EX-99.(17)(H) 12 dex9917h.txt OVERSEAS EQUITY C 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, 1998 -------------------------------------------------------------------------------- Emerging Markets Equity Fund Van Kampen Narayan Ramachandran -------------------------------------------------------------------------------- . In 2003, the Fund returned 56.9% outperforming its benchmark, the MSCI EMF Index. . The Fund outperformed its benchmark primarily due to favorable stock selection and country allocation decisions. Sector allocation decisions detracted, primarily due to the Fund's modest exposure to cash. . Stock selection exposures were most positive from the Fund's holdings in Russia, South Korea and India and from overweight positions in outperforming countries such Turkey and Thailand. . The Fund's exposure to the materials and financial sectors and to South Africa, South Korea and Russia were some of the largest contributors to absolute returns. . The top contributing stocks to absolute returns came from a variety of sectors and included Samsung Electronics, Anglo American and Petrobras. Stocks that detracted the most included LG Card Co. and SK Telecom. . The manager combines top-down country allocation decisions with bottom-up fundamental stock selection. The manager selects stocks within undervalued countries using fundamental proprietary research to identify companies with strong earnings growth and reasonable valuations. [CHART] Line Chart Historical Fund Return $10,000 Investment made 5/1/98 (Fund Inception Date) Emerging Markets MSCI Emerging Markets Equity Fund Free Index (2) ---------------- --------------------- 5/01/1998 $10,000.00 $10,000.00 5/31/1998 8,687.98 8,630.00 6/30/1998 7,960.03 7,724.71 7/31/1998 8,533.05 7,969.59 8/31/1998 5,844.62 5,665.58 9/30/1998 6,556.15 6,024.78 10/31/1998 7,080.77 6,659.19 11/30/1998 7,667.81 7,213.23 12/31/1998 7,113.31 7,108.64 1/31/1999 6,933.57 6,994.19 2/28/1999 6,732.04 7,062.03 3/31/1999 7,577.83 7,992.81 4/30/1999 8,290.44 8,981.52 5/31/1999 7,990.48 8,929.43 6/30/1999 9,228.06 9,942.92 7/31/1999 8,932.36 9,672.47 8/31/1999 8,752.42 9,760.49 9/30/1999 8,575.24 9,430.58 10/31/1999 9,055.88 9,631.46 11/30/1999 10,560.14 10,495.40 12/31/1999 12,901.29 11,830.41 1/31/2000 12,556.47 11,901.39 2/29/2000 13,603.32 12,058.49 3/31/2000 13,829.75 12,117.58 4/30/2000 12,047.85 10,968.83 5/31/2000 11,235.00 10,515.82 6/30/2000 12,012.47 10,885.98 7/31/2000 11,066.32 10,326.44 8/31/2000 11,162.35 10,377.04 9/30/2000 9,707.19 9,471.12 10/31/2000 8,762.37 8,784.46 11/30/2000 7,692.06 8,016.70 12/31/2000 7,726.21 8,209.91 1/31/2001 8,827.46 9,340.41 2/28/2001 7,938.17 8,609.06 3/31/2001 7,092.43 7,763.65 4/30/2001 7,533.72 8,147.17 5/31/2001 7,613.46 8,244.12 6/30/2001 7,488.06 8,075.12 7/31/2001 7,035.61 7,564.77 8/31/2001 6,855.90 7,489.88 9/30/2001 5,800.53 6,330.45 10/31/2001 6,216.98 6,723.57 11/30/2001 6,947.56 7,425.51 12/31/2001 7,445.52 8,015.09 1/31/2002 7,710.67 8,286.80 2/28/2002 7,912.91 8,422.71 3/31/2002 8,414.89 8,929.75 4/30/2002 8,425.45 8,987.80 5/31/2002 8,339.70 8,844.89 6/30/2002 7,732.18 8,181.52 7/31/2002 7,180.60 7,558.91 8/31/2002 7,186.77 7,675.32 9/30/2002 6,437.58 6,847.15 10/31/2002 6,841.91 7,291.53 11/30/2002 7,280.03 7,793.19 12/31/2002 6,944.46 7,534.45 1/31/2003 6,806.33 7,501.30 2/28/2003 6,667.82 7,298.77 3/31/2003 6,440.33 7,091.48 4/30/2003 7,008.44 7,723.33 5/31/2003 7,541.39 8,277.87 6/30/2003 7,973.17 8,749.71 7/31/2003 8,454.58 9,297.44 8/31/2003 9,082.73 9,921.30 9/30/2003 9,205.9 9,993.72 10/31/2003 9,898.28 10,844.19 11/30/2003 10,103.15 10,977.57 12/31/2003 10,896.18 11,773.45 Value on 12/31/03: ------------------ $10,896 Emerging Markets Equity Fund $11,773 MSCI Emerging Markets Free Index (2) MORNINGSTAR CATEGORY+: . Diversified Emerging Markets MORNINGSTAR RISK+: . Above Average (VL/VUL) . Above Average (VA) MORNINGSTAR RATING+: . *** (VL/VUL) . *** (VA) TOP TEN HOLDINGS (as of December 31, 2003) % of Assets ------ Samsung 8.5% Anglo American 4.1% Petroleo Brasileiro SA 2.6% JSC Norilsk Nickel 2.4% America Movil SA de CV 2.0% Surgutneftegaz 1.7% Telefonos de Mexico SA 1.6% Companhia Vale Do Rio Doce 1.6% Lukoil Holding 1.6% Standard Bank Investment Corp., Ltd. 1.5% AVERAGE ANNUAL TOTAL RETURNS* Emerging Markets MSCI Emerging Equity Fund(1) Markets Free Index(2) ---------------- --------------------- 1 Year 56.90% 56.26% 3 Years 12.14 12.77 5 Years 8.90 10.62 Since Inception (5/1/98) 1.52 2.92 DIVERSIFICATION BY REGION AND COUNTRY(3) (as of December 31, 2003) % of Assets ------ Asia 51.2% United States 23.6% Middle East/Africa 20.5% Latin America 2.8% Europe 2.1% DIVERSIFICATION BY REGION(4) Developed Markets 0% Emerging Markets 100% (1) Returns reflect extra-ordinary capital contribution of $445.000 in June 1999. (2) On May 31, MSCI implemented the final phase of its enhanced methodology which shifts to a weighting system based on freely floated or publicly available shares, rather than just market capitalization. South Africa and South Korea market weight increased the most while Mexico, India and Malaysia declined the most. * 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. International investing entails special risks as outlined in the prospectus. The performance of the fund on this page is reported net of Trust level charges (i.e. investment management fees and operating expenses). It does not reflect expense and charges of the applicable separate accounts and variable products, all of which vary to a considerable extent and are described in your product prospectus. Performance would be lower if expenses and charges of the separate accounts and products were reflected. + Source: MorningStar, Inc. Data as of 12/31/03. VL represents Variable Life subaccounts, VUL represents Variable Universal Life subaccounts and VA represents Variable Annuity subaccounts Hancock VL/VUL subaccounts were rated against 127 VL/VUL subaccounts and 227 VA subaccounts in the Morningstar Diversified Emerging Markets category. This represents the Morningstar 3 year rating. "Van Kampen" is a registered trade name used by Morgan Stanley Investment Management, Inc. in its role as a subadvisor to the Fund. (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 ...................................... $ 47,315 Net unrealized appreciation of investments ......................... 16,144 Short-term investments at value .................................... 1,205 -------- Total investments ............................................ 64,664 Cash ............................................................... 1 Foreign currency at value (cost $261) .............................. 266 Receivable for: Investments sold ................................................ 72 Dividends ....................................................... 222 -------- Total assets ....................................................... 65,225 -------- LIABILITIES Payables for: Investments purchased ........................................... 8 Fund shares purchased ........................................... 230 Other liabilities ............................................... 314 -------- Total liabilities .................................................. 552 -------- Net assets ......................................................... $ 64,673 ======== Shares of beneficial interest outstanding .......................... 7,263 -------- Net asset value per share .......................................... $ 8.90 ======== Composition of net assets: Capital paid-in ................................................. $ 65,342 Accumulated net realized loss on investments, and foreign currency transactions ................................ (16,376) Undistributed net investment loss ............................... (134) Net unrealized appreciation/(depreciation) of: Investments .................................................. 16,144 Translation of assets and liabilities in foreign currencies ................................................ (303) -------- Net assets ......................................................... $ 64,673 ======== STATEMENT OF OPERATIONS JOHN HANCOCK VARIABLE SERIES TRUST I For the Year Ended December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) INVESTMENT INCOME Interest ...................................................... $ 21 Dividends ..................................................... 1,249 ------- Total investment income ............................................. 1,270 ------- EXPENSES Investment advisory fee ....................................... 661 Auditors fees ................................................. 6 Custodian fees ................................................ 308 Legal fees .................................................... 3 Printing & mailing fees ....................................... 3 Trustees' fees ................................................ 1 Other fees .................................................... 9 ------- Total expenses ...................................................... 991 Less expenses reimbursed ...................................... (286) ------- Net expenses ........................................................ 705 ------- Net investment income ............................................... 565 ------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain on: Investments ................................................... 2,193 Foreign currency transactions ................................. 586 Change in unrealized appreciation (depreciation) on: Investments ................................................... 18,424 Translation of assets and liabilities in foreign currencies ................................................. (311) ------- Net realized and unrealized gain .................................... 20,892 ------- Net increase in net assets resulting from operations ....................................................... $21,457 ======= 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 ................................................ $ 565 $ 99 Net realized gain (loss) ............................................. 2,779 (1,885) Change in net unrealized appreciation (depreciation) ................. 18,113 (1,219) -------- -------- Net increase (decrease) in net assets resulting from operations ... 21,457 (3,005) Distributions to shareholders from: Net investment income ................................................ (803) (93) Realized gains ....................................................... (2,285) -------- -------- Decrease in net assets resulting from distributions ............... (3,088) (93) From fund share transactions: Proceeds from shares sold ............................................ 82,919 98,743 Distributions reinvested ............................................. 3,088 93 Payment for shares redeemed .......................................... (74,209) (90,188) -------- -------- Increase in net assets from fund share transactions ............... 11,798 8,648 -------- -------- NET INCREASE IN NET ASSETS .............................................. 30,167 5,550 NET ASSETS Beginning of Period .................................................. 34,506 28,956 -------- -------- End of Period ........................................................ $ 64,673 $ 34,506 ======== ======== Analysis of fund share transactions: Sold ................................................................. 12,330 15,252 Reinvested ........................................................... 376 14 Redeemed ............................................................. (11,202) (14,004) -------- -------- Net increase in fund shares outstanding ................................. 1,504 1,262 ======== ========
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:
Emerging Markets Fund ----------------------------------------------------------- Year Ended December 31, ----------------------------------------------------------- 2003 2002 2001 2000 1999(c) ------- ------- ------- ------- ------- Net Assets Value at Beginning of Period ..................... $ 5.99 $ 6.44 $ 6.70 $ 12.26 $ 7.09 Income from Investment Operations: Net Investment Income (Loss) ............................. 0.09 0.02 0.05 (0.02) 0.03 Net Realized and Unrealized Gain (Loss) on Investments(a) ........................................ 3.27 (0.45) (0.29) (4.91) 5.35 ------- ------- ------- ------- ------- Total From Investment Operations ......................... 3.36 (0.43) (0.24) (4.93) 5.38 Less Distributions: Distribution from Net Investment Income .................. (0.12) (0.02) (0.01) Distribution from Net Realized Gains on Investments ...... (0.33) (0.62) (0.10) Distribution from Excess of Net Investment Income/Gains... (0.42) Distribution from Capital Paid-in ........................ (0.02) (0.01) ------- ------- ------- ------- ------- Total Distributions ...................................... (0.45) (0.02) (0.02) (0.63) (0.53) Capital Contributions .................................... 0.32 ------- ------- ------- ------- ------- Net Assets Value at End of Period ........................... $ 8.90 $ 5.99 $ 6.44 $ 6.70 $ 12.26 ======= ======= ======= ======= ======= Total Investment Return(b) .................................. 56.90% (6.73)% (3.63)% (40.11)% 81.37%(e) Ratios/Supplemental Data: Ratio of Operating Expenses to Average Net Assets ........ 1.60%(d) 1.60%(d) 1.40%(d) 1.32%(d) 1.39%(d) Ratio of Net Investment Income (Loss) to Average Net Assets ................................................ 1.28% 0.27% 0.77% (0.28)% 0.19% Portfolio Turnover Rate .................................. 92.85% 88.40% 120.72% 103.90% 196.32% Net Assets End of Period (000s Omitted) ..................... $64,673 $34,506 $28,956 $31,010 $32,596
(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 Morgan Stanley Dean Witter Investment Management, Inc. during the period shown. (d) Expense ratio is net of expense reimbursements. Had such reimbursements not been made the expense ratio would have been 2.24%, 3.45%, 4.02%, 2.49%, and 3.44%, for the years ended December 31, 2003, 2002, 2001, 2000, and 1999, respectively. (e) The total investment return includes the effect of the capital contribution of $.32 per share. The total investment return without the capital contribution would have been 79.02%. SCHEDULE OF INVESTMENTS JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- EMERGING MARKETS EQUITY FUND Market Name of Issuer Shares Value -------------- --------- ------- (000's) COMMON STOCK Brazil - 0.5% Aracruz Celulose SA - ADR * (BG) ...................... 9,100 $ 334 Egypt - 0.8% Egypt Mobile Phone * (J2) ............................. 25,130 308 Orascom Construction Industries * (BJ) ................ 20,144 238 ------ 546 Hong Kong - 6.9% ASIA Aluminum Holdings, Ltd. (BI) ..................... 418,000 83 Avichina Industry * (BV) .............................. 589,000 125 BYD Co. (BL) .......................................... 99,000 261 China Life Insurance Co., Ltd. * (JR) ................. 438,000 358 China Merchants Holdings International Co., Ltd. * (BL) ..................... 98,000 129 China Oilfield Series * (BB) .......................... 768,000 272 China Petroleum (BB) .................................. 520,000 233 China Res Holdings (FB) ............................... 160,000 74 China Shipping Development * (BR) ..................... 322,000 236 China Telecom Corp. * (J2) ............................ 356,000 146 China Unicom, Ltd. (J2) ............................... 162,000 151 CNOOC, Ltd. * (BB) .................................... 436,000 856 Fountain Set Holdings (BY) ............................ 233,000 159 Grande Holdings (BW) .................................. 121,000 155 Hopewell Highway * (BT) ............................... 301,000 171 Huaneng Power International * (J3) .................... 144,000 249 Kingboard Chemical (JY) ............................... 89,000 137 Lianhua Supermarket * (JF) ............................ 125,000 132 Moulin International Holding * (JL) ................... 72,000 48 Norstar Founders * (BU) ............................... 216,000 70 PetroChina Company, Ltd. (BB) ......................... 274,000 157 PICC Property & Casualty (JR) ......................... 174,000 78 Shougang Concord (BF) ................................. 755,000 111 Victory City International (BY) ....................... 92,000 40 Wumart Stores, Inc. * (JD) ............................ 63,000 62 ------ 4,493 Hungary - 0.6% Gedeon Richter * (JO) ................................. 3,503 412 India - 6.0% Bharat Heavy Electricals, Ltd. (BK) ................... 31,450 351 Colgate Palmolive Co. * (JK) .......................... 19,051 67 Container Corp. of India, Ltd. (BJ) ................... 14,092 206 GlaxoSmithKline Pharmaceuticals (JO) .................. 7,000 88 Gujarat Ambuja Cements Ltd. (BD) ...................... 25,250 169 Hero Honda Motors, Ltd. (BV) .......................... 16,950 167 Hindlaco Industries (BD) .............................. 4,850 150 Hindustan Lever Ltd. (JJ) ............................. 29,700 134 Hindustan Petroleum Corp., Ltd. (BB) .................. 14,000 135 Indialnfo, Ltd. (JA) .................................. 10,639 Indiana Development Bank (JQ) ......................... 103,000 141 Infosys Technologies, Ltd. * (JU) ..................... 3,109 380 ITC, Ltd. (JI) ........................................ 6,500 141 Morgan Stanley Group (JQ) ............................. 705,000 261 Oil & Natural Gas (BB) ................................ 10,750 $ 189 Ranbaxy Laboratories, Ltd. (JO) ....................... 8,660 209 Reliance Industries, Inc. * (BC) ...................... 16,300 205 State Bank of India (JP) .............................. 19,600 263 Steel Author India * (BF) ............................. 129,000 145 Tata Ironsteel (BF) ................................... 20,000 195 Tata Engineering and Locomotive Co., Ltd. (BD) .......................................... 27,400 272 ------ 3,868 Indonesia - 3.1% Astra International (BV) .............................. 650,961 386 Bank Central (JP) ..................................... 430,500 170 Bank Mandiri (JP) ..................................... 989,500 117 Bank Rakyat * (JP) .................................... 1,029,000 153 Bumi Resources Tbk (BB) ............................... 3,842,000 228 HM Sampoerna (JI) ..................................... 256,500 136 Indocement Tunggal * (BD) ............................. 593,000 150 Ramayana Lestari * (JD) ............................... 518,000 268 Telekomunikasi Indiana - Ser. B (J1) .................. 491,000 394 ------ 2,002 Jordan - 0.2% Arab Bank (JP) ........................................ 300 129 Malaysia - 1.3% Commerce Asset Holdings * (JP) ........................ 102,000 110 Magnum Corp. Berhad * (BZ) ............................ 259,000 189 Malayan Banking Berhad * (JP) ......................... 55,900 142 Resorts World Berhad * (BZ) ........................... 51,000 136 SP Setia (JS) ......................................... 168,499 155 YTL Corp., Berhad (J3) ................................ 81,000 92 ------ 824 Mexico - 1.4% Cifra SA de CV - Ser. V * (JD) ........................ 125,472 358 GF BBVA Bancomer - Ser. B (JP) ........................ 372,861 319 Wal-Mart de Mexico SA de CV - Ser. C * (JD) ........... 81,706 218 ------ 895 Singapore - 0.4% TPV Technology (JX) ................................... 453,000 240 South Africa - 13.1% ABSA Group, Ltd. * (JP) ............................... 33,800 213 African Bank Investments, Ltd. * (JP) ................. 315,000 444 African Life Assured (JR) ............................. 146,600 335 Anglo American Platinum Corp., Ltd. * (BF) ............ 5,200 227 Anglo American plc * (BF) ............................. 84,827 1,813 Anglogold * (BF) ...................................... 9,100 427 Edgars Consolidated Stores * (JE) ..................... 10,100 193 FirstRand, Ltd. (JP) .................................. 451,698 602 Gold Fields Mining * (BF) ............................. 34,400 491 SCHEDULE OF INVESTMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- EMERGING MARKETS EQUITY FUND Market Name of Issuer Shares Value -------------- ----------- ------- (000's) COMMON STOCK - Continued South Africa - Continued Harmony Gold Mining * (BF) .......................... 5,612 $ 91 Impala Platinum Holdings, Ltd. (BF) ................. 6,128 531 M-Cell, Ltd. (J2) ................................... 164,210 698 Massmart * (JF) ..................................... 41,100 187 Naspers, Ltd. - N Shares (BZ) ....................... 30,000 186 Pretoria Portland Cement (BD) ....................... 500 11 Shoprite Holdings, Ltd. (JF) ........................ 137,300 192 Standard Bank Investment Corp., Ltd. (JP) ........... 160,613 941 Steinhoff International Holdings (BW) ............... 108,000 124 Telkom Group, Ltd. (J1) ............................. 72,100 748 ------- 8,454 South Korea - 15.7% Cheil Industries (BY) ............................... 11,140 162 Daewoo Shipbuilding & Marine * (BM) ................. 35,860 460 Daishin Securities * (JQ) ........................... 22,290 327 Good Morning Securities Co., Ltd. (JQ) .............. 31,650 146 Handsome Corp. (BY) ................................. 24,870 253 Hankook Tire Co., Ltd. (BU) ......................... 33,190 251 Honam Petrochemical (BC) ............................ 6,530 337 Hyundai Department Store * (JE) ..................... 15,260 498 Hyundai Mobis (BM) .................................. 15,690 844 Kookmin Bank * (JP) ................................. 8,140 305 KT & G Corp. * (JI) ................................. 14,130 246 LG Card (JQ) ........................................ 5,810 15 LG Investment & Securities Co., Ltd. * (JQ) ......... 25,600 178 Pohang Iron & Steel Co., Ltd. (BF) .................. 500 68 Samsung Display Devices Co. (JY) .................... 15,000 1,769 Samsung Electronics * (JY) .......................... 8,750 3,312 Shinhan Financial (JP) .............................. 12,440 199 SK Telecom Co., Ltd. * (J2) ......................... 1,700 284 STX Corp. (BM) ...................................... 7,460 57 STX Shipbuilding * (BR) ............................. 16,510 220 Tongyang Cement Co. (BI) ............................ 2,940 216 ------- 10,147 Taiwan - 10.4% Acer, Inc. * (JX) ................................... 122,466 182 Asia Optical Co., Inc. (JL) ......................... 70,000 483 Catcher Technology Co., Ltd. (JY) ................... 30,000 108 China Trust Finance (JP) ............................ 360,109 362 CTCI Corp. (BJ) ..................................... 194,000 157 Cyberlink Corp. (JV) ................................ 31,000 128 Eva Airways (BQ) .................................... 255,655 104 Evergreen Marine Corp. (BR) ......................... 354,540 309 Fubon Financial HL (JQ) ............................. 282,000 270 Grand Hall Enterprises (BO) ......................... 12,000 56 Hon Hai Precision Insustry Co., Ltd. - Cl. G * (JY) ..................................... 119,680 471 Infortrend Technologies (JT) ........................ 56,000 184 Kaulin Manufacturing (BO) ........................... 58,000 $ 84 Largan Precision Co. (BL) ........................... 26,450 257 Media Tekin Corp. (J0) .............................. 50,000 470 Nan Ya Plastic Corp. (BC) ........................... 151,180 218 Novatek Microelect * (J0) ........................... 48,500 137 Phoenixtec Power (J3) ............................... 216,695 254 Pihsiang Machinery (JL) ............................. 11,150 39 Polaris Securities (JQ) ............................. 623,680 292 Richtek Technologies * (J0) ......................... 9,792 53 Sunplus Technology * (J0) ........................... 59,000 110 Taishin Financial (JP) .............................. 216,000 160 Taiwan Cellular Corp. (J2) .......................... 222,000 193 Taiwan Cement (BD) .................................. 768,060 378 Taiwan Navigation (BO) .............................. 192,800 128 Taiwan Semiconductor * (J0) ......................... 99,114 185 Waffer Technology (BF) .............................. 81,000 247 Ya Hsing Indiana Co. * (JY) ......................... 343,000 444 Yuanta Core Pacific (JQ) ............................ 233,236 139 Zyxel Communication (JW) ............................ 46,000 96 ------- 6,698 Thailand - 5.7% Asian Property Development (JS) ..................... 880,800 120 Bangkok Bank Co., Ltd. * (JP) ....................... 290,000 842 Banpu Co. (BF) ...................................... 27,800 81 BEC World Public Co., Ltd. (JA) ..................... 11,000 68 Italian-Thai Development Public Co., Ltd. (BD) ........................................ 104,000 310 Kasikornbank plc (JP) ............................... 166,200 273 Land & Houses (BJ) .................................. 993,800 318 MBK PCL (JS) ........................................ 47,500 43 PTT Public Co. (BB) ................................. 52,400 211 Ratchaburi Electric (J3) ............................ 64,900 74 Seven Eleven * (JE) ................................. 45,300 64 Siam Cement Co. * (BD) .............................. 73,600 472 Siam Commercial Bank Public Co. * (JP) ............................................. 149,800 210 Sino Thai Engineering * (BJ) ........................ 140,800 59 Thai Airways International plc (BQ) ................. 94,000 113 Thai Farmers Bank Public Co., Ltd. * (JP) ............................................. 188,100 332 Thai Olefin Public * (BC) ........................... 52,100 58 Thai Plastic & Chemical Public Co., Ltd. (BC) ........................................ 14,300 71 ------- 3,719 Turkey - 6.0% Akbank TAS * (JP) ................................... 68,890,305 360 Akcansa Cimento SA (BD) ............................. 107,330,825 307 Arcelik AS (BW) ..................................... 58,868,750 327 Enka Insaat (BL) .................................... 9,803,129 255 Ford Otomotiv (BV) .................................. 5,505,000 37 SCHEDULE OF INVESTMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- EMERGING MARKETS EQUITY FUND Market Name of Issuer Shares Value -------------- ----------- ------- (000's) COMMON STOCK - Continued Turkey - Continued Hurriyet Gazete * (JA) .............................. 114,886,700 $ 409 Migros Turk TAS (JF) ................................ 4,096,000 59 Tofas Otomobil (BV) ................................. 93,221,269 206 Trakya * (BI) ....................................... 64,478,650 142 Turkcell Iletisim Hizmetleri AS (J2) ................ 39,719,000 396 Turkiye Garanti Bankasi AS * (JP) ................... 177,759,700 519 Turkiye Is Bankasi - Cl. C * (JP) ................... 158,340,512 643 Yapi ve Kredi Bankasi AS * (JP) ..................... 102,596,000 212 ------- 3,872 United Kingdom - 1.4% Anglo American plc (BF) ............................. 23,420 505 Gazprom Oao * (BB) .................................. 16,500 427 ------- 932 United States - 23.2% Advanced Semiconductor Engineering, Inc. (JY) ....... 21,340 108 America Movil SA de CV - ADR Ser. L (J2) ........... 47,233 1,291 Banco Bradesco - ADR (JP) ........................... 6,039 160 Banco Itau SA - ADR * (JP) .......................... 8,594 419 Cemex SA de CV - ADR * (BD) ......................... 12,400 325 Check Point Software Technologies, Ltd. * (JT) ..... 36,512 614 Coca-Cola Co. - ADR (JG) ............................ 4,600 98 Companhia De Bebidas ADR (JG) ....................... 30,723 784 Companhia Energetica de Minas Gerias - ADR (J3) ..... 9,700 177 Companhia Siderurgica Nacional SA - ADR * (BF) ...... 4,300 230 Companhia Vale do Rio Doce - ADR (BF) ............... 15,547 793 Companhia Vale Do Rio Doce - ADR (BF) ............... 3,600 211 Compania Anonima Nacional Telefonos De Venezuela - ADR (J1) ................ 10,056 153 Compania Brasileira de Distribuicao Grupo Pao de Acucar - ADR (JF) ................... 8,100 204 Compania de Minas Buenaventura SA - ADR * (BF) ...... 15,500 438 ECI Telecommunications, Ltd. * (JW) ................. 7,073 41 Grupo Aeroportuario Sur - ADR * (BT) ................ 8,930 157 Grupo Financiero BBVA Bancomer, SA de CV * (JP) .................................. 6,600 113 Grupo Televisa SA - GDR * (JA) ...................... 10,000 399 Harmony Gold Mining, Ltd. (BF) ...................... 1,200 19 JSC Norilsk Nickel - ADR (BF) ....................... 23,700 1,544 Lukoil Holding - ADR * (BB) ......................... 10,754 1,000 Magyar Tavkozlesi - ADR * (J1) ...................... 2,634 49 Marvell Technology Group, Ltd. * (J0) ............... 1 Mobile Systems - ADR * (J2) ......................... 4,100 339 Mobile Telesystems OJSC - GDR 144A (a) (J2) .................................... 3,000 238 OAO Gazprom - ADR * (BL) ............................ 4,200 $ 109 Orascom Construction Industries - GDR (BJ) .......... 10,110 195 Petroleo Brasileiro SA * (BB) ....................... 25,641 750 Petroleo Brasileiro SA - ADR (BB) ................... 33,828 896 Surgutneftegaz - ADR (BB) ........................... 37,064 1,103 Telefonos de Mexico SA - ADR (J1) ................... 30,480 1,007 Telesp Celular Participacoes SA - ADR * (J2) ........ 6,200 41 Telkom SA Ltd. - ADR * (J1) ......................... 2,600 110 Tenaris SA - ADR (BA) ............................... 4,100 137 Unibanco - Uniao de Bancos Brasileiros SA - GDR * (JP) ...................... 11,200 279 Votorantim Celulose e Papel SA - ADR (BG) ........... 9,100 285 Wal-Mart de Mexico SA de CV - ADR (JD) .............. 3,016 86 Yukos Corp. - ADR * (BB) ............................ 2,096 88 ------- 14,990 ------- TOTAL COMMON STOCK- ................................. 96.7% 62,555 PREFERRED STOCK Brazil - 0.8% Banco Bradesco SA (JP) .............................. 21,960,000 115 BCO Itau Holdings Financeira (JP) ................... 359,000 36 Companhia Energetica de Minas Gerais (J3) .......... 8,489,503 155 Telesp Celular Participacoes SA (J2) ................ 83,929,111 220 ------- 526 South Korea - 0.6% Daishin Securities (JQ) ............................. 5,840 42 Samsung Electronics (JY) ............................ 1,630 336 ------- 378 ------- TOTAL PREFERRED STOCK- .............................. 1.4% 904 Par Value ------- (000's) SHORT-TERM INVESTMENTS - 1.9% Investment in joint trading account (Note B) 1.061% due 01/02/04 .................................. $1,205 1,205 ------ ------- TOTAL INVESTMENTS- ................................ 100.0% 64,664 Cash and Receivables, less payables- ................. 0.0% 9 ------ ------- NET ASSETS- ....................................... 100.0% $64,673 ====== ======= * Non-income producing security. ADR-American Depository Receipt GDR-Global Depository Receipt. (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 $238 or 0.4% of net assets of the Portfolio. See notes to financial statements. SCHEDULE OF INVESTMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- EMERGING MARKETS EQUITY FUND SUMMARY OF LONG-TERM SECURITIES BY INDUSTRY (UNAUDITED) Market % of Industry Value Long-Term Industry Abbreviation (000s) Investments -------- ------------ ------- ----------- Banks .................................. JP $ 9,141 14.4% Metals & Mining ........................ BF 8,168 12.9% Electronic Equipment & Instruments ..... JY 6,684 10.5% Oil & Gas .............................. BB 6,546 10.3% Wireless Telecommunications Services ... J2 4,306 6.8% Construction Materials ................. BD 2,543 4.0% Diversified Telecommunication Services ............................ J1 2,461 3.9% Diversified Financials ................. JQ 1,812 2.9% Machinery .............................. BM 1,362 2.1% Construction & Engineering ............. BJ 1,174 1.8% Industrial Conglomerates ............... BL 1,010 1.6% Electric Utilities ..................... J3 1,002 1.6% Multiline Retail ....................... JD 991 1.6% Semiconductor Equipment & Products ..... J0 956 1.5% Automobiles ............................ BV 921 1.4% Chemicals .............................. BC 890 1.4% Beverages .............................. JG 881 1.4% Media .................................. JA 875 1.4% Internet Software & Services ........... JT 798 1.3% Food & Drug Retailing .................. JF 774 1.2% Insurance .............................. JR 771 1.2% Marine ................................. BR 765 1.2% Specialty Retail ....................... JE 755 1.2% Pharmaceuticals ........................ JO 710 1.1% Paper & Forest Products ................ BG 620 1.0% Textiles & Apparel ..................... BY 614 1.0% Household Durables ..................... BW 606 1.0% Health Care Equipment & Supplies ....... JL 569 0.9% Tobacco ................................ JI 522 0.8% Hotels Restaurants & Leisure ........... BZ 511 0.8% Building Products ...................... BI 441 0.7% Computers & Peripherals ................ JX 422 0.7% IT Consulting & Services ............... JU 380 0.6% Electrical Equipment ................... BK 351 0.6% Transportation Infrastructure .......... BT 328 0.5% Auto Components ........................ BU 320 0.5% Commercial Services & Supplies ......... BO 267 0.4% Airlines ............................... BQ 217 0.3% Real Estate Investment Trust ........... JS 155 0.2% Communications Equipment ............... JW 137 0.2% Energy Equipment & Services ............ BA 137 0.2% Household Products ..................... JJ 134 0.2% Software ............................... JV 128 0.2% Real Estate Development ................ JS 120 0.2% Finance ................................ FB 74 0.1% Personal Products ...................... JK 67 0.1% Real Estate Operations ................. JS 43 0.1% ------- ----- $63,459 100.0% ======= ===== NOTES TO FINANCIAL STATEMENTS JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE A--ORGANIZATION John Hancock Emerging Markets Equity Fund (the "Fund") is a diversified series of John Hancock Variable Series Trust I (the "Trust"), an open-end investment management company registered under the Investment Company Act of 1940. The Trust is organized as a Massachusetts business trust and consists of thirty different funds as of December 31, 2003. The results of this Fund are included in this report. The results of the other Funds in the Trust are presented under separate cover. The Trust may add or delete Funds in the future to accommodate various investment objectives. The Trust has issued shares of beneficial interest exclusively to John Hancock Variable Life Account U ("JHVLAU"), John Hancock Variable Life Account V ("JHVLAV"), John Hancock Variable Life Account S ("JHVLAS"), and John Hancock Variable Annuity Account I ("JHVAAI") to fund policies and contracts issued by the John Hancock Variable Life Insurance Company ("JHVLICO"), and to John Hancock Variable Annuity Account U ("JHVAAU"), John Hancock Variable Annuity Account V ("JHVAAV"), John Hancock Variable Life Account UV ("JHVLAUV"), John Hancock Variable Annuity Account H ("JHVAAH"), and John Hancock Variable Annuity Account JF ("JHVAAJF") to fund contracts and policies issued by John Hancock Life Insurance Company ("John Hancock" or "JHLICO"), to John Hancock Variable Life Account PPM-1 ("PPM-1"), and to John Hancock Variable Life Account PPM-2 ("PPM-2"). NOTE B--ACCOUNTING POLICIES Valuation of investments: Common stocks and other such securities traded on national exchanges are normally valued on the basis of closing prices. Securities traded in the over-the-counter market and securities with no sales on the day of valuation are normally valued at their last available bid price. Short-term investments, with a maturity not to exceed 60 days, are valued at amortized cost, which approximates market value. Fair value pricing, determined in good faith by the Board of Trustees, may be used by the Fund when current market values are unavailable or when an event occurs after the close of the exchange on which the Fund's portfolio securities are principally traded that is likely to have changed the value of the securities. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using current market values. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities. Investment security transactions are recorded on the date of purchase or sale. Repurchase agreements: The Fund may enter into repurchase agreements which are contracts under which the Fund would acquire a security for a relatively short period (usually not more than 7 days) subject to the obligation of the seller to repurchase and the Fund to resell such security at a fixed time and price (representing the Fund's cost plus interest). The Fund will enter into repurchase agreements only with member banks of the Federal Reserve System and with "primary dealers" in United States Government Securities. The underlying securities, which represent the collateral of the agreement, must be marked to market daily to ensure that each repurchase agreement is fully collateralized at all times. The Fund will not invest more than 10% of its net assets in repurchase agreements maturing in more than 7 days. Joint 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 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 NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE B--ACCOUNTING POLICIES--Continued Name of Issuer Market Value -------------- ------------ 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 --------------------------- ---------------- ---------------- $69 1.75% $- 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 Fund's currency exposure. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge the Fund's investments against currency fluctuations. Neither type of forward foreign currency transaction will eliminate fluctuations in the prices of the Fund's securities or prevent loss if the price of such securities should decline. The U.S. dollar value of a forward foreign currency contract is determined using forward exchange rates supplied by a quotation service. Realized gain (loss) on the purchases and sales of forward foreign currency contracts is recognized on settlement date. At December 31, 2003, the Fund had no open forward foreign currency contracts. Federal income taxes: The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to shareholders. Therefore, no federal income tax provision is required. As of December 31, 2003, the the Fund had approximate net tax basis capital loss carryforwards, which may be applied against any net taxable gains, as follows: $12,716 and $3,211 which expire in 2009 and 2010, respectively. In addition, from the period November 1, 2003 through December 31, 2003, the Fund incurred no net realized capital losses. Dividends, Interest and Distributions: Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Dividend income for the Fund is shown net of foreign taxes withheld of $131. 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. NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE C--INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES 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 $10 Million and Excess Over First $10 Million $150 Million $150 Million ----------------- --------------- ------------ 1.65% 1.45% 1.35% 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 $286 to the Fund. John Hancock has entered into a Sub-Advisory Agreement with Morgan Stanley Investment Management, Inc., with respect to the Fund. Morgan Stanley Investment Management, Inc. is an affiliate of John Hancock, and under its supervision, is responsible for the day-to-day investment management of the Fund. Signator Investors, Inc., a wholly owned subsidiary of John Hancock is the principal underwriter and transfer agent of the Trust. Certain officers and trustees of the Trust are officers and directors of JHVLICO, JHVLAU, JHVLAV, JHVLAS, JHVAAI, JHVLAUV, JHVAAV, JHVAAU, JHVAAH, JHVAAJF, PPM-1, and PPM-2, and some are also officers of John Hancock. Fees for independent trustees are paid by the Trust. NOTE D--INVESTMENT TRANSACTIONS Purchases and proceeds from sales and maturities of investments, excluding short-term securities and obligations of the U.S. government, for the Fund for the year ended December 31, 2003 were as follows: Purchases Sales and Maturities --------- -------------------- $48,158 $39,509 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 ---------- ------------ ------------ -------------- $49,043 $16,200 $(579) $15,621 NOTES TO FINANCIAL STATEMENTS--Continued JOHN HANCOCK VARIABLE SERIES TRUST I December 31, 2003 -------------------------------------------------------------------------------- (000's Omitted) NOTE D--INVESTMENT TRANSACTIONS--Continued Distribution of Income and Gains: Distributions of net investment income, if any, are made at least annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually. Earnings and profits distributed to shareholders on redemption of fund shares may be utilized by the Fund, to the extent permissible, as part of the Fund's dividends-paid deduction on its federal income tax return. The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations, 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 and gains and losses related to certain foreign equity 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 ------------- ------------- ------------- -------------- $-- $-- $15,927 $15,621 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 $2,228 $-- $860 2002 93 -- -- Included in the Fund's 2003 distributions from ordinary income is $870 in excess of investment company taxable income, which in accordance with applicable US tax law, is taxable to shareholders as ordinary income distributions. NOTE E--BOARD OF TRUSTEES AND OFFICERS OF THE TRUST (UNAUDITED) The Board of Trustees of the Trust is responsible for overall management of the Trust. The Board may exercise all powers of the Trust, except those powers which are conferred solely upon or reserved to the shareholders. The Trust's Statement of Additional Information (SAI) includes additional information about the Trustees and is available without charge, upon request, by calling toll-free at 1-800-576-2227. 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 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, c/o John Hancock Variable Series Dana- Farber Cancer Trust I Institute; President, The John Hancock Place Advertising Club of Greater Boston, Massachusetts 02117 Boston Diane C. Kessler (age 57) Trustee Executive Director, c/o John Hancock Variable Series Massachusetts Council of Trust I Churches John Hancock Place Boston, Massachusetts 02117 Robert Verdonck (age 58) Trustee President and Chief c/o John Hancock Variable Series Executive Officer, East Trust I Boston Savings Bank John Hancock Place Boston, Massachusetts 02117 Hassell H. McClellan (age 58) Trustee Associate Professor and c/o John Hancock Variable Series Graduate Dean, The Graduate Trust I School of the Wallace G. John Hancock Place Carroll School of Boston, Massachusetts 02117 Management, Boston College 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 Senior Vice President, John Hancock Place and Trustee Product Management, John Boston, Massachusetts 02117 Hancock Life Insurance Company; Vice Chairman, President & Director, John Hancock Variable Life Insurance Company Kathleen F. Driscoll* (age 47) Vice Chairman, Senior Vice President, John Hancock Place President and Signator Brokerage, John Boston, Massachusetts 02117 Trustee Hancock Life Insurance Company; Vice President Corporate Communications, John Hancock Life Insurance Company 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 -------------------------------- -------------- ---------------------------- Jude A. Curtis (age 45) Compliance Vice President and Chief John Hancock Place Officer Investment Compliance Boston, Massachusetts 02117 Officer, John Hancock 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 Specialist, John John Hancock Place Compliance Hancock Life Insurance Boston, Massachusetts 02117 Officer Company Raymond F. Skiba (age 58) Treasurer Director of Fund Operations, John Hancock Place John Hancock Life Insurance Boston, Massachusetts 02117 Company Gladys C. Millan (age 57) Assistant Manager of Fund Operations, John Hancock Place Treasurer John Hancock Life Insurance Boston, Massachusetts 02117 Company Karen Q. Visconti (age 50) Secretary Director, Product & Market John Hancock Place Management, John Hancock Boston, Massachusetts 02117 Life Insurance Company Arnold R. Bergman (age 53) Assistant Senior Counsel, Law John Hancock Place Secretary Department, John Hancock Boston, Massachusetts 02117 Life Insurance 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 Emerging Markets Equity 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 Emerging Markets 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