<PAGE>
As filed with the Securities and Exchange Commission on May 13, 1997
Registration No. 33-76662
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-6
Post-Effective Amendment No. 4 to
Registration Statement Under
THE SECURITIES ACT OF 1933
----------------------
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
(Exact name of trust)
JOHN HANCOCK MUTUAL 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)
/X/immediately upon filing pursuant to paragraph (b) of Rule 485
--
/ /on (date) 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 1996 pursuant to Rule 24f-2 on February 26, 1997.
<PAGE>
CROSS-REFERENCE TABLE
Form N-8B-2 Item Caption in Prospectus
- ---------------- ---------------------
1, 2 Cover, The Account and Series
Fund, and John Hancock
3 Inapplicable
4 Cover, Distribution of Policies
5,6 The Account and Series Fund,
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 John Hancock
Can Make
10(i) Appendix--Other Policy
Provisions, The Account and
Series Fund
11, 12 Summary, The Account and Series
Fund, 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 Series Fund
17 Summary, Policy
Provisions and Benefits
18 The Account and Series Fund,
Tax Considerations
19 Reports
20 Changes that John Hancock
Can Make
21 Policy Provisions and Benefits
22 Policy Provisions and Benefits
<PAGE>
23 Distribution of Policies
24 Not Applicable
25 John Hancock
26 Not Applicable
27,28,29,30 John Hancock, Board
of Directors and Executive
Officers of John Hancock
31,32,33,34 Not Applicable
35 John Hancock
37 Not Applicable
38,39,40,41(a) Distribution of Policies,
John Hancock, Charges and
Expenses
42, 43 Not Applicable
44 The Account and Series Fund,
Policy Provisions,
Appendix--Illustration of Death
Benefits, Account Values,
Surrender Values and
Accumulated Premiums
45 Not Applicable
46 The Account and Series Fund,
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 Series Fund,
Changes that John Hancock
Can Make
53,54,55 Not Applicable
56,57,58,59 Not Applicable
<PAGE>
[LOGO OF JOHN HANCOCK APPEARS HERE]
[LOGO OF MEDALLION Mutual Life
VARIABLE LIFE APPEARS HERE] Insurance Company
(John Hancock)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
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 1-617-572-5410
PROSPECTUS MAY 13, 1997
The flexible 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 Mutual Variable Life Insurance Account UV
(the "Account"), by a fixed subaccount (the "Fixed Account"), or by any
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 investment portfolio ("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 Mutual Life Insurance Company ("John
Hancock").
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 John Hancock Variable Series Trust I: Growth & Income, Large
Cap Growth, Sovereign Bond, Money Market, Managed, Real Estate Equity,
International Equities, Short-Term U.S. Government, Special Opportunities,
Small Cap Growth, Small Cap Value, Mid Cap Growth, Mid Cap Value,
International Balanced, International Opportunities, Large Cap Value,
Strategic Bond and Equity Index; and in the Portfolios of M Funds, Inc.:
Edinburgh Overseas Equity, Turner Core Growth, Frontier Capital Appreciation,
and Enhanced U.S. Equity. (The Enhanced U.S. Equity Portfolio is not currently
available to Owners but is expected to be made available sometime in the
future.) 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 CURRENT PROSPECTUSES FOR THE FUNDS.
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
JOHN HANCOCK.............................................................. 7
THE ACCOUNT AND SERIES FUNDS.............................................. 7
The Account............................................................. 7
Series Funds............................................................ 7
THE FIXED ACCOUNT......................................................... 10
POLICY PROVISIONS AND BENEFITS............................................ 11
Requirements for Issuance of Policy..................................... 11
Premiums................................................................ 11
Account Value and Surrender Value....................................... 13
Death Benefits.......................................................... 15
Transfers Among Subaccounts............................................. 16
Telephone Transfers and Policy Loans.................................... 17
Loan Provisions and Indebtedness........................................ 18
Default................................................................. 19
Exchange Privilege...................................................... 19
CHARGES AND EXPENSES...................................................... 19
Charges Deducted from Premiums.......................................... 19
Sales Charges........................................................... 20
Administrative Surrender Charge......................................... 22
Reduced Charges for Eligible Groups..................................... 22
Charges Deducted from Account Value or Assets........................... 22
Guarantee of Premiums and Certain Charges............................... 24
DISTRIBUTION OF POLICIES.................................................. 24
TAX CONSIDERATIONS........................................................ 25
Policy Proceeds......................................................... 25
Charge for John Hancock's Taxes......................................... 26
Corporate and H.R. 10 Plans............................................. 26
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK................. 27
REPORTS................................................................... 28
VOTING PRIVILEGES......................................................... 28
CHANGES THAT JOHN HANCOCK CAN MAKE........................................ 29
STATE REGULATION.......................................................... 29
LEGAL MATTERS............................................................. 29
REGISTRATION STATEMENT.................................................... 29
EXPERTS................................................................... 29
FINANCIAL STATEMENTS...................................................... 30
APPENDIX--OTHER POLICY PROVISIONS......................................... 71
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES
AND ACCUMULATED PREMIUMS................................................. 73
</TABLE>
THE POLICY DESCRIBED HEREIN IS AVAILABLE ONLY IN NEW YORK. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING IN ANY OTHER 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....................................................... 6
Account Value................................................. 1
Age........................................................... 58
Base Policy Target Premium.................................... 18
DAC Tax....................................................... 18
Death Benefit................................................. 13
Fixed Account................................................. 9
Fund.......................................................... Front Cover
Guaranteed Death Benefit...................................... 10
Guaranteed Death Benefit Grace Period......................... 10
Guaranteed Death Benefit Premium ............................. 10
Indebtedness.................................................. 16
Investment Rule............................................... 11
Loan Assets................................................... 16
Minimum First Premium......................................... 10
Modal Processing Date......................................... 10
Planned Premium............................................... 10
Policy Anniversary............................................ 58
Policy Grace Period........................................... 10
Portfolio..................................................... Front Cover
Servicing Office.............................................. 6
Subaccount.................................................... Front Cover
Sum Insured................................................... 4
Surrender Value............................................... 12
Target Premium................................................ 18
Valuation Date................................................ 8
Valuation Period.............................................. 8
Variable Subaccounts.......................................... 2
7-Pay Premium Limit........................................... 11
</TABLE>
<PAGE>
SUMMARY
WHAT IS THE VARIABLE LIFE POLICY OFFERED?
John Hancock issues variable life insurance policies. The Policies described
in this Prospectus are flexible premium policies. John Hancock issues other
variable life insurance policies. These other policies are offered by means of
other Prospectuses, but use the same underlying Fund.
As explained below, the death benefit and Surrender Value under the Policy
may increase or decrease daily. The Policies differ from ordinary fixed-
benefit life insurance in the way they work. However, the Policies are like
fixed-benefit life insurance in providing lifetime protection against economic
loss resulting from the death of the insured. The Policies are primarily
insurance and not investments.
The Policies work generally as follows. A premium payment is periodically
made to John Hancock. John Hancock takes from each premium an amount for taxes
and, from certain premiums, sales expenses. John Hancock 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
John Hancock. During the year, John Hancock 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 Policy provides for payment of death benefit proceeds when the insured
dies. The death benefit proceeds will equal the death benefit, plus any
additional benefit included by rider and then due, minus any Indebtedness. 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. The Policy also increases the death
benefit if necessary to ensure that the Policy will continue to qualify as
life insurance under the Federal tax laws.
The initial Account Value is the amount of the premium that John Hancock
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. John Hancock 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, any Contingent Deferred
Sales Charge and any Indebtedness. The Owner may also make partial withdrawals
from a Policy, subject to certain restrictions and an administrative charge.
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 $100,000. All persons insured must be
between ages 20 and 75 years at issue and meet certain health and other
criteria called "underwriting standards." An insured may be eligible for the
"preferred" class, which has the lowest insurance charges. The smoking status
of the insured is generally reflected in the insurance charges made. Policies
issued 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.
1
<PAGE>
The Owner of a Policy issued on a standard or preferred underwriting basis
may be eligible for the Guaranteed Death Benefit feature if he or she
satisfies certain other underwriting standards relating to health and
occupation. This provision is applicable at no additional cost only in the
first five Policy years and cannot be extended. Under this provision, the
Policy will be guaranteed not to lapse during the first five Policy years,
regardless of adverse investment performance, if the Owner pays the Guaranteed
Death Benefit Premiums on a cumulative basis over that period.
WHAT IS THE AMOUNT OF THE PREMIUMS?
Premiums are flexible and the Owner may choose the amount and frequency of
premium payments.
The minimum amount of premium required at the time of Policy issue is three
months of Guaranteed Death Benefit Premium. One year's Guaranteed Death
Benefit Premium equals the "Target Premium" of a Policy. Unless the Guaranteed
Death Benefit is in effect, if the Account Value at the beginning of any
Policy month is insufficient to pay the monthly Policy charges then due, John
Hancock will estimate the amount of additional premiums necessary to keep the
Policy in force for three months. The Owner will have a 61 day grace period to
pay at least that amount or the Policy will lapse.
The Target Premium is equal to the annual Guaranteed Death Benefit Premium.
The Target Premium is the sum of Base Policy Target Premium, an amount set
forth in the Policy at issue, plus any rider premium.
At the time of Policy issue, the Owner may designate the amount and
frequency of Planned Premium payments. The Owner may pay premiums other than
the Planned Premium payments, subject to certain limitations.
WHAT IS JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV?
The Account is a separate investment account of John Hancock, 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 Funds. The assets of each variable
Subaccount within the Account are invested in a corresponding Portfolio of the
Funds. The Portfolios of the Funds which are currently available are Growth &
Income, Large Cap Growth, Sovereign Bond, Money Market, Managed, Real Estate
Equity, International Equities, Short-Term U.S. Government, Special
Opportunities, Small Cap Growth, Small Cap Value, Mid Cap Growth, Mid Cap
Value, International Balanced, International Opportunities, Large Cap Value,
Strategic Bond, Equity Index, Edinburgh Overseas Equity, Turner Core Growth
and Frontier Capital Appreciation. The Enhanced U.S. Equity Portfolio is
expected to be made available sometime in the future.
2
<PAGE>
John Hancock Variable Series Trust I pays John Hancock a fee for providing
investment management services to each of its Portfolios. The Fund also pays
for certain non-advisory 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 1996
non-advisory expenses that would have been allocated to the Fund under the
allocation rules currently in effect.
<TABLE>
<CAPTION>
Other Total Fund Other Fund
Investment Fund Operating Expenses Absent
Portfolio Management Fee Expenses Expenses Reimbursement*
--------- -------------- -------- ---------- ---------------
<S> <C> <C> <C> <C>
Managed................. 0.34% 0.03% 0.37% N/A
Growth & Income......... 0.25% 0.03% 0.28% N/A
Equity Index............ 0.20% 0.25% 0.45% 1.61%
Large Cap Value......... 0.75% 0.25% 1.00% 1.89%
Large Cap Growth........ 0.40% 0.05% 0.45% N/A
Mid Cap Value........... 0.80% 0.25% 1.05% 2.15%
Mid Cap Growth.......... 0.85% 0.25% 1.10% 2.34%
Special Opportunities... 0.75% 0.12% 0.87% N/A
Real Estate Equity...... 0.60% 0.11% 0.71% N/A
Small Cap Value......... 0.80% 0.25% 1.05% 2.06%
Small Cap Growth........ 0.75% 0.25% 1.00% 1.55%
International Balanced.. 0.85% 0.25% 1.10% 1.44%
International Equities.. 0.60% 0.18% 0.78% N/A
International Opportuni-
ties................... 1.00% 0.25% 1.25% 2.76%
Short-Term U.S. Govern-
ment................... 0.30% 0.25% 0.55% 0.79%
Sovereign Bond.......... 0.25% 0.06% 0.31% N/A
Strategic Bond.......... 0.75% 0.25% 1.00% 1.57%
Money Market............ 0.25% 0.07% 0.32% N/A
</TABLE>
- --------
* John Hancock reimburses a Portfolio when the Portfolio's Other 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 non-advisory 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 1996 non-advisory expenses that would have been allocated to
the Fund under the allocation rules currently in effect.
<TABLE>
<CAPTION>
Other Total Fund Other Fund
Investment Fund Operating Expenses Absent
Portfolio Management Fee Expenses Expenses Reimbursement*
--------- -------------- -------- ---------- ---------------
<S> <C> <C> <C> <C>
Edinburgh Overseas Equity... 1.05% 0.25% 1.30% 6.29%
Turner Core Growth**........ 0.45% 0.25% 0.70% 8.06%
Frontier Capital Apprecia-
tion**..................... 0.90% 0.25% 1.15% 7.29%
Enhanced U.S. Equity........ 0.55% 0.25% 0.80% 11.90%
</TABLE>
- --------
* M Financial reimburses a Portfolio when the Portfolio's Other Expenses
exceed 0.25% of the Portfolio's average daily net assets.
** Figures do not reflect interest expense, which is 0.08% for the Turner Core
Growth Portfolio and 0.05% for the Frontier Capital Appreciation Portfolio.
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 JOHN HANCOCK?
State Premium Tax Charge and Federal DAC Tax Charge. 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 deducted from premium payments
equal to no more than 4% of the Target Premium received in any Policy year.
John Hancock currently intends to waive this deduction from 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 12 Policy years. The
amount of the charge depends upon the Policy year in which lapse or surrender
occurs. The charge will never be higher than 26% of Base Policy Target
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
Target Premium payments under the Policy; assuming all Target Premiums are
paid.
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 Policy year in which lapse or surrender occurs and the
Policy's Sum Insured at that time. The maximum charge is $5 per $1,000 of
current Sum Insured.
Issue Charge. A charge deducted monthly from Account Value at the rate of
$20 per month for the first 12 Policy months.
Maintenance Charge. A charge deducted monthly from Account Value in an
amount equal to no more than $8 (currently $6) for all Policy years.
Insurance Charge. A charge based upon the amount for which John Hancock is
at risk, considering the attained age and risk classification of the insured
and John Hancock's then current monthly insurance rates (never to exceed rates
set forth in the Policy) deducted monthly from Account Value. John Hancock
currently intends to reduce this charge beginning the tenth Policy year.
Charge for Mortality and Expense Risks. A charge deducted daily from the
variable Subaccounts at a maximum effective annual rate of .90% (currently
.60%) of the assets of each variable Subaccount.
Charge for Extra Mortality Risks. An additional charge, depending upon the
age of the insured and the degree of additional mortality risk, required if
the insured does not qualify for the standard or preferred underwriting class.
This additional charge is deducted monthly from Account Value.
Charge for Optional Rider Benefits. An additional charge required if the
Owner elects to purchase any optional insurance benefits by rider. Any such
additional charge is deducted monthly from Account Value.
Charge for Partial Withdrawal. A charge of $20 deducted from Account Value
at the time of withdrawal.
See "Charges and Expenses", for a fuller 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 John Hancock 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. John Hancock expects that it will continue to be taxed
as a life insurance company. See "Charge for John Hancock's Taxes".
4
<PAGE>
WHAT IS THE RELATIONSHIP BETWEEN THE PREMIUM AND THE AMOUNT ALLOCATED TO THE
SUBACCOUNTS?
The initial net premium is allocated by John Hancock from its general
account to one or more of its Subaccounts on the date of issue of the Policy.
The initial net premium is the gross premium less the sales charge deducted
from certain premium payments and less the charges deducted from all premiums
for state premium taxes and the Federal DAC Tax charge. 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 John Hancock will allocate amounts to
Subaccounts.
WHAT COMMISSIONS ARE PAID TO AGENTS?
The Policies are sold through agents who are licensed by state authorities
to sell John Hancock'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 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 Sum
Insured or, if greater, the Account Value multiplied by the applicable
Corridor Factor.
Option 2: Variable Death Benefit. A variable death benefit equal to the Sum
Insured plus any Account Value, or, if greater, the Account Value multiplied
by the applicable Corridor Factor.
If neither of the above Options meets the objectives of the Owner, a third
Option may be elected and an endorsement to the Policy will be issued. This
third Option is described below.
Option 3: Level Death Benefit With Greater Funding. A level death benefit
equal to the Sum Insured, or, if greater, the Account Value multiplied by the
applicable Death Benefit Factor. 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.
Under each of the Options, an alternative death benefit is computed that is
equal to the Account Value multiplied by a Corridor Factor or a Death Benefit
Factor to 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", "Definition of Life Insurance" and "Tax Considerations".
Under the Guaranteed Death Benefit provision, the Policy is guaranteed not
to lapse during the first 5 Policy years, provided that, on each Modal
Processing Date, the amount of cumulative premiums paid, minus any
withdrawals, is at least equal to the cumulative amount of Guaranteed Death
Benefit Premiums due to date. This provision applies only if the insured is in
the preferred or standard underwriting risk class and satisfies certain other
underwriting standards relating to health and occupation.
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, 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?
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 effective annual rate determined by John Hancock 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%. 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 current Sum Insured 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 Part A of the application has been completed or within 10 days
after receipt of the Policy by the Owner, or within 10 days after mailing by
John Hancock of a Notice of Withdrawal Right, whichever is latest, to John
Hancock's Servicing Office, or to the agent or agency office through which it
was delivered. Coverage under the Policy will be canceled immediately as of
the date of such mailing or delivery. 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 Funds.
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.
6
<PAGE>
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.
JOHN HANCOCK
John Hancock, a mutual life insurance company, is authorized to transact a
life insurance and annuity business in Massachusetts and all other states.
John Hancock is 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.
THE ACCOUNT AND SERIES FUNDS
THE ACCOUNT
The Account, a separate account established under Massachusetts law, 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 John Hancock. 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 John Hancock may conduct. In addition to the assets
attributable to variable life policies, the Account's assets include assets
derived from charges made by John Hancock. From time to time these additional
assets may be transferred in cash by John Hancock to its general account.
Before making any such transfer, John Hancock will consider any possible
adverse impact the transfer might have on any Subaccount.
The Account is registered with the Securities and Exchange Commission (the
"Commission") under the 1940 Act. Such registration does not involve
supervision by the Commission of the management or policies of the Account or
John Hancock.
The assets in each variable Subaccount 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.
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.
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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 by management to offer growth
potential over both the intermediate and long-term.
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 or with rights to purchase common
stock) of companies believed to offer above-average capital appreciation
opportunities. Current income is not an objective of the Portfolio.
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. Total rate of return consists
of current income, including interest and discount accruals, and capital
appreciation.
Money Market Portfolio. The investment objective of this Portfolio is to
provide maximum current income consistent with capital preservation and
liquidity. It seeks to achieve this objective by investing in a managed
portfolio of high quality money market instruments.
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.
Real Estate Equity Portfolio. The investment objective of this Portfolio is
to provide above-average income and long-term growth of capital by investment
principally in equity securities of companies in the real estate and related
industries.
International Equities Portfolio. The investment objective of this Portfolio
is to achieve long-term growth of capital by investing primarily in foreign
equity securities.
Special Opportunities Portfolio. The investment objective of this Portfolio
is to achieve long-term capital appreciation by emphasizing investments in
equity securities of issuers in various economic sectors.
Short-Term U.S. Government Portfolio. The investment objective of this
Portfolio is to provide a high level of current income consistent with the
maintenance of principal, through investment in a portfolio of short-term U.S.
Treasury securities and U S. Government agency securities.
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 investment in the common stocks of established companies
believed to offer favorable prospects for increasing dividends and capital
appreciation.
Mid Cap Growth Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital through a non-diversified portfolio
investing largely in common stocks of medium capitalization companies.
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Mid Cap Value Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital primarily through investment in the common
stocks of medium capitalization companies believed to sell at a discount to
their intrinsic value.
Small Cap Growth Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital through a diversified portfoli investing
primarily in common stocks of small capitalization emerging growth companies.
Small Cap Value Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital by investing in a well diversified
portfolio of equity securities of small capitalization companies exhibiting
value characteristics.
Strategic Bond Portfolio: The investment objective of this Portfolio is to
provide a high total return consistent with moderate risk of capital and
maintenance of liquidity, from a portfolio of domestic and international fixed
income securities.
International Opportunities Portfolio: The investment objective of this
Portfolio is to provide capital appreciation through investment in common
stocks of primarily well-established, non-United States companies.
International Balanced Portfolio: The investment objective of this Portfolio
is to maximize total U.S. dollar return, consisting of capital appreciation
and current income, through investment in non-U.S. equity and fixed income
securities.
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 Growth &
Income, Large Cap Growth, Managed, Real Estate Equity, and Short-Term U.S.
Government Portfolios. Another indirectly owned subsidiary, John Hancock
Advisers, Inc., located at 101 Huntington Avenue, Boston, MA 02199, and its
subsidiary, John Hancock Advisers International, Limited, located at 34 Dover
Street, London, England, provide sub-investment advice with respect to the
International Equities Portfolio, and John Hancock Advisers, Inc. does
likewise with respect to the Sovereign Bond, Small Cap Growth and Special
Opportunities Portfolios.
T. Rowe Price Associates, Inc., located at 100 East Pratt St., Baltimore, MD
21202, provides sub-investment advice with respect to the Large Cap Value
Portfolio and 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 sub-investment adviser to the Equity Index Portfolio. INVESCO
Management and Research located at 101 Federal Street, Boston, MA 02110, is
the sub-investment adviser to the Small Cap Value Portfolio. Janus Capital
Corporation, with its principal place of business at 100 Filmore Street,
Denver, CO 80206, is the sub-investment adviser to the Mid Cap Growth
Portfolio. Neuberger & Berman, 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, 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.
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.
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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
three 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 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.
John Hancock will purchase and redeem Fund shares for the Account at their
net asset value without any sales or redemption charges. Shares of the Fund
represent an interest in one of the Portfolios of the Fund which corresponds
to 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 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
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 John Hancock's general account
assets. John Hancock's general account consists of assets owned by John
Hancock other than those in the Account and in other separate accounts that
have been or may be established by John Hancock. Subject to applicable law,
John Hancock 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, John Hancock 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.
Transfers from the Fixed Account are
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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".
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. John Hancock guarantees that interest credited to
the Account Value in the Fixed Account will not be less than an effective
annual rate of 4%. John Hancock 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, John Hancock will inform Owners of the then-applicable rates.
Because of exemptive and exclusionary provisions, interests in John
Hancock's general account have not been registered under the Securities Act of
1933 and the general account has not been registered as an investment company
under the 1940 Act. Accordingly, neither the general account nor any interests
therein are subject to the provisions of these Acts, and John Hancock has been
advised that the staff of the Commission has not reviewed the disclosure in
this Prospectus relating to the Fixed Account. Disclosure regarding the Fixed
Account may, however, be subject to certain generally-applicable provisions of
the Federal securities laws relating to accuracy and completeness of
statements made in prospectuses.
POLICY PROVISIONS AND BENEFITS
REQUIREMENTS FOR ISSUANCE OF POLICY
The Policy is generally available with a minimum Sum Insured at issue of
$100,000. At the time of issue, the insured must be age 20 through 75. All
persons insured must meet certain health and other criteria called
"underwriting standards". The smoking status of each insured is reflected in
the insurance charges made.
Policies issued 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 Flexibility. Premiums are flexible. The Owner may choose the amount
and frequency of premium payments, so long as each premium payment meets the
requirements described below.
Minimum First Premium. The amount of premium required at the time of issue
is determined by John Hancock, and depends on the age, sex, smoking status,
and underwriting class of the insured at issue, the Policy's Sum Insured at
issue, and any additional benefits selected. The Minimum First Premium must be
received by John Hancock at its Servicing Office in order for the Policy to be
in full force and effect. See "Death Benefits". There is no grace period for
the payment of the Minimum First Premium. The minimum amount of premium
required at the time of Policy issue is three months of Guaranteed Death
Benefit Premium. However, an automatic check writing program ("premiumatic")
may be available to an Owner interested in making monthly premium payments
and, if utilized by an Owner, only one month of Guaranteed Death Benefit
Premium need be paid to satisfy the minimum amount.
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Minimum Premiums. If the Policy's Surrender Value at the beginning of any
Policy month is insufficient to pay the monthly Policy charges then due, John
Hancock will notify the Owner and the Policy will enter a Policy grace period,
unless the Guaranteed Death Benefit is in effect. If premiums sufficient to
pay at least three months' estimated charges are not paid by the end of the
grace period, the Policy will lapse. The estimated charges will equal three
times the monthly Policy charges then due. See "Default".
Planned Premium Schedule. At the time of issue, the Owner may designate a
Planned Premium schedule for the amount and frequency of premium payments.
John Hancock will send billing statements for the amount chosen, at the
frequency chosen whether quarterly, monthly, semi-annually or annually. The
Owner may change the Planned Premium after issue. The Owner may also pay a
premium in excess of the Planned Premium, subject to the limitations described
below. At the time of Policy issuance, John Hancock will determine whether the
Planned Premium schedule will exceed the 7-Pay limit discussed below. If so,
John Hancock's standard procedures prohibit issuance of the Policy unless the
Owner signs a form acknowledging that fact.
Other Premium Limitations. Federal tax law requires a minimum death benefit
in relation to Account Value. See "Death Benefits--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 Account Value to increase to such an
extent that an increase in death benefit is necessary to satisfy Federal tax
law requirements, John Hancock 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 John Hancock refuse to accept
any premium necessary to prevent the Policy from lapsing. Also, if an Owner
has elected to use the "guideline premium and cash value corridor" test for
Federal income tax purposes, John Hancock will not accept the portion of any
premium that exceeds the maximum amount prescribed under that test.
Guaranteed Death Benefit Premiums. A Guaranteed Death Benefit feature may
apply during the first five Policy years. See "Death Benefits". The Guaranteed
Death Benefit Premiums required to maintain this benefit in force depend on
the issue age, sex, smoking status, and underwriting class of the insured at
issue, the Sum Insured at issue and any additional benefits selected. This
premium will equal 1/12th of the Target Premium for Owners electing a monthly
premium payment mode; 1/4 of the Target Premium for Owners electing the
quarterly mode; 1/2 of the Target Premium for owners electing the semi-annual
mode; and the Target Premium for Owners electing the annual mode. The due date
for each premium is referred to as the Modal processing date. To keep the
Guaranteed Death Benefit in effect, the amount of actual premiums paid minus
any withdrawals must at each Modal processing date be at least equal to the
Guaranteed Death Benefit Premiums due to date. If this test is not satisfied
on any Modal processing date, John Hancock will notify the Owner of the
shortfall immediately and a Guaranteed Death Benefit grace period will
commence as of that anniversary. The Guaranteed Death Benefit grace period
will end on the second monthly processing date after the determination of the
shortfall. This notice will be mailed to the Owner's last-known address at
least 31 days prior to the end of the Guaranteed Death Benefit grace period.
If John Hancock does not receive payment for the amount of the deficiency by
the end of the Guaranteed Death Benefit grace period, the Guaranteed Death
Benefit feature will permanently lapse with no possibility of restoration. The
Guaranteed Death Benefit is only available if the insured's underwriting class
is standard or preferred and the insured meets certain other underwriting
standards relating to health and occupation.
Billing, Allocation of Premium Payments (Investment Rule). The Owner may at
any time elect to be billed by John Hancock for a Planned Premium other than
the Guaranteed Death Benefit Premium. The Owner may also elect to be billed
for premiums on an annual, semi-annual, quarterly or monthly basis. An
automatic check-
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writing program ("premiumatic") may be available to an Owner interested in
making monthly premium payments. All premiums are payable at John Hancock's
Servicing Office.
Any premium payment will be processed by John Hancock as of the end of the
Valuation Period in which it is received, unless one of the three exceptions
noted below is applicable. Each premium payment will be reduced by the state
premium tax charge, any sales charge, and the Federal DAC Tax charge. 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,
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 John Hancock's Servicing
Office of notice satisfactory to John Hancock.
There are three 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) 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 date of
issue until all of the Minimum First Premium is received.
(3) That portion of any premium that we delay accepting as described
under "Other Premium Limitations" above, or "7-Pay Premium Limit"
below, will be processed as of the end of the Valuation Period in
which we accept that amount.
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 limit as defined in the law. 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 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 John Hancock
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
an excess premium, John Hancock sends the Owner immediate notice and refunds
the excess premium if it has not received notice of the acknowledgement 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 Account established upon the making of a
Policy loan. In
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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, 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.
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 Policy 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 John Hancock's Servicing Office of a signed request and the
surrendered Policy.
A portion of the Contingent Deferred Sales Charge, equal to 20% of premiums
paid in the second Policy year up to one Base Policy Target Premium, will be
waived in calculating the second Policy year's Surrender Value.
Partial Withdrawal of Surrender Value. The Owner may request withdrawal of
part of the Surrender Value in accordance with John Hancock's rules then in
effect. Any withdrawal must be at least $1,000 and is subject to an
administrative charge of $20.
An Owner may request a partial withdrawal of Surrender Value at any time
provided that the Policy is not in a Policy grace period. This privilege,
which reduces the Account Value by the amount of the withdrawal and the
associated charge, may not be used to reduce the Account Value below the
amount John Hancock estimates will be required to pay three months' charges
under the Policy as they fall due. The withdrawal will be effective as of the
end of the Valuation Period in which John Hancock receives written notice
satisfactory to it at its Servicing Office.
An amount equal to the Account Value withdrawn will be removed from each
Subaccount in the same proportion as the Account Value is then allocated among
the Subaccounts. A withdrawal is not a loan and, once made, cannot be repaid.
The effect of a withdrawal, including its associated charge, upon the death
benefit depends upon the death benefit option in effect.
Option 1. Level Death Benefit. Any withdrawal will first be deducted from
Account Value until the Account Value, multiplied by the appropriate Corridor
Factor, is no higher than the Sum Insured. Thereafter, both the Sum Insured
and the Account Value will be reduced by the remaining amount of the
withdrawal. If the Account Value multiplied by the appropriate Corridor Factor
does not exceed the Sum Insured at the time of the withdrawal, the withdrawal
will reduce both the Sum Insured and the Account Value.
Option 2. Variable Death Benefit. Any withdrawal will be deducted from
Account Value and will not affect the Sum Insured. Nonetheless, because
Account Value will be reduced, the death benefit under this option also will
be reduced.
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Option 3. Level Death Benefit with Greater Funding. Any withdrawal will
first be deducted from Account Value until the Account Value, multiplied by
the appropriate Death Benefit Factor, is no higher than the Sum Insured.
Thereafter, both the Sum Insured and the Account Value will be reduced by any
remaining amount of the withdrawal. If the Account Value multiplied by the
appropriate Death Benefit Factor does not exceed the Sum Insured at the time
of the withdrawal, the withdrawal will reduce both the Sum Insured and the
Account Value.
A surrender or withdrawal may have significant tax consequences. See "Tax
Considerations".
John Hancock reserves the right to refuse any withdrawal request that would
cause the Policy's Sum Insured to fall below $100,000.
DEATH BENEFITS
The death benefit proceeds will equal the death benefit of the Policy, plus
any additional rider benefits then due, minus any Indebtedness. If the insured
dies during a Policy grace period, John Hancock will also deduct any overdue
monthly deductions.
The death benefit payable depends on the current Sum Insured and the death
benefit option selected by the Owner. At the time of application for a Policy,
the Owner must select from among three death benefit options. After issue 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 John Hancock may
require. The three options are:
Option 1: Level Death Benefit: Under this option, the death benefit will
equal the Sum Insured, unless the Account Value multiplied by the Corridor
Factor produces a higher death benefit. The Corridor Factor depends upon the
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. 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 Account Value
multiplied by the Corridor Factor exceeds the Sum Insured, 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 Sum Insured.
Option 2: Variable Death Benefit: Under this option, the death benefit will
equal the Sum Insured plus any Account Value, unless the Account Value
multiplied by the Corridor Factor produces a higher death benefit. 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. 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. 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 Sum Insured.
If neither of the above Options meets the objectives of the Owner, a third
Option may be elected and an endorsement to the Policy will be issued. This
third Option is described below.
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Option 3: Level Death Benefit With Greater Funding: Under this option, the
death benefit will equal the Sum Insured, unless the Account Value, multiplied
by the Death Benefit Factor, gives a higher death benefit. The Death Benefit
Factor depends upon the sex, smoking status and 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. Under this option, the death benefit 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 Account
Value multiplied by the Death Benefit Factor exceeds the Sum Insured, 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 Sum Insured.
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
automatically by multiplying the Account Value by a "Death Benefit Factor"
computed in compliance with the Code.
Guaranteed Death Benefit. During the first 5 Policy years the Policy is
guaranteed not to lapse, provided that (1) the amount of premiums paid through
each Modal Processing Date minus any withdrawals is at least equal to the sum
of the cumulative Guaranteed Death Benefit Premiums due to date and (2) the
insured is in the standard or preferred underwriting class and satisfies
certain other underwriting standards relating to health and occupation. At any
time when this feature is not in force, the death benefit of the Policy is not
guaranteed and the Policy may lapse if the Account Value falls to a low level.
TRANSFERS AMONG SUBACCOUNTS
The Owner may reallocate the amounts held for the Policy in the Subaccounts
with no charge at any time, except as noted below. 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 John Hancock receives at
its Servicing Office notice satisfactory to John Hancock.
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
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<PAGE>
anniversary, they will be processed at the end of the Valuation Period in
which John Hancock receives the request at its Servicing Office. (John Hancock
reserves the right to defer such Fixed Account transfers for six months.) 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. 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 John Hancock reserves the right to
impose such a limit in the future. No transfers among Subaccounts may be made
while the Policy is in a grace period.
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.
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 one or more of any other variable
Subaccounts but the amount to be transferred monthly to any Subaccount must be
$100 or more.
Once the written election is received in form satisfactory to John Hancock
at its Servicing Office, transfers will begin on the second monthly processing
date following its receipt. To request an election form or if you have any
questions with respect to this provision, call 1-800-732-5543.
Once elected, the scheduled monthly transfer option will remain in effect
until the receipt of written notice from the Owner by John Hancock at its
Servicing Office of cancellation of the option 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 by 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 telecommunication 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
transactions instructions which John Hancock reasonably believes to be
genuine, unless such loss, expense or cost is the result of John Hancock's
mistake or negligence. John Hancock employs procedures which provide
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 John
Hancock 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.
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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
John Hancock 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 determined by John
Hancock at the start of each Policy Year. This interest rate will not exceed
the greater of (1) the "Published Monthly Average" (defined below) for the
calendar month ending 2 months before the calendar month of the policy
anniversary or (2) 5%. The "Published Monthly Average" means Moody's Corporate
Bond Yield Average--Monthly Average Corporates, as published by Moody's
Investors Service, Inc., or if the average is no longer published, a
substantially similar average established by the insurance regulator where the
Policy is issued.
The amount of any outstanding loan plus accrued interest is called the
"Indebtedness", 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 "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 $3,000 of which $1,000 was borrowed
from the Fixed Account, then upon a repayment of $1,500, $500 would be
allocated to the Fixed Account and the remaining $1,000 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.
Effect of Loan and Indebtedness. While the Indebtedness is outstanding, that
portion of the Account Value that is in the Loan Assets is credited interest
at a rate that is 1% less than the loan interest rate for the first 20 Policy
years and, thereafter, .5% less than the loan interest rate. This rate will
usually be different than the net return for the Subaccounts. Since the 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 Sum Insured 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 John Hancock 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".
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<PAGE>
DEFAULT
Grace Period, Default and Lapse. Unless the 5 Year Guaranteed Death Benefit
is in force, at the beginning of each Policy month John Hancock determines
whether the Account Value, net of any Indebtedness, is sufficient to pay all
monthly charges then due under the Policy. If not, the Policy is in default
and John Hancock will notify the Owner of the amount estimated to be necessary
to pay three months' deductions, and a Policy grace period will be in effect
until 61 days after the date the notice was mailed. If John Hancock does not
receive payment of at least this amount by the end of the Policy grace period,
the Policy will lapse, and any remaining amount owed to the Owner as of the
date of lapse will be paid to the Owner.
Lapse can have significant tax consequences. See "Tax Considerations--Policy
Proceeds". If the Guaranteed Death Benefit has been in effect and lapses at
the end of a Guaranteed Death Benefit grace period (as described in
"Premiums--Guaranteed Death Benefit Premiums"), the usual default, Policy
grace period and lapse procedures described in the preceding paragraph will be
applied commencing with the first day of the Policy month in which the lapse
of the Guaranteed Death Benefit occurs.
The insurance under the Policy continues in full force during any grace
period but, if the insured dies during the Policy grace period, the amount in
default is deducted from the death benefit otherwise payable.
Written notice will be furnished to the Owner at his or her last known
address, at least 31 days prior to the end of any grace period. If in the
Policy grace period, the notice will specify the minimum amount which must be
paid to continue the Policy in force on a premium paying basis after the end
of the Policy grace period. If in the Guaranteed Death Benefit grace period,
the notice will specify the amount which must be paid to continue the
Guaranteed Death Benefit feature in force.
Reinstatement. A lapsed Policy may be reinstated in accordance with the
Policy's terms. Evidence of insurability satisfactory to John Hancock will be
required and payment of the required premium and charges. The request must be
received at John Hancock's Servicing Office within 1 year after the beginning
of the applicable grace period. A reinstatement of the Policy may be treated
as a material change for Federal income tax purposes. See "Premiums--7-Pay
Premium Limit" and "Tax Considerations".
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 John Hancock receives
at its Servicing Office notice of the transfer satisfactory to John Hancock.
-------------------------
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.
CHARGES AND EXPENSES
CHARGES DEDUCTED FROM PREMIUMS
In addition to part of the sales charges (see "Sales Charges" below), the
following charges are deducted from premiums:
State Premium Tax Charge. A charge currently equal to 2.35% of each premium
payment will be deducted from each premium payment. The 2.35% rate is the
average rate currently expected to be paid on premiums
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<PAGE>
received in all states over the lifetimes of the insureds covered by the
Policies. John Hancock will not increase this charge under outstanding
Policies, but reserves the right to change this charge for Policies not yet
issued in order to correspond with changes in the state premium tax levels.
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 John Hancock of the Federal income tax treatment of the Policies' deferred
acquisition costs--commonly referred to as the "DAC Tax". John Hancock has
determined that this charge is reasonable in relation to John Hancock's
increased Federal income tax burden under the Internal Revenue Code resulting
from the receipt of premiums. John Hancock 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 John Hancock for the cost of selling the
Policy. This cost includes agents' commissions, commission overrides,
advertising, and the printing of Prospectuses and sales literature. The amount
of the charge in any Policy year cannot be specifically related to sales
expenses for that year. John Hancock 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 mortality
and expense risks and other gains with respect to the Policies, or from John
Hancock's general assets. See "Distribution of Policies".
From Premiums. Part of the sales charge is deducted from premiums received.
The amount is 4% of the premiums received in any Policy year that do not
exceed that year's total Target Premium. The Target Premium is established at
issue and is the sum of Base Policy Target Premium and any rider premium. The
Base Policy Target Premium is set forth in the Policy. Target Premiums will
vary based on the issue age, sex, smoking status and underwriting class of the
insured. John Hancock 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.
John Hancock will waive a portion of the sales charge (it is currently
waiving a portion equal to 2% of all premiums from which sales charges are
deducted) otherwise to be deducted from premiums under 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 John
Hancock in the future.
No sales charge is deducted from a premium payment received in excess of one
Target Premium in any Policy year.
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 twelfth 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 twelfth Policy year.
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The Contingent Deferred Sales Charge is computed as a percentage of Base
Policy Target Premiums paid in accordance with the following schedule:
<TABLE>
<CAPTION>
Maximum Contingent
For Surrenders or Lapses Effective During: Deferred Sales Charge
------------------------------------------ ---------------------
<S> <C>
Policy Year 1 26% of premiums received in Policy
Year 1 up to 1 Base Policy Target
Premium*
Policy Year 2 26% of premiums received in Policy
Years 1 and 2 up to 1 Base Policy
Target Premium in each year
Policy Years 3-7 26% of premiums received in Policy
Years 1, 2 and 3 up to 1 Base Policy
Target Premium in each year
Policy Year 8 83.33% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 9 66.67% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 10 50% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 11 33.33% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 12 16.67% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 13 and later 0
</TABLE>
- --------
* The amount of the Contingent Deferred Sales Charge is calculated on the
basis of the Base Policy Target Premium for the age of the insured at the time
of issue of the Policy.
The Contingent Deferred Sales Charge reaches its maximum at the end of the
third Policy year, stays level through the seventh Policy year, and is reduced
by an equal amount at the beginning of each Policy year thereafter until it
reaches zero in Policy year 13. 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.
Effect of Premium Payment Pattern. An Owner may structure the timing and
amount of premium payments to minimize the sales charges, although doing so
involves certain risks. Paying less than one Target Premium in the first
Policy year or paying more than one Target Premium in any Policy year could
reduce the Owner's total sales charges over time. For example, an Owner,
paying ten Target Premiums of $1,000 each would pay total premium sales
charges of $400 and be subject to a maximum Contingent Deferred Sales Charge
of $780 if he paid $1,000 in each of the first ten Policy years, but would pay
only a $200 premium sales charge and $520 Contingent Deferred Sales Charge if
he paid $2,000 (i.e., two times the Target Premium amount) in every other
Policy year up to the tenth Policy year. However, delaying the payment of
Target Premiums to later Policy years could increase the risk that the Account
Value will be insufficient to pay monthly Policy charges as they come due and
that, as a result, the Policy will lapse and eventually terminate. See
"Default". Conversely, accelerating the payment of Target Premiums to earlier
Policy years could cause aggregate premiums paid to exceed the Policy's 7-pay
premium limit and, as a result, cause the Policy to become a modified
endowment, with adverse tax consequences to the Owner upon receipt of Policy
distributions. See "Premiums--7-Pay Premium Limit".
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<PAGE>
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 Policy which
would not otherwise be recouped. The maximum charge in Policy years 1 through
7 is $5 per $1,000 of current Sum Insured, in Policy year 8 is $4 per $1,000
of current Sum Insured and in Policy year 9 is $3 per $1,000 of current Sum
Insured.
This charge is made to compensate John Hancock for expenses incurred in
connection with the underwriting, issuance and maintenance of the Policy which
may not be recovered upon the early surrender or lapse of the Policy.
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 John Hancock anticipates that the sales to the members of
the class will result in lower than normal sales or administrative expenses.
These reductions will be made in accordance with John Hancock's rules in
effect at the time of the application for a Policy. The factors considered by
John Hancock 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
owner.
CHARGES DEDUCTED FROM ACCOUNT VALUE OR ASSETS
The following charges are deducted from Account Value or assets:
Issue Charge. John Hancock will deduct monthly from Account Value an Issue
Charge equal to $20 per month for the first 12 Policy months to compensate
John Hancock 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. John Hancock will deduct from the Account Value a
monthly charge not to exceed $8 for all Policy years. The current monthly
charge is $6.
This charge is to compensate John Hancock 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 current death benefit and the Account
Value. The amount of the insurance charge is determined by multiplying John
Hancock's then current monthly rate for insurance by the amount at risk.
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<PAGE>
Current monthly rates for insurance are based on the sex, age, smoking
status and underwriting class of the insured and the length of time the Policy
has been in effect. John Hancock will review these rates at least every 5
years, and may change these rates from time to time based on John Hancock's
expectations of future experience. However, these rates 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. This reduction is not
guaranteed but it is John Hancock's present intention to effect this 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 effective annual 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 effective annual rate of .40%.
For example, it is expected that the reduction percentage in Policy year 11
would be at an effective annual rate of .21%, in Policy year 20 would be .30%
and in Policy year 30 would be .40%.
John Hancock 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 are
eligible for the preferred underwriting class of the Policy.
John Hancock 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.
Charge for Mortality and Expense Risks. A daily charge is deducted from the
variable Subaccounts for mortality and expense risks assumed by John Hancock
at a maximum effective annual rate of .90% of the value of the assets of each
variable Subaccount attributable to the Policy. The current charge is at an
effective annual rate of .60%. 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. John Hancock 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 the
standard or preferred underwriting class must pay an additional charge because
of the extra mortality risk. The level of the charge depends upon the age of
the insured and the degree of extra mortality risk. This additional charge is
deducted monthly from Account Value. Alternatively, the charge may take the
form of an additional insurance charge as described above.
Charges for Optional Rider Benefits. An additional charge must be paid if
the Owner elects to purchase any optional insurance benefit by Policy rider.
Any such additional charge is deducted monthly from Account Value.
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<PAGE>
Charges for Taxes. Currently no charge is made against Account Value for
John Hancock's Federal income taxes, but if John Hancock 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. John Hancock will deduct a charge in the
amount of $20 on a partial withdrawal of Surrender Value, as described under
"Account Value and Surrender Value". The charge will be deducted from Account
Value. The charge is to compensate John Hancock for the administrative
expenses of effecting the withdrawal.
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 non-Advisory Fund operating expenses, which are described in the
Summary of this Prospectus. For a full description of these deductions, see
the attached Prospectuses for the Funds.
The monthly deductions from Account Value described above are deducted on
the date of issue and on each monthly processing date thereafter. These
deductions are made from the Subaccounts in proportion to the amount of
Account Value in each. For each month that John Hancock 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.
GUARANTEE OF PREMIUMS AND CERTAIN CHARGES
The Policy's Guaranteed Death Benefit Premium is guaranteed not to increase.
The state premium tax charge, the Federal DAC Tax charge, the Administrative
Surrender Charge, the Issue Charge and the charge for partial withdrawals are
guaranteed not to increase over the life of the Policy. The maintenance
charge, the sales charges, the mortality and expense risk charge, and the
insurance charge are guaranteed not to exceed the maximums set forth in the
Policy.
DISTRIBUTION OF POLICIES
Applications are solicited by agents who are licensed by state insurance
authorities to sell John Hancock'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, 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. John Hancock 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
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 John Hancock 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.
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<PAGE>
The maximum commission payable to a Distributors representative for selling
a Policy is 50% of the Target Premium paid in the first Policy year, 6% of the
Target Premium paid in the second through fourth Policy years, and 3% of the
Target Premium paid in each year thereafter. The maximum commission on any
premium paid in any year in excess of the Target Premium is 3%.
In addition, Distributors' representatives may earn "credits" toward
qualification for attendance at certain business meetings sponsored by John
Hancock.
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 John
Hancock will be eligible for additional compensation.
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 John Hancock will reimburse Distributors for such
amounts and for certain other direct expenses in connection with marketing the
Policies through other broker-dealers.
Distributors serves as principal underwriter for other separate accounts
registered under the 1940 Act: John Hancock Variable Annuity Accounts U, I and
V and John Hancock Variable Life Accounts U, V and S. Distributor is also
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, John Hancock 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. See "Death
Benefits--Definition of Life Insurance". If certain standards are met at issue
and over the life of the Policy, the Policy will come within that definition.
John Hancock will monitor compliance with these standards. Furthermore, John
Hancock reserves the right to make any changes in the Policy necessary to
ensure the Policy is within the definition of life insurance.
If the Policy complies with the definition of life insurance, John Hancock
believes 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.
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<PAGE>
A surrender, lapse or partial withdrawal may have tax consequences. For
example, the Owner will be taxed on a surrender to the extent that the Account
Value exceeds the premiums paid under the Policy, ignoring premiums paid for
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.
John Hancock 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 if a Policy lapses.
Distributions under Policies on which premiums greater than the "7-pay"
limit (see "Premiums--7-Pay Premium Limit") have been paid will be treated as
distributions from a "modified endowment," which are subject to special
taxation based on Federal tax law. The Owner of such a Policy will be taxed on
distributions such as loans, surrenders and partial 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 affected income distributed before the Owner
attains age 59 1/2.
Furthermore, any time there is a "material change" in a Policy (such as 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 endowments 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 the modified endowment 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 JOHN HANCOCK'S TAXES
Except for the DAC Tax charge, John Hancock currently makes no charge for
Federal income taxes that may be attributable to this class of Policies. If
John Hancock 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, John Hancock 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.
26
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK
The Directors and Executive Officers of John Hancock and their principal
occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Directors Principal Occupations
--------- ---------------------
<S> <C>
Samuel W. Bodman Chairman of The Board and Chief Executive
Officer, Cabot Corporation (chemicals)
Nelson S. Gifford Director, Boston Edison Company (electric
utility)
William L. Boyan President, John Hancock
E. James Morton Director, formerly Chairman of the Board, John
Hancock
John F. Magee Chairman of the Board, Arthur D. Little, Inc.
(industrial research consultant).
John M. Connors, Jr. President and Chief Executive Officer, Hill,
Holliday, Connors, Cosmopoulos, Inc.
(advertising).
Stephen L. Brown Chairman of the Board and Chief Executive
Officer, John Hancock
Thomas L. Phillips Director, formerly Chairman of the Board,
Raytheon Company (electronics).
I. MacAllister Booth Former Chairman of the Board and Chief Executive
Officer, Polaroid Corporation (photographic
products)
C. Vincent Vappi Former President and Chief Executive Officer,
Vappi & Company, Inc. (construction).
Randolph W. Bromery President, Springfield College.
Robert J. Tarr, Jr. Former President, Chief Executive Officer and
Chief Operations Officer, Harcourt General, Inc.
(publishing).
David F. D'Alessandro Senior Executive Vice President, John Hancock
Joan T. Bok Chairman of the Board, New England Electric
System (electric utility).
Robert E. Fast Partner, Hale and Dorr (law firm).
Foster L. Aborn Vice Chairman of the Board, John Hancock
Kathleen F. Feldstein President, Economic Studies Inc. (economic
consulting).
Lawrence K. Fish Chairman and Chief Executive Officer, Citizens
Financial Group (banking).
Richard F. Syron Chairman of the Board and Chief Executive
Officer, American Stock Exchange.
Michael C. Hawley President and Chief Operating Officer, The
Gillette Company (razors etc).
<CAPTION>
Executive Officers
------------------
<S> <C>
Diane M. Capstaff Executive Vice President
Thomas E. Moloney Executive Vice President
Richard S. Scipione General Counsel
Bruce E. Skrine Senior Vice President and Secretary
</TABLE>
The business address of all Directors and officers of John Hancock is John
Hancock Place, Boston, Massachusetts 02117.
27
<PAGE>
REPORTS
At least once each Policy year a statement will be sent to the Owner setting
forth the amount of the death benefit, Account Value, the portion of the
Account Value in each Subaccount, Surrender Value, premiums received and
charges deducted from premiums since the last report, and any outstanding
Policy loan (and interest charged for the preceding Policy year) as of the
last day of such year. Moreover, confirmations will be furnished to Owners of
premium payments, transfers among Subaccounts, Policy loans, partial
withdrawals and certain other Policy transactions.
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. John Hancock 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 John Hancock 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 Funds' meeting.
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 John Hancock in order that voting instructions may be given.
John Hancock 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. John Hancock 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 John Hancock (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 John Hancock or
of an affiliated life insurance company, which separate accounts have
investment objectives similar to those of the variable Subaccount. In the
event John Hancock 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.
28
<PAGE>
CHANGES THAT JOHN HANCOCK CAN MAKE
The voting privileges described in this Prospectus are afforded based on
John Hancock's understanding of applicable Federal securities law
requirements. To the extent that applicable law, regulations or
interpretations change to eliminate or restrict the need for such voting
privileges, John Hancock reserves the right to proceed in accordance with any
such revised requirements. John Hancock also reserves the right, subject to
compliance with applicable law, including approval of owners if so required,
(1) to transfer assets determined by John Hancock 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 John Hancock or an affiliate, (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. John Hancock 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
John Hancock 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.
John Hancock 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
Legal matters in connection with the Policies described in this Prospectus
have been passed on by Ronald J. Bocage, Vice President and Counsel for John
Hancock. Messrs. Freedman, Levy, Kroll & Simonds, Washington, D.C., have
advised John Hancock 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 John Hancock 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 Randi M.
Sterrn, F.S.A., an Actuary of John Hancock.
29
<PAGE>
FINANCIAL STATEMENTS
The financial statements of John Hancock included herein should be
distinguished from the financial statements of the Account and should be
considered only as bearing upon the ability of John Hancock to meet its
obligations under the Policies.
30
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
31
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Large Cap Sovereign International Small Cap International Mid Cap Large Cap Money Mid Cap
Growth Bond Equities Growth Balanced Growth Value Market Value
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ----------- ------------- ---------- ------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $12,863,129 $52,753,269 $3,757,643 $257,053 $32,766 $165,152 $104,532 $ 9,960,187 $228,427
Investments in
shares of
portfolios of M
Fund, Inc., at
value........... -- -- -- -- -- -- -- -- --
Policy loans and
accrued interest
receivable...... 1,217,789 9,183,115 205,660 -- -- -- -- 2,124,205 --
Receivable from:
John Hancock
Variable Series
Trust I........ 5,468 46,420 2,024 6,728 83 3,468 12,908 95,672 3,265
M Fund, Inc..... -- -- -- -- -- -- -- -- --
----------- ----------- ---------- -------- ------- -------- -------- ----------- --------
Total assets.... 14,086,386 61,982,804 3,965,327 263,781 32,849 168,620 117,440 12,180,064 231,692
LIABILITIES
Payable to John
Hancock Variable
Life Insurance
Company......... 5,244 45,466 1,962 6,724 82 3,466 12,906 96,772 3,261
Asset charges
payable......... 224 954 62 4 1 2 2 186 4
----------- ----------- ---------- -------- ------- -------- -------- ----------- --------
Total
liabilities..... 5,468 46,420 2,024 6,728 83 3,468 12,908 96,958 3,265
----------- ----------- ---------- -------- ------- -------- -------- ----------- --------
Net assets....... $14,080,918 $61,936,384 $3,963,303 $257,053 $32,766 $165,152 $104,532 $12,083,106 $228,427
=========== =========== ========== ======== ======= ======== ======== =========== ========
<CAPTION>
Special Real Estate
Opportunities Equity
Subaccount Subaccount
------------- -----------
<S> <C> <C>
ASSETS
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $2,981,726 $3,453,171
Investments in
shares of
portfolios of M
Fund, Inc., at
value........... -- --
Policy loans and
accrued interest
receivable...... -- 191,332
Receivable from:
John Hancock
Variable Series
Trust I........ 9,468 71,976
M Fund, Inc..... -- --
------------- -----------
Total assets.... 2,991,193 3,716,479
LIABILITIES
Payable to John
Hancock Variable
Life Insurance
Company......... 9,419 71,915
Asset charges
payable......... 49 58
------------- -----------
Total
liabilities..... 9,468 71,973
------------- -----------
Net assets....... $2,981,726 $3,644,506
============= ===========
</TABLE>
See accompanying notes.
32
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES -- CONTINUED
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Short-Term Turner Edinburgh
Growth & U.S. Small Cap International Equity Strategic Core International
Income Managed Government Value Opportunities Index Bond Growth Equity
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
------------ ----------- ----------- ---------- ------------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $147,820,489 $70,927,719 $25,065,342 $64,908 $145,273 $235,875 $13,218 $ -- $ --
Investments in
shares of
portfolios of
M Fund, Inc., at
value........... -- -- -- -- -- -- -- 28,792 88,903
Policy loans and
accrued interest
receivable...... 21,886,336 9,676,484 -- -- -- -- -- -- --
Receivable from:
John Hancock
Variable Series
Trust I........ 43,492 21,493 467 1 6,018 4 47 -- --
M Fund, Inc. ... -- -- -- -- -- -- -- -- 1
------------ ----------- ----------- ------- -------- -------- ------- ------- -------
Total assets.... 169,750,317 80,625,696 25,065,809 64,909 151,291 235,879 13,265 28,792 88,904
LIABILITIES
Payable to John
Hancock Variable
Life Insurance
Company......... 40,849 20,919 55 -- 6,016 -- 47 -- --
Asset charges
payable......... 2,643 1,259 412 1 2 4 -- -- 1
------------ ----------- ----------- ------- -------- -------- ------- ------- -------
Total
liabilities..... 43,492 22,178 467 1 6,018 4 47 -- 1
------------ ----------- ----------- ------- -------- -------- ------- ------- -------
Net assets....... $169,706,825 $80,603,518 $25,065,342 $64,908 $145,273 $235,875 $13,218 $28,792 $89,903
============ =========== =========== ======= ======== ======== ======= ======= =======
<CAPTION>
Frontier
Capital
Appreciation
Subaccount
------------
<S> <C>
ASSETS
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $ --
Investments in
shares of
portfolios of
M Fund, Inc., at
value........... 159,209
Policy loans and
accrued interest
receivable...... --
Receivable from:
John Hancock
Variable Series
Trust I........ --
M Fund, Inc. ... 3
------------
Total assets.... 159,212
LIABILITIES
Payable to John
Hancock Variable
Life Insurance
Company......... --
Asset charges
payable......... 3
------------
Total
liabilities..... 3
------------
Net assets....... $159,209
============
</TABLE>
See accompanying notes.
33
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Large Cap Growth Subaccount Sovereign Bond Subaccount International Equities Subaccount
------------------------------- ------------------------------------ ---------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
---------- ---------- --------- ----------- ---------- ----------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment in-
come:
Distributions
received from:
John Hancock
Variable Series
Trust I........ $1,905,476 $ 754,115 $ 288,656 $ 3,765,421 $3,504,747 $ 2,780,967 $ 42,110 $ 29,692 $ 32,660
M Fund, Inc. ... -- -- -- -- -- -- -- -- --
Interest income
on policy
loans.......... 83,974 67,279 54,175 678,580 641,677 622,042 13,158 9,853 7,477
---------- ---------- --------- ----------- ---------- ----------- ---------- ---------- -----------
Total investment
income......... 1,989,450 821,394 342,831 4,444,001 4,146,424 3,403,009 55,268 39,545 40,137
Expenses:
Mortality and
expense risks.. 69,829 48,056 31,565 325,346 286,349 257,251 19,834 15,495 9,653
---------- ---------- --------- ----------- ---------- ----------- ---------- ---------- -----------
Net investment
income (loss)... 1,919,621 773,338 311,266 4,118,655 3,860,075 3,145,758 35,434 24,050 30,484
Net realized and
unrealized gain
(loss) on in-
vestments:
Net realized
gain (loss).... 145,304 23,090 (35,449) (169,158) (127,733) (215,268) 25,854 14,367 11,225
Net unrealized
appreciation
(depreciation)
during the
year........... 3,756 1,225,784 (298,196) (1,418,707) 4,205,161 (3,583,940) 217,574 164,490 (159,108)
---------- ---------- --------- ----------- ---------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain
(loss) on
investments..... 149,060 1,248,874 (333,645) (1,587,865) 4,077,428 (3,799,208) 243,428 178,857 (147,883)
---------- ---------- --------- ----------- ---------- ----------- ---------- ---------- -----------
Net increase (de-
crease) in net
assets resulting
from operations. $2,068,681 $2,022,212 $ (22,379) $ 2,530,790 $7,937,503 $ (653,450) $ 278,862 $ 202,907 $ (117,399)
========== ========== ========= =========== ========== =========== ========== ========== ===========
<CAPTION>
Small Cap International
Growth Balanced
Subaccount Subaccount
---------- -------------
1996* 1996*
---------- -------------
<S> <C> <C>
Investment in-
come:
Distributions
received from:
John Hancock
Variable Series
Trust I........ $ 160 $ 734
M Fund, Inc. ... -- --
Interest income
on policy
loans.......... -- --
---------- -------------
Total investment
income......... 160 734
Expenses:
Mortality and
expense risks.. 538 81
---------- -------------
Net investment
income (loss)... (378) 653
Net realized and
unrealized gain
(loss) on in-
vestments:
Net realized
gain (loss).... (690) 9
Net unrealized
appreciation
(depreciation)
during the
year........... (5,174) 899
---------- -------------
Net realized and
unrealized gain
(loss) on
investments..... (5,864) 908
---------- -------------
Net increase (de-
crease) in net
assets resulting
from operations. $(6,242) $1,561
========== =============
</TABLE>
* From May 1, 1996 (commencement of operations).
See accompanying notes.
34
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS -- CONTINUED
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Mid Cap Growth Large Cap Value Mid Cap Value
Subaccount Subaccount Money Market Subaccount Subaccount Special Opportunities Subaccount
-------------- --------------- ---------------------------- ------------- ------------------------------------
1996* 1996* 1996 1995 1994 1996* 1996 1995 1994**
-------------- --------------- ---------- -------- -------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment in-
come:
Distributions
received from:
John Hancock
Variable Series
Trust I........ $ 411 $2,056 $1,073,915 $810,091 $284,469 $ 5,010 $ 114,600 $ 22,718 $ 746
M Fund, Inc..... -- -- -- -- -- -- -- -- --
Interest income
on policy loans -- -- 160,206 155,058 148,601 -- -- -- --
------ ------ ---------- -------- -------- ------- ----------- ----------- ---------
Total investment
income......... 411 2,056 1,234,121 965,149 433,070 5,010 114,600 22,718 746
Expenses:
Mortality and
expense risks.. 292 218 134,461 96,074 52,620 572 10,841 3,017 289
------ ------ ---------- -------- -------- ------- ----------- ----------- ---------
Net investment
income......... 119 1,838 1,099,660 869,075 380,450 4,438 103,759 19,701 457
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss).... (17) 588 -- -- -- 8,413 81,916 9,743 77
Net unrealized
appreciation
(depreciation)
during the
year........... 1,684 4,787 -- -- -- 14,211 264,010 126,004 (1,412)
------ ------ ---------- -------- -------- ------- ----------- ----------- ---------
Net realized and
unrealized gain
(loss) on
investments.... 1,667 5,375 -- -- -- 22,624 345,926 135,747 (1,335)
------ ------ ---------- -------- -------- ------- ----------- ----------- ---------
Net increase
(decrease) in
net assets
resulting from
operations...... $1,786 $7,213 $1,099,660 $869,075 $380,450 $27,062 $ 449,685 $ 155,448 $ (878)
====== ====== ========== ======== ======== ======= =========== =========== =========
</TABLE>
*From May 1, 1996 (commencement of operations).
**From May 6, 1994 (commencement of operations).
See accompanying notes.
35
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS -- CONTINUED
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Growth & Income
Real Estate Equity Subaccount Subaccount Managed Subaccount
------------------------------ ----------------------------------- -------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
--------- --------- --------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment in-
come:
Distributions re-
ceived from:
John Hancock
Variable Series
Trust I......... $ 177,243 $ 153,495 $ 99,568 $18,406,284 $10,687,455 $ 5,320,942 $ 8,705,892 $ 5,946,035 $ 2,136,167
M Fund, Inc..... -- -- -- -- -- -- -- -- --
Interest income
on policy loans.. 13,041 12,322 10,386 1,562,266 1,397,618 1,289,505 705,413 626,984 554,232
--------- --------- --------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment
income........... 190,284 165,817 109,954 19,968,550 12,085,073 6,610,447 9,411,305 6,573,019 2,690,399
Expenses:
Mortality and ex-
pense risks...... 16,931 13,502 9,807 842,055 646,807 529,971 426,946 356,869 299,763
--------- --------- --------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment
income........... 173,352 152,315 100,147 19,126,495 11,438,266 6,080,476 8,984,359 6,216,150 2,390,636
Net realized and
unrealized gain
(loss) on invest-
ments:
Net realized gain
(loss)........... 39,891 (39,490) (17,561) 820,430 85,385 (249,230) 230,806 (6,127) (182,296)
Net unrealized
appreciation
(depreciation)
during the year.. 637,301 155,992 (47,683) 4,555,481 17,351,805 (5,560,223) (2,103,918) 7,134,666 (2,984,103)
--------- --------- --------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized and
unrealized gain
(loss) on invest-
ments............ 677,192 $ 116,502 (65,244) 5,375,911 17,437,190 (5,809,453) (1,873,112) 7,128,539 (3,166,399)
--------- --------- --------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase
(decrease) in net
assets resulting
from operations.. $ 850,544 $ 268,817 $ 34,903 $24,502,406 $28,875,456 $ 271,023 $ 7,111,247 $13,344,689 $ (775,763)
========= ========= ========= =========== =========== =========== =========== =========== ===========
<CAPTION>
Short-Term
U.S. Government Small Cap Value
Subaccount Subaccount
----------------------- ---------------
1996 1995 1994** 1996*
-------- ------ ------- ---------------
<S> <C> <C> <C> <C>
Investment in-
come:
Distributions re-
ceived from:
John Hancock
Variable Series
Trust I......... $201,830 $2,749 $ 239 $1,653
M Fund, Inc..... -- -- -- --
Interest income
on policy loans.. -- -- -- --
-------- ------ ------- ---------------
Total investment
income........... 201,830 2,749 239 1,653
Expenses:
Mortality and ex-
pense risks...... 15,305 295 22 128
-------- ------ ------- ---------------
Net investment
income........... 186,525 2,454 217 1,525
Net realized and
unrealized gain
(loss) on invest-
ments:
Net realized gain
(loss)........... 577 477 (6) 11
Net unrealized
appreciation
(depreciation)
during the year.. 225,129 1,735 (282) 2,702
-------- ------ ------- ---------------
Net realized and
unrealized gain
(loss) on invest-
ments............ 225,706 2,212 (288) 2,713
-------- ------ ------- ---------------
Net increase
(decrease) in net
assets resulting
from operations.. $412,231 $4,666 $ (71) $4,238
======== ====== ======= ===============
</TABLE>
* From May 1, 1996 (commencement of operations).
** From May 1, 1994 (commencement of operations).
See accompanying notes.
36
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS -- CONTINUED
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
International Edinburgh Frontier
Opportunities Equity Index Strategic Bond Turner Core Growth International Equity Capital Appreciation
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
1996* 1996* 1996* 1996* 1996* 1996*
------------- ------------ -------------- ------------------ -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions re-
ceived from:
John Hancock Vari-
able Series Trust
I................ $ 482 $ 4,958 $539 $ -- $ -- $ --
M Fund, Inc....... -- -- -- 958 510 --
Interest income on
policy loans..... -- -- -- -- -- --
------ ------- ---- ------ ------- ------
Total investment
income........... 482 4,958 539 958 510 --
Expenses:
Mortality and ex-
pense risks...... 295 287 30 83 173 477
------ ------- ---- ------ ------- ------
Net investment in-
come (loss)...... 187 4,671 509 875 337 (477)
Net realized and
unrealized gain
(loss) on
investments:
Net realized gain
(loss)........... 57 620 36 48 (91) 6,683
Net unrealized ap-
preciation (de-
preciation) dur-
ing the year..... 7,271 6,278 8 784 (1,056) 1,317
------ ------- ---- ------ ------- ------
Net realized and
unrealized gain
(loss) on
investments...... 7,328 6,898 44 832 (1,147) 8,000
------ ------- ---- ------ ------- ------
Net increase
(decrease) in net
assets resulting
from operations... $7,515 $11,569 $553 $1,707 $ (810) $7,523
====== ======= ==== ====== ======= ======
</TABLE>
* From May 1, 1996 (commencement of operations).
See accompanying notes.
37
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Large Cap Growth Subaccount Sovereign Bond Subaccount
------------------------------------ -------------------------------------
1996 1995 1994 1996 1995 1994
----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (de-
crease) in net
assets from op-
erations:
Net investment
income (loss).. $ 1,919,621 $ 773,338 $ 311,266 $ 4,118,655 $ 3,860,075 $ 3,145,758
Net realized
gain (loss).... 145,304 23,090 (35,449) (169,158) (127,733) (215,268)
Net unrealized
appreciation
(depreciation)
during the
year........... 3,756 1,225,784 (298,196) (1,418,707) 4,205,161 (3,583,940)
----------- ----------- ---------- ----------- ----------- -----------
Net increase
(decrease) in
net assets re-
sulting from
operations..... 2,068,681 2,022,212 (22,379) 2,530,790 7,937,503 (653,450)
From policyholder
transactions:
Net premiums
from
policyholders.. 4,588,842 3,921,962 3,110,357 12,282,665 8,741,178 9,292,171
Net benefits to
policyholders.. (3,100,493) (2,170,453) (1,704,646) (8,373,358) (8,117,059) (8,795,613)
Net increase in
policy loans... 174,445 181,384 187,506 344,564 344,088 454,821
----------- ----------- ---------- ----------- ----------- -----------
Net increase in
net assets from
policyholder
transactions.... 1,662,794 1,932,893 1,593,217 4,253,871 968,207 951,379
----------- ----------- ---------- ----------- ----------- -----------
Net increase in
net assets..... 3,731,475 3,955,105 1,570,838 6,784,661 8,905,710 297,929
Net assets at be-
ginning of year. 10,349,443 6,394,338 4,823,500 55,151,723 46,246,013 45,948,084
----------- ----------- ---------- ----------- ----------- -----------
Net assets at end
of year......... $14,080,918 $10,349,443 $6,394,338 $61,936,384 $55,151,723 $46,246,013
=========== =========== ========== =========== =========== ===========
<CAPTION>
Small Cap International
Growth Balanced
International Equities Subaccount Subaccount Subaccount
------------------------------------ ---------- -------------
1996 1995 1994 1996* 1996*
------------ ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Increase (de-
crease) in net
assets from op-
erations:
Net investment
income (loss).. $ 35,434 $ 24,050 $ 30,484 $ (378) $ 653
Net realized
gain (loss).... 25,854 14,367 11,225 (690) 9
Net unrealized
appreciation
(depreciation)
during the
year........... 217,574 164,490 (159,108) (5,174) 899
------------ ----------- ----------- ---------- -------------
Net increase
(decrease) in
net assets re-
sulting from
operations..... 278,862 202,907 (117,399) (6,242) 1,561
From policyholder
transactions:
Net premiums
from
policyholders.. 1,691,043 1,439,112 1,997,179 276,720 32,725
Net benefits to
policyholders.. (1,137,159) (927,937) (636,005) (13,425) (1,520)
Net increase in
policy loans... 47,823 27,649 54,609 -- --
------------ ----------- ----------- ---------- -------------
Net increase in
net assets from
policyholder
transactions.... 601,707 538,824 1,415,783 263,295 31,205
------------ ----------- ----------- ---------- -------------
Net increase in
net assets..... 880,569 741,731 1,298,384 257,053 32,766
Net assets at be-
ginning of year. 3,082,734 2,341,003 1,042,619 -- --
------------ ----------- ----------- ---------- -------------
Net assets at end
of year......... $ 3,963,303 $3,082,734 $2,341,003 $257,053 $32,766
============ =========== =========== ========== =============
</TABLE>
* From May 1, 1996 (commencement of operations).
See accompanying notes.
38
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Mid Cap Growth Large Cap Value Mid Cap Value
Subaccount Subaccount Money Market Subaccount Subaccount
-------------- --------------- -------------------------------------- -------------
1996* 1996* 1996 1995 1994 1996*
-------------- --------------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (de-
crease) in net
assets from op-
erations:
Net investment
income......... $ 119 $ 1,838 $ 1,099,660 $ 869,075 $ 380,450 $ 4,438
Net realized
gain (loss).... (17) 588 -- -- -- 8,413
Net unrealized
appreciation
(depreciation)
during the
year........... 1,684 4,787 -- -- -- 14,211
-------- -------- ------------ ----------- ----------- --------
Net increase
(decrease) in
net assets re-
sulting from
operations..... 1,786 7,213 1,099,660 869,075 380,450 27,062
From policyholder
transactions:
Net premiums
from policy-
holders........ 172,848 107,940 34,216,886 13,611,860 2,450,447 284,225
Net benefits to
policyholders.. (9,482) (10,621) (44,096,427) (2,969,848) (2,597,488) (82,860)
Net increase
(decrease) in
policy loans... -- -- (134,332) 149,842 25,104 --
-------- -------- ------------ ----------- ----------- --------
Net increase (de-
crease) in net
assets from pol-
icyholder trans-
actions......... 163,366 97,319 (10,013,873) 10,791,854 (121,937) 201,365
-------- -------- ------------ ----------- ----------- --------
Net increase
(decrease) in
net assets..... 165,152 104,532 (8,914,213) 11,660,929 258,513 228,427
Net assets at be-
ginning of year. -- -- 20,997,319 9,336,390 9,077,877 --
-------- -------- ------------ ----------- ----------- --------
Net assets at end
of year......... $165,152 $104,532 $ 12,083,106 $20,997,319 $ 9,336,390 $228,427
======== ======== ============ =========== =========== ========
<CAPTION>
Special Opportunities Subaccount
-----------------------------------
1996 1995 1994**
------------ ----------- ----------
<S> <C> <C> <C>
Increase (de-
crease) in net
assets from op-
erations:
Net investment
income......... $ 103,759 $ 19,701 $ 457
Net realized
gain (loss).... 81,916 9,743 77
Net unrealized
appreciation
(depreciation)
during the
year........... 264,010 126,004 (1,412)
------------ ----------- ----------
Net increase
(decrease) in
net assets re-
sulting from
operations..... 449,685 155,448 (878)
From policyholder
transactions:
Net premiums
from policy-
holders........ 2,077,582 774,566 201,268
Net benefits to
policyholders.. (497,713) (164,561) (13,671)
Net increase
(decrease) in
policy loans... -- -- --
------------ ----------- ----------
Net increase (de-
crease) in net
assets from pol-
icyholder trans-
actions......... 1,579,869 610,005 187,597
------------ ----------- ----------
Net increase
(decrease) in
net assets..... 2,029,554 765,453 186,719
Net assets at be-
ginning of year. 952,172 186,719 --
------------ ----------- ----------
Net assets at end
of year......... $ 2,981,726 $ 952,172 $ 186,719
============ =========== ==========
</TABLE>
* From May 1, 1996 (commencement of operations).
** From May 6, 1994 (commencement of operations).
See accompanying notes.
39
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Real Estate Equity Subaccount Growth & Income Subaccount
----------------------------------- ----------------------------------------
1996 1995 1994 1996 1995 1994
----------- ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in net
assets from
operations:
Net investment
income........... $ 173,352 $ 152,315 $ 100,147 $ 19,126,495 $ 11,438,266 $ 6,080,476
Net realized gain
(loss)........... 39,891 (39,490) (17,561) 820,430 85,385 (249,230)
Net unrealized
appreciation
(depreciation)
during the year.. 637,301 155,992 (47,683) 4,555,481 17,351,805 (5,560,223)
----------- ---------- ---------- ------------ ------------ ------------
Net increase
(decrease) in net
assets resulting
from operations.. 850,545 268,817 34,903 24,502,406 28,875,456 271,023
From policyholder
transactions:
Net premiums from
policyholders.... 1,161,434 1,086,721 1,225,072 32,903,369 20,933,714 20,019,801
Net benefits to
policyholders.... (1,008,266) (814,812) (573,521) (21,130,764) (16,972,544) (16,374,221)
Net increase
(decrease) in
policy loans..... 33,973 (13,207) 57,955 1,965,133 1,898,826 1,394,155
----------- ---------- ---------- ------------ ------------ ------------
Net increase in
net assets from
policyholder
transactions..... 187,142 258,702 709,506 13,737,738 5,859,996 5,039,735
----------- ---------- ---------- ------------ ------------ ------------
Net increase in
net assets...... 1,037,686 527,519 744,409 38,240,144 34,735,452 5,310,758
Net assets at
beginning of
year............. 2,606,820 2,079,301 1,334,892 131,466,681 96,731,229 91,420,471
----------- ---------- ---------- ------------ ------------ ------------
Net assets at end
of year.......... $ 3,644,506 $2,606,820 $2,079,301 $169,706,825 $131,466,681 $ 96,731,229
=========== ========== ========== ============ ============ ============
<CAPTION>
Small Cap
Short-Term U.S. Value
Managed Subaccount Government Subaccount Subaccount
----------------------------------------- ------------------------------- ----------
1996 1995 1994 1996 1995 1994** 1996*
------------- ------------- ------------- ------------ --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in net
assets from
operations:
Net investment
income........... $ 8,984,359 $ 6,216,150 $ 2,390,636 $ 186,525 $ 2,454 $ 217 $ 1,525
Net realized gain
(loss)........... 230,806 (6,127) (182,296) 577 477 (6) 11
Net unrealized
appreciation
(depreciation)
during the year.. (2,103,918) 7,134,666 (2,984,103) 225,129 1,735 (282) 2,702
------------- ------------- ------------- ------------ --------- -------- ----------
Net increase
(decrease) in net
assets resulting
from operations.. 7,111,247 13,344,689 (775,763) 412,231 4,666 (71) 4,238
From policyholder
transactions:
Net premiums from
policyholders.... 14,481,195 13,141,463 13,309,384 24,721,092 68,539 21,611 63,825
Net benefits to
policyholders.... (12,942,967) (11,680,334) (10,118,793) (147,655) (14,808) (263) (3,155)
Net increase
(decrease) in
policy loans..... 719,880 1,120,431 723,705 -- -- -- --
------------- ------------- ------------- ------------ --------- -------- ----------
Net increase in
net assets from
policyholder
transactions..... 2,258,108 2,581,560 3,914,296 24,573,437 53,731 21,348 60,670
------------- ------------- ------------- ------------ --------- -------- ----------
Net increase in
net assets...... 9,369,355 15,926,249 3,138,533 24,985,668 58,397 21,277 64,908
Net assets at
beginning of
year............. 71,234,163 55,307,914 52,169,381 79,674 21,277 -- --
------------- ------------- ------------- ------------ --------- -------- ----------
Net assets at end
of year.......... $ 80,603,518 $ 71,234,163 $ 55,307,914 $25,065,342 $ 79,674 $21,277 $64,908
============= ============= ============= ============ ========= ======== ==========
</TABLE>
* From May 1, 1996 (commencement of operations).
** From May 1, 1994 (commencement of operations).
See accompanying notes.
40
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Frontier
International Equity Turner Core Edinburgh Capital
Opportunities Index Strategic Bond Growth International Appreciation
Subaccount Subaccount Subaccount Subaccount Equity Subaccount Subaccount
------------- ---------- -------------- ----------- ----------------- ------------
1996* 1996* 1996* 1996* 1996* 1996*
------------- ---------- -------------- ----------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from opera-
tions:
Net investment income
(loss)................ $ 187 $ 4,671 $ 509 $ 875 $ 337 $ (477)
Net realized gain
(loss)................ 57 620 36 48 (91) 6,683
Net unrealized appreci-
ation (depreciation)
during the year....... 7,271 6,278 8 784 (1,056) 1,317
-------- -------- ------- ------- ------- --------
Net increase (decrease)
in net assets result-
ing from operations... 7,515 11,569 553 1,707 (810) 7,523
From policyholder trans-
actions:
Net premiums from poli-
cyholders............. 141,907 234,122 13,347 28,147 91,573 230,461
Net benefits to policy-
holders............... (4,149) (9,816) (682) (1,062) (1,860) (78,775)
Net increase (decrease)
in policy loans....... -- -- -- -- -- --
-------- -------- ------- ------- ------- --------
Net increase in net as-
sets from policyholder
transactions........... 137,758 224,306 12,665 27,085 89,713 151,686
-------- -------- ------- ------- ------- --------
Net increase in net as-
sets.................. 145,273 235,875 13,218 28,792 88,903 159,209
Net assets at beginning
of year................ -- -- -- -- -- --
-------- -------- ------- ------- ------- --------
Net assets at end of
year................... $145,273 $235,875 $13,218 $28,792 $88,903 $159,209
======== ======== ======= ======= ======= ========
</TABLE>
* From May 1, 1996 (commencement of operations).
See accompanying notes.
41
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1. ORGANIZATION
John Hancock Mutual Variable Life Insurance Account UV (the Account) is a
separate investment account of John Hancock Mutual Life Insurance Company
(JHMLICO or John Hancock). John Hancock Mutual Variable Life Insurance Account
UV was formed to fund variable life insurance policies (Policies) issued by
JHMLICO. The Account is operated as a unit investment trust registered under
the Investment Company Act of 1940, as amended, and currently consists of
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 of 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 JHMLICO'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 JHMLICO. The portion of the
Account's assets applicable to the policies may not be charged with
liabilities arising out of any other business JHMLICO may conduct.
NOTE 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 JHMLICO, which is taxed as a life insurance company under the Internal
Revenue Code. JHMLICO has the right to charge the Account any federal income
taxes, or provision for federal income taxes, attributable to the operations
of the Account or to the Policies funded in the Account. Currently, JHMLICO
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.
42
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
Expenses
JHMLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at various rates ranging from
.50% to .625%, depending on the type of policy, of net assets (excluding
policy loans) of the Account. Additionally, a monthly charge at varying levels
for the cost of extra insurance is deducted from the net assets of the
Account.
JHMLICO makes certain deductions for administrative expenses and state
premium taxes from premium payments before amounts are transferred to the
Account.
Policy Loans
Policy loans represent outstanding loans plus accrued interest. Interest is
accrued (net of a charge for policy loan administration determined at an
annual rate of .75% of the aggregate amount of policyholder indebtedness) and
compounded daily.
NOTE 3. TRANSACTIONS WITH AFFILIATES
JHMLICO acts as the distributor, principal underwriter and investment
advisor for the Fund.
Certain officers of the Account are officers and directors of JHMLICO or the
Fund.
NOTE 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, 1996 were as follows:
<TABLE>
<CAPTION>
Portfolio Shares Owned Cost Value
--------- ------------ ------------ ------------
<S> <C> <C> <C>
Large Cap Growth........................ 753,383 $ 12,264,052 $ 12,863,129
Sovereign Bond.......................... 5,399,127 54,416,066 52,753,269
International Equities.................. 223,257 3,471,773 3,757,643
Small Cap Growth........................ 25,875 262,227 257,053
International Balanced.................. 3,153 31,867 32,766
Mid Cap Growth.......................... 16,156 163,468 165,152
Large Cap Value......................... 9,426 99,745 104,532
Money Market............................ 996,019 9,960,187 9,960,187
Mid Cap Value........................... 20,128 214,216 228,427
Special Opportunities................... 180,471 2,593,124 2,981,726
Real Estate Equity...................... 235,948 2,771,228 3,453,171
Growth & Income......................... 10,087,105 135,260,759 147,820,489
Managed................................. 5,312,019 70,602,813 70,927,719
Short-Term U.S. Government.............. 2,494,808 25,291,924 25,065,342
Small Cap Value......................... 6,049 62,206 64,908
International Opportunities............. 13,709 138,002 145,273
Equity Index............................ 21,256 229,597 235,875
Strategic Bond.......................... 1,301 13,210 13,218
Turner Core Growth...................... 2,482 28,008 28,792
Edinburgh International Equity.......... 8,998 89,959 88,903
Frontier Capital Appreciation........... 12,716 157,892 159,209
</TABLE>
43
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 4. DETAILS OF INVESTMENTS--CONTINUED
Purchases, including reinvestment of dividend distributions and proceeds from
the sales of shares in the Portfolios of the Fund and of M Fund during 1996,
were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
--------- ----------- -----------
<S> <C> <C>
Large Cap Growth....................................... $ 4,544,864 $ 963,567
Sovereign Bond......................................... 10,719,783 2,708,914
International Equities................................. 1,233,884 646,203
Small Cap Growth....................................... 277,121 14,204
International Balanced................................. 33,304 1,445
Mid Cap Growth......................................... 174,282 10,797
Large Cap Value........................................ 108,910 9,753
Money Market........................................... 35,555,205 44,368,729
Mid Cap Value.......................................... 285,317 79,514
Special Opportunities.................................. 1,904,890 221,262
Real Estate Equity..................................... 958,884 633,505
Growth & Income........................................ 37,331,710 6,520,911
Managed................................................ 15,375,370 4,875,941
Short-Term U.S. Government............................. 25,381,085 167,959
Small Cap Value........................................ 64,983 2,788
International Opportunities............................ 141,170 3,225
Equity Index........................................... 238,550 9,573
Strategic Bond......................................... 15,082 1,908
Turner Core Growth..................................... 29,706 1,746
Edinburgh International Equity......................... 92,504 2,454
Frontier Capital Appreciation.......................... 244,138 92,928
</TABLE>
44
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Policyholders
John Hancock Mutual Variable Life Insurance Account UV
of John Hancock Mutual Life Insurance Company
We have audited the accompanying statement of assets and liabilities of John
Hancock Mutual Variable Life Insurance Account UV (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, 1996, 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 Mutual Variable Life Insurance Account
UV at December 31, 1996, and the results of their operations and changes in
their net assets for each of the periods indicated, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
February 7, 1997
45
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Directors and Policyholders
John Hancock Mutual Life Insurance Company
We have audited the accompanying statutory-basis statements of financial
position of John Hancock Mutual Life Insurance Company as of December 31, 1996
and 1995, and the related statutory-basis summaries of operations, changes in
policyholders' contingency reserves 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.
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.
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 report dated February 7, 1996, we expressed an opinion that the 1995
financial statements of the Company fairly present, in all material respects,
the Company's financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles for mutual life
insurance companies and with reporting practices prescribed or permitted by
the Commonwealth of Massachusetts Division of Insurance. As described in Note
1, the accompanying statutory-basis financial statements are no longer
considered to be prepared in conformity with generally accepted accounting
principles. Accordingly, our present opinion on the 1995 financial statements,
as presented in the following paragraph, is different from that expressed in
our previous report.
In our opinion, because of the effects of the matter described in the second
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 Mutual Life Insurance Company at December
31, 1996 and 1995, or the results of its operations or its cash flows for the
years then ended.
Also, in our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of John
Hancock Mutual Life Insurance Company at December 31, 1996 and 1995, 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.
ERNST & YOUNG LLP
Boston, Massachusetts
February 14, 1997
46
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31
-------------------
1996 1995
--------- ---------
(In millions)
<S> <C> <C>
ASSETS
Bonds--Note 6............................................... $22,467.0 $21,108.5
Stocks:
Preferred................................................. 416.2 338.8
Common.................................................... 249.8 130.9
Investments in affiliates................................. 1,268.9 1,265.3
--------- ---------
1,934.9 1,735.0
Mortgage loans on real estate--Note 6....................... 7,964.0 8,801.5
Real estate:
Company occupied.......................................... 372.1 377.4
Investment properties..................................... 2,042.3 1,949.5
--------- ---------
2,414.4 2,326.9
Policy loans................................................ 1,589.3 1,621.3
Cash items:
Cash in banks and offices................................. 348.4 286.6
Temporary cash investments................................ 1,068.3 254.1
--------- ---------
1,416.7 540.7
Premiums due and deferred................................... 278.4 234.0
Investment income due and accrued........................... 547.8 597.5
Other general account assets................................ 1,009.9 883.0
Assets held in separate accounts............................ 13,969.1 12,928.2
--------- ---------
TOTAL ASSETS................................................ $53,591.5 $50,776.6
========= =========
Obligations and Policyholders' Contingency Reserves
OBLIGATIONS
Policy reserves........................................... $18,544.0 $17,711.4
Policyholders' and beneficiaries' funds................... 14,679.3 14,724.8
Dividends payable to policyholders........................ 395.5 378.6
Policy benefits in process of payment..................... 236.3 217.1
Other policy obligations.................................. 210.5 159.6
Asset valuation reserve--Note 1........................... 1,064.8 1,014.3
Federal income and other accrued taxes--Note 1............ 125.1 250.5
Other general account obligations......................... 1,521.7 873.2
Obligations related to separate accounts.................. 13,958.2 12,913.6
--------- ---------
TOTAL OBLIGATIONS........................................... 50,735.4 48,243.1
Policyholders' Contingency Reserves
Surplus notes--Note 2..................................... 450.0 450.0
Special contingency reserve for group insurance........... 194.8 193.1
General contingency reserve............................... 2,211.3 1,890.4
--------- ---------
TOTAL POLICYHOLDERS' CONTINGENCY RESERVES................... 2,856.1 2,533.5
--------- ---------
TOTAL OBLIGATIONS AND POLICYHOLDERS' CONTINGENCY RESERVES... $53,591.5 $50,776.6
========= =========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
47
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS SUMMARY OF OPERATIONS AND CHANGES IN POLICYHOLDERS' CONTINGENCY
RESERVES
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1996 1995
----------- -----------
(In millions)
<S> <C> <C>
Income
Premiums, annuity considerations and pension fund
contributions..................................... $ 8,003.1 $ 8,127.8
Net investment income--Note 4...................... 2,803.1 2,678.5
Other, net......................................... 68.6 90.8
----------- -----------
10,874.8 10,897.1
Benefits and Expenses
Payments to policyholders and beneficiaries:
Death benefits................................... 886.8 787.4
Accident and health benefits..................... 300.9 321.3
Annuity benefits................................. 1,539.4 1,342.7
Surrender benefits and annuity fund withdrawals.. 5,565.4 5,243.6
Matured endowments............................... 20.6 19.8
----------- -----------
8,313.1 7,714.8
Additions to reserves to provide for future
payments to policyholders and beneficiaries....... 880.5 1,497.0
Expenses of providing service to policyholders and
obtaining new insurance:
Field sales compensation and expenses............ 275.0 277.4
Home office and general expenses................. 514.8 455.8
Payroll, state premium and miscellaneous taxes..... 70.9 78.6
----------- -----------
10,054.3 10,023.6
----------- -----------
GAIN FROM OPERATIONS BEFORE DIVIDENDS TO
POLICYHOLDERS, FEDERAL INCOME TAXES AND NET
REALIZED CAPITAL GAINS (LOSSES)............... 820.5 873.5
Dividends to policyholders........................... 399.4 465.9
Federal income taxes--Note 1......................... 107.1 128.5
----------- -----------
506.5 594.4
----------- -----------
GAIN FROM OPERATIONS BEFORE NET REALIZED
CAPITAL GAINS (LOSSES)........................ 314.0 279.1
Net realized capital gains (losses)--Note 5.......... (43.6) 21.2
----------- -----------
NET INCOME..................................... 270.4 300.3
Other increases (decreases) in policyholders'
contingency reserves:
Net unrealized capital losses and other
adjustments--Note 5............................... $ 191.7 $ (85.1)
Valuation reserve changes--Note 1.................. (27.5) 0.0
Prior years' federal income taxes.................. (28.9) (36.8)
Other reserves and adjustments..................... (83.1) 25.1
----------- -----------
NET INCREASE IN POLICYHOLDERS' CONTINGENCY
RESERVES...................................... 322.6 203.5
Policyholders' contingency reserves at beginning of
year................................................ 2,533.5 2,330.0
----------- -----------
POLICYHOLDERS' CONTINGENCY RESERVES AT END OF YEAR... $ 2,856.1 $ 2,533.5
=========== ===========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
48
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1996 1995
----------- -----------
(In millions)
<S> <C> <C>
Cash Flows From Operating Activities:
Insurance premiums, annuity considerations and de-
posits............................................ $ 8,120.4 $ 8,280.3
Net investment income.............................. 2,965.5 2,756.9
Benefits to policyholders and beneficiaries........ (8,476.6) (7,917.6)
Dividends paid to policyholders.................... (382.6) (464.9)
Insurance expenses and taxes....................... (884.1) (795.1)
Net transfers from separate accounts............... 198.2 132.0
Other, net......................................... (602.7) (202.7)
----------- -----------
NET CASH PROVIDED FROM OPERATIONS................ 938.1 1,788.9
----------- -----------
Cash Flows Used In Investing Activities:
Bond purchases..................................... (7,590.7) (6,456.9)
Bond sales......................................... 2,812.4 2,874.9
Bond maturities and scheduled redemptions.......... 2,241.0 1,600.6
Bond prepayments................................... 1,223.2 795.9
Stock purchases.................................... (391.2) (224.3)
Proceeds from stock sales.......................... 573.2 131.4
Real estate purchases.............................. (447.7) (375.1)
Real estate sales.................................. 382.1 365.0
Other invested assets purchases.................... (214.7) (46.5)
Proceeds from the sale of other invested assets.... 183.6 251.1
Mortgage loans issued.............................. (1,582.7) (2,041.6)
Mortgage loan repayments........................... 2,247.3 1,277.9
Other, net......................................... 205.3 (506.6)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES............ (358.9) (2,354.2)
----------- -----------
Cash Flows From Financing Activities:
Issuance of short-term note payable................ 90.0 0.0
Issuance of REMIC notes payable.................... 292.0 213.1
Repayment of REMIC notes payable................... (85.2) 0.0
----------- -----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES...... 296.8 213.1
----------- -----------
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH
INVESTMENTS......................................... 876.0 (352.2)
Cash and temporary cash investments at beginning of
year................................................ 540.7 892.9
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR... $ 1,416.7 $ 540.7
=========== ===========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
49
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES
John Hancock Mutual Life Insurance Company (the Company) provides a broad
range of financial services and insurance products. The Company's insurance
operations focus principally in three segments: the Retail Sector, which
encompasses the Company's individual life, annuity, and long-term care
operations; Group Pension, which offers single premium annuity and guaranteed
investment contracts through both the general and separate accounts; and
Business Insurance, its group life, health, and long-term care operations
including administrative services provided to group customers. On October 10,
1996, the Company entered into an agreement to sell its group health and a
portion of its group life business to WellPoint Health Networks Inc. of
California during the first quarter of 1997. In addition, through its
subsidiaries and affiliates, the Company also offers a wide range of
investment management and advisory services and other related products
including life insurance products for the Canadian market, sponsorship and
distribution of mutual funds, real estate financing and management, and
various other financial services. Investments in these subsidiaries and other
affiliates are recorded on the statutory equity method.
The Company is domiciled in the Commonwealth of Massachusetts and licensed in
all fifty of the United States, the District of Columbia, Puerto Rico, Guam,
the US Virgin Islands, and Canada. The Company distributes its individual
products in North America primarily through a career agency system. The career
agency system is composed of company-owned, unionized branch offices and
independent general agencies. The Company also distributes its individual
products through several alternative distribution channels.
The Company markets pension and other investment-related products primarily to
sponsors of retirement and savings plans covering employees of private sector
companies, and plans covering public employees and collective bargaining
unions and non-profit organizations. Products are marketed and sold through a
combination of group pension field employee representatives, as well as
marketing personnel and investment professionals employed by the Company.
The Company distributes its group benefit products through group
representatives, who are John Hancock employees or through intermediaries, in
key markets nationwide.
The preparation of the 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 1995
financial statements presented for comparative purposes were previously
described as being prepared in accordance with GAAP for mutual life insurance
companies. Pursuant to Financial Accounting Standards Board Interpretation 40,
"Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises" (FIN 40), as amended, which is effective for
1996 financial statements, financial statements based on statutory accounting
practices can no longer be described as prepared in conformity with GAAP.
Furthermore, financial statements prepared in conformity with statutory
accounting practices for periods prior to the effective date of FIN 40 are not
considered GAAP presentations
50
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES-- CONTINUED
when presented in comparative form with financial statements for periods
subsequent to the effective date. Accordingly, the 1995 financial statements
are no longer considered to be presented in conformity with 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 policyholders' contingency
reserves 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) surplus notes are reported as
surplus rather than as liabilities. 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 completed in 1999 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 statutory surplus cannot be determined at this time
and could be material.
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 market. The discount or premium on bonds is amortized
using the interest method.
Investments in affiliates are included on the statutory equity method.
51
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES-- CONTINUED
Mortgage loans are carried at outstanding principal balance or amortized
cost.
Investment and company-occupied real estate is carried at depreciated cost,
less encumbrances. Depreciation on investment and company-occupied real
estate is recorded on a straight-line basis. Accumulated depreciation
amounted to $393.5 million and $361.7 million at December 31, 1996 and
1995, respectively.
Real estate acquired in satisfaction of debt and held for sale, which is
classified with investment properties, is carried at the lower of cost or
fair value as of the date of foreclosure.
Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.
Other invested assets, which are classified with other general account
assets, include real estate and energy joint ventures and limited
partnerships and generally are valued based on the Company's equity in the
underlying net assets.
Asset Valuation and Interest Maintenance Reserves: The Asset Valuation Reserve
(AVR) is computed in accordance with the prescribed NAIC formula and
represents a provision for possible fluctuations in the value of bonds, equity
securities, mortgage loans, real estate and other invested assets. The Company
makes additional contributions to the AVR in excess of the required amounts to
account for potential losses and risks in the investment portfolio when the
Company believes such provisions are prudent. Changes to the AVR are charged
or credited directly to policyholders' contingency reserves.
The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents that portion of the after tax net accumulated
unamortized realized capital gains and losses on sales of fixed income
securities, principally bonds and mortgage loans, attributable to changes in
the general level of interest rates. Such gains and losses are deferred and
amortized into income over the remaining expected lives of the investments
sold. At December 31, 1996, the IMR, net of 1996 amortization of $18.9
million, amounted to $121.7 million which is included in other policy
obligations. The corresponding 1995 amounts were $16.4 million and $69.5
million, respectively.
Property and Equipment: Data processing equipment, which amounted to $41.6
million in 1996 and $52.9 million in 1995 and is included in other general
account assets, is reported at depreciated cost, with depreciation recorded on
a straight-line basis. Nonadmitted furniture and equipment also is depreciated
on a straight-line basis. The useful lives of these assets range from three to
twenty years. Depreciation expense was $31.0 million in 1996 and $38.0 million
in 1995.
Separate Accounts: Separate account assets and liabilities reported in the
accompanying statements of financial position represent funds that are
separately administered, principally for annuity contracts and variable life
insurance policies, and for which the contractholder, rather than the Company,
generally bears the investment risk. Separate account contractholders have no
claim against the assets of the general account of the Company. Separate
account assets are reported at market value. The operations of the separate
accounts are not included in the summary of operations; however, income earned
on amounts initially invested by the Company in the formation of new separate
accounts is included in other income.
52
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES-- CONTINUED
Fair Values of Financial Instruments: Statement of Financial Accounting
Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about financial
instruments, whether or not recognized in the statement of financial position,
for which it is practicable to estimate the value. In situations where quoted
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Therefore, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:
The carrying amounts reported in the statement of financial position for
cash and temporary cash investments approximate their fair values.
Fair values for public bonds are obtained from an independent pricing
service. Fair values for private placement securities and publicly traded
bonds not provided by the independent pricing service are estimated by the
Company by discounting expected future cash flows using current market
rates applicable to the yield, credit quality and maturity of the
investments. The fair values for common and preferred stocks, other than
subsidiary investments which are carried at equity values, are based on
quoted market prices.
The fair value for mortgage loans is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit
characteristics of the underlying loans. Mortgage loans with similar
characteristics and credit risks are aggregated into qualitative categories
for purposes of the fair value calculations.
The carrying amounts in the statement of financial position for policy
loans approximates their fair value.
The fair value of interest rate swaps and currency rate swaps is estimated
using a discounted cash flow method adjusted for the difference between the
rate of the existing swap and the current swap market rate. Discounted cash
flows in foreign currencies are converted to U.S. dollars using current
exchange rates.
The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow
method incorporating adjustments for the difference in the level of
interest rates between the dates the commitments were made and December 31,
1996. The fair value for commitments to purchase real estate approximates
the amount of the initial commitment.
Fair values for the Company's guaranteed investment contracts are estimated
using discounted cash flow calculations, based on interest rates currently
being offered for similar contracts with maturities consistent with those
remaining for the contracts being valued. The fair value for fixed-rate
deferred annuities is the cash surrender value, which represents the
account value less applicable surrender charges. Fair values for immediate
annuities without life contingencies and supplementary contracts without
life contingencies are estimated based on discounted cash flow calculations
using current market rates.
Capital Gains and Losses: Realized capital gains and losses 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 income.
Unrealized gains and losses, which consist of market value and book value
adjustments, are shown as adjustments to policyholders' contingency reserves.
53
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES-- CONTINUED
Interest Rate and Currency Rate Swap Contracts and Financial Futures
Contracts: The net interest effect of interest rate and currency rate swap
transactions is recorded as an adjustment of interest income as incurred.
Gains and losses on financial futures contracts used as hedges against
interest rate fluctuations are deferred and recognized in income over the
period being hedged.
Foreign Exchange Gains and Losses: Foreign exchange gains and losses are
reflected as direct credits or charges to policyholders' contingency reserves
through unrealized capital gains and losses.
Policy Reserves: Life, annuity, and accident and health benefit 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 traditional
individual life insurance policies are maintained using the 1941, 1958 and
1980 Commissioner's Standard Ordinary and American Experience Mortality
Tables, with assumed interest rates ranging from 2 1/2% to 6%, and using
principally the net level premium method for policies issued prior to 1978 and
a modified preliminary term method for policies issued in 1979 and later.
Annuity and supplementary contracts with life contingency reserves are based
principally on modifications of the 1937 Standard Annuity Table, the Group
Annuity Mortality Tables for 1951, 1971 and 1983, the 1971 Individual Annuity
Mortality Table and the a-1983 Individual Annuity Mortality Table, with
interest rates ranging from 2% to 11 1/4%.
Reserves for deposit administration funds and immediate participation
guarantee funds are based on accepted actuarial methods at various interest
rates. Accident and health policy reserves generally are calculated using
either the two-year preliminary term or the net level premium method based on
various morbidity tables.
The statement value and fair value for investment-type insurance contracts are
as follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
------------------- -------------------
Statement Fair Statement Fair
Value Value Value Value
--------- --------- --------- ---------
(In millions)
<S> <C> <C> <C> <C>
Guaranteed investment contracts........ $11,921.6 $11,943.2 $12,014.3 $12,325.3
Fixed-rate deferred and immediate annu-
ities................................. 3,909.3 3,886.1 3,494.5 3,478.6
Supplementary contracts without life
contingencies......................... 45.6 46.0 39.6 40.7
--------- --------- --------- ---------
$15,876.5 $15,875.3 $15,548.4 $15,844.6
========= ========= ========= =========
</TABLE>
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 and its
subsidiaries and affiliates are combined in filing a consolidated federal
income tax return for the group. The federal income taxes of the Company are
determined on a separate return basis with certain adjustments.
54
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES-- CONTINUED
Income before taxes differs from taxable income principally due to tax-exempt
investment income, dividends-received tax deductions, the limitation placed on
the tax deductibility of mutual companies' policyholder dividends, accelerated
depreciation, differences in policy and contract liabilities for tax return
and financial statement purposes, capitalization of policy acquisition
expenses for tax purposes and other adjustments prescribed by the Internal
Revenue Code.
Amounts for disputed tax issues relating to prior years are charged or
credited directly to policyholders' contingency reserves. No provision is
generally recognized for temporary differences that may exist between
financial reporting and taxable income.
When determining its consolidated federal income tax expense, the Company uses
a number of estimated amounts that may change when the actual tax return is
completed. In addition, the Company must also use an estimated differential
earnings rate (DER) to compute the equity tax portion of its federal income
tax expense. Because the DER is set by the Internal Revenue Service in the
second subsequent year, a true-up adjustment (i.e., effect of the difference
between the estimated and final DER) is necessary.
Certain subsidiaries acquired by the Company have potential tax loss
carryforwards of $114.1 million expiring through 1998. These amounts may be
used in the consolidated tax return, but only to offset future taxable income
related to those subsidiaries. The Company made federal tax payments of $309.9
million in 1996 and $211.5 million in 1995.
Adjustments to Policy Reserves and Policyholders' and Beneficiaries'
Funds: From time to time, the Company finds it appropriate to modify certain
required policy reserves because of changes in actuarial assumptions or
increased benefits. Reserve modifications resulting from such determinations
are recorded directly to policyholders' contingency reserves. During 1996, the
Company refined certain actuarial assumptions inherent in the calculation of
reserves related to guaranteed investment contracts resulting in a $27.5
million decrease in policyholders' contingency reserves at December 31, 1996.
Reinsurance: Premiums, commissions, expense reimbursements, benefits and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies issued and the terms
of the reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premium income. Amounts applicable to reinsurance
ceded for future policy benefits, unearned premium reserves and claim
liabilities have been reported as reductions of these items.
Restructuring Charge: In 1994, the Company provided for restructuring charges
of $57.8 million in accordance with the Company's plan to reduce its cost
structure and consolidate operations. The restructuring charge includes
severance costs and facilities consolidation expenses. During 1996 and 1995,
the Company paid $8.6 million and $32.9 million, respectively, under its
restructuring plan. The remaining liability for restructuring charges at
December 31, 1996 was $5.7 million.
Guaranty Fund Assessments: Guaranty fund assessments are accrued when the
Company receives notice that an amount is payable to a guaranty fund.
55
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES-- CONTINUED
Reclassifications: Certain 1995 amounts have been reclassified to permit
comparison with the corresponding 1996 amounts.
NOTE 2--SURPLUS NOTES
On February 25, 1994, the Company issued $450 million of surplus notes that
bear interest at 7 3/8% and are scheduled to mature on February 15, 2024. The
issuance of the surplus notes was approved by the Commonwealth of
Massachusetts Division of Insurance and any payment of interest on and
principal of the notes may be made only with the prior approval of the
Commissioner of the Commonwealth of Massachusetts Division of Insurance.
Surplus notes are reported as part of policyholders' contingency reserves
rather than liabilities. Interest of $33.2 million was paid on the notes
during each of 1996 and 1995.
NOTE 3--BORROWED MONEY
At December 31, 1996, the Company had a $500 million syndicated line of
credit. There are 26 banks who are part of the syndicate which is under the
leadership of Morgan Guaranty Trust Company of New York. The banks will
commit, when requested, to loan funds at prevailing interest rates as
determined in accordance with the line of credit agreement, which terminates
on June 30, 2001. The agreement does not contain a material adverse change
clause. Under the terms of the agreement, the Company is required to maintain
certain minimum levels of net worth and comply with certain other covenants.
As of December 31, 1996, these covenants were met; however, no amounts had
been borrowed under this agreement.
In 1995, the Company issued $213.1 million of debt through a Real Estate
Mortgage Investment Conduit (REMIC). As collateral to the debt, the Company
pledged $1,065.8 million of commercial mortgages to the REMIC Trust. In
addition, the Company has guaranteed the timely payment of principal and
interest on the debt. The debt was issued in two notes of equal amounts with
last scheduled payment dates on March 25, 1997 and June 25, 1998,
respectively. The interest rates on the two notes are calculated on a floating
basis, based on the monthly LIBOR rates plus 22 and 27 basis points,
respectively. The LIBOR rates were 5.50% and 5.9375%, respectively, at
December 31, 1996 and 1995. The outstanding balances of the notes totaled
$127.9 million and $213.1 million at December 31, 1996 and 1995, respectively,
and are included in other general account obligations.
In 1996, the Company issued $292.0 million of debt through a REMIC (REMIC II).
As collateral to the debt, the Company pledged $1,455.4 million of commercial
mortgages to the REMIC II Trust. The debt was issued in two notes. The class
A1 notes totaled $70.0 million with a last scheduled payment date of December
26, 1997. The class A2 notes totaled $222.0 million with a last scheduled
payment date of July 26, 1999. The interest rates on the two notes are
calculated on a floating basis, based on the monthly LIBOR rate plus 5 and 19
basis points, respectively. The outstanding balances of the notes totaled
$292.0 million at December 31, 1996 and are included in other general account
obligations.
On December 31, 1996, the Company had outstanding a short-term note of $90.0
million payable to an affiliate at 5.70%. The note, which is included in other
general account obligations, was repaid in early January 1997.
56
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 4--NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
1996 1995
------ ------
(In millions)
<S> <C> <C>
Investment expenses.............................................. $333.8 $332.9
Interest expense................................................. 48.1 38.3
Depreciation on real estate and other invested assets............ 73.3 62.7
Real estate and other investment taxes........................... 65.2 61.2
------ ------
$520.4 $495.1
====== ======
</TABLE>
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital gains (losses) consist of the following items:
<TABLE>
<CAPTION>
1996 1995
------ -------
(In millions)
<S> <C> <C>
Net gains from asset sales and foreclosures................... $ 81.2 $ 118.6
Capital gains tax............................................. (53.7) (64.2)
Net capital gains transferred to the IMR...................... (71.1) (33.2)
------ -------
Net Realized Capital Gains (Losses)......................... $(43.6) $ 21.2
====== =======
Net unrealized capital gains (losses) and other adjustments consist of the
following items:
<CAPTION>
1996 1995
------ -------
(In millions)
<S> <C> <C>
Net gains from changes in security values and book value ad-
justments.................................................... $242.2 $ 93.4
Increase in asset valuation reserve........................... (50.5) (178.5)
------ -------
Net Unrealized Capital Gains (Losses) and Other Adjustments. $191.7 $ (85.1)
====== =======
</TABLE>
57
<PAGE>
JOHN HANCOCK MUTUAL 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
Value Gains Losses Fair Value
--------- ---------- ---------- ----------
(In millions)
Year ended December 31, 1996
----------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies.......... $ 430.2 $ 8.8 $ 4.2 $ 434.8
Obligations of states and political
subdivisions....................... 175.2 8.8 3.9 180.1
Debt securities issued by foreign
governments........................ 203.5 30.1 0.0 233.6
Corporate securities................ 16,902.1 1,083.2 112.6 17,872.7
Mortgage-backed securities.......... 4,756.0 116.3 54.5 4,817.8
--------- -------- ------ ---------
Total bonds $22,467.0 $1,247.2 $175.2 $23,539.0
========= ======== ====== =========
<CAPTION>
Year ended December 31, 1995
----------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and
Obligations of U.S. government
corporations and agencies.......... $ 638.5 $ 42.5 $ 0.2 $ 680.8
Obligations of states and political
subdivisions....................... 194.1 20.6 0.1 214.6
Debt securities issued by foreign
governments........................ 297.7 42.2 0.0 339.9
Corporate securities................ 18,358.6 1,818.3 73.9 20,103.0
Mortgage-backed securities.......... 1,619.6 57.9 20.8 1,656.7
--------- -------- ------ ---------
Total bonds....................... $21,108.5 $1,981.5 $ 95.0 $22,995.0
========= ======== ====== =========
</TABLE>
The statement value and fair value of bonds at December 31, 1996, 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............................... $ 1,430.4 $ 1,463.8
Due after one year through five years................. 5,987.3 6,226.8
Due after five years through ten years................ 5,421.9 5,732.3
Due after ten years................................... 4,871.4 5,298.3
--------- ---------
17,711.0 18,721.2
Mortgage-backed securities............................ 4,756.0 4,817.8
--------- ---------
$22,467.0 $23,539.0
========= =========
</TABLE>
Proceeds from sales of bonds during 1996 and 1995 were $2.8 billion and $2.9
billion, respectively. Gross gains of $43.8 million in 1996 and $69.7 million
in 1995 and gross losses of $27.6 million in 1996 and $44.3 million in 1995
were realized on these transactions.
58
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS--CONTINUED
The cost of common stocks was $136.1 million and $78.1 million at December 31,
1996 and 1995, respectively. At December 31, 1996, gross unrealized
appreciation on common stocks totaled $135.0 million, and gross unrealized
depreciation totaled $21.3 million. The fair value of preferred stock totaled
$416.2 million at December 31, 1996 and $338.8 million at December 31, 1995.
Mortgage loans with outstanding principal balances of $56.0 million, bonds
with amortized cost of $159.7 million and real estate with depreciated cost of
$23.0 million were nonincome producing for the twelve months ended December
31, 1996.
Restructured commercial mortgage loans aggregated $385.8 million and $466.0
million as of December 31, 1996 and 1995, respectively. The expected gross
interest income that would have been recorded had the loans been current in
accordance with the original loan agreements and the actual interest income
recorded were as follows:
<TABLE>
<CAPTION>
Year ended December 31
-----------------------
1996 1995
----------- -----------
(In millions)
<S> <C> <C>
Expected........................................... $ 46.3 $ 47.0
Actual............................................. 29.1 $ 26.8
</TABLE>
Generally, the terms of the restructured mortgage loans call for the Company
to receive some form or combination of an equity participation in the
underlying collateral, excess cash flows or an effective yield at the maturity
of the loans sufficient to meet the original terms of the loans.
At December 31, 1996, 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>
Property
Type Statement Value
-------- ---------------
(In millions)
<S> <C>
Apartments.............. $1,667.9
Hotels.................. 147.4
Industrial.............. 882.1
Office buildings........ 1,707.0
Retail.................. 1,489.8
1-4 Family.............. 7.4
Agricultural............ 1,608.1
Other................... 454.3
--------
$7,964.0
========
</TABLE>
<TABLE>
<CAPTION>
Property
Type Statement Value
-------- ---------------
(In millions)
<S> <C>
East North Central...... $ 734.6
East South Central...... 158.9
Middle Atlantic......... 1,543.3
Mountain................ 382.8
New England............. 843.9
Pacific................. 2,015.4
South Atlantic.......... 1,437.6
West North Central...... 240.6
West South Central...... 558.3
Other................... 48.6
--------
$7,964.0
========
</TABLE>
59
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS--CONTINUED
At December 31, 1996, the fair values of the commercial and agricultural
mortgage loan portfolios were $6.6 billion and $1.8 billion, respectively. The
corresponding amounts as of December 31, 1995 were approximately $7.6 billion
and $1.8 billion, respectively.
The maximum and minimum lending rates for mortgage loans during 1996 were
9.92% and 7.0% for agricultural loans, 9.25% and 6.75% for other properties,
and 8.05% and 7.0% for purchase money mortgages. Generally, the percentage of
any loan to the value of security at the time of the loan, exclusive of
insured or 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.
NOTE 7--REINSURANCE
Premiums, benefits and reserves associated with reinsurance assumed in 1996
were $742.0 million, $317.8 million, and $14.2 million, respectively. The
corresponding amounts in 1995 were $455.2 million, $276.7 million, and $12.7
million, respectively.
The Company cedes business to reinsurers to share risks under life, health and
annuity contracts for the purpose of reducing exposure to large losses.
Premiums, benefits and reserves ceded to reinsurers in 1996 were $304.0
million, $217.0 million and $251.2 million, respectively. The corresponding
amounts in 1995 were $281.0 million, $217.0 million and $185.4 million,
respectively.
Amounts recoverable on paid claims and funds held by reinsurers were as
follows:
<TABLE>
<CAPTION>
Year endedDecember 31
---------------------
1996 1995
---------- ----------
(In millions)
<S> <C> <C>
Reinsurance recoverables............................ $ 26.5 $ 30.7
Funds held by reinsurers............................ 23.4 2.6
</TABLE>
The Company has a coinsurance agreement with another insurer to cede 100% of
its individual disability business. Reserves ceded under this agreement,
included in the amount shown above, were $226.4 million at December 31, 1996
and $212.7 million at December 31, 1995.
Effective January 1, 1994, John Hancock Variable Life Insurance Company
(Variable Life, a wholly-owned affiliate) entered into a modified coinsurance
agreement with the Company to reinsure 50% of Variable Life's 1996, 1995 and
1994 issues of flexible premium variable life insurance and scheduled premium
variable life insurance policies. In connection with this agreement, the
Company transferred $24.5 million and $32.7 million of cash for tax,
commission, and expense allowances to Variable Life, which decreased the
Company's net gain from operations by $15.7 million and $20.3 million in 1996
and 1995, respectively.
60
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--REINSURANCE--CONTINUED
Effective January 1, 1996, Variable Life entered into a modified coinsurance
agreement with the Company to reinsure 50% of Variable Life's 1995 and 1996
issues of retail annuity contracts (Independence Preferred and Declaration).
In connection with this agreement, the Company transferred $23.2 million of
cash for surrender benefits, tax, reserve increase, commission, expense
allowances and premium to Variable Life, which decreased the Company's net
gain from operations by $15.1 million in 1996.
To the extent that an assuming reinsurance company is unable to meet its
obligations under a reinsurance agreement, the Company remains liable as the
direct insurer on all risks reinsured.
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, 1996 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--BENEFIT PLANS
The Company provides retirement benefits to substantially all employees and
general agency personnel. These benefits are provided through both defined
benefit and defined contribution pension plans. Pension benefits under the
defined benefit plans are based on years of service and average compensation
generally during the five years prior to retirement. Benefits related to the
Company's defined pension plans paid to employees and retirees covered by
annuity contracts issued by the Company amounted to $84.4 million in 1996 and
$76.3 million in 1995. The Company's funding policy for qualified defined
benefit plans is to contribute annually an amount in excess of the minimum
annual contribution required under the Employee Retirement Income Security Act
(ERISA). This amount is limited by the maximum amount that can be deducted for
federal income tax purposes. The funding policy for nonqualified defined
benefit plans is to contribute the amount of the benefit payments made during
the year. Plan assets consist principally of listed equity securities,
corporate obligations and U.S. government securities.
Defined contribution plans include The Investment Incentive Plan (TIP) and the
Savings and Investment Plan (SIP). Employees are eligible to participate in
TIP after one year of service and may contribute up to the lesser of 15% of
their salary or $9,500 annually to the plan. The Company matches the first 2%
of pre-tax contributions and makes an additional annual profit sharing
contribution for employees who have completed at least two years of service.
Through SIP, marketing representatives, sales managers and agency managers are
eligible to contribute up to the lesser of 13% of their salary or $9,500. The
Company matches the first 3% of pretax contributions for marketing
representatives and the first 2% of pretax contributions for sales managers
and agency managers. The Company makes an annual profit sharing contribution
of up to 1% for sales managers and agency managers who have completed at least
two years of service.
61
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 8--BENEFIT PLANS--CONTINUED
The Company provides additional compensation to certain employees based on
achievement of annual and long-term corporate financial objectives.
Pension expense is summarized as follows:
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1996 1995
----------- -----------
(In millions)
<S> <C> <C>
Defined benefit plans:
Service cost--benefits earned during the peri-
od........................................... $ 32.4 $ 30.1
Interest cost on the projected benefit obliga-
tion......................................... 107.4 103.5
Actual return on plan assets.................. (225.1) (369.5)
Net amortization and deferral................. 85.0 260.5
----------- -----------
(0.3) 24.6
Defined contribution plans...................... 21.4 19.8
----------- -----------
Total pension expense........................... $ 21.1 $ 44.4
=========== ===========
</TABLE>
Assumptions used in accounting for the defined benefit pension plans were as
follows:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Discount rate.................................................. 7.25% 7.50%
Weighted rate of increase in compensation levels............... 4.78% 5.10%
Expected long-term rate of return on assets.................... 8.50% 7.75%
</TABLE>
The following table sets forth the funded status and actuarially determined
amounts related to the Company's defined benefit pension plans:
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1996 1995
----------- -----------
(In millions)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation..................... $ (1,344.8) $ (1,242.9)
=========== ===========
Accumulated benefit obligation................ $ (1,387.7) $ (1,300.3)
=========== ===========
Projected benefit obligation.................... $ (1,582.4) $ (1,480.0)
Plan assets fair value.......................... 1,787.6 1,645.3
----------- -----------
Excess of plan assets over projected benefit ob-
ligation....................................... 205.2 165.3
Unrecognized net gain........................... (176.1) (139.1)
Prior service cost not yet recognized in net pe-
riodic pension cost............................ 42.8 50.0
Unrecognized net asset, net of amortization..... (95.9) (111.2)
----------- -----------
Net pension liability........................... $ (24.0) $ (35.0)
=========== ===========
</TABLE>
Since 1988, the Massachusetts Division of Insurance has provided the Company
with approval to recognize the pension plan prepaid expense, if any, in
accordance with the requirements of SFAS No. 87, "Employers' Accounting for
Pensions." The Company furnishes the Division of Insurance with an actuarial
certification of the prepaid expense computation on an annual basis.
62
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 9--OTHER POSTRETIREMENT BENEFIT PLANS
In addition to the Company's defined benefit pension plans, the Company has
employee welfare plans for medical, dental, and life insurance covering most
of its retired employees and general agency personnel. Substantially all
employees may become eligible for these benefits if they reach retirement age
while employed by the Company. The postretirement health care and dental
coverages are contributory based on service for post January 1, 1992 non-union
retirees. A small portion of pre-January 1, 1992 non-union retirees also
contribute. The applicable contributions are based on service.
In 1993, the Company changed its method of accounting for the costs of its
retiree benefit plans to the accrual method and elected to amortize its
transition liability for retirees and fully eligible or vested employees over
twenty years.
Since 1993, the Company funded a portion of the postretirement obligation. The
Company's policy is to fund postretirement benefits for non-union employees to
the maximum amount that can be deducted for federal income tax purposes and to
fund the benefits for union employees, which are fully tax qualified, at
sufficient amounts so that the total accrued liability related to
postretirement benefits is zero. As of December 31, 1996, plan assets related
to non-union employees were comprised of an irrevocable health insurance
contract to provide future health benefits to retirees while plan assets
related to union employees were comprised of approximately 70% equity
securities and 30% fixed income investments. The following table shows the
plans' combined funding status for vested benefits reconciled with the amounts
recognized in the Company's statements of financial position.
<TABLE>
<CAPTION>
December 31
-------------------------------------
1996 1995
------------------ ------------------
Medical Medical
and Life and Life
Dental Insurance Dental Insurance
Plans Plans Plans Plans
------- --------- ------- ---------
(In millions)
<S> <C> <C> <C> <C>
Accumulated postretirement benefit obli-
gation:
Retirees............................... $(234.2) $(100.6) $(236.5) $ (89.2)
Fully eligible active plan partici-
pants................................. (46.4) (19.4) (42.9) (20.1)
------- ------- ------- -------
(280.6) (120.0) (279.4) (109.3)
Plan assets at fair value................ 132.4 0.0 96.9 0.0
------- ------- ------- -------
Accumulated postretirement benefit
obligation in excess of plan assets..... (148.2) (120.0) (182.5) (109.3)
Unrecognized prior service cost.......... 16.7 5.3 18.2 5.8
Unrecognized prior net gain.............. (93.0) 4.0 (84.2) (4.2)
Unrecognized transition obligation....... 256.8 78.4 272.9 83.3
------- ------- ------- -------
Accrued postretirement benefit cost...... $ 32.3 $ (32.3) $ 24.4 $ (24.4)
======= ======= ======= =======
</TABLE>
63
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 9--OTHER POSTRETIREMENT BENEFIT PLANS--CONTINUED
Net postretirement benefits costs for the years ended December 31, 1996 and
1995 were $47.4 million and $50.2 million, respectively, and include the
expected cost of such benefits for newly eligible or vested employees,
interest cost, and amortization of the transition liability.
Net periodic postretirement benefits cost included the following components:
<TABLE>
<CAPTION>
December 31
-------------------------------------
1996 1995
------------------ ------------------
Medical Medical
and Life and Life
Dental Insurance Dental Insurance
Plans Plans Plans Plans
------- --------- ------- ---------
(In millions)
<S> <C> <C> <C> <C>
Eligibility cost...................... $ 7.1 $ 1.8 $ 5.3 $ 1.5
Interest cost......................... 19.8 8.3 21.1 7.8
Actual return on plan assets.......... (15.9) 0.0 (15.5) 0.0
Net amortization and deferral......... 20.9 5.4 25.0 5.0
------ ----- ------ -----
Net periodic postretirement benefit
cost................................. $ 31.9 $15.5 $ 35.9 $14.3
====== ===== ====== =====
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation at December 31, 1996 was 7.25% (7.5% for 1995). The annual assumed
rate of increase in the health care cost trend rate for the medical coverages
is 8.0% for 1997 (8.25% was assumed for 1996) and is assumed to decrease
gradually to 5.25% in 2001 and remain at that level thereafter. The health
care cost trend rate assumption has a significant effect on the amounts
reported. For example, increasing the assumed health care cost trend rates by
one percentage point in each year would increase the accumulated post
retirement benefit obligation for the medical coverages as of December 31,
1996 by $28.1 million and the aggregate of the eligibility and interest cost
components of net periodic postretirement benefit cost by $2.9 million for
1996 and $3.6 million for 1995.
Postretirement welfare benefits for non-vested employees are not reflected in
the above expenses or accumulated postretirement benefit obligations. As of
December 31, 1996, the accumulated postretirement benefit obligations for non-
vested employees amounted to $69.4 million for medical and dental plans and
$10.7 million for life insurance plans. The corresponding amounts as of
December 31, 1995 were $67.7 million and $10.8 million, respectively.
NOTE 10--AFFILIATES
The Company has subsidiaries and affiliates in a variety of industries
including domestic and foreign life insurance and domestic property casualty
insurance, real estate, mutual funds, investment brokerage and various other
financial services entities.
Total assets of unconsolidated affiliates amounted to $9.6 billion at December
31, 1996 and $9.5 billion at December 31, 1995; total liabilities amounted to
$8.5 billion at December 31, 1996 and $8.3 billion at December 31, 1995; and
total net income was $193.0 million in 1996 and $89.5 million in 1995.
64
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 10--AFFILIATES--CONTINUED
During 1996, the Company sold certain of its affiliates including its ongoing
property and casualty business and its broker-dealer operations to realign its
business objectives.
The Company customarily engages in transactions with its unconsolidated
affiliates, including the cession and assumption of certain insurance business
under the terms of established reinsurance agreements. Various services are
performed by the Company for certain affiliates for which the Company is
reimbursed on the basis of cost. Certain affiliates have entered into various
financial arrangements relating to borrowings and capital maintenance under
which agreements the Company would be obligated in the event of nonperformance
by an affiliate (see Note 15).
The Company received dividends of $9.4 million and $9.7 million in 1996 and
1995, respectively, from unconsolidated affiliates.
NOTE 11--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company enters into interest rate swap contracts for the purpose of
converting the interest rate characteristics (fixed or variable) of certain
investments to match those of related insurance liabilities. Maturities of
current agreements range from 1997 to 2026. These swaps involve, to varying
degrees, interest rate risk in excess of amounts recognized in the statement
of financial position.
The Company enters into currency rate swap agreements to manage exposure to
foreign exchange rate fluctuations. Maturities of current agreements range
through 2009. Should the counterparty fail to meet the terms of the contract,
the Company's market risk is limited to the currency rate differential.
The Company enters into interest rate cap and floor contracts to manage
exposure on underlying security values due to a rise in interest rates.
Maturities of current agreements range through 2003.
The Company also uses financial futures contracts to hedge risks associated
with interest rate fluctuations on sales of guaranteed investment contracts.
The Company is subject to the risks associated with changes in the value of
the underlying securities; however, such changes in value generally are offset
by opposite changes in the value of the hedged items. The contract or notional
amounts of the contracts represent the extent of the Company's involvement but
not the future cash requirements, as the Company intends to close the open
positions prior to settlement. Net deferred losses on future contracts were
$0.5 million and $7.7 million at December 31, 1996 and 1995, respectively.
65
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 11--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--CONTINUED
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
-----------------
1996 1995
-------- --------
(In millions)
<S> <C> <C>
Futures contracts to purchase securities.................... $ 117.6 $ 62.2
======== ========
Futures contracts to sell securities........................ $ 136.4 $ 299.9
======== ========
Notional amount of interest rate swaps, interest rate
swaptions, currency rate swaps, interest rate caps and in-
terest rate floors to:
Receive variable rates.................................... $3,822.8 $1,735.0
======== ========
Receive fixed rates....................................... $2,912.5 $1,756.3
======== ========
</TABLE>
The Company continually monitors its positions and the credit ratings of the
counterparties to these financial instruments. The Company believes the risk
of incurring losses due to nonperformance by its counterparties is remote and
that any such losses would be immaterial.
Based on market rates in effect at December 31, 1996, the Company's interest
rate swaps, interest rate swaptions, currency rate swaps, interest rate caps,
and interest rate floors represented (assets) liabilities to the Company with
fair values of $16.4 million, $0.0 million, $41.1 million, $(0.6) million and
$(0.1) million, respectively. The corresponding amounts as of December 31,
1995 were $37.0 million, $0.0 million, $23.3 million, $(0.3) million and $0.0
million, respectively.
NOTE 12--LEASES
The Company leases office space and furniture and equipment under various
operating leases including furniture and equipment leased under a series of
sales-leaseback agreements with a nonaffiliated organization. Rental expense
for all operating leases totaled $32.1 million in 1996 and $32.2 million in
1995. Future minimum rental commitments under noncancellable operating leases
for office space and furniture and equipment are as follows:
<TABLE>
<CAPTION>
December 31, 1996
-----------------
(In millions)
<S> <C>
1997..................................................... $23.2
1998..................................................... 18.8
1999..................................................... 15.3
2000..................................................... 12.3
2001..................................................... 7.8
Thereafter............................................... 17.0
-----
Total minimum payments................................... $94.4
=====
</TABLE>
66
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 13--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 adjustment), subject to discretionary
withdrawal (without adjustment), and not subject to discretionary withdrawal
provisions are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1996 Percent
----------------- -------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal (with adjust-
ment):
With market value adjustment....................... $ 1,748.9 4.9%
At book value less surrender charge................ 2,681.4 7.5
--------- -----
Total with adjustment.............................. 4,430.3 12.4
Subject to discretionary withdrawal (without ad-
justment) at book value........................... 815.7 2.3
Subject to discretionary withdrawal--separate ac-
counts............................................ 11,816.8 33.0
Not subject to discretionary withdrawal:
General account.................................... 17,422.1 48.7
Separate accounts.................................. 1,297.3 3.6
--------- -----
Total annuity reserves and deposit liabilities--be-
fore reinsurance.................................... 35,782.2 100.0%
=====
Less reinsurance ceded............................... (0.2)
---------
Net annuity reserves and deposit fund liabilities.... $35,782.0
=========
</TABLE>
Any liquidation costs associated with the $11.8 billion of separate accounts
subject to discretionary withdrawal are sustained by the separate account
contractholders and not by the general account.
NOTE 14--UNPAID CLAIMS
Activity in the liability for accident and health unpaid claims is as follows:
<TABLE>
<CAPTION>
1996 1995
------ ------
(In millions)
<S> <C> <C>
Balance at January 1............................................ $207.7 $216.2
Less reinsurance recoverables................................. 4.0 (7.3)
------ ------
Net balance at January 1........................................ 203.7 208.9
------ ------
Incurred related to:
Current year.................................................. 293.8 301.0
Prior years................................................... (36.1) (25.2)
------ ------
Total incurred.................................................. 257.7 275.8
------ ------
Paid related to:
Current year.................................................. 183.7 192.0
Prior years................................................... 71.7 89.0
------ ------
Total paid...................................................... 255.4 281.0
------ ------
Net balance at December 31...................................... 206.0 203.7
Plus reinsurance recoverable.................................. 3.0 4.0
------ ------
Balance at December 31.......................................... $209.0 $207.7
====== ======
</TABLE>
67
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 14--UNPAID CLAIMS--CONTINUED
As a result of favorable changes in claim estimates and a decline in fully
insured business, the liability for prior year claims decreased in 1996 and
1995.
NOTE 15--COMMITMENTS AND CONTINGENCIES
The Company has extended commitments to purchase long-term bonds, preferred
and common stocks, and real estate and issue real estate mortgages totaling
$619.4 million, $14.7 million, $160.2 million and $275.4 million,
respectively, at December 31, 1996. If funded, loans related to real estate
mortgages would be fully collateralized by related properties. The Company
monitors the credit worthiness of borrowers under long-term bond commitments
and requires collateral as deemed necessary. The fair value of the commitments
described above is $1.1 billion at December 31, 1996. The majority of these
commitments expire in 1997.
The Company has contingent liabilities, pursuant to guarantee agreements
issued in connection with real estate joint ventures, in the amount of $43.3
million.
During 1996, the Company entered into a credit support and collateral pledge
agreement with the Federal National Mortgage Association (FNMA). Under the
agreement, the Company sold $532.8 million of commercial mortgage loans and
acquired an equivalent amount of FNMA securities. The Company completed
similar transactions with FNMA in 1991 for $1.042 billion and in 1993 for
$71.9 million. FNMA is guarantying the full face value of the bonds of the
three transactions to the bondholders. However, the Company has agreed to
absorb the first 12.25% of the principal and interest losses (less buy-backs)
for the pools of loans involved in the three transactions, based on the total
outstanding principal balance of $1.036 billion as of July 1, 1996, but is not
required to commit collateral to support this loss contingency. At December
31, 1996, the aggregate outstanding principal balance of all the remaining
pools of loans from 1991, 1993, and 1996 is $907.4 million.
Historically, the Company has experienced losses of less than one percent on
its multi-family mortgage portfolio. Mortgage loan buy-backs required by the
FNMA in 1996 and 1995 amounted to $3.4 million and $0.0 million, respectively.
During 1996, the Company entered into credit support and collateral pledge
agreement with the Federal Home Loan Mortgage Corporation (FHLMC). Under the
agreement, the Company sold $535.3 million of multi-family loans and acquired
and equivalent amount of FHLMC securities. FHLMC is guarantying the full face
value of the bonds to the bondholders. However, the Company has agreed to
absorb the first 10.5% of original principal and interest losses (less buy-
backs) for the pool of loans involved but is not required to commit collateral
to support this loss contingency. Historically, the Company has experienced
total losses of less than one percent on its multi-family loan portfolio. At
December 31, 1996, the aggregate outstanding principal balance of the pools of
loans was $535.3 million. There were no mortgage loans buy-backs in 1996.
The Company has a support agreement with JHVLICo under which the Company
agrees to continue directly or indirectly to own all of JHVLICo's common stock
and maintain JHVLICo's net worth at not less than $1 million.
68
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 15--COMMITMENTS AND CONTINGENCIES--CONTINUED
The Company has a support agreement with John Hancock Capital Corporation
(JHCC) under which the Company agrees to continue directly or indirectly to
own all of JHCC's common stock and maintain JHCC's net worth at not less than
$1 million. JHCC's outstanding borrowings as of December 31, 1996 were $278.3
million for short-term borrowings and $145.1 million for notes payable.
The Company is subject to insurance guaranty fund laws in the states in which
it does business. These laws assess insurance companies amounts to be used to
pay benefits to policyholders and claimants of insolvent insurance companies.
Many states allow these assessments to be credited against future premium
taxes. The Company believes such assessments in excess of amounts accrued will
not materially affect its financial position.
Various lawsuits arise against the Company in the course of the Company's
business. Purported class actions and individual actions have been or could be
brought against the Company in its normal course of business. While the
Company specifically denies any wrongdoing, such litigation is subject to many
uncertainties, and given the current environment and complexity of various
types of litigation, their outcome can not be predicted. Accordingly, the
Company has established a litigation reserve. As appropriate, the reserve will
be used for legal and other costs related to opposing such litigation or in
the ultimate settlement of suits. The reserve has been charged directly to
policyholders' contingency reserves of the Company. The Company believes that
the ultimate outcome of pending litigation should not have a material adverse
effect on the Company's financial position.
69
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 16--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
----------------------------------------
1996 1995
------------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------- --------- --------- ---------
(In millions)
<S> <C> <C> <C> <C>
Assets
Bonds--Note 6...................... $22,467.0 $23,539.0 $21,108.5 $22,995.0
Preferred stocks--Note 6........... 416.2 416.2 338.8 338.8
Common stocks--Note 6.............. 249.8 249.8 130.9 130.9
Mortgage loans on real estate--Note
6................................. 7,964.0 8,400.2 8,801.5 9,381.8
Policy loans--Note 1............... 1,589.3 1,589.3 1,621.3 1,621.3
Cash and cash equivalents--Note 1.. 1,416.7 1,416.7 540.7 540.7
Liabilities
Guaranteed investment contracts--
Note 1............................ 11,921.6 11,943.2 12,014.3 12,325.3
Fixed rate deferred and immediate
annuities--Note 1................. 3,909.3 3,886.1 3,494.5 3,478.6
Supplementary contracts without
life contingencies--Note 1........ 45.6 46.0 39.6 40.7
Derivatives liabilities relating
to:--Note 11
Interest rate swaps.................. -- 16.4 -- 37.0
Currency rate swaps.................. -- 41.1 -- 23.3
Interest rate caps................... -- (0.6) -- (0.3)
Interest rate floors................. -- (0.1) -- 0.0
Commitments--Note 15................. -- 1,095.7 -- 1,070.2
</TABLE>
The carrying amounts in the table are included in the statutory-basis
statements of financial position. The methods and assumptions utilized by the
Company in estimating its fair value disclosures are described in Note 1.
70
<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 John
Hancock 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 than 3 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 than 3 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 John Hancock's approval.
ADDITIONAL INSURANCE BENEFITS
On payment of an additional charge 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 by rider.
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. In general, 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.
OWNER AND ASSIGNMENT. The Owner's interest in the Policy may be assigned
without the consent of any revocable Beneficiary. John Hancock 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 John Hancock's Servicing Office. John
Hancock 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, John Hancock 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.
71
<PAGE>
SUICIDE. If the insured commits suicide within 2 years (except where state
law requires a shorter period) from the date of issue shown in the Policy, the
Policy will terminate and John Hancock 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 within 2 years (except where state
law requires a shorter period) from the date of any Policy change that
increases the death benefit, or the payment of any premium requiring evidence
of insurability, the death benefit will not include the increased benefit but
will include the excess premium.
AGE, POLICY ANNIVERSARIES AND MONTHLY PROCESSING DATE. For purpose of the
Policy, an insured's "age" is his or her age on his or her nearest birthday.
Policy months, Policy years and Policy anniversaries are calculated from the
date of issue. The monthly processing date is on or about the first Valuation
Date in each Policy month.
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,
John Hancock 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 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, such increase 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 DETERMINATIONS AND PAYMENTS. Payment of any death, surrender,
partial withdrawal or loan proceeds will ordinarily be made within seven days
after receipt at John Hancock'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.
John Hancock may defer any transaction requiring a determination of Account
Value in any variable Subaccount 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 Owners.
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.
72
<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,
Planned Premium schedule and Sum Insured and shows how the death benefit,
Account Value and Surrender Value 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 Planned
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 John Hancock 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 fluctuate above or below the average for individual Policy
years, or if the Policy were issued in a state in which no distinctions are
made based on the gender of the insureds.
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 the current rates for insurance, sales, risk, and expense
charges (including John Hancock's intended waiver after ten Policy years of
the sales charges deducted from certain premiums and its intended reduction in
the tenth Policy year in the insurance charge deducted monthly from Account
Value) will apply in each year illustrated. The tables headed "Using Maximum
Charges" assumes that the maximum (guaranteed) insurance, sales, risk, and
expense charges will be made in each year illustrated. The amounts shown in
all tables reflect an average asset charge for the daily investment advisory
expense charges to the Portfolios of the Funds (equivalent to an effective
annual rate of .61%) and an assumed average asset charge for the annual
nonadvisory operating expenses of each Portfolio of the Funds (equivalent to
an effective annual rate of .19%). 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
Prospectuses for the Funds. 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 Portfolio 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, John Hancock 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. All of the tables do,
however, reflect the imposition of a Federal DAC Tax charge in the amount of
1.25% of all premiums paid and a premium tax charge in the amount of 2.35% of
all premiums paid.
The tables assume that the Guaranteed Death Benefit feature was in effect
the first 5 Policy years.
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.
John Hancock will furnish upon request a comparable illustration reflecting
the proposed insureds' ages, sexes, underwriting risk classifications and the
Sum Insured at issue and Planned Premium amount requested, and assuming annual
Planned Premiums.
73
<PAGE>
DEATH BENEFIT OPTION 1: --LEVEL DEATH BENEFIT
ILLUSTRATION ASSUMES CURRENT CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM*
<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 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>
1 798 100,000 100,000 100,000 237 264 292 0 0 0
2 1,636 100,000 100,000 100,000 695 771 851 0 28 108
3 2,516 100,000 100,000 100,000 1,132 1,286 1,455 39 194 362
4 3,439 100,000 100,000 100,000 1,549 1,811 2,107 456 719 1,014
5 4,409 100,000 100,000 100,000 1,946 2,345 2,813 854 1,253 1,720
6 5,428 100,000 100,000 100,000 2,324 2,889 3,578 1,231 1,797 2,486
7 6,497 100,000 100,000 100,000 2,683 3,445 4,411 1,590 2,352 3,318
8 7,620 100,000 100,000 100,000 3,023 4,012 5,317 2,129 3,118 4,423
9 8,799 100,000 100,000 100,000 3,345 4,590 6,305 2,649 3,895 5,610
10 10,037 100,000 100,000 100,000 3,656 5,194 7,400 3,360 4,897 7,104
11 11,337 100,000 100,000 100,000 3,981 5,845 8,635 3,783 5,647 8,438
12 12,702 100,000 100,000 100,000 4,288 6,515 9,992 4,189 6,416 9,894
13 14,135 100,000 100,000 100,000 4,580 7,205 11,487 4,580 7,205 11,487
14 15,640 100,000 100,000 100,000 4,858 7,921 13,137 4,858 7,921 13,137
15 17,220 100,000 100,000 100,000 5,127 8,666 14,963 5,127 8,666 14,963
16 18,879 100,000 100,000 100,000 5,392 9,449 16,992 5,392 9,449 16,992
17 20,621 100,000 100,000 100,000 5,596 10,214 19,194 5,596 10,214 19,194
18 22,450 100,000 100,000 100,000 5,760 10,983 21,610 5,760 10,983 21,610
19 24,370 100,000 100,000 100,000 5,881 11,752 24,263 5,881 11,752 24,263
20 26,387 100,000 100,000 100,000 5,958 12,521 27,182 5,958 12,521 27,182
25 38,086 100,000 100,000 100,000 5,461 16,177 46,950 5,461 16,177 46,950
30 53,018 100,000 100,000 100,000 2,862 18,944 80,308 2,862 18,944 80,308
35 72,076 ** 100,000 157,383 ** 19,404 136,855 ** 19,404 136,855
40 96,398 ** 100,000 241,761 ** 14,595 230,249 ** 14,595 230,249
45 127,441 ** ** 405,009 ** ** 385,723 ** ** 385,723
</TABLE>
- --------
(*) If premiums are paid more frequently than annually, the above values shown
would be affected.
(**) Policy lapses unless additional premium payments are made.
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.
74
<PAGE>
DEATH BENEFIT OPTION 1: LEVEL DEATH BENEFIT
ILLUSTRATION ASSUMES MAXIMUM CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM *
<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 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>
1 798 100,000 100,000 100,000 191 216 242 0 0 0
2 1,636 100,000 100,000 100,000 609 680 754 0 0 10
3 2,516 100,000 100,000 100,000 1,010 1,152 1,306 0 59 214
4 3,439 100,000 100,000 100,000 1,393 1,634 1,904 301 541 811
5 4,409 100,000 100,000 100,000 1,757 2,122 2,548 664 1,029 1,456
6 5,428 100,000 100,000 100,000 2,101 2,618 3,245 1,009 1,525 2,152
7 6,497 100,000 100,000 100,000 2,423 3,118 3,995 1,331 2,025 2,902
8 7,620 100,000 100,000 100,000 2,723 3,622 4,805 1,829 2,728 3,911
9 8,799 100,000 100,000 100,000 2,998 4,128 5,678 2,303 3,433 4,983
10 10,037 100,000 100,000 100,000 3,257 4,647 6,635 2,961 4,351 6,339
11 11,337 100,000 100,000 100,000 3,489 5,167 7,671 3,291 4,969 7,473
12 12,702 100,000 100,000 100,000 3,692 5,685 8,792 3,594 5,586 8,693
13 14,135 100,000 100,000 100,000 3,867 6,201 10,006 3,867 6,201 10,006
14 15,640 100,000 100,000 100,000 4,010 6,714 11,324 4,010 6,714 11,324
15 17,220 100,000 100,000 100,000 4,119 7,219 12,754 4,119 7,219 12,754
16 18,879 100,000 100,000 100,000 4,192 7,715 14,306 4,192 7,715 14,306
17 20,621 100,000 100,000 100,000 4,223 8,195 15,991 4,223 8,195 15,991
18 22,450 100,000 100,000 100,000 4,205 8,652 17,817 4,205 8,652 17,817
19 24,370 100,000 100,000 100,000 4,135 9,081 19,799 4,135 9,081 19,799
20 26,387 100,000 100,000 100,000 4,002 9,471 21,948 4,002 9,471 21,948
25 38,086 100,000 100,000 100,000 2,168 10,547 35,894 2,168 10,547 35,894
30 53,018 ** 100,000 100,000 ** 8,868 57,973 ** 8,868 57,973
35 72,076 ** 100,000 109,818 ** 796 95,494 ** 796 95,494
40 96,398 ** ** 165,977 ** ** 158,074 ** ** 158,074
45 127,441 ** ** 273,204 ** ** 260,194 ** ** 260,194
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
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%, 5% 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.
75
<PAGE>
DEATH BENEFIT OPTION 2: VARIABLE DEATH BENEFIT
ILLUSTRATION ASSUMES CURRENT CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM*
<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 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>
1 798 100,237 100,264 100,291 237 264 291 0 0 0
2 1,636 100,693 100,769 100,849 693 769 849 0 26 106
3 2,516 101,128 101,282 101,449 1,128 1,282 1,449 35 189 356
4 3,439 101,542 101,802 102,097 1,542 1,802 2,097 449 710 1,004
5 4,409 101,935 102,331 102,795 1,935 2,331 2,795 842 1,238 1,703
6 5,428 102,307 102,867 103,551 2,307 2,867 3,551 1,214 1,775 2,458
7 6,497 102,660 103,413 104,369 2,660 3,413 4,369 1,567 2,321 3,277
8 7,620 102,992 103,968 105,257 2,992 3,968 5,257 2,098 3,074 4,363
9 8,799 103,304 104,532 106,222 3,304 4,532 6,222 2,609 3,837 5,527
10 10,037 103,606 105,118 107,287 3,606 5,118 7,287 3,309 4,821 6,990
11 11,337 103,918 105,747 108,483 3,918 5,747 8,483 3,721 5,549 8,285
12 12,702 104,212 106,391 109,792 4,212 6,391 9,792 4,114 6,292 9,693
13 14,135 104,489 107,052 111,226 4,489 7,052 11,226 4,489 7,052 11,226
14 15,640 104,751 107,732 112,802 4,751 7,732 12,802 4,751 7,732 12,802
15 17,220 105,003 108,438 114,540 5,003 8,438 14,540 5,003 8,438 14,540
16 18,879 105,250 109,175 116,463 5,250 9,175 16,463 5,250 9,175 16,463
17 20,621 105,431 109,884 118,528 5,431 9,884 18,528 5,431 9,884 18,528
18 22,450 105,569 110,585 120,772 5,569 10,585 20,772 5,569 10,585 20,772
19 24,370 105,662 111,275 123,211 5,662 11,275 23,211 5,662 11,275 23,211
20 26,387 105,707 111,951 125,866 5,707 11,951 25,866 5,707 11,951 25,866
25 38,086 104,999 114,839 143,015 4,999 14,839 43,015 4,999 14,839 43,015
30 53,018 102,157 116,038 168,955 2,157 16,038 68,955 2,157 16,038 68,955
35 72,076 ** 113,599 207,924 ** 13,599 107,924 ** 13,599 107,924
40 96,398 ** 104,185 265,994 ** 4,185 165,994 ** 4,185 165,994
45 127,441 ** ** 351,128 ** ** 251,128 ** ** 251,128
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
above would be affected.
** Policy lapses unless additional premium payments are made.
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.
76
<PAGE>
DEATH BENEFIT OPTION 2: VARIABLE DEATH BENEFIT
ILLUSTRATION ASSUMES MAXIMUM CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM*
<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 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>
1 798 100,190 100,216 100,241 190 216 241 0 0 0
2 1,636 100,607 100,677 100,751 607 677 751 0 0 8
3 2,516 101,006 101,148 101,301 1,006 1,148 1,301 0 55 208
4 3,439 101,386 101,625 101,894 1,386 1,625 1,894 293 532 801
5 4,409 101,746 102,108 102,532 1,746 2,108 2,532 653 1,015 1,439
6 5,428 102,085 102,597 103,219 2,085 2,597 3,219 993 1,504 2,126
7 6,497 102,401 103,088 103,956 2,401 3,088 3,956 1,308 1,995 2,863
8 7,620 102,694 103,581 104,749 2,694 3,581 4,749 1,800 2,687 3,855
9 8,799 102,961 104,073 105,599 2,961 4,073 5,599 2,265 3,378 4,904
10 10,037 103,209 104,575 106,528 3,209 4,575 6,528 2,913 4,279 6,231
11 11,337 103,430 105,073 107,526 3,430 5,073 7,526 3,232 4,876 7,328
12 12,702 103,620 105,566 108,599 3,620 5,566 8,599 3,521 5,468 8,501
13 14,135 103,779 106,053 109,755 3,779 6,053 9,755 3,779 6,053 9,755
14 15,640 103,906 106,529 110,997 3,906 6,529 10,997 3,906 6,529 10,997
15 17,220 103,996 106,992 112,334 3,996 6,992 12,334 3,996 6,992 12,334
16 18,879 104,050 107,439 113,771 4,050 7,439 13,771 4,050 7,439 13,771
17 20,621 104,059 107,861 115,313 4,059 7,861 15,313 4,059 7,861 15,313
18 22,450 104,017 108,250 116,962 4,017 8,250 16,962 4,017 8,250 16,962
19 24,370 103,920 108,601 118,726 3,920 8,601 18,726 3,920 8,601 18,726
20 26,387 103,759 108,899 120,605 3,759 8,899 20,605 3,759 8,899 20,605
25 38,086 101,779 109,273 131,932 1,779 9,273 31,932 1,779 9,273 31,932
30 53,018 ** 106,372 146,802 ** 6,372 46,802 ** 6,372 46,802
35 72,076 ** ** 164,618 ** ** 64,618 ** ** 64,618
40 96,398 ** ** 182,715 ** ** 82,715 ** ** 82,715
45 127,441 ** ** 193,249 ** ** 93,249 ** ** 93,249
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
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.
77
<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: $100,000
$760 BASE POLICY TARGET PREMIUM*
<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 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>
1 798 100,000 100,000 100,000 237 264 292 0 0 0
2 1,636 100,000 100,000 100,000 695 771 851 0 28 108
3 2,516 100,000 100,000 100,000 1,132 1,286 1,455 39 194 362
4 3,439 100,000 100,000 100,000 1,549 1,811 2,107 456 719 1,014
5 4,409 100,000 100,000 100,000 1,946 2,345 2,813 854 1,253 1,720
6 5,428 100,000 100,000 100,000 2,324 2,889 3,578 1,231 1,797 2,486
7 6,497 100,000 100,000 100,000 2,683 3,445 4,411 1,590 2,352 3,318
8 7,620 100,000 100,000 100,000 3,023 4,012 5,317 2,129 3,118 4,423
9 8,799 100,000 100,000 100,000 3,345 4,590 6,305 2,649 3,895 5,610
10 10,037 100,000 100,000 100,000 3,656 5,194 7,400 3,360 4,897 7,104
11 11,337 100,000 100,000 100,000 3,981 5,845 8,635 3,783 5,647 8,438
12 12,702 100,000 100,000 100,000 4,288 6,515 9,992 4,189 6,416 9,894
13 14,135 100,000 100,000 100,000 4,580 7,205 11,487 4,580 7,205 11,487
14 15,640 100,000 100,000 100,000 4,858 7,921 13,137 4,858 7,921 13,137
15 17,220 100,000 100,000 100,000 5,127 8,666 14,963 5,127 8,666 14,963
16 18,879 100,000 100,000 100,000 5,392 9,449 16,992 5,392 9,449 16,992
17 20,621 100,000 100,000 100,000 5,596 10,214 19,194 5,596 10,214 19,194
18 22,450 100,000 100,000 100,000 5,760 10,983 21,610 5,760 10,983 21,610
19 24,370 100,000 100,000 100,000 5,881 11,752 24,263 5,881 11,752 24,263
20 26,387 100,000 100,000 100,000 5,958 12,521 27,182 5,958 12,521 27,182
25 38,086 100,000 100,000 100,000 5,461 16,177 46,950 5,461 16,177 46,950
30 53,018 100,000 100,000 134,782 2,862 18,944 79,190 2,862 18,944 79,190
35 72,076 ** 100,000 196,136 ** 19,404 129,583 ** 19,404 129,583
40 96,398 ** 100,000 283,835 ** 14,595 207,360 ** 14,595 207,360
45 127,441 ** ** 411,057 ** ** 325,564 ** ** 325,564
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
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.
78
<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: $100,000
$760 BASE POLICY TARGET PREMIUM*
<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 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>
1 798 100,000 100,000 100,000 191 216 242 0 0 0
2 1,636 100,000 100,000 100,000 609 680 754 0 0 10
3 2,516 100,000 100,000 100,000 1,010 1,152 1,306 0 59 214
4 3,439 100,000 100,000 100,000 1,393 1,634 1,904 301 541 811
5 4,409 100,000 100,000 100,000 1,757 2,122 2,548 664 1,029 1,456
6 5,428 100,000 100,000 100,000 2,101 2,618 3,245 1,009 1,525 2,152
7 6,497 100,000 100,000 100,000 2,423 3,118 3,995 1,331 2,025 2,902
8 7,620 100,000 100,000 100,000 2,723 3,622 4,805 1,829 2,728 3,911
9 8,799 100,000 100,000 100,000 2,998 4,128 5,678 2,303 3,433 4,983
10 10,037 100,000 100,000 100,000 3,257 4,647 6,635 2,961 4,351 6,339
11 11,337 100,000 100,000 100,000 3,489 5,167 7,671 3,291 4,969 7,473
12 12,702 100,000 100,000 100,000 3,692 5,685 8,792 3,594 5,586 8,693
13 14,135 100,000 100,000 100,000 3,867 6,201 10,006 3,867 6,201 10,006
14 15,640 100,000 100,000 100,000 4,010 6,714 11,324 4,010 6,714 11,324
15 17,220 100,000 100,000 100,000 4,119 7,219 12,754 4,119 7,219 12,754
16 18,879 100,000 100,000 100,000 4,192 7,715 14,306 4,192 7,715 14,306
17 20,621 100,000 100,000 100,000 4,223 8,195 15,991 4,223 8,195 15,991
18 22,450 100,000 100,000 100,000 4,205 8,652 17,817 4,205 8,652 17,817
19 24,370 100,000 100,000 100,000 4,135 9,081 19,799 4,135 9,081 19,799
20 26,387 100,000 100,000 100,000 4,002 9,471 21,948 4,002 9,471 21,948
25 38,086 100,000 100,000 100,000 2,168 10,547 35,894 2,168 10,547 35,894
30 53,018 ** 00,000 100,000 ** 8,868 57,972 ** 8,868 57,972
35 72,076 ** 100,000 139,515 ** 796 92,174 ** 796 92,174
40 96,398 ** ** 194,047 ** ** 141,764 ** ** 141,764
45 127,441 ** ** 267,166 ** ** 211,600 ** ** 211,600
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
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.
79
<PAGE>
LOGO
POLICIES ISSUED BY JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, MASSACHUSETTS 02117
S8148NY-M 5/97
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
REPRESENTATION OF REASONABLENESS
John Hancock Mutual Life Insurance Company represents that the fees and
charges deducted under the Policies, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the insurance company.
UNDERTAKING REGARDING INDEMNIFICATION
Pursuant to Article 9 of John Hancock's Bylaws and Section 67 of the
Massachusetts Business Corporation Law, John Hancock indemnifies each director,
former director, officer, and former officer, and his heirs and legal
representatives from liability incurred or imposed in connection with any legal
action in which he may be involved by reason of any alleged act or omission as
an officer or a director of John Hancock.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
Cross-Reference Table.
The prospectus consisting of 82 pages.
The undertaking to file reports.
The undertaking regarding indemnification.
The signatures.
The following exhibits:
<PAGE>
1.A.(1) John Hancock Board Resolution establishing the separate account
included in Post-Effective Amendment No. 1 to the registration
statement of this Account, filed in April, 1995
(2) Not Applicable
(3) (a) Form of Distribution Agreement by and among John Hancock
Distributors, Inc., John Hancock Mutual Life Insurance Company,
and John Hancock Variable Life Insurance Company, incorporated by
reference from Pre-Effective Amendment No. 2 to Form S-6
Registration Statement of John Hancock Variable Life Account S
(File No. 333-15075) filed April 18, 1997.
(b) Specimen Variable Contracts Selling Agreement between John Hancock
Distributors, Inc., and selling broker-dealers, incorporated by
reference from Pre-Effective Amendment No. 2 to Form S-6
Registration Statement of John Hancock Variable Life Account S
(File No. 333-15075) filed April 18, 1997.
(c) Schedule of sales commissions included in Exhibit 1. A. (3) (a)
above.
(4) Not Applicable
(5) Form of flexible premium variable life insurance policy included in
the initial registration statement of this Account on this Form S-6,
filed March 18, 1994.
(6) Charter and By-Laws of John Hancock Mutual Life Insurance Company,
previously filed electronically on April 19, 1996.
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) Form of application for Policy, previously filed electronically on
April 19, 1996.
2. Included as exhibit 1.A (5) above
<PAGE>
3. Opinion and consent of counsel as to securities being registered included in
Pre-Effective Amendment No. 1 to the registration statement of this Account
on this Form S-6, filed August 30, 1994.
4. Not Applicable
5. Not Applicable
6. Opinion and consent of actuary, previously filed electronically on April 23,
1997.
7. Consent of independent auditors.
8. Memorandum describing John Hancock's issuance, transfer and redemption
procedures for the policy pursuant to Rule 6e-3(T)(b)(12)(iii), previously
filed electronically on April 19, 1996.
9. Power of attorney for Robert J. Tarr, previously filed electronically on
April 23, 1997. Powers of attorney for Bodman, Gifford, Boyan, Morton,
Magee, Connors, Brown, Phillips, Booth, Vappi, Bromery, Staley,
D'Alessandro, Fast, Aborn, Bok, Feldstein, Fish, Syron and Hawley,
previously filed electronically on April 19, 1996.
10. Representations, Description and Undertaking pursuant to Rule 6e-
3(T)(b)(13)(iii)(F) under the Investment Company Act of 1940, included in
Pre-Effective Amendment No. 1 to the registration statement of this Account
on this Form S-6, filed August 30, 1994.
11. Opinion of counsel as to eligibility of this Post-Effective Amendment for
filing pursuant to Rule 485(b).
- -------------------------------------------
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the John
Hancock Mutual Life Insurance Company has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunder duly authorized, and its seal to be hereunto fixed and
attested, all in the City of Boston and Commonwealth of Massachusetts on the
12th day of May, 1997.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
(SEAL)
By STEPHEN L. BROWN
----------------
Stephen L. Brown
Chairman
Attest: RONALD J. BOCAGE
--------------------------
Ronald J. Bocage
Vice President and Counsel
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities with John Hancock Mutual Life Insurance
Company and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
THOMAS E. MOLONEY
- -----------------
Thomas E. Moloney May 12, 1997
JANET A. PENDLETON Vice President/Controller
- ------------------ (Principal
Janet A. Pendleton Accounting Officer) May 12, 1997
Chairman of the Board and
Chief Executive Officer
STEPHEN L. BROWN (Principal Executive Officer)
- ----------------
Stephen L. Brown
for himself and as
Attorney-in-Fact May 12, 1997
</TABLE>
FOR: Foster L. Aborn Vice Chairman of the Board
William L. Boyan President, Chief Operating Officer & Director
David F. D'Alessandro Senior Executive Vice President & Director
Nelson S. Gifford Director E. James Morton Director
John F. Magee Director Thomas L. Phillips Director
John M. Connors Director Joan T. Bok Director
Robert J. Tarr, Jr. Director Robert E. Fast Director
C. Vincent Vappi Director Samuel W. Bodman Director
Randolph W. Bromery Director Lawrence K. Fish Director
I. MacAllister Booth Director Kathleen F. Feldstein Director
Michael C. Hawley Director
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, John Hancock Mutual Variable Life Insurance Account UV, certifies
that it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto fixed and attested, all in the City of Boston and Commonwealth of
Massachusetts on the 12th day of May, 1997.
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
(Registrant)
By John Hancock Mutual Life Insurance Company
(Depositor)
(SEAL)
By STEPHEN L. BROWN
----------------
Stephen L. Brown
Chairman
Attest: RONALD J. BOCAGE
--------------------------
Ronald J. Bocage
Vice President and Counsel
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> LARGE CAP GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 12,264,052
<INVESTMENTS-AT-VALUE> 12,863,129
<RECEIVABLES> 1,217,789
<ASSETS-OTHER> 5,468
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,086,386
<PAYABLE-FOR-SECURITIES> 5,244
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 224
<TOTAL-LIABILITIES> 5,468
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 14,080,918
<DIVIDEND-INCOME> 1,905,476
<INTEREST-INCOME> 83,974
<OTHER-INCOME> 0
<EXPENSES-NET> 68,829
<NET-INVESTMENT-INCOME> 1,919,621
<REALIZED-GAINS-CURRENT> 145,304
<APPREC-INCREASE-CURRENT> 3,756
<NET-CHANGE-FROM-OPS> 2,068,681
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,544,864
<NUMBER-OF-SHARES-REDEEMED> 963,567
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,731,475
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 68,829
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> SOVEREIGN BOND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 54,416,066
<INVESTMENTS-AT-VALUE> 52,753,269
<RECEIVABLES> 9,183,115
<ASSETS-OTHER> 46,420
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61,982,804
<PAYABLE-FOR-SECURITIES> 45,466
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 954
<TOTAL-LIABILITIES> 46,420
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 61,936,384
<DIVIDEND-INCOME> 3,765,421
<INTEREST-INCOME> 67,279
<OTHER-INCOME> 0
<EXPENSES-NET> 48,056
<NET-INVESTMENT-INCOME> 773,338
<REALIZED-GAINS-CURRENT> 23,090
<APPREC-INCREASE-CURRENT> 1,225,784
<NET-CHANGE-FROM-OPS> 2,022,212
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,719,783
<NUMBER-OF-SHARES-REDEEMED> 2,708,914
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,784,661
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 48,056
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> INTERNATIONAL EQUITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 3,471,773
<INVESTMENTS-AT-VALUE> 3,757,643
<RECEIVABLES> 205,660
<ASSETS-OTHER> 2,024
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<TOTAL-ASSETS> 3,965,327
<PAYABLE-FOR-SECURITIES> 1,962
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<OTHER-ITEMS-LIABILITIES> 62
<TOTAL-LIABILITIES> 2,024
<SENIOR-EQUITY> 0
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<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,963,303
<DIVIDEND-INCOME> 42,110
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<EXPENSES-NET> 19,834
<NET-INVESTMENT-INCOME> 35,434
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<NUMBER-OF-SHARES-SOLD> 1,233,884
<NUMBER-OF-SHARES-REDEEMED> 646,203
<SHARES-REINVESTED> 0
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<GROSS-EXPENSE> 19,834
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> SMALL CAP GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 262,227
<INVESTMENTS-AT-VALUE> 257,053
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<TOTAL-ASSETS> 263,781
<PAYABLE-FOR-SECURITIES> 6,724
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 6,728
<SENIOR-EQUITY> 0
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<NET-ASSETS> 257,053
<DIVIDEND-INCOME> 160
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 538
<NET-INVESTMENT-INCOME> (378)
<REALIZED-GAINS-CURRENT> (690)
<APPREC-INCREASE-CURRENT> (5,174)
<NET-CHANGE-FROM-OPS> (6,242)
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<NUMBER-OF-SHARES-SOLD> 277,121
<NUMBER-OF-SHARES-REDEEMED> 14,204
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 257,053
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 538
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> INTERNATIONAL BALANCED
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 31,867
<INVESTMENTS-AT-VALUE> 32,766
<RECEIVABLES> 0
<ASSETS-OTHER> 83
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,849
<PAYABLE-FOR-SECURITIES> 82
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1
<TOTAL-LIABILITIES> 83
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 32,766
<DIVIDEND-INCOME> 734
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 81
<NET-INVESTMENT-INCOME> 653
<REALIZED-GAINS-CURRENT> 9
<APPREC-INCREASE-CURRENT> 899
<NET-CHANGE-FROM-OPS> 1,561
<EQUALIZATION> 0
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33,304
<NUMBER-OF-SHARES-REDEEMED> 1,445
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 32,766
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 81
<AVERAGE-NET-ASSETS> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> MID CAP GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<INVESTMENTS-AT-VALUE> 165,152
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 168,621
<PAYABLE-FOR-SECURITIES> 3,466
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 3,468
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 165,152
<DIVIDEND-INCOME> 411
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 292
<NET-INVESTMENT-INCOME> 119
<REALIZED-GAINS-CURRENT> (17)
<APPREC-INCREASE-CURRENT> 1,684
<NET-CHANGE-FROM-OPS> 1,786
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 174,282
<NUMBER-OF-SHARES-REDEEMED> 10,797
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 165,152
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
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<GROSS-EXPENSE> 292
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<PER-SHARE-DIVIDEND> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> LARGE CAP VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 99,745
<INVESTMENTS-AT-VALUE> 104,532
<RECEIVABLES> 0
<ASSETS-OTHER> 12,908
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117,439
<PAYABLE-FOR-SECURITIES> 12,906
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 12,908
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 104,532
<DIVIDEND-INCOME> 2,056
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 217
<NET-INVESTMENT-INCOME> 1,838
<REALIZED-GAINS-CURRENT> 588
<APPREC-INCREASE-CURRENT> 4,787
<NET-CHANGE-FROM-OPS> 7,213
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 108,910
<NUMBER-OF-SHARES-REDEEMED> 9,753
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 104,532
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 217
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MONEY MARKET
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 9,960,187
<INVESTMENTS-AT-VALUE> 9,960,187
<RECEIVABLES> 2,124,205
<ASSETS-OTHER> 12,908
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<TOTAL-ASSETS> 12,180,064
<PAYABLE-FOR-SECURITIES> 96,772
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 186
<TOTAL-LIABILITIES> 96,958
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 12,083,106
<DIVIDEND-INCOME> 1,073,915
<INTEREST-INCOME> 160,206
<OTHER-INCOME> 0
<EXPENSES-NET> 134,461
<NET-INVESTMENT-INCOME> 1,099,660
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,099,660
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,555,205
<NUMBER-OF-SHARES-REDEEMED> 44,368,729
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (8,914,213)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 134,461
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
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<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> MID CAP VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 214,216
<INVESTMENTS-AT-VALUE> 228,427
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 231,691
<PAYABLE-FOR-SECURITIES> 3,261
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 3,265
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 228,427
<DIVIDEND-INCOME> 5,010
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 572
<NET-INVESTMENT-INCOME> 4,438
<REALIZED-GAINS-CURRENT> 8,413
<APPREC-INCREASE-CURRENT> 14,211
<NET-CHANGE-FROM-OPS> 27,062
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 285,317
<NUMBER-OF-SHARES-REDEEMED> 79,514
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 228,427
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 572
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<PER-SHARE-DIVIDEND> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> SPECIAL OPPORTUNITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 2,593,124
<INVESTMENTS-AT-VALUE> 2,981,726
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<TOTAL-ASSETS> 2,991,193
<PAYABLE-FOR-SECURITIES> 9,419
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49
<TOTAL-LIABILITIES> 9,468
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,981,726
<DIVIDEND-INCOME> 114,600
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 10,841
<NET-INVESTMENT-INCOME> 103,759
<REALIZED-GAINS-CURRENT> 81,916
<APPREC-INCREASE-CURRENT> 264,010
<NET-CHANGE-FROM-OPS> 449,686
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,904,890
<NUMBER-OF-SHARES-REDEEMED> 221,262
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,029,554
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,841
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> REAL ESTATE EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 2,771,228
<INVESTMENTS-AT-VALUE> 3,453,171
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<TOTAL-ASSETS> 3,716,479
<PAYABLE-FOR-SECURITIES> 71,915
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58
<TOTAL-LIABILITIES> 71,973
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,644,506
<DIVIDEND-INCOME> 177,243
<INTEREST-INCOME> 13,041
<OTHER-INCOME> 0
<EXPENSES-NET> 16,931
<NET-INVESTMENT-INCOME> 173,352
<REALIZED-GAINS-CURRENT> 39,891
<APPREC-INCREASE-CURRENT> 637,301
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<NUMBER-OF-SHARES-SOLD> 958,884
<NUMBER-OF-SHARES-REDEEMED> 633,505
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,037,686
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,931
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GROWTH & INCOME
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 135,260,759
<INVESTMENTS-AT-VALUE> 147,820,489
<RECEIVABLES> 21,886,336
<ASSETS-OTHER> 43,492
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 169,750,317
<PAYABLE-FOR-SECURITIES> 40,849
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<TOTAL-LIABILITIES> 43,492
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<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 169,706,825
<DIVIDEND-INCOME> 18,406,284
<INTEREST-INCOME> 1,562,266
<OTHER-INCOME> 0
<EXPENSES-NET> 842,055
<NET-INVESTMENT-INCOME> 19,126,495
<REALIZED-GAINS-CURRENT> 820,430
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<NUMBER-OF-SHARES-SOLD> 37,331,710
<NUMBER-OF-SHARES-REDEEMED> 6,520,911
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 38,240,144
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 842,055
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<PER-SHARE-NAV-BEGIN> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> MANAGED
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 70,602,813
<INVESTMENTS-AT-VALUE> 70,927,719
<RECEIVABLES> 9,676,484
<ASSETS-OTHER> 21,493
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 80,625,696
<PAYABLE-FOR-SECURITIES> 20,919
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,259
<TOTAL-LIABILITIES> 22,178
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 80,603,518
<DIVIDEND-INCOME> 8,705,892
<INTEREST-INCOME> 705,413
<OTHER-INCOME> 0
<EXPENSES-NET> 426,946
<NET-INVESTMENT-INCOME> 8,984,359
<REALIZED-GAINS-CURRENT> 230,806
<APPREC-INCREASE-CURRENT> (2,103,918)
<NET-CHANGE-FROM-OPS> 7,111,247
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,375,370
<NUMBER-OF-SHARES-REDEEMED> 4,875,941
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,369,355
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 426,946
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<PER-SHARE-DIVIDEND> 0
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> SHORT-TERM U.S. GOVERNMENT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 25,291,924
<INVESTMENTS-AT-VALUE> 25,065,342
<RECEIVABLES> 0
<ASSETS-OTHER> 467
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,065,809
<PAYABLE-FOR-SECURITIES> 55
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 412
<TOTAL-LIABILITIES> 467
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 25,065,342
<DIVIDEND-INCOME> 201,830
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 15,305
<NET-INVESTMENT-INCOME> 186,525
<REALIZED-GAINS-CURRENT> 577
<APPREC-INCREASE-CURRENT> 225,129
<NET-CHANGE-FROM-OPS> 412,231
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,381,085
<NUMBER-OF-SHARES-REDEEMED> 167,959
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,985,668
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15,305
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> SMALL CAP VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 62,206
<INVESTMENTS-AT-VALUE> 64,908
<RECEIVABLES> 0
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 64,908
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1
<TOTAL-LIABILITIES> 1
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 64,908
<DIVIDEND-INCOME> 1,653
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 128
<NET-INVESTMENT-INCOME> 1,525
<REALIZED-GAINS-CURRENT> 11
<APPREC-INCREASE-CURRENT> 2,702
<NET-CHANGE-FROM-OPS> 4,238
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 64,983
<NUMBER-OF-SHARES-REDEEMED> 2,788
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 64,908
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 128
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> INTERNATIONAL OPPORTUNITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 138,002
<INVESTMENTS-AT-VALUE> 145,273
<RECEIVABLES> 0
<ASSETS-OTHER> 6,018
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 151,291
<PAYABLE-FOR-SECURITIES> 6,016
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 6,018
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 145,273
<DIVIDEND-INCOME> 482
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 295
<NET-INVESTMENT-INCOME> 187
<REALIZED-GAINS-CURRENT> 57
<APPREC-INCREASE-CURRENT> 7,271
<NET-CHANGE-FROM-OPS> 7,515
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 141,170
<NUMBER-OF-SHARES-REDEEMED> 3,225
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 145,273
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 295
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<PER-SHARE-DIVIDEND> 0
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 17
<NAME> EQUITY INDEX
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 229,597
<INVESTMENTS-AT-VALUE> 235,875
<RECEIVABLES> 0
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 235,879
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 235,875
<DIVIDEND-INCOME> 4,958
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 287
<NET-INVESTMENT-INCOME> 4,671
<REALIZED-GAINS-CURRENT> 620
<APPREC-INCREASE-CURRENT> 6,278
<NET-CHANGE-FROM-OPS> 11,569
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 238,550
<NUMBER-OF-SHARES-REDEEMED> 9,573
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 235,875
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 287
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> STRATEGIC BOND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 13,210
<INVESTMENTS-AT-VALUE> 13,218
<RECEIVABLES> 0
<ASSETS-OTHER> 47
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,265
<PAYABLE-FOR-SECURITIES> 47
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 47
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 13,218
<DIVIDEND-INCOME> 539
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 30
<NET-INVESTMENT-INCOME> 509
<REALIZED-GAINS-CURRENT> 36
<APPREC-INCREASE-CURRENT> 8
<NET-CHANGE-FROM-OPS> 553
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,082
<NUMBER-OF-SHARES-REDEEMED> 1,908
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,218
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 30
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 19
<NAME> TURNER CORE GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 28,008
<INVESTMENTS-AT-VALUE> 28,792
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,792
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 28,792
<DIVIDEND-INCOME> 958
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 83
<NET-INVESTMENT-INCOME> 875
<REALIZED-GAINS-CURRENT> 48
<APPREC-INCREASE-CURRENT> 784
<NET-CHANGE-FROM-OPS> 1,707
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29,706
<NUMBER-OF-SHARES-REDEEMED> 1,746
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 28,792
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 83
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 20
<NAME> EDINBURGH INT'L EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 89,959
<INVESTMENTS-AT-VALUE> 88,903
<RECEIVABLES> 0
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 88,904
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1
<TOTAL-LIABILITIES> 1
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 89,903
<DIVIDEND-INCOME> 510
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 173
<NET-INVESTMENT-INCOME> 337
<REALIZED-GAINS-CURRENT> (91)
<APPREC-INCREASE-CURRENT> (1,056)
<NET-CHANGE-FROM-OPS> (810)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 92,504
<NUMBER-OF-SHARES-REDEEMED> 2,454
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 88,903
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 173
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 21
<NAME> FRONTIER CAPITAL APPRECIATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 157,892
<INVESTMENTS-AT-VALUE> 159,209
<RECEIVABLES> 0
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 159,212
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3
<TOTAL-LIABILITIES> 3
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 159,209
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 477
<NET-INVESTMENT-INCOME> (477)
<REALIZED-GAINS-CURRENT> 6,683
<APPREC-INCREASE-CURRENT> 1,317
<NET-CHANGE-FROM-OPS> 7,523
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 224,138
<NUMBER-OF-SHARES-REDEEMED> 92,928
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 159,209
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 477
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 7
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Prospectus and to the use of our reports dated February 7, 1997, with respect to
the financial statements of John Hancock Mutual Variable Life Insurance Account
UV, and February 14, 1997, with respect to the financial statements of John
Hancock Mutual Life Insurance Company, included in this Post-Effective Amendment
No. 4 to the Registration Statement (Form S-6, No. 33-76662).
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
May 12, 1997
<PAGE>
EXHIBIT 11
[John Hancock Mutual Life Insurance Company Letterhead]
May 12, 1997
United States Securities
and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
John Hancock Mutual Variable Life Insurance Account UV
File Nos. 33-76662 and 811-7766
Commissioners:
This opinion is being furnished with respect to the filing of this post-
effective amendment of the Registrant's Registration Statement with the
Securities and Exchange Commission as required by Rule 485 under the Securities
Act of 1933.
We have acted as counsel to Registrant for the purpose of preparing this
post-effective amendment which is being filed pursuant to paragraph (b) of Rule
485 and hereby represent to the Commission that in our opinion this post-
effective amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b).
We hereby consent to the filing of this opinion with and as a part of this
post-effective amendment to Registrant's Registration Statement with the
Commission.
Very truly yours,
/s/ Sandra M. DaDalt
--------------------
Sandra M. DaDalt
Counsel
