electric Glass # (JY) .......................... 7,000 179
Nippon Telegraph & Telephone Corp. (J1) ............... 167 748
Nissan Motor Acceptance Corp. # (BV) .................. 241,400 2,618
Nitto Denko Corp. (BK) ................................ 8,600 470
Omron Corp. (JY) ...................................... 22,000 524
Orix Corp. (JQ) ....................................... 13,100 1,775
Ricoh Co., Ltd. (JZ) .................................. 20,000 385
Rohm Co., Ltd. (JY) ................................... 4,300 444
Sankyo Co., Ltd. (JO) ................................. 63,100 1,422
Sekisui House, Ltd. # (BW) ............................ 119,000 1,383
Shimamura Co., Ltd. # (JE) ............................ 1,400 102
Shionogi & Co., Ltd. # (JO) ........................... 36,000 497
SMC Corp. # (BM) ...................................... 10,300 1,176
Softbank Corp. # (JT) ................................. 12,000 583
Sumitomo Chemical Co. # (BC) .......................... 197,000 963
Sumitomo Corp. (BN) ................................... 12,000 103
Sumitomo Forestry Co. (BW) ............................ 8,000 80
Sumitomo Mitsui GR # (JP) ............................. 413 2,995
Suzuki Motor Corp. (BV) ............................... 23,000 419
T&D Holdings, Inc. * (JR) ............................. 6,200 296
Takeda Pharmaceuticals Co. (JO) ....................... 20,900 1,050
TDK Corp. (JY) ........................................ 5,900 436
Tokyo Electron, Ltd. (J0) ............................. 21,300 1,308
Tokyo Gas Co. # (J4) .................................. 200,000 818
Tostem Corp. (BI) ..................................... 22,000 399
Toyota Motor Corp. (BV) ............................... 37,200 1,510
UFJ Holdings, Inc. * (JP) ............................. 544 3,288
Uni-Charm Corp. (JJ) .................................. 10,700 511
Yahoo Japan Corp. # * (JT) ............................ 25 120
Yamada Denki Co. # (JE) ............................... 13,900 594
Yamanouchi Pharmaceutical Co., Ltd. # (JO) ............ 14,200 552
Yamato Transport Co., Ltd. (BP) ....................... 81,000 1,198
Yasuda F & M Insurance (JR) ........................... 83,000 $ 843
-------
54,603
Luxembourg - 0.2%
Society Europeenne des Satellites (JA) ................ 40,900 529
Netherlands - 6.1%
ABN Amro Holding NV (JP) .............................. 30,148 795
Aegon NV (JR) ......................................... 13,763 187
Elsevier NV (JA) ...................................... 16,900 230
Heineken Holdings (JG) ................................ 4,325 130
Heineken NV # (JG) .................................... 79,000 2,623
ING Groep NV (JQ) ..................................... 16,072 484
Koninklijke (Royal) Philips Electronics NV (BW) ....... 14,927 394
Koninklijke KPN NV (J1) .............................. 411,800 3,897
Royal Dutch Petroleum Co. (BB) ........................ 86,920 4,983
TNT Post Group NV (BP) ................................ 18,100 490
VNU NV # (JA) ......................................... 27,753 816
-------
15,029
Norway - 1.0%
Den Norske Bank (JP) .................................. 77,200 758
Norsk Hydro ASA (BB) .................................. 6,125 480
Norske Skogindustrier ASA - Cl. A # (BG) .............. 22,500 485
Statoil ASA (BB) ...................................... 48,100 751
-------
2,474
Singapore - 1.0%
Singapore Telecom (J1) ................................ 1,089,790 1,589
United Overseas Bank, Ltd. (JP) ....................... 63,072 533
Venture Manufacturing, Ltd. (JY) ...................... 44,000 429
-------
2,551
South Africa - 0.1%
Anglo American plc (BF) ............................... 12,300 291
South Korea - 1.2%
Samsung Electronics (J0) .............................. 6,660 2,898
Spain - 4.2%
Banco Bilbao Vizcaya SA # (JP) ........................ 251,700 4,447
Banco Santander Central Hispano SA # (JP) ............. 31,700 392
Iberdrola SA # (J3) ................................... 24,900 630
Inditex (JE) .......................................... 47,800 1,404
Repsol SA # (BB) ...................................... 18,800 488
Telefonica SA (J1) .................................... 147,962 2,776
-------
10,137
Sweden - 1.2%
AstraZeneca Group plc (JO) ............................ 36,000 1,303
ForeningsSparbanken AB (JP) ........................... 200 5
Scania AB - Ser. B (BM) ............................... 15,100 595
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
OVERSEAS EQUITY B FUND
Market
Name of Issuer Shares Value
-------------- ----------- --------
(000's)
COMMON STOCK - Continued
Sweden - Continued
Telefonaktiebolaget LM Ericsson AB * (JW) ........ 351,000 $ 1,116
--------
3,019
Switzerland - 10.6%
Adecco SA (BO) ................................... 10,282 516
Credit Suisse Group (JP) ......................... 41,546 1,741
Holcim (BD) ...................................... 45,094 2,707
Nestle SA (JH) ................................... 14,062 3,666
Novartis AG (JO) ................................. 102,928 5,169
Richemont (JE) ................................... 81,055 2,689
Roche Holdings AG (JO) ........................... 4,533 520
Serono SA # (JN) ................................. 1,007 661
Swiss Reinsurance Co. (JR) ....................... 35,920 2,553
Swisscom AG (J1) ................................. 8,286 3,253
Syngenta AG (BC) ................................. 7,164 758
Synthes, Inc. (JL) ............................... 4,891 547
UBS AG (JP) ...................................... 13,577 1,135
--------
25,915
United Kingdom - 16.9%
Anglo American plc (BF) .......................... 12,900 305
ARM Holdings plc (J0) ............................ 239,600 507
AstraZeneca Group plc (JO) ....................... 78,658 2,847
Barclays (JP) .................................... 41,700 468
BG Group plc (BB) ................................ 178,500 1,211
BHP Billington plc (BF) .......................... 12,255 143
Centrica (J4) .................................... 198,810 900
Compass Group plc (BZ) ........................... 82,500 389
CRH (BD) ......................................... 45,800 1,220
Diageo plc (JG) .................................. 115,137 1,639
HBOS (JP) ........................................ 141,100 2,292
HSBC Holdings plc (JP) ........................... 96,700 1,628
Johnston Press (JA) .............................. 30,600 318
Lloyds TSB Group plc (JP) ........................ 66,200 600
National Grid Group (J3) ......................... 102,900 978
Pearson plc (JA) ................................. 128,600 1,549
Reckitt Benckiser (JJ) ........................... 19,400 585
Reed International plc (JA) ...................... 183,661 1,691
Rio Tinto plc (BF) ............................... 33,251 977
Royal Bank of Scotland Group (JP) ................ 98,102 3,293
Shell Transport & Trading Co. plc (BB) ........... 349,311 2,971
Smiths Group (BL) ................................ 36,700 578
Standard Chartered plc (JP) ...................... 50,200 931
Unilever plc (JH) ................................ 260,248 2,550
Vodafone AirTouch plc (J2) ....................... 3,307,782 8,951
Wolseley (BN) .................................... 34,600 645
Xstrata (BF) ..................................... 60,300 1,077
--------
41,243
United States - 3.3%
America Movil SA de CV - ADR Ser. L * (J2) ....... 20,700 1,084
AstraZeneca Group plc - ADR * (JO) ............... 5,000 $ 182
Companhia Vale do Rio Doce - ADR * (BF) .......... 15,507 374
Companhia Vale Do Rio Doce - ADR * (BF) .......... 11,400 331
Hon Hai Precision Industry Co., Ltd. - GDR *
(JY) .......................................... 62,048 585
Inco, Ltd. * (BF) ................................ 28,800 1,059
lm Ericcson Telephone Co. - Cl. B ADR * (JW) ..... 13,400 422
Samsung Electronics * (J0) ....................... 2,250 493
Sap Aktiengesellschaft - ADR * (JV) .............. 2,700 119
Taiwan Semiconductor Manufacturing
Co., Ltd. - ADR * (J0) ........................ 148,133 1,258
Telefonica SA * (J1) ............................. 6,725 380
The Thomson Corp. * (JA) ......................... 46,200 1,630
Vodafone Group plc * (J2) ........................ 4,600 126
Yukos Corp. - ADR # * (BL) ....................... 17,983 54
--------
8,097
--------
TOTAL COMMON STOCK-
(Cost $197,948) 94.6% 231,573
Par
Value
-----------
(000's)
PUBLICLY-TRADED BONDS
Supra National - 0.6%
SMFG Finance - Bonds (FB)
2.25% due 7/11/05 - NA..........................JPY $66,000,000 1,531
Switzerland - 0.3%
Credit Suisse - Bonds (JP)
6.0% due 12/23/05 - NA..........................CHF 507,000 606
------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $1,948) 0.9% 2,137
INVESTMENT COMPANIES HELD
AS COLLATERAL ON LOANED
SECURITIES - 24.6%
State Street Navigator Securities
Lending Portfolio ................................ 60,216 60,216
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
OVERSEAS EQUITY B FUND
Par Market
Name of Issuer Value Value
-------------- ------- ---------
(000's) (000's)
SHORT-TERM INVESTMENTS - 2.6%
Investment in joint trading account
2.29% due 01/03/05
(Cost $6,312) $6,312 $ 6,312
------ --------
TOTAL INVESTMENTS-
(Cost $266,424) 122.7% 300,238
Payables, less cash and receivables- (22.7)% (55,527)
------ --------
NET ASSETS- 100.0% $244,711
====== ========
* Non-income producing security.
** Bond ratings are not audited.
(a) At December 31, 2004 this security was fair valued.
# At December 31, 2004 all or portion of this security was out on loan.
ADR-American Depsository Receipt
GDR-Global Depository Receipt
SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY
% of
Industry Market Long-Term
Industry Abbreviation Value Investments
-------- ------------ -------- -----------
(000s)
Banks .................................. JP $ 38,395 16.4%
Pharmaceuticals ........................ JO 22,902 9.8%
Diversified Telecommunication
Services ............................ J1 14,270 6.1%
Wireless Telecommunications Services ... J2 13,521 5.8%
Insurance .............................. JR 13,394 5.7%
Oil & Gas .............................. BB 12,452 5.3%
Semiconductor Equipment & Products ..... J0 9,422 4.0%
Automobiles ............................ BV 9,226 4.0%
Metals & Mining ........................ BF 8,406 3.6%
Media .................................. JA 8,186 3.5%
Food Products .......................... JH 8,010 3.4%
Specialty Retail ....................... JE 5,490 2.4%
Electrical Equipment ................... BK 5,206 2.2%
Beverages .............................. JG 4,887 2.1%
Construction Materials ................. BD 4,793 2.1%
Chemicals .............................. BC 4,444 1.9%
Diversified Financials ................. JQ 4,283 1.8%
Electronic Equipment & Instruments ..... JY 4,278 1.8%
Electric Utilities ..................... J3 4,121 1.8%
Real Estate Operations ................. JS 3,891 1.7%
Household Durables ..................... BW 3,595 1.5%
Communications Equipment ............... JW 2,557 1.1%
Trading Companies & Distributors ....... BN 2,352 1.0%
Multiline Retail ....................... JD 1,784 0.8%
Machinery .............................. BM 1,771 0.8%
Gas Utilities .......................... J4 1,718 0.7%
Air Freight & Couriers ................. BP 1,688 0.7%
Finance ................................ FB 1,531 0.7%
Hotels Restaurants & Leisure ........... BZ $ 1,366 0.6%
Distributors ........................... JB 1,345 0.6%
Office Electronics ..................... JZ 1,214 0.5%
Industrial Conglomerates ............... BL 1,200 0.5%
Leisure Equipment & Products ........... BX 1,198 0.5%
Household Products ..................... JJ 1,096 0.5%
Health Care Equipment & Supplies ....... JL 1,093 0.5%
Personal Products ...................... JK 1,033 0.4%
Commercial Services & Supplies ......... BO 992 0.4%
Food & Drug Retailing .................. JF 889 0.4%
Paper & Forest Products ................ BG 797 0.3%
Internet Software & Services ........... JT 703 0.3%
Auto Components ........................ BU 676 0.3%
Biotechnology .......................... JN 661 0.3%
Containers & Packaging ................. BE 597 0.3%
Road & Rail BS 555 0.2%
Computers & Peripherals ................ JX 496 0.2%
Software ............................... JV 489 0.2%
Building Products ...................... BI 399 0.2%
Airlines ............................... BQ 338 0.1%
-------- -----
$233,710 100.0%
======== =====
Key to Currency Abbreviations
Japanese Yen ..................... JPY
Swiss Franc ...................... CHF
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Overseas Equity B, (formerly John Hancock International
Opportunities Fund), (the "Fund" or "VST Overseas Equity B") 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
twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. In the event the Exchange
closes at any time other than 4:00 p.m. Eastern Standard Time on a particular
day, the Fund will determine its net asset value per share as of the close of
the Exchange on that day. All other securities held by the Fund are valued at
the last sale price or official closing price (closing bid price or last
evaluated quote if no sale has occurred) as of the close of business on a
principal securities exchange (domestic or foreign) or, lacking any sales, at
the closing bid price. Investment security transactions are recorded on the date
of purchase or sale.
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.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
indicate a market fluctuation significant event has occurred, including, but not
limited to, a swing in the U.S. market indexes, a swing in particular foreign
market indexes, or a significant price change in Exchange Traded Funds in a par-
ticular foreign market.
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
$362,053
========
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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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 $90 and $10 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, 2004 as follows:
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$1,843 1.79% $2
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, 2004, 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
- -------------------------- -------------------
$57,277 $60,216
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, 2004, the Fund had open forward foreign currency
contracts which contractually obligate the Fund to deliver or receive currencies
at a specified date, as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Unrealized
Principal Amount Appreciation/
Currency Sold Covered by Contract Expiration Month (Depreciation)
- ------------- ------------------- ---------------- --------------
Swiss Franc 586 February 05 $ (18)
Swiss Franc 2,410 March 05 1
Swiss Franc 595 April 05 1
Euro 737 June 05 (2)
Japanese Yen 1,318 Janaury 05 (85)
Japanese Yen 778 March 05 2
-----
$(101)
=====
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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $172, $2,071, $2,540, $3,181, $9,394 and $11,857 which expire in 2006,
2007, 2008, 2009, 2010 and 2011, respectively.
Certain of the above losses may be limited under sections 382 - 384 of the
Internal Revenue Code, as amended.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $312. Realized gains and losses
from security transactions are determined on the basis of identified cost.
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 11, 2004, 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 bais of the
Fund's net assets:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES--Continued
Between
$20 Million and Excess Over
First $20 Million $50 Million $50 Million
- ----------------- --------------- -----------
1.30% 1.15% 1.05%
For the period from January 1, 2004 to April 30, 2004, John Hancock and JVLICO
agreed to reimburse the Fund for normal operating expenses, exclusive of
investment advisory fees, taxes, interest, brokerage commissions and
extraordinary expenses that exceed 0.10% of the Fund's daily net asset value.
Accordingly, for the period from January 1, 2004 to April 30, 2004 the Fund was
reimbursed $158 by John Hancock and JVLICO. On March 18, 2004, the Fund's Share-
holders approved the removal of John Hancock and JVLICO's respective obligations
to reimburse the Fund for excess operating expenses effective May 1, 2004.
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 in expenses
of $10.
As of April 30, 2004, John Hancock has entered into a Sub-Advisory
Agreement with Capital Guardian Trust Company, which under John Hancock's
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,
JHV-LAS, 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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$220,413 $140,753
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$268,787 $34,951 $(3,500) $31,451
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $29,215 $31,565
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
- ---- ------------------ ---------------------- -----------------
2004 $ 767 $-- $--
2003 1,514 -- 42
Included in the Fund's 2004 distributions from ordinary income is $767 in
excess of investment company taxable income, which in accordance with applicable
US tax law, was distributed to shareholders as ordinary income distributions.
NOTE E--COMBINATION
On October 15, 2004, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
-------------- -----------
VST Overseas Equity B VST Overseas Equity C
VST Overseas Equity B VST Overseas Equity
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE E--COMBINATION--Continued
These combinations provided for the transfer of substantially all of the
assets and liabilities of the target funds to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The acquisitions were
accounted for as a tax-free exchanges as follows:
Trust Shares Target Fund Acquiring Fund Acquiring Fund
Issued by Target Fund Unrealized Net Assets Prior Aggregate Net Assets
Target Fund Acquiring Fund Net Assets Appreciation to Combination After Combination
----------- -------------- ----------- ------------ ---------------- --------------------
VST Overseas Equity C 5,835 $58,096 $1,157 $117,174 $175,270
VST Overseas Equity 5,501 $54,780 $6,490 $175,270 $230,050
NOTE F--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust.
John Hancock Variable Series Trust I solicited a vote at a special meeting of
Contract owners/Policyholders held on March 18, 2004 on the following matter:
For Against Abstain
--- ------- -------
To approve, as to the Overseas Equity B Fund, an 89% 6% 5%
amendment to the current investment management
agreement between the Trust and John Hancock to
eliminate John Hancock's obligation to reimburse
this Fund for certain operating expenses.
John Hancock Variable Series Trust I solicited a vote at a special meeting of
Contract owners/Policyholders held on October 15, 2004 on the following matters:
For Against Abstain
--- ------- -------
To approve, as to the Overseas Equity B Fund, a 94% 1% 5%
proposal to combine with the Overseas Equity C Fund
of John Hancock Variable Series Trust I. Share-
holders in the Overseas Equity C Fund would receive
Overseas Equity B Fund shares having the same value
as their prior Overseas Equity C Fund shares.
To approve, as to the Overseas Equity B Fund, a 92% 5% 3%
proposal to combine with the Overseas Equity Fund
of John Hancock Variable Series Trust I. Sharehold-
ers in the Overseas Equity Fund would receive
Overseas Equity B Fund shares having the same value
as their prior Overseas Equity Fund shares.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE F--OTHERS MATTERS (UNAUDITED)-Continued
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 B Fund (formerly,
International Opportunities Fund) (a portfolio included in the series of John
Hancock Variable Series Trust I {the "Trust"}) as of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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 B Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 16, 1988
- --------------------------------------------------------------------------------
Real Estate Equity Fund
Rreef America LLC K. Knudson/J. Robertson
Van Kampen T. Bigman
- --------------------------------------------------------------------------------
.. The Fund employs a multi-manager approach with two sub-advisers, each of
which independently manages its portion of the Fund.
.. RREEF uses both a top-down market overview to identify attractive growth
sectors and bottom-up fundamental research to identify companies that have
sustainable cash flow growth.
.. Van Kampen uses a top-down market overview and bottom-up fundamental,
value-driven research to select stocks that are attractively priced
relative to their underlying real estate assets.
Fund Commentary
Overall Performance: In 2004, the Real Estate Equity Fund returned +36.48%
outperforming the +33.15% return of the Dow Jones Wilshire REIT Index.
RREEF America LLC
Environment: The Fund outperformed the Dow Jones Wilshire REIT Index this year
due to positive sector and stock selection. From a stock selection perspective,
individual holdings in apartment, retail, hotel and industrial sectors performed
particularly well on a relative basis, while holdings within the office sector
served as a drag on the portfolio. From a sector perspective, the mall, retail
and hotel sectors outperformed the benchmark and the other property types during
the year, while the office, industrial and storage sectors lagged. As such,
relative sector performance for the Fund was helped by an overweight position in
hotel and mall sectors and by an underweight position in the office sector.
Outlook: Even as fundamentals are improving for real estate, we are cautious
about returns in 2005. Although REITs continue to provide investors with
attractive diversification benefits, we expect returns will fall below
historical averages this year as the sector digests the performance of the past
several years. That said accelerating earning growth and increased investor
demand for real estate should provide support for current valuations.
Van Kampen
Environment: The outperformance was primarily the result of stock selection.
Sector allocation was also favorable. From a bottom-up perspective, the
portfolio benefited from stock selection in the apartment, office, hotel and
mall sectors. From a top-down perspective, the most significant favorable
contributors to outperformance were from the overweight to the mall and hotel
sectors and underweight to the mixed industrial/office sector.
Outlook: We maintain our core investment philosophy as a real estate value
investor. This results in the ownership of stocks that provide the best
valuation relative to their underlying real estate values. Our company-specific
research leads us to preferences for sub-segments within each property sector.
Current top-down preferences include an overweighting of companies that are
focused in the ownership of upscale urban hotels, coastal apartments, higher-end
malls and urban offices, and underweighting to owners of strip shopping centers
and suburban offices.
We remain optimistic for the prospects of a recovery in fundamentals for the
apartment sector. This is tied to the continuation of an economic recovery and
related job growth. We remain cautious on the prospects of a recovery in
fundamentals for the office sector. This sector is similar to the apartment
sector, as it requires a job recovery in order to generate better demand.
However, there are several notable differences. Tenants are currently leasing
excess office space, which will absorb part of the demand recovery. In addition,
there are high costs required for attracting and retaining tenants. Finally,
given the longer lease term, office owners will face a roll down in rents at
lease expiration in most markets for the next several years.
In retail, we continue to favor malls over the open-air shopping centers, which
appear expensive versus underlying real estate values. Within both sub-sectors,
we continue to favor owners of higher quality assets in major metropolitan
areas.
Inception: May 16, 1988
- --------------------------------------------------------------------------------
Real Estate Equity Fund
RREEF America LLC K. Knudson/J. Robertson
Van Kampen T. Bigman
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 12/31/94 (10-Year Period)
Real Estate Real Estate
Equity Fund Equity Benchmark (1)
----------- --------------------
Dec-94 $10,000 $10,000
Jan-95 9,654 9,677
Feb-95 9,857 9,980
Mar-95 9,884 10,038
Apr-95 9,758 9,966
May-95 10,173 10,295
Jun-95 10,334 10,474
Jul-95 10,529 10,643
Aug-95 10,602 10,773
Sep-95 10,855 10,971
Oct-95 10,490 10,631
Nov-95 10,532 10,742
Dec-95 11,231 11,365
Jan-96 11,361 11,522
Feb-96 11,481 11,750
Mar-96 11,584 11,845
Apr-96 11,545 11,898
May-96 11,760 12,163
Jun-96 12,005 12,407
Jul-96 11,967 12,296
Aug-96 12,472 12,819
Sep-96 12,816 13,139
Oct-96 13,150 13,495
Nov-96 13,605 14,055
Dec-96 14,945 15,555
Jan-97 15,109 15,778
Feb-97 15,097 15,787
Mar-97 15,010 15,841
Apr-97 14,558 15,329
May-97 15,014 15,786
Jun-97 15,784 16,569
Jul-97 16,209 17,114
Aug-97 16,106 16,987
Sep-97 17,506 18,662
Oct-97 16,875 17,869
Nov-97 17,090 18,228
Dec-97 17,518 18,635
Jan-98 17,020 18,372
Feb-98 16,719 18,137
Mar-98 17,140 18,494
Apr-98 16,604 17,912
May-98 16,489 17,740
Jun-98 16,437 17,646
Jul-98 15,325 16,418
Aug-98 13,942 14,712
Sep-98 14,903 15,536
Oct-98 14,531 15,323
Nov-98 14,737 15,611
Dec-98 14,591 15,388
Jan-99 14,192 15,054
Feb-99 13,845 14,935
Mar-99 13,776 14,854
Apr-99 15,234 16,438
May-99 15,634 16,715
Jun-99 15,469 16,431
Jul-99 14,953 15,802
Aug-99 14,886 15,565
Sep-99 14,177 14,863
Oct-99 13,880 14,586
Nov-99 13,770 14,357
Dec-99 14,345 14,897
Jan-00 14,365 14,958
Feb-00 14,059 14,673
Mar-00 14,813 15,315
Apr-00 15,683 16,407
May-00 15,896 16,604
Jun-00 16,436 17,164
Jul-00 17,917 18,705
Aug-00 17,330 18,032
Sep-00 18,089 18,618
Oct-00 17,299 17,810
Nov-00 17,672 18,210
Dec-00 18,824 19,476
Jan-01 18,693 19,671
Feb-01 18,366 19,262
Mar-01 18,236 19,277
Apr-01 18,585 19,736
May-01 18,980 20,288
Jun-01 19,943 21,386
Jul-01 19,606 20,958
Aug-01 20,361 21,690
Sep-01 19,183 20,404
Oct-01 18,480 19,641
Nov-01 19,588 20,913
Dec-01 20,067 21,520
Jan-02 20,128 21,612
Feb-02 20,530 22,107
Mar-02 21,743 23,467
Apr-02 21,861 23,612
May-02 22,063 23,851
Jun-02 22,447 24,340
Jul-02 21,110 22,833
Aug-02 21,066 22,842
Sep-02 20,201 21,833
Oct-02 19,200 20,745
Nov-02 20,110 21,772
Dec-02 20,339 22,090
Jan-03 19,722 21,443
Feb-03 20,033 21,758
Mar-03 20,539 22,311
Apr-03 21,433 23,250
May-03 22,648 24,566
Jun-03 23,029 25,097
Jul-03 24,403 26,432
Aug-03 24,743 26,651
Sep-03 25,600 27,589
Oct-03 25,867 27,997
Nov-03 27,013 29,232
Dec-03 27,843 30,109
Jan-04 28,738 31,313
Feb-04 29,387 31,830
Mar-04 30,993 33,743
Apr-04 27,050 28,803
May-04 28,891 31,004
Jun-04 29,797 31,915
Jul-04 30,049 32,078
Aug-04 32,313 34,724
Sep-04 32,294 34,561
Oct-04 34,105 36,479
Nov-04 35,783 38,114
Dec-04 37,998 40,092
Value on 12/31/04:
- ------------------
$40,092 Real Estate Equity Benchmark (1)
$37,998 Real Estate Equity Fund
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Simon Property Group, Inc. 9.4%
Avalonbay Communities, Inc. 5.6%
Starwood Hotels & Resorts Worldwide, Inc. 5.4%
Prologis Trust 4.8%
Equity Residential Properties Trust 4.5%
Brookfield Properties Corporation 4.4%
Hilton Hotels Corp. 4.1%
Archstone Communities Trust 3.6%
Federal Realty Investment Trust 3.5%
Mack-Cali Realty LP 3.2%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Real Estate Real Estate
Equity Fund Equity Fund Benchmark/1/
----------- ------------------------
1 Year 36.48% 33.15%
3 Years 23.72% 23.05%
5 Years 21.51% 21.90%
10 Years 14.28% 14.90%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN INDUSTRY CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Real Estate Investment Trust 88.5%
Real Estate Operations 8.4%
Real Estate Development 3.1%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original costs. Sector investing and a nondiversified
fund entails special risks as discussed in the prospectus. The performance
of the fund on this page is reported net of Trust level charges (i.e.
investment management fees and operating expenses). It does not reflect
expense and charges of the applicable separate accounts and variable
products, all of which vary to a considerable extent and are described in
your product prospectus. Performance would be lower if expenses and charges
of the separate accounts and products were reflected.
/1/ The Real Estate Equity Fund Benchmark represents the Dow Jones Wilshire
Real Estate Securities Index from June 1988 to April 2003 and then the Dow
Jones Wilshire REIT Index from May 2003 to present. Dow Jones Wilshire Real
Estate Securities Index is a market-capitalization weighted index which
measures the performance of real estate securities. The index contains
performance data on five major categories of property: office, retail,
industrial, apartment and miscellaneous.
"Van Kampen" is a registered trade name used by Morgan Stanley Investment
Management, Inc. in its role as a subdivision to the Fund.
Inception: May 16, 1988
- --------------------------------------------------------------------------------
Real Estate Equity Fund
RREEF America LLC K. Knudson/J. Robertson
Van Kampen T. Bigman
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Real Estate Fund shareholder, you pay ongoing expenses, such as management
fees; distribution fees (12b-1); and other expenses. Using the information
below, you can estimate how these expenses affect your investment and compare
them with the expenses of other funds. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,275.30
Expense paid per $1,000* $ 5.70
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,020.13
Expense paid per $1,000* $ 5.06
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Real Estate Equity Fund
(000's Omitted)
ASSETS
Long term investments at cost ....................................... $222,974
Net unrealized appreciation of investments .......................... 103,678
Short-term investments at value ..................................... 10,784
--------
Total investments ............................................. 337,436
Receivable for:
Investments sold ................................................. 1,069
Dividends ........................................................ 1,631
--------
Total assets ........................................................ 340,136
--------
LIABILITIES
Payables for:
Investments purchased ............................................ 1,203
Fund shares purchased ............................................ 294
Accrued operating expenses ....................................... 111
Other liabilities ................................................ 1,436
--------
Total liabilities ................................................... 3,044
--------
Net assets .......................................................... $337,092
========
Shares outstanding, $0.01 Par Value (unlimited shares authorized) ... 16,834
--------
Net asset value per share ........................................... $ 20.02
========
Composition of net assets:
Capital paid-in .................................................. $225,022
Accumulated net realized gain on investments ..................... 8,392
Net unrealized appreciation of investments ....................... 103,678
--------
Net assets .......................................................... $337,092
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Real Estate Equity Fund
(000's Omitted)
INVESTMENT INCOME
Interest ...................................................... $ 97
Dividends (net of foreign withholding tax of $35) ............. 12,925
-------
Total investment income ............................................. 13,022
-------
EXPENSES
Investment advisory fee ....................................... 2,496
Auditors fees ................................................. 32
Custodian fees ................................................ 84
Fidelity Bond fees ............................................ 1
Legal fees .................................................... 40
Printing & mailing fees ....................................... 40
Trustees' fees ................................................ 7
Other fees .................................................... 8
-------
Total expenses ...................................................... 2,708
Less custodian expense reduction offset by
commission recapture arrangement (Note C) .................. (8)
-------
Net expenses ........................................................ 2,700
-------
Net investment income ............................................... 10,322
-------
REALIZED AND UNREALIZED GAIN
Net realized gain on investments ................................. 27,343
Change in unrealized appreciation on investments ................. 49,997
-------
Net realized and unrealized gain .................................... 77,340
-------
Net increase in net assets resulting from operations ................ $87,662
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Real Estate Equity Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE IN NET ASSETS
From operations
Net investment income ....................................................... $ 10,322 $ 9,610
Net realized gain ........................................................... 27,343 6,974
Change in net unrealized appreciation ....................................... 49,997 46,768
-------- --------
Net increase in net assets resulting from operations ..................... 87,662 63,352
Distributions to shareholders from:
Net investment income ....................................................... (5,991) (6,533)
Realized gains .............................................................. (24,812) (9,658)
-------- --------
Decrease in net assets resulting from distributions ...................... (30,803) (16,191)
From fund share transactions:
Proceeds from shares sold ................................................... 58,111 52,162
Distributions reinvested .................................................... 30,803 16,191
Payment for shares redeemed ................................................. (45,605) (56,516)
-------- --------
Increase in net assets from fund share transactions ...................... 43,309 11,837
-------- --------
NET INCREASE IN NET ASSETS ..................................................... 100,168 58,998
NET ASSETS
Beginning of Period ......................................................... 236,924 177,926
-------- --------
End of Period (including undistributed net investment income of $0 and $0,
respectively) ............................................................ $337,092 $236,924
======== ========
Analysis of fund share transactions:
Sold ........................................................................ 3,263 3,726
Reinvested .................................................................. 1,591 1,077
Redeemed .................................................................... (2,629) (4,106)
-------- --------
Net increase in fund shares outstanding ........................................ 2,225 697
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each fund share of beneficial interest outstanding throughout
the year end indicated:
Real Estate Equity Fund
-----------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------
2004 2003 (d)(f) 2002 2001 2000(c)
----------- ----------- -------- -------- --------
Net Assets Value at Beginning of Period ................ $ 16.22 $ 12.79 $ 13.55 $ 13.67 $ 11.47
Income from Investment Operations:
Net Investment Income ............................... 0.67 0.69 0.62 0.67 0.76
Net Realized and Unrealized Gain (Loss) on
Investment(a) .................................... 5.11 3.90 (0.43) 0.21 2.73
-------- -------- -------- -------- --------
Total From Investment Operations .................... 5.78 4.59 0.19 0.88 3.49
Less Distributions:
Distribution from Net Investment Income ............. (0.38) (0.47) (0.65) (0.58) (0.76)
Distribution from Net Realized Gains on
Investments ...................................... (1.60) (0.69) (0.30) (0.42) (0.06)
Distribution from Excess of Net Investment Income/
Gains ............................................ (0.17)
Distribution from Capital Paid-in ................... (0.30)
-------- -------- -------- -------- --------
Total Distributions ................................. (1.98) (1.16) (0.95) (1.00) (1.29)
-------- -------- -------- -------- --------
Net Assets Value at End of Period ...................... $ 20.02 $ 16.22 $ 12.79 $ 13.55 $ 13.67
======== ======== ======== ======== ========
Total Investment Return(b) ............................. 36.48% 36.89% 1.36% (6.61)% 31.29%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ........................................... 1.01%(e) 1.07% 1.07% 1.07% 0.76%
Ratio of Net Investment Income to Average Net
Assets ........................................... 3.86% 4.84% 4.60% 4.97% 5.99%
Portfolio Turnover Rate ............................. 37.13% 38.11% 22.74% 29.07% 58.81%
Net Assets End of Period (000s Omitted) ................ $337,092 $236,924 $177,926 $163,653 $158,811
(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 Van Kampen during
the period shown.
(d) The Fund entered into a new sub-advisory agreement with RREEF America LLC
during the period shown.
(e) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(f) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
REAL ESTATE EQUITY FUND
Market
Name of Issuer Shares Value
-------------- ------- ---------
(000's)
COMMON STOCK
Real Estate Development - 3.0%
Catellus Development Corp. ............................ 226,500 $ 6,931
The Macerich Co. ...................................... 51,810 3,253
--------
10,184
Real Estate Investment Trust - 85.8%
Acadia Realty Trust ................................... 45,130 736
American Campus Communities, Inc. ..................... 20,800 468
American Financial Realty Trust ....................... 336,000 5,437
AMLI Residential Properties Trust ..................... 34,325 1,098
Apartment Investment & Management Co. ................. 264,100 10,178
Archstone Communities Trust ........................... 305,910 11,716
Arden Realty Group, Inc. .............................. 268,500 10,128
Avalonbay Communities, Inc. ........................... 241,622 18,194
Biomed Realty Trust, Inc. ............................. 79,400 1,763
Boston Properties, Inc. ............................... 122,350 7,912
Brandywine Realty Trust ............................... 17,960 528
BRE Properties, Inc. .................................. 123,435 4,976
Correctional Properties Trust ......................... 14,300 413
Crescent Real Estate Equities, Inc. ................... 34,846 636
CRT Properties, Inc. .................................. 70,800 1,689
Equity Office Properties Trust ........................ 328,125 9,555
Equity Residential Properties Trust ................... 407,990 14,761
Essex Property Trust, Inc. ............................ 40,100 3,360
Federal Realty Investment Trust ....................... 220,500 11,389
Gables Residential Trust .............................. 5,600 200
General Growth Properties ............................. 107,190 3,876
Glenborough Realty Trust, Inc. ........................ 66,700 1,419
GMH Communities Trust * ............................... 81,100 1,144
Heritage Property Investment Trust, Inc. .............. 22,825 732
Highwoods Properties, Inc. ............................ 141,200 3,911
Hilton Hotels Corp. ................................... 590,800 13,435
Host Marriott Corp. ................................... 601,400 10,404
Inland Real Estate Corp. .............................. 116,900 1,865
Innkeepers USA Trust .................................. 22,600 321
Kimco Realty Corp. .................................... 10,555 612
Liberty Property Trust ................................ 110,000 4,752
Mack-Cali Realty LP ................................... 229,583 10,568
MeriStar Hospitality Corp. * .......................... 68,000 568
Mills Corp. ........................................... 95,300 6,076
OMEGA Healthcare Investors, Inc. ...................... 57,200 675
PAN Pacific Retail Properties, Inc. ................... 65,230 4,090
Pennsylvania Real Estate Investment ................... 123,683 5,294
Post Properties, Inc. ................................. 60,450 2,110
Prologis Trust ........................................ 360,490 15,620
PS Business Parks, Inc. ............................... 19,300 870
Public Storage, Inc. .................................. 106,600 5,943
Reckson Associates Realty Corp. ....................... 187,900 6,165
Regency Centers Corp. ................................. 167,555 9,283
Shurgard Storage Centers, Inc. ........................ 96,750 4,258
Simon Property Group, Inc. ............................ 471,480 30,491
SL Green Realty Corp. ................................. 22,650 1,371
Starwood Hotels & Resorts Worldwide, Inc. ............. 299,102 $ 17,468
Sunstone Hotel Investments, Inc. * .................... 15,050 313
Taubman Centers, Inc. ................................. 66,800 2,001
The St. Joe Co. ....................................... 13,000 835
Trizec Properties, Inc. ............................... 54,500 1,031
Ventas, Inc. .......................................... 3,100 85
Vornado Realty Trust .................................. 82,575 6,286
--------
289,009
Real Estate Operations - 8.1%
AMB Property Corp. .................................... 131,010 5,291
Brookfield Properties Corporation ..................... 382,100 14,291
Developers Diversified Realty Corp. ................... 18,200 808
Equity Lifestyle Properties, Inc. ..................... 55,400 1,981
Forest City Enterprises, Inc. ......................... 30,700 1,767
Great Wolf Resorts, Inc. * ............................ 13,200 295
La Quinta Corp. - CTF 1 Cl. B * ....................... 264,500 2,404
Lodgian, Inc. * ....................................... 24,100 296
Wyndham International, Inc. * ......................... 148,000 176
--------
27,309
--------
TOTAL COMMON STOCK-
(Cost $222,838) 96.9% 326,502
PREFERRED STOCK
Real Estate Investment Trust - 0.0%
Simon Property Group, Inc. ............................ 2,535 150
--------
TOTAL PREFERRED STOCK-
(Cost $136) 0.0% 150
Par
Value
---------
(000's)
SHORT-TERM INVESTMENTS - 3.2%
Investment in joint trading account
2.29% due 01/03/05
(Cost $10,784) ..................................... $10,784 10,784
------- ---------
TOTAL INVESTMENTS-
(Cost $233,758) 100.1% 337,436
Payables, less cash and receivables- (0.1)% (344)
------- --------
NET ASSETS- 100.0% $337,092
======= ========
* Non-income producing security.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Real Estate Equity 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
twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$190 1.50% $--
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, 2004, 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. At December 31, 2004, 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, 2004, 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, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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 $35. Realized gains and losses
from security transactions are determined on the basis of identified cost.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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 11, 2004, 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 annual basis of the
Fund's net assets:
Between Between
$50 Million and $100 Million and Excess Over
First $50 Million $100 Million $200 Million $200 Million
- ----------------- --------------- ---------------- ------------
1.10% 1.00% 0.90% 0.80%
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 period ended December 31, 2004, there were no reimbursements paid 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 in expenses
of $8.
John Hancock has entered into Sub-Advisory Agreements with Morgan Stanley
Investment Management, Inc., and RREEF America LLC, each of which under John
Hancock's supervision, are responsible for a portion of 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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$118,512 $97,792
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
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, 2004 were as follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$231,753 $107,476 $(1,793) $105,683
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $6,387 $-- $105,683
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
- ---- ------------------ ---------------------- -----------------
2004 $10,193 $20,610 $--
2003 7,260 8,931 --
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Real Estate Equity Fund (a
portfolio included in the series of John Hancock Variable Series Trust I {the
"Trust"}) as of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Real Estate Equity Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1994
- --------------------------------------------------------------------------------
Short-Term Bond Fund
Independence Investment LLC J. Shallcross/P. Farley
- --------------------------------------------------------------------------------
.. The manager employs proprietary research and quantitative tools in a risk
controlled, benchmark-relative approach to evaluate bonds and bond sectors
that are attractively priced. The Fund emphasizes higher quality U.S.
investment grade sectors.
Fund Commentary
Performance: For the year 2004, the Short Term Bond Fund returned +1.42%, in
line with the +1.43% return of the Lehman Aggregate 1-3 Index.
Environment: The year 2004 became the bear bond market that wasn't. Although
early signs reminiscent of 1994 emerged in April, the bond market remained
resilient throughout the year. Paradoxically, long-term interest rates finished
the year lower in an interest rate-tightening environment. The 10-Year Treasury
ended the year virtually unchanged in yield, while short-term rates rose by
nearly a full percentage point.
Benign inflation and concerns of chronic fatigue in the labor market kept a lid
on interest rates, while the Federal Reserve lifted short-term rates higher.
Despite some volatile labor market numbers, other cyclical economic indicators
reaffirmed the economy's growth. There were several economic hurdles, notably
investor paranoia over slower growth expectations, higher energy prices, the
falling U.S. dollar, concerns over higher interest rates, geopolitical issues
and slower growth in Asia. However, most spread sectors performed well as
underlying improving fundamentals and strong market technicals pushed spreads
tighter.
Corporate bonds were the best performer. The portfolio remained overweight in
corporate credit, and benefited from having a high concentration in lower rated
bonds. Larger weightings in media/cable, telecommunications, energy, utilities
and consumer cyclicals added to performance. Asset Backed Securities and
Commercial Mortgage Backed Securities had strong performance. We remained
overweight and benefited from owning a higher concentration of home equity
bonds.
Outlook: The economy is poised for gradual growth, but there are lingering
issues. The Fed is still in tightening mode. Oil prices remain high, but so far
this has been moderately absorbed by consumers and some industries. The falling
dollar remains a concern. Interest rates will probably trend higher. Corporate
bonds should still benefit from improving fundamentals and positive technicals,
but profit taking could lead to short-term spread widening. The mortgage market
looks relatively expensive and unattractive.
Inception: May 1, 1994
- --------------------------------------------------------------------------------
Short-Term Bond Fund
Independence Investment LLC J. Shallcross/P. Farley
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 12/31/94 (Fund Inception Date)
Short-Term Bond VST VST Short-Term Bond Benchmark (1)
------------------- ---------------------------------
10,000 10,000
Jan-95 10,138 10,155
Feb-95 10,290 10,327
Mar-95 10,333 10,383
Apr-95 10,428 10,490
May-95 10,658 10,735
Jun-95 10,733 10,798
Jul-95 10,744 10,825
Aug-95 10,809 10,900
Sep-95 10,856 10,961
Oct-95 10,959 11,068
Nov-95 11,061 11,187
Dec-95 11,150 11,285
Jan-96 11,235 11,387
Feb-96 11,146 11,305
Mar-96 11,106 11,271
Apr-96 11,087 11,260
May-96 11,087 11,266
Jun-96 11,174 11,361
Jul-96 11,200 11,401
Aug-96 11,223 11,428
Sep-96 11,355 11,551
Oct-96 11,489 11,709
Nov-96 11,569 11,820
Dec-96 11,552 11,790
Jan-97 11,604 11,843
Feb-97 11,623 11,862
Mar-97 11,593 11,834
Apr-97 11,689 11,946
May-97 11,766 12,032
Jun-97 11,855 12,125
Jul-97 12,018 12,301
Aug-97 11,994 12,283
Sep-97 12,098 12,396
Oct-97 12,201 12,509
Nov-97 12,207 12,536
Dec-97 12,293 12,630
Jan-98 12,423 12,776
Feb-98 12,419 12,774
Mar-98 12,462 12,822
Apr-98 12,517 12,882
May-98 12,580 12,957
Jun-98 12,637 13,023
Jul-98 12,695 13,083
Aug-98 12,830 13,205
Sep-98 12,964 13,387
Oct-98 12,956 13,418
Nov-98 12,976 13,454
Dec-98 13,008 13,508
Jan-99 13,037 13,583
Feb-99 12,992 13,536
Mar-99 13,062 13,643
Apr-99 13,111 13,701
May-99 13,079 13,685
Jun-99 13,121 13,727
Jul-99 13,148 13,756
Aug-99 13,181 13,787
Sep-99 13,283 13,887
Oct-99 13,319 13,937
Nov-99 13,368 13,978
Dec-99 13,393 13,997
Jan-00 13,391 14,004
Feb-00 13,486 14,105
Mar-00 13,554 14,174
Apr-00 13,585 14,185
May-00 13,634 14,235
Jun-00 13,795 14,396
Jul-00 13,882 14,504
Aug-00 13,985 14,626
Sep-00 14,105 14,756
Oct-00 14,136 14,800
Nov-00 14,283 14,929
Dec-00 14,462 15,105
Jan-01 14,661 15,338
Feb-01 14,777 15,460
Mar-01 14,884 15,587
Apr-01 14,930 15,642
May-01 15,016 15,750
Jun-01 15,073 15,814
Jul-01 15,262 16,028
Aug-01 15,362 16,145
Sep-01 15,568 16,351
Oct-01 15,710 16,515
Nov-01 15,650 16,470
Dec-01 15,632 16,477
Jan-02 15,674 16,533
Feb-02 15,742 16,591
Mar-02 15,632 16,496
Apr-02 15,742 16,661
May-02 15,870 16,750
Jun-02 15,991 16,882
Jul-02 16,159 17,049
Aug-02 16,251 17,138
Sep-02 16,399 17,270
Oct-02 16,385 17,306
Nov-02 16,364 17,302
Dec-02 16,519 17,479
Jan-03 16,563 17,510
Feb-03 16,658 17,596
Mar-03 16,692 17,619
Apr-03 16,764 17,679
May-03 16,842 17,721
Jun-03 16,867 17,760
Jul-03 16,802 17,648
Aug-03 16,787 17,655
Sep-03 16,928 17,843
Oct-03 16,874 17,778
Nov-03 16,884 17,784
Dec-03 16,975 17,898
Jan-04 17,031 17,958
Feb-04 17,110 18,059
Mar-04 17,164 18,111
Apr-04 17,031 17,937
May-04 16,989 17,912
Jun-04 17,000 17,916
Jul-04 17,060 17,993
Aug-04 17,166 18,133
Sep-04 17,180 18,126
Oct-04 17,225 18,189
Nov-04 17,176 18,108
Dec-04 17,218 18,153
Value on 12/31/04:
- ------------------
$17,218 Short-Term Bond VST
$18,153 VST Short-Term Bond Benchmark (1)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
Federal National Mortgage Assoc. 13.2%
Federal Home Loan Mortgage Corp. 9.1%
U.S. Treasury 6.9%
Structured ARM Loan Trust 2.4%
JP Morgan Chase & Co. 2.2%
Lehman Brothers Holdings, Inc. 2.0%
Wells Fargo & Co. 2.1%
General Motors 1.8%
Citigroup, Inc. 1.7%
Bear Stearns Cos, Inc. 1.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Short Term
Short-Term Bond Fund
Bond Fund Benchmark/1/
---------- ------------
1 Year 1.42% 1.43%
3 Years 3.27% 3.28%
5 Years 5.15% 5.34%
10 Years 5.58% 6.14%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND COMPOSITION (as of December 31, 2004)
% of
Credit Quality Assets
- -------------- ------
Government 32.41%
AAA 22.40%
AA 5.52%
A 10.88%
BBB 23.87%
BB 4.92%
Weighted Average Yield 3.48%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expense and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
/1/ The Short-Term Bond Fund Benchmark represents the Merrill Lynch 1-5 Year
Government Bond Index from May 1994 to April 1998, 65% Lehman Brothers 1-3
Year Credit Bond Index, 35% Lehman Brothers 1-3 Year Government Bond Index,
May 1998 to April 2002 and now Lehman Brothers 1-3 Year Aggregate Bond
Index from May 2002 to present.
Inception: May 1, 1994
- --------------------------------------------------------------------------------
Short-term Bond Fund
Independence Investment LLC J. Shallcross/P. Farley
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Short-Term Bond Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,012.80
Expense paid per $1,000* $ 3.50
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,021.66
Expense paid per $1,000* $ 3.51
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Short-Term Bond Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $22,893 of securities
loaned (Note B)) ................................................ $244,296
Net unrealized depreciation of investments ......................... (763)
Short-term investments at value .................................... 30,026
--------
Total investments ............................................ 273,559
Cash ............................................................... 3,213
Receivables for:
Investments sold ................................................ 750
Interest ........................................................ 2,406
--------
Total assets ....................................................... 279,928
--------
LIABILITIES
Payables for:
Investments purchased ........................................... 3,213
Fund shares purchased ........................................... 40
Collateral for securities on loan ............................... 23,338
Accrued operating expenses ...................................... 84
--------
Total liabilities .................................................. 26,675
--------
Net assets ......................................................... $253,253
========
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ..................................................... 25,508
--------
Net asset value per share .......................................... $ 9.93
========
Composition of net assets:
Capital paid-in ................................................. $254,357
Accumulated net realized loss on investments .................... (341)
Net unrealized depreciation of investments ...................... (763)
--------
Net assets ......................................................... $253,253
========
INVESTMENT INCOME
Interest ..................................................... $ 9,296
Securities lending ........................................... 34
--------
Total investment income ............................................ 9,330
========
EXPENSES
Investment advisory fee ...................................... 1,539
Auditors fees ................................................ 32
Custodian fees ............................................... 84
Fidelity Bond fees ........................................... 1
Legal fees ................................................... 43
Printing & mailing fees ...................................... 43
Trustees' fees ............................................... 8
Other fees ................................................... 8
--------
Total expenses ..................................................... 1,758
--------
Net investment income .............................................. 7,572
--------
REALIZED AND UNREALIZED LOSS
Net realized loss on investments ................................ (375)
Change in unrealized depreciation on investments ................ (3,592)
--------
Net realized and unrealized loss ................................... (3,967)
--------
Net increase in net assets resulting from operations ............... $ 3,605
========
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Short-Term Bond Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ............................................... $ 7,572 $ 9,392
Net realized loss ................................................... (375) (468)
Change in net unrealized depreciation ............................... (3,592) (2,066)
-------- --------
Net increase in net assets resulting from operations ............. 3,605 6,858
Distributions to shareholders from:
Net investment income ............................................... (7,642) (8,761)
Realized gains ...................................................... (54)
Capital paid-in ..................................................... (1,232) (552)
-------- --------
Decrease in net assets resulting from distributions .............. (8,874) (9,367)
From fund share transactions:
Proceeds from shares sold ........................................... 76,567 96,185
Distributions reinvested ............................................ 8,874 9,367
Payment for shares redeemed ......................................... (86,936) (84,143)
-------- --------
Increase (decrease) in net assets from fund share transactions ... (1,495) 21,409
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS .................................. (6,764) 18,900
NET ASSETS
Beginning of Period ................................................. 260,017 241,117
-------- --------
End of Period (including undistributed net investment income
of $0 and $0, respectively) ...................................... $253,253 $260,017
======== ========
Analysis of fund share transactions:
Sold ................................................................ 7,616 9,405
Reinvested .......................................................... 885 919
Redeemed ............................................................ (8,649) (8,235)
-------- --------
Net increase (decrease) in fund shares outstanding ..................... (148) 2,089
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Short-Term Bond Fund
------------------------------------------------------
Year Ended December 31,
------------------------------------------------------
2004 2003(e) 2002(e) 2001 2000
-------- -------- -------- -------- -------
Net Assets Value at Beginning of Period ............... $ 10.13 $ 10.23 $ 10.11 $ 9.86 $ 9.72
Income from Investment Operations:
Net Investment Income .............................. 0.30 0.37 0.44 0.52 0.61
Net Realized and Unrealized Gain (Loss) on
Investment(a) ................................... (0.15) (0.10) 0.12 0.26 0.14
-------- -------- -------- -------- -------
Total From Investment Operations ................... 0.15 0.27 0.56 0.78 0.75
Less Distributions:
Distribution from Net Investment Income ............ (0.30) (0.35) (0.41) (0.53) (0.61)
Distribution from Net Realized Gains on
Investments ..................................... (d)
Capital paid-in .................................... (0.05) (0.02) (0.03)
-------- -------- -------- -------- -------
Total Distributions ................................ (0.35) (0.37) (0.44) (0.53) (0.61)
-------- -------- -------- -------- -------
Net Assets Value at End of Period ..................... $ 9.93 $ 10.13 $ 10.23 $ 10.11 $ 9.86
======== ======== ======== ======== =======
Total Investment Return(b) ............................ 1.42% 2.76% 5.67% 8.09% 7.98%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ... 0.69% 0.67% 0.68% 0.48% 0.36%
Ratio of Net Investment Income to Average
Net Assets ...................................... 2.96% 3.68% 4.29% 5.20%(c) 6.27%
Portfolio Turnover Rate ............................ 38.61% 58.94% 97.00% 86.39% 52.68%
Net Assets End of Period (000s Omitted) ............... $253,253 $260,017 $241,117 $149,450 $80,109
(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) Had the Fund not amortized premiums and accreted discounts on debt
securities, the annual ratio of net investment income to average net assets
would have been 5.32% for the years ended December 31, 2001.
(d) Amount is less than $0.01.
(e) Certain amounts in 2003 and 2002 have been reclassified to permit
comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND **
Par Market
Value Value
Name of Issuer (000's) (000's)
-------------- ------- -------
PUBLICLY-TRADED BONDS
Aerospace & Defense - 0.3%
Raytheon Co. - Notes
6.75% due 08/15/07 - BBB- ............................ $ 643 $ 693
Auto Loan - 2.1%
Ford Motor Credit Co. - Notes
6.875% due 02/01/06 - BBB- ........................... 1,000 1,030
General Motors Acceptance Corp. - Notes
6.125% due 09/15/06 - BBB- ........................... 3,265 3,347
6.75% due 01/15/06 - BBB- ............................ 1,000 1,026
-------
5,403
Automobiles - 0.9%
Daimler Chrysler - Notes
6.4% due 05/15/06 - BBB .............................. 1,500 1,560
Hertz Corp. - Notes
1.0% due 08/05/08 - BBB- ............................. 750 754
-------
2,314
Banks - 4.8%
Bank of America Corp. - Notes
4.75% due 10/15/06 - A+ .............................. 1,400 1,434
Bank One Corp. - Notes
6.875% due 08/01/06 - A+ ............................. 1,800 1,899
Bear Stearns Commercial Mortgage
Securities, Inc. - Ser. 2004 Cl. A1
3.26% due 02/11/41 - AAA ............................. 2,834 2,775
Credit Suisse First Boston - Ser. 2003-C3 Cl. A1
2.218% due 05/15/38 - AAA ............................ 2,429 2,353
Credit Suisse First Boston Mortgage
Securities Corp. - Cl. A1
3.801% due 06/15/06 - AAA ............................ 95 96
First Union Corp. - Notes
7.55% due 08/18/05 - A ............................... 2,500 2,571
Popular North America, Inc.
6.125% due 10/15/06 - BBB+ ........................... 855 891
-------
12,019
Beverages - 0.4%
Coca Cola Co. - Sr. Notes
4.0% due 06/01/05 - A+ ............................... 1,000 1,004
CMBS - 0.8%
JP Morgan Chase & Co. Commercial
Mortgage Securities - Ser. 2004 FL1 A1 144A (a)
1.71% due 04/16/19 - AAA ............................. 1,992 1,994
Diversified Financials - 10.0%
Bear Stearns Cos, Inc. - Notes
3.0% due 03/30/06 - A ................................ 1,250 1,247
BP Capital Markets plc - Notes
4.0% due 04/29/05 - AA+ .............................. 1,000 1,004
Chase Commercial Mortgage Securities Corp. - Cl. A1
7.656% due 06/15/08 - AAA ............................ 1,179 1,214
Chase Manhattan Corp.
6.0% due 11/01/05 - A ................................ $2,000 $ 2,047
CIT Group, Inc.
1.48% due 05/18/07 - A ............................... 1,000 1,000
Citigroup, Inc. - Notes
6.75% due 12/01/05 - AA- ............................. 4,000 4,128
GE Capital Commercial Mortgage Corp. - CTF Cl. A1
5.033% due 12/10/35 - NA ............................. 621 634
GE Commercial Mortgage Corp. - Ser.
2004-C1 CTF Cl. A1
3.009% due 11/10/38 - AAA ............................
Goldman Sachs Group, Inc. - Notes
7.625% due 08/17/05 - A+ ............................. 1,000 1,030
Green Tree Financial Corp. - Ser. 1996-8 Cl. A6
7.6% due 10/15/27 - AAA .............................. 239 257
GS Mortgage Securities Corp. II - Ser.
2003-C1 Cl. A1
2.904% due 01/10/40 - AAA ............................ 1,706 1,678
Hartford Financial Services Group, Inc. -
Sr. Notes
6.375% due 11/01/08 - A- ............................. 1,000 1,074
Lehman Brothers Holdings, Inc. - Notes
6.625% due 02/05/06 - A .............................. 2,600 2,693
Morgan Stanley Group, Inc.
6.1% due 04/15/06 - A+ ............................... 800 828
Nomura Asset Securities Corp. - Ser. 1998- D6 A1A
6.28% due 03/17/28 - AAA ............................. 1,416 1,467
Wells Fargo Mortgage Backed Securities -
Ser. 2003-2 Cl. A6
5.25% due 02/25/18 - AAA ............................. 5,000 5,082
-------
25,383
Diversified Telecommunication Services - 1.8%
France Telecom SA - Notes
8.7% due 03/01/06 - BBB+ ............................. 2,000 2,100
Verizon Global Funding Corp. - Notes
6.75% due 12/01/05 - A+ .............................. 2,303 2,378
-------
4,478
Electric Utilities - 1.5%
Firstenergy Corp. - Notes Ser. A
5.5% due 11/15/06 - BB+ .............................. 2,200 2,271
Progress Energy, Inc. - Sr. Notes
6.75% due 03/01/06 - BBB- ............................ 700 727
TXU Energy Co. LLC - Sr. Notes 144A (a)
2.38% due 01/17/06 - BBB ............................. 750 752
-------
3,750
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Electric/Gas - 2.8%
Alabama Power Co. - Sr. Notes Ser. U
2.65% due 02/15/06 - A ............................... $1,000 $ 994
American Electric Power, Inc. - Sr. Notes Ser. A
6.125% due 05/15/06 - BBB ............................ 1,145 1,187
Citizens Utilities Co. Delaware - Debs.
7.6% due 06/01/06 - BB+ .............................. 1,250 1,322
Kansas City Power & Light Co. - Sr. Notes Ser. A
6.0% due 03/15/07 - BBB .............................. 1,000 1,045
Pacific Gas & Electric Co. - Bonds
1.81% due 04/03/06 - BBB ............................. 1,375 1,376
TXU Corp. - Sr. Notes
6.375% due 06/15/06 - BBB- ........................... 1,000 1,038
-------
6,962
Finance - 6.4%
Boeing Capital Corp. - Sr. Notes
5.65% due 05/15/06 - A ............................... 650 670
Bombadier Capital, Inc. - 144A (a)
6.125% due 06/29/06 - BB ............................. 1,000 1,000
Chase Funding Loan Acquisition Trust - CTF Cl. A2
1.275% due 04/25/31 - AAA ............................ 124 124
Deutsche Telekom International Finance
8.25% due 06/15/05 - BBB+ ............................ 1,300 1,330
General Electric Capital Corp.
5.0% due 02/15/07 - AAA .............................. 3,000 3,090
Household Financial Corp.
6.5% due 01/24/06 - A ................................ 2,000 2,068
Nisource Finance Corp. - Notes
7.625% due 11/15/05 - BBB ............................ 1,700 1,762
Pinnacle West Capital Corp. - Sr. Notes
6.4% due 04/01/06 - BBB- ............................. 1,700 1,750
PNC Funding Corp. - Sr. Notes
5.75% due 08/01/06 - A- .............................. 875 907
Sprint Capital Corp. - Note
7.9% due 03/15/05 - BBB- ............................. 2,000 2,022
Vornado Realty Trust - Sr. Notes
5.625% due 06/15/07 - BBB ............................ 1,485 1,542
-------
16,265
Gas Utilities - 0.9%
Keyspan Corp. - Notes
6.15% due 06/01/06 - A ............................... 1,150 1,197
Sempra Energy - Notes
1.0% due 05/21/08 - BBB+ ............................. 1,130 1,126
-------
2,323
Health Care Providers & Services - 0.5%
Anthem, Inc. - Notes
3.5% due 09/01/07 - BBB+ ............................. $1,225 $ 1,218
Home Equity Loan - 1.5%
Centex Home Equity Loan Trust - Ser. 2003-B Cl. AF 2
1.838% due 06/25/20 - AAA ............................ 871 869
Residential Asset Mortgage Products, Inc. - Cl. AI2
3.38% due 03/25/29 - AAA ............................. 2,899 2,897
-------
3,766
Hotels Restaurants & Leisure - 1.9%
Harrah's Operating, Inc. - Sr. Notes
7.125% due 06/01/07 - BBB- ........................... 1,000 1,071
Hilton Hotels Corp. - Sr. Notes
7.95% due 04/15/07 - BBB- ............................ 1,000 1,088
Park Place Entertainment Corp. - Notes
8.5% due 11/15/06 - BB+ .............................. 1,500 1,620
Starwood Hotels & Resorts - Sr. Notes
7.375% due 05/01/07 - BB+ ............................ 1,000 1,068
-------
4,847
Industrial Conglomerates - 0.6%
Tyco International Group SA - Notes
5.8% due 08/01/06 - BBB .............................. 1,500 1,553
Insurance - 1.4%
Aetna Inc. - Sr. Notes
7.375% due 03/01/06 - BBB+ ........................... 2,000 2,082
Marsh & McLennan Cos., Inc. - Sr. Notes #
5.375% due 03/15/07 - BBB+ ........................... 590 602
Wellpoint, Inc. - Notes 144A (a)
3.75% due 12/14/07 - BBB+ ............................ 895 894
-------
3,578
Media - 3.8%
British Sky Broadcasting Group - Gtd. Notes
7.3% due 10/15/06 - BBB- ............................. 1,000 1,062
Continental Cablevision - Sr. Notes
8.3% due 05/15/06 - BBB .............................. 615 653
Cox Communications, Inc. - Notes 144A (a)
3.04% due 12/14/07 - BBB- ............................ 1,000 1,000
Lenfest Communications, Inc. - Notes
8.375% due 11/01/05 - BBB ............................ 1,000 1,042
Liberty Media Corp. - Sr. Notes
2.64% due 09/17/06 - BBB- ............................ 1,500 1,518
The Walt Disney Co. - Sr. Notes
6.75% due 03/30/06 - BBB+ ............................ 1,100 1,146
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Media - Continued
Time Warner, Inc. - Notes
5.625% due 05/01/05 - BBB+ ........................... $1,500 $ 1,514
Univision - Sr. Notes
2.875% due 10/15/06 - BBB- ........................... 1,700 1,678
-------
9,613
Metals & Mining - 0.9%
Falconbridge, Ltd.
7.375% due 09/01/05 - BBB- ........................... 1,125 1,156
Minnesota Ming & Manufacturing Co.
4.15% due 06/30/05 - AA .............................. 1,000 1,006
-------
2,162
Multi-Utilities - 0.5%
Centerpoint Energy, Inc. - Sr. Notes
5.875% due 06/01/08 - BBB- ........................... 1,150 1,205
Multiline Retail - 0.4%
May Department Stores Co. - Notes
3.95% due 07/15/07 - BBB ............................. 1,000 1,002
Oil & Gas - 2.8%
Devon Energy Corp. - Sr. Notes
2.75% due 08/01/06 - BBB ............................. 1,500 1,482
Duke Energy Field Services - Notes
5.75% due 11/15/06 - BBB ............................. 1,450 1,503
Enterprise Products Operating LP - Sr. Notes 144A (a)
4.0% due 10/15/07 - BB+ .............................. 2,000 1,995
Northern Border Pipeline Co. - Sr. Notes
6.25% due 05/01/07 - A- .............................. 2,000 2,112
-------
7,092
Other Asset Backed - 6.3%
CWABS, Inc. - Ser. 2004-10 Cl. AF3
3.842% due 02/01/05 - AAA ............................ 1,445 1,428
CWABS, Inc. Ser. 2003-5 Cl. AF 2
3.042% due 04/25/25 - AAA ............................ 1,300 1,298
Equity One ABS, Inc. - Ser. 2003-3 Cl. AF3
3.531% due 12/25/33 - AAA ............................ 900 899
Equity One ABS, Inc. - Ser. 2004-2 Cl. AV2
1.55% due 07/25/34 - AAA ............................. 1,213 1,210
Long Beach Mortgage Loan Trust - Ser. 2004-1 Cl. M3
1.0% due 03/25/35 - AA- .............................. 4,000 4,000
Option One Loan Trust - Ser. 2004-1 CTF Cl A2
1.39% due 01/25/34 - AAA ............................. 999 999
Structured ARM Loan Trust - Ser. 2004-14 Cl. 1 A
5.129% due 10/25/34 - AAA ............................ 5,732 5,832
Vanderbilt & Mortgage, Inc. - Sr. Sub. CTF Cl. A2
4.235% due 08/07/14 - AAA ............................ $ 272 $ 272
-------
15,938
Other Mortgage - 1.5%
LB UBS Commercial Mortgage Trust - CTF Cl. A1
7.95% due 07/15/09 - NA .............................. 1,396 1,494
LB UBS Commercial Mortgage Trust - Ser. 2003-C1 Cl. A1
2.72% due 01/17/08 - AAA ............................. 2,429 2,383
-------
3,877
Personal Products - 0.6%
Colgate Palmolive Co.
3.98% due 04/29/05 - AA- ............................. 1,500 1,506
Real Estate Development - 0.3%
Rouse Co. - Noyes
3.625% due 03/15/09 - BB+ ............................ 900 849
Real Estate Investment Trust - 3.5%
CarrAmerica Realty Corp. - Notes
6.625% due 03/01/05 - BBB ............................ 1,167 1,173
7.375% due 07/01/07 - BBB ............................ 1,197 1,302
Duke Realty Limited Partnership - Notes
3.35% due 01/15/08 - BBB+ ............................ 1,625 1,593
IStar Financial, Inc. - Sr. Notes
4.875% due 01/15/09 - BBB- ........................... 1,620 1,644
Simon Property Group, Inc. - Notes
3.75% due 01/30/09 - BBB ............................. 2,256 2,220
United Dominion Realty Trust, Inc.
4.5% due 03/03/08 - BBB .............................. 1,000 1,021
-------
8,953
U.S. Government Agencies - 22.7%
Federal Home Loan Bank - Notes
7.5% due 06/01/12 - AAA .............................. 482 511
Federal Home Loan Mortgage Corp. - Bonds
3.907% due 11/01/33 - AAA ............................ 1,393 1,404
4.0% due 03/15/26 - AAA .............................. 6,079 6,075
7.0% due 08/01/12 - AAA .............................. 385 408
7.0% due 02/01/14 - AAA .............................. 1,030 1,091
8.5% due 05/01/15 - AAA .............................. 1,227 1,310
Federal Home Loan Mortgage Corp. -
Bonds Ser. 2516 Cl. AX
8.5% due 01/15/16 - AAA .............................. 1,544 1,648
Federal Home Loan Mortgage Corp. - Notes
2.375% due 04/15/06 - AAA ............................ 6,500 6,442
6.5% due 12/01/09 - AAA .............................. 730 765
7.0% due 12/01/10 - AAA .............................. 248 263
7.0% due 12/01/13 - AAA .............................. 1,673 1,774
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
Par Market
Name of Issuer Value Value
-------------- -------- ---------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
U.S. Government Agencies - Continued
7.5% due 11/01/09 - AAA ........................... $ 645 $ 670
8.0% due 06/01/10 - AAA ........................... 202 215
Federal National Mortgage Assoc. - Bonds
3.638% due 09/01/33 - AAA ......................... 1,790 1,808
3.64% due 01/01/33 - AAA .......................... 1,670 1,682
6.0% due 01/01/17 - AAA ........................... 1,442 1,512
6.0% due 01/01/17 - AAA ........................... 1,284 1,347
6.5% due 04/01/17 - AAA ........................... 3,203 3,397
6.5% due 08/01/17 - AAA ........................... 3,567 3,783
7.0% due 10/01/15 - AAA ........................... 721 765
7.0% due 07/01/34 - AAA ........................... 5,009 5,308
7.5% due 07/01/34 - AAA ........................... 3,156 3,379
8.0% due 07/01/14 - AAA ........................... 944 1,008
8.0% due 09/25/16 - AAA ........................... 561 598
Federal National Mortgage Assoc. - Notes
6.0% due 01/01/11 - AAA ........................... 491 511
7.0% due 12/01/10 - AAA ........................... 239 251
7.5% due 08/01/09 - AAA ........................... 714 758
2.25% due 05/15/06 - # AAA ........................ 6,000 5,929
Government National Mortgage Assoc. - Bonds
8.0% due 12/15/25 - AAA ........................... 1,101 1,190
8.5% due 11/15/15 - AAA ........................... 858 927
Government National Mortgage Assoc. - Notes
7.0% due 12/15/08 - AAA ........................... 712 745
--------
57,474
U.S. Government - 6.6%
U.S. Treasury - Notes
3.25% due 01/15/09 - # AAA ....................... 6,000 5,948
3.375% due 12/15/08 - # AAA ....................... 5,300 5,283
3.625% due 07/15/09 - # AAA ....................... 5,500 5,516
--------
16,747
Whole Loan CMOs - 7.2%
Banc America Commercial Mortgage, Inc. - Ser. 2004-1
Cl. A1
3.156% due 11/10/39 - AAA ......................... 3,152 3,091
CWALT, Inc. - Ser. 2004 J7 Cl. 1AIO
1.3% due 09/25/21 - AAA ........................... 73,479 787
CWMBS, Inc. - Ser. 2002 Mortgage Pass Thru Certs
Cl. 2A3
5.0% due 12/25/17 - AAA ........................... 1,390 1,413
GS Mortgage Securities Corp. - Ser. 2004 Cl. A2C
1.58% due 05/25/34 - AAA .......................... 1,000 1,002
Lehman Brothers Commercial Mortgage Trust - Cl. A2
144A (a)
1.749% due 10/15/17 - AAA ......................... 2,500 2,506
Merrill Lynch Mortgage Investments, Inc. - Ser. 2003
A1 Cl. IA
3.981% due 12/25/32 - NA .......................... $ 947 $ 955
Merrill Lynch Mortgage Investments, Inc. - Ser.
2003-C Cl. B1
1.75% due 06/25/28 - AA+ .......................... 2,000 2,041
Morgan Stanley Mortgage Loan Trust - Ser. 2004 (b)
1.0% due 01/25/35 - NA ............................ 249,428 3,000
Sequoia Mortgage Trust - Ser. 2004-4 Cl. A
1.0% due 05/20/34 - AAA ........................... 3,428 3,410
--------
18,205
Wireless Telecommunications Services - 0.5%
AT&T Wireless Services, Inc. - Sr. Notes
7.35% due 03/01/06 - A ............................ 1,300 1,360
--------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $244,296) 96.2% 243,533
INVESTMENT COMPANIES HELD AS COLLATERAL ON LOANED
SECURITIES - 9.2%
State Street Navigator Securities Lending Portfolio .. 23,338 23,338
SHORT-TERM INVESTMENTS - 2.6%
Investment in joint trading account
2.29% due 01/03/05
(Cost $6,688) ..................................... 6,688 6,688
-------- --------
TOTAL INVESTMENTS-
(Cost $274,322) 108.0% 273,559
Payables, less cash and receivables- (8.0)% (20,306)
-------- --------
NET ASSETS- 100.0% $253,253
======== ========
# At December 31, 2004 all or portion of this security was out on loan.
(a) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2004, securities aggregated
$10,141 or 4.0% of net assets of the Portfolio.
(b) At December 31, 2004 this security was fair valued.
** Bond ratings are not audited.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Short-Term Bond (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 twenty-three
different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
Discount and premium on debt securities: The Fund accretes discount and
amortizes premium from par value on securities from either the date of issue or
the date of purchase over the life of the security.
Expenses: Expenses directly attributable to 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 $90 and $10 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. For year ended December 31,
2004, the Fund had no bank borrowings.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004, 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
- -------------------------- -------------------
$22,893 $23,338
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, 2004, 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. At December 31, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforward, which may be applied against any net taxable gains of $153
which expire in 2012.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred approximately $217 in net realized capital 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, 2005.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Dividend and Interest: 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.
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.
Restricted Securities: Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense, either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such sales. The
Fund's restricted securities are valued at the price provided by dealers in the
secondary market, or, if no market prices are available, at the fair value as
determined in accordance with procedures established by and under general
supervision of the Trustees.
NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
On February 11, 2004, 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 rate of 0.60% on an annual basis of the
Fund's net assets.
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. For the year
ended December 31, 2004, there were no reimbursements paid to the Fund.
John Hancock has entered into a Sub-Advisory Agreement with Independence
Investment LLC. Independence Investment LLC is an affiliate of John Hancock,
which under John Hancock's 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, 2004 were as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
Purchases Sales and Maturities
- --------- --------------------
$136,284 $95,440
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Depreciation
- ---------- ------------ ------------ --------------
$274,293 $951 $(1,685) $(734)
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss or difference in accretion/amortization. Therefore, the source of
each Fund's distributions may be shown in the accompanying financial statements
as either from, or in excess of, net investment income or net realized gain on
capital transactions, or from capital. The Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund to present the Fund's capital accounts on a tax
basis.
At December 31, 2004, 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 Depreciation
- ------------- ------------- ------------- --------------
$-- $-- $153 $(734)
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
- ---- ------------------ ---------------------- -----------------
2004 $7,642 $-- $1,232
2003 8,761 54 552
Included in the Fund's 2003 distributions from ordinary income is $1,302 in
excess of investment company taxable income, which in accordance with applicable
US tax law, was distributed to shareholders as ordinary income distribution.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Short-Term Bond Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Short-Term Bond Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Small Cap Emerging Growth Fund
Wellington Management Company, LLP Steven C. Angeli
- --------------------------------------------------------------------------------
.. The manager employs bottom-up, fundamental research to identify
attractively valued growth stocks. The Fund's sector allocations are
broadly diversified but are driven primarily by stock selection.
Fund Commentary
Performance: For 2004, the Small Cap Emerging Growth Fund returned +9.45%,
underperforming the +14.31% return of the Russell 2000 Growth Index.
Environment: Small caps capped a sixth consecutive year of outperformance
relative to large caps. Within the Russell 2000 Growth Index, nine of 10 sectors
advanced. Energy, Materials, Industrials and Telecommunication Services were the
strongest sectors. Information Technology was the only sector to decline over
the year.
Stock selection in Health Care and Consumer Discretionary were the largest
detractors from the Trust's relative return. Within Health Care, negative stock
selection effects were most acute among health care equipment & supplies
companies. Within Consumer Discretionary, selection among media holdings hurt
returns. While the portfolio's sector allocations are a result of our bottom-up
investment process, we benefited from sector positioning during the year. In
particular, we were overweight the strong performing Telecommunications Services
sector and underweight the Information Technology sector.
Outlook: While confident in the economy's direction, we believe the recovery has
been hampered by inflationary pressures throughout the manufacturing supply
chain. As a result, decelerating profit growth and weak employment trends are
hindering consumption. While we do not foresee a doomsday scenario, we might see
lower-than-expected earnings growth, especially in the traditional or more
mature parts of Information Technology and within the Consumer Discretionary
sector. Therefore, we will continue to focus on individual stock selection
across all sectors.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 4/1/96 (Fund Inception Date)
Small Cap
Emerging Growth Small Cap Emerging
Fund Growth Benchmark (1)
--------------- --------------------
Apr-96 $10,000 $10,000
May-96 10,232 10,253
Jun-96 10,126 10,132
Jul-96 9,630 9,593
Aug-96 10,161 10,009
Sep-96 10,450 10,283
Oct-96 10,340 10,402
Nov-96 10,678 10,961
Dec-96 11,033 11,318
Jan-97 11,115 11,492
Feb-97 10,927 11,601
Mar-97 10,594 11,290
Apr-97 10,831 11,456
May-97 11,818 12,368
Jun-97 12,512 12,994
Jul-97 13,256 13,540
Aug-97 13,389 13,755
Sep-97 14,242 14,670
Oct-97 13,761 14,271
Nov-97 13,863 14,428
Dec-97 13,863 14,917
Jan-98 13,521 14,647
Feb-98 14,532 15,531
Mar-98 15,138 16,162
Apr-98 15,222 16,241
May-98 14,459 15,666
Jun-98 14,458 15,579
Jul-98 13,270 14,359
Aug-98 10,901 12,110
Sep-98 11,414 12,794
Oct-98 11,733 13,174
Nov-98 12,320 13,531
Dec-98 13,037 13,956
Jan-99 12,715 13,640
Feb-99 11,876 12,708
Mar-99 11,826 12,602
Apr-99 12,619 13,753
May-99 12,798 14,175
Jun-99 13,630 14,688
Jul-99 13,444 14,340
Aug-99 12,849 13,817
Sep-99 12,620 13,541
Oct-99 12,365 13,270
Nov-99 12,267 13,339
Dec-99 12,590 13,748
Jan-00 11,854 13,389
Feb-00 12,345 14,208
Mar-00 12,574 14,274
Apr-00 12,787 14,358
May-00 12,670 14,139
Jun-00 12,740 14,552
Jul-00 13,003 15,036
Aug-00 13,762 15,708
Sep-00 13,774 15,619
Oct-00 13,768 15,563
Nov-00 10,732 13,964
Dec-00 11,470 15,164
Jan-01 13,023 15,954
Feb-01 11,056 14,907
Mar-01 10,142 14,178
Apr-01 11,316 15,287
May-01 11,655 15,663
Jun-01 11,932 16,204
Jul-01 11,175 15,327
Aug-01 10,648 14,832
Sep-01 8,697 12,835
Oct-01 9,424 13,586
Nov-01 10,224 14,638
Dec-01 11,037 15,541
Jan-02 10,629 15,379
Feb-02 10,383 14,958
Mar-02 11,650 16,161
Apr-02 11,264 16,308
May-02 10,629 15,584
Jun-02 9,917 14,811
Jul-02 8,284 12,574
Aug-02 8,126 12,542
Sep-02 7,370 11,641
Oct-02 7,539 12,015
Nov-02 8,411 13,087
Dec-02 7,924 12,358
Jan-03 7,586 12,015
Feb-03 7,294 11,652
Mar-03 7,369 11,803
Apr-03 8,126 12,922
May-03 8,991 14,378
Jun-03 9,325 14,655
Jul-03 9,985 15,763
Aug-03 10,524 16,610
Sep-03 10,176 16,190
Oct-03 11,139 17,588
Nov-03 11,523 18,162
Dec-03 11,793 18,244
Jan-04 12,245 19,201
Feb-04 12,246 19,173
Mar-04 12,438 19,263
Apr-04 11,725 18,296
May-04 11,967 18,660
Jun-04 12,172 19,281
Jul-04 11,172 17,550
Aug-04 10,725 17,172
Sep-04 11,566 18,122
Oct-04 11,734 18,562
Nov-04 12,385 20,131
Dec-04 12,908 20,855
Value on 12/31/04:
- ------------------
$20,855 Small Cap Emerging Growth Benchmark(1)
$12,908 Small Cap Emerging Growth Fund
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
American Tower Corp. 3.3%
Crown Castle International Corp. 2.8%
MEMC Electronic Materials, Inc. 1.9%
CB Richard Ellis Group, Inc. 1.8%
Take Two Interactive Software 1.8%
Jackson Hewitt, Inc. 1.8%
Gol-Linhas Aereas Inteligentes SA 1.7%
Affiliated Managers Group, Inc. 1.7%
Arkansas Best Corp. 1.6%
La Quinta Corp. 1.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Small Cap Emerging
Small Cap Emerging Growth Fund
Growth Fund Benchmark/1/
------------------ ------------------
1 Year 9.45% 14.31%
3 Years 5.36% 10.30%
5 Years 0.50% 8.69%
Since Inception (5/1/96) 2.99% 8.85%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Information Technology 20.6%
Industrials 19.3%
Consumer Discretionary 17.1%
Health Care 15.1%
Financials 10.1%
Telecommunication Services 7.0%
Materials 5.9%
Energy 4.0%
Consumer Staples 0.9%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. 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.
/1/ The Small Cap Emerging Growth Fund benchmark represents the Russell 2000
Value Index from May 1996 to October 2000, the Russell 2000 Index from
November 2000 to April 2003 and then the Russell 2000 Growth Index from May
2003 to present.
Inception: May 1, 1996
- --------------------------------------------------------------------------------
Small Cap Emerging Growth Fund
Wellington Management Company, LLP Steven C. Angeli
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Small Cap Emerging Growth Fund shareholder, you pay ongoing expenses, such
as management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,060.40
Expense paid per $1,000* $ 5.87
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,019.44
Expense paid per $1,000* $ 5.75
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Small Cap Emerging Growth Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $55,742 of
securities loaned (Note B)) ..................................... $189,568
Net unrealized appreciation of investments ......................... 34,052
Short-term investments at value .................................... 61,322
--------
Total investments ............................................ 284,942
Receivable for:
Investments sold ................................................ 1,229
Dividends ....................................................... 26
--------
Total assets ....................................................... 286,197
--------
LIABILITIES
Payables for:
Investments purchased ........................................... 943
Fund shares purchased ........................................... 115
Collateral for securities on loan ............................... 57,121
Accrued operating expenses ...................................... 17
--------
Total liabilities .................................................. 58,196
--------
Net assets ......................................................... $228,001
========
Shares outstanding, $0.01 Par Value (unlimited shares authorized) .. 25,707
--------
Net asset value per share .......................................... $ 8.87
========
Composition of net assets:
Capital paid-in ................................................. $289,527
Accumulated net realized loss on investments .................... (95,578)
Net unrealized appreciation of investments ...................... 34,052
--------
Net assets ......................................................... 228,001
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Small Cap Emerging Growth Fund
(000's Omitted)
INVESTMENT INCOME
Interest ...................................................... $ 96
Dividends ..................................................... 247
Securities lending ............................................ 35
-------
Total investment income ............................................. 378
-------
EXPENSES
Investment advisory fee ....................................... 1,080
Auditors fees ................................................. 11
Custodian fees ................................................ 107
Legal fees .................................................... 14
Printing & mailing fees ....................................... 174
Trustees' fees ................................................ 3
Other fees .................................................... 6
-------
Total expenses ...................................................... 1,395
Less expenses reimbursed ...................................... (211)
Less custodian expense reduction offset by
commission recapture arrangement (Note C) .................. (75)
-------
Net expenses ........................................................ 1,109
-------
Net investment loss ................................................. (731)
-------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments ................................. 8,607
Change in unrealized appreciation on investments ................. 11,772
-------
Net realized and unrealized gain .................................... 20,379
-------
Net increase in net assets resulting from operations ............... $19,648
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Small Cap Emerging Growth Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment loss ....................................... $ (731) $ (384)
Net realized gain (loss) .................................. 8,607 (4,652)
Change in net unrealized appreciation ..................... 11,772 32,639
-------- --------
Net increase in net assets resulting from operations ... 19,648 27,603
Distributions to shareholders from:
Capital paid-in ........................................... (11,543)
--------
Decrease in net assets resulting from distributions .... (11,543)
From fund share transactions:
Proceeds from shares sold ................................. 37,753 50,786
Shares issued in reorganization ........................... 139,231
Distributions reinvested .................................. 11,543
Payment for shares redeemed ............................... (55,210) (42,137)
-------- --------
Increase in net assets from fund share transactions .... 121,774 20,192
-------- --------
NET INCREASE IN NET ASSETS ................................... 141,422 36,252
NET ASSETS
Beginning of Period ....................................... 86,579 50,327
-------- --------
End of Period (including undistributed net investment
income of $0 and $0, respectively) ..................... $228,001 $ 86,579
======== ========
Analysis of fund share transactions:
Sold ...................................................... 4,570 6,929
Issued in reorganization .................................. 17,269
Reinvested ................................................ 1,458
Redeemed .................................................. (6,816) (5,696)
-------- --------
Net increase in fund shares outstanding ...................... 15,023 2,691
======== ========
(a) Certain amounts in 2003 have been reclassified to permit comparison.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Small Cap Emerging Growth Fund
--------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------------
2004 2003(e)(h) 2002 2001 2000(c)
-------- ---------- ------- ------- -------
Net Assets Value at Beginning of Period ................. $ 8.10 $ 6.30 $ 8.79 $ 9.14 $ 10.92
Income from Investment Operations:
Net Investment Income (Loss) ......................... (0.03) 0.01 0.01 0.14
Net Realized and Unrealized Gain (Loss) on
Investment(a) ..................................... 0.77 3.07 (2.49) (0.35) (1.13)
-------- ------- ------- ------- -------
Total From Investment Operations ..................... 0.77 3.04 (2.48) (0.34) (0.99)
Less Distributions:
Distribution from Net Investment Income .............. (0.01) (0.01) (0.15)
Distribution from Net Realized Gains on Investments .. (0.14)
Distribution from Excess of Net Investment Income/
Gains ............................................. (0.20)
Distribution from Capital Paid-in .................... (1.24) (0.30)
-------- ------- ------- ------- -------
Total Distributions .................................. (1.24) (0.01) (0.01) (0.79)
-------- ------- ------- ------- -------
Net Assets Value at End of Period ....................... $ 8.87 $ 8.10 $ 6.30 $ 8.79 $ 9.14
======== ======= ======= ======= =======
Total Investment Return(b) .............................. 9.45% 48.83% (28.21)% (3.78)% (8.89)%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ..... 1.14%(d)(f) 1.11%(d)(f) 1.00%(d) 1.00%(d) 0.92%(d)
Ratio of Net Investment Income (Loss) to Average Net
Assets ............................................ (0.71)% (0.59)% 0.19% 0.06% 1.25%
Portfolio Turnover Rate .............................. 160.48%(g) 235.48% 45.03% 60.73% 189.57%
Net Assets End of Period (000s Omitted) ................. $228,001 $86,579 $50,327 $71,193 $70,031
(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 1.35%, 1.21%, 1.04%, 1.02%, and
95%, for the years ended December 31, 2004, 2003, 2002, 2001, and 2000,
respectively.
(e) The fund entered into a new sub-advisory agreement with Wellington
Management Company during the period shown.
(f) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(g) Excludes merger activity.
(h) Certain amounts in 2003 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SMALL CAP EMERGING GROWTH FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 2.4%
Aeroflex, Inc. # * ...................................... 225,400 $ 2,732
Moog, Inc. - Cl. A * .................................... 59,050 2,678
-------
5,410
Airlines - 2.7%
Airtran Holdings, Inc. # * .............................. 206,060 2,205
Gol-Linhas Aereas Inteligentes SA - ADR # * ............. 121,430 3,871
-------
6,076
Banks - 1.0%
Amcore Financial, Inc. .................................. 73,530 2,366
Biotechnology - 5.5%
Abgenix, Inc. # * ....................................... 130,880 1,353
Alkermes, Inc. # * ...................................... 176,670 2,489
Amylin Pharmaceuticals, Inc. # * ........................ 73,900 1,726
Encysive Pharmaceuticals, Inc. * ........................ 115,390 1,146
Exelixis, Inc. # * ...................................... 168,327 1,599
Human Genome Sciences, Inc. # * ......................... 103,030 1,239
ICOS Corp. # * .......................................... 57,430 1,624
Neurocrine Biosciences, Inc. # * ........................ 27,400 1,351
-------
12,527
Chemicals - 0.7%
Hercules, Inc. # * ...................................... 100,300 1,489
Commercial Services & Supplies - 4.4%
Corporate Executive Board Co. # ......................... 22,200 1,486
CSG Systems International, Inc. # * ..................... 82,340 1,540
DiamondCluster, Inc. # * ................................ 97,300 1,394
Navigant Consulting, Inc. # * ........................... 109,500 2,913
Strayer Education, Inc. # ............................... 25,090 2,754
-------
10,087
Communications Equipment - 4.7%
AudioCodes, Ltd. * ...................................... 97,740 1,623
EFJ, Inc. * ............................................. 164,130 1,584
Kanbay International, Inc. * ............................ 63,210 1,979
Novatel Wireless, Inc. # * .............................. 67,650 1,311
Polycom, Inc. # * ....................................... 137,635 3,210
Sierra Wireless, Inc. # * ............................... 62,050 1,097
-------
10,804
Computers & Peripherals - 1.0%
SBS Technologies, Inc. * ................................ 164,600 2,298
Construction & Engineering - 0.8%
Washington Group International, Inc. * .................. 44,310 1,828
Construction Materials - 1.3%
Eagle Materials, Inc. # ................................. 35,220 3,041
Containers & Packaging - 0.5%
Jarden Corp. # * ........................................ 25,500 1,108
Diversified Financials - 4.5%
Affiliated Managers Group, Inc. # * ..................... 56,560 3,831
IndyMac Bancorp, Inc. # ................................. 68,390 $ 2,356
Jackson Hewitt, Inc. # .................................. 157,780 3,984
-------
10,171
Diversified Telecommunication Services - 1.0%
Spectrasite, Inc. * ..................................... 38,450 2,226
Electrical Equipment - 1.5%
Fuelcell Energy, Inc. # * ............................... 92,700 918
Techtronic Industries, Ltd. - ADR ....................... 234,940 2,561
-------
3,479
Food Products - 0.9%
Peets Coffee & Tea, Inc. # * ............................ 76,540 2,026
Health Care Equipment & Supplies - 1.4%
Foxhollow Technologies, Inc. # * ........................ 1,600 39
Respironics, Inc. * ..................................... 24,235 1,318
Zoll Medical Corp. # * .................................. 54,300 1,868
-------
3,225
Health Care Providers & Services - 3.2%
Advisory Co. # * ........................................ 61,700 2,276
Genesis Healthcare Corp. * .............................. 69,430 2,432
Symbion, Inc. # * ....................................... 118,570 2,618
-------
7,326
Hotels Restaurants & Leisure - 6.0%
La Quinta Corp. - CTF 1 Cl. B # * ....................... 383,240 3,484
Landry's Seafood Restaurants, Inc. # .................... 56,750 1,649
Mikohn Gaming Corp. * ................................... 88,100 900
Rare Hospitality International, Inc. # * ................ 79,650 2,538
Red Robin Gourmet Burgers, Inc. # * ..................... 55,790 2,983
Vail Resorts # * ........................................ 99,150 2,223
-------
13,777
Household Durables - 4.0%
Fleetwood Enterprises, Inc. # * ......................... 143,960 1,938
Helen of Troy, Ltd. # * ................................. 81,820 2,750
Standard Pacific Corp. # ................................ 50,910 3,265
Tempur Pedic International, Inc. # * .................... 51,500 1,092
-------
9,045
Insurance - 2.6%
American Equity Investment Life # ....................... 145,060 1,562
Arch Capital Group, Ltd. * .............................. 40,030 1,549
Healthextras, Inc. # * .................................. 73,890 1,205
Platinum Underwriters Holdings .......................... 54,010 1,680
-------
5,996
Internet & Catalog Retail - 1.0%
Insight Enterprises, Inc. * ............................. 107,530 2,207
Internet Software & Services - 2.2%
F5 Networks, Inc. * ..................................... 31,200 1,520
Openwave Systems, Inc. # * .............................. 136,640 2,112
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SMALL CAP EMERGING GROWTH FUND
Market
Name of Issuer Shares Value
-------------- -------- ---------
(000's)
COMMON STOCK - Continued
Internet Software & Services - Continued
Opsware, Inc. # * .................................... 200,400 $ 1,471
--------
5,103
IT Consulting & Services - 0.9%
NAVTEQ Corp. # * ..................................... 41,990 1,947
Machinery - 1.3%
ESCO Technologies, Inc. # * .......................... 39,080 2,995
Media - 1.5%
Lions Gate Entertainment Corp. # * ................... 221,440 2,352
Tivo, Inc. # * ....................................... 174,800 1,026
--------
3,378
Metals & Mining - 3.3%
Arch Coal, Inc. # .................................... 72,510 2,577
Carpenter Technology Corp. # ......................... 42,160 2,465
GrafTech International, Ltd. # * ..................... 261,360 2,472
--------
7,514
Oil & Gas - 4.0%
Cabot Oil & Gas Corp. # .............................. 48,590 2,150
OMI Corp. # .......................................... 57,380 967
Patina Oil & Gas Corp. ............................... 54,020 2,026
Range Resources Corp. # .............................. 87,850 1,797
Whiting Petroleum Corp. * ............................ 69,410 2,100
--------
9,040
Pharmaceuticals - 4.7%
Atherogenics, Inc. # * ............................... 81,510 1,920
Eyetech Pharmaceuticals, Inc. # * .................... 32,400 1,474
Impax Laboratories, Inc. # * ......................... 103,640 1,646
Medicines Co. # * .................................... 94,700 2,727
NPS Pharmaceuticals, Inc. # * ........................ 73,120 1,337
Salix Pharmaceuticals, Ltd. # * ...................... 84,910 1,494
--------
10,598
Real Estate Operations - 1.8%
CB Richard Ellis Group, Inc. - Cl. A * ............... 123,490 4,143
Road & Rail - 5.8%
Arkansas Best Corp. .................................. 79,200 3,555
Forward Air Corp. # * ................................ 49,040 2,192
Knight Transportation, Inc. # * ...................... 71,450 1,772
Sirva, Inc. * ........................................ 167,680 3,223
Yellow Roadway Corp. # * ............................. 44,910 2,502
--------
13,244
Semiconductor Equipment & Products - 5.1%
Fairchild Semiconductor Corp. - Cl. A # * ............ 145,120 2,360
MEMC Electronic Materials, Inc. # * .................. 320,800 4,250
Microsemi Corp. # * .................................. 151,950 2,638
Semtech Corp. # * .................................... 109,090 2,386
--------
11,634
Software - 6.2%
Agile Software Corp. * ............................... 259,610 $ 2,121
Salesforce Common, Inc. # * .......................... 148,600 2,517
Take Two Interactive Software # * .................... 114,840 3,995
THQ, Inc. # * ........................................ 149,390 3,427
Verint Systems, Inc. * ............................... 58,950 2,142
--------
14,202
Specialty Retail - 3.2%
AC Moore Arts & Crafts, Inc. # * ..................... 91,620 2,639
Electronics Boutique Holdings Corp. * ................ 10,900 468
Hot Topic, Inc. # * .................................. 85,380 1,468
Men's Wearhouse, Inc. # * ............................ 87,200 2,787
--------
7,362
Textiles & Apparel - 1.1%
Quiksilver, Inc. * ................................... 81,470 2,427
Wireless Telecommunications Services - 5.9%
American Tower Corp. - Cl. A * ....................... 398,880 7,339
Crown Castle International Corp. * ................... 371,490 6,182
--------
13,521
--------
TOTAL COMMON STOCK-
(Cost $189,568) 98.1% 223,620
Par
Value
--------
(000's)
INVESTMENT COMPANIES HELD AS COLLATERAL ON LOANED
SECURITIES - 25.1%
State Street Navigator Securities Lending
Portfolio ......................................... $ 57,121 57,121
SHORT-TERM INVESTMENTS - 1.8%
Investment in joint trading account
2.29% due 01/03/05
(Cost $4,201) ..................................... 4,201 4,201
-------- --------
TOTAL INVESTMENTS-
(Cost $250,890) 125.0% 284,942
Payables, less cash and receivables- (25.0)% (56,941)
-------- --------
NET ASSETS- 100.0% $228,001
======== ========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
ADR-American Depository Receipt.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Small Cap Emerging Growth Fund, (formerly John Hancock Small
Cap Equity), (the "Fund" or "VST Small Cap Emerging Growth") 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
twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$1,506 1.61% $2
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, 2004, 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
- -------------------------- -------------------
$55,742 $57,121
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, 2004, 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. At December 31, 2004, 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, 2004, the Fund had approximate net tax basis capital
loss carryforwards, which may be applied against any net taxable gains, as
follows: $1,071, $2,042, $26,139, $46,928, $10,248 and $7,993 which expire in
2006, 2007, 2008, 2009, 2010 and 2011, respectively.
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Dividend and Interest: 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.
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 11, 2004, 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, 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, 2004, the reimbursements paid from John
Hancock and JHVLICO were $211 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 in expenses
of $75.
John Hancock has entered into a Sub-Advisory Agreement with Wellington
Management Company LLP, which under John Hancock's 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, JHV
LAS, 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, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$268,720 $159,702
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$252,047 $37,868 $(4,973) $32,895
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 return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$-- $-- $94,421 $32,895
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
- ---- ------------------ ---------------------- -----------------
2004 $-- $-- $ --
2003 -- -- 11,543
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE E--COMBINATION
On October 15, 2004, the shareholders of the Fund (acquiring fund) approved
the combination of the funds in the following table:
Acquiring Fund Target Fund
-------------- -----------
VST Small Cap Emerging Growth VST Small Cap Growth
This combination provided for the transfer of substantially all of the
assets and liabilities of the target fund to the acquiring fund in exchange
solely for the fund shares of the acquiring fund. The acquisition was accounted
for as a taxfree exchange as follows:
Trust Shares Target Fund Acquiring Fund Acquiring Fund
Issued by Target Fund Unrealized Net Assets Prior Aggregate Net Assets
Acquiring Fund Net Assets Appreciation to Combination After Combination
- -------------- ----------- ------------ ---------------- --------------------
17,269 $139,231 $8,409 $71,666 $210,897
NOTE F--OTHER MATTERS (UNAUDITED)
Section 30 and Rule 30d-1(b) under the Investment Company Act of 1940, as
amended, requires registered management investment companies to furnish
information relating to any matter submitted during the reporting period to a
vote of Shareholders of the Trust.
John Hancock Variable Series Trust I solicited a vote at a special meeting of
Contract owners/Policyholders held on October 15, 2004 on the following matter:
For Against Abstain
--- ------- -------
To approve, as to the Small Cap Emerging Growth Fund, 92% 3% 5%
a proposal to combine with the Small Cap Growth
Fund of John Hancock Variable Series Trust I.
Shareholders in the Small Cap Growth Fund would
receive Small Cap Emerging Growth Fund shares
having the same value as their prior Small Cap
Growth Fund shares.
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Cap Emerging Growth Fund (a
portfolio included in the series of John Hancock Variable Series Trust I {the
"Trust"}) as of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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 Cap Emerging Growth Fund of John Hancock Variable Series Trust I at
December 31, 2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: August 31, 1999
- --------------------------------------------------------------------------------
Small Cap Value Fund
T. Rowe Price Associates, Inc. Preston G. Athey
Wellington Management Company, LLP S. O'Brien/T.McCormack
- --------------------------------------------------------------------------------
.. The Fund employs a multi-manager approach with two sub-advisers
independently managing portions of the Fund and each using distinct
investment strategies.
.. T. Rowe Price Associates, Inc. selects stocks using proprietary fundamental
equity research and seeks companies with attractive valuation relative to
industry peers and historical norms.
.. Wellington Management Company, LLP employs proprietary fundamental research
to identify stocks having distinct value characteristics based on
industry-specific valuation criteria.
Fund Commentary
Overall Performance: For the year 2004, the Small Cap Value Trust returned
+25.45%, outperforming the +22.26% return of the Russell 2000 Value Index.
Wellington Management Company, LLP
Environment: In the Russell 2000 Value Index, the Energy and Materials sectors
dominated returns for the first three quarters of 2004. Performance was broadly
positive across all 10 sectors in the fourth quarter. The peak and subsequent
decline in oil prices in late October, as well as the Presidential election,
appear to have triggered the sharp year-end rally. The portfolio's strongest
sectors relative to the Index were Consumer Discretionary and Health Care,
driven by stock selection. The Industrials sector was the largest negative
contributor to relative performance, since positive stock performance lagged
that of the Index sector. Stock selection was responsible for the relative
underperformance of the Information Technology and Consumer Staples sectors. The
cash balance, which averaged 2.6% during the year, also detracted in a year of
positive returns.
Outlook: We would agree with the consensus of strategists who believe that
investor returns for the foreseeable future will be more dependent on individual
stock selection rather than sector bets. Small cap value stocks are less likely
to be up in the straight line fashion that we have seen over the past 18 months,
thus providing an opportunity to build larger position sizes near our entry cost
and thus focus the portfolio in somewhat fewer names.
T. Rowe Price Associates, Inc.
Environment: U.S. stock prices climbed higher in 2004. Throughout much of the
year, equities struggled to make headway as economic growth moderated amid
rising short-term interest rates, surging energy costs and a heated presidential
campaign. Late in the year, however, stocks rallied as oil prices retreated from
a late-October peak of $55 per barrel. Gains accelerated after the re-election
of President Bush.
Holdings in nearly every sector of investment generated strong increases, led by
Energy. Versus the Index, positions in the Industrials and Business Services and
Financials sectors were the main contributors to performance. The portfolio's
Consumer Staples and Energy exposures were less favorable.
Among Industrial and Business Services companies, stock selection was a source
of relative strength, as was an overweight in the group. This sector is strongly
leveraged to global economic growth, and many of the world's economies expanded
in 2004. In the Financials sector, good stock selection helped drive the Trust's
performance.
Consumer Staples detracted from relative performance due to stock selection. For
example, the fund was overweight a natural foods grocery chain that was weak on
news of higher-than-anticipated expenses. An overweight in Energy helped
performance, but negative stock selection almost entirely offset this benefit.
Outlook: Given that we are near the upper end of historic relative valuation
levels for small-cap stocks, we are cautious. We continue to find good
risk/reward candidates among small-caps, although they are somewhat harder to
come by than in previous years.
Inception: August 31, 1999
- --------------------------------------------------------------------------------
Small Cap Value Fund
T. Rowe Price Associates, Inc. Preston G. Athey
Wellington Management Company, LLP S. O'Brien/T. Mccormack
- --------------------------------------------------------------------------------
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 8/31/99 (Fund Inception Date)
Small Cap Small Cap Value
Value Fund Fund Benchmark (1)
---------- ------------------
8/31/1999 $10,000 $10,000
9/30/1999 9,559 9,685
10/31/1999 9,441 9,695
11/30/1999 9,941 9,748
12/31/1999 10,507 10,080
1/31/2000 9,755 9,661
2/29/2000 9,774 9,828
3/31/2000 11,917 10,552
4/30/2000 12,264 10,547
5/31/2000 12,274 10,528
6/30/2000 12,413 10,488
7/31/2000 12,367 10,716
8/31/2000 13,855 11,277
9/30/2000 13,470 11,210
10/31/2000 13,913 11,203
11/30/2000 12,934 11,061
12/31/2000 14,100 12,176
1/31/2001 14,698 12,512
2/28/2001 14,806 12,494
3/31/2001 14,643 12,294
4/30/2001 16,012 12,864
5/31/2001 16,429 13,194
6/30/2001 16,673 13,725
7/31/2001 16,432 13,417
8/31/2001 15,997 13,370
9/30/2001 14,536 11,894
10/31/2001 15,073 12,205
11/30/2001 15,774 13,082
12/31/2001 16,792 13,883
1/31/2002 17,149 14,067
2/28/2002 17,408 14,153
3/31/2002 18,658 15,213
4/30/2002 19,407 15,749
5/31/2002 18,595 15,227
6/30/2002 18,040 14,891
7/31/2002 15,629 12,678
8/31/2002 15,697 12,622
9/30/2002 14,827 11,721
10/31/2002 15,093 11,897
11/30/2002 15,954 12,846
12/31/2002 15,713 12,298
1/31/2003 15,194 11,951
2/28/2003 14,847 11,549
3/31/2003 15,279 11,673
4/30/2003 16,657 12,782
5/31/2003 17,792 14,087
6/30/2003 18,160 14,325
7/31/2003 18,807 15,040
8/31/2003 19,426 15,611
9/30/2003 19,223 15,432
10/31/2003 20,409 16,689
11/30/2003 21,135 17,330
12/31/2003 21,679 17,958
1/31/2004 22,246 18,579
2/28/2004 22,728 18,940
3/31/2004 23,159 19,201
4/30/2004 22,394 18,208
5/31/2004 22,612 18,429
6/30/2004 23,839 19,365
7/31/2004 23,000 18,474
8/31/2004 23,012 18,655
9/30/2004 24,023 19,394
10/31/2004 24,570 19,695
11/30/2004 26,575 21,443
12/31/2004 27,195 21,954
Value on 12/31/04:
- ------------------
$27,195 Small Cap Value Fund
$21,954 Small Cap Value Benchmark (1)
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of December 31, 2004)
% of
Investments
-----------
United Stationers, Inc. 1.4%
O'Reilly Automotive, Inc. 1.4%
Belden CDT, Inc. 1.4%
AptarGroup, Inc. 1.3%
WCI Communities, Inc. 1.2%
Genesee & Wyo., Inc. 1.2%
Encore Acquisition Co. 1.1%
Reinsurance Group of America 1.0%
Casey's General Stores, Inc. 1.0%
Scottish Annuity & Life 1.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Small Cap
Small Cap Value Fund
Value Fund Benchmark/1/
---------- ------------
1 Year 25.45% 22.26%
3 Years 17.43% 16.51%
5 Years 20.95% 16.84%
Since Inception (8/31/99) 20.60% 15.89%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN SECTOR CLASSIFICATIONS (as of December 31, 2004)
% of
Investments
-----------
Financials 24.1%
Industrials 23.1%
Consumer Discretionary 19.9%
Materials 7.6%
Energy 6.7%
Information Technology 5.2%
Utilities 5.1%
Health Care 4.4%
Consumer Staples 3.9%
- --------------------------------------------------------------------------------
* Total returns are for the period ended June 30, 2004. 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.
/1/ The Small Cap Value Fund benchmark represents the Russell 2500(TM) Value
Index from September 1999 to December 2000 and the Russell 2000(R) Value
Index January 2001-present.
Inception: August 31, 1999
- --------------------------------------------------------------------------------
Small Cap Value Fund
T. Rowe Price Associates, Inc. Preston G. Athey
Wellington Management Company, LLP S. O'Brien/T. McCormack
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Small Cap Value Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,140.80
Expense paid per $1,000* $ 5.65
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,019.86
Expense paid per $1,000* $ 5.33
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Small Cap Value Fund
(000's Omitted)
ASSETS
Long term investments at cost (including $28,720 of securities loaned
(Note B)) ........................................................ $176,038
Net unrealized appreciation of investments .......................... 65,503
Short-term investments at value ..................................... 35,064
--------
Total investments ............................................. 276,605
Receivable for:
Dividends ........................................................ 408
--------
Total assets ........................................................ 277,013
--------
LIABILITIES
Payables for:
Investments purchased ............................................ 504
Fund shares purchased ............................................ 224
Collateral for securities on loan ................................ 29,536
Accrued operating expenses ....................................... 82
--------
Total liabilities ................................................... 30,346
--------
Net assets .......................................................... $246,667
========
Shares outstanding, $0.01 Par Value (unlimited shares authorized).... 12,700
--------
Net asset value per share ........................................... $ 19.42
========
Composition of net assets:
Capital paid-in .................................................. $177,844
Accumulated net realized gain on investments ..................... 3,320
Net unrealized appreciation of investments ....................... 65,503
--------
Net assets .......................................................... $246,667
========
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Small Cap Value Fund
(000's Omitted)
INVESTMENT INCOME
Interest ......................................................... $ 60
Dividends ........................................................ 4,399
Securities lending ............................................... 52
-------
Total investment income ............................................. 4,511
-------
EXPENSES
Investment advisory fee .......................................... 2,001
Auditors fees .................................................... 51
Custodian fees ................................................... 88
Legal fees ....................................................... 31
Printing & mailing fees .......................................... 31
Trustees' fees ................................................... 6
Other fees ....................................................... 8
-------
Total expenses ...................................................... 2,216
Less expenses reimbursed ......................................... (5)
Less custodian expense reduction offset by
commission recapture arrangement (Note C) ..................... (29)
-------
Net expenses ........................................................ 2,182
-------
Net investment income ............................................... 2,329
-------
REALIZED AND UNREALIZED GAIN
Net realized gain on investments ................................. 16,658
Change in unrealized appreciation on investments ................. 30,386
-------
Net realized and unrealized gain .................................... 47,044
-------
Net increase in net assets resulting from operations ................ $49,373
=======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Small Cap Value Fund
(000's Omitted)
Year Ended Year Ended
December 31, December 31,
2004 2003
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ..................................... $ 2,329 $ 978
Net realized gain ......................................... 16,658 7,581
Change in net unrealized appreciation ..................... 30,386 39,529
-------- --------
Net increase in net assets resulting from operations ... 49,373 48,088
Distributions to shareholders from:
Net investment income ..................................... (1,925) (980)
Realized gains ............................................ (13,807) (7,128)
-------- --------
Decrease in net assets resulting from distributions .... (15,732) (8,108)
From fund share transactions:
Proceeds from shares sold ................................. 69,246 59,731
Distributions reinvested .................................. 15,732 8,108
Payment for shares redeemed ............................... (61,725) (38,116)
-------- --------
Increase in net assets from fund share transactions .... 23,253 29,723
-------- --------
NET INCREASE IN NET ASSETS ................................... 56,894 69,703
NET ASSETS
Beginning of Period ....................................... 189,773 120,070
-------- --------
End of Period (including undistributed net investment
income of $0 and $0, respectively) ..................... $246,667 $189,773
======== ========
Analysis of fund share transactions:
Sold ...................................................... 3,891 4,095
Reinvested ................................................ 820 495
Redeemed .................................................. (3,474) (2,697)
-------- --------
Net increase in fund shares outstanding ...................... 1,237 1,893
======== ========
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Small Cap Value Fund
---------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------------
2004 2003 2002(d)(g) 2001(c) 2000
-------- -------- ---------- -------- -------
Net Assets Value at Beginning of Period ..... $ 16.56 $ 12.55 $ 13.76 $ 11.70 $ 10.13
Income from Investment Operations:
Net Investment Income .................... 0.19 0.09 0.08 0.09 0.01
Net Realized and Unrealized Gain (Loss) on
Investment(a) ......................... 3.99 4.66 (0.96) 2.14 3.37
-------- -------- -------- -------- -------
Total From Investment Operations ......... 4.18 4.75 (0.88) 2.23 3.38
Less Distributions:
Distribution from Net Investment Income .. (0.16) (0.09) (0.09) (0.09) (0.01)
Distribution from Net Realized Gains on
Investments ........................... (1.16) (0.65) (0.11) (0.08) (1.80)
Distributions from Capital Paid-In ....... (0.13)
-------- -------- -------- -------- -------
Total Distributions ...................... (1.32) (0.74) (0.33) (0.17) (1.81)
-------- -------- -------- -------- -------
Net Assets Value at End of Period ........... $ 19.42 $ 16.56 $ 12.55 $ 13.76 $ 11.70
======== ======== ======== ======== =======
Total Investment Return(b) .................. 25.45% 37.97% (6.43)% 19.10% 34.19%
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net
Assets ................................ 1.05%(e)(f) 1.05%(e)(f) 1.04%(e) 1.05%(e) 1.05%(e)
Ratio of Net Investment Income to Average
Net Assets ............................ 1.11% 0.67% 0.62% 0.87% 0.13%
Portfolio Turnover Rate .................. 32.61% 29.95% 41.46% 60.36% 220.80%
Net Assets End of Period (000s Omitted) ..... $246,667 $189,773 $120,070 $103,224 $29,436
(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 T. Rowe Price
Associates, Inc. during the period shown.
(d) The fund entered into a new sub-advisory agreement with Wellington
Management Company during the period shown.
(e) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made the expense ratio would have been 1.06%, 1.06%, 1.04%, 1.08%, and
1.29%, for the years ended December 31, 2004, 2003, 2002, 2001, and 2000,
respectively.
(f) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
(g) Certain amounts in 2002 have been reclassified to permit comparison.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK
Aerospace & Defense - 0.8%
Curtiss Wright Corp. - Cl. B ............................ 25,600 $ 1,440
EDO Corp. ............................................... 18,600 591
-------
2,031
Air Freight & Couriers - 1.2%
Hub Group Inc. - Cl. A * ................................ 25,400 1,326
United Technologies Worldwide, Inc. # ................... 23,000 1,565
-------
2,891
Airlines - 0.8%
Airtran Holdings, Inc. # * .............................. 99,800 1,068
Frontier Airlines, Inc. # * ............................. 91,900 1,048
-------
2,116
Auto Components - 1.2%
Keystone Automotive Industries, Inc. * .................. 34,200 795
Modine Manufacturing Co. ................................ 39,800 1,344
Spartan Motors, Inc. .................................... 66,000 788
-------
2,927
Banks - 5.0%
Amcore Financial, Inc. .................................. 29,800 959
Century Bancorp, Inc. - Cl. A ........................... 20,000 590
East West Bancorp, Inc. ................................. 45,900 1,926
First Midwest Bancorp, Inc. ............................. 26,900 976
First Republic Bank # ................................... 41,000 2,173
MB Financial, Inc. ...................................... 500 21
NetBank, Inc. # ......................................... 54,000 562
New Alliance Bancshares, Inc. ........................... 88,700 1,357
Silicon Valley Bancshares # * ........................... 44,900 2,012
Texas Regional Bancshares, Inc. ......................... 52,800 1,726
-------
12,302
Beverages - 0.2%
Coca Cola Bottling Co. .................................. 10,900 622
Biotechnology - 0.2%
Diversa Corp. # * ....................................... 53,700 469
Building Products - 1.5%
Gibraltar Industries, Inc. # ............................ 52,800 1,247
Insituform Technologies, Inc. - Cl. A * ................. 48,900 1,109
Simpson Manufacturing, Inc. ............................. 37,800 1,319
-------
3,675
Chemicals - 1.7%
Airgas, Inc. ............................................ 48,000 1,273
Arch Chemicals, Inc. .................................... 35,100 1,010
MacDermid, Inc. ......................................... 17,600 635
Material Sciences Corp. * ............................... 45,900 826
Symyx Technologies, Inc. # * ............................ 13,700 412
-------
4,156
Commercial Services & Supplies - 5.3%
Casella Waste Systems, Inc. - Cl. A * ................... 74,700 1,094
Centerplate, Inc. ....................................... 39,100 517
Electro Rent Corp ....................................... 85,000 $ 1,210
G & K Services, Inc. - Cl. A ............................ 31,900 1,385
Healthcare Services Group, Inc. ......................... 51,790 1,079
Icon Public, Ltd. * ..................................... 12,300 475
Landauer, Inc ........................................... 15,900 727
Macquarie Infrastructure Co. # * ........................ 18,000 528
McGrath Rent Corp. ...................................... 36,700 1,601
Nam Tai Electronics # ................................... 27,500 529
United Stationers, Inc. * ............................... 71,200 3,290
Waste Connections, Inc. * ............................... 15,600 534
-------
12,969
Commingled Fund - 0.5%
First Financial Fund, Inc. # ............................ 53,000 1,138
Communications Equipment - 0.8%
Black Box Corp. ......................................... 20,600 989
Catapult Communications Corp. * ......................... 39,100 945
-------
1,934
Computers & Peripherals - 1.0%
Electronics for Imaging, Inc. * ......................... 54,200 943
Intergraph Corp. # * .................................... 31,900 859
SBS Technologies, Inc. * ................................ 48,900 683
-------
2,485
Construction & Engineering - 0.1%
Bowne & Co., Inc. # ..................................... 13,800 224
Construction Materials - 0.9%
Ameron International Corp. .............................. 22,800 864
Florida Rock Industries, Inc. ........................... 24,000 1,429
-------
2,293
Containers & Packaging - 1.5%
AptarGroup, Inc. ........................................ 58,700 3,098
Myers Industries, Inc. .................................. 49,170 630
-------
3,728
Diversified Financials - 2.7%
Allied Capital Corp. # .................................. 60,600 1,566
American Capital Strategies, Ltd. # ..................... 62,800 2,094
Assured Guaranty, Ltd. .................................. 119,300 2,347
Financial Federal Corp. # * ............................. 14,400 564
-------
6,571
Electric Utilities - 2.8%
Black Hills Corp. # ..................................... 56,300 1,727
Cleco Corp. ............................................. 57,000 1,155
El Paso Electric Co. * .................................. 82,000 1,553
Otter Tail Power Co. # .................................. 20,200 516
PNM Resources, Inc. ..................................... 82,000 2,074
-------
7,025
Electrical Equipment - 4.2%
Acuity Brands, Inc. ..................................... 43,600 1,386
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
Market
Name of Issuer Shares Value
-------------- ------- -------
(000's)
COMMON STOCK - Continued
Electrical Equipment - Continued
Belden CDT, Inc. # ...................................... 141,449 $ 3,282
C&D Technologies, Inc. .................................. 36,300 618
Deswell Industries, Inc. # .............................. 60,100 1,486
Franklin Electric Co., Inc. ............................. 26,900 1,137
The Genlyte Corp. * ..................................... 18,200 1,559
Woodward Governor Co. ................................... 12,200 874
-------
10,342
Electronic Equipment & Instruments - 1.1%
Analogic Corp. .......................................... 9,200 412
Exar Corp. * ............................................ 34,200 485
Littelfuse, Inc. * ...................................... 25,400 868
Methode Electronics, Inc. - Cl. A ....................... 31,900 410
Technitrol, Inc. * ...................................... 33,100 602
-------
2,777
Energy Equipment & Services - 1.4%
Atwood Oceanics, Inc. * ................................. 8,800 459
Carbo Ceramics, Inc. .................................... 5,600 387
Lone Star Technologies, Inc. * .......................... 44,000 1,472
Tetra Technologies, Inc. * .............................. 23,500 665
West Hampshire Energy Services, Inc. * .................. 20,500 458
-------
3,441
Food & Drug Retailing - 1.3%
Casey's General Stores, Inc. ............................ 136,300 2,474
Nash Finch Co. # ........................................ 11,700 442
Wild Oats Markets, Inc. # * ............................. 27,400 241
-------
3,157
Food Products - 0.6%
John B Sanfilippo & Son, Inc. * ......................... 31,000 799
Sensient Technologies Corp. # ........................... 27,600 662
-------
1,461
Gas Utilities - 1.4%
Atmos Energy Corp. ...................................... 33,400 914
New Jersey Resources Corp. .............................. 23,700 1,027
NorthWestern Corp. * .................................... 23,600 661
WGL Holdings, Inc. ...................................... 29,000 894
-------
3,496
Health Care Equipment & Supplies - 1.3%
Arrow International, Inc. ............................... 17,400 539
Diagnostic Products Corp. ............................... 26,200 1,442
PolyMedica Corp. ........................................ 34,700 1,294
-------
3,275
Health Care Providers & Services - 2.8%
Amerigroup Corp. * ...................................... 12,500 946
Amsurg Corp. # * ........................................ 45,749 1,351
Capital Senior Living Corp. * ........................... 127,000 719
Corvel Corp. * .......................................... 19,600 525
Maximus, Inc. * ......................................... 51,900 1,615
Owens & Minor, Inc. ..................................... 60,000 $ 1,690
-------
6,846
Hotels Restaurants & Leisure - 2.5%
CEC Entertainment, Inc. * ............................... 19,350 773
Interstate Hotels & Resorts * ........................... 137,500 737
Rare Hospitality International, Inc. * .................. 35,700 1,137
Ruby Tuesday, Inc. ...................................... 87,800 2,290
Sonic Corp. * ........................................... 21,100 644
The Steak and Shake Co. * ............................... 24,400 490
-------
6,071
Household Durables - 3.9%
CSS Industries, Inc. .................................... 31,900 1,013
Mathews International Corp. ............................. 30,300 1,115
Meritage Corp. # * ...................................... 6,800 767
Skyline Corp. ........................................... 25,900 1,057
Stanley Furniture Co., Inc. ............................. 25,000 1,124
WCI Communities, Inc. # * ............................... 98,000 2,881
Yankee Candle, Inc. * ................................... 52,300 1,735
-------
9,692
Industrial Conglomerates - 0.6%
Carlisle Cos., Inc. ..................................... 24,400 1,584
Insurance - 7.8%
Delphi Financial Group, Inc. - Cl. A .................... 35,950 1,659
IPC Holdings, Ltd. ...................................... 39,100 1,701
Markel Corp. * .......................................... 2,600 946
Max Re Capital, Ltd. .................................... 68,400 1,459
Platinum Underwriters Holdings .......................... 53,300 1,658
Proassurance Corp. * .................................... 50,000 1,956
Reinsurance Group of America ............................ 52,200 2,529
Scottish Re Group, Ltd. # ............................... 93,200 2,414
The Midland Co. ......................................... 48,300 1,510
Triad Guaranty, Inc. * .................................. 23,600 1,427
Universal American Financial Corp. * .................... 122,400 1,894
-------
19,153
Internet Software & Services - 0.3%
Websense, Inc. * ........................................ 14,700 746
Leisure Equipment & Products - 0.4%
SCP Pool Corp. .......................................... 34,200 1,091
Machinery - 4.7%
Albany International Corp. - Cl. A ...................... 55,400 1,948
IDEX Corp. .............................................. 35,200 1,426
JLG Industries, Inc. .................................... 74,800 1,468
Kadant, Inc. * .......................................... 63,800 1,308
Nordson Corp. ........................................... 34,000 1,362
Quixote Corp. # ......................................... 48,000 976
Thomas Industries, Inc. ................................. 43,000 1,716
Wolverine Tube, Inc. * .................................. 103,300 1,334
-------
11,538
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
Market
Name of Issuer Shares Value
-------------- ------ -------
(000's)
COMMON STOCK - Continued
Marine - 0.5%
Kirby Corp. * ........................................... 26,400 $ 1,172
Media - 2.1%
Advo, Inc. .............................................. 44,200 1,576
Courier Corp. # ......................................... 37,100 1,926
Journal Register Co. * .................................. 50,000 966
Saga Communications, Inc. - Cl. A * ..................... 43,000 725
-------
5,193
Metals & Mining - 1.8%
Aber Diamond Corp. * .................................... 17,400 614
Carpenter Technology Corp. .............................. 40,000 2,338
Meridian Gold, Inc. * ................................... 40,100 761
Mueller Industries, Inc. ................................ 24,400 786
-------
4,499
Multi-Utilities - 0.7%
Vectren Corp. ........................................... 29,000 777
Weststar Energy, Inc. ................................... 39,100 894
-------
1,671
Multiline Retail - 0.6%
Stein Mart, Inc. * ...................................... 83,100 1,418
Oil & Gas - 5.1%
Encore Acquisition Co. * ................................ 73,000 2,548
Forest Oil Corp. * ...................................... 50,500 1,602
Magnum Hunter Resources, Inc. * ......................... 99,600 1,285
Penn Virginia Corp. ..................................... 29,000 1,177
Plains Exploration & Production Co. * ................... 75,400 1,960
Todco - Cl. A * ......................................... 88,400 1,628
Vintage Petroleum, Inc. ................................. 57,100 1,296
Whiting Petroleum Corp. # * ............................. 38,100 1,152
-------
12,648
Paper & Forest Products - 1.5%
Chesapeake Corp. ........................................ 18,400 500
Deltic Timber Corp. ..................................... 21,500 913
Potlatch Corp. .......................................... 32,100 1,623
Wausau-Mosinee Paper Corp. .............................. 40,300 720
-------
3,756
Personal Products - 0.6%
NBTY, Inc. * ............................................ 65,800 1,580
Real Estate Investment Trust - 7.7%
Acadia Realty Trust ..................................... 55,100 898
Bedford Property Investors, Inc. # ...................... 48,600 1,381
East Group Properties, Inc. ............................. 33,700 1,291
Gables Residential Trust # .............................. 32,300 1,156
Getty Realty Corp. ...................................... 22,200 638
Glenborough Realty Trust, Inc. .......................... 22,800 485
Innkeepers USA Trust .................................... 99,100 1,407
Kilroy Realty Corp. ..................................... 45,800 1,958
LaSalle Hotel Properties * .............................. 48,300 1,537
Maguire Properties, Inc. ................................ 21,900 601
PS Business Parks, Inc. ................................. 18,900 $ 853
RAIT Investment Trust ................................... 26,600 744
Realty Income Corp. # ................................... 25,600 1,295
Strategic Hotel Capital, Inc. ........................... 21,900 361
Sun Communities, Inc. ................................... 30,500 1,228
United Store IT Trust * ................................. 62,900 1,091
Ventas, Inc. ............................................ 30,900 847
Washington Real Estate Investment Trust ................. 39,200 1,328
-------
19,099
Road & Rail - 3.4%
Dollar Thrifty Automotive Group, Inc. * ................. 29,300 885
Genesee & Wyo., Inc. - Cl. A * .......................... 99,750 2,806
Landstar Systems, Inc. * ................................ 24,400 1,797
Overnite Corp. .......................................... 45,400 1,690
USF Corp. ............................................... 29,400 1,116
-------
8,294
Semiconductor Equipment & Products - 1.3%
Helix Technology Corp. # ................................ 44,000 765
MPS Group, Inc. * ....................................... 94,800 1,162
Mykrolis Corp. * ........................................ 52,000 737
Pericom Semiconductor Corp. * ........................... 50,400 476
-------
3,140
Software - 0.6%
Progress Software Corp. * ............................... 36,200 845
SPSS, Inc. * ............................................ 38,200 598
-------
1,443
Specialty Retail - 7.8%
Aaron Rents, Inc. - Cl. B ............................... 76,000 1,900
Building Materials Holdings Corp. - Sr. Notes # ......... 58,600 2,244
Cato Corp. - Cl. A ...................................... 63,000 1,816
Gildan Activewear, Inc. - Cl. A ......................... 53,100 1,805
Hancock Fabrics, Inc. # ................................. 50,000 518
Haverty Furniture Co., Inc. ............................. 70,600 1,306
Hibbett Sporting Goods, Inc. * .......................... 87,100 2,318
O'Reilly Automotive, Inc. # * ........................... 72,900 3,284
Shoe Carnival, Inc. # * ................................. 57,500 747
Stage Stores, Inc. * .................................... 40,800 1,694
TBC Corp. * ............................................. 56,500 1,571
-------
19,203
Textiles & Apparel - 0.5%
Culp, Inc. * ............................................ 32,900 223
Cutter & Buck, Inc. ..................................... 62,000 903
-------
1,126
Tobacco - 1.2%
Standard Commercial Corp. # ............................. 50,000 973
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
Market
Name of Issuer Shares Value
-------------- ------ ---------
(000's)
COMMON STOCK - Continued
Tobacco - Continued
Universal Corp. .................................... 43,900 $ 2,100
--------
3,073
--------
TOTAL COMMON STOCK-
(Cost $176,038) 97.9% 241,541
Par
Value
-------
(000's)
INVESTMENT COMPANIES HELD AS COLLATERAL ON LOANED
SECURITIES - 12.0%
State Street Navigator Securities Lending Portfolio ... 29,536 29,536
SHORT-TERM INVESTMENTS - 2.2%
Investment in joint trading account 2.29% due 01/03/05
(Cost $5,528) ...................................... 5,528 5,528
------ --------
TOTAL INVESTMENTS-
(Cost $211,102) 112.1% 276,605
Payables, less cash and receivables- (12.1)% (29,938)
------ --------
NET ASSETS- 100.0% $246,667
====== ========
* Non-income producing security.
# At December 31, 2004 all or portion of this security was out on loan.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Small Cap Value 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
twenty-three different funds as of December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices
as late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at
any time other than 4:00 p.m. Eastern Standard Time on a particular day, the
Fund will determine its net asset value per share as of the close of the
Exchange on that day. Investment security transactions are recorded on the date
of purchase or sale.
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.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including,
but not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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 $90 and $10 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, 2004 as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Average Daily Loan Balance
During the Period for which Weighted Average
Loans were Outstanding Interest Rate Interest Expense
- --------------------------- ---------------- ----------------
$1,259 1.67% $2
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, 2004, 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
- -------------------------- -------------------
$28,720 $29,536
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, 2004, 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. At December 31, 2004, 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, 2004, the Fund had no capital loss carryforwards on a
tax basis to be applied against any future taxable gains.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
In addition, from the period November 1, 2004 through December 31, 2004,
the Fund incurred no net realized capital losses.
Dividend and Interest: 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.
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 11, 2004, 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 rate of 0.95% on an annual basis of the
Fund's net assets.
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, 2004, the reimbursements paid from John
Hancock and JHVLICO were $5 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 in expenses
of $29.
John Hancock has entered into Sub-Advisory Agreements with T. Rowe Price
Associates, Inc. and Wellington Management Company, LLP, each of which under
John Hancock's supervision, are responsible for a portion of 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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$77,326 $67,497
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE D--INVESTMENT TRANSACTIONS--Continued
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, 2004 were as
follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$211,004 $67,272 $(1,671) $65,601
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$518 $2,704 $-- $65,601
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
- ---- ------------------ ---------------------- -----------------
2004 $5,004 $10,728 $--
2003 2,961 5,147 --
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Cap Value Fund (a portfolio
included in the series of John Hancock Variable Series Trust I {the "Trust"}) as
of December 31, 2004, 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 the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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 Cap Value Fund of John Hancock Variable Series Trust I at December 31,
2004, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
Inception: May 1, 2003
- --------------------------------------------------------------------------------
Total Return Bond Fund
Pacific Investment Management Company LLC William H. Gross
- --------------------------------------------------------------------------------
.. The manager uses proprietary research, economic analysis and quantitative
tools seeking to add value across all key decisions (duration, sector,
security and derivatives) and opportunistically invests broadly across key
fixed income sectors including high yield and non-U.S. sectors.
Fund Commentary
Performance: For the year 2004, the Total Return Fund returned +4.91%,
outperforming the +4.34% return of the Lehman Brothers Aggregate Bond Index.
Environment: For the year, bonds displayed unexpected growth, as all fixed
income sectors showed gains. The yield on the 10-year Treasury note fell by 0.03
percentage points, to 4.22% at year end. The Lehman Brothers Aggregate Bond
Index, a widely used index for the high-grade bond market, returned 4.34% for
the year despite several major headwinds. These included expanding U.S. fiscal
deficits, a falling U.S. dollar and market perceptions as the year began that
interest rates were bound to rise from levels near historic lows.
Besides these headwinds, fixed income markets had to weather a tightening cycle
by the Federal Reserve that began in June. The central bank raised the federal
funds rate five times during the year for a total of 1.25 percentage points. The
latest move came on December 14, when the Fed hiked rates by one-quarter
percentage point to 2.25%. Despite this tightening cycle, bond investors were
encouraged by statements from the Fed that it would continue to move at a
measured pace. Investors also understood that rates were lifted from unusually
low levels.
Outlook: Global growth should slow this year as the U.S. recovery cools and
Europe and Japan prove unable to pick up the slack. Higher unit labor costs and
a weaker dollar should create inflationary pressure, but lingering overcapacity
worldwide may limit this effect over a cyclical time frame. The yield on the
benchmark 10-year Treasury should range between 4 and 4.5%, with the risk of a
0.25 percentage point breakout on the high side. We should remain defensive and
look for value in an environment where interest rates are low and core bond
sectors have continued to strengthen. Tactical flexibility will be critical in
this setting, such as shifting between U.S. and non-U.S. bonds or between market
sub-sectors within the U.S.
[CHART]
Line chart
Historical Fund Return
$10,000 Investment made 4/30/03 (Fund Inception Date)
Total Return Lehman Brothers
Bond Aggregate Bond Index
------------ --------------------
Apr-03 $10,000 $10,000
May-03 10,200 10,186
Jun-03 10,165 10,166
Jul-03 9,823 9,824
Aug-03 9,898 9,889
Sep-03 10,161 10,151
Oct-03 10,084 10,057
Nov-03 10,102 10,081
Dec-03 10,199 10,184
Jan-04 10,266 10,265
Feb-04 10,369 10,376
Mar-04 10,466 10,454
Apr-04 10,219 10,182
May-04 10,187 10,141
Jun-04 10,222 10,199
Jul-04 10,321 10,300
Aug-04 10,500 10,497
Sep-04 10,513 10,525
Oct-04 10,589 10,613
Nov-04 10,587 10,528
Dec-04 10,699 10,625
Value on 12/31/04:
- ------------------
$10,699 Total Return Bond
$10,625 Lehman Brothers Aggregate Bond Index
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (as of June 30, 2004)
% of
Investments
-----------
U.S. Treasury 17.8%
Federal Home Loan Mortgage Corp. 15.0%
Government National Mortgage Assoc. 10.1%
Bear Steams 8.9%
CWMBS, Inc. 7.6%
Federal National Mortgage Assoc. 6.2%
Bank America Funding Corp. 2.8%
Small Business Administration 2.8%
Credit Suisse First Boston 1.8%
NAAC Reperforming Loan Remic Trust 1.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
Lehman Brothers
Total Return Aggregate
Bond Fund Bond Index
------------ ---------------
1 Year 4.91% 4.34%
Since Inception (5/1/03) 4.12% 3.71%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND COMPOSITION (as of December 31, 2004)
% of
Credit Quality Assets
- -------------- ------
Government 47.53%
AAA 32.26%
AA 8.40%
A 1.09%
BBB 8.68%
BB 1.94%
B 0.76%
Not rated -0.65%
Weighted Average Yield 4.17%
- --------------------------------------------------------------------------------
* Total returns are for the period ended December 31, 2004. Returns represent
past performance, assume reinvestment of all distributions and are not
indicative of future performance. Investment returns and principal value of
fund shares will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The performance of the fund on this page
is reported net of Trust level charges (i.e. investment management fees and
operating expenses). It does not reflect expenses and charges of the
applicable separate accounts and variable products, all of which vary to a
considerable extent and are described in your product prospectus.
Performance would be lower if expenses and charges of the separate accounts
and products were reflected.
Inception: May 1, 2003
- --------------------------------------------------------------------------------
Total Return Bond Fund
Pacific Investment Management Company LLC William H. Gross
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR FUND'S EXPENSES
As a Total Return Bond Fund shareholder, you pay ongoing expenses, such as
management fees; distribution fees (12b-1); and other expenses. Using the
information below, you can estimate how these expenses affect your investment
and compare them with the expenses of other funds. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
Actual Expenses
The first line of the table for each Fund shows the actual account values and
actual Fund expenses you would have paid on a $1,000 investment in the Fund from
July 1, 2004 through December 31, 2004. It also shows how much a $1,000
investment would be at the close of the period, assuming actual fund returns and
expenses. To estimate the expenses that you paid over the period, simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), and multiply the result by the number in the "Expenses Paid
During Period" column as shown below for your Series.
Hypothetical Example for Comparison Purposes
The second line of the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratios and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid on your investment for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Actual Fund Returns
- -------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,046.70
Expense paid per $1,000* $ 4.25
Hypothetical 5% Fund Returns
- ----------------------------
Beginning account value 7/1/2004 $1,000.00
Ending account value 12/31/2004 $1,020.99
Expense paid per $1,000* $ 4.19
* Expenses are equal to the Fund's annualized expense ratio for each Series,
multiplied by the average account value over the period, multiplied by the
number of days in the most recent six-month period, then divided by 365.
STATEMENT OF ASSETS AND LIABILITIES
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
Total Return Bond Fund
(000's Omitted)
ASSETS
Long term investments at cost ....................................... $51,453
Net unrealized appreciation of investments .......................... 389
Short-term investments at value ..................................... 6,976
-------
Total investments ................................................ 58,818
Cash ................................................................ 193
Foreign currency at value (cost $10) ................................ 10
Receivable for:
Investments sold ................................................. 4,323
Fund shares sold ................................................. 3
Interest ......................................................... 408
Unrealized appreciation in forward currency contracts ............ 49
Net receivable for swap contracts ................................ 21
-------
Total assets ........................................................ 63,825
-------
LIABILITIES
Payables for:
Investments purchased ............................................ 4,798
Accrued operating expenses ....................................... 2
Unrealized depreciation in forward currency contracts ............ 12
-------
Total liabilities ................................................... 4,812
-------
Net assets .......................................................... $59,013
=======
Shares outstanding, $0.01 Par Value (unlimited shares
authorized) ...................................................... 5,816
-------
Net asset value per share ........................................... $ 10.15
=======
Composition of net assets:
Capital paid-in .................................................. $58,414
Accumulated net realized gain on investments, swaps, options
and foreign currency transactions ............................. 202
Distributions in excess of net investment income ................. (50)
Net unrealized appreciation of:
Investments ................................................... 389
Swap contracts ................................................ 21
Translation of assets and liabilities in foreign
currencies ................................................. 37
-------
Net assets .......................................................... $59,013
=======
STATEMENT OF OPERATIONS
JOHN HANCOCK VARIABLE SERIES TRUST I
For the Year Ended December 31, 2004
- --------------------------------------------------------------------------------
Total Return Bond Fund
(000's Omitted)
INVESTMENT INCOME
Interest .......................................................... $1,633
EXPENSES
Investment advisory fee ........................................... 356
Auditors fees ..................................................... 5
Custodian fees .................................................... 37
Legal fees ........................................................ 6
Printing & mailing fees ........................................... 7
Trustees'fees ..................................................... 1
Other fees ........................................................ 1
------
Total expenses ....................................................... 413
Less expenses reimbursed .......................................... (9)
------
Net expenses ......................................................... 404
------
Net investment income ................................................ 1,229
------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments and swaps .......................................... 1,320
Foreign currency transactions .................................. (450)
Options ........................................................ 77
Change in unrealized appreciation (depreciation) on:
Investments .................................................... 136
Written options ................................................ (3)
Swap contracts ................................................. 52
Translation of assets and liabilities in foreign currencies .... 113
------
Net realized and unrealized gain ..................................... 1,245
------
Net increase in net assets resulting from operations ................. $2,474
======
See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Total Return Bond Fund
(000's Omitted)
Period from
Year Ended May 1, 2003 (*)
December 31, to December 31,
2004 2003
------------ ---------------
INCREASE (DECREASE) IN NET ASSETS
From operations
Net investment income ............................................... $ 1,229 $ 404
Net realized gain ................................................... 947 142
Change in net unrealized appreciation ............................... 298 149
------- -------
Net increase in net assets resulting from operations ............. 2,474 695
Distributions to shareholders from:
Net investment income ............................................... (1,287) (400)
Realized gains ...................................................... (710) (173)
------- -------
Decrease in net assets resulting from distributions .............. (1,997) (573)
From fund share transactions:
Proceeds from shares sold ........................................... 24,087 43,263
Distributions reinvested ............................................ 1,997 573
Payment for shares redeemed ......................................... (9,554) (1,952)
------- -------
Increase in net assets from fund share transactions .............. 16,530 41,884
------- -------
NET INCREASE IN NET ASSETS ............................................. 17,007 42,006
NET ASSETS
Beginning of Period ................................................. 42,006
------- -------
End of Period (including distributions in excess of net
investment income of ($50) and undistributed net investment
income of $4, respectively) ...................................... $59,013 $42,006
======= =======
Analysis of fund share transactions:
Sold ................................................................ 2,374 4,324
Reinvested .......................................................... 197 57
Redeemed ............................................................ (941) (195)
------- -------
Net increase in fund shares outstanding ................................ 1,630 4,186
======= =======
* Commencement of Operations.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
JOHN HANCOCK VARIABLE SERIES TRUST I
- --------------------------------------------------------------------------------
Selected data for each share of beneficial interest outstanding throughout the
year end indicated:
Total Return Bond Fund
-----------------------------------------
Period from May 1, to
Year Ended December 31,
December 31, 2004 2003(e)
----------------- ---------------------
Net Assets Value at Beginning of Period ......................... $ 10.04 $ 10.00
Income from Investment Operations:
Net Investment Income ........................................ 0.24 0.12
Net Realized and Unrealized Gain (Loss) on Investment(a) ..... 0.24 0.08
------- -------
Total From Investment Operations ............................. 0.48 0.20
Less Distributions:
Distribution from Net Investment Income ...................... (0.24) (0.12)
Distribution from Net Realized Gains on Investments .......... (0.13) (0.04)
------- -------
Total Distributions .......................................... (0.37) (0.16)
------- -------
Net Assets Value at End of Period ............................... $ 10.15 $ 10.04
======= =======
Total Investment Return(b) ...................................... 4.91% 1.99%(c)
Ratios/Supplemental Data:
Ratio of Operating Expense to Average Net Assets ............. 0.80%(f) 0.77%(d)
Ratio of Net Investment Income to Average Net Assets ......... 2.42% 1.89%(d)
Portfolio Turnover Rate ...................................... 844.90% 537.79%(c)
Net Assets End of Period (000s Omitted) ......................... $59,013 $42,006
(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) Not annualized.
(d) Annualized.
(e) Commencement of investment operations.
(f) Expense ratio is net of expense reimbursements. Had such reimbursements not
been made, the expense ratio would have been .81% for the year ended
December 31, 2004.
SCHEDULE OF INVESTMENTS
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND **
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS
Auto Loan - 1.5%
Capital Auto Receivables Asset - Notes Cl. A 1B
1.0% due 01/16/06 - AAA .............................. $ 96 $ 95
Ford Motor Credit Co. - Bonds
7.75% due 03/15/05 - BBB- ............................ 90 91
General Motors Acceptance Corp.
1.995% due 05/18/06 - BBB- ........................... 700 697
------
883
Banks - 1.9%
Banc America Mortgage Securities, Inc. - Ser.
2004-2 Cl. 5A1
6.5% due 10/25/19 - AAA .............................. 191 193
Credit Suisse First Boston - CTF Cl. 2A1
4.671% due 09/25/34 - AAA ............................ 930 929
------
1,122
Credit Card - 0.3%
Sears Credit Account Master Trust II -Ser.
2002-5 Cl. A
2.78% due 11/17/09 - AAA ............................. 200 200
Diversified Financials - 0.4%
CIT Group, Inc. - Sr. Notes
7.75% due 04/02/12 - A ............................... 200 237
Diversified Telecommunication Services - 1.9%
AT&T Broadband Corp. - Notes
8.375% due 03/15/13 - BBB ............................ 200 247
AT&T Corp. - Sr. Notes
7.8% due 11/15/11 - BB+ .............................. 150 173
BellSouth Corp. - Notes
6.0% due 10/15/11 - A ................................ 150 163
France Telecom
7.5% due 03/14/08 - BBB+ ............................. 200 303
France Telecom SA - Notes
9.75% due 03/01/11 - BBB+ ............................ 200 238
------
1,124
Electric/Gas - 0.7%
Dominion Resources, Inc. - Notes
5.7% due 09/17/12 - BBB+ ............................. 150 159
Pacific Gas & Electric Co. - Bonds
1.81% due 04/03/06 - BBB ............................. 137 137
PSEG Power LLC - Sr. Notes
6.95% due 06/01/12 - BBB ............................. 100 113
------
409
Finance - 5.8%
AIG SunAmerica Institutional Funding
1.2% due 01/26/05 - AAA .............................. 45,000 438
Bank America Funding Corp. - Ser. 2004- A Cl. 1A3
5.08% due 09/20/34 - AAA ............................. 1,475 1,469
Deutsche Telekom International Finance
6.375% due 07/11/06 - BBB+ ........................... $ 400 $ 570
Tobacco Settlement Financing Corp. - Ser. A
6.25% due 06/01/42 - BBB ............................. 500 466
Tobacco Settlement Revenue Management - Ser. B
6.375% due 05/15/28 - BBB ............................ 200 195
UFJ Finance Aruba - GTD Notes
6.75% due 07/15/13 - BBB ............................. 50 56
Verizon Global Funding Corp. - Notes
7.25% due 12/01/10 - A+ .............................. 200 229
------
3,423
Food Products - 0.2%
Kraft Foods, Inc. - Notes
6.25% due 06/01/12 - BBB+ ............................ 100 110
Foreign Government - 4.0%
Federal Republic of Germany
4.5% due 01/04/13 - AAA
5.0% due 07/04/12 - AAA .............................. 300 448
Republic of Brazil
3.063% due 04/15/09 - BB- ............................ 26 26
8.0% due 04/15/14 - BB- .............................. 279 285
Republic of Brazil - Ser. L
3.063% due 04/15/06 - BB- ............................ 128 129
Republic of Panama
9.625% due 02/08/11 - BB ............................. 350 414
Republic of Peru - Bonds
9.125% due 02/21/12 - BB ............................. 225 262
Russian Federation
8.75% due 07/24/05 - BB+ ............................. 50 51
United Mexican States
1.84% due 01/13/09 - BBB- ............................ 500 507
6.375% due 01/16/13 - BBB- ........................... 230 245
------
2,367
Hotels Restaurants & Leisure - 0.3%
MGM Mirage, Inc. - Ser. B
6.0% due 10/01/09 - BB+ .............................. 200 206
Media - 0.6%
Time Warner, Inc. - Notes
6.875% due 05/01/12 - BBB+ ........................... 300 342
Municipal - 2.3%
De Kalb County Georgia Water & Sewage - Ser. A
5.0% due 10/01/35 - AA ............................... 200 206
Harris County Texas
5.0% due 08/15/33 - AAA .............................. 100 102
Massachusetts Saint - Ser. C
5.5% due 11/01/10 - AAA .............................. 500 565
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Municipal - Continued
University of Texas Permanent University
Fund - Ser. B
4.75% due 07/01/30 - AAA ............................. $ 500 $ 500
-------
1,373
Other Asset Backed - 5.2%
Argent Securities, Inc. - Ser. 2004 W11 Cl. A2
2.60% due 11/25/34 - AAA ............................. 186 186
Bear Stearns Asset Backed Securities - Ser.
2004-HE9 Cl. 1A1
1.0% due 03/25/23 - AAA .............................. 81 81
CWABS, Inc. - Bonds Ser. 2004 6 Cl. 2 A1
2.60% due 10/25/21 - AAA ............................. 155 155
CWABS, Inc. - CTF Cl. A 1 FLTG
2.15% due 01/25/35 - AAA ............................. 97 97
Homestar Mortgage Acceptance Corp. - Ser.
2004-4 Cl. A1
1.79% due 01/25/22 - AAA ............................. 259 259
Household Mortgage Loan Trust - Notes Ser.
2003 HC1 Cl. A
2.76% due 02/20/33 - AAA ............................. 144 144
Indymac ABS, Inc. - Ser 2004 A Cl. A2
2.341% due 07/25/34 - AAA ............................ 287 287
Long Beach Mortgage Loan Trust - Ser.
2004-A Cl. A
2.083% due 02/25/24 - AAA ............................ 150 150
Morgan Stanley ABS Capital - Ser. 2004 HE9 Cl. A 3A
2.358% due 10/25/34 - AAA ............................ 296 296
Morgan Stanley ABS Capital, Inc. - Ser. 2004
HE1 Cl. A3
2.341% due 01/25/34 - AAA ............................ 60 60
NAAC Reperforming Loan Remic Trust - Ser.
2004-R1 Cl. A2 144A (a)
7.5% due 03/25/34 - AAA .............................. 755 809
Residential Asset Funding and Mortgage
Securities Corp. - Ser. 2001 KS3 Cl. A II
1.33% due 09/25/31 - AAA ............................. 75 75
Residential Asset Securities Corp. - Ser. 2004
KS6 Cl. AII B1
1.22% due 04/25/13 - AAA ............................. 157 158
Structured Asset Investment Loan Trust - Ser.
2004-2 Cl. 3 A1
2.53% due 03/25/34 - NA .............................. 99 99
Wells Fargo Home Equity - Ser. 2004 2 Cl. A1 1A
2.59% due 02/25/18 - AAA ............................. 186 186
-------
3,042
Paper & Forest Products - 0.1%
Weyerhaeuser Co. - Notes
6.125% due 03/15/07 - BBB ............................ 33 35
U.S. Government Agencies - 29.7%
Federal Home Loan Mortgage Corp. - Bonds
3.972% due 06/01/34 - AAA ............................ $1,464 $ 1,438
5.5% due 06/01/24 - AAA .............................. 1,906 1,950
6.0% due 10/15/32 - AAA .............................. 401 407
Federal Home Loan Mortgage Corp. - Bonds
Ser. 2849 Cl. PZ
5.0% due 07/15/33 - AAA .............................. 813 705
Federal Home Loan Mortgage Corp. - Bonds
Ser. 2906 Cl. GZ
5.0% due 09/15/34 - AAA .............................. 300 273
Federal Home Loan Mortgage Corp. - Cl. ZA
6.5% due 09/15/31 - AAA .............................. 1,228 1,330
Federal Home Loan Mortgage Corp. - Ser.
2489 Cl. PE
6.0% due 08/15/32 - AAA .............................. 1,600 1,663
Federal National Mortgage Assoc. - Bonds
Ser. 2004-11 Cl. 1A
1.22% due 03/25/34 - AAA ............................. 358 356
Federal National Mortgage Assoc. - Bonds
Ser. 2004-W2 Cl. 1A2F
1.44% due 02/25/44 - AAA ............................. 771 769
Federal National Mortgage Assoc. - Ser.
2004-T1 1A1
6.0% due 01/25/44 - AAA .............................. 753 774
Federal National Mortgage Assoc. - Ser.
2003-116 Cl. FA
2.58% due 11/25/33 - AAA ............................. 1,116 1,122
Government National Mortgage Assoc. - Bonds
5.0% due 05/15/33 - AAA .............................. 5,244 5,254
Small Business Administration - Ser. 2004 10A
4.504% due 02/10/14 - NA ............................. 1,274 1,264
Small Business Administration - Ser. 2004 20K
4.88% due 11/01/24 - AAA ............................. 200 201
-------
17,506
U.S. Government - 15.6%
U.S. Treasury - Bonds
7.875% due 02/15/21 - AAA ............................ 100 135
U.S. Treasury - Notes
0.875% due 04/15/10 - AAA ............................ 1,604 1,588
2.0% due 01/15/14 - AAA .............................. 1,756 1,818
2.0% due 07/15/14 - AAA .............................. 405 418
3.0% due 07/15/12 - AAA .............................. 531 592
4.25% due 01/15/10 - AAA ............................. 1,021 1,184
4.375% due 08/15/12 - AAA ............................ 600 614
4.875% due 02/15/12 - AAA ............................ 2,700 2,854
-------
9,203
SCHEDULE OF INVESTMENTS--Continued
(AUDITED)
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
PUBLICLY-TRADED BONDS - Continued
Whole Loan CMOs - 17.0%
Ameriquest Mortgage Securities, Inc. - Ser.
2004-X2 Cl. A 144A (a)
2.98% due 06/25/34 - AAA ............................. $ 142 $ 142
Bear Stearns ARM Trust - Ser. 2004-3
Cl. IA 2
3.996% due 07/25/34 - AAA ............................ 855 849
Bear Stearns ARM Trust - Ser. 2004-6 CTF
Cl. I A1
4.70% due 09/25/34 - AAA ............................. 1,589 1,600
Bear Stearns ARM Trust - Ser. 2004-7
Cl. 1A1
5.036% due 10/25/34 - AAA ............................ 1,342 1,362
Bear Stearns Trust - Ser. 2004-9 Cl. II A1
5.518% due 08/25/34 - AAA ............................ 715 727
CWMBS, Inc. - Ser. 2003-J14 Cl. 2A1
6.25% due 12/25/33 - AAA ............................. 378 388
CWMBS, Inc. - Ser. 2003-R4 Cl. 1A3
144A (a)
6.0% due 11/25/26 - AAA .............................. 2,000 2,062
CWMBS, Inc. - Ser. 2003-R4 Cl. 2A 144A (a)
6.5% due 01/25/34 - AAA .............................. 623 646
CWMBS, Inc. - Ser. 2004 12 Cl. 11A2
4.431% due 08/25/34 - AAA ............................ 841 849
GS Mortgage Securities Corp. - Ser. 2003-1
Cl. A2
3.12% due 01/25/32 - AAA ............................. 174 175
Mellon Residential Funding Corp. - Ser. 2000
TBC2 Cl. A1
1.34% due 06/15/30 - AAA ............................. 105 105
Residential Asset Mortgage Products - Ser.
2004-RS9 Cl. AII1
2.0% due 09/25/13 - AAA .............................. 280 280
Residential Funding -Ser. 2004-S2 Cl. A1
5.25% due 03/25/34 - AAA ............................. 419 419
Structured Asset Securities - Ser. 2004 Cl. A1
1.97% due 12/25/33 - AAA ............................. 70 70
Structured Asset Securities Corp. - Ser. 2003
NP3 Cl. A1 144A (a)
1.6% due 11/25/33 - AAA .............................. 100 100
WAMU - CTF Cl. A
1.0% due 02/27/34 - NA ............................... 266 266
-------
10,040
-------
TOTAL PUBLICLY-TRADED BONDS-
(Cost $51,233) 87.5% 51,622
Shares
------
PREFERRED STOCK
U.S. Government Agencies - 0.4%
Federal National Mortgage Assoc. ........................ 4,400 220
-------
TOTAL PREFERRED STOCK-
(Cost $220) 0.4% 220
Par Market
Name of Issuer Value Value
-------------- ------- -------
(000's) (000's)
COMMERCIAL PAPER
Auto Loan - 0.8%
Ford Motor Credit Co.
2.52% due 04/08/05 ................................... $ 500 $ 497
Banks - 1.2%
ASB Bank, Ltd.
2.04% due 02/14/05 ................................... 700 698
Finance - 6.4%
ANZ Delaware, Inc.
2.42% due 03/16/05 ................................... 600 597
BP Amoco Capital plc
2.10% due 01/03/05 ................................... 600 600
Dexia Delaware
2.01% due 01/21/05 ................................... 600 599
HBOS Treasury Services plc
2.07% due 02/22/05 ................................... 900 897
UBS Finance Delaware LLC
2.03% due 02/22/05 ................................... 200 199
2.07% due 02/28/05 ................................... 400 399
2.41% due 03/15/05 ................................... 500 498
-------
3,789
U.S. Government Agencies - 1.0%
Federal Home Loan Mortgage Corp. - Disc. Notes
2.38% due 03/31/05 ................................... 99 99
Federal National Mortgage Assoc. - Disc. Notes
2.36% due 03/09/05 ................................... 100 100
2.44% due 03/23/05 ................................... 398 398
-------
597
-------
TOTAL COMMERCIAL PAPER -
(Cost $5,581) 9.4% 5,581
SHORT-TERM INVESTMENTS - 2.4%
US Treasury - Bills
2.212% due 03/03/05
(Cost $1,395)......................................... 1,395 1,395
------ -------
TOTAL INVESTMENTS -
(Cost $58,429) 99.7% 58,818
Cash and Receivables, less payables- 0.3% 195
------ -------
NET ASSETS- 100.0% $59,013
====== =======
See notes to financial statements.
(a) Pursuant to Rule 144A under the Securities Act of 1933, these securities
may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 2004, securities aggregated
$3,759 or 6.4% of net assets of the Portfolio.
** Bond ratings are unaudited.
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
John Hancock Total Return Bond Fund (the "Fund"), which commenced
operations on May 1, 2003, 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 twenty-three different funds as of
December 31, 2004. 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: The Fund determines its net asset value per share
once daily as of the close of the customary trading session of the New York
Stock Exchange ("Exchange") on each business day of the Fund. The Exchange
generally closes at 4:00 p.m. Eastern Standard Time. However, Exchange Traded
Funds ("ETF's") and certain derivative instruments may be valued using prices as
late as 4:15 p.m. Eastern Standard Time. In the event the Exchange closes at any
time other than 4:00 p.m. Eastern Standard Time on a particular day, the Fund
will determine its net asset value per share as of the close of the Exchange on
that day. Investment security transactions are recorded on the date of purchase
or sale.
Debt investment securities having a primary market over-the-counter are
valued on the basis of valuations furnished by a pricing service which
determines valuations for normal institutional size trading units of debt
securities, without exclusive reliance upon quoted prices.
Short-term investments, with a maturity not to exceed 60 days, are valued
at amortized cost, which approximates market value.
Investment securities for which no current market quotations are readily
available, including certain foreign securities, when held by the Fund, are
valued at fair value as determined in good faith by the Board of Trustees.
Occasionally, events that affect the values of certain foreign securities may
occur between the times at which the local exchanges on which the foreign
securities are listed close and the close of the New York Stock Exchange. In
such events, these securities will then be valued at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees. Three types of
significant events may require valuation of a portfolio security. In each
situation, the significant event has rendered the price of the affected security
as not "readily available."
The first type of significant events involves single issuer specific events
that affect only the price of one particular portfolio security. Examples
include, but are not limited to: corporate reorganizations, mergers, corporate
announcements of earnings, buyouts, and significant litigation involving the
issuer of the portfolio security.
The second type of significant events involves events that may relate to
more than one issuer. These events could include, for example: governmental
actions affecting securities in a sector, country or region; a natural disaster;
an armed conflict; or a similar situation affecting a country, region or sector.
The third category of significant events involves significant fluctuations
in domestic or foreign markets that may affect the prices of all portfolio
securities belonging to a particular market. There are a number of factors that
may indicate a market fluctuation significant event has occurred, including, but
not limited to, a swing in the U.S. market indexes, a swing in particular
foreign market indexes, or a significant price change in ETF's in a particular
foreign market.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
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, 2004 are as follows:
Name of Issuer Market Value
- -------------- ------------
Chevron Texaco Funding Corp., 2.25%, due 01/05/05 $ 29,996
Citicorp., 2.18%, due 01/05/05 29,996
Danske Corp., 2.34%, due 01/04/05 29,998
Falcon Asset Securitization, 2.28%, due 01/04/05 29,998
HSBC Finance Corp., 2.1%, due 01/05/05 29,997
Mortgage Int Network, 2.33%, due 01/03/05 20,000
National Australia Funding Corp., 2.29%, due 01/05/05 29,996
Old Line Funding Corp., 2.33%, due 01/05/05 29,996
Preferred Receivables Funding Corp., 2.34%, due 01/04/05 29,998
Prudential Funding LLC, 2.18%, due 01/05/05 29,997
Rabobank USA Financial Corp., 2.17%, due 01/03/05 12,089
Societe Generale North, 2.32%, due 01/05/05 29,996
State Street Boston Corp., 2.23%, due 01/05/05 29,996
--------
Joint Trading Account Totals $362,053
========
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.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Discount and premium on debt securities: The Fund accretes discount and
amortizes premium from par value on securities from either the date of issue or
the date of purchase over the life of the security.
Expenses: Expenses directly attributable to 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 $90 and $10 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. For the year ended December
31, 2004, the Fund had no bank borrowings.
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, 2004, 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, 2004, the Fund had open forward foreign currency
contracts which contractually obligate the Fund to deliver or receive currencies
at a specified date, as follows:
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Principal Amount Unrealized
Covered by Contract Expiration Month Gain (Loss)
------------------- ---------------- -----------
Currency Purchased
- ------------------
Brazilian Real 21 March 05 $ 1
Chilean Peso 31 February 05 2
Chilean Peso 21 March 05 1
Euro 393 January 05 5
Pound Sterling 86 January 05 --
Hong Kong Dollar 10 January 05 --
Indian Rupee 31 March 05 --
Japanese Yen 1,073 January 05 35
South Korean Won 10 January 05 1
South Korean Won 22 March 05 1
Mexican Peso 20 March 05 --
Peruvian Nouveau 21 March 05 --
Polish Zloty 7 February 05 --
Polish Zloty 8 March 05 1
New Russian Ruble 22 March 05 --
Singapore Dollar 10 January 05 --
Singapore Dollar 22 March 05 1
New Taiwan Dollar 21 March 05 1
----
$ 49
====
Currency Sold
- -------------
Euro 1,408 January 05 $(12)
Japanese Yen 401 January 05 --
Swedish Krona 138 January 05 --
-----
$(12)
=====
Options: The Fund may use option contracts to manage its exposure to the
bond market and to fluctuations in interest rates and currency values. Option
contracts tend to increase or decrease the Fund's exposure to the underlying
instrument or hedge other fund investments.
When the Fund purchases an option, the premium paid by the Fund is included
in the Fund's Statement of Assets and Liabilities as an investment and
subsequently "marked to market" to reflect the option's current market value.
Purchased options are valued at the last sale price on the market on which they
are principally traded. If the purchased option expires, the Fund realizes a
loss in the amount of the premium. If the Fund enters into a closing sale
transaction, it realizes a gain or loss, depending on whether the proceeds from
the sale are greater or less than the cost of the option. If the Fund exercises
a call option, the cost of the securities acquired by exercising the call is
increased by the premium paid to buy the call. If the Fund exercises a put
option, it realizes a gain or loss from the sale of the underlying security and
the proceeds from such sale are decreased by the premium originally paid. The
risk associated with purchasing options is limited to the premium originally
paid.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
When the Fund writes an option, the premium received by the Fund is
presented in the Fund's Statement of Assets and Liabilities as an asset and an
equivalent liability. The amount of the liability is subsequently "marked to
market" to reflect the current market value of the option written. Written
options are valued at the last sale price or, in the absence of a sale, the last
offering price on the market on which they are principally traded. If an option
expires on its stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the amount of the premium
originally received reduces the cost of the security which the Fund purchases
upon exercise of the option.
The risk in writing a call option is that the Fund relinquishes the
opportunity to profit if the market price of the underlying security increases
and the option is exercised. In writing a put option, the Fund assumes the risk
of incurring a loss if the market price of the underlying security decreases and
the option is exercised. In addition, there is a risk the Fund may not be able
to enter into a closing transaction because of an illiquid secondary market, or
if the counterparties do not preform under the contracts' terms. As of December
31, 2004, the Fund had no written options.
Swap Agreements: The Fund may invest in swap agreements which involve the
exchange of cash payments based on the specified terms and conditions of such
agreements. A swap is an agreement to exchange the return generated by one
investment for the return generated by another instrument. The value of each
swap is determined by the counterparty to the swap agreement using a methodology
which discounts the expected future cash receipts or disbursements related to
the swap. The Fund may also enter into interest rate swap agreements which
involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, (e.g., an exchange of floating rate
payments with respect to a notional amount of principal). Interest rate swaps
are "marked-to-market" daily. Net market value is reported as an asset or a
liability in the Statement of Assets and Liabilities. The cash paid or received
on a swap is recognized as realized gain or loss when such a payment is paid or
received.
Entering into swap agreements involves, to varying degrees, elements of
credit risk, market risk and interest rate risk in excess of the amount
recognized in the Statement of Assets and Liabilities. Such risks involve the
possibility that there is not a liquid market for these agreements, that the
counterparty to the agreements may default on its obligation to perform and that
there may be unfavorable changes in market conditions or interest rates.
Swap agreements which were open for the year ended December 31, 2004 are
summarized as follows:
Net Unrealized
Appreciation
Par Value Interest Rate Swaps: Counter Party (Depreciation)
- --------- -------------------- ------------- --------------
3,200 To make or receive semi-annual pay- Morgan Stanley $(32)
ments through 6/15/2010 based on the
difference between (A) the fixed rate
of 4.00% and (B) floating rate of 3
Month LIBOR, adjusted every 3 months.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Net Unrealized
Appreciation
Par Value Interest Rate Swaps: Counter Party (Depreciation)
- --------- -------------------- ------------- --------------
400 To make or receive semi-annual pay- Bank of $ (4)
ments through 6/15/2010 based on the America
difference between (A) the fixed
rate of 4.00% and (B) floating rate
of 3 Month LIBOR, adjusted every 3
months.
1,400 To make or receive semi-annual pay- Barclays (14)
ments through 6/15/2010 based on the
difference between (A) the fixed rate
of 4.00% and (B) floating rate of 3
Month LIBOR, adjusted every 3 months.
500 To make or receive semi-annual pay- JP Morgan 9
ments through 6/15/2015 based on the
difference between (A) the fixed rate
of 5.00% and (B) floating rate of 6
Month LIBOR, adjusted every 3 months.
900 To make or receive semi-annual pay- RBS (86)
ments through 6/15/2025 based on the Greenwich
difference between (A) the fixed rate Capital
of 6.00% and (B) floating rate of 6
Month LIBOR, adjusted every 6 months.
9,800 To make or receive semi-annual pay- Barclays (45)
ments through 6/15/2006 based on the
difference between (A) the fixed rate
of 3.00% and (B) floating rate of 3
Month LIBOR, adjusted every 3 months.
15,000 To make or receive semi-annual pay- Goldman Sachs (69)
ments through 6/15/2006 based on the
difference between (A) the fixed rate
of 3.00% and (B) floating rate of 3
Month LIBOR, adjusted every 3 months.
1,900 To make or receive semi-annual pay- UBS 61
(GBP) ments through 3/15/2032 based on the
difference between (A) the fixed rate
of 5.00% and (B) floating rate of 6
Month LIBOR, adjusted every 6 months.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Net Unrealized
Appreciation
Par Value Interest Rate Swaps: Counter Party (Depreciation)
- --------- -------------------- ------------- --------------
2,400 To make or receive semi-annual pay- JP Morgan $ 220
(EURO) ments through 3/15/2032 based on the
difference between (A) the fixed rate
of 6.00% and (B) floating rate of 6
Month EURIBOR, adjusted every 6
months.
28,000 To make or receive semi-annual pay- Barclays (19)
(SEK) ments through 6/17/2008 based on the
difference between (A) the fixed rate
of 4.5% and (B) floating rate of 3
Month STIBOR, adjusted every 3
months.
Net Unrealized
Appreciation
Par Value Credit Default Swaps: Counter Party (Depreciation)
- --------- --------------------- -------------- --------------
300 To make annual fixed coupon payments Morgan Stanley --
through 5/24/2005 based on the annual
fixed rate of 0.70%. In the event of
a predefined "credit event notice" of
the Russian Federation 5.0%,
3/31/2030 Note, the Fund will receive
amounts specified under the terms of
the swap agreement.
200 To make annual fixed coupon payments Merrill Lynch --
through 3/09/2005 based on the annual
fixed rate of 0.97%. In the event of
a predefined "credit event notice" of
the Russian Federation 5.0%,
3/31/2030 Note, the Fund will receive
amounts specified under the terms of
the swap agreement.
---
$21
===
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, 2004, 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, 2004 through December 31, 2004,
the Fund incurred approximately $301 in net realized capital 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, 2005.
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
NOTE B--ACCOUNTING POLICIES--Continued
Dividend and Interest: 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.
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.
Restricted Securities: Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense, either upon demand by the Fund or in connection with another registered
offering of the securities. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such sales. The
Fund's restricted securities are valued at the price provided by dealers in the
secondary market, or, if no market prices are available, at the fair value as
determined in accordance with procedures established by and under general
supervision of the Trustees.
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
$250 Million and Excess Over
First $250 Million $500 Million $500 Million
- ------------------ ---------------- ------------
0.70% 0.68% 0.65%
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, 2004, the reimbursements paid from John Hancock and JHVLICO
were $9 to the Fund.
John Hancock has entered into a Sub-Advisory Agreement with Pacific
Investment Management Company, LLC, with respect to the Fund. Pacific Investment
Management Company, LLC, is an affiliate of John Hancock, which under John
Hancock's 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, 2004
- --------------------------------------------------------------------------------
(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, 2004 were as follows:
Purchases Sales and Maturities
- --------- --------------------
$ 376,276 $350,547
As of December 31, 2004, transactions for written options were as follows:
Contracts Premium ($)
--------- -----------
Beginning of period 4,000 35
Options opened 5,900 42
Options closed/expired (9,900) (77)
------ ---
End of period -- --
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, 2004 were as follows:
Identified Unrealized Unrealized Net Unrealized
Cost Appreciation Depreciation Appreciation
- ---------- ------------ ------------ --------------
$58,434 $1,494 $(1,110) $384
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
based on the Fund's income and capital gains computed on a tax basis, which may
differ from income and capital gains recognized according to generally accepted
accounting principles. These differences primarily relate to certain securities
sold at a loss. Therefore, the source of each Fund's distributions may be shown
in the accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on capital transactions, or from capital.
The Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund to present the Fund's
capital accounts on a tax basis.
At December 31, 2004, 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
- ------------- ------------- ------------- --------------
$509 $-- $-- $391
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
December 31, 2004
- --------------------------------------------------------------------------------
(000's Omitted)
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
- ---- ------------------ ---------------------- -----------------
2004 $1,997 $-- $--
2003 573 $-- $--
NOTE E--OTHER MATTERS (UNAUDITED)
Fund Mergers: On December 15, 2004, the Board of Trustees approved the
reorganization of the Funds of John Hancock Variable Series Trust I into the
Funds of Manufacturers Investment Trust. Completion of the merger is subject to
approval by the shareholders of the Funds at a shareholder meeting expected to
be held in April of 2005.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Total Return Bond Fund (a
portfolio included in the series of John Hancock Variable Series Trust I {the
"Trust"}) as of December 31, 2004, and the related statement of operations for
the year then ended, the statement of changes in net assets for the year then
ended and for the period from May 1, 2003 (commencement of operations) to
December 31, 2003, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (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 consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2004 by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. 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
Total Return Bond Fund of John Hancock Variable Series Trust I at December 31,
2004, the results of its operations for the year then ended, the statement of
changes in net assets for the year then ended and for the period from May 1,
2003 (commencement of operations) to December 31, 2003, and the financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 21, 2005
NOTES TO FINANCIAL STATEMENTS
JOHN HANCOCK VARIABLE SERIES TRUST I
(UNAUDITED)
December 31, 2004
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
Voting Proxies on Fund Portfolio Securities: A description of the policies
and procedures that the Fund uses to determine how to vote proxies relating to
securities held in the Fund's portfolio is available, without charge and upon
request, by calling, 1-800-576-2227. A report on "Form N-PX" of how the Fund
voted any such proxies during the most recent 12-month period ended June 30,
2004, is available from the EDGAR database on the SEC's website at http://
www.sec.gov.
Quarterly Portfolio Schedule: The Fund files with the SEC a complete
schedule of its portfolio holdings, as of the close of the first and third
quarters of its fiscal year, on "Form NQ". These filings are available on the
SEC's website at http://www.sec.gov and may be reviewed and copied at the SEC's
Public Reference Room in Washington DC. (Call 1- 800-SEC-0330) for information
on the Public Reference Room.)
BOARD OF TRUSTEES AND OFFICERS OF THE TRUST
The Board of Trustees of the Trust is responsible for overall management of
the Trust. The Board may exercise all powers of the Trust, except those powers
which are conferred solely upon or reserved to the shareholders. The 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
Position with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- -------------------------------- ------------- -----------------------------
Elizabeth G. Cook (age 67) Trustee Expressive Arts Therapist,
c/o John Hancock Variable Series (Since 1993) Dana-Farber Cancer Institute;
Trust I President, The Advertising
John Hancock Place Club of Greater Boston
Boston, Massachusetts 02117
Diane C. Kessler (age 58) Trustee Executive Director,
c/o John Hancock Variable Series (Since 1999) Massachusetts Council of
Trust I Churches
John Hancock Place
Boston, Massachusetts 02117
Robert Verdonck (age 59) Trustee President and Chief Executive
c/o John Hancock Variable Series (Since 1999) Officer, East Boston Savings
Trust I Bank
John Hancock Place
Boston, Massachusetts 02117
Hassell H. McClellan (age 59) Trustee Associate Professor and
c/o John Hancock Variable Series (Since 2001) former Graduate Dean, The
Trust I Graduate School of the
John Hancock Place Wallace G. Carroll School of
Boston, Massachusetts 02117 Management, Boston College
NOTES TO FINANCIAL STATEMENTS--Continued
JOHN HANCOCK VARIABLE SERIES TRUST I
(UNAUDITED)
December 31, 2004
- --------------------------------------------------------------------------------
Trustees Affiliated with the Trust and Officers of the Trust
Position with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- -------------------------------- ---------------------------- ------------------------------------
Michele G. Van Leer* (age 47) Chairman and Trustee Executive Vice President, Long
John Hancock Place (Since 1998) Term Care, John Hancock Life
Boston, Massachusetts 02117 Insurance Company; Senior Vice
President, Product Management,
John Hancock Life Insurance
Company; Vice Chairman, President
& Director, John Hancock Variable
Life Insurance Company
Ronald J. Bocage (age 59) Chief Legal Officer Vice President & Counsel, John
John Hancock Place (Since 2003) Hancock Life Insurance Company
Boston, Massachusetts 02117 and
Compliance Officer
(Since 2004)
Janet Wang (age 36) Assistant Compliance Officer Compliance Specialist, John
John Hancock Place (Since 2003) Hancock Life Insurance Company
Boston, Massachusetts 02117
Raymond F. Skiba (age 59) Treasurer Director of Fund Operations, John
John Hancock Place (Since 1986) Hancock Life Insurance Company
Boston, Massachusetts 02117
Gladys C. Millan (age 58) Assistant Treasurer Manager of Fund Operations, John
John Hancock Place (Since 2003) Hancock Life Insurance Company
Boston, Massachusetts 02117
Karen Q. Visconti (age 51) Secretary Director, Product & Market
John Hancock Place (Since 1999) Management, John Hancock Life
Boston, Massachusetts 02117 Insurance Company
Arnold R. Bergman (age 54) Assistant Secretary Senior Counsel, Law Department,
John Hancock Place (Since 1999) John Hancock Life Insurance
Boston, Massachusetts 02117 company; formerly Vice President,
General Counsel and Secretary, First
Variable Life Insurance Company
Scott Hill (age 28) Assistant Secretary Compliance Specialist, John
John Hancock Place (Since 2003) Hancock Life Insurance Company
Boston, Massachusetts 02117
*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.
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. The investment adviser for each fund is John Hancock Life Insurance
Company, but the Trust employs a subadviser for each fund. The subadvisers are
identified in the reports contained in this booklet.
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. Read the prospectus carefully
before investing or sending money.
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.
[LOGO] John Hancock
WORLDWIDE SPONSOR
[LOGO] IMSA
INSURANCE
MARKETPLACE
STANDARDS
ASSOCIATION
S8128 2/05
ITEM 2. CODE OF ETHICS
2 (a) As of the end of the period covered by this report (December 31, 2004),
the Board of Trustees of John Hancock Variable Series Trust I (the "Registrant")
has adopted a "code of ethics," within the meaning of Item 2, that applies to
the Registrant's principal executive officer, principal financial officer and
principal accounting officer (or persons performing similar functions),
regardless of whether these individuals are employed by the Registrant or by a
third party.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of John Hancock Variable Series Trust I has determined
that Robert F. Verdonck and Hassell H. McClellan are each audit committee
financial experts, within the meaning of Item 3 of Form N-CSR. In making its
determination, the Board considered Mr. Verdonck's relevant experience as the
Chief Executive Officer of the East Boston Savings Bank and as Chairman of the
Board and member of the Audit Committee of the Federal Home Loan Bank of Boston,
and Dr. McClellan's relevant experience as Associate Professor and former
Associate Dean of Boston College's Carroll Graduate School of Management, as a
director with Smith Whiley & Co. and as a commercial loan officer for Harris
Bank (a trade name used by Harris Trust and Savings Bank and its affiliated
banks).
Mr. Verdonck and Dr. McClellan are each independent within the meaning of Item 3
of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
4(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years
for professional services rendered by the principal accountant for the audit of
the Registrant's annual financial statements are:
Fiscal Year 2004 - $522,000
Fiscal Year 2003 - $745,000
4(b) Audit-Related Fees. The aggregate fees billed for each of the last two
fiscal years for assurance and related services rendered by the principal
accountant that are reasonably related to the performance of the audit of the
Registrant's annual financial statements that are not reported under paragraph
(a) above are:
Fiscal Year 2004 - 0
Fiscal Year 2003 - $25,000 (For services related to SAS 99 procedures.)
4(c) TAX FEES. The aggregate fees billed for each of the last two fiscal years
for assurance and related services rendered by the principal accountant for tax
compliance, tax advice and tax planning are:
Fiscal Year 2004 - $300,000 (For services related to Fund tax distribution,
provision and return preparation and $75,500 related to fund merger reviews.)
Fiscal Year 2003 - $333,500 ($330,000 for services related to Fund tax
distribution, provision and return preparation and $3,500 for services related
to Fund merger reviews.)
4(d) ALL OTHER FEES. The aggregate fees billed for each of the last two fiscal
years for products and services provided by the principal accountant other than
the services described above are:
Fiscal Year 2004 - 0
Fiscal Year 2003 - $120,000 (For services related to review of the market
timing/late trading policy and procedures controls of affiliated entities of
John Hancock Financial Services, Inc., which was paid for by John Hancock
Financial Services, Inc. The services also included a review of such policy and
controls of the Registrant).
4 (e)(1) The pre-approval policies and procedures of the Registrant's Audit
Committee are disclosed below:
Audit and Non-Audit Services Pre-Approval Policy
(Effective September 24, 2003)
I. Statement of Principles
Under the Sarbanes-Oxley Act of 2002 (the "Act"), the Audit Committee of the
Board of Trustees is required to pre-approve the audit and non-audit services
performed by the independent auditor in order to assure that they do not impair
the auditor's independence from the John Hancock Variable Series Trust I (the
"Trust"). To implement these provisions of the Act, the Securities and Exchange
Commission (the "SEC") has issued rules specifying the types of services that an
independent auditor may not provide to its audit client, as well as the audit
committee's administration of the engagement of the independent auditor.
Accordingly, the Audit Committee has adopted, and the Board of Trustees has
ratified, the Audit and Non-Audit Services Pre-Approval Policy (the "Policy"),
which sets forth the procedures and the conditions pursuant to which services
proposed to be performed by the independent auditor may be pre-approved.
The SEC's rules establish two different approaches to pre-approving services,
which the SEC considers to be equally valid. Proposed services either: may be
pre-approved without consideration of specific case-by-case services by the
Audit Committee ("general pre-approval"); or require the specific pre-approval
of the Audit Committee ("specific pre-approval"). The Audit Committee believes
that the combination of these two approaches in this Policy will result in an
effective and efficient procedure to pre-approve services performed by the
independent auditor. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee if it is to be provided by the auditor. Any proposed services
exceeding pre-approved cost levels or budgeted amounts will also require
pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee will consider whether such
services are consistent with the SEC's rules on auditor independence. The Audit
Committee will also consider whether the independent auditor is best positioned
to provide the most effective and efficient services, for reasons such as its
familiarity with the Trust's business, people, culture, accounting systems, risk
profile and other factors, and whether the service might enhance the Trust's
ability to manage or control risk or improve audit quality. All such factors
will be considered as a whole, and no one factor should necessarily be
determinative.
The Audit Committee is also mindful of the relationship between fees for audit
and non-audit services in deciding whether to pre-approve any such services and
may determine for each fiscal year, the appropriate ratio between the total
amount of fees for Audit, Audit-related and Tax services for the Trust
(including any Audit-related or Tax service fees for affiliates that were
subject to pre-approval), and the total amount of fees for certain permissible
non-audit services classified as All Other services for the Trust (including any
such services for affiliates subject to pre-approval).
The appendices to this policy describe the Audit, Audit-related, Tax and All
Other services that have the general pre-approval of the Audit Committee. The
term of any general pre-approval is 12 months from the date of pre-approval
unless the Audit Committee considers a different period and states otherwise.
The Audit Committee will annually review and pre-approve the services that may
be provided by the independent auditor without obtaining specific pre-approval
from the Audit Committee. The Audit Committee will add or subtract from the list
of general pre-approved services from time to time, based on subsequent
determinations.
The purpose of this Policy is to set forth the procedures by which the Audit
Committee intends to fulfill its responsibilities. It does not delegate the
Audit Committee's responsibilities to pre-approve services performed by the
independent auditor to management.
The independent auditor has reviewed this Policy and believes that
implementation of the policy will not adversely affect the auditor's
independence.
II. Delegation
As provided in the Act and the SEC's rules, the Audit Committee may delegate
either type of pre-approval authority to one or more of its members. The member
to whom such authority is delegated must report, for informational purposes
only, any pre-approval decisions to the Audit Committee as its next scheduled
meeting.
III. Audit Services
The annual Audit services engagement terms and fees will be subject to the
specific pre-approval of the Audit Committee. Audit services include the annual
financial statement audit and other procedures required to be performed by the
independent auditor to be able to form an opinion on the Trust's financial
statements. These other procedures include information systems and procedural
reviews and testing performed in order to understand and place reliance on the
systems of internal control, and consultations relating to the audit. The Audit
Committee will monitor the Audit services engagement as necessary, but no less
than on a semi-annual basis, and will also approve, if necessary, any changes in
terms, conditions and fees resulting from changes in audit scope, Trust
structure or other items.
In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the independent auditor reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1. All
other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee.
IV. Audit-related Services
Audit-related services are assurance and related services that are reasonably
related to the performance of the audit or review of the Trust's financial
statements or that are traditionally performed by the independent auditor.
Because the Audit Committee believes that the provision of Audit-related
services does not impair the independence of the auditor and is consistent with
the SEC's rules on auditor independence, the Audit Committee may grant general
pre-approval to Audit-related services. Audit-related services include, among
others, accounting consultations related to accounting, financial reporting or
disclosure matters not classified as "Audit services"; assistance with
understanding and implementing new accounting and financial reporting guidance
from rulemaking authorities; agreed-upon or expanded audit procedures related to
accounting and/or billing records required to respond to or comply with
financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under Forms N-SAR and N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix B.2.
All other Audit-related services not listed in Appendix B.2 must be specifically
pre-approved by the Audit Committee.
V. Tax Services
The Audit Committee believes that the independent auditor can provide Tax
services to the Trust such as tax compliance, tax planning and tax advice
without impairing the auditor's independence, and the SEC has stated that the
independent auditor may provide such services. Hence, the Audit Committee
believes it may grant general pre-approval to those Tax Services that have
historically been provided by the auditor, that the Audit Committee has reviewed
and believes would not impair the independence of the auditor, and that are
consistent with the SEC's rules on auditor independence. The Audit Committee
will not permit the retention of the independent auditor by the Trust in
connection with a transaction initially recommended by the independent auditor,
the sole business purpose of which may be tax avoidance and the tax treatment of
which may not be supported in the Internal Revenue Code and related regulations.
The Audit Committee will consult with the Treasurer of the Trust or outside
counsel to determine that the tax planning and reporting positions are
consistent with this policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved the
Tax Services in Appendix B.3. All Tax services involving large and complex
transactions not listed I Appendix B.3 must be specifically pre-approved by the
Audit Committee, including tax services proposed to be provided by the
independent auditor to an executive officer or Trustee of the Trust, in his or
her individual capacity, where such services are paid for by the Trust.
VII. All Other Services
The Audit Committee believes, based on the SEC's rules prohibiting the
independent auditor from providing specific non-audit services, that other types
of non-audit services are permitted. Accordingly, the Audit Committee believes
it may grant general pre-approval to those permissible non-audit services
classified as All Other services that it believes are routine and recurring
services, would not impair the independence of the auditor and are consistent
with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix B.4.
Permissible All Other services not listed in Appendix B.4 must be specifically
pre-approved by the Audit Committee.
A list of the SEC's prohibited non-audit services is attached to this policy as
Appendix B.5. The SEC's rules and relevant guidance should be consulted to
determine the precise definitions of these services and the applicability of
exceptions to certain of the prohibitions.
VII. Pre-Approval Fee Levels or Budgeted Amounts
Pre-approval fee levels or budgeted amounts for all services to be provided by
the independent auditor will be established annually by the Audit Committee.
(Note that separate amounts may be specified for the Trust and for other
affiliates in the investment company complex subject to pre-approval). Any
proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for Audit, Audit-related and Tax services for the Trust (including any
Audit-related or Tax service fees for affiliates subject to pre-approval), and
the total amount of fees for certain permissible non-audit services classified
as All Other services for the Trust (including any such services for affiliates
subject to pre-approval).
VIII. Procedures
All requests or applications for services to be provided by the independent
auditor that do not require specific approval by the Audit Committee will be
submitted to the Treasurer of the Trust and must include a detailed description
of the services to be rendered. The Treasurer of the Trust will determine
whether such services are included within the list of services that have
received the general pre-approval of the Audit Committee and shall inform the
Audit Committee on a timely basis of any such services rendered by the
independent auditor. The Treasurer of the Trust will advise the Board of the
facts and circumstances of these services so that the Audit Committee can assess
the impact of the service on the independent auditor's independence.
Requests or applications to provide services that require specific approval by
the Audit Committee will be submitted to the Audit Committee by both the
independent auditor and the Treasurer of the Trust, and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's rules on auditor independence.
The Audit Committee has designated the Treasurer of the Trust to monitor the
performance of all services provided by the independent auditor and to determine
whether such services are in compliance with this policy. The Treasurer of the
Trust will report to the Audit Committee on a periodic basis on the results of
its monitoring. Both the Treasurer of the Trust and management will immediately
report to the chairman of the Audit Committee any breach of this policy that
comes to the attention of the Treasurer of the Trust or any member of
management.
The Treasurer of the Trust will develop a plan that provides for the monitoring
of the independent auditor's services and update it as necessary, and in any
event at least annually. The Audit Committee will also review the Treasurer's
plan and any updates to determine that the plan provides for the monitoring of
the independent auditor's services.
IX. Additional Requirements
The Audit Committee has determined to take additional measures on an annual
basis to meets its responsibility to oversee the work of the independent auditor
and to assure the auditor's independence from the Trust, such as reviewing a
formal written statement from the independent auditor delineating all
relationships between the independent auditor and the Trust, consistent with
Independence Standards Board No. 1, and discussing with the independent auditor
its methods and procedures for ensuring independence.
Appendix B.1
Pre-Approved Audit Services for Fiscal Year 2004
Dated: September 21, 2004
Service Range of Fees
- ------------------------------------------------------ ---------------------
Trust
- ------------------------------------------------------ ---------------------
Statutory audits or financial audits for the Trust Pre-Approved-Audit/A/
- ------------------------------------------------------ ---------------------
Services associated with SEC registration Pre-Approved-Other/B/
statements, periodic Pre-Approved-OtherB reports
and other documents filed with the SEC or other
documents issued in connection with securities
offerings (e.g., consents), and assistance in
responding to SEC comment letters
- ------------------------------------------------------ ---------------------
Consultations by the Trust's management as to the Pre-Approved-Audit/A/
accounting or disclosure treatment of transactions
or events and/or the actual or potential impact of
final or proposed rules, standards or
interpretations by the SEC, FASB, or other
regulatory or standard setting bodies (Note: Under
SEC rules, some consultations may be
"audit-related" services rather than "audit"
services. In such cases, the consultation for
"audit-related" services shall be deemed to be
"Pre-Approved-Other" and subject to the limit on
fees set forth below in Note B.)
- ------------------------------------------------------ --------------------
Attest services required by statute or regulation Not Applicable
(not paid by the Trust, e.g. 17f-2 Security
Counts)
- ------------------------------------------------------ --------------------
/A/ Fees for services listed as "Pre-Approved-Audit" shall not exceed the
annual fees of $972,000 for audit services for fiscal year 2004 approved on
September 21, 2004.
/B/ Aggregate fees for services listed as "Pre-Approved-Other" in Appendices
B.1 - B.4 shall not exceed an amount equal to 10% of the annual fees of
$972,000 for audit services for fiscal year 2004 approved on September 21,
2004.
Appendix B.2
Pre-Approved Audit-Related Services
Dated: September 21, 2004
Service Range of Fees
- ------------------------------------------------------ ---------------------
Trust
- ------------------------------------------------------ ---------------------
Due Diligence services pertaining to Pre-Approved-Other/B/
potential Fund mergers
- ------------------------------------------------------ ---------------------
Issuance of SAS-70 reports on internal Pre-Approved-Other/B/
controls of a service provider
- ------------------------------------------------------ ---------------------
Consultations by the Trust's management as to the Pre-Approved-Other/B/
accounting or disclosure treatment of transactions
or events and/or the actual or potential impact of
final or proposed rules, standards or
interpretations by the SEC, FASB, or other
regulatory or standard-setting bodies (Note: Under
SEC rules, some consultations may be "audit"
services rather than "audit-related" services. In
such cases, the consultation shall be deemed part
of the "Pre-Approved - Audit" services and covered
under the fee specified in Note A, below.)
- ------------------------------------------------------ ---------------------
Review of the Trust's semi-annual financial statements Pre-Approved-Audit/A/
- ------------------------------------------------------ ---------------------
Information systems reviews not performed in Not Applicable
connection with the audit (e.g., application data
center and technical reviews)
- ------------------------------------------------------ ---------------------
General assistance with implementation of the Pre-Approved-Other/B/
requirements of SEC rules
- ------------------------------------------------------ ---------------------
Regulatory compliance assistance (e.g., Pre-Approved-Other/B/
agreed-upon procedures for Section 15(c) contract
renewals, Rule 12b-1 plan renewals)
- ------------------------------------------------------ ---------------------
/A/ Fees for services listed as "Pre-Approved -Audit" shall not exceed the
annual fees of $972,000 for audit services for fiscal year 2003 approved on
September 21, 2004.
/B/ Aggregate fees for services listed as "Pre-Approved - Other" in Appendices
B.1 - B.4 shall not exceed an amount equal to 10% of the annual fees of
$972,000 for audit services for fiscal year 2004 approved on September 21,
2004.
Appendix B.3
Pre-Approved Tax Services
Dated: September 21, 2004
Service Range of Fees
- --------------------------------------------------------- ---------------------
Trust
- --------------------------------------------------------- ---------------------
U.S. federal, state and local tax planning and advice Pre-Approved-Other/B/
- --------------------------------------------------------- ---------------------
U.S. federal, state and local tax compliance Pre-Approved-Audit/A/
- --------------------------------------------------------- ---------------------
International tax planning and advice Pre-Approved-Other/B/
- --------------------------------------------------------- ---------------------
International tax compliance (e.g., tracking sales Pre-Approved-Other/B/
of Indian securities and filing local Fund tax
returns in India by Ernst & Young Private Limited)
- --------------------------------------------------------- ---------------------
Review of federal, state, local and international Pre-Approved-Other/B/
income, franchise and other tax returns
- --------------------------------------------------------- ---------------------
Domestic and foreign tax planning, compliance, and advice Pre-Approved-Other/B/
- --------------------------------------------------------- ---------------------
Assistance with tax audits and appeals before the Pre-Approved-Other/B/
IRS and similar state, local and foreign agencies
- --------------------------------------------------------- ---------------------
Tax advice and assistance regarding statutory, Pre-Approved-Other/B/
regulatory or administrative developments (e.g.,
excise tax reviews, evaluation of Trust's tax
compliance function) (Note: Under SEC rules, some
tax reviews and evaluations may be "audit"
services rather than "Tax" services. In such
cases, the tax review and evaluation shall be
deemed part of the "Pre-Approved - Audit" services
and covered under the fee specified in Note A,
below.)
- --------------------------------------------------------- ---------------------
/A/ Fees for services listed as "Pre-Approved -Audit" shall not exceed the
annual fees of $972,000 for audit services for fiscal year 2003 approved on
September 21, 2004.
/B/ Aggregate fees for services listed as "Pre-Approved - Other" in Appendices
B.1 - B.4 shall not exceed an amount equal to 10% of the annual fees of
$972,000 for audit services for fiscal year 2004 approved on September 21,
2004.
Appendix B.4
Pre-Approved All Other Services
Dated: September 21, 2004
- ----------------------------------- --------------------------------------------
Service Range of Fees
- ----------------------------------- --------------------- ---------------------
Trust Affiliates/A/
- ----------------------------------- --------------------- ---------------------
Risk management advisory services, Pre-Approved-Other/B/ Pre-Approved-Other/B/
e.g., assessment and testing of
security infrastructure controls
- ----------------------------------- --------------------- ---------------------
Assistance with respect to SEC Pre-Approved-Other/B/ Pre-Approved-Other/B/
examinations, investigations,
inquiries and proceedings
- ----------------------------------- --------------------- ---------------------
Audit, audit-related and tax Not Applicable Pre-Approved-Other/B/
services furnished to Affiliates
that are subject to Trust
pre-approval requirements
- ----------------------------------- --------------------- ---------------------
/A/ These include the investment manager (excluding sub-investment managers) and
any entity controlling, controlled by or under common control with the
investment manager that provides ongoing services to the Trust. Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Trust's
Audit Committee must pre-approve non-audit services provided not only to the
Trust but also to the investment manager and other entities in the complex,
where such entities provide ongoing services to the Trust and the independent
accountant's services have a direct impact on the Trust's operations or
financial reporting.
/B/ Aggregate fees for services listed as "Pre-Approved -Other" in Appendices
B.1 - B.4 shall not exceed an amount equal to 10% of the annual fees of $972,000
for audit services for fiscal year 2004 approved on September 21, 2004.
Appendix B.5
Prohibited Non-Audit Services
Dated: September 24, 2003
o Bookkeeping or other services related to the accounting records or
financial statements of the audit client
o Financial information systems design and implementation
o Appraisal or valuation services, fairness opinions or contribution-in-kind
reports
o Actuarial services
o Internal audit outsourcing services
o Management functions
o Human resources
o Broker-dealer, investment advisor or investment banking services
o Legal services
o Expert services unrelated to the audit
4 (e)(2) The percentage of services described in paragraphs (b) through (d) of
Item 4 were approved by the Registrant's Audit Committee pursuant to paragraph
(c) (7) (i) (C) of Rule 2-01 of Regulation S-X was 100%.
4(f) N/A
4(g) The aggregate non-audit fees billed by the Registrant's accountant for
services rendered to the Registrant, and rendered to the Registrant's investment
adviser, and any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant for each of the
last two fiscal years of the registrant were:
Fiscal Year 2004 - 0
Fiscal Year 2003 - $120,000 (For services related to review of the market
timing/late trading policy and procedures controls of affiliated entities of
John Hancock Financial Services, Inc., which was paid for by John Hancock
Financial Services, Inc. The services also included a review of such policy and
controls of the Registrant).
4(h) N/A.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Included as part of the report to shareholders filed under Item 1 of
this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES
FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No material changes.
ITEM 11. CONTROLS AND PROCEDURES.
(a)(i) The Chairman and Treasurer for the John Hancock Variable Series Trust I
(the "Trust") have concluded that the disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) provide
reasonable assurance that material information relating to the Trust is
accumulated and made known to them on a timely basis by appropriate persons,
based on their evaluations of these controls and procedures as of a date within
90 days of the filing date of this report.
(a)(ii) There was no change in the Trust's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that
occurred during the Trust's last fiscal half-year that has materially affected,
or is reasonably likely to materially affect, the Trust's internal control over
financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers.
(a)(2) Section 302 Certifications.
(b) 906 Certification.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Variable Series Trust I
(Registrant)
By: /s/ MICHELE G. VAN LEER
-----------------------------------
Michele G. Van Leer
Chairman
Date: March 9, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
John Hancock Variable Series Trust I
(Registrant)
By: /s/ MICHELE G. VAN LEER
-----------------------------------
Michele G. Van Leer
Chairman
Date: March 9, 2005
By: /s/ GLADYS C. MILLAN
-----------------------------------
Gladys C. Millan
Assistant Treasurer
Date: March 9, 2005