<PAGE>
As filed with the Securities and Exchange Commission on November 1, 2000
Registration No. 333-15075
____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-6
Post-Effective Amendment
No. 5 to
Registration Statement Under
THE SECURITIES ACT OF 1933
-----------------
JOHN HANCOCK 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 LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, 02117
(Name and complete address of agent for service)
-----------------
Copy to:
THOMAS C. LAUERMAN, 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 November 1, 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.
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.
The prospectus containing the information specified in the instructions in
Form S-6 under the Securities Act of 1933.
The undertaking regarding indemnification.
The undertaking to file reports.
The signatures.
The following exhibits:
<PAGE>
1.A. (1) JHVLICO Board Resolution establishing the separate account,
previously filed electronically on October 30, 1996.
(2) Not Applicable.
(3) (a) Form of Distribution and Servicing Agreement by and among
John Hancock Distributors, Inc., John Mutual Life Insurance
Company, and John Hancock Variable Life Insurance Company,
previously filed electronically on April 23, 1997.
(b) Specimen Variable Contracts Selling Agreement between John
Hancock Mutual Life Insurance Company and selling broker-
dealers, previously filed electronically on April 23, 1997.
(c) Schedule of sales commissions included in I.A.(3)(a) above.
(4) Not Applicable.
(5) Form of flexible premium variable life insurance policy,
previously filed electronically on April 3, 1997.
(6) (a) JHVLICO Certificate of Incorporation, previously filed
electronically on October 30, 1996.
(b) JHVLICO By-laws, previously filed electronically on October
30, 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 individual and master applications for Policy, previously
filed electronically on October 30, 1996.
(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,
previously filed electronically on April 3, 1997.
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 premium policy pursuant to Rule
6e-3(T)(b)(12)(iii), previously filed electronically on April 3, 1997.
9. Powers of attorney for Tomlinson, D'Alessandro, Shaw, Luddy, Lee, Reitano,
Van Leer and Paster, previously filed electronically on October 30, 1996.
Power of attorney for Ronald J. Bocage, incorporated by reference from Form
10-K annual report for 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. Opinion of Counsel as to eligibility of this Post-Effective Amendment for
filing pursuant to Rule 485(b).
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities with John Hancock Variable Life Insurance
Company and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ PATRICK J. GILL
--------------------
PATRICK J. GILL Controller (Principal Accounting November 1, 2000
Officer and Acting Principal
Financial Officer)
/s/ MICHELE G. VAN LEER
-----------------------
Michele G. Van Leer Vice Chairman of the Board November 1, 2000
for herself and as and President(Acting Principal
Attorney-in-Fact Executive Officer)
For: David F. D'Alessandro Chairman of the Board
Robert S. Paster Director
Thomas J. Lee Director
Bruce M. Jones Director
Paul Strong Director
Barbara L. Luddy Director
Ronald J. Bocage Director
Robert R. Reitano Director
<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 1st day of November, 2000.
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
(SEAL)
By /s/ MICHELE G. VAN LEER
-----------------------
Michele G. Van Leer
Vice Chairman and President
Attest: /s/ PETER SCAVONGELLI
------------------------
Peter 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 1st day of November, 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
Vice Chairman and President
Attest /s/ PETER SCAVONGELLI
------------------------
Peter Scavongelli
Secretary
<PAGE>
Prospectus dated November 1, 2000
MAJESTIC VARIABLE UNIVERSAL LIFE
a flexible premium variable life insurance policy issued by
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
("JHVLICO")
The policy provides an investment option with fixed rates of return declared by
JHVLICO and the following variable investment options:
<TABLE>
<S> <C>
Variable Investment Option Managed By
Managed . . . . . . . . . . . . . . . . . . . . . . Independence Investment Associates, Inc. and Capital
Guardian Trust Company
Growth & Income . . . . . . . . . . . . . . Independence Investment Associates, Inc. and Putnam
Investment Management, Inc.
Fidelity VIP Contrafund(R). . . . . . . . . Fidelity Management and Research Company
Equity Index . . . . . . . . . . . . . . . . . . . State Street Global Advisors
Large Cap Value . . . . . . . . . . . . . . . T. Rowe Price Associates, Inc.
American Leaders Large Cap Value . Federated Investment Management Company
Large Cap Growth . . . . . . . . . . . . . . Independence Investment Associates, Inc.
Large Cap Aggressive Growth . . . . . Alliance Capital Management L.P.
Fidelity VIP Growth . . . . . . . . . . . . . Fidelity Management and Research Company
AIM V.I. Value . . . . . . . . . . . . . . . . . A I M Advisors, Inc.
Janus Aspen Global Technology. . . . Janus Capital Corporation
Mid Cap Value . . . . . . . . . . . . . . . . . Neuberger Berman, LLC
Mid Cap Growth . . . . . . . . . . . . . . . Janus Capital Corporation
Fundamental Growth. . . . . . . . . . . . . Putnam Investment Management, Inc.
Real Estate Equity . . . . . . . . . . . . . . Independence Investment Associates, Inc. and Morgan
Stanley Dean Witter Investment Management Inc.
Small/Mid Cap CORE SM . . . . . . . . . Goldman Sachs Asset Management
Small/Mid Cap Growth . . . . . . . . . . . Wellington Management Company, LLP
Small Cap Equity . . . . . . . . . . . . . . . Capital Guardian Trust Company
Small Cap Growth . . . . . . . . . . . . . . John Hancock Advisers, Inc.
MFS New Discovery. . . . . . . . . . . . . MFS Investment Management(R)
Global Balanced . . . . . . . . . . . . . . . . Capital Guardian Trust Company
Janus Aspen Worldwide Growth . . . Janus Capital Corporation
Templeton International Securities . . Templeton Investment Counsel, Inc.
International Equity Index . . . . . . . . Independence International Associates, Inc.
International Opportunities . . . . . . . T. Rowe Price International, Inc.
Emerging Markets Equity . . . . . . . . Morgan Stanley Dean Witter Investment Management Inc.
Short-Term Bond . . . . . . . . . . . . . . . Independence Investment Associates, Inc.
Bond Index . . . . . . . . . . . . . . . . . . . . Mellon Bond Associates, LLP
Active Bond . . . . . . . . . . . . . . . . . . . John Hancock Advisers, Inc.
Core Bond . . . . . . . . . . . . . . . . . . . . . Federated Investment Management Company
Global Bond . . . . . . . . . . . . . . . . . . . Capital Guardian Trust Company
High Yield Bond . . . . . . . . . . . . . . . Wellington Management Company, LLP
Money Market. . . . . . . . . . . . . . . . . . John Hancock Life Insurance Company
Brandes International Equity. . . . . . . Brandes Investment Partners, L.P.
Turner Core Growth . . . . . . . . . . . . . Turner Investment Partners, Inc.
Frontier Capital Appreciation . . . . . . Frontier Capital Management Company, LLC
Clifton Enhanced U.S. Equity. . . . . . The Clifton Group
</TABLE>
<PAGE>
The variable investment options shown on page 1 are those available as of
the date of this prospectus. We may add, modify or delete variable investment
options in the future.
When you select one or more of these variable investment options, we invest
your money in the corresponding investment option(s) of one or more of the
following: the John Hancock Variable Series Trust I, the AIM Variable Insurance
Funds, Inc., the Templeton Variable Products Series Fund, Fidelity's Variable
Insurance Products Fund and Variable Insurance Products Fund II, the MFS
Variable Insurance Trust, and the M Fund, Inc. (together, "the Trusts"). In this
prospectus, the investment options of the Trusts are referred to as "funds". In
the prospectuses for the Trusts, the investment options may be referred to as
"funds", "portfolios" or "series".
Each Trust is a so-called "series" type mutual fund registered with the
Securities and Exchange Commission ("SEC"). The investment results of each
variable investment option you select will depend on those of the corresponding
fund of one of the Trusts. Each of the funds is separately managed and has its
own investment objective and strategies. Attached at the end of this prospectus
is a prospectus for each Trust. The Trust prospectuses contain detailed
information about each available fund. Be sure to read those prospectuses before
selecting any of the variable investment options shown on page 1.
* * * * * * * * * * * *
Please note that the SEC has not approved or disapproved these securities,
or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
* * * * * * * * * * * *
JHVLICO Life Servicing Office
Express Delivery U.S. Mail
529 Main Street (X-4) P.O. Box 111
Charlestown, MA 02129 Boston, MA 02117
Phone: 1-800-521-1234
Fax: 1-617-572-6956
2
<PAGE>
GUIDE TO THIS PROSPECTUS
This prospectus contains information that you should know before you buy a
policy or exercise any of your rights under the policy. However, please keep in
mind that this is a prospectus - - it is not the policy. The prospectus
---
simplifies many policy provisions to better communicate the policy's essential
features. Your rights and obligations under the policy will be determined by the
language of the policy itself. When you receive your policy, read it carefully.
This prospectus is arranged in the following way:
. The section which follows is called "Basic Information". It is in a question
and answer format. We suggest you read the Basic Information section before
reading any other section of the prospectus.
. Behind the Basic Information section are illustrations of hypothetical
policy benefits that help clarify how the policy works. These start on page
21.
. Behind the illustrations is a section called "Additional Information" that
gives more details about the policy. It generally does not repeat
information that is in the Basic Information section. A table of contents
for the Additional Information section appears on page 32.
. Behind the Additional Information section are the financial statements for
JHVLICO and Separate Account S. These start on page 46.
. Finally, there is an Alphabetical Index of Key Words and Phrases at the back
of the prospectus on page 130.
After the Alphabetical Index of Key Words and Phrases, this prospectus ends and
the prospectuses for the Trusts begin.
* * * * * * * * * * * *
<PAGE>
BASIC INFORMATION
This part of the prospectus provides answers to commonly asked questions
about the policy. Here are the page numbers where the questions and answers
appear:
<TABLE>
<CAPTION>
Question Beginning on page
<S> <C>
.What is the policy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
. . . . . . .
.Who owns the policy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
. . . . .
.How can I invest money in the policy? . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
.Is there a minimum amount I must invest? . . . . . . . . . . . . . . . . . . . . . . . . 6
.How will the value of my investment in the policy change over time? . . . 8
.What charges will JHVLICO deduct from my investment in the policy? . 9
.What charges will the Trusts deduct from my investment in the policy? . 10
.What other charges could JHVLICO impose in the future?. . . . . . . . . . . . 12
.How can I change my policy's investment allocations? . . . . . . . . . . . . . . 13
.How can I access my investment in the policy?. . . . . . . . . . . . . . . . . . . . . 13
.How much will JHVLICO pay when the insured person dies? . . . . . . . . . 15
.How can I change my policy's insurance coverage? . . . . . . . . . . . . . . . . . 17
.Can I cancel my policy after it's issued? . . . . . . . . . . . . . . . . . . . . . . . . . 17
.
.Can I choose the form in which JHVLICO pays out policy proceeds? . . . 18
.To what extent can JHVLICO vary the terms and conditions of its policies
in particular cases? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
. . . . . . . .
.How will my policy be treated for income tax purposes? . . . . . . . . . . . . . 19
.How do I communicate with JHVLICO?. . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
4
<PAGE>
What is the policy?
The policy's primary purpose is to provide lifetime protection against
economic loss due to the death of the insured person. The value of the amount
you have invested under the policy may increase or decrease daily based upon the
investment results of the variable investment options that you choose. The
amount we pay to the policy's beneficiary if the insured person dies (we call
this the "death benefit") may be similarly affected.
While the insured person is alive, you will have a number of options under
the policy. Here are some major ones:
. Determine when and how much you invest in the various investment options
. Borrow or withdraw amounts you have in the investment options
. Change the beneficiary who will receive the death benefit
. Change the amount of insurance
. Turn in (i.e., "surrender") the policy for the full amount of its surrender
value
. Choose the form in which we will pay out the death benefit or other proceeds
Most of these options are subject to limits that are explained later in this
prospectus.
Who owns the policy?
That's up to the person who applies for the policy. The owner of the policy
is the person who can exercise most of the rights under the policy, such as the
right to choose the investment options or the right to surrender the policy. In
many cases, the person buying the policy is also the person who will be the
owner. However, the application for a policy can name another person or entity
(such as a trust) as owner. Whenever we've used the term "you" in this
prospectus, we've assumed that the reader is the person who has whatever right
or privilege is being discussed. There may be tax consequences if the owner and
the insured person are different, so you should discuss this issue with your tax
adviser.
How can I invest money in the policy?
Premium Payments
We call the investments you make in the policy "premiums" or "premium
payments". The amount we require as your first premium depends upon the
specifics of your policy and the insured person. Except as noted below, you can
make any other premium payments you wish at any time. That's why the policy is
called a "flexible premium" policy.
Minimum premium payment
Each premium payment must be at least $100.
5
<PAGE>
Maximum premium payments
Federal tax law limits the amount of premium payments you can make relative
to the amount of your policy's insurance coverage. We will not knowingly accept
any amount by which a premium payment exceeds the maximum. If you exceed certain
other limits, the law may impose a penalty on amounts you take out of your
policy. We'll monitor your premium payments and let you know if you're about to
exceed this limit. More discussion of these tax law requirements begins on page
40. Also, we may refuse to accept any amount of an additional premium if:
. that amount of premium would increase our insurance risk exposure, and
. the insured person doesn't provide us with adequate evidence that he or she
continues to meet our requirements for issuing insurance.
In no event, however, will we refuse to accept any premium necessary to prevent
the policy or the guaranteed minimum death benefit feature from terminating. We
reserve the right to limit premium payments above the amount of cumulative
Guaranteed Minimum Death Benefit Premiums (whether or not the guaranteed minimum
death benefit feature described on page 7 is in effect).
Ways to pay premiums
If you pay premiums by check or money order, they must be drawn on a U.S.
bank in U.S. dollars and made payable to "John Hancock Variable Life Insurance
Company." Premiums after the first must be sent to the JHVLICO Life Servicing
Office at the appropriate address shown on page 2 of this prospectus.
We will also accept premiums:
. by wire or by exchange from another insurance company, or
. if we agree to it, through a salary deduction plan with your employer.
You can obtain information on these other methods of premium payment by
contacting your JHVLICO representative or by contacting the JHVLICO Life
Servicing Office.
Is there a minimum amount I must invest?
Planned Premiums
The Policy Specifications page of your policy will show the "Planned
Premium" for the policy. You choose this amount in the policy application. The
premium reminder notice we send you is based on this amount. You will also
choose how often to pay premiums-- annually, semi-annually, quarterly or
monthly. The date on which such a payment is "due" is referred to in the policy
as a "modal processing date." However, payment of Planned Premiums is not
necessarily required. You need only invest enough to keep the policy in force
(see "Lapse and reinstatement" and "Guaranteed minimum death benefit feature"
below).
6
<PAGE>
Lapse and reinstatement
Either your entire policy or the Additional Sum Insured portion of your
Total Sum Insured can terminate (i.e., "lapse") for failure to pay charges due
under the policy. If the guaranteed minimum death benefit feature is in effect,
only the Additional Sum Insured, if any, can lapse. If the guaranteed minimum
death benefit feature is not in effect, the entire policy can lapse. In either
case, if the policy's surrender value is not sufficient to pay the charges on a
monthly deduction date, we will notify you of how much you will need to pay to
keep any Additional Sum Insured or the policy in force. You will have a 61 day
"grace period" to make that payment. If you don't pay at least the required
amount by the end of the grace period, the Additional Sum Insured or your policy
will lapse. If your policy lapses, all coverage under the policy will cease.
Even if the policy or the Additional Sum Insured terminates in this way, you can
still reactivate (i.e., "reinstate") it within 1 year from the beginning of the
grace period. You will have to provide evidence that the insured person still
meets our requirements for issuing coverage. You will also have to pay a minimum
amount of premium and be subject to the other terms and conditions applicable to
reinstatements, as specified in the policy. If the guaranteed minimum death
benefit is not in effect and the insured person dies during the grace period, we
will deduct any unpaid monthly charges from the death benefit. During such a
grace period, you cannot make a partial withdrawal or policy loan.
Guaranteed minimum death benefit feature
This feature is available only if the insured person meets certain
underwriting requirements. The feature guarantees that your Basic Sum Insured
will not lapse during the first 10 policy years, regardless of adverse
investment performance, if on each policy anniversary during that 10 year period
the amount of cumulative premiums you have paid accumulated at 4% (less all
withdrawals from the policy accumulated at 4%) equals or exceeds the sum of all
Guaranteed Minimum Death Benefit Premiums due to date accumulated at 4%. The
Guaranteed Minimum Death Benefit Premium (or "GMDB Premium) is defined in the
policy and is "due" on each policy anniversary. On the application for the
policy, you may elect for this feature to extend beyond the tenth policy year.
If you so elect, we will impose a special charge for this feature after the
tenth policy year. You may revoke the election at any time.
No GMDB Premium will ever be greater than the so-called "guideline premium"
for the policy as defined in Section 7702 of the Internal Revenue Code. Also,
the GMDB Premiums may change in the event of any change in the Additional Sum
Insured of the policy or any change in the death benefit option (see "How much
will JHVLICO pay when the insured person dies?" on page 15).
If the guaranteed minimum death benefit test is not satisfied on any policy
anniversary, we will notify you immediately and tell you how much you will need
to pay to keep the feature in effect. You will have 61 days after default to
make that payment. If you don't pay at least the required amount by the end of
that period, the feature will lapse. The feature may be reinstated in accordance
with the terms of the policy within 5 years after the policy anniversary on
which default occurred. If it is reinstated more than 1 year after such policy
anniversary, we will require evidence that the insured person still meets our
requirements for issuing coverage. We may refuse to reinstate the feature more
than once during the life of the policy.
7
<PAGE>
The guaranteed minimum death benefit feature applies only to the Basic Sum
Insured. It does not apply to any amount of Additional Sum Insured (see "How
much will JHVLICO pay when the insured person dies?" on page 15).
If there are monthly charges that remain unpaid because of this feature, we
will deduct such charges when there is sufficient surrender value to pay them.
How will the value of my investment in the policy change over time?
From each premium payment you make, we deduct the charges described under
"Deductions from premium payments" below. We invest the rest in the investment
options you've elected. Special investment rules apply to premiums processed
prior to the 20th day after your policy becomes effective. (See "Commencement of
investment performance" beginning on page 36.)
Over time, the amount you've invested in any variable investment option
will increase or decrease the same as if you had invested the same amount
directly in the corresponding fund of one of the Trusts and had reinvested all
fund dividends and distributions in additional fund shares; except that we will
deduct certain additional charges which will reduce your account value. We
describe these charges under "What charges will JHVLICO deduct from my
investment in the policy?" below.
The amount you've invested in the fixed investment option will earn
interest at a rate we declare from time to time. We guarantee that this rate
will be at least 4%. If you want to know what the current declared rate is, just
call or write to us. The current declared rate will also appear in the annual
statement we will send you. Amounts you invest in the fixed investment option
will not be subject to the mortality and expense risk charge described on page
10. Otherwise, the charges applicable to the fixed investment option are the
same as those applicable to the variable investment options.
At any time, the "account value" of your policy is equal to:
. the amount you invested,
. plus or minus the investment experience of the investment options you've
chosen,
. minus all charges we deduct, and
. minus all withdrawals you have made.
If you take a loan on the policy, however, your account value will be computed
somewhat differently. This is discussed beginning on page 14.
8
<PAGE>
What charges will JHVLICO deduct from my investment in the policy?
Deductions from premium payments
. Premium tax charge - A charge to cover state premium taxes we currently
expect to pay, on average. This charge is currently 2.35% of each premium.
. DAC tax charge - A charge to cover the increased Federal income tax burden
that we currently expect will result from receipt of premiums. This charge
is currently 1.25% of each premium.
. Premium processing charge - A charge to help defray our administrative
costs. This charge is 1.25% of each premium.
. Sales charge - A charge to help defray our sales costs. The charge is 30% of
premiums paid in the first policy year up to the Target Premium, 10% of
premiums paid in each of policy years 2 through 10 up to the Target Premium,
4% of premiums paid in each policy year after policy year 10 up to the
Target Premium, and 3.5% of premiums paid in any policy year in excess of
the Target Premium. The "Target Premium" is determined at the time the
policy is issued and will appear in the "Policy Specifications" section of
the policy.
. Optional enhanced cash value rider charge - A charge imposed if you elect
this rider. It is deducted only from premiums received in the first policy
year. The charge is 2% of premiums paid in the first policy year up to the
Target Premium.
Deductions from account value
. Issue charge - A monthly charge to help defray our administrative costs.
This is a charge per $1,000 of Basic Sum Insured at issue that varies by age
and that is deducted only during the first ten policy years. The charge will
appear in the "Policy Specifications" section of the policy. As an example,
the monthly charge for a 45 year old is 10(cent) per $1,000 of Basic Sum
Insured. The monthly charge will be at least $5 and is guaranteed not to
exceed $200.
. Administrative charge - A monthly charge to help defray our administrative
costs. This is a flat dollar charge of up to $10 (currently $5).
. Insurance charge - A monthly charge for the cost of insurance. To determine
the charge, we multiply the amount of insurance for which we are at risk by
a cost of insurance rate. The rate is derived from an actuarial table. The
table in your policy will show the maximum cost of insurance rates. The cost
of insurance rates that we currently apply are generally less than the
maximum rates. We will review the cost of insurance rates at least every 5
years and may change them from time to time. However, those rates will never
be more than the maximum rates shown in the policy. The table of rates we
use will depend on the insurance risk characteristics and (usually) gender
of the insured person, the Total Sum Insured and the length of time the
policy has been in effect. Regardless of the table used, cost of insurance
rates generally increase each year that you own your policy, as the insured
person's attained age increases. (The insured person's "attained age" on any
date is his or her age on the birthday nearest that date.) Higher current
insurance rates are generally applicable to policies issued on a "guaranteed
issue" basis, where only very limited underwriting
9
<PAGE>
information is obtained. This is often the case with policies issued to
trustees, employers and similar entities.
. Extra mortality charge - A monthly charge specified in your policy for
additional mortality risk if the insured person is subject to certain types
of special insurance risk.
. M &E charge - A daily charge for mortality and expense risks we assume. This
charge is deducted from the variable investment options. It does not apply
to the fixed investment option. The current charge is at an effective annual
rate of .20% of the value of the assets in each variable investment option.
We guarantee that this charge will never exceed an effective annual rate of
.60%.
. Guaranteed minimum death benefit charge - A monthly charge beginning in the
eleventh policy year if the guaranteed minimum death benefit feature is
elected to extend beyond the first ten policy years. This charge is
currently 1(cent) per $1,000 of Basic Sum Insured and is guaranteed not to
exceed 3(cent) per $1,000 of Basic Sum Insured. Because policies of this
type were first offered in 1997, this charge is not yet applicable to any
policy at the current rate.
. Optional benefits charge - Monthly charges for any optional insurance
benefits added to the policy by means of a rider (other than the optional
enhanced cash value rider).
. Partial withdrawal charge - A charge for each partial withdrawal of account
value to compensate us for the administrative expenses of processing the
withdrawal. The charge is equal to the lesser of $20 or 2% of the withdrawal
amount.
What charges will the Trusts deduct from my investment in the policy?
The Trusts must pay investment management fees and other operating
expenses. These fees and expenses are different for each fund and reduce the
investment return of each fund. Therefore, they also indirectly reduce the
return you will earn on any variable investment options you select.
The following figures for the funds are based on historical fund expenses,
as a percentage (rounded to two decimal places) of each fund's average daily net
assets for 1999, except as indicated in the Notes appearing at the end of this
table. Expenses of the funds are not fixed or specified under the terms of the
policy, and those expenses may vary from year to year.
<TABLE>
<CAPTION>
Investment Distribution andOther Operating Total Fund Other Operating
Management Service Expenses With Operating Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Expenses Reimbursement
John Hancock Variable Series Trust I
(Note 1):
<S> <C> <C> <C> <C> <C>
Managed . . . . . . . . . . . . . . . . . . . 0.67% N/A 0.03% 0.70% 0.03%
. . . . . .
Growth & Income . . . . . . . . . . . . . . . 0.67% N/A 0.03% 0.70% 0.03%
. . .
Equity Index . . . . . . . . . . . . . . . . 0.14% N/A 0.00% 0.14% 0.08%
. . . . . .
American Leaders Large Cap Value . . . . 0.80% N/A 0.10% 0.90% N/A
Large Cap Growth. . . . . . . . . . . . . . . 0.36% N/A 0.03% 0.39% 0.03%
. . .
Large Cap Aggressive Growth . . . . . . . . 0.98% N/A 0.10% 1.08% 0.19%
Mid Cap Value . . . . . . . . . . . . . . . . 0.80% N/A 0.10% 0.90% 0.12%
. . . .
Mid Cap Growth . . . . . . . . . . . . . . . 0.82% N/A 0.10% 0.92% 0.11%
. . . .
Fundamental Growth * . . . . . . . . . . . . 0.90% N/A 0.10% 1.00% 0.24%
. .
Real Estate Equity . . . . . . . . . . . . . 1.01% N/A 0.10% 1.11% 0.10%
. . . . .
Small/Mid Cap CORE SM . . . . . . . . . . . . 0.80% N/A 0.10% 0.90% 0.66%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Distribution Other Operating Total Fund Other Operating
and
Management Service Expenses With Operating Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Expenses Reimbursement
<S> <C> <C> <C> <C> <C>
Small/Mid Cap Growth . . . . . . . . . . . . 0.75% N/A 0.10% 0.85% 0.10%
. .
Small Cap Equity * . . . . . . . . . . . . . 0.90% N/A 0.10% 1.00% 0.16%
. . . .
Small Cap Growth. . . . . . . . . . . . . . . 0.75% N/A 0.10% 0.85% 0.14%
. . .
Global Balanced * . . . . . . . . . . . . . . 1.05% N/A 0.10% 1.15% 0.46%
. . . .
International Equity Index. . . . . . . . . . 0.16% N/A 0.10% 0.26% 0.22%
. .
International Opportunities . . . . . . . . . 0.87% N/A 0.10% 0.97% 0.29%
. .
Emerging Markets Equity . . . . . . . . . . . 1.27% N/A 0.10% 1.37% 2.17%
.
Short-Term Bond. . . . . . . . . . . . . . . 0.30% N/A 0.10% 0.40% 0.13%
. . . .
Bond Index . . . . . . . . . . . . . . . . . 0.15% N/A 0.10% 0.25% 0.20%
. . . . . .
Active Bond * . . . . . . . . . . . . . . . . 0.61% N/A 0.03% 0.64% 0.03%
. . . . .
Core Bond . . . . . . . . . . . . . . . . . . 0.70% N/A 0.10% 0.80% N/A
. . . . . .
Global Bond . . . . . . . . . . . . . . . . . 0.85% N/A 0.10% 0.95% 0.15%
. . . . .
High Yield Bond . . . . . . . . . . . . . . . 0.65% N/A 0.10% 0.75% 0.39%
. . . .
Money Market . . . . . . . . . . . . . . . . 0.25% N/A 0.06% 0.31% 0.06%
. . . . .
AIM Variable Insurance Funds, Inc.:
AIM V.I. Value . . . . . . . . . . . . . . . 0.61% N/A 0.15% 0.76% 0.15%
. . . . .
Variable Insurance Products Fund -
Service Class (Note 2):
Fidelity VIP Growth . . . . . . . . . . . . . 0.58% 0.10% 0.07% 0.75% 0.09%
. . .
Variable Insurance Products Fund II -
Service Class (Note 2):
Fidelity VIP Contrafund(R). . . . . . . . . . 0.58% 0.10% 0.07% 0.75% 0.10%
. .
Franklin Templeton Variable
Insurance Products Trust - Class 2
Shares (Note 3):
Templeton International Securities . . . . . 0.69% 0.25% 0.19% 1.13% 0.19%
Janus Aspen Series - Service Shares
Class (Note 4):
Janus Aspen Global Technology. . . . . . . 0.65% 0.25% 0.13% 1.03% 0.13%
Janus Aspen Worldwide Growth. . . . . . . 0.65% 0.25% 0.05% 0.95% 0.05%
MFS Variable Insurance Trust
(Note 5):
MFS New Discovery. . . . . . . . . . . . . . 0.90% N/A 0.17% 1.07% 1.59%
. .
M Fund, Inc. (Note 6):
Brandes International Equity. . . . . . . . . 0.96% N/A 0.25% 1.21% 0.97%
.
Turner Core Growth . . . . . . . . . . . . . 0.45% N/A 0.25% 0.70% 0.95%
. . .
Frontier Capital Appreciation . . . . . . . . 0.90% N/A 0.25% 1.15% 0.57%
.
Clifton Enhanced U.S. Equity ** . . . . . . 0.55% N/A 0.25% 0.80% 1.08%
</TABLE>
Notes to Fund Expense Table
(1) John Hancock Variable Series Trust I funds' percentages for "other fund
expenses" are based on the allocation methodology and expense reimbursement
policy adopted April 23, 1999, and are calculated as if that allocation
methodology and expense reimbursement policy had been in effect for all of 1999.
Under the expense reimbursement policy, John Hancock Life Insurance Company
voluntarily reimburses a fund when the fund's "other fund expenses" exceed
0.10% of the fund's average daily net assets (0.00% for Equity Index). All
percentages for the American Leaders Large Cap Value Fund and the Core Bond
Fund are estimates for the current fiscal year because the funds were not in
operation in 1999. Shareholders of the Managed, Growth & Income, Fundamental
Growth, Real Estate Equity,
11
<PAGE>
Small Cap Equity, Global Balanced, Active Bond, and Global Bond funds have
approved new management fee schedules, which apply to those funds effective
November 1, 2000. The investment management fee percentages for each of those
funds are calculated as if those new fee schedules had been in effect for all of
1999. The investment management fee percentages for all other funds reflect the
investment management fees that were actually payable for 1999.
* Fundamental Growth was formerly "Fundamental Mid Cap Growth", Small Cap
Equity was formerly "Small Cap Value", Global Balanced was formerly
"International Balanced" and Active Bond was formerly "Sovereign Bond".
" CORE SM" is a service mark of Goldman, Sachs & Co.
(2) A portion of the brokerage commissions that certain of the Fidelity VIP
funds pay was used to reduce fund expenses. In addition, through arrangements
with certain funds' custodian, credits realized as a result of uninvested cash
balances were used to reduce a portion of each applicable fund's expenses.
Without these reductions, the operating expenses of the funds would have been
higher, as shown in the last column of this table.
(3) On February 8, 2000, shareholders of each fund approved a merger and
reorganization that combined the Templeton International Equity Fund with the
Templeton International Securities Fund, effective May 1, 2000. Shareholders of
the Templeton International Securities Fund had approved new management fees,
which apply to the combined funds effective May 1, 2000. The table shows
restated total expenses for the fund based on the new fees and the assets, as of
December 31, 1999, of the Templeton International Securities Fund. However, if
the table reflected both the new fees and the combined assets of the Templeton
International Equity Fund and the Templeton International Securities Fund, the
estimated expenses for the two funds combined after May 1, 2000 would be:
Management Fees 0.65%, Distribution and Service Fees 0.25%, Other Expenses
0.20%, and Total Fund Operating Expenses 1.10%.
(4) The percentages for the new Service Shares Class of the Janus Aspen Global
Technology Fund and the Janus Aspen Worldwide Growth Fund are estimates because
the Service Shares Class was not in operation in 1999. All such estimates have
been made without regard to the effect of any expense offset arrangements.
(5) MFS Variable Insurance Trust Funds have an expense offset arrangement which
reduces each fund's custodian fee based upon the amount of cash maintained by
the fund with its custodian and dividend disbursing agent. Each fund may enter
into other such arrangements and directed brokerage arrangements, which would
also have the effect of reducing the fund's expenses. Expenses do not take into
account these expense reductions, and are therefore higher than the actual
expenses of the fund. MFS
Investment Management(R) (also doing business as Massachusetts Financial
Services Company) has contractually agreed to bear expense for the New
Discovery Fund, subject to reimbursement by the fund, such that such fund's
"other fund expenses" shall not exceed 0.15% of the average daily net assets
of the fund during the current fiscal year.
(6) M Fund, Inc. Funds' percentages reflect the investment management fees
currently payable and other fund expenses allocated in 1999. M Financial
Advisers, Inc. reimburses a Fund when the Fund's other operating expenses exceed
0.25% of that Fund's average daily net assets.
** Clifton Enhanced U.S. Equity Fund was formerly "Enhanced U.S. Equity Fund".
What other charges could JHVLICO impose in the future?
Except for the DAC tax charge, we currently make no charge for our Federal
income taxes. However, if we incur, or expect to incur, additional income taxes
attributable to any subaccount
12
<PAGE>
of the Account or this class of policies in future years, we reserve the right
to make a charge for such taxes. Any such charge would reduce what you earn on
any affected investment options. However, we expect that no such charge will be
necessary.
We also reserve the right to increase the premium tax charge and the DAC
tax charge in order to correspond, respectively, with changes in the state
premium tax levels and with changes in the Federal income tax treatment of the
deferred acquisition costs for this type of policy.
Under current laws, we may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, we may make
charges for such taxes.
How can I change my policy's investment allocations?
Future premium payments
At any time, you may change the investment options in which future premium
payments will be invested. You make the original allocation in the application
for the policy. The percentages you select must be in whole numbers and must
total 100%.
Transfers of existing account value
You may also transfer your existing account value from one investment
option to another. To do so, you must tell us how much to transfer, either as a
whole number percentage or as a specific dollar amount.
Under our current rules, you can make transfers out of any variable
investment option anytime you wish. However, transfers out of the fixed
investment option are currently subject to the following restrictions:
. You can only make such a transfer once a year and only during the 31 day
period following your policy anniversary.
. We must receive the request for such a transfer during the period beginning
60 days prior to the policy anniversary and ending 30 days after it.
. The most you can transfer at any one time is the greater of $500 or 20% of
the assets in your fixed investment option.
We reserve the right to impose a minimum amount limit on transfers out of
the fixed investment option. We also reserve the right to impose limits on the
number and frequency of transfers out of the variable investment options.
How can I access my investment in the policy?
Full surrender
You may surrender your policy in full at any time. If you do, we will pay
you the account value less any policy loans. This is called your "surrender
value." You must return your policy when you request a full surrender.
13
<PAGE>
Partial withdrawals
You may make a partial withdrawal of your surrender value at any time. Each
partial withdrawal must be at least $1,000. There is a charge (usually $20) for
each partial withdrawal. We will automatically reduce the account value of your
policy by the amount of the withdrawal and the related charge. Each investment
option will be reduced in the same proportion as the account value is then
allocated among them. We will not permit a partial withdrawal if it would cause
your account value to fall below 3 months' worth of monthly charges (see
"Deductions from account value" on page 9). We also reserve the right to refuse
any partial withdrawal that would cause the policy's Total Sum Insured to fall
below $250,000. Any partial withdrawal (other than a Terminated ASI Withdrawal
Amount, as described below) will reduce your death benefit under any of the
death benefit options (see "How much will JHVLICO pay when the insured person
dies?" on page 15) and under the guaranteed death benefit feature (see page 7).
Under Option A or Option M, such a partial withdrawal will reduce the Total Sum
Insured. Under Option B, such a partial withdrawal will reduce your account
value. Under the guaranteed death benefit feature, such a partial withdrawal
will reduce the Basic Sum Insured. A "Terminated ASI Withdrawal Amount" is any
partial withdrawal made while there is an Additional Sum Insured under the
policy that later lapses as described on page 7. The total of all Terminated ASI
Withdrawal Amounts cannot exceed the Additional Sum Insured in effect
immediately before the Additional Sum Insured lapses.
Policy loans
You may borrow from your policy at any time by completing a form
satisfactory to us or, if the telephone transaction authorization form has been
completed, by telephone. However, you can't borrow from your policy during a
"grace period" (see "Lapse and reinstatement" on page 7). The maximum amount you
can borrow is determined as follows:
. We first determine the account value of your policy.
. We then subtract an amount equal to 12 times the monthly charges then being
deducted from account value.
. We then multiply the resulting amount by .75% in policy years 1 through 20
and .25% thereafter.
. We then subtract the third item above from the second item above.
The minimum amount of each loan is $1,000. The interest charged on any loan
is an effective annual rate of 4.75% in the first 20 policy years and 4.25%
thereafter. Accrued interest will be added to the loan daily and will bear
interest at the same rate as the original loan amount. The amount of the loan is
deducted from the investment options in the same proportion as the account value
is then allocated among them and is placed in a special loan account. This
special loan account will earn interest at an effective annual rate of 4.0%.
However, if we determine that a loan will be treated as a taxable distribution
because of the differential between the loan interest rate and the rate being
credited on the special loan account, we reserve the right to
14
<PAGE>
decrease the rate credited on the special loan account to a rate that would, in
our reasonable judgement, result in the transaction being treated as a loan
under Federal tax law.
You can repay all or part of a loan at any time. Each repayment will be
allocated among the investment options as follows:
. The same proportionate part of the loan as was borrowed from the fixed
investment option will be repaid to the fixed investment option.
. The remainder of the repayment will be allocated among the investment
options in the same way a new premium payment would be allocated.
If you want a payment to be used as a loan repayment, you must include
instructions to that effect. Otherwise, all payments will be assumed to be
premium payments.
How much will JHVLICO pay when the insured person dies?
In your application for the policy, you will tell us how much life
insurance coverage you want on the life of the insured person. This is called
the "Total Sum Insured." Total Sum Insured is composed of the Basic Sum Insured
and any Additional Sum Insured you elect. The only limitation on how much
Additional Sum Insured you can have is that it cannot exceed 400% of the Basic
Sum Insured. There are a number of factors you should consider in determining
whether to elect coverage in the form of Basic Sum Insured or in the form of
Additional Sum Insured. These factors are discussed under "Basic Sum Insured vs.
Additional Sum Insured" on page 35.
When the insured person dies, we will pay the death benefit minus any
outstanding loans. There are three ways of calculating the death benefit. You
choose which one you want in the application. The three death benefit options
are:
. Option A - The death benefit will equal the greater of (1) the Total Sum
Insured, or (2) the minimum insurance amount (as described below).
. Option B -The death benefit will equal the greater of (1) the Total Sum
Insured plus your policy's account value on the date of death, or (2) the
minimum insurance amount.
. Option M - The death benefit will equal the greater of (1) the Total Sum
Insured plus any optional extra death benefit (as described below), or (2)
the minimum insurance amount.
For the same premium payments, the death benefit under Option B will tend
to be higher than the death benefit under Option A or Option M. On the other
hand, the monthly insurance charge will be higher under Option B to compensate
us for the additional insurance risk. Because of that, the account value will
tend to be higher under Option A or Option M than under Option B for the same
premium payments.
15
<PAGE>
Optional extra death benefit feature
The optional extra death benefit is determined as follows:
. First, we multiply your account value by a factor specified in the policy.
The factor is based on the insured person's age on the date of calculation.
. We will then subtract your Total Sum Insured.
If you change the way in which the minimum insurance amount is calculated
(see below), we may have to change the factors described above (perhaps
retroactively) in order to maintain qualification of the policy as life
insurance under Federal tax law. This feature may result in the Option M death
benefit being higher than the minimum insurance amount. Although there is no
special charge for this feature, your monthly insurance charge will be based on
that higher death benefit amount. Election of this feature must be made in the
application for the policy.
The minimum insurance amount
In order for a policy to qualify as life insurance under Federal tax law,
there has to be a minimum amount of insurance in relation to account value.
There are two tests that can be applied under Federal tax law - - the "guideline
premium and cash value corridor test" and the "cash value accumulation test."
When you elect the death benefit option, you must also elect which test you wish
to have applied. Under the guideline premium and cash value corridor test, we
compute the minimum insurance amount each business day by multiplying the
account value on that date by the "required additional death benefit factor"
applicable on that date. In this case, the death benefit factors are derived by
applying the guideline premium and cash value corridor test. The death benefit
factor starts out at 2.50 for ages at or below 40 and decreases as attained age
increases, reaching a low of 1.0 at age 95. Under the cash value accumulation
test, we compute the minimum insurance amount each business day by multiplying
the account value on that date by the death benefit factor applicable on that
date. In this case, the death benefit factors are derived by applying the cash
value accumulation test. The death benefit factor decreases as attained age
increases. Regardless of the test you elect, a table showing the required
additional death benefit factor for each age will appear in the policy.
As noted above, you have to elect which test will be applied when you elect
the death benefit option. The cash value accumulation test may be preferable if
you want an increasing death benefit in later policy years and/or want to fund
the policy at the "7 pay" limit for the full 7 years (see "Tax Considerations"
beginning on page 40). The guideline premium and cash value corridor test may be
preferable if you want the account value under the policy to increase without
increasing the death benefit as quickly as might otherwise be required.
Enhanced cash value rider
In the application for the policy, you may elect to purchase the enhanced
cash value rider. This rider provides an enhanced cash value benefit (in
addition to the surrender value) if you surrender the policy within the first
nine policy years. The amount of the benefit will be shown in the "Policy
Specifications" section of the policy. The benefit is also included in the
account value when calculating the death benefit. Election of this rider could
increase your insurance
16
<PAGE>
charge since it affects our amount at risk under the policy. The amount
available for partial withdrawals and loans are based on the surrender value and
will in no way be increased due to this rider.
How can I change my policy's insurance coverage?
Increase in coverage
The Basic Sum Insured generally cannot be increased after policy issue.
After the first policy year, you may request an increase in the Additional Sum
Insured. However, you will have to provide us with evidence that the insured
person still meets our requirements for issuing insurance coverage. As to when
an approved increase would take effect, see "Effective date of other policy
transactions" on page 37.
Decrease in coverage
The Basic Sum Insured generally cannot be decreased after policy issue.
After the first policy year, you may request a reduction in the Additional Sum
Insured, but only if:
. the remaining Total Sum Insured will be at least $250,000, and
. the remaining Total Sum Insured will at least equal the minimum required by
the tax laws to maintain the policy's life insurance status.
We may refuse any decrease in Additional Sum Insured if it would cause the
death benefit to reflect an increase pursuant to the optional extra death
benefit feature. As to when an approved decrease would take effect, see
"Effective date of other policy transactions" on page 37.
Change of death benefit option
At any time, you may request to change your coverage from death benefit
Option B to Option A. Our administrative systems do not currently permit any
other change of death benefit option. Such changes may be permitted in the
future, but that is not guaranteed.
Tax consequences
Please read "Tax considerations" starting on page 40 to learn about
possible tax consequences of changing your insurance coverage under the policy.
Can I cancel my policy after it's issued?
You have the right to cancel your policy within 10 days after you receive
it (this period may be longer in some states). This is often referred to as the
"free look" period. To cancel your policy, simply deliver or mail the policy to
JHVLICO at one of the addresses shown on page 2, or to the JHVLICO
representative who delivered the policy to you.
In most states, you will receive a refund of any premiums you've paid. In
some states, the refund will be your account value on the date of cancellation
plus all charges deducted by
17
<PAGE>
JHVLICO or the Trusts prior to that date. The date of cancellation will be the
date of such mailing or delivery.
Can I choose the form in which JHVLICO pays out policy proceeds?
Choosing a payment option
You may choose to receive proceeds from the policy as a single sum. This
includes proceeds that become payable because of death or full surrender.
Alternatively, you can elect to have proceeds of $1,000 or more applied to any
of a number of other payment options, including the following:
. Option 1 - Proceeds left with us to accumulate with interest
. Option 2A - Equal monthly payments of a specified amount until all proceeds
are paid out
. Option 2B - Equal monthly payments for a specified period of time
. Option 3 - Equal monthly payments for life, but with payments guaranteed for
a specific number of years
. Option 4 - Equal monthly payments for life with no refund
. Option 5 - Equal monthly payments for life with a refund if all of the
proceeds haven't been paid out
You cannot choose an option if the monthly payments under the option would
be less than $50. We will issue a supplementary agreement when the proceeds are
applied to any alternative payment option. That agreement will spell out the
terms of the option in full. We will credit interest on each of the above
options. For Options 1 and 2A, the interest will be at least an effective annual
rate of 3 1/2%.
Changing a payment option
You can change the payment option at any time before the proceeds are
payable. If you haven't made a choice, the payee of the proceeds has a
prescribed period in which he or she can make that choice.
Tax impact
There may be tax consequences to you or your beneficiary depending upon
which payment option is chosen. You should consult with a qualified tax adviser
before making that choice.
18
<PAGE>
To what extent can JHVLICO vary the terms and conditions of its policies in
particular cases?
Listed below are some variations we can make in the terms of our policies.
Any variation will be made only in accordance with uniform rules that we apply
fairly to all of our customers.
State law insurance requirements
Insurance laws and regulations apply to JHVLICO in every state in which its
policies are sold. As a result, various terms and conditions of your insurance
coverage may vary from the terms and conditions described in this prospectus,
depending upon where you reside. These variations will be reflected in your
policy or in endorsements attached to your policy.
Variations in expenses or risks
We may vary the charges and other terms of our policies where special
circumstances result in sales or administrative expenses, mortality risks or
other risks that are different from those normally associated with the policies.
These include the type of variations discussed under "Reduced charges for
eligible classes" on page 38. No variation in any charge will exceed any maximum
stated in this prospectus with respect to that charge.
How will my policy be treated for income tax purposes?
Generally, death benefits paid under policies such as yours are not subject
to income tax. Earnings on your account value are not subject to income tax as
long as we don't pay them out to you. If we do pay out any amount of your
account value upon surrender or partial withdrawal, all or part of that
distribution should generally be treated as a return of the premiums you've paid
and should not be subject to income tax. Amounts you borrow are generally not
taxable to you.
However, some of the tax rules change if your policy is found to be a
"modified endowment contract." This can happen if you've paid more than a
certain amount of premiums that is prescribed by the tax laws. Additional taxes
and penalties may be payable for policy distributions of any kind.
For further information about the tax consequences of owning a policy,
please read "Tax considerations" beginning on page 40.
How do I communicate with JHVLICO?
General Rules
You should mail or express all checks and money orders for premium payments
and loan repayments to the JHVLICO Life Servicing Office at the appropriate
address shown on page 2.
Certain requests must be made in writing and be signed and dated by you.
They include the following:
. loans, surrenders or partial withdrawals
19
<PAGE>
. transfers of account value among investment options
. change of allocation among investment options for new premium payments o
change of death benefit option o increase or decrease in Total Sum Insured o
change of beneficiary o election of payment option for policy proceeds o tax
withholding elections o election of telephone transaction privilege
You should mail or express these requests to the JHVLICO Life Servicing Office
at the appropriate address shown on page 2. You should also send notice of the
insured person's death and related documentation to the JHVLICO Life Servicing
Office. We don't consider that we've "received" any communication until such
time as it has arrived at the proper place and in the proper and complete form.
We have special forms that should be used for a number of the requests
mentioned above. You can obtain these forms from the JHVLICO Life Servicing
Office or your JHVLICO representative. Each communication to us must include
your name, your policy number and the name of the insured person. We cannot
process any request that doesn't include this required information. Any
communication that arrives after the close of our business day, or on a day that
is not a business day, will be considered "received" by us on the next following
business day. Our business day currently closes at 4:00 p.m. Eastern Standard
Time, but special circumstances (such as suspension of trading on a major
exchange) may dictate an earlier closing time.
Telephone Transactions
If you complete a special authorization form, you can request loans,
transfers among investment options and changes of allocation among investment
options simply by telephoning us at 1-800-521-1234 or by faxing us at
1-617-572-6956. Any fax request should include your name, daytime telephone
number, policy number and, in the case of transfers and changes of allocation,
the names of the investment options involved. We will honor telephone
instructions from anyone who provides the correct identifying information, so
there is a risk of loss to you if this service is used by an unauthorized
person. However, you will receive written confirmation of all telephone
transactions. There is also a risk that you will be unable to place your request
due to equipment malfunction or heavy phone line usage. If this occurs, you
should submit your request in writing.
The policies are not designed for professional market timing organizations
or other persons or entities that use programmed or frequent transfers among
investment options. For reasons such as that, we reserve the right to change our
telephone transaction policies or procedures at any time. We also reserve the
right to suspend or terminate the privilege altogether.
20
<PAGE>
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES,
SURRENDER VALUES AND ACCUMULATED PREMIUMS
The following tables illustrate the changes in death benefit, account value
and surrender value of the policy under certain hypothetical circumstances that
we assume solely for this purpose. Each table separately illustrates the
operation of a policy for a specified issue age, premium payment schedule and
Total Sum Insured. The amounts shown are for the end of each policy year and
assume that all of the account value is invested in funds that achieve
investment returns at constant annual rates of 0%, 6% and 12% (i.e., before any
fees or expenses deducted from Trust assets). After the deduction of average
fees and expenses at the Trust level (as described below) the corresponding net
annual rates of return would be -0.82%, 5.13% and 11.08%. (Investment return
reflects investment income and all realized and unrealized capital gains and
losses.) The tables assume annual Planned Premiums that are paid at the
beginning of each policy year for an insured person who is a 45 year old male
standard non-smoker underwriting risk when the policy is issued.
Tables are provided for each of the two death benefit options. The tables
headed "Current Charges" assume that the current rates for all charges deducted
by JHVLICO will apply in each year illustrated. The tables headed "Maximum
Charges" are the same, except that the maximum permitted rates for all years are
used for all charges. The tables do not reflect any charge that we reserve the
right to make but are not currently making.
With respect to fees and expenses deducted from Trust assets, the amounts
shown in all tables reflect (1) investment management fees equivalent to an
effective annual rate of .71%, and (2) an assumed average asset charge for all
other Trust operating expenses equivalent to an effective annual rate of .11%.
These rates are the arithmetic average for all funds of the Trusts. In other
words, they are based on the hypothetical assumption that policy account values
are allocated equally among the variable investment options. The actual rates
associated with any policy will vary depending upon the actual allocation of
policy values among the investment options. The charge shown above for all other
Trust operating expenses reflects reimbursements to certain funds as described
in the footnotes to the table beginning on page 10. We currently expect those
reimbursement arrangements to continue indefinitely, but that is not guaranteed.
The second column of each table shows the amount you would have at the end
of each policy year if an amount equal to the assumed Planned Premiums were
invested to earn interest, after taxes, at 5% compounded annually. This is not a
policy value. It is included for comparison purposes only.
Because your circumstances will no doubt differ from those in the
illustrations that follow, values under your policy will differ, in most cases
substantially. Upon request, we will furnish you with a comparable illustration
reflecting your proposed insured person's issue age, sex and underwriting risk
classification, and the Total Sum Insured and annual Planned Premium amount
requested.
21
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue age 45, Fully Underwritten Nonsmoker Underwriting Class
Option A Death Benefit Cash Value Accumulation Test No Guaranteed
Minimum Death Benefit After Tenth Policy Year Planned Premium: $4,530*
Using Current Charges
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
<TABLE>
<CAPTION>
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 250,000 250,000 250,000 2,136 2,286 2,437
2 9,751 250,000 250,000 250,000 5,091 5,579 6,085
3 14,995 250,000 250,000 250,000 7,965 8,981 10,076
4 20,501 250,000 250,000 250,000 10,816 12,558 14,510
5 26,283 250,000 250,000 250,000 13,634 16,310 19,428
6 32,353 250,000 250,000 250,000 16,425 20,251 24,887
7 38,727 250,000 250,000 250,000 19,197 24,398 30,954
8 45,420 250,000 250,000 250,000 21,951 28,764 37,701
9 52,448 250,000 250,000 250,000 24,679 33,349 45,194
10 59,827 250,000 250,000 250,000 27,376 38,163 53,510
11 67,575 250,000 250,000 250,000 30,599 43,799 63,351
12 75,710 250,000 250,000 250,000 33,745 49,676 74,241
13 84,252 250,000 250,000 250,000 36,778 55,775 86,271
14 93,221 250,000 250,000 250,000 39,700 62,110 99,579
15 102,638 250,000 250,000 250,000 42,511 68,698 114,317
16 112,527 250,000 250,000 250,000 45,218 75,559 130,664
17 122,910 250,000 250,000 271,781 47,812 82,706 148,766
18 133,812 250,000 250,000 300,626 50,285 90,152 168,721
19 145,259 250,000 250,000 331,594 52,637 97,917 190,714
20 157,278 250,000 250,000 364,895 54,858 106,020 214,948
25 227,014 250,000 250,000 573,213 62,875 151,813 377,337
30 316,016 250,000 289,164 881,263 66,177 209,828 639,477
35 429,609 250,000 356,407 1,347,762 60,549 279,820 1,058,147
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
22
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue Age 45, Fully Underwritten Nonsmoker Underwriting Class
Option A Death Benefit Cash Value Accumulation Test No Guaranteed
Minimum Death Benefit Option Tenth Policy Year Planned Premium: $4,530*
Using Maximum Charges
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
<TABLE>
<CAPTION>
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 250,000 250,000 250,000 1,375 1,500 1,627
2 9,751 250,000 250,000 250,000 3,543 3,933 4,340
3 14,995 250,000 250,000 250,000 5,595 6,388 7,249
4 20,501 250,000 250,000 250,000 7,527 8,863 10,371
5 26,283 250,000 250,000 250,000 9,331 11,350 13,720
6 32,353 250,000 250,000 250,000 11,001 13,843 17,318
7 38,727 250,000 250,000 250,000 12,520 16,324 21,174
8 45,420 250,000 250,000 250,000 13,873 18,778 25,306
9 52,448 250,000 250,000 250,000 15,042 21,187 29,728
10 59,827 250,000 250,000 250,000 16,007 23,528 34,458
11 67,575 250,000 250,000 250,000 17,326 26,384 40,148
12 75,710 250,000 250,000 250,000 18,412 29,173 46,280
13 84,252 250,000 250,000 250,000 19,257 31,889 52,911
14 93,221 250,000 250,000 250,000 19,847 34,517 60,100
15 102,638 250,000 250,000 250,000 20,165 37,041 67,913
16 112,527 250,000 250,000 250,000 20,182 39,430 76,422
17 122,910 250,000 250,000 250,000 19,861 41,651 85,708
18 133,812 250,000 250,000 250,000 19,157 43,659 95,864
19 145,259 250,000 250,000 250,000 18,011 45,397 106,999
20 157,278 250,000 250,000 250,000 16,367 46,810 119,254
25 227,014 ** 250,000 307,413 ** 46,817 202,365
30 316,016 ** 250,000 447,217 ** 23,713 324,517
35 429,609 ** ** 631,413 ** ** 495,731
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
** Policy lapses unless additional premium payments are made.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
23
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue Age 45, Fully Underwritten Nonsmoker Underwriting Class
Option B Death Benefit Cash Value Accumulation Test No Guaranteed
Minimum Death Benefit After Tenth Policy Year Planned Premium: $4,530*
Using Current Charges
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
<TABLE>
<CAPTION>
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 252,132 252,282 252,432 2,132 2,282 2,432
2 9,751 255,076 255,562 256,066 5,076 5,562 6,066
3 14,995 257,931 258,942 260,032 7,931 8,942 10,032
4 20,501 260,757 262,489 264,428 10,757 12,489 14,428
5 26,283 263,544 266,199 269,292 13,544 16,199 19,292
6 32,353 266,298 270,088 274,678 16,298 20,088 24,678
7 38,727 269,026 274,170 280,652 19,026 24,170 30,652
8 45,420 271,732 278,458 287,279 21,732 28,458 37,279
9 52,448 274,404 282,952 294,622 24,404 32,952 44,622
10 59,827 277,040 287,657 302,751 27,040 37,657 52,751
11 67,575 280,191 293,160 312,355 30,191 43,160 62,355
12 75,710 283,251 298,874 322,939 33,251 48,874 72,939
13 84,252 286,175 304,760 334,561 36,175 54,760 84,561
14 93,221 288,962 310,825 347,332 38,962 60,825 97,332
15 102,638 291,611 317,077 361,373 41,611 67,077 111,373
16 112,527 294,126 323,525 376,825 44,126 73,525 126,825
17 122,910 296,496 330,167 393,828 46,496 80,167 143,828
18 133,812 298,708 336,997 412,535 48,708 86,997 162,535
19 145,259 300,758 344,020 433,125 50,758 94,020 183,125
20 157,278 302,632 351,228 455,786 52,632 101,228 205,786
25 227,014 307,825 388,549 606,836 57,825 138,549 356,836
30 316,016 306,478 428,810 851,541 56,478 178,810 601,541
35 429,609 293,393 466,463 1,267,804 43,393 216,463 995,371
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
24
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue Age 45, Fully Underwritten Nonsmoker Underwriting Class
Option B Death Benefit Cash Value Accumulation Test No Guaranteed
Minimum Death Benefit After Tenth Policy Year Planned Premium: $4,530*
Using Maximum Charges
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
<TABLE>
<CAPTION>
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 251,365 251,490 251,616 1,365 1,490 1,616
2 9,751 253,513 253,899 254,303 3,513 3,899 4,303
3 14,995 255,531 256,315 257,165 5,531 6,315 7,165
4 20,501 257,416 258,731 260,213 7,416 8,731 10,213
5 26,283 259,157 261,135 263,455 9,157 11,135 13,455
6 32,353 260,750 263,519 266,903 10,750 13,519 16,903
7 38,727 262,173 265,858 270,553 12,173 15,858 20,553
8 45,420 263,412 268,133 274,409 13,412 18,133 24,409
9 52,448 264,447 270,318 278,468 14,447 20,318 28,468
10 59,827 265,255 272,383 282,725 15,255 22,383 32,725
11 67,575 266,390 274,897 287,800 16,390 24,897 37,800
12 75,710 267,262 277,269 293,141 17,262 27,269 43,141
13 84,252 267,864 279,482 298,765 17,864 29,482 48,765
14 93,221 268,182 281,511 304,682 18,182 31,511 54,682
15 102,638 268,200 283,325 310,901 18,200 33,325 60,901
16 112,527 267,890 284,882 317,419 17,890 34,882 67,419
17 122,910 267,217 286,131 324,225 17,217 36,131 74,225
18 133,812 266,138 287,008 331,299 16,138 37,008 81,299
19 145,259 264,604 287,438 338,610 14,604 37,438 88,610
20 157,278 262,566 287,345 346,123 12,566 37,345 96,123
25 227,014 ** 276,445 385,660 ** 26,445 135,660
30 316,016 ** ** 421,564 ** ** 171,564
35 429,609 ** ** 431,194 ** ** 181,194
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
** Policy lapses unless additional premium payments are made.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
25
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue age 45, Fully Underwritten Nonsmoker Underwriting Class Option
M Death Benefit Cash Value Accumulation Test No Guaranteed Minimum Death
Benefit After Tenth Policy Year Planned Premium: $4,530* Using Current
Charges
<TABLE>
<CAPTION>
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 250,000 250,000 250,000 2,136 2,286 2,437
2 9,751 250,000 250,000 250,000 5,091 5,579 6,085
3 14,995 250,000 250,000 250,000 7,965 8,981 10,076
4 20,501 250,000 250,000 250,000 10,816 12,558 14,510
5 26,283 250,000 250,000 250,000 13,634 16,310 19,428
6 32,353 250,000 250,000 250,000 16,425 20,251 24,887
7 38,727 250,000 250,000 250,000 19,197 24,398 30,954
8 45,420 250,000 250,000 250,000 21,951 28,764 37,701
9 52,448 250,000 250,000 250,000 24,679 33,349 45,194
10 59,827 250,000 250,000 250,000 27,376 38,163 53,510
11 67,575 250,000 250,000 250,406 30,599 43,799 63,351
12 75,710 250,000 250,000 280,854 33,745 49,676 74,192
13 84,252 250,000 250,000 312,168 36,778 55,775 86,063
14 93,221 250,000 250,000 344,422 39,700 62,110 99,057
15 102,638 250,000 250,000 377,713 42,511 68,698 113,278
16 112,527 250,000 250,000 412,174 45,218 75,559 128,845
17 122,910 250,000 253,928 447,888 47,812 82,702 145,873
18 133,812 250,000 265,602 484,952 50,285 90,086 164,485
19 145,259 250,000 276,783 523,543 52,637 97,714 184,828
20 157,278 250,000 287,506 563,789 54,858 105,584 207,047
25 227,014 250,000 333,425 790,116 62,875 147,801 350,244
30 316,016 250,000 372,508 1,080,295 66,177 196,616 570,197
35 429,609 250,000 406,555 1,457,838 60,549 251,285 901,068
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
26
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue age 45, Fully Underwritten Nonsmoker Underwriting Class
Option M Death Benefit Cash Value Accumulation Test No Guaranteed Minimum
Death Benefit After Tenth Policy Year Planned Premium: $4,530* Using
Maximum Charges
<TABLE>
<CAPTION>
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 250,000 250,000 250,000 1,375 1,500 1,627
2 9,751 250,000 250,000 250,000 3,543 3,933 4,340
3 14,995 250,000 250,000 250,000 5,595 6,388 7,249
4 20,501 250,000 250,000 250,000 7,527 8,863 10,371
5 26,283 250,000 250,000 250,000 9,331 11,350 13,720
6 32,353 250,000 250,000 250,000 11,001 13,843 17,318
7 38,727 250,000 250,000 250,000 12,520 16,324 21,174
8 45,420 250,000 250,000 250,000 13,873 18,778 25,306
9 52,448 250,000 250,000 250,000 15,042 21,187 29,728
10 59,827 250,000 250,000 250,000 16,007 23,528 34,458
11 67,575 250,000 250,000 250,000 17,326 26,384 40,148
12 75,710 250,000 250,000 250,000 18,412 29,173 46,280
13 84,252 250,000 250,000 250,000 19,257 31,889 52,911
14 93,221 250,000 250,000 250,000 19,847 34,517 60,100
15 102,638 250,000 250,000 250,000 20,165 37,041 67,913
16 112,527 250,000 250,000 250,000 20,182 39,430 76,422
17 122,910 250,000 250,000 262,891 19,861 41,651 85,621
18 133,812 250,000 250,000 281,018 19,157 43,659 95,315
19 145,259 250,000 250,000 298,817 18,011 45,397 105,492
20 157,278 250,000 250,000 316,267 16,367 46,810 116,146
25 227,014 ** 250,000 398,744 ** 46,817 176,756
30 316,016 ** 250,000 471,793 ** 23,713 249,020
35 429,609 ** ** 533,734 ** ** 329,893
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
** Policy lapses unless additional premium payments are made.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
27
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue age 45, Fully Underwritten Nonsmoker Underwriting Class
Option A Death Benefit Guideline Premium and Cash Value Corridor Test No
Guaranteed Minimum Death Benefit After Tenth Policy Year Planned Premium:
$4,530* Using Current Charges
<TABLE>
<CAPTION>
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 250,000 250,000 250,000 2,136 2,286 2,437
2 9,751 250,000 250,000 250,000 5,091 5,579 6,085
3 14,995 250,000 250,000 250,000 7,965 8,981 10,076
4 20,501 250,000 250,000 250,000 10,816 12,558 14,510
5 26,283 250,000 250,000 250,000 13,634 16,310 19,428
6 32,353 250,000 250,000 250,000 16,425 20,251 24,887
7 38,727 250,000 250,000 250,000 19,197 24,398 30,954
8 45,420 250,000 250,000 250,000 21,951 28,764 37,701
9 52,448 250,000 250,000 250,000 24,679 33,349 45,194
10 59,827 250,000 250,000 250,000 27,376 38,163 53,510
11 67,575 250,000 250,000 250,000 30,599 43,799 63,351
12 75,710 250,000 250,000 250,000 33,745 49,676 74,241
13 84,252 250,000 250,000 250,000 36,778 55,775 86,271
14 93,221 250,000 250,000 250,000 39,700 62,110 99,579
15 102,638 250,000 250,000 250,000 42,511 68,698 114,317
16 112,527 250,000 250,000 250,000 45,218 75,559 130,664
17 122,910 250,000 250,000 250,000 47,812 82,706 148,810
18 133,812 250,000 250,000 250,000 50,285 90,152 168,974
19 145,259 250,000 250,000 250,000 52,637 97,917 191,409
20 157,278 250,000 250,000 263,978 54,858 106,020 216,375
25 227,014 250,000 250,000 448,961 62,875 151,813 387,035
30 316,016 250,000 250,000 717,809 66,177 211,012 670,850
35 429,609 250,000 304,027 1,201,541 60,549 289,549 1,144,325
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
28
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue Age 45, Fully Underwritten Nonsmoker Underwriting Class
Option A Death Benefit Guideline Premium and Cash Value Corridor Test No
Guaranteed Minimum Death Benefit After Tenth Policy Year Planned
Premium: $4,530* Using Maximum Charges
<TABLE>
<CAPTION>
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 250,000 250,000 250,000 1,375 1,500 1,627
2 9,751 250,000 250,000 250,000 3,543 3,933 4,340
3 14,995 250,000 250,000 250,000 5,595 6,388 7,249
4 20,501 250,000 250,000 250,000 7,527 8,863 10,371
5 26,283 250,000 250,000 250,000 9,331 11,350 13,720
6 32,353 250,000 250,000 250,000 11,001 13,843 17,318
7 38,727 250,000 250,000 250,000 12,520 16,324 21,174
8 45,420 250,000 250,000 250,000 13,873 18,778 25,306
9 52,448 250,000 250,000 250,000 15,042 21,187 29,728
10 59,827 250,000 250,000 250,000 16,007 23,528 34,458
11 67,575 250,000 250,000 250,000 17,326 26,384 40,148
12 75,710 250,000 250,000 250,000 18,412 29,173 46,280
13 84,252 250,000 250,000 250,000 19,257 31,889 52,911
14 93,221 250,000 250,000 250,000 19,847 34,517 60,100
15 102,638 250,000 250,000 250,000 20,165 37,041 67,913
16 112,527 250,000 250,000 250,000 20,182 39,430 76,422
17 122,910 250,000 250,000 250,000 19,861 41,651 85,708
18 133,812 250,000 250,000 250,000 19,157 43,659 95,864
19 145,259 250,000 250,000 250,000 18,011 45,397 106,999
20 157,278 250,000 250,000 250,000 16,367 46,810 119,254
25 227,014 ** 250,000 250,000 ** 46,817 205,151
30 316,016 ** 250,000 379,615 ** 23,713 354,780
35 429,609 ** ** 627,605 ** ** 597,719
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
** Policy lapses unless additional premium payments are made.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
29
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue age 45, Fully Underwritten Nonsmoker Underwriting Class
Option B Death Benefit Guideline Premium and Cash Value Corridor Test No
Guaranteed Minimum Death Benefit After Tenth Policy Year Planned Premium:
$4,530* Using Current Charges
<TABLE>
<CAPTION>
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 252,132 252,282 252,432 2,132 2,282 2,432
2 9,751 255,076 255,562 256,066 5,076 5,562 6,066
3 14,995 257,931 258,942 260,032 7,931 8,942 10,032
4 20,501 260,757 262,489 264,428 10,757 12,489 14,428
5 26,283 263,544 266,199 269,292 13,544 16,199 19,292
6 32,353 266,298 270,088 274,678 16,298 20,088 24,678
7 38,727 269,026 274,170 280,652 19,026 24,170 30,652
8 45,420 271,732 278,458 287,279 21,732 28,458 37,279
9 52,448 274,404 282,952 294,622 24,404 32,952 44,622
10 59,827 277,040 287,657 302,751 27,040 37,657 52,751
11 67,575 280,191 293,160 312,355 30,191 43,160 62,355
12 75,710 283,251 298,874 322,939 33,251 48,874 72,939
13 84,252 286,175 304,760 334,561 36,175 54,760 84,561
14 93,221 288,962 310,825 347,332 38,962 60,825 97,332
15 102,638 291,611 317,077 361,373 41,611 67,077 111,373
16 112,527 294,126 323,525 376,825 44,126 73,525 126,825
17 122,910 296,496 330,167 393,828 46,496 80,167 143,828
18 133,812 298,708 336,997 412,535 48,708 86,997 162,535
19 145,259 300,758 344,020 433,125 50,758 94,020 183,125
20 157,278 302,632 351,228 455,786 52,632 101,228 205,786
25 227,014 307,825 388,549 606,836 57,825 138,549 356,836
30 316,016 306,478 428,810 851,541 56,478 178,810 601,541
35 429,609 293,393 466,463 1,245,785 43,393 216,463 995,785
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
30
<PAGE>
Plan: Flexible Premium Variable Life $250,000
Total Sum Insured
Male, Issue Age 45, Fully Underwritten Nonsmoker Underwriting Class
Option B Death Benefit Guideline Premium and Cash Value Corridor Test No
Guaranteed Minimum Death Benefit After Tenth Policy Year Planned Premium:
$4,530* Using Maximum Charges
<TABLE>
<CAPTION>
Death Benefit Surrender Value
Assuming Assuming
hypothetical hypothetical
End of Planned Premiums
gross annual gross annual
return of return of
Policy accumulated at
Year 5% annual interest 0% 6% 12% 0% 6% 12%
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,757 251,365 251,490 251,616 1,365 1,490 1,616
2 9,751 253,513 253,899 254,303 3,513 3,899 4,303
3 14,995 255,531 256,315 257,165 5,531 6,315 7,165
4 20,501 257,416 258,731 260,213 7,416 8,731 10,213
5 26,283 259,157 261,135 263,455 9,157 11,135 13,455
6 32,353 260,750 263,519 266,903 10,750 13,519 16,903
7 38,727 262,173 265,858 270,553 12,173 15,858 20,553
8 45,420 263,412 268,133 274,409 13,412 18,133 24,409
9 52,448 264,447 270,318 278,468 14,447 20,318 28,468
10 59,827 265,255 272,383 282,725 15,255 22,383 32,725
11 67,575 266,390 274,897 287,800 16,390 24,897 37,800
12 75,710 267,262 277,269 293,141 17,262 27,269 43,141
13 84,252 267,864 279,482 298,765 17,864 29,482 48,765
14 93,221 268,182 281,511 304,682 18,182 31,511 54,682
15 102,638 268,200 283,325 310,901 18,200 33,325 60,901
16 112,527 267,890 284,882 317,419 17,890 34,882 67,419
17 122,910 267,217 286,131 324,225 17,217 36,131 74,225
18 133,812 266,138 287,008 331,299 16,138 37,008 81,299
19 145,259 264,604 287,438 338,610 14,604 37,438 88,610
20 157,278 262,566 287,345 346,123 12,566 37,345 96,123
25 227,014 ** 276,445 385,660 ** 26,445 135,660
30 316,016 ** ** 421,564 ** ** 171,564
35 429,609 ** ** 431,194 ** ** 181,194
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy year, or optional rider benefits are
elected.
** Policy lapses unless additional premium payments are made.
It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time.
31
<PAGE>
ADDITIONAL INFORMATION
This section of the prospectus provides additional detailed information
that is not contained in the Basic Information section on pages 4 through 20.
<TABLE>
<CAPTION>
Contents of this section Beginning on page
------------------------ -----------------
<S> <C>
Description of JHVLICO 33
How we support the policy and investment options 33
Procedures for issuance of a policy 34
Basic Sum Insured vs. Additional Sum Insured 35
Commencement of investment performance 36
How we process certain policy transactions 36
Effects of policy loans 37
Additional information about how certain policy charges work 38
How we market the policies 39
Tax considerations 40
Reports that you will receive 41
Voting privileges that you will have 42
Changes that JHVLICO can make as to your policy 42
Adjustments we make to death benefits 43
When we pay policy proceeds 43
Other details about exercising rights and paying benefits 43
Legal matters 44
Registration statement filed with the SEC 44
Accounting and actuarial experts 44
Financial statements of JHVLICO and the Account 44
List of Directors and Executive Officers of JHVLICO 45
</TABLE>
32
<PAGE>
Description of JHVLICO
We are JHVLICO, a stock life insurance company chartered in 1979 under
Massachusetts law. We are authorized to transact a life insurance and annuity
business in all states other than New York and in the District of Columbia. We
began selling variable life insurance policies in 1980.
We are regulated and supervised by the Massachusetts Commissioner of
Insurance, who periodically examines our affairs. We also are subject to the
applicable insurance laws and regulations of all jurisdictions in which we are
authorized to do business. We are required to submit annual statements of our
operations, including financial statements, to the insurance departments of the
various jurisdictions in which we do business for purposes of determining
solvency and compliance with local insurance laws and regulations. The
regulation to which we are subject, however, does not provide a guarantee as to
such matters.
We are a wholly-owned subsidiary of John Hancock Life Insurance Company
("John Hancock"), a Massachusetts stock life insurance company. On February 1,
2000, John Hancock Mutual Life Insurance Company (which was chartered in
Massachusetts in 1862) converted to a stock company by "demutualizing" and
changed its name to John Hancock Life Insurance Company. As part of the
demutualization process, John Hancock became a subsidiary of John Hancock
Financial Services, Inc., a newly formed publicly-traded corporation. John
Hancock's home office is at John Hancock Place, Boston, Massachusetts 02117. As
of December 31, 1999, John Hancock's assets were approximately $71 billion and
it had invested approximately $575 million in JHVLICO in connection with
JHVLICO's organization and operation. It is anticipated that John Hancock will
from time to time make additional capital contributions to JHVLICO to enable us
to meet our reserve requirements and expenses in connection with our business.
John Hancock is committed to make additional capital contributions if necessary
to ensure that we maintain a positive net worth.
How we support the policy and investment options
Separate Account S
The variable investment options shown on page 1 are in fact subaccounts of
Separate Account S (the "Account"), a separate account established by us under
Massachusetts law. The Account meets the definition of "separate account" under
the Federal securities laws and is registered as a unit investment trust under
the Investment Company Act of 1940 ("1940 Act"). Such registration does not
involve supervision by the SEC of the management of the Account or JHVLICO.
The Account's assets are the property of JHVLICO. Each policy provides that
amounts we hold in the Account pursuant to the policies cannot be reached by any
other persons who may have claims against us.
The assets in each subaccount are invested in the corresponding fund of one
of the Trusts. New subaccounts may be added as new funds are added to the Trusts
and made available to policy owners. Existing subaccounts may be deleted if
existing funds are deleted from the Trusts.
We will purchase and redeem Trust shares for the Account at their net asset
value without any sales or redemption charges. Shares of a Trust represent an
interest in one of the funds of the Trust which corresponds to a subaccount of
the Account. Any dividend or capital gains distributions received by the Account
will be reinvested in shares of that same fund at their net asset value as of
the dates paid.
On each business day, shares of each fund are purchased or redeemed by us
for each subaccount based on, among other things, the amount of net premiums
allocated to the subaccount, distributions reinvested, and transfers to, from
and among subaccounts, all to be effected as of that date. Such
33
<PAGE>
purchases and redemptions are effected at each fund's net asset value per share
determined for that same date. A "business day" is any date on which the New
York Stock Exchange is open for trading. We compute policy values for each
business day as of the close of that day (usually 4:00 p.m. Eastern Standard
Time).
Our general account
Our obligations under the policy's fixed investment option are backed by
our general account assets. Our general account consists of assets owned by us
other than those in the Account and in other separate accounts that we may
establish. Subject to applicable law, we have sole discretion over the
investment of assets of the general account and policy owners do not share in
the investment experience of, or have any preferential claim on, those assets.
Instead, we guarantee that the account value allocated to the fixed investment
option will accrue interest daily at an effective annual rate of at least 4%
without regard to the actual investment experience of the general account.
Because of exemptive and exclusionary provisions, interests in our fixed
investment option have not been registered under the Securities Act of 1933 and
our general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein are
subject to the provisions of these acts, and we have been advised that the staff
of the SEC has not reviewed the disclosure in this prospectus relating to the
fixed investment option. Disclosure regarding the fixed investment option may,
however, be subject to certain generally-applicable provisions of the Federal
securities laws relating to accuracy and completeness of statements made in
prospectuses.
Procedures for issuance of a policy
Generally, the policy is available with a minimum Total Sum Insured at
issue of $250,000 and a minimum Basic Sum Insured at issue of $100,000.
At the time of issue, the insured person must have an attained age of at least
20 and no more than 85. All insured persons must meet certain health and other
insurance risk criteria called "underwriting standards".
Policies issued in Montana or in connection with certain employee plans
will not directly reflect the sex of the insured person in either the premium
rates or the charges or values under the policy. The illustrations set forth in
this prospectus are sex-distinct and, therefore, may not reflect the rates,
charges, or values that would apply to such policies.
Minimum Initial Premium
The Minimum Initial Premium must be received by us at our Life Servicing
Office in order for the policy to be in full force and effect. There is no grace
period for the payment of the Minimum Initial Premium. The Minimum Initial
Premium is determined by us based on the characteristics of the insured person,
the Total Sum Insured at issue, and the policy options you have selected.
Commencement of insurance coverage
After you apply for a policy, it can sometimes take up to several weeks for
us to gather and evaluate all the information we need to decide whether to issue
a policy to you and, if so, what the insured person's rate class should be.
After we approve an application for a policy and assign an appropriate insurance
rate class, we will prepare the policy for delivery. We will not pay a death
benefit under a policy unless the policy is in effect when the insured person
dies (except for the circumstances described under "Temporary insurance coverage
prior to policy delivery" on page 35).
The policy will take effect only if all of the following conditions are
satisfied:
. The policy is delivered to and received by the applicant.
. The Minimum Initial Premium is received by us.
34
<PAGE>
. Each insured person is living and still meets our health criteria for
issuing insurance.
If all of the above conditions are satisfied, the policy will take effect on
the date shown in the policy as the "date of issue." That is the date on which
we begin to deduct monthly charges. Policy months, policy years and policy
anniversaries are all measured from the date of issue.
Backdating
In order to preserve a younger age at issue for the insured person, we can
designate a date of issue that is up to 60 days earlier than the date that would
otherwise apply. This is referred to as "backdating" and is allowed under state
insurance laws. Backdating can also be used in certain corporate-owned life
insurance cases involving multiple policies to retain a common monthly deduction
date.
The conditions for coverage described above under "Commencement of
insurance coverage" must still be satisfied, but in a backdating situation the
policy always takes effect retroactively. Backdating results in a lower
insurance charge (because of the insured person's younger age at issue), but
monthly charges begin earlier than would otherwise be the case. Those monthly
charges will be deducted as soon as we receive premiums sufficient to pay them.
Temporary coverage prior to policy delivery
If a specified amount of premium is paid with the application for a policy
and other conditions are met, we will provide temporary term life insurance
coverage on the insured person for a period prior to the time coverage under the
policy takes effect. Such temporary term coverage will be subject to the terms
and conditions described in the application for the policy, including limits on
amount and duration of coverage.
close of business on the date of issue and at the close of the first business
day in each subsequent policy month.
Basic Sum Insured vs. Additional Sum Insured
As noted earlier in this prospectus, you should consider a number of
factors in determining whether to elect coverage in the form of Basic Sum
Insured or in the form of Additional Sum Insured.
The amount of sales charge deducted from premiums and from account value
and the amount of compensation paid to the selling insurance agent will be less
if coverage is included as Additional Sum Insured, rather than as Basic Sum
Insured. On the other hand, the amount of any Additional Sum Insured is not
included in the guaranteed minimum death benefit feature. Therefore, if the
policy's surrender value is insufficient to pay the monthly charges as they fall
due (including the charges for the Additional Sum Insured), the Additional Sum
Insured coverage will lapse, even if the Basic Sum Insured stays in effect
pursuant to the guaranteed minimum death benefit feature.
Generally, you will incur lower sales charges and have more flexible
coverage with respect to the Additional Sum Insured than with respect to the
Basic Sum Insured. If this is your priority, you may wish to maximize the
proportion of the Additional Sum Insured. However, if your priority is to take
advantage of the guaranteed minimum death benefit feature, the proportion of the
Policy's Total Sum Insured that is guaranteed can be increased by taking out
more coverage as Basic Sum Insured at the time of policy issuance.
Monthly deduction dates
Each charge that we deduct monthly is assessed against your
account value or the subaccounts at the
If you want to purchase Additional Sum Insured, you may select from among
several forms of it: a level amount of coverage; an amount of coverage that
increases on each policy anniversary up to a prescribed limit; an amount of
coverage that increases on each policy anniversary to the amount of premiums
paid during prior policy years plus the Planned Premium for the current policy
year, subject
35
<PAGE>
to certain limits; or a combination of those forms of coverage.
Any decision you make to modify the amount of Additional Sum Insured
coverage after issue can have significant tax consequences (see "Tax
Considerations" beginning on page 40).
Commencement of investment performance
Any premium payment processed prior to the twentieth day after the date of
issue will automatically be allocated to the Money Market investment option. On
the later of the date such payment is received or the twentieth day following
the date of issue, the portion of the Money Market investment option
attributable to such payment will be reallocated automatically among the
investment options you have chosen.
All other premium payments will be allocated among the investment options
you have chosen as soon as they are processed.
How we process certain policy transactions
Premium payments
We will process any premium payment as of the day we receive it, unless one
of the following exceptions applies:
(1) We will process a payment received prior to a policy's date of issue as
if received on the date of issue.
(2) If the Minimum Initial Premium is not received prior to the date of
issue, we will process each premium payment received thereafter as if received
on the business day immediately preceding the date of issue until all of the
Minimum Initial Premium is received.
(3) We will process the portion of any premium payment for which we require
evidence of the insured person's continued insurability only after we have
received such evidence and found it satisfactory to us.
(4) If we receive any premium payment that we think will cause a policy to
become a modified endowment or will cause a policy to lose its status as life
insurance under the tax laws, we will not accept the excess portion of that
premium payment and will immediately notify the owner. We will refund the excess
premium when the premium payment check has had time to clear the banking system
(but in no case more than two weeks after receipt), except in the following
circumstances:
. The tax problem resolves itself prior to the date the
refund is to be made; or
. The tax problem relates to modified endowment status and we receive a signed
acknowledgment from the owner prior to the refund date instructing us to
process the premium notwithstanding the tax issues involved.
In the above cases, we will treat the excess premium as having been received on
the date the tax problem resolves itself or the date we receive the signed
acknowledgment. We will then process it accordingly.
(5) If a premium payment is received or is otherwise scheduled to be
processed (as specified above) on a date that is not a business day, the premium
payment will be processed on the business day next following that date.
Transfers among investment options
Any reallocation among investment options must be such that the total in
all investment options after reallocation equals 100% of account value.
Transfers out of a variable investment option will be effective at the end of
the business day in which we receive at our Life Servicing Office notice
satisfactory to us.
If received on or before the policy anniversary, requests for transfer out
of the fixed investment option will be processed on the policy anniversary (or
the next business day if the policy anniversary does not occur on a business
day). If received after the policy anniversary, such a request will be processed
36
<PAGE>
at the end of the business day in which we receive the request at our Life
Servicing Office. If you request a transfer out of the fixed investment option
61 days or more prior to the policy anniversary, we will not process that
portion of the reallocation, and your confirmation statement will not reflect a
transfer out of the fixed investment option as to such request. Currently, there
is no minimum amount limit on transfers into the fixed investment option, but we
reserve the right to impose such a limit in the future. We have the right to
defer transfers of amounts out of the fixed investment option for up to six
months.
Telephone transfers and policy loans
Once you have completed a written authorization, you may request a transfer
or policy loan by telephone or by fax. If the fax request option becomes
unavailable, another means of telecommunication will be substituted.
If you authorize telephone transactions, you will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which we reasonably believe to be genuine, unless such loss,
expense or cost is the result of our mistake or negligence. We employ procedures
which provide safeguards against the execution of unauthorized transactions, and
which are reasonably designed to confirm that instructions received by telephone
are genuine. These procedures include requiring personal identification, tape
recording calls, and providing written confirmation to the owner. If we do not
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, we may be liable for any loss due to unauthorized or
fraudulent instructions.
Effective date of other policy transactions
The following transactions take effect on the policy anniversary on or next
following the date we approve the request:
. Total Sum Insured decreases
. Additional Sum Insured increases
. Change of death benefit option from Option B to Option A
. Any other change of death benefit option, when and if permitted by our
administrative rules (see "Change of death benefit option" on page 17)
Reinstatements of lapsed policies take effect on the monthly deduction date
on or next following the date we approve the request for reinstatement.
We process loans, surrenders, partial withdrawals and loan repayments as of
the day we receive such request or repayment.
Effects of policy loans
The account value, the surrender value, and any death benefit above the
Total Sum Insured are permanently affected by any loan, whether or not it is
repaid in whole or in part. This is because the amount of the loan is deducted
from the investment options and placed in a special loan account. The investment
options and the special loan account will generally have different rates of
investment return.
The amount of the outstanding loan (which includes accrued and unpaid
interest) is subtracted from the amount otherwise payable when the policy
proceeds become payable.
Whenever the outstanding loan equals or exceeds the account value, the
policy will terminate 31 days after we have mailed notice of termination to you
(and to any assignee of record at such assignee's last known address) specifying
the minimum amount that must be paid to avoid termination, unless a repayment of
at least the amount specified is made within that period.
37
<PAGE>
Additional information about how certain policy charges work
Sales expenses and related charges
The sales charges help to compensate us for the cost of selling our
policies. (See "What charges will JHVLICO deduct from my investment in the
policy?" in the Basic Information section of this prospectus.) The amount of the
charges in any policy year does not specifically correspond to sales expenses
for that year. We expect to recover our total sales expenses over the life of
the policies. To the extent that the sales charges do not cover total sales
expenses, the sales expenses may be recovered from other sources, including
gains from the charge for mortality and expense risks and other gains with
respect to the policies, or from our general assets. (See "How we market the
policies" on page 39.)
Effect of premium payment pattern
You may structure the timing and amount of premium payments to minimize the
sales charges, although doing so involves certain risks. Paying less than one
Target Premium in the first policy year or paying more than one Target Premium
in any policy year could reduce your total sales charges over time. For example,
if the Target Premium was $10,000 and you paid a premium of $10,000 in each of
the first ten policy years, you would pay total sales charges of $12,000. If you
paid $20,000 (i.e., two times the Target Premium amount) in every other policy
year up to the ninth policy year, you would pay total sales charges of only
$8,750. However, delaying the payment of Target Premiums to later policy years
could increase the risk that the guaranteed minimum death benefit feature will
lapse and the account value will be insufficient to pay monthly policy charges
as they come due. As a result, the policy or any Additional Sum Insured may
lapse and eventually terminate. Conversely, accelerating the payment of Target
Premiums to earlier policy years could cause aggregate premiums paid to exceed
the policy's 7-pay premium limit and, as a result, cause the policy to become a
modified endowment, with adverse tax consequences to you upon receipt of policy
distributions. (See "Tax considerations" beginning on page 40.)
Monthly charges
We deduct the monthly charges described in the Basic Information section
from your policy's investment options in proportion to the amount of account
value you have in each. For each month that we cannot deduct any charge because
of insufficient account value, the uncollected charges will accumulate and be
deducted when and if sufficient account value becomes available.
The insurance under the policy continues in full force during any grace
period but, if the insured person dies during the policy grace period, the
amount of unpaid monthly charges is deducted from the death benefit otherwise
payable.
Reduced charges for eligible classes
The charges otherwise applicable (including the M&E charge) may be reduced
with respect to policies issued to a class of associated individuals or to a
trustee, employer or similar entity where we anticipate that the sales to the
members of the class will result in lower than normal sales or administrative
expenses, lower taxes or lower risks to us. We will make these reductions in
accordance with our rules in effect at the time of the application for a policy.
The factors we consider in determining the eligibility of a particular group for
reduced charges, and the level of the reduction, are as follows: the nature of
the association and its organizational framework; the method by which sales will
be made to the members of the class; the facility with which premiums will be
collected from the associated individuals and the association's capabilities
with respect to administrative tasks; the anticipated lapse and surrender rates
of the policies; the size of the class of associated individuals and the number
of years it has been in existence; the aggregate amount of premiums paid; and
any other such circumstances which result in a reduction in sales or
administrative
38
<PAGE>
expenses, lower taxes or lower risks. Any reduction in charges will be
reasonable and will apply uniformly to all prospective policy purchasers in the
class and will not unfairly discriminate against any owner.
How we market the policies
Signator Investors, Inc. ("Signator"), an indirect wholly-owned subsidiary
of John Hancock located at 197 Clarendon Street, Boston, MA 02117, is registered
as a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. and the Securities Investor
Protection Corporation. Signator acts as principal underwriter and principal
distributor of the policies pursuant to a sales agreement among John Hancock,
Signator, JHVLICO, and the Account. Signator also serves as principal
underwriter for John Hancock Variable Annuity Accounts U, I and V, John Hancock
Mutual Variable Life Insurance Account UV and John Hancock Variable Life
Accounts U and V, all of which are registered under the 1940 Act. Signator is
also the principal underwriter for John Hancock Variable Series Trust I.
Applications for policies are solicited by agents who are licensed by state
insurance authorities to sell JHVLICO's policies and who are also registered
representatives ("representatives") of Signator or other broker-dealer firms, as
discussed below. John Hancock (on behalf of JHVLICO) performs insurance
underwriting and determines whether to accept or reject the application for a
policy and each insured person's risk classification. JHVLICO will make the
appropriate refund if a policy ultimately is not issued or is returned under the
"free look" provision. Officers and employees of John Hancock and JHVLICO are
covered by a blanket bond by a commercial carrier in the amount of $25 million.
Signator's representatives are compensated for sales of the policies on a
commission and service fee basis by Signator, and JHVLICO reimburses Signator
for such compensation and for other direct and indirect expenses (including
agency expense allowances, general agent, district manager and supervisor's
compensation, agent's training allowances, deferred compensation and insurance
benefits of agents, general agents, district managers and supervisors, agency
office clerical expenses and advertising) actually incurred in connection with
the marketing and sale of the policies.
The maximum commission payable to a Signator representative for selling a
policy is 65% of the Target Premium paid in the first policy year, 10% of the
Target Premium paid in the second through tenth policy years, and 3% of the
Target Premium paid in each policy year thereafter. The maximum commission on
any premium paid in any policy year in excess of the Target Premium is 3%.
Representatives with less than four years of service with Signator and
those compensated on salary plus bonus or level commission programs may be paid
on a different basis. Representatives who meet certain productivity and
persistency standards with respect to the sale of policies issued by JHVLICO and
John Hancock will be eligible for additional compensation.
The policies are also sold through other registered broker-dealers that
have entered into selling agreements with Signator and whose representatives are
authorized by applicable law to sell variable life insurance policies. The
commissions which will be paid by such broker-dealers to their representatives
will be in accordance with their established rules. The commission rates may be
more or less than those set forth above for Signator's representatives. In
addition, their qualified registered representatives may be reimbursed by the
broker-dealers under expense reimbursement allowance programs in any year for
approved voucherable expenses incurred. Signator will compensate the broker-
dealers as provided in the selling agreements, and JHVLICO will reimburse
Signator for such amounts and for certain other direct expenses in connection
with marketing the policies through other broker-dealers.
39
<PAGE>
Representatives of Signator and the other broker-dealers mentioned above
may also earn "credits" toward qualification for attendance at certain business
meetings sponsored by John Hancock.
The offering of the policies is intended to be continuous, but neither
JHVLICO nor Signator is obligated to sell any particular amount of policies.
Tax considerations
This description of federal income tax consequences is only a brief summary
and is not intended as tax advice. Tax consequences will vary based on your own
particular circumstances, and for further information you should consult a
qualified tax advisor. Federal, state and local tax laws, regulations and
interpretations can change from time to time. As a result, the tax consequences
to you and the beneficiary may be altered, in some cases retroactively.
Policy proceeds
We believe the policy will receive the same federal income and estate tax
treatment as fixed benefit life insurance policies. Section 7702 of the Internal
Revenue Code (the "Code") defines life insurance for federal tax purposes. If
certain standards are met at issue and over the life of the policy, the policy
will satisfy that definition. We will monitor compliance with these standards.
If the policy complies with the definition of life insurance, we believe
the death benefit under the policy will be excludable from the beneficiary's
gross income under the Code. In addition, increases in account value as a result
of interest or investment experience will not be subject to federal income tax
unless and until values are actually received through distributions.
Distributions for tax purposes can include amounts received upon surrender or
partial withdrawals. You may also be deemed to have received a distribution for
tax purposes if you assign all or part of your policy rights or change your
policy's ownership.
In general, the owner will be taxed on the amount of distributions that
exceed the premiums paid under the policy. But under certain circumstances
within the first 15 policy years, the owner may be taxed on a distribution even
if total withdrawals do not exceed total premiums paid. Any taxable distribution
will be ordinary income to the owner (rather than capital gains).
We also believe that, except as noted below, loans received under the
policy will be treated as indebtedness of an owner and that no part of any loan
will constitute income to the owner. However, the amount of any outstanding loan
that was not previously considered income (as discussed below) will be treated
as if it had been distributed to the owner if the policy terminates for any
reason.
It is possible that, despite our monitoring, a policy might fail to qualify
as life insurance under Section 7702 of the Code. This could happen, for
example, if we inadvertently failed to return to you any premium payments that
were in excess of permitted amounts, or if a Trust failed to meet certain
investment diversification or other requirements of the Code. If this were to
occur, you would be subject to income tax on the income and gains under the
policy for the period of the disqualification and for subsequent periods.
In the past, the United States Treasury Department has stated that it
anticipated issuing guidelines prescribing circumstances in which the ability of
a policy owner to direct his or her investment to particular funds may cause the
policy owner, rather than the insurance company, to be treated as the owner of
the shares of those funds. In that case, any income and gains attributable to
those shares would be included in your current gross income for federal income
tax purposes. Under current law, however, we believe that we, and not the owner
of a policy, would be considered the owner of the fund's shares for tax
purposes.
Tax consequences of ownership or receipt of policy proceeds
under federal, state and local estate,
40
<PAGE>
inheritance, gift and other tax laws depend on the circumstances of each
owner or beneficiary.
Because there may be unfavorable tax consequences (including recognition of
taxable income and the loss of income tax-free treatment for any death benefit
payable to the beneficiary), you should consult a qualified tax adviser prior to
changing the policy's ownership or making any assignment of ownership interests.
7-pay premium limit
At the time of policy issuance, we will determine whether the Planned
Premium schedule will exceed the 7-pay limit discussed below. If so, our
standard procedures prohibit issuance of the policy unless you sign a form
acknowledging that fact.
The 7-pay limit is the total of net level premiums that would have been
payable at any time for a comparable fixed policy to be fully "paid-up" after
the payment of 7 equal annual premiums. "Paid-up" means that no further premiums
would be required to continue the coverage in force until maturity, based on
certain prescribed assumptions. If the total premiums paid at any time during
the first 7 policy years exceed the 7-pay limit, the policy will be treated as a
"modified endowment", which can have adverse tax consequences.
The owner will be taxed on distributions and loans from a "modified
endowment" to the extent of any income (gain) to the owner (on an income-first
basis). The distributions and loans affected will be those made on or after, and
within the two year period prior to, the time the policy becomes a modified
endowment. Additionally, a 10% penalty tax may be imposed on taxable portions of
such distributions or loans that are made before the owner attains age 591/2.
Furthermore, any time there is a "material change" in a policy (such as an
increase in Additional Sum Insured, the addition of certain other policy
benefits after issue, a change in death benefit option, or reinstatement of a
lapsed policy), the policy will have a new 7-pay limit as if it were a
newly-issued policy. If a prescribed portion of the policy's then account value,
plus all other premiums paid within 7 years after the material change, at any
time exceed the new 7-pay limit, the policy will become a modified endowment.
Moreover, if benefits under a policy are reduced (such as a reduction in
the Total Sum Insured or death benefit or the reduction or cancellation of
certain rider benefits) during the 7 years in which a 7-pay test is being
applied, the 7-pay limit will be recalculated based on the reduced benefits. If
the premiums paid to date are greater than the recalculated 7-pay limit, the
policy will become a modified endowment.
All modified endowments issued by the same insurer (or its affiliates) to
the owner during any calendar year generally will be treated as one contract for
the purpose of applying the modified endowment rules. A policy received in
exchange for a modified endowment will itself also be a modified endowment. You
should consult your tax advisor if you have questions regarding the possible
impact of the 7-pay limit on your policy.
Corporate and H.R. 10 plans
The policy may be acquired in connection with the funding of retirement
plans satisfying the qualification requirements of Section 401 of the Code. If
so, the Code provisions relating to such plans and life insurance benefits
thereunder should be carefully scrutinized. We are not responsible for
compliance with the terms of any such plan or with the requirements of
applicable provisions of the Code.
Reports that you will receive
At least annually, we will send you a statement setting forth the following
information as of the end of the most recent reporting period: the amount of the
death benefit, the Basic Sum Insured and the Additional Sum Insured, the account
value, the portion of the account value in each investment
41
<PAGE>
option, the surrender value, premiums received and charges deducted from
premiums since the last report, and any outstanding policy loan (and interest
charged for the preceding policy year). Moreover, you also will receive
confirmations of premium payments, transfers among investment options, policy
loans, partial withdrawals and certain other policy transactions.
Semiannually we will send you a report containing the financial statements
of each Trust, including a list of securities held in each fund.
Voting privileges that you will have
All of the assets in the subaccounts of the Account are invested in shares
of the corresponding funds of the Trusts. We will vote the shares of each of the
funds of the Trusts which are deemed attributable to variable life insurance
policies at regular and special meetings of the Trusts' shareholders in
accordance with instructions received from owners of such policies. Shares of
the Trusts held in the Account which are not attributable to such policies, as
well as shares for which instructions from owners are not received, will be
represented by us at the meeting. We will vote such shares for and against each
matter in the same proportions as the votes based upon the instructions received
from the owners of such policies.
We determine the number of a fund's shares held in a subaccount
attributable to each owner by dividing the amount of a policy's account value
held in the subaccount by the net asset value of one share in the fund.
Fractional votes will be counted. We determine the number of shares as to which
the owner may give instructions as of the record date for the Trust's meeting.
Owners of policies may give instructions regarding the election of the Board of
Trustees or Board of Directors of the Trust, ratification of the selection of
independent auditors, approval of Trust investment advisory agreements and other
matters requiring a shareholder vote. We will furnish owners with information
and forms to enable owners to give voting instructions.
However, we may, in certain limited circumstances permitted by the SEC's
rules, disregard voting instructions. If we do disregard voting instructions,
you will receive a summary of that action and the reasons for it in the next
semi-annual report to owners.
Changes that JHVLICO can make as to your policy
Changes relating to a Trust or the Account
The voting privileges described in this prospectus reflect our
understanding of applicable Federal securities law requirements. To the extent
that applicable law, regulations or interpretations change to eliminate or
restrict the need for such voting privileges, we reserve the right to proceed in
accordance with any such revised requirements. We also reserve the right,
subject to compliance with applicable law, including approval of owners if so
required, (1) to transfer assets determined by JHVLICO to be associated with the
class of policies to which your policy belongs from the Account to another
separate account or subaccount, (2) to operate the Account as a "management-type
investment company" under the 1940 Act, or in any other form permitted by law,
the investment adviser of which would be JHVLICO, John Hancock or an affiliate
of either, (3) to deregister the Account under the 1940 Act, (4) to substitute
for the fund shares held by a subaccount any other investment permitted by law,
and (5) to take any action necessary to comply with or obtain any exemptions
from the 1940 Act. We would notify owners of any of the foregoing changes and,
to the extent legally required, obtain approval of owners and any regulatory
body prior thereto. Such notice and approval, however, may not be legally
required in all cases.
Other permissible changes
We reserve the right to make any changes in the policy necessary to ensure
the policy is within the definition of life insurance under the Federal tax laws
and is in compliance with any changes in Federal or state tax laws.
42
<PAGE>
In our policies, we reserve the right to make certain changes if they would
serve the best interests of policy owners or would be appropriate in carrying
out the purposes of the policies. Such changes include the following:
o Changes necessary to comply with or obtain or continue exemptions under the
federal securities laws
o Combining or removing investment options
o Changes in the form of organization of any separate
account
Any such changes will be made only to the extent permitted by applicable
laws and only in the manner permitted by such laws. When required by law, we
will obtain your approval of the changes and the approval of any appropriate
regulatory authority.
Adjustments we make to death benefits
If the insured person commits suicide within certain time periods, the
amount of death benefit we pay will be limited as described in the policy. Also,
if an application misstated the age or gender of the insured person, we will
adjust the amount of any death benefit as described in the policy.
When we pay policy proceeds
General
We will pay any death benefit, withdrawal, surrender value or loan within 7
days after we receive the last required form or request (and, with respect to
the death benefit, any other documentation that may be required). If we don't
have information about the desired manner of payment within 7 days after the
date we receive notification of the insured person's death, we will pay the
proceeds as a single sum, normally within 7 days thereafter.
Delay to challenge coverage
We may challenge the validity of your insurance policy based on any
material misstatements made to us in the application for the policy. We cannot
make such a challenge, however, beyond certain time limits that are specified in
the policy.
Delay for check clearance
We reserve the right to defer payment of that portion of your account value
that is attributable to a premium payment made by check for a reasonable period
of time (not to exceed 15 days) to allow the check to clear the banking system.
Delay of separate account proceeds
We reserve the right to defer payment of any death benefit, loan or other
distribution that is derived from a variable investment option if (a) the New
York Stock Exchange is closed (other than customary weekend and holiday
closings) or trading on the New York Stock Exchange is restricted; (b) an
emergency exists, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to fairly determine the account
value; or (c) the SEC by order permits the delay for the protection of owners.
Transfers and allocations of account value among the investment options may also
be postponed under these circumstances. If we need to defer calculation of
separate account values for any of the foregoing reasons, all delayed
transactions will be processed at the next values that we do compute.
Other details about exercising rights and paying benefits
Joint ownership
If more than one person owns a policy, all owners must join in most
requests to exercise rights under the policy.
43
<PAGE>
Assigning your policy
You may assign your rights in the policy to someone else as collateral for
a loan or for some other reason. Assignments do not require the consent of any
revocable beneficiary. A copy of the assignment must be forwarded to us. We are
not responsible for any payment we make or any action we take before we receive
notice of the assignment in good order. Nor are we responsible for the validity
of the assignment. An absolute assignment is a change of ownership. All
collateral assignees of record must consent to any full surrender, partial
withdrawal or loan from the policy.
Your beneficiary
You name your beneficiary when you apply for the policy. The beneficiary is
entitled to the proceeds we pay following the insured person's death. You may
change the beneficiary during the insured person's lifetime. Such a change
requires the consent of any irrevocable named beneficiary. A new beneficiary
designation is effective as of the date you sign it, but will not affect any
payments we make before we receive it. If no beneficiary is living when the
insured person dies, we will pay the insurance proceeds to the owner or the
owner's estate.
Legal matters
The legal validity of the policies described in this
prospectus has been passed on by Ronald J. Bocage, Vice President
and Counsel for JHVLICO. Messrs. Freedman, Levy, Kroll & Simonds,
Washington, D.C., have advised us on certain Federal securities
law matters in connection with the policies.
Registration statement filed with the SEC
This prospectus omits certain information contained in the Registration
Statement which has been filed with the SEC. More details may be obtained from
the SEC upon payment of the prescribed fee.
Accounting and actuarial experts
Certain of the financial statements of JHVLICO and the Account included in
this prospectus have been audited by Ernst & Young LLP, independent auditors,
for the periods indicated in their reports thereon which appear elsewhere herein
and have been included in reliance on their reports given on their authority as
experts in accounting and auditing. Actuarial matters included in this
prospectus have been examined by Deborah A. Poppel, F.S.A., an Actuary of
JHVLICO and Second Vice President of John Hancock.
Financial statements of JHVLICO and the Account
The financial statements of JHVLICO included herein should be distinguished
from the financial statements of the Account and should be considered only as
bearing upon the ability of JHVLICO to meet its obligations under the policies.
In addition to those financial statements of JHVLICO and the Account
included herein that have been audited by Ernst & Young LLP, this prospectus
also contains unaudited financial statements of both JHVLICO and the Account for
a period subsequent to the audited financial statements.
44
<PAGE>
List of Directors and Executive Officers of JHVLICO
The Directors and Executive Officers of JHVLICO and their principal
occupations during the past five years are as follows:
<TABLE>
<S> <C>
Directors and Executive Officers Principal Occupations
David F. D'Alessandro . . . . . . . . . . Chairman of the Board and Chief Executive Officer of JHVLICO; President
. .
and Chief Executive Officer, John Hancock Life Insurance Company.
Michele G. Van Leer. . . . . . . . . . . Vice Chairman of the Board and President of JHVLICO; Senior Vice Pres-
. . .
ident, John Hancock Life Insurance Company.
Ronald J. Bocage. . . . . . . . . . . . . Director, Vice President and Counsel of JHVLICO; Vice President and
. . . .
Counsel, John Hancock Life Insurance Company.
Bruce M. Jones . . . . . . . . . . . . . Director and Vice President of JHVLICO; Vice President, John Hancock
. . . . .
Life Insurance Company.
Thomas J. Lee . . . . . . . . . . . . . . Director and Vice President of JHVLICO; Vice President, John Hancock
. . . . .
Life Insurance Company.
Barbara L. Luddy . . . . . . . . . . . . Director, Vice President and Actuary of JHVLICO; Senior Vice President,
. . . .
John Hancock Life Insurance Company.
Robert S. Paster . . . . . . . . . . . . Director and Vice President of JHVLICO; Vice President, John Hancock
. . . . . .
Life Insurance Company.
Robert R. Reitano . . . . . . . . . . . . Director and Vice President of JHVLICO; Vice President, John Hancock
. . . .
Life Insurance Company.
Paul Strong . . . . . . . . . . . . . . . Director and Vice President of JHVLICO; Vice President, John Hancock
. . . . . .
Life Insurance Company.
Daniel L. Ouellette . . . . . . . . . . . Vice President, Marketing, of JHVLICO; Senior Vice President, John
. . . .
Hancock Life Insurance Company.
Edward P. Dowd . . . . . . . . . . . . . Vice President, Investments, of JHVLICO; Senior Vice President, John
. . . .
Hancock Life Insurance Company
Roger G. Nastou . . . . . . . . . . . . . Vice President, Investments, of JHVLICO; Vice President, John Hancock
. . . .
Life Insurance Company
Todd G. Engelsen . . . . . . . . . . . . Vice President and Illustration Actuary of JHVLICO; Second Vice Presi-
. . . .
dent, John Hancock Life Insurance Company
Julie H. Indge . . . . . . . . . . . . . Treasurer of JHVLICO; Financial Officer, John Hancock Life Insurance
. . . . . .
Company
Patrick J. Gill. . . . . . . . . . . . . Controller of JHVLICO; Senior Associate Controller, John Hancock Life
. . . . . . .
Insurance Company.
Peter Scavongelli. . . . . . . . . . . . Secretary of JHVLICO; State Compliance Officer, John Hancock Life In-
. . . . .
surance Company
</TABLE>
The business address of all Directors and officers of JHVLICO is John Hancock
Place, Boston, Massachusetts 02117.
45
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
FOR
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
SECOND QUARTER 2000
46
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
2000 1999
(In millions)
<S> <C> <C>
Assets
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,344.7 $ 1,216.3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
Preferred stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.9 35.9
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.5 80.7
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage loans on real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468.2 433.1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.7 25.0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195.5 172.1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Items:
Cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.0) 27.2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Temporary cash investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284.6 222.9
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
281.6 250.1
Premiums due and deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.9 29.9
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment income due and accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.9 33.2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other general account assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.7 65.3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets held in separate accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,569.0 8,268.2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,116.6 $ 10,613.0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
Obligations and Stockholder's Equity
Obligations
Policy reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,048.1 $ 1,866.6
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal income and other taxes payable . . . . . . . . . . . . . . . . . . . . . . . . 97.8 67.3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other general account obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 207.4 219.0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers from separate account, net . . . . . . . . . . . . . . . . . . . . . . . . . (229.6) (221.6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset valuation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.3 23.1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations related to separate accounts . . . . . . . . . . . . . . . . . . . . . . . 8,562.1 8,261.6
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,705.1 10,216.0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder's equity
Common Stock, $50 par value; authorized 50,000 shares; issued and outstanding 50,000 2.5 2.5
shares . . . . . . . . . . . . .
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572.4 572.4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unassigned deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (163.4) (177.9)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholder's equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411.5 397.0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total obligations and stockholder's equity . . . . . . . . . . . . . . . . . . . . . $ 11,116.6 $ 10,613.0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
See condensed notes to the financial statements (unaudited).
47
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(In millions)
<S> <C> <C> <C> <C>
Income
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 255.7 $ 228.6 $ 487.0 $ 452.2
. . . . . . . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . 43.4 31.9 83.0 64.4
. . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110.1 116.6 242.5 261.9
. . . . . . . . . . . . . . . . . . . . .
409.2 377.1 812.5 778.5
Benefits and Expenses
Payments to policyholders and beneficiaries . . . . . . . . . . . . . . . 93.2 94.1 182.4 174.4
. . . . . . . . . .
Additions to reserves to provide for future payments to policyholders and
beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213.4 198.6 429.7 436.8
. . . . . . . . . . . . . . . . . . . .
Expenses of providing service to policyholders and obtaining new
insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.4 77.8 153.9 153.5
. . . . . . . . . . . . . . . . . . . .
State and miscellaneous taxes . . . . . . . . . . . . . . . . . . . . . . 5.7 8.1 13.3 10.9
. . . . . . . . . . . . . .
392.7 378.6 779.3 775.6
Gain from operations before federal income taxes and net realized
capital
gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 (1.5) 33.2 2.9
. . . . . . . . . . . . . . . . . . .
Federal income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 (1.4) 16.9 (0.4)
. . . . . . . . . . . . . . . .
Gain from operations before net realized capital gains (losses) . . . . 4.3 (0.1) 16.3 3.3
. . . .
Net realized capital gains (losses) . . . . . . . . . . . . . . . . . . . 0.1 0.5 0.5 (1.0)
. . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 0.4 16.8 2.3
. . . . . . . . . . . . . . . . . . .
Unassigned deficit at beginning of period . . . . . . . . . . . . . . . . (164.5) (51.2) (177.9) (49.2)
. . . . . . . . . . .
Net unrealized capital gains (losses) and other adjustments . . . . . . . (3.1) (3.4) (2.0) (3.1)
. . . . . .
Other reserves and adjustments . . . . . . . . . . . . . . . . . . . . . . (0.2) 2.0 (0.3) (2.2)
. . . . . . . . . . . . .
Unassigned deficit at end of period . . . . . . . . . . . . . . . . . $ (163.4) $ (52.2) $ (163.4) $ (52.2)
. . . . . . . . . . . .
</TABLE>
See condensed notes to the financial statements (unaudited).
48
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended
June 30,
2000 1999
(In millions)
<S> <C> <C>
Cash flows from operating activities:
Insurance premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 495.7 $ 452.0
. . . . . . . . . . . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.2 60.5
. . . . . . . . . . . . . . . . . . . . . . .
Benefits to policyholders and beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . (167.9) (274.6)
. . . . . . . . . . . . . . . . . .
Dividends paid to policyholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13.0) (12.6)
. . . . . . . . . . . . . . . . . . . . . .
Insurance expenses and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (174.4) (195.0)
. . . . . . . . . . . . . . . . . . . . . .
Net transfers to separate accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (254.7) (343.7)
. . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257.1 289.9
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218.0 (23.5)
. . . . . . . . . . . . . . . . . . .
Cash flows used in investing activities:
Bond purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (305.5) (143.7)
. . . . . . . . . . . . . . . . . . . . . . . . . .
Bond sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128.1 41.3
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bond maturities and scheduled redemptions . . . . . . . . . . . . . . . . . . . . . . . . . 36.6 38.9
. . . . . . . . . . . . . . . .
Bond prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 8.0
. . . . . . . . . . . . . . . . . . . . . . . . .
Stock purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.9) (0.2)
. . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from stock sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 3.6
. . . . . . . . . . . . . . . . . . . . . . .
Real estate purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) (1.5)
. . . . . . . . . . . . . . . . . . . . . . . . .
Real estate sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 17.9
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Other invested assets purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.0) (4.5)
. . . . . . . . . . . . . . . . . . . . .
Proceeds from the sale of other invested assets . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0
. . . . . . . . . . . . . . . . .
Mortgage loans issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49.7) (39.4)
. . . . . . . . . . . . . . . . . . . . . . . .
Mortgage loan repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5 11.4
. . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15.8) 75.1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . (186.5) 6.9
. . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
Net increase (decrease) in short-term note payable . . . . . . . . . . . . . . . . . . . . (0.0) (10.7)
. . . . . . . . . . . . . . . .
Net cash provided from financing activities . . . . . . . . . . . . . . . . . . . . . . . (0.0) (10.7)
. . . . . . . . . . . . . . . . .
Increase (decrease) in cash and temporary cash investments . . . . . . . . . . . . . . . 31.5 (27.3)
. . . . . . . . . . .
Cash and temporary cash investments at beginning of year . . . . . . . . . . . . . . . . . . . 250.1 19.9
. . . . . . . . . . . .
Cash and temporary cash investments at the end of period . . . . . . . . . . . . . . . . $ 281.6 $ (7.4)
. . . . . . . . . . . .
</TABLE>
See condensed notes to the financial statements (unaudited).
49
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Common Paid-in Unassigned
Stock Capital Deficit Total
(In millions)
For the six months ended June 30, 1999 (unaudited)
<S> <C> <C> <C> <C>
Balance at January 1, 1999 . . . . . . . . . . . . . . . . . . . . . . . $ 2.5 $ 377.5 $ (49.2) $ 330.8
. . . . . . . . . . . . . .
1999 Transactions:
Capital contribution
Net gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 2.3
. . . . . . . . . . . . . . . . . . . .
Net unrealized capital gains and other adjustments . . . . . . . . . (3.1) (3.1)
. . . . . . .
Other reserves and adjustments . . . . . . . . . . . . . . . . . . . (2.2) (2.2)
. . . . . . . . . . . .
Balance at June 30, 1999 . . . . . . . . . . . . . . . . . . . . . . . . $ 2.5 $ 377.5 $ (52.2) $ 327.8
. . . . . . . . . . . . . .
For the six months ended June 30, 2000 (unaudited)
Balance at January 1, 2000 . . . . . . . . . . . . . . . . . . . . . . . $ 2.5 $ 572.4 $ (177.9) $ 397.0
. . . . . . . . . . . . . .
2000 Transactions:
Capital contribution
Net gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.8 16.8
. . . . . . . . . . . . . . . . . . . .
Net unrealized capital gains and other adjustments . . . . . . . . . (2.0) (2.0)
. . . . . . .
Other reserves and adjustments . . . . . . . . . . . . . . . . . . . (0.3) (0.3)
. . . . . . . . . . . .
Balance at June 30, 2000 . . . . . . . . . . . . . . . . . . . . . . . . $ 2.5 $ 572.4 $ (163.4) $ 411.5
. . . . . . . . . . . . . .
</TABLE>
See condensed notes to the financial statements (unaudited).
50
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 six-month period ending June 30, 2000 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2000.
51
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Directors and Policyholders
John Hancock Variable Life Insurance Company
We have audited the accompanying statutory-basis statements of financial
position of John Hancock Variable Life Insurance Company as of December 31, 1999
and 1998, and the related statutory-basis statements of operations and
unassigned deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in Note 1 to the financial statements, the Company presents
its financial statements in conformity with accounting practices prescribed or
permitted by the Commonwealth of Massachusetts Division of Insurance, which
practices differ from accounting principles generally accepted in the United
States. The variances between such practices and accounting principles generally
accepted in the United States also are described in Note 1. The effects on the
financial statements of these variances are not reasonably determinable but are
presumed to be material.
In our opinion, because of the effects of the matter described in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with accounting principles generally accepted in the
United States, the financial position of John Hancock Variable Life Insurance
Company at December 31, 1999 and 1998, or the results of its operations or its
cash flows for the years then ended.
However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of John Hancock
Variable Life Insurance Company at December 31, 1999 and 1998, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.
ERNST & YOUNG LLP
Boston, Massachusetts March
10, 2000
52
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1999 1998
(In millions)
<S> <C> <C>
Assets
Bonds--Note 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,216.3 $ 1,185.8
. . . . . . . . . . . . . . . . . .
Preferred stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.9 36.5
. . . . . . . . . . . . . . . . . . .
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.1
. . . . . . . . . . . . . . . . . .
Investment in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.7 81.7
. . . . . . . . . . . . . . . . . .
Mortgage loans on real estate--Note 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . 433.1 388.1
. . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.0 41.0
. . . . . . . . . . . . . . . . . . . . .
Policy loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172.1 137.7
. . . . . . . . . . . . . . . . . . . .
Cash items:
Cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.2 11.4
. . . . . . . . . . . . . . . . .
Temporary cash investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222.9 8.5
. . . . . . . . . . . . .
250.1 19.9
Premiums due and deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.9 32.7
. . . . . . . . . . . . . . .
Investment income due and accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.2 29.8
. . . . . . . . . . . . .
Other general account assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.3 47.5
. . . . . . . . . . . . . . .
Assets held in separate accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,268.2 6,595.2
. . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,613.0 $ 8,599.0
. . . . . . . . . . . . . . . .
Obligations and Stockholder's Equity
Obligations
Policy reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,866.6 $ 1,652.0
. . . . . . . . . . . . . . . . .
Federal income and other taxes payable--Note 1 . . . . . . . . . . . . . . . . . . . . . 67.3 44.3
. . . . .
Other general account obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 219.0 150.9
. . . . . . . . . . .
Transfers from separate accounts, net . . . . . . . . . . . . . . . . . . . . . . . . . (221.6) (190.3)
. . . . . . . . . .
Asset valuation reserve--Note 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1 21.9
. . . . . . . . . . .
Obligations related to separate accounts . . . . . . . . . . . . . . . . . . . . . . . 8,261.6 6,589.4
. . . . . . . . . .
Total obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,216.0 8,268.2
. . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572.4 377.5
. . . . . . . . . . . . . . . . . .
Unassigned deficit--Note 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (177.9) (49.2)
. . . . . . . . . . . .
Total stockholder's equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397.0 330.8
. . . . . . . . . . . . . .
Total obligations and stockholder's equity . . . . . . . . . . . . . . . . . . . $ 10,613.0 $ 8,599.0
. . . . . . .
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
53
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
(In millions)
<S> <C> <C>
Income
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 950.8 $ 1,272.3
. . . . . . . . . . . . . . . . . . .
Net investment income--Note 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136.0 122.8
. . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605.4 618.1
. . . . . . . . . . . . . . . . . . . .
1,692.2 2,013.2
Benefits and Expenses
Payments to policyholders and beneficiaries . . . . . . . . . . . . . . . . . . . . . . 349.9 301.4
. . . . . . . . . .
Additions to reserves to provide for future payments to
policyholders and beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 888.8 1,360.2
. . . . . . . . . . . . .
Expenses of providing service to policyholders and
obtaining new insurance--Note 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . 314.4 274.2
. . . . . . . . . . .
State and miscellaneous taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5 28.1
. . . . . . . . . . . . . . .
1,573.6 1,963.9
Gain from operations before federal income
taxes and net realized capital losses . . . . . . . . . . . . . . . . . . . . . 118.6 49.3
. . . . . . . . . . . . . .
Federal income taxes--Note 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.9 33.1
. . . . . . . . . . . . .
Gain from operations before net realized capital losses . . . . . . . . . . . . . . 75.7 16.2
. . . . . . .
Net realized capital losses--Note 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.7) (0.6)
. . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.0 15.6
. . . . . . . . . . . . .
Unassigned deficit at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . (49.2) (58.3)
. . . . . . . . . . . .
Net unrealized capital losses and other adjustments--Note 4 . . . . . . . . . . . . . . . (3.8) (6.0)
. . . .
Other reserves and adjustments--Note 10 . . . . . . . . . . . . . . . . . . . . . . . . . (198.9) (0.5)
. . . . . . . . .
Unassigned deficit at end of year . . . . . . . . . . . . . . . . . . . . . . $ (177.9) $ (49.2)
. . . . . . . . .
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
54
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
(In millions)
<S> <C> <C>
Cash flows from operating activities:
Insurance premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 958.5 $ 1,275.3
. . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134.2 118.2
. . . . . . . . . . . . . .
Benefits to policyholders and beneficiaries . . . . . . . . . . . . . . . . . . . . . (321.6) (275.5)
. . . . . . . . . .
Dividends paid to policyholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25.6) (22.3)
. . . . . . . . . . . . .
Insurance expenses and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (344.8) (296.9)
. . . . . . . . . . . . .
Net transfers to separate accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . (705.3) (874.4)
. . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540.6 551.3
. . . . . . . . . . . . . . . . . . . .
Net cash provided from operations . . . . . . . . . . . . . . . . . . . . . . . 236.0 475.7
. . . . . . . . .
Cash flows used in investing activities:
Bond purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (240.7) (618.8)
. . . . . . . . . . . . . . . . .
Bond sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108.3 340.7
. . . . . . . . . . . . . . . . . . .
Bond maturities and scheduled redemptions . . . . . . . . . . . . . . . . . . . . . . 78.4 111.8
. . . . . . . .
Bond prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7 76.5
. . . . . . . . . . . . . . . .
Stock purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.9) (23.4)
. . . . . . . . . . . . . . . . .
Proceeds from stock sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 1.9
. . . . . . . . . . . . . .
Real estate purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.2) (4.2)
. . . . . . . . . . . . . . . .
Real estate sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8 2.1
. . . . . . . . . . . . . . . . . .
Other invested assets purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . (4.5) 0.0
. . . . . . . . . . . . .
Mortgage loans issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70.7) (145.5)
. . . . . . . . . . . . . . .
Mortgage loan repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.3 33.2
. . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (68.9) (435.2)
. . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . (138.8) (660.9)
. . . . . . . . . .
Cash flows from financing activities:
Capital contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194.9
. . . . . . . . . . . . . . . . .
Net (decrease) increase in short-term note payable . . . . . . . . . . . . . . . . . (61.9) 61.9
. . . . . . .
Net cash provided from financing activities . . . . . . . . . . . . . . . . . . . . 133.0 61.9
. . . . . .
Increase (decrease) in cash and temporary cash investments . . . . . . . . . . . 230.2 (123.3)
.
Cash and temporary cash investments at beginning of year . . . . . . . . . . . . . . . . 19.9 143.2
. . . .
Cash and temporary cash investments at end of year . . . . . . . . . . . . . . . $ 250.1 $ 19.9
. . .
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
55
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
1. Nature of Operations and Significant Accounting Practices
John Hancock Variable Life Insurance Company (the Company) is a wholly-
owned subsidiary of John
Hancock Life Insurance Company (formerly John Hancock Mutual Life Insurance
Company) (John Hancock). The Company, domiciled in the Commonwealth of
Massachusetts, principally writes variable and universal life insurance
policies. Those policies primarily are marketed through John Hancock's sales
organization, Signator Insurance Agency, which includes a career agency system
composed of Company-supported independent general agencies and a direct
brokerage system that markets directly to external independent brokers. Policies
also are sold through various unaffiliated securities broker-dealers and certain
other financial institutions. Currently, the Company writes business in all
states except New York.
The preparation of financial statements requires management to make
estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions could change
in the future as more information becomes known, which could impact the amounts
reported and disclosed herein.
Basis of Presentation
The financial statements have been prepared using accounting practices
prescribed or permitted by the Commonwealth of Massachusetts Division of
Insurance and in conformity with the practices of the National Association of
Insurance Commissioners (NAIC), which practices differ from generally accepted
accounting principles (GAAP).
The significant differences from GAAP include: (1) policy acquisition costs
are charged to expense as incurred rather than deferred and amortized in
relation to future estimated gross profits; (2) policy reserves are based on
statutory mortality, morbidity, and interest requirements without consideration
of withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available for
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances are
provided when there has been a decline in value deemed other than temporary; (7)
investments in affiliates are carried at their net equity value with changes in
value being recorded directly to unassigned deficit rather than consolidated in
the financial statements; (8) no provision is made for the deferred income tax
effects of temporary differences between book and tax basis reporting; and (9)
certain items, including modifications to required policy reserves resulting
from changes in actuarial assumptions, are recorded directly to unassigned
deficit rather than being reflected in income. The effects of the foregoing
variances from GAAP have not been determined but are presumed to be material.
The significant accounting practices of the Company are as follows:
Pending Statutory Standards
During March 1998, the NAIC adopted codified statutory accounting
principles ("Codification") effective January 1, 2001. Codification will likely
change, to some extent, prescribed statutory accounting practices and may result
in changes to the accounting practices that the Company uses to prepare its
statutory-basis financial statements. Codification will require adoption by the
various states before it becomes the prescribed statutory basis of accounting
for insurance companies domesticated within those states. Accordingly, before
Codification becomes effective for the Company, the Commonwealth of
Massachusetts must adopt Codification as the prescribed basis of accounting on
which domestic insurers must report their statutory-basis results to the
Division
56
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
of Insurance. At this time, it is anticipated that the Commonwealth of
Massachusetts will adopt Codification effective January 1, 2001. The impact of
any such changes on the Company's unassigned deficit is not expected to be
material.
Revenues and Expenses
Premium revenues are recognized over the premium-paying period of the
policies whereas expenses, including the acquisition costs of new business, are
charged to operations as incurred and policyholder dividends are provided as
paid or accrued.
Cash and Temporary Cash Investments
Cash includes currency on hand and demand deposits with financial
institutions. Temporary cash investments are short-term, highly-liquid
investments both readily convertible to known amounts of cash and so near
maturity that there is insignificant risk of changes in value because of changes
in interest rates.
Valuation of Assets
General account investments are carried at amounts determined on the
following bases:
Bond and stock values are carried as prescribed by the NAIC; bonds
generally at amortized amounts or cost, preferred stocks generally at cost and
common stocks at fair value. The discount or premium on bonds is amortized using
the interest method.
Investments in affiliates are included on the statutory equity method.
Loan-backed bonds and structured securities are valued at amortized cost
using the interest method including anticipated prepayments. Prepayment
assumptions are obtained from broker dealer surveys or internal estimates and
are based on the current interest rate and economic environment. The
retrospective adjustment method is used to value all such securities except for
interest-only securities, which are valued using the prospective method.
The net interest effect of interest rate and currency rate swap
transactions is recorded as an adjustment of interest income as incurred. The
initial cost of interest rate cap agreements is amortized to net investment
income over the life of the related agreement. Gains and losses on financial
futures contracts used as hedges against interest rate fluctuations are deferred
and recognized in income over the period being hedged.
Mortgage loans are carried at outstanding principal balance or amortized
cost.
Investment real estate is carried at depreciated cost, less encumbrances.
Depreciation on investment real estate is recorded on a straight-line basis.
Accumulated depreciation amounted to $1.9 million in 1999 and $3.0 million in
1998.
Real estate acquired in satisfaction of debt and real estate held for sale
are carried at the lower of cost or fair value.
Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.
57
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
Asset Valuation and Interest Maintenance Reserves
The Asset Valuation Reserve (AVR) is computed in accordance with the
prescribed NAIC formula and represents a provision for possible fluctuations in
the value of bonds, equity securities, mortgage loans, real estate and other
invested assets. Changes to the AVR are charged or credited directly to the
unassigned deficit.
The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents that portion of the after tax net accumulated unamortized
realized capital gains and losses on sales of fixed income securities,
principally bonds and mortgage loans, attributable to changes in the general
level of interest rates. Such gains and losses are deferred and amortized into
income over the remaining expected lives of the investments sold. At December
31, 1999, the IMR, net of 1999 amortization of $2.3 million, amounted to $7.4
million, which is included in policy reserves. The corresponding 1998 amounts
were $2.4 million and $10.7 million, respectively.
Goodwill
The excess of cost over the statutory book value of the net assets of life
insurance business acquired was $8.9 million and $11.4 million at December 31,
1999 and 1998, respectively, and generally is amortized over a ten-year period
using a straight-line method.
Separate Accounts
Separate account assets and liabilities reported in the accompanying
statements of financial position represent funds that are separately
administered, principally for variable life insurance policies, and for which
the contractholder, rather than the Company, generally bears the investment
risk. Separate account obligations are intended to be satisfied from separate
account assets and not from assets of the general account. Separate accounts
generally are reported at fair value. The operations of the separate accounts
are not included in the statement of operations; however, income earned on
amounts initially invested by the Company in the formation of new separate
accounts is included in other income.
Fair Value Disclosure of Financial Instruments
Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosure
about Fair Value of Financial Instruments," requires disclosure of fair value
information about certain financial instruments, whether or not recognized in
the statement of financial position, for which it is practicable to estimate the
value. In situations where quoted market prices are not available, fair values
are based on estimates using present value or other valuation techniques. SFAS
No. 107 excludes certain financial instruments and all nonfinancial instruments
from its disclosure requirements. Therefore, the aggregate fair value amounts
presented do not represent the underlying value of the Company. See Note 11.
The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:
The carrying amounts reported in the statement of financial position for
cash and temporary cash investments approximate their fair values.
Fair values for public bonds are obtained from an independent pricing
service. Fair values for private placement securities and publicly traded bonds
not provided by the independent pricing service are estimated by the
58
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
Company by discounting expected future cash flows using current market rates
applicable to the yield, credit quality and maturity of the investments.
The fair values for common and preferred stocks, other than its subsidiary
investments, which are carried at equity values, are based on quoted market
prices.
Fair values for futures contracts are based on quoted market prices. Fair
values for interest rate swap, cap agreements, and currency swap agreements are
based on current settlement values. The current settlement values are based on
brokerage quotes that utilize pricing models or formulas using current
assumptions.
The fair value for mortgage loan is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit characteristics of
the underlying loans. Mortgage loans with similar characteristics and credit
risks are engaged into qualitative categories for purposes of the fair value
calculations.
The carrying amount in the statement of financial position for policy loans
approximates their fair value.
The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow method
incorporating adjustments for the difference in the level of interest rates
between the dates the commitments were made and December 31, 1999.
Capital Gains and Losses
Realized capital gains and losses are determined using the specific
identification method. Realized capital gains and losses, net of taxes and
amounts transferred to the IMR, are included in net gain or loss. Unrealized
gains and losses, which consist of market value and book value adjustments, are
shown as adjustments to the unassigned deficit.
Policy Reserves
Life reserves are developed by actuarial methods and are determined based
on published tables using statutorily specified interest rates and valuation
methods that will provide, in the aggregate, reserves that are greater than or
equal to the minimum or guaranteed policy cash values or the amounts required by
the Commonwealth of Massachusetts Division of Insurance. Reserves for variable
life insurance policies are maintained principally on the modified preliminary
term method using the 1958 and 1980 Commissioner's Standard Ordinary (CSO)
mortality tables, with an assumed interest rate of 4% for policies issued prior
to May 1, 1983 and 4 1/2% for policies issued on or thereafter. Reserves for
single premium policies are determined by the net single premium method using
the 1958 CSO mortality table, with an assumed interest rate of 4%. Reserves for
universal life policies issued prior to 1985 are equal to the gross account
value which at all times exceeds minimum statutory requirements. Reserves for
universal life policies issued from 1985 through 1988 are maintained at the
greater of the Commissioner's Reserve Valuation Method (CRVM) using the 1958 CSO
mortality table, with 4 1/2% interest or the cash surrender value. Reserves for
universal life policies issued after 1988 and for flexible variable policies are
maintained using the greater of the cash surrender value or the CRVM method with
the 1980 CSO mortality table and 5 1/2% interest for policies issued from 1988
through 1992; 5% interest for policies issued in 1993 and 1994; and 4 1/2%
interest for policies issued in 1995 through 1999.
Federal Income Taxes
Federal income taxes are reported in the financial statements based on
amounts determined to be payable as a result of operations within the current
accounting period. The operations of the Company are consolidated with John
Hancock in filing a consolidated federal income tax return basis for the
affiliated group. The federal income
59
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
taxes of the Company are allocated on a separate return basis with certain
adjustments. The Company made federal income tax payments of $10.6 million in
1999 and $38.2 million in 1998.
Income before taxes differs from taxable income principally due to
tax-exempt investment income, the limitation placed on the tax deductibility of
policyholder dividends, accelerated depreciation, differences in policy reserves
for tax return and financial statement purposes, capitalization of policy
acquisition expenses for tax purposes and other adjustments prescribed by the
Internal Revenue Code.
Amounts for disputed tax issues relating to the prior years are charged or
credited directly to policyholders' contingency reserve.
Adjustments to Policy Reserves
From time to time, the Company finds it appropriate to modify certain
required policy reserves because of changes in actuarial assumptions. Reserve
modifications resulting from such determinations are recorded directly to
stockholder's equity. No such refinements were made during 1999 or 1998.
Reinsurance
Premiums, commissions, expense reimbursements, benefits and reserves
related to reinsured business are accounted for on bases consistent with those
used in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums ceded to other companies have been reported as a
reduction of premium income. Amounts applicable to reinsurance ceded for future
policy benefits, unearned premium reserves and claim liabilities have been
reported as reductions of these items.
2. Acquisition
On June 23, 1993, the Company acquired all of the outstanding shares of
stock of Colonial Penn Annuity and
Life Insurance Company (CPAL) from Colonial Penn Life Insurance Company for an
aggregate purchase price of approximately $42.5 million. At the date of
acquisition, assets of CPAL were approximately $648.5 million, consisting
principally of cash and temporary cash investments and liabilities were
approximately $635.2 million, consisting principally of reserves related to a
block of interest sensitive single-premium whole life insurance business assumed
by CPAL from Charter National Life Insurance Company (Charter). The purchase
price includes contingent payments of up to approximately $7.3 million payable
between 1994 and 1998 based on the actual lapse experience of the business in
force on June 23, 1993. The Company made the final contingent payment to CPAL of
$1.5 million during 1998.
60
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
On June 24, 1993, the Company contributed $24.6 million in additional
capital to CPAL. CPAL was renamed John Hancock Life Insurance Company of America
(JHLICOA) on July 7, 1993. JHLICOA was subsequently renamed Investors Partner
Life Insurance Company (IPL) on March 5, 1998. IPL manages the business assumed
from Charter and began marketing term life and variable universal life products
through brokers in 1999. Summarized financial information for IPL for 1999 and
1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
(In millions)
<S> <C> <C>
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 570.7 $ 587.8
. . . . . . . . . . . . . . . . .
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498.9 517.5
. . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.6 38.8
. . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 3.8
. . . . . . . . . . . . . . . .
</TABLE>
3. Net Investment Income
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
1999 1998
(In millions)
<S> <C> <C>
Investment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.5 $ 8.3
. . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 2.4
. . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 0.8
. . . . . . . . . . . . .
Investment taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.7
. . . . . . . . . . . . . . .
$ 12.1 $ 12.2
</TABLE>
61
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
4. Net Capital Gains (Losses) and Other Adjustments
Net realized capital gains (losses) consist of the following items:
<TABLE>
<CAPTION>
1999 1998
(In millions)
<S> <C> <C>
Net gains from asset sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2.8) $7.6
. . . . . . . . . . . . .
Capital gains tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 (2.9)
. . . . . . . . . . . . . . . .
Net capital gains transferred to IMR . . . . . . . . . . . . . . . . . . . . . . . 0.9 (5.3)
. . . . . . . . . .
Net realized capital losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.7) $(0.6)
. . . . . . . . . . . . .
Net unrealized capital gains (losses) and other adjustments consist of the
following items:
<CAPTION>
1999 1998
(In
millions)
<S> <C> <C>
Net losses from changes in security values and book
value adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2.6) $ (2.7)
. . . . . . . . . . . . . .
Increase in asset valuation reserve . . . . . . . . . . . . . . . . . . . . . . . . (1.2) (3.3)
. . . . . . . . . . .
Net unrealized capital losses and other adjustments . . . . . . . . . . . . . . . . $ (3.8) $ (6.0)
. . . . . .
</TABLE>
62
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
5. Transactions with Parent
The Company's Parent provides the Company with personnel, property and
facilities in carrying out certain of its corporate functions. The Parent
annually determines a fee for these services and facilities based on a
number of criteria which were revised in 1999 and 1998 to reflect
continuing changes in the Company's operations. The amount of the service
fee charged to the Company was $188.3 million and $157.5 million in 1999
and 1998, respectively, which has been included in insurance and investment
expenses. The Parent has guaranteed that, if necessary, it will make
additional capital contributions to prevent the Company's stockholder's
equity from declining below $1.0 million.
The service fee charged to the Company by the Parent includes $0.2 million
and $0.7 million in 1999 and 1998, respectively, representing the portion of the
provision for retiree benefit plans determined under the accrual method,
including a provision for the 1993 transition liability which is being amortized
over twenty years, that was allocated to the Company.
The Company has a modified coinsurance agreement with John Hancock to
reinsure 50% of 1994 through 1999 issues of flexible premium variable life
insurance and scheduled premium variable life insurance policies. In connection
with this agreement, John Hancock transferred $44.5 million and $4.9 million of
cash for tax, commission, and expense allowances to the Company, which increased
the Company's net gain from operations by $20.6 million and $22.2 million in
1999 and 1998, respectively.
Effective January 1, 1996, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of the 1995 inforce block and 50% of
1996 and all future issue years of certain variable annuity contracts
(Independence Preferred, Declaration, Independence 2000, MarketPlace, and
Revolution). In connection with this agreement, the Company received a net cash
payment of $40.0 million and $12.7 million in 1999 and 1998, respectively, for
surrender benefits, tax, reserve increase, commission, expense allowances and
premium, This agreement increased the Company's net gain from operations by
$26.9 million and $8.4 million in 1999 and 1998, respectively.
Effective January 1, 1997, the Company entered into a stop-loss agreement
with John Hancock to reinsure mortality claims in excess of 110% of expected
mortality claims in 1999 and 1998 for all policies that are not reinsured under
any other indemnity agreement. In connection with the agreement, John Hancock
received $0.8 million and 1.0 million in 1999 and 1998, respectively, for
mortality claims to the Company. This agreement decreased the Company's net gain
from operations in both 1999 and 1998 by $0.5 million.
At December 31, 1998 the Company had outstanding a short-term note of $61.9
million payable to an affiliate at a variable rate of interest. The note was
part of a revolving line of credit and was repaid in 1999. Interest paid in 1999
and 1998 was $1.7 million and $2.9 million, respectively. The note is included
in other general account obligations at December 31, 1998.
63
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
6. Investments
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
Gross Gross Unrealized
Unrealized
Statement Value Gains Losses Fair Value
(In millions)
<S> <C> <C> <C> <C>
December 31, 1999
U.S. Treasury securities and obligations of U.S.
government corporations and agencies . . . . . . $ 5.9 $ 0.0 $ 0.1 $ 5.8
. .
Obligations of states and political subdivisions 2.2 0.1 0.1 2.2
. . . .
Debit securities issued by foreign governments . 13.9 0.8 0.1 14.6
. . .
Corporate securities . . . . . . . . . . . . . . 964.9 13.0 59.4 918.5
. . . . . . . . . . .
Mortgage-backed securities . . . . . . . . . . . 229.4 0.5 7.8 222.1
. . . . . . . .
Total bonds . . . . . . . . . . . . . . . . . . $ 1,216.3 $ 14.4 $ 67.5 $ 1,163.2
. . . . . . . . . . . . . .
December 31, 1998
U.S. Treasury securities and obligations of U.S.
government corporations and agencies . . . . . . $ 5.1 $ 0.1 $ 0.0 $ 5.2
. .
Obligations of states and political subdivisions 3.2 0.3 0.0 3.5
. . . .
Corporate securities . . . . . . . . . . . . . . 925.2 50.4 15.0 960.6
. . . . . . . . . . .
Mortgage-backed securities . . . . . . . . . . . 252.3 10.0 0.1 262.2
. . . . . . . .
Total bonds . . . . . . . . . . . . . . . . . . $ 1,185.8 $ 60.8 $ 15.1 $ 1,231.5
. . . . . . . . . . . . . .
</TABLE>
64
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
The statement value and fair value of bonds at December 31, 1999, by
contractual maturity, are shown below. Maturities will differ from contractual
maturities because eligible borrowers may exercise their right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Statement Fair
Value Value
(In millions)
<S> <C> <C>
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58.5 $ 58.2
. . . . . . . . . . . . . . . .
Due after one year through five years . . . . . . . . . . . . . . . . . . . . . . . . . 286.8 282.0
. . . . . . . . . . . .
Due after five years through ten years. . . . . . . . . . . . . . . . . . . . . . . . . 425.4 405.6
. . . . . . . . . . . .
Due after ten years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216.2 195.3
. . . . . . . . . . . . . . . . . .
986.9 941.1
Mortgage-backed securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229.4 222.1
. . . . . . . . . . . . . .
$ 1,216.3 $ 1,163.2
</TABLE>
Gross gains of $0.3 million in 1999 and $3.4 million in 1998 and gross
losses of $4.0 million in 1999 and $0.7 million in 1998 were realized from the
sale of bonds.
At December 31, 1999, bonds with an admitted asset value of $9.1 million
were on deposit with state insurance departments to satisfy regulatory
requirements.
The cost of common stocks was $3.1 million and $2.1 million at December 31,
1999 and 1998, respectively. At December 31, 1999, gross unrealized appreciation
on common stocks totaled $1.2 million, and gross unrealized depreciation totaled
$1.1 million. The fair value of preferred stock totaled $35.9 million at
December 31, 1999 and $36.5 million at December 31, 1998.
Bonds with amortized cost of $0.4 million were non-income producing for the
twelve months ended December 31, 1999.
At December 31, 1999, the mortgage loan portfolio was diversified by
geographic region and specific collateral property type as displayed below. The
Company controls credit risk through credit approvals, limits and monitoring
procedures.
65
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
<TABLE>
<CAPTION>
Statement Geographic Statement
Property Type Value Concentration Value
(In millions) (In millions)
<S> <C> <C> <C>
Apartments . . . . . . . . . . . . . . . . $ 112.1 East North Central $ 71.3
. . . . . . . . . .
Hotels . . . . . . . . . . . . . . . . . . 11.3 East South Central 7.4
. . . . . . . . . . . .
Industrial . . . . . . . . . . . . . . . . 66.0 Middle Atlantic 28.5
. . . . . . . . . . . .
Office buildings . . . . . . . . . . . . . 86.4 Mountain 21.0
. . . . . . . . . .
Retail . . . . . . . . . . . . . . . . . . 25.5 New England 37.5
. . . . . . . . . . . . .
Agricultural . . . . . . . . . . . . . . . 99.6 Pacific 111.1
. . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . 32.2 South Atlantic 87.6
. . . . . . . . . . . . .
West North Central 16.6
West South Central 48.6
Other 3.5
$ 433.1 $ 433.1
</TABLE>
At December 31, 1999, the fair values of the commercial and agricultural
mortgage loans portfolios were $323.5 million and $98.2 million, respectively.
The corresponding amounts as of December 31, 1998 were approximately $331.3
million and $70.0 million, respectively.
The maximum and minimum lending rates for mortgage loans during 1999 were
14.24% and 6.84% for agricultural loans, 7.45% and 7.00% for other properties.
Generally, the maximum percentage of any loan to the value of security at the
time of the loan, exclusive of insured, guaranteed or purchase money mortgages,
is 75%. For city mortgages, fire insurance is carried on all commercial and
residential properties at least equal to the excess of the loan over the maximum
loan which would be permitted by law on the land without the building, except as
permitted by regulations of the Federal Housing Commission on loans fully
insured under the provisions of the National Housing Act. For agricultural
mortgage loans, fire insurance is not normally required on land based loans
except in those instances where a building is critical to the farming operation.
Fire insurance is required on all agri-business facilities in an aggregate
amount equal to the loan balance.
66
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
7. Reinsurance
The Company cedes business to reinsurers to share risks under variable
life, universal life and flexible variable life insurance policies for the
purpose of reducing exposure to large losses. Premiums, benefits and
reserves ceded to reinsurers in 1999 were $594.9 million, $132.8 million,
and $13.6 million, respectively. The corresponding amounts in 1998 were
$590.2 million, $63.2 million, and $8.2 million, respectively.
Reinsurance ceded contracts do not relieve the Company from its obligations
to policyholders. The Company remains liable to its policyholders for the
portion reinsured to the extent that any reinsurer does not meet its obligations
for reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the reinsurer.
Neither the Company, nor any of its related parties, control, either
directly or indirectly, any external reinsurers with which the Company conducts
business. No policies issued by the Company have been reinsured with a foreign
company which is controlled, either directly or indirectly, by a party not
primarily engaged in the business of insurance.
The Company has not entered into any reinsurance agreement in which the
reinsurer may unilaterally cancel any reinsurance for reasons other than
nonpayment of premiums or other similar credits. The Company does not have any
reinsurance agreements in effect in which the amount of losses paid or accrued
through December 31, 1999 would result in a payment to the reinsurer of amounts
which, in the aggregate and allowing for offset of mutual credits from other
reinsurance agreements with the same reinsurer, exceed the total direct premiums
collected under the reinsured policies.
8. Financial Instruments with Off-Balance-Sheet Risk
The notional amounts, carrying values and estimated fail values of the
Company's derivative instruments were
as follows at December 31:
<TABLE>
<CAPTION>
Number of Contracts/ Assets (Liabilities)
-----------------------------------------------
Notional Amounts 1999 1998
Carrying Carrying
1999 1998 Value Fair Value Value Fair Value
---- ---- -------- ---------
(In millions)
<S> <C> <C> <C>
Futures contracts to sell securities 362.0 947.0 $ 0.6 $ 0.6 $ (0.5) $ (0.5)
Interest rate swap agreements $ 965.0 $ 365.0 -- 11.5 -- (17.7)
Interest rate cap agreements 239.4 89.4 5.6 5.6 3.1 3.1
Currency rate swap agreements 15.8 15.8 -- (1.6) -- (3.3)
</TABLE>
67
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
The Company uses futures contracts, interest rate swap, cap agreements, and
currency rate swap agreements for other than trading purposes to hedge and
manage its exposure to changes in interest rate levels, foreign exchange rate
fluctuations and to manage duration mismatch of assets and liabilities.
The futures contracts expire in 2000. The interest rate swap agreements
expire in 2000 to 2011. The interest rate cap agreements expire in 2006 to 2008.
The currency rate swap agreements expire in 2006 to 2009.
The Company's exposure to credit risk is the risk of loss from a
counterparty failing to perform to the terms of the contract. The Company
continually monitors its position and the credit ratings of the counterparties
to these derivative instruments. To limit exposure associated with counterparty
nonperformance on interest rate and currency swap agreements, the Company enters
into master netting agreements with its counterparties. The Company believes the
risk of incurring losses due to nonperformance by its counterparties is remote
and that such losses, if any, would be immaterial. Futures contracts trade on
organized exchanges and, therefore, have minimal credit risk.
9. Policy Reserves Policyholders' and Benificiaries' Funds and Obligations
Related to Separate Accounts
The Company' annuity reserves and deposit fund liabilities that are subject
to discretionary withdrawal, with
and without adjustment, are summarized as follows.
<TABLE>
<CAPTION>
December 31, 1999 Percent
----------------- -------
(In millions)
Subject to discretionary withdrawal (with adjustment)
<S> <C> <C>
With market value adjustment . . . . . . . . . . . . . . . . . . . . . $ 3.8 0.1%
At book value less surrender charge 40.5 1.5
At market value . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,326.6 87.1
Total with adjustment. . . . . . . . . . . . . . . . . . . . . . . 2,370.9 88.7
Subject to discretionary withdrawal
at book value (without adjustment) . . . . . . . . . . . . . . . 287.1 10.7
Not subject to discretionary withdrawal--general account . . . . . . . 15.4 0.6
Total annuity reserves and deposit liabilities . . . . . . . . . . . . $ 2,673.4 100.0%
</TABLE>
68
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
10. Commitments and Contingencies
The Company has extended commitments to purchase long-term bonds and issue
real estate mortgages totaling $15.4 million and $3.5 million, respectively, at
December 31, 1999. The Company monitors the creditworthiness of borrowers under
long-term bonds commitments and requires collateral as deemed necessary. If
funded, loans related to real estate mortgages would be fully collateralized by
the related properties. The estimated fair value of the commitments described
above is $19.4 million at December 31, 1999. The majority of these commitments
expire in 2000.
In the normal course of its business operations, the Company is involved
with litigation from time to time with claimants, beneficiaries and others, and
a number of litigation matters were pending as of December 31, 1999. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position or results of operations of the Company.
During 1997, John Hancock entered into a court-approved settlement relating
to a class action lawsuit involving certain individual life insurance policies
sold from 1979 through 1996. In entering into the settlement, John Hancock
specifically denied any wrongdoing. During 1999, the Company recorded a $194.9
million reserve, through a direct charge to its unassigned deficit, representing
the Company's share of the settlement and John Hancock contributed $194.9
million of capital to the Company. The reserve held at December 31, 1999
amounted to $136.5 million and is based on a number of factors, including the
estimated number of claims, the expected type of relief to be sought by class
members (general relief or alternative dispute resolution), the estimated cost
per claim and the estimated costs to administer the claims.
Given the uncertainties associated with estimating the reserve, it is
reasonably possible that the final cost of the settlement could differ
materially from the amounts presently provided for by the Company. John Hancock
and the Company will continue to update their estimate of the final cost of the
settlement as claims are processed and more specific information is developed,
particularly as the actual cost of the claims subject to alternative dispute
resolution becomes available. However, based on information available at this
time, and the uncertainties associated with the final claim processing and
alternative dispute resolution, the range of any additional costs related to the
settlement cannot be reasonably estimated. If the Company's share of the
settlement increases, John Hancock will contribute additional capital to the
Company so that the Company's total stockholder's equity would not be impacted.
69
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(continued)
11. Fair Value of Financial Instruments
The following table presents the carrying amounts and fair values of the
Company's financial instruments:
<TABLE>
<CAPTION>
December 31,
1999 1998
---------------------- --------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- -------- -------- -------
(In millions)
Assets
<S> <C> <C> <C> <C>
Bonds--Note 6 $ 1,216.3 $ 1,163.2 $ 1,185.8 $ 1,231.5
Preferred stocks--Note 6 35.9 35.9 36.5 36.5
Common stocks--Note 6 3.2 3.2 3.1 3.1
Mortgage loans on real estate--Note 6 433.1 421.7 388.1 401.3
Policy loans--Note 1 172.1 172.1 137.7 137.7
Cash items--Note 1 250.1 250.1 19.9 19.9
Derivatives assets (liabilities) relating
to:--Note 8
Futures contracts 0.6 0.6 (0.5) (0.5)
Interest rate swaps -- 11.5 -- (17.7)
Currency rate swaps -- (1.6) -- (3.3)
Interest rate caps 5.6 5.6 3.1 3.1
Liabilities
Commitments--Note 10 -- 19.4 -- 32.1
</TABLE>
The carrying amounts in the table are included in the statutory-basis
statements of financial position. The method and assumptions utilized by the
Company in estimating its fair value disclosures are described in Note 1.
12. Subsequent Events
Reorganization and Initial Public Offering
Pursuant to a Plan of Reorganization approved by the policyholders of John
Hancock and the Commonwealth of Massachusetts Division of Insurance, effective
February 1, 2000, John Hancock converted from a mutual life insurance company to
a stock life insurance company (i.e., demutualized) and became a wholly owned
subsidiary of John Hancock Financial Services, Inc., which is a holding company.
In connection with the reorganization, John Hancock changed its name to John
Hancock Life Insurance Company. In addition, on February 1, 2000, John Hancock
Financial Services, Inc. completed its initial public offering and 102 million
shares of common stock were issued at an initial public offering price of $17
per share.
70
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENT--(continued)
13. Impact of Year 2000 (Unaudited)
The Company participated in the Year 2000 remediation project of its
parent, John Hancock. By late 1999, John Hancock and the Company completed their
Year 2000 readiness plan to address issues that could result from computer
programs written using two digits to define the applicable year rather than four
to define the applicable year and century. As a result, John Hancock and the
Company were prepared for the transition to the Year 2000 and did not experience
any significant Year 2000 problems with respect to mission critical information
technology ("IT") or non-IT systems, applications or infrastructure. During the
date rollover to the year 2000, John Hancock and the Company implemented and
monitored their millennium rollover plan and conducted business as usual on
Monday, January 3, 2000.
Since January 3, 2000, the information systems, including mission critical
systems, which in the event of a Year 2000 failure would have the greatest
impact on operations, have functioned properly. In addition, neither John
Hancock nor the Company have experienced any significant Year 2000 issues
related to interactions with material business partners. No disruptions have
occurred which impact John Hancock or the Company's ability to process claims,
update customer accounts, process financial transactions, or report accurate
data to management and no business interruptions due to Year 2000 issues have
been experienced. While John Hancock and the Company continue to monitor their
systems, and those of material business partners, closely to ensure that no
unexpected Year 2000 issues develop, neither John Hancock nor the Company have
reason to expect any such issues.
The costs of the Year 2000 project consist of internal IT personnel and
external costs such as consultants, programmers, replacement software, and
hardware. The costs of the Year 2000 project are expensed as incurred. The
project is funded partially through a reallocation of resources from
discretionary projects. Through December 31, 1999, John Hancock has incurred and
expensed approximately $20.8 million in related payroll costs for internal IT
personnel on the project. The estimated remaining IT personnel costs of the
project are approximately $1.0 million. Through December 31, 1999, John Hancock
has incurred and expensed approximately $47.0 million in external costs for the
project. John Hancock's estimated remaining external cost of the project is
approximately $2.0 million. The total costs of the Year 2000 project to John
Hancock, based on management's best estimates, include approximately $21.7
million in internal IT personnel, $14.6 million in the external modification of
software, $18.3 million for external solution providers, $9.1 million in
replacement costs of non-compliant IT systems and $6.9 million in oversight,
test facilities and other expenses. Accordingly, the estimated range of total
costs of the Year 2000 project to John Hancock, internal and external, is
approximately $70 to $72.5 million. John Hancock's total Year 2000 project costs
include the estimated impact of external solution providers based on presently
available information.
71
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
FOR
JOHN HANCOCK VARIABLE LIFE ACCOUNTS
SECOND QUARTER 2000
72
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNTS
Statement of Assets and Liabilities (Unaudited)
June 30, 2000
<TABLE>
<CAPTION>
International
Large Cap Active 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 . . . . . . . . . . . . . . . . . . . . . 139,955,553 35,417,027 34,419,184 38,614,519
. . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value . -- -- -- --
. . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . . 8,252 209,538 63,374 0
. . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 139,963,805 35,626,565 34,482,558 38,614,519
. . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 1,113 213 286 354
. . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 1,113 213 286 354
. . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 139,962,692 $ 35,626,352 $ 34,482,272 $ 38,614,165
. . . . . . . . . . . . . . . . . . . . . . . .
Global Mid Cap Large Cap Money
Balanced Growth Value Market
Subaccount SubaccounSubaccount Subaccount
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $-- $-- $ -- $--
. . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series
Trust I, at value . . . . . . . . . . . . . . . . . . . . . 5,203,893 66,875,13830,925,488 106,126,654
. . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value . -- -- -- --
. . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . . 11,430 0 40,214 55,584
. . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 5,215,323 66,875,13830,965,702 106,182,238
. . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 48 604 267 2,853
. . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 48 604 267 2,853
. . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,215,275 $ 66,874,$3430,965,435$ 106,179,385
. . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
See accompany notes.
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (Unaudited) (continued)
June 30, 2000
<TABLE>
<CAPTION>
Mid Cap Small/MidCap 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. . . . . . . . . . . . . . . . . . . . 20,720,541 9,664,300 19,827,328 209,587,121
. . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at -- -- -- --
value. . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . 14,784 -- -- 141,635
. . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 20,735,325 9,664,300 19,827,328 209,728,756
. . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . 189 93 160 2,206
. . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . 189 93 160 2,206
. . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,735,136 $ 9,664,207 $ 19,827,168 $ 209,726,550
. . . . . . . . . . . . . . . . . . . . . . .
Short-Term Small Cap International
Managed Bond Value Opportunities
Subaccount Subaccount Subaccount Subaccount
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $-- $ -- $ -- $--
. . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series
Trust I, at value. . . . . . . . . . . . . . . . . . . . 129,010,254 14,876,205 23,028,226 40,698,659
. . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at -- -- -- --
value. . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . 306,228 76,873 29,212 32,651
. . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 129,316,482 14,953,078 23,057,438 40,731,310
. . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . 1,865 88 231 358
. . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . 1,865 88 231 358
. . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 129,314,61$ 14,952,990$ 23,057,207$ 40,730,952
. . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
See accompany notes.
74
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (Unaudited) (continued)
June 30, 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. . . . . . . . . . . . . . . . . . . . . 172,410,513 6,753,777 19,350,682 24,763,277
. . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value. -- -- -- --
. . . . . . . . . .
Receivable from: . . . . . . . . . . . . . . . . . . . . . . . -- --
. . . . . . . . . . . . . . . . . . . . .
John Hancock Variable Series Trust I . . . . . . . . . . . 108,870 29,165 -- --
. . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 172,519,383 6,782,942 19,350,682 24,763,277
. . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 1,345 67 115 126
. . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 1,345 67 115 126
. . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 172,518,03$ 6,782,875 $ 19,350,567$ 24,763,151
. . . . . . . . . . . . . . . . . . . . . . . .
Frontier Clifton Emerging International
Capital Enhanced Markets Opportunities
Appreciation U.S. Equity II
Equity
Subaccount SubaccounSubaccount Subaccount
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ --
. . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series
Trust I, at value. . . . . . . . . . . . . . . . . . . . . 21,071,755 9,661,9176,102,393 1,310,825
. . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value. -- -- -- --
. . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . . -- -- -- 909
. . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 21,071,755 9,661,9176,102,393 1,311,734
. . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 112 43 58 16
. . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 112 43 58 16
. . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,071,643 $ 9,661,$746,102,235 $ 1,311,718
. . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
See accompany notes.
75
<PAGE>
OHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (Unaudited) (continued)
June 30, 2000
<TABLE>
<CAPTION>
High Fundamental
Bond Small/Mid Yield Mid Cap
Index Cap CORE Bond 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. . . . . . . . . . . . . . . . . . . . . 7,579,153 1,409,959 4,035,963 20,405
. . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value. -- -- --
. . . . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . . 41,425 2,129 27,597 --
. . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
. . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 7,620,578 1,412,088 4,063,560 20,405
. . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 69 13 37 --
. . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 69 13 37 --
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,620,50$ 1,412,075 $ 4,063,523$ `20,405
</TABLE>
<TABLE>
<CAPTION>
New Fidelity Fidelity
AIM V.I. Discovery VIP VIP II Templeton
Value Series Contrafund Growth International
SubaccountSubaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C> <C>
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ -- $-- $ -- $ --
. . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock
Variable Series Trust I, at value . . . . . . . . 99,180 322,881 20,127 79,989 150,853
. . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., -- -- -- -- --
at value
Receivable from:
John Hancock Variable Series Trust I . . . . . . -- -- -- -- --
. . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . -- -- -- -- --
. . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . 99,180 322,881 20,127 79,989 150,853
. . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . 1 2 -- 1 1
. . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . -- -- -- -- --
. . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . -- -- -- -- --
. . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . 1 2 -- 1 1
. . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . $ 99,179 $ 322,879 $ 20,127 $ 79,988 $ 150,852
</TABLE>
See accompany notes.
76
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (Unaudited)
Years and periods ended June 30,
<TABLE>
<CAPTION>
Large Cap Growth Subaccount Active 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 $ 151,072 $ 17,558,034 $ 6,312,073 $ 1,067,381 $ 2,851,613 $ 2,190,901
. . . .
M Fund Inc. . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . .
Total investment income . . . . . . . . 151,072 17,558,034 6,312,073 1,067,381 2,851,613 2,190,901
. . . . . . . .
Expenses:
Mortality and expense risks . . . . . 225,388 324,595 168,652 51,193 126,407 93,556
. . . . . . .
Net investment income (loss) . . . . . . (74,316) 17,233,439 6,143,421 1,016,188 2,725,206 2,097,345
. . . . . .
Net realized and unrealized gain (loss)
on
investments:
Net realized gains (losses) . . . . . 2,734,096 5,003,007 1,750,881 (874,542) (1,391,910) 185,230
. . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . . 4,426,209 (2,053,672) 8,041,022 952,272 (1,837,190) (378,058)
. . . . . . . . .
Net realized and unrealized gain (loss)
on
investments . . . . . . . . . . . . . 7,160,305 2,949,335 9,791,903 77,730 (3,229,100) (192,828)
. . . . . . . . . . .
Net increase (decrease) in net assets
resulting
from operations . . . . . . . . . . . $ 7,085,989 $ 20,182,774 $ 15,935,324$ 1,093,918 $ (503,894) $ 1,904,517
</TABLE>
<TABLE>
<CAPTION>
International Equity Index Small Cap Growth Subaccount
Subaccount
2000 1999 1998 2000 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I $ 296,545 $ 936,475 $ 1,930,710 $-- $ 3,697,955 $--
. . . .
M Fund Inc. . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . .
Total investment income (loss) . . . . . 296,545 936,475 1,930,710 -- 3,697,955 --
. . . . . .
Expenses:
Mortality and expense risks . . . . . 62,937 81,058 45,651 72,582 60,221 22,593
. . . . . . .
Net investment income (loss) . . . . . . 233,608 855,417 1,885,059 (72,582) 3,637,734 (22,593)
. . . . . .
Net realized and unrealized gain (loss)
on
investments:
Net realized gains . . . . . . . . . 1,515,308 753,750 152,030 4,544,105 2,548,944 58,729
. . . . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . . (3,395,800) 4,871,167 78,480 (3,503,834) 3,920,455 1,070,805
. . . . . . . . .
Net realized and unrealized gain (loss)
on
investments . . . . . . . . . . . . . (1,880,492) 5,624,917 230,510 1,040,271 6,469,399 1,129,534
. . . . . . . . . . .
Net increase (decrease) in net assets
resulting
from operations . . . . . . . . . . . $ (1,646,884$ 6,480,334 $ 2,115,569 $ 967,689 $ 10,107,133$ 1,106,941
</TABLE>
See accompanying notes.
77
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF OPERATIONS
(Unaudited) (continued) Years and periods ended June 30,
<TABLE>
<CAPTION>
Global 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 . . $ 63,243 $ 372,766 $ 185,760 $ -- $ 6,491,783 $ 1,114,374
. . . . .
M Fund Inc. . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . .
Total investment income . . . . . . . . . . 63,243 372,766 185,760 -- 6,491,783 1,114,374
. . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . 8,184 13,792 9,687 135,550 102,248 26,123
. . . . . . . . .
Net investment income (loss) . . . . . . . 55,059 358,974 176,073 (135,550) 6,389,535 1,088,251
. . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . (123,229) 15,640 24,206 8,716,345 5,188,018 599,619
. . . . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . . . (109,231) (173,912) 147,461 (13,790,389) 15,078,681 1,184,263
. . . . . . . . . . .
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . (232,460) (158,272) 171,667 (5,074,044) 20,266,699 1,783,882
Net increase (decrease) in net assets
resulting from
operations . . . . . . . . . . . . . . . $ (177,401)$ 200,702 $ 347,740 $ (5,209,594)$ 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 . . $ 329,521 $ 1,809,072 $ 797,874 $ 2,267,940 $ 3,279,928 $ 1,854,829
. . . . .
M Fund Inc. . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . .
Total investment income . . . . . . . . . . 329,521 1,809,072 797,874 2,267,940 3,279,928 1,854,829
. . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . 51,584 88,877 41,415 158,685 291,398 167,813
. . . . . . . . .
Net investment income . . . . . . . . . . . 277,937 1,720,195 756,459 2,109,255 2,988,530 1,687,016
. . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . (232,676) 705,454 330,827 -- -- --
. . . . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . . . (596,463)(2,181,112) 145,355 -- -- --
. . . . . . . . . . .
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . (829,139)(1,475,658) 476,182 -- -- --
. . . . . . . . . . . .
Net increase (decrease) in net assets
resulting from
operations . . . . . . . . . . . . . . . $ (551,202)$ 244,537 $ 1,232,64$ 2,109,255 $ 2,988,530 $ 1,687,016
</TABLE>
See accompanying notes.
78
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF OPERATIONS
(Unaudited) (continued) Years and periods ended June 30,
<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 . . $ 45,440 $ 110,190 $ 120,469 $ -- $ 1,421,656 $ 142,469
. . . .
M Fund Inc. . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . .
Total investment income (loss) . . . . . . 45,440 110,190 120,469 -- 1,421,656 142,469
. . . . . . .
Expenses:
Mortality and expense risks . . . . . . 39,462 68,611 45,020 18,930 32,995 34,432
. . . . . . . .
Net investment income (loss) . . . . . . . 5,978 41,579 75,449 (18,930) 1,388,661 108,037
. . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . 783,358 (860,332) (538,516) (567,320) 13,375 232,246
. . . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . . . 289,049 1,757,919 (830,390) 1,251,426 (1,001,208) 236,333
. . . . . . . . . .
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . 1,072,407 897,587 (1,368,906) 684,106 (987,833) 468,579
. . . . . . . . . . . .
Net increase (decrease) in net assets
resulting
from operations . . . . . . . . . . . . $ 1,078,385$ 939,166 $ (1,293,45$) 665,176 $ 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 . . $ 324,574 $ 544,845 $ 305,783 $ 1,040,920 $23,565,679$ 9,266,175
. . . .
M Fund Inc. . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . .
Total investment income . . . . . . . . . . 324,574 544,845 305,783 1,040,92023,565,679 9,266,175
. . . . . . . .
Expenses:
Mortality and expense risks . . . . . . 20,547 29,468 22,716 442,927 715,377 290,361
. . . . . . . .
Net investment income . . . . . . . . . . . 304,027 515,377 283,067 597,993 22,850,302 8,975,814
. . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . (9,406) (735,504) (454,979) 1,331,371 6,207,253 2,061,212
. . . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . . . 1,465,596 80,925 (698,676)(3,257,862) (5,814,839) 7,759,307
. . . . . . . . . .
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . 1,456,190 (654,579) (1,153,65(1,926,491) 392,414 9,820,519
. . . . . . . . . . . .
Net increase (decrease) in net assets
resulting
from operations . . . . . . . . . . . . $ 1,760,217$ (139,202) $ (870,588)$ (1,328,49$) 23,242,716$ 18,796,333
</TABLE>
See accompanying notes.
79
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF OPERATIONS
(Unaudited) (continued) Years and periods ended June 30,
<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 . . $ 1,918,560 $ 11,251,980$3,606,186 $ 433,130 $ 957,614 $ 977,164
. . . . . .
M Fund Inc. . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . .
Total investment income . . . . . . . . . . 1,918,560 11,251,980 3,606,186 433,130 957,614 977,164
. . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . 340,006 495,544 121,905 19,435 50,128 50,947
. . . . . . . . .
Net investment income . . . . . . . . . . . 1,578,554 10,756,436 3,484,281 413,695 907,486 926,217
. . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . (259,619) 2,233,258 278,186 (190,959) (441,667) 24,740
. . . . . . . . . .
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . (110,575) (6,419,069)1,791,231 169,777 (85,754) (136,999)
. . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . (370,194) (4,185,811)2,069,417 (21,182) (527,421) (112,259)
. . . . . . . . . . . . .
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . $ 1,208,360 $ 6,570,625 $5,553,698 $ 392,513 $ 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 . . $ 183,706 $ 409,324 $47,350 $ 147,896 $ 2,096,195 $ 103,399
. . . . . .
M Fund Inc. . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . .
Total investment income . . . . . . . . . . 183,706 409,324 47,350 147,896 2,096,195 103,399
. . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . 42,741 64,613 33,335 70,749 90,191 50,003
. . . . . . . . .
Net investment income . . . . . . . . . . . 140,965 344,711 14,015 77,147 2,006,004 53,396
. . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . 45,176 (979,002) (9,919) 2,289,932 1,907,809 191,495
. . . . . . . . . .
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . 151,771 325,684 (523,693) (3,683,990) 3,818,953 1,108,416
. . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . 196,947 (653,318) (533,612) (1,394,058) 5,726,762 1,299,911
. . . . . . . . . . . . .
Net increase (decrease) in net assets
resulting from
operations . . . . . . . . . . . . . . . $ 337,912 $ (308,607) $(519,597) $ (1,316,91$) 7,732,766 $ 1,353,307
</TABLE>
See accompanying notes.
80
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF OPERATIONS
(Unaudited) (continued) Years and periods ended June 30,
<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 . . . $ 896,990 $ 5,839,023 $ 1,337,75 $111,426 $ 460,088 $ 303,545
. . . . . .
M Fund Inc. . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . 896,990 5,839,023 1,337,750 111,426 460,088 303,545
. . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . 289,729 335,573 126,021 15,928 35,321 19,894
. . . . . . . . . .
Net investment income . . . . . . . . . . . . 607,261 5,503,450 1,211,729 95,498 424,767 283,651
. . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . 3,352,907 7,681,081 691,270 (278,305) (204,675) 81,659
. . . . . . . . . . .
Net unrealized appreciation (depreciation)
during
the period . . . . . . . . . . . . . . . (4,597,742)4,678,509 6,098,919 387,581 (433,526) 43,608
. . . . . . . . . . . . . .
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . (1,244,835)12,359,590 6,790,189 109,276 (638,201) 125,267
. . . . . . . . . . . . .
Net increase (decrease) in net assets
resulting from
operations . . . . . . . . . . . . . . . . $ (637,574)$ 17,863,040$ 8,001,91$ 204,774 $ (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 . . . $ 221,603 $ 1,349,358 $ -- $ 306,598 $ 549,978 $--
. . . . . .
M Fund Inc. . . . . . . . . . . . . . . . -- -- 84,940 -- -- 358,080
. . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . 221,603 1,349,358 84,940 306,598 549,978 358,080
. . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . 38,241 33,920 7,737 28,784 34,297 14,434
. . . . . . . . . .
Net investment income . . . . . . . . . . . . 183,362 1,315,438 77,203 277,814 515,681 343,646
. . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains . . . . . . . . . . . . 2,411,545 1,038,462 156,278 181,342 507,727 89,337
. . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during
the period . . . . . . . . . . . . . . . (1,758,048)1,626,646 562,620 784,685 3,486,097 91,915
. . . . . . . . . . . . . .
Net realized and unrealized gain on 653,497 2,665,108 718,898 966,027 3,993,824 181,252
investments . .
Net increase in net assets resulting from $ 836,859 $ 3,980,546 $ 796,101 $ 1,243,841 $ 4,509,505 $ 524,898
operations
</TABLE>
See accompanying notes.
81
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF OPERATIONS
(Unaudited) (continued) Years and periods ended June 30,
<TABLE>
<CAPTION>
Frontier Capital Appreciation Clifton 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 . . . . . $ 565,927 $ 487,465 $-- $ 253,050 $ 532,067 $--
. . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- 34,738 -- -- 72,302
. . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . 565,927 487,465 34,738 253,050 532,067 72,302
. . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . 32,774 37,471 24,841 11,633 13,930 4,069
. . . . . . . . . . . .
Net investment income. . . . . . . . . . . . . . 533,153 449,994 9,897 241,417 518,137 68,233
. . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . 3,686,537 624,068 (445,752) 105,370 264,436 87,723
. . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . (2,068,274) 3,431,408 432,064 (545,352) 151,562 89,677
. . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on 1,618,263 4,055,476 (13,688) (439,982) 415,998 177,400
investments .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . . $ 2,151,416 $ 4,505,470$ (3,791) $ (198,565)$ 934,135 $ 245,633
. . . . . . . . . . . . . . . .
<CAPTION>
Emerging Markets Equity International Opportunities II
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 $ 14,069 $ 6,063 $ 491
. . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . -- 137,724 522 14,069 6,063 491
. . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . 12,643 5,465 387 2,617 1,859 339
. . . . . . . . . . . .
Net investment income (loss) . . . . . . . . . . (12,643) 132,259 135 11,452 4,204 152
. . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . (101,200) 663,998 (45,975) 20,107 82,873 (21,835)
. . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . (287,458) 432,248 2,289 (56,174) 47,295 4,812
. . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on (388,658) 1,096,246 (43,686) (36,067) 130,168 (17,023)
investments .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . . $ (401,301)$ 1,228,505$ (43,551) $ (24,615) $ 134,372 $ (16,871)
. . . . . . . . . . . . . . . .
</TABLE>
*From May 1, 1998 (commencement of operations).
See accompanying notes.
82
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF OPERATIONS
(Unaudited) (continued) Years and periods ended June 30,
<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 . . . . . . . . $ 206,555 $ 140,772 $ 23,842 $ 2,253 $ 54,784 $ --
. . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . . . 206,555 140,772 23,842 2,253 54,784 --
. . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . . . . 12,909 10,636 937 2,315 2,073 535
. . . . . . . . . . . . . . .
Net investment income (loss) . . . . . . . . . . . . . 193,646 130,136 22,905 (62) 52,711 (535)
. . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . . . . (54,090) (104,174) 1,002 84,929 65,733 (25,196)
. . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during
the period . . . . . . . . . . . . . . . . . . . . 65,510 (78,192) (10,217) (10,858) (10,735) 18,718
. . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on . . . . 11,420 (182,366) (9,215) 74,071 54,998 (6,478)
investments . . .
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . . . . $ 205,066 $ (52,230) $ 13,690 $ 74,009 $ 107,709 $ (7,013)
. . . . . . . . . . . . . . . . . .
<CAPTION>
Fundamental
High Yield Bond Mid Cap Growth
Subaccount Subaccount
2000 1999 1998* 2000
<S> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . . . . . . . . . . . $ 163,403 $ 352,641 $ 88,721 $ --
. . . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . . . . . . . . . . 163,403 352,641 88,721 --
. . . . . . . . . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . . . . . . . . . . . 7,445 12,206 1,962 1
. . . . . . . . . . . . . . . . . . . . . . .
Net investment income (loss) . . . . . . . . . . . . . . . . . . . . 155,958 340,435 86,759 (1)
. . . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . . . . . . . . . . . (100,732) 42,365 64,824 --
. . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation) during the period . . . (131,236) (139,659) 149,416 877
. . . . . . . . . . . . .
Net realized and unrealized gain (loss) on . . . . . . . . . . . (231,968) (97,294) 214,240 877
investments . . . . . . . . . . .
Net increase (decrease) in net assets resulting from operations . . . $ (76,010)$ 243,141 $ 300,999 $ 876
. . . . . . . . . . . . .
</TABLE>
*From May 1, 1998 (commencement of operations).
See accompanying notes.
83
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF OPERATIONS
(Unaudited) (continued) Years and periods ended June 30,
<TABLE>
<CAPTION>
New Fidelity
AIM V.I. Discovery VIP II Fidelity Templeton
Value Series Contrafund VIP Growth International
Subaccount Subaccount Subaccount Subaccount Subaccount
2000 2000 2000 2000 2000
<S> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ -- $ -- $ -- $ -- $ --
. . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . -- -- -- -- --
. . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . -- -- -- -- --
. . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . . 33 84 6 32 17
. . . . . . . . . . . .
Net investment income (loss) . . . . . . . . . . . (33) (84) (6) (32) (17)
. . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . . (2,026) 6 (3,386) 7 612
. . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during
the period . . . . . . . . . . . . . . . . . (2,289) 28,003 134 4,523 2,513
. . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on . . (4,315) 28,009 (3,252) 4,530 3,125
investments
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . . $ (4,348)$ 27,925 $ (3,258)$ 4,498 $ 3,108
. . . . . . . . . . . . . . .
</TABLE>
See accompanying notes.
84
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF CHANGES IN
NET ASSETS (Unaudited) Years and periods ended June 30,
<TABLE>
<CAPTION>
Large Cap Growth Subaccount Active 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) . . $ (74,316) $ 17,233,439 $ 6,143,421 $ 1,016,$82,725,206 $2,097,345
. .
Net realized gains (losses) . . 2,734,096 5,003,007 1,750,881 (874,542(1,391,910) 185,230
. . . . .
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . 4,426,209 (2,053,672) 8,041,022 952,272 (1,837,190) (378,058)
. . . . . . . . .
Net increase (decrease) in net
assets
resulting from operations . . . 7,085,989 20,182,774 15,935,324 1,093,91(503,894) 1,904,517
. . . . .
From policyholder transactions:
Net premiums from
policyholders . . . . . . . . 52,259,426 75,667,981 29,859,648 14,410,774,595,720 38,567,292
. . . . . . .
Net benefits to policyholders . (34,904,274) (45,347,424) (13,281,028(18,199,821(68,312,320) (27,391,317)
. . . .
Net increase (decrease) in net
assets
resulting from policyholder
transactions . . . . . . . . . . 17,355,152 30,320,557 16,578,620 (3,789,06,283,400 11,175,975
. . . . . . . .
Net increase (decrease) in net
assets . . . . . . . . . . . . . 24,441,141 50,503,331 32,513,944 (2,695,15,779,506 13,080,492
. . . . . . . . . .
Net assets at beginning of period . 115,521,551 65,018,220 32,504,276 38,321,432,541,967 19,461,475
. .
Net assets at end of period . . . . $ 139,962,692 $ 115,521,551 $ 65,018,220 $ 35,626$338,321,473 $32,541,967
. . . . .
International Equity Index Subaccount Small Cap Growth Subaccount
2000 1999 1998 2000 1999 1998
Increase (decrease) in net assets
from
operations:
Net investment income (loss) . . $ 233,608 $ 855,417 $ 1,885,059 $ (72,58$)3,637,734 $(22,593)
. .
Net realized gains . . . . . . . 1,515,308 753,750 152,030 4,544,102,548,944 58,729
. . . . . .
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . (3,395,800) 4,871,167 78,480 (3,503,83,920,455 1,070,805
. . . . . . . . .
Net increase (decrease) in net
assets
resulting from operations . . . (1,646,884) 6,480,334 2,115,569 967,689 10,107,133 1,106,941
. . . . .
From policyholder transactions:
Net premiums from
policyholders . . . . . . . . 42,506,597 53,332,374 10,034,119 58,788,952,637,861 12,088,047
. . . . . . .
Net benefits to policyholders . (39,576,115) (39,209,664) (8,344,107)(52,165,304(40,800,272) (6,621,834)
. . . .
Net increase in net assets resulting
from policyholder transactions . 2,930,482 14,122,710 1,690,012 6,632,6411,837,589 5,466,213
. .
Net increase in net assets . . . . 1,283,598 20,603,044 3,805,581 7,591,3321,944,722 6,573,154
. . . . . .
Net assets at beginning of period . 33,198,674 12,595,630 8,790,049 31,022,89,078,106 2,504,952
. .
Net assets at end of period . . . . $ 34,482,272 $ 33,198,674 $ 12,595,630 $ 38,614$131,022,828 $9,078,106
. . . . .
</TABLE>
See accompanying notes.
85
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)
Years and periods ended June 30,
<TABLE>
<CAPTION>
Global Balanced Subaccount Mid Cap Growth Subaccount
2000 1999 1998 2000 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets
from operations:
Net investment income (loss) $ 55,059 $ 358,974 $ 176,073 $ (135,550) $ 6,389,535 $ 1,088,251
. .
Net realized gains (losses) . (123,229) 15,640 24,206 8,716,345 5,188,018 599,619
. . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . (109,231) (173,912) 147,461 (13,790,389) 15,078,681 1,184,263
. . . . . . . .
Net increase (decrease) in net
assets
resulting from operations . . (177,401) 200,702 347,740 (5,209,594) 26,656,234 2,872,133
. . . .
From policyholder transactions:
Net premiums from
policyholders . . . . . . . 2,921,405 6,295,052 3,163,316 65,255,866 65,183,285 11,323,614
. . . . . .
Net benefits to policyholders (2,120,585) (5,007,225) (1,882,974) (56,671,354) (41,018,347) (5,132,055)
. . .
Net increase in net assets
resulting
from policyholder . 800,820 1,287,827 1,280,342 8,584,512 24,164,938 6,191,559
transactions
Net increase in net assets . . . 623,419 1,488,529 1,628,082 3,374,918 50,821,172 9,063,692
. . . . .
Net assets at beginning of . 4,591,856 3,103,327 1,475,245 63,499,616 12,678,444 3,614,752
period
Net assets at end of period . . $ 5,215,275 $ 4,591,856 $ 3,103,327 $ 66,874,534 $ 63,499,616 $ 12,678,444
. . . . .
Large Cap Value Subaccount Money Market Subaccount
2000 1999 1998 2000 1999 1998
Increase (decrease) in net
assets
from operations:
Net investment income . . . . $ 277,937 $ 1,720,195 $ 756,459 $ 2,109,255 $ 2,988,530 $ 1,687,016
. . .
Net realized gains (losses) . (232,676) 705,454 330,827 -- -- --
. . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . (596,463) (2,181,112) 145,355 -- -- --
. . . . . . . .
Net increase (decrease) in net
assets
resulting from operations . . (551,202) 244,537 1,232,641 2,109,255 2,988,530 1,687,016
. . . .
From policyholder transactions:
Net premiums from
policyholders . . . . . . . 28,000,911 37,432,039 15,144,316 485,999,845 890,376,545 340,377,358
. . . . . .
Net benefits to policyholders (23,591,191) (27,199,179) (4,937,583) (442,936,484) (918,869,964) (269,723,839)
. . .
Net increase (decrease) in net
assets
resulting from policyholder
transactions . . . . . . . . 4,409,720 10,232,860 10,206,733 43,063,361 (28,493,419) 70,653,519
. . . . . . . .
Net increase (decrease) in net
assets
3,858,518 10,477,397 11,439,374 45,172,616 (25,504,889) 72,340,535
Net assets at beginning of . 27,106,917 16,629,520 5,190,146 61,006,769 86,511,658 14,171,123
period
Net assets at end of period . . $ 30,965,435 $ 27,106,917 $ 16,629,520$ 106,179,385 $ 61,006,769 $ 86,511,658
. . . . .
</TABLE>
See accompanying notes.
86
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)
Years and periods ended June 30,
<TABLE>
<CAPTION>
Mid Cap Value Subaccount Small/Mid Cap Growth Subaccount
2000 1999 1998 2000 1999 1998
<S> <C>
Increase (decrease) in net assets
from
operations:
Net investment income (loss) . . $ 5,978 $ 41,579 $ 75,449 $ (18,930) $ 1,388,661 $ 108,037
. .
Net realized gains (losses) . . 783,358 (860,332) (538,516) (567,320) 13,375 232,246
. . . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . 289,049 1,757,919 (830,390) 1,251,426 (1,001,208) 236,333
. . . . . . . .
Net increase (decrease) in net
assets
resulting from operations . . . 1,078,385 939,166 (1,293,457) 665,176 400,828 576,616
. . . . .
From policyholder transactions:
Net premiums from policyholders . 15,917,480 32,024,751 18,837,112 7,306,590 11,809,133 4,563,154
Net benefits to policyholders . (15,399,262) (29,579,995) (7,855,945) (8,233,390) (9,775,543) (6,481,542)
. . . .
Net increase (decrease) in net
assets
resulting from policyholder
transactions . . . . . . . . . . 518,218 2,444,756 10,981,167 (926,800) 2,033,590 (1,918,388)
. . . . . . . .
Net increase (decrease) in net 1,596,603 3,383,922 9,687,710 (261,624) 2,434,418 (1,341,772)
assets .
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 . . . . $ 20,735,136 $ 19,138,533 $ 15,754,611$ 9,664,207 $ 9,925,831 $ 7,491,413
. . . . .
Real Estate Equity Subaccount Growth & Income Subaccount
2000 1999 1998 2000 1999 1998
Increase (decrease) in net assets
from
operations:
Net investment income . . . . . $ 304,027 $ 515,377 $ 283,067 $ 597,993 $ 22,850,302 $ 8,975,814
. . . .
Net realized gains (losses) . . (9,406) (735,504) (454,979) 1,331,371 6,207,253 2,061,212
. . . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . 1,465,596 80,925 (698,676) (3,257,862) (5,814,839) 7,759,307
. . . . . . . .
Net increase (decrease) in net
assets
resulting from operations . . . 1,760,217 (139,202) (870,588) (1,328,498) 23,242,716 18,796,333
. . . . .
From policyholder transactions:
Net premiums from policyholders . 33,616,441 22,699,314 6,964,604 43,866,020 196,639,863 60,975,616
Net benefits to policyholders . (24,788,136) (18,093,640) (5,513,221) (42,336,871) (106,763,955) (31,360,866)
. . . .
Net increase in net assets resulting
from policyholder transactions . 8,828,305 4,605,674 1,451,383 1,529,149 89,875,908 29,614,750
. .
Net increase in net assets . . . . 10,588,522 4,466,472 580,795 200,651 113,118,624 48,411,083
. . . . . .
Net assets at beginning of period . 9,238,646 4,772,174 4,191,379 209,525,899 96,407,275 47,996,192
. .
Net assets at end of period . . . . $ 19,827,168 $ 9,238,646 $ 4,772,174 $ 209,726,550 $ 209,525,899 $ 96,407,275
. . . . .
</TABLE>
See accompanying notes.
87
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)
Years and periods ended June 30,
<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 . . . . . . $ 1,578,554 $ 10,756,436 $ 3,484,281 $ 413,695 $ 907,486 $ 926,217
. . . .
Net realized gains (losses) . . . (259,619) 2,233,258 278,186 (190,959) (441,667) 24,740
. . . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . (110,575) (6,419,069) 1,791,231 169,777 (85,754) (136,999)
. . . . . . . . .
Net increase in net assets resulting
from
operations . . . . . . . . . . . 1,208,360 6,570,625 5,553,698 392,513 380,065 813,958
. . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . 22,089,393 113,292,87221,019,273 14,314,278 41,259,110 27,490,588
.
Net benefits to policyholders . . (19,693,945) (34,219,380) (8,281,600) (11,482,789) (49,156,693) (21,534,195)
. . . .
Net increase (decrease) in net assets
resulting from policyholder
transactions . . . . . . . . . . 2,395,448 79,073,492 12,737,673 2,831,489 (7,897,583) 5,956,393
. . . . . . . . .
Net increase (decrease) in net 3,603,808 85,644,117 18,291,371 3,224,002 (7,517,518) 6,770,351
assets . .
Net assets at beginning of period . 125,710,809 40,066,692 21,775,321 11,728,988 19,246,506 12,476,155
. . .
Net assets at end of period . . . . $ 129,314,617 $ 125,710,809$ 40,066,692$ 14,952,990 $ 11,728,988 $ 19,246,506
. . . . . .
<CAPTION>
Small Cap Value Subaccount International Opportunities Subaccount
2000 1999 1998 2000 1999 1998
<S>
Increase (decrease) in net assets <C> <C> <C> <C> <C> <C>
from
operations:
Net investment income . . . . . . $ 140,965 $ 344,711 $ 14,015 $ 77,147 $ 2,006,004 $ 53,396
. . . .
Net realized gains (losses) . . . 45,176 (979,002) (9,919) 2,289,932 1,907,809 191,495
. . . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . 151,771 325,684 (523,693) (3,683,990) 3,818,953 1,108,416
. . . . . . . . .
Net increase (decrease) in net assets
resulting from operations . . . . 337,912 (308,607) (519,597) (1,316,911) 7,732,766 1,353,307
. . . . .
From policyholder transactions:
Net premiums from policyholders . 13,651,361 39,172,672 11,420,833 44,500,103 43,216,216 23,844,756
.
Net benefits to policyholders . . (9,715,462) (30,591,417) (4,363,378) (33,987,289) (38,372,463) (12,275,087)
. . . .
Net increase in net assets resulting
from
policyholder transactions . . . . 3,935,899 8,581,255 7,057,455 10,512,814 4,843,753 11,569,669
. . . . .
Net increase in net assets . . . . . 4,273,811 8,272,648 6,537,858 9,195,903 12,576,519 12,922,976
. . . . . .
Net assets at beginning of period . 18,783,396 10,510,748 3,972,890 31,535,049 18,958,530 6,035,554
. . .
Net assets at end of period . . . . $ 23,057,207 $ 18,783,396 $ 10,510,748$ 40,730,952 $ 31,535,049 $ 18,958,530
. . . . . .
</TABLE>
See accompanying notes.
88
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)
Years and periods ended June 30,
<TABLE>
<CAPTION>
Equity Index Subaccount Global Bond Subaccount
2000 1999 1998 2000 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from
operations:
Net investment income . . . . . . $ 607,261 $ 5,503,450 $ 1,211,729 $ 95,498 $ 424,767 $ 283,651
. . . . .
Net realized gains (losses) . . . 3,352,907 7,681,081 691,270 (278,305) (204,675) 81,659
. . . . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . (4,597,742) 4,678,509 6,098,919 387,581 (433,526) 43,608
. . . . . . . . . .
Net increase (decrease) in net assets
resulting from operations . . . . (637,574) 17,863,040 8,001,918 204,774 (213,434) 408,918
. . . . . .
From policyholder transactions:
Net premiums from policyholders . 60,696,851 225,994,914 60,690,933 3,569,560 11,387,398 9,258,713
. .
Net benefits to policyholders . . (37,454,370) (147,909,470)(31,166,123) (5,829,975)(10,615,019) (3,008,341)
. . . . .
Net increase (decrease) in net assets
resulting from policyholder
transactions . . . . . . . . . . 23,242,481 78,085,444 29,524,810 (2,260,415) 772,379 6,250,372
. . . . . . . . . .
Net increase (decrease) in net 22,604,907 95,948,484 37,526,728 (2,055,641) 558,945 6,659,290
assets . . .
Net assets at beginning of period . 49,913,131 53,964,647 16,437,919 8,838,516 8,279,571 1,620,281
. . . .
Net assets at end of period . . . . $ 72,518,038 $ 49,913,131 $ 53,964,647 $ 6,782,875 $ 8,838,516 $ 8,279,571
. . . . . . .
<CAPTION>
Turner Core Growth Subaccount Brandes International Equity
Subaccount
2000 1999 1998 2000 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
from
operations:
Net investment income . . . . . . $ 183,362 $ 1,315,438 $ 77,203 $ 277,814 $ 515,681 $ 343,646
. . . . .
Net realized gains . . . . . . . 2,411,545 1,038,462 156,278 181,342 507,727 89,337
. . . . . . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . (1,758,048) 1,626,646 562,620 784,685 3,486,097 91,915
. . . . . . . . . .
Net increase in net assets resulting
from
operations . . . . . . . . . . . 836,859 3,980,546 796,101 1,243,841 4,509,505 524,898
. . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . 22,340,884 23,098,524 4,779,974 9,965,330 12,134,533 5,520,633
. .
Net benefits to policyholders . . (26,498,181) (9,308,254) (1,690,860) (3,861,316) (5,569,496) (2,041,375)
. . . . .
Net increase (decrease) in net assets
resulting from policyholder
transactions . . . . . . . . . . (4,157,297) 13,790,270 3,089,114 6,104,014 6,565,037 3,479,258
. . . . . . . . . .
Net increase in net assets . . . . . (3,320,438) 17,770,816 3,885,215 7,347,855 11,074,542 4,004,156
. . . . . . .
Net assets at beginning of period . 22,671,005 4,900,189 1,014,974 17,415,296 6,340,754 2,336,598
. . . .
Net assets at end of period . . . . $ 19,350,567 $ 22,671,005 $ 4,900,189 $ 24,763,151 $ 17,415,296 $ 6,340,754
. . . . . . .
</TABLE>
See accompanying notes.
89
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)
Years and periods ended June 30,
<TABLE>
<CAPTION>
Clifton Enhanced U.S. Equity
Frontier Capital Appreciation 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 . . . . . . . $ 533,153 $ 449,994 $ 9,897 $ 241,417 $ 518,137 $ 68,233
. . . . . . .
Net realized gains (losses) . . . . 3,686,537 624,068 (445,752) 105,370 264,436 87,723
. . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . (2,068,274) 3,431,408 432,064 (545,352) 151,562 89,677
. . . . . . . . .
Net increase (decrease) in net assets
resulting
from operations . . . . . . . . . . 2,151,416 4,505,470 (3,791) (198,565) 934,135 245,633
. . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . 16,538,331 25,135,447 13,982,031 6,521,334 6,480,741 3,031,309
. . . .
Net benefits to policyholders . . . (14,603,126) (22,331,613) (9,695,520) (3,399,109) (3,151,279)(1,299,530)
. . . . . . .
Net increase in net assets resulting
from
policyholder transactions . . . . . 1,935,205 2,803,834 4,286,511 3,122,225 3,329,462 1,731,779
. . . . . . . .
Net increase in net assets . . . . . . 4,086,621 7,309,304 4,282,720 2,923,660 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 . . . . . . $ 21,071,643 $ 16,985,022 $ 9,675,718 $ 9,661,874 $ 6,738,214$ 2,474,617
. . . . . . . .
<CAPTION>
International Opportunities II
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) . . . . $ (12,643) $ 132,259 $ 135 $ 11,452 $ 4,204 $ 152
. . . . .
Net realized gains (losses) . . . . (101,200) 663,998 (45,975) 20,107 82,873 (21,835)
. . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . (287,458) 432,248 2,289 (56,174) 47,295 4,812
. . . . . . . . .
Net increase (decrease) in net assets
resulting
from operations . . . . . . . . . . (401,301) 1,228,505 (43,551) (24,615) 134,372 (16,871)
. . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . 38,341,068 18,579,194 2,434,226 3,547,466 3,151,983 2,372,034
. . . .
Net benefits to policyholders . . . (35,650,812) (16,271,324) (2,203,670) (3,048,011) (2,613,505)(2,191,135)
. . . . . . .
Net increase in net assets resulting
from
policyholder transactions . . . . . 2,690,256 2,307,870 230,556 499,455 538,478 180,899
. . . . . . . .
Net increase in net assets . . . . . . 2,288,955 3,536,375 187,005 474,840 672,850 164,028
. . . . . . . . .
Net assets at beginning of period . . . 3,723,380 187,005 0 836,878 164,028 0
. . . . .
Net assets at end of period . . . . . . $ 6,012,335 $ 3,723,380 $ 187,005 $ 1,311,718 $ 836,878 $ 164,028
. . . . . . . .
</TABLE>
*From May 1, 1998 (commencement of operations).
See accompanying notes.
90
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)
Years and periods ended June 30,
<TABLE>
<CAPTION>
Bond Index Small/Mid Cap CORE
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) . . . . . . $ 193,646 $ 130,136 $ 22,905 $ (62) $52,711 $ (535)
. . . . . . .
Net realized gains (losses) . . . . . . (54,090) (104,174) 1,002 84,929 65,733 (25,196)
. . . . . . . . . .
Net unrealized appreciation
(depreciation)
during the period . . . . . . . . . . 65,510 (78,192) (10,217) (10,858) (10,735) 18,718
. . . . . . . . . . .
Net increase (decrease) in net assets
resulting
from operations . . . . . . . . . . . . 205,066 (52,230) 13,690 74,009 107,709 (7,013)
. . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . 6,026,847 6,471,518 1,176,234 8,814,315 5,817,483 1,089,030
. . . . . .
Net benefits to policyholders . . . . . (3,737,455) (2,358,694) (124,467) (8,093,062) (5,611,532) (778,864)
. . . . . . . . .
Net increase in net assets resulting from
policyholder transactions . . . . . . . 2,289,392 4,112,824 1,051,767 721,253 205,951 310,166
. . . . . . . . . .
Net increase in net assets . . . . . . . . 2,494,458 4,060,594 1,065,457 795,262 313,660 303,153
. . . . . . . . . . .
Net assets at beginning of period . . . . . 5,126,051 1,065,457 0 616,813 303,153 0
. . . . . . .
Net assets at end of period . . . . . . . . $ 7,620,509 $ 5,126,051 $ 1,065,457 $ 1,412,075 $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 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 155,958 $ 340,435 $ 86,759
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Net realized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . (100,732) 42,365 64,824
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation) during the period . . . . . . . (131,236) (139,659) 149,416
. . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting from . . . . . . . . . . (76,010) 243,141 300,999
operations . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . . . . . . . . . . . . . . . . 3,701,759 19,870,990 6,683,673
. . . . . . . . . . . . . . . . . . . . . . . .
Net benefits to policyholders . . . . . . . . . . . . . . . . . . . . . . (3,835,440) (20,368,501(2,457,088)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting from policyholder (133,681) (497,511) 4,226,585
transactions . . . . . . . . . . . .
Net increase (decrease) in net assets . . . . . . . . . . . . . . . . . . . . (209,691) (254,370) 4,527,584
. . . . . . . . . . . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . . . . . . . . . . . . . . . . 4,273,214 4,527,584 0
. . . . . . . . . . . . . . . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,063,523 $ 4,273,214 $ 4,527,584
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
*From May 1, 1998 (commencement of operations).
See accompanying notes.
91
91
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)
Years and periods ended June 30,
<TABLE>
<CAPTION>
Fundamental New Fidelity Fidelity
Mid Cap AIM V.I. Discovery VIP II VIP Templeton
Growth Value Series Contrafund Growth International
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
2000 2000 2000 2000 2000 2000
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) . . . $ (1) $ (33) $ (84) $ (6) $ (32) $ (17)
. . .
Net realized gains (losses) . . . 0 (2,026) 6 (3,386) 7 612
. . . . . .
Net unrealized appreciation
(depreciation) during the period 877 (2,289) 28,003 134 4,523 2,513
. .
Net increase (decrease) in net assets
resulting from operations . . . . 876 (4,348) 27,925 (3,258) 4,498 3,108
. . . . . .
From policyholder transactions:
Net premiums from policyholders . 19,529 301,720 295,000 324,607 75,543 455,074
. .
Net benefits to policyholders . . 0 (198,193) (46) (301,222) (53) (307,330)
. . . . .
Net increase in net assets resulting
from
policyholder transactions . . . . 19,529 103,527 294,954 23,385 75,490 147,744
. . . . . .
Net increase in net assets . . . . . 20,405 99,179 322,879 20,127 79,988 150,852
. . . . . . .
Net assets at beginning of period . . 0 0 0 0 0 0
. . .
Net assets at end of period . . . . . $ 20,405 $ 99,179 $ 322,879 $ 20,127 $ 79,988 $ 150,852
. . . . . .
</TABLE>
See accompanying notes.
92
92
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S NOTES TO FINANCIAL
STATEMENTS (Unaudited) June 30, 2000
1. Organization
John Hancock Variable Life Account S (the Account) is a separate investment
account of John Hancock 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 thirty-three 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 thirty-three Portfolios of the Fund and M Fund which are
currently available are the Large Cap Growth, Active Bond (formerly, Sovereign
Bond), International Equity Index, Small Cap Growth, Global Balanced (formerly,
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, Clifton Enhanced U.S. Equity (formerly, Enhanced U.S. Equity),
Emerging Markets Equity, International Opportunities II (formerly, Global
Equity), Bond Index, Small/Mid Cap CORE, High Yield Bond, Fundamental Mid Cap
Growth, AIM V.I. Value, New Discovery Series, Fidelity VIP II Contrafund,
Fidelity VIP Growth, and Templeton International 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.
93
93
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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.
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 June 30, 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.
94
94
<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 June 30, 2000 were as follows:
<TABLE>
<CAPTION>
Portfolio Shares Owned Cost Value
<S> <C> <C> <C>
Large Cap Growth . . . . . . 4,849,462 $ 123,194,174 $ 139,962,692
. .
Active Bond. . . . . . . . . 3,874,512 38,257,002 35,626,352
. . . .
International Equity Index. .1,861,146 33,149,994 34,482,272
Small Cap Growth. . . . . . 1,914,842 34,454,118 38,614,165
. .
Global Balanced . . . . . . 515,617 5,397,773 5,215,275
. . .
Mid Cap Growth . . . . . . . 2,386,951 58,721,939 66,874,534
. .
Large Cap Value . . . . . . 2,373,079 32,589,463 30,965,435
. . .
Money Market . . . . . . . . 10,612,665 106,183,237 106,179,385
. . .
Mid Cap Value. . . . . . . . 1,537,316 20,407,887 20,735,136
. . .
Small/Mid Cap Growth . . . . 634,316 9,361,832 9,664,207
Real Estate Equity . . . . . 1,563,808 19,502,392 19,827,168
. . .
Growth & Income . . . . . . 10,573,323 204,640,498 209,726,550
. .
Managed . . . . . . . . . . 8,379,360 131,570,457 129,314,617
. . . . .
Short Term Bond . . . . . . 1,533,368 15,459,641 14,952,990
. . .
Small Cap Value . . . . . . 2,102,924 24,087,256 23,057,207
. . .
International Opportunities .2,800,216 37,804,122 40,730,952
Equity Index . . . . . . . . 8,517,628 158,210,577 172,518,038
. . . .
Global Bond . . . . . . . . 677,499 7,002,271 6,782,875
. . . .
Turner Core Growth . . . . . 81,169 21,806,142 19,350,567
.
Brandes International
Equity . . . . . . . . . . . 1,511,593 13,549,208 24,763,151
. . . .
Frontier Capital
Appreciation . . . . . . . . 889,489 16,547,489 21,071,643
. .
Clifton Enhanced US
Equity . . . . . . . . . . . 485,524 6,331,067 9,661,874
. . . .
Emerging Markets . . . . . . 526,597 5,201,315 6,012,335
. .
International
Opportunities II . . . . . . 109,154 1,232,932 1,311,718
. .
Bond Index . . . . . . . . . 810,548 7,747,650 7,620,509
. . . .
Small Mid Cap CORE. . . . . 137,033 1,349,230 1,412,075
High-Yield. . . . . . . . . 477,718 4,142,675 4,063,523
. . . . .
Fundamental Mid Cap
Growth. . . . . . . . . . . 1,200 19,528 20,405
. . . .
AIM V.I. Value . . . . . . . 2,969 99,443 99,180
. . .
New Discovery Series . . . . 17,586 294,884 322,881
.
Fidelity VIP II Contrafund . 804 16,875 20,127
Fidelity VIP Growth . . . . 1,557 75,473 79,989
. .
Templeton International . . .7,853 148,952 150,853
</TABLE>
95
95
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
4. Details of Investments (continued)
Purchases, including reinvestment of dividend distributions, and proceeds
from sales of shares in the Portfolios of the Fund and of M Fund during 2000
were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
<S> <C> <C>
Large Cap Growth ............................. $ 29,329,448 $ 12,047,499
Active Bond................................... 7,716,510 10,489,149
International Equity Index.................... 17,045,896 13,881,519
Small Cap Growth.............................. 26,140,733 19,589,311
Global Balanced............................... 2,196,143 1,340,216
Mid Cap Growth................................ 37,093,206 28,643,640
Large Cap Value............................... 13,666,105 8,978,183
Money Market.................................. 132,183,644 87,007,175
Mid Cap Value................................. 6,316,325 5,788,939
Small/Mid Cap Growth.......................... 3,375,804 4,321,441
Real Estate Equity............................ 16,395,846 7,263,356
Growth & Income............................... 14,294,301 12,164,954
Managed....................................... 12,738,146 8,762,379
Short-Term U.S. Government.................... 9,609,491 6,364,221
Small Cap Value............................... 7,099,451 3,022,358
International Opportunities . . . . . . . . . 24,437,465 13,847,145
Equity Index . . . . . . . . . . . . . . . . . 42,348,010 18,496,923
Global Bond . . . . . . . . . . . . . . . . . 2,533,200 4,698,051
Turner Core Growth . . . . . . . . . . . . . . 0 0
Brandes International Equity. . . . . . . . . 0 0
Frontier Capital Appreciation . . . . . . . . 0 0
Clifton Enhanced US Equity . . . . . . . . . . 0 0
Emerging Markets . . . . . . . . . . . . . . . 14,283,977 11,606,307
International Opportunities II . . . . . . . . 2,092,407 1,581,482
Bond Index . . . . . . . . . . . . . . . . . . 3,684,786 1,201,679
Small Mid Cap CORE. . . . . . . . . . . . . . 2,077,976 1,356,772
High Yield Bond . . . . . . . . . . . . . . . 2,786,550 2,764,235
Fundamental Mid Cap Growth . . . . . . . . . . 0 0
AIM V.I. Value . . . . . . . . . . . . . . . . 0 0
New Discovery Series . . . . . . . . . . . . . 0 0
Fidelity VIP II Contrafund . . . . . . . . . . 0 0
Fidelity VIP Growth . . . . . . . . . . . . . 0 0
Templeton International . . . . . . . . . . . 0 0
</TABLE>
96
<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 June 30, 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 537,965 36.03 492,996 36.15 135,475 36.26
Active Bond 233,844 14.22 174,990 14.26 37,880 14.31
International Equity Index 253,026 16.55 187,338 16.64 6,384 16.70
Small Cap Growth 232,913 22.80 261,061 22.84 41,970 22.89
Global Balanced 17,635 12.66 89,308 12.68 16,270 12.71
Mid Cap Growth 279,087 33.98 205,937 34.05 67,794 34.12
Large Cap Value 210,063 15.73 197,584 15.76 25,556 15.79
Money Market 698,349 13.43 1,348,986 13.47 320,780 13.51
Mid Cap Value 114,583 14.81 51,945 14.84 4,132 14.87
Small/Mid Cap Growth 89,083 21.40 90,352 21.46 5,734 21.53
Real Estate Equity 107,483 16.32 57,887 16.37 221,806 16.43
Growth & Income 1,030,086 30.67 618,930 30.77 188,739 30.87
Managed 573,827 21.07 272,670 21.14 35,242 21.20
Short-Term Bond 86,767 13.32 106,729 13.36 10,815 13.40
Small Cap Value 122,705 12.41 88,704 12.44 24,207 12.46
International Opportunities 159,417 15.83 203,984 15.87 14,705 15.90
Equity Index 587,297 22.87 624,209 22.92 246,373 22.97
Global Bond 61,189 12.50 49,459 12.52 19,899 12.55
Turner Core Growth 26,973 29.67 15,373 29.73 0 29.80
Brandes International Equity 24,380 17.55 33,462 17.59 0 17.64
Frontier Capital Appreciation 21,833 26.14 14,354 26.20 0 26.25
Clifton Enhanced U.S. Equity 4,521 16.98 0 17.00 0 17.03
Emerging Markets Equity 81,008 11.87 86,902 11.88 17,124 11.89
International Opportunities II 29,808 12.20 31,583 12.21 2,696 12.23
Bond Index 102,163 10.71 64,884 10.72 64,762 10.73
Small/Mid Cap CORE 23,891 11.26 17,194 11.27 4,107 11.28
High Yield Bond 53,628 9.87 43,805 9.88 2,247 9.89
Fundamental Mid Cap
Growth 1,626 12.55 0 12.55 0 12.55
AIM V.I. Value 3,936 9.87 0 9.87 0 9.87
New Discovery Series 0 11.10 0 11.10 0 11.10
Fidelity VIP II Contrafund 30 10.22 0 10.22 0 10.22
Fidelity VIP Growth 3,709 10.66 0 10.66 0 10.66
Templeton International 0 10.11 0 10.11 0 10.11
</TABLE>
97
<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 656,260 36.40 257,435 36.44 286,766 36.47
Active Bond 15,096 15.13 603,645 15.14 452,608 15.16
International Equity Index 43,882 15.42 155,946 15.43 215,996 15.45
Small Cap Growth 122,919 23.23 141,128 23.25 46,717 23.27
Global Balanced 38,720 12.90 10,108 12.91 54,885 12.92
Mid Cap Growth 128,031 34.63 89,731 34.65 63,109 34.67
Large Cap Value 112,093 16.03 56,194 16.04 417,402 16.05
Money Market 196,820 13.39 16,175 13.40 148,908 13.42
Mid Cap Value 89,613 15.09 18,805 15.10 239,528 15.11
Small/Mid Cap Growth 27,132 21.45 378 21.47 23,248 21.50
Real Estate Equity 128,413 16.95 143,737 16.97 197,963 16.99
Growth & Income 594,664 30.69 523,471 30.72 25,448 30.76
Managed 237,562 21.88 115,789 21.91 115,065 21.93
Short-Term Bond 207,003 13.60 412,601 13.61 0 13.63
Small Cap Value 34,631 12.65 21,107 12.66 275,960 12.67
International Opportunities 248,993 16.14 274,408 16.15 103,553 16.16
Equity Index 385,480 23.31 118,709 23.33 573,858 23.34
Global Bond 63,318 12.74 4,998 12.75 0 12.76
Turner Core Growth 4,794 30.28 20,069 30.30 0 30.33
Brandes International Equity 97,992 17.91 107,630 17.93 53,047 17.95
Frontier Capital Appreciation 88,691 26.68 66,885 26.69 0 26.72
Clifton Enhanced U.S. Equity 62,494 17.22 80,906 17.22 0 17.23
Emerging Markets Equity 9,109 11.99 39,251 11.99 0 11.99
International Opportunities II 0 12.33 0 12.33 0 12.33
Bond Index 5,049 10.82 19,587 10.83 0 10.83
Small/Mid Cap CORE 0 11.38 0 11.38 0 11.38
High Yield Bond 3,390 9.98 0 9.98 8,354 9.98
Fundamental Mid Cap Growth 0 11.02 0 11.02 0 11.02
AIM V.I. Value 0 9.55 0 9.55 0 9.55
New Discovery Series 0 10.64 0 10.65 0 10.65
Fidelity VIP II Contrafund 0 9.99 0 9.99 0 9.99
Fidelity VIP Growth 0 10.25 0 10.25 0 10.25
Templeton International 0 10.60 0 10.60 0 10.60
</TABLE>
98
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
<TABLE>
<CAPTION>
MedallionExecutive
VLI Class#7 MVEP Class #8 MVUL Class #9
AccumulationAccumulation Accumulation Accumulation Accumulation Accumulation
Portfolio Shares Share Values Shares Share Values Shares Share Values
<S> <C>
Large Cap Growth 116,600 83.98 818,698 26.19 351,348 23.33
Active Bond 61,302 24.13 313,740 12.84 344,746 12.09
International Equity Index 154,944 26.08 782,949 14.27 222,369 14.73
Small Cap Growth 181,373 22.82 238,097 23.06 205,968 25.92
Global Balanced 67,046 12.67 42,577 12.80 39,098 12.27
Mid Cap Growth 239,385 34.02 367,485 34.37 138,068 38.12
Large Cap Value 339,911 15.74 174,739 15.91 117,629 13.61
Money Market 408,415 18.58 1,280,481 12.28 315,719 11.74
Mid Cap Value 420,027 14.82 260,399 14.98 60,746 12.66
Small/Mid Cap Growth 6,155 21.43 243,378 13.69 41,310 13.93
Real Estate Equity 62,138 25.09 201,437 19.23 42,565 10.83
Growth & Income 819,706 67.63 1,283,758 21.75 415,131 19.01
Managed 2,303,473 40.02 213,655 16.99 86,308 15.53
Short-Term Bond 82,590 13.34 44,119 12.26 94,438 11.76
Small Cap Value 635,265 12.43 355,740 12.56 106,344 11.92
International Opportunities665,897 15.86 268,074 16.02 484,313 15.33
Equity Index 678,628 22.90 1,184,989 23.14 773,513 19.74
Global Bond 116,046 12.51 88,071 12.64 68,278 11.93
Turner Core Growth 0 27.61 215,390 26.95 68,280 25.90
Brandes International 0 17.80 0 17.19 65,376 18.37
Equity
Frontier Capital 0 24.60 0 22.13 82,469 21.42
Appreciation
Clifton Enhanced U.S. 0 12.87 0 17.12 160,901 17.12
Equity
Emerging Markets Equity 31,882 11.88 88,222 11.94 92,679 11.94
International 3,429 12.21 24,319 12.27 844 12.28
Opportunities II
Bond Index 21,473 10.72 21,624 10.77 174 10.78
Small/Mid Cap CORE 1,231 11.27 20,797 11.33 1,226 11.33
High Yield Bond 39,774 9.88 92,930 9.93 81,701 9.93
Fundamental Mid Cap
Growth 0 11.02 0 12.56 0 11.02
AIM V.I. Value 0 9.54 5,155 9.88 0 9.55
New Discovery Series 0 10.64 29,076 11.11 0 10.64
Fidelity VIP II Contrafund 0 9.98 0 10.23 0 9.99
Fidelity VIP Growth 1,980 10.24 0 10.67 0 10.25
Templeton International 0 10.60 14,196 10.11 0 10.60
</TABLE>
99
<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
AccumulationAccumulation Accumulation Accumulation Accumulation Accumulation
Portfolio Shares Share Values Shares Share Values Shares Share Values
<S> <C>
Large Cap Growth 286,862 23.33 294,419 26.19 3,879 86.16
Active Bond 154,851 12.09 114,636 12.84 0 29.22
International Equity Index 59,837 14.73 78,792 14.27 2,147 27.62
Small Cap Growth 68,282 25.92 100,523 23.06 0 23.40
Global Balanced 29,924 12.27 5,692 12.80 0 12.90
Mid Cap Growth 158,424 38.12 171,055 34.37 6,364 34.86
Large Cap Value 122,195 13.61 207,621 15.91 0 16.14
Money Market 2,591,514 11.74 300,260 12.28 54,988 13.46
Mid Cap Value 85,110 12.66 64,180 14.98 0 15.20
Small/Mid Cap Growth 18,565 13.93 19,363 13.69 0 22.24
Real Estate Equity 17,774 10.83 34,869 13.92 0 26.35
Growth & Income 1,088,676 19.01 271,319 21.75 2,135 81.14
Managed 90,276 15.53 58,406 16.99 1,481 47.44
Short-Term Bond 42,209 11.76 36,660 12.26 5,127 13.84
Small Cap Value 46,049 11.92 137,025 12.56 0 12.74
International Opportunities 55,835 15.33 88,759 16.02 0 16.25
Equity Index 2,042,059 19.74 621,198 23.14 10,824 23.47
Global Bond 44,341 11.93 28,907 12.64 0 12.83
Turner Core Growth 166,332 25.90 202,145 26.95 0 30.51
Brandes International Equity 172,977 18.37 274,521 17.19 0 18.05
Frontier Capital Appreciation 108,198 21.42 106,028 22.13 0 25.83
Clifton Enhanced U.S. Equity 46,767 17.12 48,373 17.12 0 17.30
Emerging Markets Equity 32,899 11.94 24,646 11.94 0 12.03
International Opportunities II 9,104 12.27 4,356 12.27 0 12.37
Bond Index 146,467 10.77 261,447 10.77 0 10.86
Small/Mid Cap CORE 16,316 11.33 38,984 11.33 0 11.41
High Yield Bond 23,040 9.93 60,673 9.93 0 10.01
Fundamental Mid Cap
Growth 0 11.02 0 12.56 0 18.32
AIM V.I. Value 991 9.55 0 9.55 0 39.72
New Discovery Series 0 10.64 0 11.11 0 19.19
Fidelity VIP II Contrafund 1,938 9.99 0 10.23 0 33.44
Fidelity VIP Growth 1,888 10.25 0 10.67 0 102.05
Templeton International 0 10.60 0 10.11 0 25.87
</TABLE>
100
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
VEP Class #13
<TABLE>
<CAPTION>
Accumulation Accumulation
Portfolio Shares Share Values
<S> <C>
Large Cap Growth 2,316 86.16
Active Bond 21 29.22
International Equity Index 3,005 27.62
Small Cap Growth 4,238 23.40
Global Balanced 0 12.90
Mid Cap Growth 4,655 34.86
Large Cap Value 3,092 16.14
Money Market 288,791 13.46
Mid Cap Value 835 15.20
Small/Mid Cap Growth 1,930 22.24
Real Estate Equity 57 26.35
Growth & Income 1,481 81.14
Managed 17,796 47.44
Short-Term Bond 1,970 13.84
Small Cap Value 2,378 12.74
International Opportunities 3,842 16.25
Equity Index 35,759 23.47
Global Bond 97 12.83
Turner Core Growth 30.51
Brandes International Equity 0 18.05
Frontier Capital Appreciation 0 25.83
Clifton Enhanced U.S. Equity 0 17.30
Emerging Markets Equity 1,521 12.03
International Opportunities II 806 12.37
Bond Index 826 10.85
Small/Mid Cap CORE 1,138 11.41
High Yield Bond 307 10.01
Fundamental Mid Cap Growth 0 18.22
AIM V.I. Value 0 39.72
New Discovery Series 0 19.19
Fidelity VIP II Contrafund 0 33.44
Fidelity VIP Growth 0 102.05
Templeton International 0 25.87
</TABLE>
101
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Policyholders of
John Hancock Variable Life Account S of John Hancock
Variable Life Insurance Company
We have audited the accompanying statement of assets and liabilities of
John Hancock Variable Life Account S (the Account) (comprising, respectively,
the Large Cap Growth, Sovereign Bond, International 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 Subaccounts) as of December 31,
1999, and the related statements of operations and changes in net assets for
each of the periods indicated therein. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of each of the
respective subaccounts constituting John Hancock Variable Life Account S at
December 31, 1999, the results of their operations and the changes in their net
assets for each of the periods indicated, in conformity with accounting
principles generally accepted in the United States.
ERNST & YOUNG LLP
Boston, Massachusetts
February 11, 2000
102
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
International
Large Cap Sovereign Equity Small Cap
Growth Bond Index Growth
Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C>
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,016 $ 2,380 $2,435 $ 2,357
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at
value . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,521,551 38,321,47433,198,674 31,022,828
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value . -- -- -- --
. . . . . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . . 21,617 12,536 419 208,513
. . . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 115,551,184 38,336,39033,201,528 31,233,698
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 20,467 12,194 75 208,172
. . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . 9,166 2,723 2,779 2,698
. . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 29,633 14,917 2,854 210,870
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 115,521,551 $ 38,321,47$33,198,674 $ 31,022,828
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<TABLE>
<CAPTION>
International Mid Cap Large Cap Money
Balanced Growth Value Market
Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C>
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 304 $ 4,698 $ 1,803 $ 3,061
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at
value . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,591,857 63,499,61627,106,918 61,006,769
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value . -- -- -- --
. . . . . . . . . . . . .
Receivable from:
John Hancock Varidable Series Trust I . . . . . . . . . . . 52 27,659 12,738 1,396,082
. . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 4,592,213 63,531,97327,121,459 62,405,912
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 9 26,980 12,479 1,395,329
. . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . 348 5,377 2,063 3,814
. . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 357 32,357 14,542 1,399,143
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,591,856 $ 63,499,6$627,106,917 $ 61,006,769
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
See accompanying notes.
103
103
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENT OF ASSETS AND
LIABILITIES (continued) December 31, 1999
<TABLE>
<CAPTION>
Mid Cap Small/Mid Cap Real Estate Growth&
Value Growth Equity Income
SubaccountSubaccount Subaccount Subaccount
<S> <C> <C> <C> <C>
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,422 $ 701 $ 611 $ 17,877
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series Trust I,
at value . . . . . . . . . . . . . . . . . . . . . . . . 19,138,533 9,925,831 9,238,646 209,525,898
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value -- -- -- --
. . . . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . 38,609 580,155 88 330,982
. . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 19,178,564 10,506,687 9,239,345 209,874,757
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . 38,404 580,049 -- 328,424
. . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . 1,627 807 699 20,434
. . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . 40,031 580,856 699 348,858
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,138,533$ 9,925,831 $ 9,238,646 $ 209,525,899
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<TABLE>
<CAPTION>
Short-Term Small Cap International
Managed Bond Value Opportunities
SubaccounSubaccount Subaccount Subaccount
<S> <C> <C> <C> <C>
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,307 $ 731 $ 1,430 $ 2,454
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series Trust I,
at value . . . . . . . . . . . . . . . . . . . . . . . . 125,710,809 11,728,988 18,783,397 31,535,050
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value -- -- -- --
. . . . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . 34,311 215 189,514 1,308
. . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 125,758,427 11,729,934 18,974,341 31,538,812
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . 32,402 114 189,306 955
. . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . 15,216 832 1,639 2,808
. . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . 47,618 946 190,945 3,763
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 125,710,8$9 11,728,98$ 18,783,396$ 31,535,049
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
See accompanying notes.
104
104
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENT OF ASSETS AND
LIABILITIES (continued) December 31, 1999
<TABLE>
<CAPTION>
Turner Brandes
Equity Global Core International
Index Bond Growth Equity
Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C>
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,574 $ 734 $ 1,535 $ 1,016
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at
value . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,913,130 8,838,516 -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value . -- -- 22,671,006 17,415,296
. . . . . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . . 126,680 766,077 222 271
. . . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 150,050,384 9,605,327 22,672,763 17,416,583
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 125,115 765,972 -- 122
. . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . 12,138 839 1,758 1,165
. . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 137,253 766,811 1,758 1,287
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 149,913,131 $ 8,838,51$ 22,671,005$ 17,415,296
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,031 $ 437 $ 370 $ 71
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at
value . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 3,723,380 836,878
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value . 16,985,022 6,738,214-- --
. . . . . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . . 771 63 254 24
. . . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 16,986,824 6,738,7143,724,004 836,973
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . 620 -- 204 13
. . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . 1,182 500 420 82
. . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 1,802 500 624 95
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,985,022 $ 6,738,2$43,723,380 $ 836,878
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
See accompanying notes.
105
105
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENT OF ASSETS AND
LIABILITIES (continued) December 31, 1999
<TABLE>
<CAPTION>
Small/
Mid High
Bond Cap Yield
Index CORE Bond
SubaccountSubaccount Subaccount
<S> <C> <C> <C>
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 374 $ 56 $ 310
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
Investments in shares of portfolios of John Hancock Variable Series Trust I, at 5,126,051 616,813 4,273,214
value . . . . . . . . . . . .
Investments in shares of portfolios of M Fund Inc., at value . . . . . . . . . -- -- --
. . . . . . . . . . . . . . . . . . . . . . . .
Receivable from:
John Hancock Variable Series Trust I . . . . . . . . . . . . . . . . . . . . 87 7 906,251
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,126,512 616,876 5,179,775
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Payable to:
John Hancock Variable Life Insurance Company . . . . . . . . . . . . . . . . 20 -- 906,193
. . . . . . . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset charges payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 63 368
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461 63 906,561
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,126,0$1 616,813 $ 4,273,214
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
See accompanying notes.
106
106
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS
Years and periods ended December 31,
<TABLE>
<CAPTION>
Large Cap Growth Subaccount Sovereign Bond Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 17,558,034$ 6,312,073$ 2,884,498 $ 2,851,613 $ 2,190,901$855,742
. . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . 17,558,034 6,312,073 2,884,498 2,851,613 2,190,901 855,742
. . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks. . . . . . . . . . 324,595 168,652 91,256 126,407 93,556 39,184
. . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . 17,233,439 6,143,421 2,793,242 2,725,206 2,097,345 816,558
. . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . 5,003,007 1,750,881 619,721 (1,391,910) 185,230 80,538
. . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . (2,053,672) 8,041,022 2,301,920 (1,837,190) (378,058) 63,687
. . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on 2,949,335 9,791,903 2,921,641 (3,229,100) (192,828) 144,225
investments . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . . $ 20,182,774$ 15,935,32$ 5,714,883 $ (503,894) $ 1,904,517$960,783
. . . . . . . . . . . . . . . . . . .
</TABLE>
<TABLE>
<CAPTION>
International Equity Index Small Cap Growth Subaccount
Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 936,475 $ 1,930,710$ 422,913 $ 3,697,955 $-- $473
. . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . 936,475 1,930,710 422,913 3,697,955 -- 473
. . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks. . . . . . . . . . 81,058 45,651 33,893 60,221 22,593 6,547
. . . . . . . . . . . . . .
Net investment income (loss) . . . . . . . . . . 855,417 1,885,059 389,020 3,637,734 (22,593) (6,074)
. . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains . . . . . . . . . . . . . . 753,750 152,030 244,810 2,548,944 58,729 21,707
. . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . 4,871,167 78,480 (1,219,540) 3,920,455 1,070,805 126,699
. . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on 5,624,917 230,510 (974,730) 6,469,399 1,129,534 148,406
investments . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . . $ 6,480,334 $ 2,115,569$ (585,710) $ 10,107,133$ 1,106,941$142,332
. . . . . . . . . . . . . . . . . . .
</TABLE>
See accompanying notes.
107
107
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (continued)
Years and periods ended December 31,
<TABLE>
<CAPTION>
International Balanced Mid Cap Growth Subaccount
Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . . $ 372,766 $185,760 $ 61,249 $ 6,491,783 $ 1,114,37$--
. . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . 372,766 185,760 61,249 6,491,783 1,114,374--
. . . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks. . . . . . . . . . . 13,792 9,687 4,443 102,248 26,123 8,287
. . . . . . . . . . . . . . . .
Net investment income (loss) . . . . . . . . . . . 358,974 176,073 56,806 6,389,535 1,088,251 (8,287)
. . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains . . . . . . . . . . . . . . . 15,640 24,206 8,667 5,188,018 599,619 1,235
. . . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . . (173,912) 147,461 (67,714) 15,078,681 1,184,263 486,186
. . . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on (158,272) 171,667 (59,047) 20,266,699 1,783,882 487,421
investments . . . . . .
Net increase (decrease) in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . $ 200,702 $347,740 $ (2,241) $ 26,656,234$ 2,872,13$ 479,134
. . . . . . . . . . . . . . . . . . . . .
</TABLE>
<TABLE>
<CAPTION>
Large Cap Value Subaccount Money Market Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . . $ 1,809,072$797,874 $ 194,199 $ 3,279,928 $ 1,854,82$ 758,434
. . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . 1,809,072 797,874 194,199 3,279,928 1,854,829 758,434
. . . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks. . . . . . . . . . . 88,877 41,415 11,163 291,398 167,813 66,882
. . . . . . . . . . . . . . . .
Net investment income. . . . . . . . . . . . . . . 1,720,195 756,459 183,036 2,988,530 1,687,016 691,552
. . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains . . . . . . . . . . . . . . . 705,454 330,827 164,821 -- -- --
. . . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . . (2,181,112) 145,355 279,449 -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on (1,475,658) 476,182 444,270 -- -- --
investments . . . . . .
Net increase in net assets resulting from $ 244,537 $1,232,641$ 627,306 $ 2,988,530 $ 1,687,01$ 691,552
operations . . . . . . . . .
</TABLE>
See accompanying notes.
108
108
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (continued)
Years and periods ended December 31,
<TABLE>
<CAPTION>
Mid Cap Value Subaccount Small/Mid Cap Growth Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . $ 110,190 $ 120,469 $ 446,081 $ 1,421,656$ 142,469 $ 878,600
. . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . 110,190 120,469 446,081 1,421,656 142,469 878,600
. . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks. . . . . . . . . 68,611 45,020 11,421 32,995 34,432 35,934
. . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . 41,579 75,449 434,660 1,388,661 108,037 842,666
. . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . (860,332) (538,516) 101,787 13,375 232,246 297,666
. . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . 1,757,919 (830,390) (39,717) (1,001,208)236,333 (730,748)
. . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on 897,587 (1,368,90662,070 (987,833) 468,579 (433,082)
investments . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . $ 939,166 $ (1,293,4$7496,730 $ 400,828 $ 576,616 $ 409,584
. . . . . . . . . . . . . . . . . . .
</TABLE>
<TABLE>
<CAPTION>
Real Estate Equity Subaccount Growth & Income Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . $ 544,845 $ 305,783 $ 246,677 $ 23,565,67$ 9,266,175 $ 5,917,063
. . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . 544,845 305,783 246,677 23,565,679 9,266,175 5,917,063
. . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks. . . . . . . . . 29,468 22,716 13,879 715,377 290,361 169,135
. . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . 515,377 283,067 232,798 22,850,302 8,975,814 5,747,928
. . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . (735,504) (454,979) 252,095 6,207,253 2,061,212 2,390,414
. . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . 80,925 (698,676) (13,488) (5,814,839)7,759,307 435,778
. . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on (654,579) (1,153,655238,607 392,414 9,820,519 2,826,192
investments . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . $ (139,202)$ (870,588$ 471,405 $ 23,242,71$ 18,796,333$ 8,574,120
. . . . . . . . . . . . . . . . . . .
</TABLE>
See accompanying notes.
109
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (continued)
Years and periods ended December 31,
<TABLE>
<CAPTION>
Managed Subaccount Short-Term Bond Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 11,251,980$3,606,186$ 1,879,95$ 957,614 $977,164 $ 415,542
. . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . 11,251,980 3,606,186 1,879,954 957,614 977,164 415,542
. . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . 495,544 121,905 65,383 50,128 50,947 20,551
. . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . 10,756,436 3,484,281 1,814,571 907,486 926,217 394,991
. . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . 2,233,258 278,186 171,318 (441,667) 24,740 35,294
. . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . (6,419,069) 1,791,231 715,231 (85,754) (136,999) (25,976)
. . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on (4,185,811)2,069,417 886,549 (527,421) (112,259) 9,318
investments . . . .
Net increase in net assets resulting from $ 6,570,625 $5,553,698$ 2,701,12$ 380,065 $813,958 $ 404,309
operations . . . . . . .
</TABLE>
<TABLE>
<CAPTION>
International Opportunities
Small Cap Value Subaccount Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 409,324 $47,350 $ 299,278 $ 2,096,195 $103,399 $ 69,078
. . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . 409,324 47,350 299,278 2,096,195 103,399 69,078
. . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . 64,613 33,335 8,494 90,191 50,003 13,177
. . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . 344,711 14,015 290,784 2,006,004 53,396 55,901
. . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . (979,002) (9,919) 75,149 1,907,809 191,495 80,782
. . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . 325,684 (523,693) (18,626) 3,818,953 1,108,416 (260,664)
. . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on (653,318) (533,612) 56,523 5,726,762 1,299,911 (179,882)
investments . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . . $ (308,607) $(519,597)$ 347,307 $ 7,732,766$1,353,307 $ (123,981)
. . . . . . . . . . . . . . . . . . . .
</TABLE>
See accompanying notes.
110
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (continued)
Years and periods ended December 31,
<TABLE>
<CAPTION>
Equity Index Subaccount Global Bond Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . . $ 5,839,023 $ 1,337,75$ 409,920 $ 460,088 $ 303,545$ 74,850
. . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . 5,839,023 1,337,750 409,920 460,088 303,545 74,850
. . . . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . . . 335,573 126,021 31,223 35,321 19,894 3,820
. . . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . . 5,503,450 1,211,729 378,697 424,767 283,651 71,030
. . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . . . 7,681,081 691,270 901,978 (204,675) 81,659 8,335
. . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation) during
the
period . . . . . . . . . . . . . . . . . . . . 4,678,509 6,098,919 392,256 (433,526) 43,608 (11,727)
. . . . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on 12,359,590 6,790,189 1,294,234 (638,201) 125,267 (3,392)
investments . . . . . . .
Net increase (decrease) in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . $ 17,863,040$ 8,001,91$ 1,672,931$ (213,434) $ 408,918$ 67,638
. . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<TABLE>
<CAPTION>
Brandes International
Turner Core Growth Subaccount Equity Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series
Trust I . . . . . . . . . . . . . . . . . . . . $ 1,349,358 $-- $-- $ 549,978 $-- $--
. . . . . . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . -- 84,940 91,360 -- 358,080 32,677
. . . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . 1,349,358 84,940 91,360 549,978 358,080 32,677
. . . . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . . . 33,920 7,737 4,071 34,297 14,434 7,502
. . . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . . 1,315,438 77,203 87,289 515,681 343,646 25,175
. . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on
investments: . . . . . . .
Net realized gains . . . . . . . . . . . . . . . 1,038,462 156,278 76,711 507,727 89,337 12,541
. . . . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation) during
the
period . . . . . . . . . . . . . . . . . . . . 1,626,646 562,620 32,626 3,486,097 91,915 (26,022)
. . . . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on 2,665,108 718,898 109,337 3,993,824 181,252 (13,481)
investments . . . . . . .
Net increase in net assets resulting from operations $ 3,980,546 $ 796,101 $ 196,626 $ 4,509,505 $ 524,898$ 11,694
. . . . . . . . . .
</TABLE>
See accompanying notes.
111
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (continued)
Years and periods ended December 31,
<TABLE>
<CAPTION>
Frontier Capital Appreciation
Subaccount Enhanced U.S. Equity Subaccount
1999 1998 1997 1999 1998 1997*
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . . . $ 487,465 $-- $-- $ 532,067 $ -- $ --
. . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . -- 34,738 128,190 -- 72,302 15,335
. . . . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . . 487,465 34,738 128,190 532,067 72,302 15,335
. . . . . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . . . . 37,471 24,841 10,040 13,930 4,069 478
. . . . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . . . 449,994 9,897 118,150 518,137 68,233 14,857
. . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on investments:
Net realized gains (losses) . . . . . . . . . . . . 624,068 (445,752) 614,358 264,436 87,723 4,177
. . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation) during 3,431,408 432,064 (368,570151,562 89,677 6,844
the period . .
Net realized and unrealized gain (loss) on investments 4,055,476 (13,688) 245,788 415,998 177,400 11,021
. . . . . . . . .
Net increase (decrease) in net assets resulting from $ 4,505,470$ (3,791) $ 363,938 $ 934,135 $ 245,633$ 25,878
operations . . .
</TABLE>
<TABLE>
<CAPTION>
Emerging
Markets Equity Global Equity Bond Index
Subaccount Subaccount Subaccount
1999 1998** 1999 1998** 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 $ 140,772$ 23,842
. . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . -- -- -- -- -- --
. . . . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . . 137,724 522 6,063 491 140,772 23,842
. . . . . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . . . . 5,465 387 1,859 339 10,636 937
. . . . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . . . . . 132,259 135 4,204 152 130,136 22,905
. . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on investments:
Net realized gains (losses) . . . . . . . . . . . . 663,998 (45,975) 82,873 (21,835)(104,174) 1,002
. . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation) during 432,248 2,289 47,295 4,812 (78,192(10,217)
the period . .
Net realized and unrealized gain (loss) on investments 1,096,246 (43,686) 130,168 (17,023)(182,366) (9,215)
. . . . . . . . .
Net increase (decrease) in net assets resulting from $ 1,228,505$ (43,551)$ 134,372 $ (16,871)$ (52,230$ 13,690
operations . . .
</TABLE>
______________________
* From July 1, 1997 (commencement of operations).
**From May 1, 1998 (commencement of operations).
112
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (continued)
Years and periods ended December 31,
<TABLE>
<CAPTION>
Small/Mid High Yield
Cap CORE Bond
Subaccount Subaccount
1999 1998** 1999 1998**
<S> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . . . . . . . . . . . . . . . $ 54,784 $-- $352,641 $88,721
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
M Fund Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,784 -- 352,641 88,721
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses:
Mortality and expense risks . . . . . . . . . . . . . . . . . . . . . . . 2,073 535 12,206 1,962
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net investment income (loss) . . . . . . . . . . . . . . . . . . . . . . . . 52,711 (535) 340,435 86,759
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on investments:
Net realized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . 65,733 (25,196) 42,365 64,824
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation) during the period . . . . . . . (10,735) 18,718 (139,659) 149,416
. . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on investments . . . . . . . . . . . 54,998 (6,478) (97,294) 214,240
. . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting from operations . . . . . . . $ 107,709 $(7,013) $243,141 $300,999
. . . . . . . . . . . . . . . . . . . . . .
</TABLE>
_____________
**From May 1, 1998 (commencement of operations).
See accompanying notes.
113
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS
Years and periods ended December 31,
<TABLE>
<CAPTION>
Large Cap Growth Subaccount Sovereign Bond Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income . . . . . . . . . . . . $ 17,233,439 6,143,421 $ 2,793,242 $2,725,206 $2,097,345 $ 816,558
. . . . . . . . . . . . . . $
Net realized gains (losses) . . . . . . . . . 5,003,007 1,750,881 619,721 (1,391,910)185,230 80,538
. . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . (2,053,672)8,041,022 2,301,920 (1,837,190)(378,058) 63,687
. . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . 20,182,774 15,935,324 5,714,883 (503,894) 1,904,517 960,783
. . . . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . . 75,667,981 29,859,648 20,264,849 74,595,720 38,567,292 21,324,560
. . . . . . . . . .
Net benefits to policyholders . . . . . . . . (45,347,424(13,281,02(10,390,849) (68,312,320(27,391,317)(8,009,615)
. . . . . . . . . . . . .
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . . . 30,320,557 16,578,620 9,874,000 6,283,400 11,175,975 13,314,945
. . . . . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . . . . 50,503,331 32,513,944 15,588,883 5,779,506 13,080,492 14,275,728
. . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . 65,018,220 32,504,276 16,915,393 32,541,967 19,461,475 5,185,747
. . . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . $ 115,521,55165,018,220$ 32,504,276 38,321,473 32,541,967 $19,461,475
. . . . . . . . . . . . . . . $ $ $
</TABLE>
<TABLE>
<CAPTION>
International Equity Small Cap
Index Subaccount Growth Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) . . . . . . . . $ 855,417 $ 1,885,059 $ 389,020 $ 3,637,734 $(22,593) $ (6,074)
. . . . . . . . . . . . .
Net realized gains . . . . . . . . . . . . . 753,750 152,030 244,810 2,548,944 58,729 21,707
. . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . 4,871,167 78,480 (1,219,540)3,920,455 1,070,805 126,699
. . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . 6,480,334 2,115,569 (585,710) 10,107,133 1,106,941 142,332
. . . . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . . 53,332,374 10,034,119 8,150,400 52,637,861 12,088,047 2,870,481
. . . . . . . . . .
Net benefits to policyholders . . . . . . . . (39,209,664(8,344,107) (4,505,840)(40,800,272(6,621,834) (1,005,386)
. . . . . . . . . . . . .
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . . . 14,122,710 1,690,012 3,644,560 11,837,589 5,466,213 1,865,095
. . . . . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . . . . 20,603,044 3,805,581 3,058,850 21,944,722 6,573,154 2,007,427
. . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . 12,595,630 8,790,049 5,731,199 9,078,106 2,504,952 497,525
. . . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . $ 33,198,674 12,595,630$ 8,790,049 $31,022,828 9,078,106 $ 2,504,952
. . . . . . . . . . . . . . . $ $
</TABLE>
See accompanying notes.
114
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF CHANGES IN
NET ASSETS (continued) Years and periods ended December 31,
<TABLE>
<CAPTION>
International Balanced
Subaccount Mid Cap Growth Subaccount
1999 1998 1997 1999 1998 1997
<S> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) . . . . . . . . $ 358,974 $ 176,073 $ 56,806 $ 6,389,535 $ 1,088,251 $ (8,287)
. . . . . . . . . . . .
Net realized gains . . . . . . . . . . . . . 15,640 24,206 8,667 5,188,018 599,619 1,235
. . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . (173,912) 147,461 (67,714) 15,078,681 1,184,263 486,186
. . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . 200,702 347,740 (2,241) 26,656,234 2,872,133 479,134
. . . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . 6,295,052 3,163,316 1,608,069 65,183,285 11,323,614 3,212,754
. . . . . . . . . .
Net benefits to policyholders . . . . . . . (5,007,225(1,882,974)(282,878) (41,018,347)(5,132,055) (915,459)
. . . . . . . . . . . . .
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . . . 1,287,827 1,280,342 1,325,191 24,164,938 6,191,559 2,297,295
. . . . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . . . 1,488,529 1,628,082 1,322,950 50,821,172 9,063,692 2,776,429
. . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . 3,103,327 1,475,245 152,295 12,678,444 3,614,752 838,323
. . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . $ 4,591,856 3,103,327 $1,475,245 63,499,616 $12,678,444 $3,614,752
. . . . . . . . . . . . . . $ $
Large Cap Value Subaccount Money Market Subaccount
1999 1998 1997 1999 1998 1997
Increase (decrease) in net assets from operations:
Net investment income . . . . . . . . . . . $ 1,720,195 756,459 $ 183,036 $ 2,988,530 $ 1,687,016 $ 691,552
. . . . . . . . . . . . . . $
Net realized gains . . . . . . . . . . . . . 705,454 330,827 164,821 -- -- --
. . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . (2,181,112145,355 279,449 -- -- --
. . . . . . . . . . . . . . . . . . .
Net increase in net assets resulting from 244,537 1,232,641 627,306 2,988,530 1,687,016 691,552
operations . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . 37,432,03915,144,316 5,421,062 890,376,545 340,377,358 103,737,470
. . . . . . . . . .
Net benefits to policyholders . . . . . . . (27,199,179)(4,937,583) (918,869,964(269,723,839(100,296,756)
. . . . . . . . . . . . . (1,620,578)
Net increase (decrease) in net assets resulting
from
policyholder transactions . . . . . . . . . 10,232,86010,206,733 3,800,484 (28,493,419)70,653,519 3,440,714
. . . . . . . . . . . . . .
Net increase (decrease) in net assets . . . . . 10,477,39711,439,374 4,427,790 (25,504,889)72,340,535 4,132,266
. . . . . . . . . . . .
Net assets at beginning of period . . . . . . . 16,629,5205,190,146 762,356 86,511,658 14,171,123 10,038,857
. . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . $ 27,106,91716,629,520 5,190,146 61,006,769 $86,511,658 $14,171,123
. . . . . . . . . . . . . . $ $ $
</TABLE>
See accompanying notes.
115
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF CHANGES IN
NET ASSETS (continued) Years and periods ended December 31,
<TABLE>
<CAPTION>
Small/Mid Cap
Mid Cap Value Subaccount Growth Subaccount
<S> <C> <C>
1999 1998 1997 1999 1998 1997
Increase in net assets from operations:
Net investment income . . . . . . . . . . . . . $ 41,579 $ 75,449 $ 434,660 $ 1,388,661 $108,037 $ 842,666
. . . . . . . . . . . . . . . .
Net realized gains (losses) . . . . . . . . . . (860,332) (538,516) 101,787 13,375 232,246 297,666
. . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . 1,757,919 (830,390) (39,717) (1,001,208)236,333 (730,748)
. . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . . 939,166 (1,293,457496,730 400,828 576,616 409,584
. . . . . . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . . . 32,024,751 18,837,112 6,323,061 11,809,133 4,563,154 8,511,081
. . . . . . . . . . . .
Net benefits to policyholders . . . . . . . . . (29,579,995)(7,855,945(1,089,206)(9,775,543)(6,481,542(6,274,668)
. . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
policyholder transactions . . . . . . . . . . . 2,444,756 10,981,167 5,233,855 2,033,590 (1,918,3882,236,413
. . . . . . . . . . . . . . . .
Net increase (decrease) in net assets . . . . . . 3,383,922 9,687,710 5,730,585 2,434,418 (1,341,7722,645,997
. . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . . 15,754,611 6,066,901 336,316 7,491,413 8,833,185 6,187,188
. . . . . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . . $ 19,138,533 $15,754,6116,066,901 $9,925,831 $7,491,413 8,833,185
. . . . . . . . . . . . . . . . . $ $
Real Estate Equity Subaccount Growth & Income Subaccount
1999 1998 1997 1999 1998 1997
Increase in net assets from operations:
Net investment income . . . . . . . . . . . . . $ 515,377 $ 283,067 $ 232,798 $ 22,850,302 8,975,814 5,747,928
. . . . . . . . . . . . . . . . $ $
Net realized gains (losses) . . . . . . . . . . (735,504) (454,979) 252,095 6,207,253 2,061,212 2,390,414
. . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . 80,925 (698,676) (13,488) (5,814,839)7,759,307 435,778
. . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . . (139,202) (870,588) 471,405 23,242,716 18,796,3338,574,120
. . . . . . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . . . 22,699,314 6,964,604 4,833,914 196,639,86360,975,61635,535,599
. . . . . . . . . . . .
Net benefits to policyholders . . . . . . . . . (18,093,640)(5,513,221(2,393,463) (106,763,955) (31,360,866)
. . . . . . . . . . . . . . . (21,776,809)
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . . . . 4,605,674 1,451,383 2,440,451 89,875,908 29,614,75013,758,790
. . . . . . . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . . . . . 4,466,472 580,795 2,911,856 113,118,62448,411,08322,332,910
. . . . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . . 4,772,174 4,191,379 1,279,523 96,407,275 47,996,19225,663,282
. . . . . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . . $ 9,238,646 $ 4,772,174 4,191,379 $209,525,89996,407,27547,996,192
. . . . . . . . . . . . . . . . . $ $ $
</TABLE>
See accompanying notes.
116
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF CHANGES IN
NET ASSETS (continued) Years and periods ended December 31,
<TABLE>
<CAPTION>
Short-Term Bond
Managed Subaccount Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income . . . . . . . . . . . . $ 10,756,436 $3,484,281 1,814,571 $907,486 $ 926,217 $ 394,991
. . . . . . . . . . . . . . . $
Net realized gains (losses) . . . . . . . . . 2,233,258 278,186 171,318 (441,667) 24,740 35,294
. . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . (6,419,069) 1,791,231 715,231 (85,754) (136,999) (25,976)
. . . . . . . . . . . . . . . . . . . .
Net increase in net assets resulting from 6,570,625 5,553,698 2,701,120 380,065 813,958 404,309
operations . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . . 113,292,872 21,019,27316,914,475 41,259,110 27,490,588 12,911,228
. . . . . . . . . . .
Net benefits to policyholders . . . . . . . . (34,219,380)(8,281,600(9,357,535)(49,156,693(21,534,195(4,234,624)
. . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
policyholder transactions . . . . . . . . . . 79,073,492 12,737,673 7,556,940 (7,897,583)5,956,393 8,676,604
. . . . . . . . . . . . . . .
Net increase (decrease) in net assets . . . . . . 85,644,117 18,291,371 10,258,060 (7,517,518)6,770,351 9,080,913
. . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . . 40,066,692 21,775,321 11,517,261 19,246,506 12,476,155 3,395,242
. . . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . . $ 125,710,809 40,066,69221,775,321 11,728,988 19,246,506 12,476,155
. . . . . . . . . . . . . . . $ $ $ $ $
International Opportunities
Small Cap Value Subaccount Subaccount
1999 1998 1997 1999 1998 1997
Increase (decrease) in net assets from operations:
Net investment income . . . . . . . . . . . . $ 344,711 $ 14,015 $ 290,784 $ 2,006,004 $53,396 $ 55,901
. . . . . . . . . . . . . . .
Net realized gains (losses) . . . . . . . . . (979,002) (9,919) 75,149 1,907,809 191,495 80,782
. . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . . 325,684 (523,693) (18,626) 3,818,953 1,108,416 (260,664)
. . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . . (308,607) (519,597) 347,307 7,732,766 1,353,307 (123,981)
. . . . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . . 39,172,672 11,420,833 4,182,527 43,216,216 23,844,756 8,906,153
. . . . . . . . . . .
Net benefits to policyholders . . . . . . . . (30,591,417)(4,363,378(897,951) (38,372,463(12,275,087(3,655,731)
. . . . . . . . . . . . . .
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . . . . 8,581,255 7,057,455 3,284,576 4,843,753 11,569,669 5,250,422
. . . . . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . . . . 8,272,648 6,537,858 3,631,883 12,576,519 12,922,976 5,126,441
. . . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . . 10,510,748 3,972,890 341,007 18,958,530 6,035,554 909,113
. . . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . . $ 18,783,396 $10,510,7483,972,890 $31,535,049 18,958,530 6,035,554
. . . . . . . . . . . . . . . $ $ $
</TABLE>
See accompanying notes.
117
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF CHANGES IN
NET ASSETS (continued) Years and periods ended December 31,
<TABLE>
<CAPTION>
Equity Index Subaccount Global Bond Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income . . . . . . . . . $ 5,503,450 $ 1,211,729 $378,697 $ 424,767 $ 283,651 $ 71,030
. . . . . . . . . . . .
Net realized gains (losses) . . . . . . 7,681,081 691,270 901,978 (204,675) 81,659 8,335
. . . . . . . . . . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . . 4,678,509 6,098,919 392,256 (433,526) 43,608 (11,727)
. . . . . . . . . . . . . . . .
Net increase (decrease) in net assets
resulting from
operations . . . . . . . . . . . . . . . 17,863,040 8,001,918 1,672,931 (213,434) 408,918 67,638
. . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . 225,994,914 60,690,933 23,412,687 11,387,398 9,258,713 1,828,179
. . . . . . . .
Net benefits to policyholders . . . . . (147,909,470(31,166,123)(9,622,006(10,615,019) (3,008,341(534,164)
. . . . . . . . . . .
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . 78,085,444 29,524,810 13,790,681 772,379 6,250,372 1,294,015
. . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . 95,948,484 37,526,728 15,463,612 558,945 6,659,290 1,361,653
. . . . . . . . . . . . . .
Net assets at beginning of period . . . . . 53,964,647 16,437,919 974,307 8,279,571 1,620,281 258,628
. . . . . . . . . .
Net assets at end of period . . . . . . . . $ 149,913,13$ 53,964,647 $16,437,919$ 8,838,516 $ 8,279,57$ 1,620,281
. . . . . . . . . . . .
<CAPTION>
Brandes International
Turner Core Growth Subaccount Equity Subaccount
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income . . . . . . . . . $ 1,315,438 $ 77,203 $87,289 $ 515,681 $ 343,646 $ 25,175
. . . . . . . . . . . .
Net realized gains . . . . . . . . . . . 1,038,462 156,278 76,711 507,727 89,337 12,541
. . . . . . . . . . . . . .
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . . 1,626,646 562,620 32,626 3,486,097 91,915 (26,022)
. . . . . . . . . . . . . . . .
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . 3,980,546 796,101 196,626 4,509,505 524,898 11,694
. . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . 23,098,524 4,779,974 743,622 12,134,533 5,520,633 2,484,010
. . . . . . . .
Net benefits to policyholders . . . . . (9,308,254) (1,690,860) (580,027) (5,569,496(2,041,375(1,088,249)
. . . . . . . . . . .
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . 13,790,270 3,089,114 163,595 6,565,037 3,479,258 1,395,761
. . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . 17,770,816 3,885,215 360,221 11,074,542 4,004,156 1,407,455
. . . . . . . . . . . . . .
Net assets at beginning of period . . . . . 4,900,189 1,014,974 654,753 6,340,754 2,336,598 929,143
. . . . . . . . . .
Net assets at end of period . . . . . . . . $ 22,671,005$ 4,900,189 $1,014,974 $ 17,415,296$ 6,340,75$ 2,336,598
. . . . . . . . . . . .
</TABLE>
See accompanying notes.
118
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF CHANGES IN
NET ASSETS (continued) Years and periods ended December 31,
<TABLE>
<CAPTION>
Frontier Capital Appreciation Enhanced U.S.
Subaccount Equity Subaccount
1999 1998 1997 1999 1998 1997*
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income . . . . . . . . . . . $ 449,994 $ 9,897 $ 118,150 $ 518,137 $ 68,233 $ 14,857
. . . . . . . . . . . . . .
Net realized gains (losses) . . . . . . . . 624,068 (445,752) 614,358 264,436 87,723 4,177
. . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . 3,431,408 432,064 (368,570) 151,562 89,677 6,844
. . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . 4,505,470 (3,791) 363,938 934,135 245,633 25,878
. . . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . 25,135,447 13,982,03110,030,418 6,480,741 3,031,309 475,503
. . . . . . . . . .
Net benefits to policyholders . . . . . . . (22,331,613(9,695,520) (5,969,436)(3,151,2(1,299,530) (4,176)
. . . . . . . . . . . . .
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . . . 2,803,834 4,286,511 4,060,982 3,329,462 1,731,779 471,327
. . . . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . . . 7,309,304 4,282,720 4,424,920 4,263,597 1,977,412 497,205
. . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . 9,675,718 5,392,998 968,078 2,474,617 497,205 0
. . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . $ 16,985,02$ 9,675,718 $ 5,392,998$ 6,738,21$ 2,474,617$ 497,205
. . . . . . . . . . . . . .
<CAPTION>
Emerging Markets Global Equity Bond Index
Equity Subaccount Subaccount Subaccount
1999 1998** 1999 1998** 1999 1998**
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income . . . . . . . . . . . $ 132,259 $ 135 $ 4,204 $ 152 $ 130,136 $ 22,905
. . . . . . . . . . . . . .
Net realized gains (losses) . . . . . . . . 663,998 (45,975) 82,873 (21,835) (104,174) 1,002
. . . . . . . . . . . . . .
Net unrealized appreciation (depreciation)
during the
period . . . . . . . . . . . . . . . . . . 432,248 2,289 47,295 4,812 (78,192) (10,217)
. . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting
from
operations . . . . . . . . . . . . . . . . . 1,228,505 (43,551) 134,372 (16,871) (52,230) 13,690
. . . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . 18,579,194 2,434,226 3,151,983 2,372,034 6,471,5181,176,234
. . . . . . . . . .
Net benefits to policyholders . . . . . . . (16,271,324(2,203,670) (2,613,505)(2,191,1(2,358,694) (124,467)
. . . . . . . . . . . . .
Net increase in net assets resulting from
policyholder
transactions . . . . . . . . . . . . . . . . 2,307,870 230,556 538,478 180,899 4,112,8241,051,767
. . . . . . . . . . . . . . . . . .
Net increase in net assets . . . . . . . . . . 3,536,375 187,005 672,850 164,028 4,060,5941,065,457
. . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . 187,005 0 164,028 0 1,065,457 0
. . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . $ 3,723,380$ 187,005 $ 836,878 $ 164,028 $ 5,126,051$ 1,065,457
. . . . . . . . . . . . . .
</TABLE>
* From July 1, 1997 (commencement of operations). **From May 1, 1998
(commencement of operations).
See accompanying notes.
119
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S STATEMENTS OF CHANGES IN
NET ASSETS (continued) Years and periods ended December 31,
<TABLE>
<CAPTION>
Small/Mid Cap CORE High Yield Bond
Subaccount Subaccount
1999 1998** 1999 1998**
<S> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) . . . . . . . . . . . . . . . . . . . $ 52,711 $ (535) $ 340,435 $ 86,759
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net realized gains (losses) . . . . . . . . . . . . . . . . . . . 65,733 (25,196) 42,365 64,824
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized appreciation (depreciation) during the period . . . (10,735) 18,718 (139,659) 149,416
. . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting from operations . . . 107,709 (7,013) 243,141 300,999
. . . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . . . . . . . . . . . . . . 5,817,483 1,089,030 19,870,990 6,683,673
. . . . . . . . . . . . . . . . . . . . . . . .
Net benefits to policyholders . . . . . . . . . . . . . . . . . . (5,611,532(778,864) (20,368,501(2,457,088)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net assets resulting from policyholder 205,951 310,166 (497,511) 4,226,585
transactions . . . . . . . .
Net increase (decrease) in net assets . . . . . . . . . . . . . . . . 313,660 303,153 (254,370) 4,527,584
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets at beginning of period . . . . . . . . . . . . . . . . . . 303,153 0 4,527,584 0
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets at end of period . . . . . . . . . . . . . . . . . . . . . $ 616,813 $ 303,153 $ 4,273,214$ 4,527,584
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
**From May 1, 1998 (commencement of operations).
See accompanying notes.
120
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
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.
121
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(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 December 31, 1999, 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.
122
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(continued)
4. Details of Investments
The details of the shares owned and cost and value of investments in the
Portfolios of the Fund and of M Fund at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
Portfolio Shares Owned Cost Value
<S> <C> <C> <C>
Large Cap Growth . . . . . . . . . . . . . . 4,226,550 $ 108,181,136 $ 115,521,551
. . .
Sovereign Bond . . . . . . . . . . . . . . . 4,200,440 40,512,273 38,321,473
. . . .
International Equity Index . . . . . . . . . 1,689,937 29,224,059 33,198,674
. .
Small Cap Growth . . . . . . . . . . . . . . 1,622,919 25,907,535 31,022,828
. . .
International Balanced . . . . . . . . . . . 428,930 4,680,715 4,591,856
. . .
Mid Cap Growth . . . . . . . . . . . . . . . 2,172,468 46,744,046 63,499,616
. . .
Large Cap Value . . . . . . . . . . . . . . . 2,009,306 28,839,671 27,106,917
. . .
Money Market . . . . . . . . . . . . . . . . 6,100,677 61,006,768 61,006,769
. . . .
Mid Cap Value . . . . . . . . . . . . . . . . 1,497,913 18,236,811 19,138,533
. . . .
Small/Mid Cap Growth . . . . . . . . . . . . .707,222 10,888,164 9,925,831
Real Estate Equity . . . . . . . . . . . . . 805,182 9,643,804 9,238,646
. . . .
Growth & Income . . . . . . . . . . . . . . . 10,470,370 207,387,033 209,525,899
. .
Managed . . . . . . . . . . . . . . . . . . . 8,137,552 130,087,567 125,710,809
. . . . .
Short-Term Bond . . . . . . . . . . . . . . . 1,206,452 11,963,663 11,728,988
. . .
Small Cap Value . . . . . . . . . . . . . . . 1,720,546 18,985,985 18,783,396
. . .
International Opportunities . . . . . . . . . 2,078,452 26,831,679 31,535,049
.
Equity Index . . . . . . . . . . . . . . . . 7,327,855 138,687,664 149,913,131
. . . . .
Global Bond . . . . . . . . . . . . . . . . . 900,154 9,240,752 8,838,516
. . . .
Turner Core Growth . . . . . . . . . . . . . 988,705 20,433,059 22,671,005
. .
Brandes International Equity . . . . . . . . .1,122,129 13,875,593 17,415,296
Frontier Capital Appreciation . . . . . . . . 804,225 13,485,020 16,985,022
Enhanced U.S. Equity . . . . . . . . . . . . 321,327 6,490,133 6,738,214
. .
Emerging Markets Equity . . . . . . . . . . . 303,646 3,288,843 3,723,380
Global Equity . . . . . . . . . . . . . . . . 68,965 784,773 836,878
. . . .
Bond Index . . . . . . . . . . . . . . . . . 550,115 5,214,459 5,126,051
. . . . .
Small/Mid Cap CORE . . . . . . . . . . . . . .62,841 608,830 616,813
High Yield Bond . . . . . . . . . . . . . . . 475,514 4,263,457 4,273,214
. . .
</TABLE>
123
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(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>
124
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(continued)
5. Net Assets
Accumulation shares attributable to net assets of policyholders and
accumulation share values for each subaccount at December 31, 1999 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 . . . . . . . . . . .432,627 $ 34.19 442,008 $ 34.29 156,934 $ 34.39
Sovereign Bond . . . . . . . . . . . 226,496 13.80 170,995 13.84 28,389 13.88
. .
International Equity Index . . . . . 205,346 17.52 163,712 17.58 4,631 17.63
Small Cap Growth . . . . . . . . . . .151,029 21.68 131,551 21.71 42,832 21.76
International Balanced . . . . . . . .21,487 13.28 25,817 13.30 12,453 13.33
Mid Cap Growth . . . . . . . . . . . 202,405 35.56 145,034 35.62 45,513 35.69
. .
Large Cap Value . . . . . . . . . . . 191,629 16.15 140,376 16.18 4,476 16.21
. .
Money Market . . . . . . . . . . . . 613,611 13.08 1,102,161 13.12 347,735 13.15
. .
Mid Cap Value . . . . . . . . . . . . 106,938 14.05 45,955 14.08 2,990 14.10
. .
Small/Mid Cap Growth . . . . . . . 83,852 19.77 90,674 19.83 41,701 19.88
Real Estate Equity . . . . . . . . . 94,768 14.40 68,355 14.44 2,732 14.49
. .
Growth & Income . . . . . . . . . . . 945,411 30.90 579,234 31.00 212,540 31.09
.
Managed . . . . . . . . . . . . . . . 554,374 20.88 279,936 20.94 23,988 21.00
. . . .
Short-Term Bond . . . . . . . . . . . 94,078 12.97 84,892 13.00 7,712 13.04
.
Small Cap Value . . . . . . . . . . . 114,641 12.30 82,461 12.33 55,278 12.35
. .
International Opportunities . . . . 115,902 16.52 159,219 16.55 2,521 16.58
Equity Index . . . . . . . . . . . . 442,683 23.06 565,394 23.10 189,577 23.14
. . . .
Global Bond . . . . . . . . . . . . . 55,090 12.15 48,036 12.17 16,751 12.19
. . .
Turner Core Growth . . . . . . . . . .31,697 28.29 15,337 28.36 -- --
Brandes International Equity . . . 18,319 16.91 33,342 16.94 -- --
Frontier Capital Appreciation . . . 20,409 22.75 13,182 22.80 -- --
Enhanced U.S. Equity . . . . . . . . 3,102 17.47 -- 17.50 -- --
Emerging Markets Equity . . . . . 31,332 12.77 114,481 12.78 4,803 12.79
Global Equity . . . . . . . . . . . . 11,223 12.22 15,873 12.23 777 12.24
. . .
Bond Index . . . . . . . . . . . . . 99,617 10.34 99,264 10.34 64,039 10.35
. . . .
Small/Mid Cap CORE . . . . . . . . 12,833 10.76 3,271 10.77 4,416 10.78
High Yield Bond . . . . . . . . . . . 51,021 10.09 40,169 10.10 -- --
. .
</TABLE>
125
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(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 . . . . . . 646,018 $ 34.50 282,553 $ 34.49 252,596 $ 34.52
. . . . .
Sovereign Bond . . . . . . . 17,426 14.64 538,047 14.66 335,449 14.67
. . . . . .
International Equity Index . 63,956 16.24 130,903 16.26 235,165 16.28
. . . .
Small Cap Growth . . . . . . 90,088 22.04 39,929 22.05 38,804 22.07
. . . . .
International Balanced . . . 68,220 13.50 6,065 13.51 54,964 13.52
. . . . .
Mid Cap Growth . . . . . . . 146,264 36.15 124,116 36.18 5,992 36.19
. . . . . .
Large Cap Value . . . . . . . 151,753 16.42 133,066 16.43 416,273 16.44
. . . . . .
Money Market . . . . . . . . 218,714 13.01 5,906 13.02 136,140 13.04
. . . . . .
Mid Cap Value . . . . . . . . 69,726 14.29 24,485 14.30 281,375 14.30
. . . . . .
Small/Mid Cap Growth . . . . 27,983 19.77 958 19.79 42,902 19.81
. . .
Real Estate Equity . . . . . 58,475 14.92 4,323 14.93 203,728 14.95
. . . . . .
Growth & Income . . . . . . . 641,268 30.84 447,326 30.87 16,723 30.91
. . . . .
Managed . . . . . . . . . . . 162,478 21.64 83,071 21.66 150,514 21.68
. . . . . . . .
Short-Term Bond . . . . . . . 99,163 13.21 351,710 13.22 -- --
. . . . .
Small Cap Value . . . . . . . 32,245 12.51 49,419 12.52 281,896 12.53
. . . . . .
International Opportunities . 203,225 16.80 157,727 16.80 74,340 16.81
. . .
Equity Index . . . . . . . . 324,024 23.44 37,253 23.46 533,298 23.47
. . . . . . . .
Global Bond . . . . . . . . . 54,500 12.35 9,809 12.36 -- --
. . . . . . .
Turner Core Growth . . . . . 7,772 28.80 12,496 28.83 -- --
. . . . .
Brandes International Equity 104,626 17.21 81,372 17.23 42,458 17.25
. . .
Frontier Capital Appreciation 74,553 23.16 62,806 23.18 -- --
. . .
Enhanced U.S. Equity . . . . 13,962 17.68 1 17.68 -- --
. . . .
Emerging Markets Equity . . .-- -- 24,692 12.87 -- --
. .
Global Equity . . . . . . . .-- -- -- 12.32 -- --
. . . . . . .
Bond Index . . . . . . . . . 2,519 10.42 10,132 10.42 -- --
. . . . . . . .
Small/Mid Cap CORE . . . . . -- -- -- 10.84 -- --
. . .
High Yield Bond . . . . . . . 1,998 10.18 310 10.18 85,180 10.18
. . . . . .
</TABLE>
126
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(continued)
<TABLE>
<CAPTION>
Medallion Executive VLI MVEP Class #8 MVUL Class #9
Class #7
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 . . . . 92,840 $ 79.68 781,223 $ 24.82 213,207 $ 22.10
. . . .
Sovereign Bond . . . . . 57,389 23.69 765,173 12.44 500,049 11.71
. . . . .
International Equity 113,572 27.55 780,218 15.05 200,089 15.54
Index . .
Small Cap Growth . . . . 193,672 21.70 298,417 21.90 197,401 24.61
. . . .
International Balanced . 52,288 13.29 41,158 13.41 36,634 12.85
. . . .
Mid Cap Growth . . . . . 168,579 35.59 383,762 35.92 103,210 39.83
. . . . .
Large Cap Value . . . . 269,931 16.17 125,284 16.31 115,052 13.95
. . . . . .
Money Market . . . . . . 280,073 18.10 339,940 11.94 435,648 11.42
. . . . .
Mid Cap Value . . . . . 412,439 14.06 242,213 14.19 70,954 12.00
. . . . . .
Small/Mid Cap Growth . . 3,416 19.80 257,950 12.63 33,652 12.85
. .
Real Estate Equity . . . 39,901 22.14 116,040 12.27 38,147 9.54
. . . . .
Growth & Income . . . . 828,857 68.13 1,383,220 21.88 552,475 19.13
. . . . .
Managed . . . . . . . . 2,321,332 39.65 236,592 16.81 102,294 15.37
. . . . . . . .
Short-Term Bond . . . . 63,598 12.99 63,326 11.93 95,428 11.43
. . . . .
Small Cap Value . . . . 473,526 12.32 281,097 12.43 87,362 11.80
. . . . . .
International 559,454 16.54 227,841 16.68 335,763 15.97
Opportunities .
Equity Index . . . . . . 477,728 23.08 1,251,427 23.29 598,377 19.87
. . . . . . .
Global Bond . . . . . . 146,786 12.16 62,185 12.27 258,673 11.58
. . . . . . .
Turner Core Growth . . .-- -- 229,705 25.66 76,087 24.67
. . . .
Brandes International
Equity . . . . . . . . .-- -- 495,542 16.53 58,572 17.67
. . . . . . .
Frontier Capital
Appreciation . . . . . .-- -- 405,890 19.23 119,967 18.62
. . . . .
Enhanced U.S. Equity . .-- -- 145,784 17.59 139,459 17.59
. . .
Emerging Markets Equity 45,954 12.77 18,062 12.82 40,257 12.82
. .
Global Equity . . . . . 2,967 12.23 4,588 12.28 29,228 12.28
. . . . . . .
Bond Index . . . . . . . 18,855 10.34 12,439 10.38 185 10.38
. . . . . . .
Small/Mid Cap CORE . . .-- -- 16,742 10.81 477 10.81
. .
High Yield Bond . . . . 34,470 10.10 82,547 10.14 72,026 10.14
. . . . . .
</TABLE>
127
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(continued)
<TABLE>
<CAPTION> MVUL 98 Class #10 MVEP 98 Class #11 MEVL II Class #12
AccumulationAccumulation Accumulation Accumulation Accumulation Accumulation
Portfolio Shares Share Values Shares Share Values Shares Share Values
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth . . . . . . . 221,057 $ 22.10 133,186 $ 24.82 -- --
. . . .
Sovereign Bond . . . . . . . . 122,492 11.71 96,742 12.44 -- --
. . . . .
International Equity Index . . 40,197 15.54 68,833 15.05 -- --
. . .
Small Cap Growth . . . . . . . 158,068 24.61 34,357 21.90 -- --
. . . .
International Balanced . . . . 22,819 12.85 3,040 13.41 -- --
. . . .
Mid Cap Growth . . . . . . . . 291,628 39.83 111,636 35.92 -- --
. . . . .
Large Cap Value . . . . . . . 66,485 13.95 73,993 16.31 -- --
. . . . . .
Money Market . . . . . . . . . 575,670 11.42 718,107 11.94 -- --
. . . . .
Mid Cap Value . . . . . . . . 62,352 11.99 52,021 14.19 -- --
. . . . . .
Small/Mid Cap Growth . . . . . 15,710 12.85 20,460 12.63 -- --
. .
Real Estate Equity . . . . . . 10,691 9.54 7,405 12.27 -- --
. . . . .
Growth & Income . . . . . . . 1,047,922 19.13 196,321 21.88 -- --
. . . . .
Managed . . . . . . . . . . . 55,779 15.37 43,618 16.81 -- --
. . . . . . . .
Short-Term Bond . . . . . . . 26,887 11.43 31,697 11.93 -- --
. . . . .
Small Cap Value . . . . . . . 22,247 11.80 40,374 12.43 -- --
. . . . . .
International Opportunities . 39,238 15.97 35,379 16.68 -- --
. . .
Equity Index . . . . . . . . . 1,960,860 19.87 440,030 23.29 -- --
. . . . . . .
Global Bond . . . . . . . . . 35,346 11.58 51,458 12.27 -- --
. . . . . . .
Turner Core Growth . . . . . . 377,311 24.67 142,883 25.66 -- --
. . . .
Brandes International Equity . 82,135 17.67 116,504 16.53 -- --
. .
Frontier Capital Appreciation 90,807 18.62 69,320 20.00 -- --
. . .
Enhanced U.S. Equity . . . . . 48,887 17.59 30,852 17.59 -- --
. . .
Emerging Markets Equity . . . 7,584 12.82 3,832 12.82 -- --
. .
Global Equity . . . . . . . . 1,070 12.28 2,561 12.28 -- --
. . . . . . .
Bond Index . . . . . . . . . . 137,733 10.38 46,924 10.38 -- --
. . . . . . .
Small/Mid Cap CORE . . . . . . 10,536 10.81 8,881 10.81 -- --
. .
High Yield Bond . . . . . . . 15,036 10.14 38,875 10.14 -- --
. . . . . .
</TABLE>
128
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(continued)
<TABLE>
<CAPTION>
VEP Class #13
Accumulation Accumulation
Portfolio Shares Share Values
<S> <C> <C>
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 . . . . . . .-- --
Real Estate Equity . . . . . . . .-- --
. . .
Growth & Income . . . . . . . . . -- --
. . .
Managed . . . . . . . . . . . . . -- --
. . . . . .
Short-Term Bond . . . . . . . . . -- --
. . .
Small Cap Value . . . . . . . . . -- --
. . . .
International Opportunities . . . .-- --
Equity Index . . . . . . . . . . .-- --
. . . . .
Global 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 . . . . . . . .-- --
High Yield Bond . . . . . . . . . -- --
. . . .
</TABLE>
129
<PAGE>
ALPHABETICAL INDEX OF KEY WORDS AND PHRASES
This index should help you locate more information about many of the
important concepts in this prospectus.
<TABLE>
<CAPTION>
Key Word or Phrase Page Key Word or Phrase Page
<S> <C> <C> <C>
Account . . . . . . . . . . . . . . . . . . . . . 33 monthly deduction date . . . . . . . . . . 35
. .
account value . . . . . . . . . . . . . . . . . . .8 mortality and expense risk charge . . 10
Additional Sum Insured . . . . . . . . . . . 15 Option A; Option B: Option M. . . . . 15
attained age . . . . . . . . . . . . . . . . . . . 9 optional extra death benefit feature . 16
.
Basic Sum Insured . . . . . . . . . . . . . . . 15 owner . . . . . . . . . . . . . . . . . . . . 5
. . . .
beneficiary . . . . . . . . . . . . . . . . . . . 44 partial withdrawal . . . . . . . . . . . . . . 14
. . .
business day . . . . . . . . . . . . . . . . . . . 34 partial withdrawal charge . . . . . . . . . 10
.
changing Option A or B. . . . . . . . . . . 17 payment options . . . . . . . . . . . . . . . .18
changing the Total Sum Insured . . . . 16 Planned Premium . . . . . . . . . . . . . . . 6
charges . . . . . . . . . . . . . . . . . . . . . 9 policy anniversary. . . . . . . . . . . . . . .35
. . .
Code . . . . . . . . . . . . . . . . . . . . . . . 40 policy year . . . . . . . . . . . . . . . . . 35
. . . . . .
cost of insurance rates . . . . . . . . . . . . 9 premium; premium payment . . . . . . 5
date of issue . . . . . . . . . . . . . . . . . . 35 prospectus . . . . . . . . . . . . . . . . . . 3
. . . . .
death benefit. . . . . . . . . . . . . . . . . . . 5 receive; receipt . . . . . . . . . . . . . . . 20
. . .
deductions . . . . . . . . . . . . . . . . . . . . 9 reinstate; reinstatement . . . . . . . . . . . 7
.
enhanced cash value rider . . . . . . . . . 16 sales charges . . . . . . . . . . . . . . . . 9
. . .
expenses of the Trusts . . . . . . . . . . . . 10 SEC. . . . . . . . . . . . . . . . . . . . . . 2
. . . .
fixed investment option . . . . . . . . . . . 34 Separate Account S. . . . . . . . . . . . . . 33
full surrender . . . . . . . . . . . . . . . . . . 13 Servicing Office . . . . . . . . . . . . . . . 2
. .
fund . . . . . . . . . . . . . . . . . . . . . . . 2 special loan account . . . . . . . . . . . . . 14
. . .
grace period . . . . . . . . . . . . . . . . . . . 7 subaccount . . . . . . . . . . . . . . . . . . 33
. . .
guaranteed minimum death benefit . . 7 surrender . . . . . . . . . . . . . . . . . . 13
. . . .
Guaranteed Minimum Death Benefit
Premium . . . . . . . . . . . . . . . . . . . 7 surrender value . . . . . . . . . . . . . . . 13
. . . .
insurance charge . . . . . . . . . . . . . . . . 9 Target Premium . . . . . . . . . . . . . . . . 9
insured person . . . . . . . . . . . . . . . . . . 5 tax considerations . . . . . . . . . . . . . . 40
.
investment options . . . . . . . . . . . . . . . 1 telephone transfers . . . . . . . . . . . . . .20
JHVLICO. . . . . . . . . . . . . . . . . . . . . . 33 Total Sum Insured . . . . . . . . . . . . . . 15
lapse . . . . . . . . . . . . . . . . . . . . . . 7 transfers of account value . . . . . . . . . 13
. . . .
loan. . . . . . . . . . . . . . . . . . . . . . . 14 Trusts . . . . . . . . . . . . . . . . . . . . 2
. . . . . . . .
loan interest . . . . . . . . . . . . . . . . . . 14 variable investment options . . . . . . . 1
. .
maximum premiums . . . . . . . . . . . . . 6 we; us . . . . . . . . . . . . . . . . . . . . 33
. . . .
Minimum Initial Premium . . . . . . . . . 34 withdrawal . . . . . . . . . . . . . . . . . . 14
. .
minimum insurance amount. . . . . . . . 16 withdrawal charges . . . . . . . . . . . . . . 10
minimum premiums. . . . . . . . . . . . . . 5 you; your. . . . . . . . . . . . . . . . . . . 5
. . .
modified endowment contract . . . . . . 41
</TABLE>
130
<PAGE>
PROSPECTUS DATED NOVEMBER 1, 2000
MAJESTIC VARIABLE UNIVERSAL LIFE 98
a flexible premium variable life insurance policy
issued by
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JHVLICO") The policy
provides an investment option with fixed rates of return declared by
JHVLICO and the following variable investment options:
<TABLE>
<CAPTION>
VARIABLE INVESTMENT OPTION MANAGED BY
-------------------------- ----------
------------------------------------------------------------------------------------------------------------------
<S> <C>
Managed. . . . . . . . . . . . . . . . . . . . . . . . . . Independence Investment Associates, Inc. and
Capital Guardian Trust Company
Growth & Income . . . . . Independence Investment Associates, Inc. and
Putnam Investment Management, Inc.
Fidelity VIP Contrafund/(R)/ . . . . . . . . . . . . . . . Fidelity Management and Research Company
Equity Index . . . . . . . State Street Global Advisors
Large Cap Value . . . . . T. Rowe Price Associates, Inc.
American Leaders Large Cap Value. . . . . . . . . . . . . Federated Investment Management Company
Large Cap Growth . . . . . Independence Investment Associates, Inc.
Large Cap Aggressive Growth. . . . . . . . . . . . . . . . Alliance Capital Management L.P.
Fidelity VIP Growth. . . Fidelity Management and Research Company
AIM V.I. Value. . . . . . A I M Advisors, Inc.
Janus Aspen Global Technology. . . . . . . . . . . . . . . Janus Capital Corporation
Mid Cap Value . . . . . . Neuberger Berman, LLC
Mid Cap Growth . . . . . . Janus Capital Corporation
Fundamental Growth. . . . Putnam Investment Management, Inc.
Real Estate Equity . . . . Independence Investment Associates, Inc. and
Morgan Stanley Dean Witter Investment
Management Inc.
Small/Mid Cap CORE /SM/ . Goldman Sachs Asset Management
Small/Mid Cap Growth. . . Wellington Management Company, LLP
Small Cap Equity . . . . . Capital Guardian Trust Company
Small Cap Growth . . . . . . . . . . . . . . . . . . . . . John Hancock Advisers, Inc.
MFS New Discovery. . . . MFS Investment Management/(R)/
Global Balanced . . . . . Capital Guardian Trust Company
Janus Aspen Worldwide Growth. . . . . . . . . . . . . . . Janus Capital Corporation
Templeton International Securities. . . . . . . . . . . . Templeton Investment Counsel, Inc.
International Equity Index . . . . . . . . . . . . . . . . Independence International Associates, Inc.
International Opportunities . . . . . . . . . . . . . . . . T. Rowe Price International, Inc.
Morgan Stanley Dean Witter Investment Management
Emerging Markets Equity . . . . . . . . . . . . . . . . . Inc.
Short-Term Bond . . . . . Independence Investment Associates, Inc.
Bond Index . . . . . . . . Mellon Bond Associates, LLP
Active Bond . . . . . . . . . . . . . . . . . . . . . . . John Hancock Advisers, Inc.
Core Bond. . . . . . . . Federated Investment Management Company
Global Bond . . . . . . . . . . . . . . . . . . . . . . . Capital Guardian Trust Company
High Yield Bond . . . . . Wellington Management Company, LLP
Money Market. . . . . . . John Hancock Life Insurance Company
Brandes International Equity. . . . . . . . . . . . . . . Brandes Investment Partners, L.P.
Turner Core Growth. . . . Turner Investment Partners, Inc.
Frontier Capital Appreciation. . . . . . . . . . . . . . . Frontier Capital Management Company, LLC
Clifton Enhanced U.S. Equity. . . . . . . . . . . . . . . The Clifton Group
------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The variable investment options shown on page 1 are those available as of the
date of this prospectus. We may add, modify or delete variable investment
options in the future.
When you select one or more of these variable investment options, we invest
your money in the corresponding investment option(s) of one or more of the
following: the John Hancock Variable Series Trust I, the AIM Variable Insurance
Funds, Inc., the Templeton Variable Products Series Fund, Fidelity's Variable
Insurance Products Fund and Variable Insurance Products Fund II, the MFS
Variable Insurance Trust, and the M Fund, Inc. (together, "the Trusts"). In this
prospectus, the investment options of the Trusts are referred to as "funds".
In the prospectuses for the Trusts, the investment options may be referred to
as "funds", "portfolios" or "series".
Each Trust is a so-called "series" type mutual fund registered with the
Securities and Exchange Commission ("SEC"). The investment results of each
variable investment option you select will depend on those of the corresponding
fund of one of the Trusts. Each of the funds is separately managed and has its
own investment objective and strategies. Attached at the end of this prospectus
is a prospectus for each Trust. The Trust prospectuses contain detailed
information about each available fund. Be sure to read those prospectuses before
selecting any of the variable investment options shown on page 1.
* * * * * * * * * * * *
Please note that the SEC has not approved or disapproved these securities, or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
* * * * * * * * * * * *
JHVLICO LIFE SERVICING OFFICE
-----------------------------
2
<PAGE>
GUIDE TO THIS PROSPECTUS
This prospectus contains information that you should know before you buy a
policy or exercise any of your rights under the policy. However, please keep in
mind that this is a prospectus - - it is not the policy. The prospectus
---
simplifies many policy provisions to better communicate the policy's essential
features. Your rights and obligations under the policy will be determined by the
language of the policy itself. When you receive your policy, read it carefully.
This prospectus is arranged in the following way:
. The section which follows is called "Basic Information". It is in a
question and answer format. We suggest you read the Basic Information
section before reading any other section of the prospectus.
. Behind the Basic Information section are illustrations of hypothetical
policy benefits that help clarify how the policy works. These start on
page 21.
. Behind the illustrations is a section called "Additional Information"
that gives more details about the policy. It generally does not
---
repeat information that is in the Basic Information section. A table of
contents for the Additional Information section appears on page 32.
. Behind the Additional Information section are the financial statements
for JHVLICO and Separate Account S. These start on page 46.
. Finally, there is an Alphabetical Index of Key Words and Phrases at the
back of the prospectus on page 130.
After the Alphabetical Index of Key Words and Phrases, this prospectus ends and
the prospectuses for the Trusts begin.
* * * * * * * * * * * *
3
<PAGE>
BASIC INFORMATION
This part of the prospectus provides answers to commonly asked questions about
the policy.
<TABLE>
<CAPTION>
<S> <C>
Question Beginning on page
--------
.What is the policy?. . . . . . . . . . . . . . . 5
.Who owns the policy?. . . . . . . . . . . . . . 5
.How can I invest money in the policy?. . . . . . 5
.Is there a minimum amount I must invest?. . . . 6
.How will the value of my investment in the policy change 8
over time?. . . . . . . . . . . . . . . . . . . .
.What charges will JHVLICO deduct from my investment in 8
the policy?. . . . . . . . . . . . . . . . . . .
.What charges will the Trusts deduct from my investment in 10
the policy?. . . . . . . . . . . . . . . . . . .
.What other charges could JHVLICO impose in the future? 12
.How can I change my policy's investment allocations? 13
.How can I access my investment in the policy?. . 13
.How much will JHVLICO pay when the insured person dies? 15
.How can I change my policy's insurance coverage? 17
.Can I cancel my policy after it's issued?. . . . 17
.Can I choose the form in which JHVLICO pays out policy 18
proceeds?. . . . . . . . . . . . . . . . . . . .
.To what extent can JHVLICO vary the terms and conditions
of its policies in particular cases?. . . . . . 18
.How will my policy be treated for income tax purposes? 19
.How do I communicate with JHVLICO?. . . . . . . 19
</TABLE>
Here are the page numbers where the questions and answers appear:
4
<PAGE>
WHAT IS THE POLICY?
The policy's primary purpose is to provide lifetime protection against
economic loss due to the death of the insured person. The value of the amount
you have invested under the policy may increase or decrease daily based upon the
investment results of the variable investment options that you choose. The
amount we pay to the policy's beneficiary if the insured person dies (we call
this the "death benefit") may be similarly affected.
While the insured person is alive, you will have a number of options under the
policy. Here are some major ones:
. Determine when and how much you invest in the various investment
options
. Borrow or withdraw amounts you have in the investment options
. Change the beneficiary who will receive the death benefit
. Change the amount of insurance
. Turn in (i.e., "surrender") the policy for the full amount of its
surrender value
. Choose the form in which we will pay out the death benefit or other
proceeds
Most of these options are subject to limits that are explained later in this
prospectus.
WHO OWNS THE POLICY?
That's up to the person who applies for the policy. The owner of the policy is
the person who can exercise most of the rights under the policy, such as the
right to choose the investment options or the right to surrender the policy. In
many cases, the person buying the policy is also the person who will be the
owner. However, the application for a policy can name another person or entity
(such as a trust) as owner. Whenever we've used the term "you" in this
prospectus, we've assumed that the reader is the person who has whatever right
or privilege is being discussed. There may be tax consequences if the owner and
the insured person are different, so you should discuss this issue with your tax
adviser.
HOW CAN I INVEST MONEY IN THE POLICY?
Premium Payments
We call the investments you make in the policy "premiums" or "premium
payments". The amount we require as your first premium depends upon the
-----
specifics of your policy and the insured person. Except as noted below, you can
make any other premium payments you wish at any time. That's why the policy is
called a "flexible premium" policy.
Minimum premium payment
Each premium payment must be at least $100.
5
<PAGE>
Maximum premium payments
Federal tax law limits the amount of premium payments you can make relative to
the amount of your policy's insurance coverage. We will not knowingly accept any
amount by which a premium payment exceeds the maximum. If you exceed certain
other limits, the law may impose a penalty on amounts you take out of your
policy. We'll monitor your premium payments and let you know if you're about to
exceed this limit. More discussion of these tax law requirements begins on page
40. Also, we may refuse to accept any amount of an additional premium if:
. that amount of premium would increase our insurance risk exposure,
and
. the insured person doesn't provide us with adequate evidence that he or
she continues to meet our requirements for issuing insurance.
In no event, however, will we refuse to accept any premium necessary to prevent
the policy or the guaranteed minimum death benefit feature from terminating. We
reserve the right to limit premium payments above the amount of cumulative
Guaranteed Minimum Death Benefit Premiums (whether or not the guaranteed minimum
death benefit feature described on page 7 is in effect).
Ways to pay premiums
If you pay premiums by check or money order, they must be drawn on a U.S. bank
in U.S. dollars and made payable to "John Hancock Variable Life Insurance
Company." Premiums after the first must be sent to the JHVLICO Life Servicing
Office at the appropriate address shown on page 2 of this prospectus.
We will also accept premiums:
. by wire or by exchange from another insurance company, or
. if we agree to it, through a salary deduction plan with your
employer.
You can obtain information on these other methods of premium payment by
contacting your JHVLICO representative or by contacting the JHVLICO Life
Servicing Office.
IS THERE A MINIMUM AMOUNT I MUST INVEST?
Planned Premiums
The Policy Specifications page of your policy will show the "Planned Premium"
for the policy. You choose this amount in the policy application. The premium
reminder notice we send you is based on this amount. You will also choose how
often to pay premiums-- annually, semi-annually, quarterly or monthly. The date
on which such a payment is "due" is referred to in the policy as a "modal
processing date." However, payment of Planned Premiums is not necessarily
required. You need only invest enough to keep the policy in force (see "Lapse
and reinstatement" and "Guaranteed minimum death benefit feature" below).
6
<PAGE>
Lapse and reinstatement
Either your entire policy or the Additional Sum Insured portion of your Total
Sum Insured can terminate (i.e., "lapse") for failure to pay charges due under
the policy. If the guaranteed minimum death benefit feature is in effect, only
the Additional Sum Insured, if any, can lapse. If the guaranteed minimum death
benefit feature is not in effect, the entire policy can lapse. In either case,
---
if the policy's surrender value is not sufficient to pay the charges on a
monthly deduction date, we will notify you of how much you will need to pay to
keep any Additional Sum Insured or the policy in force. You will have a 61 day
"grace period" to make that payment. If you don't pay at least the required
amount by the end of the grace period, the Additional Sum Insured or your policy
will lapse. If your policy lapses, all coverage under the policy will cease.
Even if the policy or the Additional Sum Insured terminates in this way, you can
still reactivate (i.e., "reinstate") it within 1 year from the beginning of the
grace period. You will have to provide evidence that the insured person still
meets our requirements for issuing coverage. You will also have to pay a minimum
amount of premium and be subject to the other terms and conditions applicable to
reinstatements, as specified in the policy. If the guaranteed minimum death
benefit is not in effect and the insured person dies during the grace period, we
will deduct any unpaid monthly charges from the death benefit. During such a
grace period, you cannot make a partial withdrawal or policy loan.
Guaranteed minimum death benefit feature
This feature is available only if the insured person meets certain
underwriting requirements. The feature guarantees that your Basic Sum Insured
will not lapse during the first 10 policy years, regardless of adverse
investment performance, if on each policy anniversary during that 10 year period
the amount of cumulative premiums you have paid accumulated at 4% (less all
withdrawals from the policy accumulated at 4%) equals or exceeds the sum of all
Guaranteed Minimum Death Benefit Premiums due to date accumulated at 4%. The
Guaranteed Minimum Death Benefit Premium (or "GMDB Premium) is defined in the
policy and is "due" on each policy anniversary. On the application for the
policy, you may elect for this feature to extend beyond the tenth policy year.
If you so elect, we will impose a special charge for this feature after the
tenth policy year. You may revoke the election at any time.
No GMDB Premium will ever be greater than the so-called "guideline premium"
for the policy as defined in Section 7702 of the Internal Revenue Code. Also,
the GMDB Premiums may change in the event of any change in the Additional Sum
Insured of the policy or any change in the death benefit option (see "How much
will JHVLICO pay when the insured person dies?" on page 15).
If the guaranteed minimum death benefit test is not satisfied on any policy
anniversary, we will notify you immediately and tell you how much you will need
to pay to keep the feature in effect. You will have 61 days after default to
make that payment. If you don't pay at least the required amount by the end of
that period, the feature will lapse. The feature may be reinstated in accordance
with the terms of the policy within 5 years after the policy anniversary on
which default occurred. If it is reinstated more than 1 year after such policy
anniversary, we will require evidence that the insured person still meets our
requirements for issuing coverage. We may refuse to reinstate the feature more
than once during the life of the policy.
7
<PAGE>
The guaranteed minimum death benefit feature applies only to the Basic Sum
Insured. It does not apply to any amount of Additional Sum Insured (see "How
---
much will JHVLICO pay when the insured person dies?" on page 15).
If there are monthly charges that remain unpaid because of this feature, we
will deduct such charges when there is sufficient surrender value to pay them.
HOW WILL THE VALUE OF MY INVESTMENT IN THE POLICY CHANGE OVER TIME?
From each premium payment you make, we deduct the charges described under
"Deductions from premium payments" below. We invest the rest in the investment
options you've elected. Special investment rules apply to premiums processed
prior to the 20th day after your policy becomes effective. (See "Commencement of
investment performance" beginning on page 36.)
Over time, the amount you've invested in any variable investment option will
increase or decrease the same as if you had invested the same amount directly in
the corresponding fund of one of the Trusts and had reinvested all fund
dividends and distributions in additional fund shares; except that we will
deduct certain additional charges which will reduce your account value. We
describe these charges under "What charges will JHVLICO deduct from my
investment in the policy?" below.
The amount you've invested in the fixed investment option will earn interest
at a rate we declare from time to time. We guarantee that this rate will be at
least 4%. If you want to know what the current declared rate is, just call or
write to us. The current declared rate will also appear in the annual statement
we will send you. Amounts you invest in the fixed investment option will not be
---
subject to the mortality and expense risk charge described on page 10.
Otherwise, the charges applicable to the fixed investment option are the same as
those applicable to the variable investment options.
At any time, the "account value" of your policy is equal to:
. the amount you invested,
. plus or minus the investment experience of the investment options
you've chosen,
. minus all charges we deduct, and
. minus all withdrawals you have made.
If you take a loan on the policy, however, your account value will be computed
somewhat differently. This is discussed beginning on page 14.
WHAT CHARGES WILL JHVLICO DEDUCT FROM MY INVESTMENT IN THE POLICY?
Deductions from premium payments
. Premium tax charge - A charge to cover state premium taxes we currently
--------------------
expect to pay, on average. This charge is currently 2.35% of each premium.
8
<PAGE>
. DAC tax charge - A charge to cover the increased Federal income tax
----------------
burden that we currently expect will result from receipt of premiums. This
charge is currently 1.25% of each premium.
. Premium processing charge - A charge to help defray our administrative
---------------------------
costs. This charge is 1.25% of each premium.
. Sales charge - A charge to help defray our sales costs. The charge is 30%
--------------
of premiums paid in the first policy year up to the Target Premium, 10% of
premiums received in each of policy years 2 through 10 up to the Target
Premium, 4% of premiums received in each policy year after policy year 10 up
to the Target Premium, and 3.5% of premiums received in any policy year in
excess of the Target Premium. If premium received in the first policy year is
less than the Target Premium, then premium received in the second policy year
will be treated as if received in the first policy year until first year
premiums equal the Target Premium. The "Target Premium" is determined at the
time the policy is issued and will appear in the "Policy Specifications"
section of the policy.
. Optional enhanced cash value rider charge - A charge imposed if you elect
-------------------------------------------
this rider. It is deducted only from premiums received in the first two policy
years. The charge is 2% of premiums received in the first two policy years
until the total charges deducted equal 2% of one year's Target Premium.
Deductions from account value
. Issue charge - A monthly charge to help defray our administrative costs.
--------------
This is a charge per $1,000 of Basic Sum Insured at issue that varies by age
and that is deducted only during the first ten policy years. The charge will
appear in the "Policy Specifications" section of the policy. As an example,
the monthly charge for a 45 year old is 10c per $1,000 of Basic Sum Insured.
The monthly charge will be at least $5 and is guaranteed not to exceed $200.
. Administrative charge - A monthly charge to help defray our
-----------------------
administrative costs. This is a flat dollar charge of up to $10 (currently
$5).
. Insurance charge - A monthly charge for the cost of insurance. To
------------------
determine the charge, we multiply the amount of insurance for which we are
at risk by a cost of insurance rate. The rate is derived from an actuarial
table. The table in your policy will show the maximum cost of insurance
-------
rates. The cost of insurance rates that we currently apply are generally less
than the maximum rates. We will review the cost of insurance rates at least
every 5 years and may change them from time to time. However, those rates will
never be more than the maximum rates shown in the policy. The table of rates
we use will depend on the insurance risk characteristics and (usually) gender
of the insured person, the Total Sum Insured and the length of time the policy
has been in effect. Regardless of the table used, cost of insurance rates
generally increase each year that you own your policy, as the insured person's
attained age increases. (The insured person's "attained age" on any date is
his or her age on the birthday nearest that date.) Higher current insurance
rates are generally applicable to policies issued on a "guaranteed issue"
basis, where only very limited underwriting information is obtained. This is
often the case with policies issued to trustees, employers and similar
entities.
9
<PAGE>
. Extra mortality charge - A monthly charge specified in your policy for
------------------------
additional mortality risk if the insured person is subject to certain types of
special insurance risk.
. M &E charge - A daily charge for mortality and expense risks we assume.
-------------
This charge is deducted from the variable investment options. It does not
apply to the fixed investment option. The current charge is at an effective
annual rate of .20% of the value of the assets in each variable investment
option. We guarantee that this charge will never exceed an effective annual
rate of .60%.
. Guaranteed minimum death benefit charge - A monthly charge beginning in
-----------------------------------------
the eleventh policy year if the guaranteed minimum death benefit feature is
elected to extend beyond the first ten policy years. This charge is currently
1c per $1,000 of Basic Sum Insured and is guaranteed not to exceed 3c per
$1,000 of Basic Sum Insured. Because policies of this type were first offered
in 1998, this charge is not yet applicable to any policy at the current rate.
. Optional benefits charge - Monthly charges for any optional insurance
--------------------------
benefits added to the policy by means of a rider (other than the optional
enhanced cash value rider).
. Partial withdrawal charge - A charge for each partial withdrawal of
-------------------------
account value to compensate us for the administrative expenses of processing
the withdrawal. The charge is equal to the lesser of $20 or 2% of the
withdrawal amount.
WHAT CHARGES WILL THE TRUSTS DEDUCT FROM MY INVESTMENT IN THE POLICY?
The Trusts must pay investment management fees and other operating expenses.
These fees and expenses are different for each fund and reduce the investment
return of each fund. Therefore, they also indirectly reduce the return you will
earn on any variable investment options you select.
The following figures for the funds are based on historical fund expenses, as
a percentage (rounded to two decimal places) of each fund's average daily net
assets for 1999, except as indicated in the Notes appearing at the end of this
table. Expenses of the funds are not fixed or specified under the terms of the
policy, and those expenses may vary from year to year.
<TABLE>
<CAPTION>
Investment Distribution and Other Operating Total Fund Other Operating
Management Service Expenses With Operating Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Expenses Reimbursement
--------- ---------- ---------------- --------------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
JOHN HANCOCK VARIABLE SERIES TRUST I
(NOTE 1):
Managed . . . . . . . . . . . . . . . . 0.67% N/A 0.03% 0.70% 0.03%
Growth & Income . . . . . . . . . . . . 0.67% N/A 0.03% 0.70% 0.03%
Equity Index . . . . . . . . . . . . . 0.14% N/A 0.00% 0.14% 0.08%
American Leaders Large Cap Value. . . . 0.80% N/A 0.10% 0.90% N/A
Large Cap Growth . . . . . . . . . . . 0.36% N/A 0.03% 0.39% 0.03%
Large Cap Aggressive Growth . . . . . . 0.98% N/A 0.10% 1.08% 0.19%
Mid Cap Value . . . . . . . . . . . . . 0.80% N/A 0.10% 0.90% 0.12%
Mid Cap Growth . . . . . . . . . . . . 0.82% N/A 0.10% 0.92% 0.11%
Fundamental Growth * . . . . . . . . . 0.90% N/A 0.10% 1.00% 0.24%
Real Estate Equity . . . . . . . . . . 1.01% N/A 0.10% 1.11% 0.10%
Small/Mid Cap CORE /SM/ . . . . . . . . 0.80% N/A 0.10% 0.90% 0.66%
Small/Mid Cap Growth . . . . . . . . . 0.75% N/A 0.10% 0.85% 0.10%
Small Cap Equity * . . . . . . . . . . 0.90% N/A 0.10% 1.00% 0.16%
Small Cap Growth . . . . . . . . . . . 0.75% N/A 0.10% 0.85% 0.14%
Global Balanced * . . . . . . . . . . . 1.05% N/A 0.10% 1.15% 0.46%
International Equity Index . . . . . . 0.16% N/A 0.10% 0.26% 0.22%
International Opportunities . . . . . . 0.87% N/A 0.10% 0.97% 0.29%
Emerging Markets Equity . . . . . . . . 1.27% N/A 0.10% 1.37% 2.17%
Short-Term Bond . . . . . . . . . . . . 0.30% N/A 0.10% 0.40% 0.13%
Bond Index . . . . . . . . . . . . . . 0.15% N/A 0.10% 0.25% 0.20%
Active Bond * . . . . . . . . . . . . . 0.61% N/A 0.03% 0.64% 0.03%
Core Bond . . . . . . . . . . . . . . . 0.70% N/A 0.10% 0.80% N/A
Global Bond . . . . . . . . . . . . . . 0.85% N/A 0.10% 0.95% 0.15%
High Yield Bond . . . . . . . . . . . . 0.65% N/A 0.10% 0.75% 0.39%
Money Market . . . . . . . . . . . . . 0.25% N/A 0.06% 0.31% 0.06%
AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. Value . . . . . . . . . . . . 0.61% N/A 0.15% 0.76% 0.15%
VARIABLE INSURANCE PRODUCTS FUND -
SERVICE CLASS (NOTE 2):
Fidelity VIP Growth . . . . . . . . . . 0.58% 0.10% 0.07% 0.75% 0.09%
VARIABLE INSURANCE PRODUCTS FUND II -
SERVICE CLASS (NOTE 2):
Fidelity VIP Contrafund/(R)/ . . . . . 0.58% 0.10% 0.07% 0.75% 0.10%
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - CLASS 2 SHARES (NOTE 3):
Templeton International Securities . . 0.69% 0.25% 0.19% 1.13% 0.19%
JANUS ASPEN SERIES - SERVICE SHARES
CLASS (NOTE 4):
Janus Aspen Global Technology . . . . . 0.65% 0.25% 0.13% 1.03% 0.13%
Janus Aspen Worldwide Growth. . . . . . 0.65% 0.25% 0.05% 0.95% 0.05%
MFS VARIABLE INSURANCE TRUST
(NOTE 5):
MFS New Discovery . . . . . . . . . . . 0.90% N/A 0.17% 1.07% 1.59%
M FUND, INC. (NOTE 6):
Brandes International Equity . . . . . 0.96% N/A 0.25% 1.21% 0.97%
Turner Core Growth . . . . . . . . . . 0.45% N/A 0.25% 0.70% 0.95%
Frontier Capital Appreciation . . . . . 0.90% N/A 0.25% 1.15% 0.57%
Clifton Enhanced U.S. Equity ** . . . . 0.55% N/A 0.25% 0.80% 1.08%
</TABLE>
10
<PAGE>
NOTES TO FUND EXPENSE TABLE
(1) John Hancock Variable Series Trust I funds' percentages for "other fund
expenses" are based on the allocation methodology and expense reimbursement
policy adopted April 23, 1999, and are calculated as if that allocation
methodology and expense reimbursement policy had been in effect for all of
1999. Under the expense reimbursement policy, John Hancock Life Insurance
Company voluntarily reimburses a fund when the fund's "other fund expenses"
exceed 0.10% of the fund's average daily net assets (0.00% for Equity
Index). All percentages for the American Leaders Large Cap Value Fund and
the Core Bond Fund are estimates for the current fiscal year because the
funds were not in operation in 1999. Shareholders of the Managed, Growth &
Income, Fundamental Growth, Real Estate Equity, Small Cap Equity, Global
Balanced, Active Bond, and Global Bond funds have approved new management
fee schedules, which apply to those funds effective November 1, 2000. The
investment management fee percentages for each of those funds are calculated
as if those new fee schedules had been
in effect for all of 1999. The investment management fee percentages for
all other funds reflect the
11
<PAGE>
investment management fees that were actually payable for 1999.
*Fundamental Growth was formerly "Fundamental Mid Cap Growth", Small Cap
Equity was formerly "Small Cap Value", Global Balanced was formerly
"International Balanced" and Active Bond was formerly "Sovereign Bond".
CORE /SM/ IS A SERVICE MARK OF GOLDMAN, SACHS & CO.
(2) A portion of the brokerage commissions that certain of the Fidelity VIP
funds pay was used to reduce fund expenses. In addition, through
arrangements with certain funds' custodian, credits realized as a result of
uninvested cash balances were used to reduce a portion of each applicable
fund's expenses. Without these reductions, the operating expenses of the
funds would have been higher, as shown in the last column of this table.
(3) On February 8, 2000, shareholders of each fund approved a merger and
reorganization that combined the Templeton International Equity Fund with
the Templeton International Securities Fund, effective May 1, 2000.
Shareholders of the Templeton International Securities Fund had approved new
management fees, which apply to the combined funds effective May 1, 2000.
The table shows restated total expenses for the fund based on the new fees
and the assets, as of December 31, 1999, of the Templeton International
Securities Fund. However, if the table reflected both the new fees and the
combined assets of the Templeton International Equity Fund and the Templeton
International Securities Fund, the estimated expenses for the two funds
combined after May 1, 2000 would be: Management Fees 0.65%, Distribution and
Service Fees 0.25%, Other Expenses 0.20%, and Total Fund Operating Expenses
1.10%.
(4) The percentages for the new Service Shares Class of the Janus Aspen Global
Technology Fund and the Janus Aspen Worldwide Growth Fund are estimates
because the Service Shares Class was not in operation in 1999.
All such estimates have been made without regard to the effect of any
expense offset arrangements.
(5) MFS Variable Insurance Trust Funds have an expense offset arrangement
which reduces each fund's custodian fee based upon the amount of cash
maintained by the fund with its custodian and dividend disbursing agent.
Each fund may enter into other such arrangements and directed brokerage
arrangements, which would also have the effect of reducing the fund's
expenses. Expenses do not take into account these expense reductions, and
are therefore higher than the actual expenses of the fund. MFS Investment
Management(R) (also doing business as Massachusetts Financial Services
Company) has contractually agreed to bear expense for the New Discovery
Fund, subject to reimbursement by the fund, such that such fund's "other
fund expenses" shall not exceed 0.15% of the average daily net assets of the
fund during the current fiscal year.
(6) M Fund, Inc. Funds' percentages reflect the investment management fees
currently payable and other fund expenses allocated in 1999. M Financial
Advisers, Inc. reimburses a Fund when the Fund's other operating expenses
exceed 0.25% of that Fund's average daily net assets.
** Clifton Enhanced U.S. Equity Fund was formerly "Enhanced U.S. Equity
Fund".
WHAT OTHER CHARGES COULD JHVLICO IMPOSE IN THE FUTURE?
Except for the DAC tax charge, we currently make no charge for our Federal
income taxes. However, if we incur, or expect to incur, additional income taxes
attributable to any subaccount of the Account or this class of policies in
future years, we reserve the right to make a charge for such taxes. Any such
charge would reduce what you earn on any affected investment options. However,
we expect that no such charge will be necessary.
12
<PAGE>
We also reserve the right to increase the premium tax charge and the DAC tax
charge in order to correspond, respectively, with changes in the state premium
tax levels and with changes in the Federal income tax treatment of the deferred
acquisition costs for this type of policy.
Under current laws, we may incur state and local taxes (in addition to premium
taxes) in several states. At present, these taxes are not significant. If there
is a material change in applicable state or local tax laws, we may make charges
for such taxes.
HOW CAN I CHANGE MY POLICY'S INVESTMENT ALLOCATIONS?
Future premium payments
At any time, you may change the investment options in which future premium
payments will be invested. You make the original allocation in the application
for the policy. The percentages you select must be in whole numbers and must
total 100%.
Transfers of existing account value
You may also transfer your existing account value from one investment option
to another. To do so, you must tell us how much to transfer, either as a whole
number percentage or as a specific dollar amount.
Under our current rules, you can make transfers out of any variable investment
option anytime you wish. However, transfers out of the fixed investment option
are currently subject to the following restrictions:
.You can only make such a transfer once a year and only during the 31 day
period following your policy anniversary.
.We must receive the request for such a transfer during the period beginning
60 days prior to the policy anniversary and ending 30 days after it.
.The most you can transfer at any one time is the greater of $500 or 20% of
the assets in your fixed investment option.
We reserve the right to impose a minimum amount limit on transfers out of the
fixed investment option. We also reserve the right to impose limits on the
number and frequency of transfers out of the variable investment options.
HOW CAN I ACCESS MY INVESTMENT IN THE POLICY?
Full surrender
You may surrender your policy in full at any time. If you do, we will pay you
the account value less any policy loans. This is called your "surrender value."
You must return your policy when you request a full surrender.
Partial withdrawals
You may make a partial withdrawal of your surrender value at any time. Each
partial withdrawal must be at least $1,000. There is a charge (usually $20) for
each partial withdrawal.
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<PAGE>
We will automatically reduce the account value of your policy by the amount of
the withdrawal and the related charge. Each investment option will be reduced in
the same proportion as the account value is then allocated among them. We will
not permit a partial withdrawal if it would cause your account value to fall
below 3 months' worth of monthly charges (see "Deductions from account value" on
page 9). We also reserve the right to refuse any partial withdrawal that would
cause the policy's Total Sum Insured to fall below $250,000. Any partial
withdrawal (other than a Terminated ASI Withdrawal Amount, as described below)
will reduce your death benefit under any of the death benefit options (see "How
much will JHVLICO pay when the insured person dies?" on page 15) and under the
guaranteed death benefit feature (see page 7). Under Option A or Option M, such
a partial withdrawal will reduce the Total Sum Insured. Under Option B, such a
partial withdrawal will reduce your account value. Under the guaranteed death
benefit feature, such a partial withdrawal will reduce the Basic Sum Insured. A
"Terminated ASI Withdrawal Amount" is any partial withdrawal made while there is
an Additional Sum Insured under the policy that later lapses as described on
page 7. The total of all Terminated ASI Withdrawal Amounts cannot exceed the
Additional Sum Insured in effect immediately before the Additional Sum Insured
lapses.
Policy loans
You may borrow from your policy at any time by completing a form satisfactory
to us or, if the telephone transaction authorization form has been completed, by
telephone. However, you can't borrow from your policy during a "grace period"
(see "Lapse and reinstatement" on page 7). The maximum amount you can borrow is
determined as follows:
. We first determine the account value of your policy.
. We then subtract an amount equal to 12 times the monthly charges then
being deducted from account value.
. We then multiply the resulting amount by .75% in policy years 1 through
20 and .25% thereafter.
. We then subtract the third item above from the second item above.
The minimum amount of each loan is $1,000. The interest charged on any loan is
an effective annual rate of 4.75% in the first 20 policy years and 4.25%
thereafter. Accrued interest will be added to the loan daily and will bear
interest at the same rate as the original loan amount. The amount of the loan is
deducted from the investment options in the same proportion as the account value
is then allocated among them and is placed in a special loan account. This
special loan account will earn interest at an effective annual rate of 4.0%.
However, if we determine that a loan will be treated as a taxable distribution
because of the differential between the loan interest rate and the rate being
credited on the special loan account, we reserve the right to decrease the rate
credited on the special loan account to a rate that would, in our reasonable
judgement, result in the transaction being treated as a loan under Federal tax
law.
You can repay all or part of a loan at any time. Each repayment will be
allocated among the investment options as follows:
14
<PAGE>
. The same proportionate part of the loan as was borrowed from the fixed
investment option will be repaid to the fixed investment option.
. The remainder of the repayment will be allocated among the investment
options in the same way a new premium payment would be allocated.
If you want a payment to be used as a loan repayment, you must include
instructions to that effect. Otherwise, all payments will be assumed to be
premium payments.
HOW MUCH WILL JHVLICO PAY WHEN THE INSURED PERSON DIES?
In your application for the policy, you will tell us how much life insurance
coverage you want on the life of the insured person. This is called the "Total
Sum Insured." Total Sum Insured is composed of the Basic Sum Insured and any
Additional Sum Insured you elect. The only limitation on how much Additional Sum
Insured you can have is that it cannot exceed 400% of the Basic Sum Insured.
There are a number of factors you should consider in determining whether to
elect coverage in the form of Basic Sum Insured or in the form of Additional Sum
Insured. These factors are discussed under "Basic Sum Insured vs. Additional Sum
Insured" on page 35.
When the insured person dies, we will pay the death benefit minus any
outstanding loans. There are three ways of calculating the death benefit. You
choose which one you want in the application. The three death benefit options
are:
. Option A - The death benefit will equal the greater of (1) the Total Sum
Insured, or (2) the minimum insurance amount (as described below).
. Option B -The death benefit will equal the greater of (1) the Total Sum
Insured plus your policy's account value on the date of death, or (2) the
minimum insurance amount.
. Option M - The death benefit will equal the greater of (1) the Total Sum
Insured plus any optional extra death benefit (as described below), or
(2) the minimum insurance amount.
For the same premium payments, the death benefit under Option B will tend to
be higher than the death benefit under Option A or Option M. On the other hand,
the monthly insurance charge will be higher under Option B to compensate us for
the additional insurance risk. Because of that, the account value will tend to
be higher under Option A or Option M than under Option B for the same premium
payments.
Optional extra death benefit feature
The optional extra death benefit is determined as follows:
. First, we multiply your account value by a factor specified in the
policy. The factor is based on the insured person's age on the date of
calculation.
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<PAGE>
. We will then subtract your Total Sum Insured.
If you change the way in which the minimum insurance amount is calculated (see
below), we may have to change the factors described above (perhaps
retroactively) in order to maintain qualification of the policy as life
insurance under Federal tax law. This feature may result in the Option M death
benefit being higher than the minimum insurance amount. Although there is no
special charge for this feature, your monthly insurance charge will be based on
that higher death benefit amount. Election of this feature must be made in the
application for the policy.
The minimum insurance amount
In order for a policy to qualify as life insurance under Federal tax law,
there has to be a minimum amount of insurance in relation to account value.
There are two tests that can be applied under Federal tax law - - the "guideline
premium and cash value corridor test" and the "cash value accumulation test."
When you elect the death benefit option, you must also elect which test you wish
to have applied. Under the guideline premium and cash value corridor test, we
compute the minimum insurance amount each business day by multiplying the
account value on that date by the "required additional death benefit factor"
applicable on that date. In this case, the death benefit factors are derived by
applying the guideline premium and cash value corridor test. The death benefit
factor starts out at 2.50 for ages at or below 40 and decreases as attained age
increases, reaching a low of 1.0 at age 95. Under the cash value accumulation
test, we compute the minimum insurance amount each business day by multiplying
the account value on that date by the death benefit factor applicable on that
date. In this case, the death benefit factors are derived by applying the cash
value accumulation test. The death benefit factor decreases as attained age
increases. Regardless of which tesy you elect, a table showing the required
additional death benefit factor for each age will appear in the policy.
As noted above, you have to elect which test will be applied when you elect
the death benefit option. The cash value accumulation test may be preferable if
you want an increasing death benefit in later policy years and/or want to fund
the policy at the "7 pay" limit for the full 7 years (see "Tax Considerations"
beginning on page 40). The guideline premium and cash value corridor test may be
preferable if you want the account value under the policy to increase without
increasing the death benefit as quickly as might otherwise be required.
Enhanced cash value rider
In the application for the policy, you may elect to purchase the enhanced cash
value rider. This rider provides an enhanced cash value benefit (in addition to
the surrender value) if you surrender the policy within the first nine policy
years. The amount of the benefit will be shown in the "Policy Specifications"
section of the policy. The benefit is also included in the account value when
calculating the death benefit. Election of this rider could increase your
insurance charge since it affects our amount at risk under the policy. The
amount available for partial withdrawals and loans are based on the surrender
value and will in no way be increased due to this rider.
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<PAGE>
HOW CAN I CHANGE MY POLICY'S INSURANCE COVERAGE?
Increase in coverage
The Basic Sum Insured generally cannot be increased after policy issue. After
the first policy year, you may request an increase in the Additional Sum Insured
at any time. However, you will have to provide us with evidence that the insured
person still meets our requirements for issuing insurance coverage. As to when
an approved increase would take effect, see "Effective date of other policy
transactions" on page 37.
Decrease in coverage
The Basic Sum Insured generally cannot be decreased after policy issue. After
the first policy year, you may request a reduction in the Additional Sum Insured
at any time, but only if:
. the remaining Total Sum Insured will be at least $250,000, and
. the remaining Total Sum Insured will at least equal the minimum required
by the tax laws to maintain the policy's life insurance status.
We may refuse any decrease in Additional Sum Insured if it would cause the
death benefit to reflect an increase pursuant to the optional extra death
benefit feature. As to when an approved decrease would take effect, see
"Effective date of other policy transactions" on page 37.
Change of death benefit option
At any time, you may request to change your coverage from death benefit Option
B to Option A. Our administrative systems do not currently permit any other
change of death benefit option. Such changes may be permitted in the future, but
that is not guaranteed.
Tax consequences
Please read "Tax considerations" starting on page 40 to learn about possible
tax consequences of changing your insurance coverage under the policy.
CAN I CANCEL MY POLICY AFTER IT'S ISSUED?
You have the right to cancel your policy within 10 days after you receive it
(this period may be longer in some states). This is often referred to as the
"free look" period. To cancel your policy, simply deliver or mail the policy to
JHVLICO at one of the addresses shown on page 2, or to the JHVLICO
representative who delivered the policy to you.
In most states, you will receive a refund of any premiums you've paid. In some
states, the refund will be your account value on the date of cancellation plus
all charges deducted by JHVLICO or the Trusts prior to that date. The date of
cancellation will be the date of such mailing or delivery.
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<PAGE>
CAN I CHOOSE THE FORM IN WHICH JHVLICO PAYS OUT POLICY PROCEEDS?
Choosing a payment option
You may choose to receive proceeds from the policy as a single sum. This
includes proceeds that become payable because of death or full surrender.
Alternatively, you can elect to have proceeds of $1,000 or more applied to any
of a number of other payment options, including the following:
. Option 1 - Proceeds left with us to accumulate with interest
. Option 2A - Equal monthly payments of a specified amount until all
proceeds are paid out
. Option 2B - Equal monthly payments for a specified period of time
. Option 3 - Equal monthly payments for life, but with payments guaranteed
for a specific number of years
. Option 4 - Equal monthly payments for life with no refund
. Option 5 - Equal monthly payments for life with a refund if all of the
proceeds haven't been paid out
You cannot choose an option if the monthly payments under the option would be
less than $50. We will issue a supplementary agreement when the proceeds are
applied to any alternative payment option. That agreement will spell out the
terms of the option in full. We will credit interest on each of the above
options. For Options 1 and 2A, the interest will be at least an effective annual
rate of 3 1/2%.
Changing a payment option
You can change the payment option at any time before the proceeds are payable.
If you haven't made a choice, the payee of the proceeds has a prescribed period
in which he or she can make that choice.
Tax impact
There may be tax consequences to you or your beneficiary depending upon which
payment option is chosen. You should consult with a qualified tax adviser before
making that choice.
TO WHAT EXTENT CAN JHVLICO VARY THE TERMS AND CONDITIONS OF ITS POLICIES IN
PARTICULAR CASES?
Listed below are some variations we can make in the terms of our policies. Any
variation will be made only in accordance with uniform rules that we apply
fairly to all of our customers.
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<PAGE>
State law insurance requirements
Insurance laws and regulations apply to JHVLICO in every state in which its
policies are sold. As a result, various terms and conditions of your insurance
coverage may vary from the terms and conditions described in this prospectus,
depending upon where you reside. These variations will be reflected in your
policy or in endorsements attached to your policy.
Variations in expenses or risks
We may vary the charges and other terms of our policies where special
circumstances result in sales or administrative expenses, mortality risks or
other risks that are different from those normally associated with the policies.
These include the type of variations discussed under "Reduced charges for
eligible classes" on page 38. No variation in any charge will exceed any maximum
stated in this prospectus with respect to that charge.
HOW WILL MY POLICY BE TREATED FOR INCOME TAX PURPOSES?
Generally, death benefits paid under policies such as yours are not subject to
income tax. Earnings on your account value are not subject to income tax as long
as we don't pay them out to you. If we do pay out any amount of your account
value upon surrender or partial withdrawal, all or part of that distribution
should generally be treated as a return of the premiums you've paid and should
not be subject to income tax. Amounts you borrow are generally not taxable to
you.
However, some of the tax rules change if your policy is found to be a
"modified endowment contract." This can happen if you've paid more than a
certain amount of premiums that is prescribed by the tax laws. Additional taxes
and penalties may be payable for policy distributions of any kind.
For further information about the tax consequences of owning a policy, please
read "Tax considerations" beginning on page 40.
HOW DO I COMMUNICATE WITH JHVLICO?
General Rules
You should mail or express all checks and money orders for premium payments
and loan repayments to the JHVLICO Life Servicing Office at the appropriate
address shown on page 2.
Certain requests must be made in writing and be signed and dated by you. They
include the following:
. loans, surrenders or partial withdrawals
. transfers of account value among investment options
. change of allocation among investment options for new premium
payments
. change of death benefit option
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<PAGE>
. increase or decrease in Total Sum Insured
. change of beneficiary
. election of payment option for policy proceeds
. tax withholding elections
. election of telephone transaction privilege
You should mail or express these requests to the JHVLICO Life Servicing Office
at the appropriate address shown on page 2. You should also send notice of the
insured person's death and related documentation to the JHVLICO Life Servicing
Office. We don't consider that we've "received" any communication until such
time as it has arrived at the proper place and in the proper and complete form.
We have special forms that should be used for a number of the requests
mentioned above. You can obtain these forms from the JHVLICO Life Servicing
Office or your JHVLICO representative. Each communication to us must include
your name, your policy number and the name of the insured person. We cannot
process any request that doesn't include this required information. Any
communication that arrives after the close of our business day, or on a day that
is not a business day, will be considered "received" by us on the next following
business day. Our business day currently closes at 4:00 p.m. Eastern Standard
Time, but special circumstances (such as suspension of trading on a major
exchange) may dictate an earlier closing time.
Telephone Transactions
If you complete a special authorization form, you can request loans, transfers
among investment options and changes of allocation among investment options
simply by telephoning us at 1-800-521-1234 or by faxing us at 1-617-572-6956.
Any fax request should include your name, daytime telephone number, policy
number and, in the case of transfers and changes of allocation, the names of the
investment options involved. We will honor telephone instructions from anyone
who provides the correct identifying information, so there is a risk of loss to
you if this service is used by an unauthorized person. However, you will receive
written confirmation of all telephone transactions. There is also a risk that
you will be unable to place your request due to equipment malfunction or heavy
phone line usage. If this occurs, you should submit your request in writing.
The policies are not designed for professional market timing organizations or
other entities that use programmed and frequent transfers among investment
options. For reasons such as that, we reserve the right to change our telephone
transaction policies or procedures at any time. We also reserve the right to
suspend or terminate the privilege altogether.
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<PAGE>
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES AND
ACCUMULATED PREMIUMS
The following tables illustrate the changes in death benefit, account value
and surrender value of the policy under certain hypothetical circumstances that
we assume solely for this purpose. Each table separately illustrates the
operation of a policy for a specified issue age, premium payment schedule and
Total Sum Insured. The amounts shown are for the end of each policy year and
assume that all of the account value is invested in funds that achieve
investment returns at constant annual rates of 0%, 6% and 12% (i.e., before any
fees or expenses deducted from Trust assets). After the deduction of average
fees and expenses at the Trust level (as described below) the corresponding net
annual rates of return would be -0.82%, 5.13% and 11.08%. (Investment return
reflects investment income and all realized and unrealized capital gains and
losses.) The tables assume annual Planned Premiums that are paid at the
beginning of each policy year for an insured person who is a 45 year old male
preferred underwriting risk when the policy is issued.
Tables are provided for each of the two death benefit options. The tables
headed "Current Charges" assume that the current rates for all charges deducted
by JHVLICO will apply in each year illustrated. The tables headed "Maximum
Charges" are the same, except that the maximum permitted rates for all years are
used for all charges. The tables do not reflect any charge that we reserve the
right to make but are not currently making.
With respect to fees and expenses deducted from Trust assets, the amounts
shown in all tables reflect (1) investment management fees equivalent to an
effective annual rate of .71%, and (2) an assumed average asset charge for all
other Trust operating expenses equivalent to an effective annual rate of .11%.
These rates are the arithmetic average for all funds of the Trusts. In other
words, they are based on the hypothetical assumption that policy account values
are allocated equally among the variable investment options. The actual rates
associated with any policy will vary depending upon the actual allocation of
policy values among the investment options. The charge shown above for all other
Trust operating expenses reflects reimbursements to certain funds as described
in the footnotes to the table beginning on page 10. We currently expect those
reimbursement arrangements to continue indefinitely, but that is not guaranteed.
The second column of each table shows the amount you would have at the end of
each policy year if an amount equal to the assumed Planned Premiums were
invested to earn interest, after taxes, at 5% compounded annually. This is not a
policy value. It is included for comparison purposes only.
Because your circumstances will no doubt differ from those in the
illustrations that follow, values under your policy will differ, in most cases
substantially. Upon request, we will furnish you with a comparable illustration
reflecting your proposed insured person's issue age, sex and underwriting risk
classification, and the Total Sum Insured and annual Planned Premium amount
requested.
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PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION A DEATH BENEFIT
CASH VALUE ACCUMULATION TEST NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH
POLICY YEAR PLANNED PREMIUM: $4,530* USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
--------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at --------------------------- --------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- --------- ------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 250,000 250,000 250,000 2,188 2,339 2,492
2 9,751 250,000 250,000 250,000 5,213 5,707 6,220
3 14,995 250,000 250,000 250,000 8,177 9,210 10,323
4 20,501 250,000 250,000 250,000 11,099 12,874 14,862
5 26,283 250,000 250,000 250,000 13,995 16,724 19,901
6 32,353 250,000 250,000 250,000 16,867 20,771 25,499
7 38,727 250,000 250,000 250,000 19,719 25,030 31,721
8 45,420 250,000 250,000 250,000 22,550 29,510 38,634
9 52,448 250,000 250,000 250,000 25,360 34,221 46,314
10 59,827 250,000 250,000 250,000 28,142 39,169 54,841
11 67,575 250,000 250,000 250,000 31,452 44,947 64,915
12 75,710 250,000 250,000 250,000 34,690 50,978 76,067
13 84,252 250,000 250,000 250,000 37,828 57,251 88,395
14 93,221 250,000 250,000 250,000 40,863 63,776 102,035
15 102,638 250,000 250,000 250,000 43,801 70,573 117,147
16 112,527 250,000 250,000 250,935 46,637 77,657 133,903
17 122,910 250,000 250,000 278,487 49,369 85,044 152,437
18 133,812 250,000 250,000 308,040 51,992 92,749 172,881
19 145,259 250,000 250,000 339,791 54,500 100,789 195,428
20 157,278 250,000 250,000 373,962 56,887 109,186 220,289
25 227,014 250,000 250,000 588,179 65,881 156,742 387,189
30 316,016 250,000 298,781 906,499 70,782 216,807 657,789
35 429,609 250,000 368,732 1,390,932 67,911 289,497 1,092,040
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
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<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION A DEATH BENEFIT
CASH VALUE ACCUMULATION TEST NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH
POLICY YEAR PLANNED PREMIUM: $4,530* USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------- -----------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ------------------------- -----------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 250,000 250,000 250,000 1,375 1,500 1,627
2 9,751 250,000 250,000 250,000 3,543 3,933 4,340
3 14,995 250,000 250,000 250,000 5,595 6,388 7,249
4 20,501 250,000 250,000 250,000 7,527 8,863 10,371
5 26,283 250,000 250,000 250,000 9,331 11,350 13,720
6 32,353 250,000 250,000 250,000 11,001 13,843 17,318
7 38,727 250,000 250,000 250,000 12,520 16,324 21,174
8 45,420 250,000 250,000 250,000 13,873 18,778 25,306
9 52,448 250,000 250,000 250,000 15,042 21,187 29,728
10 59,827 250,000 250,000 250,000 16,007 23,528 34,458
11 67,575 250,000 250,000 250,000 17,326 26,384 40,148
12 75,710 250,000 250,000 250,000 18,412 29,173 46,280
13 84,252 250,000 250,000 250,000 19,257 31,889 52,911
14 93,221 250,000 250,000 250,000 19,847 34,517 60,100
15 102,638 250,000 250,000 250,000 20,165 37,041 67,913
16 112,527 250,000 250,000 250,000 20,182 39,430 76,422
17 122,910 250,000 250,000 250,000 19,861 41,651 85,708
18 133,812 250,000 250,000 250,000 19,157 43,659 95,864
19 145,259 250,000 250,000 250,000 18,011 45,397 106,999
20 157,278 250,000 250,000 250,000 16,367 46,810 119,254
25 227,014 ** 250,000 307,413 ** 46,817 202,365
30 316,016 ** 250,000 447,217 ** 23,713 324,517
35 429,609 ** ** 631,413 ** ** 495,731
</TABLE>
*The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
23
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION B DEATH BENEFIT
CASH VALUE ACCUMULATION TEST NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH
POLICY YEAR PLANNED PREMIUM: $4,530* USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
--------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at --------------------------- --------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- --------- ------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 252,184 252,335 252,487 2,184 2,335 2,487
2 9,751 255,200 255,693 256,204 5,200 5,693 6,204
3 14,995 258,148 259,177 260,285 8,148 9,177 10,285
4 20,501 261,049 262,814 264,791 11,049 12,814 14,791
5 26,283 263,917 266,628 269,784 13,917 16,628 19,784
6 32,353 266,756 270,630 275,318 16,756 20,630 25,318
7 38,727 269,572 274,833 281,459 19,572 24,833 31,459
8 45,420 272,360 279,246 288,269 22,360 29,246 38,269
9 52,448 275,124 283,879 295,822 25,124 33,879 45,822
10 59,827 277,854 288,734 304,190 27,854 38,734 54,190
11 67,575 281,103 294,401 314,064 31,103 44,401 64,064
12 75,710 284,268 300,293 324,955 34,268 50,293 74,955
13 84,252 287,313 306,385 336,936 37,313 56,385 86,936
14 93,221 290,232 312,679 350,118 40,232 62,679 100,118
15 102,638 293,030 319,188 364,633 43,030 69,188 114,633
16 112,527 295,700 325,915 380,619 45,700 75,915 130,619
17 122,910 298,236 332,862 398,228 48,236 82,862 148,228
18 133,812 300,629 340,031 417,625 50,629 90,031 167,625
19 145,259 302,868 347,418 438,990 52,868 97,418 188,990
20 157,278 304,945 355,025 462,527 54,945 105,025 212,527
25 227,014 311,310 394,859 619,827 61,310 144,859 369,827
30 316,016 311,844 439,198 876,011 61,844 189,198 626,011
35 429,609 301,676 483,336 1,324,541 51,676 233,336 1,039,916
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
24
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION B DEATH BENEFIT
CASH VALUE ACCUMULATION TEST NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH
POLICY YEAR PLANNED PREMIUM: $4,530* USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------- -----------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ------------------------- -----------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 251,365 251,490 251,616 1,365 1,490 1,616
2 9,751 253,513 253,899 254,303 3,513 3,899 4,303
3 14,995 255,531 256,315 257,165 5,531 6,315 7,165
4 20,501 257,416 258,731 260,213 7,416 8,731 10,213
5 26,283 259,157 261,135 263,455 9,157 11,135 13,455
6 32,353 260,750 263,519 266,903 10,750 13,519 16,903
7 38,727 262,173 265,858 270,553 12,173 15,858 20,553
8 45,420 263,412 268,133 274,409 13,412 18,133 24,409
9 52,448 264,447 270,318 278,468 14,447 20,318 28,468
10 59,827 265,255 272,383 282,725 15,255 22,383 32,725
11 67,575 266,390 274,897 287,800 16,390 24,897 37,800
12 75,710 267,262 277,269 293,141 17,262 27,269 43,141
13 84,252 267,864 279,482 298,765 17,864 29,482 48,765
14 93,221 268,182 281,511 304,682 18,182 31,511 54,682
15 102,638 268,200 283,325 310,901 18,200 33,325 60,901
16 112,527 267,890 284,882 317,419 17,890 34,882 67,419
17 122,910 267,217 286,131 324,225 17,217 36,131 74,225
18 133,812 266,138 287,008 331,299 16,138 37,008 81,299
19 145,259 264,604 287,438 338,610 14,604 37,438 88,610
20 157,278 262,566 287,345 346,123 12,566 37,345 96,123
25 227,014 ** 276,445 385,660 ** 26,445 135,660
30 316,016 ** ** 421,564 ** ** 171,564
35 429,609 ** ** 431,194 ** ** 181,194
</TABLE>
*The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
25
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION M DEATH BENEFIT
CASH VALUE ACCUMULATION TEST NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH
POLICY YEAR PLANNED PREMIUM: $4,530* USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
--------------------------- ------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at --------------------------- ------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- --------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 250,000 250,000 250,000 2,188 2,339 2,492
2 9,751 250,000 250,000 250,000 5,213 5,707 6,220
3 14,995 250,000 250,000 250,000 8,177 9,210 10,323
4 20,501 250,000 250,000 250,000 11,099 12,874 14,862
5 26,283 250,000 250,000 250,000 13,995 16,724 19,901
6 32,353 250,000 250,000 250,000 16,867 20,771 25,499
7 38,727 250,000 250,000 250,000 19,719 25,030 31,721
8 45,420 250,000 250,000 250,000 22,550 29,510 38,634
9 52,448 250,000 250,000 250,000 25,360 34,221 46,314
10 59,827 250,000 250,000 250,000 28,142 39,169 54,841
11 67,575 250,000 250,000 256,584 31,452 44,947 64,914
12 75,710 250,000 250,000 287,735 34,690 50,978 76,010
13 84,252 250,000 250,000 319,865 37,828 57,251 88,185
14 93,221 250,000 250,000 353,039 40,863 63,776 101,535
15 102,638 250,000 250,000 387,379 43,801 70,573 116,177
16 112,527 250,000 250,000 422,989 46,637 77,657 132,225
17 122,910 250,000 261,037 459,978 49,369 85,017 149,810
18 133,812 250,000 273,116 498,466 51,992 92,635 169,069
19 145,259 250,000 284,715 538,612 54,500 100,514 190,147
20 157,278 250,000 295,877 580,570 56,887 108,658 213,210
25 227,014 250,000 344,077 817,782 65,881 152,523 362,508
30 316,016 250,000 386,220 1,125,841 70,782 203,853 594,237
35 429,609 250,000 424,004 1,531,588 67,911 262,071 946,652
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
26
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION M DEATH BENEFIT
CASH VALUE ACCUMULATION TEST NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH
POLICY YEAR PLANNED PREMIUM: $4,530* USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------- -----------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ------------------------- -----------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 250,000 250,000 250,000 1,375 1,500 1,627
2 9,751 250,000 250,000 250,000 3,543 3,933 4,340
3 14,995 250,000 250,000 250,000 5,595 6,388 7,249
4 20,501 250,000 250,000 250,000 7,527 8,863 10,371
5 26,283 250,000 250,000 250,000 9,331 11,350 13,720
6 32,353 250,000 250,000 250,000 11,001 13,843 17,318
7 38,727 250,000 250,000 250,000 12,520 16,324 21,174
8 45,420 250,000 250,000 250,000 13,873 18,778 25,306
9 52,448 250,000 250,000 250,000 15,042 21,187 29,728
10 59,827 250,000 250,000 250,000 16,007 23,528 34,458
11 67,575 250,000 250,000 250,000 17,326 26,384 40,148
12 75,710 250,000 250,000 250,000 18,412 29,173 46,280
13 84,252 250,000 250,000 250,000 19,257 31,889 52,911
14 93,221 250,000 250,000 250,000 19,847 34,517 60,100
15 102,638 250,000 250,000 250,000 20,165 37,041 67,913
16 112,527 250,000 250,000 250,000 20,182 39,430 76,422
17 122,910 250,000 250,000 262,891 19,861 41,651 85,621
18 133,812 250,000 250,000 281,018 19,157 43,659 95,315
19 145,259 250,000 250,000 298,817 18,011 45,397 105,492
20 157,278 250,000 250,000 316,267 16,367 46,810 116,146
25 227,014 ** 250,000 398,744 ** 46,817 176,756
30 316,016 ** 250,000 471,793 ** 23,713 249,020
35 429,609 ** ** 533,734 ** ** 329,893
</TABLE>
*The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
27
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION A DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST NO GUARANTEED MINIMUM DEATH
BENEFIT AFTER TENTH POLICY YEAR PLANNED PREMIUM: $4,530* USING CURRENT
CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
--------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at --------------------------- --------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- --------- ------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 250,000 250,000 250,000 2,188 2,339 2,492
2 9,751 250,000 250,000 250,000 5,213 5,707 6,220
3 14,995 250,000 250,000 250,000 8,177 9,210 10,323
4 20,501 250,000 250,000 250,000 11,099 12,874 14,862
5 26,283 250,000 250,000 250,000 13,995 16,724 19,901
6 32,353 250,000 250,000 250,000 16,867 20,771 25,499
7 38,727 250,000 250,000 250,000 19,719 25,030 31,721
8 45,420 250,000 250,000 250,000 22,550 29,510 38,634
9 52,448 250,000 250,000 250,000 25,360 34,221 46,314
10 59,827 250,000 250,000 250,000 28,142 39,169 54,841
11 67,575 250,000 250,000 250,000 31,452 44,947 64,915
12 75,710 250,000 250,000 250,000 34,690 50,978 76,067
13 84,252 250,000 250,000 250,000 37,828 57,251 88,395
14 93,221 250,000 250,000 250,000 40,863 63,776 102,035
15 102,638 250,000 250,000 250,000 43,801 70,573 117,147
16 112,527 250,000 250,000 250,000 46,637 77,657 133,903
17 122,910 250,000 250,000 250,000 49,369 85,044 152,501
18 133,812 250,000 250,000 250,000 51,992 92,749 173,160
19 145,259 250,000 250,000 250,000 54,500 100,789 196,134
20 157,278 250,000 250,000 270,432 56,887 109,186 221,666
25 227,014 250,000 250,000 459,571 65,881 156,742 396,182
30 316,016 250,000 250,000 734,718 70,782 218,367 686,652
35 429,609 250,000 314,321 1,229,953 67,911 299,354 1,171,384
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
28
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION A DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST NO GUARANTEED MINIMUM DEATH
BENEFIT AFTER TENTH POLICY YEAR PLANNED PREMIUM: $4,530* USING MAXIMUM
CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------- -----------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ------------------------- -----------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 250,000 250,000 250,000 1,375 1,500 1,627
2 9,751 250,000 250,000 250,000 3,543 3,933 4,340
3 14,995 250,000 250,000 250,000 5,595 6,388 7,249
4 20,501 250,000 250,000 250,000 7,527 8,863 10,371
5 26,283 250,000 250,000 250,000 9,331 11,350 13,720
6 32,353 250,000 250,000 250,000 11,001 13,843 17,318
7 38,727 250,000 250,000 250,000 12,520 16,324 21,174
8 45,420 250,000 250,000 250,000 13,873 18,778 25,306
9 52,448 250,000 250,000 250,000 15,042 21,187 29,728
10 59,827 250,000 250,000 250,000 16,007 23,528 34,458
11 67,575 250,000 250,000 250,000 17,326 26,384 40,148
12 75,710 250,000 250,000 250,000 18,412 29,173 46,280
13 84,252 250,000 250,000 250,000 19,257 31,889 52,911
14 93,221 250,000 250,000 250,000 19,847 34,517 60,100
15 102,638 250,000 250,000 250,000 20,165 37,041 67,913
16 112,527 250,000 250,000 250,000 20,182 39,430 76,422
17 122,910 250,000 250,000 250,000 19,861 41,651 85,708
18 133,812 250,000 250,000 250,000 19,157 43,659 95,864
19 145,259 250,000 250,000 250,000 18,011 45,397 106,999
20 157,278 250,000 250,000 250,000 16,367 46,810 119,254
25 227,014 ** 250,000 250,000 ** 46,817 205,151
30 316,016 ** 250,000 379,615 ** 23,713 354,780
35 429,609 ** ** 627,605 ** ** 597,719
</TABLE>
*The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
29
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION B DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST NO GUARANTEED MINIMUM DEATH
BENEFIT AFTER TENTH POLICY YEAR PLANNED PREMIUM: $4,530* USING CURRENT
CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
--------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at --------------------------- --------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- --------- ------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,757 252,184 252,335 252,487 2,184 2,335 2,487
2 9,751 255,200 255,693 256,204 5,200 5,693 6,204
3 14,995 258,148 259,177 260,285 8,148 9,177 10,285
4 20,501 261,049 262,814 264,791 11,049 12,814 14,791
5 26,283 263,917 266,628 269,784 13,917 16,628 19,784
6 32,353 266,756 270,630 275,318 16,756 20,630 25,318
7 38,727 269,572 274,833 281,459 19,572 24,833 31,459
8 45,420 272,360 279,246 288,269 22,360 29,246 38,269
9 52,448 275,124 283,879 295,822 25,124 33,879 45,822
10 59,827 277,854 288,734 304,190 27,854 38,734 54,190
11 67,575 281,103 294,401 314,064 31,103 44,401 64,064
12 75,710 284,268 300,293 324,955 34,268 50,293 74,955
13 84,252 287,313 306,385 336,936 37,313 56,385 86,936
14 93,221 290,232 312,679 350,118 40,232 62,679 100,118
15 102,638 293,030 319,188 364,633 43,030 69,188 114,633
16 112,527 295,700 325,915 380,619 45,700 75,915 130,619
17 122,910 298,236 332,862 398,228 48,236 82,862 148,228
18 133,812 300,629 340,031 417,625 50,629 90,031 167,625
19 145,259 302,868 347,418 438,990 52,868 97,418 188,990
20 157,278 304,945 355,025 462,527 54,945 105,025 212,527
25 227,014 311,310 394,859 619,827 61,310 144,859 369,827
30 316,016 311,844 439,198 876,011 61,844 189,198 626,011
35 429,609 301,676 483,336 1,290,972 51,676 233,336 1,040,972
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
30
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE $250,000 TOTAL SUM INSURED MALE, ISSUE AGE
45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS OPTION B DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST NO GUARANTEED MINIMUM DEATH
BENEFIT AFTER TENTH POLICY YEAR PLANNED PREMIUM: $4,530* USING MAXIMUM
CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------- -----------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ------------------------- -----------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
------- ------------------ ------- ------- ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4757 251365 251490 251616 1365 1490 1616
2 9,751 253,513 253,899 254,303 3,513 3,899 4,303
3 14,995 255,531 256,315 257,165 5,531 6,315 7,165
4 20,501 257,416 258,731 260,213 7,416 8,731 10,213
5 26,283 259,157 261,135 263,455 9,157 11,135 13,455
6 32,353 260,750 263,519 266,903 10,750 13,519 16,903
7 38,727 262,173 265,858 270,553 12,173 15,858 20,553
8 45,420 263,412 268,133 274,409 13,412 18,133 24,409
9 52,448 264,447 270,318 278,468 14,447 20,318 28,468
10 59,827 265,255 272,383 282,725 15,255 22,383 32,725
11 67,575 266,390 274,897 287,800 16,390 24,897 37,800
12 75,710 267,262 277,269 293,141 17,262 27,269 43,141
13 84,252 267,864 279,482 298,765 17,864 29,482 48,765
14 93,221 268,182 281,511 304,682 18,182 31,511 54,682
15 102,638 268,200 283,325 310,901 18,200 33,325 60,901
16 112,527 267,890 284,882 317,419 17,890 34,882 67,419
17 122,910 267,217 286,131 324,225 17,217 36,131 74,225
18 133,812 266,138 287,008 331,299 16,138 37,008 81,299
19 145,259 264,604 287,438 338,610 14,604 37,438 88,610
20 157,278 262,566 287,345 346,123 12,566 37,345 96,123
25 227,014 ** 276,445 385,660 ** 26,445 135,660
30 316,016 ** ** 421,564 ** ** 171,564
35 429,609 ** ** 431,194 ** ** 181,194
</TABLE>
*The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies, if
Policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy year, or optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
31
<PAGE>
ADDITIONAL INFORMATION
This section of the prospectus provides additional detailed information that
is not contained in the Basic Information section on pages 4 through 20.
<TABLE>
<CAPTION>
CONTENTS OF THIS SECTION BEGINNING ON PAGE
------------------------ -----------------
<S> <C>
Description of JHVLICO ................................... 33
How we support the policy and investment options 33
Procedures for issuance of a policy....................... 34
Basic Sum Insured vs. Additional Sum Insured.............. 35
Commencement of investment performance.................... 36
How we process certain policy transactions................ 36
Effects of policy loans................................... 37
Additional information about how certain policy charges 37
work......................................................
How we market the policies................................ 39
Tax considerations........................................ 40
Reports that you will receive............................. 41
Voting privileges that you will have...................... 42
Changes that JHVLICO can make as to your policy 42
Adjustments we make to death benefits..................... 43
When we pay policy proceeds............................... 43
Other details about exercising rights and paying benefits. 43
Legal matters............................................. 44
Registration statement filed with the SEC................. 44
Accounting and actuarial experts.......................... 44
Financial statements of JHVLICO and the Account 44
List of Directors and Executive Officers of JHVLICO 45
</TABLE>
32
<PAGE>
DESCRIPTION OF JHVLICO
We are JHVLICO, a stock life insurance company chartered in 1979 under
Massachusetts law. We are authorized to transact a life insurance and annuity
business in all states other than New York and in the District of Columbia. We
began selling variable life insurance policies in 1980.
We are regulated and supervised by the Massachusetts Commissioner of
Insurance, who periodically examines our affairs. We also are subject to the
applicable insurance laws and regulations of all jurisdictions in which we are
authorized to do business. We are required to submit annual statements of our
operations, including financial statements, to the insurance departments of the
various jurisdictions in which we do business for purposes of determining
solvency and compliance with local insurance laws and regulations. The
regulation to which we are subject, however, does not provide a guarantee as to
such matters.
We are a wholly-owned subsidiary of John Hancock Life Insurance Company ("John
Hancock"), a Massachusetts stock life insurance company. On February 1, 2000,
John Hancock Mutual Life Insurance Company (which was chartered in Massachusetts
in 1862) converted to a stock company by "demutualizing" and changed its name to
John Hancock Life Insurance Company. As part of the demutualization process,
John Hancock became a subsidiary of John Hancock Financial Services, Inc., a
newly formed publicly-traded corporation. John Hancock's home office is at John
Hancock Place, Boston, Massachusetts 02117. As of December 31, 1999, John
Hancock's assets were approximately $71 billion and it had invested
approximately $575 million in JHVLICO in connection with JHVLICO's organization
and operation. It is anticipated that John Hancock will from time to time make
additional capital contributions to JHVLICO to enable us to meet our reserve
requirements and expenses in connection with our business. John Hancock is
committed to make additional capital contributions if necessary to ensure that
we maintain a positive net worth.
HOW WE SUPPORT THE POLICY AND INVESTMENT OPTIONS
Separate Account S
The variable investment options shown on page 1 are in fact subaccounts of
Separate Account S (the "Account"), a separate account established by us under
Massachusetts law. The Account meets the definition of "separate account" under
the Federal securities laws and is registered as a unit investment trust under
the Investment Company Act of 1940 ("1940 Act"). Such registration does not
involve supervision by the SEC of the management of the Account or JHVLICO.
The Account's assets are the property of JHVLICO. Each policy provides that
amounts we hold in the Account pursuant to the policies cannot be reached by any
other persons who may have claims against us.
The assets in each subaccount are invested in the corresponding fund of one of
the Trusts. New subaccounts may be added as new funds are added to the Trusts
and made available to policy owners. Existing subaccounts may be deleted if
existing funds are deleted from the Trusts.
We will purchase and redeem Trust shares for the Account at their net asset
value without any sales or redemption charges. Shares of a Trust represent an
interest in one of the funds of the Trust which corresponds to a subaccount of
the Account. Any dividend or capital gains distributions received by the Account
will be reinvested in shares of that same fund at their net asset value as of
the dates paid.
On each business day, shares of each fund are purchased or redeemed by us for
each subaccount based on, among other things, the amount of net premiums
allocated to the subaccount, distributions reinvested, and transfers to, from
and among subaccounts, all to be effected as of that date. Such
33
<PAGE>
purchases and redemptions are effected at each fund's net asset value per share
determined for that same date. A "business day" is any date on which the New
York Stock Exchange is open for trading. We compute policy values for each
business day as of the close of that day (usually 4:00 p.m. Eastern Standard
Time).
Our general account
Our obligations under the policy's fixed investment option are backed by our
general account assets. Our general account consists of assets owned by us other
than those in the Account and in other separate accounts that we may establish.
Subject to applicable law, we have sole discretion over the investment of assets
of the general account and policy owners do not share in the investment
experience of, or have any preferential claim on, those assets. Instead, we
guarantee that the account value allocated to the fixed investment option will
accrue interest daily at an effective annual rate of at least 4% without regard
to the actual investment experience of the general account.
Because of exemptive and exclusionary provisions, interests in our fixed
investment option have not been registered under the Securities Act of 1933 and
our general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein are
subject to the provisions of these acts, and we have been advised that the staff
of the SEC has not reviewed the disclosure in this prospectus relating to the
fixed investment option. Disclosure regarding the fixed investment option may,
however, be subject to certain generally-applicable provisions of the Federal
securities laws relating to accuracy and completeness of statements made in
prospectuses.
PROCEDURES FOR ISSUANCE OF A POLICY
Generally, the policy is available with a minimum Total Sum Insured at issue
of $250,000 and a minimum Basic Sum Insured at issue of $100,000. At the time of
issue, the insured person must have an attained age of no more than 85. All
insured persons must meet certain health and other insurance risk criteria
called "underwriting standards".
Policies issued in Montana or in connection with certain employee plans will
not directly reflect the sex of the insured person in either the premium rates
or the charges or values under the policy. The illustrations set forth in this
prospectus are sex-distinct and, therefore, may not reflect the rates, charges,
or values that would apply to such policies.
Minimum Initial Premium
The Minimum Initial Premium must be received by us at our Life Servicing
Office in order for the policy to be in full force and effect. There is no grace
period for the payment of the Minimum Initial Premium. The Minimum Initial
Premium is determined by us based on the characteristics of the insured person,
the Total Sum Insured at issue, and the policy options you have selected.
Commencement of insurance coverage
After you apply for a policy, it can sometimes take up to several weeks for us
to gather and evaluate all the information we need to decide whether to issue a
policy to you and, if so, what the insured person's rate class should be. After
we approve an application for a policy and assign an appropriate insurance rate
class, we will prepare the policy for delivery. We will not pay a death benefit
under a policy unless the policy is in effect when the insured person dies
(except for the circumstances described under "Temporary insurance coverage
prior to policy delivery" on page 35).
The policy will take effect only if all of the following conditions are
satisfied:
. The policy is delivered to and received by the applicant.
. The Minimum Initial Premium is received by us.
34
<PAGE>
.Each insured person is living and still meets our health criteria for issuing
insurance.
If all of the above conditions are satisfied, the policy will take effect on
the date shown in the policy as the "date of issue." That is the date on which
we begin to deduct monthly charges. Policy months, policy years and policy
anniversaries are all measured from the date of issue.
Backdating
In order to preserve a younger age at issue for the insured person, we can
designate a date of issue that is up to 60 days earlier than the date that would
otherwise apply. This is referred to as "backdating" and is allowed under state
insurance laws. Backdating can also be used in certain corporate-owned life
insurance cases involving multiple policies to retain a common monthly deduction
date.
The conditions for coverage described above under "Commencement of insurance
coverage" must still be satisfied, but in a backdating situation the policy
always takes effect retroactively. Backdating results in a lower insurance
charge (because of the insured person's younger age at issue), but monthly
charges begin earlier than would otherwise be the case. Those monthly charges
will be deducted as soon as we receive premiums sufficient to pay them.
Temporary coverage prior to policy delivery
If a specified amount of premium is paid with the application for a policy and
other conditions are met, we will provide temporary term life insurance coverage
on the insured person for a period prior to the time coverage under the policy
takes effect. Such temporary term coverage will be subject to the terms and
conditions described in the application for the policy, including limits on
amount and duration of coverage.
Monthly deduction dates
Each charge that we deduct monthly is assessed against your account value or
the subaccounts at the close of business on the date of issue and at the close
of the first business day in each subsequent policy month.
BASIC SUM INSURED VS. ADDITIONAL SUM INSURED
As noted earlier in this prospectus, you should consider a number of factors
in determining whether to elect coverage in the form of Basic Sum Insured or in
the form of Additional Sum Insured.
The amount of sales charge deducted from premiums and from account value and
the amount of compensation paid to the selling insurance agent will be less if
coverage is included as Additional Sum Insured, rather than as Basic Sum
Insured. On the other hand, the amount of any Additional Sum Insured is not
included in the guaranteed minimum death benefit feature. Therefore, if the
policy's surrender value is insufficient to pay the monthly charges as they fall
due (including the charges for the Additional Sum Insured), the Additional Sum
Insured coverage will lapse, even if the Basic Sum Insured stays in effect
pursuant to the guaranteed minimum death benefit feature.
Generally, you will incur lower sales charges and have more flexible coverage
with respect to the Additional Sum Insured than with respect to the Basic Sum
Insured. If this is your priority, you may wish to maximize the proportion of
the Additional Sum Insured. However, if your priority is to take advantage of
the guaranteed minimum death benefit feature, the proportion of the Policy's
Total Sum Insured that is guaranteed can be increased by taking out more
coverage as Basic Sum Insured at the time of policy issuance.
If you want to purchase Additional Sum Insured, you may select from among
several forms of it: a level amount of coverage; an amount of coverage that
increases on each policy anniversary up to a prescribed limit; an amount of
coverage that increases on each policy anniversary to the amount of premiums
paid during prior policy years plus the Planned Premium for the current policy
year, subject
35
<PAGE>
to certain limits; or a combination of those forms of coverage.
Any decision you make to modify the amount of Additional Sum Insured coverage
after issue can have significant tax consequences (see "Tax Considerations"
beginning on page 40).
COMMENCEMENT OF INVESTMENT PERFORMANCE
Any premium payment processed prior to the twentieth day after the date of
issue will automatically be allocated to the Money Market investment option. On
the later of the date such payment is received or the twentieth day following
the date of issue, the portion of the Money Market investment option
attributable to such payment will be reallocated automatically among the
investment options you have chosen.
All other premium payments will be allocated among the investment options you
have chosen as soon as they are processed.
HOW WE PROCESS CERTAIN POLICY TRANSACTIONS
Premium payments
We will process any premium payment as of the day we receive it, unless one of
the following exceptions applies:
(1) We will process a payment received prior to a policy's date of issue as if
received on the date of issue.
(2) If the Minimum Initial Premium is not received prior to the date of issue,
we will process each premium payment received thereafter as if received on the
business day immediately preceding the date of issue until all of the Minimum
Initial Premium is received.
(3) We will process the portion of any premium payment for which we require
evidence of the insured person's continued insurability only after we have
received such evidence and found it satisfactory to us.
(4) If we receive any premium payment that we think will cause a policy to
become a modified endowment or will cause a policy to lose its status as life
insurance under the tax laws, we will not accept the excess portion of that
premium payment and will immediately notify the owner. We will refund the excess
premium when the premium payment check has had time to clear the banking system
(but in no case more than two weeks after receipt), except in the following
circumstances:
. The tax problem resolves itself prior to the date the refund is to be
made; or
.The tax problem relates to modified endowment status and we receive a signed
acknowledgment from the owner prior to the refund date instructing us to
process the premium notwithstanding the tax issues involved.
In the above cases, we will treat the excess premium as having been received on
the date the tax problem resolves itself or the date we receive the signed
acknowledgment. We will then process it accordingly.
(5) If a premium payment is received or is otherwise scheduled to be processed
(as specified above) on a date that is not a business day, the premium payment
will be processed on the business day next following that date.
Transfers among investment options
Any reallocation among investment options must be such that the total in all
investment options after reallocation equals 100% of account value. Transfers
out of a variable investment option will be effective at the end of the business
day in which we receive at our Life Servicing Office notice satisfactory to us.
If received on or before the policy anniversary, requests for transfer out of
the fixed investment option will be processed on the policy anniversary (or the
next business day if the policy anniversary does not occur on a business day).
If received after the policy anniversary, such a request will be processed
36
<PAGE>
at the end of the business day in which we receive the request at our Life
Servicing Office. If you request a transfer out of the fixed investment option
61 days or more prior to the policy anniversary, we will not process that
portion of the reallocation, and your confirmation statement will not reflect a
transfer out of the fixed investment option as to such request. Currently, there
is no minimum amount limit on transfers into the fixed investment option, but we
reserve the right to impose such a limit in the future. We have the right to
defer transfers of amounts out of the fixed investment option for up to six
months.
Telephone transfers and policy loans
Once you have completed a written authorization, you may request a transfer or
policy loan by telephone or by fax. If the fax request option becomes
unavailable, another means of telecommunication will be substituted.
If you authorize telephone transactions, you will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which we reasonably believe to be genuine, unless such loss,
expense or cost is the result of our mistake or negligence. We employ procedures
which provide safeguards against the execution of unauthorized transactions, and
which are reasonably designed to confirm that instructions received by telephone
are genuine. These procedures include requiring personal identification, tape
recording calls, and providing written confirmation to the owner. If we do not
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, we may be liable for any loss due to unauthorized or
fraudulent instructions.
Effective date of other policy transactions
The following transactions take effect on the policy anniversary on or next
following the date we approve the request:
. Total Sum Insured decreases
. Additional Sum Insured increases
. Change of death benefit option from Option B to Option A
.Any other change of death benefit option, when and if permitted by our
administrative rules (see "Change of death benefit option" on page 17)
Reinstatements of lapsed policies take effect on the monthly deduction date on
or next following the date we approve the request for reinstatement.
We process loans, surrenders, partial withdrawals and loan repayments as of
the day we receive such request or repayment.
EFFECTS OF POLICY LOANS
The account value, the surrender value, and any death benefit above the Total
Sum Insured are permanently affected by any loan, whether or not it is repaid in
whole or in part. This is because the amount of the loan is deducted from the
investment options and placed in a special loan account. The investment options
and the special loan account will generally have different rates of investment
return.
The amount of the outstanding loan (which includes accrued and unpaid
interest) is subtracted from the amount otherwise payable when the policy
proceeds become payable.
Whenever the outstanding loan equals or exceeds the account value, the policy
will terminate 31 days after we have mailed notice of termination to you (and to
any assignee of record at such assignee's last known address) specifying the
amount you must pay to avoid termination, unless a repayment of at least the
amount specified is made within that period.
ADDITIONAL INFORMATION ABOUT HOW CERTAIN POLICY CHARGES WORK
Sales expenses and related charges
The sales charges help to compensate us for the cost of selling our policies.
(See "What charges will
37
<PAGE>
JHVLICO deduct from my investment in the policy?" in the Basic Information
section of this prospectus.) The amount of the charges in any policy year does
not specifically correspond to sales expenses for that year. We expect to
recover our total sales expenses over the life of the policies. To the extent
that the sales charges do not cover total sales expenses, the sales expenses may
be recovered from other sources, including gains from the charge for mortality
and expense risks and other gains with respect to the policies, or from our
general assets. (See "How we market the policies" on page 39.)
Effect of premium payment pattern
You may structure the timing and amount of premium payments to minimize the
sales charges, although doing so involves certain risks. Paying less than one
Target Premium in the first policy year or paying more than one Target Premium
in any policy year could reduce your total sales charges over time. For example,
if the Target Premium was $10,000 and you paid a premium of $10,000 in each of
the first ten policy years, you would pay total sales charges of $12,000. If you
paid $20,000 (i.e., two times the Target Premium amount) in every other policy
year up to the ninth policy year, you would pay total sales charges of only
$8,750. However, delaying the payment of Target Premiums to later policy years
could increase the risk that the guaranteed minimum death benefit feature will
lapse and the account value will be insufficient to pay monthly policy charges
as they come due. As a result, the policy or any Additional Sum Insured may
lapse and eventually terminate. Conversely, accelerating the payment of Target
Premiums to earlier policy years could cause aggregate premiums paid to exceed
the policy's 7-pay premium limit and, as a result, cause the policy to become a
modified endowment, with adverse tax consequences to you upon receipt of policy
distributions. (See "Tax considerations" beginning on page 40.)
Monthly charges
We deduct the monthly charges described in the Basic Information section from
your policy's investment options in proportion to the amount of account value
you have in each. For each month that we cannot deduct any charge because of
insufficient account value, the uncollected charges will accumulate and be
deducted when and if sufficient account value becomes available.
The insurance under the policy continues in full force during any grace period
but, if the insured person dies during the policy grace period, the amount of
unpaid monthly charges is deducted from the death benefit otherwise payable.
Reduced charges for eligible classes
The charges otherwise applicable (including the M&E charge) may be reduced
with respect to policies issued to a class of associated individuals or to a
trustee, employer or similar entity where we anticipate that the sales to the
members of the class will result in lower than normal sales or administrative
expenses, lower taxes or lower risks to us. We will make these reductions in
accordance with our rules in effect at the time of the application for a policy.
The factors we consider in determining the eligibility of a particular group for
reduced charges, and the level of the reduction, are as follows: the nature of
the association and its organizational framework; the method by which sales will
be made to the members of the class; the facility with which premiums will be
collected from the associated individuals and the association's capabilities
with respect to administrative tasks; the anticipated lapse and surrender rates
of the policies; the size of the class of associated individuals and the number
of years it has been in existence; the aggregate amount of premiums paid; and
any other such circumstances which result in a reduction in sales or
administrative expenses, lower taxes or lower risks. Any reduction in charges
will be reasonable and will apply uniformly to all prospective policy purchasers
in the
38
<PAGE>
class and will not unfairly discriminate against any owner.
HOW WE MARKET THE POLICIES
Signator Investors, Inc. ("Signator"), an indirect wholly-owned subsidiary of
John Hancock located at 197 Clarendon Street, Boston, MA 02117, is registered as
a broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. and the Securities Investor
Protection Corporation. Signator acts as principal underwriter and principal
distributor of the policies pursuant to a sales agreement among John Hancock,
Signator, JHVLICO, and the Account. Signator also serves as principal
underwriter for John Hancock Variable Annuity Accounts U, I and V, John Hancock
Mutual Variable Life Insurance Account UV and John Hancock Variable Life
Accounts U and V, all of which are registered under the 1940 Act. Signator is
also the principal underwriter for John Hancock Variable Series Trust I.
Applications for policies are solicited by agents who are licensed by state
insurance authorities to sell JHVLICO's policies and who are also registered
representatives ("representatives") of Signator or other broker-dealer firms, as
discussed below. John Hancock (on behalf of JHVLICO) performs insurance
underwriting and determines whether to accept or reject the application for a
policy and each insured person's risk classification. JHVLICO will make the
appropriate refund if a policy ultimately is not issued or is returned under the
"free look" provision. Officers and employees of John Hancock and JHVLICO are
covered by a blanket bond by a commercial carrier in the amount of $25 million.
Signator's representatives are compensated for sales of the policies on a
commission and service fee basis by Signator, and JHVLICO reimburses Signator
for such compensation and for other direct and indirect expenses (including
agency expense allowances, general agent, district manager and supervisor's
compensation, agent's training allowances, deferred compensation and insurance
benefits of agents, general agents, district managers and supervisors, agency
office clerical expenses and advertising) actually incurred in connection with
the marketing and sale of the policies.
The maximum commission payable to a Signator representative for selling a
policy is 65% of the Target Premium paid in the first policy year, 10% of the
Target Premium paid in the second through tenth policy years, and 3% of the
Target Premium paid in each policy year thereafter. The maximum commission on
any premium paid in any policy year in excess of the Target Premium is 3%.
Representatives with less than four years of service with Signator and those
compensated on salary plus bonus or level commission programs may be paid on a
different basis. Representatives who meet certain productivity and persistency
standards with respect to the sale of policies issued by JHVLICO and John
Hancock will be eligible for additional compensation.
The policies are also sold through other registered broker-dealers that have
entered into selling agreements with Signator and whose representatives are
authorized by applicable law to sell variable life insurance policies. The
commissions which will be paid by such broker-dealers to their representatives
will be in accordance with their established rules. The commission rates may be
more or less than those set forth above for Signator's representatives. In
addition, their qualified registered representatives may be reimbursed by the
broker-dealers under expense reimbursement allowance programs in any year for
approved voucherable expenses incurred. Signator will compensate the
broker-dealers as provided in the selling agreements, and JHVLICO will reimburse
Signator for such amounts and for certain other direct expenses in connection
with marketing the policies through other broker-dealers.
Representatives of Signator and the other broker-dealers mentioned above may
also earn "credits"
39
<PAGE>
toward qualification for attendance at certain business meetings sponsored by
John Hancock.
The offering of the policies is intended to be continuous, but neither JHVLICO
nor Signator is obligated to sell any particular amount of policies.
TAX CONSIDERATIONS
This description of federal income tax consequences is only a brief summary
and is not intended as tax advice. Tax consequences will vary based on your own
particular circumstances, and for further information you should consult a
qualified tax advisor. Federal, state and local tax laws, regulations and
interpretations can change from time to time. As a result, the tax consequences
to you and the beneficiary may be altered, in some cases retroactively.
Policy proceeds
We believe the policy will receive the same federal income and estate tax
treatment as fixed benefit life insurance policies. Section 7702 of the Internal
Revenue Code (the "Code") defines life insurance for federal tax purposes. If
certain standards are met at issue and over the life of the policy, the policy
will satisfy that definition. We will monitor compliance with these standards.
If the policy complies with the definition of life insurance, we believe the
death benefit under the policy will be excludable from the beneficiary's gross
income under the Code. In addition, increases in account value as a result of
interest or investment experience will not be subject to federal income tax
unless and until values are actually received through distributions.
Distributions for tax purposes can include amounts received upon surrender or
partial withdrawals. You may also be deemed to have received a distribution for
tax purposes if you assign all or part of your policy rights or change your
policy's ownership.
In general, the owner will be taxed on the amount of distributions that exceed
the premiums paid under the policy. But under certain circumstances within the
first 15 policy years, the owner may be taxed on a distribution even if total
withdrawals do not exceed total premiums paid. Any taxable distribution will be
ordinary income to the owner (rather than capital gains).
We also believe that, except as noted below, loans received under the policy
will be treated as indebtedness of an owner and that no part of any loan will
constitute income to the owner. However, the amount of any outstanding loan that
was not previously considered income (as discussed below) will be treated as if
it had been distributed to the owner if the policy terminates for any reason.
It is possible that, despite our monitoring, a policy might fail to qualify as
life insurance under Section 7702 of the Code. This could happen, for example,
if we inadvertently failed to return to you any premium payments that were in
excess of permitted amounts, or if a Trust failed to meet certain investment
diversification or other requirements of the Code. If this were to occur, you
would be subject to income tax on the income and gains under the policy for the
period of the disqualification and for subsequent periods.
In the past, the United States Treasury Department has stated that it
anticipated issuing guidelines prescribing circumstances in which the ability of
a policy owner to direct his or her investment to particular funds may cause the
policy owner, rather than the insurance company, to be treated as the owner of
the shares of those funds. In that case, any income and gains attributable to
those shares would be included in your current gross income for federal income
tax purposes. Under current law, however, we believe that we, and not the owner
of a policy, would be considered the owner of the fund's shares for tax
purposes.
Tax consequences of ownership or receipt of policy proceeds under federal,
state and local estate, inheritance, gift and other tax laws depend on the
circumstances of each owner or beneficiary.
40
<PAGE>
Because there may be unfavorable tax consequences (including recognition of
taxable income and the loss of income tax-free treatment for any death benefit
payable to the beneficiary), you should consult a qualified tax adviser prior to
changing the policy's ownership or making any assignment of ownership interests.
7-pay premium limit
At the time of policy issuance, we will determine whether the Planned Premium
schedule will exceed the 7-pay limit discussed below. If so, our standard
procedures prohibit issuance of the policy unless you sign a form acknowledging
that fact.
The 7-pay limit is the total of net level premiums that would have been
payable at any time for a comparable fixed policy to be fully "paid-up" after
the payment of 7 equal annual premiums. "Paid-up" means that no further premiums
would be required to continue the coverage in force until maturity, based on
certain prescribed assumptions. If the total premiums paid at any time during
the first 7 policy years exceed the 7-pay limit, the policy will be treated as a
"modified endowment", which can have adverse tax consequences.
The owner will be taxed on distributions and loans from a "modified endowment"
to the extent of any income (gain) to the owner (on an income-first basis). The
distributions and loans affected will be those made on or after, and within the
two year period prior to, the time the policy becomes a modified endowment.
Additionally, a 10% penalty tax may be imposed on taxable portions of such
distributions or loans that are made before the owner attains age 591/2.
Furthermore, any time there is a "material change" in a policy (such as an
increase in Additional Sum Insured, the addition of certain other policy
benefits after issue, a change in death benefit option, or reinstatement of a
lapsed policy), the policy will have a new 7-pay limit as if it were a
newly-issued policy. If a prescribed portion of the policy's then account value,
plus all other premiums paid within 7 years after the material change, at any
time exceed the new 7-pay limit, the policy will become a modified endowment.
Moreover, if benefits under a policy are reduced (such as a reduction in the
Total Sum Insured or death benefit or the reduction or cancellation of certain
rider benefits) during the 7 years in which a 7-pay test is being applied, the
7-pay limit will be recalculated based on the reduced benefits. If the premiums
paid to date are greater than the recalculated 7-pay limit, the policy will
become a modified endowment.
All modified endowments issued by the same insurer (or its affiliates) to the
owner during any calendar year generally will be treated as one contract for the
purpose of applying the modified endowment rules. A policy received in exchange
for a modified endowment will itself also be a modified endowment. You should
consult your tax advisor if you have questions regarding the possible impact of
the 7-pay limit on your policy.
Corporate and H.R. 10 plans
The policy may be acquired in connection with the funding of retirement plans
satisfying the qualification requirements of Section 401 of the Code. If so, the
Code provisions relating to such plans and life insurance benefits thereunder
should be carefully scrutinized. We are not responsible for compliance with the
terms of any such plan or with the requirements of applicable provisions of the
Code.
REPORTS THAT YOU WILL RECEIVE
At least annually, we will send you a statement setting forth the following
information as of the end of the most recent reporting period: the amount of the
death benefit, the Basic Sum Insured and the Additional Sum Insured, the account
value, the portion of the account value in each investment option, the surrender
value, premiums received and charges deducted from premiums since the last
report, and any outstanding policy loan (and interest
41
<PAGE>
charged for the preceding policy year). Moreover, you also will receive
confirmations of premium payments, transfers among investment options, policy
loans, partial withdrawals and certain other policy transactions.
Semiannually we will send you a report containing the financial statements of
each Trust, including a list of securities held in each fund.
VOTING PRIVILEGES THAT YOU WILL HAVE
All of the assets in the subaccounts of the Account are invested in shares of
the corresponding funds of the Trusts. We will vote the shares of each of the
funds of the Trusts which are deemed attributable to variable life insurance
policies at regular and special meetings of the Trusts' shareholders in
accordance with instructions received from owners of such policies. Shares of
the Trusts held in the Account which are not attributable to such policies, as
well as shares for which instructions from owners are not received, will be
represented by us at the meeting. We will vote such shares for and against each
matter in the same proportions as the votes based upon the instructions received
from the owners of such policies.
We determine the number of a fund's shares held in a subaccount attributable
to each owner by dividing the amount of a policy's account value held in the
subaccount by the net asset value of one share in the fund. Fractional votes
will be counted. We determine the number of shares as to which the owner may
give instructions as of the record date for the Trust's meeting. Owners of
policies may give instructions regarding the election of the Board of Trustees
or Board of Directors of the Trust, ratification of the selection of independent
auditors, approval of Trust investment advisory agreements and other matters
requiring a shareholder vote. We will furnish owners with information and forms
to enable owners to give voting instructions.
However, we may, in certain limited circumstances permitted by the SEC's
rules, disregard voting instructions. If we do disregard voting instructions,
you will receive a summary of that action and the reasons for it in the next
semi-annual report to owners.
CHANGES THAT JHVLICO CAN MAKE AS TO YOUR POLICY
Changes relating to a Trust or the Account
The voting privileges described in this prospectus reflect our understanding
of applicable Federal securities law requirements. To the extent that applicable
law, regulations or interpretations change to eliminate or restrict the need for
such voting privileges, we reserve the right to proceed in accordance with any
such revised requirements. We also reserve the right, subject to compliance with
applicable law, including approval of owners if so required, (1) to transfer
assets determined by JHVLICO to be associated with the class of policies to
which your policy belongs from the Account to another separate account or
subaccount, (2) to operate the Account as a "management-type investment company"
under the 1940 Act, or in any other form permitted by law, the investment
adviser of which would be JHVLICO, John Hancock or an affiliate of either, (3)
to deregister the Account under the 1940 Act, (4) to substitute for the fund
shares held by a subaccount any other investment permitted by law, and (5) to
take any action necessary to comply with or obtain any exemptions from the 1940
Act. We would notify owners of any of the foregoing changes and, to the extent
legally required, obtain approval of owners and any regulatory body prior
thereto. Such notice and approval, however, may not be legally required in all
cases.
Other permissible changes
We reserve the right to make any changes in the policy necessary to ensure the
policy is within the definition of life insurance under the Federal tax laws and
is in compliance with any changes in Federal or state tax laws.
42
<PAGE>
In our policies, we reserve the right to make certain changes if they would
serve the best interests of policy owners or would be appropriate in carrying
out the purposes of the policies. Such changes include the following:
.Changes necessary to comply with or obtain or continue exemptions under the
federal securities laws
. Combining or removing investment options
. Changes in the form of organization of any separate account
Any such changes will be made only to the extent permitted by applicable laws
and only in the manner permitted by such laws. When required by law, we will
obtain your approval of the changes and the approval of any appropriate
regulatory authority.
ADJUSTMENTS WE MAKE TO DEATH BENEFITS
If the insured person commits suicide within certain time periods, the amount
of death benefit we pay will be limited as described in the policy. Also, if an
application misstated the age or gender of the insured person, we will adjust
the amount of any death benefit as described in the policy.
WHEN WE PAY POLICY PROCEEDS
General
We will pay any death benefit, withdrawal, surrender value or loan within 7
days after we receive the last required form or request (and, with respect to
the death benefit, any other documentation that may be required). If we don't
have information about the desired manner of payment within 7 days after the
date we receive notification of the insured person's death, we will pay the
proceeds as a single sum, normally within 7 days thereafter.
Delay to challenge coverage
We may challenge the validity of your insurance policy based on any material
misstatements made to us in the application for the policy. We cannot make such
a challenge, however, beyond certain time limits that are specified in the
policy.
Delay for check clearance
We reserve the right to defer payment of that portion of your account value
that is attributable to a premium payment made by check for a reasonable period
of time (not to exceed 15 days) to allow the check to clear the banking system.
Delay of separate account proceeds
We reserve the right to defer payment of any death benefit, loan or other
distribution that is derived from a variable investment option if (a) the New
York Stock Exchange is closed (other than customary weekend and holiday
closings) or trading on the New York Stock Exchange is restricted; (b) an
emergency exists, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to fairly determine the account
value; or (c) the SEC by order permits the delay for the protection of owners.
Transfers and allocations of account value among the investment options may also
be postponed under these circumstances. If we need to defer calculation of
separate account values for any of the foregoing reasons, all delayed
transactions will be processed at the next values that we do compute.
OTHER DETAILS ABOUT EXERCISING RIGHTS AND PAYING BENEFITS
Joint ownership
If more than one person owns a policy, all owners must join in most requests
to exercise rights under the policy.
Assigning your policy
You may assign your rights in the policy to someone else as collateral for a
loan or for some other reason. Assignments do not require the consent of any
revocable beneficiary. A copy of the assignment must be forwarded to us. We are
not responsible for
43
<PAGE>
any payment we make or any action we take before we receive notice of the
assignment in good order. Nor are we responsible for the validity of the
assignment. An absolute assignment is a change of ownership. All collateral
assignees of record must consent to any full surrender, partial withdrawal or
loan from the policy.
Your beneficiary
You name your beneficiary when you apply for the policy. The beneficiary is
entitled to the proceeds we pay following the insured person's death. You may
change the beneficiary during the insured person's lifetime. Such a change
requires the consent of any irrevocable named beneficiary. A new beneficiary
designation is effective as of the date you sign it, but will not affect any
payments we make before we receive it. If no beneficiary is living when the
insured person dies, we will pay the insurance proceeds to the owner or the
owner's estate.
LEGAL MATTERS
The legal validity of the policies described in this prospectus has been
passed on by Ronald J. Bocage, Vice President and Counsel for JHVLICO. Messrs.
Freedman, Levy, Kroll & Simonds, Washington, D.C., have advised us on certain
Federal securities law matters in connection with the policies.
REGISTRATION STATEMENT FILED WITH THE SEC
This prospectus omits certain information contained in the Registration
Statement which has been filed with the SEC. More details may be obtained from
the SEC upon payment of the prescribed fee.
ACCOUNTING AND ACTUARIAL EXPERTS
Certain of the financial statements of JHVLICO and the Account included in
this prospectus have been audited by Ernst & Young LLP, independent auditors,
for the periods indicated in their reports thereon which appear elsewhere herein
and have been included in reliance on their reports given on their authority as
experts in accounting and auditing. Actuarial matters included in this
prospectus have been examined by Deborah A. Poppel, F.S.A., an Actuary of
JHVLICO and Second Vice President of John Hancock.
FINANCIAL STATEMENTS OF JHVLICO AND THE ACCOUNT
The financial statements of JHVLICO included herein should be distinguished
from the financial statements of the Account and should be considered only as
bearing upon the ability of JHVLICO to meet its obligations under the policies.
In addition to those financial statements of JHVLICO and the Account included
herein that have been audited by Ernst & Young LLP, this prospectus also
contains unaudited financial statements of both JHVLICO and the Account for a
period subsequent to the audited financial statements.
44
<PAGE>
LIST OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO
The Directors and Executive Officers of JHVLICO and their principal
occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Directors and Executive Principal Occupations
----------------------- ---------------------
Officers
--------
<S> <C>
David F. D'Alessandro Chairman of the Board and Chief
Executive Officer of JHVLICO; President and Chief
Executive Officer, John Hancock Life Insurance
Company.
Michele G. Van Leer. Vice Chairman of the Board and President of
JHVLICO; Senior Vice President, John Hancock
Life Insurance Company.
Ronald J. Bocage . . . Director, Vice President and
Counsel of JHVLICO; Vice President and Counsel,
John Hancock Life Insurance Company.
Bruce M. Jones. . . . Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Thomas J. Lee. . . . Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Barbara L. Luddy. . . Director, Vice President and Actuary of JHVLICO;
Senior Vice President, John Hancock Life
Insurance Company.
Robert S. Paster. . . Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Robert R. Reitano. . Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Paul Strong . . . . . Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance Company.
Daniel L. Ouellette. Vice President, Marketing, of JHVLICO; Senior
Vice President, John Hancock Life Insurance
Company.
Edward P. Dowd. . . . Vice President, Investments, of JHVLICO; Senior
Vice President, John Hancock Life Insurance
Company
Roger G. Nastou. . . Vice President, Investments, of JHVLICO; Vice
President, John Hancock Life Insurance Company
Todd G. Engelsen. . . Vice President and Illustration Actuary of
JHVLICO; Second Vice President, John Hancock
Life Insurance Company
Julie H. Indge. . . . Treasurer of JHVLICO; Financial Officer, John
Hancock Life Insurance Company
Patrick J. Gill . . . Controller of JHVLICO; Senior Associate
Controller, John Hancock Life Insurance Company.
Peter Scavongelli. . Secretary of JHVLICO; State Compliance Officer,
John Hancock Life Insurance Company
</TABLE>
The business address of all Directors and officers of JHVLICO is John Hancock
Place, Boston, Massachusetts 02117.
45
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
FOR
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
SECOND QUARTER 2000
46
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
2000 1999
----------------------- --------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Bonds . . . . . . . . . . . . . . . . $ 1,344.7 $ 1,216.3
Preferred stocks . . . . . . . . . . 36.9 35.9
Common stocks . . . . . . . . . . . . 2.0 3.2
Investment in affiliates . . . . . . 80.5 80.7
Mortgage loans on real estate . . . . 468.2 433.1
Real estate . . . . . . . . . . . . . 24.7 25.0
Policy loans . . . . . . . . . . . . 195.5 172.1
Cash Items:
Cash in banks . . . . . . . . . . . (3.0) 27.2
Temporary cash investments . . . . . 284.6 222.9
---------------------- ---------
281.6 250.1
Premiums due and deferred . . . . . . 28.9 29.9
Investment income due and accrued . . 40.9 33.2
Other general account assets . . . . 43.7 65.3
Assets held in separate accounts . . 8,569.0 8,268.2
---------------------- ---------
Total assets . . . . . . . . . . . $11,116.6 $10,613.0
====================== =========
OBLIGATIONS AND STOCKHOLDER'S EQUITY
Obligations
Policy reserves . . . . . . . . . . $ 2,048.1 $ 1,866.6
Federal income and other taxes
payable . . . . . . . . . . . . . . 97.8 67.3
Other general account obligations . 207.4 219.0
Transfers from separate account, net (229.6) (221.6)
Asset valuation reserve . . . . . . 19.3 23.1
Obligations related to separate
accounts. . . . . . . . . . . . . . 8,562.1 8,261.6
---------------------- ---------
Total obligations . . . . . . . . . 10,705.1 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 . . . . . . . . . (163.4) (177.9)
---------------------- ---------
Total stockholder's equity . . . . . 411.5 397.0
---------------------- ---------
Total obligations and stockholder's
equity . . . . . . . . . . . . . . $11,116.6 $10,613.0
====================== =========
See condensed notes to the financial statements (unaudited).
</TABLE>
47
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -----------------
2000 1999 2000 1999
--------- -------- -------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
INCOME
Premiums . . . . . . . . . . . . . . $ 255.7 $228.6 $ 487.0 $452.2
Net investment income . . . . . . . 43.4 31.9 83.0 64.4
Other, net . . . . . . . . . . . . . 110.1 116.6 242.5 261.9
------- ------ ------- ------
409.2 377.1 812.5 778.5
BENEFITS AND EXPENSES
Payments to policyholders and
beneficiaries . . . . . . . . . . . 93.2 94.1 182.4 174.4
Additions to reserves to provide for
future payments to policyholders and
beneficiaries . . . . . . . . . . . 213.4 198.6 429.7 436.8
Expenses of providing service to
policyholders and obtaining new
insurance . . . . . . . . . . . . . 80.4 77.8 153.9 153.5
State and miscellaneous taxes . . . 5.7 8.1 13.3 10.9
------- ------ ------- ------
392.7 378.6 779.3 775.6
------- ------ ------- ------
Gain from operations before federal
income taxes and net realized
capital gains (losses) . . . . . . 16.5 (1.5) 33.2 2.9
Federal income taxes . . . . . . . . 12.2 (1.4) 16.9 (0.4)
------- ------ ------- ------
Gain from operations before net
realized capital gains (losses) . 4.3 (0.1) 16.3 3.3
Net realized capital gains (losses) 0.1 0.5 0.5 (1.0)
------- ------ ------- ------
Net income . . . . . . . . . . . . 4.4 0.4 16.8 2.3
Unassigned deficit at beginning of
period. . . . . . . . . . . . . . . (164.5) (51.2) (177.9) (49.2)
Net unrealized capital gains (losses)
and other adjustments . . . . . . . (3.1) (3.4) (2.0) (3.1)
Other reserves and adjustments . . . (0.2) 2.0 (0.3) (2.2)
------- ------ ------- ------
Unassigned deficit at end of period $(163.4) $(52.2) $(163.4) $(52.2)
======= ====== ======= ======
See condensed notes to the financial statements (unaudited).
</TABLE>
48
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
-----------------
2000 1999
-------- ----------
(IN MILLIONS)
<S> <C> <C>
Cash flows from operating activities:
Insurance premiums . . . . . . . . . . . . . . . . . . $ 495.7 $ 452.0
Net investment income . . . . . . . . . . . . . . . . . 75.2 60.5
Benefits to policyholders and beneficiaries . . . . . . (167.9) (274.6)
Dividends paid to policyholders . . . . . . . . . . . . (13.0) (12.6)
Insurance expenses and taxes . . . . . . . . . . . . . . (174.4) (195.0)
Net transfers to separate accounts . . . . . . . . . . . (254.7) (343.7)
Other, net . . . . . . . . . . . . . . . . . . . . . . 257.1 289.9
------- -------
Net cash provided from operations . . . . . . . . . . 218.0 (23.5)
------- -------
Cash flows used in investing activities:
Bond purchases . . . . . . . . . . . . . . . . . . . . (305.5) (143.7)
Bond sales . . . . . . . . . . . . . . . . . . . . . . 128.1 41.3
Bond maturities and scheduled redemptions . . . . . . . 36.6 38.9
Bond prepayments . . . . . . . . . . . . . . . . . . . 7.9 8.0
Stock purchases . . . . . . . . . . . . . . . . . . . . (1.9) (0.2)
Proceeds from stock sales . . . . . . . . . . . . . . . 1.4 3.6
Real estate purchases . . . . . . . . . . . . . . . . . (0.1) (1.5)
Real estate sales . . . . . . . . . . . . . . . . . . . 0.0 17.9
Other invested assets purchases . . . . . . . . . . . . (2.0) (4.5)
Proceeds from the sale of other invested assets . . . . 0.0 0.0
Mortgage loans issued . . . . . . . . . . . . . . . . . (49.7) (39.4)
Mortgage loan repayments . . . . . . . . . . . . . . . 14.5 11.4
Other, net . . . . . . . . . . . . . . . . . . . . . . (15.8) 75.1
------- -------
Net cash used in investing activities . . . . . . . . (186.5) 6.9
------- -------
Cash flows from financing activities:
Net increase (decrease) in short-term note payable . . (0.0) (10.7)
------- -------
Net cash provided from financing activities . . . . . (0.0) (10.7)
------- -------
Increase (decrease) in cash and temporary cash
investments . . . . . . . . . . . . . . . . . . . . . 31.5 (27.3)
Cash and temporary cash investments at beginning of year 250.1 19.9
------- -------
Cash and temporary cash investments at the end of
period. . . . . . . . . . . . . . . . . . . . . . . . $ 281.6 $ (7.4)
======= =======
See condensed notes to the financial statements (unaudited).
</TABLE>
49
<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 SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
Balance at January 1, 1999 . . . . . . $2.5 $377.5 $ (49.2) $330.8
1999 Transactions:
Capital contribution
Net gain . . . . . . . . . . . . . . 2.3 2.3
Net unrealized capital gains and other
adjustments. . . . . . . . . . . . . (3.1) (3.1)
Other reserves and adjustments . . . (2.2) (2.2)
------- ------
Balance at June 30, 1999 . . . . . . . $2.5 $377.5 $ (52.2) $327.8
==== ====== ======= ======
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
Balance at January 1, 2000 . . . . . . $2.5 $572.4 $(177.9) $397.0
2000 Transactions:
Capital contribution
Net gain . . . . . . . . . . . . . . 16.8 16.8
Net unrealized capital gains and other
adjustments. . . . . . . . . . . . . (2.0) (2.0)
Other reserves and adjustments . . . (0.3) (0.3)
------- ------
Balance at June 30, 2000 . . . . . . . $2.5 $572.4 $(163.4) $411.5
==== ====== ======= ======
See condensed notes to the financial statements (unaudited).
</TABLE>
50
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 six-month period ending June 30, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.
51
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Directors and Policyholders
John Hancock Variable Life Insurance Company
We have audited the accompanying statutory-basis statements of financial
position of John Hancock Variable Life Insurance Company as of December 31, 1999
and 1998, and the related statutory-basis statements of operations and
unassigned deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Commonwealth of Massachusetts Division of Insurance, which
practices differ from accounting principles generally accepted in the United
States. The variances between such practices and accounting principles generally
accepted in the United States also are described in Note 1. The effects on the
financial statements of these variances are not reasonably determinable but are
presumed to be material.
In our opinion, because of the effects of the matter described in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with accounting principles generally accepted in the
United States, the financial position of John Hancock Variable Life Insurance
Company at December 31, 1999 and 1998, or the results of its operations or its
cash flows for the years then ended.
However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of John Hancock
Variable Life Insurance Company at December 31, 1999 and 1998, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.
ERNST & YOUNG LLP
Boston, Massachusetts
March 10, 2000
52
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1999 1998
---------- -----------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Bonds--Note 6 . . . . . . . . . . . . . . . . . . . . $ 1,216.3 $1,185.8
Preferred stocks . . . . . . . . . . . . . . . . . . 35.9 36.5
Common stocks . . . . . . . . . . . . . . . . . . . . 3.2 3.1
Investment in affiliates . . . . . . . . . . . . . . 80.7 81.7
Mortgage loans on real estate--Note 6 . . . . . . . . 433.1 388.1
Real estate . . . . . . . . . . . . . . . . . . . . . 25.0 41.0
Policy loans . . . . . . . . . . . . . . . . . . . . 172.1 137.7
Cash items:
Cash in banks . . . . . . . . . . . . . . . . . . 27.2 11.4
Temporary cash investments . . . . . . . . . . . . 222.9 8.5
--------- --------
250.1 19.9
Premiums due and deferred . . . . . . . . . . . . . . 29.9 32.7
Investment income due and accrued . . . . . . . . . . 33.2 29.8
Other general account assets . . . . . . . . . . . . 65.3 47.5
Assets held in separate accounts . . . . . . . . . . 8,268.2 6,595.2
--------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . $10,613.0 $8,599.0
========= ========
OBLIGATIONS AND STOCKHOLDER'S EQUITY
OBLIGATIONS
Policy reserves . . . . . . . . . . . . . . . . . . $ 1,866.6 $1,652.0
Federal income and other taxes payable--Note 1 . . 67.3 44.3
Other general account obligations . . . . . . . . . 219.0 150.9
Transfers from separate accounts, net . . . . . . . (221.6) (190.3)
Asset valuation reserve--Note 1 . . . . . . . . . . 23.1 21.9
Obligations related to separate accounts . . . . . 8,261.6 6,589.4
--------- --------
TOTAL OBLIGATIONS . . . . . . . . . . . . . . . . .
10,216.0 8,268.2
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 . . . . . . . . . . . . . . . . . . 572.4 377.5
Unassigned deficit--Note 10 . . . . . . . . . . . . (177.9) (49.2)
--------- --------
TOTAL STOCKHOLDER'S EQUITY . . . . . . . . . . . . 397.0 330.8
--------- --------
TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY . . . . . $10,613.0 $8,599.0
========= ========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
53
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998
--------- ---------
(IN MILLIONS)
<S> <C>
INCOME
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . $1,272.3
Net investment income--Note 3 . . . . . . . . . . . . . . . 136.0 122.8
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 605.4 618.1
--------- --------
1,692.2 2,013.2
BENEFITS AND EXPENSES
Payments to policyholders and beneficiaries . . . . . . . . 349.9 301.4
Additions to reserves to provide for future payments to
policyholders and beneficiaries . . . . . . . . . . . . . 888.8 1,360.2
Expenses of providing service to policyholders and
obtaining new insurance--Note 5 . . . . . . . . . . . . . . 314.4 274.2
State and miscellaneous taxes. . . . . . . . . . . . . . . . 20.5 28.1
---------- --------
1,573.6 1,963.9
----------
Gain from operations before federal income
taxes and net realized capital losses 118.6 49.3
Federal income taxes--Note 1 . . . . . . . . . . . . . . . . 42.9 33.1
---------- --------
GAIN FROM OPERATIONS BEFORE NET REALIZED CAPITAL LOSSES 75.7 16.2
Net realized capital losses--Note 4 . . . . . . . . . . . . (1.7) (0.6)
---------- --------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . 74.0 15.6
Unassigned deficit at beginning of year . . . . . . . . . . (49.2) (58.3)
Net unrealized capital losses and other adjustments--Note 4 (3.8) (6.0)
Other reserves and adjustments--Note 10 . . . . . . . . . . (198.9) (0.5)
---------- --------
UNASSIGNED DEFICIT AT END OF YEAR . . . . . . . . . . . $(177.9) $ (49.2)
========== ========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
54
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------
1999 1998
------- --------
(IN MILLIONS)
<S> <C>
Cash flows from operating activities:
Insurance premiums . . . . . . . . . . . . . .
Net investment income . . . . . . . . . . . 134.2 118.2
Benefits to policyholders and beneficiaries . (321.6) (275.5)
Dividends paid to policyholders . . . . . . . . . (25.6) (22.3)
Insurance expenses and taxes . . . . . . . . . (344.8) (296.9)
Net transfers to separate accounts . . . . . . . (705.3) (874.4)
Other, net . . . . . . . . . . . . . . . . . . 540.6 551.3
------- -----------
NET CASH PROVIDED FROM OPERATIONS . . . . . . 236.0 475.7
------- -----------
Cash flows used in investing activities:
Bond purchases . . . . . . . . . . . . . . . . (240.7) (618.8)
Bond sales . . . . . . . . . . . . . . . . . . 108.3 340.7
Bond maturities and scheduled redemptions . . 78.4 111.8
Bond prepayments . . . . . . . . . . . . . . . 18.7 76.5
Stock purchases . . . . . . . . . . . . . . . (3.9) (23.4)
Proceeds from stock sales . . . . . . . . . . 3.6 1.9
Real estate purchases . . . . . . . . . . . . (2.2) (4.2)
Real estate sales . . . . . . . . . . . . . . 17.8 2.1
Other invested assets purchases . . . . . . . (4.5) 0.0
Mortgage loans issued. . . . . . . . . . . . . (70.7) (145.5)
Mortgage loan repayments . . . . . . . . . . . 25.3 33.2
Other, net . . . . . . . . . . . . . . . . . . (68.9) (435.2)
------- -----------
NET CASH USED IN INVESTING ACTIVITIES . . . . (138.8) (660.9)
------- -----------
Cash flows from financing activities:
Capital contribution . . . . . . . . . . . . . 194.9
Net (decrease) increase in short-term note
payable. . . . . . . . . . . . . . . . . . . (61.9) 61.9
------- -----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES . . 133.0 61.9
------- -----------
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH
INVESTMENTS 230.2
Cash and temporary cash investments at beginning
of year. . . . . . . . . . . . . . . . . . . . . 19.9 143.2
------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF
YEAR. . . . . . . . . . . . . . . . . . . . . 250.1 $19.9
======= ===========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
55
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES
John Hancock Variable Life Insurance Company (the Company) is a wholly-owned
subsidiary of John Hancock Life Insurance Company (formerly John Hancock Mutual
Life Insurance Company) (John Hancock). The Company, domiciled in the
Commonwealth of Massachusetts, principally writes variable and universal life
insurance policies. Those policies primarily are marketed through John Hancock's
sales organization, Signator Insurance Agency, which includes a career agency
system composed of Company-supported independent general agencies and a direct
brokerage system that markets directly to external independent brokers.
Policies also are sold through various unaffiliated securities broker-dealers
and certain other financial institutions. Currently, the Company writes business
in all states except New York.
The preparation of financial statements requires management to make estimates
and assumptions that affect amounts reported in the financial statements and
accompanying notes. Such estimates and assumptions could change in the future as
more information becomes known, which could impact the amounts reported and
disclosed herein.
Basis of Presentation
The financial statements have been prepared using accounting practices
prescribed or permitted by the Commonwealth of Massachusetts Division of
Insurance and in conformity with the practices of the National Association of
Insurance Commissioners (NAIC), which practices differ from generally accepted
accounting principles (GAAP).
The significant differences from GAAP include: (1) policy acquisition costs
are charged to expense as incurred rather than deferred and amortized in
relation to future estimated gross profits; (2) policy reserves are based on
statutory mortality, morbidity, and interest requirements without consideration
of withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available for
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances are
provided when there has been a decline in value deemed other than temporary; (7)
investments in affiliates are carried at their net equity value with changes in
value being recorded directly to unassigned deficit rather than consolidated in
the financial statements; (8) no provision is made for the deferred income tax
effects of temporary differences between book and tax basis reporting; and (9)
certain items, including modifications to required policy reserves resulting
from changes in actuarial assumptions, are recorded directly to unassigned
deficit rather than being reflected in income. The effects of the foregoing
variances from GAAP have not been determined but are presumed to be material.
The significant accounting practices of the Company are as follows:
Pending Statutory Standards
During March 1998, the NAIC adopted codified statutory accounting principles
("Codification") effective January 1, 2001. Codification will likely change, to
some extent, prescribed statutory accounting practices and may result in changes
to the accounting practices that the Company uses to prepare its statutory-basis
financial statements. Codification will require adoption by the various states
before it becomes the prescribed statutory basis of accounting for insurance
companies domesticated within those states. Accordingly, before Codification
becomes effective for the Company, the Commonwealth of Massachusetts must adopt
Codification as the prescribed basis of accounting on which domestic insurers
must report their statutory-basis results to the Division
56
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
of Insurance. At this time, it is anticipated that the Commonwealth of
Massachusetts will adopt Codification effective January 1, 2001. The impact of
any such changes on the Company's unassigned deficit is not expected to be
material.
Revenues and Expenses
Premium revenues are recognized over the premium-paying period of the policies
whereas expenses, including the acquisition costs of new business, are charged
to operations as incurred and policyholder dividends are provided as paid or
accrued.
Cash and Temporary Cash Investments
Cash includes currency on hand and demand deposits with financial
institutions. Temporary cash investments are short-term, highly-liquid
investments both readily convertible to known amounts of cash and so near
maturity that there is insignificant risk of changes in value because of changes
in interest rates.
Valuation of Assets
General account investments are carried at amounts determined on the following
bases:
Bond and stock values are carried as prescribed by the NAIC; bonds generally
at amortized amounts or cost, preferred stocks generally at cost and common
stocks at fair value. The discount or premium on bonds is amortized using the
interest method.
Investments in affiliates are included on the statutory equity method.
Loan-backed bonds and structured securities are valued at amortized cost using
the interest method including anticipated prepayments. Prepayment assumptions
are obtained from broker dealer surveys or internal estimates and are based on
the current interest rate and economic environment. The retrospective adjustment
method is used to value all such securities except for interest-only securities,
which are valued using the prospective method.
The net interest effect of interest rate and currency rate swap transactions
is recorded as an adjustment of interest income as incurred. The initial cost of
interest rate cap agreements is amortized to net investment income over the life
of the related agreement. Gains and losses on financial futures contracts used
as hedges against interest rate fluctuations are deferred and recognized in
income over the period being hedged.
Mortgage loans are carried at outstanding principal balance or amortized cost.
Investment real estate is carried at depreciated cost, less encumbrances.
Depreciation on investment real estate is recorded on a straight-line basis.
Accumulated depreciation amounted to $1.9 million in 1999 and $3.0 million in
1998.
Real estate acquired in satisfaction of debt and real estate held for sale are
carried at the lower of cost or fair value.
Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.
57
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
Asset Valuation and Interest Maintenance Reserves
The Asset Valuation Reserve (AVR) is computed in accordance with the
prescribed NAIC formula and represents a provision for possible fluctuations in
the value of bonds, equity securities, mortgage loans, real estate and other
invested assets. Changes to the AVR are charged or credited directly to the
unassigned deficit.
The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents that portion of the after tax net accumulated unamortized
realized capital gains and losses on sales of fixed income securities,
principally bonds and mortgage loans, attributable to changes in the general
level of interest rates. Such gains and losses are deferred and amortized into
income over the remaining expected lives of the investments sold. At December
31, 1999, the IMR, net of 1999 amortization of $2.3 million, amounted to $7.4
million, which is included in policy reserves. The corresponding 1998 amounts
were $2.4 million and $10.7 million, respectively.
Goodwill
The excess of cost over the statutory book value of the net assets of life
insurance business acquired was $8.9 million and $11.4 million at December 31,
1999 and 1998, respectively, and generally is amortized over a ten-year period
using a straight-line method.
Separate Accounts
Separate account assets and liabilities reported in the accompanying
statements of financial position represent funds that are separately
administered, principally for variable life insurance policies, and for which
the contractholder, rather than the Company, generally bears the investment
risk. Separate account obligations are intended to be satisfied from separate
account assets and not from assets of the general account. Separate accounts
generally are reported at fair value. The operations of the separate accounts
are not included in the statement of operations; however, income earned on
amounts initially invested by the Company in the formation of new separate
accounts is included in other income.
Fair Value Disclosure of Financial Instruments
Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair value
information about certain financial instruments, whether or not recognized in
the statement of financial position, for which it is practicable to estimate the
value. In situations where quoted market prices are not available, fair values
are based on estimates using present value or other valuation techniques. SFAS
No. 107 excludes certain financial instruments and all nonfinancial instruments
from its disclosure requirements. Therefore, the aggregate fair value amounts
presented do not represent the underlying value of the Company. See Note 11.
The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:
The carrying amounts reported in the statement of financial position for cash
and temporary cash investments approximate their fair values.
Fair values for public bonds are obtained from an independent pricing service.
Fair values for private placement securities and publicly traded bonds not
provided by the independent pricing service are estimated by the
58
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
Company by discounting expected future cash flows using current market rates
applicable to the yield, credit quality and maturity of the investments.
The fair values for common and preferred stocks, other than its subsidiary
investments, which are carried at equity values, are based on quoted market
prices.
Fair values for futures contracts are based on quoted market prices. Fair
values for interest rate swap, cap agreements, and currency swap agreements are
based on current settlement values. The current settlement values are based on
brokerage quotes that utilize pricing models or formulas using current
assumptions.
The fair value for mortgage loan is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit characteristics of
the underlying loans. Mortgage loans with similar characteristics and credit
risks are engaged into qualitative categories for purposes of the fair value
calculations.
The carrying amount in the statement of financial position for policy loans
approximates their fair value.
The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow method
incorporating adjustments for the difference in the level of interest rates
between the dates the commitments were made and December 31, 1999.
Capital Gains and Losses
Realized capital gains and losses are determined using the specific
identification method. Realized capital gains and losses, net of taxes and
amounts transferred to the IMR, are included in net gain or loss. Unrealized
gains and losses, which consist of market value and book value adjustments, are
shown as adjustments to the unassigned deficit.
Policy Reserves
Life reserves are developed by actuarial methods and are determined based on
published tables using statutorily specified interest rates and valuation
methods that will provide, in the aggregate, reserves that are greater than or
equal to the minimum or guaranteed policy cash values or the amounts required by
the Commonwealth of Massachusetts Division of Insurance. Reserves for variable
life insurance policies are maintained principally on the modified preliminary
term method using the 1958 and 1980 Commissioner's Standard Ordinary (CSO)
mortality tables, with an assumed interest rate of 4% for policies issued prior
to May 1, 1983 and 41/2% for policies issued on or thereafter. Reserves for
single premium policies are determined by the net single premium method using
the 1958 CSO mortality table, with an assumed interest rate of 4%. Reserves for
universal life policies issued prior to 1985 are equal to the gross account
value which at all times exceeds minimum statutory requirements. Reserves for
universal life policies issued from 1985 through 1988 are maintained at the
greater of the Commissioner's Reserve Valuation Method (CRVM) using the 1958 CSO
mortality table, with 41/2% interest or the cash surrender value. Reserves for
universal life policies issued after 1988 and for flexible variable policies are
maintained using the greater of the cash surrender value or the CRVM method with
the 1980 CSO mortality table and 51/2% interest for policies issued from 1988
through 1992; 5% interest for policies issued in 1993 and 1994; and 41/2%
interest for policies issued in 1995 through 1999.
Federal Income Taxes
Federal income taxes are reported in the financial statements based on amounts
determined to be payable as a result of operations within the current accounting
period. The operations of the Company are consolidated with John Hancock in
filing a consolidated federal income tax return basis for the affiliated group.
The federal income
59
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
taxes of the Company are allocated on a separate return basis with certain
adjustments. The Company made federal income tax payments of $10.6 million in
1999 and $38.2 million in 1998.
Income before taxes differs from taxable income principally due to tax-exempt
investment income, the limitation placed on the tax deductibility of
policyholder dividends, accelerated depreciation, differences in policy reserves
for tax return and financial statement purposes, capitalization of policy
acquisition expenses for tax purposes and other adjustments prescribed by the
Internal Revenue Code.
Amounts for disputed tax issues relating to the prior years are charged or
credited directly to policyholders' contingency reserve.
Adjustments to Policy Reserves
From time to time, the Company finds it appropriate to modify certain required
policy reserves because of changes in actuarial assumptions. Reserve
modifications resulting from such determinations are recorded directly to
stockholder's equity. No such refinements were made during 1999 or 1998.
Reinsurance
Premiums, commissions, expense reimbursements, benefits and reserves related
to reinsured business are accounted for on bases consistent with those used in
accounting for the original policies issued and the terms of the reinsurance
contracts. Premiums ceded to other companies have been reported as a reduction
of premium income. Amounts applicable to reinsurance ceded for future policy
benefits, unearned premium reserves and claim liabilities have been reported as
reductions of these items.
2. ACQUISITION
On June 23, 1993, the Company acquired all of the outstanding shares of stock
of Colonial Penn Annuity and Life Insurance Company (CPAL) from Colonial Penn
Life Insurance Company for an aggregate purchase price of approximately $42.5
million. At the date of acquisition, assets of CPAL were approximately $648.5
million, consisting principally of cash and temporary cash investments and
liabilities were approximately $635.2 million, consisting principally of
reserves related to a block of interest sensitive single-premium whole life
insurance business assumed by CPAL from Charter National Life Insurance Company
(Charter). The purchase price includes contingent payments of up to
approximately $7.3 million payable between 1994 and 1998 based on the actual
lapse experience of the business in force on June 23, 1993. The Company made the
final contingent payment to CPAL of $1.5 million during 1998.
60
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
On June 24, 1993, the Company contributed $24.6 million in additional capital
to CPAL. CPAL was renamed John Hancock Life Insurance Company of America
(JHLICOA) on July 7, 1993. JHLICOA was subsequently renamed Investors Partner
Life Insurance Company (IPL) on March 5, 1998. IPL manages the business assumed
from Charter and began marketing term life and variable universal life products
through brokers in 1999. Summarized financial information for IPL for 1999 and
1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
------- -------
(IN MILLIONS)
<S> <C> <C>
Total assets. . . . . . . . . . . . . . . . 570.7 587.8
Total liabilities. . . . . . . . . . . . . . 498.9 517.5
Total revenue. . . . . . . . . . . . . . . . 35.6 38.8
Net income. . . . . . . . . . . . . . . . . 3.5 3.8
</TABLE>
3. NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
------ ------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(IN MILLIONS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Investment expenses . . . . . . . . . . . . . $ 9.5 $ 8.3
Interest expense. . . . . . . . . . . . . . 1.7 2.4
Depreciation expense. . . . . . . . . . . . 0.6 0.8
Investment taxes. . . . . . . . . . . . . . 0.3 0.7
------ ------
$12.1 $12.2
====== ======
</TABLE>
61
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
4. NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital gains (losses) consist of the following items:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
------ ------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(IN MILLIONS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Net gains from asset sales . . . . . . . . . . . (2.8) 7.6
Capital gains tax . . . . . . . . . . . . . . . . 0.2 (2.9)
Net capital gains transferred to IMR . . . . . . 0.9 (5.3)
------ ------
Net REALIZED CAPITAL LOSSES . . . . . . . . . . . (1.7) (0.6)
====== ======
</TABLE>
Net unrealized capital gains (losses) and other adjustments consist of the
following items:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
------ ------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(IN MILLIONS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Net losses from changes in security values and book
value adjustments. . . . . . . . . . . . . . . (2.6) (2.7)
Increase in asset valuation reserve . . . . . . . . (1.2) (3.3)
------ ------
Net UNREALIZED CAPITAL LOSSES AND OTHER ADJUSTMENTS (3.8) (6.0)
====== ======
</TABLE>
62
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
5. TRANSACTIONS WITH PARENT
The Company's Parent provides the Company with personnel, property and
facilities in carrying out certain of its corporate functions. The Parent
annually determines a fee for these services and facilities based on a number of
criteria which were revised in 1999 and 1998 to reflect continuing changes in
the Company's operations. The amount of the service fee charged to the Company
was $188.3 million and $157.5 million in 1999 and 1998, respectively, which has
been included in insurance and investment expenses. The Parent has guaranteed
that, if necessary, it will make additional capital contributions to prevent the
Company's stockholder's equity from declining below $1.0 million.
The service fee charged to the Company by the Parent includes $0.2 million and
$0.7 million in 1999 and 1998, respectively, representing the portion of the
provision for retiree benefit plans determined under the accrual method,
including a provision for the 1993 transition liability which is being amortized
over twenty years, that was allocated to the Company.
The Company has a modified coinsurance agreement with John Hancock to reinsure
50% of 1994 through 1999 issues of flexible premium variable life insurance and
scheduled premium variable life insurance policies. In connection with this
agreement, John Hancock transferred $44.5 million and $4.9 million of cash for
tax, commission, and expense allowances to the Company, which increased the
Company's net gain from operations by $20.6 million and $22.2 million in 1999
and 1998, respectively.
Effective January 1, 1996, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of the 1995 inforce block and 50% of
1996 and all future issue years of certain variable annuity contracts
(Independence Preferred, Declaration, Independence 2000, MarketPlace, and
Revolution). In connection with this agreement, the Company received a net cash
payment of $40.0 million and $12.7 million in 1999 and 1998, respectively, for
surrender benefits, tax, reserve increase, commission, expense allowances and
premium, This agreement increased the Company's net gain from operations by
$26.9 million and $8.4 million in 1999 and 1998, respectively.
Effective January 1, 1997, the Company entered into a stop-loss agreement with
John Hancock to reinsure mortality claims in excess of 110% of expected
mortality claims in 1999 and 1998 for all policies that are not reinsured under
any other indemnity agreement. In connection with the agreement, John Hancock
received $0.8 million and 1.0 million in 1999 and 1998, respectively, for
mortality claims to the Company. This agreement decreased the Company's net gain
from operations in both 1999 and 1998 by $0.5 million.
At December 31, 1998 the Company had outstanding a short-term note of $61.9
million payable to an affiliate at a variable rate of interest. The note was
part of a revolving line of credit and was repaid in 1999. Interest paid in 1999
and 1998 was $1.7 million and $2.9 million, respectively. The note is included
in other general account obligations at December 31, 1998.
63
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
6. INVESTMENTS
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
-------------- -------------- --------------- ---------
(IN MILLIONS)
December 31, 1999 . .
U.S. Treasury
securities and
obligations of U.S.
government
corporations and
agencies . . . . . . 5.9 0.0 0.1 5.8
Obligations of states
and political
subdivisions . . . . 2.2 0.1 0.1 2.2
Debit securities
issued by foreign
governments. . . . . 13.9 0.8 0.1 14.6
Corporate securities 964.9 13.0 59.4 918.5
Mortgage-backed
securities . . . . . 229.4 0.5 7.8 222.1
-------- ----- ------ --------
Total bonds . . . . .
======== ===== ====== ========
December 31, 1998
U.S. Treasury
securities and
obligations of U.S.
government
corporations and
agencies . . . . . . 5.1 0.1 0.0 5.2
Obligations of states
and political
subdivisions . . . . 3.2 0.3 0.0 3.5
Corporate securities 925.2 50.4 15.0 960.6
Mortgage-backed
securities . . . . . 252.3 10.0 0.1 262.2
-------- ----- ------ --------
Total bonds . . . . . 15.1
======== ===== ====== ========
</TABLE>
64
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
The statement value and fair value of bonds at December 31, 1999, by
contractual maturity, are shown below. Maturities will differ from contractual
maturities because eligible borrowers may exercise their right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
<S> <C> <C>
FAIR
VALUE VALUE
-------- ---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(IN MILLIONS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Due in one year or less. . . . . . . . . . . . . . $ 58.5 58.2
Due after one year through five years. . . . . . . 286.8 282.0
Due after five years through ten years . . . . . . 425.4 405.6
Due after ten years. . . . . . . . . . . . . . . . 216.2 195.3
-------- ---------
986.9 941.1
Mortgage-backed securities . . . . . . . . . . . . 229.4 222.1
-------- ---------
$1,216.3
======== =========
</TABLE>
Gross gains of $0.3 million in 1999 and $3.4 million in 1998 and gross losses
of $4.0 million in 1999 and $0.7 million in 1998 were realized from the sale of
bonds.
At December 31, 1999, bonds with an admitted asset value of $9.1 million were
on deposit with state insurance departments to satisfy regulatory requirements.
The cost of common stocks was $3.1 million and $2.1 million at December 31,
1999 and 1998, respectively. At December 31, 1999, gross unrealized appreciation
on common stocks totaled $1.2 million, and gross unrealized depreciation totaled
$1.1 million. The fair value of preferred stock totaled $35.9 million at
December 31, 1999 and $36.5 million at December 31, 1998.
Bonds with amortized cost of $0.4 million were non-income producing for the
twelve months ended December 31, 1999.
At December 31, 1999, the mortgage loan portfolio was diversified by
geographic region and specific collateral property type as displayed below. The
Company controls credit risk through credit approvals, limits and monitoring
procedures.
65
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GEOGRAPHIC
PROPERTY TYPE CONCENTRATION
Apartments. . . . . . . . $112.1 East North Central $ 71.3
Hotels. . . . . . . . . . 11.3 East South Central 7.4
Industrial. . . . . . . . 66.0 Middle Atlantic 28.5
Office buildings. . . . . 86.4 Mountain 21.0
Retail. . . . . . . . . . 25.5 New England 37.5
Agricultural. . . . . . . 99.6 Pacific 111.1
Other . . . . . . . . . . 32.2 South Atlantic 87.6
West North Central 16.6
West South Central 48.6
Other 3.5
------
$433.1 $433.1
======
</TABLE>
At December 31, 1999, the fair values of the commercial and agricultural
mortgage loans portfolios were $323.5 million and $98.2 million, respectively.
The corresponding amounts as of December 31, 1998 were approximately $331.3
million and $70.0 million, respectively.
The maximum and minimum lending rates for mortgage loans during 1999 were
14.24% and 6.84% for agricultural loans, 7.45% and 7.00% for other properties.
Generally, the maximum percentage of any loan to the value of security at the
time of the loan, exclusive of insured, guaranteed or purchase money mortgages,
is 75%. For city mortgages, fire insurance is carried on all commercial and
residential properties at least equal to the excess of the loan over the maximum
loan which would be permitted by law on the land without the building, except as
permitted by regulations of the Federal Housing Commission on loans fully
insured under the provisions of the National Housing Act. For agricultural
mortgage loans, fire insurance is not normally required on land based loans
except in those instances where a building is critical to the farming operation.
Fire insurance is required on all agri-business facilities in an aggregate
amount equal to the loan balance.
66
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
7. REINSURANCE
The Company cedes business to reinsurers to share risks under variable life,
universal life and flexible variable life insurance policies for the purpose of
reducing exposure to large losses. Premiums, benefits and reserves ceded to
reinsurers in 1999 were $594.9 million, $132.8 million, and $13.6 million,
respectively. The corresponding amounts in 1998 were $590.2 million, $63.2
million, and $8.2 million, respectively.
Reinsurance ceded contracts do not relieve the Company from its obligations to
policyholders. The Company remains liable to its policyholders for the portion
reinsured to the extent that any reinsurer does not meet its obligations for
reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the reinsurer.
Neither the Company, nor any of its related parties, control, either directly
or indirectly, any external reinsurers with which the Company conducts business.
No policies issued by the Company have been reinsured with a foreign company
which is controlled, either directly or indirectly, by a party not primarily
engaged in the business of insurance.
The Company has not entered into any reinsurance agreement in which the
reinsurer may unilaterally cancel any reinsurance for reasons other than
nonpayment of premiums or other similar credits. The Company does not have any
reinsurance agreements in effect in which the amount of losses paid or accrued
through December 31, 1999 would result in a payment to the reinsurer of amounts
which, in the aggregate and allowing for offset of mutual credits from other
reinsurance agreements with the same reinsurer, exceed the total direct premiums
collected under the reinsured policies.
8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The notional amounts, carrying values and estimated fail values of the
Company's derivative instruments were as follows at December 31:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <S> <C> <C>
NUMBER OF CONTRACTS/ ASSETS (LIABILITIES)
------------------
NOTIONAL AMOUNTS 1999 1998
FAIR VALUE
---------
------- ------- --------- --------- ---------
(IN MILLIONS)
Futures contracts to $ (0.5)
sell securities 362.0 947.0 $0.6 $0.6 $(0.5)
Interest rate swap (17.7)
agreements $965.0 $365.0 -- 11.5 --
Interest rate cap
agreements 239.4 89.4 5.6 5.6 3.1
Currency rate swap (3.3)
agreements 15.8 15.8 -- (1.6) --
</TABLE>
67
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
The Company uses futures contracts, interest rate swap, cap agreements, and
currency rate swap agreements for other than trading purposes to hedge and
manage its exposure to changes in interest rate levels, foreign exchange rate
fluctuations and to manage duration mismatch of assets and liabilities.
The futures contracts expire in 2000. The interest rate swap agreements expire
in 2000 to 2011. The interest rate cap agreements expire in 2006 to 2008. The
currency rate swap agreements expire in 2006 to 2009.
The Company's exposure to credit risk is the risk of loss from a counterparty
failing to perform to the terms of the contract. The Company continually
monitors its position and the credit ratings of the counterparties to these
derivative instruments. To limit exposure associated with counterparty
nonperformance on interest rate and currency swap agreements, the Company enters
into master netting agreements with its counterparties. The Company believes the
risk of incurring losses due to nonperformance by its counterparties is remote
and that such losses, if any, would be immaterial. Futures contracts trade on
organized exchanges and, therefore, have minimal credit risk.
9. POLICY RESERVES POLICYHOLDERS' AND BENIFICIARIES' FUNDS AND OBLIGATIONS
RELATED TO SEPARATE ACCOUNTS
The Company' annuity reserves and deposit fund liabilities that are subject to
discretionary withdrawal, with and without adjustment, are summarized as
follows.
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1999 PERCENT
---------------- ------
(IN MILLIONS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Subject to discretionary withdrawal (with
adjustment)
With market value adjustment . . . . . . . . . $3.8 0.1%
At book value less surrender charge 40.5 1.5
At market value . . . . . . . . . . . . . . . . 2,326.6 87.1
--------
Total with adjustment. . . . . . . . . . . 2,370.9 88.7
Subject to discretionary withdrawal 287.1 10.7
at book value (without adjustment) . . . . .
Not subject to discretionary withdrawal--general
account. . . . . . . . . . . . . . . . . . . . 15.4 0.6
--------
Total annuity reserves and deposit liabilities $2,673.4 100.0%
========
</TABLE>
68
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
10. COMMITMENTS AND CONTINGENCIES
The Company has extended commitments to purchase long-term bonds and issue
real estate mortgages totaling $15.4 million and $3.5 million, respectively, at
December 31, 1999. The Company monitors the creditworthiness of borrowers under
long-term bonds commitments and requires collateral as deemed necessary. If
funded, loans related to real estate mortgages would be fully collateralized by
the related properties. The estimated fair value of the commitments described
above is $19.4 million at December 31, 1999. The majority of these commitments
expire in 2000.
In the normal course of its business operations, the Company is involved with
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1999. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position or results of operations of the Company.
During 1997, John Hancock entered into a court-approved settlement relating to
a class action lawsuit involving certain individual life insurance policies sold
from 1979 through 1996. In entering into the settlement, John Hancock
specifically denied any wrongdoing. During 1999, the Company recorded a $194.9
million reserve, through a direct charge to its unassigned deficit, representing
the Company's share of the settlement and John Hancock contributed $194.9
million of capital to the Company. The reserve held at December 31, 1999
amounted to $136.5 million and is based on a number of factors, including the
estimated number of claims, the expected type of relief to be sought by class
members (general relief or alternative dispute resolution), the estimated cost
per claim and the estimated costs to administer the claims.
Given the uncertainties associated with estimating the reserve, it is
reasonably possible that the final cost of the settlement could differ
materially from the amounts presently provided for by the Company. John Hancock
and the Company will continue to update their estimate of the final cost of the
settlement as claims are processed and more specific information is developed,
particularly as the actual cost of the claims subject to alternative dispute
resolution becomes available. However, based on information available at this
time, and the uncertainties associated with the final claim processing and
alternative dispute resolution, the range of any additional costs related to the
settlement cannot be reasonably estimated. If the Company's share of the
settlement increases, John Hancock will contribute additional capital to the
Company so that the Company's total stockholder's equity would not be impacted.
69
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--(CONTINUED)
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and fair values of the
Company's financial instruments:
<TABLE>
<CAPTION>
<S> <C>
DECEMBER 31,
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
--------------- ---------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(IN MILLIONS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ASSETS
Bonds--Note 6. . . . .
Preferred stocks--Note
6. . . . . . . . . . . . 35.9 35.9 36.5 36.5
Common stocks--Note 6. 3.2 3.2 3.1 3.1
Mortgage loans on real
estate--Note 6. . . . . 433.1 421.7 388.1 401.3
Policy loans--Note 1. 172.1 172.1 137.7 137.7
Cash items--Note 1. . 250.1 250.1 19.9 19.9
Derivatives assets
(liabilities) relating
to: --Note 8. . . . .
Futures contracts. . . 0.6 0.6 (0.5) (0.5)
Interest rate swaps. . -- 11.5 -- (17.7)
Currency rate swaps. . -- (1.6) -- (3.3)
Interest rate caps. . 5.6 5.6 3.1 3.1
LIABILITIES
Commitments--Note 10. -- 19.4 -- 32.1
</TABLE>
The carrying amounts in the table are included in the statutory-basis
statements of financial position. The method and assumptions utilized by the
Company in estimating its fair value disclosures are described in Note 1.
12. SUBSEQUENT EVENTS
REORGANIZATION AND INITIAL PUBLIC OFFERING
Pursuant to a Plan of Reorganization approved by the policyholders of John
Hancock and the Commonwealth of Massachusetts Division of Insurance, effective
February 1, 2000, John Hancock converted from a mutual life insurance company to
a stock life insurance company (i.e., demutualized) and became a wholly owned
subsidiary of John Hancock Financial Services, Inc., which is a holding company.
In connection with the reorganization, John Hancock changed its name to John
Hancock Life Insurance Company. In addition, on February 1, 2000, John Hancock
Financial Services, Inc. completed its initial public offering and 102 million
shares of common stock were issued at an initial public offering price of $17
per share.
70
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENT--(CONTINUED)
13. IMPACT OF YEAR 2000 (UNAUDITED)
The Company participated in the Year 2000 remediation project of its parent,
John Hancock. By late 1999, John Hancock and the Company completed their Year
2000 readiness plan to address issues that could result from computer programs
written using two digits to define the applicable year rather than four to
define the applicable year and century. As a result, John Hancock and the
Company were prepared for the transition to the Year 2000 and did not experience
any significant Year 2000 problems with respect to mission critical information
technology ("IT") or non-IT systems, applications or infrastructure. During the
date rollover to the year 2000, John Hancock and the Company implemented and
monitored their millennium rollover plan and conducted business as usual on
Monday, January 3, 2000.
Since January 3, 2000, the information systems, including mission critical
systems, which in the event of a Year 2000 failure would have the greatest
impact on operations, have functioned properly. In addition, neither John
Hancock nor the Company have experienced any significant Year 2000 issues
related to interactions with material business partners. No disruptions have
occurred which impact John Hancock or the Company's ability to process claims,
update customer accounts, process financial transactions, or report accurate
data to management and no business interruptions due to Year 2000 issues have
been experienced. While John Hancock and the Company continue to monitor their
systems, and those of material business partners, closely to ensure that no
unexpected Year 2000 issues develop, neither John Hancock nor the Company have
reason to expect any such issues.
The costs of the Year 2000 project consist of internal IT personnel and
external costs such as consultants, programmers, replacement software, and
hardware. The costs of the Year 2000 project are expensed as incurred. The
project is funded partially through a reallocation of resources from
discretionary projects. Through December 31, 1999, John Hancock has incurred and
expensed approximately $20.8 million in related payroll costs for internal IT
personnel on the project. The estimated remaining IT personnel costs of the
project are approximately $1.0 million. Through December 31, 1999, John Hancock
has incurred and expensed approximately $47.0 million in external costs for the
project. John Hancock's estimated remaining external cost of the project is
approximately $2.0 million. The total costs of the Year 2000 project to John
Hancock, based on management's best estimates, include approximately $21.7
million in internal IT personnel, $14.6 million in the external modification of
software, $18.3 million for external solution providers, $9.1 million in
replacement costs of non-compliant IT systems and $6.9 million in oversight,
test facilities and other expenses. Accordingly, the estimated range of total
costs of the Year 2000 project to John Hancock, internal and external, is
approximately $70 to $72.5 million. John Hancock's total Year 2000 project costs
include the estimated impact of external solution providers based on presently
available information.
71
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
FOR
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
SECOND QUARTER 2000
72
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 2000
<TABLE>
<CAPTION>
INTERNATIONAL
LARGE CAP ACTIVE 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 . 139,955,553 35,417,027 34,419,184 38,614,519
Investments in shares
of portfolios of M
Fund Inc., at value -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . 8,252 209,538 63,374 0
M Fund Inc. . . . . -- -- -- --
------------ ----------- ----------- ------------
Total assets . . . . 139,963,805 35,626,565 34,482,558 38,614,519
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . 1,113 213 286 354
M Fund Inc. . . . . -- -- -- --
Asset charges payable -- -- -- --
------------ ----------- ----------- ------------
Total liabilities . . 1,113 213 286 354
------------ ----------- ----------- ------------
Net assets . . . . . $139,962,692 $35,626,352 $34,482,272 $ 38,614,165
============ =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
GLOBAL 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 . . . 5,203,893 66,875,138 30,925,488 106,126,654
Investments in shares of
portfolios of M Fund
Inc., at value . . . . . -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . . . 11,430 0 40,214 55,584
M Fund Inc. . . . . . . -- -- -- --
---------- ----------- ----------- ------------
Total assets . . . . . . 5,215,323 66,875,138 30,965,702 106,182,238
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance Company 48 604 267 2,853
M Fund Inc. . . . . . . -- -- -- --
Asset charges payable . . -- -- -- --
---------- ----------- ----------- ------------
Total liabilities . . . . 48 604 267 2,853
---------- ----------- ----------- ------------
Net assets . . . . . . . $5,215,275 $66,874,534 $30,965,435 $106,179,385
========== =========== =========== ============
</TABLE>
See accompany notes.
73
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
MID CAP SMALL/MIDCAP 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. . 20,720,541 9,664,300 19,827,328 209,587,121
Investments in shares
of portfolios of M
Fund Inc., at value. -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I. . . 14,784 -- -- 141,635
M Fund Inc.. . . . . -- -- -- --
------------ ----------------------------- ----------- ------------
Total assets. . . . . 20,735,325 9,664,300 19,827,328 209,728,756
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . 189 93 160 2,206
M Fund Inc.. . . . . -- -- -- --
Asset charges payable -- -- -- --
------------ ----------------------------- ----------- ------------
Total liabilities . . 189 93 160 2,206
------------ ----------------------------- ----------- ------------
Net assets. . . . . . $ 20,735,136 $ 9,664,207 $19,827,168 $209,726,550
============ ============================= =========== ============
</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. . . . . . . . . . . . . 129,010,254 14,876,205 23,028,226 40,698,659
Investments in shares of portfolios of M
Fund Inc., at value. . . . . . . . . . . . -- -- -- --
Receivable from:
John Hancock Variable Series Trust I . . . 306,228 76,873 29,212 32,651
M Fund Inc.. . . . . . . . . . . . . . . . -- -- -- --
------------------- ------------------------ ----------- -----------
Total assets. . . . . . . . . . . . . . . . 129,316,482 14,953,078 23,057,438 40,731,310
LIABILITIES
Payable to:
John Hancock Variable Life Insurance
Company . . . . . . . . . . . . . . . . . 1,865 88 231 358
M Fund Inc.. . . . . . . . . . . . . . . . -- -- -- --
Asset charges payable . . . . . . . . . . . -- -- -- --
------------------- ------------------------ ----------- -----------
Total liabilities . . . . . . . . . . . . . 1,865 88 231 358
------------------- ------------------------ ----------- -----------
Net assets. . . . . . . . . . . . . . . . . $129,314,617 $ 14,952,990 $23,057,207 $40,730,952
=================== ======================== =========== ===========
</TABLE>
See accompany notes.
74
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
JUNE 30, 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 . . 172,410,513 6,753,777 19,350,682 24,763,277
Investments in shares
of portfolios of M
Fund Inc., at value . -- -- -- --
Receivable from: . . . -- --
John Hancock Variable
Series Trust I . . . 108,870 29,165 -- --
M Fund Inc. . . . . . -- -- -- --
------------ ---------- ----------- -----------
Total assets . . . . . 172,519,383 6,782,942 19,350,682 24,763,277
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company. . . . . . . 1,345 67 115 126
M Fund Inc. . . . . . -- -- -- --
Asset charges payable. -- -- -- --
------------ ---------- ----------- -----------
Total liabilities. . . 1,345 67 115 126
------------ ---------- ----------- -----------
Net assets . . . . . . $172,518,038 $6,782,875 $19,350,567 $24,763,151
============ ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FRONTIER CLIFTON EMERGING INTERNATIONAL
CAPITAL ENHANCED MARKETS OPPORTUNITIES
APPRECIATION U.S. EQUITY EQUITY II
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 . . . 21,071,755 9,661,917 6,102,393 1,310,825
Investments in shares of portfolios of M Fund
Inc., at value. . . . . . . . . . . . . . . . . -- -- -- --
Receivable from:
John Hancock Variable Series Trust I. . . . . . -- -- -- 909
M Fund Inc. . . . . . . . . . . . . . . . . . . -- -- -- --
----------- ---------- ---------- ---------------------------------------
Total assets . . . . . . . . . . . . . . . . . . 21,071,755 9,661,917 6,102,393 1,311,734
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company. . 112 43 58 16
M Fund Inc. . . . . . . . . . . . . . . . . . . -- -- -- --
Asset charges payable. . . . . . . . . . . . . . -- -- -- --
----------- ---------- ---------- ---------------------------------------
Total liabilities. . . . . . . . . . . . . . . . 112 43 58 16
----------- ---------- ---------- ---------------------------------------
Net assets . . . . . . . . . . . . . . . . . . . $21,071,643 $9,661,874 $6,102,235 $ 1,311,718
=========== ========== ========== =======================================
</TABLE>
See accompany notes.
75
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNTS
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
HIGH FUNDAMENTAL
BOND SMALL/MID YIELD MID CAP
INDEX CAP CORE BOND 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. . 7,579,153 1,409,959 4,035,963 20,405
Investments in shares
of portfolios of M
Fund Inc., at value. -- -- --
Receivable from:
John Hancock Variable
Series Trust I. . . 41,425 2,129 27,597 --
M Fund Inc.. . . . . -- -- --
---------- ---------- ------------------------ --------
Total assets. . . . . 7,620,578 1,412,088 4,063,560 20,405
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . 69 13 37 --
M Fund Inc.. . . . . -- -- -- --
Asset charges payable -- -- -- --
---------- ---------- ------------------------ --------
Total liabilities . . 69 13 37 --
---------- ---------- ------------------------ --------
Net assets. . . . . . $7,620,509 $1,412,075 $ 4,063,523 $`20,405
========== ========== ======================== ========
</TABLE>
<TABLE>
<CAPTION>
NEW FIDELITY FIDELITY
AIM V.I. DISCOVERY VIP VIP II TEMPLETON
VALUE SERIES CONTRAFUND GROWTH INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash. . . . . . . . . $ -- $ -- $ -- $ -- $ --
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. . . . . . . . 99,180 322,881 20,127 79,989 150,853
Investments in shares
of portfolios of M
Fund Inc., at value. -- -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I. . . -- -- -- -- --
M Fund Inc.. . . . . -- -- -- -- --
------- -------- ------- ------- --------
Total assets. . . . . 99,180 322,881 20,127 79,989 150,853
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . 1 2 -- 1 1
M Fund Inc.. . . . . -- -- -- -- --
Asset charges payable -- -- -- -- --
------- -------- ------- ------- --------
Total liabilities . . 1 2 -- 1 1
------- -------- ------- ------- --------
Net assets. . . . . . $99,179 $322,879 $20,127 $79,988 $150,852
======= ======== ======= ======= ========
</TABLE>
See accompany notes.
76
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT
---------------------------------------
2000 1999 1998
------------ ------------ -----------
<S> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 151,072 $17,558,034 $ 6,312,073
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Total investment income . . . . . . . . . . . . 151,072 17,558,034 6,312,073
Expenses:
Mortality and expense risks . . . . . . . . . 225,388 324,595 168,652
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . (74,316) 17,233,439 6,143,421
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . 2,734,096 5,003,007 1,750,881
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . 4,426,209 (2,053,672) 8,041,022
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . 7,160,305 2,949,335 9,791,903
----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . $ 7,085,989 $20,182,774 $15,935,324
=========== =========== ===========
<CAPTION>
ACTIVE BOND SUBACCOUNT
--------------------------------------
2000 1999 1998
------------ ------------ -------------
<S> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 1,067,381 $ 2,851,613 $2,190,901
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- --
----------- ----------- ----------
Total investment income . . . . . . . . . . . . 1,067,381 2,851,613 2,190,901
Expenses:
Mortality and expense risks . . . . . . . . . 51,193 126,407 93,556
----------- ----------- ----------
Net investment income (loss) . . . . . . . . . 1,016,188 2,725,206 2,097,345
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . (874,542) (1,391,910) 185,230
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . 952,272 (1,837,190) (378,058)
----------- ----------- ----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . 77,730 (3,229,100) (192,828)
----------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . $ 1,093,918 $ (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 . . . . . $ 296,545 $ 936,475 $1,930,710 $ -- $ 3,697,955 $ --
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
----------- ---------- ---------- ----------- ----------- ----------
Total investment income (loss) . . . . . . . . 296,545 936,475 1,930,710 -- 3,697,955 --
Expenses:
Mortality and expense risks . . . . . . . . . 62,937 81,058 45,651 72,582 60,221 22,593
----------- ---------- ---------- ----------- ----------- ----------
Net investment income (loss) . . . . . . . . . 233,608 855,417 1,885,059 (72,582) 3,637,734 (22,593)
Net realized and unrealized gain (loss) on
investments:
Net realized gains . . . . . . . . . . . . . . 1,515,308 753,750 152,030 4,544,105 2,548,944 58,729
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . (3,395,800) 4,871,167 78,480 (3,503,834) 3,920,455 1,070,805
----------- ---------- ---------- ----------- ----------- ----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . (1,880,492) 5,624,917 230,510 1,040,271 6,469,399 1,129,534
----------- ---------- ---------- ----------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . $(1,646,884) $6,480,334 $2,115,569 $ 967,689 $10,107,133 $1,106,941
=========== ========== ========== =========== =========== ==========
</TABLE>
See accompanying notes.
77
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
GLOBAL 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 . . $ 63,243 $ 372,766 $ 185,760 $ -- $ 6,491,783 $1,114,374
M Fund Inc. . . . . -- -- -- -- -- --
--------- ---------- ------------ ------------ ----------- ----------
Total investment
income . . . . . . . 63,243 372,766 185,760 -- 6,491,783 1,114,374
Expenses:
Mortality and expense
risks . . . . . . . 8,184 13,792 9,687 135,550 102,248 26,123
--------- ---------- ------------ ------------ ----------- ----------
Net investment income
(loss) . . . . . . . 55,059 358,974 176,073 (135,550) 6,389,535 1,088,251
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (123,229) 15,640 24,206 8,716,345 5,188,018 599,619
Net unrealized
appreciation
(depreciation)
during the period . (109,231) (173,912) 147,461 (13,790,389) 15,078,681 1,184,263
--------- ---------- ------------ ------------ ----------- ----------
Net realized and
unrealized gain
(loss)
on investments . . . (232,460) (158,272) 171,667 (5,074,044) 20,266,699 1,783,882
--------- ---------- ------------ ------------ ----------- ----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $(177,401) $ 200,702 $ 347,740 $(5,209,594) $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 . . $ 329,521 $ 1,809,072 $ 797,874 $2,267,940 $3,279,928 $1,854,829
M Fund Inc. . . . . -- -- -- -- -- --
--------- ----------- ---------- ---------- ---------- ----------
Total investment
income . . . . . . . 329,521 1,809,072 797,874 2,267,940 3,279,928 1,854,829
Expenses:
Mortality and expense
risks . . . . . . . 51,584 88,877 41,415 158,685 291,398 167,813
--------- ----------- ---------- ---------- ---------- ----------
Net investment income 277,937 1,720,195 756,459 2,109,255 2,988,530 1,687,016
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (232,676) 705,454 330,827 -- -- --
Net unrealized
appreciation
(depreciation)
during the period . (596,463) (2,181,112) 145,355 -- -- --
--------- ----------- ---------- ---------- ---------- ----------
Net realized and
unrealized gain
(loss)
on investments . . . (829,139) (1,475,658) 476,182 -- -- --
--------- ----------- ---------- ---------- ---------- ----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $(551,202) $ 244,537 $1,232,641 $2,109,255 $2,988,530 $1,687,016
========= =========== ========== ========== ========== ==========
</TABLE>
See accompanying notes.
78
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<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 . . . . . $ 45,440 $ 110,190 $ 120,469 $ -- $ 1,421,656 $ 142,469
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
---------- ---------- ----------- ---------- ------------ ------------
Total investment income (loss) . . . . . . . . 45,440 110,190 120,469 -- 1,421,656 142,469
Expenses:
Mortality and expense risks . . . . . . . . . 39,462 68,611 45,020 18,930 32,995 34,432
---------- ---------- ----------- ---------- ------------ ------------
Net investment income (loss) . . . . . . . . . 5,978 41,579 75,449 (18,930) 1,388,661 108,037
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . 783,358 (860,332) (538,516) (567,320) 13,375 232,246
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . 289,049 1,757,919 (830,390) 1,251,426 (1,001,208) 236,333
---------- ---------- ----------- ---------- ------------ ------------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . 1,072,407 897,587 (1,368,906) 684,106 (987,833) 468,579
---------- ---------- ----------- ---------- ------------ ------------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . $1,078,385 $ 939,166 $(1,293,457) $ 665,176 $ 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 . . . . . $ 324,574 $ 544,845 $ 305,783 $ 1,040,920 $23,565,679 $ 9,266,175
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
---------- --------- ------------ ----------- ----------- -----------
Total investment income . . . . . . . . . . . . 324,574 544,845 305,783 1,040,920 23,565,679 9,266,175
Expenses:
Mortality and expense risks . . . . . . . . . 20,547 29,468 22,716 442,927 715,377 290,361
---------- --------- ------------ ----------- ----------- -----------
Net investment income . . . . . . . . . . . . . 304,027 515,377 283,067 597,993 22,850,302 8,975,814
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . (9,406) (735,504) (454,979) 1,331,371 6,207,253 2,061,212
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . 1,465,596 80,925 (698,676) (3,257,862) (5,814,839) 7,759,307
---------- --------- ------------ ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . 1,456,190 (654,579) (1,153,655) (1,926,491) 392,414 9,820,519
---------- --------- ------------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . $1,760,217 $(139,202) $ (870,588) $(1,328,498) $23,242,716 $18,796,333
========== ========= ============ =========== =========== ===========
</TABLE>
See accompanying notes.
79
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<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 . . $1,918,560 $11,251,980 $3,606,186 $ 433,130 $ 957,614 $ 977,164
M Fund Inc. . . . . -- -- -- -- -- --
---------- ----------- ---------- ----------- ---------- ---------
Total investment
income . . . . . . . 1,918,560 11,251,980 3,606,186 433,130 957,614 977,164
Expenses:
Mortality and expense
risks . . . . . . . 340,006 495,544 121,905 19,435 50,128 50,947
---------- ----------- ---------- ----------- ---------- ---------
Net investment income 1,578,554 10,756,436 3,484,281 413,695 907,486 926,217
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (259,619) 2,233,258 278,186 (190,959) (441,667) 24,740
Net unrealized
appreciation
(depreciation)
during the period . (110,575) (6,419,069) 1,791,231 169,777 (85,754) (136,999)
---------- ----------- ---------- ----------- ---------- ---------
Net realized and
unrealized gain
(loss) on investments (370,194) (4,185,811) 2,069,417 (21,182) (527,421) (112,259)
---------- ----------- ---------- ----------- ---------- ---------
Net increase in net
assets resulting from
operations . . . . . $1,208,360 $ 6,570,625 $5,553,698 $ 392,513 $ 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 . . $ 183,706 $ 409,324 $ 47,350 $ 147,896 $2,096,195 $ 103,399
M Fund Inc. . . . . -- -- -- -- -- --
--------- ---------- ---------- ----------- ---------- ----------
Total investment
income . . . . . . . 183,706 409,324 47,350 147,896 2,096,195 103,399
Expenses:
Mortality and expense
risks . . . . . . . 42,741 64,613 33,335 70,749 90,191 50,003
--------- ---------- ---------- ----------- ---------- ----------
Net investment income 140,965 344,711 14,015 77,147 2,006,004 53,396
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 45,176 (979,002) (9,919) 2,289,932 1,907,809 191,495
Net unrealized
appreciation
(depreciation)
during the period . 151,771 325,684 (523,693) (3,683,990) 3,818,953 1,108,416
--------- ---------- ---------- ----------- ---------- ----------
Net realized and
unrealized gain
(loss) on investments 196,947 (653,318) (533,612) (1,394,058) 5,726,762 1,299,911
--------- ---------- ---------- ----------- ---------- ----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ 337,912 $ (308,607) $ (519,597) $(1,316,911) $7,732,766 $1,353,307
========= ========== ========== =========== ========== ==========
</TABLE>
See accompanying notes.
80
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<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 . . $ 896,990 $ 5,839,023 $1,337,750 $ 111,426 $ 460,088 $303,545
M Fund Inc. . . . . -- -- -- -- -- --
----------- ----------- ---------- ---------- ---------- --------
Total investment
income . . . . . . . 896,990 5,839,023 1,337,750 111,426 460,088 303,545
Expenses:
Mortality and expense
risks . . . . . . . 289,729 335,573 126,021 15,928 35,321 19,894
----------- ----------- ---------- ---------- ---------- --------
Net investment income 607,261 5,503,450 1,211,729 95,498 424,767 283,651
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 3,352,907 7,681,081 691,270 (278,305) (204,675) 81,659
Net unrealized
appreciation
(depreciation)
during the period . (4,597,742) 4,678,509 6,098,919 387,581 (433,526) 43,608
----------- ----------- ---------- ---------- ---------- --------
Net realized and
unrealized gain
(loss)
on investments . . . (1,244,835) 12,359,590 6,790,189 109,276 (638,201) 125,267
----------- ----------- ---------- ---------- ---------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ (637,574) $17,863,040 $8,001,918 $ 204,774 $ (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 . . $ 221,603 $1,349,358 $ -- $ 306,598 $ 549,978 $ --
M Fund Inc. . . . . -- -- 84,940 -- -- 358,080
----------- ---------- -------- ---------- ---------- --------
Total investment
income . . . . . . . 221,603 1,349,358 84,940 306,598 549,978 358,080
Expenses:
Mortality and expense
risks . . . . . . . 38,241 33,920 7,737 28,784 34,297 14,434
----------- ---------- -------- ---------- ---------- --------
Net investment income 183,362 1,315,438 77,203 277,814 515,681 343,646
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains . 2,411,545 1,038,462 156,278 181,342 507,727 89,337
Net unrealized
appreciation
(depreciation)
during the period . (1,758,048) 1,626,646 562,620 784,685 3,486,097 91,915
----------- ---------- -------- ---------- ---------- --------
Net realized and
unrealized gain on
investments. . . . . 653,497 2,665,108 718,898 966,027 3,993,824 181,252
----------- ---------- -------- ---------- ---------- --------
Net increase in net
assets resulting from
operations . . . . . $ 836,859 $3,980,546 $796,101 $1,243,841 $4,509,505 $524,898
=========== ========== ======== ========== ========== ========
</TABLE>
See accompanying notes.
81
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
FRONTIER CAPITAL APPRECIATION CLIFTON 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 . . $ 565,927 $ 487,465 $ -- $ 253,050 $532,067 $ --
M Fund Inc. . . . . -- -- 34,738 -- -- 72,302
----------- ---------- --------- --------- -------- --------
Total investment
income . . . . . . . 565,927 487,465 34,738 253,050 532,067 72,302
Expenses:
Mortality and expense
risks . . . . . . . 32,774 37,471 24,841 11,633 13,930 4,069
----------- ---------- --------- --------- -------- --------
Net investment income 533,153 449,994 9,897 241,417 518,137 68,233
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 3,686,537 624,068 (445,752) 105,370 264,436 87,723
Net unrealized
appreciation
(depreciation)
during the period . (2,068,274) 3,431,408 432,064 (545,352) 151,562 89,677
----------- ---------- --------- --------- -------- --------
Net realized and
unrealized gain
(loss) on investments 1,618,263 4,055,476 (13,688) (439,982) 415,998 177,400
----------- ---------- --------- --------- -------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ 2,151,416 $4,505,470 $ (3,791) $(198,565) $934,135 $245,633
=========== ========== ========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
EMERGING MARKETS EQUITY INTERNATIONAL OPPORTUNITIES II
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 $ 14,069 $ 6,063 $ 491
M Fund Inc. . . . . -- -- -- -- -- --
------------- ----------- ---------- --------- ---------- ----------
Total investment
income . . . . . . . -- 137,724 522 14,069 6,063 491
Expenses:
Mortality and expense
risks . . . . . . . 12,643 5,465 387 2,617 1,859 339
------------- ----------- ---------- --------- ---------- ----------
Net investment income
(loss) . . . . . . . (12,643) 132,259 135 11,452 4,204 152
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (101,200) 663,998 (45,975) 20,107 82,873 (21,835)
Net unrealized
appreciation
(depreciation)
during the period . (287,458) 432,248 2,289 (56,174) 47,295 4,812
------------- ----------- ---------- --------- ---------- ----------
Net realized and
unrealized gain
(loss) on investments (388,658) 1,096,246 (43,686) (36,067) 130,168 (17,023)
------------- ----------- ---------- --------- ---------- ----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ (401,301) $ 1,228,505 $ (43,551) $ (24,615) $ 134,372 $ (16,871)
============= =========== ========== ========= ========== ==========
</TABLE>
---------
* From May 1, 1998 (commencement of operations).
See accompanying notes.
82
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<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 . . $206,555 $ 140,772 $ 23,842 $ 2,253 $ 54,784 $ --
M Fund Inc. . . . . -- -- -- -- -- --
-------- --------- -------- -------- -------- --------
Total investment
income . . . . . . . 206,555 140,772 23,842 2,253 54,784 --
Expenses:
Mortality and expense
risks . . . . . . . 12,909 10,636 937 2,315 2,073 535
-------- --------- -------- -------- -------- --------
Net investment income
(loss) . . . . . . . 193,646 130,136 22,905 (62) 52,711 (535)
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (54,090) (104,174) 1,002 84,929 65,733 (25,196)
Net unrealized
appreciation
(depreciation)
during
the period . . . . 65,510 (78,192) (10,217) (10,858) (10,735) 18,718
-------- --------- -------- -------- -------- --------
Net realized and
unrealized gain
(loss) on investments 11,420 (182,366) (9,215) 74,071 54,998 (6,478)
-------- --------- -------- -------- -------- --------
Net increase
(decrease) in net
assets resulting
from operations . . $205,066 $ (52,230) $ 13,690 $ 74,009 $107,709 $ (7,013)
======== ========= ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FUNDAMENTAL
HIGH YIELD BOND MID CAP GROWTH
SUBACCOUNT SUBACCOUNT
-------------------------------- --------------
2000 1999 1998* 2000
---------- ---------- -------- ----------------
<S> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . . . . $ 163,403 $ 352,641 $ 88,721 $ --
M Fund Inc. . . . . . . . -- -- -- --
--------- --------- -------- ----
Total investment income . 163,403 352,641 88,721 --
Expenses:
Mortality and expense
risks. . . . . . . . . . 7,445 12,206 1,962 1
--------- --------- -------- ----
Net investment income
(loss). . . . . . . . . . 155,958 340,435 86,759 (1)
Net realized and unrealized
gain (loss) on
investments:
Net realized gains
(losses) . . . . . . . . (100,732) 42,365 64,824 --
Net unrealized
appreciation
(depreciation) during the
period . . . . . . . . . (131,236) (139,659) 149,416 877
--------- --------- -------- ----
Net realized and unrealized
gain (loss) on investments (231,968) (97,294) 214,240 877
--------- --------- -------- ----
Net increase (decrease) in
net assets resulting from
operations. . . . . . . . $ (76,010) $ 243,141 $300,999 $876
========= ========= ======== ====
</TABLE>
---------
* From May 1, 1998 (commencement of operations).
See accompanying notes.
83
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
NEW FIDELITY
AIM V.I. DISCOVERY VIP II FIDELITY TEMPLETON
VALUE SERIES CONTRAFUND VIP GROWTH INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- -------------
2000 2000 2000 2000 2000
---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ -- $ -- $ -- $ -- $ --
M Fund Inc. . . . . -- -- -- -- --
------- ------- ------- ------ ------
Total investment
income . . . . . . . -- -- -- -- --
Expenses:
Mortality and expense
risks . . . . . . . 33 84 6 32 17
------- ------- ------- ------ ------
Net investment income
(loss) . . . . . . . (33) (84) (6) (32) (17)
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (2,026) 6 (3,386) 7 612
Net unrealized
appreciation
(depreciation)
during
the period . . . . (2,289) 28,003 134 4,523 2,513
------- ------- ------- ------ ------
Net realized and
unrealized gain
(loss) on investments (4,315) 28,009 (3,252) 4,530 3,125
------- ------- ------- ------ ------
Net increase
(decrease) in net
assets resulting
from operations . . $(4,348) $27,925 $(3,258) $4,498 $3,108
======= ======= ======= ====== ======
</TABLE>
See accompanying notes.
84
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT ACTIVE 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) . . . . $ (74,316) $ 17,233,439 $ 6,143,421 $ 1,016,188 $ 2,725,206 $ 2,097,345
Net realized gains (losses) . . . . . 2,734,096 5,003,007 1,750,881 (874,542) (1,391,910) 185,230
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . . . . 4,426,209 (2,053,672) 8,041,022 952,272 (1,837,190) (378,058)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . 7,085,989 20,182,774 15,935,324 1,093,918 (503,894) 1,904,517
From policyholder transactions:
Net premiums from
policyholders . . . . . . . . . . . 52,259,426 75,667,981 29,859,648 14,410,782 74,595,720 38,567,292
Net benefits to policyholders . . . . (34,904,274) (45,347,424) (13,281,028) (18,199,821) (68,312,320) (27,391,317)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions. . . . . . . . . . . . . 17,355,152 30,320,557 16,578,620 (3,789,039) 6,283,400 11,175,975
------------ ------------ ------------ ------------ ------------ -------------
Net increase (decrease) in net
assets . . . . . . . . . . . . . . . 24,441,141 50,503,331 32,513,944 (2,695,121) 5,779,506 13,080,492
Net assets at beginning of period . . 115,521,551 65,018,220 32,504,276 38,321,473 32,541,967 19,461,475
------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of period . . . . . $139,962,692 $115,521,551 $ 65,018,220 $ 35,626,352 $ 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) . . . . $ 233,608 $ 855,417 $ 1,885,059 $ (72,582) $ 3,637,734 $ (22,593)
Net realized gains . . . . . . . . . 1,515,308 753,750 152,030 4,544,105 2,548,944 58,729
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . . . . (3,395,800) 4,871,167 78,480 (3,503,834) 3,920,455 1,070,805
------------ ------------ ----------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations . . . . . . (1,646,884) 6,480,334 2,115,569 967,689 10,107,133 1,106,941
From policyholder transactions:
Net premiums from
policyholders . . . . . . . . . . . 42,506,597 53,332,374 10,034,119 58,788,952 52,637,861 12,088,047
Net benefits to policyholders . . . . (39,576,115) (39,209,664) (8,344,107) (52,165,304) (40,800,272) (6,621,834)
------------ ------------ ----------- ------------ ------------ -----------
Net increase in net assets resulting
from policyholder transactions . . . 2,930,482 14,122,710 1,690,012 6,632,648 11,837,589 5,466,213
------------ ------------ ----------- ------------ ------------ -----------
Net increase in net assets . . . . . . 1,283,598 20,603,044 3,805,581 7,591,337 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 . . . . . $ 34,482,272 $ 33,198,674 $12,595,630 $ 38,614,165 $ 31,022,828 $ 9,078,106
============ ============ =========== ============ ============ ===========
</TABLE>
See accompanying notes.
85
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
GLOBAL BALANCED SUBACCOUNT
-----------------------------------------
2000 1999 1998
------------- ------------- ------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . $ 55,059 $ 358,974 $ 176,073
Net realized gains (losses) . . . . (123,229) 15,640 24,206
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . (109,231) (173,912) 147,461
------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations . . . . . (177,401) 200,702 347,740
From policyholder transactions:
Net premiums from policyholders . . 2,921,405 6,295,052 3,163,316
Net benefits to policyholders . . . (2,120,585) (5,007,225) (1,882,974)
------------ ------------ -----------
Net increase in net assets resulting
from policyholder transactions . . . 800,820 1,287,827 1,280,342
------------ ------------ -----------
Net increase in net assets . . . . . 623,419 1,488,529 1,628,082
Net assets at beginning of period . . 4,591,856 3,103,327 1,475,245
------------ ------------ -----------
Net assets at end of period . . . . . $ 5,215,275 $ 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) . . . . $ (135,550) $ 6,389,535 $ 1,088,251
Net realized gains (losses) . . . . 8,716,345 5,188,018 599,619
Net unrealized appreciation
(depreciation) during (13,790,389)
the period . . . . . . . . . . . . ------------- 15,078,681 1,184,263
------------- -------------
Net increase (decrease) in net assets (5,209,594) 26,656,234 2,872,133
resulting from operations . . . . .
From policyholder transactions:
Net premiums from policyholders . . 65,255,866 65,183,285 11,323,614
Net benefits to policyholders . . . (56,671,354) (41,018,347) (5,132,055)
------------- ------------- -------------
Net increase in net assets resulting
from policyholder transactions . . . 8,584,512 24,164,938 6,191,559
------------- ------------- -------------
Net increase in net assets . . . . . 3,374,918 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 . . . . . $ 66,874,534 $ 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 . . . . . . . $ 277,937 $ 1,720,195 $ 756,459
Net realized gains (losses) . . . . (232,676) 705,454 330,827
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . (596,463) (2,181,112) 145,355
------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations . . . . . (551,202) 244,537 1,232,641
From policyholder transactions:
Net premiums from policyholders . . 28,000,911 37,432,039 15,144,316
Net benefits to policyholders . . . (23,591,191) (27,199,179) (4,937,583)
------------ ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder
transactions . . . . . . . . . . . . 4,409,720 10,232,860 10,206,733
------------ ------------ -----------
Net increase (decrease) in net assets 3,858,518 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 . . . . . $ 30,965,435 $ 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 . . . . . . . $ 2,109,255 $ 2,988,530 $ 1,687,016
Net realized gains (losses) . . . . -- -- --
Net unrealized appreciation
(depreciation) during --
the period . . . . . . . . . . . . ------------- -- --
------------- -------------
Net increase (decrease) in net assets 2,109,255 2,988,530 1,687,016
resulting from operations . . . . .
From policyholder transactions:
Net premiums from policyholders . . 485,999,845 890,376,545 340,377,358
Net benefits to policyholders . . . (442,936,484) (918,869,964) (269,723,839)
------------- ------------- -------------
Net increase (decrease) in net assets
resulting from policyholder 43,063,361
transactions . . . . . . . . . . . . ------------- (28,493,419) 70,653,519
------------- -------------
Net increase (decrease) in net assets 45,172,616 (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 . . . . . $ 106,179,385 $ 61,006,769 $ 86,511,658
============= ============= =============
</TABLE>
See accompanying notes.
86
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<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) . . . . $ 5,978 $ 41,579 $ 75,449 $ (18,930) $ 1,388,661 $ 108,037
Net realized gains (losses) . . . . . 783,358 (860,332) (538,516) (567,320) 13,375 232,246
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . 289,049 1,757,919 (830,390) 1,251,426 (1,001,208) 236,333
------------ ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . 1,078,385 939,166 (1,293,457) 665,176 400,828 576,616
From policyholder transactions:
Net premiums from policyholders . . . 15,917,480 32,024,751 18,837,112 7,306,590 11,809,133 4,563,154
Net benefits to policyholders . . . . (15,399,262) (29,579,995) (7,855,945) (8,233,390) (9,775,543) (6,481,542)
------------ ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions. . . . . . . . . . . . . 518,218 2,444,756 10,981,167 (926,800) 2,033,590 (1,918,388)
------------ ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets 1,596,603 3,383,922 9,687,710 (261,624) 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 . . . . . $ 20,735,136 $ 19,138,533 $15,754,611 $ 9,664,207 $ 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 . . . . . . . $ 304,027 $ 515,377 $ 283,067 $ 597,993 $ 22,850,302 $ 8,975,814
Net realized gains (losses) . . . . . (9,406) (735,504) (454,979) 1,331,371 6,207,253 2,061,212
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . 1,465,596 80,925 (698,676) (3,257,862) (5,814,839) 7,759,307
------------ ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . 1,760,217 (139,202) (870,588) (1,328,498) 23,242,716 18,796,333
From policyholder transactions:
Net premiums from policyholders . . . 33,616,441 22,699,314 6,964,604 43,866,020 196,639,863 60,975,616
Net benefits to policyholders . . . . (24,788,136) (18,093,640) (5,513,221) (42,336,871) (106,763,955) (31,360,866)
------------ ------------ ----------- ------------ ------------- ------------
Net increase in net assets resulting
from policyholder transactions . . . 8,828,305 4,605,674 1,451,383 1,529,149 89,875,908 29,614,750
------------ ------------ ----------- ------------ ------------- ------------
Net increase in net assets . . . . . . 10,588,522 4,466,472 580,795 200,651 113,118,624 48,411,083
Net assets at beginning of period . . 9,238,646 4,772,174 4,191,379 209,525,899 96,407,275 47,996,192
------------ ------------ ----------- ------------ ------------- ------------
Net assets at end of period . . . . . $ 19,827,168 $ 9,238,646 $ 4,772,174 $209,726,550 $ 209,525,899 $ 96,407,275
============ ============ =========== ============ ============= ============
</TABLE>
See accompanying notes.
87
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<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 . . . . . . . $ 1,578,554 $ 10,756,436 $ 3,484,281 $ 413,695 $ 907,486 $ 926,217
Net realized gains (losses) . . . . . (259,619) 2,233,258 278,186 (190,959) (441,667) 24,740
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . (110,575) (6,419,069) 1,791,231 169,777 (85,754) (136,999)
------------ ------------ ----------- ------------ ------------ ------------
Net increase in net assets resulting
from operations . . . . . . . . . . . 1,208,360 6,570,625 5,553,698 392,513 380,065 813,958
From policyholder transactions:
Net premiums from policyholders . . . 22,089,393 113,292,872 21,019,273 14,314,278 41,259,110 27,490,588
Net benefits to policyholders . . . . (19,693,945) (34,219,380) (8,281,600) (11,482,789) (49,156,693) (21,534,195)
------------ ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions . . . . . . . . . . . . . 2,395,448 79,073,492 12,737,673 2,831,489 (7,897,583) 5,956,393
------------ ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in net assets . 3,603,808 85,644,117 18,291,371 3,224,002 (7,517,518) 6,770,351
Net assets at beginning of period . . . 125,710,809 40,066,692 21,775,321 11,728,988 19,246,506 12,476,155
------------ ------------ ----------- ------------ ------------ ------------
Net assets at end of period . . . . . . $129,314,617 $125,710,809 $40,066,692 $ 14,952,990 $ 11,728,988 $ 19,246,506
============ ============ =========== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP VALUE SUBACCOUNT INTERNATIONAL OPPORTUNITIES SUBACCOUNT
---------------------------------------------- ---------------------------------------------
2000 1999 1998 2000 1999 1998
------------- --------------- --------------- ------------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets from operations:
Net investment income . . . . $ 140,965 $ 344,711 $ 14,015 $ 77,147 $ 2,006,004 $ 53,396
Net realized gains (losses) . 45,176 (979,002) (9,919) 2,289,932 1,907,809 191,495
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . 151,771 325,684 (523,693) (3,683,990) 3,818,953 1,108,416
------------ -------------- -------------- ------------ ------------ ---------------
Net increase (decrease) in net
assets resulting from
operations . . . . . . . . . . 337,912 (308,607) (519,597) (1,316,911) 7,732,766 1,353,307
From policyholder transactions:
Net premiums from policyholders 13,651,361 39,172,672 11,420,833 44,500,103 43,216,216 23,844,756
Net benefits to policyholders (9,715,462) (30,591,417) (4,363,378) (33,987,289) (38,372,463) (12,275,087)
------------ -------------- -------------- ------------ ------------ ---------------
Net increase in net assets
resulting from policyholder
transactions . . . . . . . . . 3,935,899 8,581,255 7,057,455 10,512,814 4,843,753 11,569,669
------------ -------------- -------------- ------------ ------------ ---------------
Net increase in net assets . . 4,273,811 8,272,648 6,537,858 9,195,903 12,576,519 12,922,976
Net assets at beginning of
period . . . . . . . . . . . . 18,783,396 10,510,748 3,972,890 31,535,049 18,958,530 6,035,554
------------ -------------- -------------- ------------ ------------ ---------------
Net assets at end of period . . $ 23,057,207 $ 18,783,396 $ 10,510,748 $ 40,730,952 $ 31,535,049 $ 18,958,530
============ ============== ============== ============ ============ ===============
</TABLE>
See accompanying notes.
88
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT
-------------------------------------------
2000 1999 1998
------------- -------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . $ 607,261 $ 5,503,450 $ 1,211,729
Net realized gains (losses) . . . . . 3,352,907 7,681,081 691,270
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . (4,597,742) 4,678,509 6,098,919
------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . (637,574) 17,863,040 8,001,918
From policyholder transactions:
Net premiums from policyholders . . . 60,696,851 225,994,914 60,690,933
Net benefits to policyholders . . . . (37,454,370) (147,909,470) (31,166,123)
------------ ------------- ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions. . . . . . . . . . . . . 23,242,481 78,085,444 29,524,810
------------ ------------- ------------
Net increase (decrease) in net assets 22,604,907 95,948,484 37,526,728
Net assets at beginning of period . . 49,913,131 53,964,647 16,437,919
------------ ------------- ------------
Net assets at end of period . . . . . $ 72,518,038 $ 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 . . . . . . . $ 95,498 $ 424,767 $ 283,651
Net realized gains (losses) . . . . . (278,305) (204,675) 81,659
Net unrealized appreciation
(depreciation) during 387,581
the period . . . . . . . . . . . . . ------------- (433,526) 43,608
------------ -----------
Net increase (decrease) in net assets 204,774 (213,434) 408,918
resulting from operations . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . 3,569,560 11,387,398 9,258,713
Net benefits to policyholders . . . . (5,829,975) (10,615,019) (3,008,341)
------------- ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder (2,260,415)
transactions. . . . . . . . . . . . . ------------- 772,379 6,250,372
------------ -----------
Net increase (decrease) in net assets (2,055,641) 558,945 6,659,290
Net assets at beginning of period . . 8,838,516 8,279,571 1,620,281
------------- ------------ -----------
Net assets at end of period . . . . . $ 6,782,875 $ 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 . . . . . . . . . $ 183,362 $ 1,315,438 $ 77,203
Net realized gains . . . . . . . . . . . 2,411,545 1,038,462 156,278
Net unrealized appreciation
(depreciation) during
the period . . . . . . . . . . . . . . (1,758,048) 1,626,646 562,620
------------ ----------- -------------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . 836,859 3,980,546 796,101
From policyholder transactions:
Net premiums from policyholders . . . . 22,340,884 23,098,524 4,779,974
Net benefits to policyholders . . . . . (26,498,181) (9,308,254) (1,690,860)
------------ ----------- -------------
Net increase (decrease) in net assets
resulting from policyholder transactions (4,157,297) 13,790,270 3,089,114
------------ ----------- -------------
Net increase in net assets . . . . . . . (3,320,438) 17,770,816 3,885,215
Net assets at beginning of period . . . . 22,671,005 4,900,189 1,014,974
------------ ----------- -------------
Net assets at end of period . . . . . . . $ 19,350,567 $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 . . . . . . . . . $ 277,814 $ 515,681 $ 343,646
Net realized gains . . . . . . . . . . . 181,342 507,727 89,337
Net unrealized appreciation
(depreciation) during 784,685
the period . . . . . . . . . . . . . . ------------ 3,486,097 91,915
----------- -----------
Net increase in net assets resulting from 1,243,841 4,509,505 524,898
operations . . . . . . . . . . . . . . .
From policyholder transactions:
Net premiums from policyholders . . . . 9,965,330 12,134,533 5,520,633
Net benefits to policyholders . . . . . (3,861,316) (5,569,496) (2,041,375)
------------ ----------- -----------
Net increase (decrease) in net assets
resulting from policyholder transactions 6,104,014 6,565,037 3,479,258
------------ ----------- -----------
Net increase in net assets . . . . . . . 7,347,855 11,074,542 4,004,156
Net assets at beginning of period . . . . 17,415,296 6,340,754 2,336,598
------------ ----------- -----------
Net assets at end of period . . . . . . . $ 24,763,151 $17,415,296 $ 6,340,754
============ =========== ===========
</TABLE>
See accompanying notes.
89
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
CLIFTON ENHANCED U.S. EQUITY
FRONTIER CAPITAL APPRECIATION 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 . . . . . . . . . $ 533,153 $ 449,994 $ 9,897 $ 241,417 $ 518,137 $ 68,233
Net realized gains (losses) . . . . . . 3,686,537 624,068 (445,752) 105,370 264,436 87,723
Net unrealized appreciation
(depreciation) during the period . . . (2,068,274) 3,431,408 432,064 (545,352) 151,562 89,677
------------- ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations . . . . . . . 2,151,416 4,505,470 (3,791) (198,565) 934,135 245,633
From policyholder transactions:
Net premiums from policyholders . . . . 16,538,331 25,135,447 13,982,031 6,521,334 6,480,741 3,031,309
Net benefits to policyholders . . . . . (14,603,126) (22,331,613) (9,695,520) (3,399,109) (3,151,279) (1,299,530)
------------- ------------ ----------- ----------- ----------- -----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . 1,935,205 2,803,834 4,286,511 3,122,225 3,329,462 1,731,779
------------- ------------ ----------- ----------- ----------- -----------
Net increase in net assets . . . . . . . 4,086,621 7,309,304 4,282,720 2,923,660 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 . . . . . . . $ 21,071,643 $ 16,985,022 $ 9,675,718 $ 9,661,874 $ 6,738,214 $ 2,474,617
============= ============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL OPPORTUNITIES II
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) $ (12,643) $ 132,259 $ 135 $ 11,452 $ 4,204 $ 152
Net realized gains (losses) . (101,200) 663,998 (45,975) 20,107 82,873 (21,835)
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . (287,458) 432,248 2,289 (56,174) 47,295 4,812
------------ ------------- --------------- ------------ ------------- ---------------
Net increase (decrease) in net
assets resulting from
operations. . . . . . . . . . (401,301) 1,228,505 (43,551) (24,615) 134,372 (16,871)
From policyholder transactions:
Net premiums from
policyholders. . . . . . . . 38,341,068 18,579,194 2,434,226 3,547,466 3,151,983 2,372,034
Net benefits to policyholders (35,650,812) (16,271,324) (2,203,670) (3,048,011) (2,613,505) (2,191,135)
------------ ------------- --------------- ------------ ------------- ---------------
Net increase in net assets
resulting from policyholder
transactions. . . . . . . . . 2,690,256 2,307,870 230,556 499,455 538,478 180,899
------------ ------------- --------------- ------------ ------------- ---------------
Net increase in net assets . . 2,288,955 3,536,375 187,005 474,840 672,850 164,028
Net assets at beginning of
period. . . . . . . . . . . . 3,723,380 187,005 0 836,878 164,028 0
------------ ------------- --------------- ------------ ------------- ---------------
Net assets at end of period . $ 6,012,335 $ 3,723,380 $ 187,005 $ 1,311,718 $ 836,878 $ 164,028
============ ============= =============== ============ ============= ===============
</TABLE>
---------
*From May 1, 1998 (commencement of operations).
See accompanying notes.
90
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
BOND INDEX SMALL/MID CAP CORE
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) . . . . . . . . $ 193,646 $ 130,136 $ 22,905 $ (62) $ 52,711 $ (535)
Net realized gains (losses) . . . . . . . . . (54,090) (104,174) 1,002 84,929 65,733 (25,196)
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . 65,510 (78,192) (10,217) (10,858) (10,735) 18,718
----------- ----------- ---------- ----------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . 205,066 (52,230) 13,690 74,009 107,709 (7,013)
From policyholder transactions:
Net premiums from policyholders . . . . . . . 6,026,847 6,471,518 1,176,234 8,814,315 5,817,483 1,089,030
Net benefits to policyholders . . . . . . . . (3,737,455) (2,358,694) (124,467) (8,093,062) (5,611,532) (778,864)
----------- ----------- ---------- ----------- ----------- ----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . . . 2,289,392 4,112,824 1,051,767 721,253 205,951 310,166
----------- ----------- ---------- ----------- ----------- ----------
Net increase in net assets . . . . . . . . . . 2,494,458 4,060,594 1,065,457 795,262 313,660 303,153
Net assets at beginning of period . . . . . . 5,126,051 1,065,457 0 616,813 303,153 0
----------- ----------- ---------- ----------- ----------- ----------
Net assets at end of period . . . . . . . . . $ 7,620,509 $ 5,126,051 $1,065,457 $ 1,412,075 $ 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 . . . . . $ 155,958 $ 340,435 $ 86,759
Net realized gains (losses) . . (100,732) 42,365 64,824
Net unrealized appreciation
(depreciation) during the period (131,236) (139,659) 149,416
----------- ------------ -----------
Net increase (decrease) in net
assets resulting from operations (76,010) 243,141 300,999
From policyholder transactions:
Net premiums from policyholders 3,701,759 19,870,990 6,683,673
Net benefits to policyholders . (3,835,440) (20,368,501) (2,457,088)
----------- ------------ -----------
Net increase (decrease) in net
assets resulting from
policyholder transactions . . . (133,681) (497,511) 4,226,585
----------- ------------ -----------
Net increase (decrease) in net
assets . . . . . . . . . . . . . (209,691) (254,370) 4,527,584
Net assets at beginning of period 4,273,214 4,527,584 0
----------- ------------ -----------
Net assets at end of period . . . $ 4,063,523 $ 4,273,214 $ 4,527,584
=========== ============ ===========
</TABLE>
---------
*From May 1, 1998 (commencement of operations).
See accompanying notes.
91
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
YEARS AND PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
FUNDAMENTAL NEW FIDELITY FIDELITY
MID CAP AIM V.I. DISCOVERY VIP II VIP TEMPLETON
GROWTH VALUE SERIES CONTRAFUND GROWTH INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ---------- ---------- ---------- ---------- ---------------
2000 2000 2000 2000 2000 2000
------------ ---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income
(loss). . . . . . . $ (1) $ (33) $ (84) $ (6) $ (32) $ (17)
Net realized gains
(losses). . . . . . 0 (2,026) 6 (3,386) 7 612
Net unrealized
appreciation
(depreciation)
during the period . 877 (2,289) 28,003 134 4,523 2,513
------- --------- -------- --------- ------- ---------
Net increase
(decrease) in net
assets resulting from
operations . . . . . 876 (4,348) 27,925 (3,258) 4,498 3,108
From policyholder
transactions:
Net premiums from
policyholders . . . 19,529 301,720 295,000 324,607 75,543 455,074
Net benefits to
policyholders . . . 0 (198,193) (46) (301,222) (53) (307,330)
------- --------- -------- --------- ------- ---------
Net increase in net
assets resulting from
policyholder
transactions . . . . 19,529 103,527 294,954 23,385 75,490 147,744
------- --------- -------- --------- ------- ---------
Net increase in net
assets . . . . . . . 20,405 99,179 322,879 20,127 79,988 150,852
Net assets at
beginning of period 0 0 0 0 0 0
------- --------- -------- --------- ------- ---------
Net assets at end of
period . . . . . . . $20,405 $ 99,179 $322,879 $ 20,127 $79,988 $ 150,852
======= ========= ======== ========= ======= =========
</TABLE>
See accompanying notes.
92
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2000
1. ORGANIZATION
John Hancock Variable Life Account S (the Account) is a separate investment
account of John Hancock 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
thirty-three 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 thirty-three Portfolios
of the Fund and M Fund which are currently available are the Large Cap Growth,
Active Bond (formerly, Sovereign Bond), International Equity Index, Small Cap
Growth, Global Balanced (formerly, 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, Clifton Enhanced U.S.
Equity (formerly, Enhanced U.S. Equity), Emerging Markets Equity, International
Opportunities II (formerly, Global Equity), Bond Index, Small/Mid Cap CORE, High
Yield Bond, Fundamental Mid Cap Growth, AIM V.I. Value, New Discovery Series,
Fidelity VIP II Contrafund, Fidelity VIP Growth, and Templeton International
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.
93
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
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 June 30, 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.
94
<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 June 30, 2000 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO SHARES OWNED COST VALUE
--------- ------------ ------------ --------------
<S> <C> <C> <C>
Large Cap Growth . . . . . 4,849,462 $123,194,174 $139,962,692
Active Bond. . . . . . . . 3,874,512 38,257,002 35,626,352
International Equity Index 1,861,146 33,149,994 34,482,272
Small Cap Growth . . . . . 1,914,842 34,454,118 38,614,165
Global Balanced. . . . . . 515,617 5,397,773 5,215,275
Mid Cap Growth . . . . . . 2,386,951 58,721,939 66,874,534
Large Cap Value. . . . . . 2,373,079 32,589,463 30,965,435
Money Market . . . . . . . 10,612,665 106,183,237 106,179,385
Mid Cap Value. . . . . . . 1,537,316 20,407,887 20,735,136
Small/Mid Cap Growth . . . 634,316 9,361,832 9,664,207
Real Estate Equity . . . . 1,563,808 19,502,392 19,827,168
Growth & Income. . . . . . 10,573,323 204,640,498 209,726,550
Managed. . . . . . . . . . 8,379,360 131,570,457 129,314,617
Short Term Bond. . . . . . 1,533,368 15,459,641 14,952,990
Small Cap Value. . . . . . 2,102,924 24,087,256 23,057,207
International Opportunities 2,800,216 37,804,122 40,730,952
Equity Index . . . . . . . 8,517,628 158,210,577 172,518,038
Global Bond. . . . . . . . 677,499 7,002,271 6,782,875
Turner Core Growth . . . . 81,169 21,806,142 19,350,567
Brandes International
Equity. . . . . . . . . . 1,511,593 13,549,208 24,763,151
Frontier Capital
Appreciation. . . . . . . 889,489 16,547,489 21,071,643
Clifton Enhanced US
Equity. . . . . . . . . . 485,524 6,331,067 9,661,874
Emerging Markets . . . . . 526,597 5,201,315 6,012,335
International
Opportunities II . . . 109,154 1,232,932 1,311,718
Bond Index . . . . . . . . 810,548 7,747,650 7,620,509
Small Mid Cap CORE . . . . 137,033 1,349,230 1,412,075
High-Yield . . . . . . . . 477,718 4,142,675 4,063,523
Fundamental Mid Cap Growth 1,200 19,528 20,405
AIM V.I. Value . . . . . . 2,969 99,443 99,180
New Discovery Series . . . 17,586 294,884 322,881
Fidelity VIP II Contrafund 804 16,875 20,127
Fidelity VIP Growth. . . . 1,557 75,473 79,989
Templeton International. . 7,853 148,952 150,853
</TABLE>
95
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. DETAILS OF INVESTMENTS (CONTINUED)
Purchases, including reinvestment of dividend distributions, and proceeds from
sales of shares in the Portfolios of the Fund and of M Fund during 2000 were as
follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
--------- ------------ -------------
<S> <C> <C>
Large Cap Growth . . . . . . . . . . $ 29,329,448 $12,047,499
Active Bond. . . . . . . . . . . . . 7,716,510 10,489,149
International Equity Index . . . . . 17,045,896 13,881,519
Small Cap Growth . . . . . . . . . . 26,140,733 19,589,311
Global Balanced. . . . . . . . . . . 2,196,143 1,340,216
Mid Cap Growth . . . . . . . . . . . 37,093,206 28,643,640
Large Cap Value. . . . . . . . . . . 13,666,105 8,978,183
Money Market . . . . . . . . . . . . 132,183,644 87,007,175
Mid Cap Value. . . . . . . . . . . . 6,316,325 5,788,939
Small/Mid Cap Growth . . . . . . . . 3,375,804 4,321,441
Real Estate Equity . . . . . . . . . 16,395,846 7,263,356
Growth & Income. . . . . . . . . . . 14,294,301 12,164,954
Managed. . . . . . . . . . . . . . . 12,738,146 8,762,379
Short-Term U.S. Government . . . . . 9,609,491 6,364,221
Small Cap Value. . . . . . . . . . . 7,099,451 3,022,358
International Opportunities. . . . . 24,437,465 13,847,145
Equity Index . . . . . . . . . . . . 42,348,010 18,496,923
Global Bond. . . . . . . . . . . . . 2,533,200 4,698,051
Turner Core Growth . . . . . . . . . 0 0
Brandes International Equity . . . . 0 0
Frontier Capital Appreciation. . . . 0 0
Clifton Enhanced US Equity . . . . . 0 0
Emerging Markets . . . . . . . . . . 14,283,977 11,606,307
International Opportunities II . . . 2,092,407 1,581,482
Bond Index . . . . . . . . . . . . . 3,684,786 1,201,679
Small Mid Cap CORE . . . . . . . . . 2,077,976 1,356,772
High Yield Bond. . . . . . . . . . . 2,786,550 2,764,235
Fundamental Mid Cap Growth . . . . . 0 0
AIM V.I. Value . . . . . . . . . . . 0 0
New Discovery Series . . . . . . . . 0 0
Fidelity VIP II Contrafund . . . . . 0 0
Fidelity VIP Growth. . . . . . . . . 0 0
Templeton International. . . . . . . 0 0
</TABLE>
96
<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 June 30, 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 537,965 36.03 492,996 36.15 135,475 36.26
Active Bond 233,844 14.22 174,990 14.26 37,880 14.31
International Equity Index 253,026 16.55 187,338 16.64 6,384 16.70
Small Cap Growth 232,913 22.80 261,061 22.84 41,970 22.89
Global Balanced 17,635 12.66 89,308 12.68 16,270 12.71
Mid Cap Growth 279,087 33.98 205,937 34.05 67,794 34.12
Large Cap Value 210,063 15.73 197,584 15.76 25,556 15.79
Money Market 698,349 13.43 1,348,986 13.47 320,780 13.51
Mid Cap Value 114,583 14.81 51,945 14.84 4,132 14.87
Small/Mid Cap Growth 89,083 21.40 90,352 21.46 5,734 21.53
Real Estate Equity 107,483 16.32 57,887 16.37 221,806 16.43
Growth & Income 1,030,086 30.67 618,930 30.77 188,739 30.87
Managed 573,827 21.07 272,670 21.14 35,242 21.20
Short-Term Bond 86,767 13.32 106,729 13.36 10,815 13.40
Small Cap Value 122,705 12.41 88,704 12.44 24,207 12.46
International Opportunities 159,417 15.83 203,984 15.87 14,705 15.90
Equity Index 587,297 22.87 624,209 22.92 246,373 22.97
Global Bond 61,189 12.50 49,459 12.52 19,899 12.55
Turner Core Growth 26,973 29.67 15,373 29.73 0 29.80
Brandes International Equity 24,380 17.55 33,462 17.59 0 17.64
Frontier Capital Appreciation 21,833 26.14 14,354 26.20 0 26.25
Clifton Enhanced U.S. Equity 4,521 16.98 0 17.00 0 17.03
Emerging Markets Equity 81,008 11.87 86,902 11.88 17,124 11.89
International Opportunities II 29,808 12.20 31,583 12.21 2,696 12.23
Bond Index 102,163 10.71 64,884 10.72 64,762 10.73
Small/Mid Cap CORE 23,891 11.26 17,194 11.27 4,107 11.28
High Yield Bond 53,628 9.87 43,805 9.88 2,247 9.89
Fundamental Mid Cap Growth 1,626 12.55 0 12.55 0 12.55
AIM V.I. Value 3,936 9.87 0 9.87 0 9.87
New Discovery Series 0 11.10 0 11.10 0 11.10
Fidelity VIP II Contrafund 30 10.22 0 10.22 0 10.22
Fidelity VIP Growth 3,709 10.66 0 10.66 0 10.66
Templeton International 0 10.11 0 10.11 0 10.11
</TABLE>
97
<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 656,260 36.40 257,435 36.44 286,766 36.47
Active Bond 15,096 15.13 603,645 15.14 452,608 15.16
International Equity Index 43,882 15.42 155,946 15.43 215,996 15.45
Small Cap Growth 122,919 23.23 141,128 23.25 46,717 23.27
Global Balanced 38,720 12.90 10,108 12.91 54,885 12.92
Mid Cap Growth 128,031 34.63 89,731 34.65 63,109 34.67
Large Cap Value 112,093 16.03 56,194 16.04 417,402 16.05
Money Market 196,820 13.39 16,175 13.40 148,908 13.42
Mid Cap Value 89,613 15.09 18,805 15.10 239,528 15.11
Small/Mid Cap Growth 27,132 21.45 378 21.47 23,248 21.50
Real Estate Equity 128,413 16.95 143,737 16.97 197,963 16.99
Growth & Income 594,664 30.69 523,471 30.72 25,448 30.76
Managed 237,562 21.88 115,789 21.91 115,065 21.93
Short-Term Bond 207,003 13.60 412,601 13.61 0 13.63
Small Cap Value 34,631 12.65 21,107 12.66 275,960 12.67
International Opportunities 248,993 16.14 274,408 16.15 103,553 16.16
Equity Index 385,480 23.31 118,709 23.33 573,858 23.34
Global Bond 63,318 12.74 4,998 12.75 0 12.76
Turner Core Growth 4,794 30.28 20,069 30.30 0 30.33
Brandes International Equity 97,992 17.91 107,630 17.93 53,047 17.95
Frontier Capital Appreciation 88,691 26.68 66,885 26.69 0 26.72
Clifton Enhanced U.S. Equity 62,494 17.22 80,906 17.22 0 17.23
Emerging Markets Equity 9,109 11.99 39,251 11.99 0 11.99
International Opportunities II 0 12.33 0 12.33 0 12.33
Bond Index 5,049 10.82 19,587 10.83 0 10.83
Small/Mid Cap CORE 0 11.38 0 11.38 0 11.38
High Yield Bond 3,390 9.98 0 9.98 8,354 9.98
Fundamental Mid Cap Growth 0 11.02 0 11.02 0 11.02
AIM V.I. Value 0 9.55 0 9.55 0 9.55
New Discovery Series 0 10.64 0 10.65 0 10.65
Fidelity VIP II Contrafund 0 9.99 0 9.99 0 9.99
Fidelity VIP Growth 0 10.25 0 10.25 0 10.25
Templeton International 0 10.60 0 10.60 0 10.60
</TABLE>
98
<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 116,600 83.98 818,698 26.19 351,348 23.33
Active Bond 61,302 24.13 313,740 12.84 344,746 12.09
International Equity Index 154,944 26.08 782,949 14.27 222,369 14.73
Small Cap Growth 181,373 22.82 238,097 23.06 205,968 25.92
Global Balanced 67,046 12.67 42,577 12.80 39,098 12.27
Mid Cap Growth 239,385 34.02 367,485 34.37 138,068 38.12
Large Cap Value 339,911 15.74 174,739 15.91 117,629 13.61
Money Market 408,415 18.58 1,280,481 12.28 315,719 11.74
Mid Cap Value 420,027 14.82 260,399 14.98 60,746 12.66
Small/Mid Cap Growth 6,155 21.43 243,378 13.69 41,310 13.93
Real Estate Equity 62,138 25.09 201,437 19.23 42,565 10.83
Growth & Income 819,706 67.63 1,283,758 21.75 415,131 19.01
Managed 2,303,473 40.02 213,655 16.99 86,308 15.53
Short-Term Bond 82,590 13.34 44,119 12.26 94,438 11.76
Small Cap Value 635,265 12.43 355,740 12.56 106,344 11.92
International Opportunities 665,897 15.86 268,074 16.02 484,313 15.33
Equity Index 678,628 22.90 1,184,989 23.14 773,513 19.74
Global Bond 116,046 12.51 88,071 12.64 68,278 11.93
Turner Core Growth 0 27.61 215,390 26.95 68,280 25.90
Brandes International Equity 0 17.80 0 17.19 65,376 18.37
Frontier Capital Appreciation 0 24.60 0 22.13 82,469 21.42
Clifton Enhanced U.S. Equity 0 12.87 0 17.12 160,901 17.12
Emerging Markets Equity 31,882 11.88 88,222 11.94 92,679 11.94
International Opportunities II 3,429 12.21 24,319 12.27 844 12.28
Bond Index 21,473 10.72 21,624 10.77 174 10.78
Small/Mid Cap CORE 1,231 11.27 20,797 11.33 1,226 11.33
High Yield Bond 39,774 9.88 92,930 9.93 81,701 9.93
Fundamental Mid Cap Growth 0 11.02 0 12.56 0 11.02
AIM V.I. Value 0 9.54 5,155 9.88 0 9.55
New Discovery Series 0 10.64 29,076 11.11 0 10.64
Fidelity VIP II Contrafund 0 9.98 0 10.23 0 9.99
Fidelity VIP Growth 1,980 10.24 0 10.67 0 10.25
Templeton International 0 10.60 14,196 10.11 0 10.60
</TABLE>
99
<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 286,862 23.33 294,419 26.19 3,879 86.16
Active Bond 154,851 12.09 114,636 12.84 0 29.22
International Equity Index 59,837 14.73 78,792 14.27 2,147 27.62
Small Cap Growth 68,282 25.92 100,523 23.06 0 23.40
Global Balanced 29,924 12.27 5,692 12.80 0 12.90
Mid Cap Growth 158,424 38.12 171,055 34.37 6,364 34.86
Large Cap Value 122,195 13.61 207,621 15.91 0 16.14
Money Market 2,591,514 11.74 300,260 12.28 54,988 13.46
Mid Cap Value 85,110 12.66 64,180 14.98 0 15.20
Small/Mid Cap Growth 18,565 13.93 19,363 13.69 0 22.24
Real Estate Equity 17,774 10.83 34,869 13.92 0 26.35
Growth & Income 1,088,676 19.01 271,319 21.75 2,135 81.14
Managed 90,276 15.53 58,406 16.99 1,481 47.44
Short-Term Bond 42,209 11.76 36,660 12.26 5,127 13.84
Small Cap Value 46,049 11.92 137,025 12.56 0 12.74
International Opportunities 55,835 15.33 88,759 16.02 0 16.25
Equity Index 2,042,059 19.74 621,198 23.14 10,824 23.47
Global Bond 44,341 11.93 28,907 12.64 0 12.83
Turner Core Growth 166,332 25.90 202,145 26.95 0 30.51
Brandes International Equity 172,977 18.37 274,521 17.19 0 18.05
Frontier Capital Appreciation 108,198 21.42 106,028 22.13 0 25.83
Clifton Enhanced U.S. Equity 46,767 17.12 48,373 17.12 0 17.30
Emerging Markets Equity 32,899 11.94 24,646 11.94 0 12.03
International Opportunities II 9,104 12.27 4,356 12.27 0 12.37
Bond Index 146,467 10.77 261,447 10.77 0 10.86
Small/Mid Cap CORE 16,316 11.33 38,984 11.33 0 11.41
High Yield Bond 23,040 9.93 60,673 9.93 0 10.01
Fundamental Mid Cap Growth 0 11.02 0 12.56 0 18.32
AIM V.I. Value 991 9.55 0 9.55 0 39.72
New Discovery Series 0 10.64 0 11.11 0 19.19
Fidelity VIP II Contrafund 1,938 9.99 0 10.23 0 33.44
Fidelity VIP Growth 1,888 10.25 0 10.67 0 102.05
Templeton International 0 10.60 0 10.11 0 25.87
</TABLE>
100
<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 2,316 86.16
Active Bond 21 29.22
International Equity Index 3,005 27.62
Small Cap Growth 4,238 23.40
Global Balanced 0 12.90
Mid Cap Growth 4,655 34.86
Large Cap Value 3,092 16.14
Money Market 288,791 13.46
Mid Cap Value 835 15.20
Small/Mid Cap Growth 1,930 22.24
Real Estate Equity 57 26.35
Growth & Income 1,481 81.14
Managed 17,796 47.44
Short-Term Bond 1,970 13.84
Small Cap Value 2,378 12.74
International Opportunities 3,842 16.25
Equity Index 35,759 23.47
Global Bond 97 12.83
Turner Core Growth 30.51
Brandes International Equity 0 18.05
Frontier Capital Appreciation 0 25.83
Clifton Enhanced U.S. Equity 0 17.30
Emerging Markets Equity 1,521 12.03
International Opportunities II 806 12.37
Bond Index 826 10.85
Small/Mid Cap CORE 1,138 11.41
High Yield Bond 307 10.01
Fundamental Mid Cap Growth 0 18.22
AIM V.I. Value 0 39.72
New Discovery Series 0 19.19
Fidelity VIP II Contrafund 0 33.44
Fidelity VIP Growth 0 102.05
Templeton International 0 25.87
</TABLE>
101
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Policyholders of John Hancock Variable Life Account S of John Hancock
Variable Life Insurance Company
We have audited the accompanying statement of assets and liabilities of John
Hancock Variable Life Account S (the Account) (comprising, respectively, the
Large Cap Growth, Sovereign Bond, International 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 Subaccounts) as of December 31,
1999, and the related statements of operations and changes in net assets for
each of the periods indicated therein. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting John Hancock Variable Life Account S at December 31,
1999, the results of their operations and the changes in their net assets for
each of the periods indicated, in conformity with accounting principles
generally accepted in the United States.
ERNST & YOUNG LLP
Boston, Massachusetts
February 11, 2000
102
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL
LARGE CAP SOVEREIGN EQUITY SMALL CAP
GROWTH BOND INDEX GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ----------- ------------- -------------
-------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . $ 8,016 $ 2,380 $ 2,435 $ 2,357
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. . . . . . . . 115,521,551 38,321,474 33,198,674 31,022,828
Investments in shares
of portfolios of M
Fund Inc., at value -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . 21,617 12,536 419 208,513
M Fund Inc. . . . . -- -- -- --
------------ ----------- ----------- -----------
Total assets . . . . 115,551,184 38,336,390 33,201,528 31,233,698
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . 20,467 12,194 75 208,172
M Fund Inc. . . . . -- -- -- --
Asset charges payable 9,166 2,723 2,779 2,698
------------ ----------- ----------- -----------
Total liabilities . . 29,633 14,917 2,854 210,870
------------ ----------- ----------- -----------
Net assets . . . . . $115,521,551 $38,321,473 $33,198,674 $31,022,828
============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL MID CAP LARGE CAP MONEY
BALANCED GROWTH VALUE MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ----------- ----------- -------------
------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . . $ 304 $ 4,698 $ 1,803 $ 3,061
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value . . . . . . . . 4,591,857 63,499,616 27,106,918 61,006,769
Investments in shares
of portfolios of M
Fund Inc., at value . -- -- -- --
Receivable from:
John Hancock Varidable
Series Trust I . . . 52 27,659 12,738 1,396,082
M Fund Inc. . . . . . -- -- -- --
---------- ----------- ----------- -----------
Total assets . . . . . 4,592,213 63,531,973 27,121,459 62,405,912
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company. . . . . . . 9 26,980 12,479 1,395,329
M Fund Inc. . . . . . -- -- -- --
Asset charges payable 348 5,377 2,063 3,814
---------- ----------- ----------- -----------
Total liabilities . . 357 32,357 14,542 1,399,143
---------- ----------- ----------- -----------
Net assets . . . . . . $4,591,856 $63,499,616 $27,106,917 $61,006,769
========== =========== =========== ===========
</TABLE>
See accompanying notes.
103
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<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 . . . . . . . . $ 1,422 $ 701 $ 611 $ 17,877
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. . . . . . . . 19,138,533 9,925,831 9,238,646 209,525,898
Investments in shares
of portfolios of M
Fund Inc., at value -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . 38,609 580,155 88 330,982
M Fund Inc. . . . . -- -- -- --
------------ -------------- ------------ ------------
Total assets . . . . 19,178,564 10,506,687 9,239,345 209,874,757
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . 38,404 580,049 -- 328,424
M Fund Inc. . . . . -- -- -- --
Asset charges payable 1,627 807 699 20,434
------------ -------------- ------------ ------------
Total liabilities . . 40,031 580,856 699 348,858
------------ -------------- ------------ ------------
Net assets . . . . . $ 19,138,533 $ 9,925,831 $ 9,238,646 $209,525,899
============ ============== ============ ============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM SMALL CAP INTERNATIONAL
MANAGED BOND VALUE OPPORTUNITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- -------------
-------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . $ 13,307 $ 731 $ 1,430 $ 2,454
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. . . . . . . . 125,710,809 11,728,988 18,783,397 31,535,050
Investments in shares
of portfolios of M
Fund Inc., at value -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I . . 34,311 215 189,514 1,308
M Fund Inc. . . . . -- -- -- --
------------ ----------- ----------- -----------
Total assets . . . . 125,758,427 11,729,934 18,974,341 31,538,812
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company . . . . . . 32,402 114 189,306 955
M Fund Inc. . . . . -- -- -- --
Asset charges payable 15,216 832 1,639 2,808
------------ ----------- ----------- -----------
Total liabilities . . 47,618 946 190,945 3,763
------------ ----------- ----------- -----------
Net assets . . . . . $125,710,809 $11,728,988 $18,783,396 $31,535,049
============ =========== =========== ===========
</TABLE>
See accompanying notes.
104
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
TURNER BRANDES
EQUITY GLOBAL CORE INTERNATIONAL
INDEX BOND GROWTH EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------- ---------------
------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Cash . . . . . . . . . $ 10,574 $ 734 $ 1,535 $ 1,016
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value . . . . . . . . 149,913,130 8,838,516 -- --
Investments in shares
of portfolios of M
Fund Inc., at value . -- -- 22,671,006 17,415,296
Receivable from:
John Hancock Variable
Series Trust I . . . 126,680 766,077 222 271
M Fund Inc. . . . . . -- -- -- --
------------ ---------- ----------- -----------
Total assets . . . . . 150,050,384 9,605,327 22,672,763 17,416,583
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company. . . . . . . 125,115 765,972 -- 122
M Fund Inc. . . . . . -- -- -- --
Asset charges payable 12,138 839 1,758 1,165
------------ ---------- ----------- -----------
Total liabilities . . 137,253 766,811 1,758 1,287
------------ ---------- ----------- -----------
Net assets . . . . . . $149,913,131 $8,838,516 $22,671,005 $17,415,296
============ ========== =========== ===========
</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 . . . . . . . . . . $ 1,031 $ 437 $ 370 $ 71
Investments in shares of
portfolios of John
Hancock Variable Series
Trust I, at value . . . -- -- 3,723,380 836,878
Investments in shares of
portfolios of M Fund
Inc., at value . . . . . 16,985,022 6,738,214 -- --
Receivable from:
John Hancock Variable
Series Trust I . . . . 771 63 254 24
M Fund Inc. . . . . . . -- -- -- --
----------- ---------- ---------- --------
Total assets . . . . . . 16,986,824 6,738,714 3,724,004 836,973
LIABILITIES
Payable to:
John Hancock Variable
Life Insurance Company 620 -- 204 13
M Fund Inc. . . . . . . -- -- -- --
Asset charges payable . . 1,182 500 420 82
----------- ---------- ---------- --------
Total liabilities . . . . 1,802 500 624 95
----------- ---------- ---------- --------
Net assets . . . . . . . $16,985,022 $6,738,214 $3,723,380 $836,878
=========== ========== ========== ========
</TABLE>
See accompanying notes.
105
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
SMALL/ MID
CAP CORE HIGH
BOND SUBACCOUNT YIELD
INDEX ---------- BOND
SUBACCOUNT SUBACCOUNT
---------- ------------
------------------------------------
<S> <C> <C> <C>
ASSETS
Cash . . . . . . . . . . . . . . . . . . $ 374 $ 56 $ 310
Investments in shares of portfolios of
John Hancock Variable Series Trust I, at
value . . . . . . . . . . . . . . . . . 5,126,051 616,813 4,273,214
Investments in shares of portfolios of M
Fund Inc., at value . . . . . . . . . . -- -- --
Receivable from:
John Hancock Variable Series Trust I . 87 7 906,251
M Fund Inc. . . . . . . . . . . . . . . -- -- --
---------- -------- ----------
Total assets . . . . . . . . . . . . . . 5,126,512 616,876 5,179,775
LIABILITIES
Payable to:
John Hancock Variable Life Insurance
Company. . . . . . . . . . . . . . . . 20 -- 906,193
M Fund Inc. . . . . . . . . . . . . . . -- -- --
Asset charges payable . . . . . . . . . 441 63 368
---------- -------- ----------
Total liabilities . . . . . . . . . . . 461 63 906,561
---------- -------- ----------
Net assets . . . . . . . . . . . . . . . $5,126,051 $616,813 $4,273,214
========== ======== ==========
</TABLE>
See accompanying notes.
106
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT SOVEREIGN BOND SUBACCOUNT
-------------------------------------- -----------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $17,558,034 $ 6,312,073 $ 2,884,498 $ 2,851,613 $2,190,901 $855,742
M Fund Inc. . . . . -- -- -- -- -- --
----------- ----------- ----------- ----------- ---------- --------
Total investment
income . . . . . . . 17,558,034 6,312,073 2,884,498 2,851,613 2,190,901 855,742
Expenses:
Mortality and expense
risks . . . . . . . 324,595 168,652 91,256 126,407 93,556 39,184
----------- ----------- ----------- ----------- ---------- --------
Net investment income 17,233,439 6,143,421 2,793,242 2,725,206 2,097,345 816,558
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 5,003,007 1,750,881 619,721 (1,391,910) 185,230 80,538
Net unrealized
appreciation
(depreciation)
during the period . (2,053,672) 8,041,022 2,301,920 (1,837,190) (378,058) 63,687
----------- ----------- ----------- ----------- ---------- --------
Net realized and
unrealized gain
(loss) on investments 2,949,335 9,791,903 2,921,641 (3,229,100) (192,828) 144,225
----------- ----------- ----------- ----------- ---------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $20,182,774 $15,935,324 $ 5,714,883 $ (503,894) $1,904,517 $960,783
=========== =========== =========== =========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
-------------------------------------- ----------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 936,475 $1,930,710 $ 422,913 $ 3,697,955 $ -- $ 473
M Fund Inc. . . . . -- -- -- -- -- --
---------- ---------- ----------- ----------- ---------- --------
Total investment
income . . . . . . . 936,475 1,930,710 422,913 3,697,955 -- 473
Expenses:
Mortality and expense
risks . . . . . . . 81,058 45,651 33,893 60,221 22,593 6,547
---------- ---------- ----------- ----------- ---------- --------
Net investment income
(loss) . . . . . . . 855,417 1,885,059 389,020 3,637,734 (22,593) (6,074)
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains . 753,750 152,030 244,810 2,548,944 58,729 21,707
Net unrealized
appreciation
(depreciation)
during the period . 4,871,167 78,480 (1,219,540) 3,920,455 1,070,805 126,699
---------- ---------- ----------- ----------- ---------- --------
Net realized and
unrealized gain
(loss) on investments 5,624,917 230,510 (974,730) 6,469,399 1,129,534 148,406
---------- ---------- ----------- ----------- ---------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $6,480,334 $2,115,569 $ (585,710) $10,107,133 $1,106,941 $142,332
========== ========== =========== =========== ========== ========
</TABLE>
See accompanying notes.
107
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
---------------------------------- ---------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 372,766 $ 185,760 $ 61,249 $ 6,491,783 $1,114,374 $ --
M Fund Inc. . . . . -- -- -- -- -- --
---------- ---------- --------- ----------- ---------- --------
Total investment
income . . . . . . . 372,766 185,760 61,249 6,491,783 1,114,374 --
Expenses:
Mortality and expense
risks . . . . . . . 13,792 9,687 4,443 102,248 26,123 8,287
---------- ---------- --------- ----------- ---------- --------
Net investment income
(loss) . . . . . . . 358,974 176,073 56,806 6,389,535 1,088,251 (8,287)
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains . 15,640 24,206 8,667 5,188,018 599,619 1,235
Net unrealized
appreciation
(depreciation)
during the
period . . . . . . (173,912) 147,461 (67,714) 15,078,681 1,184,263 486,186
---------- ---------- --------- ----------- ---------- --------
Net realized and
unrealized gain
(loss) on investments (158,272) 171,667 (59,047) 20,266,699 1,783,882 487,421
---------- ---------- --------- ----------- ---------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ 200,702 $ 347,740 $ (2,241) $26,656,234 $2,872,133 $479,134
========== ========== ========= =========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
---------------------------------- --------------------------------
1999 1998 1997 1999 1998 1997
------------ ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 1,809,072 $ 797,874 $194,199 $3,279,928 $1,854,829 $758,434
M Fund Inc. . . . . -- -- -- -- -- --
----------- ---------- -------- ---------- ---------- --------
Total investment
income . . . . . . . 1,809,072 797,874 194,199 3,279,928 1,854,829 758,434
Expenses:
Mortality and expense
risks . . . . . . . 88,877 41,415 11,163 291,398 167,813 66,882
----------- ---------- -------- ---------- ---------- --------
Net investment income 1,720,195 756,459 183,036 2,988,530 1,687,016 691,552
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains . 705,454 330,827 164,821 -- -- --
Net unrealized
appreciation
(depreciation)
during the
period . . . . . . (2,181,112) 145,355 279,449 -- -- --
----------- ---------- -------- ---------- ---------- --------
Net realized and
unrealized gain
(loss) on investments (1,475,658) 476,182 444,270 -- -- --
----------- ---------- -------- ---------- ---------- --------
Net increase in net
assets resulting from
operations . . . . . $ 244,537 $1,232,641 $627,306 $2,988,530 $1,687,016 $691,552
=========== ========== ======== ========== ========== ========
</TABLE>
See accompanying notes.
108
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MID CAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
----------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
----------- ------------ --------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I . . . . . $ 110,190 $ 120,469 $446,081 $ 1,421,656 $ 142,469 $ 878,600
M Fund Inc. . . . . . . . . . . . . . . . . . -- -- -- -- -- --
---------- ----------- -------- ----------- ------------- -----------
Total investment income . . . . . . . . . . . . 110,190 120,469 446,081 1,421,656 142,469 878,600
Expenses:
Mortality and expense risks. . . . . . . . . . 68,611 45,020 11,421 32,995 34,432 35,934
---------- ----------- -------- ----------- ------------- -----------
Net investment income . . . . . . . . . . . . . 41,579 75,449 434,660 1,388,661 108,037 842,666
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses) . . . . . . . . . (860,332) (538,516) 101,787 13,375 232,246 297,666
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . . 1,757,919 (830,390) (39,717) (1,001,208) 236,333 (730,748)
---------- ----------- -------- ----------- ------------- -----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . 897,587 (1,368,906) 62,070 (987,833) 468,579 (433,082)
---------- ----------- -------- ----------- ------------- -----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . $ 939,166 $(1,293,457) $496,730 $ 400,828 $ 576,616 $ 409,584
========== =========== ======== =========== ============= ===========
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
---------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
---------- ------------ --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 544,845 $ 305,783 $246,677 $23,565,679 $ 9,266,175 $5,917,063
M Fund Inc. . . . . -- -- -- -- -- --
--------- ----------- -------- ----------- ----------- ----------
Total investment
income . . . . . . . 544,845 305,783 246,677 23,565,679 9,266,175 5,917,063
Expenses:
Mortality and expense
risks . . . . . . . 29,468 22,716 13,879 715,377 290,361 169,135
--------- ----------- -------- ----------- ----------- ----------
Net investment income 515,377 283,067 232,798 22,850,302 8,975,814 5,747,928
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (735,504) (454,979) 252,095 6,207,253 2,061,212 2,390,414
Net unrealized
appreciation
(depreciation)
during the period . 80,925 (698,676) (13,488) (5,814,839) 7,759,307 435,778
--------- ----------- -------- ----------- ----------- ----------
Net realized and
unrealized gain
(loss) on investments (654,579) (1,153,655) 238,607 392,414 9,820,519 2,826,192
--------- ----------- -------- ----------- ----------- ----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $(139,202) $ (870,588) $471,405 $23,242,716 $18,796,333 $8,574,120
========= =========== ======== =========== =========== ==========
</TABLE>
See accompanying notes.
109
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
------------------------------------ ------------------------------------
1999 1998 1997 1999 1998 1997
------------ ---------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $11,251,980 $3,606,186 $1,879,954 $ 957,614 $ 977,164 $ 415,542
M Fund Inc. . . . . -- -- -- -- -- --
----------- ---------- ---------- ---------- ----------- ---------
Total investment
income . . . . . . . 11,251,980 3,606,186 1,879,954 957,614 977,164 415,542
Expenses:
Mortality and expense
risks . . . . . . . 495,544 121,905 65,383 50,128 50,947 20,551
----------- ---------- ---------- ---------- ----------- ---------
Net investment income 10,756,436 3,484,281 1,814,571 907,486 926,217 394,991
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 2,233,258 278,186 171,318 (441,667) 24,740 35,294
Net unrealized
appreciation
(depreciation)
during the period . (6,419,069) 1,791,231 715,231 (85,754) (136,999) (25,976)
----------- ---------- ---------- ---------- ----------- ---------
Net realized and
unrealized gain
(loss) on investments (4,185,811) 2,069,417 886,549 (527,421) (112,259) 9,318
----------- ---------- ---------- ---------- ----------- ---------
Net increase in net
assets resulting from
operations . . . . . $ 6,570,625 $5,553,698 $2,701,120 $ 380,065 $ 813,958 $ 404,309
=========== ========== ========== ========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL OPPORTUNITIES
SMALL CAP VALUE SUBACCOUNT SUBACCOUNT
-------------------------------- ---------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 409,324 $ 47,350 $299,278 $2,096,195 $ 103,399 $ 69,078
M Fund Inc. . . . . -- -- -- -- -- --
--------- --------- -------- ---------- ---------- ---------
Total investment
income . . . . . . . 409,324 47,350 299,278 2,096,195 103,399 69,078
Expenses:
Mortality and expense
risks . . . . . . . 64,613 33,335 8,494 90,191 50,003 13,177
--------- --------- -------- ---------- ---------- ---------
Net investment income 344,711 14,015 290,784 2,006,004 53,396 55,901
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (979,002) (9,919) 75,149 1,907,809 191,495 80,782
Net unrealized
appreciation
(depreciation)
during the period . 325,684 (523,693) (18,626) 3,818,953 1,108,416 (260,664)
--------- --------- -------- ---------- ---------- ---------
Net realized and
unrealized gain
(loss) on investments (653,318) (533,612) 56,523 5,726,762 1,299,911 (179,882)
--------- --------- -------- ---------- ---------- ---------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $(308,607) $(519,597) $347,307 $7,732,766 $1,353,307 $(123,981)
========= ========= ======== ========== ========== =========
</TABLE>
See accompanying notes.
110
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT GLOBAL BOND SUBACCOUNT
----------------------------------- --------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 5,839,023 $1,337,750 $ 409,920 $ 460,088 $303,545 $ 74,850
M Fund Inc. . . . . -- -- -- -- -- --
----------- ---------- ---------- ----------- -------- --------
Total investment
income . . . . . . . 5,839,023 1,337,750 409,920 460,088 303,545 74,850
Expenses:
Mortality and expense
risks . . . . . . . 335,573 126,021 31,223 35,321 19,894 3,820
----------- ---------- ---------- ----------- -------- --------
Net investment income 5,503,450 1,211,729 378,697 424,767 283,651 71,030
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 7,681,081 691,270 901,978 (204,675) 81,659 8,335
Net unrealized
appreciation
(depreciation)
during the
period . . . . . . 4,678,509 6,098,919 392,256 (433,526) 43,608 (11,727)
----------- ---------- ---------- ----------- -------- --------
Net realized and
unrealized gain
(loss) on investments 12,359,590 6,790,189 1,294,234 (638,201) 125,267 (3,392)
----------- ---------- ---------- ----------- -------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $17,863,040 $8,001,918 $1,672,931 $ (213,434) $408,918 $ 67,638
=========== ========== ========== =========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
BRANDES INTERNATIONAL
TURNER CORE GROWTH SUBACCOUNT EQUITY SUBACCOUNT
------------------------------ ------------------------------
1999 1998 1997 1999 1998 1997
---------- -------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series
Trust I . . . . . . $1,349,358 $ -- $ -- $ 549,978 $ -- $ --
M Fund Inc. . . . . -- 84,940 91,360 -- 358,080 32,677
---------- -------- -------- ---------- -------- --------
Total investment
income . . . . . . . 1,349,358 84,940 91,360 549,978 358,080 32,677
Expenses:
Mortality and expense
risks . . . . . . . 33,920 7,737 4,071 34,297 14,434 7,502
---------- -------- -------- ---------- -------- --------
Net investment income 1,315,438 77,203 87,289 515,681 343,646 25,175
Net realized and
unrealized gain
(loss) on
investments: . . . .
Net realized gains . 1,038,462 156,278 76,711 507,727 89,337 12,541
Net unrealized
appreciation
(depreciation)
during the
period . . . . . . 1,626,646 562,620 32,626 3,486,097 91,915 (26,022)
---------- -------- -------- ---------- -------- --------
Net realized and
unrealized gain
(loss) on investments 2,665,108 718,898 109,337 3,993,824 181,252 (13,481)
---------- -------- -------- ---------- -------- --------
Net increase in net
assets resulting from
operations . . . . . $3,980,546 $796,101 $196,626 $4,509,505 $524,898 $ 11,694
========== ======== ======== ========== ======== ========
</TABLE>
See accompanying notes.
111
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FRONTIER CAPITAL APPRECIATION
SUBACCOUNT ENHANCED U.S. EQUITY SUBACCOUNT
--------------------------------- --------------------------------
1999 1998 1997 1999 1998 1997*
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I . . $ 487,465 $ -- $ -- $532,067 $ -- $ --
M Fund Inc. . . . . -- 34,738 128,190 -- 72,302 15,335
---------- --------- --------- -------- -------- -------
Total investment
income . . . . . . . 487,465 34,738 128,190 532,067 72,302 15,335
Expenses:
Mortality and expense
risks . . . . . . . 37,471 24,841 10,040 13,930 4,069 478
---------- --------- --------- -------- -------- -------
Net investment income 449,994 9,897 118,150 518,137 68,233 14,857
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 624,068 (445,752) 614,358 264,436 87,723 4,177
Net unrealized
appreciation
(depreciation)
during the period . 3,431,408 432,064 (368,570) 151,562 89,677 6,844
---------- --------- --------- -------- -------- -------
Net realized and
unrealized gain
(loss) on investments 4,055,476 (13,688) 245,788 415,998 177,400 11,021
---------- --------- --------- -------- -------- -------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $4,505,470 $ (3,791) $ 363,938 $934,135 $245,633 $25,878
========== ========= ========= ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
EMERGING
MARKETS EQUITY GLOBAL EQUITY BOND INDEX
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------- ------------------ --------------------
1999 1998** 1999 1998** 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 $ 140,772 $ 23,842
M Fund Inc. . . . . -- -- -- -- -- --
---------- -------- -------- -------- --------- --------
Total investment
income . . . . . . . 137,724 522 6,063 491 140,772 23,842
Expenses:
Mortality and expense
risks . . . . . . . 5,465 387 1,859 339 10,636 937
---------- -------- -------- -------- --------- --------
Net investment income 132,259 135 4,204 152 130,136 22,905
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 663,998 (45,975) 82,873 (21,835) (104,174) 1,002
Net unrealized
appreciation
(depreciation)
during the period . 432,248 2,289 47,295 4,812 (78,192) (10,217)
---------- -------- -------- -------- --------- --------
Net realized and
unrealized gain
(loss) on investments 1,096,246 (43,686) 130,168 (17,023) (182,366) (9,215)
---------- -------- -------- -------- --------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $1,228,505 $(43,551) $134,372 $(16,871) $ (52,230) $ 13,690
========== ======== ======== ======== ========= ========
</TABLE>
---------
* From July 1, 1997 (commencement of operations). ** From May 1, 1998
(commencement of operations).
112
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF OPERATIONS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
SMALL/MID HIGH YIELD
CAP CORE BOND
SUBACCOUNT SUBACCOUNT
------------------- --------------------
1999 1998** 1999 1998**
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series
Trust I . . . . . . . . . . . $ 54,784 $ -- $ 352,641 $ 88,721
M Fund Inc. . . . . . . . . . . -- -- -- --
-------- -------- --------- --------
Total investment income . . . . 54,784 -- 352,641 88,721
Expenses:
Mortality and expense risks . . 2,073 535 12,206 1,962
-------- -------- --------- --------
Net investment income (loss) . . 52,711 (535) 340,435 86,759
Net realized and unrealized gain
(loss) on investments:
Net realized gains (losses) . . 65,733 (25,196) 42,365 64,824
Net unrealized appreciation
(depreciation) during the
period . . . . . . . . . . . . (10,735) 18,718 (139,659) 149,416
-------- -------- --------- --------
Net realized and unrealized gain
(loss) on investments . . . . . 54,998 (6,478) (97,294) 214,240
-------- -------- --------- --------
Net increase (decrease) in net
assets resulting from operations $107,709 $ (7,013) $ 243,141 $300,999
======== ======== ========= ========
</TABLE>
---------
** From May 1, 1998 (commencement of operations).
See accompanying notes.
113
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
LARGE CAP GROWTH SUBACCOUNT SOVEREIGN BOND SUBACCOUNT
------------------------------------------ -----------------------------------------
1999 1998 1997 1999 1998 1997
------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . . $ 17,233,439 $ 6,143,421 $ 2,793,242 $ 2,725,206 $ 2,097,345 $ 816,558
Net realized gains (losses) . . . . . 5,003,007 1,750,881 619,721 (1,391,910) 185,230 80,538
Net unrealized appreciation
(depreciation) during the period . . (2,053,672) 8,041,022 2,301,920 (1,837,190) (378,058) 63,687
------------ ------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations . . . . . . 20,182,774 15,935,324 5,714,883 (503,894) 1,904,517 960,783
From policyholder transactions:
Net premiums from policyholders . . . 75,667,981 29,859,648 20,264,849 74,595,720 38,567,292 21,324,560
Net benefits to policyholders . . . . (45,347,424) (13,281,028) (10,390,849) (68,312,320) (27,391,317) (8,009,615)
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net assets resulting
from policyholder
transactions . . . . . . . . . . . . . 30,320,557 16,578,620 9,874,000 6,283,400 11,175,975 13,314,945
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net assets . . . . . . 50,503,331 32,513,944 15,588,883 5,779,506 13,080,492 14,275,728
Net assets at beginning of period . . . 65,018,220 32,504,276 16,915,393 32,541,967 19,461,475 5,185,747
------------ ------------ ------------ ------------ ------------ -----------
Net assets at end of period . . . . . . $115,521,551 $ 65,018,220 $ 32,504,276 $ 38,321,473 $ 32,541,967 $19,461,475
============ ============ ============ ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY SMALL CAP
INDEX SUBACCOUNT GROWTH SUBACCOUNT
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
------------- ------------ ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . $ 855,417 $ 1,885,059 $ 389,020 $ 3,637,734 $ (22,593) $ (6,074)
Net realized gains . . . . . . . . . . . 753,750 152,030 244,810 2,548,944 58,729 21,707
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . 4,871,167 78,480 (1,219,540) 3,920,455 1,070,805 126,699
------------ ----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations . . . . . . . . 6,480,334 2,115,569 (585,710) 10,107,133 1,106,941 142,332
From policyholder transactions:
Net premiums from policyholders . . . . . 53,332,374 10,034,119 8,150,400 52,637,861 12,088,047 2,870,481
Net benefits to policyholders . . . . . . (39,209,664) (8,344,107) (4,505,840) (40,800,272) (6,621,834) (1,005,386)
------------ ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . 14,122,710 1,690,012 3,644,560 11,837,589 5,466,213 1,865,095
------------ ----------- ----------- ------------ ----------- -----------
Net increase in net assets . . . . . . . . 20,603,044 3,805,581 3,058,850 21,944,722 6,573,154 2,007,427
Net assets at beginning of period . . . . 12,595,630 8,790,049 5,731,199 9,078,106 2,504,952 497,525
------------ ----------- ----------- ------------ ----------- -----------
Net assets at end of period . . . . . . . $ 33,198,674 $12,595,630 $ 8,790,049 $ 31,022,828 $ 9,078,106 $ 2,504,952
============ =========== =========== ============ =========== ===========
</TABLE>
See accompanying notes.
114
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED
SUBACCOUNT MID CAP GROWTH SUBACCOUNT
-------------------------------------- ---------------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ----------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . $ 358,974 $ 176,073 $ 56,806 $ 6,389,535 $ 1,088,251 $ (8,287)
Net realized gains . . . . . . . . . . 15,640 24,206 8,667 5,188,018 599,619 1,235
Net unrealized appreciation
(depreciation) during the period . . (173,912) 147,461 (67,714) 15,078,681 1,184,263 486,186
----------- ----------- ---------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations . . . . . . 200,702 347,740 (2,241) 26,656,234 2,872,133 479,134
From policyholder transactions:
Net premiums from policyholders . . . 6,295,052 3,163,316 1,608,069 65,183,285 11,323,614 3,212,754
Net benefits to policyholders . . . . (5,007,225) (1,882,974) (282,878) (41,018,347) (5,132,055) (915,459)
----------- ----------- ---------- ------------- ------------- -------------
Net increase in net assets resulting
from policyholder transactions . . . . 1,287,827 1,280,342 1,325,191 24,164,938 6,191,559 2,297,295
----------- ----------- ---------- ------------- ------------- -------------
Net increase in net assets . . . . . . 1,488,529 1,628,082 1,322,950 50,821,172 9,063,692 2,776,429
Net assets at beginning of period . . . 3,103,327 1,475,245 152,295 12,678,444 3,614,752 838,323
----------- ----------- ---------- ------------- ------------- -------------
Net assets at end of period . . . . . . $ 4,591,856 $ 3,103,327 $1,475,245 $ 63,499,616 $ 12,678,444 $ 3,614,752
=========== =========== ========== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
---------------------------------------- ---------------------------------------------
1999 1998 1997 1999 1998 1997
------------- ------------ ------------ -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . $ 1,720,195 $ 756,459 $ 183,036 $ 2,988,530 $ 1,687,016 $ 691,552
Net realized gains . . . . . . . . . 705,454 330,827 164,821 -- -- --
Net unrealized appreciation
(depreciation) during the period . (2,181,112) 145,355 279,449 -- -- --
------------ ----------- ----------- ------------- ------------- -------------
Net increase in net assets resulting
from operations . . . . . . . . . . 244,537 1,232,641 627,306 2,988,530 1,687,016 691,552
From policyholder transactions:
Net premiums from policyholders . . 37,432,039 15,144,316 5,421,062 890,376,545 340,377,358 103,737,470
Net benefits to policyholders . . . (27,199,179) (4,937,583) (1,620,578) (918,869,964) (269,723,839) (100,296,756)
------------ ----------- ----------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from policyholder
transactions . . . . . . . . . . . . 10,232,860 10,206,733 3,800,484 (28,493,419) 70,653,519 3,440,714
------------ ----------- ----------- ------------- ------------- -------------
Net increase (decrease) in net assets 10,477,397 11,439,374 4,427,790 (25,504,889) 72,340,535 4,132,266
Net assets at beginning of period . . 16,629,520 5,190,146 762,356 86,511,658 14,171,123 10,038,857
------------ ----------- ----------- ------------- ------------- -------------
Net assets at end of period . . . . . $ 27,106,917 $16,629,520 $ 5,190,146 $ 61,006,769 $ 86,511,658 $ 14,171,123
============ =========== =========== ============= ============= =============
</TABLE>
See accompanying notes.
115
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
SMALL/MID CAP
MID CAP VALUE SUBACCOUNT GROWTH SUBACCOUNT
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
------------- ------------ ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income . . . . . . . . . . $ 41,579 $ 75,449 $ 434,660 $ 1,388,661 $ 108,037 $ 842,666
Net realized gains (losses) . . . . . . . (860,332) (538,516) 101,787 13,375 232,246 297,666
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . 1,757,919 (830,390) (39,717) (1,001,208) 236,333 (730,748)
------------ ----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from
operations . . . . . . . . . . . . . . . 939,166 (1,293,457) 496,730 400,828 576,616 409,584
From policyholder transactions:
Net premiums from policyholders . . . . . 32,024,751 18,837,112 6,323,061 11,809,133 4,563,154 8,511,081
Net benefits to policyholders . . . . . . (29,579,995) (7,855,945) (1,089,206) (9,775,543) (6,481,542) (6,274,668)
------------ ----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from policyholder transactions 2,444,756 10,981,167 5,233,855 2,033,590 (1,918,388) 2,236,413
------------ ----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets . . 3,383,922 9,687,710 5,730,585 2,434,418 (1,341,772) 2,645,997
Net assets at beginning of period . . . . 15,754,611 6,066,901 336,316 7,491,413 8,833,185 6,187,188
------------ ----------- ----------- ------------ ----------- -----------
Net assets at end of period . . . . . . . $ 19,138,533 $15,754,611 $ 6,066,901 $ 9,925,831 $ 7,491,413 $ 8,833,185
============ =========== =========== ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
---------------------------------------- -------------------------------------------
1999 1998 1997 1999 1998 1997
------------- ------------ ------------ -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income . . . . . . . . $ 515,377 $ 283,067 $ 232,798 $ 22,850,302 $ 8,975,814 $ 5,747,928
Net realized gains (losses) . . . . . (735,504) (454,979) 252,095 6,207,253 2,061,212 2,390,414
Net unrealized appreciation
(depreciation) during the period . . 80,925 (698,676) (13,488) (5,814,839) 7,759,307 435,778
------------ ----------- ----------- ------------- ------------ ------------
Net increase (decrease) in net assets
resulting from
operations . . . . . . . . . . . . . . (139,202) (870,588) 471,405 23,242,716 18,796,333 8,574,120
From policyholder transactions:
Net premiums from policyholders . . . 22,699,314 6,964,604 4,833,914 196,639,863 60,975,616 35,535,599
Net benefits to policyholders . . . . (18,093,640) (5,513,221) (2,393,463) (106,763,955) (31,360,866) (21,776,809)
------------ ----------- ----------- ------------- ------------ ------------
Net increase in net assets resulting
from policyholder
transactions . . . . . . . . . . . . . 4,605,674 1,451,383 2,440,451 89,875,908 29,614,750 13,758,790
------------ ----------- ----------- ------------- ------------ ------------
Net increase in net assets . . . . . . 4,466,472 580,795 2,911,856 113,118,624 48,411,083 22,332,910
Net assets at beginning of period . . . 4,772,174 4,191,379 1,279,523 96,407,275 47,996,192 25,663,282
------------ ----------- ----------- ------------- ------------ ------------
Net assets at end of period . . . . . . $ 9,238,646 $ 4,772,174 $ 4,191,379 $ 209,525,899 $ 96,407,275 $ 47,996,192
============ =========== =========== ============= ============ ============
</TABLE>
See accompanying notes.
116
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
SHORT-TERM BOND
MANAGED SUBACCOUNT SUBACCOUNT
---------------------------------------- -----------------------------------------
1999 1998 1997 1999 1998 1997
------------- ------------ ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . . . $ 10,756,436 $ 3,484,281 $ 1,814,571 $ 907,486 $ 926,217 $ 394,991
Net realized gains (losses) . . . . . . 2,233,258 278,186 171,318 (441,667) 24,740 35,294
Net unrealized appreciation
(depreciation) during the period . . . (6,419,069) 1,791,231 715,231 (85,754) (136,999) (25,976)
------------ ----------- ----------- ------------ ------------ -----------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . 6,570,625 5,553,698 2,701,120 380,065 813,958 404,309
From policyholder transactions:
Net premiums from policyholders . . . . 113,292,872 21,019,273 16,914,475 41,259,110 27,490,588 12,911,228
Net benefits to policyholders . . . . . (34,219,380) (8,281,600) (9,357,535) (49,156,693) (21,534,195) (4,234,624)
------------ ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder transactions 79,073,492 12,737,673 7,556,940 (7,897,583) 5,956,393 8,676,604
------------ ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets . . 85,644,117 18,291,371 10,258,060 (7,517,518) 6,770,351 9,080,913
Net assets at beginning of period . . . . 40,066,692 21,775,321 11,517,261 19,246,506 12,476,155 3,395,242
------------ ----------- ----------- ------------ ------------ -----------
Net assets at end of period . . . . . . . $125,710,809 $40,066,692 $21,775,321 $ 11,728,988 $ 19,246,506 $12,476,155
============ =========== =========== ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL OPPORTUNITIES
SMALL CAP VALUE SUBACCOUNT SUBACCOUNT
--------------------------------------- -----------------------------------------
1999 1998 1997 1999 1998 1997
------------- ------------ ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . . . . $ 344,711 $ 14,015 $ 290,784 $ 2,006,004 $ 53,396 $ 55,901
Net realized gains (losses) . . . . . . . (979,002) (9,919) 75,149 1,907,809 191,495 80,782
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . 325,684 (523,693) (18,626) 3,818,953 1,108,416 (260,664)
------------ ----------- ---------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations . . . . . . . . (308,607) (519,597) 347,307 7,732,766 1,353,307 (123,981)
From policyholder transactions:
Net premiums from policyholders . . . . . 39,172,672 11,420,833 4,182,527 43,216,216 23,844,756 8,906,153
Net benefits to policyholders . . . . . . (30,591,417) (4,363,378) (897,951) (38,372,463) (12,275,087) (3,655,731)
------------ ----------- ---------- ------------ ------------ -----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . 8,581,255 7,057,455 3,284,576 4,843,753 11,569,669 5,250,422
------------ ----------- ---------- ------------ ------------ -----------
Net increase in net assets . . . . . . . . 8,272,648 6,537,858 3,631,883 12,576,519 12,922,976 5,126,441
Net assets at beginning of period . . . . 10,510,748 3,972,890 341,007 18,958,530 6,035,554 909,113
------------ ----------- ---------- ------------ ------------ -----------
Net assets at end of period . . . . . . . $ 18,783,396 $10,510,748 $3,972,890 $ 31,535,049 $ 18,958,530 $ 6,035,554
============ =========== ========== ============ ============ ===========
</TABLE>
See accompanying notes.
117
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY INDEX SUBACCOUNT
-----------------------------------------------------
1999 1998 1997
------------------------- ------------- ------------
<S> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income $ 5,503,450 $ 1,211,729 $ 378,697
Net realized gains
(losses). . . . . . 7,681,081 691,270 901,978
Net unrealized
appreciation
(depreciation)
during the period . 4,678,509 6,098,919 392,256
------------------------ ------------ -----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . 17,863,040 8,001,918 1,672,931
From policyholder
transactions:
Net premiums from
policyholders . . . 225,994,914 60,690,933 23,412,687
Net benefits to
policyholders . . . (147,909,470) (31,166,123) (9,622,006)
------------------------ ------------ -----------
Net increase in net
assets resulting from
policyholder
transactions . . . . 78,085,444 29,524,810 13,790,681
------------------------ ------------ -----------
Net increase in net
assets . . . . . . . 95,948,484 37,526,728 15,463,612
Net assets at
beginning of period 53,964,647 16,437,919 974,307
------------------------ ------------ -----------
Net assets at end of
period . . . . . . . $ 149,913,131 $ 53,964,647 $16,437,919
======================== ============ ===========
<CAPTION>
GLOBAL BOND SUBACCOUNT
--------------------------------------------------
1999 1998 1997
------------------------ ------------ -------------
<S> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income $ 424,767 $ 283,651 $ 71,030
Net realized gains (204,675) 81,659 8,335
(losses). . . . . .
Net unrealized
appreciation (433,526) 43,608 (11,727)
(depreciation) ----------------------- ----------- ----------
during the period .
Net increase (213,434) 408,918 67,638
(decrease) in net
assets resulting from
operations . . . . .
From policyholder
transactions:
Net premiums from 11,387,398 9,258,713 1,828,179
policyholders . . .
Net benefits to
policyholders . . . (10,615,019) (3,008,341) (534,164)
----------------------- ----------- ----------
Net increase in net
assets resulting from 772,379 6,250,372 1,294,015
policyholder ----------------------- ----------- ----------
transactions . . . .
Net increase in net 558,945 6,659,290 1,361,653
assets . . . . . . .
Net assets at
beginning of period 8,279,571 1,620,281 258,628
----------------------- ----------- ----------
Net assets at end of
period . . . . . . . $ 8,838,516 $ 8,279,571 $1,620,281
======================= =========== ==========
</TABLE>
<TABLE>
<CAPTION>
BRANDES INTERNATIONAL
TURNER CORE GROWTH SUBACCOUNT EQUITY SUBACCOUNT
-------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . . . . . $ 1,315,438 $ 77,203 $ 87,289 $ 515,681 $ 343,646 $ 25,175
Net realized gains . . . . . . . . . . . . . 1,038,462 156,278 76,711 507,727 89,337 12,541
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . 1,626,646 562,620 32,626 3,486,097 91,915 (26,022)
----------- ----------- ---------- ----------- ------------ -----------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . . 3,980,546 796,101 196,626 4,509,505 524,898 11,694
From policyholder transactions:
Net premiums from policyholders . . . . . . 23,098,524 4,779,974 743,622 12,134,533 5,520,633 2,484,010
Net benefits to policyholders . . . . . . . (9,308,254) (1,690,860) (580,027) (5,569,496) (2,041,375) (1,088,249)
----------- ----------- ---------- ----------- ------------ -----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . . 13,790,270 3,089,114 163,595 6,565,037 3,479,258 1,395,761
----------- ----------- ---------- ----------- ------------ -----------
Net increase in net assets . . . . . . . . . 17,770,816 3,885,215 360,221 11,074,542 4,004,156 1,407,455
Net assets at beginning of period . . . . . . 4,900,189 1,014,974 654,753 6,340,754 2,336,598 929,143
----------- ----------- ---------- ----------- ------------ -----------
Net assets at end of period . . . . . . . . . $22,671,005 $ 4,900,189 $1,014,974 $17,415,296 $ 6,340,754 $ 2,336,598
=========== =========== ========== =========== ============ ===========
</TABLE>
See accompanying notes.
118
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FRONTIER CAPITAL APPRECIATION
SUBACCOUNT
--------------------------------------------------------------------
1999 1998 1997
----------------------------------------- ------------ ------------
<S> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income $ 449,994 $ 9,897 $ 118,150
Net realized gains
(losses). . . . . . 624,068 (445,752) 614,358
Net unrealized
appreciation
(depreciation)
during the period . 3,431,408 432,064 (368,570)
---------------------------------------- ----------- -----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . 4,505,470 (3,791) 363,938
From policyholder
transactions:
Net premiums from
policyholders . . . 25,135,447 13,982,031 10,030,418
Net benefits to
policyholders . . . (22,331,613) (9,695,520) (5,969,436)
---------------------------------------- ----------- -----------
Net increase in net
assets resulting from
policyholder
transactions . . . . 2,803,834 4,286,511 4,060,982
---------------------------------------- ----------- -----------
Net increase in net
assets . . . . . . . 7,309,304 4,282,720 4,424,920
Net assets at
beginning of period 9,675,718 5,392,998 968,078
---------------------------------------- ----------- -----------
Net assets at end of
period . . . . . . . $ 16,985,022 $ 9,675,718 $ 5,392,998
======================================== =========== ===========
<CAPTION>
ENHANCED U.S.
EQUITY SUBACCOUNT
---------------------------------------------------------
1999 1998 1997*
-------------------------------- ------------ ------------
<S> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income $ 518,137 $ 68,233 $ 14,857
Net realized gains 264,436 87,723 4,177
(losses). . . . . .
Net unrealized
appreciation 151,562 89,677 6,844
(depreciation) ------------------------------- ----------- ---------
during the period .
Net increase 934,135 245,633 25,878
(decrease) in net
assets resulting from
operations . . . . .
From policyholder
transactions:
Net premiums from 6,480,741 3,031,309 475,503
policyholders . . .
Net benefits to
policyholders . . . (3,151,279) (1,299,530) (4,176)
------------------------------- ----------- ---------
Net increase in net
assets resulting from 3,329,462 1,731,779 471,327
policyholder ------------------------------- ----------- ---------
transactions . . . .
Net increase in net 4,263,597 1,977,412 497,205
assets . . . . . . .
Net assets at
beginning of period 2,474,617 497,205 0
------------------------------- ----------- ---------
Net assets at end of
period . . . . . . . $ 6,738,214 $ 2,474,617 $ 497,205
=============================== =========== =========
</TABLE>
<TABLE>
<CAPTION>
EMERGING MARKETS GLOBAL EQUITY BOND INDEX
EQUITY SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------------- ------------------------- ------------------------
1999 1998** 1999 1998** 1999 1998**
------------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . . . . . $ 132,259 $ 135 $ 4,204 $ 152 $ 130,136 $ 22,905
Net realized gains (losses) . . . . . . . . 663,998 (45,975) 82,873 (21,835) (104,174) 1,002
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . 432,248 2,289 47,295 4,812 (78,192) (10,217)
------------ ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations . . . . . . . . . 1,228,505 (43,551) 134,372 (16,871) (52,230) 13,690
From policyholder transactions:
Net premiums from policyholders . . . . . . 18,579,194 2,434,226 3,151,983 2,372,034 6,471,518 1,176,234
Net benefits to policyholders . . . . . . . (16,271,324) (2,203,670) (2,613,505) (2,191,135) (2,358,694) (124,467)
------------ ----------- ----------- ----------- ----------- ----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . . 2,307,870 230,556 538,478 180,899 4,112,824 1,051,767
------------ ----------- ----------- ----------- ----------- ----------
Net increase in net assets . . . . . . . . . 3,536,375 187,005 672,850 164,028 4,060,594 1,065,457
Net assets at beginning of period . . . . . 187,005 0 164,028 0 1,065,457 0
------------ ----------- ----------- ----------- ----------- ----------
Net assets at end of period . . . . . . . . $ 3,723,380 $ 187,005 $ 836,878 $ 164,028 $ 5,126,051 $1,065,457
============ =========== =========== =========== =========== ==========
</TABLE>
---------
* From July 1, 1997 (commencement of operations). ** From May 1, 1998
(commencement of operations).
See accompanying notes.
119
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
SMALL/MID CAP CORE HIGH YIELD BOND
SUBACCOUNT SUBACCOUNT
------------------------ ----------------------------------------
1999 1998** 1999 1998**
------------ ----------- --------------------------- --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income
(loss). . . . . . . $ 52,711 $ (535) $ 340,435 $ 86,759
Net realized gains
(losses). . . . . . 65,733 (25,196) 42,365 64,824
Net unrealized
appreciation
(depreciation)
during the period . (10,735) 18,718 (139,659) 149,416
----------- ---------- -------------------------- -----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . 107,709 (7,013) 243,141 300,999
From policyholder
transactions:
Net premiums from
policyholders . . . 5,817,483 1,089,030 19,870,990 6,683,673
Net benefits to
policyholders . . . (5,611,532) (778,864) (20,368,501) (2,457,088)
----------- ---------- -------------------------- -----------
Net increase
(decrease) in net
assets resulting from
policyholder
transactions . . . . 205,951 310,166 (497,511) 4,226,585
----------- ---------- -------------------------- -----------
Net increase
(decrease) in net
assets . . . . . . . 313,660 303,153 (254,370) 4,527,584
Net assets at
beginning of period 303,153 0 4,527,584 0
----------- ---------- -------------------------- -----------
Net assets at end of
period . . . . . . . $ 616,813 $ 303,153 $ 4,273,214 $ 4,527,584
=========== ========== ========================== ===========
</TABLE>
---------
** From May 1, 1998 (commencement of operations).
See accompanying notes.
120
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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.
121
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(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 December 31, 1999, 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.
122
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. DETAILS OF INVESTMENTS
The details of the shares owned and cost and value of investments in the
Portfolios of the Fund and of M Fund at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO SHARES OWNED COST VALUE
--------- ------------ ------------ --------------
--------------------------------
<S> <C> <C> <C>
Large Cap Growth . . . . . . 4,226,550 $108,181,136 $115,521,551
Sovereign Bond . . . . . . . 4,200,440 40,512,273 38,321,473
International Equity Index . 1,689,937 29,224,059 33,198,674
Small Cap Growth . . . . . . 1,622,919 25,907,535 31,022,828
International Balanced . . . 428,930 4,680,715 4,591,856
Mid Cap Growth . . . . . . . 2,172,468 46,744,046 63,499,616
Large Cap Value . . . . . . . 2,009,306 28,839,671 27,106,917
Money Market . . . . . . . . 6,100,677 61,006,768 61,006,769
Mid Cap Value . . . . . . . . 1,497,913 18,236,811 19,138,533
Small/Mid Cap Growth . . . . 707,222 10,888,164 9,925,831
Real Estate Equity . . . . . 805,182 9,643,804 9,238,646
Growth & Income . . . . . . . 10,470,370 207,387,033 209,525,899
Managed . . . . . . . . . . . 8,137,552 130,087,567 125,710,809
Short-Term Bond . . . . . . . 1,206,452 11,963,663 11,728,988
Small Cap Value . . . . . . . 1,720,546 18,985,985 18,783,396
International Opportunities . 2,078,452 26,831,679 31,535,049
Equity Index . . . . . . . . 7,327,855 138,687,664 149,913,131
Global Bond . . . . . . . . . 900,154 9,240,752 8,838,516
Turner Core Growth . . . . . 988,705 20,433,059 22,671,005
Brandes International Equity 1,122,129 13,875,593 17,415,296
Frontier Capital Appreciation 804,225 13,485,020 16,985,022
Enhanced U.S. Equity . . . . 321,327 6,490,133 6,738,214
Emerging Markets Equity . . . 303,646 3,288,843 3,723,380
Global Equity . . . . . . . . 68,965 784,773 836,878
Bond Index . . . . . . . . . 550,115 5,214,459 5,126,051
Small/Mid Cap CORE . . . . . 62,841 608,830 616,813
High Yield Bond . . . . . . . 475,514 4,263,457 4,273,214
</TABLE>
123
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(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>
124
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. NET ASSETS
Accumulation shares attributable to net assets of policyholders and
accumulation share values for each subaccount at December 31, 1999 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 . . . . . . 432,627 $34.19 442,008 $34.29 156,934 $34.39
Sovereign Bond . . . . . . . 226,496 13.80 170,995 13.84 28,389 13.88
International Equity Index . 205,346 17.52 163,712 17.58 4,631 17.63
Small Cap Growth . . . . . . 151,029 21.68 131,551 21.71 42,832 21.76
International Balanced . . . 21,487 13.28 25,817 13.30 12,453 13.33
Mid Cap Growth . . . . . . . 202,405 35.56 145,034 35.62 45,513 35.69
Large Cap Value . . . . . . . 191,629 16.15 140,376 16.18 4,476 16.21
Money Market . . . . . . . . 613,611 13.08 1,102,161 13.12 347,735 13.15
Mid Cap Value . . . . . . . . 106,938 14.05 45,955 14.08 2,990 14.10
Small/Mid Cap Growth . . . . 83,852 19.77 90,674 19.83 41,701 19.88
Real Estate Equity . . . . . 94,768 14.40 68,355 14.44 2,732 14.49
Growth & Income . . . . . . . 945,411 30.90 579,234 31.00 212,540 31.09
Managed . . . . . . . . . . . 554,374 20.88 279,936 20.94 23,988 21.00
Short-Term Bond . . . . . . . 94,078 12.97 84,892 13.00 7,712 13.04
Small Cap Value . . . . . . . 114,641 12.30 82,461 12.33 55,278 12.35
International Opportunities . 115,902 16.52 159,219 16.55 2,521 16.58
Equity Index . . . . . . . . 442,683 23.06 565,394 23.10 189,577 23.14
Global Bond . . . . . . . . . 55,090 12.15 48,036 12.17 16,751 12.19
Turner Core Growth . . . . . 31,697 28.29 15,337 28.36 -- --
Brandes International Equity 18,319 16.91 33,342 16.94 -- --
Frontier Capital Appreciation 20,409 22.75 13,182 22.80 -- --
Enhanced U.S. Equity . . . . 3,102 17.47 -- 17.50 -- --
Emerging Markets Equity . . . 31,332 12.77 114,481 12.78 4,803 12.79
Global Equity . . . . . . . . 11,223 12.22 15,873 12.23 777 12.24
Bond Index . . . . . . . . . 99,617 10.34 99,264 10.34 64,039 10.35
Small/Mid Cap CORE . . . . . 12,833 10.76 3,271 10.77 4,416 10.78
High Yield Bond . . . . . . . 51,021 10.09 40,169 10.10 -- --
</TABLE>
125
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(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 . . . . . . 646,018 $34.50 282,553 $34.49 252,596 $34.52
Sovereign Bond . . . . . . . 17,426 14.64 538,047 14.66 335,449 14.67
International Equity Index . 63,956 16.24 130,903 16.26 235,165 16.28
Small Cap Growth . . . . . . 90,088 22.04 39,929 22.05 38,804 22.07
International Balanced . . . 68,220 13.50 6,065 13.51 54,964 13.52
Mid Cap Growth . . . . . . . 146,264 36.15 124,116 36.18 5,992 36.19
Large Cap Value . . . . . . . 151,753 16.42 133,066 16.43 416,273 16.44
Money Market . . . . . . . . 218,714 13.01 5,906 13.02 136,140 13.04
Mid Cap Value . . . . . . . . 69,726 14.29 24,485 14.30 281,375 14.30
Small/Mid Cap Growth . . . . 27,983 19.77 958 19.79 42,902 19.81
Real Estate Equity . . . . . 58,475 14.92 4,323 14.93 203,728 14.95
Growth & Income . . . . . . . 641,268 30.84 447,326 30.87 16,723 30.91
Managed . . . . . . . . . . . 162,478 21.64 83,071 21.66 150,514 21.68
Short-Term Bond . . . . . . . 99,163 13.21 351,710 13.22 -- --
Small Cap Value . . . . . . . 32,245 12.51 49,419 12.52 281,896 12.53
International Opportunities . 203,225 16.80 157,727 16.80 74,340 16.81
Equity Index . . . . . . . . 324,024 23.44 37,253 23.46 533,298 23.47
Global Bond . . . . . . . . . 54,500 12.35 9,809 12.36 -- --
Turner Core Growth . . . . . 7,772 28.80 12,496 28.83 -- --
Brandes International Equity 104,626 17.21 81,372 17.23 42,458 17.25
Frontier Capital Appreciation 74,553 23.16 62,806 23.18 -- --
Enhanced U.S. Equity . . . . 13,962 17.68 1 17.68 -- --
Emerging Markets Equity . . . -- -- 24,692 12.87 -- --
Global Equity . . . . . . . . -- -- -- 12.32 -- --
Bond Index . . . . . . . . . 2,519 10.42 10,132 10.42 -- --
Small/Mid Cap CORE . . . . . -- -- -- 10.84 -- --
High Yield Bond . . . . . . . 1,998 10.18 310 10.18 85,180 10.18
</TABLE>
126
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(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 . . . . . 92,840 $79.68 781,223 $24.82 213,207 $22.10
Sovereign Bond . . . . . . 57,389 23.69 765,173 12.44 500,049 11.71
International Equity Index 113,572 27.55 780,218 15.05 200,089 15.54
Small Cap Growth . . . . . 193,672 21.70 298,417 21.90 197,401 24.61
International Balanced . . 52,288 13.29 41,158 13.41 36,634 12.85
Mid Cap Growth . . . . . . 168,579 35.59 383,762 35.92 103,210 39.83
Large Cap Value . . . . . . 269,931 16.17 125,284 16.31 115,052 13.95
Money Market . . . . . . . 280,073 18.10 339,940 11.94 435,648 11.42
Mid Cap Value . . . . . . . 412,439 14.06 242,213 14.19 70,954 12.00
Small/Mid Cap Growth . . . 3,416 19.80 257,950 12.63 33,652 12.85
Real Estate Equity . . . . 39,901 22.14 116,040 12.27 38,147 9.54
Growth & Income . . . . . . 828,857 68.13 1,383,220 21.88 552,475 19.13
Managed . . . . . . . . . . 2,321,332 39.65 236,592 16.81 102,294 15.37
Short-Term Bond . . . . . . 63,598 12.99 63,326 11.93 95,428 11.43
Small Cap Value . . . . . . 473,526 12.32 281,097 12.43 87,362 11.80
International Opportunities 559,454 16.54 227,841 16.68 335,763 15.97
Equity Index . . . . . . . 477,728 23.08 1,251,427 23.29 598,377 19.87
Global Bond . . . . . . . . 146,786 12.16 62,185 12.27 258,673 11.58
Turner Core Growth . . . . -- -- 229,705 25.66 76,087 24.67
Brandes International
Equity . . . . . . . . . . -- -- 495,542 16.53 58,572 17.67
Frontier Capital
Appreciation . . . . . . . -- -- 405,890 19.23 119,967 18.62
Enhanced U.S. Equity . . . -- -- 145,784 17.59 139,459 17.59
Emerging Markets Equity . . 45,954 12.77 18,062 12.82 40,257 12.82
Global Equity . . . . . . . 2,967 12.23 4,588 12.28 29,228 12.28
Bond Index . . . . . . . . 18,855 10.34 12,439 10.38 185 10.38
Small/Mid Cap CORE . . . . -- -- 16,742 10.81 477 10.81
High Yield Bond . . . . . . 34,470 10.10 82,547 10.14 72,026 10.14
</TABLE>
127
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(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 . . . . . . 221,057 $22.10 133,186 $24.82 -- --
Sovereign Bond . . . . . . . 122,492 11.71 96,742 12.44 -- --
International Equity Index . 40,197 15.54 68,833 15.05 -- --
Small Cap Growth . . . . . . 158,068 24.61 34,357 21.90 -- --
International Balanced . . . 22,819 12.85 3,040 13.41 -- --
Mid Cap Growth . . . . . . . 291,628 39.83 111,636 35.92 -- --
Large Cap Value . . . . . . . 66,485 13.95 73,993 16.31 -- --
Money Market . . . . . . . . 575,670 11.42 718,107 11.94 -- --
Mid Cap Value . . . . . . . . 62,352 11.99 52,021 14.19 -- --
Small/Mid Cap Growth . . . . 15,710 12.85 20,460 12.63 -- --
Real Estate Equity . . . . . 10,691 9.54 7,405 12.27 -- --
Growth & Income . . . . . . . 1,047,922 19.13 196,321 21.88 -- --
Managed . . . . . . . . . . . 55,779 15.37 43,618 16.81 -- --
Short-Term Bond . . . . . . . 26,887 11.43 31,697 11.93 -- --
Small Cap Value . . . . . . . 22,247 11.80 40,374 12.43 -- --
International Opportunities . 39,238 15.97 35,379 16.68 -- --
Equity Index . . . . . . . . 1,960,860 19.87 440,030 23.29 -- --
Global Bond . . . . . . . . . 35,346 11.58 51,458 12.27 -- --
Turner Core Growth . . . . . 377,311 24.67 142,883 25.66 -- --
Brandes International Equity 82,135 17.67 116,504 16.53 -- --
Frontier Capital Appreciation 90,807 18.62 69,320 20.00 -- --
Enhanced U.S. Equity . . . . 48,887 17.59 30,852 17.59 -- --
Emerging Markets Equity . . . 7,584 12.82 3,832 12.82 -- --
Global Equity . . . . . . . . 1,070 12.28 2,561 12.28 -- --
Bond Index . . . . . . . . . 137,733 10.38 46,924 10.38 -- --
Small/Mid Cap CORE . . . . . 10,536 10.81 8,881 10.81 -- --
High Yield Bond . . . . . . . 15,036 10.14 38,875 10.14 -- --
</TABLE>
128
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
VEP CLASS #13
--------------------------
ACCUMULATION ACCUMULATION
PORTFOLIO SHARES SHARE VALUES
--------- ------------ --------------
----------------------------
<S> <C> <C>
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 . . . . -- --
Real Estate Equity . . . . . -- --
Growth & Income . . . . . . . -- --
Managed . . . . . . . . . . . -- --
Short-Term Bond . . . . . . . -- --
Small Cap Value . . . . . . . -- --
International Opportunities . -- --
Equity Index . . . . . . . . -- --
Global 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 . . . . . -- --
High Yield Bond . . . . . . . -- --
</TABLE>
129
<PAGE>
ALPHABETICAL INDEX OF KEY WORDS AND PHRASES
This index should help you locate more information about many of the important
concepts in this prospectus.
<TABLE>
<CAPTION>
KEY WORD OR PHRASE PAGE KEY WORD OR PHRASE PAGE
<S> <C> <C> <C> <C>
Account . . . . . . . 33 35
account value . . . . 8 10
Additional Sum Insured 15 15
attained age. . . . . 9 15
Basic Sum Insured . . 15 5
beneficiary . . . . . 44 13
business day. . . . . 34 10
1
changing Option A or B 17 8
changing the Total Sum 1
Insured . . . . . . 7 6
charges . . . . . . . 9 35
Code. . . . . . . . . 40 35
cost of insurance
rates. . . . . . . . 9 5
date of issue . . . . 35 3
death benefit . . . . 5 20
deductions. . . . . . 9 7
enhanced cash value
rider. . . . . . . . 16 9
expenses of the Trusts 10 2
fixed investment
option . . . . . . . 34 33
full surrender. . . . 13 2
fund. . . . . . . . . 2 14
grace period. . . . . 7 33
guaranteed minimum
death benefit . . . 7 13
Guaranteed Minimum
Death Benefit Premium 7 13
insurance charge. . . 9 9
insured person. . . . 5 40
investment options. . 1 20
JHVLICO . . . . . . . 33 15
lapse . . . . . . . . 7 13
loan. . . . . . . . . 14 2
loan interest . . . . 14 1
maximum premiums. . . 6 33
Minimum Initial
Premium. . . . . . . 34 13
minimum insurance
amount . . . . . . . 16 10
minimum premiums. . . 5 5
modified endowment
contract . . . . . . 41
</TABLE>
130
<PAGE>
SUPPLEMENT DATED NOVEMBER 1, 2000
TO
VARIABLE LIFE INSURANCE
PROSPECTUSES DATED NOVEMBER 1, 2000
This Supplement is intended to be distributed with prospectuses dated November
1, 2000 for certain VARIABLE LIFE INSURANCE POLICIES ISSUED ON OR BEFORE MAY 1,
2000 by John Hancock Life Insurance Company, John Hancock Variable Life
Insurance Company, or Investors Partner Life Insurance Company. The variable
life insurance policies involved bear the title "Variable Estate Protection",
"Variable Estate Protection II", "Majestic Variable Estate Protection",
"Majestic Variable Estate Protection 98", "Medallion Variable Life", "Medallion
Executive Variable Life", "Medallion Executive Variable Life II", "Medallion
Executive Variable Life III", "Majestic Variable Universal Life", "Majestic
Variable Universal Life 98", "Variable Master Plan Plus", "Investors Partner
Variable Life", "Flex V-1" or "Flex V-2".
------------------------
GUIDE TO THIS SUPPLEMENT
------------------------
. Your policy enables you to invest in the INTERNATIONAL OPPORTUNITIES II
VARIABLE INVESTMENT OPTION. This variable investment option is subject to
all the terms and conditions of the policies and the procedures described
in the Product Prospectuses. Prior to June, 2000, this variable investment
option was known as the "Global Equity" variable investment option. We may
modify or delete this investment option in the future.
. If you select the International Opportunities II variable investment
option, we will invest your money in the corresponding fund of the John
Hancock Variable Series Trust I. The International Opportunities II Fund is
managed by T. Rowe Price International, Inc.
. Page 2 of this Supplement amends the fund expense table in each of the
Product Prospectuses that follows the question "What charges will the
Trust[s] deduct from my investment in the policy?"
. Pages 3, 4 and 5 of the Supplement amend the John Hancock Variable Series
Trust I prospectus and describe the Goal and Strategy, Subadviser, Past
Performance, Main Risks, Financial Highlights, and Expenses, Dividends and
Taxes of the International Opportunities II Fund.
1
<PAGE>
ANNUAL FUND EXPENSES
The following figures for the International Opportunities II fund are based
on historical and current fund expenses, as a percentage (rounded to two decimal
places) of the fund's average daily net assets for 1999. Shareholders of the
International Opportunities II fund have approved a new management fee schedule,
effective November 1, 2000, and the "investment management fee" percentage is
calculated as if the new fee schedule had been in effect for all of 1999. The
percentage for "other operating expenses" is based on the allocation methodology
and expense reimbursement policy adopted by the John Hancock Variable Series
Trust I on April 23, 1999, and is calculated as if that allocation methodology
and expense reimbursement policy had been in effect for all of 1999. Under the
expense reimbursement policy, John Hancock Life Insurance Company voluntarily
reimburses the International Opportunities II fund when the fund's "other fund
expenses" exceed 0.10% of the fund's average daily net assets.
<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:
International Opportunities II ....... 1.00% N/A 0.10% 1.10% 0.50%
</TABLE>
2
<PAGE>
International Opportunities II Fund
(Formerly Global Equity Fund)
GOAL AND STRATEGY
This is an international stock fund that seeks long-term growth in capital.
The Fund primarily invests in a diversified mix of common stocks of large
established and medium-sized foreign companies located throughout the world,
including developed, newly industrialized, and emerging countries.
The manager determines the distribution among countries and regions by using a
combination of fundamental research and economic analysis, emphasizing:
. prospects for relative economic growth between foreign countries;
. expected levels of inflation;
. government policies influencing business conditions; and
. outlook for currency relationships.
The manager selects stocks that have growth characteristics such as:
. leading market position or technological leadership;
. high return on invested capital;
. healthy balance sheets with relatively low debt;
. strong competitive advantage;
. strength of management; and
. earnings growth and cash flow sufficient to support growing dividends.
The Fund invests:
. in at least 3 different countries other than the U.S., and
. no more than 20% of its assets in emerging market stocks.
Although the Fund may employ foreign currency hedging techniques, the Fund nor-
mally maintains the currency exposure of the underlying equity investments.
The Fund normally invests in 150 to 250 stocks in 15 to 20 countries, with at
least 65% of its assets in securities of non-U.S. entities. The Fund normally
has 10% or less of its assets in cash and cashequivalents.
The Fund also may purchase other types of securities that are not primary
investment vehicles, for example: American Depository Receipts (ADRs), Global
Depository Receipts (GDRs), European Depository Receipts (EDRs), 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
T. Rowe Price International, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Managing since 1979
Managed approximately $42 billion in assets at the end of 1999
Managing Fund since June 13, 2000
FUND MANAGERS
Management by Investment Advisory Group overseen by:
David J. L. Warren
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Portfolio Manager of subadviser
Joined subadvisor in 1983
Began career in 1981
John R. Ford
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Portfolio Manager of subadviser
Joined subadvisor in 1982
Began career in 1980
James B. M. Seddon
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Portfolio Manager of subadvisor
Joined subadvisor in 1987
Began career in 1987
Mark Bickford-Smith
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Portfolio Manager of subadvisor
Joined subadvisor in 1995
Began career in 1985
PAST PERFORMANCE
The graph will show how the fund's total return varies from year to year, while
the table will show 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
[GRAPH]
1999 24.19%
Best quarter: up 15.94%, fourth quarter 1999 Worst quarter: down 12.39%, third
quarter 1998
Average annual total returns -- for periods ending 12/31/99(/1/)
<TABLE>
<CAPTION>
Fund Index
<S> <C> <C>
1 year 24.19% 25.34%
Life of fund 13.48% 19.92%
</TABLE>
Index:MSCI World Index
(1)Began operations on May 1, 1998.
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<PAGE>
MAIN RISKS
Primary
Foreign Risk: The Fund's foreign securities will pose special risks, due to
limited government regulation, lack of public information, economic, political
and social instability and foreign currency rate fluctuations. Factors such as
lack of liquidity, foreign ownership limits and restrictions on removing cur-
rency also pose special risks. All foreign securities have some degree of for-
eign risk. However, to the extent the Fund invests in emerging market coun-
tries, it will have a significantly higher degree of foreign risk than if it
invested exclusively in developed or newly-industrialized countries.
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.
Secondary
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 equity investments. Also, in a down market,
derivatives could become harder to value or sell at a fair price.
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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>
--------------------------------------------------------------------------------
International Opportunities II Fund (Formerly Global Equity
Fund) -- Period ended December 31; 1998** 1999
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 9.87
Income from investment operations:
Net investment income (loss) 0.07 0.10
Net realized and unrealized gain (loss) on investments* (0.13) 2.27
Total from investment operations (0.06) 2.37
Less distributions:
Distributions from net investment income and capital paid
in (0.07) (0.07)
Distributions from net realized gain on investments sold -- --
Distributions in excess of income, capital paid in & gains -- (0.04)
Total distributions (0.07) (0.11)
Net asset value, end of period $ 9.87 $ 12.13
Total investment return (0.55)% 24.19%
Ratios and supplemental data
Net assets, end of period (000s omitted)($) $15,281 $22,311
Ratio of expenses to average net assets (%)*** 1.15% 1.04%
Ratio of net investment income (loss) to average net assets
(%) 1.11% 0.96%
Turnover rate (%) 33.17% 49.51%
</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
purchases and withdrawals of shares in relation to the fluctuation in
market values of the fund.
** Fund began operations May 1, 1998.
*** Expense ratio is net of expense reimbursement. Had such reimbursement not
been made the expense ratio would have been 2.47% and 1.26% for the years
ended December 31, 1998, and 1999, respectively.
4
<PAGE>
. The table entitled "FUNDS' EXPENSES" in the prospectus for the John Hancock
Variable Series Trust I dated November 1, 20000 is supplemented with the
following information:
The advisory fee paid by the International Opportunities II fund to the
adviser in 1999 was 0.90% of the fund's net assets. The International
Opportunities II fund was formerly the "Global Equity" fund.
. The section entitled "DIVIDENDS AND TAXES" in the prospectus for the John
Hancock Variable Series Trust I dated November 1, 20000 is supplemented
with the following information:
The International Opportunities II fund reinvests and declares its
dividends and distributions in the manner described in this section.
5
