-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FVBrAJsye4ZWUMJVk6/sbiPLKRdiF6uIMgtHGumqWpG9bX3a8GPpAa9GuLY5AJn9 bBXQN21cH8d9bBS1dUBJdg== 0000928816-00-000138.txt : 20000307 0000928816-00-000138.hdr.sgml : 20000307 ACCESSION NUMBER: 0000928816-00-000138 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000303 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN DECLARATION TRUST CENTRAL INDEX KEY: 0001003457 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07437 FILM NUMBER: 560815 BUSINESS ADDRESS: STREET 1: 101 HUNTINGTON AVE CITY: BOSTON STATE: MA ZIP: 02199-7603 BUSINESS PHONE: 6173751702 MAIL ADDRESS: STREET 1: 101 HUNTINGTON AVE CITY: BOSTON STATE: MA ZIP: 02199-7603 N-30D 1 JOHN HANCOCK DECLARATION TRUST The latest report from your Fund's management team ANNUAL REPORT Declaration Trust Growth V.A. Financial Industries Fund V.A. 500 Index Fund V.A. International Fund V.A. Large Cap Growth Fund V.A. Mid Cap Growth Fund V.A. Regional Bank Fund V.A. Small Cap Growth Fund - ------------------------------------------------------ Growth V.A. Core Equity Fund & Income V.A. Large Cap Value Fund V.A. Sovereign Investors Fund - ------------------------------------------------------ Income V.A. Bond Fund V.A. High Yield Bond Fund V.A. Money Market Fund V.A. Strategic Income Fund DECEMBER 31, 1999 Table of Contents John Hancock Funds - Declaration Trust Page 1) CEO Corner 3 2) Portfolio Manager Commentary This commentary reflects the views of the portfolio managers or portfolio management teams through the end of the Fund's period discussed in this report. Of course, the managers' or team's views are subject to change as market and other conditions warrant. Growth V.A. Financial Industries Fund 4 V.A. 500 Index Fund 7 V.A. International Fund 10 V.A. Large Cap Growth Fund 13 V.A. Mid Cap Growth Fund 16 V.A. Regional Bank Fund 19 V.A. Small Cap Growth Fund 22 Growth & Income V.A. Core Equity Fund 25 V.A. Large Cap Value Fund 28 V.A. Sovereign Investors Fund 31 Income V.A. Bond Fund 34 V.A. High Yield Bond Fund 37 V.A. Money Market Fund 40 V.A. Strategic Income Fund 42 3) Financial Statements 45 4) Notes to Financial Statements 115 TRUSTEES Dennis S. Aronowitz* Stephen L. Brown Richard P. Chapman, Jr.* William J. Cosgrove Leland O. Erdahl Richard A. Farrell Maureen R. Ford Gail D. Fosler William F. Glavin Anne C. Hodsdon Dr. John A. Moore Patti McGill Peterson John W. Pratt* Richard S. Scipione * Members of the Audit Committee OFFICERS Stephen L. Brown Chairman Maureen R. Ford Vice Chairman and Chief Executive Officer Anne C. Hodsdon President, Chief Investment Officer and Chief Operating Officer Osbert M. Hood Executive Vice President and Chief Financial Officer Susan S. Newton Vice President and Secretary James J. Stokowski Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer CUSTODIANS Investors Bank & Trust Company 200 Clarendon Street Boston, Massachusetts 02116 V.A. Bond Fund V.A. Core Equity Fund V.A. Financial Industries Fund V.A. High Yield Bond Fund V.A. Large Cap Growth Fund V.A. Large Cap Value Fund V.A. Mid Cap Growth Fund V.A. Regional Bank Fund V.A. Small Cap Growth Fund V.A. Sovereign Investors Fund V.A. Strategic Income Fund State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 V.A. 500 Index Fund V.A. International Fund V.A. Money Market Fund TRANSFER AGENT John Hancock Servicing Center P.O. Box 9298 Boston, Massachusetts 02205-9298 INVESTMENT ADVISER John Hancock Advisers, Inc. 101 Huntington Avenue Boston, Massachusetts 02199-7603 SUB-INVESTMENT ADVISERS Indocam International Investment Services 90 Boulevard Pasteur Paris, France 75015 John Hancock Advisers International Limited 34 Dover Street London, England W1X3RA V.A. International Fund Independence Investment Associates, Inc. 53 State Street Boston, Massachusetts 02109 V.A. Core Equity Fund ISSUER John Hancock Life Insurance Company John Hancock Variable Life Insurance Company* 200 Clarendon Street Boston, Massachusetts 02117 *Not Licensed in New York PRINCIPAL DISTRIBUTOR John Hancock Funds, Inc. 101 Huntington Avenue Boston, Massachusetts 02199-7603 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 INDEPENDENT AUDITORS Ernst & Young LLP 200 Clarendon Street Boston, Massachusetts 02116-5072 CEO CORNER [A 1" x 1" photo of Maureen R. Ford, Vice Chairman and Chief Executive Officer, flush right next to second paragraph.] DEAR SHAREHOLDERS: As "The American Century" drew to a close this past year, the U.S. economy ended the era on a high note. With robust growth continuing in 1999, our economy stood poised to enter the history books for producing the longest expansion on record. The stock market also rang out the century in style. For an unprecedented fifth straight year, both the Dow Jones Industrial Average and the Standard & Poor's 500 Index produced 20%-plus returns. However, the market's advances were restricted to a very select group of stocks, primarily in the technology sector. Many others, including some of the household blue-chip names, languished or lost ground as the result of investors' seemingly insatiable appetite for tech stocks. Bonds struggled through their second-worst year in more than two decades, as the strength of the U.S. economy and the rebound of many others around the world provoked inflation fears. Though their outlook from here looks brighter, in many instances, bond mutual fund investors actually lost a little ground or made only slight advances in 1999. While we expect the market to broaden eventually, we also expect more volatility. More than ever, this type of environment calls for investment diversification. Since not all parts of your portfolio will perform equally well all the time, we believe it is important to allocate your assets among different types of investments and funds that target a variety of market segments. This strategy, executed under the guidance of a seasoned investment professional, could provide you with a better chance of both realizing results and weathering the market's changing conditions. The market's disappointingly narrow focus has created a widening gap in investment performance. Keep that in mind as you read the report from your fund's portfolio management team on the following pages. It's all too easy to get caught up in the headlines and miss what lies underneath. Sincerely, /S/ MAUREEN R. FORD MAUREEN R. FORD, VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER BY JAMES K. SCHMIDT, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND THOMAS FINUCANE AND THOMAS GOGGINS, PORTFOLIO MANAGERS [A 3" x 2-1/2" photo at bottom right side of page of John Hancock V.A. Financial Industries Fund. Caption below reads "Fund management team members. Standing (l-r): Jay McKelvey, Tom Goggins and Tom Finucane. Sitting (l-r): Lisa Welch, Jim Schmidt and Patricia Ouimet."] John Hancock V.A. Financial Industries Fund Rising interest rates send financial stocks tumbling Financial stocks had a tough year in 1999. A combination of factors worked on the group, from robust economic growth, rising interest rates and inflation fears, to Y2K concerns, fewer consolidations and a torrid technology sector that lured investors away. The only pockets of strength came from the largest financial institutions, like Citigroup. Bank stocks were especially vulnerable to the three interest-rate hikes by the Federal Reserve aimed at slowing down the economy and preempting inflation. Several high-profile earnings disappointments didn't help, even though bank fundamentals, for the most part, were sound. "Banks, despite their stocks' behavior, continue to exhibit solid fundamentals..." Fund performance Given these circumstances, John Hancock V.A. Financial Industries Fund's performance was quite modest. We did, however, do better than other funds focused primarily on financial stocks, which had trouble breaking even. For the year ended December 31, 1999, the Fund returned 1.23% at net asset value, compared to the -1.04% return of the average open-end financial services fund, according to Lipper, Inc. The average variable annuity specialty/miscellaneous fund returned 50.22%. [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is American Express 4.7%, the second is Fiserv 4.6%, the third Legg Mason 3.7%, the fourth Morgan Stanley Dean Witter 3.5% and the fifth Marsh & McLennan 3.3%. A note below the table reads "As a percentage of net assets on December 31, 1999."] Contributors and detractors Our overweighting in investment bankers and life insurance companies compared to the S&P Financial Index, and our underweight in banks helped the Fund post positive results. On the flip side, the weakness of the new European currency, the euro, hurt our holdings in EMU-member countries. However, we remain optimistic about the prospects for further consolidation in Europe and the increased focus there on shareholder value. Insurance choices pay off Property and casualty companies struggled all year in a tough pricing environment, and we significantly cut our stake, from 12% six months ago to 4% by year end, eliminating such names as Berkshire Hathaway and Progressive, which had earnings shortfalls. Our large life insurance and reinsurance companies, on the other hand, had good results, including AXA Financial and American International Group. Insurance broker Marsh & McLennan was also a key performer. Including all its sub categories, insurance remained the Fund's top sector at 32% of net assets. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 10% with -10% at the bottom and 60% at the top. The first bar represents the 1.23% total return for John Hancock V.A. Financial Industries Fund. The second bar represents the -1.04% total return for Average open-end financial services fund. The third bar represents the 50.22% total return for Average variable annuity specialty/miscellaneous fund. A note below the chart reads "The total return for John Hancock V.A. Financial Industries Fund is at net asset value with all distributions reinvested. The average open-end financial services fund and variable annuity specialty/miscellaneous fund are tracked by Lipper, Inc. See the following page for historical performance information."] Shift to the big brokers As the booming bull market continues, investment management companies benefited from a high volume of equity offerings and a growing stream of merger advisory revenues, as well as renewed trading profits. Our largest names, including Morgan Stanley Dean Witter and American Express, were two of the Fund's top contributors. During the year, we cut some of our positions in regional brokerage houses, such as Raymond James and Freedom Securities, as the regionals lost investment-banking market share to the leading national firms. In their place, we bought a stake in Charles Schwab, which has become the model for multi-channel financial product distribution. The move didn't help us this period, but we believe in the company long term. Bank fundamentals strong, stock prices weak Banks, despite their stocks' behavior, continue to exhibit solid fundamentals, given that global markets stabilized and economic growth was better than anticipated. As a result, they have shown excellent loan growth and relatively low credit losses. Bank earnings were up approximately 12% for 1999, even with the rising interest-rate environment, again confirming our belief that the market unfortunately overestimates the impact of rising rates on bank profits. Our best bank performers were money-center bank Citigroup and the large super-regionals. While U.S. banks remain our second largest sector weighting, at 23% of the Fund, our underweight versus the financial index served us well this year. Consolidation slowed from its red-hot 1998 pace due to Y2K concerns, a more difficult pricing environment and leftover indigestion from some prior acquisitions. Reform legislation bodes well This year produced an historic piece of financial services reform legislation. The bill amends the Glass-Steagall and Bank Holding Company acts to permit banks, securities companies and insurance companies to affiliate in the same holding company. With its passage, we expect a period of consolidation to result featuring just such cross-industry consolidations. The potential for such deregulation was one of the motivating factors for creating John Hancock V.A. Financial Industries Fund. Specifically, we think there will be further cases of banks buying brokers, and, more important, for the first time we should see banks interested in acquiring life insurance companies. "This year produced an historic piece of financial services reform legislation." A look ahead As long as the economy shows no signs of slowing and inflation remains a threat, the prospect for further rate increases remains real. While that should keep the waters choppy for financial stocks in the near term, the longer-term outlook is brighter. After their recent struggles, financial stocks are very compelling, with their valuations at substantial discounts to the market average. That, together with landmark regulatory reform now poised to spark change, bodes well for the financial sector. - --------------------------------------------------------------------------- Sector investing is subject to different, and sometimes greater, risks than the market as a whole. International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (4/30/97) ------- ------- Cumulative Total Returns 1.23% 48.42% Average Annual Total Returns (1) 1.23% 15.95% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return since inception would have been 15.86%. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Financial Industries Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Standard & Poor's 500 Index -- an unmanaged index that includes 500 widely traded common stocks and is often used as a measure of stock market performance. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Financial Industries Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the Standard & Poor's 500 Index and is equal to $19,075 as of December 31, 1999. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Financial Industries Fund on April 30, 1997 and is equal to $14,842 as of December 31, 1999. BY ROGER HAMILTON, CFA, PORTFOLIO MANAGER [A 3" x 3" photo at bottom right side of page of John Hancock V.A. 500 Index Fund. Caption below reads "Fund management team members Barry Evans (l) and Roger Hamilton (r)."] John Hancock V.A. 500 Index Fund S&P 500 Index scores fifth consecutive year of double-digit gains Powered by the stratospheric climb of technology and telecommunications stocks, the S&P 500 Index finished 1999 at a record high. For the 12 months ended December 31, 1999, the Index climbed by more than 20%, marking the fifth consecutive year in which it posted double-digit gains. This five-for-five record run resulted in a 219% cumulative gain from 1994 to 1999. Despite intensifying inflation concerns and interest rate worries, investors kept pushing technology and telecommunications stocks "to infinity and beyond." They bet that the global economic recovery would stimulate a level of demand for tech and telecom products so strong that rising interest rates wouldn't jeopardize earnings growth. But the meteoric rise of tech and telecom stocks belied a more somber truth. Many non-technology stocks suffered in 1999, and some out-and-out stumbled. Although the Index posted a gain of 21.04%, including reinvested dividends, the average stock in it rose only about half as much. In fact, the final tally showed that while 46% of the companies that made up the S&P 500 posted gains, a surprising 54% posted losses for the year. Even established blue-chip companies, such as soft-drink maker Coca-Cola and drug company Merck, found themselves in the losing column. Without the gains posted by white-hot technology and telecommunications shares, the S&P 500 Index's returns would have been very modest, at best. [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is Microsoft 4.9%, the second is General Electric 4.1%, the third Cisco Systems 2.8%, the fourth Wal-Mart Stores 2.5% and the fifth Exxon 2.3%. A note below the table reads "As a percentage of net assets on December 31, 1999."] "...bright promise of the Internet... helped set technology and telecommunications stocks ablaze." Performance overview For the 12-month period ended December 31, 1999, John Hancock V.A. 500 Index Fund had a total return of 20.81% at net asset value. By comparison, the average variable annuity S&P 500 Index objective fund had a total return of 20.48%, according to Lipper, Inc. Historical performance information can be found on page 9. Our goal is to have the Fund's holdings closely track those of the S&P 500 Index, while minimizing the costs associated with buying and selling shares of stocks. Although there are frequent changes in the composition of the Index, we re-balance the Fund's holdings less frequently to keep our transaction costs at a minimum. When we get new money that cannot immediately be deployed into Index components, we buy S&P 500 Stock Index futures. They allow us to participate in the Index's performance without incurring the transaction costs of buying stocks. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 10% with 0% at the bottom and 30% at the top. The first bar represents the 20.81% total return for John Hancock V.A. 500 Index Fund. The second bar represents the 21.04% total return for S&P 500 Index. The third bar represents the 20.48% total return for Average variable annuity S&P 500 Index objective fund. A note below the chart reads "The total return for John Hancock V.A. 500 Index Fund is at net asset value with all distributions reinvested. The average variable annuity S&P 500 Index objective fund is tracked by Lipper, Inc. See the following page for historical performance information."] "S&P Index funds aren't immune to market downdrafts..." Tech, telecom dominate The bright promise of the Internet, together with a rebounding world economy, helped set technology and telecommunications stocks ablaze. In fact, all but one of the S&P 500 Index's 30 best performers for the year were members of those two groups. Topping the Index was QUALCOMM, a provider of digital wireless communications products and services, which climbed an eye-popping 2,619%. More than one-third of its 1999 gains -- $153 to be exact -- came in the last week of the year after a brokerage analyst set a 12-month price target of $1000. Because of its incredible rise, QUALCOMM accounted for more than 9% of the S&P 500 Index's value by year's end. Rounding out the 10 biggest gainers, Sprint PCS (+343%) emerged as the top player in the wireless phone wars. Cell-phone firm Nextel Communications (+337%) enjoyed rapid subscriber and cash flow growth. LSI Logic (+319%) benefited from improving demand and pricing for semiconductors. Nortel Networks (+303%), Oracle (+290%) and Network Appliance (+270%) all were boosted by strong earnings growth. Yahoo! (+265%) benefited from rising advertising revenues, strong subscriber growth and being named a component of the S&P 500 Index. Sun Microsystems (+262%) climbed, thanks to a sales surge of Internet-infrastructure technology. National Semiconductor (+216%) was boosted by the more favorable semiconductor environment. Laggards The biggest detractors from the Index came from a broad range of industries. Funeral home operator Service Corporation International (-82%) sent condolences to investors, blaming a variety of factors including a declining death rate. Drug store chain Rite Aid (-77%) collapsed when creditors forced out management after accounting woes. McKesson HBOC (-71%) stumbled on news of alleged accounting irregularities and the pressures of managed care. HEALTHSOUTH (-65%) was hurt when managed-care firms trimmed reimbursements. Quintiles Transnational (-65%) suffered after the firm warned of profit shortfall. Pollution control companies Waste Management (-63%) and Allied Waste (-63%) were hurt by worse-than-expected losses. Xerox (-62%) slumped in response to intensified competition and sliding earnings. Outlook The Fund's returns, as always, will be dictated by the performance of the S&P 500 Stock Index. It's important for shareholders to realize that the S&P Stock Index's performance has been extremely strong over the past five years, especially when viewed from a historical basis. S&P Index funds aren't immune to market downdrafts, and they will rise and fall in concert with the underlying stocks in the Index. But no matter what the market environment, our goal will be to closely track the performance to the S&P 500 Stock Index. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (8/29/96) ------- ------- Cumulative Total Returns 20.81% 124.03% Average Annual Total Returns (1) 20.81% 27.32% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% and the management fee to 0.10% of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return for the one-year period and since inception would have been 20.41% and 26.98%, respectively. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. 500 Index Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Standard & Poor's 500 Index -- an unmanaged index that includes 500 widely traded common stocks and is often used as a measure of stock market performance. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. 500 Index Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the Standard & Poor's 500 Index and is equal to $24,250 as of December 31, 1999. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. 500 Index Fund on August 29, 1996 and is equal to $22,404 as of December 31, 1999. BY MIREN ETCHEVERRY FOR THE PORTFOLIO MANAGEMENT TEAM [A 3" x 3" photo at bottom right side of page of John Hancock V.A. International Fund. Caption below reads "Fund management team members (l-r): Jean-Claude Kaltenbach and, Miren Etcheverry."] John Hancock V.A. International Fund International markets roar back to life Recently, shareholders voted to approve a new subadvisory investment management contract with Indocam International Investment Services, effective January 1, 2000. Overseas financial markets made a remarkable recovery in 1999, astounding investors by their quick rebound from 1998's global economic turmoil. Japan and the emerging markets had the best returns, as many of the Southeast Asian countries that sparked the problems in 1997 came back to life. Lower interest rates and a pickup in exports and growth produced especially strong results in South Korea, Thailand and Malaysia, while rising commodity prices helped Latin American markets. "...we went from a large underweighting in Japan to a significant overweighting..." Japan was one of the bigger winners and most prominent highlights of the year, as the government took steps to fix the ailing banking system, corporate restructuring began to take hold and the first signs of economic recovery emerged. That prompted a flood of foreign investors to re-enter the Japanese market and caused the yen to strengthen versus the dollar -- further benefiting American investors. Europe's results were more modest for U.S. investors because the decline of its newly minted currency, the euro, throughout the year eroded most of the markets' gains. [Pie chart at bottom left hand column with heading "Portfolio Diversification". The chart is divided into seven sections (from top to left): Latin America 1%, Canada 5%, Pacific Rim ex-Japan 8%, Short-Term Investments & Other 8%, U.K. & Ireland 16%, Japan 27% and Continental Europe 35%. A note below the chart reads "As a percentage of net assets on December 31, 1999."] Taken as a whole, overseas stock markets outperformed the United States for the first time in several years, many driven by the same technology and telecommunications frenzy that brought U.S. stock indices to record highs. For the year ended December 31, 1999, world stock markets as measured by the Morgan Stanley Capital International (MSCI) All Country World Free Ex-U.S. Index returned 28.80%, compared to the 21.04% return of the Standard & Poor's 500 Index. Fund performance John Hancock V.A. International Fund participated fully in the strength of the overseas markets and outperformed our MSCI benchmark, returning 31.55% at net asset value for the year ended December 31, 1999. On a relative basis, our performance was less than the 42.88% return of the average variable annuity international fund, according to Lipper, Inc. Historical performance information can be found on page 12. Our lag occurred in the first half of the year, when we had little exposure to emerging markets as they began their ascent and were significantly overweighted in Europe when results were more modest. We also missed April's sharp advance by cyclical companies, although we made up for that later. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 10% with 0% at the bottom and 50% at the top. The first bar represents the 31.55% total return for John Hancock V.A. International Fund. The second bar represents the 42.88% total return for Average variable annuity international fund. A note below the chart reads "The total return for John Hancock V.A. International Fund is at net asset value with all distributions reinvested. The average variable annuity international fund is tracked by Lipper, Inc. See the following page for historical performance information."] Shifting emphasis helps As we grew more confident in the prospects for recovery in Asia, we repositioned the portfolio to reflect that, moving the Fund to a more average weight in Europe -- ending the year at 51% of net assets from 76% a year ago. Shifting to an overweighted position in Canada and making good stock choices there also helped, given the strong performance of telecommunications company Nortel Networks. Like the market in general, our Fund's best performers were our technology, telecommunications and electronics stocks across all continents. Japan During the course of the year, we went from a large underweighting in Japan to a significant overweighting compared to our benchmark, and that served us well, given Japan's 61% return. Our position grew from 11% to 27% of net assets, and Japan was the largest country contributor to our performance. Sony, which recently began a major corporate restructuring, was our top holding and best performer. Others included Fujitsu, one of the largest manufacturers of computers and electronic components which is thriving on the telecom equipment boom, and investment banker Nomura Securities, which rose as confidence grew in the financial sector. The two fundamental themes driving the Japanese markets are the prospects for economic recovery and corporate restructuring and our portfolio is composed of blue-chip companies benefiting from those themes. Europe: cut but still important We got to our reduced focus in Europe by cutting our overweightings in France, Switzerland, Belgium, Italy and the United Kingdom. Being underweighted in Italy, which lagged, while making good stock choices there also helped performance. Going forward, we plan to keep an important position in Europe because of the opportunities for corporate restructurings and merger activity. In addition, its economic outlook has strengthened, fueled by Asia's recovery and the weak euro that helped exporters. Europe produced some of our biggest winners, such as leading wireless phone manufacturer Nokia and telecom company Mannesmann. Our biggest disappointment was also there in Allied Irish Banks, which was unduly hurt by concerns over its recent merger with a bank in Singapore. "...stock valuations remain attractive compared to U.S. equities." Cautious optimism ahead We remain encouraged about the long-term prospects for international equities, while recognizing the short-term uncertainties surrounding interest rates. Overall, worldwide economic growth is solid and for the most part stock valuations remain attractive compared to U.S. equities. As for the Fund, the addition of a subadviser should bolster our investment capabilities, but will not alter our strategy. The Fund will continue to own a diversified portfolio of stocks chosen through a combination of top-down country allocation, which takes political and economic factors into consideration, and sector and individual stock selections, targeting companies with stable growth, reasonable valuations and strong managements. - --------------------------------------------------------------------------- International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (8/29/96) ------- ------- Cumulative Total Returns 31.55% 72.26% Average Annual Total Returns (1) 31.55% 17.68% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return for the one-year period and since inception would have been 30.19% and 16.26%, respectively. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. International Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Morgan Stanley Capital International (MSCI) All Country World Free Ex-U.S. Index, which measures the performance of a broad range of developed and emerging stock markets. The index represents securities that are freely traded on a variety of equity exchanges around the world. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. International Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. International Fund on August 29, 1996 and is equal to $17,225 as of December 31, 1999. The second line represents the MSCI All Country World Free Ex-U.S. Index and is equal to $16,017 as of December 31, 1999. BY DAVID L. EISENBERG, CFA, AND GEOFFREY PLUME, CFA, PORTFOLIO MANAGERS [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Large Cap Growth Fund. Caption below reads "Fund management team members (l-r): John Golden, David Eisenberg and Geoffrey Plume."] John Hancock V.A. Large Cap Growth Fund Double-digit growth for 1999 Fiscal 1999 began last January with the same narrow band of large-company growth stocks fueling the market upward as they had for the past few years. That trend continued through mid-April, when market leadership broadened as investors took note of a pick-up in global economic growth. Economically sensitive value stocks, small-capitalization companies and energy-related issues moved up in price. Not long after, however, investors grew increasingly concerned about the inflation outlook at home and the possibility of the Federal Reserve Board's raising interest rates -- which it did twice over the summer. Market volatility ensued and technology, pharmaceutical, retail and financial stocks came under significant pressure. By fall, many of the same large-cap growth stocks that took center stage earlier did so once again. Near period's end, investors refocused on mounting inflationary pressures. In November, the Fed raised rates for the third time, creating another meaningful pullback in some of the same industry sectors that suffered over the summer. The exception was technology. Undaunted, technology stock prices hit extreme highs as the rest of the market posted mediocre results. [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is Microsoft 4.5%, the second is General Electric 3.5%, the third Cisco Systems 3.5%, the fourth IBM 3.5% and the fifth Intel 3.2%. A note below the table reads "As a percentage of net assets on December 31, 1999."] Performance results For the 12 months ended December 31, 1999, the Fund posted a total return of 20.71% at net asset value. This compares with the 21.04% return of the S&P 500 Index and the 29.93% return of the average variable annuity growth fund, according to Lipper, Inc. The Fund's double-digit performance was driven, in large part, by its heavy weighting in high-flying technology stocks. The same holds true for many of its competitors, who had even greater exposure to the technology sector, and that gave them a performance edge. Historical performance information can be found on page 15. "Technology- related and communication services stocks were the Fund's strongest contributors to performance." Financial services cut Rising interest rates prompted us to move out of several financial companies that were strong contributors to performance earlier in the year. Taking profits, we either pared back or eliminated the Fund's positions in Providian, Wells Fargo, Bank of America, American Express and Citigroup, sharply reducing the portfolio's overall financial weighting. What remained was an emphasis on several bank, consumer finance and insurance stocks that, as possible acquisition targets, stand to be beneficiaries of the recently passed financial reform bill. American General and MBNA Corp. are two such holdings. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 10% with 0% at the bottom and 40% at the top. The first bar represents the 20.71% total return for John Hancock V.A. Large Cap Growth Fund. The second bar represents the 29.93% total return for Average variable annuity growth fund. A note below the chart reads "The total return for John Hancock V.A. Large Cap Growth Fund is at net asset value with all distributions reinvested. The average variable annuity growth fund is tracked by Lipper, Inc. See the following page for historical performance information."] Health care Looming patent expirations and Medicare reform made for a tough year in pharmaceutical stocks. Early on, we significantly reduced the Fund's health-care exposure, sidestepping the sector's downturn. By mid-fall, however, valuations had become so attractive that we added back to companies such as Schering-Plough and Warner-Lambert. The proposed acquisition of Warner-Lambert by American Home Products sent Warner-Lambert's stock price -- and many others -- soaring in November and then plunging in December as investors decided that mergers in this arena have had a spotty record of success. We had reduced the Fund's position in Warner-Lambert before December's rout and realized profits. While we are still holding some fundamentally sound pharmaceutical stocks, we are also exploring growth prospects in medical device and biotechnology companies. "...we shall become increasingly selective going forward." Retail In the period's first half, we favored cyclically oriented retailers, such as Home Depot, Costco, Lowe's and Wal-Mart Stores -- all of which experienced strong run-ups in price. By late summer, believing in the likelihood of an economic slowdown, we re-deployed assets into the more defensive consumer staple sector. Although holdings such as Kroger, CVS and Safeway suffered along with many others later in the period, they remain in the portfolio because we believe investors will find their predictable earnings appealing should the economy slow. Technology and communication services Technology-related and communication services stocks were the Fund's strongest contributors to performance. Among the main drivers were those companies focused on the Internet and its build-out, such as EMC Corp., Sun Micro-systems and Cisco Systems. The expansion of global telecom also fueled the performance of Motorola and Lucent Technologies, two companies involved in the building of the tele- communications infrastructure. Wireless service providers such as Nextel Communications and Sprint PCS also rocketed to new heights as subscriber growth accelerated. Interestingly, the dawning of the digital age and the explosion of the Internet are helping the performance of several non-tech holdings, such as Best Buy, a consumer electronics retailer, and advertising and cable companies such as the Interpublic Group and Cablevision Systems, respectively. Outlook We enter 2000 with somewhat of a wary eye on technology stocks. Prices have risen so dramatically that a correction of some sort cannot be ruled out. Although we expect to continue having substantial exposure to tech stocks because of their strong growth potential, we shall become increasingly selective going forward. Given the economy's uncertain direction, multinational corporations and diversified industrial firms that can participate in growth overseas, as well as predictable stable growth players at home, shall also continue to have fair representation within the portfolio. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (8/29/96) ------- ------- Cumulative Total Returns 20.71% 61.39% Average Annual Total Returns (1) 20.71% 15.41% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return for the one-year period and since inception would have been 20.69% and 14.51%, respectively. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Large Cap Growth Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Standard & Poor's 500 Index -- an unmanaged index that includes 500 widely traded common stocks and is often used as a measure of stock market performance. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Large Cap Growth Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the Standard & Poor's 500 Index and is equal to $24,250 as of December 31, 1999. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Large Cap Growth Fund on August 29, 1996 and is equal to $16,139 as of December 31, 1999. BY BARBARA C. FRIEDMAN, CFA, PORTFOLIO MANAGER [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Mid Cap Growth Fund. Caption below reads "Mid Cap Growth Fund management team members (l-r)" Barbara Friedman, Lisa Welch and John Golden."] John Hancock V.A. Mid Cap Growth Fund Mid-cap growth stocks take off; Fund posts strong return The U.S. stock market surprised investors with another year of strong double-digit gains. Early on, lower short-term interest rates fueled a rise in mid-cap growth stocks. But signs of slower economic growth soon caused investors to move back into large-cap names. In early April, renewed confidence in the economy's strength and the likelihood of higher interest rates ignited another rise in less expensive mid-cap stocks, which climbed even as interest rates moved higher. In mid-summer, inflation concerns, rising interest rates and Y2K uncertainties stalled the market's climb. With the expectation that interest-rate hikes were mostly over, inflation was under control and prospects for technology stocks were stronger than ever, the market re-accelerated in the fourth quarter. The Russell Midcap Growth Index returned 51.29% for the year ended December 31, 1999, well ahead of the 21.04% return for the Standard & Poor's 500 Index. "The Fund also got a boost from strong stock selection in the media sector." [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is Omnipoint 1.8%, the second is i2 Technologies 1.8%, the third CMGI 1.8%, the fourth McLeodUSA 1.5% and the fifth Oak Industries 1.5%. A note below the table reads "As a percentage of net assets on December 31, 1999."] Performance review John Hancock V.A. Mid Cap Growth Fund returned 56.18% at net asset value, during the same period. This return exceeded the 46.25% return for the average variable annuity mid-cap fund, according to Lipper, Inc. Historical performance information appears on page 18. The Fund benefited from its focus on mid-cap stocks with market capitalizations between $1 billion and $10 billion, particularly in the top-performing technology sector. A surge of mid-cap buyouts by both foreign corporations and large U.S. companies also helped. The Fund owned stakes in several companies where takeovers were either announced or took place. These included Ascend Communications, DSP Communications, Frontier, Omnipoint and Orange Plc in the technology sector; AMFM and Outdoor Systems in the media area and Oak Industries, which makes electronic components, and Select Appointments, a European temporary help agency. Telecommunications leads Our concentration in telecommunications semiconductor and service stocks served us particularly well. Among our top performers were Global Crossing, NEXTLINK Communications and McLeodUSA, all of which are involved in building fiber-optic networks, as well as Corning, which supplies the fiber for the networks. Other winners included wireless phone companies Omnipoint, Nextel Communications and VoiceStream Wireless, and Conexant Systems, Comverse Technology and QUALCOMM, all of which provide equipment to the telecommunications industry. Each of these stocks returned over 100% for the period. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 10% with 0% at the bottom and 60% at the top. The first bar represents the 56.18% total return for John Hancock V.A. Mid Cap Growth Fund. The second bar represents the 46.25% total return for Average variable annuity mid-cap fund. A note below the chart reads "The total return for John Hancock V.A. Mid Cap Growth Fund is at net asset value with all distributions reinvested. The average variable annuity mid-cap growth fund is tracked by Lipper, Inc. See the following page for historical performance information."] Software and Internet winners Many of our other technology names also did quite well. In the software sector, i2 Technologies, a leading supply-chain vendor, and VERITAS Software both saw their stock prices climb with growing demand for their products. Internet stocks, which we had begun adding to in August, also took off late in the year. We benefited from owning CMGI, a holding company with a portfolio of Internet stocks, and DoubleClick, an Internet advertising company. Media and energy pay off The Fund also got a boost from strong stock selection in the media sector. We focused on media outlets that offer consumer companies a more targeted and cost-effective way to advertise. Among the names we owned were Outdoor Systems, a billboard company that was acquired by Infinity Broadcasting; Univision Communications, a Spanish language television company; Hispanic Broadcasting, a Spanish language radio company; and AMFM, a U.S. radio company that is being bought out by Clear Channel Communications. Our stake in energy stocks, which we began increasing late last winter when oil prices were around $11 per barrel, also helped the Fund's returns. Oil service stocks like BJ Services did particularly well as oil prices approached $25 per barrel, at which point we began taking profits and reducing our position. Health care and finance disappoint Health-care stocks weakened as concerns grew that tightened Medicare reimbursement policies would hurt profit margins. We sold names like Cardinal Health, a drug distribution company, and Total Renal Care, a kidney dialysis company facing internal problems, and focused on biotechnology companies. In the finance area, we cut back on bank and insurance stocks, which were hurt by rising interest rates. With passage of financial reform legislation, however, we expect to see more consolidation in the insurance sector. Late in the year, we began buying more shares of Ace, Ltd., a Bermuda-based property and casualty company, and adding new names like ReliaStar Financial, a life insurer. "...we've increased our investment in mid-cap names with an international presence..." Opportunities ahead We expect higher interest rates, the labor shortage and higher energy prices to slow U.S. economic growth in 2000. In addition, some of the wholesale price increases that we've seen lately may not get passed onto the consumer, but could instead erode corporate profit margins. In this kind of environment, we believe strong stock selection -- avoiding companies whose profit margins may deteriorate -- will become increasingly important. As we go forward, we also expect the economies of Europe and Asia to accelerate. With this in mind, we've increased our investment in mid-cap names with an international presence, concentrating on sectors that we already like. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (1/7/98) ------- ------- Cumulative Total Returns 56.18% 72.35% Average Annual Total Returns (1) 56.18% 31.63% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the total return for the one-year period and since inception would have been 54.82% and 29.40%, respectively. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Mid Cap Growth Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in both the Standard & Poor's 500 Index and the Russell Midcap Growth Index. The Standard & Poor's 500 Index is an unmanaged index that includes 500 widely traded common stocks and is a commonly used measure of stock market performance. The Russell Midcap Growth Index is an unmanaged index that contains those securities from the Russell Midcap Index with a greater-than-average growth orientation. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Mid Cap Growth Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are three lines. The first line represents the Russell Midcap Growth Index and is equal to $17,832 as of December 31, 1999. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Mid Cap Growth Fund on January 7, 1998 and is equal to $17,234 as of December 31, 1999. The third line represents the Standard & Poor's 500 Index and is equal to $15,565 as of December 31, 1999. BY JAMES K. SCHMIDT, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND THOMAS FINUCANE AND THOMAS GOGGINS, PORTFOLIO MANAGERS [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Regional Bank Fund. Caption below reads "Fund management team members. Standing (l-r): Jay McKelvey, Tom Goggins and Tom Finucane. Sitting (l-r): Lisa Welch, Jim Schmidt and Patricia Ouimet."] John Hancock V.A. Regional Bank Fund Bank stocks lag amid rising interest rates and inflation fears Bank stocks ran into stiff headwinds during 1999, as the economy remained remarkably strong, interest rates rose and inflation fears grew. Banks also fell prey to Y2K concerns and neglect, as investors left the sector to chase high-flying technology stocks. Even the passage in November of long-awaited financial reform legislation -- which long term will be a benefit to financial stocks -- sparked only a two-week rally before bank stocks, with the exception of the behemoth Citigroup, were quashed again by rate jitters. Regional bank stocks in particular were hurt by the three interest-rate hikes implemented by the Federal Reserve in 1999 to cool off the economy and prevent an inflation spike. There were also a few headline-grabbing earnings disappointments that overshadowed the majority of banks, whose fundamentals remained strong. [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is Mid-State Bancshares 3.9%, the second is Valley National Bancorp 3.9%, the third Commerce Bancshares 3.8%, the fourth M&T Bank Corp. 3.7% and the fifth Cullen/Frost Bankers 3.4%. A note below the table reads "As a percentage of net assets on December 31, 1999."] Fund performance The difficult environment caused many financial services mutual funds to lose ground and John Hancock V.A. Regional Bank Fund was no exception. For the year ended December 31, 1999, the Fund returned - -4.86% at net asset value compared to the -1.04% return of the average open-end financial services fund, according to Lipper, Inc., and the average 50.22% of Lipper's catchall group of variable annuity specialty/miscellaneous funds. The Fund's underperformance was clearly due to our focus on regional banks and thrifts, since these smaller-sized companies were decidedly out of favor again in 1999. We also do not own non-bank financial stocks, such as investment brokerage firms, or the several large money- center banks -- like Citigroup -- that were the best performers this year. "The difficult environment caused many financial services mutual funds to lose ground..." Fundamentals still strong We recognize that sector investing is a long-term proposition, and while sector-specific funds are subject to different and sometimes greater volatility than the market as a whole, they can also provide long-term investors with greater outperformance. Despite the current backdrop, we remain encouraged by the generally positive fundamentals of our banks and thrifts. The feared global financial crisis of 1998 never materialized and economic growth has been better than anticipated. As a result, our banks have shown excellent loan growth and low credit losses. Bank earnings were up approximately 12% for 1999, even in a rising interest-rate environment. This is further proof that the stock market unfortunately overestimates the impact that rising rates have on bank profits. While we do expect a small decrease in net profit margins in 2000, we still anticipate bank earnings growth of approximately 8% to 10% over 1999. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 10% with -10% at the bottom and 60% at the top. The first bar represents the -4.86% total return for John Hancock V.A. Regional Bank Fund. The second bar represents the -1.04% total return for Average open-end financial services fund. The third bar represents the 50.22% total return for Average variable annuity specialty/miscellaneous fund. A note below the chart reads "The total return for John Hancock V.A. Regional Bank Fund is at net asset value with all distributions reinvested. The average open-end financial services fund and variable annuity specialty/miscellaneous fund are tracked by Lipper, Inc. See the following page for historical performance information."] "...passage of historic financial- services reform legislation was the most important development..." Consolidation slows, but remains a key theme Consolidation activity slowed from its torrid 1998 pace for a number of reasons. Y2K computer issues were a distraction, banks were still digesting some recent acquisitions and the pricing environment became more difficult. This year, three of the Fund's holdings were involved in mergers. As we have said before, even though the pace of consolidations will always be affected by market forces, the process is bound to continue to address the over-capacity that still exists in the U.S. banking system. Reform legislation: catalyst for rebound? The passage of historic financial-services reform legislation was the most important development for financial companies this year. The bill amends the Glass-Steagall and Bank Holding Company Acts to permit banks, insurance companies and securities brokers to affiliate in the same holding company. As a result, we expect a period of consolidation featuring just such cross-industry combinations. Specifically, we think there will be further cases of banks buying brokers, and, more important, for the first time we should see banks interested in acquiring insurance companies. This consolidation should produce more efficient and profitable financial services providers. It will also reward shareholders through takeover premiums and a greater industry focus on operating with maximum efficiency to generate shareholder value. Strategy stays constant Throughout the year, we took profits and trimmed our stakes in the super-regional banks that were the year's better performers, including Wells Fargo and, earlier in the year, Bank of America. We also took advantage of price declines to add to our position in banks whose stocks were undervalued compared to the companies' fundamentals. With regional bank prices compellingly attractive, we added to such quality names as First Tennessee, Valley National and Citizens Bank. Interest rates, cheap stock prices Uncertainty could keep bank stocks in its grip for a while longer. With the economy still on a roll, and the market and the Fed focused on inflation, the possibilities for further rate hikes remain likely. Until it is clear that the Fed is done raising rates, this nervous environment will prevail, keeping a cloud over the market and financial stocks. Our longer-term outlook, on the other hand, is much brighter. After their recent struggles, bank-stock valuations are very compelling, selling for 50% less than the price/earnings ratio of the S&P 500 Index. As long as bank fundamentals remain solid and once reform legislation kicks in, investors should increasingly recognize the attractive opportunities the sector offers. - --------------------------------------------------------------------------- Sector investing is subject to different, and sometimes greater, risks than the market as a whole. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (5/1/98) ------- ------- Cumulative Total Returns (4.86%) (10.98%) Average Annual Total Returns (1) (4.86%) (6.74%) Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets.Without the limitation of expenses, the average total return since inception would have been (6.78%). WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Regional Bank Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Standard & Poor's 500 Index -- an unmanaged index that includes 500 widely traded common stocks and is often used as a measure of stock market performance. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Regional Bank Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the Standard & Poor's 500 Index and is equal to $13,522 as of December 31, 1999. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Regional Bank Fund on May 1, 1998 and is equal to $8,902 as of December 31, 1999. BY BERNICE S. BEHAR, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND LAURA ALLEN, CFA, AND ANURAG PANDIT, CFA, PORTFOLIO MANAGERS [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Small Cap Growth Fund. Caption below reads "Fund management team members (l-r): Anurag Pandit, Bernice Behar and Laura Allen."] John Hancock V.A. Small Cap Growth Fund Internet and technology stocks spark a small-cap stock rally in 1999 Good stock picking, particularly among technology names, provided John Hancock V.A. Small Cap Growth Fund with outstanding results well in excess of both our peers and benchmark in 1999. For the 12 months ended December 31, 1999, the Fund posted a total return of 68.52% at net asset value, compared to the 38.28% return of the average variable annuity small-cap fund, according to Lipper, Inc. Historical performance information appears on page 24. "Since technology was the place to be this year, we were well served by our sizable stake..." A year of rebound The Fund achieved these results in a year when small-company growth stocks diverged sharply from small-company value stocks and rallied significantly, outdistancing the Standard & Poor's 500 Index for the first time in several years. Small-cap growth stocks were powered mostly by the amazing strength of the technology sector -- Internet stocks in particular -- and biotech stocks to a lesser degree. Their bright prospects caused investors to look beyond rising interest rates, Y2K worries and profit concerns that weighed on many other industry groups this year. For the year ended December 31, 1999, the Russell 2000 Growth Index -- the Fund's benchmark -- returned 43.09%, while the Russell 2000 Value Index lost ground, returning -1.49%. At the same time, the S&P 500 Index returned 21.04%, most of that performance coming from a small band of technology names. [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is Data Return Corp. 1.2%, the second is Cognizant Technology Solutions 1.2%, the third Pegasus Communications 1.2%, the fourth Aspen Technology 1.1% and the fifth BindView Development 1.1%. A note below the table reads "As a percentage of net assets on December 31, 1999."] Technology rules; telecom grows Since technology was the place to be this year, we were well served by our sizable stake in the sector. Although we build the portfolio stock-by-stock, the broad technology sector, including telecommunications, provides us with many companies that fit our investment criteria of having strong and consistent earnings growth, dominant market share and enlightened management. During the year, we shifted our semiconductor emphasis away from companies that service the computer industry toward companies focused on telecommunications, so we could take better advantage of the explosion in the worldwide development of telecommunications infrastructure and services. This area provided us with some of the Fund's top performers, including RF Micro Devices and Alpha Industries, which supply chip sets for Nokia and Motorola cell phones, respectively. Telecom service providers like NEXTLINK Communications and Allegiance Telecom continue to experience huge growth as they have beaten the Bell operating companies at developing and providing sophisticated voice, data and Internet transmission services to mid- and small-sized companies. With their success, these companies grew too large for the Fund's small-cap focus so we took profits. Internet plays Internet companies held much of the limelight this year and they provided us with stellar performance. We firmly believe in the Internet, not just for the myriad ways in which it touches consumers, but also for the revolutionary impact it is having on how business is conducted. That said, our weighting does not remain constant, as happened this year when our stake ranged from 3% to 15% at various times, the largest stakes at the beginning and end of the year. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 20% with 0% at the bottom and 80% at the top. The first bar represents the 68.52% total return for John Hancock V.A. Small Cap Growth Fund. The second bar represents the 38.28% total return for Average variable annuity small- cap fund. A note below the chart reads "The total return for John Hancock V.A. Small Cap Growth Fund is at net asset value with all distributions reinvested. The average variable annuity small-cap fund is tracked by Lipper, Inc. See the following page for historical performance information."] For now, our Internet focus is in two areas. The first is Internet "tool" companies that provide information about where the Internet is going and how it, and individual Web sites, are being used. This group includes companies such as Media Metrix and Forrester Research, for broad trends, and Accrue Software, WebTrends and Broadbase Software for company-specific Web-site analysis. A more recent focus is on the business-to-business subsector ("B2B") involving companies that provide Internet tools and Web sites to help companies conduct business with each other online. An example is our recent addition of Chemdex, an Internet company that distributes pharmaceutical and chemical supplies online. Takeovers abound During the year, the Fund held stakes in more than 20 companies, representing more than 10% of the Fund's net assets, that were taken over by larger companies at significant premiums. Among the group were AboveNet, Level One, Nielsen Media Research, Executive Risk, Hambrecht & Quist and Abacus Direct. Radio shines Our media stocks have been exceptional this year, as consolidation activity picked up and the strong economy provided a boost to radio companies' advertising revenue. Pegasus Communications Corp., the largest rural distributor of Direct TV, saw its stock rise along with a huge growth in demand for satellite TV. Cumulus Media and Citadel Communications also served us well, as they are the top consolidation players in the mid- and small-sized radio markets. Our focus on niche players like Hispanic Broadcasting and Radio One, which dominate in urban markets, also paid off. "Even with their advances, the small-cap group remains compellingly attractive..." Education disappoints Along with our strong performance came several disappointments, particularly among our education companies that provide adult education, such as ITT Educational Services. The group was held back by the strong economy, which caused more people to go to work rather than school. Going forward We are keeping our outlook cautiously optimistic for small-company growth stocks. Even with their advances, the small-cap group remains compellingly attractive, and that bodes well for both a further market rally and more takeover activity in the private market, especially among the high-quality companies the Fund targets. - --------------------------------------------------------------------------- See the prospectus for a discussion of the risks of investing in small-cap stocks. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (8/29/96) ------- ------- Cumulative Total Returns 68.52% 102.63% Average Annual Total Returns (1) 68.52% 23.55% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return for the one-year period and since inception would have been 68.14% and 22.30%, respectively. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Small Cap Growth Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Russell 2000 Index and the Russell 2000 Growth Index. The Russell 2000 Index is an unmanaged small-cap index that is comprised of 2,000 U.S. stocks. The Russell 2000 Growth Index is an unmanaged index that contains Russell 2000 Index stocks with a greater-than-average growth orientation. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Small Cap Growth Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are three lines. The first line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Small Cap Growth Fund on August 29, 1996 and is equal to $20,263 as of December 31, 1999. The second line represents the Russell 2000 Growth Index and is equal to $18,525 as of December 31, 1999. The third line represents the Russell 2000 Index and is equal to $16,724 as of December 31, 1999. BY PAUL MCMANUS FOR THE PORTFOLIO MANAGEMENT TEAM [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Core Equity Fund. Caption below reads "Fund management team members (l-r): Stephen Lanzendorf, John Montgomery and Paul McManus."] John Hancock V.A. Core Equity Fund Internet stocks lead a narrow advance 1999 was another banner year for the popular stock averages, but once again their strength masked extreme selectivity on the part of investors. The technology sector proved to be a favorite, especially in the fourth quarter, when the technology-laden Nasdaq Composite Index skyrocketed. Propelling the rally, however, were a mere handful of Internet and telecommunications stocks, many of them with sky-high valuations that fell outside of the Fund's parameters. All in all, it was a difficult environment for the Fund, which emphasizes broad diversification and concentrates on undervalued stocks of companies with improving fundamentals. Another important development that contributed to the lackluster performance of the broader market was rising short-term interest rates. As the year progressed and it became clear that the U.S. economy was continuing to grow at a robust pace, the Federal Reserve Board raised interest rates in June, August and November. Despite the Fed's recent tightening bias, though, rates remained near the low end of their historical range, and the rate hikes did not stop investors from piling into a select few market leaders, virtually without regard to value. [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is Microsoft 4.7%, the second is General Electric 3.5%, the third Cisco Systems 3.4%, the fourth Citigroup 3.1% and the fifth MCI WorldCom 2.2%. A note below the table reads "As a percentage of net assets on December 31, 1999."] Fund performance Rather than chase stocks that we considered to be drastically overvalued, or make big bets on specific stocks or sectors, we maintained the Fund's disciplined investment strategy. While in some market environments, for relatively short periods of time, certain sectors may significantly outperform the rest of the market, we believe a core-holdings fund such as this one is best served in the long run by a consistent focus on both diversification and growth at a reasonable price. Unfortunately, 1999 was one of those years when our approach was not favored by market conditions, as evidenced by the performance gap between the Fund and the S&P 500. "...the Fund's technology holdings did not have the eye-popping gains of the market leaders..." For the year ended December 31, 1999, the John Hancock V.A. Core Equity Fund had a total return of 13.89% at net asset value. In comparison, the S&P 500 returned 21.04%, including reinvested dividends. The Fund's returns were much closer to those of its peer group, as reflected in the 14.51% return of the average variable annuity growth and income fund, according to Lipper, Inc. Longer-term performance information can be found on page 27. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 5% with 0% at the bottom and 20% at the top. The first bar represents the 13.89% total return for John Hancock V.A. Core Equity Fund. The second bar represents the 14.51% total return for Average variable annuity growth and income fund. A note below the chart reads "The total return for John Hancock V.A. Core Equity Fund is at net asset value with all distributions reinvested. The average variable annuity growth and income fund is tracked by Lipper, Inc. See the following page for historical performance information."] Technology and retailing lead the way Although some of the Fund's technology holdings did not have the eye-popping gains of the market leaders, we maintained a technology weighting roughly comparable to that of the S&P 500, and some of our technology holdings were top contributors to the Fund's performance. Included were hardware companies Hewlett Packard and Dell Computer, semiconductor maker Intel and a variety of other technology holdings, including Teradyne, Cisco Systems, America Online and Microsoft. "...investors will likely continue to focus on interest rates." The strong economy also benefited well- managed retailers like Home Depot and Wal-Mart Stores. Home Depot was one of the sector's strongest performers, boosted by a 3-for-2 split and the stock's inclusion in the Dow Jones Industrial Average as of late October. From then until year end, the price of Home Depot shares rose roughly 39%. Wal-Mart advanced on the basis of strong sales and earnings results, as well as an announced partnership with America Online. In the financial sector, a few stocks, such as Citigroup, were able to buck the interest-rate headwinds in virtue of cost reductions stemming from recent mergers or acquisitions. Aerospace and health care struggle Holding back the Fund's returns were stocks in the aerospace industry. While industry consolidation helped their performance earlier in the year, cutbacks in government defense spending resulted in a weak second half for most aerospace stocks, including B.F. Goodrich, General Dynamics and Textron. Another weak sector was health care, especially the hospital management and large pharmaceutical sub-sectors. Hospital management holdings HEALTHSOUTH and Omnicare were hurt by continued problems concerning the government's Medicare reimbursement policy. We sold those two stocks because we didn't see the situation improving any time soon. The large pharmaceutical company stocks were a different story. They normally suffer some temporary weakness when the presidential campaign season rolls around because of the candidates' penchant for complaining about high drug prices. After reducing the Fund's large drug-company holdings earlier in 1999 in favor of biotechnology stocks, we rotated back into drug stocks later in the year, after the biotechnology sector had enjoyed a strong run. Outlook Aside from election-year uncertainties, investors will likely continue to focus on interest rates. It might be difficult in the short term for stocks -- even in the technology sector -- to continue advancing in the face of rising interest rates. However, unless the economy slows noticeably from its recent pace, the Fed will have no choice but to increase rates again. In the stock market, the situation appears somewhat reminiscent of late 1996, when Fed Chairman Alan Greenspan criticized market participants for their "irrational exuberance" and raised rates shortly thereafter. We may be in for a repeat performance of that scenario. Looking at the big picture, though, stocks recovered nicely from the weakness following the Fed's decision to tighten early in 1997, and we expect that they could do so should further rate increases be in the cards for the first half of 2000. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (8/29/96) ------- ------- Cumulative Total Returns 13.89% 113.61% Average Annual Total Returns (1) 13.89% 25.52% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return since inception would have been 24.99%. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Core Equity Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Standard & Poor's 500 Index -- an unmanaged index that includes 500 widely traded common stocks and is often used as a measure of stock market performance. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Core Equity Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the Standard & Poor's 500 Index and is equal to $24,250 as of December 31, 1999. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Core Equity Fund on August 29, 1996 and is equal to $21,362 as of December 31, 1999. BY TIMOTHY E. KEEFE, CFA, PORTFOLIO MANAGEMENT TEAM LEADER [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Large Cap Value Fund. Caption below reads "Fund management team members (l-r): Sylvester Marquardt, Tim Keefe and David Eisenberg."] John Hancock V.A. Large Cap Value Fund Technology stocks take market to new heights The U.S. stock market turned in another banner year, with investor interest expanding to stocks of all sizes but focusing on just a few sectors. John Hancock V.A. Large Cap Value Fund more than fully participated in the market's gains, returning 56.65% at net asset value for the year ended December 31, 1999. Our strategy of finding great businesses at relatively low prices compared to the company's true value again worked well, with the Fund dramatically outperforming the Standard & Poor's 500 Index, which returned 21.04% for 1999. The Fund also crushed the average variable annuity growth and income fund, which returned 14.51% during the same period, according to Lipper, Inc. For historical performance information, please see page 30. "Strong stock selection was the key to our success." The Fund's performance came amidst a backdrop of tremendous market volatility. Cyclical stocks, those more closely connected to moves in the economy, rallied in April as investors regained confidence in U.S. economic growth and overseas economies showed signs of stabilizing. But the comeback was short-lived, as rising interest rates put pressure on many sectors, including finance. Even as interest rates climbed, however, technology and telecommunications stocks continued to hit on all cylinders, propelling the market to new heights by year-end. [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is Oak Industries 9.2%, the second is ANTEC 7.5%, the third Amphenol Corp. 5.3%, the fourth QUALCOMM 4.7% and the fifth Parametric Technology Group 4.1%. A note below the table reads "As a percentage of net assets on December 31, 1999."] Strong stock selection Strong stock selection was the key to our success. Despite a lighter stake in technology than the S&P 500, the Fund benefited from major investments in names like QUALCOMM, a semiconductor company that makes advanced communications systems based on digital wireless technology. QUALCOMM is a perfect example of our relative value investment strategy, which we apply to companies wherever we find them -- even in technology, which is not traditionally viewed as a value sector. We bought the stock early in the year when it seemed cheap compared to its potential to grow revenues based on its patented wireless technology. Conexant Systems, a top provider of broadband and wireless semiconductors, was a similar story. In 1999, each of these stocks returned over 500% and together generated approximately 20% of the Fund's return. We also saw software stocks like Computer Associates International do well as investors began anticipating a ramp-up in corporate technology spending. Commonwealth Telephone Enterprises, a phone company serving rural Eastern Pennsylvania, took off as the company began successfully entering new markets. Other top performers included AT&T-Liberty Media Group, a company with ownership interests in major entertainment networks and video distribution businesses; Nielsen Media Research, a leading provider of TV audience research that was recently bought out; and Danka Business Systems, a newly restructured company that distributes and services office equipment. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 20% with 0% at the bottom and 60% at the top. The first bar represents the 56.65% total return for John Hancock V.A. Large Cap Value Fund. The second bar represents the 14.51% total return for Average variable annuity growth and income fund. A note below the chart reads "The total return for John Hancock V.A. Large Cap Value Fund is at net asset value with all distributions reinvested. The average variable annuity growth and income fund is tracked by Lipper, Inc. See the following page for historical performance information."] Opportunities in electronics During the spring, we began building a large stake in Oak Industries, which makes components for the cable TV, wireless and fiber-optics markets. The stock was cheap, business prospects were excellent and we expected Oak to spin out or sell off its Lasertron optics division. Instead Corning, a fiber manufacturer, announced it was acquiring Oak this past fall. Oak's stock price soared, providing the Fund with approximately 20% of its return. We also bought Amphenol, a similar type of company, which has since done well. By contrast, our investment in ANTEC -- which makes equipment for both the cable TV and broadband communications industries -- tumbled on near-term concerns. Given the company's excellent long-term prospects, we held on. We also acquired Sony at a bargain price, given the company's assets, new video game offerings and restructuring efforts. Between the time we bought it and year end, the stock doubled. Disappointments in finance and health care Unfortunately, weak pricing and rising interest rates hurt almost all our insurance stocks. Our largest investment was Ace, Ltd., a property and casualty insurer with consistent earnings growth that recently merged with CIGNA. As the stock's price fell, we added to our stake, believing the company's prospects remain strong. But we gave up on some of our auto insurance stocks including Progressive, expecting continued weak pricing. Fortunately, these losses were offset by investments in Fuji Bank as well as Citigroup, both of which did well as Asian economies improved. In the health-care sector, we sold Total Renal Care Holdings, a leading provider of kidney dialysis treatment, whose stock price tumbled as internal problems surfaced. "Volatility, however, offers bargain- hunters like us great opportunities..." Recent additions During the second half of the year, we made several sizable additions. We snapped up a stake in Iron Mountain, a paper storage company, on weakness related to its acquisition of Pierce Leahy, its next largest competitor. The stock has since rebounded nicely. We also bought zero coupon bonds issued by Brightpoint, a distributor of wireless phones and accessories to retailers, whose recent restructuring has begun to re- awaken investor interest. Finally, we took some profits in QUALCOMM to buy promising names like software developer Parametric Technology and disk-drive maker Seagate Technology. Optimism ahead Going forward, although 50%-plus annual Fund returns aren't necessarily the norm, we're optimistic that we'll continue to find more buying opportunities like these. We expect the stock market to remain volatile in 2000, especially as investors wait to see what will happen with interest rates and inflation. Volatility, however, offers bargain-hunters like us great opportunities to buy leading businesses at prices that make a lot of sense. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (1/6/98) ------- ------- Cumulative Total Returns 56.65% 90.14% Average Annual Total Returns (1) 56.65% 38.26% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the annual total return since inception would have been 38.10%. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Large Cap Value Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Standard & Poor's 500 Index -- an unmanaged index that includes 500 widely traded common stocks and is often used as a measure of stock market performance. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Large Cap Value Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Large Cap Value Fund on January 6, 1998 and is equal to $19,014 as of December 31, 1999. The second line represents the Standard & Poor's 500 Index and is equal to $15,565 as of December 31, 1999. BY JOHN F. SNYDER III, PORTFOLIO MANAGEMENT TEAM LEADER, BARRY H. EVANS, CFA, AND PETER M. SCHOFIELD, CFA, PORTFOLIO MANAGERS [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Sovereign Investors Fund. Caption below reads "Portfolio managers (l-r): Barry Evans, Peter Schofield and John Snyder."] John Hancock V.A. Sovereign Investors Fund Driven by narrow universe of stocks, market indices end the century with big gains The last year of the millennium was certainly full of surprises for investors. A year ago, after an unprecedented four years of double-digit gains, most market experts warned investors that stocks couldn't possibly repeat their outstanding performance again in 1999. However, with stronger-than-expected growth and continued low inflation, the economy beat the odds and the experts were proven wrong. With the favorable economic backdrop, the major stock market indices posted remarkable gains with the Standard & Poor's 500 Stock Index rising 21.04%, the Dow Jones Industrial Average advancing 27.20% and the Nasdaq Composite Index surging a whopping 86.12%. The market's blockbuster returns were driven by a very narrow universe of stocks. Investors spent the year chasing after the same small group of high-flying technology stocks. In hopes of landing on the next big winner in the information-technology revolution, investors focused on momentum stocks -- those that are going up -- while ignoring both quality and valuations. In the process, most non-technology stocks were left behind and many even declined for the year. In fact, there was a huge discrepancy between the winners and losers. Even though the Nasdaq Composite soared, a large number of stocks in the Index actually posted losses for the year. And the return on the S&P 500, if you exclude technology stocks, was only 3.1%, according to the Leuthold Group, a stock market research firm. [Table at bottom left hand column entitled "Top Five Common Stock Holdings". The first listing is Interpublic Group 3.8%, the second is Chevron Corp. 3.5%, the third Citigroup 2.9%, the fourth Avery Dennison 2.6% and the fifth SYSCO Corp. 2.6%. A note below the table reads "As a percentage of net assets on December 31, 1999."] "...our more conservative investment approach was clearly out of favor." Understanding performance In this technology-driven market, our more conservative investment approach was clearly out of favor. As we have discussed in past reports, most technology companies don't meet our investment criterion of consistently increasing dividends for the past 10 years. That's because technology companies tend to reinvest their earnings rather than using them to pay out dividends. What's more, we focus on companies with stable earnings growth, solid fundamentals and reasonable valuations. In a momentum-driven market -- as we experienced in 1999 -- investors were interested in only one thing -- that is, rising stock prices -- and they ignored our key tenets of earnings growth, valuations and fundamentals. So it's not surprising when you look at the performance figures that the Fund wasn't able to keep up with its more aggressive peers. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 2% with 0% at the bottom and 10% at the top. The first bar represents the 3.84% total return for John Hancock V.A. Sovereign Investors Fund. The second bar represents the 9.78% total return for Average variable annuity equity income fund. A note below the chart reads "The total return for John Hancock V.A. Sovereign Investors Fund is at net asset value with all distributions reinvested. The average variable annuity equity income fund is tracked by Lipper, Inc. See the following page for historical performance information."] "...we believe that the economy will continue to grow, albeit at a slower rate..." While investment styles go in and out of favor -- and it's impossible to time those shifts in the market -- history has shown that it's better to invest for the long term rather than trying to chase the flavor of the day. The Fund is designed for conservative investors who want solid returns over the long haul without a lot of risk. Although we, too, are frustrated by the narrowness of the current market, we still firmly believe that our Dividend Performers strategy has delivered, and will continue to deliver, on that promise. So we encourage you to keep the long-term picture in mind when you look at short-term performance numbers. Performance scorecard For the 12 months ended December 31, 1999, John Hancock V.A. Sovereign Investors Fund returned 3.84% at net asset value, compared to the 9.78% return of the average variable annuity equity income fund, according to Lipper, Inc. See page 33 for historical performance information. Profit-taking in retail stocks One of our top-performing sectors in this narrow market was retail stocks. Thanks to strong wage growth and a healthy stock market, consumers have gone on a spending spree. That has benefited retailers such as mass-merchandise giant Wal-Mart Stores and department store Dayton Hudson. While the fundamentals of these companies remain extremely solid, we believe their valuations have become a bit expensive. In addition, it's hard to imagine that consumers will be able to continue spending at the same rate throughout 2000. So we have taken advantage of the market's strength to take profits in these holdings in favor of ones that offer better relative value. Increasing capital goods In turn, we've added to our position in capital goods stocks, because we firmly believe that the stock market will broaden out in 2000. When it does, capital good stocks will start to look more appealing to investors. Not only are these stocks undervalued, but they are benefiting from a pickup in the U.S. industrial sector as well as a turnaround in the global economy. So we've beefed up our holdings in multinational capital goods companies such as Avery Dennison, Dover Corporation and Minnesota Mining & Manufacturing. Outlook As we enter the new millennium, we are cautiously optimistic. As investors try to figure out where the market is headed in 2000, we are likely to experience some volatility. A big question weighing on investors' minds is whether the technology bull market will continue for another year, and that's likely to add to the uncertainty. On the positive side, however, we believe that the economy will continue to grow, albeit at a slower rate, and we see no reason for inflation to pick up significantly. Given that, we expect interest rates to begin to trend down in the second half of the year. As we mentioned above, we also believe that participation in the market's bounty will eventually broaden, allowing a wider variety of stocks to prosper. When that happens, we expect stocks that were out of favor in 1999 -- many of which are Dividend Performers -- to make a recovery. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (8/29/96) ------- ------- Cumulative Total Returns 3.84% 68.79% Average Annual Total Returns (1) 3.84% 16.97% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return for the one-year period and since inception would have been 3.84% and 16.59%, respectively. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Sovereign Investors Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Standard & Poor's 500 Index -- an unmanaged index that includes 500 widely traded common stocks and is often used as a measure of stock market performance. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Sovereign Investors Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the Standard & Poor's 500 Index and is equal to $24,250 as of December 31, 1999. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Sovereign Investors Fund on August 29, 1996 and is equal to $16,880 as of December 31, 1999. BY JAMES K. HO, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND ANTHONY A. GOODCHILD, BENJAMIN MATTHEWS AND TRIET NGUYEN, PORTFOLIO MANAGERS [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Bond Fund. Caption below reads "Fund management team members (l-r): Ben Matthews, Jim Ho, Triet Nguyen and Tony Goodchild."] John Hancock V.A. Bond Fund Inflation concerns, rising interest rates depress bond market Calendar 1999 was the second-worst year for the broad fixed-income market in more than two decades. The persistent strength of the U.S. economy not only caused investors to worry about higher inflation, it also prompted the Federal Reserve Board to raise short-term interest rates three times during the year. When the books finally closed on 1999, the majority of benchmark fixed-income indices posted negative or flat results, with only a few showing ever-so-slight gains. In a dramatic about-face from 1998, U.S. Treasury securities turned in the worst performance of all fixed-income sectors, while emerging-market bonds rallied to the top spot. The remaining sectors performed fitfully, causing most bond funds to produce disappointing results. "...second- worst year for the broad fixed-income market in more than two decades." [Table at bottom left hand column entitled "Top Five Bond Sectors". The first listing is U.S. Government & Agencies 43%, the second is Finance 14%, the third Utilities 8%, the fourth Telecommunications 6% and the fifth Media 4%. A note below the table reads "As a percentage of net assets on December 31, 1999."] Market turmoil hindered Fund's performance For the 12 months ended December 31, 1999, John Hancock V.A. Bond Fund returned a total of -0.51% at net asset value. This compares with the - -1.94% return of the average variable annuity corporate debt A-rated fund, according to Lipper, Inc. Historical performance information can be found on page 36. Flexibility proved vital Throughout 1999, the bulk of the Fund's net assets remained invested in the corporate arena -- both in investment-grade bonds and to a lesser extent in high-yield issues. Remaining assets were invested in U.S. government bonds, agency securities and asset-backed obligations. We avoided emerging-market debt, believing that the current risks and volatility associated with these securities remain excessive. We also paid particular attention to the Fund's average duration (a measure of its sensitivity to interest rate changes) relative to its benchmark. For defensive purposes, we maintained a relatively short duration through early fall, as a shorter duration tends to help buoy a portfolio's share price when interest rates rise. Keeping in mind that such a stance may also inhibit a portfolio from participating fully in price appreciation possibilities, we extended duration slightly in the year's final months as it appeared much of the bad news had already been priced into the market. Our duration posture now stands at neutral to the portfolio's benchmark. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 5% with -5% at the bottom and 15% at the top. The first bar represents the -0.51% total return for John Hancock V.A. Bond Fund. The second bar represents the - 1.94% total return for Average variable annuity corporate debt A-rated fund. A note below the chart reads "The total return for John Hancock V.A. Bond Fund is at net asset value with all distributions reinvested. The average variable annuity corporate debt A-rated fund is tracked by Lipper, Inc. See the following page for historical performance information."] Corporate tactics At the outset of the fiscal year, we bolstered the Fund's corporate bond exposure, participating in that sector's run-up through mid-April. By mid-year, we had begun paring back on corporate issues, as increased volatility seemed likely. We used the proceeds to slightly increase the Fund's stake in long-term U.S. Treasury bonds. Doing so enabled us to avoid the worst of the summer's downdraft in the corporate sector. By early September, corporate prices presented value and we began adding back positions. When the new-issue calendar failed to be as heavy as first anticipated, credit spreads (the difference in yield between bonds of different credit quality) narrowed and prices rose. Cyclical theme introduced With the economy strong, we introduced A- and BBB-rated names of a cyclical nature in the energy, paper, industrial and real estate investment trust (REIT) sectors during the year. These included Ocean Energy, Apache Finance Canada Corp., Abitibi-Consolidated, Packaging Corp. of America, Lyondell Chemical, Lockheed Martin and ProLogis Trust. Telecom and cable stars The very same investor sentiment and dynamic growth potential that are fueling the stock performance of telecommunication and cable companies are also doing so on the fixed-income side. With a sizable weighting in telecom and cable bonds, the Fund was able to participate in the technology explosion. Holdings such as Orange Plc, a wireless operator in the U.K., Qwest Communications, Chancellor Broadcasting, Adelphia Communications, Continental Cable-vision, Metromedia Fiber, Global Crossing, SFX Broadcast, PSINet and Nextel Communications all worked well for the Fund. "...we are optimistic that the bond market will find its footing before 2000 ends." U.S. government sector strategies We moved out of intermediate-term holdings and into 30-year issues later in the period to create more of a barbell structure, which means these assets are clustered at both the short and long end of the Treasury maturity spectrum. This type of structure historically works well in a flattening yield curve environment. Should the Fed continue to demonstrate its vigilance in containing inflation, as we expect it will, then the yield curve may well flatten. Short-term rates could rise and longer-term rates could decline, as investors become more comfortable owning longer-term debt once the threat of inflation is removed. In the fall, we swapped out of some mortgage-backed issues as they recovered in price and purchased a few government agency positions, such as Fannie Mae. Should the economy slow later in 2000, agency bonds tend to have a structure that can benefit from a decline in mortgage rates. Crosscurrents may still exist in the near term We enter 2000 with market uncertainty intact. It appears all eyes are on upcoming economic reports and the Fed to determine what direction the economy, inflation and interest rates may likely take. Corporate bond supply could prove a problem in the months ahead as the new-issue calendar may start to pick up steam. Despite the possibility of near-term unease, we are optimistic that the bond market will find its footing before 2000 ends. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (8/29/96) ------- ------- Cumulative Total Returns (0.51%) 24.25% Average Annual Total Returns (1) (0.51%) 6.72% YIELD As of December 31, 1999 SEC 30-DAY YIELD ------- John Hancock V.A. Bond Fund (1) 6.66% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return for the one-year period and since inception would have been (0.77%) and 5.59%, respectively, and the yield would have been 6.40%. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Bond Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Lehman Brothers Corporate Bond Index -- an unmanaged index that mirrors the investment objectives and characteristics of the Fund. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Bond Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Bond Fund on August 29, 1996 and is equal to $12,419 as of December 31, 1999. The second line represents the Lehman Brothers Corporate Bond Index and is equal to $12,302 as of December 31, 1999. BY ARTHUR N. CALAVRITINOS, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND FREDERICK L. CAVANAUGH, JR., JANET L. CLAY, CFA, AND DANIEL S. JANIS, PORTFOLIO MANAGERS [A 3" x 3" photo at bottom right side of page of John Hancock V.A. High Yield Bond Fund. Caption below reads "Fund management team members (l-r): Janet Clay, Dan Janis, Arthur Calavritinos and Fred Cavanaugh."] John Hancock V.A. High Yield Bond Fund Fund outperforms its peers as most bonds struggle In 1999, bond investors in nearly every category suffered through their worst year since 1994 and second-worst since 1973. The U.S. economy remained surprisingly robust, economies worldwide stabilized and commodity prices rose, so fears grew that inflation would re-emerge. A glut of new corporate bond issuance in anticipation of Y2K was also met with lackluster demand, as investors were lured to the dazzling returns of technology stocks. This combination of factors caused interest rates to rise and bond prices to fall from the spring until the year's end. Starting in June, the Federal Reserve Board raised short-term interest rates three times to try to cool off the economy and prevent an outbreak of inflation, which bond investors dread since it erodes the value of their fixed-income streams. U.S. Treasury bonds, which are the most sensitive to interest-rate moves, were especially hard hit. High-yield bonds, those rated below investment grade, fared better than Treasuries as their higher yields helped better offset price declines. [Pie chart at bottom left hand column with heading "Portfolio Diversification." The chart is divided into six sections (from top to left): Convertible Bonds 4%, Short-Term Investments & Other 4%, Preferred Stock 6%, Common Stock 7%, Foreign Corporate Bonds 19% and U.S. Corporate Bonds 60%. A note below the chart reads "As a percentage of net assets on December 31, 1999."] Fund performance John Hancock V.A. High Yield Bond Fund's overweighting in cyclical names and our ability to invest in a limited amount of equities helped the Fund substantially outperform its peers. For the year ended December 31, 1999, the Fund posted a total return of 13.12% at net asset value, compared to the 3.83% return of the average variable annuity high current yield fund, according to Lipper, Inc. Historical performance information can be found on page 39. "...overweighting in cyclical names and our ability to invest in a limited amount of equities helped..." Paper, energy rebound Rising oil prices and rebounding Asian economies boosted our cyclical companies whose fortunes are closely tied to moves in the economy. Energy and paper companies in particular were two areas of strength. Our bond and stock holdings in Key Energy Services rebounded as oil and gas drilling revived with oil prices and fueled demand for the types of well- maintenance services that Key Energy provides. Brazilian company Trikem, a producer of PVC, was also one of our top performers. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 5% with 0% at the bottom and 15% at the top. The first bar represents the 13.12% total return for John Hancock V.A. High Yield Bond Fund. The second bar represents the 3.83% total return for Average variable annuity high current yield fund. A note below the chart reads "The total return for John Hancock V.A. High Yield Bond Fund is at net asset value with all distributions reinvested. The average variable annuity high current yield fund is tracked by Lipper, Inc. See the following page for historical performance information."] Canadian paper companies Repap New Brunswick and Abitibi-Consolidated, whose stock we hold, contributed significantly to performance, as paper prices rose along with Asian demand, which had virtually dried up during Asia's near-depression last year. "...individual credit selection is becoming more important than ever." Avoiding trouble Individual security selection was an important factor for us this year - -- especially the names we avoided. The number of high-yield companies that failed to execute their business plans rose somewhat in 1999, including such high-profile names as Iridium and Fruit of the Loom, neither of which we owned. Our underweight in textile and health-care companies in general served us well, although we did not succeed in sidestepping all troubles. By definition, companies rated below investment grade are subject to greater risk of default and earnings disappointments. Textile loom manufacturer Steel Heddle and Imperial Home Decor were two examples, as was Integrated Health Services, which was stung by questions about billing practices in Florida and federal reimbursement levels. Better quality and value overseas In contrast to the saturated U.S. market, we are now finding better quality and value overseas, particularly lately in Western Europe, where high-yield bond issuance is continuing to grow, offering us better deals and higher-quality companies to choose from. As a result, we added or boosted our stakes in overseas telecommunications, paper and energy companies. Our biggest positions are a 5% stake in the Netherlands and the United Kingdom. In fact, our foreign holdings contributed to our outperformance this year, because their prices were steadier, at the same time that we continued to earn an attractive level of current income. In addition to the paper and energy companies we mentioned earlier, we also had good results from our telecommunications names, such as Dutch phone company VersaTel Telecom International, which provides voice, data and Internet transmission service to small and mid-sized businesses in Europe. Omnipoint did well when it was recently taken over by VoiceStream. We will continue to use our ability to invest overseas to take advantage of this growing part of the high-yield universe, keeping in mind, of course, the added risks that accompany international investing. A look ahead Our outlook remains cautiously optimistic for high-yield bonds, as they continue to present very attractive values and income streams. Yet we believe individual credit selection is becoming more important than ever. Should the Fed's tightening measures slow the U.S. economy down too much, it will become even more difficult for high-yield companies with aggressive business plans to reach their earnings targets. We will continue to apply our in-depth fundamental analysis toward finding companies worth the extra risk that we are taking to own them. - --------------------------------------------------------------------------- International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. See the prospectus for the risks of investing in high-yield bonds. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (1/6/98) ------- ------- Cumulative Total Returns 13.12% 2.04% Average Annual Total Returns (1) 13.12% 1.02% YIELD As of ended December 31, 1999 SEC 30-DAY YIELD ------- John Hancock V.A. High Yield Bond Fund (1) 11.87% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return for the one-year period and since inception would have been 12.94% and 0.78%, respectively, and the yield would have been 11.69%. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. High Yield Bond Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Lehman Brothers High Yield Bond Index -- an unmanaged index of fixed-income securities that are similar, but not identical, to the bonds in the Fund's portfolio. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. High Yield Bond Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the Lehman Brothers High Yield Bond Index and is equal to $10,430 as of December 31, 1999. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. High Yield Bond Fund on January 6, 1998 and is equal to $10,204 as of December 31, 1999. BY DAWN BAILLIE FOR THE PORTFOLIO MANAGEMENT TEAM [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Money Market Fund. Caption below reads "Fund management team members Barry Evans and Dawn Baillie."] John Hancock V.A. Money Market Fund Robust economy provokes Federal Reserve to raise rates three times in 1999 Money-market yields rose in 1999 as the result of several important changes in the economic environment. Global economies began to stabilize from the turmoil in 1998 that had caused the U.S. Federal Reserve Board and governments around the world to lower rates to prevent global recession. At the same time, the U.S. economy continued to grow at an amazingly strong rate. "Money-market yields rose in 1999..." When the year began, signs of strength were not so pronounced, and with global uncertainties remaining, the Fed stayed on the sidelines during the first three months. Although inflation remained tame, U.S. growth began to pick up steam, aided in part by the booming stock market and the "wealth effect" it created. In the spring, investors grew more nervous and pushed interest rates higher, anticipating that the economy's strength, coupled with the lowest unemployment level in years, would lead to Fed action. Even the market's moves were not enough to slow the roaring U.S. economy, and the Fed wound up raising short-term rates three times between June and November as preemptive strikes aimed at gradually cooling down the economy and nipping any hint of inflation in the bud. As a result, the federal funds rate -- that which banks charge each other for overnight loans -- rose from 4.75% at the beginning of the year to 5.50% at the end of December. Money-market yields also moved up in response, since the federal funds rate is a key pricing benchmark for money-market securities. 7-day effective yield On December 31, 1999, John Hancock V.A. Money Market Fund had a 7-day effective yield of 5.02%. By comparison, the average taxable money-market fund had a 7-day effective yield of 5.13%, according to Lipper, Inc. Maturity moves For the first three months of 1999, we kept the Fund's maturity slightly longer than average, because with the global economies still in turmoil, we expected the Fed to stand aside, which it did. Our more aggressive approach allowed us to lock in some higher yields early on. But with each passing month, as evidence grew that the U.S. economy was gaining steam, the Fed's attention turned away from the global scene toward the home front. Anticipating rate hikes, we scaled back the Fund's maturity to be right in line with the average money-market fund's by the end of June, and we stayed on average for the rest of the year. This way, we didn't have our money locked up for as long, and were ready to reinvest in higher-yielding securities after the Fed's rate hikes in June, August and November. The only exception came as we approached year end and shortened briefly to enable the Fund to accommodate potential increased liquidity demands as a result of the approaching changeover to the year 2000. [Bar chart at the top of left hand column with heading "7-Day Effective Yield". Under the heading is a note that reads "As of December 31, 1999." The chart is scaled in increments of 1% with 0% at the bottom and 6% at the top. The first bar represents the 5.02% total return for John Hancock V.A. Money Market Fund. The second bar represents the 5.13% total return for Average taxable money-market fund. A note below the chart reads "The average taxable money-market fund is tracked by Lipper, Inc. Past performance is no guarantee of future results."] "...we expect growth to slow, but possibly not until the second half of 2000." A look ahead With three interest rate hikes now working their way through the economy, we expect growth to slow, but possibly not until the second half of 2000. In the meantime, inflation will remain a concern, and the ever-vigilant Fed will likely stay in the middle of the action, with the real possibility of raising rates some more to keep inflation in check. By how much, and when, depends largely on the important monthly and quarterly economic data. Several key reports include the fourth-quarter gross domestic product (GDP) numbers and those dealing with employment figures, especially the employment cost index. It is the most accurate way to measure wage inflation, and since it's a quarterly, rather than a monthly, report, it also is very useful in determining if new trends are emerging. Given the prevailing uncertainty, we will keep the Fund's maturity close to the average until it is clear that the Fed is done raising rates. As always, we will also stay focused on providing the Fund with a competitive level of current income, while preserving stability of capital. - --------------------------------------------------------------------------- An investment in the Fund is not insured or guaranteed by the FDIC or any other government agency. Although the Fund seeks to maintain a net asset value of $1.00 per share, it is possible to lose money by investing in the Fund. BY FREDERICK L. CAVANAUGH, JR., PORTFOLIO MANAGEMENT TEAM LEADER, AND ARTHUR N. CALAVRITINOS, CFA, PORTFOLIO MANAGER [A 3" x 3" photo at bottom right side of page of John Hancock V.A. Strategic Income Fund. Caption below reads "Fund management team members (l-r): Dan Janis, Arthur Calavritinos and Fred Cavanaugh."] John Hancock V.A. Strategic Income Fund Inflation jitters, rising rates roil global bond markets The ongoing strength of the U.S. economy, the comeback of many foreign economies and persistent worldwide inflation fears weighed heavily on most global bond markets throughout 1999. Reacting to evidence that the U.S. economy was growing at a much faster-than-anticipated clip and that many overseas economies had apparently bottomed, the Federal Reserve raised interest rates three times by a total of three-quarters of a percentage point to stave off potential inflation pressures. Bond investors dislike even the hint of inflation because it eats into the returns of fixed-income investments. In response, Treasuries had their second-worst year since 1973. Although there was spotty evidence that inflation was on the rise, it remained under the historically low level of 3%. "Among our best performers were telecommunications companies..." European government bonds performed slightly better, although rising interest rates on that continent muted their returns. Practically the year's only bright spot was the comeback of emerging-market bonds. Beginning the year at depressed levels, emerging-market bonds posted double-digit gains, as Asian and Latin American economies rebounded, alleviating fears of a global economic meltdown. [Table at bottom left hand column entitled "Top Five Bond Sectors". The first listing is Telecommunications 33%, the second is U.S. Government 23%, the third Media 7%, the fourth Leisure 5% and the fifth Foreign Governments 4%. A note below the table reads "As a percentage of net assets on December 31, 1999."] The high amounts of income they carry helped high-yield corporate bonds outpace Treasuries, although they posted only modest gains. Demand for high-yield bonds was rather anemic given the red-hot stock market and concerns about potential Y2K. Meanwhile, the supply of high-yield securities expanded. Many corporations rushed to issue debt in the summer and fall to lock in relatively low interest rates, while others accelerated issuance in order to sidestep potential fourth quarter Y2K-related bumps. Performance review For the 12 months ended December 31, 1999, John Hancock V.A. Strategic Income Fund posted a total return of 4.82% at net asset value, compared with the 0.79% return of the average variable annuity general bond fund, according to Lipper, Inc. Historical performance information can be found on page 44. [Bar chart at the top of left hand column with heading "Fund Performance". Under the heading is a note that reads "For the year ended December 31, 1999." The chart is scaled in increments of 1% with 0% at the bottom and 5% at the top. The first bar represents the 4.82% total return for John Hancock V.A. Strategic Income Fund. The second bar represents the 0.79% total return for Average variable annuity general bond fund. A note below the chart reads "The total return for John Hancock V.A. Strategic Income Fund is at net asset value with all distributions reinvested. The average variable annuity general bond fund is tracked by Lipper, Inc. See the following page for historical performance information."] High-yield corporate bonds Throughout the period, we continued to maintain a relatively large weighting in high-yield corporate bonds, reflecting our view that they continue to offer an attractive combination of value and high income. Among our best performers were telecommunications companies such as TeleCorp PCS, a wireless telecommunications provider that continued to enjoy good subscriber growth. Another strong performer was RCN Corp., a provider of communications services to the residential market that was boosted by expansion of its service area. On the flip side, our disappointments included movie theater chain Regal Cinemas, which posted worse-than-expected earnings after failing to execute its aggressive expansion plan, and coal company AEI Resources, which suffered from weak coal prices and rising transportation costs. Government bond choices Our stake in high-quality government bonds was tilted in favor of U.S. Treasuries during the period. Although they had a rather tough go of it, we continued to hold onto Treasuries because they offered yields well in excess of most high-quality government bonds elsewhere, including Europe. We also had holdings in government bonds from the United Kingdom and Canada, which offered competitive yields and performed well relative to their U.S. counterparts. Despite their recent run-up, we did not increase our stake in emerging-market bonds, which made up less than 3% of the Fund's total net assets at the end of the period. We think that the potential risks of owning them over the long term far outweigh the potential rewards. As has been proven time and again during the last decade, there's often another proverbial shoe that eventually drops in emerging markets and investors usually pay a pretty steep price for them. Given the breadth of our concerns, we chose to invest in emerging markets on a very selective basis only. "We believe that the high-yield corporate market still offers very good value." Outlook Our view is that high-quality foreign government bonds offer little value now, with yields well below U.S. Treasuries. And with all the uncertainty clouding the outlook for emerging markets, we're likely to keep our stake in them relatively small even though they're attractive from a yield standpoint. We believe that the high-yield corporate market still offers very good value. Yields on most high-yield bonds are around 12%, a historically wide spread compared with the 6.5% yield on Treasuries. The U.S. economy has recently shown some signs of slowing, which would likely be a positive for high-yield bonds since interest rates could stabilize or fall as a result. As long as economic growth remains reasonably good, companies that issue high-yield debt will likely fare well. - --------------------------------------------------------------------------- International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. A LOOK AT PERFORMANCE For the period ended December 31, 1999 SINCE ONE INCEPTION YEAR (8/29/96) ------- ------- Cumulative Total Returns 4.82% 30.85% Average Annual Total Returns (1) 4.82% 8.39% YIELD As of ended December 31, 1999 SEC 30-DAY YIELD ------- John Hancock V.A. Strategic Income Fund (1) 9.17% Total return measures the change in value of an investment from the beginning to the end of a period, assuming all distributions were reinvested. Performance figures reflect the effect of investment-related charges on the underlying funds, but do not include insurance and other charges levied at the separate account level. All figures represent past performance and are no guarantee of future results. Keep in mind that the total return and share price of the Fund's investments will fluctuate. As a result, your Fund's shares may be worth more or less than their original cost, depending on when you sell them. Note to Performance (1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not including management fee) of the Fund's daily average net assets. Without the limitation of expenses, the average annual total return for the one-year period and since inception would have been 4.80% and 8.05%, respectively, and the yield would have been 9.15%. WHAT HAPPENED TO A $10,000 INVESTMENT . . . The chart below shows how much a $10,000 investment in the John Hancock V.A. Strategic Income Fund would be worth, assuming all distributions were reinvested for the period indicated. For comparison, we've shown the same $10,000 investment in the Lehman Brothers Government/Corporate Bond Index -- an unmanaged index that measures the performance of U.S. government bonds, U.S. corporate bonds and Yankee bonds. It is not possible to invest in an index. Line chart with the heading John Hancock V.A. Strategic Income Fund, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the value of the hypothetical $10,000 investment made in the John Hancock V.A. Strategic Income Fund on August 29, 1996 and is equal to $13,086 as of December 31, 1999. The second line represents the Lehman Brothers Government/Corporate Bond Index and is equal to $12,302 as of December 31, 1999. FINANCIAL STATEMENTS John Hancock Funds - Declaration Trust
Statements of Assets and Liabilities December 31, 1999 - ------------------------------------------------------------------------------------------------------------------------------- V.A. V.A. V.A. V.A. V.A. V.A. V.A. FINANCIAL 500 INDEX INTERNATIONAL LARGE CAP MID CAP REGIONAL SMALL CAP INDUSTRIES FUND FUND FUND GROWTH FUND GROWTH FUND BANK FUND GROWTH FUND ----------- ----------- ----------- ----------- ----------- ----------- ----------- Assets: Investments at value - Note D: Common stocks and rights (cost - $40,561,767, $26,691,135, $6,322,532, $17,686,521, $3,914,727, $21,491,150 and $13,700,474, respectively) $47,253,646 $37,800,781 $8,705,667 $21,708,313 $5,751,575 $19,518,770 $20,626,058 Short-term investments (cost - $1,578,000, $145,000, $811,763, $286,000, $620,000, $926,000 and $263,000, respectively) - - Note B 1,578,000 145,000 811,763 286,000 620,000 926,000 263,000 Corporate savings account 293 -- -- 691 832 750 350 ----------- ----------- ---------- ----------- ---------- ----------- ----------- 48,831,939 37,945,781 9,517,430 21,995,004 6,372,407 20,445,520 20,889,408 Cash -- 19,391 697 -- -- -- -- Foreign currency, at value (cost - none, none, $303, none, none, none and none, respectively) -- -- 299 -- -- -- -- Receivable for investments sold 865,257 -- 256,841 262,845 -- -- 290,013 Receivable for shares sold 146,134 1,518 -- 344 39,915 41 1,235 Receivable for futures variation margin - Note B -- 850 -- -- -- -- -- Dividends and interest receivable 48,439 34,092 3,777 7,330 1,425 48,801 2,355 Foreign tax receivable 2,151 -- 6,647 -- -- -- -- Receivable from John Hancock Advisers, Inc. and affiliates - Note C -- 7,419 5,862 -- 286 -- -- Deferred organization expenses - - Note B -- 3,554 3,554 3,554 -- -- 3,554 Other Assets 5,271 4,724 631 773 3 45 870 ----------- ----------- ---------- ----------- ---------- ----------- ----------- Total Assets 49,899,191 38,017,329 9,795,738 22,269,850 6,414,036 20,494,407 21,187,435 - ------------------------------------------------------------------------------------------------------------------------------- Liabilities: Due to custodian including foreign currencies (cost - $348,287, none, none, none, none, none and none, respectively) 350,882 -- -- -- -- -- -- Payable for investments purchased 188,996 -- 54,813 365,133 32,687 165,307 284,083 Payable for shares repurchased -- 28,716 199 2,135 72 268 8,332 Payable for forward foreign currency exchange contracts sold - Note B -- -- 447 -- -- -- -- Payable upon return of securities on loan - Note B -- -- 334,763 -- -- -- -- Foreign tax payable -- 23 -- -- -- -- -- Payable to John Hancock Advisers, Inc. and affiliates - Note C 33,589 -- -- 14,439 -- 14,504 5,769 Accounts payable and accrued expenses 13,284 35,374 30,903 16,211 18,477 19,233 22,641 ----------- ----------- ---------- ----------- ---------- ----------- ----------- Total Liabilities 586,751 64,113 421,125 397,918 51,236 199,312 320,825 - ------------------------------------------------------------------------------------------------------------------------------- Net Assets: Capital paid-in 46,819,623 26,883,898 6,808,850 17,256,995 4,461,080 22,344,520 12,767,174 Accumulated net realized gain (loss) on investments, financial futures contracts and foreign currency transactions (4,198,815) (49,819) 230,353 593,186 64,872 (80,199) 1,173,892 Net unrealized appreciation (depreciation) of investments, financial futures contracts and foreign currency transactions 6,694,123 11,118,802 2,382,132 4,021,792 1,836,848 (1,972,380) 6,925,584 Undistributed net investment income (distributions in excess of net investment income) (2,491) 335 (46,722) (41) -- 3,154 (40) ----------- ----------- ---------- ----------- ---------- ----------- ----------- Net Assets $49,312,440 $37,953,216 $9,374,613 $21,871,932 $6,362,800 $20,295,095 $20,866,610 =============================================================================================================================== Net Asset Value Per Share: (Based on 3,409,541, 2,097,858, 606,901, 1,387,351, 369,783, 2,371,635 and 1,055,999 shares, respectively, of beneficial interest outstanding - unlimited number of shares authorized with no par value) $14.46 $18.09 $15.45 $15.77 $17.21 $8.56 $19.76 =============================================================================================================================== The Statement of Assets and Liabilities is each Fund's balance sheet and shows the value of what the Fund owns, is due and owes on December 31, 1999. You'll also find the net asset value per share as of that date. See notes to financial statements.
Statements of Assets and Liabilities (continued) December 31, 1999 - --------------------------------------------------------------------------------------- V.A. V.A. V.A. CORE EQUITY LARGE CAP SOVEREIGN FUND VALUE FUND INVESTORS FUND ------------ ------------ ------------ Assets: Investments at value - Note D: Common stocks (cost - $35,516,045, $27,369,628 and $39,421,747, respectively) $43,061,738 $36,445,309 $45,266,398 Preferred stocks (cost - none, $323,092 and none, respectively) -- 408,125 -- Bonds (cost - none, $959,984 and none, respectively) -- 1,410,000 -- U.S. government obligations (cost - none, none and $2,343,102, respectively) -- -- 2,184,926 Joint repurchase agreements (cost - $1,770,000, none and $3,398,000, respectively) 1,770,000 -- 3,398,000 Corporate savings account 914 -- 381 ------------ ------------ ------------ 44,832,652 38,263,434 50,849,705 Receivable for investments sold -- 1,407,857 -- Receivable for shares sold 157,672 77,289 22,467 Dividends and interest receivable 35,489 24,229 114,324 Foreign tax receivable 45 -- -- Deferred organization expenses - Note B 3,554 -- 3,554 Other assets 2,228 33 3,151 ------------ ------------ ------------ Total Assets 45,031,640 39,772,842 50,993,201 - --------------------------------------------------------------------------------------- Liabilities: Due to custodian -- 77,031 -- Payable for forward foreign currency exchange contracts purchased - Note B -- 453 -- Payable for forward foreign currency exchange contracts sold - Note B -- 446 -- Payable for investments purchased -- 896,171 701,194 Payable to John Hancock Advisers, Inc. and affiliates - Note C 26,625 19,317 26,057 Accounts payable and accrued expenses 13,698 13,320 11,753 ------------ ------------ ------------ Total Liabilities 40,323 1,006,738 739,004 - --------------------------------------------------------------------------------------- Net Assets: Capital paid-in 36,923,119 25,215,093 44,937,264 Accumulated net realized gain (loss) on investments, financial futures contracts and foreign currency transactions 522,590 3,944,623 (369,437) Net unrealized appreciation of investments, financial futures contracts and foreign currency transactions 7,545,693 9,609,824 5,686,475 Distributions in excess of net investment income (85) (3,436) (105) ------------ ------------ ------------ Net Assets $44,991,317 $38,766,104 $50,254,197 ======================================================================================= Net Asset Value Per Share: (Based on 2,283,348, 2,150,502 and 3,149,115 shares, respectively, of beneficial interest outstanding - unlimited number of shares authorized with no par value) $19.70 $18.03 $15.96 ======================================================================================= See notes to financial statements.
Statements of Assets and Liabilities (continued) December 31, 1999 - ------------------------------------------------------------------------------------------------------ V.A. V.A. V.A. V.A. BOND HIGH YIELD MONEY MARKET STRATEGIC FUND BOND FUND FUND INCOME FUND ------------ ------------ ------------ ------------ Assets: Investments at value - Note D: Bonds (cost - $11,694,423, $8,816,927, none and $21,974,386, respectively) $11,228,394 $7,653,430 -- $20,904,118 Common stocks (cost - none, $752,020, none and $127,949, respectively) -- 661,797 -- 199,832 Preferred stocks and warrants (cost - $51, $592,934, none and $335,445, respectively) 675 667,402 -- 425,751 Short-term investments (cost - none, none, $26,480,203 and none, respectively) -- -- $26,480,203 -- Joint repurchase agreements (cost - $1,196,000, $48,000, $5,973,000 and $278,000, respectively) 1,196,000 48,000 5,973,000 278,000 Corporate savings account 441 519 -- 602 ------------ ------------ ------------ ------------ 12,425,510 9,031,148 32,453,203 21,808,303 Receivable for investments sold -- -- 1,063,927 -- Receivable for shares sold 8,577 -- 322,922 6,561 Receivable for forward foreign currency exchange contracts sold - Note B 913 34,442 -- 59,159 Dividends and interest receivable 219,190 232,989 197,719 448,826 Foreign tax receivable -- 282 -- 571 Receivable from John Hancock Advisers, Inc. and affiliates - Note C 945 3,096 -- -- Deferred organization expenses - Note B 3,554 -- 3,554 3,554 Other Assets 837 19 2,527 1,303 ------------ ------------ ------------ ------------ Total Assets 12,659,526 9,301,976 34,043,852 22,328,277 - ------------------------------------------------------------------------------------------------------ Liabilities: Due to custodian -- -- 71,316 -- Payable for investments purchased 30,066 -- 992,320 -- Payable for shares repurchased 79,395 242 -- -- Payable for forward foreign currency exchange contracts purchased - Note B -- 527 -- 17,772 Payable to John Hancock Advisers, Inc. and affiliates - Note C -- -- 12,613 10,094 Accounts payable and accrued expenses 19,477 14,675 16,096 18,428 ------------ ------------ ------------ ------------ Total Liabilities 128,938 15,444 1,092,345 46,294 - ------------------------------------------------------------------------------------------------------ Net Assets: Capital paid-in 13,213,558 10,556,294 32,951,455 23,346,435 Accumulated net realized loss on investments, financial futures contracts and foreign currency transactions (239,968) (128,739) -- (149,318) Net unrealized depreciation of investments, financial futures contracts and foreign currency transactions (464,496) (1,146,051) -- (867,965) Undistributed net investment income (distributions in excess of net investment income) 21,494 5,028 52 (47,169) ------------ ------------ ------------ ------------ Net Assets $12,530,588 $9,286,532 $32,951,507 $22,281,983 ====================================================================================================== Net Asset Value Per Share: (Based on 1,277,244, 1,117,910, 32,951,507 and 2,281,028 shares, respectively, of beneficial interest outstanding - unlimited number of shares authorized with no par value) $9.81 $8.31 $1.00 $9.77 ====================================================================================================== See notes to financial statements.
Statements of Operations Year ended December 31, 1999 - ------------------------------------------------------------------------------------------------------------------------------- V.A. V.A. V.A. V.A. V.A. V.A. V.A. FINANCIAL 500 INDEX INTERNATIONAL LARGE CAP MID CAP REGIONAL SMALL CAP INDUSTRIES FUND FUND FUND GROWTH FUND GROWTH FUND BANK FUND GROWTH FUND ----------- ----------- ----------- ----------- ----------- ----------- ----------- Investment Income: Dividends (net of foreign withholding tax of $13,059, $4,151, $15,337, none, $5, none and none, respectively) $775,381 $458,579 $112,506 $91,655 $8,658 $452,443 $8,979 Interest (including securities lending income of none, none, $357, none, none, $75 and $1,279, respectively) 58,408 -- 10,893 29,778 12,659 45,166 16,690 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 833,789 458,579 123,399 121,433 21,317 497,609 25,669 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Expenses: Investment management fee - Note C 398,471 114,145 66,480 121,727 20,806 173,090 80,965 Custodian fee 20,354 91,559 89,942 21,455 24,718 16,887 45,208 Auditing fee 12,382 12,218 12,218 10,950 13,602 12,382 12,382 Accounting and legal services fee - Note C 8,707 5,834 1,312 2,952 511 3,822 1,972 Printing 2,917 5,433 7,387 4,680 5,553 6,590 5,092 Trustees' fee 2,582 1,329 350 566 84 1,119 408 Legal fees 1,362 900 2,915 454 74 844 271 Miscellaneous 1,170 10,664 261 561 131 1,228 410 Registration and filing fees 19 13 2,653 101 57 27 127 Organization expense - Note B -- 2,136 2,136 2,136 -- -- 2,136 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total Expenses 447,964 244,231 185,654 165,582 65,536 215,989 148,971 - ------------------------------------------------------------------------------------------------------------------------------ Less Expense Reductions - Note C -- (130,049) (100,697) (3,265) (37,793) -- (41,006) - ------------------------------------------------------------------------------------------------------------------------------ Net Expenses 447,964 114,182 84,957 162,317 27,743 215,989 107,965 - ------------------------------------------------------------------------------------------------------------------------------ Net Investment Income (Loss) 385,825 344,397 38,442 (40,884) (6,426) 281,620 (82,296) - ------------------------------------------------------------------------------------------------------------------------------ Realized and Unrealized Gain (Loss) on Investments, Financial Futures Contracts and Foreign Currency Transactions: Net realized gain (loss) on investments sold (3,548,074) 52,728 716,863 1,316,751 187,318 232,178 2,352,183 Net realized gain on financial futures contracts -- 38,790 -- -- -- -- -- Net realized gain (loss) on foreign currency transactions (2,150) 1 (35,180) -- -- -- -- Change in net unrealized appreciation/depreciation of investments 3,535,108 5,780,736 1,498,760 1,878,149 1,607,019 (1,578,109) 5,122,311 Change in net unrealized appreciation/depreciation of financial futures contracts -- (25,510) -- -- -- -- -- Change in net unrealized appreciation/ depreciation of foreign currency transactions 2,240 -- (1,595) -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Realized and Unrealized Gain (Loss) on Investments, Financial Futures Contracts and Foreign Currency Transactions (12,876) 5,846,745 2,178,848 3,194,900 1,794,337 (1,345,931) 7,474,494 - ------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations $372,949 $6,191,142 $2,217,290 $3,154,016 $1,787,911 ($1,064,311) $7,392,198 =============================================================================================================================== The Statement of Operations summarizes for each of the Funds the investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated. See notes to financial statements.
Statements of Operations (continued) Year ended December 31, 1999 - --------------------------------------------------------------------------------------- V.A. V.A. V.A. CORE EQUITY LARGE CAP SOVEREIGN FUND VALUE FUND INVESTORS FUND ------------ ------------ ------------ Investment Income: Dividends (net of foreign withholding tax of $2,216, $15,602 and $2,137, respectively) $419,289 $130,447 $593,329 Interest 52,921 219,968 350,421 ------------ ------------ ------------ 472,210 350,415 943,750 ------------ ------------ ------------ Expenses: Investment management fee - Note C 254,281 147,515 248,937 Custodian fee 20,202 17,927 11,665 Auditing fee 10,964 12,218 12,382 Accounting and legal services fee - Note C 6,545 4,476 7,445 Printing 4,116 4,481 4,697 Organization expense - Note B 2,136 -- 2,136 Trustees' fee 1,378 890 1,763 Miscellaneous 1,284 940 1,542 Legal fees 986 618 1,186 Registration and filing fees 57 46 13 ------------ ------------ ------------ Total Expenses 301,949 189,111 291,766 - --------------------------------------------------------------------------------------- Net Investment Income 170,261 161,304 651,984 - --------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments, Financial Futures Contracts and Foreign Currency Transactions: Net realized gain (loss) on investments sold 1,489,402 5,328,068 (211,594) Net realized loss on foreign currency transactions -- (5,671) -- Change in net unrealized appreciation/depreciation of investments 3,097,564 7,741,100 1,075,319 Change in net unrealized appreciation/depreciation of financial futures contracts -- 1,003 -- Change in net unrealized appreciation/depreciation of foreign currency transactions -- (906) -- ------------ ------------ ------------ Net Realized and Unrealized Gain on Investments, Financial Futures Contracts and Foreign Currency Transactions 4,586,966 13,063,594 863,725 - --------------------------------------------------------------------------------------- Net Increase in Net Assets Resulting from Operations $4,757,227 $13,224,898 $1,515,709 ======================================================================================= See notes to financial statements.
Statements of Operations (continued) Year ended December 31, 1999 - ------------------------------------------------------------------------------------------------------ V.A. V.A. V.A. V.A. BOND HIGH YIELD MONEY MARKET STRATEGIC FUND BOND FUND FUND INCOME FUND ------------ ------------ ------------ ------------ Investment Income: Interest $827,479 $980,370 $1,228,171 $1,713,632 Dividends (net of foreign withholding tax of none, $763, none and $856, respectively) 17 48,151 -- 29,289 ------------ ------------ ------------ ------------ 827,496 1,028,521 1,228,171 1,742,921 ------------ ------------ ------------ ------------ Expenses: Investment management fee - Note C 57,967 54,095 117,918 117,404 Custodian fee 35,710 13,946 12,521 19,006 Auditing fee 12,218 10,715 12,382 16,600 Printing 5,516 4,207 4,023 9,008 Organization expense - Note B 2,136 -- 2,136 2,136 Accounting and legal services fee - Note C 2,094 1,598 4,300 3,504 Trustees' fee 544 411 914 896 Miscellaneous 445 327 503 646 Legal fees 339 7,626 611 537 Registration and filing fees 13 46 13 212 ------------ ------------ ------------ ------------ Total Expenses 116,982 92,971 155,321 169,949 - ------------------------------------------------------------------------------------------------------ Less Expense Reductions - Note C (30,015) (16,324) -- (3,603) - ------------------------------------------------------------------------------------------------------ Net Expenses 86,967 76,647 155,321 166,346 - ------------------------------------------------------------------------------------------------------ Net Investment Income 740,529 951,874 1,072,850 1,576,575 - ------------------------------------------------------------------------------------------------------ Realized and Unrealized Gain (Loss) on Investments, Financial Futures Contracts and Foreign Currency Transactions: Net realized gain (loss) on investments sold (216,207) 86,112 -- (150,711) Net realized loss on financial futures contracts -- -- -- (17,996) Net realized gain (loss) on foreign currency transactions (169) 18,128 -- 11,884 Change in net unrealized appreciation/ depreciation of investments (584,709) 25,496 -- (563,340) Change in net unrealized appreciation/ depreciation of financial futures contracts -- -- -- (2,996) Change in net unrealized appreciation/ depreciation of foreign currency transactions 913 33,915 -- 31,585 ------------ ------------ ------------ ------------ Net Realized and Unrealized Gain (Loss) on Investments, Financial Futures Contracts and Foreign Currency Transactions (800,172) 163,651 -- (691,574) - ------------------------------------------------------------------------------------------------------ Net Increase (Decrease) in Net Assets Resulting from Operations ($59,643) $1,115,525 $1,072,850 $885,001 ====================================================================================================== See notes to financial statements.
Statements of Changes in Net Assets - ------------------------------------------------------------------------------------------------------------------------- V.A. FINANCIAL INDUSTRIES FUND V.A. 500 INDEX FUND V.A. INTERNATIONAL FUND ------------------------- -------------------------- --------------------------- YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ------------------------- -------------------------- --------------------------- 1998 1999 1998 1999 1998 1999 ----------- ------------ ------------ ------------ ------------ ------------ Increase (Decrease) in Net Assets: From Operations: Net investment income $506,912 $385,825 $291,272 $344,397 $32,354 $38,442 Net realized gain (loss) on investments sold, financial futures contracts and foreign currency transactions (508,505) (3,550,224) 1,119,454 91,519 (142,171) 681,683 Change in net unrealized appreciation/depreciation of investments, financial futures contracts and foreign currency transactions 1,601,203 3,537,348 4,459,671 5,755,226 899,109 1,497,165 ----------- ------------ ------------ ------------ ------------ ------------ Net Increase in Net Assets Resulting from Operations 1,599,610 372,949 5,870,397 6,191,142 789,292 2,217,290 ----------- ------------ ------------ ------------ ------------ ------------ Distributions to Shareholders:* Dividends from net investment income (510,853) (362,866) (292,838) (344,375) (32,354) (46,076) Distributions in excess of net investment income -- -- -- -- (13,953) (9,515) Distributions from net realized gain on investments sold, financial futures contracts and foreign currency transactions (11,398) (153,776) (1,211,700) (231,893) -- (259,599) Distributions in excess of net realized gain on investments sold, financial futures contracts and foreign currency transactions -- -- -- (15,178) -- -- Tax return of capital -- (23,257) -- -- -- -- ----------- ------------ ------------ ------------ ------------ ------------ Total Distributions to Shareholders (522,251) (539,899) (1,504,538) (591,446) (46,307) 315,190 ----------- ------------ ------------ ------------ ------------ ------------ From Fund Share Transactions:** Shares sold 41,125,976 10,055,880 15,705,605 13,349,010 3,453,932 1,131,817 Shares issued to shareholders in reinvestment of distributions 522,251 539,899 1,504,538 591,446 46,307 315,190 ----------- ------------ ------------ ------------ ------------ ------------ 41,648,227 10,595,779 17,210,143 13,940,456 3,500,239 1,447,007 Less shares repurchased (6,622,052) (15,685,364) (15,126,656) (8,044,099) (834,714) (1,175,008) ----------- ------------ ------------ ------------ ------------ ------------ Net Increase (Decrease) 35,026,175 (5,089,585) 2,083,487 5,896,357 2,665,525 271,999 ----------- ------------ ------------ ------------ ------------ ------------ Net Assets: Beginning of period 18,465,441 54,568,975 20,007,817 26,457,163 3,792,004 7,200,514 ----------- ------------ ------------ ------------ ------------ ------------ End of period (including undistributed net investment income (distributions in excess of net investment income) of ($1,308), ($2,491), $325, $335, ($30,980) and ($46,722), respectively) $54,568,975 $49,312,440 $26,457,163 $37,953,216 $7,200,514 $9,374,613 =========== ============ ============ ============ ============ ============ * Distributions to Shareholders: Per share dividends from net investment income $0.1354 $0.1078 $0.1980 $0.1710 $0.0674 $0.0791 ----------- ------------ ------------ ------------ ------------ ------------ Per share dividends in excess of net investment income -- -- -- -- $0.0118 $0.0163 ----------- ------------ ------------ ------------ ------------ ------------ Per share distributions from net realized gain on investments sold, financial futures contracts and foreign currency transactions $0.0030 $0.0457 $0.7583 $0.1105 -- $0.4454 ----------- ------------ ------------ ------------ ------------ ------------ Per share distributions in excess of net realized gain on investments sold, financial futures contracts and foreign currency transactions -- -- -- $0.0072 -- -- ----------- ------------ ------------ ------------ ------------ ------------ Tax return of capital -- $0.0069 -- -- -- -- ----------- ------------ ------------ ------------ ------------ ------------ ** Analysis of Fund Share Transactions: Shares sold 2,866,051 691,929 1,100,338 816,451 300,316 86,360 Shares issued to shareholders in reinvestment of distributions 37,039 38,926 99,865 34,866 3,843 ----------- ------------ ------------ ------------ ------------ ------------ 2,903,090 730,855 1,200,203 851,317 2,903,090 107,993 Less shares repurchased (501,775) (1,096,716) (1,048,754) (490,081 (74,252) (92,089) ----------- ------------ ------------ ------------ ------------ ------------ Net Increase (Decrease) 2,401,315 (365,861) 151,449 361,236 229,907 15,904 =========== ============ ============ ============ ============ ============ The Statement of Changes in Net Assets shows how the value of each Fund's net assets has changed since the end of the previous period. The difference reflects earnings less expenses, any investment and foreign currency gains and losses, distributions paid to shareholders, if any, and any increase or decrease in money shareholders invested in each Fund. The footnotes illustrate the number of Fund shares sold, reinvested and repurchased during the last two periods, along with the per share amount of distributions made to shareholders of each Fund for the period indicated. See notes to financial statements.
Statements of Changes in Net Assets (continued) - ------------------------------------------------------------------------------------------------------------------------- V.A. LARGE CAP GROWTH FUND V.A. MID CAP GROWTH FUND V.A. REGIONAL BANK FUND ------------------------- -------------------------- --------------------------- YEAR ENDED DECEMBER 31, PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED ------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1998 1999 1998(1) 1999 1998(2) 1999 ------------ ----------- ------------ ------------ ------------ ------------ Increase (Decrease) in Net Assets: From Operations: Net investment income (loss) ($48) ($40,884) $627 ($6,426) $126,597 $281,620 Net realized gain (loss) on investments sold and foreign currency transactions 17,279 1,316,751 (110,615) 187,318 42,921 232,178 Change in net unrealized appreciation/depreciation of investments and foreign currency transactions 1,630,671 1,878,149 229,829 1,607,019 (394,271) (1,578,109) ------------ ----------- ------------ ------------ ------------ ------------ Net Increase (Decrease) in Net Assets Resulting from Operations 1,647,902 3,154,016 119,841 1,787,911 (224,753) (1,064,311) ------------ ----------- ------------ ------------ ------------ ------------ Distributions to Shareholders: * Dividends from net investment income -- -- (627) -- (123,559) (281,482) Distributions from net realized gain on investments sold and foreign currency transactions -- (491,445) -- (5,407) (7,896) (347,453) Tax return of capital -- -- (125) -- -- -- ------------ ----------- ------------ ------------ ------------ ------------ Total Distributions to Shareholders -- (491,445) (752) (5,407) (131,455) (628,935) ------------ ----------- ------------ ------------ ------------ ------------ From Fund Share Transactions: ** Shares sold 5,891,440 10,666,325 1,858,855 3,390,736 23,505,925 7,383,736 Shares issued to shareholders in reinvestment of distributions -- 491,445 752 5,407 131,455 628,935 ------------ ----------- ------------ ------------ ------------ ------------ 5,891,440 11,157,770 1,859,607 3,396,143 5,891,440 8,012,671 Less shares repurchased (900,237) (2,320,226) (199,625) (594,918) (3,024,755) (6,280,747) ------------ ----------- ------------ ------------ ------------ ------------ Net Increase 4,991,203 8,837,544 1,659,982 2,801,225 20,612,625 1,731,924 ------------ ----------- ------------ ------------ ------------ ------------ Net Assets: Beginning of period 3,732,712 10,371,817 -- 1,779,071 -- 20,256,417 ------------ ----------- ------------ ------------ ------------ ------------ End of period (including undistributed net investment income (distributions in excess of net investment income) of ($12), ($41), none, none, $3,038 and $3,154, respectively) $10,371,817 $21,871,932 $1,779,071 $6,362,800 $20,256,417 $20,295,095 ============ =========== ============ ============ ============ ============ * Distributions to Shareholders: Per share dividends from net investment income -- -- $0.0040 -- $0.0694 $0.1190 ------------ ----------- ------------ ------------ ------------ ------------ Per share distributions from net realized gain on investments sold and foreign currency transactions -- $0.3598 -- $0.0160 $0.0036 $0.1489 ------------ ----------- ------------ ------------ ------------ ------------ Tax return of capital -- -- $0.0008 -- -- -- ------------ ----------- ------------ ------------ ------------ ------------ ** Analysis of Fund Share Transactions: Shares sold 505,076 738,312 180,723 257,673 2,519,857 798,204 Shares issued to shareholders in reinvestment of distributions -- 31,974 72 329 14,871 73,089 ------------ ----------- ------------ ------------ ------------ ------------ 505,076 770,286 180,795 258,002 505,076 871,293 Less shares repurchased (76,970) (158,856) (19,519) (49,495) (351,377) (683,009) ------------ ----------- ------------ ------------ ------------ ------------ Net Increase 428,106 611,430 161,276 208,507 2,183,351 188,284 ============ =========== ============ ============ ============ ============ (1) Commenced operations on January 7, 1998. (2) Commenced operations on May 1, 1998. See notes to financial statements.
Statements of Changes in Net Assets (continued) - ------------------------------------------------------------------------------------------------------------------------- V.A. SMALL CAP GROWTH FUND V.A. CORE EQUITY FUND V.A. LARGE CAP VALUE FUND ------------------------- -------------------------- --------------------------- YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, PERIOD ENDED YEAR ENDED ------------------------- -------------------------- DECEMBER 31, DECEMBER 31, 1998 1999 1998 1999 1998(1) 1999 ------------ ----------- ------------ ------------ ------------ ------------ Increase (Decrease) in Net Assets: From Operations: Net investment income (loss) ($33,890) ($82,296) $103,965 $170,261 $88,381 $161,304 Net realized gain (loss) on investments sold and foreign currency transactions (402,192) 2,352,183 292,353 1,489,402 (21,183) 5,322,397 Change in net unrealized appreciation/depreciation of investments and foreign currency transactions 1,479,880 5,122,311 3,818,765 3,097,564 1,868,627 7,741,197 ------------ ----------- ------------ ------------ ------------ ------------ Net Increase in Net Assets Resulting from Operations 1,043,798 7,392,198 4,215,083 4,757,227 1,935,825 13,224,898 ------------ ----------- ------------ ------------ ------------ ------------ Distributions to Shareholders: * Dividends from net investment income -- -- (102,677) (174,331) (81,327) (162,651) Distributions in excess of net investment income -- -- -- (86) -- -- Distributions from net realized gain on investments sold and foreign currency transactions -- (441,478) (388,348) (895,808) -- (1,365,816) ------------ ----------- ------------ ------------ ------------ ------------ Total Distributions to Shareholders -- (441,478) (491,025) (1,070,225) (81,327) (1,528,467) ------------ ----------- ------------ ------------ ------------ ------------ From Fund Share Transactions: ** Shares sold 4,538,788 7,383,931 16,435,328 21,277,999 16,705,530 12,838,972 Shares issued to shareholders in reinvestment of distributions -- 441,478 491,025 1,070,225 81,327 1,528,467 ------------ ----------- ------------ ------------ ------------ ------------ 4,538,788 7,825,409 16,926,353 22,348,224 4,538,788 14,367,439 Less shares repurchased (1,191,507) (2,141,408) (2,678,249) (7,735,163) (1,273,103) (4,666,018) ------------ ----------- ------------ ------------ ------------ ------------ Net Increase 3,347,281 5,684,001 14,248,104 14,613,061 15,513,754 9,701,421 ------------ ----------- ------------ ------------ ------------ ------------ Net Assets: Beginning of period 3,840,810 8,231,889 8,719,092 26,691,254 -- 17,368,252 ------------ ----------- ------------ ------------ ------------ ------------ End of period (including undistributed net investment income (distributions in excess of net investment income) of ($12), ($40), $1,579, ($85), $3,516 and ($3,436), respectively) $8,231,889 $20,866,610 $26,691,254 $44,991,317 $17,368,252 $38,766,104 ============ =========== ============ ============ ============ ============ * Distributions to Shareholders: Per share dividends from net investment income -- -- $0.0967 $0.0861 $0.0962 $0.0980 ------------ ----------- ------------ ------------ ------------ ------------ Per share distributions in excess of net investment income -- -- -- $0.0001 -- -- ------------ ----------- ------------ ------------ ------------ ------------ Per share distributions from net realized gain on investments sold and foreign currency transactions -- $0.4314 $0.2702 $0.4028 -- $0.6493 ------------ ----------- ------------ ------------ ------------ ------------ ** Analysis of Fund Share Transactions: Shares sold 430,241 499,482 1,023,938 1,133,853 1,560,370 949,975 Shares issued to shareholders in reinvestment of distributions -- 23,955 28,311 55,765 7,693 91,349 ------------ ----------- ------------ ------------ ------------ ------------ 430,241 523,437 1,052,249 1,189,618 430,241 1,041,324 Less shares repurchased (115,191) (153,686) (165,911) (410,573) (124,862) (334,023) ------------ ----------- ------------ ------------ ------------ ------------ Net Increase 315,050 369,751 886,338 779,045 1,443,201 707,301 ============ =========== ============ ============ ============ ============ (1) Commenced operations on January 6, 1998. See notes to financial statements.
Statements of Changes in Net Assets (continued) - ---------------------------------------------------------------------------------------------------------------------- V.A. SOVEREIGN INVESTORS FUND V.A. BOND FUND V.A. HIGH YIELD BOND FUND ------------------------ ------------------------ -------------------------- YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, PERIOD ENDED YEAR ENDED ------------------------ ------------------------ DECEMBER 31, DECEMBER 31, 1998 1999 1998 1999 1998(1) 1999 ----------- ----------- ----------- ----------- ------------ ------------ Increase (Decrease) in Net Assets: From Operations: Net investment income $436,382 $651,984 $421,763 $740,529 $532,172 $951,874 Net realized gain (loss) on investments sold, financial futures contracts and foreign currency transactions (157,903) (211,594) 155,311 (216,376) (164,756) 104,240 Change in net unrealized appreciation/depreciation of investments, financial futures contracts and foreign currency transactions 3,493,431 1,075,319 72,362 (583,796) (1,205,462) 59,411 ----------- ----------- ----------- ----------- ----------- ------------ Net Increase (Decrease) in Net Assets Resulting from Operations 3,771,910 1,515,709 649,436 (59,643) (838,046) 1,115,525 ----------- ----------- ----------- ----------- ----------- ------------ Distributions to Shareholders: * Dividends from net investment income (454,539) (651,984) (421,762) (740,530) (518,660) (945,546) Distributions in excess of net investment income -- (617) -- -- -- -- Distributions from net realized gain on investments sold, financial futures contracts and foreign currency transactions -- -- (170,439) -- -- (74,253) Tax return of capital -- (2,297) -- -- (8,794) -- ----------- ----------- ----------- ----------- ----------- ------------ Total Distributions to Shareholders (454,539) (654,898) (592,201) (740,530) (527,454) (1,019,799) ----------- ----------- ----------- ----------- ----------- ------------ From Fund Share Transactions: ** Shares sold 21,913,811 19,084,625 8,832,995 5,640,516 10,161,830 2,548,352 Shares issued to shareholders in reinvestment of distributions 454,539 654,898 592,175 740,530 527,454 1,019,800 ----------- ----------- ----------- ----------- ----------- ------------ 22,368,350 19,739,523 9,425,170 6,381,046 22,368,350 3,568,152 Less shares repurchased (3,703,040) (4,515,757) (2,495,458) (3,719,713) (1,204,237) (2,496,893) ----------- ----------- ----------- ----------- ----------- ------------ Net Increase 18,665,310 15,223,766 6,929,712 2,661,333 9,485,047 1,071,259 ----------- ----------- ----------- ----------- ----------- ------------ Net Assets: Beginning of period 12,186,939 34,169,620 3,682,481 10,669,428 -- 8,119,547 ----------- ----------- ----------- ----------- ----------- ------------ End of period (including undistributed net investment income (distributions in excess of net investment income) of $495, ($105), $11, $21,494, ($300) and $5,028, respectively) $34,169,620 $50,254,197 $10,669,428 $12,530,588 $8,119,547 $9,286,532 =========== =========== =========== =========== =========== ============ * Distributions to Shareholders: Per share dividends from net investment income $0.2548 $0.2404 $0.6266 $0.6448 $0.8426 $0.8767 ----------- ----------- ----------- ----------- ----------- ------------ Per share distributions in excess of net investment income -- $0.0002 -- -- -- -- ----------- ----------- ----------- ----------- ----------- ------------ Per share distributions from net realized gain on investments sold and foreign currency transactions -- -- $0.1710 -- -- $0.0657 ----------- ----------- ----------- ----------- ----------- ------------ Tax return of capital -- $0.0009 -- -- $0.0143 -- ----------- ----------- ----------- ----------- ----------- ------------ ** Analysis of Fund Share Transactions: Shares sold 1,514,230 1,204,042 838,775 556,313 1,069,122 305,760 Shares issued to shareholders in reinvestment of distributions 30,975 42,073 56,408 73,574 59,435 122,160 ----------- ----------- ----------- ----------- ----------- ------------ 1,545,205 1,246,115 895,183 629,887 1,545,205 427,920 Less shares repurchased (253,627) (285,296) (235,975) (367,396) (140,657) (297,910) ----------- ----------- ----------- ----------- ----------- ------------ Net Increase 1,291,578 960,819 659,208 262,491 987,900 130,010 =========== =========== =========== =========== =========== ============ (1) Commenced operations on January 6, 1998. See notes to financial statements.
Statements of Changes in Net Assets (continued) - ------------------------------------------------------------------------------------------------------ V.A. MONEY MARKET FUND V.A. STRATEGIC INCOME FUND --------------------------- --------------------------- YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, --------------------------- --------------------------- 1998 1999 1998 1999 ------------ ------------ ------------ ------------ Increase (Decrease) in Net Assets: From Operations: Net investment income $577,123 $1,072,850 $859,114 $1,576,575 Net realized loss on investments sold, financial futures contracts and foreign currency transactions -- -- (8,657) (156,823) Change in net unrealized appreciation/depreciation of investments, financial futures contracts and foreign currency transactions -- -- (397,587) (534,751) ------------ ------------ ------------ ------------ Net Increase in Net Assets Resulting from Operations 577,123 1,072,850 452,870 885,001 ------------ ------------ ------------ ------------ Distributions to Shareholders: * Dividends from net investment income (577,123) (1,072,850) (859,114) (1,576,590) Distributions from net realized gain on investments sold, financial futures contracts and foreign currency transactions -- -- (33,336) -- ------------ ------------ ------------ ------------ Total Distributions to Shareholders (577,123) (1,072,850) (892,450) (1,576,590) ------------ ------------ ------------ ------------ From Fund Share Transactions: ** Shares sold 33,372,181 48,097,999 10,522,329 8,665,787 Shares issued in reorganization - Note F -- -- -- 2,569,836 Shares issued to shareholders in reinvestment of distributions 578,296 944,404 892,895 1,576,592 ------------ ------------ ------------ ------------ 33,950,477 49,042,403 11,415,224 12,812,215 Less shares repurchased (25,808,161) (32,610,270) (1,495,808) (4,858,040) ------------ ------------ ------------ ------------ Net Increase 8,142,316 16,432,133 9,919,416 7,954,175 ------------ ------------ ------------ ------------ Net Assets: Beginning of period 8,377,058 16,519,374 5,539,561 15,019,397 ------------ ------------ ------------ ------------ End of period (including undistributed net investment income (distributions in excess of net investment income) of $3, $52, ($8,929) and ($47,169), respectively) $16,519,374 $32,951,507 $15,019,397 $22,281,983 ============ ============ ============ ============ * Distributions to Shareholders: Per share dividends from net investment income $0.0478 $0.0452 $0.8496 $0.7977 ------------ ------------ ------------ ------------ Per share distributions from net realized gain on investments sold and foreign currency transactions -- -- $0.0229 -- ------------ ------------ ------------ ------------ ** Analysis of Fund Share Transactions: Shares sold 33,372,181 48,097,999 1,015,843 872,439 Shares issued in reorganization - Note F -- -- -- 253,313 Shares issued to shareholders in reinvestment of distributions 578,296 944,404 86,949 159,651 ------------ ------------ ------------ ------------ 33,950,477 49,042,403 1,102,792 1,285,403 Less shares repurchased (25,808,161) (32,610,270) (144,814) (491,471) ------------ ------------ ------------ ------------ Net Increase 8,142,316 16,432,133 957,978 793,932 ============ ============ ============ ============ See notes to financial statements.
Financial Highlights Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - --------------------------------------------------------------------------------------- V.A. FINANCIAL INDUSTRIES FUND ------------------------------------------ PERIOD YEAR YEAR ENDED ENDED ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 1997(1) 1998 1999 ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $13.44 $14.45 ------------ ------------ ------------ Net Investment Income (2) 0.11 0.18 0.11 Net Realized and Unrealized Gain on Investments and Foreign Currency Transactions 3.39 0.97 0.06 ------------ ------------ ------------ Total from Investment Operations 3.50 1.15 0.17 ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.05) (0.14) (0.10) Distributions from Net Realized Gain on Investments Sold and Foreign Currency Transactions (0.01) (0.00)(8) (0.05) Tax Return of Capital -- -- (0.01) ------------ ------------ ------------ Total Distributions (0.06) (0.14) (0.16) ------------ ------------ ------------ Net Asset Value, End of Period $13.44 $14.45 $14.46 ============ ============ ============ Total Investment Return at Net Asset Value (3) 35.05%(5) 8.55% 1.23% Total Adjusted Investment Return at Net Asset Value (3,4) 34.71%(5) -- -- Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $18,465 $54,569 $49,312 Ratio of Expenses to Average Net Assets 1.05%(6) 0.92% 0.90% Ratio of Adjusted Expenses to Average Net Assets (7) 1.39%(6) -- -- Ratio of Net Investment Income to Average Net Assets 1.32%(6) 1.25% 0.77% Ratio of Adjusted Net Investment Income to Average Net Assets (7) 0.98%(6) -- -- Portfolio Turnover Rate 11% 38% 72% Fee Reduction Per Share (2) $0.03 -- -- (1) Commenced operations on April 30, 1997. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. (8) Less than $0.01 per share. The Financial Highlights summarizes the impact of the following factors on a single share for each period indicated: net investment income, gains (losses), distributions and total investment return of each Fund. It shows how the Fund's net asset value for a share has changed since the end of the previous period. Additionally, important relationships between some items presented in the financial statements are expressed in ratio form. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. 500 INDEX FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $10.44 $12.62 $15.23 ------------ ------------ ------------ ------------ Net Investment Income (2) 0.17 0.30 0.20 0.17 Net Realized and Unrealized Gain on Investments and Financial Futures Contracts 0.98 2.72 3.37 2.98 ------------ ------------ ------------ ------------ Total from Investment Operations 1.15 3.02 3.57 3.15 ------------ ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.16) (0.30) (0.20) (0.17) Distributions from Net Realized Gain on Investments Sold and Financial Futures Contracts (0.55) (0.54) (0.76) (0.11) Distributions in Excess of Net Realized Gain on Investments Sold and Financial Futures Contracts -- -- -- (0.01) ------------ ------------ ------------ ------------ Total Distributions (0.71) (0.84) (0.96) (0.29) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $10.44 $12.62 $15.23 $18.09 ============ ============ ============ ============ Total Investment Return at Net Asset Value (3) 11.49%(5) 29.51% 28.44% 20.81% Total Adjusted Investment Return at Net Asset Value (3,4) 11.25%(5) 29.04% 27.87% 20.41% Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $4,049 $20,008 $26,457 $37,953 Ratio of Expenses to Average Net Assets 0.60%(6) 0.36% 0.35% 0.35% Ratio of Adjusted Expenses to Average Net Assets (7) 1.31%(6) 0.83% 0.92% 0.75% Ratio of Net Investment Income to Average Net Assets 4.57%(6) 2.45% 1.44% 1.06% Ratio of Adjusted Net Investment Income to Average Net Assets (7) 3.86%(6) 1.98% 0.87% 0.66% Portfolio Turnover Rate -- 9% 47% 5% Fee Reduction Per Share (2) $0.03 $0.06 $0.07 $0.07 (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. See notes to financial statements.
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. INTERNATIONAL FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $11.23 $10.50 $12.18 ------------ ------------ ------------ ------------ Net Investment Income (2) 0.07 0.05 0.07 0.07 Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions 1.20 (0.13) 1.69 3.75 ------------ ------------ ------------ ------------ Total from Investment Operations 1.27 (0.08) 1.76 3.82 ------------ ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.04) (0.01) (0.07) (0.08) Dividends in Excess of Net Investment Income -- -- (0.01) (0.02) Distributions from Net Realized Gain on Investments Sold and Foreign Currency Transactions -- (0.64) -- (0.45) ------------ ------------ ------------ ------------ Total Distributions (0.04) (0.65) (0.08) (0.55) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $11.23 $10.50 $12.18 $15.45 ============ ============ ============ ============ Total Investment Return at Net Asset Value (3) 12.75%(5) (0.54%) 16.75% 31.55% Total Adjusted Investment Return at Net Asset Value (3,4) 12.07%(5) (1.43%) 14.77% 30.19% Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $2,267 $3,792 $7,201 $9,375 Ratio of Expenses to Average Net Assets 1.15%(6) 1.15% 1.15% 1.15% Ratio of Adjusted Expenses to Average Net Assets (7) 3.13%(6) 2.04% 3.13% 2.51% Ratio of Net Investment Income to Average Net Assets 2.03%(6) 0.43% 0.59% 0.52% Ratio of Adjusted Net Investment Income (Loss) to Average Net Assets (7) 0.05%(6) (0.46%) (1.39%) (0.84%) Portfolio Turnover Rate 14% 273% 89% 116% Fee Reduction Per Share (2) $0.07 $0.10 $0.22 $0.17 (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. LARGE CAP GROWTH FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $9.39 $10.73 $13.37 ------------ ------------ ------------ ------------ Net Investment Loss (2) (0.01) (0.04) (0.00)(8) (0.04) Net Realized and Unrealized Gain (Loss) on Investments (0.60) 1.38 2.64 2.80 ------------ ------------ ------------ ------------ Total from Investment Operations (0.61) 1.34 2.64 2.76 ------------ ------------ ------------ ------------ Less Distributions: Distributions from Net Realized Gain on Investments Sold -- -- -- (0.36) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $9.39 $10.73 $13.37 $15.77 ============ ============ ============ ============ Total Investment Return at Net Asset Value (3) (6.10%)(5) 14.27% 24.60% 20.71% Total Adjusted Investment Return at Net Asset Value (3,4) (7.39%)(5) 12.90% 24.27% 20.69% Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $994 $3,733 $10,372 $21,872 Ratio of Expenses to Average Net Assets 1.00%(6) 1.00% 1.00% 1.00% Ratio of Adjusted Expenses to Average Net Assets (7) 4.76%(6) 2.37% 1.33% 1.02% Ratio of Net Investment Loss to Average Net Assets (0.23%)(6) (0.39%) (0.00%) (0.25%) Ratio of Adjusted Net Investment Loss to Average Net Assets (7) (3.99%)(6) (1.76%) (0.33%) (0.27%) Portfolio Turnover Rate 68% 136% 176% 172% Fee Reduction Per Share (2) $0.13 $0.13 $0.04 $0.00(8) (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. (8) Less than $0.01 per share.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------ V.A. MID CAP GROWTH FUND --------------------------- PERIOD YEAR ENDED ENDED DECEMBER 31, DECEMBER 31, 1998(1) 1999 ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $11.03 ------------ ------------ Net Investment Income (Loss) (2) 0.01 (0.03) Net Realized and Unrealized Gain on Investments 1.03 6.23 ------------ ------------ Total from Investment Operations 1.04 6.20 ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.01) -- Distributions from Net Realized Gain on Investments Sold -- (0.02) Tax Return of Capital (0.00)(8) -- ------------ ------------ Total Distributions (0.01) (0.02) ------------ ------------ Net Asset Value, End of Period $11.03 $17.21 ============ ============ Total Investment Return at Net Asset Value (3) 10.35%(5) 56.18% Total Adjusted Investment Return at Net Asset Value (3,4) 7.17%(5) 54.82% Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $1,779 $6,363 Ratio of Expenses to Average Net Assets 1.00%(6) 1.00% Ratio of Adjusted Expenses to Average Net Assets (7) 4.23%(6) 2.36% Ratio of Net Investment Income (Loss) to Average Net Assets 0.06%(6) (0.23%) Ratio of Adjusted Net Investment Loss to Average Net Assets (7) (3.17%)(6) (1.59%) Portfolio Turnover Rate 103% 136% Fee Reduction Per Share (2) $0.33 $0.17 (1) Commenced operations on January 7, 1998. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. (8) Less than $0.01 per share. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------- V.A. REGIONAL BANK FUND ---------------------------- PERIOD YEAR ENDED ENDED DECEMBER 31, DECEMBER 31, 1998(1) 1999 ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $9.28 ------------ ----------- Net Investment Income (2) 0.09 0.12 Net Realized and Unrealized Loss on Investments (0.74) (0.57) ------------ ----------- Total from Investment Operations (0.65) (0.45) ------------ ----------- Less Distributions: Dividends from Net Investment Income (0.07) (0.12) Distributions from Net Realized Gain on Investments Sold (0.00)(8) (0.15) ------------ ----------- Total Distributions (0.07) (0.27) ------------ ----------- Net Asset Value, End of Period $9.28 $8.56 ============ =========== Total Investment Return at Net Asset Value (3) (6.43%)(5) (4.86%) Total Adjusted Investment Return at Net Asset Value (3,4) (6.49%)(5) -- Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $20,256 $20,295 Ratio of Expenses to Average Net Assets 1.05%(6) 1.00% Ratio of Adjusted Expenses to Average Net Assets (7) 1.14%(6) -- Ratio of Net Investment Income to Average Net Assets 1.39%(6) 1.30% Ratio of Adjusted Net Investment Income to Average Net Assets (7) 1.30%(6) -- Portfolio Turnover Rate 28% 49% Fee Reduction Per Share (2) $0.01 -- (1) Commenced operations on May 1, 1998. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. (8) Less than $0.01 per share. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. SMALL CAP GROWTH FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $9.32 $10.35 $12.00 ------------ ------------ ------------ ------------ Net Investment Income (Loss) (2) 0.02 (0.02) (0.06) (0.10) Net Realized and Unrealized Gain (Loss) on Investments (0.68) 1.05 1.71 8.29 ------------ ------------ ------------ ------------ Total from Investment Operations (0.66) 1.03 1.65 8.19 ------------ ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.02) (0.00)(3) -- -- Distributions from Net Realized Gain on Investments Sold -- -- (0.43) ------------ ------------ ------------ ------------ Total Distributions to Shareholders (0.02) (0.00) -- (0.43) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $9.32 $10.35 $12.00 $19.76 ============ ============ ============ ============ Total Investment Return at Net Asset Value (4) (6.62%)(6) 11.06% 15.94% 68.52% Total Adjusted Investment Return at Net Asset Value (4,5) (8.05%)(6) 9.34% 15.31% 68.14% Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $975 $3,841 $8,232 $20,867 Ratio of Expenses to Average Net Assets 1.00%(7) 1.00% 1.00% 1.00% Ratio of Adjusted Expenses to Average Net Assets (8) 5.19%(7) 2.72% 1.63% 1.38% Ratio of Net Investment Income (Loss) to Average Net Assets 0.62%(7) (0.16%) (0.59%) (0.76%) Ratio of Adjusted Net Investment Loss to Average Net Assets (8) (3.57%)(7) (1.88%) (1.22%) (1.14%) Portfolio Turnover Rate 31% 79% 93% 120% Fee Reduction Per Share (2) $0.14 $0.17 $0.07 $0.05 (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Less than $0.01 per share. (4) Assumes dividend reinvestment. (5) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (6) Not annualized. (7) Annualized. (8) Unreimbursed, without fee reduction. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. CORE EQUITY FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $11.11 $14.11 $17.74 ------------ ------------ ------------ ------------ Net Investment Income (2) 0.06 0.16 0.10 0.09 Net Realized and Unrealized Gain on Investments 1.12 3.23 3.90 2.36 ------------ ------------ ------------ ------------ Total from Investment Operations 1.18 3.39 4.00 2.45 ------------ ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.06) (0.14) (0.10) (0.09) Distributions in Excess of Net Investment Income -- -- -- (0.00)(8) Distributions from Net Realized Gain on Investments Sold (0.01) (0.25) (0.27) (0.40) ------------ ------------ ------------ ------------ Total Distributions (0.07) (0.39) (0.37) (0.49) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $11.11 $14.11 $17.74 $19.70 ============ ============ ============ ============ Total Investment Return at Net Asset Value (3) 11.78%(5) 30.68% 28.42% 13.89% Total Adjusted Investment Return at Net Asset Value (3,4) 10.66%(5) 30.04% -- -- Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $1,149 $8,719 $26,691 $44,991 Ratio of Expenses to Average Net Assets 0.95%(6) 0.95% 0.95% 0.83% Ratio of Adjusted Expenses to Average Net Assets (7) 4.23%(6) 1.59% -- -- Ratio of Net Investment Income to Average Net Assets 1.60%(6) 1.24% 0.65% 0.47% Ratio of Adjusted Net Investment Income (Loss) to Average Net Assets (7) (1.68%)(6) 0.60% -- -- Portfolio Turnover Rate 24% 53% 55% 77% Fee Reduction Per Share (2) $0.12 $0.08 -- -- (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. (8) Less than $0.01 per share. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------ V.A. LARGE CAP VALUE FUND --------------------------- PERIOD YEAR ENDED ENDED DECEMBER 31, DECEMBER 31, 1998(1) 1999 ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $12.03 ------------ ------------ Net Investment Income (2) 0.11 0.10 Net Realized and Unrealized Gain on Investments, Financial Futures Contracts and Foreign Currency Transactions 2.02 6.65 ------------ ------------ Total from Investment Operations 2.13 6.75 ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.10) (0.10) Distributions from Net Realized Gain on Investments Sold, Financial Futures Contracts and Foreign Currency Transactions -- (0.65) ------------ ------------ Total Distributions (0.10) (0.75) ------------ ------------ Net Asset Value, End of Period $12.03 $18.03 ============ ============ Total Investment Return at Net Asset Value (3) 21.39%(5) 56.65% Total Adjusted Investment Return at Net Asset Value (3,4) 21.21%(5) -- Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $17,368 $38,766 Ratio of Expenses to Average Net Assets 0.85%(6) 0.77% Ratio of Adjusted Expenses to Average Net Assets (7) 1.03%(6) -- Ratio of Net Investment Income to Average Net Assets 1.17%(6) 0.66% Ratio of Adjusted Net Investment Income to Average Net Assets (7) 0.99%(6) -- Portfolio Turnover Rate 242% 166% Fee Reduction Per Share (2) $0.02 -- (1) Commenced operations on January 6, 1998. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. SOVEREIGN INVESTORS FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $10.74 $13.59 $15.61 ------------ ------------ ------------ ------------ Net Investment Income (2) 0.07 0.22 0.27 0.24 Net Realized and Unrealized Gain on Investments 0.76 2.82 2.00 0.35 ------------ ------------ ------------ ------------ Total from Investment Operations 0.83 3.04 2.27 0.59 ------------ ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.07) (0.18) (0.25) (0.24) Distributions in Excess of Net Investment Income -- -- -- (0.00)(8) Distributions from Net Realized Gain on Investments Sold (0.02) (0.01) -- -- Tax Return of Capital -- -- -- (0.00)(8) ------------ ------------ ------------ ------------ Total Distributions (0.09) (0.19) (0.25) (0.24) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $10.74 $13.59 $15.61 $15.96 ============ ============ ============ ============ Total Investment Return at Net Asset Value (3) 8.30%(5) 28.43% 16.88% 3.84% Total Adjusted Investment Return at Net Asset Value (3,4) 7.30%(5) 28.12% -- -- Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $1,111 $12,187 $34,170 $50,254 Ratio of Expenses to Average Net Assets 0.85%(6) 0.85% 0.74% 0.70% Ratio of Adjusted Expenses to Average Net Assets (7) 3.78%(6) 1.16% -- -- Ratio of Net Investment Income to Average Net Assets 1.90%(6) 1.81% 1.88% 1.57% Ratio of Adjusted Net Investment Income (Loss) to Average Net Assets (7) (1.03%)(6) 1.50% -- -- Portfolio Turnover Rate 17% 11% 19% 26% Fee Reduction Per Share (2) $0.11 $0.04 -- -- (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. (8) Less than $0.01 per share. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. BOND FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $10.19 $10.36 $10.51 ------------ ------------ ------------ ------------ Net Investment Income (2) 0.23 0.68 0.63 0.64 Net Realized and Unrealized Gain (Loss) on Investments 0.21 0.24 0.32 (0.70) ------------ ------------ ------------ ------------ Total from Investment Operations 0.44 0.92 0.95 (0.06) ------------ ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.23) (0.68) (0.63) (0.64) Distributions from Net Realized Gain on Investments Sold (0.02) (0.07) (0.17) -- ------------ ------------ ------------ ------------ Total Distributions (0.25) (0.75) (0.80) (0.64) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $10.19 $10.36 $10.51 $9.81 ============ ============ ============ ============ Total Investment Return at Net Asset Value (3) 4.42%(5) 9.30% 9.41% (0.51%) Total Adjusted Investment Return at Net Asset Value (3,4) 3.25%(5) 7.52% 8.82% (0.77%) Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $1,056 $3,682 $10,669 $12,531 Ratio of Expenses to Average Net Assets 0.75%(6) 0.75% 0.75% 0.75% Ratio of Adjusted Expenses to Average Net Assets (7) 4.15%(6) 2.53% 1.34% 1.01% Ratio of Net Investment Income to Average Net Assets 6.69%(6) 6.57% 5.93% 6.39% Ratio of Adjusted Net Investment Income to Average Net Assets (7) 3.29%(6) 4.79% 5.34% 6.13% Portfolio Turnover Rate 45% 193% 367% 307% Fee Reduction Per Share (2) $0.12 $0.18 $0.06 $0.03 (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------ V.A. HIGH YIELD BOND FUND --------------------------- PERIOD YEAR ENDED ENDED DECEMBER 31, DECEMBER 31, 1998(1) 1999 ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $8.22 ------------ ------------ Net Investment Income (2) 0.90 0.88 Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions (1.82) 0.16 ------------ ------------ Total from Investment Operations (0.92) 1.04 ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.84) (0.88) Distributions from Net Realized Gain on Investments Sold and Foreign Currency Transactions -- (0.07) Tax Return of Capital (0.02) -- ------------ ------------ Total Distributions (0.86) (0.95) ------------ ------------ Net Asset Value, End of Period $8.22 $8.31 ============ ============ Total Investment Return at Net Asset Value (3) (9.80%)(5) 13.12% Total Adjusted Investment Return at Net Asset Value (3,4) (10.10%)(5) 12.94% Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $8,120 $9,287 Ratio of Expenses to Average Net Assets 0.85%(6) 0.85% Ratio of Adjusted Expenses to Average Net Assets (7) 1.15%(6) 1.03% Ratio of Net Investment Income to Average Net Assets 9.85%(6) 10.56% Ratio of Adjusted Net Investment Income to Average Net Assets (7) 9.55%(6) 10.38% Portfolio Turnover Rate 102% 122% Fee Reduction Per Share (2) $0.03 $0.02 (1) Commenced operations on January 6, 1998. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. MONEY MARKET FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 ------------ ------------ ------------ ------------ Net Investment Income (2) 0.02 0.05 0.05 0.05 ------------ ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.02) (0.05) (0.05) (0.05) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 ============ ============ ============ ============ Total Investment Return at Net Asset Value (3) 1.61%(5) 4.88% 4.87% 4.58% Total Adjusted Investment Return at Net Asset Value (3,4) (7.55%)(5) 4.36% -- -- Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $207 $8,377 $16,519 $32,952 Ratio of Expenses to Average Net Assets 0.75%(6) 0.75% 0.74% 0.66% Ratio of Adjusted Expenses to Average Net Assets (7) 27.48%(6) 1.27% -- -- Ratio of Net Investment Income to Average Net Assets 4.68%(6) 4.86% 4.70% 4.55% Ratio of Adjusted Net Investment Income (Loss) to Average Net Assets (7) (22.05%)(6) 4.34% -- -- Fee Reduction Per Share (2) $0.08 $0.00(8) -- -- (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. (8) Less than $0.01 per share. See notes to financial statements.
Financial Highlights (continued) Selected data for a share of beneficial interest outstanding throughout each period indicated, investment returns, key ratios and supplemental data are listed as follows: - ------------------------------------------------------------------------------------------------------ V.A. STRATEGIC INCOME FUND --------------------------------------------------------- PERIOD ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------ 1996(1) 1997 1998 1999 ------------ ------------ ------------ ------------ Per Share Operating Performance Net Asset Value, Beginning of Period $10.00 $10.30 $10.47 $10.10 ------------ ------------ ------------ ------------ Net Investment Income (2) 0.27 0.91 0.85 0.80 Net Realized and Unrealized Gain (Loss) on Investments, Financial Futures Contracts and Foreign Currency Transactions 0.36 0.26 (0.35) (0.33) ------------ ------------ ------------ ------------ Total from Investment Operations 0.63 1.17 0.50 0.47 ------------ ------------ ------------ ------------ Less Distributions: Dividends from Net Investment Income (0.27) (0.91) (0.85) (0.80) Distributions from Net Realized Gain on Investments Sold, Financial Futures Contracts and Foreign Currency Transactions (0.06) (0.09) (0.02) -- ------------ ------------ ------------ ------------ Total Distributions (0.33) (1.00) (0.87) (0.80) ------------ ------------ ------------ ------------ Net Asset Value, End of Period $10.30 $10.47 $10.10 $9.77 ============ ============ ============ ============ Total Investment Return at Net Asset Value (3) 6.45%(5) 11.77% 4.92% 4.82% Total Adjusted Investment Return at Net Asset Value (3,4) 5.96%(5) 11.25% 4.84% 4.80% Ratios and Supplemental Data Net Assets, End of Period (000s omitted) $2,131 $5,540 $15,019 $22,282 Ratio of Expenses to Average Net Assets 0.85%(6) 0.85% 0.85% 0.85% Ratio of Adjusted Expenses to Average Net Assets (7) 2.28%(6) 1.37% 0.93% 0.87% Ratio of Net Investment Income to Average Net Assets 7.89%(6) 8.77% 8.19% 8.06% Ratio of Adjusted Net Investment Income to Average Net Assets (7) 6.46%(6) 8.25% 8.11% 8.04% Portfolio Turnover Rate 73% 110% 92% 53%(8) Fee Reduction Per Share (2) $0.05 $0.05 $0.01 $0.00(9) (1) Commenced operations on August 29, 1996. (2) Based on the average of the shares outstanding at the end of each month. (3) Assumes dividend reinvestment. (4) An estimated total return calculation which does not take into consideration fee reductions by the Adviser during the periods shown. (5) Not annualized. (6) Annualized. (7) Unreimbursed, without fee reduction. (8) Portfolio turnover rate excludes merger activity. (9) Less than $0.01 per share. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Financial Industries Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Financial Industries Fund on December 31, 1999. It's divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry groups. Short-term investments, which represent the Fund's "cash" position, are listed last. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Banks - Foreign (6.95%) Bipop (Italy) 9,000 $792,469 ING Groep NV American Depository Receipt (ADR) (Netherlands) 15,350 936,350 Lloyds TSB Group Plc (United Kingdom) 88,500 1,104,710 MeritaNordbanken Oyj* (Finland) 101,000 591,193 -------------- 3,424,722 -------------- Banks - Midwest (4.79%) Commerce Bancshares, Inc. 19,100 647,013 Fifth Third Bancorp 10,000 733,750 FirstMerit Corp. 4,500 103,500 Marshall & Ilsley Corp. 14,000 879,375 -------------- 2,363,638 -------------- Banks - Money Center (3.85%) Chase Manhattan Corp. 9,040 702,295 Citigroup, Inc. 21,500 1,194,594 -------------- 1,896,889 -------------- Banks - Northeast (3.46%) M & T Bank Corp. 1,600 662,800 U.S. Trust Corp. 13,000 1,042,437 -------------- 1,705,237 -------------- Banks - Southeast (3.87%) CCB Financial Corp. 22,500 980,156 First Tennessee National Corp. 32,500 926,250 -------------- 1,906,406 -------------- Banks - Southwest (1.48%) Cullen/Frost Bankers., Inc. 28,250 727,438 -------------- Banks - Superregional (4.58%) FleetBoston Financial Corp. 22,536 784,535 Wells Fargo Co. 36,500 1,475,969 -------------- 2,260,504 -------------- Banks - West (1.40%) City National Corp. 20,900 688,394 -------------- Broker Services (11.03%) Legg Mason, Inc. 51,000 1,848,750 Merrill Lynch & Co., Inc. 8,000 668,000 Morgan Stanley Dean Witter & Co. 12,000 1,713,000 Schwab (Charles) Corp. 31,500 1,208,812 -------------- 5,438,562 -------------- Computer - Services (7.47%) BISYS Group, Inc. (The)* 9,000 587,250 First Data Corp. 17,000 838,313 Fiserv, Inc.* 59,000 2,260,437 -------------- 3,686,000 -------------- Computer - Software (1.94%) Intuit, Inc.* 16,000 959,000 -------------- Finance - Consumer Loans (7.41%) American Express Co. 14,000 2,327,500 MBNA Corp. 48,650 1,325,712 -------------- 3,653,212 -------------- Finance - Investment Management (3.07%) Price (T. Rowe) Associates, Inc. 41,000 1,514,437 -------------- Finance - SBIC & Commercial (1.38%) Heller Financial, Inc. 34,000 682,125 -------------- Insurance (5.17%) Financial Security Assurance Holdings Ltd. 19,500 1,016,437 MBIA, Inc. 29,000 1,531,562 -------------- 2,547,999 -------------- Insurance - Accident & Health (3.06%) AFLAC, Inc. 32,000 1,510,000 -------------- Insurance - Brokers (4.52%) Aon Corp. 15,000 600,000 Marsh & McLennan Cos., Inc. 17,000 1,626,687 -------------- 2,226,687 -------------- Insurance - Diversified (2.13%) AXA Financial, Inc. 31,000 1,050,125 -------------- Insurance - Life (9.92%) American General Corp. 10,700 811,863 Axa (ADR) (France) 12,500 887,500 Lincoln National Corp. 17,400 696,000 Protective Life Corp. 48,000 1,527,000 Reinsurance Group of America, Inc. 26,500 735,375 ReliaStar Financial Corp. 6,000 235,125 -------------- 4,892,863 -------------- Insurance - Multi Line (2.75%) Allmerica Financial Corp. 11,100 617,438 Fortis (NL) NV (Netherlands) 20,627 739,113 -------------- 1,356,551 -------------- Insurance - Property & Casualty (3.98%) American International Group, Inc. 13,750 1,486,719 Travelers Property Casualty Corp. (Class A) 13,900 476,075 -------------- 1,962,794 -------------- Mortgage & Real Estate Services (1.62%) Freddie Mac 17,000 800,063 -------------- TOTAL COMMON STOCKS (Cost $40,561,767) (95.83%) 47,253,646 -------------- -------------- INTEREST PAR VALUE MARKET ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE - ------------------- -------- -------------- -------------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (3.20%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond 10.625% due 08-15-15 and U.S. Treasury Notes 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.49% $1,578 $1,578,000 -------------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 293 -------------- TOTAL SHORT-TERM INVESTMENTS (3.20%) 1,578,293 ------- -------------- TOTAL INVESTMENTS (99.03%) 48,831,939 ------- -------------- OTHER ASSETS AND LIABILITIES, NET (0.97%) 480,501 ------- -------------- TOTAL NET ASSETS (100.00%) $49,312,440 ======= ============== * Non-income producing security. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. 500 Index Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. 500 Index Fund on December 31, 1999. It is divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's "cash" position, are listed last. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Advertising (0.27%) Interpublic Group of Companies, Inc. (The) 861 $49,669 Omnicom Group, Inc. 545 54,500 -------------- 104,169 -------------- Aerospace (0.85%) Boeing Co. (The) 2,869 119,243 General Dynamics Corp. 617 32,547 Goodrich (B.F.) Co. (The) 338 9,295 Lockheed Martin Corp. 1,215 26,578 Northrop Grumman Corp. 213 11,515 Raytheon Co. (Class B) 1,039 27,598 United Technologies Corp. 1,470 95,550 -------------- 322,326 -------------- Automobile/Trucks (1.11%) Cummins Engine Co., Inc. 127 6,136 Dana Corp. 505 15,118 Delphi Automotive Systems Corp. 1,734 27,310 Eaton Corp. 226 16,413 Ford Motor Co. 3,708 198,146 General Motors Corp. 1,965 142,831 PACCAR, Inc. 240 10,635 Ryder System, Inc. 197 4,814 -------------- 421,403 -------------- Banks - United States (4.96%) AmSouth Bancorp. 1,200 23,175 Banc One Corp. 3,520 112,860 BankAmerica Corp. 5,240 262,982 Bank of New York Co., Inc. 2,260 90,400 BB&T Corp. 1,016 27,813 Chase Manhattan Corp. 2,532 196,705 Comerica, Inc. 480 22,410 Fifth Third Bancorp 948 69,559 First Union Corp. 3,032 99,487 Firstar Corp. 3,009 63,565 FleetBoston Financial Corp. 2,810 97,823 Huntington Bancshares, Inc. 705 16,832 KeyCorp. 1,373 30,378 Mellon Financial Corp. 1,561 53,172 Morgan (J.P.) & Co., Inc. 531 67,238 National City Corp. 1,893 44,840 Northern Trust Corp. 683 36,199 Old Kent Financial Corp. 361 12,770 PNC Bank Corp. 902 40,139 Regions Financial Corp. 671 16,859 Republic New York Corp. 322 23,184 SouthTrust Corp. 515 19,473 State Street Corp. 491 35,874 Summit Bancorp. 536 16,415 SunTrust Banks, Inc. 982 67,574 Synovus Financial Corp. 859 17,073 Union Planters Corp. 433 17,076 U.S. Bancorp. 2,234 53,197 Wachovia Corp. 622 42,296 Wells Fargo Co. 5,041 203,845 -------------- 1,881,213 -------------- Beverages (2.12%) Anheuser-Busch Cos., Inc. 1,428 101,209 Brown-Forman Corp. 210 12,022 Coca-Cola Co. (The) 7,582 441,651 Coca-Cola Enterprises, Inc. 1,306 26,283 Coors (Adolph) Co. (Class B) 113 5,932 PepsiCo, Inc. 4,468 157,497 Seagram Co. Ltd. (The) (Canada) 1,331 59,812 -------------- 804,406 -------------- Broker Services (1.31%) Bear Stearns Cos., Inc. 366 15,646 Lehman Brothers Holdings, Inc. 368 31,165 Merrill Lynch & Co., Inc. 1,138 95,023 Morgan Stanley Dean Witter & Co. 1,710 244,103 Paine Webber Group, Inc. 438 17,000 Schwab (Charles) Corp. 2,517 96,590 -------------- 499,527 -------------- Building (0.62%) Armstrong World Industries, Inc. 123 4,105 Black & Decker Corp. 267 13,951 Centex Corp. 182 4,492 Danaher Corp. 437 21,085 Fleetwood Enterprises, Inc. 100 2,062 Fluor Corp. 233 10,689 Georgia-Pacific Corp. 525 26,644 Kaufman & Broad Home Corp. 146 3,531 Louisiana-Pacific Corp. 327 4,660 Masco Corp. 1,372 34,815 Owens Corning 168 3,245 Pulte Corp. 133 2,993 Sherwin-Williams Co. 509 10,689 Snap-on, Inc. 180 4,781 Stanley Works (The) 274 8,254 Vulcan Materials Co. 307 12,261 Weyerhauser Co. 721 51,777 Willamette Industries, Inc. 342 15,882 -------------- 235,917 -------------- Business Services - Misc. (0.33%) Block, H & R, Inc. 300 13,125 Cendant Corp.* 2,183 57,986 Dun & Bradstreet Corp. 494 14,573 Equifax, Inc. 434 10,226 Paychex, Inc. 757 30,280 -------------- 126,190 -------------- Chemicals (0.73%) Air Products & Chemicals, Inc. 704 23,628 Dow Chemical Co. 673 89,930 Eastman Chemical Co. 240 11,445 Engelhard Corp. 386 7,286 FMC Corp.* 94 5,387 Grace (W. R.) & Co. 220 3,052 Great Lakes Chemical Corp. 177 6,759 Hercules, Inc. 326 9,087 PPG Industries, Inc. 533 33,346 Praxair, Inc. 488 24,553 Rohm & Haas Co. 672 27,342 Sigma-Aldrich Corp. 310 9,319 Union Carbide Corp. 411 27,434 -------------- 278,568 -------------- Computers (18.94%) 3Com Corp.* 1,059 49,773 Adaptec, Inc.* 313 15,611 Adobe Systems, Inc. 369 24,815 America Online, Inc.* 6,862 517,652 Apple Computer, Inc.* 494 50,789 Autodesk, Inc. 187 6,311 Automatic Data Processing, Inc. 1,919 103,386 BMC Software, Inc.* 744 59,474 Cabletron Systems, Inc.* 554 14,404 Ceridian Corp.* 444 9,574 Cisco Systems, Inc.* 10,041 1,075,642 Citrix Systems, Inc.* 275 33,825 Compaq Computer Corp. 5,218 141,212 Computer Associates International, Inc. 1,655 115,747 Computer Sciences Corp.* 511 48,353 Compuware Corp.* 1,098 40,900 Dell Computer Corp.* 7,799 397,749 Electronic Data Systems Corp. 1,445 96,725 EMC Corp.* 3,123 341,188 First Data Corp. 1,286 63,416 Gateway 2000, Inc.* 972 70,045 Hewlett-Packard Co. 3,128 356,396 IMS Health, Inc. 945 25,692 International Business Machines Corp. 5,533 597,564 Lexmark International Group, Inc. (Class A)* 392 35,476 Microsoft Corp.* 15,839 1,849,203 Network Appliance, Inc.* 458 38,043 Novell, Inc.* 1,022 40,816 Oracle Corp.* 4,370 489,713 Parametric Technology Corp.* 827 22,381 PeopleSoft, Inc.* 754 16,070 Seagate Technology, Inc.* 639 29,753 Shared Medical System Corp. 83 4,228 Silicon Graphics, Inc.* 564 5,534 Sun Microsystems, Inc.* 4,795 371,313 Unisys Corp.* 951 30,373 -------------- 7,189,146 -------------- Consumer Products - Misc. (0.02%) American Greetings Corp. (Class A) 198 4,678 Jostens, Inc. 102 2,480 -------------- 7,158 -------------- Containers (0.13%) Ball Corp. 93 3,662 Bemis Co., Inc. 161 5,615 Crown Cork & Seal Co., Inc. 374 8,368 Owens-Illinois, Inc.* 461 11,554 Pactiv Corp.* 526 5,589 Sealed Air Corp. * 256 13,264 -------------- 48,052 -------------- Cosmetics & Personal Care (0.46%) Alberto Culver Co. (Class B) 171 4,414 Avon Products, Inc. 744 24,552 Gillette Co. 3,293 135,630 International Flavors & Fragrances, Inc. 323 12,193 -------------- 176,789 -------------- Diversified Operations (2.29%) Crane Co. 202 4,015 Du Pont (E.I.) De Nemours & Co. 3,206 211,195 Fortune Brands, Inc. 504 16,663 Honeywell International, Inc. 2,430 140,181 IKON Office Solutions, Inc. 458 3,120 ITT Industries, Inc. 270 9,028 Johnson Controls, Inc. 262 14,901 Loews Corp. 326 19,784 Minnesota Mining & Manufacturing Co. 1,232 120,582 Monsanto Co. 1,948 69,398 NACCO Industries, Inc., (Class A) 25 1,389 National Service Industries, Inc. 125 3,688 Textron, Inc. 457 35,046 TRW, Inc. 373 19,373 Tyco International Ltd. 5,184 201,528 -------------- 869,891 -------------- Electronics (9.64%) Advanced Micro Devices, Inc.* 452 13,080 Analog Devices, Inc.* 536 49,848 Applied Materials, Inc.* 1,162 147,211 Emerson Electric Co. 1,334 76,538 General Electric Co. 10,071 1,558,487 Grainger (W.W.), Inc. 287 13,722 Intel Corp. 10,255 844,115 KLA-Tencor Corp.* 276 30,739 LSI Logic Corp.* 457 30,847 Micron Technology, Inc. 828 64,377 Molex, Inc. 481 27,267 Motorola, Inc. 1,870 275,358 National Semiconductor Corp.* 526 22,519 Parker-Hannifin Corp. 344 17,652 PE Corp-PE Biosystems Group 316 38,019 PerkinElmer, Inc. 142 5,920 Rockwell International Corp. 584 27,959 Solectron Corp.* 899 85,517 Tektronix, Inc. 145 5,637 Teradyne, Inc.* 525 34,650 Texas Instruments, Inc. 2,462 238,506 Thomas & Betts Corp. 177 5,642 Xilinx, Inc.* 978 44,468 -------------- 3,658,078 -------------- Finance (3.17%) American Express Co. 1,374 228,427 Associates First Capital Corp. (Class A) 2,235 61,323 Capital One Financial Corp. 605 29,153 Citigroup, Inc. 10,350 575,072 Franklin Resources, Inc. 774 24,816 Golden West Financial Corp. 496 16,616 Household International, Inc. 1,443 53,752 Kansas City Southern Industries, Inc. 339 25,298 MBNA Corp. 2,461 67,062 Price (T. Rowe) Associates, Inc. 367 13,556 Providian Financial Corp. 436 39,703 SLM Holding Corp. 488 20,618 Washington Mutual, Inc. 1,772 46,072 -------------- 1,201,468 -------------- Food (1.42%) Archer-Daniels-Midland Co. 1,867 22,754 Bestfoods 856 44,993 Campbell Soup Co. 1,313 50,797 ConAgra, Inc. 1,511 34,092 General Mills, Inc. 933 33,355 Heinz (H.J.) Co. 1,100 43,794 Hershey Foods Corp. 425 20,187 Kellogg Co. 1,244 38,331 Nabisco Group Holdings Corp. 1,001 10,636 Quaker Oats Co. 411 26,972 Ralston Purina Group 993 27,680 Sara Lee Corp. 2,789 61,532 Unilever NV, American Depositary Receipts (Netherlands) 1,754 95,483 Wrigley (WM) Jr. Co. 355 29,443 -------------- 540,049 -------------- Funeral Services & Related (0.02%) Service Corporation International 835 5,793 -------------- Furniture (0.03%) Leggett & Platt, Inc. 603 12,927 -------------- Household (0.15%) Maytag Corp. 259 12,432 Newell Rubbermaid, Inc. 866 25,114 Springs Industries, Inc. 55 2,197 Tupperware Corp. 177 2,998 Whirlpool Corp. 228 14,834 -------------- 57,575 -------------- Instruments - Scientific (0.03%) Millipore Corp. 139 5,369 Thermo Electron Corp.* 486 7,290 -------------- 12,659 -------------- Insurance (2.93%) Aetna, Inc. 459 25,618 AFLAC, Inc. 817 38,552 Allstate Corp. (The) 2,472 59,328 American General Corp. 759 57,589 American International Group, Inc. 4,752 513,810 Aon Corp. 788 31,520 Chubb Corp. (The) 540 30,409 CIGNA Corp. 571 46,001 Cincinnati Financial Corp. 504 15,718 Conseco, Inc. 1,004 17,946 Hartford Financial Services Group, Inc. (The) 680 32,215 Jefferson Pilot Corp 321 21,908 Lincoln National Corp. 600 24,000 Marsh & McLennan Cos., Inc. 819 78,368 MBIA, Inc. 306 16,161 MGIC Investment Corp. 324 19,501 Progressive Corp. 224 16,380 SAFECO Corp. 399 9,925 St. Paul Cos., Inc. 698 23,514 Torchmark Corp. 404 11,741 UnumProvident Corp. 737 23,630 -------------- 1,113,834 -------------- Internet Services (0.92%) Yahoo! Inc.* 808 349,612 -------------- Leisure (1.14%) Brunswick Corp. 282 6,274 Carnival Corp. (Class A) 1,894 90,557 Disney (Walt) Co., (The) 6,330 185,152 Eastman Kodak Co. 969 64,196 Harrah's Entertainment, Inc.* 395 10,443 Hasbro, Inc. 595 11,342 Hilton Hotels Corp. 1,132 10,895 Marriott International, Inc. (Class A) 764 24,114 Mattel, Inc. 1,292 16,958 Mirage Resorts, Inc.* 593 9,080 Polaroid Corp. 137 2,577 -------------- 431,588 -------------- Machinery (0.41%) Briggs & Stratton Corp. 71 3,807 Caterpillar Tractor, Inc. 1,091 51,345 Cooper Industries, Inc. 289 11,686 Deere & Co. 717 31,100 Dover Corp. 625 28,359 Foster Wheeler Corp. 125 1,109 Ingersoll-Rand Co. 502 27,641 Milacron, Inc. 114 1,753 -------------- 156,800 -------------- Media (2.66%) CBS Corp. 2,340 149,614 Clear Channel Communications, Inc.* 1,039 92,731 Comcast Corp. 2,307 116,648 Dow Jones & Co., Inc. 275 18,700 Gannett Co., Inc. 856 69,817 Harcourt General, Inc. 218 8,774 Knight-Ridder, Inc. 258 15,351 McGraw-Hill Cos., Inc. (The) 602 37,098 Meredith Corp. 158 6,587 New York Times Co. (Class A) 526 25,840 Time Warner, Inc. 3,949 286,056 Times Mirror Co. (Class A) 184 12,328 Tribune Co. 729 40,141 Viacom, Inc. (Class B)* 2,139 129,276 -------------- 1,008,961 -------------- Medical (9.09%) Abbott Laboratories 4,719 171,359 Allergan, Inc. 404 20,099 ALZA Corp.* 313 10,838 American Home Products Corp. 4,008 158,065 Amgen, Inc.* 3,136 188,356 Bard (C.R.), Inc. 157 8,321 Bausch & Lomb, Inc. 177 12,113 Baxter International, Inc. 893 56,092 Becton, Dickinson & Co. 768 20,544 Biomet, Inc. 346 13,840 Boston Scientific Corp.* 1,273 27,847 Bristol-Myers Squibb Co. 6,089 390,838 Cardinal Health, Inc. 860 41,172 Columbia/HCA Healthcare Corp. 1,729 50,681 Guidant Corp. 943 44,321 HEALTHSOUTH Corp.* 1,186 6,375 Humana, Inc.* 514 4,208 Johnson & Johnson 4,268 397,457 Lilly (Eli) & Co. 3,347 222,575 Mallinckrodt, Inc. 214 6,808 Manor Care, Inc.* 316 5,056 McKesson HBOC, Inc. 864 19,494 Medtronic, Inc. 3,669 133,689 Merck & Co., Inc. 7,175 481,173 Pall Corp. 381 8,215 Pfizer, Inc. 11,883 385,455 Pharmacia & Upjohn, Inc. 1,592 71,640 Quintiles Transnational Corp.* 353 6,597 Schering-Plough Corp. 4,509 190,223 St. Jude Medical, Inc. * 258 7,917 Tenet Healthcare Corp.* 956 22,466 United Healthcare Corp. 521 27,678 Warner-Lambert Co. 2,636 215,987 Watson Pharmaceutical, Inc.* 295 10,565 Wellpoint Health Networks, Inc.* 195 12,858 -------------- 3,450,922 -------------- Metal (0.80%) Alcan Aluminium Ltd. (Canada) 673 27,719 Alcoa, Inc. 1,125 93,375 Barrick Gold Corp. (Canada) 1,210 21,402 Bethlehem Steel Corp.* 403 3,375 Freeport-McMoran Copper & Gold, Inc. (Class B) 502 10,605 Homestake Mining Co. 799 6,242 Illinois Tool Works, Inc. 922 62,293 Inco, Ltd. (Canada) 589 13,841 Newmont Mining Corp. 514 12,593 Phelps Dodge Corp. 249 16,714 Placer Dome, Inc. (Canada) 999 10,739 Reynolds Metals Co. 194 14,865 Timken Co. (The) 190 3,883 Worthington Industries, Inc. 274 4,538 -------------- 302,184 -------------- Mortgage Banking (0.81%) Countrywide Credit Industries, Inc. 347 8,762 Fannie Mae 3,146 196,428 Freddie Mac 2,134 100,431 -------------- 305,621 -------------- Office (0.31%) Avery Dennison Corp. 346 25,215 Deluxe Corp. 225 6,173 Pitney Bowes, Inc. 814 39,326 Xerox Corp. 2,039 46,260 -------------- 116,974 -------------- Oil & Gas (5.89%) Amerada Hess Corp. 278 15,776 Anadarko Petroleum Corp. 391 13,343 Apache Corp. 350 12,928 Ashland, Inc. 222 7,312 Atlantic Richfield Co. 991 85,721 Baker Hughes, Inc. 1,011 21,294 Burlington Resources, Inc. 668 22,086 Chevron Corp. 2,014 174,463 Coastal Corp. (The) 656 23,247 Columbia Energy Group 249 15,749 Conoco, Inc. (Class B) 1,922 47,810 El Paso Energy Corp. 701 27,208 Enron Corp. 2,197 97,492 Exxon Mobil Corp. 10,601 854,043 Halliburton Co. 1,356 54,579 Helmerich & Payne, Inc. 152 3,315 Kerr-McGee Corp. 265 16,430 McDermott International, Inc. 183 1,658 Occidental Petroleum Corp. 1,128 24,393 Phillips Petroleum Co. 777 36,519 Rowan Cos., Inc.* 256 5,552 Royal Dutch Petroleum Co. (Netherlands) 6,582 397,800 Schlumberger, Ltd. 1,688 94,950 Sunoco, Inc. 277 6,510 Texaco, Inc. 1,698 92,223 Tosco Corp. 442 12,017 Transocean Sedco Forex, Inc. 326 10,982 Union Pacific Resources Group 774 9,869 Unocal Corp. 744 24,971 USX - Marathon Group 954 23,552 -------------- 2,233,792 -------------- Paper & Paper Products (0.69%) Boise Cascade Corp. 175 7,088 Champion International Corp. 295 18,272 Fort James Corp. 664 18,177 International Paper Co. 1,271 71,732 Kimberly-Clark Corp. 1,671 109,033 Mead Corp. (The) 315 13,683 Potlatch Corp. 89 3,972 Temple-Inland, Inc. 171 11,275 Westvaco Corp. 308 10,049 -------------- 263,281 -------------- Pollution Control (0.10%) Browning-Ferris Industries, Inc. 580 5,111 Waste Management, Inc. 1,902 32,691 -------------- 37,802 -------------- Printing - Commercial (0.03%) Donnelley (R.R.) & Sons 388 9,627 -------------- Retail (7.34%) Albertson's, Inc. 1,300 41,925 AutoZone, Inc.* 443 14,314 Bed Bath & Beyond, Inc.* 429 14,908 Best Buy Co., Inc.* 630 31,618 Circuit City Stores-Circuit City Group 624 28,119 Consolidated Stores Corp.* 340 5,525 Costco Wholesale Corp. 681 62,141 CVS Corp. 1,203 48,045 Darden Restaurants, Inc. 403 7,304 Dayton Hudson Corp. 1,353 99,361 Dillards, Inc. 329 6,642 Dollar General Corp. 816 18,564 Federated Department Stores, Inc.* 644 32,562 Gap, Inc. (The) 2,628 120,888 Genuine Parts Co. 546 13,548 Great Atlantic & Pacific Tea Co., Inc. 118 3,289 Home Depot, Inc. (The) 7,068 484,600 Kmart Corp.* 1,515 15,245 Kohl's Corp.* 500 36,094 Kroger Co.* 2,554 48,207 Limited, Inc. (The) 659 28,543 Longs Drug Stores Corp. 121 3,123 Lowe's Cos., Inc. 1,173 70,087 May Department Stores 1,026 33,089 McDonald's Corp. 4,156 167,539 Nordstrom, Inc. 425 11,130 Office Depot, Inc.* 1,010 11,047 Penney (J. C.) Co., Inc. 799 15,930 Pep Boys - Manny, Moe & Jack (The) 162 1,478 Reebok International Ltd.* 173 1,416 Rite Aid Corp. 795 8,894 Safeway, Inc.* 1,562 55,549 Sears, Roebuck & Co. 1,160 35,308 Staples, Inc.* 1,426 29,590 SUPERVALU, INC. 429 8,580 SYSCO Corp. 1,011 39,998 Tandy Corp. 593 29,168 TJX Cos., Inc. 952 19,457 Toys "R" Us, Inc.* 751 10,749 Tricon Global Restaurants, Inc.* 471 18,192 Walgreen Co. 3,080 90,090 Wal-Mart Stores, Inc. 13,660 944,248 Wendy's International, Inc. 367 7,569 Winn-Dixie Stores, Inc. 456 10,916 -------------- 2,784,589 -------------- Rubber - Tires & Misc. (0.05%) Cooper Tire & Rubber Co. 233 3,626 Goodyear Tire & Rubber Co. (The) 480 13,530 -------------- 17,156 -------------- Shoes & Related Apparel (0.11%) Nike, Inc. (Class B) 860 42,624 -------------- Soap & Cleaning Preparations (1.61%) Clorox Co. 726 36,572 Colgate-Palmolive Co. 1,788 116,220 Ecolab, Inc. 398 15,572 Procter & Gamble Co. (The) 4,034 441,975 -------------- 610,339 -------------- Steel (0.08%) Allegheny Teledyne, Inc. 287 6,440 Nucor Corp. 268 14,690 USX-U.S. Steel Group, Inc. 271 8,943 -------------- 30,073 -------------- Telecommunications (10.20%) ADC Telecommunications, Inc.* 459 33,306 Andrew Corp.* 252 4,772 AT&T Corp. 9,808 497,756 Bell Atlantic Corp. 4,766 293,407 CenturyTel, Inc. 429 20,324 Comverse Technology, Inc.* 219 31,700 Corning, Inc. 751 96,832 General Instrument Corp.* 534 45,390 Global Crossing Ltd.* (Bermuda) 2,329 116,450 Lucent Technologies, Inc. 9,617 719,472 MCI WorldCom, Inc.* 8,712 462,281 MediaOne Group, Inc.* 1,879 144,331 Nextel Communications, Inc. (Class A)* 1,116 115,088 Nortel Networks Corp. (Canada) 4,100 414,100 QUALCOMM, Inc.* 2,024 356,477 Scientific-Atlanta, Inc. 241 13,406 Sprint Corp. 2,675 180,061 Sprint PCS* 1,323 135,608 Tellabs, Inc.* 1,235 79,272 U.S. WEST, Inc. 1,551 111,672 -------------- 3,871,705 -------------- Textile (0.05%) Liz Claiborne, Inc. 181 6,810 Russell Corp. 103 1,725 VF Corp. 363 10,890 -------------- 19,425 -------------- Tobacco (0.48%) Philip Morris Cos., Inc. 7,263 168,411 UST, Inc. 525 13,223 -------------- 181,634 -------------- Transportation (0.64%) AMR Corp.* 455 30,485 Burlington Northern Santa Fe Corp. 1,403 34,023 CSX Corp. 670 21,021 Delta Air Lines, Inc. 408 20,323 FDX Corp.* 916 37,499 Navistar International Corp.* 195 9,238 Norfolk Southern Corp. 1,168 23,944 Southwest Airlines Co. 1,548 25,058 Union Pacific Corp. 763 33,286 US Airways Group, Inc.* 219 7,022 -------------- 241,899 -------------- Utilities (4.66%) AES Corp. 634 47,391 ALLTEL Corp. 964 79,711 Ameren Corp. 421 13,788 American Electric Power Co., Inc. 596 19,147 BellSouth Corp. 5,778 270,483 Carolina Power & Light Co. 490 14,914 Central & South West Corp. 653 13,060 Cinergy Corp. 488 11,773 CMS Energy Corp. 355 11,072 Consolidated Edison, Inc. 678 23,391 Consolidated Natural Gas Co. 294 19,092 Constellation Energy Group, Inc. 459 13,311 Dominion Resources, Inc. 586 23,000 DTE Energy Co. 445 13,962 Duke Energy Corp. 1,122 56,240 Eastern Enterprises 83 4,767 Edison International 1,066 27,916 Entergy Corp. 758 19,518 FirstEnergy Corp.* 715 16,222 Florida Progress Corp. 301 12,736 FPL Group, Inc. 550 23,547 GPU, Inc. 379 11,346 GTE Corp. 2,983 210,488 New Century Energies, Inc. 355 10,783 Niagara Mohawk Power Corp.* 575 8,014 NICOR, Inc. 144 4,680 Northern States Power Co. 475 9,263 ONEOK, Inc. 97 2,437 PECO Energy Co. 570 19,808 People's Energy Corp. 109 3,652 PG&E Corp. 1,179 24,170 Pinnacle West Capital Corp. 260 7,946 PP&L Resources, Inc. 441 10,088 Public Service Enterprise Group, Inc. 671 23,359 Reliant Energy, Inc. 908 20,771 SBC Communications, Inc. 10,472 510,510 Sempra Energy 738 12,823 Southern Co. 2,066 48,551 Texas Utilities Co. 848 30,157 Unicom Corp. 668 22,378 Williams Cos., Inc. (The) 1,334 40,770 -------------- 1,767,035 -------------- TOTAL COMMON STOCKS (Cost $26,691,135) (99.60%) 37,800,781 ------------ -------------- INTEREST PAR VALUE MARKET ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE - ------------------- -------- ------------ -------------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (0.38%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99, due 01-03-00 (Secured by U.S. Treasury Notes, 4.000% due 10-31-00 and U.S. Treasury Bond, 7.625% due 11-15-22) - Note B 2.49% $145 $145,000 -------------- TOTAL SHORT-TERM INVESTMENTS (0.38%) 145,000 ------- -------------- TOTAL INVESTMENTS (99.98%) 37,945,781 ------- -------------- OTHER ASSETS AND LIABILITIES, NET (0.02%) 7,435 ------- -------------- TOTAL NET ASSETS (100.00%) $37,953,216 ======= ============== * Non-income producing security. Parenthetical disclosure of a foreign country in the security description represents country of foreign issuer; however, security is U.S. dollar denominated. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. International Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. International Fund on December 31, 1999. It's divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by country. Short-term investments, which represent the Fund's "cash" position, are listed last. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Australia (2.05%) Capral Aluminium, Ltd. (Metal) 9,459 $12,171 National Australia Bank, Ltd. (Banks - Foreign) 1,416 21,660 National Foods, Ltd. (Food) 5,892 10,367 News Corp., Ltd. (The), American Depositary Receipt (ADR) (Media) 2,177 83,270 Qantas Airways, Ltd. (Airlines) 5,712 14,250 Telstra Corp., Ltd. (Telecommunications) 5,008 27,223 WMC, Ltd. (Metal) 4,196 23,139 -------------- 192,080 -------------- Belgium (0.00%) Fortis (B) (Diversified Financial Services) 378 4 -------------- Canada (5.14%) Barrick Gold Corp. (Mining) 2,950 52,178 Bombardier, Inc. (Diversified Operations) 10,034 206,102 Nortel Networks Corp. (Telecommunications) 1,192 120,439 Petro-Canada (Oil & Gas) 7,326 103,787 -------------- 482,506 -------------- China (0.20%) Yanzhou Coal Mining Co., Ltd. (Metal) 69,000 19,084 -------------- 19,084 -------------- Finland (3.00%) Merita Plc (Banks - Foreign)* 3,342 19,661 Nokia AB (Telecommunications) 1,441 261,286 -------------- 280,947 -------------- France (10.07%) Alcatel SA (Telecommunications) 549 126,092 Axa SA (Insurance) 269 37,503 Bouygues SA (Building) 159 101,066 Carrefour SA (Retail) 704 129,850 France Telecom SA (Telecommunications) 499 66,000 Legrand SA (Electronics) 65 15,472 L'Oreal SA (Cosmetics & Personal Care) 29 23,268 Pinault-Printemps-Redoute SA (Retail) 170 44,867 PSA Peugeot Citroen SA (Automobile/Trucks) 183 41,551 Schneider Electric SA (Machinery) 274 21,515 Suez Lyonnaise des Eaux SA (Diversified Operations) 416 66,672 Total Fina SA-B (Oil & Gas) 1,237 165,107 Valeo SA (Automobile/Trucks) 266 20,525 Vivendi SA (Diversified Operations) 941 84,981 -------------- 944,469 -------------- Germany (6.68%) Allianz AG (Insurance) 323 108,512 Bayerische Hypo- und Vereinsbank AG (Banks - Foreign) 832 56,824 Bayerische Motoren Werke (BMW) AG (Automobile/Trucks) 691 21,091 DaimlerChrysler AG (Automobile/Trucks) 665 51,715 Deutsche Telekom AG (Telecommunications) 636 45,296 Fresenius AG (Medical) 133 19,427 Mannesmann AG (Machinery) 743 179,256 SAP AG (Computers) 80 39,408 Siemens AG (Diversified Operations) 636 80,917 VEBA AG (Diversified Operations) 493 23,962 -------------- 626,408 -------------- Hong Kong (2.23%) Aeon Credit Service Co., Ltd. (Finance) 34,000 13,996 Cable & Wireless HKT, Ltd. (Telecommunications) 7,126 20,580 Cheung Kong Holdings, Ltd. (Real Estate Operations) 4,000 50,685 China Resources Enterprises, Ltd. (Real Estate Operations) 16,000 25,626 Guoco Group, Ltd. (Finance) 7,000 21,342 HSBC Holdings Plc (Banks - Foreign) 2,981 41,800 JCG Holdings, Ltd. (Diversified Financial Services) 40,000 22,512 Shandong International Power Development Co. Ltd. (Electric-Generation)* 90,000 12,736 -------------- 209,277 -------------- Indonesia (0.18%) PT Bank Internasional Indonesia (Banks - Foreign) 712,500 15,295 PT Bank Negara Indonesia (Banks - Foreign) 28,000 1,202 -------------- 16,497 -------------- Ireland (1.65%) Allied Irish Banks Plc (ADR) (Banks - Foreign) 3,774 79,726 CRH Plc (Building) 3,452 74,590 -------------- 154,316 -------------- Italy (2.25%) Assicurazioni Generali SpA (Insurance) 897 29,638 ENI SpA (Oil & Gas) 3,500 19,250 Telecom Italia Mobile SpA (Telecommunications) 11,593 129,511 Telecom Italia SpA (Telecommunications) 1,727 24,356 UniCredito Italiano SpA (Banks - Foreign) 1,571 7,723 -------------- 210,478 -------------- Japan (27.32%) AIFUL Corp. (Finance) 200 24,469 Bank of Tokyo-Mitsubishi, Ltd. (Banks - Foreign) 10,000 139,376 Daiwa House Industry Co., Ltd. (Building) 3,000 22,316 Denso Corp. (Automobile/Trucks) 2,000 47,764 Fuji Heavy Industries, Ltd. (Automobile/Trucks) 4,000 27,405 Fujitsu, Ltd. (Computers) 4,000 182,441 Fujitsu Systems Construction, Ltd. (Engineering/R&D Services) 4,000 66,556 Ito-Yokado Co., Ltd. (Retail) 1,000 108,642 Marubeni Corp. (Distribution-Wholesale) 29,000 121,768 NEC Corp. (Electronics) 6,000 142,997 Nikko Securities Co., Ltd. (The) (Broker Services) 17,000 215,141 Nintendo Co. Ltd. (Toys) 300 49,858 Nippon Telegraph & Telephone Corp. (Telecommunications) 10 171,283 Nomura Securities Co., Ltd. (Broker Services) 7,000 126,407 NTT Mobile Communication Network, Inc. (Telecommunications) 5 192,327 Orix Corp. (Leasing Companies) 500 112,655 Sakura Bank, Ltd. (The) (Banks - Foreign) 7,000 40,560 Sekisui House, Ltd. (Building) 4,000 35,431 Sony Corp. (Electronics) 1,600 474,503 Takeda Chemical Industries, Ltd. (Medical) 3,000 148,282 Takefuji Corp. (Finance) 500 62,592 Toyota Motor Corp. (Automobile/Trucks) 1,000 48,449 -------------- 2,561,222 -------------- Mexico (1.05%) Grupo Televisa SA, Global Depositary Receipt (GDR) (Media)* 399 27,232 Telefonos de Mexico SA (ADR) (Telecommunications) 630 70,875 -------------- 98,107 -------------- Netherlands (4.55%) AEGON NV (Insurance) 533 51,490 Akzo Nobel NV (Chemicals) 1,064 53,377 Dordtsche Petroleum-Industrie Maatschappij NV (Diversified Operations) 2,079 107,437 Fortis (NL) NV (Diversified Financial Services) 1,602 57,692 ING Groep NV (Banks - Foreign) 1,050 63,400 Koninklijke Numico NV (Food) 411 15,335 Randstad Holding NV (Business Services - Human Resources) 353 16,997 VNU NV (Publishing-Newspapers) 488 25,651 Wolters Kluwer NV (Publishing-Periodicals) 1,027 34,761 -------------- 426,140 -------------- Norway (0.22%) Tomra Systems ASA (Recycling)* 1,238 21,026 -------------- South Korea (2.01%) Hanvit Bank (Banks - Foreign) 2,500 8,454 Kookmin Bank (Banks - Foreign) 690 10,816 Korea Telecom Corp. (Telecommunications) 400 63,056 Samsung Electronics Co. (Electronics) 400 93,703 Shinhan Bank (Banks - Foreign) 1,120 12,132 -------------- 188,161 -------------- Spain (2.81%) Banco Santander Central Hispano, SA (Banks - Foreign) 5,224 59,149 Centros Comerciales Pryca, SA (Retail) 867 13,625 Endesa SA (Utilities) 1,823 36,195 Telefonica SA (Telecommunications)* 6,178 154,340 -------------- 263,309 -------------- Sweden (1.08%) Ericsson (LM) Telefonaktiebolaget (Telecommunications) 786 50,528 Skandia Forsakrings AB (Insurance) 1,691 51,074 -------------- 101,602 -------------- Switzerland (4.46%) Adecco SA (Business Services - Misc.) 114 88,777 Credit Suisse Group (Banks - Foreign) 91 18,088 Nestle SA (Food) 38 69,614 Novartis AG (Medical) 70 102,782 Roche Holding AG (Medical) 6 71,218 Zurich Allied AG (Insurance) 119 67,859 -------------- 418,338 -------------- Taiwan (1.29%) China Steel Corp. (GDR) (Steel) 1,423 21,309 Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) (Electronics)* 2,217 99,765 -------------- 121,074 -------------- Thailand (0.28%) Golden Land Property Development Pcl (Real Estate Operations)* 60,000 21,904 Land & Houses Public Co., Ltd (Real Estate Development) 4,900 4,651 -------------- 26,555 -------------- United Kingdom (14.34%) Bank of Scotland (Banks - Foreign)* 2,992 34,749 Barclay's Plc (Banks - Foreign) 2,146 61,668 BP Amoco Plc (Oil & Gas) 19,959 201,473 British Telecommunications Plc (Telecommunications) 6,771 164,058 Cadbury Schweppes Plc (Food) 4,336 26,125 Carlton Communications Plc (Television) 6,963 67,821 Compass Group Plc (Food) 3,737 51,309 Dixons Group Plc (Retail) 1,921 46,235 Glaxo Wellcome Plc (Medical) 2,703 76,582 Invensys Plc (Diversified Operations) 7,200 38,067 Kingfisher Plc (Retail) 5,675 62,976 Lloyds TSB Group Plc (Banks - Foreign) 9,507 118,093 Misys Plc (Computers) 1,835 28,485 Pearson Plc (Media) 1,619 52,696 SEMA Group Plc (Computers) 1,309 23,470 SmithKline Beecham Plc (Medical) 8,203 104,015 Smiths Industries Plc (Manufacturing) 2,444 36,517 Unilever Plc (Food) 8,660 63,648 Vodafone Group Plc (Telecommunications) 17,269 86,080 -------------- 1,344,067 -------------- TOTAL COMMON STOCKS (Cost $6,322,532) (92.86%) 8,705,667 -------------- -------------- INTEREST PAR VALUE RATE (000s OMITTED) -------- -------------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (5.09%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99, due 01-03-00 (Secured by U.S. Treasury Notes, 4.000%, due 10-31-00 and U.S. Treasury Bond, 7.625%, due 11-15-22) - Note B 2.49% $477 477,000 -------------- Cash Equivalents (3.57%) Navigator Securities Lending Prime Portfolio** 335 334,763 -------------- TOTAL SHORT-TERM INVESTMENTS (8.66%) 811,763 ------- -------------- TOTAL INVESTMENTS (101.52%) 9,517,430 ------- -------------- OTHER ASSETS AND LIABILITIES, NET (1.52%) (142,817) ------- -------------- TOTAL NET ASSETS (100.00%) $9,374,613 ======= ============== * Non-income producing security. ** Represents investment of security lending collateral - Note B. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.
Industry Diversification (Unaudited) - ------------------------------------------------------------------- The Fund primarily invests in securities issued by companies of other countries. The performance of the Fund is closely tied to the economic conditions within the countries in which it invests. The concentration of investments by country for individual securities held by the Fund is shown in the schedule of investments. In addition, the concentration of investments can be aggregated by various industry groups. The table below shows the percentages of the Fund's investments at December 31, 1999 assigned to the various investment categories. MARKET VALUE AS A % INVESTMENT CATEGORIES OF FUND NET ASSETS - --------------------- ------------------ Airlines 0.15% Automobile/Trucks 2.75 Banks - Foreign 8.64 Broker Services 3.64 Building 2.49 Business Services - Human Resources 0.95 Business Services - Misc. 0.18 Chemicals 0.57 Computers 2.92 Cosmetics & Personal Care 0.25 Distribution - Wholesale 1.30 Diversified Financial Services 0.86 Diversified Operations 6.49 Electric - Generation 0.14 Electronics 8.82 Engineering/R&D Services 0.71 Finance 1.31 Food 2.52 Insurance 3.69 Leasing Companies 1.20 Machinery 2.14 Manufacturing 0.39 Media 1.74 Medical 5.57 Metal 0.58 Mining 0.56 Oil & Gas 5.22 Publishing - Newspapers 0.27 Publishing - Periodicals 0.37 Real Estate Development 0.05 Real Estate Operations 1.05 Recycling 0.22 Retail 4.33 Steel 0.23 Telecommunications 18.92 Television 0.72 Toys 0.53 Utilities 0.39 Short-Term Investments 8.66 ------ TOTAL INVESTMENTS 101.52% ====== See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Large Cap Growth Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Large Cap Growth Fund on December 31, 1999. It's divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry groups. Short-term investments, which represent the Fund's "cash" position, are listed last. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Advertising (1.85%) Interpublic Group of Companies, Inc. (The) 7,000 $403,813 -------------- Business Services - Misc. (1.21%) Cendant Corp.* 10,000 265,625 -------------- Computers (24.36%) America Online, Inc.* 6,200 467,713 BMC Software, Inc.* 7,500 599,531 Cisco Systems, Inc.* 7,100 760,588 Computer Associates International, Inc. 9,000 629,438 EMC Corp.* 4,000 437,000 Gateway, Inc.* 3,000 216,187 Hewlett-Packard Co. 1,500 170,906 International Business Machines Corp. 7,000 756,000 Microsoft Corp.* 8,500 992,375 Parametric Technology Corp.* 11,000 297,687 -------------- 5,327,425 -------------- Cosmetics & Personal Care (1.33%) Dial Corp. (The) 12,000 291,750 -------------- Diversified Operations (4.51%) Honeywell International, Inc. 9,000 519,188 Tyco International Ltd. 12,000 466,500 -------------- 985,688 -------------- Electronics (12.84%) Applied Materials, Inc.* 5,500 696,781 General Electric Co. 5,000 773,750 Intel Corp. 8,500 699,656 Motorola, Inc. 2,400 353,400 Solectron Corp.* 3,000 285,375 -------------- 2,808,962 -------------- Finance (3.35%) Citigroup, Inc. 5,850 325,041 MBNA Corp. 15,000 408,750 -------------- 733,791 -------------- Food (1.53%) Ralston Purina Group 12,000 334,500 -------------- Insurance (2.43%) American General Corp. 7,000 531,125 -------------- Leisure (1.92%) Royal Caribbean Cruises Ltd. 8,500 419,156 -------------- Media (8.32%) AMFM, Inc.* 8,000 626,000 AT&T Corp. - Liberty Media Group* 8,000 454,000 Cablevision Systems Corp. (Class A)* 5,000 377,500 Infinity Broadcasting Corp. (Class A)* 10,000 361,875 -------------- 1,819,375 -------------- Medical (4.02%) Johnson & Johnson 3,000 $279,375 Merck & Co., Inc. 4,000 268,250 Schering-Plough Corp. 3,000 126,562 Warner-Lambert Co. 2,500 204,844 -------------- 879,031 -------------- Office (2.21%) Pitney Bowes, Inc. 10,000 483,125 -------------- Retail (14.10%) Amazon.com, Inc.* 3,000 228,375 Best Buy Co., Inc.* 8,000 401,500 CVS Corp. 10,000 399,375 Home Depot, Inc. (The) 6,750 462,797 Kroger Co.* 25,000 471,875 McDonald's Corp. 6,000 241,875 Safeway, Inc.* 15,000 533,437 Staples, Inc.* 10,000 207,500 Wal-Mart Stores, Inc. 2,000 138,250 -------------- 3,084,984 -------------- Soap & Cleaning Preparations (2.15%) Procter & Gamble Co. (The) 4,300 471,119 -------------- Telecommunications (13.12%) ANTEC Corp.* 10,000 365,000 Bell Atlantic Corp. 7,500 461,719 Corning, Inc. 3,000 386,812 Lucent Technologies, Inc. 8,000 598,500 MCI WorldCom, Inc.* 3,000 159,188 Sprint Corp. (PCS Group)* 5,000 512,500 Tellabs, Inc.* 6,000 385,125 -------------- 2,868,844 -------------- TOTAL COMMON STOCKS (Cost $17,686,521) (99.25%) 21,708,313 -------------- -------------- INTEREST PAR VALUE MARKET ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE - ------------------- -------- -------------- -------------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (1.31%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond 10.625% due 08-15-15 and U.S. Treasury Notes 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.49% $286 $286,000 -------------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 691 -------------- TOTAL SHORT-TERM INVESTMENTS (1.31%) 286,691 ------- -------------- TOTAL INVESTMENTS (100.56%) 21,995,004 ------- -------------- OTHER ASSETS AND LIABILITIES, NET (0.56%) (123,072) ------- -------------- TOTAL NET ASSETS (100.00%) $21,871,932 ======= ============== * Non-income producing security. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Mid Cap Growth Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Mid Cap Growth Fund on December 31, 1999. It's divided into three main categories: common stocks, rights and short-term investments. Common stocks and rights are further broken down by industry groups. Short-term investments, which represent the Fund's "cash" position, are listed last. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Advertising (2.31%) DoubleClick, Inc.* 290 $73,388 Interpublic Group of Cos., Inc. (The) 580 33,459 Omnicom Group, Inc. 400 40,000 -------------- 146,847 -------------- Banks - United States (1.80%) Comerica, Inc. 340 15,874 First Security Corp. 700 17,872 First Tennessee National Corp. 610 17,385 Northern Trust Corp. 1,200 63,600 -------------- 114,731 -------------- Chemicals (0.46%) Rohm & Haas Co. 720 29,295 -------------- Computers (20.23%) Active Software, Inc.* 320 29,440 Akamai Technologies, Inc.* 70 22,934 BMC Software, Inc.* 460 36,771 Cambridge Technology Partners, Inc.* 750 19,687 CMGI, Inc.* 415 114,903 Computer Sciences Corp.* 580 54,882 DST Systems, Inc.* 420 32,051 Edwards (J.D.) & Co.* 1,720 51,385 Electronics for Imaging, Inc.* 510 29,644 EMC Corp.* 320 34,960 Exodus Communications, Inc.* 690 61,281 Fiserv, Inc.* 1,315 50,381 Foundry Networks, Inc.* 85 25,643 FreeMarkets, Inc.* 25 8,533 Gateway, Inc.* 520 37,473 i2 Technologies, Inc.* 590 115,050 Informix Corp.* 1,100 12,581 Lexmark International Group, Inc. (Class A)* 680 61,540 Media Metrix, Inc.* 690 24,667 Mercury Interactive Corp.* 240 25,905 Network Appliance, Inc.* 540 44,854 OpenTV Corp.* 50 4,013 Parametric Technology Corp.* 1,690 45,736 PSINet, Inc.* 450 27,788 RealNetworks, Inc.* 100 12,031 Rhythms NetConnections, Inc.* 550 17,050 S1 Corp.* 760 59,375 Unisys Corp.* 1,155 36,888 VA Linux Systems, Inc.* 50 10,331 VERITAS Software Corp.* 485 69,416 VerticalNet, Inc.* 440 72,160 Viant Corp.* 100 9,900 Whittman-Hart, Inc.* 370 19,841 Williams Communications Group, Inc.* 270 7,813 -------------- 1,286,907 -------------- Cosmetics & Personal Care (1.05%) Dial Corp. (The) 1,640 39,873 Estee Lauder Cos., Inc. (The) (Class A) 540 27,236 -------------- 67,109 -------------- Diversified Operations (0.77%) Mitsubishi Corp., American Depositary Receipts (ADR) (Japan) 3,172 48,902 -------------- Electronics (16.76%) Altera Corp.* 785 38,907 Amphenol Corp. (Class A)* 520 34,612 Analog Devices, Inc.* 440 40,920 Applied Materials, Inc.* 255 32,305 ASM Lithography Holding N.V. (Netherlands)* 470 53,463 Atmel Corp.* 1,320 39,022 Broadcom Corp. (Class A)* 210 57,199 Conexant Systems, Inc.* 830 55,091 Flextronics International Ltd.* 740 34,040 Jabil Circuit, Inc.* 740 54,020 KLA-Tencor Corp.* 450 50,119 Linear Technology Corp. 640 45,800 Maxim Integrated Products, Inc.* 1,080 50,963 Novellus Systems, Inc.* 275 33,696 Oak Industries, Inc.* 920 97,635 Sanmina Corp.* 325 32,459 Solectron Corp.* 320 30,440 STMicroelectronics N.V. (Netherlands) 390 59,061 Teradyne, Inc.* 950 62,700 Vitesse Semiconductor Corp.* 860 45,096 Waters Corp.* 1,280 67,840 Xilinx, Inc.* 1,120 50,925 -------------- 1,066,313 -------------- Fiber Optics (0.31%) Sycamore Networks, Inc.* 65 20,020 -------------- Finance (1.46%) Capital One Financial Corp. 510 24,576 Concord EFS, Inc.* 1,470 37,853 NextCard, Inc.* 450 12,994 Providian Financial Corp. 190 17,302 -------------- 92,725 -------------- Insurance (2.49%) Ace, Ltd. (Bermuda) 1,625 27,117 AFLAC, Inc. 470 22,178 Lincoln National Corp. 350 14,000 MBIA, Inc. 350 18,484 Protective Life Corp. 500 15,906 Reinsurance Group of America, Inc. 1,332 36,963 ReliaStar Financial Corp. 610 23,904 -------------- 158,552 -------------- Linen Supply & Related (0.35%) Cintas Corp. 420 22,312 -------------- Machinery (0.43%) SPX Corp.* 340 27,476 -------------- Media (9.66%) Adelphia Communications Corp. (Class A)* 480 31,500 AMFM, Inc.* 590 46,167 Charter Communications, Inc. (Class A)* 600 13,125 Cox Radio, Inc. (Class A)* 660 65,835 Cumulus Media, Inc. (Class A)* 610 30,957 Emmis Communications Corp. (Class A)* 260 32,407 Entercom Communications Corp.* 935 61,710 Hispanic Broadcasting Corp.* 390 35,965 Infinity Broadcasting Corp. (Class A)* 1,521 55,041 Insight Communications Co., Inc.* 630 18,664 Radio One, Inc.* 770 70,840 Spanish Broadcasting System, Inc. (Class A)* 1,050 42,263 Telewest Communications Plc (ADR) (United Kingdom)* 844 46,631 Univision Communications, Inc. (Class A)* 290 29,634 Wink Communications, Inc.* 560 33,635 -------------- 614,374 -------------- Medical (3.44%) Allergan, Inc. 480 23,880 Biogen, Inc.* 580 49,010 Express Scripts, Inc. (Class A)* 405 25,920 Forest Laboratories, Inc.* 360 22,118 Genzyme Corp.* 445 20,025 Health Management Associates, Inc. (Class A)* 1,800 24,075 Immunex Corp.* 270 29,565 Wellpoint Health Networks, Inc.* 370 24,397 -------------- 218,990 -------------- Office (0.47%) Avery Dennison Corp. 410 29,879 -------------- Oil & Gas (1.55%) Apache Corp. 480 17,730 BJ Services Co.* 610 25,506 Burlington Resources, Inc. 320 10,580 Cooper Cameron Corp.* 280 13,702 Noble Affiliates, Inc. 420 9,004 R&B Falcon Corp.* 1,670 22,128 -------------- 98,650 -------------- Paper & Paper Products (1.14%) Bowater, Inc. 500 27,156 Fort James Corp. 1,660 45,442 -------------- 72,598 -------------- Retail (3.47%) Amazon.com, Inc.* 280 21,315 Best Buy Co., Inc.* 570 28,607 Circuit City Stores-Circuit City Group 1,225 55,202 Kohl's Corp.* 300 21,656 SYSCO Corp. 440 17,408 Tandy Corp. 1,400 68,863 TJX Cos., Inc. 370 7,562 -------------- 220,613 -------------- Steel (0.56%) Nucor Corp. 650 35,628 -------------- Telecommunications (21.30%) Adelphia Business Solutions, Inc.* 450 21,600 Allegiance Telecom, Inc.* 630 58,117 American Tower Corp. (Class A)* 960 29,340 ANTEC Corp.* 2,080 75,920 COLT Telecom Group Plc (ADR) (United Kingdom)* 360 73,440 Comverse Technology, Inc.* 540 78,165 Crown Castle International Corp.* 1,100 35,337 Global Crossing Ltd. (Bermuda)* 1,863 93,150 Global TeleSystems Group, Inc.* 1,180 40,857 i-CABLE Communications Ltd. (ADR) (Hong Kong)* 1,250 31,328 ICG Communications, Inc.* 1,025 19,219 Intermedia Communications, Inc.* 560 21,735 Jazztel Plc (ADR) (United Kingdom)* 24 1,563 McLeodUSA Inc. (Class A)* 1,660 97,732 Metromedia Fiber Network, Inc. (Class A)* 710 34,036 Nextel Communications, Inc. (Class A)* 660 68,063 NEXTLINK Communications, Inc. (Class A)* 930 77,248 NTL, Inc.* 250 31,187 Omnipoint Corp.* 970 117,006 QUALCOMM, Inc.* 400 70,450 RCN Corp.* 520 25,220 Scientific-Atlanta, Inc. 370 20,581 TALK.com, Inc.* 1,470 26,093 TeleCorp PCS, Inc.* 100 3,800 Teligent, Inc. (Class A)* 170 10,498 Time Warner Telecom, Inc. (Class A)* 300 14,981 Tritel, Inc.* 230 7,288 UnitedGlobalCom, Inc. (Class A)* 880 62,150 Versatel Telecom International N.V. (ADR) (Netherlands)* 700 24,456 VoiceStream Wireless Corp.* 380 54,079 WinStar Communications, Inc.* 410 30,853 -------------- 1,355,492 -------------- Utilities (0.38%) Montana Power Co. 670 24,162 -------------- TOTAL COMMON STOCKS (Cost $3,914,727) (90.39%) 5,751,575 -------------- -------------- RIGHTS Telecommunications (0.00%) TALK.com, Inc.* 33 -- -------------- TOTAL RIGHTS (Cost $0) (0.00%) -- -------------- -------------- TOTAL COMMON STOCKS AND RIGHTS (Cost $3,914,727) (90.39%) 5,751,575 -------------- -------------- INTEREST PAR VALUE MARKET ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE - ------------------- -------- -------------- -------------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (9.75%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond, 10.625% due 08-15-15 and U.S. Treasury Notes 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.49% $620 $620,000 -------------- Corporate Savings Account (0.01%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 832 -------------- TOTAL SHORT-TERM INVESTMENTS (9.76%) 620,832 ------- -------------- TOTAL INVESTMENTS (100.15%) 6,372,407 ------- -------------- OTHER ASSETS AND LIABILITIES, NET (0.15%) (9,607) ------- -------------- TOTAL NET ASSETS (100.00%) $6,362,800 ======= ============== * Non-income producing security. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.
Portfolio Concentration December 31, 1999 (Unaudited) - ----------------------------------------------------------------------- The V.A. Mid Cap Growth Fund invests primarily in common stocks of U.S. and foreign issuers. The performance of the Fund is closely tied to the economic and financial conditions within the countries in which it invests. The concentration of investments by industry category for individual securities held by the Fund is shown in the schedule of investments. In addition, concentration of investments can be aggregated by various countries. The table below shows the percentages of the Fund's investments at December 31, 1999 assigned to country categories. MARKET VALUE AS A % COUNTRY DIVERSIFICATION OF FUND NET ASSETS - ----------------------- ------------------ Bermuda 1.89% Hong Kong 0.49 Japan 0.77 Netherlands 2.15 United Kingdom 1.91 ------ TOTAL INVESTMENTS 100.15% ====== See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Regional Bank Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Regional Bank Fund on December 31, 1999. It's divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry groups. Short-term investments, which represent the Fund's "cash" position, are listed last. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Superregional Banks (3.78%) Mellon Financial Corp. (PA) 6,000 $204,375 PNC Bank Corp. (PA) 5,000 222,500 U.S. Bancorp (MN) 10,000 238,125 Wells Fargo Co. (CA) 2,500 101,094 -------------- 766,094 -------------- Banks - United States (88.26%) BancFirst Corp. (OK) 9,400 319,012 BancorpSouth, Inc. (MS) 12,450 203,091 BancWest Corp. (HI) 33,300 649,350 Bank of the Ozarks, Inc. (AR) 15,350 299,325 Cascade Bancorp (OR) 35,260 440,750 CCB Financial Corp. (NC) 7,700 335,431 Centennial Bancorp.* (OR) 25,375 272,781 Centura Banks, Inc. (NC) 8,325 367,341 Chittenden Corp. (VT) 11,000 325,875 Citizens Banking Corp. (MI) 14,621 327,145 City National Corp. (CA) 16,200 533,588 Colonial BancGroup, Inc. (AL) 15,000 155,625 Columbia Bancorp. (OR) 13,500 96,187 Comerica, Inc. (MI) 13,400 625,612 Commerce Bancshares, Inc. (MO) 22,762 771,063 Community First Bankshares, Inc. (ND) 11,450 180,337 Compass Bancshares, Inc. (AL) 8,000 178,500 Cullen/Frost Bankers., Inc. (TX) 27,150 699,112 Eldorado Bancshares, Inc.* (CA) 37,000 397,750 Fifth Third Bancorp (OH) 6,895 505,921 Financial Institutions, Inc.* (NY) 34,750 421,344 First Security Corp. (UT) 11,000 280,844 First Tennessee National Corp. (TN) 15,000 427,500 First Virginia Banks, Inc. (VA) 2,750 118,250 FirstMerit Corp. (OH) 25,300 581,900 Independent Bank Corp. (MI) 21,750 318,094 Lamar Capital Corp. (MS) 21,000 233,625 M & T Bank Corp. (NY) 1,800 745,650 Marshall & Ilsley Corp. (WI) 4,000 251,250 Mercantile Bankshares Corp. (MD) 14,000 447,125 Mid-State Bancshares (CA) 25,000 796,875 Mississippi Valley Bancshares, Inc. (MO) 9,850 265,950 National Commerce Bancorp. (TN) 18,000 408,375 North Fork Bancorp., Inc. (NY) 8,750 153,125 Northrim Bank (AK) 15,900 158,006 Pacific Capital Bancorp. (CA) 15,000 461,250 Prosperity Banchares, Inc. (TX) 26,000 416,000 Security Bank Holding Co. (OR) 12,862 72,349 Sky Financial Group, Inc. (OH) 16,369 329,426 Southwest Bancorp. of Texas, Inc.* (TX) 12,000 237,750 Sterling Bancshares, Inc. (TX) 19,300 215,919 Summit Bancshares, Inc. (TX) 14,800 273,800 TCF Financial Corp. (MN) 4,500 111,937 Texas Regional Bancshares, Inc. (Class A) (TX) 8,500 246,500 Umpqua Holdings Corp. (OR) 20,000 185,000 UnionBanCal Corp. (CA) 5,500 216,906 Vail Banks, Inc.* (CO) 21,850 215,769 Valley National Bancorp. (NJ) 28,000 784,000 Whitney Holding Corp. (LA) 4,800 177,900 Wilmington Trust Corp. (DE) 8,000 386,000 Yardville National Bancorp. (NJ) 25,000 290,625 -------------- 17,912,840 -------------- Thrifts (4.14%) Charter One Financial, Inc. (OH) 16,279 311,336 First Financial Holdings, Inc. (SC) 14,800 236,800 InterWest Bancorp., Inc. (WA) 6,387 122,950 Warren Bancorp., Inc. (MA) 22,500 168,750 -------------- 839,836 -------------- TOTAL COMMON STOCKS (Cost $21,491,150) (96.18%) 19,518,770 -------------- -------------- INTEREST PAR VALUE RATE (000s OMITTED) -------- -------------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (4.56%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond 10.625% due 08-15-15 and U.S. Treasury Notes 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.49% $926 $926,000 -------------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 750 -------------- TOTAL SHORT-TERM INVESTMENTS (4.56%) 926,750 ------- -------------- TOTAL INVESTMENTS (100.74%) 20,445,520 ------- -------------- OTHER ASSETS AND LIABILITIES, NET (0.74%) (150,425) ------- -------------- TOTAL NET ASSETS (100.00%) $20,295,095 ======= ============== * Non-income producing security. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Small Cap Growth Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Small Cap Growth Fund on December 31, 1999. It's divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry groups. Short-term investments, which represent the Fund's "cash" position, are listed last. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Advertising (2.53%) 24/7 Media, Inc.* 1,500 $84,375 Catalina Marketing Corp.* 800 92,600 Cybergold, Inc.* 8,550 151,228 Getty Images, Inc.* 4,100 200,387 -------------- 528,590 -------------- Automobile/Trucks (0.94%) Gentex Corp.* 2,800 77,700 Monaco Coach Corp.* 4,600 117,588 -------------- 195,288 -------------- Banks - United States (0.61%) Greater Bay Bancorp. 2,950 126,481 -------------- Beverages (0.31%) Beringer Wine Estates Holdings, Inc. (Class B)* 1,600 63,800 -------------- Broker Services (0.69%) Raymond James Financial, Inc. 2,150 40,178 Web Street, Inc.* 8,350 103,331 -------------- 143,509 -------------- Business Services - Misc. (7.51%) Charles River Associates, Inc.* 3,550 118,925 Chemdex Corp.* 1,350 149,850 Corporate Executive Board Co. (The)* 2,550 142,481 FactSet Research Systems, Inc. 1,550 123,419 Forrester Research, Inc.* 3,000 206,625 InsWeb Corp.* 4,250 108,641 Interim Services, Inc.* 4,200 103,950 Jupiter Communications, Inc.* 3,050 92,263 Management Network Group, Inc. (The)* 400 13,050 MedQuist, Inc.* 1,050 27,103 META Group, Inc.* 5,450 103,550 Modem Media.Poppe Tyson, Inc.* 1,950 137,231 On Assignment, Inc.* 2,900 86,638 Profit Recovery Group International, Inc. (The)* 1,800 47,813 Quanta Services, Inc.* 3,750 105,938 -------------- 1,567,477 -------------- Computer Service (6.47%) Advent Software, Inc.* 1,450 93,434 Dendrite International, Inc.* 3,375 114,328 Digital Impact, Inc.* 50 2,506 IntraNet Solutions, Inc.* 3,250 120,250 Lifeminders.com, Inc.* 1,850 106,838 Media Metrix, Inc.* 3,050 109,037 Mediaplex, Inc.* 2,700 169,425 Multex.com, Inc.* 3,750 141,094 NetRatings, Inc.* 1,550 74,594 Official Payments Corp.* 2,750 143,000 SportsLine USA, Inc.* 2,450 122,806 TheStreet.com, Inc.* 5,350 102,653 VerticalNet, Inc.* 300 49,200 -------------- 1,349,165 -------------- Computer Software (21.03%) Accrue Software, Inc.* 3,300 178,612 Aspect Development, Inc.* 1,950 133,575 Aspen Technology, Inc.* 8,400 222,075 Be Free, Inc.* 2,850 204,844 BindView Development Corp.* 4,450 221,109 Broadbase Software, Inc.* 1,850 208,125 BSQUARE Corp.* 2,250 94,359 C-bridge Internet Solutions, Inc.* 50 2,431 Clarus Corp.* 2,900 191,400 Cognizant Technology Solutions Corp.* 2,250 245,953 Commtouch Software, Ltd. (Israel)* 3,050 148,116 Data Return Corp.* 4,650 248,775 Digex, Inc.* 2,600 178,750 Digimarc Corp.* 250 12,500 Diversinet Corp. (Canada)* 7,550 166,100 Fundtech Ltd. (Israel)* 4,650 95,325 iManage, Inc.* 2,650 85,131 Insight Enterprises, Inc.* 2,900 117,812 Interwoven, Inc.* 500 60,813 JDA Software Group, Inc.* 5,600 91,700 Level 8 Systems, Inc.* 2,100 72,581 Micromuse, Inc.* 1,000 170,000 Net Perceptions, Inc.* 3,600 151,200 Packeteer, Inc.* 2,100 149,100 pcOrder.com, Inc.* 2,100 107,100 Predictive Systems, Inc.* 2,000 131,000 Prodigy Communications Corp.* 4,950 95,906 ScanSource, Inc.* 3,400 137,913 Secure Computing Corp.* 9,250 116,203 WebTrends Corp.* 1,700 137,700 Whittman-Hart, Inc.* 2,200 117,975 Wind River Systems, Inc.* 2,550 93,394 -------------- 4,387,577 -------------- Electronics (13.82%) Alpha Industries, Inc. 1,300 74,506 Apex, Inc.* 5,000 161,250 ATMI, Inc.* 3,100 102,494 Caliper Technologies Corp.* 200 13,350 Concord Communications, Inc.* 1,950 86,531 Credence Systems Corp.* 1,850 160,025 CVC, Inc.* 7,700 74,113 DuPont Photomasks, Inc.* 2,350 113,387 GlobeSpan, Inc.* 550 35,819 Immersion Corp.* 3,150 120,881 JNI Corp.* 650 42,900 Maxtor Corp.* 13,300 96,425 Metalink Ltd. (Israel)* 2,700 55,013 Micrel, Inc.* 1,050 59,784 National Computer Systems, Inc. 3,200 120,400 National Instruments Corp.* 2,450 93,713 Novellus Systems, Inc.* 650 79,645 Orckit Communications Ltd. (Israel)* 3,650 125,241 Paradyne Networks, Inc.* 3,100 84,475 PLX Technology, Inc.* 8,350 158,128 Powerwave Technologies, Inc.* 2,450 143,019 PRI Automation, Inc.* 1,950 130,894 Qlogic Corp.* 700 111,912 Quantum Corp., Hard Disk Drive Group* 8,700 60,356 Rudolph Technologies, Inc.* 900 30,150 Sage, Inc.* 3,400 65,875 SCM Microsystems, Inc.* 1,500 95,906 Semtech Corp.* 2,900 151,162 Vicor Corp.* 3,900 157,950 Virata Corp.* 400 11,950 Visual Networks, Inc.* 850 67,363 -------------- 2,884,617 -------------- Engineering/R&D Services (0.09%) Symyx Technologies, Inc.* 600 18,000 -------------- Finance (1.80%) Affiliated Managers Group, Inc.* 2,050 82,897 Medallion Financial Corp. 3,500 62,781 Metris Cos., Inc. 2,650 94,572 NextCard, Inc.* 2,950 85,181 S1 Corp.* 650 50,781 -------------- 376,212 -------------- Food (0.50%) American Italian Pasta Co. (Class A)* 3,400 104,550 -------------- Leisure (1.80%) Cinar Films, Inc. (Class B) (Canada)* 6,100 149,450 Imax Corp. (Canada)* 5,600 153,300 Premier Parks, Inc.* 2,500 72,188 -------------- 374,938 -------------- Machinery (0.38%) Terex Corp.* 2,900 80,475 -------------- Media (10.51%) Ackerley Group, Inc. (The) 5,500 99,688 Acme Communications, Inc.* 3,700 123,025 Citadel Communications Corp.* 2,500 162,187 Classic Communications, Inc. (Class A)* 2,750 100,547 Cumulus Media, Inc. (Class A)* 3,400 172,550 Entercom Communications Corp.* 1,500 99,000 Hispanic Broadcasting Corp.* 500 46,109 Martha Stewart Living Omnimedia, Inc. (Class A)* 3,050 73,200 Network Event Theater, Inc.* 5,900 175,525 Pegasus Communications Corp.* 2,500 244,375 Radio One, Inc.* 2,000 184,000 Radio Unica Corp.* 4,100 118,387 TiVo, Inc.* 3,250 109,687 Westwood One, Inc.* 2,250 171,000 Wink Communications, Inc.* 2,850 171,178 XM Satellite Radio Holdings, Inc. (Class A)* 3,750 142,969 -------------- 2,193,427 -------------- Medical (6.80%) Alkermes, Inc.* 3,100 152,287 Alpharma, Inc. (Class A) 3,300 101,475 CV Therapeutics, Inc.* 6,200 161,588 Cytyc Corp.* 2,750 167,922 Human Genome Sciences, Inc.* 800 122,100 IDEC Pharmaceuticals Corp.* 1,100 108,075 Interpore International, Inc.* 15,250 120,094 King Pharmaceuticals, Inc.* 3,300 185,006 Pharmacopeia, Inc.* 2,900 65,613 Pharmacyclics, Inc.* 2,850 117,562 Triangle Pharmaceuticals, Inc.* 5,550 71,109 Tularik, Inc.* 1,450 46,944 -------------- 1,419,775 -------------- Metal (0.88%) Maverick Tube Corp.* 7,450 183,922 -------------- Oil & Gas (2.60%) Core Laboratories N.V. (Netherlands)* 4,300 86,269 Dril-Quip, Inc.* 2,600 78,975 Marine Drilling Cos., Inc.* 6,300 141,356 Newfield Exploration Co.* 3,650 97,638 Pride International, Inc.* 4,600 67,275 Stone Energy Corp.* 2,000 71,250 -------------- 542,763 -------------- Retail (7.89%) 99 Cents Only Stores* 3,593 137,432 Applebee's International, Inc. 3,550 104,725 Brightpoint, Inc.* 14,450 189,656 Cost Plus, Inc.* 3,350 119,344 CSK Auto Corp.* 4,150 72,625 Duane Reade, Inc.* 4,850 133,678 Ethan Allen Interiors, Inc. 1,800 57,713 Linens 'N Things, Inc.* 4,050 119,981 O'Reilly Automotive, Inc.* 4,600 98,900 Pacific Sunwear of California, Inc.* 3,725 119,898 RARE Hospitality International, Inc.* 3,250 70,332 RoweCom, Inc.* 2,450 111,169 Tech Data Corp.* 2,300 62,388 Whole Foods Market, Inc.* 2,150 99,706 Wild Oats Markets, Inc.* 6,750 149,766 -------------- 1,647,313 -------------- Schools/Education (0.35%) ITT Educational Services, Inc.* 4,750 73,328 -------------- Steel (0.70%) Lone Star Technologies, Inc.* 5,250 146,344 -------------- Telecommunications (7.85%) AirGate PCS, Inc.* 2,950 155,612 Airnet Communications Corp.* 50 1,819 CoreComm Ltd.* 2,250 133,594 Crown Castle International Corp.* 2,800 89,950 Deltathree.com, Inc. (Class A)* 1,450 37,338 Efficient Networks, Inc.* 1,850 125,800 Global TeleSystems Group, Inc.* 1,400 48,475 Illuminet Holdings, Inc.* 1,850 101,750 Latitude Communications, Inc.* 4,250 111,031 Pinnacle Holdings, Inc.* 4,250 180,094 Powertel, Inc.* 1,550 155,581 Rural Cellular Corp. (Class A)* 1,900 171,950 Terayon Communication Systems, Inc.* 1,750 109,922 US LEC Corp. (Class A)* 3,750 120,937 WinStar Communications, Inc.* 1,250 94,063 -------------- 1,637,916 -------------- Textile (0.32%) Cutter & Buck, Inc.* 4,400 66,550 -------------- Transportation (2.26%) Circle International Group, Inc. 4,850 107,912 Eagle USA Airfreight, Inc.* 2,100 90,563 Expeditors International of Washington, Inc. 2,650 116,103 Forward Air Corp.* 3,600 156,150 -------------- 470,728 -------------- Waste Disposal Service & Equip. (0.21%) Waste Connections, Inc.* 3,000 43,313 -------------- TOTAL COMMON STOCKS (Cost $13,700,474) (98.85%) 20,626,058 -------------- -------------- INTEREST PAR VALUE MARKET ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE - ------------------- -------- -------------- -------------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (1.26%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond, 10.625% due 08-15-15 and U.S. Treasury Notes, 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.49% $263 $263,000 -------------- -------------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 350 -------------- TOTAL SHORT-TERM INVESTMENTS (1.26%) 263,350 -------------- -------------- TOTAL INVESTMENTS (100.11%) 20,889,408 -------------- -------------- OTHER ASSETS AND LIABILITIES, NET (0.11%) (22,798) -------------- -------------- TOTAL NET ASSETS (100.00%) $20,866,610 ============== ============== * Non-income producing security. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Core Equity Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Core Equity Fund on December 31, 1999. It is divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's "cash" position, are listed last. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Aerospace (4.52%) General Dynamics Corp. 6,700 $353,425 Goodrich (B.F.) Co. (The) 5,600 154,000 Honeywell International, Inc. 14,500 836,469 United Technologies Corp. 10,600 689,000 -------------- 2,032,894 -------------- Automobile/Trucks (1.82%) Borg-Warner Automotive, Inc. 2,900 117,450 Ford Motor Co. 8,500 454,219 Lear Corp.* 4,000 128,000 Meritor Automotive, Inc. 6,200 120,125 -------------- 819,794 -------------- Banks - United States (3.60%) Bank of America Corp. 6,800 341,275 Chase Manhattan Corp. 3,300 256,369 Comerica, Inc. 3,400 158,737 Fifth Third Bancorp 2,400 176,100 First Union Corp. 2,400 78,750 FleetBoston Financial Corp. 9,700 337,681 Wells Fargo Co. 6,700 270,931 -------------- 1,619,843 -------------- Beverages (1.16%) Anheuser-Busch Cos., Inc. 5,900 418,163 PepsiCo, Inc. 3,000 105,750 -------------- 523,913 -------------- Building (2.72%) Black & Decker Corp. (The) 8,500 444,125 Centex Corp. 5,500 135,781 Danaher Corp. 5,700 275,025 Georgia-Pacific Group 3,800 192,850 Willamette Industries, Inc. 3,800 176,463 -------------- 1,224,244 -------------- Chemicals (0.27%) Dow Chemical Co. 900 120,262 -------------- Computers (17.82%) America Online, Inc.* 12,100 912,794 Cisco Systems, Inc.* 14,100 1,510,462 Compaq Computer Corp. 4,200 113,662 Computer Associates International, Inc. 9,600 671,400 Dell Computer Corp.* 9,400 479,400 EMC Corp.* 1,300 142,025 First Data Corp. 5,400 266,287 Hewlett-Packard Co. 1,000 113,937 International Business Machines Corp. 7,000 756,000 Microsoft Corp.* 18,300 2,136,525 Oracle Corp.* 4,300 481,869 Yahoo! Inc.* 1,000 432,687 -------------- 8,017,048 -------------- Cosmetics & Personal Care (0.26%) Avon Products, Inc. 3,500 115,500 -------------- Diversified Operations (2.50%) Monsanto Co. 14,600 520,125 Textron, Inc. 1,200 92,025 Tyco International Ltd. 13,200 513,150 -------------- 1,125,300 -------------- Electronics (9.48%) Altera Corp.* 2,100 104,081 General Electric Co. 10,100 1,562,975 Intel Corp. 11,900 979,519 Linear Technology Corp. 1,500 107,344 Maxim Intergrated Products, Inc.* 5,800 273,687 SCI Systems, Inc* 2,200 180,812 Teradyne, Inc.* 2,300 151,800 Texas Instruments, Inc. 6,100 590,937 Thomas & Betts Corp. 1,900 60,562 Xilinx, Inc.* 5,600 254,625 -------------- 4,266,342 -------------- Finance (3.99%) Associates First Capital Corp. (Class A) 4,800 131,700 Citigroup, Inc. 25,200 1,400,175 MBNA Corp. 9,600 261,600 -------------- 1,793,475 -------------- Food (0.51%) Kellogg Co. 4,200 129,412 Quaker Oats Co. 1,500 98,437 -------------- 227,849 -------------- Insurance (3.25%) American General Corp. 3,500 265,562 American International Group, Inc. 1,800 194,625 AXA Financial, Inc. 12,800 433,600 Marsh & McLennan Cos., Inc. 2,700 258,356 XL Capital Ltd. (Class A) 6,000 311,250 -------------- 1,463,393 -------------- Machinery (0.93%) Ingersoll-Rand Co. 7,600 418,475 -------------- Media (5.01%) CBS Corp. 6,600 421,987 Clear Channel Communications, Inc.* 10,100 901,425 Time Warner, Inc. 11,000 796,813 Viacom, Inc. (Class B)* 2,200 132,963 -------------- 2,253,188 -------------- Medical (9.24%) American Home Products Corp. 2,300 90,706 Baxter International, Inc. 4,700 295,219 Bristol-Myers Squibb Co. 10,500 673,969 Genentech, Inc.* 1,600 215,200 Johnson & Johnson 8,000 745,000 Lilly (Eli) & Co. 2,900 192,850 Merck & Co., Inc. 6,400 429,200 Pfizer, Inc. 6,400 207,600 Schering-Plough Corp. 14,700 620,156 Warner-Lambert Co. 8,400 688,275 -------------- 4,158,175 -------------- Metal (0.57%) Illinois Tool Works, Inc. 3,798 256,602 -------------- Mortgage Banking (1.15%) Fannie Mae 8,300 518,231 -------------- Office (0.67%) Avery Dennison Corp. 1,800 131,175 Reynolds & Reynolds Co. (The) (Class A) 7,600 171,000 -------------- 302,175 -------------- Oil & Gas (5.12%) Atlantic Richfield Co. 2,700 233,550 Chevron Corp. 5,800 502,425 El Paso Energy Corp. 3,300 128,081 Exxon Mobil Corp. 7,212 581,017 Kerr-McGee Corp. 2,400 148,800 Royal Dutch Petroleum Co., American Depositary Receipts (ADR) (Netherlands) 9,200 556,025 USX - Marathon Group 6,300 155,531 -------------- 2,305,429 -------------- Paper & Paper Products (1.15%) Champion International Corp. 1,800 111,488 International Paper Co. 2,700 152,381 Kimberly-Clark Corp. 1,900 123,975 Smurfit-Stone Container Corp.* 5,300 129,850 -------------- 517,694 -------------- Retail (6.58%) Dayton Hudson Corp. 2,400 176,250 Federated Department Stores, Inc.* 2,800 141,575 Gap, Inc. (The) 5,600 257,600 Home Depot, Inc. (The) 10,050 689,053 Limited, Inc. (The) 5,000 216,563 Lowe's Cos., Inc. 4,300 256,925 Tandy Corp. 2,000 98,375 TJX Cos., Inc. 7,400 151,238 Wal-Mart Stores, Inc. 14,100 974,663 -------------- 2,962,242 -------------- Soap & Cleaning Preparations (0.27%) Colgate-Palmolive Co. 1,900 123,500 -------------- Telecommunications (6.33%) AT&T Corp. 7,900 400,925 Bell Atlantic Corp. 2,000 123,125 Lucent Technologies, Inc. 10,400 778,050 MCI WorldCom, Inc.* 19,050 1,010,841 Sprint Corp. 2,000 134,625 Tellabs, Inc.* 6,200 397,963 -------------- 2,845,529 -------------- Textile (0.26%) Tommy Hilfiger Corp.* 5,000 116,563 -------------- Tobacco (0.79%) Philip Morris Cos., Inc. 8,600 199,413 UST, Inc. 6,200 156,163 -------------- 355,576 -------------- Transportation (1.07%) Alaska Air Group, Inc.* 3,300 115,913 Burlington Northern Santa Fe Corp. 5,400 130,950 UAL Corp.* 3,000 232,688 -------------- 479,551 -------------- Utilities (4.67%) Ameren Corp. 6,800 222,700 BellSouth Corp. 9,000 421,313 Edison International 10,300 269,731 Florida Progress Corp. 6,200 262,338 GTE Corp. 4,700 331,644 PECO Energy Co. 5,700 198,075 Reliant Energy, Inc. 6,400 146,400 Southern Co. (The) 10,500 246,750 -------------- 2,098,951 -------------- TOTAL COMMON STOCKS (Cost $35,516,045) (95.71%) 43,061,738 -------------- -------------- INTEREST PAR VALUE RATE (000s OMITTED) -------- -------------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (3.94%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond 10.625% due 08-15-15 and U.S. Treasury Notes 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.49% $1,770 1,770,000 -------------- -------------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 914 -------------- -------------- TOTAL SHORT-TERM INVESTMENTS (3.94%) 1,770,914 -------------- -------------- TOTAL INVESTMENTS (99.65%) 44,832,652 -------------- -------------- OTHER ASSETS AND LIABILITIES, NET (0.35%) 158,665 -------------- -------------- TOTAL NET ASSETS (100.00%) $44,991,317 ============== ============== * Non-income producing security. The percentage shown for each investment category is the total of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Large Cap Value Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Large Cap Value Fund on December 31, 1999. It's divided into three main categories: common stocks, preferred stocks and bonds. Common and preferred stocks and bonds are further broken down by industry groups. NUMBER OF MARKET ISSUER, DESCRIPTION SHARES VALUE - ------------------- -------------- -------------- COMMON STOCKS Automobile/Trucks (0.07%) Tenneco Automotive, Inc. 2,800 $26,075 -------------- Banks - United States (1.03%) PNC Bank Corp. 5,000 222,500 TCF Financial Corp. 7,150 177,856 -------------- 400,356 -------------- Business Services - Misc. (5.19%) Cendant Corp.* 10,000 265,625 Iron Mountain, Inc.* 32,000 1,258,000 Sensormatic Electronics Corp.* 28,000 488,250 -------------- 2,011,875 -------------- Computers (15.86%) Comdisco, Inc. 10,000 372,500 Computer Associates International, Inc. 17,750 1,241,391 Etec Systems, Inc.* 9,000 403,875 i2 Technologies, Inc.* 850 165,750 Integrated Systems, Inc.* 10,000 335,625 Parametric Technology Corp.* 58,000 1,569,625 Seagate Technology, Inc.* 20,000 931,250 Sterling Software, Inc. 7,000 220,500 SunGard Data Systems, Inc.* 10,100 239,875 Wind River Systems, Inc.* 18,250 668,406 -------------- 6,148,797 -------------- Containers (0.49%) Pactiv Corp.* 18,000 191,250 -------------- Electronics (24.55%) Amphenol Corp. (Class A)* 30,600 2,036,813 Arrow Electronics, Inc. 12,000 304,500 Conexant Systems, Inc.* 15,000 995,625 Oak Industries, Inc. 33,500 3,555,187 SCI Systems, Inc.* 6,070 498,878 Sony Corp. (Japan) 2,400 710,468 Tektronix, Inc. 6,000 233,250 Vicor Corp.* 29,200 1,182,600 -------------- 9,517,321 -------------- Energy (1.53%) Calpine Corp.* 2,600 166,400 Citizens Utilities Co. (Class B) 30,000 425,625 -------------- 592,025 -------------- Finance (1.06%) Citigroup, Inc. 7,381 410,107 -------------- Instruments - Scientific (3.15%) Millipore Corp. 10,000 386,250 PerkinElmer, Inc. 20,000 833,750 -------------- 1,220,000 -------------- Insurance (9.71%) Ace, Ltd. (Bermuda) 91,300 1,523,569 Ambac Financial Group, Inc. 7,200 375,750 Financial Security Assurance Holdings, Ltd. 12,860 670,327 Radian Group, Inc. 10,000 477,500 Reinsurance Group of America, Inc. 14,550 403,762 XL Capital, Ltd., (Class A) 6,032 312,910 -------------- 3,763,818 -------------- Leisure (2.29%) Ascent Entertainment Group, Inc.* 35,000 444,063 Galileo International, Inc. 14,885 445,620 -------------- 889,683 -------------- Media (3.67%) AT&T Corp. - Liberty Media Group (Class A)* 21,872 1,241,236 Central Newspapers, Inc. (Class A) 4,600 181,125 -------------- 1,422,361 -------------- Mortgage Banking (0.19%) Fannie Mae 201 12,550 Freddie Mac 1,267 59,628 -------------- 72,178 -------------- Office (3.96%) Danka Business Systems Plc, American Depository Receipt (ADR) (United Kingdom) 120,946 1,534,502 -------------- Oil & Gas (1.27%) Alberta Energy Co. Ltd. (Canada) 392 12,275 Alberta Energy Co. Ltd. (Canada) 1,389 43,068 EOG Resources, Inc. 25,000 439,063 -------------- 494,406 -------------- Paper & Paper Products (1.48%) Fort James Corp. 21,000 574,875 -------------- Telecommunications (14.85%) ANTEC Corp.* 79,750 2,910,875 Commonwealth Telephone Enterprises, Inc. 15,000 793,125 Intermedia Communications, Inc.* 3,850 149,428 QUALCOMM, Inc.* 10,400 1,831,700 TeleCorp PCS, Inc.* 700 26,600 Time Warner Telecom, Inc. (Class A)* 900 44,944 -------------- 5,756,672 -------------- Transport (1.32%) Air Canada (Canada)* 23,766 178,492 Northwest Airlines Corp.* 15,000 333,750 -------------- 512,242 -------------- Utilities (2.34%) Independent Energy Holdings Plc (ADR) (United Kingdom)* 27,220 906,766 -------------- TOTAL COMMON STOCKS (Cost $27,369,628) (94.01%) 36,445,309 -------------- -------------- PREFERRED STOCKS Office (1.05%) Danka Business Systems Plc 500,000 408,125 -------------- TOTAL PREFERRED STOCKS (Cost $323,092) (1.05%) 408,125 -------------- -------------- INTEREST CREDIT PAR VALUE RATE RATING** (000s OMITTED) -------------- -------------- -------------- BONDS Retail (3.64%) Brightpoint, Inc. Conv. Bond 03-11-18 Zero B $4,000 1,410,000 -------------- TOTAL BONDS (Cost $959,984) (3.64%) 1,410,000 -------------- -------------- TOTAL INVESTMENTS (98.70%) 38,263,434 -------------- -------------- OTHER ASSETS AND LIABILITIES, NET (1.30%) 502,670 -------------- -------------- TOTAL NET ASSETS (100.00%) $38,766,104 ============== ============== * Non-income producing security. ** Credit ratings are unaudited and rated by Standard & Poor's where available, or Moody's Investors Service or John Hancock Advisers, Inc. where Standard & Poor's ratings are not available. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer; however, the security is U.S. dollar denominated. The percentage shown for each investment category is the total of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Sovereign Investors Fund Schedule of Investments December 31, 1999 Per share earnings and dividends and their compound growth rates are shown for the most recently reported ten year periods on common stocks, as well as price/earnings ratios, and are unaudited. - ------------------------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Sovereign Investors Fund on December 31, 1999. It is divided into three main categories: common stocks, U.S. government and agencies obligations and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's "cash" position, are listed last. COMPOUND NUMBER GROWTH MARKET OF SHARES RATE VALUE - -------------- -------- ------------- COMMON STOCKS (90.07%) Advertising (3.81%) 33,200 Interpublic Group of Companies, Inc. (The) @ 57 11/16 $1,915,225 One of the largest advertising agencies in the world ------------ Earnings P/S $0.40, 0.44, 0.39, 0.56, 0.29, 0.51, 0.80, 0.75, 1.11, 1.30 14.0% Dividends P/S $0.13, 0.14, 0.15, 0.17, 0.19, 0.21, 0.23, 0.25, 0.29, 0.34 11.3% Price/Earnings Ratio 44.4 Banks (6.13%) 24,763 Bank of America Corp. @ 50 3/16 1,242,793 Holding company for Bank of America and NationsBank Earnings P/S $0.40, 1.20, 1.98, 2.46, 2.54, 2.98, 3.36, 3.61, 2.90, 4.69 12.8% Dividends P/S $0.57, 0.62, 0.64, 0.69, 0.94, 1.04, 1.20, 1.37, 1.59, 1.85 14.0% Price/Earnings Ratio 10.7 19,000 First Tennessee National Corp. @ 28 1/2 541,500 Tennessee-based bank holding company Earnings P/S $0.45, 0.57, 0.72, 0.81, 1.08, 1.21, 1.34, 1.50, 1.72, 1.91 17.4% Dividends P/S $0.28, 0.29, 0.32, 0.38, 0.44, 0.49, 0.55, 0.62, 0.69, 0.79 12.2% Price/Earnings Ratio 14.9 15,000 SunTrust Banks, Inc. @ 68 13/16 1,032,187 Holding company for SunTrust Banks operating through 700 offices in Florida, Georgia, Tennessee and Alabama Earnings P/S $1.30, 1.26, 1.46, 1.90, 2.22, 2.38, 2.59, 3.04, 3.04, 3.93 13.1% Dividends P/S $0.46, 0.47, 0.49, 0.58, 0.66, 0.74, 0.83, 0.93, 1.00, 1.38 13.0% Price/Earnings Ratio 17.5 6,500 Wells Fargo Co. @ 40 7/16 262,844 Diversified financial services company providing banking, insurance, investments and consumer finance Earnings P/S $0.79, 0.36, 0.53, 0.98, 1.36, 1.62, 1.36, 1.48, 1.17, 2.24 12.3% Dividends P/S $0.21, 0.24, 0.27, 0.32, 0.39, 0.45, 0.53, 0.62, 0.70, 0.79 15.9% Price/Earnings Ratio 18.1 ------------ 3,079,324 ------------ Beverages (1.19%) 17,000 PepsiCo, Inc. @ 35 1/4 599,250 Second largest soft drink company ------------ Earnings P/S $0.68, 0.68, 0.23, 0.98, 1.09, 1.00, 0.72, 1.36, 1.31, 1.21 6.6% Dividends P/S $0.19, 0.23, 0.26, 0.31, 0.35, 0.39, 0.45, 0.49, 0.52, 0.54 12.3% Price/Earnings Ratio 29.1 Building (1.71%) 33,800 Masco Corp. @ 25 3/8 857,675 Manufactures buildings, home improvement ------------ and consumer products Earnings P/S $0.46, 0.15, 0.61, 0.73, 0.61, (1.39) 0.92, 1.15, 1.39, 1.59 14.8% Dividends P/S $0.27, 0.29, 0.31, 0.33, 0.35, 0.37, 0.39, 0.41, 0.44, 0.46 6.1% Price/Earnings Ratio 16.0 Chemicals (0.55%) 27,000 RPM, Inc. @ 10 3/16 275,063 Manufacturer of specialty chemicals ------------ and coatings to waterproof and rustproof structures Earnings P/S $0.40, 0.46, 0.46, 0.46, 0.56, 0.65, 0.69, 0.76, 0.84, 0.86 8.9% Dividends P/S $0.23, 0.26, 0.28, 0.30, 0.33, 0.35, 0.38, 0.41, 0.44, 0.48 8.5% Price/Earnings Ratio 11.8 Computers (1.76%) 8,000 Automatic Data Processing, Inc. @ 53 7/8 431,000 Largest independent computing services firm in the U.S. Earnings P/S $0.36, 0.41, 0.46, 0.52, 0.59, 0.67, 0.76, 0.85, 0.98, 1.10 13.2% Dividends P/S $0.08, 0.09, 0.11, 0.12, 0.14, 0.16, 0.20, 0.23, 0.26, 0.32 16.7% Price/Earnings Ratio 49.0 4,000 Hewlett-Packard Co. @ 113 15/16 455,750 Manufactures and services electronic measurement, analysis and computation instruments Earnings P/S $0.77, 0.76, 0.55, 1.17, 1.54, 2.32, 2.46, 2.95, 2.77, 3.24 17.3% Dividends P/S $0.11, 0.12, 0.19, 0.23, 0.28, 0.35, 0.44, 0.52, 0.60, 0.64 21.6% Price/Earnings Ratio 35.1 ------------ 886,750 ------------ Containers (1.44%) 20,700 Bemis Co., Inc. @ 34 7/8 721,912 Producer of a broad range of flexible ------------ packaging and equipment and pressure-sensitive materials Earnings P/S $0.99, 1.03, 1.10, 0.86, 1.40, 1.63, 1.90, 2.00, 2.09, 2.16 9.1% Dividends P/S $0.36, 0.42, 0.46, 0.50, 0.54, 0.64, 0.72, 0.80, 0.88, 0.92 11.0% Price/Earnings Ratio 16.1 Diversified Operations (4.99%) 7,300 DuPont (E.I.) De Nemours & Co. @ 65 7/8 480,888 Nation's largest chemical manufacturer Earnings P/S $1.70, 1.04, (2.92) 0.41, 1.98, 2.77, 3.18, 2.08, 3.90, 2.42 4.0% Dividends P/S $0.81, 0.84, 0.87, 0.88, 0.91, 1.01, 1.12, 1.23, 1.37, 1.40 6.3% Price/Earnings Ratio 27.2 15,000 Honeywell International, Inc. @ 57 11/16 865,312 Diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; power generation systems; specialty chemicals; fibers; plastics; and electronic and advanced materials Earnings P/S $1.01, 0.07, (0.56) 0.88, 1.27, 1.47, 1.73, 2.00, 2.34, 2.62 11.2% Dividends P/S $0.23, 0.24, 0.25, 0.29, 0.34, 0.39, 0.45, 0.52, 0.60, 0.68 12.8% Price/Earnings Ratio 22.0 9,800 Johnson Controls, Inc. @ 56 7/8 557,375 Manufactures automotive systems and building controls Earnings P/S $1.02, 1.06, 1.37, 0.08, 1.80, 2.13, 2.55, 3.12, 3.63, 4.27 17.2% Dividends P/S $0.60, 0.62, 0.64, 0.68, 0.72, 0.78, 0.82, 0.86, 0.92, 1.03 6.2% Price/Earnings Ratio 13.3 6,200 Minnesota Mining & Manufacturing Co. @ 97 7/8 606,825 Manufactures industrial, commercial and health-care products Earnings P/S $2.96, 2.63, 2.81, 2.91, 3.13, 2.31, 3.62, 5.06, 2.88, 4.14 3.8% Dividends P/S $1.46, 1.56, 1.60, 1.66, 1.76, 1.88, 1.92, 2.12, 2.20, 2.24 4.9% Price/Earnings Ratio 23.6 ------------ 2,510,400 ------------ Electronics (4.83%) 17,700 Emerson Electric Co. @ 57 3/8 1,015,537 Produces and sells electrical/electronic products and systems Earnings P/S $1.38, 1.42, 1.48, 1.58, 1.76, 2.03, 2.28, 2.50, 2.77, 3.06 9.3% Dividends P/S $0.63, 0.66, 0.69, 0.72, 0.78, 0.89, 0.98, 1.08, 1.18, 1.33 8.7% Price/Earnings Ratio 18.8 6,600 General Electric Co. @ 154 3/4 1,021,350 Dominant force in home appliances, electrical power and financial services Earnings P/S $1.21, 0.76, 1.38, 1.26, 1.39, 1.93, 2.16, 2.46, 2.80, 3.23 11.5% Dividends P/S $0.48, 0.52, 0.58, 0.66, 0.75, 0.85, 0.95, 1.08, 1.25, 1.46 13.2% Price/Earnings Ratio 47.9 8,200 Grainger (W.W.), Inc. @ 47 13/16 392,063 Leading distributor of electrical equipment Earnings P/S $1.16, 1.19, 1.29, 1.43, 1.25, 1.82, 2.02, 2.27, 2.44, 2.16 7.2% Dividends P/S $0.28, 0.31, 0.33, 0.36, 0.39, 0.45, 0.49, 0.53, 0.59, 0.63 9.4% Price/Earnings Ratio 22.1 ------------ 2,428,950 ------------ Finance (4.75%) 26,125 Citigroup, Inc. @ 55 9/16 1,451,570 Diversified global financial services company offering commercial/consumer banking, investment banking, brokerage services and insurance to consumer and corporate customers around the world Earnings P/S $0.37, 0.11, 0.62, 1.13, 1.12, 1.50, 1.81, 1.83, 1.62, 2.82 25.3% Dividends P/S $0.04, 0.05, 0.08, 0.11, 0.13, 0.18, 0.20, 0.27, 0.37, 0.54 33.5% Price/Earnings Ratio 19.7 15,000 Fannie Mae @ 62 7/16 936,563 Largest U.S. investor in home mortgage loans providing funds to the mortgage market by purchasing mortgage loans from various nationwide lenders Earnings P/S $1.12, 1.25, 1.48, 1.71, 1.94, 1.95, 2.48, 2.83, 3.23, 3.66 14.1% Dividends P/S $0.18, 0.26, 0.35, 0.46, 0.60, 0.68, 0.76, 0.84, 0.96, 1.08 22.0% Price/Earnings Ratio 17.1 ------------ 2,388,133 ------------ Food (1.57%) 15,000 Bestfoods, Inc. @ 52 9/16 788,437 Manufactures consumer food and baking products ------------ in 62 countries Earnings P/S $0.88, 0.92, 0.40, 1.14, 0.69, 1.68, 1.93, 1.15, 2.09, 2.47 12.2% Dividends P/S $0.50, 0.55, 0.60, 0.64, 0.69, 0.74, 0.79, 0.86, 0.94, 1.02 8.2% Price/Earnings Ratio 21.3 Furniture (1.24%) 29,000 Leggett & Platt, Inc. @ 21 7/16 621,687 Produces intermediate products for the home ------------ furnishings industry Earnings P/S $0.21, 0.27, 0.41, 0.52, 0.68, 0.75, 0.77, 1.08, 1.24, 1.45 24.0% Dividends P/S $0.11, 0.22, 0.12, 0.14, 0.16, 0.19, 0.23, 0.27, 0.32, 0.36 14.1% Price/Earnings Ratio 14.8 Insurance (5.11%) 7,400 AFLAC, Inc. @ 47 3/16 349,187 Global specialty insurer Earnings P/S $0.39, 0.49, 0.60, 0.81, 0.95, 1.17, 1.37, 2.08, 1.76, 1.99 19.9% Dividends P/S $0.09, 0.10, 0.12, 0.13, 0.15, 0.17, 0.20, 0.23, 0.25, 0.29 13.9% Price/Earnings Ratio 23.7 10,000 American General Corp. @ 75 7/8 758,750 Provides retirement services, life insurance and consumer loans to more than 12 million customers through various operating subsidiaries Earnings P/S $2.30, 2.13, 2.24, 1.20, 2.46, 2.66, 2.63, 2.19, 2.96, 4.59 8.0% Dividends P/S $0.79, 1.00, 1.04, 1.10, 1.16, 1.24, 1.30, 1.40, 1.50, 1.60 8.2% Price/Earnings Ratio 16.5 8,062 American International Group, Inc. @ 108 1/8 871,704 Broadly based property-casualty insurance organization Earnings P/S $1.25, 1.34, 1.38, 1.62, 1.62, 1.88, 2.18, 2.52, 2.86, 3.19 11.0% Dividends P/S $0.06, 0.07, 0.08, 0.09, 0.10, 0.11, 0.14, 0.15, 0.17, 0.19 12.3% Price/Earnings Ratio 33.9 15,000 ReliaStar Financial Corp. @ 39 3/16 587,813 Financial services company engaged in life/health insurance and consumer finance Earnings P/S $1.00, 0.80, 0.95, 0.95, 1.50, 1.98, 2.37, 2.55, 2.56, 2.87 12.4% Dividends P/S $0.33, 0.35, 0.37, 0.40, 0.44, 0.49, 0.55, 0.61, 0.71, 0.80 10.3% Price/Earnings Ratio 13.7 ------------ 2,567,454 ------------ Leisure (0.51%) 13,500 Hasbro, Inc. @ 19 1/16 257,344 Designs, manufactures and markets toys, games ------------ and interactive software Earnings P/S $0.46, 0.42, 0.89, 0.99, 0.87, 0.77, 0.98, 0.68, 1.00, 1.41 18.3% Dividends P/S $0.06, 0.07, 0.09, 0.11, 0.13, 0.14, 0.18, 0.20, 0.21, 0.24 16.7% Price/Earnings Ratio 13.4 Machinery (4.14%) 23,500 Dover Corp. @ 45 3/8 1,066,312 Manufactures a variety of specialized industrial products Earnings P/S $0.64, 0.54, 0.56, 0.70, 0.89, 1.22, 1.69, 1.79, 1.69, 1.88 12.7% Dividends P/S $0.19, 0.21, 0.22, 0.23, 0.25, 0.28, 0.32, 0.36, 0.40, 0.44 9.8% Price/Earnings Ratio 24.1 26,300 Pentair, Inc. @ 38 1/2 1,012,550 Manufactures enclosures for electrical, electronic, woodworking and power tool equipment Earnings P/S $0.81, 1.00, (0.18) 1.10, 1.26, 1.81, 1.73, 2.11, 2.46, 2.85 15.0% Dividends P/S $0.30, 0.31, 0.33, 0.34, 0.36, 0.40, 0.50, 0.54, 0.60, 0.64 8.8% Price/Earnings Ratio 13.5 ------------ 2,078,862 ------------ Media (2.73%) 11,400 Gannett Co., Inc. @ 81 9/16 929,812 News and information company that publishes newspapers, operates broadcasting stations and cable television systems, and is engaged in marketing, commercial printing, newswire service, data services and news programming Earnings P/S $1.18, 1.00, 0.70, 1.36, 1.62, 1.71, 3.35, 2.50, 3.50, 3.29 12.1% Dividends P/S $0.61, 0.62, 0.63, 0.65, 0.67, 0.69, 0.71, 0.74, 0.78, 0.82 3.3% Price/Earnings Ratio 24.8 7,200 McGraw-Hill Cos., Inc. @ 61 5/8 443,700 Provides informational products and services for business and industry Earnings P/S $0.89, 0.76, 0.15, 0.06, 1.03, 1.14, 2.48, 1.46, 1.67, 1.95 9.1% Dividends P/S $0.54, 0.55, 0.56, 0.57, 0.58, 0.60, 0.66, 0.72, 0.78, 0.86 5.3% Price/Earnings Ratio 31.6 ------------ 1,373,512 ------------ Medical (10.94%) 18,000 Abbott Laboratories @ 36 5/16 653,625 Major pharmaceutical and healthcare firm Earnings P/S $0.56, 0.64, 0.74, 0.85, 0.94, 1.05, 1.19, 1.34, 1.51, 1.66 12.8% Dividends P/S $0.21, 0.25, 0.30, 0.34, 0.38, 0.42, 0.48, 0.54, 0.60, 0.68 14.0% Price/Earnings Ratio 21.9 10,000 American Home Products Corp. @ 39 7/16 394,375 Discovers, develops, manufactures and markets prescription drugs and over-the-counter medications as well as vaccines, biotechnology, agricultural products and animal health-care items Earnings P/S $0.98, 1.09, 1.17, 1.19, 1.25, 1.35, 1.46, 1.56, 1.85, 1.76 13.6% Dividends P/S $0.54, 0.60, 0.67, 0.72, 0.74, 0.76, 0.79, 0.83, 0.87, 0.91 6.0% Price/Earnings Ratio 22.3 14,100 Baxter International, Inc. @ 62 13/16 885,656 The company operates four divisions: renal, biotech, cardiovascular and intravenous systems and international distribution Earnings P/S ($0.05) 2.03, 1.56, (0.72) 2.13, 2.31, 2.41, 1.06, 1.09, 2.86 56.8% Dividends P/S $0.64, 0.74, 0.86, 1.00, 1.03, 1.11, 1.12, 1.13, 1.14, 1.16 6.8% Price/Earnings Ratio 22.0 15,000 Bristol-Myers Squibb Co. @ 64 3/16 962,812 Produces pharmaceuticals, medical devices, non-prescription health products Earnings P/S $0.84, 0.99, 0.95, 0.95, 0.91, 0.89, 1.40, 1.57, 1.55, 2.05 10.4% Dividends P/S $0.53, 0.60, 0.69, 0.72, 0.73, 0.74, 0.75, 0.76, 0.78, 0.89 5.9% Price/Earnings Ratio 31.3 6,000 Johnson & Johnson @ 93 1/8 558,750 Major producer of prescription and non-prescription drugs, toiletries, medical instruments and supplies Earnings P/S $0.86, 1.10, 0.78, 1.37, 1.56, 1.86, 2.17, 2.41, 2.23, 3.01 14.9% Dividends P/S $0.33, 0.39, 0.45, 0.51, 0.56, 0.64, 0.74, 0.85, 0.97, 1.09 14.2% Price/Earnings Ratio 31.0 15,000 Merck & Co., Inc. @ 67 1/16 1,005,938 World's largest ethical drug manufacturer Earnings P/S $0.75, 0.91, 0.86, 0.93, 1.17, 1.32, 1.56, 1.87, 2.15, 2.45 14.1% Dividends P/S $0.34, 0.40, 0.48, 0.52, 0.57, 0.62, 0.71, 0.85, 0.95, 1.12 14.2% Price/Earnings Ratio 27.4 11,000 Schering-Plough Corp. @ 42 3/16 464,062 Discovers, develops, manufactures and markets pharmaceutical and health-care products worldwide Earnings P/S $0.32, 0.38, 0.45, 0.47, 0.61, 0.60, 0.82, 0.98, 1.18, 1.41 17.9% Dividends P/S $0.14, 0.16, 0.19, 0.22, 0.25, 0.28, 0.32, 0.37, 0.43, 0.49 14.9% Price/Earnings Ratio 30.1 7,000 Warner-Lambert Co. @ 81 15/16 573,563 Major producer of consumer health-care, pharmaceutical and confectionery products Earnings P/S $0.60, 0.04, 0.80, 0.41, 0.86, 0.90, 0.95, 1.04, 1.48, 1.95 14.0% Dividends P/S $0.25, 0.29, 0.34, 0.38, 0.41, 0.43, 0.46, 0.51, 0.64, 0.80 13.8% Price/Earnings Ratio 42.0 ------------ 5,498,781 ------------ Metal Products (2.02%) 15,000 Illinois Tool Works, Inc. @ 67 9/16 1,013,438 Designs and manufacturers fasteners and ------------ components, equipment and consumable systems and a variety of specialty products and equipment Earnings P/S $0.84, 0.82, 0.86, 0.92, 1.23, 1.65, 1.95, 2.33, 2.67, 2.99 15.2% Dividends P/S $0.18, 0.20, 0.23, 0.25, 0.27, 0.31, 0.35, 0.43, 0.51, 0.66 15.5% Price/Earnings Ratio 22.6 Office (4.55%) 18,150 Avery Dennison Corp. @ 72 7/8 1,322,681 Develops, manufactures and markets innovative self-adhesive solutions for consumer products and label systems Earnings P/S $0.05, 0.51, 0.67, 0.73, 0.99, 1.32, 1.63, 1.93, 2.15, 2.51 54.5% Dividends P/S $0.32, 0.38, 0.41, 0.45, 0.50, 0.56, 0.62, 0.72, 0.87, 0.99 13.4% Price/Earnings Ratio 29.0 20,000 Pitney Bowes, Inc. @ 48 5/16 966,250 Manufactures office automation equipment Earnings P/S $0.67, 0.93, 0.32, 1.11, 0.87, 1.92, 1.56, 1.80, 2.06, 2.32 14.8% Dividends P/S $0.30, 0.34, 0.39, 0.45, 0.52, 0.60, 0.69, 0.80, 0.90, 1.02 14.6% Price/Earnings Ratio 20.8 ------------ 2,288,931 ------------ Oil & Gas (6.68%) 20,200 Chevron Corp. @ 86 5/8 1,749,825 One of the largest integrated, international oil companies with interest in petrochemicals Earnings P/S $3.05, 1.85, 2.32, 1.95, 2.60, 1.43, 3.99, 4.95, 2.04, 3.48 1.5% Dividends P/S $1.48, 1.63, 1.65, 1.75, 1.85, 1.93, 2.08, 2.28, 2.44, 2.48 5.9% Price/Earnings Ratio 24.9 13,184 Exxon Mobil Corp. @ 80 9/16 1,062,136 Worldwide leader in the petroleum and petrochemicals business Earnings P/S $1.94, 2.12, 1.59, 2.06, 1.73, 2.48, 2.91, 3.28, 2.28, 2.39 2.3% Dividends P/S $1.19, 1.30, 1.36, 1.38, 1.41, 1.46, 1.54, 1.62, 1.64, 1.67 3.8% Price/Earnings Ratio 33.7 9,000 Royal Dutch Petroleum Co., American Depository Receipt (Netherlands) @ 60 7/16 543,938 Owns 60% of the Royal Dutch/Shell Group of companies. Operations include production, transportation, refining and sales of oil/natural gas Earnings P/S $1.95, 1.26, 1.30, 1.24, 1.78, 1.90, 2.69, 2.20, 0.13, 1.45 NMF Dividends P/S $1.06, 1.11, 1.22, 1.18, 1.33, 1.40, 1.45, 1.53, 1.61, 1.58 4.5% Price/Earnings Ratio 41.8 ------------ 3,355,899 ------------ Paper & Paper Products (2.47%) 19,000 Kimberly-Clark Corp. @ 65 1/4 1,239,750 Leading producer of consumer and personal care products ------------ Earnings P/S $1.05, 0.79, 0.27, 0.42, 1.36, 0.06, 2.48, 1.61, 2.11, 2.95 12.2% Dividends P/S $0.68, 0.73, 0.82, 0.85, 0.88, 0.90, 0.92, 0.95, 1.00, 1.04 4.8% Price/Earnings Ratio 22.2 Retail (8.70%) 15,000 Dayton Hudson Corp. @ 73 7/16 1,101,562 General merchandiser selling through Target and Marvyn stores Earnings P/S $0.87, 0.62, 0.81, 0.80, 0.92, 0.65, 0.98, 1.59, 1.98, 2.51 12.5% Dividends P/S $0.20, 0.23, 0.25, 0.26, 0.27, 0.28, 0.30, 0.32, 0.33, 0.40 8.0% Price/Earnings Ratio 29.3 9,000 Home Depot, Inc. (The) @ 68 9/16 617,063 Operates a chain of retail building supply/home improvement warehouse stores Earnings P/S $0.11, 0.13, 0.18, 0.23, 0.30, 0.35, 0.44, 0.53, 0.71, 1.10 29.2% Dividends P/S $0.01, 0.01, 0.02, 0.02, 0.03, 0.04, 0.05, 0.06, 0.08, 0.11 33.8% Price/Earnings Ratio 62.5 13,000 Lowe's Cos., Inc. @ 59 3/4 776,750 Retail distributes building materials and supplies through stores in the United States Earnings P/S $0.23, 0.03, 0.29, 0.44, 0.63, 0.66, 0.86, 1.05, 1.38, 1.77 25.5% Dividends P/S $0.07, 0.07, 0.07, 0.08, 0.09, 0.09, 0.10, 0.11, 0.12, 0.13 8.0% Price/Earnings Ratio 33.8 14,000 McDonald's Corp. @ 40 5/16 564,375 Develops, operates, franchises and services a worldwide system of restaurants Earnings P/S $0.55, 0.59, 0.65, 0.73, 0.84, 0.98, 1.08, 1.15, 1.10, 1.41 11.0% Dividends P/S $0.08, 0.09, 0.10, 0.11, 0.12, 0.13, 0.14, 0.16, 0.18, 0.20 10.7% Price/Earnings Ratio 28.6 33,200 SYSCO Corp. @ 39 9/16 1,313,475 Largest distributor of food service products Earnings P/S $0.37, 0.42, 0.47, 0.54, 0.59, 0.69, 0.76, 0.86, 0.86, 1.08 12.6% Dividends P/S $0.05, 0.06, 0.09, 0.13, 0.16, 0.20, 0.24, 0.28, 0.33, 0.42 26.7% Price/Earnings Ratio 36.6 ------------ 4,373,225 ------------ Steel Producers (1.64%) 15,000 Nucor Corp. @ 54 13/16 822,188 Manufactures steel products ------------ Earnings P/S $0.88, 0.75, 0.92, 1.42, 2.60, 3.14, 2.83, 3.35, 3.00, 2.57 12.7% Dividends P/S $0.12, 0.13, 0.14, 0.16, 0.18, 0.28, 0.32, 0.40, 0.48, 0.52 17.7% Price/Earnings Ratio 21.3 Tobacco (0.69%) 15,000 Philip Morris Cos., Inc. @ 23 3/16 347,813 Global tobacco, brewing and food company ------------ Earnings P/S $1.28, 1.08, 1.82, 1.17, 1.82, 2.16, 2.56, 2.58, 2.20, 3.19 10.7% Dividends P/S $0.52, 0.64, 0.78, 0.87, 1.01, 1.22, 1.47, 1.60, 1.68, 1.84 15.1% Price/Earnings Ratio 7.2 Utilities (5.92%) 6,000 ALLTEL Corp. @ 82 11/16 496,125 Provides wireline and wireless communications and information services Earnings P/S $0.67, 0.65, 0.75, 0.76, 0.91, 1.27, 1.26, 2.11, 1.89, 2.58 16.2% Dividends P/S $0.44, 0.48, 0.50, 0.82, 0.90, 0.98, 1.06, 1.12, 1.18, 1.24 12.2% Price/Earnings Ratio 32.1 25,000 CenturyTel, Inc. @ 47 3/8 1,184,375 Louisiana-based telecommunications company Earnings P/S $0.29, 0.35, 0.41, 0.59, 0.80, 0.87, 0.95, 1.87, 1.64, 1.68 21.6% Dividends P/S $0.12, 0.13, 0.13, 0.14, 0.14, 0.15, 0.16, 0.16, 0.17, 0.18 4.2% Price/Earnings Ratio 28.2 15,400 Questar Corp. @ 15 231,000 Diversified holding company for Utah, Wyoming and Colorado natural gas transmission, distribution and storage Earnings P/S $0.73, 0.82, 1.01, 1.02, 1.08, 1.03, 1.20, 1.27, 0.93, 1.33 6.9% Dividends P/S $0.49, 0.51, 0.52, 0.55, 0.57, 0.58, 0.60, 0.62, 0.65, 0.67 3.5% Price/Earnings Ratio 11.3 21,844 SBC Communications, Inc. @ 48 3/4 1,064,895 Provides telephone service throughout the United States and internationally Earnings P/S $0.92, 0.90, 1.09, (1.37) 1.54, (1.82) 1.77, 0.85, 2.03, 2.26 10.5% Dividends P/S $0.69, 0.71, 0.73, 0.76, 0.79, 0.83, 0.86, 0.90, 0.94, 0.97 3.9% Price/Earnings Ratio 21.6 ------------ 2,976,395 ------------ TOTAL COMMON STOCKS (Cost $39,421,747) 45,266,398 ------------ PAR VALUE (000s OMITTED) - ------------- UNITED STATES GOVERNMENT AND AGENCIES OBLIGATIONS (4.35%) $1,500 United States Treasury, Bond 10.75%, 08-15-05 @ 119.266 1,788,990 400 United States Treasury, Note 5.875%, 09-30-02 @ 98.984 395,936 ------------ TOTAL UNITED STATES GOVERNMENT AND AGENCIES OBLIGATIONS (Cost $2,343,102) 2,184,926 ------------ INTEREST RATE --------- SHORT-TERM INVESTMENTS (6.76%) 3,398 Joint Repurchase Agreement (6.76%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond 10.625% due 08-15-15 and U. S. Treasury Notes 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.49% 3,398,000 ----------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.00% 381 ----------- TOTAL SHORT-TERM INVESTMENTS (6.76%) 3,398,381 ---------- ----------- TOTAL INVESTMENTS (101.18%) 50,849,705 ---------- ----------- OTHER ASSETS AND LIABILITIES, NET (1.18%) (595,508) ---------- ----------- TOTAL NET ASSETS (100.00%) $50,254,197 ========== =========== NMF = No Meaningful Figure The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Bond Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Bond Fund on December 31, 1999. It is divided into three main categories: bonds, warrants and short-term investments. Bonds and warrants are further broken down by industry group. Short-term investments, which represent the Fund's "cash" position, are listed last. INTEREST CREDIT PAR VALUE MARKET ISSUER, DESCRIPTION RATE RATING* (000s OMITTED) VALUE - -------------------------- -------------- ------------ -------------- -------------- BONDS Automobile/Trucks (1.57%) Chrysler Financial Co. LLC, Medium Term Note Ser S 11-15-01 5.690% A+ $55 $53,862 ERAC USA Finance Co., Gtd Med Term Note 06-15-00 (R) 7.000 BBB+ 50 50,106 Note 02-15-05 (R) 6.625 BBB+ 49 46,516 Ford Motor Co., Deb 02-01-29 6.375 A+ 55 46,176 -------------- 196,660 -------------- Banks - Foreign (1.04%) Abbey National First Capital, B.V., Sub Note (United Kingdom) 10-15-04 (Y) 8.200 AA- 30 30,940 Scotland International Finance No. 2, B.V., Gtd Sub Note (Netherlands) 11-01-06 (R) (Y) 8.850 A+ 95 99,687 -------------- 130,627 -------------- Banks - United States (1.56%) Bank of New York, Cap Security 12-01-26 (R) 7.780 A- 50 45,748 First Union National Bank, Sub Note 12-01-28 6.500 A 40 33,296 FleetBoston Financial Corp., Sub Note 12-01-05 6.625 A- 35 33,491 National Westminster Bank Plc - New York Branch, Sub Note 05-01-01 9.450 AA- 5 5,155 NB Capital Trust IV, Gtd Cap Security 04-15-27 8.250 A- 20 19,700 RBSG Capital Corp., Gtd Cap Note 03-01-04 10.125 A 15 16,401 Security Pacific Corp., Sub Note 03-01-01 11.000 A 40 41,739 -------------- 195,530 -------------- Beverages (0.45%) Canandaigua Brands, Inc., Sr Sub Note Ser C 12-15-03 8.750 B+ 30 29,850 J Seagram & Sons, Inc., Gtd Deb 09-15-11 8.875 BBB- 25 26,463 -------------- 56,313 -------------- Broker Services (0.35%) Goldman Sachs Group, Inc., Note 10-01-09 7.350 A+ 45 43,929 -------------- Chemicals (0.85%) Akzo Nobel, Inc., Bond 11-15-03 (R) 6.000 A 45 42,806 DuPont (E.I.) de Nemours & Co., Note 10-15-09 6.875 AA- 25 24,214 Equistar Chemicals L.P., Sr Note 02-15-04 (R) 8.500 BBB- 40 39,700 -------------- 106,720 -------------- Computers (1.24%) Ceridian Corp., Sr Note 06-01-04 (R) 7.250 BBB 30 28,939 Exodus Communications, Inc., Sr Note 12-15-09 (R) 10.750 B- 15 15,262 International Business Machines Corp., Med Term Note 09-22-03 5.370 A+ 35 33,231 PSINet, Inc., Sr Note 11-01-08 11.500 B- 25 26,250 Sr Note 08-01-09 11.000 B- 15 15,450 Verio, Inc., Sr Note 04-01-05 10.375 B- 15 15,150 Sr Note 11-15-09 (R) 10.625 B- 20 20,500 -------------- 154,782 -------------- Energy (0.56%) MidAmerican Energy Holdings Co., Sr Bond 09-15-28 8.480 BBB- 40 41,249 P&L Coal Holdings Corp., Sr Sub Note Ser B 05-15-08 9.625 B 30 29,175 -------------- 70,424 -------------- Finance (5.78%) Bombardier Capital, Inc., Note 01-15-02 (R) 6.000 A- 30 29,259 CIT Group Holdings, Inc., Note 10-15-01 5.500 A+ 35 34,218 Commercial Credit Co., Note 07-01-02 6.450 AA- 45 44,365 EES Coke Battery Co., Inc., Sr Sec Note 04-15-02 (R) 7.125 BBB 5 5,284 Finova Capital Corp., Note 11-01-02 6.250 A- 60 58,204 Ford Capital B.V., Gtd Deb (Netherlands) 05-15-02 (Y) 9.875 A+ 50 52,914 Ford Motor Credit Co., Note 04-28-03 6.125 A+ 35 33,957 Note 10-28-09 7.375 A+ 45 44,426 General Motors Acceptance Corp., Note 12-01-01 6.375 A 45 44,502 Household Finance Corp., Note 11-01-02 5.875 A 70 67,421 Sr Note 09-25-04 5.875 A 55 51,900 JCP Master Credit Card Trust, Pass Thru Ctf Ser C Class A 06-15-00 9.625 AA+ 95 96,158 Marlin Water Trust & Marlin Water Capital Corp., Sr Sec Note 12-15-01 (R) 7.090 BBB 30 29,493 Midland Funding Corp. I, Deb Ser C-94 07-23-02 10.330 BBB- 10 9,932 Sec Deb Ser C-91 07-23-02 10.330 BBB- 13 13,836 Midland Funding Corp. II, Deb Ser A 07-23-05 11.750 BB 40 43,194 WMC Finance (USA) Ltd., Gtd Note (Australia) 11-15-03 (Y) 6.500 A 65 62,390 Yanacocha Receivables Master Trust, Pass Thru Cert Ser 1997-A 06-15-04 (R) 8.400 BBB- 4 3,243 -------------- 724,696 -------------- Government - Foreign (0.17%) Nova Scotia, Province of, Deb (Canada) 11-15-19 (Y) 8.250 A- 20 20,885 -------------- Government - U.S. (29.15%) United States Treasury, Bond 08-15-17 8.875 AAA 557 673,185 Bond 02-15-23 7.125 AAA 1,380 1,436,704 Note 05-15-01 8.000 AAA 85 86,965 Note 05-15-02 7.500 AAA 369 378,801 Note 08-15-03 5.750 AAA 190 186,111 Note 02-15-05 7.500 AAA 725 756,153 Note 07-15-06 7.000 AAA 132 135,197 -------------- 3,653,116 -------------- Government - U.S. Agencies (14.22%) Federal National Mortgage Assn., 15 Yr Pass Thru Ctf 12-01-12 6.500 AAA 36 35,169 30 Yr Pass Thru Ctf 06-01-29 6.000 AAA 20 18,004 Bond 05-15-29 6.250 AAA 165 146,850 Note 04-15-03 5.750 AAA 310 301,087 Note 05-14-04 5.625 AAA 50 47,781 Note 08-15-04 6.500 AAA 110 108,625 Note 09-15-09 6.625 AAA 260 252,525 Pass Thru Ctf Ser 1997-M8 Class A-1 01-25-22 6.940 AAA 3 2,668 Government National Mortgage Assn., 30 Yr Pass Thru Ctf 07-15-26 8.000 AAA 25 25,433 30 Yr Pass Thru Ctf 02-15-28 6.500 AAA 42 39,359 30 Yr Pass Thru Ctf 04-15-28 6.500 AAA 244 230,200 30 Yr Pass Thru Ctf 06-15-28 to 04-15-29 7.000 AAA 564 545,033 30 Yr Pass Thru Ctf 01-01-29 7.500 AAA 30 29,662 -------------- 1,782,396 -------------- Insurance (1.01%) Conseco, Inc., Note 10-15-06 9.000 BBB+ 35 35,787 Equitable Life Assurance Society of the United States, Surplus Note 12-01-05 (R) 6.950 AA 15 14,545 Fairfax Financial Holdings Ltd., Note (Canada) 04-15-26 (Y) 8.300 BBB+ 15 13,300 Liberty Mutual Insurance Co., Surplus Note 10-15-26 (R) 7.875 A 10 9,246 Massachusetts Mutual Life Insurance Co., Surplus Note 11-15-23 (R) 7.625 AA 5 4,889 New York Life Insurance Co., Surplus Note 12-15-23 (R) 7.500 AA- 5 4,575 Sun Canada Financial Co., Gtd Sub Note 12-15-07 (R) 6.625 AA- 20 18,718 URC Holdings Corp., Sr Note 06-30-06 (R) 7.875 A- 25 25,226 -------------- 126,286 -------------- Leasing Companies (0.15%) United Rentals, Inc., Sr Sub Note Ser B 04-01-09 9.000 BB- 20 18,800 -------------- Leisure (0.72%) Harrah's Operating Co., Inc., Sr Note 01-15-09 7.500 BBB- 35 32,680 HMH Properties, Inc., Sr Gtd Sec Note Ser A 08-01-05 7.875 BB 20 18,450 Premier Parks, Inc., Sr Note 06-15-07 9.750 B- 20 19,900 Trump Hotels & Casino Resorts Funding, Inc./Holdings, L.P., Sr Note 06-15-05 15.500 B- 5 4,138 Waterford Gaming LLC, Sr Note 03-15-10 (R) 9.500 B+ 15 15,000 -------------- 90,168 -------------- Media (4.44%) Adelphia Communications Corp., Sr Note Ser B 10-01-02 9.250 B+ 17 17,106 Sr Note Ser B 07-15-03 8.125 B+ 15 14,325 AMFM, Inc., Sr Sub Note 10-01-08 9.000 B 25 26,000 Charter Communications Holdings, LLC, Sr Note 04-01-09 8.625 B+ 30 27,937 Comcast Cable Communications, Inc., Note 11-15-08 6.200 BBB 45 40,696 Continental Cablevision, Inc., Sr Note 05-15-06 8.300 BBB 60 62,132 Sr Sub Deb 05-15-16 10.500 BB- 20 22,100 CSC Holdings, Inc., Sr Note Ser B 07-15-09 8.125 BB+ 35 35,350 Echostar DBS Corp., Sr Note 02-01-09 9.375 B 25 25,063 Falcon Holdings Group L.P., Sr Deb Ser B 04-15-10 8.375 B 15 15,112 Garden State Newspapers, Inc., Sr Sub Note 07-01-11 (R) 8.625 B+ 45 41,175 Sr Sub Note Ser B 10-01-09 8.750 B+ 7 6,580 Jones Intercable, Inc., Sr Note 04-15-08 7.625 BB 35 33,521 Liberty Media Group, Note 07-15-29 (R) 8.500 BBB- 30 30,565 Mediacom LLC/Mediacom Capital Corp., Sr Note Ser B 04-15-08 8.500 B+ 20 18,650 News America Holdings, Inc., Gtd Sr Deb 08-10-18 8.250 BBB- 33 33,014 TCI Communications, Inc., Sr Deb 02-15-26 7.875 AA- 40 40,220 Time Warner, Inc., Deb 01-15-13 9.125 BBB 38 41,616 TV Guide, Inc., Sr Sub Note Ser B 03-01-09 8.125 B+ 25 24,938 -------------- 556,100 -------------- Medical (0.72%) Dynacare, Inc., Sr Note (Canada) 01-15-06 (Y) 10.750 B+ 37 35,890 Fresenius Medical Care Capital Trust II, Gtd Trust Preferred Security 02-01-08 7.875 B+ 10 9,300 IASIS Healthcare Corp., Sr Sub Note 10-15-09 (R) 13.000 B- 20 20,600 Quest Diagnostics, Inc., Sr Sub Note 12-15-06 10.750 B+ 23 24,150 -------------- 89,940 -------------- Metal (0.13%) Golden Northwest Aluminum, Inc., 1st Mtg Note 12-15-06 12.000 BB- 15 15,750 -------------- Mortgage Banking (3.15%) Citibank Credit Card Master Trust I, Pass Thru Ctf Ser 1997-7 Class A 08-15-02 6.350 AAA 45 44,919 Commercial Mortgage Acceptance Corp., Pass Thru Ctf Ser 1999-C1 Class A-1 08-15-08 6.790 Aaa 49 47,678 ContiMortgage Home Equity Loan Trust, Pass Thru Ctf Ser 1995-2 Class A-5 08-15-25 8.100 AAA 10 10,078 Credit Suisse First Boston Mortgage Securities Corp., Commercial Mtg Pass Thru Ctf Ser 1998-C1 Class A-1A 12-17-07 6.260 AAA 22 21,249 EQCC Home Equity Loan Trust, Pass Thru Ctf Ser 1997-3 Class A-9 02-15-29 6.570 AAA 50 47,686 GMAC Commercial Mortgage Securities, Inc., Pass Thru Ctf Ser 1997-C2 Class A-3 11-15-07 6.566 Aaa 25 23,437 HomeSide Lending, Inc., Medium Term Sr Note 05-15-03 6.200 A+ 65 62,767 IMC Home Equity Loan Trust, Pass Thru Ctf Ser 1998-1 Class A-4 03-20-25 6.600 AAA 15 14,372 Money Store Home Equity Trust (The), Pass Thru Ctf Ser 1997-D Class AF-7 12-15-38 6.485 AAA 16 15,590 Morgan Stanley Capital I, Inc., Pass Thru Ctf Ser 1997-WF1 Class A-1 10-15-06 (R) 6.830 AAA 92 90,861 Salomon Brothers Mortgage Securities VII, Inc., Mtg Pass Thru Ctf Ser 1997-HUD2 Class A-2 07-25-24 6.750 Aaa 6 5,927 UCFC Home Equity Loan Trust, Pass Thru Ctf Ser 1997-A1 Class A-8 06-15-28 7.220 AAA 10 9,956 -------------- 394,520 -------------- Oil & Gas (1.59%) Amerada Hess Corp., Bond 10-01-29 7.875 BBB 40 39,012 Apache Finance Canada Corp., Note (Canada) 12-15-29 (Y) 7.750 BBB+ 25 24,187 CMS Panhandle Holding Co., Sr Note 07-15-29 (R) 7.000 BBB- 20 17,664 Lyondell Chemical Co., Sr Sec Note Ser A 05-01-07 9.625 BB 20 20,450 Ocean Energy, Inc., Sr Sub Note Ser B 07-15-07 8.875 BB- 15 14,888 Petroleum Geo-Services, Sr Note (Norway) 03-30-08 (Y) 6.625 BBB 30 27,737 Snyder Oil Corp., Sr Sub Note 06-15-07 8.750 BB- 20 20,000 Triton Energy Ltd., Sr Note 04-15-02 8.750 BB- 35 35,263 -------------- 199,201 -------------- Paper & Paper Products (0.59%) Abitibi-Consolidated, Inc., Deb (Canada) 08-01-29 (Y) 8.500 BBB- 25 24,100 Fort James Corp., Sr Note 09-15-02 6.500 BBB 5 4,901 Packaging Corp. of America, Sr Sub Note Ser B 04-01-09 (R) 9.625 B 15 15,338 S.D. Warren Co., Sr Sub Note Ser B 12-15-04 12.000 B+ 28 29,260 -------------- 73,599 -------------- Real Estate Investment Trust (1.10%) American Health Properties, Inc., Note 01-15-07 7.500 BBB- 20 17,719 Cabot Industrial Properties, L.P., Note 05-01-04 7.125 BBB- 25 24,007 Camden Property Trust, Sr Note 04-15-04 7.000 BBB 30 28,945 Liberty Property L.P., Medium Term Note 06-05-02 6.600 BBB- 40 38,780 ProLogis Trust, Note 04-15-04 6.700 BBB+ 25 23,844 TriNet Corporate Realty Trust, Inc., Note 05-15-01 7.300 BB 5 4,835 -------------- 138,130 -------------- Retail (0.97%) Dillard's, Inc., Note 08-01-18 7.130 BBB 30 25,711 Great Atlantic & Pacific Tea Co., Inc. (The) Note 04-15-07 7.750 BBB- 20 18,738 Kmart Corp., Sr Note 12-01-04 8.375 BB+ 15 14,954 Meyer (Fred), Inc., Note 03-01-08 7.450 BBB- 35 34,083 Pathmark Stores, Inc., Sub Note 06-15-02 11.625 CCC+ 40 14,000 Safeway, Inc., Sr Note 11-15-01 5.875 BBB 15 14,650 -------------- 122,136 -------------- Revenue Bonds (0.44%) Massachusetts Bay Transportation Auth, Gen Trans Sys Ser 1998B 03-01-28 5.000 AAA 20 16,751 Metropolitan Transportation Auth, Dedicated Tax Fund Rev Ser 1998A 04-01-23 5.000 AAA 45 38,540 -------------- 55,291 -------------- Soap & Cleaning Preparations (0.43%) Procter & Gamble Co. (The), Note 09-15-09 6.875 AA 55 53,727 -------------- Steel (0.62%) National Steel Corp., 1st Mtg Ser D 03-01-09 9.875 B+ 25 25,688 UCAR Global Enterprises, Inc., Sr Sub Note Ser B 01-15-05 12.000 B 50 52,250 -------------- 77,938 -------------- Telecommunications (6.33%) AXIA, Inc., Sr Sub Note 07-15-08 10.750 B- 17 15,597 Clearnet Communications, Inc., Sr Disc Note, Step Coupon (10.125%, 05-01-04) (Canada) 05-01-09 (A) (Y) Zero B 50 30,375 Sr Disc Note, Step Coupon (14.75%, 12-15-00) (Canada) 12-15-05 (A) (Y) Zero B3 15 14,700 Colt Telecom Group Plc, Sr Note (Euro) 12-15-09 (R) # 7.625 B 30 30,224 Crown Castle International Corp., Sr Note 05-15-11 9.000 B 35 34,475 Global Crossing Holdings Ltd., Sr Note 11-15-06 (R) 9.125 BB 15 14,812 Sr Note 11-15-09 (R) 9.500 BB 30 29,662 Hermes Europe Railtel BV, Sr Note (Netherlands) 08-15-07 (Y) 11.500 B 25 25,625 Sr Note (Netherlands) 01-15-09 (Y) 10.375 B 10 9,900 Jazztel Plc, Sr Note (Euro) 12-15-09 (R) # 13.250 CCC+ 30 30,375 LCI International, Inc., Sr Note 06-15-07 7.250 BB+ 30 28,844 Level 3 Communications, Inc., Sr Note 05-01-08 9.125 B 20 18,900 McLeodUSA, Inc., Sr Note 11-01-08 9.500 B+ 30 30,075 Metromedia Fiber Network, Inc., Sr Note Ser B 11-15-08 10.000 B+ 35 35,788 MetroNet Communications Corp., Sr Note (Canada) 08-15-07 (Y) 12.000 BBB 15 17,400 Nextel Communications, Inc., Sr Disc Note, Step Coupon (9.95%, 02-15-03) 02-15-08 (A) Zero B 30 21,075 Sr Note 11-15-09 (R) 9.375 B 25 24,563 NEXTLINK Communications, Inc., Sr Note 11-15-08 10.750 B 35 36,050 NTL Communications Corp., Sr Note Ser B 10-01-08 11.500 B- 35 37,800 Omnipoint Corp., Sr Note 09-15-09 (R) 11.500 CCC+ 20 21,600 Orange Plc, Sr Note (United Kingdom) 08-01-08 (Y) 8.000 BBB 25 25,438 RCN Corp., Sr Note 10-15-07 10.000 B- 20 19,900 Sprint Capital Corp., Gtd Note 05-01-04 5.875 BBB+ 65 61,304 Gtd Note 05-01-19 6.900 BBB+ 40 36,379 TeleCorp PCS, Inc., Sr Sub Disc Note, Step Coupon (11.625%, 04-15-04) 04-15-09 (A) Zero B3 25 15,750 Tritel PCS, Inc., Sr Disc Note, Step Coupon (12.75%, 05-15-04) 05-15-09 (A) (R) Zero B3 10 6,300 Triton PCS, Inc., Gtd Sr Sub Disc Note, Step Coupon (11.00%, 05-01-03) 05-01-08 (A) Zero CCC+ 20 14,150 United Pan-Europe Communications N.V., Sr Note (Netherlands) 11-01-09 (R) (Y) 11.250 B 15 15,375 WorldCom, Inc., Sr Note 08-15-01 6.125 A- 60 59,351 Worldwide Fiber, Inc., Sr Note (Canada) 12-15-05 (R) (Y) 12.500 B+ 30 31,350 -------------- 793,137 -------------- Transportation (2.54%) America West Airlines, Pass Thru Ctf Ser B 01-02-08 6.930 A- 4 3,510 Continental Airlines, Pass Thru Ctf Ser 1999-1A 08-02-20 6.545 AA+ 60 54,508 Pass Thru Ctf Ser 1997-2C 06-30-04 7.206 BBB 17 16,904 Note 12-15-05 8.000 BB- 25 23,062 Delta Air Lines, Inc., Deb 12-15-29 (R) 8.300 BBB- 25 24,307 Fine Air Services, Inc., Sr Note 06-01-08 9.875 B 15 12,750 Lockheed Martin Corp., Bond 12-01-29 8.500 BBB- 30 30,105 Northwest Airlines, Inc., Pass Thru Ctf Ser 1996-1D 01-02-15 8.970 BBB- 5 4,725 Gtd Note 03-15-04 8.375 BB 25 23,649 NWA Trust, Sr Note Ser A 12-21-12 9.250 AA 39 40,188 U.S. Airways, Inc., Pass Thru Ctf Ser 1989-A2 01-01-13 9.820 BB 40 38,200 Pass Thru Ctf Ser 1990-A1 03-19-05 11.200 BB 38 39,409 Wisconsin Central Transportation Corp., Note 04-15-08 6.625 BBB- 8 7,324 -------------- 318,641 -------------- Utilities (7.73%) AES Corp., Sr Sub Note 07-15-06 10.250 BB 10 10,150 AES Eastern Energy, Pass Thru Ctf 01-02-17 (R) 9.000 BBB- 25 23,516 Avon Energy Partners Holdings, Sr Note (United Kingdom) 12-11-02 (R) (Y) 6.730 A- 40 39,008 Beaver Valley Funding Corp, Deb 06-01-07 8.625 BB- 60 60,078 Sec Lease Oblig Bond 06-01-17 9.000 BB- 23 23,057 BVPS II Funding Corp., Collateralized Lease Bond 06-01-17 8.890 BB- 5 5,062 Calpine Corp., Sr Note 04-01-08 7.875 BB+ 15 14,287 Cleveland Electric Illuminating Co., 1st Mtg Ser B 05-15-05 9.500 BB+ 45 46,462 Sr Sec Note Ser D 11-01-17 7.880 BB+ 20 18,968 CMS Energy Corp., Sr Note 01-15-04 6.750 BB 55 52,535 Sr Note 05-15-02 8.125 BB 25 24,746 Sr Note 01-15-09 7.500 BB 35 32,200 Connecticut Light & Power Co., 1st Mtg Bond Ser C 06-01-02 7.750 BBB- 45 45,552 East Coast Power LLC, Sr Sec Note 03-31-08 (R) 6.737 BBB- 47 44,923 Sr Sec Note 03-31-12 (R) 7.066 BBB- 50 45,000 EIP Funding-PNM, Sec Fac Bond 10-01-12 10.250 BBB- 39 41,296 GG1B Funding Corp., Deb 01-15-11 7.430 BBB- 26 24,839 GTE North, Inc., Deb Ser H 11-15-08 5.650 AA- 75 66,466 Hydro-Quebec, Gtd Bond (Canada) 02-01-21 (Y) 9.400 A+ 30 34,795 Gtd Bond (Canada) 01-15-22 (Y) 8.400 A+ 20 21,218 Iberdrola International B.V., Note 10-01-02 7.500 AA- 35 35,222 Long Island Lighting Co., Deb 03-15-23 8.200 A- 40 39,900 Niagara Mohawk Power Corp., Deb 01-01-18 8.770 BBB 45 45,950 North Atlantic Energy Corp., 1st Mtg Ser A 06-01-02 9.050 BB+ 8 8,108 Northeast Utilities, Note Ser A 12-01-06 8.580 BB+ 4 3,569 PECO Energy Transition Trust, Pass Thru Ctf Ser 1999-A Class A-6 03-01-09 6.050 AAA 35 32,834 PNPP II Funding Corp., Deb 05-30-16 9.120 BB- 30 30,938 U.S. WEST Capital Funding, Inc., Gtd Bond 07-15-28 6.875 A- 40 34,990 Waterford 3 Funding Corp., Sec Lease Oblig Bond 01-02-17 8.090 BBB- 66 63,283 -------------- 968,952 -------------- TOTAL BONDS (Cost $11,694,423) (89.60%) 11,228,394 -------- -------------- NUMBER OF SHARES --------- WARRANTS Telecommunications (0.01%) MetroNet Communications Corp. (Canada) (R) (Y) 5 675 -------- -------------- TOTAL WARRANTS (Cost $51) (0.01%) 675 -------- -------------- INTEREST PAR VALUE RATE (000s OMITTED) --------- ------------ SHORT-TERM INVESTMENTS Joint Repurchase Agreement (9.55%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99, due 01-03-00 (Secured by U.S. Treasury Bond, 10.625% due 08-15-15, and U.S. Treasury Notes, 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.490% $1,196 1,196,000 ----------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 441 ----------- TOTAL SHORT-TERM INVESTMENTS (9.55%) 1,196,441 ---------- ----------- TOTAL INVESTMENTS (99.16%) 12,425,510 ---------- ----------- OTHER ASSETS AND LIABILITIES, NET (0.84%) 105,078 ---------- ----------- TOTAL NET ASSETS (100.00%) $12,530,588 ========== =========== * Credit ratings are unaudited and rated by Standard & Poor's where available, or Moody's Investors Service or John Hancock Advisers, Inc., where Standard & Poor's ratings are not available. # Par value of foreign bonds is expressed in local currency, as shown parenthetically in security description. (A) Cash interest will be paid on this obligation at the stated rate beginning on the stated date. (R) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $1,146,635 or 9.15% of net assets as of December 31, 1999. (Y) Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer; however, security is U.S. dollar denominated. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. High Yield Bond Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. High Yield Bond Fund on December 31, 1999. It is divided into four main categories: bonds, common stocks, preferred stocks and warrants, and short-term investments. Bonds are further broken down by industry group. Short-term investments, which represent the Fund's "cash" position, are listed last. INTEREST CREDIT PAR VALUE MARKET ISSUER, DESCRIPTION RATE RATING* (000s OMITTED) VALUE - -------------------------- -------------- ------------ -------------- -------------- BONDS Aerospace (0.15%) Compass Aerospace Corp., Sr Sub Note Ser C 04-15-05 (R) 10.125% B- $25 $13,812 -------------- Agricultural Operations (0.05%) Iowa Select Farms L.P./ISF Finance, Inc., Sr Sub Note 12-01-05 (R) 10.750 CCC+ 10 4,750 -------------- Automobile/Trucks (0.26%) J.B. Poindexter & Co., Inc., Sr Note 05-15-04 12.500 B 25 23,875 -------------- Building (0.77%) Amatek Industries Property Ltd., Sr Sub Note (Australia) 02-15-08 (Y) 12.000 B 25 24,000 Nortek, Inc., Sr Note 08-01-08 8.875 B+ 50 47,500 -------------- 71,500 -------------- Chemicals (2.88%) General Chemical Industrial Products, Inc., Sr Sub Note 05-01-09 10.625 B+ 50 49,500 Huntsman ICI Chemicals LLC, Sr Sub Note 07-01-09 (R) 10.125 B+ 100 102,500 Huntsman ICI Holdings LLC, Sr Disc Note 12-31-09 (R) Zero B+ 100 30,125 Trikem S.A., Bond (Brazil) 07-24-07 (R) (Y) 10.625 B+ 125 85,000 -------------- 267,125 -------------- Computers (3.73%) ENTEX Information Services, Inc., Sr Sub Note 08-01-06 12.500 B- 25 11,250 Exodus Communications, Inc., Sr Note 07-01-08 11.250 B- 75 77,813 Sr Note 12-15-09 (R) 10.750 B- 50 50,875 PSINet, Inc., Sr Note 11-01-08 11.500 B- 25 26,250 Sr Note Ser B 02-15-05 10.000 B- 130 129,025 Verio, Inc., Sr Note 11-15-09 (R) 10.625 B- 50 51,250 -------------- 346,463 -------------- Consumer Products - Misc. (1.31%) Diamond Brands Operating Corp., Sr Sub Note 04-15-08 10.125 CCC+ 100 77,000 Indesco International, Inc., Sr Sub Note 04-15-08 9.750 B- 100 45,000 -------------- 122,000 -------------- Containers (2.92%) Gaylord Container Corp., Sr Note Ser B 06-15-07 9.375 B- 15 13,912 Sr Sub Note Ser B 02-15-08 9.875 CCC+ 100 86,000 Riverwood International Corp., Gtd Sr Sub Note 04-01-08 10.875 CCC+ 20 19,600 Stone Container Corp., Unit (Sr Sub Deb & Supplemental Int Cert) 04-01-02 12.250 B- 150 151,875 -------------- 271,387 -------------- Cosmetics & Personal Care (1.09%) Carson, Inc., Gtd Sr Sub Note Ser B 11-01-07 10.375 CCC+ 65 52,000 Global Health Sciences, Inc., Gtd Sr Note 05-01-08 11.000 B+ 75 45,750 Styling Technology Corp., Gtd Sr Sub Note 07-01-08 10.875 D 10 3,500 -------------- 101,250 -------------- Diversified Operations (0.86%) Diamond Holdings Plc, Bond (British Pound Sterling) 02-01-08 # 10.000 B- 50 79,928 -------------- Electronics (0.14%) Pacific Aerospace & Electronics, Inc., Gtd Sr Sub Note 08-01-05 11.250 CCC+ 25 13,000 -------------- Energy (1.61%) AEI Resources, Inc./AEI Resources Holdings, Inc., Gtd Note 12-15-05 (R) 10.500 CCC- 75 52,500 P&L Coal Holdings Corp., Sr Sub Note Ser B 05-15-08 9.625 B 100 97,250 -------------- 149,750 -------------- Fiber Optics (0.85%) Williams Communications Group, Inc., Sr Note 10-01-09 10.875 BB- 75 78,469 -------------- Finance (0.86%) ASAT Finance LLC, Unit (Sr Note & Warrant) 11-01-06 (R) 12.500 B 50 54,250 PTC International Finance II S.A., Gtd Sr Sub Note (Euro) 12-01-09 # (R) 11.250 B+ 25 25,942 -------------- 80,192 -------------- Food (2.19%) Agrilink Foods, Inc., Sr Sub Note 11-01-08 11.875 B 100 100,500 Mastellone Hermanos S.A., Sr Note (Argentina) 04-01-08 (Y) 11.750 B+ 125 102,500 -------------- 203,000 -------------- Insurance (0.45%) Willis Corroon Corp., Gtd Sr Sub Note 02-01-09 9.000 B+ 50 41,625 -------------- Leisure (5.73%) Claridge Hotel & Casino Corp., 1st Mtg Note 02-01-02 11.750 D 50 28,875 Fitzgerald's Gaming Corp., Gtd Sr Sec Note Ser B 12-15-04 12.250 D 50 26,875 Hollywood Casino Shreveport, 1st Mtg Bond 08-01-06 (R) 13.000 B 50 53,500 Premier Parks, Inc., Sr Note 06-15-07 9.750 B- 75 74,625 Production Resource Group LLC, Sr Sub Note 01-15-08 11.500 B- 25 22,250 Regal Cinemas, Inc., Sr Sub Note 06-01-08 9.500 B- 25 19,000 SC International Services, Inc., Sr Sub Note Ser B 09-01-07 9.250 B 30 27,900 SFX Entertainment, Inc., Sr Sub Note 02-01-08 9.125 B- 100 94,000 Six Flags Entertainment Corp., Gtd Sr Note 04-01-06 8.875 B- 100 97,750 Venetian Casino Resort LLC/Las Vegas Sands, Inc., 1st Mtg Note 11-15-04 12.250 B- 100 87,250 -------------- 532,025 -------------- Machinery (0.19%) Glasstech, Inc., Sr Note Ser B 07-01-04 12.750 B3 25 17,375 -------------- Manufacturing (1.72%) AP Holdings, Inc., Sr Disc Note, Step Coupon (11.25%, 03-15-03) 03-15-08 (A) Zero B- 200 80,000 Coyne International Enterprises Corp., Sr Sub Note 06-01-08 11.250 B- 75 67,125 ICON Health & Fitness, Inc., Gtd Note 09-27-05 12.000 B 22 12,210 -------------- 159,335 -------------- Media (1.63%) CD Radio, Inc., Sr Disc Note, Step Coupon (15.00%, 12-01-02) 12-01-07 (A) Zero CCC+ 110 57,200 DIVA Systems Corp., Sr Disc Note Ser B, Step Coupon (12.625%, 03-01-03) 03-01-08 (A) Zero B- 25 9,125 Regional Independent Media Group Plc, Sr Disc Note, Step Coupon (12.875%, 07-01-03) (United Kingdom) 07-01-08 # (A) Zero B3 20 20,668 Sr Note (United Kingdom) 07-01-08 (Y) 10.500 B- 5 4,900 Supercanal Holdings S.A./Supercanal S.A., Sr Note (Argentina) 05-15-05 (R) (Y) 11.500 D 24 12,360 United International Holdings, Inc., Sr Disc Note, Step Coupon (10.75%, 02-15-03) 02-15-08 (A) Zero B- 75 47,438 -------------- 151,691 -------------- Medical (0.33%) Total Renal Care Holdings, Inc., Conv Sub Note 05-15-09 (R) 7.000 B 50 30,500 -------------- Metal (4.03%) ALatief Freeport Finance Co. B.V. (P.T.), Sr Note 04-15-01 9.750 CCC+ 50 43,750 Doe Run Resources Corp., Gtd Sr Note Ser B 03-15-03 12.231 B- 25 23,000 Gtd Sr Note Ser B 03-15-05 11.250 B- 10 9,200 Freeport-McMoRan Copper & Gold, Inc., Sr Note 11-15-06 7.500 CCC 75 54,375 Golden Northwest Aluminum, Inc., 1st Mtg Note 12-15-06 12.000 BB- 25 26,250 Kappa Beheer B.V., Sr Sub Note (Netherlands) 07-15-09 (R) (Y) 10.625 B 75 78,375 Sr Sub Note, Step Coupon (12.50%, 07-15-04) (Euro) 07-15-09 # (A) Zero B 100 63,469 TVX Gold, Inc., Conv Sub Note (Canada) 03-28-02 (Y) 5.000 B- 100 76,000 -------------- 374,419 -------------- Oil & Gas (6.98%) Comstock Resources, Inc., Gtd Sr Note 05-01-07 11.250 B 75 76,875 Frontier Oil Corp., Sr Note 11-15-09 11.750 B+ 50 49,250 Gothic Energy Corp., Sr Disc Note, Step Coupon (14.125%, 05-01-02) 05-01-06 (A) Zero CCC- 10 3,500 Gothic Production Corp., Sr Sec Note Ser B 05-01-05 11.125 CCC+ 25 21,000 Great Lakes Acquisition Corp., Sr Disc Deb, Step Coupon (13.125%, 05-15-03) 05-15-09 (A) Zero B- 200 106,000 Key Energy Services, Inc., Conv Sub Note 09-15-04 (R) 5.000 B 80 56,400 Conv Sub Note 09-15-04 5.000 Caa2 143 100,815 Sr Sub Note Ser B 01-15-09 14.000 B- 100 109,000 Mariner Energy, Inc., Sr Sub Note Ser B 08-01-06 10.500 B- 10 8,975 Ocean Rig Norway A.S., Gtd Sr Sec Note (Norway) 06-01-08 (Y) 10.250 B- 55 45,650 PANACO, Inc., Gtd Sr Sub Note Ser B 10-01-04 10.625 CCC 10 7,000 R&B Falcon Corp., Gtd Sr Note 12-15-03 9.125 B+ 60 57,000 Universal Compression, Inc., Sr Disc Note, Step Coupon (9.875%, 02-15-03) 02-15-08 (A) Zero B 10 6,300 -------------- 647,765 -------------- Paper & Paper Products (5.41%) Advance Agro Capital B.V., Gtd Sr Note (Thailand) 11-15-07 (Y) 13.000 CC 50 36,500 APP Finance (VII) Mauritius Ltd., Gtd Note (Indonesia) 04-30-03 (R) (Y) 3.500 CCC+ 10 7,200 APP International Finance Co. B.V., Gtd Sec Note (Indonesia) 10-01-05 (Y) 11.750 CCC+ 150 126,000 Grupo Industrial Durango, S.A., Note (Mexico) 08-01-03 (Y) 12.625 BB- 125 124,375 Packaging Corp. of America, Sr Sub Note Ser B 04-01-09 9.625 B 150 153,375 Repap New Brunswick, Inc., Sr Sec 2nd Priority Note (Canada) 04-15-05 (Y) 10.625 CCC+ 50 46,250 Sappi BVI Finance Ltd., Gtd Conv Bond (South Africa) 08-01-02 (R) (Y) 7.500 BB- 10 9,000 -------------- 502,700 -------------- Real Estate Operations (0.23%) Signature Resorts, Inc., Conv Sub Note 01-15-07 5.750 B 35 21,394 -------------- REIT (0.25%) Host Marriott L.P., Gtd Sr Note 02-15-06 8.375 BB 25 23,500 -------------- Retail (1.67%) Ames Department Stores, Inc., Gtd Sr Note 04-15-06 10.000 B+ 50 49,250 Imperial Home Decor Group, Inc., Gtd Sr Sub Note 03-15-08 11.000 D 125 23,750 Pathmark Stores, Inc., Sub Note 06-15-02 11.625 CCC+ 55 19,250 RAB Holdings, Inc., Sr Note 05-01-08 (R) 13.000 CCC 120 57,600 SpinCycle, Inc., Sr Disc Note, Step Coupon (12.75%, 05-01-01) 05-01-05 (A) Zero CCC+ 25 5,500 -------------- 155,350 -------------- Steel (2.90%) Gulf States Steel, Inc. of Alabama, 1st Mtg Bond 04-15-03 13.500 Caa3 100 10,000 Metallurg, Inc., Gtd Sr Note Ser B 12-01-07 11.000 B- 30 26,700 Metallurg Holdings, Inc., Sr Disc Note, Step Coupon (12.75%, 07-15-03) 07-15-08 (A) Zero CCC+ 50 16,000 NSM Steel, Inc./NSM Steel Ltd., Gtd Sr Sub Mtg Note Ser B 02-01-08 (R) 12.250 D 75 750 Oregon Steel CF&I, Note 03-31-03 (r) 9.500 B 75 72,463 Renco Steel Holdings, Sr Sec Note Ser B 02-01-05 10.875 B- 25 22,313 Weirton Steel Corp., Sr Note 07-01-04 11.375 B 125 120,625 -------------- 268,851 -------------- Telecommunications (22.52%) AMSC Acquisition Co., Inc., Sr Note Ser B 04-01-08 12.250 B- 40 32,800 COLT Telecom Group Plc, Sr Note (Germany) 07-31-08 # 7.625 B 200 103,535 Crown Castle International Corp., Sr Disc Note, Step Coupon (10.625%, 11-15-02) 11-15-07 (A) Zero B 10 7,475 Sr Note 05-15-11 9.000 B 25 24,625 CTI Holdings S.A., Sr Note, Step Coupon (11.25%, 04-15-03) (Argentina) 04-15-08 (A) (Y) Zero B 75 43,950 Dolphin Telecom Plc, Sr Disc Note Ser B, Step Coupon (14.00%, 05-15-04) (United Kingdom) 05-15-09 (A) (Y) Zero CCC+ 50 22,500 Sr Disc Note, Step Coupon (11.50%, 06-01-03) (United Kingdom) 06-01-08 (A) (Y) Zero B- 60 27,450 Esprit Telecom Group Plc, Sr Note (Germany) 06-15-08 # 11.000 BB- 60 30,983 Global TeleSystems Group, Inc., Sr Note 02-15-05 9.875 B- 50 45,750 Hermes Europe Railtel BV, Sr Note (Netherlands) 01-15-09 (Y) 10.375 B 50 49,500 International Wireless Communications, Inc., Sr Sec Disc Note 08-15-01 Zero B- 50 4,500 ITC DeltaCom, Inc., Sr Note 11-15-08 9.750 B 100 101,000 Jazztel Plc, Sr Note (Euro) 12-15-09 # (R) 13.250 CCC+ 50 50,624 KMC Telecom Holdings, Inc., Sr Note 05-15-09 (R) 13.500 B- 100 99,000 McLeodUSA, Inc., Sr Disc Note, Step Coupon (10.50%, 03-01-02) 03-01-07 (A) Zero B+ 20 16,200 Sr Note 03-15-08 8.375 B+ 35 33,250 Sr Note 11-01-08 9.500 B+ 100 100,250 Metromedia Fiber Network, Inc., Sr Note 12-15-09 10.000 B+ 75 76,688 Nextel Partners, Inc., Sr Disc Note, Step Coupon (14.00%, 02-01-04) 02-01-09 (A) Zero CCC+ 25 16,375 NEXTLINK Communications, Inc., Sr Note 11-15-08 10.750 B 75 77,250 NTL Communications Corp., Sr Note Ser B 10-01-08 11.500 B- 50 54,000 Sr Note, Step Coupon (12.375%, 10-01-03) 10-01-08 (A) Zero B- 100 69,750 Nuevo Grupo Iusacell S.A. de C.V., Sr Note (Mexico) 12-01-06 (R) 14.250 B+ 35 36,225 Omnipoint Corp., Sr Note 09-15-09 (R) 11.500 CCC+ 25 27,000 ONO Finance Plc, Sr Sub Note (United Kingdom) 05-01-09 (Y) 13.000 CCC+ 50 52,000 Pac-West Telecomm, Inc., Sr Note 02-01-09 13.500 B 50 51,750 Pegasus Communications Corp., Sr Sub Note 08-01-07 (R) 12.500 CCC+ 35 37,713 Primus Telecommunications Group, Inc., Sr Note 10-15-09 (R) 12.750 B- 50 51,750 Spectrasite Holdings, Inc., Sr Disc Note, Step Coupon (11.25%, 04-15-04) 04-15-09 (A) Zero B- 100 53,500 Tele1 Europe B.V., Sr Note (Euro) 12-01-09 # (R) 11.875 B- 50 50,876 Telewest Communications Plc, Sr Disc Note, Step Coupon (9.875%, 04-15-04) (United Kingdom) 04-15-09 # (A) (R) Zero B+ 25 25,633 Teligent, Inc., Sr Note 12-01-07 11.500 CCC 16 15,600 United Pan-Europe Communications N.V., Sr Disc Note, Step Coupon (13.375%, 11-01-04) (Euro) 11-01-09 # (A) (R) Zero B- 50 27,957 Sr Note (Euro) 11-01-07 # (R) 10.875 B- 50 51,632 Sr Note (Euro) 11-01-09 # (R) 11.250 B- 25 25,816 VersaTel Telecom International N.V., Sr Note (Netherlands) 05-15-08 (Y) 13.250 B- 125 133,125 Sr Note (Netherlands) 07-15-09 (Y) 11.875 B- 25 25,500 Viatel, Inc., Sr Note (Germany) 04-15-08 # 11.150 Caa1 170 87,567 Sr Sec Note 04-15-08 11.250 B- 75 74,625 WinStar Communications, Inc., Sr Sub Def Int Note (11.00%, 03-15-03) 03-15-08 (A) Zero CCC 34 32,640 World Access, Inc., Sr Note 01-15-08 13.250 CCC 100 91,000 Worldwide Fiber, Inc., Sr Note (Canada) 12-15-05 (Y) 12.500 B+ 50 52,250 -------------- 2,091,614 -------------- Textile (1.37%) Polymer Group, Inc., Sr Sub Note 03-01-08 8.750 B 35 33,600 Steel Heddle Group, Inc., Sr Disc Deb, Step Coupon (13.75%, 06-01-03) 06-01-09 (A) Zero CCC+ 200 26,000 Steel Heddle Manufacturing Co., Gtd Sr Sub Note Ser B 06-01-08 10.625 CCC+ 50 20,000 Tropical Sportswear International Corp., Sr Sub Note Ser A 06-15-08 11.000 B- 50 48,000 -------------- 127,600 -------------- Transportation (5.75%) Cenargo International Plc, 1st Mtg Note (United Kingdom) 06-15-08 (Y) 9.750 B+ 20 16,650 Continental Airlines, Sr Note 12-15-05 8.000 BB- 25 23,063 Fine Air Services, Inc., Sr Note 06-01-08 9.875 B 100 85,000 North American Van Lines, Inc., Sr Sub Note 12-01-09 (R) 13.375 B- 75 75,000 Northwest Airlines Corp., Gtd Note 03-15-07 8.700 BB 100 92,495 Pacer International, Inc., Sr Sub Note 06-01-07 11.750 B- 50 50,750 Pacific & Atlantic Holdings, Inc., 1st Mtg Note (Greece) 05-30-08 (Y) 11.500 CC 50 19,000 US Airways, Inc., Pass Thru Ctf Ser 1993-A3 03-01-13 10.375 BB 50 48,000 Sr Note 02-01-01 9.625 B 75 74,625 Worldwide Flight Services, Inc., Unit (Sr Note & Warrant) 08-15-07 (R) 12.250 B 50 49,750 -------------- 534,333 -------------- Waste Disposal Service & Equip. (1.58%) Waste Systems International, Inc., Gtd Sr Note 01-15-06 11.500 B 15 14,531 Sub Note 05-13-05 (R) 7.000 CCC+ 159 132,321 -------------- 146,852 -------------- TOTAL BONDS (Cost $8,816,927) (82.41%) 7,653,430 -------- -------------- NUMBER OF SHARES OR WARRANTS --------- COMMON STOCKS Abitibi-Consolidated, Inc. (Canada) 12,500 148,438 American Pacific Corp.** 5,000 42,500 Continental Airlines, Inc. (Class B)** 800 35,500 Gaylord Container Corp. (Class A) 6,000 40,875 Grey Wolf, Inc.** 23,800 68,425 Key Energy Services, Inc.** 25,000 129,688 KLM Royal Dutch Airlines (Netherlands) # 78 1,945 Northwest Airlines Corp. 3,250 72,313 Repap Enterprises, Inc. (Canada)** # 150,000 8,265 Star Gas Partners, L.P. 3,300 43,725 Viatel, Inc.** 423 22,683 Waste Systems International, Inc.** 8,715 41,396 World Access, Inc. 314 6,044 -------------- TOTAL COMMON STOCKS (Cost $752,020) (7.13%) 661,797 -------- -------------- PREFERRED STOCKS AND WARRANTS American Mobile Satellite Corp., Warrant (R)** 40 -- Cumulus Media, Inc., 13.75%, Ser A, Preferred Stock 22 24,640 DIVA Systems Corp., Warrant** 75 150 Gothic Energy Corp., Warrant** 79 -- HF Holdings, Inc., Warrant** 212 318 Hills Stores Co., Warrant** 35,000 -- Key Energy Services, Inc., Warrant (R)** 100 2,500 Nakornthai Strip Mill Plc, Warrant (Thailand) (R)** 63,309 63 Nextel Communications, Inc., 11.125%, Ser E, Payment-In-Kind, Preferred Stock 179 179,000 ONO Finance Plc, Warrant (United Kingdom) (R)** 50 5,000 Packaging Corp. of America, 12.375%, Payment-In-Kind, Preferred Stock 2,116 231,702 R&B Falcon Corp., Warrant (R)** 50 12,500 R&B Falcon Corp., 13.875%, Preferred Stock 52 54,860 Sirius Satellite Radio, Inc., Conv, 10.50%, Ser C, Preferred Stock 200 36,000 SpinCycle, Inc., Warrant (R)** 25 -- Stone Container Corp., $1.75, Ser E, Preferred Stock 3,000 70,500 VersaTel Telecom International N.V., Warrant (R)** 125 50,000 Waste Systems International, Inc., Warrant (R)** 225 169 -------------- TOTAL PREFERRED STOCKS AND WARRANTS (Cost $592,934) (7.19%) 667,402 -------- -------------- INTEREST PAR VALUE RATE (000s OMITTED) --------- ------------ SHORT-TERM INVESTMENTS Joint Repurchase Agreement (0.52%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond 10.625% due 08-15-15 and U.S. Treasury Notes 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.490% $48 48,000 ----------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 519 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $48,000) (0.52%) 48,519 ---------- ----------- TOTAL INVESTMENTS (97.25%) 9,031,148 ---------- ----------- OTHER ASSETS AND LIABILITIES, NET (2.75%) 255,384 ---------- ----------- TOTAL NET ASSETS (100.00%) $9,286,532 ========== =========== NOTES TO SCHEDULE OF INVESTMENTS * Credit ratings are unaudited and rated by Moody's Investors Service or John Hancock Advisers, Inc. where Standard and Poor's ratings are not available. ** Non-income producing security. *** Represents rate in effect on December 31, 1999. # Par value of foreign bonds and common stocks is expressed in local currency, as shown parenthetically in security description. (A) Cash interest will be paid on this obligation at the stated rate beginning on the stated date. (R) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $1,588,218 or 17.10% of net assets as of December 31, 1999. (Y) Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer; however, security is U.S. dollar denominated. (r) Direct placement securities are restricted as to resale. They have been valued in accordance with procedures approved by the Trustees after after consideration of restrictions as to resale, financial condition and prospects of the issuer, general market conditions and pertinent information in accordance with the Fund's By-Laws and the Investment Company Act of 1940, as amended. The Fund has limited rights to registration under the Securities Act of 1933 with respect to these restricted securities. Additional information on these securities is as follows: MARKET MARKET VALUE AS A VALUE AT ACQUISITION ACQUISITION % OF FUND DECEMBER 31, ISSUER, DESCRIPTION DATE COST NET ASSETS 1999 ------------------- ----------- ----------- ---------- ----------- Oregon Steel CF&I 05-14-98 $72,374 0.78% $72,463 The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
Portfolio Concentration December 31, 1999 (Unaudited) - ------------------------------------------------------------------------- The V.A. High Yield Bond Fund invests primarily in securities issued in the United States of America. The performance of this Fund is closely tied to the economic and financial conditions of the countries within which it invests. The concentration of investments by industry category for individual securities held by the Fund is shown in the schedule of investments. In addition, concentration of investments can be aggregated by various countries. The table below shows the percentages of the Fund's investments at December 31, 1999 assigned to country categories. MARKET VALUE AS A % OF COUNTRY DIVERSIFICATION FUND'S NET ASSETS - ----------------------- ----------------- Argentina 1.73% Australia 0.26 Brazil 0.92 Canada 3.60 Finland 0.69 Greece 0.21 Indonesia 1.45 Luxembourg 0.28 Mexico 1.35 Netherlands 4.84 Norway 0.50 South Africa 0.10 Thailand 0.40 United Kingdom 4.78 United States 76.14 ------- TOTAL INVESTMENTS 97.25% ======= Additionally, the concentration of investments can be aggregated by the quality rating for each debt security. QUALITY DISTRIBUTION - -------------------- BB 4.91% B 59.81 CCC 16.06 CC 0.60 D 1.03 ------- TOTAL BONDS 82.41% ======= See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Money Market Fund Schedule of Investments December 31, 1999 - ------------------------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Money Market Fund on December 31, 1999. INTEREST QUALITY PAR VALUE MARKET ISSUER, DESCRIPTION RATE RATING* (000s OMITTED) VALUE - ------------------- ------------ ----------- ------------ -------------- COMMERCIAL PAPER Automotive (0.83%) Ford Motor Credit Co., 01-13-00 6.400% Tier 1 $275 $274,413 -------------- Banking (3.01%) Bank of America FSB, 02-22-00 5.120 Tier 1 1,000 992,604 -------------- Beverages (4.24%) Coca-Cola Co., 01-18-00 5.730 Tier 1 1,400 1,396,212 -------------- Broker Services (7.19%) Goldman Sachs Group, L.P., 04-28-00 6.000 Tier 1 1,400 1,372,467 Merrill Lynch & Co., Inc., 01-21-00 6.330 Tier 1 1,000 996,483 -------------- 2,368,950 -------------- Chemicals (4.23%) DuPont (E.I.) de Nemours & Co., 01-21-00 6.060 Tier 1 1,400 1,395,287 -------------- Finance (4.01%) General Electric Corp., 01-27-00 6.450 Tier 1 330 328,463 International Lease Finance, 02-11-00 5.740 Tier 1 1,000 993,463 -------------- 1,321,926 -------------- Oil & Gas (4.23%) Chevron USA, Inc., 01-26-00 6.400 Tier 1 1,400 1,393,778 -------------- Utilities (4.24%) Bell Atlantic Network Funding, 01-21-00 5.820 Tier 1 1,400 1,395,473 -------------- TOTAL COMMERCIAL PAPER (Cost $10,538,643) (31.98%) 10,538,643 -------- -------------- CORPORATE INTEREST BEARING OBLIGATIONS Automotive (4.09%) General Motors Acceptance Corp., 08-07-00 5.800 Tier 1 1,350 1,347,391 -------------- Finance (5.22%) CIT Group Holdings, Inc., 01-28-00 6.400 Tier 1 720 720,378 General Electric Capital Corp., 05-15-00 5.890 Tier 1 999,634 -------------- 1,720,012 -------------- Mortgage Banking (3.04%) Countrywide Home Loans, 01-13-00 5.250 Tier 1 1,000 999,647 -------------- Utilities (4.26%) Duke Power Co., 06-01-00 7.000 Tier 1 1,400 1,404,801 -------------- TOTAL CORPORATE INTEREST BEARING OBLIGATIONS (Cost $5,471,851) (16.61%) 5,471,851 -------- -------------- U.S. GOVERNMENT OBLIGATIONS Governmental - U.S. Agencies (31.77%) Federal Home Loan Bank., 03-08-00 5.160 Tier 1 5,000 4,994,646 Federal Home Loan Mortgage Corp., 01-20-00 5.200 Tier 1 1,650 1,645,472 01-31-00 4.750 Tier 1 3,500 3,486,146 06-23-00 5.600 Tier 1 353 343,445 -------------- 10,469,709 -------------- TOTAL U.S. GOVERNMENT OBLIGATIONS (Cost $10,469,709) (31.77%) 10,469,709 -------- -------------- TOTAL SHORT-TERM INVESTMENTS (Cost $26,480,203) (80.36%) 26,480,203 -------- -------------- INTEREST RATE ---------- JOINT REPURCHASE AGREEMENT (18.13%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99, due 01-03-00 (Secured by U.S. Treasury Bond 7.625% due 11-15-22 and U.S. Treasury Note 4.000% due 10-31-00) - Note B 2.490% 5,973 5,973,000 ----------- TOTAL JOINT REPURCHASE AGREEMENT (18.13%) 5,973,000 ---------- ----------- TOTAL INVESTMENTS (98.49%) 32,453,203 ---------- ----------- OTHER ASSETS AND LIABILITIES, NET (1.51%) 498,304 ---------- ----------- TOTAL NET ASSETS (100.00%) $32,951,507 ========== =========== * Quality ratings indicate the categories of eligible securities, as defined by Rule 2a-7 of the Investment Company Act of 1940, owned by the Fund. The percentage shown for each investment category is the total value of that category expressed as a percentage of the net assets of the Fund. See notes to financial statements.
John Hancock Funds - Declaration Trust - V.A. Strategic Income Fund Schedule of Investments December 31, 1999 - ----------------------------------------------------------------------------------------------------------- The Schedule of Investments is a complete list of all securities owned by the V.A. Strategic Income Fund on December 31, 1999. It is divided into four main categories: bonds, common stocks, preferred stocks and warrants, and short-term investments. Bonds are further broken down by industry group. Short-term investments, which represent the Fund's "cash" position, are listed last. INTEREST CREDIT PAR VALUE MARKET ISSUER, DESCRIPTION RATE RATING* (000s OMITTED) VALUE - -------------------------- -------------- -------------- -------------- -------------- BONDS Advertising (0.94%) Go Outdoor Systems Holding S.A., Sr Sub Note (France) 07-15-09 (E) (R) 10.500% B- $100 $106,286 Outdoor Systems, Inc., Sr Sub Note 10-15-06 9.375 B 100 102,750 -------------- 209,036 -------------- Beverages (1.31%) Canandaigua Brands, Inc., Sr Sub Note 03-01-09 8.500 B+ 200 190,000 National Wine & Spirits, Inc., Sr Note 01-15-09 10.125 B 100 101,750 -------------- 291,750 -------------- Building (0.41%) Standard Pacific Corp., Sr Note 04-01-09 8.500 BB 100 92,500 -------------- Business Services - Misc. (0.42%) United Rentals, Inc., Sr Sub Note Ser B 08-15-08 8.800 BB- 100 93,250 -------------- Chemicals (0.90%) General Chemical Industrial Products, Inc., Sr Sub Note 05-01-09 10.625 B+ 100 99,000 Huntsman ICI Chemicals LLC, Sr Sub Note 07-01-09 (R) 10.125 B+ 100 102,500 -------------- 201,500 -------------- Computers (1.05%) Exodus Communications, Inc., Sr Note (United States) 12-15-09 (E) (R) 10.750 B- 200 205,520 Unisys Corp., Sr Note 10-15-04 11.750 BB+ 25 27,500 -------------- 233,020 -------------- Containers (0.92%) Berry Plastics Corp., Sr Sub Note 04-15-04 12.250 B- 100 102,500 Consolidated Container Co. LLC/ Cons. Container Capital, Inc., Sr Sub Note 07-15-09 (R) 10.125 B 100 101,750 -------------- 204,250 -------------- Diversified Operations (0.46%) Tenneco, Inc., Sr Sub Note 10-15-09 (R) 11.625 B+ 100 102,000 -------------- Electronics (0.37%) Communications Instruments, Inc., Sr Sub Note Ser B 09-15-04 10.000 B- 100 83,000 -------------- Energy (0.75%) AEI Resources, Inc./ AEI Resources Holdings, Inc., Note 12-15-05 (R) 10.500 CCC- 100 70,000 P&L Coal Holdings Corp., Sr Sub Note Ser B 05-15-08 9.625 B 100 97,250 -------------- 167,250 -------------- Finance (1.60%) PTC International Finance II S.A., Sr Sub Note (Luxembourg) 12-01-09 (E) (R) 11.250 B+ 100 103,767 Sovereign Bancorp, Inc., Sr Note 11-15-06 10.500 BB+ 150 153,000 Sr Note 07-01-00 6.750 BB+ 100 99,730 -------------- 356,497 -------------- Food (0.45%) Agrilink Foods, Inc., Sr Sub Note 11-01-08 11.875 B 100 100,500 -------------- Government - Foreign (4.09%) Canada, Government of, Government Bond (Canada) 03-01-01 # 7.500 AAA 400 281,311 Government Bond (Canada) 09-01-02 # 5.500 AAA 150 102,025 Government Bond (Canada) 12-01-05 # 8.750 AAA 165 127,640 United Kingdom of Great Britain Treasury Gilts, Government Bond (United Kingdom) 11-06-01 # 7.000 AAA 50 81,559 Government Bond (United Kingdom) 06-07-02 # 7.000 AAA 70 114,555 Government Bond (United Kingdom) 06-10-03 # 8.000 AAA 120 203,627 -------------- 910,717 -------------- Government - U.S. (22.61%) United States Treasury, Bond 08-15-05 6.500 AAA 400 400,000 Bond 08-15-05 10.750 AAA 100 119,266 Bond 02-15-16 9.250 AAA 415 512,330 Bond 08-15-19 8.125 AAA 1,140 1,299,064 Bond 08-15-23 6.250 AAA 800 754,248 Bond 02-15-27 6.625 AAA 500 495,545 Bond 11-15-28 5.250 AAA 250 205,937 Note 08-31-02 6.250 AAA 570 569,111 Note 08-15-04 7.250 AAA 340 350,625 Note 08-15-07 6.125 AAA 340 331,500 -------------- 5,037,626 -------------- Leisure (5.07%) Cinemark USA, Inc., Sr Sub Note Ser D 08-01-08 9.625 B 100 92,000 Harrah's Operating Co., Inc., Sr Sub Note 12-15-05 7.875 BB+ 100 96,250 HMH Properties, Inc., Sr Note Ser B 08-01-08 7.875 BB 100 89,000 Hollywood Casino Shreveport, 1st Mtg Bond 08-01-06 (R) 13.000 B 100 107,000 Isle of Capri Casinos, Inc., Sr Sub Note 04-15-09 8.750 B 100 92,250 Jupiters Ltd., Sr Note (Australia) 03-01-06 (Y) 8.500 BB+ 150 145,500 Premier Parks, Inc., Sr Note 06-15-07 9.750 B- 150 149,250 Regal Cinemas, Inc., Sr Sub Deb 12-15-10 8.875 B- 100 73,500 SFX Entertainment, Inc., Sr Sub Note Ser B 02-01-08 9.125 B- 100 94,000 Sun International Hotels Ltd., Sr Sub Note (Bahamas) 12-15-07 (Y) 8.625 B+ 100 94,000 Waterford Gaming LLC, Sr Note 03-15-10 (R) 9.500 B+ 97 97,000 -------------- 1,129,750 -------------- Machinery (0.39%) Columbus McKinnon Corp., Sr Sub Note 04-01-08 8.500 B 100 86,000 -------------- Media (6.67%) Adelphia Communications Corp., Sr Note 11-15-09 9.375 B+ 100 98,250 American Media Operations, Inc., Sr Sub Note 05-01-09 10.250 B- 150 150,375 AMFM Operating, Inc., Sr Sub Deb 10-31-06 12.625 B- 64 76,440 Chancellor Media Corp., Sr Sub Note 01-15-07 10.500 B 100 109,000 Citadel Broadcasting Co., Sr Sub Note 11-15-08 9.250 B- 100 100,000 Diamond Holdings Plc, Bond (United Kingdom) 02-01-08 # 10.000 B- 50 79,928 DIVA Systems Corp., Sr Disc Note Ser B, Step Coupon (12.625%, 03-01-03) 03-01-08 (A) Zero B- 250 91,250 Emmis Communications Corp., Sr Sub Note, Ser B 03-15-09 8.125 B- 125 118,437 Falcon Holdings Group L.P./ Falcon Funding Corp., Sr Deb Ser B 04-15-10 8.375 B 200 201,500 Garden State Newspapers, Inc., Sr Sub Note 07-01-11 8.625 B+ 100 91,500 Regional Independent Media Group Plc, Sr Note (United Kingdom) 07-01-08 (Y) 10.500 B- 175 171,500 STC Broadcasting, Inc., Sr Sub Note 03-15-07 11.000 B- 100 99,250 TV Guide, Inc., Sr Sub Note 03-01-09 8.125 B+ 100 99,750 -------------- 1,487,180 -------------- Metal (0.86%) Euramax International Plc, Sr Sub Note (United Kingdom) 10-01-06 (Y) 11.250 B 100 100,125 Koppers Industries, Inc., Sr Sub Note 12-01-07 9.875 B- 100 91,750 -------------- 191,875 -------------- Oil & Gas (1.63%) Comstock Resources, Inc., Sr Note 05-01-07 11.250 B 100 102,500 Frontier Oil Corp., Sr Note 11-15-09 11.750 B+ 200 197,000 Universal Compression, Inc., Sr Disc Note, Step Coupon (9.875%, 02-15-03) 02-15-08 (A) Zero B 100 63,000 -------------- 362,500 -------------- Paper & Paper Products (2.98%) Grupo Industrial Durango, S.A., Note (Mexico) 08-01-03 (Y) 12.625 BB- 200 199,000 Kappa Beheer BV, Sr Sub Note (Netherlands) 07-15-09 (E) (R) 10.625 B 150 159,429 Packaging Corp. of America, Sr Sub Note 04-01-09 9.625 B 200 204,500 Stone Container Corp., Unit (Sr Sub Deb & Supplemental Int Cert) 04-01-02 12.250 B- 100 101,250 -------------- 664,179 -------------- Retail (0.62%) United Stationers Supply Co., Sr Sub Note 04-15-08 8.375 B 150 137,250 -------------- Steel (0.42%) AK Steel Corp., Sr Note 02-15-09 7.875 BB 100 94,250 -------------- Technology (0.47%) ChipPAC International Ltd., Sr Sub Note 08-01-09 (R) 12.750 B- 100 105,000 -------------- Telecommunications (9.73%) Allegiance Telecom, Inc., Sr Disc Note, Ser B, Step Coupon (11.75%, 02-15-03) 02-15-08 (A) Zero B 250 178,437 AMSC Acquisition Co., Inc., Sr Note Ser B 04-01-08 12.250 B- 100 82,000 Cellco Finance NV, Sr Note (Netherlands) 08-01-05 (R) (Y) 12.750 B- 100 103,500 Centennial Cellular Operating Co., Sr Sub Note 12-15-08 10.750 Caa1 100 107,500 Comunicacion Celular S.A., Bond, Step Coupon (13.125%, 11-15-00) (Colombia) 03-01-05 (A) (R) (Y) Zero B 100 66,000 Esprit Telecom Group Plc, Sr Note (United Kingdom) 12-15-07 (Y) 11.500 B- 100 100,000 Sr Note (Deutsche Mark) 06-15-08 # 11.000 BB- 200 103,278 Intercel, Inc., Unit (Sr Discount Note & Warrant), Step Coupon (12.00%, 02-01-01) 02-01-06 (A) Zero B 200 173,000 Ionica PLC, Sr Disc Note, Step Coupon (15.00%, 05-01-02) (United Kingdom) 05-01-07 (A) (Y) Zero Ca 200 6,500 MetroNet Communications Corp., Sr Disc Note, Step Coupon (10.75%, 11-01-02) (Canada) 11-01-07 (A) (Y) Zero BBB 200 169,130 Sr Note (Canada) 08-15-07 (Y) 12.000 BBB 50 58,000 NorthEast Optic Network, Inc., Sr Note 08-15-08 12.750 B- 100 106,000 Nuevo Grupo Iusacell S.A., Sr Note (Mexico) 12-01-06 (R) (Y) 14.250 B+ 200 207,000 ONO Finance Plc, Sr Note (United Kingdom) 05-01-09 (E) (Y) 13.000 CCC+ 50 52,387 Sr Note (United Kingdom) 05-01-09 (R) (Y) 13.000 CCC+ 50 52,000 Orange Plc, Sr Note (United Kingdom) 08-01-08 (E) 7.625 BBB 25 26,005 Sr Note (United Kingdom) 08-01-08 (Y) 8.000 BBB 100 101,750 Spectrasite Holdings, Inc., Sr Disc Note, Step Coupon (11.25%, 04-15-04) 04-15-09 (A) Zero B- 200 107,000 TeleCorp PCS, Inc., Sr Disc Note, Step Coupon (11.625%, 04-15-04) 04-15-09 (A) (R) Zero B3 175 110,250 Telewest Communications Plc, Sr Disc Note, Step Coupon (9.25%, 04-15-04) (United Kingdom) 04-15-09 (A) (R) (Y) Zero B+ 100 102,533 Williams Communications Group, Inc., Sr Note 10-01-09 10.875 BB- 150 156,937 -------------- 2,169,207 -------------- Telecommunications Services (21.27%) CapRock Communications Corp., Sr Note 05-01-09 11.500 B 100 102,500 Clearnet Communications, Inc., Sr Disc Note, Step Coupon (10.40%, 05-15-03) (Canada) 05-15-08 (A) # Zero B3 150 65,454 Sr Disc Note, Step Coupon (10.125%, 05-01-04) (Canada) 05-01-09 (A) (Y) Zero B3 150 91,125 COLT Telecom Group Plc (United Kingdom), Sr Note (Deutsche Mark) 07-31-08 # 7.625 B 300 155,303 Crown Castle International Corp., Sr Disc Note, Step Coupon (10.625%, 11-15-02) 11-15-07 (A) Zero B 150 112,125 Dolphin Telecom Plc, Sr Disc Note, Step Coupon (11.50%, 06-01-03) (United Kingdom) 06-01-08 (A) (Y) Zero CCC+ 200 91,500 Sr Disc Note, Step Coupon (14.00%, 05-15-04) (United Kingdom) 05-15-09 (A) (Y) Zero CCC+ 200 90,000 Energis Plc, Sr Note (United Kingdom) 06-15-09 (R) # 9.500 B 130 217,258 Global Crossing Holdings Ltd., Sr Note 05-15-08 9.625 BB 100 99,750 Hermes Europe Railtel BV, Sr Note (Netherlands) 08-15-07 (Y) 11.500 B 100 102,500 Jazztel Plc, Sr Note (United Kingdom) 12-15-09 (E) (R) 13.250 CCC+ 200 202,497 Level 3 Communications, Inc., Sr Note 05-01-08 9.125 B 100 94,500 McLeodUSA, Inc., Sr Note 07-15-07 9.250 B+ 100 100,250 Sr Note 11-01-08 9.500 B+ 50 50,125 Metromedia Fiber Network, Inc., Sr Note 11-15-08 10.000 B+ 300 306,750 Sr Note (United States) 12-15-09 (E) 10.000 B+ 100 103,012 Nextel Communications, Inc., Sr Disc Note 08-15-04 9.750 B 75 77,250 Sr Disc Note, Step Coupon (9.95%, 02-15-03) 02-15-08 (A) Zero B 125 87,813 Nextel Partners, Inc., Sr Disc Note, Step Coupon (14.00%, 02-01-04) 02-01-09 (A) Zero CCC+ 250 163,750 NEXTLINK Communications, Inc., Sr Disc Note, Step Coupon (12.125%, 12-01-04) 12-01-09 (R) Zero B 100 58,250 Sr Note 11-15-08 10.750 B 100 103,000 NTL Communications Corp., Sr Note Ser B 10-01-08 11.500 B- 100 108,000 Sr Note Ser B, Step Coupon (12.375%, 10-01-03) 10-01-08 (A) Zero B- 150 104,625 Omnipoint Corp., Sr Note 09-15-09 (R) 11.500 CCC+ 100 108,000 Orion Network Systems, Sr Note 01-15-07 11.250 B+ 100 74,000 Primus Telecommunications Group, Inc., Sr Note 10-15-09 (R) 12.750 B- 250 258,750 Qwest Communications International, Inc., Sr Note Ser B 04-01-07 10.875 BB+ 65 71,941 RCN Corp., Sr Disc Note, Step Coupon (11.125%, 10-15-02) 10-15-07 (A) Zero B- 200 141,500 Tele1 Europe B.V., Sr Note (Netherlands) 12-01-09 (E) (R) 11.875 B- 200 203,505 Teligent, Inc., Sr Note 12-01-07 11.500 CCC 100 97,500 Time Warner Telecom LLC, Sr Note 07-15-08 9.750 B 100 102,500 Tritel PCS, Inc., Sr Disc Note, Step Coupon (12.75%, 05-15-04) 05-15-09 (A) (R) Zero B3 100 63,000 United Pan-Europe Communications N.V., Sr Disc Note, Step Coupon (13.375%, 11-01-04) (Netherlands) 11-01-09 (E) (R) Zero B- 100 55,913 Sr Note (Netherlands) 11-01-07 (E) (R) 10.875 B- 100 103,264 Sr Note (Netherlands) 11-01-09 (E) (R) 11.250 B- 100 103,264 VersaTel Telecom International N.V., Sr Note (Netherlands) 05-15-08 (Y) 13.250 B- 100 106,500 Sr Note Ser EU (Netherlands) 07-15-09 (E) 11.875 B- 100 107,293 Viatel, Inc., Sr Note 04-15-08 11.250 B- 350 348,250 Winstar Equipment Corp., Sec Note 03-15-04 12.500 CCC+ 100 106,500 -------------- 4,739,017 -------------- Telecommunications/Internet Service Providers (1.88%) PSINet, Inc., Sr Note 11-01-08 11.500 B- 100 105,000 Verio, Inc., Sr Note 12-01-08 11.250 B- 300 315,000 -------------- 420,000 -------------- Transportation (1.66%) Continental Airlines, Inc., Sr Note 12-15-05 8.000 BB- 200 184,500 Fine Air Services Corp., Sr Note 06-01-08 9.875 B 100 85,000 North American Van Lines, Inc., Sr Sub Note 12-01-09 (R) 13.375 B- 100 100,000 -------------- 369,500 -------------- Utilities (3.88%) Calpine Corp., Sr Note 04-01-08 7.875 BB+ 100 95,250 CMS Energy Corp., Sr Note Ser B 11-15-00 7.375 Ba3 250 248,528 Midland Funding Corp. II, Deb Ser A 07-23-05 11.750 BB 100 107,985 Deb Ser B 07-23-06 13.250 BB 150 176,190 Monterrey Power S.A. de C.V., Sr Sec Bond (Mexico) 11-15-09 (R) (Y) 9.625 BB 100 89,500 Niagara Mohawk Power Corp., Sec Fac Bond 01-01-18 8.770 BBB 145 148,061 -------------- 865,514 -------------- TOTAL BONDS (Cost $21,974,386) (93.81%) 20,904,118 -------- -------------- NUMBER OF SHARES --------- COMMON STOCKS KLM Royal Dutch Airlines N.V. (Netherlands) 397 9,900 Nextel Communications, Inc. (Class A)** 232 23,925 Northeast Utilities** 6,000 123,375 Viatel, Inc.** 795 42,632 -------------- 199,832 -------------- TOTAL COMMON STOCK (Cost $127,949) (0.90%) 199,832 -------- -------------- PREFERRED STOCKS AND WARRANTS Allegiance Telecom Inc., Warrant** 250 20,000 American Mobile Satellite Corp., Warrant (R)** 100 0 Comunicacion Celular S.A., Warrant (Colombia)** 100 0 DIVA Systems Corp., Warrant** 750 1,500 Loral Space & Communications Ltd., Warrant** 100 1,000 LTV Corp., 8.25%, Conv Preferred Stock (R) 4,000 243,000 NEXTLINK Communications Inc., 14.00%, Preferred Stock 2,041 110,214 ONO Finance Plc, Warrant (United Kingdom) (R) (Y)** 50 5,000 ONO Finance Plc, Warrant (United Kingdom) (E) (R)** 50 5,037 VersaTel Telecom B.V., Warrant (R)** 100 40,000 -------------- 425,751 -------------- TOTAL PREFERRED STOCKS AND WARRANTS (Cost $335,445) (1.91%) 425,751 -------- -------------- INTEREST PAR VALUE RATE (000s OMITTED) --------- ------------ SHORT-TERM INVESTMENTS Joint Repurchase Agreement (1.25%) Investment in a joint repurchase agreement transaction with Barclay's, Inc. - Dated 12-31-99 due 01-03-00 (Secured by U.S. Treasury Bond 10.625% due 08-15-15 and U.S. Treasury Notes 5.375% thru 7.125% due 01-31-00 thru 05-15-00) - Note B 2.490% $278 278,000 ----------- Corporate Savings Account (0.00%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 4.50% 602 ----------- TOTAL SHORT-TERM INVESTMENTS (1.25%) 278,602 ---------- ----------- TOTAL INVESTMENTS (97.87%) 21,808,303 ---------- ----------- OTHER ASSETS AND LIABILITIES, NET (2.13%) 473,680 ---------- ----------- TOTAL NET ASSETS (100.00%) $22,281,983 ========== =========== * Credit ratings are unaudited and rated by Moody's Investors Service or John Hancock Advisers, Inc. where Standard & Poor's ratings are not available. ** Non-income producing security. # Par value of foreign bonds is expressed in local currency, as shown parenthetically in security description. (A) Cash interest will be paid on this obligation at the stated rate beginning on the stated date. (E) Parenthetical disclosure of a country in the security description represents country of issuer; however, security is euro denominated. (R) These securities are exempt from registration under rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $3,757,773 or 16.86% of the fund's net assets as of December 31, 1999. (Y) Parenthetical disclosure of a foreign country in the security description represents country of foreign issuer; however, security is U.S. dollar denominated. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements.
Portfolio Concentration December 31, 1999 (Unaudited) - --------------------------------------------------------------------------- The V.A. Strategic Income Fund invests primarily in securities issued in the United States of America. The performance of this Fund is closely tied to the economic and financial conditions of the countries within which it invests. The concentration of investments by industry category for individual securities held by the Fund is shown in the schedule of investments. In addition, concentration of investments can be aggregated by various countries. The table below shows the percentages of the Fund's investments at December 31, 1999 assigned to country categories. MARKET VALUE AS A % OF COUNTRY DIVERSIFICATION FUND'S NET ASSETS - ----------------------- ----------------- Australia 0.65% Bahamas 0.42 Canada 4.01 Colombia 0.30 France 0.48 Luxembourg 0.47 Mexico 1.29 Netherlands 4.73 United Kingdom 9.26 United States 76.26 ---------- TOTAL INVESTMENTS 97.87% ========== Additionally, the concentration of investments can be aggregated by the quality rating for each debt security. QUALITY DISTRIBUTION - -------------------- AAA 26.70% BBB 3.37 BB 9.76 B 48.83 CCC 5.12 CC 0.03 ---------- TOTAL BONDS 93.81% ========== NOTES TO FINANCIAL STATEMENTS John Hancock Funds - Declaration Trust NOTE A - ORGANIZATION John Hancock V.A. Financial Industries Fund ("V.A. Financial Industries Fund"), John Hancock V.A. 500 Index Fund ("V.A. 500 Index Fund"), John Hancock V.A. International Fund ("V.A. International Fund"), John Hancock V.A. Large Cap Growth Fund ("V.A. Large Cap Growth Fund"), John Hancock V.A. Mid Cap Growth Fund ("V.A. Mid Cap Growth Fund"), John Hancock V.A. Regional Bank Fund ("V.A. Regional Bank Fund"), John Hancock V.A. Small Cap Growth Fund ("V.A. Small Cap Growth Fund"), John Hancock V.A. Core Equity Fund ("V.A. Core Equity Fund"), John Hancock V.A. Large Cap Value Fund ("V.A. Large Cap Value Fund"), John Hancock V.A. Sovereign Investors Fund ("V.A. Sovereign Investors Fund"), John Hancock V.A. Bond Fund ("V.A. Bond Fund"), John Hancock V.A. High Yield Bond Fund ("V.A. High Yield Bond Fund), John Hancock V.A. Money Market Fund ("V.A. Money Market Fund") and John Hancock V.A. Strategic Income Fund ("V.A. Strategic Income Fund") (each a "Fund," collectively, the "Funds") are separate series of John Hancock Declaration Trust (the "Trust"), an open-end management investment company, registered under the Investment Company Act of 1940. Prior to May 1, 1999, V.A. Large Cap Growth Fund was known as John Hancock V.A. Growth Fund, V.A. Mid Cap Growth Fund was known as John Hancock V.A. Special Opportunities Fund, V.A. Small Cap Growth Fund was known as John Hancock V.A. Emerging Growth Fund, V.A. Core Equity Fund was known as John Hancock V.A. Independence Equity Fund and V.A. Large Cap Value Fund was known as John Hancock Growth and Income Fund. The Trust, organized as a Massachusetts business trust in 1995, consists of fourteen different series at December 31, 1999. Each Fund currently has one class of shares with equal rights as to voting, redemption, dividends and liquidation within its respective Fund. The Trustees may authorize the creation of additional series from time to time to satisfy various investment objectives. An insurance company issuing a Variable Contract that participates in the Trust will vote shares of the Funds held by the insurance company's separate accounts as required by law. In accordance with current law and interpretations thereof, participating insurance companies are required to request voting instructions from policy owners and must vote shares of the Funds in proportion to the voting instructions received. The investment objective of the V.A. Financial Industries Fund is to seek capital appreciation. The investment objective of the V.A. 500 Index Fund is to provide investment results that correspond to the total return performance of the Standard & Poor's 500 Stock Price Index (the "S&P 500 Index"). The investment objective of the V.A. International Fund is to seek long-term growth of capital. The investment objective of the V.A. Large Cap Growth Fund is to seek long-term capital appreciation. The investment objective of the V.A. Mid Cap Growth Fund is to seek long-term capital appreciation. The investment objective of the V.A. Regional Bank Fund is to seek long-term capital appreciation. The investment objective of the V.A. Small Cap Growth Fund is to seek long-term capital appreciation. The investment objective of the V.A. Core Equity Fund is to seek above-average total return, consisting of capital appreciation and income. The investment objective of the V.A. Large Cap Value Fund is to seek the highest total return (capital appreciation plus current income) that is consistent with reasonable safety of capital. The investment objective of the V.A. Sovereign Investors Fund is to seek long-term growth of capital and income without assuming undue market risks. The investment objective of the V.A. Bond Fund is to seek a high level of current income consistent with prudent investment risk. The investment objective of the V.A. High Yield Bond Fund is to seek maximum current income without assuming undue risk. The investment objective of the V.A. Money Market Fund is to seek maximum current income consistent with capital preservation and liquidity. The investment objective of the V.A. Strategic Income Fund is to seek a high level of current income. NOTE B - ACCOUNTING POLICIES VALUATION OF INVESTMENTS Securities in the Funds' portfolios (except for the V.A. Money Market Fund) are valued on the basis of market quotations, valuations provided by independent pricing services or at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. All portfolio transactions initially expressed in terms of foreign currencies have been translated into U.S. dollars as described in "Foreign Currency Translation." The Funds may invest in indexed securities whose value is linked either directly or inversely to changes in foreign currencies, interest rates, indices or other reference instruments. Indexed securities may be more volatile than the reference instrument itself, but any loss is limited to the amount of the original investment. The V.A. Money Market Fund's portfolio of securities is valued at amortized cost, in accordance with Rule 2a-7 of the Investment Company Act of 1940, 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. Interest income on certain portfolio securities such as negotiable bank certificates of deposit and interest- bearing notes is accrued daily and included in interest receivable. JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Funds, along with other registered investment companies having a management contract with John Hancock Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, Inc., may participate in joint repurchase agreement transactions. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Funds' custodian bank receives delivery of the underlying securities for the joint account on the Funds' behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Capital gains realized on some foreign securities are subject to foreign taxes and are accrued, as applicable. FEDERAL INCOME TAXES The Funds' policies are to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies. They will not be subject to federal income tax on taxable earnings which are distributed to shareholders. For federal income tax purposes, net currency exchange gains and losses from sales of foreign debt securities may be treated as ordinary income even though such items are capital gains and losses for accounting purposes. For federal income tax purposes, the following Funds had capital loss carryforwards available. To the extent such carryforwards are used by the Funds, no capital gain distributions will be made. Capital loss carryforwards in the amount of $4,130, which were acquired by the V.A. Strategic Income Fund from the merger of the V.A. World Bond Fund on March 26, 1999, may be limited in a given year. Expired capital loss carryforwards are reclassified to capital paid-in, in the year of expiration. Additionally, net capital losses attributable to security transactions occurring after October 31, 1999 are treated as arising on the first day (January 1, 2000) of the Funds' next taxable year.
CAPITAL LOSS CAPITAL LOSS POST 10/31/1999 CARRYFORWARD CARRYFORWARD LOSS TREATED AS FUND EXPIRING 12/31/2006 EXPIRING 12/31/2007 ARISING 1/1/2000 - ---- ------------------- ------------------- ------------------- V.A. Financial Industries Fund $ -- $2,140,648 $2,011,448 V.A. 500 Index Fund -- -- 32,182 V.A. International Fund -- -- -- V.A. Large Cap Growth Fund -- -- -- V.A. Mid Cap Growth Fund -- -- 2,013 V.A. Regional Bank Fund -- -- 6,293 V.A. Small Cap Growth Fund -- -- -- V.A. Core Equity Fund -- -- -- V.A. Large Cap Value Fund -- -- 4,326 V.A. Sovereign Investors Fund 157,877 101,159 110,401 V.A. Bond Fund -- 67,593 29,471 V.A. High Yield Bond Fund 122,097 -- 1,954 V.A. Money Market Fund -- -- -- V.A. Strategic Income Fund 4,130 136,493 8,695
DIVIDENDS, INTEREST AND DISTRIBUTIONS Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Funds are notified of the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Funds record all distributions to shareholders from net investment income and realized gains on the ex-dividend date. Such distributions are determined in conformity with income tax regulations, which may differ from generally accepted accounting principles. EXPENSES The majority of the expenses of the Trust are directly identifiable to an individual Fund. Expenses which are not readily identifiable to a specific Fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative size of the Funds. USE OF ESTIMATES The preparation of these financial statements in accordance with generally accepted accounting principles incorporates estimates made by management in determining the reported amounts of assets, liabilities, revenues and expenses of the Funds. Actual results could differ from these estimates. ORGANIZATION EXPENSES Any expenses incurred in connection with the organization of the Funds have been capitalized and are being charged to the Funds' operations ratably over a five-year period that commenced with the investment operations of each applicable Fund. BANK BORROWINGS The Funds (except V.A. Money Market Fund) are permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Effective March 12, 1999, the Funds entered into a syndicated line of credit agreement with various banks that enable the Funds to participate with other funds managed by the Adviser in an unsecured line of credit with banks which permit borrowings up to $500 million, collectively. Interest is charged to each fund, based on its borrowings. In addition, a commitment fee is charged based on the average daily unused portion of the line of credit and is allocated among the participating funds. The Funds had no borrowing activity for the year ended December 31, 1999. SECURITIES LENDING The Funds may lend their securities to certain qualified brokers who pay the Funds negotiated lender fees. These fees are included in interest income. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Funds may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral should the borrower of the securities fail financially. At December 31, 1999, the V.A. International Fund loaned securities having a market value of $324,508 collateralized by cash in the amount of $334,763, which was invested in a short-term instrument and the V.A. Small Cap Growth loaned securities having a market value of $177,384 collateralized by securities in the amount of $183,286. FOREIGN CURRENCY TRANSLATION All assets and liabilities initially expressed in terms of foreign currencies are translated into U.S. dollars based on London currency exchange quotations as of 5:00 p.m., London time, on the date of any determination of the net asset value of the Funds. Transactions affecting statement of operations accounts and net realized gain/(loss) on investments are translated at the rates prevailing at the dates of the transactions. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds' books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Funds (except for the V.A. Core Equity Fund, V.A. 500 Index Fund, V.A. Sovereign Investors Fund and V.A. Money Market Fund) may enter into forward foreign currency exchange contracts as a hedge against the effect of fluctuations in currency exchange rates. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date at a set price. The aggregate principal amounts of the contracts are marked to market daily at the applicable foreign currency exchange rates. Any resulting unrealized gains and losses are included in the determination of each Fund's daily net assets. The Funds record realized gains and losses at the time the forward foreign currency contract is closed out or offset by a matching contract. Risks may arise upon entering these contracts from potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. These contracts involve market or credit risk in excess of the unrealized gain or loss reflected in the Funds' Statements of Assets and Liabilities. The Funds (except for the V.A. Core Equity Fund, V.A. 500 Index Fund, V.A. Sovereign Investors Fund and V.A. Money Market Fund) may also purchase and sell forward contracts to facilitate the settlement of foreign currency denominated portfolio transactions, under which they intend to take delivery of the foreign currency. Such contracts normally involve no market risk if they are offset by the currency amount of the underlying transaction. Open forward foreign currency exchange contracts for the Trust at December 31, 1999, were as follows: UNREALIZED PRINCIPAL AMOUNT EXPIRATION APPRECIATION/ CURRENCY COVERED BY CONTRACT MONTH (DEPRECIATION) - -------- ------------------- ---------- ------------ V.A. INTERNATIONAL FUND Sells Euro Currency 61,336 JAN 00 ($205) Indonesian Rupiah 56,338,800 JAN 00 (214) Pound Sterling 3,556 JAN 00 (15) Singapore Dollar 14,294 JAN 00 (13) ------- ($447) ======= V.A. LARGE CAP VALUE FUND Buys Japanese Yen 3,697,363 MAR 00 ($453) ------- Sells Japanese Yen 828,898 JAN 00 $1 Japanese Yen 3,705,446 MAR 00 (447) ------- ($446) ======= V.A. BOND FUND Sells Euro Currency 61,548 MAR 00 $913 ------- V.A. HIGH YIELD BOND FUND Buys Euro Currency 25,776 FEB 00 ($553) Euro Currency 51,482 MAR 00 197 Pound Sterling 16,429 FEB 00 (171) ------- ($527) ======= Sells Canadian Dollar 14,283 MAR 00 ($296) Euro Currency 142,181 JAN 00 10,744 Euro Currency 233,521 FEB 00 14,338 Euro Currency 211,767 MAR 00 6,626 Pound Sterling 15,125 JAN 00 620 Pound Sterling 80,154 FEB 00 2,410 ------- $34,442 ======= V.A. STRATEGIC INCOME FUND Buys Euro Currency 463,542 FEB 00 ($16,813) Pound Sterling 232,073 FEB 00 (959) ------- ($17,772) ======= Sells Euro Currency 463,542 FEB 00 $30,482 Pound Sterling 301,031 JAN 00 12,459 Pound Sterling 719,540 FEB 00 15,511 Pound Sterling 865,614 MAR 00 707 ------- $59,159 ======= FINANCIAL FUTURES CONTRACTS The Funds (except V.A. Money Market Fund) may buy and sell financial futures contracts to hedge against the effects of fluctuations in interest rates, currency exchange rates and other market conditions. Buying futures tends to increase the Funds' exposure to the underlying instrument. Selling futures tends to decrease the Funds' exposure to the underlying instrument or hedge other Funds' instruments. At the time each 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," equal to a certain percentage of the value of the financial futures contract being traded. Each day, the futures contract is valued at the official settlement price on the board of trade or U.S. commodities exchange on which it trades. Subsequent payments, known as "variation margin," to and from the broker are made on a daily basis as the market price of the financial futures contract fluctuates. Daily variation margin adjustments, arising from this "mark to market," will be recorded by the Funds as unrealized gains or losses. When the contracts are closed, the Funds recognize a gain or 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 contracts may not correlate with changes in the value of the underlying securities. In addition, the Funds could be prevented from opening or realizing the benefits of closing out futures positions because of position limits or limits on daily price fluctuation imposed by an exchange. For federal income tax purposes, the amount, character and timing of the Funds' gains and/or losses can be affected as a result of futures contracts. Open financial futures contracts for the Trust at December 31, 1999 were as follows: OPEN UNREALIZED EXPIRATION CONTRACTS POSITION APPRECIATION - ---------- ----------------- ---------- ------------ V.A. 500 INDEX FUND MAR 00 1 S&P 500 Long $9,156 ======= At December 31, 1999, the V.A. 500 Index Fund had deposited $18,750 in a segregated account to cover margin requirements on open financial futures contracts. OPTIONS The Funds (except V.A. Money Market Fund) may purchase options contracts. Listed options are valued at the last quoted sales price on the exchange on which they are primarily traded. Over-the-counter options are valued at the mean between the last bid and asked prices. Upon the writing of a call or put option, an amount equal to the premium received by the Fund will be included in the Statement of Assets and Liabilities as an asset and corresponding liability. The amount of the liability will be subsequently marked to market to reflect the current market value of the written option. The Funds may use option contracts to manage their exposure to changing security prices. Writing puts and buying calls will tend to increase the Funds' exposure to the underlying instrument and buying puts and writing calls will tend to decrease the Funds' exposure to the underlying instrument, or hedge other Fund investments. The maximum exposure to loss for any purchased options will be limited to the premium initially paid for the option. In all other cases, the face (or "notional") amount of each contract at value will reflect the maximum exposure of the Funds in these contracts, but the actual exposure will be limited to the change in value of the contract over the period the contract remains open. Risks may also arise if counterparties do not perform under the contract's terms ("credit risk"), or if the Funds are unable to offset a contract with a counterparty on a timely basis ("liquidity risk"). Exchange-traded options have minimal credit risk as the exchanges act as counterparties to each transaction, and only present liquidity risk in highly unusual market conditions. To minimize credit and liquidity risks in over-the-counter option contracts, the Funds will continuously monitor the creditworthiness of all its counterparties. At any particular time, except for purchased options, market or credit risk may involve amounts in excess of those reflected in the Funds' Statements of Assets and Liabilities. There were no written option transactions for the year ended December 31, 1999, for the Funds. NOTE C - MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES AND OTHERS Under the present investment management contract, each Fund pays a monthly management fee to the Adviser, for a continuous investment program equivalent, on an annual basis as follows: FUND RATE - ---- ---- V.A. Financial Industries Fund 0.80% of average daily net assets V.A. 500 Index Fund 0.35% of average daily net assets V.A. International Fund 0.90% of average daily net assets V.A. Large Cap Growth Fund 0.75% of average daily net assets V.A. Mid Cap Growth Fund 0.75% of average daily net assets V.A. Regional Bank Fund 0.80% of average daily net assets V.A. Small Cap Growth Fund 0.75% of average daily net assets V.A. Core Equity Fund 0.70% of average daily net assets V.A. Large Cap Value Fund 0.60% of average daily net assets V.A. Sovereign Investors Fund 0.60% of average daily net assets V.A. Bond Fund 0.50% of average daily net assets V.A. High Yield Bond Fund 0.60% of average daily net assets V.A. Money Market Fund 0.50% of average daily net assets V.A. Strategic Income Fund 0.60% of average daily net assets John Hancock Advisers International Limited ("JHAI") serves as the sub-adviser to the V.A. International Fund pursuant to a subadvisory agreement among the Fund, the Adviser and JHAI. JHAI was formed in 1987 and is a wholly owned subsidiary of the Adviser. JHAI provides international investment research and advisory services to investment companies and institutional clients. On December 1, 1999, the shareholders of the V.A. International Fund approved a new subadvisory contract between the Adviser and Indocam International Investments Services ("IIIS"), effective January 1, 2000. Under the new contract, IIIS will provide the V.A. International Fund with advice and recommendations regarding the V.A. International Fund's investments. The Adviser pays a portion of its advisory fee from the V.A. International Fund to JHAI at the following rate: 70% of the advisory fee payable by the Fund. Effective January 1, 2000, JHAI will voluntarily limit its subadvisory fee to 0.05% of the V.A. International Fund's average daily net assets. As of January 1, 2000, the Adviser will pay a portion of its advisory fee from the V.A. International Fund to IIIS at the following rate: 55% of the advisory fee payable by the Fund. Independence Investment Associates, Inc. ("IIA") serves as the sub- adviser to the V.A. Core Equity Fund pursuant to a separate subadvisory agreement among the Fund, the Adviser, and IIA. IIA was organized in 1982 and is a wholly owned indirect subsidiary of John Hancock Mutual Life Insurance Company ("JHMLICo"). IIA provides investment advice and advisory services to investment companies and institutional accounts. The Adviser pays a portion of its advisory fee from the V.A. Core Equity Fund to IIA at the following rate: 55% of the advisory fee payable by the Fund. The V.A. 500 Index Fund has an agreement with Standard & Poor's ("S&P") to license certain trademarks and trade names of S&P and of the S&P 500 Index, which is determined, composed and calculated by S&P without regard to the Adviser or the V.A. 500 Index Fund. (Requisite disclosure regarding the use of the Standard & Poor's name is included in the Trust's prospectus.) Effective February 10, 1997, the Adviser agreed to limit its management fee on the V.A. 500 Index Fund to 0.10% of the Fund's average daily net assets. The Adviser may terminate this limitation in the future. Accordingly, for the year ended December 31, 1999, the reduction in the Fund's management fee amounted to $81,532. The Adviser has voluntarily agreed to limit each Fund's expenses, excluding the management fee, to 0.25% of each Fund's average daily net assets. Accordingly, the reductions in expenses for the year ended December 31, 1999 were as follows: FUND FEE REDUCTION - ---- ------------- V.A. Financial Industries Fund $ -- V.A. 500 Index Fund 48,517 V.A. International Fund 100,697 V.A. Large Cap Growth Fund 3,265 V.A. Mid Cap Growth Fund 37,793 V.A. Regional Bank Fund -- V.A. Small Cap Growth Fund 41,006 V.A. Core Equity Fund -- V.A. Large Cap Value Fund -- V.A. Sovereign Investors Fund -- V.A. Bond Fund 30,015 V.A. High Yield Bond Fund 16,324 V.A. Money Market Fund -- V.A. Strategic Income Fund 3,603 The Adviser reserves the right to terminate this limitation in the future. The Funds have an agreement with the Adviser to perform necessary tax, accounting and legal services for the Funds. The compensation for the year was at an annual rate of less than 0.02% of the average net assets of the Funds. Mr. Stephen L. Brown, Ms. Maureen R. Ford, Ms. Anne C. Hodsdon and Mr. Richard S. Scipione are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Funds. The compensation of unaffiliated Trustees is borne by the Funds. The unaffiliated Trustees may elect to defer, for tax purposes, their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Funds make investments into other John Hancock funds, as applicable, to cover their liability for the deferred compensation. Investments to cover the Funds' deferred compensation liability are recorded on the Funds' books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investment as well as any unrealized gains or losses. The Adviser and other subsidiaries of John Hancock Mutual Life Insurance Company owned the following shares of beneficial interest of the Funds as of December 31, 1999: FUND SHARES OF BENEFICIAL INTEREST - ---- ----------------------------- V.A. Financial Industries Fund -- V.A. 500 Index Fund -- V.A. International Fund 222,987 V.A. Large Cap Growth Fund 102,341 V.A. Mid Cap Growth Fund 50,071 V.A. Regional Bank Fund 51,995 V.A. Small Cap Growth Fund 102,547 V.A. Core Equity Fund -- V.A. Large Cap Value Fund 52,730 V.A. Sovereign Investors Fund -- V.A. Bond Fund 125,908 V.A. High Yield Bond Fund 244,286 V.A. Money Market Fund 115,864 V.A. Strategic Income Fund 494,232 NOTE D - INVESTMENT TRANSACTIONS Purchases and proceeds from sales of securities for the Funds, excluding short-term securities, during the year ended December 31, 1999, were as follows: FUND PURCHASES SALES - ---- ----------- ----------- V.A. Financial Industries Fund $35,055,103 $39,313,221 V.A. 500 Index Fund 8,639,187 1,557,032 V.A. International Fund 8,290,079 8,550,835 V.A. Large Cap Growth Fund 35,732,659 27,006,559 V.A. Mid Cap Growth Fund 5,846,137 3,571,941 V.A. Regional Bank Fund 11,681,004 10,112,018 V.A. Small Cap Growth Fund 17,337,802 12,353,728 V.A. Core Equity Fund 39,763,490 27,129,812 V.A. Large Cap Value Fund 50,070,303 40,564,005 V.A. Sovereign Investors Fund U.S. Government Securities 1,028,614 -- Other Investments 23,049,771 10,011,211 V.A. Bond Fund U.S. Government Securities 13,663,565 15,822,068 Other Investments 20,375,274 17,054,453 V.A. High Yield Bond Fund U.S. Government Securities -- -- Other Investments 11,454,414 10,379,553 V.A. Strategic Income Fund U.S. Government Securities 2,313,135 564,387 Other Investments 14,112,484 9,328,560 At December 31, 1999, the cost (excluding the corporate savings accounts) and gross unrealized appreciation and depreciation in value of investments owned by the Funds, as computed on a federal income tax basis, were as follows:
GROSS GROSS NET UNREALIZED AGGREGATE UNREALIZED UNREALIZED APPRECIATION/ FUND COST APPRECIATION DEPRECIATION (DEPRECIATION) - ---- ----------- ------------ ------------ ---------- V.A. Financial Industries Fund $42,186,487 $ 7,910,868 $1,265,709 $ 6,645,159 V.A. 500 Index Fund 26,844,616 13,178,435 2,077,270 11,101,165 V.A. International Fund 6,912,226 2,497,690 227,249 2,270,441 V.A. Large Cap Growth Fund 18,022,997 4,863,409 892,093 3,971,316 V.A. Mid Cap Growth Fund 4,546,110 1,964,459 138,994 1,825,465 V.A. Regional Bank Fund 22,491,056 719,489 2,765,775 (2,046,286) V.A. Small Cap Growth Fund 13,982,774 7,380,878 474,594 6,906,284 V.A. Core Equity Fund 37,305,600 9,392,353 1,866,215 7,526,138 V.A. Large Cap Value Fund 28,700,532 12,135,379 2,572,477 9,562,902 V.A. Sovereign Investors Fund 45,162,849 7,889,523 2,203,048 5,686,475 V.A. Bond Fund 13,033,378 17,079 625,388 (608,309) V.A High Yield Bond Fund 10,214,169 309,385 1,492,925 (1,183,540) V.A. Money Market Fund 32,453,203 -- -- -- V.A. Strategic Income Fund 22,715,781 456,741 1,364,821 (908,080)
NOTE E - RECLASSIFICATION OF CAPITAL ACCOUNTS During the year ended December 31, 1999, reclassifications have been made in each Fund's capital accounts to report these balances on a tax basis, excluding certain temporary differences, as of December 31, 1999. Additional adjustments may be needed in subsequent reporting periods. These reclassifications, which have no impact on the net asset value of the Funds, are primarily attributable to differences in the treatment of net operating losses, foreign currency gains and losses and return of capital under federal tax rules versus generally accepted accounting principles. The calculation of net investment income per share in the financial highlights excludes these adjustments.
UNDISTRIBUTED NET ACCUMULATED NET CAPITAL INVESTMENT REALIZED FUND PAID-IN INCOME/(LOSS) GAIN/(LOSS) - ---- --------- -------------- ------------ V.A. Financial Industries Fund ($24,815) ($885) $25,700 V.A. 500 Index Fund (38) (12) 50 V.A. International Fund (11) 1,407 (1,396) V.A. Large Cap Growth Fund (15) 40,855 (40,840) V.A. Mid Cap Growth Fund (2) 6,426 (6,424) V.A. Regional Bank Fund (29) (22) 51 V.A. Small Cap Growth Fund (11) 82,268 (82,257) V.A. Core Equity Fund (40) 2,492 (2,452) V.A. Large Cap Value Fund (82) 10,442 (10,360) V.A. Sovereign Investors Fund (2,348) 2,314 34 V.A. Bond Fund (17) 21,484 (21,467) V.A. High Yield Bond Fund 8,782 (1,000) (7,782) V.A. Money Market Fund (30) 49 (19) V.A. Strategic Income Fund (7,246) (38,225) 45,471
NOTE F - REORGANIZATION On March 18, 1999, the shareholders of John Hancock V.A. World Bond Fund (VAWBF) approved a plan of reorganization between VAWBF and V.A. Strategic Income Fund, providing for the transfer of substantially all of the assets and liabilities of VAWBF to V.A. Strategic Income Fund in exchange solely for shares of V.A. Strategic Income Fund. The acquisition of VAWBF was accounted for as a tax free exchange of 253,313 shares of V.A. Strategic Income for the net assets of VAWBF, which amounted to $2,569,836, including $17,012 of unrealized depreciation, after the close of business on March 26, 1999. NOTE G - SHAREHOLDER MEETING (UNAUDITED) On December 1, 1999, the shareholders of John Hancock V.A. International Fund approved a subadvisory contract between the Adviser and Indocam International Investment Services (465,986 FOR, 81,973 AGAINST and 25,945 ABSTAINING). REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS To the Contract Owners and Trustees of John Hancock Declaration Trust We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of John Hancock Declaration Trust (the Trust) (comprising, respectively, V.A. Financial Industries Fund, V.A. 500 Index Fund, V.A. International Fund, V.A. Large Cap Growth Fund (formerly, V.A. Growth Fund), V.A. Mid Cap Growth Fund (formerly, V.A. Special Opportunities Fund), V.A. Regional Bank Fund, V.A. Small Cap Growth Fund (formerly, V.A. Emerging Growth Fund), V.A. Core Equity Fund (formerly, V.A. Independence Equity Fund), V.A. Large Cap Value Fund (formerly, V.A. Growth and Income Fund), V.A. Sovereign Investors Fund, V.A. Bond Fund, V.A. High Yield Bond Fund, V.A. Money Market Fund and V.A. Strategic Income Fund) as of December 31, 1999, and the related statements of operations for the year then ended, the statements of changes in net assets 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 1999, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective portfolios constituting the John Hancock Declaration Trust at December 31, 1999, the results of their operations for the year then ended, and the changes in their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States. /S/ ERNST & YOUNG LLP Boston, Massachusetts February 11, 2000 TAX INFORMATION (UNAUDITED) The Funds designated the following as long-term capital gain dividends during the fiscal year ended December 31, 1999. Additionally, the following dividend distributions qualify for the dividends received deduction available to corporations. FUND PURCHASES SALES - ---- ----------- ------- V.A. Financial Industries Fund $ 25,360 99.96% V.A. 500 Index Fund 126,055 85.42 V.A. International Fund 259,599 -- V.A. Large Cap Growth Fund 222,670 12.13 V.A. Mid Cap Growth Fund 5,407 -- V.A. Regional Bank Fund -- 84.35 V.A. Small Cap Growth Fund 441,478 -- V.A. Core Equity Fund 166,196 36.40 V.A. Large Cap Value Fund 494,597 2.78 V.A. Sovereign Investors Fund -- 89.11 V.A. Bond Fund -- -- V.A. High Yield Bond Fund -- 4.14 V.A. Money Market Fund -- -- V.A. Strategic Income Fund -- 1.54 Dividend Increases (Unaudited) Listed below are the most recent dividend increases for the common stocks held in the V.A. Sovereign Investors Fund as of December 31, 1999. - ------------------------------------------------------------------------- PERCENT OF COMPANY DIVIDEND INCREASE - ------- ----------------- Abbott Laboratories 13.3% AFLAC, Inc. 14.6 ALLTEL Corp. 5.1 American General Corp. 6.7 American Home Products Corp. 4.6 American International Group, Inc. 13.1 Automatic Data Processing, Inc. 24.5 Avery Dennison Corp. 13.8 Bank of America Corp. 16.4 Baxter International, Inc. 1.8 Bemis Co., Inc. 4.5 Bestfoods, Inc. 8.5 Bristol-Myers Squibb Co. 14.1 CenturyTel, Inc. 4.0 Chevron Corp. 1.6 Citigroup, Inc. 44.8 Dayton Hudson Corp. 21.2 Dover Corp. 10.0 DuPont (E.I.) De Nemours & Co. 2.2 Emerson Electric Co. 12.7 Exxon Mobil Corp. 1.8 Fannie Mae 12.5 First Tennessee National Corp. 15.3 Gannett Co., Inc. 5.1 General Electric Co. 16.8 Grainger (W.W.), Inc. 6.8 Hasbro, Inc. 14.3 Hewlett-Packard Co. 6.7 Home Depot, Inc. 37.5 Honeywell International, Inc. 13.3 Illinois Tool Works, Inc. 29.4 Interpublic Group of Companies, Inc. (The) 17.2 Johnson & Johnson 12.4 Johnson Controls, Inc. 12.0 Kimberly-Clark Corp. 4.0 Leggett & Platt, Inc. 12.5 Lowe's Cos., Inc. 8.3 Masco Corp. 4.5 McDonald's Corp. 11.1 McGraw-Hill Cos., Inc. 10.3 Merck & Co., Inc. 17.9 Minnesota Mining & Manufacturing Co. 1.8 Nucor Corp. 8.3 Pentair, Inc. 6.7 PepsiCo, Inc. 4.9 Philip Morris Cos., Inc. 9.5 Pitney Bowes, Inc. 13.3 Questar Corp. 3.1 ReliaStar Financial Corp. 12.7 RPM, Inc. 9.1 SBC Communications, Inc. 3.2 Schering-Plough Corp. 14.0 SunTrust Banks, Inc. 38.0 SYSCO Corp. 27.3 Warner-Lambert Co. 0.3 Wells Fargo Co. 12.9 ---- The average dividend increase for this group was 12.4% ==== Historical Data (Unaudited) The table below shows the record for the V.A. Sovereign Investors Fund during the past periods. - ----------------------------------------------------------------- PER SHARE YEAR ----------------------------------------------------- ENDED SHARES DIVIDENDS NET ASSET CAPITAL GAINS DEC. 31 OUTSTANDING FROM INCOME VALUE DISTRIBUTION - ------- ----------- ----------- ------ ------------- 1996(1) 103,482 $0.07 $10.74 $0.02 1997 896,718 0.18 13.59 0.01 1998 2,188,296 0.25 15.61 -- 1999 3,149,115 0.24 15.96 -- (1) For the period from commencement of operations on August 29, 1996 to December 31, 1996. [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the page. A box sectioned in quadrants with a triangle in upper left, a circle in upper right, a cube in lower left and a diamond in lower right. A tag line below reads "A Global Investment Management Firm." 101 Huntington Avenue, Boston, MA 02199-7603 1-800-824-0335 This report is for the information of shareholders of the John Hancock Declaration Trust. It may be used as sales literature when preceded or accompanied by the current prospectus, which details charges, investment objectives and operating policies. A recycled logo in lower left hand corner with caption "Printed on Recycled Paper." DEC0A 12/99 2/00 -----END PRIVACY-ENHANCED MESSAGE-----