The latest report from your
Fund's management team
SEMIANNUAL REPORT
Declaration Trust
Equity V.A. Core Equity Fund
V.A. 500 Index Fund
V.A. Large Cap Growth Fund
V.A. Mid Cap Growth Fund
V.A. Relative Value Fund
(formerly V.A. Large Cap Value Fund)
V.A. Small Cap Growth Fund
V.A. Sovereign Investors Fund
------------------------------------------------------
International V.A. International Fund
------------------------------------------------------
Sector V.A. Financial Industries Fund
V.A. Regional Bank Fund
V.A. Technology Fund
------------------------------------------------------
Income V.A. Bond Fund
V.A. High Yield Bond Fund
V.A. Money Market Fund
V.A. Strategic Income Fund
JUNE 30, 2000
Table of Contents
Page
1) CEO Corner 3
2) Portfolio Manager Commentary
This commentary reflects the views of the portfolio managers or
portfolio management teams through the end of the period discussed in
this report. Of course, the managers' or team's views are subject to
change as market and other conditions warrant.
Equity
V.A. Core Equity Fund 4
V.A. 500 Index Fund 7
V.A. Large Cap Growth Fund 10
V.A. Mid Cap Growth Fund 13
V.A. Relative Value Fund 16
V.A. Small Cap Growth Fund 19
V.A. Sovereign Investors Fund 22
International
V.A. International Fund 25
Sector
V.A. Financial Industries Fund 28
V.A. Regional Bank Fund 31
V.A. Technology Fund 34
Income
V.A. Bond Fund 37
V.A. High Yield Bond Fund 40
V.A. Money Market Fund 43
V.A. Strategic Income Fund 45
3) Financial Statements 48
4) Notes to Financial Statements 121
TRUSTEES
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.
William J. Cosgrove*
Leland O. Erdahl
Richard A. Farrell
Maureen R. Ford
Gail D. Fosler
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
* Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and
Chief Executive Officer
Osbert M. Hood
Executive Vice President and
Chief Financial Officer
William L. Braman
Executive Vice President and
Chief Investment Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIANS
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
V.A. Bond Fund
V.A. Core Equity Fund
V.A. Financial Industries Fund
V.A. High Yield Bond Fund
V.A. Large Cap Growth Fund
V.A. Mid Cap Growth Fund
V.A. Regional Bank Fund
V.A. Relative Value Fund
V.A. Small Cap Growth Fund
V.A. Sovereign Investors Fund
V.A. Strategic Income Fund
V.A. Technology Fund
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
V.A. 500 Index Fund
V.A. International Fund
V.A. Money Market Fund
TRANSFER AGENT
John Hancock Annuity Servicing Office
529 Main Street (X-4)
Charlestown, Massachusetts 02129
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUB-INVESTMENT ADVISERS
American Fund Advisors, Inc.
1415 Kellum Place
Garden City, New York 11530
V.A. Technology Fund
Indocam International Investment Services
90 Boulevard Pasteur
Paris, France 75015
V.A. International Fund
Independence Investment Associates, Inc.
53 State Street
Boston, Massachusetts 02109
V.A. Core Equity Fund
ISSUER
John Hancock Life Insurance Company
John Hancock Variable
Life Insurance Company*
200 Clarendon Street
Boston, Massachusetts 02117
*Not Licensed in New York
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
CEO CORNER
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman,
President and Chief Executive Officer, flush right next to
second paragraph.]
DEAR SHAREHOLDERS:
After four years of spectacular returns, the stock market succumbed in
the first six months of 2000 largely to the pressures of rising interest
rates, as the Federal Reserve kept up its campaign to fight inflation.
The red-hot economy has begun to show signs of slowing, and investors
are no longer blind to the real possibility that rising rates could
slow corporate profits. The result was flat-to- negative results for
the three main stock-market indexes through June. Bonds also suffered
during this period, since their prices generally move in the opposite
direction of rates.
But there was good news, too. The Treasury market, where shrinking
supply bolstered prices thanks to the government's efforts to retire
some of its debt, performed well. And the Fed appears closer to the end
of its tightening cycle, which will be a strong positive if it can slow
the economy to a level that supports corporate earnings growth but keeps
inflation at bay. The picture on the global economy is brighter and
technology continues to dominate as the driver of ever-improving
corporate productivity.
No matter what happens next in the financial markets, these past several
months only served to reinforce some of the important lessons for
investors: Diversify, invest in line with your tolerance for risk and
maintain a long-term perspective.
Since not all parts of your portfolio will perform equally well all the
time, it is important to allocate your assets among different types of
investments and funds that target a variety of stock- and bond-market
segments. This strategy, executed under the guidance of a seasoned
investment professional, could provide you with a better chance of both
realizing longer-term results and weathering the market's changing
conditions.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY PAUL MCMANUS FOR THE PORTFOLIO MANAGEMENT TEAM
John Hancock
V.A. Core Equity Fund
Higher rates prompt correction, deflation of technology values
The first two months of the six-month period saw a continuation of
several trends in place at the end of 1999. Technology stocks led the
market higher, but most other sectors struggled. Investors bought
technology issues virtually without regard to valuations, and many
stocks with little more than an intriguing business concept were bid to
stratospheric levels. The narrow market advance and rich valuations were
both challenging for the Fund, which emphasizes broad diversification
and stocks with improving fundamentals that are reasonably priced.
Technology
helps...
and hurts.
Strong economic growth, combined with a frothy stock market, prompted
the Federal Reserve Board to continue its effort to keep inflation in
check by raising interest rates. The Fed hiked key short-term rates in
February, March and May -- the last time by an increment of 0.50%.
Rising rates, which typically have the greatest impact on stocks with
the highest valuations, finally took their toll on the market in March,
April and May. From peak to trough, the NASDAQ Composite Index fell
almost 40%, while on April 14 the Dow Jones Industrial Average and the
S&P 500 Index both experienced one-day drops exceeding 5%.
[Table at bottom left hand column entitled "Top Five Stock Holdings."
The first listing is Pfizer 5.0%, the second is Cisco Systems 3.7%,
the third General Electric 3.7%, the fourth Intel 3.6% and the fifth
Microsoft 3.3%. A note below the table reads "As a percentage of net
assets on June 30, 2000."]
Stocks stabilized and even rebounded somewhat near the end of the
period, as investors attempted to weigh a number of factors. On the one
hand, there was a sense that the Fed was close to the end of its series
of tightening moves. Another positive for the market was the prospect of
generally favorable second-quarter earnings announcements in July. On
the negative side, some investors anticipated one more rate increase in
August. Furthermore, there was concern about the effect of a slower
economy on earnings growth in the second half of the year.
Fund results
While the Fund's disciplined investment strategy was not favored by the
speculative conditions that prevailed earlier in the period, it
performed better in the more sober climate after the correction. With
investors paying more attention to valuations, the Fund was able to make
up a substantial amount of ground on its benchmarks. For the six months
ended June 30, 2000, the John Hancock V.A. Core Equity Fund had a return
of 0.64% at net asset value. That was marginally better than the -0.43%
return of the S&P 500 Index. The Fund also outperformed the average
variable annuity growth and income fund, which finished the period with
a return of -1.11%, according to Lipper, Inc. Longer-term performance
information can be found on page six.
Technology helps...
Although technology stocks with meager earnings were hit hard during the
spring correction, higher-quality issues weathered the storm fairly
well. For example, semiconductor stalwart Intel was one of the most
positive contributors to the Fund's performance, benefiting from tight
supplies and strong demand. Another semiconductor manufacturer, Texas
Instruments, also helped the Fund. Whereas Intel dominates the market
for personal computer semiconductors, Texas Instruments is a leading
manufacturer of the semiconductors used in wireless telephones, another
high-growth area during the period. In the health-care sector,
Warner-Lambert, a pharmaceutical holding, was helped by the company's
acquisition by competitor Pfizer during the period.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with -3% at the bottom and 1% at the top.
The first bar represents the 0.64% total return for John
Hancock V.A. Core Equity Fund. The second bar represents the
-1.11% total return for Average variable annuity growth and
income fund. A note below the chart reads "The total return
for John Hancock V.A. Core Equity Fund is at net asset value
with all distributions reinvested. The average variable
annuity growth and income fund is tracked by Lipper, Inc. See
the following page for historical performance information."]
...and hurts
Some technology and telecommunications leaders faltered during the
period, however. A prime example was Microsoft, which lost its antitrust
case with the federal government and faces the possibility of being
split into two smaller companies. While Microsoft's competitive
abilities have been eroded to some extent, the company looks to remain a
dominant player in its markets. Accordingly, we reduced the Fund's
position in the stock but maintained a weighting comparable to that of
the S&P 500.
America Online declined when its growth prospects were downgraded as a
result of AOL's bid to acquire Time Warner. Long-distance telephone
giant WorldCom also ran into problems when it attempted to buy Sprint.
Investors judged that WorldCom offered too much for Sprint, causing the
former's stock to sag. When the deal appeared to be souring, WorldCom
stock recovered somewhat. In the consumer-cyclicals group, Home Depot
was hurt by the perception that higher interest rates would slow the
housing market and reduce demand for the home-related products in which
the company specializes.
Looking ahead
Going forward, we look for a continuation of the sort of environment
we've seen since March -- much less speculative than before, with
investors paying more attention to valuations. It's reasonable to think
we are close to the end of the cycle of higher interest rates at this
point, but confirmation of that judgment awaits more concrete evidence
of slower economic growth. If the Fed can engineer a smooth transition
to slower growth, the environment for stocks should be favorable.
"We caution
the Fund's
investors to
keep their
eyes firmly
on the long
term..."
We caution the Fund's investors to keep their eyes firmly on the long
term and try to avoid being seduced by the easy money that can be made
-- temporarily -- during a speculative bubble such as we saw recently.
The dramatic rise and fall of many "dot-com" stocks with no earnings is
a testament to the futility of using short-term yardsticks such as stock
price momentum as the main criterion for investment decisions. In
contrast, we remain convinced that buying undervalued stocks of
companies with improving fundamentals offers a way to achieve
competitive returns over the long run.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (8/29/96)
---------- ----------
Cumulative Total Returns 3.68% 114.99%
Average Annual Total Returns(1) 3.68% 22.09%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return
since inception would have been 21.62%.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Core Equity Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in the Standard & Poor's 500 Index -- an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance. It is not possible
to invest in an index.
Line chart with the heading John Hancock V.A. Core Equity
Fund, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are
two lines. The first line represents the Standard & Poor's
500 Index and is equal to $24,147 as of June 30, 2000. The
second line represents the value of the hypothetical $10,000
investment made in the John Hancock V.A. Core Equity Fund on
August 29, 1996 and is equal to $21,499 as of June 30, 2000.
BY ROGER HAMILTON, CFA, PORTFOLIO MANAGER
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. 500 Index Fund. Caption below reads "Roger Hamilton."]
John Hancock
V.A. 500 Index Fund
S&P 500 Index stalls as interest rate
and valuation concerns take hold
In the first six months of 2000, the S&P 500 Index posted some of its
least impressive results in more than five years. During this time
period, the Index in fact fell just short of producing a gain, returning
-0.43%. The period got off to an ugly start on the first day of the new
year as stocks suffered sizable losses in response to an uncertain
interest-rate outlook, tax-related selling and plain old profit-taking.
Lots of zigzagging ensued throughout the next month or so as investors
struggled to get a handle on the direction of the economy, inflation,
interest rates and corporate earnings.
Mid-March, however, marked a dramatic turning point for the stock
market. Just prior to that, Federal Reserve Chairman Alan Greenspan
reminded investors he intended to raise interest rates to slow the
economy. Furthermore, investors began to worry that stocks --
particularly 1999's high-flying technology and telecommunications stocks
-- might be vulnerable to a slowing economy and higher interest rates.
In addition, those groups were beset by the uncertainty surrounding the
U.S. Justice Department's antitrust suit against Microsoft. Those
factors combined to set off a slide among tech and telecom stocks that
bottomed out in late May. By the end of May, tech stocks were firmly in
correction territory.
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is General Electric 4.1%,
the second is Intel 3.5%, the third Cisco Systems 3.5%, the
fourth Microsoft 3.3% and the fifth Pfizer 2.4%. A note below
the table reads "As a percentage of net assets on June 30,
2000."]
After the spring pullback, stocks gained some steam again in June amid
hope that economic data showing some signs of an economic slowdown would
convince the Fed not to make any further interest rate hikes.
"...some tech
stocks ended
up being
among the
S&P 500
Index's top
winners..."
Performance and strategy overview
For the six-month period ended June 30, 2000, John Hancock V.A. 500
Index Fund had a total return of -0.52% at net asset value. By
comparison, the average variable annuity S&P 500 Index objective fund
had a total return of -0.60%, according to Lipper, Inc. Historical
performance information can be found on page nine.
Our goal is to have the Fund's holdings closely track those of the S&P
500 Index, while minimizing the costs associated with buying and selling
shares of stocks. Although there are frequent changes in the composition
of the Index, we re-balance the Fund's holdings less frequently to keep
our transaction costs at a minimum. When we get additional money that
cannot immediately be deployed into Index components, we buy S&P 500
Index futures. They allow us to participate in the Index's performance
without incurring the transaction costs of buying stocks.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with -1% at the bottom and 0% at the top.
The first bar represents the -0.52% total return for John
Hancock V.A. 500 Index Fund. The second bar represents the
-0.43% total return for S&P 500 Index. The third bar
represents the -0.60% total return for Average variable
annuity S&P 500 Index objective fund. A note below the chart
reads "The total return for John Hancock V.A. 500 Index Fund
is at net asset value with all distributions reinvested. The
average variable annuity S&P 500 Index objective fund is
tracked by Lipper, Inc. See the following page for historical
performance information."]
"...the spring
sell-off took
away a lot
of the
speculative
excess that
had been
built up in
the market."
Leaders and laggards
Despite the unfavorable backdrop, some tech stocks ended up being among
the S&P 500 Index's top winners during the past six months. Topping the
list was Micron Technology, a designer, developer and manufacturer of
semiconductor products and computer systems, which climbed 127% during
the period. It, like other semiconductor companies such as Altera,
soared in response to strong demand and better pricing for semiconductor
chips. Although the demand for chips to run computers remained
reasonably strong, the demand for chips in other appliances -- such as
cell phones and personal communication devices -- skyrocketed with
advances in technology and the ongoing expansion of the Internet. Other
winners included energy companies such as Union Pacific Resources Group,
Coastal Corp. and Apache Corp. Oil prices stayed above $30 a barrel
during most of the period, and investors seemingly didn't believe that
production increases from OPEC countries would be enough to bring prices
down during the summer.
Perhaps the biggest beneficiaries of the spring technology stock
sell-off were health-care stocks, including ALZA, United Healthcare,
Cardinal Health, Eli Lilly, Watson Pharma ceutical, Allergan and Pfizer.
With the risk of an economic slowdown growing, investors increasingly
viewed health-care shares as one of the safer, more defensive sectors.
Some well-known stocks suffered serious blows over the past six months.
QUALCOMM, the wireless technology stock that helped lead the S&P 500
Index in 1999, lost more than half its value from January through June
2000 in large part because it warned of sluggish sales to come. Other
technology names topped the laggard list, including Novell, Compuware,
Parametric Technology and Unisys.
Outlook
The stock market enters the second half of 2000 with a fair amount of
uncertainty. On the plus side is the macroeconomic environment, which in
our view is pretty good. Both the U.S. and global economies remain
reasonably strong, which should translate into respectable corporate
earnings growth. Furthermore, the spring sell-off took away a lot of the
speculative excess that had been built up in the market. But no matter
what the market environment, our goal will be to closely track the
performance of the S&P 500 Index. The Fund's returns, as always, will be
dictated by the performance of the S&P 500 Index. It's important for
shareholders to realize that S&P Index funds aren't immune to the
market's ebbs and flows, and they will rise and fall in concert with the
underlying stocks in the Index.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (8/29/96)
---------- ----------
Cumulative Total Returns 6.90% 122.86%
Average Annual Total Returns(1) 6.90% 23.24%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) and the management fee to 0.10% of the Fund's
daily average net assets. Without the limitation of expenses, the
average annual total return for the one-year period and since inception
would have been 6.46% and 22.74%, respectively.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. 500 Index Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in the Standard & Poor's 500 Index -- an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance. It is not possible
to invest in an index.
Line chart with the heading John Hancock V.A. 500 Index Fund,
representing the growth of a hypothetical $10,000 investment
over the life of the fund. Within the chart are two lines.
The first line represents the Standard & Poor's 500 Index and
is equal to $24,147 as of June 30, 2000. The second line
represents the value of the hypothetical $10,000 investment
made in the John Hancock V.A. 500 Index Fund on August 29,
1996 and is equal to $22,287 as of June 30, 2000.
BY WILLIAM L. BRAMAN, DAVID L. EISENBERG, CFA, AND GEOFFREY R. PLUME, CFA,
FOR THE PORTFOLIO MANAGEMENT TEAM
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Large Cap Growth Fund. Caption below reads "Will Braman."]
John Hancock
V.A. Large Cap Growth Fund
Growth stocks come under pressure in six-month period
Recently, Will Braman assumed the role of portfolio management team
leader for V.A. Large Cap Growth Fund. Prior to joining John Hancock
Funds, Mr. Braman was at Baring Asset Management and he brings with him
23 years of investment management experience.
"...technology
stocks
defined the
market's
movements..."
The six months ended June 30, 2000 proved to be a trying period for most
growth-stock investors. Activity in medium- and large- company
technology stocks defined the market's movements almost single-handedly.
In the early months of the year, investors witnessed the meteoric rise
of technology stocks, particularly mid-cap companies focused on
communications and the Internet, only to watch them plummet in price
soon thereafter. During the severe correction from mid-March through
mid-May, the market broadened out a bit to allow large-company stocks in
such industries as pharmaceutical, financial and retail to make some
headway. But by period's end, technology stocks once again began
garnering the limelight. As the second quarter drew to a close, the Dow
Jones Industrial Average and the S&P 500 Index were entrenched in
negative territory, posting results of -8.44% and -0.43%,
respectively.
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is Microsoft 5.2%, the
second is Intel 4.0%, the third General Electric 3.7%, the
fourth Cisco Systems 3.5% and the fifth Wal-Mart Stores 3.3%.
A note below the table reads "As a percentage of net assets
on June 30, 2000."]
Fund performance
For the six months ended June 30, 2000, John Hancock V.A. Large Cap
Growth Fund produced a total return of -4.19% at net asset value. This
compares with the 3.29% return of the average variable annuity growth
fund, according to Lipper, Inc. The Fund's results reflect a heavier
emphasis on mega- and large-company technology stocks than our
competitors -- many of whom targeted more mid-sized tech stocks -- as
well as a few individual holdings that disappointed. Historical
performance information can be found on page 12.
Technology-laden
The dominant leaders in this year's early rally were mid-sized companies
involved in Internet infrastructure, business-to-business Internet
enablement, fiber-optic communications equipment, communications
semiconductors and semiconductor equipment companies. Many doubled and
even tripled in price. While the Fund's weighting in technology was
substantial, it centered mainly on larger issues, in keeping with the
portfolio's focus. We did, however, move into the mid-cap arena,
purchasing such holdings as NBC Internet, J.D. Edwards, Conexant Systems
and Para metric Technology. In hindsight, our foray into several
mid-sized holdings, including the ones just mentioned, was a bit late
given that much of the gains had been realized already. Later in the
period, we eliminated our positions in NBC Internet, J.D. Edwards and
Parametric. But when the tech sector plunged, our exposure to these
medium-sized stocks dragged performance down.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with -5% at the bottom and 4% at the top.
The first bar represents the -4.19% total return for John
Hancock V.A. Large Cap Growth Fund. The second bar represents
the 3.29% total return for Average variable annuity growth
fund. A note below the chart reads "The total return for John
Hancock V.A. Large Cap Growth Fund is at net asset value with
all distributions reinvested. The average variable annuity
growth fund is tracked by Lipper, Inc. See the following page
for historical performance information."]
Recognizing that potential exists for further volatility -- particularly
should the economy slow significantly -- we have again channeled our
efforts toward the larger tech companies whose products and services
tend to be more diverse than smaller firms'. These larger- company names
also exhibit a greater predictability of earnings potential. We added to
existing holdings or re-initiated positions in such companies as Oracle,
Sun Microsystems, VERITAS Software, KLA-Tencor, Teradyne, Texas
Instruments and Broadcom Corp., all of which, in some form or another,
help facilitate how other companies embrace the Internet to grow their
businesses.
Wireless focus in telecom
In the telecommunications subsector of the technology umbrella, we
emphasized companies in the newer, faster-growing wireless
communications sector. Holdings that performed quite well include Sprint
and VoiceStream Wireless. We also recently branched out into competitive
local exchange carriers (CLECs), adding such stocks as McLeodUSA and
Metromedia Fiber Network.
Health care branches out
Our pharmaceutical holdings benefited the Fund during the market's rout
and through period's end. Schering-Plough and Warner-Lambert (now Pfizer
because of a recent merger) posted strong gains. As the period
progressed, we branched out more into biotechnology and medical device
companies and modestly increased our positions in pharmaceutical firms.
A few examples of the companies we recently purchased are Amgen,
Medtronic, Immunex and Genentech.
Other areas of note
During the period, the outlook improved for oil exploration and drilling
activity. We re-initiated positions in two perennial favorites,
Schlumberger and Halliburton. By period's end, we had harvested profits
by selling Schlumberger, but we are retaining Halliburton in
anticipation of further potential. We recently boosted the Fund's stake
in non-bank financial companies, such as American Express and Morgan
Stanley Dean Witter, believing their earnings potential should hold up
well as economic growth moderates. In the retail arena, consumer
electronics holdings performed quite well, and we opted to sell Radio
Shack and Best Buy at profits and add to more stable players such as
Wal-Mart Stores.
"...we foresee
the second
half of 2000
as being
favorable for
growth-stock
investing"
Outlook
In general, we foresee the second half of 2000 as being favorable for
growth-stock investing, although we may witness some corporate earnings
deceleration as the Federal Reserve Board's recent rate hikes begin to
have their intended effect. In such a moderating growth environment, we
believe investors will turn toward companies that exhibit a higher
certainty of growth potential over the long term. By favoring the
larger, more stable companies in technology and health care, we believe
we have positioned the Fund to weather the market uncertainty that may
lie ahead.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (8/29/96)
---------- ----------
Cumulative Total Returns 4.63% 54.64%
Average Annual Total Returns(1) 4.63% 12.04%
Total return measures the change in value of an investment from the
beginning to the end of a period, assum ing all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return for
the one-year period and since inception would have been 4.62% and
11.25%, respectively.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Large Cap Growth Fund would be worth, assuming all distributions
were reinvested for the period indicated. For comparison, we've shown
the same $10,000 investment in the Standard & Poor's 500 Index -- an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance. In addition, the
Fund is compared to the Russell Top 200 Growth Index, which measures the
performance of the Russell Top 200 companies with higher price-to-book
ratios and higher forecasted growth values. For future reports the
Adviser will compare the Fund's performance only to the broad-based
Russell Top 200 Growth Index, which more closely represents the
investment strategy of the Fund. It is not possible to invest in an
index.
Line chart with the heading John Hancock V.A. Large Cap
Growth Fund, representing the growth of a hypothetical
$10,000 investment over the life of the fund. Within the
chart are three lines. The first line represents the Russell
Top 200 Growth Index and is equal to $29,845 as of June 30,
2000. The second line represents the Standard & Poor's 500
Index and is equal to $24,147 as of June 30, 2000. The third
line represents the value of the hypothetical $10,000
investment made in the John Hancock V.A. Large Cap Growth
Fund on August 29, 1996 and is equal to $15,464 as of June
30, 2000.
BY BARBARA C. FRIEDMAN, CFA, PORTFOLIO MANAGEMENT TEAM LEADER
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Mid Cap Growth Fund. Caption below reads "Barbara
Friedman."]
John Hancock
V.A. Mid Cap Growth Fund
Following strong run-up at year-end, stock market turns volatile in 2000
Mid-cap stocks fared well during the first half of 2000. Investor
recognition of the sector's strong growth prospects pushed the Russell
Mid-cap Growth Index to a 12.15% return for the six months ended June
30, 2000. By comparison, the Standard & Poor's 500 Index returned
-0.43% for the same period. After surging ahead late last year, the
market became increasingly volatile in the new year. Investors worried
that further interest-rate hikes would hurt earnings growth or possibly
send the economy into recession. Mounting concerns culminated in a
severe downdraft from mid-March through May, as investors sold off the
high-priced technology and telecommunications stocks that had earlier
led the market's charge. Fortunately, in June, the market began to
rebound as economic growth began showing signs of moderating.
Performance review
After an unusually strong fourth quarter last year, John Hancock V.A.
Mid Cap Growth Fund returned 7.32% at net asset value for the six months
ended June 30, 2000. By comparison, the average variable annuity mid-cap
fund returned 8.54%, according to Lipper, Inc. Historical performance
information appears on page 15. The Fund benefited from focusing on
mid-size companies with market capitalizations between $1 billion and
$10 billion, particularly in selected areas of technology.
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is Scientific-Atlanta
1.8%, the second is E-Tek Dynamics 1.8%, the third Waters
Corp. 1.6%, the fourth Western Wireless 1.4% and the fifth
AMFM 1.4%. A note below the table reads "As a percentage of
net assets on June 30, 2000."]
"Some of our
biggest gains
came from
companies
participating
in the cable
upgrade..."
Technology and cable still strong
Some of our biggest gains came from companies participating in the cable
upgrade that is currently underway. Oak Industries, a company that
supplies components for the cable, TV, wireless and fiber-optics
markets, did exceptionally well following a buyout by Corning. The Fund
subsequently benefited from owning Corning, which is the leading
supplier of fiber for fiber-optic networks. Other top performers
included Amphenol, which makes components for the cable and wireless
industries, and Scientific-Atlanta, one of the foremost producers of
transmission equipment and digital set-top boxes for the cable industry.
We also profited from our stake in Network Appliance, a company that
provides data storage capabilities, as well as CMGI, a holding company
with a portfolio of Internet stocks.
Telecommunications and media stumble
After strong advances in 1999, many telecommunications stocks declined
in the new year, including McLeodUSA, NEXTLINK Com munications and
Global Crossing, all of which are involved with building fiber-optic
networks. We boosted our stakes in these names, believing that investor
concerns about future financing issues were unmerited. In addition,
these companies have strong earnings outlooks that are getting even
stronger. McLeodUSA, for example, a competitive local exchange carrier
in the Midwest and Rocky Mountain areas, recently made an acquisition
that will add to its nationwide data capabilities. Our media
investments, particularly radio companies like AMFM, Infinity
Broadcasting and Radio One, also suffered as investors worried that
advertising from Internet companies would evaporate. Knowing Internet
companies account for a very small percentage of total ad revenues, we
maintained our investments.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 2% with 0% at the bottom and 10% at the top.
The first bar represents the 7.32% total return for John
Hancock V.A. Mid Cap Growth Fund. The second bar represents
the 8.54% total return for Average variable annuity mid-cap
fund. A note below the chart reads "The total return for John
Hancock V.A. Mid Cap Growth Fund is at net asset value with
all distributions reinvested. The average variable annuity
mid-cap fund is tracked by Lipper, Inc. See the following
page for historical performance information."]
"...we will
continue to
use market
weakness to
add to
our core
investments."
Technology changes
Despite the turbulence this past spring, we made few major changes to
our technology stake. We trimmed Internet-related names like CMGI and
DoubleClick early in the year when it looked like they were approaching
full valuation. We later added a few new names like E-Tek Dynamics, a
leading producer of fiber-optic equipment whose stock looked undervalued
relative to its strong sales and earnings growth prospects. JDS
Uniphase, another top manufacturer of fiber-optic equipment, later
announced it was buying E-Tek, causing E-Tek's stock price to soar. In
addition, we built a major stake in Western Wireless, a rural cellular
provider that is benefiting from profitable roaming agreements with AT&T
Wireless. Toward the end of the period, we also began nibbling again at
Internet stocks, whose prices had fallen to attractive levels.
Energy and biotech additions
During the period, we substantially increased the Fund's stake in the
oil-service area. Oil and gas companies had cut back on exploration and
production in recent years, resulting in declining non-OPEC oil and gas
reserves. Expecting exploration and production spending to pick up, we
began adding to our investment in rig equipment and service companies
like BJ Services and Baker Hughes, as well as rig-only companies like
R&B Falcon and Diamond Offshore Drilling. We also boosted our
health-care stake, buying mostly biotechnology names. We focused on
companies like QLT PhotoTherapeutics that have products in test; firms
like Affymetrix, PE Corp. and Waters Corp. that design and produce
equipment used by biotechnology companies; and companies like Millennium
Pharmaceuticals that provide genetic information to pharmaceutical
companies. One of our largest investments was Waters Corp., whose stock
price benefited greatly from news of a new product offering.
Positive outlook
We expect U.S. economic growth to slow but remain positive. As long as
there continues to be concern that interest rates will rise further, the
stock market will remain volatile. However, once inflation is in check
and interest rates stabilize, the stock market should benefit. Mid-cap
stocks, in particular, stand to do well, given their strong growth
prospects. As we have done in recent months, we will continue to use
market weakness to add to our core investments. We expect to stick with
our high technology weighting, which stands at about 60% of net assets,
including telecommunications and capital goods. We believe that
technology and telecommunications will continue to be the
fastest-growing part of the economy. Technology spending will most
likely remain strong, resulting in healthy earnings growth and rising
stock prices. Although technology stock prices relative to other
measures like earnings may seem high, so is their growth potential.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (1/7/98)
---------- ----------
Cumulative Total Returns 48.62% 84.96%
Average Annual Total Returns(1) 48.62% 28.19%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return for
the one-year period and since inception would have been 47.87% and
26.36%, respectively.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Mid Cap Growth Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in both the Standard & Poor's 500 Index and the
Russell Midcap Growth Index. The Standard & Poor's 500 Index is an
unmanaged index that includes 500 widely traded common stocks and is a
commonly used measure of stock market performance. The Russell Midcap
Growth Index is an unmanaged index that contains those securities from
the Russell Midcap Index with a greater-than-average growth orientation.
It is not possible to invest in an index.
Line chart with the heading John Hancock V.A. Mid Cap Growth
Fund, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are
three lines. The first line represents the Russell Midcap
Growth Index and is equal to $19,999 as of June 30, 2000. The
second line represents the value of the hypothetical $10,000
investment made in the John Hancock V.A. Mid Cap Growth Fund
on January 7, 1998 and is equal to $18,496 as of June 30,
2000. The third line represents the Standard & Poor's 500
Index and is equal to $15,498 as of June 30, 2000.
BY TIMOTHY E. QUINLISK, CFA, PORTFOLIO MANAGEMENT TEAM LEADER,
AND R. SCOTT MAYO, CFA, PORTFOLIO MANAGER
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Relative Value Fund. Caption below reads "Timothy
Quinlisk."]
John Hancock
V.A. Relative Value Fund
Volatility rocks stock market as investors flee expensive large-cap names
On May 1, 2000, John Hancock V.A. Large Cap Value Fund changed its name
to John Hancock V.A. Relative Value Fund.
U.S. stocks made little progress in the first half of 2000. Despite a
strong start, the market grew jittery early in the year as interest-rate
concerns mounted. Investors abandoned economically sensitive and
interest-rate sensitive stocks -- the traditional value sectors -- and
focused on growth stocks. Then in mid-March, they even dumped
high-priced technology growth stocks, sending the market into a nosedive
that lasted through May and erased all earlier gains. In June,
indications of slower economic growth and the prospect that the Federal
Reserve might slow the economy down to just the right level buoyed
investor confidence. Although many stocks began to rebound, the Standard
& Poor's 500 Index closed the six months ended June 30, 2000 with an
uninspiring -0.43% return.
"...an added
boost from
companies
that supply
test and
measurement
products."
Fund performance
We continued to look for great businesses selling at relatively cheap
prices where there was a catalyst -- a restructuring, spin-off or
management change, for example -- that could unlock the company's true
value. This strategy helped John Hancock V.A. Relative Value Fund return
6.09% at net asset value during the six-month period. By comparison, the
average variable annuity growth and income fund returned -1.11%,
according to Lipper, Inc. For historical performance information, please
see page 18.
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is Ace, Ltd. 6.0%, the
second is Vicor Corp. 4.8%, the third Tyco International
3.7%, the fourth Amphenol Corp. 3.5% and the fifth Computer
Associates International 3.4%. A note below the table reads
"As a percentage of net assets on June 30, 2000."]
Technology rebounds
Some of the Fund's biggest gains came from companies involved with
upgrading the communications infrastructure to enable high-speed voice
and data transmissions. Corning, the leading provider of fiber for
fiber-optic networks, saw its stock take off as investors recognized the
company's strength in the growing optical market known as photonics.
Amphenol, an electronics company that designs and makes connectors for
the aerospace, cable and wireless industries, also did well as
end-market demand accelerated, both internationally and domestically.
ANTEC, which supplies components primarily for telephony (the delivery
of telephone services over the existing cable infrastructure), also
posted strong gains. Other technology winners included Sea gate
Technology, a disk- drive maker that is in the process of being bought
out.
Test and measurement names take off
The Fund received an added boost from companies that supply test and
measurement products. Millipore, a company that provides filtration
products for the pharmaceutical, bio technology and semiconductor
markets, posted an outstanding gain as the semiconductor market began
to turn around. We later decided to take profits. Other excellent
performers were PerkinElmer, a company that targets the health-care
industry, and Tektronix, a company that supplies electronics
manufacturers. Both stocks benefited from strong demand, new management
teams and renewed growth orientations.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with -2% at the bottom and 7% at the top.
The first bar represents the 6.09% total return for John
Hancock V.A. Relative Value Fund. The second bar represents
the -1.11% total return for Average variable annuity growth
and income fund. A note below the chart reads "The total
return for John Hancock V.A. Relative Value Fund is at net
asset value with all distributions reinvested. The average
variable annuity growth and income fund is tracked by Lipper,
Inc. See the following page for historical performance
information."]
Finance and energy also deliver
Our investment in Ace, Ltd. paid off handsomely as we began seeing early
signs of improved pricing in the property and casualty insurance
business. Recent acquisitions had strengthened Ace's position globally,
giving the company added upside earnings potential. Another winner was
Financial Security Assurance (FSA), a U.S.-based company that provides
asset-based and municipal bond insurance. It was bought out at a nice
premium by a foreign insurer, which recognized FSA's unique underwriting
capabilities and strong international growth potential. EOG Resources,
an independent exploration and production company that focuses on the
North American natural gas market, also did well, thanks to strong
demand and limited supply, and we took profits.
Software leads disappointments
Many software stocks suffered as corporations kept the lid on new
technology spending even after the new year. The Fund owned Parametric
Technology, whose stock tumbled as sales of its new Windchill product
were slower than expected. Another disappointment was Computer
Associates International, a company that specializes in software for
mainframes, but has recently been developing products that are more
oriented toward the client-server model. The stock tumbled as investors
worried about the company's recent acquisitions, along with a slow
recovery in the mainframe market post-Y2K. We kept both names because we
continued to believe in their prospects. Danka Business Systems, which
distributes and services office equipment, also had a tough time due to
pressure on profit margins and rising labor costs.
"We remain
optimistic,
however,
about our
ability to take
advantage of
the market's
volatility..."
Volatility yields opportunity
We used market weakness to add to existing investments like Vicor, a
power conversion company whose stock price weakened when it lost a major
customer during the ramp-up of its new second-generation product. We
increased our stake because we expect this event to have little effect
on the company's strong long-term prospects. We also bought new names
like Tyco International, a multi-industrial company whose stock price
was depressed in part because of accounting problems that the company
has since addressed. We like Tyco's superior management team,
diversified business mix and improving prospects.
Stock picking will be key
We remain cautious. Slower economic growth could weaken corporate
earnings growth and possibly cause companies to miss their earnings
forecasts. In addition, technology stocks often weaken in the summer
months. Concerns like these suggest that there will most likely be
continued volatility in the market. Selectivity -- avoiding stocks where
there are any hints of deteriorating business trends -- will be key. We
remain optimistic, however, about our ability to take advantage of the
market's volatility by buying great companies when their stocks go on
sale.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (1/6/98)
---------- ----------
Cumulative Total Returns 41.77% 101.72%
Average Annual Total Returns(1) 41.77% 32.71%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return
since inception would have been 32.69%.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Relative Value Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in the Standard & Poor's 500 Index -- an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance. It is not possible
to invest in an index.
Line chart with the heading John Hancock V.A. Relative Value
Fund, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are
two lines. The first line represents the value of the
hypothetical $10,000 investment made in the John Hancock V.A.
Relative Value Fund on January 6, 1998 and is equal to
$20,172 as of June 30, 2000. The second line represents
the Standard & Poor's 500 Index and is equal to $15,498
as of June 30, 2000.
BY BERNICE S. BEHAR, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND
ANURAG PANDIT, CFA, PORTFOLIO MANAGER
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Small Cap Growth Fund. Caption below reads "Bernice
Behar."]
John Hancock
V.A. Small Cap Growth Fund
Small-cap stocks slow down, but still outperform
Rising interest rates finally caught up to small-cap growth stocks
during the last six months and the group took a breather after last
year's spectacular run-up. At the start of 2000, the high-growth
technology and telecommunications sectors were still dominating the
market's performance, particularly mid- and small-cap companies. But in
March and April, the tech sector plunged, as investors grew more focused
on fundamentals and concerned that rising rates would indeed cut into
corporate profits. In a flight to safety, investors also turned their
attention away from growth stocks to less expensive value stocks. With
their strong earnings outlook still intact, however, small-cap stocks
still managed to outpace the broader market, with the Russell 2000 Index
returning 3.04% in the first six months of 2000. The Standard & Poor's
500 Index returned -0.43% in the same period.
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is CV Therapeutics 1.4%,
the second is Exar Corp. 1.2%, the third Tech Data Corp.
1.2%, the fourth PLX Technology 1.2% and the fifth Virata
Corp. 1.2%. A note below the table reads "As a percentage of
net assets on June 30, 2000."]
Fund performance
With our focus on small-cap companies that are growing their earnings
aggressively, we felt the effects of the move away from growth stocks,
although we managed to outperform our benchmark Russell 2000 Growth
Index, which returned 1.23% in the six months ended June 30, 2000. In
the same period, John Hancock V.A. Small Cap Growth Fund returned 2.94%
at net asset value, compared to the 6.89% return of the average variable
annuity small-cap fund, according to Lipper, Inc. Historical performance
information can be found on page 21.
"Within the
technology
group,
semiconductor
companies
were the
standouts..."
Biotech moves
Biotechnology companies were volatile over the last six months, taking
us through several peaks and valleys. But on balance the stocks we held
did well, including Alkermes and NPS Pharmaceuticals. We were
underweighted versus our peers when the group skyrocketed in January and
we built our stake in February. Even though the stocks gave back much of
their gains in March, we stuck with the group, but did some pruning,
refocusing and doubling up on more high-quality names. For example, we
bought more Alkermes in the downturn, which helped us in June when the
sector rallied again. We remain very high on the group since many
exciting products are winding their way through clinical trials and the
FDA approval process. We have specific focuses on companies that have
products in later stages of development and on those that are benefiting
from the increased spending in the industry. In particular, we like
companies that furnish supplies to the biotech industry, like Invitrogen
and Techne Corp., two of our bigger contributors to performance.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with 0% at the bottom and 7% at the top. The
first bar represents the 2.94% total return for John Hancock
V.A. Small Cap Growth Fund. The second bar represents the
6.89% total return for Average variable annuity small-cap
fund. A note below the chart reads "The total return for John
Hancock V.A. Small Cap Growth Fund is at net asset value with
all distributions reinvested. The average variable annuity
small-cap fund is tracked by Lipper, Inc. See the following
page for historical performance information."]
Semiconductors, telecom
Within the technology group, semiconductor companies were the standouts
throughout the period. Semiconductor companies focused on the
telecommunications industry provided us with the best results, as they
continued to benefit from the ongoing build-out of the broadband
network. Some of our best names were Terayon Communication Systems,
Virata, Exar and PLX Technology. Telecom-related companies such as
Powerwave Technologies, which makes power amplifiers for wireless
handsets, and Quanta Services, which provides maintenance and line
installation services to telecom companies, were two other top
performers.
"We are very
pleased with
the level
of earnings
that our
companies are
reporting..."
Internet, radio weak
Internet software application companies had a huge move up in 1999, and
we locked in some good profits at the time. In hindsight, we should have
been more aggressive in doing so, since the group has come down this
year from its lofty levels. That hurt our stakes in companies like
Broadbase Software and Accrue Software. But we held on, still believing
in these companies' prospects, and the stocks have had a nice rebound
off their April bottom. The rebound also helped our stake in Interwoven,
which we bought in April during the turmoil. On the other hand,
customer-focused e-commerce companies like 24/7 Media, Netcentives,
MyPoints.com and Cybergold have stayed in the doldrums and we eliminated
them. Other software companies with a broader focus did better for us,
including Aspect Development, which was bought by i2 Technologies, and
Advent Software.
Radio stocks have been a main theme of ours for the past year, and they
served us well until this period. Late last year, we began to sell or
cut back some of our holdings because we felt there was a lot of good
news already priced into the sector. But we still had an overweighting,
and this year advertising spending by start-up Internet companies, which
fueled growth last year, began to slow in the more challenging
environment. As a result, the group fell out of favor, hurting companies
like Radio One, Citadel Communications and Regent Communications that
still have a solid outlook.
Energy shines
Our energy holdings, while not a big piece of the portfolio, have
produced some of our strongest results this period. As the price of oil
has risen, so, too, has drilling and exploration activity. That has
benefited companies like Lone Star Technologies, which produces oil
field tubular goods, and Pride International, a well-diversified
contract gas drilling company with both onshore and offshore drilling
services.
A look ahead
We expect that volatility will remain with us while the market continues
to contend with rising interest rates and the threat of inflation. At
the same time, we are maintaining our optimistic outlook for small-cap
growth stocks. We are very pleased with the level of earnings that our
companies are reporting, and it gives us renewed confidence in the
high-quality companies we have chosen to own.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (8/29/96)
---------- ----------
Cumulative Total Returns 51.06% 108.58%
Average Annual Total Returns(1) 51.06% 21.13%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return for
the one-year period and since inception would have been 50.81% and
20.04%, respectively.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Small Cap Growth Fund would be worth, assuming all distributions
were reinvested for the period indicated. For comparison, we've shown
the same $10,000 investment in the Russell 2000 Index and the Russell
2000 Growth Index. The Russell 2000 Index is an unmanaged small-cap
index that is comprised of 2,000 U.S. stocks. The Russell 2000 Growth
Index is an unmanaged index that contains Russell 2000 Index stocks with
a greater-than-average growth orientation. It is not possible to invest
in an index.
Line chart with the heading John Hancock V.A. Small Cap
Growth Fund, representing the growth of a hypothetical
$10,000 investment over the life of the fund. Within the
chart are three lines. The first line represents the value of
the hypothetical $10,000 investment made in the John Hancock
V.A. Small Cap Growth Fund on August 29, 1996 and is equal to
$20,858 as of June 30, 2000. The second line represents the
Russell 2000 Growth Index and is equal to $18,752 as of June
30, 2000. The third line represents the Russell 2000 Index
and is equal to $17,232 as of June 30, 2000.
BY JOHN F. SNYDER, III, PORTFOLIO MANAGEMENT TEAM LEADER AND
BARRY H. EVANS, CFA, AND PETER M. SCHOFIELD, PORTFOLIO MANAGERS
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Sovereign Investors Fund. Caption below reads "John
Snyder."]
John Hancock
V.A. Sovereign Investors Fund
A volatile market produces mixed results in the first half of the year
The first half of 2000 was marked by two distinct periods of
stock-market performance. In the first quarter of the year, the market
continued where it left off last year. A narrow group of "new economy"
stocks -- led primarily by high-flying technology stocks in the NASDAQ
Composite Index -- fueled an unprecedented surge in the market.
"...an amend-
ment that we
believe will
enhance
the Fund's
investment
flexibility."
In the second quarter, however, the tide turned. With technology
valuations stretched beyond reason, the disparity between technology and
other market sectors exceeded any rational explanation. So it wasn't
surprising when tech stocks started to tumble in the second quarter.
With the Fed's interest-rate hikes sparking concerns about a slower
economy, the market started to broaden out and investors began to
gravitate to more stable companies with more reasonable valuations.
Blue-chip and "old economy" companies -- whose businesses had been
strong, but whose stocks had languished -- suddenly came back into
favor.
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is Citigroup 3.3%, the
second is Emerson Electric 3.1%, the third Chevron 3.1%, the
fourth Interpublic Group 3.0% and the fifth Bestfoods 2.6%. A
note below the table reads "As a percentage of net assets on
June 30, 2000."]
Understanding performance
Like the stock market, John Hancock V.A. Sovereign Investors Fund also
experienced two distinct periods of performance in the first half of the
year. During the first quarter's technology-driven market, the Fund
lagged its competitors due to its lack of technology holdings. With the
market shift in the second quarter, however, the Fund began to outpace
its peer group. As value-oriented stocks rebounded, so did many of the
stocks in our investment universe, including steady consumer staples
stocks like PepsiCo and health-care names like Baxter International and
Abbott Laboratories. Consumer cyclical stocks like Home Depot, Lowe's
and Target, on the other hand, were hurt by fears that a slowing economy
would slow consumer spending. The Fund's strong second-quarter
performance wasn't enough to make up for the first-quarter
disappointment, and that prevented us from keeping up with our peers
during the first half of the year.
For the six months ended June 30, 2000, John Hancock V.A. Sovereign
Investors Fund returned -4.49% at net asset value. By comparison, the
average variable annuity equity income fund returned -1.64% for the
same period, according to Lipper, Inc. Historical performance
information can be found on page 24.
Enhancing the investment flexibility
Effective July 1, the Fund's Board of Trustees has approved an amendment
that we believe will enhance the Fund's invest ment flexibility. Since
its inception, the Fund has invested 100% of its stock investments in
what we call "dividend performers" -- those companies that have
increased their dividends for at least ten consecutive years. As of July
1, the Fund is able to invest up to 35% of its stock investments in
non-dividend performers.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with -5% at the bottom and 0% at the top.
The first bar represents the -4.49% total return for John
Hancock V.A. Sovereign Investors Fund. The second bar
represents the -1.64% total return for Average variable
annuity equity income fund. A note below the chart reads "The
total return for John Hancock V.A. Sovereign Investors Fund
is at net asset value with all distributions reinvested. The
average variable annuity equity income fund is tracked by
Lipper, Inc. See the following page for historical
performance information."]
The reason for this modification is simple. Historically, companies have
been measured largely on their ability to consistently produce and
increase dividends. Today, however, many companies have different views
on the importance of dividends as a measure of corporate health. In
fact, the number of companies that raise their dividends year after year
is shrinking. Instead of paying for dividend increases, many companies
are using cash flow to reinvest in their businesses through stock
buybacks, acquisitions or restructurings. The rising-dividend
requirement that has made so much sense and has served shareholders so
well is still valid. However, as the market has evolved, blind adherence
to it would threaten our ability to deliver returns.
Fundamental objective unchanged
We want to stress that this modification will not change the Fund's
fundamental objective. However, it will give us the flexibility to keep
the stocks we like even if their rising-dividend pattern is interrupted.
Under the previous policy, not only would we have to sell a company once
it broke its rising-dividend pattern, but we couldn't even consider it
again until it had another ten consecutive years of rising dividends.
In addition, we will now have the opportunity to consider a broader
universe of attractive companies that fit our fundamental criteria --
strong management, financial soundness, stable earnings and
profitability, brand-name recognition and reasonable valuations -- even
if they do not meet our ten-year rising dividend test.
A look ahead
In our view, this update to the Fund's investment strategy is both
practical and prudent. Over the long term, the enhanced flexibility will
give us -- and our shareholders -- a better ability to take advantage of
opportunities in today's market. In the second half of the year, we will
gradually begin to look for opportunities to add non-dividend performer
stocks to the portfolio. Of course, we will look across all sectors to
find the best investments. Given the Fund's previous underweighting in
technology, however, this is one sector we will focus on. We want to
stress that even though we will buy some non-dividend performer stocks
in this sector, they will still meet our stringent criteria of being
established companies with a history of stable earnings and reasonable
valuations.
"...we do
believe that
the market will
continue to
broaden out."
On the macro level, we're optimistic about the market's prospects for
the remainder of the year. One of the big questions weighing on
investors is how much more the Fed will raise interest rates and what
the effect will be on the economy. We've already started to see economic
growth taper off from its extremely high levels and inflation remains
relatively benign. Given that, we're anticipating more modest rate
increases, if any, over next several months.
While investors will continue to buy technology stocks, we do believe
that the market will continue to broaden out. As it does, stock
selectivity will become even more critical. It will be important to own
those companies with solid earnings and reasonable valuations. In our
opinion, these are the companies with the strongest upside potential.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (8/29/96)
---------- ----------
Cumulative Total Returns (6.33%) 61.22%
Average Annual Total Returns(1) (6.33%) 13.26%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of
investment-related charges on the underlying funds, but do not include
insurance and other charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return
since inception would have been 12.92%.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Sovereign Investors Fund would be worth, assuming all distributions
were reinvested for the period indicated. For comparison, we've shown
the same $10,000 investment in the Standard & Poor's 500 Index -- an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance. It is not possible
to invest in an index.
Line chart with the heading John Hancock V.A. Sovereign
Investors Fund, representing the growth of a hypothetical
$10,000 investment over the life of the fund. Within the
chart are two lines. The first line represents the Standard &
Poor's 500 Index and is equal to $24,147 as of June 30, 2000.
The second line represents the value of the hypothetical
$10,000 investment made in the John Hancock V.A. Sovereign
Investors Fund on August 29, 1996 and is equal to $16,123 as
of June 30, 2000.
BY MIREN ETCHEVERRY FOR THE PORTFOLIO MANAGEMENT TEAM
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. International Fund. Caption below reads "Miren
Etcheverry."]
John Hancock
V.A. International Fund
Overseas markets stumble in 2000 after a strong 1999
International markets posted disappointing results overall in the first
six months of 2000. Like the United States, overseas bourses started the
year off at a blistering pace, lifted by the strength of the "TMT"
sectors -- technology, media and telecommunications. These groups
dominated the global markets' performance, leaving old-economy stocks by
the wayside. But volatility increased as the year progressed and the
rising interest-rate environment prevailed, prompting fears of eroding
corporate profits. By March, the trend had reversed, with TMT stocks
around the world plunging dramatically between March and April before
regaining some of their lost ground in June. In the interim, traditional
stocks made a comeback.
[Pie chart at bottom left hand column with heading "Portfolio
Diversification." The chart is divided into seven sections
(from top to left): Latin America 3%, Canada 5%, Short-Term
Investments & Other 6%, Pacific Rim ex-Japan 9%, U.K. &
Ireland 15%, Japan 25% and Continental Europe 37%. A note
below the chart reads "As a percentage of net assets on June
30, 2000."]
In addition to this broad trend in foreign markets, specific regions and
countries had their own issues. Japan began the year buoyed by
increasing optimism about the economy and corporate restructuring. But
then the market, as measured by the Nikkei Index, fell after an index
reshuffling led to a heavier weighting in technology stocks. Emerging
markets in Asia and Latin America fell steeply as concerns grew about
the U.S. economic and monetary outlook, and therefore their prospects
for growth. In Europe, economic recovery continued, although the United
Kingdom fell on profit worries. For U.S. investors, however, the
continuing decline of the euro currency took away any gains. What's
more, after valuations in Europe had become lofty and the climate grew
more uncertain, investors began shifting assets from Europe to the
United States, where valuations seemed more attractive following the
tech-heavy NASDAQ Composite Index's plunge. Overall, overseas markets,
as measured by the Fund's benchmark, the MSCI All Country World Free
Ex-U.S. Index, lost ground, returning -3.33%.
"...the
technology
and telecom
groups
provided us
with some of
our best
and worst
performers."
TMT hurts relative performance
For the six months ended June 30, 2000, John Hancock V.A. International
Fund posted a total return of -11.72% at net asset value, compared to
the -3.59% return of the average variable annuity international fund,
according to Lipper, Inc. Historical performance information can be
found on page 27.
Even though we were overweighted in tech and telecom stocks compared to
the MSCI index, our overweighting was less than that of our peers when
the tech group skyrocketed in early 2000. We also maintained a higher
TMT weighting as these stocks came back to earth, causing us to miss on
both the dramatic up and down sides. Not surprisingly, the technology
and telecom groups provided us with some of our best and worst
performers. The best included Germany's Mannesmann, which was acquired
during the period by the U.K.'s Vodafone, whose stock got pummeled after
the announcement. We also did well with Canada's Nortel Networks,
Finland's Nokia and Taiwan's Taiwan Semiconductor Manufacturing. What
hurt us were our technology and telecom stock selections, especially in
Japan and the U.K., including NTT Mobile Communication Network, Fujitsu,
Hikari Tsushin and Sony in Japan and British Telecom, which is
struggling with weak management and disappointing earnings results, and
Vodafone in the U.K.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 2% with -12% at the bottom and 0% at the top.
The first bar represents the -11.72% total return for John
Hancock V.A. International Fund. The second bar represents
the -3.59% total return for Average variable annuity
international fund. A note below the chart reads "The total
return for John Hancock V.A. International Fund is at net
asset value with all distributions reinvested. The average
variable annuity international fund is tracked by Lipper, Inc.
See the following page for historical performance information."]
"The backdrop
remains
positive for
international
equities..."
Japan, Europe still focus areas
We are maintaining an overweighting in Japan, which stood at 25% of the
Fund's net assets at the end of June, because, despite short-term
setbacks, the economic picture is showing signs of improving slowly but
surely. We would rather see a gradual, tentative recovery in Japan than
a sharp one, because it helps maintain the discipline needed to ensure
that recovery and corporate reform actually happen long term. We also
see real opportunity in the corporate restructurings that continue to
take place there. Our focus remains on companies that stand to benefit
from economic recovery, corporate restructuring and the worldwide
telecommunications boom.
To take advantage of the growing opportunity in Japan, we trimmed our
stake in Europe to an underweighted 52% of net assets. After the
Continent's strong run-up last year, European stocks appear fully valued
compared to Japan, especially in the technology and telecommunications
areas. We continue to prefer countries in continental Europe to the
U.K., where the outlook for earnings is less certain. The Continent is
where much of the positive developments are occurring, including a more
robust economic growth picture and corporate restructurings.
Going forward
The backdrop remains positive for international equities, given the
current macroeconomic environment of high growth with low inflation, and
continued corporate restructurings. In the near term, however, we are
moving to a slightly more defensive country allocation due to the
current market uncertainty and prospects for further rate increases. For
example, we trimmed our overweighting in Japan during the period,
although we remain very positive, since the fundamentals and valuation
levels there are good. Corporate and economic reforms and the return to
a more sustainable level of earnings growth, through increased domestic
demand, will be the main forces behind performance of the Asian markets
for the rest of the year. We are also increasing our underweighting in
the U.K., where a sudden deterioration in business sentiment strikes us
as a bad omen for earnings. Although we added some countries to our
emerging-market basket early in the period, we pared it later on and are
keeping our stake in these countries well below the index weighting.
Finally, we remain high on technology not only as a sector to invest in,
but also because it has provided the productivity enhancements that are
at the root of the quickening pace of corporate restructuring we are
seeing around the world.
-----------------------------------------------------------------------
International investing involves special risks such as political,
economic and currency risks and differences in accounting standards and
financial reporting.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (8/29/96)
---------- ----------
Cumulative Total Returns 15.20% 52.08%
Average Annual Total Returns(1) 15.20% 11.55%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return for
the one-year period and since inception would have been 13.69% and
10.05%, respectively.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. International Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in the Morgan Stanley Capital International
(MSCI) All Country World Free Ex-U.S. Index, which measures the
performance of a broad range of developed and emerging stock markets.
The index represents securities that are freely traded on a variety of
equity exchanges around the world. It is not possible to invest in an
index.
Line chart with the heading John Hancock V.A. International
Fund, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are
two lines. The first line represents the MSCI All Country
World Free Ex-U.S. Index and is equal to $15,484 as of June
30, 2000. The second line represents the value of the
hypothetical $10,000 investment made in the John Hancock V.A.
International Fund on August 29, 1996 and is equal to $15,207
as of June 30, 2000.
BY JAMES K. SCHMIDT, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND
THOMAS FINUCANE AND THOMAS GOGGINS, PORTFOLIO MANAGERS
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Financial Industries Fund. Caption below reads "Jim
Schmidt."]
John Hancock
V.A. Financial Industries Fund
Fund outperforms peers in rising interest-rate environment
Financial stocks struggled in a rising interest-rate environment over
the last six months. The culprit was the super-robust economy that
prompted the Federal Reserve to continue last year's inflation-fighting
posture of raising interest rates, which it did three more times in the
last six months. As if that weren't enough, in January and February,
investors only had eyes for red-hot technology stocks and left the
financial sector to jump on the high-growth bandwagon. Brief
financial-stock rallies in March and May were halted in June when
several banks revised their earnings expectations downward due to
increases in bad loans. Regional bank stocks were hit hardest of all,
despite the continued strength of the overall group's fundamentals,
because the market perceives their profits to be the most susceptible to
rising rates. The large money-center banks and brokerage houses -- with
their investment advisory and other market-related activities -- were
the group's pockets of strength.
"...well served
by our focus
on the...
leaders in
each of their
categories."
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is Charles Schwab 5.7%,
the second is American Express 4.6%, the third Morgan Stanley
Dean Witter 3.9%, the fourth Fiserv 3.8% and the fifth Bank
of New York 3.6%. A note below the table reads "As a
percentage of net assets on June 30, 2000."]
Fund performance
In this challenging environment, financial-stock investors did well just
to break even, so we were pleased that the Fund outperformed other
financial services funds. For the six months ended June 30, 2000, John
Hancock V.A. Financial Industries Fund posted a total return of 5.74% at
net asset value. That compared with the --1.93% return of the average
open-end financial services fund, and the 9.83% return of the average
variable annuity sector/miscellaneous fund, according to Lipper, Inc.
See page 30 for historical performance information.
Mergers and financial reform
We attribute part of our outperformance to mergers during the period
that involved several of our larger holdings. Shortly after the
Gramm-Leach-Bliley Financial Services Modernization Act was signed last
November, we saw the first fruits of this landmark bill that broke down
Depression-era barriers preventing banks, insurance companies and
securities brokers from affiliating. They included broker Charles
Schwab, which bought U.S. Trust, and Citigroup, which bought the
remaining portion of Travelers Property Casualty. The positive trend of
industry mergers also continued, with European insurance company Dexia
purchasing Financial Security Assurance, a U.S.-based com pany that
provides municipal bond insurance.
Our several Euro pean financial stocks also did well, including
Amvescap, a very well-run U.K. money-management company, and Nordic
Baltic Holding, the premier Internet bank in Scandinavia which was
formed from the merger of Finnish bank Merita and Swedish bank
Nordbanken.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 3% with -3% at the bottom and 12% at the top.
The first bar represents the 5.74% total return for John
Hancock V.A. Financial Industries Fund. The second bar
represents the -1.93% total return for Average open-end
financial services fund. The third bar represents the 9.83%
total return for Average variable annuity sector/miscellaneous
fund. A note below the chart reads "The total return for John
Hancock V.A. Financial Industries Fund is at net asset value
with all distributions reinvested. The average open-end financial
services fund and variable annuity sector/miscellaneous fund
are tracked by Lipper, Inc. See the following page for historical
performance information."]
Dominant-player theme pays off
Overall, the Fund was well served by our focus on the largest companies
that are the leaders in each of their categories. Brokerage companies
were some of the best-performing financial stocks, and we benefited from
our shift last year away from the smaller regional names toward the
larger firms such as Merrill Lynch, Morgan Stanley Dean Witter and
Charles Schwab. There has been a significant concentration of investment
banking market share in the hands of a few "bulge bracket" firms at the
expense of some of the regionals. Additionally, smaller firms tend to be
more dependent on retail commission revenues that are vulnerable to
price competition from on-line traders.
Our stake in the dominant life insurance company AXA Financial helped
us, as the stock of this well-run company continued to advance.
Likewise, Marsh & McLennan, which is a combination of the largest
insurance brokerage firm and an asset manager, Putnam, served us well.
Focus on trust banks
We avoided a number of the regional banks that were hurt by rising rates
and some earnings shortfall announcements, although we owned First
Tennessee, whose stock was hurt by a severe drop in mortgage-banking
earnings. Rather, we focused on trust banks, such as Northern Trust,
Bank of New York and State Street Corporation -- the largest global
player in the custody arena. These banks have held up the best because
of what they have in common, which is recurring revenue streams from
their main trust advisory business and less exposure to credit risk,
since their loan activity is either small or nonexistent. This leaves
them less vulnerable to interest-rate moves.
Individual disappointments
As in any time period, this one had its share of disappointments for us.
Financial software company Intuit, which served us well last year and
early this year in the technology sector's long surge, was dragged down
with the rest of the group during the turmoil in March and April.
Insurance company Protective Life saw its stock hit after it missed its
first-quarter earnings target. It was only the first time in ten years
that it did so and we believe it was an isolated event, so we are
holding on to the stock.
"Business
conditions
remain
basically
sound for
the financial
companies in
which we
invest..."
Reasons for optimism
While questions about interest rates and inflation could keep the market
volatile for now, we continue to believe that today financial stocks
hold enormous potential. Business conditions remain basically sound for
the financial companies in which we invest, with a healthy economic
background bolstering favorable earnings growth at most financial
companies. We also expect Gramm-Leach-Bliley to produce further
cross-industry consolidation. Finally, many financial stocks' prices
have fallen to very attractive levels, and investors have begun to
broaden their interest beyond the technology sector.
-----------------------------------------------------------------------
Sector investing is subject to greater risks than the market as a whole.
International investing involves special risks such as political,
economic and currency risks and differences in accounting standards and
financial reporting.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (4/30/97)
---------- ----------
Cumulative Total Returns 2.36% 56.94%
Average Annual Total Returns(1) 2.36% 15.31%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return
since inception would have been 15.24%.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Financial Industries Fund would be worth, assuming all
distributions were reinvested for the period indicated. For comparison,
we've shown the same $10,000 investment in the Standard & Poor's 500
Index -- an unmanaged index that includes 500 widely traded common
stocks and is often used as a measure of stock market performance. It is
not possible to invest in an index.
Line chart with the heading John Hancock V.A. Financial
Industries Fund, representing the growth of a hypothetical
$10,000 investment over the life of the fund. Within the
chart are two lines. The first line represents the Standard &
Poor's 500 Index and is equal to $18,994 as of June 30, 2000.
The second line represents the value of the hypothetical
$10,000 investment made in the John Hancock V.A. Financial
Industries Fund on April 30, 1997 and is equal to $15,694 as
of June 30, 2000.
BY JAMES K. SCHMIDT, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND
THOMAS FINUCANE AND THOMAS GOGGINS, PORTFOLIO MANAGERS
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Regional Bank Fund. Caption below reads "Jim Schmidt."]
John Hancock
V.A. Regional Bank Fund
Rising interest rates continue to dog regional bank stocks
In the first six months of 2000, regional bank stocks continued to buck
the stiff headwinds of rising interest rates and a red-hot technology
sector that held investors' undivided attention early in the year and
sent bank stocks down to historically low levels by March. Shortly
thereafter, the group staged two brief rallies, first when tech stocks
lost their luster and then in May when the belief grew that the Federal
Reserve was nearing the end of its cycle of interest-rate hikes. But the
group was stopped dead in its tracks in June by announcements from a few
of the larger regional banks that they expected earnings shortfalls due
to increases in non- performing loans. Even though bank fundamentals for
the overall group remain sound and the level of bad loans is still very
low, the news shook up investors who began to wonder if this was just
the tip of the iceberg.
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is FirstMerit Corp. 3.3%,
the second is Financial Institutions, Inc. 3.2%, the third
Mid-State Bancshares 3.1%, the fourth Fifth Third Bancorp
3.1% and the fifth Cascade Bancorp 2.8%. A note below the
table reads "As a percentage of net assets on June 30,
2000."]
Regional bank focus hurts fund
In this difficult environment, regional bank stocks lost ground and so
did the Fund. For the six months ended June 30, 2000, John Hancock V.A.
Regional Bank Fund returned -9.37%. That compared with the -1.93%
return of the average open-end financial services fund and the 9.83%
return of the average variable annuity sector/miscellaneous fund,
according to Lipper, Inc. Historical performance information can be
found on page 33.
"...we remain
encouraged
by the news
we are get-
ting from our
companies."
Our performance versus the Lipper group of financial services funds
suffered from our focus on regional banks, as opposed to the
better-performing securities brokers, money center banks and larger
diversified firms. Furthermore, we did have positions in several banks
whose stock declined due to disappointing earnings. These included First
Tennessee, which experienced a severe drop in mortgage-banking earnings;
Centura, which had declines in net interest margins as loans had to be
funded with higher-cost deposits; and Union BanCal, one of the banks
that had to bolster its reserve level, and therefore reduce
second-quarter earnings, due to an increase in non-performing loans.
A word about asset quality
Since the early 1990s, banks operating in the United States have
benefited from an expanding economy and a favorable lending environment.
The current level of non-performing assets is only 0.65% of total
assets, which is an extremely low number by historical standards.
Therefore, we think there is a likelihood that we will see a pickup in
problem loans if the Fed's interest-rate hikes have their desired effect
of slowing economic growth. We think the area most likely to experience
deteriorating credit quality is syndicated loans. These are large loans,
shared among a consortium of banks, made to companies that are typically
rated below investment grade. In particular, loans booked in 1997 and
early 1998 -- when lending terms were more flexible and the market was
more receptive than it is today to considering marginal credits -- are
vulnerable. Indeed, a handful of banks have already recognized problems
in their syndicated portfolio. However, we think that the increase in
bad loans across the system will be muted, and that the banking industry
has established adequate loan loss reserves. On an ongoing basis, our
seasoned team of managers and analysts will continue to carefully
scrutinize the credit risks and prospects of our banks.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 2% with -10% at the bottom and 12% at the top.
The first bar represents the -9.37% total return for John
Hancock V.A. Regional Bank Fund. The second bar represents
the -1.93% total return for Average open-end financial
services fund. The third bar represents the 9.83% total
return for Average variable annuity sector/miscellaneous
fund. A note below the chart reads "The total return for John
Hancock V.A. Regional Bank Fund is at net asset value with
all distributions reinvested. The average open-end financial
services fund and variable annuity sector/miscellaneous fund
are tracked by Lipper, Inc. See the following page for
historical performance information."]
"Despite
sporadic
credit-quality
problems,
the banking
industry is
basically
healthy..."
Good fundamentals nonetheless
In fact, we remain encouraged by the news we are getting from our
companies. Even with rising rates and an increase in non-performing
assets, we still anticipate average bank earnings growth in 2000 of
between 8% and 10% over 1999. Although this is slower than the
unsustainable levels of the past five years, it has been far better than
the performance of the stocks would indicate. Loan growth remains
excellent and revenue growth is good, especially in the fee-related
line.
Basic strategy intact
Over the last six months, we maintained our long-term strategy of owning
regional banks and thrifts that can produce reliable earnings growth and
also have the potential to benefit from industry consolidation. Because
of the steady increase in interest rates, we are especially wary of
banks or thrifts that have asset-liability mismatches that make them
vulnerable to high rates. We took profits and cut back on some of our
larger-sized banks, which rose the most during the brief rallies, and
redeployed the assets into less expensive small and mid-sized bank
stocks such as M&T Bank Corp. and Cascade Bancorp.
Merger slowdown, but longer-term trend continues
Although many banks are selling at inexpensive prices that would make
them ripe for being taken over at a premium, merger activity was slow in
the first half of 2000. Many banks are resisting being sold at price
levels lower than they were two years ago. What's more, investors still
have a bad taste in their mouths from some of the headline mergers in
1997 and 1998 that have not lived up to expectations. Eventually,
consolidation activity should pick up once the sparks of rising
bank-stock prices and several successfully completed mergers kick in.
Bank stocks remain compelling
As investors wait for signals that the Federal Reserve is done raising
interest rates, bank stocks could remain volatile. We are also keeping
our eyes on the potential for further asset- quality announcements that
could roil the group. While these events might color our short-term
view, they have not changed our positive long-term outlook. Despite
sporadic credit-quality problems, the banking industry is basically
healthy, with earnings growth equal to the overall market's, even as
bank-stock prices remain far below average. In addition, the theme of
industry consolidation remains solidly in place, albeit waxing and
waning with the market's moves.
-----------------------------------------------------------------------
Sector investing is subject to greater risks than the market as a whole.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (5/1/98)
---------- ----------
Cumulative Total Returns (17.26%) (19.33%)
Average Annual Total Returns(1) (17.26%) (9.45%)
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average total return since
inception would have been (9.46%).
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Regional Bank Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in the Standard & Poor's 500 Index -- an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance. It is not possible
to invest in an index.
Line chart with the heading John Hancock V.A. Regional Bank
Fund, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are
two lines. The first line represents the Standard & Poor's
500 Index and is equal to $13,464 as of June 30, 2000. The
second line represents the value of the hypothetical $10,000
investment made in the John Hancock V.A. Regional Bank Fund
on May 1, 1998 and is equal to $8,068 as of June 30, 2000.
BY BARRY GORDON, MARC H. KLEE, CFA, AND ALAN LOEWENSTEIN, CFA,
PORTFOLIO MANAGERS
[A 3" x 2" photo at bottom right side of page of John Hancock
V.A. Technology Fund. Caption below reads "Technology Fund
management team members (l-r): Barry Gordon, Marc Klee and
Alan Loewenstein."]
John Hancock
V.A. Technology Fund
Up and down period for high-flying technology stocks
To better understand how technology stocks fared during the Fund's first
two months of operations in May and June, it's useful to take a look
backward. From August through October 1998, tech stocks were severely
beaten down in response to fears of a global recession. When those
worries abated, it wasn't all that surprising that bargain-priced
technology stocks staged an unprecedented rally that extended into March
2000. That's when the tech sector took a headlong plunge, posting losses
in response to some old-fashioned profit-taking, concerns about sky-high
valuations in some areas, particularly Internet-related stocks, and
uncertainty over the outcome of the government's antitrust suit against
Microsoft -- and, by extension, the tech sector's prospects. Tech stocks
remained extremely volatile over the next several weeks, and by late May
the tech-laden NASDAQ Composite Index lost more than a third of its
value. However, a late-June burst of renewed optimism about tech stocks
and interest rates sent the NASDAQ to its highest level in two months.
"Among our
best perform-
ers over the
last two
months were
semiconductor
and related
companies."
[Table at bottom left hand column entitled "Top Five Common
Stock Holdings." The first listing is Micron Technology 3.6%,
the second is EMC Corp. 2.5%, the third CIENA Corp. 2.4%, the
fourth Integrated Device Technology 2.2% and the fifth
Solectron Corp. 2.2%. A note below the table reads "As a
percentage of net assets on June 30, 2000."]
Fund performance
John Hancock V.A. Technology Fund, which was launched on May 1, 2000,
posted a total return of 10.50% at net asset value in its brief first
two months of operations. Those returns were better than the average
open-end science and technology fund's 1.95% return and the average
variable annuity sector/miscellaneous fund's return of 4.16% in the same
two-month period, according to Lipper, Inc.
Strategy and performance explained
We're bottom-up investors, focusing on individual stock selection,
looking at companies across the broad spectrum of tech companies
including hardware, software, the Internet and telecommunications. Even
if there are periods when it appears as if all tech stocks have the
Midas touch, we know that over the long term all tech companies are not
created equal, and their stocks do not always behave alike. We believe
the key to investing in technology is to keep our eyes focused on the
basics. We take a diversified approach, holding stocks from a wide range
of technology subsectors to better manage risk.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "From inception
May 1, 2000 through June 30, 2000." The chart is scaled in
increments of 2% with 0% at the bottom and 12% at the top.
The first bar represents the 10.50% total return for John
Hancock V.A. Technology Fund. The second bar represents the
1.95% total return for Average open-end science and
technology fund. The third bar represents the 4.16% total
return for Average variable annuity sector/miscellaneous
fund. A note below the chart reads "The total return for John
Hancock V.A. Technology Fund is at net asset value with all
distributions reinvested. The average open-end science and
technology fund and variable annuity sector/miscellaneous
fund are tracked by Lipper, Inc. See the following page for
historical performance information."]
This is a relatively conservative approach for a technology fund, but
it's the way we operate, and we believe it's especially prudent in these
times. We avoid falling under the spell of technology as a phenomenon,
or swooning over each new idea, such as the Internet. Instead, we draw
on our decades of industry and investment experience, using in-depth
research and fundamental analysis to understand a company and the
environment in which it operates. We then determine its true value and
what we're willing to pay for it. This includes realistically assessing
a company's long-term business prospects and its potential for profit
growth.
Leaders and laggards
Among our best performers over the last two months were semiconductor
and related companies. They did exceedingly well as the demand for chips
outstripped supply, driving chip prices higher. In addition to strong
growth in personal computers, many chip makers benefited from
increasing demand for a whole range of products -- including various
telecommunications products, cable television, radios, medical devices,
cars, stereos, Internet access devices and a variety of other consumer
products. Some of the Fund's best performers were chipmakers such as
Micron Technology, Integrated Device Technology and Cypress
Semiconductor Corp.
While most dot-com stocks tumbled during the period, many of the
companies that form the infrastructure of the Internet enjoyed
tremendous gains. The ongoing explosion in Internet usage helped propel
Oracle, which makes the software that has become the foundation for Web
sites, e-commerce and corporate networks, to strong gains. Cisco
Systems, which provides the backbone to the Internet, followed close
behind. Two other holdings, storage company EMC and telephone handset
maker Nokia, both benefited from the explosion in data transmission that
has been aided by the growth of the Internet.
Most of our disappointments were limited to dot-com companies. One of
our biggest disappointments was Internet search service Ask Jeeves. We
continued to maintain our stake in the company because we believe that
the company has plenty to gain with its entry into business-to-business
applications.
"...we believe
an even
broader range
of technology
stocks can
continue to
outperform
the market..."
Outlook
We remain optimistic about the prospects for technology stocks, although
we certainly do not expect their returns to approach the levels
investors enjoyed in 1999. Today's ever-shorter product life cycle
quickly renders products obsolete, and a company's ability to maintain a
competitive lead keeps shrinking. The cyclical nature of technology
spending means that tech stocks will respond to the economy's ups and
downs. But, with fundamentals increasingly solid at many tech companies,
we believe an even broader range of technology stocks can continue to
outperform the market, albeit on a more modest basis. That said, we also
expect that heightened volatility will remain a fact of life, especially
while the prospects for further interest-rate hikes remain real. In this
type of environment, selectivity -- choosing individual companies based
on good valuations and fundamentals -- becomes more important than ever.
In addition, we encourage investors to keep a long-term perspective and
set appropriate expectations when investing in this more volatile,
cutting-edge sector of the market.
-----------------------------------------------------------------------
Sector investing is subject to greater risks than the market as a whole.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
INCEPTION
(5/1/00)
----------
Cumulative Total Return 10.50%
Average Annual Total Return(1) 10.50%(2)
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Notes to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return
since inception would have been 9.24%.
(2) Not annualized.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Technology Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in the Standard & Poor's 500 Index -- an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance. It is not possible
to invest in an index.
Line chart with the heading John Hancock V.A. Technology
Fund, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are
two lines. The first line represents the value of the
hypothetical $10,000 investment made in the John Hancock V.A.
Technology Fund on May 1, 2000 and is equal to $11,050 as of
June 30, 2000. The second line represents the Standard &
Poor's 500 Index and is equal to $10,036 as of June 30, 2000.
BY JAMES K. HO, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND
BENJAMIN A.MATTHEWS, PORTFOLIO MANAGER
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Bond Fund. Caption below reads "James Ho."]
John Hancock
V.A. Bond Fund
Fund weathers market's challenges, posts gains
The six months ended June 30, 2000 was a difficult time for corporate
bond investors, although the broad fixed-income market showed
considerable improvement in the final weeks of the period. The Federal
Reserve Board's commitment to reining in inflation in the face of strong
economic growth caused investors to worry about the effect such a
slowdown might have on corporate earnings. This, in turn, led to concern
about the future creditworthiness of corporate issuers, driving prices
down and yields up. The Treasury's announcement that it would buy back
millions of dollars in debt, along with the stock market's volatility,
further exacerbated corporate-bond price declines as investors flocked
to long-term Treasury bonds. Other fixed-income sectors suffered as
well. The yield curve inverted for the first time since 1990. Corporate
bond spreads, the difference in yield between bonds of different credit
quality, reached levels as wide as in the 1990 recession.
[Table at bottom left hand column entitled "Top Five Bond
Sectors." The first listing is U.S. Government & Agencies
52%, the second is Utilities 7%, the third Mortgage Banking
6%, the fourth Telecommunications 5% and the fifth Media 4%.
A note below the table reads "As a percentage of net assets
on June 30, 2000."]
Market settles down
The market's choppiness lasted through mid-May. At that time, a series
of economic reports suggested that the Fed's actions were having an
effect on moderating economic growth. Investors took that to mean the
Fed may be near the end of its tightening cycle, giving them reason to
feel more comfortable owning credit-sensitive securities, such as
corporate bonds -- both investment-grade and high-yield -- and
mortgage-backed issues. In the final month of the period, these sectors
rebounded and credit spreads began to narrow.
"For defensive
reasons, we
chose to
upgrade the
portfolio early
in the
year..."
Fund's flexibility helps it outperform
For the six months ended June 30, 2000, John Hancock V.A. Bond Fund
produced a total return of 4.19% at net asset value. This compares
favorably with the 3.23% return of the average variable annuity
corporate debt A-rated fund, according to Lipper, Inc. We believe the
Fund's outperformance was due, in large part, to the portfolio's
flexible sector strategy and our timely shifts in duration and
yield-curve positioning. For historical performance information, please
turn to page 39.
Upgrading takes place
For defensive reasons, we chose to upgrade the portfolio early in the
year, trimming back positions in the high-yield arena and moving into
the shorter-term maturity debt of companies in which we already owned
30-year issues. For example, in anticipation of credit spread widening
we rotated out of the longer-term bonds of General Motors, CalEnergy and
Lockheed Martin in favor of their five-year debt. This strategy proved
advantageous as longer-term issues suffered the most from investors'
credit fears. By the end of the period, the improved investment
environment had prompted us to begin selectively adding back to
longer-term corporate issues, taking advantage of their attractive
valuations.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with 0% at the bottom and 5% at the top. The
first bar represents the 4.19% total return for John Hancock
V.A. Bond Fund. The second bar represents the 3.23% total
return for Average variable annuity corporate debt A-rated
fund. A note below the chart reads "The total return for John
Hancock V.A. Bond Fund is at net asset value with all
distributions reinvested. The average variable annuity
corporate debt A-rated fund is tracked by Lipper, Inc. See
the following page for historical performance information."]
"...we are
cautiously
optimistic..."
The other leg of our upgrade strategy involved bolstering the Fund's
stake in AAA-rated mortgage-backed issues, primarily Ginnie Maes, and
limiting the portfolio's exposure to emerging-market bonds. We also
moved out of some Fannie Mae positions and bank holdings quickly,
thereby avoiding the brunt of the price declines. First Union, Liberty
Mutual and Fairfax Financial were a few of the finance holdings we sold.
Late in the period, we began adding back to some of the Fannie Mae
securities because their prices had become quite compelling.
Partaking in the "new economy"
We believe telecommunications, media/cable and wireless companies are
among the more dynamic sectors of the corporate bond market. Their
astounding growth potential makes them attractive to investors in all
stages of a market's cycle. For this reason, they continue to be one of
our main focuses in the corporate arena. Noteworthy holdings include
Continental Cablevision, Metromedia Fiber Network, EchoStar, Verio,
Nextel Com munications, Clearnet Communications, SFX Entertainment and
VoiceStream Wireless.
Other sectors that worked well for the Fund this period include
utilities, because of their predictable income stream, and
energy-related issues, because of the rise in oil prices and growth in
exploration. Niagara Mohawk Power, Midland Funding, Apache Finance
Canada, Occidental Petroleum and Tosco Corp. were several holdings that
produced solid results.
Duration and yield curve tactics
Active duration management and careful positioning of the Fund's
Treasury holdings along the yield curve contributed to the portfolio's
outperformance this period. We modified our strategy from being
defensive early in the fiscal year to somewhat opportunistic at period's
end. We began with an average duration that was shorter than our peers'
and later moved it out to neutral. The shorter duration helped cushion
the portfolio's share price when interest rates were rising. Moving it
out to neutral means that we are making no major interest-rate bets just
yet.
The Fund's Treasury holdings were aligned at the short and long end of
the yield curve. (The yield curve is a plotting of yields across the
maturity spectrum.) As the yield curve flattened and then inverted,
longer-term Treasury bond prices rose and the Fund benefited. In late
May, we began moving into intermediate-term securities, preparing for
what we believe will be a steepening of the curve as the Fed winds down
on raising rates. By the period's end, the yield curve had begun to
steepen slightly and the intermediate-term issues were performing well.
Further uncertainty a possibility
Going forward, we are cautiously optimistic, recognizing there still
exists the potential for stronger economic growth, which could lead to
further interest-rate hikes. As always, we shall continue to fully
utilize the Fund's sector flexibility to tap into the possibilities that
any market uncertainty might produce.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (8/29/96)
---------- ----------
Cumulative Total Returns 5.01% 29.45%
Average Annual Total Returns(1) 5.01% 6.96%
YIELD
For the period ended June 30, 2000
SEC 30-DAY
YIELD
----------
John Hancock V.A. Bond Fund(1) 6.63%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return for
the one-year period and since inception would have been 4.82% and 5.96%,
respectively. Without the limitation of expenses, the yield would have
been 6.50%.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Bond Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the
same $10,000 investment in the Lehman Brothers Corporate Bond Index --
an unmanaged index that measures the investment objectives and
characteristics of the Fund. It is not possible to invest in an index.
Line chart with the heading John Hancock V.A. Bond Fund,
representing the growth of a hypothetical $10,000 investment
over the life of the fund. Within the chart are two lines.
The first line represents the value of the hypothetical
$10,000 investment made in the John Hancock V.A. Bond Fund on
August 29, 1996 and is equal to $12,940 as of June 30, 2000.
The second line represents the Lehman Brothers Corporate Bond
Index and is equal to $12,635 as of June 30, 2000.
BY ARTHUR N. CALAVRITINOS, CFA, PORTFOLIO MANAGEMENT TEAM LEADER, AND
FREDERICK L. CAVANAUGH, JR., JANET L. CLAY, CFA, AND DANIEL S. JANIS,
PORTFOLIO MANAGERS
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. High Yield Bond Fund. Caption below reads "Arthur
Calavritinos."]
John Hancock
V.A. High Yield Bond Fund
High-yield bonds post dreary results for past six months
High-yield bonds made little headway over the last six months, as they
fought the twin demons of rising interest rates and investor
disinterest. With the U.S. economy growing at a blistering pace, the
Federal Reserve continued to raise interest rates to ward off inflation.
As a result, bond prices, which move in the opposite direction of
interest rates, fell. High-yield bonds also just couldn't compete with
the returns of high-flying technology stocks in early 2000, and
investors left, or ignored, the sector to pursue the lure of the New
Economy. This, combined with a lack of liquidity and an increase in the
number of high-yield defaults, drove high-yield prices down further.
"The Fund
benefited
from its
overweighted
position in
the energy
and paper
sectors."
[Pie chart at bottom left hand column with heading "Portfolio
Diversification." The chart is divided into six sections
(from top to left): Convertible Bonds 3%, Short-Term
Investments & Other 4%, Common Stock 8%, Preferred Stock 11%,
Foreign Corporate Bonds 17% and U.S. Corporate Bonds 57%. A
note below the chart reads "As a percentage of net assets on
June 30, 2000."]
Fund performance
In this difficult environment, high-yield bond funds had a hard time
just breaking even. For the six months ended June 30, 2000, John Hancock
V.A. High Yield Bond Fund posted a total return of -0.43% at net asset
value. By comparison, the average variable annuity high current yield
fund returned -1.15%, according to Lipper, Inc. Historical performance
information can be found on page 42.
Energy, paper help Fund hold up better
The Fund benefited from its overweighted position in the energy and
paper sectors. Rising oil prices prompted a renewed interest in drilling
and exploration, to the benefit of oil service companies R&B Falcon and
Key Energy Services, in which we took some profits when its stock and
bonds hit our price targets. Drilling company Grey Wolf was also a
strong performer, with its dominance in drilling for natural gas. These
three companies are dominant in their fields and have the most valuable,
sought-after assets where the barriers to entry are high. Companies like
Key Energy have also reaped the rewards of spearheading the
consolidation that has changed and improved its industry.
Consolidation activity in the paper industry continued to benefit the
sector, allowing the remaining players to boost prices, especially given
the lack of new supply. As merger activity heated up, the stock and bond
prices of longtime holding Repap New Bruns wick rose on speculation that
the company would be bought out. When they reached our target levels, we
sold our position and locked in profits. Packaging Corp. of America also
served us well when the company took back some of its preferred stock at
an attractive price.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with -2% at the bottom and 0% at the top.
The first bar represents the -0.43% total return for John
Hancock V.A. High Yield Bond Fund. The second bar represents
the -1.15% total return for Average variable annuity high
current yield fund. A note below the chart reads "The total
return for John Hancock V.A. High Yield Bond Fund is at net
asset value with all distributions reinvested. The average
variable annuity high current yield fund is tracked by
Lipper, Inc. See the following page for historical
performance information."]
New additions do well
We used our value approach to investing to add a couple of holdings with
compelling risk/reward profiles to the top of our list, including
Canadian forest products company TimberWest Forest Corp. and mining
company Freeport-McMoRan Copper & Gold. TimberWest has great physical
assets, and the security we bought was yielding 12% with the potential
for dividend increases. Freeport-McMoRan is a New Orleans-based company
with the world's largest copper and gold mine in Indonesia. We bought a
very high- yielding, short-maturity bond that was cheap because of the
perceived higher risk of the mine's location. We believe the company's
strong fundamentals, including great interest coverage and free cash
flow, adequately compensate for the added risk. Both of these securities
rose in price during the period.
Selectivity counts
In addition to avoiding a number of sectors that produced poor results,
like health care, textiles, specialty retailers and consumer products,
we also managed to steer clear of some of the worst-performing
individual companies. We did not escape altogether, however. Pathmark
Supermarkets saw its preferred stock and bonds hit hard when a U.S.
antitrust ruling foiled a Dutch company's bid to buy the New York
supermarket chain. Pathmark defaulted on its bonds and is in the process
of working out a financial restructuring package. Coal company AEI
Resources also ran into difficulties over accounting issues and falling
coal prices.
Telecom picks
Telecommunications companies make up the largest component of the
high-yield market, and it is the Fund's largest sector weighting as
well. The sector got hit when the environment for technology soured in
March and April and fears grew that telecom companies might have a
harder time getting access to their next phase of capital in the equity
market. We have maintained an underweighting in the sector, since so
many telecom companies have yet to deliver results. We are sticking with
companies that display the best ability to grow revenues and that have
good business plans and a market, cost or product advantage. Currently
we like telephone companies in Europe and cell-phone companies like
Nextel Communications that are developing the next generation of
wireless equipment.
"In this
environment,
individual
credit selec-
tion is more
important
than ever."
A look ahead
For now, all eyes are on the economy, waiting for signs that growth has
slowed to the Fed's satisfaction. In the short term, if the U.S. economy
slows too much, high-yield companies could have a harder time
implementing their business plans and making their earnings targets. In
this environment, individual credit selection is more important than
ever. Consolidating industries remain a focus, including the airlines,
where merger activity picked up in the last six months, causing us to
double our position in Northwest Airlines at times when the stock was in
a lull.
-----------------------------------------------------------------------
International investing involves special risks such as political,
economic and currency risks and differences in accounting standards and
financial reporting. See the prospectus for the risks of investing in
high-yield bonds.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (1/6/98)
---------- ----------
Cumulative Total Returns 3.44% 1.60%
Average Annual Total Returns(1) 3.44% 0.64%
YIELD
For the period ended June 30, 2000
SEC 30-DAY
YIELD
----------
John Hancock V.A. High Yield Bond Fund(1) 11.64%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return for
the one-year period and since inception would have been 3.14% and 0.36%,
respectively. Without the limitation of expenses, the yield would have
been 11.26%.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. High Yield Bond Fund would be worth, assuming all distributions
were reinvested for the period indicated. For comparison, we've shown
the same $10,000 investment in the Lehman Brothers High Yield Bond Index
-- an unmanaged index of fixed-income securities that are similar, but
not identical, to the bonds in the Fund's portfolio. It is not possible
to invest in an index.
Line chart with the heading John Hancock V.A. High Yield Bond
Fund, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are
two lines. The first line represents the Lehman Brothers High
Yield Bond Index and is equal to $10,304 as of June 30, 2000.
The second line represents the value of the hypothetical
$10,000 investment made in the John Hancock V.A. High Yield
Bond Fund on January 6, 1998 and is equal to $10,160 as of
June 30, 2000.
BY DAWN BAILLIE FOR THE PORTFOLIO MANAGEMENT TEAM
[A 2" x 3" photo at bottom middle of page of John Hancock
V.A. Money Market Fund. Caption below reads "Dawn Baillie."]
John Hancock
V.A. Money Market Fund
Inflation fears and a strong economy
push interest rates higher
Money-market yields continued to rise over the last six months, as the
roaring U.S. economy caused the Federal Reserve to intensify its
inflation-fighting campaign with three additional interest-rate hikes in
2000. As a result, the federal funds rate that banks charge each other
for overnight loans climbed from 5.50% in December to 6.50% by the end
of June. Money-market yields are pegged to changes in the federal funds
rate, also rose. As the stock market -- technology stocks in particular
-- cooled off and produced lackluster results in the first six months of
the year, money-market funds began to provide very competitive returns.
The Federal Reserve remains intent on preventing inflation from spiking,
and entered 2000 with its "tightening" bias decidedly intact. Robust
fourth-quarter gross domestic product numbers released in January
signaled that economic growth remained strong, so the Fed raised rates
by one-quarter of a percentage point. Then oil prices rose to over $30
per barrel -- a level not seen since the 1970s -- and unemployment edged
down to 3.9%, increasing the potential for wage inflation. As a result,
the Fed raised rates by another quarter percentage point in March and a
half a percentage point in May. Finally, the economy began to show signs
of slowing, and the Fed left rates unchanged at its recent June meeting.
However, it restated its position that inflation was still public enemy
number one and that the Fed would not permit it to emerge.
7-day effective yield
On June 30, 2000, John Hancock V.A. Money Market Fund had a 7-day
effective yield of 6.23%. By comparison, the average taxable
money-market fund had a 7-day effective yield of 5.90%, according to
Lipper, Inc.
"Money-market
yields
continued to
rise over
the last six
months..."
Short maturity provides flexibility
Since it was clear that the Fed was going to continue to push rates up
in response to the steaming economy, we maintained a conservative stance
through much of the last six months. By keeping the Fund's maturity
shorter than average, we didn't have our money locked up for so long,
and were able to reinvest in higher-yielding securities after each rate
hike.
A look ahead
While there have been some hints of an economic slowdown lately, we
believe there is a real possibility that the Fed could raise rates a few
more times. Typically, it takes at least six months for higher interest
rates to have a measurable economic impact, so it could be at least the
end of the summer before the effects of the three latest hikes have an
impact. But if signs of a slowdown continue, the Fed could be coming
nearer to ending its rate-hike cycle. In an election year, the Fed may
also want to stay out of the political fray by wrapping up before the
campaign season moves into high gear.
[Bar chart at the top of left hand column with heading "7-Day
Effective Yield." Under the heading is a note that reads "As
of June 30, 2000." The chart is scaled in increments of 2%
with 0% at the bottom and 8% at the top. The first bar
represents the 6.23% total return for John Hancock V.A. Money
Market Fund. The second bar represents the 5.90% total return
for Average taxable money-market fund. A note below the chart
reads "The average taxable money-market fund is tracked by
Lipper, Inc. Past performance is no guarantee of future
results."]
"...we believe
there is a
real possibility
that the Fed
could raise
rates a few
more times."
Until it's clear that the Fed is done, we will keep the Fund's duration
shorter than average to take advantage of further increases. As always,
we will focus not only on providing the Fund with a competitive yield,
but also on preserving stability of principal.
-----------------------------------------------------------------------
The Fund is neither insured nor guaranteed by the U.S. government.
Although the Fund seeks to maintain a net asset value of $1.00 per
share, it is possible to lose money by investing in the Fund.
BY FREDERICK CAVANAUGH, PORTFOLIO MANAGEMENT TEAM LEADER,
ARTHUR N. CALAVRITINOS, CFA, JANET L. CLAY, CFA, AND DANIEL S. JANIS,
PORTFOLIO MANAGERS
[A 2" x 3" photo at bottom right side of page of John Hancock
V.A. Strategic Income Fund. Caption below reads "Fred
Cavanaugh."]
John Hancock
V.A. Strategic Income Fund
Rate jitters, inflation worries plague global bond markets
The global bond markets produced divergent results during the six-month
period ended June 30, 2000. The U.S. Treasury market posted positive
returns even though the Federal Reserve continued to raise interest
rates. Faced with a stubbornly robust economy and a red-hot stock
market, the Fed acted preemptively to cool inflationary pressures. Of
course, bond investors dislike even the hint of inflation because it
erodes the returns of fixed-income investments. The most recent rate
hike was a half-percentage-point increase in May, the largest rate hike
in five years.
Amid these rate hikes, the Treasury market's reasonably strong
performance was driven by technical factors, rather than fundamental
economic and interest-rate concerns. Investors increasingly focused on
the U.S. government's efforts to pay down its debt. During the period,
the Treasury scaled back its auctions of new debt and announced plans to
repurchase $30 billion of its outstanding higher-yielding longer-term
Treasury bonds. This caused the Treasury yield curve to invert for the
first time since 1990. Investors usually demand higher yields on
longer-term bonds than on shorter-term ones. But because of the reduced
supply of long-term securities, the yield on the 30-year bond was about
one percentage point lower than the yield on the 10-year Treasury bond.
[Table at bottom left hand column entitled "Top Five Bond
Sectors." The first listing is U.S. Government 35%, the
second is Telecommunications 27%, the third Media 4%, the
fourth Leisure 3% and the fifth Utilities 3%. A note below
the table reads "As a percentage of net assets on June 30,
2000."]
Foreign bonds turned in a mixed performance. European government bonds
lagged their U.S. counterparts as improving economic conditions and
rising interest rates on that continent curtailed bond returns.
Emerging-market bonds from Asia and Latin America started the year off
strong, but languished a bit toward the end of the period as their
economies improved.
"Entering the
new year, we
had increased
our stake in
U.S. Treasury
securities..."
High-yield corporate bonds were the among the global bond market's
biggest disappointment during the period. For the majority of companies,
their challenges had nothing to do with a material worsening of their
credit quality. In fact, the opposite was true. The debt repayment
capabilities of the U.S. corporate bond market remained solid, thanks
largely to strong economic conditions. Their trouble mainly stemmed from
the fact that demand for high-yield bonds was weak given the general
aversion to bonds in a rising interest-rate environment and competition
from the red-hot stock market. By June, however, bond market conditions
began to improve. Bonds -- particularly the high-yield variety --
strengthened on investors' growing belief that the Fed's interest-rate
raising campaign might be over.
[Bar chart at the top of left hand column with heading "Fund
Performance." Under the heading is a note that reads "For the
six months ended June 30, 2000." The chart is scaled in
increments of 1% with 0% at the bottom and 2% at the top. The
first bar represents the 1.24% total return for John Hancock
V.A. Strategic Income Fund. The second bar represents the
1.57% total return for Average variable annuity general bond
fund. A note below the chart reads "The total return for John
Hancock V.A. Strategic Income Fund is at net asset value with
all distributions reinvested. The average variable annuity
general bond fund is tracked by Lipper, Inc. See the
following page for historical performance information."]
Performance review
For the six months ended June 30, 2000, John Hancock V.A. Strategic
Income Fund posted a total return of 1.24% at net asset value, compared
with the 1.57% return of the average variable annuity general bond fund,
according to Lipper, Inc. Historical performance information can be
found on page 47.
"...we believe
that high-yield
corporate
bonds offer
very good
value now."
U.S. Treasuries grow
Entering the new year, we had increased our stake in U.S. Treasury
securities by reducing our holdings in both high-yield corporate and
foreign government bonds, and we continued to add to them in the first
several months of the year. In the foreign government bond category, we
locked in the gains generated by our holdings in government bonds issued
by the United Kingdom, which had performed relatively well given the
slowing economy in that country. Our sales of high-yield securities were
concentrated in those that our research staff felt might have credit
problems if the economy slows later this year.
Although Treasuries weren't immune to the vagaries of higher interest
rates, they held up much better than high-yield securities. In addition,
they offered yields well in excess of most foreign high-quality
government bonds, particularly those issued in Europe. We focused on
owning a combination of shorter- and longer-term Treasury securities, a
strategy that proved more advantageous than emphasizing
intermediate-maturity Treasuries as the yield curve inverted.
High-yield markets: leaders and laggards
Increased volatility and lack of demand help explain why there were
clear-cut winners and losers in the high-yield market over the past 12
months. On the plus side were our holdings in Verio and Intercel, both
of which were acquired during the period. Our disappointments were
mainly companies that didn't achieve expected financial results. Coal
company AEI Resources, for example, suffered from weak coal prices and
rising transportation costs, while movie theater chain Cinemark USA was
plagued by the company's rapid expansion.
Outlook
Given the ongoing strength of the world's economy, we believe that
high-yield corporate bonds offer very good value now. Yields on most
high-yield bonds are around 12%, a historically large advantage over
Treasury yields. As long as we avoid a recession, which we don't believe
is in the cards, we feel confident that the vast majority of the
companies we own will fare well. Of course, timing is everything and we
can't pinpoint exactly when investors will embrace the high-yield market
again. For that reason, we're likely to keep our weighting in the
high-yield arena lower than we normally would given our optimism over
valuations. But once we see evidence of money flowing back into the
market, we're likely to increase our weighting there. We don't believe
that high-quality foreign government bonds will offer attractive value
any time soon, so we're likely to keep our holdings in them relatively
small.
-----------------------------------------------------------------------
International investing involves special risks such as political,
economic and currency risks and differences in accounting standards and
financial reporting.
A LOOK AT PERFORMANCE
For the period ended June 30, 2000
SINCE
ONE INCEPTION
YEAR (8/29/96)
---------- ----------
Cumulative Total Returns 4.06% 32.48%
Average Annual Total Returns(1) 4.06% 7.61%
YIELD
For the period ended June 30, 2000
SEC 30-DAY
YIELD
----------
John Hancock V.A. Strategic Income Fund(1) 8.54%
Total return measures the change in value of an investment from the
beginning to the end of a period, assuming all distributions were
reinvested. Performance figures reflect the effect of investment-related
charges on the underlying funds, but do not include insurance and other
charges levied at the separate account level.
All figures represent past performance and are no guarantee of future
results. Keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 0.25% (not
including management fee) of the Fund's daily average net assets.
Without the limitation of expenses, the average annual total return for
the one-year period and since inception would have been 4.05% and 7.32%,
respectively. Without the limitation of expenses, the yield would have
been 8.53%.
WHAT HAPPENED TO A $10,000 INVESTMENT . . .
The chart below shows how much a $10,000 investment in the John Hancock
V.A. Strategic Income Fund would be worth, assuming all distributions
were reinvested for the period indicated. For comparison, we've shown
the same $10,000 investment in the Lehman Brothers Government/Corporate
Bond Index -- an unmanaged index that measures the performance of U.S.
government bonds, U.S. corporate bonds and Yankee bonds. It is not
possible to invest in an index.
Line chart with the heading John Hancock V.A. Strategic
Income Fund, representing the growth of a hypothetical
$10,000 investment over the life of the fund. Within the
chart are two lines. The first line represents the value of
the hypothetical $10,000 investment made in the John Hancock
V.A. Strategic Income Fund on August 29, 1996 and is equal to
$13,249 as of June 30, 2000. The second line represents the
Lehman Brothers Government/Corporate Bond Index and is equal
to $12,816 as of June 30, 2000.
FINANCIAL STATEMENTS
John Hancock Funds - Declaration Trust
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
June 30, 2000 (Unaudited)
----------------------------------------------------------------------------------------------------------------------------------
V.A. V.A. V.A. V.A. V.A. V.A. V.A.
CORE EQUITY 500 INDEX LARGE CAP MID CAP RELATIVE SMALL CAP SOVEREIGN
FUND FUND GROWTH FUND GROWTH FUND VALUE FUND GROWTH FUND INVESTORS FUND
----------- ----------- ----------- ---------- ----------- ----------- --------------
<S> <C> <C> <C> C> <C> <C> <C>
Assets:
Investments at value - Note D:
Common stocks
(cost - $35,616,019,
$23,071,935, $17,005,387,
$11,567,568, $37,564,338,
$23,914,535 and
$40,309,002, respectively) $42,505,991 $33,911,709 $21,048,082 13,630,099 $42,434,027 $31,887,729 $44,260,304
Bonds (cost - none, none,
none, none, $1,360,434,
none and none, respectively) -- -- -- -- 1,532,500 -- --
U.S. government obligations
(cost - none, none, none,
none, none, none and $401,814,
respectively) -- -- -- -- -- -- 395,564
Joint repurchase agreements
(cost - $1,523,000, $516,000,
$405,000, $900,000, $173,000,
$1,740,000 and $3,225,000,
respectively) 1,523,000 516,000 405,000 900,000 173,000 1,740,000 3,225,000
Corporate savings account 541 -- 572 126 704 965 768
----------- ----------- ----------- ---------- ----------- ----------- -----------
44,029,532 34,427,709 21,453,654 14,530,225 44,140,231 33,628,694 47,881,636
Cash -- 19,074 -- -- -- -- --
Receivable for
investments sold -- 15,580 126,118 167,887 -- 318,257 --
Receivable for futures
variation margin - Note B -- 2,525 -- -- -- -- --
Dividends and interest receivable 35,589 26,728 2,089 1,389 34,395 366 47,818
Foreign tax receivable -- -- -- 20 -- -- 698
Receivable from John Hancock
Advisers, Inc. and
affiliates - Note C -- 12,811 -- -- -- -- --
Deferred organization
expenses - Note B 2,490 2,490 2,490 -- -- 2,490 2,490
Other assets 2,227 298 772 2 34 870 3,151
----------- ----------- ----------- ---------- ----------- ----------- -----------
Total Assets 44,069,838 34,507,215 21,585,123 14,699,523 44,174,660 33,950,677 47,935,793
----------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for
investments purchased -- -- -- 42,432 -- 355,109 --
Payable to John Hancock
Advisers, Inc. and
affiliates - Note C 24,905 -- 13,015 8,843 17,446 16,436 24,739
Accounts payable and
accrued expenses 6,133 32,183 12,178 13,260 -- 24,903 10,136
----------- ----------- ----------- ---------- ----------- ----------- -----------
Total Liabilities 31,038 32,183 25,193 64,535 17,446 396,448 34,875
----------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Capital paid-in 35,883,551 23,840,458 17,901,225 12,172,838 27,956,882 25,715,936 45,303,374
Accumulated net realized
gain (loss) on investments,
financial futures contracts
and foreign currency
transactions 1,264,065 (199,646) (324,599) 418,020 11,164,001 (36,157) (1,346,798)
Net unrealized appreciation of
investments, financial futures
contracts and foreign currency
transactions 6,889,972 10,834,516 4,042,695 2,062,531 5,041,755 7,973,194 3,945,052
Undistributed net investment
Income (distributions in excess
of net investment income) 1,212 (296) (59,391) (18,401) (5,424) (98,744) (710)
----------- ----------- ----------- ---------- ----------- ----------- -----------
Net Assets $44,038,800 $34,475,032 $21,559,930 14,634,988 $44,157,214 $33,554,229 $47,900,918
==================================================================================================================================
Net Asset Value Per Share:
(Based on 2,226,984, 1,924,306,
1,426,838, 792,520, 2,310,104,
1,649,582 and 3,165,345 shares,
respectively, of beneficial
interest outstanding -
unlimited number of shares
authorized with no par value) $19.78 $17.92 $15.11 $18.47 $19.11 $20.34 $15.13
==================================================================================================================================
The Statement of Assets and Liabilities is each Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on June 30, 2000.
You'll also find the net asset value per share as of that date.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Assets and Liabilities (continued)
June 30, 2000 (Unaudited)
--------------------------------------------------------------
V.A.
INTERNATIONAL
FUND
-----------------
<S> <C>
Assets:
Investments at value - Note D:
Common stocks (cost - $7,857,151) $8,996,856
Preferred stocks (cost - $44,259) 50,053
Short-term investments
(cost - $1,176,250) 1,176,250
-----------------
10,223,159
Cash 410
Foreign currency, at value
(cost - $46,822) 46,910
Receivable for investments sold 158,481
Dividends and interest receivable 14,399
Foreign tax receivable 3,966
Receivable for forward foreign currency
exchange contracts sold - Note B 173
Receivable from John Hancock Advisers,
Inc. and affiliates - Note C 21,488
Deferred organization expenses - Note B 2,490
Other assets 83
-----------------
Total Assets 10,471,559
--------------------------------------------------------------
Liabilities:
Payable for investments purchased 164,547
Payable for forward foreign currency
exchange contracts purchased - Note B 83
Payable for securities on loan 890,250
Accounts payable and accrued expenses 35,950
-----------------
Total Liabilities 1,090,830
--------------------------------------------------------------
Net Assets:
Capital paid-in 8,028,250
Accumulated net realized gain on
investments and foreign currency
transactions 235,132
Net unrealized appreciation of
investments and foreign currency
transactions 1,145,731
Distributions in excess of net
investment income (28,384)
-----------------
Net Assets $9,380,729
==============================================================
Net Asset Value Per Share:
(Based on 687,691 shares of beneficial
interest outstanding - unlimited
number of shares authorized with no
par value) $13.64
==============================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Assets and Liabilities (continued)
June 30, 2000 (Unaudited)
----------------------------------------------------------------------------------------------------------
V.A. V.A. V.A.
FINANCIAL REGIONAL BANK TECHNOLOGY
INDUSTRIES FUND FUND FUND
----------------- ----------------- -----------------
<S> <C> <C> <C>
Assets:
Investments at value - Note D:
Common stocks (cost - $40,303,069,
$14,623,212 and $2,177,246,
respectively) $49,655,169 $12,398,383 $2,313,330
Short-term investments (cost -
$598,000, $673,000 and $866,531,
respectively) 598,000 673,000 866,531
Corporate savings account 452 275 822
----------------- ----------------- -----------------
50,253,621 13,071,658 3,180,683
Receivable for investments sold 527,022 161,492 10,440
Dividends and interest receivable 22,193 42,912 204
Foreign tax receivable 2,214 -- --
Receivable from John Hancock Advisers,
Inc. and affiliates - Note C -- -- 906
Other assets 5,682 46 --
----------------- ----------------- -----------------
Total Assets 50,810,732 13,276,108 3,192,233
----------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investments purchased -- 66,086 333,748
Payable to John Hancock Advisers, Inc.
and affiliates - Note C 35,052 9,333 --
Accounts payable and accrued expenses -- 11,353 5,452
----------------- ----------------- -----------------
Total Liabilities 35,052 86,772 339,200
----------------------------------------------------------------------------------------------------------
Net Assets:
Capital paid-in 45,763,843 17,425,069 2,645,390
Accumulated net realized gain (loss) on
investments, financial futures
contracts and foreign currency
transactions (4,478,744) (2,014,506) 68,991
Net unrealized appreciation
(depreciation) of investments,
financial futures contracts and
foreign currency transactions 9,351,951 (2,224,829) 136,084
Undistributed net investment income 138,630 3,602 2,568
----------------- ----------------- -----------------
Net Assets $50,775,680 $13,189,336 $2,853,033
==========================================================================================================
Net Asset Value Per Share:
(Based on 3,321,136, 1,719,274 and
258,253 shares, respectively, of
beneficial interest outstanding -
unlimited number of shares authorized
with no par value) $15.29 $7.67 $11.05
==========================================================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Assets and Liabilities (continued)
June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------------------------------------------------------
V.A. V.A. V.A. V.A.
BOND HIGH YIELD MONEY MARKET STRATEGIC
FUND BOND FUND FUND INCOME FUND
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Assets:
Investments at value - Note D:
Common stocks (cost - none, $892,488,
none and $157,714, respectively) -- $723,082 -- $277,942
Preferred stocks and warrants (cost -
$51, $1,017,120, none and $153,513,
respectively) $650 913,825 -- 145,529
Bonds (cost - $13,968,213, $8,538,570,
none and $25,309,001, respectively) 13,823,386 6,777,046 -- 23,699,115
Short-term investments (cost - none,
none, $29,723,278 and none,
respectively) -- -- $29,723,278 --
Joint repurchase agreements (cost -
$1,467,000, $320,000, $5,852,000 and
$2,747,000, respectively) 1,467,000 320,000 5,852,000 2,747,000
Corporate savings account 688 165 -- 857
----------------- ----------------- ----------------- -----------------
15,291,724 8,734,118 35,575,278 26,870,443
Cash -- -- 434 --
Foreign currency, at value (cost -
none, $23,259, none and $187,380,
respectively) -- 23,982 -- 191,150
Receivable for investments sold 1,011,727 79,228 -- 308,378
Receivable for forward foreign currency
exchange contracts purchased - Note B 1,542 1,509 -- --
Receivable for forward foreign currency
exchange contracts sold - Note B -- -- -- 35,138
Dividends and interest receivable 257,987 249,413 173,662 583,102
Foreign tax receivable -- 1,425 -- --
Deferred organization expenses -
Note B 2,490 -- 2,490 2,490
Other assets 73 19 2,527 1,302
----------------- ----------------- ----------------- -----------------
Total Assets 16,565,543 9,089,694 35,754,391 27,992,003
--------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investments purchased 1,266,586 193,178 -- 479,660
Payable for shares repurchased -- -- 63,996 --
Payable for forward foreign currency
exchange contracts purchased - Note B 1,558 -- -- 2,397
Payable for forward foreign currency
exchange contracts sold - Note B -- 4,652 -- --
Distributions payable 2,765 3,063 5,936 6,795
Due to custodian 275 -- -- --
Payable to John Hancock Advisers, Inc.
and affiliates - Note C 5,084 2,433 14,624 14,551
Accounts payable and accrued expenses 11,900 278 12,111 17,927
----------------- ----------------- ----------------- -----------------
Total Liabilities 1,288,168 203,604 96,667 521,330
--------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Capital paid-in 15,834,061 10,707,471 35,657,672 29,272,923
Accumulated net realized gain (loss) on
investments, financial futures
contracts and foreign currency
transactions (434,044) 197,740 -- (285,085)
Net unrealized appreciation
(depreciation) of investments,
financial futures contracts and
foreign currency transactions (144,232) (2,039,216) -- (1,469,996)
Undistributed net investment income
(distributions in excess of net
investment income) 21,590 20,095 52 (47,169)
----------------- ----------------- ----------------- -----------------
Net Assets $15,277,375 $8,886,090 $35,657,724 $27,470,673
================================================================================================================================
Net Asset Value Per Share:
(Based on 1,544,389, 1,137,688,
35,657,724 and 2,900,601 shares,
respectively, of beneficial interest
outstanding - unlimited number of
shares authorized with no par value) $9.89 $7.81 $1.00 $9.47
================================================================================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Operations
Six months ended June 30, 2000 (Unaudited)
-------------------------------------------------------------------------------------------------------------------------------
V.A. V.A. V.A. V.A. V.A. V.A. V.A.
CORE EQUITY 500 INDEX LARGE CAP MID CAP RELATIVE SMALL CAP SOVEREIGN
FUND FUND GROWTH FUND GROWTH FUND VALUE FUND GROWTH FUND INVESTORS FUND
----------- ----------- ----------- ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends (net of foreign
Withholding tax of $1,221,
$1,033, $402, $113,
none, none and $1,047,
respectively) $245,641 $210,886 $30,408 $6,945 $89,337 $4,274 $368,314
Interest (including
securities lending
income of $408, none,
$351, $176, $4,733,
$16,607 and none,
respectively) 32,999 -- 13,427 35,096 103,200 45,373 152,013
----------- ----------- ----------- ----------- ---------- ----------- -----------
278,640 210,886 43,835 42,041 192,537 49,647 520,327
----------- ----------- ----------- ----------- ---------- ----------- -----------
Expenses:
Investment management
fee - Note C 149,088 61,278 81,040 45,332 127,505 111,263 140,319
Custodian fee 10,827 66,697 7,981 15,736 14,267 41,010 8,204
Auditing fee 5,462 7,540 7,701 5,967 6,561 7,459 8,450
Accounting and legal
services fee - Note C 3,838 3,155 1,947 1,089 3,829 2,673 4,214
Printing 1,155 1,273 2,224 1,889 1,213 2,715 769
Organization expense - Note B 1,064 1,064 1,064 -- -- 1,064 1,064
Trustees' fees 895 1,000 624 190 746 558 1,221
Miscellaneous 628 7,933 427 164 490 380 831
Legal fees 213 359 169 71 163 113 174
Registration and
filing fees 5 7 8 6 41 7 7
----------- ----------- ----------- ----------- ---------- ----------- -----------
Total Expenses 173,175 150,306 103,185 70,444 154,815 167,242 165,253
-------------------------------------------------------------------------------------------------------------------------------
Less Expense Reductions - Note C -- (89,027) -- (10,002) -- (18,891) --
-------------------------------------------------------------------------------------------------------------------------------
Net Expenses 173,175 61,279 103,185 60,442 154,815 148,351 165,253
-------------------------------------------------------------------------------------------------------------------------------
Net Investment
Income (Loss) 105,465 149,607 (59,350) (18,401) 37,722 (98,704) 355,074
-------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments,
Financial Futures Contracts
And Foreign Currency
Transactions:
Net realized gain (loss)
on investments
sold 741,475 (175,883) (917,785) 353,148 7,220,311 (1,210,049) (977,361)
Net realized gain on
financial futures contracts -- 26,056 -- -- -- -- --
Net realized loss on
foreign currency transactions -- -- -- -- (933) -- --
Change in net unrealized
appreciation/ depreciation
of investments (655,721) (269,872) 20,903 225,683 (4,568,975) 1,047,610 (1,741,423)
Change in net unrealized
appreciation/depreciation
of financial futures
contracts -- (14,414) -- -- 906 -- --
----------- ----------- ----------- ----------- ---------- ----------- -----------
Net Realized and Unrealized
Gain (Loss) on Investments,
Financial Futures Contracts
and Foreign Currency
Transactions 85,754 (434,113) (896,882) 578,831 2,651,309 (162,439) (2,718,784)
-------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations $191,219 ($284,506) ($956,232) $560,430 $2,689,031 ($261,143) ($2,363,710)
===============================================================================================================================
The Statement of Operations summarizes for each of the Funds the
investment income earned and expenses incurred in operating the Fund. It
also shows net gains (losses) for the period stated.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Operations (continued)
Six months ended June 30, 2000 (Unaudited)
--------------------------------------------------------------
V.A.
INTERNATIONAL
FUND
-----------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding
tax of $10,275) $59,218
Interest 14,757
-----------------
73,975
-----------------
Expenses:
Investment management fee - Note C 43,542
Custodian fee 80,562
Auditing fee 6,509
Accounting and legal services fee - Note C 872
Printing 3,191
Organization expense - Note B 1,064
Trustees' fees 241
Miscellaneous 179
Legal fees 126
Registration and filing fees 279
-----------------
Total Expenses 136,565
--------------------------------------------------------------
Less Expense Reductions - Note C (80,928)
--------------------------------------------------------------
Net Expenses 55,637
--------------------------------------------------------------
Net Investment Income 18,338
--------------------------------------------------------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions:
Net realized gain on investments sold 18,345
Net realized loss on foreign currency
transactions (13,566)
Change in net unrealized appreciation/
depreciation of investments (1,237,636)
Change in net unrealized appreciation/
depreciation of foreign currency
transactions 1,235
-----------------
Net Realized and Unrealized Loss on
Investments and Foreign Currency
Transactions (1,231,622)
--------------------------------------------------------------
Net Decrease in Net Assets
Resulting from Operations ($1,213,284)
==============================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Operations (continued)
Six months ended June 30, 2000 (Unaudited)
----------------------------------------------------------------------------------------------------------
V.A. V.A. V.A.
FINANCIAL REGIONAL BANK TECHNOLOGY
INDUSTRIES FUND FUND FUND
----------------- ----------------- -----------------
<S> <C> <C> <C>
Investment Income:
Dividends (net of foreign withholding
tax of $10,462, none and none,
respectively) $321,269 $215,169 $47
Interest (including securities lending
income of none, $22 and none,
respectively) 23,478 12,616 5,087
----------------- ----------------- -----------------
344,747 227,785 5,134
----------------- ----------------- -----------------
Expenses:
Investment management fee - Note C 188,700 58,841 1,955
Custodian fee 5,143 7,202 1,992
Auditing fee 3,914 5,285 2,988
Accounting and legal services fee - Note C 4,251 1,325 44
Printing 594 538 526
Trustees' fees 587 429 3
Miscellaneous 342 196 30
Legal fees 92 9 23
Registration and filing fees 3 6 --
----------------- ----------------- -----------------
Total Expenses 203,626 73,831 7,561
----------------------------------------------------------------------------------------------------------
Less Expense Reductions - Note C -- -- (4,995)
----------------------------------------------------------------------------------------------------------
Net Expenses 203,626 73,831 2,566
----------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 141,121 153,954 2,568
----------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain (loss) on investments
sold (284,772) (1,934,307) 68,991
Net realized gain on foreign currency
transactions 4,843 -- --
Change in net unrealized appreciation/
depreciation of investments 2,660,221 (252,449) 136,084
Change in net unrealized appreciation/
depreciation of foreign currency
transactions (2,393) -- --
----------------- ----------------- -----------------
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions 2,377,899 (2,186,756) 205,075
----------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations $2,519,020 ($2,032,802) $207,643
==========================================================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Operations (continued)
Six months ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------------------------------------------------------
V.A. V.A. V.A. V.A.
BOND HIGH YIELD MONEY MARKET STRATEGIC
FUND BOND FUND FUND INCOME FUND
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment Income:
Dividends (net of foreign withholding
tax of none, $2,266, none and none,
respectively) -- $64,099 -- $12,549
Interest $488,977 512,277 $870,459 1,157,412
----------------- ----------------- ----------------- -----------------
488,977 576,376 870,459 1,169,961
----------------- ----------------- ----------------- -----------------
Expenses:
Investment management fee - Note C 33,023 27,159 70,153 73,149
Custodian fee 20,619 7,703 8,971 14,372
Auditing fee 6,049 7,294 5,725 7,374
Accounting and legal services fee - Note C 1,190 816 2,528 2,197
Printing 1,662 1,619 810 1,339
Organization expense - Note B 1,064 -- 1,064 1,064
Trustees' fees 345 255 1,015 767
Miscellaneous 235 195 331 463
Legal fees 68 10,399 169 226
Registration and filing fees 387 16 9 9
----------------- ----------------- ----------------- -----------------
Total Expenses 64,642 55,456 90,775 100,960
--------------------------------------------------------------------------------------------------------------------------------
Less Expense Reductions - Note C (15,108) (16,980) -- --
--------------------------------------------------------------------------------------------------------------------------------
Net Expenses 49,534 38,476 90,775 100,960
--------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 439,443 537,900 779,684 1,069,001
--------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions:
Net realized gain (loss) on investments
sold (195,067) 253,067 -- (282,574)
Net realized gain on foreign currency
transactions 991 73,412 -- 146,807
Change in net unrealized appreciation/
depreciation of investments 321,177 (854,973) -- (589,563)
Change in net unrealized appreciation/
depreciation of foreign currency
transactions (913) (38,192) -- (12,468)
----------------- ----------------- ----------------- -----------------
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions 126,188 (566,686) -- (737,798)
--------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations $565,631 ($28,786) $779,684 $331,203
================================================================================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
----------------------------------------------------------------------------------------------------------------------------------
V.A. CORE EQUITY FUND V.A. 500 INDEX FUND V.A. LARGE CAP GROWTH FUND
------------------------------- ------------------------------ ------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000
1999 (UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED)
------------ ---------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income (loss) $170,261 $105,465 $344,397 $149,607 ($40,884) ($59,350)
Net realized gain (loss) on
investments sold, financial
futures contracts and foreign
currency transactions 1,489,402 741,475 91,519 (149,827) 1,316,751 (917,785)
Change in net unrealized
appreciation/depreciation of
investments, financial futures
contracts and foreign currency
transactions 3,097,564 (655,721) 5,755,226 (284,286) 1,878,149 20,903
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase (Decrease) in Net
Assets Resulting from Operations 4,757,227 191,219 6,191,142 (284,506) 3,154,016 (956,232)
------------ ---------------- ------------ ---------------- ------------ ----------------
Distributions to Shareholders: *
Dividends from net investment
income (174,331) (104,168) (344,375) (150,238) -- --
Distributions in excess of net
investment income (86) -- -- -- -- --
Distributions from net realized
gain on investments sold,
financial futures contracts and
foreign currency transactions (895,808) -- (231,893) -- (491,445) --
Distributions in excess of net
realized gain on investments
sold, financial futures contracts
and foreign currency transactions -- -- (15,178) -- -- --
------------ ---------------- ------------ ---------------- ------------ ----------------
Total Distributions to
Shareholders (1,070,225) (104,168) (591,446) (150,238) (491,445) --
------------ ---------------- ------------ ---------------- ------------ ----------------
From Fund Share Transactions: **
Shares sold 21,277,999 5,587,018 13,349,010 1,585,400 10,666,325 4,525,178
Shares issued to shareholders in
reinvestment of distributions 1,070,225 104,168 591,446 150,200 491,445 --
------------ ---------------- ------------ ---------------- ------------ ----------------
22,348,224 5,691,186 13,940,456 1,735,600 11,157,770 4,525,178
Less shares repurchased (7,735,163) (6,730,754) (8,044,099) (4,779,040) (2,320,226) (3,880,948)
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase (Decrease) 14,613,061 (1,039,568) 5,896,357 (3,043,440) 8,837,544 644,230
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Assets:
Beginning of period 26,691,254 44,991,317 26,457,163 37,953,216 10,371,817 21,871,932
------------ ---------------- ------------ ---------------- ------------ ----------------
End of period (including
undistributed net investment
income (distributions in excess
of net investment income) of
($85), $1,212, $335, ($296),
($41) and ($59,391),
respectively) $44,991,317 $44,038,800 $37,953,216 $34,475,032 $21,871,932 $21,559,930
============ ================ ============ ================ ============ ================
* Distributions to Shareholders:
Per share dividends from net
investment income $0.0861 $0.0470 $0.1710 $0.0770 -- --
------------ ---------------- ------------ ---------------- ------------ ----------------
Per share dividends in excess of
net investment income $0.0001 -- -- -- -- --
------------ ---------------- ------------ ---------------- ------------ ----------------
Per share distributions from net
realized gain on investments
sold, financial futures contracts
and foreign currency transactions $0.4028 -- $0.1105 -- $0.3598 --
------------ ---------------- ------------ ---------------- ------------ ----------------
Per share distributions in excess
of net realized gain on
investments sold, financial
futures contracts and foreign
currency transactions -- -- $0.0072 -- -- --
------------ ---------------- ------------ ---------------- ------------ ----------------
** Analysis of Fund
Share Transactions:
Shares sold 1,133,853 290,662 816,451 90,057 738,312 300,659
Shares issued to shareholders in
reinvestment of distributions 55,765 5,233 34,866 8,245 31,974 --
------------ ---------------- ------------ ---------------- ------------ ----------------
1,189,618 295,895 851,317 98,302 770,286 300,659
Less shares repurchased (410,573) (352,259) (490,081) (271,854) (158,856) (261,172)
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase (Decrease) 779,045 (56,364) 361,236 (173,552) 611,430 39,487
============ ================ ============ ================ ============ ================
The Statement of Changes in Net Assets shows how the value of each
Fund's net assets has changed since the end of the previous period. The
difference reflects earnings less expenses, any investment and foreign
currency gains and losses, distributions paid to shareholders, if any,
and any increase or decrease in money shareholders invested in each
Fund. The footnotes illustrate the number of Fund shares sold,
reinvested and repurchased during the last two periods, along with the
per share amount of distributions made to shareholders of each Fund for
the period indicated.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (continued)
----------------------------------------------------------------------------------------------------------------------------------
V.A. MID CAP GROWTH FUND V.A. RELATIVE VALUE FUND V.A. SMALL CAP GROWTH FUND
------------------------------ ------------------------------ ------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000
1999 (UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED)
------------ ---------------- ------------ ---------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income (loss) ($6,426) ($18,401) $161,304 $37,722 ($82,296) ($98,704)
Net realized gain (loss) on
investments sold and foreign
currency transactions 187,318 353,148 5,322,397 7,219,378 2,352,183 (1,210,049)
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions 1,607,019 225,683 7,741,197 (4,568,069) 5,122,311 1,047,610
------------ ---------------- ------------ ---------------- ------------ ---------------
Net Increase (Decrease) in Net
Assets Resulting from Operations 1,787,911 560,430 13,224,898 2,689,031 7,392,198 (261,143)
------------ ---------------- ------------ ---------------- ------------ ---------------
Distributions to Shareholders: *
Dividends from net investment
income -- -- (162,651) (39,710) -- --
Distributions from net realized
gain on investments sold and
foreign currency transactions (5,407) -- (1,365,816) -- (441,478) --
------------ ---------------- ------------ ---------------- ------------ ---------------
Total Distributions to
Shareholders (5,407) -- (1,528,467) (39,710) (441,478) --
------------ ---------------- ------------ ---------------- ------------ ---------------
From Fund Share Transactions: **
Shares sold 3,390,736 9,546,361 12,838,972 8,265,050 7,383,931 16,885,730
Shares issued to shareholders in
reinvestment of distributions 5,407 -- 1,528,467 39,710 441,478 --
------------ ---------------- ------------ ---------------- ------------ ---------------
3,396,143 9,546,361 14,367,439 8,304,760 7,825,409 16,885,730
Less shares repurchased (594,918) (1,834,603) (4,666,018) (5,562,971) (2,141,408) (3,936,968)
------------ ---------------- ------------ ---------------- ------------ ---------------
Net Increase 2,801,225 7,711,758 9,701,421 2,741,789 5,684,001 12,948,762
------------ ---------------- ------------ ---------------- ------------ ---------------
Net Assets:
Beginning of period 1,779,071 6,362,800 17,368,252 38,766,104 8,231,889 20,866,610
------------ ---------------- ------------ ---------------- ------------ ---------------
End of period (including
undistributed net investment
income (distributions in excess
of net investment income) of
none, ($18,401), ($3,436),
($5,424), ($40) and ($98,744),
respectively) $6,362,800 $14,634,988 $38,766,104 $44,157,214 $20,866,610 $33,554,229
============ ================ ============ ================ ============ ===============
* Distributions to Shareholders:
Per share dividends from net
investment income -- -- $0.0980 $0.0172 -- --
------------ ---------------- ------------ ---------------- ------------ ---------------
Per share distributions from net
realized gain on investments sold
and foreign currency transactions $0.0160 -- $0.6493 -- $0.4314 --
------------ ---------------- ------------ ---------------- ------------ ---------------
** Analysis of Fund
Share Transactions:
Shares sold 257,673 526,008 949,975 461,032 499,482 797,319
Shares issued to shareholders in
reinvestment of distributions 329 -- 91,349 2,069 23,955 --
------------ ---------------- ------------ ---------------- ------------ ---------------
258,002 526,008 1,041,324 463,101 523,437 797,319
Less shares repurchased (49,945) (103,271) (334,023) (303,499) (153,686) (203,736)
------------ ---------------- ------------ ---------------- ------------ ---------------
Net Increase 208,057 422,737 707,301 159,602 369,751 593,583
============ ================ ============ ================ ============ ===============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------------------------------------------------------
V.A. SOVEREIGN INVESTORS FUND V.A. INTERNATIONAL FUND V.A. FINANCIAL INDUSTRIES FUND
------------------------------ ------------------------------ ------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000
1999 (UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED)
------------ ---------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $651,984 $355,074 $38,442 $18,338 $385,825 $141,121
Net realized gain (loss) on
investments sold and foreign
currency transactions (211,594) (977,361) 681,683 4,779 (3,550,224) (279,929)
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions 1,075,319 (1,741,423) 1,497,165 (1,236,401) 3,537,348 2,657,828
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase (Decrease) in Net
Assets Resulting from Operations 1,515,709 (2,363,710) 2,217,290 (1,213,284) 372,949 2,519,020
------------ ---------------- ------------ ---------------- ------------ ----------------
Distributions to Shareholders: *
Dividends from net investment
income (651,984) (355,679) (46,076) -- (362,866) --
Distributions in excess of net
investment income (617) -- (9,515) -- -- --
Distributions from net realized
gain on investments sold,
financial futures contracts and
foreign currency transactions -- -- (259,599) -- (153,776) --
Tax return of capital (2,297) -- -- -- (23,257) --
------------ ---------------- ------------ ---------------- ------------ ----------------
Total Distributions to
Shareholders (654,898) (355,679) (315,190) -- (539,899) --
------------ ---------------- ------------ ---------------- ------------ ----------------
From Fund Share Transactions: **
Shares sold 19,084,625 7,856,795 1,131,817 1,761,784 10,055,880 5,941,247
Shares issued to shareholders in
reinvestment of distributions 654,898 355,679 315,190 -- 539,899 --
------------ ---------------- ------------ ---------------- ------------ ----------------
19,739,523 8,212,474 1,447,007 1,761,784 10,595,779 5,941,247
Less shares repurchased (4,515,757) (7,846,364) (1,175,008) (542,384) (15,685,364) (6,997,027)
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase (Decrease) 15,223,766 366,110 271,999 1,219,400 (5,089,585) (1,055,780)
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Assets:
Beginning of period 34,169,620 50,254,197 7,200,514 9,374,613 54,568,975 49,312,440
------------ ---------------- ------------ ---------------- ------------ ----------------
End of period (including
undistributed net investment
income (distributions in excess
of net investment income) of
($105), ($710), ($46,722),
($28,384), ($2,491) and $138,630,
respectively) $50,254,197 $47,900,918 $9,374,613 $9,380,729 $49,312,440 $50,775,680
============ ================ ============ ================ ============ ================
* Distributions to Shareholders:
Per share dividends from net
investment income $0.2404 $0.1129 $0.0791 -- $0.1078 --
------------ ---------------- ------------ ---------------- ------------ ----------------
Per share distributions in excess
of net investment income $0.0002 -- $0.0163 -- -- --
------------ ---------------- ------------ ---------------- ------------ ----------------
Per share distributions from net
realized gain on investments sold
and foreign currency transactions -- -- $0.4454 -- -- --
------------ ---------------- ------------ ---------------- ------------ ----------------
Tax return of capital $0.0009 -- -- -- $0.0069 --
------------ ---------------- ------------ ---------------- ------------ ----------------
** Analysis of Fund
Share Transactions:
Shares sold 1,204,042 519,727 86,360 117,957 691,929 414,319
Shares issued to shareholders in
reinvestment of distributions 42,073 23,733 21,633 -- 38,926 --
------------ ---------------- ------------ ---------------- ------------ ----------------
1,246,115 543,460 107,993 117,957 730,855 414,319
Less shares repurchased (285,296) (527,230) (92,089) (37,167) (1,096,716) (502,724)
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase (Decrease) 960,819 16,230 15,904 80,790 (365,861) (88,405)
============ ================ ============ ================ ============ ================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------------------------------------------------------
V.A. REGIONAL BANK FUND V.A. TECHNOLOGY FUND V.A. BOND FUND
------------------------------- -------------------- -------------------------------
YEAR ENDED SIX MONTHS ENDED PERIOD ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 2000 JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000
1999 (UNAUDITED) (UNAUDITED)(1) 1999 (UNAUDITED)
------------ ---------------- ----------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $281,620 $153,954 $2,568 $740,529 $439,443
Net realized gain (loss) on
investments sold and foreign
currency transactions 232,178 (1,934,307) 68,991 (216,376) (194,076)
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions (1,578,109) (252,449) 136,084 (583,796) 320,264
------------ ---------------- ----------------- ------------ -----------------
Net Increase (Decrease) in Net
Assets Resulting from Operations (1,064,311) (2,032,802) 207,643 (59,643) 565,631
------------ ---------------- ----------------- ------------ -----------------
Distributions to Shareholders: *
Dividends from net investment
income (281,482) (153,506) -- (740,530) (439,347)
Distributions from net realized
gain on investments sold,
financial futures contracts and
foreign currency transactions (347,453) -- -- -- --
------------ ---------------- ----------------- ------------ -----------------
Total Distributions to
Shareholders (628,935) (153,506) -- (740,530) (439,347)
------------ ---------------- ----------------- ------------ -----------------
From Fund Share Transactions: **
Shares sold 7,383,736 968,882 2,793,865 5,640,516 4,485,603
Shares issued to shareholders in
reinvestment of distributions 628,935 153,506 -- 740,530 436,582
------------ ---------------- ----------------- ------------ -----------------
8,012,671 1,122,388 2,793,865 6,381,046 4,922,185
Less shares repurchased (6,280,747) (6,041,839) (148,475) (3,719,713) (2,301,682)
------------ ---------------- ----------------- ------------ -----------------
Net Increase (Decrease) 1,731,924 (4,919,451) 2,645,390 2,661,333 2,620,503
------------ ---------------- ----------------- ------------ -----------------
Net Assets:
Beginning of period 20,256,417 20,295,095 -- 10,669,428 12,530,588
------------ ---------------- ----------------- ------------ -----------------
End of period (including
undistributed net investment
income of $3,154, $3,602, $2,658,
$21,494 and $21,590,
respectively) $20,295,095 $13,189,336 $2,853,033 $12,530,588 $15,277,375
============ ================ ================= ============ =================
* Distributions to Shareholders:
Per share dividends from net
investment income $0.1190 $0.0872 -- $0.6448 $0.3223
------------ ---------------- ----------------- ------------ -----------------
Per share distributions from net
realized gain on investments sold
and foreign currency transactions $0.1489 -- -- -- --
------------ ---------------- ----------------- ------------ -----------------
** Analysis of Fund
Share Transactions:
Shares sold 798,204 124,147 272,901 556,313 457,191
Shares issued to shareholders in
reinvestment of distributions 73,089 20,052 -- 73,574 44,485
------------ ---------------- ----------------- ------------ -----------------
871,293 144,199 272,901 629,887 501,676
Less shares repurchased (683,009) (796,560) (14,648) (367,396) (234,531)
------------ ---------------- ----------------- ------------ -----------------
Net Increase (Decrease) 188,284 (652,361) 258,253 262,491 267,145
============ ================ ================= ============ =================
(1) Commenced operations on May 1, 2000.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (continued)
----------------------------------------------------------------------------------------------------------------------------------
V.A. HIGH YIELD BOND FUND V.A. MONEY MARKET FUND V.A. STRATEGIC INCOME FUND
------------------------------ ------------------------------ ------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000
1999 (UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED)
------------ ---------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $951,874 $537,900 $1,072,850 $779,684 $1,576,575 $1,069,001
Net realized gain (loss) on
investments sold, financial
futures contracts and foreign
currency transactions 104,240 326,479 -- -- (156,823) (135,767)
Change in net unrealized
appreciation/depreciation of
investments, financial futures
contracts and foreign currency
transactions 59,411 (893,165) -- -- (534,751) (602,031)
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase (Decrease) in Net
Assets Resulting from Operations 1,115,525 (28,786) 1,072,850 779,684 885,001 331,203
------------ ---------------- ------------ ---------------- ------------ ----------------
Distributions to Shareholders: *
Dividends from net investment
income (945,546) (522,833) (1,072,850) (779,684) (1,576,590) (1,069,001)
Distributions from net realized
gain on investments sold,
financial futures contracts and
foreign currency transactions (74,253) -- -- -- -- --
------------ ---------------- ------------ ---------------- ------------ ----------------
Total Distributions to
Shareholders (1,019,799) (522,833) (1,072,850) (779,684) (1,576,590) (1,069,001)
------------ ---------------- ------------ ---------------- ------------ ----------------
From Fund Share Transactions: **
Shares sold 2,548,352 580,305 48,097,999 38,337,278 8,665,787 6,929,124
Shares issued in reorganization -
Note E -- -- -- -- 2,569,836 --
Shares issued to shareholders in
reinvestment of distributions 1,019,800 519,770 944,404 889,233 1,576,592 1,062,206
------------ ---------------- ------------ ---------------- ------------ ----------------
3,568,152 1,100,075 49,042,403 39,226,511 12,812,215 7,991,330
Less shares repurchased (2,496,893) (948,898) (32,610,270) (36,520,294) (4,858,040) (2,064,842)
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase 1,071,259 151,177 16,432,133 2,706,217 7,954,175 5,926,488
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Assets:
Beginning of period 8,119,547 9,286,532 16,519,374 32,951,507 15,019,397 22,281,983
------------ ---------------- ------------ ---------------- ------------ ----------------
End of period (including
undistributed net investment
income (distributions in excess
of net investment income) of
$5,028, $20,095, $52, $52,
($47,169) and ($47,169),
respectively) $9,286,532 $8,886,090 $32,951,507 $35,657,724 $22,281,983 $27,470,673
============ ================ ============ ================ ============ ================
* Distributions to Shareholders:
Per share dividends from net
investment income $0.8767 $0.4648 $0.0452 $0.0269 $0.7977 $0.4145
------------ ---------------- ------------ ---------------- ------------ ----------------
Per share distributions from net
realized gain on investments sold
and foreign currency transactions $0.0657 -- -- -- -- --
------------ ---------------- ------------ ---------------- ------------ ----------------
** Analysis of Fund
Share Transactions:
Shares sold 305,760 71,569 48,097,999 38,337,278 872,439 723,698
Shares issued in reorganization -
Note E -- -- -- -- 253,313 --
Shares issued to shareholders in
reinvestment of distributions 122,160 64,506 944,404 889,233 159,651 111,439
------------ ---------------- ------------ ---------------- ------------ ----------------
427,920 136,075 49,042,403 39,226,511 1,285,403 835,137
Less shares repurchased 297,910) (116,297) (32,610,270) (36,520,294) (491,471) (215,564)
------------ ---------------- ------------ ---------------- ------------ ----------------
Net Increase 130,010 19,778 16,432,133 2,706,217 793,932 619,573
============ ================ ============ ================ ============ ================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. CORE EQUITY FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $11.11 $14.11 $17.74 $19.70
------------- ------------- ------------- ------------- -------------
Net Investment Income(2) 0.06 0.16 0.10 0.09 0.05
Net Realized and Unrealized
Gain on Investments 1.12 3.23 3.90 2.36 0.08
------------- ------------- ------------- ------------- -------------
Total from Investment
Operations 1.18 3.39 4.00 2.45 0.13
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.06) (0.14) (0.10) (0.09) (0.05)
Distributions in Excess of
Net Investment Income -- -- -- --(3) --
Distributions from Net
Realized Gain on
Investments Sold (0.01) (0.25) (0.27) (0.40) --
------------- ------------- ------------- ------------- -------------
Total Distributions (0.07) (0.39) (0.37) (0.49) (0.05)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $11.11 $14.11 $17.74 $19.70 $19.78
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(4) 11.78%(5) 30.68% 28.42% 13.89% 0.64%(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) 10.66%(5) 30.04% -- -- --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $1,149 $8,719 $26,691 $44,991 $44,039
Ratio of Expenses to Average
Net Assets 0.95%(7) 0.95% 0.95% 0.83% 0.81%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 4.23%(7) 1.59% -- -- --
Ratio of Net Investment
Income to Average Net
Assets 1.60%(7) 1.24% 0.65% 0.47% 0.50%(7)
Ratio of Adjusted Net
Investment Income (Loss) to
Average Net Assets(8) (1.68%)(7) 0.60% -- -- --
Portfolio Turnover Rate 24% 53% 55% 77% 52%
Fee Reduction Per Share(2) $0.12 $0.08 -- -- --
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
The Financial Highlights summarizes the impact of the following factors
on a single share for each period indi cated: net investment income,
gains (losses), distributions and total investment return of each Fund.
It shows how the Fund's net asset value for a share has changed since
the end of the previous period. Additionally, important relationships
between some items presented in the financial statements are expressed
in ratio form.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. 500 INDEX FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $10.44 $12.62 $15.23 $18.09
------------- ------------- ------------- ------------- -------------
Net Investment Income(2) 0.17 0.30 0.20 0.17 0.07
Net Realized and Unrealized
Gain (Loss) on Investments 0.98 2.72 3.37 2.98 (0.16)
------------- ------------- ------------- ------------- -------------
Total from Investment
Operations 1.15 3.02 3.57 3.15 (0.09)
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.16) (0.30) (0.20) (0.17) (0.08)
Distributions from Net
Realized Gain on
Investments Sold (0.55) (0.54) (0.76) (0.11) --
Distributions in Excess of
Net Realized Gain on
Investments Sold -- -- -- (0.01) --
------------- ------------- ------------- ------------- -------------
Total Distributions (0.71) (0.84) (0.96) (0.29) (0.08)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $10.44 $12.62 $15.23 $18.09 $17.92
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(3) 11.49%(4) 29.51% 28.44% 20.81% (0.52%)(4)
Total Adjusted Investment
Return at Net Asset
Value(3,5) 11.25%(4) 29.04% 27.87% 20.41% (0.65%)(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $4,049 $20,008 $26,457 $37,953 $34,475
Ratio of Expenses to Average
Net Assets 0.60%(6) 0.36% 0.35% 0.35% 0.35%(6)
Ratio of Adjusted Expenses
to Average Net Assets(7) 1.31%(6) 0.83% 0.92% 0.75% 0.86%(6)
Ratio of Net Investment
Income to Average Net
Assets 4.57%(6) 2.45% 1.44% 1.06% 0.85%(6)
Ratio of Adjusted Net
Investment Income to
Average Net Assets(7) 3.86%(6) 1.98% 0.87% 0.66% 0.34%(6)
Portfolio Turnover Rate -- 9% 47% 5% 3%
Fee Reduction Per Share(2) $0.03 $0.06 $0.07 $0.07 $0.04
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. LARGE CAP GROWTH FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $9.39 $10.73 $13.37 $15.77
------------- ------------- ------------- ------------- -------------
Net Investment Loss(2) (0.01) (0.04) --(3) (0.04) (0.04)
Net Realized and Unrealized
Gain (Loss) on Investments (0.60) 1.38 2.64 2.80 (0.62)
------------- ------------- ------------- ------------- -------------
Total from Investment
Operations (0.61) 1.34 2.64 2.76 (0.66)
------------- ------------- ------------- ------------- -------------
Less Distributions:
Distributions from Net
Realized Gain on
Investments Sold -- -- -- (0.36) --
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $9.39 $10.73 $13.37 $15.77 $15.11
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(4) (6.10%)(5) 14.27% 24.60% 20.71% (4.19%)(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) (7.39%)(5) 12.90% 24.27% 20.69% --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $994 $3,733 $10,372 $21,872 $21,560
Ratio of Expenses to Average
Net Assets 1.00%(7) 1.00% 1.00% 1.00% 0.95%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 4.76%(7) 2.37% 1.33% 1.02% --
Ratio of Net Investment Loss
to Average Net Assets (0.23%)(7) (0.39%) (0.00%) (0.25%) (0.55%)(7)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(8) (3.99%)(7) (1.76%) (0.33%) (0.27%) --
Portfolio Turnover Rate 68% 136% 176% 172% 174%
Fee Reduction Per Share(2) $0.13 $0.13 $0.04 --(3) --
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------
V.A. MID CAP GROWTH FUND
-------------------------------------------------
PERIOD YEAR SIX MONTHS
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, JUNE 30, 2000
1998(1) 1999 (UNAUDITED)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $11.03 $17.21
------------- ------------- -------------
Net Investment Income
(Loss)(2) 0.01 (0.03) (0.03)
Net Realized and Unrealized
Gain on Investments 1.03 6.23 1.29
------------- ------------- -------------
Total from Investment
Operations 1.04 6.20 1.26
------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.01) -- --
Distributions from Net
Realized Gain on
Investments Sold -- (0.02) --
Tax Return of Capital --(3) -- --
------------- ------------- -------------
Total Distributions (0.01) (0.02) --
------------- ------------- -------------
Net Asset Value, End of
Period $11.03 $17.21 $18.47
============= ============= =============
Total Investment Return at
Net Asset Value(4) 10.35%(5) 56.18% 7.32%(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) 7.17%(5) 54.82% 7.24%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $1,779 $6,363 $14,635
Ratio of Expenses to Average
Net Assets 1.00%(7) 1.00% 1.00%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 4.23%(7) 2.36% 1.17%(7)
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.06%(7) (0.23%) (0.30%)(7)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(8) (3.17%)(7) (1.59%) (0.47%)(7)
Portfolio Turnover Rate 103% 136% 68%
Fee Reduction Per Share(2) $0.33 $0.17 $0.02
(1) Commenced operations on January 7, 1998.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------
V.A. RELATIVE VALUE FUND
-------------------------------------------------
PERIOD YEAR SIX MONTHS
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, JUNE 30, 2000
1998(1) 1999 (UNAUDITED)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $12.03 $18.03
------------- ------------- -------------
Net Investment Income(2) 0.11 0.10 0.02
Net Realized and Unrealized
Gain on Investments 2.02 6.65 1.08
------------- ------------- -------------
Total from Investment
Operations 2.13 6.75 1.10
------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.10) (0.10) (0.02)
Distributions from Net
Realized Gain on
Investments Sold -- (0.65) --
------------- ------------- -------------
Total Distributions (0.10) (0.75) (0.02)
------------- ------------- -------------
Net Asset Value, End of
Period $12.03 $18.03 $19.11
============= ============= =============
Total Investment Return at
Net Asset Value(3) 21.39%(4) 56.65% 6.09%(4)
Total Adjusted Investment
Return at Net Asset
Value(3,5) 21.21%(4) -- --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $17,368 $38,766 $44,157
Ratio of Expenses to Average
Net Assets 0.85%(6) 0.77% 0.73%(6)
Ratio of Adjusted Expenses
to Average Net Assets(7) 1.03%(6) -- --
Ratio of Net Investment
Income to Average Net
Assets 1.17%(6) 0.66% 0.18%(6)
Ratio of Adjusted Net
Investment Income to
Average Net Assets(7) 0.99%(6) -- --
Portfolio Turnover Rate 242% 166% 132%
Fee Reduction Per Share(2) $0.02 -- --
(1) Commenced operations on January 6, 1998.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. SMALL CAP GROWTH FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $9.32 $10.35 $12.00 $19.76
------------- ------------- ------------- ------------- -------------
Net Investment Income
(Loss)(2) 0.02 (0.02) (0.06) (0.10) (0.07)
Net Realized and Unrealized
Gain (Loss) on Investments (0.68) 1.05 1.71 8.29 0.65
------------- ------------- ------------- ------------- -------------
Total from Investment
Operations (0.66) 1.03 1.65 8.19 0.58
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.02) --(3) -- -- --
Distributions from Net
Realized Gain on
Investments Sold -- -- -- (0.43) --
------------- ------------- ------------- ------------- -------------
Total Distributions to
Shareholders (0.02) -- -- (0.43) --
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $9.32 $10.35 $12.00 $19.76 $20.34
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(4) (6.62%)(5) 11.06% 15.94% 68.52% 2.94%(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) (8.05%)(5) 9.34% 15.31% 68.14% 2.88%(5)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $975 $3,841 $8,232 $20,867 $33,554
Ratio of Expenses to Average
Net Assets 1.00%(7) 1.00% 1.00% 1.00% 1.00%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 5.19%(7) 2.72% 1.63% 1.38% 1.13%(7)
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.62%(7) (0.16%) (0.59%) (0.76%) (0.67%)(7)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(8) (3.57%)(7) (1.88%) (1.22%) (1.14%) (0.80%)(7)
Portfolio Turnover Rate 31% 79% 93% 120% 43%
Fee Reduction Per Share(2) $0.14 $0.17 $0.07 $0.05 $0.01
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. SOVEREIGN INVESTORS FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $10.74 $13.59 $15.61 $15.96
------------- ------------- ------------- ------------- -------------
Net Investment Income(2) 0.07 0.22 0.27 0.24 0.11
Net Realized and Unrealized
Gain (Loss) on Investments 0.76 2.82 2.00 0.35 (0.83)
------------- ------------- ------------- ------------- -------------
Total from Investment
Operations 0.83 3.04 2.27 0.59 (0.72)
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.07) (0.18) (0.25) (0.24) (0.11)
Distributions in Excess of
Net Investment Income -- -- -- --(3) --
Distributions from Net
Realized Gain on
Investments Sold (0.02) (0.01) -- -- --
Tax Return of Capital -- -- -- --(3) --
------------- ------------- ------------- ------------- -------------
Total Distributions (0.09) (0.19) (0.25) (0.24) (0.11)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $10.74 $13.59 $15.61 $15.96 $15.13
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(4) 8.30%(5) 28.43% 16.88% 3.84% (4.49%)(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) 7.30%(5) 28.12% -- -- --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $1,111 $12,187 $34,170 $50,254 $47,901
Ratio of Expenses to Average
Net Assets 0.85%(7) 0.85% 0.74% 0.70% 0.71%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 3.78%(7) 1.16% -- -- --
Ratio of Net Investment
Income to Average Net
Assets 1.90%(7) 1.81% 1.88% 1.57% 1.52%(7)
Ratio of Adjusted Net
Investment Income (Loss) to
Average Net Assets(8) (1.03%)(7) 1.50% -- -- --
Portfolio Turnover Rate 17% 11% 19% 26% 19%
Fee Reduction Per Share(2) $0.11 $0.04 -- -- --
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. INTERNATIONAL FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $11.23 $10.50 $12.18 $15.45
------------- ------------- ------------- ------------- -------------
Net Investment Income(2) 0.07 0.05 0.07 0.07 0.03
Net Realized and Unrealized
Gain (Loss) on Investments 1.20 (0.13) 1.69 3.75 (1.84)
------------- ------------- ------------- ------------- -------------
Total from Investment
Operations 1.27 (0.08) 1.76 3.82 (1.81)
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.04) (0.01) (0.07) (0.08) --
Dividends in Excess of Net
Investment Income -- -- (0.01) (0.02) --
Distributions from Net
Realized Gain on
Investments Sold -- (0.64) -- (0.45) --
------------- ------------- ------------- ------------- -------------
Total Distributions (0.04) (0.65) (0.08) (0.55) --
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $11.23 $10.50 $12.18 $15.45 $13.64
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(3) 12.75%(4) (0.54%) 16.75% 31.55% (11.72%)(4)
Total Adjusted Investment
Return at Net Asset
Value(3,5) 12.07%(4) (1.43%) 14.77% 30.19% (12.55%)(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $2,267 $3,792 $7,201 $9,375 $9,381
Ratio of Expenses to Average
Net Assets 1.15%(6) 1.15% 1.15% 1.15% 1.15%(6)
Ratio of Adjusted Expenses
to Average Net Assets(7) 3.13%(6) 2.04% 3.13% 2.51% 2.82%(6)
Ratio of Net Investment
Income to Average Net
Assets 2.03%(6) 0.43% 0.59% 0.52% 0.38%(6)
Ratio of Adjusted Net
Investment Income (Loss) to
Average Net Assets(7) 0.05%(6) (0.46%) (1.39%) (0.84%) (1.29%)(6)
Portfolio Turnover Rate 14% 273% 89% 116% 85%
Fee Reduction Per Share(2) $0.07 $0.10 $0.22 $0.17 $0.02
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------
V.A. FINANCIAL INDUSTRIES FUND
-------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------- JUNE 30, 2000
1997(1) 1998 1999 (UNAUDITED)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $13.44 $14.45 $14.46
------------- ------------- ------------- -------------
Net Investment Income(2) 0.11 0.18 0.11 0.04
Net Realized and Unrealized
Gain on Investments 3.39 0.97 0.06 0.79
------------- ------------- ------------- -------------
Total from Investment
Operations 3.50 1.15 0.17 0.83
------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.05) (0.14) (0.10) --
Distributions from Net
Realized Gain on
Investments Sold (0.01) --(3) (0.05) --
Tax Return of Capital -- -- (0.01) --
------------- ------------- ------------- -------------
Total Distributions (0.06) (0.14) (0.16) --
------------- ------------- ------------- -------------
Net Asset Value, End of
Period $13.44 $14.45 $14.46 $15.29
============= ============= ============= =============
Total Investment Return at
Net Asset Value(4) 35.05%(5) 8.55% 1.23% 5.74%(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) 34.71%(5) -- -- --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $18,465 $54,569 $49,312 $50,776
Ratio of Expenses to Average
Net Assets 1.05%(7) 0.92% 0.90% 0.86%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 1.39%(7) -- -- --
Ratio of Net Investment
Income to Average Net
Assets 1.32%(7) 1.25% 0.77% 0.60%(7)
Ratio of Adjusted Net
Investment Income to
Average Net Assets(8) 0.98%(7) -- -- --
Portfolio Turnover Rate 11% 38% 72% 31%
Fee Reduction Per Share(2) $0.03 -- -- --
(1) Commenced operations on April 30, 1997.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------
V.A. REGIONAL BANK FUND
-------------------------------------------------
PERIOD YEAR SIX MONTHS
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, JUNE 30, 2000
1998(1) 1999 (UNAUDITED)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $9.28 $8.56
------------- ------------- -------------
Net Investment Income(2) 0.09 0.12 0.08
Net Realized and Unrealized
Loss on Investments (0.74) (0.57) (0.88)
------------- ------------- -------------
Total from Investment
Operations (0.65) (0.45) (0.80)
------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.07) (0.12) (0.09)
Distributions from Net
Realized Gain on
Investments Sold --(3) (0.15) --
------------- ------------- -------------
Total Distributions (0.07) (0.27) (0.09)
------------- ------------- -------------
Net Asset Value, End of
Period $9.28 $8.56 $7.67
============= ============= =============
Total Investment Return at
Net Asset Value(4) (6.43%)(5) (4.86%) (9.37%)(5)
Total Adjusted Investment
Return at Net Asset
Value(4,6) (6.49%)(5) -- --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $20,256 $20,295 $13,189
Ratio of Expenses to Average
Net Assets 1.05%(7) 1.00% 1.00%(7)
Ratio of Adjusted Expenses
to Average Net Assets(8) 1.14%(7) -- --
Ratio of Net Investment
Income to Average Net
Assets 1.39%(7) 1.30% 2.09%(7)
Ratio of Adjusted Net
Investment Income to
Average Net Assets(8) 1.30%(7) -- --
Portfolio Turnover Rate 28% 49% 17%
Fee Reduction Per Share(2) $0.01 -- --
(1) Commenced operations on May 1, 1998.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Less than $0.01 per share.
(4) Assumes dividend reinvestment.
(5) Not annualized.
(6) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------
V.A. TECHNOLOGY FUND
--------------------
PERIOD ENDED
JUNE 30, 2000(1)
(UNAUDITED)
-------------
<S> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00
-------------
Net Investment Income(2) 0.02
Net Realized and Unrealized
Gain on Investments 1.03
-------------
Total from Investment
Operations 1.05
-------------
Net Asset Value, End of
Period $11.05
=============
Total Investment Return at
Net Asset Value(3) 10.50%(4)
Total Adjusted Investment
Return at Net Asset
Value(3,5) 10.17%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $2,853
Ratio of Expenses to Average
Net Assets 1.05%(6)
Ratio of Adjusted Expenses
to Average Net Assets(7) 3.04%(6)
Ratio of Net Investment
Income to Average Net
Assets 1.05%(6)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(7) (0.94%)(6)
Portfolio Turnover Rate 200%
Fee Reduction Per Share(2) $0.03
(1) Commenced operations on May 1, 2000.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. BOND FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $10.19 $10.36 $10.51 $9.81
------------- ------------- ------------- ------------- -------------
Net Investment Income(2) 0.23 0.68 0.63 0.64 0.32
Net Realized and Unrealized
Gain (Loss) on Investments 0.21 0.24 0.32 (0.70) 0.08
------------- ------------- ------------- ------------- -------------
Total from Investment
Operations 0.44 0.92 0.95 (0.06) 0.40
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.23) (0.68) (0.63) (0.64) (0.32)
Distributions from Net
Realized Gain on
Investments Sold (0.02) (0.07) (0.17) -- --
------------- ------------- ------------- ------------- -------------
Total Distributions (0.25) (0.75) (0.80) (0.64) (0.32)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $10.19 $10.36 $10.51 $9.81 $9.89
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(3) 4.42%(4) 9.30% 9.41% (0.51%) 4.19%(4)
Total Adjusted Investment
Return at Net Asset
Value(3,5) 3.25%(4) 7.52% 8.82% (0.77%) 4.08%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $1,056 $3,682 $10,669 $12,531 $15,277
Ratio of Expenses to Average
Net Assets 0.75%(6) 0.75% 0.75% 0.75% 0.75%(6)
Ratio of Adjusted Expenses
to Average Net Assets(7) 4.15%(6) 2.53% 1.34% 1.01% 0.98%(6)
Ratio of Net Investment
Income to Average Net
Assets 6.69%(6) 6.57% 5.93% 6.39% 6.65%(6)
Ratio of Adjusted Net
Investment Income to
Average Net Assets(7) 3.29%(6) 4.79% 5.34% 6.13% 6.42%(6)
Portfolio Turnover Rate 45% 193% 367% 307% 149%
Fee Reduction Per Share(2) $0.12 $0.18 $0.06 $0.03 $0.01
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------
V.A. HIGH YIELD BOND FUND
-------------------------------------------------
PERIOD YEAR SIX MONTHS
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, JUNE 30, 2000
1998(1) 1999 (UNAUDITED)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $8.22 $8.31
------------- ------------- -------------
Net Investment Income(2) 0.90 0.88 0.48
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions (1.82) 0.16 (0.52)
------------- ------------- -------------
Total from Investment
Operations (0.92) 1.04 (0.04)
------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.84) (0.88) (0.46)
Distributions from Net
Realized Gain on
Investments Sold and
Foreign Currency
Transactions -- (0.07) --
Tax Return of Capital (0.02) -- --
------------- ------------- -------------
Total Distributions (0.86) (0.95) (0.46)
------------- ------------- -------------
Net Asset Value, End of
Period $8.22 $8.31 $7.81
============= ============= =============
Total Investment Return at
Net Asset Value(3) (9.80%)(4) 13.12% (0.43%)(4)
Total Adjusted Investment
Return at Net Asset
Value(3,5) (10.10%)(4) 12.94% (0.45%)(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $8,120 $9,287 $8,886
Ratio of Expenses to Average
Net Assets 0.85%(6) 0.85% 0.85%(6)
Ratio of Adjusted Expenses
to Average Net Assets(7) 1.15%(6) 1.03% 0.89%(6)
Ratio of Net Investment
Income to Average Net
Assets 9.85%(6) 10.56% 11.88%(6)
Ratio of Adjusted Net
Investment Income to
Average Net Assets(7) 9.55%(6) 10.38% 11.84%(6)
Portfolio Turnover Rate 102% 122% 35%
Fee Reduction Per Share(2) $0.03 $0.02 --(8)
(1) Commenced operations on January 6, 1998.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Less than $0.01 per share.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. MONEY MARKET FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $1.00 $1.00 $1.00 $1.00 $1.00
------------- ------------- ------------- ------------- -------------
Net Investment Income(2) 0.02 0.05 0.05 0.05 0.03
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.02) (0.05) (0.05) (0.05) (0.03)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $1.00 $1.00 $1.00 $1.00 $1.00
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(3) 1.61%(4) 4.88% 4.87% 4.58% 2.74%(4)
Total Adjusted Investment
Return at Net Asset
Value(3,5) (7.55%)(4) 4.36% -- -- --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $207 $8,377 $16,519 $32,952 $35,658
Ratio of Expenses to Average
Net Assets 0.75%(6) 0.75% 0.74% 0.66% 0.65%(6)
Ratio of Adjusted Expenses
to Average Net Assets(7) 27.48%(6) 1.27% -- -- --
Ratio of Net Investment
Income to Average Net
Assets 4.68%(6) 4.86% 4.70% 4.55% 5.56%(6)
Ratio of Adjusted Net
Investment Income (Loss) to
Average Net Assets(7) (22.05%)(6) 4.34% -- -- --
Fee Reduction Per Share(2) $0.08 --(8) -- -- --
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Less than $0.01 per share.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
-----------------------------------------------------------------------------------------------------------------------
V.A. STRATEGIC INCOME FUND
-------------------------------------------------------------------------------------
PERIOD SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED
DECEMBER 31, ------------------------------------------------- JUNE 30, 2000
1996(1) 1997 1998 1999 (UNAUDITED)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $10.30 $10.47 $10.10 $9.77
------------- ------------- ------------- ------------- -------------
Net Investment Income(2) 0.27 0.91 0.85 0.80 0.42
Net Realized and Unrealized
Gain (Loss) on Investments 0.36 0.26 (0.35) (0.33) (0.30)
------------- ------------- ------------- ------------- -------------
Total from Investment
Operations 0.63 1.17 0.50 0.47 0.12
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends from Net
Investment Income (0.27) (0.91) (0.85) (0.80) (0.42)
Distributions from Net
Realized Gain on
Investments Sold (0.06) (0.09) (0.02) -- --
------------- ------------- ------------- ------------- -------------
Total Distributions (0.33) (1.00) (0.87) (0.80) (0.42)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of
Period $10.30 $10.47 $10.10 $9.77 $9.47
============= ============= ============= ============= =============
Total Investment Return at
Net Asset Value(3) 6.45%(4) 11.77% 4.92% 4.82% 1.24%(4)
Total Adjusted Investment
Return at Net Asset
Value(3,5) 5.96%(4) 11.25% 4.84% 4.80% --
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $2,131 $5,540 $15,019 $22,282 $27,471
Ratio of Expenses to Average
Net Assets 0.85%(6) 0.85% 0.85% 0.85% 0.83%(6)
Ratio of Adjusted Expenses
to Average Net Assets(7) 2.28%(6) 1.37% 0.93% 0.87% --
Ratio of Net Investment
Income to Average Net
Assets 7.89%(6) 8.77% 8.19% 8.06% 8.77%(6)
Ratio of Adjusted Net
Investment Income to
Average Net Assets(7) 6.46%(6) 8.25% 8.11% 8.04% --
Portfolio Turnover Rate 73% 110% 92% 53%(8) 30%
Fee Reduction Per Share(2) $0.05 $0.05 $0.01 --(9) --
(1) Commenced operations on August 29, 1996.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment.
(4) Not annualized.
(5) An estimated total return calculation which does not take into
consideration fee reductions by the Adviser during the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Portfolio turnover rate excludes merger activity.
(9) Less than $0.01 per share.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Core Equity Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Core Equity Fund on June 30, 2000. It is divided into two
main categories: common stocks and short-term investments. Common stocks
are further broken down by industry group. Short-term investments, which
represent the Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Advertising (1.61%)
Interpublic Group of Cos., Inc. (The) 6,500 $279,500
Omnicom Group, Inc. 4,800 427,500
------------
707,000
------------
Aerospace (1.54%)
General Dynamics Corp. 6,200 323,950
United Technologies Corp. 6,000 353,250
------------
677,200
------------
Automobile/Trucks (0.55%)
Ford Motor Co. 3,600 154,800
Lear Corp.* 4,000 80,000
Visteon Corp.* 471 5,711
------------
240,511
------------
Banks - United States (3.07%)
Bank of America Corp. 5,300 227,900
Comerica, Inc. 3,900 175,012
FleetBoston Financial Corp. 19,000 646,000
Morgan (J.P.) & Co., Inc. 1,400 154,175
SunTrust Banks, Inc. 3,300 150,769
------------
1,353,856
------------
Beverages (1.13%)
Anheuser-Busch Cos., Inc. 3,700 276,344
Seagram Co. Ltd. (The) (Canada) 3,800 220,400
------------
496,744
------------
Building (0.98%)
Black & Decker Corp. (The) 8,300 326,294
Willamette Industries, Inc. 3,800 103,550
------------
429,844
------------
Chemicals (0.29%)
Dow Chemical Co. 4,200 126,787
------------
Computers (18.62%)
America Online, Inc.* 7,400 390,350
Cisco Systems, Inc.* 25,600 1,627,200
Compaq Computer Corp. 7,500 191,719
Dell Computer Corp.* 9,300 458,606
Electronic Data Systems Corp. 4,000 165,000
EMC Corp.* 6,200 477,013
First Data Corp. 6,600 327,525
Hewlett-Packard Co. 3,300 412,087
International Business Machines Corp. 6,300 690,244
Microsoft Corp.* 18,100 1,448,000
Network Appliance, Inc.* 1,700 136,850
Oracle Corp.* 10,800 907,875
Sun Microsystems, Inc.* 5,000 454,688
VERITAS Software Corp.* 2,000 226,031
Yahoo! Inc.* 2,300 284,912
------------
8,198,100
------------
Cosmetics & Personal Care (0.18%)
Avon Products, Inc. 1,800 80,100
------------
Diversified Operations (2.28%)
Honeywell International, Inc. 5,100 171,806
Minnesota Mining & Manufacturing Co. 3,200 264,000
Textron, Inc. 3,000 162,938
Tyco International Ltd. 8,600 407,425
------------
1,006,169
------------
Electronics (11.78%)
Agilent Technologies, Inc.* 1,258 92,777
Altera Corp.* 1,500 152,906
Analog Devices, Inc.* 2,200 167,200
Applied Materials, Inc.* 3,300 299,063
General Electric Co. 30,300 1,605,900
Intel Corp. 11,800 1,577,513
Maxim Integrated Products, Inc.* 2,700 183,431
Motorola, Inc. 7,600 220,875
PE Corp. - PE Biosystems Group 1,100 72,462
SCI Systems, Inc.* 1,800 70,537
Solectron Corp.* 2,900 121,438
Texas Instruments, Inc. 6,800 467,075
Xilinx, Inc.* 1,900 156,869
------------
5,188,046
------------
Finance (4.17%)
American Express Co. 4,500 234,563
Associates First Capital Corp. (Class A) 10,000 223,125
Citigroup, Inc. 20,400 1,229,100
MBNA Corp. 5,500 149,187
------------
1,835,975
------------
Food (0.52%)
Kellogg Co. 3,900 116,025
Quaker Oats Co. 1,500 112,688
------------
228,713
------------
Insurance (5.71%)
Allstate Corp. (The) 4,500 100,125
American General Corp. 4,800 292,800
American International Group, Inc. 3,000 352,500
Aon Corp. 5,400 167,738
AXA Financial, Inc. 12,600 428,400
Hartford Financial Services Group, Inc. (The) 5,600 313,250
Lincoln National Corp. 5,200 187,850
Marsh & McLennan Cos., Inc. 1,300 135,769
St. Paul Cos., Inc. (The) 4,700 160,387
Torchmark Corp. 4,200 103,687
XL Capital Ltd. (Class A) 5,000 270,625
------------
2,513,131
------------
Machinery (0.49%)
Ingersoll-Rand Co. 5,400 217,350
------------
Media (3.28%)
AT&T Corp. - Liberty Media Group* 3,600 87,300
Clear Channel Communications, Inc.* 1,500 112,500
Infinity Broadcasting Corp. (Class A)* 4,900 178,544
Time Warner, Inc. 2,800 212,800
Viacom, Inc. (Class B)* 12,507 852,821
------------
1,443,965
------------
Medical (13.29%)
Allergan, Inc. 4,400 327,800
American Home Products Corp. 3,900 229,125
Baxter International, Inc. 2,700 189,844
Bristol-Myers Squibb Co. 9,700 565,025
Johnson & Johnson 4,300 438,062
Lilly (Eli) & Co. 4,300 429,462
Merck & Co., Inc. 9,300 712,613
Pfizer, Inc. 45,950 2,205,600
Pharmacia Corp. 4,100 211,919
Schering-Plough Corp. 10,800 545,400
------------
5,854,850
------------
Metal (0.26%)
Illinois Tool Works, Inc. 2,000 114,000
------------
Mortgage Banking (1.14%)
Fannie Mae 9,600 501,000
------------
Office (0.27%)
Avery Dennison Corp. 1,800 120,825
------------
Oil & Gas (6.19%)
BP Amoco Plc, American Depositary Receipts (ADR)
(United Kingdom) 12,136 686,443
Chevron Corp. 2,900 245,956
El Paso Energy Corp. 4,400 224,125
Exxon Mobil Corp. 11,712 919,392
Kerr-McGee Corp. 2,400 141,450
Royal Dutch Petroleum Co. (ADR) (Netherlands) 6,000 369,375
USX - Marathon Group 5,600 140,350
------------
2,727,091
------------
Paper & Paper Products (0.80%)
International Paper Co. 4,900 146,081
Kimberly-Clark Corp. 3,600 206,550
------------
352,631
------------
Retail (5.61%)
Circuit City Stores-Circuit City Group 2,300 76,331
Federated Department Stores, Inc.* 4,700 158,625
Gap, Inc. (The) 9,100 284,375
Home Depot, Inc. (The) 10,050 501,872
Lowe's Cos., Inc. 4,100 168,356
Target Corp. 3,800 220,400
TJX Cos., Inc. 11,100 208,125
Wal-Mart Stores, Inc. 14,800 852,850
------------
2,470,934
------------
Soap & Cleaning Preparations (0.53%)
Procter & Gamble Co. (The) 4,100 234,725
------------
Telecommunications (7.15%)
ADC Telecommunications, Inc.* 1,300 109,037
AT&T Wireless Group* 3,700 103,137
Bell Atlantic Corp. 3,000 152,438
Corning, Inc. 1,100 296,863
Lucent Technologies, Inc. 5,500 325,875
Nortel Networks Corp. (Canada) 11,100 757,575
Sprint Corp. 6,000 306,000
Sprint PCS* 9,200 547,400
WorldCom, Inc.* 12,000 550,500
------------
3,148,825
------------
Tobacco (0.71%)
Philip Morris Cos., Inc. 8,400 223,125
UST, Inc. 6,200 91,063
------------
314,188
------------
Transport (0.21%)
UAL Corp.* 1,600 93,100
------------
Utilities (4.16%)
Ameren Corp. 6,800 229,500
BellSouth Corp. 4,300 183,288
Dominion Resources, Inc. 5,600 240,100
Duke Energy Corp. 5,100 287,512
Entergy Corp. 5,400 146,812
FPL Group, Inc. 2,600 128,700
Reliant Energy, Inc. 6,300 186,244
SBC Communications, Inc. 9,900 428,175
------------
1,830,331
------------
TOTAL COMMON STOCKS
(Cost $35,616,019) (96.52%) 42,505,991
------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (3.46%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.55% $1,523 1,523,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 541
------------
TOTAL SHORT-TERM INVESTMENTS (3.46%) 1,523,541
------- ------------
TOTAL INVESTMENTS (99.98%) 44,029,532
------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.02%) 9,268
------- ------------
TOTAL NET ASSETS (100.00%) $44,038,800
======= ============
* Non-income producing security.
The percentage shown for each investment category is the total of that
category as a percentage of the net assets of the Fund.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. 500 Index Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. 500 Index Fund on June 30, 2000. It is divided into two
main categories: common stocks and short-term investments. Common
stocks are further broken down by industry group. Short-term
investments, which represent the Fund's "cash" position, are listed
last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Advertising (0.26%)
Interpublic Group of Companies, Inc. (The) 818 $35,174
Omnicom Group, Inc. 482 42,928
Young & Rubicam, Inc. 196 11,209
------------
89,311
------------
Aerospace (0.79%)
Boeing Co. (The) 2,459 102,817
General Dynamics Corp. 544 28,424
Goodrich (B.F.) Co. (The) 291 9,912
Lockheed Martin Corp. 1,085 26,922
Northrop Grumman Corp. 189 12,521
Raytheon Co. (Class B) 921 17,729
United Technologies Corp. 1,276 75,125
------------
273,450
------------
Automobile/Trucks (0.84%)
Cummins Engine Co., Inc. 113 3,079
Dana Corp. 413 8,750
Delphi Automotive Systems Corp. 1,526 22,222
Eaton Corp. 197 13,199
Ford Motor Co. 3,267 140,481
General Motors Corp. 1,450 84,191
PACCAR, Inc. 207 8,215
Ryder System, Inc. 161 3,049
Visteon Corp. 427 5,177
------------
288,363
------------
Banks - United States (4.24%)
AmSouth Bancorp. 1,065 16,774
BankAmerica Corp. 4,493 193,199
Bank of New York Co., Inc. 1,999 92,953
Bank One Corp. 3,109 82,583
BB&T Corp. 945 22,562
Chase Manhattan Corp. 3,353 154,448
Comerica, Inc. 424 19,027
Fifth Third Bancorp 840 53,130
First Union Corp. 2,658 65,952
Firstar Corp. 2,630 55,394
FleetBoston Financial Corp. 2,443 83,062
Huntington Bancshares, Inc. 602 9,519
KeyCorp. 1,179 20,780
Mellon Financial Corp. 1,332 48,535
Morgan (J.P.) & Co., Inc. 440 48,455
National City Corp. 1,643 28,034
Northern Trust Corp. 603 39,233
Old Kent Financial Corp. 372 9,951
PNC Bank Corp. 787 36,891
Regions Financial Corp. 598 11,885
SouthTrust Corp. 456 10,317
State Street Corp. 436 46,243
Summit Bancorp. 477 11,746
SunTrust Banks, Inc. 820 37,464
Synovus Financial Corp. 766 13,501
U.S. Bancorp. 2,038 39,232
Union Planters Corp. 367 10,253
Wachovia Corp. 549 29,783
Wells Fargo Co. 4,368 169,260
------------
1,460,166
------------
Beverages (2.19%)
Anheuser-Busch Cos., Inc. 1,225 91,492
Brown-Forman Corp. 186 9,997
Coca-Cola Co. (The) 6,710 385,406
Coca-Cola Enterprises, Inc. 1,140 18,596
Coors (Adolph) Co. (Class B) 99 5,989
PepsiCo, Inc. 3,907 173,617
Seagram Co. Ltd. (The) (Canada) 1,183 68,614
------------
753,711
------------
Broker Services (1.63%)
Bear Stearns Cos., Inc. 300 12,487
Lehman Brothers Holdings, Inc. 328 31,016
Merrill Lynch & Co., Inc. 1,052 120,980
Morgan Stanley Dean Witter & Co. 3,068 255,411
Paine Webber Group Inc. 395 17,973
Schwab (Charles) Corp. 3,691 124,110
------------
561,977
------------
Building (0.43%)
Armstrong World Industries, Inc. 109 1,669
Black & Decker Corp. 231 9,081
Centex Corp. 161 3,783
Danaher Corp. 384 18,984
Fluor Corp. 207 6,546
Georgia-Pacific Corp. 462 12,127
Kaufman & Broad Home Corp. 130 2,576
Louisiana-Pacific Corp. 282 3,067
Masco Corp. 1,216 21,964
Owens Corning 150 1,388
Pulte Corp. 112 2,422
Sherwin-Williams Co. 444 9,407
Snap-on, Inc. 159 4,233
Stanley Works (The) 238 5,653
Vulcan Materials Co. 273 11,654
Weyerhauser Co. 632 27,176
Willamette Industries, Inc. 300 8,175
------------
149,905
------------
Business Services - Misc. (0.36%)
Block, H&R, Inc. 267 8,644
Cendant Corp.* 1,955 27,370
Convergys Corp.* 416 21,580
Dun & Bradstreet Corp. 438 12,538
Equifax, Inc. 383 10,054
Paychex, Inc. 1,007 42,294
------------
122,480
------------
Chemicals (0.54%)
Air Products & Chemicals, Inc. 622 19,165
Dow Chemical Co. 1,813 54,730
Eastman Chemical Co. 208 9,932
Engelhard Corp. 346 5,904
FMC Corp.* 82 4,756
Grace (W. R.) & Co. 183 2,219
Great Lakes Chemical Corp. 148 4,662
Hercules, Inc. 291 4,092
PPG Industries, Inc. 472 20,916
Praxair, Inc. 427 15,986
Rohm & Haas Co. 590 20,355
Sigma-Aldrich Corp. 231 6,757
Union Carbide Corp. 365 18,068
------------
187,542
------------
Computers (18.85%)
3Com Corp.* 951 54,801
Adaptec, Inc.* 282 6,415
Adobe Systems, Inc. 325 42,250
America Online, Inc.* 6,228 328,527
Apple Computer, Inc.* 882 46,195
Autodesk, Inc. 158 5,481
Automatic Data Processing, Inc. 1,700 91,056
BMC Software, Inc.* 662 24,153
Cabletron Systems, Inc.* 494 12,473
Ceridian Corp.* 393 9,457
Cisco Systems, Inc.* 18,858 1,198,662
Citrix Systems, Inc.* 502 9,507
Compaq Computer Corp. 4,603 117,664
Computer Associates International, Inc. 1,595 81,644
Computer Sciences Corp.* 454 33,908
Compuware Corp.* 977 10,136
Dell Computer Corp.* 6,981 344,251
Electronic Data Systems Corp. 1,263 52,099
EMC Corp.* 5,883 452,623
First Data Corp. 1,118 55,481
Gateway 2000, Inc.* 872 49,486
Hewlett-Packard Co. 2,711 338,536
IMS Health, Inc. 806 14,508
International Business Machines Corp. 4,806 526,557
Lexmark International Group, Inc. (Class A)* 350 23,537
Microsoft Corp.* 14,266 1,141,280
MIPS Technologies, Inc. (Class B)* 69 2,657
NCR Corp.* 258 10,046
Network Appliance, Inc.* 826 66,493
Novell, Inc.* 893 8,260
Oracle Corp.* 7,695 646,861
Parametric Technology Corp.* 748 8,228
PeopleSoft, Inc.* 748 12,529
Sabre Holdings Corp.* 350 9,975
Sapient Corp.* 159 17,003
Seagate Technology, Inc.* 616 33,880
Siebel Systems, Inc.* 541 88,487
Silicon Graphics, Inc.* 501 1,879
Sun Microsystems, Inc.* 4,301 391,122
Unisys Corp.* 845 12,305
VERITAS Software Corp.* 1,060 119,797
------------
6,500,209
------------
Consumer Products Misc. (0.01%)
American Greetings Corp. (Class A) 175 3,325
------------
Containers (0.09%)
Ball Corp. 81 2,607
Bemis Co., Inc. 144 4,842
Crown Cork & Seal Co., Inc. 347 5,205
Owens-Illinois, Inc.* 397 4,640
Pactiv Corp.* 458 3,607
Sealed Air Corp.* 227 11,889
------------
32,790
------------
Cosmetics & Personal Care (0.41%)
Alberto Culver Co. (Class B) 151 4,615
Avon Products, Inc. 644 28,658
Gillette Co. 2,830 98,873
International Flavors & Fragrances, Inc. 279 8,422
------------
140,568
------------
Diversified Operations (1.71%)
Crane Co. 164 3,987
Du Pont (E.I.) De Nemours & Co. 2,839 124,206
Fortune Brands, Inc. 429 9,894
Honeywell International, Inc. 2,164 72,900
IKON Office Solutions, Inc. 405 1,569
ITT Industries, Inc. 238 7,229
Johnson Controls, Inc. 232 11,904
Loews Corp. 267 16,020
Minnesota Mining & Manufacturing Co. 1,073 88,523
National Service Industries, Inc. 110 2,145
Textron, Inc. 391 21,236
TRW, Inc. 334 14,487
Tyco International Ltd. 4,576 216,788
------------
590,888
------------
Electronics (12.56%)
Advanced Micro Devices, Inc.* 415 32,059
Agilent Technologies, Inc.* 1,225 90,344
Altera Corp.* 540 55,046
American Power Conversion Corp.* 525 21,427
Analog Devices, Inc.* 959 72,884
Applied Materials, Inc.* 2,189 198,378
Conexant Systems, Inc.* 589 28,640
Emerson Electric Co. 1,157 69,854
General Electric Co. 26,821 1,421,513
Grainger (W.W.), Inc. 255 7,857
Intel Corp. 9,079 1,213,749
KLA-Tencor Corp.* 504 29,515
Linear Technology Corp. 843 53,899
LSI Logic Corp.* 832 45,032
Maxim Integrated Products, Inc.* 766 52,040
Micron Technology, Inc. 1,504 132,446
Molex Inc. 532 25,603
Motorola, Inc. 5,835 169,580
National Semiconductor Corp.* 479 27,183
Novellus Systems, Inc.* 354 20,023
Parker-Hannifin Corp. 304 10,412
PE Corp-PE Biosystems Group 565 37,219
PerkinElmer, Inc. 133 8,795
Rockwell International Corp. 510 16,065
Solectron Corp.* 1,616 67,670
Tektronix, Inc. 131 9,694
Teradyne, Inc.* 469 34,472
Texas Instruments, Inc. 4,436 304,698
Thomas & Betts Corp. 157 3,003
Xilinx, Inc.* 871 71,912
------------
4,331,012
------------
Finance (3.20%)
American Express Co. 3,622 188,797
Associates First Capital Corp. (Class A) 1,975 44,067
Capital One Financial Corp. 531 23,696
Charter One Financial, Inc. 568 13,064
Citigroup, Inc. 9,149 551,227
Franklin Resources, Inc. 660 20,048
Golden West Financial Corp. 429 17,509
Household International, Inc. 1,283 53,325
Kansas City Southern Industries, Inc. 302 26,784
MBNA Corp. 2,174 58,970
Price (T. Rowe) Associates, Inc. 327 13,898
Providian Financial Corp. 386 34,740
SLM Holding Corp. 425 15,911
Washington Mutual, Inc. 1,485 42,879
------------
1,104,915
------------
Food (1.31%)
Archer-Daniels-Midland Co. 1,632 16,014
Bestfoods 744 51,522
Campbell Soup Co. 1,145 33,348
ConAgra, Inc. 1,334 25,429
General Mills, Inc. 790 30,217
Heinz (H.J.) Co. 955 41,781
Hershey Foods Corp. 372 18,042
Kellogg Co. 1,099 32,695
Nabisco Group Holdings Corp. 885 22,955
Quaker Oats Co. 355 26,669
Ralston Purina Group 832 16,588
Sara Lee Corp. 2,357 45,520
Unilever NV, American Depositary Receipts
(ADR) (Netherlands) 1,550 66,650
Wrigley (WM) Jr. Co. 309 24,778
------------
452,208
------------
Furniture (0.03%)
Leggett & Platt, Inc. 533 8,794
------------
Household (0.12%)
Maytag Corp. 213 7,854
Newell Rubbermaid, Inc. 723 18,617
Springs Industries, Inc. 49 1,577
Tupperware Corp. 156 3,432
Whirlpool Corp. 198 9,232
------------
40,712
------------
Instruments - Scientific (0.05%)
Millipore Corp. 125 9,422
Thermo Electron Corp.* 423 8,909
------------
18,331
------------
Insurance (2.85%)
Aetna, Inc. 382 24,520
AFLAC, Inc. 720 33,075
Allstate Corp. (The) 2,019 44,923
American General Corp. 673 41,053
American International Group, Inc. 4,179 491,032
Aon Corp. 694 21,557
Chubb Corp. (The) 474 29,151
CIGNA Corp. 441 41,233
Cincinnati Financial Corp. 436 13,707
Conseco, Inc. 882 8,599
Hartford Financial Services Group, Inc. (The) 583 32,612
Jefferson Pilot Corp. 279 15,746
Lincoln National Corp. 520 18,785
Marsh & McLennan Cos., Inc. 731 76,344
MBIA, Inc. 267 12,866
MGIC Investment Corp. 287 13,058
Progressive Corp. 198 14,652
SAFECO Corp. 346 6,877
St. Paul Cos., Inc. 575 19,622
Torchmark Corp. 347 8,567
UnumProvident Corp. 652 13,081
------------
981,060
------------
Internet Services (0.53%)
Yahoo! Inc.* 1,473 182,468
------------
Leisure (1.16%)
Brunswick Corp. 238 3,942
Carnival Corp. (Class A) 1,639 31,960
Disney (Walt) Co., (The) 5,633 218,631
Eastman Kodak Co. 840 49,980
Harley-Davidson, Inc. 823 31,685
Harrah's Entertainment, Inc.* 331 6,930
Hasbro, Inc. 467 7,034
Hilton Hotels Corp. 998 9,356
Marriott International, Inc. (Class A) 650 23,441
Mattel, Inc. 1,154 15,218
Polaroid Corp. 122 2,204
------------
400,381
------------
Machinery (0.31%)
Briggs & Stratton Corp. 60 2,055
Caterpiller Tractor, Inc. 945 32,012
Cooper Industries, Inc. 253 8,238
Deere & Co. 634 23,458
Dover Corp. 550 22,309
Ingersoll-Rand Co. 439 17,670
Milacron, Inc. 97 1,407
------------
107,149
------------
Media (2.56%)
Clear Channel Communications, Inc.* 919 68,925
Comcast Corp. 2,434 98,577
Dow Jones & Co., Inc. 240 17,580
Gannett Co., Inc. 722 43,185
Harcourt General, Inc. 194 10,549
Knight-Ridder, Inc. 211 11,223
McGraw-Hill Cos., Inc. (The) 527 28,458
Meredith Corp. 137 4,624
New York Times Co. (Class A) 461 18,210
Time Warner, Inc. 3,567 271,092
Tribune Co. 836 29,260
Viacom, Inc. (Class B)* 4,134 281,887
------------
883,570
------------
Medical (11.47%)
Abbott Laboratories 4,200 187,162
Allergan, Inc. 351 26,149
ALZA Corp.* 278 16,437
American Home Products Corp. 3,536 207,740
Amgen, Inc.* 2,784 195,576
Bard (C.R.), Inc. 137 6,593
Bausch & Lomb, Inc. 144 11,142
Baxter International, Inc. 787 55,336
Becton, Dickinson & Co. 684 19,622
Biogen, Inc.* 403 25,993
Biomet, Inc. 321 12,338
Boston Scientific Corp.* 1,105 24,241
Bristol-Myers Squibb Co. 5,348 311,521
Cardinal Health, Inc. 746 55,204
Guidant Corp. 831 41,134
HCA-The Healthcare Co. 1,512 45,927
HEALTHSOUTH Corp.* 1,045 7,511
Humana, Inc.* 455 2,218
Johnson & Johnson 3,771 384,171
Lilly (Eli) & Co. 3,062 305,817
Mallinckrodt, Inc. 182 7,906
Manor Care, Inc.* 277 1,939
McKesson HBOC, Inc. 764 15,996
MedImmune, Inc.* 566 41,884
Medtronic, Inc. 3,245 161,642
Merck & Co., Inc. 6,234 477,680
Pall Corp. 335 6,198
Pfizer Inc. 17,063 819,024
Pharmacia Corp. 3,441 177,857
Quintiles Transnational Corp.* 312 4,407
Schering-Plough Corp. 3,969 200,435
St. Jude Medical, Inc.* 227 10,414
Tenet Healthcare Corp.* 848 22,896
United Healthcare Corp. 440 37,730
Watson Pharmaceutical, Inc.* 262 14,083
Wellpoint Health Networks, Inc.* 168 12,170
------------
3,954,093
------------
Metal (0.59%)
Alcan Aluminium Ltd. (Canada) 593 18,383
Alcoa Inc. 2,342 67,918
Barrick Gold Corp. (Canada) 1,073 19,515
Bethlehem Steel Corp.* 357 1,272
Freeport-McMoran Copper & Gold, Inc. (Class B)* 434 4,014
Homestake Mining Co. 706 4,854
Illinois Tool Works, Inc. 817 46,569
Inco, Ltd. (Canada) 493 7,580
Newmont Mining Corp. 455 9,839
Phelps Dodge Corp. 213 7,921
Placer Dome, Inc. (Canada) 888 8,492
Timken Co. (The) 165 3,073
Worthington Industries, Inc. 234 2,457
------------
201,887
------------
Mortgage Banking (0.66%)
Countrywide Credit Industries, Inc. 307 9,306
Fannie Mae 2,731 142,524
Freddie Mac 1,885 76,342
------------
228,172
------------
Office (0.26%)
Avery Dennison Corp. 304 20,406
Deluxe Corp. 196 4,618
Pitney Bowes, Inc. 699 27,960
Xerox Corp. 1,806 37,475
------------
90,459
------------
Oil & Gas (5.94%)
Amerada Hess Corp. 246 15,190
Anadarko Petroleum Corp. 347 17,111
Apache Corp. 308 18,114
Ashland, Inc. 191 6,697
Baker Hughes, Inc. 895 28,640
Burlington Resources, Inc. 584 22,338
Chevron Corp. 1,767 149,864
Coastal Corp. (The) 580 35,307
Columbia Energy Group 219 14,372
Conoco, Inc. (Class B) 1,692 41,560
El Paso Energy Corp. 627 31,938
Enron Corp. 1,985 128,032
Exxon Mobil Corp. 9,437 740,804
Halliburton Co. 1,203 56,767
Kerr-McGee Corp. 255 15,029
McDermott International, Inc. 163 1,436
Occidental Petroleum Corp. 999 21,041
Phillips Petroleum Co. 688 34,873
Rowan Cos., Inc.* 254 7,715
Royal Dutch Petroleum Co. ADR (Netherlands) 5,813 357,863
Schlumberger Ltd. 1,543 115,146
Sunoco, Inc. 240 7,065
Texaco, Inc. 1,497 79,715
Tosco Corp. 392 11,099
Transocean Sedco Forex, Inc. 571 30,513
Union Pacific Resources Group 683 15,026
Unocal Corp. 658 21,796
USX - Marathon Group 845 21,178
------------
2,046,229
------------
Paper & Paper Products (0.48%)
Boise Cascade Corp. 155 4,011
Fort James Corp. 558 12,904
International Paper Co. 1,310 39,054
Kimberly-Clark Corp. 1,506 86,407
Mead Corp. (The) 279 7,045
Potlatch Corp. 78 2,584
Temple-Inland, Inc. 142 5,964
Westvaco Corp. 273 6,774
------------
164,743
------------
Pollution Control (0.11%)
Allied Waste Industries, Inc.* 512 5,120
Waste Management, Inc. 1,684 31,996
------------
37,116
------------
Printing - Commercial (0.02%)
Donnelley (R.R.) & Sons 330 7,446
------------
Retail (6.08%)
Albertson's, Inc. 1,148 38,171
AutoZone, Inc.* 363 7,986
Bed Bath & Beyond, Inc.* 380 13,775
Best Buy Co., Inc.* 554 35,040
Circuit City Stores-Circuit City Group 551 18,286
Consolidated Stores Corp.* 300 3,600
Costco Wholesale Corp. 1,211 39,963
CVS Corp. 1,058 42,320
Darden Restaurants, Inc. 335 5,444
Dillards, Inc. 254 3,111
Dollar General Corp. 892 17,394
Federated Department Stores, Inc.* 580 19,575
Gap, Inc. (The) 2,307 72,094
Genuine Parts Co. 479 9,580
Great Atlantic & Pacific Tea Co., Inc. 104 1,729
Home Depot, Inc. (The) 6,272 313,208
Kmart Corp.* 1,304 8,883
Kohl's Corp.* 884 49,172
Kroger Co.* 2,264 49,949
Limited, Inc. (The) 1,165 25,193
Longs Drug Stores Corp. 107 2,327
Lowe's Cos., Inc. 1,036 42,541
May Department Stores 901 21,624
McDonald's Corp. 3,622 119,300
Nordstrom, Inc. 365 8,806
Office Depot, Inc.* 857 5,356
Penney (J.C.) Co., Inc. 708 13,054
RadioShack Corp. 506 23,972
Reebok International Ltd.* 154 2,454
Rite Aid Corp. 702 4,607
Safeway, Inc.* 1,346 60,738
Sears, Roebuck & Co. 956 31,190
Staples, Inc.* 1,313 20,187
Starbucks Corp.* 498 19,017
SUPERVALU, INC. 356 6,786
SYSCO Corp. 903 38,039
Target Corp. 1,236 71,688
TJX Cos., Inc. 813 15,244
Toys R Us, Inc.* 586 8,534
Tricon Global Restaurants, Inc.* 400 11,300
Walgreen Co. 2,732 87,936
Wal-Mart Stores, Inc. 12,083 696,283
Wendy's International, Inc. 308 5,486
Winn-Dixie Stores, Inc. 392 5,611
------------
2,096,553
------------
Rubber - Tires & Misc. (0.03%)
Cooper Tire & Rubber Co. 200 2,225
Goodyear Tire & Rubber Co. (The) 424 8,480
------------
10,705
------------
Shoes & Related Apparel (0.09%)
Nike, Inc. (Class B) 741 29,501
------------
Soap & Cleaning Preparations (0.98%)
Clorox Co. 636 28,501
Colgate-Palmolive Co. 1,563 93,585
Ecolab, Inc. 351 13,711
Procter & Gamble Co. (The) 3,546 203,009
------------
338,806
------------
Steel (0.05%)
Allegheny Technologies, Inc. 226 4,068
Nucor Corp. 231 7,666
USX - U.S. Steel Group, Inc. 240 4,455
------------
16,189
------------
Telecommunications (9.30%)
ADC Telecommunications, Inc.* 829 69,532
Andrew Corp.* 219 7,350
AT&T Corp. 10,173 321,721
Bell Atlantic Corp. 4,190 212,904
CenturyTel, Inc. 380 10,925
Comverse Technology, Inc.* 414 38,502
Corning, Inc. 748 201,866
Global Crossing Ltd.* (Bermuda) 2,391 62,913
Lucent Technologies, Inc. 8,828 523,059
MediaOne Group, Inc.* 1,678 111,274
Nextel Communications, Inc. (Class A)* 2,056 125,801
Nortel Networks Corp. (Canada) 8,031 548,116
QUALCOMM, Inc.* 2,009 120,540
Scientific-Atlanta, Inc. 432 32,184
Sprint Corp. 2,376 121,176
Sprint PCS* 2,481 147,620
Tellabs, Inc.* 1,110 75,966
U.S. WEST, Inc. 1,376 117,992
WorldCom, Inc.* 7,762 356,082
------------
3,205,523
------------
Textile (0.04%)
Liz Claiborne, Inc. 148 5,217
Russell Corp. 88 1,760
VF Corp. 310 7,382
------------
14,359
------------
Tobacco (0.50%)
Philip Morris Cos., Inc. 6,199 164,661
UST, Inc. 440 6,463
------------
171,124
------------
Transport (0.51%)
AMR Corp.* 406 10,734
Burlington Northern Santa Fe Corp. 1,161 26,630
CSX Corp. 592 12,543
Delta Air Lines, Inc. 332 16,787
FDX Corp.* 786 29,868
Navistar International Corp.* 168 5,219
Norfolk Southern Corp. 1,039 15,455
Southwest Airlines Co. 1,345 25,471
Union Pacific Corp. 672 24,990
US Airways Group, Inc.* 181 7,059
------------
174,756
------------
Utilities (4.23%)
AES Corp. (The)* 1,156 52,742
ALLTEL Corp. 855 52,957
Ameren Corp. 372 12,555
American Electric Power Co., Inc. 872 25,833
BellSouth Corp. 5,101 217,430
Cinergy Corp. 431 10,964
CMS Energy Corp. 298 6,593
Consolidated Edison, Inc. 575 17,034
Constellation Energy Group, Inc. 406 13,220
CP&L, Inc. 433 13,829
Dominion Resources, Inc. 645 27,654
DTE Energy Co. 387 11,828
Duke Energy Corp. 996 56,149
Eastern Enterprises 74 4,662
Edison International 901 18,470
Entergy Corp. 623 16,938
FirstEnergy Corp.* 626 14,633
Florida Progress Corp. 267 12,516
FPL Group, Inc. 483 23,908
GPU, Inc. 329 8,904
GTE Corp. 2,610 162,472
New Century Energies, Inc. 316 9,480
Niagara Mohawk Holdings, Inc.* 467 6,509
NICOR, Inc. 126 4,111
Northern States Power Co. 426 8,600
ONEOK, Inc. 79 2,049
PECO Energy Co. 460 18,544
Peoples Energy Corp. 96 3,108
PG&E Corp. 1,045 25,733
Pinnacle West Capital Corp. 230 7,791
PPL Corp. 391 8,578
Public Service Enterprise Group, Inc. 587 20,325
Reliant Energy, Inc. 802 23,709
SBC Communications, Inc. 9,222 398,852
Sempra Energy 554 9,418
Southern Co. 1,758 40,983
TXU Corp. 715 21,093
Unicom Corp. 482 18,647
Williams Cos., Inc. (The) 1,198 49,942
------------
1,458,763
------------
TOTAL COMMON STOCKS
(Cost $23,071,935) (98.37%) 33,911,709
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.49%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 8.125% thru 9.125% due 05-15-18
thru 05-15-21) - Note B 6.55% $516 516,000
------------
TOTAL SHORT-TERM INVESTMENTS (1.49%) 516,000
--------- ------------
TOTAL INVESTMENTS (99.86%) 34,427,709
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.14%) 47,323
--------- ------------
TOTAL NET ASSETS (100.00%) $34,475,032
========= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Large Cap Growth Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Large Cap Growth Fund on June 30, 2000. It's divided into
two main categories: common stocks and short-term investments. Common
stocks are further broken down by industry groups. Short-term
investments, which represent the Fund's "cash" position, are listed
last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Advertising (1.86%)
Interpublic Group of Companies, Inc. (The) 4,650 $199,950
Omnicom Group, Inc. 2,250 200,391
------------
400,341
------------
Banks - United States (0.49%)
State Street Corp. 1,000 106,063
------------
Broker Services (1.00%)
Schwab (Charles) Corp. (The) 6,400 215,200
------------
Computers (21.29%)
Apple Computer, Inc.* 3,950 206,881
Cisco Systems, Inc.* 12,000 762,750
Computer Associates International, Inc. 4,050 207,309
EMC Corp.* 6,000 461,625
International Business Machines Corp. 4,000 438,250
Microsoft Corp.* 14,000 1,120,000
Oracle Corp.* 6,650 559,016
Sun Microsystems, Inc.* 5,000 454,688
VERITAS Software Corp.* 1,650 186,476
Yahoo! Inc.* 1,550 192,006
------------
4,589,001
------------
Diversified Operations (2.16%)
Tyco International Ltd. 9,850 466,644
------------
Electronics (19.40%)
Applied Materials, Inc.* 4,000 362,500
Broadcom Corp. (Class A)* 1,300 284,619
Conexant Systems, Inc.* 3,850 187,206
Flextronics International Ltd. (Singapore)* 3,000 206,062
General Electric Co. 15,000 795,000
Intel Corp. 6,500 868,969
KLA-Tencor Corp.* 3,500 204,969
Solectron Corp.* 5,400 226,125
Taiwan Semiconductor Manufacturing Co. Ltd.,
American Depositary Receipts (ADR) (Taiwan)* 7,094 275,336
Teradyne, Inc.* 2,750 202,125
Texas Instruments, Inc. 5,600 384,650
Xilinx, Inc.* 2,250 185,766
------------
4,183,327
------------
Fiber Optics (1.89%)
JDS Uniphase Corp.* 3,400 407,575
------------
Finance (4.43%)
American Express Co. 7,500 390,937
Citigroup, Inc. 5,850 352,462
Morgan Stanley Dean Witter & Co. 2,550 212,288
------------
955,687
------------
Media (4.79%)
AMFM, Inc.* 4,450 307,050
Infinity Broadcasting Corp. (Class A)* 6,250 227,734
Time Warner, Inc. 6,550 497,800
------------
1,032,584
------------
Medical (15.90%)
Amgen Inc.* 5,000 351,250
Cardinal Health, Inc. 6,000 444,000
Genentech, Inc.* 1,400 240,800
Immunex Corp.* 4,000 197,750
Johnson & Johnson 4,900 499,187
Medtronic, Inc. 8,000 398,500
Millennium Pharmaceuticals, Inc.* 1,500 167,813
Pfizer, Inc. 14,025 673,200
Schering-Plough Corp. 9,000 454,500
------------
3,427,000
------------
Oil & Gas (0.96%)
Halliburton Co. 4,400 207,625
------------
Retail (9.23%)
Best Buy Co., Inc.* 3,000 189,750
CVS Corp. 5,000 200,000
Home Depot, Inc. (The) 9,050 451,934
Kroger Co.* 20,000 441,250
Wal-Mart Stores, Inc. 12,250 705,906
------------
1,988,840
------------
Telecommunications (14.23%)
Corning, Inc. 2,000 539,750
Dobson Communications Corp. (Class A)* 1,850 35,613
Level 3 Communications, Inc.* 4,000 352,000
Lucent Technologies, Inc. 9,500 562,875
McLeodUSA, Inc. (Class A)* 8,950 185,153
Metromedia Fiber Network, Inc. (Class A)* 5,200 206,375
Nokia Corp. (ADR) (Finland) 9,000 449,437
Sprint Corp. (PCS Group)* 7,500 446,250
VoiceStream Wireless Corp.* 2,500 290,742
------------
3,068,195
------------
TOTAL COMMON STOCKS
(Cost $17,005,387) (97.63%) 21,048,082
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.88%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.55% $405 405,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 572
------------
TOTAL SHORT-TERM INVESTMENTS (1.88%) 405,572
--------- ------------
TOTAL INVESTMENTS (99.51%) 21,453,654
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.49%) 106,276
--------- ------------
TOTAL NET ASSETS (100.00%) $21,559,930
========= ============
* Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Mid Cap Growth Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Mid Cap Growth Fund on June 30, 2000. It's divided into two
main categories: common stocks and short-term investments. Common stocks
are further broken down by industry groups. Short-term investments,
which represent the Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Advertising (0.23%)
DoubleClick, Inc.* 900 $34,312
------------
Banks - United States (0.92%)
Northern Trust Corp. 2,070 134,679
------------
Broker Services (0.32%)
Lehman Brothers Holdings, Inc. 500 47,281
------------
Chemicals (0.47%)
Rohm & Haas Co. 2,000 69,000
------------
Computers (13.60%)
Art Technology Group, Inc.* 1,940 195,819
CheckFree Holdings Corp.* 1,500 77,344
CMGI, Inc.* 800 36,650
DST Systems, Inc.* 570 43,391
E.piphany, Inc.* 200 21,438
EMC Corp.* 1,040 80,015
Exodus Communications, Inc.* 1,760 81,070
Fiserv, Inc.* 1,215 52,549
Globix Corp.* 1,200 35,175
Hyperion Solutions Corp.* 1,000 32,437
i2 Technologies, Inc.* 1,190 124,076
Informix Corp.* 4,900 36,444
Interwoven, Inc.* 270 29,696
Mercury Interactive Corp.* 1,270 122,872
Network Appliance, Inc.* 2,340 188,370
NorthPoint Communications Group, Inc.* 7,600 85,025
Parametric Technology Corp.* 8,900 97,900
Phone.com, Inc.* 700 45,588
Proxicom, Inc.* 2,080 99,580
Rational Software Corp.* 1,520 141,265
RealNetworks, Inc.* 1,350 68,259
Siebel Systems, Inc.* 600 98,138
StorageNetworks, Inc.* 50 4,513
VERITAS Software Corp.* 926 104,652
Viant Corp.* 2,950 87,394
------------
1,989,660
------------
Cosmetics & Personal Care (0.93%)
Dial Corp. (The) 3,300 34,238
Estee Lauder Cos., Inc. (The) (Class A) 2,050 101,347
------------
135,585
------------
Diversified Operations (0.65%)
Mitsubishi Corp., American Depositary Receipts
(ADR) (Japan) 5,272 95,572
------------
Electronics (22.39%)
Aeroflex, Inc.* 3,350 166,453
Altera Corp.* 1,205 122,835
Amkor Technology, Inc.* 950 33,547
Amphenol Corp. (Class A)* 2,850 188,634
Analog Devices, Inc.* 1,540 117,040
Applied Micro Circuits Corp.* 1,240 122,450
ASM Lithography Holding NV (Netherlands)* 2,800 123,550
Atmel Corp.* 2,360 87,025
Broadcom Corp. (Class A)* 490 107,279
Conexant Systems, Inc.* 2,790 135,664
Fairchild Semiconductor International Corp.
(Class A)* 1,650 66,825
Flextronics International, Ltd. (Singapore)* 2,540 174,466
Jabil Circuit, Inc.* 4,040 200,485
KLA-Tencor Corp.* 950 55,634
Lam Research Corp.* 3,820 143,250
Linear Technology Corp. 2,000 127,875
Maxim Intergrated Products, Inc.* 1,630 110,738
Molex, Inc. 2,600 125,125
Novellus Systems, Inc.* 635 35,917
ONI Systems Corp.* 150 17,580
Qlogic Corp.* 1,450 95,791
Sanmina Corp.* 1,690 144,495
SCI Systems, Inc* 3,950 154,791
Tektronix, Inc.* 2,350 173,900
Teradyne, Inc.* 1,740 127,890
Vishay Intertechnology, Inc.* 1,005 38,127
Vitesse Semiconductor Corp.* 1,930 141,976
Xilinx, Inc.* 1,670 137,879
------------
3,277,221
------------
Fiber Optics (3.44%)
C-COR.net Corp.* 3,950 106,650
E-Tek Dynamics, Inc.* 1,000 263,813
Exfo Electro-Optical Engineering, Inc. (Canada)* 100 4,387
JDS Uniphase Corp.* 1,070 128,266
------------
503,116
------------
Finance (1.30%)
Concord EFS, Inc.* 7,290 189,540
------------
Instruments (3.10%)
Nycomed Amersham Plc (ADR) (United Kingdom) 1,410 69,090
PE Corp.-PE Biosystems Group 2,240 147,560
Waters Corp.* 1,900 237,144
------------
453,794
------------
Insurance (0.57%)
AFLAC, Inc. 1,820 83,606
------------
Media (7.33%)
AMFM, Inc.* 2,980 205,620
Entercom Communications Corp.* 1,545 75,319
Hispanic Broadcasting Corp.* 2,640 87,450
Infinity Broadcasting Corp. (Class A)* 5,252 191,370
New York Times Co. (The) (Class A) 1,500 59,250
NTL, Inc.* 1,017 60,893
Radio One, Inc. (Class D)* 6,880 151,790
Telewest Communications Plc (ADR) (United
Kingdom)* 2,248 83,176
UnitedGlobalCom, Inc. (Class A)* 2,300 107,525
Univision Communications, Inc. (Class A)* 490 50,715
------------
1,073,108
------------
Medical (8.71%)
Affymetrix, Inc.* 680 112,285
Alkermes, Inc.* 2,500 117,812
Allergan, Inc. 1,830 136,335
Community Health Care* 4,400 71,225
Forest Laboratories, Inc.* 510 51,510
Health Management Associates, Inc. (Class A)* 8,770 114,558
Immunex Corp.* 1,380 68,224
Incyte Pharmaceuticals, Inc.* 370 30,409
MedImmune, Inc.* 1,740 128,760
Millennium Pharmaceuticals, Inc.* 1,120 125,300
QLT PhotoTherapeutics, Inc. (Canada)* 2,200 170,088
Stryker Corp. 3,400 148,750
------------
1,275,256
------------
Office (1.08%)
Avery Dennison Corp. 2,350 157,744
------------
Oil & Gas (7.17%)
Baker Hughes, Inc. 6,220 199,040
BJ Services Co.* 2,610 163,125
Coflexip SA (ADR) (France) 790 47,795
Cooper Cameron Corp.* 1,620 106,920
Diamond Offshore Drilling, Inc. 3,300 115,913
Grant Prideco, Inc.* 2,340 58,500
R&B Falcon Corp.* 5,940 139,961
Transocean Sedco Forex, Inc. 2,210 118,097
Weatherford International, Inc.* 2,520 100,328
------------
1,049,679
------------
Retail (0.58%)
Kroger Co.* 3,850 84,941
------------
Telecommunications (20.34%)
Allegiance Telecom, Inc.* 2,380 152,320
American Tower Corp. (Class A)* 3,600 150,075
ANTEC Corp.* 2,530 105,153
COLT Telecom Group Plc (ADR) (United Kingdom)* 374 50,724
Comverse Technology, Inc.* 2,100 195,300
Corning, Inc. 574 154,908
Crown Castle International Corp.* 2,640 96,360
Dobson Communications Corp. (Class A)* 7,930 152,652
Global Crossing Ltd. (Bermuda)* 5,213 137,167
Global TeleSystems Group, Inc.* 6,860 82,749
ICG Communications, Inc.* 1,125 24,820
IMPSAT Fiber Networks, Inc.* 2,560 42,880
Intermedia Communications, Inc.* 5,710 169,872
McLeodUSA Inc. (Class A)* 9,780 202,324
Metromedia Fiber Network, Inc. (Class A)* 2,870 113,903
Microcell Telecommunications, Inc.
(Class B) (Canada)* 1,230 44,434
Nextel Communications, Inc. (Class A)* 970 59,352
NEXTLINK Communications, Inc. (Class A)* 3,600 136,575
Powertel, Inc.* 750 53,203
RF Micro Devices, Inc.* 450 39,431
Scientific-Atlanta, Inc. 3,600 268,200
Sonus Networks, Inc.* 50 7,894
Time Warner Telecom, Inc. (Class A)* 840 54,075
Versatel Telecom International NV (ADR)
(Netherlands)* 2,015 86,897
VoiceStream Wireless Corp.* 1,590 184,912
Western Wireless Corp. (Class A)* 3,850 209,825
------------
2,976,005
------------
TOTAL COMMON STOCKS
(Cost $11,567,568) (93.13%) 13,630,099
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (6.15%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.55% $900 900,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 126
------------
TOTAL SHORT-TERM INVESTMENTS (6.15%) 900,126
--------- ------------
TOTAL INVESTMENTS (99.28%) 14,530,225
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.72%) 104,763
--------- ------------
TOTAL NET ASSETS (100.00%) $14,634,988
========= ============
* Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer.
See notes to financial statements.
</TABLE>
Portfolio Concentration
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The V.A. Mid Cap Growth Fund invests primarily in common stocks of U.S.
and foreign issuers. The performance of the Fund is closely tied to the
economic and financial conditions within the countries in which it
invests. The concentration of investments by industry category for
individual securities held by the Fund is shown in the schedule of
investments.
In addition, concentration of investments can be aggregated by various
countries. The table below shows the percentages of the Fund's
investments at June 30, 2000 assigned to country categories.
MARKET VALUE AS A %
COUNTRY DIVERSIFICATION OF FUND NET ASSETS
----------------------- ------------------
Bermuda 0.94%
Canada 1.50
France 0.33
Japan 0.65
Netherlands 1.44
Singapore 1.19
United Kingdom 1.39
United States 91.84
-------
TOTAL INVESTMENTS 99.28%
=======
See notes to financial statements.
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Relative Value Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Relative Value Fund on June 30, 2000. It's divided into
three main categories: common stocks, bonds and short-term investments.
Common and preferred stocks and bonds are further broken down by
industry groups. Short-term investments, which represent the Fund's
"cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Business Services - Misc. (9.03%)
ACNielsen Corp.* 56,050 $1,233,100
Convergys Corp.* 23,650 1,226,844
Dun & Bradstreet Corp. (The), 13,000 372,125
Iron Mountain, Inc.* 34,000 1,156,000
------------
3,988,069
------------
Chemicals (0.40%)
Rohm & Haas Co. 5,150 177,675
------------
Computers (18.16%)
Computer Associates International, Inc. 29,493 1,509,673
Diversinet Corp. (Canada)* 60,000 712,500
Hyperion Solutions Corp.* 14,000 454,125
J.D. Edwards & Co.* 56,150 845,759
NorthPoint Communications Group, Inc.* 30,000 335,625
Parametric Technology Corp.* 128,000 1,408,000
PSINet, Inc.* 13,500 339,187
Seagate Technology, Inc.* 25,000 1,375,000
Wind River Systems, Inc.* 27,450 1,039,669
------------
8,019,538
------------
Containers (0.32%)
Pactiv Corp.* 18,000 141,750
------------
Diversified Operations (3.70%)
Tyco International, Ltd. 34,500 1,634,438
------------
Electronics (17.13%)
Amphenol Corp. (Class A)* 23,100 1,528,931
Arrow Electronics, Inc. 12,000 372,000
Conexant Systems, Inc.* 22,700 1,103,787
SCG Holding Corp.* 18,900 413,437
SCI Systems, Inc* 17,140 671,674
Sensormatic Electronics Corp.* 28,000 442,750
Sony Corp. (Japan) 4,800 449,143
Tektronix, Inc. 6,000 444,000
Vicor Corp.* 61,400 2,137,488
------------
7,563,210
------------
Fiber Optics (2.18%)
Corning, Inc. 3,570 963,454
------------
Finance (1.01%)
Citigroup, Inc. 7,381 444,705
------------
Food (1.47%)
Nabisco Group Holdings Corp. 25,000 648,438
------------
Instruments - Scientific (3.00%)
PerkinElmer, Inc. 20,000 1,322,500
------------
Insurance (10.54%)
Ace, Ltd. (Bermuda) 94,300 2,640,400
Ambac Financial Group, Inc. 25,800 1,414,162
XL Capital, Ltd., (Class A) 11,032 597,107
------------
4,651,669
------------
Machinery (1.17%)
Applied Science & Technology, Inc.* 20,000 517,500
------------
Media (6.66%)
AT&T Corp. - Liberty Media Group (Class A)* 43,744 1,060,792
Pegasus Communications Corp.* 30,700 1,506,219
XM Satellite Radio Holdings, Inc. (Class A)* 10,000 374,375
------------
2,941,386
------------
Office (1.82%)
Danka Business Systems Plc, American Depositary
Receipt (ADR) (United Kingdom) 120,946 468,666
Xerox Corp. 16,200 336,150
------------
804,816
------------
Paper & Paper Products (1.57%)
Fort James Corp. 30,000 693,750
------------
Pollution Control (1.08%)
Waste Management, Inc. 25,000 475,000
------------
Schools/Education (0.49%)
Corinthian Colleges, Inc.* 9,200 215,625
------------
Telecommunications (14.82%)
ANTEC Corp.* 32,750 1,361,172
CenturyTel, Inc. 30,000 862,500
CTC Communications Group, Inc.* 20,000 720,000
General Motors Corp. (Class H) 11,000 965,250
Intermedia Communications, Inc.* 33,150 986,212
Lucent Technologies, Inc. 22,900 1,356,825
Time Warner Telecom, Inc. (Class A)* 4,550 292,906
------------
6,544,865
------------
Transport (1.55%)
Air Canada (Canada)* 23,766 312,780
Northwest Airlines Corp.* 12,250 372,859
------------
685,639
------------
TOTAL COMMON STOCKS
(Cost $37,564,338) (96.10%) 42,434,027
------ ------------
INTEREST CREDIT PAR VALUE
RATE RATING** (000s OMITTED)
-------- -------- ------------
BONDS
Office (0.77%)
Danka Business Systems Plc,
Conv Note (United
Kingdom) 04-01-02 6.750% B+ $500 340,000
------------
Retail (2.70%)
Brightpoint, Inc.,
Conv Bond 03-11-18 Zero B 4,000 1,192,500
------------
TOTAL BONDS
(Cost $1,360,434) (3.47%) 1,532,500
------ ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (0.39%)
Investment in a joint
Repurchase agreement
transaction with UBS
Warburg, Inc. -
Dated 06-30-00, due
07-03-00 (Secured by
U.S. Treasury Bonds
6.250% thru 7.500%
due 08-15-22 thru
08-15-27) - Note B 6.550 173 173,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 704
------------
TOTAL SHORT-TERM INVESTMENTS (0.39%) 173,704
------- ------------
TOTAL INVESTMENTS (99.96%) 44,140,231
------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.04%) 16,983
------- ------------
TOTAL NET ASSETS (100.00%) $44,157,214
======= ============
* Non-income producing security.
** Credit ratings are unaudited and rated by Standard & Poor's where
available, or Moody's Investors Service or John Hancock Advisers, Inc.
where Standard & Poor's ratings are not available.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
The percentage shown for each investment category is the total of that
category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Small Cap Growth Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Small Cap Growth Fund on June 30, 2000. It's divided into
two main categories: common stocks and short-term investments. Common
stocks are further broken down by industry groups. Short-term
investments, which represent the Fund's "cash" position, are listed
last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Advertising (0.69%)
Getty Images, Inc.* 6,250 $231,641
------------
Business Services - Misc. (5.79%)
Corporate Executive Board Co. (The)* 4,000 239,500
Forrester Research, Inc.* 5,300 385,906
Jupiter Communications, Inc.* 3,350 77,050
Management Network Group, Inc. (The)* 6,900 241,500
META Group, Inc.* 7,850 151,113
Modem Media.Poppe Tyson, Inc.* 2,700 33,581
On Assignment, Inc.* 9,900 301,950
ProBusiness Services, Inc.* 8,600 228,438
Quanta Services, Inc.* 5,125 281,875
------------
1,940,913
------------
Computers (16.80%)
Accrue Software, Inc.* 5,250 186,375
Advent Software, Inc.* 4,300 277,350
Apex, Inc.* 6,950 304,062
Aspen Technology, Inc.* 4,900 188,650
BindView Development Corp.* 11,650 139,800
Broadbase Software, Inc.* 4,900 150,063
Cognizant Technology Solutions Corp.* 5,000 165,937
Data Return Corp.* 9,000 261,000
eMachines, Inc.* 14,900 40,044
Etinuum, Inc.* 4,150 23,344
i2 Technologies, Inc.* 1,870 194,977
Interwoven, Inc.* 3,250 357,449
IntraNet Solutions, Inc.* 5,350 205,306
Manugistics Group Inc.* 3,300 154,275
MarketWatch.com, Inc.* 8,900 167,431
Maxtor Corp.* 4,900 51,756
Media Metrix, Inc.* 7,700 195,869
Mediaplex, Inc.* 4,300 83,044
Micromuse, Inc.* 1,450 239,952
Multex.com, Inc.* 5,850 147,347
National Computer Systems, Inc. 6,400 315,200
National Instruments Corp.* 2,750 119,969
Net Perceptions, Inc.* 3,650 57,944
Netpliance, Inc.* 12,450 113,606
NetRatings, Inc.* 5,300 135,813
Predictive Systems, Inc.* 3,650 131,172
Quantum Corp. Hard Disk Drive Group* 12,600 139,388
SCM Microsystems, Inc.* 2,650 160,491
Secure Computing Corp.* 15,650 294,416
SportsLine USA, Inc.* 6,250 106,641
Transaction Systems Architects, Inc. (Class A)* 7,050 120,731
Viant Corp.* 5,200 154,050
Virage, Inc.* 450 8,128
WebTrends Corp.* 3,750 145,078
Wind River Systems, Inc.* 2,650 100,369
------------
5,637,027
------------
Electronics (18.47%)
Alpha Industries, Inc.* 2,900 127,781
ATMI, Inc.* 5,300 246,450
Brooks Automation, Inc.* 2,900 185,419
Capstone Turbine Corp.* 850 38,303
Credence Systems Corp.* 3,800 209,712
DDi Corp.* 6,600 188,100
DuPont Photomasks, Inc.* 4,050 277,425
Elantec Semiconductor, Inc.* 5,100 355,087
Exar Corp.* 4,725 411,961
GaSonics International Corp.* 6,450 254,372
GlobeSpan, Inc.* 1,650 201,429
Integrated Silicon Solution, Inc.* 9,000 342,000
Kent Electronics Corp.* 6,050 180,366
Manufacturers' Services, Ltd.* 1,000 20,563
Marvell Technology Group, Ltd. (Bermuda)* 150 8,550
Mattson Technology, Inc.* 2,400 78,000
Merix Corp.* 2,650 124,550
Metalink Ltd.* (Israel) 5,250 155,531
Micrel, Inc.* 2,100 91,219
Microsemi Corp.* 6,600 223,988
Nanometrics, Inc.* 5,750 236,828
Novellus Systems, Inc.* 2,050 115,953
Nu Horizons Electronics Corp.* 3,000 79,875
Pixelworks, Inc.* 1,200 27,300
Plexus Corp.* 2,050 231,650
PLX Technology, Inc.* 9,650 400,475
Powerwave Technologies, Inc.* 4,500 198,000
PRI Automation, Inc.* 2,750 179,824
Qlogic Corp.* 1,500 99,094
Rudolph Technologies, Inc.* 5,450 211,187
Semtech Corp.* 3,850 294,465
Stratos Lightwave, Inc.* 500 13,938
Virata Corp.* 6,500 387,562
------------
6,196,957
------------
Finance (1.39%)
Actrade International, Ltd.* 3,150 64,575
Affiliated Managers Group, Inc.* 4,100 186,550
Medallion Financial Corp. 3,650 56,347
Metris Cos., Inc. 6,375 160,172
------------
467,644
------------
Instruments - Scientific (0.82%)
Varian, Inc.* 5,950 274,444
------------
Leisure (0.58%)
Cinar Films, Inc. (Class B) (Canada)* 6,650 46,550
Premier Parks, Inc.* 6,550 149,013
------------
195,563
------------
Media (3.94%)
Acme Communications, Inc.* 8,450 154,212
Citadel Communications Corp.* 2,900 101,319
Pegasus Communications Corp.* 1,850 90,766
Radio One, Inc. (Class A)* 3,800 112,338
Radio One, Inc. (Class D)* 6,950 153,334
Regent Communications, Inc.* 19,300 165,860
Sinclair Broadcast Group, Inc. (Class A)* 10,300 113,300
Westwood One, Inc.* 4,500 153,562
Wink Communications, Inc.* 7,700 234,850
YouthStream Media Networks, Inc.* 7,450 41,906
------------
1,321,447
------------
Medical (18.96%)
Alexion Pharmaceuticals, Inc.* 4,600 328,900
Alkermes, Inc.* 7,500 353,437
Alpharma, Inc. (Class A) 4,500 280,125
AmeriSource Health Corp. (Class A)* 2,150 66,650
Aurora Biosciences Corp.* 5,100 347,756
Bindley Western Industries, Inc. 3,700 97,819
COR Therapeutics, Inc.* 4,400 375,375
CV Therapeutics, Inc.* 6,650 460,928
Cyberonics, Inc.* 3,500 42,000
Cytyc Corp.* 4,100 218,837
Exelixis, Inc.* 2,700 90,113
Genome Therapeutics Corp.* 6,100 185,669
Human Genome Sciences, Inc.* 1,400 186,725
Inhale Therapeutic Systems, Inc.* 2,850 289,186
Interpore International, Inc.* 18,600 180,188
Invitrogen Corp.* 3,750 282,012
LifePoint Hospitals, Inc.* 11,300 251,425
Ligand Pharmaceuticals, Inc. (Class B)* 9,400 123,963
NPS Pharmaceuticals, Inc.* 14,100 377,175
OXiGENE, Inc.* 5,300 53,000
Pharmacopeia, Inc.* 5,550 257,381
Pharmacyclics, Inc.* 3,150 192,150
Priority Healthcare Corp.* 2,300 170,919
Province Healthcare Co.* 7,900 285,387
Techne Corp.* 2,550 331,500
Titan Pharmaceuticals, Inc.* 5,950 255,850
Virologic, Inc.* 5,850 87,019
Visible Genetics, Inc. (Canada)* 4,250 191,781
------------
6,363,270
------------
Metal (0.91%)
Maverick Tube Corp.* 10,450 304,356
------------
Oil & Gas (6.85%)
Atwood Oceanics, Inc.* 4,450 197,469
Core Laboratories NV (Netherlands)* 6,700 194,300
Dril-Quip, Inc.* 3,900 182,325
Marine Drilling Cos, Inc.* 10,650 298,200
NATCO Group, Inc. (Class A)* 10,300 97,206
Newfield Exploration Co.* 6,300 246,487
Patterson Energy, Inc.* 5,450 155,325
Pride International, Inc.* 12,100 299,475
Stone Energy Corp.* 4,650 277,837
Universal Compression Holdings, Inc.* 5,850 195,975
Veritas DGC, Inc.* 5,850 152,100
------------
2,296,699
------------
Printing - Commercial (0.65%)
Houghton Mifflin Co. 4,700 219,431
------------
Real Estate Investment Trust (0.83%)
Pinnacle Holdings, Inc.* 5,150 278,100
------------
Retail (7.94%)
99 Cents Only Stores* 6,790 270,751
Applebee's International, Inc. 5,400 163,688
Brightpoint, Inc.* 20,150 174,424
Cost Plus, Inc.* 6,850 196,509
Duane Reade, Inc.* 6,350 163,512
Insight Enterprises Inc.* 4,500 266,906
Linens 'N Things, Inc.* 6,750 183,094
Pacific Sunwear of California, Inc.* 5,925 111,094
RARE Hospitality International, Inc.* 5,000 141,250
ScanSource, Inc.* 4,750 184,656
Tech Data Corp.* 9,350 407,309
Too, Inc.* 4,400 111,925
Tweeter Home Entertainment Group, Inc.* 4,650 141,244
Whole Foods Market, Inc.* 3,550 146,659
------------
2,663,021
------------
Schools/Education (0.49%)
ProsoftTraining.com* 9,850 165,603
------------
Steel (0.90%)
Lone Star Technologies, Inc.* 6,550 302,937
------------
Telecommunications (7.96%)
Accelerated Networks, Inc.* 50 2,109
Advanced Radio Telecom Corp.* 11,450 167,456
AirGate PCS, Inc.* 4,200 220,763
CoreComm Ltd.* 5,925 115,538
CTC Communications Group, Inc.* 4,200 151,200
Efficient Networks, Inc.* 1,850 136,091
I-Link, Inc.* 19,400 104,275
Orckit Communications Ltd.* (Israel) 6,200 186,775
Powertel, Inc.* 2,650 187,984
Radyne ComStream, Inc.* 4,750 68,875
Rural Cellular Corp. (Class A)* 2,450 187,578
SBA Communications Corp.* 6,150 319,416
Telaxis Communications Corp.* 5,300 165,625
Terayon Communication Systems, Inc.* 3,200 205,550
Tollgrade Communications, Inc.* 400 53,000
UbiquiTel, Inc.* 13,600 128,350
US LEC Corp. (Class A)* 6,800 115,600
XM Satellite Radio Holdings, Inc. (Class A)* 4,150 155,366
------------
2,671,551
------------
Transport (1.06%)
Expeditors International of Washington, Inc. 3,350 159,125
Forward Air Corp.* 4,950 198,000
------------
357,125
------------
TOTAL COMMON STOCKS
(Cost $23,914,535) (95.03%) 31,887,729
------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Purchase Agreement (5.19%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.55% $1,740 1,740,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 965
------------
TOTAL SHORT-TERM INVESTMENTS (5.19%) 1,740,965
--------- ------------
TOTAL INVESTMENTS (100.22%) 33,628,694
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.22%) (74,465)
--------- ------------
TOTAL NET ASSETS (100.00%) $33,554,229
========= ============
* Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Sovereign Investors Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Sovereign Investors Fund on June 30, 2000. It is divided
into three main categories: common stocks, U.S. government and agencies
securities and short-term investments. Common stocks are further broken
down by industry group. Short-term investments, which represent the
Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Advertising (2.98%)
Interpublic Group of Cos., Inc. (The) 33,200 $1,427,600
------------
Banks - United States (4.93%)
Bank of America Corp. 23,763 1,021,809
Firstar Corp. 10,000 210,625
State Street Corp. 5,000 530,313
Wells Fargo Co. 15,500 600,625
------------
2,363,372
------------
Beverages (1.58%)
PepsiCo, Inc. 17,000 755,438
------------
Building (0.35%)
Masco Corp. 9,400 169,788
------------
Chemicals (1.29%)
Air Products & Chemicals, Inc. 20,000 616,250
------------
Computers (1.94%)
Automatic Data Processing, Inc. 8,000 428,500
Hewlett-Packard Co. 4,000 499,500
------------
928,000
------------
Containers (1.45%)
Bemis Co., Inc. 20,700 696,038
------------
Diversified Operations (4.17%)
Du Pont (E.I.) De Nemours & Co. 7,300 319,375
Honeywell International, Inc. 15,000 505,312
Minnesota Mining & Manufacturing Co. 14,200 1,171,500
------------
1,996,187
------------
Electronics (5.30%)
Emerson Electric Co. 24,700 1,491,263
General Electric Co. 19,800 1,049,400
------------
2,540,663
------------
Finance (3.29%)
Citigroup, Inc. 26,125 1,574,031
------------
Food (2.60%)
Bestfoods 18,000 1,246,500
------------
Furniture (1.00%)
Leggett & Platt, Inc. 29,000 478,500
------------
Insurance (4.59%)
AFLAC, Inc. 12,400 569,625
American General Corp. 15,000 915,000
American International Group, Inc. 6,062 712,285
------------
2,196,910
------------
Machinery (4.28%)
Dover Corp. 27,500 1,115,469
Pentair, Inc. 26,300 933,650
------------
2,049,119
------------
Media (3.57%)
Gannett Co., Inc. 19,400 1,160,363
McGraw-Hill Cos., Inc. (The) 10,200 550,800
------------
1,711,163
------------
Medical (16.13%)
Abbott Laboratories 23,000 1,024,938
American Home Products Corp. 13,000 763,750
Bard (C.R.), Inc. 12,800 616,000
Baxter International, Inc. 16,100 1,132,031
Bristol-Myers Squibb Co. 15,000 873,750
Johnson & Johnson 9,000 916,875
Merck & Co., Inc. 12,000 919,500
Pfizer, Inc. 19,250 924,000
Schering-Plough Corp. 11,000 555,500
------------
7,726,344
------------
Metal (1.90%)
Illinois Tool Works, Inc. 16,000 912,000
------------
Mortgage Banking (1.64%)
Fannie Mae 15,000 782,813
------------
Office (4.21%)
Avery Dennison Corp. 15,150 1,016,944
Pitney Bowes, Inc. 25,000 1,000,000
------------
2,016,944
------------
Oil & Gas (5.87%)
Chevron Corp. 17,200 1,458,774
Exxon Mobil Corp. 10,184 799,444
Royal Dutch Petroleum Co., American Depositary
Receipts (ADR) (Netherlands) 9,000 554,063
------------
2,812,281
------------
Paper & Paper Products (2.28%)
Kimberly-Clark Corp. 19,000 1,090,125
------------
Retail (10.25%)
Albertson's, Inc. 30,000 997,500
Home Depot, Inc. (The) 9,000 449,437
Lowe's Cos., Inc. 23,000 944,437
McDonald's Corp. 14,000 461,124
SYSCO Corp. 28,200 1,187,924
Target Corp. 15,000 870,000
------------
4,910,422
------------
Telecommunications (2.10%)
CenturyTel, Inc. 35,000 1,006,250
------------
Tobacco (0.83%)
Philip Morris Cos., Inc. 15,000 398,438
------------
Utilities (3.87%)
ALLTEL Corp. 14,000 867,125
SBC Communications, Inc. 22,844 988,003
------------
1,855,128
------------
TOTAL COMMON STOCKS
(Cost $40,309,002) (92.40%) 44,260,304
------------
INTEREST CREDIT PAR VALUE
RATE RATING** (000s OMITTED)
-------- -------- ------------
U.S. GOVERNMENT AND AGENCIES SECURITIES
Government - U.S. (0.83%)
United States Treasury, Note 09-30-02 5.875% AA $400 395,564
------------
TOTAL U.S. GOVERNMENT
AND AGENCIES SECURITIES
(Cost $401,814) (0.83%) 395,564
------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (6.73%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.550 3,225 3,225,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 768
------------
TOTAL SHORT-TERM INVESTMENTS (6.73%) 3,225,768
------- ------------
TOTAL INVESTMENTS (99.96%) 47,881,636
------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.04%) 19,282
------- ------------
TOTAL NET ASSETS (100.00%) $47,900,918
======= ============
* Credit ratings are rated by Moody's Investors Service or John
Hancock Advisers, Inc. where Standard & Poor's ratings are not
available.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. International Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. International Fund on June 30, 2000. It's divided into
three main categories: common stocks, preferred stocks and short-term
investments. Common and preferred stocks are further broken down by
country. Short-term investments, which represent the Fund's "cash"
position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Argentina (0.18%)
PC Holdings SA (Class B) (Finance) 9,000 $16,479
------------
Australia (1.29%)
AMP, Ltd. (Insurance) 1,690 17,182
Lend Lease Corp., Ltd. (Finance) 1,000 12,743
National Australia Bank, Ltd. (Banks - Foreign) 1,000 16,684
News Corp., Ltd. (The), American Depositary
Receipt (ADR) (Media) 377 20,547
Qantas Airways, Ltd. (Airlines) 2,530 5,114
Telstra Corp., Ltd. (Telecommunications) 2,508 10,169
Westpac Banking Corp., Ltd. (Banks - Foreign) 1,670 12,035
WMC, Ltd. (Metal) 4,196 18,753
Woodside Petroleum, Ltd. (Oil & Gas) 1,000 7,775
------------
121,002
------------
Belgium (0.00%)
Fortis (B) (Insurance) 378 4
------------
Brazil (1.36%)
Companhia Brasileira de Distribuicao Grupo Pao
de Acucar (ADR) (Retail) 1,000 32,125
Companhia Paranaense de Energia-Copel (ADR)
(Utilities) 2,700 25,144
Tele Norte Leste Participacoes SA (ADR)
(Telecommunications) 24 567
Telecomunicacoes Brasileiras SA (ADR)
(Telecommunications) 400 38,850
Telecomunicacoes de Sao Paulo SA (ADR)
(Telecommunications) 400 7,400
Tele Sudeste Celular Participacoes SA (ADR)
(Telecommunications) 80 2,440
Uniao de Bancos Brasileiros SA Global Depository
Receipt (GDR) (Finance) 745 21,419
------------
127,945
------------
Canada (4.78%)
Bombardier, Inc. (Diversified Operations) 9,034 245,383
Nortel Networks Corp. (Telecommunications) 2,264 157,103
Suncor Energy, Inc. (Oil & Gas) 2,000 46,216
------------
448,702
------------
Chile (0.24%)
Empresa Nacional de Electricidad SA (ADR)
(Utilities) 2,000 22,125
------------
China (0.23%)
PetroChina Co., Ltd.* (Oil & Gas) 20,000 4,156
Shandong International Power Development Co.,
Ltd. (Utilities) 120,000 17,703
------------
21,859
------------
Finland (2.53%)
Nokia Oyj (Telecommunications) 4,170 212,790
Nordic Baltic Holding AB (Banks - Foreign) 3,408 24,793
------------
237,583
------------
France (9.16%)
Accor SA (Leisure) 800 32,788
Alcatel SA (Telecommunications) 1,209 79,296
BNP Paribas (Banks - Foreign) 400 38,494
Bouygues SA (Building) 62 41,434
Carrefour SA (Retail) 950 64,939
Dassault Systemes SA (Computers) 470 43,839
France Telecom SA (Telecommunications) 549 76,733
Lagardere SCA (Diversified Operations) 604 46,131
Legrand SA (Electronics) 123 27,596
Pinault-Printemps-Redoute SA (Retail) 225 49,986
PSA Peugeot Citroen SA (Automobile/Trucks) 119 23,881
Schneider Electric SA (Machinery) 407 28,365
Sodexho Alliance SA (Business Services - Misc.) 119 21,586
STMicroelectronics NV (Electronics) 516 32,513
Suez Lyonnaise des Eaux SA (Diversified
Operations) 316 55,359
Total Fina SA (Oil & Gas) 809 124,040
Valeo SA (Automobile/Trucks) 451 24,112
Vivendi SA (Diversified Operations) 550 48,544
------------
859,636
------------
Germany (2.85%)
Allianz AG (Insurance) 220 79,036
Bayerische Motoren Werke (BMW) AG
(Automobile/Trucks) 1 30
Deutsche Telekom AG (Telecommunications) 636 36,310
Dresdner Bank AG (Banks - Foreign) 850 34,975
SAP AG (Computers) 342 50,413
Siemens AG (Diversified Operations) 445 67,125
------------
267,889
------------
Greece (0.57%)
Alpha Bank SA (Banks - Foreign) 480 18,937
Hellenic Telecommunications Organization SA (ADR)
(Telecommunications) 1,660 20,231
STET Hellas Telecommunicatons SA (ADR)*
(Telecommunications) 740 14,708
------------
53,876
------------
Hong Kong (3.17%)
Aeon Credit Service Co., Ltd. (Finance) 37,400 12,594
ASM Pacific Technology, Ltd. (Electronics) 8,000 29,966
Bank of East Asia, Ltd. (Banks - Foreign) 2,000 4,669
Cable & Wireless HKT, Ltd. (Telecommunications) 7,126 15,723
Cathay Pacific Airways (Transport) 2,000 3,694
Cheung Kong Holdings, Ltd. (Real Estate
Operations) 4,000 44,000
China Unicom, Ltd.* (Telecommunications) 2,000 4,220
Citic Pacific, Ltd. (Diversified Operations) 3,000 15,740
Dah Sing Financial Group (Finance) 6,400 25,779
Giordana International, Ltd. (Retail) 2,000 3,040
Guoco Group, Ltd. (Finance) 5,000 10,038
Hongkong Electric Holdings, Ltd. (Utilities) 1,500 4,830
Hongkong Land Holdings, Ltd. (Real Estate
Operations) 4,000 6,400
HSBC Holdings Plc (Banks - Foreign) 2,400 27,477
Hutchison Whampoa, Ltd. (Diversified Operations) 3,300 41,485
JCG Holdings, Ltd. (Diversified Financial
Services) 20,000 10,006
Legend Holdings, Ltd. (Computers) 4,000 3,874
Next Media, Ltd.* (Printing - Commercial) 28,000 4,274
QPL International Holdings, Ltd.* (Electronics) 7,000 10,057
Swire Pacific, Ltd. (Class A) (Diversified
Operations) 2,000 11,725
Yuxing Infotech Holdings, Ltd.* (Computers) 14,000 7,678
------------
297,269
------------
Hungary (0.14%)
Magyar Tavkozlesi Rt (Telecommunications) 1,850 12,866
------------
Ireland (0.36%)
CRH Plc (Building) 1,862 33,687
------------
Israel (0.19%)
Bank Leumi Le-Israel (Banks - Foreign) 5,400 11,149
Partner Communications Co., Ltd. (ADR)*
(Telecommunications) 750 7,125
------------
18,274
------------
Italy (5.53%)
Assicurazioni Generali SpA (Insurance) 1,823 62,481
Banca Intesa SpA (Banks - Foreign) 11,607 51,971
ENI SpA (Oil & Gas) 5,500 31,768
Gruppo Editoriale L'Espresso (Media) 1,789 21,179
Riunione Adriatica di Sicurta SpA (Insurance) 3,732 40,974
San Paolo-IMI SpA (Banks - Foreign) 3,710 65,845
Seat Pagine Gialle SpA (Media) 9,000 31,104
Telecom Italia Mobile SpA (Telecommunications) 9,008 92,019
Telecom Italia SpA (Telecommunications) 5,000 68,738
UniCredito Italiano SpA (Banks - Foreign) 10,915 52,207
------------
518,286
------------
Japan (25.16%)
AIFUL Corp. (Finance) 700 64,521
ASAHI Breweries, Ltd. (Beverages) 8,000 95,679
Asahi Glass Co., Ltd. (Glass Products) 3,000 33,505
Bank of Tokyo-Mitsubishi, Ltd. (Banks - Foreign) 5,000 60,365
Chubu Electric Power Co., Inc. (Utilities) 5,000 88,827
Chugai Pharmaceutical Co., Ltd. (Medical) 1,000 18,896
Daibiru Corp. (Real Estate Operations) 3,000 24,231
Daito Trust Construction Co., Ltd. (Real Estate
Operations) 4,000 65,972
Daiwa House Industry Co., Ltd. (Building) 5,000 36,473
Fuji Heavy Industries, Ltd. (Automobile/Trucks) 4,000 29,028
Fujisawa Pharmaceutical Co., Ltd (Medical) 1,000 40,432
Futaba Industrial Co., Ltd. (Automobile/Trucks) 5,000 65,737
Katokichi Co., Ltd. (Business Services - Misc.) 1,000 25,305
Kirin Beverage Corp. (Beverages) 2,000 53,155
Kirin Brewery Co., Ltd. (Beverages) 6,000 74,926
Kurita Water Industries Co., Ltd. (Pollution
Control) 2,000 44,013
Marui Co., Ltd. (Retail) 4,000 76,528
Max Co., Ltd. (Machinery) 1,000 11,196
Meiwa Estate Co., Ltd (Real Estate Operations) 2,000 52,778
Mitsui Fudosan Co., Ltd. (Real Estate Operations) 5,000 54,192
Nikko Securities Co., Ltd. (The) (Broker
Services) 2,000 19,792
Nippon Meat Packers, Inc. (Food) 8,000 116,865
Nippon Telegraph & Telephone Corp.
(Telecommunications) 7 93,021
Nissin Food Products Co., Ltd. (Food) 1,000 25,446
Orix Corp. (Leasing Companies) 100 14,750
Promise Co., Ltd. (Finance) 200 15,796
Q.P. Corp. (Food) 3,000 25,022
Sakura Bank, Ltd. (The) (Banks - Foreign) 5,000 34,541
Santen Pharmaceutical Co., Ltd. (Medical) 1,000 24,127
Sekisui House, Ltd. (Building) 16,000 147,929
Stanley Electric Co., Ltd. (Electronics) 7,000 75,736
Sumitomo Bakelite Co., Ltd. (Chemicals) 5,000 65,831
Sumitomo Forestry Co., Ltd. (Building) 7,000 47,038
Sumitomo Heavy Industries, Ltd. (Machinery) 9,000 30,112
Taisho Pharmaceutical Co., Ltd. (Medical) 2,000 71,627
Takeda Chemical Industries, Ltd. (Medical) 2,000 131,191
Takefuji Corp. (Finance) 1,000 120,729
Terumo Corp. (Medical) 2,000 67,669
Toho Gas Co., Ltd. (Oil & Gas) 13,000 25,362
Tokuyama Corp. (Chemicals) 4,000 29,028
Tokyo Electric Power Co., Inc. (Utilities) 4,000 97,451
Tokyu Corp. (Transport) 4,000 19,754
Toyota Motor Corp. (Automobile/Trucks) 1,000 45,521
------------
2,360,097
------------
Malaysia (0.56%)
AMMB Holdings Berhad (Banks - Foreign) 3,000 10,026
British American Tobacco Berhad (Tobacco) 400 3,263
Malayan Banking Berhad (Banks - Foreign) 1,800 7,295
Malaysian Pacific Industries Berhad (Electronics) 1,000 10,263
Mesiniaga Berhad (Computers) 1,000 2,632
Resorts World Berhad (Leisure) 4,000 10,947
Tanjong Plc (Leisure) 1,000 2,395
Technology Resources Industries Berhad
(Telecommunications) 2,000 2,126
Tenaga Nasional Berhad (Utilities) 1,000 3,263
------------
52,210
------------
Mexico (1.09%)
Controladora Comercial Mexicana SA de CV (Retail) 23,600 22,052
Grupo Financiero Bancomer, SA de CV (Finance) 74,000 37,579
Telefonos de Mexico SA (ADR) (Telecommunications) 740 42,273
------------
101,904
------------
Netherlands (6.48%)
AEGON NV (Insurance) 1,066 37,930
Akzo Nobel NV (Chemicals) 1,064 45,203
ASM Lithography Holding NV* (Computers) 864 37,135
Fortis NV (Diversified Financial Services) 1,327 38,627
ING Groep NV (Banks - Foreign) 931 62,929
Koninklijke Numico NV (Food) 542 25,717
Koninklijke Philips Electronics NV (Electronics) 2,280 107,530
KPN NV (Telecommunications) 286 12,792
Royal Dutch Petroleum Co. (Oil & Gas) 2,400 149,162
TNT Post Group NV (Transport) 963 25,972
VNU NV (Media) 708 36,568
Wolters Kluwer NV (Publishing-Periodicals) 1,050 27,968
------------
607,533
------------
Norway (0.39%)
Tomra Systems ASA* (Machinery) 1,371 36,350
------------
Philippine Islands (0.01%)
Manila Electric Co. (Class B) (Utilities) 500 734
------------
Poland (0.10%)
Polski Koncern Naftowy Orlen S.A. (Oil & Gas) 1,900 9,163
------------
Portugal (0.05%)
PT Multimedia.com Servicos de Acesso a Internet,
SGPS, SA* (Computers) 562 4,308
------------
Singapore (1.34%)
Chartered Semiconductor Manufacturing, Ltd.*
(Electronics) 1,000 8,743
DBS Group Holdings, Ltd. (Banks - Foreign) 2,000 25,709
DBS Land, Ltd. (Real Estate Operations) 4,000 5,188
Flextech Holdings, Ltd. (Electronics) 5,000 3,445
Keppel Land, Ltd. (Real Estate Operations) 8,000 10,608
Neptune Orient Lines, Ltd. (Transport) 7,000 6,485
Overseas Union Bank, Ltd. (Banks - Foreign) 1,000 3,880
Pacific Century Regional Developments, Ltd.
(Real Estate Operations) 2,000 27,331
SembCorp Industries, Ltd. (Engineering/R&D
Services) 1,000 1,089
Singapore Technologies Engineering, Ltd.
(Engineering/R&D Services) 11,000 16,178
Singapore Telecommunications, Ltd.
(Telecommunications) 3,000 4,395
United Overseas Bank, Ltd. (Banks - Foreign) 2,000 13,086
------------
126,137
------------
South Africa (0.94%)
ABSA Group, Ltd. (Banks - Foreign) 9,100 34,469
Comparex Holdings, Ltd.* (Computers) 11,000 19,374
DataTec, Ltd.* (Computers) 1,460 10,070
Rembrandt Group, Ltd. (Diversified Operations) 2,550 24,617
------------
88,530
------------
South Korea (1.22%)
Pohang Iron & Steel Co., Ltd. (Steel) 150 12,726
Samsung Electro Mechanics Co., Ltd. (Electronics) 200 12,538
Samsung Electronics Co. (Electronics) 250 82,734
Shinhan Bank (Banks - Foreign) 670 6,309
------------
114,307
------------
Spain (4.68%)
Amadeus Global Travel Distribution SA (Class A)
(Transport) 4,711 53,746
Banco Bilbao Vizcaya Argentaria SA*
(Banks - Foreign) 7,365 110,041
Banco Santander Central Hispano, SA
(Banks - Foreign) 6,105 64,404
Endesa SA (Utilities) 1,500 29,056
Indra Sistemas SA (Computers) 1,964 44,926
Telefonica SA* (Telecommunications) 5,368 115,309
Terra Networks SA* (Computers) 565 21,846
------------
439,328
------------
Sweden (2.54%)
Ericsson (LM) Telefonaktiebolaget
(Telecommunications) 8,208 162,392
Skandia Forsakrings AB (Insurance) 2,862 75,606
------------
237,998
------------
Switzerland (1.72%)
Adecco SA (Business Services - Misc.) 29 24,639
Credit Suisse Group (Banks - Foreign) 121 24,069
Givaudan* (Consumer Products Misc.) 4 1,217
Novartis AG (Medical) 58 91,873
Roche Holding AG (Medical) 2 19,469
------------
161,267
------------
Taiwan (1.44%)
Advanced Semiconductor Engineering, Inc.*
(Electronics) (R) 700 11,550
Compal Electronics, Inc. (Computers) 13,000 31,945
D-Link Corp. (Computers) 2,300 5,390
Taiwan Semiconductor Manufacturing Co., Ltd.*
(Electronics) 17,600 83,632
Winbond Electronics Corp.* (Electronics) 1,000 2,897
------------
135,414
------------
Thailand (0.18%)
BEC World Plc (Media) 700 4,038
Golden Land Property Development Plc* (Real
Estate Development) 60,000 8,117
PTT Exploration & Production Plc (Oil & Gas) 1,000 4,850
------------
17,005
------------
Turkey (0.43%)
Dogan Yayin Holding AS* (Diversified Operations) 570,000 9,647
Vestel Elektronik Sanayi ve Ticaret AS
(Household) 36,000 10,880
Yapi ve Kredi Bankasi AS (Banks - Foreign) 1,755,600 19,525
------------
40,052
------------
United Kingdom (15.00%)
ARM Holdings Plc* (Electronics) 2,500 26,782
Barclay's Plc (Banks - Foreign) 1,870 46,489
BP Amoco Plc (Oil & Gas) 23,359 224,084
British Telecommunications Plc
(Telecommunications) 3,933 50,822
Cable & Wireless Plc (Telecommunications) 2,423 41,025
Capita Group Plc (Business Services - Misc.) 1,389 33,984
Centrica Plc (Utilities) 11,400 38,035
CMG Plc (Computers) 2,000 28,325
CMG Plc (Computers) 2,660 37,585
COLT Telecom Group Plc* (Telecommunications) 678 22,569
Compass Group Plc (Food) 1,986 26,159
Glaxo Wellcome Plc (Medical) 2,711 79,046
Invensys Plc (Diversified Operations) 10,169 38,159
Lloyds TSB Group Plc (Banks - Foreign) 6,209 58,624
Logica Plc (Computers) 1,342 31,758
Marconi Plc (Telecommunications) 4,000 52,051
Pearson Plc (Media) 1,119 35,556
Prudential Plc (Insurance) 3,144 46,050
Reuters Group Plc (Business Services - Misc.) 3,274 55,830
Sage Group Plc (The) (Computers) 4,065 32,907
Scoot.com Plc* (Business Services - Misc.) 11,225 26,156
SEMA Group Plc (Computers) 2,646 37,634
Shell Transport & Trading Co. Plc (Oil & Gas) 5,900 49,234
SmithKline Beecham Plc (Medical) 3,807 49,827
Telewest Communications Plc* (Media) 6,832 23,569
Vodafone AirTouch Plc (Telecommunications) 53,163 214,777
------------
1,407,037
------------
TOTAL COMMON STOCKS
(Cost $7,857,151) (95.91%) 8,996,856
--------- ------------
PREFERRED STOCKS
Germany (0.53%)
Fresenius AG (Medical) 109 25,183
ProSieben Media AG (Media) 200 24,870
------------
TOTAL PREFERRED STOCKS
(Cost $44,259) (0.53%) 50,053
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (3.05%)
Investment in a joint repurchase
Agreement transaction with UBS
Warburg, Inc. - Dated 6-30-00,
due 7-3-00 (Secured by U.S.
Treasury Bond, 8.125% thru 9.125%,
due 05-15-18 thru 05-15-21)
- Note B 6.55% $286 286,000
------------
NUMBER
OF SHARES
---------
Cash Equivalents (9.49%)
Navigator Securities Lending
Prime Portfolio** 890,250 890,250
--------- ------------
TOTAL SHORT-TERM INVESTMENTS (12.54%) 1,176,250
--------- ------------
TOTAL INVESTMENTS (108.98%) 10,223,159
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (8.98%) (842,430)
--------- ------------
TOTAL NET ASSETS (100.00%) $9,380,729
========= ============
* Non-Income producing security.
** Represents investment of security lending collateral - Note A .
(R) This security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such security may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $11,550 or 0.12% of net
assets as of June 30, 2000.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
Industry Diversification (Unaudited)
-----------------------------------------------------------------------
The Fund primarily invests in securities issued by companies of other
countries. The performance of the Fund is closely tied to the economic
conditions within the countries in which it invests. The concentration
of investments by country for individual securities held by the Fund is
shown in the schedule of investments. In addition, the concentration of
investments can be aggregated by various industry groups. The table
below shows the percentages of the Fund's investments at June 30, 2000
assigned to the various investment categories.
MARKET VALUE AS A %
INVESTMENT CATEGORIES OF FUND NET ASSETS
----------------------- ------------------
Airlines 0.09%
Automobile/Trucks 2.01
Banks - Foreign 10.03
Beverages 2.39
Broker Services 0.21
Building 3.27
Business Services - Misc. 2.00
Chemicals 1.49
Computers 4.81
Consumer Products - Misc. 0.01
Diversified Operations 6.61
Electronics 5.61
Engineering/R&D Services 0.18
Finance 3.53
Food 2.34
Glass Products 0.36
Household 0.12
Insurance 4.24
Leasing Companies 0.16
Leisure 0.50
Machinery 1.13
Media 0.86
Medical 6.60
Metal 0.20
Oil & Gas 7.20
Pollution Control 0.47
Printing - Commercial 0.05
Publishing - Newspapers 1.21
Publishing - Periodicals 0.33
Real Estate Development 1.83
Real Estate Operations 1.35
Retail 2.65
Steel 0.14
Telecommunications 17.81
Tobacco 0.03
Transport 1.13
Utilities 3.49
Short-Term Investments 12.54
-------
TOTAL INVESTMENTS 108.98%
=======
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Financial Industries Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Financial Industries Fund on June 30, 2000. It's divided
into two main categories: common stocks and short-term investments.
Common stocks are further broken down by industry groups. Short-term
investments, which represent the Fund's "cash" position, are listed
last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCK
Banks - Foreign (5.93%)
Bipop-Carire SpA (Italy) 107,000 $845,172
Lloyds TSB Group Plc (United Kingdom) 88,500 836,033
Nordic Baltic Holding AB (Sweden) 178,020 1,331,056
------------
3,012,261
------------
Banks - Midwest (4.37%)
Fifth Third Bancorp 17,500 1,106,875
Northern Trust Corp. 17,100 1,112,569
------------
2,219,444
------------
Banks - Money Center (5.54%)
Chase Manhattan Corp. (The) 21,810 1,004,623
Citigroup, Inc. 30,000 1,807,500
------------
2,812,123
------------
Banks - Northeast (3.40%)
State Street Corp. 16,300 1,728,819
------------
Banks - Super Regional (8.03%)
Bank of New York Co., Inc. (The) 39,500 1,836,750
FleetBoston Financial Corp. 22,536 766,224
Wells Fargo Co. 38,000 1,472,500
------------
4,075,474
------------
Banks - West (1.51%)
City National Corp. 22,100 767,975
------------
Broker Services (14.87%)
Legg Mason, Inc. 21,000 1,050,000
Merrill Lynch & Co., Inc. 14,000 1,610,000
Morgan Stanley Dean Witter & Co. 24,000 1,998,000
Schwab (Charles) Corp. (The) 86,076 2,894,305
------------
7,552,305
------------
Computer - Services (7.59%)
BISYS Group, Inc. (The)* 11,250 691,875
First Data Corp. 24,500 1,215,813
Fiserv, Inc.* 45,000 1,946,250
------------
3,853,938
------------
Computer - Software (1.67%)
Intuit, Inc.* 20,500 848,188
------------
Finance - Consumer Loans (7.16%)
American Express Co. 44,400 2,314,350
MBNA Corp. 48,650 1,319,631
------------
3,633,981
------------
Finance - Investment Management (6.06%)
Amvescap Plc American Depositary Receipts
(ADR) (United Kingdom) 17,000 1,332,375
Price (T. Rowe) Associates, Inc. 41,000 1,742,500
------------
3,074,875
------------
Insurance (2.75%)
MBIA, Inc. 29,000 1,397,437
------------
Insurance - Accident & Health (2.89%)
AFLAC, Inc. 32,000 1,470,000
------------
Insurance - Brokers (3.50%)
Marsh & McLennan Cos., Inc. 17,000 1,775,437
------------
Insurance - Diversified (3.08%)
AXA Financial, Inc. 46,000 1,564,000
------------
Insurance - Life (9.65%)
American General Corp. 21,700 1,323,700
AXA Corp. (ADR) (France) 14,500 1,153,656
Protective Life Corp. 48,000 1,278,000
Reinsurance Group of America, Inc. 38,000 1,144,750
------------
4,900,106
------------
Insurance - Multi Line (3.42%)
Allmerica Financial Corp. 15,600 817,050
Fortis (NL) NV (Netherlands) 31,454 919,319
------------
1,736,369
------------
Insurance - Property & Casualty (4.98%)
Ambac Financial Group, Inc. 14,500 794,781
American International Group, Inc. 14,750 1,733,125
------------
2,527,906
------------
Mortgage & RE Services (1.39%)
Fannie Mae 13,500 704,531
------------
TOTAL COMMON STOCKS
(Cost $40,303,069) (97.79%) 49,655,169
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.18%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.55% $598 598,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 452
------------
TOTAL SHORT-TERM INVESTMENTS (1.18%) 598,452
--------- ------------
TOTAL INVESTMENTS (98.97%) 50,253,621
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (1.03%) 522,059
--------- ------------
TOTAL NET ASSETS (100.00%) $50,775,680
========= ============
* Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer.
See notes to financial statements.
</TABLE>
Portfolio Concentration
June 30, 2000 (Unaudited)
-----------------------------------------------------------------------
The V.A. Financial Industries Fund invests primarily in equity
securities in the financial sector in the United States and abroad. The
concentration of investments by industry category for individual
securities held by the Fund is shown in the schedule of investments. In
addition, concentration of investments can be aggregated by various
countries. The table below shows the percentage of the Fund's
investments at June 30, 2000 assigned to the various countries.
MARKET VALUE AS A %
COUNTRY DIVERSIFICATION OF FUND NET ASSETS
----------------------- ------------------
France 2.27%
Italy 1.66
Netherlands 1.81
Sweden 2.62
United Kingdom 4.27
United States 86.34
-------
TOTAL INVESTMENTS 98.97%
=======
See notes to financial statements.
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Regional Bank Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Regional Bank Fund on June 30, 2000. It's divided into two
main categories: common stocks and short-term investments. Common stocks
are further broken down by industry groups. Short-term investments,
which represent the Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Superregional Banks (6.79%)
Bank of America Corp. (NC) 4,500 $193,500
Mellon Financial Corp. (PA) 6,500 236,844
PNC Bank Corp. (PA) 2,500 117,187
U.S. Bancorp (MN) 5,000 96,250
Wells Fargo Co. (CA) 6,500 251,875
------------
895,656
------------
Banks - Money Center (4.03%)
Chase Manhattan Corp. (The) (NY) 5,000 230,312
Citigroup, Inc. (NY) 5,000 301,250
------------
531,562
------------
Banks - United States (79.59%)
BancFirst Corp. (OK) 4,400 138,600
BancorpSouth, Inc. (MS) 9,500 133,594
BancWest Corp. (HI) 16,000 263,000
Bank of the Ozarks, Inc. (AR) 15,350 247,519
Cascade Bancorp (OR) 33,010 369,299
CCB Financial Corp. (NC) 5,700 210,900
Centura Banks, Inc. (NC) 6,250 212,109
Chittenden Corp. (VT) 5,000 122,188
Citizens Banking Corp. (MI) 13,121 213,012
City National Corp. (CA) 7,000 243,250
Colonial BancGroup, Inc. (AL) 14,000 126,000
Comerica, Inc. (MI) 6,000 269,250
Commerce Bancshares, Inc. (MO) 11,474 341,352
Community First Bankshares, Inc. (ND) 10,000 163,125
Cullen/Frost Bankers., Inc. (TX) 11,000 289,437
Eldorado Bancshares, Inc.* (CA) 22,000 159,500
Fifth Third Bancorp (OH) 6,395 404,484
Financial Institutions, Inc.* (NY) 29,750 416,500
First Tennessee National Corp. (TN) 3,500 57,969
FirstMerit Corp. (OH) 20,300 433,913
Independent Bank Corp. (MI) 22,750 308,547
Lamar Capital Corp. (MS) 21,500 176,031
M & T Bank Corp. (NY) 700 315,000
Marshall & Ilsley Corp. (WI) 6,000 249,000
Mercantile Bankshares Corp. (MD) 12,000 357,750
Mid-State Bancshares (CA) 15,000 408,750
Mississippi Valley Bancshares, Inc. (MO) 10,350 250,987
National Commerce Bancorp. (TN) 15,000 240,938
Northrim Bank (AK) 16,695 121,039
Pacific Capital Bancorp. (CA) 12,500 313,281
Prosperity Bancshares, Inc. (TX) 14,500 233,812
SJNB Financial Corp. (CA) 8,000 224,000
Sky Financial Group, Inc. (OH) 11,000 175,312
Southwest Bancorp. of Texas, Inc.* (TX) 13,000 269,750
Sterling Bancshares, Inc. (TX) 18,000 194,625
Summit Bancshares, Inc. (TX) 14,800 255,300
Texas Regional Bancshares, Inc. (Class A) (TX) 9,000 228,375
Umpqua Holdings Corp. (OR) 35,000 280,000
UnionBanCal Corp. (CA) 10,000 185,625
Vail Banks, Inc.* (CO) 12,350 117,325
Valley National Bancorp. (NJ) 14,700 357,394
Whitney Holding Corp. (LA) 4,500 153,844
Yardville National Bancorp. (NJ) 25,000 265,625
------------
10,497,311
------------
Thrifts (3.59%)
Charter One Financial, Inc. (OH) 6,279 144,417
First Financial Holdings, Inc. (SC) 12,300 169,125
Warren Bancorp., Inc. (MA) 22,500 160,312
------------
473,854
------------
TOTAL COMMON STOCKS
(Cost $14,623,212) (94.00%) 12,398,383
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (5.10%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.55% $673 673,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 275
------------
TOTAL SHORT-TERM INVESTMENTS (5.10%) 673,275
--------- ------------
TOTAL INVESTMENTS (99.11%) 13,071,658
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.89%) 117,678
--------- ------------
TOTAL NET ASSETS (100.00%) $13,189,336
========= ============
* Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Technology Fund
Schedule of Investments
June 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Technology Fund on June 30, 2000. It is divided into two
main categories: common stocks and short-term investments. Common stocks
are further broken down by industry group. Short-term invest ments,
which represent the Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Computer - Graphics (0.52%)
Cadence Design Systems, Inc.* 732 $14,914
------------
Computer - Internet Services (11.97%)
America Online, Inc.* 924 48,741
Art Technology Group, Inc.* 360 36,337
Ask Jeeves, Inc.* 140 2,529
DoubleClick, Inc.* 272 10,370
Exodus Communications, Inc.* 876 40,351
Exult, Inc.* 350 3,500
Genuity, Inc.* 1,000 9,156
Infospace, Inc.* 472 26,078
Inktomi Corp.* 247 29,208
Pacific Century CyberWorks Ltd. (Hong Kong)* 9,000 17,550
Phone.com, Inc.* 93 6,057
Portal Software, Inc.* 292 18,651
RealNetworks, Inc.* 485 24,523
TIBCO Software, Inc.* 160 17,157
VeriSign, Inc.* 100 17,650
VerticalNet, Inc.* 366 13,519
Viant Corp.* 680 20,145
------------
341,522
------------
Computer - Memory Devices (4.72%)
EMC Corp.* 933 71,783
Network Appliance, Inc.* 140 11,270
Seagate Technology, Inc.* 613 33,715
Western Digital Corp.* 3,565 17,825
------------
134,593
------------
Computer - Mini/Macro (4.54%)
Cobalt Networks, Inc.* 340 19,677
Dell Computer Corp.* 1,087 53,603
Emulex Corp.* 350 22,991
Gateway, Inc.* 586 33,255
------------
129,526
------------
Computer - Services (2.47%)
Mercury Interactive Corp.* 581 56,212
Unisys Corp.* 972 14,155
------------
70,367
------------
Computer - Software (11.10%)
BEA Systems, Inc.* 840 41,527
BMC Software, Inc.* 165 6,020
Citrix Systems, Inc.* 297 5,624
Computer Associates International, Inc. 679 34,756
Electronics for Imaging, Inc.* 370 9,366
i2 Technologies, Inc.* 390 40,664
Microsoft Corp.* 488 39,040
Oracle Corp.* 729 61,282
Parametric Technology Corp.* 1,458 16,038
Precise Software Solutions Ltd.* 50 1,200
Rational Software Corp.* 457 42,472
SmartForce Plc,* American Depositary Receipt
(ADR) (Ireland) 392 18,816
------------
316,805
------------
Electronics - Components Misc. (3.32%)
Sanmina Corp.* 392 33,516
Solectron Corp.* 1,464 61,305
------------
94,821
------------
Electronics - Measuring Instruments (0.82%)
Agilent Technologies, Inc.* 318 23,452
------------
Electronics - Products Misc. (2.01%)
Aeroflex, Inc.* 634 31,502
Jabil Circuit, Inc.* 500 24,813
Manufacturers' Services Ltd.* 50 1,028
------------
57,343
------------
Electronics - Semiconductor Components (24.25%)
Amkor Technology, Inc.* 927 32,735
Analog Devices, Inc.* 600 45,600
Applied Materials, Inc.* 480 43,500
Applied Science & Technology, Inc.* 562 14,542
ASM Lithography Holding N.V. (Netherlands)* 1,026 45,272
Atmel Corp.* 1,012 37,317
Chartered Semiconductor Manufacturing Ltd. (ADR)
(Singapore)* 257 23,130
Cypress Semiconductor Corp.* 927 39,166
Integrated Device Technology, Inc.* 1,054 63,108
Intel Corp. 245 32,753
KLA-Tencor Corp.* 505 29,574
LSI Logic Corp.* 488 26,413
Marvell Technology Group Ltd. (Bermuda)* 10 570
Micron Technology, Inc. 1,167 102,769
National Semiconductor Corp.* 623 35,355
Novellus Systems, Inc.* 583 32,976
PRI Automation, Inc.* 438 28,641
Taiwan Semiconductor Manufacturing Co., Ltd. SP
(ADR) (Taiwan)* 290 11,238
Taiwan Semiconductor Manufacturing Co., Ltd.
(ADR) (Taiwan)* 570 22,123
Vitesse Semiconductor Corp.* 339 24,938
------------
691,720
------------
Fiber Optics (4.22%)
CIENA Corp.* 418 69,675
Corning, Inc. 92 24,829
Exfo Electro-Optical Engineering, Inc. (Canada)* 10 439
Finisar Corp.* 962 25,192
Stratos Lightwave, Inc.* 10 279
------------
120,414
------------
Media - Radio/TV (0.50%)
Infinity Broadcasting Corp. (Class A)* 390 14,211
------------
Telecom - Equipment (7.60%)
Accelerated Networks, Inc.* 10 422
Advanced Fibre Communications, Inc.* 215 9,742
ANTEC Corp.* 277 11,513
Cisco Systems, Inc.* 875 55,617
Equant N.V. (Netherlands)* 130 5,590
Global Crossing Ltd. (Bermuda)* 462 12,156
Metromedia Fiber Network, Inc. (Class A)* 784 31,115
Nokia Corp. (ADR) (Finland) 980 48,939
QUALCOMM, Inc.* 257 15,420
Tut Systems, Inc.* 460 26,393
------------
216,907
------------
Telecom - Services (3.04%)
Global Light Telecommunications, Inc. (Canada)* 488 5,338
Nortel Networks Corp. (Canada) 448 30,576
Primus Telecommunications Group, Inc.* 657 16,343
Qwest Communications International, Inc.* 578 28,719
WinStar Communications, Inc.* 170 5,759
------------
86,735
------------
TOTAL COMMON STOCKS
(Cost $2,177,246) (81.08%) 2,313,330
------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- --------------
SHORT-TERM INVESTMENTS
Government - U.S. Agencies (30.37%)
FNMA Discount Note Due 07-03-00 6.49% $867 866,531
------------
Corporate Savings Account (0.03%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 822
------------
TOTAL SHORT-TERM INVESTMENTS (30.40%) 867,353
--------- ------------
TOTAL INVESTMENTS (111.48%) 3,180,683
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (11.48%) (327,650)
--------- ------------
TOTAL NET ASSETS (100.00%) $2,853,033
========= ============
* Non-income producing security.
Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
Portfolio Concentration
June 30, 2000 (Unaudited)
-----------------------------------------------------------------------
The V.A. Technology Fund invests primarily in equity securities of
technology companies in the United States and abroad. The concentration
of investments by industry category for individual securities held by
the Fund is shown in the schedule of investments. In addition,
concentration of investments can be aggregated by various countries. The
table below shows the percentage of the Fund's investments at June 30,
2000 assigned to the various countries.
MARKET VALUE AS A %
COUNTRY DIVERSIFICATION OF FUND NET ASSETS
----------------------- ------------------
Bermuda 0.45%
Canada 1.27
Finland 1.72
Hong Kong 0.62
Ireland 0.66
Netherlands 1.78
Singapore 0.81
Taiwan 1.17
United States 103.00
-------
TOTAL INVESTMENTS 111.48%
=======
See notes to financial statements.
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Bond Fund
Schedule of Investments
December 31, 1999
-------------------------------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the V.A. Bond Fund on December 31, 1999.
It is divided into three main categories: bonds, warrants and short-term investments. Bonds and warrants are
further broken down by industry group. Short-term investments, which represent the Fund's "cash" position, are
listed last.
INTEREST CREDIT PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATING* (000s OMITTED) VALUE
-------------------------- -------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
BONDS
Aerospace (0.69%)
Lockheed Martin Corp., Bond 12-01-29 8.500% BBB- $35 $35,342
Note 12-01-05 7.950 BBB- 30 30,171
Raytheon Co., Note 03-01-03 (R) 7.900 BBB- 40 40,239
-------------
105,752
-------------
Automobile/Trucks (1.42%)
DaimlerChrysler AG, Deb 03-01-27 7.450 A+ 35 33,584
DaimlerChrysler North America Holding Corp.,
Note 01-20-05 7.400 A+ 40 39,684
ERAC USA Finance Co., Note 02-15-05 (R) 6.625 BBB+ 49 45,948
Ford Capital B.V., Gtd Deb (Netherlands)
05-15-02 (Y) 9.875 A 50 51,889
Ford Motor Co., Deb 02-01-29 6.375 A 55 45,106
-------------
216,211
-------------
Banks - Foreign (1.06%)
Abbey National First Capital, B.V., Sub Note
(United Kingdom) 10-15-04 (Y) 8.200 AA- 30 30,732
Royal Bank of Scotland Plc, Bond (United Kingdom)
03-31-05 (Y) 8.817 A- 30 30,906
Scotland International Finance No. 2, B.V., Gtd
Sub Note (Netherlands) 11-01-06 (R) (Y) 8.850 A 95 100,514
-------------
162,152
-------------
Banks - United States (1.05%)
Bank of New York, Cap Security 12-01-26 (R) 7.780 A- 50 46,057
FleetBoston Financial Corp., Sub Note 12-01-05 6.625 A- 35 33,122
National Westminster Bank Plc - New York
Branch, Sub Note 05-01-01 9.450 A+ 5 5,090
NB Capital Trust IV, Gtd Cap Security 04-15-27 8.250 A- 20 18,581
RBSG Capital Corp., Gtd Cap Note 03-01-04 10.125 A 15 16,120
Security Pacific Corp., Sub Note 03-01-01 11.000 A 40 40,890
-------------
159,860
-------------
Beverages (0.19%)
Canandaigua Brands, Inc., Sr Sub Note Ser C
12-15-03 8.750 B+ 30 28,800
-------------
Broker Services (0.19%)
Goldman Sachs Group, Inc., Med Term Note Ser B
10-01-09 7.350 A+ 30 28,823
-------------
Chemicals (0.54%)
Akzo Nobel, Inc., Bond 11-15-03 (R) 6.000 A- 45 42,683
Equistar Chemicals L.P., Sr Note 02-15-04 8.500 BBB- 40 39,200
-------------
81,883
-------------
Computers (0.97%)
Ceridian Corp., Sr Note 06-01-04 7.250 BBB 30 28,792
Exodus Communications, Inc., Sr Note 12-15-09 10.750 B 30 28,950
International Business Machines Corp., Med Term
Note 09-22-03 5.370 A+ 35 33,335
PSINet, Inc., Sr Note 11-01-08 11.500 B- 15 14,100
Verio, Inc., Sr Note 04-01-05 10.375 B- 40 42,600
-------------
147,777
-------------
Electronics (0.03%)
Amkor Technologies, Inc., Sr Sub Note 05-01-09 10.500 B 5 4,987
-------------
Energy (0.60%)
MidAmerican Energy Holdings Co., Sr Bond 09-15-28 8.480 BBB- 40 40,326
Sr Note 09-15-05 7.230 BBB- 25 24,311
P&L Coal Holdings Corp., Sr Sub Note Ser B
05-15-08 9.625 B 30 27,750
-------------
92,387
-------------
Fiber Optics (0.22%)
Williams Communications Group, Inc., Sr Note
10-01-09 10.875 BB- 35 34,300
-------------
Finance (2.73%)
Bombardier Capital, Inc., Note 01-15-02 (R) 6.000 A- 30 29,250
Commercial Credit Co., Note 07-01-02 6.450 AA- 45 44,251
EES Coke Battery Co., Inc., Sr Sec Note 04-15-02 (R) 7.125 BBB 4 4,141
Ford Motor Credit Co., Note 04-28-03 6.125 A 35 33,723
Note 10-28-09 7.375 A 35 33,854
General Motors Acceptance Corp., Note 01-19-10 7.750 A 30 29,824
Household Finance Corp., Note 11-01-02 5.875 A 70 67,255
Sr Note 09-25-04 5.875 A 55 51,295
Sr Unsub Note 02-01-09 5.875 A 30 26,091
Marlin Water Trust & Marlin Water Capital Corp.,
Sr Sec Note 12-15-01 (R) 7.090 BBB 30 29,644
Midland Funding Corp. I, Deb Ser C-94 07-23-02 10.330 BBB- 8 8,348
Sec Deb Ser C-91 07-23-02 10.330 BBB- 11 11,629
Midland Funding Corp. II, Deb Ser A 07-23-05 11.750 BB+ 40 44,777
Yanacocha Receivables Master Trust, Pass Thru
Cert Ser 1997-A 06-15-04 (R) 8.400 BBB- 3 3,021
-------------
417,103
-------------
Government - Foreign (0.14%)
Nova Scotia, Province of, Deb (Canada) 11-15-19 (Y) 8.250 A- 20 21,124
-------------
Government - U.S. (35.47%)
United States Treasury, Bond 08-15-17 8.875 AAA 532 678,135
Bond 02-15-23 7.125 AAA 1,170 1,300,350
Note 05-15-02 7.500 AAA 69 70,272
Note 08-15-03 5.750 AAA 230 226,083
Note 02-15-05 7.500 AAA 1,075 1,126,729
Note 07-15-06 7.000 AAA 662 685,998
Note 05-15-08 5.625 AAA 1,380 1,331,272
-------------
5,418,839
-------------
Government - U.S. Agencies (16.04%)
Federal National Mortgage Assn., 15 Yr Pass Thru
Ctf 03-01-02*** 7.000 AAA 55 53,952
15 Yr Pass Thru Ctf 12-01-12 6.500 AAA 34 32,575
30 Yr Pass Thru Ctf 06-01-29 6.000 AAA 19 17,644
Bond 02-15-05 7.125 AAA 180 180,731
Note 04-15-03 5.750 AAA 310 300,179
Note 09-15-09 6.625 AAA 380 367,114
Note 01-15-30 7.125 AAA 215 216,578
Pass Thru Ctf Ser 1997-M8 Class A-1 01-25-22 6.940 AAA 3 2,632
Government National Mortgage Assn., 30 Yr Pass
Thru Ctf 07-15-26 8.000 AAA 23 23,545
30 Yr Pass Thru Ctf 04-15-28 to 07-01-29*** 6.500 AAA 505 479,033
30 Yr Pass Thru Ctf 06-15-28 to 07-01-30*** 7.000 AAA 769 747,507
30 Yr Pass Thru Ctf 10-15-29 7.500 AAA 30 29,714
-------------
2,451,204
-------------
Insurance (0.44%)
Equitable Life Assurance Society of the United
States, Surplus Note 12-01-05 (R) 6.950 A+ 15 14,723
Massachusetts Mutual Life Insurance Co., Surplus
Note 11-15-23 (R) 7.625 AA 5 4,714
New York Life Insurance Co., Surplus Note
12-15-23 (R) 7.500 AA- 5 4,349
Sun Canada Financial Co., Gtd Sub Note 12-15-07 (R) 6.625 AA- 20 18,680
URC Holdings Corp., Sr Note 06-30-06 (R) 7.875 A- 25 25,483
-------------
67,949
-------------
Leasing Companies (0.12%)
United Rentals, Inc., Sr Sub Note Ser B 04-01-09 9.000 BB- 20 17,700
-------------
Leisure (0.59%)
Harrah's Operating Co., Inc., Sr Note 01-15-09 7.500 BBB- 25 23,198
HMH Properties, Inc., Gtd Sr Sec Note Ser A
08-01-05 7.875 BB 30 28,350
Premier Parks, Inc., Sr Note 06-15-07 9.750 B- 20 19,250
Waterford Gaming LLC, Sr Note 03-15-10 (R) 9.500 B+ 20 19,400
-------------
90,198
-------------
Manufacturing (0.09%)
AXIA, Inc., Gtd Sr Sub Note 07-15-08 10.750 B- 17 13,260
-------------
Media (3.96%)
Adelphia Communications Corp., Sr Note 11-15-09 9.375 B+ 15 13,912
Sr Note Ser B 10-01-02 9.250 B+ 17 16,660
Sr Note Ser B 07-15-03 8.125 B+ 15 14,025
AMFM, Inc., Sr Sub Note 10-01-08 9.000 B 25 25,437
Clear Channel Communications, Inc., Note 06-15-05 7.875 BBB- 45 45,056
Comcast Cable Communications, Inc., Note 11-15-08 6.200 BBB 45 40,623
Comcast Corp., Sr Note 04-15-08 7.625 BBB 35 33,708
Continental Cablevision, Inc., Sr Note 05-15-06 8.300 AA- 60 61,871
CSC Holdings, Inc., Sr Note Ser B 07-15-09 8.125 BB+ 45 43,425
Sr Sub Deb 05-15-16 10.500 BB- 20 21,350
EchoStar DBS Corp., Sr Note 02-01-09 9.375 B 35 33,775
Garden State Newspapers, Inc., Sr Sub Note
07-01-11 8.625 B+ 45 39,600
J Seagram & Sons, Inc., Gtd Sr Note 12-15-18*** 7.500 BBB- 20 19,132
Mediacom LLC/Mediacom Capital Corp., Sr Note Ser
B 04-15-08 8.500 B+ 20 18,400
News America Holdings, Inc., Gtd Sr Deb 08-10-18 8.250 BBB- 20 19,269
TCI Communications, Inc., Sr Deb 02-15-26 7.875 AA- 40 39,020
Telewest Communications Plc, Sr Note (United
Kingdom) 02-01-10 (R) (Y) 9.875 B+ 20 18,600
Time Warner, Inc., Deb 01-15-13 9.125 BBB 58 63,562
TV Guide, Inc., Sr Sub Note Ser B 03-01-09 8.125 BB- 25 24,688
United Pan-Europe Communications N.V., Sr Note
(Netherlands) 11-01-09 (Y) 11.250 B 15 13,200
-------------
605,313
-------------
Medical (0.72%)
Dynacare, Inc., Sr Note (Canada) 01-15-06 (Y) 10.750 B+ 37 33,300
Fresenius Medical Care Capital Trust II, Gtd
Trust Preferred Security 02-01-08 7.875 B+ 10 8,950
IASIS Healthcare Corp., Gtd Sr Sub Note 10-15-09 13.000 B- 20 19,850
Quest Diagnostics, Inc., Sr Sub Note 12-15-06 10.750 B+ 23 23,805
Tenet Healthcare Corp., Sr Note 01-15-05 8.000 BB+ 25 23,938
-------------
109,843
-------------
Metal (0.51%)
Golden Northwest Aluminum, Inc., 1st Mtg Note
12-15-06 12.000 BB- 15 15,000
WMC Finance (USA) Ltd., Gtd Note (Australia)
11-15-03 (Y) 6.500 A 65 62,642
-------------
77,642
-------------
Mortgage Banking (5.83%)
Citibank Credit Card Master Trust I, Class A
Credit Card Part Cert Ser 1997-2 02-15-04 6.550 AAA 130 128,821
Commercial Mortgage Acceptance Corp., Pass Thru
Ctf Ser 1999-C1 Class A-1 08-15-08 6.790 Aaa 76 73,797
ContiMortgage Home Equity Loan Trust, Pass Thru
Ctf Ser 1995-2 Class A-5 08-15-25 8.100 AAA 10 10,048
Credit Suisse First Boston Mortgage Securities
Corp., Commercial Mtg Pass Thru Ctf Ser 1998-C1
Class A-1A 12-17-07 6.260 AAA 21 20,333
EQCC Home Equity Loan Trust, Pass Thru Ctf Ser
1997-3 Class A-9 02-15-29 6.570 AAA 50 47,179
GMAC Commercial Mortgage Securities, Inc., Pass
Thru Ctf Ser 1997-C1 Class A-2 09-15-06 6.853 Aaa 50 48,859
Pass Thru Ctf Ser 1997-C2 Class A-3 11-15-07 6.566 Aaa 25 23,516
HomeSide Lending, Inc., Med Term Sr Note 05-15-03 6.200 A+ 65 62,304
IMC Home Equity Loan Trust, Pass Thru Ctf Ser
1998-1 Class A-4 03-20-25 6.600 AAA 15 14,442
LB Commercial Conduit Mortgage Trust, Pass Thru
Ctf Ser 1999-C1 Class A-1 08-15-07 6.410 Aaa 53 50,742
Money Store Home Equity Trust (The), Pass Thru
Ctf Ser 1997-D Class AF-7 12-15-38 6.485 AAA 16 15,475
Morgan Stanley Capital I, Inc., Pass Thru Ctf Ser
1997-WF1 Class A-1 10-15-06 (R) 6.830 AAA 81 79,762
Pass Thru Ctf Ser 1999-CAM1 Class A-3 11-15-08 6.920 AAA 140 136,544
Salomon Brothers Mortgage Securities VII, Inc.,
Mtg Pass Thru Ctf Ser 1997-HUD2 Class A-2
07-25-24 6.750 Aaa 6 5,994
Saxon Asset Securities Trust, Pass Thru Ctf Ser
2000-2 Class AF-2 06-25-15 7.965 AAA 105 105,263
UCFC Home Equity Loan Trust, Pass Thru Ctf Ser
1997-A1 Class A-8 06-15-28 7.220 AAA 10 9,380
Pass Thru Ctf Ser 1997-B Class A-6 10-15-28 6.900 AAA 60 58,560
-------------
891,019
-------------
Oil & Gas (2.31%)
Apache Finance Canada Corp., Note (Canada)
12-15-29 (Y) 7.750 BBB+ 35 34,275
Coastal Corp., Note 06-15-10 7.750 BBB 35 34,603
Occidental Petroleum Corp., Sr Note 02-15-29 8.450 BBB- 50 51,185
Ocean Energy, Inc., Sr Sub Note Ser B 07-15-07 8.875 BB- 20 19,900
Panhandle East Pipe Line Co., Sr Note 04-01-10 (R) 8.250 BBB- 30 29,906
Petroleum Geo-Services, Sr Note (Norway) 03-30-08 (Y) 6.625 BBB 30 27,215
Phillips Petroleum Co., Note 05-25-10 8.750 BBB 30 31,603
Santa Fe Snyder Corp., Gtd Sub Note 06-15-07 8.750 BB+ 20 19,800
Tosco Corp., Note 02-15-30 8.125 BBB 35 34,891
Triton Energy Ltd., Sr Note 04-15-02 8.750 BB- 35 34,738
Valero Energy Corp., Bond 06-15-30 8.750 BBB- 35 34,709
-------------
352,825
-------------
Paper & Paper Products (0.42%)
Abitibi-Consolidated, Inc., Deb (Canada) 08-01-29 (Y) 8.500 BBB- 15 14,009
Fort James Corp., Sr Note 09-15-02 6.500 BBB 5 4,884
International Paper Co., Note 07-08-05 (R) 8.125 BBB+ 45 45,329
-------------
64,222
-------------
Real Estate Investment Trust (0.90%)
American Health Properties, Inc., Note 01-15-07 7.500 BBB- 20 17,800
Cabot Industrial Properties, L.P., Note 05-01-04 7.125 BBB- 25 24,044
Camden Property Trust, Sr Note 04-15-04 7.000 BBB 30 28,672
Liberty Property L.P., Med Term Note 06-05-02 6.600 BBB- 40 38,875
ProLogis Trust, Sr Note 04-15-04 6.700 BBB+ 25 23,932
TriNet Corporate Realty Trust, Inc., Note
05-15-01 7.300 BB 5 4,886
-------------
138,209
-------------
Telecommunications (4.58%)
Clearnet Communications, Inc., Sr Disc Note, Step
Coupon (10.125%, 05-01-04) (Canada) 05-01-09 (A) (Y) Zero B3 35 20,825
Sr Disc Note, Step Coupon (14.750%, 12-15-00)
(Canada) 12-15-05 (A) (Y) Zero B3 15 15,356
Crown Castle International Corp., Sr Note
05-15-11 9.000 B 30 27,600
Deutsche Telekom International Finance B.V., Gtd
Note (Netherlands) 06-15-30 (Y)** 8.250 AA- 40 40,404
Dominion Resources, Inc., Sr Note 06-15-10 8.125 BBB+ 25 24,975
Focal Communications Corp., Sr Note 01-15-10 (R) 11.875 B 10 10,250
Global Crossing Holdings Ltd., Gtd Sr Note
(Bermuda) 11-15-09 (Y) 9.500 BB 40 38,800
GTE North, Inc., Deb Ser H 11-15-08 5.650 A+ 40 34,894
LCI International, Inc., Sr Note 06-15-07 7.250 BBB+ 30 28,405
Level 3 Communications, Inc., Sr Note 03-15-08 (R) 11.000 B 20 19,700
McLeodUSA, Inc., Sr Note 11-01-08 9.500 B+ 25 24,250
Metromedia Fiber Network, Inc., Sr Note Ser B
11-15-08 10.000 B+ 35 34,563
MetroNet Communications Corp., Sr Note (Canada)
08-15-07 (Y) 12.000 BBB 15 16,950
Nextel Communications, Inc., Sr Note 11-15-09 9.375 B 35 33,425
NEXTLINK Communications, Inc., Sr Note 11-15-08 10.750 B 20 19,700
NTL Communications Corp., Sr Note Ser B 10-01-08 11.500 B- 35 35,175
Sprint Capital Corp., Gtd Note 05-01-04 5.875 BBB+ 65 61,020
Gtd Note 05-01-19 6.900 BBB+ 40 35,566
TeleCorp PCS, Inc., Sr Sub Disc Note, Step Coupon
(11.625%, 04-15-04) 04-15-09 (A) Zero B3 25 16,375
Triton PCS, Inc., Gtd Sr Sub Disc Note, Step
Coupon (11.000%, 05-01-03) 05-01-08 (A) Zero CCC+ 10 7,200
US WEST Capital Funding, Inc., Gtd Note 07-15-28 6.875 BBB+ 50 42,948
Vodafone AirTouch Plc, Unsub Note (United
Kingdom) 02-15-10 (R) (Y) 7.750 A- 35 34,141
VoiceStream Wireless Corp., Sr Note 09-15-09 11.500 CCC+ 20 21,800
Sr Note 11-15-09 10.375 B- 15 15,563
WorldCom, Inc., Note 05-15-06 8.000 A- 40 40,420
-------------
700,305
-------------
Transportation (1.91%)
America West Airlines, Pass Thru Ctf Ser 1996-1B
01-02-08 6.930 A- 3 3,194
Continental Airlines, Pass Thru Ctf Ser 1999-1A
08-02-20 6.545 AA+ 58 52,621
Pass Thru Ctf Ser 1997-2C 06-30-04 7.206 BBB 17 16,880
Fine Air Services, Inc., Gtd Sr Sub Note 06-01-08 9.875 CC 16 7,083
Northwest Airlines, Inc., Gtd Note 03-15-04 8.375 BB 25 23,632
Pass Thru Ctf Ser 1996-1D 01-02-15 8.970 BBB- 5 4,564
NWA Trust, Sr Note Ser A 12-21-12 9.250 AA 38 40,238
Railcar Trust No. 1992-1, Pass Thru Ser 1992-1
Class A 06-01-04 7.750 AAA 66 66,555
US Airways, Inc., Pass Thru Ctf Ser 1989-A2
01-01-13 9.820 BB- 40 34,250
Pass Thru Ctf Ser 1990-A1 03-19-05 11.200 BB- 36 35,574
Wisconsin Central Transportation Corp., Note
04-15-08 6.625 BBB- 8 7,106
-------------
291,697
-------------
Utilities (6.76%)
AES Corp., Sr Note 06-01-09 9.500 BB 15 14,700
Sr Sub Note 07-15-06 10.250 B+ 10 9,950
AES Eastern Energy, Pass Thru Trust Ctf Ser
1999-A 01-02-17 9.000 BBB- 25 24,103
Avon Energy Partners Holdings, Sr Note (United
Kingdom) 12-11-02 (R) (Y) 6.730 BBB+ 40 38,970
Beaver Valley Funding Corp., Deb 06-01-07 8.625 BB- 60 60,127
Sec Lease Oblig Bond 06-01-17 9.000 BB- 23 23,259
BVPS II Funding Corp., Collateralized Lease Bond
06-01-17 8.890 BB- 5 5,062
Calpine Corp., Sr Note 04-01-08 7.875 BB+ 15 13,875
Cleveland Electric Illuminating Co., 1st Mtg Ser B
05-15-05 9.500 BB+ 45 46,294
Sr Sec Note Ser D 11-01-17 7.880 BB+ 20 18,820
CMS Energy Corp., Sr Note 05-15-02 8.125 BB 25 24,698
Sr Note 01-15-09 7.500 BB 20 17,700
Sr Note Ser B 01-15-04 6.750 BB 55 50,462
Connecticut Light & Power Co., 1st Mtg Ser C
06-01-02 7.750 BBB- 45 45,143
East Coast Power LLC, Sr Sec Note 03-31-08 6.737 BBB- 46 43,687
Sr Sec Note 03-31-12 7.066 BBB- 30 27,309
EIP Funding-PNM, Sec Fac Bond 10-01-12 10.250 BBB- 38 41,409
GG1B Funding Corp., Deb 01-15-11 7.430 BBB- 25 23,572
Hydro-Quebec, Gtd Bond (Canada) 02-01-21 (Y) 9.400 A+ 30 34,950
Gtd Bond (Canada) 01-15-22 (Y) 8.400 A+ 20 21,538
Iberdrola International B.V., Note 10-01-02 7.500 AA- 35 35,236
Long Island Lighting Co., Deb 03-15-23 8.200 A- 40 38,000
Niagara Mohawk Power Corp., Sec Fac Deb Bond
01-01-18 8.770 BBB 44 45,323
North Atlantic Energy Corp., 1st Mtg Ser A
06-01-02 9.050 BB+ 15 15,110
Northeast Utilities, Note Ser A 12-01-06 8.580 BB+ 7 7,124
PECO Energy Transition Trust, Pass Thru Ctf Ser
1999-A Class A6 03-01-09 6.050 AAA 35 32,585
Pass Thru Ctf Ser 2000-A Class A3 03-01-10 7.625 AAA 125 125,888
PNPP II Funding Corp., Deb 05-30-16 9.120 BB- 40 40,846
Sierra Pacific Resources, Note 05-15-05 8.750 BBB 45 45,594
Waterford 3 Funding Corp., Sec Lease Oblig Bond
01-02-17 8.090 BBB- 61 60,668
-------------
1,032,002
-------------
TOTAL BONDS
(Cost $13,968,213) (90.48%) 13,823,386
--------- ------------
NUMBER
OF WARRANTS
-----------
WARRANTS
Telecommunications (0.00%)
MetroNet Communications Corp.
(Canada) (R) (Y) # 5 650
-------------
TOTAL WARRANTS
(Cost $51) (0.00%) 650
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (9.61%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.550% $1,467 1,467,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company Daily
Interest Savings Account Current Rate 5.20% 688
------------
TOTAL SHORT-TERM INVESTMENTS (9.61%) 1,467,688
--------- ------------
TOTAL INVESTMENTS (100.09%) 15,291,724
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.09%) (14,349)
--------- ------------
TOTAL NET ASSETS (100.00%) $15,277,375
========= ============
(A) Cash interest will be paid on this obligation at the stated rate
beginning on the stated date.
(R) These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $706,154 or 4.62% of net
assets as of June 30, 2000.
(Y) Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer, however, security is
U.S. dollar denominated.
* Credit ratings are unaudited and rated by Standard & Poor's where
available, or Moody's Investors Service or John Hancock Advisers, Inc,
where Standard & Poor's ratings are not available.
** All or a portion of these securities, having an aggregate value of
$40,404 or 0.26% of the Fund's net assets, has been purchased on a when
issued basis. The purchase price and the interest rate of these
securities is fixed at trade date, although the Fund does not earn any
interest on these securities until settlement date. The Fund has
instructed its Custodian Bank to segregate assets with a current value
at least equal to the amount of its when issued commitment. Accordingly,
the market value of $40,789 of United States Treasury Bond, 7.125%,
02-15-23, has been segregated to cover the when issued commitment.
*** All or a portion of these securities, having an aggregate value of
$404,069 or 2.64% of the Fund's net assets, have been purchased as
forward commitments - that is, the Fund has agreed on trade date, to
take delivery of and to make payment for these securities on a delayed
basis subsequent to the date of this schedule. The purchase price and
interest rate of these securities are fixed at trade date, although the
Fund does not earn any interest on these securities until settlement
date. The Fund has instructed its Custodian Bank to segregate assets
with a current value at least equal to the amount of the forward
commitments. Accordingly, the market value of $412,555 of United States
Treasury Bond, 7.125%, 02-15-23, has been segregated to cover the
forward commitments.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
# Non-income producing security.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. High Yield Bond Fund
Schedule of Investments
December 31, 1999
-----------------------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. High Yield Bond Fund on June 30, 2000. It is divided into
four main categories: bonds, common stocks, pre ferred stocks and
warrants, and short-term investments. Bonds are further broken down by
industry group. Short-term invest ments, which represent the Fund's
"cash" position, are listed last.
INTEREST CREDIT PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATING* (000s OMITTED) VALUE
------------------------------------------ --------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
BONDS
Aerospace (0.08%)
Compass Aerospace Corp., Gtd Sr Sub Note Ser D
04-15-05 10.125% CCC $25 $7,500
-------------
Agricultural Operations (0.02%)
Iowa Select Farms L.P./ISF Finance, Inc., Sr Sub
Note 12-01-05 (B) (R) 10.750 CC 10 2,200
-------------
Automobile/Trucks (0.26%)
J.B. Poindexter & Co., Inc., Sr Note 05-15-04 12.500 B 25 23,000
-------------
Building (0.77%)
Amatek Industries Property Ltd., Sr Sub Note
(Australia) 02-15-08 (Y) 12.000 B 25 22,875
Nortek, Inc., Sr Note 08-01-08 8.875 B+ 50 45,375
-------------
68,250
-------------
Business Services - Misc. (0.23%)
AP Holdings, Inc., Sr Disc Note, Step Coupon
(11.25%, 03-15-03) 03-15-08 (A) Zero CCC+ 200 20,000
-------------
Chemicals (2.37%)
Huntsman ICI Chemicals LLC, Sr Sub Note 07-01-09 10.125 B+ 100 100,500
Huntsman ICI Holdings LLC, Sr Disc Note 12-31-09 Zero B+ 75 24,750
Trikem S.A., Bond (Brazil) 07-24-07 (R) (Y) 10.625 B+ 125 85,000
-------------
210,250
-------------
Computers (1.35%)
PSINet, Inc., Sr Note Ser B 02-15-05 10.000 B- 130 119,600
-------------
Consumer Products - Misc. (0.99%)
Diamond Brands Operating Corp., Sr Sub Note
04-15-08 10.125 CCC+ 100 53,000
Indesco International, Inc., Sr Sub Note 04-15-08 9.750 CCC+ 100 35,000
-------------
88,000
-------------
Containers (4.30%)
Gaylord Container Corp., Sr Note Ser B 06-15-07 9.375 B- 15 11,700
Sr Sub Note Ser B 02-15-08 9.875 CCC+ 100 65,000
Kappa Beheer B.V., Sr Sub Bond (Netherlands)
07-15-09 (Y) 10.625 B 75 74,813
Sr Sub Bond, Step Coupon (12.50%, 07-15-04)
(Netherlands) 07-15-09 (A) (E) Zero B 100 61,646
Riverwood International Corp., Gtd Sr Sub Note
04-01-08 10.875 CCC+ 20 17,400
Stone Container Corp., Unit (Sr Sub Deb &
Supplemental Int Cert) 04-01-02 12.250 B- 150 151,125
-------------
381,684
-------------
Cosmetics & Personal Care (0.98%)
Carson, Inc., Gtd Sr Sub Note Ser B 11-01-07 10.375 CCC+ 65 63,700
Global Health Sciences, Inc., Gtd Sr Note
05-01-08 11.000 CCC+ 75 21,000
Styling Technology Corp., Gtd Sr Sub Note
07-01-08 10.875 C 10 1,950
-------------
86,650
-------------
Diversified Operations (0.80%)
Diamond Holdings Plc, Bond (United Kingdom)
02-01-08 # 10.000 B- 50 70,859
-------------
Energy (1.19%)
AEI Resources, Inc./AEI Resources Holdings,
Inc., Gtd Note 12-15-05 (R) 10.500 CCC- 75 13,500
P&L Coal Holdings Corp., Sr Sub Note Ser B
05-15-08 9.625 B 100 92,500
-------------
106,000
-------------
Food (2.64%)
Agrilink Foods, Inc., Sr Sub Note 11-01-08 11.875 B 100 80,000
Mastellone Hermanos S.A., Sr Note (Argentina)
04-01-08 (Y) 11.750 B+ 125 94,712
RAB Holdings, Inc., Sr Note 05-01-08 13.000 CCC 120 60,000
-------------
234,712
-------------
Insurance (0.47%)
Willis Corroon Corp., Gtd Sr Sub Note 02-01-09 9.000 B+ 50 41,875
-------------
Leisure (4.96%)
Claridge Hotel & Casino Corp., 1st Mtg Note
02-01-02 (B) 11.750 D 50 28,625
Fitzgeralds Gaming Corp., Gtd Sr Sec Note Ser B
12-15-04 (B) 12.250 D 50 28,000
Premier Parks, Inc., Sr Note 06-15-07 9.750 B- 75 72,187
Production Resource Group LLC, Sr Sub Note
01-15-08 11.500 CCC- 25 5,125
SC International Services, Inc., Sr Sub Note Ser
B 09-01-07 9.250 B 30 27,900
SFX Entertainment, Inc., Sr Sub Note Ser B
02-01-08 9.125 B- 100 100,750
Station Casinos, Inc., Sr Sub Note 07-01-10 (R) 9.875 B+ 25 25,125
Trump Atlantic City Associates, 1st Mtg Note
05-01-06 11.250 B- 75 52,500
Venetian Casino Resort LLC/Las Vegas Sands,
Inc., 1st Mtg Note 11-15-04 12.250 B- 100 101,000
-------------
441,212
-------------
Machinery (0.21%)
Glasstech, Inc., Sr Note Ser B 07-01-04 12.750 B3 25 18,500
-------------
Manufacturing (0.16%)
ICON Health & Fitness, Inc., Gtd Note 09-27-05 12.000 B 22 14,430
-------------
Media (3.72%)
CD Radio, Inc., Sr Disc Note, Step Coupon
(15.00%, 12-01-02) 12-01-07 (A) Zero CCC+ 110 61,600
DIVA Systems Corp., Sr Disc Note Ser B, Step
Coupon (12.625%, 03-01-03) 03-01-08 (A) Zero B- 50 26,000
Pegasus Communications Corp., Sr Note Ser B
08-01-07 12.500 CCC+ 35 36,400
Regional Independent Media Group Plc, Sr Disc
Note, Step Coupon (12.875%, 07-01-03) (United
Kingdom) 07-01-08 (A) # Zero B3 20 19,704
Sr Note (United Kingdom) 07-01-08 (Y) 10.500 B- 5 4,900
United International Holdings, Inc., Sr Disc
Note, Step Coupon (10.75%, 02-15-03) 02-15-08 (A) Zero B- 75 50,250
XM Satellite Radio Holdings, Inc., Unit (Sr Sec
Note & Warrant) 03-15-10 (R) 14.000 CCC+ 150 132,000
-------------
330,854
-------------
Medical (0.37%)
Total Renal Care Holdings, Inc., Conv Sub Note
05-15-09 (R) 7.000 B- 50 33,250
-------------
Metal (4.74%)
ALatief Freeport Finance Co. B.V. (P.T.), Sr Note
04-15-01 9.750 CCC+ 280 257,600
Doe Run Resources Corp., Gtd Sr Note Ser B
03-15-03 12.653*** B- 25 12,500
Gtd Sr Note Ser B 03-15-05 11.250 B- 10 4,000
Freeport-McMoRan Copper & Gold, Inc., Sr Note
11-15-06 7.500 CCC 75 48,750
Golden Northwest Aluminum, Inc., 1st Mtg Note
12-15-06 12.000 BB- 25 25,000
TVX Gold, Inc., Conv Sub Note (Canada)
03-28-02 (Y) 5.000 B- 100 73,000
-------------
420,850
-------------
Oil & Gas (8.14%)
Comstock Resources, Inc., Gtd Sr Note 05-01-07 11.250 B 75 76,125
Frontier Oil Corp., Sr Note 11-15-09 11.750 B+ 75 75,000
Giant Industries, Inc., Sr Sub Note 11-15-03 9.750 B+ 25 24,187
Gothic Production Corp., Sr Sec Note Ser B
05-01-05 11.125 CCC 25 23,500
Great Lakes Acquisition Corp., Sr Disc Deb, Step
Coupon (13.125%, 05-15-03) 05-15-09 (A) Zero B- 200 80,000
Key Energy Services, Inc., Conv Sub Note
09-15-04 (R) 5.000 B 80 63,000
Conv Sub Note 09-15-04 5.000 Caa2 143 112,612
Sr Sub Note Ser B 01-15-09 14.000 B- 100 112,500
Mariner Energy, Inc., Sr Sub Note Ser B 08-01-06 10.500 B- 10 9,100
Ocean Rig Norway A.S., Gtd Sr Sec Note (Norway)
06-01-08 (Y) 10.250 B- 55 45,650
PANACO, Inc., Gtd Sr Sub Note Ser B 10-01-04 10.625 CCC 10 8,000
R&B Falcon Corp., Gtd Sr Note 12-15-03 9.125 B+ 60 58,800
Universal Compression, Inc., Sr Disc Note, Step
Coupon (9.875%, 02-15-03) 02-15-08 (A) Zero B 50 35,250
-------------
723,724
-------------
Paper & Paper Products (4.43%)
Advance Agro Capital B.V., Gtd Sr Note (Thailand)
11-15-07 (Y) 13.000 CC 50 31,000
APP China Group Ltd., Unit (Sr Disc Note &
Warrant) (Indonesia) 03-15-10 (R) (Y) 14.000 CCC+ 250 160,000
APP Finance (VII) Mauritius Ltd., Gtd Note
(Indonesia) 04-30-03 (R) (Y) 3.500 CCC+ 10 7,400
APP Global Finance Ltd., Conv Note (Indonesia)
07-25-00 2.000 CCC+ 50 61,000
Grupo Industrial Durango, S.A., Note (Mexico)
08-01-03 (Y) 12.625 BB- 125 125,000
Sappi BVI Finance Ltd., Gtd Conv Bond (South
Africa) 08-01-02 (R) (Y) 7.500 BB- 10 9,000
-------------
393,400
-------------
Real Estate Operations (0.01%)
Signature Resorts, Inc., Conv Sub Note
01-15-07 (B) 5.750 D 35 875
-------------
REIT (0.26%)
Host Marriott L.P., Gtd Sr Note 02-15-06 8.375 BB 25 23,500
-------------
Retail (0.25%)
Imperial Home Decor Group, Inc., Gtd Sr Sub Note
03-15-08 (B) 11.000 C 125 1,250
Pathmark Stores, Inc., Sub Note 06-15-02 (B) 11.625 C 55 13,200
SpinCycle, Inc., Sr Disc Note, Step Coupon
(12.75%, 05-01-01) 05-01-05 (A) Zero CCC+ 25 7,500
-------------
21,950
-------------
Steel (1.05%)
Gulf States Steel, Inc. of Alabama, 1st Mtg Bond
04-15-03 (B) 13.500 Caa3 100 9,000
Metallurg Holdings, Inc., Sr Disc Note, Step
Coupon (12.75%, 07-15-03) 07-15-08 (A) Zero CCC+ 50 11,000
Metallurg, Inc., Gtd Sr Note Ser B 12-01-07 11.000 B- 30 24,000
NSM Steel, Inc./NSM Steel Ltd., Gtd Sr Sub Mtg
Note Ser B 02-01-08 (B) (R) 12.250 D 75 750
Oregon Steel CF&I, Note 03-31-03 (r) 9.500 B 65 48,309
-------------
93,059
-------------
Telecommunications (22.73%)
AMSC Acquisition Co., Inc., Sr Note Ser B
04-01-08 12.250 B- 40 31,200
COLT Telecom Group Plc, Sr Note (Germany)
07-31-08 # 7.625 B 50 21,990
Crown Castle International Corp., Sr Disc Note,
Step Coupon (10.625%, 11-15-02) 11-15-07 (A) Zero B 10 7,412
Sr Note 05-15-11 9.000 B 25 23,000
Sr Note 08-01-11 10.750 B 25 25,438
CTI Holdings S.A., Sr Note, Step Coupon (11.25%,
04-15-03) (Argentina) 04-15-08 (A) (Y) Zero B 75 40,920
Dolphin Telecom Plc, Sr Disc Note Ser B, Step
Coupon (14.00%, 05-15-04) (United Kingdom)
05-15-09 (A) (Y) Zero CCC+ 50 18,000
Sr Disc Note, Step Coupon (11.50%, 06-01-03)
(United Kingdom) 06-01-08 (A) (Y) Zero Caa1 60 19,800
Esprit Telecom Group Plc, Sr Note (Deutsche Mark)
06-15-08 # 11.000 BB- 60 21,697
Exodus Communications, Inc., Sr Note 07-01-08 11.250 B 25 24,625
Sr Note 12-15-09 10.750 B 75 72,375
Global TeleSystems Group, Inc., Sr Note 02-15-05 9.875 B- 50 35,500
Grupo Iusacell S.A. de C.V., Sr Note (Mexico)
12-01-06 (Y) 14.250 B+ 35 36,225
GT Group Telecom, Inc., Unit (Sr Disc Note &
Warrant), Step Coupon (13.25%, 02-01-05)
(Canada) 02-01-10 (A) (R) (Y) Zero Caa1 100 55,000
Hermes Europe Railtel B.V., Sr Note (Netherlands)
01-15-09 (Y) 10.375 B 50 42,000
ICG Holdings, Inc., Sr Disc Note, Step Coupon
(13.50%, 09-15-00) 09-15-05 (A) Zero B- 25 24,188
ITC DeltaCom, Inc., Sr Note 11-15-08 9.750 B+ 100 95,000
Jazztel Plc, Sr Note (United Kingdom)
12-15-09 (E) (R) 13.250 CCC+ 50 43,487
KMC Telecom Holdings, Inc., Sr Note 05-15-09 13.500 CCC+ 100 85,000
McLeodUSA, Inc., Sr Note 03-15-08 8.375 B+ 35 31,850
Sr Note 11-01-08 9.500 B+ 100 97,000
Metromedia Fiber Network, Inc., Sr Note Ser B
11-15-08 10.000 B+ 75 74,062
Nextel Communications, Inc., Sr Note 11-15-09 9.375 B 100 95,500
Nextel Partners, Inc., Sr Disc Note, Step Coupon
(14.00%, 02-01-04) 02-01-09 (A) Zero CCC+ 15 10,275
NEXTLINK Communications, Inc., Sr Note 11-15-08 10.750 B 75 73,875
NTL Communications Corp., Sr Note Ser B 10-01-08 11.500 B- 50 50,250
Sr Note Ser B, Step Coupon (12.375%, 10-01-03)
10-01-08 (A) Zero B- 100 65,500
ONO Finance Plc, Sr Note (United Kingdom)
07-15-10 (E) (R) 14.000 CCC+ 50 46,593
Primus Telecommunications Group, Inc., Sr Note
10-15-09 12.750 B- 50 42,000
PTC International Finance II S.A., Sr Sub Note
(Luxembourg) 12-01-09 (E) (R) 11.250 B+ 25 24,312
Spectrasite Holdings, Inc., Sr Disc Note, Step
Coupon (11.25%, 04-15-04) 04-15-09 (A) Zero B3 25 14,500
Tele1 Europe B.V., Sr Note (Netherlands)
12-01-09 (E) (R) 11.875 B- 50 47,071
Telewest Communications Plc, Sr Disc Note, Step
Coupon (9.875%, 04-15-04) (United Kingdom)
04-15-09 (A) # Zero B1 25 20,841
Teligent, Inc., Sr Note 12-01-07 11.500 CCC 66 52,140
United Pan-Europe Communications N.V., Sr Disc
Note Ser B, Step Coupon (13.375%, 11-01-04)
(Netherlands) 11-01-09 (E) Zero B 30 13,189
Sr Note (Netherlands) 11-01-07 (E) 10.875 B 50 42,053
Sr Note (Netherlands) 11-01-09 (E) 11.250 B 25 21,026
VersaTel Telecom International N.V., Sr Note
(Netherlands) 05-15-02 (Y) 13.250 B- 125 126,875
Sr Note (Netherlands) 07-15-09 (Y) 11.875 B- 25 24,625
Viatel, Inc., Sr Note (Germany) 04-15-08 # 11.150 Caa1 170 68,120
Sr Sec Note 04-15-08 11.250 B- 75 55,500
Williams Communications Group, Inc., Sr Note
10-01-09 10.875 BB- 75 73,500
Winstar Communications, Inc., Sr Disc Note, Step
Coupon (14.75%, 04-15-05) 04-15-10 (A) (R) Zero B- 50 23,000
Sr Note 04-15-10 (R) 12.750 B- 17 15,980
World Access, Inc., Sr Note Ser B 01-15-08 13.250 B- 100 87,500
-------------
2,019,994
-------------
Textile (1.59%)
Coyne International Enterprises Corp., Sr Sub
Note 06-01-08 11.250 B- 75 61,500
Steel Heddle Group, Inc., Sr Disc Deb, Step
Coupon (13.75%, 06-01-03) 06-01-09 (A) Zero CC 200 14,000
Steel Heddle Manufacturing Co., Gtd Sr Sub Note
Ser B 06-01-08 10.625 CC 50 17,500
Tropical Sportswear International Corp., Sr Sub
Note Ser A 06-15-08 11.000 B- 50 48,125
-------------
141,125
-------------
Transportation (5.91%)
Amtran, Inc., Sr Note 08-01-04 10.500 B+ 50 46,000
Cenargo International Plc, 1st Mtg Note (United
Kingdom) 06-15-08 (Y) 9.750 B+ 20 14,800
CHC Helicopter Corp., Gtd Sr Sub Note (Canada)
07-15-07 (E) 11.750 B 75 71,233
Fine Air Services, Inc., Sr Note 06-01-08 9.875 CCC- 105 47,222
North American Van Lines, Inc., Sr Sub Note
12-01-09 (R) 13.375 B- 75 70,500
Northwest Airlines Corp., Gtd Note 03-15-07 8.700 BB 100 92,505
Pacer International, Inc., Sr Sub Note 06-01-07 11.750 B- 50 49,250
Pacific & Atlantic Holdings, Inc., Sr Sec Note
(Greece) 12-31-07 (R) (Y) 10.500 B- 20 14,648
US Airways, Inc., Pass Thru Ctf Ser 1993-A3
03-01-13 10.375 BB- 50 44,500
Sr Note 02-01-01 9.625 CCC+ 75 74,160
-------------
524,818
-------------
Waste Disposal Service & Equip. (1.29%)
Allied Waste North America, Inc., Sr Sub Note Ser
B 08-01-09 10.000 B+ 125 105,625
Waste Systems International, Inc., Gtd Sr Note
01-15-06 11.500 B 15 9,300
-------------
114,925
-------------
TOTAL BONDS
(Cost $8,538,570) (76.27%) 6,777,046
------ -------------
NUMBER OF
SHARES
OR WARRANTS
-----------
COMMON STOCKS
Abitibi-Consolidated, Inc. (Canada) (Y) 12,500 117,187
American Pacific Corp.** 5,000 28,125
AMR Corp.** 1,400 37,013
Chesapeake Energy Corp.** 950 7,362
Gaylord Container Corp. (Class A)** 6,500 17,469
Grey Wolf, Inc.** 28,850 144,250
International Wireless Communications Holdings, Inc. 2,417 4,500
KLM Royal Dutch Airlines N.V. (Netherlands) (Y) 78 2,072
Northwest Airlines Corp.** 6,500 197,844
R&B Falcon Corp.** 1,750 41,234
Sirius Satellite Radio, Inc. 1,222 54,150
Star Gas Partners, L.P. 3,300 50,738
Tele1 Europe Holding AB (Sweden) (Y)** 200 2,413
Waste Systems International, Inc.** 8,715 15,251
World Access, Inc.** 314 3,474
-------------
TOTAL COMMON STOCKS
(Cost $892,488) (8.14%) 723,082
------ -------------
PREFERRED STOCKS AND WARRANTS
DIVA Systems Corp., Warrant (R)** 150 300
Georgia-Pacific Group, Preferred Stock 1,525 48,800
Gothic Energy Corp., Warrant** 79 0
HF Holdings, Inc., Warrant** 212 106
Hills Stores Co., Warrant** 35,000 0
Motient Corp., Warrant (R)** 40 1,600
Nakornthai Strip Mill Plc, Warrant (Thailand) (R) (Y)** 63,309 63
Nextel Communications, Inc., 11.125%, Ser E,
Payment-In-Kind, Preferred Stock 188 179,540
ONO Finance Plc, Warrant (United Kingdom) (R) (Y)** 50 5,000
Pacific & Atlantic Holdings, Inc., (Greece)
7.50%, Preferred Stock (Y) 1,172 8,204
R&B Falcon Corp., 13.875%, Preferred Stock 54 61,290
SpinCycle, Inc., Warrant (R)** 25 0
Stone Container Corp., $1.75, Ser E, Preferred Stock 3,000 48,750
TimberWest Forest Corp., Unit (Common &
Preferred Shares) (Canada) # 73,750 517,659
Waste Systems International, Inc., Warrant (R)** 225 113
Waste Systems International, Inc., 8.00%, Ser E,
Preferred Stock 160 42,400
------------
TOTAL PREFERRED STOCKS AND WARRANTS
(Cost $1,017,120) (10.28%) 913,825
------ ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (3.60%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.550% $320 320,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 5.20% 165
------------
TOTAL SHORT-TERM INVESTMENTS (3.60%) 320,165
--------- ------------
TOTAL INVESTMENTS (98.29%) 8,734,118
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (1.71%) 151,972
--------- ------------
TOTAL NET ASSETS (100.00%) $8,886,090
========= ============
* Credit ratings are unaudited and rated by Moody's Investors Service
or John Hancock Advisors, Inc. where Standard & Poor's ratings are not
available.
** Non-income producing security.
*** Represents rate in effect on June 30, 2000.
# Par value of foreign bonds and common stocks is expressed in local currency,
as shown parenthetically in security description.
(A) Cash interest will be paid on this obligation at the stated rate
beginning on the stated date.
(B) Non-income producing issuer, filed for protection under Federal
Bankruptcy Code or is in default of interest payment.
(E) Parenthetical disclosure of a country in the security description
represents country of issuer; however, security is euro denominated.
(R) These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $878,892 or 9.89% of net
assets as of June 30, 2000.
(Y) Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer; however, security is
U.S. dollar denominated.
(r) Direct placement securities are restricted as to resale. They have
been valued in accordance with procedures approved by the Trustees after
consideration of restrictions as to resale, financial condition and
prospects of the issuer, general market conditions and pertinent
information in accordance with the Fund's By-laws and the Investment
Company Act of 1940, as amended. The Fund has limited rights to
registration under the Securities Act of 1933 with respect to these
restricted securities.
Additional information on these securities is as follows:
MARKET MARKET
VALUE AS A VALUE AT
ACQUISITION ACQUISITION % OF FUND JUNE 30,
ISSUER, DESCRIPTION DATE COST NET ASSETS 2000
------------------- ---- ---- ---------- ----
Oregon Steel CF&I 05-14-98 $63,418 0.54% $48,309
The percentage shown for each investment category is the total value of
that category expressed as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
Portfolio Concentration
June 30, 2000 (Unaudited)
-------------------------------------------------------------------------
The V.A. High Yield Bond Fund invests primarily in securities issued in
the United States of America. The performance of this Fund is closely
tied to the economic and financial conditions of the countries within
which it invests. The concentration of investments by industry category
for individual securities held by the Fund is shown in the schedule of
investments.
In addition, concentration of investments can be aggregated by various
countries. The table below shows the percentages of the Fund's
investments at June 30, 2000 assigned to country categories.
MARKET VALUE AS A %
COUNTRY DIVERSIFICATION OF FUND NET ASSETS
----------------------- ------------------
Argentina 1.53%
Australia 0.26
Brazil 0.96
Canada 9.39
Greece 0.26
Indonesia 2.57
Luxembourg 0.27
Mexico 1.81
Netherlands 5.12
Norway 0.51
South Africa 0.10
Sweden 0.03
Thailand 0.35
United Kingdom 3.46
United States 71.67
-------
TOTAL INVESTMENTS 98.29%
=======
Additionally, the concentration of investments can be aggregated by the
quality rating for each debt security.
QUALITY DISTRIBUTION
--------------------
BB 4.67%
B 49.58
CCC 20.45
CC 0.73
C 0.18
D 0.66
-------
TOTAL BONDS 76.27%
=======
See notes to financial statements.
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Money Market Fund
Schedule of Investments
June 30, 2000 (Unaudited)
-----------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Money Market Fund on June 30, 2000.
INTEREST QUALITY PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATING* (000s OMITTED) VALUE
------------------------------------------ --------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
Automobile/Trucks (4.41%)
Ford Motor Credit Co., 09-29-00 6.530% Tier 1 $1,600 $1,573,880
-------------
Banks - Foreign (4.20%)
Deutsche Bank Financial, 07-10-00 6.480 Tier 1 1,500 1,497,570
-------------
Beverages (4.47%)
Coca-Cola Co., 07-17-00 6.530 Tier 1 1,600 1,595,356
-------------
Broker Services (8.87%)
Goldman Sachs Group, L.P., 07-24-00 6.580 Tier 1 1,600 1,593,274
Merrill Lynch & Co., 08-07-00 6.160 Tier 1 1,000 993,669
01-31-01 6.710 Tier 1 600 576,068
-------------
3,163,011
-------------
Finance (18.13%)
American Express Credit Corp., 07-10-00 6.500 Tier 1 1,700 1,697,238
American Honda Finance Corp., 08-28-00 6.570 Tier 1 1,600 1,583,064
General Electric Capital Corp., 08-21-00 6.650 Tier 1 1,500 1,485,869
International Lease Finance, 07-07-00 6.490 Tier 1 1,700 1,698,161
-------------
6,464,332
-------------
Food (2.78%)
Heinz (H.J.) Co., 08-14-00 6.530 Tier 1 1,000 992,019
-------------
Media (2.79%)
Gannett Co., Inc., 07-25-00 6.550 Tier 1 1,000 995,633
-------------
Medical (4.18%)
Becton Dickinson & Co., 08-10-00 6.540 Tier 1 1,500 1,489,100
-------------
Utilities (8.95%)
Bell Atlantic Financial Services, 07-19-00 6.540 Tier 1 1,600 1,594,768
BellSouth Telecommunication, Inc., 07-18-00 6.520 Tier 1 1,600 1,595,074
-------------
3,189,842
-------------
TOTAL COMMERCIAL PAPER
(Cost $20,960,743) (58.78%) 20,960,743
--------- ------------
CORPORATE INTEREST-BEARING OBLIGATIONS
Automobile/Trucks (3.79%)
General Motors Acceptance Corp., 08-07-00 5.800 Tier 1 1,350 1,349,559
-------------
Broker Services (3.08%)
Bear Stearns Cos., Inc., 07-05-00 6.500 Tier 1 1,100 1,099,944
-------------
Building (2.81%)
Weyerhaeuser Co., 08-10-00 8.850 Tier 1 1,000 1,001,983
-------------
Finance (2.80%)
IBM Credit Corp., 09-01-00 5.860 Tier 1 1,000 999,012
-------------
Telecommunications (4.25%)
GTE Corp., 12-01-00 9.375 Tier 1 1,500 1,513,926
-------------
TOTAL CORPORATE INTEREST-BEARING OBLIGATIONS
(Cost $5,964,424) (16.73%) 5,964,424
--------- ------------
U.S. GOVERNMENT OBLIGATIONS
Government - U.S. Agencies (7.85%)
Fannie Mae, 10-23-00 6.030 Tier 1 1,000 998,891
Federal Home Loan Bank, 07-14-00 5.500 Tier 1 1,800 1,799,220
-------------
2,798,111
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $2,798,111) (7.85%) 2,798,111
--------- ------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $29,723,278) (83.36%) 29,723,278
--------- ------------
JOINT REPURCHASE AGREEMENT (16.41%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bond, 9.125% due 05-15-18 and 8.125%
due 05-15-02) - Note B 6.550 5,852 5,852,000
------------
TOTAL JOINT REPURCHASE AGREEMENT (16.41%) 5,852,000
--------- ------------
TOTAL INVESTMENTS (99.77%) 35,575,278
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (0.23%) 82,446
--------- ------------
TOTAL NET ASSETS (100.00%) $35,657,724
========= ============
* Quality ratings indicate the categories of eligible securities, as
defined by Rule 2a-7 of the Investment Company Act of 1940, owned by the
Fund.
The percentage shown for each investment category is the total value of
that category expressed as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
John Hancock Funds - Declaration Trust - V.A. Strategic Income Fund
Schedule of Investments
June 30, 2000 (Unaudited)
-----------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the V.A. Strategic Income Fund on June 30, 2000. It is divided into
four main categories: bonds, common stocks, pre ferred stocks and
warrants, and short-term investments. Bonds are further broken down by
industry group. Short-term invest ments, which represent the Fund's
"cash" position, are listed last.
INTEREST CREDIT PAR VALUE MARKET
ISSUER, DESCRIPTION RATE RATING* (000s OMITTED) VALUE
------------------------------------------ --------- ---------- -------------- ----------------
<S> <C> <C> <C> <C>
BONDS
Advertising (0.39%)
Go Outdoor Systems Holding S.A., Sr Sub Note
(France) 07-15-09 (E) 10.500% B- $100 $108,000
-------------
Beverages (0.67%)
Canandaigua Brands, Inc., Sr Sub Note 03-01-09 8.500 B+ 200 185,500
-------------
Building (0.32%)
Standard Pacific Corp., Sr Note 04-01-09 8.500 BB 100 88,750
-------------
Business Services - Misc. (0.32%)
United Rentals, Inc., Sr Sub Note Ser B 08-15-08 8.800 BB- 100 87,500
-------------
Chemicals (0.37%)
Huntsman ICI Chemicals LLC, Sr Sub Note 07-01-09 10.125 B+ 100 100,500
-------------
Computers (0.77%)
Exodus Communications, Inc., Sr Note (United
States) 12-15-09 (E) 10.750 B 200 184,460
Unisys Corp., Sr Note 10-15-04 11.750 BB+ 25 26,500
-------------
210,960
-------------
Containers (0.71%)
Berry Plastics Corp., Sr Sub Note 04-15-04 12.250 B- 100 95,500
Consolidated Container Co. LLC/Cons. Container
Capital, Inc., Sr Sub Note 07-15-09 10.125 B 100 99,000
-------------
194,500
-------------
Electronics (0.30%)
Communications Instruments, Inc., Sr Sub Note
Ser B 09-15-04 10.000 B- 100 81,500
-------------
Energy (0.07%)
AEI Resources, Inc./AEI Resources Holdings,
Inc., Note 12-15-05 (R) 10.500 CCC- 100 18,000
-------------
Finance (0.72%)
PTC International Finance II S.A., Sr Sub Note
(Luxembourg) 12-01-09 (E) 11.250 B+ 100 97,248
Sovereign Bancorp, Inc., Sr Note 07-01-00 6.750 BB+ 100 99,991
-------------
197,239
-------------
Government - Foreign (2.62%)
Canada, Government of, Government Bond (Canada)
09-01-02 # 5.500 AAA 150 100,263
Government Bond (Canada) 12-01-05 # 8.750 AAA 165 125,420
Government Bond (Canada) 06-01-09 # 5.500 AAA 750 494,277
-------------
719,960
-------------
Government - U.S. (34.96%)
United States Treasury, Bond 08-15-01 13.375 AAA 2,250 2,413,125
Bond 08-15-05 6.500 AAA 400 404,124
Bond 08-15-05 10.750 AAA 100 119,203
Bond 02-15-16 9.250 AAA 415 538,529
Bond 08-15-19 8.125 AAA 1,140 1,378,157
Bond 08-15-23 6.250 AAA 800 806,496
Bond 02-15-27 6.625 AAA 1,100 1,167,892
Bond 11-15-28 5.250 AAA 750 664,102
Note 08-31-02 6.250 AAA 570 568,039
Note 08-15-04 7.250 AAA 590 610,007
Note 08-15-07 6.125 AAA 940 933,683
-------------
9,603,357
-------------
Leisure (3.31%)
Cinemark USA, Inc., Sr Sub Note Ser D 08-01-08 9.625 B 100 59,000
Harrah's Operating Co., Inc., Sr Sub Note
12-15-05 7.875 BB+ 100 94,000
HMH Properties, Inc., Sr Note Ser B 08-01-08 7.875 BB 100 89,750
Jupiters Ltd., Sr Note (Australia) 03-01-06 (Y) 8.500 BB+ 150 139,875
Premier Parks, Inc., Sr Note 06-15-07 9.750 B- 150 144,375
SFX Entertainment, Inc., Sr Sub Note Ser B
02-01-08 9.125 B- 100 100,750
Station Casinos, Inc., Sr Sub Note 07-01-10 (R) 9.875 B+ 100 100,500
Sun International Hotels Ltd., Sr Sub Note
(Bahamas) 12-15-07 (Y) 8.625 B+ 100 90,500
Waterford Gaming LLC, Sr Note 03-15-10 (R) 9.500 B+ 95 92,150
-------------
910,900
-------------
Machinery (0.32%)
Columbus McKinnon Corp., Sr Sub Note 04-01-08 8.500 B 100 87,000
-------------
Media (3.89%)
Adelphia Communications Corp., Sr Note 11-15-09 9.375 B+ 100 92,750
American Media Operations, Inc., Sr Sub Note
05-01-09 10.250 B- 150 146,625
AMFM Operating, Inc., Sr Sub Deb 10-31-06 12.625 B 64 73,574
Citadel Broadcasting Co., Sr Sub Note 11-15-08 9.250 B- 100 97,500
Diamond Holdings Plc, Bond (United Kingdom)
02-01-08 # 10.000 B- 50 70,859
DIVA Systems Corp., Sr Disc Note Ser B, Step
Coupon (12.625%, 03-01-03) 03-01-08 (A) Zero B- 250 130,000
Garden State Newspapers, Inc., Sr Sub Note
07-01-11 8.625 B+ 100 88,000
Regional Independent Media Group Plc, Sr Note
(United Kingdom) 07-01-08 (Y) 10.500 B- 175 171,500
STC Broadcasting, Inc., Sr Sub Note 03-15-07 11.000 B- 100 98,000
TV Guide, Inc., Sr Sub Note 03-01-09 8.125 B+ 100 98,750
-------------
1,067,558
-------------
Metal (1.03%)
Euramax International Plc, Sr Sub Note (United
Kingdom) 10-01-06 (Y) 11.250 B 100 98,500
PT Alatief Freeport Finance Co. B.V., Sr Note
04-15-01 9.750 CCC 200 184,000
-------------
282,500
-------------
Oil & Gas (0.63%)
Comstock Resources, Inc., Sr Note 05-01-07 11.250 B 100 101,500
Universal Compression, Inc., Sr Disc Note, Step
Coupon (9.875%, 02-15-03) 02-15-08 (A) Zero B 100 70,500
-------------
172,000
-------------
Paper & Paper Products (2.35%)
Grupo Industrial Durango, S.A., Note (Mexico)
08-01-03 (Y) 12.625 BB- 200 200,000
Kappa Beheer BV, Sr Sub Note (Netherlands)
07-15-09 (E) (R) 10.625 B 150 146,230
Packaging Corp. of America, Sr Sub Note 04-01-09 9.625 B+ 200 198,000
Stone Container Corp., Unit (Sr Sub Deb &
Supplemental Int Cert) 04-01-02 12.250 B- 100 100,750
-------------
644,980
-------------
Retail (0.50%)
United Stationers Supply Co., Sr Sub Note
04-15-08 8.375 B 150 137,250
-------------
Steel (0.77%)
Ivaco Inc., Sr Note (Canada) 09-15-05 (Y) 11.500 Aaa 200 212,000
-------------
Technology (0.39%)
ChipPAC International Ltd., Sr Sub Note 08-01-09 12.750 B- 100 108,500
-------------
Telecommunications (11.68%)
Allegiance Telecom, Inc., Sr Disc Note, Ser B,
Step Coupon (11.75%, 02-15-03) 02-15-08 (A) Zero B 250 180,000
AMSC Acquisition Co., Inc., Sr Note Ser B
04-01-08 12.250 B- 100 78,000
Cellco Finance NV, Sr Note (Netherlands)
08-01-05 (R) (Y) 12.750 B- 100 104,250
Comunicacion Celular S.A., Bond, Step Coupon
(13.125%, 11-15-00) (Colombia)
03-01-05 (A) (R) (Y) Zero B 100 66,000
Covad Communications Group, Inc., Sr Note Ser B
02-15-10 12.000 B- 200 160,000
Esprit Telecom Group Plc, Sr Note (United
Kingdom) 12-15-07 (Y) 11.500 B- 100 80,000
Sr Note (Deutsche Mark) 06-15-08 # 11.000 BB- 200 72,323
Grupo Iusacell S.A. de C.V., Sr Note (Mexico)
12-01-06 (Y) 14.250 B+ 200 207,000
GT Group Telecom, Inc., Unit (Sr Disc Note &
Warrant) Step Coupon (13.25%, 02-01-05)
(Canada) 02-01-10 (A) (R) Zero CCC+ 200 110,000
Intercel, Inc., Unit (Sr Discount Note &
Warrant), Step Coupon (12.00%, 02-01-01)
02-01-06 (A) Zero B 200 188,000
Ionica PLC, Sr Disc Note, Step Coupon (15.00%,
05-01-02) (United Kingdom) 05-01-07 (A) (Y) Zero Ca 200 5,750
Maxcom Telecomunicaciones S.A, Unit (Sr Note &
Warrant) (Mexico) 04-01-07 (R) (Y) 13.750 CCC 200 198,000
MetroNet Communications Corp., Sr Disc Note, Step
Coupon (10.75%, 11-01-02) (Canada)
11-01-07 (A) (Y) Zero BBB 200 176,754
Sr Note (Canada) 08-15-07 (Y) 12.000 BBB 50 56,500
NorthEast Optic Network, Inc., Sr Note 08-15-08 12.750 B- 100 93,000
ONO Finance Plc, Sr Note (United Kingdom)
05-01-09 (E) 13.000 CCC+ 50 45,398
Sr Note (United Kingdom) 05-01-09 (Y) 13.000 CCC+ 50 47,500
Sr Note (United Kingdom) 07-15-10 (E) 14.000 CCC+ 200 186,371
Pronet, Inc., Sr Sub Note 06-15-00 11.875 CCC+ 280 221,200
Spectrasite Holdings, Inc., Sr Disc Note, Step
Coupon (11.25%, 04-15-04) 04-15-09 (A) Zero B- 200 116,000
TeleCorp PCS, Inc., Sr Sub Disc Note, Step Coupon
(11.625%, 04-15-04) 04-15-09 (A) Zero B3 175 114,625
Telewest Communications Plc, Sr Disc Note, Step
Coupon (9.25%, 04-15-04) (United Kingdom)
04-15-09 (A) (Y) Zero B+ 100 83,364
Sr Note (United Kingdom) 02-01-10 (R) # 9.875 B+ 100 136,413
Verio, Inc., Sr Note 12-01-02 11.250 B- 300 336,750
Williams Communications Group, Inc., Sr Note
10-01-09 10.875 BB- 150 147,000
-------------
3,210,198
-------------
Telecommunications Services (15.66%)
Clearnet Communications, Inc., Sr Disc Note,
Step Coupon (10.40%, 05-15-03) (Canada)
05-15-08 (A) # Zero B 150 61,278
Sr Disc Note, Step Coupon (10.125%, 05-01-04)
(Canada) 05-01-09 (A) (Y) Zero B 150 89,250
COLT Telecom Group Plc (United Kingdom), Sr Note
(Deutsche Mark) 07-31-08 # 7.625 B 300 131,940
Crown Castle International Corp., Sr Disc Note,
Step Coupon (10.625%, 11-15-02) 11-15-07 (A) Zero B 150 111,187
Dolphin Telecom Plc, Sr Disc Note, Step Coupon
(11.50%, 06-01-03) (United Kingdom)
06-01-08 (A) (Y) Zero CCC+ 200 66,000
Sr Disc Note, Step Coupon (14.00%, 05-15-04)
(United Kingdom) 05-15-09 (A) (Y) Zero CCC+ 200 72,000
Energis Plc, Sr Note (United Kingdom)
06-15-09 (R) # 9.500 B 130 190,145
Global Crossing Holdings Ltd., Sr Note 05-15-08 9.625 BB 100 97,500
Hermes Europe Railtel BV, Sr Note (Netherlands)
08-15-07 (Y) 11.500 B 100 83,500
Jazztel Plc, Sr Note (United Kingdom)
12-15-09 (E) 13.250 CCC+ 200 173,946
Level 3 Communications, Inc., Conv Sub Note
03-15-10 6.000 CCC+ 50 44,875
Sr Note 03-15-08 (R) 10.750 B 100 92,230
Sr Note 05-01-08 9.125 B 100 89,750
McLeodUSA, Inc., Sr Note 07-15-07 9.250 B+ 100 96,250
Sr Note 11-01-08 9.500 B+ 50 48,500
Metromedia Fiber Network, Inc., Sr Note 11-15-08 10.000 B+ 300 296,250
Sr Note (United States) 12-15-09 (E) 10.000 B+ 100 94,858
Nextel Communications, Inc., Sr Disc Note, Step
Coupon (9.95%, 02-15-03) 02-15-08 (A) Zero B 125 92,187
Nextel Partners, Inc., Sr Disc Note, Step Coupon
(14.00%, 02-01-04) 02-01-09 (A) Zero CCC+ 165 113,025
Sr Note 03-15-10 (R) 11.000 CCC+ 100 99,000
NEXTLINK Communications, Inc., Sr Disc Note, Step
Coupon (12.125%, 12-01-04) 12-01-09 (R) Zero B 100 58,000
Sr Note 11-15-08 10.750 B 100 98,500
NTL Communications Corp., Sr Note Ser B 10-01-08 11.500 B- 100 100,500
Sr Note Ser B, Step Coupon (12.375%, 10-01-03)
10-01-08 (A) Zero B- 150 98,250
Omnipoint Corp., Sr Note 09-15-09 11.500 CCC+ 100 109,000
Orion Network Systems, Sr Note 01-15-07 11.250 B+ 100 65,000
Primus Telecommunications Group, Inc., Sr Note
10-15-09 12.750 B- 250 210,000
Qwest Communications International, Inc., Sr
Note Ser B 04-01-07 10.875 BBB+ 65 70,633
RCN Corp., Sr Disc Note, Step Coupon (11.125%,
10-15-02) 10-15-07 (A) Zero B- 100 62,500
Tele1 Europe B.V., Sr Note (Netherlands)
12-01-09 (E) (R) 11.875 B- 200 188,283
Teligent, Inc., Sr Note 12-01-07 11.500 CCC 100 79,000
Time Warner Telecom LLC, Sr Note 07-15-08 9.750 B 100 97,000
Tritel PCS, Inc., Sr Disc Note, Step Coupon
(12.75%, 05-15-04) 05-15-09 (A) Zero B3 100 66,000
United Pan-Europe Communications N.V., Sr Disc
Note, Step Coupon (13.375%, 11-01-04)
(Netherlands) 11-01-09 (A) (E) Zero B 100 43,965
Sr Note (Netherlands) 11-01-07 (E) 10.875 B 100 84,106
Sr Note (Netherlands) 11-01-09 (E) 11.250 B 100 84,106
VersaTel Telecom International N.V., Sr Note
(Netherlands) 05-15-08 (Y) 13.250 B- 100 101,500
Sr Note Ser EU (Netherlands) 07-15-09 (E) 11.875 B- 100 93,186
Viatel, Inc., Sr Note 04-15-08 11.250 B- 350 259,000
Winstar Communications, Inc., Sec Note 03-15-04 12.500 B- 200 190,000
-------------
4,302,200
-------------
Transportation (0.86%)
CHC Helicopter Corp., Sr Sub Note (Canada)
07-15-07 (E) 11.750 B 200 189,955
Fine Air Services, Inc., Sr Note 06-01-08 9.875 CC 105 47,222
-------------
237,177
-------------
Utilities (2.66%)
Calpine Corp., Sr Note 04-01-08 7.875 BB+ 100 92,500
Midland Funding Corp. II, Deb Ser A 07-23-05 11.750 BB+ 200 223,884
Deb Ser B 07-23-06 13.250 BB+ 150 176,403
Monterrey Power S.A. de C.V., Sr Sec Bond
(Mexico) 11-15-09 (R) (Y) 9.625 BB+ 100 91,000
Niagara Mohawk Power Corp., Sec Fac Bond 01-01-18 8.770 BBB 143 147,299
-------------
731,086
-------------
TOTAL BONDS
(Cost $25,309,001) (86.27%) 23,699,115
--------- ------------
NUMBER OF
SHARES
OR WARRANTS
-----------
COMMON STOCKS
KLM Royal Dutch Airlines N.V. American Depositary
Receipt (ADR) (Netherlands) 397 10,545
Nextel Communications, Inc. (Class A)** 464 28,391
Northeast Utilities** 6,000 130,500
Tosco Corp. 1,000 28,313
Versatel Telecom International NV, American
Depositary Receipt (ADR) (Netherlands)** 1,333 57,486
Viatel, Inc.** 795 22,707
------------
TOTAL COMMON STOCKS
(Cost $157,714) (1.01%) 277,942
--------- ------------
PREFERRED STOCKS AND WARRANTS
Allegiance Telecom Inc., Warrant** 250 20,000
Comunicacion Celular S.A., Warrant (Colombia)** 100 0
DIVA Systems Corp., Warrant (R)** 750 1,500
Loral Space & Communications Ltd., Warrant** 100 1,000
Motient Corp., Warrant (R)** 100 4,000
NEXTLINK Communications Inc., 14.00%, Preferred Stock 2,185 109,250
ONO Finance Plc, Warrant (United Kingdom) (E) (R)** 50 4,779
ONO Finance Plc, Warrant (United Kingdom) (R) (Y)** 50 5,000
------------
TOTAL PREFERRED STOCKS AND WARRANTS
(Cost $153,513) (0.53%) 145,529
--------- ------------
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (10.00%)
Investment in a joint repurchase
agreement transaction with UBS
Warburg, Inc. - Dated 06-30-00, due
07-03-00 (Secured by U.S. Treasury
Bonds 6.250% thru 7.500% due 08-15-22
thru 08-15-27) - Note B 6.550% $2,747 2,747,000
------------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company Daily
Interest Savings Account Current Rate 5.20% 857
------------
TOTAL SHORT-TERM INVESTMENTS (10.00%) 2,747,857
--------- ------------
TOTAL INVESTMENTS (97.81%) 26,870,443
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (2.19%) 600,230
--------- ------------
TOTAL NET ASSETS (100.00%) $27,470,673
========= ============
* Credit ratings are unaudited and rated by Moody's Investors Service
or John Hancock Advisers, Inc. where Standard & Poor's ratings are not
available.
** Non-income producing security.
# Par value of foreign bonds is expressed in local currency, as shown
parenthetically in security description.
(A) Cash interest will be paid on this obligation at the stated rate
beginning on the stated date.
(E) Parenthetical disclosure of a foreign country in the security
description represents country of a foreign issuer; however, security is
euro denominated.
(R) These securities are exempt from registration under rule 144A of the
Securities Act of 1933. Such securities may be resold, normally to
qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $1,705,480 or 6.21% of
the Fund's net assets as of June 30, 2000.
(Y) Parenthetical disclosure of a foreign country in the security
description represents country of foreign issuer, however, security is
U.S. dollar denominated.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
Portfolio Concentration
June 30, 2000 (Unaudited)
-------------------------------------------------------------------------
The V.A. Strategic Income Fund invests primarily in securities issued in
the United States of America. The performance of this Fund is closely
tied to the economic and financial conditions of the countries within which
it invests. The concentration of investments by industry category for
individual securities held by the Fund is shown in the schedule of
investments. In addition, con centration of investments can be
aggregated by various countries. The table below shows the percentages
of the Fund's investments at June 30, 2000 assigned to country
categories.
MARKET VALUE
AS A % OF
COUNTRY DIVERSIFICATION FUND'S NET ASSETS
----------------------- -----------------
Australia 0.51%
Bahamas 0.33
Canada 5.88
Colombia 0.24
France 0.39
Luxembourg 0.35
Mexico 2.53
Netherlands 3.63
United Kingdom 5.98
United States 77.97
-------
TOTAL INVESTMENTS 97.81%
=======
Additionally, the concentration of investments can be aggregated by the
quality rating for each debt security.
MARKET VALUE
AS A % OF
QUALITY DISTRIBUTION FUND'S NET ASSETS
-------------------- -----------------
AAA 38.35%
BBB 1.64
BB 6.29
B 33.37
CCC 6.43
CC 0.19
-------
TOTAL BONDS 86.27%
=======
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Declaration Trust
(UNAUDITED)
NOTE A -
ORGANIZATION
John Hancock V.A. Core Equity Fund ("V.A. Core Equity Fund"), John
Hancock V.A. 500 Index Fund ("V.A. 500 Index Fund"), John Hancock V.A.
Large Cap Growth Fund ("V.A. Large Cap Growth Fund"), John Hancock V.A.
Mid Cap Growth Fund ("V.A. Mid Cap Growth Fund"), John Hancock V.A.
Relative Value Fund ("V.A. Relative Value Fund"), John Hancock V.A.
Small Cap Growth Fund ("V.A. Small Cap Growth Fund"), John Hancock V.A.
Sovereign Investors Fund ("V.A. Sovereign Investors Fund"), John Hancock
V.A. International Fund ("V.A. International Fund), John Hancock V.A.
Financial Industries Fund ("V.A. Financial Industries Fund"), John
Hancock V.A. Regional Bank Fund ("V.A. Regional Bank Fund"), John
Hancock V.A. Technology Fund ("V.A. Technology Fund"), John Hancock V.A.
Bond Fund ("V.A. Bond Fund"), John Hancock V.A. High Yield Bond Fund
("V.A. High Yield Bond Fund), John Hancock V.A. Money Market Fund ("V.A.
Money Market Fund") and John Hancock V.A. Strategic Income Fund ("V.A.
Strategic Income Fund"), (each a "Fund," collectively, the "Funds"), are
separate series of John Hancock Declaration Trust (the "Trust"), an
open-end management investment company, registered under the Investment
Company Act of 1940. Prior to May 1, 2000, V.A. Relative Value Fund was
known as John Hancock V.A. Large Cap Value Fund. Each Fund currently has
one class of shares with equal rights as to voting, redemption,
dividends and liquidation within its respective Fund. The Trustees may
authorize the creation of additional series from time to time to satisfy
various investment objectives. An insurance company issuing a Variable
Contract that participates in the Trust will vote shares of the Funds
held by the insurance company's separate accounts as required by law. In
accordance with current law and interpretations thereof, participating
insurance companies are required to request voting instructions from
policy owners and must vote shares of the Funds in proportion to the
voting instructions received.
The investment objective of the V.A. Core Equity Fund is to seek
above-average total return, consisting of capital appreciation and
income. The investment objective of the V.A. 500 Index Fund is to
provide investment results that correspond with the total return
performance of the Standard & Poor's 500 Stock Price Index (the "S&P 500
Index"). The investment objective of the V.A. Large Cap Growth Fund and
V.A. Mid Cap Growth Fund is to seek long-term capital appreciation. The
investment objective of the V.A. Relative Value Fund is to seek the
highest total return (capital appreciation plus current income) that is
consistent with reasonable safety of capital. The investment objective
of the V.A. Small Cap Growth Fund is to seek long-term capital
appreciation. The investment objective of the V.A. Sovereign Investors
Fund is to seek long-term growth of capital and income without assuming
undue market risks. The investment objective of the V.A. International
Fund is to seek long-term growth of capital. The investment objective of
the V.A. Financial Industries Fund is to seek capital appreciation. The
investment objective of the V.A. Regional Bank Fund is to seek long-term
capital appreciation. The investment objective of the V.A. Technology
Fund is to seek long-term growth of capital. The investment objective of
the V.A. Bond Fund is to seek a high level of current income consistent
with prudent investment risk. The investment objective of the V.A. High
Yield Bond Fund is to seek maximum current income without assuming undue
risk. The investment objective of the V.A. Money Market Fund is to seek
maximum current income consistent with capital preservation and
liquidity. The investment objective of the V.A. Strategic Income Fund is
to seek a high level of current income.
NOTE B -
ACCOUNTING POLICIES
VALUATION OF INVESTMENTS Securities in the Funds' portfolios (except for
the V.A. Money Market Fund) are valued on the basis of market
quotations, valuations provided by independent pricing services or at
fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60
days are valued at amortized cost, which approximates market value. All
portfolio transactions initially expressed in terms of foreign
currencies have been translated into U.S. dollars as described in
"Foreign Currency Translation." The Funds may invest in indexed
securities whose value is linked either directly or inversely to changes
in foreign currencies, interest rates, indices or other reference
instruments. Indexed securities may be more volatile than the reference
instrument itself, but any loss is limited to the amount of the original
investment.
The V.A. Money Market Fund's portfolio of securities is valued at
amortized cost, in accordance with Rule 2a-7 of the Investment Company
Act of 1940, which approximates market value. The amortized cost method
involves valuing a security at its cost on the date of purchase and
thereafter assuming a constant amortization to maturity of the
difference between the principal amount due at maturity and the cost of
the security to the Fund. Interest income on certain portfolio
securities such as negotiable bank certificates of deposit and
interest-bearing notes is accrued daily and included in interest
receivable.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Funds, along with other
registered investment companies having a management contract with John
Hancock Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of The
Berkeley Financial Group, Inc., may participate in joint repurchase
agreement transactions. Aggregate cash balances are invested in one or
more large repurchase agreements, whose underlying securities are
obligations of the U.S. government and/or its agencies. The Funds'
custodian bank receives delivery of the underlying securities for the
joint account on the Funds' behalf. The Adviser is responsible for
ensuring that the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the
date of purchase, sale or maturity. Net realized gains and losses on
sales of investments are determined on the identified cost basis.
Capital gains realized on some foreign securities are subject to foreign
taxes, which are accrued, as applicable.
FEDERAL INCOME TAXES The Funds' policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and will not be subject to federal income
tax on taxable earnings which are distributed to shareholders. For
federal income tax purposes, net currency exchange gains and losses from
sales of foreign debt securities may be treated as ordinary income even
though such items are capital gains and losses for accounting purposes.
For federal income tax purposes, the following funds had capital loss
carryforwards available. To the extent such carryforwards are used by
the Funds, no capital gain distributions will be made. Capital loss
carryforwards in the amount of $4,130, which were acquired by the V.A.
Strategic Income Fund from the merger of the V.A. World Bond Fund on
March 26, 1999, may be limited in a given year.
Expired capital loss carryforwards are reclassified to capital paid-in,
in the year of expiration.
CAPITAL LOSS CAPITAL LOSS
CARRYFORWARD CARRYFORWARD
FUND EXPIRING 12/31/2006 EXPIRING 12/31/2007
---- ------------------- -------------------
V.A. Core Equity Fund -- --
V.A. 500 Index Fund -- --
V.A. Large Cap Growth Fund -- --
V.A. Mid Cap Growth Fund -- --
V.A. Relative Value Fund -- --
V.A. Small Cap Growth Fund -- --
V.A. Sovereign Investors Fund $157,877 $101,159
V.A. International Fund -- --
V.A. Financial Industries Fund -- 2,140,648
V.A. Regional Bank Fund -- --
V.A. Technology Fund -- --
V.A. Bond Fund -- 67,593
V.A. High Yield Bond Fund 122,097 --
V.A. Money Market Fund -- --
V.A. Strategic Income Fund 4,130 136,493
DIVIDENDS, INTEREST AND DISTRIBUTIONS Dividend income on investment
securities is recorded on the ex-dividend date or, in the case of some
foreign securities, on the date thereafter when the Funds are notified
of the dividend. Foreign income may be subject to foreign withholding
taxes, which are accrued as applicable. Interest income on investment
securities is recorded on the accrual basis. The Fund may place a debt
obligation on non-accrual status and reduce related interest income by
ceasing current accruals and writing off interest receivables when the
collection of all or a portion of interest has become doubtful.
The Funds record all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with income tax regulations, which may
differ from generally accepted accounting principles.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual Fund. Expenses which are not readily
identifiable to a specific Fund are allocated in such a manner as deemed
equitable, taking into consideration, among other things, the nature and
type of expense and the relative size of the Funds.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues and expenses of the Funds. Actual results
could differ from these estimates.
ORGANIZATION EXPENSES Any expenses incurred in connection with the
organization of the Funds have been capitalized and are being charged to
the Funds' operations ratably over a five-year period that commenced
with the investment operations of each applicable Fund.
BANK BORROWINGS The Funds (except V.A. Money Market Fund) are permitted
to have bank borrowings for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the
untimely disposition of securities. The Funds entered into a syndicated
line of credit agreement with various banks that enable the Funds to
participate with other funds managed by the Adviser in an unsecured line
of credit with banks which permit borrowings up to $500 million,
collectively. Interest is charged to each fund, based on its borrowings.
In addition, a commitment fee is charged based on the average daily
unused portion of the line of credit and is allocated among the
participating funds. The Funds had no borrowing activity for the period
ended June 30, 2000.
SECURITIES LENDING The Funds may lend their securities to certain
qualified brokers who pay the Funds negotiated lender fees. These fees
are included in interest income. The loans are collateralized at all
times with cash or securities with a market value at least equal to the
market value of the securities on loan. As with other extensions of
credit, the Funds may bear the risk of delay in recovery of the loaned
securities, or even loss of rights in the collateral should the borrower
of the securities fail financially. At June 30, 2000, V.A. Core Equity
Fund loaned securities having a market value of $541,450 collateralized
by securities in the amount of $552,279, V.A. Large Cap Growth Fund
loaned securities having a market value of $440,300 collateralized by
securities in the amount of $449,106, V.A. Relative Value Fund loaned
securities having a market value of $1,047,988 collateralized by
securities in the amount of $1,068,947, V.A. Small Cap Growth loaned
securities having a market value of $2,265,269 collateralized by
securities in the amount of $2,310,574, V.A. Financial Industries Fund
loaned securities having a market value of $940,500 collateralized by
securities in the amount of $959,310 and V.A. Technology Fund loaned
securities having a market value of $40,119 collateralized by securities
in the amount of $40,921.
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially
expressed in terms of foreign currencies are translated into U.S.
dollars based on London currency exchange quotations as of 5:00 p.m.,
London time, on the date of any determination of the net asset value of
the Funds. Transactions affecting statement of operations accounts and
net realized gain/(loss) on investments are translated at the rates
prevailing at the dates of the transactions.
The Funds do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Funds' books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
or losses arise from changes in the value of assets and liabilities
other than investments in securities at fiscal year end, resulting from
changes in the exchange rate.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Funds (except for the
V.A. Core Equity Fund, V.A. 500 Index Fund, V.A. Sovereign Investors
Fund and V.A. Money Market Fund) may enter into forward foreign currency
exchange contracts as a hedge against the effect of fluctuations in
currency exchange rates. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specific currency at a
future date at a set price. The aggregate principal amounts of the
contracts are marked to market daily at the applicable foreign currency
exchange rates. Any resulting unrealized gains and losses are included
in the determination of each Fund's daily net assets. The Funds record
realized gains and losses at the time the forward foreign currency
contract is closed out or offset by a matching contract. Risks may arise
upon entering these contracts from potential inability of counterparties
to meet the terms of the contract and from unanticipated movements in
the value of a foreign currency relative to the U.S. dollar. These
contracts involve market or credit risk in excess of the unrealized gain
or loss reflected in the Funds' Statements of Assets and Liabilities.
The Funds may also purchase and sell forward contracts to facilitate the
settlement of foreign currency denominated portfolio transactions, under
which they intend to take delivery of the foreign currency. Such
contracts normally involve no market risk if they are offset by the
currency amount of the underlying transaction.
Open forward foreign currency exchange contracts for the Funds at
June 30, 2000, were as follows:
UNREALIZED
PRINCIPAL AMOUNT EXPIRATION APPRECIATION/
CURRENCY COVERED BY CONTRACT MONTH (DEPRECIATION)
-------- ------------------- ---------- ------------
V.A. INTERNATIONAL FUND
Buys
Euro Currency 23,735 July 00 $111
Polish Zloty 40,733 July 00 55
Singapore Dollar 1,905 July 00 7
-------
$173
=======
Sells
Euro Currency 22,114 July 00 ($187)
Pound Sterling 37,782 July 00 104
-------
($83)
=======
V.A. BOND FUND
Buys
Euro Currency 180,000 July 00 $1,542
=======
Sells
Euro Currency 180,975 July 00 ($1,558)
=======
V.A. HIGH YIELD BOND FUND
Buys
Euro Currency 99,380 July 00 $1,286
Euro Currency 24,937 Aug 00 223
-------
$1,509
=======
Sells
Canadian Dollar 16,500 Aug 00 $42
Euro Currency 66,750 July 00 138
Euro Currency 140,772 Aug 00 (5,225)
Euro Currency 154,618 Sept 00 (1,791)
Euro Currency 128,529 Oct 00 (1,583)
Pound Sterling 14,625 July 00 1,079
Pound Sterling 64,775 Aug 00 2,688
-------
($4,652)
=======
V.A. STRATEGIC INCOME FUND
Buys
Pound Sterling 51,427 Aug 00 ($2,397)
=======
Sells
Euro Currency 397,650 July 00 $1,734
Pound Sterling 232,494 July 00 17,152
Pound Sterling 471,051 Aug 00 19,547
Pound Sterling 697,526 Sept 00 (3,295)
-------
$35,138
=======
FINANCIAL FUTURES CONTRACTS The Funds (except V.A. Money Market Fund)
may buy and sell financial futures contracts to hedge against the
effects of fluctuations in interest rates, currency exchange rates and
other market conditions. Buying futures tends to increase the Funds'
exposure to the underlying instrument. Selling futures tends to decrease
the Funds' exposure to the underlying instrument or hedge other Funds
instruments. At the time each Fund enters into a financial futures
contract, it will be required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin,"
equal to a certain percentage of the value of the financial futures
contract being traded. Each day, the futures contract is valued at the
official settlement price on the board of trade or U.S. commodities
exchange on which it trades. Subsequent payments, known as "variation
margin," to and from the broker are made on a daily basis as the market
price of the financial futures contracts fluctuates. Daily variation
margin adjustments, arising from this "mark to market," will be recorded
by the Funds as unrealized gains or losses.
When the contracts are closed, the Funds recognize a gain or loss. Risks
of entering into futures contracts include the possibility that there
may be an illiquid market and/or that a change in the value of the
contracts may not correlate with changes in the value of the underlying
securities. In addition, the Funds could be prevented from opening or
realizing the benefits of closing out futures positions because of
position limits or limits on daily price fluctuation imposed by an
exchange.
For federal income tax purposes, the amount, character and timing of the
Funds' gains and/or losses can be affected as a result of futures
contracts.
Open financial futures contracts for the Funds at June 30, 2000 were as follows:
UNREALIZED
OPEN APPRECIATION
EXPIRATION CONTRACTS POSITION (DEPRECIATION)
---------- --------- -------- ------------
V.A. 500 INDEX FUND
Sept 00 2 S&P 500 Long ($5,258)
=======
At June 30, 2000, the V.A. 500 Index Fund had deposited $18,750 in a
segregated account to cover margin requirements on open financial
futures contracts.
NOTE C -
MANAGEMENT FEE AND TRANSACTIONS WITH
AFFILIATES AND OTHERS
Under the present investment management contract, each Fund pays a
monthly management fee to the Adviser, for a continuous investment
program equivalent, on an annual basis as follows:
RATE AS A PERCENTAGE OF
FUND AVERAGE DAILY NET ASSETS
---- ------------------------
V.A. Core Equity Fund 0.70
V.A. 500 Index Fund 0.35
V.A. Large Cap Growth Fund 0.75
V.A. Mid Cap Growth Fund 0.75
V.A. Relative Value Fund 0.60
V.A. Small Cap Growth Fund 0.75
V.A. Sovereign Investors Fund 0.60
V.A. International Fund 0.90
V.A. Financial Industries Fund 0.80
V.A. Regional Bank Fund 0.80
V.A. Technology Fund 0.80
V.A. Bond Fund 0.50
V.A. High Yield Bond Fund 0.60
V.A. Money Market Fund 0.50
V.A. Strategic Income Fund 0.60
Effective February 10, 1997, the Adviser agreed to limit its management
fee on the V.A. 500 Index Fund to 0.10% of the Fund's average daily net
assets. The Adviser may terminate this limitation in the future. For the
period ended June 30, 2000, the management fee waived by the Adviser
amounted to $43,770.
Independence Investment Associates, Inc. ("IIA"), a wholly owned
indirect subsidiary of John Hancock Life Insurance Company ("JHLICo"),
serves as the sub-adviser to the V.A. Core Equity Fund pursuant to a
separate sub-advisory agreement among the Fund, the Adviser, and IIA.
IIA provides investment advice and advisory services to investment
companies and institutional accounts. The Adviser pays a portion of its
advisory fee from the V.A. Core Equity Fund to IIA at the following
rate: 55% of the advisory fee payable by the Fund.
Indocam International Investment Services ("IIIS") serves as sub-adviser
to the V.A. International Fund, effective January 1, 2000. From January
1, 2000 until March 1, 2000, IIIS acted as co-subadviser with the V.A.
International Fund's original subadviser, John Hancock Advisers
International Limited ("JHAI"), subject to the review of the Trustees
and overall supervision of the Adviser. Both JHAI and IIIS provided the
Fund with investment management services and advice. As of March 1, 2000
the Adviser terminated its contract with JHAI so that currently IIIS is
the Fund's sole subadviser. The Adviser pays a portion of its advisory
fee from V.A. International Fund to IIIS at the following rate: 55% of
the advisory fee payable by the Fund. Prior to March 1, 2000 the Adviser
paid JHAI a fee equivalent of, on an annual basis, to the sum of (a)
0.70% of the first $200,000,000 of the V.A. International Fund's average
daily net asset value and (b) 0.6375% of the Fund's average daily net
asset value in excess of $200,000,000. JHAI waived all but 0.05% of its
fee from January 1, 2000 through February 29, 2000.
American Fund Advisors, Inc. ("AFA") serves as the sub-adviser to V.A.
Technology Fund pursuant to a separate subadvisory agreement among the
Fund, the Adviser and AFA. The Adviser pays a portion of its advisory
fee from V.A. Technology Fund to AFA at the following rate: 0.10% of
V.A. Technology Fund's average daily net assets.
The Funds have an agreement with the Adviser to perform necessary tax,
accounting and legal services for the Funds. The compensation for the
period was at an annual rate of less than 0.02% of the average net
assets of the Funds.
The Adviser has voluntarily agreed to limit each Fund's expenses,
excluding the management fee, to 0.25% of each Fund's average daily net
assets. Accordingly, the reductions in expenses for the period ended
June 30, 2000 were as follows:
FUND FEE REDUCTION
---- -------------
V.A. Core Equity Fund --
V.A. 500 Index Fund $45,257
V.A. Large Cap Growth Fund --
V.A. Mid Cap Growth Fund 10,002
V.A. Relative Value Fund --
V.A. Small Cap Growth Fund 18,891
V.A. Sovereign Investors Fund --
V.A. International Fund 80,928
V.A. Financial Industries Fund --
V.A. Regional Bank Fund --
V.A. Technology Fund 4,995
V.A. Bond Fund 15,108
V.A. High Yield Bond Fund 16,980
V.A. Money Market Fund --
V.A. Strategic Income Fund --
The Adviser reserves the right to terminate this limitation in the future.
The V.A. 500 Index Fund has an agreement with Standard & Poor's ("S&P")
to license certain trademarks and trade names of S&P and of the S&P 500
Index, which is determined, composed and calculated by S&P without
regard to the Adviser or the V.A. 500 Index Fund. (Requisite disclosure
regarding the use of the Standard & Poor's name is included in the
Funds' prospectus.)
Mr. Stephen L. Brown, Ms. Maureen R. Ford and Mr. Richard S. Scipione
are directors and/or officers of the Adviser and/or its affiliates, as
well as Trustees of the Funds. The compensation of unaffiliated Trustees
is borne by the Funds. The unaffiliated Trustees may elect to defer, for
tax purposes, their receipt of this compensation under the John Hancock
Group of Funds Deferred Compensation Plan. The Funds make investments
into other John Hancock funds, as applicable, to cover their liability
for the deferred compensation. Investments to cover the Funds' deferred
compensation liability are recorded on the Funds' books as other assets.
The deferred compensation liability and the related other asset are
always equal and are marked to market on a periodic basis to reflect any
income earned by the investment as well as any unrealized gains or
losses.
The Adviser and other subsidiaries of JHLICo owned the following shares
of beneficial interest of the Funds as of June 30, 2000:
FUND SHARES OF BENEFICIAL INTEREST
---- -----------------------------
V.A. Core Equity Fund --
V.A. 500 Index Fund --
V.A. Large Cap Growth Fund 102,341
V.A. Mid Cap Growth Fund 50,071
V.A. Relative Value Fund --
V.A. Small Cap Growth Fund 102,547
V.A. Sovereign Investors Fund --
V.A. International Fund 222,987
V.A. Financial Industries Fund --
V.A. Regional Bank Fund 51,995
V.A. Technology Fund 50,000
V.A. Bond Fund 125,908
V.A. High Yield Bond Fund 244,286
V.A. Money Market Fund 115,864
V.A. Strategic Income Fund 494,232
NOTE D -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities for the Funds, excluding
short-term securities, during the period ended June 30, 2000, were as
follows:
FUND PURCHASES SALES
---- ----------- -----------
V.A. Core Equity Fund $21,826,966 $22,468,467
V.A. 500 Index Fund 1,017,925 4,461,241
V.A. Large Cap Growth Fund 20,347,333 20,110,682
V.A. Mid Cap Growth Fund 14,677,695 7,378,003
V.A. Relative Value Fund 33,373,932 30,399,533
V.A. Small Cap Growth Fund 23,808,171 12,384,085
V.A. Sovereign Investors Fund
U.S. Government Securities -- 1,766,484
Other Investments 8,390,083 6,253,343
V.A. International Fund 9,374,775 7,813,286
V.A. Financial Industries Fund 14,342,238 14,334,597
V.A. Regional Bank Fund 2,496,179 7,429,810
V.A. Technology Fund 4,404,467 2,296,213
V.A. Bond Fund
U.S. Government Securities 11,357,280 8,849,106
Other Investments 9,208,897 9,258,716
V.A. High Yield Bond Fund
U.S. Government Securities -- --
Other Investments 2,988,563 3,079,114
V.A. Strategic Income Fund
U.S. Government Securities 4,291,691 --
Other Investments 5,636,189 6,604,331
At June 30, 2000, the cost (excluding the corporate savings account) and
gross unrealized appreciation and depreciation in value of investments
owned by the Funds, as computed on a federal income tax basis, were as
follows:
<TABLE>
<CAPTION>
GROSS GROSS NET UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION/
FUND COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
V.A. Core Equity Fund $37,156,963 $9,408,292 $2,536,264 $6,872,028
V.A. 500 Index Fund 23,594,272 13,147,114 2,313,677 10,833,437
V.A. Large Cap Growth Fund 17,419,506 4,690,938 657,362 4,033,576
V.A. Mid Cap Growth Fund 12,468,716 3,264,649 1,203,266 2,061,383
V.A. Relative Value Fund 39,125,093 8,832,093 3,817,659 5,014,434
V.A. Small Cap Growth Fund 25,670,566 10,517,695 2,560,532 7,957,163
V.A. Sovereign Investors Fund 43,935,815 7,038,379 3,093,326 3,945,053
V.A. International Fund 9,105,119 1,565,791 447,751 1,118,040
V.A. Financial Industries Fund 40,929,583 11,155,334 1,831,748 9,323,586
V.A. Regional Bank Fund 15,346,653 283,140 2,558,410 (2,275,270)
V.A. Technology Fund 3,043,777 244,442 108,358 136,084
V.A. Bond Fund 15,491,726 143,051 343,741 (200,690)
V.A. High Yield Bond Fund 10,772,466 248,773 2,287,286 (2,038,513)
V.A. Money Market Fund 35,575,278 -- -- --
V.A. Strategic Income Fund 28,367,228 416,606 1,914,248 (1,497,642)
</TABLE>
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101 Huntington Avenue, Boston, MA 02199-7603
1-800-824-0335
This report is for the information of shareholders of the John Hancock
Declaration Trust. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
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DECSA 6/00
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