<PAGE>
As filed with the Securities and Exchange Commission on April, ___ 1997
Registration No. 33-79108
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-6
Post-Effective Amendment No. 4 to
Registration Statement Under
THE SECURITIES ACT OF 1933
----------------------
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
(Exact name of trust)
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(Name of depositor)
JOHN HANCOCK PLACE
BOSTON, MASSACHUSETTS 02117
(Complete address of depositor's principal executive offices)
--------------------
RONALD J. BOCAGE, ESQ.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, 02117
(Name and complete address of agent for service)
--------------------
Copy to:
GARY O. COHEN, ESQ.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
--------------------
It is proposed that this filing become effective(check appropriate box)
/ /immediately upon filing pursuant to paragraph (b) of Rule 485
--
/X/on May 1, 1997 pursuant to paragraph (b) of Rule 485
--
/ /60 days after filing pursuant to paragraph (a)(1) of Rule 485
--
/ /on (date) pursuant to paragraph (a)(1) of Rule 485
--
If appropriate check the following box
/ /this post-effective amendment designates a new effective date for a
--
previously filed amendment
Pursuant to the provisions of Rule 24f-2, Registrant has registered an
indefinite amount of the securities being offered and filed its Notice for
fiscal year 1996 pursuant to Rule 24f-2 on February 26, 1997.
FCC0008)
<PAGE>
CROSS-REFERENCE TABLE
Form N-8B-2 Item Caption in Prospectus
- ---------------- ---------------------
1, 2 Cover, The Account and The Series
Funds, JHVLICO and John Hancock
3 Inapplicable
4 Cover, Distribution of Policies
5,6 The Account and The Series Funds,
State Regulation
7, 8, 9 Inapplicable
10(a),(b),(c),(d),(e) Policy Provisions
and Benefits
10(f) Voting Privileges
10(g),(h) Changes that JHVLICO
Can Make
10(i) Appendix--Other Policy
Provisions, The Account and
The Series Funds
11, 12 Summary, The Account and The Series
Funds, Distribution of Policies
13 Summary, Charges and Expenses,
Appendix--Illustration of Death
Benefits, Surrender Values
and Accumulated Premiums
14, 15 Summary, Distribution of
Policies, Premiums
16 The Account and The Series Funds
17 Summary, Policy
Provisions and Benefits
18 The Account and The Series Funds,
Tax Considerations
19 Reports
20 Changes that JHVLICO
Can Make
21 Policy Provisions and Benefits
22 Policy Provisions and Benefits
<PAGE>
23 Distribution of Policies
24 Not Applicable
25 JHVLICO and John Hancock
26 Not Applicable
27,28,29,30 JHVLICO and John Hancock, Board
of Directors and Executive
Officers of JHVLICO
31,32,33,34 Not Applicable
35 JHVLICO and John Hancock
37 Not Applicable
38,39,40,41(a) Distribution of Policies,
JHVLICO and John Hancock,
Charges and Expenses
42, 43 Not Applicable
44 The Account and The Series Funds,
Policy Provisions,
Appendix--Illustration of Death
Benefits, Surrender Values
and Accumulated Premiums
45 Not Applicable
46 The Account and The Series Funds,
Policy Provisions,
Appendix--Illustration of Death
Benefits, Surrender Values
and Accumulated Values
47, 48, 49, 50 Not Applicable
51 Policy Provisions and Benefits,
Appendix--Other Policy
Provisions
52 The Account and The Series Funds,
Changes that JHVLICO
Can Make
53,54,55 Not Applicable
56,57,58 Not Applicable
59 Financial Statements
RAK0243.DOC V COLI
<PAGE>
John Hancock Variable Life
Insurance Company
(JHVLICO)
[LOGO OF JOHN HANCOCK VARIABLE MASTER PLAN PLUS APPEARS HERE]
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
JOHN HANCOCK PLACE
BOSTON, MASSACHUSETTS 02117
SERVICING OFFICE:
ONE JOHN HANCOCK WAY
SUITE 1000
BOSTON, MASSACHUSETTS 02217
TELEPHONE 1-800-REAL LIFE (1-800-732-5543)
FAX 617-572-5410
PROSPECTUS MAY 1, 1997
The flexible premium variable life policy ("Policy") described in this
Prospectus can be funded, at the discretion of the Owner, by any of the
variable subaccounts of John Hancock Variable Life Account S (the "Account"),
by a fixed subaccount (the "Fixed Account"), or by any combination of the
Fixed Account and the variable subaccounts (collectively, the "Subaccounts").
The assets of each variable Subaccount will be invested in a corresponding
investment portfolio ("Portfolio") of John Hancock Variable Series Trust I, a
"series" type mutual fund advised by John Hancock Mutual Life Insurance
Company ("John Hancock") or of M Fund, Inc., a '"series" type mutual fund
advised by M Financial Investment Advisers, Inc. (collectively the "Funds").
The assets of the Fixed Account will be invested in the general account of
John Hancock Variable Life Insurance Company ("JHVLICO").
The Prospectuses for the Funds, which are attached to this Prospectus,
describe the investment objectives, policies and risks of investing in the
Portfolios of the Funds: Growth and Income, Large Cap Growth, Sovereign Bond,
Money Market, Managed, Real Estate Equity, International Equities, Short-Term
U.S. Government, Special Opportunities, Small Cap Growth, Small Cap Value, Mid
Cap Growth, Mid Cap Value, International Balanced, International
Opportunities, Large Cap Value, Strategic Bond, and Equity Index and in the
Portfolios of M Funds, Inc.: Edinburgh Overseas Equity, Turner Core Growth.
Frontier Capital Appreciation, and Enhanced U.S. Equity. (The Enhanced U.S.
Equity Portfolio is not currently available to Owners, but is expected to be
made available later in 1997.) Other variable Subaccounts and Portfolios may
be added in the future.
Replacing existing insurance with a Policy described in this Prospectus may
not be to your advantage.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
IT IS NOT VALID UNLESS ATTACHED TO CURRENT PROSPECTUSES FOR THE FUNDS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SUMMARY................................................................... 1
JHVLICO and JOHN HANCOCK.................................................. 7
THE ACCOUNT AND THE SERIES FUNDS.......................................... 7
The Account............................................................. 7
The Series Funds........................................................ 7
THE FIXED ACCOUNT......................................................... 10
POLICY PROVISIONS AND BENEFITS............................................ 11
Requirements for Issuance of Policy..................................... 11
Premiums................................................................ 11
Account Value and Surrender Value....................................... 13
Death Benefits.......................................................... 14
Transfers Among Subaccounts............................................. 16
Loan Provisions and Indebtedness........................................ 17
Default................................................................. 18
Exchange Privilege...................................................... 19
CHARGES AND EXPENSES...................................................... 19
Charges Deducted from Premiums.......................................... 19
Sales Charge............................................................ 19
Reduced Charges for Eligible Groups..................................... 20
Charges Deducted from Account Value or Assets........................... 21
Guarantee of Certain Charges............................................ 23
DISTRIBUTION OF POLICIES.................................................. 23
TAX CONSIDERATIONS........................................................ 24
Policy Proceeds......................................................... 24
Charge for JHVLICO's Taxes.............................................. 25
Corporate and H.R. 10 Plans............................................. 25
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO...................... 26
REPORTS................................................................... 26
VOTING PRIVILEGES......................................................... 27
CHANGES THAT JHVLICO CAN MAKE............................................. 27
STATE REGULATION.......................................................... 28
LEGAL MATTERS............................................................. 28
REGISTRATION STATEMENT.................................................... 28
EXPERTS................................................................... 28
FINANCIAL STATEMENTS...................................................... 28
APPENDIX--OTHER POLICY PROVISIONS......................................... A-1
Settlement Provisions................................................... A-1
Additional Insurance Benefits........................................... A-1
General Provisions...................................................... A-1
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, SURRENDER VALUES AND ACCUMULATED
PREMIUMS................................................................. A-3
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
<PAGE>
INDEX OF DEFINED WORDS AND PHRASES
Below are listed certain words and phrases used in this Prospectus, together
with identification of the page on which each is defined or explained:
<TABLE>
<CAPTION>
Page
<S> <C>
Account.............................................................. 7
Account Value........................................................ 1
Additional Sum Insured............................................... 15
Age.................................................................. A-2
Basic Sum Insured.................................................... 1
DAC Tax.............................................................. 19
Death Benefit........................................................ 14
Fixed Account........................................................ 10
Funds......................................................... Front Cover
Grace Period......................................................... 18
Guaranteed Minimum Death Benefit..................................... 15
Guaranteed Minimum Death Benefit Premium............................. 12
Indebtedness......................................................... 17
Investment Rule...................................................... 12
Loan Assets.......................................................... 18
Minimum First Premium................................................ 11
Optional Extra Death Benefit......................................... 15
Planned Premium...................................................... 11
Policy Anniversary................................................... A-2
Portfolio..................................................... Front Cover
Servicing Office..................................................... 6
Subaccount.................................................... Front Cover
Surrender Value...................................................... 14
Target Premium....................................................... 20
Total Sum Insured.................................................... 15
Valuation Date....................................................... 10
Valuation Period..................................................... 10
Variable Subaccounts................................................. 2
7-Pay Limit.......................................................... 12
</TABLE>
<PAGE>
SUMMARY
WHAT IS THE VARIABLE LIFE POLICY BEING OFFERED?
JHVLICO issues variable life insurance policies. The Policies described in
this Prospectus provide life insurance coverage when the insured dies. The
Policies also provide for premium flexibility. JHVLICO issues other variable
life insurance policies. These other policies are offered by means of other
Prospectuses.
As explained below, the death benefit and Surrender Value under the Policy
may increase or decrease daily. The Policies differ from ordinary fixed-
benefit life insurance in the way they work. However, the Policies are like
fixed-benefit life insurance in providing lifetime protection against economic
loss resulting from the death of the insured. The Policies are primarily
insurance and not investments.
The Policies work generally as follows. A premium payment is periodically
made to JHVLICO. JHVLICO takes from each premium an amount for processing
expenses, taxes, and sales expenses. JHVLICO then places the rest of the
premium into the Subaccounts as directed by the owner of the Policy (the
"Owner"). The assets allocated to each variable Subaccount are invested in
shares of the corresponding Portfolio of the Funds. The currently available
Portfolios are identified on the cover of this Prospectus. The assets
allocated to the Fixed Account are invested in the general account of JHVLICO.
During the year, JHVLICO takes charges from each Subaccount and credits or
charges each Subaccount with its respective investment performance. The
insurance charge, which is deducted from the invested assets attributable to
each Policy ("Account Value"), varies monthly with the then attained age of
the insured and with the amount of insurance provided at the start of each
month.
The Policy provides for payment of death benefit proceeds when the insured
dies. The death benefit proceeds will equal the death benefit, plus any
additional benefit included by rider and then due, minus any Indebtedness. The
death benefit under Option A equals the Total Sum Insured less any withdrawals
that the Owner has made. The death benefit under Option B equals the Total Sum
Insured plus the Policy Account Value on the date of death of the insured. The
death benefit under Option M equals the Sum Insured, less any withdrawals by
the Owner, plus any optional Extra Death Benefit. The Policy also increases
the death benefit if necessary to ensure that the Policy will continue to
qualify as life insurance under the Federal tax laws.
Within limits prescribed by JHVLICO, the Owner may also elect whether to
purchase the coverage as part of the "Basic Sum Insured" or as an "Additional
Sum Insured". The Basic Sum Insured will not lapse during the first ten Policy
years, so long as (1) specified Guaranteed Minimum Death Benefit Premiums have
been paid, and (2) the Additional Sum Insured is not scheduled to exceed the
Basic Sum Insured at any time. The Owner may elect for this Guaranteed Minimum
Death Benefit feature to extend beyond ten years. The Additional Sum Insured
is subject to lapse, but has certain cost and other advantages.
The initial Account Value is the amount of the premium that JHVLICO credits
to the Policy, after deduction of the initial charges. The Account Value
increases or decreases daily depending on the investment experience of the
Subaccounts to which the amounts are allocated at the direction of the Owner.
JHVLICO does not guarantee a minimum amount of Account Value. The Owner bears
the investment risk for that portion of the Account Value allocated to the
variable Subaccounts. The Owner may surrender a Policy at any time while the
insured is living. The Surrender Value is the Account Value less any
Indebtedness plus any sales charge refund. The Owner may also make partial
withdrawals from a Policy, subject to certain restrictions and an
administrative charge.
1
<PAGE>
If the Owner surrenders in the early Policy years, the amount of Surrender
Value would be low (as compared with other investments without sales charges)
and, consequently, the insurance protection provided prior to surrender would
be costly.
The minimum Total Sum Insured that may be bought at issue is $100,000. All
persons insured must meet specified age limits and certain health and other
criteria called "underwriting standards." The smoking status of the insured is
generally reflected in the insurance charges made. Policies issued under
certain circumstances will not directly reflect the sex of the insured in
either the premium rates or the charges and values under the Policy.
WHAT IS THE AMOUNT OF THE PREMIUMS?
Premiums are flexible, and the Owner may choose the amount and frequency of
premium payments, so long as each premium payment is at least $100 and meets
certain other requirements.
The minimum amount of premium required at the time of Policy issue is
determined by JHVLICO based on the characteristics of the insured, the
Policy's Total Sum Insured at issue, and the Policy options selected by the
Owner. Unless the Guaranteed Minimum Death Benefit is in effect, if the Policy
Account Value at the beginning of any Policy month is insufficient to pay the
monthly Policy charges then due, JHVLICO will estimate the amount of
additional premiums necessary to keep the Policy in force for three months.
The Owner will have a 61 day grace period to pay at least that amount or the
Policy will lapse.
At the time of Policy issue, the Owner may designate the amount and
frequency of Planned Premium payments. The Owner may pay premiums other than
the Planned Premium payments, subject to certain limitations.
The Policy has a Guaranteed Minimum Death Benefit provision which guarantees
that the Basic Sum Insured will not lapse during the first ten Policy years if
(1) prescribed amounts of premiums have been paid, based on the
characteristics of the insured and the amount of the Basic Sum Insured at
issue and (2) any Additional Sum Insured is not scheduled to exceed the Basic
Sum Insured at any time. The Owner may at the time of application for the
Policy elect that this feature be extended beyond the first ten Policy years
at an additional charge.
WHAT IS JOHN HANCOCK VARIABLE LIFE ACCOUNT S?
The Account is a separate investment account of JHVLICO, operated as a unit
investment trust, which supports benefits payable under the Policies. The
Account is subdivided into a number of variable Subaccounts, each of which
corresponds to one of the Portfolios of the Funds. The assets of each are
invested in the corresponding Portfolio of the Funds. The Portfolios of the
Funds which are currently available are Growth & Income, Large Cap Growth,
Sovereign Bond, Money Market, Managed, Real Estate Equity, International
Equities, Short-Term U.S. Government, Special Opportunities, Small Cap Growth,
Small Cap Value, Mid Cap Growth, Mid Cap Value, International Balanced,
International Opportunities, Large Cap Value, Strategic Bond, Equity Index,
Edinburgh Overseas Equity, Turner Core Growth, Frontier Capital Appreciation,
and Enhanced U.S. Equity.
2
<PAGE>
John Hancock receives a fee from John Hancock Variable Series Trust I for
providing investment management services to each of its Portfolios. John
Hancock also receives a fee for certain non-advisory Fund expenses. The
following chart shows the fees received in 1996 as a percentage of each
Portfolio's average daily net assets.
<TABLE>
<CAPTION>
Other Total Fund
Investment Fund Operating Other Fund Expenses
Portfolio Management Fee Expenses Expenses Absent Reimbursement*
--------- -------------- -------- ---------- ---------------------
<S> <C> <C> <C> <C>
Managed................. 0.34% 0.03% 0.37% N/A
Growth & Income......... 0.25% 0.03% 0.28% N/A
Equity Index............ 0.20% 0.25% 0.45% 1.61%
Large Cap Value......... 0.75% 0.25% 1.00% 1.89%
Large Cap Growth........ 0.40% 0.05% 0.45% N/A
Mid Cap Value........... 0.80% 0.25% 1.05% 2.15%
Mid Cap Growth.......... 0.85% 0.25% 1.10% 2.34%
Special Opportunities... 0.75% 0.12% 0.87% N/A
Real Estate Equity...... 0.60% 0.11% 0.72% N/A
Small Cap Value......... 0.80% 0.25% 1.05% 2.06%
Small Cap Growth........ 0.75% 0.25% 1.00% 1.55%
International Balanced.. 0.85% 0.25% 1.10% 1.44%
International Equities.. 0.60% 0.18% 0.78% N/A
International Opportuni-
ties................... 1.00% 0.25% 1.25% 2.76%
Short-Term U.S. Govern-
ment................... 0.30% 0.06% 0.36% 0.79%
Sovereign Bond.......... 0.25% 0.06% 0.31% N/A
Strategic Bond.......... 0.75% 0.25% 1.00% 1.57%
Money Market............ 0.25% 0.07% 0.32% N/A
</TABLE>
- --------
* John Hancock reimburses a Portfolio when the Portfolio's Other Expenses
exceed 0.25% of the Portfolio's average daily net assets.
M Financial Investment Advisers, Inc., ("M Financial") receives a fee from M
Fund, Inc., for providing investment management services to each of its
Portfolios. M Financial also receives a fee for certain non-advisory Fund
expenses. The following chart shows the fees received in 1996 as a percentage
of each Portfolio's average daily net assets.
<TABLE>
<CAPTION>
Total
Other Fund
Investment Fund Operating Other Fund Expenses
Portfolio Management Fee Expenses Expenses Absent Reimbursement*
--------- -------------- -------- --------- ---------------------
<S> <C> <C> <C> <C>
Edinburgh Overseas Equi-
ty..................... 1.05% 0.25% 1.30% 6.29%
Turner Core Growth**.... 0.45% 0.25% 0.70% 8.06%
Frontier Capital Appre-
ciation**.............. 0.90% 0.25% 1.15% 7.29%
Enhanced U.S. Equity.... 0.55% 0.25% 0.80% 11.90%
</TABLE>
- --------
* M Financial reimburses a Portfolio when the Portfolio's Other Expenses
exceed 0.25% of the Portfolio's average daily net assets.
** Figures do not reflect interest expense, which is 0.08% for the Turner Core
Growth Portfolio and 0.05% for the Frontier Capital Appreciation Portfolio.
For a full description of the Funds, see the Prospectuses for the Funds
attached to this Prospectus.
WHAT ARE THE CHARGES MADE BY JHVLICO?
State Premium Tax Charge and Federal DAC Tax Charge. Charges deducted from
each premium payment, currently 2.35% for state premium taxes and 1.25% as a
Federal deferred acquisition cost or "DAC Tax" charge.
3
<PAGE>
Sales Charge. A charge deducted from each premium payment in the amount of
9% of premiums paid in each of the first ten Policy years up to the "target
premium." No charge is deducted from premiums paid during the first 10 Policy
years in excess of that target. The current sales charge in subsequent Policy
years generally is 3% of premiums paid up to the target premium in each of
Policy years 11 through 20, and 0% thereafter. The current sales charge for
premiums paid during any Policy year in excess of one target premium after the
tenth Policy year is zero. Subject to maximums set forth in the Policy,
certain of these charges may be increased.
Issue Charge. A charge deducted monthly from Account Value in an amount
equal to $12.50 for the first 3 Policy years, plus an amount set forth in the
Policy that varies by age per $1,000 of the Basic Sum Insured at issue for the
first 10 Policy years. For example, this additional monthly amount for a 45
year old is 17c per $1000 of Basic Sum Insured.
Administrative Charge. A charge deducted monthly from Account Value in an
amount equal to no more than $4 for all Policy years plus 6c per $1,000 of the
Basic Sum Insured at issue (currently $2.50; plus 2c per $1,000 of the Basic
Sum Insured at issue.)
Insurance Charge. A charge based upon the amount for which JHVLICO is at
risk, considering the attained age and risk classification of the insured and
JHVLICO's then current monthly insurance rates (never to exceed rates set
forth in the Policy) deducted monthly from Account Value.
Guaranteed Minimum Death Benefit Charge. If the Guaranteed Minimum Death
Benefit option is elected beyond the first 10 Policy years, a maximum charge,
starting at the beginning of the eleventh Policy year not to exceed 2c per
$1,000 (currently 1c per $1,000) of the Basic Sum Insured at issue, is
deducted monthly from Account Value.
Charge for Mortality and Expense Risks. A charge deducted daily from the
variable Subaccounts at a maximum effective annual rate of .40% of the assets
of each variable Subaccount. The current charge is .20% of the assets of the
Account.
Charge for Extra Mortality Risks. An additional charge, depending upon the
age of the insured and the degree of additional mortality risk, required if
the insured does not qualify for the standard underwriting class. This
additional charge is deducted monthly from Account Value.
Charge for Optional Rider Benefits. An additional charge required if the
Owner elects to purchase any optional insurance benefits by rider. Any such
additional charge will be deducted monthly from Account Value.
Charge for Partial Withdrawal. A charge of $20 deducted from Account Value
at the time of withdrawal.
See "Charges and Expenses" for a full description of the charges under the
Policy.
IS THERE A CHARGE AGAINST THE ACCOUNT FOR FEDERAL INCOME TAX?
Currently no charge is made against any Subaccount for Federal income taxes;
but if JHVLICO incurs, or expects to incur, income taxes attributable to any
Subaccount or this class of Policies in future years, it reserves the right to
make a charge. JHVLICO expects that it will continue to be taxed as a life
insurance company. See "Charge for JHVLICO's Taxes".
4
<PAGE>
WHAT IS THE RELATIONSHIP BETWEEN THE PREMIUM AND THE AMOUNT ALLOCATED TO THE
SUBACCOUNTS?
The initial net premium is allocated by JHVLICO from its general account to
the Money Market Subaccount on the date of issue of the Policy. The initial
net premium is the gross Minimum First Premium, plus any additional amount of
premium that has been paid prior to the date of issue, less the charges
deducted for sales expenses, state premium taxes, and the Federal DAC Tax.
These charges also apply to subsequent premium payments. Twenty days after the
date of issue, the amount in the Money Market Subaccount is reallocated among
the Subaccounts in accordance with the Owner's election. Net premiums derived
from payments received after this reallocation date are allocated, generally
on the date of receipt, to one or more of the Subaccounts as elected by the
Owner.
HOW ARE AMOUNTS ALLOCATED TO EACH SUBACCOUNT?
At issue and subsequently thereafter, the Owner will provide us with the
rule ("Investment Rule") we will follow to invest net premiums or other
amounts in any of the Subaccounts. The Owner may change the Investment Rule
under which JHVLICO will allocate amounts to Subaccounts. See "Premiums--
Billing, Allocation of Premium Payments (Investment Rule)".
WHAT COMMISSIONS ARE PAID TO AGENTS?
The Policies are sold through agents who are licensed by state authorities
to sell JHVLICO's insurance policies. Commissions payable to agents are
described under "Distribution of Policies". Sales expenses in any year are not
equal to the deduction for sales expenses in that year. Rather, total sales
expenses under the Policies are intended to be recovered over the lifetimes of
the insureds covered by the Policies.
WHAT IS THE DEATH BENEFIT?
The death benefit proceeds will equal the death benefit of the Policy, plus
any additional rider benefits included and then due, minus any Indebtedness.
The death benefit payable depends on the Policy's Total Sum Insured and the
death benefit option selected by the Owner at the time the Policy is issued,
as follows:
OPTION A: The death benefit equals the Policy's current Total Sum Insured
less any withdrawals of Account Value that the Owner has made.
OPTION B: The death benefit is the Policy's current Total Sum Insured
plus the Policy Account Value on the date of death of the insured, and
varies in amount based on investment results.
OPTION M: The death benefit equals the Policy's current Total Sum Insured
less any withdrawals of Account Value that the Owner has made plus any
Optional Extra Death Benefit.
The death benefit of the Policy under Options A, B, or M will be increased
if necessary to ensure that the Policy will continue to qualify as life
insurance under the Federal tax law. See "Death Benefits" and "Tax
Considerations".
Under the Guaranteed Minimum Death Benefit provision, the Policy is
guaranteed not to lapse during the first 10 Policy years, provided the amount
of premiums paid, accumulated at 4% interest, minus any withdrawals, also
accumulated at 4% interest, is at least equal to the Guaranteed Minimum Death
Benefit Premiums, accumulated at 4% interest. For an additional charge, the
Owner may elect this benefit to continue beyond the tenth Policy year.
However, the Guaranteed Minimum Death Benefit will not apply to any Policy if
the Additional Sum Insured is scheduled to exceed the Basic Sum Insured at any
time. The Guaranteed Minimum Death Benefit feature applies only to the Basic
Sum Insured and not to any amount of Additional Sum Insured.
5
<PAGE>
HOW DOES THE ACCOUNT VALUE OF A POLICY VARY IN RELATION TO THE SUBACCOUNTS'
INVESTMENT EXPERIENCE?
In general, the Account Value for any day equals the Account Value for the
previous day, increased by any net premium placed in the Subaccounts for the
Policy, decreased by any charges made against the Account Value and by any
partial withdrawal, and increased or decreased by the investment experience of
the Subaccounts. No minimum Account Value for the Policy is guaranteed.
WHAT IS THE LOAN PROVISION AND HOW DOES A LOAN AFFECT THE DEATH BENEFIT,
ACCOUNT VALUE AND SURRENDER VALUE?
The Owner may obtain a Policy loan in the maximum amount of 90% of the
Account Value. Interest charged on any loan will accrue and compound daily at
an effective annual rate determined by JHVLICO at the start of each Policy
year. This interest rate will be at an effective annual rate of 4.5% in the
first 20 Policy years and 4.25% thereafter, accrued and compounded daily. A
loan plus accrued interest ("Indebtedness") may be repaid at the discretion of
the Owner in whole or in part in accordance with the terms of the Policy.
While a loan is outstanding, the rate of interest credited to the Account
Value because of the loan will usually be different than the net investment
experience of the Subaccounts. Therefore, the Account Value, the Surrender
Value and any death benefit above the current Total Sum Insured are
permanently affected by any loan.
IS THERE A SHORT-TERM CANCELLATION RIGHT?
The Owner may surrender a Policy by delivering or mailing it within 45 days
after the date Part A of the application has been completed, or within at
least 10 days after receipt of the Policy by the Owner, or within 10 days
after mailing by JHVLICO of a Notice of Withdrawal Right, whichever is latest,
to JHVLICO's Servicing Office, or to the agent or agency office through which
it was delivered. Coverage under the Policy will be cancelled immediately as
of the date of such mailing or delivery. Any premium paid on it will be
refunded. If required by state law, the refund will equal the Account Value at
the end of the Valuation Period in which the Policy is received plus all
charges or deductions made against premiums plus an amount reflecting charges
against the Subaccounts and the investment management fee of the Funds.
WHAT INVESTMENT TRANSFERS ARE ALLOWED AN OWNER?
The Owner may transfer the Account Value among the variable Subaccounts or
into the Fixed Account at any time. Transfers out of the Fixed Account,
however, are subject to restrictions.
ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?
The benefits under Policies described in this Prospectus are expected to
receive the same tax treatment under the Internal Revenue Code of 1986 as
benefits under traditional fixed-benefit life insurance policies. Thus, death
benefits payable under the Policies will not be included in the beneficiary's
gross income. Also, the Owner is not taxed on interest and gains under the
Policy unless and until values are actually received through withdrawal,
surrender, or other distributions.
Under Federal tax law, distributions from Policies on which premiums greater
than a "7-pay" premium limit (as defined in the law) have been paid, will be
subject to special taxation. See "Premiums--7-Pay Premium Limit" and "Policy
Proceeds" for a discussion of how the "7-pay" premium limit may be exceeded
under a Policy. A distribution on such a Policy (called a "modified
endowment") will be taxed to the extent there is any income (gain) to the
Owner and an additional penalty tax may be imposed on the taxable amount.
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JHVLICO AND JOHN HANCOCK
JHVLICO, a stock life insurance company chartered in 1979 under
Massachusetts law, is authorized to transact a life insurance and annuity
business in Massachusetts and all other states, except New York. JHVLICO began
selling variable life insurance policies in 1980.
JHVLICO is a wholly-owned subsidiary of John Hancock, a company chartered in
Massachusetts in 1862. Its Home Office is at John Hancock Place, Boston,
Massachusetts 02117. John Hancock's assets are approximately $59 billion and
it has invested over $380 million in JHVLICO in connection with JHVLICO's
organization and operations. It is anticipated that John Hancock will from
time to time make additional capital contributions to JHVLICO to enable it to
meet its reserve requirements and expenses in connection with its business,
and John Hancock is committed to make additional capital contributions if
necessary to ensure that JHVLICO maintains a positive net worth.
THE ACCOUNT AND THE SERIES FUNDS
THE ACCOUNT
The Account, a separate account established under Massachusetts law, meets
the definition of "separate account" under the Federal securities laws and is
registered as a unit investment trust under the Investment Company Act of 1940
("1940 Act").
The Account's assets are the property of JHVLICO. Each Policy provides that
the portion of the Account's assets equal to the reserves and other
liabilities under the Policy shall not be chargeable with liabilities arising
out of any other business JHVLICO may conduct. In addition to the assets
attributable to variable life policies, the Account's assets include assets
derived from charges made by JHVLICO. From time to time these additional
assets may be transferred in cash by JHVLICO to its general account. Before
making any such transfer, JHVLICO will consider any possible adverse impact
the transfer might have on any Subaccount. Additional premiums are charged for
Policies where the insured is classified as a substandard risk and a portion
of these premiums is allocated to the Account.
The Account is registered with the Securities and Exchange Commission (the
"Commission") under the 1940 Act. Such registration does not involve
supervision by the Commission of the management or policies of the Account,
JHVLICO or John Hancock.
The assets in each variable Subaccount are invested in the corresponding
Portfolio of the Funds, but the assets of one variable Subaccount are not
necessarily legally insulated from liabilities associated with another
variable Subaccount. New variable Subaccounts may be added or existing
variable Subaccounts may be deleted as new Portfolios are added to or deleted
from the Funds and made available to Owners.
THE SERIES FUNDS
Each Fund is a "series" type of mutual fund registered with the Commission
under the 1940 Act as an open-end diversified management investment company.
Each Fund serves as the investment medium for the Account and other unit
investment trust separate accounts established for other variable life
insurance policies and variable annuity contracts. (See the attached Fund
Prospectuses for a description of a need to monitor for possible conflicts and
other consequences.) A very brief summary of the investment objectives of each
Portfolio is set forth below.
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Growth & Income Portfolio. The investment objective of this Portfolio is to
achieve intermediate and long-term growth of capital, with income as a
secondary consideration. This objective will be pursued by investments
principally in common stocks (and securities convertible into or with rights
to purchase common stocks) of companies believed to offer growth potential
over both the intermediate and long-term.
Large Cap Growth Portfolio. The investment objective of this Portfolio is to
achieve above-average capital appreciation through the ownership of common
stocks (and securities convertible into or with rights to purchase common
stocks) of companies believed by management to offer above-average capital
appreciation opportunities. Current income is not an objective of the
Portfolio.
Sovereign Bond Portfolio. The investment objective of this Portfolio is to
provide as high a level of long-term total rate of return as is consistent
with prudent investment risk, through investment primarily in a diversified
portfolio of freely marketable debt securities. Total rate of return consists
of current income, including interest and discount accruals, and capital
appreciation.
Money Market Portfolio. The investment objective of this Portfolio is to
provide maximum current income consistent with capital preservation and
liquidity. It seeks to achieve this objective by investing in a managed
portfolio of high quality money market instruments.
Managed Portfolio: The investment objective of this Portfolio is to achieve
maximum long-term total return consistent with prudent investment risk.
Investments will be made in common stocks, convertibles and other equity
investments, in bonds and other fixed income securities and in money market
instruments.
Real Estate Equity Portfolio: The investment objective of this Portfolio is
to provide above-average income and long-term growth of capital by investment
principally in equity securities of companies in the real estate and related
industries.
International Equities Portfolio: The investment objective of this Portfolio
is to achieve long-term growth of capital by investing primarily in foreign
equity securities.
Special Opportunities Portfolio: The investment objective of this Portfolio
is to achieve long-term capital appreciation by emphasizing investments in
equity securities of issuers in various economic sectors.
Short-Term U.S. Government Portfolio: The investment objective of this
Portfolio is to provide a high level of current income consistent with the
maintenance of principal, through investment in a portfolio of short-term U.S.
Treasury securities and U.S. Government agency securities.
Equity Index Portfolio: The investment objective of this Portfolio is to
provide investment results that correspond to the total return of the U.S.
market as represented by the S&P 500 utilizing common stocks that are publicly
traded in the United States.
Large Cap Value Portfolio: The investment objective of this Portfolio is to
provide substantial dividend income, as well as long-term capital
appreciation, through investments in the common stocks of established
companies believed to offer favorable prospects for increasing dividends and
capital appreciation.
Mid Cap Growth Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital through a non-diversified portfolio
investing largely in common stocks of medium capitalization companies.
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Mid Cap Value Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital primarily through investment in the common
stocks of medium capitalization companies believed to sell at a discount to
their intrinsic value.
Small Cap Growth Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital through a diversified portfolio investing
primarily in common stocks of small capitalization emerging growth companies.
Small Cap Value Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital by investing in a well diversified
portfolio of equity securities of small capitalization companies exhibiting
value characteristics.
Strategic Bond Portfolio: The investment objective of this Portfolio is to
provide a high total return consistent with moderate risk of capital and
maintenance of liquidity, from a portfolio of domestic and international fixed
income securities.
International Opportunities Portfolio: The investment objective of this
Portfolio is to provide capital appreciation through investment in common
stocks of primarily well-established, non-United States companies.
International Balanced Portfolio: The investment objective of this Portfolio
is to maximize total U.S. dollar return, consisting of capital appreciation
and current income, through investment in non-U.S. equity and fixed income
securities.
John Hancock acts as the investment manager for the above Portfolios, and
John Hancock's indirectly owned subsidiary, Independence Investment
Associates, Inc., with its principal place of business at 53 State Street,
Boston, MA 02109, provides sub-investment advice with respect to the Growth &
Income, Large Cap Stock, Managed, Real Estate Equity and Short-Term U.S.
Government Portfolios. Another indirectly owned subsidiary, John Hancock
Advisers, Inc., located at 101 Huntington Avenue, Boston, MA 02199, and its
subsidiary, John Hancock Advisers International, Limited, located at 34 Dover
Street, London, England, provide sub-investment advice with respect to the
International Equities Portfolio, and John Hancock Advisers, Inc., does
likewise with respect to the Sovereign Bond, Small Cap Growth and Special
Opportunities Portfolios.
T. Rowe Price Associates, Inc., located at 100 East Pratt St., Baltimore, MD
21202, provides sub-investment advice with respect to the Large Cap Value
Portfolio and its subsidiary, Rowe Price-Fleming International, Inc., also
located at 100 East Pratt St., Baltimore, MD 21202, provides sub-investment
advice with respect to the International Opportunities Portfolio.
State Street Bank & Trust, N.A., at Two International Place, Boston, MA
02110, is the sub-investment adviser to the Equity Index Portfolio. INVESCO
Management & Research located at 101 Federal Street, Boston, MA 02110, is the
sub-investment adviser to the Small Cap Value Portfolio. Janus Capital
Corporation, with its principal place of business at 100 Filmore Street,
Denver, CO 80206, is the sub-investment adviser to the Mid Cap Growth
Portfolio. Neuberger & Berman, LLC, of 605 Third Avenue, New York, NY 10158,
provides sub-investment advice to the Mid Cap Value Portfolio. J.P. Morgan
Investment Management Inc., located at 522 Fifth Avenue, New York, NY 10036,
provides sub-investment advice with respect to the Strategic Bond Portfolio
and Brinson Partners, Inc., of 209 S. LaSalle Street, Chicago, IL 60604, does
likewise with respect to the International Balanced Portfolio.
Edinburgh Overseas Equity Portfolio. The investment objective of this
Portfolio is long-term capital appreciation with reasonable investment risk
through active management and investment in common stock and common stock
equivalents of foreign issuers. Current income, if any, is incidental.
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Turner Core Growth Portfolio. The investment objective of this Portfolio is
to seek long-term capital appreciation through a diversified portfolio of
common stocks that show strong earnings potential with reasonable market
prices.
Frontier Capital Appreciation Portfolio. The investment objective of this
Portfolio is to seek maximum capital appreciation through investment in common
stock of companies of all sizes, with emphasis on stocks of small- to-medium-
capitalization companies. Importance is placed on growth and price
appreciation, rather than income.
Enhanced U.S. Equity Portfolio. The investment objective of this Portfolio
is to provide above market total return through investment in common stock of
companies perceived to provide a return higher than that of the S&P 500 at
approximately the same level of investment risk as the S&P 500.
M Financial Investment Advisers, Inc., acts as the investment manager for
the three Portfolios described above. Edinburgh Fund Managers PLC, North
America provides sub-investment advice to the Edinburgh Overseas Equity
Portfolio; Turner Investment Partners, Inc., provides sub-investment advice to
the Turner Core Growth Portfolio; Frontier Capital Management Company, Inc.,
provides sub-investment advice to the Frontier Capital Appreciation Portfolio;
and Franklin Portfolio Associates Trust provides sub-investment advice to the
Enhanced U.S. Equity Portfolio.
JHVLICO will purchase and redeem Fund shares for the Account at their net
asset value without any sales or redemption charges. Shares of the Fund
represent an interest in one of the Portfolios which corresponds to a variable
Subaccount of the Account. Any dividend or capital gains distributions
received by the Account will be reinvested in Fund shares at their net asset
value as of the dates paid.
On each Valuation Date, shares of each Portfolio are purchased or redeemed
by JHVLICO for each variable Subaccount based on, among other things, the
amount of net premiums allocated to the variable Subaccount, distributions
reinvested, transfers to, from and among variable Subaccounts, all to be
effected as of that date. Such purchases and redemptions are effected at the
net asset value per Fund share for each Portfolio determined on that same
Valuation Date. A Valuation Date is any date on which the New York Stock
Exchange is open for trading and on which the Fund values its shares. A
Valuation Period is that period of time from the beginning of the day
following a Valuation Date to the end of the next following Valuation Date.
A full description of each Fund, its investment objectives, policies and
restrictions, its charges, expenses and all other aspects of its operation is
contained in the attached Prospectuses and the statement of additional
information referred to therein, which should be read together with this
Prospectus.
THE FIXED ACCOUNT
An Owner may allocate premiums to the Fixed Account or transfer all or a
part of the Account Value under a Policy to the Fixed Account. The amount so
allocated or transferred will become a part of JHVLICO's general account
assets. JHVLICO's general account consists of assets owned by JHVLICO other
than those in the Account and in other separate accounts that have been or may
be established by JHVLICO. Subject to applicable law, JHVLICO has sole
discretion over the investment of assets of the general account, and Owners do
not share in the investment experience of those assets. Instead, JHVLICO
guarantees that the Account Value allocated to the Fixed Account will accrue
interest daily at an effective annual rate of at least 4% without regard to
the actual investment experience of the general account. Transfers from the
Fixed Account are subject to certain limitations. See "Transfers Among
Subaccounts".
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The Account Value in the Fixed Account is equal to the portion of the net
premiums allocated to it, plus any amounts transferred to it and interest
credited to it, minus any charges deducted from it or partial withdrawals or
amounts transferred from it. JHVLICO guarantees that interest credited to the
Account Value in the Fixed Account will not be less than an effective annual
rate of 4%. JHVLICO may, in its sole discretion, credit higher rates although
it is not obligated to do so. The Owner assumes the risk that interest
credited will not exceed 4% per year. Upon request and in the annual
statement, JHVLICO will inform Owners of the then-applicable rates. The rate
of interest declared with respect to any amount in the Fixed Account may
depend on when that amount was first allocated to the Fixed Account.
Because of exemptive and exclusionary provisions, interests in JHVLICO's
general account have not been registered under the Securities Act of 1933 and
the general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein
are subject to the provisions of these Acts, and JHVLICO has been advised that
the staff of the Securities and Exchange Commission has not reviewed the
disclosure in this Prospectus relating to the Fixed Account. Disclosure
regarding the Fixed Account may, however, be subject to certain generally-
applicable provisions of the Federal securities laws relating to accuracy and
completeness of statements made in prospectuses.
POLICY PROVISIONS AND BENEFITS
REQUIREMENTS FOR ISSUANCE OF POLICY
The Policy is generally available with a minimum Total Sum Insured at issue
of $100,000 and a minimum Basic Sum Insured of $50,000. At the time of issue,
the insured must be age 20 through 85. All persons insured must meet certain
health and other criteria called "underwriting standards". The smoking status
of the insured is reflected in the insurance charges made. Amounts of coverage
that JHVLICO will accept under the Policies may be limited by JHVLICO's
underwriting and reinsurance procedures as in effect from time to time.
Policies issued in certain jurisdictions or in connection with certain
employee benefit plans will not directly reflect the sex of the insured in
either the premium rates or the charges or values under the Policy. The
illustrations set forth in this Prospectus are sex distinct and, therefore, do
not reflect the "unisex" rates, charges, or values that would apply to such
Policies.
PREMIUMS
Payment Flexibility. Premiums are flexible. The Owner may choose the amount
and frequency of premium payments, so long as each premium payment is at least
$100 and meets the other requirements described below.
Minimum First Premium. The amount of premium required at the time of issue
is determined by JHVLICO, and depends on the age, sex, smoking status, and
underwriting class of the insured at issue, the Policy's Total Sum Insured at
issue, and any additional benefits selected. The Minimum First Premium must be
received by JHVLICO at its Servicing Office in order for the Policy to be in
full force and effect. See "Death Benefits". There is no grace period for the
payment of the Minimum First Premium.
Minimum Premiums. If the Policy's Surrender Value at the beginning of any
Policy month is insufficient to pay the monthly Policy charges then due,
JHVLICO will notify the Owner and the Policy will enter a grace period, unless
the Guaranteed Minimum Death Benefit is in effect. If premiums sufficient to
pay at least three months' estimated charges are not paid by the end of the
grace period, the Policy will lapse. See "Default".
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Planned Premium Schedule. At the time of issue, the Owner may designate a
Planned Premium schedule for the amount and frequency of premium payments.
JHVLICO will send billing statements for the amount chosen at the frequency
chosen. The Owner may change the Planned Premium after issue. The Owner may
also pay a premium in excess of the Planned Premium, subject to the
limitations described below. At the time of Policy issuance, JHVLICO will
determine whether the Planned Premium schedule will exceed the 7-Pay limit
discussed below. If so, JHVLICOs standard procedures prohibit issuance of the
Policy unless the Owner signs a form acknowledging that fact.
Other Premium Limitations. Federal tax law requires a minimum death benefit
in relation to Account Value. See "Death Benefits--Definition of Life
Insurance". The death benefit of the Policy will be increased if necessary to
ensure that the Policy will continue to satisfy this requirement. Also, as
described under "Death Benefits--Optional Extra Death Benefit Feature," the
Optional Extra Death Benefit feature may result in a death benefit under
Option M that is higher than the Total Sum Insured. If the payment of a given
premium will cause the Policy Account Value to increase to such an extent that
an increase in death benefit is necessary either to satisfy federal tax law
requirements or because of the way the Optional Extra Death Benefit feature
operates, JHVLICO has the right to not accept the excess portion of that
premium payment or to require evidence of insurability before that portion is
accepted. In no event, however, will JHVLICO refuse to accept any premium
necessary to maintain the Guaranteed Minimum Death Benefit in effect under a
Policy.
Whether or not the Guaranteed Minimum Death Benefit is in effect, JHVLICO
also reserves the right to limit premium payments above the amount of the
cumulative Guaranteed Minimum Death Benefit premiums. JHVLICO will not,
however, refuse to accept any premium payment that is required to keep the
Policy from lapsing.
Guaranteed Minimum Death Benefit Premiums. A Guaranteed Minimum Death
Benefit feature may apply during the first ten Policy years and, if the Owner
has elected, thereafter. See "Death Benefits". The Guaranteed Minimum Death
Benefit Premiums required to maintain this benefit in force depend on the
issue age, sex, smoking status, and underwriting class of the insured at issue
and the Basic Sum Insured at issue. This premium is 50% of the target premium
(discussed under "Sales Charge"). To keep the Guaranteed Minimum Death Benefit
in effect, the amount of actual premiums paid, accumulated at 4% interest,
minus any withdrawals, also accumulated at 4% interest, must at the beginning
of each Policy month be at least equal to the Guaranteed Minimum Death Benefit
Premiums due to date accumulated at 4% interest. If this test is not satisfied
at the beginning of any Policy month, JHVLICO will notify the Owner of the
shortfall. The amount of the shortfall must be paid within a period which ends
at the start of the third Policy month that begins after the date of default.
This notice will be mailed to the Owner's last-known address at least 31 days
prior to the end of the grace period. If JHVLICO does not receive payment for
the amount of the deficiency by the end of the grace period, the Guaranteed
Minimum Death Benefit feature will lapse unless and until restored as
described under "Default--Reinstatement". The Guaranteed Minimum Death Benefit
will not apply if the Additional Sum Insured is scheduled to exceed the Basic
Sum Insured at any time.
Billing, Allocation of Premium Payments (Investment Rule). The Owner may at
any time elect to be billed by JHVLICO for an amount of premium other than the
Guaranteed Minimum Death Benefit Premium. The Owner may also elect to be
billed for premiums on an annual, semi-annual, quarterly or monthly basis. All
premiums are payable at JHVLICO's Servicing Office.
Any premium payment will be processed by JHVLICO as of the end of the
Valuation Period in which it is received, unless one of the three exceptions
noted below is applicable. Each premium payment will be reduced by the state
premium tax charge, any applicable sales charge, and the Federal DAC Tax
charge. See "Charges and Expenses". The remainder is the net premium.
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The Owner at the time of application must elect an Investment Rule which
will allocate net premiums and any credits to any of the Subaccounts. The
Owner must select allocation percentages in whole numbers, and the total
allocated must equal 100%. The Owner may thereafter change the Investment Rule
prospectively at any time. The change will be effective as to any net premiums
and credits applied after receipt at JHVLICO's Servicing Office of notice
satisfactory to JHVLICO. Notwithstanding the Investment Rule, any net premium
(or portion thereof) credited to Account Value as of a date prior to the end
of the Valuation Period that includes the 20th day following the date of issue
will automatically be allocated to the Money Market Subaccount. At the end of
that Valuation Period (or of the premium's date of receipt, if later), the
Policy's Account Value will be reallocated automatically among the Subaccounts
in accordance with the Investment Rule chosen by the Owner.
There are three exceptions to the normal practice of processing a premium
payment as of the end of the Valuation Period in which it is received:
(1) A payment received prior to a Policy's date of issue will be
processed as if received on the Valuation Date immediately
preceding the date of issue.
(2) If the Minimum First Premium is not received prior to the date of
issue, each payment received thereafter will be processed as if
received on the Valuation Date immediately preceding the date of
issue until all of the Minimum First Premium is received.
(3) That portion of any premium that we delay accepting as described
under "Other Premium Limitations" above, or "7-Pay Premium Limit"
below, will be processed as of the end of the Valuation Period in
which we accept that amount.
7-Pay Premium Limit. Federal tax law modifies the tax treatment of certain
Policy distributions such as loans, surrenders, partial surrenders, and
withdrawals. The application of this modified treatment to any Owner depends
upon whether premiums have been paid at any time during the first 7 Policy
years that exceed a "7-pay" premium limit as defined in the law. The 7-pay
limit is the total of net level premiums that would have been payable at any
time for the Policy to be fully paid-up after the payment of 7 level annual
premiums. If the total premiums paid exceed the 7-pay limit, the Policy will
be treated as a "modified endowment", which means that the Owner will be
subject to tax to the extent of any income (gain) on any distributions made
from the Policy. A material change in the Policy will result in a new 7-pay
limit and test period. A reduction in the Policy's benefits within the 7-year
period following issuance of, or a material change in, the Policy may also
result in the application of the modified endowment treatment. See "Policy
Proceeds" under "Tax Considerations". If JHVLICO receives any premium payment
that will cause a Policy to become a modified endowment, the excess portion of
that premium payment will not be accepted unless the Owner signs an
acknowledgment of that fact. When it identifies such an excess premium,
JHVLICO sends the Owner immediate notice and refunds the excess premium if it
has not received notice of the acknowledgment by the time the premium payment
has had a reasonable time to clear the banking system, but in no case longer
than two weeks.
ACCOUNT VALUE AND SURRENDER VALUE
Amount of Account Value. The Account Value increases or decreases depending
upon a number of factors, such as the applicable Subaccount's investment
experience, the proportion of the Account Value invested in each Subaccount
and the interest credited to any Loan Account established upon the making of a
Policy loan. In general the Account Value for any day equals the Account Value
for the previous day, decreased by charges against the Account Value,
increased or decreased by the investment experience of the Subaccounts,
increased by net premiums received and decreased by any partial withdrawal. No
minimum amount of Account Value is guaranteed.
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A Policy loan will not affect the total amount of Account Value at the time
the loan is made but will result in a different rate of return being credited
to the Loan Account portion of the Account Value.
Amount of Surrender Value. The Surrender Value will be the Account Value
less any Indebtedness. If a Policy is surrendered at any time during the first
3 Policy years, any sales charge deducted within 365 days prior to the date
JHVLICO receives the surrender request will be refunded to the Owner.
When Policy May Be Surrendered. A Policy may be surrendered for its
Surrender Value at any time while the insured is living and the Policy is not
in a grace period. Surrender takes effect and the Surrender Value is
determined as of the end of the Valuation Period in which occurs the later of
receipt at JHVLICO's Servicing Office of a signed request or the surrendered
Policy.
Partial Withdrawal of Surrender Value. The Owner may request withdrawal of
part of the Surrender Value in accordance with JHVLICO's rules then in effect.
Any withdrawal must be at least $1,000 and is subject to an administrative
charge of $20.
An Owner may request a partial withdrawal of Surrender Value at any time
while the insured is living, provided that the Policy is not in a grace
period. This privilege, which reduces the Account Value by the amount of the
withdrawal and the associated charge, may not be used to reduce the Account
Value below the amount JHVLICO estimates will be required to pay three months'
charges under the Policy as they fall due. The withdrawal will be effective as
of the end of the Valuation Period in which JHVLICO receives written notice
satisfactory to it at its Servicing Office.
A withdrawal will reduce any Option A or M Sum Insured by the amount
withdrawn. JHVLICO reserves the right to refuse any withdrawal request that
would cause the Policy's Sum Insured to fall below $100,000.
An amount equal to the Account Value withdrawn will be removed from each
Subaccount in the same proportion as the Account Value is then allocated among
the Subaccounts. A withdrawal is not a loan and, once made, cannot be repaid.
A surrender or withdrawal may have significant tax consequences. See "Tax
Considerations".
DEATH BENEFITS
The death benefit proceeds are payable when the insured dies while the
Policy is in effect. The death benefit proceeds will equal the death benefit
of the Policy, plus any additional rider benefits then due, minus any
Indebtedness. If the insured dies during a grace period, JHVLICO will also
deduct any overdue monthly deductions.
The death benefit payable depends on the current Total Sum Insured and the
death benefit option selected by the Owner at the time the Policy is issued,
as follows:
OPTION A: The death benefit equals the current Total Sum Insured, plus
any increases in the death benefit described below under "Definition of
Life Insurance", and minus the amount of any partial withdrawals that have
been made over the life of the Policy.
OPTION B: The death benefit is the current Total Sum Insured, plus the
Policy Account Value at the end of the Valuation Period in which the
insured dies. This death benefit is a varying amount and fluctuates with
the amount of the Account Value. This death benefit is also subject to any
increase described below under "Definition of Life Insurance".
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OPTION M: The death benefit is the current Total Sum Insured, plus any
increases in the death benefit described below under "Optional Extra Death
Benefit Feature" and "Definition of Life Insurance" and minus the amount of
any partial withdrawals that have been made over the life of the Policy.
The Total Sum Insured is the Basic Sum Insured plus the amount of any
Additional Sum Insured (discussed below).
Owners who prefer to have favorable investment experience reflected in
increased insurance coverage should choose Option B or M. As between the two,
the anticipated increase in insurance coverage is likely to occur later under
Option M. Owners who prefer to have insurance coverage that generally does not
vary in amount and lower cost of insurance charges should choose Option A.
Optional Extra Death Benefit Feature. Pursuant to this feature the death
benefit under Option M will be no less than the amount of the Policy Account
Value, plus any refund of sales charges, multiplied by a factor specified in
the Policy. The factor is based on the insured's age. The Optional Extra Death
Benefit feature may result in an Option M death benefit that is higher than
the minimum death benefit required under Federal tax law, as described below
under "Definition of Life Insurance." Although there is no special charge for
the Optional Extra Death Benefit feature, the monthly cost of insurance
deductions will be based on the amount of death benefit then in effect,
including any additional death benefit pursuant to this option. An election of
this option must be made at the time of application for the Policy.
Definition of Life Insurance. Federal tax law requires a minimum death
benefit in relation to cash value for a Policy to qualify as life insurance.
The death benefit of a Policy will be increased if necessary to ensure that
the Policy will continue to qualify as life insurance. The higher death
benefit amount will be equal to the Policy Account Value on the date of death
of the insured, plus any refund of sales charges, times a percentage based on
the insured's age at the beginning of the Policy year of the insured's death.
This percentage, which declines with age, is set out in the Policy. The
monthly deductions for the cost of insurance will be based on the amount of
death benefit then in effect, including any additional death benefit required
to satisfy the definition of life insurance.
Guaranteed Minimum Death Benefit. During the first 10 Policy years (and
thereafter if the Owner elects) the Basic Sum Insured is guaranteed not to
lapse, provided that (1) the amount of premiums paid through each Policy
anniversary, accumulated at 4% interest, minus any withdrawals, also
accumulated at 4% interest, is at least equal to the Guaranteed Minimum Death
Benefit Premiums accumulated at 4% interest and (2) any Additional Sum Insured
under a Policy is not scheduled to exceed the Basic Sum Insured at any time.
At any time when this feature is not in force, the death benefit of the Policy
is not guaranteed. The election to extend the Guaranteed Minimum Death Benefit
beyond ten Policy years must be made at the time of Policy issuance. The Owner
may revoke the election at any time. JHVLICO imposes a charge after the tenth
Policy year if the Owner elects to extend this Benefit.
Additional Sum Insured. The Owner may apply for an amount of Additional Sum
Insured under the Policy, pursuant to which an additional amount of death
benefit will be paid upon the death of the insured under the Policy.
Purchasers of a Policy should consider various factors in determining whether
to elect coverage in the form of Basic Sum Insured or in the form of
Additional Sum Insured.
The Basic Sum Insured generally cannot be increased or decreased after
issue, whereas the amount of Additional Sum Insured can be decreased, or, upon
application and submission of evidence of insurability, increased subsequent
to Policy issuance. JHVLICO may refuse to accept any request to reduce the
Additional Sum Insured (a) that would cause the Policy's current Total Sum
Insured to fall below $100,000 or (b) if
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immediately following the reduction, the Policy's current death benefit would
reflect an increase necessary for the Policy to continue to qualify as life
insurance (see "Death Benefits--Definition of Life Insurance") or an increase
pursuant to the Optional Extra Death Benefit feature. Any increase or decrease
in Additional Sum Insured will become effective at the beginning of the first
Policy month after JHVLICO receives in good order at its Servicing Office all
information necessary to process the change, and, in the case of an increase
in coverage, approves the change.
Any decision by the Owner to modify the amount of Additional Sum Insured
coverage after issue can have significant tax consequences. See "Tax
Considerations--Policy Proceeds".
Also, the Owner may elect among several forms of Additional Sum Insured
coverage at the time the Owner applies for 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.
The amount of target premium under a Policy is not affected by the amount of
the Additional Sum Insured. Accordingly, the amount of sales charge paid by
the Owner and the amount of compensation paid to the selling insurance agent
may be less if coverage is included as Additional Sum Insured, rather than as
Basic Sum Insured.
The amount of any Additional Sum Insured is not included in any Guaranteed
Minimum Death Benefit. Therefore, if the Policy's Account 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.
The Additional Sum Insured at issue is limited to 400% of the Basic Sum
Insured. Generally, an Owner 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. On the other hand, for Owners that wish to take
advantage of the Guaranteed Mimimum Death Benefit, the proportion of the
Policy's Sum Insured that is guaranteed can be increased by taking out more
coverage as Basic Sum Insured at the time of Policy issue. The Guaranteed
Minimum Death Benefit does not apply to either the Basic Sum Insured or any
Additional Sum Insured if the Additional Sum Insured is scheduled to exceed
the Basic Sum Insured at any time. In such a case, it could be to the Owner's
advantage either to increase the amount of coverage applied for as Basic Sum
Insured in order that the Guaranteed Minimum Death Benefit will be available
or, if such guarantee is not of value to the Owner, to maximize the proportion
of the Additional Sum Insured.
Temporary Coverage Prior to Policy Delivery. If a specified amount of
premium is paid with the application for a Policy, temporary term coverage may
be available prior to the time that coverage under the Policy takes effect.
Temporary term coverage is subject to the terms and conditions described in
the application for a Policy.
TRANSFERS AMONG SUBACCOUNTS
The Owner may reallocate the amounts held for the Policy in the Subaccounts
with no charge at any time, except as noted below. The Owner may either (1)
use percentages (in whole numbers) to be transferred among Subaccounts or (2)
designate the dollar amount of funds to be transferred among Subaccounts. The
reallocation must be such that the total in the Subaccounts after reallocation
equals 100% of Account Value. Transfers out of a variable Subaccount will be
effective at the end of the Valuation Period in which JHVLICO receives at its
Servicing Office notice satisfactory to JHVLICO.
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Transfers out of the Fixed Account to the variable Subaccounts are permitted
only once each Policy year and only during the 31-day period beginning on the
Policy anniversary. Transfers out of the Fixed Account may be requested from
60 days before to 30 days after the Policy anniversary. If received on or
before the Policy anniversary, requests for transfer out of the Fixed Account
will be processed on the Policy anniversary (or the next Valuation Date if the
Policy anniversary does not occur on a Valuation Date); if received after the
Policy anniversary, they will be processed at the end of the Valuation Period
in which JHVLICO receives the request at its Servicing Office. (JHVLICO
reserves the right to defer such Fixed Account transfers for up to six
months.) If an Owner requests a transfer out of the Fixed Account 61 days or
more prior to the Policy anniversary, that portion of the reallocation will
not be processed and the Owner's confirmation statement will not reflect a
transfer out of the Fixed Account as to such request. Transfers among variable
Subaccounts and transfers into the Fixed Account may be requested at any time.
A maximum of 20% of Fixed Account assets or, if greater, $500 may be
transferred out of the Fixed Account in any Policy year. Currently, there is
no minimum amount limit on transfers out of the Fixed Account, but JHVLICO
reserves the right to impose such a limit in the future.
No transfers among Subaccounts may be made while the Policy is in a grace
period.
Telephone Transfers and Policy Loans. Once a written authorization is
completed by the Owner, the Owner may request a transfer or policy loan by
telephoning 1-800-732-5543 or sending a written request via fax to 1-800-621-
0448. Any fax request should include the Owner's name, daytime telephone
number, Policy number and, in the case of transfers, the names of the
Subaccounts from which and to which money will be transferred. The right to
discontinue telephone transactions at any time without notice to Owners is
specifically reserved. If the fax request option becomes unavailable, another
means of telecommunication will be substituted.
An Owner who authorizes telephone transactions will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which JHVLICO reasonably believes to be genuine, unless such
loss, expense or cost is the result of JHVLICO's mistake or negligence.
JHVLICO employs procedures which provide safeguards against the execution of
unauthorized transactions, and which are reasonably designed to confirm that
instructions received by telephone are genuine. These procedures include
requiring personal identification, tape recording calls, and providing written
confirmation to the Owner. If JHVLICO does not employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, it may be
liable for any loss due to unauthorized or fraudulent instructions.
LOAN PROVISIONS AND INDEBTEDNESS
Loan Provisions. Loans may be made at any time a Loan Value is available,
the insured is alive and the Policy is not in a grace period. The Owner may
borrow money, assigning the Policy as the only security for the loan, by
completion of a form satisfactory to JHVLICO or, if the telephone transaction
authorization form has been completed by telephone. The Loan Value will be 90%
of the Account Value. Interest charged on any loan will accrue and compound
daily at an effective annual rate determined by JHVLICO at the start of each
Policy Year. This interest rate will be at an effective annual rate of 4.5% in
the first 20 Policy years, and 4.25% thereafter, compounded and accrued daily.
The "Published Monthly Average" means Moody's Corporate Bond Yield Average-
Monthly Average Corporates, as published by Moody's Investors Service, Inc.,
or if the average is no longer published, a substantially similar average
established by the insurance regulator where the Policy is issued.
The amount of any outstanding loan plus accrued interest is called the
"Indebtedness". The amount of the loan available will be the Loan Value less
any existing Indebtedness. A loan will not be permitted unless it is at least
$1,000. A loan may be repaid in full or in part at any time before the
insured's death and while the Policy is not in a grace period. When a loan is
made, an amount equal to the loan proceeds will be transferred out of
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the Account and the Fixed Account, as applicable. This amount is allocated to
a portion of JHVLICO's general account called the "Loan Assets." Each
Subaccount will be reduced in the same proportion as the Account Value is then
allocated among the Subaccounts. Upon each loan repayment, the same
proportionate amount of the entire loan as was borrowed from the Fixed Account
will be repaid to the Fixed Account. The remainder of the loan repayment will
be allocated to the appropriate Subaccounts as stipulated in the then current
Investment Rule. For example, if the entire loan outstanding is $3000 of which
$1000 was borrowed from the Fixed Account, then upon a repayment of $1500,
$500 would be allocated to the Fixed Account and the remaining $1000 would be
allocated to the appropriate Subaccounts as stipulated in the then current
Investment Rule. If an Owner wishes any payment to constitute a loan repayment
(rather than a premium payment), the Owner must so specify.
Effect of Loan and Indebtedness. While the Indebtedness is outstanding, that
portion of the Account Value that is in Loan Assets is credited with interest
at a rate that is .5% less than the loan interest rate for the first 20 Policy
years and .25% less than the loan interest rate thereafter. The rate credited
to Loan Assets will usually be different than the net return for the
Subaccounts. Since Loan Assets and the remaining portion of the Account Value
will generally have different rates of investment return, the Account Value,
the Surrender Value, and any death benefit above the Total Sum Insured are all
permanently affected by any Indebtedness, whether or not it is repaid in whole
or in part. The amount of any Indebtedness is subtracted from the amount
otherwise payable when the Policy proceeds become payable.
Whenever the Indebtedness equals or exceeds 90% of the Account Value, the
Policy terminates 31 days after notice has been mailed by JHVLICO to the Owner
and any assignee of record at their last known addresses, specifying the
minimum amount that must be paid to keep the Policy in force beyond that
period unless a repayment of at least the amount specified in the notice is
made within that period.
Tax Considerations. If the Policy is a modified endowment at the time a loan
is made, that loan may have significant tax consequences. See "Tax
Considerations".
DEFAULT
Premium Grace Period, Default and Lapse. Unless the Guaranteed Minimum Death
Benefit is in force, at the beginning of each Policy month JHVLICO determines
whether the Account Value, net of any Indebtedness, is sufficient to pay all
monthly charges then due under the Policy. If not, the Policy is in default
and JHVLICO will notify the Owner of the amount estimated to be necessary to
pay three months' deductions, and a grace period will be in effect until 61
days after the date the notice was mailed. If JHVLICO does not receive payment
of at least this amount by the end of the grace period, the Policy will lapse,
and any remaining amount owed to the Owner as of the date of lapse will be
paid to the Owner.
If the Guaranteed Minimum Death Benefit is in effect and the Policy provides
for an Additional Sum Insured, the grace period and lapse procedures set forth
in the preceding paragraph will apply only to the Additional Sum Insured.
Lapse of the Additional Sum Insured can have significant tax consequences. See
"Tax Considerations--Policy Proceeds". If the Guaranteed Minimum Death Benefit
has been in effect and lapses at the end of a grace period (as described in
"Premiums--Guaranteed Minimum Death Benefit Premiums"), the usual default,
grace period and lapse procedures described in the preceding paragraph will be
applied commencing with the first day of the first Policy month following the
lapse of the Guaranteed Minimum Death Benefit.
The insurance under the Policy continues in full force during any grace
period but, if the insured dies during the grace period, the amount in default
is deducted from the death benefit otherwise payable.
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Written notice will be furnished to the Owner at his or her last known
address, at least 31 days prior to the end of any grace period, specifying the
minimum amount which must be paid to continue the Policy in force on a premium
paying basis after the end of the grace period.
Reinstatement. A lapsed Policy (or a lapsed Additional Sum Insured, if the
Basic Sum Insured remains in force or is reinstated) or the Guaranteed Minimum
Death Benefit may be reinstated in accordance with the Policy's terms.
Evidence of insurability satisfactory to JHVLICO will be required (except as
to a request to restore the Guaranteed Minimum Death Benefit within 1 year
after the beginning of its grace period) and payment of the required premium
and charges. The request must be received at JHVLICO's Servicing Office within
1 year after the beginning of the grace period (or 5 years if the request
relates only to the Guaranteed Minimum Death Benefit). JHVLICO reserves the
right to refuse Guaranteed Minimum Death Benefit restorations after the first
restoration. A reinstatement of the Basic Sum Insured or the Additional Sum
Insured may be deemed as a material change for Federal income tax purposes.
See "Premiums--7-Pay Premium Limit" and "Tax Considerations".
EXCHANGE PRIVILEGE
The Owner may transfer the entire Account Value under the Policy to the
Fixed Account at any time, creating a non-variable policy. The exchange will
be effective at the end of the Valuation Period in which JHVLICO receives at
its Servicing Office notice of the transfer satisfactory to JHVLICO.
----------------
The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement.
CHARGES AND EXPENSES
CHARGES DEDUCTED FROM PREMIUMS
In addition to the sales charge (see "Sales Charge" below), the following
charges are deducted from premiums:
State Premium Tax Charge. A charge currently equal to 2.35% of each premium
payment will be deducted from each premium payment. Premium taxes vary from
state to state, ranging from zero to 4% currently. A charge of 2.35% is made,
regardless of the premium tax imposed by any state. The 2.35% rate is the
average rate currently expected to be paid on premiums received in all states
over the lifetimes of the insureds covered by the Policies. JHVLICO will not
increase this charge under outstanding Policies, but reserves the right to
change this charge for Policies not yet issued in order to correspond with
changes in the state premium tax levels.
Federal DAC Tax Charge. A charge currently equal to 1.25% of each premium
payment will be deducted from each premium payment to cover the estimated cost
to JHVLICO of the Federal income tax treatment of the Policies' deferred
acquisition costs--commonly referred to as the "DAC Tax". JHVLICO has
determined that this charge is reasonable in relation to JHVLICO's increased
Federal income tax burden under the Internal Revenue Code resulting from the
receipt of premiums. JHVLICO will not increase this charge under outstanding
Policies, but reserves the right, subject to any required regulatory approval,
to change this charge for Policies not yet issued in order to correspond with
changes in the Federal income tax treatment of the Policies' deferred
acquisition costs.
SALES CHARGE
A charge is made to compensate JHVLICO for the cost of selling the Policy.
This cost includes agents' commissions, commission overrides, advertising, and
the printing of Prospectuses and sales literature. The
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amount of the charge in any Policy year cannot be specifically related to
sales expenses for that year. JHVLICO expects to recover its total sales
expenses over the period the Policies are in effect. To the extent that sales
charges are insufficient to cover total sales expenses, the sales expenses may
be recovered from other sources, including gains from the charge for mortality
and expense risks and other gains with respect to the Policies, or from
JHVLICO's general assets. See "Distribution of Policies".
The current sales charge in each of the first ten Policy years is equal to
9% of the premiums paid up to one "target premium." There is no sales charge
on premiums in excess of the target premium. The target premium is established
at issue and is the amount of the 7-Pay premium limit for the Basic Sum
Insured at the maximum guaranteed cost of insurance rates and a net interest
rate of 4%. See "Premiums--7-Pay Premium Limit." Target premiums will vary
based on the issue age, sex, smoking status and underwriting class of the
insured.
The current sales charge for premiums paid up to one target premium in each
subsequent Policy year is 3% in Policy years 11 through 20, and zero
thereafter. The current sales charge for premiums paid in excess of the target
premium after the tenth Policy year is zero. Payment of premiums in excess of
the target premium may cause the Policy to become a modified endowment,
resulting in adverse tax consequences to the Owner upon receipt of any Policy
distributions. See "Premiums--7-Pay Premium Limit".
The guaranteed maximum sales charges under the Policy are no higher than the
current sales charges, except that the guaranteed maximum sales charge for
premiums paid up to one target premium is 5% in Policy years 11 through 20 and
3% after Policy year 20 and for premiums paid in excess of one target premium
is 3%. Because the Policies were first offered in 1994, sales charges at the
lower current rates are not yet applicable under any outstanding Policy.
An Owner may structure the timing and amount of premium payments to minimize
the sales charges deducted from premium payments, although doing so involves
certain risks. Paying less than one target premium in the first Policy year or
paying more than one target premium in any Policy year could reduce the
Owner's total sales charges over time. For example, an Owner, paying ten
target premiums of $10,000 each, would pay total sales charges of $9,000 if he
paid $10,000 in each of the first ten Policy years, but would pay total sales
charges of only $4,500 if he paid $20,000 (i.e., two times the target premium
amount) in every other Policy year up to the ninth Policy year. However,
delaying the payment of target premiums to later Policy years could increase
the risk that the Guaranteed Minimum Death Benefit will lapse and that 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. See
"Default". Conversely, accelerating the payment of target premiums to earlier
Policy years could cause aggregate premiums paid to exceed the Policy's 7-pay
premium limit and, as a result, cause the Policy to become a modified
endowment, with adverse tax consequences to the Owner upon receipt of Policy
distributions. See "Premiums--7-Pay Premium Limit".
REDUCED CHARGES FOR ELIGIBLE GROUPS
The sales charge and issue charge (described below) otherwise applicable may
be reduced with respect to Policies issued to a class of associated
individuals or to a trustee, employer or similar entity where JHVLICO
anticipates that the sales to the members of the class will result in lower
than normal sales or administrative expenses. The charge for mortality and
expense risks (described below) otherwise applicable may be reduced with
respect to Policies issued to a trustee, employer or similar entity where
JHVLICO anticipates that, because of the nature of the group on whose behalf
the Policies are purchased, there will be a lower than normal risk of the
mortality and expense charge not being sufficient to cover actual mortality
and expense costs. These reductions will be made in accordance with JHVLICO's
rules in effect at the time of the application for a Policy. The factors
considered by JHVLICO in determining the eligibility of a particular group for
reduced charges, and
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the level of the reduction, are as follows: the nature of the association and
its organizational framework; the method by which sales will be made to the
members of the class; the facility with which premiums will be collected from
the associated individuals and the association's capabilities with respect to
administrative tasks; the anticipated persistency of the policies; the size of
the class of associated individuals and the number of years it has been in
existence; the aggregate amount of premiums to be paid by or for the class of
associated individuals; and any other such circumstances which justify a
reduction in sales or administrative charges or mortality and expense risk
charges. Any reduction will be reasonable and will apply uniformly to all
prospective Policy purchasers in the class and will not be unfairly
discriminatory to the interests of any Policy Owner.
CHARGES DEDUCTED FROM ACCOUNT VALUE OR ASSETS
The following charges are deducted from Account Value or assets:
Issue Charge. JHVLICO will deduct an issue charge from Account Value, at the
rate of $12.50 per month for the first 3 Policy years, plus an amount set
forth in the Policy that varies by age per $1,000 of the Basic Sum Insured at
issue for the first 10 Policy years. For example, this additional monthly
amount for a 45 year old is 17c per $1000 of Basic Sum Insured.
The issue charge is to compensate JHVLICO for expenses incurred in
connection with the issuance of the Policy, other than sales expenses. Such
expenses include medical examinations, insurance underwriting costs and costs
incurred in processing applications and establishing permanent Policy records.
Administrative charge. JHVLICO will deduct from the Account Value a monthly
charge not to exceed $4 for all Policy years plus 6c per $1000 of the Basic
Sum Insured at issue. The current monthly charge is $2.50 for all Policy years
plus 2c per $1000 of Basic Sum Insured at issue.
This charge is to compensate JHVLICO for administrative expenses, including
recordkeeping, processing death claims and surrenders, making Policy changes,
reporting and other communications to Owners and other similar expense and
overhead costs.
Insurance Charge. The insurance charge deducted monthly from Account Value
is based on the attained age of the insured and the amount at risk. The amount
at risk is the difference between the current death benefit and the Account
Value (after reflecting all charges against Account Value). The amount of the
insurance charge is determined by multiplying JHVLICO's then current monthly
rate for insurance by the amount at risk.
Current monthly rates for insurance are based on the sex, age, smoking
status and underwriting class of the insureds and the length of time the
Policy has been in effect. JHVLICO will review these rates at least every 5
years, and may change these rates from time to time based on JHVLICO's
expectations of future experience. However, these rates will never be more
than the guaranteed maximum rates based on the 1980 Commissioners' Standard
Ordinary Mortality Tables, as set forth in the Policy.
Lower current insurance rates are offered at most ages for insureds who
qualify for the standard underwriting class and whose applications are fully
underwritten, i.e. subject to evidence of insurability on the part of the
insured, a process which may involve a medical examination. On the other hand,
higher current insurance rates are generally applicable if the Policies are
issued on a guaranteed issue basis, where evidence of insurability is not
required.
Policies issued to trustees, employers and similar entities are often issued
on a guaranteed issue basis. Because only limited underwriting information is
obtained in this alternative underwriting procedure, Policies in
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<PAGE>
this class may present additional mortality expense to JHVLICO relative to
Policies which are fully underwritten. This additional insurance risk is
generally reflected in higher insurance rates, nevertheless guaranteed not to
exceed the 1980 Commissioners' Standard Ordinary Mortality Tables.
Guaranteed Minimum Death Benefit Charge. If the Guaranteed Minimum Death
Benefit option is elected for a period beyond the first 10 Policy years,
JHVLICO deducts a charge from Account Value beginning in the eleventh Policy
year. The maximum monthly charge is 2c per $1000 of the Basic Sum Insured at
issue and the current monthly charge is 1c per $1,000 of the Basic Sum Insured
at issue. If the Guaranteed Minimum Death Benefit lapses due to failure to pay
sufficient premiums, the charge will be discontinued.
Charge for Mortality and Expense Risks. A daily charge is deducted from the
variable Subaccounts for mortality and expense risks assumed by JHVLICO at a
maximum effective annual rate of .40% of the value of the assets of each
variable Subaccount attributable to the Policies. The current charge is at an
effective annual rate of .20%. This charge begins when amounts under a Policy
are first allocated to the Account. The mortality risk assumed is that
insureds may live for a shorter period of time than estimated and, therefore,
a greater amount of death benefit than expected will be payable in relation to
the amount of premiums received. The expense risk assumed is that expenses
incurred in issuing and administering the Policies will be greater than
estimated. JHVLICO will realize a gain from this charge to the extent it is
not needed to provide for benefits and expenses under the Policies.
Charges for Extra Mortality Risks. An insured who does not qualify for the
standard underwriting class must pay an additional charge because of the extra
mortality risk. The level of the charge depends upon the age of the insured
and the degree of extra mortality risk. This additional charge is deducted
monthly from Account Value.
Charges for Optional Rider Benefits. An additional charge must be paid if
the Owner elects to purchase any optional insurance benefit by Policy rider.
Any such additional charge may be deducted monthly from Account Value.
Charges for Taxes. Currently no charge is made against Account Value for
JHVLICO's Federal income taxes, but if JHVLICO incurs, or expects to incur,
income taxes attributable to the Account or this class of Policies in future
years, it reserves the right to make a charge, and any charge would affect
what the Subaccounts earn. Charges for other taxes, if any, attributable to
the Subaccounts may also be made.
Charge for Partial Withdrawal. JHVLICO will deduct a charge in the amount of
$20 on a partial withdrawal of Surrender Value, as described under "Account
Value and Surrender Value". The charge will be deducted from Account Value.
The charge is to compensate JHVLICO for the administrative expenses of
effecting the withdrawal.
Fund Investment Management Fee and Other Fund Expenses. The Account
purchases shares of the Funds at net asset value, a value which reflects the
deduction from the assets of each Fund of its investment management fees and
certain other non-advisory Fund operating expenses, which are described in the
Summary of this Prospectus. For a full description of these deductions, see
the attached Prospectuses for the Funds.
The monthly deductions from Account Value described above are deducted on
the date of issue and on the first day of each Policy month thereafter. These
deductions are made from the Subaccounts in proportion to the amount of
Account Value in each. For each month that JHVLICO is unable to deduct any
charge because there is insufficient Account Value, the uncollected charges
will accumulate and be deducted when and if sufficient Account Value is
available.
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GUARANTEE OF CERTAIN CHARGES
The state premium tax charge, the Federal DAC Tax charge, the issue charge
and the charge for partial withdrawals are guaranteed not to increase over the
life of the Policy. The administrative charge, the Guaranteed Minimum Death
Benefit charge, the sales charge, the mortality and expense risk charge, and
the insurance charge are guaranteed not to exceed the maximums set forth in
the Policy.
DISTRIBUTION OF POLICIES
Applications are solicited by agents who are licensed by state insurance
authorities to sell JHVLICO's Policies and who are also registered
representatives ("representatives") of John Hancock Distributors, Inc.
("Distributors"), an indirect wholly-owned subsidiary of John Hancock located
at 197 Clarendon Street, Boston, MA 02117, or other broker-dealer firms, as
discussed below. John Hancock performs insurance underwriting and determines
whether to accept or reject the application for a Policy and each insured's
risk classification. Pursuant to a sales agreement among John Hancock,
Distributors, JHVLICO, and the Account, Distributors acts as the principal
underwriter of the Policies. The sales agreement will remain in effect until
terminated upon sixty days' written notice by any party. JHVLICO will make the
appropriate refund if a Policy ultimately is not issued or is returned under
the short-term cancellation provision. Officers and employees of John Hancock
and JHVLICO are covered by a blanket bond by a commercial carrier in the
amount of $25 million.
Distributors' representatives are compensated for sales of the Policies on a
commission and service fee basis by Distributors, and JHVLICO reimburses
Distributors for such compensation and for other direct and indirect expenses
(including agency expense allowances, general agent, district manager and
supervisor's compensation, agent's training allowances, deferred compensation
and insurance benefits of agents, general agents, district managers and
supervisors, agency office clerical expenses and advertising) actually
incurred in connection with the marketing and sale of the Policies.
The maximum commission payable to a Distributors representative for selling
a Policy is 14% of the target premium paid in each of the first 10 Policy
years, and 3% of the target premium paid in each year thereafter. The maximum
commission on any premium paid in any Policy year in excess of the target
premium is 2%.
In addition, Distributors' representatives may earn "credits" toward
qualification for attendance at certain business meetings sponsored by John
Hancock.
Representatives with less than four years of service with Distributors and
those compensated on salary plus bonus or level commission programs may be
paid on a different basis. Representatives who meet certain productivity and
persistency standards with respect to the sale of policies issued by JHVLICO
and John Hancock will be eligible for additional compensation.
Distributors is registered with the Commission under the Securities Exchange
Act of 1934 as a broker-dealer, is a member of the National Association of
Securities Dealers, Inc., and is a member of the Securities Investor
Protection Corporation. The Policies are also sold through other registered
broker-dealers that have entered into selling agreements with Distributors and
whose representatives are authorized by applicable law to sell variable life
insurance policies. The commissions which will be paid by such broker-dealers
to their representatives will be in accordance with their established rules.
The commission rates may be more or less than those set forth above for
Distributors' representatives. In addition, their qualified registered
representatives may be reimbursed by the broker-dealers under expense
reimbursement allowance programs in any year for approved voucherable expenses
incurred. Distributors will compensate the broker-dealers as provided in the
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selling agreements, and JHVLICO will reimburse Distributors for such amounts
and for certain other direct expenses in connection with marketing the
Policies through other broker-dealers.
Distributors serves as principal underwriter for other separate accounts
registered under the 1940 Act: John Hancock Variable Annuity Accounts U, I and
V, John Hancock Mutual Variable Life Insurance Account UV and John Hancock
Variable Life Accounts U and V. Distributors is also the principal underwriter
for John Hancock Variable Series Trust I.
TAX CONSIDERATIONS
The below description of Federal income tax consequences is only a brief
summary and is not intended as tax advice. For further information consult a
qualified tax advisor. Federal, state and local tax laws can change from time
to time and, as a result, the tax consequences to the Owner and beneficiary
may be altered.
POLICY PROCEEDS
Although the Policy contains provisions not found in fixed benefit life
insurance policies, JHVLICO believes the Policy will receive the same Federal
income and estate tax treatment. Section 7702 of the Internal Revenue Code
("Code") defines life insurance for Federal tax purposes. See "Death
Benefits--Definition of Life Insurance". If certain standards are met at issue
and over the life of the Policy, the Policy will come within that definition.
JHVLICO will monitor compliance with these standards. Furthermore, JHVLICO
reserves the right to make any changes in the Policy necessary to ensure the
Policy is within the definition of life insurance.
If the Policy complies with the definition of life insurance, JHVLICO
believes the death benefit under the Policy will be excludable from the
beneficiary's gross income under Section 101 of the Code. In addition,
increases in Account Value as a result of interest or investment experience
will not be subject to Federal income tax unless and until values are actually
received through withdrawal, surrender or other distributions.
A surrender, lapse or partial withdrawal may have tax consequences. For
example, the Owner will be taxed on a surrender to the extent that the Account
Value exceeds the premiums paid under the Policy, ignoring premiums paid for
riders. But under certain circumstances within the first 15 Policy years, the
Owner may be taxed on a withdrawal of Policy values even if total withdrawals
do not exceed total premiums paid.
JHVLICO also believes that, except as noted below, loans received under the
Policy will be treated as indebtedness of an Owner and that no part of any
loan will constitute income to the Owner. However, the amount of any loan
outstanding will be taxed to the Owner if a Policy lapses.
Distributions under Policies on which premiums greater than the "7-pay"
limit (see "Premiums--7-Pay Premium Limit") have been paid will be treated as
distributions from a "modified endowment," which are subject to special
taxation based on Federal tax law. The Owner of such a Policy will be taxed on
distributions such as loans, surrenders and partial withdrawals to the extent
of any income (gain) to the Owner (income-first basis). The distributions
affected will be those made on or after, and within the two year period prior
to, the time the Policy becomes a modified endowment. Additionally, a 10%
penalty tax may be imposed on affected income distributed before the Owner
attains age 59 1/2.
Furthermore, any time there is a "material change" in a Policy (such as the
addition of certain other Policy benefits after issue, or reinstatement of a
lapsed Policy), the Policy will be subject to a new "7-pay" test, with the
possibility of a tax on distributions if it were subsequently to become a
modified endowment. Moreover, if
24
<PAGE>
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, or Policy termination) during the 7 years in which the 7-pay test is
being applied, the 7-pay limit will be recalculated based on the reduced
benefits. If the premiums paid to date are greater than the recalculated 7-pay
limit, the Policy will become a modified endowment.
All modified endowments issued by the same insurer (or affiliates) to the
Owner during any calendar year generally will be treated as one contract for
the purpose of applying the modified endowment rules. Your tax advisor should
be consulted if you have questions regarding the possible impact of the 7-pay
limit on your Policy.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Owner or beneficiary.
CHARGE FOR JHVLICO'S TAXES
Except for the DAC Tax charge, JHVLICO currently makes no charge for Federal
income taxes that may be attributable to this class of Policies. If JHVLICO
incurs, or expects to incur, income taxes attributable to this class of
Policies or any Subaccount in the future, it reserves the right to make a
charge for those taxes.
Under current laws, JHVLICO may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, charges
for such taxes may be made.
CORPORATE AND H.R. 10 PLANS
The Policy may be acquired in connection with the funding of retirement
plans satisfying the qualification requirements of Section 401 of the Code. If
so, the Code provisions relating to such plans and life insurance benefits
thereunder should be carefully scrutinized.
25
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO
The Directors and Executive Officers of JHVLICO and their principal
occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Directors--Officers Principal Occupations
------------------- ---------------------
<S> <C>
David F. D'Alessandro Chairman of the Board and Chief Executive
Officer of JHVLICO; Senior Executive Vice
President and Director, John Hancock Mutual
Life Insurance Company.
Henry D. Shaw Vice Chairman of the Board and President of
JHVLICO; Senior Vice President, John
Hancock Mutual Life Insurance Company.
Thomas J. Lee Director of JHVLICO; Vice President, John
Hancock Mutual Life Insurance Company.
Michele G. Van Leer Director of JHVLICO; Vice President, John
Hancock Mutual Life Insurance Company.
Ronald J. Bocage Director, Vice President, and Counsel,
JHVLICO; Vice President and Counsel, John
Hancock Mutual Life Insurance Company.
Joseph A. Tomlinson Director and Vice President, JHVLICO; Vice
President, John Hancock Mutual Life
Insurance Company.
Robert R. Reitano Director of JHVLICO; Vice President, John
Hancock Mutual Life Insurance Company.
Robert S. Paster Director, JHVLICO; Second Vice President,
John Hancock Mutual Life Insurance Company.
Barbara L. Luddy Director and Actuary of JHVLICO; Second
Vice President, John Hancock Mutual Life
Insurance Company.
Daniel L. Ouellette Vice President, Marketing, JHVLICO; Vice
President, John Hancock Mutual Life
Insurance Company.
Patrick F. Smith Controller of JHVLICO; Assistant
Controller, John Hancock Mutual Life
Insurance Company.
</TABLE>
The business address of all Directors and officers of JHVLICO is John
Hancock Place, Boston, Massachusetts 02117.
REPORTS
At least once each Policy year a statement will be sent to the Owner setting
forth the amount of the death benefit, Basic Sum Insured, Additional Sum
Insured, Account Value, the portion of the Account Value in each Subaccount,
Surrender Value, premiums received and charges deducted from premiums since
the last report, and any outstanding Policy loan (and interest charged for the
preceding Policy year) as of the last day of such year. Moreover,
confirmations will be furnished to Owners of premium payments, transfers among
Subaccounts, Policy loans, partial withdrawals and certain other Policy
transactions.
26
<PAGE>
Owners will be sent semiannually a report containing the financial
statements of the Funds, including a list of securities held in each
Portfolio.
VOTING PRIVILEGES
All of the assets in the variable Subaccounts of the Account are invested in
shares of the corresponding Portfolios of the Funds. JHVLICO will vote the
shares of each of the Portfolios of the Funds which are deemed attributable to
qualifying variable life insurance policies and variable annuity contracts at
regular and special meetings of the Funds' shareholders in accordance with
instructions received from owners of such policies and contracts. Shares of
the Funds held in the Account which are not attributable to such policies and
contracts and shares for which instructions from owners are not received will
be represented by JHVLICO at the meeting and will be voted for and against
each matter in the same proportions as the votes based upon the instructions
received from the owners of all such policies and contracts.
The number of Fund shares held in each variable Subaccount deemed
attributable to each owner is determined by dividing the amount of a Policy's
Account Value held in the variable Subaccount by the net asset value of one
share in the corresponding Fund Portfolio in which the assets of that variable
Subaccount are invested. Fractional votes will be counted. The number of
shares as to which the owner may give instructions will be determined as of
the record date for the Funds' meetings.
Owners of Policies may give instructions regarding the election of the Board
of Trustees of each Fund, ratification of the selection of independent
auditors, approval of Fund investment advisory agreements and other matters
requiring a vote under the 1940 Act. Owners will be furnished information and
forms by JHVLICO in order that voting instructions may be given.
JHVLICO may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to change the investment objectives of the Portfolios or to
approve or disapprove an investment advisory or underwriting contract for the
Funds. JHVLICO also may disregard voting instructions in favor of changes
initiated by an owner or a Fund's Board of Trustees in the investment policy,
investment adviser or principal underwriter of the Fund, if JHVLICO (i)
reasonably disapproves of such changes and (ii) in the case of a change of
investment policy or investment adviser, makes a good-faith determination that
the proposed change is contrary to state law or prohibited by state regulatory
authorities or that the change would be inconsistent with a variable
Subaccount's investment objectives or would result in the purchase of
securities which vary from the general quality and nature of investments and
investment techniques utilized by other separate accounts of JHVLICO or of an
affiliated life insurance company, which separate accounts have investment
objectives similar to those of the variable Subaccount. In the event JHVLICO
does disregard voting instructions, a summary of that action and the reasons
for such action will be included in the next semi-annual report to owners.
CHANGES THAT JHVLICO CAN MAKE
The voting privileges described in this Prospectus are afforded based on
JHVLICO's understanding of applicable Federal securities law requirements. To
the extent that applicable law, regulations or interpretations change to
eliminate or restrict the need for such voting privileges, JHVLICO reserves
the right to proceed in accordance with any such revised requirements. JHVLICO
also reserves the right, subject to compliance with applicable law, including
approval of owners if so required, (1) to transfer assets determined by
JHVLICO to be
27
<PAGE>
associated with the class of policies to which the Policies belong from the
Account to another separate account or variable Subaccount by withdrawing the
same percentage of each investment in the Account with appropriate adjustments
to avoid odd lots and fractions, (2) to operate the Account as a "management-
type investment company" under the 1940 Act, or in any other form permitted by
law, the investment adviser of which would be JHVLICO, an affiliate or John
Hancock, (3) to deregister the Account under the 1940 Act, (4) to substitute
for the Portfolio shares held by a Subaccount any other investment permitted
by law, and (5) to take any action necessary to comply with or obtain any
exemptions from the 1940 Act. JHVLICO would notify owners of any of the
foregoing changes and, to the extent legally required, obtain approval of
owners and any regulatory body prior thereto. Such notice and approval,
however, may not be legally required in all cases.
STATE REGULATION
JHVLICO is subject to regulation and supervision by the Massachusetts
Commissioner of Insurance who periodically examines its affairs. It also is
subject to the applicable insurance laws and regulations of all jurisdictions
in which it is authorized to do business.
JHVLICO is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various
jurisdictions in which it does business for purposes of determining solvency
and compliance with local insurance laws and regulations.
LEGAL MATTERS
Legal matters in connection with the Policies described in this Prospectus
have been passed on by Ronald J. Bocage, Vice President and Counsel for
JHVLICO. Messrs. Freedman, Levy, Kroll & Simonds, Washington, D.C., have
advised JHVLICO on certain Federal securities law matters in connection with
the Policies.
REGISTRATION STATEMENT
This Prospectus omits certain information contained in the Registration
Statement which has been filed with the Commission. More details may be
obtained from the Securities and Exchange Commission upon payment of the
prescribed fee.
EXPERTS
The financial statements of the Account and JHVLICO 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 Philip
G. Johnson, F.S.A., an Actuary of JHVLICO.
FINANCIAL STATEMENTS
The financial statements of JHVLICO included herein should be distinguished
from the financial statements of the Account and should be considered only as
bearing upon the ability of JHVLICO to meet its obligations under the
Policies.
28
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Large Cap Sovereign International Small Cap International Mid Cap Large Cap Money Mid Cap
Growth Bond Equities Growth Balanced Growth Value Market Value
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ---------- ------------- ---------- ------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $16,915,393 $5,185,747 $5,731,199 $497,525 $152,295 $838,323 $762,356 $10,038,857 $336,316
Investments in
shares of
portfolios of M
Fund Inc., at
value........... -- -- -- -- -- -- -- -- --
Receivable from:
John Hancock
Variable Series
Trust I........ 20,003 26,025 11,820 8 2 31,811 10 336,601 6
M Fund Inc. -... -- -- -- -- -- -- -- -- --
----------- ---------- ---------- -------- -------- -------- -------- ----------- --------
Total assets..... 16,935,396 5,211,772 5,743,019 497,533 152,297 870,134 762,366 10,375,458 336,322
Liabilities
Payable to John
Hancock Variable
Series Trust I.. 19,803 25,968 11,736 -- -- 31,800 -- 336,451 --
Asset charges
payable......... 200 57 84 8 2 11 10 150 6
----------- ---------- ---------- -------- -------- -------- -------- ----------- --------
Total
liabilities..... 20,003 26,025 11,820 8 2 31,811 10 336,601 6
----------- ---------- ---------- -------- -------- -------- -------- ----------- --------
Net assets....... $16,915,393 $5,185,747 $5,731,199 $497,525 $152,295 $838,323 $762,356 $10,038,857 $336,316
=========== ========== ========== ======== ======== ======== ======== =========== ========
<CAPTION>
Special Real Estate
Opportunities Equity
Subaccount Subaccount
------------- -----------
<S> <C> <C>
Assets
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $6,187,188 $1,279,523
Investments in
shares of
portfolios of M
Fund Inc., at
value........... -- --
Receivable from:
John Hancock
Variable Series
Trust I........ 10,295 4,560
M Fund Inc. -... -- --
------------- -----------
Total assets..... 6,197,483 1,284,083
Liabilities
Payable to John
Hancock Variable
Series Trust I.. 10,196 4,540
Asset charges
payable......... 99 20
------------- -----------
Total
liabilities..... 10,295 4,560
------------- -----------
Net assets....... $6,187,188 $1,279,523
============= ===========
</TABLE>
- ------
See accompanying notes.
29
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES--CONTINUED
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Short-Term Turner Edinburgh
Growth & U.S. Small Cap International Strategic Core International
Income Managed Government Value Opportunities Equity Index Bond Growth Equity
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ----------- ---------- ---------- ------------- ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $25,663,282 $11,517,261 $3,395,242 $341,007 $909,113 $974,307 $258,628 $ -- $ --
Investments in
shares of
portfolios of M
Fund Inc., at
value........... -- -- -- -- -- -- -- 654,753 929,143
Receivable from:
John Hancock
Variable Series
Trust I........ 195,552 4,549 25,689 5 32,559 21,534 19,681 -- --
M Fund Inc. .... -- -- -- -- -- -- -- 9 11,706
----------- ----------- ---------- -------- -------- -------- -------- -------- --------
Total assets..... 25,858,834 11,521,810 3,420,931 341,012 941,672 995,841 278,309 654,762 940,849
Liabilities
Payable to John
Hancock Variable
Series Trust I.. 195,180 4,408 25,661 -- 32,547 21,519 19,677 -- 11,692
Asset charges
payable......... 372 141 28 5 12 15 4 9 14
----------- ----------- ---------- -------- -------- -------- -------- -------- --------
Total
liabilities..... 195,552 4,549 25,689 5 32,559 21,534 19,681 9 11,706
----------- ----------- ---------- -------- -------- -------- -------- -------- --------
Net assets....... $25,663,282 $11,517,261 $3,395,242 $341,007 $909,113 $974,307 $258,628 $654,753 $929,143
=========== =========== ========== ======== ======== ======== ======== ======== ========
<CAPTION>
Frontier
Capital
Appreciation
Subaccount
------------
<S> <C>
Assets
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $ --
Investments in
shares of
portfolios of M
Fund Inc., at
value........... 968,078
Receivable from:
John Hancock
Variable Series
Trust I........ --
M Fund Inc. .... 23,405
------------
Total assets..... 991,483
Liabilities
Payable to John
Hancock Variable
Series Trust I.. 23,391
Asset charges
payable......... 14
------------
Total
liabilities..... 23,405
------------
Net assets....... $968,078
============
</TABLE>
- ------
See accompanying notes.
30
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Small Cap
Growth
Large Cap Growth Subaccount Sovereign Bond Subaccount International Equities Subaccount Subaccount
------------------------------ ----------------------------- ------------------------------------ ----------
1996 1995 1994 1996 1995 1994 1996 1995 1994 1996*
----------- -------- -------- --------- --------- -------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Distribution
received from:
John Hancock
Variable Series
Trust.......... $ 2,452,382 $509,637 $ 39,711 $ 242,881 $ 66,972 $ 7,083 $ 52,188 $ 19,501 $ 11,324 $ 512
M Fund, Inc..... -- -- -- -- -- -- -- -- -- --
----------- -------- -------- --------- --------- -------- ----------- ----------- ----------- --------
Total investment
income.......... 2,452,382 509,637 39,711 242,881 66,972 7,083 52,188 19,501 11,324 512
Expenses:
Mortality and
expense risks.. 49,880 17,330 2,688 14,129 4,148 509 23,132 10,434 2,129 1,547
----------- -------- -------- --------- --------- -------- ----------- ----------- ----------- --------
Net investment
income (loss)... 2,402,502 492,307 37,023 228,752 62,824 6,574 29,056 9,067 9,195 (1,035)
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). 444,487 126,908 (37,955) 5,746 21,718 (2,259) 165,730 (25,931) 5,934 (40,018)
Net unrealized
appreciation
(depreciation)
during the
year........... (1,104,574) 180,251 (24,086) (69,973) 34,574 (3,839) 137,729 153,715 (46,936) (2,665)
----------- -------- -------- --------- --------- -------- ----------- ----------- ----------- --------
Net realized and
unrealized gain
(loss) on
investments..... (660,087) 307,159 (62,041) (64,227) 56,292 (6,098) 303,459 127,784 (41,002) (42,683)
----------- -------- -------- --------- --------- -------- ----------- ----------- ----------- --------
Net increase
(decrease) in
net assets
resulting from
operations...... $ 1,742,415 $799,466 $(25,018) $ 164,525 $ 119,116 $ 476 $332,515 $ 136,851 $ (31,807) $(43,718)
=========== ======== ======== ========= ========= ======== =========== =========== =========== ========
<CAPTION>
International Mid Cap Large Cap
Balanced Growth Value
Subaccount Subaccount Subaccount
------------- ---------- ----------
1996* 1996* 1996*
------------- ---------- ----------
<S> <C> <C> <C>
Investment
income:
Distribution
received from:
John Hancock
Variable Series
Trust.......... $2,947 $1,177 $13,644
M Fund, Inc..... -- -- --
------------- ---------- ----------
Total investment
income.......... 2,947 1,177 13,644
Expenses:
Mortality and
expense risks.. 356 719 964
------------- ---------- ----------
Net investment
income (loss)... 2,591 458 12,680
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). 56 (391) 1,327
Net unrealized
appreciation
(depreciation)
during the
year........... 5,307 6,440 23,553
------------- ---------- ----------
Net realized and
unrealized gain
(loss) on
investments..... 5,363 6,049 24,880
------------- ---------- ----------
Net increase
(decrease) in
net assets
resulting from
operations...... $7,954 $6,507 $37,560
============= ========== ==========
</TABLE>
*From May 1, 1996 (commencement of operations).
See accompanying notes.
31
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Mid Cap Special
Value Opportunities
Money Market Subaccount Subaccount Subaccount Real Estate Equity Subaccount
------------------------- ---------- ------------------------ ------------------------------
1996 1995 1994 1996* 1996 1995 1994** 1996 1995 1994
-------- -------- ------- ---------- -------- -------- ------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Distributions
received from:
John Hancock
Variable Series
Trust.......... $287,321 $119,746 $39,245 $ 6,878 $238,163 $ 40,159 $1,493 $ 50,204 $ 32,578 $ 10,909
M Fund, Inc..... -- -- -- -- -- -- -- -- -- --
-------- -------- ------- ------- -------- -------- ------ ---------- --------- ---------
Total investment
income.......... 287,321 119,746 39,245 6,878 238,163 40,159 1,493 50,204 32,578 10,909
Expenses:
Mortality and
expense risks.. 30,722 12,117 5,184 377 21,146 4,949 607 4,547 2,766 689
-------- -------- ------- ------- -------- -------- ------ ---------- --------- ---------
Net investment
income.......... 256,599 107,629 34,061 6,501 217,017 35,210 886 45,657 29,812 10,220
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). -- -- -- 845 317,400 28,812 (117) 19,122 613 (10,840)
Net unrealized
appreciation
(depreciation)
during the
year........... -- -- -- 13,910 344,786 185,349 3,155 191,067 25,077 9,936
-------- -------- ------- ------- -------- -------- ------ ---------- --------- ---------
Net realized and
unrealized gain
(loss) on
investments..... -- -- -- 14,755 662,186 214,161 3,038 210,189 25,690 (904)
-------- -------- ------- ------- -------- -------- ------ ---------- --------- ---------
Net increase
(decrease) in
net assets
resulting from
operations $256,599 $107,629 $34,061 $21,256 $879,203 $249,371 $3,924 $ 255,846 $ 55,502 $ 9,316
======== ======== ======= ======= ======== ======== ====== ========== ========= =========
<CAPTION>
Growth & Income Subaccount
-------------------------------
1996 1995 1994
----------- ---------- --------
<S> <C> <C> <C>
Investment
income:
Distributions
received from:
John Hancock
Variable Series
Trust.......... $3,056,625 $ 669,643 $70,819
M Fund, Inc..... -- -- --
----------- ---------- --------
Total investment
income.......... 3,056,625 669,643 70,819
Expenses:
Mortality and
expense risks.. 89,391 23,428 3,073
----------- ---------- --------
Net investment
income.......... 2,967,234 646,215 67,746
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). 512,402 170,322 (1,272)
Net unrealized
appreciation
(depreciation)
during the
year........... (496,647) 322,628 (67,362)
----------- ---------- --------
Net realized and
unrealized gain
(loss) on
investments..... 15,755 492,950 (68,634)
----------- ---------- --------
Net increase
(decrease) in
net assets
resulting from
operations $2,982,989 $1,139,165 $ (888)
=========== ========== ========
</TABLE>
* From May 1, 1996 (commencement of operations).
** From May 6, 1994 (commencement of operations).
See accompanying notes.
32
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Small Cap International Equity Strategic
Short-Term U.S. Value Opportunities Index Bond
Managed Subaccount Government Subaccount Subaccount Subaccount Subaccount Subaccount
----------------------------- ------------------------ ---------- ------------- ----------- ----------
1996 1995 1994 1996 1995 1994** 1996* 1996* 1996* 1996*
---------- -------- -------- -------- ------- ------ ---------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Distributions
received from:
John Hancock
Variable Series
Trust.......... $1,281,149 $316,774 $ 12,985 $181,937 $64,502 $ 331 $ 8,296 $ 2,965 $23,300 $7,425
M Fund, Inc..... -- -- -- -- -- -- -- -- -- --
---------- -------- -------- -------- ------- ----- ------- ------- ------- ------
Total investment
income.......... 1,281,149 316,774 12,985 181,937 64,502 331 8,296 2,965 23,300 7,425
Expenses:
Mortality and
expense risks.. 35,103 10,978 1,318 9,277 2,917 25 523 1,439 1,962 349
---------- -------- -------- -------- ------- ----- ------- ------- ------- ------
Net investment
income (loss)... 1,246,046 305,796 11,667 172,660 61,585 306 7,773 1,526 21,338 7,076
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). 124,493 179,131 (4,727) (52,888) 8,251 (1) 58 242 17,398 22
Net unrealized
appreciation
(depreciation)
during the
year........... (507,517) 51,622 (8,296) (7,734) 22,112 (325) 14,046 36,666 55,782 (591)
---------- -------- -------- -------- ------- ----- ------- ------- ------- ------
Net realized and
unrealized gain
(loss) on
investments..... (383,024) 230,753 (13,023) (60,622) 30,363 (326) 14,104 36,908 73,180 (569)
---------- -------- -------- -------- ------- ----- ------- ------- ------- ------
Net increase
(decrease) in
net assets
resulting from
operations...... $ 863,022 $536,549 $ (1,356) $112,038 $91,948 $ (20) $21,877 $38,434 $94,518 $6,507
========== ======== ======== ======== ======= ===== ======= ======= ======= ======
<CAPTION>
Edinburgh Frontier
Turner Core International Capital
Growth Equity Appreciation
Subaccount Subaccount Subaccount
----------- ------------- ------------
1996* 1996* 1996*
----------- ------------- ------------
<S> <C> <C> <C>
Investment
income:
Distributions
received from:
John Hancock
Variable Series
Trust.......... $ -- $ -- $ --
M Fund, Inc..... 21,778 5,263 --
----------- ------------- ------------
Total investment
income.......... 21,778 5,263 --
Expenses:
Mortality and
expense risks.. 2,140 2,280 1,679
----------- ------------- ------------
Net investment
income (loss)... 19,638 2,983 (1,679)
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). (9,767) (2,433) (21,044)
Net unrealized
appreciation
(depreciation)
during the
year........... 16,054 (12,286) 5,101
----------- ------------- ------------
Net realized and
unrealized gain
(loss) on
investments..... 6,287 (14,719) (15,943)
----------- ------------- ------------
Net increase
(decrease) in
net assets
resulting from
operations...... $25,925 $(11,736) $(17,622)
=========== ============= ============
</TABLE>
* From May 1, 1996 (commencement of operations).
** From May 1, 1994 (commencement of operations).
See accompanying notes.
33
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Large Cap Growth Subaccount Sovereign Bond Subaccount International Equities Subaccount
------------------------------------- -------------------------------- ------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
----------- ----------- ----------- ---------- ---------- -------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income (loss).. $ 2,402,502 $ 492,307 $ 37,023 $ 228,752 $ 62,824 $ 6,574 $ 29,056 $ 9,067 $ 9,195
Net realized
gains (losses). 444,487 126,908 (37,955) 5,746 21,718 (2,259) 165,730 (25,931) 5,934
Net unrealized
appreciation
(depreciation)
during the
year........... (1,104,574) 180,251 (24,086) (69,973) 34,574 (3,839) 137,729 153,715 (46,936)
----------- ----------- ----------- ---------- ---------- -------- ----------- ----------- ----------
Net increase
(decrease) in
net assets
resulting from
operations...... 1,742,415 799,466 (25,018) 164,525 119,116 476 332,515 136,851 (31,807)
From policyholder
transactions:
Net premiums
from
policyholders . 13,036,922 8,115,186 2,165,201 4,312,776 1,370,188 279,171 4,750,218 2,620,265 1,223,410
Net benefits to
policyholders.. (4,928,834) (2,752,131) (1,250,017) (679,839) (318,068) (62,598) (1,906,352) (1,194,625) (199,276)
----------- ----------- ----------- ---------- ---------- -------- ----------- ----------- ----------
Net increase in
net assets from
policyholder
transactions.... 8,108,088 5,363,055 915,184 3,632,937 1,052,120 216,573 2,843,866 1,425,640 1,024,134
----------- ----------- ----------- ---------- ---------- -------- ----------- ----------- ----------
Net increase in
net assets...... 9,850,503 6,162,521 890,166 3,797,462 1,171,236 217,049 3,176,381 1,562,491 992,327
Net assets at
beginning of
period.......... 7,064,890 902,369 12,203 1,388,285 217,049 -- 2,554,818 992,327 --
----------- ----------- ----------- ---------- ---------- -------- ----------- ----------- ----------
Net assets at end
of period....... $16,915,393 $ 7,064,890 $ 902,369 $5,185,747 $1,388,285 $217,049 $ 5,731,199 $ 2,554,818 $ 992,327
=========== =========== =========== ========== ========== ======== =========== =========== ==========
<CAPTION>
Small Cap International Mid Cap Large Cap
Growth Balanced Growth Value
Subaccount Subaccount Subaccount Subaccount
----------- ------------- ---------- ----------
1996* 1996* 1996* 1996*
----------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income (loss).. $ (1,035) $ 2,591 $ 458 $ 12,680
Net realized
gains (losses). (40,018) 56 (391) 1,327
Net unrealized
appreciation
(depreciation)
during the
year........... (2,665) 5,307 6,400 23,553
----------- ------------- ---------- ----------
Net increase
(decrease) in
net assets
resulting from
operations...... (43,718) 7,954 6,507 37,560
From policyholder
transactions:
Net premiums
from
policyholders . 1,120,880 148,617 858,546 767,660
Net benefits to
policyholders.. (579,637) (4,276) (26,730) (42,864)
----------- ------------- ---------- ----------
Net increase in
net assets from
policyholder
transactions.... 541,243 144,341 831,816 724,796
----------- ------------- ---------- ----------
Net increase in
net assets...... 497,525 152,295 838,323 762,356
Net assets at
beginning of
period.......... -- -- -- --
----------- ------------- ---------- ----------
Net assets at end
of period....... $ 497,525 $152,295 $838,323 $762,356
=========== ============= ========== ==========
</TABLE>
* From May 1, 1996 (commencement of operations).
See accompanying notes.
34
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
Mid Cap
Value
Money Market Subaccount Subaccount Special Opportunities Subaccount
--------------------------------------- ----------- ---------------------------------------
1996 1995 1994 1996* 1996 1995 1994**
------------ ------------ ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income......... $ 256,599 $ 107,629 $ 34,061 $ 6,501 $ 217,017 $ 35,210 $ 886
Net realized
gains (losses). -- -- -- 845 317,400 28,812 (117)
Net unrealized
appreciation
(depreciation)
during the
year........... -- -- -- 13,910 344,786 185,349 3,155
------------ ------------ ----------- -------- ------------ ----------- ---------
Net increase
(decrease) in
net assets
resulting from
operations...... 256,599 107,629 34,061 21,256 879,203 249,371 3,924
From policyholder
transactions:
Net premiums
from
policyholders.. 36,814,029 19,983,940 7,344,361 324,248 4,939,686 1,639,491 333,168
Net benefits to
policyholders.. (31,658,283) (17,720,190) (5,123,289) (9,188) (1,301,761) (551,692) (4,202)
------------ ------------ ----------- -------- ------------ ----------- ---------
Net increase in
net assets from
policyholder
transactions.... 5,155,746 2,263,750 2,221,072 315,060 3,637,925 1,087,799 328,966
------------ ------------ ----------- -------- ------------ ----------- ---------
Net increase in
net assets...... 5,412,345 2,371,379 2,255,133 336,316 4,517,128 1,337,170 332,890
Net assets at
beginning of
period.......... 4,626,512 2,255,133 -- -- 1,670,060 332,890 --
------------ ------------ ----------- -------- ------------ ----------- ---------
Net assets at end
of period....... $ 10,038,857 $ 4,626,512 $ 2,255,133 $336,316 $ 6,187,188 $ 1,670,060 $ 332,890
============ ============ =========== ======== ============ =========== =========
<CAPTION>
Real Estate Equity Subaccount Growth & Income Subaccount
--------------------------------- ------------------------------------
1996 1995 1994 1996 1995 1994
----------- ---------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income......... $ 45,657 $ 29,812 $ 10,220 $ 2,967,234 $ 646,215 $ 67,746
Net realized
gains (losses). 19,122 613 (10,840) 512,402 170,322 (1,272)
Net unrealized
appreciation
(depreciation)
during the
year........... 191,067 25,077 9,936 (496,647) 322,628 (67,362)
----------- ---------- ---------- ------------ ----------- -----------
Net increase
(decrease) in
net assets
resulting from
operations...... 255,846 55,502 9,316 2,982,989 1,139,165 (888)
From policyholder
transactions:
Net premiums
from
policyholders.. 748,683 466,306 525,631 19,263,021 8,168,426 1,606,781
Net benefits to
policyholders.. (295,788) (370,910) (115,063) (5,502,524) (1,740,418) (253,270)
----------- ---------- ---------- ------------ ----------- -----------
Net increase in
net assets from
policyholder
transactions.... 452,895 95,396 410,568 13,760,497 6,428,008 1,353,511
----------- ---------- ---------- ------------ ----------- -----------
Net increase in
net assets...... 708,741 150,898 419,884 16,743,486 7,567,173 1,352,623
Net assets at
beginning of
period.......... 570,782 419,884 -- 8,919,796 1,352,623 --
----------- ---------- ---------- ------------ ----------- -----------
Net assets at end
of period....... $1,279,523 $ 570,782 $ 419,884 $25,663,282 $8,919,796 $1,352,623
=========== ========== ========== ============ =========== ===========
</TABLE>
* From May 1, 1996 (commencement of operations).
** From May 6, 1994 (commencement of operations).
See accompanying notes.
35
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
Small Cap International Equity
Short-Term U.S. Value Opportunities Index
Managed Subaccount Government Subaccount Subaccount Subaccount Subaccount
----------------------------------- -------------------------------- ---------- ------------- ----------
1996 1995 1994 1996 1995 1994** 1996* 1996* 1996*
----------- ----------- --------- ----------- ---------- ------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income (loss).. $ 1,246,046 $ 305,796 $ 11,667 $ 172,660 $ 61,585 $ 306 $ 7,773 $ 1,526 $ 21,338
Net realized
gains (losses). 124,493 179,131 (4,727) (52,888) 8,251 (1) 58 242 17,398
Net unrealized
appreciation
(depreciation)
during the
year........... (507,517) 51,622 (8,296) (7,734) 22,112 (325) 14,046 36,666 55,782
----------- ----------- --------- ----------- ---------- ------- -------- -------- ----------
Net increase
(decrease) in
net assets
resulting from
operations...... 863,022 536,549 (1,356) 112,038 91,948 (20) 21,877 38,434 94,518
From policyholder
transactions:
Net premiums
from
policyholders.. 9,996,216 5,502,408 859,794 8,757,242 2,439,840 41,816 335,271 960,081 1,282,798
Net benefits to
policyholders.. (3,151,700) (2,875,967) (211,705) (7,683,085) (364,204) (333) (16,141) (89,402) (403,009)
----------- ----------- --------- ----------- ---------- ------- -------- -------- ----------
Net increase in
net assets from
policyholder
transactions.... 6,844,516 2,626,441 648,089 1,074,157 2,075,636 41,483 319,130 870,679 879,789
----------- ----------- --------- ----------- ---------- ------- -------- -------- ----------
Net increase in
net assets...... 7,707,538 3,162,990 646,733 1,186,195 2,167,584 41,463 341,007 909,113 974,307
Net assets at
beginning of
period.......... 3,809,723 646,733 -- 2,209,047 41,463 -- -- -- --
----------- ----------- --------- ----------- ---------- ------- -------- -------- ----------
Net assets at end
of period....... $11,517,261 $ 3,809,723 $ 646,733 $ 3,395,242 $2,209,047 $41,463 $341,007 $909,113 $ 974,307
=========== =========== ========= =========== ========== ======= ======== ======== ==========
<CAPTION>
Turner Edinburgh Frontier
Strategic Core International Capital
Bond Growth Equity Appreciation
Subaccount Subaccount Subaccount Subaccount
---------- ----------- ------------- ------------
1996* 1996* 1996* 1996*
---------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income (loss).. $ 7,076 $ 19,638 $ 2,983 $ (1,679)
Net realized
gains (losses). 22 (9,767) (2,433) (21,044)
Net unrealized
appreciation
(depreciation)
during the
year........... (591) 16,054 (12,286) 5,101
---------- ----------- ------------- ------------
Net increase
(decrease) in
net assets
resulting from
operations...... 6,507 25,925 (11,736) (17,622)
From policyholder
transactions:
Net premiums
from
policyholders.. 259,231 1,135,180 1,021,041 1,535,063
Net benefits to
policyholders.. (7,110) (506,352) (80,162) (549,363)
---------- ----------- ------------- ------------
Net increase in
net assets from
policyholder
transactions.... 252,121 628,828 940,879 985,700
---------- ----------- ------------- ------------
Net increase in
net assets...... 258,628 654,753 929,143 968,078
Net assets at
beginning of
period.......... -- -- -- --
---------- ----------- ------------- ------------
Net assets at end
of period....... $258,628 $ 654,753 $ 929,143 $ 968,078
========== =========== ============= ============
</TABLE>
* From May 1, 1996 (commencement of operations).
** From May 1, 1994 (commencement of operations).
See accompanying notes.
36
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION
John Hancock Variable Life Account S (the Account) is a separate investment
account of John Hancock Variable Life Insurance Company (JHVLICO), a wholly-
owned subsidiary of John Hancock Mutual Life Insurance Company (John Hancock).
The Account was formed to fund variable life insurance policies (Policies)
issued by JHVLICO. The Account is operated as a unit investment trust
registered under the Investment Company Act of 1940, as amended, and currently
consists of twenty-one subaccounts. The assets of each subaccount are invested
exclusively in shares of a corresponding Portfolio of John Hancock Variable
Series Trust I (the Fund) or of M Fund, Inc. (M Fund). New subaccounts may be
added as new Portfolios are added to the Fund or to M Fund, or as other
investment options are developed, and made available to policyholders. The
twenty-one Portfolios of the Fund and of M Fund which are currently available
are the Large Cap Growth, Sovereign Bond, International Equities, Small Cap
Growth, International Balanced, Mid Cap Growth, Large Cap Value, Money Market,
Mid Cap Value, Special Opportunities, Real Estate Equity, Growth & Income,
Managed, Short-Term U.S. Government, Small Cap Value, International
Opportunities, Equity Index, Strategic Bond, Turner Core Growth, Edinburgh
International Equity and Frontier Capital Appreciation Portfolios. Each
Portfolio has a different investment objective.
The net assets of the Account may not be less than the amount required under
state insurance law to provide for death benefits (without regard to the
minimum death benefit guarantee) and other policy benefits. Additional assets
are held in JHVLICO's general account to cover the contingency that the
guaranteed minimum death benefit might exceed the death benefit which would
have been payable in the absence of such guarantee.
The assets of the Account are the property of JHVLICO. The portion of the
Account's assets applicable to the policies may not be charged with
liabilities arising out of any other business JHVLICO may conduct.
2. SIGNIFICANT ACCOUNTING POLICIES
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
VALUATION OF INVESTMENTS
Investment in shares of the Fund and of M Fund are valued at the reported
net asset values of the respective Portfolios. Investment transactions are
recorded on the trade date. Dividend income is recognized on the ex-dividend
date. Realized gains and losses on sales of fund shares are determined on the
basis of identified cost.
FEDERAL INCOME TAXES
The operations of the Account are included in the federal income tax return
of JHVLICO, which is taxed as a life insurance company under the Internal
Revenue Code. JHVLICO has the right to charge the Account any
37
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--CONTINUED
2. SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
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, JHVLICO does not make a charge for income or other taxes. Charges
for state and local taxes, if any, attributable to the Account may also be
made.
EXPENSES
JHVLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at various rates ranging from
.50% to .625%, depending on the type of policy, of net assets (excluding
policy loans) of the Account. In addition, a monthly charge at varying levels
for the cost of insurance is deducted from the net assets of the Account.
JHVLICO makes certain deductions for administrative expenses and state
premium taxes from premium payments before amounts are transferred to the
Account.
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. At December 31, 1996, there were no outstanding policy
loans.
3. TRANSACTION WITH AFFILIATES
John Hancock acts as the distributor, principal underwriter and investment
advisor for the Fund.
Certain officers of the Account are officers and directors of JHVLICO, the
Fund or John Hancock.
38
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
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, 1996 were as follows:
<TABLE>
<CAPTION>
Shares
Portfolio Owned Cost Value
- --------- ------ ---- -----
<S> <C> <C> <C>
Large Cap Growth............................. 967,051 $17,864,249 $16,915,393
Sovereign Bond............................... 530,744 5,224,985 5,185,747
International Equities....................... 340,514 5,486,692 5,731,199
Small Cap Growth............................. 50,081 500,190 497,525
International Balanced....................... 14,654 146,989 152,295
Mid Cap Growth............................... 82,009 831,883 838,323
Large Cap Value.............................. 68,746 738,803 762,356
Money Market................................. 1,003,886 10,038,857 10,038,857
Mid Cap Value................................ 29,635 322,406 336,316
Special Opportunities........................ 374,484 5,653,898 6,187,188
Real Estate Equity........................... 87,427 1,053,443 1,279,523
Growth & Income.............................. 1,751,234 25,904,663 25,663,282
Managed...................................... 862,567 11,981,412 11,517,261
Short-Term U.S. Government................... 337,936 3,381,189 3,395,242
Small Cap Value.............................. 31,780 326,961 341,007
International Opportunities.................. 85,789 872,447 909,113
Equity Index................................. 87,799 918,525 974,307
Strategic Bond............................... 25,460 259,219 258,628
Turner Core Growth........................... 56,444 638,699 654,753
Edinburgh International Equity............... 94,043 941,429 929,143
Frontier Capital Appreciation................ 77,323 962,978 968,078
</TABLE>
39
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--CONTINUED
4. DETAILS OF INVESTMENTS--CONTINUED
Purchases, including reinvestment of dividend distributions and proceeds
from sales of shares in the Portfolios of the Fund and of M Fund for the
period ended December 31, 1996, were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
- --------- --------- -----
<S> <C> <C>
Large Cap Growth....................................... $13,801,918 $ 3,291,328
Sovereign Bond......................................... 4,228,908 367,218
International Equities................................. 4,596,976 1,724,053
Small Cap Growth....................................... 1,088,331 548,123
International Balanced................................. 149,257 2,270
Mid Cap Growth......................................... 853,272 20,998
Large Cap Value........................................ 764,170 26,694
Money Market........................................... 20,675,470 15,263,124
Mid Cap Value.......................................... 330,711 9,150
Special Opportunities.................................. 5,044,400 1,189,458
Real Estate Equity..................................... 650,379 151,826
Growth & Income........................................ 19,938,274 3,210,534
Managed................................................ 9,970,006 1,888,444
Short-Term U.S. Government............................. 4,417,686 3,170,870
Small Cap Value........................................ 342,052 15,149
International Opportunities............................ 948,368 76,163
Equity Index........................................... 1,295,138 394,011
Strategic Bond......................................... 265,544 6,347
Turner Core Growth..................................... 928,008 279,542
Edinburgh International Equity......................... 1,129,122 185,260
Frontier Capital Appreciation.......................... 1,259,852 275,830
</TABLE>
40
<PAGE>
REPORTS OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Policyholders
John Hancock Variable Life Account S
of John Hancock Variable Life Insurance Company
We have audited the accompanying statement of assets and liabilities of John
Hancock Variable Life Account S (the Account) (comprising, respectively, the
Large Cap Growth, Sovereign Bond, International Equities, Small Cap Growth,
International Balanced, Mid Cap Growth, Large Cap Value, Money Market, Mid Cap
Value, Special Opportunities, Real Estate Equity, Growth & Income, Managed,
Short-Term U.S. Government, Small Cap Value, International Opportunities,
Equity Index, Strategic Bond, Turner Core Growth, Edinburgh International
Equity and Frontier Capital Appreciation Subaccounts) as of December 31, 1996,
and the related statements of operations and changes in net assets for each of
the periods indicated therein. These financial statements are the
responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting John Hancock Variable Life Account S at December 31,
1996, and the results of their operations and the changes in their net assets
for each of the periods indicated, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Boston, Massachusetts
February 7, 1997
----------------
Board of Directors
John Hancock Variable Life Insurance Company
We have audited the accompanying statutory-basis statements of financial
position of John Hancock Variable Life Insurance Company as of December 31,
1996 and 1995, and the related statutory-basis statements of operations and
unassigned deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
41
<PAGE>
As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Commonwealth of Massachusetts Division of Insurance, which
practices differ from generally accepted accounting principles. The variances
between such practices and generally accepted accounting principles also are
described in Note 1. The effects on the financial statements of these
variances are not reasonably determinable but are presumed to be material.
In our report dated February 7, 1996, we expressed an opinion that the 1995
financial statements of the Company fairly present, in all material respects,
the Company's financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles for a stock life
insurance company wholly-owned by a mutual life insurance company and with
reporting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance. As described in Note 1, the accompanying
statutory-basis financial statements are no longer considered to be prepared
in conformity with generally accepted accounting principles. Accordingly, our
present opinion on the 1995 financial statements, as presented in the
following paragraph, is different from that expressed in our previous report.
In our opinion, because of the effects of the matter described in the second
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of John Hancock Variable Life Insurance Company at December
31, 1996 and 1995, or the results of its operations or its cash flows for the
years then ended.
Also, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of John Hancock
Variable Life Insurance Company at December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity
with accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.
Ernst & Young LLP
Boston, Massachusetts
February 14, 1997
42
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31
------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Assets
Bonds--Note 7.............................................. $ 753.5 $ 552.8
Preferred stocks........................................... 9.6 5.0
Common stocks.............................................. 1.4 1.7
Investment in affiliates................................... 72.0 65.3
Mortgage loans on real estate--Note 7...................... 212.1 146.7
Real estate................................................ 38.8 36.4
Policy loans............................................... 80.8 61.8
Cash items:
Cash in banks............................................ 26.7 11.6
Temporary cash investments............................... 5.2 65.0
-------- --------
31.9 76.6
Premiums due and deferred.................................. 36.8 39.6
Investment income due and accrued.......................... 22.6 18.6
Other general account assets............................... 17.8 20.8
Assets held in separate accounts........................... 3,290.5 2,421.0
-------- --------
TOTAL ASSETS............................................... $4,567.8 $3,446.3
======== ========
Obligations and Stockholder's Equity
OBLIGATIONS
Policy reserves.......................................... $ 877.8 $ 612.3
Federal income and other taxes payable--Note 1........... 29.4 14.2
Other accrued expenses................................... 75.1 138.7
Asset valuation reserve--Note 1.......................... 16.6 15.4
Obligations related to separate accounts................. 3,285.8 2,417.0
-------- --------
TOTAL OBLIGATIONS.......................................... 4,284.7 3,197.6
Stockholder's Equity--Notes 2 and 6
Common Stock, $50 par value; authorized 50,000 shares;
issued and
outstanding 50,000 shares............................... 2.5 2.5
Paid-in capital.......................................... 377.5 377.5
Unassigned deficit......................................... (96.9) (131.3)
-------- --------
TOTAL STOCKHOLDER'S EQUITY................................. 283.1 248.7
-------- --------
TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY................. $4,567.8 $3,446.3
======== ========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
43
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
INCOME
Premiums............................................ $ 820.6 $ 570.9
Net investment income--Note 4....................... 76.1 62.1
Other, net.......................................... 406.0 85.7
----------- ----------
1,302.7 718.7
BENEFITS AND EXPENSES
Payments to policyholders and beneficiaries......... 236.1 213.4
Additions to reserves to provide for future payments
to policyholders and beneficiaries................. 790.1 282.4
Expenses of providing service to policyholders and
obtaining new insurance--Note 6.................... 183.8 150.7
State and miscellaneous taxes....................... 17.3 12.7
----------- ----------
1,227.3 659.2
----------- ----------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME TAXES
AND NET REALIZED CAPITAL GAINS (LOSSES).......... 75.4 59.5
Federal income taxes--Note 1.......................... 38.6 28.4
----------- ----------
GAIN FROM OPERATIONS BEFORE NET REALIZED CAPITAL
GAINS (LOSSES)................................... 36.8 31.1
Net realized capital gains (losses)--Note 5........... (1.5) 0.5
----------- ----------
NET INCOME........................................ 35.3 31.6
Unassigned deficit at beginning of year............... (131.3) (162.1)
Net unrealized capital gains (losses) and other ad-
justments--Note 5.................................... 2.5 (3.0)
Other reserves and adjustments........................ (3.4) 2.2
----------- ----------
UNASSIGNED DEFICIT AT END OF YEAR................. $ (96.9) $ (131.3)
=========== ==========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
44
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
CASH FLOWS FROM OPRATING ACTIVITIES:
Insurance premiums................................. $ 824.2 $ 574.0
Net investment income.............................. 73.4 59.2
Benefits to policyholders and beneficiaries........ (212.7) (198.3)
Dividends paid to policyholders.................... (15.7) (13.2)
Insurance expenses and taxes....................... (196.6) (161.5)
Net transfers to separate accounts................. (524.2) (257.4)
Other, net......................................... 386.7 55.1
----------- -----------
NET CASH PROVIDED FROM OPERATIONS.............. 335.1 57.9
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Bond purchases..................................... (489.9) (172.5)
Bond sales......................................... 228.3 18.9
Bond maturities and scheduled redemptions.......... 27.8 36.0
Bond prepayments................................... 31.9 20.6
Stock purchases.................................... (6.5) (1.7)
Proceeds from stock sales.......................... 0.4 1.4
Real estate purchases.............................. (10.5) (16.2)
Real estate sales.................................. 8.5 9.3
Other invested assets purchases.................... 0.0 (0.4)
Proceeds from the sale of other invested assets.... 1.5 0.3
Mortgage loans issued.............................. (84.4) (19.8)
Mortgage loan repayments........................... 17.7 21.1
Other, net......................................... (104.6) 45.7
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES.......... (379.8) (57.3)
----------- -----------
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH IN-
VESTMENTS........................................... (44.7) 0.6
Cash and temporary cash investments at beginning of
year................................................ 76.6 76.0
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR... $ 31.9 $ 76.6
=========== ===========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
45
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES
John Hancock Variable Life Insurance Company (the Company) is a wholly-owned
subsidiary of John Hancock Mutual Life Insurance Company (John Hancock). The
Company, domiciled in the Commonwealth of Massachusetts, principally writes
variable and universal life insurance policies. Those policies primarily are
marketed through John Hancock's sales organization, which includes a career
agency system composed of company-owned, unionized branch offices and
independent general agencies. Policies also are sold through various
unaffiliated securities broker-dealers and certain other financial
institutions. Currently, the Company writes business in all states except New
York.
The preparation of the financial statements requires management to make
estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions could change
in the future as more information becomes known, which could impact the
amounts reported and disclosed herein.
Basis of Presentation: The financial statements have been prepared using
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of
the National Association of Insurance Commissioners (NAIC), which practices
differ from generally accepted accounting principles (GAAP). The 1995
financial statements presented for comparative purposes were previously
described as being prepared in accordance with GAAP for stock life insurance
companies wholly-owned by a mutual life insurance company. Pursuant to
Financial Accounting Standards Board Interpretation 40, "Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises" (FIN 40), as amended, which is effective for 1996 financial
statements, financial statements based on statutory accounting practices can
no longer be described as prepared in conformity with GAAP. Furthermore,
financial statements prepared in conformity with statutory accounting
practices for periods prior to the effective date of FIN 40 are not considered
GAAP presentations when presented in comparative form with financial
statements for periods subsequent to the effective date. Accordingly, the 1995
financial statements are no longer considered to be presented in conformity
with GAAP.
The significant differences from GAAP include: (1) policy acquisition costs
are charged to expense as incurred rather than deferred and amortized over the
related premium-paying period; (2) policy reserves are based on statutory
mortality, morbidity, and interest requirements without consideration of
withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available for
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances
are provided when there has been a decline in value deemed other than
temporary; (7) investments in affiliates are carried at their net equity value
with changes in value being recorded directly to unassigned deficit rather
than consolidated in the financial statements; and (8) no provision is made
for the deferred income tax effects of temporary differences between book and
tax basis reporting. The effects of the foregoing variances from GAAP have not
been determined but are presumed to be material.
46
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
The significant accounting practices of the Company are as follows:
Pending Statutory Standards: The NAIC currently is in the process of
recodifying statutory accounting practices, the result of which is expected to
constitute the only source of prescribed statutory accounting practices.
Accordingly, that project, which is expected to be completed in 1999 will
likely change, to some extent, prescribed statutory accounting practices, and
may result in changes to the accounting practices that the Company uses to
prepare its statutory-basis financial statements. The impact of any such
changes on the Company's unassigned deficit cannot be determined at this time
and could be material.
Revenues and Expenses: Premium revenues are recognized over the premium-paying
period of the policies whereas expenses, including the acquisition costs of
new business, are charged to operations as incurred and policyholder dividends
are provided as paid or accrued.
Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-
term, highly-liquid investments both readily convertible to known amounts of
cash and so near maturity that there is insignificant risk of changes in value
because of changes in interest rates.
Valuation of Assets: General account investments are carried at amounts
determined on the following bases:
Bond and stock values are carried as prescribed by the NAIC; bonds
generally at amortized amounts or cost, preferred stocks generally at cost
and common stocks at market. The discount or premium on bonds is amortized
using the interest method.
Investments in affiliates are included on the statutory equity method.
Goodwill is amortized on a straight-line basis over a ten year period.
Mortgage loans are carried at outstanding principal balance or amortized
cost.
Investment real estate is carried at depreciated cost, less encumbrances.
Depreciation on investment real estate is recorded on a straight-line
basis. Accumulated depreciation amounted to $1.2 million in 1996 and $0.5
million in 1995.
Real estate acquired in satisfaction of debt and held for sale is carried
at the lower of cost or market as of the date of foreclosure.
Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.
Asset Valuation and Interest Maintenance Reserves: The Asset Valuation Reserve
(AVR) is computed in accordance with the prescribed NAIC formula and
represents a provision for possible fluctuations in the value of bonds, equity
securities, mortgage loans, real estate and other invested assets. Changes to
the AVR are charged or credited directly to the unassigned deficit.
The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents that portion of the after tax net accumulated
unamortized realized capital gains and losses on sales of fixed income
securities,
47
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
principally bonds and mortgage loans, attributable to changes in the general
level of interest rates. Such gains and losses are deferred and amortized into
income over the remaining expected lives of the investments sold. At December
31, 1996, the IMR, net of 1996 amortization of $1.2 million, amounted to $5.9
million, which is included in policy reserves. The corresponding 1995 amounts
were $1.2 million and $6.9 million, respectively.
Separate Accounts: Separate account assets and liabilities reported in the
accompanying statements of financial position represent funds that are
separately administered and for which the contractholder, rather than the
Company, generally bears the investment risk. Separate account contractholders
have no claim against the assets of the general account of the Company.
Separate account assets are reported at market value. The operations of the
separate accounts are not included in the summary of operations; however,
income earned on amounts initially invested by the Company in the formation of
new separate accounts is included in other income.
Fair Values of Financial Instruments: Statement of Financial Accounting
Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about financial
instruments, whether or not recognized in the statement of financial position,
for which it is practicable to estimate the value. In situations where quoted
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Therefore, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:
The carrying amounts reported in the statement of financial position for
cash and temporary cash investments approximate their fair values.
Fair values for public bonds are obtained from an independent pricing
service. Fair values for private placement securities and publicly traded
bonds not provided by the independent pricing service are estimated by the
Company by discounting expected future cash flows using current market
rates applicable to the yield, credit quality and maturity of the
investments. The fair values for common and preferred stocks, other than
its subsidiary investments, which are carried at equity values, are based
on quoted market prices.
The fair value of interest rate swaps and currency rate swaps is estimated
using a discounted cash flow method adjusted for the difference between the
rate of the existing swap and the current swap market rate. Discounted cash
flows in foreign currencies are converted to U.S. dollars using current
exchange rates.
The fair value for mortgage loans is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit
characteristics of the underlying loans. Mortgage loans with similar
characteristics and credit risks are aggregated into qualitative categories
for purposes of the fair value calculations.
The carrying amount in the statement of financial position for policy loans
approximates their fair value.
The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow
method incorporating adjustments for the difference in the level of
interest rates between the dates the commitments were made and December 31,
1996. The fair value for commitments to purchase real estate approximates
the amount of the initial commitment.
48
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
Capital Gains and Losses: Realized capital gains and losses are determined
using the specific identification basis. Realized capital gains and losses,
net of taxes and amounts transferred to the IMR, are included in net gain or
loss. Unrealized gains and losses, which consist of market value and book
value adjustments, are shown as adjustments to the unassigned deficit.
Policy Reserves: Life reserves are developed by actuarial methods and are
determined based on published tables using statutorily specified interest
rates and valuation methods that will provide, in the aggregate, reserves that
are greater than or equal to the minimum or guaranteed policy cash values or
the amounts required by the Commonwealth of Massachusetts Division of
Insurance. Reserves for variable life insurance policies are maintained
principally on the modified preliminary term method using the 1958 and 1980
Commissioner's Standard Ordinary (CSO) mortality tables, with an assumed
interest rate of 4% for policies issued prior to May 1, 1983 and 4 1/2% for
policies issued on or thereafter. Reserves for single premium policies are
determined by the net single premium method using the 1958 CSO mortality
table, with an assumed interest rate of 4%. Reserves for universal life
policies issued prior to 1985 are equal to the gross account value which at
all times exceeds minimum statutory requirements. Reserves for universal life
policies issued from 1985 through 1988 are maintained at the greater of the
Commissioner's Reserve Valuation Method (CRVM) using the 1958 CSO mortality
table, with 4 1/2% interest or the cash surrender value. Reserves for
universal life policies issued after 1988 and for flexible variable policies
are maintained using the greater of the cash surrender value or the CRVM
method with the 1980 CSO mortality table and 5 1/2% interest for policies
issued from 1988 through 1992; 5% interest for policies issued in 1993 and
1994; and 4 1/2% interest for policies issued in 1995 and 1996.
Federal Income Taxes: Federal income taxes are reported in the financial
statements based on amounts determined to be payable as a result of operations
within the current accounting period. The operations of the Company are
consolidated with John Hancock in filing a consolidated federal income tax
return for the affiliated group. The federal income taxes of the Company are
allocated on a separate return basis with certain adjustments. The Company
made payments of $33.5 million in 1996 and $32.2 million in 1995.
Income before taxes differs from taxable income principally due to tax-exempt
investment income, the limitation placed on the tax deductibility of
policyholder dividends, accelerated depreciation, differences in policy
reserves for tax return and financial statement purposes, capitalization of
policy acquisition expenses for tax purposes and other adjustments prescribed
by the Internal Revenue Code.
No provision is generally recognized for temporary differences that may exist
between financial reporting and taxable income or loss.
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.
Reclassifications: Certain 1995 amounts have been reclassified to permit
comparison with the corresponding 1996 amounts.
49
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 2--CAPITALIZATION
In prior years, the Company received capital contributions from John Hancock,
with a portion of the contributed capital being credited to common stock,
although no additional shares were issued. This practice, which is acceptable
to statutory authorities, has the effect of stating the carrying value of
issued shares of common stock at amounts other than $50 per share par value
with the offset reflected in paid-in capital.
At December 31, 1994, the Company had 50,000 shares authorized with 20,000
shares issued and outstanding. On February 16, 1995, the Company issued the
remaining 30,000 shares to John Hancock and transferred $22.5 million from
common stock to paid-in capital. The par value per share is $50.
NOTE 3--ACQUISITION
On June 23, 1993, the Company acquired all of the outstanding shares of stock
of Colonial Penn Annuity and Life Insurance Company (CPAL) from Colonial Penn
Life Insurance Company for an aggregate purchase price of approximately $42.5
million. At the date of acquisition, assets of CPAL were approximately $648.5
million, consisting principally of cash and temporary cash investments and
liabilities were approximately $635.2 million, consisting principally of
reserves related to a block of interest sensitive single-premium whole life
insurance business assumed by CPAL from Charter National Life Insurance
Company (Charter). The purchase price includes contingent payments of up to
approximately $7.3 million payable between 1994 and 1998 based on the actual
lapse experience of the business in force on June 23, 1993. The Company made
contingent payments to CPAL of $1.5 million during each of 1996 and 1995.
Unamortized goodwill at December 31, 1996 was $15.2 million and is being
amortized over ten years on a straight-line basis.
On June 24, 1993, the Company contributed $24.6 million in additional capital
to CPAL. CPAL was renamed John Hancock Life Insurance Company of America
(JHLICOA) on July 7, 1993. JHLICOA manages the business assumed from Charter
and does not currently issue new business.
NOTE 4--NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Investment expenses............................................... $ 7.0 $ 5.1
Depreciation expense.............................................. 0.9 1.0
Investment taxes.................................................. 0.5 0.5
------ ------
$ 8.4 $ 6.6
====== ======
</TABLE>
50
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital gains (losses) consist of the following items:
<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Net gains (losses) from asset sales............................. $ (0.2) $ 4.0
Capital gains tax............................................... (1.0) (2.5)
Net capital gains transferred to IMR............................ (0.3) (1.0)
------ ------
Realized Capital Gains (Losses)............................... $ (1.5) $ 0.5
====== ======
</TABLE>
Net unrealized capital gains (losses) and other adjustments consist of the
following items:
<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Net gains (losses) from changes in security values and book
value adjustments.............................................. $ 3.7 $ (0.2)
Increase in asset valuation reserve............................. (1.2) (2.8)
------ ------
Net Unrealized Capital Gains (Losses) and Other Adjustments... $ 2.5 $ (3.0)
====== ======
</TABLE>
NOTE 6--TRANSACTIONS WITH PARENT
The Company's Parent provides the Company with personnel, property and
facilities in carrying out certain of its corporate functions. The Parent
annually determines a fee for these services and facilities based on a number
of criteria which were revised in 1996 and 1995 to reflect continuing changes
in the Company's operations. The amount of the service fee charged to the
Company was $111.7 million and $97.9 million in 1996 and 1995, respectively,
which has been included in insurance and investment expenses. The Parent has
guaranteed that, if necessary, it will make additional capital contributions
to prevent the Company's stockholder's equity from declining below $1.0
million.
The service fee charged to the Company by the Parent includes $1.6 million and
$1.8 million in 1996 and 1995, respectively, representing the portion of the
provision for retiree benefit plans determined under the accrual method,
including a provision for the 1993 transition liability which is being
amortized over twenty years, that was allocated to the Company.
Effective January 1, 1994, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of 1996, 1995 and 1994 issues of
flexible premium variable life insurance and scheduled premium variable life
insurance policies. In connection with this agreement, John Hancock
transferred $24.5 million and $32.7 million of cash for tax, commission, and
expense allowances to the Company, which increased the Company's net gain from
operations by $15.7 million and $20.3 million in 1996 and 1995, respectively.
Effective January 1, 1996, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of 1995 and 1996 issues of retail
annuity contracts (Independence Preferred and Declaration). In connection with
this agreement, John Hancock transferred $23.2 million of cash for surrender
benefits, tax, reserve increase, commission, expense allowances and premium to
the Company, which increased the Company's net gain from operations by $15.1
million in 1996.
51
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--INVESTMENTS
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
Year ended December 31, 1996 Value Gains Losses Value
---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 44.4 $ 0.2 $0.2 $ 44.4
Obligations of states and political sub-
divisions.............................. 12.6 0.4 0.0 13.0
Debt securities issued by foreign gov-
ernments............................... 0.8 0.1 0.0 0.9
Corporate securities.................... 623.2 29.8 3.4 649.6
Mortgage-backed securities.............. 72.5 10.2 0.1 82.6
------ ----- ---- ------
Total bonds........................... $753.5 $40.7 $3.7 $790.5
====== ===== ==== ======
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
Year ended December 31, 1995 Value Gains Losses Value
---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 89.0 $ 0.5 $0.0 $ 89.5
Obligations of states and political sub-
divisions.............................. 11.4 1.1 0.0 12.5
Debt securities issued by foreign gov-
ernments............................... 1.3 0.2 0.0 1.5
Corporate securities.................... 445.6 44.1 1.6 488.1
Mortgage-backed securities.............. 5.5 0.3 0.1 5.7
------ ----- ---- ------
Total bonds............................. $552.8 $46.2 $1.7 $597.3
====== ===== ==== ======
</TABLE>
The statement value and fair value of bonds at December 31, 1996, by
contractual maturity, are shown below. Maturities will differ from contractual
maturities because eligible borrowers may exercise their right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Statement Fair
Value Value
--------- -----
(In millions)
<S> <C> <C>
Due in one year or less....................................... $ 51.6 $ 52.9
Due after one year through five years......................... 260.8 267.7
Due after five years through ten years........................ 244.3 253.7
Due after ten years........................................... 124.3 133.6
------ ------
681.0 707.9
Mortgage-backed securities.................................... 72.5 82.6
------ ------
$753.5 $790.5
====== ======
</TABLE>
52
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--INVESTMENTS--CONTINUED
Proceeds from sales of bonds during 1996 and 1995 were $228.3 million and
$18.9 million, respectively. Gross gains of $1.3 million in 1996 and $0.2
million in 1995 and gross losses of $2.1 million in 1996 and $0.1 million in
1995 were realized on these transactions.
The cost of common stocks was $0.0 million and $0.1 million at December 31,
1996 and 1995, respectively. Gross unrealized appreciation on common stocks
totaled $1.4 million, and gross unrealized depreciation totaled $0.0 million
at December 31, 1996. The fair value of preferred stock totaled $9.6 million
at December 31, 1996 and $5.2 million at December 31, 1995.
Bonds with amortized cost of $11.3 million were nonincome producing for the
twelve months ended December 31, 1996.
At December 31, 1996, the mortgage loan portfolio was diversified by
geographic region and specific collateral property type as displayed below.
The Company controls credit risk through credit approvals, limits and
monitoring procedures.
<TABLE>
<CAPTION>
Statement
Property Type Value
------------- ---------
(In millions)
<S> <C>
Apartments.............. $ 96.0
Industrial.............. 35.0
Office buildings........ 11.3
Retail.................. 29.0
Agricultural............ 28.9
Other................... 11.9
------
$212.1
======
</TABLE>
<TABLE>
<CAPTION>
Geographic Statement
Concentration Value
------------- ---------
(In millions)
<S> <C>
East North Central...... $ 31.1
Middle Atlantic......... 11.5
Mountain................ 7.6
New England............. 27.6
Pacific................. 49.9
South Atlantic.......... 58.8
West South Central...... 25.6
------
$212.1
======
</TABLE>
At December 31, 1996, the fair values of the commercial and agricultural
mortgage loans portfolios were $189.0 million and $30.4 million, respectively.
The corresponding amounts as of December 31, 1995 were approximately $132.1
million and $22.2 million, respectively.
The maximum and minimum lending rates for mortgage loans during 1996 were
8.69% and 7.04% for agricultural loans and 8.5% and 7.2% for other properties.
Generally, the maximum percentage of any loan to the value of security at the
time of the loan, exclusive of insured or guaranteed or purchase money
mortgages, is 75%. For city mortgages, fire insurance is carried on all
commercial and residential properties at least equal to the excess of the loan
over the maximum loan which would be permitted by law on the land without the
building, except as permitted by regulations of the Federal Housing Commission
on loans fully insured under the provisions of the National Housing Act. For
agricultural mortgage loans, fire insurance is not normally required on land
based loans except in those instances where a building is critical to the
farming operation. Fire insurance is required on all agri-business facilities
in an aggregate amount equal to the loan balance.
53
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 8--REINSURANCE
The Company cedes business to reinsurers to share risks under variable life,
universal life and flexible variable life insurance policies for the purpose
of reducing exposure to large losses. Premiums, benefits and reserves ceded to
reinsurers in 1996 were $384.3 million, $9.9 million, and $12.1 million,
respectively. The corresponding amounts in 1995 were $72.4 million, $8.7
million, and $12.1 million, respectively.
To the extent that an assuming reinsurance company is unable to meet its
obligations under a reinsurance agreement, the Company remains liable as the
direct insurer on all risks reinsured.
NOTE 9--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company enters into interest rate swap contracts for the purpose of
converting the interest rate characteristics (fixed or variable) of certain
investments to match those of related insurance liabilities. Maturities of
current agreements range through 2011. These swaps involve, to varying
degrees, interest rate risk in excess of amounts recognized in the statement
of financial position.
The Company enters into currency rate swap agreements to manage exposure to
foreign exchange rate fluctuations. Maturities of current agreements range
through 2006. Should the counterparty fail to meet the terms of the contract,
the Company's market risk is limited to the currency rate differential.
The Company enters into interest rate cap contracts to manage exposure on
underlying security values due to a rise in interest rates. Maturities of
current agreements range through 2006.
The Company also uses financial futures contracts to hedge public bonds
intended for future sale in order to lock in the market value at the date of
contract. The Company is subject to the risks associated with changes in the
value of the underlying securities; however, such changes in value generally
are offset by changes in the value of the hedged items. The contract or
notional amounts of the contracts represent the extent of the Company's
involvement but not in the future cash requirements, as the Company intends to
close the open positions prior to settlement.
The contract or notional amount of the foregoing financial instruments, which
indicates the Company's involvement and in certain instances, maximum credit
risk related to those instruments, is as follows:
<TABLE>
<CAPTION>
December 31
-------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Futures contracts to sell securities............................ $ 73.0 $ 0.0
======= =====
Notional amount of interest rate swaps, currency rate swaps, and
interest rate caps to:
Receive variable rates........................................ $ 215.9 $ 0.0
======= =====
Receive fixed rates........................................... $ 26.6 $ 5.0
======= =====
</TABLE>
54
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 9--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--CONTINUED
The Company continually monitors its positions and the credit ratings of the
counterparties to these financial instruments. The Company believes the risk
of incurring losses due to the nonperformance by its counterparties is remote
and that any such losses would be immaterial.
Based on the market rates in effect at December 31, 1996, the Company's
interest rate swaps, currency rate swaps and interest rate caps represented
(assets) liabilities to the Company with fair values of $2.3 million, $(8.2)
million and $(2.0) million, respectively. The corresponding amounts as of
December 31, 1995 were $0.0 million.
NOTE 10--POLICYHOLDERS' RESERVES AND BENEFICIARIES' FUND
The Company's annuity reserves and deposit fund liabilities that are subject
to discretionary withdrawal and subject to discretionary withdrawal (without
adjustment) are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1996 Percent
----------------- -------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal at book value
less surrender charge............................... $441.9 89.3%
Subject to discretionary withdrawal at book value
(without adjustment)................................ 53.0 10.7
------ -----
Total annuity reserves and deposit liabilities....... $494.9 100.0%
====== =====
</TABLE>
NOTE 11--COMMITMENTS AND CONTINGENCIES
The Company has extended commitments to purchase long-term bonds and real
estate and issue real estate mortgages totalling $42.1 million, $0.1 million,
and $33.5 million, respectively, at December 31, 1996. The Company monitors
the creditworthiness of borrowers under long-term bond commitments and
requires collateral as deemed necessary. If funded, loans related to real
estate mortgages would be fully collateralized by the related properties. The
fair value of the commitments described above is $76.2 million at December 31,
1996. The majority of these commitments expire in 1997.
In the normal course of its business operations, the Company is involved in
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1996. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position of the Company.
55
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 12--FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and fair values of the
Company's financial instruments:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------
1996 1995
--------------- ---------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------ -------- ------
(In millions)
<S> <C> <C> <C> <C>
Assets
Bonds--Note 7............................... $753.5 $790.5 $552.8 $597.3
Preferred stocks--Note 7.................... 9.6 9.6 5.0 5.2
Common stocks--Note 7....................... 1.4 1.4 1.7 1.7
Mortgage loans on real estate--Note 7....... 212.1 219.4 146.7 154.3
Policy loans--Note 1........................ 80.8 80.8 61.8 61.8
Cash and cash equivalents--Note 1........... 31.9 31.9 76.6 76.6
Derivatives liabilities relating to:--Note 9
Interest rate swaps......................... -- 2.3 -- 0.0
Currency rate swaps......................... -- (8.2) -- 0.0
Interest rate caps.......................... -- (2.0) -- 0.0
Liabilities
Commitments--Note 11........................ -- 76.2 -- 23.8
</TABLE>
The carrying amounts in the table are included in the statutory-basis
statements of financial position. The method and assumptions utilized by the
Company in estimating its fair value disclosures are described in Note 1.
56
<PAGE>
APPENDIX--OTHER POLICY PROVISIONS
SETTLEMENT PROVISIONS
In place of a single payment, an amount of $1,000 or more payable under the
Policy as a benefit or as the Surrender Value, if any, may be left with
JHVLICO under the terms of a supplementary agreement. The agreement will be
issued when the proceeds are applied through the election of any one of the
options below.
The following options are subject to the restrictions and limitations stated
in the Policy.
Option 1--Interest Income at the declared rate but not less than 3 1/2% a
year on proceeds held on deposit.
Option 2A--Income of a Specified Amount, with payments each year totaling
at least 1/12th of the proceeds, until the proceeds, with interest credited
at the declared rate but not less than 3 1/2% a year on unpaid balances,
are fully paid.
Option 2B--Income for a Fixed Period, with each payment as declared.
Option 3--Life Income with Payments for a Guaranteed Period.
Option 4--Life Income without Refund at the death of the Payee of any
part of the proceeds applied. Only one payment is made if the Payee dies
before the second payment is due.
Option 5--Life Income with Cash Refund at the death of the Payee of the
amount, if any, equal to the proceeds applied less the sum of all income
payments made.
No election of an option may provide for income payments of less than $50.
Other options may be arranged with JHVLICO's approval including optional
methods of settlement available from John Hancock.
ADDITIONAL INSURANCE BENEFITS
On payment of an additional premium or charge and subject to certain age and
insurance underwriting requirements, certain additional provisions, such as an
Accidental Death Benefit, which are subject to the restrictions and
limitations set forth therein, may be included in a Policy by rider.
GENERAL PROVISIONS
BENEFICIARY. The Beneficiary will be as shown in the application for the
Policy, unless thereafter changed by the Owner in accordance with the terms of
the Policy. If the insured dies and there is no surviving Beneficiary, the
Owner will be the Beneficiary, but if the insured was the Owner, the Owner's
estate will be the Beneficiary.
OWNER AND ASSIGNMENT. The Owner's interest in the Policy may be assigned
without the consent of any revocable Beneficiary. JHVLICO will not be on
notice of any assignment unless it is in writing and until a duplicate of the
original assignment has been filed at JHVLICO's Servicing Office. JHVLICO
assumes no responsibility for the validity or sufficiency of any assignment.
MISSTATEMENT OF AGE OR SEX. If the age or sex of the insured has been
misstated, JHVLICO will adjust the Policy benefits to those which would have
been purchased at the correct age or sex by the most recent insurance charge
deducted from Account Value.
A-1
<PAGE>
SUICIDE. If the insured commits suicide within 2 years (except where state
law requires a shorter period) from the date of issue shown in the Policy, the
Policy will terminate and JHVLICO will pay in place of all other benefits an
amount equal to the premium paid less any Indebtedness on the date of death
and less any withdrawals. If the suicide is within 2 years (except where state
law requires a shorter period) from the date of any Policy change that
increases the death benefit, the death benefit will be limited as set forth in
the Policy.
AGE AND POLICY ANNIVERSARIES. For purpose of the Policy, an insured's "age"
is his or her age on his or her nearest birthday. Policy months, Policy years
and Policy anniversaries are calculated from the date of issue.
AVIATION ACTIVITY EXCLUSION. If the insured dies in an aviation accident
while a crew member on other than a commercial aircraft and the Policy
provides at the request of the Owner for a limited benefit in such situation,
JHVLICO will pay in place of all other benefits an amount equal to the greater
of the premium paid or the Surrender Value, less any Indebtedness.
INCONTESTABILITY. The Policy shall be incontestable, other than for
nonpayment of premiums, after it has been in force during the lifetime of an
insured for 2 years from its issue date. If, however, evidence of insurability
is required with respect to any increase in death benefit, such increase shall
be incontestable after the increase has been in force during the lifetime of
an insured for 2 years from the increase date.
DEFERRAL OF DETERMINATIONS AND PAYMENTS. Payment of any death, surrender,
partial withdrawal or loan proceeds will ordinarily be made within seven days
after receipt at JHVLICO's Servicing Office of all documents required for any
such payment. Approximately two-thirds of the claims for death proceeds which
are made within two years after the date of issue of the Policy will be
investigated to determine whether the claim should be contested and payment of
these claims will therefore be delayed.
JHVLICO may defer any transaction requiring a determination of Account Value
in any variable Subaccount for any period during which: (1) the disposal or
valuation of the Account's assets is not reasonably practicable because the
New York Stock Exchange is closed or conditions are such that, under the
Commission's rules and regulations, trading is restricted or an emergency is
deemed to exist or (2) the Commission by order permits postponement of such
actions for the protection of Owners.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement.
A-2
<PAGE>
APPENDIX--ILLUSTRATION OF DEATH BENEFITS,
SURRENDER VALUES AND ACCUMULATED PREMIUMS
The following tables illustrate the changes in death benefit and Surrender
Value of the Policy, disregarding any Policy loans. Each table separately
illustrates the operation of a Policy for an identified issue age, Planned
Premium schedule and Sum Insured and shows how the death benefit and Surrender
Value may vary over an extended period of time assuming hypothetical rates of
investment return (i.e., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross annual rates of 0%, 6%
and 12%. The Account Values during the first three Policy years would be
slightly less than the Surrender Values shown, due to the refund of sales
charges. See "Account Value and Surrender Value". The tables are based on
given annual Planned Premiums paid at the beginning of each Policy year and
will assist in a comparison of the death benefit and Surrender Value figures
set forth in the tables with those under other variable life insurance
policies which may be issued by JHVLICO or other companies. Tables are
provided for Options A, B and M. The death benefit and Surrender Value for a
Policy would be different from those shown if premiums are paid in different
amounts or at different times or if the actual gross rates of investment
return average 0%, 6% or 12% over a period of years, but nevertheless
fluctuate above or below the average for individual Policy years, or if the
Policy were issued under circumstances in which no distinctions are made based
on the gender of the insured.
The amounts shown for the death benefit and Surrender Value are as of the
end of each Policy year. The first three tables headed "Using Current Charges"
assume that the current rates for insurance, sales, risk, and expense charges
will apply in each year illustrated. The three tables headed "Using Maximum
Charges" assume that the maximum (guaranteed) insurance, sales, risk, and
expense charges will be made in each year illustrated. The amounts shown in
all tables reflect an average asset charge for the daily investment advisory
expense charges to the Portfolios of the Funds (equivalent to an effective
annual rate of .61%) and an assumed average asset charge for the annual
nonadvisory operating expenses of each Portfolio of the Funds (equivalent to
an effective annual rate of .19%). For a description of expenses charged to
the Portfolios, see the attached Prospectuses for the Funds. The charges for
the daily investment management fee and the annual non-advisory operating
expenses are based on the hypothetical assumption that Policy values are
allocated equally among the variable Subaccounts. The actual Portfolio charges
and expenses associated with any Policy will vary depending upon the actual
allocation of Policy values among Subaccounts.
The tables reflect that no charge is currently made to the Account for
Federal income taxes. However, JHVLICO reserves the right to make such a
charge in the future and any charge would require higher rates of investment
return in order to produce the same Policy values. All of the tables do,
however, reflect the imposition of a Federal DAC Tax charge in the amount of
1.25% of all premiums paid and a state premium tax charge in the amount of
2.35% of all premiums paid.
The tables assume that the Guaranteed Minimum Death Benefit has not been
elected beyond the tenth Policy year, that no Additional Sum Insured or
optional rider benefits have been elected, and that the application for the
Policy has been fully underwritten.
The second column of each table shows the amount to which the total premiums
paid to the end of a Policy year would accumulate if an amount equal to those
premiums were invested to earn interest, after taxes, at 5% compounded
annually.
JHVLICO will furnish upon request a comparable illustration reflecting the
proposed insured's age, sex, underwriting risk classification and the Total
Sum Insured at issue and Planned Premium amount requested, and assuming annual
Planned Premiums.
A-3
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION A DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at -------------------------------------------- --------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 100,000 $100,000 $ 100,000 $ 4,399 $ 4,652 $ 4,906
2 11,337 100,000 100,000 100,000 8,257 9,009 9,793
3 17,434 100,000 100,000 100,000 12,048 13,555 15,186
4 23,836 100,000 100,000 100,000 15,461 17,993 20,843
5 30,559 100,000 100,000 100,000 19,300 23,143 27,643
6 37,617 100,000 100,000 100,000 23,096 28,550 35,195
7 45,028 100,000 100,000 110,570 26,860 34,239 43,569
8 47,280 100,000 100,000 117,408 26,014 35,372 47,729
9 49,644 100,000 100,000 124,771 25,156 36,552 52,313
10 52,126 100,000 100,000 132,697 24,282 37,777 57,360
11 54,732 100,000 100,000 141,750 23,604 39,270 63,146
12 57,469 100,000 100,000 151,421 22,877 40,803 69,488
13 60,342 100,000 100,000 161,822 22,125 42,398 76,468
14 63,359 100,000 100,000 173,049 21,359 44,071 84,168
15 66,527 100,000 100,000 185,141 20,568 45,816 92,649
16 69,853 100,000 100,000 198,125 19,726 47,624 101,963
17 73,346 100,000 100,000 212,060 18,821 49,492 112,183
18 77,013 100,000 100,000 227,018 17,847 51,424 123,393
19 80,864 100,000 100,000 243,095 16,795 53,423 135,686
20 84,907 100,000 100,000 260,394 15,658 55,495 149,163
25 108,366 100,000 103,678 368,720 8,081 66,989 238,237
30 138,305 ** 111,843 525,273 ** 80,214 376,729
35 176,516 ** 122,142 757,346 ** 95,311 590,984
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, 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.
A-4
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION A DEATH BENEFIT NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH
POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at -------------------------------------------- --------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- ------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 100,000 $ 100,000 $ 100,000 $ 4,236 $ 4,484 $ 4,732
2 11,337 100,000 100,000 100,000 7,940 8,672 9,434
3 17,434 100,000 100,000 100,000 11,588 13,048 14,630
4 23,836 100,000 100,000 100,000 14,856 17,303 20,060
5 30,559 100,000 100,000 100,000 18,540 22,249 26,593
6 37,617 100,000 100,000 100,000 22,168 27,424 33,830
7 45,028 100,000 100,000 106,176 25,738 32,841 41,838
8 47,280 100,000 100,000 112,078 24,674 33,662 45,562
9 49,644 100,000 100,000 118,373 23,572 34,488 49,630
10 52,126 100,000 100,000 125,086 22,427 35,315 54,070
11 54,732 100,000 100,000 132,728 21,433 36,349 59,127
12 57,469 100,000 100,000 140,856 20,379 37,387 64,640
13 60,342 100,000 100,000 149,505 19,260 38,428 70,648
14 63,359 100,000 100,000 158,712 18,067 39,471 77,194
15 66,527 100,000 100,000 168,498 16,789 40,509 84,321
16 69,853 100,000 100,000 178,906 15,413 41,536 92,073
17 73,346 100,000 100,000 189,972 13,924 42,548 100,498
18 77,013 100,000 100,000 201,727 12,302 43,534 109,646
19 80,864 100,000 100,000 214,213 10,522 44,485 119,565
20 84,907 100,000 100,000 227,478 8,558 45,387 130,307
25 108,366 ** 100,000 307,448 ** 48,784 198,649
30 138,305 ** 100,000 415,500 ** 48,252 297,999
35 176,516 ** 100,000 561,749 ** 36,710 438,353
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, 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.
A-5
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION B DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at -------------------------------------------- --------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- -------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 103,914 $ 104,167 $ 104,420 $ 4,388 $ 4,641 $ 4,894
2 11,337 107,750 108,499 109,279 8,224 8,973 9,754
3 17,434 111,503 113,000 114,620 11,977 13,474 15,094
4 23,836 115,334 117,842 120,665 15,334 17,842 20,665
5 30,559 119,099 122,895 127,338 19,099 22,895 27,338
6 37,617 122,801 128,171 134,710 22,801 28,171 34,710
7 45,028 126,453 133,694 142,870 26,453 33,694 42,870
8 47,280 125,494 134,642 146,797 25,494 34,642 46,797
9 49,644 124,524 135,616 151,128 24,524 35,616 51,128
10 52,126 123,535 136,608 155,901 23,535 36,608 55,901
11 54,732 122,744 137,843 161,393 22,744 37,843 61,393
12 57,469 121,893 139,070 167,410 21,893 39,070 67,410
13 60,342 121,014 140,318 174,043 21,014 40,318 74,043
14 63,359 120,122 141,607 181,376 20,122 41,607 81,376
15 66,527 119,203 142,923 189,468 19,203 42,923 89,468
16 69,853 118,227 144,234 198,370 18,227 44,234 98,370
17 73,346 117,181 145,528 208,156 17,181 45,528 108,156
18 77,013 116,058 146,796 218,914 16,058 46,796 118,914
19 80,864 114,852 148,030 234,230 14,852 48,030 130,738
20 84,907 113,556 149,220 250,887 13,556 49,220 143,717
25 108,366 105,206 153,818 355,238 5,206 53,818 229,527
30 138,305 ** 153,813 506,049 ** 53,813 362,941
35 176,516 ** 145,179 729,613 ** 45,179 569,343
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, 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.
A-6
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION B DEATH BENEFIT NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER
TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at -------------------------------------------- --------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- -------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 103,748 $ 103,995 $ 104,243 $ 4,222 $ 4,469 $ 4,717
2 11,337 107,425 108,152 108,910 7,899 8,626 9,384
3 17,434 111,028 112,476 114,043 11,502 12,950 14,517
4 23,836 114,707 117,126 119,850 14,707 17,126 19,850
5 30,559 118,307 121,960 126,238 18,307 21,960 26,238
6 37,617 121,827 126,986 133,269 21,827 26,986 33,269
7 45,028 125,262 132,204 141,002 25,262 32,204 41,002
8 47,280 124,056 132,795 144,412 24,056 32,795 44,412
9 49,644 122,808 133,356 148,125 22,808 33,356 48,125
10 52,126 121,509 133,875 152,164 21,509 33,875 52,164
11 54,732 120,355 134,553 156,772 20,355 34,553 56,772
12 57,469 119,135 135,180 161,785 19,135 35,180 61,785
13 60,342 117,843 135,747 167,241 17,843 35,747 67,241
14 63,359 116,474 136,246 173,179 16,474 36,246 73,179
15 66,527 115,015 136,660 179,639 15,015 36,660 79,639
16 69,853 113,458 136,972 186,663 13,458 36,972 86,664
17 73,346 111,788 137,165 194,298 11,788 37,165 94,298
18 77,013 109,990 137,213 202,588 9,990 37,213 102,588
19 80,864 108,044 137,088 211,581 8,044 37,088 111,581
20 84,907 105,928 136,759 221,329 5,928 36,759 121,329
25 108,366 ** 130,963 284,333 ** 30,963 183,713
30 138,305 ** 113,756 383,901 ** 13,756 275,336
35 176,516 ** ** 518,957 ** ** 404,961
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, 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.
A-7
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION M DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at -------------------------------------------- --------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- ------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 100,000 $ 100,000 $ 100,000 $ 4,399 $ 4,652 $ 4,906
2 11,337 100,000 100,000 100,000 8,257 9,009 9,793
3 17,434 100,000 100,000 100,000 12,048 13,555 15,186
4 23,836 100,700 116,332 133,852 15,449 17,934 20,730
5 30,559 135,015 160,358 189,870 19,141 22,844 27,172
6 37,617 151,728 185,344 226,014 22,711 27,878 34,152
7 45,028 165,703 208,224 261,681 26,183 33,062 41,741
8 47,280 150,522 200,964 267,327 25,100 33,674 45,000
9 49,644 136,777 194,133 273,422 24,061 34,317 48,555
10 52,126 124,292 187,654 279,910 23,056 34,979 52,415
11 54,732 114,059 182,694 288,092 22,300 35,893 56,860
12 57,469 104,574 177,726 296,295 21,538 36,783 61,605
13 60,342 100,000 173,005 304,940 20,789 37,699 66,754
14 63,359 100,000 168,613 314,223 20,028 38,666 72,389
15 66,527 100,000 164,449 324,028 19,241 39,668 78,521
16 69,853 100,000 160,378 334,126 18,402 40,672 85,124
17 73,346 100,000 156,371 344,464 17,500 41,668 92,211
18 77,013 100,000 152,430 355,049 16,527 42,656 99,813
19 80,864 100,000 148,579 365,941 15,475 43,635 107,963
20 84,907 100,000 144,826 377,173 14,337 44,604 116,698
25 108,366 100,000 127,131 437,734 6,724 49,103 169,847
30 138,305 ** 110,873 504,795 ** 52,726 241,159
35 176,516 ** 100,000 585,311 ** 55,597 337,220
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, 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.
A-8
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED MALE,
ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION M DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS* USING
MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at -------------------------------------------- --------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- ------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 100,000 $ 100,000 $ 100,000 $ 4,236 $ 4,484 $ 4,732
2 11,337 100,000 100,000 100,000 7,940 8,672 9,434
3 17,434 100,000 100,000 100,000 11,588 13,048 14,630
4 23,836 100,000 111,920 128,813 14,853 17,251 19,946
5 30,559 129,705 154,047 182,359 18,385 21,941 26,093
6 37,617 145,468 177,600 216,427 21,770 26,709 32,697
7 45,028 158,294 198,704 249,429 25,008 31,545 39,780
8 47,280 141,994 189,525 251,964 23,674 31,752 42,407
9 49,644 127,213 180,694 254,526 22,375 31,936 45,192
10 52,126 113,806 172,179 257,075 21,107 32,089 48,131
11 54,732 102,682 165,024 260,683 20,072 32,416 51,442
12 57,469 100,000 158,077 264,223 19,021 32,711 54,927
13 60,342 100,000 151,355 267,724 17,905 32,976 58,597
14 63,359 100,000 144,849 271,167 16,715 33,211 62,459
15 66,527 100,000 138,537 274,512 15,438 33,412 66,511
16 69,853 100,000 132,420 277,757 14,060 33,576 70,751
17 73,346 100,000 126,491 280,884 12,569 33,700 75,179
18 77,013 100,000 120,731 283,843 10,942 33,779 79,782
19 80,864 100,000 115,135 286,614 9,155 33,807 84,545
20 84,907 100,000 109,696 289,164 7,180 33,779 89,452
25 108,366 ** 100,000 298,915 ** 31,923 115,964
30 138,305 ** 100,000 302,336 ** 21,740 144,413
35 176,516 ** ** 299,083 ** ** 172,285
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, 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.
A-9
<PAGE>
[LOGO OF JOHN HANCOCK OLYMPIC WORLDWIDE SPONSOR APPEARS HERE]
POLICIES ISSUED BY JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, MASSACHUSETTS 02117
S8149 M 5/97
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
REPRESENTATION OF REASONABLENESS
Registrant represents that the fees and charges deducted under the
Policies, in the aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by the insurance
company.
UNDERTAKING REGARDING INDEMNIFICATION
Pursuant to Section X of JHVLICO's Bylaws and Section 67 of the
Massachusetts Business Corporation Law, JHVLICO indemnifies each director,
former director, officer, and former officer, and his heirs and legal
representatives from liability incurred or imposed in connection with any legal
action in which he may be involved by reason of any alleged act or omission as
an officer or a director of JHVLICO.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
Cross-Reference Table.
The prospectus consisting of 65 pages.
The undertaking regarding indemnification.
The undertaking to file reports.
<PAGE>
The signatures.
The following exhibits:
I.A. (1) JHVLICO Board Resolution establishing the separate account included in
Post-Effective Amendment No. 2 to this Form S-6 Registration Statement
filed January 11, 1996.
(2) Not Applicable
(3) (a) Distribution Agreement and Amendment included in Post-Effective
Amendment No. 2 to this Form S-6 Registration Statement filed
January 11, 1996.
(b) Specimen Variable Contracts Selling Agreement between John Hancock
Mutual Life Insurance Company and selling broker-dealers included
in Post-Effective Amendment No. 2 to this Form S-6 Registration
Statement filed January 11, 1996.
(c) Schedule of sales commissions included in Exhibit I.A.(3) (a)
above.
(4) Not Applicable
(5) Form of flexible premium variable life insurance policy, included in
the initial filing of this Form S-6 Registration Statement (File No.
33-79108), filed May 18, 1994.
(6) (a) JHVLICO Certificate of Incorporation included in Post-Effective
Amendment No. 2 to this Form S-6 Registration Statement filed
January 11, 1996.
(b) JHVLICO By-laws included in Post-Effective Amendment No. 2 to
this Form S-6 Registration Statement filed January 11, 1996.
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) Forms of applications for Policy, included in the initial filing of
this Form S-6 Registration Statement (File No. 33-79108), filed May
18, 1994.
<PAGE>
2. Included as Exhibit 1.A(5) above.
3. Opinion and consent of counsel as to securities being registered, included
in Pre-Effective Amendment No. 1 to this Form S-6 Registration Statement
(File No. 33-79108), filed October 10, 1994.
4. Not Applicable
5. Not Applicable
6. Opinion and consent of actuary.
7. Consent of independent auditors.
8. Memorandum describing JHVLICO's issuance, transfer and redemption procedures
for the flexible policy pursuant to Rule 6e-3(T)(b)(12)(iii), included in
the initial filing of this Form S-6 Registration Statement, filed May 18,
1994.
9. Powers of attorney for Cleary, Tomlinson, D'Alessandro, Shaw, Luddy, Lee,
Reitano, Van Leer and Paster, included in Post-Effective Amendment No. 1 to
this Form S-6 Registration Statement, filed April 1995. Power of Attorney
for Ronald J. Bocage, incorporated by reference from Form 10-K annual report
of John Hancock Variable Life Insurance Company (File No. 33-62895) filed
March 28, 1997.
10. Representations, Description and Undertaking pursuant to Rule
6e-3(T)(b)(13)(iii)(F) under the Investment Company Act of 1940, included
in Pre-Effective Amendment No. 1 to this Form S-6 Registration Statement,
filed October 10, 1994.
11. Exemptive Relief Relied Upon, included in Pre-Effective Amendment No. 1 to
this Form S-6 Registration Statement, filed October 10, 1994.
12. Opinion of Counsel as to eligibility of this Post-Effective Amendment
for filing pursuant to Rule 485(b).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the John
Hancock Variable Life Insurance Company has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunder
duly authorized, and its seal to be hereunto fixed and attested, all in the City
of Boston and Commonwealth of Massachusetts on the 27th day of March, 1997.
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
[SEAL APPEARS HERE]
By HENRY D. SHAW
-------------
Henry D. Shaw
President
Attest: SANDRA M. DaDALT
----------------------
Sandra M. DaDalt
Assistant Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities with John Hancock Variable Life Insurance
Company and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
ROBERT REITANO
- -------------------------
Robert R. Reitano Director March 27, 1997
(Principal Financial Officer)
PATRICK F. SMITH
- -------------------------
Patrick F. Smith Controller
(Princpal Accounting Officer) March 27, 1997
HENRY D. SHAW
- -------------------------
Henry D. Shaw Vice Chairman of the Board
for himself and as and President(Acting Principal
Attorney-in-Fact Executive Officer) March 27, 1997
For: David F. D'Alessandro Chairman of the Board
Robert S. Paster Director
Thomas J. Lee Director
Michele G. Van Leer Director
Joseph A. Tomlinson Director
Barbara L. Luddy Director
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, John Hancock Variable Life Account S, certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, and its seal to be hereunto fixed
and attested, all in the City of Boston and Commonwealth of Massachusetts on the
27th day of March, 1997.
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
(Registrant)
By John Hancock Mutual Life Insurance Company
(Depositor)
[SEAL APPEARS HERE]
By HENRY D. SHAW
-------------
Henry D. Shaw
President
Attest SANDRA M. DADALT
----------------------
Sandra M. DaDalt
Assistant Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> LARGE CAP GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 17,864,249
<INVESTMENTS-AT-VALUE> 16,915,393
<RECEIVABLES> 20,003
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,935,396
<PAYABLE-FOR-SECURITIES> 19,803
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 200
<TOTAL-LIABILITIES> 20,003
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 16,915,393
<DIVIDEND-INCOME> 2,452,382
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 44,880
<NET-INVESTMENT-INCOME> 2,402,502
<REALIZED-GAINS-CURRENT> 444,487
<APPREC-INCREASE-CURRENT> (1,104,574)
<NET-CHANGE-FROM-OPS> 1,792,415
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,036,922
<NUMBER-OF-SHARES-REDEEMED> (4,928,834)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,850,503
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 49,880
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> SOVEREIGN BOND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 5,224,985
<INVESTMENTS-AT-VALUE> 5,185,747
<RECEIVABLES> 26,025
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,211,772
<PAYABLE-FOR-SECURITIES> 25,968
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 26,025
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5,185,747
<DIVIDEND-INCOME> 242,881
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 14,129
<NET-INVESTMENT-INCOME> 228,752
<REALIZED-GAINS-CURRENT> 5,746
<APPREC-INCREASE-CURRENT> (69,923)
<NET-CHANGE-FROM-OPS> 164,525
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,312,776
<NUMBER-OF-SHARES-REDEEMED> 679,839
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,797,462
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,129
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> INTERNATIONAL EQUITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 5,486,692
<INVESTMENTS-AT-VALUE> 5,731,199
<RECEIVABLES> 11,820
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,743,019
<PAYABLE-FOR-SECURITIES> 11,736
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84
<TOTAL-LIABILITIES> 11,820
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5,731,199
<DIVIDEND-INCOME> 52,188
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 23,132
<NET-INVESTMENT-INCOME> 29,056
<REALIZED-GAINS-CURRENT> 165,730
<APPREC-INCREASE-CURRENT> 137,729
<NET-CHANGE-FROM-OPS> 332,515
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,750,218
<NUMBER-OF-SHARES-REDEEMED> 1,906,352
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,176,381
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,132
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> SMALL CAP GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 500,190
<INVESTMENTS-AT-VALUE> 497,525
<RECEIVABLES> 8
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 497,533
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8
<TOTAL-LIABILITIES> 8
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 497,525
<DIVIDEND-INCOME> 512
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,547
<NET-INVESTMENT-INCOME> (1,035)
<REALIZED-GAINS-CURRENT> (40,018)
<APPREC-INCREASE-CURRENT> (2,665)
<NET-CHANGE-FROM-OPS> (42,118)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,120,880
<NUMBER-OF-SHARES-REDEEMED> 579,637
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 497,525
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,547
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> INTERNATIONAL BALANCED
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 146,989
<INVESTMENTS-AT-VALUE> 152,295
<RECEIVABLES> 2
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152,297
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 2
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 152,295
<DIVIDEND-INCOME> 2,947
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 356
<NET-INVESTMENT-INCOME> 2,591
<REALIZED-GAINS-CURRENT> 56
<APPREC-INCREASE-CURRENT> 5,307
<NET-CHANGE-FROM-OPS> 7,954
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
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<NUMBER-OF-SHARES-REDEEMED> 4,276
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<GROSS-EXPENSE> 356
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> MID CAP GROWTH
<S> <C>
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<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<NUMBER-OF-SHARES-REDEEMED> 26,730
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> LARGE CAP VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 738,803
<INVESTMENTS-AT-VALUE> 762,356
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 762,366
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10
<TOTAL-LIABILITIES> 10
<SENIOR-EQUITY> 0
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 762,356
<DIVIDEND-INCOME> 13,644
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 964
<NET-INVESTMENT-INCOME> 12,680
<REALIZED-GAINS-CURRENT> 1,327
<APPREC-INCREASE-CURRENT> 23,553
<NET-CHANGE-FROM-OPS> 37,560
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 767,660
<NUMBER-OF-SHARES-REDEEMED> 42,864
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 762,356
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 964
<AVERAGE-NET-ASSETS> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MONEY MARKET
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 10,038,857
<INVESTMENTS-AT-VALUE> 10,038,857
<RECEIVABLES> 336,601
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,375,458
<PAYABLE-FOR-SECURITIES> 336,451
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 336,601
<SENIOR-EQUITY> 0
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<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10,038,857
<DIVIDEND-INCOME> 287,321
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<NET-INVESTMENT-INCOME> 256,599
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<NUMBER-OF-SHARES-SOLD> 36,814,029
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> MID CAP VALUE
<S> <C>
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<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 336,322
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 6
<TOTAL-LIABILITIES> 6
<SENIOR-EQUITY> 0
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<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 336,316
<DIVIDEND-INCOME> 6,878
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 377
<NET-INVESTMENT-INCOME> 6,501
<REALIZED-GAINS-CURRENT> 845
<APPREC-INCREASE-CURRENT> 13,910
<NET-CHANGE-FROM-OPS> 21,256
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 324,248
<NUMBER-OF-SHARES-REDEEMED> 9,188
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 336,316
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
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<PER-SHARE-DIVIDEND> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> SPECIAL OPPORTUNITIES
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 5,653,898
<INVESTMENTS-AT-VALUE> 6,187,188
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<PAYABLE-FOR-SECURITIES> 10,295
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 99
<TOTAL-LIABILITIES> 10,295
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6,187,188
<DIVIDEND-INCOME> 238,163
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 21,146
<NET-INVESTMENT-INCOME> 217,017
<REALIZED-GAINS-CURRENT> 317,400
<APPREC-INCREASE-CURRENT> 344,786
<NET-CHANGE-FROM-OPS> 879,203
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<NUMBER-OF-SHARES-SOLD> 4,931,686
<NUMBER-OF-SHARES-REDEEMED> 1,301,761
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,517,128
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 21,146
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> REAL ESTATE EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,053,443
<INVESTMENTS-AT-VALUE> 1,279,523
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<TOTAL-ASSETS> 1,284,083
<PAYABLE-FOR-SECURITIES> 4,540
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 4,560
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,279,523
<DIVIDEND-INCOME> 50,204
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 4,547
<NET-INVESTMENT-INCOME> 46,657
<REALIZED-GAINS-CURRENT> 19,122
<APPREC-INCREASE-CURRENT> 191,067
<NET-CHANGE-FROM-OPS> 255,846
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 748,683
<NUMBER-OF-SHARES-REDEEMED> 295,788
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 708,741
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,547
<AVERAGE-NET-ASSETS> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GROWTH & INCOME
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 25,904,663
<INVESTMENTS-AT-VALUE> 25,663,282
<RECEIVABLES> 195,552
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<TOTAL-ASSETS> 25,858,834
<PAYABLE-FOR-SECURITIES> 195,180
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 372
<TOTAL-LIABILITIES> 195,552
<SENIOR-EQUITY> 0
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<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 25,663,282
<DIVIDEND-INCOME> 3,056,625
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 89,391
<NET-INVESTMENT-INCOME> 2,967,234
<REALIZED-GAINS-CURRENT> 512,402
<APPREC-INCREASE-CURRENT> (496,647)
<NET-CHANGE-FROM-OPS> 2,982,989
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<NUMBER-OF-SHARES-SOLD> 19,263,021
<NUMBER-OF-SHARES-REDEEMED> 5,502,524
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 16,743,486
<ACCUMULATED-NII-PRIOR> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> MANAGED
<S> <C>
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<TOTAL-LIABILITIES> 4,549
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 11,517,261
<DIVIDEND-INCOME> 1,281,149
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<EXPENSES-NET> 35,103
<NET-INVESTMENT-INCOME> 1,246,046
<REALIZED-GAINS-CURRENT> 124,493
<APPREC-INCREASE-CURRENT> (507,517)
<NET-CHANGE-FROM-OPS> 863,022
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<NUMBER-OF-SHARES-SOLD> 9,996,216
<NUMBER-OF-SHARES-REDEEMED> 3,151,700
<SHARES-REINVESTED> 0
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<GROSS-EXPENSE> 35,103
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> SHORT-TERM U.S. GOVERNMENT
<S> <C>
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<REALIZED-GAINS-CURRENT> (52,888)
<APPREC-INCREASE-CURRENT> (7,734)
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> SMALL CAP VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 326,961
<INVESTMENTS-AT-VALUE> 341,007
<RECEIVABLES> 5
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 341,012
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5
<TOTAL-LIABILITIES> 5
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 341,007
<DIVIDEND-INCOME> 8,296
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 523
<NET-INVESTMENT-INCOME> 7,773
<REALIZED-GAINS-CURRENT> 58
<APPREC-INCREASE-CURRENT> 14,046
<NET-CHANGE-FROM-OPS> 21,877
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 335,271
<NUMBER-OF-SHARES-REDEEMED> 16,141
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 341,007
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 523
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> INTERNATIONAL OPPORTUNITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 872,447
<INVESTMENTS-AT-VALUE> 909,113
<RECEIVABLES> 32,559
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 941,672
<PAYABLE-FOR-SECURITIES> 32,547
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12
<TOTAL-LIABILITIES> 32,559
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 909,113
<DIVIDEND-INCOME> 2,965
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,439
<NET-INVESTMENT-INCOME> 1,526
<REALIZED-GAINS-CURRENT> 242
<APPREC-INCREASE-CURRENT> 36,666
<NET-CHANGE-FROM-OPS> 38,434
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 960,081
<NUMBER-OF-SHARES-REDEEMED> 89,402
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 909,113
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,439
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 17
<NAME> EQUITY INDEX
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 918,525
<INVESTMENTS-AT-VALUE> 974,307
<RECEIVABLES> 21,534
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 995,841
<PAYABLE-FOR-SECURITIES> 21,519
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15
<TOTAL-LIABILITIES> 21,534
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 974,307
<DIVIDEND-INCOME> 23,300
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,962
<NET-INVESTMENT-INCOME> 21,338
<REALIZED-GAINS-CURRENT> 17,318
<APPREC-INCREASE-CURRENT> 55,782
<NET-CHANGE-FROM-OPS> 94,518
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,282,798
<NUMBER-OF-SHARES-REDEEMED> 403,009
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 974,307
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,962
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> STRATEGIC BOND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 259,219
<INVESTMENTS-AT-VALUE> 258,628
<RECEIVABLES> 19,681
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 278,309
<PAYABLE-FOR-SECURITIES> 19,677
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 19,681
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 258,628
<DIVIDEND-INCOME> 7,425
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 349
<NET-INVESTMENT-INCOME> 7,076
<REALIZED-GAINS-CURRENT> 22
<APPREC-INCREASE-CURRENT> (591)
<NET-CHANGE-FROM-OPS> 6,507
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 259,231
<NUMBER-OF-SHARES-REDEEMED> 7,110
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 258,628
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 349
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 19
<NAME> TURNER CORE GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 638,699
<INVESTMENTS-AT-VALUE> 654,753
<RECEIVABLES> 9
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 654,762
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9
<TOTAL-LIABILITIES> 9
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 654,753
<DIVIDEND-INCOME> 21,778
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,140
<NET-INVESTMENT-INCOME> 19,638
<REALIZED-GAINS-CURRENT> (9,767)
<APPREC-INCREASE-CURRENT> 16,054
<NET-CHANGE-FROM-OPS> 25,925
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,135,190
<NUMBER-OF-SHARES-REDEEMED> 506,352
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 654,753
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,140
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 20
<NAME> EDINBURGH INT'L EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 941,429
<INVESTMENTS-AT-VALUE> 929,143
<RECEIVABLES> 11,706
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 940,849
<PAYABLE-FOR-SECURITIES> 11,692
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14
<TOTAL-LIABILITIES> 11,706
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 929,143
<DIVIDEND-INCOME> 5,263
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,280
<NET-INVESTMENT-INCOME> 2,983
<REALIZED-GAINS-CURRENT> (2,433)
<APPREC-INCREASE-CURRENT> (12,286)
<NET-CHANGE-FROM-OPS> (11,736)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,021,091
<NUMBER-OF-SHARES-REDEEMED> 80,162
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 929,143
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,280
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 21
<NAME> FRONTEIR CAPITAL APPRECIATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 962,978
<INVESTMENTS-AT-VALUE> 968,078
<RECEIVABLES> 23,405
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 991,483
<PAYABLE-FOR-SECURITIES> 23,391
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14
<TOTAL-LIABILITIES> 23,404
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 968,078
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,679
<NET-INVESTMENT-INCOME> (1,679)
<REALIZED-GAINS-CURRENT> (21,044)
<APPREC-INCREASE-CURRENT> 5,101
<NET-CHANGE-FROM-OPS> (17,622)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,535,063
<NUMBER-OF-SHARES-REDEEMED> 549,363
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 968,078
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,679
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Exhibit 6
[John Hancock Mutual Life Insurance Company Letterhead]
March 27, 1997
Board of Directors
John Hancock Mutual Life lnsurance Company
Subject: Actuarial Opinion
Gentlemen:
This opinion is furnished in connection with the filing of this Post-Effective
Amendment to the Registration Statement on Form S-6 (File Number 33-79108) by
John Hancock Variable Life lnsurance Company (JHVLICO) under the Securities Act
of 1933, as amended, with respect to flexible premium variable life insurance
Policies under which amounts will be allocated by JHVLICO to one or more of the
subaccounts of John Hancock Variable Life Account S ("Account"). The flexible
premium policy is described in the prospectus included in the amended
Registration Statement.
The policy form was prepared under my direction, and I am familiar with the
amended Registration Statement and exhibits thereto. In my opinion, the
illustrations of death benefits, surrender values, and accumulated premiums
shown in the appendix of the flexible premium prospectus included in the amended
Registration Statement, based on the assumptions stated in the illustrations,
are consistent with the provisions of the policy. Such assumptions, including
the current cost of insurance rates and other charges, are reasonable. The
policy has not been designed so as to make the relationship between premiums and
benefits, as shown in the illustrations, appear disproportionately more
favorable to a prospective purchaser of a policy for a male age 45, nonsmoker
risk class, than to a prospective purchaser of a policy for a male at other ages
or in another risk classification or for a female; nor have the particular
examples set forth in the illustrations been selected for the purpose of making
this relationship appear more favorable.
I hereby consent to the filing of this opinion as an exhibit to the amended
Registration Statement and to the use of my name under the heading "Experts" in
the prospectus.
/s/RANDI M. STERRN
-------------------
Randi M. Sterrn, FSA
Senior Associate Actuary
<PAGE>
EXHIBIT 7
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Prospectus and to the use of our reports dated February 7, 1997, with respect to
the financial statements of John Hancock Variable Life Account S, and dated
February 14, 1997, with respect to the financial statements of John Hancock
Variable Life Insurance Company, included in this Post-Effective Amendment
No. 4 to the Registration Statement (Form S-6, No. 33-79108).
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 2, 1997
<PAGE>
EXHIBIT 12
[John Hancock Mutual Life Insurance Company Letterhead]
March 27, 1997
United States Securities
and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: John Hancock Variable Life Account S
File Nos. 811-7782 and 33-79108
Commissioners:
This opinion is being furnished with respect to the filing of this post-
effective amendment of the Registrant's Registration Statement with the
Securities and Exchange Commission as required by Rule 485 under the Securities
Act of 1933.
We have acted as counsel to Registrant for the purpose of preparing this
post-effective amendment which is being filed pursuant to paragraph (b) of Rule
485 and hereby represent to the Commission that in our opinion this post-
effective amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b).
We hereby consent to the filing of this opinion with and as a part of this
post-effective amendment to Registrant's Registration Statement with the
Commission.
Very truly yours,
/s/ Sandra M. DaDalt.
--------------------
Sandra M. DaDalt
Counsel
