EX-99.(17)(G) 11 dex9917g.txt OVERSEAS EQUITY FUND ANNUAL REPORT FOR THE YEAR ENDED 12/31/2003 Annual Report for John Hancock Variable Series Trust I December 31, 2003 [LOGO] John Hancock -------------------------------------------------------------------------------- Not FDIC Insured Not Bank Guaranteed May Lose Value -------------------------------------------------------------------------------- Not a Deposit Not Insured by Any Federal Government Agency -------------------------------------------------------------------------------- Inception: May 1, 1996 -------------------------------------------------------------------------------- Overseas Equity Fund (Formerly Global Balanced Fund) Capital Guardian Trust Company Management Team -------------------------------------------------------------------------------- . In 2003, the Fund returned 39.85% underperforming its custom benchmark. . On May 1st, the Fund's name and strategy were changed, with no change in sub-adviser. The Fund now invests primarily in foreign large and mid sized equities, while previously, it invested globally in equity and fixed income securities. . Since May 1st, the Fund underperformed its benchmark primarily due to a modest cash exposure during the year. The Fund's performance did benefit from both favorable stock selection and country allocation decisions. . The Fund's exposures to selected sectors -- financials and information technology and countries -- Japan, UK and France -- contributed the most to absolute performance. . The top contributing stocks to absolute returns included Tokyo Electron and Sanofi-Synthelabo, while the key detractors included Yahoo Japan and Holcim. . The manager employs a multiple portfolio manager system, with each portfolio managed by several portfolio managers and research analysts. The manager selects securities using proprietary fundamental research Fundamental research seeks to uncover companies that are undervalued and asset rich. [CHART] Line Chart Historical Fund Return $10,000 Investment made 5/1/96 (Fund Inception Date) Overseas Equity Overseas Equity Fund Benchmark (1) -------------------- --------------- 5/01/1996 10,000.00 $10,000.00 5/31/1996 9,992.36 9,892.00 6/30/1996 10,054.88 9,940.47 7/31/1996 9,955.81 9,849.02 8/31/1996 10,007.29 9,898.26 9/30/1996 10,256.56 10,067.52 10/31/1996 10,314.89 10,084.64 11/30/1996 10,677.97 10,397.26 12/31/1996 10,672.71 10,279.77 1/31/1997 10,508.77 9,927.18 2/28/1997 10,623.91 9,985.75 3/31/1997 10,567.65 9,971.77 4/30/1997 10,507.44 9,941.85 5/31/1997 11,089.20 10,497.60 6/30/1997 11,433.44 10,909.11 7/31/1997 11,471.15 10,940.74 8/31/1997 10,985.68 10,435.28 9/30/1997 11,470.48 10,906.96 10/31/1997 11,127.39 10,459.77 11/30/1997 10,966.64 10,291.37 12/31/1997 10,955.08 10,320.18 1/31/1998 11,195.12 10,631.85 2/28/1998 11,630.17 11,135.80 3/31/1998 11,807.71 11,310.64 4/30/1998 11,952.21 11,456.54 5/31/1998 11,952.24 11,413.01 6/30/1998 11,914.86 11,439.26 7/31/1998 11,962.23 11,494.17 8/31/1998 11,270.31 10,651.64 9/30/1998 11,435.01 10,700.64 10/31/1998 12,220.68 11,596.29 11/30/1998 12,442.76 11,897.79 12/31/1998 12,925.42 12,314.21 1/31/1999 12,913.81 12,250.18 2/28/1999 12,390.27 11,901.05 3/31/1999 12,558.03 12,234.28 4/30/1999 12,777.95 12,570.72 5/31/1999 12,313.42 12,071.66 6/30/1999 12,412.46 12,279.29 7/31/1999 12,784.63 12,662.41 8/31/1999 12,771.50 12,715.59 9/30/1999 12,780.73 12,889.79 10/31/1999 12,911.64 13,210.75 11/30/1999 12,991.88 13,449.87 12/31/1999 13,586.49 14,251.48 1/31/2000 12,794.33 13,540.33 2/29/2000 12,820.00 13,717.71 3/31/2000 13,194.62 14,254.07 4/30/2000 12,656.58 13,557.05 5/31/2000 12,722.96 13,394.36 6/30/2000 12,990.79 13,796.19 7/31/2000 12,724.74 13,470.60 8/31/2000 12,891.86 13,694.21 9/30/2000 12,570.54 13,247.78 10/31/2000 12,497.20 13,047.74 11/30/2000 11,946.29 12,677.18 12/31/2000 12,352.52 12,982.70 1/31/2001 12,722.52 13,126.81 2/28/2001 12,056.81 12,459.97 3/31/2001 11,553.80 11,827.00 4/30/2001 12,268.78 12,336.75 5/31/2001 12,111.70 12,229.42 6/30/2001 11,830.12 11,955.48 7/31/2001 11,776.35 11,981.78 8/31/2001 11,572.93 11,818.83 9/30/2001 10,739.32 11,229.07 10/31/2001 11,059.83 11,394.14 11/30/2001 11,559.96 11,735.96 12/31/2001 11,556.31 11,659.68 1/31/2002 11,211.51 11,362.36 2/28/2002 11,159.40 11,328.27 3/31/2002 11,544.13 11,617.14 4/30/2002 11,450.07 11,549.76 5/31/2002 11,571.51 11,696.44 6/30/2002 11,203.91 11,497.60 7/31/2002 10,559.42 10,961.81 8/31/2002 10,512.74 11,051.70 9/30/2002 9,863.12 10,372.02 10/31/2002 10,462.47 10,815.94 11/30/2002 11,085.89 11,172.87 12/31/2002 10,826.48 11,074.55 1/31/2003 10,667.10 10,933.90 2/28/2003 10,631.95 10,882.51 3/31/2003 10,582.62 10,878.16 4/30/2003 11,238.69 11,513.44 5/31/2003 11,827.00 12,221.52 6/30/2003 12,129.88 12,523.39 7/31/2003 12,513.22 12,828.96 8/31/2003 12,866.20 13,140.71 9/30/2003 13,152.75 13,548.07 10/31/2003 14,016.47 14,393.47 11/30/2003 14,219.35 14,715.88 12/31/2003 15,140.71 15,866.66 Value on 12/31/03: ------------------ $15,141 Overseas Equity Fund $15,867 Overseas Equity Benchmark(1) MORNINGSTAR CATEGORY+: . Foreign Large Blend MORNINGSTAR RISK+: . Low (VL/VUL) . Low (VA) MORNINGSTAR RATING+: . ***** (VL/VUL) . ***** (VA) TOP TEN HOLDINGS (as of December 31, 2003) % of Assets ------ Vodafone 3.5% AstraZeneca Group PLC 3.3% Sanofi-Synthelabo SA 3.3% Royal Dutch Petroleum Co. 2.8% Novartis AG 1.8% BNP Paribas 1.7% ABN Amro Holding NV 1.5% Mitsubishi 1.4% Heineken 1.4% Koninklijke 1.4% AVERAGE ANNUAL TOTAL RETURNS* Overseas Equity Overseas Equity Fund Benchmark(1) -------- --------------- 1 Year 39.85% 43.27% 3 Years 7.02 6.92 5 Years 3.21 5.20 Since Inception (5/1/96) 5.55 6.21 DIVERSIFICATION BY REGION AND COUNTRY(3) (as of December 31, 2003) % of Assets ------ Europe (excluding U.K.) 44.0% Japan 21.0% United Kingdom (U.K.) 15.3% Pacific Basin (excluding Japan) 6.3% United States 6.2% Other 4.1% Canada 3.6% DIVERSIFICATION BY REGION(4) Developed Markets 97% Emerging Markets 3% (1) Overseas Equity Composite Index: 65% MSCI World Index Excluding US, and 35% Citigroup Non-US Govt. Bond Index, Unhedged, May 1996 to April 2000, then 60% MSCI World / 40% Citigroup World Government Bond, Unhedged, May 2000 to April 2003 and then MSCI EAFE Index May 2003 to present. * Total returns are for the period ended December 31, 2003. Returns represent past performance, assume reinvestment of all distributions and are not indicative of future performance. Investment returns and principal value of fund shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. There are special risks associated with international investing including currency fluctuations, political and economic instability, foreign taxation and different accounting standards, as outlined in the current prospectus. The performance of the fund on this page is reported net of Trust level charges (i.e. investment management fees and operating expenses). It does not reflect expense and charges of the applicable separate accounts and variable products, all of which vary to a considerable extent and are described in your product prospectus. Performance would be lower if expenses and charges of the separate accounts and products were reflected. + Source: MorningStar, Inc. Data as of 12/31/03. VL represents Variable Life subaccounts, VUL represents Variable Universal Life subaccounts and VA represents Variable Annuity subaccounts Hancock VL/VUL subaccounts were rated against 367 VL/VUL subaccounts and 570 VA subaccounts in the Morningstar Foreign Large Blend category. This represents the Morningstar 3 year rating. (3) Calculations based upon country in which security is traded (listed). (4) Calculations based upon country in which security is domiciled. STATEMENT OF ASSETS AND LIABILITIES JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) ASSETS Long term investments at cost ....................................... $37,218 Net unrealized appreciation of investments .......................... 9,647 Short-term investments at value ..................................... 2,977 ------- Total investments ............................................. 49,842 Cash ................................................................ 22 Foreign currency at value (cost $42) ................................ 42 Receivable for: Investments sold ................................................. 232 Fund shares sold ................................................. 84 Interest ......................................................... 2 Dividends ........................................................ 41 Unrealized appreciation in forward currency contracts ..................................................... 27 Other assets ..................................................... 6 ------- Total assets ........................................................ 50,298 ------- LIABILITIES Payables for: Investments purchased ............................................ 1,058 Unrealized depreciation in forward currency contracts ..................................................... 61 Other liabilities ................................................ 3 ------- Total liabilities ................................................... 1,122 ------- Net assets .......................................................... $49,176 ======= Shares of beneficial interest outstanding ........................... 4,718 ------- Net asset value per share ........................................... $ 10.42 ======= Composition of net assets: Capital paid-in .................................................. $43,341 Accumulated net realized loss on investments, futures and foreign currency transactions ..................... (3,773) Undistributed net investment loss ................................ (5) Net unrealized appreciation (depreciation) of: Investments ................................................... 9,647 Translation of assets and liabilities in foreign currencies ................................................. (34) ------- Net assets .......................................................... $49,176 ======= STATEMENT OF OPERATIONS JOHN HANCOCK VARIABLE SERIES TRUST I For the Year Ended December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) INVESTMENT INCOME Interest ...................................................... $ 157 Dividends ..................................................... 556 ------- Total investment income ............................................. 713 ------- EXPENSES Investment advisory fee ....................................... 377 Auditors fees ................................................. 5 Custodian fees ................................................ 110 Legal fees .................................................... 2 Printing & mailing fees ....................................... 3 Trustees' fees ................................................ 1 Other fees .................................................... 2 ------- Total expenses ...................................................... 500 Less expenses reimbursed ...................................... (87) Less custodian expense reduction offset by commission recapture arrangement (Note C) .................. (1) ------- Net expenses ........................................................ 412 ------- Net investment income ............................................... 301 ------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments ................................................... (450) Foreign currency transactions ................................. 941 Change in unrealized appreciation (depreciation) on: Investments ................................................... 11,946 Translation of assets and liabilities in foreign currencies ................................................. (73) ------- Net realized and unrealized gain .................................... 12,364 ------- Net increase in net assets resulting from operations ....................................................... $12,665 ======= See notes to financial statements. STATEMENT OF CHANGES IN NET ASSETS JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted)
Year Ended Year Ended December 31, December 31, 2003 2002 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS From operations Net investment income ............................................... $ 301 $ 372 Net realized gain (loss) ............................................ 491 (2,154) Change in net unrealized appreciation (depreciation) ................ 11,873 (104) -------- -------- Net increase (decrease) in net assets resulting from operations .. 12,665 (1,886) Distributions to shareholders from: Net investment income ............................................... (1,633) (374) Realized gains ...................................................... (1,073) -------- -------- Decrease in net assets resulting from distributions .............. (2,706) (374) From fund share transactions: Proceeds from shares sold ........................................... 26,834 14,757 Distributions reinvested ............................................ 2,706 374 Payment for shares redeemed ......................................... (20,259) (14,225) -------- -------- Increase in net assets from fund share transactions .............. 9,281 906 -------- -------- NET INCREASE (DECREASE) IN NET ASSETS .................................. 19,240 (1,354) NET ASSETS Beginning of Period ................................................. 29,936 31,290 -------- -------- End of Period ....................................................... $ 49,176 $ 29,936 ======== ======== Analysis of fund share transactions: Sold ................................................................ 2,962 1,868 Reinvested .......................................................... 270 46 Redeemed ............................................................ (2,292) (1,788) -------- -------- Net increase in fund shares outstanding ................................ 940 126 ======== ========
See notes to financial statements. FINANCIAL HIGHLIGHTS JOHN HANCOCK VARIABLE SERIES TRUST I -------------------------------------------------------------------------------- Selected data for each share of beneficial interest outstanding throughout the period indicated:
Overseas Equity Fund -------------------------------------------------------------------- Year Ended December 31, -------------------------------------------------------------------- 2003 2002 2001 2000(c) 1999 ------- ------- ------- ------- ------- Net Assets Value at Beginning of Period ................... $ 7.92 $ 8.57 $ 9.27 $ 10.71 $ 11.12 Income from Investment Operations: Net Investment Income .................................. 0.09 0.10 0.11 0.23 0.29 Net Realized and Unrealized Gain (Loss) on Investments(a) ...................................... 3.03 (0.65) (0.70) (1.20) 0.25 ------- ------- ------- ------ ------- Total From Investment Operations ....................... 3.12 (0.55) (0.59) (0.97) 0.54 Less Distributions: Distribution from Net Investment Income ................ (0.37) (0.10) (0.24) (0.29) Distribution from Net Realized Gains on Investments .... (0.25) (0.01) (0.44) Distribution from Excess of Net Investment Income/Gains ........................................ (0.10) (0.16) Distribution from Capital Paid-in ...................... (0.11) (0.12) (0.06) ------- ------- ------- ------- ------- Total Distributions .................................... (0.62) (0.10) (0.11) (0.47) (0.95) ------- ------- ------- ------- ------- Net Assets Value at End of Period ......................... $ 10.42 $ 7.92 $ 8.57 $ 9.27 $ 10.71 ======= ======= ======= ======= ======= Total Investment Return(b) ................................ 39.85% (6.32)% (6.45)% (9.08)% 5.11% Ratios/Supplemental Data: Ratio of Operating Expenses to Average Net Assets ...... 1.15%(d)(f) 1.15%(d) 1.15%(d) 0.98%(d) 1.00%(d) Ratio of Net Investment Income to Average Net Assets ... 0.84% 1.28% 1.30%(e) 2.32% 2.73% Portfolio Turnover Rate ................................ 89.10% 71.20% 53.11% 204.98% 131.21% Net Assets End of Period (000s Omitted) ................... $49,176 $29,936 $31,290 $28,527 $31,577
(a) The amount shown at this caption for each share outstanding throughout the year may not accord with the change in the aggregate gains and losses in the portfolio securities for the year because of the timing of the purchases and withdrawals of the shares in relation to the fluctuating market values of the portfolio. (b) The performance does not reflect expenses and charges of the applicable separate accounts and variable products, all of which vary to a considerable extent and are described in your product's prospectus. (c) The Fund entered into a new sub-advisory agreement with Capital Guardian Trust Company during the period shown. (d) Expense ratio is net of expense reimbursements. Had such reimbursements not been made the expense ratio would have been 1.39%, 1.45%, 1.36%, 1.27%, and 1.31%, for the years ended December 31, 2003, 2002, 2001, 2000, and 1999, respectively. (e) Had the Fund not amortized premiums and accreted discounts on debt securities, the annual ratio of net investment income to average net assets would have been 1.38% for the years ended December 31, 2001. (f) The Fund is required to calculate an expense ratio without taking into consideration any expense reductions related to expense offset arrangements. SCHEDULE OF INVESTMENTS JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- OVERSEAS EQUITY FUND Market Name of Issuer Shares Value -------------- -------- ------- (000's) COMMON STOCK Australia - 3.1% Amcor, Ltd. (BE) ...................................... $ 3,400 $ 21 Australia & New Zealand Banking Group, Ltd. (JP) .......................................... 13,127 175 Brambles Industries, Ltd. (BO) ........................ 16,000 64 Foster's Brewing Group, Ltd. (JG) ..................... 55,900 189 National Australia Bank, Ltd. (JP) .................... 8,800 198 News Corp., Ltd. (JA) ................................. 8,719 79 QBE Insurance Group, Ltd. (JR) ........................ 20,400 163 Wesfarmers (BL) ....................................... 7,400 148 Westpac Banking Corp., Ltd. (JP) ...................... 7,000 84 WMC Resources, Ltd. (BB) .............................. 33,000 140 WMC, Ltd. (BF) ........................................ 31,000 153 Woolworth's, Ltd. (JF) ................................ 14,000 124 ------ 1,538 Austria - 0.1% Erste Bank (JP) ....................................... 400 49 Canada - 3.4% Abitibi Consolidated, Inc. (BG) ....................... 17,900 144 Alcan Aluminum, Ltd. (BF) ............................. 2,800 131 BCE, Inc. (J1) ........................................ 10,400 233 Bombardier, Inc. - C1. B (BH) ......................... 69,500 294 Great West Lifeco, Inc. (JR) .......................... 1,900 67 Inco, Ltd. (BF) ....................................... 3,500 140 Manulife Financial Corp. (JR) ......................... 2,200 71 Suncor Energy , Inc. (BB) ............................. 6,400 161 TELUS Corp. (J1) ...................................... 12,800 240 Thomson Corp. (BZ) .................................... 5,500 200 ------ 1,681 Denmark - 0.4% Novo Nordisk AS (JO) .................................. 3,600 146 Tele Danmark AS (J1) .................................. 800 29 ------ 175 Finland - 0.9% Nokia Oyj (JW) ........................................ 17,900 309 UPM-Kymmene Corp. (BG) ................................ 7,100 136 ------ 445 France - 11.5% Accor SA (BZ) ......................................... 4,900 222 Air Liquide (BC) ...................................... 1,900 335 BNP Paribas (JP) ...................................... 12,300 773 Bouygues SA (J2) ...................................... 11,100 388 Carrefour SA (JF) ..................................... 2,500 137 Essilor International (JL) ............................ 3,100 160 France Telecom (J1) ................................... 8,800 251 Groupe Danone (JH) .................................... 2,000 326 L'Oreal SA (JK) ....................................... 2,700 221 Renault (BV) .......................................... 6,600 455 Sanofi-Synthelabo SA (JO) ............................. 20,500 1,542 Schneider SA (BK) ..................................... 3,200 209 Societe Generale - Cl. A (JP) ......................... 1,200 106 STMicroelectronics (J0) ............................... $ 3,100 $ 84 Vivendi Universal SA (JA) ............................. 18,400 447 ------ 5,656 Germany - 5.1% Allianz AG (JR) ....................................... 2,700 340 Bayerische Motoren Werke AG (BV) ...................... 3,400 157 DaimlerChrysler AG (BV) ............................... 7,700 359 Deutsche Bank AG (JP) ................................. 3,800 315 Deutsche Boerse AG (JQ) ............................... 1,122 61 Infineon Technologies AG (J0) ......................... 7,300 101 Muenchener Rueckversicherungs- Gesellschaft AG (JR) ............................... 2,828 343 SAP AG (JV) ........................................... 1,300 218 Siemens AG (BL) ....................................... 6,200 496 Thyssen Krupp AG (BF) ................................. 5,500 109 ------ 2,499 Hong Kong - 1.8% Cheung Kong Holdings, Ltd. (JS) ....................... 18,000 142 Hang Lung Properties (JS) ............................. 110,000 141 Hang Seng Bank, Ltd. (JP) ............................. 6,200 81 Hutchison Whampoa, Ltd. (BL) .......................... 10,000 73 Johnson Electric Holdings, Ltd. (BK) .................. 44,000 56 Li & Fung, Ltd. (BO) .................................. 116,000 199 Sun Hung Kai Properties, Ltd. (JS) .................... 11,000 91 Swire Pacific, Ltd. - Cl. A (JQ) ...................... 17,000 105 ------ 888 Italy - 0.9% Assicurazioni Generali (JR) ........................... 3,100 82 ENI (BB) .............................................. 14,200 268 UniCredito Italiano SpA (JP) .......................... 17,400 94 ------ 444 Japan - 20.0% Advantest (J0) ........................................ 2,000 159 Aiful Corp. (JQ) ...................................... 1,600 117 Canon, Inc. (JZ) ...................................... 4,000 186 Dai-Nippon Printng Co., Ltd. (BO) ..................... 10,000 140 Daiwa House Industry Co., Ltd. (BW) ................... 9,000 96 Daiwa Securities Group, Inc. (JQ) ..................... 12,000 82 Fanuc, Ltd. (BM) ...................................... 3,200 192 Fuji Photo Film (BX) .................................. 3,000 97 Hirose Electric Co., Ltd. (JY) ........................ 2,100 241 Honda Motor Co. (BV) .................................. 2,000 89 Hoya Corp. (JY) ....................................... 2,400 220 Japan Airlines (BQ) ................................... 52,000 137 Jusco Co., Ltd. (JD) .................................. 13,000 436 Kansai Electric Power Co., Inc. (J3) .................. 9,700 170 Millea Holdings, Inc. (JR) ............................ 15 196 Mitsubishi Corp. (BN) ................................. 23,000 244 Mitsubishi Estate Co., Ltd. (JS) ...................... 27,000 256 Mitsubishi Heavy Industries, Ltd. (BM) ................ 33,000 92 SCHEDULE OF INVESTMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- OVERSEAS EQUITY FUND Market Name of Issuer Shares Value -------------- -------- ------- (000's) COMMON STOCK - Continued Japan - Continued Mitsubishi Motor (BV) ................................. $ 33,000 $ 67 Mitsui Fudosan Co., Ltd. (JS) ......................... 17,000 154 Mitsui Marine & Fire Insurance Co., Ltd. (JR) ......... 33,000 271 Murata Manufacturing Co., Ltd. (JY) ................... 2,700 146 NEC Corp. (JX) ........................................ 73,000 538 Nidec Corp. (JY) ...................................... 900 86 Nikko Securities Co., Ltd. (JQ) ....................... 23,000 128 Nikon Corp. (J0) ...................................... 5,000 75 Nintendo Corp., Ltd. (BW) ............................. 1,300 121 Nippon Steel Co. (BF) ................................. 62,000 133 Nissan Motor Acceptance Corp. (BV) .................... 36,000 411 Nitto Denko Corp. (BK) ................................ 4,900 261 Nomura Securities Co., Ltd. (JQ) ...................... 11,000 187 Orix Corp. (JQ) ....................................... 3,500 289 Ricoh Co., Ltd. (JZ) .................................. 6,000 118 Rohm Co., Ltd. (J0) ................................... 2,600 305 Sankyo Co., Ltd. (JO) ................................. 12,000 226 Sekisui House, Ltd. (BW) .............................. 21,000 217 Shimamura Co., Ltd. (JE) .............................. 1,400 95 Shin-Etsu Chemical Co. (BC) ........................... 2,600 106 Shionogi & Co., Ltd. (JO) ............................. 18,000 335 SMC Corp. (BM) ........................................ 1,500 187 Softbank Corp. (JT) ................................... 1,000 31 Sumitomo Chemical Co. (BC) ............................ 39,000 161 Sumitomo Forestry Co. (BG) ............................ 6,000 51 Suzuki Motor Corp. (BV) ............................... 23,000 340 Taiyo Yuden Co., Ltd. (JY) ............................ 9,000 118 Tokyo Electron, Ltd. (J0) ............................. 7,500 570 Toray Industries, Inc. (BC) ........................... 14,000 59 Tostem Corp. (BI) ..................................... 6,000 116 Toyota Motor Corp. (BV) ............................... 7,300 247 Yahoo Japan Corp. (JT) ................................ 20 269 Yamanouchi Pharmaceutical Co., Ltd. (JO) .............. 3,000 93 Yamato Transport Co., Ltd. (BP) ....................... 7,000 82 Yasuda F & M Insurance (JR) ........................... 12,000 99 ------ 9,842 Netherlands - 8.8% ABN Amro Holding NV (JP) .............................. 30,148 705 Aegon NV (JR) ......................................... 13,763 203 ASM Lithography Holding NV (J0) ....................... 4,500 89 Elsevier NV (JA) ...................................... 13,200 164 Heineken Holding (JG) ................................. 900 31 Heineken NV (JG) ...................................... 16,300 620 ING Groep NV (JQ) ..................................... 17,447 406 Koninklijke (Royal) Philips Electronics NV (JY) ............................................... 3,600 105 Koninklijke KPN NV (JY) ............................... 57,900 446 Koninklijke Numica NV (JY) ............................ 2,900 80 Royal Dutch Petroleum Co. (BB) ........................ 22,800 1,201 TNT Post Group NV (BP) ................................ 3,800 89 VNU NV (JA) ........................................... $ 6,327 $ 200 ------ 4,339 New Zealand - 0.0% Telecom Corp. of New Zealand, Ltd. (J1) ............... 436 1 Norway - 1.8% Den Norske Bank (JP) .................................. 16,000 107 Norsk Hydro ASA (BL) .................................. 7,025 433 Norske Skogindustrier ASA - Cl. A (BG) ................ 2,700 51 Statoil ASA (BB) ...................................... 25,400 285 ------ 876 Singapore - 1.0% DBS Group Holdings, Ltd. (JP) ......................... 4,000 35 Hong Kong Land Holdings, Ltd. (JS) .................... 56,000 95 Singapore Technology Engineering, Ltd. ................ (BH) ............................................... 75,000 90 Singapore Telecommunications, Ltd. (J1) ............... 117,000 135 United Overseas Bank, Ltd. (JP) ....................... 6,000 47 Venture Manufacturing, Ltd. (JY) ...................... 9,000 106 ------ 508 Spain - 2.9% Banco Bilbao Vizcaya SA (JP) .......................... 39,800 549 Inditex (JE) .......................................... 14,300 290 Repsol SA (BB) ........................................ 6,200 121 Telefonica SA (J1) .................................... 30,853 453 ------ 1,413 Sweden - 3.3% Assa Abloy (BI) ....................................... 20,200 240 AstraZeneca Group plc (BO) ............................ 16,200 789 ForeningsSparbanken AB (JP) ........................... 18,100 356 Sandvik AB (BM) ....................................... 2,500 86 Svenska Handelsbanken, Inc. (JP) ...................... 6,000 123 ------ 1,594 Switzerland - 9.3% ABB, Ltd. (BK) ........................................ 22,218 112 Credit Suisse Group (JP) .............................. 4,063 149 Holcim (BD) ........................................... 8,391 391 Nestle SA (JH) ........................................ 2,309 577 Novartis AG (JO) ...................................... 18,678 848 Richemont (JQ) ........................................ 20,336 488 Roche Holdings AG (JO) ................................ 3,033 306 Serono SA (JN) ........................................ 134 95 Swiss Reinsurance Co. (JR) ............................ 8,404 567 Swisscom AG (J1) ...................................... 1,581 521 Synthes-Stratec, Inc. (JL) ............................ 126 125 UBS AG (JP) ........................................... 5,628 385 ------ 4,564 United Kingdom - 14.6% Anglo American plc (BF) ............................... 4,400 95 SCHEDULE OF INVESTMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- OVERSEAS EQUITY FUND Market Name of Issuer Shares Value -------------- -------- ------- (000's) COMMON STOCK - Continued United Kingdom - Continued Arm Holdings plc (J0) ................................. $ 14,000 $ 32 AstraZeneca Group plc (JO) ............................ 11,100 531 Barclays (JP) ......................................... 30,200 269 BG Group plc (BB) ..................................... 92,100 471 Billiton plc (BF) ..................................... 62,655 546 British Aerospace plc (BH) ............................ 20,000 60 Centrica plc (J4) ..................................... 39,500 149 CRH (BD) .............................................. 7,900 162 Diageo plc (JG) ....................................... 13,000 170 HBOS (JP) ............................................. 24,800 320 HSBC Holdings plc (JP) ................................ 29,900 469 National Grid Group (JY) .............................. 30,600 219 Pearson plc (JA) ...................................... 29,800 331 Prudential Corp. (JR) ................................. 11,700 99 Reckitt Benckiser (JJ) ................................ 3,800 86 Rio Tinto plc (BF) .................................... 3,400 94 Royal Bank of Scotland Group (JP) ..................... 20,400 599 Smith & Nephew (JL) ................................... 14,600 122 Smiths Group (BL) ..................................... 9,900 117 Standard Chartered plc (JP) ........................... 21,300 351 Unilever plc (JK) ..................................... 50,900 473 Vodafone AirTouch plc (J2) ............................ 485,538 1,200 Wolseley (BN) ......................................... 6,600 93 Xstrata (BF) .......................................... 10,900 122 ------- 7,180 United States - 5.9% America Movil SA de CV - ADR Ser. L (J2) .............. 2,400 66 AstraZeneca Group Plc - ADR (JO) ...................... 5,000 242 Companhia Vale Do Rio Doce - ADR (BF) ................. 1,800 105 DBS Group Holdings, Ltd. - ADR 144A (a)(JP) ........... 2,000 17 Nokia Oyj - ADR (JW) .................................. 4,500 77 Royal Dutch Petroleum Co. (BB) ........................ 2,000 105 Samsung Electronics - 144A (a) (JY) ................... 2,850 536 Sap Aktiengesellschaft - ADR (JV) ..................... 3,200 133 Sony Corp. (JY) ....................................... 3,500 121 STMicroelectronics NV (J0) ............................ 5,200 140 Taiwan Semiconductor Manufacturing Co., Ltd. - ADR (J0) .................................... 48,864 500 Telefonos de Mexico SA - ADR (J1) ..................... 1,700 56 The Thomson Corp. (JA) ................................ 10,400 377 Vodafone Group plc (J1) ............................... 17,100 428 Yukos Corp. - ADR (BB) ................................ 300 13 ------- 2,916 ------- TOTAL COMMON STOCK- 94.8% 46,608 Par Market Name of Issuer Value Value -------------- -------- ------- (000's) (000's) PUBLICLY-TRADED BONDS Supra National - 0.5% SMFG Finance (FB) 2.25% due 07/11/05 ................................. $ 12,000 $ 204 2.25% due 07/11/05 ................................. 6,000 53 ------- TOTAL PUBLICLY-TRADED BONDS- 0.5% 257 SHORT-TERM INVESTMENTS - 6.1% Investment in joint trading account (Note B) 1.061% due 01/02/04 ................................ 2,977 2,977 -------- ------- TOTAL INVESTMENTS- .............................. 101.4% 49,842 Payables, less cash and receivables- ............ (1.4)% (666) -------- ------- NET ASSETS- ..................................... 100.0% $49,176 ======== ======= (a) Pursuant to Rule 144A under the Securities Act of 1993, these securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2003, securities aggregated $553 or 1.1% of net assets of the Portfolio. ADR-American Depository Receipts. GDR-Global Depository Receipts. See notes to financial statements. SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED) % of Industry Market Long-Term Industry Abbreviation Value Investments -------- ------------ ------ ----------- (000s) Banks .................................... JP $6,355 13.6% Pharmaceuticals .......................... JO 4,269 9.1% Oil & Gas ................................ BB 2,764 5.9% Insurance ................................ JR 2,501 5.3% Electronic Equipment & Instruments ....... JY 2,424 5.2% Diversified Telecommunication Services ... J1 2,347 5.0% Automobiles .............................. BV 2,126 4.5% Semiconductor Equipment & Products ....... J0 2,056 4.4% Diversified Financials ................... JQ 1,864 4.0% Wireless Telecommunications Services ..... J2 1,654 3.5% Metals & Mining .......................... BF 1,628 3.5% Media .................................... JA 1,597 3.4% Industrial Conglomerates ................. BL 1,267 2.7% Commercial Services & Supplies ........... BO 1,192 2.5% Beverages ................................ JG 1,011 2.2% Food Products ............................ JH 903 1.9% Real Estate Investment Trust ............. JS 879 1.9% Personal Products ........................ JK 694 1.5% Chemicals ................................ BC 661 1.4% Electrical Equipment ..................... BK 638 1.4% Machinery ................................ BM 557 1.2% Construction Materials ................... BD 552 1.2% SCHEDULE OF INVESTMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- OVERSEAS EQUITY FUND % of Industry Market Long-Term Industry Abbreviation Value Investments -------- ------------ ------- ----------- (000s) Computers & Peripherals ................. JX $ 538 1.1% Aerospace & Defense ..................... BH 444 0.9% Multiline Retail ........................ JD 436 0.9% Household Durables ...................... BW 434 0.9% Hotels Restaurants & Leisure ............ BZ 422 0.9% Health Care Equipment & Supplies ........ JL 407 0.9% Communications Equipment ................ JW 386 0.8% Specialty Retail ........................ JE 385 0.8% Paper & Forest Products ................. BG 381 0.8% Building Products ....................... BI 356 0.8% Software ................................ JV 351 0.8% Trading Companies & Distributors ........ BN 337 0.7% Office Electronics ...................... JZ 305 0.7% Internet Software & Services ............ JT 299 0.6% Food & Drug Retailing ................... JF 261 0.6% Finance ................................. FB 257 0.5% Air Freight & Couriers .................. BP 171 0.4% Electric Utilities ...................... J3 170 0.4% Gas Utilities ........................... J4 149 0.3% Airlines ................................ BQ 137 0.3% Leisure Equipment & Products ............ BX 97 0.2% Biotechnology ........................... JN 96 0.2% Household Products ...................... JJ 86 0.2% Containers & Packaging .................. BE 21 0.0% ------- ----- $46,865 100.0% ======= ===== NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE A--ORGANIZATION John Hancock Overseas Equity Fund, (formerly John Hancock Global Balanced Fund), (the "Fund") is a diversified series of John Hancock Variable Series Trust I (the "Trust"), an open-end investment management company registered under the Investment Company Act of 1940. The Trust is organized as a Massachusetts business trust and consists of thirty different funds as of December 31, 2003. The results of this Fund are included in this report. The results of the other Funds in the Trust are presented under separate cover. The Trust may add or delete Funds in the future to accommodate various investment objectives. The Trust has issued shares of beneficial interest exclusively to John Hancock Variable Life Account U ("JHVLAU"), John Hancock Variable Life Account V ("JHVLAV"), John Hancock Variable Life Account S ("JHVLAS"), and John Hancock Variable Annuity Account I ("JHVAAI") to fund policies and contracts issued by the John Hancock Variable Life Insurance Company ("JHVLICO"), and to John Hancock Variable Annuity Account U ("JHVAAU"), John Hancock Variable Annuity Account V ("JHVAAV"), John Hancock Variable Life Account UV ("JHVLAUV"), John Hancock Variable Annuity Account H ("JHVAAH"), and John Hancock Variable Annuity Account JF ("JHVAAJF") to fund contracts and policies issued by John Hancock Life Insurance Company ("John Hancock" or "JHLICO"), to John Hancock Variable Life Account PPM-1 ("PPM-1"), and to John Hancock Variable Life Account PPM-2 ("PPM-2"). NOTE B--ACCOUNTING POLICIES Valuation of investments: Investments in securities traded on national securities exchanges in the United States or on equivalent foreign exchanges are normally valued at the last quoted sales price on such exchanges as of the close of business on the date of which assets are valued. Securities traded in the over-the-counter market and securities traded with no sales on the day of valuation are normally valued at their last available bid price. All Fund securities initially expressed in terms of foreign currencies have been translated into U.S. Dollars as described in "Currency Translation" below. Short-term investments, with a maturity not to exceed 60 days, are valued at amortized cost, which approximates market value. Fair value pricing, determined in good faith by the Board of Trustees, may be used by the Fund when current market values are unavailable or when an event occurs after the close of the exchange on which the Fund's portfolio securities are principally traded that is likely to have changed the value of the securities. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using current market values. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities. Investment security transactions are recorded on the date of purchase or sale. Repurchase agreements: The Fund may enter into repurchase agreements which are contracts under which the Fund would acquire a security for a relatively short period (usually not more than 7 days) subject to the obligation of the seller to repurchase and the Fund to resell such security at a fixed time and price (representing the Fund's cost plus interest). The Fund will enter into repurchase agreements only with member banks of the Federal Reserve System and with "primary dealers" in United States Government Securities. The underlying securities, which represent the collateral of the agreement, must be marked to market daily to ensure that each repurchase agreement is fully collateralized at all times. The Fund will not invest more than 10% of its net assets in repurchase agreements maturing in more than 7 days. Joint trading account: Pursuant to an exemptive order issued by the Securities and Exchange Commission, the order permits the Fund to pool daily uninvested cash balances into a joint account for the purpose of investing the cash balances in short-term repurchase agreements, commercial paper and other short-term investments which in no event will have a maturity in excess of 7 days. Joint account holdings as of December 31, 2003 are as follows: Name of Issuer Market Value -------------- ------------ Alpine Securitization Corp., 1.12%, due 01/07/04 $29,995 Alpine Securitization Corp., 1.12%, due 01/06/04 19,998 Barclays US Fund, 1.10%, due 01/05/04 29,997 NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE B--ACCOUNTING POLICIES--Continued Market Name of Issuer Value -------------- -------- Cargill Asia Pacific, 1.06%, due 01/02/04 $ 20,000 Cargill Asia Pacific, 1.05%, due 01/02/04 25,000 Danske Corp., 1.07%, due 01/05/04 49,996 Greenwich CPL Holding Funding, 0.95%, due 01/02/04 17,654 Merrill Lynch & Co., Inc., 1.04%, due 01/05/04 18,838 Merrill Lynch & Co., Inc., 1.05%, due 01/06/04 31,156 Mortgage Int. Networking, 0.98%, due 01/02/04 50,000 Three Pillars Funding Corp., 1.08%, due 01/06/04 49,994 UBS Finance LLC, 1.02%, due 01/02/04 3,917 UBS Finance LLC, 1.05%, due 01/02/04 4,088 UBS Finance LLC, 0.96%, due 01/02/04 35,000 -------- Joint Trading Account Totals $385,633 ======== Currency translation: All assets or liabilities initially expressed in terms of foreign currencies are translated into U.S. dollars based on London currency exchange quotations as of 5:00 p.m., London time, on the date of any determination of the net asset value of the Fund. Unrealized exchange adjustments are included in unrealized appreciation (depreciation) of investments. Transactions affecting statement of operations accounts and net realized gain (loss) on investments are translated at the rates prevailing at the dates of transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. Reported net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of forward foreign currency contracts, disposition of foreign currencies, currency gains and losses realized between trade and settlement dates of security transactions, and the difference between the amounts of net investment income accrued and the U.S. dollar amount actually received. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities, resulting from changes in the exchange rate. Expenses: Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributed to the Fund are allocated on the basis of relative net assets of the Fund. Bank borrowings: The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into syndicated line of credit agreements with State Street Bank and Trust Company ("SSBT"), the Trust's record keeper and custodian and the Bank of New York. These agreements enable the Fund to participate in an unsecured line of credit, which permits borrowings up to $125 and $75 million, respectively. Interest is charged to the Fund, based on its borrowing. In addition, a commitment fee is charged to the Fund based on the average daily unused portion of the line of credit and is allocated among the participating Funds in the Trust. Interest expense paid under the line of credit is included under the caption "Other fees" in the Statement of Operations. The Fund had borrowings under the line of credit during the year ended December 31, 2003 as follows: Average Daily Loan Balance During the Period for which Weighted Average Loans were Outstanding Interest Rate Interest Expense --------------------------- ---------------- ---------------- $301 1.66% $-- NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE B--ACCOUNTING POLICIES--Continued Financial futures contracts: The Fund may buy and sell financial futures contracts to hedge against the effects of fluctuations in interest rates and other market conditions. At the time the Fund enters into a financial futures contract, it will be required to deposit with its custodian a specified amount of cash or U.S. government securities, known as "initial margin". Each day, the futures contract is valued at the official settlement price of the Chicago Board of Trade or U.S. commodities exchange. Daily adjustments, called variation margin, arising from this "mark to market", are recorded by the Fund as unrealized gains or losses. When the contracts are closed, the Fund recognizes a gain or a loss. Risks of entering into futures contracts include the possibility that there may be an illiquid market and/or that a change in the value of the contract may not correlate with changes in the value of the underlying securities. In addition, the Fund could be prevented from opening or realizing the benefits of closing out futures positions because of position limits or limits on daily price fluctuations imposed by an exchange.At December 31, 2003, the Fund had no open financial futures contracts. Forward foreign currency contracts: The Fund may use forward foreign currency contracts to facilitate transactions in foreign securities and to manage the Fund's currency exposure. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge the Fund's investments against currency fluctuations. Neither type of forward foreign currency transaction will eliminate fluctuations in the prices of the Fund's securities or prevent loss if the price of such securities should decline. The U.S. dollar value of a forward foreign currency contract is determined using forward exchange rates supplied by a quotation service. Realized gain (loss) on the purchases and sales of forward foreign currency contracts is recognized on settlement date. As of December 31, 2003, the Fund had open forward foreign currency contracts which contractually obligate the Fund to deliver or receive currencies at a specified date, as follows: Principal Amount Unrealized Covered by Contract Expiration Month Gain (Loss) ------------------- ---------------- ----------- Currency Purchased ------------------ Swiss Franc 202 January 04 $ 27 ==== Currency Sold ------------- Swiss Franc 211 January 04 $(18) Swiss Franc 301 May 04 (31) Japanese Yen 140 March 04 (12) ---- $(61) ==== Federal income taxes: The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to shareholders. Therefore, no federal income tax provision is required. As of December 31, 2003, the Fund had approximate net tax basis capital loss carryforwards, which may be applied against any net taxable gains, as follows: $478, $2,241 and $1,032 which expire in 2009, 2010 and 2011, respectively. In addition, from the period November 1, 2003 through December 31, 2003, the Fund incurred approximately $37 in net realized currency losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ending on December 31, 2004. NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE B--ACCOUNTING POLICIES--Continued Dividends, Interest and Distributions: Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Dividend income for the Fund is shown net of foreign taxes withheld of $55. Realized gains and losses from security transactions are determined on the basis of identified cost. Dividends of net investment income will be declared and distributed monthly by the Fund. The Fund will distribute all of its net realized capital gains annually, at the end of its fiscal year. Estimates: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES On February 5, 2003, the Board of Trustees of the Trust renewed its Investment Advisory Agreement with John Hancock. For its services, John Hancock receives monthly compensation at the following rate on an annual basis of the Fund's net assets: Between Between $150 Million and $300 Million and Excess Over First $150 Million $300 Million $500 Million $500 Million ------------------ ---------------- ---------------- ------------ 1.05% 0.95% 0.80% 0.75% In the event that normal operating expenses of the Fund, exclusive of investment advisory fees, taxes, interest, brokerage commissions and extraordinary expenses, shall exceed 0.10% of the Fund's daily net asset value, John Hancock and JHVLICO will reimburse the Fund for such excess. Accordingly, for the year ended December 31, 2003, the reimbursements paid from John Hancock and JHVLICO were $87 to the Fund. The Fund entered into a commission recapture program, which enables it to pay some of its operational expenses by recouping a portion of the commissions it pays to a broker that is not a related party of the Fund. Expenses paid through this program may include costs of custodial, transfer agency or accounting services. The impact of this arrangement was a reduction of $1. John Hancock has entered into a Sub-Advisory Agreement with Capital Guardian Trust Company, with respect to the Fund. Capital Guardian Trust Company is an affiliate of John Hancock, and under its supervision, is responsible for the day-to-day investment management of the Fund. Signator Investors, Inc., a wholly owned subsidiary of John Hancock is the principal underwriter and transfer agent of the Trust. Certain officers and trustees of the Trust are officers and directors of JHVLICO, JHVLAU, JHVLAV, JHVLAS, JHVAAI, JHVLAUV, JHVAAV, JHVAAU, JHVAAH, JHVAAJF, PPM-1, and PPM-2, and some are also officers of John Hancock. Fees for independent trustees are paid by the Trust. NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE D--INVESTMENT TRANSACTIONS Purchases and proceeds from sales and maturities of investments, excluding short-term securities and obligations of the U.S. government, for the Fund for the year ended December 31, 2003 were as follows: Purchases Sales and Maturities --------- -------------------- $36,265 $30,303 The identified cost of investments owned by the Fund (including earned discount on corporate short-term notes, and commercial paper) and their respective gross unrealized appreciation and depreciation for Federal income tax purposes at December 31, 2003 were as follows: Identified Unrealized Unrealized Net Unrealized Cost Appreciation Depreciation Appreciation ---------- ------------ ------------ -------------- $40,215 $9,900 $(273) $9,627 Distribution of Income and Gains: Distributions of net investment income, if any, are made at least annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually. Earnings and profits distributed to shareholders on redemption of fund shares may be utilized by the Fund, to the extent permissible, as part of the Fund's dividends-paid deduction on its federal income tax returns. The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to certain securities sold at a loss, premium amortization and market discount accretion on debt securities and investments in passive foreign investment companies and foreign currency denominated investments. Additionally, as a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund. At December 31, 2003, the Fund's components of distributable earnings on a tax basis were as follows: Undistributed Undistributed Ordinary Net Long-Term Capital Loss Net Unrealized Income Capital Gain Carryforwards Appreciation ------------- ------------- ------------- -------------- $-- $-- $3,751 $9,627 NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- NOTE D--INVESTMENT TRANSACTIONS--Continued In addition, the tax character of distributions paid by the Fund are summarized as follows: Distributions from Distributions from Year Ordinary Income Long-Term Capital Gain Return of Capital ---- ------------------ ---------------------- ----------------- 2003 $1,620 $-- $1,086 2002 374 -- -- NOTE E--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED) The Board of Trustees of the Trust is responsible for overall management of the Trust. The Board may exercise all powers of the Trust, except those powers which are conferred solely upon or reserved to the shareholders. The Trust's Statement of Additional Information (SAI) includes additional information about the Trustees and is available without charge, upon request, by calling toll-free at 1-800-576-2227. The following table provides information about the members of the Board of Trustees and the officers of the Trust: Disinterested Trustees
Positions Held Principal Occupation(s) Name, Address and Age With Trust During Past Five Years -------------------------------- -------------- ----------------------------------- Elizabeth G. Cook (age 66) Trustee Expressive Arts Therapist, Dana- c/o John Hancock Variable Series Farber Cancer Institute; President, Trust I The Advertising Club of Greater John Hancock Place Boston Boston, Massachusetts 02117 Diane C. Kessler (age 57) Trustee Executive Director, Massachusetts c/o John Hancock Variable Series Council of Churches Trust I John Hancock Place Boston, Massachusetts 02117 Robert Verdonck (age 58) Trustee President and Chief c/o John Hancock Variable Series Executive Officer, East Boston Trust I Savings Bank John Hancock Place Boston, Massachusetts 02117 Hassell H. McClellan (age 58) Trustee Associate Professor and Graduate c/o John Hancock Variable Series Dean, The Graduate School of the Trust I Wallace G. Carroll School of John Hancock Place Management, Boston College Boston, Massachusetts 02117
NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- NOTE E--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED)--Continued Trustees Affiliated with the Trust and Officers of the Trust
Positions Held Principal Occupation(s) Name, Address and Age With Trust During Past Five Years ------------------------------ ---------------------------- ----------------------------------- Michele G. Van Leer* (age 46) Chairman and Trustee Senior Vice President, Product John Hancock Place Management, John Hancock Life Boston, Massachusetts 02117 Insurance Company; Vice Chairman, President & Director, John Hancock Variable Life Insurance Company Kathleen F. Driscoll* (age 47) Vice Chairman, President Senior Vice President, Signator John Hancock Place and Trustee Brokerage, John Hancock Life Boston, Massachusetts 02117 Insurance Company; Vice President Corporate Communications, John Hancock Life Insurance Company Jude A. Curtis (age 45) Compliance Officer Vice President and Chief Investment John Hancock Place Compliance Officer, John Hancock Boston, Massachusetts 02117 Life Insurance Company; formerly Second Vice President and Counsel, Office of Business Conduct; John Hancock Life Insurance Company; formerly a Partner at Hale and Dorr LLP (law firm) Janet Wang (age 35) Assistant Compliance Officer Compliance Specialist, John John Hancock Place Hancock Life Insurance Company Boston, Massachusetts 02117 Raymond F. Skiba (age 58) Treasurer Director of Fund Operations, John John Hancock Place Hancock Life Insurance Company Boston, Massachusetts 02117 Gladys C. Millan (age 57) Assistant Treasurer Manager of Fund Operations, John John Hancock Place Hancock Life Insurance Company Boston, Massachusetts 02117
NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- NOTE E--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED)--Continued Trustee Affiliated with the Trust and Officers of the Trust--Continued
Positions Held Principal Occupation(s) Name, Address and Age With Trust During Past Five Years --------------------------- ------------------- ------------------------------------ Karen Q. Visconti (age 50) Secretary Director, Product & Market John Hancock Place Management, John Hancock Life Boston, Massachusetts 02117 Insurance Company Arnold R. Bergman (age 53) Assistant Secretary Senior Counsel, Law Department, John Hancock Place John Hancock Life Insurance Boston, Massachusetts 02117 company; formerly Vice President, General Counsel and Secretary, First Variable Life Insurance Company
*Trustee who is an "interested person" as defined in the 1940 Act, due to her position with John Hancock Life Insurance Company (or its affiliates), the ultimate controlling parent of the investment advisor. Because the Trust does not hold regular annual shareholders meetings, each Trustee holds office for an indefinite term until his successor is duly elected and qualified or until he dies, retires, resigns, is removed or becomes disqualified. None of the Trustees is a director of other complexes except noted above. REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS To the Contractowners, Policyholders, and Board of Trustees of John Hancock Variable Series Trust I We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Overseas Equity Fund (formerly, Global Balanced Fund) (a portfolio included in the series of John Hancock Variable Series Trust I {the "Trust"}) as of December 31, 2003, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2003, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Overseas Equity Fund of John Hancock Variable Series Trust I at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP Boston, Massachusetts February 6, 2004 Officers and Trustees Investment Adviser Michele G. Van Leer, John Hancock Life Insurance Company Chairman of the Board of Trustees John Hancock Place Kathleen F. Driscoll, P.O. Box 111 President and Vice Chairman Boston, MA 02117 of the Board of Trustees Elizabeth G. Cook, Trustee Reverend Diane C. Kessler, Trustee Hassell H. McClellan, Trustee Independent Auditors Robert F. Verdonck, Trustee Ernst & Young LLP Karen Q. Visconti, Secretary 200 Clarendon Street Arnold R. Bergman, Assistant Secretary Boston, MA 02116 Raymond F. Skiba, Treasurer Gladys C. Millan, Assistant Treasurer Ronald J. Bocage, Chief Legal Officer Jude A. Curtis, Compliance Officer Janet Wang, Assistant Compliance Officer Sub-Investment Advisers Capital Guardian Trust Company Pacific Investment Management Company LLC Los Angeles, CA 90071 Newport Beach, CA 92660 Declaration Management & Research LLC RREEF America LLC McLean, VA 22102 Chicago, IL 60611 Fidelity Management & Research Company SSgA Funds Management, Inc. Boston, MA 02109 Boston, MA 02110 Goldman Sachs Asset Management, LP Standish Mellon Asset New York, NY 10005 Management Company LLC Pittsburgh, PA 15258 Independence Investment LLC T. Rowe Price Associates, Inc. Boston, MA 02109 Baltimore, MD 21202 John Hancock Advisers, LLC T. Rowe Price International, Inc. Boston, MA 02199 Baltimore, MD 21202 Morgan Stanley Investment Management Inc. Wellington Management Company, LLP New York, NY 10020 Boston, MA 02109
The John Hancock Variable Series Trust I consists of funds used as investment options for various John Hancock variable life and variable annuity contracts. Investors are not able to invest directly in the John Hancock Variable Series Trust I. If the total investment return for any fund for any given year appears unusually high, the return may be attributable to unusually favorable market conditions which will probably not be sustainable. For instance, a high total investment return may reflect participation in IPOs, "hot" industries (e.g., internet-related companies), private placements, and/or leveraging investment techniques during the period indicated. There is no assurance that any of those methods, or any other investment technique will continue to have the same impact on the fund's total investment returns. All of the funds (except bond funds and equity index funds) may participate in initial public offerings (IPOs). Under certain market conditions, such participation could significantly improve a fund's total investment return. There is no assurance that such market conditions will continue and provide the same favorable impact on future investment returns. Please refer to the prospectus for your product for additional information about the investment options available. Variable life insurance and variable annuities are sold by prospectus. These reports may be used as sales literature when preceeded or accompanied by the funds' prospectus, which detail charges, investment objectives, and operating policies. Insurance products are issued by John Hancock Life Insurance Company, or John Hancock Variable Life Insurance Company* (*not licensed in New York), Boston, MA 02117. Securities products are distributed by Signator Investors, Inc., Member NASD, SIPC, 197 Clarendon Street, Boston, MA 02116. John Hancock [GRAPHIC] [LOGO] WORLDWIDE SPONSOR [LOGO] IMSA INSURANCE MARKETPLACE STANDARD ASSOCIATION