HANCOCK JOHN VARIABLE LIFE ACCOUNT V, 485BPOS, 1998-05-01

HANCOCK JOHN VARIABLE LIFE ACCOUNT V
485BPOS, 1998-05-01

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<PAGE>

As filed with the Securities and Exchange Commission on April 30, 1998

Registration No. 33-75610
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------

FORM S-6
Post-Effective Amendment No. 5 to
Registration Statement Under
THE SECURITIES ACT OF 1933
----------------------

JOHN HANCOCK VARIABLE LIFE ACCOUNT V
(Exact name of trust)

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(Name of depositor)

JOHN HANCOCK PLACE
BOSTON, MASSACHUSETTS 02117
(Complete address of depositor's principal executive offices)
--------------------

RONALD J. BOCAGE, ESQ.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, 02117
(Name and complete address of agent for service)
--------------------

Copy to:
GARY O. COHEN, ESQ.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
--------------------

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, 1998 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 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 1997 pursuant to Rule 24f-2 on February 26, 1998.
<PAGE>

CROSS-REFERENCE TABLE

Form N-8B-2 Item Caption in Prospectus
- ---------------- ---------------------

1, 2 Cover, The Account and The Series
Fund or Funds, JHVLICO and John
Hancock

3 Inapplicable

4 Cover, Distribution of Policies

5,6 The Account and The Series Fund or
Funds, State Regulation

7, 8, 9 Inapplicable

10(a),(b),(c),(d),(e) Policy Provisions and Benefits

10(f) Voting Privileges

10(g),(h) Changes that JHVLICO Can Make

10(i) Appendix--Other Policy Provisions,
The Account and The Series Fund
or Funds

11, 12 Summary, The Account and The Series
Fund or Funds, Distribution of
Policies

13 Charges and expenses, Appendix--
Illustration of Death Benefits,
Account Values, Surrender Values and
Accumulated Premiums

14, 15 Summary, Distribution of
Policies, Premiums

16 The Account and The Series Fund or
Funds

17 Summary, Policy Provisions and
Benefits

18 The Account and The Series Fund or
Funds, Tax Considerations

19 Reports

20 Changes that JHVLICO Can Make

21 Policy Provisions and Benefits

22 Policy Provisions and Benefits
<PAGE>

23 Distribution of Policies

24 Not Applicable

25 JHVLICO and John Hancock

26 Not Applicable

27,28,29,30 JHVLICO and John Hancock, Board
of Directors and Executive
Officers of JHVLICO

31,32,33,34 Not Applicable

35 JHVLICO and John Hancock

37 Not Applicable

38,39,40,41(a) Distribution of Policies,
JHVLICO and John Hancock,
Charges and Expenses

42, 43 Not Applicable

44 The Account and The Series Fund or
Funds, Policy Provisions,
Appendix--Illustration of Death
Benefits, Account Values,
Surrender Values and
Accumulated Premiums

45 Not Applicable

46 The Account and The Series Fund or
Funds, Policy Provisions,
Appendix--Illustration of Death
Benefits, Account Values,
Surrender Values and
Accumulated Premiums

47 Not Applicable

48,49,50 Not Applicable

51 Policy Provisions and Benefits,
Appendix--Other Policy
Provisions

52 The Account and The Series Fund or
Funds, Changes that JHVLICO Can Make

53,54,55 Not Applicable

56,57,58,59 Not Applicable

FCC0131.DOC
<PAGE>

[LOGO OF JOHN HANCOCK APPEARS HERE]

John Hancock Variable Life Insurance Company
(JHVLICO)

SCHEDULED PREMIUM VARIABLE LIFE INSURANCE POLICY JOHN HANCOCK VARIABLE LIFE
ACCOUNT V

John Hancock Place
Boston, Massachusetts 02117

JOHN HANCOCK SERVICING OFFICE:
P.O. Box 111
Boston, Massachusetts 02117

TELEPHONE 1-800-REAL LIFE (1-800-732-5543)
FAX 617-572-5410

PROSPECTUS MAY 1, 1998

The scheduled premium variable life policy ("Policy") described in this
Prospectus can be funded, at the discretion of the Owner, by up to ten of the
variable subaccounts of John Hancock Variable Life Account V ("Account"), by a
fixed subaccount (the "Fixed Account"), or by a combination of the Fixed Account
and up to nine of the variable subaccounts (collectively, "the Subaccounts").
The assets of each variable Subaccount will be invested in a corresponding
Portfolio of John Hancock Variable Series Trust I, (the "Fund") a "series" type
mutual fund advised by John Hancock Mutual Life Insurance Company ("John
Hancock"). The assets of the Fixed Account will be invested in the general
account of John Hancock Variable Life Insurance Company ("JHVLICO").

The prospectuses for the Funds, which are attached to this Prospectus,
describe the investment objectives, policies and risks of investing in the
Portfolios of Variable Series Trust I: Managed, Growth & Income, Equity Index,
Large Cap Value, Large Cap Growth, Mid Cap Value, Mid Cap Growth, Diversified
Mid Cap Growth (formerly, Special Opportunities), Real Estate Equity, Small/Mid
Cap CORE, Small Cap Value, Small Cap Growth, Global Equity, International
Balanced, International Equity Index (formerly, International Equities),
International Opportunities, Emerging Markets Equity, Short-Term Bond (formerly,
Short-Term U.S. Government), Bond Index, Sovereign Bond, Strategic Bond, High
Yield Bond, and Money Market. (The Small/Mid Cap CORE, Global Equity, Emerging
Markets Equity, Bond Index, and High Yield Bond Portfolios are not currently
available to Owners but are expected to be made available later in 1998.) Other
variable Subaccounts and Portfolios may be added in the future.

Replacing existing insurance with a Policy described in this Prospectus may
not be to your advantage.

THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. IT IS NOT
VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS FOR THE FUND.

THESE 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>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
JHVLICO AND JOHN HANCOCK . . . . . . . . . . . . . . . . . . . . . . . 7
THE ACCOUNT AND THE SERIES FUND . . . . . . . . . . . . . . . . . . . 7
THE FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . 10
POLICY PROVISIONS AND BENEFITS . . . . . . . . . . . . . . . . . . . . 11
Requirements for Issuance of Policy . . . . . . . . . . . . . . . . 11
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Account Value and Surrender Value . . . . . . . . . . . . . . . . . 15
Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Death Benefit Options . . . . . . . . . . . . . . . . . . . . . . . 16
Definition of Life Insurance . . . . . . . . . . . . . . . . . . . . 17
Excess Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Partial Withdrawal of Excess Value . . . . . . . . . . . . . . . . . 18
Transfers Among Subaccounts . . . . . . . . . . . . . . . . . . . . 18
Loan Provisions and Indebtedness . . . . . . . . . . . . . . . . . . 20
Default and Options on Lapse . . . . . . . . . . . . . . . . . . . . 21
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . 22
CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 22
Charges Deducted from Premiums . . . . . . . . . . . . . . . . . . . 22
Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Administrative Surrender Charge . . . . . . . . . . . . . . . . . . 24
Reduced Charges for Eligible Groups . . . . . . . . . . . . . . . . 24
Charges Deducted from Account Value . . . . . . . . . . . . . . . . 24
DISTRIBUTION OF POLICIES . . . . . . . . . . . . . . . . . . . . . . . 27
TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Policy Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Charge for JHVLICO's Taxes . . . . . . . . . . . . . . . . . . . . . 29
Corporate and H.R. 10 Plans . . . . . . . . . . . . . . . . . . . . 29
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO . . . . . . . . . 30
REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
VOTING PRIVILEGES . . . . . . . . . . . . . . . . . . . . . . . . . . 31
CHANGES THAT JHVLICO CAN MAKE . . . . . . . . . . . . . . . . . . . . 31
STATE REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . 32
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 32
APPENDIX--OTHER POLICY PROVISIONS . . . . . . . . . . . . . . . . . . 63
APPENDIX--IMPACT OF YEAR 2000. . . . . . . . . . . . . . . . . . . . .
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER
VALUES AND ACCUMULATED PREMIUMS . . . . . . . . . . . . . . . . . . . 66
</TABLE>

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
<PAGE>

INDEX OF DEFINED WORDS AND PHRASES

Below are listed certain words and phrases used in this Prospectus, together
with identification of the page on which each is defined or explained:

<TABLE>
<CAPTION>
Page
<S> <C>
Account Value . . . . . . . . . . . . . . . . . . . . . 15
Administrative Surrender Charge . . . . . . . . . . . . 24
Attained Age . . . . . . . . . . . . . . . . . . . . . 16
Base Policy Premium . . . . . . . . . . . . . . . . . . 12
Basic Account Value . . . . . . . . . . . . . . . . . 17
Contingent Deferred Sales Charge . . . . . . . . . . . 23
Corridor Factor . . . . . . . . . . . . . . . . . . . . 16
Current Death Benefit . . . . . . . . . . . . . . . . . 15
Death Benefit Factor . . . . . . . . . . . . . . . . . 16
Excess Value . . . . . . . . . . . . . . . . . . . . . 17
Experience Component . . . . . . . . . . . . . . . . . 17
Fixed Account . . . . . . . . . . . . . . . . . . . . . 10
Grace Period . . . . . . . . . . . . . . . . . . . . . 20
Guaranteed Death Benefit . . . . . . . . . . . . . . . 15
Guaranteed Maximum Recalculation Premium . . . . . . . 12
Indebtedness . . . . . . . . . . . . . . . . . . . . . 20
Investment Rule . . . . . . . . . . . . . . . . . . . . 13
Loan Assets . . . . . . . . . . . . . . . . . . . . . . 20
Minimum First Premium . . . . . . . . . . . . . . . . . 11
Modal . . . . . . . . . . . . . . . . . . . . . . . . . 11
Premium Component . . . . . . . . . . . . . . . . . . . 17
Premium Recalculation . . . . . . . . . . . . . . . . . 12
Required Premium . . . . . . . . . . . . . . . . . . . 12
Servicing Office . . . . . . . . . . . . . . . . . . . 6
Subaccount . . . . . . . . . . . . . . . . . . . . . . Cover
Sum Insured . . . . . . . . . . . . . . . . . . . . . . 15
Surrender Value . . . . . . . . . . . . . . . . . . . . 15
Valuation Date . . . . . . . . . . . . . . . . . . . . 9
Variable Subaccounts . . . . . . . . . . . . . . . . . 2
</TABLE>
<PAGE>

SUMMARY

WHAT IS THE VARIABLE LIFE POLICY BEING OFFERED?

JHVLICO issues variable life insurance policies. The Policies described in
this Prospectus are scheduled annual premium policies that provide for
additional premium flexibility. JHVLICO also issues in some states an earlier
version of these policies. These other policies are offered by means of other
prospectuses.

The Policies differ from ordinary fixed-benefit life insurance in the way they
work. However, the Policies are the same as fixed-benefit life insurance in
providing lifetime protection against economic loss resulting from the death of
the person insured. The Policies are primarily insurance and not investments.

The Policies work generally as follows: Premium payments are periodically made
to JHVLICO in amounts sufficient to meet the premium schedule selected. JHVLICO
takes from each premium an amount for taxes, and, from certain premiums, a sales
charge. JHVLICO then places the rest of the premium into as many as ten
Subaccounts as directed by the owner of the policy (the "Owner"). The assets
allocated to each variable Subaccount are invested in shares of the
corresponding Portfolio of the Fund. The currently available Portfolios are
identified on the cover of this Prospectus. The assets allocated to the Fixed
Account are invested in the general account of JHVLICO. During the year, JHVLICO
takes charges from each Subaccount and credits or charges each Subaccount with
its respective investment performance. The insurance charge, which is deducted
from the invested assets attributable to each Policy ("Account Value"), varies
monthly with the then attained age of the insured and with the amount of
insurance provided at the start of each month.

The death benefit may be either level or variable as elected by the Owner. The
level death benefit provides a death benefit that generally remains fixed in
amount and an Account Value that varies daily. Two versions of the level death
benefit are available. The variable death benefit provides for a death benefit
and Account Value that may vary daily. JHVLICO guarantees that the death benefit
will never be less than the Sum Insured at issue, absent a partial surrender
("Guaranteed Death Benefit").

At issuance of the Policy, the Current Death Benefit is generally well below
the Guaranteed Death Benefit. Whether or not it exceeds the Guaranteed Death
Benefit depends upon the timing and amount of the premium payments, the
investment experience, the activity under the Policy with respect to Policy
loans, additional benefits and the like, the charges made against the Policy,
and the attained age of the insured. Once the Current Death Benefit exceeds the
Guaranteed Death Benefit, the Owner bears the investment risk for any amount
above the Guaranteed Death Benefit, and JHVLICO bears the investment risk for
the Guaranteed Death Benefit.

The initial Account Value is the sum of the amounts of the premium that
JHVLICO credits to the Policy, after deduction of the initial charges. The
Account Value increases or decreases daily depending on the investment
experience of the Subaccounts to which the amounts are allocated at the
direction of the Owner. JHVLICO does not guarantee a minimum amount of Account
Value. The Owner bears the investment risk for that portion of the Account Value
allocated to the variable Subaccounts. The Owner may surrender a Policy at any
time while the insured is living. The Surrender Value is the Account Value less
the sum of any Administrative Surrender Charge and any Contingent Deferred Sales
Charge and less any Indebtedness. If the Owner surrenders in the early policy
years, the amount of Surrender Value would be low (as compared with other
investments without sales charges) and, consequently, the insurance protection
provided prior to surrender would be costly.

The minimum Sum Insured at issue is $50,000. All persons insured must be no
more than 75 years of age at issue and meet certain health and other criteria
called "underwriting standards." The smoking status of the insured

1
<PAGE>

is generally reflected in the premiums required and insurance charges made. If
the Sum Insured at issue is at least $100,000, the insured may be eligible for
the "preferred" class, which has the lowest insurance charges for this Policy.
Policies issued under certain circumstances will not directly reflect the sex of
the insured in either the premium rates or the charges and values under the
Policy.

WHAT IS THE AMOUNT OF THE PREMIUMS?

Base Policy Premiums are determined as follows: A fixed premium is applicable
which does not vary until the Policy anniversary nearest the insured's 70th
birthday or, if later, the tenth Policy anniversary. On this date, in the
absence of an earlier election by the Owner, the "Base Policy Premium" is
automatically shifted to a new premium schedule and a new fixed annual premium
becomes payable on a scheduled basis for the remaining life of the Policy. The
new Base Policy Premium depends upon the Policy's Guaranteed Death Benefit and
Account Value at the time of the premium recalculation. The Owner may request
that the Premium Recalculation take place on any Policy anniversary prior to
that nearest the insured's 70th birthday or, if later, the tenth Policy
anniversary. The Base Policy Premium depends upon the Sum Insured at issue and
the insured's age, smoking status and sex (unless the Policy is sex-neutral).
Base Policy Premiums are payable annually or more frequently over the insured's
lifetime. Additional premiums are charged for Policies in cases involving extra
mortality risks and for additional insurance benefits. These premiums, along
with the Base Policy Premiums, are the Required Premium. There is a 61-day grace
period in which to make Required Premium payments due after the Minimum First
Premium is received.

Within limits, Required Premiums may be paid in advance and more than the
Required Premiums may be paid. If the Account Value under a Policy is
sufficiently high, a Required Premium payment otherwise scheduled need not be
paid.

WHAT IS JOHN HANCOCK VARIABLE LIFE ACCOUNT V?

The Account is a separate investment account of JHVLICO, operated as a unit
investment trust, which supports benefits payable under the Policies. The
Account is subdivided into a number of variable Subaccounts, each of which
corresponds to one of the Portfolios of the Fund. The assets of each variable
Subaccount are invested in the corresponding Portfolio of the Fund. The current
Portfolios of the Fund are: Managed, Growth & Income, Equity Index, Large Cap
Value, Large Cap Growth, Mid Cap Value, Mid Cap Growth, Diversified Mid Cap
Growth, Real Estate Equity, Small/Mid Cap CORE, Small Cap Value, Small Cap
Growth, Global Equity, International Balanced, International Equity Index,
International Opportunities, Emerging Markets Equity, Short-Term Bond, Bond
Index, Sovereign Bond, Strategic Bond, High Yield Bond, and Money Market.

The figures in the following chart are expressed as a percentage of each
Portfolio's average daily net assets. The figures reflect the investment
management fees currently payable and the 1997 other fund expenses allocated to
John Hancock Variable Series Trust I (except that other fund expenses for the
Small/Mid Cap CORE, Global Equity, Emerging Markets Equity, Bond Index, and High
Yield Bond Portfolios are based upon estimates for the current fiscal year).

<TABLE>
<CAPTION>
Other
Fund
Other Fund Total Expenses
Expenses Fund Absent
Management After Expense Operating Expense
Fund Name Fee Reimbursement Expenses Reimbursement/*/
--------- ---------- ------------- --------- ----------------
<S> <C> <C> <C> <C>
Managed . . . . . . . 0.33% 0.04 % 0.37% N/A
Growth & Income . . . 0.25% 0.03 % 0.28% N/A
Equity Index. . . . . 0.15% 0.25 % 0.40% 0.40%
Large Cap Value . . . 0.75% 0.25 % 1.00% 0.31%
Large Cap Growth. . . 0.39% 0.05 % 0.44% N/A
Mid Cap Value . . . . 0.80% 0.25 % 1.05% 0.34%
Mid Cap Growth. . . . 0.85% 0.25 % 1.10% 0.57%
Diversified Mid Cap
Growth . . . . . . . 0.75% 0.10% 0.85% N/A
Real Estate Equity. . 0.60% 0.09 % 0.69% N/A
Small/Mid Cap CORE. .
Small Cap Value . . . 0.80% 0.25 % 1.05% 0.50%
Small Cap Growth. . . 0.75% 0.25 % 1.00% 0.37%
Global Equity . . . .
International Balanced 0.85% 0.25 % 1.10% 0.71%
International Equity
Index. . . . . . . . 0.18% 0.19 % 0.37% N/A
International
Opportunities. . . . 0.97% 0.25 % 1.22% 0.60%
Emerging Markets
Equity . . . . . . .
Short-Term Bond . . . 0.30% 0.21% 0.51%
Bond Index. . . . . .
Sovereign Bond. . . . 0.25% 0.06 % 0.31% N/A
Strategic Bond. . . . 0.75% 0.25 % 1.00% 0.57%
High Yield Bond . . .
Money Market. . . . . 0.25% 0.08 % 0.33% N/A
</TABLE>

2
<PAGE>

- ---------

*John Hancock reimburses a Portfolio when the Portfolio's other fund expenses
exceed 0.25% of the Portfolio's average daily net assets.

For a full description of the Fund, see the prospectus for the Fund attached
to this Prospectus.

WHAT ARE THE CHARGES MADE BY JHVLICO?

State Premium Tax and Federal DAC Tax. Charges deducted from each premium
payment, currently 2.35% for state premium taxes and 1.25% as a Federal deferred
acquisition cost or "DAC Tax" charge.

Sales Charge Deduction from Premium. A charge equal to no more than 5% of all
premiums received in any Policy year up to the Required Premium for that year.
JHVLICO currently intends to waive this deduction from Required Premiums
received after the first 10 Policy years.

Contingent Deferred Sales Charge. A charge deducted from Account Value if the
Policy lapses or is surrendered during the first 13 Policy years. The amount of
the charge depends upon the year in which lapse or surrender occurs. The charge
will never be higher than 15% of Base Policy Premiums paid to date. The total
charges for sales expenses over the lesser of 20 years or the life expectancy of
the insured will not exceed 9% of the premium payments under the Policy,
assuming all Required Premiums are paid, over that period.

3
<PAGE>

occurs and the amount of the Policy's Guaranteed Death Benefit at that time. The
maximum charge is $5 per $1000 of Guaranteed Death Benefit.

Issue Charge. A $20 charge deducted monthly from Account Value in the first
Policy year.

Maintenance Charge. A charge deducted monthly from Account Value in an amount
equal to no more than $8 (currently $6.00) for all Policy years.

Insurance Charge. A charge based upon the amount for which JHVLICO is at risk,
considering the attained age and risk classification of the insured and
JHVLICO's then current monthly insurance rates (never to exceed rates based on
the 1980 CSO Tables) deducted monthly from Account Value. JHVLICO currently
intends to make a special monthly credit to the Account Value beginning in the
tenth Policy year. Any such credit will be reflected as a reduction to the
insurance charge.

Guaranteed Death Benefit Charge. A charge not to exceed 3c per $1000
(currently 1c per $1000) of current Sum Insured deducted monthly from that
portion of Account Value not attributable to the Fixed Account allocations.

Charge for Mortality and Expense Risks. A charge made daily from the variable
Subaccounts at an effective annual rate of .60% of the assets of each variable
Subaccount.

Charges for Extra Mortality Risks. An additional premium, depending upon the
Sum Insured at issue, age of the insured and the degree of additional mortality
risk, is required if the insured does not qualify for either the preferred or
standard underwriting class. This additional premium is collected in two ways:
up to 8.6% of each year's additional premium is deducted from premiums when paid
and the remainder of each year's additional premium is deducted monthly from
Account Value in equal installments.

Charges for Additional Insurance Benefits. An additional premium is required
if the Owner elects to purchase an additional insurance benefit. This additional
premium is collected in two ways: up to 8.6% of each year's additional premium
is deducted from premiums when paid and the remainder of the additional premium
is deducted monthly from Account Value in equal installments.

Charge for Partial Withdrawal. A charge of $20 is deducted from Account Value
at the time of any partial withdrawal of any Excess Value. No Contingent
Deferred Sales Charge or Administrative Surrender Charge is applicable to any
such withdrawals.

See "Charges and Expenses" for a full description of the charges under the
Policy.

IS THERE A CHARGE AGAINST THE ACCOUNT FOR FEDERAL INCOME TAX?

Currently no charge is made against any Subaccount for Federal income taxes
but if JHVLICO incurs, or expects to incur, income taxes attributable to any
Subaccount or this class of Policies in future years, it reserves the right to
make a charge. JHVLICO expects that it will continue to be taxed as a life
insurance company. (See "Charge for JHVLICO's Taxes".)

WHAT IS THE RELATIONSHIP BETWEEN THE PREMIUM AND THE AMOUNT ALLOCATED TO THE
SUBACCOUNTS?

4
<PAGE>

certain premiums and less the charges deducted from all premiums for state
premium taxes and the Federal DAC Tax. These charges also apply to subsequent
premium payments. Net premiums derived from payments received after the issue
date are allocated, generally on the date of receipt, to one or more of the
Subaccounts as elected by the Owner.

HOW ARE AMOUNTS ALLOCATED TO EACH SUBACCOUNT?

At issue and subsequently thereafter, the Owner will provide us with the rule
("Investment Rule") we will follow to invest net premiums or other amounts in
any one but not more than ten of the Subaccounts. The Owner may change the
Investment Rule under which JHVLICO will allocate amounts to Subaccounts. (See
"Investment Rule".)

WHAT COMMISSIONS ARE PAID TO AGENTS?

The Policies are sold through agents who are licensed by state authorities to
sell JHVLICO's insurance policies. Commissions payable to agents are described
under "Distribution of Policies". Sales expenses in any year are not equal to
the deduction for sales expenses, including any Contingent Deferred Sales
Charge, in that year. Rather, total sales expenses under the Policies are
intended to be recovered over the lifetimes of the insureds covered by the
Policies.

WHAT IS THE DEATH BENEFIT?

Three death benefit options are available at the time of application for a
Policy.

Option 1: Level Death Benefit. A level death benefit equal to the greater of
the Guaranteed Death Benefit or the Current Death Benefit.

Option 2: Variable Death Benefit. A variable death benefit equal to the
greater of the Guaranteed Death Benefit plus any Excess Value or the Current
Death Benefit.

Option 3: Level Death Benefit With Greater Funding. A level death benefit
equal to the greater of the Guaranteed Death Benefit or the Current Death
Benefit. It differs from the Level Death Benefit Option described above in that
a greater amount of premium payments can generally be made by the Owner.

The Current Death Benefit is equal to the Account Value multiplied by a
Corridor Factor or a Death Benefit Factor. In all three Options, when the
Current Death Benefit exceeds the Guaranteed Death Benefit, the death benefit
will increase whenever the Policy's Account Value increases, and decrease
whenever the Account Value decreases, but never below the Guaranteed Death
Benefit. These factors increase the death benefit if necessary to ensure that
the Policy will continue to qualify as life insurance under the Federal tax law.
See "Death Benefits"; "Death Benefit Options"; "Definition of Life Insurance"
and "Tax Considerations".

HOW DOES THE ACCOUNT VALUE OF A POLICY VARY IN RELATION TO THE SUBACCOUNTS'
INVESTMENT EXPERIENCE?

In general, the Account Value for any day equals the Account Value for the
previous day, increased by any net premium placed in the Subaccounts for the
Policy, decreased by any charges made against the Account Value and by any
partial withdrawal, and increased or decreased by the investment experience of
the Subaccounts. No minimum Account Value for the Policy is guaranteed.

5
<PAGE>

WHAT IS THE LOAN PROVISION AND HOW DOES A LOAN AFFECT THE DEATH BENEFIT, ACCOUNT
VALUE AND SURRENDER VALUE?

After the first Policy year the Owner may obtain a Policy loan. Assuming no
Indebtedness (see below), the maximum amount of any loan in Policy years two and
three is 75% of that portion of the Surrender Value attributable to variable
Subaccount investments, plus 100% of that portion of the Surrender Value
attributable to Fixed Account investments; thereafter the maximum is 90% of that
portion of Surrender Value attributable to variable Subaccount investments, plus
100% of that portion of the Surrender Value attributable to Fixed Account
investments. Interest charged on any loan will accrue and compound daily at an
annual effective rate determined by JHVLICO at the start of each Policy Year.
This interest rate will not exceed the greater of (1) the "Published Monthly
Average" (see "Loan Provision and Indebtedness") for the calendar month ending
two months before the calendar month of the Policy anniversary or (2) 5%. In
jurisdictions where a fixed loan rate is applicable, JHVLICO will charge
interest at an effective annual rate of 6%, accrued and compounded daily. A loan
plus accrued interest ("Indebtedness") may be repaid at the discretion of the
Owner in whole or in part in accordance with the terms of the Policy.

While a loan is outstanding, the rate of interest credited to the Account
Value because of the loan will usually be different than the net investment
experience of the Subaccounts. Therefore, the Account Value, the Surrender Value
and any death benefit above the Guaranteed Death Benefit are permanently
affected by any loan.

IS THERE A SHORT-TERM CANCELLATION RIGHT?

The Owner may surrender a Policy by delivering or mailing it within 45 days
after the date of Part A of the application, or within 10 days after receipt of
the Policy by the Owner, or within 10 days after mailing by JHVLICO of the
Notice of Withdrawal Right, whichever is latest, to JHVLICO's Servicing Office,
or to the agent or agency office through which it was delivered. Any premium
paid on it will be refunded. If required by state law, the refund will equal the
Account Value at the end of the Valuation Period in which the Policy is received
plus all charges or deductions made against premiums plus an amount reflecting
charges against the Subaccounts and the investment management fee of the Fund.

WHAT INVESTMENT TRANSFERS ARE ALLOWED AN OWNER?

The Owner may transfer the Account Value among the variable Subaccounts or
into the Fixed Account at any time. Transfers out of the Fixed Account, however,
are subject to restrictions.

ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?

The benefits under Policies described in this Prospectus are expected to
receive the same tax treatment under the Internal Revenue Code of 1986 as
benefits under traditional fixed-benefit life insurance policies. Thus, death
benefits payable under the Policies will not be included in the beneficiary's
gross income. Also, the Owner is not taxed on interest and gains under the
Policy unless and until values are actually received through withdrawal,
surrender, or other distributions.

Under Federal tax law, distributions from Policies on which premiums greater
than a "7-pay" premium limit (as defined in the law) have been paid, will be
subject to special taxation. See "Premiums--7-Pay Premium Limit" and "Policy
Proceeds" for a discussion of how the "7-pay" premium limit may be exceeded
under a Policy. A distribution on such a Policy (called a "modified endowment")
will be taxed to the extent there is any income (gain) to the Owner and an
additional penalty tax may be imposed on the taxable amount.

6
<PAGE>

JHVLICO AND JOHN HANCOCK

JHVLICO, a stock life insurance company chartered in 1979 under Massachusetts
law, is authorized to transact a life insurance and annuity business in
Massachusetts and all states other than New York. JHVLICO began selling variable
life insurance policies in 1980.

JHVLICO is a wholly-owned subsidiary of John Hancock, a company chartered in
Massachusetts in 1862. Its Home Office is at John Hancock Place, Boston,
Massachusetts 02117. John Hancock's assets are approximately $59 billion and it
has invested over $380 million in JHVLICO in connection with JHVLICO's
organization and operations. It is anticipated that John Hancock will from time
to time make additional capital contributions to JHVLICO to enable it to meet
its reserve requirements and expenses in connection with its business and John
Hancock is committed to make additional capital contributions if necessary to
ensure that JHVLICO maintains a positive net worth.

THE ACCOUNT AND THE SERIES FUND

The Account, a separate account established under Massachusetts law in 1986
meets the definition of "separate account" under the Federal securities laws and
is registered as a unit investment trust under the Investment Company Act of
1940 ("1940 Act").

The Account's assets are the property of JHVLICO. Each Policy provides that
the portion of the Account's assets equal to the reserves and other liabilities
under the Policy shall not be chargeable with liabilities arising out of any
other business JHVLICO may conduct. In addition to the assets attributable to
variable life policies, the Account's assets include assets derived from charges
made by JHVLICO. From time to time these additional assets may be transferred in
cash by JHVLICO to its general account. Before making any such transfer, JHVLICO
will consider any possible adverse impact the transfer might have on any
Subaccount. Additional premiums are charged for Policies where the insured is
classified as a substandard risk and a portion of these premiums is allocated to
the Account.

The Account is registered with the Securities and Exchange Commission (the
"Commission") under the 1940 Act. Such registration does not involve the
supervision by the Commission of the management or policies of the Account,
JHVLICO or John Hancock.

The assets in the variable Subaccounts of the Account are invested in the
corresponding Portfolio of the Fund, but the assets of one variable Subaccount
are not necessarily legally insulated from liabilities associated with another
variable Subaccount. New variable Subaccounts may be added or existing variable
Subaccounts may be deleted as new Portfolios are added to or deleted from the
Fund and made available to Owners.

THE SERIES FUND

The Fund is a "series" type of mutual fund registered with the Commission
under the 1940 Act as an open-end diversified management investment company. The
Fund serves as the investment medium for the Account and other unit investment
trust separate accounts established for other variable life insurance policies
and variable annuity contracts. (See the attached Fund prospectus for a
description of a need to monitor for possible conflicts and other consequences.)
A very brief summary of the investment objectives of each Portfolio is set forth
below.

7
<PAGE>

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 equity investments, in bonds and other
fixed income securities and in money market instruments.

Growth & Income 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
securities convertible into or with rights to purchase common stocks) of
companies believed to offer growth potential over both the intermediate and the
long term.

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.

Large Cap Growth Portfolio

The investment objective of this Portfolio is to achieve above-average capital
appreciation through the ownership of common stocks (and securities convertible
into with rights to purchase common stocks) of companies believed to offer
above-average capital appreciation opportunities. Current income is not an
objective of the Portfolio.

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.

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.

Diversified Mid 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
medium capitalization growth companies.

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.

8
<PAGE>

Small/Mid Cap CORE Portfolio

The investment of this Portfolio is to achieve long-term growth of capital
through a broadly diversified portfolio of equity securities of U.S. issuers
which are included in the Russell 2500 Index at the time of investment.

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.

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.

Global Equity Portfolio

The investment objective of this Portfolio is to achieve long-term growth of
capital through a diversified portfolio of marketable securities, primarily
equity securities, of both U.S. and foreign issuers.

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.

International Equity Index Portfolio

The investment objective of this Portfolio is to provide investment results
that correspond to the total return of the major developed international
(non-U.S.) equity markets, as represented by the MSCI AEFE GDP Index.

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.

Emerging Markets Equity Portfolio

The investment objective of this Portfolio is to achieve capital appreciation
by investing primarily in equity securities of companies in countries having
economies and markets generally considered by the World Bank or the United
Nations to be emerging or developing.

Short-Term Bond Portfolio

The investment objective of this Portfolio is to provide a high level of
current income consistent with a low degree of share price fluctuation through
investment primarily in a diversified portfolio of short- and intermediate-term
investment-grade debt obligations.

9
<PAGE>

Bond Index Portfolio

The investment objective of this Portfolio is to provide investment results
that correspond to the total return and risk characteristics of the U.S.
investment grade fixed income market, as represented by a Lehman Brothers bond
index that tracks the performance of investment grade debt securities.

Sovereign 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.

Strategic Bond Portfolio

The investment objective of this Portfolio is to provide total return
consistent with moderate risk of capital and maintenance of liquidity, through a
portfolio of domestic and international fixed income securities.

High Yield Bond Portfolio

The investment objective of this Portfolio is to provide high current income
and capital appreciation with capital preservation through investing primarily
in high yield (below investment grade) debt securities.

Money Market Portfolio

The investment objective of this Portfolio is to provide maximum current
income consistent with capital preservation and liquidity, through investment in
high quality money market instruments.

John Hancock acts as the investment manager for the Portfolios described above
and John Hancock's indirectly owned subsidiary, Independence Investment
Associates, Inc., with its principal place of business at 53 State Street,
Boston, MA 02109, provides sub-investment advice with respect to the Managed,
Growth & Income, Large Cap Growth, Real Estate Equity and Short-Term Bond
Portfolios. Independence International Associates, Inc., a subsidiary of IIA
located at the same address as IIA, is a sub-investment adviser to the
International Equity Index Portfolio.

Another indirectly owned subsidiary of John Hancock, John Hancock Advisers,
Inc., located at 101 Huntington Avenue, Boston, MA 02199, provides
sub-investment advice with respect to the Sovereign Bond, Diversified Mid Cap
Growth, and Small Cap Growth 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 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.

State Street Bank & Trust, N.A., at Two International Place, Boston, MA 02110,
is the sub-investment adviser to the Equity Index Portfolio. INVESCO Management
& 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, LLC 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,

10
<PAGE>

NY 10036, provides sub-investment advice with respect to the Strategic Bond
Portfolio and Brinson Partners, Inc., of 209 S. LaSalle Street, Chicago, IL
60604, does likewise with respect to the International Balanced Portfolio.

Goldman Sachs & Company, located at One New York Plaza, New York, New York
10004, is sub-investment adviser to the Small/Mid Cap CORE Portfolio. Scudder
Kemper Investments, Inc., located at 345 Park Avenue, New York, New York 10154,
is the sub-investment adviser to the Global Equity Portfolio. Montgomery Asset
Management, LLC, located at 101 California Street, San Francisco, California
94111, is the sub-investment adviser to the Emerging Markets Equity Portfolio.
Mellon Bond Associates, located at One Mellon Bank Center, Suite 4135,
Pittsburgh, Pennsylvania 15258, is the sub-investment adviser to the Bond Index
Portfolio. Wellington Management Company, LLC, located at 75 State Street,
Boston, Massachusetts 02109, is the sub-investment adviser to the High Yield
Bond Portfolio.

JHVLICO 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
a variable 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.

On each Valuation Date, shares of each Portfolio are purchased or redeemed by
John Hancock for each variable Subaccount based on, among other things, the
amount of net premiums allocated to the variable Subaccount, distributions
reinvested, transfers to, from and among variable 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. 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. 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.

A full description of the Fund, its investment objectives, policies and
restrictions, its charges, expenses and all other aspects of its operation is
contained in the attached prospectus and the statement of additional information
referred to therein, which should be read together with this Prospectus.

THE FIXED ACCOUNT

An Owner may allocate premiums to the Fixed Account or transfer all or a part
of the Account Value under a Policy to the Fixed Account. The amount so
allocated or transferred will become a part of JHVLICO's general account assets.
JHVLICO's general account consists of assets owned by JHVLICO other than those
in the Account and in other separate accounts that have been or may be
established by JHVLICO. Subject to applicable law, JHVLICO has sole discretion
over the investment of assets of the general account and Owners do not share in
the investment experience of those assets. Instead, JHVLICO guarantees that the
Account Value allocated to the Fixed Account will accrue interest daily at an
effective annual rate of at least 4% without regard to the actual investment
experience of the general account. Consequently, if an Owner pays the Required
Premiums, allocates all net premiums only to the Fixed Account, and makes no
transfers, partial withdrawals, or policy loans, the minimum amount and duration
of the death benefit will be determinable and guaranteed. Transfers from the
Fixed Account are subject to certain limitations (see "Transfers Among
Subaccounts"), and charges will vary somewhat for Account Value allocated to the
Fixed Account. See "Charges Deducted From Account Value".

11
<PAGE>

will not be less than an effective annual rate of 4%. JHVLICO may, in its sole
discretion, credit higher rates although it is not obligated to do so. The Owner
assumes the risk that interest credited will not exceed 4% per year. Upon
request and in the annual statement, JHVLICO will inform Owners of the
then-applicable rate.

Because of exemptive and exclusionary provisions, interests in JHVLICO'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 JHVLICO 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.

POLICY PROVISIONS AND BENEFITS

The discussions which follow under "Death Benefits", "Account Value" and
"Surrender Value" assume that there has been no Policy loan. Benefits and values
are affected if premiums are not paid as scheduled or if a Policy loan is made.

REQUIREMENTS FOR ISSUANCE OF POLICY

The Policy is generally available with a minimum Sum Insured at issue of
$50,000. All persons insured must be age 75 or under and meet certain health and
other criteria called "underwriting standards". The smoking status of the
insured is reflected in the premiums required and insurance charges made. If the
Sum Insured at issue is at least $100,000, the insured may be eligible for the
"preferred" underwriting class of this Policy, which has the lowest insurance
charges. Amounts of coverage that JHVLICO will accept under the Policy may be
limited by JHVLICO's underwriting and reinsurance procedures as in effect from
time to time.

Policies issued in certain jurisdictions and in connection with certain
employee plans will not directly reflect the sex of the insured in either the
premium rates or the charges or values under the Policy. The illustrations set
forth in this Prospectus are sex-distinct and, therefore, do not reflect the
sex-neutral rates, charges or values that would apply to such Policies.

PREMIUMS

Payment Schedule. Premiums are scheduled and payable during the lifetime of
the insured in accordance with JHVLICO's established rules and rates. Premiums
are payable at JHVLICO's Servicing Office on or before the due date specified in
the Policy.

Scheduled premiums are payable annually or more frequently, depending upon the
premium schedule mode chosen by the Owner. The scheduled payment date of any
premium is the first day of the applicable Modal period. The "Modal" periods are
the monthly, quarterly, semi-annual or annual intervals at which the Owner
elects to have the scheduled premium payments fall due. The Owner may change the
frequency of scheduled premium payments. No additional charge is made for
premium payments made more frequently than annually.

Minimum Premium Requirements. An amount of Required Premium (see below) is
determined by JHVLICO at the time of issue of the Policy.

12
<PAGE>

A Minimum First Premium must be received by JHVLICO at its Servicing Office in
order for the Policy to be in full force and effect. The Minimum First Premium
is the first Modal premium. For example, if the Owner has elected a quarterly
Modal premium, one-quarter of the initial Required Premium must be received by
JHVLICO at the time of issue of the Policy.

Premium requirements are met by premium payments on a cumulative basis. For
example, the premium requirement on all scheduled due dates of the first Policy
year would be met if the full Required Premium for the first Policy year were
paid at issue of the Policy, regardless of the mode elected.

Generally, all premiums received, regardless of when received, are counted by
JHVLICO when it determines whether the premium requirement is met on a scheduled
due date. This cumulative amount of premiums received is reduced for this
purpose by amounts withdrawn from the Premium Component of Excess Value. The
premium requirement will also be deemed satisfied on any scheduled due date if
any Excess Value is available on that scheduled due date. See "Excess Value".

Failure to satisfy a premium requirement on a scheduled due date may cause the
Policy to terminate. See "Default and Options on Lapse".

Amount of Required Premium. The Required Premium determined at the start of
each Modal premium period equals an amount for the Sum Insured ("Base Policy
Premium") plus any additional premium because the insured is an extra mortality
risk or because additional insurance benefits have been purchased. The Base
Policy Premium does not change until the Premium Recalculation occurs or the
Policy is partially surrendered.

Premium Recalculation. All Policies are issued on a Modified Schedule as the
basis for the Base Policy Premium. The Base Policy Premium under the Modified
Schedule may increase or decrease upon any Premium Recalculation, whether
automatic or elected earlier by the Owner. A Premium Recalculation must occur no
later than the Policy anniversary nearest the insured's 70th birthday or, if
later, on the tenth Policy anniversary. At the time of the Premium
Recalculation, JHVLICO determines a new Base Policy Premium which is payable
through the remaining lifetime of the insured.

The Premium Recalculation applicable to any Policy may be elected by the Owner
at any time up to the Policy anniversary prior to that nearest the insured's
70th birthday or, if later, the tenth Policy anniversary. If elected, the
Premium Recalculation will be effected on the Policy anniversary next following
receipt by JHVLICO at its Servicing Office of satisfactory written notice. If
not elected sooner, the Premium Recalculation will be effected automatically by
JHVLICO as noted above.

The new Base Policy Premium resulting from a Premium Recalculation may be less
than, equal to or greater than the original Base Policy Premium. The new Base
Policy Premium depends on the insured's sex, smoking status, attained age, the
Guaranteed Death Benefit under the Policy and the Account Value on the Valuation
Date immediately preceding the date of the Premium Recalculation.

A table of Guaranteed Maximum Recalculation Premiums for the insured is
determined by JHVLICO and set forth in the Policy. The Guaranteed Maximum
Recalculation Premium increases as the insured's attained age increases. The new
Base Policy Premium will never exceed the Policy's Guaranteed Maximum
Recalculation Premium based on the insured's attained age at the time of the
recalculation.

13
<PAGE>

purchaser at any time wishes to "lock in" a Base Policy Premium (and Required
Premium) for the life of the Policy, he or she may request a Premium
Recalculation at that time.

The Guaranteed Maximum Recalculation Premium is lowest for a recalculation at
the time a Policy is issued and increases each year the recalculation is
delayed. Accordingly, by delaying the Premium Recalculation, the Owner assumes
the risk that the Base Policy Premium following the recalculation will be higher
than it would have been had the recalculation been performed at the time the
Policy was issued. The longer the delay and the lower the Policy's Account
Value, the greater this risk. On the other hand, an Owner who defers the Premium
Recalculation has the benefit of a lower Base Policy Premium prior to the
recalculation and a longer period of time to permit the Policy to accumulate a
sufficient amount of Account Value to reduce the possibility or amount of an
increase in the Base Policy Premium at the time of the recalculation.

If the Policy's Account Value at the time of the Premium Recalculation exceeds
the Policy's Basic Account Value, the Base Policy Premium will be less following
the recalculation than it would have been had the recalculation been performed
at the time of Policy issuance. Otherwise it will be more. As to how the Basic
Account Value is determined, see "Excess Value."

As an example, consider the Policy illustrated on page 55, of this Prospectus
(Death Benefit Option 1 in the amount of $100,000, assuming current charge
rates, for a male standard risk non-smoker age 35 at issue). If no Premium
Recalculation is made at Policy issuance, the Base Policy Premium for this
Policy would be $900 until such time as the Premium Recalculation is made.
Assuming such premium is paid annually until the Premium Recalculation, and
assuming constant gross annual investment returns at the rates set forth below,
the following table illustrates what the Base Policy Premium would be following
a recalculation on the dates shown.

<TABLE>
<CAPTION>
Base Policy Premium Following
Recalculation Assuming Hypothetical Gross
Annual Rate of Return of:
Policy Anniversary of ------------------------------------------
Premium Recalculation 0% 6% 12%
- --------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
0 (Issue Date) . . . . . . . . $1,414.00 $1,414.00 $1,414.00
5 . . . . . . . . . . . . . . $1,607.99 $1,581.92 $1,551.41
10 . . . . . . . . . . . . . . $1,900.30 $1,791.31 $1,635.15
15 . . . . . . . . . . . . . . $2,334.72 $2,058.15 $1,566.76
20 . . . . . . . . . . . . . . $3,008.11 $2,433.77 $1,151.92
25 . . . . . . . . . . . . . . $4,077.27 $2,998.48 $ 0.00
30 . . . . . . . . . . . . . . $5,845.15 $3,914.46 $ 0.00
35* . . . . . . . . . . . . . . $8,404.00 $5,561.76 $ 0.00
</TABLE>

- ---------
* Mandatory Premium Recalculation if Owner does not choose earlier date.

A charge will be made if the new Base Policy Premium is below the Guaranteed
Maximum Recalculation Premium for the insured's age at issue of the Policy. The
charge will not exceed 3% (currently1 1/2%) of the amount by which the Policy's
Account Value exceeds its Basic Account Value at the time of the Premium
Recalculation. See "Guaranteed Minimum Death Benefit Charges." This charge
compensates JHVLICO for the risk inherent in "locking in" the Base Policy
Premium at a lower rate than would have been charged if the Premium
Recalculation had been performed at the time of the Policy issuance.

The amount of any Account Value that is considered Excess Value under a Policy
may increase or decrease as a result of a Premium Recalculation. See "Excess
Value."

14
<PAGE>

Billing, Allocation of Premium Payments (Investment Rule). The Owner may at
any time elect to be billed by JHVLICO for an amount of premium greater than the
Required Premium otherwise payable. The Owner may also elect to be billed for
premiums on an annual, semi-annual or quarterly basis. An automatic
check-writing program may be available to an Owner interested in making monthly
premium payments. All premiums are payable at JHVLICO's Servicing Office.

Any premium payment will be processed by JHVLICO as of the end of the
Valuation Period in which it is received, unless one of the four exceptions
noted below is applicable. The net premium begins to earn a return in the
Account or Fixed Account, as the case may be, at the close of business on the
date as of which it is processed. Each premium payment will be reduced by the
state premium tax charge, the Federal DAC Tax charge and the sales charge
deducted from certain premiums. See "Charges and Expenses". The remainder is the
net premium.

The Owner at the time of application must elect an Investment Rule which will
allocate net premiums and any credits to as many as ten of the Subaccounts. The
Owner must select allocation percentages in whole numbers, the minimum
allocation to a subaccount may not be less than 1%, and the total allocated must
equal 100%. The Owner may thereafter change the Investment Rule prospectively at
any time. The change will be effective as to any net premiums and credits
applied after receipt at JHVLICO's Servicing Office of notice satisfactory to
JHVLICO. If the Owner requests a change inconsistent with the transfer
provisions, the portion of the request inconsistent with the transfer provisions
will not be effective.

There are four exceptions to the normal practice of processing a premium
payment as of the end of the Valuation Period in which it is received:

(1)A payment received prior to a Policy's date of issue will be processed
as if received on the Valuation Date immediately preceding the date of
issue.

(2)A payment made during a Policy's grace period will be processed as of
the scheduled due date to the extent it represents the amount of
Required Premium in default; any excess will be processed as of the date
of receipt.

(3)If the Minimum First Premium is not received prior to the date of
issue, each payment received thereafter will be processed as if received
on the Valuation Date immediately preceding the issue date until all of
the Minimum First Premium is received.

(4)That portion of any premium that JHVLICO delays accepting as described
under "Other Premium Limitations" or "7-Pay Premium Limit" below, will
be processed as of the end of the Valuation Period in which that amount
is accepted.

Flexibility as to Premium Payments. The Owner may pay more than the Required
Premium during a Policy year and may ask to be billed for an amount greater than
any Required Premium. The Owner may also pay amounts in addition to any billed
amount. JHVLICO reserves the right to limit premium payments above the amount of
the cumulative Required Premiums due on the Policy. At the time of Policy
issuance, JHVLICO will determine whether the planned premium billing schedule
will exceed the 7-pay limit discussed below. If so, JHVLICO will not issue the
Policy unless the Owner signs a form acknowledging that fact.

The ability to pay more than the Required Premium provides the Owner with
considerable payment flexibility in meeting the premium requirements of the
Policy. Consider a Policy with a $1,000 Required Premium and where the Owner
pays $1,250 in each of the first eight Policy years. If none of the additional
premium of $2,000 is withdrawn, the Policy will remain in force for at least ten
years without any further premium payments. During each of these ten years, the
premium received ($1,250 a year for eight years) at least equals the aggregate
Required

15
<PAGE>

Premiums ($1,000 a year for 10 years) on the scheduled payment dates. In other
words, the payment of more than the Required Premium in a year can be relied
upon to satisfy the Required Premium requirements in later years.

7-Pay Premium Limit. Federal tax law modifies the tax treatment of certain
Policy distributions such as loans, surrenders, partial surrenders, and
withdrawals. The application of this modified treatment to any Owner depends
upon whether premiums have been paid at any time during the first 7 Policy years
that exceed a "7-pay" premium as defined in the law. The "7-pay" premium is
greater than the Required Premium but is generally less than the amount an Owner
may choose to pay and JHVLICO will accept. The 7-pay limit is the total of net
level premiums that would have been payable at any time for the Policy to be
fully paid-up after the payment of 7 level annual premiums. If the total
premiums paid exceed the 7-pay limit, the Policy will be treated as a "modified
endowment" which means that the Owner will be subject to tax to the extent of
any income (gain) on any distributions made from the Policy. A material change
in the Policy will result in a new 7-pay limit and test period. A reduction in
the Policy's benefits within the 7-year period following issuance of, or
reinstatement of or other material change in, the Policy may also result in the
application of the modified endowment treatment. See "Policy Proceeds" under
"Tax Considerations." If JHVLICO receives any premium payment that will cause a
Policy to become a modified endowment, the excess portion of that premium
payment will not be accepted unless the Owner signs an acknowledgment of that
fact. When it identifies such excess premium, JHVLICO sends the Owner immediate
notice and refunds the excess premium if it has not received notice of the
acknowledgment by the time the premium payment check has had a reasonable time
to clear the banking system, but in no case longer than two weeks.

Other Premium Limitations. Federal tax law requires a minimum death benefit in
relation to Account Value. See "Definition of Life Insurance". The death benefit
of the Policy will be increased if necessary to ensure that the Policy will
continue to satisfy this requirement. If the payment of a given premium will
cause the Policy Account Value to increase to such an extent that an increase in
death benefit is necessary to satisfy federal tax law requirements, JHVLICO has
the right to not accept the excess portion of that premium payment, or to
require evidence of insurability before that portion is accepted. In no event,
however, will JHVLICO refuse to accept any Required Premium. Also, if an Owner
has elected to use the "guideline premium and cash value corridor" test for
Federal income tax purposes, JHVLICO will not accept the portion of any premium
that exceeds the maximum amount prescribed under that test.

ACCOUNT VALUE AND SURRENDER VALUE

Amount of Account Value. The Account Value increases or decreases depending
upon a number of factors, such as the applicable Subaccount's investment
experience, the proportion of the Account Value invested in each Subaccount and
the interest credited to any Loan Assets established upon the making of a Policy
loan. In general the Account Value for any day equals the Account Value for the
previous day, decreased by charges against the Account Value and by any partial
withdrawal of Excess Value, increased or decreased by the investment experience
of the subaccounts and increased by net premiums received. No minimum amount of
Account Value is guaranteed.

A Policy loan will not affect the total amount of Account Value at the time
the loan is made but will result in a different rate of return being credited to
the Loan Account portion of the Account Value.

Amount of Surrender Value. The Surrender Value will be the Account Value less
the sum of any Administrative Surrender Charge, any Contingent Deferred Sales
Charge and any Indebtedness.

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<PAGE>

Charges". The total charges for sales expenses, including the Contingent
Deferred Sales Charge, over the lesser of 20 years or the life expectancy of the
insured, will not exceed 9% of the payments under the Policy, assuming that all
Required Premiums are paid, over that period.

When Policy may be Surrendered. A Policy may be surrendered for its Surrender
Value at any time while the insured is living and the Policy is not in a grace
period. Surrender takes effect and the Surrender Value is determined as of the
end of the Valuation Period in which occurs the later of receipt at JHVLICO's
Servicing Office of a signed request and the surrendered Policy.

When Part of Policy may be Surrendered. A Policy may be partially surrendered
upon submission of a written request satisfactory to JHVLICO in accordance with
its rules. Currently, the Policy after partial surrender must have a Sum Insured
at least as large as the minimum amount for which JHVLICO would issue a Policy
on the life of the insured. The Guaranteed Death Benefit and Required Premium
for the Policy will be adjusted to reflect the new Sum Insured. A pro-rata
portion of the Account Value will be paid to the Owner and a pro-rata portion of
any Contingent Deferred Sales Charge and any Administrative Surrender Charge
will be deducted. A possible alternative to the partial surrender of a Policy is
the withdrawal of Excess Value. See "Excess Value".

A surrender or partial surrender may have significant tax consequences. See
"Tax Considerations".

DEATH BENEFITS

The death benefit proceeds are payable upon the death of the insured while the
Policy is in effect. The proceeds will equal the death benefit of the Policy,
plus any additional rider benefits then due, less any Indebtedness. The death
benefit payable under Death Benefit Options 1 and 3, described below, is the
greater of the Guaranteed Death Benefit or the Current Death Benefit. The death
benefit payable under Death Benefit Option 2 described below is the greater of
the Guaranteed Death Benefit, increased by any Excess Value (see "Excess Value")
or the Current Death Benefit.

Guaranteed Death Benefit. The Guaranteed Death Benefit at issue of the Policy
is the same as the Sum Insured at issue shown in the Policy. Thereafter the
Guaranteed Death Benefit may be reduced by a partial surrender on request of the
Owner. JHVLICO guarantees that, regardless of the investment experience of the
Subaccounts, the death benefit will never be less than the Guaranteed Death
Benefit.

Current Death Benefit. The Current Death Benefit on any date is the Account
Value at the end of the Valuation Period containing that date times either the
Death Benefit Factor or Corridor Factor. The Factor used depends upon the Death
Benefit Option selected by the Owner (see below). The Death Benefit Factor
depends upon the sex, smoking status and the then attained age of the insured.
The Death Benefit Factor decreases slightly from year to year as the attained
age of the insured increases. A complete list of Death Benefit Factors is set
forth in the Policy. The Corridor Factor depends upon the then attained age of
the insured. The Corridor Factor decreases slightly (or remains the same at
older and younger ages) from year to year as the attained age of the insured
increases. A complete list of Corridor Factors is set forth in the Policy. See
"Definition of Life Insurance". The Current Death Benefit is variable; it
increases as the Account Value increases and decreases as the Account Value
decreases.

17
<PAGE>

DEATH BENEFIT OPTIONS

At the time of application for a Policy, the Owner must select from among
three death benefit options. After issuance of the Policy the Owner may change
the selection from Option 1 to Option 2 or vice versa, subject to such evidence
of insurability as JHVLICO may require. The three options are:

Option 1: Level Death Benefit: Under this option, the death benefit will equal
the Guaranteed Death Benefit, unless the Account Value multiplied by the
Corridor Factor produces a higher death benefit. The Policy will be subject
under this option to the "guideline premium and cash value corridor" test as
defined by Internal Revenue Code ("Code") Section 7702. This option will offer
the best opportunity for the Account Value under a Policy to increase without
increasing the death benefit as quickly as it might under the other options.
When the Current Death Benefit exceeds the Guaranteed Death Benefit, the death
benefit will increase whenever there is an increase in the Account Value and
will decrease whenever there is a decrease in the Account Value, but never below
the Guaranteed Death Benefit.

Option 2: Variable Death Benefit: Under this option, the death benefit will
equal the Guaranteed Death Benefit, plus any Excess Value, unless the Account
Value multiplied by the Corridor Factor produces a higher death benefit. Under
this option, the Policy will be subject to the "guideline premium and cash value
corridor" test as defined by Code Section 7702. This option will offer the best
opportunity for the Owner who would like to have an increasing death benefit as
early as possible. When the Current Death Benefit exceeds the Guaranteed Death
Benefit plus Excess Value (see below), the death benefit will increase whenever
there is an increase in the Account Value and will decrease whenever there is a
decrease in the Account Value, but never below the Guaranteed Death Benefit.

Option 3: Level Death Benefit With Greater Funding: Under this option, the
death benefit will equal the Guaranteed Death Benefit, unless the Account Value,
multiplied by the Death Benefit Factor, gives a higher death benefit. Under this
option, the Policy will be subject to the "cash value accumulation" test as
defined by Code Section 7702. This option will offer the best opportunity for
the Owner who is looking for an increasing death benefit in later Policy years
and/or would like to fund the policy at the "7 pay" limit for the full 7 years.
When the Current Death Benefit exceeds the Guaranteed Death Benefit, the death
benefit will increase whenever there is an increase in the Account Value and
will decrease whenever there is a decrease in the Account Value, but never below
the Guaranteed Death Benefit.

DEFINITION OF LIFE INSURANCE

Federal tax law requires a minimum death benefit in relation to cash value for
a Policy to qualify as life insurance. The death benefit of a Policy will be
increased if necessary to ensure that the Policy will continue to qualify as
life insurance. One of two tests under current Federal tax law can be used to
determine if a Policy complies with the definition of life insurance in Section
7702 of the Code.

The "guideline premium and cash value corridor" test limits the amount of
premiums payable under a Policy to a certain amount for an insured of a
particular age and sex. The test also applies a prescribed "Corridor Factor" to
determine a minimum ratio of death benefit to Account Value.

The "cash value accumulation test" also limits the amount of premiums payable
under a Policy to a prescribed amount, using a minimum ratio of death benefit to
Account Value, but employs as a standard a "net single premium" computed in
compliance with the Code. If the Account Value under a Policy is at any time
greater than the net single premium at the insured's age and sex for the
proposed death benefit, the death benefit will be increased

18
<PAGE>

automatically by multiplying the Account Value by a "Death Benefit Factor"
computed in compliance with the Code.

EXCESS VALUE

As of the last Valuation Date in each Policy month, the Account Value of the
Policy will be compared against an amount (the Basic Account Value described
below) to determine if any "Excess Value" exists under the Policy. Any Excess
Value may be withdrawn (as described below) or, if the Variable Death Benefit
Option has been elected, will be used in computing the amount of variable death
benefit. Excess Value is any amount of Account Value greater than Basic Account
Value.

The annual account statement that JHVLICO sends to each Owner will specify the
amount of any Excess Value at the end of the reporting period. Owners who wish
this information at any other time may contact their sales representative or
telephone JHVLICO at 1-800-732-5543.

Generally, the Basic Account Value at any time is what the Policy's Account
Value would have been at that time if level annual premiums (and no additional
premiums) had been paid in the amount of the Maximum Guaranteed Recalculation
Premium at issue and earned a constant net return of 4% per annum and if the
cost of insurance charges had been deducted at the maximum rates set forth in
the Policy, and no other charges. The Maximum Guaranteed Recalculation Premium
at issue is described under "Premiums--Premium Recalculation" and its amount is
specified in each Policy. Notwithstanding the foregoing, if there is a Policy
loan outstanding, the Basic Account Value will not be less than 110% of Policy
Indebtedness. Also, in all cases where optional rider benefits have been
selected, or the insured person is in a substandard risk category, an additional
amount will be added in computing the Basic Account Value to cover these items
through the end of the then-current Policy year.

The Basic Account Value generally increases as the attained age of the insured
increases. Basic Account Value can also be thought of as what the guaranteed
cash value would be under an otherwise comparable non-variable whole life
policy. It is the amount deemed necessary to support the Policy's benefits at
any time based on accepted actuarial methods.

Excess Value may arise from two sources. The Premium Component is Excess Value
up to the amount by which the cumulative premiums paid (excluding amounts from
this component previously withdrawn) exceed the cumulative sum of Required
Premiums. The Premium Component may be zero. The Experience Component is any
amount of Excess Value above the Premium Component and arises out of favorable
investment experience or lower than maximum insurance and expense charges.

PARTIAL WITHDRAWAL OF EXCESS VALUE

Under JHVLICO's current administrative rules, an Owner may withdraw Excess
Value from the Policy on or after the first Policy anniversary. This privilege,
which reduces the Account Value by the amount of the withdrawal and the
associated charge, may be exercised only once in a Policy year and will be
effective as of the end of the Valuation Period in which JHVLICO receives
written notice satisfactory to it at its Servicing Office. The minimum amount
that may be withdrawn is $1,000. A charge of $20 is made against Account Value
for each partial withdrawal. Under Death Benefit Option 2, a partial withdrawal
will always result in a reduction of the death benefit payable. Under Death
Benefit Options 1 and 3, a partial withdrawal will reduce the death benefit
payable only when the Current Death Benefit exceeds the Guaranteed Death
Benefit. A withdrawal may have significant tax consequences. See "Tax
Considerations".

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<PAGE>

An amount equal to the Excess Value withdrawn plus the associated charge will
be removed from each Subaccount in the same proportion as the Account Value is
then allocated among the Subaccounts. A partial withdrawal is not a loan and,
once made, cannot be repaid. No Contingent Deferred Sales Charge or
Administrative Surrender Charge is deducted upon a partial withdrawal. Amounts
withdrawn may reduce the cumulative amount of premiums received for purposes of
determining whether the premium requirements of the Policy have been met.
Moreover, because the Account Value is reduced by a partial withdrawal, the
premium that results from a Premium Recalculation will be higher because of the
partial withdrawal.

TRANSFERS AMONG SUBACCOUNTS

The Owner may reallocate the amounts held for the Policy in the Subaccounts
with no charge. The Owner may either (1) use percentages (in whole numbers) to
be transferred among Subaccounts or (2) designate the dollar amount of funds to
be transferred among Subaccounts. The reallocation must be such that the total
in the Subaccounts after reallocation equals 100% of Account Value. Transfers
out of a variable Subaccount will be effective at the end of the Valuation
Period in which JHVLICO receives at its Servicing Office notice satisfactory to
JHVLICO.

Transfers out of the Fixed Account to the variable Subaccounts are permitted
only once each Policy year and only during the 31-day period beginning on the
Policy anniversary. Transfers out of the Fixed Account may be requested from 60
days before to 30 days after the Policy anniversary. If received on or before
the Policy anniversary, requests for transfer out of the Fixed Account will be
processed on the Policy anniversary (or the next Valuation Date if the Policy
anniversary does not occur on a Valuation Date); if received after the Policy
anniversary, they will be processed at the end of the Valuation Period in which
JHVLICO receives the request at its Servicing Office. (JHVLICO reserves the
right to defer such Fixed Account transfers for up to six months.) Transfers
among variable Subaccounts and transfers into the Fixed Account may be requested
at any time. A maximum of 20% of Fixed Account assets or, if greater, $500 may
be transferred out of the Fixed Account in any Policy year. Currently, there is
no minimum amount limit on transfers out of the Fixed Account, but JHVLICO
reserves the right to impose such a limit in the future. If an Owner requests a
transfer out of the Fixed Account 61 days or more prior to the Policy
anniversary, that portion of the reallocation will not be processed and the
Owner's confirmation statement will not reflect a transfer out of the Fixed
Account as to such request.

If the Owner requests a reallocation which would result in amounts being held
in more than ten Subaccounts, such reallocation will not be effective and a
revised reallocation may be chosen in order that amounts will be reallocated to
no more than ten Subaccounts. No transfers among Subaccounts may be made while
the Policy is in a grace period.

Dollar Cost Averaging. A scheduled monthly transfer option is available to
Owners seeking to take advantage of "dollar cost averaging". This option
provides for the automatic transfer on a monthly basis of a dollar amount chosen
by the Owner from the Money Market Subaccount to any of the other variable
Subaccounts.

Eligibility for this option is limited to an Owner who has $2500 or more in
the Money Market Subaccount on the day the transfer is scheduled to begin.
Scheduled transfers may be made to any one or more but not more than nine of any
other variable Subaccounts but the amount to be transferred monthly to any
Subaccount must be $100 or more.

Once the election is received in form satisfactory to JHVLICO at its Servicing
Office, transfers will begin on approximately the start of the second month
following its receipt. To make an election or if you have any questions with
respect to this provision, call 1-800-732-5543.

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<PAGE>

Once elected, the scheduled monthly transfer option will remain in effect
until the receipt of written notice from the Owner by JHVLICO at its Servicing
Office of cancellation of the option, the election of a continued insurance
option on lapse or receipt of notice of the death of the insured, whichever
first occurs.

Telephone Transfers and Policy Loans. Once a written authorization is
completed by the Owner, the Owner may request a transfer or policy loan by
telephoning 1-800-732-5543 or sending a written request via fax to
1-800-621-0448. Any fax request should include the Owner's name, daytime
telephone number, Policy number and, in the case of transfers, the names of the
Subaccounts from which and to which money will be transferred. The right to
discontinue telephone transactions at any time without notice to Owners is
specifically reserved. If the fax request option becomes unavailable, another
means of telecommunications will be substituted.

An Owner who authorizes telephone transactions will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
transaction instructions which JHVLICO reasonably believes to be genuine unless
such loss, expense or cost is the result of JHVLICO's mistake or negligence.
JHVLICO employs procedures which provide safeguards against the execution of
unauthorized transactions, and which are reasonably designed to confirm that
instructions received by telephone are genuine. These procedures include
requiring personal identification, tape recording calls, and providing written
confirmation to the Owner. If JHVLICO does not employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, it may be
liable for any loss due to unauthorized or fraudulent instructions.

LOAN PROVISIONS AND INDEBTEDNESS

Loan Provision. Loans may be made at any time a Loan Value is available after
the first Policy year. The Owner may borrow money, assigning the Policy as the
only security for the loan, by completion of a form satisfactory to JHVLICO or,
if the telephone transaction authorization form has been completed, by
telephone. Assuming no outstanding Indebtedness in Policy years two and three,
the Loan Value will be 75% of that portion of the Surrender Value attributable
to the variable Subaccount investments, plus 100% of that portion of the
Surrender Value attributable to Fixed Account investments and, in later Policy
years, 90% of that portion of the Surrender Value attributable to variable
Subaccount investments, plus 100% of that portion of the Surrender Value
attributable to Fixed Account investments. Interest charged on any loan will
accrue and compound daily at an effective annual rate of 5% in the first 20
Policy years, and 4.5% thereafter.

The amount of any outstanding loan plus accrued interest is called the
"Indebtedness". Except when used to pay premiums, a loan will not be permitted
unless it is at least $300. The Owner may repay all or a portion of any
Indebtedness while the insured is living and the Policy is not in a grace
period. When a loan is made, an amount equal to the loan proceeds will be
transferred out of the Account and the Fixed Account, as applicable. This amount
is allocated to a portion of JHVLICO's general account called the "Loan Assets".
Each Subaccount will be reduced in the same proportion as the Account Value is
then allocated among the Subaccounts. Upon each loan repayment, the same
proportionate amount of the entire loan as was borrowed from the Fixed Account
will be repaid to the Fixed Account. The remainder of the loan repayment will be
allocated to the appropriate Subaccounts as stipulated in the then current
Investment Rule. For example, if the entire loan outstanding is $3000 of which
$1000 was borrowed from the Fixed Account, then upon a repayment of $1500, $500
would be allocated to the Fixed Account and the remaining $1000 would be
allocated to the appropriate Subaccounts as stipulated in the then current
Investment Rule. If an Owner wishes any payment to constitute a loan repayment
(rather than a premium payment), the Owner must so specify.

21
<PAGE>

that for the first 20 Policy years is 1% less than the loan interest rate and
thereafter is .5% less than the loan interest rate. The rate credited to Loan
Assets will usually be different than the net return for the Subaccounts. Since
Loan Assets and the remaining portion of the Account Value will generally have
different rates of investment return, the Account Value, the Surrender Value,
and any death benefit above the Guaranteed Death Benefit are permanently
affected by any Indebtedness, whether or not it is repaid in whole or in part.
The amount of any Indebtedness is subtracted from the amount otherwise payable
when the Policy proceeds become payable.

Whenever the Indebtedness equals or exceeds the Surrender Value, the Policy
terminates 31 days after notice has been mailed by JHVLICO to the Owner and any
assignee of record at their last known addresses, unless a repayment of the
excess Indebtedness is made within that period.

If a Policy is a modified endowment at the time a loan is made, that loan may
have significant tax consequences. See "Tax Considerations".

DEFAULT AND OPTIONS ON LAPSE

Premium Grace Period, Default and Lapse. Any Required Premium, unless paid in
advance, is in default if not paid on or before its Modal scheduled payment
date, but the Policy provides a 61-day grace period for the payment of each such
amount. (This grace period does not apply to the receipt of the Minimum First
Premium.) The insurance continues in full force during the grace period but, if
the insured dies during the grace period, the amount in default is deducted from
the death benefit otherwise payable. The premium requirement may also be
satisfied and, thus, default may be avoided, if any Excess Value is available on
the scheduled due date.

Written notice will be furnished to the Owner at his or her last known
address, at least 31 days prior to the end of the grace period, specifying the
minimum amount which must be paid to continue the Policy in force on a premium
paying basis after the end of the grace period. If a payment at least equal to
the amount in default is not received by the end of the grace period, the Policy
will lapse. If payment by the Owner of an amount at least equal to the amount in
default is received prior to the end of the grace period, the Policy will no
longer be in default. The portion of the payment equal to the amount in default
will be processed as if it had been received the day it was due; any excess
payment will be processed as of the end of the Valuation Period in which it is
received. See "Premium Payments".

Options on Lapse. If a Policy lapses, the Surrender Value on the date of lapse
is applied under one of the following options for continued insurance not
requiring further payment of premiums. These options provide for Variable or
Fixed Paid-Up Insurance or Fixed Extended Term Insurance on the life of the
insured commencing on the date of lapse.

Both the Variable and Fixed Paid-Up Insurance options provide an amount of
paid-up whole life insurance, determined in accordance with the Policy, which
the Surrender Value will purchase. The amount of Variable Paid-Up Insurance may
then increase or decrease, subject to any guarantee, in accordance with the
investment experience of the Subaccounts. The Fixed Paid-Up Insurance option
provides a fixed and level amount of insurance. The Fixed Extended Term
Insurance option provides a fixed amount of insurance determined in accordance
with the Policy, with the insurance coverage continuing for as long a period as
the available Policy values will purchase.

If no option has been elected before the end of the grace period, the Fixed
Extended Term Insurance option automatically applies unless the amount of Fixed
Paid-Up Insurance would equal or exceed the amount of Fixed Extended Term
Insurance or unless the insured is a substandard risk, in either of which cases
Fixed Paid-Up Insurance is provided.

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<PAGE>

The Variable Paid-Up Insurance option is not available unless the initial
amount of Variable Paid-Up Insurance is at least $5,000.

A Policy continued under any option may be surrendered for its Surrender Value
while the insured is living. Loans may be available under the Variable and Fixed
Paid-Up Insurance options.

Reinstatement. The Policy may be reinstated in accordance with its terms
(including evidence of insurability satisfactory to JHVLICO and payment of the
required premium and charges) within 3 years after the beginning of the grace
period unless the Surrender Value has been paid or otherwise exhausted or the
period of any Fixed Extended Term Insurance has expired.

EXCHANGE PRIVILEGE

The Owner may transfer the entire Account Value under the Policy to the Fixed
Account at any time, creating a non-variable Policy. The exchange will be
effective at the end of the Valuation Period in which JHVLICO receives at its
Servicing Office notice of the transfer satisfactory to JHVLICO.

-----------------

The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement and to any variations in Policy provisions required by the regulatory
authorities of the state that has approved the Policy for issue.

CHARGES AND EXPENSES

CHARGES DEDUCTED FROM PREMIUMS

In addition to part of the sales charge (see "Sales Charges" below), the
following charges are deducted from premiums:

State Premium Tax Charge. A charge equal to 2.35% of each premium payment will
be deducted from each premium payment. The 2.35% rate is the average rate
expected to be paid on premiums received in all states over the lifetimes of the
insureds covered by the Policies.

Federal DAC Tax Charge. A charge currently equal to 1.25% of each premium
payment will be deducted from each premium payment to cover the estimated cost
to JHVLICO of the Federal income tax treatment of the Policies' deferred
acquisition costs--commonly referred to as the "DAC Tax". JHVLICO has determined
that this charge is reasonable in relation to JHVLICO's increased Federal income
tax burden under the Internal Revenue Code resulting from the receipt of
premiums. JHVLICO will not increase this charge under outstanding Policies, but
reserves the right, subject to any required regulatory approval, to change this
charge for Policies not yet issued in order to correspond with changes in the
Federal income tax treatment of the Policies' deferred acquisition costs.

SALES CHARGES

Charges are made to compensate JHVLICO for the cost of selling the Policy.
This cost includes agents' commissions, advertising, and the printing of the
prospectuses and sales literature. The amount of the charge in any Policy year
cannot be specifically related to sales expenses for that year. JHVLICO expects
to recover its total sales expenses over the period the Policies are in effect.
To the extent that sales charges are insufficient to cover total sales expenses,
the sales expenses may be recovered from other sources, including gains from the
charge for

23
<PAGE>

mortality and expense risks and other gains with respect to the Policies, or
from JHVLICO's general assets. See "Distribution of Policies."

From Premiums. Part of the sales charge is deducted from premiums received.
This amount is 5% of the premiums received in any Policy year that do not exceed
that year's total Required Premium. JHVLICO currently intends to make this
deduction only in the first 10 Policy years, but this is not contractually
guaranteed and the right is reserved to continue deductions over a longer
period. Because the Policies were first offered for sale in 1994, no Policies
have yet been outstanding for more than 10 years.

JHVLICO will waive a portion of the sales charge (it is currently waiving a
portion equal to1 1/2% of the Required Premium) otherwise to be deducted on a
Policy with a current Sum Insured of $250,000 or higher. The continuation of
this waiver is not contractually guaranteed and the waiver may be withdrawn or
modified by JHVLICO in the future.

No sales charge is deducted from a premium payment received in excess of
Required Premium in any Policy year.

Paying more than one Required Premium in any Policy year could reduce the
Owner's total sales charges. For example, if a Required Premium of $1,000 were
paid in each of the first two Policy years, total sales charges deducted would
be $100. If instead both of these Required Premiums were paid during the first
Policy year, the total sales charge deducted would be only $50. Nevertheless,
attempting to accelerate or decelerate premium payments to reduce the potential
sales charge deducted from premiums is not recommended. Any such acceleration of
premium payments could result in a greater Contingent Deferred Sales Charge
(and, hence, a greater overall sales charge) if the Policy were surrendered and
would increase the likelihood that the Policy would become a modified endowment
(see "Tax Considerations--Policy Proceeds"). On the other hand, to pay less than
the amount of Required Premiums by their due dates is to run the risk that the
Policy will lapse, in which case the Owner will lose insurance coverage and be
subject to additional charges.

Contingent Deferred Sales Charge. The remainder of the sales charge will be
deducted only if the Policy is surrendered or stays in default past its grace
period. This second part is the Contingent Deferred Sales Charge. The Contingent
Deferred Sales Charge, however, will not be deducted for a Policy that lapses or
is surrendered on or after the Policy's thirteenth anniversary, and it will be
reduced for a Policy that lapses or is surrendered between the end of the
seventh Policy year and the end of the thirteenth Policy year.

The Contingent Deferred Sales Charge is a percentage of the lesser of (a) the
total amount of premiums paid before the date of surrender or lapse and (b) the
sum of the Base Policy Premiums due on or before the date of surrender or lapse.
(For this purpose Base Policy Premiums are pro-rated through the end of the
Policy Month in which the surrender or lapse occurs).

<TABLE>
<CAPTION>
Maximum Contingent Deferred Sales
Charge as a Percentage of Base Policy
Premiums Due Through Effective
For Surrenders or Lapses Effective During: Date of Surrender or Lapse
------------------------------------------ -------------------------------------
<S> <C>
Policy Years 1-6 . . . . . . . . . . . . 15.00%
Policy Year 7 . . . . . . . . . . . . . . 12.85%
Policy Year 8 . . . . . . . . . . . . . . 10.00%
Policy Year 9 . . . . . . . . . . . . . . 7.77%
Policy Year 10 . . . . . . . . . . . . . 6.00%
Policy Year 11 . . . . . . . . . . . . . 4.55%
Policy Year 12 . . . . . . . . . . . . . 2.92%
Policy Year 13 . . . . . . . . . . . . . 1.54%
Policy Year 14 and Later . . . . . . . . 0%
</TABLE>

24
<PAGE>

- ---------

The amount of the Contingent Deferred Sales Charge is calculated on the basis
of the Base Policy Premium for the age of the insured at the time of issue of
the Policy.

The absence of any need to pay a Required Premium because of the existence of
Excess Value on a scheduled due date does not impact the amount of Base Policy
Premiums deemed to have been due to date for purposes of the Contingent Deferred
Sales Charge. For example, if the size of the Account Value is sufficiently
large that the Required Premium for the fifth Policy year otherwise payable need
not be paid and the Owner surrenders the Policy at the end of the fifth Policy
year, the Contingent Deferred Sales Charge would be based on the sum of five
Base Policy Premiums on the Policy (or, if less, the total amount of premiums
actually paid during all five Policy years). Similarly, if a Premium
Recalculation is required or effected, the amount of premiums due to the date of
any subsequent surrender or lapse for purposes of calculating the Contingent
Deferred Sales Charge will continue to be based on the Base Policy Premium in
effect prior to such recalculation.

The Contingent Deferred Sales Charge reaches its maximum at the end of the
sixth Policy year, stays level in the seventh Policy year and is reduced in each
Policy year thereafter until it reaches zero in Policy year 14. At issue ages
higher than age 54, the maximum is reached at an earlier Policy year, and may be
reduced to zero over a shorter number of years.

ADMINISTRATIVE SURRENDER CHARGE

A charge is made if the Policy is surrendered or lapses in the first nine
Policy years to recover administrative expenses relating to the issue of the
Policy which would not otherwise be recouped. The maximum charge in Policy years
1 through 6 is $5 per $1,000 of Guaranteed Death Benefit, in Policy years 7 and
8 is $4 per $1,000 of Guaranteed Death Benefit and in Policy year 9 is $3 per
$1,000 of Guaranteed Death Benefit. For insureds age 24 or less at issue, this
charge will never be more than $200 and will be charged only in the first four
Policy years. Currently a Policy with a Guaranteed Death Benefit at time of
surrender or lapse of $250,000 or more is not charged. A Policy of less than
$250,000 Guaranteed Death Benefit at time of surrender or lapse is not currently
charged if the surrender or lapse is after the fourth Policy year and is charged
no more than $300 if the surrender or lapse is in the first four Policy years.
These lower current charges may be withdrawn or modified by JHVLICO at some
future date.

This charge is made to compensate JHVLICO for expenses incurred in connection
with the underwriting, issuance and maintenance of the Policy which may not be
recovered in the event of an early surrender or lapse of the Policy.

REDUCED CHARGES FOR ELIGIBLE GROUPS

25
<PAGE>

time of the application for a Policy. The factors considered by JHVLICO in
determining the eligibility of a particular group for reduced charges, and the
level of the reduction, are as follows: the nature of the association and its
organizational framework; the method by which sales will be made to the members
of the class; the facility with which premiums will be collected from the
associated individuals and the association's capabilities with respect to
administrative tasks; the anticipated persistency of the Policies; the size of
the class of associated individuals and the number of years it has been in
existence; and any other such circumstances which justify a reduction in sales
or administrative expenses. Any reduction will be reasonable and will apply
uniformly to all prospective Policy purchasers in the class and will not be
unfairly discriminatory to the interests of any Policy Owner.

CHARGES DEDUCTED FROM ACCOUNT VALUE

The following charges are deducted from Account Value:

Issue Charge. JHVLICO will deduct from Account Value an Issue Charge equal to
$20 per month for the first twelve Policy months to compensate JHVLICO for
expenses incurred in connection with the issuance of the Policy, other than
sales expenses. Such expenses include medical examinations, insurance
underwriting costs, and costs incurred in processing applications and
establishing permanent Policy records.

Maintenance Charge. JHVLICO will deduct from Account Value a monthly charge
not to exceed $8 for all Policy years. The current monthly charge is $6.

This charge is to compensate JHVLICO for administrative expenses, including
recordkeeping, processing death claims and surrenders, making Policy changes,
reporting and other communications to Owners and other similar expense and
overhead costs.

Insurance Charge. The insurance charge deducted monthly from Account Value is
based on the attained age of the insured and the amount at risk. The amount at
risk is the difference between the death benefit and the Account Value. The
amount of the insurance charge is determined by multiplying JHVLICO's then
current monthly rate for insurance by the amount at risk.

Current monthly rates for insurance are based on the sex, age, smoking status,
underwriting class of the insured and the length of time the Policy has been in
effect. JHVLICO may change these rates from time to time, but they will never be
more than the guaranteed maximum rates based on the 1980 Commissioners' Standard
Ordinary Mortality Tables set forth in the Policy.

A reduction in the insurance charge may be made to a Policy Beginning on the
first day of the first month in the tenth Policy year, JHVLICO may make a
special monthly credit to the Account Value. If such a credit is made, it will
be reflected as a reduction to the insurance charge as described below. This
credit and reduction is not guaranteed but it is JHVLICO's present intention to
effect the credit and reduction in the tenth and following Policy years as long
as the Policy is in force.

The amount of the reduction will depend upon the length of time the Policy has
been in force. In the tenth Policy year the monthly insurance charge will be
reduced by an amount equal to a percentage of the then Account Value. This
percentage will begin at an annual effective rate of .20% in the tenth Policy
year and increase annually by .01% through and including the thirtieth Policy
year. Thereafter the percentage reduction each year the Policy remains in force
will be at an annual effective rate of .40%.

For example, it is expected that the reduction percentage would be at an
effective annual rate of .21% in Policy year 11, .30% in Policy year 20 and .40%
in Policy year 30.

26
<PAGE>

JHVLICO reserves the right to modify or discontinue this reduction. Because
the Policies were first offered for sale in 1994, no reductions have yet been
made.

Lower current insurance rates are offered at most ages for insureds who
qualify as non-smokers. To qualify, an insured must meet additional requirements
that relate to smoking habits.

JHVLICO also charges lower current insurance rates under a Policy with a
current Sum Insured of $250,000 or higher, but these lower rates are not
contractually guaranteed and may be withdrawn at some future date.

Guaranteed Death Benefit Charge. JHVLICO deducts a charge from that portion of
the Account Value attributable to the variable Subaccounts for the minimum death
benefit that has been guaranteed. JHVLICO guarantees that the death benefit will
never be less than the Sum Insured. In return for making this guarantee, JHVLICO
currently makes a monthly charge of 1c per $1000 of the current Sum Insured.
This charge may be increased by JHVLICO but will never exceed 3c per $1000 of
the current Sum Insured.

When a Premium Recalculation is effected, and the new Base Policy Premium is
less than the Guaranteed Maximum Recalculated Premium for the insured's age at
issue of the Policy, a one-time deduction is made from the amount applied as
compensation for the additional guarantee. The current charge is1 1/2% of the
portion of the Account Value applied to reduce the new Base Policy Premium to an
amount below the Guaranteed Maximum Recalculated Premium for the insured's age
at issue. This charge may be increased by JHVLICO but it will never exceed 3% of
the amount applied.

Charge for Mortality and Expense Risks. A daily charge is deducted from the
variable Subaccounts for mortality and expense risks assumed by JHVLICO at an
effective annual rate of .60% of the value of the assets of each variable
Subaccount attributable to the Policies. This charge begins when amounts under a
Policy are first allocated to the Account. The mortality risk assumed is that
insureds may live for a shorter period of time than estimated and, therefore, a
greater amount of death benefit than expected will be payable in relation to the
amount of premiums received. The expense risk assumed is that expenses incurred
in issuing and administering the Policies will be greater than estimated.
JHVLICO will realize a gain from this charge to the extent it is not needed to
provide for benefits and expenses under the Policies.

Charges for Extra Mortality Risks. An insured who does not qualify for either
the preferred or standard underwriting class must pay an additional Required
Premium because of the extra mortality risk. This additional premium is
collected in two ways: up to 8.6% of the additional premium is deducted from
premiums when paid and the remainder of the additional premium is deducted
monthly from Account Value in equal installments.

Charges for Additional Insurance Benefits. An additional Required Premium must
be paid if the Owner elects to purchase an additional insurance benefit. This
additional premium is collected in two ways: up to 8.6% of the additional
premium is deducted from premiums when paid and the remainder of the additional
premium is deducted monthly from Account Value in equal installments.

Charges for Taxes. Currently no charge is made against Account Value for
JHVLICO's Federal income taxes but if JHVLICO incurs, or expects to incur,
income taxes attributable to the Account or this class of Policies in future
years, it reserves the right to make a charge and any charge would affect what
the Subaccounts earn. Charges for other taxes, if any, attributable to the
Subaccounts may also be made.

Charge for Partial Withdrawal. On or after the first Policy anniversary, the
Owner may withdraw all or part of any Excess Value in the Policy. The amount to
be withdrawn must be at least $1,000. An administrative charge equal to $20 will
be deducted from the Account Value on the date of withdrawal.

27
<PAGE>

Guarantee of Premiums and Certain Charges. The Policy's Base Policy Premium is
guaranteed not to increase, except that a larger Base Policy Premium may result
from the Premium Recalculation. The state premium tax charge, the Federal DAC
Tax charge, mortality and expense risk charge, the charge for partial
withdrawals and the Issue Charge are guaranteed not to increase over the life of
the Policy. The maintenance charge, the Guaranteed Death Benefit Charge, the
sales charges, the Administrative Surrender Charge and the insurance charge are
guaranteed not to exceed the maximums set forth in the Policy.

Fund Investment Management Fees and Other Fund Expenses. The Account purchases
shares of the Fund at net asset value, a value which reflects the deduction from
the assets of the Fund of its investment management fees and certain other
non-advisory Fund operating expenses, which are described briefly in the Summary
of this Prospectus. For a full description of these deductions, see the attached
prospectus for the Fund.

The monthly deductions from Account Value described above are deducted on the
date of issue and on the first day of each Policy month thereafter. These
deductions are made from the Subaccounts in proportion to the amount of Account
Value in each. For each month that JHVLICO is unable to deduct any charge
because there is insufficient Account Value, the uncollected charges will
accumulate and be deducted when and if sufficient Account Value is available.

DISTRIBUTION OF POLICIES

Applications are solicited by agents who are licensed by state insurance
authorities to sell JHVLICO's Policies and who are also registered
representatives ("representatives") of John Hancock Distributors, Inc.
("Distributors"), an indirect wholly-owned subsidiary of John Hancock located at
197 Clarendon Street, Boston, MA 02117, or other broker-dealer firms, as
discussed below. John Hancock performs insurance underwriting and determines
whether to accept or reject the application for a Policy and each insured's risk
classification. Pursuant to a sales agreement among John Hancock, Distributors,
JHVLICO, and the Account, Distributors acts as the principal underwriter of the
Policies. The sales agreement will remain in effect until terminated upon sixty
days' written notice by any party. JHVLICO will make the appropriate refund if a
Policy ultimately is not issued or is returned under the short-term cancellation
provision. Officers and employees of John Hancock and JHVLICO are covered by a
blanket bond by a commercial carrier in the amount of $25 million.

Distributors' representatives are compensated for sales of the Policies on a
commission and service fee basis by Distributors, and JHVLICO reimburses
Distributors for such compensation and for other direct and indirect expenses
(including agency expense allowances, general agent, district manager and
supervisor's compensation, agent's training allowances, deferred compensation
and insurance benefits of agents, general agents, district managers and
supervisors, agency office clerical expenses and advertising) actually incurred
in connection with the marketing and sale of the Policies.

The maximum commission payable to an agent for selling a Policy is 50% of the
Base Policy Premiums (prior to any Premium Recalculation) that would be payable
in the first Policy year, 8% of such premiums payable in the second, third and
fourth Policy years and 3% of any such premiums received by JHVLICO in later
years. The maximum commission on any other premium paid in any year is 3%.

Representatives with less than four years of service with Distributors and
those compensated on salary plus bonus or level commission programs may be paid
on a different basis. Representatives who meet certain productivity and
persistency standards with respect to the sale of policies issued by JHVLICO and
John Hancock will be eligible for additional compensation.

28
<PAGE>

Distributors is registered with the Commission under the Securities Exchange
Act of 1934 as a broker-dealer, is a member of the National Association of
Securities Dealers, Inc., and is a member of the Securities Investor Protection
Corporation. The Policies are also sold through other registered broker-dealers
that have entered into selling agreements with Distributors and whose
representatives are authorized by applicable law to sell variable life insurance
policies. The commissions which will be paid by such broker-dealers to their
representatives will be in accordance with their established rules. The
commission rates may be more or less than those set forth above for
Distributors' representatives. In addition, their qualified registered
representatives may be reimbursed by the broker-dealers under expense
reimbursement allowance programs in any year for approved voucherable expenses
incurred. Distributors will compensate the broker-dealers as provided in the
selling agreements, and JHVLICO will reimburse Distributors for such amounts and
for certain other direct expenses in connection with marketing the Policies
through other broker-dealers. In addition, these representatives may earn
"credits" toward qualification for attendance at certain business meetings
sponsored by John Hancock.

Distributors serves as principal underwriter for other separate accounts
registered under the 1940 Act: John Hancock Variable Annuity Accounts U, I and
V, John Hancock Mutual Variable Life Insurance Account UV and John Hancock
Variable Life Accounts U and S. Distributors is also the principal underwriter
for John Hancock Variable Series Trust I.

TAX CONSIDERATIONS

The below description of Federal income tax consequences is only a brief
summary and is not intended as tax advice. For further information consult a
qualified tax advisor. Federal, state and local tax laws can change from time to
time and, as a result, the tax consequences to the Owner and beneficiary may be
altered.

POLICY PROCEEDS

Although the Policy contains provisions not found in fixed benefit life
insurance policies, JHVLICO believes the Policy will receive the same Federal
income and estate tax treatment. Section 7702 of the Internal Revenue Code
("Code") defines life insurance for Federal tax purposes. If certain standards
are met at issue over the life of the Policy, the Policy will come within that
definition. JHVLICO will monitor compliance with these standards. Furthermore,
JHVLICO reserves the right to make any changes in the Policy necessary to ensure
the Policy is within the definition of life insurance.

JHVLICO believes that the death benefit under the Policy will be excludable
from the beneficiary's gross income under Section 101 of the Code. In addition,
increases in Account Value as a result of interest or investment experience will
not be subject to Federal income tax unless and until values are actually
received through withdrawal, surrender or other distributions.

A surrender, partial surrender or withdrawal may have tax consequences. For
example, the Owner will be taxed on a surrender to the extent that the surrender
value exceeds the net premiums paid under the Policy, i.e., ignoring premiums
paid for optional benefits and riders. But under certain circumstances within
the first 15 Policy years the Owner may be taxed on a withdrawal of Policy
values even if total withdrawals do not exceed total premiums paid.

JHVLICO also believes that, except as noted below, loans received under the
Policy will be treated as indebtedness of an Owner and that no part of any loan
will constitute income to the Owner. However, the amount of any loan outstanding
will be taxed to the Owner when the Policy lapses.

29
<PAGE>

Distributions under Policies on which premiums greater than the "7-pay" limit
have been paid will be treated as distributions from a "modified endowment,"
which are subject to taxation based on Federal tax legislation. The Owner of
such a Policy will be taxed on distributions such as loans, surrenders, partial
surrenders and withdrawals to the extent of any income (gain) to the Owner
(income-first basis). The distributions affected will be those made on or after,
and within the two year period prior to the time the Policy becomes a modified
endowment. Additionally, a 10% penalty tax may be imposed on income distributed
before the Owner attains age59 1/2.

Furthermore, any time there is a "material change" in a Policy (such as an
increase in Sum Insured, the addition of certain other Policy benefits after
issue, or reinstatement of a lapsed policy), the Policy will be subject to a new
"7-pay" test, with the possibility of a tax on distributions if it were
subsequently to become a modified endowment. Moreover, if benefits under a
Policy are reduced (such as a reduction in the Sum Insured or death benefit or
the reduction or cancellation of certain rider benefits, or Policy termination)
during the 7 years in which the 7-pay test is being applied, the 7-pay limit
will be recalculated based on the reduced benefits. If the premiums paid to date
are greater than the recalculated 7-pay limit, the policy will become a modified
endowment.

All modified endowment contracts issued by the same insurer (or affiliates) to
the Owner during any calendar year generally will be treated as one contract for
the purpose of applying these rules. Your tax advisor should be consulted if you
have questions regarding the possible impact of the 7-pay limit on your Policy.

Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Owner or beneficiary.

CHARGE FOR JHVLICO'S TAXES

Except for the DAC Tax charge, currently JHVLICO makes no charge for Federal
income taxes that may be attributable to this class of Policies. If JHVLICO
incurs, or expects to incur, income taxes attributable to this class of Policies
or any Subaccount in the future, it reserves the right to make a charge for
those taxes.

Under current laws, JHVLICO may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, charges for
such taxes may be made.

CORPORATE AND H.R. 10 PLANS

The Policy may be acquired in connection with the funding of retirement plans
satisfying the qualification requirements of Section 401 of the Code. If so, the
Code provisions relating to such plans and life insurance benefits thereunder
should be carefully scrutinized.

30
<PAGE>

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO

The Directors and Executive Officers of JHVLICO and their principal
occupations during the past five years are as follows:

<TABLE>
<CAPTION>
Directors--Officers Principal Occupations
------------------- ---------------------
<S> <C>
David F. D'Alessandro Chairman of the Board and Chief
Executive Officer of JHLICO; President and Chief
Operating Officer, John Hancock Mutual Life Insurance
Company.
Henry D. Shaw Vice Chairman of the Board and President of JHVLICO;
Senior Vice President, John Hancock Mutual Life
Insurance Company.
Thomas J. Lee Director of JHVLICO; Vice President, John Hancock
Mutual Life Insurance Company.
Michele G. Van Leer Director of JHVLICO; Senior Vice President, John
Hancock Mutual Life Insurance Company.
Ronald J. Bocage Director, Vice President and Counsel of JHVLICO;
Vice President and Counsel, John Hancock Mutual Life
Insurance Company.
Joseph A. Tomlinson Director and Vice President of JHVLICO; Vice
President, John Hancock Mutual Life Insurance
Company.
Robert R. Reitano Director of JHVLICO; Vice President, John Hancock
Mutual Life Insurance Company.
Robert S. Paster Director of JHVLICO; Second Vice President, John
Hancock Mutual Life Insurance Company.
Barbara L. Luddy Director and Actuary of JHVLICO; Second Vice
President, John Hancock Mutual Life Insurance
Company.
Daniel L. Ouellette Vice President, Marketing, of JHVLICO; Vice
President, John Hancock Mutual Life Insurance
Company.
Patrick F. Smith Controller of JHVLICO; Assistant Controller, John
Hancock Mutual Life Insurance Company.
</TABLE>

The business address of all Directors and officers of JHVLICO is John Hancock
Place, Boston, Massachusetts 02117.

REPORTS

In each Policy year (except while the Policy is continued in effect under a
fixed option on lapse) a statement will be sent to the Owner setting forth the
amount of the Current and Guaranteed Death Benefits, the Account Value, the
portion of the Account Value in each Subaccount, the Surrender Value, premiums
received and charges deducted from premium since the last report, and any
outstanding Indebtedness (and interest charged for the preceding Policy year) as
of the last day of such year. Moreover, confirmations will be furnished to
Owners of transfers among Subaccounts, Policy loans, partial withdrawals of
Excess Value and certain other Policy transactions. Premium payments not in
response to a billing notice are "unscheduled" and will be separately confirmed.
Therefore, an Owner who makes a premium payment that differs by more than $25
from that billed will receive a separate confirmation of that premium payment.

31
<PAGE>

Owners will be sent semiannually a report containing the financial statements
of the Fund, including a list of securities held in its Portfolio.

VOTING PRIVILEGES

All of the assets in the variable Subaccounts of the Account are invested in
shares of the corresponding Portfolios of the Fund. JHVLICO will vote the shares
of each of the Portfolios of the Fund which are deemed attributable to
qualifying variable life insurance policies and variable annuity contracts at
regular and special meetings of the Fund's shareholders in accordance with
instructions received from owners of such policies or contracts. Shares of the
Fund held in the Account which are not attributable to such policies or
contracts and shares for which instructions from owners are not received will be
represented by JHVLICO at the meeting and will be voted for and against each
matter in the same proportions as the votes based upon the instructions received
from the owners of all such policies and contracts.

The number of Fund shares held in each variable Subaccount deemed attributable
to each Owner is determined by dividing the amount of a Policy's Account Value
held in the variable Subaccount by the net asset value of one share in the
corresponding Fund Portfolio in which the assets of that variable 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 meetings.

Owners of Policies may give instructions regarding the election of the Board
of Trustees of the Fund, ratification of the selection of independent auditors,
approval of Fund investment advisory agreements and other matters requiring a
vote under the 1940 Act. Owners will be furnished information and forms by
JHVLICO in order that voting instructions may be given.

JHVLICO may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to change the investment objectives of the Portfolios or to approve
or disapprove an investment advisory or underwriting contract for the Fund.
JHVLICO also may disregard voting instructions in favor of changes initiated by
an owner or a Fund's Board of Trustees in an investment policy, investment
adviser or principal underwriter of the Fund, if JHVLICO (i) reasonably
disapproves of such changes and (ii) in the case of a change of investment
policy or investment adviser, makes a good-faith determination that the proposed
change is contrary to state law or prohibited by state regulatory authorities or
that the change would be inconsistent with a variable Subaccount's investment
objectives or would result in the purchase of securities which vary from the
general quality and nature of investments and investment techniques utilized by
other separate accounts of JHVLICO or of an affiliated life insurance company,
which separate accounts have investment objectives similar to those of the
variable Subaccount. In the event JHVLICO does disregard voting instructions, a
summary of that action and the reasons for such action will be included in the
next semi-annual report to owners.

CHANGES THAT JHVLICO CAN MAKE

32
<PAGE>

variable Subaccount by withdrawing the same percentage of each investment in the
Account with appropriate adjustments to avoid odd lots and fractions, (2) to
operate the Account as a "management-type investment company" under the 1940
Act, or in any other form permitted by law, the investment adviser of which
would be JHVLICO, an affiliate or John Hancock, (3) to deregister the Account
under the 1940 Act, (4) to substitute for the Portfolio shares held by a
subaccount any other investment permitted by law, and (5) to take any action
necessary to comply with or obtain any exemptions from the 1940 Act. JHVLICO
would notify owners of any of the foregoing changes and, to the extent legally
required, obtain approval of owners and any regulatory body prior thereto. Such
notice and approval, however, may not be legally required in all cases.

STATE REGULATION

JHVLICO is subject to regulation and supervision by the Massachusetts
Commissioner of Insurance who periodically examines its affairs. It also is
subject to the applicable insurance laws and regulations of all jurisdictions in
which it is authorized to do business.

JHVLICO is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business for purposes of determining solvency and compliance
with local insurance laws and regulations.

LEGAL MATTERS

The legal validity of the Policies described in this Prospectus has been
passed on by Ronald J. Bocage, Vice President and Counsel for JHVLICO. Messrs.
Freedman, Levy, Kroll & Simonds, Washington, D.C., have advised JHVLICO on
certain Federal securities law matters in connection with the Policies.

REGISTRATION STATEMENT

This Prospectus omits certain information contained in the Registration
Statement which has been filed with the Commission. More details may be obtained
from the Securities and Exchange Commission upon payment of the prescribed fee.

EXPERTS

The financial statements of JHVLICO and the Account included in this
Prospectus have been audited by Ernst & Young LLP, independent auditors, for the
periods indicated in their reports thereon which appear elsewhere herein and
have been included in reliance on their reports given on their authority as
experts in accounting and auditing.

Actuarial matters included in this Prospectus have been examined by Malcolm
Cheung, F.S.A., an Actuary of JHVLICO.

FINANCIAL STATEMENTS

The financial statements of JHVLICO included herein should be distinguished
from the financial statements of the Account and should be considered only as
bearing upon the ability of JHVLICO to meet its obligations under the Policies.

33
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

<TABLE>
<CAPTION>
Large Cap Sovereign International Small Cap International Mid Cap
Growth Bond Equities Growth Balanced Growth
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
------------ ----------- ------------- ---------- ------------- ----------
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of portfolios of
John Hancock Variable Series Trust I,
at value . . . . . . . . . . . . . . $220,404,877 $77,364,479 $41,970,969 $8,388,753 $1,157,805 $4,786,962
Investments in shares of portfolios of
M Fund Inc., at value . . . . . . . -- -- -- -- -- --
Receivable from:
John Hancock Variable Series Trust I 136,286 346,734 1,409,104 66,139 502 5,059
M Fund Inc. . . . . . . . . . . . . -- -- -- -- -- --
------------ ----------- ----------- ---------- ---------- ----------
TOTAL ASSETS . . . . . . . . . . . . 220,541,163 77,711,213 43,380,073 8,454,892 1,158,307 4,792,021
LIABILITIES
Payable to:
John Hancock Variable Life Insurance
Company. . . . . . . . . . . . . . 132,686 345,471 1,408,454 66,005 483 4,981
M Fund Inc. . . . . . . . . . . . . -- -- -- -- -- --
Asset charges payable . . . . . . . 3,600 1,263 650 134 19 78
------------ ----------- ----------- ---------- ---------- ----------
TOTAL LIABILITIES . . . . . . . . . . 136,286 346,734 1,409,104 66,139 502 5,059
------------ ----------- ----------- ---------- ---------- ----------
NET ASSETS . . . . . . . . . . . . . $220,404,877 $77,364,479 $41,970,969 $8,388,753 $1,157,805 $4,786,962
============ =========== =========== ========== ========== ==========
<CAPTION>
Large Cap Money Mid Cap Special Real Estate
Value Market Value Opportunities Equity
Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ----------- ----------- ------------- -------------
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of portfolios of $6,535,144 $16,502,852 $13,182,435 $51,834,969 $42,559,352
John Hancock Variable Series Trust I,
at value . . . . . . . . . . . . . .
Investments in shares of portfolios of -- -- -- -- --
M Fund Inc., at value . . . . . . .
Receivable from:
John Hancock Variable Series Trust I 45,146 242,747 52,975 1,256,884 11,157
M Fund Inc. . . . . . . . . . . . . -- -- -- -- --
---------- ----------- ----------- ----------- -----------
TOTAL ASSETS . . . . . . . . . . . . 6,580,290 16,745,599 13,235,410 53,091,853 42,570,509
LIABILITIES
Payable to:
John Hancock Variable Life Insurance 45,040 242,480 52,761 1,256,074 10,480
Company. . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . -- -- -- -- --
Asset charges payable . . . . . . . 106 267 214 810 677
---------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES . . . . . . . . . . 45,146 242,747 52,975 1,256,884 11,157
---------- ----------- ----------- ----------- -----------
NET ASSETS . . . . . . . . . . . . . $6,535,144 $16,502,852 $13,182,435 $51,834,969 $42,559,352
========== =========== =========== =========== ===========
</TABLE>

- ---------
See accompanying notes.

34
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 1997

<TABLE>
<CAPTION>
Short-Term
Growth & U.S. Small Cap International
Income Managed Government Value Opportunities
Subaccount Subaccount Subaccount Subaccount Subaccount
------------ ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of portfolios of John Hancock
Variable Series Trust I, at value . . . . . . . . . . $415,058,955 $370,265,102 $4,477,991 $7,081,141 $6,510,024
Investments in shares of portfolios of M Fund Inc., at
value . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . 1,579,180 67,783 8,610 30,094 33,701
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . -- -- -- -- --
------------ ------------ ---------- ---------- ----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . 416,638,135 370,332,885 4,486,601 7,111,235 6,543,725
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company . . . . 1,572,407 61,715 8,547 29,979 33,594
M Fund Inc. . . . . . . . . . . . . . . . . . . . . -- -- -- -- --
Asset charges payable . . . . . . . . . . . . . . . . 6,773 6,068 63 115 107
------------ ------------ ---------- ---------- ----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . 1,579,180 67,783 8,610 30,094 33,701
------------ ------------ ---------- ---------- ----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . $415,058,955 $370,265,102 $4,477,991 $7,081,141 $6,510,024
============ ============ ========== ========== ==========
<CAPTION>
Turner Edinburgh Frontier
Equity Strategic Core International Capital
Index Bond Growth Equity Appreciation
Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ---------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of portfolios of John Hancock $10,430,076 $2,627,808 $ -- $ -- $ --
Variable Series Trust I, at value . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at -- -- 244,835 794,869 2,536,602
value . . . . . . . . . . . . . . . . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . 10,685 1,304 -- -- --
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . -- -- 4 13 41
----------- ---------- -------- -------- ----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . 10,440,761 2,629,112 244,839 794,882 2,536,643
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company . . . . 10,514 1,261 -- -- --
M Fund Inc. . . . . . . . . . . . . . . . . . . . . -- -- -- -- --
Asset charges payable . . . . . . . . . . . . . . . . 171 43 4 13 41
----------- ---------- -------- -------- ----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . 10,685 1,304 4 13 41
----------- ---------- -------- -------- ----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . $10,430,076 $2,627,808 $244,835 $794,869 $2,536,602
=========== ========== ======== ======== ==========
</TABLE>

- ---------
See accompanying notes.

35
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF OPERATIONS

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

Large Cap Growth Subaccount Sovereign Bond Subaccount
-------------------------------------- -------------------------------------
1997 1996 1995 1997 1996 1995
----------- ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series
Trust I . . . . . . . . . . . $19,906,569 $22,706,338 $ 9,127,019 $5,517,405 $ 4,518,056 $3,997,055
M Fund Inc. . . . . . . . . . -- -- -- -- -- --
----------- ----------- ----------- ---------- ----------- ----------
Total investment income . . . . 19,906,569 22,706,338 9,127,019 5,517,405 4,518,056 3,997,055
Expenses:
Mortality and expense
risks . . . . . . . . . . . . 1,152,388 789,368 527,639 417,812 352,330 288,879
----------- ----------- ----------- ---------- ----------- ----------
Net investment income
(loss) . . . . . . . . . . . . 18,754,181 21,916,970 8,599,380 5,099,593 4,165,726 3,708,176
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) . . . 5,377,678 2,555,654 839,997 (316,608) (136,401) 63,373
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . 24,886,516 (2,922,417) 13,485,769 1,592,275 (1,537,488) 4,386,358
----------- ----------- ----------- ---------- ----------- ----------
Net realized and unrealized gain
(loss) on investments . . . . . 30,264,194 (366,763) 14,325,766 1,275,667 (1,673,889) 4,449,731
----------- ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in net
assets resulting from operations $49,018,375 $21,550,207 $22,925,146 $6,375,260 $ 2,491,837 $8,157,907
=========== =========== =========== ========== =========== ==========
<CAPTION>
International Small Cap
Equities Growth International Balanced
Subaccount Subaccount Subaccount
------------------------------------ -------------------- -----------------------
1997 1996 1995 1997 1996* 1997 1996*
------------ ---------- ---------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series $ 2,032,258 $ 460,651 $ 313,290 $ 3,380 $ 1,404 $ 62,258 $11,409
Trust I . . . . . . . . . . .
M Fund Inc. . . . . . . . . . -- -- -- -- -- -- --
----------- ---------- ---------- -------- --------- -------- -------
Total investment income . . . . 2,032,258 460,651 313,290 3,380 1,404 62,258 11,409
Expenses:
Mortality and expense
risks . . . . . . . . . . . . 249,823 209,866 158,467 33,986 6,704 6,972 1,311
----------- ---------- ---------- -------- --------- -------- -------
Net investment income 1,782,435 250,785 154,823 (30,606) (5,300) 55,286 10,098
(loss) . . . . . . . . . . . .
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) . . . 958,182 156,348 709,715 116,210 (210,939) 29,092 1,642
Net unrealized appreciation
(depreciation) during the (4,981,747)
period . . . . . . . . . . . . ----------- 2,539,023 1,169,158 732,330 (86,846) (68,785) 18,954
---------- ---------- -------- --------- -------- -------
Net realized and unrealized gain
(loss) on investments . . . . . (4,023,565) 2,695,371 1,878,873 848,540 (297,785) (39,693) 20,596
----------- ---------- ---------- -------- --------- -------- -------
Net increase (decrease) in net
assets resulting from operations $(2,241,130) $2,946,156 $2,033,696 $817,934 $(303,085) $ 15,593 $30,694
=========== ========== ========== ======== ========= ======== =======
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

36
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Mid Cap Growth Large Cap Value
Subaccount Subaccount Money Market Subaccount
------------------ ------------------ ------------------------------
1997 1996* 1997 1996* 1997 1996 1995
--------- ------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . $ -- $ 7,102 $259,192 $ 36,343 $895,867 $918,057 $1,021,645
M Fund Inc. . . . . . . . . . . . . . . . -- -- -- -- -- -- --
-------- ------- -------- -------- -------- -------- ----------
Total investment income . . . . . . . . . . 7,102 259,192 36,343 895,867 918,057 1,021,645
Expenses:
Mortality and expense risks . . . . . . . 20,278 4,054 23,604 3,072 101,168 105,920 108,941
-------- ------- -------- -------- -------- -------- ----------
Net investment income (loss) . . . . . . . (20,278) 3,048 235,588 33,271 794,699 812,137 912,704
Net realized and unrealized gain (loss) on
investments:
Net realized gain . . . . . . . . . . . . 64,078 168 147,209 3,072 -- -- --
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . 567,677 38,250 547,716 87,225 -- -- --
-------- ------- -------- -------- -------- -------- ----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . 631,755 38,418 694,925 90,297 -- -- --
-------- ------- -------- -------- -------- -------- ----------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . $611,477 $41,466 $930,513 $123,568 $794,699 $812,137 $ 912,704
======== ======= ======== ======== ======== ======== ==========
<CAPTION>
Mid Cap Value
Subaccount Special Opportunities Subaccount
-------------------- ------------------------------------
1997 1996* 1997 1996 1995
---------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . $ 972,249 $ 28,018 $ 5,058,010 $1,789,171 $ 483,189
M Fund Inc. . . . . . . . . . . . . . . . -- -- -- -- --
---------- -------- ----------- ---------- ----------
Total investment income . . . . . . . . . . 972,249 28,018 5,058,010 1,789,171 483,189
Expenses:
Mortality and expense risks . . . . . . . 36,967 2,232 296,759 188,016 57,525
---------- -------- ----------- ---------- ----------
Net investment income (loss) . . . . . . . 935,282 25,786 4,761,251 1,601,155 425,664
Net realized and unrealized gain (loss) on
investments:
Net realized gain . . . . . . . . . . . . 148,954 2,034 4,458,015 1,418,069 118,503
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . 58,693 102,527 (7,254,086) 4,977,778 2,655,206
---------- -------- ----------- ---------- ----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . 207,647 104,561 (2,796,071) 6,395,847 2,773,709
---------- -------- ----------- ---------- ----------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . $1,142,929 $130,347 $ 1,965,180 $7,997,002 $3,199,373
========== ======== =========== ========== ==========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

37
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Growth & Income
Real Estate Equity Subaccount Subaccount
---------------------------------- -------------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust
I . . . . . . . . . . . . . . . . $2,934,672 $1,610,938 $1,424,926 $52,442,930 $37,254,741 $20,402,345
M Fund Inc. . . . . . . . . . . . -- -- -- -- -- --
---------- ---------- ---------- ----------- ----------- -----------
Total investment income . . . . . . 2,934,672 1,610,938 1,424,926 52,442,930 37,254,741 20,402,345
Expenses:
Mortality and expense risks . . . . 212,177 145,276 117,861 2,178,739 1,542,729 1,040,658
---------- ---------- ---------- ----------- ----------- -----------
Net investment income . . . . . . . 2,722,495 1,465,662 1,307,065 50,264,191 35,712,012 19,361,687
Net realized and unrealized gain
(loss):
Net realized gain (loss) . . . . . 751,985 184,058 (132,712) 7,351,086 3,938,033 1,182,185
Net unrealized appreciation
(depreciation) during the period . 2,343,294 5,976,712 1,164,732 32,872,184 6,429,197 28,390,863
---------- ---------- ---------- ----------- ----------- -----------
Net realized and unrealized gain
(loss) on investments . . . . . . . 3,095,279 6,160,770 1,032,020 40,223,270 10,367,230 29,573,048
---------- ---------- ---------- ----------- ----------- -----------
Net increase in net assets resulting
from operations . . . . . . . . . . $5,817,774 $7,626,432 $2,339,085 $90,487,461 $46,079,242 $48,934,735
========== ========== ========== =========== =========== ===========
<CAPTION>
Short-Term U.S.
Managed Subaccount Government Subaccount
--------------------------------------- ------------------------------
1997 1996 1995 1997 1996 1995
----------- ------------- ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust $34,981,042 $ 37,205,797 $24,582,126 $216,077 $140,926 $103,070
I . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . -- -- -- -- -- --
----------- ------------ ----------- -------- -------- --------
Total investment income . . . . . . 34,981,042 37,205,797 24,582,126 216,077 140,926 103,070
Expenses:
Mortality and expense risks . . . . 2,035,959 1,678,618 1,324,428 17,975 12,366 8,335
----------- ------------ ----------- -------- -------- --------
Net investment income . . . . . . . 32,945,083 35,527,179 23,257,698 198,102 128,560 94,735
Net realized and unrealized gain
(loss):
Net realized gain (loss) . . . . . 3,754,808 3,555,551 3,530,479 (12,481) 20,920 20,630
Net unrealized appreciation
(depreciation) during the period . 19,460,056 (11,690,944) 24,157,024 24,408 (69,771) 77,274
----------- ------------ ----------- -------- -------- --------
Net realized and unrealized gain
(loss) on investments . . . . . . . 23,214,864 (8,135,393) 27,687,503 11,927 (48,851) 97,904
----------- ------------ ----------- -------- -------- --------
Net increase in net assets resulting
from operations . . . . . . . . . . $56,159,947 $ 27,391,786 $50,945,201 $210,029 $ 79,709 $192,639
=========== ============ =========== ======== ======== ========
<CAPTION>
Small Cap Value
Subaccount
------------------
1997 1996*
--------- ----------
<S> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust $537,451 $32,693
I . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . -- --
-------- -------
Total investment income . . . . . . 537,451 32,693
Expenses:
Mortality and expense risks . . . . 21,374 2,395
-------- -------
Net investment income . . . . . . . 516,077 30,298
Net realized and unrealized gain
(loss):
Net realized gain (loss) . . . . . 179,065 (1,418)
Net unrealized appreciation
(depreciation) during the period . (60,841) 66,350
-------- -------
Net realized and unrealized gain
(loss) on investments . . . . . . . 118,224 64,932
-------- -------
Net increase in net assets resulting
from operations . . . . . . . . . . $634,301 $95,230
======== =======
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

38
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

International Opportunities Equity Index Strategic Bond
Subaccount Subaccount Subaccount
---------------------------- ------------------- -----------------
1997 1996* 1997 1996* 1997 1996*
-------------- ------------ ---------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . . . . $ 85,488 $ 5,631 $ 289,092 $27,780 $155,751 $13,269
M Fund Inc. . . . . . . . . . . . . . . . . . . . . -- -- -- -- -- --
--------- -------- ---------- ------- -------- -------
Total investment income . . . . . . . . . . . . . . . 85,488 5,631 289,092 27,780 155,751 13,269
Expenses:
Mortality and expense risks . . . . . . . . . . . . . 27,161 3,818 33,761 2,194 10,483 675
--------- -------- ---------- ------- -------- -------
Net investment income (loss) . . . . . . . . . . . . . 58,327 1,813 255,331 25,586 145,268 12,594
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) . . . . . . . . . . . . . . 104,001 2,596 72,875 4,690 4,242 1,272
Net unrealized appreciation (depreciation) during the
period . . . . . . . . . . . . . . . . . . . . . . . (279,934) 98,849 973,872 58,797 7,679 (2,250)
--------- -------- ---------- ------- -------- -------
Net realized and unrealized gain (loss) on investments (175,933) 101,445 1,046,747 63,487 11,921 (978)
--------- -------- ---------- ------- -------- -------
Net increase (decrease) in net assets resulting from
operations. . . . . . . . . . . . . . . . . . . . . . $(117,606) $103,258 $1,302,078 $89,073 $157,189 $11,616
========= ======== ========== ======= ======== =======
<CAPTION>
Edinburgh Frontier
Turner Core Growth International Equity Capital Appreciation
Subaccount Subaccount Subaccount
------------------- --------------------- ---------------------
1997 1996* 1997 1996* 1997 1996*
-------- ---------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . . . . $ -- $ -- $ -- $ -- $ -- $ --
M Fund Inc. . . . . . . . . . . . . . . . . . . . . 22,593 91 11,174 362 59,777 --
------- -------- -------- ---- ------- ---------
Total investment income . . . . . . . . . . . . . . . 22,593 91 11,174 362 59,777 --
Expenses:
Mortality and expense risks . . . . . . . . . . . . . 828 1,556 2,688 74 7,104 1,628
------- -------- -------- ---- ------- ---------
Net investment income (loss) . . . . . . . . . . . . . 21,765 (1,465) 8,486 288 52,673 (1,628)
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) . . . . . . . . . . . . . . 1,020 (75,788) 371 (30) 10,828 (130,154)
Net unrealized appreciation (depreciation) during the
period . . . . . . . . . . . . . . . . . . . . . . . 17,720 -- (32,110) 220 28,386 1,432
------- -------- -------- ---- ------- ---------
Net realized and unrealized gain (loss) on investments 18,740 (75,788) (31,739) 190 39,214 (128,722)
------- -------- -------- ---- ------- ---------
Net increase (decrease) in net assets resulting from
operations. . . . . . . . . . . . . . . . . . . . . . $40,505 $(77,253) $(23,253) $478 $91,887 $(130,350)
======= ======== ======== ==== ======= =========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

39
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

Large Cap Growth Subaccount Sovereign Bond Subaccount
------------------------------------------ ------------------------------------------
1997 1996 1995 1997 1996 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets from operations:
Net investment income (loss) $ 18,754,181 $ 21,916,970 $ 8,599,380 $ 5,099,593 $ 4,165,726 $ 3,708,176
Net realized gains
(losses) . . . . . . . . . . 5,377,678 2,555,654 839,997 (316,608) (136,401) 63,373
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . 24,886,516 (2,922,417) 13,485,769 1,592,275 (1,537,488) 4,386,358
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from
operations. . . . . . . . . . 49,018,375 21,550,207 22,925,146 6,375,260 2,491,837 8,157,907
From policyholder transactions:
Net premiums from
policyholders. . . . . . . . 50,870,640 51,040,008 51,711,591 21,348,125 20,848,505 23,206,470
Net benefits to policyholders (32,643,981) (33,079,850) (19,250,850) (14,778,316) (15,298,035) (14,981,037)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from policyholder
transactions . . . . . . . . 18,226,659 17,960,158 32,460,741 6,569,809 5,550,470 8,225,433
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net
assets . . . . . . . . . . . 67,245,034 39,510,365 55,385,887 12,945,069 8,042,307 16,383,340
Net assets at beginning of
period. . . . . . . . . . . . 153,159,843 113,649,478 58,263,591 64,419,410 56,377,103 39,993,763
------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of
period . . . . . . . . . . . $220,404,877 $153,159,843 $113,649,478 $ 77,364,479 $ 64,419,410 $ 56,377,103
============ ============ ============ ============ ============ ============
<CAPTION>
International Balanced
Small Cap Growth Subaccount
International Equities Subaccount Subaccount ---------------------
------------------------------------------ -------------------------
1997 1996 1995 1997 1996* 1997 1996*
------------- ------------- ------------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets from operations:
Net investment income (loss) $ 1,782,435 $ 250,785 $ 154,823 $ (30,606) $ (5,300) $ 55,286 $ 10,098
Net realized gains 958,182 156,348 709,715 116,210 (210,939) 29,092 1,642
(losses) . . . . . . . . . .
Net unrealized appreciation
(depreciation) during the (4,981,747)
period . . . . . . . . . . . ------------ 2,539,023 1,169,158 732,330 (86,846) (68,785) 18,954
------------ ------------ ----------- ----------- ---------- --------
Net increase (decrease) in net (2,241,130) 2,946,156 2,033,696 817,934 (303,085) 15,593 30,694
assets resulting from
operations. . . . . . . . . .
From policyholder transactions:
Net premiums from 17,654,531 17,279,404 17,644,301 7,111,430 5,020,648 1,210,054 777,316
policyholders. . . . . . . .
Net benefits to policyholders (12,889,618) (11,711,164) (12,682,229) (2,474,024) (1,784,150) (811,533) (64,319)
------------ ------------ ------------ ----------- ----------- ---------- --------
Net increase in net assets
resulting from policyholder 4,764,913
transactions . . . . . . . . ------------ 5,568,240 4,962,072 4,637,406 3,236,498 398,521 712,997
------------ ------------ ----------- ----------- ---------- --------
Net increase in net 2,523,783 8,514,396 6,995,768 5,455,340 2,933,413 414,114 743,691
assets . . . . . . . . . . .
Net assets at beginning of
period. . . . . . . . . . . . 39,447,186 30,932,790 23,937,022 2,933,413 -- 743,691 --
------------ ------------ ------------ ----------- ----------- ---------- --------
Net assets at end of
period . . . . . . . . . . . $ 41,970,969 $ 39,447,186 $ 30,932,790 $ 8,388,753 $ 2,933,413 $1,157,805 $743,691
============ ============ ============ =========== =========== ========== ========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

40
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Mid Cap Growth Large Cap Value
Subaccount Subaccount
------------------------ ------------------------
1997 1996* 1997 1996*
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss) . . . . . . $ (20,278) $ 3,048 $ 235,588 $ 33,271
Net realized gains . . . . . . . . . . . 64,078 168 147,209 3,072
Net unrealized appreciation
(depreciation) during the period . . . 567,677 38,250 547,716 87,225
----------- ---------- ----------- ----------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . 611,477 41,466 930,513 123,568
From policyholder transactions:
Net premiums from policyholders . . . . 3,564,986 2,413,439 5,175,373 1,814,755
Net benefits to policyholders . . . . . (1,603,972) (240,434) (1,416,071) (92,994)
----------- ---------- ----------- ----------
Net increase (decrease) in net assets
resulting from policyholder
transactions . . . . . . . . . . . . . . 1,961,014 2,173,005 3,759,302 1,721,761
----------- ---------- ----------- ----------
Net increase (decrease) in net assets . . 2,572,491 2,214,471 4,689,815 1,845,329
Net assets at beginning of period . . . . 2,214,471 -- 1,845,329 --
----------- ---------- ----------- ----------
Net assets at end of period . . . . . . . $ 4,786,962 $2,214,471 $ 6,535,144 $1,845,329
=========== ========== =========== ==========
<CAPTION>
Money Market Mid Cap Value
Subaccount Subaccount
------------------------------------------ ------------------------
1997 1996 1995 1997 1996*
------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss) . . . . . . $ 794,699 $ 812,137 $ 912,704 $ 935,282 $ 25,786
Net realized gains . . . . . . . . . . . -- -- -- 148,954 2,034
Net unrealized appreciation
(depreciation) during the period . . . -- -- -- 58,693 102,527
------------ ------------ ------------ ----------- ----------
Net increase in net assets resulting from 794,699 812,137 912,704 1,142,929 130,347
operations . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . 19,719,031 24,680,961 21,430,904 12,224,626 1,258,509
Net benefits to policyholders . . . . . (21,386,542) (27,801,448) (19,852,589) (1,523,046) (50,930)
------------ ------------ ------------ ----------- ----------
Net increase (decrease) in net assets
resulting from policyholder (1,667,511)
transactions . . . . . . . . . . . . . . ------------ (3,120,487) 1,578,315 10,701,580 1,207,579
------------ ------------ ----------- ----------
Net increase (decrease) in net assets . . (872,812) (2,308,350) 2,491,019 11,844,509 1,337,926
Net assets at beginning of period . . . . 17,375,664 19,684,014 17,192,995 1,337,926 --
------------ ------------ ------------ ----------- ----------
Net assets at end of period . . . . . . . $ 16,502,852 $ 17,375,664 $ 19,684,014 $13,182,435 $1,337,926
============ ============ ============ =========== ==========
<CAPTION>
Special Opportunities
Subaccount
-----------------------------------------
1997 1996 1995
------------- ------------- --------------
<S> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss) . . . . . . $ 4,761,251 $ 1,601,155 $ 425,664
Net realized gains . . . . . . . . . . . 4,458,015 1,418,069 118,503
Net unrealized appreciation
(depreciation) during the period . . . (7,254,086) 4,977,778 2,655,206
------------ ------------ -----------
Net increase in net assets resulting from 1,965,180 7,997,002 3,199,373
operations . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . 26,820,224 30,839,359 15,268,369
Net benefits to policyholders . . . . . (23,391,073) (12,562,876) (3,375,070)
------------ ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder 3,429,151
transactions . . . . . . . . . . . . . . ------------ 18,276,483 11,893,299
------------ -----------
Net increase (decrease) in net assets . . 5,394,331 26,273,485 15,092,672
Net assets at beginning of period . . . . 46,440,638 20,167,153 5,074,481
------------ ------------ -----------
Net assets at end of period . . . . . . . $ 51,834,969 $ 46,440,638 $20,167,153
============ ============ ===========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

41
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

Real Estate Equity Subaccount Growth & Income Subaccount
---------------------------------------- ------------------------------------------
1997 1996 1995 1997 1996 1995
------------ ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets from
operations:
Net investment income . . $ 2,722,495 $ 1,465,662 $ 1,307,065 $ 50,264,191 $ 35,712,012 $ 19,361,687
Net realized gains
(losses) . . . . . . . . 751,985 184,058 (132,712) 7,351,086 3,938,033 1,182,185
Net unrealized
appreciation
(depreciation) during the
period . . . . . . . . . 2,343,294 5,976,712 1,164,732 32,872,184 6,429,197 28,390,863
----------- ----------- ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 5,817,774 7,626,432 2,339,085 90,487,461 46,079,242 48,934,735
From policyholder
transactions:
Net premiums from
policyholders. . . . . . 13,842,210 10,025,714 10,547,817 94,961,660 93,961,136 76,729,116
Net benefits to
policyholders. . . . . . (8,886,892) (8,112,734) (10,156,449) (70,387,297) (57,300,211) (41,442,095)
----------- ----------- ------------ ------------ ------------ ------------
Net increase in net assets
resulting from
policyholder transactions 4,955,318 1,912,980 391,368 24,574,363 36,660,925 35,287,021
----------- ----------- ------------ ------------ ------------ ------------
Net increase in net assets 10,773,092 9,539,412 2,730,453 115,061,824 82,740,167 84,221,756
Net assets at beginning of
period. . . . . . . . . . 31,786,260 22,246,848 19,516,395 299,997,131 217,256,964 133,035,208
----------- ----------- ------------ ------------ ------------ ------------
Net assets at end of period $42,559,352 $31,786,260 $ 22,246,848 $415,058,955 $299,997,131 $217,256,964
=========== =========== ============ ============ ============ ============
<CAPTION>
Short-Term U.S. Government
Managed Subaccount Subaccount
------------------------------------------ ---------------------------------------
1997 1996 1995 1997 1996 1995
------------- ------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets from
operations:
Net investment income . . $ 32,945,083 $ 35,527,179 $ 23,257,698 $ 198,102 $ 128,560 $ 94,735
Net realized gains 3,754,808 3,555,551 3,530,479 (12,481) 20,920 20,630
(losses) . . . . . . . .
Net unrealized
appreciation 19,460,056 (11,690,944) 24,157,024 24,408 (69,771) 77,274
(depreciation) during the ------------ ------------ ------------ ----------- ----------- -----------
period . . . . . . . . .
Net increase in net assets 56,159,947 27,391,786 50,945,201 210,029 79,709 192,639
resulting from operations
From policyholder
transactions:
Net premiums from 71,811,719 71,167,775 80,690,820 3,042,915 2,675,105 2,846,775
policyholders. . . . . .
Net benefits to
policyholders. . . . . . (61,937,355) (56,734,361) (48,646,275) (1,790,137) (2,206,096) (1,637,415)
------------ ------------ ------------ ----------- ----------- -----------
Net increase in net assets
resulting from 9,874,364
policyholder transactions ------------ 14,433,414 32,044,545 1,252,778 469,009 1,209,360
------------ ------------ ----------- ----------- -----------
Net increase in net assets 66,034,311 41,825,200 82,989,746 1,462,806 548,718 1,401,999
Net assets at beginning of
period. . . . . . . . . . 304,230,791 262,405,591 179,415,845 3,015,184 2,466,466 1,064,467
------------ ------------ ------------ ----------- ----------- -----------
Net assets at end of period $370,265,102 $304,230,791 $262,405,591 $ 4,477,991 $ 3,015,184 $ 2,466,466
============ ============ ============ =========== =========== ===========
<CAPTION>
Small Cap Value
Subaccount
------------------------
1997 1996*
------------ -------------
<S> <C> <C>
Increase in net assets from
operations:
Net investment income . . $ 516,077 $ 30,298
Net realized gains 179,065 (1,418)
(losses) . . . . . . . .
Net unrealized
appreciation (60,841)
(depreciation) during the ----------- 66,350
period . . . . . . . . . ----------
Net increase in net assets 634,301 95,230
resulting from operations
From policyholder
transactions:
Net premiums from 6,430,967 1,344,453
policyholders. . . . . .
Net benefits to
policyholders. . . . . . (1,313,921) (109,889)
----------- ----------
Net increase in net assets
resulting from 5,117,046
policyholder transactions ----------- 1,234,564
----------
Net increase in net assets 5,751,347 1,329,794
Net assets at beginning of
period. . . . . . . . . . 1,329,794 --
----------- ----------
Net assets at end of period $ 7,081,141 $1,329,794
=========== ==========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

42
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

International Opportunities Equity Index Strategic Bond
Subaccount Subaccount Subaccount
---------------------------- ------------------------ ---------------------
1997 1996* 1997 1996* 1997 1996*
-------------- ------------- ------------ ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . $ 58,327 $ 1,813 $ 255,331 $ 25,586 $ 145,268 $ 12,594
Net realized gains (losses) . . . . . . 104,001 2,596 72,875 4,690 4,242 1,272
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . . . . . (279,934) 98,849 973,872 58,797 7,679 (2,250)
----------- ---------- ----------- ---------- ---------- --------
Net increase (decrease) in net assets
resulting from operations . . . . . . . (117,606) 103,258 1,302,078 89,073 157,189 11,616
From policyholder transactions:
Net premiums from
policyholders . . . . . . . . . . . . . 6,249,522 2,395,587 9,373,895 1,242,668 2,575,091 495,203
Net benefits to policyholders . . . . . (1,882,431) (238,306) (1,445,089) (132,549) (522,585) (88,706)
----------- ---------- ----------- ---------- ---------- --------
Net increase in net assets resulting from
policyholder transactions . . . . . . . 4,367,091 2,157,281 7,928,806 1,110,119 2,052,506 406,497
----------- ---------- ----------- ---------- ---------- --------
Net increase in net assets . . . . . . . 4,249,485 2,260,539 9,230,884 1,199,192 2,209,695 418,113
Net assets at beginning of period . . . . 2,260,539 -- 1,199,192 -- 418,113 --
----------- ---------- ----------- ---------- ---------- --------
Net assets at end of period . . . . . . . $ 6,510,024 $2,260,539 $10,430,076 $1,199,192 $2,627,808 $418,113
=========== ========== =========== ========== ========== ========
<CAPTION>
Frontier
Turner Core Edinburgh Capital
Growth International Equity Appreciation
Subaccount Subaccount Subaccount
---------------------- --------------------- ------------------------
1997 1996* 1997 1996* 1997 1996*
--------- ------------ ---------- --------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . $ 21,765 $ (1,465) $ 8,486 $ 288 $ 52,673 $ (1,628)
Net realized gains (losses) . . . . . . 1,020 (75,788) 371 (30) 10,828 (130,154)
Net unrealized appreciation
(depreciation) during the 17,720
period . . . . . . . . . . . . . . . . -------- -- (32,110) 220 28,386 1,432
----------- -------- ------- ---------- -----------
Net increase (decrease) in net assets 40,505 (77,253) (23,253) 478 91,887 (130,350)
resulting from operations . . . . . . .
From policyholder transactions:
Net premiums from 209,202 1,525,222 764,978 64,120 2,429,648 1,568,562
policyholders . . . . . . . . . . . . .
Net benefits to policyholders . . . . . (7,612) (1,445,229) (10,047) (1,407) (47,057) (1,376,088)
-------- ----------- -------- ------- ---------- -----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . 201,590 79,993 754,931 62,713 2,382,591 192,474
-------- ----------- -------- ------- ---------- -----------
Net increase in net assets . . . . . . . 242,095 2,740 731,678 63,191 2,474,478 62,124
Net assets at beginning of period . . . . 2,740 -- 63,191 -- 62,124 --
-------- ----------- -------- ------- ---------- -----------
Net assets at end of period . . . . . . . $244,835 $ 2,740 $794,869 $63,191 $2,536,602 $ 62,124
======== =========== ======== ======= ========== ===========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

43
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION

John Hancock Variable Life Account V (the Account) is a separate investment
account of John Hancock Variable Life Insurance Company (JHVLICO), a
wholly-owned subsidiary of John Hancock Mutual Life Insurance Company (John
Hancock). The Account was formed to fund variable life insurance policies
(Policies) issued by JHVLICO. The Account is operated as a unit investment trust
registered under the Investment Company Act of 1940, as amended, and currently
consists of twenty-one subaccounts. The assets of each subaccount are invested
exclusively in shares of a corresponding Portfolio of John Hancock Variable
Series Trust I (the Fund) or of M Fund Inc. (M Fund). New subaccounts may be
added as new portfolios are added to the Fund or to M Fund, or as other
investment options are developed and made available to policyholders. The
twenty-one Portfolios of the Fund and M Fund which are currently available are
the Large Cap Growth, Sovereign Bond, International Equities, Small Cap Growth,
International Balanced, Mid Cap Growth, Large Cap Value, Money Market, Mid Cap
Value, Special Opportunities, Real Estate Equity, Growth & Income, Managed,
Short-Term U.S. Government, Small Cap Value, International Opportunities, Equity
Index, Strategic Bond, Turner Core Growth, Edinburgh International Equity and
Frontier Capital Appreciation Portfolios. Each Portfolio has a different
investment objective.

The net assets of the Account may not be less than the amount required under
state insurance law to provide for death benefits (without regard to the minimum
death benefit guarantee) and other policy benefits. Additional assets are held
in JHVLICO's general account to cover the contingency that the guaranteed
minimum death benefit might exceed the death benefit which would have been
payable in the absence of such guarantee.

The assets of the Account are the property of JHVLICO. The portion of the
Account's assets applicable to the policies may not be charged with liabilities
arising out of any other business JHVLICO may conduct.

2. SIGNIFICANT ACCOUNTING POLICIES

ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

VALUATION OF INVESTMENTS

Investment in shares of the Fund and of M 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
JHVLICO, which is taxed as a life insurance company under the Internal Revenue
Code. JHVLICO has the right to charge the Account any federal

44
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS--CONTINUED

2. SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
income taxes, or provision for federal income taxes, attributable to the
operations of the Account or to the policies funded in the Account. Currently,
JHVLICO does not make a charge for income or other taxes. Charges for state and
local taxes, if any, attributable to the Account may also be made.

EXPENSES

JHVLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at an annual rate of .6% of net
assets of the Account. In addition, a monthly charge at varying levels for the
cost of insurance is deducted from the net assets of the Account.

JHVLICO makes certain deductions for administrative expenses and state premium
taxes from premium payments before amounts are transferred to the Account.

3. 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 JHVLICO, the
Fund or John Hancock.

45
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS--CONTINUED
4. DETAILS OF INVESTMENTS

The details of the shares owned and cost and value of investments in the
Portfolios of the Fund and of M Fund at December 31, 1997 were as follows:

<TABLE>
<CAPTION>
Subaccount Shares Owned Cost Value
- ---------- ------------ ---- -----
<S> <C> <C> <C>
Large Cap Growth . . . . . . . 10,586,769 $187,930,849 $220,404,877
Sovereign Bond . . . . . . . . 7,776,122 75,958,729 77,364,479
International Equities . . . . 2,761,277 43,643,958 41,970,969
Small Cap Growth . . . . . . . 739,493 7,743,268 8,388,753
International Balanced . . . . 114,518 1,207,635 1,157,805
Mid Cap Growth . . . . . . . . 401,405 4,181,035 4,786,962
Large Cap Value . . . . . . . . 481,601 5,900,203 6,535,144
Money Market . . . . . . . . . 1,650,285 16,502,852 16,502,852
Mid Cap Value . . . . . . . . . 950,696 13,021,215 13,182,435
Special Opportunities . . . . . 3,369,163 51,464,805 51,834,969
Real Estate Equity . . . . . . 2,674,924 33,759,677 42,559,352
Growth & Income . . . . . . . . 24,995,259 355,932,656 415,058,955
Managed . . . . . . . . . . . . 25,803,545 344,297,799 370,265,102
Short-Term U.S. Government . . 444,097 4,469,746 4,477,991
Small Cap Value . . . . . . . . 571,000 7,075,632 7,081,141
International Opportunities . . 612,582 6,691,109 6,510,024
Equity Index . . . . . . . . . 733,831 9,397,407 10,430,076
Strategic Bond . . . . . . . . 256,555 2,622,381 2,627,808
Turner Core Growth . . . . . . 18,136 227,115 244,835
Edinburgh International Equity 79,806 826,979 794,869
Frontier Capital Appreciation . 170,014 2,508,216 2,536,602
</TABLE>

46
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS--CONTINUED

4. DETAILS OF INVESTMENTS--CONTINUED
Purchases, including reinvestment of dividend distributions and proceeds from
sales of shares in the Portfolios of the Fund and of M Fund during 1997, were as
follows:

<TABLE>
<CAPTION>
Subaccount Purchases Sales
- ---------- --------- -----
<S> <C> <C>
Large Cap Growth . . . . . . . . . . . . . . $ 56,466,102 $19,485,262
Sovereign Bond . . . . . . . . . . . . . . . 19,397,400 7,727,997
International Equities . . . . . . . . . . . 15,253,207 8,705,859
Small Cap Growth . . . . . . . . . . . . . . 5,859,776 1,252,977
International Balanced . . . . . . . . . . . 1,159,181 705,374
Mid Cap Growth . . . . . . . . . . . . . . . 2,742,522 801,786
Large Cap Value . . . . . . . . . . . . . . . 4,652,964 658,074
Money Market . . . . . . . . . . . . . . . . 17,500,398 18,373,210
Mid Cap Value . . . . . . . . . . . . . . . . 12,117,784 480,923
Special Opportunities . . . . . . . . . . . . 21,744,442 13,554,039
Real Estate Equity . . . . . . . . . . . . . 11,188,184 3,510,371
Growth & Income . . . . . . . . . . . . . . . 101,356,390 26,517,836
Managed . . . . . . . . . . . . . . . . . . . 72,195,782 29,376,335
Short-Term U.S. Government . . . . . . . . . 2,905,273 1,454,395
Small Cap Value . . . . . . . . . . . . . . . 6,527,629 894,506
International Opportunities . . . . . . . . . 5,523,001 1,097,583
Equity Index . . . . . . . . . . . . . . . . 8,553,934 369,798
Strategic Bond . . . . . . . . . . . . . . . 2,740,710 542,935
Turner Core Growth . . . . . . . . . . . . . 234,152 10,793
Edinburgh International Equity . . . . . . . 783,703 20,053
Frontier Capital Appreciation . . . . . . . . 2,486,125 51,919
</TABLE>

5. IMPACT OF YEAR 2000 (UNAUDITED)

The John Hancock Variable Life Account V, along with John Hancock Mutual Life
Insurance Company, its ultimate parent (together, John Hancock), have developed
a plan to modify or replace significant portions of the Account's computer
information and automated technologies so that its systems will function
properly with respect to the dates in the year 2000 and thereafter. The Account
presently believes that with modifications to existing systems and conversions
to new technologies, the year 2000 will not pose significant operational
problems for its computer systems. However, if certain modifications and
conversions are not made, or are not completed timely, the year 2000 issue could
have an adverse impact on the operations of the Account.

John Hancock as early as 1994 had begun assessing, modifying and converting
the software related to its significant systems and has initiated formal
communications with its significant business partners and customers to determine
the extent to which John Hancock's interface systems are vulnerable to those
third parties' failure to remediate their own year 2000 issues. While John
Hancock is developing alternative third party processing arrangements as it
deems appropriate, there is no guarantee that the systems of other companies on
which the Account's systems rely will be converted timely or will not have an
adverse effect on the Account's systems.

47
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS--CONTINUED

5. IMPACT OF YEAR 2000 (UNAUDITED)--CONTINUED
The Account expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors. However,
there can be no guarantee that this completion target will be achieved.

48
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Policyholders
John Hancock Variable Life Account V of John Hancock Variable Life Insurance
Company

We have audited the accompanying statement of assets and liabilities of John
Hancock Variable Life Account V (the Account) (comprising, respectively, the
Large Cap Growth, Sovereign Bond, International Equities, Small Cap Growth,
International Balanced, Mid Cap Growth, Large Cap Value, Money Market, Mid Cap
Value, Special Opportunities, Real Estate Equity, Growth & Income, Managed,
Short-Term U.S. Government, Small Cap Value, International Opportunities, Equity
Index, Strategic Bond, Turner Core Growth, Edinburgh International Equity and
Frontier Capital Appreciation Subaccounts) as of December 31, 1997, and the
related statements of operations, and changes in net assets for each of the
periods indicated therein. 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 Life Account V at December 31,
1997, 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
February 6, 1998 Ernst & Young LLP

49
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Directors and Policyholders
John Hancock Variable Life Insurance Company

We have audited the accompanying statutory-basis statements of financial
position of John Hancock Variable Life Insurance Company as of December 31, 1997
and 1996, and the related statutory-basis statements of operations and
unassigned deficit and 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.

As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Commonwealth of Massachusetts Division of Insurance, which
practices differ from generally accepted accounting principles. The variances
between such practices and generally accepted accounting principles also are
described in Note 1. The effects on the financial statements of these variances
are not reasonably determinable but are presumed to be material.

In our opinion, because of the effects of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of John Hancock Variable Life Insurance Company at December 31, 1997 and 1996,
or the results of its operations or its cash flows for the year ended December
31, 1997.

Also, in our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of John Hancock Variable Life
Insurance Company at December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.

Boston Massachusetts
February 18, 1998 Ernst & Young LLP

50
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
December 31
-------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
ASSETS
Bonds--Note 6 . . . . . . . . . . . . . . . . . . . . $1,092.7 $ 753.5
Preferred stocks . . . . . . . . . . . . . . . . . . . 17.2 9.6
Common stocks . . . . . . . . . . . . . . . . . . . . 2.3 1.4
Investment in affiliates . . . . . . . . . . . . . . . 79.1 72.0
Mortgage loans on real estate--Note 6 . . . . . . . . 273.9 212.1
Real estate . . . . . . . . . . . . . . . . . . . . . 39.9 38.8
Policy loans . . . . . . . . . . . . . . . . . . . . . 106.8 80.8
Cash items:
Cash in banks . . . . . . . . . . . . . . . . . . . 83.1 26.7
Temporary cash investments . . . . . . . . . . . . . 60.1 5.2
-------- --------
143.2 31.9
Premiums due and deferred . . . . . . . . . . . . . . 33.8 36.8
Investment income due and accrued . . . . . . . . . . 24.7 22.6
Other general account assets . . . . . . . . . . . . . 16.8 17.8
Assets held in separate accounts . . . . . . . . . . . 4,691.1 3,290.5
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . $6,521.5 $4,567.8
======== ========
OBLIGATIONS AND STOCKHOLDER'S EQUITY
OBLIGATIONS
Policy reserves . . . . . . . . . . . . . . . . . . $1,124.3 $ 877.8
Federal income and other taxes payable--Note 1 . . . 36.1 29.4
Other accrued expenses . . . . . . . . . . . . . . . 335.1 75.1
Asset valuation reserve--Note 1 . . . . . . . . . . 18.6 16.6
Obligations related to separate accounts . . . . . . 4,685.7 3,285.8
-------- --------
TOTAL OBLIGATIONS . . . . . . . . . . . . . . . . . . 6,199.8 4,284.7
STOCKHOLDER'S EQUITY
Common Stock, $50 par value; authorized 50,000
shares;
issued and outstanding 50,000 shares . . . . . . . 2.5 2.5
Paid-in capital . . . . . . . . . . . . . . . . . . 377.5 377.5
Unassigned deficit . . . . . . . . . . . . . . . . . . (58.3) (96.9)
-------- --------
TOTAL STOCKHOLDER'S EQUITY . . . . . . . . . . . . . . 321.7 283.1
-------- --------
TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY . . . . . . $6,521.5 $4,567.8
======== ========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

51
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT

<TABLE>
<CAPTION>
Year ended December 31
-----------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
INCOME
Premiums . . . . . . . . . . . . . . . . . . . . $ 872.7 $ 820.6
Net investment income--Note 3 . . . . . . . . . 89.7 76.1
Other, net . . . . . . . . . . . . . . . . . . . 420.1 406.0
-------- --------
1,382.5 1,302.7
BENEFITS AND EXPENSES
Payments to policyholders and beneficiaries . . 264.0 236.1
Additions to reserves to provide for future
payments to policyholders and beneficiaries . 814.2 790.1
Expenses of providing service to policyholders
and obtaining new insurance--Note 5 . . . . . 216.2 183.8
State and miscellaneous taxes . . . . . . . . . 19.1 17.3
-------- --------
1,313.5 1,227.3
-------- --------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME
TAXES AND NET REALIZED CAPITAL LOSSES . . . 69.0 75.4
Federal income taxes--Note 1 . . . . . . . . . . . 38.5 38.6
-------- --------
GAIN FROM OPERATIONS BEFORE NET REALIZED
CAPITAL LOSSES . . . . . . . . . . . . . . . 30.5 36.8
Net realized capital losses--Note 4 . . . . . . . (3.0) (1.5)
-------- --------
NET INCOME . . . . . . . . . . . . . . . . . 27.5 35.3
Unassigned deficit at beginning of year . . . . . (96.9) (131.3)
Net unrealized capital gains and other
adjustments--Note 4 . . . . . . . . . . . . . . . 5.0 2.5
Other reserves and adjustments . . . . . . . . . . 6.1 (3.4)
-------- --------
UNASSIGNED DEFICIT AT END OF YEAR . . . . . . $ (58.3) $ (96.9)
======== ========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

52
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year ended December 31
-----------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Insurance premiums . . . . . . . . . . . . . . . $ 877.0 $ 824.2
Net investment income . . . . . . . . . . . . . 89.9 73.4
Benefits to policyholders and beneficiaries . . (245.2) (212.7)
Dividends paid to policyholders . . . . . . . . (18.7) (15.7)
Insurance expenses and taxes . . . . . . . . . . (250.2) (196.6)
Net transfers to separate accounts . . . . . . . (703.2) (524.2)
Other, net . . . . . . . . . . . . . . . . . . . 379.9 386.7
------- -------
NET CASH PROVIDED FROM OPERATIONS . . . . . . 129.5 335.1
------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Bond purchases . . . . . . . . . . . . . . . . . (621.6) (489.9)
Bond sales . . . . . . . . . . . . . . . . . . . 197.3 228.3
Bond maturities and scheduled redemptions . . . 34.1 27.8
Bond prepayments . . . . . . . . . . . . . . . . 51.6 31.9
Stock purchases . . . . . . . . . . . . . . . . (15.7) (6.5)
Proceeds from stock sales . . . . . . . . . . . 6.7 0.4
Real estate purchases . . . . . . . . . . . . . (1.3) (10.5)
Real estate sales . . . . . . . . . . . . . . . 0.4 8.5
Other invested assets purchases . . . . . . . . (1.0) 0.0
Proceeds from the sale of other invested assets 0.3 1.5
Mortgage loans issued . . . . . . . . . . . . . (94.5) (84.4)
Mortgage loan repayments . . . . . . . . . . . . 32.4 17.7
Other, net . . . . . . . . . . . . . . . . . . . 393.1 (104.6)
------- -------
NET CASH USED IN INVESTING ACTIVITIES . . . . (18.2) (379.8)
------- -------
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH
INVESTMENTS . . . . . . . . . . . . . . . . . . . 111.3 (44.7)
Cash and temporary cash investments at beginning of
year. . . . . . . . . . . . . . . . . . . . . . . 31.9 76.6
------- -------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR $ 143.2 $ 31.9
======= =======
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

53
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES

John Hancock Variable Life Insurance Company (the Company) is a wholly-owned
subsidiary of John Hancock Mutual Life Insurance Company (John Hancock). The
Company, domiciled in the Commonwealth of Massachusetts, principally writes
variable and universal life insurance policies. Those policies primarily are
marketed through John Hancock's sales organization, which includes a career
agency system composed of company-owned, unionized branch offices and
independent general agencies. Policies also are sold through various
unaffiliated securities broker-dealers and certain other financial institutions.
Currently, the Company writes business in all states except New York.

The preparation of financial statements 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 using
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 (NAIC), which practices differ
from generally accepted accounting principles (GAAP).

The significant differences from GAAP include: (1) policy acquisition costs are
charged to expense as incurred rather than deferred and amortized over the
related premium-paying period; (2) policy reserves are based on statutory
mortality, morbidity, and interest requirements without consideration of
withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available for
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances are
provided when there has been a decline in value deemed other than temporary; (7)
investments in affiliates are carried at their net equity value with changes in
value being recorded directly to unassigned deficit rather than consolidated in
the financial statements; (8) no provision is made for the deferred income tax
effects of temporary differences between book and tax basis reporting; and (9)
certain items, including modifications to required policy reserves resulting
from changes in actuarial assumptions or increased benefits, are recorded
directly to unassigned deficit rather than being reflected in income. The
effects of the foregoing variances from GAAP have not been determined but are
presumed to be material.

The significant accounting practices of the Company are as follows:

Pending Statutory Standards: The NAIC currently is in the process of recodifying
statutory accounting practices, the result of which is expected to constitute
the only source of prescribed statutory accounting practices. Accordingly, that
project, which is expected to be approved by the NAIC in 1998 will likely
change, to some extent, prescribed statutory accounting practices, and may
result in changes to the accounting practices that the Company uses to prepare
its statutory-basis financial statements. The impact of any such changes on the
Company's unassigned deficit is not expected to be material.

54
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
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 NAIC; bonds generally
at amortized amounts or cost, preferred stocks generally at cost and common
stocks at fair value. The discount or premium on bonds is amortized using the
interest method.

Investments in affiliates are included on the statutory equity method.

Goodwill is amortized on a straight-line basis over a ten year period.

Mortgage loans are carried at outstanding principal balance or amortized cost.

Investment real estate is carried at depreciated cost, less encumbrances.
Depreciation on investment real estate is recorded on a straight-line basis.
Accumulated depreciation amounted to $2.1 million in 1997 and $1.2 million in
1996.

Real estate acquired in satisfaction of debt and held for sale 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.

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. Changes to the AVR are
charged or credited directly to the unassigned deficit.

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, 1997, the IMR, net of 1997 amortization of $1.2 million, amounted to $7.8
million, which is included in policy reserves. The corresponding 1996 amounts
were $1.2 million and $5.9 million, respectively.

Goodwill: The excess of cost over the statutory book value of the net assets of
life insurance business acquired was $13.1 million and $15.1 million at December
31, 1997 and 1996, respectively, and generally is amortized over a ten-year
period using a straight-line method.

Accumulated amortization was $8.8 million and $6.7 million at December 31, 1997
and 1996, respectively.

55
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
Separate Accounts: Separate account assets and liabilities reported in the
accompanying statements of financial position represent funds that are
separately administered, principally for variable life insurance policies, and
for which the contractholder, rather than the Company, generally bears the
investment risk. Separate account obligations are intended to be satisfied from
separate account assets and not from assets of the general account. Separate
accounts generally are reported at fair value. The operations of the separate
accounts are not included in the statement of operations; however, income earned
on amounts initially invested by the Company in the formation of new separate
accounts is included in other income.

Fair Value Disclosure 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 certain
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. See Note 11.

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 its subsidiary
investments, which are carried at equity values, are based on quoted market
prices.

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 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 amount in the statement of financial position for policy loans
approximates their fair value.

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, 1997. The fair
value for commitments to purchase real estate approximates the amount of the
initial commitment.

56
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
Capital Gains and Losses: Realized capital gains and losses are determined using
the specific identification basis. Realized capital gains and losses, net of
taxes and amounts transferred to the IMR, are included in net gain or loss.
Unrealized gains and losses, which consist of market value and book value
adjustments, are shown as adjustments to the unassigned deficit.

Policy Reserves: Life reserves are developed by actuarial methods and are
determined based on published tables using statutorily specified interest rates
and valuation methods that will provide, in the aggregate, reserves that are
greater than or equal to the minimum or guaranteed policy cash values or the
amounts required by the Commonwealth of Massachusetts Division of Insurance.
Reserves for variable life insurance policies are maintained principally on the
modified preliminary term method using the 1958 and 1980 Commissioner's Standard
Ordinary (CSO) mortality tables, with an assumed interest rate of 4% for
policies issued prior to May 1, 1983 and 41/2% for policies issued on or
thereafter. Reserves for single premium policies are determined by the net
single premium method using the 1958 CSO mortality table, with an assumed
interest rate of 4%. Reserves for universal life policies issued prior to 1985
are equal to the gross account value which at all times exceeds minimum
statutory requirements. Reserves for universal life policies issued from 1985
through 1988 are maintained at the greater of the Commissioner's Reserve
Valuation Method (CRVM) using the 1958 CSO mortality table, with 41/2% interest
or the cash surrender value. Reserves for universal life policies issued after
1988 and for flexible variable policies are maintained using the greater of the
cash surrender value or the CRVM method with the 1980 CSO mortality table and
51/2% interest for policies issued from 1988 through 1992; 5% interest for
policies issued in 1993 and 1994; and 41/2% interest for policies issued in 1995
through 1997.

Federal Income Taxes: Federal income taxes are reported 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 are
consolidated with John Hancock in filing a consolidated federal income tax
return for the affiliated group. The federal income taxes of the Company are
allocated on a separate return basis with certain adjustments. The Company made
payments of $29.6 million in 1997 and $33.5 million in 1996.

Income before taxes differs from taxable income principally due to tax-exempt
investment income, the limitation placed on the tax deductibility of
policyholder dividends, accelerated depreciation, differences in policy reserves
for tax return and financial statement purposes, capitalization of policy
acquisition expenses for tax purposes and other adjustments prescribed by the
Internal Revenue Code.

Adjustments to Policy Reserves: 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 stockholder's equity. During
1997, the Company refined certain assumptions inherent in the calculation of
reserves related to AIDS claims under individual life policies resulting in a
$6.4 million increase in stockholder's equity at December 31, 1997.

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.

57
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 2--ACQUISITION

On June 23, 1993, the Company acquired all of the outstanding shares of stock of
Colonial Penn Annuity and Life Insurance Company (CPAL) from Colonial Penn Life
Insurance Company for an aggregate purchase price of approximately $42.5
million. At the date of acquisition, assets of CPAL were approximately $648.5
million, consisting principally of cash and temporary cash investments and
liabilities were approximately $635.2 million, consisting principally of
reserves related to a block of interest sensitive single-premium whole life
insurance business assumed by CPAL from Charter National Life Insurance Company
(Charter). The purchase price includes contingent payments of up to
approximately $7.3 million payable between 1994 and 1998 based on the actual
lapse experience of the business in force on June 23, 1993. The Company made
contingent payments to CPAL of $1.5 million during each of 1997 and 1996.
Unamortized goodwill at December 31, 1997 was $13.1 million and is being
amortized over ten years on a straight-line basis.

On June 24, 1993, the Company contributed $24.6 million in additional capital to
CPAL. CPAL was renamed John Hancock Life Insurance Company of America (JHLICOA)
on July 7, 1993. JHLICOA manages the business assumed from Charter and does not
currently issue new business.

NOTE 3--NET INVESTMENT INCOME

Investment income has been reduced by the following amounts:

<TABLE>
<CAPTION>
1997 1996
---- ----
(In millions)
<S> <C> <C>
Investment expenses . . . . . . . . . . . . . . . . . $ 5.0 $7.0
Interest expense . . . . . . . . . . . . . . . . . . . 0.7 0.0
Depreciation expense . . . . . . . . . . . . . . . . . 1.1 0.9
Investment taxes . . . . . . . . . . . . . . . . . . . 0.4 0.5
-------------- ----
$ 7.2 $8.4
============== ====
</TABLE>

NOTE 4--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS

Net realized capital losses consist of the following items:

<TABLE>
<CAPTION>
1997 1996
---- ----
(In millions)
<S> <C> <C>
Net gains (losses) from asset sales . . . . . . . . $ 0.8 $(0.2)
Capital gains tax . . . . . . . . . . . . . . . . . (0.7) (1.0)
Net capital gains transferred to IMR . . . . . . . (3.1) (0.3)
-------------- -----
Realized Capital Losses . . . . . . . . . . . . . . $ (3.0) $(1.5)
============== =====
</TABLE>

58
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 4--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS--CONTINUED Net
unrealized capital gains and other adjustments consist of the following items:

<TABLE>
<CAPTION>
1997 1996
---- ----
(In millions)
<S> <C> <C>
Net gains from changes in security values and book
value adjustments . . . . . . . . . . . . . . . . $ 7.0 $ 3.7
Increase in asset valuation reserve . . . . . . . . (2.0) (1.2)
-------------- -----
Net Unrealized Capital Gains and Other Adjustments $ 5.0 $ 2.5
============== =====
</TABLE>

NOTE 5--TRANSACTIONS WITH PARENT

The Company's Parent provides the Company with personnel, property and
facilities in carrying out certain of its corporate functions. The Parent
annually determines a fee for these services and facilities based on a number of
criteria which were revised in 1997 and 1996 to reflect continuing changes in
the Company's operations. The amount of the service fee charged to the Company
was $123.6 million and $111.7 million in 1997 and 1996, respectively, which has
been included in insurance and investment expenses. The Parent has guaranteed
that, if necessary, it will make additional capital contributions to prevent the
Company's stockholder's equity from declining below $1.0 million.

The service fee charged to the Company by the Parent includes $0.9 million and
$1.6 million in 1997 and 1996, respectively, representing the portion of the
provision for retiree benefit plans determined under the accrual method,
including a provision for the 1993 transition liability which is being amortized
over twenty years, that was allocated to the Company.

The Company has a modified coinsurance agreement with John Hancock to reinsure
50% of 1994 through 1997 issues of flexible premium variable life insurance and
scheduled premium variable life insurance policies. In connection with this
agreement, John Hancock transferred $22.0 million and $24.5 million of cash for
tax, commission, and expense allowances to the Company, which increased the
Company's net gain from operations by $10.1 million and $15.7 million in 1997
and 1996, respectively.

The Company has a modified coinsurance agreement with John Hancock to reinsure
50% of 1995 through 1997 issues of certain retail annuity contracts
(Independence Preferred and Declaration). In connection with this agreement, the
Company made a net cash payment of $1.1 million and received a net cash payment
of $35.0 million for surrender benefits, tax, reserve increase, commission,
expense allowances and premium. This agreement increased the Company's net gain
from operations by $9.8 million and $15.1 million and in 1997 and 1996,
respectively.

Effective January 1, 1997, the Company entered into a stop-loss agreement with
John Hancock to reinsure mortality claims in excess of 110% of expected
mortality claims in 1997 for all policies that are not reinsured under any other
indemnity agreement. In connection with the agreement, John Hancock transferred
$2.4 million of cash for mortality claims to the Company, which increased the
Company's net gain from operations by $1.3 million.

59
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS

The statement value and fair value of bonds are shown below:

<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
Year ended December 31, 1997 Value Gains Losses Value
- ---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies . . $ 254.5 $ 0.2 $0.1 $ 254.6
Obligations of states and
political subdivisions . . . . 12.1 1.0 0.0 13.1
Debt securities issued by
foreign governments . . . . . 0.2 0.0 0.0 0.2
Corporate securities . . . . . 712.7 43.9 2.7 753.9
Mortgage-backed securities . . 113.2 3.5 0.0 116.7
-------- ----- ---- --------
Total bonds . . . . . . . . . . $1,092.7 $48.6 $2.8 $1,138.5
======== ===== ==== ========
</TABLE>

<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
Year ended December 31, 1996 Value Gains Losses Value
- ---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies . . . $ 44.4 $ 0.2 $0.2 $ 44.4
Obligations of states and
political subdivisions . . . . . 12.6 0.4 0.0 13.0
Debt securities issued by foreign
governments. . . . . . . . . . . 0.8 0.1 0.0 0.9
Corporate securities . . . . . . 623.2 29.8 3.4 649.6
Mortgage-backed securities . . . 72.5 10.2 0.1 82.6
------ ----- ---- ------
Total bonds . . . . . . . . . . . $753.5 $40.7 $3.7 $790.5
====== ===== ==== ======
</TABLE>

The statement value and fair value of bonds at December 31, 1997, 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 Fair
Value Value
--------- -----
(In millions)
<S> <C> <C>
Due in one year or less . . . . . . . . . . . . . . . . $ 89.1 $ 90.7
Due after one year through five years . . . . . . . . . 466.8 477.0
Due after five years through ten years . . . . . . . . 284.2 299.2
Due after ten years . . . . . . . . . . . . . . . . . . 139.4 154.9
-------- --------
979.5 1,021.8
Mortgage-backed securities . . . . . . . . . . . . . . 113.2 116.7
-------- --------
$1,092.7 $1,138.5
======== ========
</TABLE>

Gross gains of $1.1 million in 1997 and $1.3 million in 1996 and gross losses of
$4.5 million in 1997 and $2.1 million in 1996 were realized from the sale of
bonds.

60
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 6--INVESTMENTS--CONTINUED
At December 31, 1997, bonds with an admitted asset value of $3.6 million were on
deposit with state insurance departments to satisfy regulatory requirements.

The cost of common stocks was $0.0 million at December 31, 1997 and 1996,
respectively. Gross unrealized appreciation on common stocks totaled $2.3
million, and gross unrealized depreciation totaled $0.0 million at December 31,
1997. The fair value of preferred stock totaled $17.2 million at December 31,
1997 and $9.6 million at December 31, 1996.

Bonds with amortized cost of $2.0 million were nonincome producing for the
twelve months ended December 31, 1997.

At December 31, 1997, 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>
Statement Geographic Statement
Property Type Value Concentration Value
------------- --------- ------------- ---------
(In millions) (In millions)
<S> <C> <C> <C>
Apartments. . . . . . $104.1 East North Central . . $ 32.7
Hotels. . . . . . . . 3.8 Middle Atlantic . . . 11.3
Industrial. . . . . . 51.3 Mountain . . . . . . . 17.9
Office buildings . . 32.2 New England . . . . . 35.8
Retail. . . . . . . . 33.2 Pacific . . . . . . . 64.2
Agricultural. . . . . 38.8 South Atlantic . . . . 67.9
Other . . . . . . . . 10.5 West North Central . . 2.5
West South Central . . 41.6
------ ------
$273.9 $273.9
====== ======
</TABLE>

At December 31, 1997, the fair values of the commercial and agricultural
mortgage loans portfolios were $243.8 million and $42.0 million, respectively.
The corresponding amounts as of December 31, 1996 were approximately $189.0
million and $30.4 million, respectively.

The maximum and minimum lending rates for mortgage loans during 1997 were 10.49%
and 8.14% for agricultural loans and 8.53% and 7.42% for other properties.
Generally, the maximum percentage of any loan to the value of security at the
time of the loan, exclusive of insured, guaranteed or purchase money mortgages,
is 75%. For city mortgages, fire insurance is carried on all commercial and
residential properties at least equal to the excess of the loan over the maximum
loan which would be permitted by law on the land without the building, except as
permitted by regulations of the Federal Housing Commission on loans fully
insured under the provisions of the National Housing Act. For agricultural
mortgage loans, fire insurance is not normally required on land based loans
except in those instances where a building is critical to the farming operation.
Fire insurance is required on all agri-business facilities in an aggregate
amount equal to the loan balance.

61
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--REINSURANCE

The Company cedes business to reinsurers to share risks under variable life,
universal life and flexible variable life insurance policies for the purpose of
reducing exposure to large losses. Premiums, benefits and reserves ceded to
reinsurers in 1997 were $427.4 million, $18.3 million, and $10.1 million,
respectively. The corresponding amounts in 1996 were $384.3 million, $9.9
million, and $12.1 million, respectively.

Reinsurance ceded contracts do not relieve the Company from its obligations to
policyholders. The Company remains liable to its policyholders for the portion
reinsured to the extent that any reinsurer does not meet its obligations for
reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the reinsurer.

Neither the Company, nor any of its related parties, control, either directly or
indirectly, any external reinsurers with which the Company conducts business.
No policies issued by the Company have been reinsured with a foreign company
which is controlled, either directly or indirectly, by a party not primarily
engaged in the business of insurance.

The Company has not entered into any reinsurance agreements in which the
reinsurer may unilaterally cancel any reinsurance for reasons other than
nonpayment of premiums or other similar credits. The Company does not have any
reinsurance agreements in effect in which the amount of losses paid or accrued
through December 31, 1997 would result in a payment to the reinsurer of amounts
which, in the aggregate and allowing for offset of mutual credits from other
reinsurance agreements with the same reinsurer, exceed the total direct premiums
collected under the reinsured policies.

NOTE 8--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company utilizes a variety of off-balance sheet financial instruments as
part of its efforts to hedge and manage fluctuations in the market value of its
investment portfolio attributable to changes in general interest rate levels and
to manage duration mismatch of assets and liabilities. Those instruments include
swaps, caps, and future contracts.

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 through 2011. These swaps involve, to varying degrees,
interest rate risk in excess of amounts recognized in the statement of financial
position.

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 2007.

The Company also uses financial futures contracts to hedge public bonds intended
for future sale in order to lock in the market value at the date of contract.
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
changes in the value of the hedged items. The contract or notional amounts of
the contracts represent the extent of the Company's involvement

62
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 8--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--CONTINUED but not in
the future cash requirements, as the Company intends to close the open positions
prior to settlement. Net deferred losses on financial contracts were $2.8
million and $0.0 million at December 31, 1997 and 1996, respectively.

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 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
----------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
Futures contracts to sell securities . . . . . . . . $ 40.8 $ 73.0
============== ======
Notional amount of interest rate swaps, currency rate swaps, and interest rate
caps to:
Receive variable rates . . . . . . . . . . . . . . $ 323.7 $215.9
============== ======
Receive fixed rates . . . . . . . . . . . . . . . $ 25.0 $ 26.6
============== ======
</TABLE>

The Company's exposure to credit risk is the risk of loss from a counterparty
failing to perform according to the terms of the contract. The Company
continually monitors its positions and the credit ratings of the counterparties
to these financial instruments. To limit exposure associated with counterparty
nonperformance on interest rate and currency agreements, the Company enters into
master netting agreements with its counterparties. The Company believes the risk
of incurring losses due to nonperformance by its counterparties is remote and
that such losses, if any, would not be material.

Based on the market rates in effect at December 31, 1997, the Company's interest
rate swaps, currency rate swaps and interest rate caps represented (assets)
liabilities to the Company with fair values of $7.8 million, $2.1 million and
$(1.4) million, respectively. The corresponding amounts as of December 31, 1996
were $2.3 million, $(8.2) million, and $(2.0) million, respectively. The fair
values of the swap agreements are not recognized in the financial statements.

63
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 9--POLICY RESERVES, POLICYHOLDERS' AND BENEFICIARIES' FUNDS AND OBLIGATIONS
RELATED TO SEPARATE ACCOUNTS

The Company's annuity reserves and deposit fund liabilities that are subject to
discretionary withdrawal, with and without adjustment, are summarized as
follows:

<TABLE>
<CAPTION>
December 31, 1997 Percent
----------------- -------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal (with
adjustment)
With market value adjustment . . . . . . . . . . $ 0.4 0.0%
At book value less surrender charge . . . . . . 970.3 88.7
-------- -----
Total with adjustment . . . . . . . . . . . . . 970.7 88.7
Subject to discretionary withdrawal at book value
(without adjustment) . . . . . . . . . . . . . 118.9 10.9
Not subject to discretionary withdrawal--general
account . . . . . . . . . . . . . . . . . . . . 4.1 0.4
-------- -----
Total annuity reserves and deposit liabilities . $1,093.7 100.0%
======== =====
</TABLE>

NOTE 10--COMMITMENTS AND CONTINGENCIES

The Company has extended commitments to purchase long-term bonds and issue real
estate mortgages totalling $168.6 million and $28.3 million, respectively, at
December 31, 1997. The Company monitors the creditworthiness of borrowers under
long-term bond commitments and requires collateral as deemed necessary. If
funded, loans related to real estate mortgages would be fully collateralized by
the related properties. The estimated fair value of the commitments described
above is $194.5 million at December 31, 1997. The majority of these commitments
expire in 1998.

In the normal course of its business operations, the Company is involved with
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1997. 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 or results of operations of the Company.

64
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 11--FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

<TABLE>
<CAPTION>
Year ended December 31
-----------------------------------------
1997 1996
----------------------- ----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
(In millions)
<S> <C> <C> <C> <C>
Assets
Bonds--Note 6 . . . . . . . . $1,092.7 $1,138.5 $753.5 $790.5
Preferred stocks--Note 6 . . . 17.2 17.2 9.6 9.6
Common stocks--Note 6 . . . . 2.3 2.3 1.4 1.4
Mortgage loans on real
estate--Note 6 . . . . . . . 273.9 285.8 212.1 219.4
Policy loans--Note 1 . . . . . 106.8 106.8 80.8 80.8
Cash and cash equivalents--Note
1. . . . . . . . . . . . . . 143.2 143.2 31.9 31.9
Derivatives liabilities relating
to:--Note 8
Interest rate swaps . . . . . -- 7.8 -- 2.3
Currency rate swaps . . . . . -- 2.1 -- (8.2)
Interest rate caps . . . . . . -- (1.4) -- (2.0)
Liabilities
Commitments--Note 10 . . . . . -- 194.5 -- 76.2
</TABLE>

The carrying amounts in the table are included in the statutory-basis statements
of financial position. The method and assumptions utilized by the Company in
estimating its fair value disclosures are described in Note 1.

NOTE 12--IMPACT OF YEAR 2000 (UNAUDITED)

The Company relies on John Hancock, its parent company, for information
processing services. John Hancock has developed a plan to modify or replace
significant portions of its computer information and automated technologies so
that its systems, including those relied upon by the Company, will function
properly with respect to the dates in the year 2000 and thereafter. The Company,
along with John Hancock, presently believes that with modifications to existing
systems and conversions to new technologies, the year 2000 will not pose
significant operational problems for the computer systems upon which the Company
relies. However, if certain modifications and conversions are not made, or are
not completed timely, the year 2000 issue could have an adverse impact on the
operations of the Company.

John Hancock as early as 1994 had begun assessing, modifying and converting the
software related to its significant systems and has initiated formal
communications with significant business partners and customers to determine the
extent to which interface systems are vulnerable to those third parties' failure
to remediate their own year 2000 issues. While John Hancock is developing
alternative third party processing arrangements as it deems appropriate, there
is no guarantee that the systems of other companies on which John Hancock's
systems rely will be converted timely or will not have an adverse effect on John
Hancock's systems, including those upon which the Company relies.

65
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 12--IMPACT OF YEAR 2000 (UNAUDITED)--CONTINUED
John Hancock expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors. However,
there can be no guarantee that this completion target will be achieved.

66
<PAGE>

APPENDIX--OTHER POLICY PROVISIONS

SETTLEMENT PROVISIONS

In place of a single payment, an amount of $1,000 or more payable under the
Policy as a benefit or as the Surrender Value, if any, may be left with JHVLICO
under the terms of a supplementary agreement. The agreement will be issued when
the proceeds are applied through the election of any one of the options below.

The following options are subject to the restrictions and limitations stated
in the Policy.

Option 1--Interest Income at the declared rate but not less than3 1/2% a
year on proceeds held on deposit.

Option 2A--Income of a Specified Amount, with payments each year totaling
at least 1/12th of the proceeds, until the proceeds, with interest credited at
the declared rate but not less than3 1/2% a year on unpaid balances, are fully
paid.

Option 2B--Income for a Fixed Period, with each payment as declared.

Option 3--Life Income with Payments for a Guaranteed Period.

Option 4--Life Income without Refund at the death of the Payee of any part
of the proceeds applied. Only one payment is made if the Payee dies before the
second payment is due.

Option 5--Life Income with Cash Refund at the death of the Payee of the
amount, if any, equal to the proceeds applied less the sum of all income
payments made.

No election of an option may provide for income payments of less than $50.

Other options may be arranged with JHVLICO's approval including optional
methods of settlement available from John Hancock.

ADDITIONAL INSURANCE BENEFITS

On payment of an additional premium and subject to certain age and insurance
underwriting requirements, certain additional provisions, such as an Accidental
Death Benefit, which are subject to the restrictions and limitations set forth
therein, may be included in a Policy.

GENERAL PROVISIONS

BENEFICIARY. The Beneficiary will be as shown in the application for the
Policy, unless thereafter changed by the Owner in accordance with the terms of
the Policy. If the insured dies and there is no surviving Beneficiary, the Owner
will be the Beneficiary, but if the insured was the Owner, the Owner's estate
will be the Beneficiary.

ASSIGNMENT. The Owner's interest in the Policy may be assigned without the
consent of any revocable Beneficiary. JHVLICO will not be on notice of any
assignment unless it is in writing and until a duplicate of the original
assignment has been filed at JHVLICO's Servicing Office. JHVLICO assumes no
responsibility for the validity or sufficiency of any assignment.

MISSTATEMENT OF AGE OR SEX. If the age or sex of the insured has been
misstated, JHVLICO will adjust the benefits payable to those which would have
been purchased at the correct age or sex by the most recent insurance charge
deducted from Account Value.

67
<PAGE>

SUICIDE. If the insured commits suicide, while sane or insane, within 2 years
(except where state law requires a shorter period) from the issue date shown in
the Policy, the Policy will terminate and JHVLICO will pay in place of all other
benefits an amount equal to the premium paid less any Indebtedness on the date
of death and less any withdrawals. If the suicide is more than 2 years from the
issue date but within 2 years of any increase in death benefit due to payment of
any premium in excess of the Required Premium or change in Death Benefit Option
the benefits payable will not include the increased benefit but will include the
excess premium.

AVIATION ACTIVITY EXCLUSION. If the insured dies in an aviation accident while
a crew member on other than a commercial aircraft and the Policy provides at the
request of the Owner for a limited benefit in such situation, JHVLICO will pay
in place of all other benefits an amount equal to the greater of the premium
paid or the Surrender Value, less any Indebtedness.

INCONTESTABILITY. The Policy, except for any provision for a disability
benefit or additional benefits provisions added after issue, shall be
incontestable other than for nonpayment of premiums after it has been in force
during the lifetime of the insured for 2 years from its issue date. If, however,
evidence of insurability is required with respect to any increase in death
benefit, it shall be incontestable after the increase has been in force during
the lifetime of the insured for 2 years from the increase date.

DEFERRAL OF DETERMINATION AND PAYMENTS. If the Policy is not on a fixed
non-forfeiture option, payment of any death, surrender, withdrawal or loan
proceeds will ordinarily be made within seven days after receipt at JHVLICO's
Servicing Office of all documents required for any such payment. Approximately
two-thirds of the claims for death proceeds which are made within two years
after the date of issue of the Policy will be investigated to determine whether
the claim should be contested and payment of these claims will therefore be
delayed.

JHVLICO may defer any transaction requiring a determination of Account Value
for any period during which: (1) the disposal or valuation of the Account's
assets is not reasonably practicable because the New York Stock Exchange is
closed or conditions are such that, under the Commission's rules and
regulations, trading is restricted or an emergency is deemed to exist or (2) the
Commission by order permits postponement of such actions for the protection of
JHVLICO Owners.

Under a Policy being continued under a fixed non-forfeiture option, payment of
the cash value or loan proceeds may be deferred by JHVLICO for up to six months
after receipt of a request therefor. Interest will be accrued at an annual rate
of3 1/2% if such a deferment extends beyond 29 days.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement and to any variations in Policy provisions required by the regulatory
authorities of the state that has approved the Policy for issue.

68
<PAGE>

APPENDIX--IMPACT OF YEAR 2000

The advent of the Year 2000 presents a technological challenge to JHVLICO. In
close cooperation with John Hancock Mutual Life Insurance Company, its ultimate
parent, JHVLICO has developed a plan to modify or replace significant portions
of JHVLICO's computer information and automated technologies so that its systems
will function properly with respect to dates in the year 2000 and thereafter.
The plan also involves coordination and testing with business partners to
ensure that external factors do not adversely impact JHVLICO's systems. JHVLICO
presently believes that with modifications to existing systems and conversions
to new technologies, the year 2000 will not pose significant operational
problems for its computer systems. However, if certain modifications and
conversions are not made, or are not completed on time, the year 2000 issue
could have an adverse impact on the operations of JHVLICO.

JHVLICO expects the project to be substantially complete by early 1999. This
completion target was derived utilizing numerous assumptions of future events,
including availability of certain resources and other factors. However, there
can be no guarantee that this estimate will be achieved, that these steps will
be sufficient or that actual results may not differ materially from those
anticipated.

69
<PAGE>

APPENDIX--ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES AND
ACCUMULATED PREMIUMS

The following tables illustrate the changes in death benefit, Account Value
and Surrender Value of the Policy, disregarding any Policy loans. Each table
separately illustrates the operation of a Policy for an identified issue age,
premium schedule and Sum Insured and shows how the death benefit, Account Value
and Surrender Value (reflecting the deduction of surrender charges, if any) may
vary over an extended period of time assuming hypothetical rates of investment
return (i.e., investment income and capital gains and losses, realized or
unrealized) equivalent to constant gross annual rates of 0%, 6% and 12%. The
tables are based on given annual premiums paid at the beginning of each Policy
year and will assist in a comparison of the values set forth in the tables with
those under other variable life insurance policies which may be issued by
JHVLICO or other companies. Tables are provided for each of the three available
death benefit options. The values for a Policy would be different from those
shown if premiums are paid in different amounts or at different times or if the
actual gross rates of investment return average 0%, 6% or 12% over a period of
years, but nevertheless fluctuated above or below the average for individual
Policy years.

The amounts shown for the death benefit, Account Value and Surrender Value are
as of the end of each Policy year. The tables headed "Using Current Charges"
assume that current monthly rates for insurance and current charges for expenses
(including JHVLICO's intended waiver after ten Policy years of the sales charge
deducted from certain premiums and its intended reduction in the tenth Policy
year in the insurance charge deducted monthly from Account Value) will be made
in each year illustrated. The tables headed "Using Maximum Charges" assumes that
the maximum (guaranteed) charge will be made for the monthly rates for insurance
and for expense charges in each year illustrated without waivers or reductions.
The amounts shown in all tables reflect an average asset charge for the daily
investment advisory expense charges to the Portfolios of the Fund (equivalent to
an effective annual rate of .58%) and an assumed average asset charge for the
annual nonadvisory operating expenses of each Portfolio of the Fund (equivalent
to an effective annual rate of .18%). For a description of expenses charged to
the Portfolios, including the reimbursement of any Portfolio for annual
non-advisory operating expenses in excess of an effective annual rate of .25%, a
continuing obligation of the Fund's investment adviser, see the attached
prospectus for the Fund. The charges for the daily investment management fee and
the annual non-advisory operating expenses are based on the hypothetical
assumption that Policy values are allocated equally among the variable
subaccounts. The actual charges and expenses associated with any Policy will
vary depending upon the actual allocation of Policy values among subaccounts.

The tables reflect that no charge is currently made to the Account for Federal
income taxes. However, JHVLICO reserves the right to make such a charge in the
future and any charge would require higher rates of investment return in order
to produce the same Policy values.

The second column of each table shows the amount to which the total premiums
paid to the end of a Policy year during the premium paying period would
accumulate if an amount equal to those premiums were invested to earn interest,
after taxes, at 5% compounded annually.

JHVLICO will furnish upon request a comparable illustration reflecting the
proposed insured's age, sex, underwriting risk classification and the Sum
Insured at issue or premium amount requested, and assuming annual premiums and
that the proposed insured is not in a substandard underwriting risk
classification.

70
<PAGE>

DEATH BENEFIT OPTION 1: --LEVEL DEATH BENEFIT ILLUSTRATION ASSUMES CURRENT
CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE
(GUARANTEED DEATH BENEFIT): $100,000 $900 BASE POLICY PREMIUM (1)

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
----------------------------- ----------------------------- -----------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest ----------------------------- ----------------------------- -----------------------------
Year Per Year (2) 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------- -------------- -------- -------- --------- -------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 945 100,000 100,000 100,000 323 356 390 0 0 0
2 1,937 100,000 100,000 100,000 873 967 1,065 303 397 495
3 2,979 100,000 100,000 100,000 1,405 1,595 1,802 700 890 1,097
4 4,073 100,000 100,000 100,000 1,919 2,241 2,605 1,079 1,401 1,765
5 5,222 100,000 100,000 100,000 2,414 2,904 3,479 1,739 2,229 2,804
6 6,428 100,000 100,000 100,000 2,889 3,584 4,431 2,079 2,774 3,621
7 7,694 100,000 100,000 100,000 3,341 4,279 5,468 2,531 3,469 4,658
8 9,024 100,000 100,000 100,000 3,770 4,989 6,598 3,050 4,269 5,878
9 10,420 100,000 100,000 100,000 4,175 5,713 7,828 3,545 5,083 7,198
10 11,886 100,000 100,000 100,000 4,565 6,466 9,191 4,025 5,926 8,651
11 13,425 100,000 100,000 100,000 4,976 7,283 10,732 4,526 6,833 10,282
12 15,042 100,000 100,000 100,000 5,361 8,120 12,423 5,046 7,805 12,108
13 16,739 100,000 100,000 100,000 5,721 8,977 14,280 5,541 8,797 14,100
14 18,521 100,000 100,000 100,000 6,053 9,856 16,322 6,053 9,856 16,322
15 20,392 100,000 100,000 100,000 6,356 10,753 18,567 6,356 10,753 18,567
16 22,356 100,000 100,000 100,000 6,629 11,671 21,040 6,629 11,671 21,040
17 24,419 100,000 100,000 100,000 6,862 12,601 23,759 6,862 12,601 23,759
18 26,585 100,000 100,000 100,000 7,048 13,539 26,751 7,048 13,539 26,751
19 28,859 100,000 100,000 100,000 7,184 14,480 30,044 7,184 14,480 30,044
20 31,247 100,000 100,000 100,000 7,263 15,420 33,672 7,263 15,420 33,672
25 45,102 100,000 100,000 100,000 6,576 19,934 58,479 6,576 19,934 58,479
30 62,785 100,000 100,000 120,995 3,172 23,413 100,829 3,172 23,413 100,829
35 85,353 100,000 100,000 196,302 0 23,764 170,697 0 23,764 170,697
40 142,637 100,000 100,000 293,236 0 39,744 279,272 0 39,744 279,272
45 215,749 100,000 100,000 482,900 0 34,278 459,905 0 34,278 459,905
</TABLE>

(1) Assumes annual premium payments of $900 per year until the premium
recalculation at age 70 and annual recalculated premium amounts thereafter. If
premiums are paid more frequently than annually, the above values shown would
be affected.
(2) Assumes payment of recalculated annual premium amounts of $5,809 after age
70. As indicated in note (3) below, the actual recalculated premium may be
lower or higher than this amount.
(3) Assumes payment of recalculated premiums after age 70 in annual amounts of
$8,404 at 0%, $5,809 at 6% and $0 at 12%, subject to any maximums required to
maintain the Policy's status for federal income tax purposes.

IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT, ACCOUNT VALUE AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%
OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THE AVERAGE
FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.

71
<PAGE>

DEATH BENEFIT OPTION 1: LEVEL DEATH BENEFIT ILLUSTRATION ASSUMES MAXIMUM CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE
(GUARANTEED DEATH BENEFIT): $100,000 $900 BASE POLICY PREMIUM (1)

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
------------------------------ ----------------------------- -----------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest ------------------------------ ----------------------------- -----------------------------
Year Per Year (2) 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------- -------------- -------- --------- --------- -------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 945 100,000 100,000 100,000 276 307 339 0 0 0
2 1,937 100,000 100,000 100,000 778 866 958 8 96 188
3 2,979 100,000 100,000 100,000 1,264 1,440 1,633 359 535 728
4 4,073 100,000 100,000 100,000 1,732 2,030 2,367 692 990 1,327
5 5,222 100,000 100,000 100,000 2,181 2,633 3,165 1,006 1,458 1,990
6 6,428 100,000 100,000 100,000 2,611 3,251 4,033 1,301 1,941 2,723
7 7,694 100,000 100,000 100,000 3,018 3,881 4,976 1,808 2,671 3,766
8 9,024 100,000 100,000 100,000 3,404 4,523 6,003 2,284 3,403 4,883
9 10,420 100,000 100,000 100,000 3,765 5,175 7,118 2,835 4,245 6,188
10 11,886 100,000 100,000 100,000 4,102 5,839 8,334 3,562 5,299 7,794
11 13,425 100,000 100,000 100,000 4,412 6,511 9,658 3,962 6,061 9,208
12 15,042 100,000 100,000 100,000 4,693 7,190 11,098 4,378 6,875 10,783
13 16,739 100,000 100,000 100,000 4,944 7,874 12,668 4,764 7,694 12,488
14 18,521 100,000 100,000 100,000 5,164 8,564 14,380 5,164 8,564 14,380
15 20,392 100,000 100,000 100,000 5,348 9,255 16,249 5,348 9,255 16,249
16 22,356 100,000 100,000 100,000 5,496 9,947 18,289 5,496 9,947 18,289
17 24,419 100,000 100,000 100,000 5,601 10,633 20,517 5,601 10,633 20,517
18 26,585 100,000 100,000 100,000 5,658 11,308 22,948 5,658 11,308 22,948
19 28,859 100,000 100,000 100,000 5,661 11,966 25,604 5,661 11,966 25,604
20 31,247 100,000 100,000 100,000 5,602 12,598 28,505 5,602 12,598 28,505
25 45,102 100,000 100,000 100,000 4,147 15,131 47,784 4,147 15,131 47,784
30 62,785 100,000 100,000 100,000 0 15,525 79,544 0 15,525 79,544
35 85,353 100,000 100,000 152,207 0 10,772 132,354 0 10,772 132,354
40 150,870 100,000 100,000 221,590 0 15,987 211,039 0 15,987 211,039
45 234,489 100,000 100,000 356,624 0 0 339,642 0 0 339,642
</TABLE>

(1) Assumes annual premium payments of $900 per year until the premium
recalculation at age 70 and annual recalculated premium amounts thereafter. If
premiums are paid more frequently than annually, the above values shown would
be affected.
(2) Assumes payment of recalculated annual premium amounts of $7,228 after age
70. As indicated in note (3) below, the actual recalculated premium may be
lower or higher than this amount.
(3) Assumes payment of recalculated premiums after age 70 in annual amounts of
$8,404 at 0%, $7,228 at 6% and $0 at 12%, subject to any maximums required to
maintain the Policy's status for federal income tax purposes.

72
<PAGE>

DEATH BENEFIT OPTION 2: VARIABLE DEATH BENEFIT ILLUSTRATION ASSUMES CURRENT
CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE
(GUARANTEED DEATH BENEFIT): $100,000 $900 BASE POLICY PREMIUM (1)

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
----------------------------- ----------------------------- -----------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest ----------------------------- ----------------------------- -----------------------------
Year Per Year (2) 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------- -------------- -------- -------- --------- -------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 945 100,000 100,000 100,000 323 356 390 0 0 0
2 1,937 100,000 100,000 100,000 873 967 1,065 303 397 495
3 2,979 100,000 100,000 100,000 1,405 1,595 1,802 700 890 1,097
4 4,073 100,000 100,000 100,000 1,919 2,241 2,605 1,079 1,401 1,765
5 5,222 100,000 100,000 100,000 2,414 2,904 3,479 1,739 2,229 2,804
6 6,428 100,000 100,000 100,000 2,889 3,584 4,431 2,079 2,774 3,621
7 7,694 100,000 100,000 100,000 3,341 4,279 5,468 2,531 3,469 4,658
8 9,024 100,000 100,000 100,000 3,770 4,989 6,598 3,050 4,269 5,878
9 10,420 100,000 100,000 100,000 4,175 5,713 7,828 3,545 5,083 7,198
10 11,886 100,000 100,000 100,000 4,565 6,466 9,191 4,025 5,926 8,651
11 13,425 100,000 100,000 100,000 4,976 7,283 10,732 4,526 6,833 10,282
12 15,042 100,000 100,000 100,000 5,361 8,120 12,423 5,046 7,805 12,108
13 16,739 100,000 100,000 100,000 5,721 8,977 14,280 5,541 8,797 14,100
14 18,521 100,000 100,000 100,000 6,053 9,856 16,322 6,053 9,856 16,322
15 20,392 100,000 100,000 100,000 6,356 10,753 18,567 6,356 10,753 18,567
16 22,356 100,000 100,000 100,173 6,629 11,671 21,040 6,629 11,671 21,040
17 24,419 100,000 100,000 101,272 6,862 12,601 23,757 6,862 12,601 23,757
18 26,585 100,000 100,000 102,601 7,048 13,539 26,737 7,048 13,539 26,737
19 28,859 100,000 100,000 104,187 7,184 14,480 30,008 7,184 14,480 30,008
20 31,247 100,000 100,000 106,064 7,263 15,420 33,598 7,263 15,420 33,598
25 45,102 100,000 100,000 121,108 6,576 19,934 57,607 6,576 19,934 57,607
30 62,785 100,000 100,000 150,402 3,172 23,413 96,351 3,172 23,413 96,351
35 85,353 100,000 100,000 203,738 0 23,764 159,166 0 23,764 159,166
40 142,637 100,000 104,578 284,760 0 38,194 257,817 0 38,194 257,817
45 215,749 100,000 100,000 442,603 0 31,391 421,527 0 31,391 421,527
</TABLE>

(1) Assumes annual premium payments of $900 per year until the premium
recalculation at age 70 and annual recalculated premium amounts thereafter. If
premiums are paid more frequently than annually, the above values shown would
be affected.
(2) Assumes payment of recalculated annual premium amounts of $5,809 after age
70. As indicated in note (3) below, the actual recalculated premium may be
lower or higher than this amount.
(3) Assumes payment of recalculated premiums after age 70 in annual amounts of
$8,404 at 0%, $5,809 at 6% and $0 at 12%, subject to any maximum required to
maintain the Policy's status for federal income tax purposes.

73
<PAGE>

DEATH BENEFIT OPTION 2: VARIABLE DEATH BENEFIT ILLUSTRATION ASSUMES MAXIMUM
CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE
(GUARANTEED DEATH BENEFIT): $100,000 $900 BASE POLICY PREMIUM (1)

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
----------------------------- ----------------------------- -----------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest ----------------------------- ----------------------------- -----------------------------
Year Per Year (2) 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------- -------------- -------- -------- --------- -------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 945 100,000 100,000 100,000 276 307 339 0 0 0
2 1,937 100,000 100,000 100,000 778 866 958 8 96 188
3 2,979 100,000 100,000 100,000 1,264 1,440 1,633 359 535 728
4 4,073 100,000 100,000 100,000 1,732 2,030 2,367 692 990 1,327
5 5,222 100,000 100,000 100,000 2,181 2,633 3,165 1,006 1,458 1,990
6 6,428 100,000 100,000 100,000 2,611 3,251 4,033 1,301 1,941 2,723
7 7,694 100,000 100,000 100,000 3,018 3,881 4,976 1,808 2,671 3,766
8 9,024 100,000 100,000 100,000 3,404 4,523 6,003 2,284 3,403 4,883
9 10,420 100,000 100,000 100,000 3,765 5,175 7,118 2,835 4,245 6,188
10 11,886 100,000 100,000 100,000 4,102 5,839 8,334 3,562 5,299 7,794
11 13,425 100,000 100,000 100,000 4,412 6,511 9,658 3,962 6,061 9,208
12 15,042 100,000 100,000 100,000 4,693 7,190 11,098 4,378 6,875 10,783
13 16,739 100,000 100,000 100,000 4,944 7,874 12,668 4,764 7,694 12,488
14 18,521 100,000 100,000 100,000 5,164 8,564 14,380 5,164 8,564 14,380
15 20,392 100,000 100,000 100,000 5,348 9,255 16,249 5,348 9,255 16,249
16 22,356 100,000 100,000 100,000 5,496 9,947 18,289 5,496 9,947 18,289
17 24,419 100,000 100,000 100,000 5,601 10,633 20,517 5,601 10,633 20,517
18 26,585 100,000 100,000 100,000 5,658 11,308 22,948 5,658 11,308 22,948
19 28,859 100,000 100,000 100,000 5,661 11,966 25,604 5,661 11,966 25,604
20 31,247 100,000 100,000 100,969 5,602 12,598 28,503 5,602 12,598 28,503
25 45,102 100,000 100,000 110,966 4,147 15,131 47,465 4,147 15,131 47,465
30 62,785 100,000 100,000 130,989 0 15,525 76,938 0 15,525 76,938
35 85,353 100,000 100,000 167,604 0 10,772 123,033 0 10,772 123,033
40 150,870 100,000 100,000 218,826 0 15,434 191,883 0 15,434 191,883
45 234,489 100,000 100,000 324,082 0 0 303,284 0 0 303,284
</TABLE>

(1) Assumes annual premium payments of $900 per year until the premium
recalculation at age 70 and annual recalculated premium amounts thereafter. If
premiums are paid more frequently than annually, the above values shown would
be affected.
(2) Assumes payment of recalculated annual premium amounts of $7,228 after age
70. As indicated in note (3) below, the actual recalculated premium may be
lower or higher than this amount.
(3) Assumes payment of recalculated premiums after age 70 in annual amounts of
$8,404 at 0%, $7,228 at 6% and $0 at 12%, subject to any maximums required to
maintain the Policy's status for federal income tax purposes.

74
<PAGE>

DEATH BENEFIT OPTION 3: LEVEL DEATH BENEFIT WITH GREATER FUNDING ILLUSTRATION
ASSUMES CURRENT CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE
(GUARANTEED DEATH BENEFIT): $100,000 $900 BASE POLICY PREMIUM (1)

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
----------------------------- ----------------------------- -----------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest ----------------------------- ----------------------------- -----------------------------
Year Per Year (2) 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------- -------------- -------- -------- --------- -------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 945 100,000 100,000 100,000 323 356 390 0 0 0
2 1,937 100,000 100,000 100,000 873 967 1,065 303 397 495
3 2,979 100,000 100,000 100,000 1,405 1,595 1,802 700 890 1,097
4 4,073 100,000 100,000 100,000 1,919 2,241 2,605 1,079 1,401 1,765
5 5,222 100,000 100,000 100,000 2,414 2,904 3,479 1,739 2,229 2,804
6 6,428 100,000 100,000 100,000 2,889 3,584 4,431 2,079 2,774 3,621
7 7,694 100,000 100,000 100,000 3,341 4,279 5,468 2,531 3,469 4,658
8 9,024 100,000 100,000 100,000 3,770 4,989 6,598 3,050 4,269 5,878
9 10,420 100,000 100,000 100,000 4,175 5,713 7,828 3,545 5,083 7,198
10 11,886 100,000 100,000 100,000 4,565 6,466 9,191 4,025 5,926 8,651
11 13,425 100,000 100,000 100,000 4,976 7,283 10,732 4,526 6,833 10,282
12 15,042 100,000 100,000 100,000 5,361 8,120 12,423 5,046 7,805 12,108
13 16,739 100,000 100,000 100,000 5,721 8,977 14,280 5,541 8,797 14,100
14 18,521 100,000 100,000 100,000 6,053 9,856 16,322 6,053 9,856 16,322
15 20,392 100,000 100,000 100,000 6,356 10,753 18,567 6,356 10,753 18,567
16 22,356 100,000 100,000 100,000 6,629 11,671 21,040 6,629 11,671 21,040
17 24,419 100,000 100,000 100,000 6,862 12,601 23,759 6,862 12,601 23,759
18 26,585 100,000 100,000 100,000 7,048 13,539 26,751 7,048 13,539 26,751
19 28,859 100,000 100,000 100,000 7,184 14,480 30,044 7,184 14,480 30,044
20 31,247 100,000 100,000 100,000 7,263 15,420 33,672 7,263 15,420 33,672
25 45,102 100,000 100,000 113,311 6,576 19,934 58,314 6,576 19,934 58,314
30 62,785 100,000 100,000 165,106 3,172 23,413 97,007 3,172 23,413 97,007
35 85,353 100,000 100,000 235,773 0 23,764 155,770 0 23,764 155,770
40 142,637 100,000 100,000 325,483 16,177 48,358 237,787 16,177 48,358 237,787
45 215,749 100,000 102,204 451,336 30,905 80,947 357,466 30,905 80,947 357,466
</TABLE>

(3) Assumes payment of recalculated premiums after age 70 in annual amounts of
$8,404 at 0%, $5,809 at 6% and $0 at 12%, subject to any maximums required to
maintain the Policy's status for federal income tax purposes.

75
<PAGE>

DEATH BENEFIT OPTION 3: LEVEL DEATH BENEFIT WITH GREATER FUNDING ILLUSTRATION
ASSUMES MAXIMUM CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE
(GUARANTEED DEATH BENEFIT): $100,000 $900 BASE POLICY PREMIUM (1)

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
----------------------------- ----------------------------- -----------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest ----------------------------- ----------------------------- -----------------------------
Year Per Year (2) 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------- -------------- -------- -------- --------- -------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 945 100,000 100,000 100,000 276 307 339 0 0 0
2 1,937 100,000 100,000 100,000 778 866 958 8 96 188
3 2,979 100,000 100,000 100,000 1,264 1,440 1,633 359 535 728
4 4,073 100,000 100,000 100,000 1,732 2,030 2,367 692 990 1,327
5 5,222 100,000 100,000 100,000 2,181 2,633 3,165 1,006 1,458 1,990
6 6,428 100,000 100,000 100,000 2,611 3,251 4,033 1,301 1,941 2,723
7 7,694 100,000 100,000 100,000 3,018 3,881 4,976 1,808 2,671 3,766
8 9,024 100,000 100,000 100,000 3,404 4,523 6,003 2,284 3,403 4,883
9 10,420 100,000 100,000 100,000 3,765 5,175 7,118 2,835 4,245 6,188
10 11,886 100,000 100,000 100,000 4,102 5,839 8,334 3,562 5,299 7,794
11 13,425 100,000 100,000 100,000 4,412 6,511 9,658 3,962 6,061 9,208
12 15,042 100,000 100,000 100,000 4,693 7,190 11,098 4,378 6,875 10,783
13 16,739 100,000 100,000 100,000 4,944 7,874 12,668 4,764 7,694 12,488
14 18,521 100,000 100,000 100,000 5,164 8,564 14,380 5,164 8,564 14,380
15 20,392 100,000 100,000 100,000 5,348 9,255 16,249 5,348 9,255 16,249
16 22,356 100,000 100,000 100,000 5,496 9,947 18,289 5,496 9,947 18,289
17 24,419 100,000 100,000 100,000 5,601 10,633 20,517 5,601 10,633 20,517
18 26,585 100,000 100,000 100,000 5,658 11,308 22,948 5,658 11,308 22,948
19 28,859 100,000 100,000 100,000 5,661 11,966 25,604 5,661 11,966 25,604
20 31,247 100,000 100,000 100,000 5,602 12,598 28,505 5,602 12,598 28,505
25 45,102 100,000 100,000 100,000 4,147 15,131 47,784 4,147 15,131 47,784
30 62,785 100,000 100,000 132,867 0 15,525 78,065 0 15,525 78,065
35 85,353 100,000 100,000 185,887 0 10,772 122,811 0 10,772 122,811
40 150,870 100,000 100,000 248,477 6,412 32,194 181,529 6,412 32,194 181,529
45 234,489 100,000 100,000 333,496 11,219 55,449 264,134 11,219 55,449 264,134
</TABLE>

(3) Assumes payment of recalculated premiums after age 70 in annual amounts of
$8,404 at 0%, $7,228 at 6% and $0 at 12%, subject to any maximums required to
maintain the Policy's status for federal income tax purposes.

76
<PAGE>

[LOGO OF JOHN HANCOCK APPEARS HERE]

POLICIES ISSUED BY JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY JOHN HANCOCK
PLACE, BOSTON, MASSACHUSETTS 02117

S8144 5/98
<PAGE>

[LOGO OF JOHN HANCOCK APPEARS HERE]

John Hancock Variable Life Insurance Company
(JHVLICO)

SCHEDULED PREMIUM VARIABLE LIFE INSURANCE POLICY JOHN HANCOCK VARIABLE LIFE
ACCOUNT V

John Hancock Place Boston, Massachusetts 02117

JOHN HANCOCK SERVICING OFFICE:
P.O. Box 111 Boston, Massachusetts 02117

TELEPHONE 1-800-REAL LIFE (1-800-732-5543) FAX 617-572-5410

PROSPECTUS MAY 1, 1998

The scheduled premium variable life policy ("Policy") described in this
Prospectus can be funded, at the discretion of the Owner, by up to ten of the
variable subaccounts of John Hancock Variable Life Account V ("Account"), by a
fixed subaccount (the "Fixed Account"), or by a combination of the Fixed Account
and up to nine of the variable subaccounts (collectively, "the Subaccounts").
The assets of each variable Subaccount will be invested in a corresponding
Portfolio of John Hancock Variable Series Trust I, a "series" type mutual fund
advised by John Hancock Mutual Life Insurance Company ("John Hancock") or of M
Fund, Inc., a "series" type mutual fund advised by M Financial Investment
Advisers, Inc. (collectively, the "Funds"). The assets of the Fixed Account will
be invested in the general account of John Hancock Variable Life Insurance
Company ("JHVLICO").

The prospectuses for the Funds, which are attached to this Prospectus,
describe the investment objectives, policies and risks of investing in the
Portfolios of the Funds: Managed, Growth & Income, Equity Index, Large Cap
Value, Large Cap Growth, Mid Cap Value, Mid Cap Growth, Diversified Mid Cap
Growth (formerly, Special Opportunities), Real Estate Equity, Small/Mid Cap
CORE, Small Cap Value, Small Cap Growth, Global Equity, International Balanced,
International Equity Index (formerly, International Equities), International
Opportunities, Emerging Markets Equity, Short-Term Bond (formerly, Short-Term
U.S. Government), Bond Index, Sovereign Bond, Strategic Bond, High Yield Bond,
Money Market, Edinburgh Overseas Equity, Turner Core Growth, Frontier Capital
Appreciation, and Enhanced U.S. Equity. (The Small/Mid Cap CORE, Global Equity,
Emerging Markets Equity, Bond Index, High Yield Bond, and Enhanced U.S. Equity
Portfolios are not currently available to Owners but are expected to be made
available later in 1998.) Other variable Subaccounts and Portfolios may be added
in the future.

Replacing existing insurance with a Policy described in this Prospectus may
not be to your advantage.

THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. IT IS NOT
VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS FOR THE FUND.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
JHVLICO AND JOHN HANCOCK . . . . . . . . . . . . . . . . . . . . . . . 7
THE ACCOUNT AND THE SERIES FUNDS . . . . . . . . . . . . . . . . . . . 7
THE FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . 11
POLICY PROVISIONS AND BENEFITS . . . . . . . . . . . . . . . . . . . . 11
Requirements for Issuance of Policy . . . . . . . . . . . . . . . . 11
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Account Value and Surrender Value . . . . . . . . . . . . . . . . . 16
Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Death Benefit Options . . . . . . . . . . . . . . . . . . . . . . . 17
Definition of Life Insurance . . . . . . . . . . . . . . . . . . . . 18
Excess Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Partial Withdrawal of Excess Value . . . . . . . . . . . . . . . . . 19
Transfers Among Subaccounts . . . . . . . . . . . . . . . . . . . . 19
Loan Provisions and Indebtedness . . . . . . . . . . . . . . . . . . 20
Default and Options on Lapse . . . . . . . . . . . . . . . . . . . . 21
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . 22
CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 23
Charges Deducted from Premiums . . . . . . . . . . . . . . . . . . . 23
Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Administrative Surrender Charge . . . . . . . . . . . . . . . . . . 25
Reduced Charges for Eligible Groups . . . . . . . . . . . . . . . . 25
Charges Deducted from Account Value . . . . . . . . . . . . . . . . 25
DISTRIBUTION OF POLICIES . . . . . . . . . . . . . . . . . . . . . . . 28
TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Policy Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Charge for JHVLICO's Taxes . . . . . . . . . . . . . . . . . . . . . 30
Corporate and H.R. 10 Plans . . . . . . . . . . . . . . . . . . . . 30
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO . . . . . . . . . 31
REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
VOTING PRIVILEGES . . . . . . . . . . . . . . . . . . . . . . . . . . 32
CHANGES THAT JHVLICO CAN MAKE . . . . . . . . . . . . . . . . . . . . 33
STATE REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . 33
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 34
APPENDIX--OTHER POLICY PROVISIONS . . . . . . . . . . . . . . . . . . 64
APPENDIX--IMPACT OF YEAR 2000. . . . . . . . . . . . . . . . . . . . .
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER
VALUES AND ACCUMULATED PREMIUMS . . . . . . . . . . . . . . . . . . . 67
</TABLE>

INDEX OF DEFINED WORDS AND PHRASES

Below are listed certain words and phrases used in this Prospectus, together
with identification of the page on which each is defined or explained:

<TABLE>
<CAPTION>
Page
<S> <C>
Account Value . . . . . . . . . . . . . . . . . . . . . 15
Administrative Surrender Charge . . . . . . . . . . . . 24
Attained Age . . . . . . . . . . . . . . . . . . . . . 17
Base Policy Premium . . . . . . . . . . . . . . . . . . 12
Basic Account Value . . . . . . . . . . . . . . . . . . 18
Contingent Deferred Sales Charge . . . . . . . . . . . 23
Corridor Factor . . . . . . . . . . . . . . . . . . . . 16
Current Death Benefit . . . . . . . . . . . . . . . . . 16
Death Benefit Factor . . . . . . . . . . . . . . . . . 16
Excess Value . . . . . . . . . . . . . . . . . . . . . 18
Experience Component . . . . . . . . . . . . . . . . . 18
Fixed Account . . . . . . . . . . . . . . . . . . . . . 11
Grace Period . . . . . . . . . . . . . . . . . . . . . 21
Guaranteed Death Benefit . . . . . . . . . . . . . . . 16
Guaranteed Maximum Recalculation Premium . . . . . . . 13
Indebtedness . . . . . . . . . . . . . . . . . . . . . 21
Investment Rule . . . . . . . . . . . . . . . . . . . . 14
Loan Assets . . . . . . . . . . . . . . . . . . . . . . 20
Minimum First Premium . . . . . . . . . . . . . . . . . 12
Modal . . . . . . . . . . . . . . . . . . . . . . . . . 12
Premium Component . . . . . . . . . . . . . . . . . . . 18
Premium Recalculation . . . . . . . . . . . . . . . . . 12
Required Premium . . . . . . . . . . . . . . . . . . . 12
Servicing Office . . . . . . . . . . . . . . . . . . . 6
Subaccount . . . . . . . . . . . . . . . . . . . . . . Cover
Sum Insured . . . . . . . . . . . . . . . . . . . . . . 16
Surrender Value . . . . . . . . . . . . . . . . . . . . 16
Valuation Date . . . . . . . . . . . . . . . . . . . . 10
Variable Subaccounts . . . . . . . . . . . . . . . . . 2
</TABLE>

<PAGE>

SUMMARY

WHAT IS THE VARIABLE LIFE POLICY BEING OFFERED?

The Policies work generally as follows: Premium payments are periodically made
to JHVLICO in amounts sufficient to meet the premium schedule selected. JHVLICO
takes from each premium an amount for taxes, and, from certain premiums, a sales
charge. JHVLICO then places the rest of the premium into as many as ten
Subaccounts as directed by the owner of the Policy (the "Owner"). The assets
allocated to each variable Subaccount are invested in shares of the
corresponding Portfolio of the Funds. The currently available Portfolios are
identified on the cover of this Prospectus. The assets allocated to the Fixed
Account are invested in the general account of JHVLICO. During the year, JHVLICO
takes charges from each Subaccount and credits or charges each Subaccount with
its respective investment performance. The insurance charge, which is deducted
from the invested assets attributable to each Policy ("Account Value"), varies
monthly with the then attained age of the insured and with the amount of
insurance provided at the start of each month.

1
<PAGE>

is generally reflected in the premiums required and insurance charges made. If
the Sum Insured at issue is at least $100,000, the insured may be eligible for
the "preferred" class, which has the lowest insurance charges for this Policy.
Policies issued in certain jurisdictions or in connection with certain employee
plans will not directly reflect the sex of the insured in either the premium
rates or the charges and values under the Policy.

WHAT IS THE AMOUNT OF THE PREMIUMS?

WHAT IS JOHN HANCOCK VARIABLE LIFE ACCOUNT V?

The Account is a separate investment account of JHVLICO, operated as a unit
investment trust, which supports benefits payable under the Policies. The
Account is divided into a number of variable Subaccounts, each of which
corresponds to one of the Portfolios of the Funds. The assets of each variable
Subaccount are invested in the corresponding Portfolio of the Funds. The current
Portfolios of the Funds are: Managed, Growth & Income, Equity Index, Large Cap
Value, Large Cap Growth, Mid Cap Value, Mid Cap Growth, Diversified Mid Cap
Growth, Real Estate Equity, Small/Mid Cap CORE, Small Cap Value, Small Cap
Growth, Global Equity, International Balanced, International Equity Index,
International Opportunities, Emerging Markets Equity, Short-Term Bond, Bond
Index, Sovereign Bond, Strategic Bond, High Yield Bond, Money Market, Edinburgh
Overseas Equity, Turner Core Growth, Frontier Capital Appreciation, and Enhanced
U.S. Equity.

2
<PAGE>

- ---------

* John Hancock reimburses a Portfolio when the Portfolio's other fund expenses
exceed 0.25% of the Portfolio's average daily net assets.

M Fund, Inc., pays M Financial Investment Advisers, Inc., ("M Financial") a
fee for providing investment management services to each of its Portfolios. M
Fund, Inc., also pays for certain other fund expenses. The figures in the
following chart are expressed as a percentage of each Portfolio's average daily
net assets. The figures reflect the investment management fees currently payable
and the 1997 other fund expenses allocated to the Fund.

<TABLE>
<CAPTION>
Other Total Fund
Investment Fund Operating Other Fund Expenses
Portfolio Management Fee Expenses Expenses Absent Reimbursement*
--------- -------------- -------- ---------- -----------------------
<S> <C> <C> <C> <C>
Edinburgh Overseas
Equity . . . . . . . 1.05% 0.25% 1.30% 3.89%
Turner Core Growth . 0.45% 0.25% 0.70% 5.72%
Frontier Capital
Appreciation . . . . 0.90% 0.25% 1.15% 1.96%
Enhanced U.S. Equity 0.55% 0.25% 0.80% 4.87%
</TABLE>

- ---------

* M Financial reimburses a Portfolio when the Portfolio's other fund expenses
exceed 0.25% of the Portfolio's average daily net assets.

For a full description of the Funds, see the prospectuses for the Funds
attached to this Prospectus.

3
<PAGE>

WHAT ARE THE CHARGES MADE BY JHVLICO?

State Premium Tax and Federal DAC Tax. Charges deducted from each premium
payment, currently 2.35% for state premium taxes and 1.25% as a Federal deferred
acquisition cost or "DAC Tax" charge.

Administrative Surrender Charge. A charge deducted from Account Value if the
Policy lapses or is surrendered in the first 9 Policy years. The amount of the
charge depends upon the year in which lapse or surrender occurs and the amount
of the Policy's Guaranteed Death Benefit at that time. The maximum charge is $5
per $1000 of Guaranteed Death Benefit.

Issue Charge. A $20 charge deducted monthly from Account Value in the first
Policy year.

Maintenance Charge. A charge deducted monthly from Account Value in an amount
equal to no more than $8 (currently $6.00) for all Policy years.

Charge for Mortality and Expense Risks. A charge made daily from the variable
Subaccounts at an effective annual rate of .60% of the assets of each variable
Subaccount.

4
<PAGE>

See "Charges and Expenses" for a full description of the charges under the
Policy.

IS THERE A CHARGE AGAINST THE ACCOUNT FOR FEDERAL INCOME TAX?

WHAT IS THE RELATIONSHIP BETWEEN THE PREMIUM AND THE AMOUNT ALLOCATED TO THE
SUBACCOUNTS?

The initial net premium is allocated by JHVLICO from its general account to
one or more of the Subaccounts on the date of issue of the Policy. The initial
net premium is the gross premium less the sales charge deducted from certain
premiums and less the charges deducted from all premiums for state premium taxes
and the Federal DAC Tax. These charges also apply to subsequent premium
payments. Net premiums derived from payments received after the issue date are
allocated, generally on the date of receipt, to one or more of the Subaccounts
as elected by the Owner.

HOW ARE AMOUNTS ALLOCATED TO EACH SUBACCOUNT?

WHAT COMMISSIONS ARE PAID TO AGENTS?

WHAT IS THE DEATH BENEFIT?

Three death benefit options are available at the time of application for a
Policy.

Option 1: Level Death Benefit. A level death benefit equal to the greater of
the Guaranteed Death Benefit or the Current Death Benefit.

Option 2: Variable Death Benefit. A variable death benefit equal to the
greater of the Guaranteed Death Benefit plus any Excess Value or the Current
Death Benefit.

5
<PAGE>

HOW DOES THE ACCOUNT VALUE OF A POLICY VARY IN RELATION TO THE SUBACCOUNTS'
INVESTMENT EXPERIENCE?

In general, the Account Value for any day equals the Account Value for the
previous day, increased by any net premium placed in the Subaccounts for the
Policy, decreased by any charges made against the Account Value and by any
partial withdrawal of Excess Value, and increased or decreased by the investment
experience of the Subaccounts. No minimum Account Value for the Policy is
guaranteed.

WHAT IS THE LOAN PROVISION AND HOW DOES A LOAN AFFECT THE DEATH BENEFIT, ACCOUNT
VALUE AND SURRENDER VALUE?

IS THERE A SHORT-TERM CANCELLATION RIGHT?

6
<PAGE>

WHAT INVESTMENT TRANSFERS ARE ALLOWED AN OWNER?

The Owner may transfer the Account Value among the variable Subaccounts or
into the Fixed Account at any time. Transfers out of the Fixed Account, however,
are subject to restrictions.

ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?

JHVLICO AND JOHN HANCOCK

THE ACCOUNT AND THE SERIES FUNDS

7
<PAGE>

The assets in the variable Subaccounts of the Account are invested in the
corresponding Portfolio of the Funds, but the assets of one variable Subaccount
are not necessarily legally insulated from liabilities associated with another
variable Subaccount. New variable Subaccounts may be added or existing variable
Subaccounts may be deleted as new Portfolios are added to or deleted from the
Funds and made available to Owners.

THE SERIES FUNDS

Each Fund is a "series" type of mutual fund registered with the Commission
under the 1940 Act as an open-end diversified management investment company.
Each Fund serves as the investment medium for the Account and other unit
investment trust separate accounts established for other variable life insurance
policies and variable annuity contracts. (See the attached Fund prospectuses for
a description of a need to monitor for possible conflicts and other
consequences.) A very brief summary of the investment objectives of each
Portfolio is set forth below.

Managed Portfolio

Growth & Income Portfolio

Equity Index Portfolio

Large Cap Value Portfolio

Large Cap Growth Portfolio

8
<PAGE>

Mid Cap Value Portfolio

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.

Diversified Mid 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
medium capitalization growth companies.

Real Estate Equity Portfolio

Small/Mid Cap CORE Portfolio

Small Cap Value Portfolio

Small Cap Growth Portfolio

Global Equity Portfolio

International Balanced Portfolio

International Equity Index Portfolio

9
<PAGE>

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.

Emerging Markets Equity Portfolio

Short-Term Bond Portfolio

Bond Index Portfolio

Sovereign Bond Portfolio

Strategic Bond Portfolio

High Yield Bond Portfolio

Money Market Portfolio

The investment objective of this Portfolio is to provide maximum current
income consistent with capital preservation and liquidity, through investment in
high quality money market instruments.

John Hancock acts as the investment manager for the Portfolios described above
and John Hancock's indirectly owned subsidiary, Independence Investment
Associates, Inc., with its principal place of business at 53 State Street,
Boston, MA 02109, provides sub-investment advice with respect to the Managed,
Growth & Income, Large Cap Growth, Real Estate Equity and Short-Term Bond
Portfolio. Independence International Associates, Inc., a subsidiary of IIA
located at the same address as IIA, is a sub-investment adviser to the
International Equity Index Portfolio.

10
<PAGE>

Edinburgh Overseas Equity Portfolio: The investment objective of this
Portfolio is to provide long-term capital appreciation with reasonable
investment risk through active management and investment in common stock and
common stock equivalents of foreign issuers. Current income, if any, is
incidental.

Turner Core Growth Portfolio: The investment objective of this Portfolio is to
seek long-term capital appreciation through a diversified portfolio of common
stocks that show strong earnings potential with reasonable market prices.

Frontier Capital Appreciation Portfolio: The investment objective of this
Portfolio is to seek maximum capital appreciation through investment in common
stock of companies of all sizes, with emphasis on stocks of small- to
medium-capitalization companies. Importance is placed on growth and price
appreciation, rather than income.

Enhanced U.S. Equity Portfolio. The investment objective of this Portfolio is
to provide above market total return through investment in common stock of
companies perceived to provide a return higher than that of the S&P 500 at
approximately the same level of investment risk as the S&P 500.

M Financial Investment Advisers, Inc. acts as the investment manager for the
four Portfolios described above. Edinburgh Fund Managers PLC provides
sub-investment advice to the Edinburgh Overseas Equity Portfolio; Turner
Investment Partners, Inc. provides sub-investment advice to the Turner Core
Growth Portfolio; Frontier

11
<PAGE>

Capital Management Company, Inc. provides sub-investment advice to the Frontier
Capital Appreciation Portfolio; and Franklin Portfolio Associates Trust provides
sub-investment advice to the Enhanced U.S. Equity Portfolio.

A full description of each Fund, its investment objectives, policies and
restrictions, its charges, expenses and all other aspects of its operation is
contained in the attached prospectuses and the statement of additional
information referred to therein, which should be read together with this
Prospectus.

THE FIXED ACCOUNT

The Account Value in the Fixed Account is equal to the portion of the net
premiums allocated to it, plus any amounts transferred to it and interest
credited to it, minus any charges deducted from it or partial withdrawals or
amounts transferred from it. JHVLICO guarantees that interest credited to the
Account Value in the Fixed Account will not be less than an effective annual
rate of 4%. JHVLICO may, in its sole discretion, credit higher rates although it
is not obligated to do so. The Owner assumes the risk that interest credited
will not exceed 4% per year. Upon request and in the annual statement, JHVLICO
will inform Owners of the then-applicable rate.

12
<PAGE>

be subject to certain generally-applicable provisions of the Federal securities
laws relating to accuracy and completeness of statements made in prospectuses.

POLICY PROVISIONS AND BENEFITS

REQUIREMENTS FOR ISSUANCE OF POLICY

PREMIUMS

Minimum Premium Requirements. An amount of Required Premium (see below) is
determined by JHVLICO at the time of issue of the Policy.

13
<PAGE>

Failure to satisfy a premium requirement on a scheduled due date may cause the
Policy to terminate. See "Default and Options on Lapse".

The Premium Recalculation feature makes it possible for JHVLICO to set a lower
Base Policy Premium (and thus a lower Required Premium) at the time of Policy
issuance than would be possible without this feature. If a purchaser at any time
wishes to "lock in" a Base Policy Premium (and Required Premium) for the life of
the Policy, he or she may request a Premium Recalculation at that time.

14
<PAGE>

Policy to accumulate a sufficient amount of Account Value to reduce the
possibility or amount of an increase in the Base Policy Premium at the time of
the recalculation.

<TABLE>
<CAPTION>
olicy Base Policy Premium Following
versary Recalculation Assuming Hypothetical Gross
of Annual Rate of Return of:
emium ------------------------------------------
culation 0% 6% 12%
- -------- -- -- ---
<S>um <C> <C> <C>
0 (Issue Date) . . . . . . . . $1,414.00 $1,414.00 $1,414.00
5 . . . . . . . . . . . . . . . $1,607.99 $1,581.92 $1,551.41
10 . . . . . . . . . . . . . . $1,900.30 $1,791.31 $1,635.15
15 . . . . . . . . . . . . . . $2,334.72 $2,058.15 $1,566.76
20 . . . . . . . . . . . . . . $3,008.11 $2,433.77 $1,151.92
25 . . . . . . . . . . . . . . $4,077.27 $2,998.48 $ 0.00
30 . . . . . . . . . . . . . . $5,845.15 $3,914.46 $ 0.00
35* . . . . . . . . . . . . . . $8,404.00 $5,561.76 $ 0.00
</TABLE>

- ---------
* Mandatory Premium Recalculation if Owner does not choose earlier date.

The amount of any Account Value that is considered Excess Value under a Policy
may increase or decrease as a result of a Premium Recalculation. See "Excess
Value."

15
<PAGE>

the Account or Fixed Account, as the case may be, at the close of business on
the date as of which it is processed. Each premium payment will be reduced by
the state premium tax charge, the Federal DAC Tax charge and the sales charge
deducted from certain premiums. See "Charges and Expenses". The remainder is the
net premium.

There are four exceptions to the normal practice of processing a premium
payment as of the end of the Valuation Period in which it is received:

(1) A payment received prior to a Policy's date of issue will be processed
as if received on the Valuation Date immediately preceding the date of issue.

(2) A payment made during a Policy's grace period will be processed as of
the scheduled due date to the extent it represents the amount of Required
Premium in default; any excess will be processed as of the date of receipt.

(3) If the Minimum First Premium is not received prior to the date of
issue, each payment received thereafter will be processed as if received on
the Valuation Date immediately preceding the issue date until all of the
Minimum First Premium is received.

(4) That portion of any premium that JHVLICO delays accepting as described
under "Other Premium Limitations" or "7-Pay Premium Limit" below, will be
processed as of the end of the Valuation Period in which that amount is
accepted.

16
<PAGE>

that would have been payable at any time for the Policy to be fully paid-up
after the payment of 7 level annual premiums. If the total premiums paid exceed
the 7-pay limit, the Policy will be treated as a "modified endowment" which
means that the Owner will be subject to tax to the extent of any income (gain)
on any distributions made from the Policy. A material change in the Policy will
result in a new 7-pay limit and test period. A reduction in the Policy's
benefits within the 7-year period following issuance of, or reinstatement of or
other material change in, the Policy may also result in the application of the
modified endowment treatment. See "Policy Proceeds" under "Tax Considerations."
If JHVLICO receives any premium payment that will cause a Policy to become a
modified endowment, the excess portion of that premium payment will not be
accepted unless the Owner signs an acknowledgment of that fact. When it
identifies such excess premium, JHVLICO sends the Owner immediate notice and
refunds the excess premium if it has not received notice of the acknowledgment
by the time the premium payment check has had a reasonable time to clear the
banking system, but in no case longer than two weeks.

ACCOUNT VALUE AND SURRENDER VALUE

Amount of Account Value. The Account Value increases or decreases depending
upon a number of factors, such as the applicable Subaccount's investment
experience, the proportion of the Account Value invested in each Subaccount and
the interest credited to any Loan Assets established upon the making of a Policy
loan. In general the Account Value for any day equals the Account Value for the
previous day, decreased by charges against the Account Value and by any partial
withdrawal of Excess Value, increased or decreased by the investment experience
of the Subaccounts and increased by net premiums received. No minimum amount of
Account Value is guaranteed.

Amount of Surrender Value. The Surrender Value will be the Account Value less
the sum of any Administrative Surrender Charge, any Contingent Deferred Sales
Charge and any Indebtedness.

The Contingent Deferred Sales Charge is deducted from the Account Value upon
surrender of the Policy during the first thirteen Policy years after issue. The
amount of this charge is set forth in a schedule under "Sales Charges". The
total charges for sales expenses, including the Contingent Deferred Sales
Charge, over the lesser of 20 years or the life expectancy of the insured, will
not exceed 9% of the payments under the Policy, assuming that all Required
Premiums are paid, over that period.

17
<PAGE>

A surrender or partial surrender may have significant tax consequences. See
"Tax Considerations".

DEATH BENEFITS

DEATH BENEFIT OPTIONS

18
<PAGE>

Account Value and will decrease whenever there is a decrease in the Account
Value, but never below the Guaranteed Death Benefit.

DEFINITION OF LIFE INSURANCE

EXCESS VALUE

19
<PAGE>

PARTIAL WITHDRAWAL OF EXCESS VALUE

Under JHVLICO's current administrative rules, an Owner may withdraw Excess
Value from the Policy on or after the first Policy anniversary. This privilege,
which reduces the Account Value by the amount of the withdrawal and the
associated charge, may be exercised only once in a Policy year and will be
effective as of the end of the Valuation Period in which JHVLICO receives
written notice satisfactory to it at its Home Office. The minimum amount that
may be withdrawn is $1,000. A charge of $20 is made against Account Value for
each partial withdrawal. Under Death Benefit Option 2, a partial withdrawal will
always result in a reduction of the death benefit payable. Under Death Benefit
Options 1 and 3, a partial withdrawal will reduce the death benefit payable only
when the Current Death Benefit exceeds the Guaranteed Death Benefit. A
withdrawal may have significant tax consequences. See "Tax Considerations".

20
<PAGE>

TRANSFERS AMONG SUBACCOUNTS

Transfers out of the Fixed Account to the variable Subaccounts are permitted
only once each Policy year and only during the 31-day period beginning on the
Policy anniversary. Transfers out of the Fixed Account may be requested from 60
days before to 30 days after the Policy anniversary. If received on or before
the Policy anniversary, requests for transfer out of the Fixed Account will be
processed on the Policy anniversary (or the next Valuation Date if the Policy
anniversary does not occur on a Valuation Date); if received after the Policy
anniversary, they will be processed at the end of the Valuation Period in which
JHVLICO receives the request at its Home Office. (JHVLICO reserves the right to
defer such Fixed Account transfers for up to six months.) Transfers among
variable Subaccounts and transfers into the Fixed Account may be requested at
any time. A maximum of 20% of Fixed Account assets or, if greater, $500 may be
transferred out of the Fixed Account in any Policy year. Currently, there is no
minimum amount limit on transfers out of the Fixed Account, but JHVLICO reserves
the right to impose such a limit in the future. If an Owner requests a transfer
out of the Fixed Account 61 days or more prior to the Policy anniversary, that
portion of the reallocation will not be processed and the Owner's confirmation
statement will not reflect a transfer out of the Fixed Account as to such
request.

21
<PAGE>

to discontinue telephone transactions at any time without notice to Owners is
specifically reserved. If the fax request option becomes unavailable, another
means of telecommunications will be substituted.

An Owner who authorizes telephone transactions will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
transaction instructions which JHVLICO reasonably believes to be genuine, unless
such loss, experience or cost is the result of JHVLICO's mistake or negligence.
JHVLICO employs procedures which provide safeguards against the execution of
unauthorized transactions, and which are reasonably designed to confirm that
instructions received by telephone are genuine. These procedures include
requiring personal identification, tape recording calls, and providing written
confirmation to the Owner. If JHVLICO does not employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, it may be
liable for any loss due to unauthorized or fraudulent instructions.

LOAN PROVISIONS AND INDEBTEDNESS

Effect of Loan and Indebtedness. A loan does not directly affect the amount of
the Required Premium. While the Indebtedness is outstanding, that portion of the
Account Value that is in Loan Assets is credited interest at a rate that for the
first 20 Policy years is 1% less than the loan interest rate and thereafter is
.5% less than the loan interest rate. The rate credited to Loan Assets will
usually be different than the net return for the Subaccounts. Since Loan Assets
and the remaining portion of the Account Value will generally have different
rates of investment return, the Account Value, the Surrender Value, and any
death benefit above the Guaranteed Death Benefit are permanently affected by any
Indebtedness, whether or not it is repaid in whole or in part. The amount of any
Indebtedness is subtracted from the amount otherwise payable when the Policy
proceeds become payable.

22
<PAGE>

If a Policy is a modified endowment at the time a loan is made, that loan may
have significant tax consequences. See "Tax Considerations".

DEFAULT AND OPTIONS ON LAPSE

The Variable Paid-Up Insurance option is not available unless the initial
amount of Variable Paid-Up Insurance is at least $5,000.

A Policy continued under any option may be surrendered for its Surrender Value
while the insured is living. Loans may be available under the Variable and Fixed
Paid-Up Insurance options.

23
<PAGE>

EXCHANGE PRIVILEGE

-----------------

CHARGES AND EXPENSES

CHARGES DEDUCTED FROM PREMIUMS

In addition to part of the sales charge (see "Sales Charges" below), the
following charges are deducted from premiums:

SALES CHARGES

24
<PAGE>

is reserved to continue deductions over a longer period. Because the Policies
were first offered for sale in 1994, no Policies have yet been outstanding for
more than 10 years.

No sales charge is deducted from a premium payment received in excess of
Required Premium in any Policy year.

<TABLE>
<CAPTION>
Maximum Contingent Deferred Sales
Charge as a Percentage of Base Policy
Premiums Due Through Effective
For Surrenders or Lapses Effective During: Date of Surrender or Lapse
------------------------------------------ ---------------------------------------
<S> <C>
Policy Years 1-6 . . . . . . . . . . . . . 15.00%
Policy Year 7 . . . . . . . . . . . . . . . 12.85%
Policy Year 8 . . . . . . . . . . . . . . . 10.00%
Policy Year 9 . . . . . . . . . . . . . . . 7.77%
Policy Year 10 . . . . . . . . . . . . . . 6.00%
Policy Year 11 . . . . . . . . . . . . . . 4.55%
Policy Year 12 . . . . . . . . . . . . . . 2.92%
Policy Year 13 . . . . . . . . . . . . . . 1.54%
Policy Year 14 and Later . . . . . . . . . 0%
</TABLE>

The amount of the Contingent Deferred Sales Charge is calculated on the basis
of the Base Policy Premium for the age of the insured at the time of issue of
the Policy.

25
<PAGE>

ADMINISTRATIVE SURRENDER CHARGE

REDUCED CHARGES FOR ELIGIBLE GROUPS

The sales charges, Administrative Surrender Charge and Issue Charge (described
below) otherwise applicable may be reduced with respect to Policies issued to a
class of associated individuals or to a trustee, employer or similar entity
where JHVLICO anticipates that the sales to the members of the class will result
in lower than normal sales and administrative expenses. These reductions will be
made in accordance with JHVLICO's rules in effect at the time of the application
for a Policy. The factors considered by JHVLICO in determining the eligibility
of a particular group for reduced charges, and the level of the reduction, are
as follows: the nature of the association and its organizational framework; the
method by which sales will be made to the members of the class; the facility
with which premiums will be collected from the associated individuals and the
association's capabilities with respect to administrative tasks; the anticipated
persistency of the Policies; the size of the class of associated individuals and
the number of years it has been in existence; and any other such circumstances
which justify a reduction in sales or administrative expenses. Any reduction
will be reasonable and will apply uniformly to all prospective Policy purchasers
in the class and will not be unfairly discriminatory to the interests of any
Policy Owner.

26
<PAGE>

CHARGES DEDUCTED FROM ACCOUNT VALUE

The following charges are deducted from Account Value:

Maintenance Charge. JHVLICO will deduct from Account Value a monthly charge
not to exceed $8 per Policy. The current monthly charge is $6 per Policy.

Beginning on the first day of the first month in the tenth Policy year,
JHVLICO may make a special monthly credit to the Account Value. If such a credit
is made, it will be reflected as a reduction to the insurance charge as
described below. This credit and reduction is not guaranteed but it is JHVLICO's
present intention to effect the credit and reduction in the tenth and following
Policy years as long as the Policy is in force.

For example, it is expected that the reduction percentage would be at an
effective annual rate of .21% in Policy year 11, .30% in Policy year 20 and .40%
in Policy year 30.

JHVLICO reserves the right to modify or discontinue this reduction. Because
the Policies were first offered for sale in 1994, no reductions have yet been
made.

Lower current insurance rates are offered at most ages for insureds who
qualify as non-smokers. To qualify, an insured must meet additional requirements
that relate to smoking habits.

27
<PAGE>

28
<PAGE>

Fund Investment Management Fees and Other Fund Expenses. The Account purchases
shares of the Funds at net asset value, a value which reflects the deduction
from the assets of each Fund of its investment management fees and certain other
non-advisory Fund operating expenses, which are described briefly in the Summary
of this Prospectus. For a full description of these deductions, see the attached
prospectuses for the Funds.

DISTRIBUTION OF POLICIES

The maximum commission payable to an agent for selling a Policy is 45% of the
Base Policy Premiums (prior to any Premium Recalculation) that would be payable
in the first Policy year, 7.5% of such premiums payable in the second Policy
year and 5% of any such premiums received by JHVLICO in later years. The maximum
commission on any other premium paid in any year is 3%.

29
<PAGE>

broker-dealers under expense reimbursement allowance programs in any year for
approved voucherable expenses incurred. Distributors will compensate the
broker-dealers as provided in the selling agreements, and JHVLICO will reimburse
Distributors for such amounts and for certain other direct expenses in
connection with marketing the Policies through other broker-dealers. In
addition, these representatives may earn "credits" toward qualification for
attendance at certain business meetings sponsored by John Hancock.

TAX CONSIDERATIONS

POLICY PROCEEDS

Although the Policy contains provisions not found in fixed benefit life
insurance policies, JHVLICO believes the Policy will receive the same Federal
income and estate tax treatment. Section 7702 of the Internal Revenue Code
("Code") defines life insurance for Federal tax purposes. If certain standards
are met at issue and over the life of the Policy, the Policy will come within
that definition. JHVLICO will monitor compliance with these standards.
Furthermore, JHVLICO reserves the right to make any changes in the Policy
necessary to ensure the Policy is within the definition of life insurance.

30
<PAGE>

Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Owner or beneficiary.

CHARGE FOR JHVLICO'S TAXES

CORPORATE AND H.R. 10 PLANS

31
<PAGE>

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO

The Directors and Executive Officers of JHVLICO and their principal
occupations during the past five years are as follows:

<TABLE>
<CAPTION>
Directors--Officers Principal Occupations
------------------- ---------------------
<S> <C>
David F. D'Alessandro Chairman of the Board and Chief Executive Officer
of JHVLICO; President and Chief Operating Officer,
John Hancock Mutual Life Insurance Company.
Henry D. Shaw Vice Chairman of the Board and President of
JHVLICO; Senior Vice President, John Hancock Mutual
Life Insurance Company.
Thomas J. Lee Director of JHVLICO; Vice President, John Hancock
Mutual Life Insurance Company.
Michele G. Van Leer Director of JHVLICO; Senior Vice President, John
Hancock Mutual Life Insurance Company.
Ronald J. Bocage Director, Vice President and Counsel of JHVLICO;
Vice President and Counsel, John Hancock Mutual
Life Insurance Company.
Joseph A. Tomlinson Director and Vice President of JHVLICO; Vice
President, John Hancock Mutual Life Insurance
Company.
Robert R. Reitano Director of JHVLICO; Vice President, John Hancock
Mutual Life Insurance Company.
Robert S. Paster Director of JHVLICO; Second Vice President, John
Hancock Mutual Life Insurance Company.
Barbara L. Luddy Director and Actuary of JHVLICO; Second Vice
President, John Hancock Mutual Life Insurance
Company.
Daniel L. Ouellette Vice President, Marketing, of JHVLICO; Vice
President, John Hancock Mutual Life Insurance
Company.
Patrick F. Smith Controller of JHVLICO; Assistant Controller, John
Hancock Mutual Life Insurance Company.
</TABLE>

The business address of all Directors and officers of JHVLICO is John Hancock
Place, Boston, Massachusetts 02117.

32
<PAGE>

REPORTS

Owners will be sent semiannually a report containing the financial statements
of the Funds, including a list of securities held in each Portfolio.

VOTING PRIVILEGES

All of the assets in the variable Subaccounts of the Account are invested in
shares of the corresponding Portfolios of the Funds. JHVLICO will vote the
shares of each of the Portfolios of the Funds which are deemed attributable to
qualifying variable life insurance policies and variable annuity contracts at
regular and special meetings of the Funds' shareholders in accordance with
instructions received from owners of such policies or contracts. Shares of the
Funds held in the Account which are not attributable to such policies or
contracts and shares for which instructions from owners are not received will be
represented by JHVLICO at the meeting and will be voted for and against each
matter in the same proportions as the votes based upon the instructions received
from the owners of all such policies and contracts.

Owners of Policies may give instructions regarding the election of the Board
of Trustees of each Fund, ratification of the selection of independent auditors,
approval of Fund investment advisory agreements and other matters requiring a
vote under the 1940 Act. Owners will be furnished information and forms by
JHVLICO in order that voting instructions may be given.

JHVLICO may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to change the investment objectives of the Portfolios or to approve
or disapprove an investment advisory or underwriting contract for a Fund.
JHVLICO also may disregard voting instructions in favor of changes initiated by
an owner or a Fund's Board of Trustees in an investment policy, investment
adviser or principal underwriter of the Fund, if JHVLICO (i) reasonably
disapproves of such changes and (ii) in the case of a change of investment
policy or investment adviser, makes a good-faith determination that the proposed
change is contrary to state law or prohibited by state regulatory authorities or
that the change would be inconsistent with a variable Subaccount's investment
objectives or would result in the purchase of securities which vary from the
general quality and nature of investments and investment techniques utilized by
other separate accounts of JHVLICO or of an affiliated life insurance company,
which separate accounts have investment

33
<PAGE>

objectives similar to those of the variable Subaccount. In the event JHVLICO
does disregard voting instructions, a summary of that action and the reasons for
such action will be included in the next semi-annual report to owners.

CHANGES THAT JHVLICO CAN MAKE

The voting privileges described in this Prospectus are afforded based on
JHVLICO'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, JHVLICO reserves the
right to proceed in accordance with any such revised requirements. JHVLICO also
reserves the right, subject to compliance with applicable law, including
approval of owners if so required, (1) to transfer assets determined by JHVLICO
to be associated with the class of policies to which the Policies belong from
the Account to another separate account or variable Subaccount by withdrawing
the same percentage of each investment in the Account with appropriate
adjustments to avoid odd lots and fractions, (2) to operate the Account as a
"management-type investment company" under the 1940 Act, or in any other form
permitted by law, the investment adviser of which would be JHVLICO, an affiliate
or John Hancock, (3) to deregister the Account under the 1940 Act, (4) to
substitute for the Portfolio shares held by a subaccount any other investment
permitted by law, and (5) to take any action necessary to comply with or obtain
any exemptions from the 1940 Act. JHVLICO would notify owners of any of the
foregoing changes and, to the extent legally required, obtain approval of owners
and any regulatory body prior thereto. Such notice and approval, however, may
not be legally required in all cases.

STATE REGULATION

LEGAL MATTERS

REGISTRATION STATEMENT

34
<PAGE>

EXPERTS

Actuarial matters included in this Prospectus have been examined by Randi M.
Sterrn, F.S.A., an Actuary of JHVLICO.

FINANCIAL STATEMENTS

35
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1997

- ---------
See accompanying notes.

36
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 1997

- ---------
See accompanying notes.

37
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF OPERATIONS

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

Large Cap Growth Subaccount Sovereign Bond Subaccount
-------------------------------------- -------------------------------------
1997 1996 1995 1997 1996 1995
----------- ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I $19,906,569 $22,706,338 $ 9,127,019 $5,517,405 $ 4,518,056 $3,997,055
M Fund Inc. . . . . . . . . . . . . -- -- -- -- -- --
----------- ----------- ----------- ---------- ----------- ----------
Total investment income . . . . . . . 19,906,569 22,706,338 9,127,019 5,517,405 4,518,056 3,997,055
Expenses:
Mortality and expense risks . . . . 1,152,388 789,368 527,639 417,812 352,330 288,879
----------- ----------- ----------- ---------- ----------- ----------
Net investment income (loss) . . . . 18,754,181 21,916,970 8,599,380 5,099,593 4,165,726 3,708,176
Net realized and unrealized gain
(loss) on investments:
Net realized gain
(loss) . . . . . . . . . . . . . . 5,377,678 2,555,654 839,997 (316,608) (136,401) 63,373
Net unrealized appreciation
(depreciation) during the period . 24,886,516 (2,922,417) 13,485,769 1,592,275 (1,537,488) 4,386,358
----------- ----------- ----------- ---------- ----------- ----------
Net realized and unrealized gain
(loss) on investments . . . . . . . 30,264,194 (366,763) 14,325,766 1,275,667 (1,673,889) 4,449,731
----------- ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations . . . . . $49,018,375 $21,550,207 $22,925,146 $6,375,260 $ 2,491,837 $8,157,907
=========== =========== =========== ========== =========== ==========
<CAPTION>
International Small Cap International
Equities Growth Balanced
Subaccount Subaccount Subaccount
------------------------------------ -------------------- ------------------
1997 1996 1995 1997 1996* 1997 1996*
------------ ---------- ---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I $ 2,032,258 $ 460,651 $ 313,290 $ 3,380 $ 1,404 $ 62,258 $11,409
M Fund Inc. . . . . . . . . . . . . -- -- -- -- -- -- --
----------- ---------- ---------- -------- --------- -------- -------
Total investment income . . . . . . . 2,032,258 460,651 313,290 3,380 1,404 62,258 11,409
Expenses:
Mortality and expense risks . . . . 249,823 209,866 158,467 33,986 6,704 6,972 1,311
----------- ---------- ---------- -------- --------- -------- -------
Net investment income (loss) . . . . 1,782,435 250,785 154,823 (30,606) (5,300) 55,286 10,098
Net realized and unrealized gain
(loss) on investments:
Net realized gain 958,182 156,348 709,715 116,210 (210,939) 29,092 1,642
(loss) . . . . . . . . . . . . . .
Net unrealized appreciation
(depreciation) during the period . (4,981,747) 2,539,023 1,169,158 732,330 (86,846) (68,785) 18,954
----------- ---------- ---------- -------- --------- -------- -------
Net realized and unrealized gain
(loss) on investments . . . . . . . (4,023,565) 2,695,371 1,878,873 848,540 (297,785) (39,693) 20,596
----------- ---------- ---------- -------- --------- -------- -------
Net increase (decrease) in net assets
resulting from operations . . . . . $(2,241,130) $2,946,156 $2,033,696 $817,934 $(303,085) $ 15,593 $30,694
=========== ========== ========== ======== ========= ======== =======
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

38
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

39
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

40
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

41
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

42
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

43
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

44
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

45
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION

2. SIGNIFICANT ACCOUNTING POLICIES

ESTIMATES

VALUATION OF INVESTMENTS

FEDERAL INCOME TAXES

46
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS--CONTINUED

EXPENSES

JHVLICO makes certain deductions for administrative expenses and state premium
taxes from premium payments before amounts are transferred to the Account.

3. 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 JHVLICO, the
Fund or John Hancock.

47
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS--CONTINUED
4. DETAILS OF INVESTMENTS

The details of the shares owned and cost and value of investments in the
Portfolios of the Fund and of M Fund at December 31, 1997 were as follows:

48
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS--CONTINUED
4. DETAILS OF INVESTMENTS--CONTINUED

Purchases, including reinvestment of dividend distributions and proceeds from
sales of shares in the Portfolios of the Fund and of M Fund during 1997, were as
follows:

5. IMPACT OF YEAR 2000 (UNAUDITED)

49
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT V

NOTES TO FINANCIAL STATEMENTS--CONTINUED
5. IMPACT OF YEAR 2000 (UNAUDITED)--CONTINUED

The Account expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors. However,
there can be no guarantee that this completion target will be achieved.

50
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Policyholders
John Hancock Variable Life Account V of John Hancock Variable Life Insurance
Company

Boston, Massachusetts
February 6, 1998

51
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Directors and Policyholders
John Hancock Variable Life Insurance Company

Ernst & Young LLP

Boston, Massachusetts
February 18, 1998

52
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION

The accompanying notes are an integral part of the statutory-basis financial
statements.

53
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT

<TABLE>
<CAPTION>
Year ended December 31
-----------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
INCOME
Premiums . . . . . . . . . . . . . . . . . . . . $ 872.7 $ 820.6
Net investment income--Note 3 . . . . . . . . . 89.7 76.1
Other, net . . . . . . . . . . . . . . . . . . . 420.1 406.0
-------- --------
1,382.5 1,302.7
BENEFITS AND EXPENSES
Payments to policyholders and beneficiaries . . 264.0 236.1
Additions to reserves to provide for future
payments to policyholders and beneficiaries . 814.2 790.1
Expenses of providing service to policyholders
and obtaining new insurance--
Note 5 . . . . . . . . . . . . . . . . . . . . 216.2 183.8
State and miscellaneous taxes . . . . . . . . . 19.1 17.3
-------- --------
1,313.5 1,227.3
-------- --------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME
TAXES AND NET REALIZED CAPITAL LOSSES . . . 69.0 75.4
Federal income taxes--Note 1 . . . . . . . . . . . 38.5 38.6
-------- --------
GAIN FROM OPERATIONS BEFORE NET REALIZED
CAPITAL LOSSES . . . . . . . . . . . . . . . 30.5 36.8
Net realized capital losses--Note 4 . . . . . . . (3.0) (1.5)
-------- --------
NET INCOME . . . . . . . . . . . . . . . . . 27.5 35.3
Unassigned deficit at beginning of year . . . . . (96.9) (131.3)
Net unrealized capital gains and other
adjustments--Note 4 . . . . . . . . . . . . . . . 5.0 2.5
Other reserves and adjustments . . . . . . . . . . 6.1 (3.4)
-------- --------
UNASSIGNED DEFICIT AT END OF YEAR . . . . . . $ (58.3) $ (96.9)
======== ========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

54
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of the statutory-basis financial
statements.

55
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES

The significant accounting practices of the Company are as follows:

56
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

Valuation of Assets: General account investments are carried at amounts
determined on the following bases:

Investments in affiliates are included on the statutory equity method.

Goodwill is amortized on a straight-line basis over a ten year period.

Mortgage loans are carried at outstanding principal balance or amortized cost.

Real estate acquired in satisfaction of debt and held for sale 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.

Accumulated amortization was $8.8 million and $6.7 million at December 31, 1997
and 1996, respectively.

57
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

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.

The fair values for common and preferred stocks, other than its subsidiary
investments, which are carried at equity values, are based on quoted market
prices.

The carrying amount in the statement of financial position for policy loans
approximates their fair value.

58
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

59
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
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.

NOTE 2--ACQUISITION

NOTE 3--NET INVESTMENT INCOME

Investment income has been reduced by the following amounts:

NOTE 4--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS

Net realized capital losses consist of the following items:

60
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 4--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS--CONTINUED
Net unrealized capital gains and other adjustments consist of the following
items:

NOTE 5--TRANSACTIONS WITH PARENT

61
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS

The statement value and fair value of bonds are shown below:

<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
Year ended December 31, 1996 Value Gains Losses Value
- ---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S.
government corporations and
agencies. . . . . . . . . . $ 44.4 $ 0.2 $0.2 $ 44.4
Obligations of states and
political subdivisions . . 12.6 0.4 0.0 13.0
Debt securities issued by
foreign governments . . . . 0.8 0.1 0.0 0.9
Corporate securities . . . . 623.2 29.8 3.4 649.6
Mortgage-backed securities . 72.5 10.2 0.1 82.6
-------------- ----- ---- ------
Total bonds . . . . . . . . $ 753.5 $40.7 $3.7 $790.5
============== ===== ==== ======
</TABLE>

Gross gains of $1.1 million in 1997 and $1.3 million in 1996 and gross losses of
$4.5 million in 1997 and $2.1 million in 1996 were realized from the sale of
bonds.

62
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS--CONTINUED

At December 31, 1997, bonds with an admitted asset value of $3.6 million were on
deposit with state insurance departments to satisfy regulatory requirements.

Bonds with amortized cost of $2.0 million were nonincome producing for the
twelve months ended December 31, 1997.

63
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--REINSURANCE

Neither the Company, nor any of its related parties, control, either directly or
indirectly, any external reinsurers with which the Company conducts business. No
policies issued by the Company have been reinsured with a foreign company which
is controlled, either directly or indirectly, by a party not primarily engaged
in the business of insurance.

NOTE 8--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

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 2007.

64
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 8--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--CONTINUED
but not in the future cash requirements, as the Company intends to close the
open positions prior to settlement. Net deferred losses on financial contracts
were $2.8 million and $0.0 million at December 31, 1997 and 1996, respectively.

<TABLE>
<CAPTION>
December 31
----------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
Futures contracts to sell securities . . . . . . . . $ 40.8 $ 73.0
============== ======
Notional amount of interest rate swaps, currency rate
swaps, and interest rate caps to:
Receive variable rates . . . . . . . . . . . . . . $ 323.7 $215.9
============== ======
Receive fixed rates . . . . . . . . . . . . . . . $ 25.0 $ 26.6
============== ======
</TABLE>

65
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 9--POLICY RESERVES, POLICYHOLDERS' AND BENEFICIARIES' FUNDS AND OBLIGATIONS
RELATED TO SEPARATE ACCOUNTS

The Company's annuity reserves and deposit fund liabilities that are subject to
discretionary withdrawal, with and without adjustment, are summarized as
follows:

NOTE 10--COMMITMENTS AND CONTINGENCIES

66
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 11--FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

NOTE 12--IMPACT OF YEAR 2000 (UNAUDITED)

67
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 12--IMPACT OF YEAR 2000 (UNAUDITED)--CONTINUED

John Hancock expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors. However,
there can be no guarantee that this completion target will be achieved.