<PAGE>
As filed with the Securities and Exchange Commission on June 30, 2000
Registration No. 33-79108
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-6
Post-Effective Amendment No. 9 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 June 30, 2000 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 under the Securities Act of 1933.
<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
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
REPRESENTATION OF REASONABLENESS
John Hancock Variable Life Insurance Company represents that the fees and
charges deducted under the Policies, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the insurance company.
UNDERTAKING REGARDING INDEMNIFICATION
Pursuant to 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 supplement consisting of __ 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) Form of Distribution and Servicing Agreement by and among John
Hancock Distributors, Inc., John Hancock Mutual Life Insurance
Company, and John Hancock Variable Life Insurance Company,
incorporated by reference from Pre-Effective Amendment No. 2 to
Form S-6 Registration Statement of John Hancock Variable Life
Account S (File No. 33-15075) filed April 18, 1997.
(b) Specimen Variable Contracts Selling Agreement between John Hancock
Mutual Life Insurance Company and selling broker-dealers,
incorporated by reference from Pre-Effective Amendment No. 2 to
Form S-6 Registration Statement of John Hancock Variable Life
Account S (File No. 33-15075) filed April 18, 1997.
(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) (a) Participation Agreement Among Templeton Variable Products Series
Fund, Franklin Templeton distributors, Inc. and John Hancock Life
Insurance Company, John Hancock Variable Life Insurance company,
and Investors Partner Life Insurance Company, filed in Post-
Effective Amendment No. 1 to file No. 333-81127, Filed May 4,
2000.
(b) Participation Agreement Among Variable Insurance Products Fund II,
Fidelity Distributors Corporation and John Hancock Mutual Life
Insurance Company, filed in Post-Effective Amendment No. 1 to file
No. 333-81127, Filed May 4, 2000.
(c) Participation Agreement Among Variable Insurance Products Fund,
Fidelity Distributors Corporation and John Hancock Mutual Life
Insurance Company, filed in Post-Effective Amendment No. 1 to file
No. 333-81127, Filed May 4, 2000.
(d) Participation Agreement Among MFS Variable Insurance Trust, John
Hancock Mutual Life Insurance Company and Massachusetts Financial
Services Company, filed in Post-Effective Amendment No. 1 to file
No. 333-81127, Filed May 4, 2000.
(e) Participation Agreement By And Among AIM Variable Insurance Funds,
Inc., AIM Distributors, Inc., John Hancock Mutual Life Insurance
Company and Certain Of Its Affiliated Insurance Companies, Each On
Behalf Of Itself And Its Separate Accounts, And John Hancock
Funds, Inc., filed in Post-Effective Amendment No. 1 to file No.
333-81127, Filed May 4, 2000.
(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.
(11) Not Applicable. The Registrant invests only in shares of open-end
Funds.
<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. Powers of Attorney for Bruce M. Jones and Paul Strong,
incorporated by reference from the Post-Effective Amendment No. 2 to File
No. 333-81127, Filed May 4, 2000.
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 30th day of June, 2000.
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
(SEAL)
By /s/ MICHELE G. VAN LEER
-----------------------
Michele G. Van Leer
President
Attest: /s/ PETER H. SCAVONGELLI
------------------------
Peter H. Scavongelli
Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, 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 30th day of June, 2000.
On behalf of the Registrant
By John Hancock Variable Life Insurance Company
(Depositor)
(SEAL)
By /s/ Michele G. Van Leer
-----------------------
Michele G. Van Leer
President
Attest /s/ PETER H. SCAVONGELLI
------------------------
Peter H. Scavongelli
Secretary
<PAGE>
SUPPLEMENT DATED JUNE 30, 2000
TO
PROSPECTUSES DATED MAY 1, 2000
This Supplement is intended to be distributed with all prospectuses dated May 1,
2000 for certain variable life insurance policies issued by John Hancock
Variable Life Insurance Company (the "Product Prospectuses"). The policies
involved bear the title "Variable Estate Protection", "Variable Estate
Protection II", "Majestic Variable Estate Protection", "Majestic Variable Estate
Protection 98", "Medallion Executive Variable Life", "Medallion Executive
Variable Life III", "Majestic Variable Universal Life", "Majestic Variable
Universal Life 98", or "Variable Master Plan Plus" and contain the following
investment options: Brandes International Equity, Turner Core Growth, Frontier
Capital Appreciation and Clifton Enhanced U.S. Equity. This Supplement contains
amendments to the Product Prospectuses and to the prospectuses for two of the
underlying Trusts. (The term "Trusts" is defined on page 2 of the Product
Prospectuses).
__________________________
GUIDE TO THIS SUPPLEMENT
------------------------
. Page 2 contains amendments to the Product Prospectuses relating to the
addition of four new investment options and the addition of a new subadviser
for the Real Estate Equity Fund.
. Pages 3 through 36 adds unaudited financial statements of John Hancock
Variable Life Insurance Company and John Hancock Variable Life Account S for
the three month period ended March 31, 2000 to the Product Prospectuses. None
of the financial statements contained in this supplement have been audited by
independent auditors.
. Pages 38 through 41 contain information that is added to the prospectus for
the John Hancock Variable Series Trust I. The pages describe two new fund
choices - - the American Leaders Large Cap Value Fund and the Core Bond Fund.
. Pages 42 and 43 replace the pages in the prospectus for the John Hancock
Variable Series Trust I that describe the Real Estate Equity Fund. Pages 42
and 43 describe a new "multi-manager" approach for the Real Estate Equity
Fund.
. After page 44 are the prospectuses for the two new fund choices of the Janus
Aspen Series (Service Shares Class).
<PAGE>
AMENDMENTS TO PRODUCT PROSPECTUSES
----------------------------------
(1) The table on the cover page of each Product Prospectus is amended to add
Morgan Stanley Dean Witter Investment Management Inc. as an additional
manager of the Real Estate Equity investment option and to include the
following new investment options:
<TABLE>
<CAPTION>
VARIABLE INVESTMENT OPTION MANAGED BY
-------------------------- ----------
--------------------------------------------------------------------
<S> <C>
American Leaders Large Cap Value Federated Investment
CapValue Value. . . . . . . . . Management Company
Janus Aspen Global Technology . . Janus Capital Corporation.
Janus Aspen Worldwide Growth . . Janus Capital Corporation
Core Bond . . . . . . . . . . . . Federated Investment
Management Company
--------------------------------------------------------------------
</TABLE>
(2) The second paragraph on page 2 of each Product Prospectus is amended to
read as follows:
When you select one or more of these variable investment
options, we invest your money in the corresponding investment option(s) of
one or more of the following: the John Hancock Variable Series Trust I, the
AIM Variable Insurance Funds, the Templeton Variable Products Series Fund,
Fidelity's Variable Insurance Products Fund and Variable Insurance Products
Fund II, the Janus Aspen Series (Service Shares Class), and the MFS Variable
Insurance Trust (together, "the Trusts"). In this prospectus, the investment
options of the Trusts are referred to as "funds". In the prospectuses for
the Trusts, the investment options may be referred to as "funds",
"portfolios" or "series".
(3) The fund expense table appearing in the section of each Product
Prospectus entitled "What charges will the Trusts deduct from my investment
in the policy?" is amended to include the following:
<TABLE>
<CAPTION>
Investment Distribution and Other Operating Total Fund Other Operating
Management Service Expenses With Operating Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Expenses Reimbursement
<S> <C> <C> <C> <C> <C>
JOHN HANCOCK VARIABLE SERIES TRUST I
(NOTE 1):
American Leaders Large Cap Value . . . 0.80% N/A 0.10% 0.90% N/A
Core Bond . . . . . . . . . . . . . . . 0.70% N/A 0.10% 0.80% N/A
JANUS ASPEN SERIES (SERVICE SHARES)
(NOTE 6):
Janus Aspen Global Technology . . . . . 0.65% 0.25% 0.13% 1.03% 0.13%
Janus Aspen Worldwide Growth . . . . . 0.65% 0.25% 0.05% 0.95% 0.05%
</TABLE>
NOTES TO FUND EXPENSE TABLE
(1) John Hancock Variable Series Trust I funds' percentages reflect
management fees and other fund expenses based on the allocation
methodology and expense reimbursement policy adopted April 23, 1999.
Under the policy, John Hancock Life Insurance Company voluntarily
reimburses a fund when the fund's "other fund expenses" exceed 0.10% of
the fund's average daily net assets. The percentages for the American
Leaders Large Cap Value Fund and the Core Bond Fund are estimates
because the funds were not in operation prior to the date of this
prospectus.
(6) The percentages for the new Service Shares Class of the Janus Aspen
Global Technology Fund and the Janus Aspen Worldwide Growth Fund are
estimates because the Service Shares Class was not in operation in 1999.
All such estimates have been made without regard to the effect of any
expense offset arrangements.
2
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
FOR
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
FIRST QUARTER 2000
3
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(Unaudited)
March 31 December 31
2000 1999
---------- -------------
(In millions)
<S> <C> <C>
ASSETS
Bonds . . . . . . . . . . . . . . . . . . . . . . . $ 1,276.6 $ 1,216.3
Preferred stocks . . . . . . . . . . . . . . . . 35.6 35.9
Common stocks . . . . . . . . . . . . . . . . . . 1.7 3.2
Investment in affiliates . . . . . . . . . . . . 81.3 80.7
Mortgage loans on real estate . . . . . . . . . . . 429.0 433.1
Real estate . . . . . . . . . . . . . . . . . . . . 24.8 25.0
Policy loans . . . . . . . . . . . . . . . . . . . 181.8 172.1
Cash Items:
Cash in banks . . . . . . . . . . . . . . . . . . (3.3) 27.2
Temporary cash investments . . . . . . . . . . . 309.4 222.9
--------- ---------
306.1 250.1
Premiums due and deferred . . . . . . . . . . . . . 23.1 29.9
Investment income due and accrued . . . . . . . . . 35.7 33.2
Other general account assets . . . . . . . . . . . 52.3 65.3
Assets held in separate accounts . . . . . . . . . 8,597.7 8,268.2
--------- ---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $11,045.7 $10,613.0
========= =========
OBLIGATIONS AND STOCKHOLDER'S EQUITY
OBLIGATIONS
Policy reserves . . . . . . . . . . . . . . . . . $ 1,945.6 $ 1,866.6
Federal income and other taxes payable . . . . . 73.6 67.3
Other general account obligations . . . . . . . . 232.1 219.0
Transfers from separate account, net . . . . . . (225.7) (221.6)
Asset valuation reserve . . . . . . . . . . . . . 18.8 23.1
Obligations related to separate accounts . . . . 8,590.9 8,261.6
--------- ---------
TOTAL OBLIGATIONS . . . . . . . . . . . . . . . . . 10,635.3 10,216.0
STOCKHOLDER'S EQUITY
Common Stock, $50 par value; authorized 50,000
shares; issued and outstanding 50,000 shares . 2.5 2.5
Paid-in capital . . . . . . . . . . . . . . . . . 572.4 572.4
Unassigned deficit . . . . . . . . . . . . . . . (164.5) (177.9)
--------- ---------
TOTAL STOCKHOLDER'S EQUITY . . . . . . . . . . . . 410.4 397.0
--------- ---------
TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY . . . . $11,045.7 $10,613.0
========= =========
</TABLE>
See condensed notes to the financial statements (unaudited).
4
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
(Unaudited)
Three months ended
March 31
-------------------
2000 1999
--------- ----------
(In millions)
<S> <C> <C>
INCOME
Premiums . . . . . . . . . . . . . . . . . . . . . . $ 231.3 $223.6
Net investment income . . . . . . . . . . . . . . . . 39.6 32.5
Other, net . . . . . . . . . . . . . . . . . . . . . 132.4 145.3
------- ------
403.3 401.4
BENEFITS AND EXPENSES
Payments to policyholders and beneficiaries . . . . . 89.2 80.3
Additions to reserves to provide for future payments
to policyholders and
beneficiaries . . . . . . . . . . . . . . . . . . . 216.3 238.2
Expenses of providing service to policyholders and
obtaining new insurance . . . . . . . . . . . . . . 73.5 75.7
State and miscellaneous taxes . . . . . . . . . . . . 7.6 2.8
------- ------
386.6 397.0
------- ------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME TAXES
AND NET REALIZED CAPITAL GAINS (LOSSES) . . . . . 16.7 4.4
Federal income taxes . . . . . . . . . . . . . . . . . 4.7 1.0
------- ------
GAIN FROM OPERATIONS BEFORE NET REALIZED CAPITAL
GAINS (LOSSES) . . . . . . . . . . . . . . . . . 12.0 3.4
Net realized capital gains (losses) . . . . . . . . . . 0.4 (1.5)
------- ------
NET INCOME . . . . . . . . . . . . . . . . . . . . 12.4 1.9
Unassigned deficit at beginning of period . . . . . . . (177.9) (49.2)
Net unrealized capital gains (losses) and other
adjustments. . . . . . . . . . . . . . . . . . . . . . 1.1 0.3
Other reserves and adjustments . . . . . . . . . . . . (0.1) (4.2)
------- ------
UNASSIGNED DEFICIT AT END OF PERIOD . . . . . . . . . . $(164.5) $(51.2)
======= ======
</TABLE>
See condensed notes to the financial statements (unaudited).
5
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Three months ended
March 31
-------------------
2000 1999
--------- -----------
(In millions)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Insurance premiums . . . . . . . . . . . . . . . . . $ 241.4 $ 225.3
Net investment income . . . . . . . . . . . . . . . 37.2 29.9
Benefits to policyholders and beneficiaries . . . . (79.6) (70.8)
Dividends paid to policyholders . . . . . . . . . . (6.4) (6.1)
Insurance expenses and taxes . . . . . . . . . . . . (91.9) (107.8)
Net transfers to separate accounts . . . . . . . . . (141.4) (182.0)
Other, net . . . . . . . . . . . . . . . . . . . . . 134.4 175.7
------- -------
NET CASH PROVIDED FROM OPERATIONS . . . . . . . . 93.7 64.2
------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Bond purchases . . . . . . . . . . . . . . . . . . . (157.5) (71.3)
Bond sales . . . . . . . . . . . . . . . . . . . . . 73.5 8.7
Bond maturities and scheduled redemptions . . . . . 18.9 18.8
Bond prepayments . . . . . . . . . . . . . . . . . . 2.6 3.2
Stock purchases . . . . . . . . . . . . . . . . . . (0.4) (0.2)
Proceeds from stock sales . . . . . . . . . . . . . 1.2 1.5
Real estate purchases . . . . . . . . . . . . . . . (0.1) (0.9)
Real estate sales . . . . . . . . . . . . . . . . . 0.0 10.4
Other invested assets purchases . . . . . . . . . . (0.1) 0.0
Proceeds from the sale of other invested assets . . 0.0 0.0
Mortgage loans issued . . . . . . . . . . . . . . . (4.3) (23.4)
Mortgage loan repayments . . . . . . . . . . . . . . 8.4 5.2
Other, net . . . . . . . . . . . . . . . . . . . . . 20.1 (2.8)
------- -------
NET CASH USED IN INVESTING ACTIVITIES . . . . . . (37.7) (50.8)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term note payable . (0.0) (32.3)
------- -------
NET CASH PROVIDED FROM FINANCING ACTIVITIES . . . (0.0) (32.3)
------- -------
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH
INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 56.0 (18.9)
Cash and temporary cash investments at beginning of
year. . . . . . . . . . . . . . . . . . . . . . . . . 250.1 19.9
------- -------
CASH AND TEMPORARY CASH INVESTMENTS AT THE END OF
PERIOD. . . . . . . . . . . . . . . . . . . . . . . . $ 306.1 $ 1.0
======= =======
</TABLE>
See condensed notes to the financial statements (unaudited).
6
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Common Paid-in Unassigned
Stock Capital Deficit Total
------ ------- ---------- ---------
(In millions)
<S> <C> <C> <C> <C>
For the three months ended March 31,
1999 (unaudited)
Balance at January 1, 1999 . . . . . . $2.5 $377.5 $ (49.2) $330.8
1999 Transactions:
Capital contribution . . . . . . . .
Net gain . . . . . . . . . . . . . . 1.9 1.9
Net unrealized capital gains and
other adjustments . . . . . . . . 0.3 0.3
Other reserves and adjustments . . . (4.2) (4.2)
---- ------ ------- ------
Balance at March 31, 1999 . . . . . . $2.5 $377.5 $ (51.2) $328.8
==== ====== ======= ======
For the three months ended March 31,
2000 (unaudited)
Balance at January 1, 2000 . . . . . . $2.5 $572.4 $(177.9) $397.0
2000 Transactions:
Capital contribution . . . . . . . .
Net gain . . . . . . . . . . . . . . 12.4 12.4
Net unrealized capital gains and
other adjustments . . . . . . . . 1.1 1.1
Provision for Litigation Reserve . .
Other reserves and adjustments . . . (0.1) (0.1)
---- ------ ------- ------
Balance at March 31, 2000 . . . . . . $2.5 $572.4 $(164.5) $410.4
==== ====== ======= ======
</TABLE>
See condensed notes to the financial statements (unaudited).
7
<PAGE>
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared on
the basis of 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, which practices differ from
generally accepted accounting principles (GAAP). Pursuant to Financial
Accounting Standard Board Interpretation 40, "Applicability of General Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises" (FIN 40),
as amended which was effective for 1996 financial statements, financial
statements based on statutory accounting practices can no longer be described as
prepared in conformity with GAAP.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.
8
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
FOR
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
FIRST QUARTER 2000
9
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MARCH 31, 2000
<TABLE>
<CAPTION>
INTERNATIONAL
LARGE CAP SOVEREIGN EQUITY SMALL CAP
GROWTH BOND INDEX GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . $ -- $ -- $ -- $ --
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. . . . . . . . 138,526,150 34,068,646 35,829,658 39,276,504
Investments in shares
of portfolios of M
Fund Inc., at value -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . 44,917 202,525 59,623 --
M Fund Inc. . . . . -- -- -- --
------------ ----------- ----------- -----------
Total assets . . . . 138,571,067 34,271,171 35,889,281 39,276,504
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . -- -- -- --
M Fund Inc. . . . . -- -- -- --
Asset charges payable 1,390 284 378 437
------------ ----------- ----------- -----------
Total liabilities . . 1,390 284 378 437
------------ ----------- ----------- -----------
Net assets . . . . . $138,569,677 $34,270,887 $35,888,903 $39,276,067
============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL MID CAP LARGE CAP MONEY
BALANCED GROWTH VALUE MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . . $ -- -- -- --
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. . . . . . . . 4,253,445 76,843,249 30,278,966 69,664,696
Investments in shares
of portfolios of M
Fund Inc., at value . -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . . 10,559 -- 59,377 32,506
M Fund Inc. . . . . . -- -- -- --
---------- ----------- ----------- -----------
Total assets . . . . . 4,264,004 76,843,249 30,338,343 69,697,202
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company. . . . . . . -- -- -- --
M Fund Inc. . . . . . -- -- -- --
Asset charges payable . 43 798 295 2,517
---------- ----------- ----------- -----------
Total liabilities . . . 43 798 295 2,517
---------- ----------- ----------- -----------
Net assets . . . . . . $4,263,961 $76,842,451 $30,338,048 $69,694,685
========== =========== =========== ===========
</TABLE>
See accompany notes.
10
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
MARCH 31, 2000
<TABLE>
<CAPTION>
MID CAP SMALL/MID CAP REAL ESTATE GROWTH &
VALUE GROWTH EQUITY INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . $ -- $ -- $ -- $ --
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. . . . . . . . 21,554,510 9,607,284 10,188,124 212,753,886
Investments in shares
of portfolios of M
Fund Inc., at value -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . -- -- 94,477 199,984
M Fund Inc. . . . . -- -- -- --
---------------- ------------- ----------- ------------
Total assets . . . . 21,554,510 9,607,284 10,282,601 212,953,870
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . --
M Fund Inc. . . . . -- -- -- --
Asset charges payable 240 109 98 2,577
---------------- ------------- ----------- ------------
Total liabilities . . 240 109 98 2,577
---------------- ------------- ----------- ------------
Net assets . . . . . $ 21,554,270 $ 9,607,175 $10,282,503 $212,951,293
================ ============= =========== ============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM SMALL CAP INTERNATIONAL
MANAGED BOND VALUE OPPORTUNITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ----------- ----------- ---------------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . $ -- $ -- $ -- $ --
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. . . . . . . . 128,065,080 14,256,150 21,734,702 37,871,091
Investments in shares
of portfolios of M
Fund Inc., at value -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . 315,897 74,555 26,141 --
M Fund Inc. . . . . -- -- -- --
------------ ----------- ----------- ------------------
Total assets . . . . 128,380,977 14,330,705 21,760,843 37,871,091
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . .
M Fund Inc. . . . . -- -- -- --
Asset charges payable 1,930 114 249 419
------------ ----------- ----------- ------------------
Total liabilities . . 1,930 114 249 419
------------ ----------- ----------- ------------------
Net assets . . . . . $128,379,047 $14,330,591 $21,760,594 $ 37,870,672
============ =========== =========== ==================
</TABLE>
See accompanying notes.
11
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
MARCH 31, 2000
<TABLE>
<CAPTION>
TURNER BRANDES
EQUITY GLOBAL CORE INTERNATIONAL
INDEX BOND GROWTH EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ---------- ----------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . . $ -- $ -- $ -- $ --
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value . . . . . . . . 166,904,694 6,665,704 26,408,892 20,618,593
Investments in shares
of portfolios of M
Fund Inc., at value . -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . . 148,551 24,942 -- --
M Fund Inc. . . . . . -- -- -- --
------------ ---------- ----------- -----------
Total assets . . . . . 167,053,245 6,690,646 26,408,892 20,618,593
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company. . . . . . . -- -- -- --
M Fund Inc. . . . . . -- -- -- --
Asset charges payable 1,756 84 252 177
------------ ---------- ----------- -----------
Total liabilities . . 1,756 84 252 177
------------ ---------- ----------- -----------
Net assets . . . . . . $167,051,489 $6,690,562 $26,408,640 $20,618,416
============ ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FRONTIER EMERGING
CAPITAL ENHANCED MARKETS GLOBAL
APPRECIATION U.S. EQUITY EQUITY EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . . . $ -- $ -- $ -- $ --
Investments in shares of
portfolios of John
Hancock Variable Series
Trust I, at value . . . 25,267,062 7,638,154 6,551,090 1,455,275
Investments in shares of
portfolios of M Fund
Inc., at value . . . . . -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . . . -- -- -- --
M Fund Inc. . . . . . . -- -- -- --
----------- ---------- ---------- ----------
Total assets . . . . . 25,267,062 7,638,154 6,551,090 1,455,275
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance Company -- -- -- --
M Fund Inc. . . . . . . -- -- -- --
Asset charges payable . . 225 71 85 21
----------- ---------- ---------- ----------
Total liabilities . . . . 225 71 85 21
----------- ---------- ---------- ----------
Net assets . . . . . . . $25,266,837 $7,638,083 $6,551,005 $1,455,254
=========== ========== ========== ==========
</TABLE>
See accompanying notes.
12
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
MARCH 31, 2000
<TABLE>
<CAPTION>
HIGH
BOND SMALL/MID YIELD
INDEX CAP CORE BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ------------
<S> <C> <C> <C>
ASSETS
Cash . . . . . . . . . . . . . . . . . . $ -- $ -- $ --
Investments in shares of portfolios of
John Hancock Variable Series Trust I, at
value . . . . . . . . . . . . . . . . . 5,742,766 941,401 3,455,998
Investments in shares of portfolios of M
Fund Inc., at value . . . . . . . . . . -- -- --
Receivable from:
John Hancock Variable Series Trust I . 31,284 -- 23,811
M Fund Inc. . . . . . . . . . . . . . . -- -- --
---------- -------- ----------
Total assets . . . . . . . . . . . . . 5,774,050 941,401 3,479,809
LIABILITIES
Payable to:
John Hancock Variable Life Insurance
Company. . . . . . . . . . . . . . . . -- -- --
M Fund Inc. . . . . . . . . . . . . . . -- -- --
Asset charges payable . . . . . . . . . 73 11 40
---------- -------- ----------
Total liabilities . . . . . . . . . . . 73 11 40
---------- -------- ----------
Net assets . . . . . . . . . . . . . . . $5,773,977 $941,390 $3,479,769
========== ======== ==========
</TABLE>
See accompanying notes.
13
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT SOVEREIGN BOND SUBACCOUNT
-------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
----------- ------------ ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 100,009 $17,558,034 $ 6,312,073 $ 450,283 $ 2,851,613 $2,190,901
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ----------
Total investment income . . . . . . . . . . . . 100,009 17,558,034 6,312,073 450,283 2,851,613 2,190,901
Expenses:
Mortality and expense risks . . . . . . . . . 109,487 324,595 168,652 27,938 126,407 93,556
---------- ----------- ----------- ----------- ----------- ----------
Net investment income (loss) . . . . . . . . . (9,478) 17,233,439 6,143,421 422,345 2,725,206 2,097,345
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . 1,487,863 5,003,007 1,750,881 (796,838) (1,391,910) 185,230
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . 8,093,756 (2,053,672) 8,041,022 921,253 (1,837,190) (378,058)
---------- ----------- ----------- ----------- ----------- ----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . 9,581,619 2,949,335 9,791,903 124,415 (3,229,100) (192,828)
---------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . $9,572,141 $20,182,774 $15,935,324 $ 546,760 $ (503,894) $1,904,517
========== =========== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
-------------------------------------- ------------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------ ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . $ 83,362 $ 936,475 $1,930,710 $ -- $ 3,697,955 $ --
M Fund Inc. . . . . . . . . . . . . . . . -- -- -- -- -- --
--------- ---------- ---------- ---------- ----------- ----------
Total investment income . . . . . . . . . . 83,362 936,475 1,930,710 -- 3,697,955 --
Expenses:
Mortality and expense risks . . . . . . . 32,246 81,058 45,651 39,242 60,221 22,593
--------- ---------- ---------- ---------- ----------- ----------
Net investment income . . . . . . . . . . . 51,116 855,417 1,885,059 (39,242) 3,637,734 (22,593)
Net realized and unrealized gain (loss) on
investments:
Net realized gains . . . . . . . . . . . . 703,499 753,750 152,030 2,556,750 2,548,944 58,729
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . (708,302) 4,871,167 78,480 2,295,972 3,920,455 1,070,805
--------- ---------- ---------- ---------- ----------- ----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . (4,803) 5,624,917 230,510 4,852,722 6,469,399 1,129,534
--------- ---------- ---------- ---------- ----------- ----------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . $ 46,313 $6,480,334 $2,115,569 $4,813,480 $10,107,133 $1,106,941
========= ========== ========== ========== =========== ==========
</TABLE>
See accompanying notes.
14
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
----------------------------------- ------------------------------------
2000 1999 1998 2000 1999 1998
----------- ---------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 27,773 $ 372,766 $ 185,760 $ -- $ 6,491,783 $1,114,374
M Fund Inc. . . . . -- -- -- -- -- --
---------- --------- ---------- ---------- ----------- ----------
Total investment
income . . . . . . . 27,773 372,766 185,760 -- 6,491,783 1,114,374
Expenses:
Mortality and expense
risks . . . . . . . 3,846 13,792 9,687 76,226 102,248 26,123
---------- --------- ---------- ---------- ----------- ----------
Net investment income
(loss) . . . . . . . 23,927 358,974 176,073 (76,226) 6,389,535 1,088,251
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (39,660) 15,640 24,206 1,185,070 5,188,018 599,619
Net unrealized
appreciation
(depreciation)
during the period . (121,758) (173,912) 147,461 (706,164) 15,078,681 1,184,263
---------- --------- ---------- ---------- ----------- ----------
Net realized and
unrealized gain
(loss)
on investments . . . (161,418) (158,272) 171,667 478,906 20,266,699 1,783,882
---------- --------- ---------- ---------- ----------- ----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ (137,491) $ 200,702 $ 347,740 $ 402,680 $26,656,234 $2,872,133
========== ========= ========== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
--------------------------------------- ---------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------ ----------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 168,440 $ 1,809,072 $ 797,874 $ 943,328 $3,279,928 $1,854,829
M Fund Inc. . . . . -- -- -- -- -- --
---------- ----------- ----------- --------- ---------- ----------
Total investment
income . . . . . . . 168,440 1,809,072 797,874 943,328 3,279,928 1,854,829
Expenses:
Mortality and expense
risks . . . . . . . 23,961 88,877 41,415 74,486 291,398 167,813
---------- ----------- ----------- --------- ---------- ----------
Net investment income 144,479 1,720,195 756,459 868,842 2,988,530 1,687,016
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (117,101) 705,454 330,827 -- -- --
Net unrealized
appreciation
(depreciation)
during the period . (612,964) (2,181,112) 145,355 -- -- --
---------- ----------- ----------- --------- ---------- ----------
Net realized and
unrealized gain
(loss)
on investments . . . (730,065) (1,475,658) 476,182 -- -- --
---------- ----------- ----------- --------- ---------- ----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ (585,586) $ 244,537 $ 1,232,641 $ 868,842 $2,988,530 $1,687,016
========== =========== =========== ========= ========== ==========
</TABLE>
See accompanying notes.
15
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
MID CAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . $ -- $ 110,190 $ 120,469 $ -- $ 1,421,656 $ 142,469
M Fund Inc. . . . . . . . . . . . . . . . -- -- -- -- -- --
---------- ---------- ----------- --------- ------------ -----------
Total investment income . . . . . . . . . . -- 110,190 120,469 -- 1,421,656 142,469
Expenses:
Mortality and expense risks . . . . . . . 19,514 68,611 45,020 9,470 32,995 34,432
---------- ---------- ----------- --------- ------------ -----------
Net investment income . . . . . . . . . . . (19,514) 41,579 75,449 (9,470) 1,388,661 108,037
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . 402,063 (860,332) (538,516) (289,736) 13,375 232,246
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . 1,245,582 1,757,919 (830,390) 892,135 (1,001,208) 236,333
---------- ---------- ----------- --------- ------------ -----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . 1,647,645 897,587 (1,368,906) 602,399 (987,833) 468,579
---------- ---------- ----------- --------- ------------ -----------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . $1,628,131 $ 939,166 $(1,293,457) $ 592,929 $ 400,828 $ 576,616
========== ========== =========== ========= ============ ===========
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
----------- ---------- ------------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 205,861 $ 544,845 $ 305,783 $ 512,693 $23,565,679 $ 9,266,175
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
---------- --------- ------------ ---------- ----------- ------------
Total investment income . . . . . . . . . . . . 205,861 544,845 305,783 512,693 23,565,679 9,266,175
Expenses:
Mortality and expense risks . . . . . . . . . 8,329 29,468 22,716 222,841 715,377 290,361
---------- --------- ------------ ---------- ----------- ------------
Net investment income . . . . . . . . . . . . . 197,532 515,377 283,067 289,852 22,850,302 8,975,814
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . (213,163) (735,504) (454,979) 563,798 6,207,253 2,061,212
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . 349,789 80,925 (698,676) 2,749,417 (5,814,839) 7,759,307
---------- --------- ------------ ---------- ----------- ------------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . 136,626 (654,579) (1,153,655) 3,313,215 392,414 9,820,519
---------- --------- ------------ ---------- ----------- ------------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . $ 334,158 $(139,202) $ (870,588) $3,603,067 $23,242,716 $ 18,796,333
========== ========= ============ ========== =========== ============
</TABLE>
See accompanying notes.
16
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
------------------------------------- ---------------------------------------
2000 1999 1998 2000 1999 1998
----------- ------------ ---------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . $ 979,108 $11,251,980 $3,606,186 $ 213,418 $ 957,614 $ 977,164
M Fund Inc. . . . . . . . . . . . . . . . -- -- -- -- -- --
---------- ----------- ---------- -------------- ---------- ---------
Total investment income . . . . . . . . . . 979,108 11,251,980 3,606,186 213,418 957,614 977,164
Expenses:
Mortality and expense risks . . . . . . . 168,685 495,544 121,905 9,907 50,128 50,947
---------- ----------- ---------- -------------- ---------- ---------
Net investment income . . . . . . . . . . . 810,423 10,756,436 3,484,281 203,511 907,486 926,217
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . (51,990) 2,233,258 278,186 (112,846) (441,667) 24,740
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . 1,363,763 (6,419,069) 1,791,231 68,551 (85,754) (136,999)
---------- ----------- ---------- -------------- ---------- ---------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . 1,311,773 (4,185,811) 2,069,417 (44,295) (527,421) (112,259)
---------- ----------- ---------- -------------- ---------- ---------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . $2,122,196 $ 6,570,625 $5,553,698 $ 159,216 $ 380,065 $ 813,958
========== =========== ========== ============== ========== =========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL OPPORTUNITIES
SMALL CAP VALUE SUBACCOUNT SUBACCOUNT
---------------------------------- ------------------------------------
2000 1999 1998 2000 1999 1998
--------- ----------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 93,270 $ 409,324 $ 47,350 $ -- $2,096,195 $ 103,399
M Fund Inc. . . . . -- -- -- -- -- --
-------- ---------- ---------- ----------- ---------- ----------
Total investment
income . . . . . . . 93,270 409,324 47,350 -- 2,096,195 103,399
Expenses:
Mortality and expense
risks . . . . . . . 20,424 64,613 33,335 34,751 90,191 50,003
-------- ---------- ---------- ----------- ---------- ----------
Net investment income
(loss) . . . . . . . 72,486 344,711 14,015 (34,751) 2,006,004 53,396
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 54,419 (979,002) (9,919) 1,363,359 1,907,809 191,495
Net unrealized
appreciation
(depreciation)
during the period . (47,196) 325,684 (523,693) (1,275,014) 3,818,953 1,108,416
-------- ---------- ---------- ----------- ---------- ----------
Net realized and
unrealized gain
(loss) on investments 7,223 (653,318) (533,612) 88,345 5,726,762 1,299,911
-------- ---------- ---------- ----------- ---------- ----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ 79,709 $ (308,607) $ (519,597) $ 53,594 $7,732,766 $1,353,307
======== ========== ========== =========== ========== ==========
</TABLE>
See accompanying notes.
17
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT GLOBAL BOND SUBACCOUNT
----------------------------------- ---------------------------------
2000 1999 1998 2000 1999 1998
---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 459,796 $ 5,839,023 $1,337,750 $ 26,843 $ 460,088 $303,545
M Fund Inc. . . . . -- -- -- -- -- --
---------- ----------- ---------- --------- ---------- --------
Total investment
income . . . . . . . 459,796 5,839,023 1,337,750 26,843 460,088 303,545
Expenses:
Mortality and expense
risks . . . . . . . 144,695 335,573 126,021 8,730 35,321 19,894
---------- ----------- ---------- --------- ---------- --------
Net investment income 315,101 5,503,450 1,211,729 18,113 424,767 283,651
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 1,407,391 7,681,081 691,270 (240,729) (204,675) 81,659
Net unrealized
appreciation
(depreciation)
during the period . 2,436,887 4,678,509 6,098,919 363,167 (433,526) 43,608
---------- ----------- ---------- --------- ---------- --------
Net realized and
unrealized gain
(loss)
on investments . . . 3,844,278 12,359,590 6,790,189 122,438 (638,201) 125,267
---------- ----------- ---------- --------- ---------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $4,159,379 $17,863,040 $8,001,918 $ 140,551 $ (213,434) $408,918
========== =========== ========== ========= ========== ========
</TABLE>
<TABLE>
<CAPTION>
BRANDES INTERNATIONAL
TURNER CORE GROWTH SUBACCOUNT EQUITY SUBACCOUNT
--------------------------------- --------------------------------
2000 1999 1998 2000 1999 1998
----------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ -- $1,349,358 $ -- $ -- $ 549,978 $ --
M Fund Inc. . . . . -- -- 84,940 -- -- 358,080
---------- ---------- -------- --------- ---------- --------
Total investment
income . . . . . . . -- 1,349,358 84,940 -- 549,978 358,080
Expenses:
Mortality and expense
risks . . . . . . . 22,143 33,920 7,737 14,102 34,297 14,434
---------- ---------- -------- --------- ---------- --------
Net investment income
(loss) . . . . . . . (22,143) 1,315,438 77,203 (14,102) 515,681 343,646
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains . 868,800 1,038,462 156,278 52,962 507,727 89,337
Net unrealized
appreciation
(depreciation)
during the period . 1,770,438 1,626,646 562,620 (506,321) 3,486,097 91,915
---------- ---------- -------- --------- ---------- --------
Net realized and
unrealized gain
(loss)
on investments . . . 2,639,238 2,665,108 718,898 (453,359) 3,993,824 181,252
---------- ---------- -------- --------- ---------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $2,617,095 $3,980,546 $796,101 (467,461) $4,509,505 $524,898
========== ========== ======== ========= ========== ========
</TABLE>
See accompanying notes.
18
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
FRONTIER CAPITAL APPRECIATION ENHANCED U.S. EQUITY
SUBACCOUNT SUBACCOUNT
---------------------------------- ----------------------------
2000 1999 1998 2000 1999 1998
----------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ -- $ 487,465 $ -- $ -- $532,067 $ --
M Fund Inc. . . . . -- -- 34,738 -- -- 72,302
---------- ---------- --------- -------- -------- --------
Total investment
income . . . . . . . -- 487,465 34,738 -- 532,067 72,302
Expenses:
Mortality and expense
risks . . . . . . . 17,350 37,471 24,841 5,830 13,930 4,069
---------- ---------- --------- -------- -------- --------
Net investment income
(loss) . . . . . . . (17,350) 449,994 9,897 5,830 518,137 68,233
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 466,929 624,068 (445,752) 55,792 264,436 87,723
Net unrealized
appreciation during
the period . . . . 2,840,905 3,431,408 432,064 31,920 151,562 89,677
---------- ---------- --------- -------- -------- --------
Net realized and
unrealized gain
(loss) on investments 3,307,834 4,055,476 (13,688) 87,712 415,998 177,400
---------- ---------- --------- -------- -------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $3,290,484 $4,505,470 $ (3,791) $ 81,882 $934,135 $245,633
========== ========== ========= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
EMERGING
MARKETS EQUITY GLOBAL EQUITY
SUBACCOUNT SUBACCOUNT
--------------------------------------- -----------------------------------
2000 1999 1998* 2000 1999 1998*
-------------- ----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ -- $ 137,724 $ 522 $ -- $ 6,063 $ 491
M Fund Inc. . . . . . . . . . . . . . . . . . . -- -- -- -- -- --
------------- ----------- ---------- ---------- ---------- ----------
Total investment income . . . . . . . . . . . . -- 137,724 522 -- 6,063 491
Expenses:
Mortality and expense risks . . . . . . . . . . 6,661 5,465 387 1,101 1,859 339
------------- ----------- ---------- ---------- ---------- ----------
Net investment income (loss) . . . . . . . . . . (6,661) 132,259 135 (1,101) 4,204 152
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . . 841,365 663,998 (45,975) 27,715 82,873 (21,835)
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . (423,198) 432,248 2,289 2,640 47,295 4,812
------------- ----------- ---------- ---------- ---------- ----------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . 418,167 1,096,246 (43,686) 30,355 130,168 (17,023)
------------- ----------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . . $ 411,506 $ 1,228,505 $ (43,551) $ 29,254 $ 134,372 $ (16,871)
============= =========== ========== ========== ========== ==========
</TABLE>
---------
* From May 1, 1998 (commencement of operations).
See accompanying notes.
19
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
SMALL/MID
BOND INDEX CAP CORE
SUBACCOUNT SUBACCOUNT
------------------------------- ------------------------------
2000 1999 1998* 2000 1999 1998*
--------- ---------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 98,655 $ 140,772 $ 23,842 $ 124 $ 54,784 $ --
M Fund Inc. . . . . -- -- -- -- -- --
-------- --------- -------- -------- -------- --------
Total investment
income . . . . . . . 98,655 140,772 23,842 124 54,784 --
Expenses:
Mortality and expense
risks . . . . . . . 6,322 10,636 937 1,222 2,073 535
-------- --------- -------- -------- -------- --------
Net investment income
(loss) . . . . . . . 92,333 130,136 22,905 (1,098) 52,711 (535)
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (5,117) (104,174) 1,002 106,765 65,733 (25,196)
Net unrealized
appreciation
(depreciation)
during
the period . . . . 48,121 (78,192) (10,217) (19,659) (10,735) 18,718
-------- --------- -------- -------- -------- --------
Net realized and
unrealized gain
(loss) on investments 43,004 (182,366) (9,215) 87,106 54,998 (6,478)
-------- --------- -------- -------- -------- --------
Net increase
(decrease) in net
assets resulting
from operations . . $135,337 $ (52,230) $ 13,690 $ 86,008 $107,709 $ (7,013)
======== ========= ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
BOND
SUBACCOUNT
--------------------------------
2000 1999 1998*
---------- ---------- ----------
<S> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . $ 85,793 $ 352,641 $ 88,721
M Fund Inc. . . . . . . . . . . . . . . . -- -- --
--------- --------- --------
Total investment income . . . . . . . . . 85,793 352,641 88,721
Expenses:
Mortality and expense risks . . . . . . . 3,851 12,206 1,962
--------- --------- --------
Net investment income . . . . . . . . . . 81,942 340,435 86,759
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . (16,585) 42,365 64,824
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . (189,115) (139,659) 149,416
--------- --------- --------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . (205,700) (97,294) 214,240
--------- --------- --------
Net increase (decrease) in net assets
resulting from operations . . . . . . . . $(123,758) $ 243,141 $300,999
========= ========= ========
</TABLE>
---------
* From May 1, 1998 (commencement of operations).
See accompanying notes.
20
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT SOVEREIGN BOND SUBACCOUNT
------------------------------------------ ------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . $ (9,478) $ 17,233,439 $ 6,143,421 $ 422,895 $ 2,725,206 $ 2,097,345
Net realized gains (losses) . . . . . 1,487,863 5,003,007 1,750,881 (796,838) (1,391,910) 185,230
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . . . . 8,093,756 (2,053,672) 8,041,022 921,253 (1,837,190) (378,058)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . 9,572,141 20,182,774 15,935,324 547,310 (503,894) 1,904,517
From policyholder transactions:
Net premiums from
policyholders . . . . . . . . . . . 26,306,668 75,667,981 29,859,648 11,781,689 74,595,720 38,567,292
Net benefits to policyholders . . . . (12,830,683) (45,347,424) (13,281,028) (16,379,586) (68,312,320) (27,391,317)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions. . . . . . . . . . . . . 13,475,985 30,320,557 16,578,620 (4,597,897) 6,283,400 11,175,975
Net increase (decrease) in net
assets . . . . . . . . . . . . . . . 23,048,126 50,503,331 32,513,944 (4,050,587) 5,779,506 13,080,492
Net assets at beginning of period . . 115,521,551 65,018,220 32,504,276 38,321,474 32,541,967 19,461,475
------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of period . . . . . $138,569,677 $115,521,551 $ 65,018,220 $ 34,270,887 $ 38,321,473 $ 32,541,967
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
-------------------------------------------- --------------------------------------------
2000 1999 1998 2000 1999 1998
------------- --------------- ------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income (loss) . . $ 51,116 $ 855,417 $ 1,885,059 $ (39,242) $ 3,637,734 $ (22,593)
Net realized gains . . . . . . . 703,499 753,750 152,030 2,556,750 2,548,944 58,729
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . . (708,302) 4,871,167 78,480 2,295,972 3,920,455 1,070,805
------------ -------------- ------------ ------------ ------------ --------------
Net increase in net assets
resulting from operations . . . . 46,313 6,480,334 2,115,569 4,813,480 10,107,133 1,106,941
From policyholder transactions:
Net premiums from
policyholders . . . . . . . . . 13,045,026 53,332,374 10,034,119 30,086,736 52,637,861 12,088,047
Net benefits to policyholders . . (10,401,110) (39,209,664) (8,344,107) (26,646,977) (40,800,272) (6,621,834)
------------ -------------- ------------ ------------ ------------ --------------
Net increase in net assets
resulting from policyholder
transactions. . . . . . . . . . . 2,643,916 14,122,710 1,690,012 3,493,759 11,837,589 5,466,213
------------ -------------- ------------ ------------ ------------ --------------
Net increase in net assets . . . . 2,690,229 20,603,044 3,805,581 8,253,239 21,944,722 6,573,154
Net assets at beginning of period 33,198,674 12,595,630 8,790,049 31,022,828 9,078,106 2,504,952
------------ -------------- ------------ ------------ ------------ --------------
Net assets at end of period . . . $ 35,888,903 $ 33,198,674 $ 12,595,630 $ 39,276,067 $ 31,022,828 $ 9,078,106
============ ============== ============ ============ ============ ==============
</TABLE>
See accompanying notes.
21
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED SUBACCOUNT
----------------------------------------
2000 1999 1998
------------ ------------- ------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . $ 23,927 $ 358,974 $ 176,073
Net realized gains (losses) . . . . . (39,660) 15,640 24,206
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . (121,758) (173,912) 147,461
----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations . . . . . . (137,491) 200,702 347,740
From policyholder transactions:
Net premiums from policyholders . . . 845,554 6,295,052 3,163,316
Net benefits to policyholders . . . . (1,035,960) (5,007,225) (1,882,974)
----------- ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder
transactions. . . . . . . . . . . . . (190,406) 1,287,827 1,280,342
----------- ------------ -----------
Net increase (decrease) in net assets (327,897) 1,488,529 1,628,082
Net assets at beginning of period . . 4,591,858 3,103,327 1,475,245
----------- ------------ -----------
Net assets at end of period . . . . . $ 4,263,961 $ 4,591,856 $ 3,103,327
=========== ============ ===========
<CAPTION>
MID CAP GROWTH SUBACCOUNT
---------------------------------------------
2000 1999 1998
-------------- -------------- ----------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . $ (76,226) $ 6,389,535 $ 1,088,251
Net realized gains (losses) . . . . . 1,185,070 5,188,018 599,619
Net unrealized appreciation
(depreciation) during (706,164)
the period . . . . . . . . . . . . . ------------- 15,078,681 1,184,263
------------- -------------
Net increase (decrease) in net assets 402,680 26,656,234 2,872,133
resulting from operations . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . 26,745,210 65,183,285 11,323,614
Net benefits to policyholders . . . . (13,805,055) (41,018,347) (5,132,055)
------------- ------------- -------------
Net increase (decrease) in net assets
resulting from policyholder 12,940,155
transactions. . . . . . . . . . . . . ------------- 24,164,938 6,191,559
------------- -------------
Net increase (decrease) in net assets 13,342,835 50,821,172 9,063,692
Net assets at beginning of period . . 63,499,616 12,678,444 3,614,752
------------- ------------- -------------
Net assets at end of period . . . . . $ 76,842,451 $ 63,499,616 $ 12,678,444
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP VALUE SUBACCOUNT
----------------------------------------
2000 1999 1998
------------ ------------- ------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . . $ 144,479 $ 1,720,195 $ 756,459
Net realized gains (losses) . . . . . (117,101) 705,454 330,827
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . (612,964) (2,181,112) 145,355
----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations . . . . . . (585,586) 244,537 1,232,641
From policyholder transactions:
Net premiums from policyholders . . . 9,161,994 37,432,039 15,144,316
Net benefits to policyholders . . . . (5,345,277) (27,199,179) (4,937,583)
----------- ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder
transactions. . . . . . . . . . . . . 3,816,717 10,232,860 10,206,733
----------- ------------ -----------
Net increase (decrease) in net assets 3,231,131 10,477,397 11,439,374
Net assets at beginning of period . . 27,106,917 16,629,520 5,190,146
----------- ------------ -----------
Net assets at end of period . . . . . $30,338,048 $ 27,106,917 $16,629,520
=========== ============ ===========
<CAPTION>
MONEY MARKET SUBACCOUNT
---------------------------------------------
2000 1999 1998
-------------- -------------- ----------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . . $ 868,842 $ 2,988,530 $ 1,687,016
Net realized gains (losses) . . . . . -- -- --
Net unrealized appreciation
(depreciation) during --
the period . . . . . . . . . . . . . ------------- -- --
------------- -------------
Net increase (decrease) in net assets 868,842 2,988,530 1,687,016
resulting from operations . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . 217,361,930 890,376,545 340,377,358
Net benefits to policyholders . . . . (209,542,856) (918,869,964) (269,723,839)
------------- ------------- -------------
Net increase (decrease) in net assets
resulting from policyholder 7,819,074
transactions. . . . . . . . . . . . . ------------- (28,493,419) 70,653,519
------------- -------------
Net increase (decrease) in net assets 8,687,916 (25,504,889) 72,340,535
Net assets at beginning of period . . 61,006,769 86,511,658 14,171,123
------------- ------------- -------------
Net assets at end of period . . . . . $ 69,694,685 $ 61,006,769 $ 86,511,658
============= ============= =============
</TABLE>
See accompanying notes.
22
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
MID CAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
---------------------------------------- -------------------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------- ------------ ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . $ (19,514) $ 41,579 $ 75,449 $ (9,470) $ 1,388,661 $ 108,037
Net realized gains (losses) . . . . . 402,063 (860,332) (538,516) (289,736) 13,375 232,246
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . 1,245,582 1,757,919 (830,390) 892,135 (1,001,208) 236,333
----------- ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . 1,628,131 939,166 (1,293,457) 592,929 400,828 576,616
From policyholder transactions:
Net premiums from policyholders . . . 6,813,614 32,024,751 18,837,112 1,722,182 11,809,133 4,563,154
Net benefits to policyholders . . . . (6,026,008) (29,579,995) (7,855,945) (2,633,767) (9,775,543) (6,481,542)
----------- ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions. . . . . . . . . . . . . 787,606 2,444,756 10,981,167 (911,585) 2,033,590 (1,918,388)
----------- ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets 2,415,737 3,383,922 9,687,710 (318,656) 2,434,418 (1,341,772)
Net assets at beginning of period . . 19,138,533 15,754,611 6,066,901 9,925,831 7,491,413 8,833,185
----------- ------------ ----------- ------------ ------------- ------------
Net assets at end of period . . . . . $21,554,270 $ 19,138,533 $15,754,611 $ 9,607,175 $ 9,925,831 $ 7,491,413
=========== ============ =========== ============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
---------------------------------------- -------------------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------- ------------ ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . $ 197,532 $ 515,377 $ 283,067 $ 289,852 $ 22,850,302 $ 8,975,814
Net realized gains (losses) . . . . . (213,163) (735,504) (454,979) 563,798 6,207,253 2,061,212
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . 349,789 80,925 (698,676) 2,749,417 (5,814,839) 7,759,307
----------- ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . 334,158 (139,202) (870,588) 3,603,067 23,242,716 18,796,333
From policyholder transactions:
Net premiums from policyholders . . . 5,164,186 22,699,314 6,964,604 20,391,023 196,639,863 60,975,616
Net benefits to policyholders . . . . (4,454,487) (18,093,640) (5,513,221) (20,568,695) (106,763,955) (31,360,866)
----------- ------------ ----------- ------------ ------------- ------------
Net increase in net assets resulting
from policyholder transactions . . . . 709,699 4,605,674 1,451,383 (177,672) 89,875,908 29,614,750
----------- ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets . 1,043,857 4,466,472 580,795 3,425,395 113,118,624 48,411,083
Net assets at beginning of period . . . 9,238,646 4,772,174 4,191,379 209,525,898 96,407,275 47,996,192
----------- ------------ ----------- ------------ ------------- ------------
Net assets at end of period . . . . . . $10,282,503 $ 9,238,646 $ 4,772,174 $212,951,293 $ 209,525,899 $ 96,407,275
=========== ============ =========== ============ ============= ============
</TABLE>
See accompanying notes.
23
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
----------------------------------------- ------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . $ 810,423 $ 10,756,436 $ 3,484,281 $ 203,511 $ 907,486 $ 926,217
Net realized gains (losses) . . . . . (51,990) 2,233,258 278,186 (112,846) (441,667) 24,740
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . 1,363,763 (6,419,069) 1,791,231 68,551 (85,754) (136,999)
------------ ------------ ----------- ------------ ------------ ------------
Net increase in net assets resulting
from operations . . . . . . . . . . . 2,122,196 6,570,625 5,553,698 159,216 380,065 813,958
From policyholder transactions:
Net premiums from policyholders . . . 5,409,063 113,292,872 21,019,273 7,974,976 41,259,110 27,490,588
Net benefits to policyholders . . . . (4,863,022) (34,219,380) (8,281,600) (5,532,589) (49,156,693) (21,534,195)
------------ ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions . . . . . . . . . . . . . 546,041 79,073,492 12,737,673 2,442,387 (7,897,583) 5,956,393
------------ ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in net assets . 2,668,237 85,644,117 18,291,371 2,601,603 (7,517,518) 6,770,351
Net assets at beginning of period . . . 125,710,810 40,066,692 21,775,321 11,728,988 19,246,506 12,476,155
------------ ------------ ----------- ------------ ------------ ------------
Net assets at end of period . . . . . . $128,379,047 $125,710,809 $40,066,692 $ 14,330,591 $ 11,728,988 $ 19,246,506
============ ============ =========== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP VALUE SUBACCOUNT INTERNATIONAL OPERATIONS SUBACCOUNT
---------------------------------------------- ---------------------------------------------
2000 1999 1998 2000 1999 1998
------------- --------------- --------------- ------------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets from operations:
Net investment income (loss) . $ 72,846 $ 344,711 $ 14,015 $ (34,751) $ 2,006,004 $ 53,396
Net realized gains (losses) . 54,419 (979,002) (9,919) 1,363,359 1,907,809 191,495
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . (47,196) 325,684 (523,693) (1,275,014) 3,818,953 1,108,416
------------ -------------- -------------- ------------ ------------ ---------------
Net increase (decrease) in net
assets resulting from
operations . . . . . . . . . . 80,069 (308,607) (519,597) 53,594 7,732,766 1,353,307
From policyholder transactions:
Net premiums from policyholders 6,820,059 39,172,672 11,420,833 19,896,505 43,216,216 23,844,756
Net benefits to policyholders (3,922,931) (30,591,417) (4,363,378) (13,614,477) (38,372,463) (12,275,087)
------------ -------------- -------------- ------------ ------------ ---------------
Net increase in net assets
resulting from policyholder
transactions . . . . . . . . . 2,897,128 8,581,255 7,057,455 6,282,028 4,843,753 11,569,669
------------ -------------- -------------- ------------ ------------ ---------------
Net increase in net assets . . 2,977,197 8,272,648 6,537,858 6,335,622 12,576,519 12,922,976
Net assets at beginning of
period . . . . . . . . . . . . 18,783,397 10,510,748 3,972,890 31,535,050 18,958,530 6,035,554
------------ -------------- -------------- ------------ ------------ ---------------
Net assets at end of period . . $ 21,760,594 $ 18,783,396 $ 10,510,748 $ 37,870,672 $ 31,535,049 $ 18,958,530
============ ============== ============== ============ ============ ===============
</TABLE>
See accompanying notes.
24
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT
-------------------------------------------
2000 1999 1998
------------- -------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . $ 315,101 $ 5,503,450 $ 1,211,729
Net realized gains (losses) . . . . . 1,407,391 7,681,081 691,270
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . 2,436,887 4,678,509 6,098,919
------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . 4,159,379 17,863,040 8,001,918
From policyholder transactions:
Net premiums from policyholders . . . 30,486,120 225,994,914 60,690,933
Net benefits to policyholders . . . . (17,507,140) (147,909,470) (31,166,123)
------------ ------------- ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions. . . . . . . . . . . . . 12,978,980 78,085,444 29,524,810
------------ ------------- ------------
Net increase (decrease) in net assets 17,138,359 95,948,484 37,526,728
Net assets at beginning of period . . 149,913,130 53,964,647 16,437,919
------------ ------------- ------------
Net assets at end of period . . . . . $167,051,489 $ 49,913,131 $ 53,964,647
============ ============= ============
<CAPTION>
GLOBAL BOND SUBACCOUNT
------------------------------------------
2000 1999 1998
-------------- ------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . $ 18,113 $ 424,767 $ 283,651
Net realized gains (losses) . . . . . (240,729) (204,675) 81,659
Net unrealized appreciation
(depreciation) during 363,167
the period . . . . . . . . . . . . . ------------- (433,526) 43,608
------------ -----------
Net increase (decrease) in net assets 140,551 (213,434) 408,918
resulting from operations . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . 2,169,780 11,387,398 9,258,713
Net benefits to policyholders . . . . (4,458,286) (10,615,019) (3,008,341)
------------- ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder (2,288,506)
transactions. . . . . . . . . . . . . ------------- 772,379 6,250,372
------------ -----------
Net increase (decrease) in net assets (2,147,955) 558,945 6,659,290
Net assets at beginning of period . . 8,838,517 8,279,571 1,620,281
------------- ------------ -----------
Net assets at end of period . . . . . $ 6,690,562 $ 8,838,516 $ 8,279,571
============= ============ ===========
</TABLE>
<TABLE>
<CAPTION>
TURNER CORE GROWTH SUBACCOUNT
------------------------------------------
2000 1999 1998
------------- ------------ --------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . (22,143) $ 1,315,438 $ 77,203
Net realized gains . . . . . . . . . . . 868,800 1,038,462 156,278
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . . 1,770,438 1,626,646 562,620
------------ ----------- -------------
Net increase (decrease) in net assets
resulting from operations . . . . . . . 2,617,095 3,980,546 796,101
From policyholder transactions:
Net premiums from policyholders . . . . 7,163,231 23,098,524 4,779,974
Net benefits to policyholders . . . . . (6,042,692) (9,308,254) (1,690,860)
------------ ----------- -------------
Net increase in net assets resulting from
policyholder transactions . . . . . . . 1,120,539 13,790,270 3,089,114
------------ ----------- -------------
Net increase in net assets . . . . . . . 3,737,634 17,770,816 3,885,215
Net assets at beginning of period . . . . 22,671,006 4,900,189 1,014,974
------------ ----------- -------------
Net assets at end of period . . . . . . . $ 26,408,640 $22,671,005 $ 4,900,189
============ =========== =============
<CAPTION>
BRANDES INTERNATIONAL EQUITY SUBACCOUNT
----------------------------------------
2000 1999 1998
------------- ------------ --------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . (14,102) $ 515,681 $ 343,646
Net realized gains . . . . . . . . . . . 52,962 507,727 89,337
Net unrealized appreciation
(depreciation) during (506,321)
the period . . . . . . . . . . . . . . ------------ 3,486,097 91,915
----------- -----------
Net increase (decrease) in net assets (467,461) 4,509,505 524,898
resulting from operations . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . 5,406,790 12,134,533 5,520,633
Net benefits to policyholders . . . . . (1,736,210) (5,569,496) (2,041,375)
------------ ----------- -----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . 3,670,580 6,565,037 3,479,258
------------ ----------- -----------
Net increase in net assets . . . . . . . 3,203,119 11,074,542 4,004,156
Net assets at beginning of period . . . . 17,415,297 6,340,754 2,336,598
------------ ----------- -----------
Net assets at end of period . . . . . . . $ 20,618,416 $17,415,296 $ 6,340,754
============ =========== ===========
</TABLE>
See accompanying notes.
25
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
FRONTIER CAPITAL APPRECIATION SUBACCOUNT ENHANCED U.S. EQUITY SUBACCOUNT
------------------------------------------ ---------------------------------------
2000 1999 1998 2000 1999 1998
-------------- ------------- ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . $ (17,350) $ 449,994 $ 9,897 $ (5,830) $ 518,137 $ 68,233
Net realized gains (losses) . . . . . . 466,929 624,068 (445,752) 55,792 264,436 87,723
Net unrealized appreciation during
the period . . . . . . . . . . . . . . 2,840,905 3,431,408 432,064 31,920 151,562 89,677
------------- ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations . . . . . . . 3,290,484 4,505,470 (3,791) 81,882 934,135 245,633
From policyholder transactions:
Net premiums from policyholders . . . . 8,319,565 25,135,447 13,982,031 3,512,323 6,480,741 3,031,309
Net benefits to policyholders . . . . . (3,328,234) (22,331,613) (9,695,520) (2,694,336) (3,151,279) (1,299,530)
------------- ------------ ----------- ----------- ----------- -----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . 4,991,331 2,803,834 4,286,511 817,987 3,329,462 1,731,779
------------- ------------ ----------- ----------- ----------- -----------
Net increase in net assets . . . . . . . 8,281,815 7,309,304 4,282,720 899,869 4,263,597 1,977,412
Net assets at beginning of period . . . . 16,985,022 9,675,718 5,392,998 6,738,214 2,474,617 497,205
------------- ------------ ----------- ----------- ----------- -----------
Net assets at end of period . . . . . . . $ 25,266,837 $ 16,985,022 $ 9,675,718 $ 7,638,083 $ 6,738,214 $ 2,474,617
============= ============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
GLOBAL EQUITY
EMERGING MARKETS EQUITY SUBACCOUNT SUBACCOUNT
------------------------------------------------ -----------------------------------------------
2000 1999 1998* 2000 1999 1998*
--------------- -------------- ---------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets from operations:
Net investment income
(loss). . . . . . . . . . $ (6,661) $ 132,259 $ 135 $ (1,101) $ 4,204 $ 152
Net realized gains (losses) 841,365 663,998 (45,975) 27,715 82,873 (21,835)
Net unrealized appreciation
(depreciation) during the
period. . . . . . . . . . (423,198) 432,248 2,289 2,640 47,295 4,812
-------------- ------------- --------------- ------------- ------------- ---------------
Net increase (decrease) in
net assets resulting from
operations . . . . . . . . 411,506 1,228,505 (43,551) 29,254 134,372 (16,871)
From policyholder
transactions:
Net premiums from
policyholders . . . . . . 18,848,748 18,579,194 2,434,226 1,111,909 3,151,983 2,372,034
Net benefits to
policyholders . . . . . . (16,434,122) (16,271,324) (2,203,670) (522,788) (2,613,505) (2,191,135)
-------------- ------------- --------------- ------------- ------------- ---------------
Net increase in net assets
resulting from policyholder
transactions . . . . . . . 2,414,626 2,307,870 230,556 589,121 538,478 180,899
-------------- ------------- --------------- ------------- ------------- ---------------
Net increase in net assets 2,826,132 3,536,375 187,005 618,375 672,850 164,028
Net assets at beginning of
period . . . . . . . . . . 3,724,873 187,005 0 836,879 164,028 0
-------------- ------------- --------------- ------------- ------------- ---------------
Net assets at end of period $ 6,551,005 $ 3,723,380 $ 187,005 $ 1,455,254 $ 836,878 $ 164,028
============== ============= =============== ============= ============= ===============
</TABLE>
---------
*From May 1, 1998 (commencement of operations).
See accompanying notes.
26
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
BOND INDEX
SUBACCOUNT SMALL/MID CAP CORE SUBACCOUNT
------------------------------------- --------------------------------------
2000 1999 1998* 2000 1999 1998*
----------- ------------ ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . . . . $ 92,333 $ 130,136 $ 22,905 $ (1,098) $ 52,711 $ (535)
Net realized gains (losses) . . . . . . . . . (5,117) (104,174) 1,002 106,765 65,733 (25,196)
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . 48,121 (78,192) (10,217) (19,659) (10,735) 18,718
---------- ----------- ---------- ----------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . 135,337 (52,230) 13,690 86,008 107,709 (7,013)
From policyholder transactions:
Net premiums from policyholders . . . . . . . 1,414,394 6,471,518 1,176,234 6,028,335 5,817,483 1,089,030
Net benefits to policyholders . . . . . . . . (901,805) (2,358,694) (124,467) (5,789,766) (5,611,532) (778,864)
---------- ----------- ---------- ----------- ----------- ----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . . . 512,589 4,112,824 1,051,767 238,569 205,951 310,166
---------- ----------- ---------- ----------- ----------- ----------
Net increase in net assets . . . . . . . . . . 647,926 4,060,594 1,065,457 324,577 313,660 303,153
Net assets at beginning of period . . . . . . . 5,126,051 1,065,457 0 616,813 303,153 0
---------- ----------- ---------- ----------- ----------- ----------
Net assets at end of period . . . . . . . . . . $5,773,977 $ 5,126,051 $1,065,457 $ 941,390 $ 616,813 $ 303,153
========== =========== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD BOND
SUBACCOUNT
----------------------------------------
2000 1999 1998*
------------ ------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
from operations:
Net investment income . . . . . $ 81,942 $ 340,435 $ 86,759
Net realized gains (losses) . . (16,585) 42,365 64,824
Net unrealized appreciation
(depreciation) during the period (189,115) (139,659) 149,416
----------- ------------ -----------
Net increase (decrease) in net
assets resulting from operations (123,758) 243,141 300,999
From policyholder transactions:
Net premiums from policyholders 1,581,720 19,870,990 6,683,673
Net benefits to policyholders . (2,251,407) (20,368,501) (2,457,088)
----------- ------------ -----------
Net increase (decrease) in net
assets resulting from
policyholder transactions . . . (669,687) (497,511) 4,226,585
----------- ------------ -----------
Net increase (decrease) in net
assets . . . . . . . . . . . . . (793,445) (254,370) 4,527,584
Net assets at beginning of period 4,273,214 4,527,584 0
----------- ------------ -----------
Net assets at end of period . . . $ 3,479,769 $ 4,273,214 $ 4,527,584
=========== ============ ===========
</TABLE>
---------
*From May 1, 1998 (commencement of operations).
See accompanying notes.
27
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
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-seven subaccounts. The assets of each subaccount are invested
exclusively in shares of a corresponding Portfolio of John Hancock Variable
Series Trust I (the Fund) or of M Fund Inc. (M Fund). New subaccounts may be
added as new Portfolios are added to the Fund or to M Fund, or as other
investment options are developed, and made available to policyholders. The
twenty-seven Portfolios of the Fund and M Fund which are currently available are
the Large Cap Growth, Sovereign Bond, International Equity Index, Small Cap
Growth, International Balanced, Mid Cap Growth, Large Cap Value, Money Market,
Mid Cap Value, Small/Mid Cap Growth (formerly, Diversified Mid Cap Growth), Real
Estate Equity, Growth & Income, Managed, Short-Term Bond, Small Cap Value,
International Opportunities, Equity Index, Global Bond (formerly, Strategic
Bond), Turner Core Growth, Brandes International Equity, Frontier Capital
Appreciation, Enhanced U.S. Equity, Emerging Markets Equity, Global Equity, Bond
Index, Small/Mid Cap CORE and High Yield Bond 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 respective Portfolio shares are determined
on the basis of identified cost.
Federal Income Taxes
The operations of the Account are included in the federal income tax return of
JHVLICO, which is taxed as a life insurance company under the Internal Revenue
Code. JHVLICO has the right to charge the Account any federal income taxes, or
provision for federal income taxes, attributable to the operations of the
Account or to the policies funded in the Account. Currently, 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.
28
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 March 31, 2000, 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.
29
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. DETAILS OF INVESTMENTS
The details of the shares owned and cost and value of investments in the
Portfolios of the Fund and of M Fund at March 31, 2000 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO SHARES OWNED COST VALUE
--------- ------------ ------------ --------------
<S> <C> <C> <C>
Large Cap Growth . . . 4,725,708 $129,759,928 $138,569,677
Sovereign Bond . . . . 3,720,404 54,957,680 34,270,887
International Equity
Index . . . . . . . . 1,828,860 42,194,387 35,888,903
Small Cap Growth . . . 1,783,544 44,638,874 39,276,067
International Balanced 411,770 5,792,382 4,263,961
Mid Cap Growth . . . . 2,559,283 61,055,048 76,842,451
Large Cap Value . . . . 2,322,131 36,125,073 30,338,048
Money Market . . . . . 6,966,470 137,421,592 69,694,685
Mid Cap Value . . . . . 1,556,021 25,731,991 21,554,270
Small/Mid Cap Growth . 639,205 13,859,500 9,607,175
Real Estate Equity . . 878,277 15,150,096 10,282,503
Growth & Income . . . . 10,470,973 216,940,978 212,951,293
Managed . . . . . . . . 8,209,595 135,063,985 128,379,047
Short-Term Bond . . . . 1,472,374 22,331,767 14,330,591
Small Cap Value . . . . 2,002,962 25,350,551 21,760,594
International
Opportunities . . . . 2,498,318 47,315,632 37,870,672
Equity Index . . . . . 8,004,018 158,931,331 167,051,489
Global Bond . . . . . . 668,397 14,205,761 6,690,562
Turner Core Growth . . 1,042,593 29,103,994 26,408,640
Brandes International
Equity . . . . . . . . 1,374,582 17,355,048 20,618,416
Frontier Capital
Appreciation . . . . . 999,103 21,184,263 25,266,837
Enhanced U.S. Equity . 362,858 8,235,003 7,638,083
Emerging Markets
Equity . . . . . . . . 498,382 18,281,972 6,551,005
Global Equity . . . . . 115,407 2,131,686 1,455,254
Bond Index . . . . . . 611,908 6,074,464 5,773,977
Small/Mid Cap CORE . . 89,127 2,920,766 941,390
High Yield Bond . . . . 405,962 6,265,268 3,479,769
</TABLE>
30
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Purchases, including reinvestment of dividend distributions, and proceeds from
sales of shares in the Portfolios of the Fund and of M Fund during 1999 were as
follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
--------- ------------ --------------
<S> <C> <C>
Large Cap Growth . . . . . . . . . $ 62,265,535 $ 14,711,539
Sovereign Bond . . . . . . . . . . 38,288,617 29,280,010
International Equity Index . . . . 32,519,440 17,541,313
Small Cap Growth . . . . . . . . . 27,757,302 12,281,978
International Balanced . . . . . . 3,415,587 1,768,784
Mid Cap Growth . . . . . . . . . . 45,338,211 14,783,738
Large Cap Value . . . . . . . . . . 22,257,609 10,304,554
Money Market . . . . . . . . . . . 304,141,849 329,646,739
Mid Cap Value . . . . . . . . . . . 15,413,952 12,927,617
Small/Mid Cap Growth . . . . . . . 8,759,614 5,337,363
Real Estate Equity . . . . . . . . 13,375,520 8,254,469
Growth & Income . . . . . . . . . . 144,949,345 32,223,136
Managed . . . . . . . . . . . . . . 111,633,323 21,803,394
Short-Term Bond . . . . . . . . . . 17,352,671 24,342,768
Small Cap Value . . . . . . . . . . 16,062,747 7,136,780
International Opportunities . . . . 24,767,973 17,918,215
Equity Index . . . . . . . . . . . 124,086,502 40,497,607
Global Bond . . . . . . . . . . . . 10,322,531 9,125,384
Turner Core Growth . . . . . . . . 20,980,047 5,874,338
Brandes International Equity . . . 10,664,333 3,583,615
Frontier Capital Appreciation . . . 13,387,462 10,133,633
Enhanced U.S. Equity . . . . . . . 5,925,334 2,077,734
Emerging Markets Equity . . . . . . 9,682,573 7,242,444
Global Equity . . . . . . . . . . . 2,167,637 1,624,954
Bond Index . . . . . . . . . . . . 5,900,997 1,658,038
Small/Mid Cap CORE . . . . . . . . 3,312,578 3,053,916
High Yield Bond . . . . . . . . . . 11,898,171 12,055,248
</TABLE>
31
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. NET ASSETS
Accumulation shares attributable to net assets of policyholders and
accumulation share values for each portfolio at March 31, 2000 were as follows:
<TABLE>
<CAPTION>
VEP CLASS #1 VEP CLASS #2 VEP CLASS #3
-------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
--------- ------------ ------------ ------------ ------------ ------------ --------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth 501,219 36.64 452,200 36.75 211,942 36.87
Sovereign Bond 225,529 14.01 160,910 14.05 34,047 14.10
International Equity Index 241,826 17.49 177,419 17.55 5,314 17.60
Small Cap Growth 187,881 24.93 186,116 24.98 34,022 25.03
International Balanced 18,384 12.87 25,851 12.90 15,065 12.93
Mid Cap Growth 244,467 36.47 184,426 36.54 60,720 36.61
Large Cap Value 195,113 15.68 139,786 15.71 24,929 15.74
Money Market 587,473 13.25 1,124,720 13.29 419,434 13.33
Mid Cap Value 120,750 15.21 49,381 15.24 3,276 15.27
Small/Mid Cap Growth 88,999 21.14 89,441 21.20 0 21.26
Real Estate Equity 95,604 14.85 55,305 14.89 19,250 14.94
Growth & Income 996,212 31.41 591,014 31.51 179,428 31.60
Managed 550,878 21.22 284,687 21.29 39,917 21.35
Short-Term Bond 84,327 13.10 94,761 13.14 9,722 13.18
Small Cap Value 117,863 12.27 89,562 12.29 22,744 12.32
International Opportunities 140,734 16.48 191,629 16.51 6,658 16.54
Equity Index 546,625 23.54 605,346 23.58 211,658 23.63
Global Bond 55,879 12.37 48,921 12.39 18,599 12.41
Turner Core Growth 31,801 31.21 15,389 31.28 0 31.34
Brandes International Equity 22,721 16.32 33,499 16.35 0 16.39
Frontier Capital Appreciation 26,137 27.20 13,250 27.26 0 27.31
Enhanced U.S. Equity 4,387 17.51 0 17.54 0 17.56
Emerging Markets Equity 61,060 13.69 160,303 13.70 13,962 13.71
Global Equity 27,243 12.68 27,262 12.69 2,252 12.70
Bond Index 100,226 10.59 99,922 10.60 63,929 10.60
Small/Mid Cap CORE 18,057 11.56 12,509 11.57 4,270 11.58
High Yield Bond 45,997 9.76 41,613 9.77 2,141 9.78
</TABLE>
32
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
V COLI CLASS #4 V COLI CLASS #5 V COLI CLASS #6
-------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
--------- ------------ ------------ ------------ ------------ ------------ --------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth 624,782 36.96 302,096 37.00 273,725 37.04
Sovereign Bond 14,891 14.89 610,911 14.91 449,306 14.92
International Equity Index 39,735 16.23 160,610 16.25 232,734 16.27
Small Cap Growth 66,214 25.38 39,775 25.39 46,461 25.42
International Balanced 40,176 13.10 10,196 13.11 54,443 13.12
Mid Cap Growth 151,297 37.12 135,265 37.15 63,453 37.17
Large Cap Value 168,223 15.96 160,487 15.97 419,835 15.98
Money Market 173,689 13.19 290,988 13.20 159,826 13.22
Mid Cap Value 81,017 15.48 17,842 15.49 240,521 15.50
Small/Mid Cap Growth 25,267 21.17 378 21.19 29,661 21.21
Real Estate Equity 57,478 15.40 5,284 15.42 199,999 15.43
Growth & Income 581,341 31.39 528,494 31.42 25,701 31.45
Managed 144,003 22.01 118,971 22.04 128,144 22.06
Short-Term Bond 185,563 13.36 424,715 13.38 0 0
Small Cap Value 32,369 12.49 50,061 12.50 278,886 12.50
International Opportunities 219,385 16.77 180,790 16.78 104,577 16.79
Equity Index 336,797 23.96 64,760 23.98 558,737 23.99
Global Bond 49,441 12.59 5,046 12.60 0 12.61
Turner Core Growth 9,891 31.81 20,258 31.83 0 31.86
Brandes International Equity 107,998 16.63 108,224 16.65 39,650 16.66
Frontier Capital Appreciation 90,714 27.72 67,224 27.74 0 27.77
Enhanced U.S. Equity 18,732 17.74 6,871 17.74 0 17.67
Emerging Markets Equity 0 13.81 39,505 13.81 0 13.81
Global Equity 0 12.80 0 12.80 0 12.80
Bond Index 2,500 10.68 19,774 10.68 0 10.68
Small/Mid Cap CORE 0 11.67 0 11.67 0 11.67
High Yield Bond 1,565 9.98 0 0.98 8,654 9.85
</TABLE>
33
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MEDALLION EXECUTIVE VLI CLASS #7 MVEP CLASS #8 MVUL CLASS #9
--------------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
--------- ---------------- ---------------- ------------ ------------ ------------ --------------
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth 112,264 85.40 799,241 26.61 346,876 23.70
Sovereign Bond 56,595 24.06 302,433 12.64 338,834 11.90
International Equity Index 146,837 27.50 777,766 15.04 220,189 15.52
Small Cap Growth 181,468 24.96 309,201 25.20 209,297 28.33
International Balanced 58,124 12.89 42,203 13.01 36,194 12.47
Mid Cap Growth 181,012 36.51 411,691 36.87 120,647 40.88
Large Cap Value 340,696 15.69 144,765 15.85 120,405 13.55
Money Market 351,729 18.33 681,051 12.10 410,096 11.58
Mid Cap Value 484,280 15.22 236,146 15.38 58,151 12.99
Small/Mid Cap Growth 5,968 21.17 263,530 13.51 34,027 13.75
Real Estate Equity 42,675 22.83 146,961 12.66 42,185 9.75
Growth & Income 833,145 69.25 1,328,327 22.26 456,665 19.45
Managed 2,310,154 40.30 226,876 17.09 120,259 15.63
Short-Term Bond 90,405 13.12 44,158 12.06 95,975 11.56
Small Cap Value 619,523 12.28 321,868 12.40 92,320 11.77
International Opportunities 631,815 16.50 248,891 16.65 454,435 15.94
Equity Index 602,588 23.56 1,254,544 23.79 666,253 20.30
Global Bond 167,161 12.38 61,755 12.50 64,901 11.80
Turner Core Growth 0 29.04 211,545 28.32 69,350 27.22
Brandes International
Equity 0 16.55 542,598 15.97 59,761 17.06
Frontier Capital
Appreciation 0 25.24 453,530 23.01 87,539 22.27
Enhanced U.S. Equity 0 13.28 149,272 17.65 163,219 17.65
Emerging Markets Equity 43,842 13.69 79,087 13.76 40,699 13.76
Global Equity 25,141 12.69 24,262 12.75 852 12.75
Bond Index 27,803 10.59 19,951 10.64 180 10.64
Small/Mid Cap CORE 174 11.57 18,128 11.62 706 11.62
High Yield Bond 21,279 9.76 86,249 9.81 83,050 9.81
</TABLE>
34
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
MVUL 98 CLASS #10 MVEP 98 CLASS #11 MEVL II CLASS #12
-------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
--------- ------------ ------------ ------------ ------------ ------------ --------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth 257,292 23.70 225,326 26.61 4,496 87.48
Sovereign Bond 132,915 11.90 121,516 12.64 0 28.75
International Equity Index 50,283 15.52 94,430 15.04 1,229 29.08
Small Cap Growth 178,252 28.33 75,478 25.20 0 25.55
International Balanced 24,342 12.47 5,498 13.01 0 13.19
Mid Cap Growth 325,412 40.88 155,427 36.87 4,597 37.36
Large Cap Value 82,162 13.55 148,074 15.85 0 16.07
Money Market 913,953 11.58 249,610 12.10 0 13.26
Mid Cap Value 70,658 12.99 63,590 15.38 0 15.59
Small/Mid Cap Growth 15,647 13.75 21,186 13.51 0 0
Real Estate Equity 15,207 9.84 23,604 12.66 0 23.94
Growth & Income 1,057,563 19.45 214,058 22.26 2,544 82.96
Managed 82,529 15.63 51,746 17.09 2,049 47.71
Short-Term Bond 34,938 11.56 32,271 12.06 5,208 13.60
Small Cap Value 33,605 11.77 107,429 12.40 0 12.57
International Opportunities 55,230 15.94 65,769 16.65 0 16.88
Equity Index 2,032,606 20.30 537,822 23.79 9,694 24.12
Global Bond 42,596 11.80 29,112 12.50 0 12.67
Turner Core Growth 345,860 27.22 235,445 28.32 0 32.04
Brandes International Equity 123,322 17.06 228,923 15.97 0 16.75
Frontier Capital Appreciation 240,310 22.27 91,600 23.01 0 26.83
Enhanced U.S. Equity 51,190 17.65 38,188 17.65 0 17.82
Emerging Markets Equity 24,399 13.76 14,489 13.76 0 13.85
Global Equity 5,262 12.75 2,275 12.75 0 12.83
Bond Index 140,959 10.64 68,555 10.64 0 10.71
Small/Mid Cap CORE 12,671 11.62 14,654 11.62 0 11.70
High Yield Bond 18,929 9.81 45,739 9.81 0 9.88
</TABLE>
35
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
VEP CLASS #13
--------------------------
ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES
--------- ------------ --------------
<S> <C> <C>
Large Cap Growth 502 87.48
Sovereign Bond 0 28.75
International Equity Index 879 29.08
Small Cap Growth 588 25.55
International Balanced 0 13.19
Mid Cap Growth 877 37.36
Large Cap Value 13 16.07
Money Market 7,184 13.26
Mid Cap Value 0 15.59
Small/Mid Cap Growth 0 21.94
Real Estate Equity 0 23.94
Growth & Income 307 82.96
Managed 372 47.71
Short-Term Bond 0 13.60
Small Cap Value 0 12.57
International Opportunities 1,226 16.88
Equity Index 1,481 24.12
Global Bond 0 12.67
Turner Core Growth 0 32.04
Brandes International Equity 0 16.75
Frontier Capital Appreciation 0 26.83
Enhanced U.S. Equity 0 17.82
Emerging Markets Equity 717 13.85
Global Equity 0 12.83
Bond Index 0 10.71
Small/Mid Cap CORE 0 11.70
High Yield Bond 0 9.88
</TABLE>
36
<PAGE>
SUPPLEMENT DATED JUNE 30, 2000
TO
PROSPECTUS DATED MAY 1, 2000
The prospectus for the John Hancock Variable Series Trust I is hereby amended
as follows:
. The American Leaders Large Cap Value Fund and the Core Bond Fund are added
to the John Hancock Variable Series Trust I and the Goal and Strategy,
Subadviser, Past Performance, Main Risks and Financial Highlights of each
Fund, as set forth on pages 38 through 41 of this Supplement, are added to
the prospectus.
. The pages of the prospectus that describe the Goal and Strategy,
Subadviser, Past Performance, Main Risks and Financial Highlights of the
Real Estate Equity Fund are deleted and replaced by the material on pages
42 and 43 of this Supplement. The material on pages 42 and 43 of this Sup-
plement describe a new "multi-manager" approach for the Real Estate Equity
Fund.
. The Section of the prospectus entitled "Funds' Expenses," which states that
the advisory fee paid by the Real Estate Equity Fund to the adviser last
year was 0.60% of net assets, is amended by adding the following language:
"The American Leaders Large Cap Value Fund and the Core Bond Fund were not
in operation last year. Those funds pay fees to the advisor (as a percent-
age of net assets) as follows:
. American Leaders Large Cap Value: 0.80% of first $50 million; 0.65% of
next $200 million; 0.60% of next $250 million; 0.55% above $500 million.
. Core Bond: 0.70% of first $25 million; 0.65% of next $25 million; 0.60%
of next $100 million; 0.55% above $150 million."
. The second paragraph of the Section of the prospectus entitled "Dividends
and Taxes" is amended to read as follows:
"Each fund declares and pays dividends monthly, except that the Small/Mid
Cap Growth Fund does so annually and the Money Market Fund does so daily."
The American Leaders Large Cap Value Fund and the Core Bond Fund are subject
to all provisions of the prospectus that are applicable to all funds of the
John Hancock Variable Series Trust I, including the following provisions:
RISKS OF FUNDS
These funds, like all mutual funds, are not bank deposits. They are not
insured or guaranteed by the FDIC or any other government agency. You could
lose money by investing in these funds. So, be sure to read all risk disclo-
sure carefully before investing.
MANAGEMENT
John Hancock is the investment advisor of each fund. John Hancock is a Massa-
chusetts stock life insurance company. On February 1, 2000, John Hancock
changed its form of organization and its name. Prior to that date, it was
John Hancock Mutual Life Insurance Company, a mutual life insurance company
that was chartered in 1862. At the end of 1999, John Hancock managed approxi-
mately $127 billion, of which John Hancock owned over $71 billion. Most of
the funds have subadvisers.
37
<PAGE>
American Leaders Large Cap Value Fund
GOAL AND STRATEGY
This is a large cap stock fund with a value emphasis that seeks long-term
growth in capital and dividend income.
The Fund invests primarily in a diversified mix of common stocks of large
established U.S. companies that are believed to offer favorable prospects for
increasing dividends and growth in capital.
The manager selects stocks using a combination of quantitative screening tools
and fundamental equity research.
The manager employs quantitative screening tools to identify companies that
are:
. leading their industries in terms of sales earnings and/or market capitaliza-
tion;
. exhibiting low price-to-earnings ratios relative to historical levels;
. trading at reasonable prices relative to growth expectations;
. generating strong cash flow relative to stock price; and
. not experiencing negative earnings revision trends or poor stock price momen-
tum.
The manager employs fundamental equity research to confirm the screening proc-
ess and to examine the company's:
. financial health;
. business and product strength;
. competitive position; and
. management strength.
The Fund's sector weightings are broadly diversified and managed relative to
the broad large-cap equity market.
The Fund normally invests in 70 to 120 stocks, with at least 65% (usually high-
er) of its assets in U.S. large cap companies. The Fund normally has 10% or
less of its assets in cash and cash equivalents.
The Fund may purchase other types of securities, for example: American Deposi-
tory Receipts (ADRs), and certain derivatives (investments whose value is based
on indices or other securities).
In abnormal market conditions, the Fund may take temporary defensive measures--
such as holding unusually large amounts of cash and cash equivalents--that are
inconsistent with the Fund's primary investment strategy. In taking those mea-
sures, the Fund may not achieve its investment goal.
SUBADVISER
Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222
Owned by Federated Investors, Inc.
Managing since 1955
Managed approximately $125 billion in assets at the end of 1999
FUND MANAGERS
Michael P. Donnelly, CFA
-----------------
Senior Vice President of subadviser
Joined subadviser in 1989
Began career in 1985
Kevin R. McCloskey, CFA
-----------------
Vice President of subadviser
Joined subadviser in 1999
Portfolio Manager at Killian Asset Management
Corp. (1994-1999)
Began career in 1994
PAST PERFORMANCE
This is a new Fund. It was not in operation prior to the date of this
prospectus.
--------------------------------------------------------------------------------
38
<PAGE>
MAIN RISKS
Primary
Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up
and down in value more than bonds. If the Fund's investments are concentrated
in certain sectors, the Fund's performance could be worse than the overall mar-
ket.
Manager Risk: The manager and its strategy may fail to produce the intended
results. The Fund could underperform its peers or lose money if the manager's
investment strategy does not perform as expected.
Investment Category Risk: The returns of the Fund's specific investment cate-
gory may lag the returns of the overall stock market. For example, the Fund's
"value" approach carries the risk that in certain markets "value" stocks will
underperform "growth" stocks. Also, the Fund's "large cap" approach carries the
risk that in certain markets large cap stocks will underperform small cap and
mid cap stocks.
Secondary
Derivatives Risk: Certain derivative instruments (such as options, futures and
swaps) can produce disproportionate gains or losses. They are generally consid-
ered more risky than direct equity investments. Also, in a down market, deriva-
tives could become harder to value or sell at a fair price.
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--This is a new Fund. It was not in operation prior to the
date of this prospectus.
39
<PAGE>
Core Bond Fund
GOAL AND STRATEGY
This ia a bond fund that seeks income and growth in capital.
This is considered an "intermediate" bond fund in that it maintains an average
bond maturity which is typically between four and ten years.
The Fund primarily invests in a diversified mix of debt securities, including:
. U.S. Treasury and agency securities;
. foreign government and agency securities (if dollar denominated);
. corporate bonds, both U.S. and foreign (if dollar denominated); and
. mortgage-backed and asset-backed securities.
The manager normally invests:
. mostly in investment grade debt securities;
. no more than 15% of its assets in high yield bonds; and
. no more than 25% of its assets in U.S. dollar denominated foreign securi-
ties, excluding Canadian securities.
The manager makes ongoing decisions regarding the Fund's average maturity,
sector exposures and yield curve exposures. The manager uses proprietary
research and economic analysis to try to anticipate interest rate movements
and to identify sectors and specific bonds that are undervalued. The manager
examines a variety of factors, including macroeconomic analysis and corporate
earnings analyses, to determine which business sectors and credit ratings are
most advantageous for investment. The manager evaluates bonds of all quality
levels and maturities from many different sectors and issuers. The Fund nor-
mally has an average credit quality rating of "A" or higher.
The manager actively manages the Fund's interest rate sensitivity by adjusting
the Fund's average bond maturity. The Fund's average bond maturity may there-
fore differ from that of the overall bond market (as represented by such indi-
ces as the Lehman Brothers Aggregate Bond Index). The Fund normally invests at
least 65% (usually higher) of its assets in bonds. The Fund normally has 10%
or less of its assets in cash and cash equivalents.
The manager may use derivatives (investments whose value is based on indices
or other securities) such as futures to manage the Fund's average maturity and
interest rate volatility.
The Fund may purchase other types of securities, for example: foreign bonds of
developed markets denominated in foreign currencies, and emerging market debt
securities.
In abnormal market conditions, the Fund may take temporary defensive mea-
sures--such as holding unusually large amounts of cash and cash equivalents--
that are inconsistent with the Fund's primary investment strategy. In taking
those measures, the Fund may not achieve its investment goal.
-------------------------------------------------------------------------------
SUBADVISER
Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222
Owned by Federated Investors, Inc.
Managing since 1955
Managed approximately $125 billion in assets at the end of 1999
FUND MANAGERS
Joseph M. Balestrino, CFA
-----------------
Senior Vice President of subadviser
Joined subadviser in 1986
Began career in 1986
Donald T. Ellenberger, CFA
-----------------
Vice President of subadviser
Joined subadviser in 1996
Portfolio Manager/Trader at Mellon Bank N.A. (1986-1996)
Began career in 1984
Mark E. Durbiano, CFA
-----------------
Senior Vice President of subadviser
Joined subadviser in 1982
Began career in 1982
PAST PERFORMANCE
This is a new Fund. It was not in operation prior to the date of this prospec-
tus.
40
<PAGE>
MAIN RISKS
Primary
Market Risk: The value of the securities in the Fund may go down in response
to overall stock or bond market movements. Markets tend to move in cycles,
with periods of rising prices and periods of falling prices. Stocks tend to go
up and down in value more than bonds. If the Fund's investments are concen-
trated in certain sectors, the Fund's performance could be worse than the
overall market.
Manager Risk: The manager and its strategy may fail to produce the intended
results. The Fund could underperform its peers or lose money if the manager's
investment strategy does not perform as expected.
Interest Rate Risk: When interest rates rise, the Fund's bond yields will gen-
erally rise and the Fund's bond prices will generally fall. When interest
rates fall, the reverse will generally occur. The longer the average remaining
maturity of bonds held by the Fund, the more sensitive the Fund is to interest
rate risk. This Fund has more interest rate risk than a short-term bond fund,
but less interest rate risk than a long-term bond fund.
Credit Risk: An issuer of a bond held by the Fund may default on its obliga-
tion to pay interest and repay principal. Also, the credit rating of a bond
held by the fund may be downgraded. In either case, the value of the bond held
by the Trust would fall. All bonds have some credit risk, but in general low-
er-rated bonds have higher credit risk.
Turnover Risk: In general, the greater the volume of buying and selling by a
fund (i.e., the higher its "turnover rate"), the greater the impact that bro-
kerage commissions and other transaction costs will have on the fund's perfor-
mance. Any turnover rate in excess of 100% is considered relatively high. Nor-
mally, the Fund's turnover rate will be greater than 100%.
Secondary
Foreign Risk: The Fund's foreign securities will pose special risks, due to
limited government regulation, lack of public information, and economic,
political and social instability. Factors such as lack of liquidity, foreign
ownership limits and restrictions on removing currency also pose special
risks. All foreign securities have some degree of foreign risk. However, to
the extent the Fund invests in emerging market countries, it will have a sig-
nificantly higher degree of foreign risk than if it invested exclusively in
developed or newly-industrialized countries.
High Yield Bond Risk: Junk bonds, defined as bond securities rated below BBB-
/Baa3, may be subject to more volatile or erratic price movements due to
investor sentiment. In a down market, these high yield securities become
harder to value or to sell at a fair price.
Prepayment/Call Risk: The Fund's share price or yield could be hurt if inter-
est rate movements cause the Fund's mortgage-related and callable securities
to be paid off substantially earlier than expected.
Derivatives Risk: Certain derivative instruments (such as options, futures and
swaps) can produce disproportionate gains or losses. They are generally con-
sidered more risky than direct fixed income investments. Also, in a down mar-
ket, derivatives could become harder to value or sell at a fair price.
-------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--This is a new Fund. It was not in operation prior to the
date of this prospectus.
41
<PAGE>
Real Estate Equity Fund
GOAL AND STRATEGY
This is a real estate stock fund that seeks above-average income and long-term
growth in capital.
The Fund invests primarily in:
. equity securities of real estate investment trusts (REITs) that own commer-
cial and multi-family residential real estate; and
. equity securities of real estate operating companies (i.e., companies with at
least 75% of revenue, income or fair asset value derived from real estate).
The Fund employs two subadvisers, each of which independently selects and con-
structs a portfolio for its portion of the Fund. Each sub-adviser employs its
own investment approach to identify securities considered attractive and to
construct and manage its portion of the Fund. On or about June 30, 2000, the
assets of the Fund were evenly divided between the subadvisers. All subsequent
investments in and redemptions from the Fund will be evenly divided between the
subadvisers.
Independence Investment Associates, Inc. ("IIA") selects real estate stocks
using a combination of proprietary, equity research and quantitative tools.
Real estate stocks are purchased that are undervalued relative to the stock's
history and the market and have improving earnings growth prospects.
IIA employs risk control techniques to maintain risk, style and industry char-
acteristics similar to the public equity real estate market. IIA will normally
invest in 40 to 60 securities in its portion of the Fund.
Morgan Stanley Dean Witter Investment Management Inc. ("MSDW") selects real
estate stocks using a combination of:
. top-down, market overview to identify undervalued property sectors and geo-
graphic regions; and
. proprietary, fundamental equity research to select companies that are attrac-
tively priced relative to the value of their underlying real estate assets.
MSDW seeks to maintain broad exposure to key property sectors (i.e., apart-
ments, retail and office/industrial). MSDW will normally invest in 30 to 50
securities in its portion of the Fund.
Each portion of the Fund normally has at least 65% (usually higher) of its
assets invested in real estate equity securities and 5% or less of its assets
in cash and cash equivalents.
Each portion of the Fund also may purchase other types of securities, for exam-
ple: American Depository Receipts (ADRs), convertible securities, and equity
securities of non-real estate businesses whose real estate holdings are signif-
icant in relation to their market capitalization.
In abnormal market conditions, each portion of the Fund may take temporary
defensive measures--such as holding unusually large amounts of cash and cash
equivalents--that are inconsistent with the Fund's primary investment strategy.
In taking those measures, the Fund may not achieve its investment goal.
--------------------------------------------------------------------------------
SUBADVISER
Independence Investment Associates, Inc.
53 State Street
Boston, Massachusetts 02109
Owned by John Hancock
Managing since 1982
Managed approximately $33 billion in assets at the end of 1999
Fund Managers
John F. DeSantis
-----------------
Executive Vice President of subadviser
Managed fund since 1999
Joined subadviser in 1982
Thomas D. Spicer
-----------------
Vice President of subadviser
Managed fund since 1999
Joined team in 1996
Joined subadviser in 1991
SUBADVISER
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Managing since 1975
Managed approximately $184 billion in assets at the end of 1999
Fund Managers
Theodore R. Bigman
-----------------
Managing Director, Global Real Estate, of subadviser
Joined subadviser in 1995
Douglas A. Funke
-----------------
Vice President of subadviser
Joined subadviser in 1995
PAST PERFORMANCE
The graph shows how the fund's total return has varied from year to year, while
the table shows performance over time (along with a broad-based market index
for reference). This information may help provide an indication of the fund's
risks and potential rewards. All figures assume dividend reinvestment. Past
performance does not indicate future results. The performance figures below do
not reflect the deduction of fees and charges payable under the variable
contracts. Such fees and charges would cause the investment returns under the
contracts to be less than that shown below.
Year-by-year total returns -- calendar years
1990 -21%
1991 33.50%
1992 16.00%
1993 17.29%
1994 2.86%
1995 12.31%
1996 33.07%
1997 17.22%
1998 -16.71%
1999 -1.69%
Best quarter: up 25.82%, first quarter 1991 Worst quarter: down 17.37%, third
quarter 1990
Average annual total returns -- for periods ending 12/31/99
<TABLE>
<CAPTION>
Fund Index
<S> <C> <C>
1 year -1.69% -3.19%
5 years 7.48% 8.30%
10 years 7.73% 4.11%
Life of fund 7.71% 4.52%
</TABLE>
Index: Wilshire Real Estate Securities Index
42
<PAGE>
MAIN RISKS
Primary
Real Estate Securities Risk: Real estate investment trusts (REITs) or other
real estate-related equity securities may be affected by changes in the value
of the underlying property owned by the trust. Mortgage REITs may be affected
by the quality of any credit extended. Other potential risks include the possi-
bility of a REIT failing to qualify for tax-free pass-through of income under
the Internal Revenue Code or failing to maintain exemption under the Investment
Company Act of 1940.
Market Risk: The value of the securities in the Fund may go down in response to
overall stock or bond market movements. Markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Stocks tend to go up an
down in value more than bonds. Because the Fund's investments are concentrated
in the real estate sector, the Fund's performance could be worse than the over-
all market.
Manager Risk: The managers and their respective strategies may fail to produce
the intended results. The Fund could underperform its peers or lose money if
the managers' investment strategies do not perform as expected.
Concentration Risk: The Fund's investment in securities of a smaller number of
issuers could produce more volatile performance relative to funds that invest
in a larger number of issuers. The more concentrated a fund's holdings are, the
more likely it is a specific security's poor performance will hurt the fund
significantly.
Small/Mid Cap Stock Risk: The Fund's investment in smaller or mid-sized compa-
nies may be subject to more erratic price movements than investment in large
established companies.
Interest Rate Risk: The Fund is subject to interest rate risk, which is the
possibility that changes in interest rates could hurt REIT performance. In gen-
eral, during periods of high interest rates, REITs may lose some of their
appeal for investors who may be able to obtain higher yields from other income-
producing investments, such as long-term bonds. Higher interest rates also mean
that financing for property purchases and improvements is more costly and dif-
ficult to obtain.
Turnover Risk: In general, the greater the volume of buying and selling by a
fund (i.e., the higher its "turnover rate"), the greater the impact that bro-
kerage commissions and other transaction costs will have on the fund's perfor-
mance. Any turnover rate in excess of 100% is considered relatively high. Nor-
mally, the Fund's turnover rate will be greater than 100%.
Secondary
None
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Selected data for each share interest outstanding
throughout the period indicated):
The following financial highlights have been audited by Ernst & Young LLP.
<TABLE>
<S> <C> <C> <C> <C> <C>
Period ended December 31: 1995 1996 1997 1998 1999
Net asset value, beginning of
period $11.16 $ 11.70 $ 14.64 $ 15.91 $ 12.46
Income from investment
operations:
Net investment income (loss) 0.77 0.76 0.77 0.77 0.78
Net realized and unrealized
gain (loss) on investments* 0.54 2.97 1.68 (3.38) (0.99)
Total from investment
operations 1.31 3.73 2.45 (2.61) (0.21)
Less distributions:
Distributions from net
investment income and capital
paid in (0.77) (0.76) (0.77) (0.70) (0.78)
Distributions from net realized
gain on investments sold (0.00) (0.03) (0.41) (0.14) --
Distributions in excess of
income, capital paid in &
gains -- -- -- -- --
Total distributions $(0.77) $ (0.79) $ (1.18) $ (0.84) (0.78)
Net asset value, end of period $11.70 $14.64 $ 15.91 $ 12.46 $ 11.47
Total investment return 12.31% 33.07% 17.22% (16.71)% (1.69)%
Ratios and supplemental data
Net assets, end of period (000s
omitted)($) $9,301 $10,325 $12,830 $12,263 $11,000
Ratio of expenses to average net
assets (%) 0.73% 0.69% 0.69% 0.69 % 0.70%
Ratio of net investment income
(loss) to average net assets
(%) 6.85% 6.14% 5.12% 5.48 % 6.38%
Turnover rate (%) 19.81% 18.37% 20.04% 22.69 % 12.95%
</TABLE>
* The amount shown may not accord with the change in the aggregate gains and
losses in the fund securities for the period because of the timing of pur-
chase and withdrawals of shares in relation to the fluctuation in market val-
ues of the fund.
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