<PAGE>
As filed with the Securities and Exchange Commission on April 29, 1998
Registration No. 33-63900
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-6
Post-Effective Amendment No. 5 to
Registration Statement Under
THE SECURITIES ACT OF 1933
----------------------
JOHN HANCOCK 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)
/ /immediately upon filing pursuant to paragraph (b) of Rule 485
--
/X/on May 1, 1998 pursuant to paragraph (b) of Rule 485
--
/ /60 days after filing pursuant to paragraph (a)(1) of Rule 485
--
/ /on (date) pursuant to paragraph (a)(1) of Rule 485
--
If appropriate check the following box
/_/this post-effective amendment designates a new effective date for a
previously filed amendment
Pursuant to the provisions of Rule 24f-2, Registrant has registered an
indefinite amount of the securities being offered and filed its Notice for
fiscal year 1997 pursuant to Rule 24f-2 on February 26, 1998.
<PAGE>
CROSS-REFERENCE TABLE
Form N-8B-2 Item Caption in Prospectus
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1, 2 Cover, The Account and The Series
Fund, John Hancock
3 Inapplicable
4 Cover, Distribution of Policies
5,6 The Account and The Series Fund,
State Regulation
7, 8, 9 Inapplicable
10(a),(b),(c),(d),(e) Principal Policy Provisions
10(f) Voting Privileges
10(g),(h) Changes in Applicable
Law--Funding and Otherwise
10(i) Appendix--Other Policy
Provisions, The Account and The
Series Fund
11, 12 Summary, The Account and The Series
Fund, Distribution of Policies
13 Charges and expenses,
Appendix--Illustration of Death
Benefits, Surrender Values and
Accumulated Premiums
14, 15 Summary, Distribution of
Policies, Premiums
16 The Account and The Series Fund
17 Summary of Policies, Principal
Policy Provisions
18 The Account and The Series Fund,
Tax Considerations
19 Reports
20 Changes in Applicable
Law--Funding and Otherwise
21 Principal Policy Provisions
22 Principal Policy Provisions
23 Distribution of Policies
24 Not Applicable
25 John Hancock
26 Charges and Expenses
27,28,29,30 John Hancock, Management
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 Management
43 Not Applicable
44 The Account and The Series Fund,
Principal Policy Provisions,
Appendix--Illustration of Death
Benefits, Cash Values and
Accumulated Premiums
45 Not Applicable
46 The Account and The Series Fund,
Principal Policy Provisions,
Appendix--Illustration of Death
Benefits, Cash Values and
Accumulated Premiums
47 Not Applicable
48,49,50 Not Applicable
51 Principal Policy Provisions,
Appendix--Other Policy Provisions
52 The Account and The Series Funds,
Changes in Applicable
Law--Funding and Otherwise
53,54,55 Not Applicable
56,57,58,59 Not Applicable
FCC0189.DOC
<PAGE>
[LOGO OF JOHN HANCOCK APPEARS HERE]
Mutual Life
Insurance Company
(John Hancock)
ANNUAL PREMIUM VARIABLE LIFE INSURANCE POLICIES
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 617-572-5410
Prospectus May 1, 1998
The annual premium variable life Policies described in this prospectus can be
funded, at the discretion of the Owner, by one or more of seven subaccounts of
John Hancock Mutual Variable Life Insurance Account UV ("Account"). The assets
of each subaccount will be invested in a corresponding Portfolio of John Hancock
Variable Series Trust I ("Fund"), a "series" type mutual fund advised by John
Hancock Mutual Life Insurance Company ("John Hancock").
The prospectus for the Fund, which is attached to this Prospectus, describes
the investment objectives, policies and risks of investing in a number of
Portfolios of the Fund. Of these Portfolios, only the Growth & Income Portfolio,
Sovereign Bond Portfolio, Money Market Portfolio, Large Cap Growth Portfolio,
Managed Portfolio, Real Estate Equity Portfolio and International Equities
Portfolio and their corresponding subaccounts are available to Owners of the
Policies described in this Prospectus.
Replacing existing insurance with a Policy described in this prospectus may
not be to your advantage.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
IT IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS FOR THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SUMMARY OF POLICIES.................................................................................... 1
JOHN HANCOCK........................................................................................... 5
THE ACCOUNT AND THE SERIES FUND........................................................................ 5
The Account........................................................................................ 5
The Series Fund.................................................................................... 6
PRINCIPAL POLICY PROVISIONS............................................................................ 7
Death Benefit...................................................................................... 7
Account Net Investment Rate (ANIR)................................................................. 9
Annual Dividends................................................................................... 9
Surrender Value.................................................................................... 10
Loan Provision and Indebtedness.................................................................... 11
Premiums........................................................................................... 12
Investment Option.................................................................................. 12
Transfer Option.................................................................................... 13
Default and Options on Lapse....................................................................... 13
Exchange of Policy During First 24 Months.......................................................... 14
CHARGES AND EXPENSES................................................................................... 14
Charges Deducted from Premiums..................................................................... 14
Expenses Charged to Account........................................................................ 15
Guarantee of Premiums and Certain Charges.......................................................... 16
DISTRIBUTION OF POLICIES............................................................................... 16
TAX CONSIDERATIONS..................................................................................... 17
Policy Proceeds.................................................................................... 17
Charge for John Hancock's Taxes.................................................................... 18
Corporate and H.R. 10 Plans........................................................................ 18
MANAGEMENT............................................................................................. 19
THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK.......................................... 19
VOTING PRIVILEGES...................................................................................... 20
CHANGES IN APPLICABLE LAW--FUNDING AND OTHERWISE....................................................... 20
REPORTS................................................................................................ 21
STATE REGULATION....................................................................................... 21
LEGAL MATTERS.......................................................................................... 21
REGISTRATION STATEMENT................................................................................. 21
EXPERTS................................................................................................ 21
FINANCIAL STATEMENTS................................................................................... 21
APPENDIX--OTHER POLICY PROVISIONS...................................................................... 62
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, CASH VALUES AND ACCUMULATED PREMIUMS......................... 64
</TABLE>
THE POLICY DESCRIBED HEREIN IS AVAILABLE ONLY IN NEW YORK. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING IN ANY OTHER JURISDICTION. NO PERSON IS AUTHORIZED TO
MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS.
<PAGE>
- --------------------------------------------------------------------------------
THE PURPOSE OF THE POLICIES IS TO PROVIDE INSURANCE PROTECTION FOR THE
BENEFICIARY NAMED IN THE POLICY.
NO CLAIM IS MADE THAT THE POLICIES ARE IN ANY WAY SIMILAR OR COMPARABLE TO
A SYSTEMATIC INVESTMENT PLAN OF A MUTUAL FUND.
- --------------------------------------------------------------------------------
SUMMARY OF POLICIES
What are the variable life insurance Policies being offered?
John Hancock issues variable life insurance policies in New York. The Policies
described in this prospectus are fixed annual premium policies. John Hancock
also issues other forms of variable life insurance policies. These other
policies are offered by means of other prospectuses.
As explained below, the death benefit under the Policies increases or
decreases monthly; the cash value increases or decreases daily. The Policies,
therefore, differ from ordinary fixed-benefit life insurance in the way they
work. However, the Policies are the same as ordinary fixed-benefit life
insurance in providing lifetime protection against economic loss resulting from
the death of the person insured. So, the Policies are primarily insurance and
not investments.
The Policies work generally as follows: A fixed premium is made to John
Hancock each year. John Hancock takes from the premium an amount for expenses.
John Hancock then places the rest of the premium into one or more of the seven
subaccounts of the Account that are currently available under the Policies. The
owner of the policy (the "Owner") decides how much goes into each subaccount.
The assets in each subaccount, other than assets attributable to policy loans,
are invested in shares of the corresponding Portfolio of the Fund. The seven
Portfolios currently available are Growth & Income Portfolio, Sovereign Bond
Portfolio, Money Market Portfolio, Large Cap Growth Portfolio, Managed
Portfolio, Real Estate Equity Portfolio and International Equities Portfolio.
During the year John Hancock takes charges from each subaccount and credits or
charges each subaccount with its respective investment performance. Costs of
insurance, which are deducted from each Policy's cash value, vary monthly with
the attained age of the insured and with the Variable Sum Insured.
The death benefit increases or decreases monthly depending on the investment
experience of the subaccounts to which premiums are allocated. In general, if
the net investment experience is more favorable than 4 1/2% per year, the death
benefit will increase, and, if less than 4 1/2% per year, the death benefit will
decrease. However, John Hancock guarantees that, regardless of the investment
experience, the death benefit will never be less than the amount originally
purchased. (This is called the Guaranteed Minimum Death Benefit.) The Owner,
therefore, bears the investment risk for the amount above the Guaranteed Minimum
Death Benefit, and John Hancock bears the investment risk for the Guaranteed
Minimum Death Benefit.
The Owner may surrender a Policy for its cash value (the "Policy Cash Value")
at any time while the insured is living. The Policy Cash Value is initially the
amount of the premium that John Hancock places in the Account, as explained
above. The Policy Cash Value increases or decreases daily depending on the
investment experience. However, John Hancock does not guarantee a minimum amount
of Policy Cash Value. Therefore, the Owner bears the investment risk for the
Policy Cash Value. If the Owner surrenders in the early policy years, the amount
of Policy Cash Value would be low (as compared with the premiums accumulated
with interest), and, consequently, the insurance protection provided prior to
surrender would be costly.
1
<PAGE>
This Prospectus describes three types of Policies being offered by John
Hancock: a Variable Whole Life Policy, a Variable Whole Life P 50 Policy and a
Variable Whole Life 100 Policy. The minimum death benefit that may be bought is
$25,000 for the Whole Life Policy, $50,000 for the Whole Life P 50 Policy and
$100,000 for the Whole Life 100 Policy. For the Whole Life Policy and the Whole
Life P 50 Policy, all persons insured must meet certain health and other
criteria called "underwriting standards". All persons insured under the Whole
Life 100 Policy must meet "preferred risk" and non-smoking underwriting
standards. All Policies may be issued on insureds between ages of 0 and 75.
Discounts are available to insureds meeting non-smoking underwriting criteria.
What is the amount of the premiums?
Premiums are fixed and level and do not vary with the Account's investment
experience. The amount of the premium depends on the type of Policy, the
Policy's Initial Sum Insured, the insured's age, sex and smoking habits, and the
frequency of premium payments. Premiums are payable annually or more frequently
over the insured's lifetime. Additional premiums are charged for Policies in
cases involving extra mortality risks and for additional insurance benefits.
There is a 31-day grace period in which to make premium payments due after the
first. (See "Premiums".)
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 its variable life
insurance policies. There are currently eighteen subaccounts within the Account,
but only seven of those subaccounts are available to the Policies described in
this Prospectus. Each is invested in a corresponding Portfolio of John Hancock
Variable Series Trust I, a "series" type of mutual fund. The seven Portfolios of
the Fund which are currently available under the policies are Growth & Income
Portfolio, Sovereign Bond Portfolio, Money Market Portfolio, Large Cap Growth
Portfolio, Managed Portfolio, Real Estate Equity Portfolio and International
Equities Portfolio.
The Fund 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........................................... 0.33% 0.04% 0.37% N/A
Growth & Income................................... 0.25% 0.03% 0.28% N/A
Large Cap Growth.................................. 0.39% 0.05% 0.44% N/A
Real Estate Equity................................ 0.60% 0.09% 0.69% N/A
International Equity.............................. 0.18% 0.19% 0.37% N/A
Sovereign Bond.................................... 0.25% 0.06% 0.31% N/A
Money Market...................................... 0.25% 0.08% 0.33% N/A
</TABLE>
- ------------
* John Hancock reimburses a Portfolio when the Portfolio's other fund expenses
exceed 0.25% of the Portfolio's average daily net assets.
For a full description of the Fund, see the prospectus for the Fund attached
to this Prospectus.
2
<PAGE>
What charges are deducted from the premium in determining the amount allocated
to the Subaccounts?
A modal net premium is allocated by John Hancock from its general account to
one or more of the subaccounts on the premium due date. The modal net premium
for each Policy year is the actuarial equivalent, for the premium payment
interval in effect, of the basic annual premium for a standard or preferred
mortality risk payable for such year, less the charges deducted for sales loads,
state premium taxes, annual administrative expenses, contributions for dividends
and risk charge ("modal net premium"). An additional deduction for
administrative expenses in connection with the issuance of a Policy is made in
the first Policy year. Additional premiums are charged for Policies where the
insured is classified as a substandard mortality risk and a portion of these
premiums may be allocated to the subaccounts from time to time to support the
reserves for extra mortality risks. The additional premiums for extra mortality
risks are determined such that the Policy Cash Value for a substandard risk
policy is the same as for a comparable standard risk policy.
The charges deducted from premiums are for administrative expenses ($50 in
each Policy year plus a one-time charge the first Policy year of as much as $13
per $1,000 of initial guaranteed minimum death benefit), sales expenses (which
during the first two Policy years shall not exceed 30% of the basic annual
premium paid during the first Policy year plus 10% of the basic annual premium
paid for the second Policy year and which, including sales expenses in the third
and later Policy years, average up to 9% over 20 years), state premium taxes
(2 1/2% of the basic annual premium), the risk that the death benefit payable
will be the guaranteed minimum death benefit rather than a lesser amount
(approximately 3% of the basic annual premium) and for dividends (approximately
5-9% of the basic annual premium). See "Charges Deducted from Premiums".
What are the other charges?
Charges are made against each subaccount for the mortality and expense risks
assumed by John Hancock (at an effective annual rate of .50% of the assets of
the subaccount). The Policy Cash Value is charged monthly for the cost of
insurance for the insured (at varying levels). See "Expenses Charged to
Account".
How are amounts allocated to each subaccount?
At issue and subsequently thereafter the Owner will have the option of
deciding what percentage or amount of the reserves held for the Policy will be
invested in the seven subaccounts. (See "Investment Option" and "Transfer
Option".)
Are dividends paid on the policies?
Beginning two or three years after issue, depending on the form of Policy
purchased, John Hancock expects to pay dividends on each policy anniversary.
(See "Annual Dividends".)
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. Agent's commissions for the first Policy
year do not exceed a maximum of 55% of the premiums paid. Commissions payable
for later years are described under "Distribution of Policies". Sales expenses
in any year are not equal to the deduction for sales load 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.
3
<PAGE>
How does the Death Benefit vary in relation to the subaccounts' investment
experience?
The Death Benefit during the first policy month is equal to the Initial Sum
Insured shown on the Policy at issue and thereafter will vary monthly depending
on the subaccounts' rates of return after charges against the subaccounts' (the
"Account Net Investment Rate"). In general, if the Account Net Investment Rate
on an annual basis is greater than 4 1/2% the Death Benefit will increase and if
less than 4 1/2% the Death Benefit will decrease (but never less than the
Guaranteed Minimum Death Benefit.) (See "Death Benefit".)
How does the Policy Cash Value vary in relation to the subaccounts' investment
experience?
In general, the Policy Cash Value for any day equals the Policy Cash Value for
the previous day, increased by any modal net premium placed in the subaccounts
for the Policy and decreased by any charge for the cost of insurance for the
insured, accumulated at the subaccounts' rates of return after charges against
the subaccounts. The Policy Cash Value for substandard risk policies is the same
as for comparable standard risk policies. (See "Surrender Value".)
What is the loan provision and how does a loan affect the Death Benefit and
Policy Cash Value?
The Owner may obtain a Policy loan of up to 90% of the Policy Cash Value.
Interest charged on any loan will accrue and compound daily either at an annual
rate determined by John Hancock at the start of each Policy Year (Variable Loan
Interest Rate) or, at the election of the Owner, at an effective annual rate of
8%. A loan plus accrued interest 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 portion of the Policy Cash Value equal to the
loan plus accrued interest is credited with the Policy Loan Rate (the Fixed or
Variable Loan Interest Rate less an amount not exceeding 2%, assuming no taxes)
rather than the subaccounts' net investment experience during such period.
Therefore, the Death Benefit above the Guaranteed Minimum Death Benefit and the
Policy Cash Value are permanently affected by any loan, whether or not it is
repaid in whole or in part. Also, the amount of any outstanding loan plus
accrued interest is subtracted from the Death Benefit or Policy Cash Value
otherwise payable. (See "Loan Provision and Indebtedness".)
Is there a short-term cancellation right?
The Owner may surrender this Policy by delivering or mailing it within 45 days
after the date of Part A of the application, or within 10 days after receipt of
the Policy by the Owner, or within 10 days after mailing by John Hancock of the
Notice of Withdrawal Right, whichever is latest, to John Hancock at Boston,
Massachusetts, or to the agent or agency office through which it was delivered.
Immediately on such delivery or mailing, the Policy shall be deemed void from
the beginning. Any premium paid on it will be refunded.
Can a Policy be exchanged for a fixed benefit life insurance policy?
Within twenty four months after a Policy's issue date, the Policy may be
exchanged without evidence of insurability for a fixed benefit policy on the
life of the Insured having the same face amount as the Initial Sum Insured of
the Policy. (See "Exchange of Policy During First 24 Months".)
Are the benefits under a Policy subject to Federal income tax?
There has been a determination by the Internal Revenue Service that death
benefits payable under variable life insurance policies (which appear to be
similar to those described in this Prospectus in all material respects) are
4
<PAGE>
excludable from the beneficiary's gross income for Federal tax purposes. It is
also believed that an Owner will not be deemed to be in constructive receipt of
the cash values of his or her Policy until its actual surrender. 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. (See "Tax Considerations".)
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".)
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 THE SERIES FUND
The Account
The Account, a separate account established under Massachusetts law in 1993,
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 daily charges made by John Hancock and, possibly, funds previously
contributed 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. Additional premiums are charged for
Policies where the insured is classified as a substandard risk and a portion of
these premiums may be allocated to one or more of the subaccounts from time to
time to support the reserves for extra mortality risks.
The Account is registered with the Securities and Exchange Commission (the
"Commission") under the 1940 Act. Such registration does not involve the
supervision by the Commission of the management or policies of the Account or
John Hancock.
There currently are eighteen subaccounts in the Account, but only seven of
those subaccounts are available to Policies described in this Prospectus. The
assets in each, apart from assets attributable to policy loans, are invested in
a separate class of shares issued by the Fund, but the assets of one subaccount
are not necessarily legally insulated
5
<PAGE>
from liabilities associated with another subaccount. New subaccounts may be
added as new portfolios are added to the Fund and made available to Owners.
The Series Fund
The Fund is a "series" type of mutual fund registered with the Commission as
an open-end diversified management investment company. The Fund serves as the
investment medium for the Account and for other unit investment trust separate
accounts established for other variable life insurance policies and for variable
annuity contracts. (See the attached Fund prospectus for the description of a
need to monitor for possible conflicts and other consequences.) A very brief
summary of the investment objectives of the Portfolios available to the Account
is set forth below.
Growth & Income Portfolio
The investment objective of this Portfolio is to achieve intermediate and
long-term growth of capital, with income as a secondary consideration. This
objective will be pursued by investments principally in common stocks (and
securities convertible into or with rights to purchase common stocks) of
companies believed to offer growth potential over both the intermediate and the
long term.
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.
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 stocks) of companies believed to offer
above-average capital appreciation opportunities. Current income is not an
objective of the Portfolio.
Managed Portfolio
The investment objective of this Portfolio is to achieve maximum long-term
total return consistent with prudent investment risk. Investments will be made
in common stocks, convertibles and other 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.
6
<PAGE>
International Equity Index Portfolio
The investment objective of this Portfolio is to provide investment results
that correspond to the total return of the major developed international
(non-U.S.) equity markets, as represented by the MSCI AEFE GDP Index.
John Hancock acts as the investment manager for the Fund. Its indirectly owned
subsidiary, Independence Investment Associates, Inc., with its principal place
of business at 53 State Street, Boston, MA 02109, provides sub-investment advice
with respect to the Managed, Growth & Income, Large Cap Growth and Real Estate
Equity Portfolios. Independence International Associates, Inc., a subsidiary of
IIA located at the same address as IIA, is a sub-investment adviser to the
International Equity Index Portfolio.
Another indirectly owned subsidiary of John Hancock, John Hancock Advisers,
Inc., located at 101 Huntington Avenue, Boston, MA 02199, provides sub-
investment advice with respect to the Sovereign Bond Portfolio.
John Hancock will purchase and redeem Fund shares for the Account at their net
asset value without any sales or redemption charges. Shares of the Fund
represent an interest in one of the Portfolios of the Fund which corresponds to
the subaccount of the Account. Any dividend or capital gains distributions
received by the Account will be reinvested in Fund shares at their net asset
value as of the dates paid. Any such distribution will result in a reduction in
the value of the Fund shares of the Portfolio from which the distribution was
made. The total net asset value of the Account will not change because of such
distribution, however.
On each Valuation Date, shares of each Portfolio are purchased or redeemed by
John Hancock for each subaccount based on, among other things, the amount of
modal net premiums allocated to the subaccount, dividends and distributions
reinvested, and transfers to, from and among subaccounts, all to be effected as
of that date. Such purchases and redemptions are effected at the net asset value
per Fund share for each Portfolio determined on that same Valuation Date.
A full description of the Fund, its investment objectives, policies and
restrictions, its charges, expenses and all other aspects of its operation is
contained in the attached prospectus and the statement of additional information
referred to therein, which should be read together with this Prospectus.
PRINCIPAL POLICY PROVISIONS
The discussions which follow under "Death Benefit", "Surrender Value" and
"Loan Provision and Indebtedness" assume that premiums have been duly paid and,
in the case of Death Benefit and Surrender Value that there has been no Policy
loan. Benefits and values are affected if premiums are not paid or if a Policy
loan is made. For the effect of a default in payment of premiums, see "Default
and Options on Lapse", and of a loan, see "Loan Provision and Indebtedness".
Determinations, applications, and payments may be deferred, see "Deferral of
Determinations and Payments".
Death Benefit
The Death Benefit will be an amount equal to the greater of the Initial Sum
Insured and the Variable Sum Insured on the date of death of the insured. The
Variable Sum Insured is an amount equal to the Initial Sum Insured at issue and
thereafter is the amount of life insurance determined according to the Valuation
Provisions of the Policy.
7
<PAGE>
Guaranteed Minimum Death Benefit. The Guaranteed Minimum Death Benefit is
equal to the Initial Sum Insured on the date of issue of the Policy. John
Hancock guarantees that, regardless of what the Account earns, the Death Benefit
will never be less than the Guaranteed Minimum Death Benefit.
Changes in Death Benefit. After the first policy month, the Death Benefit is
determined once each policy month on the Monthly Date. (The Monthly Date is the
first day of a policy month which day immediately follows a date which is a
Valuation Date.) The Death Benefit remains level during the policy month
following the determination. The Owner bears the investment risk that the Death
Benefit could decrease on any Monthly Date (but not below the Guaranteed Minimum
Death Benefit) and forgoes any increase in Death Benefit from favorable
investment results until the next Monthly Date.
Changes in the Death Benefit for each policy month are computed by a formula,
filed with the insurance supervisory officials of the jurisdiction in which the
Policy has been delivered or issued for delivery. Under the formula the
difference between the applicable Account Net Investment Rate (ANIR) for each
Valuation Period and the Policy's assumed annual rate of 4 1/2% is translated,
on an actuarial basis, into a change in the Death Benefit.
If the Death Benefit were equal to the Guaranteed Minimum Death Benefit for a
policy month, it would increase above the Guaranteed Minimum Death Benefit on
the next Monthly Date only if the applicable ANIR for the last policy month were
sufficiently greater than a monthly rate equivalent to an annual rate of 4 1/2%
to result in such an increase. If the ANIR was equivalent to an annual rate of
less than 4 1/2% and the Death Benefit was greater than the Guaranteed Minimum
Death Benefit, the Death Benefit would be reduced (but not below the Guaranteed
Minimum Death Benefit). The percentage change in the Death Benefit is not the
same as the Account Net Investment Rate.
The changes in Death Benefit may be more readily understood by reference to
the following examples.
Using the Variable Whole Life P50 Policy (Age 25 years Male-Smoker)
illustrated in this Prospectus and the 6% hypothetical gross annual investment
return assumption (equivalent to an ANIR of 4.85%), the Death Benefit shown at
the end of Policy year 5 would increase to the amount shown at the end of Policy
year 6, as follows:
<TABLE>
<CAPTION>
<S> <C>
Death Benefit at end of Policy year 5....................... $62,736
Increase in Death Benefit................................... $ 322 (.51% increase)
Death Benefit at end of Policy year 6....................... $63,058
</TABLE>
If, instead, the 0% hypothetical gross annual investment return assumption
(equivalent to an ANIR of 1.09%) were used, the Death Benefit shown at the end
of Policy year 5 would decrease to an amount at the end of Policy year 6 as
follows:
<TABLE>
<S> <C> <C>
Death Benefit at end of Policy year 5....................... $62,736
Decrease in Death Benefit................................... $ 298 (.48% decrease)
Death Benefit at end of Policy year 6....................... $62,438
</TABLE>
In the case of a Death Benefit which was equal to the Guaranteed Minimum Death
Benefit because the Variable Sum Insured was less than the Guaranteed Minimum
Death Benefit, such Death Benefit would increase on a Monthly Date only if the
ANIR for the last policy month was sufficiently greater than an equivalent
annual rate of 4 1/2% to result in an increase sufficiently large to bring the
Variable Sum Insured above the Guaranteed Minimum Death Benefit.
8
<PAGE>
Account Net Investment Rate (ANIR)
The ANIR for each subaccount in which the Policy reserve is invested is
determined separately for each Policy. The ANIR for a Valuation Period is
determined as of the end of the Valuation Period as a weighted average of the
Policy Loan Rate and the Account Equity Rate and reflects the Policy's
indebtedness allocated to the subaccounts. In the absence of any indebtedness,
the ANIR equals the Account Equity Rate. The ANIR may be positive or negative.
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.
Valuation Period
A Valuation Period is that period of time from the beginning of the day
following a Valuation Date to the end of the next following Valuation Date.
Values during Valuation Periods
The values of the Fund shares in the Account will be determined as of the end
of each Valuation Period and shall be the same for each day of the Valuation
Period.
Account Equity Rate
For each subaccount the Account Equity Rate for a Valuation Period is
determined as of the end of the Valuation Period and reflects the subaccount's
accrued investment income (excluding accrued policy loan interest) and capital
gains and losses, realized or unrealized, of the subaccount for the Valuation
Period, and any applicable income taxes paid or change in any provision for
taxes maintained in the subaccount during the Valuation Period, and a Valuation
Period charge at an effective rate of .50% annually of the value of the
subaccount at the beginning of the Valuation Period.
Policy Loan Rate
For each Policy the Policy Loan Rate for a Valuation Period is determined as
of the end of the Valuation Period and reflects the Policy's accrued Policy loan
interest for the Valuation Period, any applicable income taxes paid, or change
in any provision for taxes maintained by the Account during the Valuation
Period, and a Valuation Period charge at an effective rate of not more than 2%
annually of the total indebtedness of the Policy at the beginning of the
Valuation Period.
Annual Dividends
These Policies are participating policies which, except while in force as
Fixed Extended Term Insurance, are entitled to the share, if any, of the
divisible surplus which John Hancock shall annually determine and apportion to
them. Any share will be distributed as a dividend payable annually on the Policy
anniversary not later than the end of the second Policy year for the Variable
Whole Life 100 Policy and not later than the end of the third Policy year for
the Variable Whole Life Policy and Variable Whole Life P50 Policy.
Dividends under participating policies may be described as refunds of premiums
which adjust the cost of a policy to the actual level of cost emerging over time
after the Policy's issue. Thus, participating policies generally
9
<PAGE>
have gross premiums which are higher than those for comparable non-participating
policies. If a Policy is surrendered before dividends become payable, the Owner
does not benefit from having a participating policy.
Both Federal and state law recognize that dividends are considered to be a
refund of a portion of the premium paid and therefore are not treated as income
for Federal or state income tax purposes.
Dividend illustrations published at the time of issue of a Policy reflect the
actual recent experience of the issuing insurance company with respect to
factors such as interest, mortality, and expenses. State law generally prohibits
a company from projecting or estimating future results. State law also requires
that dividends must be based on surplus, after setting aside certain necessary
amounts, and that such surplus must be apportioned equitably among participating
policies. In other words, in principle and by statute, dividends must be based
on actual experience and cannot be guaranteed at issue of a Policy.
Each year John Hancock's actuary analyzes the current and recent past
experience and compares it to the assumptions used in determining the premium
rates at the time of issue. Some of the more important data studied includes
mortality and withdrawal rates, investment yield in the general account, and
actual expenses incurred in administering the Policies. Such data is then
allocated to each dividend class, e.g., by year of issue, age, smoking habits
and plan. The actuary then determines what dividends can be equitably
apportioned to each Policy class and makes a recommendation to John Hancock's
Board of Directors. The Board of Directors, which has the ultimate authority to
ascertain dividends, will vote the amount of surplus to be apportioned to each
policy class, thereby authorizing the distribution of each year's dividend.
Dividend Options. The Owner may in general elect to have any dividend paid or
applied under any one of the following options: paid in cash; applied to premium
payments; left to accumulate with interest of at least 3 1/2% a year; purchase
fixed paid-up insurance; purchase one year term insurance; or purchase variable
paid-up insurance.
Surrender Value
Amount of Policy Cash Value. The Policy Cash Value increases or decreases
depending on the applicable subaccount's investment experience and the
proportion of the Policy's reserve invested in each subaccount. The Policy Cash
Value for any day equals the Policy Cash Value for the previous day, increased
by any modal net premium placed in the subaccounts and decreased by any charge
for the cost of insurance for the insured, accumulated at the subaccounts' rates
of return after charges against the subaccounts. A modal net premium is placed
into the subaccounts on the Monthly Date if a premium is due in that Policy
Month. The cost of insurance for the insured is deducted from the Account on
every Monthly Date. No minimum amount of Policy Cash Value is guaranteed.
Even though the premium is higher for a substandard mortality risk policy than
for a comparable standard risk policy and the premium is lower if a non-smoker
discount has been made available to an insured than in the case of a comparable
standard risk policy, the premium is determined such that the Policy Cash Value
in either instance is the same as the Policy Cash Value for a standard risk
policy of the same age and sex, for the same Initial Sum Insured and having the
same date of issue.
When Policy may be Surrendered. A Policy may be surrendered for its surrender
value at any time while the insured is living. Surrender takes effect and the
surrender value is determined as of the end of the Valuation Period in which
occurs the later of receipt of John Hancock's Servicing Office of a signed
request and the surrendered policy. The surrender value will be the Policy Cash
Value plus any dividends and interest unpaid or unapplied, and
10
<PAGE>
the cash value of any insurance purchased under any dividend option with an
adjustment to reflect the difference between the gross premium and the net
premium for the period beyond the date of surrender, less any indebtedness.
When Part of Policy may be Surrendered. A Policy may be partially surrendered
in accordance with John Hancock's rules. The Policy after the partial surrender
must have an Initial Sum Insured at least as great as the minimum issue size for
that type of Policy. The premium and the Guaranteed Minimum Death Benefit for
the Policy will be based on the new Initial Sum Insured.
Loan Provision 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 on completion of a form
satisfactory to John Hancock assigning the Policy as the only security for the
loan. The Loan Value will be 90% of the total of the Policy Cash Value (assuming
no dividends) and any cash value under the variable paid-up insurance dividend
option, plus any cash value under the fixed paid up insurance dividend option.
Interest accrues and is compounded daily at an effective annual rate equal to
the then applicable Variable Loan Interest Rate. If the Owner elects the Fixed
Loan Interest Rate or the Variable Loan Interest Rate is unavailable in the
Owner's state, interest accrues and is compounded daily at an effective annual
rate of 8%.
The amount of any outstanding loan plus accrued interest is called the
"indebtedness". Except when used to pay premiums, a loan will not be permitted
unless it is at least $100. The Owner may repay all or a portion of any
indebtedness while the insured is living and premiums are being duly paid. Any
loan is charged against the subaccounts in proportion to the Policy Cash Value
allocated to the subaccounts and, upon repayment, the repayment is allocated to
the subaccounts in proportion to the outstanding indebtedness in each subaccount
at such time.
Loan Interest Rates. The Variable Loan Interest Rate is determined annually
for a Policy by John Hancock. The Fixed Loan Interest Rate is 8% for the life of
the Policy. The Owner, at the time of issue, can elect which loan interest rate
will apply to any Policy Loan. If permitted by the law of the state in which the
Policy is issued, the Owner may change a prior choice of Loan Interest Rate. If
at the time of such request there is outstanding indebtedness, the change will
generally become effective on the next Policy anniversary.
The Variable Loan Interest Rate determined annually for a Policy will apply to
all indebtedness outstanding during the policy year following the date of
determination. The rate will not exceed the higher of 5 1/2% or the Published
Monthly Average (as defined below) for the calendar month which is two months
prior to the month in which the date of determination occurs. The Published
Monthly Average means Moody's Corporate Bond Yield Average as published by
Moody's Investors Service, Inc. or any successor thereto.
Effect of Loan and Indebtedness. A loan does not affect the amount of the
premiums due. While the indebtedness is outstanding, that portion of the
indebtedness attributable to the Account is credited with the Policy Loan Rate
rather than the Account Equity Rate. The Policy Loan Rate is either the Fixed or
Variable Loan Interest Rate less an amount not exceeding 2%, assuming no taxes.
Therefore, the Death Benefit above the Guaranteed Minimum Death Benefit, the
Policy Cash Value and any insurance and cash value under the variable paid up
dividend option are permanently affected by any indebtedness, whether or not it
is repaid in whole or in part. The amount of any outstanding indebtedness is
subtracted from the amount otherwise payable when the Policy proceeds become
payable.
Whenever the then outstanding indebtedness equals or exceeds the Policy Cash
Value, plus any cash values under a dividend option providing paid-up insurance,
the Policy terminates 31 days after notice has been mailed by
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<PAGE>
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.
Premiums
Payment Period and Frequency. Premiums are payable annually or more frequently
over the insured's lifetime in accordance with John Hancock's published rules
and rates. Premiums are payable at John Hancock's Servicing Office on or before
the due date specified in the Policy. A refund or charge will be made to effect
premium payment to the end of the policy month in which the insured dies.
Level Premiums. The level premiums act as an averaging device to cover
expenses which are highest in the early Policy years and the cost of insurance
which increases with age. In the early Policy years premiums are higher than
needed to pay death claims, while in the later years premiums are less than
required to pay the death claims. Also, assets are allocated to John Hancock's
general account to accumulate as a reserve to cover the contingency that the
insured will die at a time when the Guaranteed Minimum Death Benefit exceeds the
death benefit which would have been payable in the absence of such guarantee.
Illustration of Premium Rates. The tables below show premium rates on an
annual and special monthly basis for each Policy of various Initial Sums Insured
for various issue ages. Payments may also be made on a semiannual and quarterly
basis. When payments are made on other than an annual basis, the aggregate
premium amounts for a Policy year are higher, reflecting higher surrender
experience and additional billing and collection expenses.
PREMIUMS FOR $1,000 OF INITIAL SUM INSURED
<TABLE>
<CAPTION>
% Excess of Total
Special Monthly
Premiums for Policy
Special Year Over
Initial Annual Basis Monthly Basis Annual Premiums
Issue Sum -------------- ------------- -------------------
Age Insured Male Female Male Female Male Female
- ----- ------- ---- ------ ---- ------ ---- ------
Variable Whole Life
(Standard Mortality Rate)
<S> <C> <C> <C> <C> <C> <C> <C>
25......................... $ 25,000 $13.02 $12.22 $1.15 $1.08 6.0% 6.1%
40,000 12.27 11.47 1.08 1.01 5.6 5.7
Variable Whole Life P50
(Standard Mortality Rate)
25......................... 50,000 11.54 10.77 1.01 .94 5.0 4.7
100,000 11.04 10.27 .96 .89 4.3 4.0
40......................... 50,000 20.95 19.12 1.82 1.66 4.2 4.2
100,000 20.45 18.62 1.77 1.61 3.9 3.8
Variable Whole Life 100
(Preferred Mortality Rate)
25......................... 100,000 9.38 9.23 .81 .80 3.6 4.0
40......................... 100,000 17.61 17.13 1.52 1.48 3.6 3.7
</TABLE>
Policies issued in connection with certain employee plans will not directly
reflect the sex of the insured in the premium rates.
Investment Option
The Owner has the option to allocate applicable premiums (other than premiums
for any additional insurance benefits) and dividends under the variable paid-up
insurance dividend option to any of the seven subaccounts. The
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<PAGE>
Owner must select allocation percentages in whole numbers. The minimum
allocation to a subaccount may not be less than 10% and the total allocated must
equal 100%.
The initial election must be made by the Owner at the time of completion of
the application for the Policy. The Owner may thereafter change the election at
any time. The change will be effective as to any applicable premiums and
dividends applied after receipt at John Hancock's Servicing Office of notice
satisfactory to John Hancock.
Transfer Option
The Owner may reallocate the amounts held for the Policy in the subaccounts
six times in each Policy year with no charge. The Owner may use either
percentages (in whole numbers) or designate the amount of money to be
transferred between subaccounts. The reallocation must be such that the total
after reallocation equals 100%. The change will be effective at the end of the
Valuation Period in which John Hancock receives at its Servicing Office notice
satisfactory to John Hancock.
Default and Options on Lapse
A premium unpaid as of its due date is in default, but the Policy provides for
a 31-day grace period for the payment of each premium after the first. The
insurance continues in full force during the grace period but, if the insured
dies during the grace period, the portion of the premium due which is applicable
to the period from the premium due date to the end of the policy month in which
the insured dies is deducted from the amount otherwise payable.
Prior to the end of the Valuation Period immediately preceding the 70th day
after the date of default, any Policy values available determined in accordance
with the Policy may be applied as of the date of default under one of the
following options for continued insurance not requiring further payment of
premiums. These options provide for Variable or Fixed Paid-Up Insurance or Fixed
Extended Term Insurance on the life of the insured commencing on the date of
default.
Both the Variable and Fixed Paid-Up Insurance options provide an amount of
paid-up whole life insurance which the available Policy values will purchase.
The amount of Variable Paid-Up Insurance may then increase or decrease in
accordance with the investment experience of the Account. The Fixed Paid-Up
Insurance option provides a fixed and level amount of insurance. The Fixed
Extended Term Insurance option provides a fixed amount of insurance determined
in accordance with the Policy, with the insurance coverage continuing for as
long a period as the available Policy values will purchase.
- --------------------------------------------------------------------------------
For example, using the Variable Whole Life P50 Policy (Age 25 years male-
smoker) illustrated in this Prospectus and the 6% hypothetical gross annual
investment return assumption, if an option was elected and became effective at
the end of Policy year 5, the insurance coverage provided by the options on
lapse would be as follows:
Variable or Fixed
Paid-Up Whole Life Fixed Extended Term Insurance
------------------ -----------------------------
Death Benefit or Death Benefit Term in Years and Days
------------- -------------- ----------------------
$10,427 $62,736 12 years 331 days
- --------------------------------------------------------------------------------
If no option has been elected before the end of the Valuation Period
immediately preceding the 70th day after the date of default, the Fixed Extended
Term Insurance option automatically applies unless the amount of Fixed
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<PAGE>
Paid-Up Insurance would equal or exceed the amount of Fixed Extended Term
Insurance or unless the insured is a substandard risk, in either of which cases
Fixed Paid-Up Insurance is provided.
If the insured dies after the grace period but before the end of the Valuation
Period immediately preceding the 70th day after the date of default and prior to
any election, and if the Policy is then in force, John Hancock will pay a death
benefit equal to the greater of the death benefits provided under Fixed Extended
Term Insurance (if available) or Fixed Paid-Up Insurance determined in
accordance with the Policy.
A Policy continued under any option may be surrendered for its cash value
while the insured is living. Loans may be available under the Variable and Fixed
Paid-Up Insurance options, but not under the Fixed Extended Term Insurance
option.
Reinstatement. The Policy may be reinstated in accordance with its terms
(including evidence of insurability satisfactory to John Hancock and payment of
the required charges) within 3 years after the due date of the first unpaid
premium unless the surrender value has been paid or otherwise exhausted, or the
period of any extended term insurance has expired.
Exchange of Policy During First 24 Months
At any time during the first twenty-four months after the issue date shown in
the Policy while premiums are being duly paid, the Owner may exchange the Policy
without evidence of insurability for the fixed benefit life insurance policy
specified in the Policy on the insured's life. The new policy will have the same
issue date, issue age, and risk classification for the insured as the Policy.
The Sum Insured will be equal to the Initial Sum Insured. Premiums for the new
policy will be based on the premium rates which were in effect on the issue date
of the Policy.
The exchange will be effective on receipt of written notice at John Hancock's
Servicing Office satisfactory to John Hancock, the surrender of the Policy, and
payment to John Hancock of any cost to exchange.
The exchange shall be subject to an equitable adjustment in premiums, cash
values and dividends to reflect variances, if any, in the premiums, cash values,
and dividends under the Policy and the new policy. Any outstanding indebtedness
must be repaid on or before the effective date of the exchange. The exchange is
subject to the restrictions and limitations stated in the Policy. The method of
calculating the adjustment is filed by John Hancock with the appropriate state
insurance regulatory authorities and as an exhibit to the Registration Statement
which has been filed with the Commission.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policies which have been filed as exhibits to the Registration
Statement and to any variations in Policy provisions required by the regulatory
authorities of the state that has approved the Policy for issue.
CHARGES AND EXPENSES
Charges Deducted from Premiums
The basic annual premium is the annual premium less the premiums for any
optional insurance benefits, additional charges for extra mortality risks and a
$50 annual administrative charge. Premiums paid more frequently than annually
(modal premiums) are higher.
14
<PAGE>
Annual Administrative Charge. The $50 charge in each Policy year is for annual
administrative expenses, including premium billing and collection,
recordkeeping, processing Death Benefit claims, cash surrenders and Policy
changes, reporting and other communications to Owners and other similar expense
and overhead costs.
The amount allocated to the Account for a Policy equals the basic annual
premium less the charges and deduction listed below.
Charge for Sales Load. A charge not to exceed 9% of the basic annual premium
during the period equal to the lesser of 20 years or the anticipated life
expectancy of the insured named in the Policy based on the 1980 Commissioners
Standard Ordinary Mortality Table. The charge during the first two Policy years
shall not exceed 30% of the basic annual premium paid during the first Policy
year plus 10% of the basic annual premium paid for the second Policy year.
Charges of 10% or less are made for later Policy years. The amount of the charge
in any Policy year cannot be specifically related to sales expenses for that
year. To the extent that sales expenses are not recovered from the charge for
sales load, such expenses may be recovered from other sources, including any
gains attributable to operations with respect to the Policies or John Hancock's
general assets.
Additional First Year Administrative Charge. A charge in the first Policy year
at the rate of $13 per $1,000 of Initial Sum Insured for a Variable Whole Life
Policy, $7 per $1,000 for a Variable Whole Life P50 Policy and $4 per $1,000 for
a Variable Whole Life 100 policy or a pro rata portion thereof, to cover
administrative expenses in connection with the issuance of the Policy. Such
expenses include medical examination, insurance underwriting costs, and costs
incurred in processing applications and establishing permanent Policy records.
John Hancock does not expect to profit from this charge.
State Premium Tax Charge. A charge equal to 21 1/2% of the basic annual
premium. The 21 1/2% rate is the average rate expected to be paid on premiums
received in all states over the lifetimes of the insureds covered by the
Policies.
Risk Charge. A charge necessary to cover the risk assumed by John Hancock that
the Variable Sum Insured will be less than the Guaranteed Minimum Death Benefit.
This charge will vary by age of the insured but averages approximately 3% of the
basic annual premium.
Deduction for Dividends. A deduction for dividends to be paid or credited in
accordance with the dividend scale in effect on the issue date of the Policy.
This deduction will vary by age of the insured and duration of the Policy but is
expected to average approximately 5-9% of the basic annual premium.
Expenses Charged to Account
Charge for Mortality and Expense Risks. A daily charge is made for mortality
and expense risks assumed by John Hancock at an effective annual rate of .50% of
the value of the Account's assets attributable to the Policies. The mortality
risk assumed is that insureds may live for a shorter period of time than
estimated and, therefore, a greater amount of Death Benefits 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.
The charge for mortality and expense risks constitutes the Valuation Period
charge. See "Account Net Investment Rate (ANIR)".
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<PAGE>
Charge for Taxes. Currently no charge is made to the subaccounts for company
Federal income taxes but if John Hancock incurs, or expects to incur, income
taxes attributable to the subaccounts 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 Cost of Insurance. A charge for the cost of insurance for the
insured is deducted each month in advance over the life of the Policy. This
charge is based on the attained age of the insured and the Variable Sum Insured.
The cost of insurance rates for these Policies will not exceed the rates stated
in the 1980 Commissioners Standard Ordinary Mortality Table. The cost of
insurance generally increases over time. The increase in the cost of insurance
deducted reflects the increase in the attained age of the insured. Each charge
reduces the Policy Cash Value. See "Surrender Value".
Fund Investment Management Fee. The Account purchases shares of the Fund at
net asset value, a value which reflects the deduction from the assets of the
Fund of its investment management fee and of certain non-advisory Fund operating
expenses which are described briefly in the Summary of this Prospectus. For a
full description of these deductions, see the attached prospectus for the Fund.
Guarantee of Premiums and Certain Charges
John Hancock guarantees, and may not increase, the amount of the premiums,
charges deducted from premiums and charges to the Account for mortality and
expense risks. John Hancock further guarantees that the method by which the ANIR
is calculated will not be changed for the life of any 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 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. John Hancock performs insurance
underwriting and determines whether to accept or reject the application for the
Policy and the insured's risk classification. Distributors performs suitability
underwriting and, pursuant to a sales agreement among John Hancock,
Distributors, and the Account, acts as the principal underwriter of the
Policies. John Hancock will refund any premiums paid 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 issued by a
commercial carrier in the amount of $20 million.
Distributors' representatives are compensated for sales of the Policies on a
commission and service fee basis by Distributors, 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, agency office clerical expenses and
advertising) actually incurred in connection with the marketing and sale of the
Policies.
The maximum commission payable to a Distributors' representative for selling a
Policy is 55% of the premium in the first Policy year, 15% of the premium in the
second Policy year, 10% of the premium in the third, fourth and fifth Policy
years, 5% of the premium in Policy years six through ten and 3% of the premium
in the eleventh and later Policy years.
16
<PAGE>
Distributors' 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. Distributors' representatives who
meet certain productivity and persistency standards with respect to the sale of
policies issued by John Hancock and its affiliates 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 may be sold through other registered broker-dealers
that have entered into Selling Agreement with Distributors and whose
representatives are authorized by applicable law to sell variable life insurance
policies. The Commission rates paid may be more or less than those set forth
above for Distributors' representatives. The commissions which will be paid out
by such broker-dealers to their registered representatives will be in accordance
with their established rules. 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 direct expenses in connection with marketing the
Policies through other broker-dealers. In addition, these representations may
earn "credits" toward qualification for attendance at certain business meetings
sponsored by John Hancock.
Distributors serves as principal underwriter for other separate accounts
registered under the 1940 Act: John Hancock Variable Annuity Accounts U, I and
V, and John Hancock Variable Life Accounts U, V and S. Distributors is also the
principal underwriter for the Fund.
TAX CONSIDERATIONS
Policy Proceeds
Although the Policy contains provisions not found in fixed benefit life
insurance policies, John Hancock believes the Policy will nevertheless receive
the same federal income and estate tax treatment. Section 7702 of the Internal
Revenue Code ("Code") defines life insurance for federal tax purposes. If
certain standards are met at issue and over the life of the Policy, the Policy
will come within that definition. John Hancock will monitor compliance with
these standards.
John Hancock believes that the death benefit under the Policy will be
excludable from the beneficiary's gross income under Section 101 of the Code.
The Owner of a Policy is not deemed to be in constructive receipt of the cash
values until a partial withdrawal or surrender. A surrender, partial surrender
or withdrawal may have tax consequences. For example, the Owner will be taxed on
a surrender to the extent that the surrender value exceeds the net premiums paid
under the Policy, i.e., ignoring premiums paid for optional benefits and riders.
But under certain circumstances 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 loans received under the Policy will be
treated as indebtedness of an Owner and that no part of any loan will constitute
income to the Owner. However, the amount of any loan outstanding will be taxed
to the Owner when the Policy lapses.
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.
17
<PAGE>
The above description of Federal tax consequences is only a brief summary and
is not intended as tax advice. For further information consult a qualified tax
adviser.
Federal and state tax laws can change from time to time and, as a result, the
tax consequences to the Owner and beneficiary may be altered.
Charge for John Hancock's Taxes
Currently John Hancock makes no charge against the Account 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.
18
<PAGE>
MANAGEMENT
THE 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 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 Principal, Fleetwing Capital Management (financial services)
William L. Boyan Vice Chairman of the Board , John Hancock
E. James Morton Director, formerly Chairman of the Board, John Hancock
John F. Magee Chairman, Arthur D. Little, Inc. (industrial research and
consultant).
John M. Connors, Jr. Chief Executive Officer and Director, Hill, Holliday, Connors,
Cosmopoulos, Inc. (advertising).
Stephen L. Brown Chairman of the Board and Chief Executive Officer, John
Hancock
I. MacAllister Booth Retired 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).
Robert J. Tarr, Jr. Former President, Chief Executive Officer and Chief Operations
Officer, Harcourt, General, Inc. (publishing)
David F. D'Alessandro President , John Hancock
Joan T. Bok Chairman of the Board, New England Electric System
(electricutility).
Robert E. Fast Senior Partner, Hale and Dorr (law firm).
Foster L. Aborn Vice Chairman of the Board, John Hancock
Lawrence K. Fish Chairman and Chief Executive Officer, Citizens Financial
Group, Inc. (banking).
Richard F. Syron Chairman, President and Chief Executive Officer, American Stock
Exchange.
Kathleen F. Feldstein President, Economic Studies Inc. (economic consulting).
Michael C. Hawley President and Chief Operating Officer, The Gillette Company
(razors, etc.).
Wayne A. Budd Group President, Bell Atlantic - New England
(telecommunications)
<CAPTION>
Executive Officers
- ------------------
<S> <C>
Diane M. Capstaff Executive Vice President
Thomas E. Moloney Executive Vice President
Richard S. Scipione General Counsel
Barry J. Rubenstein Vice President, Counsel and Secretary
</TABLE>
19
<PAGE>
The business address of all Directors and officers of John Hancock is John
Hancock Place, Boston, Massachusetts 02117.
VOTING PRIVILEGES
All of the assets in the subaccounts of the Account, apart from assets
attributable to policy loans, are invested in shares of the corresponding
Portfolios of the Fund. John Hancock will vote the shares of each of the
Portfolios of the Fund which are deemed attributable to the qualifying variable
life insurance policies and variable annuity contracts at meetings of the Fund's
shareholders in accordance with instructions received from owners of all such
policies or contracts. Shares of the Fund 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 proportion 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 subaccount deemed attributable to each
owner is determined by dividing a Policy's cash value (less any outstanding
indebtedness) in the subaccount by the net asset value of one share in the
corresponding Fund Portfolio in which the assets of that subaccount are
invested. Fractional votes will be counted. The number of shares as to which the
owner may give instructions will be determined as of the record date for the
Fund's meeting.
Owners of Policies may give instructions regarding the election of the Board
of Trustees of the Fund, ratification of the selection of independent auditors,
approval of the Fund's investment management agreement and other matters
requiring a vote under the 1940 Act. Owners will be furnished information and
forms by John Hancock in order that voting instructions may be given.
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 of the Fund or
to approve or disapprove an investment advisory or underwriting contract for the
Fund. John Hancock also may disregard voting instructions in favor of changes
initiated by an owner or the Fund's Board of Trustees in the 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 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 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.
CHANGES IN APPLICABLE LAW--FUNDING AND OTHERWISE
The voting privileges described in this prospectus are afforded based on John
Hancock's understanding of applicable Federal securities law requirements. To
the extent that applicable law, regulations or interpretations change to
eliminate or restrict the need for such voting privileges, John Hancock reserves
the right to proceed in accordance with any such revised requirements. John
Hancock also reserves the right, subject to compliance with applicable law,
including approval of owners if so required, (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 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
20
<PAGE>
1940 Act, or in any other form permitted by law, the investment adviser of which
would be John Hancock or an affiliate, and (3) to deregister the Account under
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.
REPORTS
In each Policy year (except while the Policy is continued in effect under a
fixed option on lapse) a statement will be sent to the Owner setting forth the
Death Benefit, Policy Cash Value, any cash value of Variable Paid-Up Insurance
and any outstanding indebtedness (and interest charged for the preceding Policy
year) as of the last day of such year. Moreover, confirmations will be furnished
to the Owner of transfers between subaccounts, Policy loans, partial surrenders
and certain other Policy transactions.
Owners will be sent semiannually a report containing the financial statements
of the Fund, including a list of securities held in each Portfolio.
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
The legal validity of the Policies described in this Prospectus has 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 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 Malcolm
Cheung, F.S.A., an Actuary of John Hancock.
21
<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.
22
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
Large Cap Sovereign International Small Cap International Mid Cap
Growth Bond Equities Growth Balanced Growth
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
------------ ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Investments in shares of.... $18,634,480 $60,032,856 $3,944,730 $962,215 $85,312 $567,830
portfolios of John Hancock
Variable Series Trust I, at
value
Investments in shares of.... -- -- -- -- -- --
portfolios of M Fund Inc.,
at value
Policy loans and accrued.... 1,557,636 9,680,029 219,946 -- -- --
interest receivable
Receivable from:
John Hancock Variable Series 10,716 14,482 1,331 1,452 100 2,261
Trust 1
M Fund Inc.................. -- -- -- -- -- --
----------- ----------- ---------- -------- ------- --------
Total assets................ 20,202,832 69,727,367 4,166,007 963,667 85,412 570,091
Liabilities
Payable to John Hancock..... 10,398 13,408 1,266 1,436 99 2,252
Mutual Variable Life
Insurance Company
Asset charges payable....... 318 1,074 65 16 1 9
----------- ----------- ---------- -------- ------- --------
Total liabilities........... 10,716 14,482 1,331 1,452 100 2,261
----------- ----------- ---------- -------- ------- --------
Net assets.................. $20,192,116 $69,712,885 $4,164,676 $962,215 $85,312 $567,830
=========== =========== ========== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
Large Cap Money Mid Cap Special Real Estate
Value Market Value Opportunities Equity
Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Assets
Investments in shares of.... $1,678,123 $12,254,998 $2,036,158 $4,091,961 $4,649,139
portfolios of John Hancock
Variable Series Trust I, at
value
Investments in shares of.... -- -- -- -- --
portfolios of M Fund Inc.,
at value
Policy loans and accrued.... -- 2,230,242 -- -- 225,571
interest receivable
Receivable from:
John Hancock Variable Series 2,449 386,526 15,188 1,935 1,502
Trust 1
M Fund Inc.................. -- -- -- -- --
---------- ----------- ---------- ---------- ----------
Total assets................ 1,680,572 14,871,766 2,051,346 4,093,896 4,876,212
Liabilities
Payable to John Hancock..... 2,421 386,304 15,155 1,868 1,425
Mutual Variable Life
Insurance Company
Asset charges payable....... 28 222 33 67 77
---------- ----------- ---------- ---------- ----------
Total liabilities........... 2,449 386,526 15,188 1,935 1,502
---------- ----------- ---------- ---------- ----------
Net assets.................. $1,678,123 $14,485,240 $2,036,158 $4,091,961 $4,874,710
========== =========== ========== ========== ==========
</TABLE>
See accompanying notes.
23
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Short-Term
Growth & U.S. Small Cap International Equity
Income Managed Government Value Opportunities Index
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
------------ ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Investments in shares of portfolios of... $199,623,682 $83,078,514 $127,103 $1,251,673 $389,007 $2,123,595
John Hancock Variable Series Trust I, at
value
Investments in shares of portfolios of M. -- -- -- -- -- --
Fund Inc., at value
Policy loans and accrued interest........ 25,360,369 10,979,401 -- -- -- --
receivable
Receivable from:
John Hancock Variable Series Trust I..... 67,248 38,235 4,076 1,152 68 5,000
M Fund Inc............................... -- -- -- -- -- --
------------ ----------- -------- ---------- -------- ----------
Total assets............................. 225,051,299 94,096,150 131,179 1,252,825 389,075 2,128,595
Liabilities
Payable to John Hancock Mutual Variable.. 63,785 36,775 4,074 1,132 62 4,965
Life Insurance Company
Asset charges payable.................... 3,463 1,460 2 20 6 35
------------ ----------- -------- ---------- -------- ----------
Total liabilities........................ 67,248 38,235 4,076 1,152 68 5,000
------------ ----------- -------- ---------- -------- ----------
Net assets............................... $224,984,051 $94,057,915 $127,103 $1,251,673 $389,007 $2,123,595
============ =========== ======== ========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Turner Edinburgh Frontier
Strategic Core International Capital
Bond Growth Equity Appreciation
Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Investments in shares of portfolios of... $147,317 $ -- $ -- $ --
John Hancock Variable Series Trust I, at
value
Investments in shares of portfolios of M. -- 68,640 126,339 273,608
Fund Inc., at value
Policy loans and accrued interest........ -- -- -- --
receivable
Receivable from:
John Hancock Variable Series Trust I..... 10 -- -- --
M Fund Inc............................... -- 1 2 4
---------- ---------- ---------- ----------
Total assets............................. 147,327 68,641 126,341 273,612
Liabilities
Payable to John Hancock Mutual Variable.. 8 -- -- --
Life Insurance Company
Asset charges payable.................... 2 1 2 4
---------- ---------- ---------- ----------
Total liabilities........................ 10 1 2 4
---------- ---------- ---------- ----------
Net assets............................... $147,317 $68,640 $126,339 $273,608
========== ========== ========== ==========
</TABLE>
- --------------------
See accompanying notes.
24
<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
------------------------------------ ------------------------------------
1997 1996 1995 1997 1996 1995
---------- ----------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series $1,686,429 $1,905,476 $ 754,115 $4,454,173 $ 3,765,421 $3,504,747
Trust I.................................
M Fund Inc.................................. -- -- -- -- -- --
Interest income on policy loans............. 103,747 83,974 67,279 696,074 678,580 641,677
---------- ---------- ---------- ---------- ----------- ----------
Total investment income..................... 1,790,176 1,989,450 821,394 5,150,247 4,444,001 4,146,424
Expenses:
Mortality and expense risks................. 99,710 69,829 48,056 370,612 325,346 286,349
---------- ---------- ---------- ---------- ----------- ----------
Net investment income (loss)................ 1,690,466 1,919,621 773,338 4,779,635 4,118,655 3,860,075
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).................... 292,430 145,304 23,090 (230,607) (169,158) (127,733)
Net unrealized appreciation (depreciation)
during the period.......................... 2,142,494 3,756 1,225,784 1,277,686 (1,418,707) 4,205,161
---------- ---------- ---------- ---------- ----------- ----------
Net realized and unrealized gain (loss) on
investments................................ 2,434,924 149,060 1,248,874 1,047,079 (1,587,865) 4,077,428
---------- ---------- ---------- ---------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations.................. $4,125,390 $2,068,681 $2,022,212 $5,826,714 $ 2,530,790 $7,937,503
========== ========== ========== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Small Cap International
International Equities Subaccount Growth Subaccount Balanced Subaccount
----------------------------------- ---------------------- -----------------------
1997 1996 1995 1997 1996* 1997 1996*
---------- --------- --------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series $ 195,240 $ 42,110 $ 29,692 $ 436 $ 160 $ 3,972 $ 734
Trust I
M Fund Inc. -- -- -- -- -- -- --
Interest income on policy loans 15,746 13,158 9,853 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total investment income 210,986 55,268 39,545 436 160 3,972 734
Expenses:
Mortality and expense risks 24,261 19,834 15,495 4,231 538 392 81
--------- --------- --------- --------- --------- --------- ---------
Net investment income (loss) 186,725 35,434 24,050 (3,795) (378) 3,580 653
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) 50,829 25,854 14,367 6,475 (690) 429 9
Net unrealized appreciation (depreciation)
during the period (463,778) 217,574 164,490 92,108 (5,174) (4,312) 899
--------- --------- --------- --------- --------- --------- ---------
Net realized and unrealized gain (loss) on
investments (412,949) 243,428 178,857 98,583 (5,864) (3,883) 908
--------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations $(226,224) $ 278,862 $ 202,907 $ 94,788 $ (6,242) $ (303) $ 1,561
========= ========= ========= ========= ========= ========= =========
</TABLE>
- --------------------
* From May 1, 1996 (commencement of operations).
See accompanying notes.
25
<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
Subaccount Subaccount Money Market Subaccount
----------------------- ----------------------- ---------------------------
1997 1996* 1997 1996* 1997 1996
---------- ---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series
Trust I.............................. $ -- $ 411 $ 57,265 $2,056 $641,356 $1,073,915
M Fund Inc............................. -- -- -- -- -- --
Interest income on policy loans.......... -- -- -- -- 148,802 160,206
------- ------ -------- ------ -------- ----------
Total investment income.................... -- 411 57,265 2,056 790,158 1,234,121
Expenses:
Mortality and expense risks.............. 2,164 292 3,303 218 81,437 134,461
------- ------ -------- ------ -------- ----------
Net investment income (loss)............... (2,164) 119 53,962 1,838 708,721 1,099,660
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)................. 5,866 (17) 17,858 588 -- --
Net unrealized appreciation (depreciation)
during the period...................... 66,874 1,684 80,036 4,787 -- --
------- ------ -------- ------ -------- ----------
Net realized and unrealized gain (loss) on
investments.............................. 72,740 1,667 97,894 5,375 -- --
------- ------ -------- ------ -------- ----------
Net increase in net assets resulting from
operations............................... $70,576 $1,786 $151,856 $7,213 $708,721 $1,099,660
======= ====== ======== ====== ======== ==========
<CAPTION>
Money Market Mid Cap Value Special Opportunities
Subaccount Subaccount Subaccount
----------- ----------------------- -------------------------------------
1995 1997 1996* 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series
Trust I.............................. $810,091 $150,951 $ 5,010 $407,765 $114,600 $ 22,718
M Fund Inc............................. -- -- -- -- -- --
Interest income on policy loans.......... 155,058 -- -- -- -- --
-------- -------- ------- -------- -------- --------
Total investment income.................... 965,149 150,951 5,010 407,765 114,600 22,718
Expenses:
Mortality and expense risks.............. 96,074 7,632 572 22,030 10,841 3,017
-------- -------- ------- -------- -------- --------
Net investment income (loss)............... 869,075 143,319 4,438 385,735 103,759 19,701
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)................. -- 10,646 8,413 276,956 81,916 9,743
Net unrealized appreciation (depreciation)
during the period...................... -- 145,409 14,211 (477,912) 264,010 126,004
-------- -------- ------- -------- -------- --------
Net realized and unrealized gain (loss) on
investments.............................. -- 156,055 22,624 (200,956) 345,926 135,747
-------- -------- ------- -------- -------- --------
Net increase in net assets resulting from
operations............................... $869,075 $299,374 $27,062 $184,779 $449,685 $155,448
======== ======== ======= ======== ======== ========
</TABLE>
- --------------------
* From May 1, 1996 (commencement of operations).
See accompanying notes.
26
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (Continued)
For the years and periods ended December 31,
<TABLE>
<CAPTION>
Real Estate Equity Subaccount Growth & Income Subaccount
-------------------------------- -------------------------------------
1997 1996 1995 1997 1996 1995
---------- -------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I..... $330,296 $177,243 $153,495 $25,377,474 $18,406,284 $10,687,455
M Fund Inc............................... -- -- -- -- -- --
Interest income on policy loans............ 15,261 13,041 12,322 1,728,054 1,562,266 1,397,618
-------- -------- -------- ----------- ----------- -----------
Total investment income...................... 345,557 190,284 165,817 27,105,528 19,968,550 12,085,073
Expenses:
Mortality and expense risks................ 25,420 16,931 13,502 1,136,268 842,055 646,807
-------- -------- -------- ----------- ----------- -----------
Net investment income........................ 320,137 173,353 152,315 25,969,260 19,126,495 11,438,266
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)................... 181,015 39,891 (39,490) 1,982,518 820,430 85,385
Net unrealized appreciation (depreciation)
during the period........................ 165,392 637,301 155,992 18,247,212 4,555,481 17,351,805
-------- -------- -------- ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments................................ 346,407 677,192 116,502 20,229,730 5,375,911 17,437,190
-------- -------- -------- ----------- ----------- -----------
Net increase in net assets resulting from
operations................................. $666,544 $850,545 $268,817 $46,198,990 $24,502,406 $28,875,456
======== ======== ======== =========== =========== ===========
<CAPTION>
Short-Term U.S.
Managed Subaccount Government Subaccount
--------------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
----------- ----------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I..... $ 7,891,222 $ 8,705,892 $ 5,946,035 $1,036,747 $201,830 $2,749
M Fund Inc............................... -- -- -- -- -- --
Interest income on policy loans............ 768,231 705,413 626,984 -- -- --
----------- ----------- ----------- ---------- -------- ------
Total investment income...................... 8,659,453 9,411,305 6,573,019 1,036,747 201,830 2,749
Expenses:
Mortality and expense risks................ 497,030 426,946 356,869 121,572 15,305 295
----------- ----------- ----------- ---------- -------- ------
Net investment income........................ 8,162,423 8,984,359 6,216,150 915,175 186,525 2,454
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)................... 437,661 230,806 (6,127) (27,616) 577 477
Net unrealized appreciation (depreciation)
during the period........................ 4,941,061 (2,103,918) 7,134,666 226,435 225,129 1,735
----------- ----------- ----------- ---------- -------- ------
Net realized and unrealized gain (loss) on
investments................................ 5,378,722 (1,873,112) 7,128,539 198,819 225,706 2,212
----------- ----------- ----------- ---------- -------- ------
Net increase in net assets resulting from
operations................................. $13,541,145 $ 7,111,247 $13,344,689 $1,113,994 $412,231 $4,666
=========== =========== =========== ========== ======== ======
<CAPTION>
Small Cap Value
Subaccount
----------------------
1997 1996*
--------- ----------
<S> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I..... $ 95,844 $1,653
M Fund Inc............................... -- --
Interest income on policy loans............ -- --
-------- ------
Total investment income...................... 95,844 1,653
Expenses:
Mortality and expense risks................ 3,270 128
-------- ------
Net investment income........................ 92,574 1,525
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)................... 19,812 11
Net unrealized appreciation (depreciation)
during the period........................ (12,804) 2,702
-------- ------
Net realized and unrealized gain (loss) on
investments................................ 7,008 2,713
-------- ------
Net increase in net assets resulting from
operations................................. $ 99,582 $4,238
======== ======
</TABLE>
- --------------------
* From May 1, 1996 (commencement of operations).
See accompanying notes.
27
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (Continued)
For the years and periods ended December 31,
<TABLE>
<CAPTION>
International
Opportunities Equity Index Strategic Bond
Subaccount Subaccount Subaccount
-------------------- ------------------- -------------------
1997 1996* 1997 1996* 1997 1996*
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I................. $ 5,284 $ 482 $ 54,601 $ 4,958 $ 9,400 $ 539
M Fund Inc........................................... -- -- -- -- -- --
Interest income on policy loans........................ -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Total investment income.................................. 5,284 482 54,601 4,958 9,400 539
Expenses:
Mortality and expense risks............................ 1,697 295 5,346 287 658 30
--------- -------- -------- -------- -------- --------
Net investment income (loss)............................. 3,587 187 49,255 4,671 8,742 509
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)............................... 3,191 57 14,525 620 348 36
Net unrealized appreciation (depreciation) during the
period............................................... (12,223) 7,271 146,714 6,278 1,260 8
--------- -------- -------- -------- -------- --------
Net realized and unrealized gain (loss) on investments... (9,032) 7,328 161,239 6,898 1,608 44
--------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets resulting from
operations............................................. $ (5,445) $ 7,515 $210,494 $ 11,569 $ 10,350 $ 553
========= ======== ======== ======== ======== ========
<CAPTION>
Frontier
Turner Core Growth Edinburgh Capital Appreciation
Subaccount International Equity Subaccount
------------------- -------------------- -------------------
1997 1996* 1997 1996* 1997 1996*
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I................. $ -- $ -- $ -- $ -- $ -- $ --
M Fund Inc........................................... 6,373 958 1,796 510 6,463 --
Interest income on policy loans........................ -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total investment income.................................. 6,373 958 1,796 510 6,463 --
Expenses:
Mortality and expense risks............................ 301 83 684 173 1,409 477
-------- -------- -------- -------- -------- --------
Net investment income (loss)............................. 6,072 875 1,112 337 5,054 (477)
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)............................... 839 48 888 (91) 8,970 6,683
Net unrealized appreciation (depreciation) during the
period............................................... 6,487 784 (1,473) (1,056) 32,469 1,317
-------- -------- -------- -------- -------- --------
Net realized and unrealized gain (loss) on investments... 7,326 832 (585) (1,147) 41,439 8,000
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets resulting from
operations............................................. $ 13,398 $ 1,707 $ 527 $ (810) $ 46,493 $ 7,523
======== ======== ======== ======== ======== ========
</TABLE>
- --------
* From May 1, 1996 (commencement of operations).
See accompanying notes.
28
<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
------------------------------------------ ------------------------------------------
1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ 1,690,466 $ 1,919,621 $ 773,338 $ 4,779,635 $ 4,118,655 $ 3,860,075
Net realized gain (loss)................ 292,430 145,304 23,090 (230,607) (169,158) (127,733)
Net unrealized appreciation
(depreciation) during the period....... 2,142,494 3,756 1,225,784 1,277,686 (1,418,707 4,205,161
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations............... 4,125,390 2,068,681 2,022,212 5,826,714 2,530,790 7,937,503
From policyholder transactions:
Net premiums from policyholders......... 5,387,401 4,588,842 3,921,962 10,001,325 12,282,665 8,741,178
Net benefits to policyholders........... (3,728,476) (3,100,493) (2,170,453) (8,526,521) (8,373,358) (8,117,059)
Net increase in policy loans............ 326,883 174,445 181,384 474,983 344,564 344,088
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from
policyholder transactions............... 1,985,808 1,662,794 1,932,893 1,949,787 4,253,871 968,207
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets............... 6,111,198 3,731,475 3,955,105 7,776,501 6,784,661 8,905,710
Net assets at beginning of period........ 14,080,918 10,349,443 6,394,338 61,936,384 55,151,723 46,246,013
------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of period.............. $ 20,192,116 $ 14,080,918 $ 10,349,443 $ 69,712,885 $ 61,936,384 $ 55,151,723
============ ============ ============ ============ ============ ============
<CAPTION>
Small Cap
International Equities Growth
Subaccount Subaccount
-------------------------------------------- ----------------------------
1997 1996 1995 1997 1996*
------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ 186,725 $ 35,434 $ 24,050 $ (3,795) $ (378)
Net realized gain (loss)................ 50,829 25,854 14,367 6,475 (690)
Net unrealized appreciation
(depreciation) during the period....... (463,778) 217,574 164,490 92,108 (5,174)
------------ ------------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations............... (226,224) 278,862 202,907 94,788 (6,242)
From policyholder transactions:
Net premiums from policyholders......... 1,504,962 1,691,043 1,439,112 809,492 276,720
Net benefits to policyholders........... (1,091,126) (1,137,159) (927,937) (199,118) (13,425)
Net increase in policy loans............ 13,761 47,823 27,649 -- --
------------ ------------- ------------ ------------ ------------
Net increase in net assets resulting from
policyholder transactions............... 427,597 601,707 538,824 610,374 263,295
------------ ------------- ------------ ------------ ------------
Net increase in net assets............... 201,373 880,569 741,731 705,162 257,053
Net assets at beginning of period........ 3,963,303 3,082,734 2,341,003 257,053 --
------------ ------------- ------------ ------------ ------------
Net assets at end of period.............. $ 4,164,676 $ 3,963,303 $ 3,082,734 $ 962,215 $ 257,053
============ ============= ============ ============ ============
<CAPTION>
International Balanced
Subaccount
----------------------------
1997 1996*
------------ ------------
<S> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ 3,580 $ 653
Net realized gain (loss)................ 429 9
Net unrealized appreciation
(depreciation) during the period....... (4,312) 899
------------ ------------
Net increase (decrease) in net assets
resulting from operations............... (303) 1,561
From policyholder transactions:
Net premiums from policyholders......... 62,380 32,725
Net benefits to policyholders........... (9,531) (1,520)
Net increase in policy loans............ -- --
------------ ------------
Net increase in net assets resulting from
policyholder transactions............... 52,849 31,205
------------ ------------
Net increase in net assets............... 52,546 32,766
Net assets at beginning of period........ 32,766 --
------------ ------------
Net assets at end of period.............. $ 85,312 $ 32,766
============ ============
</TABLE>
- -----------
* From May 1, 1996 (commencement of operations).
See accompanying notes.
29
<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
Subaccount Subaccount
---------------------------- ----------------------------
1997 1996* 1997 1996*
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss)......................... $ (2,164) $ 119 $ 53,962 $ 1,838
Net realized gain (loss)............................. 5,866 (17) 17,858 588
Net unrealized appreciation (depreciation) during the
period............................................. 66,874 1,684 80,036 4,787
------------ ------------- ------------ ------------
Net increase in net assets resulting from operations... 70,576 1,786 151,856 7,213
From policyholder transactions:
Net premiums from policyholders...................... 457,341 172,848 1,506,756 107,940
Net benefits to policyholders........................ (125,239) (9,482) (85,021) (10,621)
Net increase (decrease) in policy loans.............. -- -- -- --
------------ ------------- ------------ ------------
Net increase (decrease) in net assets resulting from
policyholder transactions.......................... 332,102 163,366 1,421,735 97,319
------------ ------------- ------------ ------------
Net increase (decrease) in net assets.................. 402,678 165,152 1,573,591 104,532
Net assets at beginning of period...................... 165,152 -- 104,532 --
------------ ------------- ------------ ------------
Net assets at end of period............................ $ 567,830 $ 165,152 $ 1,678,123 $ 104,532
============ ============= ============ ============
</TABLE>
<TABLE>
<CAPTION>
Mid Cap Value
Money Market Subaccount Subaccount
-------------------------------------------- ---------------------------
1997 1996 1995 1997 1996*
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss)......................... $ 708,721 $ 1,099,660 $ 869,075 $ 143,319 $ 4,438
Net realized gain (loss)............................. -- -- -- 10,646 8,413
Net unrealized appreciation (depreciation) during the
period............................................. -- -- -- 145,409 14,211
------------ ------------ ------------ ------------ -----------
Net increase in net assets resulting from operations... 708,721 1,099,660 869,075 299,374 27,062
From policyholder transactions:
Net premiums from policyholders...................... 11,210,536 34,216,886 13,611,860 1,620,752 284,225
Net benefits to policyholders........................ (9,620,370) (44,096,427) (2,969,848) (112,395) (82,860)
Net increase (decrease) in policy loans.............. 103,247 (134,332) 149,842 -- --
------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets resulting from
policyholder transactions............................ 1,693,413 (10,013,873) 10,791,854 1,508,357 201,365
------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets.................. 2,402,134 (8,914,213) 11,660,929 1,807,731 228,427
Net assets at beginning of period...................... 12,083,106 20,997,319 9,336,390 228,427 --
------------ ------------ ------------ ------------ -----------
Net assets at end of period............................ $ 14,485,240 $ 12,083,106 $ 20,997,319 $ 2,036,158 $ 228,427
============ ============ ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
Special Opportunities Subaccount
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss).......................... $ 385,735 $ 103,759 $ 19,701
Net realized gain (loss).............................. 276,956 81,916 9,743
Net unrealized appreciation (depreciation) during the
period.............................................. (477,912) 264,010 126,004
------------ ------------ ------------
Net increase in net assets resulting from operations.... 184,779 449,685 155,448
From policyholder transactions:
Net premiums from policyholders....................... 2,554,133 2,077,582 774,566
Net benefits to policyholders......................... (1,628,677) (497,713) (164,561)
Net increase (decrease) in policy loans............... -- -- --
------------ ------------ ------------
Net increase (decrease) in net assets resulting from
policyholder transactions............................ 925,456 1,579,869 610,005
------------ ------------ ------------
Net increase (decrease) in net assets................... 1,110,235 2,029,554 765,453
Net assets at beginning of period....................... 2,981,726 952,172 186,719
------------ ------------ ------------
Net assets at end of period............................. $ 4,091,961 $ 2,981,726 $ 952,172
============ ============ ============
</TABLE>
- ----------
* From May 1, 1996 (commencement of operations).
See accompanying notes.
30
<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
----------------------------------------------- ------------------------------
1997 1996 1995 1997 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income........................ $ 320,137 $ 173,353 $ 152,315 $ 25,969,260 $ 19,126,495
Net realized gain (loss)..................... 181,015 39,891 (39,490) 1,982,518 820,430
Net unrealized appreciation (depreciation)
during the period........................... 165,392 637,301 155,992 18,247,212 4,555,481
------------- ------------- ------------- ------------- -------------
Net increase in net assets resulting from
operations.................................. 666,544 850,545 268,817 46,198,990 24,502,406
From policyholder transactions:
Net premiums from policyholders.............. 1,748,132 1,161,434 1,086,721 30,351,780 32,903,369
Net benefits to policyholders................ (1,218,783) (1,008,266) (814,812) (24,619,851) (21,130,764)
Net increase (decrease) in policy loans...... 34,311 33,973 (13,207) 3,346,307 1,965,133
Net increase (decrease) in net assets
resulting from policyholder transactions ... 563,660 187,141 258,702 9,078,236 13,737,738
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets........ 1,230,204 1,037,686 527,519 55,277,226 38,240,144
Net assets at beginning of period............ 3,644,506 2,606,820 2,079,301 169,706,825 131,466,681
------------- ------------- ------------- ------------- -------------
Net assets at end of period.................. $ 4,874,710 $ 3,644,506 $ 2,606,820 $ 224,984,051 $ 169,706,825
============= ============- ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Growth &
Income
Subaccount Managed Subaccount
------------- ---------------------------------------------
1995 1997 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income....................... $ 11,438,266 $ 8,162,423 $ 8,984,359 $ 6,216,150
Net realized gain (loss).................... 85,385 437,661 230,806 (6,127)
Net unrealized appreciation (depreciation)
during the period.......................... 17,351,805 4,941,061 (2,103,918) 7,134,666
------------- ------------- ------------- -------------
Net increase in net assets resulting from
operations................................. 28,875,456 13,541,145 7,111,247 13,344,689
From policyholder transactions:
Net premiums from policyholders............. 20,933,714 13,194,907 14,481,195 13,141,463
Net benefits to policyholders............... (16,972,544) (14,539,295) (12,942,967) (11,680,334)
Net increase (decrease) in policy loans..... 1,898,826 1,257,640 719,880 1,120,431
Net increase (decrease) in net assets
resulting from policyholder transactions .. 5,859,996 (86,748) 2,258,108 2,281,560
------------- ------------- ------------- -------------
Net increase (decrease) in net assets....... 34,735,452 13,454,397 9,369,355 15,926,249
Net assets at beginning of period........... 96,731,229 80,603,518 71,234,163 55,307,914
------------- ------------- ------------- -------------
Net assets at end of period................. $ 131,466,681 $ 94,057,915 $ 80,603,518 $ 71,234,163
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Short-Term U.S.
Government Subaccount
-----------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Increase in net assets from operations:
Net investment income........................ $ 915,175 $ 186,525 $ 2,454
Net realized gain (loss)..................... (27,616) 577 477
Net unrealized appreciation (depreciation)
during the period........................... 226,435 225,129 1,735
------------- ------------- -------------
Net increase in net assets resulting from
operations.................................. 1,113,994 412,231 4,666
From policyholder transactions:
Net premiums from policyholders.............. 116,602 24,721,092 68,539
Net benefits to policyholders................ (26,168,835) (147,655) (14,808)
Net increase (decrease) in policy loans...... -- -- --
Net increase (decrease) in net assets
resulting from policyholder transactions.... (26,052,233) 24,573,437 53,731
------------- ------------- -------------
Net increase (decrease) in net assets........ (24,938,239) 24,985,668 58,397
Net assets at beginning of period............ 25,065,342 79,674 21,277
------------- ------------- -------------
Net assets at end of period.................. $ 127,103 $ 25,065,342 $ 79,674
============= ============= =============
</TABLE>
See accompanying notes.
31
<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>
International
Small Cap Value Opportunities Equity Index Strategic Bond
Subaccount Subaccount Subaccount Subaccount
---------------------------- ------------------------ ----------------------- --------------
1997 1996* 1997 1996* 1997 1996* 1997
----------- ------------- -------- ------------ --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets from operations:
Net investment income
(loss) ....................... $ 92,574 $ 1,525 $ 3,587 $ 187 $ 49,255 $ 4,671 $ 8,742
Net realized gain (loss) ....... 19,812 11 3,191 57 14,525 620 348
Net unrealized appreciation
(depreciation) during the
period ........................ (12,804) 2,702 (12,223) 7,271 146,714 6,278 1,260
---------- ------- -------- -------- ---------- -------- --------
Net increase (decrease) in net
assets resulting from
operations..................... 99,582 4,238 (5,445) 7,515 210,494 11,569 10,350
From policyholder transactions:
Net premiums from
policyholders ................. 1,224,547 63,825 295,915 141,907 1,827,052 234,122 161,548
Net benefits to
policyholders ................ (137,364) (3,155) (46,736) (4,149) (149,826) (9,816) (37,799)
Net increase in policy
loans ........................ -- -- -- -- -- -- --
---------- ------- -------- -------- ---------- -------- --------
Net increase in net assets
resulting from policyholder
transactions .................. 1,087,183 60,670 249,179 137,758 1,677,226 224,306 123,749
---------- ------- -------- -------- ---------- -------- --------
Net increase in net assets ..... 1,186,765 64,908 243,734 145,273 1,887,720 235,875 134,099
Net assets at beginning of
period ........................ 64,908 -- 145,273 -- 235,875 -- 13,218
---------- ------- -------- -------- ---------- -------- --------
Net assets at end of period .... $1,251,673 $64,908 $389,007 $145,273 $2,123,595 $235,875 $147,317
========== ======= ======== ======== ========== ======== ========
<CAPTION>
Edinburgh Frontier Capital
Strategic Bond Turner Core International Appreciation
Subaccount Growth Subaccount Equity Subaccount Subaccount
----------- ------------------------- ------------------------- -------------------------
1996* 1997 1996* 1997 1996* 1997 1996*
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets from operations:
Net investment income (loss) ... $ 509 $ 6,072 $ 875 $ 1,112 $ 337 $ 5,054 $ (477)
Net realized gain (loss) ....... 36 839 48 888 (91) 8,970 6,683
Net unrealized appreciation
(depreciation) during the
period ........................ 8 6,487 784 (1,473) (1,056) 32,469 1,317
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net .
assets resulting from
operations .................... 553 13,398 1,707 527 (810) 46,493 7,523
From policyholder transactions:
Net premiums from policyholders 13,347 33,658 28,147 82,259 91,573 138,553 230,461
Net benefits to policyholders .. (682) (7,208) (1,062) (45,350) (1,860) (70,647) (78,775)
Net increase in policy loans ... -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
resulting from policyholder
transactions .................. 12,665 26,450 27,085 36,909 89,713 67,906 151,686
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets ..... 13,218 39,848 28,792 37,436 88,903 114,399 159,209
Net assets at beginning of
period ........................ -- 28,792 -- 88,903 -- 159,209 --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets at end of period .... $ 13,218 $ 68,640 $ 28,792 $ 126,339 $ 88,903 $ 273,608 $ 159,209
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
- ------------
* From May 1, 1996 (commencement of operations).
See accompanying notes.
32
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
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 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.
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
33
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--Continued
2. Significant Accounting Policies--Continued
income taxes, or provision for federal income taxes, attributable to the
operations of the Account or to the Policies funded in the Account. Currently,
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.
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.
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.
34
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--Continued
4. Details of Investments
The details of the shares owned and cost and value of investments in the
Portfolios of the Fund and of M Fund at December 31, 1997 were as follows:
<TABLE>
<CAPTION>
Subaccount Shares Owned Cost Value
- ---------- ------------ ---- -----
<S> <C> <C> <C>
Large Cap Growth................................. 895,075 $ 15,892,909 $ 18,634,480
Sovereign Bond................................... 6,034,072 60,417,965 60,032,856
International Equities........................... 259,525 4,122,639 3,944,730
Small Cap Growth................................. 84,822 875,281 962,215
International Balanced........................... 8,438 88,725 85,312
Mid Cap Growth................................... 47,615 499,272 567,830
Large Cap Value.................................. 123,668 1,593,299 1,678,123
Money Market..................................... 1,225,500 12,254,998 12,254,998
Mid Cap Value.................................... 146,845 1,876,539 2,036,158
Special Opportunities............................ 265,969 4,181,272 4,091,961
Real Estate Equity............................... 292,206 3,801,801 4,649,139
Growth & Income.................................. 12,021,535 168,816,740 199,623,682
Managed.......................................... 5,789,690 77,812,548 83,078,514
Short-Term U.S. Government....................... 12,605 127,250 127,103
Small Cap Value.................................. 100,931 1,261,774 1,251,673
International Opportunities...................... 36,605 393,990 389,007
Equity Index..................................... 149,410 1,970,603 2,123,595
Strategic Bond................................... 14,383 146,050 147,317
Turner Core Growth............................... 5,084 61,369 68,640
Edinburgh International Equity................... 12,685 128,867 126,339
Frontier Capital Appreciation.................... 18,338 239,823 273,608
</TABLE>
35
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--Continued
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 1997,
were as follows:
<TABLE>
<CAPTION>
Subaccount Purchases Sales
- ---------- --------- -----
<S> <C> <C>
Large Cap Growth...................................................... $ 4,736,825 $ 1,400,399
Sovereign Bond........................................................ 10,368,825 4,136,318
International Equities................................................ 1,118,754 518,717
Small Cap Growth...................................................... 722,061 115,483
International Balanced................................................ 65,555 9,126
Mid Cap Growth........................................................ 402,499 72,561
Large Cap Value....................................................... 1,570,481 94,785
Money Market.......................................................... 10,270,729 7,975,918
Mid Cap Value......................................................... 1,700,997 49,320
Special Opportunities................................................. 2,282,246 971,054
Real Estate Equity.................................................... 1,690,164 840,607
Growth & Income....................................................... 40,552,905 8,979,442
Managed............................................................... 14,242,930 7,470,857
Short-Term U.S. Government............................................ 1,111,536 26,248,593
Small Cap Value....................................................... 1,278,340 98,584
International Opportunities........................................... 291,672 38,875
Equity Index.......................................................... 1,806,826 80,346
Strategic Bond........................................................ 165,467 32,975
Turner Core Growth.................................................... 346,070 7,548
Edinburgh International Equity........................................ 73,973 35,953
Frontier Capital Appreciation......................................... 137,628 71,165
</TABLE>
5. Impact of Year 2000 (Unaudited)
John Hancock Mutual Variable Life Insurance Account UV, along with John
Hancock Mutual Life Insurance Company, its ultimate parent (together, John
Hancock), have developed a plan to modify or replace significant portions of the
Account's computer information and automated technologies so that its systems
will function properly with respect to the dates in the year 2000 and
thereafter. The Account presently believes that with modifications to existing
systems and conversions to new technologies, the year 2000 will not pose
significant operational problems for its computer systems. However, if certain
modifications and conversions are not made, or are not completed timely, the
year 2000 issue could have an adverse impact on the operations of the Account.
John Hancock as early as 1994 had begun assessing, modifying and converting
the software related to its significant systems and has initiated formal
communications with its significant business partners and customers to determine
the extent to which John Hancock's interface systems are vulnerable to those
third parties' failure to remediate their own year 2000 issues. While John
Hancock is developing alternative third-party processing arrangements as it
deems appropriate, there is no guarantee that the systems of other companies on
which the Account's systems rely will be converted timely or will not have an
adverse effect on the Account's systems.
36
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--Continued
5. Impact of Year 2000 (Unaudited)--Continued
The Account expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors. However,
there can be no guarantee that this completion target will be achieved.
37
<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, 1997, and the related statements of operations, and statements of
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, 1997, 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 6, 1998
38
<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, 1997
and 1996, and the related statutory-basis statements of operations and 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 opinion, because of the effects of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of John Hancock Mutual Life Insurance Company at December 31, 1997 and 1996, or
the results of its operations or its cash flows for the year ended December 31,
1997.
Also, in our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of John Hancock Mutual Life
Insurance Company at December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.
Ernst & Young LLP
Boston, Massachusetts
February 18, 1998
39
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31
---------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
Assets
Bonds--Note 6........................................................................... $22,986.0 $22,467.0
Stocks:
Preferred.......................................................................... 640.6 416.2
Common............................................................................. 256.9 249.8
Investments in affiliates.......................................................... 1,442.0 1,268.9
--------- ---------
2,339.5 1,934.9
Mortgage loans on real estate--Note 6.................................................. 7,851.2 7,964.0
Real estate:
Company occupied................................................................... 375.1 372.1
Investment properties.............................................................. 1,893.4 2,042.3
--------- ---------
2,268.5 2,414.4
Policy loans........................................................................... 1,577.3 1,589.3
Cash items:
Cash in banks and offices.......................................................... 176.0 348.4
Temporary cash investments......................................................... 548.8 1,068.3
--------- ---------
724.8 1,416.7
Premiums due and deferred.............................................................. 222.3 278.4
Investment income due and accrued...................................................... 505.8 547.8
Other general account assets........................................................... 948.6 1,009.9
Assets held in separate accounts....................................................... 16,021.7 13,969.1
--------- ---------
TOTAL ASSETS $55,445.7 $53,591.5
========= =========
Obligations and Policyholders' Contingency Reserves
OBLIGATIONS
Policy reserves.................................................................... $19,206.6 $18,544.0
Policyholders' and beneficiaries' funds............................................ 13,985.1 14,679.3
Dividends payable to policyholders................................................. 399.7 395.5
Policy benefits in process of payment.............................................. 115.5 236.3
Other policy obligations........................................................... 214.8 210.5
Asset valuation reserve--Note 1.................................................... 1,165.7 1,064.8
Federal income and other accrued taxes--Note 1.................................... 96.9 125.1
Other general account obligations.................................................. 1,084.5 1,521.7
Obligations related to separate accounts........................................... 16,019.1 13,958.2
--------- ---------
TOTAL OBLIGATIONS...................................................................... 52,287.9 50,735.4
POLICYHOLDERS' CONTINGENCY RESERVES
Surplus notes--Note 2............................................................... 450.0 450.0
Special contingency reserve for group insurance.................................... 151.8 194.8
General contingency reserve........................................................ 2,556.0 2,211.3
--------- ---------
TOTAL POLICYHOLDERS' CONTINGENCY RESERVES.............................................. 3,157.8 2,856.1
--------- ---------
TOTAL OBLIGATIONS AND POLICYHOLDERS' CONTINGENCY RESERVES $55,445.7 $53,591.5
========= =========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
40
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF OPERATIONS AND CHANGES IN POLICYHOLDERS'
CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
Income
Premiums, annuity considerations and pension fund contributions.................... $ 7,371.6 $ 8,003.1
Net investment income--Note 4...................................................... 2,856.1 2,803.1
Other, net......................................................................... 119.0 68.6
--------- ---------
10,346.7 10,874.8
Benefits and Expenses
Payments to policyholders and beneficiaries:
Death benefits................................................................... 737.4 886.8
Accident and health benefits..................................................... 121.4 300.9
Annuity benefits................................................................. 1,668.2 1,539.4
Surrender benefits and annuity fund withdrawals.................................. 6,293.1 5,565.4
Matured endowments............................................................... 21.0 20.6
--------- ---------
8,841.1 8,313.1
Additions to reserves to provide for future payments to policyholders and
beneficiaries..................................................................... (186.7) 880.5
Expenses of providing service to policyholders and obtaining new insurance:
Field sales compensation and expenses............................................ 278.3 275.0
Home office and general expenses................................................. 479.7 514.8
Payroll, state premium and miscellaneous taxes..................................... 49.9 70.9
--------- ---------
9,462.3 10,054.3
GAIN FROM OPERATIONS BEFORE DIVIDENDS TO
POLICYHOLDERS, FEDERAL INCOME TAXES AND NET REALIZED CAPITAL LOSSES.......... 884.4 820.5
Dividends to policyholders............................................................. 398.2 399.4
Federal income taxes--Note 1........................................................... 18.9 107.1
--------- ---------
417.1 506.5
--------- ---------
GAIN FROM OPERATIONS BEFORE NET REALIZED CAPITAL
LOSSES....................................................................... 467.3 314.0
Net realized capital losses--Note 5.................................................... (89.8) (43.6)
--------- ---------
NET INCOME.................................................................... 377.5 270.4
Other Increases (Decreases) in Policyholders' Contingency Reserves:
Net unrealized capital gains and other adjustment--Note 5.......................... $ 58.6 $ 191.7
Valuation reserve changes--Note 1................................................... 1.4 (27.5)
Prior years' federal income taxes.................................................. (35.6) (28.9)
Other reserves and adjustments, net................................................ (100.2) (83.1)
--------- ---------
NET INCREASE IN POLICYHOLDERS' CONTINGENCY
RESERVES..................................................................... 301.7 322.6
Policyholders' contingency reserves at beginning of year............................... 2,856.1 2,533.5
--------- ---------
POLICYHOLDERS' CONTINGENCY RESERVES AT END OF
YEAR......................................................................... $ 3,157.8 $ 2,856.1
========= =========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
41
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
-------------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
Cash Flows from Operating Activities:
Insurance premiums, annuity considerations and deposits........................... $ 7,518.8 $ 8,120.4
Net investment income............................................................. 2,988.7 2,965.5
Benefits to policyholders and beneficiaries....................................... (9,030.3) (8,476.6)
Dividends paid to policyholders................................................... (394.0) (382.6)
Insurance expenses and taxes...................................................... (815.3) (884.1)
Net transfers from separate accounts.............................................. 896.8 198.2
Other, net........................................................................ (798.3) (602.7)
----------- ----------
NET CASH PROVIDED FROM OPERATIONS............................................. 366.4 938.1
----------- ----------
Cash Flows used in Investing Activities:
Bond purchases.................................................................... (18,003.6) (7,590.7)
Bond sales........................................................................ 13,541.1 2,812.4
Bond maturities and scheduled redemptions......................................... 2,927.6 2,241.0
Bond prepayments.................................................................. 1,096.3 1,223.2
Stock purchases................................................................... (1,125.7) (391.2)
Proceeds from stock sales......................................................... 921.7 573.2
REAL ESTATE PURCHASES............................................................. (243.0) (447.7)
REAL ESTATE SALES................................................................. 444.5 382.1
Other invested assets purchases................................................... (171.1) (214.7)
Proceeds from the sale of other invested assets................................... 109.3 183.6
Mortgage loans issued............................................................. (1,165.8) (1,582.7)
Mortgage loan repayments.......................................................... 1,176.9 2,247.3
Other, net........................................................................ (333.8) 205.3
----------- ----------
NET CASH USED IN INVESTING ACTIVITIES......................................... (825.6) (358.9)
----------- ----------
Cash Flows from Financing Activities:
Net (decrease) increase in short-term note payable................................ (16.4) 90.0
Issuance of REMIC notes payable................................................... 0.0 292.0
Repayment of REMIC notes payable.................................................. (216.3) (85.2)
----------- ----------
NET CASH (USED IN) PROVIDED FROM FINANCING ACTIVITIES......................... (232.7) 296.8
----------- ----------
(DECREASE) INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS............................ (691.9) 876.0
Cash and temporary cash investments at beginning of year.............................. 1,416.7 540.7
----------- ----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR $ 724.8 $ 1,416.7
=========== ==========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
42
<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. 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.
On February 28, 1997, the Company sold its group accident and health business
and related group life business to UNICARE Life & Health Insurance Company
(UNICARE), a wholly-owned subsidiary of WellPoint Health Networks Inc. The
Company retained its group long-term care operations. Assets equal to
liabilities of approximately $562.4 million at February 28, 1997, subject to the
completion of a closing audit, were transferred to UNICARE in connection with
the sale. The corresponding amount of assets and liabilities at December 31,
1996 was $559.4 million. The gain from operations in both periods was not
significant. The insurance business sold was transferred to UNICARE through a
100% coinsurance agreement. The Company remains liable to its policyholders to
the extent that UNICARE does not meet its contractual obligations under the
coinsurance agreement. As a result, the Company has secured a $397 million
letter of credit facility with a group of banks led by Morgan Guaranty Trust
Company of New York. The banks have agreed to issue a letter of credit to the
Company pursuant to which the Company may draw up to $397 million for any claims
not satisfied by UNICARE under the coinsurance agreement after the Company has
incurred the first $113 million of losses from such claims. The amount available
pursuant to the letter of credit agreement and any letter of credit issued
thereunder will be automatically reduced on a scheduled basis consistent with
the anticipated runoff of liabilities related to the business reinsured under
the coinsurance agreement. The letter of credit agreement and any letter of
credit issued thereunder are scheduled to expire on March 1, 2002.
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, including banks, brokers/dealers and
direct marketing efforts.
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.
43
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--Continued
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 financial statements requires management to make estimates
and assumptions that affect amounts reported in the financial statements and
accompanying notes. Such estimates and assumptions could change in the future as
more information becomes known, which could impact the amounts reported and
disclosed herein.
Basis of Presentation: The financial statements have been prepared using
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of the
National Association of Insurance Commissioners (NAIC), which practices differ
from generally accepted accounting principles (GAAP).
The significant differences from GAAP include: (1) policy acquisition costs are
charged to expense as incurred rather than deferred and amortized over the
related premium-paying period; (2) policy reserves are based on statutory
mortality, morbidity, and interest requirements without consideration of
withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available for
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances are
provided when there has been a decline in value deemed other than temporary; (7)
investments in affiliates are carried at their net equity value with changes in
value being recorded directly to 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; (9) certain items, including modifications to required policy
reserves resulting from changes in actuarial assumptions or increased benefits,
are recorded directly to policyholders' contingency reserves rather than being
reflected in income; and (10) 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 approved by the NAIC in 1998 will likely
change, to some extent, prescribed statutory accounting practices, and may
result in changes to the accounting practices that the Company uses to prepare
its statutory-basis financial statements. The impact of any such changes on the
Company's statutory surplus is not expected to 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.
44
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--Continued
Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-term,
highly-liquid investments both readily convertible to known amounts of cash and
so near maturity that there is insignificant risk of changes in value because of
changes in interest rates.
Valuation of Assets: General account investments are carried at amounts
determined on the following bases:
Bond and stock values are carried as prescribed by the NAIC; bonds generally
at amortized amounts or cost, preferred stocks generally at cost and common
stocks at fair value. The discount or premium on bonds is amortized using the
interest method.
Investments in affiliates are included on the statutory equity method.
Loan-backed bonds and structured securities are valued at amortized cost using
the interest method including anticipated prepayments. Prepayment assumptions
are obtained from broker dealer surveys or internal estimates and are based on
the current interest rate and economic environment. The retrospective
adjustment method is used to value all such securities except for interest-
only securities, which are valued using the prospective method.
The net interest effect of interest rate and currency rate swap transactions
is recorded as an adjustment of interest income as incurred. The initial cost
of interest rate cap and floor agreements is amortized to net investment
income over the life of the related agreement. 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.
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
$470.5 million and $393.5 million at December 31, 1997 and 1996, 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.
45
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--Continued
The Company also records the NAIC prescribed Interest Maintenance Reserve (IMR)
that represents that portion of the after tax net accumulated unamortized
realized capital gains and losses on sales of fixed income securities,
principally bonds and mortgage loans, attributable to changes in the general
level of interest rates. Such gains and losses are deferred and amortized into
income over the remaining expected lives of the investments sold. At December
31, 1997, the IMR, net of 1997 amortization of $25.2 million, amounted to $165.6
million which is included in other policy obligations. The corresponding 1996
amounts were $18.9 million and $121.7 million, respectively.
Property and Equipment: Data processing equipment, which amounted to $30.0
million in 1997 and $41.6 million in 1996 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 $21.8 million in 1997 and $31.0 million
in 1996.
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 obligations are intended
to be satisfied from separate account assets and not from assets of the general
account. Separate accounts generally are reported at fair value. The operations
of the separate accounts are not included in the statement of operations;
however, income earned on amounts initially invested by the Company in the
formation of new separate accounts is included in other income.
Fair Value Disclosure of Financial Instruments: Statement of Financial
Accounting Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about certain
financial instruments, whether or not recognized in the statement of financial
position, for which it is practicable to estimate the value. In situations where
quoted market prices are not available, fair values are based on estimates using
present value or other valuation techniques. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Therefore, the aggregate fair value amounts presented do not
represent the underlying value of the Company. See Note 15.
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.
46
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--Continued
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,
1997. 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.
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 generally
ranging from 2% to 8 3/4%.
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.
47
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--Continued
The statement value and fair value for investment-type insurance contracts are
as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
----------------------- ----------------------
Statement Fair Statement Fair
Value Value Value Value
--------- ----- --------- -----
(In millions)
<S> <C> <C> <C> <C>
Guaranteed investment contracts........................... $11,499.4 $11,516.8 $11,921.6 $11,943.2
Fixed-rate deferred and immediate annuities............... 4,289.1 4,290.4 3,909.3 3,886.1
Supplementary contracts without life contingencies........ 40.9 42.1 45.6 46.0
--------- --------- --------- ---------
$15,829.4 $15,849.3 $15,876.5 $15,875.3
========= ========= ========= =========
</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.
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.
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 after completion
of the financial statements, a true-up adjustment (i.e., effect of the
difference between the estimated and final DER) is necessary.
Amounts for disputed tax issues relating to prior years are charged or credited
directly to policyholders' contingency reserves.
Certain subsidiaries acquired by the Company have potential tax loss
carryforwards of $14.3 million expiring in 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 $146.4 million in
1997 and $309.9 million in 1996.
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 1997, the Company refined certain
actuarial assumptions inherent in the calculation of reserves related to
guaranteed investment contracts and AIDS claims under individual insurance
policies resulting in a net $1.4 million increase in policyholders' contingency
reserves at December 31, 1997. Similar refinements to the actuarial assumptions
inherent in the calculation of reserves related to guaranteed
48
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--Continued
investment contracts were made in 1996 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.
Guaranty Fund Assessments: Guaranty fund assessments are accrued when the
Company receives notice that an amount is payable to a guaranty fund.
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 1997 and 1996.
NOTE 3--BORROWED MONEY
At December 31, 1997, 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, 1997,
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. The
interest rates on the class A1 and A2 notes are calculated on a floating basis,
based on the monthly LIBOR rates plus 22 and 27 basis points, respectively. The
LIBOR rates were 5.72% and 5.50%, respectively, at December 31, 1997 and 1996.
The class A1 notes were fully repaid on March 25, 1997 and the class A2 notes
have a last scheduled payment date of June 25, 1998. The outstanding balances of
the notes totaled $42.6 million and $127.9 million at December 31, 1997 and
1996, respectively, and are included in other general account obligations.
In 1996, the Company issued $292.0 million of additional 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
49
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 3--BORROWED MONEY--Continued
in two notes. The interest rates on the class A1 and A2 notes are calculated on
a floating basis, based on the monthly LIBOR rate plus 5 and 19 basis points,
respectively. The class A1 notes were fully repaid on December 26, 1997 and the
class A2 notes have a last scheduled payment date of July 26, 1999. The
outstanding balances of the notes totaled $161.0 million and $292.0 million at
December 31, 1997 and 1996, respectively, and are included in other general
account obligations.
On December 31, 1997, the Company had outstanding a short-term note of $75.0
million payable to an affiliate at a variable rate of interest. The note, which
is included in other general account obligations, was repaid on January 5, 1998.
Interest paid on borrowed money was $19.3 million and $10.4 million during 1997
and 1996, respectively.
NOTE 4--NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In millions)
<S> <C> <C>
Investment expenses.................................................................... $339.6 $333.8
Interest expense....................................................................... 57.9 48.1
Depreciation on real estate and other invested assets.................................. 76.6 73.3
Real estate and other investment taxes................................................. 61.5 65.2
------ ------
$535.6 $520.4
====== ======
</TABLE>
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital losses consist of the following items:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In millions)
<S> <C> <C>
Net gains from asset sales and foreclosures............................................ $ 63.4 $ 81.2
Capital gains tax...................................................................... (84.1) (53.7)
Net capital gains transferred to the IMR............................................... (69.1) (71.1)
------ ------
Net Realized Capital Losses............................................................ $(89.8) $(43.6)
====== ======
</TABLE>
Net unrealized capital gains and other adjustments consist of the following
items:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In millions)
<S> <C> <C>
Net gains from changes in security values and book value adjustments................... $ 159.5 $ 242.2
Increase in asset valuation reserve.................................................... (100.9) (50.5)
-------- -------
Net Unrealized Capital Gains and Other Adjustments..................................... $ 58.6 $ 191.7
======== =======
</TABLE>
50
<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 Fair
Year ended December 31, 1997 Value Gains Losses Value
- ---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. government $ 258.9 $ 9.3 $ 0.0 $ 268.2
corporations and agencies..................................
Obligations of states and political subdivisions............ 149.6 16.3 0.0 165.9
Debt securities issued by foreign governments............... 259.7 53.2 0.1 312.8
Corporate securities........................................ 17,336.1 1,485.9 113.4 18,708.6
Mortgage-backed securities.................................. 4,981.7 115.9 28.3 5,069.3
--------- -------- ------ ---------
Total bonds................................................. $22,986.0 $1,680.6 $141.8 $24,524.8
========= ======== ====== =========
<CAPTION>
Year ended December 31, 1996
- ----------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. government $ 430.2 $ 8.8 $ 4.2 $ 434.8
corporations and agencies..................................
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
========= ======== ====== =========
</TABLE>
The statement value and fair value of bonds at December 31, 1997, by contractual
maturity, are shown below. Maturities will differ from contractual maturities
because eligible borrowers may exercise their right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Statement Fair
Value Value
--------- ---------
(In millions)
<S> <C> <C>
Due in one year or less........................................................... $ 1,386.4 $ 1,426.6
Due after one year through five years............................................. 5,809.6 6,079.2
Due after five years through ten years............................................ 5,465.5 5,867.1
Due after ten years............................................................... 5,342.8 6,082.6
--------- ---------
18,004.3 19,455.5
Mortgage-backed securities........................................................ 4,981.7 5,069.3
--------- ---------
$22,986.0 $24,524.8
========= =========
</TABLE>
Gross gains of $61.5 million in 1997 and $43.8 million in 1996 and gross losses
of $86.6 million in 1997 and $27.6 million in 1996 were realized from the sale
of bonds.
51
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 6--INVESTMENTS--Continued
At December 31, 1997, bonds with an admitted asset value of $19.2 million were
on deposit with state insurance departments to satisfy regulatory requirements.
The cost of common stocks was $148.0 million and $136.1 million at December 31,
1997 and 1996, respectively. At December 31, 1997, gross unrealized appreciation
on common stocks totaled $139.3 million, and gross unrealized depreciation
totaled $30.4 million. The fair value of preferred stock totaled $695.8 million
at December 31, 1997 and $451.0 million at December 31, 1996.
The Company participates in a security lending program for the purpose of
enhancing income on securities held. At December 31, 1997 and 1996, $217.0
million and $540.5 million, respectively, of the Company's bonds and stocks were
on loan to various brokers/dealers, but were fully collateralized by cash and
U.S. government securities in an account held in trust for the Company. Such
assets reflect the extent of the Company's involvement in securities lending,
not the Company's risk of loss.
Mortgage loans with outstanding principal balances of $71.7 million, bonds with
amortized cost of $98.9 million and real estate with depreciated cost of $18.0
million were nonincome producing for the twelve months ended December 31, 1997.
Restructured commercial mortgage loans aggregated $314.3 million and $385.8
million as of December 31, 1997 and 1996, 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
----------------------
1997 1996
---- ----
<S> <C> <C>
(In millions)
Expected............................................... $33.8 $46.3
Actual................................................. 24.9 29.1
</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.
52
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 6--INVESTMENTS--Continued
At December 31, 1997, the mortgage loan portfolio was diversified by geographic
region and specific collateral property type as displayed below. The Company
controls credit risk through credit approvals, limits and monitoring procedures.
<TABLE>
<CAPTION>
Statement Geographic Statement
Property Type Value Concentration Value
------------- --------- ------------- ---------
(In millions) (In millions)
<S> <C> <C> <C>
Apartments............................... $1,677.7 East North Central................ $ 891.5
Hotels................................... 186.7 East South Central................ 163.4
Industrial............................... 858.1 Middle Atlantic................... 1,410.2
Office buildings......................... 1,748.7 Mountain.......................... 362.2
Retail................................... 1,609.4 New England....................... 836.9
1-4 Family............................... 6.0 Pacific........................... 1,770.6
Agricultural............................. 1,426.5 South Atlantic.................... 1,475.4
Other.................................... 338.1 West North Central................ 260.1
West South Central................ 613.1
Other............................. 67.8
-------- --------
$7,851.2 $7,851.2
======== ========
</TABLE>
At December 31, 1997, the fair values of the commercial and agricultural
mortgage loan portfolios were $6.7 billion and $1.5 billion, respectively. The
corresponding amounts as of December 31, 1996 were approximately $6.6 billion
and $1.8 billion, respectively.
The maximum and minimum lending rates for mortgage loans during 1997 were 18.0%
and 7.66% for agricultural loans, 10.0% and 7.19% for other properties, and
7.27% and 7.25% for purchase money mortgages. Generally, the percentage of any
loan to the value of security at the time of the loan, exclusive of insured,
guaranteed or purchase money mortgages, is 75%. For city mortgages, fire
insurance is carried on all commercial and residential properties at least equal
to the excess of the loan over the maximum loan which would be permitted by law
on the land without the building, except as permitted by regulations of the
Federal Housing Commission on loans fully insured under the provisions of the
National Housing Act. For agricultural mortgage loans, fire insurance is not
normally required on land based loans except in those instances where a building
is critical to the farming operation. Fire insurance is required on all agri-
business facilities in an aggregate amount equal to the loan balance.
NOTE 7--REINSURANCE
Premiums, benefits and reserves associated with reinsurance assumed in 1997 were
$787.1 million, $386.6 million, and $7.5 million, respectively. The
corresponding amounts in 1996 were $742.0 million, $317.8 million, and $14.2
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 1997 were $801.8 million,
53
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 7--REINSURANCE--Continued
$767.9 million and $594.9 million, respectively. The corresponding amounts in
1996 were $304.0 million, $217.0 million and $251.2 million, respectively.
Premiums, benefits, and reserves ceded related to the business sold in 1997,
included in the amounts above, were $487.4 million, $503.3 million, and $247.9
million, respectively, at December 31, 1997.
Amounts recoverable on paid claims and funds withheld from reinsurers were as
follows:
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
Reinsurance recoverables............................... $12.5 $26.5
Funds withheld from reinsurers......................... 35.1 23.4
</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 $236.3 million at December 31, 1997 and $226.4
million at December 31, 1996.
John Hancock Variable Life Insurance Company (Variable Life, a wholly-owned
affiliate) has a modified coinsurance agreement with the Company to reinsure 50%
of Variable Life's 1994 through 1997 issues of flexible premium variable life
insurance and scheduled premium variable life insurance policies. In connection
with this agreement, the Company transferred $22.0 million and $24.5 million of
cash for tax, commission, and expense allowances to Variable Life, which
decreased the Company's net gain from operations by $10.1 million and $15.7
million in 1997 and 1996, respectively.
Variable Life has a modified coinsurance agreement with the Company to reinsure
50% of Variable Life's 1995 through 1997 issues of certain retail annuity
contracts (Independence Preferred and Declaration). In connection with this
agreement, the Company received $1.1 million in 1997 and transferred $35.0
million in 1996 of cash for surrender benefits, tax, reserve increase,
commission, expense allowances and premium. This agreement decreased the
Company's net gain from operations by $9.8 million and $15.1 million in 1997 and
1996, respectively.
Effective January 1, 1997, Variable Life entered into a stop-loss agreement with
the Company to reinsure mortality claims in excess of 110% of expected mortality
claims in 1997 for all policies that are not reinsured under any other indemnity
agreement. In connection with the agreement, the Company transferred $2.4
million of cash for mortality claims to Variable Life, which decreased the
Company's net gain from operations by $1.3 million in 1997.
Reinsurance ceded contracts do not relieve the Company from its obligations to
policyholders. The Company remains liable to its policyholders for the portion
reinsured to the extent that any reinsurer does not meet its obligations for
reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the insurer.
54
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 7--REINSURANCE--Continued
Neither the Company, nor any of its related parties, control, either directly or
indirectly, any external reinsurers with which the Company conducts business. No
policies issued by the Company have been reinsured with a foreign company which
is controlled, either directly or indirectly, by a party not primarily engaged
in the business of insurance.
The Company has not entered into any reinsurance agreements in which the
reinsurer may unilaterally cancel any reinsurance for reasons other than
nonpayment of premiums or other similar credits. The Company does not have any
reinsurance agreements in effect in which the amount of losses paid or accrued
through December 31, 1997 would result in a payment to the reinsurer of amounts
which, in the aggregate and allowing for offset of mutual credits from other
reinsurance agreements with the same reinsurer, exceed the total direct premiums
collected under the reinsured policies.
NOTE 8--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 benefit pension plans paid to employees and retirees covered
by annuity contracts issued by the Company amounted to $89.7 million in 1997 and
$84.4 million in 1996. 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.
The Company provides additional compensation to employees based on achievement
of annual and long-term corporate financial objectives.
55
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 8--BENEFIT PLANS--Continued
Pension (benefit) expense is summarized as follows:
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1997 1996
---- ----
<S> <C> <C>
(In millions)
Defined benefit plans:
Service cost--benefits earned during the period..................................... $ 30.7 $ 32.4
Interest cost on the projected benefit obligation................................... 109.3 107.4
Actual return on plan assets........................................................ (177.7) (225.1)
Net amortization and deferral....................................................... 23.7 85.0
-------- --------
(14.0) (0.3)
Defined contribution plans............................................................ 6.2 21.4
-------- --------
Total pension (benefit) expense $ (7.8) $ 21.1
======== ========
</TABLE>
Assumptions used in accounting for the defined benefit pension plans were as
follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Discount rate........................................................................... 7.00% 7.25%
Weighted rate of increase in compensation levels........................................ 4.80% 4.80%
Expected long-term rate of return on assets............................................. 8.50% 8.50%
</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
----------------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.......................................................... $(1,462.2) $(1,344.8)
========= =========
Accumulated benefit obligation..................................................... $(1,507.6) $(1,387.7)
========= =========
Projected benefit obligation....................................................... $(1,704.0) $(1,582.4)
Plan assets fair value............................................................. 1,877.7 1,787.6
--------- ---------
Excess of plan assets over projected benefit obligation............................ 173.7 205.2
Unrecognized net gain.............................................................. (101.7) (176.1)
Prior service cost not yet recognized in net periodic pension cost................. 29.6 42.8
Unrecognized net asset, net of amortization........................................ (93.2) (95.9)
--------- ---------
Net pension asset (liability)...................................................... $ 8.4 $ (24.0)
========= =========
</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.
56
<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, 1997, 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
---------------------------------------------
1997 1996
------------------ -------------------
Medical Medical
and Life and Life
Dental Insurance Dental Insurance
Plans Plans Plans Plans
------- ------- ------- -------
(In millions)
<S> <C> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees............................................................. $(228.8) $ (95.7) $(234.2) $(100.6)
Fully eligible active plan participants.............................. (38.7) (17.9) (46.4) (19.4)
------- ------- ------- -------
(267.5) (113.6) (280.6) (120.0)
Plan assets at fair value.............................................. 172.7 0.0 132.4 0.0
------- ------- ------- -------
Accumulated postretirement benefit obligation in excess of plan assets. (94.8) (113.6) (148.2) (120.0)
Unrecognized prior service cost........................................ 14.9 4.8 16.7 5.3
Unrecognized prior net gain............................................ (122.8) (4.2) (93.0) 4.0
Unrecognized transition obligation..................................... 240.7 75.0 256.8 78.4
------- ------- ------- -------
Accrued postretirement benefit cost $ 38.0 $ (38.0) $ 32.3 $ (32.3)
======= ======= ======= =======
</TABLE>
Net postretirement benefits costs for the years ended December 31, 1997 and 1996
were $40.8 million and $47.4 million, respectively, and include the expected
cost of such benefits for newly eligible or vested employees, interest cost, and
amortization of the transition liability.
57
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 9--OTHER POSTRETIREMENT BENEFIT PLANS--Continued
Net periodic postretirement benefits cost included the following components:
<TABLE>
<CAPTION>
December 31
-----------------------------------------
1997 1996
------------------- -------------------
Medical Medical
and Life and Life
Dental Insurance Dental Insurance
Plans Plans Plans Plans
------- --------- ------- ---------
(In millions)
<S> <C> <C> <C> <C>
Eligibility cost......................................................... $ 6.9 $ 1.6 $ 7.1 $ 1.8
Interest cost............................................................ 17.8 7.6 19.8 8.3
Actual return on plan assets............................................. (31.0) 0.0 (15.9) 0.0
Net amortization and deferral............................................ 32.8 5.1 20.9 5.4
------- ----- ------- -----
Net periodic postretirement benefit cost................................. $ 26.5 $14.3 $ 31.9 $15.5
======= ===== ======= =====
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation at December 31, 1997 was 7.0% (7.25% for 1996). The expected long-
term rates of return on plan assets were 8.5% and 7.0% at December 31, 1997 and
1996, respectively. The annual assumed rate of increase in the health care cost
trend rate for the medical coverages is 5.75% for 1998 (8.0% was assumed for
1997) and is assumed to decrease gradually to 5.00% 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, 1997 by $26.2 million and the aggregate of the eligibility and
interest cost components of net periodic postretirement benefit cost by $3.0
million for 1997 and $2.9 million for 1996.
Postretirement welfare benefits for non-vested employees are not reflected in
the above expenses or accumulated postretirement benefit obligations. As of
December 31, 1997, the accumulated postretirement benefit obligations for non-
vested employees amounted to $49.5 million for medical and dental plans and
$10.4 million for life insurance plans. The corresponding amounts as of December
31, 1996 were $69.4 million and $10.7 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 $12.4 billion at December
31, 1997 and $9.6 billion at December 31, 1996; total liabilities amounted to
$11.1 billion at December 31, 1997 and $8.5 billion at December 31, 1996; and
total net income was $184.8 million in 1997 and $193.0 million in 1996.
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.
58
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--Continued
NOTE 10--AFFILIATES--Continued
The Company customarily engages in transactions with its unconsolidated
affiliates, including the cession and assumption of certain insurance business
under the terms of established reinsurance agreements. Various services are
performed by the Company for certain affiliates for which the Company is
reimbursed on the basis of cost. Certain affiliates have entered into various
financial arrangements relating to borrowings and capital maintenance under
which agreements the Company would be obligated in the event of nonperformance
by an affiliate (see Note 14).
The Company received dividends of $65.9 million and $9.4 million in 1997 and
1996, respectively, from unconsolidated affiliates.
NOTE 11--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company utilizes a variety of off-balance sheet financial instruments as
part of its efforts to hedge and manage fluctuations in the market value of its
investment portfolio attributable to changes in general interest rate levels and
to manage duration mismatch of assets and liabilities. Those instruments include
swaps, caps, floors, and future contracts.
The Company enters into interest rate swap contracts for the purpose of
converting the interest rate characteristics (fixed or variable) of certain
investments to match those of related insurance liabilities. Maturities of
current agreements range from 1998 to 2026. These swaps involve, to varying
degrees, interest rate risk in excess of amounts recognized in the statements of
financial position.
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 2007.
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 $6.4
million and $0.5 million at December 31, 1997 and 1996, respectively.
The Company enters into currency rate swap agreements to manage exposure to
foreign exchange rate fluctuations. Maturities of current agreements range
through 2009. Should the counterparty fail to meet the terms of the contract,
the Company's market risk is limited to the currency rate differential.
59
<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
---------------------
1997 1996
---- ----
(In millions)
<S> <C> <C>
Futures contracts to purchase securities............................................ $ 154.0 $ 117.6
======== ========
Futures contracts to sell securities................................................ $ 414.2 $ 136.4
======== ========
Notional amount of interest rate swaps, interest rate swaps, currency rate
swaps, interest rate caps and interest rate floors to:
Receive variable rates.......................................................... $5,043.7 $3,822.8
======== ========
Receive fixed rates............................................................. $2,596.7 $2,912.5
======== ========
</TABLE>
The Company's exposure to credit risk is the risk of loss from a counterparty
failing to perform according to the terms of the contract. The Company
continually monitors its positions and the credit ratings of the counterparties
to these financial instruments. To limit exposure associated with counterparty
nonperformance on interest rate and currency agreements, the Company enters into
master netting agreements with its counterparties. The Company believes the risk
of incurring losses due to nonperformance by its counterparties is remote and
that such losses, if any, would not be material.
Based on market rates in effect at December 31, 1997, the Company's interest
rate swaps, currency rate swaps, interest rate caps, and interest rate floors
represented (assets) liabilities to the Company with fair values of $58.3
million, $9.7 million, $(0.6) million and $(0.4) million, respectively. The
corresponding amounts as of December 31, 1996 were $16.4 million, $41.1 million,
$(0.6) million and $(0.1) million, respectively. The fair values of the swap
agreements are not recognized in the financial statements.
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 $27.4 million in 1997 and $32.1 million in 1996.
Future minimum rental commitments under noncancellable operating leases for
office space and furniture and equipment are as follows:
<TABLE>
<CAPTION>
December 31, 1997
-----------------
(In millions)
<S> <C>
1998.................................................................................. $19.5
1999.................................................................................. 17.0
2000.................................................................................. 14.5
2001.................................................................................. 11.5
2002.................................................................................. 8.1
Thereafter............................................................................ 12.2
-----
Total minimum payments................................................................ $82.8
=====
</TABLE>
60
<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 and related separate
account 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, 1997 Percent
----------------- -------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal (with adjustment):
With market value adjustment.................................................... $ 3,881.6 10.5%
At book value less surrender charge............................................. 2,881.4 7.8
--------- -----
Total with adjustment........................................................... 6,763.0 18.3
Subject to discretionary withdrawal (without adjustment) at book value.......... 3,574.2 9.6
Subject to discretionary withdrawal--separate accounts.......................... 13,455.3 36.3
Not subject to discretionary withdrawal:
General account................................................................. 11,996.1 32.4
Separate accounts............................................................... 1,274.1 3.4
--------- -----
Total annuity reserves, deposit fund liabilities and separate accounts--before
reinsurance........................................................................ 37,062.7 100.0%
--------- =====
Less reinsurance ceded............................................................... 0.0
---------
Net annuity reserves, deposit fund liabilities and separate accounts................. $37,062.7
=========
</TABLE>
Any liquidation costs associated with the $13.5 billion of separate accounts
subject to discretionary withdrawal are sustained by the separate account
contractholders and not by the general account.
NOTE 14--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 $693.6
million, $27.6 million, $122.3 million and $467.2 million, respectively, at
December 31, 1997. 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 estimated fair value of the commitments described above
is $1.3 billion at December 31, 1997. The majority of these commitments expire
in 1998.
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
61
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 14--COMMITMENTS AND CONTINGENCIES--CONTINUED
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, 1997, the aggregate outstanding principal balance of all the
remaining pools of loans from 1991, 1993, and 1996 is $672.0 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
1997 and 1996 amounted to $4.1 million and $3.4 million, respectively.
During 1996, the Company entered into a 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 an
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, 1997, the
aggregate outstanding principal balance of the pools of loans was $500.8
million. There were no mortgage loans buy-backs in 1997 and 1996.
The Company has a support agreement with Variable Life under which the Company
agrees to continue directly or indirectly to own all of Variable Life's common
stock and maintain Variable Life's net worth at not less than $1 million.
The Company has a support agreement with John Hancock Capital Corporation
(JHCC), a non-consolidated wholly-owned subsidiary, 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, 1997 were $351.1 million for short-term borrowings
and $163.2 million for notes payable.
The Company is subject to insurance guaranty fund laws in the states in which it
does business. These laws assess insurance companies amounts to be used to pay
benefits to policyholders and claimants of insolvent insurance companies. Many
states allow these assessments to be credited against future premium taxes. The
Company believes such assessments in excess of amounts accrued will not
materially affect its financial position.
In the normal course of its business operations, the Company is involved with
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1997. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position or results of operations of the Company.
During 1997, the Company entered into a court approved settlement relating to a
class action lawsuit involving certain individual life insurance policies sold
from 1979 through 1996. In entering into the settlement, the Company
specifically denied any wrongdoing. The Company has established a litigation
reserve in connection with the settlement to provide for relief to class members
and for legal and administrative costs associated with the settlement. The
reserve has been charged, net of the related tax effect, directly to
policyholders' contingency reserves of the Company. Given the uncertainties
associated with estimating the reserve, it is possible that the final
62
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 14--COMMITMENTS AND CONTINGENCIES--CONTINUED
cost of the settlement could be different from the amounts presently provided
for by the Company. However, the Company does not believe that the ultimate
resolution of the settlement will have a material adverse effect on the
Company's financial position.
NOTE 15--FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and fair values of the
Company's financial instruments:
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------------------------
1997 1996
----------------------- ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
(In millions)
Assets
Bonds--Note 6............................................... $22,986.0 $24,524.8 $22,467.0 $23,539.0
Preferred stocks--Note 6.................................... 640.6 695.8 416.2 451.0
Common stocks--Note 6....................................... 256.9 256.9 249.8 249.8
Mortgage loans on real estate--Note 6....................... 7,851.2 8,215.9 7,964.0 8,400.2
Policy loans--Note 1........................................ 1,577.3 1,577.3 1,589.3 1,589.3
Cash and cash equivalents--Note 1........................... 724.8 724.8 1,416.7 1,416.7
Liabilities
Guaranteed investment contracts--Note 1..................... 11,499.4 11,516.8 11,921.6 11,943.2
Fixed rate deferred and immediate annuities--Note 1......... 4,289.1 4,290.4 3,909.3 3,886.1
Supplementary contracts without life contingencies--Note 1.. 40.9 42.1 45.6 46.0
Derivatives liabilities relating to:--Note 11
Interest rate swaps...................................... -- 58.3 -- 16.4
Currency rate swaps...................................... -- 9.7 -- 41.1
Interest rate caps....................................... -- (0.6) -- (0.6)
Interest rate floors..................................... -- (0.4) -- (0.1)
Commitments--Note 14........................................ -- 1,332.3 -- 1,095.7
</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.
NOTE 16--IMPACT OF YEAR 2000 (UNAUDITED)
The Company has developed a plan to modify or replace significant portions of
its computer information and automated technologies so that its systems will
function properly with respect to the dates in the year 2000 and thereafter. The
Company presently believes that with modifications to existing systems and
conversions to new technologies, the year 2000 will not pose significant
operational problems for its computer systems. However, if certain modifications
and conversions are not made, or are not completed timely, the year 2000 issue
could have an adverse impact on the operations of the Company.
63
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 16--IMPACT OF YEAR 2000 (UNAUDITED)--CONTINUED
The Company as early as 1994 had begun assessing, modifying and converting the
software related to its significant systems and has initiated formal
communications with its significant business partners and customers to determine
the extent to which the Company's interface systems are vulnerable to those
third parties' failure to remediate their own year 2000 issues. While the
Company is developing alternative third party processing arrangements as it
deems appropriate, there is no guarantee that the systems of other companies on
which the Company's systems rely will be converted timely or will not have an
adverse effect on the Company's systems.
The Company expects the project to be substantially complete by early 1999 and
expects the incremental cost to be between $35 million and $45 million. The cost
of the project and the date on which the Company believes it will complete the
year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous assumptions of future events, including availability
of certain resources and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results may differ materially from
those anticipated.
64
<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 Policies.
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 premium and subject to certain age and insurance
underwriting requirements, certain additional provisions, such as Disability
Waiver of Premiums and Accidental Death Benefits, which are subject to the
restrictions and limitations set forth therein, may be included in a Policy.
General Provisions
Beneficiary. The Beneficiary will be as shown in the application for the
Policy, unless thereafter changed by the Owner in accordance with the terms of
the Policy. If the insured dies and there is no surviving Beneficiary, the Owner
will be the Beneficiary, but if the insured was the Owner, the Owner's estate
will be the Beneficiary.
Assignment. The Owner's interest in the Policy may be assigned without the
consent of any revocable Beneficiary. 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.
Age and Sex. If the age or sex of the insured has been misstated, John Hancock
will adjust the Initial Sum Insured and every other benefit to that which the
premium paid would have purchased at the correct age and sex.
Suicide. If the insured commits suicide, while sane or insane, within 2 years
(except where state law requires a shorter period) from the issue date shown in
the Policy, John Hancock will pay in place of all other benefits an amount equal
to the premiums paid less any indebtedness.
65
<PAGE>
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
premiums paid or the surrender value, less indebtedness.
Incontestability. The Policy, except for any provision for a disability
benefit or additional benefit provisions added after issue, shall be
incontestable after it has been in force during the lifetime of the insured for
2 years from its issue date except for nonpayment of premium.
Deferral of Determinations and Payments. If the Policy is not on a fixed
non-forfeiture option, payment of any death, surrender, 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 the determination, payment or application of such
amounts if the effective date for determining such amounts falls within any
period during which: (1) the disposal or valuation of the Accounts' assets is
not reasonably practicable because the New York Stock Exchange is closed or
conditions are such that, under the Commissions' 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 John Hancock Owners.
Under a Policy being continued under a fixed non-forfeiture option payment of
the cash value or loan proceeds may be deferred by John Hancock for up to six
months after receipt of a request therefor. Interest will be accrued at an
annual rate of 3 1/2% if such a deferment extends beyond 29 days.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policies which have been filed as exhibits to the Registration
Statement.
66
<PAGE>
APPENDIX--IMPACT OF YEAR 2000
The advent of the Year 2000 presents a technological challenge to John
Hancock. Responding to that challenge, John Hancock has developed a plan to
modify or replace significant portions of its computer information and automated
technologies so that its systems will function properly with respect to dates in
the year 2000 and thereafter. The plan also involves coordination and testing
with business partners to ensure that external factors do not adversely impact
John Hancock's systems. John Hancock presently believes that with modifications
to existing systems and conversions to new technologies, the year 2000 will not
pose significant operational problems for its computer systems. However, if
certain modifications and conversions are not made, or are not completed on
time, the year 2000 issue could have an adverse impact on the operations of John
Hancock.
John Hancock expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors. However,
there can be no guarantee that this estimate will be achieved, that these steps
will be sufficient or that actual results may not differ materially from those
anticipated.
67
<PAGE>
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, CASH VALUES
AND ACCUMULATED PREMIUMS.
The following tables illustrate the way in which the three types of Policies
operate. Each table illustrates the changes in the death benefit and cash value
of the base Policy, disregarding any dividends or Policy loans. Each table
separately illustrates the operation of a Policy assuming dividends WHICH ARE
NOT GUARANTEED are used to purchase additional variable paid-up death benefits.
The tables show how the death benefit and cash value may vary over an extended
period of time assuming the subaccounts experience hypothetical rates of
investment return (i.e., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross annual rates of 0%, 6% and
12%. The tables are based on given annual premiums for a standard risk and will
assist in a comparison of the total death benefit and cash value figures set
forth in the tables with those under other variable life insurance policies
which may be issued by John Hancock or other companies. The death benefit and
cash value for a Policy would be different from those shown if premiums are paid
more frequently than annually or if the actual gross rates of investment return
applicable to the Policy average 0%, 6% or 12% over a period of years, but
nevertheless fluctuated above or below the average for individual Policy years.
The amounts shown for the death benefit and cash value as of the end of each
Policy year reflect a total asset charge of 1.086% comprised of the daily charge
against the Account for mortality and expense risks (equivalent to an effective
annual rate of .50% of the value of the Account's assets), an average asset
charge for the daily investment advisory expense charges to the Portfolios of
the Fund (equivalent to an effective annual rate of .39%) and an assumed average
asset charge for the annual non-advisory operating expenses of each Portfolio of
the Fund (equivalent to an effective annual rate of .20%). For a description of
expenses charged to the Portfolios, including the reimbursement of any Portfolio
for annual non-advisory operating expenses in excess of an effective annual rate
of .25%, a continuing obligation of the Fund's investment adviser, see the
attached prospectus for the Fund. The charges for the daily investment
management fee and the annual non-advisory operating expenses are based on the
hypothetical assumption that Policy values are allocated equally among the seven
subaccounts. The actual charges and expenses associated with any Policy may be
more or less than 1.086% and 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.
The second column of each table shows the amount to which the total premiums
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.
The death benefits (and resulting cash values) shown for additional variable
paid-up death benefits purchased with dividends paid under a Policy are
illustrative of those which would be paid if investment returns of 0%, 6% and
12% are realized, if John Hancock's mortality and expense experience in the
future is as currently experienced and if its dividend scale remains unchanged.
However, as experience has clearly shown, conditions cannot be expected to
continue unchanged, and accordingly dividend scales must be expected to change
from time to time. MOREOVER, THERE IS NO GUARANTEE AS TO THE AMOUNT OF
DIVIDENDS, IF ANY, THAT WILL BE PAID UNDER A POLICY. Although the tables are
based on the assumption that dividends will be used to purchase additional
variable paid-up death benefits, other dividend options are available. (See
"Annual Dividends".)
John Hancock will furnish upon request a comparable illustration reflecting
the proposed insured's age, sex, smoking status and the Initial Sum Insured or
premium amount requested, and assuming that premiums are paid on an annual basis
and the proposed insured is a standard risk.
68
<PAGE>
Plan: Variable Whole life 100
Age 25 Years Male--Non-Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $135,135
Annual Premium $1,250.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Guaranteed
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,313 135,135 0 135,135 135,550 0 135,550 142,561 0 142,561
2 2,691 135,135 208 135,343 135,588 208 135,796 143,283 208 143,491
3 4,138 135,135 400 135,535 135,786 410 136,196 147,033 421 147,454
4 5,657 135,135 575 135,710 135,993 608 136,600 151,098 642 151,739
5 7,252 135,135 734 135,869 136,206 799 137,005 155,417 869 156,286
6 8,928 135,135 879 136,014 136,423 986 137,409 159,987 1,105 161,092
7 10,686 135,135 1,011 136,146 136,644 1,168 137,812 164,813 1,350 166,164
8 12,533 135,135 1,153 136,288 136,870 1,374 138,244 169,906 1,679 171,585
9 14,472 135,135 1,302 136,437 137,099 1,601 138,700 175,277 2,126 177,403
10 16,508 135,135 1,458 136,593 137,332 1,853 139,185 180,939 2,712 183,652
15 28,322 135,135 2,420 137,555 138,519 3,981 142,500 213,370 8,251 221,620
20 43,399 135,135 3,384 138,519 139,804 7,708 147,512 255,762 19,892 275,654
25 62,642 135,135 4,103 139,238 141,231 12,607 153,838 312,737 40,264 353,002
30 87,201 135,135 4,595 139,730 142,712 18,666 161,378 386,200 74,054 460,254
35 118,545 135,135 4,986 140,121 144,248 26,213 170,461 481,203 129,322 610,525
Age 65 158,550 135,135 5,342 140,477 145,835 35,315 181,150 604,241 217,588 821,829
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,313 94 0 94 99 0 99 105 0 105
2 2,691 934 34 968 995 34 1,028 1,056 34 1,090
3 4,138 1,774 67 1,841 1,937 69 2,007 2,108 71 2,179
4 5,657 2,613 100 2,713 2,929 106 3,035 3,269 112 3,381
5 7,252 3,448 132 3,580 3,968 145 4,112 4,548 158 4,706
6 8,928 4,278 164 4,443 5,056 185 5,241 5,957 208 6,165
7 10,686 5,101 196 5,297 6,192 227 6,420 7,503 264 7,767
8 12,533 5,915 232 6,147 7,379 277 7,656 9,202 340 9,542
9 14,472 6,720 271 6,991 8,614 335 8,949 11,063 447 11,510
10 16,508 7,513 315 7,828 9,899 402 10,301 13,102 591 13,693
15 28,322 11,495 627 12,123 17,345 1,036 18,381 26,840 2,156 28,996
20 43,399 15,037 1,045 16,082 26,110 2,390 28,499 47,986 6,193 54,178
25 62,642 17,723 1,498 19,221 35,800 4,623 40,423 79,639 14,826 94,465
30 87,201 19,972 1,967 21,938 46,822 8,025 54,847 127,290 31,977 159,267
35 118,545 21,708 2,473 24,181 58,936 13,060 71,996 197,510 64,715 262,225
Age 65 158,550 22,958 3,032 25,990 71,982 20,142 92,124 299,610 124,650 424,260
</TABLE>
* Corresponding to modal premiums of: Semi-annual $638.73, Quarterly $325.90,
Special Monthly $108.30
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that hypothetical investment results are
illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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.
69
<PAGE>
Plan: Variable Whole Life 100
Age 40 Years Male--Non-Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $113,968
Annual Premium $2,000.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Guaranteed
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,100 113,968 0 113,968 114,318 0 114,318 120,231 0 120,231
2 4,305 113,968 102 114,070 114,417 102 114,519 122,111 102 122,213
3 6,620 113,968 196 114,164 114,581 202 114,783 125,257 262 125,519
4 9,051 113,968 282 114,250 114,754 342 115,096 128,695 511 129,206
5 11,604 113,968 362 114,330 114,931 536 115,467 132,341 854 133,196
6 14,284 113,968 459 114,427 115,112 780 115,892 136,184 1,296 137,479
7 17,098 113,968 577 114,545 115,295 1,072 116,367 140,221 1,840 142,061
8 20,053 113,968 735 114,703 115,480 1,437 116,917 144,460 2,529 146,989
9 23,156 113,968 923 114,891 115,667 1,867 117,535 148,909 3,365 152,273
10 26,413 113,968 1,139 115,107 115,857 2,366 118,224 153,577 4,367 157,944
15 45,315 113,968 2,421 116,389 116,823 5,812 122,635 180,222 12,462 192,684
20 69,438 113,968 3,776 117,744 117,844 10,765 128,609 214,207 27,661 241,868
Age 65 100,226 113,968 4,895 118,863 118,945 16,990 135,935 258,552 53,375 311,927
30 139,521 113,968 5,836 119,804 120,069 24,212 144,791 314,489 95,727 410,216
35 189,672 113,968 6,651 120,619 121,212 34,125 155,337 385,101 163,843 548,944
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,100 591 0 591 626 0 626 662 0 662
2 4,305 1,986 28 2,014 2,137 28 2,165 2,291 28 2,319
3 6,620 3,350 57 3,407 3,694 58 3,752 4,056 76 4,132
4 9,051 4,682 84 4,767 5,296 102 5,399 5,967 154 6,121
5 11,604 5,984 112 6,096 6,947 166 7,113 8,036 266 8,302
6 14,284 7,254 147 7,401 8,644 250 8,894 10,273 417 10,690
7 17,098 8,494 191 8,685 10,391 356 10,746 12,695 613 13,308
8 20,053 9,705 251 9,956 12,187 493 12,680 15,315 871 16,186
9 23,156 10,886 326 11,212 14,035 662 14,697 18,151 1,198 19,350
10 26,413 12,037 416 12,453 15,934 868 16,801 21,218 1,607 22,826
15 45,315 17,504 1,037 18,541 26,385 2,499 28,884 40,891 5,380 46,270
20 69,438 22,070 1,878 23,948 37,910 5,381 43,291 69,226 13,883 83,110
Age 65 100,226 25,346 2,780 28,126 49,861 9,691 59,552 108,880 30,573 139,453
30 139,521 27,731 3,736 31,467 62,133 15,892 78,025 163,488 61,828 225,316
35 189,672 29,282 4,725 34,007 74,287 24,354 98,641 237,100 117,438 354,538
</TABLE>
* Corresponding to modal premiums of: Semi-annual $1,021.60, Quarterly $520.90,
Special Monthly $172.80
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that hypothetical investment results are
illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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.
70
<PAGE>
Plan: Variable Whole Life P50
Age 25 Years Male--Non-Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $65,723
Annual Premium $700.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Qualified
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 735 65,723 0 65,723 65,925 0 65,925 69,335 0 69,335
2 1,507 65,723 0 65,723 65,930 0 65,930 69,442 0 69,442
3 2,317 65,723 175 65,898 66,029 192 66,221 71,304 211 71,515
4 3,168 65,723 352 66,075 66,130 402 66,533 73,289 456 73,745
5 4,061 65,723 527 66,250 66,234 625 66,859 75,389 735 76,124
6 4,999 65,723 702 66,425 66,340 862 67,202 77,607 1,052 78,659
7 5,984 65,723 876 66,599 66,448 1,114 67,562 79,948 1,407 81,356
8 7,019 65,723 1,056 66,779 66,557 1,388 67,945 82,417 1,816 84,234
9 8,105 65,723 1,240 66,963 66,669 1,684 68,352 85,021 2,282 87,302
10 9,245 65,723 1,428 67,151 66,782 2,002 68,784 87,765 2,810 90,575
15 15,860 65,723 2,434 68,157 67,358 4,007 71,365 103,443 6,732 110,175
20 24,303 65,723 3,406 69,129 67,982 6,620 74,601 123,953 13,481 137,433
25 35,079 65,723 4,135 69,858 68,677 9,555 78,232 151,610 23,919 175,529
30 48,833 65,723 4,571 70,294 69,399 12,600 81,999 187,256 39,210 226,466
35 66,385 65,723 4,740 70,463 70,147 15,688 85,835 233,343 61,314 294,657
Age 65 88,788 65,723 4,692 70,415 70,919 18,763 89,682 293,022 92,895 385,917
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 735 13 0 13 14 0 14 15 0 15
2 1,507 423 0 423 450 0 450 476 0 476
3 2,317 834 29 863 908 32 941 985 35 1,021
4 3,168 1,244 61 1,305 1,390 70 1,461 1,548 80 1,628
5 4,061 1,652 95 1,747 1,896 113 2,009 2,168 133 2,301
6 4,999 2,057 131 2,188 2,425 162 2,587 2,850 198 3,048
7 5,984 2,459 170 2,629 2,978 217 3,195 3,600 275 3,874
8 7,019 2,857 212 3,069 3,555 280 3,835 4,423 368 4,790
9 8,105 3,250 258 3,508 4,156 352 4,508 5,324 479 5,804
10 9,245 3,637 309 3,946 4,781 435 5,216 6,312 612 6,925
15 15,860 5,592 631 6,223 8,416 1,043 9,459 12,984 1,759 14,743
20 24,303 7,332 1,051 8,383 12,696 2,052 14,749 23,256 4,197 27,453
25 35,079 8,636 1,509 10,145 17,409 3,503 20,912 38,608 8,808 47,416
30 48,833 9,727 1,956 11,683 22,769 5,417 28,186 61,719 16,933 78,652
35 66,385 10,569 2,351 12,920 28,660 7,817 36,477 95,776 30,686 126,461
Age 65 88,788 11,176 2,664 13,839 35,004 10,702 45,706 145,295 53,222 198,517
</TABLE>
* Corresponding to modal premiums of: Semi-annual $357.95, Quarterly $182.90,
Special Monthly $61.00
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that hypothetical investment results are
illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless fluctuated above
or below the average for individual Policy years. No representations can be made
that these hypothetical investment results can be achieved for any one year or
sustained over any period of time.
71
<PAGE>
Plan: Variable Whole Life P50
Age 40 Years Male--Non-Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $62,945
Annual Premium $1,200.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Guaranteed
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 62,945 0 62,945 63,138 0 63,138 66,404 0 66,404
2 2,583 62,945 0 62,945 63,183 0 63,183 67,251 0 67,251
3 3,972 62,945 98 63,043 63,273 119 63,392 68,979 140 69,119
4 5,431 62,945 212 63,157 63,369 264 63,633 70,870 322 71,192
5 6,962 62,945 338 63,283 63,467 435 63,901 72,875 547 73,422
6 8,570 62,945 472 63,417 63,566 627 64,193 74,988 814 75,802
7 10,259 62,945 605 63,550 63,667 829 64,496 77,207 1,114 78,321
8 12,032 62,945 752 63,697 63,769 1,060 64,830 79,536 1,471 81,007
9 13,893 62,945 903 63,848 63,873 1,311 65,184 81,981 1,879 83,860
10 15,848 62,945 1,061 64,006 63,977 1,584 65,562 84,546 2,345 86,890
15 27,189 62,945 1,911 64,856 64,509 3,297 67,806 99,150 5,778 104,928
20 41,663 62,945 2,691 65,636 65,071 5,414 70,486 117,795 11,414 129,209
Age 65 60,136 62,945 3,279 66,224 65,682 7,724 73,406 142,241 19,839 162,080
30 83,713 62,945 3,713 66,658 66,304 10,211 76,516 173,058 32,226 205,284
35 113,804 62,945 3,971 66,916 66,936 12,826 79,673 211,949 50,237 262,186
</TABLE>
<TABLE>
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 251 0 251 266 0 266 281 0 281
2 2,583 1,026 0 1,026 1,101 0 1,101 1,177 0 1,177
3 3,972 1,784 28 1,813 1,962 34 1,996 2,149 41 2,189
4 5,431 2,525 63 2,588 2,848 79 2,927 3,200 97 3,296
5 6,962 3,248 104 3,353 3,760 135 3,895 4,338 170 4,508
6 8,570 3,954 151 4,105 4,699 201 4,900 5,568 262 5,830
7 10,259 4,643 200 4,843 5,664 275 5,939 6,900 371 7,271
8 12,032 5,316 257 5,573 6,657 364 7,021 8,341 507 8,848
9 13,893 5,972 319 6,292 7,679 465 8,144 9,901 669 10,570
10 15,848 6,612 388 7,000 8,729 581 9,310 11,588 863 12,451
15 27,189 9,670 818 10,488 14,530 1,418 15,947 22,435 2,494 24,929
20 41,663 12,227 1,335 13,562 20,933 2,698 23,631 38,068 5,711 43,780
Age 65 60,136 14,029 1,862 15,892 27,533 4,405 31,938 59,900 11,365 71,265
30 83,713 15,340 2,377 17,717 34,311 6,567 40,878 89,965 20,816 110,781
35 113,804 16,191 2,821 19,013 41,023 9,154 50,177 130,493 36,012 166,505
</TABLE>
- ---------------------
* Corresponding to modal premiums of Semi-annual $613.20, Quarterly $312.90,
Special Monthly $104.00.
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that hypothetical investment results are
illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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.
72
<PAGE>
Plan: Variable Whole Life P50
Age 25 Years Male--Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $61,670
Annual Premium $700.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Guaranteed
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 735 61,670 0 61,670 61,859 0 61,859 65,059 0 65,059
2 1,507 61,670 0 61,670 61,865 0 61,865 65,160 0 65,160
3 2,317 61,670 164 61,834 61,957 181 62,138 66,907 198 67,105
4 3,168 61,670 331 62,001 62,052 378 62,430 68,769 428 69,198
5 4,061 61,670 495 62,165 62,150 586 62,736 70,740 690 71,430
6 4,999 61,670 659 62,329 62,249 809 63,058 72,821 987 73,808
7 5,984 61.670 822 62,492 62,350 1,045 63,395 75,018 1,321 76,339
8 7,019 61,670 991 62,661 62,453 1,303 63,755 77,335 1,705 79,039
9 8,105 61,670 1,163 62,833 62,557 1,580 64,137 79,778 2,141 81,919
10 9,245 61,670 1,339 63,009 62,664 1,879 64,543 82,352 2,637 84,989
15 15,860 61,670 2,283 63,953 63,204 3,760 66,964 97,064 6,317 103,381
20 24,303 61.670 3,195 64,865 63,789 6,211 70,001 116,309 12,650 128,959
25 35,079 61,670 3,880 65,550 64,442 8,965 73,408 142,261 22,445 164,705
30 48,833 61,670 4,289 65,959 65,119 11,823 76,942 175,708 36,793 212,501
35 66,385 61,670 4,448 66,118 65,821 14,721 80,542 218,954 57,534 276,488
Age 65 88,788 61,670 4,402 66,072 66,546 17,606 84,152 274,952 87,168 362,121
</TABLE>
<TABLE>
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 735 12 0 12 13 0 13 14 0 14
2 1,507 397 0 397 422 0 422 446 0 446
3 2,317 782 28 810 852 30 883 924 33 958
4 3,168 1,167 58 1,224 1,305 66 1,370 1,452 75 1,527
5 4,061 1,550 89 1,639 1,779 106 1,885 2,034 125 2,159
6 4,999 1,930 123 2,053 2,276 152 2,428 2,675 186 2,860
7 5,984 2,307 159 2,466 2,794 203 2,998 3,378 258 3,635
8 7,019 2,681 199 2,880 3,336 263 3,599 4,150 345 4,495
9 8,105 3,049 242 3,292 3,900 331 4,230 4,996 450 5,446
10 9,245 3,413 290 3,702 4,486 408 4,894 5,923 575 6,498
15 15,860 5,247 592 5,839 7,897 979 8,876 12,183 1,651 13,834
20 24,303 6,880 986 7,866 11,913 1,926 13,839 21,822 3,939 25,760
25 35,079 8,103 1,416 9,519 16,335 3,287 19,622 36,227 8,265 44,492
30 48,833 9,127 1,836 10,963 21,365 5,083 26,448 57,913 15,889 73,802
35 66,385 9,918 2,206 12,123 26,893 7,334 34,227 89,870 28,794 118,663
Age 65 88,788 10,487 2,499 12,986 32,846 10,042 42,888 136,335 49,941 186,276
</TABLE>
- --------------------------
* Corresponding to modal premiums of: Semi-annual $357.95, Quarterly $182.90.
Special Monthly $61.00.
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that the hypothetical investment results shown
above are illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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.
73
<PAGE>
Plan: Variable Whole Life P50
Age 40 Years Male--Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $57,644
Annual Premium $1,200.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Guaranteed
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 57,644 0 57,644 57,821 0 57,821 60,812 0 60,812
2 2,583 57,644 0 57,644 57,862 0 57,862 61,587 0 61,587
3 3,972 57,644 90 57,734 57,945 109 58,053 63,170 128 63,299
4 5,431 57,644 194 57,838 58,032 242 58,274 64,902 295 65,197
5 6,962 57,644 309 57,953 58,122 398 58,520 66,738 501 67,239
6 8,570 57,644 432 58,076 58,213 574 58,787 68,672 746 69,418
7 10,259 57,644 554 58,198 58,305 759 59,065 70,705 1,020 71,725
8 12,032 57,644 688 58,332 58,399 971 59,370 72,838 1,347 74,185
9 13,893 57,644 827 58,471 58,494 1,201 59,695 75,077 1,721 76,797
10 15,848 57,644 972 58,616 58,589 1,451 60,040 77,425 2,148 79,573
15 27,189 57,644 1,750 59,394 59,076 3,019 62,096 90,800 5,291 96,092
20 41,663 57,644 2,464 60,108 59,591 4,959 64,550 107,875 10,453 118,327
Age 65 60,136 57,644 3,003 60,647 60,151 7,073 67,224 130,262 18,169 148,430
30 83,712 57,644 3,400 61,044 60,720 9,351 70,072 158,484 29,512 187,996
35 113,803 57,644 3,637 61,281 61,299 11,746 73,045 194,100 46,007 240,106
</TABLE>
<TABLE>
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 230 0 230 244 0 244 258 0 258
2 2,583 940 0 940 1,008 0 1,008 1,078 0 1,078
3 3,972 1,634 26 1,660 1,797 31 1,828 1,968 37 2,005
4 5,431 2,312 58 2,370 2,608 72 2,681 2,930 88 3,019
5 6,962 2,975 96 3,070 3,444 123 3,567 3,972 156 4,128
6 8,570 3,621 138 3,759 4,303 184 4,487 5,099 240 5,339
7 10,259 4,252 183 4,435 5,187 252 5,439 6,319 340 6,659
8 12,032 4,868 235 5,103 6,097 333 6,430 7,639 464 8,103
9 13,893 5,469 292 5,762 7,032 426 7,458 9,067 613 9,680
10 15,848 6,055 355 6,410 7,994 532 8,526 10,612 790 11,402
15 27,189 8,856 749 9,605 13,306 1,298 14,604 20,545 2,284 22,830
20 41,663 11,197 1,222 12,420 19,170 2,471 21,641 34,862 5,230 40,093
Age 65 60,136 12,848 1,705 14,553 25,214 4,034 29,249 54,855 10,408 65,263
30 83,712 14,048 2,177 16,225 31,421 6,014 37,435 82,389 19,063 101,451
35 113,803 14,828 2,584 17,412 37,568 8,383 45,951 119,504 32,979 152,483
</TABLE>
- -------------------------
* Corresponding to modal premiums of: Semi-Annual $613.20, Quarterly $312.90,
Special Monthly $104.00
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that hypothetical investment results are
illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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>
Plan: Variable Whole Life
Age 25 Years Male--Non-Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $28,930
Annual Premium $350.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Guaranteed
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 368 28,930 0 28,930 29,019 0 29,019 30,520 0 30,520
2 753 28,930 0 28,930 29,021 0 29,021 30,567 0 30,567
3 1,159 28,930 26 28,956 29,065 26 29,090 31,387 33 31,419
4 1,584 28,930 49 28,979 29,109 61 29,171 32,260 81 32,341
5 2,031 28,930 79 29,009 29,155 106 29,261 33,185 143 33,328
6 2,500 28,930 114 29,044 29,202 160 29,361 34,161 222 34,383
7 2,992 28,930 152 29,082 29,249 222 29,471 35,192 316 35,508
8 3,509 28,930 199 29,129 29,297 296 29,593 36,279 432 36,711
9 4,052 28,930 251 29,181 29,346 382 29,729 37,424 573 37,997
10 4,622 28,930 310 29,240 29,396 482 29,878 38,632 739 39,371
15 7,930 28,930 1,001 29,931 29,650 1,533 31,183 45,534 2,474 48,008
20 12,152 28,930 1,741 30,671 29,924 3,006 32,931 54,562 5,636 60,198
25 17,540 28,930 2,208 31,138 30,230 4,526 34,756 66,736 10,369 77,105
30 24,416 28,930 2,440 31,370 30,548 6,022 36,570 82,426 17,198 99,625
35 33,193 28,930 2,513 31,443 30,877 7,507 38,384 102,713 27,021 129,734
Age 65 44,394 28,930 2,479 31,409 31,217 8,977 40,194 128,983 41,035 170,018
</TABLE>
<TABLE>
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 368 6 0 6 6 0 6 7 0 7
2 753 186 0 186 198 0 198 209 0 209
3 1,159 367 4 371 400 4 404 434 5 439
4 1,584 547 9 556 612 11 623 681 14 695
5 2,031 727 14 741 835 19 854 954 26 980
6 2,500 905 21 927 1,068 30 1,098 1,255 42 1,296
7 2,992 1,082 30 1,112 1,311 43 1,354 1,585 62 1,646
8 3,509 1,257 40 1,297 1,565 60 1,625 1,947 88 2,034
9 4,052 1,430 52 1,483 1,829 80 1,909 2,344 120 2,464
10 4,622 1,601 67 1,668 2,105 105 2,209 2,779 161 2,940
15 7,930 2,462 260 2,721 3,705 399 4,104 5,715 646 6,362
20 12,152 3,227 538 3,765 5,589 932 6,521 10,237 1,755 11,991
25 17,540 3,801 806 4,607 7,663 1,659 9,322 16,994 3,818 20,813
30 24,416 4,282 1,044 5,326 10,022 2,589 12,612 27,167 7,427 34,595
35 33,193 4,652 1,247 5,899 12,616 3,740 16,356 42,159 13,523 55,682
Age 65 44,394 4,919 1,407 6,327 15,408 5,120 20,528 63,956 23,510 87,466
</TABLE>
- -------------------------
* Corresponding to modal premiums of: Semi-annual $179.28, Quarterly $91.90,
Special Monthly $30.90
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that hypothetical investment results are
illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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>
Plan: Variable Whole Life
Age 40 Years Male--Non-Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $28,661
Annual Premium $600.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Guaranteed
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 630 28,661 0 28,661 28,749 0 28,749 30,236 0 30,236
2 1,291 28,661 0 28,661 28,752 0 28,752 30,284 0 30,284
3 1,986 28,661 15 28,676 28,795 17 28,812 31,101 26 31,127
4 2,715 28,661 35 28,696 28,839 50 28,889 31,965 72 32,037
5 3,481 28,661 64 28,725 28,884 94 28,978 32,873 136 33,009
6 4,285 28,661 102 28,763 28,929 152 29,082 33,825 221 34,046
7 5,129 28,661 142 28,803 28,975 217 29,192 34,823 320 35,144
8 6,016 28,661 190 28,851 29,021 296 29,317 35,870 445 36,315
9 6,947 28,661 245 28,906 29,068 386 29,455 36,968 592 37,559
10 7,924 28,661 305 28,966 29,116 489 29,604 38,119 765 38,884
15 13,594 28,661 1,041 29,702 29,355 1,584 30,939 44,623 2,551 47,174
20 20,831 28,661 1,800 30,461 29,610 3,043 32,652 52,948 5,621 58,569
Age 65 30,068 28,661 2,260 30,921 29,891 4,474 34,365 64,018 9,994 74,012
30 41,856 28,661 2,512 31,173 30,177 5,897 36,074 77,947 16,251 94,198
35 56,901 28,661 2,630 31,291 30,466 7,342 37,809 95,511 25,239 120,750
</TABLE>
<TABLE>
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 630 12 0 12 12 0 12 13 0 13
2 1,291 371 0 371 394 0 394 417 0 417
3 1,986 722 4 726 787 5 792 854 8 861
4 2,715 1,065 11 1,076 1,191 15 1,206 1,327 22 1,348
5 3,481 1,401 20 1,421 1,608 29 1,637 1,839 42 1,881
6 4,285 1,728 32 1,761 2,037 49 2,085 2,392 71 2,463
7 5,129 2,048 47 2,095 2,477 72 2,549 2,991 107 3,098
8 6,016 2,360 65 2,425 2,931 102 3,032 3,639 153 3,792
9 6,947 2,664 87 2,751 3,397 137 3,534 4,341 211 4,551
10 7,924 2,961 112 3,073 3,877 179 4,056 5,099 282 5,380
15 13,594 4,406 446 4,851 6,558 681 7,239 10,014 1,101 11,115
20 20,831 5,618 893 6,511 9,525 1,516 11,041 17,112 2,812 19,924
Age 65 30,068 6,429 1,283 7,712 12,530 2,552 15,082 26,959 5,725 32,684
30 41,856 7,018 1,608 8,626 15,616 3,792 19,408 40,521 10,497 51,018
35 56,901 7,398 1,868 9,267 18,672 5,240 23,912 58,804 18,092 76,897
</TABLE>
- ----------------------
* Corresponding to modal premiums of: Semi-Annual $306.90. Quarterly $156.90,
Special Monthly $52.40.
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that the hypothetical investment results shown
above are illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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>
Plan: Variable Whole Life
Age 25 Years Male--Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $27,223
Annual Premium $350.00* (Prms Accum means Premiums Accumulated)
<TABLE>
<CAPTION>
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not Guaranteed
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 368 27,223 0 27,223 27,307 0 27,307 28,719 0 28,719
2 753 27,223 0 27,223 27,309 0 27,309 28,764 0 28,764
3 1,159 27,223 24 27,247 27,350 24 27,374 29,535 31 29,565
4 1,584 27,223 47 27,270 27,392 58 27,450 30,357 76 30,433
5 2,031 27,223 74 27,297 27,435 100 27,534 31,227 135 31,361
6 2,500 27,223 107 27,330 27,479 150 27,629 32,146 209 32,354
7 2,992 27,223 143 27,366 27,523 208 27,732 33,115 297 33,413
8 3,509 27,223 187 27,410 27,569 278 27,847 34,138 407 34,545
9 4,052 27,223 236 27,459 27,615 360 27,975 35,216 539 35,755
10 4,622 27,223 291 27,514 27,662 453 28,115 36,353 696 37,048
15 7,930 27,223 942 28,165 27,900 1,443 29,343 42,847 2,328 45,175
20 12,152 27,223 1,638 28,861 28,159 2,829 30,987 51,342 5,303 56,646
25 17,540 27,223 2,077 29,300 28,447 4,258 32,705 62,798 9,757 72,555
30 24,416 27,223 2,296 29,519 28,746 5,667 34,412 77,563 16,183 93,746
35 33,193 27,223 2,365 29,588 29,055 7,064 36,119 96,653 25,426 122,079
Age 65 44,394 27,223 2,332 29,555 29,375 8,447 37,822 121,372 38,613 159,985
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 368 5 0 5 6 0 6 6 0 6
2 753 175 0 175 186 0 186 197 0 197
3 1,159 345 4 349 376 4 380 408 5 413
4 1,584 515 8 523 576 10 586 641 13 654
5 2,031 684 13 697 785 18 803 898 24 922
6 2,500 852 20 872 1,005 28 1,033 1,181 39 1,220
7 2,992 1,018 28 1,046 1,234 41 1,274 1,491 58 1,549
8 3,509 1,183 38 1,221 1,473 56 1,529 1,832 82 1,914
9 4,052 1,346 49 1,395 1,721 75 1,797 2,205 113 2,319
10 4,622 1,506 63 1,570 1,980 98 2,079 2,615 152 2,766
15 7,930 2,316 244 2,561 3,486 375 3,861 5,378 608 5,986
20 12,152 3,037 506 3,543 5,259 877 6,136 9,633 1,651 11,284
25 17,540 3,577 758 4,335 7,211 1,561 8,772 15,992 3,593 19,585
30 24,416 4,029 983 5,012 9,431 2,436 11,867 25,564 6,989 32,553
35 33,193 4,378 1,173 5,551 11,871 3,519 15,391 39,671 12,725 52,396
Age 65 44,394 4,629 1,324 5,953 14,499 4,818 19,317 60,182 22,122 82,305
</TABLE>
- ------------
* Corresponding to modal premiums of: Semi-Annual $179.28, Quarterly $91.90,
Special Monthly $30.90
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that the hypothetical investment results shown
above are illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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>
Plan: Variable Whole Life
Age 40 Years Male--Smoker
Initial Sum Insured (Guaranteed Minimum Death Benefit) $26,354
Annual Premium $600.00* (Prms Accum means Premiums Accumulated)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds)
Dividends are Not Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Death Benefit Death Benefit Death Benefit
Prms Accum ------------------------ ------------------------ -------------------------
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------- ------ ------- ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 630 26,354 0 26,354 26,435 0 26,435 27,802 0 27,802
2 1,292 26,354 0 26,354 26,437 0 26,437 27,846 0 27,846
3 1,986 26,354 14 26,368 26,477 16 26,493 28,598 24 28,621
4 2,715 26,354 32 26,386 26,518 46 26,563 29,392 66 29,458
5 3,481 26,354 59 26,413 26,559 87 26,646 30,227 125 30,352
6 4,285 26,354 93 26,447 26,601 140 26,741 31,102 203 31,306
7 5,129 26,354 130 26,484 26,643 199 26,842 32,020 294 32,315
8 6,016 26,354 175 26,529 26,685 272 26,958 32,983 409 33,392
9 6,947 26,354 225 26,579 26,729 355 27,084 33,992 544 34,536
10 7,924 26,354 281 26,635 26,772 449 27,222 35,050 704 35,754
15 13,594 26,354 957 27,311 26,992 1,456 28,449 41,031 2,346 43,377
20 20,832 26,354 1,655 28,009 27,226 2,798 30,024 48,686 5,168 53,854
Age 65 30,068 26,354 2,078 28,432 27,485 4,114 31,599 58,865 9,190 68,055
30 41,856 26,354 2,310 28,664 27,748 5,423 33,170 71,673 14,943 86,616
35 56,902 26,354 2,418 28,772 28,014 6,751 34,765 87,823 23,207 111,030
<CAPTION>
0% 6% 12%
------------------------ ------------------------ -------------------------
Cash Value Cash Value Cash Value
Base Prem ------------------------ ------------------------ -------------------------
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
- ------ ---------- ------ ------ ------ ------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 630 11 0 11 11 0 11 12 0 12
2 1,292 341 0 341 362 0 362 383 0 383
3 1,986 664 4 668 723 5 728 785 7 792
4 2,715 980 10 989 1,095 14 1,109 1,220 20 1,240
5 3,481 1,288 18 1,306 1,479 27 1,506 1,691 39 1,729
6 4,285 1,589 30 1,619 1,873 45 1,918 2,200 65 2,265
7 5,129 1,883 43 1,926 2,278 66 2,344 2,750 98 2,848
8 6,016 2,170 60 2,230 2,695 93 2,788 3,346 141 3,487
9 6,947 2,450 80 2,530 3,124 126 3,250 3,991 194 4,185
10 7,924 2,723 103 2,825 3,565 165 3,729 4,688 259 4,947
15 13,594 4,051 410 4,461 6,030 626 6,656 9,208 1,012 10,221
20 20,832 5,166 821 5,987 8,759 1,394 10,153 15,734 2,586 18,320
Age 65 30,068 5,912 1,180 7,092 11,522 2,346 13,868 24,789 5,264 30,053
30 41,856 6,453 1,479 7,932 14,359 3,487 17,846 37,260 9,652 46,912
35 56,902 6,803 1,718 8,521 17,169 4,818 21,987 54,071 16,636 70,707
</TABLE>
- -----------
* Corresponding to Modal Premiums of: Semi-annual $306.90, Quarterly $156.90,
Special Monthly $52.40
Dividends illustrated are based on current scales and experience and are not
guaranteed. It is emphasized that the hypothetical investment results shown
above are illustrative only and should not be deemed representative 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 an Owner. The death benefit and cash 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 nevertheless 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>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
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 service 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 annual premium prospectus consisting of 80 pages
The undertaking to file reports.
<PAGE>
The undertaking regarding indemnification.
The signatures.
The following exhibits:
1.A. (1) John Hancock Board Resolution establishing the separate account,
included in the initial registration statement of this Account,
filed June 4, 1993.
(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 "Distribution of
Policies" in the prospectuses forming part of this Registration
Statement.
(4) Not Applicable
(5) (a) Form of annual premium policy, included in the initial
registration statement of this Account, filed June 4, 1993.
(b) Form of single premium policy, included in the initial
registration statement of this Account, filed June 4, 1993.
(6) Charter and By-Laws of John Hancock Mutual Life Insurance Company
previously filed electronically on April 12, 1996.
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Form of application for Policies, included in the initial
registration statement of this Account, filed June 4, 1993.
2. Included as exhibit 1.A(5) above
3. Opinion and consent of counsel as to securities being registered, included
in the initial registration statement of this Account, filed June 4, 1993
4. Not Applicable
5. Not Applicable
6. (a) and (b) Opinions and consents of actuary, included in the initial
registration statement of this Account, filed June 4, 1993.
7. Consent of independent auditors
<PAGE>
8. Memorandum describing John Hancock's issuance, transfer and redemption
procedures (which are the same as those of its affiliate John Hancock
Variable Life Insurance Company) for Policies pursuant to Rule 6e-
2(b)(12)(ii) and method of computing adjustments in payments and cash
values of Policies upon conversion to fixed benefit policies pursuant to
Rule 6e-2(b)(13)(v)(B) previously filed electronically on April 12, 1996.
9. Power of attorney of Robert J. Tarr, Jr. 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 12, 1996.
10. 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
29th day of April, 1998.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
[SEAL APPEARS HERE]
By STEPHEN L. BROWN
----------------
Stephen L. Brown
Chairman of
the Board
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>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <S> <C>
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
/s/ THOMAS E. MOLONEY
- ---------------------
Thomas E. Moloney April 29, 1998
/s/ JANET A. PENDLETON Vice President/Controller
- ---------------------- (Principal
Janet A. Pendleton Accounting Officer) April 29, 1998
Chairman of the Board and
Chief Executive Officer
/s/STEPHEN L. BROWN (Principal Executive Officer)
- ---------------------
Stephen L. Brown
for himself and as
Attorney-in-Fact April 29, 1998
</TABLE>
FOR: Foster L. Aborn Vice Chairman of the Board
William L. Boyan Vice Chairman of the Board
David F. D'Alessandro President & Chief Operating Officer
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 29th day of April, 1998.
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
(Registrant)
By John Hancock Mutual Life Insurance Company
(Depositor)
[SEAL APPEARS HERE]
By STEPHEN L. BROWN
----------------
Stephen L. Brown
Chairman of
the Board
Attest: Ronald J. Bocage
----------------------
Ronald J. Bocage
Vice President and
Counsel
<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 6, 1998 with respect to
the financial statements of John Hancock Mutual Variable Life Insurance Account
UV and dated February 18, 1998, with respect to the financial statements of John
Hancock Mutual Life Insurance Company, included in this Post-Effective Amendment
No. 5 to the Registration Statement (Form S-6, No. 33-63900).
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 24, 1998
<PAGE>
EXHIBIT 10
[John Hancock Mutual Life Insurance Company Letterhead]
April 28, 1998
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. 33-63900 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
