<PAGE>
File No. 33-82646
811-5140
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[_]
PRE-EFFECTIVE AMENDMENT NO. [_]
[X]
POST-EFFECTIVE AMENDMENT NO. 2
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]
AMENDMENT NO. 13
(CHECK APPROPRIATE BOX OR BOXES.)
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
(EXACT NAME OF REGISTRANT)
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
JOHN HANCOCK PLACE, BOSTON, MA 02117
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 572-5520
FRANCIS C. CLEARY, JR., ESQUIRE
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE
BOSTON, MA 02217
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1996 pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[_] on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate check the following box
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Pursuant to the provisions of Rule 24f-2, Registrant has registered an
indefinite amount of the securities being offered and filed its Notice for
fiscal year 1995 pursuant to Rule 24f-2 on February 22, 1996.
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<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4 ITEM NO. SECTION IN PROSPECTUS
----------------- ---------------------
<C> <S> <C>
1. Cover Page................... Cover Page
2. Definitions.................. Special Terms; Variable Account Valuation
Procedures
3. Synopsis or Highlights....... Summary Information
4. Condensed Financial
Information................. Not Available
5. General Description of
Registrant, Depositor and
Portfolio Companies......... John Hancock, The Account and the Series
Fund; Voting Privileges
6. Deductions................... Charges Variable Annuity Contracts
7. General Description of
Variable Annuity Contracts.. The Contracts; The Accumulation Period; The
Annuity Period; Miscellaneous Provisions;
Changes in Applicable Law-Funding and
Otherwise
8. Annuity Period............... The Annuity Period
9. Death Benefit................ The Accumulation Period; The Annuity Period
10. Purchases and Contract
Values...................... The Contracts; The Accumulation Period;
Variable Account Valuation Procedures;
Performance
11. Redemptions.................. The Accumulation Period; Miscellaneous
Provisions
12. Taxes........................ Federal Income Taxes
13. Legal Proceedings............ Not Applicable
14. Table of Contents of
Statement of
Additional Information...... Table of Contents of Statement of
Additional Information
</TABLE>
<PAGE>
LOGO
Mutual Life
Insurance Company
INDIVIDUAL COMBINATION FIXED/VARIABLE ANNUITY CONTRACTS
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
LIFE AND ANNUITY SERVICES
P.O. BOX 111
BOSTON, MASSACHUSETTS 02117
TELEPHONE 800 REAL LIFE (800-732-5543)
FAX 617-572-5410
PROSPECTUS MAY 1, 1996
The individual deferred annuity contracts ("Contracts") described in this
prospectus can be funded, at the discretion of the Owner by, at any one time,
up to ten of the eighteen subaccounts of John Hancock Variable Annuity Account
V ("Account"), a fixed annuity account (the "Fixed Account"), or a combination
of the Fixed Account and up to nine of the subaccounts. The assets of each
subaccount will be invested in a corresponding Portfolio of John Hancock
Variable Series Trust I ("Fund"), a mutual fund advised by John Hancock Mutual
Life Insurance Company ("John Hancock"). The Fixed Account is a part of the
general account of John Hancock.
This prospectus sets forth concisely information about the Account that a
prospective investor ought to know before investing. A statement of additional
information for the Account, dated May 1, 1996, has been filed with the
Securities and Exchange Commission ("Commission") and is incorporated herein
by reference. This statement, the table of contents of which appears at page
34 of this prospectus, is available upon request and without charge from John
Hancock at the address or telephone number above.
Only the variable features of the Contracts are described in this
prospectus. For a summary of the fixed features, see "Appendix--The Fixed
Account and Fixed Account Value".
For additional information pertaining to the purchase of a Contract as an
Individual Retirement Annuity, see "Appendix--Variable Annuity Information for
Individual Retirement Annuities".
The prospectus for the Fund, which is attached to this prospectus, describes
the investment objectives, policies and risks of investing in the Portfolios
of the Fund: Growth & Income (formerly Stock), Sovereign Bond (formerly Bond),
Money Market, Large Cap Growth (formerly Select Stock), Managed, Real Estate
Equity, International Equities (formerly International), Short-Term U.S.
Government, Special Opportunities, Equity Index, Large Cap Value, Mid Cap
Growth, Mid Cap Value, Small Cap Growth, Small Cap Value, Strategic Bond,
International Opportunities, and International Balanced.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
IT IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS FOR THE FUND.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
SPECIAL TERMS
As used in this prospectus, the following terms have the indicated meanings:
ACCUMULATION SHARE: a unit of measurement used in determining the value of a
Contract prior to the commencement of annuity payments or, if earlier,
contract lapse. The value of an Accumulation Share for each subaccount will
reflect the investment performance of that subaccount and will vary in dollar
amount.
ACCUMULATED VALUE OF A CONTRACT: total value of the Accumulation Shares in
that Contract plus the Fixed Account Value of that Contract, if any.
ANNUITANT: the person on whose life the Contract is issued.
ANNUITY OPTION: the provisions under which a series of annuity payments is
made to the Annuitant or other payee, such as the Life Annuity with Ten Years
Certain.
ANNUITY UNIT: a unit of measurement used in determining the amount of each
variable annuity payment. The value of an Annuity Unit for each subaccount
will depend upon the assumed investment rate and the investment performance of
that subaccount and will vary in dollar amount.
CONTRACT YEAR: a period between anniversaries of the date of issue of the
Contract.
OWNER: the person or entity, usually the one to whom the Contract is issued,
who has the sole right to exercise all rights and privileges under the
Contract except as otherwise provided in the Contract.
DATE OF MATURITY OF A CONTRACT: the date elected by the Owner as of which
annuity payments will commence. The election is subject to certain conditions
described in "The Annuity Period".
MINIMUM DEATH BENEFIT: the undertaking of John Hancock under a Contract to
make a payment on the death of the Annuitant at any time before the date of
maturity equal to the greatest of (a) the Accumulated Value of the Contract
next determined following John Hancock's receipt of due proof of death, (b)
the aggregate amount of the purchase payments made under the Contract (reduced
to reflect partial withdrawals and withdrawal charges), or (c) in states where
permitted by law, the highest Accumulated Value of the Contract as of any
third interval Contract anniversary preceding the Contract anniversary nearest
the Annuitant's 81st birthday, plus the purchase payments made under the
Contract, adjusted for partial withdrawals and withdrawal charges, since such
Contract anniversary. See "The Accumulation Period--Death Benefit Before Date
of Maturity".
NET PURCHASE PAYMENT: the amount of any purchase payment reduced by applicable
taxes, if any, based on the amount of the purchase payment.
SURRENDER VALUE: a cash payment made prior to a Contract's maturity, equal to
all or part of the Accumulation Shares credited to the Contract, less any
Withdrawal Charge and contract fee.
2
<PAGE>
SYNOPSIS OF EXPENSE INFORMATION
<TABLE>
<CAPTION>
GROWTH & SOVEREIGN MONEY LARGE CAP REAL ESTATE INTERNATIONAL SHORT-TERM SPECIAL
INCOME BOND MARKET GROWTH MANAGED EQUITY EQUITIES U.S. GOVERNMENT OPPORTUNITIES
-------- --------- ------ --------- ------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONTRACTOWNER
TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on
Purchases (as a
percentage of
purchase
payments)........ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales
Load (as a
percentage of
purchase
payments)........ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Withdrawal
Charges/1/ (as a
percentage of
amount
surrendered, if
applicable)...... 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Exchange Fee...... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
ANNUAL CONTRACT
FEE/2/ ............ $30 $30 $30 $30 $30 $30 $30 $30 $30
SEPARATE ACCOUNT
ANNUAL EXPENSES
(as a percentage
of average account
value)
Mortality and
Expense Risk Fees. 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15%
Account Fees and
Expenses......... 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
Total Separate
Account Annual
Expenses......... 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
ANNUAL FUND
OPERATING EXPENSES
(as a percentage
of average daily
net assets)
Management Fees... 0.25% 0.25% 0.25% 0.40% 0.34% 0.60% 0.60% 0.50% 0.75%
Other Expenses/3/. 0.03% 0.05% 0.10% 0.07% 0.04% 0.13% 0.25%4 0.25%/4/ 0.25%/4/
Total Fund Annual
Expenses......... 0.28% 0.30% 0.35% 0.47% 0.38% 0.73% 0.85% 0.75% 1.00%
</TABLE>
<TABLE>
<CAPTION>
LARGE MID MID SMALL SMALL
EQUITY CAP CAP CAP CAP CAP STRATEGIC INTERNATIONAL INTERNATIONAL
INDEX VALUE GROWTH VALUE GROWTH VALUE BOND OPPORTUNITIES BALANCED
-------- --------- ------ --------- ------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONTRACTOWNER
TRANSACTION
EXPENSES
Maximum Sales Load
Imposed on
Purchases (as a
percentage of
purchase
payments)........ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales
Load (as a
percentage of
purchase
payments)........ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Withdrawal
Charges/1/ (as a
percentage of
amount
surrendered, if
applicable)...... 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Exchange Fee...... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
ANNUAL CONTRACT
FEE/2/............. $30 $30 $30 $30 $30 $30 $30 $30 $30
SEPARATE ACCOUNT
ANNUAL EXPENSES
(as a percentage
of average account
value)
Mortality and
Expense Risk Fees. 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15%
Account Fees and
Expenses........ 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
Total Separate
Account Annual
Expenses......... 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
ANNUAL FUND
OPERATING EXPENSES
(as a percentage
of average daily
net assets)
Management Fees... 0.25% 0.75% 0.85% 0.80% 0.75% 0.80% 0.75% 1.00% 0.85%
Other Expenses/3/. 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Total Fund Annual
Expenses......... 0.50% 1.00% 1.10% 1.05% 1.00% 1.05% 1.00% 1.25% 1.10%
</TABLE>
3
<PAGE>
EXAMPLES
If you surrender your contract at the end of the applicable time period, you
would pay the following current expenses on a $1,000 investment, assuming 5%
annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS/5/ 10 YEARS/5/
------ ------- ---------- -----------
<S> <C> <C> <C> <C>
GROWTH & INCOME........................... $ 91 $130 $162 $215
SOVEREIGN BOND............................ $ 91 $130 $163 $217
MONEY MARKET.............................. $ 91 $132 $166 $222
LARGE CAP GROWTH.......................... $ 93 $135 $172 $235
MANAGED................................... $ 92 $133 $167 $225
REAL ESTATE EQUITY........................ $ 95 $143 $185 $262
INTERNATIONAL EQUITIES.................... $ 96 $147 $191 $274
SHORT-TERM US GOVERNMENT.................. $ 95 $144 $186 $264
SPECIAL OPPORTUNITIES..................... $ 98 $151 $199 $288
EQUITY INDEX.............................. $ 93 $136 NA NA
LARGE CAP VALUE........................... $ 98 $151 NA NA
MID CAP GROWTH............................ $ 99 $154 NA NA
MID CAP VALUE............................. $ 98 $153 NA NA
SMALL CAP GROWTH.......................... $ 98 $151 NA NA
SMALL CAP VALUE........................... $ 98 $153 NA NA
STRATEGIC BOND............................ $ 98 $151 NA NA
INTERNATIONAL OPPORTUNITIES............... $100 $159 NA NA
INTERNATIONAL BALANCED.................... $ 99 $154 NA NA
</TABLE>
If you annuitize at the end of the applicable time period, or if you do not
surrender your Contract, you would pay the following current expenses on a
$1,000 investment, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS/5/ 10 YEARS/5/
------ ------- ---------- -----------
<S> <C> <C> <C> <C>
GROWTH & INCOME........................... $19 $58 99 $215
SOVEREIGN BOND............................ $19 $58 $100 $217
MONEY MARKET.............................. $19 $60 $103 $222
LARGE CAP GROWTH.......................... $21 $63 $109 $235
MANAGED................................... $20 $61 $104 $225
REAL ESTATE EQUITY........................ $23 $71 $122 $262
INTERNATIONAL EQUITIES.................... $24 $75 $128 $274
SHORT-TERM US GOVERNMENT.................. $23 $72 $123 $264
SPECIAL OPPORTUNITIES..................... $26 $79 $136 $288
EQUITY INDEX.............................. $21 $64 NA NA
LARGE CAP VALUE........................... $26 $79 NA NA
MID CAP GROWTH............................ $27 $82 NA NA
MID CAP VALUE............................. $26 $81 NA NA
SMALL CAP GROWTH.......................... $26 $79 NA NA
SMALL CAP VALUE........................... $26 $81 NA NA
STRATEGIC BOND............................ $26 $79 NA NA
INTERNATIONAL OPPORTUNITIES............... $28 $87 NA NA
INTERNATIONAL BALANCED.................... $27 $82 NA NA
</TABLE>
4
<PAGE>
/1/Actual Withdrawal Charges may be lower, as the Withdrawal Charge falls
after the third Contract year and limited free partial withdrawals are
allowed.
<TABLE>
<CAPTION>
Years from date
of deposit to Withdrawal
date of withdrawal Charge
------------------ ----------
<S> <C>
7 or more..................................................... 0%
5 but less than 7............................................. 6%
3 but less than 5............................................. 7%
less than 3................................................... 8%
</TABLE>
An Owner may withdraw in any Contract Year up to 10% of the Accumulated
Value of the Contract as of the beginning of the Contract Year without any
charges.
/2/The annual contract fee is deducted on Contracts having an Accumulated
Value of less than $10,000. The contract fee is deducted at the beginning of
each Contract year after the first and at a full surrender during a Contract
Year. The contract fee is assessed only during the Accumulation Period. In the
preceding Examples, the annual contract fee has been expressed as an annual
percentage of assets based on past experience concerning Contract fees
collected on other variable annuity contracts using the same Contract fee
provision.
/3/Other fund expenses in the Synopsis and Examples are based on the year
ended December 31, 1995, except that, for the Equity Index, Large Cap Value,
Mid Cap Growth, Mid Cap Value, Small Cap Growth, Small Cap Value, Strategic
Bond, International Opportunities, and International Balanced Portfolios, they
are based on estimates for the current fiscal year.
/4/John Hancock reimburses a Portfolio when the Portfolio's Other Expenses
exceed 0.25% of its average daily net asset value. This was done for the year
ending December 31, 1995 with respect to three Portfolios. Absent the
reimbursement, the Other Expenses for the International Equities, Short Term
U.S. Government and Special Opportunities Portfolios would have been 0.87%,
1.83%, and 1.91%, respectively.
/5/Expense information for five and ten years is not currently available
for the Equity Index, Large Cap Value, Mid Cap Growth, Mid Cap Value, Small
Cap Growth, Small Cap Value, Strategic Bond, International Opportunities, and
International Balanced Portfolios.
This synopsis does not include any premium taxes that may be applicable.
These examples should not be considered representations of past or future
expenses; actual expenses may be greater than or less than those shown above.
The purpose of the above synopsis is to assist the Owner in understanding
the various costs and expenses that an Owner will bear directly or indirectly.
This synopsis includes expenses of the Account as well as those of the Fund.
For a more complete description of the Account charges, see "Charges under the
Annuity Contracts." For a more complete description of the investment advisory
fee charged each Portfolio and the annual operating expenses of each
Portfolio, see the prospectus for the Fund.
5
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
CONDENSED FINANCIAL INFORMATION
The table below reflects the historical information for a share outstanding
throughout the period for John Hancock Variable Annuity Account V.
SELECTED DATA FOR EACH ACCUMULATION SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 26, 1995
TO DECEMBER 31, 1995
--------------------
<S> <C>
STOCK SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $13.048
Number of Accumulation Shares outstanding at end of
period................................................... 1,659,869
BOND SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $11.659
Number of Accumulation Shares outstanding at end of
period................................................... 682,290
MONEY MARKET SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $10.406
Number of Accumulation Shares outstanding at end of
period................................................... 663,755
SELECT STOCK SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $12.773
Number of Accumulation Shares outstanding at end of
period................................................... 646,863
MANAGED SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $12.375
Number of Accumulation Shares outstanding at end of
period................................................... 3,049,661
REAL ESTATE EQUITY SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $11.339
Number of Accumulation Shares outstanding at end of
period................................................... 92,658
INTERNATIONAL SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $11.097
Number of Accumulation Shares outstanding at end of
period................................................... 180,112
SHORT-TERM U.S. GOVERNMENT SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $10.903
Number of Accumulation Shares outstanding at end of
period................................................... 281,217
SPECIAL OPPORTUNITIES SUBACCOUNT
Accumulation share value:
Beginning of period..................................... $10.000
End of period........................................... $13.292
Number of Accumulation Shares outstanding at end of
period................................................... 492,166
</TABLE>
6
<PAGE>
SUMMARY INFORMATION
The Contracts are designed both for purchase by individuals doing their own
retirement planning, including plans and trusts that do not qualify for
special tax treatment under the Internal Revenue Code of 1986, as amended
("Code") and for purchase for persons participating in (1) pension and profit-
sharing plans qualified under Section 401(c) of the Code, known as "H.R. 10
plans", (2) pension or profit-sharing plans qualified under Sections 401(a) or
403(a) of the Code, known as "corporate plans", (3) plans qualifying under
Section 401(k) of the Code, (4) annuity purchase plans adopted under the
provisions of Section 403(b) of the Code by public school systems and certain
other tax-exempt organizations, (5) individual retirement annuity plans
satisfying the requirements of Section 408 of the Code, and (6) deferred
compensation plans maintained by a state or political subdivision or tax
exempt organizations under Section 457 of the Code.
In order to accommodate "employer-related" plans funded by the Contracts,
contract forms using "unisex" purchase rates, i.e. rates the same for males
and females, are available. Any questions you have as to whether you are
participating in an employer-related plan should be directed to your employer.
Any other question you or your employer may have with respect to this topic
can be asked John Hancock by calling 800 REAL LIFE (800-732-5543) or by
writing Life and Annuity Services, P.O. Box 111, Boston, MA 02117.
THE CONTRACTS
The Contracts offered are deferred annuity Contracts under which purchase
payments may be made in a lump sum or at intervals until the maturity date
selected by the Owner, at which time annuity payments by John Hancock will
begin, if so elected by the Owner.
An application for a Contract is available from a marketing representative.
Upon completion, it is transmitted along with the purchase payment to John
Hancock's Home Office for review. See pages 19-20.
John Hancock also issues variable annuity contracts that charge a front-end
sales load and other forms of variable annuity contracts that charge a
contingent deferred sales load. These contracts are offered by means of other
prospectuses, but use the same underlying Fund.
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
The Account is a separate investment account of John Hancock, operated as a
unit investment trust, which supports benefits payable under its Contracts.
There are currently eighteen subaccounts within the Account: Growth & Income
(formerly Stock), Sovereign Bond (formerly Bond), Money Market, Large Cap
Growth (formerly Select Stock), Managed, Real Estate Equity, International
Equities (formerly International), Short-Term U.S. Government, Special
Opportunities, Equity Index, Large Cap Value, Mid Cap Growth, Mid Cap Value,
Small Cap Growth, Small Cap Value, Strategic Bond, International
Opportunities, and International Balanced. Each is invested in a corresponding
Portfolio of John Hancock Variable Series Trust I, a "series" type of mutual
fund consisting of the following Portfolios.
Each Portfolio has a different investment objective. As stated below, John
Hancock receives a fee from the Fund for providing investment management
services. Independence Investment Associates, Inc. ("IIA"), provides sub-
investment management services with respect to the Growth & Income, Large Cap
Growth, Equity Index, Managed, Short-Term U.S. Government, and Real Estate
Equity Portfolios. John Hancock Advisers, Inc., and John Hancock Advisers
International Limited provide sub-investment management services for the
International Equities Portfolio. John Hancock Advisers provides sub-
investment management services for the Sovereign Bond, Small Cap Growth, and
Special Opportunities Portfolios.
7
<PAGE>
T. Rowe Price Associates, Inc., provides sub-investment advice to the Large
Cap Value Portfolio and, together with its subsidiary, Rowe Price-Fleming
International, Inc., provides sub-investment advice with respect to the
International Opportunities Portfolio.
INVESCO Management and Research is the sub-investment adviser to the Small
Cap Value Portfolio. Janus Capital Corporations the sub-investment adviser to
the Mid Cap Growth Portfolio. Neuberger & Berman L.P., provides sub-investment
advice with respect to the Mid Cap Value Portfolio. J.P. Morgan Investment
Management Inc., provides sub-investment advice with respect to the Strategic
Bond Portfolio and Brinson Partners, Inc., does likewise with respect to the
International Balanced Portfolio.
Each sub-investment manager receives an annual percentage fee from John
Hancock for these services which in no way increases the costs borne by the
Fund, the Account, or Owners. For a full description of the Fund, see the
prospectus for the Fund following at the end of this prospectus.
PRINCIPAL UNDERWRITER OF THE ACCOUNT
John Hancock, a registered broker-dealer since 1970, makes Contracts
available through its registered representatives licensed to sell life
insurance policies and annuity contracts.
INVESTMENT OF PURCHASE PAYMENTS
Purchase payments received under Contracts, after deduction of premium or
similar taxes, if applicable, are allocated by John Hancock to one or more of
the variable subaccounts and the Fixed Account, as directed by the Owner.
Purchase payments should be mailed to Life and Annuity Services, Post Office
Box 111, Boston, MA 02117.
MINIMUM AND MAXIMUM PURCHASE PAYMENTS
The initial purchase payment under a Contract must be at least $5,000
($1,000 for individual retirement accounts and qualified plans); thereafter
any payment must be at least $50.
The maximum amount that can be deposited into a Contract per Contract Year
is $500,000. The maximum amount that can be deposited in or transferred to the
Fixed Account per Contract Year is $100,000, exclusive of the initial deposit
which can be as large as $500,000. Deposits in or transfers to the Fixed
Account can only be made during the first 10 Contract Years. No new deposits
may be made after Annuitant's 85th birthday. These limits may be waived by
John Hancock.
ACCOUNT FEES
The charges made directly to the Account aggregate 1.50% per annum of the
average daily net asset value of the Account and are made up of daily charges
aggregating 1.15% annually for mortality and expense risks assumed (0.45% on
an annual basis for mortality risks and 0.70% on an annual basis for expense
risks) and 0.35% for certain administrative services. See pages 16-17.
FUND CHARGES
John Hancock receives a fee from the Fund with respect to the Growth &
Income, Sovereign Bond, Equity Index, and Money Market Portfolios at an annual
rate of 0.25% of the average daily net assets; with respect to the Select
Stock and Managed Portfolios, at an annual rate of 0.40% for the first $500
million of average daily net assets, 0.35% for average daily net assets
between $500 million and $1 billion,
8
<PAGE>
and at lesser percentages for amounts above $1 billion; with respect to the
Real Estate Equity Portfolio, at an annual rate of 0.60% for the first $300
million of average daily net assets and at lesser percentages for amounts
above $300 million; with respect to the International Equities Portfolio, at
an annual rate of 0.60% for the first $250 million of average daily net assets
and at lesser percentages for amounts above $250 million; with respect to the
Short-Term U.S. Government Portfolio, at an annual rate of 0.50% for the first
$250 million of average daily net assets and at lesser percentages for amounts
above $250 million; with respect to the Special Opportunities Portfolio, at an
annual rate of 0.75% for the first $250 million of average daily net assets
and at lesser percentages for amounts above $250 million; with respect to the
Large Cap Value and Small Cap Growth Portfolios at an annual rate of 0.75% of
average daily net assets; with respect to the Mid Cap Growth Portfolio at an
annual rate of 0.85% for the first $100,000,000 of average daily net assets
and at lesser percentages for amounts above $100,000,000; with respect to the
Mid Cap Value Portfolio at an annual rate of 0.80% of the first $250,000,000
of average daily net assets and at lesser percentages for amounts above
$250,000,000; with respect to the Small Cap Value Portfolio at an annual rate
of 0.80% of the first $100,000,000 of average daily net assets and at lesser
percentages for amounts above $100,000,000; with respect to the Strategic Bond
Portfolio at an annual rate of 0.75% of the first $25,000,000 of average daily
net assets and at lesser percentages for amounts above $25,000,000; with
respect to the International Opportunities Portfolio at an annual rate of 1%
of the first $20,000,000 of average daily net assets and at lesser percentages
for amounts above $20,000,000; and for the International Balanced Portfolio at
an annual rate of 0.85% of the first $100,000,000 of average daily net assets
and at a lesser percentage for amounts above $100,000,000. Certain other
operating expenses are charged each Portfolio.
SALES DEDUCTIONS UPON WITHDRAWALS
A Withdrawal Charge (a contingent deferred sales charge), if applicable, is
deducted from amounts withdrawn prior to maturity. The aggregate Withdrawal
Charges assessed against a Contract will never exceed 8% of the total purchase
payments received. See pages 16-18 .
OTHER CHARGES OR DEDUCTIONS
Deductions are made for any applicable taxes based on the amount of a
purchase payment; currently such taxes in certain states are up to 5% of each
purchase payment. See page 19.
Charges are made for any taxes or interest expense attributable to the
Account. An annual contract fee of $30 is deducted on Contracts having an
Accumulated Value of less than $10,000. John Hancock reserves the right to
increase the contract fee up to $50, subject to state regulations. See page
17.
WITHDRAWAL PRIOR TO MATURITY
At any time before annuity payments begin, if the Annuitant is living, a
Contract may be surrendered in full for its Surrender Value or a portion of
the value of the Contract may be withdrawn, subject to certain limits. See
page 21. A 10% penalty tax may be applicable to the taxable portion (earnings)
withdrawn before the Owner attains age 59 1/2.
SYSTEMATIC WITHDRAWALS
The Owner may pre-authorize a periodic withdrawal plan. Payments may be
monthly, quarterly, semi-annual or annual, and may be for a level dollar
amount. A minimum Accumulated Value of $25,000 is required to start the
program. See page 22.
DOLLAR-COST AVERAGING
The Owner may elect to have amounts transferred automatically from the Money
Market subaccount into one or more of the other variable subaccounts.
Transfers may be made monthly, quarterly, semi-annually, or annually for a
minimum of $250. A minimum Accumulated Value of $20,000 is required to start
the program. See page 21.
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<PAGE>
GUARANTEED MINIMUM DEATH BENEFIT
Contracts include a death benefit payable on the death of the Annuitant
prior to annuitization that is the greatest of (a) the Accumulated Value of
the Contract, (b) the purchase payments made under the Contract, adjusted for
any prior partial withdrawals and withdrawal charges, or (c) in states where
permitted by law, the highest Accumulated Value of the Contract as of any
third interval Contract anniversary preceding the Contract anniversary nearest
the Annuitant's 81st birthday, plus the purchase payments made under the
Contract, adjusted for partial withdrawals and withdrawal charges, since such
Contract anniversary. See pages 22-23.
10 DAY FREE-LOOK PROVISION
An Owner may surrender the Contract for any reason within 10 days after its
receipt and receive in cash the Accumulated Value of the Contract, plus any
deductions previously made from purchase payments for premium or similar
taxes. Owners surrendering Contracts issued in North Carolina, South Carolina,
Washington, West Virginia, and Utah, and all Contracts issued under an
individual retirement account, will receive gross purchase payments made. If
the Contract is issued in California to an Owner 60 years of age or older, the
Owner may surrender the Contract within 30 days after its receipt, and, in
that event, the gross purchase payments made will be refunded to the Owner.
10
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SPECIAL TERMS.............................................................. 2
SYNOPSIS OF EXPENSE INFORMATION............................................ 3
CONDENSED FINANCIAL INFORMATION............................................
SUMMARY INFORMATION........................................................ 7
THE VARIABLE ANNUITY....................................................... 13
JOHN HANCOCK, THE ACCOUNT AND THE SERIES FUND.............................. 13
CHARGES UNDER VARIABLE ANNUITY CONTRACTS................................... 16
Charges For Mortality And Expense Risks.................................. 16
Charges for Administrative Services...................................... 17
Withdrawal Charge........................................................ 17
Variations in Charges.................................................... 18
Premium or Similar Taxes................................................. 19
THE CONTRACTS.............................................................. 19
Purchase of Contracts.................................................... 19
THE ACCUMULATION PERIOD.................................................... 20
Accumulation Shares...................................................... 20
Value of Accumulation Shares............................................. 20
Transfers Among Subaccounts.............................................. 20
Dollar-Cost Averaging.................................................... 21
Surrender of Contract; Partial Withdrawals............................... 21
Systematic Withdrawal.................................................... 22
Death Benefit Before Date of Maturity.................................... 22
THE ANNUITY PERIOD......................................................... 23
Variable Monthly Annuity Payments........................................ 24
Assumed Investment Rate.................................................. 24
Calculation of Annuity Units............................................. 24
Annuity Options.......................................................... 25
Option A: Life Annuity with Five, Ten or Twenty Years Certain............ 25
Option B: Life Annuity Without Refund.................................... 25
Other Conditions......................................................... 25
VARIABLE ACCOUNT VALUATION PROCEDURES...................................... 25
MISCELLANEOUS PROVISIONS................................................... 26
Restriction on Assignment................................................ 26
Deferment of Payment..................................................... 26
Reservation of Rights.................................................... 26
Owner and Beneficiary.................................................... 27
FEDERAL INCOME TAXES....................................................... 27
The Account and John Hancock............................................. 27
Contracts Purchased Other Than to Fund a Tax Qualified Plan.............. 27
Diversification Requirements............................................. 28
Contracts Purchased to Fund a Tax Qualified Plan......................... 28
PERFORMANCE................................................................ 31
STATE REGULATION........................................................... 32
REPORTS.................................................................... 32
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
VOTING PRIVILEGES......................................................... 32
The Account............................................................. 32
John Hancock............................................................ 33
CHANGES IN APPLICABLE LAW--FUNDING AND OTHERWISE.......................... 33
LEGAL MATTERS............................................................. 33
DISTRIBUTION OF THE CONTRACTS............................................. 33
REGISTRATION STATEMENT.................................................... 33
EXPERTS................................................................... 33
FINANCIAL STATEMENTS...................................................... 34
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.................. 34
APPENDIX--THE FIXED ACCOUNT AND FIXED ACCOUNT VALUE....................... 35
APPENDIX--VARIABLE ANNUITY INFORMATION FOR INDIVIDUAL RETIREMENT
ANNUITIES................................................................ 37
APPENDIX--ILLUSTRATIVE ACCUMULATED VALUE AND ANNUITY PAYMENT TABLES....... 38
</TABLE>
THE CONTRACTS OFFERED BY THIS PROSPECTUS MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE OR SOLICIT AN OFFER IN THAT STATE.
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<PAGE>
THE VARIABLE ANNUITY
A variable annuity is significantly different from a fixed annuity in that
it is the Owner and Annuitant under a variable annuity who assume the risk of
investment gain or loss rather than the insurance company. While under a fixed
annuity the insurance company guarantees a specified interest rate and
specified monthly annuity payments, the amounts of annuity payments under a
variable annuity are not guaranteed and will vary with the investment
performance of the portfolio securities in the underlying Fund.
Based upon the Owner's investment objective, the Owner directs the
allocation of purchase payments and Accumulated Values among the subaccounts
on a continuing basis. There can be no assurance that these investment
objectives will be achieved.
JOHN HANCOCK, THE ACCOUNT AND THE SERIES FUND
JOHN HANCOCK
John Hancock is a mutual life insurance company chartered in Massachusetts
in 1862. Its Home Office is at 200 Clarendon Street, Boston, Massachusetts
02117. It conducts a conventional life insurance business in all of the United
States, the District of Columbia and Puerto Rico. John Hancock sells insurance
policies and annuity contracts primarily through its own field force of full
time agents.
THE ACCOUNT
The Account is a separate account established under Massachusetts law on May
11, 1987. The Account, although an integral part of John Hancock, meets the
definition of a "separate account" under the Federal securities laws and is
registered as a unit investment trust under the Investment Company Act of
1940, as amended ("1940 Act").
The Account's assets are the property of John Hancock and the obligations
under the Contracts are the obligations of John Hancock. Each Contract
provides that the portion of the Account's assets equal to the reserves and
other liabilities under the Contract with respect to the Account shall not be
chargeable with liabilities arising out of any other business John Hancock may
conduct. In addition to the net assets and other liabilities for Contracts,
the Account's assets include assets derived from charges made by John Hancock
and, possibly, funds contributed by John Hancock to commence operation of the
subaccounts or their predecessors. From time to time these additional assets
may be transferred in cash by John Hancock to its general account. Before
making any such transfer, John Hancock will consider any possible adverse
impact the transfer might have on any subaccount.
Income, gains and losses, whether or not realized, from assets allocated to
the Account are, in accordance with the Contracts, credited to or charged
against the Account without regard to other income, gains or losses of John
Hancock.
There currently are eighteen subaccounts in the Account: Growth & Income,
Sovereign Bond, Money Market, Large Cap Growth, Managed, Real Estate Equity,
International Equities, Short-Term U.S. Government, Special Opportunities,
Equity Index, Large Cap Value, Mid Cap Growth, Mid Cap Value, Small Cap
Growth, Small Cap Value, Strategic Bond, International Opportunities, and
International Balanced. The assets in each are invested in a separate class of
shares issued by the Fund, but the assets of one subaccount are not
necessarily legally insulated from liabilities associated with another
subaccount. New subaccounts may be added and made available to Owners.
THE SERIES FUND
The Fund is a "series" type of mutual fund which is registered under the
1940 Act as an open-end diversified management investment company and
organized as a Massachusetts business trust. The Fund
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serves as the investment medium for the Account and other unit investment
trust separate accounts established by John Hancock and by John Hancock
Variable Life Insurance Company for variable life insurance policies and
variable annuity contracts. A full description of the Fund, its investment
objectives, policies and restrictions, its charges and expenses, and all other
aspects of its operation is contained in the attached prospectus (which should
be read carefully before investing) and the statement of additional
information referred to therein, which should be read together with this
prospectus. Among other items, note the description of the need to monitor
events on the part of the Fund's Board of Trustees for possible conflicts
between separate accounts and other consequences.
The following is a brief summary of the investment objectives of each
Portfolio.
Growth & Income (formerly Stock) Portfolio
The investment objective of this Portfolio is to achieve intermediate and
long-term growth of capital, with income as a secondary consideration. This
objective will be pursued by investments principally in common stocks (and in
securities convertible into or with rights to purchase common stocks) of
companies believed by management to offer growth potential over both the
intermediate and the long term.
Sovereign Bond (formerly Bond) Portfolio
The investment objective of this Portfolio is to provide as high a level of
long-term total rate of return as is consistent with prudent investment risk,
through investment primarily in a diversified portfolio of freely marketable
debt securities. Total rate of return consists of current income, including
interest and discount accruals, and capital appreciation. Although the
Sovereign Bond Portfolio does not have a significant portion of its assets in
high yield securities, further information in this regard may be found under
"Investment Objectives and Policies" in the Fund prospectus.
Money Market Portfolio
The investment objective of this Portfolio is to provide maximum current
income consistent with capital preservation and liquidity. It seeks to achieve
this objective by investing in a managed portfolio of high quality money
market instruments.
Large Cap Growth (formerly Select Stock) Portfolio
The investment objective of this Portfolio is to achieve above-average
capital appreciation through the ownership of common stocks of companies
believed by management to offer above-average capital appreciation
opportunities. Current income is not an objective of the Portfolio.
Managed Portfolio
The investment objective of this Portfolio is to achieve maximum long-term
total return consistent with prudent investment risk. Investments will be made
in common stocks, convertibles and other fixed income securities and in money
market instruments.
Real Estate Equity Portfolio
The investment objective of this Portfolio is to provide above-average
income and long-term growth of capital by investment principally in equity
securities of companies in the real estate and related industries.
International Equities (formerly International) Portfolio
The investment objective of this Portfolio is to achieve long-term growth of
capital by investing primarily in foreign equity securities.
14
<PAGE>
Short-Term U.S. Government Portfolio
The investment objective of this Portfolio is to provide a high level of
current income consistent with the maintenance of principal, through
investment in a portfolio of short-term U.S. Treasury securities and U.S.
Government agency securities.
Special Opportunities Portfolio
The investment objective of this Portfolio is to achieve long-term capital
appreciation by emphasizing investments in equity securities of issuers in
various economic sectors.
Equity Index Portfolio
The investment objective of this Portfolio is to provide investment results
that correspond to the total return of the U.S. market as represented by the
S&P 500 utilizing common stocks that are publicly traded in the United States.
Large Cap Value Portfolio
The investment objective of this Portfolio is to provide substantial
dividend income, as well as long-term capital appreciation, through
investments in the common stocks of established companies believed to offer
favorable prospects for increasing dividends and capital appreciation.
Mid Cap Growth Portfolio
The investment objective of this Portfolio is to provide long-term growth of
capital through a non-diversified portfolio investing primarily in common
stocks of medium capitalization companies.
Mid Cap Value Portfolio
The investment objective of this Portfolio is to provide long-term growth of
capital primarily through investment in the common stocks of medium
capitalization companies believed to sell at a discount to their intrinsic
value.
Small Cap Growth Portfolio
The investment objective of this Portfolio is to provide long-term growth of
capital through a diversified portfolio investing primarily in common stocks
of small capitalization emerging growth companies.
Small Cap Value Portfolio
The investment objective of this Portfolio is to provide long-term growth of
capital by investing in a well diversified portfolio of equity securities of
small capitalization companies exhibiting value characteristics.
Strategic Bond Portfolio
The investment objective of this Portfolio is to provide a high total return
consistent with moderate risk of capital and maintenance of liquidity, from a
portfolio of domestic and international fixed income securities.
International Opportunities Portfolio
The investment objective of this Portfolio is to provide capital
appreciation through investments in common stocks of primarily well-
established, non-United States companies.
International Balanced Portfolio
The investment objective of this Portfolio is to maximize total U.S. dollar
return, consisting of capital appreciation and current income, through
investment in non-U.S. equity and fixed income securities.
15
<PAGE>
John Hancock acts as the investment manager for the Fund. Independence
Investment Associates, Inc. ("IIA"), an indirectly-owned subsidiary of John
Hancock with its principal place of business at 53 State Street, Boston,
Massachusetts, provides sub-investment advice with respect to the Growth &
Income, Large Cap Growth, Equity Index, Managed, Real Estate Equity, and
Short-Term U.S. Government Portfolios.
John Hancock Advisers, Inc., another directly-owned subsidiary, located at
101 Huntington Avenue, Boston, Massachusetts, and its subsidiary, John Hancock
Advisers International, Limited, located at 34 Dover Street, London, England,
provide sub-investment advice with respect to the International Equities
Portfolio. John Hancock Advisers provides sub-investment advice with respect
to the Sovereign Bond, Small Cap Growth and Special Opportunities Portfolios.
T. Rowe Price Associates, Inc., located at 100 East Pratt St., Baltimore, MD
21202, provides sub-investment advice with respect to the Large Cap Value
Portfolio and, together with its subsidiary, Rowe Price-Fleming International,
Inc., also located at 100 East Pratt St., Baltimore, MD 21202, provides sub-
investment advice with respect to the International Opportunities Portfolio.
INVESCO Management and Research located at 101 Federal Street, Boston, MA
02110, is the sub-investment adviser to the Small Cap Value Portfolio. Janus
Capital Corporation, with its principal place of business at 100 Filmore
Street, Denver, CO 80206, is the sub-investment adviser to the Mid Cap Growth
Portfolio. Neuberger & Berman L.P., of 605 Third Avenue, New York, NY 10158,
provides sub-investment advice to the Mid Cap Value Portfolio. J.P. Morgan
Investment Management Inc., located at 522 Fifth Avenue, New York, NY 10036,
provides investment advice with respect to the Strategic Bond Portfolio and
Brinson Partners, Inc., of 209 South LaSalle Street, Chicago, IL 60604, does
likewise with respect to the International Balanced Portfolio.
John Hancock will purchase and redeem Fund shares for the Account at their
net asset value without any sales or redemption charges. Shares of the Fund
represent an interest in one of the Portfolios of the Fund which corresponds
to the subaccount of the Account. Any dividend or capital gains distributions
received by the Account will be reinvested in Fund shares at their net asset
value as of the dates paid. Any such distribution will result in a reduction
in the value of the Fund shares of the Portfolio from which the distribution
was made. The total net asset value of the Account will not change because of
such distribution, however.
On each Valuation Date, shares of each Portfolio are purchased or redeemed
by John Hancock for each subaccount based on, among other things, the amount
of net purchase payments allocated to the subaccount, dividends and
distributions reinvested, transfers to, from and among subaccounts, all to be
effected as of that date. Such purchases and redemptions are effected at the
net asset value per Fund share for each Portfolio determined on that same
Valuation Date.
CHARGES UNDER VARIABLE ANNUITY CONTRACTS
CHARGES FOR MORTALITY AND EXPENSE RISKS
While the variable annuity payments to Annuitants will vary in accordance
with the investment performance of the Account, the amount of such payments
will not be decreased because of adverse mortality experience of Annuitants as
a class or because of an increase in actual expenses of John Hancock over the
expense charges provided for in the Contracts. John Hancock assumes the risk
that Annuitants as a class may live longer than expected (necessitating a
greater number of annuity payments) and that its expenses may be higher than
the deductions for such expenses. John Hancock also provides a minimum death
benefit and waives Withdrawal Charges upon the death of the Annuitant.
In return for the assumption of these mortality and expense risks, John
Hancock charges the Account daily 0.001233% (0.45% on an annual basis) of the
current value of Account net assets for mortality risks and 0.001918% (0.70%
on an annual basis) for expense risks. John Hancock reserves the right to
revise
16
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the proportionate amounts of the charge as between mortality risks and expense
risks, should estimates change. Nevertheless, the aggregate charge will not
exceed 1.15% on an annual basis.
CHARGES FOR ADMINISTRATIVE SERVICES
John Hancock maintains an account for each Owner and Annuitant and makes all
disbursements of benefits. John Hancock also furnishes such administrative and
clerical services, including the calculation of Accumulation Share values and
the values and interests determined thereby, as are required for each
subaccount. John Hancock makes disbursements from Account funds to pay
obligations chargeable to the Account and maintains the accounts, records, and
other documents relating to the business of the Account required by regulatory
authorities.
For these and other administrative services, John Hancock makes a daily
charge to the Account of 0.000959% (0.35% on an annual basis) of the current
value of its net assets and assesses, during the Accumulation Period, a
contract fee of $30 on Contracts having an Accumulated Value of less than
$10,000. The contract fee will be deducted at the beginning of each Contract
Year after the first and at a full surrender during a Contract Year. John
Hancock reserves the right to increase this fee up to a maximum of $50 subject
to state regulations. The contract fee will be deducted from each subaccount
and the Fixed Account in the same proportion that the Accumulated Value of the
Contract in that subaccount or Fixed Account bears to the full Accumulated
Value of the Contract. However, the portion of the contract fee allocated to
the Fixed Account will not be deducted from the Fixed Account to the extent it
would result in an accumulation of purchase payments or other amounts
allocated to the Fixed Account at less than the guaranteed minimum rate of 3
percent.
The administrative services charges were not designed, nor are they
expected, to exceed John Hancock's cost in providing these services.
WITHDRAWAL CHARGE
A Withdrawal Charge, which is a contingent deferred sales charge, may be
assessed whenever a Contract is surrendered for cash prior to maturity ("total
withdrawal" or "surrender") or whenever an amount less than the total
Accumulated Value of the Contract is withdrawn from a Contract prior to
maturity ("partial withdrawal"). This charge is used to help defray expenses
relating to the sales of the Contracts, including commissions paid to
marketing representatives and other distribution costs.
An Owner may withdraw in any one Contract Year up to 10% of the Accumulated
Value of the Contract as of the beginning of the Contract Year without the
assessment of any charges. If, in any Contract Year, the Owner withdraws an
aggregate amount in excess of 10% of the Accumulated Value of the Contract as
of the beginning of the Contract Year, the amount withdrawn in excess of 10%
subjects the Contract to a Withdrawal Charge to the extent that the excess is
attributable to purchase payments made within seven years of the date of
withdrawal or surrender. Amounts withdrawn to satisfy the minimum distribution
requirements for qualified plans attributable to any one Contract are not
subject to a Withdrawal Charge in any Contract Year. Amounts above the minimum
distribution requirements are subject to a Withdrawal Charge as described
above.
Withdrawal Charges are based upon the purchase payments made to date and are
assessed as follows:
<TABLE>
<CAPTION>
YEARS FROM
DATE OF
DEPOSIT TO
DATE OF WITHDRAWAL
WITHDRAWAL CHARGE
--------------------------------------------------------------- ----------
<S> <C>
7 or more...................................................... 0%
5 but less than 7.............................................. 6%
3 but less than 5.............................................. 7%
less than 3.................................................... 8%
</TABLE>
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In no event will the aggregate Withdrawal Charges against a Contract ever
exceed 8% of the total purchase payments received.
Whenever a Withdrawal Charge is imposed, it is deducted from each of the
subaccounts and the Fixed Account in the proportion that the Accumulated Value
from each bears to the total Accumulated Value. All amounts withdrawn plus all
contract fees and Withdrawal Charges are assumed to be deducted first from the
earliest purchase payment, and then from the next earliest purchase payment,
and so forth until all payments have been exhausted, satisfying the first in--
first out ("FIFO") method of accounting. Further withdrawals will be deducted
from earnings, to which no Withdrawal Charge will apply. For a discussion of
the taxation of partial withdrawals, see "Federal Income Taxes--Partial
Withdrawals Before Annuity Starting Date."
To the extent that any Withdrawal Charge is applicable when a total or
partial withdrawal is requested, the Accumulated Value of the Contract will be
reduced by the amount of the Withdrawal Charge in addition to the actual
dollar amount sent to the recipient. The Withdrawal Charge is calculated based
upon the full amount by which the Accumulated Value is reduced, subject to the
conditions noted above.
For example, assume a Contract is issued on January 1, 1995, that the Owner
makes purchase payments of $5,000 on January 1, 1995, $1,000 on January 1,
1996, and $1,000 on January 1, 1997. Assume that the Accumulated Value of the
Contract on January 1, 1998, is $9,000 and that a partial withdrawal is made
by the Owner in the amount of $6,000 (no tax withholding) on June 1, 1998. The
Withdrawal Charge in this case, assuming no prior partial withdrawals, would
equal $399.89.
In calculating the Withdrawal Charge under the FIFO method, the January 1,
1995, $5,000 purchase payment is first reduced by the three $30 Contract Fees
on January 1, 1996, 1997, and 1998, i.e., to $4,910. Ten percent of the
Accumulated Value on January 1, 1998, i.e., $900 is then deducted.
The remaining balance of the $5,000 January 1, 1995, purchase payment, i.e.,
$4,010, is then withdrawn in its entirety and is assessed a Withdrawal Charge
of $280.70 (.07 x $4,010). All of the $1,000 January 1, 1996, purchase payment
is to be withdrawn and is assessed a Withdrawal Charge of $80 (.08 x $1,000).
To make up the remainder of the $6,000 paid to the Owner, $489.89 is withdrawn
from the January 1, 1997, purchase payment. This is assessed a Withdrawal
Charge of $39.19 (.08 x $489.89).
Therefore, the total amount paid to the Owner is $6,000 and the total
Withdrawal Charge is $399.89.
Withdrawals made prior to the Owner attaining age 59 1/2 may be subject to
certain adverse tax consequences. An IRS excise tax of 10% is generally
applicable to the taxable portion (earnings) of a premature withdrawal from
the Contract. (See "Federal Income Taxes--Penalty for Premature Withdrawals.")
To the extent that the proceeds from the Withdrawal Charges may be
insufficient to cover distribution costs, John Hancock may recover them from
its general account assets which may consist of, among other things, proceeds
derived from mortality and expense risk charges deducted from the Account.
VARIATIONS IN CHARGES
In the future, John Hancock may allow a reduction in or the elimination of
the Withdrawal Charges, the charges for mortality and expense risks, the
administrative services charge, or the annual contract fee assessed on
Contracts sold to groups or classes of individuals in a manner resulting in a
reduction in the expenses associated with the sale of such Contracts or the
costs associated with administering or maintaining such Contracts.
The entitlement to such a reduction in or elimination of charges and fees
will be determined by John Hancock based upon factors such as the following:
(1) the size of the initial purchase payment, (2) the size
18
<PAGE>
of the group or class, (3) the total amount of purchase payments expected to
be received from the group or class and the manner in which purchase payments
are remitted, (4) the nature of the group or class for which the Contracts are
being purchased and the persistency expected from that group or class as well
as the mortality risks associated with that group or class, (5) the purpose
for which the Contracts are being purchased and whether that purpose makes it
likely that costs and expenses will be reduced, or (6) the level of
commissions paid to selling broker/dealers or marketing representatives with
respect to Contracts within the same group or class.
John Hancock will make any reduction in charges or fees according to its own
rules in effect at the time an application for a Contract is approved. John
Hancock reserves the right to change these rules from time to time. Any
variation in charges or fees will reflect differences in costs and services,
will apply uniformly to all prospective Contract purchasers in the group or
class, and will not be unfairly discriminatory to the interests of any Owner.
PREMIUM OR SIMILAR TAXES
Several states and local governments impose a premium or similar tax on
annuities. Currently, such taxes range up to 5% of the Accumulated Value
applied to an Annuity Option. Ordinarily, any state-imposed premium or similar
tax will be deducted from the Accumulated Value of the Contract only at the
time of annuitization.
For Contracts issued in South Dakota however, John Hancock pays a tax on
each premium payment at the time it is made. John Hancock will deduct a charge
for these taxes from the Accumulated Value of the Contract at the time of
annuitization, death, surrender, or withdrawal. Such a charge is equal to the
applicable premium tax percentage stated above times the amount of Accumulated
Value that is applied to an Annuity Option, surrendered, withdrawn, or at
death. The net economic effect of this procedure is not significantly
different than if John Hancock deducted the premium tax from each premium
payment when received.
The charges described above (exclusive of taxes) and the Contracts' annuity
purchase rates will apply for the duration of each Contract and, except as
noted above, will not be increased by John Hancock. However, these charges do
not include all of the expenses which may be incurred for the account of
Owners and Annuitants. Additional charges will be made directly to the Account
for taxes, if any, based on the income of, capital gains of, assets in, or the
existence of, the Account and interest on funds borrowed. In addition, John
Hancock reserves the right to deduct premium taxes from premiums when paid.
Moreover, the Account purchases and redeems shares of the Fund at net asset
value, a value which reflects the deduction from the assets of the Fund of its
investment management fee and of certain operating expenses described briefly
under "Summary Information."
THE CONTRACTS
The descriptions herein are based on certain provisions of the Contracts
offered by this Prospectus. Reference should be made to the actual Contracts
and to the terms and limitations of any tax qualified plan which is to be
funded by such Contracts. Tax qualified plans are subject to several
requirements and limitations which may affect the terms of any particular
Contract or the advisability of taking certain action permitted thereby.
PURCHASE OF CONTRACTS
The marketing representative will assist in the completion of the
application for the Contract and will be responsible for its transmittal,
together with the necessary purchase payment, to John Hancock's Home Office.
If the application is complete and the Contract applied for is suitable, the
Contract will be issued
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<PAGE>
and thereafter delivered by the marketing representative. If the completed
application is received in proper order, the initial purchase payment
accompanying the completed application is applied within two business days
after receipt. If an initial purchase payment is not applied within five
business days after receipt, it will be refunded unless John Hancock has
received the consent of the applicant to retain the purchase payment until
receipt of information necessary to complete the issuance of the Contract.
The initial purchase payment must be at least $5,000 ($1,000 for individual
retirement accounts and qualified plans) and subsequent payments must be at
least $50 in amount, except where otherwise permitted by John Hancock. Maximum
transfers and payments to any one subaccount in a single Contract Year are
$500,000, ($100,000 into the Fixed Account after the initial premium).
Increases in purchase payments beyond the foregoing limits may be made only
with John Hancock's written consent. While the Annuitant is living and the
Contract is in force, purchase payments may be made at any time before
maturity, except that no new purchase payments may be made after the
Annuitant's 85th birthday. These limits may be waived by John Hancock.
THE ACCUMULATION PERIOD
ACCUMULATION SHARES
Net purchase payments are allocated by John Hancock to any one or more of
the subaccounts or the Fixed Account or allocated among the subaccounts and
the Fixed Account in the proportion specified in the application for the
Contract or as directed by the Owner from time to time. Any change in the
election will be effective as to purchase payments made after the receipt by
John Hancock at its Home Office of notice in form satisfactory to John
Hancock.
Each net purchase payment allocated to a subaccount purchases Accumulation
Shares of that subaccount at the value of such shares next determined after
the receipt of such net purchase payment at the Home Office of John Hancock.
See "Variable Account Valuation Procedures." The number of Accumulation Shares
of a subaccount purchased with a specific purchase payment will be determined
by dividing the net purchase payment by the value of an Accumulation Share in
that subaccount when the net purchase payment is applied. The value of the
Accumulation Shares so purchased will vary in amount thereafter, depending
upon the investment performance of the subaccount and the charges and
deductions made against the subaccount.
VALUE OF ACCUMULATION SHARES
At any date prior to a Contract's maturity date, the total value of the
Accumulation Shares in a subaccount which have been credited to a Contract can
be computed by multiplying the number of such Accumulation Shares by the
appropriate Accumulation Share Value in effect for such date.
TRANSFERS AMONG SUBACCOUNTS
Not more often than twelve times in each Contract Year, but not on or within
30 days prior to the date of maturity, the Owner may elect to transfer all or
any part of the Accumulation Shares or Annuity Units credited to a Contract
from one subaccount to another. Any such transfer will result in the
redemption and purchase of Accumulation Shares or Annuity Units, whichever is
applicable, on the basis of the respective values next determined after
receipt of notice satisfactory to John Hancock at its Home Office. (For Fixed
Account transfers, see "Appendix--Fixed Account and Fixed Account Value.") A
transfer pursuant to the dollar-cost averaging feature discussed below counts
toward the twelve transfers per year.
An Owner may request a transfer in writing or, once a written telephone
transfer authorization form is completed by the Owner, the Owner may request a
transfer by telephoning John Hancock at 800 REAL LIFE (800-732-5543). During
periods of heavy telephone transfers, implementing a telephone transfer may
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be difficult. If an Owner is unable to reach John Hancock via the telephone
transfer number cited above, the Owner should send a written request to John
Hancock via an express mailing service or via the John Hancock facsimile
machine at 617-572-5410. (Any transfer requests received via facsimile are
considered telephone transfers and are bound by the conditions outlined in the
Owner's signed telephone transfer authorization form.) Any written request
should include the Owner's name, daytime telephone number, and Contract number
as well as the names of the subaccounts from which and to which money will be
transferred. John Hancock reserves the right to modify, suspend, or terminate
telephone transfers at any time without notice to the Owners.
An Owner who authorizes telephone transfers will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
transfer instructions which John Hancock reasonably believes to be genuine,
unless such loss, expense or cost is the result of John Hancock's mistake or
negligence. John Hancock employs procedures which provide adequate safeguards
against the execution of unauthorized transfers, and which are reasonably
designed to confirm that transfer instructions received by telephone are
genuine. These procedures include requiring personal identification, tape
recording calls, and providing written confirmation to the Owner.
DOLLAR-COST AVERAGING
The Owner may elect to have automatically transferred on a monthly,
quarterly, semi-annual or annual basis, at no cost, part of the Accumulation
Shares credited to the Money Market subaccount into one or more of the other
subaccounts. The minimum amount of each transfer is $250. Automatic transfers
into the Fixed Account are not permitted. To begin the program, the
Accumulated Value of the Contract must be at least $20,000. The program
continues until the earlier of 12, 24, or 36 (as chosen by the Owner) months
and full liquidation of the Money Market subaccount. Transfers may be made via
telephone or facsimile machine provided a telephone authorization form has
been completed by the Owner. John Hancock reserves the right to terminate the
dollar-cost averaging program at any time.
SURRENDER OF CONTRACT; PARTIAL WITHDRAWALS
Prior to its date of maturity, if the Annuitant is living, a Contract may be
surrendered for a cash payment representing all or part of the total Accumu-
lated Value of the Contract. The appropriate number of Accumulation Shares
will be redeemed at their value next determined after the receipt by John Han-
cock at its Home Office of notice in form satisfactory to John Hancock. Unless
directed otherwise by the Owner, that portion of the Accumulated Value of the
Contract redeemed in a partial withdrawal will be redeemed in each subaccount
and in the Fixed Account in the same proportion as the Accumulated Value of
the Contract is then allocated among the subaccounts and the Fixed Account.
The redemption value may be more or less than the net purchase payments ap-
plied under the Contract to purchase the Accumulation Shares, depending upon
the market value of the Fund shares held in the subaccount at the time, minus
any applicable Withdrawal Charge and any unpaid contract fees. The resulting
cash payment will be made in a single sum, ordinarily within seven days after
receipt of such notice. As described under "Miscellaneous Provisions--Defer-
ment of Payment," however, redemption and payment may be delayed under certain
circumstances. See "Federal Income Taxes" for possible adverse tax conse-
quences of certain surrenders and partial withdrawals.
Any request for a surrender or partial withdrawal should be mailed to Life
and Annuity Services, Post Office Box 111, Boston, MA 02117.
A partial withdrawal is not permitted in an amount less than $100 or if the
total Accumulated Value of a Contract remaining after the withdrawal would be
less than $1000. A partial withdrawal is not a loan and, once made, cannot be
repaid.
In the event the Accumulated Value of the Contract becomes zero, the
Contract will terminate.
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SYSTEMATIC WITHDRAWAL
The Owner may elect to participate in a systematic withdrawal plan, which
enables the Owner to pre-authorize a periodic exercise of the contractual
withdrawal rights described above. Owners entering into such a plan instruct
John Hancock to withdraw a level dollar amount from the Contract on a monthly,
quarterly, semi-annual, or annual basis. The amount deducted will result in
the cancellation of Accumulation Shares from each applicable subaccount in the
ratio that the value of each subaccount bears to the total Accumulated Value.
Currently, systematic withdrawal is available to Owners who have a Contract
Value of $25,000 or more. The Company reserves the right to modify the
eligibility rules or other terms and conditions of this program at any time,
without notice. The total systematic withdrawal in a Contract Year is limited
to 10% of the Accumulated Value of the Contract as of the beginning of the
Contract Year. The minimum withdrawal is $100. Withdrawals are subject to the
Withdrawal Charge described above. The systematic withdrawal will terminate
upon cancellation by the Owner or in the event that the Accumulated Value of
the Contract becomes $5,000 or less. Systematic withdrawal is not available to
Contracts participating in the Dollar-Cost Averaging program. There may be tax
consequences associated with the systematic withdrawal plan. See "Federal
Income Taxes."
DEATH BENEFIT BEFORE DATE OF MATURITY
If the Annuitant dies before the date of maturity or the surrender or
termination of a Contract, a death benefit is payable. The death benefit will
be the greatest of (a) the Accumulated Value of the Contract next determined
following receipt at the Home Office of John Hancock of due proof of death,
together with any required instructions as to method of settlement, (b) the
amount of the purchase payments made under the Contract reduced by all prior
partial withdrawals (including Withdrawal Charges), if any, or (c) in states
where permitted by law, the highest Accumulated Value of the Contract as of
any third interval Contract anniversary preceding the Contract anniversary
nearest the Annuitant's 81st birthday, plus the purchase payments made under
the Contract, adjusted for partial withdrawals (including any Withdrawal
Charges), since such Contract anniversary.
In making the computation described in clause (c) of the preceding sentence,
the Accumulated Value on the third Contract anniversary, and on every third
anniversary thereafter (until the Contract anniversary preceding the Contract
anniversary that is closest to the Annuitant's 81st birthday) is adjusted for
subsequent premium payments and withdrawals and Withdrawal Charges. The
highest such adjusted Accumulated Value is then compared to the amounts
described in clauses (a) and (b), above. The greatest of these three amounts
forms a minimum. This minimum or "floor" is first established on the third
Contract anniversary and may increase on future third interval Contract
anniversaries as a result of additional premium payments or favorable
investment performance, but it will never decrease unless partial withdrawals
are made. This "stepped-up" death benefit is provided at no additional cost to
the Owner. In the event that the Owner is different from the Annuitant, the
distribution rules required by the Code will apply, as discussed below.
Payment of the death benefit will be made in a single sum to the beneficiary
designated by the Owner prior to the Annuitant's death unless an optional
method of settlement has been elected by the Owner. If an optional method of
settlement has not been elected by the Owner, the beneficiary may elect an
optional method of settlement in lieu of a single sum. No deduction is made
for sales or other expenses upon such election. Payment will be made in a
single sum in any event if the death benefit is less than $5000. See "Annuity
Period--Annuity Options". If there is no surviving beneficiary, the Owner, or
his or her estate is the beneficiary.
The Code requires certain distribution provisions to be included in any
Contract used to fund other than a tax qualified plan (See "Federal Income
Taxes"). Failure to include the required distribution provisions results in
the Contract not being treated as an annuity for Federal tax purposes. The
Code imposes comparable distribution requirements for Contracts used to fund
tax qualified plans. These
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required provisions for tax qualified plans will be reflected by means of
separate disclosures and endorsements furnished by John Hancock to Owners.
The Code distribution requirements are expected to present no practical
problems when the Annuitant and Owner are the same person. Nevertheless, all
Owners of Contracts not used to fund a tax qualified plan and IRA Contract
Owners should be aware that the following distribution requirements are
applicable notwithstanding any provision to the contrary in the Contract (or
in this prospectus) relating to payment of the death benefit or death of the
Annuitant.
If the Owner dies on or after annuity payments have begun, any remaining
benefit must be paid out at least as rapidly as under the method of making
annuity payments then in effect. If the Owner dies before annuity payments
have begun: (a) if the beneficiary is the surviving spouse of the Owner, the
beneficiary may continue the Contract in force as Owner; or (b) if the
beneficiary is not the surviving spouse of the Owner, or if the beneficiary is
the surviving spouse of the Owner but does not choose to continue the
Contract, the entire interest in the Contract on the date of death of the
Owner must be: (i) paid out in full within 5 years of the Owner's death, or
(ii) applied in full towards the purchase of a life annuity on the beneficiary
with payments commencing within 1 year of the Owner's death.
The Code imposes comparable distribution requirements on tax qualified
plans.
If the Owner is not the Annuitant, "the entire interest in the Contract on
the date of death of the Owner" is equal to the Surrender Value if paid out in
full within five years of the Owner's death, or is equal to the Accumulated
Value if applied in full towards the purchase of a life annuity on the
beneficiary with payments commencing within one year of the Owner's death.
Note that "the entire interest in the Contract on the date of death of the
Owner" which is payable if the Owner dies before annuity payments have begun
may be an amount less than the death benefit which would have been payable if
the Annuitant had died instead. Note also that notice should be furnished
promptly to John Hancock upon the death of the Owner.
THE ANNUITY PERIOD
During the annuity period, the total value of any one Contract must be
allocated among no more than four "accounts" (i.e., the subaccounts and/or the
Fixed Account). Amounts allocated to the Fixed Account will provide annuity
payments on a fixed basis; amounts allocated to the subaccounts will provide
annuity payments on a variable basis. If more than four accounts are being
used on the maturity date, John Hancock will divide the total Accumulated
Value of the Contract proportionately among the four accounts with the largest
Accumulated Values. Only variable annuity payments are described in this
prospectus.
Annuity payments will commence on the date of maturity of the Contract if
the Annuitant is then living and the Contract is then in force. Each Contract
will provide at the time of its issuance for a Life Annuity with Ten Years
Certain. Under this form of annuity, variable annuity payments are made
monthly to the Annuitant for life and, if the Annuitant dies within ten years
after the date of maturity of the Contract, the payments remaining in the ten-
year period will be made to the contingent payee, subject to the terms of any
supplementary agreement issued. (NOTE: The terminology used in a supplementary
agreement may differ from that used in a Contract. For example, in a
supplementary agreement, the term "payee" may be used to refer to the
Annuitant or to some other person named by the Annuitant or the Owner to
receive payments under the supplementary agreement in the event of the
Annuitant's death, and the term "contingent payee" may be used to refer to the
beneficiary.) A different form of annuity may be elected by the Owner, as
described in "Annuity Options," prior to the date of maturity of the Contract.
Once a given form of annuity takes effect, it may not be changed.
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If the initial monthly annuity payment under a Contract would be less than
$50, John Hancock may make a single sum payment equal to the total Surrender
Value of the Contract on the date the initial payment would be payable, in
place of all other benefits, or, if agreed to by the Owner, make periodic
payments at quarterly, semi-annual or annual intervals in place of monthly
payments.
Each Contract specifies a provisional date of maturity at the time of its
issuance, which date may be no earlier than six months after the date the
first payment is applied to the Contract. The Owner may subsequently elect a
different date of maturity, however. Unless otherwise permitted by John
Hancock, such subsequently-elected date may be no earlier than six months
after the date the first payment is applied to the Contract, nor later than
the maximum maturity age specified in the Contract. The election is made by
written notice received by John Hancock at its Home Office before the
provisional date of maturity and at least 31 days prior to the date of
maturity. If a date of maturity different from the provisional date of
maturity is not elected by the Owner, the provisional date of maturity shall
be the date of maturity of the Contract. Particular care should be taken in
electing the date of maturity of Contracts issued under tax qualified plans.
See "Federal Income Taxes."
VARIABLE MONTHLY ANNUITY PAYMENTS
Variable monthly annuity payments under a Contract are determined by
converting each subaccount's Accumulation Shares credited to the Contract
(less any applicable premium tax) into the respective Annuity Units of each
subaccount on the date of maturity of the Contract or some other date elected
for commencement of variable annuity payments. See "Calculation of Annuity
Units."
The amount of each annuity payment after the first payment will depend on
the investment performance of the subaccounts being used. If the actual net
investment return (after deducting all charges) of a subaccount during the
period between the dates for determining two monthly payments based on that
subaccount exceeds the "assumed investment rate" (explained below), the latter
monthly payment will be larger than the former. On the other hand, if the
actual net investment return is less than the assumed investment rate, the
latter monthly payment will be smaller than the former.
ASSUMED INVESTMENT RATE
The assumed investment rate for all Contracts will be 3 1/2% per year except
as provided below. The assumed investment rate is significant in determining
the amount of the initial variable monthly annuity payment and the amount by
which subsequent variable monthly payments are more or less than the initial
variable monthly payment.
Where applicable state law so provides, an Owner may elect a variable
annuity option with a different assumed investment rate, not in excess of 6%,
if such a rate is made available by John Hancock in the Owner's state.
Election of a higher assumed investment rate produces a larger initial annuity
payment but also means that eventually the monthly annuity payments would be
smaller than if a lower assumed investment rate had been elected.
CALCULATION OF ANNUITY UNITS
Accumulation Shares are converted into Annuity Units by first multiplying
the number of each subaccount's Accumulation Shares credited to the Contract
on the date of conversion by the appropriate Accumulation Share Value as of
ten calendar days prior to the date the initial variable monthly annuity
payment is due. For each subaccount the resulting value (less any applicable
premium tax) is then multiplied by the applicable annuity purchase rate, which
reflects the age and possibly sex of the Annuitant and the assumed investment
rate, specified in the Contract. This computation determines the amount of
each subaccount's initial monthly variable annuity payment to the Annuitant.
The number of each subaccount's Annuity Units to be credited to the Contract
is then determined by dividing the amount of
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each subaccount's initial variable monthly annuity payment by each
subaccount's Annuity Unit Value as of ten calendar days prior to the date the
initial payment is due.
ANNUITY OPTIONS
The Owner may elect an Annuity Option during the lifetime of the Annuitant
by written notice received by John Hancock at its Home Office prior to the
date of maturity of the Contract. If no option is selected, Option A with Ten
Years Certain will be used. A beneficiary entitled to payment of a death
benefit in a single sum may, if no election has been made by the Owner prior
to the Annuitant's death, elect an Annuity Option by written notice received
by John Hancock at its Home Office prior to the date the proceeds become
payable. The Owner may also elect that the Surrender Value be applied to an
Annuity Option at the time of a full surrender of a Contract that has been
outstanding for at least 6 months. No option may be elected if the Accumulated
Value of the Contract to be applied is less than $5000. Among the options
available are the following two basic Annuity Options.
OPTION A: LIFE ANNUITY WITH FIVE, TEN OR TWENTY YEARS CERTAIN
Variable monthly payments will be made for a designated period of 5, 10 or
20 years and thereafter as long as the payee lives, with the guarantee that if
the payee dies prior to the end of the 5, 10 or 20 year period, whichever is
applicable, payments will continue for the remainder of the guaranteed period
to a contingent payee, subject to the terms of any supplementary agreement
issued.
OPTION B: LIFE ANNUITY WITHOUT REFUND
Variable monthly payments will be made to the payee as long as he lives. No
minimum number of payments is guaranteed.
OTHER CONDITIONS
John Hancock reserves the right at its sole discretion to make available to
Owners and other payees optional methods of payment in addition to the Annuity
Options described in this Prospectus and the applicable Contract.
Federal income tax requirements currently applicable to H.R. 10 and
individual retirement annuity plans provide that the period of years
guaranteed under Option A cannot be any greater than the joint life
expectancies of the payee and his or her designated beneficiary.
If the Owner dies on or after annuity payments have begun, any remaining
benefit must be paid out at least as rapidly as under the method of making an-
nuity payments then in effect. The Code imposes a comparable distribution re-
quirement for Contracts used to fund tax qualified plans.
VARIABLE ACCOUNT VALUATION PROCEDURES
VALUATION DATE--A Valuation Date is any date on which the New York Stock
Exchange is open for trading and on which the Fund values its shares. On any
date other than a Valuation Date, the Accumulation Share Value or Annuity Unit
Value will be the same as that on the next following Valuation Date.
VALUATION PERIOD--A Valuation Period is that period of time from the beginning
of the day following a Valuation Date to the end of the next following
Valuation Date.
ACCUMULATION SHARE VALUE--The Accumulation Share Value is calculated
separately for each subaccount. The value of one Accumulation Share on any
Valuation Date is determined for each subaccount by multiplying the
immediately preceding Accumulation Share Value by the applicable Net
Investment Factor for the Valuation Period ending on such Valuation Date.
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ANNUITY UNIT VALUE--The Annuity Unit Value is calculated separately for each
subaccount. The value of one Annuity Unit on any Valuation Date is determined
for each subaccount by first multiplying the immediately preceding Annuity
Unit Value by the applicable Net Investment Factor for the Valuation Period
ending on such date and then multiplying this product by an adjustment factor
which will neutralize the assumed investment rate used in determining the
amounts of annuity payable. The adjustment factor for a Valuation Period of
one day for Contracts with an assumed investment rate of 3 1/2% per year is
.99990575. The assumed investment rate is neutralized by applying the
adjustment factor so that the variable annuity payments will increase only if
the actual net investment rate of the subaccount exceeds 3 1/2% per year and
will decrease only if it is less than 3 1/2% per year.
NET INVESTMENT FACTOR--The Net Investment Factor for each subaccount for any
Valuation Period is equal to 1 plus the applicable net investment rate for
such Valuation Period. A Net Investment Factor may be more or less than 1. The
net investment rate for each subaccount for any Valuation Period is equal to
(a) the accrued investment income and capital gains and losses, whether
realized or unrealized, of the subaccount for such Valuation Period less (b)
the sum of a deduction for any applicable income taxes and, for each calendar
day in the Valuation Period, a deduction of 0.004110% of the value of each
subaccount at the beginning of the Valuation Period, the result then being
divided by (c) the value of the total net assets of each subaccount at the
beginning of the Valuation Period.
ADJUSTMENT OF UNITS AND VALUES--John Hancock reserves the right to change the
number and value of the Accumulation Shares or Annuity Units or both credited
to any Contract, without the consent of the Owner or any other person,
provided strict equity is preserved and the change does not otherwise affect
the benefits, provisions or investment return of the Contract.
MISCELLANEOUS PROVISIONS
RESTRICTION ON ASSIGNMENT
In order to qualify for favorable tax treatment, certain Contracts may not
be sold, assigned, discounted or pledged as collateral for a loan or as
security for the performance of an obligation or for any other purpose, to any
person, unless the Owner is the trustee of a trust described in Section 401(a)
of the Code. Because an assignment, pledge or other transfer may be a taxable
event an Owner should consult a competent tax adviser before taking any such
action.
DEFERMENT OF PAYMENT
Payment of the value of any Accumulation Shares in a single sum upon a
surrender or partial withdrawal will ordinarily be made within seven days
after receipt of the written request therefor by John Hancock at its Home
Office. However, redemption may be suspended and payment may be postponed at
times (a) when the New York Stock Exchange is closed, other than customary
weekend and holiday closings, (b) when trading on that Exchange is restricted,
(c) when an emergency exists as a result of which disposal of securities in a
subaccount is not reasonably practicable or it is not reasonably practicable
to determine the value of the net assets of a subaccount or (d) when a
governmental body having jurisdiction over the Account by order permits such
suspension. Rules and regulations of the Securities and Exchange Commission,
if any are applicable, will govern as to whether conditions described in (b)
or (c) exist.
RESERVATION OF RIGHTS
John Hancock reserves the right to add or delete subaccounts, to change the
underlying investments of any subaccount, to operate the Account in any form
permitted by law and to terminate the Account's registration under the 1940
Act if such registration should no longer be legally required. Certain changes
may, under applicable laws and regulations, require notice to or approval of
Owners. Otherwise, changes do not require such notice or approval.
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OWNER AND BENEFICIARY
The Owner has the sole and absolute power to exercise all rights and
privileges under the Contract, except as otherwise provided by the Contract or
by written notice of the Owner. The Owner and the beneficiary are designated
in the application and may be changed by the Owner, effective upon receipt of
written notice at the Home Office, subject to the rights of any assignee of
record, any action taken prior to receipt of the notice and certain other
conditions. While the Annuitant is alive, the Owner may be changed by written
notice. The beneficiary may be changed by written notice no later than receipt
of due proof of the death of the Annuitant. The change will take effect
whether or not the Owner or the Annuitant is then alive.
FEDERAL INCOME TAXES
THE ACCOUNT AND JOHN HANCOCK
John Hancock is taxed as a life insurance company under the Code. The
Account is part of John Hancock's total operations and is not taxed separately
as a "regulated investment company" or otherwise.
The Contracts permit John Hancock to charge against the Account any taxes,
or provisions for taxes, attributable to the operation or existence of the
Contracts or the Account. Currently, John Hancock does not anticipate making a
charge for income and other taxes because of the level of such taxes. If the
level of current tax is increased, or is expected to increase in the future,
John Hancock reserves the right to make a charge in the future.
John Hancock assumes no responsibility for determining whether a particular
retirement plan satisfies the applicable requirements of the Code or whether a
particular employee is eligible for inclusion under a plan.
CONTRACTS PURCHASED OTHER THAN TO FUND A TAX QUALIFIED PLAN
THE OWNER OR OTHER PAYEE
The Contracts are considered annuity contracts under Section 72 of the Code.
Currently no Federal income tax is payable on increases in Contract Value
until payments are made to the Owner or other payee under such Contract.
However, a Contract owned other than by a natural person is not generally an
annuity for tax purposes and any increase in value thereunder is taxable as
ordinary income as accrued.
When payments under a Contract are made in the form of an annuity, the
amount of each payment is taxed to the Owner or other payee as ordinary income
to the extent that such payment exceeds an allocable portion of the Owner's
"investment in the contract" (as defined in the Code). In general, an Owner's
"investment in the contract" is the aggregate amount of purchase payments made
by him, reduced by any amounts previously distributed from the Contract that
were not subject to tax. The portion of each variable annuity payment to be
excluded from income is determined by dividing the "investment in the
contract," adjusted by any refund feature, by the number of periodic payments
anticipated during the time that periodic payments are to be made. In the case
of a fixed annuity payment, the amount to be excluded in each year is
determined by dividing the "investment in the contract," adjusted by any
refund feature, by the amount of "expected return" during the time that
periodic payments are to be made, and then multiplying by the amount of the
payment."
When a payment under a Contract is made in a single sum, the amount of the
payment is taxed as ordinary income to the Owner or other payee to the extent
it exceeds the Owner's "investment in the contract."
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PARTIAL WITHDRAWALS BEFORE ANNUITY STARTING DATE
When a payment under a Contract, including a payment under a systematic
withdrawal plan, is less than the amount that would be paid upon the
Contract's complete surrender and such payment is made prior to the
commencement of annuity payments under the Contract, part or all of the
payment (the partial withdrawal) may be taxed to the Owner or other payee as
ordinary income.
On the date of the partial withdrawal, if the cash value of the Contract is
greater than the investment in the Contract, any part of such excess value so
withdrawn is subject to tax as ordinary income.
If an individual assigns or pledges any part of the value of a Contract, the
value so pledged or assigned is taxed as ordinary income to the same extent as
a partial withdrawal.
PENALTY FOR PREMATURE WITHDRAWALS
In addition to being included in ordinary income, the taxable portion of any
withdrawal may be subject to a 10-percent penalty tax. The penalty tax does
not apply to payments made to the Owner or other payee after the Owner attains
age 59 1/2, or on account of the Owner's death or disability. If the
withdrawal is made in substantially equal periodic payments over the life of
the Annuitant or other payee or over the joint lives of the Annuitant and the
Annuitant's beneficiary the penalty will also not apply.
DIVERSIFICATION REQUIREMENTS
Each of the Portfolios of the Fund intends to qualify as a regulated
investment company under Subchapter M of the Code and will have to meet the
investment diversification tests of Section 817(h) of the Code and the
underlying regulations. The Treasury Department and the Internal Revenue
Service may, at some future time, issue a ruling or a regulation presenting
situations in which it will deem "investor control" to be present over the
assets of the underlying Portfolios, causing the Owner to be taxed currently
on income credited to the Contracts. In such a case, John Hancock reserves the
right to amend the Contract or the choice of underlying Portfolios to avoid
current taxation to the Owners.
CONTRACTS PURCHASED TO FUND A TAX QUALIFIED PLAN
WITHHOLDING ON ELIGIBLE ROLLOVER DISTRIBUTIONS
Recent legislation requires 20% withholding on certain distributions from
tax qualified plans. An Owner wishing to rollover his entire distribution
should have it paid directly to the successor plan. Otherwise, the Owner's
distribution will be reduced by the 20% mandatory income tax. Consult a
qualified tax adviser before taking such a distribution.
CONTRACTS PURCHASED UNDER INDIVIDUAL RETIREMENT ANNUITY PLANS (IRA)
The maximum amount of purchase payments deductible each year with respect to
an individual retirement annuity contract (as defined in Section 408 of the
Code) issued on the life of an eligible purchaser is the lesser of $2,000 or
100% of compensation includible in gross income. A person may also purchase a
contract for the benefit of his or her non-working spouse. Where an individual
elects to deduct amounts contributed on his or her own behalf and on behalf of
a spouse, the maximum amount of purchase payments deductible is the lesser of
$2,250 or 100% of the compensation included in the gross income of the working
spouse; provided, however, not more than $2,000 can be allocated to either
person's account. Taxpayers who are active participants in an employer-
sponsored retirement plan are permitted to make a deductible purchase payment
only if their adjusted gross incomes are below certain amounts.
No deduction is allowed for purchase payments made in or after the taxable
year in which the Owner has attained the age of 70 1/2 years nor is a
deduction allowed for a "rollover contribution" as defined in the Code.
28
<PAGE>
When payments under a Contract are made in the form of an annuity, or in a
single sum such as on surrender of the Contract or by partial withdrawal, the
payment is taxed as ordinary income.
IRS required minimum distributions must begin no later than April 1 of the
year following the year in which the Owner attains age 70 1/2. The Owner may
incur adverse tax consequences if a distribution on surrender of the Contract
or by partial withdrawal is made prior to his attaining age 59 1/2, except in
the event of his death or total disability.
CONTRACTS PURCHASED UNDER SECTION 403(B) PLANS (TSA)
Purchase payments made by an employer which is a public school system or a
tax-exempt organization described in Section 501(c)(3) of the Code under
annuity purchase arrangements described in Section 403(b) of the Code are not
taxable currently to the Owner, to the extent that the aggregate of such
amounts does not exceed the Owner's "exclusion allowance" (as defined in the
Code). In general, an Owner's "exclusion allowance" is determined by
multiplying 20% of his "includible compensation" (as defined in the Code) by
the number of years of his service with the employer and then subtracting from
that product the aggregate amount of purchase payments previously excluded
from income and certain other employer payments to retirement plans in which
the Owner is a participant. Additional limitations applicable to purchase
payments are described in Section 415 of the Code. Deferrals under all plans
made at the election of the Owner generally are limited to an aggregate of
$9500 annually.
When payments under a Contract are made in the form of an annuity, such
payments are taxed to the Owner or other payee under the same rules that apply
to such payments under corporate plans (discussed below) except that five-year
averaging and capital gain phase-out are not available.
When payment under a Contract is made in a single sum, such as on surrender
of the contract or by partial withdrawal, the taxable portion of the payment
is taxed as ordinary income and the penalty for premature withdrawals may be
applicable.
Ordinarily an Owner in a Section 403(b) plan does not have any "investment
in the contract" and, thus, any distribution is fully taxed as ordinary
income.
Distributions are prohibited before the Owner is age 59 1/2, except on the
Owner's separation from service, death, or disability and except with respect
to distributions attributable to assets held as of December 31, 1988. This
prohibition does not (1) preclude transfers and exchanges to other products
that qualify under Section 403(b) or (2) restrict withdrawals of certain
amounts attributable to pre-January 1, 1989, premium payments.
CONTRACTS PURCHASED UNDER CORPORATE PLANS
In general, purchase payments made by a corporation under a qualified
pension or profit-sharing plan described in Section 401(a) of the Code or a
qualified annuity plan described in Section 403(a) of the Code are deductible
by the corporation and are not taxable currently to the employees.
When payments under a Contract are made in the form of an annuity, the
amount of each payment is taxed to the Annuitant or other payee as ordinary
income except in those cases where the Annuitant has an "investment in the
contract" (as defined in the Code). In general, an Annuitant's "investment in
the contract" is the aggregate amount of purchase payments made by him. If an
Annuitant has an "investment in the contract," a portion of each annuity
payment is excluded from income until the investment in the contract is
recovered. The amount to be excluded in each year, in the case of a variable
annuity payment, is determined by dividing the "investment in the contract,"
adjusted by any refund feature, by the number of periodic payments anticipated
during the time that periodic payments are to be made. The calculation for
fixed annuity payments is somewhat different.
29
<PAGE>
When payment under a Contract is made in a single sum or a total
distribution is made within one taxable year of the Annuitant or other payee,
the amount of the payment is taxed to the Annuitant or other payee to the
extent it exceeds the Annuitant's "investment in the contract." If such
payment is made after the Annuitant has attained age 59 1/2, or on account of
his death, retirement or other termination of employment or on account of his
death after termination of employment, five year averaging and a phase-out of
capital gains treatment for pre-1974 contributions may be available with
respect to one distribution. Other rules may be available to taxpayers who
have attained age 50 prior to January 1, 1986.
IRS required minimum distributions must begin no later than April 1 of the
year following the year in which the Annuitant attains age 70 1/2 even if the
Annuitant has not retired.
CONTRACTS PURCHASED UNDER H.R. 10 PLANS (SELF-EMPLOYED)
Self-employed persons, including partnerships, may establish tax qualified
pension and profit-sharing plans and annuity plans for themselves and for
their employees. Generally, the maximum amount of purchase payments deductible
each year with respect to variable annuity contracts issued on the life of
self-employed persons is $30,000 or 25% of "earned income" (as defined in the
Code), whichever is less. Self-employed persons must also make purchase
payments for their employees (who have met certain eligibility requirements)
at least at the same rate as they do for themselves. In general, such purchase
payments are deductible in full and are not taxable currently to such
employees.
Tax qualified plans may permit self-employed persons and their employees to
make additional purchase payments themselves (which are not deductible) of up
to 10% of earned income or compensation.
When payments under a Contract are made in the form of an annuity, such
payments are taxed to the Annuitant or other payee under the same rules that
apply to such payments under corporate plans (discussed earlier).
The tax treatment of single sum payments is also the same as under corporate
plans except that five year averaging may be unavailable to a self-employed
Annuitant on termination of service for reasons other than disability.
The same rules that apply to commencement of annuity payments under corpo-
rate plans apply to H.R. 10 plans.
CONTRACTS PURCHASED BY TOP-HEAVY PLANS
Certain corporate and H.R. 10 plans may be characterized under Section 416
of the Code as "top-heavy plans" if a significant portion of the plan assets
is held for the benefit of the "key employees" (as defined in the Code). Care
must be taken to consider the special limitations applicable to top-heavy
plans and the potentially adverse tax consequences to key employees.
CONTRACTS PURCHASED UNDER GOVERNMENT DEFERRED COMPENSATION PLANS (SECTION
457)
Participants in certain deferred compensation plans maintained by a state, a
political subdivision of a state, or their agencies or instrumentalities or by
tax-exempt organizations are permitted to exclude a portion of their
compensation from gross income. Amounts so deferred (including any income
thereon) shall be includible in gross income only for the taxable year in
which such amounts are paid or otherwise made available to the Annuitant or
other payee.
In general, the maximum amount of compensation which may be deferred under
such tax-favored plans is the lesser of $7500 or 33 1/3% of the participant's
"includible compensation" (as defined in the Code). The deferred compensation
plan itself must satisfy several conditions, among which are that the plan
must not permit distributions prior to the participant's separation from
service (except in the case of
30
<PAGE>
an unforeseen emergency), and that all compensation deferred under the plan
shall remain solely the employer's property and may be subject to the claims
of its creditors.
When payment under a Contract is made in the form of an annuity, or in a
single sum such as on surrender of the Contract or by partial withdrawal, the
payment is taxed as ordinary income.
WITHHOLDING OF TAXES
John Hancock is obligated to withhold taxes from certain payments unless the
recipient elects otherwise. The withholding rate varies depending upon the
nature and the amount of the distribution. John Hancock will notify the Owner
or other payee in advance of the first payment of his or her right to elect
out of withholding and furnish a form on which the election may be made. Any
election must be received by John Hancock in advance of the payment in order
to avoid withholding.
SEE YOUR OWN TAX ADVISER
The above description of Federal income tax consequences of owning a
Contract and of the different kinds of tax qualified plans which may be funded
by the Contracts is only a brief summary and is not intended as tax advice.
Nor does it include a discussion of Federal estate and gift tax or state tax
consequences. Tax laws and regulations are subject to change and such changes
may be retroactive. The rules governing the provisions of tax qualified plans
are extremely complex and often difficult to understand. Anything less than
full compliance with the applicable rules, all of which are subject to change
from time to time, can have adverse tax consequences. For example, premature
withdrawals are generally subject to a 10-percent penalty tax. The taxation of
an Annuitant or other payee has become so complex and confusing that great
care must be taken to avoid pitfalls. For further information a prospective
purchaser should consult a qualified tax adviser.
PERFORMANCE
The Account may, from time to time, advertise certain performance
information with respect to its subaccounts. THE PERFORMANCE INFORMATION IS
BASED ON HISTORICAL INVESTMENT EXPERIENCE OF THE SUBACCOUNTS AND DOES NOT
INDICATE OR REPRESENT FUTURE PERFORMANCE.
The subaccounts may include total return in advertisements. When a
subaccount advertises its total return, it will usually be calculated for one
year, five years, and ten years or for the life of the applicable portfolio.
Total return is the percentage change between the value of a hypothetical
investment in the subaccount at the beginning of the relevant period to the
value of the investment at the end of the period, assuming the deduction of
any Withdrawal Charge which would be payable if the Contract Owner surrendered
the Contract at the end of the period indicated. Total return at the Account
level reflects all Contract charges (other than premium tax charges)--
Withdrawal Charge, mortality and expense risk charges, administrative service
charge, and the annual contract fee--and is therefore lower than total return
at the Fund level where no comparable charges have been deducted. Because the
Contracts were first offered in 1995, a total return figure does not
necessarily correspond to the total return actually earned by any Contract
Owner.
The Money Market Subaccount may advertise "current yield" and "effective
yield." Current yield refers to the income earned by the subaccount over a
seven-day period and then annualized; i.e., the income earned in the period is
assumed to be earned every seven days over a 52-week period and stated as a
percentage of the investment. Effective yield is calculated similarly but,
when annualized, the income earned by the investment is assumed to be
reinvested in the subaccount and thus compounded in the course of a 52-week
period. The effective yield will be slightly higher than the current yield
because of this compounding effect of the assumed reinvestment.
31
<PAGE>
The other subaccounts may also advertise current yield. For these
subaccounts, the current yield will be calculated by dividing the
annualization of the income earned by the subaccount during a recent thirty-
day period by the maximum offering price per unit at the end of such period.
In all cases, current yield and effective yield reflect the recurring charges
on the Account level including the annual contract fee but do not reflect any
premium tax charge or any Withdrawal Charge.
Performance information for the subaccounts may be compared to other
variable annuity separate accounts or other investment products surveyed by
Lipper Analytical Services, Inc., an independent service which monitors and
ranks the performance of investment companies, or tracked by other rating
services, companies, publications, or persons who independently monitor and
rank investment company performance. Performance figures are calculated in
accordance with standardized methods established by each reporting service.
STATE REGULATION
John Hancock is subject to the provisions of the Massachusetts insurance
laws applicable to mutual life insurance companies and to regulation and
supervision by the Massachusetts Commissioner of Insurance. John Hancock is
also subject to the applicable insurance laws of all the other states and
jurisdictions in which it does an insurance business.
REPORTS
Reports will be furnished at least annually to an Owner showing the number
and value of Accumulation Shares credited to the variable annuity contract and
containing the financial statements of the Fund.
VOTING PRIVILEGES
THE ACCOUNT
All of the assets in the subaccounts of the Account are invested in shares
of the corresponding Portfolios of the Fund. John Hancock will vote the shares
of each of the Portfolios of the Fund which are deemed attributable to the
Contracts at meetings of the Fund's shareholders in accordance with
instructions received from Owners of the Contracts. Shares of the Fund held in
the Account which are not attributable to the Contracts (or other variable
annuity contracts issued by John Hancock) and those for which instructions
from owners are not received will be represented by John Hancock at the
meeting and will be voted for and against each matter in the same proportion
as the votes based upon the instructions received from the owners of all
annuity contracts funded through the Account's corresponding variable
subaccounts.
The number of Fund shares held in each subaccount deemed attributable to
each Owner is determined by dividing a Contract's Accumulation Share Value (or
for a Contract under which annuity payments have commenced, the equivalent) in
the subaccount by the net asset value of one share in the corresponding Fund
Portfolio in which the assets of that subaccount are invested. Fractional
votes will be counted. The number of shares as to which the Owner may give
instructions will be determined as of the record date for the Fund's meeting.
Owners of Contracts may give instructions regarding the election of the
Board of Trustees of the Fund, ratification of the selection of independent
auditors, approval of the Fund's investment management agreement and other
matters requiring a vote under the 1940 Act. Owners will be furnished
information and forms by John Hancock in order that voting instructions may be
given.
32
<PAGE>
JOHN HANCOCK
An Owner (or the Annuitant if a different person) will have the right to
vote at annual meetings of all John Hancock policyholders for the election of
members of the Board of Directors of John Hancock and on other corporate
matters, if any, where a policyholders' vote is taken. The Owner (or the
Annuitant if a different person) may cast only one vote as the holder of a
variable annuity contract, irrespective of the value of the contract or the
number of variable annuity contracts held.
CHANGES IN APPLICABLE LAW--FUNDING AND OTHERWISE
The voting privileges described in this prospectus are afforded based on
John Hancock's understanding of applicable Federal securities law
requirements. To the extent that applicable law, regulations or
interpretations change to eliminate or restrict the need for such voting
privileges, John Hancock reserves the right to proceed in accordance with any
such revised requirements. John Hancock also reserves the right, subject to
compliance with applicable law, including approval of Owners if so required,
to transfer assets determined by John Hancock to be associated with the class
of contracts to which the Contracts belong from the Account to another
separate account or subaccount by withdrawing the same percentage of each
investment in the Account with appropriate adjustments to avoid odd lots and
fractions.
LEGAL MATTERS
Legal matters in connection with the Contracts and Federal laws and
regulations relating to their issue and sale have been passed upon by Francis
C. Cleary, Jr., Vice President and Counsel of John Hancock.
DISTRIBUTION OF THE CONTRACTS
John Hancock, the principal underwriter and distributor of the Contracts, is
registered as a broker-dealer with the Commission under the Securities
Exchange Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. The Contracts may be purchased through either registered
representatives licensed to sell John Hancock life insurance policies and
annuity contracts or other registered broker-dealers whose representatives are
authorized by applicable law to sell variable annuity contracts. The
compensation paid to such broker-dealers is not expected to exceed 3% of
purchase payments.
REGISTRATION STATEMENT
This Prospectus omits certain information contained in the Registration
Statement which has been filed with the Securities and Exchange Commission.
More details may be obtained from the Commission upon payment of the
prescribed fee.
EXPERTS
The financial statements of the Account and of John Hancock included in the
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, whose reports thereon appear in the Statement of
Additional Information and have been so included in reliance on their reports
given on their authority as experts in accounting and auditing.
33
<PAGE>
FINANCIAL STATEMENTS
Financial statements of the Account and John Hancock may be found in the
Statement of Additional Information. The financial statements of John Hancock
should be distinguished from the financial statements of the Account and
should be considered only as bearing upon the ability of John Hancock to meet
its obligations under the Contracts.
TABLE OF CONTENTS OF STATEMENT
OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
CROSS REFERENCE TO
PAGE PAGE IN PROSPECTUS
---- ------------------
<S> <C> <C>
Business History........................................ 1 12-13
Distribution Agreement and Other Services............... 1 16, 19-20, 33
Distribution Agreement................................ 1 19-20, 33
Investment Advisory Agreement......................... 1 16
Custodian Agreement................................... 2 --
Independent Auditors.................................. 2 33
Calculation of Performance Data......................... 3 31-32
Calculation of Annuity Payments......................... 4 24-26
Financial Statements.................................... 6 34
</TABLE>
34
<PAGE>
Because of exemptive and exclusionary provisions, interests in John
Hancock's general account have not been registered under the Securities Act of
1933 and the general account has not been registered as an investment company
under the 1940 Act. Accordingly, neither the general account nor any interests
therein are subject to the provisions of these Acts, and John Hancock has been
advised that the staff of the Commission has not reviewed the disclosure in
this Prospectus relating to the Fixed Account. Disclosure regarding the Fixed
Account may, however, be subject to certain generally-applicable provisions of
the Federal securities laws relating to accuracy and completeness of
statements made in prospectuses.
APPENDIX--THE FIXED ACCOUNT AND FIXED ACCOUNT VALUE
INVESTMENTS IN THE FIXED ACCOUNT
Net purchase payments will be allocated to the Fixed Account in accordance
with the selection made by the Owner in the application. The Owner may change
such selection by notice satisfactory to John Hancock at its Home Office. Any
selection must specify what percentage of the purchase payment is to be
allocated to the Fixed Account. The percentage must be a whole number.
The Value in the Fixed Account, at any time prior to annuitization, is equal
to:
(a) net purchase payments allocated to the Fixed Account; plus
(b) Variable Account Value (amounts held in the subaccounts of the
Variable Account) transferred to the Fixed Account; plus
(c) interest credited on amounts held in the Fixed Account; less
(d) any prior partial withdrawals from the Fixed Account; less
(e) amounts transferred out of the Fixed Account to the Variable Account;
less
(f) any applicable charges deducted from the Fixed Account.
INTEREST TO BE CREDITED
Prior to annuitization, John Hancock will credit interest (calculated on a
compound basis) to purchase payments allocated to the Fixed Account at rates
declared by John Hancock, subject to a minimum rate of 3%. For purposes of
this section, Variable Account Value transferred to the Fixed Account shall be
treated as a purchase payment.
Under current practice, the interest rate credited to amounts held in the
Fixed Account will be based on the size of the initial payment to the
Contract. If the initial payment was $10,000 or more, a higher interest rate
will be credited. The rate of interest credited on each amount may vary based
upon when that amount was first allocated to the Fixed Account.
TRANSFER AND REDUCTIONS OF FIXED ACCOUNT VALUE
The Owner may transfer Fixed Account Value to one or more subaccounts of the
Variable Account or may transfer Variable Account Value into the Fixed
Account. The maximum amount that may be deposited or transferred to the Fixed
Account in a Contract Year is $100,000, exclusive of any initial deposit made
to the Fixed Account at the time the Contract is issued; such initial deposit
may be as large as $500,000. After the tenth Contract Year, no deposits or
transfers may be made into the Fixed Account. John Hancock may waive these
limits.
Sums on deposit in the subaccounts may be transferred into the Fixed Account
up to twelve times within a Contract Year during the accumulation period, but
not within six months of a transfer out of the Fixed Account. Transfers out of
the Fixed Account may be made only once in a Contract Year and only on or
within 30 days after a Contract anniversary. No more than the greater of 20%
of the Fixed Account
35
<PAGE>
Value or $500 may be transferred out of the Fixed Account per Contract Year.
After annuitization, the amount of any fixed annuity allocation may not be
changed.
Transfers will be made after receipt of notice satisfactory to John Hancock
at its Home Office. Transfer requests received by John Hancock before 4:00
p.m. Eastern Time on a business day will be valued as of the close of that
day. Any requests received after 4:00 p.m. or on a non-business day will be
valued as of the close of the next business day.
An Owner may request a transfer in writing or, once a written telephone
transfer authorization form is completed by the Owner, the Owner may request a
transfer by telephoning John Hancock at 800 REAL LIFE (800-732-5543). During
periods of heavy telephone requests, implementing a telephone transfer may be
difficult. If an Owner is unable to reach John Hancock via the telephone
transfer number cited above, the Owner should send a written request to John
Hancock via an express mailing service or via the John Hancock facsimile
machine at 617-572-5410. (Any transfer requests received via facsimile are
considered telephone transfers and are bound by the conditions outlined in the
Owner's signed telephone transfer authorization form.) Any written request
should include the Owner's name, daytime telephone number, and contract number
as well as the names of the subaccounts or Fixed Account from which and to
which money will be transferred. John Hancock reserves the right to modify,
suspend, or terminate telephone transfers at any time without notice to the
Owners.
An Owner who authorizes telephone transfers will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
transfer instructions which John Hancock reasonably believes to be genuine,
unless such loss, expense or cost is the result of John Hancock's mistake or
negligence. John Hancock employs procedures which provide adequate safeguards
against the execution of unauthorized transfers, and which are reasonably
designed to confirm that transfer instructions received by telephone are
genuine. These procedures include requiring personal identification, tape
recording calls, and providing written confirmation to the Owner.
FIXED ANNUITY PAYMENT VALUES
The dollar amount of each fixed annuity payment will be determined by
dividing the amount applied under the fixed annuity option (net of any
applicable premium taxes) by $1,000 and multiplying the result by the greater
of: (a) the applicable factor shown in the appropriate table in the Contract;
or (b) the factor currently offered by John Hancock at the time of
annuitization. This current factor may be based on the sex of the payee unless
prohibited by law.
36
<PAGE>
APPENDIX--VARIABLE ANNUITY INFORMATION FOR INDIVIDUAL RETIREMENT ANNUITIES
To help you understand your purchase of this Contract as an Individual
Retirement Annuity (IRA), we are providing the following summary.
I. Accumulation Shares--Each net purchase payment you make into your
Contract is allocated to the subaccounts you select, and Accumulation Shares
are purchased. This is the unit of measurement used to determine the value of
your Contract. The number of shares purchased in any subaccount is based on
the share value of that subaccount next determined after receipt of the
payment at our Home Office. The values of shares fluctuate with the daily
investment performance of the corresponding subaccount. The growth in the
value of your Contract, to the extent invested in the Separate Account, is
neither guaranteed nor projected and varies with the investment Portfolio you
have selected. Each net purchase payment allocated to the Fixed Account will
be credited interest, as determined by John Hancock. The minimum guarantee
rate is 3%. More details appear under "Accumulation Shares" in this
Prospectus and in the "Appendix--The Fixed Account and Fixed Account Value."
II. Separate Account and Series Fund Charges--The assets of the Separate
Account are charged for services and guarantees. The annualized charge equals
1.50%. Fees varying by Portfolio are charged against the Series Fund for
investment management and advisory services. Details appear under "Charges
Under the Annuity Contracts" in this Prospectus and "Management of the Fund"
in the accompanying Series Fund prospectus.
III. Deductions from the Contract--The full amount of each deposit is
applied to the Contract. At or after the purchase date, one or more of the
following charges may be made, depending on circumstances.
1. WITHDRAWAL CHARGE--In each Contract Year, you may withdraw as much as
10% of the Accumulated Value of your Contract as of the beginning of the
Contract Year without charge. Withdrawals in excess of this amount will be
subject to the following charges:
<TABLE>
<CAPTION>
YEARS FROM DATE OF
DEPOSIT WITHDRAWAL
TO DATE OF WITHDRAWAL CHARGE
--------------------- ----------
<S> <C>
7 or more...................................................... 0%
5 but less than 7.............................................. 6%
3 but less than 5.............................................. 7%
less than 3.................................................... 8%
</TABLE>
For the purpose of calculating the withdrawal charge, deposits are
considered to be withdrawn on a "first-in first-out" basis. Earnings are
considered to be withdrawn last and without charge. This is described in
more detail under "Withdrawal Charge" in this Prospectus.
2. CONTRACT FEE--John Hancock currently deducts $30 from the Accumulated
Value of the Contract as a contract fee if the Accumulated Value is less
than $10,000. This occurs annually or at the time of surrender. Please
refer to "Charges for Administrative Services" in this Prospectus.
3. STATE PREMIUM TAX--Some states and local governments impose a premium
or similar tax on annuities. John Hancock only deducts this tax when
required to do so. Please refer to "Premium or Similar Taxes" in this
Prospectus.
37
<PAGE>
APPENDIX--ILLUSTRATIVE ACCUMULATED VALUE AND ANNUITY PAYMENT TABLES
The following Tables present illustrative periodic Accumulated Values and
annuity payments that would have resulted under a Contract described in this
prospectus had such values and payments been based exclusively upon the
investment experience of the seven specified subaccounts, assuming investment
by each of those subaccounts in the related Portfolio in the Fund and its
predecessors during the periods shown. The other subaccounts are not
illustrated, because of the limited time that they and their related Fund
Portfolios have been available. The Contracts described in this prospectus
were first offered in 1995.
For years ended December 31, 1986, and prior thereto, values have been
calculated based upon the actual investment results of the three corresponding
variable life insurance managed separate accounts which were the predecessors
to the Growth & Income, Sovereign Bond, and Money Market Portfolios, as if the
Fund had been in existence prior to March 28, 1986, the date of its
reorganization.
The Tables assume investment of a single purchase payment of $10,000, net of
any deductions from purchase payments, and that charges under the Contracts
have been made at an annual rate of 1.50% for mortality and expense risks and
administrative services. The tables also reflect actual investment management
fees and other portfolio expenses for the periods illustrated. Absent expense
reimbursements by John Hancock to certain of the Portfolios for some periods,
the values illustrated would have been lower.
WHAT THE TABLES ILLUSTRATE
Subject to the foregoing, each Table I presents for the periods shown the
illustrative periodic Accumulated Values for each Account which would have
resulted at yearly intervals under a Contract where a net single purchase
payment of $10,000 was made, based upon the investment performance of the
applicable funding medium.
Subject to the foregoing, each Table II indicates, at annual intervals,
illustrative monthly variable annuity payments for each subaccount which would
have been received by an Annuitant or other payee, assuming that an initial
annuity payment of $100 was received in the month and year indicated in the
respective Tables. The form of annuity illustrated is a life annuity with
payments guaranteed for 10 years.
The results shown should not be considered a representation of the future. A
program of the type illustrated in the Tables does not assure a profit or
protect against depreciation in declining markets.
38
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
GROWTH & INCOME (FORMERLY STOCK) SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT CONTRACT HAD BEEN ISSUED JANUARY 2,
1975
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
January 1975......................................... 12,755.81
January 1976......................................... 14,818.13
January 1977......................................... 13,031.36
January 1978......................................... 13,619.76
January 1979......................................... 15,591.96
January 1980......................................... 20,033.70
January 1981......................................... 19,914.88
January 1982......................................... 25,121.73
January 1983......................................... 30,156.05
January 1984......................................... 31,116.54
January 1985......................................... 41,312.63
January 1986......................................... 47,097.10
January 1987......................................... 48,626.56
January 1988......................................... 55,584.82
January 1989......................................... 70,924.09
January 1990......................................... 71,650.24
January 1991......................................... 88,913.44
January 1992......................................... 95,382.31
January 1993......................................... 106,491.92
January 1994......................................... 104,325.44
January 1995......................................... 137,933.51
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
GROWTH & INCOME SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in January 1975.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
January 1975................................................... 100.00
January 1976................................................... 125.93
January 1977................................................... 139.72
January 1978................................................... 121.21
January 1979................................................... 123.09
January 1980................................................... 135.79
January 1981................................................... 167.48
January 1982................................................... 161.98
January 1983................................................... 196.48
January 1984................................................... 225.28
January 1985................................................... 225.83
January 1986................................................... 291.00
January 1987................................................... 327.91
January 1988................................................... 325.80
January 1989................................................... 358.55
January 1990................................................... 423.24
January 1991................................................... 427.37
January 1992................................................... 487.59
January 1993................................................... 533.33
January 1994................................................... 573.95
January 1995................................................... 545.25
January 1996................................................... 691.83
</TABLE>
The amounts shown are based on the investment performance of the Growth &
Income Subaccount, the Growth & Income Portfolio, and its predecessors. All
amounts reflect the provisions of the Contracts described in this Prospectus,
including annuity tables based on the standard assumed investment rate of 3
1/2% per annum. The amounts shown do not reflect the deduction for any
applicable premium tax. See text preceding these Tables.
39
<PAGE>
SOVEREIGN BOND (FORMERLY BOND) SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT CONTRACT HAD BEEN ISSUED JUNE 2,
1980
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
June 1980............................................ 10,223.96
June 1981............................................ 10,479.40
June 1982............................................ 13,296.87
June 1983............................................ 13,898.62
June 1984............................................ 15,677.98
June 1985............................................ 18,775.37
June 1986............................................ 20,995.90
June 1987............................................ 21,231.75
June 1988............................................ 22,623.89
June 1989............................................ 25,121.68
June 1990............................................ 26,572.35
June 1991............................................ 30,539.94
June 1992............................................ 32,390.12
June 1993............................................ 35,345.21
June 1994............................................ 33,925.32
June 1995............................................ 39,951.50
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
SOVEREIGN BOND SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in June 1980.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
June 1980...................................................... 100.00
June 1981...................................................... 95.93
June 1982...................................................... 104.12
June 1983...................................................... 124.33
June 1984...................................................... 118.58
June 1985...................................................... 142.20
June 1986...................................................... 160.43
June 1987...................................................... 160.31
June 1988...................................................... 165.52
June 1989...................................................... 173.81
June 1990...................................................... 177.91
June 1991...................................................... 187.50
June 1992...................................................... 202.68
June 1993...................................................... 216.43
June 1994...................................................... 209.49
June 1995...................................................... 221.21
</TABLE>
The amounts shown are based on the investment performance of the Sovereign
Subaccount, the Sovereign Portfolio, and its predecessors. All amounts reflect
the provisions of the Contracts described in this Prospectus, including
annuity tables based on the standard assumed investment rate of 3 1/2% per
annum. The amounts shown do not reflect the deduction for any applicable
premium tax. See text preceding these Tables.
40
<PAGE>
MONEY MARKET SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT CONTRACT HAD BEEN ISSUED MAY 13,
1982
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
May 1982............................................. 10,447.10
May 1983............................................. 11,190.47
May 1984............................................. 12,183.44
May 1985............................................. 12,980.32
May 1986............................................. 13,643.90
May 1987............................................. 14,340.86
May 1988............................................. 15,212.41
May 1989............................................. 16,378.23
May 1990............................................. 17,463.09
May 1991............................................. 18,231.23
May 1992............................................. 18,614.20
May 1993............................................. 18,898.77
May 1994............................................. 19,379.82
May 1995............................................. 20,196.48
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
MONEY MARKET SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming that Annuitant
received a first annuity payment of $100 in May 1982.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
May 1982....................................................... 100.00
May 1983....................................................... 103.24
May 1984....................................................... 107.37
May 1985....................................................... 112.51
May 1986....................................................... 115.48
May 1987....................................................... 116.70
May 1988....................................................... 118.81
May 1989....................................................... 122.70
May 1990....................................................... 127.21
May 1991....................................................... 130.48
May 1992....................................................... 130.42
May 1993....................................................... 128.28
May 1994....................................................... 125.84
May 1995....................................................... 125.77
</TABLE>
The amounts shown are based on the investment performance of the Money
Market Subaccount, the Money Market Portfolio, and its predecessors. All
amounts reflect the provisions of the Contracts described in this Prospectus,
including annuity tables based on the standard assumed investment rate of 3
1/2% per annum. The amounts shown do not reflect the deduction for any
applicable premium tax. See text preceding these Tables.
41
<PAGE>
LARGE CAP GROWTH (FORMERLY SELECT STOCK) SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES
AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT HAD BEEN ISSUED NOVEMBER 24, 1987
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
November 1987........................................ 10,238.54
November 1988........................................ 11,607.93
November 1989........................................ 14,827.84
November 1990........................................ 15,619.39
November 1991........................................ 19,303.85
November 1992........................................ 20,907.31
November 1993........................................ 23,441.12
November 1994........................................ 22,866.63
November 1995........................................ 29,653.72
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
LARGE CAP GROWTH SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in November 1987.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
November 1987.................................................. 100.00
November 1988.................................................. 109.48
November 1989.................................................. 134.93
November 1990.................................................. 135.32
November 1991.................................................. 139.55
November 1992.................................................. 168.06
November 1993.................................................. 188.31
November 1994.................................................. 181.52
November 1995.................................................. 216.87
</TABLE>
The amounts shown are based on the investment performance of the Large Cap
Growth Subaccount and the Large Cap Growth Portfolio. All amounts reflect the
provisions of the Contracts described in this Prospectus, including annuity
tables based on the standard assumed investment rate of 3 1/2% per annum. The
amounts shown do not reflect the deduction for any applicable premium tax. See
text preceding the Tables.
42
<PAGE>
MANAGED SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES
AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT HAD BEEN ISSUED NOVEMBER 9, 1987
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
November 1987........................................ 10,225.28
November 1988........................................ 11,269.70
November 1989........................................ 13,250.77
November 1990........................................ 13,586.44
November 1991........................................ 16,326.50
November 1992........................................ 17,324.51
November 1993........................................ 19,048.41
November 1994........................................ 18,346.75
November 1995........................................ 22,970.49
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
MANAGED SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in November 1987.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
November 1987.................................................. 100.00
November 1988.................................................. 109.76
November 1989.................................................. 121.28
November 1990.................................................. 114.32
November 1991.................................................. 135.43
November 1992.................................................. 141.31
November 1993.................................................. 155.23
November 1994.................................................. 145.38
November 1995.................................................. 167.42
</TABLE>
The amounts shown are based on the investment performance of the Managed
Subaccount and the Managed Portfolio. All amounts reflect the provisions of
the Contracts described in this Prospectus, including annuity tables based on
the standard assumed investment rate of 3 1/2% per annum. The amounts shown do
not reflect the deduction for any applicable premium tax. See text preceding
the Tables.
43
<PAGE>
REAL ESTATE EQUITY SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES
AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT HAD BEEN ISSUED FEBRUARY 14, 1989
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
February 1989........................................ 10,366.26
February 1990........................................ 8,020.62
February 1991........................................ 10,549.34
February 1992........................................ 12,056.82
February 1993........................................ 13,932.73
February 1994........................................ 14,118.57
February 1995........................................ 15,620.42
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--REAL
ESTATE EQUITY SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in February 1989.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
February 1989.................................................. 100.00
February 1990.................................................. 95.81
February 1991.................................................. 85.30
February 1992.................................................. 99.50
February 1993.................................................. 114.97
February 1994.................................................. 118.20
February 1995.................................................. 121.81
February 1996.................................................. 123.86
</TABLE>
The amounts shown are based on the investment performance of the Real Estate
Equity Subaccount and the Real Estate Equity Portfolio. All amounts reflect
the provisions of the Contracts described in this Prospectus, including
annuity tables based on the standard assumed investment rate of 3 1/2% per
annum. The amounts shown do not reflect the deduction for any applicable
premium tax. See text preceding the Tables.
44
<PAGE>
INTERNATIONAL EQUITIES (FORMERLY INTERNATIONAL) SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES
AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT HAD BEEN ISSUED FEBRUARY 10, 1989
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
February 1989........................................ 11,061.43
February 1990........................................ 10,032.34
February 1991........................................ 12,193.48
February 1992........................................ 11,814.41
February 1993........................................ 15,374.36
February 1994........................................ 14,220.57
February 1995........................................ 15,131.86
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
INTERNATIONAL EQUITIES SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in February 1989.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
February 1989.................................................. 100.00
February 1990.................................................. 96.68
February 1991.................................................. 89.72
February 1992.................................................. 103.52
February 1993.................................................. 97.94
February 1994.................................................. 123.18
February 1995.................................................. 110.84
February 1996.................................................. 114.00
</TABLE>
The amounts shown are based on the investment performance of the
International Equities Subaccount and the International Equities Portfolio.
All amounts reflect the provisions of the Contracts described in this
Prospectus, including annuity tables based on the standard assumed investment
rate of 3 1/2% per annum. The amounts shown do not reflect the deduction for
any applicable premium tax. See text preceding the Tables.
45
<PAGE>
JOHN HANCOCK
MUTUAL LIFE INSURANCE COMPANY
LOGO
ANNUITY TRANSFERLINE
AUTHORIZATION FORM
INSTRUCTIONS: Please complete and sign where indicated. If your Contract
will be jointly owned, each Owner must sign. An acknowledgement letter
will be sent as soon as your Contract is issued.
THIS COMPLETED FORM MUST BE SUBMITTED WITH THE APPLICATION.
( ) Yes! I want TRANSFERLINE, John Hancock's telephone transfer program that
permits fast and toll-free transfers of funds within my Contract, as condi-
tions dictate.
As the applicant for a Contract funded by John Hancock Variable Series Trust I
(the "Fund"), I hereby authorize John Hancock, on behalf of the Fund, to act
upon my telephone instructions to:
(1) reallocate my then current value held in any one or more subaccounts,
(2) to change the allocation of future purchase payments to the
subaccounts, and
(3) change the allocation of my subaccount elections as they are applied
under the Dollar-Cost Averaging option (if available on my Contract).
I understand that John Hancock employs the following procedures reasonably
designed to confirm that the instructions received by telephone are genuine:
requiring disclosure of personal identification; tape recording calls; and
providing the Owner with a confirmation of the transfer. As long as John
Hancock follows such procedures, I will not hold John Hancock or the Fund (or
any of their successors) liable for any loss, expense, or cost resulting from
any unauthorized or fraudulent telephone instructions.
I further understand that this authorization is limited by the conditions and
procedures for telephone account transfers and investment option changes set
forth in the prospectus describing my Contract.
I further understand that this authorization will continue in force unless and
until the earlier of (a) written revocation received by John Hancock at its
home office or (b) John Hancock discontinues this service.
Signature(s) of Prospective
Contract Owner(s)
Date: _______________________________ /s/__________________________________
Date: _______________________________ /s/__________________________________
Questions call: 800 REAL LIFE (800-732-5543)
Mail to: Life and Annuity Services
P.O. Box 111
Boston, MA 02117
<PAGE>
LOGO
CONTRACTS ISSUED BY JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
200 CLARENDON STREET, BOSTON, MASSACHUSETTS 02117
S8146ML 5/96
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
INDIVIDUAL COMBINATION VARIABLE/FIXED
ANNUITY CONTRACTS
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
STATEMENT OF ADDITIONAL INFORMATION
----------------
This statement of additional information is not a prospectus. It is intended
that this statement of additional information be read in conjunction with the
prospectus of John Hancock Variable Annuity Account V, dated May 1, 1996. A
copy of the prospectus may be obtained from John Hancock Variable Annuity
Account V, Life and Annuity Services, P.O. Box 111, Boston Massachusetts,
02117, telephone number (800) REAL LIFE (800-732-5543), Fax (617) 572-5410.
This statement of additional information is dated May 1, 1996.
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
CROSS REFERENCE SHEET
----------------
<TABLE>
<CAPTION>
SECTION IN STATEMENT OF
FORM N-4 ITEM NO. ADDITIONAL INFORMATION
----------------- -----------------------
<S> <C> <C>
15. Cover Page............................ Cover Page
16. Table of Contents..................... Table of Contents
17. General Information and History....... Business History
Distribution Agreement and
18. Services.............................. Other Services
19. Purchase of Securities Being Offered.. Not Applicable (relevant
information in prospectus)
Distribution Agreement and
20. Underwriters.......................... Other Services
21. Calculation of Yield Quotations of Calculation of Performance
Money Market Subaccounts............. Data
Calculation of Annuity
22. Annuity Payments...................... Payments
23. Financial Statements.................. Financial Statements
</TABLE>
<PAGE>
TABLE OF CONTENTS
----------------
<TABLE>
<CAPTION>
CROSS REFERENCE TO
PAGE PAGE IN PROSPECTUS
---- ------------------
<S> <C> <C>
Business History........................................ 1 12-13
Distribution Agreement and Other Services............... 1 16, 19-20, 33
Distribution Agreement................................ 1 19-20, 33
Investment Advisory Agreement......................... 1 16
Custodian Agreement................................... 2 --
Independent Auditors.................................. 2 33
Calculation of Performance Data......................... 3 31-32
Calculation of Annuity Payments......................... 4 24-26
Financial Statements.................................... 6 34
</TABLE>
<PAGE>
BUSINESS HISTORY
John Hancock Variable Annuity Account V (the "Account") is a separate
account of John Hancock Mutual Life Insurance Company ("John Hancock"),
established under the laws of the Commonwealth of Massachusetts. The Account
is organized as a unit investment trust and registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act") and
the Securities Act of 1933. The Account has eighteen separate subaccounts
(Growth & Income, Sovereign Bond, Money Market, Large Cap Growth, Managed,
Real Estate Equity, International Equities, Short-Term U.S. Government,
Special Opportunities, Equity Index, Large Cap Value, Mid Cap Growth, Mid Cap
Value, Small Cap Growth, Small Cap Value, Strategic Bond, International
Opportunities, and International Balanced) through which John Hancock's
individual combination fixed/variable annuity contracts are funded, at the
discretion of the individual contract owner (the "Owner"). The assets of each
subaccount are, in turn, invested in a corresponding Portfolio of John Hancock
Variable Series Trust I (the "Fund"), a registered open-end diversified
management investment company advised by John Hancock.
DISTRIBUTION AGREEMENT AND OTHER SERVICES
DISTRIBUTION AGREEMENT
Pursuant to a Distribution Agreement, dated June 8, 1987, John Hancock, a
registered broker-dealer, acts as "principal underwriter" for the Account.
John Hancock's compensation for sales and administrative expenses and
providing the minimum death benefit is described in the Account's Prospectus
under "Charges Under the Annuity Contracts." John Hancock's major
responsibility as underwriter is to perform all sales and marketing functions
relating to the Contracts. The offering of the Account's interests is
continuous, but John Hancock is not obligated to sell any particular amount of
the Account's interests.
INVESTMENT ADVISORY AGREEMENT
The Fund, in which the Contracts are invested, has contracted with John
Hancock for investment advisory services. Pursuant to two Investment
Management Agreements, both dated as of April 12, 1988, one Investment
Management Agreement, dated April 15, 1994, and one Investment Management
Agreement, dated March 14, 1996, John Hancock, a registered investment adviser
under the Investment Advisers Act of 1940, advises the Fund in connection with
policy decisions; provides administration of day-to-day operations; negotiates
the quantity or price of its investments; provides personnel, office space,
equipment, and supplies for the Fund; maintains records required by the Act;
values assets and liabilities of the Fund; computes income, net asset value,
and yield of each Portfolio; and supervises activities of the sub-investment
managers referred to below.
John Hancock has day-to-day responsibility for making investment decisions
and placing investment orders for the Money Market Portfolio. However, with
respect to the other Portfolios, John Hancock has contracted with the
following registered investment advisors to perform these and certain other
recordkeeping functions as sub-investment manager pursuant to sub-investment
agreements dated as indicated:
<TABLE>
<S> <C> <C>
Growth & Income Independence Investment Associates, Inc. 4/15/88
Sovereign Bond John Hancock Advisers, Inc. 5/01/95
Large Cap Growth Independence Investment Associates, Inc. 4/15/88
Managed Independence Investment Associates, Inc. 4/15/88
Real Estate Equity Independence Investment Associates, Inc. 4/15/94
International Equities John Hancock Advisers, Inc. 4/15/88
John Hancock Advisers International, Inc. 4/15/88
Short-Term U.S. Government Independence Investment Associates, Inc. 4/15/94
Equity Index Independence Investment Associates, Inc. 3/29/96
Large Cap Value T. Rowe Price Associates, Inc. 3/29/96
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C>
Mid Cap Growth Janus Capital Corporation 3/29/96
Mid Cap Value Neuberger & Berman L.P. 5/02/96
Small Cap Growth John Hancock Advisers, Inc. 3/29/96
Small Cap Value INVESCO Management & Research 3/22/96
Strategic Bond J.P. Morgan Investment Management, Inc. 3/29/96
International Opportunities T. Rowe Price Associates, Inc. 3/29/96
Rowe Price-Fleming International, Inc. 3/29/96
International Balanced Brinson Partners, Inc. 3/29/96
</TABLE>
John Hancock pays the sub-investment management fees pursuant to the
Agreements and, therefore, the sub-investment management arrangements result
in no additional charge or expense to the Fund or to contractholders. A more
complete description of the Fund's management and the investment advisory fees
is included under "Management of the Fund" in the Fund's Prospectus and under
"Investment Advisory and Other Services" in the Fund's Statement of Additional
Information.
CUSTODIAN AGREEMENT
The Fund's custodian with respect to the Growth & Income, Money Market,
Large Cap Growth, Short-Term U.S. Government, and Real Estate Equity
Portfolios is Chemical Banking Corporation of 4 New York Plaza, New York, New
York, pursuant to a Custodian Agreement, dated January 15, 1986 and amended
April, 1988. The Fund's custodian with respect to the Sovereign Bond Portfolio
is Investors Bank & Trust Company of 24 Federal Street, Boston, Massachusetts,
pursuant to a Custodian Agreement, dated May 2, 1995. The Fund's custodian
with respect to all other Portfolios is State Street Bank and Trust, 225
Franklin Street, Boston, Massachusetts, pursuant to a Custodian Agreement
dated January 30, 1995, and amended March 18, 1996. The custodians' duties
include safeguarding and controlling the Fund's cash investments, handling the
receipt and delivery of securities, and collecting interest and dividends on
the Fund's investments.
INDEPENDENT AUDITORS
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts, has been
selected as the independent auditors of the Account. The firm is responsible
for auditing the financial statements of the Account and JHMLICO.
2
<PAGE>
CALCULATION OF PERFORMANCE DATA
The Account will show the average annual total return for each Subaccount,
according to the following formula prescribed by the Securities and Exchange
Commission:
P(1 + T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment,
made at the beginning of a period (or fractional portion
thereof)
Average annual total return is the annual compounded rate of return that
would have produced the cash redemption value under a Contract had the
subaccount been invested in a specified Portfolio of the Fund (or its
predecessor) over the stated period and had the performance remained constant
throughout. The calculation assumes a single $1,000 payment made at the
beginning of the period and full redemption at the end of the period. It
reflects adjustments for all Fund and Contract level charges except premium
taxes, if any.
On that basis, the following table shows the average annual total return for
each Subaccount for the periods ended December 31, 1995:
<TABLE>
<CAPTION>
YEAR AVERAGE ANNUALIZED DATE**
TO ----------------------- OF
SUBACCOUNT*** DATE 1 YEAR 5 YEAR* 10 YEAR* INCEPTION
------------- ----- ------ ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Large Cap Growth........................ 22.6% 22.6% 13.0% 14.2% 11/24/87
Sovereign Bond.......................... 10.6% 10.6% 7.7% 7.8% 06/02/80
International Equities.................. -0.9% -0.9% 7.8% 5.6% 02/01/89
Money Market............................ -3.1% -3.1% 1.9% 4.5% 05/13/82
Special Opportunities................... 26.9% 26.9% 19.8% NA 09/23/94
Real Estate Equity...................... 3.4% 3.4% 13.6% 6.1% 02/01/89
Growth & Income......................... 25.2% 25.2% 13.3% 12.7% 04/03/72
Managed................................. 18.1% 18.1% 10.3% 10.7% 11/09/87
Short-Term U.S. Government.............. 2.6% 2.6% 1.3% NA 09/23/94
</TABLE>
- --------
*or since inception of the applicable Portfolio or its predecessors.
**of the Portfolio or its predecessor.
*** Absent expense reimbursements from John Hancock to certain Portfolios for
some periods, total return figures for the related subaccounts would have
been lower.
The Account will show current yield and effective yield figures for the
Money Market Subaccount. The current yield of the Money Market Subaccount for
a seven-day period (the "base period") will be computed by determining the
"net change in value" (calculated as set forth below) of a hypothetical
account having a balance of one share at the beginning of the period, dividing
the net change in account value by the value of the account at the beginning
of the base period to obtain the base period return, and multiplying the base
period return by 365/7 with the resulting yield figure carried to the nearest
hundredth of one percent. Net changes in value of a hypothetical account will
include net investment income of the account (accrued daily dividends as
declared by the Money Market Portfolio, less daily expense charges of the
Account) for the period, but will not include realized gains or losses or
unrealized appreciation or depreciation on the underlying fund shares.
Mortality and expense risk and administrative charges are reflected, but
Withdrawal Charge and any charge for premium taxes are not.
The effective yield reflects the effects of compounding and represents an
annualization of the current return with all dividends reinvested. The formula
for effective yield, as prescribed by the SEC, is:
Effective yield = [(Base period return + 1) /365/7/] - 1
3
<PAGE>
For the 7-day period ending December 31, 1995, the Money Market Subaccount's
current yield was 4.13% and its effective yield was 4.21%.
The Account will calculate current yield for each of the other Subaccounts
according to the following formula prescribed by the SEC:
Yield = 2 [ ([(a - b)/cd] + 1)/6/ - 1]
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to received dividends
d = the maximum offering price per share on the last day of the
period.
According to this formula, yield is determined by dividing the net
investment income per Accumulation Share earned during the period (minus the
deduction for mortality and expense risk charge, contract fee, administrative
services charge) by the Accumulation Share Value on the last day of the period
and annualizing the resulting figure. The calculation is based on specified
30-day periods identified in the advertisement. No sales loads are assumed.
CALCULATION OF ANNUITY PAYMENTS
The variable monthly annuity payment to an Annuitant under a Contract is
equal to the sum of the products of the number of each subaccount's "Annuity
Units" credited to the Contract multiplied by the applicable "Annuity Unit
Value," as these terms are defined under "Special Terms" and "Variable Account
Valuation Procedures," respectively, in the Account's prospectus. The number
of each subaccount's Annuity Units credited to the Contract is multiplied by
the applicable Annuity Unit Value as of ten calendar days prior to the date
the payment is due. The value of the Annuity Units varies from day to day,
depending on the investment performance of the subaccount, the deductions made
against the subaccount, and the assumed investment rate used in computing
Annuity Unit Values. Thus, the variable monthly annuity payments vary in
amount from month to month.
The amount of the initial variable monthly payment is determined on the
assumption that the actual net investment rate of each subaccount used in
calculating the Net Investment Factor (as described under "Variable Account
Valuation Procedures--Net Investment Factor" in the Account's prospectus) will
be equal on an annual basis to the assumed investment rate. If the actual net
investment rate between the dates for determining two monthly annuity payments
is greater than the assumed investment rate, the latter monthly payment will
be larger in amount than the former. On the other hand, if the actual net
investment rate between the dates for determining two monthly annuity payments
is less than the assumed investment rate, the latter monthly payment will be
smaller in amount than the former.
The mortality tables used as a basis for the annuity purchase rates are the
1983a Mortality Tables, with projections of mortality improvements and with
certain age adjustments based on the Contract Year of annuitization. The
mortality table used in a Contract purchased in connection with certain
employer-related plans and used in all Contracts issued in Montana and
Massachusetts will be the Female Annuity Table of the 1983a Mortality Tables.
The impact of this change will be lower benefits (5% to 15%) from a male's
viewpoint than would otherwise be the case.
4
<PAGE>
An illustration of the method of calculation of variable monthly annuity
payments and the number of Annuity Units under deferred Contracts is shown in
the outline that follows.
OUTLINE FOR DEFERRED CONTRACTS
A. GENERAL FORMULAE TO DETERMINE ACCUMULATION SHARE VALUES AND ANNUITY UNIT
VALUES
Net Investment Rate =
Subaccount Charges (0.004110%
per Day of the Value of the
Investment Capital Capital Taxes Subaccount at the Beginning
Income + Gains - Losses - (if any) - of the Valuation Period)
- -------------------------------------------------------------------------------
Value of the Subaccount at the Beginning of the Valuation Period
Net Investment
Factor = 1.00000000 + Net Investment Rate
Accumulation Accumulation Share Value on Net Investment
Share Value = Preceding Valuation Date X Factor
Annuity Unit Net Factor to Neutralize
Annuity Unit Value on Preceding Investment the Assumed
Value = Valuation Date X Factor X Investment Rate
B. HYPOTHETICAL EXAMPLE ILLUSTRATING THE CALCULATION OF ACCUMULATION SHARE
VALUES AND ANNUITY UNIT VALUES
Assume at the beginning of the Valuation Period being considered, the value
of the Subaccount was $4,000,000. Investment income during the Valuation
Period totaled $2000 while capital gains were $3000 and capital losses were
$1000. No taxes accrued. Charges against the beginning value of the Subaccount
amount to $164.40 assuming a one day Valuation Period. The $164.40 was
computed by multiplying the beginning Subaccount value of $4,000,000 by the
factor 0.00004110. By substituting in the first formula above, the net
investment rate is equal to $3835.60 ($2000 + $3000 - $1000 - $164.40) divided
by $4,000,000 or 0.0009589. The Net Investment Factor would then be 1.0009589.
Assume further that each Accumulation Share had a value of $11.250000 on the
previous Valuation Date, and the value of an Annuity Unit on such date was
$1.0850000. Based upon the experience of the Subaccount during the Valuation
Period, the value of an Accumulation Share at the end of the Valuation Period
would be $11.260788 ($11.250000 X 1.0009589). The value of an Annuity Unit at
the end of the Valuation Period would be $1.085938
($1.0850000 X 1.0009589 X .99990575). The final figure, .99990575, neutralizes
the effect of a 3 1/2% assumed investment rate so that the Annuity Unit
recognizes only the actual investment experience.
5
<PAGE>
C. GENERAL FORMULAE TO DETERMINE AMOUNT OF MONTHLY VARIABLE ANNUITY PAYMENTS
AND NUMBER OF ANNUITY UNITS FOR DEFERRED CONTRACTS
Amount of the First Variable Annuity Payment =
Number of First Monthly
Accumulation Accumulation Share Value Annuity
Shares Applied X 10 Days Before Maturity Date X Payment Factor
- ---------------------------------------------------
$1,000
Number of
Annuity Units = Amount of First Variable Annuity Payment
--------------------------------------------------
Annuity Unit Value 10 Days Before Maturity Date
Amount of
Subsequent Annuity Unit Value
Variable Annuity 10 Days Before
Payment = Number of Annuity Units X Payment Date
D. HYPOTHETICAL EXAMPLE ILLUSTRATING THE CALCULATION OF THE AMOUNT OF MONTHLY
VARIABLE ANNUITY PAYMENT FOR DEFERRED CONTRACTS
Assume that 10 days before the date of maturity a Contract has credited to
it 4000.000 Accumulation Shares each having a value of $12.000000. The
appropriate annuity purchase rate in the Contract for an assumed investment
rate of 3 1/2% is $5.47 per $1000 of proceeds for the Annuity Option elected.
The Annuitant's first monthly payment would then be $262.56.
4000.000 X $12.000000 X 5.47
-----------------------------------
$1000
If the value of an Annuity Unit 10 days before the date of maturity was
$1.4000000, the number of Annuity Units represented by the first and
subsequent payments would be $187.543 ($262.56/$1.4000000). If the Annuity
Unit Value 10 days before the due date of the second monthly payment was
$1.405000, the amount of the second payment would be $263.50 (187,543 X
$1.405000).
FINANCIAL STATEMENTS
(Included on next page)
6
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Contractowners
John Hancock Variable Annuity Account V
of John Hancock Mutual Life Insurance Company
We have audited the accompanying statement of assets and liabilities of John
Hancock Variable Annuity Account V (the Account) (comprising, respectively,
the Select Stock, Bond, International, Money Market, Real Estate Equity,
Special Opportunities, Stock, Short-Term U.S. Government, and Managed
Subaccounts) as of December 31, 1995, the related statement of operations for
the year then ended, and the Statements of Changes in Net Assets for each of
the two years then ended for the Select Stock, Bond, International, Money
Market, Real Estate Equity, Stock, and Managed Subaccounts, for the year then
ended and for the period from May 6, 1994 (commencement of operations) to
December 31, 1994 for the Special Opportunities Subaccount, and for the year
then ended and for the period from May 1, 1994 (commencement of operations) to
December 31, 1994 for the Short-Term U.S. Government Subaccount. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
subaccounts constituting John Hancock Variable Annuity Account V at December
31, 1995, and the results of their operations and the changes in their net
assets for each of the periods indicated, in conformity with generally
accepted accounting principles.
Boston, Massachusetts ERNST & YOUNG LLP
February 9, 1996
----------------
To the Directors and Policyholders
John Hancock Mutual Life Insurance Company
We have audited the accompanying statements of financial position of John
Hancock Mutual Life Insurance Company as of December 31, 1995 and 1994, and
the related summary of operations and changes in policyholders' contingency
reserves and statements of cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of John Hancock Mutual Life
Insurance Company at December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles for mutual life insurance companies
and with reporting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.
ERNST & YOUNG LLP
Boston, Massachusetts
February 7, 1996
7
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
REAL SHORT-TERM
SELECT MONEY ESTATE SPECIAL U.S.
STOCK BOND INTERNATIONAL MARKET EQUITY OPPORTUNITIES STOCK GOVERNMENT MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ------------- ----------- ---------- ------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $27,495,789 $60,246,089 $8,899,248 $18,354,476 $7,069,366 $7,934,665 $107,400,414 $3,193,557 $315,169,921
Receivable from
John Hancock
Variable Series
Trust I......... 80,300 81,913 20,276 208,396 8,806 48,742 188,663 50,776 620,409
----------- ----------- ---------- ----------- ---------- ---------- ------------ ---------- ------------
Total assets.... 27,576,089 60,328,002 8,919,524 18,562,872 7,078,172 7,983,407 107,589,077 3,244,333 315,790,330
LIABILITIES
Assets charges
payable......... 2,977 6,332 950 2,006 744 928 11,436 384 33,004
Payable to John
Hancock Mutual
Life Insurance
Company......... 77,323 75,581 19,326 206,390 8,062 47,814 177,227 50,392 587,405
----------- ----------- ---------- ----------- ---------- ---------- ------------ ---------- ------------
Total
liabilities..... 80,300 81,913 20,276 208,396 8,806 48,742 188,663 50,776 620,409
----------- ----------- ---------- ----------- ---------- ---------- ------------ ---------- ------------
Net assets...... $27,495,789 $60,246,089 $8,899,248 $18,354,476 $7,069,366 $7,934,665 $107,400,414 $3,193,557 $315,169,921
=========== =========== ========== =========== ========== ========== ============ ========== ============
</TABLE>
See accompanying notes.
8
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
REAL SHORT-TERM
SELECT MONEY ESTATE SPECIAL U.S.
STOCK BOND INTERNATIONAL MARKET EQUITY OPPORTUNITIES STOCK GOVERNMENT MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ------------- ---------- ---------- ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $2,161,966 $4,345,841 $ 87,546 $742,264 $457,323 $187,556 $10,017,135 $60,287 $29,653,145
Expenses:
Mortality and
expense risks... 252,976 664,784 100,418 169,560 83,635 33,335 1,061,399 13,207 3,389,494
---------- ---------- -------- -------- -------- -------- ----------- ------- -----------
Net investment
income (loss).... 1,908,990 3,681,057 (12,872) 572,704 373,688 154,221 8,955,736 47,080 26,263,651
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss)..... 158,802 79,176 291,223 -- (83,072) 45,102 163,924 3,462 1,220,544
Net unrealized
appreciation
during the year. 2,928,433 4,908,455 188,443 -- 392,171 533,759 13,880,625 18,455 33,103,005
---------- ---------- -------- -------- -------- -------- ----------- ------- -----------
Net realized and
unrealized gain
on investments... 3,087,235 4,987,631 479,666 -- 309,099 508,657 14,044,549 21,917 34,323,549
---------- ---------- -------- -------- -------- -------- ----------- ------- -----------
Net increase in
net assets
resulting from
operations....... $4,996,225 $8,668,688 $466,794 $572,704 $682,787 $707,980 $23,000,285 $68,997 $60,587,200
========== ========== ======== ======== ======== ======== =========== ======= ===========
</TABLE>
See accompanying notes.
9
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31
<TABLE>
<CAPTION>
SELECT STOCK INTERNATIONAL MONEY MARKET
SUBACCOUNT BOND SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------ ------------------------ ----------------------- ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
From operations:
Net investment income
(loss)................ $ 1,908,990 $ 600,996 $ 3,681,057 $ 3,030,813 $ (12,872) $ 37,309 $ 572,704 $ 290,009
Net realized gains.... 158,802 277,028 79,176 73,494 291,223 315,284 -- --
Net unrealized
appreciation
(depreciation) during
the year.............. 2,928,433 (1,189,713) 4,908,455 (5,118,960) 188,443 (904,011) -- --
----------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
Net increase (decrease)
in net assets resulting
from operations........ 4,996,225 (311,689) 8,668,688 (2,014,653) 466,794 (551,418) 572,704 290,009
From contractowner
transactions:
Net contributions from
contractowners........ 10,204,395 2,998,240 10,814,815 2,322,395 2,785,422 4,509,689 13,230,728 4,808,578
Net benefits to
contractowner......... (1,948,870) (1,490,533) (7,227,709) (6,492,649) (2,128,690) (1,590,092) (6,951,455) (3,330,687)
----------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
Net increase (decrease)
in net assets from
contractowner
transactions........... 8,255,525 1,507,707 3,587,106 (4,170,254) 656,732 2,919,597 6,279,273 1,477,891
----------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
Net increase (decrease)
in net assets.......... 13,251,750 1,196,018 12,255,794 (6,184,907) 1,123,526 2,368,179 6,851,977 1,767,900
Net assets at beginning
of year................ 14,244,039 13,048,021 47,990,295 54,175,202 7,775,722 5,407,543 11,502,499 9,734,599
----------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
Net assets at end of
year................... $27,495,789 $14,244,039 $60,246,089 $47,990,295 $ 8,899,248 $7,775,722 $18,354,476 $11,502,499
=========== =========== =========== =========== =========== ========== =========== ===========
</TABLE>
See accompanying notes.
10
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS--(CONTINUED)
FOR THE YEARS AND PERIODS ENDED DECEMBER 31
<TABLE>
<CAPTION>
SHORT-TERM
REAL ESTATE EQUITY SPECIAL OPPORTUNITIES U.S. GOVERNMENT
SUBACCOUNT SUBACCOUNT* STOCK SUBACCOUNT SUBACCOUNT*
------------------------ ------------------------------------------------- ------------------
1995 1994 1995 1994 1995 1994 1995 1994
----------- ----------- ------------ ---------------------- ----------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in net
assets:
From operations:
Net investment
income (loss)... $ 373,688 $ 331,617 $ 154,221 $ (2) $ 8,955,736 $ 3,667,882 $ 47,080 $ 5
Net realized
gains (losses).. (83,072) 394,691 45,102 -- 163,924 128,757 3,462 --
Net unrealized
appreciation
(depreciation)
during the year. 392,171 (670,690) 508,657 245 13,880,625 (5,029,944) 18,455 (4)
----------- ----------- ------------ -------- ------------ ----------- ---------- ------
Net increase
(decrease) in net
assets resulting
from operations.. 682,787 55,618 707,980 243 23,000,285 (1,233,305) 68,997 1
From
contractowner
transactions:
Net
contributions
from
contractowners.. 1,649,589 2,678,730 7,505,469 6,445 27,083,900 4,898,910 3,330,813 1,510
Net benefits to
contractowners.. (1,915,596) (2,498,104) (285,472) -- (8,942,609) (5,530,505) (207,764) --
----------- ----------- ------------ -------- ------------ ----------- ---------- ------
Net increase
(decrease) in net
assets from
contractowner
transactions..... (266,007) 180,626 7,219,997 6,445 18,141,291 (631,595) 3,123,046 1,510
----------- ----------- ------------ -------- ------------ ----------- ---------- ------
Net increase
(decrease) in net
assets........... 416,780 236,244 7,927,977 6,688 41,141,576 (1,864,900) 3,192,046 1,511
Net assets at
beginning of
period........... 6,652,586 6,416,342 6,688 -- 66,258,838 68,123,738 1,511 --
----------- ----------- ------------ -------- ------------ ----------- ---------- ------
Net assets at end
of period........ $ 7,069,366 $ 6,652,586 $ 7,934,665 $ 6,688 $107,400,414 $66,258,838 $3,193,557 $1,511
=========== =========== ============ ======== ============ =========== ========== ======
<CAPTION>
MANAGED
SUBACCOUNT
---------------------------
1995 1994
------------- -------------
<S> <C> <C>
Increase
(decrease) in net
assets:
From operations:
Net investment
income (loss)... $ 26,263,651 $ 8,300,264
Net realized
gains (losses).. 1,220,544 1,918,660
Net unrealized
appreciation
(depreciation)
during the year. 33,103,005 (19,089,328)
------------- -------------
Net increase
(decrease) in net
assets resulting
from operations.. 60,587,200 (8,870,404)
From
contractowner
transactions:
Net
contributions
from
contractowners.. 44,298,944 10,025,791
Net benefits to
contractowners.. (28,755,044) (20,537,557)
------------- -------------
Net increase
(decrease) in net
assets from
contractowner
transactions..... 15,543,900 (10,511,766)
------------- -------------
Net increase
(decrease) in net
assets........... 76,131,100 (19,382,170)
Net assets at
beginning of
period........... 239,038,821 258,420,991
------------- -------------
Net assets at end
of period........ $315,169,921 $239,038,821
============= =============
</TABLE>
- ----
* The Short-Term U.S. Government and the Special Opportunities Subaccounts
commenced operations on May 1 and May 6, 1994, respectively.
See accompanying notes.
11
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION
John Hancock Variable Annuity Account V (the Account) is a separate
investment account of John Hancock Mutual Life Insurance Company (JHMLICO or
John Hancock). The Account was formed to fund variable annuity contracts
(Contracts) issued by JHMLICO. The Account is operated as a unit investment
trust registered under the Investment Company Act of 1940, as amended, and
currently consists of nine subaccounts. The assets of each subaccount are
invested exclusively in shares of a corresponding portfolio of John Hancock
Variable Series Trust I (the Fund). New subaccounts may be added as new
portfolios are added to the Fund or as other investment options are developed
and made available to contractowners. The nine portfolios of the Fund which
are currently available are Select Stock, Bond, International, Money Market,
Real Estate Equity, Special Opportunities, Stock, Short-Term U.S. Government,
and Managed. Each portfolio has a different investment objective.
The assets of the Account are the property of JHMLICO. The portion of the
Account's assets applicable to the Contracts may not be charged with
liabilities arising out of any other business JHMLICO may conduct.
2. SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments
Investment in shares of the Fund are valued at the reported net asset values
of the respective portfolios. Investment transactions are recorded on the
trade date. Dividend income is recognized on the ex-dividend date. Realized
gains and losses on sales of Fund shares are determined on the basis of
identified cost.
Federal Income Taxes
The operations of the Account are included in the federal income tax return
of JHMLICO, which is taxed as a life insurance company under the Internal
Revenue Code. JHMLICO has the right to charge the Account any federal income
taxes, or provision for federal income taxes, attributable to the operations
of the Account or to the Contracts funded in the Account. Currently, John
Hancock does not make a charge for income or other taxes. JHMLICO retains the
right to charge the Account for any federal income taxes arising from changes
in the tax law. Charges for state and local taxes, if any, attributable to the
Account may also be made.
Expenses
JHMLICO assumes mortality and expense risks of the Contracts and provides
administrative services to the Account for which asset charges are deducted at
an annual rate of 1.25% of net assets of the Account.
JHMLICO makes certain other deductions from contractowner payments for
premium taxes and sales and withdrawal charges, which are accounted for as a
reduction of net assets resulting from contractowner transactions.
12
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. DETAILS OF INVESTMENTS
The details of the shares owned and cost and value of investments in the
portfolios of the Fund at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
SHARES
PORTFOLIO OWNED COST VALUE
--------- ---------- ------------ -----------
<S> <C> <C> <C>
Select Stock.......................... 1,583,097 $ 24,111,280 $27,495,789
Bond.................................. 5,948,636 56,776,728 60,246,089
International......................... 570,112 8,719,924 8,899,248
Money Market.......................... 1,835,448 18,354,476 18,354,476
Real Estate Equity.................... 604,416 7,006,036 7,069,366
Special Opportunities................. 601,814 7,425,763 7,934,665
Stock................................. 7,703,803 93,598,086 107,400,414
Short-Term U.S. Government............ 312,103 3,175,106 3,193,557
Managed............................... 22,959,970 275,443,111 315,169,921
</TABLE>
Purchases, including reinvestment of dividend distributions and proceeds
from sales of shares in the portfolios of the Fund during 1995, were as
follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
--------- ----------- -----------
<S> <C> <C>
Select Stock...................................... $10,693,564 $ 529,049
Bond.............................................. 11,599,164 4,331,001
International..................................... 2,207,720 1,563,861
Money Market...................................... 11,501,003 4,649,026
Real Estate Equity................................ 1,659,468 1,551,788
Special Opportunities............................. 7,589,311 215,094
Stock............................................. 30,470,098 3,373,071
Short-Term U.S. Government........................ 3,350,129 180,001
Managed........................................... 54,793,507 12,985,955
</TABLE>
4. NET ASSETS
Accumulation shares attributable to net assets of contractowners and
accumulation share values for each subaccount at December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
ACCOMMODATOR 2000 INDEPENDENCE PREFERRED
------------------------- -------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES SHARES SHARE VALUES
---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Select Stock............... 635,606 $30.260 646,863 $12.773
Bond....................... 2,696,768 19.412 682,290 11.659
International.............. 448,251 15.395 180,112 11.097
Money Market............... 791,904 14.455 663,755 10.406
Real Estate Equity......... 380,741 15.891 92,658 11.339
Special Opportunities...... 104,607 13.315 492,166 13.292
Stock...................... 2,853,591 30.047 1,659,869 13.048
Short-Term US Government... 11,674 10.920 281,217 10.903
Managed.................... 11,834,432 23.443 3,049,661 12.375
</TABLE>
5. TRANSACTIONS WITH AFFILIATES
John Hancock acts as the distributor, principal underwriter and investment
advisor for the Fund. Certain officers of the Account are officers and
directors of JHMLICO or the Fund.
13
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31
-------------------
1995 1994
--------- ---------
(In millions)
<S> <C> <C>
ASSETS
Bonds--Note 6............................................... $21,108.5 $19,884.0
Stocks:
Preferred................................................. 338.8 274.4
Common.................................................... 130.9 115.9
Investments in affiliates................................. 1,265.3 1,089.4
--------- ---------
1,735.0 1,479.7
Mortgage loans on real estate--Note 6....................... 8,801.5 8,274.2
Real estate:
Company occupied.......................................... 377.4 385.2
Investment properties..................................... 1,949.5 1,765.5
--------- ---------
2,326.9 2,150.7
Policy loans................................................ 1,621.3 1,669.2
Cash items:
Cash in banks and offices................................. 286.6 336.7
Temporary cash investments................................ 254.1 556.2
--------- ---------
540.7 892.9
Premiums due and deferred................................... 234.0 230.9
Investment income due and accrued........................... 597.5 578.2
Other general account assets................................ 883.0 979.4
Assets held in separate accounts............................ 12,928.2 10,712.5
--------- ---------
TOTAL ASSETS................................................ $50,776.6 $46,851.7
========= =========
Obligations and Policyholders' Contingency Reserves
OBLIGATIONS
Policy reserves........................................... $17,711.4 $16,817.9
Policyholders' and beneficiaries' funds................... 14,724.8 13,974.8
Dividends payable to policyholders........................ 378.6 377.6
Policy benefits in process of payment..................... 217.1 224.4
Other policy obligations.................................. 159.6 256.5
Asset valuation reserve--Note 1........................... 1,014.3 835.7
Federal income and other accrued taxes--Note 1............ 250.5 231.8
Other general account obligations......................... 873.2 1,120.7
Obligations related to separate accounts.................. 12,913.6 10,682.3
--------- ---------
TOTAL OBLIGATIONS........................................... 48,243.1 44,521.7
Policyholders' Contingency Reserves
Surplus notes--Note 2..................................... 450.0 450.0
Special contingency reserve for group insurance........... 193.1 191.7
General contingency reserve............................... 1,890.4 1,688.3
--------- ---------
TOTAL POLICYHOLDERS' CONTINGENCY RESERVES................... 2,533.5 2,330.0
--------- ---------
TOTAL OBLIGATIONS AND POLICYHOLDERS' CONTINGENCY RESERVES... $50,776.6 $46,851.7
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
SUMMARY OF OPERATIONS AND CHANGES IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1995 1994
----------- -----------
(In millions)
<S> <C> <C>
Income
Premiums, annuity considerations and pension fund
contributions..................................... $ 8,127.8 $ 7,617.4
Net investment income--Note 4...................... 2,678.5 2,557.8
Other, net......................................... 90.8 64.1
----------- -----------
10,897.1 10,239.3
Benefits and Expenses
Payments to policyholders and beneficiaries:
Death benefits................................... 787.4 817.6
Accident and health benefits..................... 321.3 350.2
Annuity benefits................................. 1,342.7 1,273.9
Surrender benefits and annuity fund withdrawals.. 5,243.6 4,759.3
Matured endowments............................... 19.8 20.8
----------- -----------
7,714.8 7,221.8
Additions to reserves to provide for future
payments to policyholders and beneficiaries....... 1,497.0 1,503.5
Expenses of providing service to policyholders and
obtaining new insurance:
Field sales compensation and expenses............ 277.4 303.2
Home office and general expenses................. 455.8 437.3
Cost of restructuring.............................. 0.0 57.8
Payroll, state premium and miscellaneous taxes..... 78.6 72.1
----------- -----------
10,023.6 9,595.7
----------- -----------
GAIN FROM OPERATIONS BEFORE DIVIDENDS TO
POLICYHOLDERS, FEDERAL INCOME TAXES AND NET
REALIZED CAPITAL GAINS (LOSSES)............... 873.5 643.6
Dividends to policyholders........................... 465.9 385.0
Federal income taxes--Note 1......................... 128.5 59.7
----------- -----------
594.4 444.7
----------- -----------
GAIN FROM OPERATIONS BEFORE NET REALIZED
CAPITAL GAINS (LOSSES)........................ 279.1 198.9
Net realized capital gains (losses)--Note 5.......... 21.2 (35.3)
----------- -----------
NET INCOME..................................... 300.3 163.6
Other increases (decreases) in policyholders' contin-
gency reserves:
Net unrealized capital losses and other adjust-
ments--Note 5..................................... (85.1) (118.2)
Valuation reserve changes--Note 1.................. 0.0 41.0
Net gain from separate accounts.................... 2.6 0.8
Issuance of surplus notes.......................... 0.0 450.0
Prior years' federal income taxes.................. (36.8) (26.2)
Other reserves and adjustments..................... 22.5 4.3
----------- -----------
NET INCREASE IN POLICYHOLDERS' CONTINGENCY
RESERVES...................................... 203.5 515.3
Policyholders' contingency reserves at beginning of
year................................................ 2,330.0 1,814.7
----------- -----------
POLICYHOLDERS' CONTINGENCY RESERVES AT END OF YEAR... $ 2,533.5 $ 2,330.0
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1995 1994
----------- -----------
(In millions)
<S> <C> <C>
Cash Flows From Operating Activities:
Insurance premiums, annuity considerations and de-
posits............................................ $ 8,280.3 $ 7,827.5
Net investment income.............................. 2,756.9 2,560.0
Benefits to policyholders and beneficiaries........ (7,917.6) (7,417.0)
Dividends paid to policyholders.................... (464.9) (391.4)
Insurance expenses and taxes....................... (795.1) (801.0)
Net transfers (to) from separate accounts.......... 132.0 (548.4)
Other, net......................................... (154.7) (88.1)
----------- -----------
NET CASH PROVIDED FROM OPERATIONS................ 1,836.9 1,141.6
----------- -----------
Cash Flows Used In Investing Activities:
Bond purchases..................................... (6,456.9) (6,834.2)
Bond sales......................................... 2,874.9 2,530.2
Bond maturities and scheduled redemptions.......... 1,600.6 1,437.6
Bond prepayments................................... 795.9 620.8
Stock purchases.................................... (224.3) (282.7)
Proceeds from stock sales.......................... 131.4 70.8
Real estate purchases.............................. (375.1) (255.9)
Real estate sales.................................. 365.0 280.6
Other invested assets purchases.................... (46.5) (66.5)
Proceeds from the sale of other invested assets.... 251.1 169.3
Mortgage loans issued.............................. (2,041.6) (1,547.7)
Mortgage loan repayments........................... 1,277.9 1,391.8
Other, net......................................... (554.6) 845.3
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES............ (2,402.2) (1,640.6)
----------- -----------
Cash Flows From Financing Activities:
Issuance of surplus notes.......................... 0.0 450.0
Issuance of REMIC notes payable.................... 213.1 0.0
----------- -----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES...... 213.1 450.0
----------- -----------
DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS...... (352.2) (49.0)
Cash and temporary cash investments at beginning of
year................................................ 892.9 941.9
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR... $ 540.7 $ 892.9
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES
John Hancock Mutual Life Insurance Company (the Company) provides a broad
range of financial services and insurance products. The Company's insurance
operations focus principally in three segments: the Retail Sector, which
encompasses the Company's individual life, annuity, and long-term care
operations; Business Insurance, its group life, health, and long-term care
operations including administrative services provided to group customers; and
Group Pension, which offers single premium annuity and guaranteed investment
contracts through both the general and separate accounts. In addition, through
its subsidiaries and affiliates, the Company also offers a wide range of
investment management and advisory services and other related products
including domestic property and casualty insurance, life insurance products
for the Canadian market, a full range of retail and institutional securities
brokerage services, investment management and advisory services, sponsorship
and distribution of mutual funds, real estate financing and management, and
various other financial services. Investments in these subsidiaries and other
affiliates are recorded on the statutory equity method.
The Company is licensed in all fifty of the United States, the District of
Columbia, Puerto Rico, Guam, the US Virgin Islands, and Canada. The Company
distributes its individual products in North America primarily through a
career agency system. The career agency system is composed of company owned,
unionized branch offices and independent general agencies. The Company also
distributes its individual products through several alternative distribution
channels.
The Company distributes its group benefit products through group
representatives, who are John Hancock employees or through intermediaries, in
key markets nationwide.
The Company markets pension and other investment-related products primarily to
sponsors of retirement and savings plans covering employees of private sector
companies, and plans covering public employees and collective bargaining
unions and non-profit organizations. Products are marketed and sold through a
combination of group pension field employee representatives, as well as
marketing personnel and investment professionals employed by the Company.
The preparation of the financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Such estimates and
assumptions could change in the future as more information becomes known,
which could impact the amounts reported and disclosed herein.
Basis of Presentation: The financial statements have been prepared on the
basis of accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of
the National Association of Insurance Commissioners, which are currently
considered generally accepted accounting principles for mutual life insurance
companies. However, in April 1993, the Financial Accounting Standard Board
(FASB) issued Interpretation 40, "Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises"
(Interpretation). The Interpretation, as amended, is effective for 1996 annual
financial statements and thereafter, and no longer will allow statutory-basis
financial statements to be described as being prepared in conformity with
generally accepted accounting principles (GAAP). Upon the effective date of
the Interpretation in order for their financial statements to be described as
being prepared in conformity with GAAP, mutual life insurance companies will
be required to adopt all applicable authoritative GAAP pronouncements in any
general-purpose financial statements that they may issue. The Company has not
quantified the effects of the application of the Interpretation on its
financial statements.
The Company has not yet determined whether for general purposes it will
continue to issue statutory-basis financial statements or statements adopting
all applicable authoritative GAAP pronouncements. If the Company decides that
its general purpose financial statements will be prepared in accordance with
GAAP rather than
17
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
statutory accounting practices, the financial statements included herein would
have to be restated to reflect all applicable authoritative GAAP
pronouncements, including Statement of Financial Accounting Standards (SFAS)
Nos. 60, 97, and 113, and the American Institute of Certified Public
Accountants' Statement of Position 95-1, which addresses the accounting for
long-duration and short-duration insurance and reinsurance contracts,
including all participating business.
The significant accounting practices of the Company are as follows:
Revenues and Expenses: Premium revenues are recognized over the premium-paying
period of the policies whereas expenses, including the acquisition costs of
new business, are charged to operations as incurred and policyholder dividends
are provided as paid or accrued.
Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-
term, highly-liquid investments both readily convertible to known amounts of
cash and so near maturity that there is insignificant risk of changes in value
because of changes in interest rates.
Valuation of Assets: General account investments are carried at amounts
determined on the following bases:
Bond and stock values are carried as prescribed by the National Association
of Insurance Commissioners (NAIC): bonds generally at amortized amounts or
cost, preferred stocks generally at cost and common stocks at market. The
discount or premium on bonds is amortized using the interest method.
Investments in affiliates are included on the statutory equity method.
Mortgage loans are carried at outstanding principal balance or amortized
cost.
Investment and company occupied real estate is carried at depreciated cost,
less encumbrances. Depreciation on investment and company occupied real
estate is recorded on a straight-line basis.
Real estate acquired in satisfaction of debt and held for sale, which is
classified with investment properties, is carried at the lower of cost or
market as of the date of foreclosure.
Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.
Other invested assets, which are classified with other general account
assets, include real estate and energy joint ventures and limited
partnerships and are valued based on the Company's equity in the underlying
net assets.
Asset Valuation and Interest Maintenance Reserves: The Asset Valuation Reserve
(AVR) is computed in accordance with the prescribed NAIC formula and
represents a provision for possible fluctuations in the value of bonds, equity
securities, mortgage loans, real estate and other invested assets. The Company
makes additional contributions to the AVR in excess of the required amounts to
account for potential losses and risks in the investment portfolio when the
Company believes such provisions are prudent. Changes to the AVR are charged
or credited directly to policyholders' contingency reserves.
The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents that portion of the after tax net accumulated
unamortized realized capital gains and losses on sales of fixed income
securities, principally bonds and mortgage loans, attributable to changes in
the general level of interest rates. Such gains and losses are deferred and
amortized into income over the remaining expected lives of the investments
sold. At December 31, 1995, the IMR, net of 1995 amortization of $16.4
million, amounted to $69.5 million which is included in other policy
obligations. The corresponding 1994 amounts were $17.1 million and $52.7
million, respectively.
Property and Equipment: Data processing equipment, included in other general
account assets, is reported at depreciated cost, with depreciation recorded on
a straight-line basis. Nonadmitted furniture and equipment also is depreciated
on a straight-line basis. The useful lives of these assets range from three to
twenty years.
18
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
Separate Accounts: Separate account assets (valued at market) and obligations
are included as separate captions in the statements of financial position. The
change in separate account surplus is recognized through direct charges or
credits to policyholders' contingency reserves.
Fair Values of Financial Instruments: Statement of Financial Accounting
Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about financial
instruments, whether or not recognized in the statement of financial position,
for which it is practicable to estimate the value. In situations where quoted
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Therefore, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:
The carrying amounts reported in the statement of financial position for
cash and temporary cash investments approximate their fair values.
Fair values for public bonds are obtained from an independent pricing
service. Fair values for private placement securities and publicly traded
bonds not provided by the independent pricing service are estimated by the
Company by discounting expected future cash flows using current market
rates applicable to the yield, credit quality and maturity of the
investments. The fair values for common and preferred stocks, other than
subsidiary investments which are carried at equity values, are based on
quoted market prices.
The fair value for mortgage loans is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit
characteristics of the underlying loans. Mortgage loans with similar
characteristics and credit risks are aggregated into qualitative categories
for purposes of the fair value calculations.
The carrying amounts in the statement of financial position for policy
loans approximates their fair value.
The fair value of interest rate swaps and currency rate swaps is estimated
using a discounted cash flow method adjusted for the difference between the
rate of the existing swap and the current swap market rate. Discounted cash
flows in foreign currencies are converted to U.S. dollars using current
exchange rates.
The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow
method incorporating adjustments for the difference in the level of
interest rates between the dates the commitments were made and December 31,
1995. The fair value for commitments to purchase real estate approximates
the amount of the initial commitment.
Fair values for the Company's guaranteed investment contracts are estimated
using discounted cash flow calculations, based on interest rates currently
being offered for similar contracts with maturities consistent with those
remaining for the contracts being valued. The fair value for fixed-rate
deferred annuities is the cash surrender value, which represents the
account value less applicable surrender charges. Fair values for immediate
annuities without life contingencies and supplementary contracts without
life contingencies are estimated based on discounted cash flow calculations
using current market rates.
Capital Gains and Losses: Realized capital gains and losses, net of taxes and
amounts transferred to the IMR, are included in net income. Unrealized gains
and losses, which consist of market value and book value adjustments, are
shown as adjustments to policyholders' contingency reserves.
Interest Rate and Currency Rate Swap Contracts and Financial Futures
Contracts: The net interest effect of interest rate and currency rate swap
transactions is recorded as an adjustment of interest income as incurred.
Gains and losses on financial futures contracts used as hedges against
interest rate fluctuations are deferred and recognized in income over the
period being hedged.
19
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
Foreign Exchange Gains and Losses: Foreign exchange gains and losses are
reflected as direct credits or charges to policyholders' contingency reserves
through unrealized capital gains and losses.
Policy Reserves: Reserves for traditional individual life insurance policies
are maintained using the 1941, 1958 and 1980 Commissioner's Standard Ordinary
and American Experience mortality tables, with assumed interest rates ranging
from 2 1/2% to 6%, and using principally the net level premium method for
policies issued prior to 1978 and a modified preliminary term method for
policies issued in 1979 and later. Annuity and supplementary contracts with
life contingency reserves are based principally on modifications of the 1937
Standard Annuity Table, the Group Annuity Mortality Tables for 1951, 1971 and
1983, the 1971 Individual Annuity Mortality Table and the a-1983 Individual
Annuity Mortality Table, with interest rates ranging from 2% to 11 1/4%.
Reserves for deposit administration funds and immediate participation
guarantee funds are based on accepted actuarial methods at various interest
rates. Accident and health policy reserves generally are calculated using
either the two-year preliminary term or the net level premium method based on
various morbidity tables.
The statement value and fair value for investment-type insurance contracts are
as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
------------------- -------------------
Statement Fair Statement Fair
Value Value Value Value
--------- --------- --------- ---------
(In millions)
<S> <C> <C> <C> <C>
Guaranteed investment contracts........ $12,014.3 $12,325.3 $11,333.3 $10,966.3
Fixed-rate deferred and immediate annu-
ities................................. 3,494.5 3,478.6 2,918.5 2,840.3
Supplementary contracts without life
contingencies......................... 39.6 40.7 36.5 35.4
--------- --------- --------- ---------
$15,548.4 $15,844.6 $14,288.3 $13,842.0
========= ========= ========= =========
</TABLE>
Federal Income Taxes: Federal income taxes are provided in the financial
statements based on amounts determined to be payable as a result of operations
within the current accounting period. The operations of the Company and its
subsidiaries and affiliates are combined in filing a consolidated federal
income tax return for the group. The federal income taxes of the Company are
determined on a separate return basis with certain adjustments.
Income before taxes differs from taxable income principally due to tax-exempt
investment income, dividends-received tax deductions, the limitation placed on
the tax deductibility of mutual companies' policyholder dividends, accelerated
depreciation, differences in policy and contract liabilities for tax return
and financial statement purposes, capitalization of policy acquisition
expenses for tax purposes and other adjustments prescribed by the Internal
Revenue Code.
Amounts for disputed tax issues relating to prior years are charged or
credited directly to policyholders' contingency reserves. No provision is
generally recognized for timing differences that may exist between financial
reporting and taxable income.
At December 31, 1994, the Company's subsidiaries had total estimated tax loss
carryforwards for federal income tax purposes of $26.5 million expiring in
years 2003 to 2005. After the 1994 federal income tax return was filed on
September 15, 1995, the Company's subsidiaries remaining tax loss
carryforwards for federal income tax purposes totaled $9.9 million. It is
expected that these losses will be fully utilized in the 1995 federal income
tax return. Certain subsidiaries acquired by the Company have additional
potential tax loss carryforwards of $117.8 million expiring in years 1996 to
1998. These amounts also may be used in the consolidated tax return but only
to offset future taxable income related to those subsidiaries. The Company
made federal tax payments of $211.5 million in 1995 and $78.8 million in 1994.
20
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
Adjustments to Policy Reserves and Policyholders' and Beneficiaries'
Funds: From time to time, the Company finds it appropriate to modify certain
required policy reserves because of changes in actuarial assumptions or
increased benefits. Reserve modifications resulting from such determinations
are recorded directly to policyholders' contingency reserves. During 1994, the
Company refined certain actuarial assumptions inherent in the calculation of
preconversion yearly renewable term and gross premium deficiency reserves
resulting in a $41.0 million increase in policyholders' contingency reserves
at December 31, 1994.
Reinsurance: Premiums, commissions, expense reimbursements, benefits and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies issued and the terms
of the reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premium income. Amounts applicable to reinsurance
ceded for future policy benefits, unearned premium reserves and claim
liabilities have been reported as reductions of these items.
Restructuring Charge: In 1994, the Company provided for restructuring charges
of $57.8 million in accordance with the Company's plan to reduce its cost
structure and consolidate operations. The restructuring charge includes
severance costs and facilities consolidation expenses. During 1995 and 1994,
the Company paid $32.9 million and $10.7 million, respectively, under its
restructuring plan. The remaining liability for restructuring charges at
December 31, 1995 was $14.2 million.
Reclassifications: Certain 1994 amounts have been reclassified to permit
comparison with the corresponding 1995 amounts.
NOTE 2--SURPLUS NOTES
On February 25, 1994, the Company issued $450 million of surplus notes that
bear interest at 7 3/8% and are scheduled to mature on February 15, 2024. The
issuance of the surplus notes was approved by the Massachusetts Division of
Insurance and any payment of interest on and principal of the notes may be
made only with the prior approval of the Commissioner of the Massachusetts
Division of Insurance. Surplus notes are reported as surplus rather than
liabilities. Interest paid on the notes during 1995 and 1994 were $33.2
million and $15.7 million, respectively.
NOTE 3--BORROWED MONEY
At December 31, 1995, the Company had a $500 million syndicated line of
credit. There are 29 banks who joined the syndicate of lenders under the
leadership of Morgan Guaranty Trust Company of New York. The banks will commit
when requested to loan funds for a period of two years at prevailing interest
rates as determined in accordance with the line of credit agreement. The
agreement does not contain a material adverse change clause. As of December
31, 1995, no amounts had been borrowed under this agreement.
In 1995 the Company issued $213.1 million of debt through a Real Estate
Mortgage Investment Conduit (REMIC). As collateral to the debt, the Company
pledged $1,065.8 million of commercial mortgages to the REMIC Trust. The debt
was issued in two notes of equal amounts with last scheduled payment dates on
March 25, 1997 and June 25, 1998, respectively. The interest rates on the two
notes are calculated on a floating basis, based on LIBOR rates, and were
6.1575% and 6.2075%, respectively, at December 31, 1995. The outstanding
balances of the Notes totaled $213.1 million at December 31, 1995 and are
included in other general account obligations.
21
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 4--NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In millions)
<S> <C> <C>
Investment expenses.............................................. $332.9 $291.2
Interest expense................................................. 38.3 19.8
Depreciation on real estate and other invested assets............ 62.7 54.7
Real estate and other investment taxes........................... 61.2 61.3
------ ------
$495.1 $427.0
====== ======
</TABLE>
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital gains (losses) consist of the following items:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In millions)
<S> <C> <C>
Gains (losses) from asset sales and foreclosures............... $118.6 $(41.5)
Capital gains tax.............................................. (64.2) (20.2)
Net capital (gains) losses transferred to the IMR.............. (33.2) 26.4
------ ------
Net Realized Capital Gains (Losses).......................... $ 21.2 $(35.3)
====== ======
</TABLE>
Net unrealized capital losses and other adjustments consist of the following
items:
<TABLE>
<CAPTION>
1995 1994
------ -------
(In millions)
<S> <C> <C>
Gains from changes in security values and book value adjust-
ments......................................................... $ 93.4 $ 36.4
Increase in asset valuation reserve............................ (178.5) (154.6)
------ -------
Net Unrealized Capital Losses and Other Adjustments.......... $(85.1) $(118.2)
====== =======
</TABLE>
22
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized
Value Gains Losses Fair Value
--------- ---------- ---------- ----------
(In millions)
Year ended December 31, 1995
----------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities and
obligations of U.S. government
corporations and agencies............ $ 638.5 $ 42.5 $ 0.2 $ 680.8
Obligations of states and political
subdivisions......................... 194.1 20.6 0.1 214.6
Debt securities issued by foreign gov-
ernments............................. 297.7 42.2 0.0 339.9
Corporate securities.................. 18,358.6 1,818.3 73.9 20,103.0
Mortgage-backed securities............ 1,619.6 57.9 20.8 1,656.7
--------- -------- ------ ---------
Totals.............................. $21,108.5 $1,981.5 $ 95.0 $22,995.0
========= ======== ====== =========
<CAPTION>
Year ended December 31, 1994
----------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities and
obligations of U.S. government
corporations and agencies............ $ 1,545.1 $ 1.8 $128.6 $ 1,418.3
Obligations of states and political
subdivisions......................... 170.6 4.5 1.7 173.4
Debt securities issued by foreign gov-
ernments............................. 143.5 9.8 0.5 152.8
Corporate securities.................. 16,208.9 471.1 401.8 16,278.2
Mortgage-backed securities............ 1,815.9 4.8 44.1 1,776.6
--------- -------- ------ ---------
Totals.............................. $19,884.0 $ 492.0 $576.7 $19,799.3
========= ======== ====== =========
</TABLE>
The statement value and fair value of bonds at December 31, 1995, by
contractual maturity, are shown below. Maturities will differ from contractual
maturities because eligible borrowers may exercise their right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Statement Value Fair Value
--------------- ----------
(In millions)
<S> <C> <C>
Due in one year or less.............................. $ 1,408.9 $ 1,456.4
Due after one year through five years................ 6,406.1 6,795.4
Due after five years through ten years............... 5,969.7 6,551.4
Due after ten years.................................. 5,704.2 6,535.1
--------- ---------
19,488.9 21,338.3
Mortgage-backed securities........................... 1,619.6 1,656.7
--------- ---------
$21,108.5 $22,995.0
========= =========
</TABLE>
Proceeds from sales of bonds during 1995 and 1994 were $2.9 billion and $2.5
billion, respectively. Gross gains of $69.7 million in 1995 and $16.6 million
in 1994 and gross losses of $44.3 million in 1995 and $99.3 million in 1994
were realized on these transactions.
The cost of common stocks was $78.1 million and $82.1 million at December 31,
1995 and 1994, respectively. At December 31, 1995, gross unrealized
appreciation on common stocks totaled $76.3 million, and gross unrealized
depreciation totaled $23.5 million. The fair value of preferred stock totaled
$338.8 million at December 31, 1995 and $281.6 million at December 31, 1994.
23
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
Mortgage loans with outstanding principal balances of $115.5 million, bonds
with amortized cost of $32.8 million and real estate with depreciated cost of
$28.5 million were nonincome producing for the twelve months ended December
31, 1995.
Restructured commercial mortgage loans aggregated $466.0 million and $507.1
million as of December 31, 1995 and 1994, respectively. The expected gross
interest income that would have been recorded had the loans been current in
accordance with the original loan agreements and the actual interest income
recorded were as follows:
<TABLE>
<CAPTION>
Year ended
December 31
-------------
1995 1994
------ ------
(In millions)
<S> <C> <C>
Expected.................................................... $ 47.0 $ 54.5
Actual...................................................... $ 26.8 34.2
</TABLE>
Generally, the terms of the restructured mortgage loans call for the Company
to receive some form or combination of an equity participation in the
underlying collateral, excess cash flows or an effective yield at the maturity
of the loans sufficient to meet the original terms of the loans.
At December 31, 1995, the mortgage loan portfolio was diversified by
geographic region and specific collateral property type as displayed below.
The Company controls credit risk through credit approvals, limits and
monitoring procedures.
<TABLE>
<CAPTION>
Geographic
Concentration Statement Value
------------- ---------------
(In millions)
<S> <C>
East North Central....... $ 822.7
East South Central....... 178.2
Middle Atlantic.......... 1,861.1
Mountain................. 431.3
New England.............. 915.6
Pacific.................. 2,253.4
South Atlantic........... 1,611.7
West North Central....... 217.7
West South Central....... 447.4
Other.................... 62.4
--------
$8,801.5
========
</TABLE>
<TABLE>
<CAPTION>
Property
Type Statement Value
-------- ---------------
(In millions)
<S> <C>
Apartments................ $2,374.6
Hotels.................... 164.4
Industrial................ 780.4
Office buildings.......... 1,823.6
Retail.................... 1,545.1
1-4 Family................ 9.5
Agricultural.............. 1,607.0
Other..................... 496.9
--------
$8,801.5
========
</TABLE>
At December 31, 1995, the fair values of the commercial and agricultural
mortgage loan portfolios were $7.6 billion and $1.8 billion, respectively. The
corresponding amounts as of December 31, 1994 were approximately $6.5 billion
and $1.7 billion, respectively.
NOTE 7--REINSURANCE
Premiums, benefits and reserves associated with reinsurance assumed in 1995
were $455.2 million, $276.7 million, and $12.7 million, respectively. The
corresponding amounts in 1994 were $385.9 million, $266.0 million, and $12.1
million, respectively.
The Company cedes business to reinsurers to share risks under life, health and
annuity contracts for the purpose of reducing exposure to large losses.
Premiums, benefits and reserves ceded to reinsurers in 1995 were $281.0
million, $217.0 million and $185.4 million, respectively. The corresponding
amounts in 1994 were $246.7 million, $203.2 million and $217.3 million,
respectively.
24
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The Company has a coinsurance agreement with another insurer to cede 100% of
its individual disability business. Reserves ceded under this agreement,
included in the amount shown above, were $212.7 million at December 31, 1995
and $184.5 million at December 31, 1994.
To the extent that an assuming reinsurance company is unable to meet its
obligations under a reinsurance agreement, the Company remains liable as the
direct insurer on all risks reinsured.
NOTE 8--BENEFIT PLANS
The Company provides retirement benefits to substantially all employees and
general agency personnel. These benefits are provided through both defined
benefit and defined contribution pension plans. Pension benefits under the
defined benefit plans are based on years of service and average compensation
generally during the five years prior to retirement. The Company's funding
policy for qualified defined benefit plans is to contribute annually an amount
in excess of the minimum annual contribution required under the Employee
Retirement Income Security Act (ERISA). This amount is limited by the maximum
amount that can be deducted for federal income tax purposes. The funding
policy for nonqualified defined benefit plans is to contribute the amount of
the benefit payments made during the year. Plan assets consist principally of
listed equity securities, corporate obligations and U.S. government
securities.
Defined contribution plans include The Investment Incentive Plan (TIP) and the
Savings and Investment Plan (SIP). Employees are eligible to participate in
TIP after one year of service and may contribute up to the lesser of 15% of
their salary or $9,240 annually to the plan. The Company matches the first 2%
of pre-tax contributions and makes an additional annual profit sharing
contribution for employees who have completed at least two years of service.
Through SIP, marketing representatives, sales managers and agency managers are
eligible to contribute up to the lesser of 13% of their salary or $9,240. The
Company matches the first 3% of pretax contributions for marketing
representatives and the first 2% of pretax contributions for sales managers
and agency managers. The Company makes an annual profit sharing contribution
of up to 1% for sales managers and agency managers who have completed at least
two years of service.
The Company provides additional compensation to certain employees based on
achievement of annual and long-term corporate financial objectives.
Pension expense is summarized as follows:
<TABLE>
<CAPTION>
Year ended
December 31
----------------
1995 1994
------- -------
(In millions)
<S> <C> <C>
Defined benefit plans:
Service cost--benefits earned during the period............. $ 30.1 $ 46.5
Interest cost on the projected benefit obligation........... 103.5 96.1
Actual return on plan assets................................ (369.5) 29.4
Net amortization and deferral............................... 260.5 (144.7)
------- -------
24.6 27.3
Defined contribution plans.................................... 19.8 15.8
------- -------
Total pension expense..................................... $ 44.4 $ 43.1
======= =======
</TABLE>
Assumptions used in accounting for the defined benefit pension plans were as
follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Discount rate....................................................... 7.50% 8.00%
Weighted rate of increase in compensation levels.................... 5.10% 5.30%
Expected long-term rate of return on assets......................... 7.75% 8.25%
</TABLE>
25
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The following table sets forth the funded status and actuarially determined
amounts related to the Company's defined benefit pension plans:
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1995 1994
----------- -----------
(In millions)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.......................... $ (1,242.9) $ (1,108.9)
=========== ===========
Accumulated benefit obligation..................... $ (1,300.3) $ (1,151.0)
=========== ===========
Projected benefit obligation......................... $ (1,480.0) $ (1,350.2)
Plan assets fair value............................... 1,645.3 1,355.0
----------- -----------
Excess of plan assets over projected benefit obliga-
tion................................................ 165.3 4.8
Unrecognized net (gain) loss......................... (139.1) 36.3
Prior service cost not yet recognized in net periodic
pension cost........................................ 50.0 57.7
Unrecognized net asset, net of amortization.......... (111.2) (126.6)
----------- -----------
Net pension liability................................ $ (35.0) $ (27.8)
=========== ===========
</TABLE>
Since 1988, the Massachusetts Division of Insurance has provided the Company
with approval to recognize the pension plan prepaid expense, if any, in
accordance with the requirements of SFAS No. 87, "Employers' Accounting for
Pensions." The Company furnishes the Division of Insurance with an actuarial
certification of the prepaid expense computation on an annual basis.
NOTE 9--OTHER POSTRETIREMENT BENEFIT PLANS
In addition to the Company's defined benefit pension plans, the Company has
employee welfare plans for medical, dental, and life insurance covering most
of its retired employees and general agency personnel. Substantially all
employees may become eligible for these benefits if they reach retirement age
while employed by the Company. The postretirement health care and dental
coverages are contributory based on service for post January 1, 1992 non-union
retirees. A small portion of pre-January 1, 1992 non-union retirees also
contribute. The applicable contributions are based on service.
In 1993, the Company changed its method of accounting for the costs of its
retiree benefit plans to the accrual method and elected to amortize its
transition liability for retirees and fully eligible or vested employees over
twenty years.
Since 1993, the Company funded a portion of the postretirement obligation. The
Company's policy is to fund postretirement benefits for non-union employees to
the maximum amount that can be deducted for federal income tax purposes and to
fund the benefits for union employees, which are fully tax qualified, at
sufficient amounts so that the total accrued liability related to
postretirement benefits is zero. As of December 31, 1995, plan assets related
to non-union employees were comprised of an irrevocable health insurance
contract to provide future health benefits to retirees while plan assets
related to union employees were comprised of approximately 60% equity
securities and 40% fixed income investments. The following table shows the
plans' combined funding status for vested benefits reconciled with the amounts
recognized in the Company's statements of financial position.
26
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
December 31
-------------------------------------
1995 1994
------------------ ------------------
Medical Medical
and Life and Life
Dental Insurance Dental Insurance
Plans Plans Plans Plans
------- --------- ------- ---------
(In millions)
<S> <C> <C> <C> <C>
Accumulated postretirement benefit obli-
gation:
Retirees............................... $(236.5) $(89.2) $(239.2) $(76.5)
Fully eligible active plan partici-
pants................................. (42.9) (20.1) (51.3) (22.2)
------- ------ ------- ------
(279.4) (109.3) (290.5) (98.7)
Plan assets at fair value................ 96.9 0.0 59.9 0.0
------- ------ ------- ------
Accumulated postretirement benefit
obligation in excess of plan assets..... (182.5) (109.3) (230.6) (98.7)
Unrecognized prior service cost.......... 18.2 5.8 22.2 6.2
Unrecognized prior net gain.............. (84.2) (4.2) (63.9) (12.3)
Unrecognized transition obligation....... 272.9 83.3 288.9 88.2
------- ------ ------- ------
Accrued postretirement benefit cost...... $ 24.4 $(24.4) $ 16.6 $(16.6)
======= ====== ======= ======
</TABLE>
Net postretirement benefits costs for the years ended December 31, 1995 and
1994 were $50.2 million and $52.1 million, respectively, and include the
expected cost of such benefits for newly eligible or vested employees,
interest cost, and amortization of the transition liability.
Net periodic postretirement benefits cost included the following components:
<TABLE>
<CAPTION>
December 31
------------------------------------
1995 1994
------------------ -----------------
Medical Medical
and Life and Life
Dental Insurance Dental Insurance
Plans Plans Plans Plans
------- --------- ------- ---------
(In millions)
<S> <C> <C> <C> <C>
Eligibility cost............................ $ 5.3 $ 1.5 $ 6.1 $ 2.3
Interest cost............................... 21.1 7.8 19.9 6.8
Actual return on plan assets................ (15.5) 0.0 (2.1) 0.0
Net amortization and deferral............... 25.0 5.0 14.4 4.7
------ ----- ----- -----
Net periodic postretirement benefit cost.... $ 35.9 $14.3 $38.3 $13.8
====== ===== ===== =====
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation at December 31, 1995 was 7.5% (8.0% for 1994). The annual assumed
rate of increase in the health care cost trend rate for the medical coverages
is 8.25% for 1996 (9.75% was assumed for 1995) and is assumed to decrease
gradually to 5.5% in 2001 and remain at that level thereafter. The health care
cost trend rate assumption has a significant effect on the amounts reported.
For example, increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated post retirement
benefit obligation for the medical coverages as of December 31, 1995 by $35.0
million and the aggregate of the eligibility and interest cost components of
net periodic postretirement benefit cost by $3.6 million for 1995 and $2.7
million for 1994.
Postretirement welfare benefits for non-vested employees are not reflected in
the above expenses or accumulated postretirement benefit obligations. As of
December 31, 1995, the accumulated postretirement benefit obligations for non-
vested employees amounted to $67.7 million for medical and dental plans and
$10.8 million for life insurance plans. The corresponding amounts as of
December 31, 1994 were $70.4 million and $9.1 million, respectively.
27
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 10--AFFILIATES
The Company has subsidiaries and affiliates in a variety of industries
including domestic and foreign life insurance and domestic property casualty
insurance, real estate, mutual funds, investment brokerage and various other
financial services entities.
Total assets of unconsolidated affiliates amounted to $9.5 billion at December
31, 1995 and $7.8 billion at December 31, 1994; total liabilities amounted to
$8.3 billion at December 31, 1995 and $6.7 billion at December 31, 1994; and
total net income was $89.5 million in 1995 and $61.9 million in 1994.
The Company customarily engages in transactions with its unconsolidated
affiliates, including the cession and assumption of certain insurance business
under the terms of established reinsurance agreements. Various services are
performed by the Company for certain affiliates for which the Company is
reimbursed on the basis of cost. Certain affiliates have entered into various
financial arrangements relating to borrowings and capital maintenance under
which agreements the Company would be obligated in the event of nonperformance
by an affiliate (see Note 14).
The Company received dividends of $9.7 million and $10.1 million in 1995 and
1994, respectively, from unconsolidated affiliates.
NOTE 11--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company enters into interest rate swap contracts for the purpose of
converting the interest rate characteristics (fixed or variable) of certain
investments to match those of related insurance liabilities. Maturities of
current agreements range from 1996 to 2005. These swaps involve, to varying
degrees, interest rate risk in excess of amounts recognized in the statement
of financial position.
The Company enters into currency rate swap agreements to manage exposure to
foreign exchange rate fluctuations. Maturities of current agreements range
through 2009. Should the counterparty fail to meet the terms of the contract,
the Company's market risk is limited to the currency rate differential.
The Company enters into interest rate cap contracts to manage exposure on
underlying security values due to a rise in interest rates. Maturities of
current agreements range through 2001.
The Company also uses financial futures contracts to hedge risks associated
with interest rate fluctuations on sales of guaranteed investment contracts.
The Company is subject to the risks associated with changes in the value of
the underlying securities; however, such changes in value generally are offset
by opposite changes in the value of the hedged items. The contract or notional
amounts of the contracts represent the extent of the Company's involvement but
not the future cash requirements, as the Company intends to close the open
positions prior to settlement.
The contract or notional amount of the foregoing financial instruments, which
indicates the Company's involvement and, in certain instances, maximum credit
risk related to those instruments, is as follows:
<TABLE>
<CAPTION>
December 31
-----------------
1995 1994
-------- --------
(In millions)
<S> <C> <C>
Futures contracts to purchase securities.................... $ 62.2 $ 147.9
======== ========
Futures contracts to sell securities........................ $ 299.9 $ 98.1
======== ========
Notional amount of interest rate swaps, currency rate swaps,
and interest rate caps to:
Receive variable rates.................................... $1,735.0 $ 916.0
======== ========
Receive fixed rates....................................... $1,756.3 $1,365.2
======== ========
</TABLE>
28
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The Company continually monitors its positions and the credit ratings of the
counterparties to these financial instruments. The Company believes the risk
of incurring losses due to nonperformance by its counterparties is remote and
that any such losses would be immaterial.
Based on market rates in effect at December 31, 1995, the Company's interest
rate swaps, currency rate swaps, and interest rate caps represented (assets)
liabilities to the Company with fair values of $37.0 million, $23.3 million
and $(0.3) million, respectively. The corresponding amounts as of December 31,
1994 were $12.0 million, $15.4 million, and $(1.5) million, respectively.
NOTE 12--LEASES
The Company leases office space and furniture and equipment under various
operating leases. Rental expenses for all operating leases totaled $32.2
million in 1995 and $35.2 million in 1994. At December 31, 1995, future
minimum rental commitments under noncancellable operating leases for office
space and furniture and equipment totaled approximately $44.3 million.
NOTE 13--POLICYHOLDERS' RESERVES AND BENEFICIARIES' FUNDS
The Company's annuity reserves and deposit fund liabilities that are subject
to discretionary withdrawal (with adjustment), subject to discretionary
withdrawal (without adjustment), and not subject to discretionary withdrawal
provisions are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1995 Percent
----------------- -------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal (with adjust-
ment):
With market value adjustment....................... $ 2,517.0 7.3%
At book value less surrender charge................ 2,502.2 7.3
--------- -----
Total with adjustment.............................. 5,019.2 14.6
Subject to discretionary withdrawal (without ad-
justment) at book value........................... 594.8 1.7
Subject to discretionary withdrawal--separate ac-
counts............................................ 10,813.9 31.4
Not subject to discretionary withdrawal:
General account.................................... 16,634.4 48.3
Separate accounts.................................. 1,387.2 4.0
--------- -----
Total annuity reserves and deposit liabilities--be-
fore reinsurance.................................... 34,449.5 100.0%
=====
Less reinsurance ceded............................... (0.2)
---------
Net annuity reserves and deposit fund liabilities.... $34,449.3
=========
</TABLE>
Activity in the liability for accident and health unpaid claims is:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In millions)
<S> <C> <C>
Balance at January 1............................................ $216.2 $210.6
Less reinsurance recoverables................................. (7.3) (4.6)
------ ------
Net balance at January 1........................................ 208.9 206.0
------ ------
Incurred related to:
Current year.................................................. 301.0 350.4
Prior years................................................... (25.2) (40.4)
------ ------
Total incurred.................................................. 275.8 310.0
------ ------
Paid related to:
Current year.................................................. 192.0 231.2
Prior years................................................... 89.0 75.9
------ ------
Total paid...................................................... 281.0 307.1
------ ------
Net balance at December 31...................................... 203.7 208.9
Plus reinsurance recoverable.................................. 4.0 7.3
------ ------
Balance at December 31.......................................... $207.7 $216.2
====== ======
</TABLE>
29
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
As a result of favorable changes in claim estimates and a decline in fully
insured business, the liability for prior year claims decreased in 1995 and
1994.
NOTE 14--COMMITMENTS AND CONTINGENCIES
The Company has extended commitments to purchase long-term bonds, preferred
stocks, and real estate and issue real estate mortgages totaling $620.7
million, $19.1 million, $5.0 million and $396.6 million, respectively, at
December 31, 1995. If funded, loans related to real estate mortgages would be
fully collateralized by related properties. The Company monitors the credit
worthiness of borrowers under long-term bond commitments and requires
collateral as deemed necessary. The fair value of the commitments described
above is $1.1 billion at December 31, 1995. The majority of these commitments
expire in 1996.
During 1991, the Company entered into a credit support and collateral pledge
agreement with the Federal National Mortgage Association (FNMA). Under the
agreement, the Company sold $1.042 billion of multi-family loans and acquired
an equivalent amount of FNMA securities. FNMA is guarantying the full face
value of the bonds to the bondholders. However, the Company has agreed to
absorb the first 15% of original principal and interest losses (less buy-
backs) for the pool of loans involved, but is not required to commit
collateral to support this loss contingency. Historically, the Company has
experienced total losses as a percentage of its multi-family mortgage
portfolio of approximately 3%. Mortgage loan buy-backs required by FNMA in
1995 and 1994 amounted to $29.5 million and $12.7 million, respectively. There
were no losses associated with these buy-backs. At December 31, 1995, the
remaining pool of loans had an outstanding principal balance of $591.2
million.
The Company has a support agreement with JHVLICo under which the Company
agrees to continue directly or indirectly to own all of JHVLICo's common stock
and maintain JHVLICo's net worth at not less than $1 million.
The Company has a support agreement with John Hancock Capital Corporation
(JHCC) under which the Company agrees to continue directly or indirectly to
own all of JHCC's common stock and maintain JHCC's net worth at not less than
$1 million. JHCC's outstanding borrowings as of December 31, 1995 were $363.6
million for short-term borrowings and $142.7 million for notes payable.
The Company is subject to insurance guaranty fund laws in the states in which
it does business. These laws assess insurance companies amounts to be used to
pay benefits to policyholders and claimants of insolvent insurance companies.
Many states allow these assessments to be credited against future premium
taxes. The Company believes such assessments in excess of amounts accrued will
not materially affect its financial position.
In the normal course of its business operations, the Company is involved in
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1995. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position of the Company.
30
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
<TABLE>
<C> <S>
1. Statement of Assets and Liabilities, John Hancock Variable Annuity
Account V, at December 31, 1995. (Part B)
2. Statement of Operations, John Hancock Variable Annuity Account V, year
ended December 31, 1995. (Part B)
3. Statement of Changes in Net Assets, John Hancock Variable Annuity
Account V, for each of the two years in the period ended December 31,
1995. (Part B)
4. Notes to Financial Statements, John Hancock Variable Annuity Account V.
(Part B)
5. Statement of Financial Position, John Hancock Mutual Life Insurance
Company, at December 31, 1995 and December 31, 1994. (Part B)
6. Summary of Operations and Changes in Policyholders' Contingency
Reserves, John Hancock Mutual Life Insurance Company, for each of the
two years in the period ended December 31, 1995. (Part B)
7. Statement of Cash Flows, John Hancock Mutual Life Insurance Company,
for each of the two years in the period ended December 31, 1995. (Part
B)
8. Notes to Financial Statements, John Hancock Mutual Life Insurance
Company. (Part B)
(B) EXHIBITS:
1. John Hancock Board Resolution establishing the John Hancock Variable
Annuity Account V, included in Post-Effective Amendment No. 1 to this
File No. 33-82646, filed April 25, 1995.
2. Not Applicable.
3.(a) Distribution Agreement by and between John Hancock Mutual Life
Insurance Company and John Hancock Variable Annuity Account V, included
in Post-Effective Amendment No. 1 to this File No. 33-82646, filed
April 25, 1995.
(b) Form of Individual Variable Annuity and Combination Fixed and Variable
Annuity Contracts Marketing and Distribution Agreement Between John
Hancock Mutual Life Insurance Company John Hancock Variable Life
Insurance Company, and Essex Corporation, included in Pre-Effective
Amendment No. 1 to this File No. 33-82646, filed November, 1994.
(c) Form of Individual Variable Annuity and Combination Fixed and Variable
Annuity Contracts Selling Agreement Among John Hancock Mutual Life
Insurance Company, John Hancock Variable Life Insurance Company, Essex
Corporation, and Broker/Dealer, included in Pre-Effective Amendment No.
1 to this File No. 33-82646, filed November, 1994.
4. Form of periodic payment deferred annuity contract, included in the
initial Form N-4 Registration Statement to this File No. 33-82646,
filed August 10, 1994.
5. Form of annuity contract application, included in the initial Form N-4
Registration Statement to this File No. 33-82646, filed August 10,
1994.
6. Charter and By-Laws of John Hancock Mutual Life Insurance Company,
included in Post-Effective Amendment No. 1 to this File No. 33-82646,
filed April 25, 1995.
7. Not Applicable.
8. Not Applicable.
9. Opinion and Consent of Counsel as to legality of interests being
offered, included in the initial Form N-4 Registration Statement to
this File No. 33-82646, filed August 10, 1994.
10.(a) Consent of Independent Auditors.
10.(b) Representation of Counsel pursuant to Rule 485(b)
11. Not Applicable.
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
12. Not Applicable.
13. Diagram of Subsidiaries of John Hancock Mutual Life Insurance Company
incorporated by reference from Post-Effective Amendment No. 13 to Form N-
1A Registration Statement of John Hancock Variable Series Trust I (File
No. 33-2081) filed April 24, 1996.
14. Copy of Power of Attorney for Michael C. Hawley. Copies of Powers of
Attorney for all other directors, included in Post-Effective Amendment No.
1 to this File No. 33-82646, filed April 25, 1995.
27. Financial Data Schedule.
</TABLE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
DIRECTORS
<TABLE>
<CAPTION>
NAME POSITION WITH DEPOSITOR
---- -----------------------
<S> <C>
Foster L. Aborn......... Vice Chairman of the Board
Samuel W. Bodman........ Director
Nelson S. Gifford....... Director
Richard F. Syron........ Director
William L. Boyan........ President and Chief Operations Officer
E. James Morton......... Director
John F. Magee........... Director
John M. Connors, Jr..... Director
Stephen L. Brown........ Chairman of the Board and Chief Executive Officer
Michael C. Hawley ...... Director
I. MacAllister Booth.... Director
C. Vincent Vappi........ Director
Delbert C. Staley....... Director
Randolph W. Bromery..... Director
David F. D'Alessandro... Senior Executive Vice President and Director
Joan T. Bok............. Director
Robert E. Fast.......... Director
Lawrence K. Fish........ Director
Kathleen F. Feldstein... Director
EXECUTIVE OFFICERS OTHER THAN DIRECTORS
Thomas E. Moloney....... Executive Vice President and Chief Financial Officer
Diane M. Capstaff....... Executive Vice President
Bruce E. Skrine......... Senior Vice President, Counsel, and Secretary
Richard S. Scipione..... General Counsel
</TABLE>
All of the above-named officers and directors can be contacted at the
following business address: John Hancock Mutual Life Insurance Company, John
Hancock Place, P.O. Box 111, Boston, MA 02117.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registrant is a separate account of John Hancock, operated as a unit
investment trust. Registrant supports benefits payable under John Hancock's
variable annuity contracts by investing in shares of John Hancock Variable
Series Trust I (the "Fund") a "series" type of mutual fund, registered under
the Investment Company Act of 1940 (the "Act") as an open-end management
investment company. The Registrant and other separate accounts of John Hancock
and John Hancock Variable Life Insurance Company ("JHVLICO") own all of the
Fund's outstanding shares. The purchasers of variable annuity and variable
life insurance contracts, in connection with which the Fund is used, will have
the opportunity to instruct John Hancock and JHVLICO with respect to the
voting of the shares of the Series Fund held by Registrant as to certain
matters. Subject to the voting instructions, John Hancock directly controls
Registrant.
C-2
<PAGE>
A diagram of the subsidiaries of John Hancock is incorporated by reference
from Exhibit 17 to Post-Effective Amendment No. 13 to Form N-1A Registration
Statement of John Hancock Variable Series Trust I (File No. 33-2081) filed
April 24, 1996.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 28, 1996, the number of Contract Owners of all forms of
contracts offered by the Account was 27,367.
ITEM 28. INDEMNIFICATION
Article 9a of the By-Laws of John Hancock provides indemnification to each
present and former trustee, officer, and employee of John Hancock against
litigation expenses and liabilities incurred while acting as such, subject to
limitations of law, including under the Act. No indemnification shall be paid
if a director or officer is finally adjudicated not to have acted in good
faith in the reasonable belief that his action was in the best interest of
John Hancock. John Hancock may pay expenses incurred in defending an action or
claim in advance of its final disposition, but only upon receipt of an
undertaking by the person indemnified to repay such amounts if he or she
should be determined not be entitled to indemnification.
Reference is made to Article VI of the ByLaws of the Fund, filed as Exhibit
2 to Post Effective Amendment No. 2 to the Fund's Registration Statement (File
No. 33-2081) dated April 12, 1988, which provides that the Fund shall
indemnify or advance any expenses to the trustees, shareholders, officers, or
employees of the Fund to the extent set forth in the Declaration of Trust.
Sections 6.3 through 6.17 of the Declaration of Trust, included as Exhibit 1
to the Fund's Post Effective Amendment No. 2, relate to the indemnification of
trustees, shareholders, officers, and employees. It is provided that the
Registrant shall indemnify any trustee made a party to any proceeding by
reason of service in that capacity if the trustee (a) acted in good faith and
(b) reasonably believed, (1) in the case of conduct in the trustee's official
capacity with the Fund, that the conduct was in the best interest of the Fund
and (2) in all other cases, that the conduct was at least not opposed to the
best interests of the Fund, and (c) in the case of any criminal proceeding,
the Fund shall indemnify the trustee if the trustee acted in good faith and
had no reasonable cause to believe that the conduct was unlawful.
Indemnification may not be made by the Fund unless authorized in each case by
a determination by the Board of Trustees or by special legal counsel or by the
shareholders. Neither indemnification nor advancement of expenses may be made
if the trustee or officer has incurred liability by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of duties
involved in the conduct of his office ("Disabling Conduct"). The means for
determining whether indemnification shall be made shall be (1) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the person to be indemnified was not liable by reason of
Disabling Conduct or (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that such person was not
liable by reason of Disabling Conduct. Such latter determination may be made
either (a) by the vote of a majority of a quorum of Trustees of the Fund who
are neither "interested" persons of the Fund (as defined in the Act) nor
parties to the proceeding or (b) by an independent legal counsel in a written
opinion. The advancement of legal expenses may not occur unless the trustee or
officer agrees to repay the advance (unless it is ultimately determined that
he is entitled to indemnification) and at least one of three conditions is
satisfied: (1) he provides security for his agreement to repay, (2) the Fund
is insured against loss by reason of lawful advances, or (3) a majority of a
quorum of the Trustees of the Fund who are not interested persons and are not
parties to the proceedings, or independent counsel in a written opinion,
determine that there is reason to believe that the trustees or officer will be
found entitled to indemnification.
Similar types of provisions dealing with the indemnification of the Fund's
officers and trustees are hereby incorporated by reference from documents
previously filed with the Commission, specifically, Section 14 of the
Investment Management Agreement by and between John Hancock Variable Series
Trust I and John Hancock Mutual Life Insurance Company (Exhibit 5.f. to Post-
Effective Amendment No. 4 to the Registration Statement
C-3
<PAGE>
of the Fund (File No. 33-2081) dated April, 1989), Section 14 of the
Investment Management Agreement by and between John Hancock Variable Series
Trust I and John Hancock Mutual Life Insurance Company (Exhibit 5.a. to the
Fund's Registration Statement (File No. 33-2081) dated December 11, 1985),
Section 14 of the Investment Management Agreement by and between John Hancock
Variable Series Trust and John Hancock Mutual Life Insurance Company (Exhibit
5.g. to Post-Effective Amendment No. 9 to the Fund's Registration Statement
(File No. 33-2081) dated March 2, 1994), Section 7 of the Underwriting and
Administrative Services Agreement by and between John Hancock Variable Series
Trust I and John Hancock Mutual Life Insurance Company (Exhibit 6 to Post-
Effective Amendment No. 4 to the Registration Statement of the Fund (File No.
33-2081) dated April, 1986, and Section 15 of the Transfer Agency Agreement by
and between John Hancock Variable Series Trust I and John Hancock Mutual Life
Insurance Company (Exhibit 9 to Pre-Effective Amendment No. 1 to the
Registration Statement of the Fund (File No. 33-2081) dated March 13, 1986).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether indemnification by it is against public policy as
expressed in that Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) John Hancock is also the principal underwriter for the Fund, John
Hancock Variable Annuity Accounts U and I, and John Hancock Variable Life
Accounts U, V, and S, and John Hancock Mutual Variable Life Insurance
Account UV and the depositor for John Hancock Variable Annuity Account U
and John Hancock Mutual Variable Life Insurance Account UV. John Hancock is
an investment adviser to the Fund.
(b) Reference is made to the response to Item 25, above.
(c) The information under "Distribution Agreements and Other Services--
Distribution Agreement" in the statement of additional information forming
a part of this registration statement is incorporated herein by reference.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The following entities prepare, maintain, and preserve the records required
by Section 31(a) of the Act for the Registrant and the Fund (as indicated
below) through written agreements between the parties to the effect that such
services will be provided to the Registrant and/or the Fund for such periods
prescribed by the Rules and Regulations of the Commission under the Act and
such records will be surrendered promptly on request:
John Hancock Mutual Life Insurance Company, John Hancock Place, P.O. Box
111, Boston, Massachusetts 02117, serves as Registrant's distributor and as
the Fund's transfer agent, investment adviser, principal underwriter, and
distributor and, in such capacities, keeps records regarding shareholders
account records, cancelled stock certificates, and all other records
required by Section 31(a) of the Act.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
C-4
<PAGE>
ITEM 32. UNDERTAKINGS
(a) Registrant hereby undertakes to file a post-effective amendment to
this Registration Statement as frequently as is necessary to ensure that
the audited financial statements in the registration statement are never
more than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant hereby undertakes to include as part of any application to
purchase a contract offered by the prospectus a space that an applicant can
check to request a Statement of Additional Information.
(c) Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under Form N-4 promptly upon written or oral request.
(d) Registrant represents that, in connection with the sale of the
Contracts offered pursuant to this registration statement, it has complied
with the conditions of the SEC no-action letter regarding the purchase of
variable annuity contracts under retirement plans meeting the requirements
of Section 403(b) of the Internal Revenue Code (American Council of Life
Insurance (pub. avail. Nov. 28, 1988)). Specifically, Registrant has (1)
included appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in the prospectus; (b) included appropriate
disclosure regarding the redemption restrictions imposed by Section
403(b)(11) in any sales literature used in connection with the offer of the
Contracts; (3) instructed sales representatives specifically to bring the
redemption restrictions imposed by Section 403(b)(11) to the attention of
potential plan participants; and (4) obtained from each plan participant
who purchases a Section 403(b) annuity contract, prior to or at the time of
such purchase, a signed statement acknowledging the participant's
understanding of (a) the restrictions on redemptions imposed by Section
403(b)(11) and (b) the investment alternatives available under the
employer's Section 403(b) arrangement to which the participant may elect to
transfer his contract value.
C-5
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Boston and the Commonwealth of Massachusetts on this
22nd day of April, 1995. Registrant certifies that it meets the requirements
of Rule 485(b) of the 1933 Act for effectiveness of this Statement.
John Hancock Variable Annuity Account V
(Registrant)
By John Hancock Mutual Life Insurance
Company
/s/ Stephen L. Brown
By _____________________________________
Stephen L. Brown
Chairman of the Board and
Chief Executive Officer
John Hancock Mutual Life Insurance
Company (Depositor)
/s/ Stephen L. Brown
By _____________________________________
Stephen L. Brown
Chairman of the Board and
Chief Executive Officer
C-6
<PAGE>
AS REQUIRED BY THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THEIR CAPACITIES WITH JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Thomas E. Moloney Chief Financial
- ------------------------------------- Officer (Principal 04/22/96
THOMAS E. MOLONEY Financial Officer
and Principal
Accounting Officer)
/s/ Stephen L. Brown Chairman of the
- ------------------------------------- Board and Chief 04/22/96
STEPHEN L. BROWN Executive Officer
FOR HIMSELF AND AS (Principal
ATTORNEY-IN-FACT Executive Officer)
FOR: Foster L. Aborn Vice Chairman of the Board
David F. D'Alessandro Senior Executive Vice President and Director
William L. Boyan President of the Board and Chief Operations Officer
<TABLE>
<S> <C> <C> <C>
Nelson S. Gifford Director Joan T. Bok Director
Richard F. Syron Director Michael C. Hawley Director
John F. Magee Director Samuel W. Bodman Director
John M. Connors, Jr. Director Randolph W. Bromery Director
Delbert C. Staley Director E. James Morton Director
C. Vincent Vappi Director Lawrence K. Fish Director
Robert E. Fast Director Kathleen F. Feldstein Director
I. MacAllister Booth Director
</TABLE>
C-7
<PAGE>
INDEX TO EXHIBITS
FORM N-4
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT V
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
10.(a) Consent of Independent Auditors.
10.(b) Representation of Counsel.
14. Copy of Powers of Attorney for Michael C. Hawley.
27. Financial Data Schedule
</TABLE>
C-8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> SELECT STOCK SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 24,111,280
<INVESTMENTS-AT-VALUE> 27,495,789
<RECEIVABLES> 80,300
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,576,089
<PAYABLE-FOR-SECURITIES> 77,323
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,977
<TOTAL-LIABILITIES> 80,300
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 27,495,789
<DIVIDEND-INCOME> 2,161,966
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 252,976
<NET-INVESTMENT-INCOME> 1,908,990
<REALIZED-GAINS-CURRENT> 158,802
<APPREC-INCREASE-CURRENT> 2,928,433
<NET-CHANGE-FROM-OPS> 3,087,235
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,693,564
<NUMBER-OF-SHARES-REDEEMED> 529,049
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,251,750
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 252,976
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> BOND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 56,776,728
<INVESTMENTS-AT-VALUE> 60,246,089
<RECEIVABLES> 81,913
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60,328,002
<PAYABLE-FOR-SECURITIES> 75,581
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,332
<TOTAL-LIABILITIES> 81,913
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 60,246,089
<DIVIDEND-INCOME> 4,435,841
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 664,784
<NET-INVESTMENT-INCOME> 3,681,057
<REALIZED-GAINS-CURRENT> 79,176
<APPREC-INCREASE-CURRENT> 4,908,455
<NET-CHANGE-FROM-OPS> 8,668,688
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,599,164
<NUMBER-OF-SHARES-REDEEMED> 4,331,001
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,255,794
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 664,784
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> INTERNATIONAL
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 8,719,924
<INVESTMENTS-AT-VALUE> 8,899,248
<RECEIVABLES> 20,276
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,919,524
<PAYABLE-FOR-SECURITIES> 19,326
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 950
<TOTAL-LIABILITIES> 20,276
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,899,248
<DIVIDEND-INCOME> 87,546
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 100,418
<NET-INVESTMENT-INCOME> (12,872)
<REALIZED-GAINS-CURRENT> 291,223
<APPREC-INCREASE-CURRENT> 188,443
<NET-CHANGE-FROM-OPS> 466,794
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,207,720
<NUMBER-OF-SHARES-REDEEMED> 1,563,861
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,123,526
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 100,418
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> MONEY MARKET
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 18,354,476
<INVESTMENTS-AT-VALUE> 18,354,476
<RECEIVABLES> 208,396
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,562,872
<PAYABLE-FOR-SECURITIES> 206,390
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,006
<TOTAL-LIABILITIES> 208,396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 18,354,476
<DIVIDEND-INCOME> 742,264
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 169,560
<NET-INVESTMENT-INCOME> 572,704
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 572,704
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,501,003
<NUMBER-OF-SHARES-REDEEMED> 4,649,026
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,851,977
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 169,560
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> REAL ESTATE EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 7,006,036
<INVESTMENTS-AT-VALUE> 7,069,366
<RECEIVABLES> 8,806
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,078,172
<PAYABLE-FOR-SECURITIES> 8,062
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 744
<TOTAL-LIABILITIES> 8,806
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,069,366
<DIVIDEND-INCOME> 457,323
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 83,635
<NET-INVESTMENT-INCOME> 373,688
<REALIZED-GAINS-CURRENT> (83,072)
<APPREC-INCREASE-CURRENT> 392,171
<NET-CHANGE-FROM-OPS> 682,787
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,659,468
<NUMBER-OF-SHARES-REDEEMED> 1,551,788
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 416,780
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 83,635
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> SPECIAL OPPORTUNITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 7,425,763
<INVESTMENTS-AT-VALUE> 7,934,665
<RECEIVABLES> 48,742
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,983,407
<PAYABLE-FOR-SECURITIES> 47,814
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 928
<TOTAL-LIABILITIES> 48,742
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,934,665
<DIVIDEND-INCOME> 187,665
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 33,335
<NET-INVESTMENT-INCOME> 154,221
<REALIZED-GAINS-CURRENT> 45,102
<APPREC-INCREASE-CURRENT> 508,657
<NET-CHANGE-FROM-OPS> 707,980
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,589,311
<NUMBER-OF-SHARES-REDEEMED> 215,094
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,927,977
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 33,335
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> STOCK
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 93,598,086
<INVESTMENTS-AT-VALUE> 107,400,414
<RECEIVABLES> 188,663
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 107,589,077
<PAYABLE-FOR-SECURITIES> 177,227
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,436
<TOTAL-LIABILITIES> 188,663
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 107,400,414
<DIVIDEND-INCOME> 10,017,135
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,061,399
<NET-INVESTMENT-INCOME> 8,955,736
<REALIZED-GAINS-CURRENT> 163,924
<APPREC-INCREASE-CURRENT> 13,880,625
<NET-CHANGE-FROM-OPS> 23,000,285
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30,470,098
<NUMBER-OF-SHARES-REDEEMED> 3,373,071
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 41,141,576
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,061,399
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> SHORT-TERM U.S. GOVERNMENT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 3,175,106
<INVESTMENTS-AT-VALUE> 3,193,557
<RECEIVABLES> 50,776
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,244,333
<PAYABLE-FOR-SECURITIES> 50,392
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 384
<TOTAL-LIABILITIES> 50,776
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,193,557
<DIVIDEND-INCOME> 60,287
<INTEREST-INCOME> 0
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<EXPENSES-NET> 13,207
<NET-INVESTMENT-INCOME> 47,080
<REALIZED-GAINS-CURRENT> 3,462
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<NET-CHANGE-FROM-OPS> 68,997
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 3,350,129
<NUMBER-OF-SHARES-REDEEMED> 180,001
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,511
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> MANAGED
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 275,443,111
<INVESTMENTS-AT-VALUE> 315,169,921
<RECEIVABLES> 620,409
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 315,790,330
<PAYABLE-FOR-SECURITIES> 587,405
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<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 620,409
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<OVERDISTRIBUTION-GAINS> 0
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<NET-CHANGE-FROM-OPS> 34,323,549
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 54,793,507
<NUMBER-OF-SHARES-REDEEMED> 12,985,955
<SHARES-REINVESTED> 0
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<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 3,389,494
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<PAGE>
EXHIBIT 10(A)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Experts" in the
Prospectus and "Independent Auditors" in the Statement of Additional
Information in Post-Effective Amendment Number 2 to the Registration Statement
(Form N-4, No. 33-82646) of John Hancock Variable Annuity Account V.
We also consent to the incorporation of our reports dated February 9, 1996 on
the financial statements included in the Annual Report of the John Hancock
Variable Annuity Account V and dated February 7, 1996 on the financial
statements included in the Annual Report of the John Hancock Mutual Life
Insurance Company for the year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 24, 1996
<PAGE>
EXHIBIT 10(B)
[JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY LETTERHEAD]
April 16, 1996
SECURITIES & EXCHANGE COMMISSION
450 FIFTH STREET, NW
WASHINGTON, DC 20549
RE: John Hancock Variable Annuity Account V
File Nos. 33-82646 and 811-5140
Dear Commissioners:
This opinion is being furnished with respect to the filing of Post-Effective
Amendment No. 2 under the Securities Act of 1933 and Post-Effective Amendment
No. 13 under the Investment Company Act of 1940 of the Form N-4 Registration
Statement of John Hancock Variable Annuity Account V as required by Rule 485
under the 1933 Act.
I have acted as counsel to Registrant for the purpose of preparing this
Post-Effective Amendment which is being filed pursuant to paragraph (b) of
Rule 485 and hereby represent to the Commission that in my opinion this Post-
Effective Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b).
I hereby consent to the filing of this opinion with and as a part of this
Post-Effective Amendment to Registrant's Registration Statement with the
Commission.
Very truly yours,
/s/ FRANCIS C. CLEARY, JR.
Francis C. Cleary, Jr. Vice
President & Counsel
<PAGE>
EXHIBIT 14
JOHN HANCOCK VARIABLE ANNUITY AND VARIABLE LIFE INSURANCE ACCOUNTS
POWER OF ATTORNEY
The undersigned member of the Board of Directors of John Hancock Mutual Life
Insurance Company does hereby constitute and appoint Stephen L. Brown, Foster
L. Aborn, William L. Boyan, Richard S. Scipione and Bruce E. Skrine, and each
of them individually, with full power of substitution, his or her true and
lawful attorneys and agents to execute, in the name of, and on behalf of, the
undersigned as a member of said Board of Directors, the Registration
Statements under the Securities Act of 1933 and the Investment Company Act of
1940, and each amendment to the Registration Statements, to be filed for John
Hancock Variable Annuity Account U, John Hancock Mutual Variable Life
Insurance Account UV and any other variable annuity or variable life insurance
account of John Hancock Mutual Life Insurance Company with the Securities and
Exchange Commission and to take any and all action and to execute in the name
of, and on behalf of, the undersigned as a member of said Board of Directors
or otherwise any and all instruments, including applications for exemptions
from such Acts, which said attorneys and agents deem necessary or advisable to
enable any variable annuity or variable life insurance account of John Hancock
Mutual Life Insurance Company to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, and the rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof; and the undersigned hereby ratifies and confirms as his or
her own act and deed all that each of said attorneys and agents shall do or
cause to have done by virtue hereof. Each of said attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand on the
date shown.
September 30, 1995 /s/ MICHAEL C. HAWLEY
_____________________________________ _____________________________________
DATE DIRECTOR
