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PROSPECTUS DATED JUNE 30, 2000
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VARIABLE ESTATE PROTECTION
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a flexible premium variable life survivorship insurance policy
issued by
JOHN HANCOCK LIFE INSURANCE COMPANY
("JOHN HANCOCK")
The policy provides an investment option with fixed rates of return
declared by John Hancock and the following variable investment options:
<TABLE>
<CAPTION>
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VARIABLE INVESTMENT OPTION MANAGED BY
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<S> <C>
Managed................................................... Independence Investment Associates, Inc.
Growth & Income........................................... Independence Investment Associates, Inc.
Fidelity VIP Contrafund(R)................................ Fidelity Management and Research Company
Equity Index.............................................. State Street Global Advisors
Large Cap Value........................................... T. Rowe Price Associates, Inc.
American Leaders Large Cap Value.......................... Federated Investment Management Company
Large Cap Growth.......................................... Independence Investment Associates, Inc.
Large Cap Aggressive Growth............................... Alliance Capital Management L.P.
Fidelity VIP Growth....................................... Fidelity Management and Research Company
AIM V.I. Value............................................ A I M Advisors, Inc.
Janus Aspen Global Technology............................. Janus Capital Corporation
Mid Cap Value............................................. Neuberger Berman, LLC
Fundamental Mid Cap Growth................................ OppenheimerFunds, Inc.
Mid Cap Growth............................................ Janus Capital Corporation
Real Estate Equity........................................ Independence Investment Associates, Inc. and Morgan
Stanley Dean Witter Investment Management, Inc.
Small/Mid Cap CORE........................................ Goldman Sachs Asset Management
Small/Mid Cap Growth...................................... Wellington Management Company, LLP
Small Cap Value........................................... INVESCO Management & Research, Inc.
Small Cap Growth.......................................... John Hancock Advisers, Inc.
MFS New Discovery......................................... MFS Investment Management(R)
Global Balanced........................................... Brinson Partners, Inc.
Janus Aspen Worldwide Growth.............................. Janus Capital Corporation
Templeton International Securities........................ Templeton Investment Counsel, Inc.
International Equity Index................................ Independence International Associates, Inc.
International Opportunities............................... Rowe Price-Fleming International, Inc.
Emerging Markets Equity................................... Morgan Stanley Dean Witter Investment Management, Inc.
Short-Term Bond........................................... Independence Investment Associates, Inc.
Bond Index................................................ Mellon Bond Associates, LLP
Active Bond............................................... John Hancock Advisers, Inc.
Core Bond................................................. Federated Investment Management Company
Global Bond............................................... J.P. Morgan Investment Management, Inc.
High Yield Bond........................................... Wellington Management Company, LLP
Money Market.............................................. John Hancock Life Insurance Company
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</TABLE>
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The variable investment options shown on page 1 are those available as of
the date of this prospectus. We may add, modify or delete variable investment
options in the future.
When you select one or more of these variable investment options, we invest
your money in the corresponding investment option(s) of one or more of the
following: the John Hancock Variable Series Trust I, the AIM Variable Insurance
Funds, Inc., the Templeton Variable Products Series Fund, Fidelity's Variable
Insurance Products Fund and Variable Insurance Products Fund II, the Janus Aspen
Series (Service Shares Class), and the MFS Variable Insurance Trust (together,
"the Trusts"). In this prospectus, the investment options of the Trusts are
referred to as "funds". In the prospectuses for the Trusts, the investment
options may be referred to as "funds", "portfolios" or "series".
Each Trust is a so-called "series" type mutual fund registered with the
Securities and Exchange Commission ("SEC"). The investment results of each
variable investment option you select will depend on those of the corresponding
fund of one of the Trusts. Each of the funds is separately managed and has its
own investment objective and strategies. Attached at the end of this prospectus
is a prospectus for each Trust. The Trust prospectuses contain detailed
information about each available fund. Be sure to read those prospectuses before
selecting any of the variable investment options shown on page 1.
* * * * * * * * * * * *
Please note that the SEC has not approved or disapproved these securities,
or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
* * * * * * * * * * * *
JOHN HANCOCK LIFE SERVICING OFFICE
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EXPRESS DELIVERY U.S. MAIL
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529 Main Street (X-4) P.O. Box 111
Charlestown, MA 02129 Boston, MA 02117
PHONE: 1-800-732-5543
FAX: 1-617-886-3048
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GUIDE TO THIS PROSPECTUS
This prospectus contains information that you should know before you buy a
policy or exercise any of your rights under the policy. However, please keep in
mind that this is a prospectus -- it is not the policy. The prospectus
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simplifies many policy provisions to better communicate the policy's essential
features. Your rights and obligations under the policy will be determined by the
language of the policy itself. When you receive your policy, read it carefully.
This prospectus is arranged in the following way:
. The section which follows is called "Basic Information". It is in a
question and answer format. We suggest you read the Basic Information
section before reading any other section of the prospectus.
. Behind the Basic Information section are illustrations of hypothetical
policy benefits that help clarify how the policy works. These start on
page 22.
. Behind the illustrations is a section called "Additional Information"
that gives more details about the policy. It generally does not
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repeat information that is in the Basic Information section. A table
of contents for the Additional Information section appears on page 27.
. Behind the Additional Information section are the financial statements
for John Hancock and Separate Account UV. These start on page 41.
. Finally, there is an Alphabetical Index of Key Words and Phrases at
the back of the prospectus on page 116.
After the Alphabetical Index of Key Words and Phrases, this prospectus ends
and the prospectuses for the Trusts begin.
**********
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BASIC INFORMATION
This part of the prospectus provides answers to commonly asked questions
about the policy.
<TABLE>
<CAPTION>
Question Beginning on page
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<S> <C>
.What is the policy?.................................................................. 5
.Who owns the policy?................................................................. 5
.How can I invest money in the policy?................................................ 5
.Is there a minimum amount I must invest?............................................. 7
.How will the value of my investment in the policy change over time?.................. 8
.What charges will John Hancock deduct from my investment in the policy?.............. 9
.What charges will the Trusts deduct from my investment in the policy?................ 11
.What other charges could John Hancock impose in the future?.......................... 13
.How can I change my policy's investment allocations?................................. 13
.How can I access my investment in the policy?........................................ 14
.How much will John Hancock pay when the last insured person dies?.................... 16
.How can I change my policy's insurance coverage?..................................... 17
.Can I cancel my policy after it's issued?............................................ 18
.Can I choose the form in which John Hancock pays out policy proceeds?................ 18
.To what extent can John Hancock vary the terms and conditions of its policies in
particular cases?.................................................................... 19
.How will my policy be treated for income tax purposes?............................... 20
.How do I communicate with John Hancock?.............................................. 20
</TABLE>
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WHAT IS THE POLICY?
This is a so-called "survivorship" policy that provides coverage on two
insured persons. The policy's primary purpose is to provide lifetime protection
against economic loss due to the death of the last surviving insured person. The
value of the amount you have invested under the policy may increase or decrease
daily based upon the investment results of the variable investment options that
you choose. The amount we pay to the policy's beneficiary upon the death of the
last surviving insured person (we call this the "death benefit") may be
similarly affected.
While either of the insured persons is alive, you will have a number of
options under the policy. Here are some major ones:
. Determine when and how much you invest in the various investment
options
. Borrow or withdraw amounts you have in the investment options
. Change the beneficiary who will receive the death benefit
. Change the amount of insurance
. Turn in (i.e., "surrender") the policy for the full amount of its
surrender value
. Choose the form in which we will pay out the death benefit or other
proceeds
Most of these options are subject to limits that are explained later in this
prospectus.
WHO OWNS THE POLICY?
That's up to the person who applies for the policy. The owner of the policy
is the person who can exercise most of the rights under the policy, such as the
right to choose the investment options or the right to surrender the policy. In
many cases, the person buying the policy is also the person who will be the
owner. However, the application for a policy can name another person or entity
(such as a trust) as owner. Whenever we've used the term "you" in this
prospectus, we've assumed that the reader is the person who has whatever right
or privilege is being discussed. There may be tax consequences if the owner and
the insured person are different, so you should discuss this issue with your tax
adviser.
HOW CAN I INVEST MONEY IN THE POLICY?
Premium Payments
We call the investments you make in the policy "premiums" or "premium
payments". The amount we require as your first premium depends upon the
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specifics of your policy and the insured person. Except as noted below, you can
make any other premium payments you wish at any time. That's why the policy is
called a "flexible premium" policy.
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Minimum Premium Payment
Each premium payment must be at least $100.
Maximum Premium Payments
Federal tax law limits the amount of premium payments you can make relative
to the amount of your policy's insurance coverage. We will not knowingly accept
any amount by which a premium payment exceeds the maximum. If you exceed certain
other limits, the law may impose a penalty on amounts you take out of your
policy. We'll monitor your premium payments and let you know if you're about to
exceed this limit. More discussion of these tax law requirements begins on page
34. Also, we may refuse to accept any amount of an additional premium if:
. that amount of premium would increase our insurance risk exposure,
and
. the insured persons don't provide us with adequate evidence that they
continue to meet our requirements for issuing insurance.
In no event, however, will we refuse to accept any premium necessary to
prevent the policy or the guaranteed minimum death benefit feature from
terminating. We reserve the right to limit premium payments above the amount of
cumulative Guaranteed Minimum Death Benefit Premiums (whether or not the
guaranteed minimum death benefit feature described on page 7 is in effect).
Ways to Pay Premiums
If you pay premiums by check or money order, they must be drawn on a U.S.
bank in U.S. dollars and made payable to "John Hancock Mutual Life Insurance
Company." Premiums after the first must be sent to the John Hancock Life
Servicing Office at the appropriate address shown on page 2 of this prospectus.
We will also accept premiums:
. by wire or by exchange from another insurance company,
. via an electronic funds transfer program (any owner interested in
making monthly premium payments must use this method), or
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. if we agree to it, through a salary deduction plan with your
employer.
You can obtain information on these other methods of premium payment by
contacting your John Hancock representative or by contacting the John Hancock
Life Servicing Office.
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IS THERE A MINIMUM AMOUNT I MUST INVEST?
Planned Premiums
The Policy Specifications page of your policy will show the "Planned
Premium" for the policy. You choose this amount in the policy application. The
premium reminder notice we send you is based on this amount. You will also
choose how often to pay premiums-- annually, semi-annually, quarterly or
monthly. The date on which such a payment is "due" is referred to in the policy
as a "modal processing date." However, payment of Planned Premiums is not
necessarily required. You need only invest enough to keep the policy in force
(see "Lapse and reinstatement" and "Guaranteed minimum death benefit feature"
below).
Lapse and Reinstatement
Either your entire policy or the Additional Sum Insured portion of your
Total Sum Insured can terminate (i.e., "lapse") for failure to pay charges due
under the policy. If the guaranteed minimum death benefit feature is in effect,
only the Additional Sum Insured, if any, can lapse. If the guaranteed minimum
death benefit feature is not in effect, the entire policy can lapse. In either
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case, if the policy's surrender value is not sufficient to pay the charges on a
monthly deduction date, we will notify you of how much you will need to pay to
keep any Additional Sum Insured or the policy in force. You will have a 61 day
"grace period" to make that payment. If you don't pay at least the required
amount by the end of the grace period, the Additional Sum Insured or your policy
will lapse. If your policy lapses, all coverage under the policy will cease.
Even if the policy or the Additional Sum Insured terminates in this way, you can
still reactivate (i.e., "reinstate") it within 3 years from the beginning of the
grace period. You will have to provide evidence that the surviving insured
persons still meet our requirements for issuing coverage. You will also have to
pay a minimum amount of premium and be subject to the other terms and conditions
applicable to reinstatements, as specified in the policy. If the guaranteed
minimum death benefit is not in effect and the last surviving insured person
dies during the grace period, we will deduct any unpaid monthly charges from the
death benefit. During such a grace period, you cannot make a partial withdrawal
or policy loan.
Guaranteed Minimum Death Benefit Feature
This feature is available only if the insured persons meet certain
underwriting requirements and only if you've elected death benefit Option B (see
"How much will JHVLICO pay when the last insured person dies?" on page 16). The
feature guarantees that your Basic Sum Insured will not lapse during the first
10 policy years, regardless of adverse investment performance, if both of the
following are true:
. any Additional Sum Insured under the policy is not scheduled to exceed
the Basic Sum Insured at any time (see "How much will John Hancock pay
when the last insured person dies?" on page 16), and
. on each monthly deduction date during that 10 year period the amount
of cumulative premiums you have paid accumulated at 4% (less all
withdrawals from the policy accumulated at 4%) equals or exceeds the
sum of all
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Guaranteed Minimum Death Benefit Premiums due to date accumulated at
4%.
The Guaranteed Minimum Death Benefit Premium (or "GMDB Premium) is defined
in the policy and one-twelfth of it is "due" on each monthly deduction date. On
the application for the policy, you may elect for this feature to extend beyond
the tenth policy year. If you so elect, we will impose a special charge for this
feature after the tenth policy year. You may revoke the election at any time.
No GMDB Premium will ever be greater than the so-called "guideline premium"
for the policy as defined in Section 7702 of the Internal Revenue Code. Also,
the GMDB Premiums may change in the event of any change in the Additional Sum
Insured of the policy or any change in the death benefit option (see "How much
will John Hancock pay when the last insured person dies?" on page 16).
If the guaranteed minimum death benefit test is not satisfied on any
monthly deduction date, we will notify you immediately and tell you how much you
will need to pay to keep the feature in effect. You will have 61 days after
default to make that payment. If you don't pay at least the required amount by
the end of that period, the feature will lapse. The feature may be reinstated in
accordance with the terms of the policy within 5 years after the monthly
deduction date on which default occurred. If it is reinstated more than 1 year
after such monthly deduction date, we will require evidence that the surviving
insured persons still meet our requirements for issuing coverage. We may refuse
to reinstate the feature more than once during the life of the policy.
The guaranteed minimum death benefit feature applies only to the Basic Sum
Insured. It does not apply to any amount of Additional Sum Insured (see "How
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much will John Hancock pay when the last insured person dies?" on page 16).
If there are monthly charges that remain unpaid because of this feature, we
will deduct such charges when there is sufficient surrender value to pay them.
HOW WILL THE VALUE OF MY INVESTMENT IN THE POLICY CHANGE OVER TIME?
From each premium payment you make, we deduct the charges described under
"Deductions from premium payments" below. We invest the rest in the investment
options you've elected. Special investment rules apply to premiums processed
prior to the 20th day after your policy becomes effective. (See "Commencement of
investment performance" beginning on page 31.)
Over time, the amount you've invested in any variable investment option
will increase or decrease the same as if you had invested the same amount
directly in the corresponding fund of the Trust and had reinvested all fund
dividends and distributions in additional fund shares; except that we will
deduct certain additional charges which will reduce your account value. We
describe these charges under "What charges will John Hancock deduct from my
investment in the policy?" below.
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The amount you've invested in the fixed investment option will earn
interest at a rate we declare from time to time. We guarantee that this rate
will be at least 4%. If you want to know what the current declared rate is, just
call or write to us. The current declared rate will also appear in the annual
statement we will send you. Amounts you invest in the fixed investment option
will not be subject to the mortality and expense risk charge described on page
10. Otherwise, the charges applicable to the fixed investment option are the
same as those applicable to the variable investment options.
At any time, the "account value" of your policy is equal to:
. the amount you invested,
. plus or minus the investment experience of the investment options
you've chosen,
. minus all charges we deduct, and
. minus all withdrawals you have made.
If you take a loan on the policy, however, your account value will be computed
somewhat differently. This is discussed beginning on page 15.
WHAT CHARGES WILL JOHN HANCOCK DEDUCT FROM MY INVESTMENT IN THE POLICY?
Deductions From Premium Payments
. Premium tax charge - A charge to cover state premium taxes we currently
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expect to pay, on average. This charge is currently 2.35% of each premium.
. DAC tax charge - A charge to cover the increased Federal income tax burden
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that we currently expect will result from receipt of premiums. This charge is
currently 1.25% of each premium.
. Premium processing charge - A charge to help defray our administrative costs.
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This charge is 1.25% of each premium. For policies with a Total Sum Insured
of $5 million or more, this charge will be reduced to as low as .50%
. Sales charge - A charge to help defray our sales costs. The charge for
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premiums paid in the first policy year is 30% of premiums paid up to the
Target Premium, and 3.5% of premiums paid in excess of the Target Premium.
The charge for premiums paid after the first policy year up to the Target
Premium is 15% in policy years 2 through 5, 10% in policy years 6 through 10,
up to 4% (currently 3%) in policy years 11 through 20, and up to 3%
(currently 0%) thereafter. The charge for premiums paid after the first
policy year in excess of the Target Premium is 3.5% in policy years 2 through
10, 3% in policy years 11 through 20, and up to 3% (currently 0%) thereafter.
If the younger of the insured persons is age 71 or older when the policy is
issued, there will be no sales charges deducted from premiums paid after the
eleventh policy year. Because policies of this type were first offered in
1993, the foregoing waiver and the lower current rates after policy year 10
are not yet applicable to any policy. The "Target Premium" is
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determined at the time the policy is issued and will appear in the "Policy
Specifications" section of the policy.
. Optional benefits charge - A charge imposed for certain optional insurance
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benefits added to the policy by means of a rider.
Deductions From Account Value
. Issue charge - A monthly charge to help defray our administrative costs.
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This charge has two parts: (1) a flat dollar amount of $55.55 deducted only
during the first five policy years, and (2) a charge of 2c per $1,000 of
Total Sum Insured at issue that is deducted only during the first three
policy years. The second part of this monthly charge is guaranteed not to
exceed $200.
. Administrative charge - A monthly charge to help defray our administrative
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costs. This charge also has two parts: (1) a flat dollar charge of up to $10
(currently $7.50), and (2) a charge of 3c per $1,000 of Total Sum Insured at
issue (currently 1c per $1,000 of Total Sum Insured at issue). However, for
policies with a Total Sum Insured at issue of $5 million or more, the first
part of this charge is currently zero.
. Insurance charge - A monthly charge for the cost of insurance. To determine
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the charge, we multiply the amount of insurance for which we are at risk by a
cost of insurance rate. The rate is derived from an actuarial table. The
table in your policy will show the maximum cost of insurance rates. The cost
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of insurance rates that we currently apply are generally less than the
maximum rates. We will review the cost of insurance rates at least every 5
years and may change them from time to time. However, those rates will never
be more than the maximum rates shown in the policy. The table of rates we use
will depend on the insurance risk characteristics and (usually) gender of
each of the insured persons, the Total Sum Insured and the length of time the
policy has been in effect. Regardless of the table used, cost of insurance
rates generally increase each year that you own your policy, as each insured
person's attained age increases. (An insured person's "attained age" on any
date is his or her age on the birthday nearest that date.) The insurance
charge is not affected by the death of the first insured person to die.
. Extra mortality charge - A monthly charge specified in your policy for
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additional mortality risk if either of the insured persons is subject to
certain types of special insurance risk.
. M &E charge - A daily charge for mortality and expense risks we assume. This
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charge is deducted from the variable investment options. It does not apply to
the fixed investment option. We guarantee that this charge will never exceed
an effective annual rate of .90%. The effective annual rate will vary
depending upon the Total Sum Insured at issue. The current charge levels are
as follows: .625% for a Total Sum Insured of at least $500,000 but less than
$5 million, .575% for a Total Sum Insured of at least $5 million but less
than $15 million, and .525% for a Total Sum Insured of $15 million or more.
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. Guaranteed minimum death benefit charge - A monthly charge beginning in the
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eleventh policy year if the guaranteed minimum death benefit feature is
elected to extend beyond the first ten policy years. This charge is currently
1c per $1,000 of Basic Sum Insured at issue and is guaranteed not to exceed
3c per $1,000 of Basic Sum Insured at issue. Because policies of this type
were first offered in 1993, this charge is not yet applicable to any policy
at the current rate.
. Policy split option rider charge - A monthly charge if this rider is elected
--------------------------------
at the time of application for the policy. The charge is 3c per $1,000 of
current Total Sum Insured.
. Optional benefits charge - Monthly charges for certain other optional
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insurance benefits added to the policy by means of a rider. We currently
offer a number of such optional riders, such as the accidental death benefit
rider.
. Partial withdrawal charge - A charge for each partial withdrawal of account
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value to compensate us for the administrative expenses of processing the
withdrawal. The charge is equal to the lesser of $20 or 2% of the withdrawal
amount.
WHAT CHARGES WILL THE TRUST DEDUCT FROM MY INVESTMENT IN THE POLICY?
The Trusts must pay investment management fees and other operating expenses.
These fees and expenses are different for each fund and reduce the investment
return of each fund. Therefore, they also indirectly reduce the return you will
earn on any variable investment options you select.
The following figures for the funds are based on historical fund expenses, as
a percentage (rounded to two decimal places) of each fund's average daily net
assets for 1999, except as indicated in the Notes appearing at the end of this
table. Expenses of the funds are not fixed or specified under the terms of the
policy, and those expenses may vary from year to year.
<TABLE>
<CAPTION>
Investment Distribution and Other Operating Total Fund Other Operating
Management Service Expenses With Operating Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Expenses Reimbursement
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<S> <C> <C> <C> <C> <C>
JOHN HANCOCK VARIABLE SERIES TRUST I
(NOTE 1):
Managed................................... 0.32% N/A 0.03% 0.35% 0.03%
Growth & Income........................... 0.25% N/A 0.03% 0.28% 0.03%
Equity Index.............................. 0.14% N/A 0.00% 0.14% 0.08%
Large Cap Value........................... 0.74% N/A 0.10% 0.84% 0.11%
American Leaders Large Cap Value.......... 0.8% N/A 0.10% 0.90% N/A
Large Cap Growth.......................... 0.36% N/A 0.03% 0.39% 0.03%
Large Cap Aggressive Growth............... 0.98% N/A 0.10% 1.08% 0.19%
Mid Cap Value............................. 0.80% N/A 0.10% 0.90% 0.12%
Mid Cap Growth............................ 0.82% N/A 0.10% 0.92% 0.11%
Fundamental Mid Cap Growth................ 0.85% N/A 0.10% 0.95% 0.24%
Real Estate Equity........................ 0.60% N/A 0.10% 0.70% 0.10%
Small/Mid Cap CORE........................ 0.80% N/A 0.10% 0.90% 0.66%
Small/Mid Cap Growth...................... 0.75% N/A 0.10% 0.85% 0.10%
Small Cap Value........................... 0.80% N/A 0.10% 0.90% 0.16%
Small Cap Growth.......................... 0.75% N/A 0.10% 0.85% 0.14%
Global Balanced *......................... 0.85% N/A 0.10% 0.95% 0.46%
International Equity Index................ 0.16% N/A 0.10% 0.26% 0.22%
International Opportunities............... 0.87% N/A 0.10% 0.97% 0.29%
Emerging Markets Equity................... 1.27% N/A 0.10% 1.37% 2.17%
</TABLE>
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<TABLE>
<CAPTION>
Investment Distribution and Other Operating Total Fund Other Operating
Management Service Expenses With Operating Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Expenses Reimbursement
--------- ---------- ---------------- --------------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Short-Term Bond........................... 0.30% N/A 0.10% 0.40% 0.13%
Bond Index................................ 0.15% N/A 0.10% 0.25% 0.20%
Active Bond *............................. 0.25% N/A 0.03% 0.28% 0.03%
Core Bond................................. 0.70% N/A 1.10% 0.80% N/A
Global Bond............................... 0.69% N/A 0.10% 0.79% 0.15%
High Yield Bond........................... 0.65% N/A 0.10% 0.75% 0.39%
Money Market.............................. 0.25% N/A 0.06% 0.31% 0.06%
AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. Value............................ 0.61% N/A 0.15% 0.76% 0.15%
VARIABLE INSURANCE PRODUCTS FUND -
SERVICE CLASS (NOTE 2):
Fidelity VIP Growth....................... 0.58% 0.10% 0.07% 0.75% 0.09%
VARIABLE INSURANCE PRODUCTS FUND II -
SERVICE CLASS (NOTE 2):
Fidelity VIP Contrafund(R)................ 0.58% 0.10% 0.07% 0.75% 0.10%
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST - CLASS 2 SHARES (NOTE 3):
Templeton International Securities........ 0.69% 0.25% 0.19% 1.13% 0.19%
JANUS ASPEN SERIES - SERVICE SHARES
CLASS (NOTE 4):
Janus Aspen Global Technology............. 0.65% 0.25% 0.13% 1.03% 0.13%
Janus Aspen Worldwide Growth.............. 0.65% 0.25% 0.05% 0.95% 0.05%
MFS VARIABLE INSURANCE TRUST (NOTE 5):
MFS New Discovery......................... 0.90% N/A 0.17% 1.07% 1.59%
</TABLE>
NOTES TO FUND EXPENSE TABLE
(1) John Hancock Variable Series Trust I funds' percentages reflect management
fees and other fund expenses based on the allocation methodology and
expense reimbursement policy adopted April 23, 1999. Under the policy,
John Hancock Life Insurance Company voluntarily reimburses a fund when the
fund's "other fund expenses" exceed 0.10% of the fund's average daily net
assets (0.00% for Equity Index). The percentages for the American Leaders
Large Cap Value Fund and the Core Bond Fund are estimates because the
funds were not in operation prior to the date of this prospectus.
* Global Balanced was formerly "International Balanced" and Active Bond was
formerly "Sovereign Bond".
(2) A portion of the brokerage commissions that certain of the Fidelity VIP
funds pay was used to reduce fund expenses. In addition, through
arrangements with certain funds' custodian, credits realized as a result
of uninvested cash balances were used to reduce a portion of each
applicable fund's expenses. Without these reductions, the operating
expenses of the funds would have been higher, as shown in the last column
of this table.
(3) On February 8, 2000, shareholders of each fund approved a merger and
reorganization that combined the Templeton International Equity Fund with
the Templeton International Securities Fund, effective May 1, 2000.
Shareholders of the Templeton International Securities Fund had approved
new
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management fees, which apply to the combined funds effective May 1, 2000.
The table shows restated total expenses for the fund based on the new fees
and the assets, as of December 31, 1999, of the Templeton International
Securities Fund. However, if the table reflected both the new fees and the
combined assets of the Templeton International Equity Fund and the
Templeton International Securities Fund, the estimated expenses for the
two funds combined after May 1, 2000 would be: Management Fees 0.65%,
Distribution and Service Fees 0.25%, Other Expenses 0.20%, and Total Fund
Operating Expenses 1.10%.
(4) The percentages for the new Service Shares Class of the Janus Aspen Global
Technology Fund and the Janus Aspen Worldwide Growth Fund are estimates
because the Service Shares Class was not in operation in 1999. All such
estimates have been made without regard to the effect of any expense
offset arrangements.
(5) MFS Variable Insurance Trust funds have an expense offset arrangement
which reduces each fund's custodian fee based upon the amount of cash
maintained by the fund with its custodian and dividend disbursing agent.
Each fund may enter into other such arrangements and directed brokerage
arrangements, which would also have the effect of reducing the fund's
expenses. Expenses do not take into account these expense reductions, and
are therefore higher than the actual expenses of the fund. MFS Investment
Management(R) (also doing business as Massachusetts Financial Services
Company) has contractually agreed to bear expense for the New Discovery
Fund, subject to reimbursement by the fund, such that such fund's "other
fund expenses" shall not exceed 0.15% of the average daily net assets of
the fund during the current fiscal year.
WHAT OTHER CHARGES COULD JOHN HANCOCK IMPOSE IN THE FUTURE?
Except for the DAC tax charge, we currently make no charge for our Federal
income taxes. However, if we incur, or expect to incur, additional income taxes
attributable to any subaccount of the Account or this class of policies in
future years, we reserve the right to make a charge for such taxes. Any such
charge would reduce what you earn on any affected investment options. However,
we expect that no such charge will be necessary.
We also reserve the right to increase the premium tax charge and the DAC
tax charge in order to correspond, respectively, with changes in the state
premium tax levels and with changes in the Federal income tax treatment of the
deferred acquisition costs for this type of policy.
Under current laws, we 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, we may make charges
for such taxes.
HOW CAN I CHANGE MY POLICY'S INVESTMENT ALLOCATIONS?
Future Premium Payments
At any time, you may change the investment options in which future premium
payments will be invested. You make the original allocation in the application
for the policy. The percentages you select must be in whole numbers and must
total 100%.
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<PAGE>
Transfers of existing account value
You may also transfer your existing account value from one investment
option to another. To do so, you must tell us how much to transfer, either as a
whole number percentage or as a specific dollar amount.
Under our current rules, you can make transfers out of any variable
investment option anytime you wish. However, transfers out of the fixed
investment option are currently subject to the following restrictions:
. You can only make such a transfer once a year and only during the 31 day
period following your policy anniversary.
. We must receive the request for such a transfer during the period
beginning 60 days prior to the policy anniversary and ending 30 days after
it.
. The most you can transfer at any one time is the greater of $500 or 25%
of the assets in your fixed investment option.
We reserve the right to impose a minimum amount limit on transfers out of
the fixed investment option. We also reserve the right to impose limits on the
number and frequency of transfers out of the variable investment options.
Dollar cost averaging
This is a program of automatic monthly transfers out of the Money Market
investment option into one or more of the other variable investment options. You
choose the investment options and the dollar amount and timing of the transfers.
The program is designed to reduce the risks that result from market
fluctuations. It does this by spreading out the allocation of your money to
investment options over a longer period of time. This allows you to reduce the
risk of investing most of your money at a time when market prices are high.
Obviously, the success of this strategy depends on market trends and is not
guaranteed.
HOW CAN I ACCESS MY INVESTMENT IN THE POLICY?
Full surrender
You may surrender your policy in full at any time. If you do, we will pay
you the account value less any policy loans plus, if surrender occurs in the
second policy year, a refund of a certain portion of sales charges equal to 5%
of premiums paid in the second policy year up to the Target Premium. This is
called your "surrender value." You must return your policy when you request a
full surrender.
Partial withdrawals
You may make a partial withdrawal of your surrender value at any time. Each
partial withdrawal must be at least $1,000. There is a charge (usually $20) for
each partial withdrawal. We will automatically reduce the account value of your
policy by the amount of the withdrawal and the related charge. Each investment
option will be reduced in the same proportion as the account value is then
allocated among them. We will not permit a partial withdrawal if it would
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<PAGE>
cause your account value to fall below 3 months' worth of monthly charges (see
"Deductions from account value" on page 10). We also reserve the right to refuse
any partial withdrawal that would cause the policy's Total Sum Insured to fall
below $500,000. Any partial withdrawal (other than a Terminated ASI Withdrawal
Amount, as described below) will reduce your death benefit under any of the
death benefit options (see "How much will John Hancock pay when the last insured
person dies?" on page 16) and under the guaranteed death benefit feature (see
page 7). Under Option A, such a partial withdrawal will reduce the Total Sum
Insured. Under Option B, such a partial withdrawal will reduce your account
value. Under the guaranteed death benefit feature, such a partial withdrawal
will reduce the Basic Sum Insured. A "Terminated ASI Withdrawal Amount" is any
partial withdrawal made while there is an Additional Sum Insured under the
policy that later lapses as described on page 7. The total of all Terminated ASI
Withdrawal Amounts cannot exceed the Additional Sum Insured in effect
immediately before the Additional Sum Insured lapses.
Policy loans
You may borrow from your policy at any time by completing a form
satisfactory to us or, if the telephone transaction authorization form has been
completed, by telephone. However, you can't borrow from your policy during a
"grace period" (see "Lapse and reinstatement" on page 7). The maximum amount you
can borrow is 90% of your surrender value.
The minimum amount of each loan is $500. The interest charged on any loan
is an effective annual rate of 5% in the first 20 policy years and 4.5%
thereafter. Accrued interest will be added to the loan daily and will bear
interest at the same rate as the original loan amount. The amount of the loan is
deducted from the investment options in the same proportion as the account value
is then allocated among them and is placed in a special loan account. This
special loan account will earn interest at an effective annual rate of 4.0%.
However, if we determine that a loan will be treated as a taxable distribution
because of the differential between the loan interest rate and the rate being
credited on the special loan account, we reserve the right to decrease the rate
credited on the special loan account to a rate that would, in our reasonable
judgement, result in the transaction being treated as a loan under Federal tax
law.
You can repay all or part of a loan at any time. Each repayment will be
allocated among the investment options as follows:
. The same proportionate part of the loan as was borrowed from the
fixed investment option will be repaid to the fixed investment
option.
. The remainder of the repayment will be allocated among the investment
options in the same way a new premium payment would be allocated.
If you want a payment to be used as a loan repayment, you must include
instructions to that effect. Otherwise, all payments will be assumed to be
premium payments.
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<PAGE>
HOW MUCH WILL JOHN HANCOCK PAY WHEN THE LAST INSURED PERSON DIES?
In your application for the policy, you will tell us how much life
insurance coverage you want on the life of the insured persons. This is called
the "Total Sum Insured." Total Sum Insured is composed of the Basic Sum Insured
and any Additional Sum Insured you elect. The only limitations on how much
Additional Sum Insured you can have is that it must be equal to the Basic Sum
Insured at the time of policy issue and cannot exceed 400% of the Basic Sum
Insured at any time thereafter. There are a number of factors you should
consider in determining whether to elect coverage in the form of Basic Sum
Insured or in the form of Additional Sum Insured. These factors are discussed
under "Basic Sum Insured vs. Additional Sum Insured" on page 30.
When the last of the two insured persons dies, we will pay the death
benefit minus any outstanding loans. There are two ways of calculating the death
benefit. You choose which one you want in the application. The two death benefit
options are:
. Option A - The death benefit will equal the greater of (1) the Total
Sum Insured plus any optional extra death benefit, if elected (as
described below), or (2) the minimum insurance amount (as described
below).
. Option B -The death benefit will equal the greater of (1) the Total
Sum Insured plus your policy's account value on the date of death of
the last surviving insured person, or (2) the minimum insurance
amount.
For the same premium payments, the death benefit under Option B will tend
to be higher than the death benefit under Option A. On the other hand, the
monthly insurance charge will be higher under Option B to compensate us for the
additional insurance risk. Because of that, the account value will tend to be
higher under Option A than under Option B for the same premium payments.
Optional extra death benefit feature
If you elect the Option A death benefit, you may also elect this optional
extra death benefit feature. The optional extra death benefit is determined on
each annual processing date as follows:
. First, we multiply your account value by a factor specified in the
policy. The factor is based on the age of the younger insured person.
. We will then subtract your Total Sum Insured.
Any excess is the optional extra death benefit for the remainder of that
policy year. This feature may result in the Option A death benefit being higher
than the minimum insurance amount. Although there is no special charge for this
feature, your monthly insurance charge will be based on that higher death
benefit amount. Election of this feature must be made in the application for the
policy. You may revoke that election at any time, but there may be adverse
16
<PAGE>
tax consequences if you do. An "annual processing date" is the first business
day of a policy year.
The minimum insurance amount
In order for a policy to qualify as life insurance under Federal tax law,
there has to be a minimum amount of insurance in relation to account value. For
policies of this type, we will apply the "cash value accumulation test" as
described in Federal tax law. Under the cash value accumulation test, we compute
the minimum insurance amount on each monthly deduction date by multiplying the
account value on that date by the death benefit factor applicable on that date.
The death benefit factors are derived by applying the cash value accumulation
test. The death benefit factor decreases for each year the policy remains in
effect. A table showing the factor for each policy year will appear in the
policy.
Policy split option
At the time of policy issue, you may elect a rider that will permit the
Total Sum Insured to be evenly split into two separate policies, one for each
insured person, but only if the insured persons get divorced or certain Federal
tax law changes occur. The rider may be cancelled at any time, but it will
automatically terminate on the date of death of the first insured person to die
or on the policy anniversary nearest the older insured person's 80th birthday,
whichever is earlier. A policy split could have adverse tax consequences, so
check with your tax adviser before electing this rider.
When the last insured person reaches 100
If the last surviving insured person or the younger of two living insureds
reaches attained age 100, the surrender value will become payable to the policy
beneficiary and the death benefit will no longer be payable.
HOW CAN I CHANGE MY POLICY'S INSURANCE COVERAGE?
Increase in coverage
The Basic Sum Insured and Additional Sum Insured generally cannot be
increased after policy issue. However, you may request an increase in the
Additional Sum Insured. You will have to provide us with evidence that the
surviving insured persons still meet our requirements for issuing insurance
coverage. As to when an approved increase would take effect, see "Effective date
of other policy transactions" on page 32.
Decrease in coverage
The Basic Sum Insured and Additional Sum Insured generally cannot be
decreased after policy issue. However, you may request a reduction in the
Additional Sum Insured, but only if:
. the remaining Total Sum Insured will be at least $500,000, and
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<PAGE>
. the remaining Total Sum Insured will at least equal the minimum
required by the tax laws to maintain the policy's life insurance
status.
We may refuse any decrease in Additional Sum Insured if it would cause the
death benefit to reflect an increase pursuant to the optional extra death
benefit feature. As to when an approved decrease would take effect, see
"Effective date of other policy transactions" on page 32.
Change of death benefit option
Changes of death benefit option are not permitted under our current
administrative rules. We expect to be able to allow a change from Option B to
Option A in the near future, but that is not guaranteed.
Tax consequences
Please read "Tax considerations" starting on page 34 to learn about
possible tax consequences of changing your insurance coverage under the policy.
CAN I CANCEL MY POLICY AFTER IT'S ISSUED?
You have the right to cancel your policy within the latest of the following
periods:
. 10 days after you receive it (this period may be longer in some
states);
. 10 days after mailing by John Hancock of the Notice of Withdrawal
Right; or
. 45 days after the date Part A of the application has been completed.
This is often referred to as the "free look" period. To cancel your policy,
simply deliver or mail the policy to John Hancock at one of the addresses shown
on page 2, or to the John Hancock representative who delivered the policy to
you.
In most states, you will receive a refund of any premiums you've paid. In
some states, the refund will be your account value on the date of cancellation
plus all charges deducted by John Hancock or the Trust prior to that date. The
date of cancellation will be the date of such mailing or delivery.
CAN I CHOOSE THE FORM IN WHICH JOHN HANCOCK PAYS OUT POLICY PROCEEDS?
Choosing a payment option
You may choose to receive proceeds from the policy as a single sum. This
includes proceeds that become payable because of death or full surrender.
Alternatively, you can elect to have proceeds of $1,000 or more applied to any
of a number of other payment options, including the following:
. Option 1 - Proceeds left with us to accumulate with interest
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<PAGE>
. Option 2A - Equal monthly payments of a specified amount until all
proceeds are paid out
. Option 2B - Equal monthly payments for a specified period of time
. Option 3 - Equal monthly payments for life, but with payments
guaranteed for a specific number of years
. Option 4 - Equal monthly payments for life with no refund
. Option 5 - Equal monthly payments for life with a refund if all of
the proceeds haven't been paid out
You cannot choose an option if the monthly payments under the option would
be less than $50. We will issue a supplementary agreement when the proceeds are
applied to any alternative payment option. That agreement will spell out the
terms of the option in full. We will credit interest on each of the above
options. For Options 1 and 2A, the interest will be at least an effective annual
rate of 3 1/2%.
Changing a payment option
You can change the payment option at any time before the proceeds are
payable. If you haven't made a choice, the payee of the proceeds has a
prescribed period in which he or she can make that choice.
Tax impact
There may be tax consequences to you or your beneficiary depending upon
which payment option is chosen. You should consult with a qualified tax adviser
before making that choice.
TO WHAT EXTENT CAN JOHN HANCOCK VARY THE TERMS AND CONDITIONS OF ITS POLICIES
IN PARTICULAR CASES?
Listed below are some variations we can make in the terms of our policies.
Any variation will be made only in accordance with uniform rules that we apply
fairly to all of our customers.
State law insurance requirements
Insurance laws and regulations apply to John Hancock in every state in
which its policies are sold. As a result, various terms and conditions of your
insurance coverage may vary from the terms and conditions described in this
prospectus, depending upon where you reside. These variations will be reflected
in your policy or in endorsements attached to your policy.
Variations in expenses or risks
We may vary the charges and other terms of our policies where special
circumstances result in sales or administrative expenses, mortality risks or
other risks that are different from those normally associated with the policies.
These include the type of variations discussed under
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<PAGE>
"Reduced charges for eligible classes" on page 33. No variation in any charge
will exceed any maximum stated in this prospectus with respect to that charge.
HOW WILL MY POLICY BE TREATED FOR INCOME TAX PURPOSES?
Generally, death benefits paid under policies such as yours are not subject
to income tax. Earnings on your account value are not subject to income tax as
long as we don't pay them out to you. If we do pay out any amount of your
account value upon surrender or partial withdrawal, all or part of that
distribution should generally be treated as a return of the premiums you've paid
and should not be subject to income tax. Amounts you borrow are generally not
taxable to you.
However, some of the tax rules change if your policy is found to be a
"modified endowment contract." This can happen if you've paid more than a
certain amount of premiums that is prescribed by the tax laws. Additional taxes
and penalties may be payable for policy distributions of any kind.
For further information about the tax consequences of owning a policy,
please read "Tax considerations" beginning on page 34.
HOW DO I COMMUNICATE WITH JOHN HANCOCK?
General Rules
You should mail or express all checks and money orders for premium payments
and loan repayments to the John Hancock Life Servicing Office at the appropriate
address shown on page 2.
Certain requests must be made in writing and be signed and dated by you.
They include the following:
. loans, surrenders or partial withdrawals
. transfers of account value among investment options
. change of allocation among investment options for new premium
payments
. change of death benefit option
. increase or decrease in Total Sum Insured
. change of beneficiary
. election of payment option for policy proceeds
. tax withholding elections
. election of telephone transaction privilege
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<PAGE>
You should mail or express these requests to the John Hancock Life Servicing
Office at the appropriate address shown on page 2. You should also send notice
of an insured person's death and related documentation to the John Hancock Life
Servicing Office. We don't consider that we've "received" any communication
until such time as it has arrived at the proper place and in the proper and
complete form.
We have special forms that should be used for a number of the requests
mentioned above. You can obtain these forms from the John Hancock Life Servicing
Office or your John Hancock representative. Each communication to us must
include your name, your policy number and the name of the insured person. We
cannot process any request that doesn't include this required information. Any
communication that arrives after the close of our business day, or on a day that
is not a business day, will be considered "received" by us on the next following
business day. Our business day currently closes at 4:00 p.m. Eastern Standard
Time, but special circumstances (such as suspension of trading on a major
exchange) may dictate an earlier closing time.
Telephone Transactions
If you complete a special authorization form, you can request loans,
transfers among investment options and changes of allocation among investment
options simply by telephoning us at 1-800-732-5543 or by faxing us at 1-617-886-
3048. Any fax request should include your name, daytime telephone number, policy
number and, in the case of transfers and changes of allocation, the names of the
investment options involved. We will honor telephone instructions from anyone
who provides the correct identifying information, so there is a risk of loss to
you if this service is used by an unauthorized person. However, you will receive
written confirmation of all telephone transactions. There is also a risk that
you will be unable to place your request due to equipment malfunction or heavy
phone line usage. If this occurs, you should submit your request in writing.
The policies are not designed for professional market timing organizations
or other persons or entities that use programmed or frequent transfers among
investment options. For reasons such as that, we reserve the right to change our
telephone transaction policies or procedures at any time. We also reserve the
right to suspend or terminate the privilege altogether.
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<PAGE>
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES AND
ACCUMULATED PREMIUMS
The following tables illustrate the changes in death benefit, account value
and surrender value of the policy under certain hypothetical circumstances that
we assume solely for this purpose. Each table separately illustrates the
operation of a policy for specified issue ages, premium payment schedule and
Total Sum Insured. The amounts shown are for the end of each policy year and
assume that all of the account value is invested in funds that achieve
investment returns at constant annual rates of 0%, 6% and 12% (i.e., before any
fees or expenses deducted from Trust assets). After the deduction of average
fees and expenses at the Trust level (as described below) the corresponding net
annual rates of return would be -.77%, 5.18% and 11.14%. Investment return
reflects investment income and all realized and unrealized capital gains and
losses. The tables assume annual Planned Premiums that are paid at the beginning
of each policy year for a male insured person who is 55 years old and a
preferred underwriting risk when the policy is issued and for a female insured
person who is 50 years old and a preferred underwriting risk when the policy is
issued.
Tables are provided for each of the two death benefit options. The tables
headed "Current Charges" assume that the current rates for all charges deducted
by John Hancock will apply in each year illustrated. The tables headed "Maximum
Charges" are the same, except that the maximum permitted rates for all years are
used for all charges. The tables do not reflect any charge that we reserve the
right to make but are not currently making. The tables assume that the
guaranteed minimum death benefit has not been elected beyond the tenth policy
year and that no Additional Sum Insured or optional rider benefits have been
elected.
With respect to fees and expenses deducted from Trust assets, the amounts
shown in all tables reflect (1) investment management fees equivalent to an
effective annual rate of .66%, and (2) an assumed average asset charge for all
other Trust operating expenses equivalent to an effective annual rate of .11%.
These rates are the arithmetic average for all funds of the Trust. In other
words, they are based on the hypothetical assumption that policy account values
are allocated equally among the variable investment options. The actual rates
associated with any policy will vary depending upon the actual allocation of
policy values among the investment options. The charge shown above for all other
Trust operating expenses reflects reimbursements to certain funds as described
in the footnotes to the table beginning on page 11. We currently expect those
reimbursement arrangements to continue indefinitely, but that is not guaranteed.
The second column of each table shows the amount you would have at the end
of each policy year if an amount equal to the assumed Planned Premiums were
invested to earn interest, after taxes, at 5% compounded annually. This is not a
policy value. It is included for comparison purposes only.
Because your circumstances will no doubt differ from those in the
illustrations that follow, values under your policy will differ, in most cases
substantially. Upon request, we will furnish you with a comparable illustration
reflecting your proposed insured persons' issue ages, sex and underwriting risk
classification, and the Total Sum Insured and annual Planned Premium amount
requested.
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<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$1,000,000 SUM INSURED ($500,000 BASIC SUM INSURED; $500,000 ADDITIONAL
SUM INSURED)
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION A DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $15,969*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------------- ----------------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------------- ----------------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ---------- ---------- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,768 $1,000,000 $1,000,000 $1,000,000 $ 11,206 $ 11,910 $ 12,614
2 34,374 1,000,000 1,000,000 1,000,000 23,410 25,584 27,839
3 52,861 1,000,000 1,000,000 1,000,000 35,443 39,877 44,654
4 72,271 1,000,000 1,000,000 1,000,000 47,545 55,060 63,474
5 92,653 1,000,000 1,000,000 1,000,000 59,475 70,928 84,257
6 114,053 1,000,000 1,000,000 1,000,000 72,288 88,608 108,347
7 136,524 1,000,000 1,000,000 1,000,000 84,914 107,081 134,944
8 160,118 1,000,000 1,000,000 1,000,000 97,349 126,376 164,306
9 184,891 1,000,000 1,000,000 1,000,000 109,592 146,527 196,715
10 210,904 1,000,000 1,000,000 1,000,000 121,636 167,563 232,484
11 238,217 1,000,000 1,000,000 1,000,000 134,237 190,317 272,793
12 266,895 1,000,000 1,000,000 1,000,000 146,611 214,054 317,271
13 297,008 1,000,000 1,000,000 1,000,000 158,745 238,806 366,346
14 328,626 1,000,000 1,000,000 1,000,000 170,623 264,602 420,488
15 361,825 1,000,000 1,000,000 1,000,000 182,222 291,471 480,225
16 396,684 1,000,000 1,000,000 1,049,444 193,516 319,440 546,112
17 433,286 1,000,000 1,000,000 1,150,730 204,471 348,535 618,717
18 471,718 1,000,000 1,000,000 1,258,589 215,045 378,780 698,686
19 512,072 1,000,000 1,000,000 1,373,705 225,190 410,199 786,720
20 554,444 1,000,000 1,000,000 1,496,764 234,843 442,816 883,575
25 800,279 1,000,000 1,000,000 2,266,829 275,856 628,276 1,535,049
30 1,114,034 1,000,000 1,127,474 3,399,081 291,297 851,474 2,567,002
35 1,514,473 1,000,000 1,355,580 5,093,482 256,219 1,110,886 4,174,064
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy Year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
policy loans are taken, or if Guaranteed Minimum Death Benefit after the tenth
Policy Year, or optional rider benefits are elected.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the owner. The
death benefit and Surrender Value for a policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
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<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$1,000,000 SUM INSURED ($500,000 BASIC SUM INSURED; $500,000 ADDITIONAL
SUM INSURED)
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION B DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $15,969*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------------- --------------------------------
Assuming Hypothetical Assuming Hypothetical
End of Planned Premiums Gross Annual Return of Gross Annual Return of
Policy Accumulated at ---------------------------------- --------------------------------
Year 5% Annual Interest 0% 6% 12% 0% 6% 12%
------- ------------------ ---------- ---------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,768 $1,011,205 $1,011,910 $1,012,614 $ 11,205 $ 11,910 $ 12,614
2 34,374 1,023,408 1,025,582 1,027,837 23,408 25,582 27,837
3 52,861 1,035,439 1,039,872 1,044,648 35,439 39,872 44,648
4 72,271 1,047,538 1,055,052 1,063,464 47,538 55,052 63,464
5 92,653 1,059,464 1,070,914 1,084,239 59,464 70,914 84,239
6 114,053 1,072,271 1,088,587 1,108,319 72,271 88,587 108,319
7 136,524 1,084,889 1,107,049 1,134,902 84,889 107,049 134,902
8 160,118 1,097,315 1,126,329 1,164,241 97,315 126,329 164,241
9 184,891 1,109,543 1,146,458 1,196,617 109,543 146,458 196,617
10 210,904 1,121,568 1,167,463 1,232,338 121,568 167,463 232,338
11 238,217 1,134,149 1,190,184 1,272,590 134,149 190,184 272,590
12 266,895 1,146,492 1,213,868 1,316,978 146,492 213,868 316,978
13 297,008 1,158,581 1,238,540 1,365,912 158,581 238,540 365,912
14 328,626 1,170,390 1,264,215 1,419,836 170,390 264,215 419,836
15 361,825 1,181,891 1,290,903 1,479,235 181,891 290,903 479,235
16 396,684 1,193,044 1,318,607 1,544,637 193,044 318,607 544,637
17 433,286 1,203,803 1,347,319 1,616,612 203,803 347,319 616,612
18 471,718 1,214,106 1,377,015 1,695,775 214,106 377,015 695,775
19 512,072 1,223,882 1,407,661 1,782,795 223,882 407,661 782,795
20 554,444 1,233,041 1,439,198 1,878,389 233,041 439,198 878,389
25 800,279 1,268,458 1,610,417 2,518,582 268,458 610,417 1,518,582
30 1,114,034 1,268,271 1,786,209 3,527,234 268,271 786,209 2,527,234
35 1,514,473 1,199,713 1,927,352 5,095,022 199,713 927,352 4,095,022
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy Year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
policy loans are taken, or if Guaranteed Minimum Death Benefit after the tenth
Policy Year, or optional rider benefits are elected.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
24
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$1,000,000 SUM INSURED ($500,000 BASIC SUM INSURED; $500,000 ADDITIONAL
SUM INSURED)
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION A DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $15,969*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------------- -------------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------------- -------------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ---------- ---------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,768 $1,000,000 $1,000,000 $1,000,000 $ 10,906 $ 11,600 $ 12,294
2 34,374 1,000,000 1,000,000 1,000,000 22,735 24,864 27,076
3 52,861 1,000,000 1,000,000 1,000,000 34,279 38,599 43,262
4 72,271 1,000,000 1,000,000 1,000,000 45,760 53,050 61,230
5 92,653 1,000,000 1,000,000 1,000,000 56,919 67,981 80,885
6 114,053 1,000,000 1,000,000 1,000,000 68,789 84,486 103,520
7 136,524 1,000,000 1,000,000 1,000,000 80,278 101,507 128,269
8 160,118 1,000,000 1,000,000 1,000,000 91,356 119,035 155,324
9 184,891 1,000,000 1,000,000 1,000,000 101,997 137,062 184,895
10 210,904 1,000,000 1,000,000 1,000,000 112,164 155,572 217,213
11 238,217 1,000,000 1,000,000 1,000,000 122,322 175,082 253,104
12 266,895 1,000,000 1,000,000 1,000,000 131,898 195,045 292,336
13 297,008 1,000,000 1,000,000 1,000,000 140,822 215,419 335,224
14 328,626 1,000,000 1,000,000 1,000,000 149,001 236,143 382,121
15 361,825 1,000,000 1,000,000 1,000,000 156,331 257,149 433,429
16 396,684 1,000,000 1,000,000 1,000,000 162,694 278,364 489,622
17 433,286 1,000,000 1,000,000 1,024,951 167,907 299,662 551,089
18 471,718 1,000,000 1,000,000 1,113,071 171,918 321,039 617,904
19 512,072 1,000,000 1,000,000 1,205,448 174,521 342,375 690,359
20 554,444 1,000,000 1,000,000 1,302,370 175,525 363,570 768,820
25 800,279 1,000,000 1,000,000 1,867,041 146,151 462,870 1,264,321
30 1,114,034 1,000,000 1,000,000 2,598,076 4,131 529,465 1,962,079
35 1,514,473 ** 1,000,000 3,553,271 ** 511,756 2,911,875
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Guaranteed Minimum Death Benefit after the
tenth Policy Year, or optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
25
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$1,000,000 SUM INSURED ($500,000 BASIC SUM INSURED; $500,000 ADDITIONAL
SUM INSURED)
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION B DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $15,969*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------------- --------------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------------- --------------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ---------- ---------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,768 $1,010,906 $1,011,599 $1,012,293 $ 10,906 $ 11,599 $ 12,293
2 34,374 1,022,732 1,024,861 1,027,072 22,732 24,861 27,072
3 52,861 1,034,269 1,038,588 1,043,250 34,269 38,588 43,250
4 72,271 1,045,735 1,053,021 1,061,196 45,735 53,021 61,196
5 92,653 1,056,868 1,067,919 1,080,810 56,868 67,919 80,810
6 114,053 1,068,694 1,084,366 1,103,369 68,694 84,366 103,369
7 136,524 1,080,115 1,101,295 1,127,993 80,115 101,295 127,993
8 160,118 1,091,093 1,118,680 1,154,846 91,093 118,680 154,846
9 184,891 1,101,594 1,136,498 1,184,107 101,594 136,498 184,107
10 210,904 1,111,567 1,154,707 1,215,959 111,567 154,707 215,959
11 238,217 1,121,463 1,173,793 1,251,164 121,463 173,793 251,164
12 266,895 1,130,693 1,193,171 1,289,405 130,693 193,171 289,405
13 297,008 1,139,165 1,212,745 1,330,880 139,165 212,745 330,880
14 328,626 1,146,759 1,232,389 1,375,776 146,759 232,389 375,776
15 361,825 1,153,339 1,251,949 1,424,280 153,339 251,949 424,280
16 396,684 1,158,756 1,271,251 1,476,582 158,756 271,251 476,582
17 433,286 1,162,776 1,290,022 1,532,797 162,776 290,022 532,797
18 471,718 1,165,333 1,308,149 1,593,227 165,333 308,149 593,227
19 512,072 1,166,177 1,325,319 1,658,007 166,177 325,319 658,007
20 554,444 1,165,080 1,341,228 1,727,306 165,080 341,228 727,306
25 800,279 1,119,341 1,386,600 2,144,905 119,341 386,600 1,144,905
30 1,114,034 ** 1,309,366 2,669,628 ** 309,366 1,669,628
35 1,514,473 ** ** 3,255,940 ** ** 2,255,940
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Guaranteed Minimum Death Benefit after the
tenth Policy Year, or optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
26
<PAGE>
ADDITIONAL INFORMATION
This section of the prospectus provides additional detailed information
that is not contained in the Basic Information section on pages 4 through 21.
<TABLE>
<CAPTION>
CONTENTS OF THIS SECTION BEGINNING ON PAGE
------------------------ -----------------
<S> <C>
Description of John Hancock............................. 28
How we support the policy and investment options........ 28
Procedures for issuance of a policy..................... 29
Basic Sum Insured vs. Additional Sum Insured............ 30
Commencement of investment performance.................. 31
How we process certain policy transactions.............. 31
Effects of policy loans................................. 32
Additional information about how certain policy charges
work................................................... 33
How we market the policies.............................. 34
Tax considerations...................................... 34
Reports that you will receive........................... 36
Voting privileges that you will have.................... 36
Changes that John Hancock can make as to your policy.... 37
Adjustments we make to death benefits................... 37
When we pay policy proceeds............................. 37
Other details about exercising rights and paying
benefits............................................... 38
Legal matters........................................... 38
Registration statement filed with the SEC............... 39
Accounting and actuarial experts........................ 39
Financial statements of John Hancock and the Account.... 39
List of Directors and Executive Officers of
John Hancock........................................... 40
</TABLE>
27
<PAGE>
DESCRIPTION OF JOHN HANCOCK
We are John Hancock Life Insurance Company, a Massachusetts stock life
insuarnce company. On February 1, 2000, John Hancock Mutual Life Insurance
Company (which was chartered in Massachusetts in 1862) converted to a stock
company by "demutualizing" and changed its name to John Hancock Life Insurance
Company. As part of the demutualization process, John Hancock Life Insurance
Company became a subsidiary of John Hancock Financial Services, Inc., a newly
formed publicly-traded corporation. Our Home Office is at John Hancock Place,
Boston, Massachusetts 02117. We are authorized to transact a life insurance and
annuity business in all states and in the District of Columbia. As of December
31, 1999, our assets were approximately $71 billion.
We are regulated and supervised by the Massachusetts Commissioner of
Insurance, who periodically examines our affairs. We also are subject to the
applicable insurance laws and regulations of all jurisdictions in which we are
authorized to do business. We are required to submit annual statements of our
operations, including financial statements, to the insurance departments of the
various jurisdictions in which we do business for purposes of determining
solvency and compliance with local insurance laws and regulations. The
regulation to which we are subject, however, does not provide a guarantee as to
such matters.
HOW WE SUPPORT THE POLICY AND INVESTMENT OPTIONS
Separate Account UV
The variable investment options shown on page 1 are in fact subaccounts of
Separate Account UV (the "Account"), a separate account established by us under
Massachusetts law. The Account 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"). Such registration does not
involve supervision by the SEC of the management of the Account or John Hancock.
The Account's assets are the property of John Hancock. Each policy provides
that amounts we hold in the Account pursuant to the policies cannot be reached
by any other persons who may have claims against us.
The assets in each subaccount are invested in the corresponding fund of one
of the Trusts. New subaccounts may be added as new funds are added to the Trusts
and made available to policy owners. Existing subaccounts may be deleted if
existing funds are deleted from the Trusts.
We will purchase and redeem Trust shares for the Account at their net asset
value without any sales or redemption charges. Shares of a Trust represent an
interest in one of the funds of the Trust which corresponds to a subaccount of
the Account. Any dividend or capital gains distributions received by the Account
will be reinvested in shares of that same fund at their net asset value as of
the dates paid.
On each business day, shares of each fund are purchased or redeemed by us
for each subaccount based on, among other things, the amount of net premiums
allocated to the subaccount, distributions reinvested, and transfers to, from
and among subaccounts, all to be effected as of that date. Such purchases and
redemptions are effected at each fund's net asset value per share determined for
that same date. A "business day" is any date on which the New York Stock
Exchange is open for trading. We compute policy values for each business day as
of the close of that day (usually 4:00 p.m. Eastern Standard Time).
Our general account
Our obligations under the policy's fixed investment option are backed by
our general account assets. Our general account consists of assets owned by us
other than those in the Account and in other separate accounts that we may
establish. Subject to
28
<PAGE>
applicable law, we have sole discretion over the investment of assets of the
general account and policy owners do not share in the investment experience of,
or have any preferential claim on, those assets. Instead, we guarantee that the
account value allocated to the fixed investment option will accrue interest
daily at an effective annual rate of at least 4% without regard to the actual
investment experience of the general account.
Because of exemptive and exclusionary provisions, interests in our fixed
investment option have not been registered under the Securities Act of 1933 and
our general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein are
subject to the provisions of these acts, and we have been advised that the staff
of the SEC has not reviewed the disclosure in this prospectus relating to the
fixed investment option. Disclosure regarding the fixed investment option may,
however, be subject to certain generally-applicable provisions of the Federal
securities laws relating to accuracy and completeness of statements made in
prospectuses.
PROCEDURES FOR ISSUANCE OF A POLICY
Generally, the policy is available with a minimum Basic Sum Insured at
issue of $250,000. Since the Additional Sum Insured must equal the Basic Sum
Insured at issue, that means the minimum Total Sum Insured at issue is generally
$500,000. At the time of issue, each insured person must have an attained age of
at least 20 and no more than 80. All insured persons must meet certain health
and other insurance risk criteria called "underwriting standards".
Policies issued in Montana or in connection with certain employee plans
will not directly reflect the sex of the insured persons in either the premium
rates or the charges or values under the policy. The illustrations set forth in
this prospectus are sex-distinct and, therefore, may not reflect the rates,
charges, or values that would apply to such policies.
Minimum Initial Premium
The Minimum Initial Premium must be received by us at our Life Servicing
Office in order for the policy to be in full force and effect. There is no grace
period for the payment of the Minimum Initial Premium. The Minimum Initial
Premium is determined by us based on the characteristics of each of the insured
persons, the Total Sum Insured at issue, and the policy options you have
selected.
Commencement of insurance coverage
After you apply for a policy, it can sometimes take up to several weeks for
us to gather and evaluate all the information we need to decide whether to issue
a policy to you and, if so, what the insured persons' rate classes should be.
After we approve an application for a policy and assign an appropriate insurance
rate class, we will prepare the policy for delivery. We will not pay a death
benefit under a policy unless the policy is in effect when the last surviving
insured person dies (except for the circumstances described under "Temporary
insurance coverage prior to policy delivery" on page 30).
The policy will take effect only if all of the following conditions are
satisfied:
. The policy is delivered to and received by the applicant.
. The Minimum Initial Premium is received by us.
. Each insured person is living and still meets our health criteria for
issuing insurance.
If all of the above conditions are satisfied, the policy will take effect
on the date shown in the policy as the "date of issue." That is the date on
which we begin to deduct monthly charges. Policy months, policy years and policy
anniversaries are all measured from the date of issue.
29
<PAGE>
Backdating
In order to preserve a younger age at issue for one or both of the insured
persons, we can designate a date of issue that is up to 60 days earlier than the
date that would otherwise apply. This is referred to as "backdating" and is
allowed under state insurance laws. Backdating can also be used in certain
corporate-owned life insurance cases involving multiple policies to retain a
common monthly deduction date.
The conditions for coverage described above under "Commencement of
insurance coverage" must still be satisfied, but in a backdating situation the
policy always takes effect retroactively. Backdating results in a lower
insurance charge (because of an insured person's younger age at issue), but
monthly charges begin earlier than would otherwise be the case. Those monthly
charges will be deducted as soon as we receive premiums sufficient to pay them.
Temporary coverage prior to policy delivery
If a specified amount of premium is paid with the application for a policy
and other conditions are met, we will provide temporary survivorship term life
insurance coverage on the insured persons for a period prior to the time
coverage under the policy takes effect. Such temporary term coverage will be
subject to the terms and conditions described in the application for the policy,
including limits on amount and duration of coverage.
Monthly deduction dates
Each charge that we deduct monthly is assessed against your account value
or the subaccounts at the close of business on the date of issue and at the
close of the first business day in each subsequent policy month.
BASIC SUM INSURED VS. ADDITIONAL SUM INSURED
As noted earlier in this prospectus, you should consider a number of
factors in determining whether to elect coverage in the form of Basic Sum
Insured or in the form of Additional Sum Insured.
The amount of sales charge deducted from premiums and from account value
and the amount of compensation paid to the selling insurance agent will be less
if coverage is included as Additional Sum Insured, rather than as Basic Sum
Insured. On the other hand, the amount of any Additional Sum Insured is not
included in the guaranteed minimum death benefit feature. Therefore, if the
policy's surrender value is insufficient to pay the monthly charges as they fall
due (including the charges for the Additional Sum Insured), the Additional Sum
Insured coverage will lapse, even if the Basic Sum Insured stays in effect
pursuant to the guaranteed minimum death benefit feature.
Generally, you will incur lower sales charges and have more flexible
coverage with respect to the Additional Sum Insured than with respect to the
Basic Sum Insured. If this is your priority, you may wish to maximize the
proportion of the Additional Sum Insured. However, if your priority is to take
advantage of the guaranteed minimum death benefit feature, the proportion of the
Policy's Total Sum Insured that is guaranteed can be increased by taking out
more coverage as Basic Sum Insured at the time of policy issuance.
If you want to purchase Additional Sum Insured, you may select from among
several forms of it: a level amount of coverage; an amount of coverage that
increases on each policy anniversary up to a prescribed limit; an amount of
coverage that increases on each policy anniversary to the amount of premiums
paid during prior policy years plus the Planned Premium for the current policy
year, subject to certain limits; or a combination of those forms of coverage.
Any decision you make to modify the amount of Additional Sum Insured
coverage after issue can have significant tax consequences (see "Tax
Considerations" beginning on page 34).
30
<PAGE>
COMMENCEMENT OF INVESTMENT PERFORMANCE
Any premium payment processed prior to the twentieth day after the date of
issue will automatically be allocated to the Money Market investment option. On
the later of the date such payment is received or the twentieth day following
the date of issue, the portion of the Money Market investment option
attributable to such payment will be reallocated automatically among the
investment options you have chosen.
All other premium payments will be allocated among the investment options
you have chosen as soon as they are processed.
HOW WE PROCESS CERTAIN POLICY TRANSACTIONS
Premium payments
We will process any premium payment as of the day we receive it, unless one
of the following exceptions applies:
(1) We will process a payment received prior to a policy's date of issue as
if received on the date of issue.
(2) If the Minimum Initial Premium is not received prior to the date of
issue, we will process each premium payment received thereafter as if received
on the business day immediately preceding the date of issue until all of the
Minimum Initial Premium is received.
(3) We will process the portion of any premium payment for which we require
evidence of an insured person's continued insurability only after we have
received such evidence and found it satisfactory to us.
(4) If we receive any premium payment that we think will cause a policy to
become a modified endowment or will cause a policy to lose its status as life
insurance under the tax laws, we will not accept the excess portion of that
premium payment and will immediately notify the owner. We will refund the excess
premium when the premium payment check has had time to clear the banking system
(but in no case more than two weeks after receipt), except in the following
circumstances:
. The tax problem resolves itself prior to the date the refund is to be
made; or
. The tax problem relates to modified endowment status and we receive a
signed acknowledgment from the owner prior to the refund date instructing
us to process the premium notwithstanding the tax issues involved.
In the above cases, we will treat the excess premium as having been
received on the date the tax problem resolves itself or the date we receive the
signed acknowledgment. We will then process it accordingly.
(5) If a premium payment is received or is otherwise scheduled to be
processed (as specified above) on a date that is not a business day, the premium
payment will be processed on the business day next following that date.
Transfers among investment options
Any reallocation among investment options must be such that the total in
all investment options after reallocation equals 100% of account value.
Transfers out of a variable investment option will be effective at the end of
the business day in which we receive at our Life Servicing Office notice
satisfactory to us.
If received on or before the policy anniversary, requests for transfer out
of the fixed investment option will be processed on the policy anniversary (or
the next business day if the policy anniversary does not occur on a business
day). If received after the policy anniversary, such a request will be processed
at the end of the business day in which we receive the request at our Life
Servicing Office. If you request a transfer out of the fixed investment option
61 days or more prior to the policy anniversary, we will not process that
portion of the reallocation, and your confirmation statement will not reflect a
transfer out of the fixed investment option as to such request.
31
<PAGE>
Currently, there is no minimum amount limit on transfers into the fixed
investment option, but we reserve the right to impose such a limit in the
future. We have the right to defer transfers of amounts out of the fixed
investment option for up to six months.
Dollar cost averaging
Scheduled transfers under this option may be made from the Money Market
investment option to not more than nine other variable investment options.
However, the amount transferred to any one investment option must be at least
$100.
Once we receive the election in form satisfactory to us at our Life
Servicing Office, transfers will begin on the second monthly deduction date
following its receipt. If you have any questions with respect to this provision,
call 1-800-732-5543.
Once elected, the scheduled monthly transfer option will remain in effect
for so long as you have at least $2,500 of your account value in the Money
Market investment option, or until we receive written notice from you of
cancellation of the option or notice of the death of the last surviving insured
person. We reserve the right to modify, terminate or suspend the dollar cost
averaging program at any time.
Telephone transfers and policy loans
Once you have completed a written authorization, you may request a transfer
or policy loan by telephone or by fax. If the fax request option becomes
unavailable, another means of telecommunication will be substituted.
If you authorize telephone transactions, you will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which we reasonably believe to be genuine, unless such loss,
expense or cost is the result of our mistake or negligence. We employ procedures
which provide safeguards against the execution of unauthorized transactions, and
which are reasonably designed to confirm that instructions received by telephone
are genuine. These procedures include requiring personal identification, tape
recording calls, and providing written confirmation to the owner. If we do not
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, we may be liable for any loss due to unauthorized or
fraudulent instructions.
Effective date of other policy transactions
The following transactions take effect on the policy anniversary on or next
following the date we approve the request:
. Total Sum Insured decreases
. Additional Sum Insured increases
. Change of death benefit option from Option B to Option A, when and if
permitted by our administrative rules (see "Change of death benefit
option" on page 18)
Reinstatements of lapsed policies take effect on the monthly deduction date
on or next following the date we approve the request for reinstatement.
We process loans, surrenders, partial withdrawals and loan repayments as of
the day we receive such request or repayment.
EFFECTS OF POLICY LOANS
The account value, the surrender value, and any death benefit above the
Total Sum Insured are permanently affected by any loan, whether or not it is
repaid in whole or in part. This is because the amount of the loan is deducted
from the investment options and placed in a special loan account. The investment
options and the special loan account will generally have different rates of
investment return.
The amount of the outstanding loan (which includes accrued and unpaid
interest) is subtracted from the amount otherwise payable when the policy
proceeds become payable.
Whenever the outstanding loan exceeds 90% of your account value, the policy
will terminate 31 days after we have mailed notice of termination to you
32
<PAGE>
(and to any assignee of record at such assignee's last known address) specifying
the minimum amount that must be paid to avoid termination, unless a repayment of
at least the amount specified is made within that period.
ADDITIONAL INFORMATION ABOUT HOW CERTAIN POLICY CHARGES WORK
Sales expenses and related charges
The sales charges help to compensate us for the cost of selling our
policies. (See "What charges will John Hancock deduct from my investment in the
policy?" in the Basic Information section of this prospectus.) The amount of the
charges in any policy year does not specifically correspond to sales expenses
for that year. We expect to recover our total sales expenses over the life of
the policies. To the extent that the sales charges do not cover total sales
expenses, the sales expenses may be recovered from other sources, including
gains from the charge for mortality and expense risks and other gains with
respect to the policies, or from our general assets. (See "How we market the
policies" on page 34.)
Effect of premium payment pattern
You may structure the timing and amount of premium payments to minimize the
sales charges, although doing so involves certain risks. Paying less than one
Target Premium in the first policy year or paying more than one Target Premium
in any policy year could reduce your total sales charges over time. For example,
if the Target Premium was $10,000 and you paid a premium of $10,000 in each of
the first ten policy years, you would pay total sales charges of $14,000. If you
paid $20,000 (i.e., two times the Target Premium amount) in every other policy
year up to the ninth policy year, you would pay total sales charges of only
$9,750. However, delaying the payment of Target Premiums to later policy years
could increase the risk that the guaranteed minimum death benefit feature will
lapse and the account value will be insufficient to pay monthly policy charges
as they come due. As a result, the policy or any Additional Sum Insured may
lapse and eventually terminate. Conversely, accelerating the payment of Target
Premiums to earlier policy years could cause aggregate premiums paid to exceed
the policy's 7-pay premium limit and, as a result, cause the policy to become a
modified endowment, with adverse tax consequences to you upon receipt of policy
distributions. (See "Tax consequences" beginning on page 34.)
Monthly charges
We deduct the monthly charges described in the Basic Information section
from your policy's investment options in proportion to the amount of account
value you have in each. For each month that we cannot deduct any charge because
of insufficient account value, the uncollected charges will accumulate and be
deducted when and if sufficient account value becomes available.
The insurance under the policy continues in full force during any grace
period but, if the last surviving insured person dies during the policy grace
period, the amount of unpaid monthly charges is deducted from the death benefit
otherwise payable.
Reduced charges for eligible classes
The charges otherwise applicable (including the M&E charge) may be reduced
with respect to policies issued to a class of associated individuals or to a
trustee, employer or similar entity where we anticipate that the sales to the
members of the class will result in lower than normal sales or administrative
expenses, lower taxes or lower risks to us. We will make these reductions in
accordance with our rules in effect at the time of the application for a policy.
The factors we consider in determining the eligibility of a particular group for
reduced charges, and the level of the reduction, are as follows: the nature of
the association and its organizational framework; the method by which sales will
be made to the members of the class; the facility with which premiums will be
collected from the associated individuals and the association's capabilities
with
33
<PAGE>
respect to administrative tasks; the anticipated lapse and surrender rates of
the policies; the size of the class of associated individuals and the number of
years it has been in existence; the aggregate amount of premiums paid; and any
other such circumstances which result in a reduction in sales or administrative
expenses, lower taxes or lower risks. Any reduction in charges will be
reasonable and will apply uniformly to all prospective policy purchasers in the
class and will not unfairly discriminate against any owner.
HOW WE MARKET THE POLICIES
John Hancock Funds, Inc. ("JHFI"), an indirect wholly-owned subsidiary of
John Hancock located at 101 Huntington Avenue, Boston, MA 02199, is registered
as a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. JHFI acts as principal
underwriter and principal distributor of the policies sold through the use of
this prospectus. JHFI also serves as principal underwriter for John Hancock
Variable Annuity Accounts H and JF, John Hancock Variable Life Accounts S and U,
and Investors Partner Life Insurance Account L, all of which are registered
under the 1940 Act.
The policies may be purchased through broker-dealers and certain financial
institutions who have entered into selling agreements with JHFI and John
Hancock, and whose representatives are authorized by applicable law to sell
variable life insurance policies.Gross first year commissions plus any expense
allowance payments paid to such broker-dealers and financial institutions is not
expected to exceed 80% of premiums paid up to the Target Premium plus 3% of any
excess premium payments. Gross renewal commissions (i.e., after the first year)
are not expected to exceed 3% of total premiums paid in policy years 2 through 5
plus 0.15% of account value less loans in policy years 2 and thereafter. In some
situations where the broker dealer provides some or all of the marketing
services required, we may pay an additional gross first year commission of up to
20% of premiums paid up to the Target Premium. In such instances, we may also
pay an additional gross renewal commission. The additional gross renewal
commission would not be expected to exceed 0.10% of account value less loans in
policy years 2 and thereafter.
We reimburse JHFI for direct and indirect expenses actually incurred in
connection with the marketing and sale of the policies.
The offering of the policies is intended to be continuous, but neither John
Hancock nor JHFI is obligated to sell any particular amount of policies.
TAX CONSIDERATIONS
This description of federal income tax consequences is only a brief summary
and is not intended as tax advice. Tax consequences will vary based on your own
particular circumstances, and for further information you should consult a
qualified tax advisor. Federal, state and local tax laws, regulations and
interpretations can change from time to time. As a result, the tax consequences
to you and the beneficiary may be altered, in some cases retroactively.
Policy proceeds
We believe the policy will receive the same federal income and estate tax
treatment as fixed benefit life insurance policies. Section 7702 of the Internal
Revenue Code (the "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 satisfy that definition. We will monitor compliance with these standards.
If the policy complies with the definition of life insurance, we believe
the death benefit under the policy will be excludable from the beneficiary's
gross income under the Code. In addition, increases in account value as a result
of interest or investment experience will not be subject to federal income tax
unless and until values are actually received through distributions.
Distributions for tax purposes can include amounts received upon surrender or
partial
34
<PAGE>
withdrawals. You may also be deemed to have received a distribution for tax
purposes if you assign all or part of your policy rights or change your policy's
ownership.
In general, the owner will be taxed on the amount of distributions that
exceed the premiums paid under the policy. But under certain circumstances
within the first 15 policy years, the owner may be taxed on a distribution even
if total withdrawals do not exceed total premiums paid. Any taxable distribution
will be ordinary income to the owner (rather than capital gains).
We also believe that, except as noted below, loans received under the
policy will be treated as indebtedness of an owner and that no part of any loan
will constitute income to the owner. However, the amount of any outstanding loan
that was not previously considered income (as discussed below) will be treated
as if it had been distributed to the owner if the policy terminates for any
reason.
It is possible that, despite our monitoring, a policy might fail to qualify
as life insurance under Section 7702 of the Code. This could happen, for
example, if we inadvertently failed to return to you any premium payments that
were in excess of permitted amounts, or if the Trust failed to meet certain
investment diversification or other requirements of the Code. If this were to
occur, you would be subject to income tax on the income and gains under the
policy for the period of the disqualification and for subsequent periods.
In the past, the United States Treasury Department has stated that it
anticipated issuing guidelines prescribing circumstances in which the ability of
a policy owner to direct his or her investment to particular funds may cause the
policy owner, rather than the insurance company, to be treated as the owner of
the shares of those funds. In that case, any income and gains attributable to
those shares would be included in your current gross income for federal income
tax purposes. Under current law, however, we believe that we, and not the owner
of a policy, would be considered the owner of the fund's shares for tax
purposes.
Tax consequences of ownership or receipt of policy proceeds under federal,
state and local estate, inheritance, gift and other tax laws depend on the
circumstances of each owner or beneficiary.
Because there may be unfavorable tax consequences (including recognition of
taxable income and the loss of income tax-free treatment for any death benefit
payable to the beneficiary), you should consult a qualified tax adviser prior to
changing the policy's ownership or making any assignment of ownership interests.
7-pay premium limit
At the time of policy issuance, we will determine whether the Planned
Premium schedule will exceed the 7-pay limit discussed below. If so, our
standard procedures prohibit issuance of the policy unless you sign a form
acknowledging that fact.
The 7-pay limit is the total of net level premiums that would have been
payable at any time for a comparable fixed policy to be fully "paid-up" after
the payment of 7 equal annual premiums. "Paid-up" means that no further premiums
would be required to continue the coverage in force until maturity, based on
certain prescribed assumptions. If the total premiums paid at any time during
the first 7 policy years exceed the 7-pay limit, the policy will be treated as a
"modified endowment", which can have adverse tax consequences.
The owner will be taxed on distributions and loans from a "modified
endowment" to the extent of any income (gain) to the owner (on an income-first
basis). The distributions and loans affected will be those made on or after, and
within the two year period prior to, the time the policy becomes a modified
endowment. Additionally, a 10% penalty tax may be imposed on taxable portions of
such distributions or loans that are made before the owner attains age 59 1/2.
35
<PAGE>
Furthermore, any time there is a "material change" in a policy (such as an
increase in Additional Sum Insured, the addition of certain other policy
benefits after issue, a change in death benefit option, or reinstatement of a
lapsed policy), the policy will have a new 7-pay limit as if it were a
newly-issued policy. If a prescribed portion of the policy's then account value,
plus all other premiums paid within 7 years after the material change, at any
time exceed the new 7-pay limit, the policy will become a modified endowment.
Moreover, if benefits under a policy are reduced (such as a reduction in
the Total Sum Insured or death benefit or the reduction or cancellation of
certain rider benefits) during the 7 years in which a 7-pay test is being
applied, the 7-pay limit will be recalculated based on the reduced benefits. If
the premiums paid to date are greater than the recalculated 7-pay limit, the
policy will become a modified endowment.
All modified endowments issued by the same insurer (or its affiliates) to
the owner during any calendar year generally will be treated as one contract for
the purpose of applying the modified endowment rules. A policy received in
exchange for a modified endowment will itself also be a modified endowment. You
should consult your tax advisor if you have questions regarding the possible
impact of the 7-pay limit on your policy.
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. We are not responsible for
compliance with the terms of any such plan or with the requirements of
applicable provisions of the Code.
REPORTS THAT YOU WILL RECEIVE
At least annually, we will send you a statement setting forth the following
information as of the end of the most recent reporting period: the amount of the
death benefit, the Basic Sum Insured and the Additional Sum Insured, the account
value, the portion of the account value in each investment option, the surrender
value, premiums received and charges deducted from premiums since the last
report, and any outstanding policy loan (and interest charged for the preceding
policy year). Moreover, you also will receive confirmations of premium payments,
transfers among investment options, policy loans, partial withdrawals and
certain other policy transactions.
Semiannually we will send you a report containing the financial statements
of the Trust, including a list of securities held in each fund.
VOTING PRIVILEGES THAT YOU WILL HAVE
All of the assets in the subaccounts of the Account are invested in shares
of the corresponding funds of the Trust. We will vote the shares of each of the
funds of the Trust which are deemed attributable to variable life insurance
policies at regular and special meetings of the Trust's shareholders in
accordance with instructions received from owners of such policies. Shares of
the Trust held in the Account which are not attributable to such policies, as
well as shares for which instructions from owners are not received, will be
represented by us at the meeting. We will vote such shares for and against each
matter in the same proportions as the votes based upon the instructions received
from the owners of such policies.
We determine the number of a fund's shares held in a subaccount
attributable to each owner by dividing the amount of a policy's account value
held in the subaccount by the net asset value of one share in the fund.
Fractional votes will be counted. We determine the number of shares as to which
the owner may give instructions as of the record date for the
36
<PAGE>
Trust's meeting. Owners of policies may give instructions regarding the election
of the Board of Trustees of the Trust, ratification of the selection of
independent auditors, approval of Trust investment advisory agreements and other
matters requiring a shareholder vote. We will furnish owners with information
and forms to enable owners to give voting instructions.
However, we may, in certain limited circumstances permitted by the SEC's
rules, disregard voting instructions. If we do disregard voting instructions,
you will receive a summary of that action and the reasons for it in the next
semi-annual report to owners.
CHANGES THAT JOHN HANCOCK CAN MAKE AS TO YOUR POLICY
Changes relating to the Trust or the Account
The voting privileges described in this prospectus reflect our
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, we reserve the right to proceed in
accordance with any such revised requirements. We also reserve 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 your policy belongs from the Account to
another separate account or subaccount, (2) to operate the Account as a
"management-type investment company" under the 1940 Act, or in any other form
permitted by law, the investment adviser of which would beJohn Hancock or an
affiliate, (3) to deregister the Account under the 1940 Act, (4) to substitute
for the fund shares held by a subaccount any other investment permitted by law,
and (5) to take any action necessary to comply with or obtain any exemptions
from the 1940 Act. We 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.
Other permissible changes
We reserve the right to make any changes in the policy necessary to ensure
the policy is within the definition of life insurance under the Federal tax laws
and is in compliance with any changes in Federal or state tax laws.
In our policies, we reserve the right to make certain changes if they would
serve the best interests of policy owners or would be appropriate in carrying
out the purposes of the policies. Such changes include the following:
. Changes necessary to comply with or obtain or continue exemptions under
the federal securities laws
. Combining or removing investment options
. Changes in the form of organization of any separate account
Any such changes will be made only to the extent permitted by applicable
laws and only in the manner permitted by such laws. When required by law, we
will obtain your approval of the changes and the approval of any appropriate
regulatory authority.
ADJUSTMENTS WE MAKE TO DEATH BENEFITS
If either insured person commits suicide within certain time periods, the
amount of death benefit we pay will be limited as described in the policy. Also,
if an application misstated the age or gender of either insured person, we will
adjust the amount of any death benefit as described in the policy.
WHEN WE PAY POLICY PROCEEDS
General
We will pay any death benefit, withdrawal, surrender value or loan within 7
days after we receive the last required form or request (and, with respect to
the death benefit, any other documentation that may
37
<PAGE>
be required). If we don't have information about the desired manner of payment
within 7 days after the date we receive notification of the death of the last
surviving insured person, we will pay the proceeds as a single sum, normally
within 7 days thereafter.
Delay to challenge coverage
We may challenge the validity of your insurance policy based on any
material misstatements made to us in the application for the policy. We cannot
make such a challenge, however, beyond certain time limits that are specified in
the policy.
Delay for check clearance
We reserve the right to defer payment of that portion of your account value
that is attributable to a premium payment made by check for a reasonable period
of time (not to exceed 15 days) to allow the check to clear the banking system.
Delay of separate account proceeds
We reserve the right to defer payment of any death benefit, loan or other
distribution that is derived from a variable investment option if (a) the New
York Stock Exchange is closed (other than customary weekend and holiday
closings) or trading on the New York Stock Exchange is restricted; (b) an
emergency exists, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to fairly determine the account
value; or (c) the SEC by order permits the delay for the protection of owners.
Transfers and allocations of account value among the investment options may also
be postponed under these circumstances. If we need to defer calculation of
separate account values for any of the foregoing reasons, all delayed
transactions will be processed at the next values that we do compute.
OTHER DETAILS ABOUT EXERCISING RIGHTS AND PAYING BENEFITS
Joint ownership
If more than one person owns a policy, all owners must join in most
requests to exercise rights under the policy.
Assigning your policy
You may assign your rights in the policy to someone else as collateral for
a loan or for some other reason. Assignments do not require the consent of any
revocable beneficiary. A copy of the assignment must be forwarded to us. We are
not responsible for any payment we make or any action we take before we receive
notice of the assignment in good order. Nor are we responsible for the validity
of the assignment. An absolute assignment is a change of ownership. All
collateral assignees of record must consent to any full surrender, partial
withdrawal or loan from the policy.
Your beneficiary
You name your beneficiary when you apply for the policy. The beneficiary is
entitled to the proceeds we pay following the death of the last surviving
insured person. You may change the beneficiary during that insured person's
lifetime. Such a change requires the consent of any irrevocable named
beneficiary. A new beneficiary designation is effective as of the date you sign
it, but will not affect any payments we make before we receive it. If no
beneficiary is living when the last surviving insured person dies, we will pay
the insurance proceeds to the owner or the owner's estate.
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 us on
certain Federal securities law matters in connection with the policies.
38
<PAGE>
REGISTRATION STATEMENT FILED WITH THE SEC
This prospectus omits certain information contained in the Registration
Statement which has been filed with the SEC. More details may be obtained from
the SEC upon payment of the prescribed fee.
ACCOUNTING AND ACTUARIAL EXPERTS
The financial statements of John Hancock and certain of the financial
statements of 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 Todd G.
Engelsen, F.S.A., an Actuary and Second Vice President of John Hancock.
FINANCIAL STATEMENTS OF JOHN HANCOCK AND THE ACCOUNT
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.
In addition to those financial statements of the Account included herein
that have been audited by Ernst & Young LLP, this prospectus also contains
unaudited financial statements of the Account for a period subsequent to the
audited financial statements.
The most current financial statements for John Hancock are those as of
December 31, 1999. We do not prepare such financial statements more often than
annually. Moreover, we believe that any additional benefit you would get from
more recent financial statements would not justify our cost in preparing them.
(This is true even though we would not necessarily have to incur the expense of
an independent audit of those financial statements.) In this connection, we
represent that there have been no material adverse changes in our financial
condition or operations between December 31, 1999 and the date of this
prospectus.
39
<PAGE>
LIST OF DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK
The Directors and Executive Officers of John Hancock and their principal
occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Directors Principal Occupations
--------- ---------------------
<S> <C>
Stephen L. Brown............................ Chairman of the Board and Chief Executive Officer, John Hancock
David F. D'Alessandro....................... President, Chief Operations Officer and Chief Executive
Officer-Elect, John Hancock
Foster L. Aborn............................. Vice Chairman of the Board and Chief Investment Officer, John Hancock
Samuel W. Bodman............................ Chairman of the Board and Chief Executive Officer, Cabot Corporation
(chemicals)
I. MacAllister Booth........................ Retired Chairman of the Board and Chief Executive Officer, Polaroid
Corporation (photographic products)
Wayne A. Budd............................... Group President, Bell Atlantic - New England (telecommunications)
John M. Connors, Jr......................... Chairman and Chief Executive Officer and Director, Hill, Holliday,
Connors, Cosmopoulos, Inc. (advertising).
Robert E. Fast.............................. Senior Partner, Hale and Dorr (law firm).
Kathleen F. Feldstein....................... President, Economic Studies, Inc. (economic consulting).
Nelson S. Gifford........................... Principal, Fleetwing Capital Management (financial services)
Michael C. Hawley........................... Chairman and Chief Executive Officer, The Gillette Company (razors, etc.)
Edward H. Linde............................. President and Chief Executive Officer, Boston Properties, Inc.
(real estate)
Judith A, McHale............................ President and Chief Operating Officer, Discovery Communications, Inc.
(multimedia communications)
E. James Morton............................. Director, formerly Chairman of the Board and Chief Executive Officer,
John Hancock
Richard F. Syron............................ Chairman of the Board, President and Chief Executive Officer, Thermo
Electron Corp. (scientific and industrial instruments)
Robert J. Tarr, Jr.......................... Former President, Chief Executive Officer and Chief Operations Officer,
Harcourt General, Inc. (publishing)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Other Executive Officers
------------------------
Thomas E. Moloney .......................... Chief Financial Officer
Richard S. Scipione ........................ General Counsel
Derek Chilvers.............................. Chairman and Chief Executive Officer of John Hancock International
Holdings, Inc.
John M. DeCiccio............................ Executive Vice President and Chief Investment Officer-Elect
Maureen R. Ford............................. President, Broker-Dealer Distribution and Financial Advisory Network
Kathleen M. Graveline....................... Executive Vice President - Retail
Barry J. Rubenstein......................... Vice President, Counsel and Secretary
</TABLE>
The business address of all Directors and officers of John Hancock is John
Hancock Place, Boston, Massachusetts 02117.
40
<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, 1999
and 1998, 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 auditing standards generally
accepted in the United States. 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 accounting principles generally accepted in the United
States. The variances between such practices and accounting principles generally
accepted in the United States 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 accounting principles generally accepted in the
United States, the financial position of John Hancock Mutual Life Insurance
Company at December 31, 1999 and 1998 or the results of its operations or its
cash flows for the years then ended.
However, 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, 1999 and 1998, 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
March 10, 2000
41
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31
---------------------
1999 1998
---------- -----------
(in millions)
<S> <C> <C>
ASSETS
Bonds--Note 6.................................... $26,188.1 $23,353.0
Stocks:
Preferred...................................... 926.6 844.7
Common......................................... 458.4 269.3
Investments in affiliates...................... 1,465.8 1,520.3
--------- ---------
2,850.8 2,634.3
Mortgage loans on real estate--Note 6............ 9,165.9 8,223.7
Real estate:
Company occupied............................... 366.6 372.2
Investment properties.......................... 501.7 1,472.1
--------- ---------
868.3 1,844.3
Policy loans..................................... 1,577.8 1,573.8
Cash items:
Cash in banks and offices...................... 292.6 241.5
Temporary cash investments..................... 868.0 1,107.4
--------- ---------
1,160.6 1,348.9
Premiums due and deferred........................ 234.8 253.4
Investment income due and accrued................ 574.8 527.5
Other general account assets..................... 1,364.7 1,156.6
Assets held in separate accounts................. 16,746.0 17,447.0
--------- ---------
TOTAL ASSETS..................................... $60,731.8 $58,362.5
========= =========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
42
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31
---------------------
1999 1998
---------- -----------
(in millions)
<S> <C> <C>
OBLIGATIONS AND POLICYHOLDERS' CONTINGENCY RESERVES
OBLIGATIONS
Policy reserves.................................................. $20,574.1 $19,804.8
Policyholders' and beneficiaries' funds.......................... 16,128.3 14,216.9
Dividends payable to policyholders............................... 464.8 449.1
Policy benefits in process of payment............................ 132.3 111.4
Other policy obligations......................................... 304.7 322.6
Asset valuation reserve--Note 1.................................. 1,242.9 1,289.6
Federal income and other accrued Taxes--Note 1................... (12.1) 211.5
Other general account obligations................................ 1,695.0 1,109.3
Obligations related to separate accounts......................... 16,745.1 17,458.6
--------- ---------
TOTAL OBLIGATIONS.................................................. 57,275.1 54,973.8
POLICYHOLDERS' CONTINGENCY RESERVES
Surplus note--Note 2............................................. 450.0 450.0
Special contingency reserve for group insurance.................. 153.4 160.0
General contingency reserve...................................... 2,853.3 2,778.7
--------- ---------
TOTAL POLICYHOLDERS' CONTINGENCY RESERVES.......................... 3,456.7 3,388.7
--------- ---------
TOTAL OBLIGATIONS AND POLICYHOLDERS' CONTINGENCY
RESERVES.......................................................... $60,731.8 $58,362.5
========= =========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
43
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF OPERATIONS AND CHANGES IN POLICYHOLDERS'
CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Year ended December 31
-----------------------
1999 1998
----------- ------------
(In millions)
<S> <C> <C>
INCOME
Premiums, annuity considerations and pension fund contributions........... $ 9,622.9 $ 8,844.0
Net investment income--Note 4............................................. 3,033.4 2,956.2
Other, net................................................................ 241.9 233.8
--------- ---------
12,898.2 12,034.0
BENEFITS AND EXPENSES
Payments to policyholders and beneficiaries:
Death benefits......................................................... 675.6 582.9
Accident and health benefits........................................... 94.4 76.9
Annuity benefits....................................................... 1,734.3 1,612.4
Surrender benefits and annuity fund withdrawals........................ 7,410.6 6,712.4
Matured endowments..................................................... 18.6 20.7
--------- ---------
9,933.5 9,005.3
Additions to reserves to provide for future payments to policyholders
and beneficiaries........................................................ 1,238.9 1,106.7
Expenses of providing service to policyholders and obtaining
new insurance:
Field sales compensation and expenses.................................. 248.8 290.7
Home office and general expenses....................................... 717.8 529.0
Payroll, state premium and miscellaneous taxes............................ 48.9 52.0
--------- ---------
12,187.9 10,983.7
--------- ---------
GAIN FROM OPERATIONS BEFORE DIVIDENDS TO
POLICYHOLDERS, FEDERAL INCOME TAXES AND
NET REALIZED CAPITAL GAINS......................................... 710.3 1,050.3
Dividends to policyholders.................................................. 461.1 446.0
Federal income tax credit--Note 1........................................... (216.9) (2.8)
--------- ---------
244.2 443.2
--------- ---------
GAIN FROM OPERATIONS BEFORE NET REALIZED
CAPITAL GAINS...................................................... 466.1 607.1
Net realized capital gains--Note 5.......................................... 29.0 0.7
--------- ---------
NET INCOME.......................................................... 495.1 607.8
Other increases/(decreases) in policyholders' contingency reserves:
Net unrealized capital losses and other adjustments--Note 5............... (147.0) (214.5)
Prior years' federal income taxes......................................... (21.9) (25.5)
Other reserves and adjustments, net--Notes 1, 7 and 13.................... (258.2) (136.9)
--------- ---------
NET INCREASE IN POLICYHOLDERS' CONTINGENCY RESERVES................. 68.0 230.9
Policyholders' contingency reserves at beginning of year.................... 3,388.7 3,157.8
--------- ---------
POLICYHOLDERS' CONTINGENCY RESERVES AT END OF YEAR.......................... $ 3,456.7 $ 3,388.7
========= =========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
44
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
--------------------------
1999 1998
----------- -------------
(In millions)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Insurance premiums, annuity considerations and deposits........... $ 9,816.6 $ 8,945.5
Net investment income............................................. 2,966.1 2,952.8
Benefits to policyholders and beneficiaries....................... (10,047.9) (9,190.4)
Dividends paid to policyholders................................... (445.4) (396.6)
Insurance expenses and taxes...................................... (1,015.3) (874.4)
Net transfers from separate accounts.............................. 1,436.6 131.1
Other, net........................................................ (264.2) (181.7)
---------- ----------
NET CASH PROVIDED FROM OPERATIONS.............................. 2,446.5 1,386.3
---------- ----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Bond purchases.................................................... (15,946.3) (12,403.6)
Bond sales........................................................ 10,098.5 8,447.8
Bond maturities and scheduled redemptions......................... 2,443.9 2,537.7
Bond prepayments.................................................. 644.9 1,202.7
Stock purchases................................................... (2,546.2) (623.2)
Proceeds from stock sales......................................... 2,174.0 378.4
Real estate purchases............................................. (188.7) (147.6)
Real estate sales................................................. 1,258.4 630.5
Other invested assets purchases................................... (127.9) (185.3)
Proceeds from the sale of other invested assets................... 358.4 120.5
Mortgage loans issued............................................. (2,254.2) (1,978.5)
Mortgage loan repayments.......................................... 1,267.3 1,575.6
Other, net........................................................ 183.1 (38.6)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES.......................... (2,634.8) (483.6)
---------- ----------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net decrease in short-term note payable........................... 0.0 (75.0)
Repayment of REMIC notes payable.................................. 0.0 (203.6)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES.......................... 0.0 (278.6)
---------- ----------
(DECREASE) INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS.......... (188.3) 624.1
Cash and temporary cash investments at beginning of year............ 1,348.9 724.8
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR.................. $ 1,160.6 $ 1,348.9
========== ==========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
45
<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. Pursuant to a Plan of
Reorganization, effective February 1, 2000, the Company converted from a mutual
life insurance company to a stock life insurance company and became a wholly
owned subsidiary of John Hancock Financial Services, Inc., which is a holding
company. See Note 15--Subsequent Events.
The Company offers financial products in two major groups: (i) its retail
business, which offers protection and asset gathering products primarily to
retail consumers; and (ii) the investment and pension business, which offers
guaranteed and structured financial products primarily to institutional
customers. In addition, there is a corporate business unit. The Company's
reportable business units are strategic business units offering different
products and services. The reportable business units are managed separately, as
they focus on different products, markets or distribution channels.
In the Retail-Protection business unit, the Company offers a variety of
individual life insurance and individual and group long-term care insurance
products, including participating whole life, term life, and retail and group
long-term care insurance. Products are distributed through multiple distribution
channels, including insurance agents and brokers and alternative distribution
channels that include banks, financial planners, direct marketing and the
Internet.
In the Retail-Asset Gathering business unit, the Company offers individual
annuities, consisting of fixed deferred annuities, fixed immediate annuities,
single premium immediate annuities, and variable annuities. This business unit
distributes its products through distribution channels including insurance
agents and brokers affiliated with the Company, securities brokerage firms,
financial planners, and banks.
In the Investment and Pension business unit, the Company offers a variety of
retirement products to qualified defined benefit plans, defined contribution
plans and non-qualified buyers. The Company's products include guaranteed
investment contracts, funding agreements, single premium annuities, and general
account participating annuities and fund type products. These contracts provide
non-guaranteed, partially guaranteed, and fully guaranteed investment options
through general and separate account products. The business unit distributes its
products through a combination of dedicated regional representatives, pension
consultants and investment professionals.
The Corporate business unit primarily consists of certain corporate operations
and businesses that are either disposed or in run-off. Corporate operations
primarily include certain financing activities, income on capital not
specifically allocated to the business units and certain non-recurring expenses
not allocated to the business units. The disposed businesses primarily consist
of group health operations.
The Company established a "corporate account" as part of the Corporate business
unit to facilitate the capital management process. The corporate account
contains capital not allocated to support the operations of the Company's
business units.
Late in the fourth quarter of 1999, the Company transferred certain assets from
the business units to the corporate account. These assets include investments in
certain subsidiaries and the home office real estate complex (collectively
referred to as "corporate purpose assets"). Historically, the Company has
allocated the investment performance or other earnings of corporate purpose
assets among all of the business units. However, subsequent to the conversion to
a stock life insurance company, the Company will centrally manage the
performance of corporate purpose assets through the corporate account.
The asset transfer directly affected certain group pension participating
contractholders because those contracts have participating features under which
crediting rates and dividends are affected directly by portfolio earnings.
Certain participating contractholders participate in contract experience related
to net investment income and realized capital gains and losses in the general
account. These participating contractholders were compensated for transferred
assets
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
based on the fair value of the assets transferred, which amounted to $771.7
million. These participating contractholders were credited with their portion of
the difference between the fair value and carrying value of the assets
transferred through the crediting rates and dividends on their contracts. The
after-tax amount of the transfer was $170.8 million which was charged directly
to policyholders' contingency reserve.
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 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 or future estimated gross profits or gross
margins; (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 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: During March 1998, the NAIC adopted codified
statutory accounting principles ("Codification") effective January 1, 2001.
Codification 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. Codification will
require adoption by the various states before it becomes the prescribed
statutory basis of accounting for insurance companies domesticated within those
states. Accordingly, before Codification becomes effective for the Company, the
Commonwealth of Massachusetts must adopt Codification as the prescribed basis of
accounting on which domestic insurers must report their statutory-basis results
to the Division of Insurance. At this time, it is anticipated that the
Commonwealth of Massachusetts will adopt Codification effective January 1, 2001.
The impact of any such changes on the Company's statutory surplus is not
expected to be material.
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
Revenues and Expenses: Premium revenues are recognized over the premium-paying
period of the policies whereas expenses, including the acquisition costs of new
business, are charged to operations as incurred and policyholder dividends are
provided as paid or accrued.
Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-term,
highly liquid investments both readily convertible to known amounts of cash and
so near maturity that there is insignificant risk of changes in value because of
changes in interest rates.
Valuation of Assets: General account investments are carried at amounts
determined on the following bases:
Bond and stock values are carried as prescribed by the NAIC; bonds
generally at amortized amounts or cost, preferred stocks generally at cost
and common stocks at fair value. The discount or premium on bonds is
amortized using the interest method.
Investments in affiliates are included on the statutory equity method.
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. Net premiums related to equity collar positions are amortized into
income on a straight-line basis over the term of the collars. The collars
are carried at fair value, with changes in fair value reflected directly in
policyholders' contingency reserves.
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. During 1998, the Company made
a strategic decision to sell the majority of its commercial real estate
portfolio. Properties with a book value of $1,057.3 million and $533.8
million were sold in 1999 and 1998, respectively, and an additional $125.3
million of real estate is expected to be sold in 2000. Net gains on the
properties sold amounted to $140.8 million and $64.3 million in 1999 and
1998, respectively. Those properties to be sold subsequent to December 31,
1999 are carried at the lower of depreciated cost at the date a
determination to sell was made or fair value. Accumulated depreciation
amounted to $254.4 million and $370.0 million at December 31, 1999 and
1998, respectively.
Real estate acquired in satisfaction of debt and real estate held for sale,
which are classified with investment properties, are carried at the lower
of cost or fair value.
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
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
bonds, equity securities, mortgage loans, real estate and other invested assets.
The Company historically 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. In connection
with the Company's plans to dispose of certain real estate holdings, during
1998, an additional contribution was recorded that resulted in the AVR exceeding
the prescribed maximum reserve level by $48.0 million and $111.3 million at
December 31, 1999 and 1998, respectively. The Company received permission from
the Massachusetts Division of Insurance to record its AVR in excess of the
prescribed maximum reserve level. Changes to the AVR are charged or credited
directly to policyholders' contingency reserves.
The Company also records the NAIC prescribed Interest Maintenance Reserve (IMR)
that represents that portion of the after tax net accumulated unamortized
realized capital gains and losses on sales of fixed income securities,
principally bonds and mortgage loans, attributable to changes in the general
level of interest rates. Such gains and losses are deferred and amortized into
income over the remaining expected lives of the investments sold. At December
31, 1999, the IMR, net of 1999 amortization of $51.4 million, amounted to $261.7
million that is included in other policy obligations. The corresponding 1998
amounts were $34.9 million and $261.6 million, respectively.
Property and Equipment: Data processing equipment, which amounted to $29.2
million in 1999 and $31.4 million in 1998 and is included in other general
account assets, is reported at depreciated cost, with depreciation recorded on a
straight-line basis. Non-admitted 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 $19.7 million in 1999 and $20.1 million
in 1998.
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 14.
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.
49
<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 values for common and preferred stocks, other than subsidiary
investments, which are carried at equity values, are based on quoted market
prices.
The fair value for mortgage loans is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit
characteristics of the underlying loans. Mortgage loans with similar
characteristics and credit risks are aggregated into qualitative categories
for purposes of the fair value calculations.
The carrying amounts in the statement of financial position for policy
loans approximate their fair values.
Fair values for futures contracts are based on quoted market prices. Fair
values for interest rate swap, cap and floor agreements, swaptions, and
currency swap agreements and equity collar agreements are based on current
settlement values. The current settlement values are based on brokerage
quotes that utilize pricing models or formulas using current assumptions.
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,
1999. The fair value for commitments to purchase other invested assets
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 method. 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%.
50
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
Reserves for deposit administration funds and immediate participation guarantee
funds are based on accepted actuarial methods at various interest rates.
Accident and health policy reserves generally are calculated using either the
two-year preliminary term or the net level premium method based on various
morbidity tables.
The statement value and fair value for investment-type insurance contracts are
as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
-------------------- --------------------
Statement Fair Statement Fair
Value Value Value Value
--------- --------- --------- -----------
(in millions)
<S> <C> <C> <C> <C>
Guaranteed investment contracts.......................... $13,111.6 $12,617.2 $12,666.9 $12,599.7
Fixed rate deferred and immediate annuities.............. 4,685.7 4,656.9 4,375.0 4,412.2
Supplementary contracts without life contingencies....... 55.7 55.7 42.7 44.7
--------- --------- --------- ---------
$17,853.0 $17,329.8 $17,084.6 $17,056.6
========= ========= ========= =========
</TABLE>
Federal Income Taxes: Federal income taxes are reported in the financial
statements based on amounts determined to be payable as a result of operations
within the current accounting period. The operations of the Company and its
subsidiaries and affiliates are combined in filing a consolidated federal income
tax return for the group. The federal income taxes of the Company are determined
on a separate return basis with certain adjustments.
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 Internal Revenue Service sets the DER 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.
The Company made federal tax payments of $115.0 million in 1999 and $74.9
million in 1998.
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. Reserve modifications
resulting from such determinations are recorded directly to policyholders'
contingency reserves. No such refinements were made during 1999 or 1998.
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.
51
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
Guaranty Fund Assessments: Guaranty fund assessments are accrued when the
Company receives knowledge of an insurance insolvency.
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
and any payment of interest on and principal of the notes may be made only with
the prior approval of the Commissioner of Insurance of the Commonwealth of
Massachusetts. Surplus notes are reported as part of policyholders' contingency
reserves rather than liabilities. Interest of $33.2 million was paid on the
notes during 1999 and 1998.
NOTE 3--BORROWED MONEY
At December 31, 1999, the Company had two syndicated lines of credit with a
group of banks totaling $1.0 billion, $500.0 million of which expire on July 29,
2000 and $500.0 million of which expire on June 30, 2001. The banks will commit,
when requested, to loan funds at prevailing interest rates as determined in
accordance within each line of credit agreement. Under the terms of the
agreements, the Company is required to maintain certain minimum levels of net
worth and comply with certain other covenants, which were met at December 31,
1999. At December 31, 1999, the Company had no outstanding borrowings under
either agreement.
Interest paid on borrowed money was $7.9 million and $6.6 million during 1999
and 1998, respectively.
NOTE 4--NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
1999 1998
------- -------
(In millions)
<S> <C> <C>
Investment expenses....................................... $277.1 $317.5
Interest expense.......................................... 41.4 44.3
Depreciation on real estate and other invested assets..... 22.9 41.6
Real estate and other investment taxes.................... 41.8 60.1
------ ------
$383.2 $463.5
====== ======
</TABLE>
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital gains consist of the following items:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(In millions)
<S> <C> <C>
Net gains from asset sales and foreclosures............. $ 260.3 $ 303.3
Capital gains tax....................................... (179.8) (171.7)
Net capital gains transferred to the IMR................ (51.5) (130.9)
------- -------
Net Realized Capital Gains......................... $ 29.0 $ 0.7
======= =======
</TABLE>
52
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS--CONTINUED
Net unrealized capital losses and other adjustments consist of the following
items:
<TABLE>
<CAPTION>
1999 1998
-------- ----------
(In millions)
<S> <C> <C>
Net losses from changes in security values and book value
adjustments................................................ $(193.7) $ (90.6)
Decrease (increase) in asset valuation reserve.............. 46.7 (123.9)
------- -------
Net Unrealized Capital Losses and Other Adjustments......... $(147.0) (214.5)
======= =======
</TABLE>
NOTE 6--INVESTMENTS
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized
December 31, 1999 Value Gains Losses Fair Value
----------------- --------- ---------- ---------- ------------
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S.
government corporations and agencies.................... $ 162.3 $ 0.4 $ 2.5 $ 160.2
Obligations of states and political subdivisions......... 111.3 6.6 4.4 113.5
Debt securities issued by foreign governments............ 510.0 56.4 7.0 559.4
Corporate securities..................................... 20,460.3 587.1 970.8 20,076.6
Mortgage-backed securities............................... 4,944.2 22.1 167.7 4,798.6
--------- -------- -------- ---------
Total bonds............................................ $26,188.1 $ 672.6 $1,152.4 $25,708.3
========= ======== ======== =========
December 31, 1998
-----------------
U.S. Treasury securities and obligations of U.S.
government corporations and agencies.................... $ 123.3 $ 5.9 $ 0.0 $ 129.2
Obligations of states and political subdivisions......... 86.4 9.9 0.0 96.3
Debt securities issued by foreign governments............ 264.5 29.4 8.2 285.7
Corporate securities..................................... 18,155.4 1,567.7 294.4 19,428.7
Mortgage-backed securities............................... 4,723.4 181.2 5.2 4,899.4
--------- -------- -------- ---------
Total bonds............................................ $23,353.0 $1,794.1 $ 307.8 $24,839.3
========= ======== ======== =========
</TABLE>
The statement value and fair value of bonds at December 31, 1999, 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..................................... $ 1,515.9 $ 1,513.2
Due after one year through five years....................... 5,876.1 5,871.2
Due after five years through ten years...................... 6,801.3 6,684.9
Due after ten years......................................... 7,050.6 6,840.4
--------- ---------
21,243.9 20,909.7
Mortgage-backed securities.................................. 4,944.2 4,798.6
--------- ---------
$26,188.1 $25,708.3
========= =========
</TABLE>
53
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS--CONTINUED
Gross gains of $99.1 million in 1999 and $126.4 million in 1998 and gross losses
of $94.4 million in 1999 and $62.3 million in 1998 were realized from the sale
of bonds.
At December 31, 1999, bonds with an admitted asset value of $26.6 million were
on deposit with state insurance departments to satisfy regulatory requirements.
The cost of common stocks was $345.3 million and $258.4 million at December 31,
1999 and 1998, respectively. At December 31, 1999, gross unrealized appreciation
on common stocks totaled $177.7 million, and gross unrealized depreciation
totaled $64.6 million. The fair value of preferred stock totaled $926.7 million
at December 31, 1999 and $832.4 million at December 31, 1998.
The Company participates in a security-lending program for the purpose of
enhancing income on securities held. At December 31, 1999 and 1998, $277.7
million and $421.5 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 $19.3 million, bonds with
amortized cost of $54.4 million and real estate with depreciated cost of $9.9
million were non-income as of December 31, 1999.
Restructured commercial mortgage loans aggregated $120.3 million and $230.5
million as of December 31, 1999 and 1998, 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
-----------------------
1999 1998
----------- -------------
(In millions)
<S> <C> <C>
Expected................................. $10.8 $22.5
Actual................................... 6.9 11.6
</TABLE>
Generally, the terms of the restructured mortgage loans call for the Company to
receive some form or combination of an equity participation in the underlying
collateral, excess cash flows or an effective yield at the maturity of the loans
sufficient to meet the original terms of the loans.
At December 31, 1999, 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.
54
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
Statement Geographic Statement
Property Type Value Concentration Value
------------- ------------- ------------- ---------------
(In millions) (In millions)
<S> <C> <C> <C>
Apartments........... $1,809.1 East North Central.... $1,039.8
Hotels............... 404.0 East South Central.... 289.7
Industrial........... 816.8 Middle Atlantic....... 1,657.5
Office buildings..... 2,309.1 Mountain.............. 326.7
Retail............... 1,619.4 New England........... 836.1
1-4 Family........... 3.4 Pacific............... 2,025.0
Agricultural......... 1,803.6 South Atlantic........ 1,823.5
Other................ 400.5 West North Central.... 362.7
West South Central.... 701.9
Other................. 103.0
-------- --------
$9,165.9 $9,165.9
======== ========
</TABLE>
At December 31, 1999, the fair values of the commercial and agricultural
mortgage loan portfolios were $7.2 billion and $1.8 billion, respectively. The
corresponding amounts as of December 31, 1998 were approximately $7.3 billion
and $1.3 billion, respectively.
The maximum and minimum lending rates for mortgage loans during 1999 were 14.24%
and 6.84% for agricultural loans, 9.0% and 6.50% for other properties, and 10.0%
and 7.125% 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 1999 were
$673.5 million, $42.8 million, and $153.1 million, respectively. The
corresponding amounts in 1998 were $784.0 million, $310.0 million, and $7.7
million, respectively.
The Company cedes business to reinsurers to share risks under life, health and
annuity contracts for the purpose of reducing exposure to large losses.
Premiums, benefits and reserves ceded to reinsurers in 1999 were $1,018.3
million, $488.5 million and $823.7 million, respectively. The corresponding
amounts in 1998 were $873.9 million, $772.5 million and $712.2 million,
respectively.
Premiums, benefits, and reserves ceded related to the group accident and health
and related group life business sold in 1997, included in the amounts above,
were $463.9 million, $449.0 million, and $231.7 million, respectively, at
December 31, 1999. The corresponding amounts in 1998 were $458.2 million, $481.2
million, and $238.6 million, respectively.
55
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--REINSURANCE--CONTINUED
Amounts recoverable on paid claims and funds withheld from reinsurers were as
follows:
<TABLE>
<CAPTION>
December 31
--------------
1999 1998
------- --------
(In millions)
<S> <C> <C>
Reinsurance recoverables................. $ 27.5 $ 18.6
Funds withheld from reinsurers........... 227.3 49.5
</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 $245.7 million at December 31, 1999 and $251.1
million at December 31, 1998.
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 1999 issues of flexible premium variable life
insurance and scheduled premium variable life insurance policies. In connection
with this agreement, the Company transferred $44.5 million and $4.9 million of
cash to Variable Life in 1999 and 1998, respectively, for tax, commission, and
expense allowances to Variable Life, which decreased the Company's net gain from
operations by $20.6 million and $22.2 million in 1999 and 1998, respectively.
Variable Life also has a modified coinsurance agreement with the Company to
reinsure 50% of Variable Life's 1995 inforce block and 50% of 1996 and all
future issue years of certain retail annuity contracts. In connection with this
agreement, the Company made a net cash payment of $40.0 million and $12.7
million in 1999 and 1998, respectively, for surrender benefits, taxes, reserve
increase, commission expense allowances and premiums. This agreement decreased
the Company's net gain from operations by $26.9 million and $8.4 million in 1999
and 1998, 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 1999 and 1998 for all policies that are not reinsured under any other
indemnity agreement. In connection with the agreement, the Company received $0.8
million and $1.0 million in 1999 and 1998, respectively, for mortality claims
from Variable Life. This agreement increased the Company's net gain from
operations in both 1999 and 1998 by $0.5 million.
John Hancock Reassurance Company of Bermuda (JHReCo, a wholly-owned affiliate)
has a modified coinsurance agreement with the Company to reinsure 50% of the
Company's 1997 through 1999 issues of retail long-term care insurance policies.
In connection with this agreement, the Company transferred $22.6 million and
$1.9 million of cash to JHReCo in 1999 and 1998, respectively, for tax,
commission, and expense allowances to JHReCo. This agreement increased the
Company's net gain from operations by $17.4 million and $11.7 million in 1999
and 1998, respectively.
JHReCo has a modified coinsurance agreement with the Company to reinsure 30% of
the Company's issues prior to January 1, 1997 and 50% of the Company's 1997
through 1999 issues of group long-term care insurance policies. In connection
with this agreement, the Company transferred $49.9 million and $38.0 million of
cash to JHReCo in 1999 and 1998, respectively, for tax, commission, and expense
allowances to JHReCo. This agreement increased the Company's net gain from
operations by $3.6 million and $3.9 million in 1999 and 1998, respectively.
JHReCo also has a modified coinsurance agreement with the Company to reinsure
50% of one of the Company's single premium annuity contracts sold in 1999.
Premiums, benefits, and reserves ceded to JHReCo in 1999 were
56
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--REINSURANCE--CONTINUED
$169.4 million, $15.6 million and $166.1 million, respectively. This agreement
increased the Company's net gain from operations by $12.6 million in 1999.
On February 28, 1997, the Company sold a major portion of its group insurance
business to UNICARE Life & Health Insurance Company (UNICARE), a wholly owned
subsidiary of WellPoint Health Networks Inc. The business sold includes the
Company's group accident and health business and related group life business and
Cost Care, Inc., Hancock Association Services Group and Tri-State, Inc., all
indirect wholly-owned subsidiaries of the Company. The Company retained its
group long-term care operations. Assets equal to liabilities of approximately
$562.4 million at February 28, 1997 were transferred to UNICARE in connection
with the sale. The insurance business sold was transferred to UNICARE through a
100% coinsurance agreement.
The Company has secured a $397.0 million letter of credit facility with a group
of banks. The banks have agreed to issue a letter of credit to the Company
pursuant to which the Company may draw up to $397.0 million for any claims not
satisfied by UNICARE under the coinsurance agreement after the Company has
incurred the first $113.0 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 and any letter of credit
issued thereunder are scheduled to expire on March 1, 2002. The Company remains
liable to its policyholders to the extent that UNICARE does not meet its
contractual obligations under the coinsurance agreement.
Through the Company's group health insurance operations, the Company entered
into a number of reinsurance arrangements in respect of personal accident
insurance and the occupational accident component of workers compensation
insurance, a portion of which was originated through a pool managed by Unicover
Managers, Inc. Under these arrangements, the Company both assumed risks as a
reinsurer, and also passed 95% of these risks on to other companies. This
business had originally been reinsured by a number of different companies, and
has become the subject of widespread disputes. The disputes concern the
placement of the business with reinsurers and recovery of the reinsurance. The
Company is engaged in disputes, including a number of legal proceedings, in
respect of this business. The risk to the Company is that other companies that
reinsured the business from the Company may seek to avoid their reinsurance
obligations. However, the Company believes that it has a reasonable legal
position in this matter. During the fourth quarter of 1999 and early 2000, the
Company received additional information about its exposure to losses under the
various reinsurance programs. As a result of this additional information and in
connection with global settlement discussions initiated in late 1999 with other
parties involved in the reinsurance programs, during the fourth quarter the
Company recognized a charge to policyholders' contingency reserves for
uncollectible reinsurance of $186.1 million, aftertax, as its best estimate of
its remaining loss exposure. The Company believes that any exposure to loss from
this issue, in addition to amounts already provided for as of December 31, 1999,
would not be material.
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.
Neither the Company, nor any of its related parties, controls, 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
57
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--REINSURANCE--CONTINUED
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, 1999 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--BENEFITS PLANS AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company provides pension benefits to substantially all employees and general
agency personnel. These benefits are provided through both qualified defined
benefit and defined contribution pension plans. In addition, through
nonqualified plans, the Company provided supplemental pension benefits to
employees with salaries and/ or pension benefits in excess of the qualified plan
limits imposed by federal tax law. 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 $97.6 million in 1999 and $92.6
million in 1998. Plan assets consist principally of listed equity securities,
corporate obligations and U.S. government securities.
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. Because the qualified defined benefit plans are overfunded, no amounts
were contributed to these plans in 1999 or 1998. The funding policy for
nonqualified defined benefit plans is to contribute the amount of the benefit
payments made during the year. The projected benefit obligation and accumulated
benefit obligation for the non-qualified defined benefit pension plans, which
are underfunded, for which accumulated benefit obligations are in excess of plan
assets were $257.4 million and $239.3 million, respectively, at December 31,
1999 and $221.3 million and $194.8 million, respectively, at December 31, 1998.
Non-qualified plan assets, at fair value, were $1.0 million and $1.2 million at
December 31, 1999 and 1998, respectively.
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 $10,000 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 $10,000. The Company
matches the first 3% of pre-tax contributions for marketing representatives and
the first 2% of pre-tax 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 expense for defined contribution plans was $8.5 million and $8.1 million in
1999 and 1998, respectively.
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.
58
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 8--BENEFITS PLANS AND OTHER POSTRETIREMENT BENEFIT PLANS--CONTINUED
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.
The Company's policy is to fund postretirement benefits in amounts at or below
the annual tax qualified limits. As of December 31, 1999 and 1998, plan assets
related to non-union employees were comprised of an irrevocable health insurance
contract to provide future health benefits to retirees. Plan assets related to
union employees were comprised of approximately 70% equity securities and 30%
fixed income investments.
The changes in benefit obligation and plan assets are summarized as follows:
<TABLE>
<CAPTION>
Year ended December 31
----------------------------------------------
Pension Benefits Other Benefits
------------------------ --------------------
1999 1998 1999 1998
----------- ----------- -------- ----------
(In millions)
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning
of year...................... $1,808.4 $1,704.0 $ 366.9 $ 381.0
Service cost.................. 33.8 32.8 6.6 6.8
Interest cost................. 119.0 115.5 23.9 24.4
Actuarial loss/(gain)......... 30.7 55.5 (0.3) (16.8)
Amendments.................... 19.9 0.0 0.0 0.0
Benefits paid................. (106.5) (99.4) (29.0) (28.5)
-------- -------- ------- -------
Benefit obligation at end of
year......................... 1,905.3 1,808.4 368.1 366.9
-------- -------- ------- -------
Change in plan assets:
Fair value of plan assets at
beginning of year............ 2,202.2 1,995.5 215.2 172.7
Actual return on plan assets.. 277.7 296.1 17.7 39.9
Employer contribution......... 10.9 10.0 0.0 2.6
Benefits paid................. (106.5) (99.4) 0.0 0.0
-------- -------- ------- -------
Fair value of plan assets at
end of year.................. 2,384.3 2,202.2 232.9 215.2
-------- -------- ------- -------
Funded status................. 479.0 393.8 (135.2) (151.7)
Unrecognized actuarial loss... (349.7) (292.0) (155.7) (163.0)
Unrecognized prior service
cost......................... 39.1 23.1 16.0 17.8
Unrecognized net transition
(asset) obligation........... (11.8) (23.9) 273.3 294.3
-------- -------- ------- -------
Net amount recognized......... $ 156.6 $ 101.0 $ (1.6) $ (2.6)
-------- -------- ------- -------
</TABLE>
59
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 8--BENEFITS PLANS AND OTHER POSTRETIREMENT BENEFIT PLANS--CONTINUED
The assumptions used in accounting for the benefit plans were as follows:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------
Pension Benefits Other Benefits
----------------------- ------------------
1999 1998 1999 1998
----------- ---------- ------- ---------
<S> <C> <C> <C> <C>
Discount rate................... 7.00% 6.75% 7.00% 6.75%
Expected return on plan assets.. 8.50% 8.50% 8.50% 8.50%
Rate of compensation increase... 4.77% 4.56% 4.77% 4.00%
</TABLE>
For measurement purposes, a 5.50 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2000. The rate was
assumed to decrease gradually to 5.25 percent in 2001 and remain at that level
thereafter.
Net periodic benefit (credit) cost includes the following components:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------
Pension Benefits Other Benefits
----------------------- ------------------
1999 1998 1999 1998
----------- ----------- ------- ---------
(In millions)
<S> <C> <C> <C> <C>
Service cost.................... $ 33.8 $ 32.8 $ 6.6 $ 6.8
Interest cost................... 119.0 115.5 23.9 24.4
Expected return on plan assets.. (182.9) (165.6) (18.2) (39.9)
Amortization of transition
(assets) obligation............ (12.1) (11.6) 21.0 20.9
Amortization of prior service
cost........................... 3.9 6.5 1.8 1.9
Recognized actuarial (gain)
loss........................... (6.3) (2.6) (7.1) 19.0
------- ------- ------ ------
Net periodic benefit (credit)
cost........................ $ (44.6) $ (25.0) $ 28.0 $ 33.1
======= ======= ====== ======
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage point change in assumed
health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
1-Percentage Point 1-Percentage Point
Increase Decrease
------------------ --------------------
(In millions)
<S> <C> <C>
Effect on total of service and
interest costs..................... $ 2.9 $ (2.6)
Effect on postretirement benefit
obligations........................ 29.0 (26.1)
</TABLE>
NOTE 9--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
service entities.
Total assets of unconsolidated majority-owned affiliates amounted to $16.0
billion at December 31, 1999 and $13.8 billion at December 31, 1998; total
liabilities amounted to $14.5 billion at December 31, 1999 and $12.5 billion at
December 31, 1998; and total net income was $99.5 million in 1999 and $148.5
million in 1998.
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 (See Note 7).
60
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 9--AFFILIATES--CONTINUED
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 13).
The Company received dividends of $129.0 million and $62.2 million in 1999 and
1998, respectively, from unconsolidated affiliates.
NOTE 10--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The notional amounts, carrying values and estimated fair values of the Company's
derivative instruments are as follows at December 31:
<TABLE>
<CAPTION>
Assets (Liabilities)
Number of Contracts/ -------------------------------------------
Notional Amounts 1999 1998
--------------------- --------------------- --------------------
Carrying Fair Carrying Fair
1999 1998 Value Value Value Value
---------- --------- ---------- --------- -------- ----------
(In millions)
<S> <C> <C> <C> <C> <C> <C>
Futures contracts to
sell securities................. $18,805 $11,286 $31.5 $ 31.5 $(3.1) $ (3.1)
Futures contracts to
acquire securities.............. 4,006 1,464 (0.9) (0.9) (0.3) (0.3)
Interest rate swap
agreements...................... 9,194.0 7,684.0 -- (27.2) -- (159.1)
Interest rate cap
agreements...................... 115.0 115.0 0.2 0.2 0.4 0.4
Interest rate floor
agreements...................... 125.0 125.0 0.1 0.1 0.7 0.7
Interest rate swaption
agreements...................... 30.0 0.0 (3.6) (3.6) -- 0.0
Currency rate swap
agreements...................... 5,797.0 2,881.5 -- (44.8) -- 16.2
Equity collar
agreements...................... -- -- 53.0 53.0 28.6 28.6
</TABLE>
Financial futures contracts are used principally 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 contracts or notional
amounts of the contracts represent the extent of the Company's involvement but
not the future cash requirements, as the Company intends to close the open
positions prior to settlement. The futures contracts expire in 2000.
The Company uses futures contracts, interest rate swap, cap and floor
agreements, swaptions, and currency rate swap agreements for other than trading
purposes to hedge and manage its exposure to changes in interest rate levels,
foreign exchange rate fluctuations and to manage duration mismatch of assets and
liabilities.
The Company invests in common stock that is subject to fluctuations from market
value changes in stock prices. The Company sometimes seeks to reduce its market
exposure to such holdings by entering into equity collar agreements. A collar
consists of a call that limits the Company's potential for gain from
appreciation in the stock price as well as a put that limits the Company's loss
potential from a decline in the stock price.
The interest rate swap agreements expire in 2000 to 2029. The interest rate cap
agreements expire in 2000 to 2008. Interest rate floor agreements expire in
2003. Interest rate swaption agreements expire in 2025. The currency rate swap
agreements expire in 2000 to 2021. The equity collar agreements expire in 2003.
The Company's exposure to credit risk is the risk of loss from counterparty
failing to perform to the terms of the contract. The Company continually
monitors its position and the credit ratings of the counterparties to these
61
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 10--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--CONTINUED
derivative instruments. To limit exposure associated with counterparty
nonperformance on interest rate and currency swap 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 be immaterial. Futures contracts trade on
organized exchanges and, therefore, have minimal credit risk.
NOTE 11--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 $24.3 million in 1999 and $26.2 million in 1998.
Future minimum rental commitments under noncancellable operating leases for
office space and furniture and equipment are as follows:
<TABLE>
<CAPTION>
December 31, 1999
-------------------
(In millions)
<S> <C>
2000 ....................................... $ 19.1
2001 ....................................... 15.9
2002 ....................................... 12.8
2003 ....................................... 8.9
2004 ....................................... 5.3
Thereafter ................................. 7.0
------
Total minimum payments ..................... $ 69.0
======
</TABLE>
NOTE 12--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, 1999 Percent
----------------- --------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal (with
adjustment):
With market value adjustment.................. $ 1,126.3 2.8%
At book value less surrender charge........... 2,845.0 7.1
--------- -----
Total with adjustment......................... 3,971.3 9.9
Subject to discretionary withdrawal (without
adjustment) at book value................... 1,535.8 3.8
Subject to discretionary withdrawal--separate
accounts.................................... 14,287.3 35.4
Not subject to discretionary withdrawal:
General account............................... 19,320.6 48.0
Separate accounts............................. 1,175.7 2.9
--------- -----
Total annuity reserves, deposit fund liabilities
and separate accounts--before reinsurance...... 40,290.7 100.0%
=====
Less reinsurance ceded.......................... (0.1)
---------
Net annuity reserves, deposit fund liabilities
and separate accounts.......................... $40,290.6
=========
</TABLE>
62
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 12--POLICY RESERVES, POLICYHOLDERS' AND BENEFICIARIES' FUNDS AND
OBLIGATIONS RELATED TO SEPARATE ACCOUNTS--CONTINUED
Any liquidation costs associated with the $14.3 billion of separate accounts
subject to discretionary withdrawal are sustained by the separate account
contractholders and not by the general account.
NOTE 13--COMMITMENTS AND CONTINGENCIES
The Company has extended commitments to purchase long-term bonds, preferred and
common stocks, and other invested assets and issue real estate mortgages
totaling $706.7 million, $6.0 million, $281.1 million and $194.6 million,
respectively, at December 31, 1999. 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 $1.2 billion at December 31, 1999. The majority
of these commitments expire in 2000.
During 1996, the Company entered into a credit support and collateral pledge
agreement with the Federal National Mortgage Association (FNMA). Under the
agreement, the Company sold $532.8 million of commercial mortgage loans and
acquired an equivalent amount of FNMA securities. The Company completed similar
transactions with FNMA in 1991 for $1.042 billion and in 1993 for $71.9 million.
FNMA is guarantying the full face value of the bonds of the three transactions
to the bondholders. However, the Company has agreed to absorb the first 12.25%
of the principal and interest losses (less buy-backs) for the pools of loans
involved in the three transactions, based on the total outstanding principal
balance of $1.036 billion as of July 1, 1996, but is not required to commit
collateral to support this loss contingency. At December 31, 1999, the aggregate
outstanding principal balance of all the remaining pools of loans from 1991,
1993, and 1996 was $493.4 million.
Historically, the Company has experienced losses of less than one percent on its
multi-family mortgage portfolio. Mortgage loan buy-backs required by the FNMA in
1999 and 1998 amounted to $3.4 million and $4.6 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, 1999, the
aggregate outstanding principal balance of the pools of loans was $365.2
million. There were no mortgage loans buy-backs in 1999 and 1998.
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, 1999 were $380.6 million for short-term borrowings
and $163.0 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
63
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 13--COMMITMENTS AND CONTINGENCIES--CONTINUED
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, 1999. 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 reserve held in connection with the
settlement to provide relief to class members and for legal and administrative
costs associated with the settlement amounted to $322.8 million and $283.8
million at December 31, 1999 and 1998, respectively. Costs incurred related to
the settlement were $91.1 million and $150.0 million in 1999 and 1998,
respectively, which were charged directly to policyholders' contingency
reserves. The estimated reserve is based on a number of factors, including the
estimated number of claims, the expected type of relief to be sought by class
members (general relief or alternative dispute resolution), the estimated cost
per claim and the estimated costs to administer the claims.
During 1999, the Company transferred $194.9 million of reserves related to the
settlement to Variable Life representing Variable Life's share of the
settlement. The Company also contributed $194.9 million of capital to Variable
Life during 1999. If Variable Life's share of the settlement increases, the
Company will contribute additional capital to Variable Life so that Variable
Life's total stockholder's equity would not be impacted.
During 1996, management determined that it was probable that a settlement would
occur and that a minimum loss amount could be reasonably estimated. Accordingly,
the Company recorded its best estimate based on the information available at the
time. The terms of the settlement agreement were negotiated throughout 1997 and
approved by the court on December 31, 1997. In accordance with the terms of the
settlement agreement, the Company contacted class members during 1998 to
determine the actual type of relief to be sought by class members. The majority
of the responses from class members were received by the fourth quarter of 1998.
The type of relief sought by class members differed from the Company's previous
estimates, primarily due to additional outreach activities by regulatory
authorities during 1998 encouraging class members to consider alternative
dispute resolution relief. In 1999, the Company updated its estimate of the cost
of claims subject to alternative dispute resolution relief and revised its
reserve estimate accordingly.
Given the uncertainties associated with estimating the reserve, it is reasonably
possible that the final cost of the settlement could differ materially from the
amounts presently provided for by the Company. The Company will continue to
update its estimate of the final cost of the settlement as the claims are
processed and more specific information is developed, particularly as the actual
cost of the claims subject to alternative dispute resolution becomes available.
However, based on information available at this time, and the uncertainties
associated with the final claim processing and alternative dispute resolution,
the range of any additional costs related to the settlement cannot be reasonably
estimated.
64
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 14--FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and fair values of the
Company's financial instruments:
<TABLE>
<CAPTION>
December 31
-----------------------------------------------
1999 1998
--------------------- -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- --------- ---------- ---------
(In millions)
<S> <C> <C> <C> <C>
Assets
Bonds--Note 6............................................... $26,188.1 $25,708.3 $23,353.0 $24,839.3
Preferred stocks--Note 6.................................... 926.6 926.7 844.7 832.4
Common stocks--Note 6....................................... 458.4 458.4 269.3 269.3
Mortgage loans on real estate--Note 6....................... 9,165.9 9,009.5 8,223.7 8,619.7
Policy loans--Note 1........................................ 1,577.8 1,577.8 1,573.8 1,573.8
Cash and cash equivalents--Note 1........................... 1,160.6 1,160.6 1,348.9 1,348.9
Liabilities
Guaranteed investment contracts--Note 1..................... 13,111.6 12,617.2 12,666.9 12,599.7
Fixed rate deferred and immediate annuities--Note 1......... 4,685.7 4,656.9 4,375.0 4,412.2
Supplementary contracts without life contingencies--
Note 1.................................................... 55.7 55.7 42.7 44.7
Derivatives assets (liabilities) relating to:--Note 10
Futures contracts........................................... 30.6 30.6 (3.4) (3.4)
Interest rate swaps......................................... -- (27.2) -- (159.1)
Currency rate swaps......................................... -- (44.8) -- 16.2
Interest rate caps.......................................... 0.2 0.2 0.4 0.4
Interest rate floors........................................ 0.1 0.1 0.7 0.7
Equity collar agreements.................................... 53.0 53.0 28.6 28.6
Commitments--Note 13.......................................... -- 1,195.0 -- 1,114.2
</TABLE>
The carrying amounts in the table are included in the statutory-basis statements
of financial position. The methods and assumptions utilized by the Company in
estimating its fair value disclosures are described in Note 1.
NOTE 15--SUBSEQUENT EVENTS
Reorganization and Initial Public Offering
Pursuant to a Plan of Reorganization approved by the policyholders and the
Commonwealth of Massachusetts Division of Insurance, effective February 1, 2000,
the Company converted from a mutual life insurance company to a stock life
insurance company (i.e., demutualized) and became a wholly owned subsidiary of
John Hancock Financial Services, Inc., which is a holding company. All
policyholder membership interests in the Company were extinguished on that date
and eligible policyholders of the Company received, in the aggregate,
approximately 212.8 million shares of common stock, $1,438.7 million of cash and
$43.7 million policy credits as compensation. In connection with the
reorganization, the Company changed its name to John Hancock Life Insurance
Company.
In addition, on February 1, 2000, John Hancock Financial Services, Inc.
completed its initial public offering and 102 million shares of common stock
were issued at an initial public offering price of $17 per share. Net proceeds
from the offering were $1,657.7 million, of which $105.7 million was retained by
John Hancock Financial Services, Inc. and $1,552.0 million was contributed to
the Company.
65
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 15--SUBSEQUENT EVENTS--CONTINUED
Establishment of the Closed Block
Under the Plan of Reorganization, effective February 1, 2000, the Company
created a closed block for the benefit of policies included therein. The
policies included in the closed block are individual and joint traditional whole
life insurance policies of the Company that are paying or are expected to pay
dividends, and individual term life insurance policies that were in force on
February 1, 2000. The purpose of the closed block is to protect the policy
dividend expectations of these policies after the demutualization. Unless the
Commonwealth of Massachusetts Commissioner of Insurance and, in certain
circumstances, the New York Superintendent of Insurance consents to an earlier
termination, the closed block will continue in effect until the date none of
such policies is in force.
Acquisition of Long-Term Care Business
On January 3, 2000, the Company signed an agreement to purchase the individual
long-term care insurance business of Fortis, Inc. ("Fortis"). The business to be
acquired had earned premiums of approximately $124.4 million in 1999 and
included approximately 97,000 policies in force as of December 31, 1999. During
1999 the Company's individual long-term care earned premium was $177.3 million
and approximately 164,000 individual long-term care policies were in force.
NOTE 16--IMPACT OF YEAR 2000 (UNAUDITED)
By late 1999, the Company completed its Year 2000 readiness plan to address
issues that could result from computer programs being written using two digits
to define the applicable year rather than four to define the applicable year and
century. As a result the Company prepared for the transition to the Year 2000
and did not experience any significant Year 2000 problems with respect to its
mission critical information technology ("IT") or non-IT systems, applications
or infrastructure. During the date rollover to the year 2000, the Company
implemented and monitored its millennium rollover plan and conducted business as
usual on Monday, January 3, 2000.
Since January 3, 2000, the Company's information systems, including its mission
critical systems, which in the event of a Year 2000 failure would have the
greatest impact on its operations, have functioned properly. In addition, the
Company has not experienced any significant Year 2000 issues related to
interactions with its material business partners. The Company has experienced no
disruption in its ability to process claims, update customer accounts, process
financial transactions, report accurate data to management and no business
interruptions due to Year 2000 issues. While the Company continues to monitor
its systems, and those of its material business partners closely to ensure that
no unexpected Year 2000 issues develop, the Company has no reason to expect any
such issues.
The costs of the Year 2000 project consist of internal IT personnel and external
costs such as consultants, programmers, replacement software, and hardware. The
costs of the Year 2000 project are expensed as incurred. The project is funded
partially through a reallocation of resources from discretionary projects.
Through December 31, 1999, the Company has incurred and expensed approximately
$20.8 million in related payroll costs for internal IT personnel on the project.
The estimated remaining IT personnel costs of the project are approximately $1.0
million. Through December 31, 1999, the Company incurred and expensed
approximately $47.0 million in external costs for the project. The estimated
remaining external cost of the project is approximately $2.0 million. The total
costs of the Year 2000 project, based on management's best estimates, include
approximately $21.7 million in internal IT personnel, $14.6 million in the
external modification of software, $18.3 million for external solution
providers, $9.1 million in replacement costs of non-compliant IT systems and
$6.9 million in oversight, test facilities and other expenses. Accordingly, the
estimated range of total costs of the Year 2000 project, internal and external,
is approximately $70 to $72.5 million. The Company's total Year 2000 project
costs include the estimated impact of external solution providers based on
presently available information.
66
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
FOR
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
FIRST QUARTER 2000
67
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MARCH 31, 2000
<TABLE>
<CAPTION>
INTERNATIONAL
LARGE CAP SOVEREIGN EQUITY SMALL CAP
GROWTH BOND INDEX GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash.......................................... $ -- $ -- $ -- $ --
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value.... 47,884,809 72,367,249 7,430,517 6,868,139
Investments in shares of portfolios of M
Fund Inc., at value.......................... -- -- -- --
Policy loans and accrued interest receivable.. 2,881,867 10,323,501 386,100 --
Receivable from:
John Hancock Variable Series Trust I......... 15,529 430,192 12,364 --
M Fund Inc................................... -- -- -- --
----------- ----------- ---------- -----------
Total assets.................................. 50,782,205 83,120,942 7,828,981 6,868,139
LIABILITIES
Payable to John Hancock Mutual Life Insurance
Company...................................... -- -- -- --
Asset charges payable......................... 796 1,292 122 109
----------- ----------- ---------- -----------
Total liabilities............................. 796 1,292 122 109
----------- ----------- ---------- -----------
Net assets.................................... $50,781,408 $83,119,650 $7,828,859 $ 6,868,030
=========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL MID CAP LARGE CAP MONEY
BALANCED GROWTH VALUE MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
ASSETS
Cash.......................................... $ -- $ -- $ -- $ (1,285)
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value.... 158,423 16,802,095 9,335,096 18,838,258
Investments in shares of portfolios of M
Fund Inc., at value.......................... -- -- -- --
Policy loans and accrued interest receivable.. -- -- -- 2,179,525
Receivable from:
John Hancock Variable Series Trust I......... 393 -- 18,307 8,791
M Fund Inc................................... -- -- -- --
--------- ----------- ---------- -----------
Total assets.................................. 158,816 16,802,095 9,353,403 21,025,289
LIABILITIES
Payable to John Hancock Mutual Life Insurance
Company...................................... -- -- -- --
Asset charges payable......................... 3 267 153 998
--------- ----------- ---------- -----------
Total liabilities............................. 3 267 153 998
--------- ----------- ---------- -----------
Net assets.................................... $ 158,813 $16,801,828 $9,353,250 $21,024,291
========= =========== ========== ===========
</TABLE>
See accompanying notes.
68
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
MARCH 31, 2000
<TABLE>
<CAPTION>
MID CAP SMALL/MID REAL ESTATE GROWTH &
VALUE CAP GROWTH EQUITY INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
ASSETS
Cash............................................. $ -- $ -- $ -- $ --
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value....... 4,922,228 5,405,216 3,759,336 311,940,456
Investments in shares of portfolios of M Fund
Inc., at value.................................. -- -- -- 0
Policy loans and accrued interest receivable..... -- -- 240,022 32,758,289
Receivable from:
John Hancock Variable Series Trust I........... -- -- 34,861 293,221
M Fund Inc...................................... -- -- -- --
----------- ---------- ---------- ------------
Total assets..................................... 4,922,228 5,405,216 4,034,222 344,991,966
LIABILITIES
Payable to John Hancock Mutual Life Insurance
Company......................................... -- -- -- --
Asset charges payable............................ 79 86 64 5,297
----------- ---------- ---------- ------------
Total liabilities................................ 79 86 64 5,297
----------- ---------- ---------- ------------
Net assets....................................... $ 4,922,149 $5,405,130 $4,034,158 $344,986,669
=========== ========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM SMALL CAP INTERNATIONAL
MANAGED BOND VALUE OPPORTUNITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
ASSETS
Cash.......................................... $ (685) $ -- $ -- $ --
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at
value........................................ 105,442,736 239,981 3,352,754 8,133,294
Investments in shares of portfolios of M
Fund Inc., at value.......................... 0 0 0 0
Policy loans and accrued interest
receivable................................... 13,011,771 -- -- --
Receivable from:
John Hancock Variable Series Trust I......... 260,094 1,255 4,033 --
M Fund Inc................................... -- -- -- --
------------ --------- ----------- -----------
Total assets.................................. 118,713,916 241,236 3,356,787 8,133,294
LIABILITIES
Payable to John Hancock Mutual Life
Insurance Company............................ -- -- -- --
Asset charges payable......................... 1,839 4 54 133
------------ --------- ----------- -----------
Total liabilities............................. 1,839 4 54 133
------------ --------- ----------- -----------
Net assets.................................... $118,712,077 $ 241,232 $ 3,356,733 $ 8,133,161
============ ========= =========== ===========
</TABLE>
See accompanying notes.
69
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
MARCH 31, 2000
<TABLE>
<CAPTION>
BRANDES
EQUITY GLOBAL TURNER INTERNATIONAL
INDEX BOND CORE GROWTH EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
ASSETS
Cash............................................................... $ -- $ -- $ -- $ --
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value......................................... 17,313,806 800,153 344,698 709,047
Investments in shares of portfolios of M Fund Inc., at value....... 0 0 -- --
Policy loans and accrued interest receivable....................... -- -- -- --
Receivable from:
John Hancock Variable Series Trust I............................. 15,411 2,994 -- --
M Fund Inc....................................................... -- -- -- --
----------- ----------- ----------- --------------
Total assets....................................................... 17,329,217 803,147 344,698 709,047
LIABILITIES
Payable to John Hancock Mutual Life Insurance Company.............. -- -- -- --
Asset charges payable.............................................. 282 13 5 11
----------- ----------- ----------- --------------
Total liabilities.................................................. 282 13 5 11
----------- ----------- ----------- --------------
Net assets......................................................... $17,328,935 $ 803,134 $ 344,694 $ 709,036
=========== =========== =========== ==============
</TABLE>
<TABLE>
<CAPTION>
FRONTIER CAPITAL EMERGING GLOBAL
APPRECIATION MARKETS EQUITY EQUITY BOND INDEX
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash................................................................ $ -- $ -- $ -- $ --
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value.......................................... 652,467 1,002,691 222,631 75,111
Investments in shares of portfolios of M Fund Inc., at value........ -- -- -- --
Policy loans and accrued interest receivable........................ -- -- -- --
Receivable from:
John Hancock Variable Series Trust I.............................. -- -- -- 409
M Fund Inc........................................................ -- -- -- --
------------- ------------- ---------- -----------
Total assets........................................................ 652,467 1,002,691 222,631 75,520
LIABILITIES
Payable to John Hancock Mutual Life Insurance Company............... -- -- -- --
Asset charges payable............................................... 10 17 4 1
------------- ------------- ---------- -----------
Total liabilities................................................... 10 17 4 1
------------- ------------- ---------- -----------
Net assets.......................................................... $ 652,457 $ 1,002,674 $ 222,627 $ 75,519
============= ============= ========== ===========
</TABLE>
See accompanying notes.
70
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
MARCH 31, 2000
<TABLE>
<CAPTION>
SMALL/MID CAP HIGH YIELD ENHANCED U.S.
CORE BOND EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- --------------
<S> <C> <C> <C>
ASSETS
Cash.................................................................................... $ -- $ -- $ --
Investments in shares of portfolios of John Hancock Variable Series Trust I, at value... 151,853 98,021 20,673
Investments in shares of portfolios of M Fund Inc., at value............................ -- -- --
Policy loans and accrued interest receivable............................................ -- -- --
Receivable from:
John Hancock Variable Series Trust I.................................................. -- 675 --
M Fund Inc............................................................................ -- -- --
-------- ------- -------
Total assets............................................................................ 151,853 98,696 20,673
LIABILITIES
Payable to John Hancock Mutual Life Insurance Company................................... -- -- --
Asset charges payable................................................................... 2 2 1
-------- ------- -------
Total liabilities....................................................................... 2 2 1
-------- ------- -------
Net assets.............................................................................. $151,851 $98,694 $20,673
======== ======= =======
</TABLE>
See accompanying notes.
71
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (UNAUDITED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT SOVEREIGN BOND SUBACCOUNT
--------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
----------- ------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.......... $ 35,004 $ 6,381,711 $ 2,836,032 $ 964,076 $ 5,184,234 $ 5,266,576
M Fund Inc.................................... -- -- -- -- -- --
Interest income on policy loans............... 49,804 161,454 128,186 188,119 750,673 727,807
----------- ------------ ------------ ----------- ------------ -----------
Total investment income......................... 84,808 6,543,165 2,964,218 1,152,195 5,934,907 5,994,383
Expenses:
Mortality and expense risks................... 66,579 213,770 143,859 116,907 452,925 415,570
----------- ------------ ------------ ----------- ------------ -----------
Net investment income........................... 18,229 6,329,395 2,820,359 1,035,288 5,481,982 5,578,813
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)...................... 331,582 1,146,308 433,509 (367,297) (388,883) (142,628)
Net unrealized appreciation (depreciation)
during the period........................... 2,976,234 320,087 4,558,660 636,719 (5,439,148) (102,600)
----------- ------------ ------------ ----------- ------------ -----------
Net realized and unrealized gain
(loss) on investments......................... 3,307,816 1,466,395 4,992,169 269,422 (5,828,031) (245,228)
----------- ------------ ------------ ----------- ------------ -----------
Net increase (decrease) in net
assets resulting from operations.............. $ 3,326,045 $ 7,795,790 $ 7,812,528 $ 1,304,710 $ (346,049) $ 5,333,585
=========== ============ ============ =========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX
SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
--------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
----------- ------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I........... $ 17,223 $ 212,869 $ 743,339 $ -- $ 543,433 $ --
M Fund Inc..................................... -- -- -- -- -- --
Interest income on policy loans................ 6,520 20,538 17,802 -- -- --
----------- ----------- ----------- ---------- ----------- ----------
Total investment income......................... 23,743 233,407 761,141 -- 543,433 --
Expenses:
Mortality and expense risks.................... 10,492 32,838 26,542 8,796 15,809 8,233
----------- ----------- ----------- ---------- ----------- ----------
Net investment income (loss).................... 13,251 200,569 734,599 (8,796) 527,624 (8,233)
Net realized and unrealized gain
(loss) on investments:
Net realized gain.............................. 29,784 62,140 52,891 3,248 48,210 21,741
Net unrealized appreciation (depreciation)
during the period............................ (36,779) 1,295,768 13,239 651,201 1,125,829 204,674
----------- ----------- ----------- ---------- ----------- ----------
Net realized and unrealized gain
(loss) on investments.......................... (6,995) 1,357,908 66,130 654,449 1,174,415 226,415
----------- ------------ ----------- ---------- ----------- ----------
Net increase in net assets resulting from
operations..................................... $ 6,256 $ 1,558,477 $ 800,729 $ 645,653 $ 1,701,663 $ 218,182
=========== =========== =========== ========== =========== ==========
</TABLE>
See accompanying notes.
72
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
---------------------------------- -----------------------------------
2000 1999 1998 2000 1999 1998
----------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I................... $ 1,127 $ 17,211 $ 12,240 $ -- $1,373,009 $ 130,303
M Fund Inc............................................. -- -- -- -- -- --
Interest income on policy loan......................... -- -- -- -- -- --
--------- -------- -------- --------- ---------- ----------
Total investment income.................................. 1,127 17,211 12,240 -- 1,373,009 130,303
Expenses:
Mortality and expense risks............................ 268 1,267 826 25,962 34,834 5,242
--------- -------- -------- --------- ---------- ----------
Net investment income (loss)............................. 859 15,944 11,414 (25,962) 1,338,175 125,061
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)............................... (1,703) 1,061 1,050 874,318 420,826 26,192
Net unrealized appreciation (depreciation) during the
period............................................. (5,870) (8,559) 12,294 (649,885) 4,283,452 193,946
--------- -------- -------- --------- ---------- ----------
Net realized and unrealized gain (loss) on investments... (7,573) (7,498) 13,344 224,433 4,704,278 220,138
--------- -------- -------- --------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations........................................... $ (6,714) $ 8,446 $ 24,758 $ 198,471 $6,042,453 $ 345,199
========= ======== ======== ========= ========== ==========
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
----------------------------------- -----------------------------------
2000 1999 1998 2000 1999 1998
----------- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I................... $ 53,189 $ 511,132 $ 185,232 $ 259,668 $1,134,371 $2,249,510
M Fund Inc............................................. -- -- -- -- -- --
Interest income on policy loans.......................... -- -- -- 39,531 155,491 154,162
---------- --------- -------- -------- --------- ---------
Total investment income.................................. 53,189 511,132 185,232 299,199 1,289,862 2,403,672
Expenses:
Mortality and expense risks............................ 13,268 36,983 15,356 29,820 146,758 263,735
---------- --------- --------- --------- ---------- ----------
Net investment income.................................... 39,921 474,149 169,876 269,379 1,143,104 2,139,937
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)............................... (90,136) 123,242 68,953 -- -- --
Net unrealized appreciation (depreciation) during
period............................................. (245,175) (499,454) 64,132 -- -- --
---------- --------- --------- --------- ---------- ----------
Net realized and unrealized gain (loss) on investments... (335,311) (376,212) 133,085 -- -- --
---------- --------- --------- --------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations........................................... $ (295,390) $ 97,937 $ 302,961 $ 269,379 $1,143,104 $2,139,937
========== ========= ========= ========= ========== ==========
</TABLE>
See accompanying notes.
73
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
MID CAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
----------------------------------- ---------------------------------------------
2000 1999 1998 2000 1999 1998
--------- ---------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I....... $ -- $ 30,563 $ 53,920 $ -- $ 840,786 $ 93,281
M Fund Inc................................. -- -- -- -- -- --
Interest income on policy loans............ -- -- -- -- -- --
-------- --------- ------------ ------------ -------------- ------------
Total investment income..................... -- 30,563 53,920 -- 840,786 93,281
Expenses:
Mortality and expense risks................ 6,927 28,106 34,857 7,903 30,491 26,942
-------- --------- ------------ ------------ -------------- ------------
Net investment income (loss)................ (6,927) 2,457 19,063 (7,903) 810,295 66,339
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)................... (41,101) (547,518) 74,634 (138,462) 16,952 33,249
Net unrealized appreciation (depreciation)
during the period......................... 422,026 657,486 (944,401) 485,947 (590,295) 126,465
-------- --------- ------------ ------------ -------------- ------------
Net realized and unrealized gain (loss) on
investments................................ 380,925 109,968 (869,767) 347,485 (573,343) 159,714
-------- --------- ------------ ------------ -------------- ------------
Net increase (decrease) in net assets
resulting from operations.................. $373,998 $ 112,425 $ (850,704) $ 339,582 $ 236,952 $ 226,053
======== ========= ============ ============ ============== ============
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
----------------------------------- ---------------------------------------
2000 1999 1998 2000 1999 1998
---------- ---------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............. $ 79,133 $ 262,930 $ 343,976 $ 754,111 $35,057,066 $26,306,209
M Fund Inc....................................... -- -- -- -- -- --
Interest income on policy loans.................. 4,618 17,361 17,260 588,028 2,279,107 1,996,131
--------- --------- ----------- ----------- ----------- -----------
Total investment income........................... 83,751 280,291 361,236 1,342,139 37,336,173 28,302,340
Expenses:
Mortality and expense risks...................... 5,766 24,900 33,890 462,018 1,779,482 1,466,469
--------- --------- ----------- ----------- ----------- -----------
Net investment income............................. 77,985 255,391 327,346 880,121 35,556,691 26,835,871
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)......................... (56,481) (168,994) 158,205 1,425,819 5,502,422 3,223,935
Net unrealized appreciation (depreciation) during
the period ..................................... 95,421 (220,380) (1,546,717) 3,226,658 2,405,417 32,918,552
--------- --------- ----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments..................................... 38,940 (389,374) (1,388,512) 4,652,477 7,907,839 36,142,487
--------- --------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations................................. $ 116,925 $(133,983) $(1,061,166) $ 5,532,598 $43,464,530 $62,978,358
========= ========== ============ ============ ============ ============
</TABLE>
See accompanying notes.
74
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
------------------------------------- --------------------------------
2000 1999 1998 2000 1999 1998
---------- ------------ ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.............. $ 817,245 $ 9,998,433 $ 9,347,788 $ 3,842 $ 15,539 $ 27,350
M Fund Inc........................................ -- -- -- -- -- --
Interest income on policy loans................... 236,141 953,686 854,487 -- -- --
---------- ------------ ----------- -------- --------- --------
Total investment income............................. 1,053,387 10,952,119 10,202,275 3,842 15,539 27,350
Expenses:
Mortality and expense risks....................... 163,479 649,802 577,276 360 1,497 2,680
---------- ------------ ----------- -------- --------- --------
Net investment income (loss)........................ 889,907 10,302,317 9,624,999 3,482 14,042 24,670
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).......................... 313,202 996,546 791,245 (1,072) (8,638) 265
Net unrealized appreciation (depreciation)
during the period................................ 638,748 (2,108,530) 6,629,458 117 (2,442) (4,247)
---------- ------------ ----------- -------- --------- --------
Net realized and unrealized gain (loss) on
investments...................................... 951,950 (1,111,984) 7,420,703 (955) (11,080) (3,982)
---------- ------------ ----------- -------- --------- --------
Net increase (decrease) in net assets
resulting from operations........................ $1,841,857 $ 9,190,333 $17,045,702 $ 2,527 $ 2,962 $ 20,688
========== ============ =========== ======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL OPPORTUNITIES
SMALL CAP VALUE SUBACCOUNT SUBACCOUNT
--------------------------------- --------------------------------
2000 1999 1998 2000 1999 1998
---------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.............. $ 15,741 $ 79,585 $ 12,675 $ -- $ 241,151 $ 33,443
M Fund Inc........................................ -- -- -- -- -- --
Interest income on policy loans................... -- -- -- -- -- --
---------- --------- --------- --------- -------- --------
Total investment income............................. 15,741 79,585 12,675 -- 241,151 33,443
Expenses:
Mortality and expense risks....................... 4,955 17,680 11,853 11,099 17,937 21,581
---------- --------- --------- --------- -------- --------
Net investment income (loss)........................ 10,786 61,905 822 (11,099) 223,214 11,862
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).......................... (54,620) (33,134) 29,257 22,577 155,412 33,474
Net unrealized appreciation (depreciation)
during the period................................ 31,818 (148,401) (105,331) 149,567 387,412 272,314
---------- --------- --------- --------- -------- --------
Net realized and unrealized gain (loss) on
investments...................................... (22,802) (181,535) (76,074) 172,144 542,824 305,788
---------- --------- --------- --------- -------- --------
Net increase (decrease) in net assets
resulting from operations........................ $ (12,016) $ (119,630) $ (75,252) $ 161,045 $ 766,038 $ 317,650
========== ========== ========== ========== ========= =========
</TABLE>
See accompanying notes.
75
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT GLOBAL BOND SUBACCOUNT
-------------------------------- -------------------------------
2000 1999 1998 2000 1999 1998
-------- ---------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.............. $ 49,090 $ 593,325 $ 185,267 $ 3,209 $ 37,862 $ 19,628
M Fund Inc........................................ -- -- -- -- -- --
Interest income on policy loans................... -- -- -- -- -- --
-------- ---------- ---------- -------- --------- ---------
Total investment income............................. 49,090 593,325 185,267 3,209 37,862 19,628
Expenses:
Mortality and expense risks....................... 24,252 63,950 27,141 1,227 4,084 1,979
-------- ---------- ---------- -------- --------- ---------
Net investment income............................... 24,838 529,375 158,126 1,982 33,778 17,649
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).......................... 110,558 271,978 443,879 (8,414) (151) 3,991
Net unrealized appreciation (depreciation)
during the period................................ 240,624 1,282,937 585,673 20,874 (52,953) 4,308
-------- ---------- ---------- -------- --------- ---------
Net realized and unrealized gain (loss) on
investments...................................... 351,182 1,554,915 1,029,552 12,460 (53,104) 8,299
-------- ---------- ---------- -------- --------- ---------
Net increase (decrease) in net assets
resulting from operations........................ $376,020 $2,084,290 $1,187,678 $ 14,442 $ (19,326) $ 25,948
======== ========== ========== ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
BRANDES INTERNATIONAL EQUITY
TURNER CORE GROWTH SUBACCOUNT SUBACCOUNT
------------------------------- -------------------------------
2000 1999 1998 2000 1999 1998
------------ -------- ------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.............. $ -- $ -- $ -- $ -- $ -- $ --
M Fund Inc........................................ -- $19,328 2,231 -- $ 16,354 14,444
Interest income on policy loans................... -- -- -- -- -- --
---------- ------- ------- --------- -------- -------
Total investment income............................. -- 19,328 2,231 -- 16,354 14,444
Expenses:
Mortality and expense risks....................... 468 1,139 565 862 2,166 1,158
---------- ------- ------- --------- -------- -------
Net investment income (loss)........................ (468) 18,189 1,666 (862) 14,188 13,286
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).......................... 6,241 26,736 2,780 1,188 11,526 600
Net unrealized appreciation (depreciation)
during the period................................ 25,712 23,628 22,686 (14,134) 122,734 8,581
---------- ------- ------- --------- -------- -------
Net realized and unrealized gain (loss) on
investments...................................... 31,953 50,364 25,466 (12,946) 134,260 9,181
---------- ------- ------- --------- -------- -------
Net increase (decrease) in net assets
resulting from operations........................ $ 31,485 $68,553 $27,132 $ (13,808) $148,448 $22,467
========== ======= ======= ========= ======== =======
</TABLE>
See accompanying notes.
76
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
GLOBAL MARKETS
FRONTIER CAPITAL APPRECIATION EQUITY
SUBACCOUNT SUBACCOUNT
------------------------------ ----------------------------
2000 1999 1998 2000 1999 1998
------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............................. $ -- $ -- $ -- $ -- $ 15,636 $ --
M Fund Inc....................................................... -- 13,028 12,832 -- -- --
Interest income on policy loans.................................. -- -- -- -- -- --
------- -------- ------- ------- -------- --------
Total investment income
Expenses:......................................................... -- 13,028 12,832 -- 15,636 --
Mortality and expense risks...................................... 817 4,257 13,446 1,069 466 --
------- -------- ------- ------- -------- --------
Net investment income (loss)...................................... (817) 8,771 (614) (1,069) 15,170
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)......................................... 1,328 (59,550) 23,061 21,863 1,838
Net unrealized appreciation (depreciation) during the period.....
89,905 89,369 (840) 6,439 92,713 --
------- -------- ------- ------- -------- --------
Net realized and unrealized gain on investments................... 91,233 29,819 22,221 28,302 94,551 --
------- -------- ------- ------- -------- --------
Net increase in net assets resulting from operations.............. $90,416 $ 38,590 $21,607 $27,233 $109,721 $ --
======= ======== ======= ======= ======== ========
<CAPTION>
GLOBAL EQUITY BOND INDEX
SUBACCOUNT SUBACCOUNT
------------------------------ ----------------------------
2000 1999 1998 2000 1999 1998
-------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............................. $ -- $ 816 $ -- $ 1,342 $ 2,971 $ --
M Fund Inc....................................................... -- -- -- -- -- --
Interest income on policy loans.................................. -- -- -- -- -- --
-------- -------- ------- ------- -------- --------
Total investment income........................................... -- 816 -- 1,342 2,971 --
Expenses:
Mortality and expense risks...................................... 254 378 -- 110 270 --
-------- -------- ------- ------- -------- --------
Net investment income (loss)...................................... (254) 438 -- 1,232 2,701 --
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)......................................... 801 196 -- (97) (1,613) --
Net unrealized appreciation (depreciation) during the period..... 6,451 20,203 -- 636 (1,753) --
-------- ------- ------- ------- -------- --------
Net realized and unrealized gain (loss) on investments............ 7,252 20,399 -- 539 (3,366) --
-------- ------- ------- ------- -------- --------
Net increase (decrease) in net assets resulting from operations... $ 6,998 $20,837 $ -- $ 1,771 $ (665) $ --
======== ======= ======= ======= ======== ========
</TABLE>
---------
* From May 1, 1998 (commencement of operations).
** From May 1, 1999 (commencement of operations).
See accompanying notes.
77
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
SMALL/MID CAP CORE HIGH YIELD BOND
SUBACCOUNT SUBACCOUNT
-------------------------- ----------------------------
2000 1999 1998 2000 1999 1998
-------- ------- ------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............................... $ 10 $ 2,971 $ -- $ 2,054 $ 3,011 $ --
M Fund Inc......................................................... -- -- -- -- -- --
Interest income on policy loans.................................... -- -- -- -- -- --
-------- ------- ------ -------- -------- --------
Total investment income............................................. 10 6,699 -- 2,054 3,011 --
Expenses:
Mortality and expense risks........................................ 149 335 -- 134 220 --
-------- ------- ------ -------- -------- --------
Net investment income............................................... 139 6,364 -- 1,920 2,791 --
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss)........................................... 134 1,093 -- (278) (396) --
Net unrealized appreciation (depreciation) during the period....... 1,709 4,719 -- (4,859) (1,172) --
-------- ------- ------ -------- -------- --------
Net realized and unrealized gain (loss) on investments.............. 1,843 5,812 -- (5,137) (1,568) --
-------- ------- ------ -------- -------- --------
Net increase (decrease) in net assets resulting from operations..... $ 1,704 $12,176 $ -- $ (3,217) $ 1,223 $ --
======== ======= ====== ======== ======== ========
<CAPTION>
ENHANCED U.S.
EQUITY SUBACCOUNT
-----------------------
2000 1999 1998
------ ------- ------
<S> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.................................................................. $ -- $ -- $ --
M Fund Inc............................................................................................ -- 1,435 --
Interest income on policy loans....................................................................... -- -- --
------ ------- ------
Total investment income................................................................................ -- 1,435 --
Expenses:
Mortality and expense risks........................................................................... 29 61 --
------ ------- ------
Net investment income (loss)........................................................................... (29) 1,374 --
Net realized and unrealized gain (loss) on investments:
Net realized gain..................................................................................... 276 11 --
Net unrealized appreciation during the period......................................................... 101 1,285 --
------ ------- ------
Net realized and unrealized gain on investments........................................................ 377 1,296 --
------ ------- ------
Net increase in net assets resulting from operations................................................... $ 348 $ 2,670 $ --
====== ======= ======
</TABLE>
---------
* From May 1, 1998 (commencement of operations).
** From May 1, 1999 (commencement of operations).
See accompanying notes.
78
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT SOVEREIGN BOND SUBACCOUNT
--------------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income....................... $ 18,230 $ 6,329,395 $ 2,820,359 $ 1,035,289 $ 5,481,982 $ 5,578,813
Net realized gain (loss).................... 331,582 1,146,308 433,509 (367,297) (388,883) (142,628)
Net unrealized appreciation (depreciation)
during the period.......................... 2,976,234 320,087 4,558,660 636,719 (5,439,148) (102,600)
----------- ----------- ----------- ----------- ----------- ------------
Net increase (decrease) in net assets
resulting from operations................... 3,326,046 7,795,790 7,812,528 1,304,711 (346,049) 5,333,585
From policyholder transactions:
Net premiums from policyholders............. 5,859,645 10,950,682 6,922,934 4,481,558 11,668,600 10,038,753
Net benefits to policyholders............... (2,722,620) (5,776,293) (3,869,320) (3,620,100) (7,543,864) (7,974,328)
Net increase in policy loans................ 289,900 -- -- 63,900 -- --
----------- ----------- ----------- ----------- ----------- ------------
Net increase in net assets resulting from
policyholder transactions................... 3,426,925 5,174,389 3,053,614 925,358 4,124,736 2,064,425
----------- ----------- ----------- ----------- ----------- ------------
Net increase in net assets................... 6,752,971 12,970,179 10,866,142 2,230,069 3,778,687 7,398,010
Net assets at beginning of period............ $44,028,437 31,058,258 20,192,116 $80,889,582 77,110,895 69,712,885
----------- ----------- ----------- ----------- ----------- ------------
Net assets at end of period.................. $50,781,408 $44,028,437 $31,058,258 $83,119,651 $80,889,582 $ 77,110,895
=========== =========== =========== =========== =========== ============
<CAPTION>
INTERNATIONAL EQUITY INDEX
SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
-------------------------------------- -------------------------------------
2000 1999 1998 2000 1999 1998
---------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss)............... $ 13,252 $ 200,569 $ 734,599 $ (8,796) $ 527,624 $ (8,233)
Net realized gain.......................... 29,784 62,140 52,891 3,248 48,210 21,741
Net unrealized appreciation (depreciation)
during the period......................... (36,779) 1,295,768 13,239 651,201 1,125,829 204,674
---------- ----------- ----------- ---------- ---------- ----------
Net increase in net assets resulting from
operations................................. 6,257 1,558,477 800,729 645,653 1,701,663 218,182
From policyholder transactions:
Net premiums from policyholders............ 1,029,865 1,634,643 1,489,281 1,949,600 1,398,160 891,480
Net benefits to policyholders.............. (442,743) (1,119,500) (1,347,312) (239,156) (390,180) (269,586)
Net increase in policy loans............... 54,486 -- -- -- -- --
---------- ----------- ----------- ---------- ---------- ----------
Net increase in net assets resulting from
policyholder transactions.................. 641,608 515,143 141,969 1,710,444 1,007,980 621,894
---------- ----------- ----------- ---------- ---------- ----------
Net increase in net assets.................. 647,865 2,073,620 942,698 2,356,096 2,709,643 840,076
Net assets at beginning of period........... $5,107,374 5,107,374 4,164,676 $4,511,934 1,802,291 962,215
---------- ----------- ----------- ---------- ---------- ----------
Net assets at end of period................. $7,828,859 $ 7,180,994 $ 4,164,676 $6,868,030 $4,511,934 $1,802,291
========== =========== =========== ========== ========== ==========
</TABLE>
See accompanying notes.
79
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
------------------------------------ ------------------------------------------
2000 1999 1998 2000 1999 1998
--------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss)............... $ 859 $ 15,944 $ 11,414 $ (25,962) $ 1,338,175 $ 125,061
Net realized gain (loss)................... (1,703) 1,061 1,050 874,318 420,826 26,192
Net unrealized appreciation (depreciation)
during the period......................... (5,870) (8,559) 12,294 (649,885) 4,283,452 193,946
--------- ---------- ----------- ----------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations................. (6,714) 8,446 24,758 198,471 6,042,453 345,199
From policyholder transactions:
Net premiums from policyholders............ 19,174 115,573 150,466 5,214,988 7,041,199 772,359
Net benefits to policyholders.............. (54,015) (133,983) (50,204) (2,221,205) (947,660) (211,806)
Net increase in policy loans............... -- -- -- -- -- --
--------- ---------- ----------- ----------- ------------ ------------
Net increase (decrease) in net assets
resulting from policyholder transactions.. (34,841) (18,410) 100,262 2,993,783 6,093,539 560,553
--------- ---------- ----------- ----------- ------------ ------------
Net increase (decrease) in net assets....... (41,555) (9,964) 125,020 3,192,254 12,135,992 905,752
Net assets at beginning of period........... $ 200,368 210,332 85,312 $13,609,574 1,473,582 567,830
--------- ---------- ----------- ----------- ------------ ------------
Net assets at end of period................. $ 158,813 $ 200,368 $ 210,332 $16,801,828 $ 13,609,574 $ 1,473,582
========= ========== =========== =========== ============ ============
<CAPTION>
LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
-------------------------------------- ------------------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income...................... $ 39,921 $ 474,149 $ 169,876 $ 269,379 $ 1,143,104 $ 2,139,937
Net realized gain (loss)................... (90,136) 123,242 68,953 -- -- --
Net unrealized appreciation (depreciation)
during the period........................ (245,175) (499,454) 64,132 -- -- --
----------- ----------- ---------- ----------- ------------- ------------
Net increase (decrease) in net assets
resulting from operations.................. (295,390) 97,937 302,961 269,379 1,143,104 2,139,937
From policyholder transactions:
Net premiums from policyholders............ 2,389,260 5,449,922 2,321,440 2,404,134 16,733,655 55,692,824
Net benefits to policyholders.............. (1,003,407) (1,059,147) (528,449) (2,177,192) (46,642,184) (22,850,788)
Net increase in policy loans............... -- -- -- 24,864 -- (198,682)
----------- ----------- ---------- ----------- ------------- ------------
Net increase (decrease) in net assets
resulting from policyholder transactions... 1,385,853 4,390,775 1,792,991 251,806 (29,908,529) 32,643,354
----------- ----------- ---------- ----------- ------------- ------------
Net increase (decrease) in net assets....... 1,090,463 4,488,712 2,095,952 521,185 (28,765,425) 34,783,291
Net assets at beginning of period........... $ 8,262,787 3,774,075 1,678,123 $20,503,106 49,268,531 14,485,240
----------- ----------- ---------- ----------- ------------- ------------
Net assets at end of period................. $ 9,353,250 $ 8,262,787 $3,774,075 $21,024,290 $ 20,503,106 $ 49,268,531
=========== =========== ========== =========== ============= ============
</TABLE>
80
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
MID CAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
-------------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss).............. $ (6,927) $ 2,457 $ 19,063 $ (7,903) $ 810,295 $ 66,339
Net realized gain (loss).................. (41,101) (547,518) 74,634 (138,462) 16,952 33,249
Net unrealized appreciation
(depreciation) during the period......... 422,026 657,486 (944,401) 485,947 (590,295) 126,465
---------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................. 373,998 112,425 (850,704) 339,582 236,952 226,053
From policyholder transactions:
Net premiums from policyholders........... 299,060 2,086,192 5,639,732 353,544 1,533,102 1,812,713
Net benefits to policyholders............. (452,541) (3,546,814) (775,357) (774,040) (1,200,248) (1,214,489)
Net increase in policy loans.............. -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from policyholder transactions.. (153,481) (1,460,622) 4,864,375 (420,497) 332,854 598,224
---------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets...... 220,517 (1,348,197) 4,013,671 (80,914) 569,806 824,277
Net assets at beginning of period.......... 4,701,632 6,049,829 2,036,158 5,486,044 4,916,238 4,091,961
---------- ----------- ----------- ----------- ----------- -----------
Net assets at end of period................ $4,922,149 $ 4,701,632 $ 6,049,829 $ 5,405,130 $ 5,486,044 $ 4,916,238
========== =========== =========== =========== =========== ===========
<CAPTION>
REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
--------------------------------------- --------------------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income..................... $ 77,984 $ 255,391 $ 327,346 $ 880,121 $ 35,556,691 $ 26,835,871
Net realized gain (loss).................. (56,481) (168,994) 158,205 1,425,819 5,502,422 3,223,935
Net unrealized appreciation
(depreciation) during the period......... 95,421 (220,380) (1,546,717) 3,226,658 2,405,417 32,918,552
----------- ----------- ----------- ------------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations................. 116,924 (133,983) (1,061,166) 5,532,598 43,464,530 62,978,358
From policyholder transactions:
Net premiums from policyholders........... 179,951 968,627 3,382,263 9,232,088 34,593,082 35,108,834
Net benefits to policyholders............. (299,820) (2,335,552) (1,663,696) (10,377,163) (34,650,911) (29,649,984)
Net increase in policy loans.............. 7,003 -- (1,103) 99,049 -- 3,672,137
----------- ----------- ----------- ------------- ------------ ------------
Net increase (decrease) in net assets
resulting from policyholder transactions.. (112,866) (1,366,925) 1,717,464 (1,046,026) (57,829) 9,130,987
----------- ----------- ----------- ------------- ------------ ------------
Net increase (decrease) in net assets...... 4,058 (1,500,908) 656,298 4,486,572 43,406,701 72,109,345
Net assets at beginning of period.......... 4,030,100 5,531,008 4,874,710 340,500,097 297,093,396 224,984,051
----------- ----------- ----------- ------------- ------------ ------------
Net assets at end of period................ $ 4,034,158 $ 4,030,100 $ 5,531,008 $ 344,986,669 $340,500,097 $297,093,396
=========== =========== =========== ============= ============ ============
</TABLE>
See accompanying notes.
81
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
------------------------------------------ -----------------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------ ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income..................... $ 889,906 $ 10,302,317 $ 9,624,999 $ 3,482 $ 14,042 $ 24,670
Net realized gain (loss).................. 313,202 996,546 791,245 (1,072) (8,638) 265
Net unrealized appreciation
(depreciation) during the period......... 638,748 (2,108,530) 6,629,458 117 (2,442) (4,247)
------------ ------------ ------------ ------------ ---------- ------------
Net increase in net assets resulting from
operations................................ 1,841,856 9,190,333 17,045,702 2,527 2,962 20,688
From policyholder transactions:
Net premiums from policyholders........... 2,717,887 13,430,282 13,116,210 30,879 109,732 420,697
Net benefits to policyholders............. (4,995,864) (14,305,859) (14,539,301) (31,087) (370,270) (71,999)
Net increase in policy loans.............. 18,779 -- 1,134,137 -- -- --
------------ ------------ ------------ ------------ ---------- ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions.............................. (2,259,198) (875,577) (288,954) (208) (260,538) 348,698
------------ ------------ ------------ ------------ ---------- ------------
Net increase (decrease) in net assets...... (417,342) 8,314,756 16,756,748 2,319 (257,576) 369,386
Net assets at beginning of period.......... 119,129,419 110,814,663 94,057,915 238,913 496,489 127,103
------------ ------------ ------------ ------------ ---------- ------------
Net assets at end of period................ $ 8,712,077 $119,129,419 $110,814,663 $ 241,232 $ 238,913 $ 496,489
============ ============ ============ ============ ========== ============
<CAPTION>
SMALL CAP VALUE SUBACCOUNT INTERNATIONAL OPPORTUNITIES SUBACCOUNT
----------------------------------------- -----------------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss).............. $ 10,786 $ 61,905 $ 822 $ (11,099) $ 223,214 $ 11,862
Net realized gain (loss).................. (54,620) (33,134) 29,257 22,577 155,412 33,474
Net unrealized appreciation
(depreciation) during the period......... 31,818 (148,401) (105,331) 149,567 387,412 272,314
----------- ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations................. (12,016) (119,630) (75,252) 161,045 766,038 317,650
From policyholder transactions:
Net premiums from policyholders........... 109,194 1,483,922 1,644,666 4,426,626 2,354,681 3,814,201
Net benefits to policyholders............. (207,837) (447,402) (270,585) (83,453) (3,673,500) (339,134)
Net increase in policy loans.............. -- -- -- -- -- --
----------- ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in net assets
resulting from policyholder
transactions.............................. (98,643) 1,036,520 1,374,081 4,343,173 (1,318,819) 3,475,067
----------- ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in net assets...... (110,659) 916,890 1,298,829 4,504,218 (552,781) 3,792,717
Net assets at beginning of period.......... 3,467,392 2,550,502 1,251,673 3,628,943 4,181,724 389,007
----------- ----------- ----------- ---------- ----------- ----------
Net assets at end of period................ $ 3,356,733 $ 3,467,392 $ 2,550,502 $8,133,161 $ 3,628,943 $4,181,724
=========== =========== =========== ========== =========== ==========
</TABLE>
See accompanying notes.
82
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT GLOBAL BOND SUBACCOUNT
-------------------------------------- ----------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------ ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income............................. $ 24,838 $ 529,375 $ 158,126 $ 1,982 $ 33,778 $ 17,649
Net realized gain (loss).......................... 110,558 271,978 443,879 (8,414) (151) 3,991
Net unrealized appreciation (depreciation)
during the period............................... 240,624 1,282,937 585,673 20,874 (52,953) 4,308
----------- ----------- ---------- -------- --------- --------
Net increase (decrease) in net assets
resulting from operations........................ 376,020 2,084,290 1,187,678 14,442 (19,326) 25,948
From policyholder transactions:
Net premiums from policyholders................... 3,636,358 6,697,385 4,822,053 32,150 696,619 381,025
Net benefits to policyholders..................... (1,089,522) (1,623,429) (885,493) (73,176) (317,999) (83,865)
Net increase in policy loans...................... -- -- -- -- -- --
----------- ----------- ---------- -------- --------- --------
Net increase (decrease) in net assets
resulting from policyholder transactions.......... 2,546,836 5,073,956 3,936,560 (41,026) 378,620 297,159
----------- ----------- ---------- -------- --------- --------
Net increase (decrease) in net assets.............. 2,922,856 7,158,246 5,124,238 (26,584) 359,294 323,107
Net assets at beginning of period.................. $14,406,079 7,247,833 2,123,595 $829,718 470,424 147,317
----------- ----------- ---------- -------- --------- --------
Net assets at end of period........................ $ 7,328,935 $14,406,079 $7,247,833 $803,134 $ 829,718 $470,424
=========== =========== ========== ======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
TURNER CORE GROWTH SUBACCOUNT BRANDES INTERNATIONAL EQUITY SUBACCOUNT
-------------------------------------- ---------------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss).................... $ (468) $ 18,189 $ 1,666 $ (862) $ 14,188 $ 13,286
Net realized gain............................... 6,241 26,736 2,780 1,188 11,526 600
Net unrealized appreciation (depreciation)
during the period.............................. 25,712 23,628 22,686 (14,134) 122,734 8,581
----------- ----------- ---------- ----------- --------- ----------
Net increase (decrease) in net assets
resulting from operations....................... 31,485 68,553 27,132 (13,808) 148,448 22,467
From policyholder transactions:
Net premiums from policyholders................. 69,137 109,802 39,070 188,196 152,629 141,892
Net benefits to policyholders................... (13,735) (45,555) (9,835) 9,146 (31,332) (34,941)
Net increase in policy loans.................... -- -- -- -- -- --
----------- ----------- ---------- ----------- --------- ----------
Net increase in net assets resulting from
policyholder transactions....................... 55,402 64,247 29,235 197,342 121,297 106,951
----------- ----------- ---------- ----------- --------- ----------
Net increase in net assets....................... 86,887 132,800 56,367 183,534 269,745 129,418
Net assets at beginning of period................ $ 257,807 125,007 68,640 $ 525,502 255,757 126,339
----------- ----------- ---------- ----------- --------- ----------
Net assets at end of period...................... $ 344,694 $ 257,807 $ 125,007 $ 709,036 $ 525,502 $ 255,757
=========== =========== ========== =========== ========= ==========
</TABLE>
See accompanying notes.
83
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (unaudited) (continued)
Years and periods ended march 31
<TABLE>
<CAPTION>
Frontier CAPITAL APPRECIATION EMERGING MARKETS EQUITY
SUBACCOUNT SUBACCOUNT
----------------------------------- --------------------------
2000 1999 1998 2000 1999
-------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss)................... $ (817) $ 8,771 $ (614) $ (1,069) $ 15,170
Net realized gain (loss)....................... 1,328 (59,550) 23,061 21,863 1,838
Net unrealized appreciation (depreciation)
during the period ............................ 89,905 89,369 (840) 6,439 92,713
-------- ----------- ---------- ---------- ------------
Net increase in net assets resulting from
operations..................................... 90,416 38,590 21,607 27,233 109,721
From policyholder transactions:
Net premiums from policyholders................ 108,533 103,675 2,465,299 629,596 336,277
Net benefits to policyholders.................. (475) (2,221,410) (227,386) (91,967) (8,915)
Net increase in policy loans................... -- -- -- -- --
-------- ----------- ---------- ---------- ------------
Net increase (decrease) in net assets
resulting from policyholder transactions....... 108,058 (2,117,735) 2,237,913 537,629 327,362
-------- ----------- ---------- ---------- ------------
Net increase (decrease) in net assets........... 198,474 (2,079,145) 2,259,520 564,862 437,083
Net assets at beginning of period............... $453,983 $ 2,533,128 $ 273,608 $ 437,812 $ 729
-------- ----------- ---------- ---------- ------------
Net assets at end of period..................... $652,457 $ 453,983 $2,533,128 $1,002,674 $ 437,812
======== =========== ========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
SMALL/MID CAP
GLOBAL EQUITY BOND INDEX CORE
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------- ------------------- ---------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss)......................... $ (254) $ 438 $ 1,232 $ 2,701 $ (140) $ 6,364
Net realized gain (loss)............................. 801 196 (97) (1,613) 134 1,093
Net unrealized appreciation (depreciation)
during the period................................... 6,451 20,203 636 (1,753) 1,709 4,719
-------- -------- ------- -------- -------- --------
Net increase (decrease) in net assets resulting
from operations..................................... 6,998 20,837 1,771 (665) 1,703 12,176
From policyholder transactions:
Net premiums from policyholders...................... 121,807 125,955 2,848 80,921 73,094 44,493
Net benefits to policyholders........................ (53,893) (15,572) (3,307) (20,596) (311) (12,003)
Net increase in policy loans......................... -- -- -- -- -- --
-------- -------- ------- -------- -------- --------
Net increase (decrease) in net assets resulting
from policyholder transactions...................... 67,914 110,383 (461) 60,325 72,783 32,490
-------- -------- ------- -------- -------- --------
Net increase in net assets............................ 74,912 131,220 1,310 59,660 74,486 44,666
Net assets at beginning of period $147,715 $ 16,495 $74,209 $ 14,549 $ 77,365 $ 32,699
-------- -------- ------- -------- -------- --------
Net assets at end of period........................... $222,627 $147,715 $75,519 $ 74,209 $151,851 $ 77,365
======== ======== ======= ======== ======== ========
</TABLE>
See accompanying notes.
84
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31
<TABLE>
<CAPTION>
HIGH YIELD ENHANCED
BOND U.S. EQUITY
SUBACCOUNT SUBACCOUNT
------------------ -------------------
2000 1999 2000 1999
--------- ------- -------- ---------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss)........................................ $ 1,920 $ 2,791 $ (29) $ 1,374
Net realized gain (loss)............................................ (278) (396) 276 11
Net unrealized appreciation (depreciation) during the period........ (4,859) (1,172) 101 1,285
-------- ------- ------- -------
Net increase (decrease) in net assets resulting from operations...... (3,217) 1,223 348 2,670
From policyholder transactions:
Net premiums from policyholders..................................... 80,978 69,375 10,189 15,505
Net benefits to policyholders....................................... (55,118) -- (8,040) --
Net increase in policy loans........................................ -- -- -- --
-------- ------- ------- -------
Net increase in net assets resulting from policyholder transactions.. 25,860 69,375 2,149 15,505
-------- ------- ------- -------
Net increase in net assets........................................... 22,643 70,598 2,497 18,175
Net assets at beginning of period.................................... $ 76,051 $ 5,453 $18,175 $ --
-------- ------- ------- -------
Net assets at end of period.......................................... $ 98,694 $76,051 $20,672 $18,175
======== ======= ======= =======
</TABLE>
_________
From May 1, 1998 (commencement of operations).
See accompanying notes.
85
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS (Unaudited)
MARCH 31, 1999
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-seven 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-seven Portfolios
of the Fund and M Fund which are currently available are the Large Cap Growth,
Sovereign Bond, International Equity Index, Small Cap Growth, International
Balanced, Mid Cap Growth, Large Cap Value, Money Market, Mid Cap Value,
Small/Mid Cap Growth (formerly, Diversified Mid Cap Growth), Real Estate Equity,
Growth & Income, Managed, Short-Term Bond, Small Cap Value, International
Opportunities, Equity Index, Global Bond (formerly, Strategic Bond), Turner Core
Growth, Brandes International Equity, Frontier Capital Appreciation, Emerging
Markets Equity, Global Equity, Bond Index, Small/Mid Cap CORE, High Yield Bond
and Enhanced U.S. Equity 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 respective Portfolio shares are
determined on the basis of identified cost.
Federal Income Taxes
The operations of the Account are included in the federal income tax return
of JHMLICO, which is taxed as a life insurance company under the Internal
Revenue Code. JHMLICO has the right to charge the Account any federal income
taxes, or provision for federal income taxes, attributable to the operations of
the Account or to the Policies funded in the Account. Currently, JHMLICO does
not make a charge for income or other taxes. Charges for state and local taxes,
if any, attributable to the Account may also be made.
86
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
Expenses
JHMLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at various rates ranging from .50%
to .625%, depending on the type of policy, of net assets (excluding policy
loans) of the Account. Additionally, a monthly charge at varying levels for the
cost of extra insurance is deducted from the net assets of the Account.
JHMLICO makes certain deductions for administrative expenses and state
premium taxes from premium payments before amounts are transferred to the
Account.
Policy Loans
Policy loans represent outstanding loans plus accrued interest. Interest is
accrued (net of a charge for policy loan administration determined at an annual
rate of .75% of the aggregate amount of policyholder indebtedness) and
compounded daily.
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.
87
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS (Unaudited) (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 March 31, 2000 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO SHARES OWNED COST VALUE
--------- ------------ ------------ --------------
<S> <C> <C> <C>
Large Cap Growth.................. 1,633,552 $ 37,288,256 $ 50,781,408
Sovereign Bond.................... 7,902,734 77,657,389 83,119,650
International Equity Index........ 379,277 6,309,196 7,828,858
Small Cap Growth.................. 311,882 4,799,905 6,868,030
International Balanced............ 16,337 163,971 158,814
Mid Cap Growth.................... 559,598 12,906,023 16,801,827
Large Cap Value................... 715,920 9,930,771 9,353,251
Money Market...................... 1,883,826 18,838,259 21,024,291
Mid Cap Value..................... 355,336 4,627,498 4,922,149
Small/Mid Cap Growth.............. 359,627 5,472,409 5,405,130
Real Estate Equity................ 324,077 4,583,675 4,034,158
Growth & Income................... 15,352,576 242,582,888 344,986,670
Managed........................... 6,759,393 95,017,092 118,712,077
Short-Term Bond................... 24,785 246,700 241,232
Small Cap Value................... 308,973 3,584,770 3,356,732
International Opportunities....... 536,545 7,328,983 8,133,161
Equity Index...................... 830,294 15,051,579 17,328,934
Global Bond....................... 80,235 826,656 803,134
Turner Core Growth................ 13,608 265,402 344,693
Brandes International Equity...... 47,270 594,396 709,036
Frontier Capital Appreciation..... 25,799 440,247 652,456
Emerging Markets Equity........... 76,281 903,587 1,002,674
Global Equity..................... 17,655 196,278 222,627
Bond Index........................ 8,003 76,376 75,519
Small/Mid Cap CORE................ 14,377 143,537 151,851
High Yield Bond................... 11,514 104,070 98,694
Enhanced U.S. Equity.............. 982 9,099 20,672
</TABLE>
88
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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
2000, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
--------- ---------- -----------
<S> <C> <C>
Large Cap Growth...................... $3,853,906 $ 737,730
Sovereign Bond........................ 4,093,503 2,636,307
International Equity Index............ 730,780 174,525
Small Cap Growth...................... 1,707,603 5,446
International Balanced................ 16,417 50,789
Mid Cap Growth........................ 4,611,653 1,643,566
Large Cap Value....................... 2,325,879 918,257
Money Market.......................... 1,904,934 1,417,847
Mid Cap Value......................... 209,163 369,492
Small/Mid Cap Growth.................. 212,104 640,417
Real Estate Equity.................... 125,568 205,190
Growth & Income....................... 3,934,928 4,518,333
Managed............................... 1,305,732 2,993,499
Short-Term Bond....................... 25,840 23,816
Small Cap Value....................... 86,690 178,525
International Opportunities........... 4,436,279 104,072
Equity Index.......................... 3,270,015 713,472
Global Bond........................... 57,637 99,662
Turner Core Growth.................... 68,401 13,462
Brandes International Equity.......... 200,576 4,084
Frontier Capital Appreciation......... 110,984 3,733
Emerging Markets Equity............... 603,977 67,401
Global Equity......................... 71,989 4,326
Bond Index............................ 3,617 3,255
Small/Mid Cap CORE.................... 73,551 905
High Yield Bond....................... 30,846 3,740
Enhanced U.S. Equity.................. -- 8,067
</TABLE>
89
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. NET ASSETS
Accumulation shares attributable to net assets of policyholders and
accumulation share values for each subaccount at March 31, 2000 were as follows:
<TABLE>
<CAPTION>
VLI CLASS #1 MVL CLASS #3 FLEX CLASS #4
-------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
--------- ------------ ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth -- -- 34,583 $85.40 329,328 $85.40
Sovereign Bond -- -- 14,534 24.06 1,306,891 24.06
International Equity Index -- -- 14,424 27.50 149,444 27.50
Small Cap Growth -- -- 49,177 24.96 194,052 24.96
International Balanced -- -- 5,799 12.89 3,533 12.89
Mid Cap Growth -- -- 104,808 36.51 301,510 36.51
Large Cap Value -- -- 52,445 15.69 488,310 15.69
Money Market -- -- 61,717 18.33 535,463 18.33
Mid Cap Value -- -- 47,386 15.22 229,580 15.22
Small/Mid Cap Growth -- -- 23,537 21.17 218,694 21.17
Real Estate Equity -- -- 8,416 22.83 106,638 22.83
Growth & Income -- -- 109,065 69.25 1,908,532 69.25
Managed -- -- 44,971 40.30 1,175,913 40.30
Short-Term Bond -- -- 2,093 13.12 13,560 13.12
Small Cap Value -- -- 30,955 12.28 214,842 12.28
International Opportunities -- -- 16,490 16.50 452,700 16.50
Equity Index -- -- 183,383 23.56 459,297 23.56
Global Bond -- -- 14,099 12.38 39,977 12.38
Turner Core Growth -- -- 2,814 29.04 9,049 29.04
Brandes International Equity -- -- 8,079 16.55 23,235 16.55
Frontier Capital Appreciation -- -- 1,176 25.24 19,395 25.24
Emerging Markets Equity -- -- 8,868 13.69 54,726 13.69
Global Equity -- -- 7,055 12.69 2,350 12.69
Bond Index -- -- 4,203 10.59 2,681 10.59
Small/Mid Cap CORE -- -- 1,763 11.57 383 11.57
High Yield Bond -- -- 6,458 9.76 580 9.76
Enhanced U.S. Equity -- -- 1,557 13.28 -- 13.28
</TABLE>
90
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
FLEX II CLASS #5 VEP CLASS #7 VEP CLASS #8
-------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
--------- ------------ ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth 19,489 $85.40 12,989 $ 36.64 13,461 $ 36.75
Sovereign Bond 8,610 24.06 6,766 14.01 5,802 14.05
International Equity Index 8,227 27.50 12,120 17.49 6,404 17.55
Small Cap Growth 24,735 24.96 5,579 24.93 1,643 24.98
International Balanced 2,859 12.89 132 12.87 0 12.90
Mid Cap Growth 30,222 36.51 11,755 36.47 11,939 36.54
Large Cap Value 35,338 15.69 10,347 15.68 9,512 15.71
Money Market 7,906 18.33 7,536 13.2464 7,414 13.29
Mid Cap Value 22,518 15.22 23,069 15.21 754 15.24
Small/Mid Cap Growth 6,004 21.17 2,703 21.14 4,334 21.20
Real Estate Equity 6,206 22.83 487 14.85 -- 14.89
Growth & Income -- -- 65,422 31.41 23,206 31.51
Managed 24,560 40.30 12,863 21.22 9,853 21.29
Short --Term Bond 1,719 13.12 892 13.10 -- 13.14
Small Cap Value 18,920 12.28 7,017 12.27 1,581 12.29
International Opportunities 9,975 16.50 8,101 16.48 5,782 16.51
Equity Index 57,154 23.56 24,275 23.54 11,362 23.58
Global Bond 6,387 12.38 4,387 12.37 -- 12.39
Turner Core Growth -- 29.04 -- 31.21 -- 31.28
Brandes International Equity 563 16.55 751 16.32 10,360 16.35
Frontier Capital Appreciation 294 25.24 234 27.20 4,361 27.26
Emerging Markets Equity 3,883 13.69 5,834 13.69 -- 13.70
Global Equity 155 12.69 3,334 12.68 -- 12.6927
Bond Index 162 10.59 83 10.59 -- 10.5957
Small/Mid Cap CORE 79 11.57 10,910 11.56 -- 11.57
High Yield Bond 1,371 9.76 1,702 9.76 -- 9.7676
Enhanced U.S. Equity -- 13.28 -- 17.51 -- 17.54
</TABLE>
91
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
VEP CLASS #9
--------------------------
ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES
--------- ------------ --------------
<S> <C> <C>
Large Cap Growth 1,570 $ 36.87
Sovereign Bond -- 14.10
International Equity Index -- 17.60
Small Cap Growth -- 25.03
International Balanced -- 12.93
Mid Cap Growth -- 36.61
Large Cap Value -- 15.74
Money Market -- 13.33
Mid Cap Value -- 15.27
Small/Mid Cap Growth -- 21.26
Real Estate Equity -- 14.9418
Growth & Income 2,475 31.60
Managed -- 21.3523
Short-Term Bond -- 13.18
Small Cap Value -- 12.32
International Opportunities -- 16.54
Equity Index -- 23.63
Global Bond -- 12.41
Turner Core Growth -- 31.33
Brandes International Equity -- 16.39
Frontier Capital Appreciation -- 27.31
Emerging Markets Equity -- 13.711
Global Equity 4,649 12.70
Bond Index -- 11
Small/Mid Cap CORE -- 11.58
High Yield Bond -- 9.78
Enhanced U.S. Equity -- 17.5629
</TABLE>
92
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Policyholders of
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
Equity Index, Small Cap Growth, International Balanced, Mid Cap Growth, Large
Cap Value, Money Market, Mid Cap Value, Small/Mid Cap Growth (formerly,
Diversified Mid Cap Growth), Real Estate Equity, Growth & Income, Managed,
Short-Term Bond, Small Cap Value, International Opportunities, Equity Index,
Global Bond (formerly, Strategic Bond), Turner Core Growth, Brandes
International Equity, Frontier Capital Appreciation, Emerging Markets Equity,
Global Equity, Bond Index, Small/Mid Cap CORE, High-Yield Bond and Enhanced U.S.
Equity Subaccounts) as of December 31, 1999, and the related statements of
operations and changes in net assets for each of the periods indicated therein.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, 1999, the results of their operations and changes in their net
assets for each of the periods indicated, in conformity with accounting
principles generally accepted in the United States.
ERNST & YOUNG LLP
Boston, Massachusetts
February 11, 2000
93
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
Large Cap Sovereign International Small Cap International
Growth Bond Equity Index Growth Balanced
Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ----------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Assets
Cash............................................ $ 4,878 $ 8,824 $ 777 $ 493 $ 23
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value...... 41,460,815 70,640,632 6,854,257 4,511,934 200,368
Investments in shares of portfolios of M
Fund Inc., at value............................ -- -- -- -- --
Policy loans and accrued interest receivable.... 2,567,621 10,248,950 326,736 -- --
Receivable from:
John Hancock Variable Series Trust I........... 12,029 21,016 3,262 2,588 3
M Fund Inc..................................... -- -- -- -- --
----------- ----------- ----------- ---------- ----------
Total assets.................................... 44,045,343 80,919,422 7,185,032 4,515,015 200,394
Liabilities
Payable to John Hancock Mutual Life
Insurance Company.............................. 11,330 19,753 3,148 2,515 --
Asset charges payable........................... 5,576 10,087 890 566 26
----------- ----------- ----------- ---------- ----------
Total liabilities............................... 16,906 29,840 4,038 3,081 26
----------- ----------- ----------- ---------- ----------
Net assets...................................... $44,028,437 $80,889,582 $ 7,180,994 $4,511,934 $ 200,368
=========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Mid Cap Large Cap Money Mid Cap Small/mid Cap
Growth Value Market Value Growth
Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Assets
Cash............................................ $ 1,515 $ 941 $ 11 $ 532 $ 612
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value...... 13,609,575 8,262,786 18,351,172 4,701,632 5,486,044
Investments in shares of portfolios of M
Fund Inc., at value............................ -- -- -- -- --
Policy loans and accrued interest receivable.... -- -- 2,153,219 -- --
Receivable from:
John Hancock Variable Series Trust I........... 5,644 1,207 7,868 2,755 2,116
M Fund Inc..................................... -- -- -- -- --
----------- ---------- ----------- ---------- ------------
Total assets.................................... 13,616,734 8,264,934 20,512,270 4,704,919 5,488,772
Liabilities
Payable to John Hancock Mutual Life
Insurance Company.............................. 5,423 1,072 7,543 2,678 2,026
Asset charges payable........................... 1,737 1,075 1,621 609 702
----------- ---------- ----------- ---------- ------------
Total liabilities............................... 7,160 2,147 9,164 3,287 2,728
----------- ---------- ----------- ---------- ------------
Net assets...................................... $13,609,574 $8,262,787 $20,503,106 $4,701,632 $5,486,044
=========== ========== =========== ========== ============
</TABLE>
See accompanying notes.
94
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Real Estate Growth & Short-term Small Cap
Equity Income Managed Bond Value
Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Assets
Cash............................................ $ 444 $ 36,737 $ 12,274 $ 27 $ 387
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value...... 3,800,017 307,871,384 106,178,553 238,913 3,467,391
Investments in shares of portfolios of M
Fund Inc., at value............................ -- -- -- -- --
Policy loans and accrued interest receivable.... 230,080 32,628,714 12,951,552 -- --
Receivable from:
John Hancock Variable Series Trust I........... 1,091 56,249 48,999 64 103
M Fund Inc..................................... -- -- -- -- --
---------- ------------ ------------ -------- ----------
Total assets.................................... 4,031,632 340,593,084 119,191,378 239,004 3,467,881
Liabilities
Payable to John Hancock Mutual Life
Insurance Company.............................. 1,027 50,987 47,141 60 46
Asset charges payable........................... 505 42,000 14,818 31 443
---------- ------------ ------------ -------- ----------
Total liabilities............................... 1,532 92,987 61,959 91 489
---------- ------------ ------------ -------- ----------
Net assets...................................... $4,030,100 $340,500,097 $119,129,419 $238,913 $3,467,392
========== ============ ============ ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Brandes
International Equity Global Turner International
Opportunities Index Bond Core Growth Equity
Subaccount Subaccount Subaccount Subaccount Subaccount
------------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Assets
Cash............................................ $ 406 $ 1,634 $ 87 $ 29 $ 59
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value...... 3,628,943 14,406,079 829,719 -- --
Investments in shares of portfolios of M
Fund Inc., at value............................ -- -- -- 257,807 525,501
Policy loans and accrued interest receivable.... -- -- -- -- --
Receivable from:
John Hancock Variable Series Trust I........... 1,276 7,201 28 -- --
M Fund Inc..................................... -- -- -- 4 9
---------- ----------- ---------- ---------- ------------
Total assets.................................... 3,630,625 14,414,914 829,834 257,840 525,569
Liabilities
Payable to John Hancock Mutual Life
Insurance Company.............................. 1,217 6,965 15 -- --
Asset charges payable........................... 465 1,870 101 33 67
---------- ----------- ---------- ---------- ------------
Total liabilities............................... 1,682 8,835 116 33 67
---------- ----------- ---------- ---------- ------------
Net assets...................................... $3,628,943 $14,406,079 $ 829,718 $ 257,807 $ 525,502
========== =========== ========== ========== ============
</TABLE>
See accompanying notes.
95
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
FRONTIER CAPITAL EMERGING
APPRECIATION MARKETS EQUITY GLOBAL EQUITY BOND INDEX
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Cash................................................. $ 50 $ 48 $ 16 $ 8
Investments in shares of portfolios of
John Hancock Variable Series Trust I, at
value............................................... -- 437,812 147,715 74,210
Investments in shares of portfolios of M Fund Inc.,
at value............................................ 453,983 -- -- --
Policy loans and accrued interest receivable......... -- -- -- --
Receivable from:
John Hancock Variable Series Trust I................ -- 1,808 2 1
M Fund Inc.......................................... 7 -- -- --
-------- -------- -------- -------
Total assets......................................... 454,040 439,668 147,733 74,219
LIABILITIES
Payable to John Hancock Mutual Life Insurance
Company............................................. -- 1,801 -- --
Asset charges payable................................ 57 55 18 10
-------- -------- -------- -------
Total liabilities.................................... 57 1,856 18 10
-------- -------- -------- -------
Net asset............................................ $453,983 $437,812 $147,715 $74,209
======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
SMALL/MID CAP HIGH YIELD ENHANCED U.S.
CORE BOND EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- ---------------
<S> <C> <C> <C>
ASSETS
Cash............................................................... $ 9 $ 9 $ 2
Investments in shares of portfolios of John Hancock
Variable Series Trust I, at value................................. 77,365 76,051 --
Investments in shares of portfolios of M Fund Inc.,
at value.......................................................... -- -- 18,175
Policy loans and accrued interest receivable....................... -- -- --
Receivable from:
John Hancock Variable Series Trust I ............................. 1 1 --
M Fund Inc........................................................ -- -- --
------- ------- -------
Total assets....................................................... 77,375 76,061 18,177
LIABILITIES
Payable to John Hancock Mutual Life Insurance Company.............. -- -- --
Asset charges payable.............................................. 10 10 2
------- ------- -------
Total liabilities.................................................. 10 10 2
------- ------- -------
Net assets......................................................... $77,365 $76,051 $18,175
======= ======= =======
</TABLE>
See accompanying notes.
96
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF OPERATIONS
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT SOVEREIGN BOND SUBACCOUNT
------------------------------------ --------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............ $6,381,711 $2,836,032 $1,686,429 $ 5,184,234 $5,266,576 $ 4,454,173
M Fund Inc...................................... -- -- -- -- -- --
Interest income on policy loans.................. 161,454 128,186 103,747 750,673 727,807 696,074
---------- ---------- ---------- ----------- ---------- -----------
Total investment income.......................... 6,543,165 2,964,218 1,790,176 5,934,907 5,994,383 5,150,247
Expenses:
Mortality and expense risks..................... 213,770 143,859 99,710 452,925 415,570 370,612
---------- ---------- ---------- ----------- ---------- -----------
Net investment income............................ 6,329,395 2,820,359 1,690,466 5,481,982 5,578,813 4,779,635
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)........................ 1,146,308 433,509 292,430 (388,883) (142,628) (230,607)
Net unrealized appreciation (depreciation)
during the period.............................. 320,087 4,558,660 2,142,494 (5,439,148) (102,600) 1,277,686
---------- ---------- ---------- ----------- ---------- -----------
Net realized and unrealized gain (loss)
on investments.................................. 1,466,395 4,992,169 2,434,924 (5,828,031) (245,228) 1,047,079
---------- ---------- ---------- ----------- ---------- -----------
Net increase (decrease) in net assets resulting
from operations................................ $7,795,790 $7,812,528 $4,125,390 $ (346,049) $5,333,585 $ 5,826,714
========== ========== ========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
-------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
------------ ---------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............ $ 212,869 $743,339 $ 195,240 $ 543,433 $ -- $ 436
M Fund Inc...................................... -- -- -- -- -- --
Interest income on policy loans.................. 20,538 17,802 15,746 -- -- --
---------- -------- --------- ---------- -------- -------
Total investment income.......................... 233,407 761,141 210,986 543,433 -- 436
Expenses:
Mortality and expense risks..................... 32,838 26,542 24,261 15,809 8,233 4,231
---------- -------- --------- ---------- -------- -------
Net investment income (loss)..................... 200,569 734,599 186,725 527,624 (8,233) (3,795)
Net realized and unrealized gain (loss)
on investments:
Net realized gain............................... 62,140 52,891 50,829 48,210 21,741 6,475
Net unrealized appreciation (depreciation)
during the period.............................. 1,295,768 13,239 (463,778) 1,125,829 204,674 92,108
---------- -------- --------- ---------- -------- -------
Net realized and unrealized gain (loss)
on investments.................................. 1,357,908 66,130 (412,949) 1,174,039 226,415 98,583
---------- -------- --------- ---------- -------- -------
Net increase (decrease) in net assets resulting
from operations................................ $1,558,477 $800,729 $(226,224) $1,701,663 $218,182 $94,788
========== ======== ========= ========== ======== =======
</TABLE>
See accompanying notes.
97
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
---------------------------------- -----------------------------------
1999 1998 1997 1999 1998 1997
---------- --------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.............. $ 17,211 $ 12,240 $ 3,972 $1,373,009 $ 130,303 --
M Fund Inc........................................ -- -- -- -- -- --
Interest income on policy loans.................... -- -- -- -- -- --
-------- -------- --------- ---------- ---------- --------
Total investment income............................ 17,211 12,240 3,972 1,373,009 130,303 --
Expenses:
Mortality and expense risks....................... 1,267 826 392 34,834 5,242 2,164
-------- -------- --------- ---------- ---------- --------
Net investment income (loss)....................... 15,944 11,414 3,580 1,338,175 125,061 (2,164)
Net realized and unrealized gain (loss)
on investments:
Net realized gain................................. 1,061 1,050 429 420,826 26,192 5,866
Net unrealized appreciation (depreciation) during
the period....................................... (8,559) 12,294 (4,312) 4,283,452 193,946 66,874
-------- -------- --------- ---------- ---------- --------
Net realized and unrealized gain (loss) on
investments....................................... (7,498) 13,344 (3,883) 4,704,278 220,138 72,740
-------- -------- --------- ---------- ---------- --------
Net increase (decrease) in net assets resulting
from operations................................... $ 8,446 $ 24,758 $ (303) $6,042,453 $ 345,199 $ 70,576
======== ======== ========= ========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
--------------------------------- -----------------------------------
1999 1998 1997 1999 1998 1997
---------- --------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.............. $ 511,132 $185,232 $ 57,265 $1,134,371 $2,249,510 $641,356
M Fund Inc........................................ -- -- -- -- -- --
Interest income on policy loans.................... -- -- -- 155,491 154,162 148,802
--------- -------- -------- ---------- ---------- --------
Total investment income............................ 511,132 185,232 57,265 1,289,862 2,403,672 790,158
Expenses:
Mortality and expense risks....................... 36,983 15,356 3,303 146,758 263,735 81,437
--------- -------- -------- ---------- ---------- --------
Net investment income.............................. 474,149 169,876 53,962 1,143,104 2,139,937 708,721
Net realized and unrealized gain (loss) on
investments:
Net realized gain................................. 123,242 68,953 17,858 -- -- --
Net unrealized appreciation (depreciation) during
the period....................................... (499,454) 64,132 80,036 -- -- --
--------- -------- -------- ---------- ---------- --------
Net realized and unrealized gain (loss) on
investments....................................... (376,212) 133,085 97,894 -- -- --
--------- -------- -------- ---------- ---------- --------
Net increase in net assets resulting from
operations........................................ $ 97,937 $302,961 $151,856 $1,143,104 $2,139,937 $708,721
========= ======== ======== ========== ========== ========
</TABLE>
See accompanying notes.
98
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MID CAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
---------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
---------- ------------ -------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............ $ 30,563 $ 53,920 $150,951 $ 840,786 $ 93,281 $ 407,765
M Fund Inc...................................... -- -- -- -- -- --
Interest income on policy loans.................. -- -- -- -- -- --
--------- ----------- -------- ----------- ----------- -----------
Total investment income.......................... 30,563 53,920 150,951 840,786 93,281 407,765
Expenses:
Mortality and expense risks..................... 28,106 34,857 7,632 30,491 26,942 22,030
--------- ----------- -------- ----------- ----------- -----------
Net investment income............................ 2,457 19,063 143,319 810,295 66,339 385,735
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)........................ (547,518) 74,634 10,646 16,952 33,249 276,956
Net unrealized appreciation (depreciation)
during the period.............................. 657,486 (944,401) 145,409 (590,295) 126,465 (477,912)
--------- ----------- -------- ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments.................................... 109,968 (869,767) 156,055 (573,343) 159,714 (200,956)
--------- ----------- -------- ----------- ----------- -----------
Net increase (decrease) in net asset resulting
from operations................................ $ 112,425 $ (850,704) $299,374 $ 236,952 $ 226,953 $ 184,779
========= =========== ======== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
---------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
---------- ------------ -------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............ $ 262,930 $ 343,976 $330,296 $35,057,066 $26,306,209 $25,377,474
M Fund Inc...................................... -- -- -- -- -- --
Interest income on policy loans.................. 17,361 17,260 15,261 2,279,107 1,996,131 1,728,054
--------- ----------- -------- ----------- ----------- -----------
Total investment income.......................... 280,291 361,236 345,557 37,336,173 28,302,340 27,105,528
Expenses:
Mortality and expense risks..................... 24,900 33,890 25,420 1,779,482 1,466,469 1,136,268
--------- ----------- -------- ----------- ----------- -----------
Net investment income............................ 255,391 327,346 320,137 35,556,691 26,835,871 25,969,260
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)........................ (168,994) 158,205 181,015 5,502,422 3,223,935 1,982,518
Net unrealized appreciation (depreciation)
during the period.............................. (220,380) (1,546,717) 165,392 2,405,417 32,918,552 18,247,212
--------- ----------- -------- ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments..................................... (389,374) (1,388,512) 346,407 7,907,839 36,142,487 20,229,730
--------- ----------- -------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations....................... $(133,983) $(1,061,166) $666,544 $43,464,530 $62,978,358 $46,198,990
========= =========== ======== =========== =========== ===========
</TABLE>
See accompanying notes.
99
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
-------------------------------------- ------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ----------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............ $ 9,998,433 $ 9,347,788 $ 7,891,222 $ 15,539 $ 27,350 $1,036,747
M Fund Inc...................................... -- -- -- -- --
Interest income on policy loans.................. 953,686 854,487 768,231 -- -- --
----------- ----------- ----------- --------- -------- ----------
Total investment income.......................... 10,952,119 10,202,275 8,659,453 15,539 27,350 1,036,747
Expenses:
Mortality and expense risks..................... 649,802 577,276 497,030 1,497 2,680 121,572
----------- ----------- ----------- --------- -------- ----------
Net investment income............................ 10,302,317 9,624,999 8,162,423 14,042 24,670 915,175
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)........................ 996,546 791,245 437,661 (8,638) 265 (27,616)
Net unrealized appreciation (depreciation)
during the period.............................. (2,108,530) 6,629,458 4,941,061 (2,442) (4,247) 226,435
----------- ----------- ----------- --------- -------- ----------
Net realized and unrealized gain (loss) on
investments..................................... (1,111,984) 7,420,703 5,378,722 (11,080) (3,982) 198,819
----------- ----------- ----------- --------- -------- ----------
Net increase in net assets resulting from
operations...................................... $ 9,190,333 $17,045,702 $13,541,145 $ 2,962 $ 20,688 $1,113,994
=========== =========== =========== ========= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP VALUE SUBACCOUNT INTERNATIONAL OPPORTUNITIES SUBACCOUNT
------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I............ $ 79,585 $ 12,675 $ 95,844 $241,151 $ 33,443 $ 5,284
M Fund Inc...................................... -- -- -- -- -- --
Interest income on policy loans.................. -- -- -- -- -- --
--------- --------- -------- -------- -------- --------
Total investment income.......................... 79,585 12,675 95,844 241,151 33,443 5,284
Expenses:
Mortality and expense risks..................... 17,680 11,853 3,270 17,937 21,581 1,697
--------- --------- -------- -------- -------- --------
Net investment income............................ 61,905 822 92,574 223,214 11,862 3,587
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss)........................ (33,134) 29,257 19,812 155,412 33,474 3,191
Net unrealized appreciation (depreciation)
during the period.............................. (148,401) (105,331) (12,804) 387,412 272,314 (12,223)
--------- --------- -------- -------- -------- --------
Net realized and unrealized gain (loss) on
investments..................................... (181,535) (76,074) 7,008 542,824 305,788 (9,032)
--------- --------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations....................... $(119,630) $ (75,252) $ 99,582 $766,038 $317,650 $ (5,445)
========= ========= ======== ======== ======== ========
</TABLE>
See accompanying notes.
100
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT GlOBAL BOND SUBACCOUNT
-------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.................. $ 593,325 $ 185,267 $ 54,601 $ 37,862 $19,628 $ 9,400
M Fund Inc............................................ -- -- -- -- --
Interest income on policy loans........................ -- -- -- -- -- --
---------- ---------- -------- -------- ------- -------
Total investment income................................ 593,325 185,267 54,601 37,862 19,628 9,400
Expenses:
Mortality and expense risks........................... 63,950 27,141 5,346 4,084 1,979 658
---------- ---------- -------- -------- ------- -------
Net investment income.................................. 529,375 158,126 49,255 33,778 17,649 8,742
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).............................. 271,978 443,879 14,525 (151) 3,991 348
Net unrealized appreciation (depreciation)
during the period.................................... 1,282,937 585,673 146,714 (52,953) 4,308 1,260
---------- ---------- -------- -------- ------- -------
Net realized and unrealized gain (loss) on
investments........................................... 1,554,915 1,029,552 161,239 (53,104) 8,299 1,608
---------- ---------- -------- -------- ------- -------
Net increase (decrease) in net assets
resulting from operations............................. $2,084,290 $1,187,678 $210,494 $(19,326) $25,948 $10,350
========== ========== ======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
TURNER CORE GROWTH SUBACCOUNT BRANDES INTERNATIONAL EQUITY SUBACCOUNT
-------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
--------- --------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.................. $ -- $ -- $ -- $ -- $ -- $ --
M Fund Inc............................................ 19,328 2,231 6,373 16,354 14,444 1,796
Interest income on policy loans........................ -- -- -- -- -- --
------- ------- ------- -------- ------- -------
Total investment income................................ 19,328 2,231 6,373 16,354 14,444 1,796
Expenses:
Mortality and expense risks........................... 1,139 565 301 2,166 1,158 684
------- ------- ------- -------- ------- -------
Net investment income.................................. 18,189 1,666 6,072 14,188 13,286 1,112
Net realized and unrealized gain (loss) on
investments:
Net realized gain..................................... 26,736 2,780 839 11,526 600 888
Net unrealized appreciation (depreciation)
during the period.................................... 23,628 22,686 6,487 122,734 8,581 (1,473)
------- ------- ------- -------- ------- -------
Net realized and unrealized gain (loss) on
investments........................................... 50,364 25,466 7,326 134,260 9,181 (585)
------- ------- ------- -------- ------- -------
Net increase in net assets resulting from
operations............................................ $68,553 $27,132 $13,398 $148,448 $22,467 $ 527
======= ======= ======= ======== ======= =======
</TABLE>
See accompanying notes.
101
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FRONTIER CAPITAL APPRECIATION EMERGING MARKETS EQUITY GLOBAL EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------------- ------------------------- --------------------
1999 1998 1997 1999 1998* 1999 1998*
---------- --------- -------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I........ $ -- $ -- $ -- $ 15,636 $ 1 $ 816 $ 117
M Fund Inc.................................. 13,028 12,832 6,463 -- -- -- --
Interest income on policy loans.............. -- -- -- -- -- -- --
-------- ------- ------- -------- ------ ------- ------
Total investment income...................... 13,028 12,832 6,463 15,636 1 816 117
Expenses:
Mortality and expense risks................. 4,257 13,446 1,409 466 0 378 60
-------- ------- ------- -------- ------ ------- ------
Net investment income (loss)................. 8,771 (614) 5,054 15,170 1 438 57
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss).................... (59,550) 23,061 8,970 1,838 (1) 196 (16)
Net unrealized appreciation (depreciation)
during the period.......................... 89,369 (840) 32,469 92,713 (48) 20,203 (303)
-------- ------- ------- -------- ------ ------- ------
Net realized and unrealized gain (loss)
on investments.............................. 29,819 22,221 41,439 94,551 (49) 20,399 (319)
-------- ------- ------- -------- ------ ------- ------
Net increase (decrease) in net assets
resulting from operations................... $ 38,590 $21,607 $46,493 $109,721 $ (48) $20,837 $ (262)
======== ======= ======= ======== ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
ENHANCED
BOND INDEX SMALL/MID CAP CORE HIGH YIELD BOND U.S. EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------------- ----------------------- ---------------------- ------------
1999 1998* 1999 1998* 1999 1998* 1999**
--------- ---------- ---------- ----------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I...... $ 2,971 $ 296 $ 6,699 $ -- $ 3,011 $ 50 $ --
M Fund Inc................................ -- -- -- -- -- -- 1,435
Interest income on policy loans............ -- -- -- -- -- -- --
-------- ------- -------- -------- -------- ------ -------
Total investment income.................... 2,971 296 6,699 -- 3,011 50 1,435
Expenses:
Mortality and expense risks............... 270 11 335 48 220 2 61
-------- ------- -------- -------- -------- ------ -------
Net investment income (loss)............... 2,701 285 6,364 (48) 2,791 48 1,374
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss).................. (1,613) (26) 1,093 (1,957) (396) (108) 11
Net unrealized appreciation
(depreciation) during the period......... (1,753) (147) 4,719 1,888 (1,172) (19) 1,285
-------- ------- -------- -------- -------- ------ -------
Net realized and unrealized gain (loss)
on investments............................ (3,366) (173) 5,812 (69) (1,568) (127) 1,296
-------- ------- -------- -------- -------- ------ -------
Net increase (decrease) in net assets
resulting from operations................. $ (665) $ 112 $ 12,176 $ (117) $ 1,223 $ (79) $ 2,670
======== ======= ======== ======== ======== ====== =======
</TABLE>
---------
* From May 1, 1998 (commencement of operations).
** From May 1, 1999 (commencement of operations).
See accompanying notes.
102
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT SOVEREIGN BOND SUBACCOUNT
-------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income.............................. $ 6,329,395 $ 2,820,359 $ 1,690,466 $ 5,481,982 $ 5,578,813 $ 4,779,635
Net realized gain (loss)........................... 1,146,308 433,509 292,430 (388,883) (142,628) (230,607)
Net unrealized appreciation (depreciation) during
the period........................................ 320,087 4,558,660 2,142,494 (5,439,148) (102,600) 1,277,686
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................... 7,795,790 7,812,528 4,125,390 (346,049) 5,333,585 5,826,714
From policyholder transactions:
Net premiums from policyholders.................... 10,950,682 6,922,934 5,387,401 11,668,600 10,038,753 10,001,325
Net benefits to policyholders...................... (5,776,293) (3,869,320) (3,401,593) (7,543,864) (7,974,428) (8,051,538)
Net increase in policy loans....................... -- -- -- -- -- --
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting from
policyholder transactions.......................... 5,174,389 3,053,614 1,985,808 4,124,736 2,064,425 1,949,787
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets.......................... 12,970,179 10,866,142 6,111,198 3,778,687 7,398,010 7,776,501
Net assets at beginning of period................... 31,058,258 20,192,116 14,080,918 77,110,895 69,712,885 61,936,384
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of period......................... $ 44,028,437 $31,058,258 $20,192,116 $80,889,582 $77,110,895 $69,712,885
============ =========== =========== =========== =========== ===========
<CAPTION>
INTERNATIONAL EQUITY INDEX SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
-------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss)....................... $ 200,569 $ 734,599 $ 186,725 $ 527,624 $ (8,233) $ (3,795)
Net realized gain.................................. 62,140 52,891 50,829 48,210 21,741 6,475
Net unrealized appreciation (depreciation) during
the period........................................ 1,295,768 13,239 (463,778) 1,125,829 204,674 92,108
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................... 1,558,477 800,729 (226,224) 1,701,663 218,182 94,788
From policyholder transactions:
Net premiums from policyholders.................... 1,634,643 1,489,281 1,504,962 1,398,160 891,480 809,492
Net benefits to policyholders...................... (1,119,500) (269,586) (199,118) (390,180) -- --
Net increase in policy loans....................... -- -- -- -- -- --
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting from
policyholder transactions.......................... 515,143 141,969 427,597 1,007,980 621,894 610,374
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets.......................... 2,073,620 942,698 201,373 2,709,643 840,076 705,162
Net assets at beginning of period................... 5,107,374 4,164,676 3,963,303 1,802,291 962,215 257,053
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of period......................... $ 7,180,994 $ 5,107,374 $ 4,164,676 $ 4,511,934 $ 1,802,291 $ 962,215
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
103
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
-------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss)...................... $ 15,944 $ 11,414 $ 3,580 $ 1,338,175 $ 125,061 $ (2,164)
Net realized gain................................. 1,061 1,050 429 420,826 26,192 5,866
Net unrealized appreciation (depreciation)
during the period................................ (8,559) 12,294 (4,312) 4,283,452 193,946 66,874
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................. 8,446 24,758 (303) 6,042,453 345,199 70,576
From policyholder transactions:
Net premiums from policyholders................... 115,573 150,466 62,380 7,041,199 772,359 457,341
Net benefits to policyholders..................... (133,983) (50,214) (9,531) (947,660) (211,806) (125,239)
Net increase in policy loans...................... -- -- -- -- -- --
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from policyholder transactions................... (18,410) 100,262 52,849 6,093,539 560,553 332,102
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets.............. (9,964) 125,020 52,546 12,135,992 905,752 402,678
Net assets at beginning of period.................. 210,332 85,312 32,766 1,473,582 567,830 165,152
------------ ----------- ----------- ----------- ----------- -----------
Net assets at end of period........................ $ 200,368 $ 210,332 $ 85,312 $13,609,574 $ 1,473,582 $ 567,830
============ =========== =========== =========== =========== ===========
<CAPTION>
LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
-------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income............................. $ 474,149 $ 169,876 $ 53,962 $ 1,143,104 $ 2,139,937 $ 708,721
Net realized gain................................. 123,242 68,953 17,858 -- -- --
Net unrealized appreciation (depreciation) during
the period....................................... (499,454) 64,132 80,036 -- -- --
------------ ----------- ----------- ------------ ------------ -----------
Net increase in net assets resulting from
operations....................................... 97,937 302,961 151,856 1,143,104 2,139,937 708,721
From policyholder transactions:
Net premiums from policyholders................... 5,449,922 2,321,440 1,506,756 16,733,655 55,692,824 11,210,536
Net benefits to policyholders..................... (1,059,147) (528,449) (85,021) (46,642,184) (22,850,788) (9,620,370)
Net increase (decrease) in policy loans........... -- -- -- -- (198,682) 103,247
------------ ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder transactions.......... 4,390,775 1,792,991 1,421,735 (29,908,529) 32,643,354 1,693,413
------------ ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets.............. 4,488,712 2,095,952 1,573,591 (28,765,425) 34,783,291 2,402,134
Net assets at beginning of period.................. 3,774,075 1,678,123 104,532 49,268,531 14,485,240 12,083,106
------------ ----------- ----------- ------------ ------------ -----------
Net assets at end of period........................ $ 8,262,787 $ 3,774,075 $ 1,678,123 $ 20,503,106 $ 49,268,531 $14,485,240
============ =========== =========== ============ ============ ===========
</TABLE>
See accompanying notes.
104
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MIDCAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
---------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income............................. $ 2,457 $ 19,063 $ 143,319 $ 810,295 $ 66,339 $ 385,735
Net realized gain (loss).......................... (547,518) 74,634 10,646 16,952 33,249 276,956
Net unrealized appreciation (depreciation) during
the period....................................... 657,486 (944,401) 145,409 (590,295) 126,465 (477,912)
------------ ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets resulting
from operations.................................. 112,425 (850,704) 299,374 236,952 226,053 184,779
From policyholder transactions:
Net premiums from policyholders................... 2,086,192 5,639,732 1,620,752 1,533,102 1,812,713 2,554,133
Net benefits to policyholders..................... (3,546,814) (775,357) (112,395) (1,200,248) (1,214,489) (1,628,677)
Net increase in policy loans...................... -- -- -- -- -- --
------------ ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets resulting
from policyholder transactions................... (1,460,622) 4,864,375 1,508,357 332,854 598,224 925,456
------------ ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets.............. (1,348,197) 4,013,671 1,807,731 569,806 824,277 1,110,235
Net assets at beginning of period.................. 6,049,829 2,036,158 228,427 4,916,238 4,091,961 2,981,726
------------ ----------- ----------- ------------ ------------ -----------
Net assets at end of period........................ $ 4,701,632 $ 6,049,829 $ 2,036,158 $ 5,486,044 $ 4,916,238 $ 4,091,961
============ =========== =========== ============ ============ ===========
<CAPTION>
REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income............................ $ 255,391 $ 327,346 $ 320,137 $ 35,556,691 $ 26,835,871 $ 25,969,260
Net realized gain (loss)......................... (168,994) 158,205 181,015 5,502,422 3,223,935 1,982,518
Net unrealized appreciation (depreciation) during
the period...................................... (220,380) (1,546,717) 165,392 2,405,417 32,918,552 18,247,212
----------- ----------- ----------- ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations................................. (133,983) (1,061,166) 666,544 43,464,530 62,978,358 46,198,990
From policyholder transactions:
Net premiums from policyholders.................. 968,627 3,382,263 1,748,132 34,593,082 35,108,834 30,351,780
Net benefits to policyholders.................... (2,335,552) (1,663,696) (1,218,783) (34,650,911) (29,649,984) (24,619,851)
Net increase in policy loans..................... -- (1,103) 34,311 -- 3,672,137 3,346,307
----------- ----------- ----------- ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from policyholder transactions.................. (1,366,925) 1,717,464 563,660 (57,829) 9,130,987 9,078,236
----------- ----------- ----------- ------------ ------------ ------------
Net increase (decrease) in net assets............. (1,500,908) 656,298 1,230,204 43,406,701 72,109,345 55,277,226
Net assets at beginning of period................. 5,531,008 4,874,710 3,644,506 297,093,396 224,984,051 169,706,825
----------- ----------- ----------- ------------ ------------ ------------
Net assets at end of period....................... $ 4,030,100 $ 5,531,008 $ 4,874,710 $340,500,097 $297,093,396 $224,984,051
=========== =========== =========== ============ ============ ============
</TABLE>
See accompanying notes.
105
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
------------------------------------------ --------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income...................... $ 10,302,317 $ 9,624,999 $ 8,162,423 $ 14,042 $ 24,670 $ 915,175
Net realized gain (loss)................... 996,546 791,245 437,661 (8,638) 265 (27,616)
Net unrealized appreciation (depreciation)
during the period......................... (2,108,530) 6,629,458 4,941,061 (2,442) (4,247) 226,435
------------ ------------ ------------ ----------- ---------- ------------
Net increase in net assets resulting from
operations.................................. 9,190,333 17,045,702 13,541,145 2,962 20,688 1,113,994
From policyholder transactions:
Net premiums from policyholders............ 13,430,282 13,116,210 13,194,907 109,732 420,697 116,602
Net benefits to policyholders.............. (14,305,859) (14,539,301) (14,539,295) (370,270) (71,999) (26,168,835)
Net increase in policy loans............... -- 1,134,137 1,257,640 -- -- --
------------ ------------ ------------ ----------- ---------- ------------
Net increase (decrease) in net assets
resulting from policyholder transactions.... (875,577) (288,954) (86,748) (260,538) 348,698 (26,052,233)
------------ ------------ ------------ ----------- ---------- ------------
Net increase (decrease) in net assets........ 8,314,756 16,756,748 13,454,397 (257,576) 369,386 (24,938,239)
Net assets at beginning of period............ 110,814,663 94,057,915 80,603,518 496,489 127,103 25,065,342
------------ ------------ ------------ ----------- ---------- ------------
Net assets at end of period.................. $119,129,419 $110,814,663 $ 94,057,915 $ 238,913 $ 496,489 $ 127,103
============ ============ ============ =========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP VALUE SUBACCOUNT INTERNATIONAL OPPORTUNITIES SUBACCOUNT
------------------------------------------ --------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income...................... $ 61,905 $ 822 $ 92,574 $ 223,214 $ 11,862 $ 3,587
Net realized gain (loss)................... (33,134) 29,257 19,812 155,412 33,474 3,191
Net unrealized appreciation (depreciation)
during the period......................... (148,401) (105,331) (12,804) 387,412 272,314 (12,223)
------------ ------------ ------------ ----------- ---------- ------------
Net increase (decrease) in net assets
resulting from operations................... (119,630) (75,252) 99,582 766,038 317,650 (5,445)
From policyholder transactions:
Net premiums from policyholders............ 1,483,922 1,644,666 1,224,547 2,354,681 3,814,201 295,915
Net benefits to policyholders.............. (447,402) (270,585) (137,364) (3,673,500) (339,134) (46,736)
Net increase in policy loans............... -- -- -- -- -- --
------------ ------------ ------------ ----------- ---------- ------------
Net increase (decrease) in net assets
resulting from policyholder transactions.... 1,036,520 1,374,081 1,087,183 (1,318,819) 3,475,067 249,179
------------ ------------ ------------ ----------- ---------- ------------
Net increase (decrease) in net assets........ 916,890 1,298,829 1,186,765 (552,781) 3,792,717 243,734
Net assets at beginning of period............ 2,550,502 1,251,673 64,908 4,181,724 389,007 145,273
------------ ------------ ------------ ----------- ---------- ------------
Net assets at end of period.................. $ 3,467,392 $ 2,550,502 $ 1,251,673 $ 3,628,943 $4,181,724 $ 389,007
============ ============ ============ =========== ========== ============
</TABLE>
See accompanying notes.
106
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT GLOBAL BOND SUBACCOUNT
------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income........................... $ 529,375 $ 158,126 $ 49,255 $ 33,778 $ 17,649 $ 8,742
Net realized gain (loss)........................ 271,978 443,879 14,525 (151) 3,991 348
Net unrealized appreciation (depreciation)
during the period.............................. 1,282,937 585,673 146,714 (52,953) 4,308 1,260
----------- ---------- ---------- --------- -------- --------
Net increase (decrease) in net assets
resulting from operations....................... 2,084,290 1,187,678 210,494 (19,326) 25,948 10,350
From policyholder transactions:
Net premiums from policyholders................. 6,697,385 4,822,053 1,827,052 696,619 381,024 161,548
Net benefits to policyholders................... (1,623,429) (885,493) (149,826) (317,999) (83,865) (37,799)
Net increase in policy loans.................... -- -- -- -- -- --
----------- ---------- ---------- --------- -------- --------
Net increase in net assets resulting from
policyholder transactions....................... 5,073,956 3,936,560 1,677,226 378,620 297,159 123,749
----------- ---------- ---------- --------- -------- --------
Net increase in net assets....................... 7,158,246 5,124,238 1,887,720 359,294 323,107 134,099
Net assets at beginning of period................ 7,247,833 2,123,595 235,875 470,424 147,317 13,218
----------- ---------- ---------- --------- -------- --------
Net assets at end of period...................... $14,406,079 $7,247,833 $2,123,595 $ 829,718 $470,424 $147,317
=========== ========== ========== ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
TURNER CORE GROWTH SUBACCOUNT BRANDES INTERNATIONAL EQUITY SUBACCOUNT
------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income........................... $ 18,189 $ 1,666 $ 6,072 $ 14,188 $ 13,286 $ 1,112
Net realized gain............................... 26,736 2,780 839 11,526 600 888
Net unrealized appreciation (depreciation)
during the period.............................. 23,628 22,686 6,487 122,734 8,581 (1,473)
----------- ---------- ---------- --------- -------- --------
Net increase in net assets resulting from
operations...................................... 68,553 27,132 13,398 148,448 22,467 527
From policyholder transactions:
Net premiums from policyholders................. 109,802 39,070 33,658 152,629 141,892 82,259
Net benefits to policyholders................... (45,555) (9,835) (7,208) (31,332) (34,941) (45,350)
Net increase in policy loans.................... -- -- -- -- -- --
----------- ---------- ---------- --------- -------- --------
Net increase in net assets resulting from
policyholder transactions....................... 64,247 29,235 26,450 121,297 106,951 36,909
----------- ---------- ---------- --------- -------- --------
Net increase in net assets....................... 132,800 56,367 39,848 269,745 129,418 37,436
Net assets at beginning of period................ 125,007 68,640 28,792 255,757 126,339 88,903
----------- ---------- ---------- --------- -------- --------
Net assets at end of period...................... $ 257,807 $ 125,007 $ 68,640 $ 525,502 $255,757 $126,339
=========== ========== ========== ========= ======== ========
</TABLE>
See accompanying notes.
107
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FRONTIER CAPITAL APPRECIATION EMERGING MARKETS EQUITY GLOBAL EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------------------- ----------------------- --------------------
1999 1998 1997 1999 1998* 1999 1998*
----------- ---------- -------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ 8,771 $ (614) $ 5,054 $ 15,170 $ 1 $ 438 $ 57
Net realized gain (loss)................ (59,550) 23,061 8,970 1,838 (1) 196 (16)
Net unrealized appreciation
(depreciation) during the period....... 89,369 (840) 32,469 92,713 (48) 20,203 (303)
----------- ---------- -------- --------- -------- --------- -------
Net increase (decrease) in net assets
resulting from operations............... 38,590 21,607 46,493 109,721 (48) 20,837 (262)
From policyholder transactions:
Net premiums from policyholders......... 103,675 2,465,299 138,553 336,277 784 125,955 17,519
Net benefits to policyholders........... (2,221,410) (227,386) (70,647) (8,915) (7) (15,572) (762)
Net increase in policy loans............ -- -- -- -- -- -- --
----------- ---------- -------- --------- -------- --------- -------
Net increase (decrease) in net assets
resulting from policyholder
transactions............................ (2,117,735) 2,237,913 67,906 327,362 777 110,383 16,757
----------- ---------- -------- --------- -------- --------- -------
Net increase (decrease) in net assets.... (2,079,145) 2,259,520 114,399 437,083 729 131,220 16,495
Net assets at beginning of period........ 2,533,128 273,608 159,209 729 0 16,495 0
----------- ---------- -------- --------- -------- --------- -------
Net assets at end of period.............. $ 453,983 $2,533,128 $273,608 $ 437,812 $ 729 $ 147,715 $16,495
=========== ========== ======== ========= ======== ========= =======
</TABLE>
<TABLE>
<CAPTION>
ENHANCED
BOND INDEX SMALL/MID CAP CORE HIGH YIELD BOND U.S. EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------- --------------------- --------------------- ----------
1999 1998* 1999 1998* 1999 1998* 1999
----------- ---------- -------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ 2,701 $ 285 $ 6,364 $ (48) $ 2,791 $ 48 $ 1,374
Net realized gain (loss)................ (1,613) (26) 1,093 (1,957) (396) (108) 11
Net unrealized appreciation
(depreciation) during the period....... (1,753) (147) 4,719 1,888 (1,172) (19) 1,285
----------- ---------- -------- --------- -------- --------- -------
Net increase (decrease) in net assets
resulting from operations............... (665) 112 12,176 (117) 1,223 (79) 2,670
From policyholder transactions:
Net premiums from policyholders......... 80,921 16,730 44,493 52,673 69,375 108,274 15,505
Net benefits to policyholders........... (20,596) (2,293) 12,003) (19,857) -- (102,742) --
Net increase in policy loans............ -- -- -- -- -- -- --
----------- ---------- -------- --------- -------- --------- -------
Net increase in net assets resulting from
policyholder transactions............... 60,325 14,437 32,490 32,816 69,375 5,532 15,505
----------- ---------- -------- --------- -------- --------- -------
Net increase in net assets............... 59,660 14,549 44,666 32,699 70,598 5,453 18,175
Net assets at beginning of period........ 14,549 0 32,699 0 5,453 0 0
----------- ---------- -------- --------- -------- --------- -------
Net assets at end of period.............. $ 74,209 $ 14,549 $ 77,365 $ 32,699 $ 76,051 $ 5,453 $18,175
=========== ========== ======== ========= ======== ========= =======
</TABLE>
_________
* From May 1, 1998 (commencement of operations).
See accompanying notes.
108
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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-
seven 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-seven Portfolios of
the Fund and M Fund which are currently available are the Large Cap Growth,
Sovereign Bond, International Equity Index, Small Cap Growth, International
Balanced, Mid Cap Growth, Large Cap Value, Money Market, Mid Cap Value,
Small/Mid Cap Growth (formerly, Diversified Mid Cap Growth), Real Estate Equity,
Growth & Income, Managed, Short-Term Bond, Small Cap Value, International
Opportunities, Equity Index, Global Bond (formerly, Strategic Bond), Turner Core
Growth, Brandes International Equity, Frontier Capital Appreciation, Emerging
Markets Equity, Global Equity, Bond Index, Small/Mid Cap CORE, High Yield Bond
and Enhanced U.S. Equity 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 respective Portfolio shares are determined
on the basis of identified cost.
Federal Income Taxes
The operations of the Account are included in the federal income tax return of
JHMLICO, which is taxed as a life insurance company under the Internal Revenue
Code. JHMLICO has the right to charge the Account any federal income taxes, or
provision for federal income taxes, attributable to the operations of the
Account or to the Policies funded in the Account. Currently, JHMLICO does not
make a charge for income or other taxes. Charges for state and local taxes, if
any, attributable to the Account may also be made.
109
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Expenses
JHMLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at various rates ranging from .50%
to .625%, depending on the type of policy, of net assets (excluding policy
loans) of the Account. Additionally, a monthly charge at varying levels for the
cost of extra insurance is deducted from the net assets of the Account.
JHMLICO makes certain deductions for administrative expenses and state premium
taxes from premium payments before amounts are transferred to the Account.
Policy Loans
Policy loans represent outstanding loans plus accrued interest. Interest is
accrued (net of a charge for policy loan administration determined at an annual
rate of .75% of the aggregate amount of policyholder indebtedness) and
compounded daily.
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.
110
<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, 1999 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO SHARES OWNED COST VALUE
--------- ------------ ------------ -------------
<S> <C> <C> <C>
Large Cap Growth.......................... 1,516,913 $ 33,840,498 $ 41,460,815
Sovereign Bond............................ 7,742,962 76,567,490 70,640,632
International Equity Index................ 348,907 5,723,159 6,854,257
Small Cap Growth.......................... 236,036 3,094,500 4,511,934
International Balanced.................... 18,717 200,046 200,368
Mid Cap Growth............................ 465,615 9,063,619 13,609,575
Large Cap Value........................... 612,481 8,613,285 8,262,786
Money Market.............................. 1,835,117 18,351,172 18,351,172
Mid Cap Value............................. 367,982 4,828,927 4,701,632
Small/Mid Cap Growth...................... 390,884 6,039,184 5,486,044
Real Estate Equity........................ 331,185 4,719,779 3,800,017
Growth & Income........................... 15,384,863 241,740,472 307,871,384
Managed................................... 6,873,184 96,391,658 106,178,553
Short-Term Bond........................... 24,575 245,749 238,913
Small Cap Value........................... 317,611 3,731,225 3,467,391
International Opportunities............... 239,181 2,974,200 3,628,943
Equity Index.............................. 704,179 12,384,477 14,406,079
Global Bond............................... 84,502 877,096 829,719
Turner Core Growth........................ 11,243 204,222 257,807
Brandes International Equity.............. 33,860 396,716 525,501
Frontier Capital Appreciation............. 21,495 331,669 453,983
Emerging Markets Equity................... 35,704 345,147 437,812
Global Equity............................. 12,173 127,815 147,715
Bond Index................................ 7,964 76,110 74,210
Small/Mid Cap CORE........................ 7,882 70,758 77,365
High Yield Bond........................... 8,463 77,242 76,051
Enhanced U.S. Equity...................... 867 16,890 18,175
</TABLE>
111
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--(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 1999,
were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
--------- ----------- -------------
<S> <C> <C>
Large Cap Growth..................... $13,422,273 $ 2,517,136
Sovereign Bond....................... 13,709,441 4,426,503
International Equity Index........... 1,206,222 553,307
Small Cap Growth..................... 1,705,289 169,682
International Balanced............... 102,061 104,527
Mid Cap Growth....................... 8,451,704 1,019,989
Large Cap Value...................... 6,131,213 1,266,291
Money Market......................... 17,249,777 46,141,311
Mid Cap Value........................ 1,774,841 3,233,006
Small/Mid Cap Growth................. 1,914,302 771,153
Real Estate Equity................... 859,997 1,976,566
Growth & Income...................... 47,518,686 15,480,980
Managed.............................. 14,747,572 6,118,076
Short-Term Bond...................... 116,133 362,629
Small Cap Value...................... 1,396,171 297,748
International Opportunities.......... 2,979,658 4,075,263
Equity Index......................... 7,159,058 1,555,726
Global Bond.......................... 695,939 283,540
Turner Core Growth................... 142,622 60,186
Brandes International Equity......... 181,255 45,768
Frontier Capital Appreciation........ 91,263 2,200,227
Emerging Markets Equity.............. 351,448 8,915
Global Equity........................ 113,648 2,828
Bond Index........................... 86,949 23,921
Small/Mid Cap CORE................... 58,717 19,864
High Yield Bond...................... 85,583 13,417
Enhanced U.S. Equity................. 17,418 539
</TABLE>
112
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. NET ASSETS
Accumulation shares attributable to net assets of policyholders and
accumulation share values for each portfolio at December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
VLI CLASS #1 MVL CLASS #3 FLEX CLASS #4
---------------------------- ---------------------------- ------------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARES VALUES SHARES SHARES VALUES SHARES SHARES VALUES
--------- ------------ -------------- ------------ -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth............. -- -- 30,422 $79.68 303,522 $79.68
Sovereign Bond............... -- -- 13,276 23.69 1,236,413 23.69
International Equity Index... -- -- 12,251 27.55 147,364 27.55
Small Cap Growth............. -- -- 38,152 21.70 144,335 21.70
International Balanced....... -- -- 6,210 13.29 3,652 13.29
Mid Cap Growth............... -- -- 95,740 35.59 245,163 35.59
Large Cap Value.............. -- -- 50,345 16.17 406,006 16.17
Money Market................. -- -- 31,966 18.10 535,048 18.10
Mid Cap Value................ -- -- 54,325 14.06 234,907 14.06
Small/Mid Cap Growth......... -- -- 23,443 18.80 240,110 19.80
Real Estate Equity........... -- -- 8,437 22.14 111,094 22.14
Growth & Income.............. -- -- 102,216 68.13 1,902,118 68.13
Managed...................... -- -- 45,437 39.65 1,203,335 39.65
Short-Term Bond.............. -- -- 2,066 12.99 14,631 12.99
Small Cap Value.............. -- -- 29,974 12.32 222,258 12.32
International Opportunities.. -- -- 14,160 16.54 183,229 16.54
Equity Index................. -- -- 173,452 23.08 367,259 23.08
Global Bond.................. -- -- 16,532 12.16 39,548 12.16
Turner Core Growth........... -- -- 1,897 26.33 7,888 26.33
Brandes International
Equity...................... -- -- 5,884 17.14 20,691 17.14
Frontier Capital
Appreciation................ -- -- 1,074 21.11 18,559 21.11
Emerging Markets Equity...... -- -- 2,490 12.77 25,395 12.77
Global Equity................ -- -- 3,549 12.23 264 12.23
Bond Index................... -- -- 4,208 10.34 2,651 10.34
Small/Mid Cap CORE........... -- -- 794 10.76 201 10.76
High Yield Bond.............. -- -- 4,951 10.10 551 10.10
Enhanced U.S. Equity......... -- 1,372 13.25 -- 13.25
</TABLE>
113
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
FLEX II CLASS #5 VEP CLASS #7 VEP CLASS #8
---------------------------- ---------------------------- ----------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARES VALUES SHARES SHARES VALUES SHARES SHARES VALUES
--------- ------------ -------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth............... 18,120 $79.68 11,630 $34.19 14,305 $34.28
Sovereign Bond................. 7,625 23.69 6,071 13.80 5,831 13.84
International Equity Index..... 7,387 27.55 8,217 17.52 2,077 17.58
Small Cap Growth............... 19,575 21.70 5,119 21.68 778 21.71
International Balanced......... 2,567 13.29 2,650 13.28 -- 13.30
Mid Cap Growth................. 25,572 35.60 8,683 35.56 7,218 35.62
Large Cap Value................ 32,808 16.17 8,456 16.15 10,743 16.18
Money Market................... 8,023 18.10 13,653 13.08 10,717 13.12
Mid Cap Value.................. 21,416 14.06 19,817 14.05 3,847 14.08
Small/Mid Cap Growth........... 5,669 19.80 3,944 19.77 3,887 19.83
Real Estate Equity............. 5,693 22.14 1,424 14.40 -- 14.44
Growth & Income................ 54,684 68.13 57,852 30.90 23,997 31.00
Managed........................ 23,610 39.65 11,858 20.88 9,588 20.94
Short-Term Bond................ 1,526 12.99 52 12.97 -- 13.00
Small Cap Value................ 18,339 12.32 7,072 12.30 3,899 12.33
International Opportunities.... 9,070 16.54 7,208 16.52 5,805 16.55
Equity Index................... 50,932 23.08 22,543 23.06 7,757 23.10
Global Bond.................... 5,693 12.16 3,685 12.15 2,757 12.17
Turner Core Growth............. -- -- -- -- -- --
Brandes International Equity... -- -- 581 16.91 3,546 16.94
Frontier Capital Appreciation.. -- -- 185 22.75 1,528 22.80
Emerging Markets Equity........ 2,886 12.77 3,505 12.77 -- --
Global Equity.................. 147 12.23 3,346 12.22 -- --
Bond Index..................... 177 10.34 140 10.34 -- --
Small/Mid Cap CORE............. 57 10.76 6,139 10.76 -- --
High Yield Bond................ 1,033 10.10 997 10.10 -- --
Enhanced U.S. Equity........... -- -- -- -- -- --
</TABLE>
114
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
VEP CLASS #9
--------------------------------
ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARES VALUES
--------- --------------------------------
<S> <C> <C>
Large Cap Growth.................................................. 3,240 $34.39
Sovereign Bond.................................................... -- --
International Equity Index........................................ -- --
Small Cap Growth.................................................. -- --
International Balanced............................................ -- --
Mid Cap Growth.................................................... -- --
Large Cap Value................................................... 2,782 16.21
Money Market...................................................... -- --
Mid Cap Value..................................................... -- --
Small/Mid Cap Growth.............................................. -- --
Real Estate Equity................................................ -- --
Growth & Income................................................... 3,934 31.09
Managed........................................................... -- --
Short-Term Bond................................................... -- --
Small Cap Value................................................... -- --
International Opportunities....................................... -- --
Equity Index...................................................... 2,213 23.14
Global Bond....................................................... -- --
Turner Core Growth................................................ -- --
Brandes International Equity...................................... -- --
Frontier Capital Appreciation..................................... -- --
Emerging Markets Equity........................................... -- --
Global Equity..................................................... 4,771 12.24
Bond Index........................................................ -- --
Small/Mid Cap CORE................................................ -- --
High Yield Bond................................................... -- --
Enhanced U.S. Equity.............................................. -- --
</TABLE>
115
<PAGE>
ALPHABETICAL INDEX OF KEY WORDS AND PHRASES
This index should help you locate more information about many of the important
concepts in this prospectus.
<TABLE>
<CAPTION>
KEY WORD OR PHRASE PAGE
<S> <C>
Account...................................... 28
account value................................ 9
Additional Sum Insured....................... 16
annual processing date....................... 17
attained age................................. 10
Basic Sum Insured............................ 16
beneficiary.................................. 38
business day................................. 28
changing Option A or B....................... 18
changing the Total Sum Insured............... 17
charges...................................... 9
Code......................................... 34
cost of insurance rates...................... 10
date of issue................................ 29
death benefit................................ 5
deductions................................... 9
dollar cost averaging........................ 14
expenses of the Trusts....................... 11
fixed investment option...................... 28
full surrender............................... 14
fund......................................... 2
grace period................................. 7
guaranteed minimum death benefit............. 7
Guaranteed Minimum Death Benefit Premium..... 8
insurance charge............................. 10
insured person............................... 5
investment options........................... 1
John Hancock................................. 28
lapse........................................ 7
loan......................................... 15
loan interest................................ 15
maximum premiums............................. 6
Minimum Initial Premium...................... 29
minimum insurance amount..................... 17
minimum premiums............................. 6
modified endowment contract.................. 35
monthly deduction date....................... 30
mortality and expense risk charge............ 10
Option A; Option B........................... 16
optional extra death benefit feature......... 16
owner........................................ 5
partial withdrawal........................... 14
partial withdrawal charge.................... 11
payment options.............................. 18
Planned Premium.............................. 7
policy anniversary........................... 29
policy split option.......................... 17
policy year.................................. 29
premium; premium payment..................... 5
prospectus................................... 3
receive; receipt............................. 21
reinstate; reinstatement..................... 7
sales charges................................ 9
SEC.......................................... 2
Separate Account UV.......................... 28
Servicing Office............................. 2
special loan account......................... 15
subaccount................................... 28
surrender.................................... 14
surrender value.............................. 14
Target Premium............................... 8
tax considerations........................... 34
telephone transfers.......................... 21
Total Sum Insured............................ 16
transfers of account value................... 14
Trusts....................................... 2
variable investment options.................. 1
we; us....................................... 28
withdrawal................................... 14
withdrawal charges........................... 11
you; your.................................... 5
</TABLE>
116
